Gold Vs Dollar

For centuries gold has been part of the human civilization symbolizing power, wealth and supremacy.  Decades after the US officially ceased down the conversion of dollars to gold, for the primary reasons of avoiding devaluation of the dollar and depletion of its gold reserves, investors and spectators remain cautious and watchful on every significant movement of the US dollar and its greatest opponent, the gold. 

Why Gold?

Each has his own evaluation and predictions why is it still good to invest in gold while others consider it simply a scrap of metal with no value in this modern world.  One of the reasons why people still regard gold as a very valuable investment and asset is perhaps because gold has surpassed history and already proven its worth regardless of different economic, financial, and political changes this world has experienced. 

A sudden “gold rush” occurs when the foreign exchange value of the US dollar collapses resulting to higher demand for gold.

Various economic and political events are becoming apparent suggesting the dollar to persist its new lows.   

The production of gold is impossible to increase continuously compare to a fiat currency such as the US dollar making it a better place to invest.  

Gold protects an investor against the decreasing purchasing power of a currency – due to various reasons.

Supports a more open international trading and investment since it is naturally imposed into the market through voluntary exchange.

Why Dollar?

Times have passed when kings and queens rule the world and now it is time for “Corporate America” to reign.  But it would be a misstatement to claim the world has not benefited from the financial evolution the US dollar has provided.  It fact, it changes how people trade, invest, save, and of course, borrow money.  Below are general but highly evident upsides why dollar will eventually remain as the world’s currency: 

Almost every major economy in the world uses the US dollar as a standard reserve.

It allows a sustainable economic development such as the US current-account deficits which would have been impossible using a gold standard. 

Inflows of dollars helped the stock market boom all over the world.    

It has replaced the gold as the international money and has become the most dominant currency in the world for decades. 

There was a time in history when gold was the international standard for trading.  A time when dollar is valued based on the price of gold.  But In 1971, the Bretton Woods was finally ended resulting to changes and consequences each of us have experienced one way or another, consciously or otherwise.  Time will only tell how long and how far the US dollar can take the world economies and how much other country are willing to pay for the ride…