A few charts to share to suggest to you dear reader that our "money" , whether it is the US dollar, Canadian dollar, or Euro, is not behaving as money.
As we mentioned in a previous post here, for a currency to function as money, it must be a store of value, besides being a unit of exchange.
Consider a person who put $1000 in a safety deposit box in 1971. That money would have dropped in purchasing power by 82% to an amount equivalent to $180 by 2009. Clearly, our fiat currencies are not a particularly good store of value.
Gold and silver, act, as they have for close to 5000 years, as stores of value.
As we continue in this period of financial uncertainty, where governments and central banks have debased currencies almost continually to finance their central planning schemes, we need to reflect on the long term impact this has on our hard earned wealth. Rather than depend on government pensions and promises, we believe that each investor and citizen needs to reflect on how long overspending by city, state, provincial, and federal governments can continue.
While a time is coming for equities, bonds and other income producing assets, as the Dow:Gold ratio shows, in our view, precious metals are a fine way to anchor a percentage of our wealth that will not be deflated, or inflated away by monetary policy.