The Phaserl


This Is What Gold Does In a Currency Crisis

by John Rubino, Dollar Collapse:

To say that gold is in a bear market is to misunderstand both gold and markets. Gold isn’t an investment that goes up and down. It is money in the most basic store-of-value sense. Most of the time it just sits there, and when its price changes in local currency terms that says more about the local currency than about gold.

But when currencies collapse, gold shines.

Consider the above from the point of view of a typical Russian. The ruble is tanking (no need to understand why — all fiat currencies go this way eventually and the proximate cause is almost irrelevant). Russians who trusted their government and kept their savings in, say, a bank account, are losing their shirts. But those who own boring, doesn’t-pay-interest, in-a-bear-market gold have seen their capital appreciate in local currency terms by about 60 percent in just the past month. They’re not “making money,” but they are preserving wealth.

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2 comments to This Is What Gold Does In a Currency Crisis

  • Eric

    Nice chart. Ironically the ruble is sound while the dollar is a crap sandwich.

    The comments are interesting too. I still can’t get over how many people still measure their wealth in terms of fiat currency rather than in gold. Gold will be used for global trade settlement. If anyone still believes that they will be using dollars in russia or china in a year or 2, i would love to hear why. They always tell your what they’re going to do. Aren’t you listening.

    Weights and measures. Weights and measures… this is true wealth. not digits on a screen. The price matters not. The dollars days for world trade are numbered. It is always a buying opportunity. You should never want to sell gold. If you have powder, use the sale to your advantage. If you don’t, just turn off the computer and go outside, do something productive/creative and wait it out just like any other day.

    If you don’t have any gold or silver, you’re in deep doo doo. Not having any is the equivalent of financial suicide. It doesn’t matter how many ounces you have. It only matters that you are saving something each month and not spending what you don’t have…i.e. living within your means. And that you are saving in gold and silver. NOT in banker IOU’s!

    You should always be saving. Saving for an emergency. Saving for a car. Saving for a house. You should not always be spending.

  • Ed_B

    Warren Buffet often criticizes gold and its ownership by exclaiming that “it doesn’t pay a dividend!”. If that is the standard by which an investment is measured, then one also cannot buy any Berkshire Hathaway stock either because it also does not pay a dividend. Despite this truth, none of the financial presstitutes will EVER bring this fact up to Buffet. They just smile, nod, and accept his comments on something about which he knows nothing because he does know a lot about stock investing. The logic of this escapes me.

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