{"id":17528,"date":"2016-07-13T16:19:29","date_gmt":"2016-07-13T23:19:29","guid":{"rendered":"https:\/\/goldcopreciousmetals.com\/?p=17528"},"modified":"2026-01-18T19:11:13","modified_gmt":"2026-01-19T03:11:13","slug":"why-your-cash-is-no-longer-king","status":"publish","type":"post","link":"https:\/\/goldco.com\/why-your-cash-is-no-longer-king\/","title":{"rendered":"Why Your Cash is No Longer King"},"content":{"rendered":"

There was a time when saying something was as safe as \u201cmoney in the bank\u201d meant it was the soundest of all possible investments. You don\u2019t often hear that line these days, and for good reason. Never in our history has cash been as abstract as it is today. The currency we use is nothing more than a vapor of numbers in a bank computer.<\/p>\n

There\u2019s still some paper currency floating around, but the only reason you can exchange it for anything these days is faith. The person accepting currency has faith he or she will be able to use that paper you hand them to pay their own bills. But in contrast to how our system was originally designed, you can\u2019t take paper dollars to the government and exchange them for anything of inherent value.<\/p>\n

In the old days if a government wanted to cheat on currency valuations they had to cut down on the actual amount of gold or silver in government-issued coins; they literally had to dilute the volume of precious metal in coins by mixing it with a cheaper metal. Applying the word \u201cdilution\u201d to our sagging modern currency is a holdover from those days, but it helps one make sense of an inherently nonsensical system.<\/p>\n

Too Much Cash Sloshing Around<\/strong><\/h3>\n

The financial world is drowning in cash<\/a> because central banks keep trying, and failing, to fix what may be an irreparably broken system.<\/p>\n

First, you have to wrap your head around the fact that each nation\u2019s central bank actually wants the value of its national currency to go down relative to everyone else\u2019s. A weak currency means goods and services manufactured in your country look cheaper to overseas buyers than the exact same goods and services from a country with a stronger currency. The alternative to arbitrarily devaluing their currency is to implement tariffs and trade barriers. Tariffs are, in effect, taxing other countries for having a weak currency, thus making their goods more price-competitive with domestically produced goods and services.<\/p>\n

Supporters of this approach are routinely branded as being opposed to free markets and international trade. But instead of the honest approach of tariffs, central banks game their own system by devaluing the yen, the yuan, the dollar, etc.\u00a0 The result? We\u2019re trapped in a global race to the bottom on currency valuations, with central banks pumping more and more cash into an already cash-bloated financial system.<\/p>\n

The Golden Upside<\/strong><\/h3>\n

There\u2019s one bright spot to these attacks on the value of your currency, and that\u2019s their effect on gold. Currency dilution hits a wall when it comes to commodity prices. No matter how much a central bank devalues its currency, there\u2019s still a fixed cost associated with an asset that has to be clawed out of the earth. Since historically gold has functioned as money, it\u2019s the one tangible asset investors can purchase \u2013 with cash \u2013 that can preserve the buying power of that cash for decades.<\/p>\n

Does gold really have that power? Consider this: While $100,000 cash today will buy you one-third<\/a> of what it did in 1980, if you\u2019d converted that $100,000 to gold in 1980, at $460 an ounce, and simply held on to it, at the market\u2019s close today you\u2019d have over $292,000.<\/p>\n

Given that central banks seemingly can\u2019t find an alternative to digging an ever-deeper hole for their currencies, gold gives you a nearly unlimited upside<\/a>.<\/p>\n

It\u2019s no accident that China and Russia are stockpiling gold<\/a> and that China\u2019s working hard to make itself a major player in the global gold trade. Many suspect that after decades as the world champion of currency dilution, even China sees an endpoint, and is now looking to create some kind of gold-backed medium of exchange for settling future trade debts.<\/p>\n

Say what you will, the Chinese have a long-term vision, one that\u2019s already led to their fighting for a seat on London\u2019s new LBMA gold fix, as well as setting up their own yuan- denominated gold fix.\u00a0 When the world\u2019s biggest cheater says it\u2019s time to try something different, and that something definitely has a gold tint to it, it\u2019s time we all sat up and paid serious attention.<\/p>\n","protected":false},"excerpt":{"rendered":"

It used to be that if all else failed, you could still hold savings in cash. But what happens when all else IS failing\u2014including your cash?<\/p>\n","protected":false},"author":3,"featured_media":32114,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[207],"tags":[469,238,322,230,413,731],"class_list":["post-17528","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-cash","tag-china","tag-currency","tag-gold","tag-russia","tag-value"],"acf":[],"yoast_head":"\nWhy Your Cash is No Longer King<\/title>\n<meta name=\"description\" content=\"It used to be that if all else failed, you could still hold savings in cash. 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