Dollar Currency In Terms Of Gold Has Lost 98-Percent In ~100 Years

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The United States dollar is of course, a piece of paper. While it is a medium of currency used for exchange between labor, services, products and goods — it is a constantly devaluing currency. Sometimes slow, sometimes fast.

The dollar doesn’t stretch as far as it used to because the money supply is always expanding.

When compared with it’s value in gold, here’s what happened, and the reason why you might want to own some physical silver or gold…

 
Between 1783 and 1913, the U.S. dollar was a real store of wealth because inflation was essentially zero (except during wartime). If you saved a dollar in the year 1800, a hundred years later you could still buy the same amount of goods with your savings.

Until 1933, people carried gold coins in their pockets, and paper bills could be exchanged for gold and silver coins at any bank. In 1933 however, the gold of US citizen’s was confiscated by the government, and the dollar was devalued by 41%.

The treasury then attempted to hold the value of the dollar at 1/35 of an ounce of gold (810 mg), which was mostly successful into the late 1960’s.

Shortly thereafter, the fact that it required so much gold to buy up all the dollars that foreign countries were selling – the government decided to stop, and “closed the gold window” in 1971.

Over the next 10 years the value of the dollar collapsed and hit bottom in 1980.

Then, through the next 20 years the dollar slowly recovered “some” of it’s value as a result of paying high rates of interest and reducing taxes, but the dollar recovery didn’t last long.

From 1999 to today, the dollar fell in value from about 123 mg of gold (1/230 of an ounce) to less than 23 mg (1/1232 of an ounce). That’s more than 80%.

From 1900 to 2014, the dollar has fallen from from 1500 mg of gold to about 23 mg of gold, and has lost over 98% of it’s purchasing power.

Do you think the trend will continue?
Yes the trend will continue.

The Federal Reserve has no choice but to maintain their ZIRP (zero interest rate policies) and will be printing dollar currency for the foreseeable future.

Their other choice (to raise interest rates) will destroy what’s left of the economy (the interest payments on the debt will sky rocket) and will likely trigger the chain-reaction destruction of the derivatives market worth hundreds of trillions of dollars (some say as high as a quadrillion) bringing down the entire financial system into a heap of rubble.

It seems reasonable then to preserve some of one’s wealth by procuring some physical bullion, be it silver or gold.

Silver certainly is the easiest to build on, given it’s current bargain spot price of approximately $19 an ounce (as of this article date).

Gold, although more expensive in dollars (about $1,245 an ounce as of today’s date), has been manipulated to this low dollar price – and will eventually find it’s real physical value dollar equivalent when they are no longer able to control it. At that time it could be stunning as to the new highs it will reach. Until then though, it may be wise to procure some, if one can afford the luxury of doing so.

One gold bullion dealer here on Modern Survival Blog is GoldenEagle.com.

If you still need some convincing, check out the U.S. debt graph here:

The United States National Debt Is Surging

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4 Comments

  1. “Only government can take perfectly good paper, cover it with perfectly good ink and make it worthless.”

    Milton Friedman

  2. Until the paper market has its epiphany, and people realize they are only holding empty promises, gold and silver will remain range bound. I have read many, many articles on the subject and hold some silver myself, but my vision is for the long term. I merely wish to preserve the value of my savings, not get rich. Remember, when silver is a hundred bucks an ounce, a single egg will cost three dollars. What gold and silver will do however, is eliminate any further inflation, meaning that as far as purchasing power, you will have approximately the same purchasing power in twenty years that you have today. This is of course prefaced upon the government not confiscating gold/silver or outlawing ownership. Precedent has been set after all.

    1. I agree, with the exception that the best play during this coming economic crisis will be precious metals to real estate. Metals will increase in dollars while property/land will decrease in dollars due to the majority of people losing their purchasing power and a significant rise occurring in interest rates, (thereby making very few eligible for loans). This lack of demand will drop values significantly.

      While metals may not make people rich, those who have researched, planned, and purchased ahead of time, stand to potentially own a home and land outright due to this.

      Always interested in others opinions who have researched metals extensively.

  3. “Ken” you wanted an alternative for toilet paper after TSHTF….I think you found it!

    We print money like it was a news paper and a printing press can make millions in just a short amount of time and they are ran 7 days a week. But as you stated..where is the gold that is supposed to be backing all that toilet paper? Our government is quickly flushing The United States currency and its value down the toilet and our debtors are just sitting back waiting for the collapse so they can TAKE what they want for payment…say Mount Rushmore for one Billion and if we argue or disagree it will be the cause of yet another war. But being realistic I believe our government has already sold us out to China, Japan and others and they own much more than the average citizen could realize or if knew would be outraged. This subject has been a great debate in our group. Some say China will never own such land and holdings in America. Others say that it is just to late.

    When I was growing up the minimum wage was $5.35 an hour. BUT you could buy a new truck for under $7,000.00. You could actually SAVE money then because as bad as it was the value was higher. Now fast forward to today $7.35 is I think the minimum wage but the VALUE of that dollar is nothing as look at the price of a new truck today. Everything price wise is growing higher but wages are set so you cannot make a living. My dad always said “if your an American you WILL work every day of your life and you will pay taxes, social security, state and local, THEN pay tax AGAIN for the product you are buying and in the end you will most likely be in debt when you die”. This I have found to be true.

    But again “Ken” I think you found that alternative toilet paper you was looking for.

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