E.D. Hart

The Start of a Run for Gold

I have a collection of German coins. They're gold and were minted during the hyper-inflationary period of the 20's and 30's, before the currency became confetti.

The German government tried to convince its citizens NOT to trade its paper currency for gold; the government said that to hold the DeutchMark bills was patriotic.

Then the bills became worthless. The people that held the gold DM were able to eat, and not live in dire poverty. Those that only held paper suffered much more.

Many people know this little bit of history, but its quaint and far removed, and felt that it cant happen here. The people I talk to consider this an anomaly, an outlier, and highly improbable.

A historical reading of paper currencies shows the contrary truth: that almost all currencies ever introduced reverted to their intrinsic value. Confetti.

The exceptions are the ones extant.

But the current dollar meltdown has been predicted for decades. It is likely to continue for many years. Soros, Buffett, Rogers, and many people far smarter than I have been explaining the dangers of our bloated nations debt problems for years, and expect this to continue.

My coin collection, by the way, has appreciated in value. A German DM in 1920 was worth about .25 dollar, if I remember correctly. My 20 DM coins would have been worth $5 dollars then.

Today they are worth $225 for the 20 DM gold coin. Thats a 45 fold increase, not incredibly impressive, compared to stocks, but nothing to sneeze at.

More importantly, the paper 20 DM I can buy on e-bay for about $5, before shipping.


Now, which would you rather own? Gold has never been relatively worthless, it is the one currency that has been used throughout 10,000 years of the history of money (in almost every culture).

Food is important as is water, and you need them, no doubt. But its a false dichotomy--you don't need to pick one or the other. Food spoils, and is cumbersome to transport. Diamonds might make a good currency too, as would silver. But gold is one form of a store of value. Why not own food, water, silver, gold and diamonds? (Diamonds are the easiest way to smuggle large amounts of wealth with no electronic trace, but they need to be graded and authenticated) .