Philman

Gold - Not the Safe Haven People Think it Is

You should not write further on this topic until you have done enough research to become an expert on precious metals. That will require hundreds of hours of work that you have not yet done.

In short, your most fundamental historical facts are incorrect. The U.S. government was absolutely NOT propping up gold during the panics of 1807, 1819, 1826, 1837, 1842, 1861, 1865. Gold was an entirely free agent that occasionally filled a commemorative coin, but that was about it. The United States of America was, at the time, a relatively minor economic force in the world, dwarfed by the power of England, France, Germany etc. It still followed the silver standard, NOT the gold standard.

In the 18th century, China, like today, was draining the world of its money, which, at that time, was mainly backed by silver. China, like other nations, was on the silver standard. The U.K. was also on the silver standard. A currency that was literally named for what it was the "pound sterling" (one imperial pound of sterling silver) reigned supreme in the world of currencies. But, silver from Europe and America was being fast drained away by the voracious appetite of the Chinese for the white metal.

In 1818, the silver standard was abandoned by Holland and replaced with the gold standard. This was followed, shortly thereafter by most continental European nations. In 1844, the silver standard was finally abandoned by its creator, Great Britain, in favor of gold. In 1873, the United States of America abandoned silver and adopted the gold standard.

In short, you are wrong. Gold did not perform well, historically, simply because the U.S. government was "propping" it up. Gold and the human psych has such a long and intimate association with one another, that it is unlikely that any action by the government against the price will suffice for long in suppressing it.

If you look further back in history, gold served as a safe haven during the time of Abraham when grain sought in Egypt, in the midst of a widespread crop failure in the Middle East was paid for with gold, during the buildup of the Athenian Empire after the Persian Invasion, during the later Peloponnese wars between Athens and Sparta, during the course of the Roman Republic, and, especially, at the fall of the Roman Empire, particularly in Palestine during the times of the Hebrew revolts against Rome, and at all times in history before and after all of these events.

The fact that people turned to gold during the fall of the Roman Empire is still evident in Britain, when people sometimes dig in their backyards and find a pot of Roman gold buried, long ago, by frightened Romans, and, later, forgotten about.