Tuesday, March 6, 2012

I Am Real Money : Gold


Let's start with the basics. I have some characteristics that no other matter on Earth has...

I cannot be:

  • Printed (ask a miner how long it takes to find me and dig me up)

  • Counterfeited (you can try, but a scale will catch it every time)

  • Mistaken (how many metals are bright yellow?)

I cannot be destroyed by:

  • Fire (it takes heat at least 1945.4° F to melt me)

  • Water (I don't rust or tarnish)

  • Time (my coins remain recognizable after a thousand years)

I don't need:

  • Feeding (like cattle)

  • Fertilizer (like corn)

  • Maintenance (like printing presses)

I don't have:

  • Industrial Dependence (keeps my volatility lower)

  • Counterparty Risk (remember MF Global?)

  • Shelf life (I never expire)

As a metal, I am uniquely:

  • Malleable (I spread without cracking)

  • Ductile (I stretch without breaking)

  • Beautiful (just ask a bride)

As money, I am:

  • Liquid (easily convertible to cash worldwide)

  • Portable (you can conveniently hold $50,000 in one hand)

  • Divisible (you can use me in tiny fractions)

  • Consistent (I am the same in any quantity, at any place)

  • Private (no one has to know you own me)


You've heard that statement before - but do you know what it really means? Money is a medium of exchange and a store of value. Almost anything can be used as money, but obviously some things work better than others. It's hard to exchange things people don't want or don't store well. Over thousands of years, I have emerged as the best form of money (along with silver).

The paper dollars in your wallet are technically just a currency, not real money. In other words, they are a government substitute for money. Money must be durable, divisible, consistent, convenient, and have value in and of itself.

  • It must be durable because you can't have it disintegrating in your pocket or bank. That's why you don't use wheat; it can rot or be eaten by insects.

  • It must be divisible, which is why you don't use diamonds or artwork; they can't be split into pieces without destroying the value of the whole.

  • The lack of consistency is why you can't use real estate. One property is always different from another.

  • It must be convenient, which is why you don't use other metals like iron. The coins would be too big to handle easily.

  • It must have value in and of itself. This is why you shouldn't use paper as money.

  • And one more thing: it must not be easily duplicated. Not even the kings and emperors who clipped and diluted gold coins dared to use paper as money.

My function is as money and a store of value, so the proper comparison is to your dollars or Treasury Bills (of similar nominal value). And here is where I excel and serve my purpose: since 1913, the US dollar has lost 96% of its purchasing power. I have lost none.

Remember, I am the only financial asset that is not simultaneously someone else's liability. I don't require the backing of any bank or government.

1 comment:

  1. The burgeoning realisation of the evil of usury and the need for equity in exchange in our time came from among the sadiqun, particularly Shaykh Dr. Abdalqadir as-Sufi, over forty years ago, while the ‘ulama scoffed in their ignorance and it is thanks to him that Kelantan state in Malaysia is able to execute the correct payment of obligatory Zakah. This is ‘aml. The Rasul said, ‘ad-Deen al-Mu’amalah’, ‘the Deen is transaction’. All Muslims will strive to establish Salah, but it is the Sadiqun who realise there is no Salah without Zakah and its efflorescence of the Mu’amalat. It is the mu’amalat that need putting back into place, firmly based upon correct Zakah, that means men and women should transact in the market place according to the forgotten ma’ruf of correct trading with real money and leave the munkar of the corrupt financial system of banks, companies and limited liabilities, they will not be there much longer anyway. We need to move gold and silver into the market place, that is when things will change, this current hoarding of gold is not it; having gold coins is meaningless unless they buy things regardless of electronic values. This means creating new societies with real leadership firmly grounded in turning to the Real and obeying His commands.