Is gold overpriced?
To answer the question is gold overpriced it all depends on what you consider gold to be. Our present world’s capitalist society is based on consumption. Oil for example is something we consume it’s something we need in North America in order to feed our ever growing population. That being said gold is not something we need to survive. Because of the creation of our current fiat money system in reality gold as it stands now should be considered a luxury precious metal because as it stands in 2011 it really doesn’t do anything.
Understanding the reason the price of gold continues to rise
The reason the price of gold continues to rise is because more and more people and countries continue to buy into it. The talk of the world right now is throughout history the world has always returned to gold as a form of a trading. The problem with using this historic reference is the mere fact that the world has never tried the fiat money system which in reality is the real cause of all the economic booms the world has experienced since 1971. Some people are crying for a return to the gold standard which basically means people can turn in their money for gold coins or pieces at a set price.
If this we’re to happen again the truth of the matter is countries and their money supply will lose all meaning because gold which would be considered the new money will be the financial ruler of us all. Having a gold standard means the people with gold rule definitely with no real hopes of change. What makes a gold standard worse as people learned in during the great depression is that in times of economic turmoil the people with the gold can opt not to share their gold with anyone. Which can stunt growth and destroy countries?
Understanding fiat money and its purpose
The real purpose of fiat money is to encourage reinvestment of one’s income. To understand this in its simplest form let’s say that I’m a billionaire scrooge, in a gold standard system if I opt not to reinvest my money into society I can and most likely will live comfortably and potentially have more power over government just by not spending any of my gold. This cannot happen in a fiat money system, people who do not invest and choose to save lose money in many different ways namely in taxes. Plus with a fiat monetary system there’s inflation which also contributes to the loss of value in one’s money. The point I’m trying to make here is fiat money forces people to invest in the future.
How overpriced is gold?
In my opinion Gold is way overpriced, the thing people need to understand is that if we return to a gold standard or even if the United States and other countries start paying back debt in the forms of gold the price of gold will drop enormously. In my personal opinion gold is being propped up basically because of the media. Our current world is based on consumption gold as it stands now contributes nothing to human consumption. Gold is a hoarded precious metal people dig it up out of the ground and then throw it into a safe. In my personal opinion the gold market as it stands now is propaganda based. That being said in my personal opinion I feel s though gold should be between $300 – $500 United States dollars.
Final thoughts on gold
I predict that in the future gold will be a large contributor to the energy. I also predict that gold coins and bars will be relics or reminders of human evolution. We the people give gold value and we the people give fiat money value, we do this so things at least in our own minds will be fair and equal for everyone. Throughout history the gold system has always failed, never in history have we tried the fiat monetary system the fiat monetary system has allowed middle class people the ability to live a luxurious life without having to pay the full price all at once. There are more rich people in today’s world than in all history and the number continues to grow.
As you can tell I’m a fan of the fiat monetary system which means that I look at gold like an investment, that being said being that gold is a hoarded precious metal I feel as though it’s over valued and overpriced based on our current world. On the positive side I do think gold will be valuable in about 20 -30 years once the world starts moving away from oil. Thanks for taking the time to read this post please leave your thoughts below by sharing you help educate others.
Consider reading one of our other post about gold.