Which of these would you rather have?  Lately, more and more folks have been picking option number two.  That’s right, these days many people are feeling more confident with an ounce of pure gold in their hands instead of a ( roughly ) a thousand bucks.  The spot price of gold is about $933 as I write this – add on a premium for the Gold Eagle pictured here, and you’re nearly at a cool grand. 

Advantages of Gold

Well, the dollar is in the toilet if you haven’t noticed.  Traveling abroad is absurdly expensive in dollars these days – nearly every major foreign currency is worth way more in dollars than it used to be.  Back here in the states, inflation is out of control.  Everyday things like food and gasoline are skyrocketing in price, week after week.  A dollar just doesn’t go as far as it used to, as they say.  Meanwhile, the shiny yellow metal ( AU for the nerdy types ) is up about 40% over the last year.  Over the past several years, gold has been an incredible store of value – that cannot be said for the dollar.  With potentially unlimited greenbacks available vs limited ounces of gold – which do you think has more “intrinsic” value?

Advantages of the paper stuff

My mortgage company doesn’t accept payment in gold coin or bar.  Nor does my grocery store.  Even my local coin dealer wants the green stuff in exchange for his wares.  The fact is, the green stuff spends a lot easier.  No need to convert it into another form of currency before spending.  I can also keep Federal Reserve Notes in the safety of my bank.  I don’t need to lie awake at night and worry about being robbed like I would with a big pile of gold.  If my bank gets robbed, then I won’t be held liable – my bank will keep my money safe.  Also, in the event of hyperinflation, I can burn my money to keep warm.  You can’t keep a fire going with gold coins.

I’m not crazy but…..

There are some pretty crazy “goldbug” types out there who are constantly preparing for the end of the world as we know it.  They stockpile gold, food, and guns, just waiting for the day when things really go south.  I’m not in that camp.  But at the same time, I have extremely little faith in the short-mid term future of the US dollar.  Gold, on the other hand, has been the world’s longest and most consistent form of money.  It’s been around for thousands of years, and won’t be going anywhere.  For now, I’ll continue to buy gold ( and silver ) when I have the extra greenbacks to spare.