SovereignLife Freedom Blog

It’s well known that gold is a hedge against the devaluation of paper money. In fact I’m always impressed by the following statistical proof of that fact.

According to the Minneapolis Federal Reserve, since 1935 the US Dollar has lost 93.5% of its value. That means if you had put $100 in the bank in 1935, its purchasing power today would be just $6.50. But if you had simply held gold since that time you wouldn’t have lost any purchasing power at all – as the following illustrates:

In 1935, when an ounce of gold was worth $35, you could buy:

• a top-quality tailored suit for $19.75 – or 0.56 ounces of gold
• a family car for $500 – or 14.3 ounces of gold
• a house for $7,150 – or 204.2 ounces of gold

Today, with gold at $1,060 an ounce:

• that same top-quality, tailored suit costs $600 – or 0.56 ounces of gold
• the family car now costs $15,000 – or 14.2 ounces of gold
• the house averages $181,100 – or 204.6 ounces of gold (average house price from 2008 / gold at 2008 price of $880/ounce)

As you can clearly see, the prices for those items remains virtually the same when expressed in gold rather than paper fiat money. So on that basis alone it’s worth holding physical gold.

But you can also do a lot better – as this critical information on how to leverage gold discloses.