If you pick up a newspaper, go online, listen to the radio or watch television these days, it’s hard not to catch a commercial for gold. They make some enticing claims:
“Gold has tripled in value since 2000…”
“It’s a safe haven for investors…”
“It’s outperformed the stock markets…”
“…and it’s never been worth zero.”
Historically, most of these facts are true. Go back far enough, before we placed a value on it as a commodity, it was actually worth zero: it had no value. Demand for gold – once upon a time – was so low compared to the abundance of it just ‘lying on the ground’ that it really had little or no value to anybody. Even as early as the Gold Rush, many prospectors found it lying above ground.
Here are some other very interesting facts about gold:
“You can’t eat it…”
“You can’t use it for heat…”
“You can’t make particularly good, warm clothing from it…”
“And, on occasion, governments have compulsorily recalled it.”
Therefore, in a world where the dollar is increasingly less stable and economies are still extremely wobbly, stimulus plans in the trillions of dollars are proving ineffective, unemployment is increasing at an alarming rate, and the civilized world is potentially headed back to the Stone Age, what does this all mean? Simple, we’d better get educated on how to engage in the age-old practice of bartering.
We don’t have to turn back the clock far to get a tiny glimpse of what can happen. Not long after the Y2K switch over, the entire country of Argentina went bankrupt. The citizens woke up one morning and found all the banks were shut. There was no other choice than to revert back to a system of bartering goods and services. What value does gold have when you need to eat and keep warm?
I’m not suggesting that you don’t currently invest in gold, that’s entirely your investment decision and I’m not claiming to be an investment specialist. It’s true, it has historically been a very good safe haven in turbulent markets. The major problem right now is that we have nothing to compare our current economic circumstances to. Too many factors have changed, even since the Great Depression. We no longer adhere to the gold standard, we are in a global market place, there are many more private investors ‘playing’ in the markets, and there are also enormous fund portfolios pooling billions of dollars, just as a few major differences.
Just as we have seen over the last year, it does not take much for the whole, wobbly house of cards to come tumbling down. Another Katrina… something on the scale of September 11th… or another financial bubble, could be all it takes to push the global economy right over the edge. When printing more paper won’t help any more – and I haven’t scope in this article to expand on the inflationary implications already set in motion by the most recent print run of dollar bills – what then?
We will be forced to comply to Natural Law: beg, steal, or barter. The latter is the only civilized alternative we have, although the first two are unfortunately unavoidable (even with FEMA roaming the streets!) So, it’s your choice: invest in gold – which seems like a good idea right now – or invest in the future. It may not happen tomorrow, it may not even happen next year, but unless things make a very drastic 180-degree turn for the better, it will happen. When it does, if you don’t have anything to barter, or can’t farm the land, or are able to trade, there probably won’t be much to bail you out.
My advise? If you get the chance, invest at least some of your wealth into something you can help to build and grow. Recently I’ve become very interested in barter exchanges – one in particular, Merchants Barter Exchange, which has some very exciting statistics and a solid business model behind it. Certainly, if we do have to resort to a barter system, I’d definitely want to be the one that owns the local exchange, or at the very least be a member. It’s worked for thousands of years, and when the smelly stuff hits the fan, it’ll be a much better investment than bars of gold, that’s for sure.
Ronald T. Smythe is a freelance journalist, self-professed ?tap-room? economist, futurist, and retired corporate manager.
