Don't Be Fooled By The Glitter

The gold standard is the old standard in an economic collapse.

- Peter Suciu

The end of 2016 saw the price of gold trending to-ward $1,100 an ounce. That was rather pricey for the shiny metal, yet it was still way down from its record high of nearly $1,900 an ounce in August 2011. In fact, while gold rebounded throughout much of 2016, it was headed in a downward slide as the year ended.

That could mean that gold would be a wise investment in 2017—good news for so-called "gold bugs," those individuals who hoard gold in fears of economic downturns and even collapse. No doubt such individuals watched the news as Russia and Germany—among other nations—began to hoard the shiny stuff. China and India still remain the largest markets for gold, while the United Kingdom has rather modest gold reserves. In the latter case, it is because, like the United States, the British currency is not on a gold standard.

In countries such as Germany, where there was massive currency devaluation and hyperinflation after World War I, bullion can still be purchased over the counter. Here, gold could be a good buffer against such economic downturns.

This is why in India it is estimated that three-quarters of Indian household savings are in gold—and interestingly, it is in jewelry, not in bullion or coins.

The reason many Indians and Chinese buy gold is that they have less access to financial institutions, and gold always has value.

Andrew Gause, author of The Secret  World of Money, explained that gold has been a useful store of value for 6,500 years.