By Chris Rossini
The price of gold has exploded to the upside and there's a lot of emotion in the air. Advocates of sound money smile, while Keynesians who incessantly tried to convince us that "gold is doomed" have to find something else to talk about.
While it's always nice to see that reality has not left us, it's important not to get too caught up in market swings. Gold can be up $65/oz today, yet go down $30/oz tomorrow. Who knows? The key is to have a solid understanding as to why owning gold is important, and what owning gold actually means. Buy exchanging Federal Reserve fiat dollars for gold, you are demonstrating some very significant preferences.
Owning gold means speculating against the Federal Reserve and its fictional ability to "run the economy" by counterfeiting dollars. It's a way of saying: "I don't believe that a bunch of PhD-holding bureaucrats can overpower the market." Or, "I don't believe that a bunch of professors can overrule supply and demand." Tremendous resources are constantly being put to work on propaganda that's meant to gain your allegiance to the Fed.
By owning gold, you forbid the Fed from robbing you of your purchasing power. Although central planners continue to create dollars by the trillions that relentlessly drive up your bills, they cannot counterfeit gold. This is the main reason why governments hate gold with a passion, and why the precious metal has served as money for thousands of years before the PhD's took over.
By owning gold, you are choosing privacy over the snooping surveillance state. There's a saying that "gold has no smell". Government cannot watch your every financial move, as they do now do with electronic dollars.
By owning gold you are choosing to own real money. As Thomas Jefferson pointed out: “Paper is poverty. It is only the ghost of money, and not money itself.” Voltaire pointed out correctly that: “Paper money eventually returns to its intrinsic value: zero”.
Government paper money comes and goes. History is stuffed with tales of failed government "experiments". Yet gold has gone nowhere. It has been through it all.
So as you can see, market swings are really a sideshow. Up one day, down another. It's not important when looking at the big picture. When you know why owning gold is important, and the stance that you're taking by owning the precious metal, you can sleep like a baby at night and leave the noise outside.