Economic prosperity is fostered in a society with reliable, sound money as currency. Throughout history, governments and rulers have used devaluation of their currency as a stealth means to tax society, which dilutes economic prosperity quietly. Gold is honest money, and the “Gold Standard” evolved as a measure to restore reliable, stable money within and across sovereign boundaries.
Broadly, a gold standard is any mechanism that inhibits governmental devaluation of the currency by using gold as the actual or comparative standard of value. That said, any gold standard is only as good as the government’s adherence to it, which is why the “failure” of “The Gold Standard,” as some might argue, is actually rooted in the rulers’ failure to adhere to it, and not associated with the economic benefits and systematic advantages of a gold standard itself.
In ancient times, many economies prospered by using gold as money. However, the first widespread example of a consistent gold currency that showed extreme economic growth was the gold florin, introduced by the Florentine in 1252. The florin remained consistent in design and gold content (3.5 grams = .1125 oz troy) until the fall of the republic in 1533, becoming a global monetary standard of its day. Formed near the end of the medieval era, the Republic of Florence’s economy flourished through the strength of its currency and the stability of its banking industry. Other economies mirrored this trend, most notably the Venetians and their gold ducat coinage of the same gold content introduced in 1284, followed by the British and Austrian Hapsburg empires.
Modern economic theory and expansionary banking system advocates gave rise to expanding the supply of currency faster than precious hard money mineral deposits could provide. In the early United States, the Hard Money proponents following Andrew Jackson, who wanted to protect the value of money, were overrun by the Soft Money banking system proponents. Currency without intrinsic value was created and perceived as valuable and stable with the promise by the issuer to exchange it for a set amount of gold or silver. As long as the “set amount” was honored and not manipulated, this promoted efficient global commerce and prosperity.
Unfortunately, people across the globe have too great of an awareness, if not direct experiences, of the dilution of the promise of a currency. Most refer to “The Gold Standard” as a period of one hundred years, from 1870 to 1971 when international trade and sovereign currencies were settled under the measure of a given quantity of gold.
In 1971, President Richard Nixon spent three days with his top economic advisors, making the momentous decision to shake the dollar loose from gold. This single action shook the global monetary system to its core. The shift allowed central banks greater flexibility in managing their monetary policies, including controlling interest rates, providing politically motivated stimulus and addressing economic challenges. However, it also opened the door to challenges such as inflation and currency fluctuations. The rise of fiat currencies has since influenced economic dynamics on a global scale, shaping international trade, financial markets, and the role of central banks in maintaining economic stability. The ongoing debates about the merits of fiat currencies versus a gold standard highlight the complex differences between economic theories, policy decisions, and the need for a stable monetary system.
Today, debates persist over the advantages and disadvantages of fiat currencies versus the gold standard. For those skeptical about the stability of fiat currency, gold investments, such as the 10 oz gold bar, continue to be sought-after options, providing a tangible and historically recognized store of value.
Contact one of our knowledgeable account representatives today for more information about investing in the remarkable 10 oz Gold Bullion Bars with Monex.
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