The federal government tries to maintain a monopoly on money, but you don’t have to use it. You can use an alternative. It’s just like the US Post Office. You don’t have to use the government option. You can ship a package with FedEx or UPS. In the same way, you can use an alternative to government money – you can use gold or silver.
Last week, the Texas Bullion Depository opened for business. The facility will not only provide a secure place for individuals, business, cities, counties, government agencies and even other countries to store gold and other precious metals, the law also creates a mechanism to facilitate the everyday use of gold and silver in transactions. In short, a person will eventually be able to deposit gold or silver – and pay other people through electronic means or checks – in sound money.
Goldmoney owns SchiffGold, founded by financial guru Peter Schiff. Peter recently talked about the benefits of using gold and silver in everyday transactions during a speech at the International Mining Investment Conference, in Vancouver, B.C.
As Peter pointed out, gold wasn’t always money. At first, people bartered. They traded apples for eggs, or chairs for belts. Over time, they realized they could just trade in one commodity and money began to evolve.
“There was a lot of competition over the years, but metal seemed to be the most efficient form of money and gold was the best metal to use. And gold functioned as money for thousands of years.”
Eventually, governments got involved by issuing paper money. Initially, currency was basically an IOU for gold. You could take your paper money to a bank and exchange it for physical metal.
“Nobody was dumb enough just to accept a piece of paper with a number on it and think it had any value. The reason people would accept a piece of paper was because it was backed by gold.”
But today, fiat money is backed by nothing. Peter said fiat doesn’t really work as money because it is not a reliable long-term store of value. A dollar works as a short-term store of value. It will probably still have value next week. It may even still have value in 10 years. But in 100 years? Who knows.
“One of the reasons that gold works so well as money is because it’s a reliable store of value. If I have an ounce of gold today, 10 years from now, 50 years from now, 100 years from now, it’s an ounce of gold. People can relate prices. You can have loans. You can contract. You can do all sorts of things with gold because it’s a reliable store of value.”
With companies like Goldmoney, you can open an account that is funded in gold. When you buy the metal, it is stored in a vault. But thanks to the evolution of electronic payment systems, your gold is liquid. You have 24/7 access to your gold. That means you can use it as a medium of exchange. With the swipe of a card, you can transfer a portion of your gold to another individual.
“It costs me nothing to transfer a dollar quantity of