Gold: the wealth of nations

Abhijeet Goel's Picture
Abhijeet Goel

"Gold and Silver are money…everything else is credit."
J. P. Morgan

If you ever read the statement mentioned on the Indian currency note, it mentions that the governor promises to pay the bearer of the note a sum of the mentioned amount on the note. That message basically indicates that if ever that paper bill goes out of recognition by the government, there is something else in the background that still holds that note’s worth of wealth. This hidden entity is nothing but GOLD which has been backing up the currency throughout the world since so many years now. Gold has been the real money that has been holding its value and will be valuable in future as well.

If you see gold, you will realize that it can’t be devalued or loose its power like the currency notes do. We all know that the currency loses its purchasing power over time and this phenomenon is known as inflation. However, gold will never fall into this category because it has its own intrinsic value forever. When the government wants, they can print as many currency notes as possible, thus reducing the purchasing power of that currency. So basically, if you buy 1 kg wheat for Rs.100/- today, you will eventually have to pay more money in the next year due to inflation.

Gold has proved to be the symbol of wealth throughout history. Wars have been fought for it and the more gold you possess, the wealthier you are as a nation. All the countries in the world therefore maintain their gold reserves to stabilize their economy.

The chart below gives us data of the gold reserves of various nations: -

source: www.gold.org

Thus, we may clearly see that even though new currencies will come and go, but the real wealth is and will always be gold. That is why still so many nations are still trying to accumulate it and grow their reserves.

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