Stop Thinking in Dollars, Start Thinking in Gold

This article was written by Dickson Buchanan Jr., SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.

Whether intuitively or analytically, we all know that the dollar is not such a great form of money. That’s putting it lightly, though. A dollar is a terrible form of money when you take a closer look. Those who have lived longer on this earth tend to grasp this reality more clearly. Like trying to walk up a downward-moving escalator, the momentum of a falling dollar is always against you. This becomes clearer when engaging in economic planning. Whether it’s starting a business, making an investment, saving for retirement, putting something away for a rainy day, or simply making ends meet on a week to week basis, all of us have to work against a falling dollar (or fill in the blank with your fiat currency of choice.)

If that’s true, why do we keep using it?

significant for anyone who wants to save for more than a couple of months at a time. A different and better unit of account is necessary. Namely, one that accurately reflects the current state of value exchange as it occurs over time. We suggest gold.

How can you start thinking in gold terms again? Here is one simple and practical suggestion: Start calculating and measuring your net worth in gold. On a quarterly basis, calculate your net worth in dollars and then divide that number by the current dollar gold price. This will give you, approximately, your net worth in ounces of gold. If the number of ounces is increasing every quarter then you can rest assured your net worth is increasing in value.

However, we recommend converting some of those dollars into real physical ounces at some point. Otherwise, you run the risk of your net worth increasing in bad money (dollars) while it’s decreasing in good money (gold ounces). This would end up, of course, as a net decrease in real value, which dollar-thinkers would be completely oblivious to. This is also why we prefer to measure the dollar (and other currencies) in gold and not the other way around. It shows us where the true volatility lies – in fiat currencies, not in gold.

Have you ever heard the statement, perspective is everything? Well with money, it’s no different. Looking through the foggy lens of dollar money you will get a distorted and unclear vision of the world and its affairs. Walking through life with foggy dollar lenses could lead to a very bumpy ride. Looking through the lens of gold, however, will bring precision and clarity. You will be able to see things as they are and make your way.

Reprinted from SchiffGold.com.

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