There are dozens of financial reasons why it makes sense to own gold (and silver) as insurance against the risk of declining values of paper assets such as stocks and bonds and currencies (especially the U.S. dollar). Many of my weekly essays are devoted to the financial aspects of owning precious metals.This week, I would like to address what I consider the number one political reason to own gold - individual freedom. Although I have considered the political aspects of gold ownership ever since I bought my first gold coins in 1973, it wasn't until last week that I came across a superb articulation of this concept.
Dr. Arthur B. Robinson is president and a research professor at the Oregon Institute of Science and Medicine. Years ago, he took over publication of Access To Energy (ATE), a pro-science, pro-technology, pro-free enterprise monthly newsletter. Since energy availability is affected as often by political actions as technological issues, ATE regularly covers politics and economics. The recently released August 2008 issue of ATE contains an essay titled "Printing Capital." With Dr. Robinson's permission, here are some cogent sections related to gold:
"Most capital is stored in kind as factories, power plants, roads, buildings and other useful products of human effort. It can also be temporarily stored in smaller quantities as money - the medium of exchange ... Money is, however, not capital.
"All sorts of things have been used as money. Thousands of years of experimentation has determined, however, that the best money is silver and gold, especially gold. Gold is convenient in many ways. One important way is that it cannot be counterfeited and is costly to obtain from nature. This difficulty keeps the supply of gold approximately constant so that prices remain stable.
"The rise of the United States as a free, prosperous industrial civilization was greatly facilitated by the use of gold as money ... In addition, the great industrial productivity of the American people - a greatness that resulted from our freedom, not from our genetics - and the stability of our gold-backed currency made the U.S. dollar the world reserve currency. Throughout the world, people trusted the U.S. dollar as money.
"Then - the counterfeiting began. The U.S. government ... printed new money as a way of funding its activities. As the supply of money rose, prices rose concomitantly.
"Printing money can be used, however, as more than a mechanism of hidden taxation. It can be used as a weapon against freedom.
"Gold money has been correctly called 'coined freedom.' Even today when few Americans are old enough to remember the use of gold coins as money in the United States, the U.S. government realizes that gold provides a measure of its economic dishonesty and works through surrogates to minimize the rising price of gold. It also taxes gold in such a way that gold cannot serve as a store of value ... because the gold itself is gradually confiscated through taxation by claiming that its price rise is 'income' or 'capital gains.'
To obtain the entire August 2008 issue of Access To Energy or for subscription information, go to their Web site at www.accesstoenergy.com.
I have concrete examples relayed to me personally how gold buys freedom.
I have met a number of Southeast Asian refugees over the years, including many who have come to my coin shop to buy gold. In almost every instance, these refugees were able to escape with their lives because they owned gold to buy their way out. The general public would be surprised how many of these refugees still want to own gold even though they might consider the United States a "safe haven."
A few years ago, I bought the surviving pieces of a hoard stored in a Dutch cookie jar. When the Germans overran The Netherlands in 1940, the gold coins were used to pay for the escape to the Western Hemisphere of many of this Jewish family's members.
So, buy gold (and silver) for all the right financial reasons. But keep in mind that some physical gold in your possession may someday save your life and freedom.
Source: numismaster.com
