In The Event Of A Fiat Currency Collapse Would Gold Rocket? / Commodities / Gold & Silver 2019

One of the reasons given for allocating aportion of one’s investment assets to the precious metals sector such asphysical gold is that gold can be considered as an insurance policy against thedevaluation of paper money. On my office wall I have framed various bank notesfrom an 'inflationary' period of time which include the following:

2,000,000 marks, Germany 1923

100,000,000 Pengos, Hungry 1946

5,000,000 Kwanza, Angola 1995

100,000,000,000,000 dollars, Zimbabwe 2008

These bank notes serve as a reminder thatcurrencies can be devalued in dramatic fashion and eventually become worthless.In today's world we are reliant on a number of Fiat currencies of which somecould suffer a similar fate

We know that Fiat currencies eventuallyreturn to their intrinsic value which is zero and therefore we take steps todiversify some of our wealth into other asset classes such as gold

The expectation in some quarters is thatgold would rocket should such a catastrophe occur within our Fiat currencysystem.  

So, the question we wrestle with is this:

Would gold really rocket or are there othersolutions available should we encounter such a disaster, negating the need forgold?

Possible Alternative SolutionsFor A Fiat Currency Collapse.

The demise of the mark for instance wasalmost 100 years ago and a lot of things have changed since then. We do ofcourse live in the world of the Internet and crypto currencies and other suchwonderful inventions which may or may not harbor a solution

It may also be possible for governmentsand centralbankers to put their headstogether and just move on from the pound, the yen, or the dollar to anotherform of paper money in a seamless transition. After all we had the Emu beforewe had the Euro, and we had the Continental before we had the US dollar, somaybe in the event of a catastrophe with any particular Fiat currency it couldbe retired and replaced by a new currency and business would continue to betransacted as per usual.

Conclusion

It may be a question of timing; if a numberof the top six currencies collapsed at once then gold could well be the lastman standing and become a fallback position during a period of utter economicand social carnage. However, if one of the top currencies failed then businesswould quickly move to conduct trade in another currency. This would be aninconvenience but not a disaster.

The possibility of one Fiat currencyfailing exists, but for the majority to all fail simultaneously is a remote apossibility and therefore would not cause us to edit our portfolio.

Fear is an ugly thing and can bring toomuch negativity into our lives, our thinking, and our investing.

There are many reasons to invest in goldand its associatedstocks, so do it in a positive frameof mind and not for ‘doom and gloom’ reasons, after all it may never happen.

Take good care as these are treacherouswaters.

Take care.
BobKirtley
Email:bob@gold-prices.biz
www.gold-prices.biz  
URL: www.skoptionstrading.com

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