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Apparently the world financial crisis is becoming more acute  instead of redressing. That scares us all and makes it even more important that we educate ourselves in economic matters. You want to make the best decisions when you’re in sailing in a storm.

Stumbling around the internet, I found this informative editorial posted on a website that I’ve never visited before. The article is called “Gold is money; therefore a hedge against inflation and deflation.” Even is some may already know the things it presents, I believe there are many people who don’t read such informative articles too often (myself included) and would therefore benefit from it.

Here’s an excerpt:

Gold is money; therefore a hedge against inflation and deflation

Hubert Moolman
Dec 15, 2008

Warren Buffett one of the world’s most successful investors apparently once said the following about gold:

“It gets dug out in Africa or some place. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it.
It has no utility. Anyone watching from Mars would be scratching their head.”

Well, Mr Buffett let me attempt to explain to you and the “Martians” why this is so, as well as correct your statement (if it was your statement) that it has no utility.

First of all, gold is money; it is not like other commodities that we use mostly in production, consumption etc. One of money’s main functions is to store wealth. We therefore earn money, we hoard it, we guard it and then we exchange it for assets when needed.

Gold is the premier store of wealth that this world has known for the last 3000 plus years. Even the fact that gold is not the official currency in the countries of the world has not changed this fact. I know of no place in the world, now or many years before, where gold is not known and not highly valued.

So in summary, gold is money and it derives its usefulness from being money and therefore people dig it out, melt it down and guard it like they would guard money.

You can read the full article, and many others, on the 321gold website.

Here’s to prosperity,
Armand

image by: artist.dude