Gold is money, because of its fundamental nature.

Gold is money because it is liquid and easily tradable, with a narrow spread between the prices to buy and sell (about 3%). Also, gold is easily transportable, because it has a high value for its weight. This makes gold an excellent medium of exchange. Gold is money because it is divisible, you can divide it into coins, or re-melt it into bars, without destroying it. Also, gold is fungible, where each unit of .999 fine gold (99.9% pure) is similar enough to another unit so as to be easily interchangeable. Gold is also nearly impossible to counterfeit, as genuine gold is easily recognizable. When measured by weight, gold is easily countable, and verifiable. These properties make gold an excellent unit of account. Gold is money because it is a great store of value. Gold is not subject to decay, rot, or rust. Gold has an intrinsic value, because it is rare, highly coveted the world over, and is a luxury item. Gold has also become more and more important as an industrial metal especially for technology applications. Because of its rarity and its durability, gold has been almost universally acceptable as money for thousands of years. As an example, in ancient Rome for an ounce of gold you would be able to purchase a very fine toga, a hand crafted belt and a pair of sandals. Today that same ounce of gold would buy us a fine suit, a hand crafted belt and a pair of shoes. Comparatively the US dollar in recent years has lost about 40% of its purchasing power. Gold remains the only world currency not open to debasement, competitive devaluation, or the excessive promises of overspent governments. As an investment, gold typically is viewed as a financial asset that will maintain its value during times of political, social, or economic distress. As such, gold can provide individual and institutional investors alike with a portfolio safety net against sharp downward spikes in complementary assets such as stocks and bonds. Recently, Russian President Vladimir Putin ordered the Russian central bank to raise the gold share of its foreign reserves from 5% to 10%. Russia’s reserves have surged to $247 billion – the world’s fourth largest. Accomplishing the shift to 10% gold would require purchasing 21 million ounces of bullion, which is about one-quarter of the world’s annual mine production. With Russia’s oil exports it is accumulating additional foreign currency reserves at a rate of about $100 billion per year. With reserves growing so rapidly, just keeping the gold portion at 5% would require Russia to absorb a huge piece of the world’s gold output. Think Real Estate Outperformed Gold… Think again Average price of Gold in 1971: $35.00 per oz   Price of Gold today: $900.00 per oz Average home price in 1971: $25,200.00 Average home price in 2007: $212,300.00 On average $25,200 would buy you one home in 1971. That investment today would be worth on average $212,300. The same $25,200 would buy you 720 oz of Gold in 1971. That investment today would be worth $648,000! Want to learn more? Download your Free Metals Report today!