Gold vs. Currencies Over 50 Years
This chart highlights the long-term depreciation of various fiat currencies compared to gold. The US dollar, euro, Japanese yen, and Swiss franc have all steadily lost value against gold over the past 50 years. Even if we assume an initial value of 1,000, today, the US dollar would be at 10, the euro at 11, the Swiss franc at 12, and the yen at 7. No currency has been able to maintain its purchasing power relative to gold over this time.
End of the Gold Standard in 1971
Before 1971, currencies were backed by gold, meaning governments could only print money equivalent to their gold reserves. This system changed when the Bretton Woods agreement ended, and US President Nixon announced that the US dollar would no longer be convertible into gold. From that moment, all major global currencies became “fiat” money, meaning their value was no longer tied to any tangible asset.
Impact of Fiat Money Printing
With no requirement for gold backing, governments worldwide gained the ability to print unlimited money, leading to economic expansion but also currency devaluation. Countries like the US and Japan have printed vast amounts of money over the years, which has fueled economic growth but simultaneously eroded the value of their currencies. Politicians, eager to stimulate economies and fund social programs, have relied on borrowing or printing money, further weakening the purchasing power of fiat currencies.
The Illusion of Gold’s Rising Price
What we commonly perceive as gold’s increasing price is, in reality, the steady decline of paper money. If we view gold as the true form of money, then fiat currencies are depreciating against it. Over the past five decades, the purchasing power of major currencies has eroded by over 99% when measured against gold.
Why Gold Investment is Essential
Understanding this trend makes it clear why holding gold is crucial for long-term wealth preservation. Unlike fiat money, gold cannot be printed or manipulated by governments. It acts as a hedge against inflation, currency depreciation, and financial uncertainty. If you haven’t yet considered gold as part of your portfolio, this data makes a compelling case to do so.
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