By Gary, on August 3rd, 2011
I know this appears to be mundane and well – boring, but don’t close this page yet. Understanding these three terms will help you think about our global financial systems in a different way. Having a good grasp on the meaning of these terms will also initiate your thoughts toward your own wealth.
A commodity is a raw material that has value based upon its supply and our demand. Examples are coffee, cotton, corn, oranges, silver, gold, copper, etc. They were used as barter in the past and until recently some of the commodities were used by countries to back their own money.
Money is a medium of exchange used by countries and governments that are backed or based on the value of a commodity such as silver, gold, or copper. Money can be considered a currency which has the value assigned by the commodity used as backing. Examples are gold coins, silver coins, silver certificates, paper currency based on a commodity standard.
Currency is almost always mistaken for money. However, currency is not money because currency has no commodity backing. It is only backed by the goodwill of the particular country issuing it. The goodwill of the country is similar to your credit rating. If your credit rating is good, the bank will loan you funds at a lower rate and will require you to use less of your money as collateral. The goodwill of the country is similar: measuring sticks are GDP (gross domestic product), national debt, unemployment, tax rates, etc. The better the countries’ good will, the stronger their currency will be, giving the currency holders more buying power. The lower the good will, the weaker the currency will be.
Ever since we went from a Money System to a Currency System, we have experienced inflation, hyper-inflation, high interest rates, greater and greater national debt, greater and greater personal debt, the rich getting richer, the poor getting poorer and, the middle class shrinking in size. Our goodwill is at an all-time low and so is the value of our currency, the dollar. World currencies are suffering, too.
The way to reverse this is to return to a money system. This probably won’t happen because it would eliminate the banking and tax systems as we now know them. When we were on the money system, national debt was unheard of, inflation was nil, and unemployment was stable.
So what can WE do? We protect ourselves from a falling dollar by buying commodities. Since we went off the gold standard (money to currency) in 1971, the price for 1 ounce of gold has gone from $41 to currently as of today is $1,660. Based upon the weakness of the dollar, gold is predicted to reach anywhere from $4,000 to $6,000 per ounce in three to four years. With falling interest rate for savings, a stagnant stock and bond market, and a real estate market that is deflating, what better way to increase your wealth than to buy commodities?
Check out: Goldline International, Inc.