The Heroism of Owning Gold and Silver

During the Far East Asia Currency Crisis of 1997, the value of Indonesia’s rupiah currency fell more than issues of other nations. Indonesian citizens whose wealth was denominated in the rupiah fiat (paper) currency became destitute. Indonesians who held a sufficient part of their wealth in physical gold and silver saw their standard of living largely unaffected.

I have heard numerous stories how the ownership of physical gold and silver has not only supported a standard of living, but literally saved lives. One customer of my business, when selling us a variety of European gold coins, explained that they were the residual holdings of what had been stored in a cookie jar in the Netherlands in 1940 when the German military overran that country. A large number of this Jewish family’s relatives used some of those gold coins to pay for passage to the United Kingdom, United States, and to South America.

Over the years, we have also been told by numerous customers who fled from the former South Vietnam, that they needed to pay gold to those who helped them escape to other lands. Further, as they purchased more bullion-priced gold coins and bars, they explained that just because they were now in America did not necessarily mean that they might not need gold once again to pay for rescue.

Even the U.S. military for decades supplied gold sovereigns and rings in the emergency kits of aircraft, for potential use if the crew were downed behind enemy lines.

Hopefully the ownership of bullion-priced physical gold and silver coins and ingots will rarely be needed to make a difference in life-or-death situations. But, the near future of the global and US economy has so many uncertainties that the long-term survival of today’s fiat (paper) currencies is at a higher risk than in years past.

Among fiat currencies, the track record is that they all eventually fail. The mean average lifespan of a fiat currency is forty years, but the median average lifespan is just twenty-five years.

Despite all the posturing by today’s politicians and bureaucrats in Washington, D.C., the purchasing power of the fiat US Dollar continues to decline. In 1913, upon the establishment of the Federal Reserve Bank, one US dollar was worth 0.04838 of an ounce of gold. On December 31, 2019, near the onset of the COVID pandemic, one US dollar had plummeted 98.6 percent to be worth only .000658 of an ounce of gold. As of Wednesday afternoon this week, the value of the U.S. dollar had fallen further, to be equal to only .000554 of an ounce of gold. Effectively, the US dollar has lost 98.9% of its value versus gold since 1913, or had fallen 15.8 percent against gold just since Dec. 31, 2019!

To help maintain prosperity and financial stability, Americans need a stable monetary system. For many decades of America’s history, there was stability and rising prosperity as the dollar was fixed to the prices of gold and silver. Since the U.S. dollar linkage to gold was completely severed in August 1971 and no U.S. silver coins for circulation have been struck since 1969, the relative purchasing power of the dollar has fallen significantly.

The recent U.S. government’s extraordinary surge in the money supply, with the M2 definition of the U.S. money supply up 42.9 percent from mid-September 2019 to October this year and the Federal Reserve Bank balance sheet up 127.7 percent from mid-September 2019 to Dec. 1, 2022, is accelerating the devaluation of the purchasing power of the dollar.

While ownership of bullion-priced physical gold and silver coins and ingots may help protect someone’s personal finances, as it has done for countless people over history, such ownership may also help contribute to helping maintain the prosperity and financial stability of the nation as a whole. When considered from that perspective, owning gold and silver could be called an act of heroism.

Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including in 2021 for Best Investment Newsletter), Professional Numismatists Guild, Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at www.1320wils.com).