The last myth I am going to cover in this series of short blog-articles is one that currently a half truth, but at one time was pretty much for certain. I’ll be able to give you some examples, and some reasoning to support my points.

Why Invest In Gold? When I Sell Gold Coins, I’ll Only Be Able To Buy What I Would Have Been Able To Buy Before Because Gold Coins Only Stay Even With The Currency

Perhaps you have heard the parable of an ancient well-dressed Roman compared to a well-dressed man of today. It goes like this:

Thousands of years ago, a Roman man could trade an ounce of gold for a finely woven toga, a pair of sandals made from the finest leather, and a belt made from the same fine hide. Today, that same gold coin will pay for a men’s tailored suit of choice cloth, a fine pair of leather shoes, and the matching belt.

The Up’s And Down’s Of This Comparison
This comparison will hold true over long periods of time because gold coins and gold bars have a constant that does not change over any amount of time; the gold that makes up gold coins and gold bullion must be mined from the Earth. This requires time, labor, and of course the gold, which is a finite resource. World gold production has hit it’s peak and is now on the downslope, this means that no matter how much demand there is for gold coins or gold bullion products, or whatever technological advances there are in gold mining, gold will continue to act as a constant. This is the upside of the Roman Toga comparison. The downside is this: today, gold and the currencies which it is judged against are heavily manipulated. We learned in a previous part of this series of articles that gold is forward sold in large contracts for future delivery. Another part of this little somewhat dirty secret is that most of these gold contracts are never filled, they are simply sold back to the COMEX (a commodities exchange), usually for a profit, and I’ll explain this a little further in a bit. Because the gold that creates gold coins and gold bullion is bought and sold and does not even have to exist, more gold is sold than ever does exist for sale, and this keeps the true price of gold not only depressed, but a secret. Consider this: Gold was recently $1900 an ounce, and is now about $1250 an ounce. You can’t ask a tailor to make you a $1900 suit and then only give him or her $1250, and you certainly would not want to pay $1900 for a $1250 suit!

The COMEX
Here is a quick comparison that will demonstrate how the COMEX works. Imagine you are a real estate developer and you own land that you want to put 500 houses on. You own the land, but no lumber, no concrete, no roofing material, and the carpentry contract you have is only substantial enough to provide the labor for 100 houses. Before construction starts, you begin selling finished houses to be completed by a certain date. The unfinished “promise houses” are sold and resold before a single foundation is ever poured. By the time the finish date arrives, only 100 of the 500 houses have been built, but all of the contracts have either been bought and resold, or you have purchased them back for less than you sold them for originally. Sometimes you may have to pay more than you sold the original contract for, just to keep your secret from being found out. In the real world this is called fraud, but on the gold COMEX this is called business as usual.