Most people are totally unaware that the US dollar is a currency and not money. The US dollar became a currency in 1971 when President Richard Nixon took the dollar off the gold standard. At that moment, the dollar stopped being money – backed by gold – and became an instrument of debt.
IT’S ALL ABOUT DEBT
Keeping things simple, the reason everyone needs currency insurance is because too much debt in the monetary system creates a very unstable situation. Think back to the housing crisis of 2007-2008. Too much debt almost brought down the global financial system. Well, guess what? Today, there is even more debt than in 2008, and things are considerably shaky once again!
LET’S TALK INSURANCE
Historically, real money consists of silver and gold. And when there is too much debt in the system and banks become endangered, silver and gold are revalued to account for all the currency in circulation. Here’s the catch: To balance the financial system, silver and gold go up in price, while the purchasing power of currency gets reduced (aka inflated away). Here’s a historical example.
GOLD RESERVE ACT OF 1934
Due to the expansion of the money supply, in 1934 the United States made an attempt to stabilize the monetary system by revaluing the price of gold. The dollar price of gold rose from $20.67 an ounce to $35 an ounce. This amounted to a 41% loss in purchasing power of the dollar. To present the loss in another light, it would have taken 1.69 times the number of previous dollars to purchase the same amount of goods and services. Anyone holding gold (although this was illegal at the time) maintained their purchasing power. The takeaway here is the accounting that gold and silver do periodically to reflect the expansion of the currency supply. Both act as a type of insurance against the loss of currency value.
WE’RE ON SHAKY GROUND AGAIN
The reason having currency insurance today (silver or gold) is so important is because there is a lot of currency out there in the form of debt. McKinsey Global Institute estimates that global debt increased by approximately $57 trillion from 2007 to 2014. Although all of this debt is not only denominated in dollars, the amount of dollar denominated debt is substantial.
As was the case in 1934, a devaluation of the dollar is imminent. According to economist and best-selling author, Jim Rickards, a gold price target of $10,000 per ounce is feasible. With gold currently priced at around $1,250 an ounce, the $10,000 estimate looks very appealing. However, the revaluation would also mean an 80-90% decrease in the value of the dollar. Imagine gasoline at $10-$20 a gallon.
GET INSURANCE TODAY!
A dollar devaluation of 80-90% would financially destroy most people. That’s why not having currency insurance is very dangerous and not smart. See it this way: It’s guaranteed that a financial debt storm is coming where the dollar has to be devalued. A $2,600 currency “insurance policy” would provide you with two ounces of gold with a potential price target of $20,000 total or more. On the flip side, not having insurance would wipe out the purchasing power of your savings in a heartbeat.
The important thing is you need to make sure you have some amount of coverage when the dollar reset happens. Just like fire insurance for a house, you can’t purchase a policy after the fire. You’re either covered or you’re not. Do the wise thing and purchase some gold or silver today!