by | Nov 26, 2003 | Archives

Recently when a reader asked how to hold gold and which currencies were backed by gold, I realized it’s time to share some insights into the yellow stuff because gold is worth investing in now. Please let me explain.

Real money has five values. It is durable, divisible, portable, desirable and rare. Anything that fits these test can be used as money. Gold as a commodity fits these standards just about best of all and for many years was money.

Portability however is gold’s weakest link. Gold weighs a lot!

Paper money (or plastic fits the first three requirements of money perfectly. It is more durable (through reprinting), divisible and portable than gold.

So smart…and honest jewelers started storing gold for people and issuing bearer gold certificates. The certificate represented gold in storage and because the jewelers were honest, the certificates were as good as gold. Then governments became involved and issued the certificates. For awhile these certificates were still…as good as gold. Then they backed off a bit and made the certificates redeemable in silver, then they backed off a bit more and linked their currencies to the global reserve currency the U.S. dollar.

But now the US dollar is broken. For decades it has not been backed by silver or gold, but it was desirable because it bought American goods and shares in American companies and land in the U.S.

However as this U.S. land and U.S. shares have become more and more burdened by government and private debt, the dollar has lost value.

In years past when the U.S. dollar fell, investors fled to fiscal stalwarts, the German mark, Japanese yen and Swiss franc because the governments who issued these currencies were financially prudent.

Today there are no currencies that are really safe nor any that are truly backed by gold. Japan now has the highest deficit among developed nations (7.7% of GDP compared to the U.S. 4.4%) The German government has such a high deficit that it is in default of the European Currency Stability Pact and faces the prospects of fines for overspending. The Swiss franc in turn is linked to the Euro because of close trading links. All these currencies have some risk so the old concept of buy and hold no longer works.

This leaves gold. There are three reasons to buy it now. First, because of the weakening U.S. dollar. Second, because it is trending up and third because of the other currency problems. In addition, the research that developed the course International Currencies Made EZ uncovered an old book that plotted the price of gold over hundreds of years. Why not download it for free? Go to

This study showed that gold tends to moves in spurts that take place about every 20 years. The timing is therefore right for an upwards spurt in gold.

One of the safest, least expensive ways of holding gold is through Perth Mint Precious Metal Certificates. These government guaranteed certificates are as close as you can come to a gold backed currency.

The Perth Mint is operated by Gold Corporation a company created in 1987 by the Western Australian government (which by the way has a AAA credit rating). So you have a fiscally strong government backing your certificate…plus the certificate truly is backed 100% by gold or whatever metals you choose.

You can choose certificates in Gold, silver, platinum or palladium. Since the certificates are non negotiable (but transferable) they are not deemed to be accounts and are one of the most private ways (along with overseas real estate-see yesterday’s message) to hold wealth. You can choose allocated or unallocated accounts. Because the certificates are backed by the metals they can be redeemed at any time, anywhere and in any currency. I especially like the unallocated storage account because there are no storage fees. This creates a huge savings, yet the metal can be delivered (or sold) within ten business days of your instruction.

You can get full details about Perth Mint Precious Metals Certificates (fees-etc.) from Asset Strategies at Good luck in your endeavors to protect your financial future.