January 1919 170 September 1919 499 January 1920 1,340 September 1920 1,201 January 1921 1,349 September 1921 2,175 January 1922 3,976 September 1922 30,381 January 1923 372,477 September 1923 269,439,000 Oct 2, 1923 6,631,749,000 Oct 9, 1923 24,868,950,000 Oct 16, 1923 84,969,072,000 Oct 23, 1923 1,160,552,882,000 Oct 30, 1923 1,347,070,000,000 Nov 5, 1923 8,700,000,000,000 Nov 30, 1923 87,000,000,000,000
To all; the above "Gold prices" were the result of German monetary policy from 1919 to 1923. It is very important to understand that I put "Gold prices" in quotes because this is how we Americans think. This is completely wrongheaded thinking. The truth of the matter is that German Reichmarks were valued in Gold ounces and the German currency collapsed in value, thus the amount of currency necessary to purchase 1 ounce of Gold exploded exponentially. Gold did not "go up", the Reichmark imploded.
We think in terms of Gold went up or down today when we should be thinking the Dollar went up or down. An ounce of Gold 200 years ago is still that same ounce of Gold today. 200 years ago Dollars did not exist, they may not exist in the near future. The point is that Gold or Silver is a constant or a measuring stick for other goods and for paper currencies, not vice versa.
Looking at the above numbers is certainly startling. I read about the Weimar Republic years ago (not in college because this is not something Americans "need" to know) and I knew the currency went to zero. What I did not know was how fast it really happened! In 3 years the Reichmark dropped 95% vs. Gold, it only took another 21 months to become worthless. Think about the numbers above. 87 trillion RM's for one ounce, 87 trillion?! You may be wondering why I am posting this. I am not trying to show you that you will become "rich" or that you will retain your purchasing power by owning Gold, by now I think we all understand the many reasons to own Gold and that hyperinflation and destruction of the Dollar is virtually a given.
I show you this because many people have asked me "what is our exit strategy"? This is always a logical question to ask and one that is always necessary when you first enter into an investment. I believe that what lies ahead of us will in no way resemble 1980 when Gold spiked and then plunged, only to barely tread water for the next 20 years. My thoughts are; that since the global currency markets are Dollar based, once the fiat Ponzi scheme collapses we will have plenty of time to survey the lay of the land and make intelligent investments from that point without time pressure to get out before Gold crashes again. Why do I believe it will be different this time? Simple, people will not trust another fiat currency again during our lifetimes because of the wealth destruction that has and will occur due to "funny money". Gold will be seen again for what it always has been, MONEY and a the ultimate store of value. ......................................................... http://www.hartgeld.com/dr-gold.htm ----------- "Die Börse reagiert nur zu 10% auf Fakten, der Rest ist Psychologie!" (Kostolany) "Selten war mehr als ein Zehntel der Bevölkerung an dem beteiligt, was man Geschichte zu nennen pflegt!" (Samhaber) |