The only real purpose to gold is to act as an hyperinflation hedge or as wealth protection against economic Armageddon. The problem here is that if either of those things happen, you're going to have trouble finding enough food to feed yourself, and you can't eat gold or silver. I also believe that these two things (hyperinflation and economic Armageddon are very unlikely).
For run-of-the-mill inflation, real estate funds like REITs would work for the shorter and longer term, and even stocks funds like VTSAX would work over the long term.
Gold would be hurt by deflation. Bond funds would help protect against deflation. Cash is also a deflation hedge.
People tend to act real funny around gold and silver. Exercise caution.
Neither can you eat dollar bills. In fact, those bills are NASTY with all the crap that's been handed from person to person. Did you know that a large amount of dollar bills have traces of cocaine on them?
And, silver has antimicrobial properties, which make it useful in medical applications. If I was held at gunpoint and made to choose between eating the dollar bill and the silver half dollar, I'd do the latter every time.
To learn about deflationary pressures, read this one.
What Does Deflation Do to Gold Prices? | Gold News
And, you're supposed to have enough food on hand to last you through a rough patch until you get to the other side and people realize who has the money - those with gold and silver will also have firepower to be able to enforce using gold and silver and by setting an example by paying people for work and goods, and being willing to do the same as buyers themselves. If you are serious about gold/silver as money, you would also be serious about heavy firepower and contacts to protect one another until chaos plays out (hopefully). They will be the ones who kick-start the process again. How do you think many countries who had their experiments in paper money got back on a gold standard of some sort? Please read history on paper money and how they did not work out in the end. NO currency regime in the past has survived. None. This one is going bad as well. According to
http://www.bls.gov/data/inflation_calculator.htm;
$1000 in 1913 has the same buying power as $23,191 - 95% drop in value
$1000 in 1933 has the same buying power as $17,661 - 94% drop in value
$1000 in 1955 has the same buying power as $8,566 - 88% drop in value
$1000 in 1975 has the same buying power as $4,267 - 76% drop in value
$1000 in 2000 has the same buying power as $1,333 - 25% drop in value
$1000 in 2010 has the same buying power as $1,052 - 5% drop in value
Looking at this differently:
$1000 in 1913 similar to $1727 in 1923 - 42% drop in value
$1000 in 1950 similar to $1228 in 1960 - 18% drop in value
$1000 in 1970 similar to $2124 in 1980 - 53% drop in value
$1000 in 1980 similar to $1586 in 1990 - 37% drop in value
$1000 in 2000 similar to $1266 in 2010 - 21% drop in value
Remember, these are numbers based on the CPI, which always changes the things being measured to keep inflation understated. If you were to use the numbers for contemporary standard of living, the numbers would be even higher:
$1000 in 1980 similar to $1750 in 1990 - 43% drop in value
And so on. It should become evident that the dollar does NOT hold value. Whatever the earnings were, you have to remember to DEDUCT inflation from those numbers. It had better be higher than the rate of inflation.
Since 2008, $1000 has the same buying power as *** $985 *** in 2013, and yet Gold had a low of $709.50 during the financial crisis of 2008 (is standing right at 1610 today). Let's see you top 227% in 5 years. How about silver? Dayum, that was where the money was! Silver was at a low of $8.92 at the same time (is standing just under $30 today). How about 334% in 5 years? Remember, silver hit a high of 48.48. Cashing out at that point left me with 543% gains over those same 5 years. Even at today's prices, I'm still doing well.
Now, you can go to several charting web sites like this one -
Kitco - Silver Page
Typical statements like yours shows a lack of understanding in human history regarding gold/silver as MONEY and not as an investment, and no understanding of the purpose of fiat currency.
