Invest in Gold: The Gold Standard
“What is that? The Gold Standard?” asked Mira
“Well, until a few years ago, most countries used to have a lot of gold stored in their vaults. The value of the currency was determined by how much gold it could be exchanged for", Granny explained.
She continued, "When my father was a child, if you had a note of $20 (which was a lot back then) you could take it to the bank and get about 1 ounce of gold for it. That’s the same weight as 4 loonies today. This also meant that the price of gold was fixed at a certain price in that country”.
“Do we still have the Gold Standard?”
““No” replied Granny. “You see, as the number of people in each country grew, more money was needed. This would mean that the banks and governments had to store more and more gold to back all of this money. Eventually, it got to a point when they needed so much gold that it was unmanageable. So one by one, the countries decided that they didn’t want to base the value of their currency on gold and they abandoned the Gold Standard. The most important country to do so was the United States which left it in 1971, about 45 years ago”.
Both travellers were now totally focussed on this. Mira asked if gold is no longer needed to value the currency, is it still precious?