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<p>[QUOTE="Billincolo, post: 856640, member: 17389"]Guy: Yes, but ...</p><p><br /></p><p>Start with your entire fortune of $1000 in currency in one hand, and your investment of $1000 in gold in the other hand.</p><p><br /></p><p>Imagine that the government devalues your currency 50%, and that $1000 in currency is suddenly only worth $500 in buying power. Now, you will need $2000 to buy what your $1000 would buy pre-devaluation. But, you still only have your $1000 in currency, so you can only buy half as much as before.</p><p><br /></p><p>Your gold, which was worth $1000 before the currency devaluation, is not devalued. It is now worth $2000 in terms of the new dollars. Its value has not been diminished by the dollar devaluation.</p><p><br /></p><p>So, what you said is correct in a way, but the part that was left out is that the gold holds its value as you said, but the currency loses value, and, you still only have the currency you started with.</p><p><br /></p><p>At least, that's the way I understand it ...</p><p>Bill[/QUOTE]</p><p><br /></p>
[QUOTE="Billincolo, post: 856640, member: 17389"]Guy: Yes, but ... Start with your entire fortune of $1000 in currency in one hand, and your investment of $1000 in gold in the other hand. Imagine that the government devalues your currency 50%, and that $1000 in currency is suddenly only worth $500 in buying power. Now, you will need $2000 to buy what your $1000 would buy pre-devaluation. But, you still only have your $1000 in currency, so you can only buy half as much as before. Your gold, which was worth $1000 before the currency devaluation, is not devalued. It is now worth $2000 in terms of the new dollars. Its value has not been diminished by the dollar devaluation. So, what you said is correct in a way, but the part that was left out is that the gold holds its value as you said, but the currency loses value, and, you still only have the currency you started with. At least, that's the way I understand it ... Bill[/QUOTE]
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