Tags: McAlvany | gold | money | cash

David McAlvany: Gold Is the Most Valuable Form of Cash

Monday, 30 Sep 2013 01:05 PM

By John Bachman and Dan Weil

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Gold represents a more valuable store of cash than the world's currencies, says David McAlvany, CEO of McAlvany Financial Group, a precious metals brokerage and money management firm.

"If you look back at the history of money, you find that gold features prominently," he tells Newsmax TV in an exclusive interview.

"There have been various experiments with fiat money, where you have nothing backing that paper currency, and every one of those experiments has failed miserably given enough time."

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With the dollar not backed by gold since 1971, the precious metal is the world's chief financial asset, McAlvany says.

"When we look at gold, we don't see a commodity that trades up and down on a daily basis. We tend to look at it as a fixed asset, with other asset values fluctuating up and down around that particular value," he explains.

"So the dollar may be up or down on a given day if you assume that gold is constant, and the Dow [Jones Industrial Average] may be up or down relative to gold."

Measured on that basis, the Dow has dropped 60 to 70 percent over the last decade, McAlvany notes. "Clearly in real money terms, the Dow is in a bear market," he said. "This kind of a cycle generally sees the Dow with an 85 to 90 percent total decline."

As for those who expect gold to continue its recent decline, these are economists who are overly optimistic about the world economy, he argues.

For example, most economists thought the economy was strong enough for the Federal Reserve to announce a tapering of quantitative earlier this month, he says. But the economy turned out to be weaker than the Fed expected.

Gold gives investors safety, McAlvany maintains.

"When you look at central bank intervention around the world and look at the amount of liquidity that has been created over the last five years, an unprecedented amount in global history, you do look at gold as something that is important in the equation," he says.

You can also use the government as a guide.

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"If there are folks in Washington who are making considerable changes at the fiscal level and getting us on a road to recovery, then you may need less stupidity insurance [gold]," he asserts.

"But as long as we keep the same cast of characters in D.C., stupidity insurance is as important as ever."

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