Gold vs. fiat currency
The dollar has lost over 96% of its purchasing power since 1913. Gold has not.
Fiat currency is money declared legal tender by a government but not backed by a physical commodity. Every major world currency today is fiat.
The purchasing power story
In 1913, one US dollar bought roughly 1/20th of an ounce of gold. Today, one dollar buys roughly 1/2,400th of an ounce. Gold did not become more valuable in some abstract sense — the dollar lost purchasing power.
Why does this happen?
Fiat currencies expand. Central banks and governments issue more of them over time. Gold supply grows too — but slowly, at about 1.5% per year, constrained by mining physics.
The takeaway
Owning gold is a bet against the long-term purchasing power of currencies you cannot control. It is not a bet against your country. It is a bet on arithmetic.
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