Inflation Targeting

wealthymattersWhen printing presses started making currency notes, there was trouble. It was too easy to be irresponsible, and print too much “fiat money”.Every currency needs a “nominal anchor”: something that pins fiat money down to reality. There are exactly three choices for this nominal anchor: gold, a foreign currency like the dollar, or the consumer price index (CPI) basket of goods.

The gold standard — where the US dollar was pegged to 35 ounces of gold — fell apart in 1973. Since then, the world has been looking for a new nominal anchor. Pegging to a foreign currency works well in some places, e.g., for Hong Kong. But pegging the Indian rupee to the US dollar is not a viable option, as this is tantamount to handing over the Indian monetary policy to the US Federal Reserve. This is inappropriate as the Indian business cycle is quite different from the US’.  Read more of this post

Gold By Transmutation

Gold them becomes a fiat currency?

Please Help Me Understand Gold

I graduated in 2000.In the same year I made my first purchase of  gold.Since then I’ve been watching the price of gold.The first thing to attract my attention was the relentless upward movement in the price show in the graph below:                                                                                                                                                                    

Logic suggested that what goes up in price must come down.So I tried looking for the historic prices of gold to try to see if there was a cycle . Read more of this post

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