Thursday, August 02, 2007

What exactly is a fiat currency?

In economics, fiat currency is money backed by government demand for it as legal tender in payment of legal liabilities, such as taxes. It is often associated with paper money because legal liabilities are created and settled by documents which are always paper.

But we accept this paper money in confidence on the Government without ever questioning the real value.

Governments introduced this form of exchange replacing the gold as the form of exchange mainly because paper currency is easy to handle. So, we can safely assume that this paper currency is backed by the gold reserve that the Government has built up.

So, buying gold has been recognized for centuries as one of the best ways to preserve one’s wealth and purchasing power. If the economy of a nation depends on its gold reserve, then it applies to individuals also.

As an investment, gold coin is a unique investment because of its proven ability to diversify investments, protect wealth and preserve one’s purchasing power.

Monex Precious Metals is home to a large and dedicated staff of hard asset professionals committed to serving your precious metals investment needs and being America’s best dealer with a convenient market and competitive precious metals prices.

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