Fiat money will be a passing fad in the long-lasting history of money, while gold, as a hedge versus federal government money, is outshined by equities in the long run, according to Jim Reid, Research Study Strategist at German banking giant Deutsche Bank
In a note to customers on Wednesday, he confessed that even as he’s ‘a gold bug’ due to the bleak future of fiat money “in my long-term work I’ve always found many commodities difficult to recommend on a buy and hold basis as most underperform inflation over the long run.”
“Indeed, between 1860 and 1971 (when we moved from a gold-based system to fiat money) the real price of Gold fell by 75% and over 80% for Oil and Silver. Since then, Oil and Silver have only doubled in real terms and are still less than half their 1860 values, but Gold is up 7 times, double its 1860s real level. For context, however, the S&P 500 is up 22 times in real total return terms (including dividends) since 1971 and 40,000 times since 1860,” Reid composed.
He concluded that while gold is absolutely a fiat money hedge, on a overall return basis equities have actually tended to do better in the long run.
Reid did not comment on the role of Bitcoin (BTC) in the long-lasting history of money when called by Cryptonews.com
Nevertheless, in December in 2015, Deutsche Bank Research Study stated that the forces that hold the fiat money system together look vulnerable and, over the next years, some of these forces might start to require and unwind for alternative currencies, from gold to crypto, might remove.
According to the scientists, it is possible that inflation will end up being more and more ingrained in our system and doubts will rise about the sustainability of fiat money.
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