Ron Paul talks gold’s volatility, U.S. dollar’s weak purchasing power

For years, retired Texas Republican Congressman and three-time presidential candidate Ron Paul has espoused the virtues of precious metals and the disasters of a fiat currency, most notably the United States dollar. As a long-term investor of gold and a promoter of the gold standard, Dr. Paul has been paying attention to the recent plummets in the prices of the yellow metal, but he isn’t too concerned.

The bestselling author of “End the Fed” and “The Revolution: A Manifesto” sat down with Kitco News during the Metals and Minerals Investment Conference in New York recently. The interview consisted of his thoughts and insights into gold prices, the markets, the history of gold, the dollar and the Federal Reserve.

After pointing out gold’s fluctuation recently, Paul noted that those who are in gold for the short-term just to make a profit are going to be “very nervous.” In the past, Paul explained, there have been high periods of volatility in gold prices, but said that it’s crucial to look past the short-term corrections.

Paul cited the 1970s as a good example of this. Gold was up at $200, but plunged to $100 an ounce just two short years later. When the markets corrected, Paul remembered that “everybody thought the world had ended for gold.”

“I was told one time that you shouldn’t be concentrating so much on the price of gold,” said Paul. “What you should ask is, ‘how many ounces of gold do you own?’”

Investors must be prepared for the day that the U.S. dollar becomes virtually worthless and know if they have enough gold for the day “we all expect will come.”

“In the last year or so, the dollar has been strong compared to the other currencies. But it hasn’t been strong in purchasing power,” explained the former libertarian-leaning congressman. “I’ve been watching it for a long time, and I usually talk about watching the dollar rather than just watching gold because my interest in monetary ideas and monetary policies started when we got rid of Bretton Woods — the last link to gold.”

Since the end of Bretton Woods, Paul has been promoting the concept of the U.S. returning to the gold standard. Although it acknowledges it would be a superior system to the present day’s, he understood the various flaws, such as it being a form of bimetallism, there was tremendous inflation going on and there was suspension of the monetary policy during the Civil War.

He made the decision, however, to let the markets decide what form of currency we should use. “But we need the market to make the decision with one rule; you can’t defraud people.”

On the issue of the U.S. dollar, he elaborated that a lot of investors see the U.S. and the greenback as the powerhouses of the global economy. Paul believes that is a false notion and concluded that the dollar has been stronger than other currencies, but certainly not in purchasing power.

“I travel a lot and talk to a lot of people, and they’re still talking about not having much money being left at the end of the month,” Paul said.

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