Financial Planning

Financial Planning — Investment Accounts

Financial planning is an important part of your overall wealth-building plan. An investment account is part of your financial plan and should be treated as such. As an account, the investment account has the same capabilities and face value as any other deposit instrument. However, this type of account functions differently and should be treated as a business decision.

Many people have diligently watched the news over the last few years, as they’ve learned that the value of the dollar is slipping away. The common idea is that the greenback is about to go south and become weak. The media, at times, headlines this news and, therefore, serves to underline the importance of investing in gold and other hard currencies. There are two reasons why one might want to use gold as a financial instrument: it’s available in small, easily liquidated form; and it’s regarded as a precious metal because of its value and backing by the government. These two factors serve to underline the value of gold in the marketplace and provide investors with a market in which to invest. Involving itself in trades, such as buying and selling gold, makes it a popular option. An additional, albeit less obvious reason for wanting to invest in gold, is that it is perceived as a fairly safe and solid investment, even compared to other discretionary and riskier financial instruments. Consider the fact that even the colonial government of the United States was robbed, much of its wealth by the Spanish, and you get an idea of how flexible gold coins were.

The first implementation of a gold standard

The first official gold standard was established in the late 1700s in Germany and Western Europe. Under this system, gold and silver were widely measured in terms of their gold content, or gold content expressed in troy ounces. Where it was not possible to have an adequate amount of gold to full value (the complete gold standard), the physical gold of the gold standard was suspended and, therefore, made to be less valuable and thus, less valuable than the legal tender of the day.

This lack of a gold standard would eventually lead to the Weimar Republic’s collapse and World War. We aid the newly established nation on the route of a full-scale exchange of currencies. In the latter stages of World War I, gold would once again be made to be a currency, and the various currencies of the world would be forced to float freely on the free market. Three years after the end of World War I and the announcement of the gold standard, it became known across the world speedily after the first one ended as the Bretton Woods Accord. This accord was established to monitor the world economy by effectively stopping gold fluctuation and allowing for the free-floating of currencies. This act allowed for a free-floating currency and would prove to be the catalyst for the establishment of the World Bank and the establishing of the International Monetary Fund.

First free banking system

Following the establishment of the International Monetary Fund, the world would have the world’s first sovereign, independent, and generally free banking system. This system took effect on conjointly, December 31st, 1933. This initial gold standard is known as the gold specie standard or the gold bullion standard. The ensuing second gold standard would be established on August 5th, 1934, by an act of legislation signed into law by President Franklin Roosevelt. It would be on this occasion that $35.5 million in gold should be set aside by the various governments for circulation. The gold reserve of the United States would hold say, 2,160,000 ounces of gold. Within 4 years of this date, the value of the gold in terms of dollars was set at $35.5 million per ounce and would grow to around $50 million per ounce by annal fronts. Thus, it is clear that the United States’ gold and its financial power grew at an unbelievable rate following the establishment of the gold standard.

For the next 21 years after these laws were passed, the world operated on what was known as the gold specie standard for the vast majority of the 20th century and into the 21st century. However, as is the case with any monetary system, at some point in time, there was a technological innovation that pushed the gold specie standard to its limits. And then collapsed it completely on the attends of the Minneapolis Erin Bankouredlegraphs and Commodity Futures Exchange-listed securities, a process known as the Crash.

Now, 5 years after that date, the currency, and financial markets are once again reassessing the use of gold as a currency. Analysts suggest that the increase in debt in Europe, Japan, China, India, Brazil, Russia, and essentially all of North America and the Western world has pushed countries to ban the use of paper currency of any sort. Gold and silver and those who understand the currency crisis are gradually raising their concerns that there may be a disastrous, worldwide, financial event in the future.

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