Recently last year when Genneva Pte Ltd was in trouble, there were talks in the news, online forums and websites/ blogs that Genneva (a gold trading company) is scamming people’s money.

It all started when Genneva director management found there was a financial improprieties that led to a delay paying back the money and returns on time. Some complaint to the Malaysia authority and checks were done on Genneva; and they were raided in Sept 2012. Read more about it here.

The Gold Guarantee (TGG) and Asia Pacific Bullion (APB) offered to buyback the gold from the Genneva clients in hope to help the Genneva’s customers to get their money back. There are terms and conditions for the Genneva’s customers however. Read about their rescue scheme here.

Because of this unfortunate incident, both The Gold Guarantee Ltd (TGG) and Asia Pacific Bullion (APB) are on the alert list of MAS.

The Gold Guarantee Pte Ltd is owned by Lee Song Teck (1 million shares) and it is located in Singapore (listed in ARCA), Malaysia, Hong Kong and Thailand. What the business does is to trade gold (physically) in exchange for cash from the customers. The transaction comes with an option to sell back the gold at the rate the contract stated. The price of each contract differs as the price of gold fluctuates daily.

The customer in return will get a discount or interest for holding the gold for a certain number of months. The longer the holding period, the more the interest they have. This is how the customers get their returns on the investment.

From what I observe from these gold companies, they provide a warranty to buy back the gold at a specific period at a fixed rate according to the transaction contract. To tell the truth, most of the banks in Singapore sell gold as well, and they are at least 10 to 15% cheaper than what these gold companies are selling!!!

Why would anyone be Interested and buy from them?

The main reason is that the gold companies are using the fact that fiat currency especially the U.S and European currency are losing confidence, and thus making gold increase in value and confidence.

What they are offering is an option (after a specific period) to sell back the gold to the companies at the selling prices stated in the contract. The buyers will earn a profit from the discount they received when they first purchased the gold.

The Gold Guarantee Contact Information

Address: 42A Boat Quay Singapore 049831

Phone: +65 6535 4052

Fax: +65 6535 4076

Email: info(at)

Gold investing has exists since man started to use gold as jewellery and became valuable. If you are planning to join in the gold investment, you can attend their free previews. Their sales consultants will be able to answer your questions.

There will be risks involved in everything we do; we MUST use calculated risks in investment and business that we are comfortable with. We have to be careful and research on investments that you are not familiar of.

You can read more about gold investing posts in this website.

Gold is a commodity and its value is subject to the law of supply and demand.

You can say gold is basically real money in all the senses due to its value. It is not like the paper money of the currency of US which only print unlimited money. Whereas countries like Singapore does not print currency.

Gold will soon become more valuable as the press will release more and more money and in this way people will try to buy more gold for them and to save it.

The more supply, the value will automatically fall down badly. The value goes up when the supply of anything is less.

It will require more money to purchase an ounce of gold when you have limited amount of gold and the supply of dollar is unlimited. It cannot be avoided that dollar always fall but at the same time gold prices get more and more high.

The dollars of America in the circulation are just for the IOUs and it will be fine if the reserves of gold were in the Fort Knox to back up the IOUs, but what will happen then if there will be no gold present in Fort Knox?

This query dates back of the Great Depression days.

The American people given the vote for change in November 1932 and as a president they elected New York governor who was Franklin Roosevelt. Executive order 6102 was issued by him who immediately finished the ownership of the gold coins, even bullions and certificates by the citizens themselves.

He explained that why he did and took this step. He wanted that people to take the loan from the government during the great Depression. In his period only the American gave the gold to the US treasury. 

In Fort Knox there was a lot of gold present, it was told by the treasury department that Fort Knox Depository held 649.6 million ounces of gold as dated Dec. 31, 1941. This was around 20,000 tons of gold.

The cold war which was supposed to be world war II and the Korean war, the Vietnam War and also a long string of few US military who were engaged and committed till now.

A lot of money is given to the big wars and the people of that nation which means government. It is stated by the treasury department that there are 147.3 million ounces of gold in Fort Knox. This is supposed to be less than 23% of the original quantity taken by the people in the early 1930 and returned back in 1941.

You don’t need to worry for this. In Fort Knox, The official Treasury Department statement on the matter of gold is that "The only gold removed (from Fort Knox) has been very small quantities used to test the purity of gold during regularly scheduled audits. Except for these samples, no gold has been transferred to or from the Depository for many years."

The Treasury Department adds in it, "The Depository is a classified facility. No visitors are permitted, and no exceptions are made."

We never like that any visitors to keep an eye in the Fort Knox Depository, shall we? 
Why we take the words of anonymous people who are the federal managers? Actually nobody exactly knows what is inside Fort Knox. You can take an example; you have seen the film of James Bond. So it is just a movie but that is not real.

If you get the knowledge from any independent source so it is not something bad. We can understand the need to keep the Fort Knox secure so that it can remain safe. From the US Treasury Department there is no need to have a declaration statement. It is not out of line to know about the national gold depository.

President Ronald Reagan said, "Trust, but verify."

The gold supply is the important part of the US monetary base. It assures the quality and amount of the gold which is very important. It keeps the nation’s powerful weapon in full control.

What can be the result of the gold audit? There can be two possibilities.

A new series of issues for the gold market and the federal monetary authorities will be missing which will be independent audit needed as same as the gold is required.

It is now common every where to get the gold on same prices. It really does not make any sense. The demand of gold on one way is increasing rapidly.

Next, why the prices of gold are too high? What are the prices doing? The first thing that comes on our mind is Mediocre. In the whole world it has been noticed that the fireworks have taken place all around.

On few areas there is some links which are connected with each other.

Isn't the old law of supply and order still in effect? Isn't it still true that when people want more of incredible, its supply decreases and its price head north?

Or did the law acquire revoked, and we just not at all got the memo?


The things taking place on the Wall Street is something which you don’t know about. The stock are decreasing and getting worse loss in the value and how government is not taking any step.

This will be left on your brain forever as a memory.

There always a rush for the precious metals which are gold silver in many areas which includes Europe to Asia and even to America all over the world.

In one of the story which was in London’s Evening Standard, the sale of gold coins have been halting and said. "German gold dealers say demand has skyrocketed this past week to 10 times normal so no more orders can be taken for the foreseeable future."

The producer of gold and silver Philharmonics who is Muenze Osterreich was given report by Toni Straka of in which the third work was added to get more coins which was the extraordinary demand. 
The sale of these popular coins has stopped now which was after the introduction of gold Eagles 20 years
ago. It decided to give more quality supply to the dealers who buy those products.

It has spread widely. It has been predicted by Paul Joseph Watson that nowadays people are running towards eBay. He said "Since buyers are finding it near impossible to get gold bullion from recognized dealers, many are turning to eBay where auctions for one ounce Krugerrands and Maple Leafs are fetching anything up to 150 ($260) over spot price."

The demand for gold is increasing rapidly.

Its prices are also increasing with the increase in its demand.

What is this actually?

It is like that the tank of gas is full but the gauge is nil.

This is the prediction of many experts that in spite of $800s or $900s the gold rates should have gone to above something $1,100 an ounce. This is the conservative estimate which is provided to the destruction to the nation.

Why the separate? The Market Oracle's Alex Wallenwein believes he knows:

"Gold is gold, paper is paper, and 'Comex gold' is nothing but paper masquerading as gold while simultaneously pretending to be the price-setting medium for actual gold in the world. Now, finally, Comex-gold is in the process of being unmasked."

He further told that what this reveal has unmasking:

"The real supply and demand determinants for Comex gold are not actual gold investors but fund managers. Fund managers are inextricably intertwined with the world of contract-based credit instruments. They bet on Comex gold contracts to hedge their other (currently horrendously losing) bets with something they all, in their in-bred belief in paper markets, believe will 'go up' in value while everything else is going down."

Another perspective was taken by Trader Dan Norcini from it has been known that when the funds get redemption from the clients which need them badly who now wanted money in spite of investing on it, their manager are emphasized to give them to produce money in return.

Read more about this article here.


Is it a serious issue which is running here?

Are really the prices are red hot which pouring water on the metals with their forced redemption? Does the
Comex version somehow look alike with the happening of the dealers? Are the supplies and need in the real world?

It has been understood that the metal prices are shamelessly manipulated. This is the perspective from the anecdotal of a gold dealer.

The price is so low but the demand for it is so high.

Is the American Gold Eagle ready of gold?

The president of Lear Capital named Kevin DeMeritt who is also a author who publish focused on more than 1000 programs of the radio which are Rush Limbaugh and Coast to Coast with George Noory which explained the economy of the present and shown the clear picture.
The uniqueness of gold reflects the eye and everyone like its brightness and shininess. The flakes which are the smallest are easily removed. Gold always played an important role in human life in the past as well as at present.

Gold was considered as the first element which was collected by man and it was also prized. This was indicated by Anthropological excavations of Stone Age burial sites. They are also formed in the nuggets form. This was having higher prize but it was not used practically. Many new applications of gold were also invented by the man. Gold has its intrinsic beauty.

On Antarctica, gold is not mined in this continent. Except this continent, gold is mined on all the continents. In South Africa, in the Witwatersrand District are the richest areas of the world that produce gold. It contains 18000 tons of gold with no end. Few more areas which bear gold are Siberia in the former USSR, the Porcupine District in Ontario, Canada and in the United States the Yukon District of Alaska and the famous Mother Lode District in California.

Nature was kind in the United States. For the commercial production of gold, 32 states were calculated. The western states, California, Colorado, Alaska, Nevada and South Dakota are the areas where yielding is located. Few more areas have also been noticed which are, Arkansas, Idaho, Utah, Montana, Washington, New Mexico, Wyoming, North and South Carolina, Tennessee, Michigan, Vermont, Georgia and New Hampshire. 

The symbol of wealth, power and status was considered gold for more than 6000 years. It has been studied that from long ago, when the history was being taught the men and women use to wear expensive gold which looked amazing. The Egyptian boy who was the king Tutankhem in 1350 BC, was interred in a coffin highly for spreading from 242 pounds of the gold which was solid. Today also, in the marriages gold is considered a good source of gift and expression of joy and is exchanged in the ceremonies.

The gold was sprinkled in different forms which includes dust, flake or leaves on their food items for their domestic wealth. In food, gold is still sometimes used by the people and contain the E number 175. The metallic gold is tasteless as it is not moving to all the chemicals of the body metabolism. It does not have any medicinal effect as well and the body left is just unchanged.

The healing properties of gold are focused by the modern esotericists who told the physical properties. The gold which are used as pharmaceutical for the treatment of arthritis and other diseases contain anti-inflammatory features. Inside the body, metallic gold are inert to all the chemicals. The pharmacological value is only of the salts and radioisotopes of gold.

Storehouse of value is termed as gold. It is utilized by the men in order to keep himself protective and safe at the time of need and difficulty. Gold has reduced many problems of men today and even in the past it was of great value.

Gold is considered to be the crowned king of all the metals; this was named this in the past as well. Gold has now considered as the monetary exchange. This currency of gold is your own property and you are the one who need to take care of it. The value of gold is only due to its purity and its uniqueness; it does not depend upon any political decline, financial cartel or any other issues.

The London Golden Market produced the day to day world price of gold and gold items which rated the gold bullion and coins according to other centers which includes Hong Kong, Zurich, Frankfurt and Paris. The prices may differ if the impurities are found in the gold. The rates of the gold are made by its purity and quality. It is considered that the prices of raw gold which is sold as the specimen and even jewelry are sold on the higher rates. The nuggets of gold are entirely different from each other. For instance we can say snowflakes. It can be easily sold as more as five times when it is compared to its weight.

The old jewelry sometimes gets broken. So do you have any broken set which you can’t use now? You can get the money from that broken gold piece. You can simply sell out that broken piece and get handsome amount on its behalf and with the addition of some money you can now buy some good jewelry.

You should learn how to calculate the karat count in order to sell your gold at right cost. Usually the 24k gold is alloyed with the base metals for several uses which are in jewelry, color, texture, hardness, melting point and ductility. The gold karat which is of lower karat values as 22k, 18k 14k and even 10k contain different alloys which are of copper and silver. The more the karat of your gold, the better price you will be getting of that item.

You should concern local jewelry if you just need to sell few stones of your gold. Or you can also visit to an antique shop. They will help you to get the better sale and will guide you with the accurate artist who will keep this in consideration and in this way you can get better gold sale price.

It is believed that rise in gold or anything is the natural phenomenon, but it is in real a hidden form of taxation. Why is this so? Is increase in anything is good sign or considered bad? 

This is considered to be the most efficient form of market. People now compete for wealth as well. For the operation, the economy is rarely permitted in such way. The government is involved in this in many different ways. By taxation, government charges the people with their money and they return the money to other people through entitlement schedules or simply by sending them.

The government in this way tries to please many people they can. This is something natural which offend just little people which are possible. This is very easy for them if the taxes are kept hidden. To several discrete subgroups this can be given by the government, without any cost of alienating other groups. How is it possibly done?

The cost of government is obvious when we talk about the control of money; this is due to that the dollar given by government is obviously commanded by government which is subtracted from any source. What will happen when the government can make the money out of thin air? This is basically known as fiat currency. The stability to survive is dependent upon fiat currency, but when we compare commodity currency so that is dependent upon the value or rarity of the commodity which is considered to be independent of the government. A natural and permanent right of government is the people which are in US which are considered to regard fiat currency. This is as of the recent development made. It was distributed by the founding fathers with full zest.

Inflation is allowed by fiat currency, it is considered to be the rate which is faster than the economy rate and it is considered to be the creation of the currency.

By any example it can be clearer to us. If an island has $100 on it and $100 value of supplies, what happens if the island's people learn how to produce goods worth $10, at the same time as the government prints up an extra $10 in currency? The result will be that nothing, in lockstep the currency has grown as well as the economy has also grown. Both the currency and goods retain equal value.

What will happen if the government adds an extra $100 and give it without the increase in the amount of goods? This is supposed to be inflation in which there is growth in the money which is relative to the gold which is present. The rates of all the goods will automatically increase twice in money relative to goods.

When the government generates at a deficit, what it is doing by description is expenditure money without having taxed it out of anyone earliest. It is printing money into survival and spending on it. Since it cost it in a variety of traditions it makes in receipt of classes (owners and selected welfare groups) cheerful. This income is considered to be active and thoroughly given but this can be understood by few people only. People think of it as to give without taking, but administration can not at all really do this. For the reason that it is spending without earlier taxing, there is no supporting cost for pleasing the money and spending it no counterbalance to hold back management. The result is of course raising affinity to increase and use.

Not only are these considered for the increase and to spend on giving the wealth in different ways, it also skews the financial system, more and more "punishing" economically viable actions and "rewarding" efficiently foolish actions or circumstances. This is due to that United states has started this process, which is a self preservation spirit which is advised strongly by reducing your holdings of fiat currency and it also increase your holdings of that the other currencies like commodity currency.

In the world, gold is considered to be the primary form of commodity currency.

Read more about "Will The Prices of Gold Rise?"
The prices of gold are rising very high which is giving different impact on the buyers. This will stay at the same place for some time.

Federal Reserve and Gold Prices

The actions of Federal Reserve is considered t be the most important catalyst. The printing of money, to get bonds, or implement quantitative easing was based on the commitment from Chairmen Ben Bernanke who continued this. This all give the same result in the same consequences.

This produces in the degrading of the US dollar which continues to produce an invalid debt level.

In the future, if these quantitative easing were stopped, so from the actions the fall out of the Federal Reserve will remain with us for much time which can last for years or more.

This is considered to be the most important factor which helps to know about the ongoing rise in the prices of gold.

Interest charge

The most important factor is supposed to be the low rate interest climate which benefits from the prices of

Ben Bernanke said that it won’t go much high till the economy is weak. This is also told by the action of Federal Reserve. The main problem still is that to the contrary to some reports, this economy is considered to be a disaster still and there is no other way Bernanke will increase the rates of interest any time he thinks.

It will help the gold to be protected as far as it is concerned. And in this way it can be somehow helpful for people.

Economic flaw

Ever since, we had the worst economy with the tech bubble burst, and there are no recovery found till then.

This is all done in the response of the high rate of the federal debt to the unsustainable levels, but it is of no use also. More people or you can say students enter in to the markets, but still there are no jobs available for them and the economy is still is disaster.

Banks aren't lending also, which is in fact what the problem is at the back. The basis they aren't lending is since of the risk they be familiar with is there, and the reason many businesses aren't even attempting to get loans is there are a small number of increase opportunities that would give cause for the debt load.

In America, this is considered to be the fact which leads the growth of economy.

For the support puzzle of gold, this is another way.

US dollar Collapse

Many people around are losing their power to purchase, this we have discussed earlier as well. And in history this has never been recorded when it comes about that it is dropping so easily today.

The US dollar will be at low rate if the sovereign debt crisis comes down more easily to the pressure on the euro.

But it is also noticed that there is nothing available that will change the rise or decline of the rates of the dollar, this is because there is no will or the political will which will help to take such important steps.

This is very important news for the people who invest on gold. As they think this is the most lawful form of currency. Some people also identify it as gold bugs.

This is because of the truthiness of the degrading of the greenback.

Sovereign Debt Crisis

In Europe, it was supposed that gold was protected by the sovereign debt crisis and it is not good that the US dollar and gold abandon gone up at the same time. When we talk about gold, it goes very high and as the depth of crisis which is understood.


It has been noticed that when it comes down, the prices of gold are interlinked to the fall of socialism, which is invalid and made a culture of entitlement over the world.

Over the whole universe, this will happen many times till the fall of socialism is agreed upon.


To protect against increase in the prices is considered to be the last point in which the gold and other commodities are the ways in which we can place the money. This have little effect on different investment vehicles. 

Gold bullion are usually defined as the gold bars and the refined gold coins. They are found in different shapes and sizes; they are also formed in different types. This article emphasizes you on the importance of buying gold bars from your near shop. 

Do you really know that why you need to purchase gold bars?

Some people think to purchase gold in different forms like coins, jewelry and many more. Many people buy such items for investing purposes and want to get many savings from them. It is important that you go through all the advantages and disadvantages of buying gold bars which have some side effects which can be easily reduced. 
Past Prices of Gold:

Nowadays it has been observed that the prices of gold are increasing rapidly. It was estimated that gold prices were closed at a rate of $414.80 a troy ounce in 2003. The price estimated in 2008 was double the price studied in the year 2003 which is approximately $930 for a troy ounce. You should try to get more knowledge of past about the gold you are buying which will make you realize that prices are increasing as with the passage of time. But it is also true that the performance of past doesn’t reflect its future.

Pureness and Weightage:

The supply and demand of the gold proves its purity and rates. But the two major things which should be focused must be the weight of the gold and the purity.

Cleanliness: the government backed the gold to the purity up to 99.99% pure but the normal purity which is considered is 99.98%. Usually the gold is imprinted with the purity label.

Heaviness: the sizes of gold ranges from about 1 gram (.035274 ounces) and goes till the range of 440 grams which is equal to just 1 lb. larger the gold bar will be, the more will be the chances to get good quality piece of gold. The prices of the heavy gold are more when they are compared to the smaller ones. 
Standard that should be available in Gold Bars:

Four marks are found in every gold bar which define its uniqueness, they are: 
· The brand name must be labeled by the refiner
· The weight should be noted in troy ounces
· Percentage of its purity
· The bar serial number

Make it clear that you need to check them before buying any gold item. Try to avoid purchasing from internet through which fraud can be done, so try to purchase from a famous dealer.

Right decision of Choosing Dealer:

It is very important to keep in mind that from you are buying gold bars or gold. As it is about the money you are paying to them. Try to purchase such items from reliable source and who are the real dealers of gold bars. Make sure the test and assays are performed before buying them and should give you guarantee that the gold is pure. It is very necessary to get gold from any respectable dealer as it is the matter of
your savings and future. 

Keep in mind, if you purchase online gold bars so dealer must send you it through registered insured mail or
some other useful way which can help you to get the best gold. It warrants the armored service of the car delivery. So a person must keep in mind that they are not being cheated by anyone.

Saving your earnings:

It is considered very easy to store your savings if they are light weight so in this way you can easily protect and save them from any damage. In the deposit box of your bank you can easily keep your savings save. But you should remember one thing that they are not FDIC insured. You need to focus on the protection of your gold and other valuable items when dealing with the right person. Read more about "Saving Your Earnings By Purchasing Gold Bars" here.

It has been estimated by the experts that the prices of gold will rise to double or even to triple of the prices found now which then will prove to be a better investment. The people who invest gold for their future lead a happy and easy life. 

It has always seen that gold is the precious metal which is widely used. It is also considered as the treasury for both the government as well as for the person who supplies gold. There is no comparison of gold. The prices of gold are always high which help people to save from buying gold and then investing it. Following are few prices that for you I have explained which are:

Prices of gold:

The prices of gold are always talking in the sky. The reason behind the rise in the prices of gold is that it grows rapidly and is always appreciated by the people. With the rise in economic, gold is such a product which is linked with it. It does not only fall when the prices of dollars decrease. It is obvious that the wealth all over the world are linked with each other. The main disadvantage of rising in the prices is that people don’t value the currency and their faith declines. After the year 1972, the climb in gold prices took place when then US president Nixon closed the standard of the gold. This is observed by the dealers and experts of that time. The US government has taken benefit from the rise in the prices of gold and it was selling freely to the people of the world.

Gold reduction:

India, USA, Australia, South Africa, Canada, China, New Zealand and many countries are considered to be the producing nation of gold. As it is widely needed today, its value has reduced and availability also in mines. In Kolar located in India, the gold was first brought there but now due to depletion it has stopped its production over there. May be many wont agree with this statement that gold has being reduced these days but it is true fact that the quantity of gold around the world is not too much now as compared to before. It has been quoted by the laws state that any product which is inadequate will goes high when it
comes to prices.

Demands of gold:

All around the people are still demanding for gold although they know the prices are talking to sky, this is because it is a good source to keep money save for the future time. For investment reason it has been calculated that only 25% is used which includes gold bonds. By the US the country which was popular for having gold was considered as India.

History of gold:

Every day it has been observed that gold with the rising in prices comes up with new look which attracts the people very much. The market of gold has always been a fish market. By the gold speculation, people try to make out the useful and benefits from the prices of gold. This is simple but though among the main reason for the increase of prices of gold. The prices of gold varies day by day and keep the people puzzled that what to do next. The people purchase gold in order to keep themselves away from the hikes before they need it. The speculators gain more profit from such thing with the rise in the prices of gold. Read more about the fiat currency history here.

Economical benefit:

We have seen that world is in trauma over more than half century. This is because of the two wars which took place. Such wars were not only fought by the men but also country requires pooling of the funds to get
the time costs. The government of US thus took action on it and banned the hoarding gold. People of that time considered better to keep gold in their pockets instead of placing cash.

It has been observed that the prices of gold are rising since 2001 and it has no decline over it. It will be the same only if fictional King Midas is alive again and make any such metal again then there is a chance of its decline else it will increase further more in several years. 
In this age of modern financial, to spend money in buying the gold bullion is the secure way to get your money saved. It is considered that the gold is the best way to keep the money saves for the hard time as gold is the strong saving way.

From this we can judge that gold is the best way to earn and keep the money save for both getting any loss or to just protect your wealth when you need it in hard time. 
It has been noticed that in few years back, the institutions have declined fast. And as a result of it the values in the banks are declining rapidly. But as compared to gold still the prices of gold are too high for anything. When the crisis was observed it was noticed that the prices of gold were at around $9000 per ounce. Just with the passage of time, its value has increased double of the cash. This return was for sometime when the prices of real estate and currency markets had fallen badly.

The other investments in this way fall badly and produces attractive piece of the gold as a metal. Confidence is the thing which made the currency market. The production of money is from low metal and in just a piece of paper. It has no such truth but the faith we have on it makes it some valuable. The money gets decreased when the currency market gets in trouble. It has been observed from past that many rich people have lost the entire amount so rapidly. This was observed in the year 1920’S in Germany. In the mid of the year 1922, it was considered that per dollar it has mark of 320. At the same year when it came to end it risen till 8000 marks per dollar. This goes on for several few years and in view of the fact that it happened on other events also.

In the economy which is balanced, there is a risk of happening this again. The main thing which can help you is only that you invest it in mixed way. After purchasing gold bullion bars, you can easily keep all worries aside as this will help you a lot in your hard time or at the time of sale. As we know that this is available now in just restricted amount of gold in the whole universe.

When there is hyper inflation, the step which government should take is that money can be minted. This can be helpful to avoid all the importance of cash which do exist apart from this.

You must keep something for your protection so buying gold is the best idea around also for the physical
control. When you decide to buy into the product shops so at that moment you get help by financial institutions. Always prefer physical gold for security purpose as it will never harm you and won’t let you down in any case.

After preferring gold bullion bars, its your duty to find the best dealers who deals on gold bullion which can be helpful for you in future.

Recommended Read:
1) History of Fiat Currency

With fiat money having its roots in 11th century China, fiat currency has had a long and chequered history. Fiat currency is simply the term used for fiat money that is effectively the main currency of the country.

Yuan Dynasty

Fiat currency first emerged when the Yuan Dynasty of China started to print paper money without restrictions on duration, in order to fund their reign in the absence of sufficient specie. This led to hyperinflation. Eventually, by the mid-15th century, the new Ming Dynasty stopped printing paper money altogether in order to contain both hyperinflation and economic expansion.

Fiat Currency in the West

The first instance of fiat currency in the West came about when the issuing of paper money in Sweden was taken over by the Scandinavian country’s government. This happened in the latter half of the 17th century. Although paper money was inconvertible to specie by 1745, the government mandated its acceptance.

American Colonies

In the Thirteen Colonies, an early form of fiat currency was known as bills of credit. Notes were produced by provincial government, with the promise that holders would be allowed to pay taxes with those notes. The notes were issued for the purpose of paying current obligations and were called by levying taxes at a later point in time. They were circulated between individuals in non-tax transactions because they were denominated in the local unit of account. The colonies where bills of credit were most prevalent were Massachusetts, Pennsylvania and Virginia. The money was sold at a discount of silver, which was then spent by the government. It expired at a pre-agreed later time. Other colonies that had this fiat currency included New England and the Carolinas, where the bills of credit depreciated more dramatically than anywhere else.

As colonial powers continued to introduce fiat currencies backed by taxes such as poll taxes or hut taxes, a cycle of deflationary hard money followed by inflationary paper money continued repeatedly for the majority of the 18th and 19th centuries. The reason why the authorities kept introducing fiat currencies backed by taxes was because they needed to mobilize economic resources in their new possessions, in the context of a transitional arrangement, at least. The Federal Government introduced United States Notes during the course of the American Civil War. These represented a form of paper fiat currency that came to be commonly known as greenbacks.

World War One and Beyond

Although most governments had a legalized monopoly on bank notes and the legal tender status thereof by 1914, most of them still promised to redeem notes in specie on demand. However, as the war wore on, authorities moved to suspend redemption in specie due to the high costs of the military conflict and the accompanying policies of huge expansion. Due to a lack of direct penalty for doing so, governments were not directly responsible for the economic effects of printing more money. This inevitably led to hyperinflation, perhaps most notably in post-war Germany.

In consequent attempts to regain economic stability, pure fiat currency was combined with a form of convertibility via gold bullion exchange. This was done with the purpose of anchoring currency to gold bullion under the Bretton Woods system. This system was established in 1945, after an agreement was made at the Bretton Woods Conference to fix the value of 35 US dollars to one troy ounce of gold and then peg other currencies to the US dollar at fixed rates. This system lasted until 1971, when it collapsed as a result of President Richard Nixon ending the convertibility of the US dollar for gold.

Fiat currency has caused drama throughout history and does so to this day, if only theoretically. Nowadays, critics of fiat currency claim that the United States could use it as a dangerous financial weapon, as much of the rest of the world currently holds US debt and US dollars as central bank reserves. According to the supporters of this argument, fiat money could be printed in the US to cover its debts abroad, yet creditors are unable to sell the devalued US dollar off because doing so would destroy the purchasing power of their own dollar-denominated collections from the United States. It certainly is quite the conundrum.