How precious metals relate to the economy Research Paper

How precious metals relate to the economy - Research Paper Example While gold remains the most popular investment vehicle for investors, silver, platinum, and palladium continue to hold strong interest. This research paper focuses on how these precious metals relate to the American economy and examines the price of the dollar in relation to these metals. This essay describes the history of the Western economy and banking structure, that was originally linked to gold through the gold standard. At a time in history all currency produced was held to a standard reserve of gold in the country’s central bank. However, recent decades have gradually witnessed a shift from this economic structure. Today precious metals operate in large degree like a currency, as they are subject to market inflations and deflations. There are many motivations for the purchase or investment in precious metals. In this context of understanding, this research paper reveales that precious metals largely function as a hedge for investors against fiat currency and volatile markets. In addition the nature of the historic relation between gold and currency is examined in terms of the gold standard. It’s noted that supporters argue going off the gold standards creates greater government volatility, while detractors argue that going off the gold standard creates the potential for a welfare state. Ultimately, it’s clear that both historically and in the contemporary environment precious metals and the economy are greatly intertwined.