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Submission + - Is 2008 the time for digital gold currency? (smh.com.au)

wikinerd writes: "Gold as an investment is frequently used when investors are worried about the economy, the geopolitical situation, and inflation. Generally, the higher the price, the more desirable gold is by investors. Gold just now made the jump to a new all-time high price, at the time of writing being 856.70 USD (see recent charts). While this does not signify anything about the value of gold as a short-term investment, as the price often drops after the holidays, the fact that it reached such a record and has been generally upward for the last 10 years should make us think of the reasons investors prefer tangible commodities to papers (currency or stock).

One possible reason is the currency situation: A softer US dollar is often cited as a driver for rocketing gold prices, but alternative currencies, such as digital gold currency, time-based money or similar schemes are sometimes viewed with suspicion, but not by everyone. According to Wikipedia, in response to a recent FBI raid in the offices of Liberty Dollar, a firm circulating private alternative currency, presidential candidate Dr Ron Paul said: "We stand on the precipice of an unprecedented monetary collapse, and as a result many people have begun to look for alternatives to the dollar...I believe that the American people should be free to choose the type of currency they prefer to use. The ability of consumers to adopt alternative currencies can help to keep the government and the Federal Reserve honest, as the threat that further inflation will cause more and more people to opt out of using the dollar may restrain the government from debasing the currency".

As it is recognised by economists that there is profit in the issuing of currency, wouldn't it be a reasonable to encourage the establishment of alternative parallel currencies, particularly digital gold money or time-based schemes, in a free market system controlled by the laws of competition in order to avoid a monopoly in currency? Such an environment could, in theory, help keep a nation's main currency in stability, thus solving one of the prime reasons that make investors worry and seek safety in gold."

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