Although, the price of gold fluctuates from time to time it is still the most stable and a good hedge against inflation.Gold is probably the safest investment in time of war and financial crisis.
In times of economic crisis or inflation, recession or worst case scenario, a depression, gold always stands out as a stable value so that, even when you might need wheel barrows of dollars to buy a loaf of bread (like in Zimbabwe), a tiny gold coin would be enough for you to buy a wheel barrow full of bread.
In 2010, Indian converted more gold into investment than into jewelery.
The chart below shows the price of gold the past decade.
The Kelantan state government has issued gold dinar and silver dirham as legal tender.Which means you can buy them to use as legal tender in Kelantan only or if you wish keep it as an investment.
The move by Kelantan should not be viewed as an illegal action but more to allow its citizens the opportunity of having a more secured currency, as an investment or as an hedge against inflation and in times of economic crisis.
My grandmother used to hoard gold in the form of jewellery and coins.Your grandmother must have done the same.So, the practice of keeping gold as security for bad times has been around for thousand of years.
It is certainly better than investing in some State government's unit trust that have completely wiped out investors money with some losing their whole lifetime savings to this moronic former Sabah chief minister here.
If your are a CEO of a company or leader of a state who manages the state's finances and something goes wrong you are responsible no matter how much you wish to deny it, be it due to external forces beyond your control or bad decision on your part.
Anyway, which right thinking chief minister would allow a share swap of state owned blue chip shares for crappy junks in shitty companies?
I think Kelantan's gold dinar will not become a bona fide currency even in Kelantan but depending on its par value ( I have no yardstick to assess it at the moment) I believe it will be good investment to buy some for keeps.
Bank Negara should approved the minting, maybe not as currency, but as instrument of investment.
Other states should emulate Kelantan's move to offer its citizens a stable and safe investment alternative.
The World Islamic Mint that issues the gold and silver currency is here.