Tag: gold is money
Despite another so-called “smash down” of gold and silver, having an awareness of the direction of the trend, as we have been advocating for the past few years, one cannot be surprised by the drop as much as one can be verily surprised by the extent to which the central bankers have had such a relentless stranglehold on gold and silver, and it appears that they have not yet finished playing their manipulated hand.
Years ago gold and silver were money. Physical coins were replaced with gold and silver certificates. Those certificates were replaced with “Notes” or debt of the U.S. government issued by the central bank. Those notes have largely been replaced by more ephemeral digital debts in the form of credit card debt, debit accounts, checking accounts, short term debts (T-bills), longer term debt and derivatives of those debts. The intrinsic value of those notes and debt instruments is minimal – they are accepted because they are accepted, UNTIL THEY AREN’T. When that day arrives, we will wish we still used gold and silver as money.
To Congress and the Administration: Give Bail-UPS and Bail-DOWNS a chance. Clearly bail-outs and bail-ins have been problematic, so let’s progress in a new direction that benefits taxpayers and debtors.
The story will bear close watching as HSBC and the New York Fed prepare for Texas to take actual delivery down the road. Texas’ gold holdings are reported to now total $1 billion in value. If those gold bars have been surreptitiously leased out, pledged, hypothecated or even sold, then we could see a major scramble when the time comes.
There will always be hawks and vultures in our financial world. If you are not a hawk, don’t want to be a vulture, are worried about “black swans,” own no “tame” politicians, and want to protect the purchasing power of your assets, then use gold and silver for financial insurance and protection, just as the shell protects the turtle.
When debt is rolled over and never repaid, how much is the debt truly worth? Would you lend money to someone who assured you he could only repay the debt by borrowing a larger amount from another person? Clearly not, but this is normal in modern “twilight zone” finance. Gold and silver are real. All paper currencies and fiat debt are less real, less solid, and less reliable. Worse, these are becomes increasingly less real and more unreliable every year as governments devalue their currencies.
The argument that one cannot eat, wear, or build with gold is often used as an attempt to show that gold has no value in-and-of itself. The anti-gold crowd often claims that if it were not for gold’s monetary use, which it has not had since 1971, at least not formally, gold would be useless with little or no value. What is left unmentioned is its growing use in a growing electronic device market. If gold has no value beyond its monetary use, why did it not become cheaper than gravel when its monetary use ended? This argument against gold is stupid and is intended to deceive.
Debt will increase substantially from here, until a massive reset occurs. Gold and silver, in spite of financial cartel resistance, will assert their real value and be priced much higher, depending on the quantity of debt created, loss of confidence in government and central bankers, and the amount of chaos that occurs during the coming storm. Exponentially increasing systems do not last forever. Gold and silver do.
What should we do to hedge against the massive increase in the number of (Ponzi-like) currency units? Hard assets such as gold, silver, diamonds, land, and real estate may protect you from the devaluation of currency units. Gold and silver are long-term insurance to help protect from Ponzi economics and devaluing currency units.
The global financial system is vulnerable and dangerously fragile. If it were safe and healthy, why would Europe continue to “throw good money after bad” with more bailouts to Greece and other countries? Ask yourself if Italy, Spain, Japan and the US are materially different. A vulnerable and dangerous financial system that is increasingly leveraged is a bubble in search of a pin. Accidents happen! Protect yourself and insure your assets with gold and silver.
Don’t believe the lies or trust that unbacked debt based paper currencies will survive (they never do). Learn from the lessons of history – gold and silver have been money for thousands of years. The western world currently has amnesia about the true nature of money. Asia has not forgotten the value of gold and silver. Convert increasingly risky dollars, euros, yen, bonds, and other delusions into gold and silver while you can. The window of opportunity will not remain open much longer.
The essential trust in fiat currencies is beginning to fade. People look aghast at the “debt clock” in Times Square now surpassing $18 trillion. Their minds are boggled at the trillions of new dollars created by the Fed via extraordinary maneuvers such as Quantitative Easing. Today, there are real questions about the solvency of the U.S. government, and the value of the scrip issued on its behalf.
Americans today have no memory of those times when gold, silver, and copper coins were tossed across a store counter, or counted out by hand, to pay for everything from penny candies to Ford Model-T automobiles. That era began ending when President Roosevelt in 1933 outlawed the use of gold coins in everyday American commerce. The separation of Americans from their Constitutional heritage to true money continued through 1964, with the end of small coinage containing 90% silver. The deception was complete by 1982 when copper quietly disappeared from the Lincoln penny.
Granted, it seems unlikely that the U.S. or any major country will return their currency to a classical gold standard anytime soon. But signs abound that precious metals are re-entering the public consciousness – and will be playing a more prominent role in monetary systems as geopolitical tensions rise, debt levels become more unmanageable, and public confidence in political institutions wanes.