GOLDBUG: The allure of gold in a fiat currency world

Friday, May 15, 2015

http://www.zerohedge.com/news/2015-05-09/russell-napier-explains-whats-store-gold-if-cash-outlawed

Russell Napier Explains What’s In Store For Gold If Cash Is Outlawed
Submitted by Tyler Durden on 05/09/2015 19:45 -0400

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However, in such a world, zero-yielding gold would be a high-yielding instrument. If the authorities ever sought to restrict access to banknotes, then gold would suddenly find itself enfranchised as money for the first time in many decades. So, given the scale of these competing forces, it is just too early to say what might happen to the gold price, but the allure of gold will grow the more it becomes clear that central bank fiat has failed and the age of government fiat is dawning.

The time is ever nearer when the price of gold will rise in an era of deflation. In due course, though no time soon, the full force of government fiat will engineer a reflation, albeit one replete with the misallocations of savings and capital so beloved by the bureaucrat. Then the PhD standard, in which the value of money is linked only to the words of the over-educated, will have ended. The gold price will rise even further, ‘And the words that are used for to get the ship confused will not be understood as they’re spoken, for the chains of the sea will have busted in the night’. And that’s ‘The hour when the ship comes in.’

*** end quote ***

Interesting change of the interest rate perception.

“Gold doesn’t earn interest.”

That was the common complaint. It just sits there. And, there is a negative opportunity cost.

Now for gold bugs like me, it’s insurance. 

The Gooferment can’t tax it when I die because it doesn’t exist.

The FED, the banking cartel’s, “man in the Gooferment”, can’t inflate it.

And, no one can track it.

With the FED’s zero interest rate policy — screw you senior citizens living on a pension and some savings —, there doesn’t seem to be quite the argument about not paying interest. Compare zero to, as Ric Edelman puts it, zero point nothing, doesn’t seem so bad now does it?

Also, when you think about Cyprus and their “bail in” solution that turns depositors into creditors of the bank, or worse shareholders with non-tradeable shares — think non-traded REITs, another of Ric Edelman’s “favorites” — gold doesn’t compare badly.

I go back to my two favorite … … examples.

  • In Roman times, two ounces of gold got a custom man’s outfit with cloak and sandals; today, those same two ounces translates to about 3,400 FRB “dollars”. Pretty equivalent.
     
  • And, in my yute, gas at the old Hess station was 30¢ a gallon with trading stamps, a glass, and the attendant pumped it — also cleaned the windshield; today those same three SILVER dimes could be sold for about 6 FRB “dollars”, which would buy more than TWO gallons of “better gas”, but no glass, stamps, or attendant (except in the Pepuls Republik of Nu Jerzee). Pretty equivalent. 

SO WHAT’S DIFFERENT?

The value of the currency!

Argh!

I’ll keep my nonexistent gold, silver, and nickels. Thank you very much.

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GOLD: Russia or China could put a stake in the heart of the USA easily

Monday, February 9, 2015

http://www.lewrockwell.com/2015/02/marcia-christoff-kurapovna/is-russia-planning-a-gold-based-currencye280a8/

Is Russia Planning a Gold-Based Currency?
By Marcia Christoff-Kurapovna
Mises.org
February 7, 2015

*** begin quote ***

Nor is that prospect too far-fetched. As Dutch author Willem Middelkoop has written in his 2014 book The Big Reset: War on Gold and the Financial Endgame,

A system reset is imminent. Even before 2020 the world’s financial system will need to find a different anchor. … In a desperate attempt to maintain this dollar system, the United States waged a secret war on gold since the 1960s. China and Russia have pierced through the American smokescreen around gold and the dollar and are no longer willing to continue lending to the United States. Both countries have been accumulating enormous amounts of gold, positioning themselves for the next phase of the global financial system.

*** end quote ***

One has to be very circumspect about gold and the manipulation there of.

The central banks, most notably the FED, have an incentive to keep the paper merry go round moving.

That being said, for the little people, they have to defend their own wealth.

Folks long the Swiss Franc were rewarded when that peg was removed.

Folks long the US Dollar have a long way to fall if the Russians and Chinese move to a gold standard.

While one can’t tell when the “music for the chairs” stops, it’s going to be rough in the US for the poor and middle class. Inflation will roar back and make the Carter 21% look like child’s play.

The only saving grace is that China is our “partner” in this bubble.

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GOLD: Switzerland portends Chinese action?

Tuesday, January 20, 2015

http://schiffgold.com/commentaries/will-china-pull-switzerland-us-dollar-video/

Will China Pull a “Switzerland” on the US Dollar? (Video)
JANUARY 17, 2015  BY MIKE FINGER   

*** begin quote ***

In his first Schiff Report video of the year, Peter Schiff explains the Swiss news that rattled the foreign exchange markets this week. Peter had predicted that Switzerland would eventually be forced to drop its euro peg, just as he’s been warning that countries like China will be forced to abandon their ties to a weakening US dollar. If investors don’t want to experience even worse losses than Europeans were hit with this week, they need to start preparing for a dollar crisis. Gold has performed very well this year, even while the US dollar and stock market moved higher, which Peter sees as an indicator that a new bull trend has started in precious metals.

*** end quote ***

Poor people in China subsidizes the American dollar.

Argh!

Clearly, this is going to mean more inflation.

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GOLDBUG: Have skills and things of value

Saturday, November 8, 2014

http://www.lewrockwell.com/2014/11/alasdair-macleod/chinas-gold-strategy/

China’s Gold Strategy
By Alasdair Macleod
GoldMoney.com
November 1, 2014

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Since 2002, the Chinese state has almost certainly acquired by these means a further 5,000 tonnes or more. Allowing the public to buy gold, as well as satisfying the public’s desire for owning it, also reduces the need for currency intervention to stop the renminbi rising. Therefore the Chinese state has probably accumulated between 20,000 and 30,000 tonnes since 1983, and has no need to acquire any more through market purchases given her own refineries are supplying over 500 tonnes per annum.

*** end quote ***

The “barbarous relic”?

Now if the Chinese are good “Communists”, then why stockpile gold?

Maybe because they take a 1,000 year view!

The Swiss will vote on Gold and their national bank. While the jury is still out until the end of the month, either way, you have to wonder why folks don’t trust paper money.

I sure don’t. I remember the grandparents talking about the Great Depression.

Be nice to have skills and things of value WHEN the SHTF!

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GOLD: Everyone’s dumber than dirt

Tuesday, July 1, 2014

http://www.lewrockwell.com/2014/06/gary-north/germany-asked-for-its-fed-stored-gold/

LewRockwell.com ANTI-STATE•ANTI-WAR•PRO-MARKET
In 2013, Germany Asked for Its Stored Gold. HaHaHaHaHa.
By Gary North
The Tea Party Economist
June 27, 2014

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In January 2013, the German central bank asked for half of its gold back. It was being stored by the Federal Reserve Bank of New York on behalf of the German government.

The Federal Reserve said: “Sure. In seven years, maybe.”

This week, the German government said: “We were only kidding. We don’t want our gold. We trust the American government.”

*** and ***

There has never been a full audit of the gold held by the Federal Reserve or at Fort Knox. “Trust us.”

If the voters in Germany go along with this, they will announce for all the world to hear: “We are dumber than dirt.”

*** end quote ***

What happened to “trust, but verify”?

Argh!

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GOLD: Smuggling into India is akin to drugs in prisons

Saturday, November 16, 2013

*** begin quote ***

November 16, 2013
Bangkok, Thailand

Thailand is known for a lot of things– quintessential white sandy beaches, hard partying nightlife, quiet Buddhist reverence…

*** and ***

And now, thanks to India’s sagging economy, they can add one more to this list: gold smuggling.

*** and ***

This constitutes theft, plain and simple. By eliminating options to hold anything other than rapidly depreciating paper, Indian politicians essentially stole the purchasing power of people’s savings

*** and ***

The World Gold Council recently released its quarterly data on global trends, and the numbers are very clear: India’s gold demand cratered, dropping 32% because of the restrictions.

In Thailand, however, gold demand is up 125% from the 3rd quarter of 2012.

*** end quote ***

Yup. The Gooferment can’t print any more commodities. Fiat currencies always go to zero.

Drugs in prisons. Humans are nature’s version of rats and roaches in a larger size.

Best way to get something done is to tell someone they can’t!

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GOLD: Cash is not a “store of value”

Sunday, October 13, 2013

http://news.yahoo.com/ap-impact-families-hoard-cash-5-yrs-crisis-042042926.html

AP IMPACT: Families hoard cash 5 yrs after crisis

Associated Press BERNARD CONDON 3 hours ago

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NEW YORK (AP) — Five years after U.S. investment bank Lehman Brothers collapsed, triggering a global financial crisis and shattering confidence worldwide, families in major countries around the world are still hunkered down, too spooked and distrustful to take chances with their money.

An Associated Press analysis of households in the 10 biggest economies shows that families continue to spend cautiously and have pulled hundreds of billions of dollars out of stocks, cut borrowing for the first time in decades and poured money into savings and bonds that offer puny interest payments, often too low to keep up with inflation.

“It doesn’t take very much to destroy confidence, but it takes an awful lot to build it back,” says Ian Bright, senior economist at ING, a global bank based in Amsterdam. “The attitude toward risk is permanently reset.”

A flight to safety on such a global scale is unprecedented since the end of World War II.

The implications are huge: Shunning debt and spending less can be good for one family’s finances. When hundreds of millions do it together, it can starve the global economy.

Weak growth around the world means wages in the United States, which aren’t keeping up with inflation, will continue to rise slowly. Record unemployment in parts of Europe, higher than 35 percent among youth in several countries, won’t fall quickly. Another wave of Chinese, Brazilians and Indians rising into the middle class, as hundreds of millions did during the boom years last decade, is unlikely.

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“Money is a matter of functions four, a medium, a measure, a standard, a store.” He repeated that four times like poetry. “Six Characters in Money: Portable – Durable – Divisible – Uniformity – Limited Supply – Acceptability.” — CHURCH 10●19●62 (Vol 1) 978-0-557-08387-9 page 110

Sorry, but “cash” isn’t money these days. While it is a “medium of exchange” and “measure”, it fails as a “standard” or “store”.

And maybe if it fails “standard”, it may be failing “measure”.

OK, it does serve as a “medium of exchange”. 

But that’s it.

Note that in disasters and civil unrest, there is no exchange.

And, the TEOTWAWKI (The End Of The World As We Know It) preppers point out you can eat money. But you can make an expensive fire and poor quality toilet paper out of it.

Let’s tackle “standard” next. What is a “dollar”? It’s got no measure. It’s purchasing power decreases year over year due to inflation. An ounce, a gallon, a meter — they don’t change.

Back to “measure”, a 100 is still a 100. But it’s like baseball and football records. How do we measure if every year they change the definition of distance?

And cash is certainly not a “store”. The “rats” are eating the “seed corn” of value.

Argh!

I suggest the preppers’ mantra — beans, bullets, bandaids, and then bullion!

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