Gold’s monetary features:
Eroding value of currencies:
Gold is the perfect hedge for the eroding value of currencies. Most people don’t own physical gold. They don’t view it as a long-term investment or even as a store of wealth. They’re told it is useless and has no “intrinsic value” — a questionable statement at best. And so, except for a relatively small group of investors who happen to know better, mainstream economists are able to perpetuate the fallacy that gold is a useless asset.
“Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium.” — Murray N. Rothbard (1926 – 1995) an American, who was an Austrian School economist, historian, and political theorist.
End of unbacked paper money:
Paper money is a PROMISE that something of value is tied to it, like gold. But the gold standard was left behind decades ago. Today the U.S. dollar – and all other currencies – is only as good as the faith people have in it.
When faith is lost, problems begin to take care of themselves, in one of two ways:
- A quick, sharp depression wipes out the value of credit claims. Borrowers go broke. Bonds expire worthless. Companies declare bankruptcy. The whole capital structure tends to get marked down as debts are written off and financial assets of all kinds lose their value.
- Or, under pressure, the central bankers print money. Debts are diminished as the currency loses its value. The zombies still get money, but it is worth less. Inflation adjustments cannot keep up with high rates of inflation. Pensions, prices, and promises fade.
Either way, accounts are wiped clean and a new cycle can start.
Gold will be the rescuer:
The first question to be answered is: Is gold a commodity, an investment, or money? Gold is variable in its nature depending on the circumstances, and right now it is making a big change from one of its features into another.
When gold behave as a commodity it tracks the ups and downs of indices. When viewed as safe haven investment, it competes with stocks and bonds. And when it takes on the role of money the world is in turmoil, then gold performs its duty as most stable long-term form of money, as is proven by its five thousand-years of history. When every currency is in their final stage of debasement, like now, gold and also silver employ their monetary properties. Today this powerful trend is growing, while nothing is in its way to avoid this. Prepare for a chain reaction collapses that are going to wipe out everyone.
Nowadays, gold is behaving more like money than as a commodity or investment. It is competing with central banks’ fiat moneys for asset allocations by global investors. That’s a big deal because it shows that citizens around the world are starting to lose confidence in other forms of money such as dollars, Yuan, yen, euros and sterling.
This is great news for those with price exposure to gold. The price of gold in many currencies is going up as confidence in those other currencies goes down. Confidence in currencies is dropping because investors are losing faith in the central banks that print them out of nothing. For the first time since 2008, it looks like central banks are losing control of the global financial system. Gold does not have, or need a central bank. Gold always encourage confidence because it is scarce, tested by time and has no credit risk.
Gold’s role as money is difficult for investors to grasp. One criticism of gold is that is has no yield. Gold has no yield because money has no yield. In order to get yield, you have to take risks. But remember:
“Gold is money, everything else is credit!”
Bank deposits, and so-called money market funds have yield, but they are not money. A bank deposit is subject to default by the bank as recently was seen in Greece and Cyprus. A money market fund is subject to collapse of the fund itself as was seen in 2008. Gold does not have these risks. Lost confidence in fiat money starts slowly then builds rapidly to an upsurge. The end result is panic buying of gold and a super-rise in price. Be warned; this will be the biggest wealth transfer in history. The money being lost will be from those holding paper assets, while those holding real assets like gold and silver will win what is lost.
Gold moved from $35 per ounce in August 1971 to $800 per ounce in January 1980. That’s a 2,200% gain in less than nine years. The world may be looking at the early stages of a similar super-rise that could take gold to $10,000 per ounce or higher. Soon in this new surge, most won’t be able to get any gold at all, as no one is willing to sell. So, gold will be in short supply that only central banks, giant hedge funds, and billionaires will be able to get their hands on any. The mint and local dealers will be sold out. That physical shortage will make the price super-rise even more extreme than in 1980.
The time to buy gold is NOW, before the price rises and before supplies dry up.
Gold’s monetary features:
What are the signs to see that gold is behaving like money? For starters, the gold price action has diverged from other commodities’ price action. This divergence first appeared in late 2014, but has become more pronounced in recent months.
Gold observers know that gold measured in dollars is down significantly from its all-time high in 2011. COMEX gold peaked at $1,876 per ounce on Sept. 2, 2011. And recently traded as low as $1,056 per ounce on Nov. 27, 2015. That’s a 44% decline in just over four years. Yet in the same time period, broad-based commodities indices fell even more. One major commodities index fell 53%.
The contrast between the behaviour of gold and commodities is even more extreme when the time period is reduced.
From June 20, 2014 to Jan. 15, 2016, the broad-based commodity index fell 63%, while gold fell only 17%. The recent collapse in commodity prices was almost four times greater than the decline in gold prices. From mid-January to mid-February 2016, gold rallied 14% while commodities still languished near five-year lows.
Gold is a global currency, right now; investors around the world are losing confidence in Chinese Yuan, Saudi Rials, South African Rand, Russian Rubles and a long-list of other emerging market currencies. Investor preferences are shifting toward dollars and gold. This explains gold’s outperformance over the rest of the commodities when measured in dollars.
Interestingly when the price of gold is measured not in dollars, but in other currencies the percentage price increase in gold is even more impressive because those currencies have all declined lately against the dollar.
Important to notice in this respect is that the U.S. dollar lost around 33% of its value between 2000 and 2012. This decline is because the world is waking up to the awful situation America has borrowed and spent its way into. And once this decline is brought into its true perspective, during the same time, gold climbed from less than $300 per ounce to more than $1,790 an ounce.
When is understood that gold is money, and competes with other forms of money in a clutter of cross-rates with no anchor, then is known why the monetary system is unstable, and only gold is able to provide strength.
It’s important to see that the dollar is just one form of money, and not necessarily the best for all investors in all circumstances. Gold is a strong competitor in the horse race among various forms of money. This is the reason why gold recently changed its function into money.
A 10-fold increase is envisioned from current prices, as the silver price skyrockets and the silver/ gold ratio, which is currently at very elevated level of over 80 to 1, will return to historic lows, around 10 to 1 or 15 to 1. “Based on that premise, don’t think one can buy enough physical silver at these prices, and don’t worry about any short-term pullbacks.
Just get in there and buy what silver you can while you can.” Gold and silver are cash; liquidity and they can be used for barter. Precious metals will not only maintain purchasing power, like they have done for thousands of years, but also will in the coming crisis, they will appreciate in real terms a lot faster than anyone can imagine. Precious metals will begin acceleration to the upside in the next few weeks. And that could happen so fast that most investors will be left behind waiting for another pullback.
Gold versus negative interest rates:
Two out of three leading central banks – the BoJ and the ECB – have implemented negative-interest-rate policies that initiated a discussing at the FED to follow such a policy.
The question now is how high the price of gold and silver will go if all three major central banks institute negative interest rates? Where will people put their savings if keeping money in the bank actually costs them money every year? That makes gold and silver the perfect underground currency. – How will the global economy function if there’s not a safe world reserve currency in which to store value and exchange trade receipts? Nobody knows. Nobody has any idea at all; while the solution is quite simple, back all world currencies by gold or silver at a price that equals most or all of the debt.
In New York are rumors heard about a plan to use the gold in Fort Knox – if still there (?) – to mint a new gold dollar, while retiring a large amount of Treasury debt. It would only be done in a currency emergency to regain control of a plummeting U.S. dollar.
These types of discussions are happening because nobody up in the hierarchy knows how central banks are going to manage the ongoing global currency war and the crushing debt loads that are strangling all of the major western economies.
The world is approaching a major inflection point as the world’s entire paper currency regime is likely falling apart.
If you don’t have at least 5% of your wealth in precious metals – and you’re not buying because you’re waiting for a correction – take another look at the chart. This is the correction. It’s time to buy gold and silver. Silver is very cheap relative to gold.
Some readers on this forum continually express their disbelieve in silver as a monetary vehicle. The ratio today indicates gold is currently extremely overvalued compared to silver. That means silver likely has a strong upside.
But ultimately, investors should focus on the long-term value of silver. Like gold, silver is “real money,” not fiat currency. While its price may fluctuate in the short-term, it has historically held its value over time. Silver also provides a means to barter. This could prove extremely important in the next crisis, as the Greeks found out earlier on. The bottom line is that while gold is flashing intense right now, there are also good reasons to take a serious look at silver’s shining capability.
Worldwide PANIC Has Begun: Gold Target: $10,000! – Jim Willie
Is Deutsche Bank the catalyst that takes down the banking system and sends gold north of $10,000/oz. and silver skyrocketing towards $500!
The Gold price will find its true value and price over $10,000 per ounce. The Silver price will find its true value and price over $ 500 per ounce. In reaching these levels, the ratio will return to the 20-1 range.
The major upcoming events will be exciting to watch unfold, one after the other, in an inevitable sequence away from fascism and concentrated uni-polar power, with a strong movement toward freedom and equitable systems with distributed power. The steps will each involve a quantum jump in the Gold & Silver prices. The process will take a few years, but might be breath-taking in speed once the process is begun.
The steps involve:
- The critical mass of rejected US T-Bills in trade settlement, citing its corrupt roots and illicit monetary policy as foundation
- The return to the Gold Trade Standard and introduction of Gold Trade Notes as letters of credit, in replacement for a fair tangible payment system (no more IOU coupons)
- The recapitalisation of the global banking system with Gold as primary reserve asset, so as to relieve the grotesque stagnation, insolvency, and dysfunction
- The seeking of equilibrium in Supply versus Demand in the new fair uninhibited market, with exclusive control removed from London and New York, and placed elsewhere like in Shanghai, Hong Kong, Dubai, and Singapore.
- The seeding of BRICS gold & silver backed currencies from participating nations within the Alliance (likely several with slight variation in features)
- The re-opening of the gold mine industry with some blue sky, and relief from the Evergreen element at Barrick
- The remedy toward owners (RKM) of over 40,000 tons of re-hypothecated and stolen gold in bullion banks across the world (primarily in Switzerland.
The man who warned years ago that when Deutsche Bank goes under it will be Lehman X 5 warns the END GAME that will Trigger Global Gold Revaluation HAS BEGUN:
Gold is Running Out!
What is about to happen to the supply and price of physical in the end game of record global demand and dwindling liquidity? Listen to the opinion of the international acclaimed physical expert, here.
THE FINAL COUNTDOWN | 2016 PDAC Presentation
Bo Polny calculates the future to know when the collapse will happen, and gold and silver will start their meteoric rise in price to an all time high before the end of this year!. Gold bottomed out on December 3, 2015 at $ 1045, and its price breakout started January 29, 2016. The crash of the century takes place in 2016, and has started now, its only days or weeks away. Have you insured your wealth?