AuthorTopic: Gold & Silver News  (Read 388911 times)

Offline Golden Oxen

  • Golden Oxen
  • Moderator
  • Master Chef
  • *****
  • Posts: 11997
    • View Profile
Re: Gold & Silver News - When the Freaks Run Wild
« Reply #2400 on: August 06, 2018, 03:28:52 PM »

   

When the Freaks Run Wild

The unpleasant sight of a physical absurdity is both grotesque and interesting.  Only the most disciplined individual can resist an extra peek at a three-legged hunch back with face tattoos.  The disfigurement has the odd effect of turning the stomach and twisting the mind in unison.

After repeated exposure, however, the shock of an absurdity is reduced to that of vanilla ice cream.  Somehow, even the extremely preposterous becomes commonplace after a while.  For example, a panhandling Batman doesn’t get a second look in Hollywood.  That persona comes a dime a dozen.

Yet just because an absurdity’s been watered down to the seemingly ordinary, doesn’t mean it has become any less ridiculous.  Rather, the viewer has become conditioned to the absurdity.  The abnormal has been calibrated to a feigning normal.

Extreme market intervention by central planners has been going on for so long that the distorted conditions it produces are considered normal.  The Cyclically Adjusted Price Earnings Ratio (CAPE Ratio) of the S&P 500 is currently more than double its historic average.  But no one, save a few grumpy old farts, are alarmed by this.  Like a freak at a freak show, it all seems perfectly normal.

Diapers, soda pop, beer, chocolate, and chicken, are all rising in price.  At the same time, the federal government is aiming for a $1 trillion deficit.  Still, U.S. consumers haven’t been this fired up about the economy since February 2001.  You see, in the year 2018, spending more and getting less is perfectly normal.

Cancer and Crackpots

The destructive absurdity of modern fiscal and monetary policy is only matched in nature by the insidious replication of cancer cells.  As these cancerous cells are replicated and divided, and then replicated and divided again and again, their uncontrollable growth flows into lumps and tumors.  Sometimes these cancerous growths go undetected for years, as if the body is perfectly normal.

The cancer cells also sometimes move throughout the lymphatic system and start growing elsewhere in the body.  The body’s cells defect in a way that brings about a wretched cycle of self-destruction.  The cancer, in other words, is an absurdity.  Yet once set in motion, it’s difficult for the body to stop.

Today’s money is also an absurdity.  Yet only a small fraction of the population bothers to understand this.  Moreover, there’s hardly a soul among us with living memory of a day and age when money had stored value.  In contrast, today’s money is derived from debt.  It’s not real money.  It’s fake – pretend – money.

Like replicating cancer cells, unbacked, inconvertible legal tender, grows without limits.  So, too, its over issuance has destructive consequences.  Yet most don’t seem to notice with any clear understanding.

This perpetual money debasement has been going on for so long it’s considered perfectly normal.  No one, save a few grumpy old farts, gives a lick.  Instead, crackpot economic theories, espousing the virtues of 2 percent inflation, are parroted without thought.

The mantra, as absurd as it may be, is that 2 percent inflation is needed to avoid falling into something called a “liquidity trap.”  How 2 percent inflation protects the economy from becoming ensnared is unclear.  But it may have something to do with a continual process of easing the debt burden via currency debasement.

Where this all leads is a thought provoking topic.  In case you missed it, this week offered an ever so slight gander at an absolute freak show…if only for a brief moment.
When the Freaks Run Wild

The preeminent pioneer of modern day fiscal and monetary absurdity is the Bank of Japan (BOJ).  In fact, the BOJ has been executing policies of mass money debasement for several decades.  Their primary objective’s been to suspend the deflationary effects that followed the bursting of a cheap credit induced asset bubble that popped nearly 30 years ago.

The BOJ blazed the trail of a variety of absurdities, including quantitative easing and negative interest rates.  They also perfected the art and science of direct purchases of Japanese stocks via exchange traded funds.  But while the BOJ’s efforts have not succeeded at stimulating Japan’s economy, they have succeeded in attaining several remarkable feats.

Japan’s government debt had exceeded 250 percent of the country’s gross domestic product (GDP).  What’s more, the BOJ owns over 40 percent of the Japanese government bond market.  Of course, the BOJ purchased this massive pile of government bonds with money they, in effect, create from thin air.  These figures, no doubt, are absurdities.

Without question, the central planners at the BOJ run a highly managed and controlled monetary system.  Hardly a hint of a free market remains within the BOJ’s new ‘yield curve control program.’  But that doesn’t mean things aren’t completely aghast under its tight cover.

Earlier this week the BOJ’s central planners ever so slightly opened the peek hole to its monetary policy freak show tent.  The central bank doubled the cap that it will allow the yield on 10-year Japanese Government Bonds (JGBs) to rise from 0.1 percent to 0.2 percent.

Following the move, JGBs promptly sold off.  Yields spiked up 6 basis points to 0.12 percent – eclipsing the old 0.1 percent cap on the first trading day after it was raised.

As context, given the BOJ’s extreme monetary intervention over the years, we venture a guess that yields of 0.1 percent and even 0.2 percent on 10-year JGBs are absolute absurdities.  But what do we know?

Should yields violently test the new 0.2 percent cap will the BOJ be able to slam the lid shut?  Or will they lose control as the freaks run wild?

Certainly, the answer will be revealed in due time.

Sincerely,

MN Gordon
for Economic Prism

https://economicprism.com/when-the-freaks-run-wild/  :icon_study: :icon_study:

                         


Offline Golden Oxen

  • Golden Oxen
  • Moderator
  • Master Chef
  • *****
  • Posts: 11997
    • View Profile
Re: Gold & Silver News
« Reply #2401 on: August 10, 2018, 08:31:30 PM »
Why do I see big trouble ahead?  :icon_scratch: :-\


                                 

Offline Golden Oxen

  • Golden Oxen
  • Moderator
  • Master Chef
  • *****
  • Posts: 11997
    • View Profile
Re: Gold & Silver News
« Reply #2402 on: August 13, 2018, 07:06:35 AM »
Dear Readers, it is my current opinion that this current so called Great Boom may soon end in a Great Bang if history is any guide. Have been lightening my equity positions and adding to my precious metals ones today. As always do your own due diligence, hopefully the market will make a fool of me again as it often does when bearishness calls me to action. 

                     

http://www.acting-man.com/?p=53262 :icon_study: :icon_study: :icon_study:

         
                                   

                                             China Taiwan 1984 Year of the OX Stamp Set
                                         

Offline azozeo

  • Sous Chef
  • ****
  • Posts: 6625
    • View Profile
Gold & Silver News - Golden Library Discovered in Ecuadorian caves
« Reply #2403 on: August 20, 2018, 02:03:56 PM »
<a href="http://www.youtube.com/v/UkN4qamIXeQ&fs=1" target="_blank" class="new_win">http://www.youtube.com/v/UkN4qamIXeQ&fs=1</a>
« Last Edit: August 20, 2018, 02:06:35 PM by azozeo »
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline Surly1

  • Administrator
  • Master Chef
  • *****
  • Posts: 13906
    • View Profile
    • Doomstead Diner
Re: Gold & Silver News - Golden Library Discovered in Ecuadorian caves
« Reply #2404 on: August 20, 2018, 07:07:23 PM »
<a href="http://www.youtube.com/v/UkN4qamIXeQ&fs=1" target="_blank" class="new_win">http://www.youtube.com/v/UkN4qamIXeQ&fs=1</a>

I recall reading a book about Fr. Crespi and this very thing many years ago. The author made a very compelling case. There are so many historical anomalies tat hve been discovered, from Father Crespi's mysterious "artifact" collection to the Bimini Road in the Bahamas. To say nothing of the giant stone structures elsewhere in South Americ featuring fitted stones of exacting tolerances, and carvings of animals known to have been extinct for over 10,000 years...

It doesn't take much imagination to infer that there was a much older "Lost Civilization" that thrived in the Caribbean and South America. So old that the evidence is barely visible. The underlying mystery of it all captivates the imagination.

People still revisit this subjeect-- there are several articles on "Ancient Origins." But the original finds have been hidden away and the record so bowdlerized and encrusted with crap that the truth will be almost impossible to find.  I find this subject intriguing and am baffled that Fr. Crespi's treasures were never formally catalogued and examined by science.  Some stories blame the usual suspect, the Vatican. Supposedly Crespi's finds are all now locked away in the hands of the Catholic Church. I doubt it, but then I doubt almost everything-- except that carved and standing stones often tell a story that we have to work really hard to ignore.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline azozeo

  • Sous Chef
  • ****
  • Posts: 6625
    • View Profile
Re: Gold & Silver News
« Reply #2405 on: August 21, 2018, 08:46:43 AM »
This is the 1st time I have seen this discovery.
I'm with you, there is a tremendous amount of locked away knowledge left to be revealed.
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline Golden Oxen

  • Golden Oxen
  • Moderator
  • Master Chef
  • *****
  • Posts: 11997
    • View Profile
Re: Gold & Silver News - The Mighty Dollar
« Reply #2406 on: August 27, 2018, 07:47:20 PM »
This is a chart of the Mighty dollar for the last 40 years that we hear so much about from the Dim.

The reserve currency of the world they think, The almighty buck. Note as well that this remarkable and almighty currency is being pictured primarily here against the Japanese Yen and Euro. Yet the Dim and detractors of Gold exclaim it's great might and status daily. Marvel along with them Dear readers at the world's reserve currency and don't piss your pants laughing.           

Chart posted courtesy of one of my favorite economists Willem Middelkoop. 

                             


                                               
                          U.S. Mint 1/2 oz Gold Commemorative Arts Medal John Steinbeck               


                                               





Offline monsta666

  • Administrator
  • Sous Chef
  • *****
  • Posts: 1377
    • View Profile
Re: Gold & Silver News - The Mighty Dollar
« Reply #2407 on: August 28, 2018, 04:04:33 AM »
This is a chart of the Mighty dollar for the last 40 years that we hear so much about from the Dim.

The reserve currency of the world they think, The almighty buck. Note as well that this remarkable and almighty currency is being pictured primarily here against the Japanese Yen and Euro. Yet the Dim and detractors of Gold exclaim it's great might and status daily. Marvel along with them Dear readers at the world's reserve currency and don't piss your pants laughing.

The dollar maybe going down over 40 years but often it is a matter of relativity. Yes it has found itself more or less in parity against the major currencies and on a domestic level the spending power of the dollar has declined but how has the dollar performed when compared to other currencies? The big power and pull for the dollar comes from the fact it acts as a very good medium of exchange. If I have a US dollar it is not just good for using in the US but it can also act as a good currency in other countries particularly ones that are currently experiencing an economic crisis (the list of crisis ridden countries seems to grow on a yearly basis). When I go to Sudan later this year the US dollar is sought after and I can get a lot of local currency, considerably more than even two years ago. What can gold get me there? It is not easily exchangeable because demand is primarily centered on paper currencies and not commodities.

Besides that so there is the idea that having a stable currency is a good thing and for most modern economies having an economy with no inflation is NOT a good thing. The reason economists aim for an inflation rate of around 2% is it encourages people to invest their money into company stock/bonds, real estate investment etc. all of which will ultimately increase the rate of innovation. It also assists in reducing the income for legacy industries as it is hard to decrease wages outright. A theft through stealth if you will. A stable currency supply as many gold supporters advocates creates additional problems as it will result in the scenario of deflation. Deflation will happen because whilst the money supply is constant the number of goods and services will generally increase. This leads to costs across the board declining which may sound great for the average consumer but has the problem that debt becomes more expensive and people will stop spending because they are waiting for their money to gain more in value. This dynamic can easily result in the country falling into a deflationary trap (like Japan) that is hard to get out of and this trap can increase the risk of recessions occurring. In the worst case scenario this can even result in state bankruptcy.

In any case the claim that using gold or a gold based currency will lead to stable prices or stable economies sounds like a plausible theory but it is not supported by any evidence. If you look at the 19th century when gold backed currencies were at their most influential there was still major recessions, depressions and large currency fluctuations so it is not a panacea for the current economic woes. More important than that though is if the US didn't abandon the gold standard then the country would have gone bankrupt. No politician will want to lead their country into bankruptcy. In terms of popularity recessions are like kryptonite. It will kill any incumbent in power. Better to go to war and blame the economic woes on the war effort than to have an outright recession (wars tend to boost ratings for the current party in power).

Online Eddie

  • Administrator
  • Master Chef
  • *****
  • Posts: 15482
    • View Profile
Re: Gold & Silver News
« Reply #2408 on: August 28, 2018, 06:22:50 AM »
Like the emerging nations, my debt is in dollars, and so I have to pay in dollars. Cheaper dollars means easier payments. Bring it on.

You can butt heads with reality or you can ride the wave. Your choice.

No doubt the longer term trend is down and down, for the USD. It's the short term reversals (which can be brutal) that tend to wipe people out, when the dollar is surging, credit is tightening, and asset classes of various types take a hit. The secret is to avoid being over-leveraged.

But being over-leveraged is human nature, so it happens again and again. My wife wonders why I'm not loading the boat with Tesla stock. Typical thinking, not that unusual at all, although we here cringe when we hear that kind of talk.



What makes the desert beautiful is that somewhere it hides a well.

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 33274
    • View Profile
Re: Gold & Silver News
« Reply #2409 on: August 28, 2018, 07:00:47 AM »

No doubt the longer term trend is down and down, for the USD.

Down against what?  The Pound? The Euro?  The Yen? The Yuan?  The Rouble?

RE
SAVE AS MANY AS YOU CAN

Online Eddie

  • Administrator
  • Master Chef
  • *****
  • Posts: 15482
    • View Profile
Re: Gold & Silver News
« Reply #2410 on: August 28, 2018, 07:54:43 AM »
Down in terms of buying power, which is the only thing that matters to those of us who are not economists. Money is best measured in what it will buy at the store. That's the only metric that I pay much attention to.....
What makes the desert beautiful is that somewhere it hides a well.

Offline Golden Oxen

  • Golden Oxen
  • Moderator
  • Master Chef
  • *****
  • Posts: 11997
    • View Profile
Re: Gold & Silver News
« Reply #2411 on: September 02, 2018, 11:36:58 AM »
Quote
Eddie Says, Peak platinum might come well before peak gold.

Peak is not a word that is applicable to Gold.

Gold is not a commodity, it is money.

All the Gold that has been mined is in existence and hoarded, it is not used like commodities, it is saved, treasured, made into priceless art objects by artisans, inert and everlasting.

Few understand the uniqueness of gold and it's qualities which set it apart from all others and why the billions of citizens who came before us handed it to us as the worlds money.

Please, never confuse it with commodity metals that lack it's uniqueness and history.

It didn't come four thousand years for nothing.   


                                   

                              Canada  The Red River Metis Ox & Cart Stamp


Online Eddie

  • Administrator
  • Master Chef
  • *****
  • Posts: 15482
    • View Profile
Re: Gold & Silver News
« Reply #2412 on: September 02, 2018, 11:48:06 AM »
Peak mine production then. It is not an inexhaustible resource.

It still obeys the law of supply and demand, which is one reason why it fluctuates against various currencies so much. It is not the monolithic thing, always holding EXACTLY the same value, while other things vary, that goldbugs claim.

And when it is all dug out of the ground, I expect all that hoarded gold (actually a small amount is consumed too, just not much) to go up in price against other things, not down. Scarcity of gold is a market force.
What makes the desert beautiful is that somewhere it hides a well.

Offline Golden Oxen

  • Golden Oxen
  • Moderator
  • Master Chef
  • *****
  • Posts: 11997
    • View Profile
Re: Gold & Silver News - Apocalypse, Or Not? - Alasdair
« Reply #2413 on: September 06, 2018, 09:06:38 AM »
My fellow Gold bugs this broad and long term overview by Alasdair is a must read. It is lengthy and will be as timely six months from now as it is today. Set it aside if your busy but kindly read it at your leisure.                                                                                                          Regards, GO



Apocalypse, Or Not?

Alasdair Macleod


Members of the American libertarian movement, particularly extremist preppers, are often associated with a belief that a complete breakdown in society is the only outcome from government economic policies and will lead to complete social disintegration. At the centre of their concerns is monetary destruction, with other issues, such as the erosion of personal freedom and the right to bear arms, important but peripheral. They cite history, particularly the hyperinflationary collapses, from Rome to Zimbabwe, and now Venezuela. They draw on Austrian economic theory, which fans their dislike of government and their expectation of total chaos.

Properly reasoned economic theory certainly reduces the science to one of black and white conclusions, which suits conclusion-jumpers. But the whole point of it is to explain society’s errors, so that they may be corrected. It is only by understanding the errors of state intervention and socialism, both communistic and fascist, that solutions can be found. Solutions then need to be applied, not taken into a mountain or forest retreat never to be implemented.

The real world does not work on black and white economic theories. It progresses along a muddled course, torn between statist mistakes and society’s unending patience with government intervention. Governments are the source of all wars and wealth destruction, but societies tolerate them. Philosophers have argued over this from Plato versus Aristotle onwards, and we are still here, two and a half millennia later, chewing over the same bones.

History records our philosophical chewing, and Man’s continuing conflict with and tolerances of the state. It records the rise and fall of kings, emperors, dictators and governments. Hermits and other preppers come and go, either unrecorded or, like Saint Simeon Stylites, noted as little more than historical footnotes. To future generations, prepping will almost certainly be a bygone curiosity, and humanity will continue despite government suppression.

This article is an attempt to rationalise an apparently apocalyptic future into how it is likely to evolve over the coming years. In the absence of a nuclear Armageddon, what we fear, more than anything else, is actually uncertainty and change.
Out with the old


Uncertainty and change are with us all the time. In a truly free market economy we embrace it because they are driven by our personal economic interests, and it is a continual process. But the desire for change is driven by us only in our role as consumers; as workers or businessmen facing competition for our existing labour and skills we tend to resist it. It is that side of us that a government taps into.

Modern governments, except where they are overtly mercantilist, don’t do change. Their support, indeed their reason for being, is based on anti-progressive lobbying from both establishment businesses and socialistic pressure groups. Government economists do not recognise progress, living in a stagnant world of historical statistics. Progressive change interferes with their certainties and is therefore never properly considered.

This is what the welfare states in the West have become, societies managed by anti-progressive governments, nominally responsible to their electorates, but in fact with a life of their own. The interests of governments have long since departed from those of consumers and increasingly conflict with their needs and wants. It is a process that has evolved to the current position over the last hundred years, when governments had understood their role should be strictly limited to identifiable national interests, when government employees deferred to the general public as their civil servants, and importantly, when the national currency was based on money chosen collectively by individuals.

It is therefore a much larger issue than just money. It is about the direction of political travel. For individuals it has become a prolonged road to serfdom, where power and personal freedom have been sequestered by the government from the consumer. The consumer has lost the right to keep his own income, and his preferences are now regarded by the state as subject to its control, to plan and dispose of as it sees fit.

The so-called free world was first ruled by the British and then by the Americans. The roots of both regimes were trade, protected by a government enforcing the rules of property ownership, the certainties of contract law and laws that protected individuals in their interpersonal relationships. As law-makers, governments now legislate to extend control over their peoples. And now the American government, in the name of American business, is even directing its own citizens not to buy from foreigners and is taxing them if they do so.

It is not the first time the state has interfered with our preferences in this way. The lurch into protectionism that led to the Smoot-Hawley Tariff Act of 1930 was one example, and the nationalisation policies of Britain’s post-war government another. These were errors from which a retreat proved possible. Today, the West’s democratic system has reached a point from which no ordered retreat back to free markets, to personal freedom and to governments which serve the people and not themselves, seems possible. Change will only come from the ultimate collapse of a system that promotes interests over freedom.
Transiting to the new

Western doomsters, seeing the contradictions around them and armed with little more than libertarian ideals, believe the world is coming to an impasse. They know it will end badly, and America’s resistance to decline by retreating into yet greater suppression of freedom confirms this view. The mistake is to assume nothing will replace the disintegration of the American state.

Money is the talisman for the doomsters’ vision. The destruction of paper currencies is inevitable, they say. Given these dissenters are very much American-based, their approbation is reserved for the dollar. But we should all take notice because the dollar is the reserve currency. That is to say, we measure our own currencies primarily against the dollar, and we use the dollar to settle our international trade. Our central banks tend to the view that they should generally manage their currencies in dollar terms. Therefore, if the dollar falls, we should all fall with it.

After a temporary bout of strength, concerns that the dollar will enter a terminal decline are spreading in some quarters. There are those who point to the seemingly limitless accumulation of unproductive debt, and the fact that the lessons from succeeding credit crises are always ignored. Today, the chatter is of a global monetary reset, with proposed solutions incorporating debt write-offs, the mobilisation of super-monies such as SDRs, and monetary applications of blockchain technology. The libertarians talk of total monetary failure and of gold, somehow rising from the ashes of the dollar’s immolation. All these solutions ignore wider issues. For the fact of the matter is we face the end of an empire. The American global empire is being superseded by an Asian phoenix.

The loss of influence to rivals is always painful. America’s geopolitical strategists feel acutely threatened by the Russian-Chinese partnership. America’s backing for Georgia in 2008, stimulating colour revolutions in Ukraine, and a proxy war over Syria have all failed to destabilise Russia. Afghanistan and Iran are works in progress, or rather non-progress. In the past, America could rely on unwavering support from her NATO allies. One of them, Turkey, has now all but defected, and the Europeans are breaking ranks on sanctions over Iran and Russian energy imports.

American trade tariffs against China must also be regarded in this light. Recent moves to retain influence in key African nations as well are too late. China is already the largest infrastructure provider to sub-Saharan Africa by far, and she is not making the mistake of just giving money to African politicians. The politicians get their money from extended aid and new donations dressed up as trade deals from America and Britain, as they always have. The West cannot even buy respect, let alone influence, because the Chinese are doing the real work.

America never had very much influence in sub-Saharan Africa anyway. Instead, she focused on North Africa and the Middle East. Regimes from Iraq to Libya have been changed at America’s behest.

It was the agreement with Saudi Arabia in 1974 that oil would be sold exclusively for dollars that legitimised the dollar as the global trade and pricing currency. When Iraq proposed to sell oil for euros, it was invaded, and Saddam Hussein deposed and executed. When Libya proposed a new central African currency based on gold, civil war suddenly broke out and Ghadaffy was hounded and shot by a mob. The message was simple: don’t mess with America and the dollar.

This has now changed. China is buying oil for yuan, and there’s nothing America can do about it. America has tried to destabilise Russia with dollar sanctions, unsuccessfully. President Trump has leant on Angela Merkle not to do business with Russia and Iran. He has also threatened this NATO ally with trade tariffs. The message to Germany is clear, the alliance with America no longer applies. Consequently, Germany is quietly turning her back on America and continuing to trade with Russia. The old threats just don’t work anymore.

China and Russia have long planned to jointly lead Asia and Eastern Europe into a new economic bloc. The Shanghai Cooperation Organisation was set up firstly to coordinate security and anti-terrorist activities, but this morphed into unifying Asian trade. China is building the infrastructure to make the Asian continent the most powerful economic unit ever seen. No doubt she will rebuild Syria when the Americans have left. No wonder America’s strategic planners are worried.
Post-apocalypse currencies

In 1983, China enacted the Regulations of the PRC on the Control of Gold and Silver, giving the People’s Bank of China the responsibility for all the nation’s gold and silver resources under Article 4 of those regulations. In 2002, the Shanghai Gold Exchange was launched by the PBOC and private individuals were permitted to own gold. It is clear that the PBOC over two decades had accumulated sufficient gold to then allow ordinary citizens to do the same. China even advertised the merits of gold ownership, encouraging individuals to accumulate gold. We have no knowing how much gold the Chinese state had accumulated, but given contemporary gold prices, inward dollar flows in the 1980s and trade surpluses thereafter, China could easily have accumulated a strategic reserve of 20,000 tonnes before the public was authorised to acquire gold. We may never know the true figure. We do know that in addition to the state’s accumulation, some 17,000 tonnes have been withdrawn from SGE vaults by the general public.

The Russian government has belatedly begun to accumulate gold reserves, and has now declared reserves of 2,170 tonnes, and importantly, has reduced its dollar reserves substantially to do so. Even India, a staunchly Keynesian state, has finally started accumulating additional gold reserves, having repeatedly tried and failed to encourage its own people to transfer gold to the government. Its nationals have probably accumulated over 10,000 tonnes since the Gold Control Act was repealed in 1990. Other Asian states from Turkey to Mongolia have all been building official gold reserves as well.

There can be no doubt that Asians and their governments not only hold the traditional view that gold is the ultimate money, but their coordinated physical accumulation is strong circumstantial evidence that gold will have an official monetary role in future. In this context, even Germany’s gold policy is interesting. We know the Bundesbank traditionally retains a strong anti-inflation bias and is unlikely to view the ECB’s management of the euro with favour. Furthermore, Germany decided to repatriate some of her gold reserves held at the New York Fed. After an embarrassing row with the US authorities, the gold sought was eventually returned. Various motives were ascribed to this move by Germany, but perhaps the most interesting possibility – which was never reported – is that Germany’s deep state was looking to the East.

Other European nations, particularly France and Italy, retain substantial gold reserves, which places them in a good position to adapt to a Eurasian world without the dollar. We can see that a future without it, and without other fiat currencies backed by nothing other than dollar reserves is certainly possible. It will involve enormous challenges, not least for governments relying on inflationary financing. To secure sound money, governments will be forced to discard socialism and embrace freer markets to bring their own financial demands under control. Those that don’t could rapidly descend into an Argentinian or even a Venezuelan monetary hell.

The US, which still records the largest official reserves, can also stabilise the dollar by offering gold backing and convertibility. To do so would require a significantly higher gold price, as indeed would be the situation for China’s yuan. But it also requires an enormous leap in official imagination, not only concerning gold’s reintroduction as backing for the dollar, but over America’s imperial role. It requires an acceptance that America can never win the geopolitical war with China and Russia, and must accept a diminished global status, just as Britain did when she rapidly shed her colonies in the 1960s.

It is hard to see America giving up her hegemony willingly, and therefore it will be down to events. America and other welfare states also face a transition into more free-market oriented economies with considerably less state intervention. That will not be easy either. Furthermore, there is no guarantee Russia and China will take on the mantle of world domination successfully, but we can be reasonably certain they have planned for this eventuality for a long time.

In the absence of a transformation towards sound money, the loss of purchasing power for pure fiat money will not be a smooth process. The next credit crisis, itself an event of which we can be sure, will almost certainly be met with lower interest rates and more quantitative easing, designed to support the banks with new money and to finance rocketing government deficits. State-issued currencies are bound to accelerate in their decline following this renewed inflation of supply, but for currencies to really collapse requires the public to change its preferences in favour of goods and totally against fiat money. In practice, the public tends to hold onto their belief in state money longer than might seem reasonable, in the hope that its purchasing power will stabilise.

It will be at the next credit crisis, if not before, that China and Russia will reveal their plans to protect their currencies from a financial and currency collapse in the West.
Conclusion

The prospects for fiat currencies and welfare states are not good, but it is a mistake to think homo economicus will sink with them. The views of the super-bears appear to be fundamentally parochial, particularly among the preppers in America. Instead of society’s destruction, we face a period of seismic change, notably the rise of Asia as the centre for global economic power.

Asia’s two major currencies, the yuan and the rouble, will not survive in their current form. They will have to be backed by gold, but fortunately for the world this has long been China’s backstop plan, and Russia is now belatedly acquiring the gold necessary to back the rouble as well. Depending how China and Russia go about it, this could easily be achieved with current levels of gold backing and a somewhat higher gold price.

America could save the dollar by following suit. She probably has sufficient gold reserves, but to do so requires her to abandon almost everything the government and the Fed currently believe in and is therefore only likely to happen under duress.

But our central conclusion is that we will survive, and to retreat into mountain and jungle hideaways to escape an apocalypse is a mistake. We do not face a new Dark Age. What we do face are some home truths about unsound money, bringing with them considerable uncertainty and change.

The views and opinions expressed in this article are those of the author(s) and do not reflect those of Goldmoney, unless expressly stated. The article is for general information purposes only and does not constitute either Goldmoney or the author(s) providing you with legal, financial, tax, investment, or accounting advice. You should not act or rely on any information contained in the article without first seeking independent professional advice. Care has been taken to ensure that the information in the article is reliable; however, Goldmoney does not represent that it is accurate, complete, up-to-date and/or to be taken as an indication of future results and it should not be relied upon as such. Goldmoney will not be held responsible for any claim, loss, damage, or inconvenience caused as a result of any information or opinion contained in this article and any action taken as a result of the opinions and information contained in this article is at your own risk.

https://www.goldmoney.com/research/goldmoney-insights/apocalypse-or-not-t  :icon_study: :icon_study: :icon_study: :icon_study: :icon_study:


                                   


                                           



 


Online Eddie

  • Administrator
  • Master Chef
  • *****
  • Posts: 15482
    • View Profile
Re: Gold & Silver News
« Reply #2414 on: September 06, 2018, 09:30:24 AM »
It will be at the next credit crisis, if not before, that China and Russia will reveal their plans to protect their currencies from a financial and currency collapse in the West.

This is the real news. The rest is old news, which has been repeated throughout the world of goldbugs and doomers for years.

Are the chickens coming home to roost with the next recession? With the next banking crisis?

Maybe.

But I question the certainty of that. Since goldbugs always say the exact same thing, one day they'll be right, and then they can claim they were right all along, which is only sorta true.

Sorry I insist on thinking for myself. I know it's bad manners.
What makes the desert beautiful is that somewhere it hides a well.

 

Related Topics

  Subject / Started by Replies Last post
0 Replies
1117 Views
Last post June 06, 2015, 08:05:44 AM
by Eddie
11 Replies
3021 Views
Last post November 06, 2015, 04:18:12 PM
by Palloy
2 Replies
772 Views
Last post January 15, 2016, 06:40:32 PM
by Eddie