"All Fiat Currencies Are Being Debased And Devalued And They Are Losing Value Over Time"

GoldCore's picture


Today’s AM fix was USD 1,602.25, EUR 1,232.97 and GBP 1,053.70 per ounce.
Friday’s AM fix was USD 1,611.50, EUR 1,246.62 and GBP 1,059.99 per ounce.

Gold was +1.01% and silver -0.14% higher for the week.

Gold fell $6.80 or 0.42% and closed Friday at $1,607.60/oz. Silver hit a low of $28.52 and finished -1.54%. 

Gold is slightly lower in most major currencies this morning but remains near 4 week highs, underpinned by safe haven demand. Gold is flat in yen terms with the Japanese currency falling again today.

Gold bullion had its third consecutive weekly rise last week and rose 1% to close at $1,607.60.oz.

Gold in USD – March 2010 – Today 

Importantly, Cypriots and other Eurozone citizens who own gold saw the value of their holdings rise 2% in euro terms.

While the risk of financial meltdown in Cyprus has been averted, the risk of contagion in the Eurozone remains. Wealthy individuals, businesses and corporations will likely begin moving some of their deposits from banks in Spain and Italy thereby deepening the crisis in these countries and the Eurozone.

Burning senior bond holders could create contagion again in European debt markets and now in addition to that bureaucrats have managed to make depositors in periphery nations nervous about their deposits in banks. This could precipitate bank runs in Greece, Spain and Italy with obvious negative ramifications for the entire EU banking and financial system.

Cyprus is a little domino which has fallen and may knock the larger more important dominos of Spain and Italy thereby creating contagion in the Eurozone. Especially as the political backlash against the EU and Troika is likely to be substantial and could lead to more power being gained by parties and movements that advocate leaving the European Monetary Union and indeed the European Union.

The cost of averting a Troika induced financial meltdown may condemn Cyprus to becoming an economic basket case with a vastly diminished financial sector and dependence again on agriculture and tourism. 

Gold Large Specs, Futures – March 2010 – Today 

Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended March 19, according to U.S. CFTC data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 135,610 contracts on the Comex division of the New York Mercantile Exchange, the Commitments of Traders (COT) report showed. Net-long positions rose by 21,103 contracts, or 18%, from a week earlier (see chart above). 

Gains in recent weeks were in part due to short covering by hedge funds and banks. There is the possibility of the much more short covering and also the likelihood that traders will now go long again which allied with physical demand could push prices higher again in the coming weeks.

GoldCore’s Director of Research, Mark O’Byrne was interviewed on Bloomberg Television’s "On the Move" by Francine Lacqua this morning. To listen to the full interview click here.

Despite gold being slightly weaker today after the announcement of the Cyprus deal, O'Byrne advised that anything can happen in the short term and it is important to focus on the long term.

He pointed out that although gold is down in dollar terms year to date, in yen terms and sterling terms, gold is actually higher - up 4.5% and 2.5% respectively. Gold has risen 3 weeks in a row now and Cyprus may mark a bottom for gold.

The demise of gold and the "death of the gold bull market" is "greatly exaggerated" says Mr. O’Byrne.

He said that while the risk from Cyprus has abated, in the light of capital controls in EU country and the treatment of Cyprus, there are now huge question marks over the future of the European Union itself.

When questioned about gold reaching new record highs, O'Byrne said that people need to focus on gold’s value as a “safe haven” not solely gold’s price.

Mr. O’Byrne asserts the yellow metal’s nominal high in 1980 was $850/oz, and the inflation adjusted high of $2,400/oz we believe is likely within 12-18 months. People should not be "buying simply for the capital gain, gold is more important for hedging and diversification."

When asked if the dollar is to increase further? Mr. O’Byrne notes that the U.S. has over $16 trillion in national debt and between $50 trillion and $100 trillion in unfunded liabilities.

"I don’t know how people can be bullish about it long term."

In bull markets, markets climb a wall of worry and weak hands get shook out. Sticking with your position in the long-term and buying the dips is always prudent.

He concluded by saying "all fiat currencies are being debased and devalued and they are losing value over time." 

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Bicycle Repairman's picture

Currency debasement has been going on continuously in the USA since 1913.  The issue is financial repression.  Which is J6P saver being singled out to pay for all of the systems sins.  There is no easy answer, because if there was, they'd attack that, too.


Financial repression is their profession.

proLiberty's picture

For me this is very very simple: the deliberate dilution of the major currencies continues, and is in fact official policy.  Anyone can google the term "federal reserve targeted rate inflation" and get speeches and papers from Federal Reserve officials and staff economists documenting this.  

I would also add:



"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.


"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." From the last two paragraphs of Gold and Economic Freedom by Alan Greenspan.  1966. see: http://www.constitution.org/mon/greenspan_gold.htm


akak's picture


"all fiat currencies are being debased and devalued and they are losing value over time"

While I take the obvious truth of this statement to be self-evident, as would any honest and objective observer of the monetary scene today, and of monetary history itself, it is most curious to me that even some members of ZH continue to ridiculously (or mendaciously) dare to try refute such an obvious and undeniable fact of life.

rfwashere's picture

Let's all keep our money in the banks and see what happens...yeah, right...<sarc>

THIS is what's going to happen to 'savers' that keep their money in the bank 'for safekeeping'.

All you need to know in less than 2 minutes: http://vimeo.com/43762138

Aaaand...it's gone!

IamtheREALmario's picture

So, savers cannot keep money in banks because not only are they being paid no interest, but they are losing value because of inflation AND the money is not safe because giving money to a bank is giving the bank an unsecured loan. What idiots would give criminals an unsecured interest free loan ... well aparently a lot of people because the governments of the world insure the bank accounts with a massively underfunded insurance fund.

And savers cannot keep their savings out of banks because it is losing value to inflation for the same reason above and there is the risk that someone will want to take the money from you because the cost of making it safe from theft is high compared to the value of the money.

So, what is a saver to do? Buy land? You can, but you can always be taxed off your land because the governments of the world think that they own all of the land and will use their force or implied force to make you pay rents in the form of taxes and if you do not pay then they will use force to take the land from you. Land may appreciate in value, but fallow land is a money loser from day 1 because of property taxes run by the government gang.

Should a saver put the money in the stock market? Well, given that all "stock" shares are owned by the DTCC (and hence the Fed and its member banks) and that the people who think they own shares are only the beneficiary of the shares, in a crunch the DTCC will most likely change the rules and just keep their ownership (not unlike unsecured bank loans called "savings"). The "more" riskless way is to take possession of the share certificates and somehow safeguard their existence ... kinda like taking possession of you money. However, there is the added risk that the shares might decline in price or not appreciate enough to compensate for inflation, given that there is no free market and the banks, with their free fiat money created out of thin air control price. They can move the price of any equity up or down on any given day at their discretion.

Save the money in hard assets? Well, maybe if the hard assets do not have a shelf live and actually have an intrinsic value based on fundamental use. However, gold and silver do not have findamental uses in line with the production volumes and so, while a good form of fiat, really hold little intrinsic value.

Put the money into productive assets that people can use and need? Yes, if you can find it. The only thing that will hurt this strategy is a reduction of population or a targeted effort by those who control fiat to kill your productive assets... because as long as the fiat has power, they can always use that power to put you out of business, through laws, regulation or unfair competition.

What's a mother to do?

Oh, just don't think about and buy gold, like the man says.

Hulk's picture

Whew!!! This investing stuff is easy !!!