Freegold

The force of nature which is the market will do what it needs to do in order to regain equilibrium.

Gold is an asset based currency, thus it represents payment in full, where as fiat currency is a debt based currency that represents a claim in the system. In this light, the ‘preservation of wealth’ simply means - he who holds gold has already been paid.

 The market will move to an evolved form of the gold standard, 'freegold', as the provider of this equilibrium.

One in which the 'price' of gold floats freely against all currencies.

And all Central Banks, as well as individuals, mark their gold reserves to market.

Physical gold will be the asset with which one (state, individual, whatever) 'saves' their wealth, their excess (if they generate one) over and above their day to day expenses. Expenses which will continue to be paid in fiat, which works particularly well as a transaction medium, but, due to the political 'necessity' of inflation, performs exceedingly poorly as a store of wealth.

Sovereign states, just like sovereign persons, will accrue gold when running a surplus, and part with gold when running a deficit.

The accrual of gold will strengthen the local fiat currency, making gold 'cheaper' in that currency.

Physical gold will become the clearing mechanism in international trade, the payment in full that todays debt based system cannot achieve. We will no longer need government mandated continual "growth".

Gold will rise to whatever 'price' the market requires to achieve this function. It may seem high, by today's standards perhaps, but it is the issue of 'price' that has everyone confused.

It is not an issue of 'price', but rather of value. When one understands the subtle difference, all becomes clear.

This is why the gold standard is a 'barbarous relic'. This is why the west has been (successfully) conditioned to see gold as a 'commodity' for the last hundred odd years. So we could not conceive as to how we were being robbed through inflation, and not conceive of how gold could restore justice and freedom.

Any serious study of the nature of money reveals that the nature of the money dictates the nature of the society.

The only fundamental about markets which matters is that they need an honest form of money in order to function at all.

And by money, I mean WEALTH RESERVE. What is commonly regarded as 'money' by most today, would be better termed 'currency'. Today's general perception of money is not as a wealth reserve, hence the fashion of 'investing', seeking a 'return'.

Debt is not an honest form of money, and will soon eliminate itself, ironically.

When those who control the money do not do so with honest intent, then love of (the control of?) money does indeed become the root of all evil. In the most literal way.

Our move to an honest monetary system will have positive benefits in all spheres, not just the markets. Society itself will change, to something more akin to a meritocracy. 

And it will be our responsibility to be, as Marc Faber says, our own central bank.

There are many, many very smart people in the ZH community, but without correct perspective, all 'thought' is wasted.

Sometimes it is helpful to step back from the details, right back, to examine the big(ger/gest) picture.

The perspective with which to understand this simple concept has been conditioned out of our society, and for good reason. Government has had a lot of debt for sale. It has a Ponzi Scheme to maintain.

It is all about perspective. We assume we are viewing things from the correct perspective. But if our perspective is correct, why then do things make no sense?

The perspective that we have been conditioned to see with is the one which ensures the continuation of the current regime, unless said regime breaks due to an inherent flaw. Which it is doing. Which is why we don't see the way out.

It (the way out) is there, but we have been blinded to it.

But that does not mean the superorganism which is the market, which is the total sum of all of us, won't do it anyway, as an act of survival.

The information pertaining to freegold in this thread can also be found in a somewhat tidier, and hopefully easy to follow, form on my blog, at this link here - Freegold. Posts and responses in this thread are in many cases in working form, rather than a finished and refined thesis, and should be read as such.

It was my hope that this thread would generate some mature discussion amongst ZH readers, and keep people informed as to the role of gold in the monetary system.

I view Freegold very much as part of the natural evolution of money. Nobody "invented" money. A very strong case can be made that many/most of the current woes of the world can be attributed to the artificial intervention of banking, governmental, and corporate interests in this natural evolution.

I consider much of the structure of human society, and politics in particular, to be the result of the monetary system they use.

Without free and honest money, there can be no free and honest society. 

“In short: for a monetary system to work, #ffff00;">ANYone, #ffff00;">ANYwhere, must be able to exchange the currency for gold AT A #ffff00;">FLOATING RATE. We call this #ffff00;">FREEDOM.”