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Gold: The Good, Bad, and Truly Ugly
Posted with permission of Gary Christenson The Deviant Investor - Sprott Money
THE GOLD STANDARD: Although it may be unrealistically optimistic, I believe my paraphrase of a Churchill quote:
“Central Bankers will eventually do the right thing and return to a gold standard after they have exhausted all other alternatives.”
While central bankers are exhausting all other alternatives, I worry about the collateral damage to 90% of the population who are not first in line on the fiat money gravy train that benefits the financial and political elite.
Clearly, central bankers will return to a gold standard only if forced by a financial implosion, economic collapse or equivalent disaster. Hence, the powers-that-be will do whatever is necessary to conceal the sovereign debt bubble, hide the insolvency of sovereign governments, and extend and pretend regarding the value of bonds, equities, and fiat paper currencies.
THE GOOD: Gold is and has been real money for 5,000 years.
THE BAD: Gold prices will benefit from the following items. (This is a long and incomplete list.)
- Greek bankruptcy and their inevitable exit from the Euro zone: Such an exit will confirm bad debts, weaken or destroy the banks that made the loans, and damage confidence in fiat currencies, ever-increasing debt, and sovereign debt collateral.
- Euro, Yen, Dollar collapse: Can a major world currency collapse in value without damaging confidence in all other fiat currencies? People will have more confidence in gold and will lose confidence in fiat currencies.
- Baltic Dry Index has hit new all-time lows. Global economic activity is weakening. Will central banks do nothing as the world economy weakens or will they continue the global QE to infinity to stimulate the global economy? Of course central banks will print currencies.
- Price of oil has collapsed. The same arguments apply as with the Baltic Dry Index.
- Central bank creation of currencies: QE to infinity! Maybe it will prolong the current system or perhaps a deflationary collapse will occur regardless. Would you rather own gold, or sovereign bonds backed by insolvent governments that can repay their debts only because central banks create new currency and monetize their debt?
- Cooked statistics: Who still believes the GDP, unemployment, retail sales or real estate sales numbers in the US?
- Ukraine conflict: Expect this growing conflict to damage European stability, increase military budgets, and substantially increase debt and financial risk.
- Syria and the Middle East: Expect more military spending, debt, bond monetization, and currency in circulation.
- “No boots on the ground,” except in the Middle East, Asia, Africa, Europe, and South America. However, I know of no plan to invade Antarctica. Swell! And you can trust that the economies of Europe and the US are humming along nicely, employment is robust, the people are happy, banks are solvent, politicians are truthful, and this is the best of all possible worlds.
THE TRULY UGLY:
- COMEX default or shutdown: What if the COMEX can’t deliver gold or silver and is forced to cash settle futures contracts. It could happen, perhaps soon since a huge quantity of gold has been shipped from western vaults to Asia. Paper gold is not real gold and that realization will be devastating to global confidence if the COMEX defaults on gold or silver delivery.
- LBMA shutdown: Same as a COMEX shutdown. See above.
- Global reset and financial collapse: We don’t want to think about the ramifications, the inevitable blame-game, false flag diversions, escalating wars and human suffering that will result from an economic collapse.
- Global credit collapse: Most economic transactions are based on credit. A global credit collapse probably would collapse global financial and economic systems, including the delivery of food and fuel. See above. Again, the consequences will be truly ugly.
President Nixon separated gold from the dollar (temporarily) on August 15, 1971. Currency in circulation and debt have subsequently increased exponentially. The purchasing power of fiat currencies has similarly decreased. The exponential price increase is gold mirrors the devaluation of the dollar. See the graph below. I discuss this in my book, “Gold Value and Gold Prices From 1971 – 2021.”
CONCLUSIONS:
- The global financial system is vulnerable and dangerously fragile. If it were safe and healthy, why would Europe continue to “throw good money after bad” with more bailouts to Greece and other countries? Ask yourself if Italy, Spain, Japan and the US are materially different.
- A vulnerable and dangerous financial system that is increasingly leveraged is a bubble in search of a pin. Accidents happen! Protect yourself and insure your assets with gold and silver.
- The Baltic Dry Index and the price of crude oil are telling us that global demand and economic strength are faltering. Expect more central bank intervention, bond monetization, and “money printing.” If sovereign debt is a dangerous bubble now, what will it be after another year or two of massive printing and stimulus?
- Various wars and boots on the ground: Wars are inflationary. More war creates more debt, more “money printing” and higher prices for commodities and the cost of living. The S&P, sovereign debt prices, and politician approval ratings probably will not benefit from more wars, a higher cost of living, and declining living standards. Protect yourself. Gold prices will rise.
- Gold has been real money for 5,000 years. Dollars, Euros, Yen, and other unbacked fiat currencies have been printed to excess for decades. Bet on gold prices rising.
Posted with permission of Gary Christenson The Deviant Investor - Sprott Money
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If the gold standard ever returns, the very first move will be a confiscation of all out-standing stocks held by trust entities, and a law making it a capital crime to own gold privately. We have seen this movie before.
Churchill.....got us involved in 2 wars to bail out the fucking banksters and we should believe his shit?
I think you missed the point dude
Ok - two chapters posted online that may provide some insight into what's taking place...
http://econimica.blogspot.com/2015/02/fundamentally-flawed-chapter-6-debt.html
http://econimica.blogspot.com/2015/02/fundamentally-flawed-chapter-10-gold.html
Central bankers do the right thing and return the right to issue money to the people. Not bloody likely. They'll apply the Samson Option first.
Our masters are understandably determined to see to it that the meek will only inherit the earth when there is nothing left on earth worth inheriting. If and when they day comes that holding on to power is no longer a realistic option, they'll still have the option of turning the earth into a radioactive grave for mankind, and that's precisely what they'll do.
Look at it from their point of view:
Personal consequences of surrendering all powers of government to the proles: Death.
Personal consequences of the destruction of industrial and agricultural civilization and extinction of the human race: Death.
The best for 'the People' at this point, would be officially sanctioned convertability. If all Banks were required to exchange fiat for Gold and Silver (and visa versa) for a set premium over spot, wealth could be protected. No taxes involved, of course.
Cash your pycheck take 20% home in PMs. Need some fiat? Take some PMs from home to the Bank. Too lazy or stupid to want PMs? Carry on as usual.
“Central Bankers will eventually do the right thing and return to a gold standard after they have exhausted all other alternatives.”
That was a really good one. I just about peed myself laughing. Thanks!
CB's will go to the gold standard after the shooting is over and the guiltones are rolled away.
CB's will go to the gold standard after the shooting is over and the guiltones are rolled away.
Gold and Economic Freedom
by Alan Greenspan
http://www.constitution.org/mon/greenspan_gold.htm
"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."
Now add the QE in from Japan,USA,EU and everyone else and figure in how high gold would have to be repriced in order to compensate for trillions of fiat paper currency.I'm looking at $15,000 eventually on a monetary reset and even higher.Debts are pretty high along with unfunded liabilities and everyone knows that the debts cannot be paid back or the future liabilities met.The BIS is stalling itself in a corrupt syste today.Reminds you of hiding money and gold for nazis for years and at the same time passing their money onto The Bank of England in order to support the war.
My concern is that they will put strict controls on gold long before it will be allowed to reach 15k, or possibly outlaw/ban/confiscate it altogether. Good, honest, gold has too many unscrupulous enemies. Too many powerful people stand to be hurt by gold.
D you own and have possession of physical?
Or do you own paper?
comex will never default .if u believe as i do that our govt is crooked they have already made fake bars to sell . please dont give them any credit they have and always will pull out all the stops to stay in power just like their dad the devil.
You are apparently unacquainted with the 11th Commandment:
T B T F
Here's a "Dot": T B T F
Here's another "Dot": Federal Reserve Note Printing machine, or Iphone hookup to the Interwebnet with access to the COMEX Christmas Club Account.
NOW, all you have to do is connect those two dots and what do you have?
The Cognoscenti who have peopled this blog for a few years already know the answer.
And don't say it can't happen because there are already a dozen black eyed Jews who have become trillionaires in the last few years for utter failure using precisely that little tactic.
Gold price creeping up some in the wee hours. It's scratching at $1220. I wonder if the inevitable smash-down to ~ $1200 or below will come before or after noon?
The chart should be adjusted for inflation.
Yes, real inflation, not the current CPI.
Gold is not the answer to central bank manipulation. There was plenty of manipulation, rigging, etc under the gold standards of the past.
An honest government could establish a stable currency without a gold standard but a dishonest one will finagle their way around a gold standard.
Therefore, what we need is an honest government more than a gold standard.
"an honest government"
UNPOSSIBLE
I normally don't care to respond to comments at ZH. I don't care about a gold standard. But I have to say you are full of it. Gold is what keeps governments honest. Printed, paper money is invented wealth, imaginary wealth. and it's printed ad nauseum so that governments can spend it long before you get it. It's debt, not weatlth. The government doesn't end up with the debt--the taxpayers end up with the debt. Governments get the benefit of the printed money, while taxpayers get the shit end of paying off that debt for centuries. There is no such thing as an honest government. There is only honest money.
Gold is the money of the free. No hampering of government will ever change that. And to trust government is the same as trusting hell.
If heavens do exist I wish for a separate heaven for the clueless....
Like German's in the late 30's. They did just fine without a gold standard.
Like the German's whats?
Yeah we really did great till 1939. Great show, many lights and fires and even better millions of death men thereafter
exactly, in fact we already have a gold standard, just compare currencies against gold, but it is rigged.
Would it make any difference if the government or central banks would say they made a gold standard, no ! Just buy fucking gold at the dips.
Amen,
Except you can't depend on honest government. I can't think of one government in the history of the world that wasn't corrupted in some way. Government is made of people. People are imperfect, thus government is imperfect.
That is why I rail against government. While I know some sort of government is likely to happen to maintain a sort of civil order with laws, I prefer a small government. The power should be with the people, not the government. Government should fear the people.
If there was any situation in which I believe in slavery, Government should be a slave to the people. Instead, we are the slaves to government.
Go FOFOA! No more dirty float, a clean float with new currency backed part by gold, commodities and or other stores of wealth. And yes, to pay homage, THE BANKSTERS NEED TO REPAY US!
A gold standard would be possible. Consider the technology that allows a small strip to be implanted into a 'paper' bill. Such a strip could contain a minute amount of gold. You wouldn't need coins, and the bills could be 'read' by scanner.
Since the amounts were so tiny, it would be difficult to amass enough to recover anything worth the trouble, so that would solve your currency-flight problems. And as difficult to counterfeit as the bills we now have.
That answers the folks who claim "there isn't enough gold for our economy...", and allows for a significant increase in the price of the gold back to a normal price-range, because you are only using tiny amounts per bill.
There, does that work? What's wrong with my idea?
I've got a few of them already, same size as a paper bill
https://silvergoldbull.com/1-10-g-silver-gold-bull-aurum-gold-wafer
.A fool and his money......
A few as in 3. Thought they were kind of neat for my 2 little kids, and don't consider them part of my stack.
And why can't that be counterfited? Ever hear of mica?
Hey, does anyone know what a "nginx/0.8.55" is? I keep getting that when I go to my account...
Web server identifying itself.
http://wiki.nginx.org/Main
Pffftttt......
Articles like this make me think the bottom is still ahead of us.
American
International
Group.
AIG.
And "moral hazard"=
gold.
Corzine, Detroit, Total Information Awareness...what a mess.
Hard to imagine there is any capitalism left anymore.
There is however gold...
Fofoa has a far better explanation of how gold could work (and already is working) to 'back' currencies.
The world will simply never limit itself to available metal and so a return to so much gold per so much currency is not going to happen...been tried before.
Gold will function but as a separate store of value.
This post is an interesting alternitive to going back to a gold standard, scary but good. Its a good read overall.
http://debtcrash.blogspot.com/2015/02/history-and-introduction.html
Sorry, there's just too big a conflict of interest for a Gold article coming from Sprott Money blog.
Eric Sprott, John Embry, Rick Rule are all articulate,intelligent and business savvy .... they've also been wrong, Wrong, WRONG in their calls. This article didn't even come from one of those heavyhitters, and it shows. It's filled with worn cliches.
And yes, they might be valid, if one lives to be 150.
There comes a time when one just has to shut off folk who haven't gotten a call right in eons.
Retreat, make some calls correct on your own web site, reestablish creditability, and then get back to us on the Internet at large. This has nothing to do with whether PMs are valid investments, it's about accountability.
The lower oil goes the better gold looks.
I will say silver has in fact corrected so if you're of the buy low sell high mentality as I am then that's probably the place to start.
Always expect the heartache of course....
And actually the authors overstate money....confidence is King when it comes to currency. If Yellen can't stand up to Wall Street here and now she never will.
I am betting on that white horse, "Silver" in the 3rd race to win !
Great thing is, even if I am wrong I will have an heirloom shiny stash for my tribe.
Pretty much a win win with a pile of shiny.
So I patiently stack on and just wait for the inevitable SHTF to happen, while watching the shyte show unfold, popcorn at hand.
Sadly, I think we have a few more years before TSHTF. CB's worldwide are all in and this won't end until they have exhausted every crazy maniacal option.
I think there's a decent chance that the crash starts in the 2nd half of this year or the beginning of next year. If the CBs and governments can pull another rabbit out of the hat, expect yet another 6-8 years of this bullshit before we get another Fed fueled credit bubble that ends.
The pebbles are starting to move in the economic avalanche but I don't expect it to become obvious to the sheep until early next year. As for the CB's converting to a gold standard, I don't see it happening because it destroys their ability to lie and manipulate at will.
The rest of the world is buying gold.
Are WE buying gold ?
Do we have the gold we claim to ?
If major (gold owning) world powers unite and return to the gold standard, we're cooked.