Russell Napier Explains What's In Store For Gold If Cash Is Outlawed

Tyler Durden's picture

By Russell Napier of the Electronic Research Interchange

Why we didn’t have negative nominal yields in the Depression and the end of QE

Oh the time will come up
When the winds will stop
And the breeze will cease to be breathin’,
Like the stillness in the wind
’Fore the hurricane begins ---
The hour when the ship comes in.

 

And the words that are used
For to get the ship confused
Will not be understood as they’re spoken,
For the chains of the sea
Will have busted in the night
And will be buried at the bottom of the ocean.

     -  When The Ship Comes In (Bob Dylan 1963)

 

The Napier Euro High Yield Capital Guarantee Fund (discussed in the November 12th edition of The Solid Ground) is almost ready for launch. It offers a unique combination of attributes to investors. It has significantly better risk/reward characteristics than both deposits and government debt securities. In short, it is a room full of Euro banknotes.

The launch of the fund will clearly mark the limits to monetary policy and thus the end to QE in Europe. The fund’s many attractive features include:

  • a small negative yield (my fee), but it yields more than Euro bank deposits and most Euro denominated government debt securities.
  • the assets are a liability of the central bank and not the commercial banks. While bank deposits, above the level guaranteed by governments, can be bailed-in and frozen during any bank reconstruction, the banknotes nominal value is assured by the central bank. The fund thus offers significant capital protection and enhanced liquidity to any bank deposit.
  • unlike longer-dated debt securities of the government, the banknote will not suffer a loss in value should fears of inflation rear their ugly head. While the markets will begin to price future inflation into longer-dated fixed interest securities, the banknote holder suffers no loss at such apprehension. The fund would seek to move from banknotes should recorded inflation appear, as this would impact the real value of investments. The nominal value of the fund cannot decline if inflation expectations rise, ensuring significant protection compared to government debt securities.
  • banknotes could be bid up, relative to deposits, as the authorities seek to restrict access. Last week Schweizer Radio und Fernsehen reported that a Swiss bank had refused to transform the deposits of a Swiss pension fund into banknotes and that the Swiss National Bank confirmed that they were against the hoarding of banknotes to avoid negative deposit rates. The ECB is just as likely to be against such bank runs as the SNB. Any move to restrict access to central bank liabilities (banknotes) and enforce the holding of commercial bank liabilities (bank deposits) is likely to lead to a premium of one over the other. Given the capital risk and lower yield on bank money, Gresham’s Law is likely to see banknotes becoming a store of value, while people seek to use the inferior bank deposit as a means of transaction. Banknotes traded at premiums to bank deposits, albeit in closed banks, in the US in the 1930s. A premium for banknotes would provide a rising nominal value for the fund.
  • the fund would hold only Euro notes with a serial number beginning with X, the X denoting that these notes have been printed by Germany. Such notes could also be bid up relative to deposits and even other notes, should investors fear the demise of the Euro and the re-birth of the DM or a northern European ‘NEuro’. Should this occur, the nominal value of the fund would once more rise.
  • a banknote owner will be able to shift capital to any jurisdiction where the Euro remains fungible. Restrictions on banknote withdrawals and transfers of deposits were imposed in Cyprus, as part of the plan to prevent the funding base of the Cypriot banks moving to other banks in the European Union. The ability to shift capital across borders, should such movement be outlawed, would likely lead to a premium developing for banknotes. Should this occur, the nominal value of the fund would, yet again, rise.
  • notes would be held in denominations of 50 Euros. The authorities are already minded to ban the Euro 500 note (known by some as the ‘Bin Laden’ because it is known to exist but is rarely seen). It is rarely seen because the ‘Bin Laden’ is prized by criminals and those seeking to avoid taxation, meaning it’s increasingly likely to be recalled and abolished. Any ban on large denomination notes to combat illegal activity is unlikely, however, to affect the 50 Euro note given its key role in everyday transactions in Europe. Those bent on illegal activity may just have to get themselves bigger suitcases to stash their smaller denomination notes. A premium may develop for such notes, and such suitcases, and should this occur the nominal value of the fund would, you’ve guessed it, rise.

The fund produces an enhanced yield over bank deposits and most government debt securities, and cannot be subject to a decline in nominal value unlike bank deposits or government debt securities. In some fairly extreme cases it may even produce a capital gain relative to most money (bank deposits). The only likelihood of loss is in the case of an instant and material rise in inflation that would undermine the real value of the fund. However, unless such inflation developed virtually overnight the fund could be liquidated, without capital loss unlike government securities subjected to an inflationary shock.

The inflation protection offered by banknotes is thus significant given the current yield on government bonds. While government bond prices may rise somewhat further in a deflation, the banknote arbitrage opportunity suggests that the upside for government bond prices in a deflation is very limited. Government debt securities did not have negative nominal yields in the Great Depression despite gross deflation so why should they they have them now? Thus, those speculating on government bonds to see negative nominal yields go ever lower may not get the capital gains they think are coming their way. Banknotes may even perform as well in a deflation as government debt securities and offer much better protection should an inflationary future appear more likely.

Given this combination of risk characteristics, why would you want to own a government bond or a bank deposit when the Napier Euro High Yield Capital Guarantee Fund is available? (Before I am inundated with e-mails looking for a prospectus, I should point out that I am independent financial consultant and, am not regulated to look after client monies. Also, I don’t have a basement or a machine gun.)

The attraction of a banknote fund arises due to an arbitrage which creates a limit to monetary policy. It is that limit which contains the key information about financial market reactions for investors. QE cannot force the price of government debt securities much higher and yields much lower, as increasingly banknotes and even bank deposits become attractive to investors compared to government debt. A limit to QE is a big story.

Such an arbitrage opportunity would limit the profits one makes in such bonds during a deflation and both notes and deposits offer major protection from capital losses should there be a major change in inflationary expectations. This would be a world of deflation where the scale of negative nominal rates would have a floor. Indeed, bond yields could overshoot into negative territory and then rise into a deflation as the limits to negative nominal yields became increasingly clear. Thus the recent rise in the yields of Euroland government securities may not be a signal of inflation at all, but rather a realization that we have reached the arbitrage limits of how far yields can fall.

A world of less growth and deflation, but one where interest rates are clearly stuck in nominal terms, is a very dangerous world for equity investors with surprisingly few gains for bond investors.

Historically the shift from deposits to banknotes was associated with the fear of commercial bank insolvency or illiquidity. That was called a bank run. Today a bank run is the natural consequence of forcing too much central bank liquidity (bank reserves) onto a system which simply does not want them. A banker does not want to accept this short-term funding if he cannot lend the proceeds at a profit.

The only way for the banking system in aggregate to repel such funding is to offer interest rates on deposits (bank liabilities) which force investors into banknotes (someone else’s liability). Tighter regulation and collapsing long-term interest rates mean that profits from lending for Euroland bankers are increasingly illusory. Banks are keen to repel deposits given the lack of opportunity to use them. If QE reduces the banks’ ability to lend money and also creates an arbitrage from bank deposits into banknotes, will it reflate the economy?

If you think the answer is ‘no’ then European QE will have to stop with fairly negative consequences for the equity market and positive implications for the Euro exchange rate. Evidence of selling of government debt securities with negative yields is thus not necessarily a sign of inflation. A move to bank deposits or banknotes from government debt securities can instead indicate that the limits for QE have been reached.

The more investors focus on the limits to the scale of negative nominal rates, the more they focus on the failure of QE or on Ken Rogoff’s paper on killing cash: "Costs and benefits to phasing out paper currency By Kenneth Rogoff, Harvard University."

While he doesn’t quite label banknotes a ‘barbarous relic’, he comes pretty close. The direction of travel in seeking to ban the use of cash is the same as those who railed against gold as a form of money. Once gold was considered too hard a money for society but now paper may be too hard for us to bear. It seems we need the digital money of deposits that shrink when subjected by central bankers to the hot light of negative nominal interest rates!

If banknotes are outlawed you will be forced to hold money that is a liability of a commercial bank (deposits) and refused access to money that is the liability of the central bank (bank notes). You will be forced to accept the risk of losses on a bank failure and banned from an instrument which promises no adjustment in nominal value. Any such ban would have to be a decision of government and not of the central bank. This means we’ll all have plenty of warning that it is on its way! We will be forced by law to liquidate the Napier Euro High Yield Capital Guarantee Fund and return capital or watch the fund’s value fall to zero as it holds something which has been stripped of legal tender status.

Euroland is not the only place where the limits to monetary policy are becoming more apparent. In the JPMorgan Chase annual report President and CEO Jamie Dimon warned that banks are having to turn away even USD deposits. This analyst has now spoken with three investment managers who have been asked to close their deposit accounts with JPM. At this stage other bankers still offer positive nominal yields on bank deposits, but how long will that last as orphaned deposits roam the streets of Manhattan, like Oliver Twist, in search of somewhere they can call home? These orphaned deposits will put downward pressure on interest rates for large-scale depositors and eventually, even in the US, the much reviled greenback may be seen as a store of value relative to bank deposits or Treasuries.

So, should we reach the limits to monetary policy, what’s in store for that ‘barbarous relic’ sometimes known as gold? It would be a period of rapidly rising real interest rates, as a floor on negative nominal interest rates had been set in a period of accelerating deflation. This should be bad for gold. As The Solid Ground has argued before, the de-leveraging which always comes with deflation and falling cashflows would be very positive for the USD. This would also be bad for gold.

However, in such a world, zero-yielding gold would be a high-yielding instrument. If the authorities ever sought to restrict access to banknotes, then gold would suddenly find itself enfranchised as money for the first time in many decades. So, given the scale of these competing forces, it is just too early to say what might happen to the gold price, but the allure of gold will grow the more it becomes clear that central bank fiat has failed and the age of government fiat is dawning.

The time is ever nearer when the price of gold will rise in an era of deflation. In due course, though no time soon, the full force of government fiat will engineer a reflation, albeit one replete with the misallocations of savings and capital so beloved by the bureaucrat. Then the PhD standard, in which the value of money is linked only to the words of the over-educated, will have ended. The gold price will rise even further, ‘And the words that are used for to get the ship confused will not be understood as they’re spoken, for the chains of the sea will have busted in the night’. And that’s ‘The hour when the ship comes in.’

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q99x2's picture

A little gold, a little silver and a bitcoin. Last price $242

Captain Debtcrash's picture
Captain Debtcrash (not verified) q99x2 May 9, 2015 12:58 PM

For anyone aquiering precious metals here is the program I use to help me buy the dips:

http://debtcrash.report/entry/debtcrash-metal-purchase-program

It's a free download.

Arius.'s picture

incidentally, one of issues DisselBloom is pressing on Greece is to outlaw use of cash on greek islands. .. the government is pressed by small business and is asking to have a floor of 70-100 dollars in cash, everything over only plastic.

Achilles Heel's picture
Achilles Heel (not verified) Arius. May 9, 2015 2:20 PM

From what I understand, the Maxwell House, & Chock full o Nuts Banks are offering safe deposit boxes which can be guarded, free of charge, by Browning A5 shotguns, or the weapon of your choice.

jefferson32's picture

The war on cash advances in Switzerland. Today biggest newspaper in French headlines "cash will soon be banned" (to protect people against the risk of carrying it). Here:

http://www.lematin.ch/suisse/achats-cash-c-bientot-fini/story/16212346

MonetaryApostate's picture

This article is full of Wishful Assumptions.....

The Elite love C O N T R O L, so Digital Currency / Banking is what will be M A N D A T E D, or did the entire gold confisication & switch to fiat escape everyone's memory?

green sheen's picture

.Truly pathetic this site is still pumping gold & talking about the Fed as if it's some sort of government intervention.
Retards, the banks own the Fed. They decide everything it does to enrich themselves and rape you. This stupid website and its blog roll have been telling you to sell them your stocks, buy their gold , & gold mining stocks since the crisis and it still doesn't compute. None of these sites would ever suggest maybe we let anyone EXCEPT the banks control our money.
They won't talk about North Dakota's state bank either. They wouldn't dare. Why is that? It's much more stable. It pays more taxes. It earns more. It causes less inflation than letting Bank of America print 1 trillion for a currency trade.
If the rich do get their gold backed currency they will confiscate your gold AGAIN. People are much dumber now than they were last time they took it in 1933
http://www.youtube.com/watch?v=Ey20x-VlDYQ

cornflakesdisease's picture

You are right about state banks.  Land banks are an even better idea.   But Wall Street wines and dines the other state comptrollers and pension people and does their best to keep them from going that route.

Gold could be confiscated possibly in the future, though I doubt it.  If they did, they would take the bullion banks and ishares people's gold.  Gold and silver are a great hedge.  I bought silver at $4 and gold at $286, sold a few months off the peak, and am now slowly re-accumulating.  You buy precious metals for 2o years from now, not for get rich quick.  You just buy old gold and silver coins, even the worst grade if you just want the weight.  They are considered legal tender and have numismatic value.  It was exempt from confiscation in the 1930's and it will be exempt in the future.  Incidentally, the 1% own these same coins.  They tend to protect themselves via edict and laws.

Incidently, when the government goes to means testing (and they will) you can quite honestly say that you only have about $400 in savings (16 St. Gaudens $20 gold pieces at NGC rating "CRAP" worth $18,500 etc.)

You also come across as a "grunt fug".  You know, that loud old fart at a resturant who bores his company by explaining all the failures and wrong moves his family members and friends have done and how much smarter he is.  "People are dumber . . "  Pathetic sheeple, fat lazy americans, etc; these are all clues to listen for in these forums the let other's know right away you are an emotional cripple and failed man (perhaps not monitarily, but spiritually, morally, and otherwise; no compassion, no fellow feeling for others, greedy, selfish, emotionally constipated.)  Are you able to tell your family members you love them?  Or are you all alone by yourself and alienated?  Sadly, your daughter will put you in a low cost home at the end, siphon off most your wealth, and blow it all on cocaine and drugs with her boyfriend down in Florida.  All that will remain of you is some ash on the ground at a cut-rate crematorium.

Pinto Currency's picture

 

 

Outlaw cash and outlaw gold.

Then the central planners have full incompetent control until everything fully collapses.

And then they'll find a new external reason for the collapse.

Publicus's picture

lol, so gold pumpers are now pinning their hope on cash being outlawed.

Bendromeda Strain's picture

Hey Publicus - fat, dumb & statist is no way to go through life, son...

Frankie Carbone's picture

The simpleton probably missed the last bull market, so I can guarantee you that the dimwit will miss the next one. 

Then, after we've all cashed out and made yet again, triple digit returns, he'll step in and start mock the bear correction as if it doesn't happen to any other financial instrument. 

Another dead consumer post-collapse. Enjoy talking to him now. I give him a week after the stores shutter their doors and windows. 

do-loop's picture

The swissoids will not tolerate a cash ban. They will reluctantly go along with limits on cash withdrawals, but the only people who need to worry about that is people trying to pull big amounts of cash - for high net worth individuals - understandable considering the negative interest rates.

BarbaricRelic's picture

Translation of the headline and first paragraph:

"Purchases in cash, it's almost over!
silver -

Denmark plans to eliminate cash payments in some shops . A measure that could become widespread soon. Traders are not all convinced ."

The first comment translates: "Governments want to remove the liquid for better control our spending and tax us ."

daveO's picture

Better get the cash or metals soon.

A cash ban = bail in.

They will, probably, start slowing the pace of Reserve Note printing intentionally. On a side note, from what little I understand, Utility bonds (and defensive corporate bonds)  fared well in the 30's while many muni's went broke.  

cornflakesdisease's picture

If they ban cash, how will politicians get bribes?

HamFistedIdiot's picture

Digital will enable sleaze on a vast scale. But it will be of the fascist, vertically integrated type that bars entry to free lance, unaffiliated scammers. Big Brother will run the hood from top to bottom.

Frankie Carbone's picture

So in other words, even if I had the money I couldn't buy one of these political prostitutes in DC?

Cloud9.5's picture

It works like this.  Your friend loans you $50,000 to buy some property.  Then six months later, he buys that property from you for five million.  Deal done and patronage bought.

Dewey Cheatum Howe's picture

Cash ban is a one time spending boon to boost GDP and tax revenue numbers.

It draws all the cash off the sidelines i.e. stuff like drug money cash into the system for a one time revenue boost since it becomes useless unless it is spent and it is the quickest 'legal' way to launder the profits at that point in time. It is a one shot tax revenue boost because there is nothing else to steal from the system. The whole deck of cards just collapses quicker when you do that. It is a desperation move if they ban cash and an even bigger tell if happens globally.

You don't ban cash if you need a large tax revenue boost like that, you discontinue the notes then reissue new ones afterwards if the system wasn't totally bankrupt.

McCormick No. 9's picture

If cash is outlawed, I will accepot the following as payment for goods and services:

Denominated gold and silver coins

Guns

Ammunition of any caliber

Tobacco

Marijuanna

Alcohol (spirits, not beer or wine)

I will accept any of these with a minimum of negotiation. I am sure that set values for these items will quickly emerge, and the market will allow for price discovery at relatively stable values for all of the above. Thus three bales of hay or an hour of skilled labor might be set at the following:

1 silver dollar

1/5 of a firearm (obviously it will be difficult to break a gun into fifths, but we might trade for more time and or more hay at the 1/5 rate)

10 rounds of large caliber ammo, or twenty .22 rounds

3 packs of cigarettes or 1 oz loose tobacco

3 nugs marijuanna

1 fifth of spirits

All other items can be bartered for, but such barter will have to be negotiated. I might not want the items offered for various reasons- I can't use it, I can't trade it, I have it already. But you can always ask.

 

Other barter

DrJRiddle's picture

You're undervaluing your firearms and overvaluing the ammo and hay, but yeah. Though consumables might get awfully high. 

NoDecaf's picture

You may be over paying with that silver dollar. People scrape by in sub-Saharan Africa on 1/5 - 1/7 of an ounce per day. (~$2-5) That's a full day of calories put toward whatever manual labor gets them through the day. Here in the USSA, post collapse, you will have more stored calories in a typical human body and should get more productivity.

I think that you could get a full 40 hour work week for an ounce of silver...

bid the soldiers shoot's picture

The notion of prohibiting the use of cash stems from a desire to collect all the tax revenue obliged to be paid.

It prevents cash businesses from cheating the IRS and the IMF out of what is due them.

The gold guys never miss an opportunity to turn a topic into the price of gold.

scaleindependent's picture

nothing to do with negative rates, ha, idiot?

RickyJabbour's picture

Look for a currency exchange before a cash ban.

unrulian's picture

haha A5..funny choice i call it the AK of shotguns, you can bury it in a swamp for a year and it will fire as soon as you hose it down

AGuy's picture

FWIW: If the outlaw cash, then PM's will likely be outlawed to. I can't see them leaving such a huge loophole. if cash is deemed a "problem" So will PMs. That said I don't think they will get rid of cash, but perhaps get rid of larger notes (ie remove $50/$100 notes from circulation).

Probably the best thing that can happen is more cybercrime problems that expose the huge security problems with electronic payment systems.

realmoney2015's picture

We need to not worry about what gold and silver are priced at in terms of the dollar. We need to look at what gold and silver can buy. They are, after all, money. Old timers can remember when a gallon of gas was a couple of dimes. Well a gallon a gas is still only a couple of dimes...real silver dimes of course. 

Its my goal to raise awareness on real money and to spread the ideas ( and the metals themselves) throughout our society. That's why I male candles with silver coin prizes: www.etsy.com/shop/ScentSavers

The more people know about the true value of money, the closer we will be to bucking this system.

Kaiser Sousa's picture

here, here!

carry on...u r not alone.

Real Estate Geek's picture

A male candle? Is that some kind code for 'dildo?'

ebworthen's picture

I'm with you, but when they get rid of cash they'll concurrently make Gold and Silver illegal to buy, sell, or trade with.

It will come with "the terrorists are using precious metals to buy weapons and fund operations".

chubbar's picture

Yes, I think this as well. However, concurrently with that decree, the rest of the world will see that the king (dollar) has no clothes as even emerging markets embrace gold backed notes and other trading platforms that have gold as it's basis. Also, standby for a massive black market in gold. The US outlaws gold and for sure it'll be relegated to 3rd world status immediately and become a complete joke on the international stage. The US gov't is going to have one hell of a hard time getting it's citizens to follow any stupid, fucked up law that outlaws gold when said citizens are having a hard time feeding their families with a bankrupt currency and full stop economy thanks to their lawmakers incompetence to begin with. Those idiots would be better served quitting while they are behind but not yet lynched.

philosophers bone's picture

And insurance companies will no longer offer boat insurance. 

daveO's picture

Amen to that. FDR outlawed gold, but not silver. Not everyone turned in their gold. There is always a market at a price, see Argentina a dozen years ago. Smugglers were bringing in US greenbacks. The same thing could happen here. It's better to be a temporary outlaw than completely penniless and/or homeless.

cornflakesdisease's picture

They turned in their numismatic coins that were legal tender and had collector value?

SoilMyselfRotten's picture

Not everyone turned in their gold.

For anyone who purchased PMs in the last 10-20 years it's my guess there are ample saved records by TPTB to know who has purchased what gold. They may not know who has legacy gold but they know who's been buying.


Bro of the Sorrowful Figure's picture

i just watched john wick (on an international flight). the movie is totally unrealistic but is all about russian gangsters and hitmen and the criminal underworld in NY. they all used gold coins to pay for everything. some interesting conditioning going on.

RichardParker's picture

England essentially made private ownership of gold coins illegal in 1966.

https://www.google.com/?gws_rd=ssl#q=1966+gold+ban+england

 

 

2handband's picture

Gold and silver are only money if people say they are. That's what you don't get... there's no such thing as "natural money". All money is really fiat money; it's valuable because somebody says it is. In truth, if you look at gold/silver based currencies in days of yore they were manipulated as FUCK... just like unbacked fiat is today. The idea that a metals-backed currency is utterly stable and unmanipulable is naive beyond belief. It still mostly benefits those in power, and it's still fiat. I'll bet anything you like that it's be worthless in a real crisis... if shit really flew off the rails nothing would be valuable if you couldn't eat it, drink it, smoke it, or fuck it.

Zoomorph's picture

Good points. However, using Gold as a currency would indeed be far more stable since it's extremely rare and difficult to produce compared with printed paper money. Gold currency would be harder to manipulate, but still not impossible. Fake gold would pose a whole new problem and it would be difficult to ask every person to test gold for every transaction.

Anyways, I would not feel particularly safe owning gold, even burying it somewhere. Technology will soon be able to find hidden gold (if it can't already) and the government WILL catch those who didn't turn it in this time, and you will be treated as criminals and have your children taken away.

The only way to fight back against an all-powerful opponent is to feign compliance for long enough that he lets his guard down, grows fat and lazy, and isn't all-powerful anymore. And if the government can scan our brains for compliance, then it gets a whole lot more serious and we move into the realm explored by many scifis.

Welfare Tycoon's picture

The rage on here about Gold and Silver is absolutely rediculous and unwarranted. 

If and when a meltdown actually occurs, the government will outlaw these resources and jail the people who try to use them.

Seriously, if people are getting cops sent after them for withdrawing over $5000 cash from their own bank account right now, do you really think that they are going to let you walk around with precious metals in your pocket?

If people really do want to make the most of their prepping efforts for a complete meltdown (if one ever does occur, Fed willing), the only things that you should be concerned about hoarding are guns, ammo, crops, and livestock. All other resources and fall-back plans that involve public transaction and usage will be made irrelevant by government legislation. 

BoredRoom's picture
BoredRoom (not verified) Welfare Tycoon May 9, 2015 3:03 PM

silver and gold are money and will always be accepted in trade for other things of value.

giggler321's picture

You can stand there with your pockets and hands full of yellow and white metal but the people around you will have guns, ammo and familys to feed.  While the pen might be mightier than the sword; I wouldn't want to be standing around to find out if some metal is.

daveO's picture

Have you ever watched an old Western? What were they always killing each other for? Two guesses.

http://www.youtube.com/watch?v=OLxScqSZ9D4

greenskeeper carl's picture

Im going to take a shot in the dark, just a guess here, and say that most holders of gold and silver also have guns and plenty of 'lead bullion' as well.

 

Although the gold and silver crowd do tend to be very accident prone, and could have lost their guns in a tragic ocean kayak related incident

Okienomics's picture

In addition to criminalizing the exchange of metals for goods ("only terrorists use gold") you can bet your last ounce of bullion there will be a lot of fake metals (gold plated tungston coins).  Precious metals will be as "distrusted" by the public as bitcoin wallets have become.  To maintain the necessary levels of control, tptb will find it absolutely necessary to strafe the lifeboats, i.e., destroy any alternative to the approved financial instruments.

You may be able to trade gold to an underground "dealer" but it will be at a significant discount to whatever value is assigned to it by the globalists.  I'm not saying don't stack, but be clear headed about it.  Play the scenarios out.  If money is outlawed, it will damn hard to convert your metals at anything resembling fair value because the right connections will be, by definition, criminals, and well-armed criminals at that.

Tall Tom's picture

Hiding Gold?

 

This is the best way...

 

Dissolve it in Aqua Regia and then drop it out of solution (with Urea to neutarlize the Nitric Acid and then followed with Sodium Pyrosulfite to release Gold from the Gold Chloride by substitution with Sodium.)

 

It looks like DIRT...MUD...before melting.

 

Check out this picture...

 

http://en.wikipedia.org/wiki/Aqua_regia#/media/File:Golddust.jpg

 

It is real. I own Gold, 24k. 999 Fine, in this form...

 

Over 190 Cell Phones destroyed. Goodbye NSA Tracking Devices. Thank you for the Gold, Obama. The homeless thank you for their drink upon the US Government Obamaphone Program. I will enjoy the shiny....er...MUD.

 

Boris Alotovkrap has a copper mining outfit???

 

He needs to transition to Gold Mining.

 

To turn it back into a recognizable form?

 

Easy. Melt it with a torch. It will look like Gold at that point. But the concealment factor is also lost at that point.

 

And now you know how to hide your Gold.

 

 

Welfare Tycoon's picture

If we had ideal circumstances, I would agree. However, I am saying that there isnt much of a point at this time due to several modern constraints that we have.

1) The government will simply outlaw these methods of trade. All transactions involving gold would have to be done behind closed doors to avoid arrest. This in itself would make gold a risk to handle. 

-I am not sure if you referenced pop-culture spaghetti western's as a pro or con for gold, but I will use that as a point as well (if these movies are even accurate). Why would you want possession of a resource that people will kill for that does not really help you survive to begin with? That seems like a unnecessary added risk to me. 

2) Only a tiny percentage of the population has a physical stock of these resources at the moment. There is not enough widespread use or handling of it in today's economic system to make it a viable currency. 

3) Why would I or some average citizen want to trade my possesions for gold? I think I would rather prefer to buy natural resources like firewood or food if SHTF, not a metal that would have no utilitarian purpose while I am living by the skin of my teeth. There is so little of it in the civilian population's hands that I cannot see how it would serve a widespread use. Correct me if I am wrong, but if I have a steady supply of food, shelter, defense, and warmth, why would I need gold to begin with in a post-apocalyptic world of survival of the fitest?

I will conceed that gold would have purpose if you want to hedge against a shit currency. However, do not think it would serve a good purpose outside of that, especially in regards to a post-collapse trade situation.  

If we lived in a sane economy, I would agree that gold or gold-backed curency would be a viable method of trade. I just do not think that that is possible at this point in time.