The U.S. Empire Would Have Collapsed Decades Ago If It Didn’t Abandon The Gold Standard

SRSrocco's picture

SRSrocco Report

By the SRSrocco Report,

The U.S. will never go back on a gold standard.  The notion that a U.S. Dollar backed by gold would solve our financial problems is pure folly.  Why?  Because, if the U.S. Empire didn't abandon the gold standard in 1971, it would have collapsed decades ago.

Unfortunately, some of the top experts in the precious metals community continue to suggest that revaluing gold much higher, to say.... $15,000-$50,000 an ounce, would bring confidence back into the Dollar.  Not only will this not happen, it wouldn't save the Dollar even if it did.

Why?  Well, that is the $10.5 trillion question, isn't it?  I provided that exact $10.5 trillion figure for good reason... which I will get to shortly, but the innate value of the U.S. Dollar died decades ago and will never come back.  Basically, it is a DEAD MAN WALKING.

However, the market hasn't figured that out yet, but it will.  It is just a matter of time, and time is running out.

Hugo Salinas Price Was The Motivation For Writing This Article

As I mentioned in prior articles, Hugo Salinas Price has been keeping an eye on International Reserves for many years.  In his recent article, A Reversal In The Trend Of International Reserves, he stated the following:

International Reserves peaked on August 1, 2014, at $12.032 Trillion dollars, and as of October 28, 2016 they stood at $11.066 Trillion dollars.

 

International Reserves

 

When a trend has been firmly in place in the world for 45 years, a reversal of that trend must be the result of a profound change which will produce a new trend that will not be easily altered, just as the previous trend was unalterable for 45 years. The new trend is deflation, contraction of credit.

According to my analysis in a recent article, The Implosion Of The Global Markets Has Started & Can't Be Stopped, the reason the International Reserves peaked and declined, was due to the price of oil falling below $100 in August 2014 and then crashing to $30 by the beginning of 2016:

WTIC vs Reserves

As we can see in the chart, when the price of oil fell below $100, it gutted the oil and goods producing countries economies.  Thus, these countries had to sell off their Reserves (U.S. Treasuries and etc) to offset the losses from a collapsing oil price.  Indeed, this was the very DEFLATION Hugo Salinas Price stated in his article.

Since that article, Hugo and I have had several email exchanges.  In one of our exchanges, he brought to my attention the amount of gold the U.S. would have had to liquidate just to import one million barrels of oil per day.  Looking at his calculations, it turned out to be one hell of a lot of gold.

So, I decided to look into this in more detail to get a better idea of HOW MUCH GOLD would have been liquidated and sold into the market to support the U.S. Empire's insatiable oil consumption.

Let me tell you, it's a great deal more than I ever imagined.

The Total Dollar Amount Of U.S. Net Oil Imports Was Quite Large

If we totaled the Dollar amount of U.S. net oil imports since 1973, the figure is staggering to say the least.  According to the U.S. Energy Information Agency (EIA) data on U.S. net oil imports, the United States spent a stunning $4.8 trillion on its net oil imports from 1973 to 2015.  I wanted to provide data going back until 1971, but the EIA's data for U.S. net oil imports only went back until 1973:

U.S. Net Oil Import Cost

The figures in this chart were calculated by taking the annual average daily net oil imports, multiplying it by the average Brent Crude oil price and then by 365 days per year.  For example, the U.S. spent a record $394 billion on its net oil imports in 2008:

2008 = 11,114,000 barrels per day (x) $97.26 (x) 365 days = $394 billion

While this may not seem like a lot when we compare it to our highly inflated Gross Domestic Product (GDP) of $14.2 trillion in 2008, it turns out to be one heck of a lot of gold when we consider it in respect to our balance of trade deficits.

But, before we get into that, let's look at a chart of annual U.S. net oil imports since 1973:

U.S. net oil imports

As we can see from the chart above, U.S. net oil imports peaked at 12.5 million barrels per day (mbd) in 2005.  According to the EIA, the U.S. consumed 20.8 mbd of petroleum in 2005.  Thus, our net oil imports of 12. 5 mbd were roughly two-thirds (60%) of our total demand that year.

Furthermore, U.S. net oil imports totaled 124 billion barrels from 1973 to 2015.   Again, the total Dollar amount of these net oil imports during that time period was $4.8 trillion.  Even thought that figure may not even raise an eyebrow today, if we consider what it means in "Gold terms", it's off the charts.

U.S. Net Oil Imports Cost More Gold Than Entire Global Gold Holdings

If we look at the data provided by the United States Geological Survey (USGS), total global gold holdings were 171,300 metric tons in 2011:

World Gold Holdings

If we include the global gold mine supply from 2012 to 2015, it totaled 12,200 metric tons.  So, if we add that figure to the world gold holdings of 171,300 metric tons, we end up with a grand total of 183,500 metric tons.

Yes, this is just an estimate of all known world gold holdings.  While some readers may believe there are more like 1-2 million metric tons of gold in the world, due to the work of several precious metals analysts... I DON'T BUY IT.  Why?  Because the facts provide the real answer when we look at cumulative gold production since 1493:

World Gold Production

Even though this stirs up fanciful "conspiracy theories" such as Yamashita's massive gold treasure as well as the supposed hidden Nazi gold hoard, the world cannot hold more gold than it could produce.  Well, maybe it could if we had the help of Aliens from distant planets.  While some readers may actually believe Aliens would come down here and mine gold for us, logic suggests that they would likely have much more important things to do with their time.

Anyhow, the chart above reveals that 166,640 metric tons of gold were mined between 1493 and 2014.  If we add what was mined during ancient times, it is logical to assume (estimate) that the world may contain the 183,500 metric tons of gold.

Unfortunately, even though logic can easily destroy lousy conspiracy theories, folks continue to believe them as fact, regardless.  When I get into a logical debate with someone who continues to believe in a lousy conspiracy, I shut up, because there is no use in going further.  While conspiracies do take place in this crazy world of ours, not everything is a conspiracy.

That being said, let's look at how much gold the United States would have had to liquidate to pay for its net oil imports.

First, let's look at the table below that shows the Gold-Oil price ratio from 1970 to 1980:

Gold-oil ratio table

The table displays the gold price, oil price and the ratio on the right.  If we average the Gold-Oil price ratio for the 1970's decade, we can see that one ounce of gold could purchase 14 barrels of oil.

Second, if we consider that the U.S. average net oil imports were 8 million barrels per day for the 43 year period (1973-2015), that would equate to a staggering 279,500 metric tons of gold:

Gold consumed for U.S. Oil Imports

Yes, that is correct.  If the United States stayed on the gold standard, it would have had to fork over 279,500 metric tons of gold to pay for its net oil imports during that 43 year period (1973-2015).   This is much more than the 183,500 metric tons of known world gold holdings.  Matter-a-fact, the U.S. would have needed almost 100,000 metric tons more of gold to pay for its net oil imports.

This is precisely the reason President Nixon had to abandon the convertibility of the U.S. Dollar into gold.  While there are more factors to consider in the dropping of the Gold-Dollar Peg in 1971, oil was a leading cause.

Okay... I can hear it now from some readers.  Yes, it is true that the United States took this oil and created goods or services that they exported.  So, it makes some sense that not all of of our net oil imports would consume 279.500 metric tons of gold.  However, when we look at additional information.... the situation is even worse.

The U.S. Cumulative Net Trade Deficit Since 1973 Was Far Worse Than Our Oil Import Cost

To make those who "doubt" the figures above, I decided to research the U.S. balance of trade since 1960.  When I added up the total net trade deficits, I was more surprised than the figure of the net oil import cost.

This chart below represents the annual U.S. Balance Of Trade in Goods & Services since 1960:

U.S. Balance of Trade

Looking at the top left-hand part of the chart, you will notice the tiny green smudges on the chart.  These represent the U.S. trade surpluses.  Here are a few of the annual trade surpluses (and deficits) during the 1960's and early 1970's:

U.S. Balance Of Trade

    1965 = $4.7 billion
    1966 = $2.9 billion
    1967 = $2.6 billion
    1968 = $250 million
    1969 = $91 million
    1970 = $2.2 billion
    1971 = -$1.3 billion
    1972 = -$5.4 billion

Well, look at that.  In 1971, the U.S. began to suffer trade deficits.  Even though the United States enjoyed a few more trade surpluses in 1973 & 1975, it ran consecutive deficits for the next 40 years, starting in 1976.

You will notice the trade surpluses were quite tiny compared to the deficits, especially after 2000.  If we add up all the U.S. annual trade deficits from 1976 to 2015, it totaled an amazing $10.5 trillion.  Basically, the U.S. Empire was able to bamboozle the world by exchanging worthless U.S. Dollars or Treasuries for energy or real goods and services.

Furthermore, the $4.8 trillion in U.S. net oil imports from 1973-2015 accounted for nearly 50% of the total U.S. trade deficit of $10.5 trillion.  Which means, the U.S. Empire would have needed to FORK OVER even more gold if we consider the total cumulative $10.5 trillion trade deficit since 1976.

Does anyone actually believe the U.S. is going to make good on its $10.5 trillion in trade deficits.  I am making an assumption here (as I have not taken the time to look at the data), but I image the $11 trillion of International Reserves shown in Hugo Salinas Price's chart above, are mostly accumulated IOU's from the U.S. Empire.

According to this article on Global Currency Reserves, the U.S. Dollar comprised 63% (in green) of the $11.6 trillion total as of the second half of 2014:

Global Currency Reserves

Thus, 63% of the $11.6 trillion equates to $7.2 trillion in U.S. Dollar denominated International Reserves.  Now, where is the other $3.3 trillion of U.S. IOU's to account for the $10.5 trillion in the total U.S. trade deficit, I have no clue.

The U.S. Empire Would Have Collapsed Decades Ago If It Didn't Drop The U.S. Gold Standard

As I stated in the beginning of the article, the U.S. Empire would have been TOAST decades ago if it didn't drop the Dollar-Gold peg.  In order for the United States to continue spreading its SUBURBAN LEECH & SPEND ECONOMY, it desperately needed to come up with a better way to do business than to fork over the rest of its 8,100 metric tons of gold reserves.

Actually, according to the data, U.S. net oil imports that averaged 8 million barrels per day during that 40+ year period, would have liquidated approximately 6,500 metric tons of gold a year.  Here is that table again:

Gold consumption for U.S. net oil imports

Which means, the U.S. Government had to drop the gold standard, or it would have gone the way of present-day Venezuela decades ago.  That may seem like a stretch to some readers, but keeping the world believing in the "ALMIGHTY U.S. DOLLAR" is job number one for the U.S. Treasury and government.

Now, I am not trying to be harsh against the U.S. government for its U.S. DOLLAR DIPLOMACY POLICIES... I am just stating the facts as I see them.  When we look at the data and figures presented in this article, it is clear to see how vital it was for the United States to continue importing oil, without the cost in REAL MONEY... GOLD.

Again, the only way the U.S. Empire could continue business as usual, was to exchange worthless FIAT DOLLAR IOU's for oil, rather than fork over gold that it didn't have.

Especially, when the figures show that the U.S. Empire needed 279,500 metric tons of gold just to pay for its net oil imports.  This turned out to be 100,000 metric tons more gold than the world holds.

This is why the Federal Reserve and Central Banks continue to manipulate the paper price of gold.  Why?  Because, the day the MUSIC FINALLY STOPS, the world will realize there is only one gold chair for the 100 people holding paper IOU's.

Lastly, if you haven't checked out our new PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page, I highly recommend you do.

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yngso's picture

The US bought itself half a century by abandoning gold, but the end is near for USD rule. The IMF SDR will be the new world money, because that's the only way to bail out the broke central banks according to Jim Rickards.

Silver Savior's picture

I would much rather just use gold and silver possibly copper for money directly. That is my dream. I can't even use credit cards or debit cards because they feel so damn fake and no coins back as change.

ebworthen's picture

The Central Banking Kabal and their lackeys would have collapsed and fallen into disrepute or been hung.

The U.S.A. however, perhaps would have not sold out it's citizenry and founding principles.

Lies All Lies's picture

The author of this report follows Hugo Salinas Price and as some will know, that gentleman  is a very wealthy & accomplished  retired Mexican  businessman who is not trying to flog anything (except sound ideas, both monetary and societal).  

Whether you agree or disagree with the interpretation of SRSRocco's views in this current article - and he's copped some flak -  Mr Price’s sage words are well worth a read. (spoiler alert: sh** storm directly ahead)

 

www.plata.com.mx  

Carl LaFong's picture

This article is complet BS. All Nixon had to do was to revalue gold to a few hundred an ounce. Abandoning the gold standard was the beginning of the end of the USD.

hendrik1730's picture

No, since either way, the end result is exactly the same. The gold price soared, period. And it will soar again - where do you think Trump will find lenders for his projects ( infrastructure, defense )?

Foreign countries are SELLING treasuries. Import duties will only make goods ( the US since long does not produce anymore ) much more expensive. Building production facilities in the US 1) take 2 years, 2) require a lot of materials the US will have to buy abroad ( with import duties, making these plants expensive again ), 3) after startup, the manufacturing cost of these plants will be far higher than before the shift back to the US because of 2) and the higher wages in the US.

The end result will be very high inflation and a strong reduction of the purchasing power of the US$ - hence soaring gold prices expressed in US$. Furthermore, when the US raises import duties to say 20% for all imported goods, Trump can expect the other countries to do the same thing for US exports and the US export will collapse - leading to new future plant closedowns.

Protectionism just does NOT work, it makes everyone poor, it leads to economic wars and kills the global economy.

It is dead simple : the US is bankrupt, everyone starts to realise this, so Trump faces an impossible task. He is the E.Hoover of our days.

Infnordz's picture

Agreed, the US should have defaulted by devaluing the currency explicitly rather than by stealthy inflation.

Basically Gold and Silver have been massively undervalued for decades, the paper price in Dollars is a (private) central bank driven fraud!

Lost in translation's picture

This report sucks, blog sucks.

Can we get Chumbawamba back, please?

AgShaman's picture

Assumption based metrics.

If you don't grow a free shit army...you can get by on minimal percentage growth and have quality of life without extravagent debt loads.

At least that's what the tooth fairy told me when I trapped her and forced out all the pertinent secrets to life in McMeristan

kenny500c's picture

Increases income inequality, less inteligent people may have heard the word inflation but they don't understand it besides knowing that prices are going up.

bshirley1968's picture

I am calling bs on the premise of the article.  I won't even bother tog go into all the contextual problems of his analysis.  Like the fact that every dollar wasn't backed by gold in 1971, and had not been for some time, or how we could have devalued the dollar to gold as needed (kind of like we have anyway) to meet the currency demand while having the gold standard as a check and balance against the free willy-nilly credit expansion we have had since 1971.

This country was a powerhouse of growth on the gold standard.  Credit did in 1971 what it does today.  It allowed people to build and buy what they would otherwise have had to wait for.  The credit put growth into hyper mode and has outstripped the economy as we will soon learn.

The rush to make money has turned into the race to stay ahead of the debt.  The stability of gold backed money would have prevented that, just like it did prior to 1913.  There is no coincidence that trade deficits began when we went off the gold standard, because we started buying more than we could ever pay for.  The world stupidly took our soon to be worthless paper.  We will have been a shooting star of success on the time line of history because of this debt bubble we created......soon to burst as we burn out.

To the author I say, "The US Empire would have collapsed decades ago if we had not abandoned the gold standard?  Really?"  Well, we are going to collapse in decades of abandoning the gold standard.........and the collapse is going to a hell of a lot worse since we abandoned gold.  The world and the US is going to wish we would have stayed on the gold stsndard.  They may now be too stupid to realize it, but it will be what they would wish for if they had any sense.

bshirley1968's picture

Let me further add that the debt binge we have been on has exponentially increased the speed with which the debauchery has rotted the soul of our society.

Debt has skewed the value system of our society.  Debt has debased the moral character of our society.  Debt has created vast inequalities in our society.  Debt has been the destruction of many families in our society.  Debt has created a welfare state dependent upon the government.  The price of "Empire", according to the article, is serfdom and debt enslavement.

All so we could build $70k pickups with touch screen radios and backup cameras or yachts with swimming pools built on their decks or personal 757 jets with servants and a jacuzzi or 15,000 sq ft mansions for two (soon to be one) or $12k engagement rings or $300 pair of blue jeans or a $4500 hand bag.   So we could build and buy anything and everything our hearts could imagine and desire.

Is that the definition of empire?  At what price?  The price of our souls and freedom.  No, I am pretty sure we would have lasted longer on the stodgy old gold standard.  Maybe our society would still have some grit, character, and moral fiber.  Maybe we would value more the important things in life like our families, our neighbors, food, clean water, personal freedom........life itself.  Maybe we would be happy being alive and not in a race to see who can borrow the most money.

Stud Duck's picture

Gold is fine for moving liquid assets around in dangerous times. Lead and brass has utility besides a medium of exchange. It also has a lonngtime shelf life to go with the utility. Ammo has actually increased in value relative to gold over the last 8-10 years.

O C Sure's picture

The crux of the argument is that the 14:1 constancy of gold to oil could only be maintained by introducing more dollars?

Seems like the cause of the problem was the monopoly on the banking system that operates on a fractional basis by loaning currency against collateral that does not exist. This being similar to what the eastern banks in the 1800's would do by sending more currency west than they had collateral (any species of commodity) to cover the return of the currency. Thus the run on the banks. To resolve this, the third monopoly on the banking system ensued and the problem they claimed to be solving was instead replicated on a larger scale to other nations.

Had the international run on the monopoly been honored it may not have collapsed the US economy but rather kept it in check thereby holding it to a responsible fiduciary standard (not to mention the possibility of ending the monopoly). This would have been just. It may have exacerbated the ratio but only for as long as it could until other actions within the markets naturally do what they do, such as encouraging new oil discoveries and new methods of oil extraction, etc.

If Empire is the principle at work here and not the market action of a commonwealth, then it seems better to say that the empire could not truly come to be without forcing others to accept its dishonor. However, what made the international empire possible at all was the domestic monopoly, since force begets force. If the domestic banks had not been monopolized and instead naturally matured as honest businesses, then international affairs, in an economic sense, may have become agreeable.

besnook's picture

oil would not have been imported nor would the current account been so out of whack had the usa remained on the gold standard. that is not to say the usa empire would have folded sooner. i am just saying the entire premise of this article is based upon a false assumption that the usa would continue to import oil at the levels it has. other elements like the mpg ratings of autos would have been much greater, alt energy would have been in much more use and more technologically advanced, alternatives to petro fertilizers would have been developed, etc.. i could make an argument just based upon this cursory examination to assert that going off the gold standard and exchanging it with the petro dollar caused the false economic condition that caused the misallocation of resources inhibiting the natural progress of research and technology in the enrgy field.

Kefeer's picture

Take the desired outcome of a story and make the narrative fit.

NoWayJose's picture

Empires fall WHEN they abandon the gold standard. What killed the gold standard was the moon landings and Great Society of LBJ. No nation could afford such things while on a gold standard. The cure was to cut spending - but instead it accelerated spending.

The author's focus on oil is misplaced - the cure was to cut back - and open up more areas in the US to drilling - not import more.

The author is wrong about the gold standard - you do not need a 1-to-1 dollar value in gold - you only need to set or defend a price for gold by buying and delivering it on demand. Does anyone think this requires phyzz?

And the author is wrong about the US returning to the gold standard - it won't - until after the collapse which shows the world the true value of unbacked fiat! To restore confidence in the currency, it will need to be backed or convertible into gold.

O C Sure's picture

1 for 1.

The currency we desire is money, not its contrary.

The paper or blips are the receipt for the money.

The money represents that productive work has been performed on both ends of the current. Money is justice as it equalizes both ends of the current.

Farqued Up's picture

Well, Mr SRS, you collect all the toilet paper you desire and I'll collect all the bling I can afford. You can theorize a while longer as the PTB rampage through the IMF SDR's for a last dying quiver of fiat stalling. It seemed like a good idea to them as they conjured up a world gov with it's spanking new world currency and fit it in with a basket and a shoe horn.

For that to work, they have to get the whole world equalized, thus Mexicans and Muzzies as just 2 examples must be allowed into free access to the fruits of all countries. One major problem, some of us don't like free loaders getting free shit and leaving us workers to support their little rug rats and porch monkeys. We also don't like the browns and blacks raping and pillaging. It won't be long before all hell breaks loose and there will be blood everywhere and I'll bet that much of it will be PTB's. How the hell the Brit Royals have made it without being lynched I'll never know.

I read that Queenie is abdicating and heading for the hills to enter her underground castle. Oh goody, now Jolly Prince Cholly will dumb the Earth to death with his erudite droolings.

SunRise's picture

Gold Price Today:

1,187.82 U.S. Dollar (USD)

 429,872.25 Zimbabwe Dollar (ZWD) (and that's "The New" Zimbabwe Dollar)

 

Zorba's idea's picture

Perhaps it would be good to solve "Triffin's Paradox". Average worker's back pocket is played out.

rf80412's picture

When a national currency is used as an international reserve currency, the issuing country is forced to satisfy foreign demand for its currency by printing it far in excess of domestic demand for its currency, resulting in inflation.  And the way the currency gets into foreign hands is through large and enduring trade deficits.

We'd have to make Keynes' bancor work, or else go with China's plan to use special drawing rights.  The place to start would be oil: allow it to be bought and sold in currencies other than the dollar, and you'd eliminate the biggest reason why other countries need dollars.

But Americans are fucked either way: slow, steady, constant inflation over years and decades or a unimaginably painful and logically permanent deflationary depression as the dollar collapses back to pre-WWII values.

Zorba's idea's picture

Perhaps now would be good time to solve "Triffin's Paradox"

bankerssuck's picture

Good,

when the US empire fails, the world may well be a safer place.

US was entrusted with honest money, and it failed, it should not have the position of world leader when it is a total fraud.

Ridiculous article,

blames gold for the world's problems, rather than the criminal financial engineering.

Gold-Silver can still provide the necessary foundation for the requirements of real money, protecting the wealth of savers and wealth creators, but not takers, as it should be.

 

 

Slomotrainwreck's picture

You are correct, SRSRocco. Gold will never be able to be valued compared to the Dollar. Gold, Silver and other such commodities have a "value" onto themselves. Without the assinine Dollar, gold and silver will reach theitr own natural market value. That being a silver ounce will be worth whatever it will be acceptable to a seller of goods. The dollar is a fallacy. it has no value. it has no means of worthwhile trade comparison. The market will perform quite well as long as some bureaucrat decrees otherwise.

Let's face it. We live in a world of electronoic exchanges. Anyone can exchange silver, dollars, Bitcoin, Monero for whatever media they decide to purchase. The government no longer (will no longer) decide what market value is.

TeethVillage88s's picture

What are the assumptions?

- US Govt, US Banks, US Central bank work to support the value of WRC
- Stock Markets are supported
- R/E Markets are Supported
- Inflation is supported, but damages at least 50% of citizen who's wealth is stagnant
- Use of US military force & defense MIC spending supports WRC/USD
- US Hegemony supports USD

Hm...

- No tech exists to create Gold from cheap elements or compounds
- No big Gold Reserves found in USA
- No substitute for Gold has been identified
- I don;t expect officials or US Leaders to Reveal 3 bullets above or those first

JailBanksters's picture

The US Economy depends on Money loaned into Existance.

Mortgages, Cars, Credit Cards are all the same, as soon as you accept the terms for that loan, money is instantly conjured up out of nothing.

The Money never existed until you borrowed it.

They can't change it, or the entire system will be Bankrupt and the only way to change it, is to Bankrupt the entire system.

And if it's Bankrupt, the Feral Reserve/Rothschilds will loose their stranglehold on the World. So they will beg,  borrow,  steal, create wars, murder, bribe to ensure it doesn't break. Where as the Wall St Banks will do anything to ensure it breaks so they can wipe the slate clean and start again.

It's a fight to the death, Central Banks vs Banks.

 

 

 

Snaffew's picture

What the author of this article fails to comprehend is that gold prices have been artificially suppressed since 1971.  Had gold been the true monetary standard, the author could not make any of these calculations based on historical prices of gold.  The actual price of gold if left as the standard would have increased dramatically to possibly well beyond $15k an oz today.  There are some good ideas in his research, but it is severely flawed with its' complete lack of inciteful reality.

Snaffew's picture

this Price guy did a whole lot of work based on a completely and wildly mis-interpreted price of gold.  You can throw this entire article out the window because of this major erroneous calculation of the primary control point---The assumed price of gold--- had it been left as the monetary standard and not been suppressed by the global banking/ financial leviathon it would surely not have averaged $176 an oz.

dexter_morgan's picture

Ummm, ok sure. If we stayed on we would not have HAD to collapse as debt to infinity not possible.

tbagonya's picture

Either way it happens (forcing cb's hands or good ole supply and demand) gold and it's little bromo are getting revalued....HIGHER! Chinga Derra!

PumpherDumper's picture

The days of the gold standard are over.  Do you know what would happen to the value of gold if the discovery of the massive gold vein in the Grand Canyon were to become common knowledge?

Stud Duck's picture

Shhhhhhhhhhhhh, GAWD DAMMIT you were told!!!!

Herdee's picture

Nixon got caught counterfeiting or printing the currency without gold backing it. At the time you could exchange gold bullion for fiat paper. The French were the first to catch on that the Americans were swindling everyone to finance the Vietnam War. In other words they were cheating the system that everyone trusted. The gold stopped going out only because the United States would have been bankrupted and their reserve currency status thrown out the window with no gold left. The result of the financial scam was inflation until the early 1980's that took about a 20% interest rate to stop. What's misleading about the article is that it gives you the impression that gold is always changing hands when countries trade. That's nonsense. Confidence is the present issue and the federal deficit along with the ability to be able to pay $200 Trillion of unfunded liabilities going forward if the ongoing trigger. The only way out is default or create hyperinflation. The course is being set for the basics behind hyperinflation. Politicians will take the easy way out, guaranteed.

peddling-fiction's picture

+200T Herdee

This also coincides approximately with De Gaulle's loss of power and then quick death.

DarkPurpleHaze's picture

Yep, pure folly and not to be taken seriously. But this was delusional, if not desperate.

 

http://www.tfmetalsreport.com/comment/170246#comment-170246

 

"There is ZERO CHANCE that gold is headed to $1200. ZERO.

Physical demand will not allow it. Additionally, at some point, mines will close due to the lack of profit on extracting difficult veins. This means even less supply. This is all well and good but it's just noise.

Nope. I will eat my hat at 1200. It would be the opportunity of a lifetime. Post-whateverthisis, as fiat finally collapses, the world (including the U.S.) will be forced back onto a gold standard. A gold price that is anything other than multiples higher from here would be tremendously deflationary and counter-productive. Simply divide your favorite measure of dollar money supply by the (alleged) number of ounces held by the U.S., add a few extra thousand dollars on for good measure to allow for overshoot, and you get an ultimate dollar value. Again, multiples higher than today.

Knowing this, why do I even care about $1550 vs $1500 vs $1450 vs $1600. It simply doesn't matter toward the end game. And trust me, The End Game is coming a lot sooner than you think."

Thalamus's picture

I have to disagree with the premise of this article.  If we stayed on the gold standard we would've had to tighten our belt and live within our means, not creating a deficit, so we, though much poorer, wouldn't have any debt and wouldn't experience WWIII or whatever the next calamity is.  

And if we installed Thorium Molten Salt Reactors, since the technology was available in the 50's, our energy problems might have been massively reduced.

Yukon Cornholius's picture

LFTR is the technology that should have been persued from the beginning of the atomic age. Unfortunately the Chinese have the lead on most of the patents and this energy tech will go by the wayside in North America.

El Vaquero's picture

We should be pursuing multiple strategies, but I do like the LFTR concept.  Make them modular, pick places where the geology is nice, and put them 10m or 20m under ground.  If there is a catastrophic failure, and it is too dangerous to go in and fix, just fill the hole up with concrete.  Combine that with the concept of manufacturing liquid fuels from the energy produced, and life might have to change, depending on overall costs, but can you imagine if all of a sudden, we couldn't use oil?  

inosent's picture

That is exactly right. If we had a government that wasn't loaded up with psychotic greedy azhlz, we would never have spent what we did not have, we would have abolished the fed res system to put real money back in the hands of the ppl, the govt would have been forced to shrink, there would have been no expansion of the empire, and the jewSA as a global empire would have ceased to exist. But that does not mean America still would not have been a great country. the jew counterfeit money really f-s things up, and but for all that counterfeit money, the world never would have seen the great wars of the 20th century, and would not be experiencing all the convulsions we see now.

SAD.

#destroyzionismNOW

Grandad Grumps's picture

Gold is not consumed because for the most part it has been recycled throughout history. Oil is consumed by changing it into CO2, CO and H2O. It is not recycled.

Latitude25's picture

If priced high enough gold could purchase any amount of oil.

Clint Liquor's picture

OK, screw the "Gold Standard'. How about we just get convertibility. Require Banks to trade fiat (and visa-versa) for Gold and Silver coins, tax free with a small premium. Give the working people some way to protect their hard earned money from being inflated away.

rf80412's picture

Anybody who did this would quickly end up with a vault full of paper rather than a vault full of metal.  Even if most people would be content to leave "their" gold or silver in the vault and transact with paper or electrons for convenience - unless you figure out how to get people to carry bags full of coins or rigid plastic slips with little squares of gold or silver leaf in them - all it would take is a few wealthy people determined to get the metal for the system to break down ... unless they then decide to become the new banks.

You'd also have to set up a pretty brutal exchange rate or tolerate an enormous leverage ratio because there simply isn't enough gold and silver out there to allow every dollar to be redeemable for metal, never mind every other fiat currency in the world as well.

Clint Liquor's picture

Bullshit! The one oz Silver coin would just become the new $100 Bill and all the fractions thereof. PM price changes everything when it comes to 'redeem-ability'.

You make a good point though: Gold and Silver are way undervalued.

One-Eyed-Thong's picture
One-Eyed-Thong (not verified) Jan 26, 2017 7:10 PM

i think the usa would have collapsed in 1971 due to trade deficits - not because of the gold standard

the bankers printed more notes than they had gold reserves - and by not allowing the bankers to go to jail for fraud, that is why we are where we are today (getting ready for the bubble to pop)

 

before the creation of the usa central bank in 1913 there were NO WORLD WARS - that is NOT a coincidence

El Vaquero's picture

You do realize that when we started the American Revolution and got the French involved, we did start what was, in fact, a world war, right?  The last battle in that war was fought half way around the world, after we had achieved independence.

bankerssuck's picture

Exactly.

The problem is never solved because they conjure up fake culprits..... but it has always been the fucking banksters.

Follow the money and all things become clear in this ponzi crime cabal of banksters.govt.militaryindustrialcomplex.org

We can go back to honest money when the govts fail, which may be very close.

Citxmech's picture

Interesting point.

PS  How 'bout that reserves chart?  JFC - what could possibly go wrong?