The Seven Characteristics of Money

Read the Thursday Afternoon Wrap-up for 3/22/2012 and the Friday Morning Commentary for 3/23/2012

If there is one thing I try to relate, it is that gold is NOT an “investment,” but MONEY.

“Dollars” and “Euros” are currency, but currency is not MONEY.  In my presentation last night, Andy Schectman and I were allocated two slides each before opening the floor for Q&A.  Thus, I had to pick the most important topic in my repertoire, and this is what I chose:

First, a table listing the primary attributes of MONEY, which contrary to popular PROPAGANDA, is not just a medium of exchange.  In fact, the only definitional parameters the dollar satisfies are the least important, its divisibility and fungibility.  Conversely, it doesn’t come close to meeting the other four, all of which are vitally important to your financial health­ – particularly item #3, the necessity to maintain VALUE…

…which the dollar has NOT been since the Federal Reserve was unconstitutionally created in 1913, per the chart below.  For that matter, you could replace the word “dollar” with ANY of the world’s nearly 200 fiat currencies, and the chart would look the same…

I CANNOT EMPHASIZE THIS POINT ENOUGH, and felt compelled to reiterate it when I came across one of Miles Franklin’s marketing pamphlets, titled “GOOD MONEY MUST HAVE SEVEN CHARACTERISTICS.”  This timeless piece was taken from Richard Russell of Dow Theory Letters, and nothing proves my point better:

(1) It must be durable, which is why we don’t use wheat or corn or rice.

(2) It must be divisible, which is why we don’t use art work.

(3) It must be convenient, which is why we don’t use lead or copper.

(4) It must be consistent, which is why we don’t use real estate.

(5) It must possess value in itself, which is why we don’t use paper.

(6) It must be limited in the quantity that is available, which is why we don’t use aluminum or iron.

(7) It should have a long history of acceptance, which is why we don’t use molybdenum or rhodium.

Only GOLD and SILVER fit all seven characteristics.

When deciding how to allocate your wealth, think long and hard of what you consider wealth.  If you owned stocks or real estate for the past decade, there’s probably little wealth left, as well as essentially all bonds except Treasuries, which are only higher because the Federal Reserve purchases roughly two-thirds of all issuance, soon to be 100%.  Only PHYSICAL Precious Metals have maintained purchasing power over this period, or more accurately, dramatically increased it.  Actually, they have done so for more than 5,000 years, leaving in their wake THOUSANDS of failed currencies.

The dollar, Euro, and Pound (among others) are no different than the thousands of failed currencies, and are at the end of their lifespans – simultaneously.  It won’t be long before the lure of PHYSICAL gold and silver yields EXLODING DEMAND, wiping out supply so quickly that companies like Miles Franklin will no longer function.  Not to mention, the simultaneous collapse of the fraudulent PAPER markets, which will destroy the bullion business and any remaining opportunity for you to PROTECT YOURSELF.  When this occurs, gold and silver prices will go hyperbolic, and either you’ll be IN, or OUT.

ONLY PHYSICAL gold and silver are money, and shortly ALL seven billion of the world’s citizens will be painfully aware of this historical FACT.

PROTECT YOURSELF, and do it NOW!Similar Posts:

• The Ultimate Quadruple-Top Breakout
• Miles Franklin Quarterly Report Spring 2012
• What Differentiates Miles Franklin

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