by Dave Kranzler, Investment Research Dynamics:
If one can only see value in paper currency terms, one cannot see value at all
Hugo Salinas Price – website link – posted a couple of comments on Stewart Dougherty’s guest post earlier this week. I concluded that his insights needed to be shared on the front of this blog and he gave me permission to edit them together to make them easier to read for everyone. “I know my comment was complex but I wanted to condense the thoughts I have developed over three decades:”
I would like to take this chance to share a few of my thoughts on this. To me it is pretty clear that the American gold is encumbered. Not because of the usual reasons found on the web but because America defaulted on its gold under the Nixon administration. There are still, many foreign claims on that gold. If America starts to use that gold officially, the gold vultures, like the bond vulture funds, will be out en masse and with force. So it is in America’s best interest to ignore that gold – and gold in general.
The world has (finally) realized that a country with the reserve currency is not something a country should want and that the dollar can fail. The danger is that it will fail to soon. That is why the euro was created for example. The currencies from the individual countries were all issued from the US treasury. Meaning that if the dollar went the way of the dodo, the European currencies would die with it. Enter the euro, issued from gold [the euro was originally partially backed by gold]. The gold held by the ECB is priced on a mark to market basis. You can check the website of the ECB, its number one asset is listed as gold and, sadly, gold receivables [meaning that gold is leased out]. Most of the Eurasian landmass followed this initiative [pricing Central Bank gold on a mark to market basis] – for instance, the BRICS countries. All that is needed a rebalancing of the gold holdings of major countries. Enter China. They had way too little gold and way too many dollars. But last year they also started to mark their gold holdings to market.
Seems to me the world is ready to hyperinflate into gold. After all, all currencies have already hyperinflated in the financial world. When the run on real things happens, as a system operator, you don’t want that since a functioning printing press is worth way more than gold. So you want to guide the hyperinflation into a useless metal and use this gold to help equalize the tradeflows. They cannot implement a global political & economic system when things are unstable because it will fail again and soon. Just as all reserve currencies did since late 1400. If I were in the position of the globalists, I would aim for the Roman model. Split the money concept. Currency for spending and settling debts but use gold and silver as a final debt extinguisher. This would function to prevent the kind of mess the EU countries are now in. The debts of the south are the assets of the North. This is a recipe for disaster.
Let me elaborate on why I think that the world is ready to hyperinflate in gold terms. The Western public will not hold an asset that goes nowhere, at least in currency terms. The public in the East were never fooled that way. Some – I think rightly – joke “if one can only see value in paper currency terms, one cannot see value at all”. I also think gold is wealth and not money. Gold has always been funny in that way. So many people worldwide think of it as money even though its supply tends to dry up as the price rises.
First the Comex will be thrown under the bus to destroy the paper leverage (price suppression) game. Maybe the LBMA as well though I would not be surprised as well if it’s allowed to stay alive. Then the prices can rise and the message will sent: “gold is the new wealth reserve to balance trade imbalances and then the Western hyperinflation will be killed.” Central banks lose most of their gold reserves (and that is good) and gold can do what it did for millennia again, settle trade imbalances.
As usual, in historical terms, most of the average people wont have it besides a few grams. But it will be people, not institutions that control it and will help to create a decentralised counterforce to the centralized system we live in that is hopelessly out of touch with reality.
A last thing, courtesy of JS mineset, of the countries that value their gold on a mark to market basis (a few others may have followed since this graph was created:
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