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Why is Gold appreciating?

by on December 22, 2011

Many people would say that Gold and other precious metals are gaining momentum, as a hedge against inflation and economic/financial turmoil.

This certainly is a motivation to buy some for many awakening members of the public.

It’s not, however, the reason Central Banks are buying Gold.

Are the Powers that Be unhappy with the appreciation of Gold?
Many seem to think so. They say the banks suppress the price of Gold, to hide the depreciation of paper currencies. The people from http://www.gata.com have been exposing that process for years.

On the other hand: the Powers that Be control or outright own most of the Gold. The few ounces that the few people reading the Free Media own, are not a significant part of the World’s Gold reserves.

Where these reserves are? Nobody knows.
But it is a reasonable bet, that the same families that control the FED and other CB’s, also own most of the Gold. After all: we used to have a Gold Standard under their control, the Rothschilds made their fortune with it. It is unlikely they dumped their Gold after 1972, when Nixon finally killed Bretton Woods.

So the rising price of Gold increases the worth of their Gold too.

Ah, you say, but it decreases the relative worth of their paper monopoly.
True, but that is end of life as it is.

A new Gold Standard is the likely solution for the problems they created with paper.

That’s the fundamental reason why Gold has been on the up for years now. The avant garde in the market is speculating Gold will be restored as the Phoenix our bosses so much like to associate themselves with.

And if Gold is indeed reinstated, it will have to buy up all the paper around. In practice it will be more complicated than that, there will likely be a haircut for those holding paper, but basically this is what is going to happen.

And if it does, Gold would have to go to about 40k dollars per ounce to be able to mop up all the paper.

So as long as a new Gold Standard is a plausible ‘solution’ to the current ‘problems’, it will continue to appreciate. Notwithstanding the fierce downward corrections that we have seen over the last few years.

8 Comments
  1. I like to put things down simply: The reason I am against the gold standard? The answer: “I don’t have any!” Ha! And neither do you, at least not a whole lot; that is my bet. I believe you would have to have a considerable stash to come out ahead if a gold standard was implemented.

    To me the most important question is: Are we in this monetary reform game just for our own sake? If so, then we could just keep things as they are and gather as much as we can and the devil take the hindmost! But I have seen enough by now to be sure that there are plenty of us who wish to see a more fair and equitable monetary system than what we have now. A system that will serve the greater good and not just the few.

    Like many others, I learned that the dollar was doomed and the only replacement I could see was gold. It’s solid, lasting, sought after, and keeps its value over time and is stable (more or less). However, lately I have come to realize that gold as money would of course favor those who have lots of it over those who don’t and thus would have to buy it or work for it from the holders. The perverse golden rule applies: “He who owns the gold makes the rules!” In other words, even if you pull in gold and get a more solid and stable system, does this mean that the new system will be more fair than the old? I am sorry, but I don’t think so. Especially not if the same people are in charge as today.

    Let’s put it like this: I am a small farmer who spends most of my time working for the biggest farmer in the neighborhood. So far the community has been using grain as money, but for some reason there has been a glut and inflation has taken place and there has been other problems as well. The big honcho then proposes and argues convincingly that gold would be a much better solution. He tells me that I do not have to store grain which rots and has a limited life span etc etc etc. Gold is the solution he proclaims! And I think about how in the past the farmer has grown all the grain as he had the best land and he does not own a gold mine, I am pretty sure of that! I sleep really well that night as I have just lost most of my savings due to bad weather and a leak in the roof.

    The question now for all wise people to ponder is: What are the chances I will be better off in the future with the “new” money?

    Another question is: If we are talking about real healthy monetary reform, then what kind of money would a working person suggest, I mean someone who actually works for a living and not only pushes buttons on a computer. Or maybe rather has others that pushes buttons for him!
    Anyway, it seems we need the kind of money that is fair towards the farmer and the carpenter and the driver and everyone. The ones who comprise the world that surrounds us and that actually deliver goods and services we need and appreciate. And the answer as far as I have understood looks much like mutual credit.

  2. Hi Anthony, I find your articles very insightful and interesting!
    With our situation here, our fiat currency vs gold-standard currency; I see no damn difference!
    Because it can be munipulated with inflation/deflation plus interest. Those money masters use fractional reserve banking, its is a disease. As long as they use inflation on any commodity or currency, it causes problems. Even if the whole world trades on tea-blocks, you can produce many as hell,or make it a scarcity; interest is still there and this fiscal paradigm as whole with those parameters(interest,inflation/deflation)…. It does not matter wheather it is gold or silver. It is the fiscal system of fractional banking is the disease!

    If it was not for interest, everyone will be rich. Just like the times of Golden Age of Asia and the Middle East. That is why Islam,Christianity, Judaism and Buddhism says no to interest, its a disease.

    As for gold, if one hedges his savings into Gold or silver. Just say one man has never saved his money in his entire life and he has saved a fortune, and all the money will go away this year due to a global depression. How does he preserve his wealth. Why alot people say its a good way to preserve. But some people say no, since gold might crash… I don’t know.

    Look, im no expert at economics but please advise me about how to preserve my savings, so that after the some global crisis, I can see my money again.

    Thanks

    • Hi Ed,

      thanks!

      To be honest: more people ask me and some time back I wrote this:
      https://realcurrencies.wordpress.com/2012/01/29/how-about-wealth-preservation/

      But I can give some advice:
      – Liquidate all paper assets. Both paper money and stocks/bonds/options.
      – buy a little Gold or Silver, 10 to 20% of your assets. No more: this will cover you if things get really nasty, but it is not enough for you to start hoping things will go wrong.
      – Spend all the rest of your paper savings on:
      paying off debts and mortgage
      investing in things that make you less dependent on the grid: a vegetable garden, cheap electricity for your house.
      Invest in education
      use your savings for a sabbatical: quit your job and start doing something that will be less stressful and more beneficial for your community.
      Prepare spiritually: that’s what this time is all about.

Trackbacks & Pingbacks

  1. Bloomberg, the dying Fed and the birth pangs of the new Gold Standard « Real Currencies
  2. Don’t hoard the Means of Exchange! (Part 1) « Real Currencies
  3. Inflation? Deflation? Stagflation? « Real Currencies
  4. How about Wealth Preservation? « Real Currencies
  5. Why Bankers love Gold « Realcurrencies's Blog

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