Gold is not a hand-to-hand money so it has no “buying power.” Gold is currently acting as an ultimate hedge money. It’s protection against what Mr. Bernanke euphemistically calls “tail risk” of “really, really bad outcomes” aka monetary collapse.
My opinion is that, in the event of monetary collapse, gold could not become hand-to-hand money. It is too scarce and people are not used to using it. Even after the collapse of the Barre regime, Somalians continued using Somali shillings which were rampantly counterfeited and had been hyper-inflated to oblivion. This shows just how difficult it is to arbitrarily define money. Precious metal coinage could certainly re-emerge as money in the wake of an end to national monetary monopolies. Of course, this is a highly unlikely event. Just talk to the average retiree to understand whether the public is widely disposed to “End the Fed” and end the Fed’s monetary monopoly. But even given a monetary collapse, I believe it would take some time for the transition to happen. In the meantime, other highly liquid commodities such as cigarettes, hard alcohol, cell phone cards - even drugs - would function as temporary exchange media for transactions larger than buying a loaf of bread which could not be conducted in the now worthless national money. You would not see precious metal coinage until the economy rebuilt itself from the ashes and copper or silver would likely come into use before gold.
But you can rest assured that, as maniacal as the central bankers are, they really, really don’t want this to happen. What they’re essentially doing is playing chicken with the private sector. The private sector is trying to escape the paper money by flooding into commodities. This is driving Marc Faber’s “bubble in everything.” But, at the same time, if they don’t collapse the system, everyone who’s been fleeing into commodities will get murdered if the economy returns to normal and the commodity bubble collapses. Basically, the central bankers are trying to scare people into not fleeing paper. Dollars are dangerous but so is everything else.
The endgame is nationalization of retirement assets. I think this all started in 2001 with a goal of establishing a global taxing authority, world central bank and - ultimately - a global, cashless monetary system. I think those plans have fallen through. They got shot down in December 2009 when the CRU emails were leaked just before the Copenhagen Summit. But they still have a major mess on their hands in the form of Social Security/Medicare, etc. So, the endgame has changed and the new goal is to gracefully exit the SS/Medicare stranglehold on the Federal budget by simply nationalizing retirement funds and healthcare. In the meantime, they need people to keep their assets parked in 401(k)s and IRAs where they can be folded into some future, not-as-yet-revealed plan to nationalize retirement and combine the 401(k)/IRA and SS system into one national system. This is not significantly different than the systems in some European countries. Step 1 was Obamacare. Step 2 hasn’t happened yet.
The breakdown of the globalists’ plans is why Osama bin Laden was “killed.” They’re aborting mission, cutting losses and taking profits. This is why I don’t believe the gold price is going to plateau. For now, they’re just going to keep scaring the hell out of the private sector while shorting commodities. When the time is right, they’re going to start calling their shorts, central banks will start announcing they’re selling gold and ending QE and bailout measures, fiscal austerity in Greece, etc. will have been imposed and a collapse in commodities will ensue while equities will again hit all-time highs. A year later, the NBER will reveal that we’ve been out of recession for the last two years.
True inflation is high - much higher than the official lies indicate - but nowhere near hyper-inflationary. The gold price is way outpacing true inflation. It is not merely correctional, it actually indicates a speculative belief that the gold price will continue to rise for a long time. I’m double-contrarian right now… not only is the mainstream, as always, wrong (“everything’s fine!”) but so are the perma-bears (“gold will go up forever!”). We’re not fine but I don’t think the present brinkmanship is going to continue indefinitely. The globalists know they’ve lost this round so now they just have to content themselves with profit-taking. Sooner or later, gold/silver are going to have to correct. I don’t want to be in the situation where the central bankers get to decide when my assets are going to crash in value. Of course, it’s tough to find safety in this ultra-bubbly environment.
Clayton -
