Could there have ever been constructed four finer sentences strung
together for the purpose of defining eight items related to money and social
standing than the following?
"Gold is the money of kings. Silver is the money of gentlemen.
Barter is the money of peasants. And debt is the money of slaves."
While they sound impressive, and while I understand the reason for their
construct, I actually take umbrage with the linkage of debt to slavery
because slavery is a man-induced condition whereby one man is responsible for
the enslavement of another while debt is often (but not always) a choice made
by the individual. If that were a paragraph to which I could be allowed to
impart my name, I would say "And debt is the money of sloth",
rather than "slave," where those that opt for debt over savings
wind up with an unfavourable outcome, one connoted by the original sin of
"sloth." Ergo, the alteration. . .
"Debt is the money of sloth; barter is the money of
peasants; silver is the money of gentlemen; but GOLD is the money of
kings."
Now that sounds one helluva lot better because it disassociates the
unfortunate "slave" from the term "debt" as one may
safely assume that the laborers that built the Great Pyramids of Egypt didn't
owe anyone a dime while those mighty workers that built the American cotton
dynasties had very little knowledge of the concept of "debt" while
struggling to endure the Atlantic crossing in the hold of a Spanish or Dutch
or Portuguese vessel.
It gets even more interesting. Take a look at the following picture of a
"carriage" a solid gold, US$158 million vehicle that must be pulled
by eight horses and which contains 128,000 ounces of gold.
Photo by Joey O'Rourke
We must therefore rewrite the quote one more time to include the rightful
owner of this majestic vessel of epic history and grandeur.
"Debt is the money of sloth; barter is the money of peasants;
silver is the money of gentlemen; but gold is the money of QUEENS."
England is, in fact, the only nation on the face of the earth whose
citizens, after essentially removing all legislative power from the monarchy,
allowed them to remain as an integral part of the heritage and social fabric
of its people. Under this system, the British Empire was born and went on to
be omnipotent in its scope and historical influence since the early 1300s.
The Golden State Coach is a suitable emblem of just such an empire and is
deserving of considerable mention.
Now, is "barter" truly the domain of "peasants"? In
modern times, the resurgence of the art of "barter" is only
noticeable in countries where regimes continually debase currency. In India,
"barter" in the public food markets and bazaars is not only
expected but also DEMANDED because to engage a vendor without the act of
barter is actually an insult to the vendor, as in, one has SO much money that
little value is given to the product being displayed. In Weimar Germany
1921-1923, "barter" was a necessity as the prices of milk and bread
and meat and vegetables would change literally by the hour as the Reich mark
used by the citizens was soundly rejected in favor of stores of value that
actually fell into the category of "staples." People who haggle
over price are not normally "peasants" but rather "price
seekers" whose primary function is to collectively seek out the fair,
market-determined "price" of a particular good or service. Finally,
in terms of social standing, those that barter in the search for fair and
honest pricing are typically of the working classes, not all of whom would be
deemed "peasants."
"Debt is the money of sloth; barter is the money of "the working
classes"; silver is the money of gentlemen; but gold is the money of
queens."
Which leaves us to the topic of "silver" so beautifully
described in the original quote: "Silver is the money of gentlemen."
That word bears repeating: "gentlemen." In modern parlance, a
gentleman is any man of "good, courteous conduct." Originally, a
gentleman was a man of the lowest rank of the English gentry, standing below
an esquire and above a yeoman, which meant that the bulk of commerce
transacted throughout the empire was in silver, not gold, because the bulk of
commerce could not afford gold's constrictive qualities but rather preferred
silver's far-more-ductile applications. Hence, silver shall remain "the
money of gentlemen."
Over time and throughout the annals of history, both gold and silver have
been the currencies of choice for those citizens desirous of vessels within
which one might shelter one's true wealth. However, since the advent of the
modern fiat regimes and the abandonment of the Breton Woods agreement by
Nixon in 1973, the investing populace gradually at first, then suddenly came
to the recognition that sound money (gold and silver) had been subjugated by
the U.S. dollar so foreign treasuries and central banks began to build large
foreign reserves of dollars and abandoned gold. Despite that trend ending in
and around 2003, through interventions and moral suasion, gold and silver
prices were managed by the controllers so as to diffuse their historical
roles as economic "coal mine canaries."
Since the arrival of the New Millennium, we have had the dot.com meltdown,
the 9/11 attacks, the Great Financial Crisis (err-fraudulent bailout), and
unprecedented credit creation and money-printing, yet gold has never been
allowed to resume its rightful place on the throne of fiscal sanity. Many
would point to the ascent from $250 per ounce in the late 1990s to $1,920 in
August 2011 as the move that would constitute gold's "rightful
place" but that is not exactly correct. From the graphic shown below, it
makes no common sense whatsoever to believe that the U.S. is better equipped
or more likely to repay its gargantuan debt load than China, Japan or Italy.
Why on earth would anyone place their faith in the currency of a nation
whose banks blew up the financial system and then got rescued while millions
of jobs went offshore with nary a soul going to jail?
Another graphic that depicts the Ponzi-like status of the U.S. dollar is
the total public debt measured against the 8,133.5 metric tonnes of gold and
the 25,000 metric tonnes of silver held by the U.S. Treasury.
The purpose of this exercise is to illustrate why the U.S. dollar has no
right to wear the robe of the world's reserve currency. Britain lost its
right to strut around waving the pound in everyone's face after a century of
empire-building through naval superiority after the Germans bombed them into
submission during WWII. Debts incurred defending their little island crippled
their economy and torpedoed the pound leaving them a shadow of the nation
that ruled the waves for a generation or two. Soon after the Allies emerged
victorious, the mantle of reserve currency status was transferred to the
mighty American dollar backed by an omnipotent military machine and a
juggernaut of growth in the U.S. post-war expansion. However, the U.S. fell
victim to hubris and mistaken patriotism and forgot all of the warnings
imbedded by its Founding Fathers about faulty imperialism and the dangers of
empire maintenance and in a series of steps that violated the spirit and
intent of its Constitution, it abandoned the use of silver and gold designed
to govern the frailties of the common man and instead set about to convince
the planet that it was the only nation allowed to print its currency based
upon the full faith and credit of its government.
During the mighty boom years of the post-war period 1945-1969, it was hard
not to believe in America's Divine Right to world supremacy. The U.S. had the
massive job-creating industrial powerhouse that allowed men to forge ahead as
sole breadwinners in families where stay-at-home mothers raised their
baby-boomer children. However, as has been proven throughout history whether
Spartan or Roman or British Empires, declines from the throne of world
domination occur quietly at first, where the duel dangers of denial and
desperation combine to unseat the emperors. I believe that in the case of the
U.S., it began in the late 1950s when General Eisenhower issued a warning
during his farewell speech: "In the councils of government, we must
guard against the acquisition of unwarranted influence, whether sought or
unsought, by the military-industrial complex. The potential for the
disastrous rise of misplaced power exists and will persist."
In the next decade, assassinations of two Kennedys and Martin Luther King
as well as civil strife and a totally ill-fated and ill-planned sojourn into
Vietnam left the American Empire on the verge of disintegration, and it was
only after the stagflation 1970s that a rebirth of sorts occurred with the
arrival of Ronald Reagan. The problem with the last 40 years is that it was
allowed to go completely out of control when Richard Nixon terminated the
Bretton Woods Agreement and rendered the U.S. dollar a totally
"fiat" currency. Gone forever was the convertibility of dollars to
gold and with that, the American military-industrial complex had full
authorization to spend whatever and wherever it wished. Had Bretton Woods not
been abandoned, the safeguards envisioned by the Founding Fathers would not
have allowed the fiscal profligacy that enabled the American war machine to
terrorize the Middle East in the name of "stability." It still
continues to this day with U.S. troops actively engaged in Afghanistan, Iraq,
Syria, Yemen, Somalia, Libya and Niger.
This is the primary reason that I have always said that gold will be
hard-pressed to see $1,900 again until the USS Nimitz pulls into Gibraltar
for a re-fit and they refuse the credit card—which IS coming.
The Silver "Double-Tap" for 2019
The two charts above in combination with last week's silver COT allow me
to establish a strategic "double-tap" in that we have technical
evidence of a breakout in silver with the 200-dma moving average at $15.56 in
the crosshairs while we have the gold-silver ratio (GTSR) above 85, an ideal
entry point for silver relative to gold. Since gold has broken back above
$1,250, it stands to reason that the GTSR should decline, which gives silver
added torque going into year-end. I am going to assume that gold can print
$1,300 in the next three weeks and as it advances, the GTSR, now at 85.23,
declines to 80. That takes silver to $16.25 from tomorrow's $4.75 entry
point, an advance of 10.16% for the trade. I have already written and tweeted
my two purchases of the SLV April $13 calls for $1.00 and $0.92 and which now
reside at $1.16. If SLV makes the same move, it will get to $15.12 putting
the April calls at an intrinsic value of $2.12 representing a 120.8% return.
So, the breakout in gold above $1,250 is the first "tap" while
the second is the GTSR north of 85; this "double-tap" signal is the
impetus for the trade.
While gold may be the currency of kings and queens, silver was and is
designed to be the currency of the masses, and whether or not these masses
are comprised of gentlemen is irrelevant; when the dollars currently fleeing
crypto, cannabis and finally the FANGS get reinvested between now and
year-end, it is my belief that gold and silver will be recipients, with
SILVER firmly in the Millennial crosshairs.
[NLINSERT]
Charts and image provided by the author.
Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of
the data provided. Nothing contained herein is intended or shall be deemed to
be investment advice, implied or otherwise. This letter represents my views
and replicates trades that I am making but nothing more than that. Always
consult your registered advisor to assist you with your investments. I accept
no liability for any loss arising from the use of the data contained on this
letter. Options and junior mining stocks contain a high level of risk that
may result in the loss of part or all invested capital and therefore are
suitable for experienced and professional investors and traders only. One
should be familiar with the risks involved in junior mining and options
trading and we recommend consulting a financial adviser if you feel you do
not understand the risks involved.
