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Dollar-Priced Gold

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Published : September 06th, 2012
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Category : Market Analysis

 

 

 

 

I have long emphasized a point that few – if any – discuss regularly. To me, it’s not just the MOST IMPORTANT VARIABLE in understanding REAL MONEY; but ultimately, the key to the Cartel’s demise, and with it, the GLOBAL FIAT CURRENCY REGIME. And that point, of course, is that the world DOES NOT revolve around the United States!


Twelve years into the world’s most powerful bull market – or should I say, the most powerful fiat bear market – I cannot recall a SINGLE DAY when the U.S. MSM, or newsletter/analyst community – discussed the movement of PM prices in anything other than dollars.


Remember, for a substance to truly act as MONEY – as opposed to just currency – it must meet ALL the parameters below. Dollars, Euros, and Yen only meet the two black-highlighted points – the LEAST IMPORTANT, I might add – as countless substances are both divisible and fungible




Conversely, only GOLD and SILVER are accepted mediums of exchange EVERYWHERE – which the dollar, Euro and Yen are decidedly NOT – and serve as reliable stores of value, exactly the OPPOSITE of the dollar’s performance during the Fed’s 99-year “reign of terror”…




Sadly, the secular, sheltered MSM – and much of the “PM community” – refuses to acknowledge, or even understand, that these issues are not just American, but GLOBAL. And equally important, that PMs are not only priced in dollars. The fact is, essentially EVERY country has its own fiat currency; most of which have been anchored to the failing dollar since the gold standard was abandoned 41 years ago – and thus, will soon be DEAD…


The Average Life Expectancy For A Fiat Currency Is 27 Years … Every 30 To 40 Years The Reigning Monetary System Fails And Has To Be Retooled


Because the U.S. dollar was granted “reserve currency” status at Bretton Woods in 1944 – the world is DROWNING in dollar reserves. Nearly all nations have been furiously trading them for ITEMS OF REAL VALUE, but there are simply too many to go around, chasing an increasingly scarce supply of “THINGS”…


Why Central Banks are Buying Gold


Thus, currencies are ALL falling in value against commodities – GLOBAL RECESSION NOTWITHSTANDING – some more than others. The dollar has certainly been weak, but remains atop the “currency totem pole” due to said reserve status. Thus, currency collapse, and the resultant inflation, has been greater EVERYWHERE – as reflected in higher-priced PMs in nearly ALL other currencies. Not only that, currency “blocs” like the Euro are under pressure from the POLITICAL ramifications of ill-begotten alliances; thus, even so-called “first world” countries are experiencing surging inflation and collapsing fiat confidence…


Italians Squeezed by $9.50-a-Gallon Gas Face Costly Drive


…but then again, even “strong” political unions like the States are suffering from the final stages of “fiat cancer”…


Near record U.S. gas prices foreshadow new economic crash


The beauty about gold and silver – as opposed to “investments” – is they have inelastic supply AND demand. In other words, the higher the price, the higher the demand; and, care of the interaction of myriad factors, supply has an extremely limited response to higher prices and demand. Thus, as fiat currencies fail – one by one – GLOBAL PM demand increases, while supply remains stagnant. As I write, numerous currencies have risen to within a few percent of last year’s ALL-TIME HIGHS – most notably, the WORLD’S TWO MOST IMPORTANT MARKETS – Euro gold and Rupee gold – as I write about most every day.


Each time PMs hit ALL-TIME HIGHS in another currency, demand growths surges further – but particularly, when the two billion people utilizing Euros…




…and Indian Rupees realize their currencies have officially become TRASH against REAL MONEY.




In my view, these two events – likely to occur simultaneously – will catalyze the long awaited PHYSICAL PM mania that causes the GLOBAL financial system to quickly unravel, with the FINAL BLOW to occur when “DOLLAR-PRICED GOLD” breaks its own ALL-TIME HIGH of $1,920/oz – and subsequently, the ULTIMATE KEY ROUND NUMBER of $2,000/oz




PROTECT YOURSELF, and do it NOW!


 

 



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Andrew Hoffman was a buy-side and sell-side analyst in the United States (including six years as an II-ranked oilfield service analyst at Salomon Smith Barney), but since 2002 his focus has been entirely in the metals markets, principally gold and silver. He recently worked as a consultant to junior mining companies, head of Corporate Development, and VP of Investor Relations for different mining ventures, and is now the Director of Marketing for Miles Franklin, a U.S.-based bullion dealer.
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