“...the broken wall, the burning
roof and tower, and Agamemnon dead.”
W. B. Yeats, Leda
and the Swan
Hugo Salinas-Price reminds us of something important in a striking 'heart of
the matter' essay.
Gold is the standard of monetary value, because of its unique characteristics
which are founded in nature, and are contingent on no other counterparty.
And this is why central bankers are so interested in the relative value of
their paper and gold, even if they choose to feign indifference.
The ratio of increase of gold bullion is relatively steady at 1.75% increase
per year, also known as the 'stock-to-flow' ratio. This is discussed in more
detail by Ronald-Peter Stöferle, Analyst at Erste Bank, and James Turk, in the video below.
Gold and silver are the benchmarks, the 'north star' if you will of monetary
exchange fluctuations throughout history. It is how one finds their way
through the troubled waters of currency devaluations, war, and temporal customs
Empires rise and fall, and currencies come and go; gold and silver endure.
The Price of the Dollar
By Hugo Salinas Price
December 4, 2012
It is a mistake to attribute a price to gold.
What is in question today – and has been in question for a century
– is not the price of gold, but rather the price of the dollar, and in
turn, the price of all the fiat currencies of the world, which are nothing
more than derivatives of the fiat dollar.
The price of the dollar today is 0.01835 grams of gold. That it to say, it is less that
two-hundredths of a gram of gold; physically, a tiny speck of gold. We have
to turn the popularly quoted “price” of gold around: at $1,695
dollars for an ounce of gold.
If you want the price of the dollar in ounces of gold, take $1 dollar and
divide it by 1695 = 0.0005899 ounces of gold. In other words, slightly less
than six ten-thousandths of an ounce of gold will buy you a dollar.
Since gold is the numeraire – the
substance which prices all fiat currencies – it is not the price of
gold which is fluctuating, as the popular press and mainstream media would
have us believe. What fluctuate are the diverse prices of all currencies.
We know that the banking cartels which issue these currencies all strive to
control the dollar prices of their currencies by numberless forms of
intervention in the world markets. Of course, the prime fiat currency (of
which all the others are derivatives) is the US dollar and its price in gold
is continuously manipulated in a vain attempt to keep it from falling.
The false “dollar price of gold” is promoted and published as a
deft and subtle means of throwing public opinion on a mistaken track right at
the start of any consideration of gold. The “dollar price of
gold” is a case of the tail wagging the dog.
The gold price of the dollar has fallen from 0.8886572 grams of gold in 1934
(at “$35 dollars an ounce”) or slightly less that
nine-tenths of a gram, to less than two-hundredths of a gram today.
Unless monetary policy changes in a revolutionary manner, the gold price of
the dollar is going to continue to fall until it approaches zero. In other
words, eventually the dollar will be worthless in terms of gold.
"I met a traveller
from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them on the sand,
Half sunk, a shattered visage lies, whose frown
And wrinkled lip and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear:
"My name is Ozymandias, King of Kings:
Look on my works, ye mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away."
Percy Bysshe Shelley