Hugo Salinas Price – website link
– posted a couple of comments on Stewart Dougherty’s guest post earlier
this week. I concluded that his insights needed to be shared on the
front of this blog and he gave me permission to edit them together to
make them easier to read for everyone. “I know my comment was complex
but I wanted to condense the thoughts I have developed over three
decades:”
I would like to take this chance to share a few of my thoughts on
this. To me it is pretty clear that the American gold is encumbered. Not
because of the usual reasons found on the web but because America
defaulted on its gold under the Nixon administration. There are still,
many foreign claims on that gold. If America starts to use that gold
officially, the gold vultures, like the bond vulture funds, will be out
en masse and with force. So it is in America’s best interest to ignore
that gold – and gold in general.
The world has (finally) realized that a country with the reserve
currency is not something a country should want and that the dollar can
fail. The danger is that it will fail to soon. That is why the euro was
created for example. The currencies from the individual countries were
all issued from the US treasury. Meaning that if the dollar went the
way of the dodo, the European currencies would die with it. Enter the
euro, issued from gold [the euro was originally partially backed by
gold]. The gold held by the ECB is priced on a mark to market basis.
You can check the website of the ECB, its number one asset is listed as
gold and, sadly, gold receivables [meaning that gold is leased out].
Most of the Eurasian landmass followed this initiative [pricing Central
Bank gold on a mark to market basis] – for instance, the BRICS
countries. All that is needed a rebalancing of the gold holdings of
major countries. Enter China. They had way too little gold and way too
many dollars. But last year they also started to mark their gold
holdings to market.
Seems to me the world is ready to hyperinflate into gold. After all,
all currencies have already hyperinflated in the financial world. When
the run on real things happens, as a system operator, you don’t want
that since a functioning printing press is worth way more than gold. So
you want to guide the hyperinflation into a useless metal and use this
gold to help equalize the tradeflows. They cannot implement a global
political & economic system when things are unstable because it will
fail again and soon. Just as all reserve currencies did since late
1400. If I were in the position of the globalists, I would aim for the
Roman model. Split the money concept. Currency for spending and settling
debts but use gold and silver as a final debt extinguisher. This would
function to prevent the kind of mess the EU countries are now in. The
debts of the south are the assets of the North. This is a recipe for
disaster.
Let me elaborate on why I think that the world is ready to
hyperinflate in gold terms. The Western public will not hold an asset
that goes nowhere, at least in currency terms. The public in the East
were never fooled that way. Some – I think rightly – joke “if one can
only see value in paper currency terms, one cannot see value at all”. I
also think gold is wealth and not money. Gold has always been funny in
that way. So many people worldwide think of it as money even though its
supply tends to dry up as the price rises.
First the Comex will be thrown under the bus to destroy the paper
leverage (price suppression) game. Maybe the LBMA as well though I would
not be surprised as well if it’s allowed to stay alive. Then the prices
can rise and the message will sent: “gold is the new wealth reserve to
balance trade imbalances and then the Western hyperinflation will be
killed.” Central banks lose most of their gold reserves (and that is
good) and gold can do what it did for millennia again, settle trade
imbalances.
As usual, in historical terms, most of the average people wont have
it besides a few grams. But it will be people, not institutions that
control it and will help to create a decentralised counterforce to the
centralized system we live in that is hopelessly out of touch with
reality.
A last thing, courtesy of JS mineset, of the countries that value
their gold on a mark to market basis (a few others may have followed
since this graph was created:
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Dave Kranzler spent many years working in various Wall Street jobs. After business school, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance, and graduated Oberlin College with majors in Economics and English. Dave has nearly thirty years of experience in studying, researching, analyzing and investing in the financial markets. Currently he co-manages a precious metals and mining stock investment fund in Denver and publishes the Mining Stock and Short Seller Journals. Contact Dave at dkranzler62@gmail.com.
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The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
