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Whether or not a reserve currency, or any currency is officially backed by Gold,
Gold always remains the standard. Either a fixed amount of paper currency is
attached to each ounce of Gold as in a real Gold standard, or there is a
variable amount of paper currency attached to each ounce of Gold. The
standard still exists.
Gold sits in permanent judgement
on any currency, whether officially recognized or not. To ignore the warnings
of Gold does not mean that Gold ceases to do its job. Gold has an indefatigable
integrity and will always do its job, whether or not people acknowledge its
presence, whether or not people even understand what that job is. Gold as the
standard means Gold as the yardstick, or Gold as the measure.
Gold's role is no passive role, it also means Gold as the judge, jury and
executioner. Gold is omnipotent and omnipresent. In the material world of no
absolutes, Gold is as close as it gets. If paper currencies should cease to
exist, Gold would still be there.
When a paper currency lets its
hair down and goes out on the town chasing excessive and seedy ideas and
values, it will find Gold standing by in judgement, like the condemnatory
parent of a 14 year old schoolgirl who has stayed out overnight. The currency
graveyard is full of the bones of government paper currencies that were found
guilty of bad behaviour leading to worthlessness under gold's inscrutable and
stern gaze.
"it is not the government, but the market that makes gold
money..." Professor Antal E. Fekete
Ipso facto, it is also the
market that makes gold the standard of the value that underpins any currency,
at any point in time. Paper coupon currencies are very useful and will,
almost certainly continue to reappear in use. They are wonderfully
convenient, especially for minor transactions, and as long as no wealth is
stored in paper coupons then all is well.
It is only when people arrive at
the breathtakingly silly belief that the pieces of paper themselves are the
value, as opposed to merely the representations of value, that problems
occur. It is akin to waving pieces of paper which have 'rain' printed on them
and expecting the crops to get watered. Paper currencies are not wealth, they
are representations of wealth. The difference is enormous, yet totally
overlooked by many.
Whilst a currency is in
circulation it can always be exchanged for gold. That is where the standard
exerts itself. It matters not what the numbers say on the currency. If the
American currency will cost you 1000 dollars for 1 ounce of gold, when the
Zimbabwean currency will cost you 23 million dollars* for one ounce of gold,
then you can be assured that, at that precise moment, 1000 American dollars
will purchase the same amount of goods, any goods, as 23 million Zimbabwean
dollars. That is because gold is the standard.
It could have been anything that
was the standard of course... anything that was a 'thing', and not just a
promise. It could have been oil, but that is very messy and heavy to carry
around. It could have been carrots, but they deteriorate and so are not a good store of wealth. It could have been
sea-shells but they are not easily divisible. It could have been all sorts of
things, and at various stages of our history it was many things. Eventually
gold was chosen by free people everywhere because it was the one standard
that worked everywhere.
Gold as money has been around
for 3000 years, and absolutely nothing has changed 3000 years later except
that acceptance of gold as the standard of real value has continued to grow
until now it is world wide... with all people of all religions, nations,
sexes, colours, political persuasions and cultures. Gold has dramatically
increased in acceptance during the last 100 years. Marxist government
discussions about building their public toilets out of gold are not heard
much anymore. It is a reasonable conjecture that nothing will change in the
next 3000 years.
State run schools all over the
world fail to educate people in the area of money (they fail in most other
areas also). Many of the products of these school systems have no knowledge
of gold's role or history, and have become impressed by how big the numbers
are on government issued paper coupons.
The 19th Century was a time of
unprecedented prosperity. It was the time of the gold standard, and consequently
a time of relative peace in the world. There were only five wars of any note
during the whole 19th Century. At the turn of the 20th Century over 50
nations had currencies backed wholly by gold**. Then in 1914 the world went
off the gold standard and in 1922 moved to a gold exchange standard.
That was the end of pure gold
currencies and the start of almost a century of innumerable wars and deaths. From
1922, not only gold, but the currencies (UK Pounds and U.S.$'s) of the victorious nations
in WW1 were used as reserves.
The millions of deaths in the
20th Century, including two world wars, and hundreds of wars of 'liberation',
were only overtly caused by psychopathic leaders inspiring simple minded
idealists to take up arms and kill each other. Covertly the wars were caused
by people bearing batty ideas about money and economics.
The fact of the matter is, that
there is a gold standard, and by that standard the US$, and many other currencies
that have lived the wild life of pseudo economic expansion, are currently
found wanting. Paper currencies were printed in bulk by politicians the world
over who were convinced that in their ultimate wisdom they had discovered the
secret to wealth without the need for production. They are now in the process
of discovering, too late, that wealth can only come from production.
As fast as real estate went from
being a no-lose situation to being a no-win situation, will be the same speed
that gold goes from being a dog investment, fit only for 'gold bugs' wearing
tin-foil hats, to being a must-have investment for Main Street. Indications
are that we are very, very close to that point. If you wish to preserve any
wealth it is imperative to buy gold (and/or silver) now. Fortunately it is on
sale at the moment, and it is available if you look around, though you will
almost certainly pay a premium over the so-called 'spot' price of paper
bullion.
Today Gold sits in judgment on
the US$
(amongst other currencies) and has a black hood placed over its head. Gold
also sits in judgment on the foolish politicians and central bankers who,
without the burden of any self doubt, have led America to bankruptcy. In the
words of the worthy Bill Bonner: the day of reckoning has arrived.
"We lived our
lives in a vacuum and allowed so many things to go wrong. We let go of our
freedoms and rights and when we started realising our mistake, it was too
late.
We ceded power to
people we trusted to look after our welfare. We went to sleep and forgot that
good governance, democracy and human rights are precious commodities that
need to be kept under close and constant guard.
What we did can
happen to any nation that relaxes and forgets or ignores the fact that
absolute power corrupts absolutely and that leaders are people who need to be
constantly made to account for their actions." - From a blogger in Zimbabwe-September, 2008
For those of my friends and
readers who have written to me about the difficulties of obtaining bullion, I
am currently dealing with the AuAg999 Company and have found them very reliable. I am currently buying gold in
grams. Firstly because I cannot afford any more ounces, and secondly because
grams could prove to be very useful in the short term.
Sam Mathid
September, 2008
Zimbabwe knocked ten zeros off the end of their currency
last month. If not for that, one ounce of gold in Z$'s
would now cost just over 229 quadrillion Z$'s.
** "Why Gold-Backed Currencies Help
Prevent Wars". Ferdinand Lips
The brilliant
Professor Antal E. Fekete,
economist and mathematician, is conducting a seminar in Canberra, Australia
from the 11th to the 14th November this year. Talk about perfect timing. It
is the ONLY seminar anywhere in the world where all aspects of the gold and
silver basis are discussed, together with a trading system guided by the
basis. Meet and hear one of the giants of our age. Bookings for the seminar
can be made through: feketeaustralia@yahoo.com
I was privileged
to attended Professor Fekete's seminar in Hungary in August of 2006, and will again be
in attendance in Canberra.
Sadly it will be Professor Fekete's last
presentation of Gold
Standard University
Live. Also in attendance will be the loquacious Mr D.R. Schoon
and possibly even Tom Szabo of silveraxis.
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