An
ancient gnarled tree:
Too fibrous for a logger’s
saw,
Too twisted to fit a
carpenter’s square,
Outlasts the whole forest. TAOISM
The late John
Maynard Keynes, a revered economist and said to be the father of today’s western
economic philosophy (Keynesianism) once called gold coins a “barbaric relic.”
Is gold like
the ancient gnarled tree:
Too heavy to
carry around as money,
Too laborious
to find and too energy intensive to mint into coins?
Gold’s
obscurity as wealth is still debated even today, yet it has been the desire of
many powerful leaders in history. It has compelled men to risk their lives for
it and many wars have been fought over it. Yet for some strange reason gold is
commonly frowned upon by the average financial expert. They say it’s useless as
an investment because it produces “no interest or dividends.”
Could this obscurity
be why gold has outlasted all paper currencies, banks, governments and stock
markets throughout all history, like the gnarled tree outlasting the whole forest?
Is gold so important as money that it’s considered useless by many financial
experts? Is this gold’s secret to success?
Even the great
Warren Buffet is not in favor of investing in gold. Meanwhile his father and
former governor of Nebraska, Howard Buffet was a strong supporter of the gold
standard and oddly enough, Warren himself started his investing career in the
jewelry business.
However, the founder
of one of Wall Street’s biggest institutions, J.P. Morgan once said, “Gold is money, and nothing else.” Let’s
explore this statement for a moment. So what is “money?” As defined by the 1980
edition of Webster Encyclopedic Dictionary; Money: Coin; gold, silver, or other metal, stamped by public authority and
used as the medium of exchange; in a wider sense, any equivalent for
commodities, and for which individuals readily exchange their goods or
services; a circulating medium; wealth; affluence. So, is money the paper
currency we carry in our pockets or the deposits we have at the bank? Well,
here’s what Webster defines as paper
currency: bank notes, or other
documents serving as a substitute for money or a representative of it.
You mean CASH is not MONEY!?
Bank
notes or currency as they are commonly referred to, are issued by a country’s
central bank and represent the DEBT of that nation, NOT money! For
example; a Federal Reserve Note is issued by America’s central bank called the
“Federal Reserve.” Currency with no gold or silver backing is called a “fiat
currency.” This means the currency only has value based on the good faith and
credit of the nation. It’s just like a promissory note between two individuals;
one is the lender, the other the borrower. Similarly deposits at a bank are
credit. You, the depositor are the lender and the bank is the creditor on your
account. This is very important to understand in light of the recent “bail-in”
policy passed by many governments, even the Canadian government in 2013. They
are planning to confiscate your savings to keep the system afloat! Interesting
however, practically every central bank in the world is a private institution
that answers to no branch of government, not even the president of a nation. Sure,
central bankers meet with government officials to discuss monetarypolicy, but
they act independently and look out for the best interest of their
stakeholders, NOT the citizens of a nation. Central Banks are owned by wealthy,
powerful and elite individuals who have no allegiance to any one country, they
consider themselves global citizens. Did you know that EVERY paper currency
that ever existed, ended up being worthless like the Zimbabwe dollar and the
German Mark during the hyperinflation of the Weimar Republic. Hyperinflation is
the result of a central bank creating too much money and credit to keep an
economy going artificially. This is exactly what the FED is doing with the USD
and it will end up in hyperinflation as it always has. This means a cup of
coffee could cost $1,000 and a gallon of gas $50,000! Your retirement portfolio
will not even last two months. Coincidentally, almost all central banks keep
gold bullion in reserve. Why not you?
The
great Henry Ford once said, “It is well
enough that the people of the nation do not understand our banking and monetary
system, for if they did, I believe there would be a revolution before tomorrow
morning.” The fact is; central banks dictate interest rates on their own
and create money to buy the debt (treasury bonds) of a government. Think of a
central bank like a credit card company; they issue credit (currency) to a
government in exchange for bonds and the interest on the bonds is paid by the
taxpayer.Who do you
think is on the hook for the massive “bail-out” from 2008 and the easy credit
policy of the FED over the past decade? Yes, YOU the taxpayer! So, as a result of all this injection of money
and credit into the system, we get inflation. Inflation is not an economic phenomena,
it is planned by central bankers to keep a nation in debt and under control.
Think about it for a second; why does a loaf of bread today cost ten times more
than fifty years ago? It’s the same loaf of bread, just the currency it’s
priced in has lost VALUE! An ounce of gold fifty years ago was $35, today that
same ounce of gold is well over $1,000! Why did the price of real estate skyrocket
over the past decade? Not because more value was added to the homes, but
because too many lax mortgages were issued by the banks. Like the loaf of bread
going up in price a house went up in price with no added “value.” Real estate
prices were inflated artificially by the creation of easy credit and we’ve
experienced the crisis of 2008 because of it. The fact is; the USD has lost
over 90% of its value since the creation of the FED in 1913.
So what does
all this have to do with the price of gold? Just ask one of the greatest gold
traders of our time, Jim Sinclair of JSMineset.com, who has been accurately
predicting the price of gold for decades. He says based on the expansion of
money and credit by the FED and the TRILLIONS in derivatives that have no
market to settle in, gold will be at least…
$3,500
per ounce!
Truth be told;
gold is simply honest money because it is:
· Rare and
precious
· Globally
recognized
· Transportable
· A durable store
of value
· Evenly
divisible
· Everlasting
Gold maintains
value because a thousand men can go searching for gold in a mountain for six
months and only one of those thousand men will discover gold. So gold’s value
is not only the labour of one man going hungry and thirsty for six months, but
also the labour of the other 999 men who found nothing. Once gold is refined
into a tradable form like a coin or a bar, it harnesses the productive powers
of labour as “intrinsic value” and it’s locked into that gold coin forever! Gold
is the only form of wealth or money that cannot be destroyed! This is why gold was used as money
throughout most of history. Since gold cannot be created easily and lasts
forever, it limits the creation of currency and credit by a central bank or a government.
As a result, inflation and debt is contained because the money supply and credit
issued by a government has to be backed by the gold in reserve. So, is a gold
standard the best monetary policy for a government? I’m not sure, but according
to a paper written by the late Howard Buffet, a gold standard is essential for
the economic freedom and liberty of man. Personally, I believe having
restrictions like a gold standard for the creation of currency and credit is
definitely better than allowing central banks to create it freely on their own.
So is gold a
“Perfect Imperfection?” Is it a “Barbaric Relic?” Does it produce “Interest or Dividends?”
Yes, all of the
above. Gold bullion has all the requirements to perform as perfect money and
for about 5,000 years it has done so, very successfully. So, thank you Mr.
Keynes for calling gold coins a “barbaric relic.” I believe this is why central
bankers keep gold in reserve. They know the truemeaning of gold
and want to distract the public into other forms of wealth like currencies or
stocks, making gold “imperfect” as an investment. It’s no secret that
mainstream financial institutions discount gold investing because they want you
to invest in “their” customized financial products. You don’t have to be a
“gold bug” to buy gold coins, just do what central bankers do and keep gold
in reserve to protect your true wealth. At least it’s real money and not a liability
of any government. As for paying interest and dividends, just ask the major
bullion banks like J.P. Morgan and Scotia Bank if they charge interest on the
gold they lease to central banks and you’ll find your answer to that fallacy.
In conclusion, if
we want to save anything for the future that maintains true value, then we need
to change our culture and pay more attention to history and become our own
“central bank” with gold in reserve!
Sincerely,
Bosko Kacarevic
Copyright 2014 Central Metals Corp. All Rights Reserved
