Commodity Trade Mantra

It is all about Gold and Devaluing Fiat Currencies

It is all about Gold and Devaluing Fiat Currencies

It is all about Gold and Devaluing Fiat Currencies

Harry Dent is a good demographer and stands for what he believes.  But this is not about Harry Dent.

Charles Sizemore is a writer and editor who works for Harry Dent, but this is not about Charles Sizemore.

This is about gold!

Over a century ago JP Morgan understood that gold was money and the rest was credit.  But he lived when you could buy groceries with a gold eagle and a cup of coffee cost a few cents.

Ben Bernanke and hundreds of other “paper pushers” ignore gold, pretend not to understand it, and pressure the world to transact business using their paper currency Ponzi schemes.  Why?  Because the dollar (euro, yen, pound) Ponzi scheme produces power and profit for the financial community and politicians.  But this is not about the bankers and politicians who want control over your money as they extract a slice from every transaction.

This is about gold, and it is not personal with Charles Sizemore.  He represents a typical view of gold so I’ll use quotes from his article.  It could have been any of 1,000 other writers.

“Gold isn’t so much an investment as it is an emotional ideology.”  He thinks belief in gold is basically a religion and he is critical of those who believe it is the “one true currency.”  He promotes a mainstream view created by the political and financial elite in the west for their own benefit.  Don’t try to sell this nonsense in China, India or Russia.

History shows that silver, shells, rocks and other items have been used as currency over the centuries, but societies have usually chosen silver and gold as their preferred currencies because they have worked better.  Gold and silver were used because they held value, were universally recognized, accepted, and were convenient.  Gold and silver were used as honest money until the central bankers gained control over the money.

Gold and silver still hold value and are universally appreciated, but you can’t buy groceries with silver or gold.  However, you can use a debit card and pay a 1% fee to the bank, or use a credit card and pay a 3% fee to the bank in addition to 10 – 20% annual interest.  Yes, I know, the grocer officially pays the fee but ultimately you pay it in higher prices.

Sizemore:  “Gold is an inflation hedge…  The big problem here is that an inflation hedge is only valuable when you actually have inflation.”  Hmmm.

  1. Have you looked at prices in a grocery store?
  2. Yes, I know. Gasoline and televisions are cheaper.  Did they compensate for your increase in health insurance costs from Obamacare?
  3. College tuition? NFL games?  Beer?  Cigarettes? Local taxes?
  4. Health care, prescription drugs, hospital care, ER care, doctor office calls?
  5. Apartment rent and housing costs?

But it is misguided to believe that people primarily buy gold as an inflation hedge.  Yes, there was inflation in the 1970s and people bought gold.  People also bought gold during thousands of years when there was no inflation.  The real issue is that gold is an honest currency and therefore is a hedge against currency devaluations by central banks and governments who devalue to increase banking profits and allow governments to overspend their budgets.

When governments and central banks are allowed to devalue their currencies without restraint … they do what you would expect … they devalue their currencies and overspend.  Argentina has devalued their currency so much that they lopped off 13 zeros from their currency in the last 60 years.  The process is less extreme but similar elsewhere.

Sizemore:  “Gold is a crisis hedge….When the world gets shaky, investors tend to flock to the U.S. dollar and to U.S. government bonds rather than to gold.”

Which is more sensible?  Flock to a 5,000 year old currency that has no counter-party risk and is valued globally … or flock to a debt based fiat currency (or bond)issued by an insolvent government that has a 100 year track record of devaluing its currency and has publicly stated its intention to continue that devaluation?

Sizemore:  “Gold is a store of value.  This one I just don’t get… So assigning a real value to gold is just about impossible.”

No comment needed!  Anti-gold propaganda is heavily promoted because gold is honest money that generates little profit for the financial community and because it competes against the paper stuff issued by central banks.

Harry Dent believes that gold prices will fall to $700 and possibly as low as $250 in the next five to ten years, so he discourages buying gold.  If you prefer debt based fiat currencies that can be created by the trillions with a keystroke, confiscated easily, and devalued overnight, then by all means, trust in those dollars, euros, and yen instead of gold.  The financial and political elite might thank you.

It is not about Harry Dent or Charles Sizemore … it is about gold and devaluing fiat currencies.




Courtesy: Gary Christenson – The Deviant Investor

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