Gold: Wealth Champion in a Scary World (Part II)

global currencyWhen currency was backed with gold and silver, no one was concerned about a doomsday scenario in the financial markets. But today that is a constant concern, and gold will always trump paper. 

The financial crises we see taking place in Europe are not currency crises, but government spending fiascos compounded by banking crises arising from the tenuous state of fiat currency credit and debt ratios and a nascent lack of faith in the banking system.

ROTTEN APPLES

Arguments claiming the sighting of an increasingly strong dollar are just plain silly. Major currencies are like apples – the term comparing apples to apples comes to mind – but these ‘apples’ are all rotten. Some are quite rotten and others are rotten to the core. So comparing dollars to euros to pounds to yen is, in a sense, meaningless; together, they represent a basket of rotting apples. When you compare these currencies to gold, you begin to understand value.

If you measure the U.S. Dollar against gold, it becomes clear that, on average over a twelve-year period, the dollar lost 16% of its value each year.

GOLD: INFLATION FIGHTER

Gold is traditionally thought of as, among other things, a hedge against inflation. But because official U.S. Government figures peg current inflation since 2010 at between 1% and almost 4%, some might say that inflation is not a major concern. It is well-known that the Consumer Price Index (CPI) has been ‘adjusted’ since the early 1980’s so that it understates inflation which, when all factors are taken into account, is actually running at just below 10% each year. Now do you still think you don’t need to own gold?

Think about this. If gold is not the ultimate store of value, why do the world’s central banks have any gold in their vaults at all?

DISTRUST OF GOVERNMENT

Liberty ReserveRecent polls confirm that we live in an era of general distrust, and particular lack of faith and confidence in our government; financial mismanagement and misguided bailouts; taxpayer money squandered on Solyndra et al; a rigged CPI that understates inflation to achieve political gain; currency debasement to bail out a broken financial system; a trillion-dollar failed war on drugs; the multi-trillion dollar Ponzi schemes of Social Security and Medicare; the $3 trillion foreign wars in Iraq and Afghanistan that we cannot afford; the wasteful burden of inefficient regulation and pork-barrel projects; the Fast & Furious gun-running scandal; the government’s targeting of political opponents with IRS witch hunts; the government trying to extinguish freedoms such as gun control, the freedom of the Press and the right to a fair trial; NSA surveillance of millions of us; FBI drones overhead; biased preferences, quotas, special privileges and exemptions;  35,000 D.C. lobbyists; and of course, the general tax-and-spend myopia that heaps the unremitting financial burden on our grand-children.

Washington D.C. has difficulty delivering the mail, but the Feds think they are capable of controlling our healthcare system?

CONTROL

Two of the most frustrating issues for Big Government are its inability to control the masses and to control economic activity. The two-part pre-condition for the first issue is gun registration followed by gun confiscation; Stalin and Hitler both followed that path. The pre-condition for the second issue is the monopoly of a nation’s gold, something that was well understood and put into effect by Lenin, Mussolini, Hitler and even F.D.R. Gold therefore, is indisputably power as well as a store of value.

To paraphrase F.D.R. at his First Inaugural Address in 1933, “The only thing we have to fear is Fed itself.”

When the financial meltdown finally arrives – and it will be sudden and unexpected – would you rather have a loaf of bread, or a piece of paper saying the government or a bank owes you a loaf of bread?

The USA Today article included an innocuous-sounding statement that will unfortunately prove to be eerily prescient. “A dollar, ultimately, is worth what you think it is.”

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