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« When Will Inflation Really Hit Us? | Main | Gold, Silver, HUI and the Dollar Compared »

A Readers View of the Current Situation

Car for one hundred dollars.JPG

Enlightenment here it comes. Understanding around the world that paper money was a depreciating reality has been around for a long time, but understanding and realisation are two different things. The tipping point came with QE. The realisation that governments and bankers are the enemy of one's personal wealth has finally dawned upon an increasing amount of ordinary people turning them towards the only recognised form of safe value namely gold.

People are buying it, the real stuff not paper promises or ETFs a bit here and a bit there, none of which is reported. Two, the quoted jewellery sales are a complete fraud, 40% of "Gold' Jewellery is an alloy, add in 50 to 100% mark up and how much gold have you really got? But these are not the real factors. Far eastern governments have realised that their paper currency investments are at risk, not only are they diversifying but also planning a world currency based partly at least on gold.

At $1000 an ounce there is not enough gold around, however with a universally fixed price at $60000 an ounce there is. Ridiculous you say? Well step into my time machine to the year 1909, Along comes an analyst and tells you that in 100 years the dollar in your pocket will buy 100th of what it will buy today and that gold will be valued at fifty times the then present value. You would at least mentally have consigned that analyst to the funny farm. Fast forward today, if I tell you that the ounce of gold in your account will be worth 100 times as much in 100 years, knowing what you now know would you send that analyst to the madhouse? Particularly since what I am suggesting is only 60 times as much.

How would the central bankers get the gold? Confiscation? well no. Since as the price went up to say $5000 every one would rush to sell thinking what a bargain they got, not knowing that the price was to be fixed well above that. Fantastic speculation you say? Well maybe, but such a price would solve the problem of a world currency based upon gold would it not?  That is the basis now for the expectations. So far all the predictions of a reduction in the present gold price because of COTS and fancy lines drawn upon graphs are not happening in the way previous highs in the gold price have induced, this is because of personal physical buying at the local level, the heavy buying at governmental and central bank level, the realisation that much of the central bank gold is only 22 Carat if it is even there and the understanding that the criminal debasement of currency carried out around the world via QE in such a manner that makes Madoff look like a school kid is nothing more than bare faced robbery.

Finally the real risk that what has happened will persuade more and more persons to call their paper contracts upon maturity this December and later.  Do you think that I am mad? No madder than the analyst in 1909 and we know what happened since then do we not?   Think about it and use imagination, however much you use will not be enough. 


Have a good one.

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Reader Comments (7)

Before 60,000 an ounce, i would like to know who is going to buy gold at todays 1060. Lots of people are unemployed with a huge amount of debt to pay.

October 22, 2009 | Unregistered CommenterDi

The Chinese, that's who...Snakeman

October 22, 2009 | Unregistered CommenterSnakeman

At least the fellow selling the car still has his cellular telephone.

October 22, 2009 | Unregistered CommenterRichard Roper

Thank you for publishing my comment. It is a first. Regards, Roger Levinson.

October 23, 2009 | Unregistered CommenterRoger Levinson

That's what made America great. We had cell phones in the 1920's!

October 23, 2009 | Unregistered CommenterDavid

It is a good point to make that pricing gold at 10000 - 50000 would help eliminate the worlds debt imbalance. However the world governments will never do that. They will never return to a Gold backed currency. By doing so the government would be shifting power to the people.

They are going to go completely digital and they want to chip you and your bank accounts.

October 24, 2009 | Unregistered Commenterroberto

Roberto, you're probably correct but those of us with some physical metal will avoid some of that nonsense...the governments of the world can Kiss My Royal...sorry, the beer made me say it LOL...Snakeman

October 24, 2009 | Unregistered CommenterSnakeman

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