Dear Reader,
Reports The Times of London:
- Gold, it seems, just can’t be ignored any more. The prospect of falling US interest rates, a decline in the dollar and worries about America’s debt sustainability should lead to more institutional and retail money flocking into gold…
- A century on from the demise of the [Classical] Gold Standard, which collapsed in the interwar years amid a breakdown in central bank cooperation over how to manage the metal, gold is quietly becoming a more important feature of our financial system rather than an outmoded 20th-century relic.
Economist Judy Shelton — potential successor to Jerome Powell atop the Federal Reserve — has even proposed a fresh form of gold standard.
“Treasury Trust Bonds” are at its center. Owners of these instruments can redeem them in gold upon maturity… should they choose.
I hazard these Treasury Trust Bonds will never enter existence. They would simply confront too much resistance.
That is because gold is to the central banker as holy water is to the devil.
It is the “barbarous relic.”
Thanks, Nixon
No government will offer to place its wrists in golden handcuffs. Governments dedicated centuries attempting to wriggle free from them.
At last they did in 1971 when old Dick Nixon scissored the dollar’s final chain to gold.
We suffer each day because of it.
The United States dollar has shed some 98% of its value since the Federal Reserve’s 1913 demon birth.
The greatest plummets came after 1971.
One 2024 dollar purchases under 15% of the 1971 dollar. That is, the 1971 dollar did the duty of seven-plus 2024 dollars.
Is this monetary stability?
If this is monetary stability then schizophrenia is psychiatric stability.
Against the unstable dollar stands stable gold — a sort of monetary Gibraltar.
“No Central Banks [Provide] That Kind of Price Stability”
Explains author Edward Griffin in The Creature from Jekyll Island:
- In ancient Rome, the cost of a finely made toga, belt and pair of sandals was one ounce of gold. That is almost exactly the same cost today, 2,000 years later, for a hand-crafted suit, belt, and a pair of dress shoes at Barneys in New York.
- There are no central banks or other human institutions which could even come close to providing that kind of price stability.
The Federal Reserve System of the United States certainly has not provided that kind of price stability.
Gold is perhaps the ideal money — if you will forgive the expression — the gold standard of money.
Money must be rare. Rocks cannot be money due to their vast abundance.
Simply consider the quantity of rocks lodged within the skull of a single United States senator.
Multiply it by 100 skulls and you have a near infinity of rocks.
Multiply it by all the skulls in Washington and you have your infinity… and then some more.
Nor can sand meet the monetary standard — and for the identical reason.
Check, Check, Check, Check
Yet there must be enough money to “go around.”
Gold is rare, it is true. Yet its quantity is adequate for purposes. There is always enough.
Gold is likewise durable. Gold mined thousands of years ago lives yet, fresh as a sprig, no wrinkles, no sags.
And unlike gems or diamonds, gold is divisible. It can be fashioned into bars or coins as needs require.
Meantime, money must be a store of value. Well friends, gold has maintained its value across centuries, across millenia.
Hence it meets money’s strict conditions.
Sound Money Is Honest Money
I stand in defense of gold today because it is sound money. Sound money is honest money.
And sound money equals sound government. Sound money chains government down in impossible fetters.
Explains the titanic “Austrian” economist, Ludwig von Mises:
- It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments.
- Ideologically it belongs in the same class with political constitutions and bills of rights. [The] postulate of sound money was first brought up as a response to the princely practice of debasing the coinage.
Label what you will the money of the United States. You cannot label it “sound.”
“Gold Has the Public Spirit of a Cat”
Before the 20th century, debt was a cultural taboo — a scarlet “D” emblazoned upon the bosom.
Credit for households was virtually unknown. And only the poorest households resorted to debt-financed consumption.
But along came the 20th century with its wars… its world-improvers… and its cranks.
Gold was in their way.
Gold proceeds at its own leisurely pace. And the milk of human kindness? You will not find it in gold. The greater good is beyond its care.
Gold has the public spirit of a cat.
Meantime, gold lacks martial spirit… and turns from the roar of cannons. “You go over there,” gold tells its fiat counterpart.
“I’ll stay here.”
As wrote Messieurs Bill Bonner and Addison Wiggin in their masterwork Empire of Debt:
- The trouble with gold is that it turns its back on world improvers, empire builders and do-gooders. The nice thing about gold is that it is so unresponsive. It neither laughs nor applauds.
That is precisely why gold could not endure…
Debt-Based Money Is Ideal for Public Service
Only a debt-backed system of paper money could finance the great wars, the social improvements and the fevered dreams of the 20th century.
This money is ideal for public service.
It is civic-minded. It has a heart. It follows orders.
Whatever war, whatever boondoggle, whatever swindle it is ordered to stand behind… it will stand behind.
It willingly sacrifices its value for the greater good.
Gold, meantime, is jealous of its value. It guards its virtue.
I argued above that no government will offer to place its wrists in golden handcuffs.
Yet events may throw the cuffs around government’s wrists.
The world careens towards a sovereign debt crisis. And gold will be the anchor that holds things together.
Governments will cling to it — not by choice — but of necessity.
Multiple millennia of history attest to gold’s enduring value. Those same millennia attest to the unenduring value of paper monies.
They have all ended in history’s hellbox. The United States dollar will one day join them.
And gold will once again assume its throne.
Regards,
Brian Maher
for Freedom Financial News
P.S. Inflation is baked into our monetary system. It couldn’t survive without it.
But legendary investor Robert Kiyosaki knows how to take advantage of the system to amass wealth.
He’s even written books about it. It’s the secret to how the middle class gets rich… and the rich get richer.
It all comes down to one unique but powerful strategy. What is it?
Go here to find out — and how you can take advantage of inflation to build true wealth.
