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The War Between Gold and the Fiat Currency State

Commodities / Gold & Silver 2009 Nov 26, 2009 - 01:27 AM GMT

By: Adam_Brochert


It really is a war of this proportion. It really is the Gold holder versus "The State" when there is a paper fiat currency system in place. The U.S. Mint has suspended American Gold Eagle coin production AGAIN, citing rising demand (link here).

My comment from the last piece I did when the U.S. Mint pulled this crap (see the link here for a decent rant from a year ago) remains appropriate in my opinion:

Gold is an alternate currency. It competes with the paper promises of panicked politicians, which throughout history have yielded less than a junk bond and harbored three times the risk. Which investment do you think will hold up better going forward?

Since that prior rant over a year ago, Gold is up about 35% or so and our currency is down around 9% - and I don't even have a PhD in paper economics like Paul Krugman! I am an adult with an education, not a vapid 6 year old child. If demand is too high for American Gold coins, BUY SOME MORE FREAKIN' GOLD TO KEEP UP WITH DEMAND! This, of course, is the mandate of the U.S. Mint, but anyhoo...

Of course, anyone with the appropriate intellectual and analytical skills knows the high demand is not the problem for the U.S. Mint. The problem is that Gold ownership is anathema to a paper fiat regime, particularly in its later stages (i.e. towards the end of the road, as all fiat currencies go away and are replaced). If everyone starts clamoring for Gold and it's easy to get, then gosh darnit, fewer people will need to rely on the government for everything in their lives! This is bad for Big Government, Inc. - a menacing corporation that has shown a wonderful propensity for aggressive growth in any economic environment and regardless of whether democratic or republican "candidates" are in control.

Why does the U.S. government not want to make it easy for you to own Gold? Because Gold is the enemy of the fiat state. Don't believe me? How about Sir Alan Greenspan (see here for more info on this classic piece before Greenspan "sold out"):

...The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against [G]old. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the [G]old standard.

OK, so now we know what the past chairman of the federal reserve thinks about Gold and why it is the enemy of the state. Expect more artificial shortages to be announced by the U.S. Mint as this Gold secular bull market rages onward and upward. And make no mistake, the shortages are unequivocally artificial and intentional. Against the War on Terror? Then you're a terrorist. Against the War on Drugs? Then you're a drug pusher and/or user. Hold physical Gold over U.S. Dollars? You have (knowingly or not) become an Enemy of the State as it currently exists. Funding the bankstaz physical metal short position by buying the paper GLD or SLV ETF? Good boy/girl!

Gold is the money of choice in the "free" world. This process was intentionally subverted to benefit a select few. Gold is not always a good investment (there are times to be in cash [Gold] and times to invest in productive enterprises). Gold sucked as an investment from 1980 to 2000. But it is Gold's time now and you are advised to buy some physical Gold on the next correction to be held outside the realm of prying government eyes if you haven't already. It is not too late. Things will get worse before they get better and all global fiat currencies will be debased further before this secular stock and economy bear cycle is over.

The only safe cash is that which cannot be debased, which eliminates every national currency in the world right now. Once the Dow to Gold ratio gets to 2 (it may well go below 1 this cycle), it will be time to start looking around for other opportunities. Until then, join the dark side of the investment world and put on a tinfoil hat (they're quite stylish really...).

Visit Adam Brochert’s blog:

Adam Brochert

BIO: Markets and cycles are my new hobby. I've seen the writing on the wall for the U.S. and the global economy and I am seeking financial salvation for myself (and anyone else who cares to listen) while Rome burns around us.

© 2009 Copyright Adam Brochert - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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