Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20
Global "Debt Mountain": Beware of This "New Peak" - 13th Nov 20
Overclocking Zen 3 Ryzen 5600x, 5800x, 5900x and 5950x to 4.7ghz All Cores Cinebench R20 Scores - 13th Nov 20
Is Silver Leading Bitcoin or is Bitcoin Leading Silver? - 13th Nov 20
How Elliott Waves Simplify Your Technical Analysis - 13th Nov 20
How to buy Bitcoins using debit/credit card? - 13th Nov 20
Will COVID Vaccine Kill Gold and Silver? - 12th Nov 20
Access to Critical Market Reports - 12th Nov 20
Stock Market Dow Futures Reach 30,000 on News of COVID-19 Vaccine Trials Success - 12th Nov 20
8 Terms & Conditions You Must Know Before Asking For Life Insurance Policy Quotes - 12th Nov 20
Gold Stocks Post 2020 US Election Outlook - 11th Nov 20
Champions’ League Group Stage Draw: All You Need To Know - 11th Nov 20
Stock Market Secular Trend - 11th Nov 20
Stock Market Correction Curtailed by US Election - 11th Nov 20
What Causes a Financial Bubble? - 11th Nov 20
Ryzen 9 5900X RTX 3080 - Scan.co.uk vs Overclockers.co.uk UK Custom PC System Builder Review - 10th Nov 20
Killing Driveway Weeds FAST with a Pressure Washer - Saving Block Paving from LOTS of WEEDs - 10th Nov 20
Trump Fired, Biden Hired, What Next?  - 10th Nov 20
Looking for a Personal Loan? Here Is What You Have To Know  - 10th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Will Be the Final Currency – Yes or No?

Commodities / Gold and Silver 2014 Jul 03, 2014 - 09:54 PM GMT

By: DeviantInvestor

Commodities

Will gold regain its monetary standing and will it again back a major currency as in previous centuries?

Readers on www.deviantinvestor.com responded to my question about the creation of a gold backed currency by July 2017.  The voting shows about 78% believe that within 3 years there will be a gold backed currency – perhaps issued by China, Russia, or even the United States.  This is sensible because readers on the DI site are generally pro-gold and suspicious of unbacked debt based paper currencies.


For additional perspective on gold, consider what Bill Holter stated in his always insightful column.  Here are a few quotes from his article:

“JP Morgan was in my opinion trying to convey the idea that gold was the money itself and everything else was a ‘derivative’ (derived) from this money.”

“He understood that any currency, any debt, any equity or receipt had counterparty risk.”

“Counterparty risk is the risk that whoever you are doing business with does not or cannot perform his side of the bargain.”

“…  the world must run on ‘trust’ but there is now a problem.  The problem is that credit has engulfed the world.  And the danger that a counterparty cascade begins because the risk of a default has never been greater than it is now.”

“The derivatives chain will break and that everything financial will have a worth or ‘value’ far lower than it does now… because of counterparty failures creating a credit contraction.”

“…  physical gold in your possession has no counterparty risk.”

“When the credit edifice comes down, people from all walks of life (including governments themselves) will seek safety.”

“Truly folks this is what it’s all about and why you own (or should) own gold.  The financial system is mathematically going to come down and the best position to have when this occurs is to have ‘money’ [gold].”

Okay, he made convincing arguments.  Gold is important now and will become essential when/if the cracks in the financial system widen and a massive crash occurs, which seems more likely each day.

But will a gold backed currency be the answer?  Clearly central banks want to peddle their debt backed paper currencies that they create at no cost.  We can assume the politicians are either owned or controlled by the banks, so what the banks want will be the deciding factor, not political rhetoric.  So why would central banks want to abandon their mountains of paper assets and embrace gold?

They might do so because they had no choice – such as in the event of a massive financial crash.  After “inflate or die” might come “gold – real money – or die.”  Central banks will choose gold, no matter how distasteful to them, rather than extinction.  Banks will find a way to remain profitable, viable, and in control.  When gold looks like the only good option to reestablish trust in a failed financial system, they will embrace gold.

On the other hand, many non-mainstream thinkers, such as myself, could be horribly wrong about their concerns for the viability of our financial system – the system might continue enriching politicians and bankers for many more decades.  It is comforting, but often delusional, to believe all is well, especially when so much data indicates otherwise.

But please ask yourself why the central banks and the citizens of Russia, China, India and many other countries are aggressively buying gold!  I believe they more correctly understand the risks and the vulnerabilities of our debt based pyramid of paper that western governments and central bankers have constructed.  I believe they have chosen to hedge their paper risks with physical gold.

Should you convert some paper or digital dollars, euros, pounds, and yen into physical gold?  What is your “Plan B” in case paper currencies and over-valued stocks and bonds approach their intrinsic values – at much lower prices?

 More to consider:

1)   How much central bank gold actually remains in their (unaudited) vaults?  Has most of it been shipped to Switzerland, China, India, and Russia?

2)   The precedent for “bail-ins” was set in Cyprus last year.  Further bail-ins could occur in Europe and the United States in the event of another financial crash.  How safe is your digital bank account if global monetary systems repeat the 2008 Lehman experience?

3)   You could trade digital currencies for physical gold and reduce your anxiety level.

GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2014 Copyright Deviant Investor - 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.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules