Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24
Banxe Reviews: Revolutionising Financial Transactions with Innovative Solutions - 3rd May 24
MRNA - The beginning of the end of cancer? - 3rd May 24
The Future of Gaming: What's Coming Next? - 3rd May 24
What is A Split Capital Investment Trust? - 3rd May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Versus The Status Quo

Commodities / Gold and Silver 2015 Jun 16, 2015 - 05:39 PM GMT

By: DeviantInvestor


Gold has been a store of value for 1000s of years.  You can’t purchase gasoline with gold but it has no counter-party risk and is valued world-wide.

In contrast, paper and digital dollars, euros, pounds and yen are debt based fiat currencies backed only by the faith and credit of the governments and central banks which issued them.  Devaluation and higher consumer prices are all but guaranteed.

It should be an easy choice, but clearly there is more to the story.

The power and influence of the status quo is immense.  Consider the forces and institutions that support the status quo, usually in opposition to honest money as represented by gold.

Your central bank:  The Fed issues dollars as Federal Reserve Notes, which are a liability of the privately owned central bank.  Those fiat dollars create tremendous wealth and power for the central bank.  A modified gold standard would restrict their wealth and power.

Your government:  The government wants to borrow and spend to excess without the limitations imposed by a modified gold standard and honest money.

Banking and Finance:  Fractional reserve banking and the profitability of the banking and finance sectors depend upon the creation of digital dollars.  Clearly this sector does not want its profitability restricted by the use of gold as honest money.

Military Contractors and Security Contractors:  The US government purchases hundreds of $Billions in weapons and contractual services.  If government expenditures were restricted by actual revenues, the military and security contractor profits would collapse.  They do not want their profitability restricted by the use of gold as honest money.

Big Pharma and Health Care:  How many hundreds of $Billions are spent each year by the US government to purchase drugs and services? This sector does not want honest money that would restrict their revenues.

Transportation, Energy, Communications:  It is the same story in these sectors.

Food Stamps, Welfare, and Social Programs:  Don’t cut my benefits!  Borrow and spend policies are necessary to maintain the flow of benefits in these programs.  No politician wants the EBT cards to malfunction or quit working.

The list goes on, but the bottom line analysis is simple.  The status quo is huge, powerful, and expanding because more people every year depend upon the continuing flow of fiat dollars, euros, yen, and pounds to the favored businesses and individuals.  No politician wants to crash the status quo “money printing” and spending machine.

The opposition to gold is formidable, intense, and well-financed.  You might liken the situation to a baseball game where the anti-gold interests own the field and equipment, make and enforce the rules, and if needed, have employed a sniper to terminate the opposing pitcher.

In spite of the opposition, gold has risen from about $255 in 2001 to nearly $1,200 in June of 2015.  Similarly, silver has risen from $4.01 in 2001 to about $16 today.  The status quo is not all-powerful.  Gold and silver prices can rise, but they are controlled.  When gold and/or silver prices again streak higher we will know that the status quo and the financial system are on shaky ground.

A history of fiat currencies showed that nearly 600 paper currencies no longer exist.  The usual reason was that those currencies were printed to excess by governments or banking authorities.  If you live in the United States, Europe, Japan or the UK this might sound familiar.

As a side note, gold was valuable when the first paper currency was created and when it died.  Gold is still valuable today, 600 dead currencies later. 

 If the financial and political elite could increase their wealth and power more effectively with a gold standard, then the gold standard would still be in use, paper currencies would not be printed to excess, and money would remain controlled and honest.  Obviously the powers-that-be prefer the current financial system.

The financial system is unlikely to materially change without trauma.  Catastrophic failure is possible.  Don’t expect gold to crash in price or disappear.  About 3 Billion Asians and their governments will disagree if you think gold is no longer important.  Note the following graph which shows gold demand in China and India.

But if you want an anti-gold story, look at this infographic from Harry Dent.  He will reassure you that your fiat dollars are solid and that gold prices are going much lower.  He stated, “Gold is the WORST investment to make until around after 2023.”

I disagree.


The status quo is heavily slanted in favor of fiat currencies, against gold, and maintaining their power and wealth.  The anti-gold sentiment is quite strong.  It reminds me of two thoughts:

  1. If everyone is thinking the same thing, no one is thinking.
  2. If everyone is leaning over the same side of the boat, watch out.
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

© 2015 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.

Deviant Investor Archive

© 2005-2022 - 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