Monday, 13 June 2016

A Quick Look At Why GOLD and Why NOW?


Last (but maybe not least) a short piece on Gold. For the deepest, most thorough exposition I have found, (and believe me I’ve looked) on ‘why gold, and why now’ I can most highly recommend THIS post and also be sure to check the whole site out. Beautiful. But that will take a while, as it is rather long. For here and now, try this. 

Nearly everyone, most quite erroneously, think they know about gold, or at least enough. (It’s an expensive precious shiny metal, used for jewellery and collected as coins by enthusiasts and ‘gold nuts’, the wealthy have some as diversification, in the olden days gold coins were used as currency, the price increased a lot for a while but lately not so much. You can invest in risky gold mining shares.) Like that, right? What more could anyone possibly need to know? It’s just rare shiny metal.

As BitGold points out here;  Why Gold?, physical gold has, because of it’s many properties; (rare, robust [inert], divisible, fungible, hoardable [as not used for much], hard to imitate, of known quantity, widely held, used by the wealthy/central banks as a reserve asset, etc etc) throughout all known history has perfectly provided society a long term store of value (SOV). In doing so it has supported and promoted trust and cooperation between people to the advantage of all. Very few people outside of high finance realize the importance to society of a perfect SOV. All advanced societies need something into which savings can be safely kept and maintained over long timeframes, don’t they? Both for each generations old age and, for the wealthy even into future generations. Although other things also are used in that role, like land, antiques, art, etc none but gold have all the qualities necessary to do so perfectly. Fulfilling this critical role, along with its being quite rare and therefore needing a great deal of energy to find, mine, process, and distribute, has meant that gold possesses a high value for society and has been priced accordingly.

Now we come to the modern ‘debt based fiat’ era and its associated problems, both economic and financial. In a nutshell, I can say that the main issue is that an impure debt based ‘fiat’ system like the one we have (one that suppresses and makes volatile the gold price and through the misuse of gold paper derivatives blocks gold acting properly as a store of value) engenders instability by both widespread over-indebtedness and mis-pricing of real assets (real estate, stock, bond, art, antiques and collectable bubbles, anyone). This leads to many highly problematic systemically threatening crisis. 

The key issue in this situation that is not well understood happens to involve Gold at its centre. For something to be able to act well as a long term SOV it necessarily needs to have its value be stable and at the same time be responsive to destabilizing events. The main conditions necessary to accomplish that have been found to be twofold - that it be widely held and also freely traded in its physical form. 

Now we get to the tricky part, so please pay especially close attention. Although physical gold is generally traded freely most everywhere, a process has developed gradually over fairly recent times which enables those who most profit from the debt based fiat system to subvert gold from playing its role as the SOV. That process, gradually increasing in scope over recent centuries, has really been perfected in the last 50 or so years.

To explain this properly would take too long here (that's why I gave the link to the FOFOA site above ) but suffice to say that the current ability to trade non physical (paper) gold in the futures market without full physical backing (selling short without needing to hold physical gold), creates both price suppression and price volatility. And that in turn destroys golds ability to act as what it historically has been, a perfect SOV, because those two factors impair the necessary ‘trust factor’ needed by a store of value. This is by evil design, BTW, because what this then supports and encourages is that ‘fiat’ currency takes on the role of the ‘store of value’ (and falsely gains thereby) which it should not, because, unlike gold, it doesn’t possess all the properties necessary to fulfill that role properly, and will eventually fail. The bottom line is that because of this manipulated and distorted false fiat financial setup, we have a very problematic unstable global economic/financial system which is doomed to catastrophic failure sooner or later (soon now IMHO). 

Any time you have widespread long-term ‘interference’ in natural free human exchange/trade (usually effected through government edict/laws/regulations) what is engendered is mis-pricing market distortion (assets become either grossly over or under valued). This happens to allow for those few who recognize the opportunity created, to position themselves properly to profit (sometimes greatly) when the fundamental natural market process reasserts itself, as it always does eventually. This time when that happens (called by some the ‘Reset’) GOLD, whose price has been long and greatly suppressed because, as we just briefly described, it has been prevented from exercising its historically proven role as global store of value ‘par excellence’, will suddenly be ‘repriced’ in the marketplace to its natural real value, which is MUCH MUCH HIGHER, as it regains its true value operating as societies main SOV. 

(BTW, knowing this is why the power elite, both individually and collectively through central bank gold reserve holdings, always keep lots of physical gold safely and quietly stored away for themselves) 

If this short exposition happens to indeed be in fact true, it means that anyone with the power of correct knowledge and the foresight to properly position themselves (by accumulating physical gold at the suppressed price), will benefit greatly after the system ‘resets’ to its real/natural free trading condition. This is destined to happen at some point because natural market forces cannot be suppressed forever. That’s my strongly held perspective and I am positioned accordingly, and will remain so. Folks, for the little guy, opportunity like this knocks rarely. 

As I said to a friend when discussing, “If there were ever advantageous times to own gold, this surely one of the best”. Full stop.

That about covers it, I think? Good enough for me, anyway! Go Gold! Go BitGold!

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