You'd be correct if the expectation were that the POG were driven to that level by future inflation.
I think it is true, even whether they know it or not, that the only way you will get that sort of a repricing event in gold... is if it occurs as a function of a currency devaluation... ie, not a market event, but a policy change.
Seen in that context the number used is on the low side.
We've had same/similar events imposed on us twice in the prior century...
One, of course, was FDR's confiscation and repricing of gold. The repricing not inconsequential, but the point was the takings... They paid you cash for your gold, then, afterwards, raised the set price...
The bigger event was "Nixon closing the gold window"... which also, in theory, ended the fixed price for gold, and allowed currencies to float... but, of course, what floated was the gold price... running from the fixed $45 per ounce, to a bit over $800 at the peak ? That a repricing event of 17x. Do that same thing to gold today... and you get... $30, 488 per ounce. But, of course, it would probably end up closer to $50,000 or more.
And that would cause roughly zero inflation... just like repricing bitcoin hasn't caused inflation ?
The reason being... the inflation has already occurred... and all you're doing is an accounting entry to address the correction to prior history.
Nixon ended government fixed pricing... but replaced it with Federal Reserve policy that suppresses the price of gold using market means... just not "free market" means...
The plans for a currency reset have been gathering dust on the shelf at the BIS for a long time...
Will this crackup be what kills the dollar and forces the final implementation of Basel III ?
I'm doubtful... but, the event WILL generate more inflation than before... to counter the deflationary impacts of QE... which is not "printing money" that ever gets into the economy... |
