My thoughts on gold are best summarized in the words of President Herbert Hoover, who said, “We have gold because we cannot trust governments.”
There remains truth in that statement. And when the US financial system becomes as corrupt and opaque as many others in the world, then gold will be the place to be, as well as commodities and energy.
That is, if they let you have it in your possession...
If the U.S. were to go back on the old gold standard at $20.67 per ounce, we would find that prices really haven’t changed all that much over the last half-century.
The insane logic upon which this statement is based relies upon assigning an arbitrary value on gold. And isn't that just as corrupt as making an arbitrary value judgement about Fiat currency? Both still rely upon corrupt human decisions made with logic pulled out of their 4th point of contact.
For the gold standard to truly come back into play, all of the current gold specie out there would have to be divided into the current value of global M1, M2, M3 components, not just the US. And assigning such an inanely low value to gold, like $20/ounce, would be highly deflationary, since the supply of gold is limited and thus would restrain economic potential for lack of capital.
Unfortunately, people just can't seem to deal with the fact that any financial system, whether backed Fiat, or backed by gold, is still nothing more than a system of financial obligations and legal contracts. A gold based system still uses fractional lending practices and not a one for one reserve ratio for outstanding loans.
And a gold standard didn't prevent the US and the entire world from collapsing into global economic depression during the '30s. In fact, it's possible that the gold standard exacerbated it as Churchill found out by re-instituing it at pre-WWI valuation.
This is some shoddy analysis on the part of this Red Chip analyst.
In fact, it sounds more like a promotional piece.
Regards,
Ron |
