Gold serves as the basis of the global monetary system for the simple reason that it exists as a finite, physical store of value. And unlike every issuance of debt or piece of printed money, there is no counter party risk – unless, of course, you don’t actually have the physical gold in your possession. Then it’s no more a basis of one’s reserves than all of the digital money created with a keystroke.
Here’s an excellent interview with former Dallas Fed Vice President Gerald O’Driscoll in which he exposes the Federal Reserve’s recent dollar swaps with the European Central Bank for what they are: a continued bailout of Europe’s banking system by the US central bank.
The 99% and the 1%. We see it all over the news. There are protest movements in almost every major city focused on it. We all know that something is wrong, but almost no one can put their finger on the root cause. The reason is that the vast majority of people have no idea how banking works or where money comes from.
As anticipated, the solution to the banking crisis in the eurozone is the printing of still more fiat money. However, this approach is not a solution at all but a temporary band-aid that will have to be reapplied again unless changes are made in the Europeans’ love affair with socialism. Changing that will be much more difficult than getting six central banks to create more fiat currencies.
The title to an AP article on yahoo.com’s finance page tells it all: World’s central banks act to ease market strains, Central banks take action to provide cheaper dollar liquidity to financial system. Read the article if you want, but title really does tell it all. This is not a novel “solution” to the world’s
The Establishment disses gold while central banks, icons of the Establishment, load up big. The third quarter saw the most central bank buying for a single quarter in forty years, and this year is on pace to see the most central bank gold buying since the collapse of the Bretton Woods Agreement in 1971.
If you’ve watched the news for any length of time you’ve probably heard mention of speculators and how they seem to be responsible for much of what ills us. Last week, Japan’s Finance Minister Jun Azumi said that a massive intervention in the Yen market was necessary as there were signs of speculation. Much of the price inflation in commodities over the last decade has been…
Various reports coming out of last week’s G20 meeting in Cannes are suggesting that some member countries had proposed Germany use its gold reserves as collateral for a Eurozone bailout fund. This brought a series of quick and unequivocal responses:
When gold topped $1900, there was much talk about gold being in a bubble. With the subsequent decline, many gold naysayers declared themselves vindicated. Gold denigraters remain wrong. Gold is a long way from a bubble. That the World Gold Council has to urges Wall Street to invest as little as 3.3% in gold is evidence just how far away gold’s top is.
Many precious metals investors are perplexed in the metals inability to move higher with all the negative financial news. Athens is aflame (literally) as the euro crisis remains unsolved; the GOP seems to be foundering in deciding on which candidate will face Obama next year;and the US continues to borrow forty cents of every dollar it spends, with real solution in sight. So, why are gold and silver not surging? In my view, it’s period of consolidation, and I think that Gene Arensberg’s latest Got Gold Report back me up.