Wednesday, April 27, 2011

The Times they are a-Changing

Gold in New Zealand dollars: $1865.29 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $56.07 per oz
Previous all time high: $48.58
per oz

Being brought up in the 1960’s, I still remember quite a few of the old songs. The 60’s produced some of the greatest protest songs ever.

One of the more apt phrases was written by Bob Dylan in the song, “The Times They are a-Changing”

With governments, the times can change at any time. They make the rules.

Here’s an example from a New Zealand newspaper in 1919.

The Wanganui Chronicle, at the time, talks about a man saying that you could still legally demand gold for bank-notes from the Bank of England. The journalist soon puts this right.

He states, “You could do so before the war (The First World War), because the gold standard was based on a rule which provided that the Bank of England note issue must be backed by a certain amount of gold held by the Bank. The gold standard, however, could not be observed when the war broke out.

The Bank is now under no obligation to redeem its notes in gold as was formerly the case, and Treasury have issued Treasury Notes to the value of legal tender for the payment of debts. Neither can the holders of these demand that they be redeemed in gold.”
The Wanganui Chronicle; 2 September 1919, Page 5

So at one stage before the War, the bank Notes in New Zealand, were backed by physical gold. You could just take them to The Bank and get the equivalent gold…nice.

However, by whim of Government decree, this changed overnight. Notes were not redeemable in gold. Credit was created by fiat (latin for ‘let it be done’); value was created out of thin air. Money had value only because the Government of the day deemed it.

When do our governments today get desperate and change the rules once again? This is the game that is played with your wealth. One minute your labour is measured in gold and then debt based notes. But wait, even then it can be revalued (by stealth with inflation) and you lose the buying power and wealth stored in that previous note. What is rightfully yours, by the sweat of your brow, is stolen.

It may be a long stretch to re-instate the gold standard as it once was, but something needs to be agreed upon when the world monetary system resets. Some say a form of gold standard is applicable. Whatever is decided must be just and fair and not manipulated by Governments. Good luck with that I hear you say.

The times they could be But we can preserve the wealth we have now by purchasing gold. This has been so for the last 5000 years of monetary history and it's not about to change.

In the words of another Bob Dylan song, “A Hard Rains a-Gonna Fall”. Will we be ready?


Articles of interest:

Axel Merk: Why Is Anyone Still Waiting to Sell the Dollar?

See article here

Monetary Reform: The Key to Spending Restraint

A call for a return to the gold standard
See article here
The Wall Street Journal

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