Friday, May 27, 2011

The Re-monetization of Gold and Silver and Precious Metals

There is a news article today about gold being allowed to be used as collateral, or a trading security, in Europe.

"The European Parliament's Committee on Economic and Monetary Affairs Tuesday agreed unanimously to allow clearing houses to accept gold." World Gold Council

So the re-monetization of precious metals begins in earnest for Investors. Not that the private citizens who own gold didn't know that precious metals are already the ultimate form of money. Indians own it as a preference to the rupee. The Chinese are out to swap as many dollars and renminbi they can for gold. Furthermore, ask the Eastern Europeans, in or out of the Euro system, what they would rather hold. Perhaps Belarusian rubles?

You see, the world is slowly getting it. Paper money is not capital. Where is the hard work and toil in producing zeros created on a keyboard at your local friendly Central Bank? The computer operator gets paid, yes, but will probably get RSI in his or her fingers.

Real capital is produced by people working hard, producing something and saving. The savings are then turned into investments in new capital producing ventures.

You simply cannot print capital and wealth. If you do it finds its way into bad investments (to make a quick speculative buck) or into excessive debt.

Sound familiar?

But what would really happen if we had to use precious metals as the measure of our labour and as money?

For one, we would need to give up some of our lifestyle now. We would need to decide to forgo those entitlements that we think we have paid for with our taxes. Retirement and other social welfare programs. If we don't do this now we may be forced to give up the lot, under duress, later.

Because this system cannot be maintained. We cannot print our way to wealth, all we do is create more debt, and debt is the money of slaves. Just read the story of Joseph in the Bible. Once the Hebrews had given up their gold and silver for food, they gave up themselves to slavery.

Our money is already gone, it's debt. What's next for New Zealand? Debt slavery. What form will that take? I don't know, but I, and my family, are attempting to put in place our finances to mitigate against that scenario.

These are interesting times. Have you protected yourself?

I am in Singapore for the next two weeks and will try to bring you some observations from that part of the world.

Gold in New Zealand dollars: $1875.11 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $45.90 per oz
Previous all time high: $48.58
per oz

Articles of interest:

Gold to be used as collateral confirming its status as a high-quality liquid asset

See article here
World Gold Council

Gold Revaluation & Seasonals

See article here

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001

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