Monday, October 17, 2011

The Occupy Drum-beat and Gold

Over the past year or two, I have been reading and agreeing with comentators who predicted a spread of the riots that occurred across the Middle-East to the West. The reasons for the riots in the Middle-East haven't yet been fully determined and, like the riots in Rome this weekend, there are factions who high-jack the message to push their own insane violent or anarchic agendas.

Were the middle-eastern riots about power, corruption, democracy, freedom or food?

So to which drum the 'Occupy' movement is marching to is still moot. We are seeing a small marxist element muscling their way in. These dangerous people tend to jump on anything vaguely resembling a protest movement, let alone one that purports to criticise capitalism. Students who have too much time on their hands to discuss the ills of the world. With heads filled with utopian marxist nonsense, some student movements have always participated in protests to play politics on their guitars.

But, while these Western movements are seemingly populated with unsophiscated looking lower and middle-class marchers, this doesn't mean that the ideas they gripe about are less important and, more worringly, less destabilising. They are shouting because they are frustrated and want to be heard. As in the Middle-East, a lot of these people have lost everything and are genuinely angry at how they perceive they have been treated and at how the elite bankers appear to have been given priority.

As Gerald Celente keeps saying, when the money stops flowing to the people in the street, the blood starts flowing on the street.

Whether this will be a violent revolution type movement that will cause massive change is yet to be seen. My thinking is that unless politicians get to the source of the issues soon and make structural changes to the financial system, then 'Occupy' may spiral out of their control. Politicians cannot keep spending money they do not have. We are on the brink of that philosophy ending badly. What a new system will consist of is up to the International Community to decide. We need another Bretton Woods. Going to a gold standard is not necessarily the best option. But options we need, and fast.

But be sure to hold gold. It is an insurance against bad government and the coming disruption.

This is a moment in history that matters. We have reached a point in the credit cycle where too much debt has been misallocated. Too much money has flowed to too few areas of investment and greed has taken hold. The debt has to be delt with. It has to be 'forgiven' and we need to start again.


Gold in New Zealand dollars: $2086.45 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $39.95 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)

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