Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold, Silver, and Blue Dollars

Commodities / Gold and Silver 2014 Nov 24, 2014 - 12:43 PM GMT

By: Dr_Jeff_Lewis

Commodities

“Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange.


Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society's divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.”
- Alan Greenspan, former Chairman of the Federal Reserve

The political-financial elite will never formally acknowledge gold as a currency. Formally, it is more likely that standard drawing rights, via the IMF's balance, will dovetail with the U.S. dollar's drift away from reserve status.

The irony of course, is that the political-financial elite of the West is basically synonymous with the IMF - especially the United States. But formal admission or official re-institution will never occur.

Instead, a return to hard money will grow from the shadows, as more and more mainstream investors are forced out of the current financial ponzi. Awareness lies buried in the libraries of bureaucracy in the form of suffocating regulations that protect the elite from us.

Outside of the dirt road grass roots, nationally elected officials are powerless and ignorant.  Leaders have very little idea of what is happening. Re-election tactics require an appeal to the superficial, paid for by the military-industrial handlers. 

The darker and more complicated these unnatural systems become, the systems become more fragile. Confidence across institutions goes hand in hand with social volatility as the political financial elite become further detached from reality.

Today, thanks to the Internet and social media, we can see the financial infernos many years in advance. Yet the mainstream will not listen. Everything is conspiracy. Then a fact. Then it breaks.

Except for cultures predominantly in the East, most people are disillusioned by money or the concept of wealth. Western culture is distracted and running on an endless hedonistic treadmill like a mouse in a cage. But change can come from the ordinary.

If you are reading these words, then you are a part of that. The perception won't be pretty, but the damn will break. Will it be more like the Argentinean currency crisis with an official value and a street value?

The precious metals physical divergence could take some of what happened in Argentina. It will occur slowly, then all at once. 

As Giles Powdrill writes:

http://thefuturescompany.com/business-categories/business-economy-posts/argentinas-blue-dollar/

“What do you get when you mix greenbacks with black markets and red tape?

In Argentina today, the answer is a ‘blue’ exchange rate: An informal market where $1USD currently trades for around 7.5 Argentine pesos (as of 23rd January 2013), or around 50% higher than the official rate of $1USD to 5 pesos.

Rampant inflation (conservatively estimated by the government to be around 10% but measured by independent assessors at around 25+%), draconian capital controls and a population that remembers clearly the dramatic collapse of the peso at the turn of the century, have resulted in a huge rise in the number of people seeking out the security of alternative currencies by whatever means are available. The rising popularity of the ‘blue dollar’ demonstrates both the level of concern consumers have about the ongoing stability of the peso, and the entrepreneurial spirit of the people.

Argentines are no strangers to alternative currencies. When the peso was pegged to the dollar in the 1990s, people became accustomed to using both. And during the height of the crisis in 2001, the government introduced the patacón, a state-backed bond that was used to pay bills and salaries and provide some liquidity whilst pesos were scarce.

What is different during the present economic uncertainty are the channels and tools that people are using to exchange their money and to secure their savings..."

And of course, paper still wags the dog in every market. But it’s certainly not hard to envision a shortage, where the premiums make up the difference between physical and paper even if things were to get truly out of hand.

Ban sales or prohibiting ownership would go about as well as 100 tax or banning firearms in this country.

While the gold propaganda hit piece that followed Greenspan’s outrageous reassertions have been all over the map, the hope must be that confusion leaves the institutions out of the precious metals space.

Formal return to hard money may be an anathoma to the foundation of what they are - a ponzi for debt-tickets, notes used to destroy in the name of profits and so-called capitalism. Driven by rising premiums, the physical retail market takes on a mind of its own.

Bitcoin and other cryptocurrencies will certainly evolve over time. But widespread ownership will be limited, mainly due to technical barriers to access.

Certainly not as easy as precious metals. Once precious metals shortages become widespread rampant, sellers disappear.

The CME or COMEX or government can "fix" the price all they want. But at that point, it's all a street game.

For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out http://www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2014 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in