Everything Outside Your Control And Ownership Is At Risk

by John Rubino, Dollar Collapse:

Excerpted from comments on previous DollarCollapse.com posts:

“Is Gold Too Expensive?” – March 22

I think one big reason why so many people are ambivalent about gold and silver is they don’t understand them. By that I mean they don’t understand their “price behavior,” as a proxy for a lot of other issues. And I include myself in that camp.

There are more questions than satisfying answers to just too many questions. I’m not saying there aren’t valid answers but many of them ultimately rely on a certain level of faith.

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On the one hand gold/silver are considered ancient default forms of money – except for today. For better or worse the vast majority now think currencies are (real) money. Will that change and g/s once again assume their traditional roles? Maybe not as physical currency but I’m pretty sure g/s will eventually (and probably sooner than later) be recognized and used more monetarily than they are now.

I think it’s most likely that gold (and maybe silver too) will become a monetary backstop once again. A gold standard if you will, that backs a new currency whether its paper or digital. I say that largely because the lack of any basis of value in currencies is essentially the problem, so something needs to assume that role. In any case, I would rather own that basis than not own it, if for no other reason than having a better starting point when a new currency is adopted. That’s one way one’s wealth can be preserved through changes in regimes.

But that’s probably too abstract for most. People want to know why g/s don’t “do” what’s expected of them. For years g/s have almost acted randomly in response to “clearly” problematic circumstances. In fact, they often act in reverse. Prices drop for no apparent reason, and prices don’t rise when one should most expect them to. Prices rise and fall for reasons identified only in retrospect, and sometimes are still speculative. I would argue that that lack of understanding sheds doubt on all of their alleged claims of value and use.

For some reason people today don’t like “conspiracies” as an explanation of things. They’re also still surprisingly trusting of governments and institutions. And they have trouble thinking conceptually and integrating multiple concepts together. However that may finally be starting to change.

Even if g/s are “just” commodities after all, then one has to wonder why they’re the only two that haven’t risen in price by high double digit percentages during the last few years. Silver has more special and useful properties than any other element in existence. (Gold is the only element that is a better conductor of electricity.) But silver and gold are also considered to be the only two “monetary metals.” Could that be why? Would a rapid and extensive price rise in either gold or silver mean something to most people, something foreboding? Well, governments and banks think so and they’re pretty sure everyone else does too. That’s why gold and silver prices are controlled, suppressed primarily. (Fed Chairman Alan Greenspan lamented that the Fed ‘lost control of the gold price’ in 1980, for example.)

But that can’t be done indefinitely, especially as more pressure and attention exists in the physical market. Hypothecation and paper derivatives only work when physical delivery isn’t required. So, for those who understand that, gold is definitely not too expensive in terms of today’s fiat currencies, but on the contrary. As more and more physical gold and silver are removed from the exchanges their prices have to rise, and at some point explode higher as the paper market breaks down. It’s already starting in many other areas, such as nickel.

It’s only prudent to have some form of wealth that is outside of “the system” (and cryptos are definitely not outside). IMO very little is institutionally reliable anymore, stemming from the lack or arbitrariness of law and contract enforcement. Everything outside of your direct control and ownership is at risk. When in doubt, diversify. Whatever “money” you want to allocate to physical PMs, my advice is to spend half of it now in one shot and then dollar-cost average in after that.

PS, What’s important about physical PMs is not their spot prices per se but the “ask” and “bid” prices. Both are rising much faster than spot prices which reflects the tightness in the physical market.

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“MN Gordon: What Is The Strike Price Of The Powell Put?” – March 18

I have the feeling that if there is a Fed “put” it will not be based on a major index like the S&P 500 but rather on the value of one or just a few individual stocks.

These days you can’t think too perversely. It could be stocks owned by some politically powerful people, including in particular those by Fed “governors” themselves. There are many companies whose stocks have fallen by more than 50% and barely a peep is heard about them from the mainstream financial media. Clearly, those don’t count. So we’re really talking about the biggest name companies, or perhaps more “importantly” the companies that benefit the US government the most. Names like Apple, Google, Meta, Microsoft. In other words the “information technology” companies.

Considering so many peoples’ addiction to consumer technology and the dystopia it’s creating, it’s entirely possible that those shares may be very resilient compared with more boring companies that produce actually existential value like food, energy, and shelter. Furthermore, governments need those companies to maintain control of their citizens, so as long as they remain viable all the others don’t matter as much.

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