Posted on 07/06/2014 8:14:24 PM PDT by blam
Tyler Durden
07/06/2014
Submitted by Adam Taggart via Peak Prosperity,
This week's podcast sees the return of Mike Maloney, monetary historian and founder of precious metals broker GoldSilver.com.
Based on historical patterns and the alarming state of our current monetary system, Mike believes the fiat US dollar is in its last years as a viable currency. He sees its replacement as inevitable in the near term -- as in by or before the end of the decade:
All of this is converging with the crazy experiments the Federal Reserve has done.
I absolutely believe that there are economic consequences to this that are inescapable. The Fed is not just in a box; a trap has been set. And before the end of this decade, if there is still a US Dollar around it will not be this US Dollar. It will be a dollar that is tied to a very different monetary system.
The last three shifts in our monetary system were little baby steps off of the classical gold standard where it was fully backed. We went down to a 40% reserve ratio with the Federal Reserve in the United States during the Gold Exchange Standard. Then the Bretton Woods system didn't have a reserve ratio specified, but I believe the dollar was about 8% backed by gold by the time Nixon took us off of gold in '71. Now, the only backing that the US Dollar has is the promise to tax us all in the future: it is US Treasury bonds, or the Fed doing its quantitative easing and buying mortgage-backed securities.
And how corrupt is the notion that you can give some entity the power to have a check book that has a $0 balance and they can go out
(snip)
(Excerpt) Read more at zerohedge.com ...
Gold was under $300 an ounce in the months after 9/11, in 2001. That didn’t buy a decent suit then and it wasn’t equivalent to a month of manual labor.
So, would you say it fell more into the loaf of bread range?
Gold hasn’t been a consistent measure of the cost of anything. There have been swings both up and down relative to any item you could name. It was $800 an ounce in 1980, in 1980 dollars. It was between $250 and $300 an ounce in late 2001. People look for patterns that aren’t there. Has a suit gotten $400 cheaper since gold fell from over $1,600 an ounce to, what, a little over $1,200 an ounce now? No, it hasn’t. It’s an historical safe haven in times of economic turmoil. It runs up leading into and during such times. It falls when the threat is perceived to have passed.
A good SHTF plan should be effective no matter what the economic conditions are. Can you go buy your loaf of bread today with your gold? Since owner/operators for groceries is pretty low today, odds are you're dealing with a moderately paid clerk, who has to answer for their totals in the drawer or they lose their job in a down economy. A gram of gold is $42 in fiat currency. Who will give you $42 for that speck of gold in a glass tube out of their pocket?
If it won't work today, why would it suddenly work during a collapse? The ounce for a loaf of bread is illustrative, not really predictive. But if all you want was a loaf of bread, and all you have is an ounce coin, I sincerely doubt you'll be getting any fiat currency as change. And in all cases, you'll be severely overpaying for whatever you're buying.
It has been, if you average it out over time. Example: when gold was $300, would you have been smart to have bought it then? Why or why not?
It’s not about gold for bread. It becomes an issue of gold for a field of wheat. The guy with the field of wheat can’t store it; but he could, and would be glad to, take your gold for his wheat at such a time as that.
You’re probably thinking I’m the dumbass.
I did buy it then. Not a lot but it served me well, nearly quadrupling before I sold. Too bad I didn’t go all in, but that’s not my nature. I got an excellent return on a moderate investment.
Congrats. I went all in. We’re both pretty happy. Why?
Creep me out Pings. ; )
Because I got considerably more dollars out of the transaction than I would have had I held the original dollar amount in a savings account or even stocks.
As for you, I can only guess. I don’t know whether you still hold it or not. Equating the price of gold to various items as if gold consistently tracks inflation is a statement typically made by people who are a little too attached, so I’m going to assume you haven’t sold. You’ve lost 25% from peak.
Unfortunately, I won't survive a societal meltdown. Not with an active chronic disease, requiring a steady supply of medication and medical supplies.
Mark
My local government shut down my little jewelry sales business, and I was really pixxed because I had just bought $4,000 worth of silver jewelry pieces wholesale at $4 an ounce. I’m not mad any more!! I’m also glad I have a 3 months supply of nonperishible foodstuffs. Of course the Mormons say you should have a year’s food supply.
You’re wrong. I’ve done some of each, and bought more on dips. It’s called leverage.
Just don’t get caught without any.
It’s been dipping quite a bit over the past year year and a half.
You mention an interesting problem. That's another item people should work their way into an oversupply of -- life-sustaining meds. There is a way: always order them the instant they are available on your plan, and maybe over 3-5 years of time, you'll be a couple of years ahead!
That's when to buy a little more. The whole idea is to sell high and buy low (now there's a truism). The fluctuation is the lever. But the bottom line is that the "game" the Fed has been playing has a shelf-life. At some point, the "jig" (forgive the insensitive terminology) will be up. At that point, you won't be able to give $dollars away at hardly any price. That's when metals will look incredibly sane.
I did sell high. It still looks high to me. Buying as you have over the past year and a half would have been a losing proposition.
In most cases, that would be prudent, and in fact, I'm about a month ahead on many of my prescriptions. The problem is that some MUST be kept refrigerated, and the insurance companies will NOT let you "get ahead" on it (very expensive retail prices). And many of my other supplies are temperature sensitive and have shelf lives of less than 2 years. But except for that very expensive Rx, I've got enough for a month or so.
Mark
DOLLAR FADE: SKorea, China to trade in national currencies...
BRICs Morphing Into Anti-Dollar Alliance...
http://www.zerohedge.com/news/2014-07-02/brics-are-morphing-anti-dollar-alliance
France hits out at dominance; Calls for ‘rebalancing’...http://www.ft.com/intl/cms/s/0/883e7912-0513-11e4-b098-00144feab7de.html#axzz36l0QEItG
France’s political and business establishment has hit out against the hegemony of the dollar in international transactions after US authorities fined BNP Paribas $9bn for helping countries avoid sanctions.
Michel Sapin, the French finance minister, called for a “rebalancing” of the currencies used for global payments, saying the BNP Paribas case should “make us realise the necessity of using a variety of currencies”.
He said, in an interview with the Financial Times on the sidelines of a weekend economics conference: “We [Europeans] are selling to ourselves in dollars, for instance when we sell planes. Is that necessary? I don’t think so. I think a rebalancing is possible and necessary, not just regarding the euro but also for the big currencies of the emerging countries, which account for more and more of global trade.”
Christophe de Margerie, the chief executive of Total, France’s biggest company by market capitalisation, said he saw no reason for oil purchases to be made in dollars, even if the benchmark price in dollars was likely to remain.
“Companies like ours are in a bind because we sell a lot in dollars but we do not always want to deal with all the US rules and regulations,” he said.
The uproar over the BNP fine at the usually sedate Cercle des Economistes conference in Aix-en-Provence highlighted what has become yet another friction point in transatlantic relations.
French officials lobbied heavily on behalf of the country’s largest bank and argued that BNP broke no European rules, prompting a debate about whether it had been the victim of US judicial over-reach.
Looks like Europe is tired of being effed by the Obama Administration.
EU goes to war against power of digital giants...
http://www.theguardian.com/technology/2014/jul/06/google-amazon-europe-goes-to-war-power-digital-giants
A temporary loss, if you consider it that way, is only a way to get in on a considerable run-up. This is basic. You have to be willing to take risks at times.
And I consider myself to be hugely risk-averse!
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