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How much gold is enough?

View from the Mount

Sober Thought Provoking Essays

O gold! I still prefer thee unto paper which makes bank credit like a bank of vapour.
George Gordon, Lord Byron

How much gold is enough?

Do you own enough?

Many people have an ambiguous understanding of the nature of GOLD. The financial manipulators have no such deficiency. They fear gold for a very good reason - it places the brakes on the systematic destruction of currencies. Look at it this way. Historically, currencies have recurrently been destroyed - becoming worthless. If only those confederate notes could still buy an antebellum mansion. Gold can never go to zero.

But before you decide to stock up and turn in all that worthless paper, keep in mind that money has become the decisive political decision. Governments repel from guardianship of purchasing power for their currencies. In its most reducible simplicity, regimes love inflation since it is the silent tax. Ever since the gold window was closed by Richard Nixon, the float of the metal has become the most concerted market to tame and subdue.

So what is the significance of the recent breaking of the 400 dollar mark? Are the bulls running in the streets of Pamplona or is this just another false fiesta? The rise in the gold price, denominated in Federal Reserve Notes, is more a function of the decline of the US Dollar than an appreciation in the price of the precious metal. The pertinent question since the early 80’s is why gold has not risen in redemption convertibility against a basket of world currencies? The unadorned answer is that the ‘so called’ free traders that reside in the central banks have a unified goal of discrediting gold at any opportunity, contrived or real.

As they laud paper, they horde gold. Why? Because, however else you wish to characterize the bankers, they are not stupid about the threat from gold to thwart their debt created fractional reserve hoax. Remember that première Commie - Franklin Delano Roosevelt - made gold illegal to possess. Some coins of numismatic classification were excluded, but don’t rely that this oversight will be repeated when the day of reckoning arrives. Now, don’t faint just yet if you think that this assessment is a rejection to own gold. Not at all, just understand the nature of the real risks.

Don’t look at gold as an investment. Folks, the notion of investing has become so distorted that the odds at a casino appear to be a fairer game. Gold is simply your ultimate insurance protection. The fundamental reason to own gold is to hold it in a secure location. That means it has to be debt free. Forward, futures and options contracts have an inherent claim against the metal. Loans secured by the alloy mean they can be called in and the collateral forfeited.

Fully paid gold that can be withdrawn from its safekeeping, allows for a fresh start. The need to bribe a government official to exit a hostile jurisdiction, has invariably been an essential function of gold. It will always have value to insure escape. But the likelihood of a mass exodus is even more remote than real reforms to the world banking and financial system. Holding enough gold to live on for a minimum of a year is just plain prudent.

NORFED and e-gold programs are attempts to provide an alternative to paper. However, physical gold is the real thing. Price valuation for gold has been influenced by the shorts for decades. The stalled and often downward pressure on gold is a function of keeping the metal out of the hands of the individuals. A visit to East Driefontein, a South African mine, with Don McAlvany will quickly illustrate that it is a hard task to extract gold away from mother earth. The supply is finite and the conversion into fiat currencies should rise in value as more paper floods the marketplace. But gold is not allowed to trade freely. When gold becomes viewed as the quintessential asset holding and people buy and hold the metal, the strangle hold of the central banks will be cracked.

Friends such as All American Gold provide priceless information, both political and financial. Robby Noel says: 'Don't wait for your ship to come in, swim out to it.'  Sorry to say most Americans, just don’t value their own personal well being enough to secure enough gold to provide a real material safety net. The final judgment of what is enough for you is more then you probably already have and hold.

The politics that preserves the State seldom provides trustworthy protection for you. When individuals acquire gold in mass, politicians will be forced to address the public debt, and the true extent of the unconscionable confiscatory taxation condition that we all suffer. Limited government can be achieved, but must be based upon a currency that has gold convertibility. There lies the answer, keep enough gold to insist that real money will replace phony Fed notes. Nothing less will restore a store of value or a nation of free citizens.

SARTRE - November 30, 2003

The desire of gold is not for gold. It is for the means of freedom and benefit.
Ralph Waldo Emerson

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Inherent Autonomy, 'Strappado Wrack', Dueling Twins, Global Gulag and Negotium

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