The blogger Brian at Frankenstein Government is a friend and a Guest Saturday collaborator here at Conservatives on Fire. Brian is a genuine wordsmith, in my opinion. I have told him before that he is missing his calling. he should be writing “Who Done Its”. He is, after all, an ex-cop. Here are a couple of lines from a recent post that provided the link to the story that inspired this post.
The difference between genius and stupidity is, genius has its limits.
Never underestimate the willingness of your adversaries to keep an ugly truth from becoming a hideous reality.
I don’t know about you, but I thought those to be a couple of pretty clever lines.
Brian’s article talks about enormous scams run on the public and how politicians and institutions often work to keep the public from learning of the scams even though there have been a few who try to sound the alarms. he talks about a man by the name of Harry Markopolis who tried for years to get the SEC to investigate the Ponzi scheme run by Bernie Madoff and how Peter Schiff warned CNBC viewers for two years that the housing market and that banks were going to implode nobody listened. Brian admonishes his readers that it is time to start listening and he recommends we listen to the blogger, Dave, at the Golden Truth blog who wants people to understand why gold prices are going much higher.
On the side bar of the Golden Truth is this quote from J. P. Morgan
Gold is money…everything else is credit.
My entire career was spent in the mining industry and the last eighteen years of it were in gold mining. I am very knowledgable about gold as a commodity. I do not pretend to understand the principles of gold as a store of wealth or its role as money.
There are lots of “Goldbugs” out there in the blogosphere and I do not know how to judge their opinions. But, if you want to scare yourself witless, read this Golden Truth article. For now, I will share a few quote and numbers from the author of this article.
With regard to gold, gold isn’t an investment. Gold is a currency. It’s only an investment to the extent that its value as a currency is cheap relative to all other currencies. The only value behind any paper fiat currency is the “faith” that the issuing Government will maintain supply of the currency relative to the wealth and economic output of the issuing country. We’re well beyond that ability now in every currency. Right now the only “value” of the U.S. dollar is the Government’s ability to print more currency in order to avoid default on the Government debt.
At some point the gold standard will be restored to the global economic system. I don’t know which country will force the issue and I don’t know when. But in order to create the financial “reset” that will be required to restructure and discharge inter-Governmental debt obligations, the value of gold will have to be reset to a much higher level in current dollar/euro/yen/yuan terms. Much higher. Ron Paul wrote a brief essay addressing this issue. The essay summarizes how the dollar engineered into a pure fiat currency and was enabled to remain the world’s reserve currency: LINK The only idea in this essay with which I disagree is the notion that it’s not too late to save the U.S. dollar’s status as the world’s reserve currency. There’s been too much damage and our country has crossed the Rubicon of dollar destruction.
Whether or not the public ever jumps on this bandwagon and gets it before the reset occurs is irrelevant. The public participation in driving a bull market is only relevant to the extent that it provides the buyer of last resort for the insiders and smart money to dump (greater fool dynamic). That will not be required in this situation because it will be the Governments which determine the reset price, not the markets.
The author then goes on to talk about the US gold reserves, which are published to be 8100 tonnes, the most of any country.
But let’s assume that the U.S. gold is intact. And let’s assume that the world were to resort to the old gold standard which required the value of any country’s gold to represent 40% of the country’s reserves. In order for the U.S. to “monetize” its $16 trillion of on-balance-sheet debt, the price of gold would have to be reset to $23,500/oz. That’s just the direct U.S. Treasury debt and that doesn’t include all the other non-direct, non-current debt obligations. It doesn’t include the $7 trillion FNM/FRE debt guarantees. And it doesn’t address the private sector debt load in this country.
Now, if that number of $23,500 per ounce doesn’t scare you I don’t know what will.
As I said earlier, I do not pretend to understand the principles of gold as a store of value or its role as money. However, I do know that there are powerful people and institutions that do manipulate commodity prices. For example, it is not much of a secret that JP Morgan and Goldman Sachs manipulate the price of gold and silver. For whatever reason, they do not want the prices of gold and silver seek their free market price. When ever precious metals take off, these banks start selling short gold and silver that they do not have and their influence is that the prices fall back. If you don’t know, you should know that there is not nearly enough physical gold and silver in the world to cover all of the paper certificates supposedly backed by the metals.
Let me share with you a true story from my own experience.
If you want some interesting reading, enter the name Harry Oppenheimer in your search engine. In 1991, Harry Oppenheimer, the aging CEO of one of the worlds biggest mining conglomerate, Anglo American, in South Africa. Within the Anglo America family are the famous diamond mines of De Beers Consolidated Mines. It was this year, at the age of about 82, that Mr. Oppenheimer made his very first trip to the United States. The occasion was to visit a small gold mining company his company had acquired in northern Nevada. The president of that company in Nevada and I were acquainted. One day I received a phone call from him inviting me to join them at a special dinner for Mr. Oppenheimer at a resort in the mountains south of Elko, Nevada. Of course I wasn’t going to miss a chance to meet the famous Mr. Oppenheimer. When I arrived at the resort, I was literally shocked to find out that I was the guest of honor and that Mr. Oppenheimer had requested that I be there. (It’s a very long story how Harry Oppenheimer even knew that I existed. I was but a General Manager of a mine belonging to Consolidated Gold Fields.)
At dinner, I was seated to Harry’s right and his daughter was seated across from me. Harry was a perfect gentleman and an interesting conversationalist. I was quite uncomfortable. I didn’t understand why I was receiving so much attention from this famous and powerful man. Then as the table was being cleared and coffee was served, he put his hand on my arm and said: “Jim, I would like your opinion on something.” Harry Oppenheimer wanted to know what I thought about the idea of creating a “Gold Cartel” like the “Diamond Cartel” he had operated for years. (At De Beers there are literally mountains of diamonds that never reach the market. If they did, diamonds would be worthless.) Well, I never heard from Harry again. I guess he didn’t like my answer.
I shared this story with you so you can understand how very powerful people think and act. One must wonder who really controls our destiny?
Well, that’s what I’m thinking. What are your thoughts?