August 21, 2011





Let me play Devils Advocate for a moment, and shed light on the "other" side of Gold.

by Clay Finley

(henrymakow.com)

It seems that whenever almost everyone is saying "buy this" or "buy that", and no one is saying "wait, let's think this over", that particular market is fueled primarily by a speculative fever and is at some saturation point: nearly saturated, saturated, or over-saturated.



Let me play Devils Advocate for a moment, and shed light on the "other" side of Gold.



1) Gold has almost no intrinsic value: you can't eat it, drink it, take a bath in it, drive it to work, fly it to New York, or sail it to the Bahamas.



Furthermore, industrial use is a flyspeck on the wallpaper of production, while jewelry use is a consumer option.



2) Gold is a terrible currency backing: The Mother of fractional reserve banking reaches a critical mass of, maybe, one cent backing each paper dollar in circulation. This anemic and deceitful commodity uniquely misleads citizens and investors.



3) Gold is NOT a stable international platform: when the US dollar was gold-backed, there was substantial price disparity from Nation to Nation and from region to region. Remember why Auric Goldfinger tooled around in that funky old Rolls?



4)

In the Great Depression, my Granddad was a fairly small-time bootlegger in California and booze was one medium of exchange, cause nobody had any CASH!! gold and silver were not popular!





Ever hear of the Scots War? American-Scots were using whiskey as money, and the federales went to war with them. Don't steal, the govt hates competition.



5) Most Important, there is NOT a natural, organic marketplace: where the few that really NEED Gold can hammer out the best deal from the many suppliers.



The "price" of Gold is determined by trading on commodity exchanges. These "contracts" are just a piece of paper: the feared derivative, in the flesh. You will not see tons of grain, or heating oil or Gold on these exchanges: only paper. Some contract totals surpass worldwide physical inventory of the underlying "commodity".



Suppose tomorrow morning, Chicken Little Network excitedly reports that trading in acorns commenced today on CME, and the price has already hit $50 per bushel!! Next comes an assortment of "experts" to rationalize this market behavior and distract us from reality for as long as possible.



The "market price" of acorns on the CME has absolutely NOTHING to do with your life.



Don't you find it curious, that if rapid Gold price appreciation is a given, why are Gold dealers selling? Why aren't they offering to buy at 2 points, 5 points, even 20 points over street? The CASH is worth more to them! Hello.



Christians share a faith, the substance and promise of which is priceless. Gold ain't "worth" hardly nothing: AU, economic mystery meat.



So, let's think this over!



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Makow comment: As long as currency is debt instead of a medium of exchange, I expect gold will do OK, because it is not an obligation, but the economy will crash due to the preoccupation with sovereign debt. Gold hardly budged during the Great Depression.



This is a good time to remember this 1865 London Times editorial, printed after Lincoln produced debt free currency:



"If that mischievous financial policy which had its origin in the North American Republic during the late war in that country, should become indurated [hardened] down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without debt. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe."







