Gold Is Not “Money”
Commodities / Gold and Silver 2010 Mar 30, 2010 - 03:31 AM GMTBy: Brian_M_Thiesen
Simply put, for now and likely later, gold is not and will not, be “Money”.
I ask people to suspend their beleifs for a few minutes if they want to make it through this writing and to try not to stare at facts or numbers and scenarios and dismiss them on those beliefs.
I know this is possible because in life and trading I have done this myself and mostly at the end of this tunnel is a very hard a painful lesson, which may or may not be the case this time for only a power beyond my mind knows what will be.
What is money to you may not be money to me as far as a belief is concerned.
Some of the worlds most highly educated “economists” or “analysts” can’t even agree so I doubt we could very easily, even on definition alone.
As is with the market belief often does not match reality. I may believe the market will go up or down but if it is not then it is just that a belief not a reality.
Reality is ever unfolding, and with this will be no different. However many have put an almost certain reality on gold/PM’s etc. which in turn could affect your investment and therefore life decisions be it by time or money, which we know are for the most part the same thing.
Reality is money (dollars, francs, yen euros, yuan) are money. Money whether digital fiat etc. is what is exchanged for a good or service for the most part in lets say %95 of all transactions (including that to BUY gold)
I invite you to look into your pocket wherever you are and tell me if it is gold or “paper” in their? Exactly. In the event it is only plastic what does this plastic represent/what will a merchant consider it AS GOOD AS……?
At this time you are invited to think I have no idea about the Nixon Gold Window, 1694, 1913, Bretton Woods, and other important things/dates as far as gold/money is concerned.
Also you are invited to think I have no idea what Fiat Currency is and the fact they are for the most part worthless other than that they are for the most part a control mechanism or measure of confidence.
Worthless to a degree… But not to the end for if so they would not exist.
But why do they? Because people think/believe/are conifdent they are worth something….among other reasons (some of which noted above)
Further to point out I am not here to say gold will be worth $1-$10000 at X time.
The statement “GOLD IS MONEY” is the question/statement/reasoning I am looking at.
As is with all words and human behaviour we will all define things differently so on this basis I must state depending on your definitions on any words here we can be instantly lead astray without even knowing.
So here goes,
Money is what people use as money at the time for now we use $ etc. Simply ask yourself what is gold priced in? IE what is the gauge of its worth. Is it gold itself or $’s, Euros etc. Have you ever seen a Gold to Gold Chart? Let me know if you do.
Gold is X $$$ per ounce. As in you would need X $$$ to BUY gold. Buy means purchase, as in to purchase you will need this much MONEY or CASH to BUY the gold. Now you can also say X gold can BUY X dollars/euros etc. and of course you would be right.
But if we look at this barring countries trading X gold for X oil…. This is all gold can really buy and this is for %98-99.8 (guess) of general population of planet.
Now asking have you ever bought $1000 worth of goods at Wal Mart etc. for 1 oz. gold?
Now asking have you ever bought $8, 49, 181, 610 worth of goods with gold? Certainly you may have done the other way around in various denomintion of/for gold.
Now ask yourself or look in the yellow pages how many people or stores or businesses do you know besides maybe a buddy that will take gold AS A MEDIUM OF EXCHANGE? Or can or will very simply and easily if something “big” was to happen switch to gold as an exchange?
Why do they not except gold and only FIAT Then? Because it is MONEY And that is why %99.99 of businesses accept cash or credit (as cash or easily converted into) only.
So what is it you use for money? FIAT….. Not gold.
Gold or some other type of resource (salt, timber) may have been what the system worked on but not anymore, and just think of how long that took to make it this way and how much it might take to get it back that way then think of the overnight so to speak hypotheses on gold being the “smart, safe or only” bet. For this scenario.
(in this world of derivatives that we now speak of in certain circles… isnt it that the biggest derivative of all time has existed for many years FIAT beyond this most recent scope?..... just a thought) As in that money was at a time again derived from things like gold But now is so far from that (check out derivatives/swaps etc. of the top 3 banks in Operation golbally and you will see a large disortion one not easily returned to) So the world in a sense has been under derivatives for maybe a few hundred years to some degree. So just because “MONEY” or paper fiat was derived from X resources etc. doesn’t now make those resources money, but only what money has been derived from.
Moving forward. So say if it is the whole system collapses (which I don’t doubt at some point and likely soon it will) and is the scenario for gold $XXXXXX
Let’s say the world has 50k tonnes ( as many tonnes as you want to conceive) of gold (more or less depending on who or what is counting, and what is counted and what is known as we may never know how much is in the Vatican etc. or how much the rockefellers or rothschilds etc. really have)
Let us say that if we believe (as I do and has been pretty much proven upto a global person to person audit) that %1-5 of the population controls %80-90 of the wealth, let us say the general public may at this point have access to high figure 10k tonnes of gold for roughly 6 billion people. This includes coins etc.
(really makes you wonder about LME, COMEX doesn’t it now?)… anyway!
At 10k metric tonnes this will allow 1 ounce for 353 000 000 people…. Please read and observe this very carefully.
Fair to say we double this? 1 ounce for 710 000 000 people
That would leave (if a 1 ounce piece of gold became money) 5.5 billion people without even 1 ounce of gold (at this point the reader is invited to play with the numbers a bit… lets say even consider the “big dogs” (central banks, swf’s etc.) would unleash 50k tonnes of gold to the public…. We would X the number by 5 and get lets say 1.6 billion ounces leaving lets say 4 billion people without even 1 ounce of gold) and so on and so on. You can go as far as you want to match your beleifs but these numbers are not fantasy…. Have fun.
So even if we get silver involved at lets say 500 000k tonnes…. This does not print a pretty picture! Leaving a very minute amount of available “coins after minting and distribution “etc for all the earths inhabitants.
Lets say we disclude all the impoverished like the poor (homeless, most of africa and south america etc.) and get to 3 billion people of “economic importance” as society has made so to speak.
Lets then say each person gets 1 oz gold (minted etc.) @ $10000 and 50 oz silver @ $150 well then each person has a total of $17 500 Maybe we could buy a car or something? But I doubt a decent ride would be under $100 000 at this point.
Now this may be good for anyone with monies totalling less than $17 500 which as we know is the majority… but not those with certain powers etc.
Many of you will jump at this and toss in all kinds of supply and demand justifications…. Go ahead this is the time. I also hope you can see this in the “estimated rise numbers” above with a handsome %1000 increase for you.
In this world of figures ranging from 1-3 trillion TRADED DAILY IN FOREX (not including swaps/bonds/cdo’s bla bla bla
This doesn’t seem like much to keep everything rolling along nice and easy or that all would be easy if things didn’t roll along
Also consider this is very much a fantasy scenario that all would get equal amounts and that after that all would resume as normal and even after that Gold/silver would be somehow endless to say that if you traded a few of your ounces for the Currency of the time or the product or service (food or farming as example) then consumed this product or service… what would you be left with?
Answer: No gold (or less gold) and no food (or less as you consume it) as to say this system would be a dead end very very quickly. So then it would seem after a very brief period of operation this system to would collapse or at least stop or be very very slow and still.
For those who have any reason to doubt I invite you to find a chart on population growth and credit expansion to note the correlation… both charts go nearly straight up (or in the dollars case… straight down) and by most accounts this alone (population chart) should be seen as unsustainable. For afterall when has anyone ever looked at any chart so parabolic and not at some future date seen it collapse drastically? Anyone with a basic knowledge of averages and their return at some point ot some area near their moving average etc. knows what I am talking about.
So if these 2 are so close then what might happen in a credit collapse, which is the means by which some postulate golds moon shot? Can we even fathom this/these events or happenings that may occur? If so could it be all bets (including mine of course) are off.... Something to think about I guess.
Please note this is not an attempt at forecasting global catastophe, but again putting forth notions for “moon shots” of pm’s etc.
Also I do not know if the figures above which will differ on the internet depending on source or who you choose to believe are in “minted or coined” in all cases as in industrial silver or PM jewellry etc.
Also noting that if some is in jewellry the very few qualified people or certified “testers of fineness” will be available as the average guy knows not how much gold is in a piece of jewellry so it is highly unlikely in this form it will be traded like a Maple Leaf coin or Eagle etc. (these are high fineness coins for those who don’t know)
(I’ll let the reader decide the odds that humanity can find a way to get all these reserves into one spot(s)/distribution centres, melt, coin and equally distribute all of these metals to each and every human) and also all other forms of wealth. That also in this process nothing revolving around “greed” will happen. Also consider the time and logistics this would take… My bet is %99.9999 impossible (but I have been wrong before!)
I also invite the reader to ponder that this may be the sole reason that after all of this talk and rhetoric why gold hasn’t been put back as “money” It seems to me it is to late now.
Also obviously the greed and control of banks/sters from USA to China and everywhere in between is another reason
So at any point NOW (not in the past, but now) does it seem “SO EASY” that gold or silver can or will magically become money?
So this leads to a very peculiar point in the theory.
IF “money” is going to be of this nature (gold) 1 of two things will need to happen.
1 PM’s massively mined, minted etc. which im sure any of you pm guys know is all but impossible, consider the small fact that there is not much left to mine etc. (by current consensus and reasoning for gold “explosion”) all you PM guys who have physical ask yourself how you may give your 1-1000 ounces of anything to this cause even if “God” himself were in charge!
2. Massive population reduction to the tune of billions in order to suit gold or silver as being currency/money. This scenario although I don’t hope for sadly seems more possible as humans have shown time and again that money or its derivatives are far more valuable than life itself (I don’t think I have to “prove” this I’ll let your morning paper do this) Or maybe you couyld go to a 3rd world country or your cities poverty made neighbourhoods.
So then what are the general public of which likely I will guess here %98 of which do not own gold or silver do? (discluding jewelry) Will they just then lay down and die?
Or likely might they instead of this as instinct to survive says come up with a different way? In this may we only have to look back at maslow’s theory to see that basic human nature in this type of situation (catastrophe/doomsday/apocalypse) may look more towards immediate survival and not so much “wealth accumulation” so to speak? In this what is listed in these categories? FOOD CLOTHING SHELTER (if you see hoarding or amassing PM’s in there let me know)
What aboout something that has value to all in any case at any time good or bad and rich or poor? (mostly poor)
What if a systemic collapse were to occur. May we now look at systemic collapses of the past to maybe see what people clamour for?
If we could glimpse into the past of Rome etc. I wonder what the general population was clamouring for when it was burning… was it really gold/silver? (chipped, shaved and “dilluted” as it was)
Now to also think if entire empires can fall/collapse no matter how much gold they have what might this say about your “empire?”
The most recent and popular world case may be 1929-1945 (many parallels of which or by are drawn today) I like some of you have relatives etc. who have survived such times. Might it be time for us to revisit some of these people and ask them “How much was spot gold in 1929-45 and further did you care in the least?” Like people of the war or the “Hoovervilliains”
Or maybe even now we could go to some other war or economically torn countries and ask the public “How much gold/silver are you socking away right now and how much more do you wish to acquire before X time?”
Maybe now we can even look at some of the pictures of the depressions of times in all countries and look back into archives of papers/illustatrations dating back to Rome and see how many gold headlines/pictures there were and how people were lined up at the gold window rather than…… the bread line. (noting both of which in any case would be likely controlled as is today by government in the forms of either land annexation or in the form of more modern times like food stamps etc.)
We should also note that in these times governments have done some crazy things even in times of not so much crises (Nixon etc,) or in crises (Roosevelt making owning somehow treason overnight, the Romans mixing in likely any metal they could find with silver coins etc.)
In this case if we are still to have governments or systems I doubt all will remain status quo if some collapse occurs. If by now you cannot see the ever faster encroachment on your life by big government I don’t know if you ever will… and I also doubt in this type of scenario it will/would reverse or even stop or even slow at all.
Does this in any way make you ponder what is really of worth to gevernment IE the dollar/gold/land etc Or YOU. Now they know or want your worth in a sinister way, I wonder if you could see your worth in the “right” way so to speak… just a thought.
It is my belief as things stand that if a collapse occurs simply a new type of currency or system will be introduced even further (If you can imagine) monitored by governments or some type of one bank system at which point gold will be set by them at that value etc. It is ok to believe this is impossible, but I will invite you to look at history and see how easily this happens. As in the case with Nixon it is literally as easy as a few meetings and a press conference! At this time he wasn’t just telling a few PM guys or small time collectors about gold he was telling entire countries with standing armies the window was closed!
Again guess who will be at the front of trough caring not about gold prices etc. but being able to start (potentially) a new system of lending/credit/credits etc. Further if markets are still humming along nice and smooth as some say they will profiting massively not from gold up or down, but leveraged bets for this and all other assets allowing them to compile massive fortunes in whatever is of value.
Let us also consider the massive attempts at bankrupting farmers globally through means of subsidization etc. Which for all intents and purposes have worked by running markets up and down in non correlation to have inputs costs high and product prices low to slowly or quickly bankrupt farmers so the companies (which are really government ) we all know and love (Monsanto, Cargill etc) can snap up huge swaths of land for nothing either from the farmers themselves or by bankrupting entire countries and forcing them to sell resources dirt cheap or simply paying off politicians to sell out countries (examples of this can be seen in any country who has had a “Colour Revolution” or even taken a dollar from the IMF, which are many and with “good” reason.
Or can be seen with even the slightest of knowledge of how the big bankster houses really work. This in the cases of “poppy money” or things of the like.
So then why now of all times are they snapping up massive amounts of land or if they havent wanting to (ukraine, afghanistan, venezuela, ecuador ) to name a few global entitiies? How is it or why is it that the governments of these countires no matter how good or bad are considered evil etc. I’ll let you answer that.
We must also note that governments have become extremely good at maximizing and likely willingly or not creating crises to further their grip. Now I am not saying this will go on forever and likely will not, as likely at some point they will go a little to far for both themselves and their respective societies and collapse effectivley bringing in the best possible opportunity to have change both inner and outer.
Also in this respect I doubt the top issue of towns etc. will be how to set gold price etc.
If a systemic credit collapse occurs which means to the point nothing moves, or even a series of shocks etc. I wonder if people will be waiting close to their computer screens checking spot price or waiting for the gold truck to stop in town to pass out gold!
Now what if all currencies “GO TO ZERO” well then what will gold be priced in? GOLD itself or maybe against silver then? I highly doubt it. But maybe
As to say 1 oz gold is worth X oz silver…. Well that is just great but really who would really care?
You may say “gold could be used as the standard to pirce wheat etc.” I will say as per the above it would likely be the other way around and likely gold would be phased out as not really needed as well as not available in most cases/cities/towns/1to1 barters/exchanges. Citing the numbers/scenarios previously mentioned
Further then can we maybe entertain that besides a few pm guys holding the last straws… who will care about metals over food or survival things like family , clothes, community etc.
I remind you to check the above or devise your own theories or beleifs on how gold or silver in the case of such shock or shocks magically become “MONEY” or medium of exchange considering the near both mathematical and “human nature” so to speak probabilities.
Now let us move into another issue. Those that hold this “MONEY” if this money is worth $10000 (note I must use the $ at all times which should be a small indicator although almost way to in your face to see) that this is money… at least for now.
I wonder if you then you that hold PM’s would want the other %95 of people who do not, knowing you have this that is worth more than life itself, when it seems life itself truly (at a time we may expect is coming) is worth less than it already is.
This is to say that people may have nothing left to lose and all to gain. Have we not seen in crazy or desperate times that so many bugs are calling for people may do crazy things…. like robbery/murder etc. so they can be fed or further their children? Do we not see this in all aspects of nature as well? IE when other animals fight for territory (food shelter) is their conern to check comex 100 oz pit before they do? Finally have we not seen robbery/murder etc. (not including banksters!) happen in the best of times as well?
In a survival state which is what many call for as the potential reason for gold explosion, might it be that people resort to primal means of animal/human nature?
I wonder.
I wonder then if you are prepared to risk family etc. or whatever may come to a mass of people potentially wanting this gold from your basement or safe or hideout etc.
Even further I wonder if they will give it the value you do if they are trying to eat to survive, as it is likely their energy will be conserved for these purposes. In so saying might it be what they want/demand…. And in so saying might it be that is what IS WORTH itself and in so saying might it be that if anything is to be confidently considered of worth or value to the masses themselves might it be then that this replaces what is considered money and itself becomes money?
(or might it be that people end up valuing themselves and seeing maybe they are what is of worth rather than systems/moneys etc.) I leave this for you to ponder.
Now let us move into the I word, and not the one that describes self but “INFLATION”
This for the most part is why people are such bugs… and likely with some good reason.
However to me it seems they in ways, miss the point and only the ones we despise so much the “manipulators, war mongers, elite, illuminati etc. etc”Actually have it all figured out, in a sense to say that is an inflating/ated item a store of value or is the value in correspondence with inflation?
Or is value in correspondence with the perceived value (via markets… manipulated or not…. As even in this case a value is put on a screen so this is what we see and like it or not must then see as real…. or believe it) to what the value of what it is priced in is? Then why no just buy “inflation” itself. Likely if spot gold was $1000 an ounce and I said it was $500 or $1500 would nt you call me a fool?
So then we must look at something here…. Gold has gone up $250-1000 so this is %400 return this would be awesome for all the people who held gold from say 2000-2010, or even 83-2010 although I don’t think in the scheme of population this is a very high number likely in the low fractions of % and even lower when we take out paper gold to physical.
This would also present a very substantial gain…. Except for one small fact. Am I wrong to say that all other things more or less have gone up by nearly the same margin? (yes I know Dollar etc. or whatever you want has gone down)
Therefore, if you decide to sell your gold (FOR $$$$’s in order to BUY GOODS AND SERVICES AS A MEDIUM OF EXCHANGE….. OR WHAT SOME MAY CALL MONEY)
You may be selling an item that gained you %400 depending if you timed exactly right and held in order to buy an item that went up….. %400
(this is broken down into RE, bread, milk, gas which went up %600, and really all other items) give or take some percents but nonetheless in one direction…. Nearly straight up.
So buying one item for that has gained X % for another that has gained the same X %
EQUALS %000000 return over ten years or so!
(please note I think I was quite generous previous at putting gold at $10000 and silver @ $150 so as to say that if gold or silver haven’t caught up to the price of other things that may have gone up %1000 I would allow this to happen in a 1-5 years time or so)
I hope this in some way can satisfy some of the more “extreme” price forecasts for gold/silver I of course leave you to any % figure increase noting it is likely most other things would go up near to that as well.
(I am also not saying to hold cash or really hold anything as this way of investing is long dead, nor am I not saying to buy gold or PM’s) Maybe in the end of it all what I might say is that it for all things is a true investors and possibly to say traders only market, not so much buy and forget on someones advice/aricle using tactics to lure you into buying or supporting their opinion or subscribing to their newsletter etc.
It is also funny that when any other asset goes up %400 or so or even less it is in a bubble…. But not gold? ( I am not going to come even close to this “discussion” just pointing this out)
So getting back to the elite, they control and despite whether we think they know or are smart or clueless they control by virtue of position/title not smarts rates etc. which for the most part control MONEY which they are at the head of the trough and do all the lending and all the breaking people down (simply by piling everyone into one direction…. Or letting them do it themselves as human nature….. betting the opposite and letting it unfold)
As the old saying goes “When people lose their shirts, someone has to pick up all the shirts” they are that someone! Usually there are a lot of shirts to be had and the ones that pick them up are in $5000 suits!
This causes higher borrowing (for the bonds they underwrite/buy etc. )which causes better returns for them which causes less for us which is how the %1 controls %90 number comes from which makes it really the only way to make the money and have a better return. (on top of futures etc.) now 2-%10 may not seem like much but imagine you were charging EVERYBODY this in the form of all mortgages bonds of all types etc?
I don’t want to get into conspiracy etc. but what I do want to attempt to dissolve is that gold or silver is was and will be the only way to make money moving forward as I hope the above points illustrate is not the case considering the above factors. I will let others research the history that goes beyond theire grade 10 text books and follow the trails.
So then again lets look at this, if gold goes to $10000 an ounce is it not likely this will be reflected in the price of all other things? …. Priced at the rate gold is priced in ($’s) and again give or take some %’s or factors like the gold bugs love…. Supply and demand? IE might it be safe to say milk would be $15 a litre?
Good luck to all those who can use 1 oz to buy a few trucks of milk or bread etc, store it and have no one know you have it!
So in a sense is it possible if all these things “collapse” or experience “shocks”etc,
Might people go to what they know IE food over complex futures contracts derivatives, spot prices etc.?
Might markets become the one that is outside your door or down the street?
Might it be that in this type of world (although gold can tell a bit of a story) that it is not the most important thing and the only way to make it through?
Might it be people understand (as I know most do) more about how much energy they and their family can get out of food rather than a few metric tonnes of PM’s
Might it be then that food itself then becomes the “currency” or “medium of exchange” (or time or clothes etc.)?
Could we say that these are things that can never be manipulated in this local or smaller market scenario? (im not talking gmo foods etc.) I am talking that when I look at a pound of beans it is there and that’s it. (I am also not saying one day to the next 1 lb of beans might be worth more or less ounces of corn etc.)
Should we also note corn etc. comes up every year and is somewhat plentiful (like poppies and coca plants to name a few others…) so it might be much easier to use then something that is there and that’s it?
In this scenario might it be that we will get rid of all that causes theses problems of derivatives etc.?
Might it be possible to enter a GOLDEN AGE!!!
Finally I again ask you to consider the logistics behind gold/silver becoming MONEY or CURRENCY etc. overnight or easily.
This “article” is not so much based on everything I think of gold etc. (I like some of you reading this love to hold and own gold/silver in my hands etc.) but of many theories presented by bugs etc. on why gold is going to the moon why you should buy etc. and that you may miss out if you don’t when in reality you may be looking in the completely wrong direction on what is valuable now, always was, and always will be so long as we eat/drink and breathe (note the words eat/drink). Or simply tying your money up while other opportunities present themselves.
Also note that the majority of humans/investors or whatever are always looking in the wrong direction. Many times (if not every time!) it is because certain forces want it this way as it works every time as history as shown. I am not saying anyone is conspiring to make you do this just that they do things at times… although it is possible they are!) Or in any other case it is the force called “THE MARKET” which gets everyone looking the wrong way!!
The intent of this writing is not to prove I am right or this or that but to maybe let you sit back and take all the stuff you read or theories etc. and put into a new perspective/angle/light. Maybe to re evaluate the portfolio that is your life tailored to your belief system.
I am not here to sway you completely to my side etc for truly this changes with each day and not just trading day, just to invite you to think on something with a few facts and some theories that some others may not be presenting for whatever reasons.
It is likely for example that most do not want to say anything on the possibility of many people dying if it is they want their “gold/PM world” to come true as this is not a very safe view or attitude. But safety or gettting subscriptions/readership etc. should not in my humble opinion be of importance to you if it is the theories they propose come to the forefront now or later.
Truly I know looking at a different angle can be very hard as mostly it goes against your ego which is supplanted in beleifs we have collected, let alone completely change someones mind. So from this stance it is a waste to try and “change someone” but not a waste to present a new idea or thought as this can be the catalyst for such change positive or negative, up or down, right or wrong.
It is said at times “truth before its time is considered herecy” or something like that. I am not saying this is the exact truth or not… and I will say as far as this is concerned my true beliefs are far from gold/PM’s and its importance…. But this is a topic for another time.
Maybe this only proves that the system we have now and mostly all systems humans have made have been not so much for the greater good as far back as history goes.
Perhaps this is a good indication for us to maybe see who is responsible for these systems which includes some elite etc. but should in no way disclude all of mankinds responsibility in this area.
Whatever happens smooth or otherwise I wish everyone good luck no matter what
I thank any of you especially the hard core bugs who managed to make it through my ramblings and from this point draw your own conclusions
Brian M. Thiesen – Regular Guy
I am just a guy who has been trading and learning markets, geo-politics, history, human nature, etc. for the past while with really no education of merit to speak of other than reading articles and books from time to time. I grew up in a small town and tried to have since birth grow in whatever way possible. I love trading and markets etc.
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