econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 27 April 2016

A Gold Revaluation Could Transform Your Financial Status - Overnight

from Money Metals Exchange

-- this post authored by David Smith

As we move through 2016, the Horsemen of the geopolitical, economic, and social apocalypse are on the march. China burns through its currency reserves as billions in yuan flee the mainland for safe harbor. Japan prints mountains of yen debt in an effort to create inflation - and thereby the conscious devaluation of its citizens' purchasing power.

Saudi Arabia's gamble of cutting oil prices to the bone in an effort to break the back of the shale oil industry is becoming so costly that it may have to sell a portion of mighty Aramco to outside investors, while keeping secret the amount of its U.S. debt.

The U.S. government holds an incomprehensible $19 trillion dollar debt, in a presidential election year where the programs offered by front-runners of both parties would increase that amount... by trillions more!

And to top it off, many nations - the U.S. included - are moving to implement a policy of negative interest rates (NIRP), where the bank charges you the customer for the privilege of holding a cash balance! Think about how corrosive NIRP would be. And while that's going on, the government is actively working to promote inflation - in order to pay its social security and government pension obligations - while your purchasing power continues to decline.

The result of this policy is financial repression. A double sucker punch to your economic gut.

In Europe, NIRP is causing large corporations to hoard cash and buy gold rather than keep a large bank balance. In Japan, home safes, in which to store cash, are being purchased in record amounts, and demand for 100,000 yen (c. $1000) notes is going through the roof.

Central Banks Net Purchases of Gold

Since 2010, central banks have become net buyers of gold

As the world's governments come face to face with the prospect of currency collapse, something's going to give. Confidence in (acceptance of) fiat money is literally all that holds things together.

Let a run out of a country's paper money get underway - into anything of tangible value - and it's GAME OVER. Even the ability of banks to suspend redemptions from your money market funds - instituted by federal decree last year - will prove to be nothing more than a metaphorical finger in the dike.

What is to be done? How can the central banks of countries around the globe, as they slip into a synchronized recession (or worse), dig themselves out of the approaching monetary-debt abyss without going through a systemic collapse first?

The Coming Revaluation of Gold

There is an answer... it's written about occasionally, but scoffed at by virtually every "intellectual" and "economist" who has cared to give its backers the time of day.

That "answer" is born and nurtured through centuries of history in the crucible of economic need: There will be a revaluation in the price of the most powerful, effective, and durable store of value humankind has ever utilized - gold.

Talking heads and politicians like to say, "but there wouldn't be enough gold for that!" Oh, yes there is... but only at the right price!

Gold revaluation (not monetization - where gold is redeemable in exchange for paper script as a monetary medium), would be instituted by central banks - perhaps first by the U.S. Federal Reserve, with others in tow...

Revaluing All Currencies against Gold Is as Simple as Eighth Grade Math

So far, the world's major currencies have been taking turns devaluing against each other, to improve their country's trade position in the global economy. It's mathematically impossible to devalue all currencies at the same time, so as the "currency wars" intensify, the inevitable result is a spiraling race to the bottom.

Jim Rickards, in his recently-published seminal work, The New Case for Gold, shines a light on the way out for these dysfunctional entities, saying:

"..if you devalue it against gold - because gold is money. It's not the kind of money that can be printed by a central bank... (but) with gold, everybody can devalue (their currencies) at once... It's eighth grade math."

In order to derive a per ounce dollar figure at which gold needs to be priced, in order to restore public confidence, and jumpstart inflation - central bank goals - Rickards suggests the following formula:

First take 40% of global money supply (M-I x 40%), then divide this figure by the official gold holdings of the world's central banks (35,000 tonnes), and you get $10,000 an ounce as a realistic gold revaluation price. This action would stop deflation - a central bank's worst nightmare - dead in its tracks. And they might not even have to reduce the money supply!

Other thinkers, including Antal Fekete and Hugo Salinas Price, have toyed with a gold figure of between $10,000 and $50,000. Price, who has been a tireless advocate for using the silver Libertad in Mexico as a circulating parallel currency, selects $20,000 as a realistic figure.

International Paper & Gold Reserves in Central Banks

Price says,

"The discipline of gold as Reserves backing currency at a revalued price will restore order to a world that has refused to adopt the necessary discipline until forced to do so in the desperate situation now evolving, where there will be no other alternative but to accept the detested fiscal and financial discipline imposed by gold."

Exchanging a "Paper Promise" for Real Money

The idea of backing a large portion of the floating debt that David Morgan of The Morgan Report has long referred to as "paper promises", looks like it may be moving from a once far-fetched idea towards a place on center stage.

You may think that if a gold revaluation happens, you will be able to quickly go to the local coin shop and pick up a handful as soon as the possibility of a gold price rocket launch becomes obvious. But think again. Most likely announced on a Sunday evening, by Monday morning the precious metals supply would be gone. And mining stock share prices would go through the roof. Rickards notes:

"Gold will be in such short supply that only the central banks, giant hedge funds, and billionaires will be able to get their hands on any. The mint and your local dealer will be sold out. That physical scarcity will make the price super-spike even more extreme than in 1980. The time to buy gold is now, before the price spikes and before supplies dry up."

In summary, continue to buy and hold physical gold (and silver) as insurance first and for possible profit generation second. But now you have a third compelling reason - if gold revaluation does come to pass, those who have it will also have a personal financial game-changer of the first order!

About the Author:

David Smith

David Smith is Senior Analyst for TheMorganReport.com and is a regular contributor to MoneyMetals.com. For the last 15 years, he has investigated precious metals mines and exploration sites in Argentina, Chile, Bolivia, Mexico, China, Canada, and the U.S. and shared his findings and investment wisdom with readers, radio listeners, and audiences at North American investment conferences.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Metals Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Precious Metals


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Are You Feeling the Economic Surge?
Big Mess in Italy
News Blog
Italy's Referendum: What's At Stake And What You Need To Know
There Were Over A Million Casualties At The Somme
The Best Countries In The World
What We Read Today 03 December 2016 - Public Edition
Big Mac Index In Its 30th Year
What We Read Today 03 December 2016
Scientists Find Giant Underground Ice Reserve On Mars
Sustained 3 To 4% GDP Growth Is A Huge Stretch
New Earthquake Risk Model Confirms Possibility Of Statewide Earthquake In California
Subprime Auto Debt Grows Despite Rising Delinquencies
Silver Sentiment Looks Golden
Infographic Of The Day: Investing In A Cure For Cancer
Early Headlines: Trump Campaigning Still, WaPo Finds Voter Fraud Favored Trump, No Carolina GOP Shotguns For Voter Fraud, New Age Of Blacklisting, All Eyes On Italy, Big Bucks In India And More
Investing Blog
How To Invest When The Fed Destroys Capitalism
Technical Thoughts: Manage Risk
Opinion Blog
Jobs Without Disruptions Through Concordian Economics
Modern Slavery
Precious Metals Blog
Silver Prices Rebounded Today: Where They Are Headed
Live Markets
02Dec2016 Market Close: WTI Crude Climbed Back Up To Previous 51 Handle, US Dollar Index Trading At The100 Level, Oil Rig Count At 10-Month High
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved