A 5x Rise Coming Soon for Gold? Or Why you Should Be Careful of What You Wish For!
Midday edit: I just had this amusing but terrible thought. Tomorrow the 31st is a rare Blue Moon day, plus Bernanke is going to speak in Jackson Hole, WY. Need I say more? LOL
While I am skeptical that the gold standard is about to arrive because one political party suddenly decides to talk about it, though I am certainly expecting a gold standard in the future, there is the interim to be concerned with. But I am not so concerned. I see a steadily rising medium and longer term gold outlook as the fiat paper currencies will eventually become obsolete – a laughing stock, worth no more than the paper they are printed on. Some say that time is now, but let’s be realistic: The dollar still has value. Just back from vacation, I can tell you that using those green pieces of paper, or a plastic debit card, was quite nice and quite handy. I exchanged my green for various products and services. It still works! There will come a day of reckoning when the financial system we have known for every day of our lives shall eventually run into trouble, though the present system is not going down without a fight. This could take up to several more years, though we are hearing lot’s of scary talk about a coming fiscal cliff. Let’s be realistic again: Folks, we have already gone off the cliff, but have caught a branch that was fortunately sticking out from the cliff. It’s now looking like the branch on the way down is about to send us further down, but that doesn’t mean we are any where near the bottom. Just look at Europe. Every time it appears as if it is about to flat line, the pulse comes back though in the near term (like this fall) their system shall be supremely tested.
But let’s get back to the subject of gold and its recent rise and its future prospects. Even in the shorter term there are some bullish signals.
[@Maxkeiser] Gold Option Traders Most Bullish Since Bottom In October 2008 http://n0.gd/SXr5jW
As to the proposition of price for gold under the gold standard?
Gold Price To Rise Fivefold If U.S. Returns To Gold Standard — Morgan Gold http://gold-silver-report.blogspot.com/2012/08/gold-price-to-rise-fivefold-if-us.html
At least the above story by Morgan Gold admits that putting a gold standard into place now would be very “complicated”, but I find fault with the ‘blue sky’ attitude that gold investors will see a 5x increase in their investment. That’s all well and good, but as I mentioned earlier in the week, to reintroduce a gold standard will require the world Ponzi financial system to be turned on its head for it to happen. Mountains of Ponzi paper whether it be the currencies, or the derivatives contracts are not compatible with gold since there is (at the basic core of my position) not enough gold in the world to back the currencies, let alone the so called cash equivalents and other goo. The paper is going to have to burn in order for their to be a reset of the financial system and for it to resume a gold standard, probably modified, and not completely like the gold standard of the late 19th century. This is going to be a profound event. For the average imagination, it’s almost inconceivable.
The Morgan Gold story is probably low ball in terms of a 5x jump in gold given the total magnitude of world economies and people. I just get tired of seeing that type of claptrap speculation about the price of gold and how that’s then used by what I call gold hucksters to sell you gold for all of the wrong reasons.
Breaking News/Reality check: Yes, we know gold is going to go up. But Do Not buy it for that reason. Buy it because you will then have something of value (dare I say financial insurance?). In the wishful thinking for the gold standard to magically reappear, the proponents forget that it will take gut wrenching societal change for it to happen. The definition of wealth itself will take on new meaning when we come to the point of an imploded financial system (basic math predicts that such an event is bound to happen). Your gold shall end up being an actual lifeline (if you can hide it well enough from the have nots and find the provisions you need for ongoing survival) and not something you are going to be able to necessarily use to flaunt to live the high (but phony) life that comes from being wealthy in Ponzi paper terms.
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.
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