Book Review: The Big Reset, War On Gold And The Financial Endgame

Includes: GLD, IAG, IAU
by: Dutch Trader

One of the best economic books of a Dutch writer is a book called The Big Reset, War on Gold and the Financial Endgame. It is a remarkable well researched book by gold bull Willem Middelkoop.

Mr. Middelkoop is the founder of the Commodity Discovery Fund and has written about the world's financial system since the early 2000s. He predicted the credit crisis in his first bestseller in 2007. Unfortunately, all his previous books were written in the Dutch language. The Big Reset combines all the information from his previous Dutch books with an additional chapter on the expected Big Reset for the current worldwide monetary system. The book tells the story of a mostly hidden world of money and gold.

Chapter One - The History Of Money

In this chapter the origin of money is described, but also the advantages of a gold standard. The fact that money is created out of thin air and in the form of credit is quite difficult to understand. People not familiar with quantitative easing will get a clear explanation about this unconventional monetary policy.

Chapter Two - Central Bankers: The Alchemists of our Time

We all have become used to seeing unbacked paper money as value, which is exactly what our central bankers have been conditioning us to believe for over a century. Our entire monetary system is build on trust. Since the outbreak of the credit crisis, this trust has been waning rapidly worldwide. Even central banks have started buying gold to hedge the risks of their fiat own money system.

Chapter Three - The History of the Dollar

In this chapter we get more insight how the central banking started in the U.S. but also when the dollar system was born.

Chapter Four - A Planet of Debt

The decoupling of gold and money made creating new money very simple. Countries with debt issued in their own currency cannot go bankrupt. They can always switch on the printing press to create as much as money as is needed to pay off their debts. There is one drawback, however: when too money is created, their economy can become paralyzed due to (hyper) inflation. At some point in time, even governments have to get rid of the debts.

Chapter 5 - The War on Gold

The days of the dollar as a world reserve currency are numbered, which explains why gold will make a remarkable comeback and why a flight to hard assets including farm land and old masters has started.

The U.S. wants its dollar system to prevail for as long as possible. It therefore has every vested interest in preventing a "rush out of dollars towards gold". By selling (paper) gold, bankers have been trying in the last few decades to keep the price of gold under control.

Chapter 6 - The Big Reset

Our financial system can be changed in almost any way as long as the main world trading partners can agree to the changes. There are two types of resets: those that are planned well in advance - such as the Bretton Woods reset in 1944, which affected almost the whole world - and smaller resets needed due to monetary developments.

Two major problems in the world's financial system have to be addressed:

  1. The demise of the US dollar as the world's reserve currency, and
  2. The almost uncontrollable growth in debts and central banks' balance sheets.

For all these issues, central banks have only been buying time since the start of the credit crisis in 2007. Insiders predict that much more radical action will be needed before 2020.

While most experts believe there will be no return to a full gold standard, gold will probably play a much greater role in the next phase of the financial systems.

The best quote in the book

Why then, is gold the unmentionable four letter word of economics? The answer is threefold; A misunderstanding of the role of money; a misreading of history; and finally, visceral revulsion to the notion that a metal can do a better job of guiding monetary policy than a gaggle of finance ministers, central bankers and well-degreed economists.

- Malcolm Forbes, Forbes Magazine (2002)


History reveals countless examples of failed monetary systems. The economy and its financial markets are being increasingly centrally controlled. Since the fall of Lehman, central bankers are desperately trying to avoid a collapse of the financial system. Governments and central bankers know the whole economic system will fall part once they stop printing money. This leads to the only logical conclusion that we are stuck with infinite QE. As more and more paper assets are being printed, more and more "smart money" will flee towards asset classes that can't be printed.

My opinion

The Big Reset is a book that tells you many interesting facts about the monetary system, the gold manipulation and of course several reset scenarios. A must read for everyone who is interested in the answer to the question: why hard assets (gold and silver) belong to any investment portfolio.

I think gold and silver investors are not broken. Given gold's recent fall from grace, the yellow metal is still a "safe-haven". Despite the collapse in prices, there remain strong and solid factors that argue for portfolio diversification into gold.

Gold and silver can be an effective diversifier that helps reduce portfolio volatility. The correlation between these hard assets and traditional assets generally decreases in bear markets.

With the current uncertainties in the market, The Big Reset is not far away or might even already been started.

We currently have only one gold stock in portfolio: IAMGOLD (NYSE:IAG). But with the current volatility in the markets, more exposure to gold could be a great bet. Gold ETF's, such as streetTRACKS Gold Shares ETF (NYSEARCA:GLD) and iShares COMEX Gold Trust (NYSEARCA:IAU) are good choices because of their liquidity.

Disclosure: I am long IAG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Dutch Trader is managing partner of RJT Capital, a Dutch-based investment fund in US-listed equities. RJT Capital is long IAMGOLD (IAG). For our current holdings check here.