Those who have been following precious metals manipulation in the market have been waiting a long time for the explosion in prices. Since gold is hovering around $1200 now and silver broke $19 very recently, it seems as though the breakout has occurred.
However, I would like to submit to you, in the following analysis, that the breakout we have already seen is simply one stage of price explosion, and that subsequent larger stages are forthcoming. The reason for this is that gold is money and paper dollars are measured in gold, and not vice versa. That is why banks must use gold and gold derivatives to suppress the price of gold. And despite their best efforts, the market is beginning to win.
Gold as Money?
For evidence on whether gold is money, we submit some current examples. Historically, gold has performed as the best money. An examination of gold as money can be found in Murray Rothbard’s History of Money and Banking in the United States, Edward G. Griffin’s The Creature from Jekyll Island: A Second Look at the Federal Reserve, and Charles Goyette’s The Dollar Meltdown. Please check out these works.
Currently, Malaysia has adopted a gold and silver money system to free them from ‘Western hegemony’. Goldsilver.com has a video of a Malaysian explaining why he avoids paper money issued by banks, and retains his buying power by using gold money. The video is entitled An Ironic Reflection.
What is Western hegemony? Murray Rothboard, in the above book History of Money and Banking in the United States, chronicles how the US has used the paper dollar to rob real wealth from many other countries. It is no wonder why other nations are trying so hard to extricate themselves from its use.
And based upon my studies of asset cycle investing, housing will move through equilibrium to some bottom level, while gold will shoot through equilibrium and go into some level of bubble value. Along the way, the failure of paper currencies will cause people to panic and go back to monetary metals, which will cause a temporary excess rise in the value of gold relative to all else. Henry Hazlitt in his book, The Inflation Crisis and How to Resolve It, noted such behavior in Germany.
This allegation is just the opposite of the truth. The heyday of the gold standard was the 100-year period between 1815 (the end of the Napoleonic wars) and 1914 (the start of World War I). This was the age of transcontinental railways, intercontinental shipping This was the time when all the key inventions were made that ushered in the age of electricity and electronics, the age of the internal combustion engine, the age of aviation, the age of wireless telecommunication, the age of the X-ray, radium, and the ultrasound, etc. Financing these discoveries and their applications in production, transportation,telecommunication, and therapeutics wouldn’t have been possible without the gold standard and the accumulation of capital that it facilitated.
Disclosure: long the physical stuff
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