Friday, January 2, 2009
Gold - a mirror
Paper and electronic money created using a printing press and computer, respectively, are inherently unstable because they are inherently non-valuable yet mandated to have value by governments. When money, the lifeblood of any economy, is phony, terrible dislocations in the society that uses that phony money occur.
If I told you tomorrow that new pieces of red paper I had created with stars and squiggles on them were money and asked you to trade me your car for some of these pieces of paper, I'm guessing you wouldn't make the trade. We have had money backed by nothing tangible since 1971 when Nixon closed the gold window. Fortunately, the possession of gold was de-criminalized shortly thereafter by our loving government, giving people a way to protect themselves.
Look, if you want proof that a fiat money system is destroying our country economically, look at investment returns since 1971!
If you had bought the S&P 500 in 1971 and held it until the end of 2008 (i.e. two days ago), you would have made about a 1000% return on price and we'll be overly generous and say with dividends that you would have made 1300% return on your investment. If instead, you illegally bought and hoarded gold at $35/oz. in 1971, you would be sitting on gains of 2500% as of 12/31/2008.
Let me repeat this: the 37 year returns for physical gold coins and bars are almost DOUBLE the S&P 500 even after including dividends.
Are you fucking kidding me (excuse my French)?!
Why put money in risky stocks at all? Gold has no risk (other than somebody stealing it from you)! Gold has intrinsic value, unlike our paper currency and many of our over-leveraged, riddled with fraud paper corporations. Gold is a mirror and shows the depravity of a fiat money system, exposing its intrinsic corruption and decay.
Our international central bankster cartels can create money and debt at their whim and then ask us to pay them for that privilege. Our governments are all too happy to comply, as members at its highest levels are openly bribed to play the game and make the bankers even more money. It is the corruption of our money that has led to the corruption of our society.
Bernard Madoff did NOT act alone in creating his multi-billion dollar Ponzi scheme, I promise you. People at the highest levels of our government happily looked the other way and allowed his scam to occur. With the payoffs that must have been involved and the generalized government and corporate fraud that occurs today, it is not really all that surprising, though it remains disgusting.
He with the power over society's money supply has more control over that society's ultimate economic fate than any other. Obama will be but an obedient lapdog to the corrupted money men and their corporate arms that will reward him handsomely for his servitude. Our monetary system is crumbling and gold is simply reflecting this back at it.
Gold is money because humans chose it after thousands of years of experimentation. You cannot make that collective human wisdom go away by bureaucratic decree. Gold is not increasing in value, paper promises are decreasing in value. Gold has a steady intrinsic value, which is why it should be our money of choice. Rapid currency fluctuations and volatility will now become the norm as our weightless and phony paper money system starts to fall apart faster and faster.
Gold will maintain its value and will far outperform the stock market, real estate and bonds in the years to come. It also won't go bankrupt, get nationalized, commit fraud or lie to you. I am not talking about paper gold (i.e. the GLD ETF), either. Buy physical gold coins and bars as the bedrock of your investment/retirement portfolio and keep at least some of this gold yourself so there is no counterparty risk involved.