I’ve recently written 3 pieces regarding the world’s central banks beginning to “question” other central banks and custodians. It is beginning to go beyond citizens asking these questions and having their doubts. But why is it important? What’s the big deal even if it does turn out that they don’t have the tonnage of Gold that they say or think that they have? Couldn’t the system just chug along unchanged or untouched and continue on its merry way? Well, in a word, no. THIS is exactly what we have already been through, “chugging along” on trust. Or better yet, we’ve gone along without the apple cart being upset other than asset prices of all sorts from stocks, bonds, commodities etc. being priced incorrectly either far too high or low. In my opinion, it is not “if” it turns out that the central banks do not have the amounts of Gold that they say they have, only “when”.
That said, the entire system from the “money” we use and spend to credit and bonds, to stocks to real estate… to everything under the sun that has value, has value and is “valued” against everything else. “Cross values” if you will. The problem is this; what used to be your garden variety standard investment “pyramid” has been turned upside down. It used to be that the “money” itself was the foundation and it supported everything else. “Money” (Gold) was the base of the pyramid and it was broad. Then WWI came along and wars were waged that required more “money” than was available which central banks gladly created and gradually we went off of the Gold standard. We had Bretton Woods and then Nixon taking the U.S. off of the Gold standard… which turned the pyramid upside down.
From that point forward, the “point” of the pyramid got smaller and smaller in relation to the base which got bigger and bigger and grew further and further into the sky. My point is this, what if the “tip” of the upside down pyramid (Gold) which must support more and more weight doesn’t even exist? What if it’s all been sold or leased out already?
Better yet, look at it this way. The U.S. claims to have 262 million ounces of Gold, that works out to roughly 8/10ths of an ounce for every man, woman and child citizen in the country. Back in the late 70′s and early 80′s using $400 per ounce, roughly half of our foreign debt was covered by our (supposed) Gold reserves. Also, everything else in relation was smaller and more “supported” if you will. The Dow Jones average was still trying to break through the 1,000 barrier which had held since 1966. Now, you would need AT LEAST $6,000 per ounce to cover half of our foreign debt and Lord only knows what the number would have to be if half of ALL debt and ALL other unfunded promises and obligations were to be covered. Today, the only thing supporting the system is “credit,” debt!
My point is this; there is today even at current prices (which the MSM continually calls a bubble to scare you out of your wits AND positions), less Gold “supporting” the system than there used to be (ever!). This is assuming that ALL of the “claimed” Gold actually is where it’s supposed to be and not pledged, leased or otherwise rehypothecated multiple times over. IF, as I suspect (and have suspected for many years based on putting the various pieces of evidence together), the amounts of central bank Gold holdings are less than stated, it makes the system as a whole much shakier and with even less foundation. It would almost be as if the inverted pyramid was “floating” in mid air as it gets bigger and heavier each and every day. Simply put, there is more risk today to the global fiat monetary system than there has ever been since its initial inception. …By the way, there will be more risk tomorrow, the day after that and the day after that as QE’s go further toward infinity. In my opinion, THE only possible outcome is where everything gets “revalued” which means that Gold MUST be revalued MUCH MUCH higher to re assume its place as the base and foundation to the monetary pyramid.