HAIL TO THE FIAT MOGULS
Alex Wallenwein
I don't understand what our (the gold community's) beef is with fiat money and all its evils. Fiat (especially of the dollar kind) is the greatest windfall opportunity to gold investors that has ever existed. And - oh yeah, by the way - all that moaning and complaining about gold price manipulation? Let's all fall to our knees and pay homage to these evil manipulators. They should
be our heroes!
Have I lost my mind?
That's of course very possible. But just try to look at it this way, for a moment:
Haven't you always wished as a kid that you could use your fake monopoly money to buy real things of value like, say, a whole ice cream truck, or a fifty-year supply of Legos? Well, that's exactly the situation that has for the last few years (and decades) presented itself to us - courtesy of the "fiat moguls."
They have given us a gift that goes beyond imagination, and all we were able to come up with in our leveraged short-term-profits mindset is: "they are cheating!" or: "they are abusing their power to manipulate the paper price of gold to go lower and lower!" (etc., etc.) Believe me, I was once in the same camp, until not very long ago.
Heck, what do we want? What do we like better? Some quick short-term fiat paper-dollar profits, or the ability to use worthless monopoly money (okay, so you have to work for it, but it's still essentially worthless, and the price of gold is still low as hell in fiat terms) to buy the ultimate wealth-asset of human history itself, in physical form, for next to nothing, and watch it appreciate as the entire world financial structure starts rocking and rolling into the swing of a new millennium and into a new concept of "gold-friendly fiat" that is no longer opposed to a higher price of gold, but instead relishes it - and floats on top of it like a beach ball on a rising tide?
Phew! That was a long sentence. Let me rest for a moment here.
Okay, that's better. Anyway, in order to appreciate the magnitude of what is currently happening, just apply a bit of traditional hard-money thinking on fiat inflation vs the growth of whatever economy it is circulating in, and apply it to the paper gold market.
What does it mean when we say that there are too many derivatives out there that can never be covered (at current prices) by the amount of physical gold available? We are essentially saying that paper gold as a "quasi currency" has been inflated versus the available value that, in theory, is supposed to be there to back it up.
This is no different than the paper dollar inflation of 1933 versus the available gold to back it at the time. In both cases the value of the "currency" eventually drops relative to the gold that supposedly backs it - or physical shortages appear. In both cases, the true value of gold versus paper money only appears in the system set up by such shenanigans if and when the
paper holders line up at the "counter" and demand their metal.
In 1933 this was about to happen, and FDR, great statist-socialist tyrant that he was, punished the citizen gold-owners rather than the bankers who really caused the squeeze by loaning more paper than they had gold to back up. In 2003, it sadly looks that this is not about to happen because too many gold players would rather chase a leveraged illusion than hold the solid
reality of physical metal in their hands.
It is precisely our seeking that leveraged play that allows the bullion bankers to play their paper game over, and over, and over again. How could they sell gold short in such horrendous amounts if there weren't an equal amount of players out there willing to go long as the counter-parties to the same transactions?
Well, sure, there are always the hedge funds or tech funds who seem to play right into their hands, at every turn, buying and selling according to their predictable mathematical models (to which the bullion banks of course are also privy). Naturally, the "blame," if there is any, can not be laid exclusively at our own individual option-players' feet, but we do have our fingers in the same pie.
Bottom line is, we are playing the casino owner's rigged game, while complaining all of the time that the game is rigged - but playing, and playing, and playing away anyway, hoping desperately that some day they will all just lie down and play "fair" - to their own detriment. Yeah, right. When is that ever going to happen?
Or, we hope that the government, which many of us have documented over and over again to be aiding and abetting the bullion banks in rigging their game (or actually prompting them to rig it), will step in and "restrain" them.
Fat chance!
But the one tool that will surely, inevitably, and unquestioningly bring about the total collapse of the rigged paper gold market, namely the buying and "hoarding" of nothing but physical gold, is precisely the one tool we all forget to use - or maybe don't want to use, because it's just that much more exciting to sit there and hope for our leverage to bring us untold riches without ever actually having to pay for and stand for delivery of the metal we like to buy paper bets on so much.
We sit there on the bleachers, watching this rigged horse race, betting hundreds, thousands, or more dollars on the horse that we think will eventually win all of the races, making the race track owners richer and richer, while totally overlooking the sign that tells us that the entire horse population of the United States is for sale, essentially for less that the amount of one good bet.
We put money down on the price movements of gold as our trading models or hard money analyses show us, instead of going and actually outright buying and owning the very metal on whose price movements we like to bet so much, an action which we know is destined to bring about the very short-squeeze we are all looking for.
But not to worry: it doesn't really matter whether or not we follow this new game plan. It doesn't really matter if we focus our attention on owning metal outright in order to completely sidestep the paper casino. Whether we do this or not, the 'euro vs dollar' dynamics that are in play as we speak (discussed at length and in great detail in the "Euro vs Dollar Currency War
Montior" and hinted at in various essays) guarantee this outcome eventually anyway.
The only question is, will we have exchanged a sufficient portion of our worthless monopoly money into physical gold when that moment comes, and will we be able to ride its ascent into the thousands of dollars, euros, or whatever currency there will be? Or will we be chasing more ever-depreciating dollar-paper profits on the horse track instead, feeding the very dragon we claim we so detest?
We should be thankful that this "dragon" (the anti-gold US dollar faction and its bullion banker henchmen) made it possible for us to buy gold for next to nothing and legally own it almost for free. Instead of feeding him our hard-earned but essentially worthless money, we should say: "thanks, little dragon" and starve him to death by depriving him of what he depends on for
his very life: our play-money. Let's take our play-money to a reputable dealer instead, and buy real gold with it.
All the rest will fall into place.
(Just for your information: I am a newsletter publisher, not a gold dealer. I do, however, earn a tiny commission on purchase transactions of only those people who choose to buy from what in my opinion are reputable sources of physical metal).
Alex Wallenwein
Editor, Publisher
The EURO VS DOLLAR CURRENCY WAR MONITOR
www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
August 5, 2003
- What do you do when all your investments are doing great, when you have a high-paying job or successful business, but the dollars you earn are dropping and dropping in value?
- The euro continues to beat the tar out of the dollar (and your pocketbook) and there is no end in sight.
- How will this affect your money, your job/business, your retirement, and your kids' education?
- You owe it to yourself, your family, and your future to find out.
Find out NOW. Free Report: currencywar@getresponse.com
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