Gold is comin’ apart at every nail

This may be a little weird for you if you’re interested in gold. I don’t own any gold and I don’t want to own any gold. I don’t think you need gold, period. There’s a huge problem with trying to use “gold as money”: no one can agree on its value, and sometimes, its existence (in your vault or saftey deposit box or on paper–which is even more problematic.)

There are more news reports today about owners of gold checking for their physical metal in vaults finding them missing or nearly empty–a sure sign of massive fraud or a desire to game the system to increase prices: either way, when you try to store “value” in a physical metal you must have “physical possession” or you own nothing. Even if you do indeed have physical possession of any gold or metal, you still need to contend with the market’s perception of “how much its worth.”

Central banks make announcements of massive amounts of gold to be sold or considerations to sell massive amounts of gold—if you’re going to sell anything of a commodity, you don’t want to tell the market that you’re going to glut the supply in advance, that violates basic economics. More supply=lower prices. So, any organization that makes these kinds of announcements must be assumed to be buying the gold instead of selling it.

What if your bar of gold is actually a tungsten bar with a gold veneer? What if you believe that there’s tons of tungten gold veener bars when there aren’t? [Wait what?! See: Gld ETF Warning, Tungsten Filled Fake Gold Bars; Fake Tungsten Gold Story Pushing Investors to Buy Gold ETFs?] How much is that worth?  How would you convert it into the local currency quickly enough in a local currency to be able to eat?

What’s your recourse if your local government decides to seize all precious physical metals? [Don’t think it can happen? This was done in 1933 via Franklin Roosevelt’s Executive Order 6013.]

Tying your store of value to chunk of metal that is continuously being gamed by central banks, hedge funds or other shady players is madness. Even if you do have physical possession of it, you’ll need to keep it somewhere safe [from thieves or governments] and that will in turn impact your ability to spend it—keeping in mind that how much its worth is turning into a game of predict the weather.

Everyone knows that diamonds are worthless bits of carbon that have been branded, marketed and controlled in supply to increase their value dramatically—when will the world realize that gold is being traded on paper so much that there isn’t even a connection anymore to a physical metal to the paper anymore and everyone’s perception of its value is hopelessly gamed.

Yes, your gold is pretty to look at, but its not money to me.

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One thought on “Gold is comin’ apart at every nail

  1. Pingback: Why I do not believe in a Gold Standard « ξFin

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