A Primer for Gold Newbies
The comments below are an edited and abridged synopsis of an article by Alasdair Macleod
“The purpose of this article is purely educational. Increasingly, the wider public is turning to gold in a spontaneous reaction to financial and economic problems that have become suddenly apparent, hastened by the spread of the coronavirus. For everyone now thinking of buying gold it is a leap into the unknown, so they should know why.”
“We are in the early stages of a radical debasement of state-issued currencies which is on course to collapse the entire financial system.”
“I explain the two phases of this destruction of fiat money, the one experienced so far and the one we are about to suffer. I explain why sound money has always been physical gold and silver, returned to by the people after government and banks have collectively destroyed state-originated unsound money.”
Up for discussion: Introduction; why gold and silver are always money and why fiat is failing; what will alert the public to failing fiat currencies; the replacement of government fiat money by gold and silver; and the failure of derivatives.
“Events over the last few weeks have alerted a wider audience to the destruction of values in financial markets. The unwritten agreement between investors and the major central banks whereby financial markets will always be supported is now unravelling. Increasingly, the only buyers of government bonds at current levels are the central banks by inflating their currencies.”
“Meanwhile, liquidity problems in hard-hit economies are mounting. And it is not just the coronavirus; nearly five months before the virus hit Western financial markets the Fed was having to inject liquidity into the US banking system in record amounts through the repo market.”
“Signs of failure in some markets, such as derivative markets for precious metals, can be taken as evidence that a wider financial dislocation is now in progress. It is in this light that an understanding of the role of physical gold and silver is so important. They are the only sound money, a safe refuge for ordinary people, being incorruptible by governments. And as their prices rise towards infinity, it will be entirely a reflection of the end of the current fiat money regime.”
