Tag Archives: gold

Is The Federal Reserve Losing Control Of The Gold Price?

After years of being kept in the doldrums by orchestrated short selling described on this website by Roberts and Kranzler, gold has lately moved up sharply, reaching over $1,500 this week.  The gold price has continued to rise despite the continuing practice of dumping large volumes of naked contracts in the futures market.  The gold price is driven down but quickly recovers and moves on up.  I haven’t an explanation at this time for the new force that is more powerful than the short-selling that has been used to control the price of gold.

Various central banks have been converting their dollar reserves into gold, which reduces the demand for dollars and increases the demand for gold.  Existing stocks of gold available to fill orders are being drawn down, and new mining output is not keeping pace with the rise in demand.  Perhaps this is the explanation for the rise in the price of gold.

During the many years of Quantitative Easing the exchange value of the dollar was protected by the Japanese, British, and EU central banks also printing money to insure that their currencies did not rise in value relative to the dollar. The Federal Reserve needs to protect the dollar’s exchange value so that it continues in its role as the world’s reserve currency in which international transactions are conducted.  If the dollar loses this role, the US will lose the ability to pay its bills by printing dollars.  A dollar declining in value relative to other countries would cause flight from the dollar to the rising currencies.  Catastrophe quickly occurs from increasing the supply of a currency that central banks are unwilling to hold.

One problem remained. The dollar was depreciating relative to gold.  Rigging the currency market was necessary but not sufficient to stabilize the dollar’s value. The gold market also had to be rigged. To stop the dollar’s depreciation, naked short selling has been used to artificially increase the supply of paper gold in order to suppress the price.  Unlike equities, gold shorts don’t have to be covered. This turns the price-setting gold futures market into a paper market where contracts are settled primarily in cash and not by taking delivery of gold.  Therefore, participants can increase the supply of the paper gold traded in the futures market by printing new contracts. When large numbers of contracts are suddenly dumped in the market, the sudden increase in paper gold supply drives down the price. This has worked until now.

If flight from the dollar is beginning, it will make it difficult for the Federal Reserve to accommodate the growing US budget deficit and continue its policy of lowering interest rates. With central banks moving their reserves from dollars (US Treasury bonds and bills) to gold, the demand for US government debt is not keeping up with supply.  The supply will be increasing due to the $1.5 trillion US budget deficit.  The Federal Reserve will have to take up the gap between the amount of new debt that has to be issued and the amount that can be sold by purchasing the difference.  In other words, the Fed will print more money with which to purchase the unsold portion of the new debt.  

The creation of more dollars when the dollar is experiencing pressure puts more downward pressure on the dollar.  To protect the dollar, that is, to make it again attractive to investors and central banks, the Federal Reserve would have to raise interest rates substantially.  If the US economy is in recession or moving toward recession, the cost of rising interest rates would be high in terms of unemployment.  

With a rising price of gold, who would want to hold debt denominated in a rapidly depreciating currency when interest rates are low, zero, or negative?

The Federal Reserve might have no awareness of the pending crisis that it has set up for itself.  On the other hand, the Federal Reserve is responsive to the elite who want to rid themselves of Trump.  Collapsing the economy on Trump’s head is one way to prevent his reelection.

Source: by Paul Craig Roberts

Advertisements

Does Gold’s Breakout Mean Silver Is On The Launchpad?

Gold and silver prices continue to push higher. They’re starting to get some attention from the mainstream, too. A new uptrend in gold is clearly underway, but silver’s performance has so far trailed gold’s. Let’s take a look at the price behavior over the past six-plus years of both metals to see if we can gain any insights about silver.

Is Trump Positioning America For A Return To The Gold Standard?

(Alex Deluce) There may be readers who weren’t even born when the U.S. still had a gold-backed dollar. Since the gold standard was abolished in 1971, the value of the dollar has decreased annually by 3.96 percent. You would need over $600 today to purchase the same goods you purchased for $100 in 1973. Still, a dollar is a dollar, right? No, it is not. It is just a piece of paper.

Is there a chance the U.S. could return to the gold standard and provide real value to the U.S. currency? Judy Shelton and Christopher Waller are President Trump’s pick for Federal Reserve governors. As it happens, Ms. Shelton is a believer in the gold standard and a critic of current Federal Reserve policies. She believes that the Fed has become unnecessarily involved in trade policies instead of adhering to its function of regulating the monetary system. Returning to the gold standard is not a popular idea these days when economists support the limitless printing for currency, high debt, and inflation.

Ms. Shelton would have been considered mainstream 35 years ago. Today, she is thought of as unorthodox. In 2018, she wrote in an article published by the conservative thinktank, Cato Institute,

If the appeal of cryptocurrencies is their capacity to provide a common currency, and to maintain a uniform value for every issued unit, we need only consult historical experience to ascertain that these same qualities were achieved through the classical international gold standard.”  

She also authored a book, Fixing the Dollar Now. In it, she advocates for linking the dollar to a benchmark of value, preferably gold. More than four decades ago, the currency of all major countries, such a Britain, Japan, France, Russia, and others were linked to gold. In 1933, the dollar was linked to $35 worth of gold. In 2019, the value of the dollar is less than one-thirtieth of that.

The gold standard helped the U.S. prosper for 180 years. The signers of the U.S. Constitution included this requirement in Article 10.

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Almost two hundred years later, such a concept is deemed unorthodox. Ideologies change, and not always for the better. 

The reason the Founding Fathers included a monetary policy in the Constitution is that they wanted money to be as far away as possible from any human intervention. This was achieved by linking the dollar to gold. Gold is a stable commodity, and thus ensures a stable U.S. currency.

Countries today link their currency to some other, stronger currency, such as the dollar or the euro. This means that these countries have no control over their own currency and are at the mercy of an arbitrary link. But as the dollar and euro weaken, so do the currencies that have linked themselves to it. This serves as a disruption of all global economies.

“Stable money” provides us with logical economic guidelines. Market forces become the determining factor of what is produced and where capital is spent. For example, if the price of oil becomes too high, the consumer will reduce oil consumption while companies will either increase their production of oil or seek other sources. When market forces rule, everyone benefits. 

Market forces have largely been replaced by government interference and manipulation. The cost of a loaf of bread is what the government says it will be. (See Venezuela for an extreme example.) To manipulate prices, the government, or the Fed, needs to manipulate the value of the dollar. The loaf of bread purchased a year ago for $2.00 now costs $2.50. Same bread, manipulated price. When market forces rule, the price of a loaf of bread would be determined by consumer choice. Under central banking rules, the price would be manipulated by some artificial whim.

One of the easiest ways to manipulate money is through easy credit. Print unlimited currency with no intrinsic value and you create a mountain of debt. This will inevitably lead to inflation and higher prices. If the dollar were once again linked to gold, only a certain amount of money, backed by gold, could be printed. Debt, inflation and higher prices would almost immediately go into a tailspin. Money cannot be manipulated under the gold standard. Perhaps that is why so many economists fear to return to such a standard.

Judy Shelton will be duly criticized for her opinions. Stable money is a new concept for a new generation of bankers and economists. But gold has been around for thousands of years and will undoubtedly outlast these new thinkers.

Source: by Alex Deluce | ZeroHedge

America’s Adversaries Are Buying Gold Hand Over Fist


Having tested $1300 numerous times over the past few years, gold has broken dramatically higher in the last month, hitting 6-year highs as President Trump rhetoric around the world raises tensions, increasing the odds of open WWIII conflict.

https://www.zerohedge.com/s3/files/inline-images/bfm297F.jpg?itok=NSwXn0Kd

The surge in the precious metal has accompanied a collapse in bond yields around the world and a record level of negative-yielding debt…

https://www.zerohedge.com/s3/files/inline-images/bfm5767_1.jpg?itok=RFzcu5ga

And while Gold volatility is soaring…

https://www.zerohedge.com/s3/files/inline-images/bfm4AF0_0.jpg?itok=AVs7XLx2

Demand remains abundant, as Goldman details in its latest note, raising its outlook for gold, countries with “geopolitical tensions with the US” are buying everything:

https://www.zerohedge.com/s3/files/inline-images/2019-06-25_8-31-56.jpg?itok=gGGl0dTX

Central bank demand is gaining momentum and we now expect 2019 purchases to reach 750 tonnes vs 650 tonnes last year. Visible gold purchases YTD are running at 211 tonnes until April vs 117 tonnes over the same period last year (see Exhibit 11).

Importantly, China just raised its gold purchasing pace from 10 tonnes per month to 15 tonnes for April and May as it aims to diversify its reserve holdings. 

With the Fed and ECB now both likely easing monetary policy, more CBs may decide to add gold to their portfolios as they did between 2008 and 2012 (see Exhibit 12).

https://www.zerohedge.com/s3/files/inline-images/2019-06-25_8-34-38.jpg?itok=72uMsaYX

Also, just recently, trade tensions between India and the US have begun to escalate as India retaliated with tariffs on US goods in response to US steel tariffs. Rising tensions with the US often create upside potential to a country’s gold purchases

Additionally, in case you thought the move was exhausted, Goldman notes that there is about to a pick up in demand as Russia purchases tend to be strongest in Q3…

https://www.zerohedge.com/s3/files/inline-images/2019-06-25_8-40-22.jpg?itok=XUkbj0p-

And finally, Goldman notes that good economic news and bad economic news could both be positive for the precious metal at this point in the cycle.

If DM growth fails to pick up in the second half, gold has substantial upside potential

If DM growth continues to underperform, there is room for a much more substantial build in ETF positions. Last time we were in a similar environment was in 2016. DM growth back then was as weak as it is now and both the Fed and the ECB turned more dovish.

https://www.zerohedge.com/s3/files/inline-images/2019-06-25_8-46-27.jpg?itok=c9RpItJW

But back then the push into ETFs was significantly higher than it is currently… we think that current low growth makes owning gold appealing from a diversification perspective.

And Goldman notes that an improvement in global economic growth is not necessarily bearish for gold.

Our economists expect the bulk of the acceleration in GDP growth to come from ex-US and EM countries in particular. This should support gold through the “wealth” channel. Importantly, a reduced US growth outperformance points to a weakening of the dollar, which should boost the dollar purchasing power of the world ex-US (see Exhibit 7). In addition to this, gold is starting to build momentum in the local currencies of its two biggest consumers, India and China.

And the momentum gold prices built in the first half of 2019 can lead to an increase in EM (emerging markets) retail gold demand in the second half.

Goldman concludes, we believe that gold continues to offer significant diversification value with substantial upside if DM (developed markets) growth continues to underperform… or, as we noted above, global tensions continue to rise.

As we noted previously, combined Russia and China Treasury holdings are at their lowest since June 2010 as China and Russia’s gold holdings have soared…

https://www.zerohedge.com/s3/files/inline-images/bfm348C.jpg?itok=8s85CyGy

De-dollarization?

Source: ZeroHedge

Gold Likely To Soon Be Lifted By Rising De-Dollarization Surge

Summary:
  • What the gold buying strategies of major countries have in common is a desire to escape from dollar hegemony and the imposition of dollar-based sanctions.
  • The practical implication for gold investors is a firm floor under gold prices since these players can be relied upon to buy any dips. Downside is limited.
  • The technical charts are starting to sing the same tune with lyrics such as “Reverse Head & Shoulders”, “Cup & Handle” and “Bullish Ascending Triangle”.
  • All of this leaves us currently at critical overhead resistance levels, which if broken will likely take gold denominated in US dollar towards previous highs.

The reaction to the “Weaponization” of the US dollar via US sanctions has accelerated the ongoing global de-dollarization efforts. We outlined the rapidly unfolding developments earlier this year in our 151 page Annual Thesis paper entitled, De-Dollarization. Documented de-dollarization efforts are now underway in China, Russia, Venezuela, Iran, India, Turkey, Syria, Qatar, Pakistan, Lebanon, Libya, Egypt, Philippines and more.

Situational Analysis

The real power of the dollar is its relationship with sanctions programs. Legislation such as the International Emergency Economic Powers Act, The Trading With the Enemy Act and The Patriot Act have allowed Washington to weaponize payment flows. The proposed Defending Elections From Threats by Establishing Redlines Act and Defending American Security From Kremlin Aggression Act would extend that armory.

When combined with access it gained to data from Swift, the Society for Worldwide Interbank Financial Telecommunication’s global messaging system, the U.S. exerts unprecedented control over global economic activity. Sanctions target persons, entities, organizations, a regime or an entire country. Secondary curbs restrict foreign corporations, financial institutions and individuals from doing business with sanctioned entities. Any dollar payment flowing through a U.S. bank or the American payments system provides the necessary nexus for the U.S. to prosecute the offender or act against its American assets. This gives the nation extraterritorial reach over non-Americans trading with or financing a sanctioned party. The mere threat of prosecution can destabilize finances, trade and currency markets, effectively disrupting the activities of non-Americans.

The countries cited above are aggressively reacting to this. Gold is non-digital and does not move through electronic payments systems, so it is impossible for the U.S. to freeze on interdict.

Central banks are stocking up on gold. According to the World Gold Council, net buying by central banks reached 145.5 tons in the first quarter of 2019. That’s a 68% increase over last year. And it’s the most gold central banks have bought in the first quarter since 2013.

High Probability Market Ramifications

Soon both the buying of gold by major players such as Russia, China, India, Iran and Turkey, along with an emerging gold backed cryptocurrency for international settlements, will take gold towards testing prior 2011 highs.

https://static.seekingalpha.com/uploads/2019/6/13/saupload_06-13-19-MATA-PATTERNS-GOLD.png
(larger Image)

Major investors such as Paul Tudor Jones recently went on record as saying:

“The best trade is going to be gold. If I have to pick my favorite for the next 12-24 months it probably would be gold. I think gold goes beyond $1,400… it goes to $1,700 rather quickly. It has everything going for it in a world where rates are conceivably going to zero in the United States.”

“Remember we’ve had 75 years of expanding globalization and trade, and we built the machine around the believe that’s the way the world’s going to be. Now all of a sudden it’s stopped, and we are reversing that. When you break something like that, the consequences won’t be seen at first, it might be seen one year, two years, three years later. That would make one think that it’s possible that we go into a recession. That would make one think that rates in the US go back toward the zero bound and in the course of that situation, gold is going to scream.

Of course, we have heard this sort of talk ever since gold hit its prior high in 2011.

Technical Support

However, this time the technical charts are starting to sing the same tune with lyrics such as “Reverse Head & Shoulders”, “Cup & Handle” and “Bullish Ascending Triangle”.

All of this leaves us currently at critical overhead resistance levels, which if broken will likely take gold denominated in US dollar towards previous highs.

(larger Image)

What the gold buying strategies of Russia, China, India, Iran, Turkey et al. have in common is a desire to escape from dollar hegemony and the imposition of dollar-based sanctions by the U.S. The practical implication for gold investors is a firm floor under gold prices since these players can be relied upon to buy any dips.

Downside Is Limited – Upside Is Good

According to James Rickards:

The primary factor that has been keeping a lid on gold prices is the strong dollar. The dollar itself has been propped up by the Fed’s policy of raising interest rates and reducing money supply, so-called “quantitative tightening” or QT. These tight money policies have amplified disinflationary trends and pushed the Fed further away from its 2% inflation goal.

However, the Fed reversed course on rate hikes last December and has announced it will end QT next September. These actions will make gold more attractive to dollar investors and lead to a dollar devaluation when measured in gold.

The price of gold in euros, yen and yuan could go even higher since the ECB, Bank of Japan and People’s Bank of China will still be trying to devalue against the dollar as part of the ongoing currency wars. The only way all major currencies can devalue at the same time is against gold, since they cannot simultaneously devalue against each other.

A situation in which there is a solid floor on the dollar price of gold and a need to devalue the dollar means only one thing – higher dollar prices for gold. A breakout to the upside is the next move for gold.


Source: by Gordon Long | Seeking Alpha

Under “Basel III” Rules Gold Becomes Money Again

In 2018, central banks added nearly 23 million ounces of gold, up 74% from 2017. This is the highest annual purchase rate increase since 1971, and the second-highest rate in history. Russia was the biggest buyer. And not surprisingly, the lion’s share of gold is flowing into central banks of countries that are in the sights of America’s killing machine—the Military Industrial Complex that Eisenhower warned us about in 1958.

https://www.zerohedge.com/s3/files/inline-images/Central-bank-gold-reserves-March-19.jpg?itok=bLc9J7va

The Bank for International Settlements (BIS), located in Basal, Switzerland, is often referred to as the central bankers’ bank. Related to this issue of central bank hoarding of gold is the fact that on March 29 the BIS will permit central banks to count the physical gold it holds (marked to market) as a reserve asset just the same as it allows cash and sovereign debt instruments to be counted.

There has been a long-term view that China and other nations dishoarding dollars in favor of gold have been quite happy about western banks trashing the gold price through the synthetic paper markets. But one has to wonder if that might not change, once physical gold is marked to market for the sake of enlarging bank balance sheets.

This also raises the question with regard to how much gold the U.S. actually holds as opposed to what it claims to hold. James Sinclair has always argued that the only way the world can overcome the debt that is strangling the global economy is to remonetize gold on the balance sheets of central banks at a price in many thousands of dollars higher. This would mean a major change in the global monetary system away from the dollar, as China has been pushing for the last decade or so.

If banks own and possess gold bullion, they can use that asset as equity and thus this will enable them to print more money. It may be no coincidence that as March 29th has been approaching banks around the world have been buying huge amounts of physical gold and taking delivery. For the first time in 50 years, central banks bought over 640 tons of gold bars last year, almost twice as much as in 2017 and the highest level raised since 1971, when President Nixon closed the gold window and forced the world onto a floating rate currency system.

https://www.zerohedge.com/s3/files/inline-images/gold-vs-fiat-money_0.jpg?itok=WLnwyvvd

But as Chris Powell of GATA noted, that in itself is not news. The move toward making gold equal to cash and bonds was anticipated several years ago. However, what is news is the realization by a major Italian Newspaper, II Sole/24 Ore, that “synthetic gold,” or “paper gold,” has been used to suppress the price of gold, thus enabling countries and their central banks to continue to buy gold and build up their reserves at lower and lower prices as massive amounts of artificially-created “synthetic gold” triggers layer upon layer of artificially lower priced gold as unaware private investors panic out of their positions.

The paper concludes that,

“In recent years, but especially in 2018, a jump in the price of gold would have been the normal order of things. On the contrary, gold closed last year with a 7-percent downturn and a negative financial return. How do you explain this? While the central banks raided “real” gold bars behind the scenes, they pushed and coordinated the offer of hundreds of tons of “synthetic gold” on the London and New York exchanges, where 90 percent of the trading of metals takes place. The excess supply of gold derivatives obviously served to knock down the price of gold, forcing investors to liquidate positions to limit large losses accumulated on futures. Thus, the more gold futures prices fell, the more investors sold “synthetic gold,” triggering bearish spirals exploited by central banks to buy physical gold at ever-lower prices”.

The only way governments can manage the levels of debt that threaten the financial survival of the Western world is to inflate (debase) their currencies. The ability to count gold as a reserve from which banks can create monetary inflation is not only to allow gold to become a reserve on the balance sheet of banks but to have a much, much higher, gold price to build up equity in line with the massive debt in the system.

Source: ZeroHedge

What Turkey Can Teach Us About Gold

If you were contemplating an investment at the beginning of 2014, which of the two assets graphed below would you prefer to own?

https://www.zerohedge.com/sites/default/files/inline-images/1-gold.png?itok=RqzcFr6tData Courtesy: Bloomberg

In the traditional and logical way of thinking about investing, the asset that appreciates more is usually the preferred choice.

However, the chart above depicts the same asset expressed in two different currencies. The orange line is gold priced in U.S. dollars and the teal line is gold priced in Turkish lira. The y-axis is the price of gold divided by 100.

Had you owned gold priced in U.S. dollar terms, your investment return since 2014 has been relatively flat.  Conversely, had you bought gold using Turkish Lira in 2014, your investment has risen from 2,805 to 7,226 or 2.58x. The gain occurred as the value of the Turkish lira deteriorated from 2.33 to 6.04 relative to the U.S. dollar.

Although the optics suggest that the value of gold in Turkish Lira has risen sharply, the value of the Turkish Lira relative to the U.S. dollar has fallen by an equal amount. A position in gold acquired using lira yielded no more than an investment in gold using U.S. dollars.

https://www.zerohedge.com/sites/default/files/inline-images/2.1.png?itok=ZFZyUtVc
Data Courtesy: Bloomberg

This real-world example is elusive but important. It helps quantify the effects of the recent economic chaos in

This real-world example is elusive but important. It helps quantify the effects of the recent economic chaos in Turkey. Turkey’s economic future remains uncertain, but the reality is that their currency has devalued as a result of large fiscal deficits and heavy borrowing used to make up the revenue shortfall. Inflation is not the cause of the problem; it is a symptom. The cause is the dramatic increase in the supply of lira designed to solve the poor fiscal condition.

A Turkish citizen who held savings in lira is much worse off today than even two months ago as the lira has fallen in value. She still has the same amount of savings, but the savings will buy far less today than only a few weeks ago. Her neighbor, who held gold instead of lira, has retained spending power and therefore wealth. This illustration highlights the ability of gold to convey clear comparisons of various countries’ circumstances. It also illustrates the damage that imprudent monetary policy can inflict and the importance of gold as insurance against those policies.

Penalty

Using Turkey as an example also helps illustrate why we say that inflationary regimes impose a penalty on savers. Inflation encourages and even forces people to spend, invest or speculate to offset the effects of inflation. Investing and speculating entail risk, however, so in an inflationary regime one must assume risk or accept a decline in purchasing power.

Most people think of inflation as rising prices. Although that is the way most economists represent inflation, the truth is that inflation is actually your money losing value. Inflation is not caused by rising prices; rising prices are a symptom of inflation. The value of money declines as a result of increasing money supply provided by the stewards of monetary discipline, the Federal Reserve or some other global central bank.

This is difficult to conceptualize, so let’s bring it home in a simple example. If you live in a country where the annual inflation rate is a steady 2%, the value of the currency will decline every year by 2% on a compounded basis. At this rate, the purchasing power of the currency will be cut in half in less than 35 years.

Now consider a country, like Turkey, that has been running chronic deficits, printing money rapidly to make up a revenue shortfall, and begins to experience accelerating inflation. The annual inflation rate in Turkey is now estimated to be over 100% or 8.30% per month, a difficult number to comprehend. The value of their currency is currently falling at an accelerating pace so that what might have been purchased with 500 lira 9 months ago now requires 1,000 lira.

Put another way, for the prudent retiree who had 10,000 lira in cash stashed away nine months ago, the inflation-adjusted value of that money has now fallen to less than 5,000 lira.  If inflation persists at that rate, the 10,000 will become less than 1,000 in 29 months.

Believe it or not, Turkey is, so far, a relatively mild example compared to hyperinflationary episodes previously seen in Germany, Czechoslovakia, Venezuela, and Zimbabwe. These instances devastated the currencies and the wealth of the affected citizens. Fiscal imprudence is a real phenomenon and one that eventually destroys the financial infrastructure of a country. For more on the insidious role that even low levels of inflation have on purchasing power, please read our article: The Fed’s Definition of Price Stability is Likely Different than Yours.

Summary

There are over 3,800 historical examples of paper currencies that no longer exist. Although some of these currencies, like the French franc or the Greek drachma disappeared as a result of being replaced by an alternative (euro), many disappeared as a result of government imprudence, debauching the currency and hyperinflation. In all of those cases, persistent budget deficits and printed money were common factors. This should sound worryingly familiar.

Modern day central banks function by employing a steady dose of propaganda arguing against the risks of deflation and in favor of the benefits of a “modest” level of inflation. The Fed’s Congressional mandate is to “foster economic conditions that promote stable prices and maximum sustainable employment” but promoting stable prices evolved into a 2% inflation target. The math is not complex but it is difficult to grasp. Any number, no matter how small, compounded over a long enough time frame eventually takes on a parabolic, hockey stick, shape. The purpose of the inflation target is clearly intended to encourage borrowing, spending and speculating as the value of the currency gradually erodes but at an ever-accelerating pace. Those not participating in such acts will get left behind.

In the same way that rising prices are a symptom of inflation attributable to too much printed money in the system, deflation is falling prices due to unfinanceable inventories and merchandise pushed on to the market caused by too much debt. Contrary to popular economic opinion, deflation is not falling prices caused by a technology-enhanced decline in the costs of production – that is more properly labeled as “progress.” The Fed is either knowingly or unknowingly conflating these two separate and very different issues under the deflation label as support for their “inflation target”. In doing so, they are creating the conditions for deflation as debt burdens mount.

Gold, for all its imperfections, offers a time-tested, stable base against which to measure the value of fiat currencies. Accountability cannot be denied.  Despite the unwillingness of most central bankers to acknowledge gold’s relevance, the currencies of nations will remain beholden to the “barbarous relic”, especially as governments continue to prove feckless in their application of fiscal and monetary discipline.

Source: Authored by Michael Lebowitz via RealInvestmentAdvice.com| ZeroHedge