-- Posted Monday, 1 December 2008 | Digg This Article | Source: GoldSeek.com
In order to understand why gold is so important now you must realize that the very concept of what is money is fluid. Since the early 80s, up until quite recently, the following were regarded as money or a proxy for money: blue chip stocks, quality real estate, quality corporate bonds. Two years ago, collaterized low quality loans were even considered money.
Ultimately fear determines what is money and what is not. We have been living in a low fear environment, obviously that is changing now.
There are two types of fear:
1) Fear of economic collapse - You will hear this expressed as a fear of deflation, but from a monetary perspective, this is a fear of loss due to insolvency, lower earnings, inability to service debt. This can be caused by over extension of credit, fraud, corruption or a combination of all of the above, which is what we are experiencing now.
2) Fear of fiat currency collapse - You will hear this expressed as hyperinflation. It is a self-reinforcing loss of confidence in the value of fiat currency.
We are being crushed between these two types of fear. There are no sound fiat currencies in which to seek shelter. This is the ultimate setup for gold and silver bullion.
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