-- Posted Thursday, 30 December 2010 | | Source: GoldSeek.com

The obscene concentration of wealth in our world must explode.   I'm talking about over the counter derivative contracts.  They are spreadsheet entries, computer generated dark faeries which are given value only by the US Fed's proven commitment to print money to buy them.  They are being held on the books of elite financial institutions, also pension funds, and banks, valued at par via accounting fraud.   It's simply not possible to buy real things at today's prices with the amount of money that is locked up in these phony wealth instruments.  We are talking about upwards of one 1000 trillion dollars.

We all live under the Sword of Damocles, a clear agreement by the US Fed to print hundreds of trillions of dollars to make the phony wealth real, at our expense.  The printing is going to continue (or the entire financial system is going to lock up, which will not be allowed) until the elite financial institutions are solvent again.  

Of course this will create a panic by all holders of fiat currency to save their wealth by buying something real.   It's definitely in the interest of the money printers to minimize the flow of this hot money into food and energy.   The obvious target for this hot money is monetary metals, especially gold, which is held in reserve by central banks and which has very few industrial applications.  The value of gold can run away from everything else without destroying the current political order.  Assuming that the price of gold runs away, the hot money will follow it, leaving food and oil at relatively more affordable prices than they would otherwise achieve during this crisis.

Today there is active suppression of the value of monetary metals, gold and silver, by the US Fed and its agents.  This supports the value of the dollar on financial markets.  As long as food and energy prices are not running away, or can be brought back down, as in 2008, it is in the interest of the US Fed to continue to suppress the prices of gold and silver. 

However, as food and energy run up in price, the Fed will cut the price of gold loose, and encourage its rise.  This did not happen in 2008 because confidence in the dollar was still strong and the dramatic increase in the price of commodities at that time, particularly oil, was an inside job where elite financial interests profited on the way up and down.

Silver is the common person's best vehicle to build wealth during the upcoming transition.  For more on that see the following article [link].

In the end, a very significant proportion of the world's wealth will be concentrated in gold, and none in imaginary financial constructions.  Concentration of wealth will be reduced dramatically, simply because the wealth that will remain will represent productive potential or real products, not an illusion out of all proportion with reality. 

Those who say that gold's role is to maintain and reflect purchasing power have an incomplete understanding of what is going on.  Gold's role changes, its inherent value is greatest during great transitions, and we are approaching the greatest transition ever.  For more on this, see the following article [link].

Voltaire@incitertrading.com

http://www.incitertrading.com
-- Posted Thursday, 30 December 2010 | Digg This Article | Source: GoldSeek.com

© 1995 - 2019

Live GoldSeek Visitor Map | Disclaimer