After writing my last piece regarding Martin Armstrong I thought that would be enough, it wasn't.  A reader replied and forwarded this recent article by Mr. Armstrong "Did Gold Survive the Depression?  Please read this short article twice before continuing to my commentary.  I had to read this twice myself because the first time through I kept saying "Huh?", the second time through all I could say is "WHAT???"!

  OK, let's start with a most ridiculous statement, one patently false and a revision of history ..."You are doomed if you cling to the idea that gold will rise simply because stocks decline. Gold was DEVALUED in 1934 since gold was MONEY. What it could purchase for $20.67 then cost $35. The government confiscated gold and moved to a TWO-TIER monetary system with gold used exclusively for international settlements, not domestic."  Gold was NOT "devalued", it was "revalued" higher versus the dollar.  Another way to say this is "the dollar was devalued versus gold".  This is fact.  He then said "what it could purchase for $20.67 then cost $35".  Really Martin?  Don't you mean the $20.67 that used to be required to purchase one ounce of gold then cost $35 or about 70% MORE DOLLARS!???

  The crux of the rest of his article is "gold is not money", he claims dollars are money.  He defines money as: "MONEY is solely what another will accept because they know someone else will accept it from them. You cannot dictate to the world what you think should be money".  He goes on to say "They refuse to understand that MONEY is just a unit or account and a medium of exchange that everyone must agree on". ...um no Martin, you just described "currency", NOT money!   You  also forgot another minor point (of many), MONEY MUST BE FIRST AND FOREMOST A STORE OF VALUE!!!

  In case you were wondering Martin, even the BIS considers gold to be "money".  In fact, gold is considered to be tier one capital on the balance sheet of central banks and banks in general.  You can even ask Alan Greenspan this question whether gold is money or not.  He has already answered "during a time of stress, gold is THE ULTIMATE form of settlement" (MONEY)!  Or, ask the Chinese if gold is money?  They are not importing the worlds entire global production to make solid gold toilets or bathtubs.  They know gold is and always has been money.  If they preferred dollars instead of gold then why are they not selling gold and securely storing dollar bills?

Lastly he says "Did gold rally because of fiat? No. Gold rallied because the banking system was collapsing. These people kept buying gold, swearing QE1-3 was inflationary, and lost all the way down because they failed to comprehend that this is not a battle against fiat." The term "QE" (quantitative easing) IS in fact synonymous with monetization of debt. This is also fact. In order to HIDE this fact, gold price has necessarily been suppressed. If you look at the graph below, it shows 293 paper contract gold ounces are now outstanding versus each real gold ounce held in COMEX registered inventories. How is this explained Mr. Armstrong? This is not manipulation? Is this not the reverse of the manipulation you were squealing about when you were short silver while Warren Buffett was buying?