-- Posted Thursday, 20 October 2005 | Digg This Article
October 15, 2005
Today, I want to discuss the idea that individuals who understand gold and the role that gold plays in the realm of finance, money, and wealth, are in short supply. At best, the gold community is a small one and consequently we all need to chip in and do our part to help it grow larger. If we don’t, then we have no right to moan and groan about the vicissitudes of the gold market and how unfair and unpredictable it can be. As usual, a very small number of people are doing their level best to discover and explain the real “gold story” for a much larger majority of interested parties. The United States and all of its interrelated components will benefit when a larger number of its citizens understand this relationship between gold, money, and wealth.
Understanding those relationships in the long run may actually help you financially. However, if that isn’t reason enough, consider that historically the Asian and to some degree the Arabian communities have been firmly committed to the relationship between wealth and gold. Not money and wealth, mind you, but wealth and gold. In my mind that puts them way ahead of us. He who owns the gold makes the rules. That’s a clichéd little adage but it is also a very powerful one and one that historically has been proven valid.
If you’re of a competitive nature, and even if you aren’t, don’t lose sight of the fact that we live in an extremely competitive world. Other countries and cultures are not only well aware of these facts; they are expanding their own bases in ways that are simultaneously direct, bold, surreptitious, and clever. Additionally, they have a historical precedent from which to educate their populations. They understand the power of gold and are making great strides towards accumulating it while the US goes out of its way to demean it and its political ramifications.
China has opened the doors for its citizens to own gold. There are excellent reasons why. Do you have any ideas as to why? I thought you might.
And lest we forget, it is not in the best interest of a jeep perched precipitously on a cliff to have a Mac Truck give it a little bump from behind. Let’s put that a different way. It is not in the best interests of the PTB (Powers That Be) to have gold, the financial thermometer of the world, working properly—doing its job, just at the time when inflation is running rampant, there are systemic problems in the derivative world, and the debt of the US is at levels where five dollar bills can be stacked to the moon and back. That is not poetic license, folks, that is indeed an accurate statement. Put another way, the PTB, do not want the average citizen in these United States understanding the relationship between gold, money, and wealth. All right then, I think that just about covers it.
Will the Circle Be Unbroken?
There is one thing all well managed and coherent organized groups want to accomplish and that is to increase their membership. I think of it in terms of expanding the circle and that circle should indeed be unbroken if the group is to grow. The faster the circle expands, the faster the group will grow. Regardless of whether we are referring to business, government, religious, or private concerns, all organizations want to attract new members and keep their existing ones. This is for obvious reasons—survivability being the most prevalent one. Power being the second one and profitability being the third. No “new blood” and the “gene pool” will become stagnant and there is a loss of members, power, and money. American consumerism and the capitalist way of life need to constantly expand in order to survive. Contraction is not an option.
As a simple exercise, consider the gold community as your base. Many of you understand the power of the precious yellow and how it can impact the global monetary system as well as it can affect your own personal portfolio. I suggest that we all take steps to expand our circle of gold aficionados or gold bulls. You would be in good company. People like Richard Russell, Bill Buckler, Jim Sinclair, Jim Puplava, James Turk, Bill Murphy, Alan Greenspan, et al, are all in the “gold is real money—real wealth, camp”.
Wait, what was that? Alan Greenspan? Yes, read some of his earlier work on gold and you’ll understand. There was a personal relationship between our venerated “General” of the Federal Reserve and Ayn Rand. You’ll have to go back 20-30 years but it’s there and its worth your time to understand how Mr. Greenspan once felt about gold. It‘s also amazing what being in the nexus of political power will do to a man. As a quick aside, I want you all to understand and be fully cognizant of the fact that the Federal Reserve is in no way part or parcel of the United States Government. With that little teaser we will move on, that important subject to be covered on another day.
Definition of Terms
First, let us agree on a definition of terms. After posting one of my recent columns, a reader advised me that I had used the term Gold Bug, and I should have used the term Gold Bull. I will acquiesce to a point well taken! This individual went on to specify that the term gold bug has a negative connotation, and he just might be correct in his assessment.
I’ll go along with my new friend and choose the term gold bull realizing full well the positive implications of both terms. Please understand that “the king” doesn’t like people or”vehicles” that compete with what he defines as money—his money, that is. So, historically, we discover the status quo as deriding gold aficionados as “bugs”! In truth, that is what has most likely occurred.
But then again, what is wrong with actually being a gold bug? It could indicate that you stand for real money, for less dilution of our existing monetary standards, that you think government and central banks should be truthful and held accountable for their actions, and that you understand that running the monetary printing presses 24/7 is counter productive if your purpose is to create real wealth for your Nation and to serve your citizens. But nevertheless, gold bull or gold bug, wear the title as a badge of honor. It indicates that you might well be ahead of the national and international curve in your comprehension of sound monetary policy.
Recycling or Preaching to the Choir
I sometimes get the feeling that there is too much internal recycling going on in the gold community. In the larger financial picture, the ones holding gold and gold shares are indeed a very small part of the overall financial investment community at the current time; and of course this might change at any given moment. The same writers are writing for the same audience and the same audience is reading the same writers. Combined, we might be talking about people comprising less than one percent of the nation’s population. Again, all the more reason to expand the base.
What is the Real Value of Gold?
One ounce of gold has its counterpart in 15 cazillion parts of fiat currency. (Definition of terms: cazillion—a calculation of measure too enormous for the human mind to truly comprehend!)
In other words, if we had to take all the gold in the world and divide it by the entire amount of fiat paper currency that all governments have created en toto, we truly would have an ounce of gold being worth something in the 15 cazillion range. 15 cazillion what? Well, 15 cazillion pieces of pretty colored paper anchored (backed) by all those government promises. Beware! The more pieces of pretty colored paper you own, the more your financial future may be in jeopardy.
That’s not idle speculative rhetoric, but rather a simple fact that can be empirically calculated by ascertaining the purchasing power of the fiat currency of today versus the purchasing power of that identical fiat currency ten, twenty or fifty years ago. It is a fact based upon the concept that the more widgets one creates, the less they are worth. That principle applies to cars, computers, yen, or dollars. Remember that slick computer monitor you paid $800 for about ten years ago? Today, you have to pay $20.00 to discard it!
The old saying that cash is king may not always be true. I heard a pundit use the phrase this very day. Actually, to my way of thinking, gold is king. And if you want to preserve your wealth for more than several months or several years, consider the ownership of physical gold and or silver. At the very least, consider it as an insurance policy. We might actually utilize that type of reasoning when we are expanding our base.
Why is this so important for People of the US to Understand the US financial Picture?
It goes to awareness. The United States of America has a large portion of its citizenry that is uninformed and unaware. That is not meant as a criticism; simply a statement of fact. As absolutely idealistic as it may sound, I believe that we have to start somewhere and begin to get ourselves, our Nation, back on track. That means educating ourselves, our young people, our university students, our economics professors, and engaging anyone who will listen in a dialog as to why gold is so important to a sound monetary system. We also want to understand why it is a financial thermometer and what happens when any thermometer is broken. You can’t take a temperature (duh!) and in this case it means you cannot take the temperature of the US economy, inflation, deflation, and the overall financial picture that we are faced with on a daily basis. This dialog also entails the communication and exchange of ideas as to the true political reasons national events, thinking, and principles, are moving in the direction they are.
When this gold bull market hits the third leg in its frothy maniacal conclusion, there will be many jumping on the bandwagon believing that they will be riding the gravy train to riches. Perhaps they will, but will they truly understand what lies behind the excitement of simply making money? However, those folks coming in on the last leg are frequently the ones who historically buy high and sell low.
So yes, the financial aspect of it is very important and we all want to make a few bucks along the way. But what is also important is the role that gold plays in keeping governments’ honest vis a vis their particular currency. Yes, I know, this is so un-American—actually contemplating what is good for the Republic above and beyond our own idiosyncratic wants and ideals. But really, think about it. At the end of the day, if we are eventually relegated to the status of a third world country or a police state with all that accompanies such an environment, what good is all the money in the world if some goon is smashing down your door in the middle of the night and we’re living in fear? Not possible? Read or re-read the Patriot Act, the Congressional Bill which is going to keep us all so safe. It is akin to having all the money in the world and no safe place in which to enjoy it. I keep asking myself, where is Congress—where is the loyal opposition!?
In order to create real wealth it is necessary to produce more than you consume in some form or fashion. The excess that one produces is then sold into the marketplace. Americans need to understand that we are no longer producing because we’ve exported most of our textile, steel, machine tools, and a plethora of other quintessential American manufacturing enterprises. We’ve been surpassed by the countries with the vast populations willing to work for reasonable wages as defined by multinational corporations looking to increase their bottom line. (Definition of Terms: reasonable wages—anything they can get away with while avoiding the local lynch mob). Does this bode well for the US? I think not. America is now a service economy and produces little in the overall scheme of things. Our reserve currency has allowed us to “get away” with things that other countries can only dream about.
Should we not also consider that it is important to save a bit for a rainy day? The rainy day is close at hand. “They”, the PTB know it, and so should you. And that is why it is so important for people in the US to understand the financial picture. The ramifications extend far beyond the dollars and sense (sic) of it.
The Soap Box
However, we who endeavor to understand that gold is a benchmark from which to calculate real wealth need to get off our collective butts and expand our own circle—expand our own base. We need to do it because the very survivability of the country is at stake. If the country is at risk, then make no mistake about it, you and I as part of this country are also at risk. It is indeed a syllogism. Is this too dramatic or sensationalistic? I think not.
This is where I kind of climb up on to the soap box and reiterate what this informed gold community already understands. A country that loses its manufacturing base, lives off the collective efforts of other countries, consumes more than it creates, spends more than it saves, places a self-serving political spin on all matters of real significance, and needs one trillion dollars of (borrowed!) fiat paper to service its own debts on an annul basis, is a country heading in the wrong direction. In a word, it is a country in decline.
Still lathered up in my soap bubbles—gee, I take that back as I really don’t want to be compared to Mr. Bubbles; I go on to realize that most Americans really don’t desire a declining standard of living. They are simply being forced into it by an administration not able to overcome its own draconian bureaucracy. Let’s be honest about this—it is more than one administration. Americans have been fed such a line of baloney, especially financial baloney over the past ten to twenty years that we don’t know which end is up. But in reality, there is a bit of a buzzer going off in our collective heads that says, “this ain’t right”. You can’t simply print money and call it wealth. You can’t have it both ways, and there appears to be too many people trying to live off the spin and trying to have it both ways. If the fiasco in New Orleans taught us anything, it was that the US and the PTB are not remotely ready for that rainy day. No pun intended because it is much too serious a topic for joviality.
I think this line of baloney has increased over the past six years. There are always the Paul Reveres trying to warn us that the situation is quite perilous. Have we become so involved with the every day mode of survival in our own lives that we’ve forgotten how America came to be America? Are we too busy, do we not care, are we too strapped for cash, are we becoming immune to the tremendous need we see around us on a daily basis?
Again, I don’t mean this as mean spirited criticism because I fully realize that trying to raise a family or run a household in this country in this day and age is no easy task. We can’t be experts at everything but we need to be experts in certain things of real importance. Yes, we have Wall Street and Madison Avenue telling us what we really should want and need. The influence is constant, unrelenting, and overwhelming. But we are smarter than they are; just as Cindy Sheehan is.
I’ve heard that the US government has promised to rebuild the Gulf Coast at a cost in excess of 200 billion US. Well, if we’re truthful about this, we realize that the 200 billion will turn into 400 billion. My question to you is where does this country acquire a half a trillion dollars? Where does it get that kind of money when America needs one and a half billion dollars a day to service the published national debt? When we go beyond that national debt and get real, then we get into that cazillion category which is something like a national debt of 86 trillion combined federal, state, local, household, entitlement programs, and on and on we go. Again, this country needs about a trillion dollars a year to service its debts. That is a lot of dough.
Most of the folks who read the gold sites and read them regularly are already (members) in the gold camp. They own gold, gold shares, and realize the value of true money, real currency, verifiable wealth, and what it all means to a country. They might be trying to protect their wealth. They might be trying to increase it. But many of them are passionate about the true value of gold and understand the real battle lines.
Those lines are simple and basic. You cannot forever consume more than you produce and fool the rest of the world into paying your way because your currency is dubbed the world’s reserve currency. These folks also know that money and wealth are two different things. Money is a medium of exchange and wealth is something that is created by the sweat of the brow and then endures. Wealth is not a promise for the future; it is not what we are going to create—it is what we have created. And if we dig a bit deeper, wealth can be a national consciousness wherein the citizens of a country understand their history and the real value of freedom and what it takes to preserve it.
Often times the most difficult questions are answered by the simplest of solutions.
A country cannot simply create paper, call it money, and not have any substance behind it. That is what the US is doing. We need to explain those kinds of things to our children, friends, neighbors, and office counterparts—anyone who will listen. Heaven knows that the mainstream press is not covering these concepts. These topics are strictly “verboten” because of the enormous implications that go along with the understanding of them.
This group of gold bulls needs to sally forth and to do some small part to recruit one other gold bull to the camp in order to expand the circle-expand the base. That’s what I’m doing right now and I hope you’ll push this message along to one of your friends.
We cannot afford to sit back and accept the status quo any longer. What is this status quo to which I refer? Pure and simple it is the complete and utter debasement of our common stock of the United States, “ye ole Greenback”. We can complain until the cows come home but it ain’t gonna do us no good until we get into the game. First, I urge you to recognize how the game is being played—how they are using fiat paper dollars and the creation of them in the cazillions for their own private fleecing of America.
It really isn’t that complex. Paper instruments (derivatives) are created and used to hold down the price of gold which would otherwise “float” to a much higher level in an unobstructed market. Concurrently, paper assets are created, endorsed, and supported. Americans, at the very least need to understand the basics of these contrived endeavors. Then, we personally should endeavor to act as a counterpoint to those trends that will ultimately cause us all to eventually go broke. After all, we as a Nation are on a fast track to that type of a situation already.
Remember also, that gold with all of its political ramifications is a state of mind—as much as it is real wealth.
Take one Person and Pay it Forward
So rather than complain about mundane details when others are putting everything on the line, I challenge you to take one person and to educate them as to what you know is the truth. The only thing that you request in return for your time is that the one person you take under your “wing” takes one other person under theirs. It’s very much like that “Pay if Forward” concept. I know it is idealistic and corny as all get out---but true to the core.
This is what is called a Grass Roots campaign and if we are to take our country back it is going to be taken back one and two individuals at a time. But take an action, any positive action. Give five bucks or five minutes, but give something. Get in touch with your Congressional Representatives. That is why they were elected—to serve you; not the needs of the special interests.
Conclusion
I believe that the gold community needs to attract new members. I believe there are several points of departure that all gold bulls need to clearly understand within their own particular framework of financial goals.
There are too few of us and we need to expand our base. Most of the young people “coming up” don’t have a clue as to what is happening to our monetary system and the ramifications of believing that wealth is equated with paper dollars. It goes without saying that certain groups would have a vested interest in keeping them in the dark.
The key to most important issues of the day is to acquire critical mass in order to move the status of any issue to a more elevated profile. We gold bulls need to expand the circle and we need critical mass: people, power, and promotion. We’re not only doing this for ourselves, but we’re doing it for our country, our families, while firmly and intelligently adhering to the principals upon which our Founding Fathers so astutely brought forth our Constitution and our Bill of Rights. These ideas are not so different from the ones we are currently asking our young people to shed their blood for in foreign lands.
Ladies and Gentlemen: we cannot have it both ways. We cannot in good faith ask our young soldiers to die for the identical causes in foreign lands that we are unwilling to fight for at home. We cannot allow our own leaders to defray the impact, the validity of our own Constitution under the guise of the Patriot Act, while they build the case for a police state under the guise of saving us from terror and the activity of a small group of terrorists. Meanwhile, many of us are only too happy to give away our personal power if the PTB promise to keep us safe. Think again.
Never make the mistake of believing that someone else is going to keep us safe. That job will always fall to us as American citizens utilizing our own minds and our own positive devices. It is the most important job we will ever undertake in our lifetime, especially in this current geo-political environment. We do that by encouraging men of integrity to run for office and having them endorse a sane and sensible foreign policy doctrine that brings respect back to a Nation that at one time held the moral high ground. Events do not occur in a vacuum. There are causes and effects. There are stimuli and responses. Wars do not simply happen; they are created. Citizens can stop them if they put their collective minds to the task.
Therefore—we need to expand our base, so we have the critical mass to proceed forward and protect our true freedoms—those would be the ones our forefathers died for some 230 years ago, and the same ones our young soldiers are dying for today. We need intelligent, well informed, well intentioned Americans in order to act as a counter weight for what is occurring in the halls of Congress and affected by untold numbers of lobbyists working for special interests. We need an educated and committed American Public that is educating and expanding a coherent base of like-minded citizens seeking to take this country back to the center, back to the people, back to the points from which it emerged into a globally respected nation.
Much of this begins with a currency that is truly valid and a populace that understands the connection and the relationships between money, wealth, and gold.
Why not be one of those people who are part of the solution and not part of the problem; one of the folks helping to expand the base—your base.
Until next time,
D. Stewart Armstrong
Consultant to Junior Mining Companies
consulting@seacoastpub.com
-- Posted Thursday, 20 October 2005 | Digg This Article
