Monday, January 09, 2006

The Historic Role of Gold

In my last blog, I wondered what China might have chosen to include in its "basket of currencies." I neglected to wonder whether they might have thrown into that basket a gold coin or two. That is what I would have done, were I in control of that basket.

The Privateer, an Australian website that tracks gold's performance, has some interesting things to say about gold, things that I myself have stated in the past, most particularly that:

"The global paper currency system is very young. It depends for its continued functioning on the belief that the debt upon which it is based will, someday, be repaid." He goes on to say:

"The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold."

I couldn't agree more. Hold onto to your hats, folks, because we're on for a golden ride.

My deepist desire is that the market, i.e. individuals, will put us back on track and show us the way forward by choosing gold over fiat and reasserting a kind of de facto gold standard, in spite of the Machiavellian wishes of those who would dare to overthrow monetary wisdom. The problem is that, faced with any temporary economic instability, the macroeconomic puppeteers will attempt to convince a naive public that this rush to gold is the cause of our problems and not the cure. And they just might succeed, as they have in the past. If that happens, watch out for your freedom to own gold.

See more from The Privateer here.


Blogger L-train said...

Katy, a while ago I and a friend of mine stumbled on your blog.

I've come back from time to time. To be honest, I had never thought about some of the issues that you blog about.

I would have said that about this particular post, but over the past few months I've done a lot of reading on the subject, with a skeptical eye.

And I now get it. I see it. I think that you're right on.

Keep banging your stick on the homesteads to spread the word.

8:36 PM  

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