Gold news

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How free market defenders can spread freedom

  • 12 Ottobre 2018
  • by Blogger

The public remains unfamiliar with gold coins, and this is not likely to change, short of an international economic catastrophe. We who are defenders of the free market must do what we can to educate people, especially ourselves, to understand the case for freedom and individual responsibility. This involves understanding the case for voluntary contracts. As part of this educational effort, we should make the case for honest money, which is the case against fractional reserve banking. But this task has barely begun, and the rise in debt is now becoming exponential. There will be a series of debt crises long before voters force the politicians to return to a full gold coin standard. That return would involve a return to freedom.

Francesco Simoncelli

How to return to a gold based currency

  • 09 Ottobre 2018
  • by Blogger

It is conceivable that individuals will someday return to a full gold coin standard, but only in response to a breakdown in the monetary units of international trade. The cost of such a transition would be horrendous. Hardly anyone knows where to buy gold coins. There are not enough coin stores to handle demand for two or three billion adults to sell debt or equity (to whom?) and buy gold.

A tiger by the tail: central banks cartel demise

  • 06 Ottobre 2018
  • by Blogger

There is no conceivable way to establish a full gold coin standard that doesn’t involve either massive deflation or else a huge hike in the price of gold as the price of de-monetizing debt. A rise in the price of gold that didn't also mandate the return to the public of all of the stolen gold would validate the central banks’ ownership of most of the world’s gold, which is the opposite of the traditional free market economist’s case for gold: individual consumer sovereignty.

This means three things: (1) the level of debt will increase, (2) the central banks’ monetization of debt will increase, and (3) monetary inflation will increase.

Fiat currencies are not eternal, but gold it is

  • 02 Ottobre 2018
  • by Blogger

There is only one way back to a full gold coin standard without fractional reserve banking that would not be massively deflationary, thereby destroying men’s confidence in the free market. That non-deflationary transition would involve the central banks’ raising the price of gold while simultaneously selling off its debt. The currency-denominated value of the nation’s monetary base would remain the same.

Gold is still cheap and price inflation is rearing its ugly head

  • 29 Settembre 2018
  • by Blogger

Gold has gotten a bad rap.

Long seen as the investment choice of the cranky and the fearful, the metal yields nothing; as Warren Buffett has said, it just “looks at you.”

This year has been especially lackluster for gold. Its price has slumped 8%, to about $1,200 an ounce, and is off more than 35% from its high of $1,900 in 2011. Adding insult to injury, Vanguard will soon rechristen the largest gold-oriented U.S. mutual fund and shift its focus away from the metal.

But this out-of-favor asset class now deserves a place in investment portfolios.

Compared with stocks and other financial assets, gold looks inexpensive. More important, inflation is starting to pick up in the U.S. and in much of the world as central banks shrink their enormous balance sheets. And gold has represented a good defense against inflation eroding the value of a stock or bond portfolio. Over time, it has held its value against the dollar. Gold was $20.67 an ounce 100 years ago and that bought a good men’s suit. At $1,200 an ounce, the same is true today.

At the end of a credit cycle what counts is gold

  • 24 Settembre 2018
  • by Blogger

There have been many negative developments in the ten years following the Lehman crisis. Logically, you would expect the authorities would have been rethinking monetary and fiscal policies to ensure that the errors that led up to the Lehman crisis are not repeated. You would be wrong, both for the current credit cycle and for the next. The problem is one of not knowing who is responsible. And this is an economic theory matter.

Modern economists insist that the state should have primacy over free markets. They argue that free markets have shown a track record of periodic booms and slumps, which can only be alleviated by the state. This belief has evolved from the Keynesians’ original proposition that the state should run a balanced budget over the business cycle, instead of all the time. The original idea was to increase spending by running budget deficits to create money during the slump in the hope of recouping government finances later when the recovery generates surplus tax revenues. The classic economic theory was replaced by a state theory of economic planning.

Price inflation incoming

  • 22 Settembre 2018
  • by Blogger

The following news is none other than the inevitable consequence of fiat money expansionary policies. In fact, if price inflation has been temporarily tamed, in addition to the fact that it has largely remained confined to the financial sector in recent years, it has also been thanks to low-cost goods from China. It should also be remembered that the stock market boom hasn't made the majority of the population rich in spite of what some scoundrels traders impose as truth. In fact, as we read from the following report the wealth of the average family in the US has not gone anywhere despite the huge boom in equities. There is a severe problem with central banks’ fiat money: It affects income and wealth distribution, and it does so in a non-merit-based, anti-free market way. To understand this, we have to consider that if and when the quantity of money increases in an economy, the prices of different goods will be affected at different points in time and to a different degree. In other words: A rise in the quantity of money changes — and necessarily so — peoples' relative income and wealth position.

Governments epitaph: sovereign debt default

  • 19 Settembre 2018
  • by Blogger

The mountain of debt piles up because creditors are convinced that the central banks will not inflate their currency units “too much,” and debtors are convinced that central banks will not allow price deflation. They believe that the existing pile of debt will never be repaid. It cannot be repaid without shrinking the money supply, because the monetary system is based on the monetization of debt, especially government debt, by the central banks. If the government ever paid off their debts, forcing the central banks to sell their debt, the central banks would have to monetize something else as a replacement asset in the monetary base. If the banks don’t monetize debt, then they must monetize equity: stocks, real estate, or (if necessary to prevent monetary deflation) desk chairs.

How bubbles pop and how to hedge against them

  • 15 Settembre 2018
  • by Blogger

Does it make sense that bubbles have nothing to do with central banks? According to popular thinking, an asset bubble is about a large, above historical average, increase in asset prices. A price of a thing is the amount of dollars paid for it. This means that a bubble is about large, above the historical average, payment of dollars for various assets. As a rule for this to occur there must be an increase in the pool of dollars, or the pool of money. Therefore, if one were to accept the popular definition of what a bubble is one must also accept that without the expansion in the pool of money bubbles cannot emerge.

People no more regard gold as money, but fiat currencies will make change their mind

  • 12 Settembre 2018
  • by Blogger

Government manipulation of the monetary system is inefficient. This interference with consumer sovereignty over money through contract law must produce a misallocation of money, meaning capital. The present system will produce booms and busts in the capital markets and the consumer markets. Austrian economists stand on the sidelines and yell “stop” every time the central bank interferes with interest rates by increasing or decreasing the supply of “high-powered money” — mainly its holdings of government debt certificates.

 

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