TOP 10 Q & A's

Q1. You seem to be a permanent bull on gold. Why are you always so bullish on gold?

 

Gold, and sometimes silver, has always been chosen as money when those choices were available. Markets have first chosen gold as money because it is superior to every other form of money known to man. Doug Casey often mentions the five reasons given by Aristotle as to why markets have always chosen gold as a store of value and medium of exchange and why they have ignored other items:

 

1. Gold is durable. That’s why we don’t use wheat.
2. Gold is divisible. That’s why we don’t use diamonds.
3. Gold is convenient in that it is portable and very valuable. That’s why we don’t use lead.
4. Gold is consistent. That’s why we don’t use real estate.
5. Gold is value in and of itself. That’s why we don’t use paper.

 

But of course we do use paper money and not gold, not because the markets have chosen paper but because politicians at the point of a gun have forced us to use it. Politicians hate gold and love paper money because a paper money system allows them to “print” money and use it to buy votes. Bankers prefer paper as money because, being allied with the politicians, they are licensed to create their inventory for making loans out of thin air!

In short, paper money is a license for bankers and politicians to rob the public through the fires of inflation and that is exactly what has been going on at an accelerated rate of speed, especially since Richard Nixon severed monetary ties to gold in 1971. As a result, as the chart above illustrates, the money supply has exploded and paper money has lost most of its value over the years. Meanwhile, gold continues to buy roughly the same amount of goods and services as it bought during biblical times. Gold is the ultimate store of value and now with the Federal Reserve’s printing presses printing out trillions of dollars of bailout money, gold figures to be the primary store of wealth and value in the years to come. Gold is a most essential portfolio item to hold if one is to retain wealth. And because governments and banks show no signs that their addiction to paper money is about to abate, I have become a permanent gold bull.

 

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