Fiat Currency Is The Bubble, Not Gold

By: Jeff Berwick | Sun, Jul 24, 2011
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There are countless reasons, which we've shown in our public and subscription-based writings over time, why gold is not in a bubble.

Aside from all the empirical data, however, probably the most obvious sign that gold is not in a bubble is the fact that the media and the government keep proclaiming it to be in a bubble. The media and the government never see bubbles coming.

Just look at Mike Norman, the Chief Economist for John Thomas Financial in 2006, nearly choke on his own tongue laughing at the thought the US housing market was going to collapse on Fox News (fast forward to the final minute).

 


12/31/2006 Peter Schiff On FOX Bulls And Bears/Cavuto

 

In honor of Mike Norman, we will create the "Norman Indicator". When he appears on Fox News and almost urinates in his pants at the thought of the price of gold going down we will have to re-assess our view.

No other "bubble" in history has ever had so many people aware of its existence. It seems every man, woman and child is aware of the gold bubble and is incredibly vigilant to any information or data that agrees with their worldview.

As one example, a reader forwarded us this photo they took in San Francisco of a company that was being fairly extravagant (they had balloons!) about wanting to "buy your gold".

Surely this must mean the end of the gold "bubble" is nigh! There is a company operating in plain site that is in the gold business!

Note, however, that they are buying gold. Not selling. When there are line-ups in every major city and people calling in sick to work to run down to buy gold (like they did in 1980) then, maybe, we are nearing the end.

As well, another reader forwarded us an email, stating that Ebay had opened a gold & silver center. Surely, they intoned, this must mark the peak.

After all, you can buy billions of things on Ebay and now you can also buy gold and silver. What euphoria!

However, the thing is, even if we did start to see euphoria style buying and gold and gold stocks were the topic of conversation at every cocktail party, every taxi driver was giving you gold stock tips and a picture of a golden bear rampaging through Wall Street was on the front cover of Newspeak... sorry, News Week, this still would not necessarily mean gold is in a "bubble".


Fiat Currency is the Bubble

Today's ADD culture and non-financial literate, government educated populace have forgotten that prior to 1971 gold, or at the very least something tied to gold, was money. Next month truly fiat global currencies celebrate their 40th anniversary.

All of the agents of the state and the international fiat bankers have tried for forty years to convince people that gold is a barbarous relic. But the fact of the matter is that this period since 1971 has been the aberrant period and the current rise of gold is not a bubble - it is simply a reversion to the mean, in which gold and silver are a more widespread part of financial and goods markets.

It is amazing how well the financial establishment has convinced people that gold is dead. During the 1990s and much of the 2000s anyone interested in gold was considered some kind of an anachronism, sort of like a cross between a stamp collector and a gun nut.

As gold rises it will not be a "bubble". It will not rise to a certain number. $2,000. $3,000. $5,000. These are all numbers batted about. But the fact of the matter is that the most likely outcome is that the 40 year fiat currency bubble not only collapses but fiat currencies become completely worthless.


The Return of Gold as Money

Ben Bernanke, sadly, was correct when he said gold isn't money. However, the day draws very near when he will be incorrect. On that date, Bernanke will likely find himself hiding in a bathroom with a pistol in his mouth or hung from a tree. So, he better enjoy his box seats at Washington Nationals games while he can. His voice quivers every interview because he knows this is coming.

Interestingly, much of the "western" world is still quite brainwashed and believe that the financial world for the last 40 years was real. Other parts of the world have never forgotten what is real money and what is not.

Global gold demand comes 20% from China and 32% from India. The US and Canada? Only 8% combined.

People who have lived off of debt, war and fiat currencies in the western world for the last 40 years are about to realize that almost everything they believed in wasn't true. They will be left holding scraps of paper that, in hindsight, they won't believe they could have been so silly as to think that pieces of paper with drawings written on them were something they considered of value.

Fiat currencies are the bubble and they are about to go pop. Your government won't tell you that. The talking heads on TV won't tell you that. You need to find this out for yourself before it is too late.

 


 

Jeff Berwick

Author: Jeff Berwick

Jeff Berwick
Chief Editor
The Dollar Vigilante

Jeff Berwick

Anarcho-Capitalist. Libertarian. Freedom fighter against mankind's two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.

Jeff's background in the financial markets dates back to his founding of Canada's largest financial website, Stockhouse.com, in 1994. In the late '90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of $240 million USD at the peak of the "tech bubble". To this day more than a million investors use Stockhouse.com for investment information every month.

Jeff was the CEO from 1994 until 2002 when he sold the company and still continued on as a director afterwards until 2007. Afterwards, Berwick went forth to live on and travel the world by sailboat but after one year of sailing his boat sank in a storm off the coast of El Salvador. After being saved clinging to his surfboard with nothing but a pair of surfing shorts left of all his material possessions he decided to "live nowhere" and travel the world as spontaneously as possible with one overarching goal: See and understand the world with his own eyes, not through the lens of the media.

He went on to visit nearly 100 countries over four years and did and saw things that no education could ever teach. He met and spoke with a plethora of amazing people, from self-made billionaires to some of the brightest minds in finance - as well as entrepreneurs from a broad range of backgrounds and locations from tech companies in southern China to resource developers in Mongolia, Thailand, Russia and Chile. He also read everything he could find on how the world really works... politically and financially. A pursuit he continues to this day.

He expatriated, long ago from his country of birth, Canada, and considers himself a citizen of the world. He has lived in numerous locales since including Los Angeles, Hong Kong, Bangkok and currently lives in Acapulco, Mexico and is building a home in Cafayate, Argentina. In essence, everything he writes about here for TDV he has done or is doing.

As well, during his travels, both real and virtual (through the internet), he met some amazing people who have a similar shared vision of what is currently going on in the world and enticed them to come aboard TDV and provide their own brand of analysis.

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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/