Gold and Money

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The End of Gold's 40-Year Exile Gold Standard Returns, It is often said that the only difference between the Government and the Mafia is the cost of their suits. Face it: The government is an organized crime syndicate that succeeded. Ownership of precious metals shows you do not have full faith in the Country's currency and consequently the ability of the banking isector to give you returns equal to th returns on gold. But can you trust the banks who have lent of GTL group, Kingfisher and many
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  The End of Gold's 40-Year Exile Gold Standard Returns, It is often said that the only difference between the Government and the Mafia is thecost of their suits.   Face it: The government is an organized crimesyndicate that succeeded.  Ownership of precious metals shows you do not have full faith in the Country's currency andconsequently the ability of the banking isector to give you returns equal to th returns on gold.But can you trust the banks who have lent of GTL group, Kingfisher and many similarshennenigans euphestimacally called Corporate India and then allowed CDR. The accountsof GTL should have been under scrutiny of the lenders, as should have been those ofKingfsher. Many a years back there was an Institution within RBI called the Department ofBanking Suprevision. I would like to know what DBS has done and whether the Public cansee any worthwhile report of this once prestigious organ of RBI.By buying gold, you are a revolutionary. You believe the government can't print its way out ofa debt crisis. You have put yourself and your family above their apparatchiks. In the budgetof 2012-2013, the budget imposed a duty which has driven smuggling back into fashion:evidence the number of gold seizures at airports. With the porous borders, the quantum ofseizures may be a pittance of the gold coming. the unofficial rate or the Hawala has made aresurgence and already it is at a premium of 2 1/2 % to the official rate. During his monetary policy meeting in July, Ron Paul, a US Senator asked Bob BernankeGovernor of Federal bank in USA if gold was money.    A clearly bothered Bernanke told Rep. Paul: “No. It’s aprecious metal.”   The fact is gold has always been held in the same regard as currency...   The only time throughout the entirety of history that gold was not considered synonymouswith cash is the last 41 years — and that was because the U.S. government exiled it. Butnow central banks, international financiers, and the world's wealthiest people are quietlymoving their wealth back into gold, the same way they always have, by trading their dollarsin for safe haven precious metals...   Gold's Exile   Let's back up a bit and talk about why gold was exiled inthe first place...   The Bretton Woods system had been in place since July1944 to tie currencies to the U.S. dollar and providestability among economies and currencies worldwide.   John Maynard Keynes' srcinal proposal involved a supranational currency called the bancor that would be used as the lynchpin...   The United States objected, and thus the dollar hassince been the world's reserve currency.   To maintain some semblance of faith in the system, theUSD would maintain the ability to convert to gold at $35per ounce.    For two and a half decades, the system worked fairlywell, all things considered, but it didn't last...   U.S. involvement in the Vietnam War ran a balance-of-payments deficit and a trade deficit, the first in the 20thcentury. 1970 was a crucial turning point wherein foreignarbitrage of the U.S. dollar caused governmental goldcoverage of the paper dollar to decline from 55% to22%.   Nations grew increasingly worried about recklesseconomics in the U.S. and began cashing in dollars for gold...   Switzerland redeemed $50 million of paper for gold inJuly; France cashed out $191 million in the yellow metal.   Gold's exile from its position as universal money startedon August 15, 1971.   The whole system came crashing down when Nixon andhis advisers decided — without consulting the membersof the international monetary system — the dollar-to-gold convertibility was done for. This policy removed anyabsolute value from currency strength.   The lynchpin of the global currency system was still theUSD — but currencies were based on faith in promisesfrom politicians and the economists they hire.   Gold was exiled from modern currencies because U.S. politicians and all their friends acrossthe world wanted to rack up unsustainable debts and were tired of suffering theconsequences.   Politicians still use central bankers to patch up the economy through currency manipulation,deficits, and trade imbalances that are driving national debt past sustainable levels.   Just as the Swiss and French did in 1970 as Uncle Sam outspent himself on war efforts inVietnam, SMART INVESTORS are quietly converting their wealth from the greenback backto gold.   Just take a look at official central bank gold sales andpurchases:      In the second quarter of 2012, Central banks around the world scooped up 157.5 tons of gold, marking a 63% increase from the first quarter and a whopping 138% increase year over year.    And Central banks aren't the only ones making the switch from paper to physical bullion,coins,ETC...   Ray Dalio, George Soros, John Paulson, and countlessothers interested in protecting massive wealth are, too.The world's richest man, Carlos Slim, dumped $750million into troubled gold mines in Mexico.   The Basel III rules will put gold back on par with cash and Treasury bonds as top-tier assetsfor bank reserves starting January 1, 2013.   Though Central banks all over the world may not bewilling to say gold is money (because it wouldundermine their position), policymakers cannot hide thetruth...   Gold is still used as money, it always has been, and italways will be.  
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