Why we should own gold and the disingenuous gold promoting and dollar bashing

Own gold for the right reasons

If you are familiar with my blog and research then you know how I approach gold as an investment. Gold should comprise a small percentage (10-15%) of our asset portfolio and we need to appreciate why we hold it. This understanding is important, because if we own it for the wrong reasons (e.g. inflation hedge, currency converting to gold-backing, market collapse, China acquiring gold in size, etc.) we will be disappointed and become disillusioned when it doesn’t perform as we were told. Moreover, we run the risk of misallocating our personal investment capital if we devote working funds to physical gold and expect imminent capital gains.

There are two reasons why we should own gold:

  1. We should own gold as an asset shield against potential lawsuits and liability that arise from daily life. Imagine having to go through a contentious divorce or being exposed to a catastrophic civil suit. Imagine if your balance sheet was in the cross hairs of a prosecuting attorney? If we held gold out of the system who would know? If you keep your gold buying and holdings discreet, you will always have unencumbered net worth.
  2. Gold is an insurance policy against unstable and corrupt governments that have a proclivity to abscond with their citizens’ wealth. This is especially true if a person lives in an unstable jurisdiction with a poorly performing currency. (e.g. India, Iran, Russia, Turkey, South Africa, Venezuela, Argentina, etc.).

By the way, notice this list of nations; they have unstable currencies and their leaders always seem to run cover for their corrupt governments. They tend to bash the US dollar, as it is easy to blame others for their own problems. If gold was the world’s currency, these nations would publicly denounce gold, since their balance of payments would be in even worse shape.

Beware of the gold “experts”

This is why I continually take exception to the gold promoters, shills, and the copywriters who promote the disinformation we read daily.

Case in point; this morning, I came across this article from Jim Rickards, titled, [T]he “Axis of Gold” Will Drive Gold Higher by the End of 2018. It appeared on the copywriting website, The Daily Reckoning.

The whole premise of the article provides nothing new from the gold shill perspective. Indeed, I can spend hours refuting much of what Mr. Rickards said, as there are instances in the article in which he makes sweeping generalizations that have no basis in fact.

This gold-based payments system will dilute and ultimately eliminate the impact of U.S. dollar-based sanctions.

Jim Rickards – The “Axis of Gold” Will Drive Gold Higher by the End of 2018 (May 24)

Is this true? There is no country in existence that wants to move to a gold-backed currency. If any nation wished to transact in gold and/or wanted to back their currency with gold their economic woes would mount and their debt would quickly become untenable. Gold, by definition is deflationary and any tax jurisdiction would suffocate under a gold-backed transaction system.

Iran also has an enormous amount of gold….  Iran has also received gold imported from Europe via Turkey, but the exact amount is unknown.

We don’t have any insight into how much it has because it’s also highly nontransparent. But in the first quarter of 2018, Iranian gold bar and coin purchases more than tripled.

Turkey is also acquiring enormous amounts of gold, which should not be surprising given Turkish president Recep Erdogan’s recent comments questioning the role of the dollar in global trade.

The Turkish central bank has almost doubled its gold holdings since last May, according to the World Gold Council. And it was the second largest buyer of gold among central banks for the first quarter of 2018.

So that’s the Axis of Gold. Again, evidence for this Axis of Gold is overwhelming.

Jim Rickards – The “Axis of Gold” Will Drive Gold Higher by the End of 2018 (May 24)

So what? These nations claiming to support gold are hemorrhaging foreign currency reserves in a futile attempt to support their own corrupt currency systems. Going to gold-backing would just hasten the process. With respect to Turkey, if this nation was about to flex its muscle and begin using gold for international settlements why is the lira continuing to collapse? I thought their intention to go to gold would help the lira.

The tumble of two Middle Eastern currencies – the Turkish lira and Iranian rial – which are among the world’s worst performers this year, is predicted to continue as regulators fail to arrest their tailspin.

The lira, which has weakened by about 20 per cent this year, and lost around 70 per cent of its value over the past five years, continued its free-fall even on Thursday despite a central bank intervention by boosting interest rates.

“The reasons for lira’s woes are deep-rooted and cannot be overcome with a rate cut or other drastic measures,” a currency analyst pointed out, hinting that Turkey might be entering the grips of a full-blown currency crisis.

The plunge of the lira against the US dollar and other currencies is unstoppable given Turkey’s double-digit inflation and large external financing needs as the country grapples with widening current-account deficit, consistent rise in oil prices, and a pullout by Japanese investors, analysts said.

Khaleej Times – Woes of lira and Iran rial to persist (May 24)

Turkey and President Erdoğan can denigrate the US dollar as the reserve currency and may wish to navigate around its usage, but there is no replacement for poor economic policies, reckless social spending, and a corrupt government.

Just because a nation is building a gold stockpile does not mean it intends to go to some sort of gold backing. Moreover, the last thing Turkey and Iran wish to do is to go to a gold backing. Turkey’s huge external debt load precludes it going to any gold backing. Its debt burden would immediately become unsustainable. They would no longer be able to print lira to spend.

China does not wish to go to any form of gold backing. The Chicom government has built its economic powerhouse entirely on a fiat-based, centrally-managed, fractional reserve monetary system. The usage of fiat money was the centerpiece of this economic miracle and the People’s Bank of China is a privately-run central bank. China would only lose with gold-backing. It wants nothing to do with having the yuan as a primary reserve currency as there are too many requirements that would run counter to its internal growth agenda into making China a formidable military opponent to the U.S.

Where there’s smoke….

I find it peculiar that the anti-dollar, gold-promoting rhetoric of the alt-financial media dovetails perfectly with the propaganda emanating out of the media outlets in the Russian-Sino sphere of influence. This one aspect alone should force us to take pause as Russia and China are not our friends. We should not fall victim to the fallacy of opposition; the enemy of our enemy is not our friend.

Obviously, I cannot conclude definitively that there is a relationship with some of the alt-financial media and foreign propaganda outfits like RT, Sputnik News, and PressTV. But, if the popular personalities in the alt-financial media are gaining exposure on these propaganda channels that’s a clue that we should stay away from much of what they have to say.  Where there’s smoke, there’s usually fire. These outlets are preying on our predisposition to embrace the anti-US Fed confirmation bias. But remember, China and Russia’s central banks are privately-run as well. This conspiracy is much larger than most are saying.

Own gold for the right reasons….