"Et tu, Golde?"

The Recent Gold and Silver Selloff: There is gold news and not-so-gold news.

The gold news: If “the launch site for the silver rocket was moved from sea level to the top of Mt. Everest” as Ted Butler assumed on March 11, today we would be in Mad Max territory, Iceland would be Escape From Iceland and the inevitable collapse of our global consumer society would not be postponed until 2023.

Now the not-so-gold news: In March, Ted thought “Silver was a Still A Great Trade” because the rocket fuel has not been used up yet and in August when silver was 16.67 Julian D.W. Phillips writes in the Financial Times “the second half of this year is likely to be as dramatic as the first half but with a golden or silver sheen”. Add their voices to every other financial adviser writing the obituary of the dollar and you get precious metal investors who took their advise with a portfolio in the financial toilet.

So how do they explain the collapse of Gold and Silver instead of the dollar? They don’t.

I just received the latest Gold & Money report from James Turk: “In short, the gold mining stocks are a screaming buy but they might go lower. Nevertheless, my recommendation remains unchanged.  Continue to accumulate the stocks on my recommended list.”  Ted still says it is a crime but he is sure the  “ongoing crime is now intentional and not accidental” and in his October commentary: Given the recent sharp price decline (from 12.82) in silver and the strong dollar investment flows this year, those dollar flows will now buy a lot more metal.

Sheen, accumulate, buy.. with what? Going without one meal a day? If we weren’t fully invested before the launch we surely were on August 8.

Ted, David and Jim and Julian apparently are not familiar with Ney’s first law of financial markets: Gold and silver do not move up or down in price because you buy or sell; you buy or sell because the price of gold or silver moves up or down.

However the four of them will agree the sell-off has been so severe that it demands more than just simple answers. It requires that we go back to square one; back to the start.

And where would that start be? What about 1910 when the Federal Reserve Act gave birth to our consumer society and fiat currency on Jekyll Island.
Behind every consumer society is the reality of a credit based monetary system and a fiat currency.  There is not enough sound money, i.e. not enough gold and silver in the world to back the trillions of dollars required for the industrial revolution and the global consumer economy. And without the FED manipulating the paper price of gold and silver to discourage buying and hoarding there would be no illusion the trillions of pieces of paper they printed were “money”.

Got House, TVs, DVDs and SUVs? Thank the puppet masters because as Ron (sound money) Paul puts it,  “our current system gives us a free ride, our paper buys cheap goods from overseas, and foreigners risk all by financing our extravagance”.  

A society that values gold and silver doesn’t take Vacations and buy all that cheap “stuff” from China... they are down on the farm, and that just might be good for all of us.