Posted by Francis Koh on 10 Feb 2015

Gold And Silver vs Fiat Money: It’s A Confidence Game

Dollars, euros, yen and others are fiat currency units based on confidence and debt (not assets) and are supported by government mandates that these pieces of colored paper and computerized digits shall be accepted as money.


But confidence in debt based currencies promoted by insolvent governments is clearly waning. The Russians and Chinese understand – they are converting dollars, yuan, and rubles into gold. Europe, Japan and the U.S. are “printing” more euros, yen, and dollars hoping that “extend and pretend” will give the politicians more years in office, another war or two, and more profits for the military contractors and bankers.

When propaganda and “statistics” fail, there are always diversions like bombs and invasions. (What happened to the gold from Iraq, Libya, and the Ukraine? If gold has little value, why did it disappear so quickly?)

What happens when another financial calamity occurs? Something major can and will occur in the next few years. Possibilities: derivative crisis in Europe (Greek bonds anyone?); tactical nukes in Ukraine; cyberattack on US, Japanese or European banking systems; fall of the Petrodollar; credit collapse in China; US T-bond crash; an audit of the gold in Fort Knox (just kidding); or many other possibilities.

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