If the US were to actually default on its debt, it would potentially risk a war with China whose national wealth would be wiped out overnight.
Gold will be brought into the monetary system at some point in the future and will then stay at a permanent higher level. The US does not need to outlaw private ownership of gold. That is idiotic thinking. What it needs to do is to only allow the price of gold to move to much, much higher levels. The reason that Roosevelt passed an executive order forbidding private ownership of gold in the US back during the Great Depression was because at that time, the US was on a direct gold standard domestically and needed the gold to ramp up the money supply. The first thing that then happened was they devalued the dollar or a better way of saying it, they let the price of gold move higher.
The US claims to have 8000+ tons of gold. We have no idea if that is true because we cannot audit our own gold. But assume that they did – they still have the damn stuff valued at an asinine price on their books. They need to simply allow the price to rise to an equilibrium value to balance the amount of liabilities. That would bring the total “Dollar value” of the gold that is held to a significantly higher level.
The World Bank President let the cat out of the bag last week when he said that gold was acting as a sort of defacto reserve currency. That tells us what the international monetary lords are already thinking.
When the Dollar loses its reserve currency status, the new reserve currency will be a unit made up of a basket of major currencies – with the yen, the euro, the yuan, the real and perhaps the ruble or even the rupie part of that basket. I am also confident that gold will be in the mix.
I do not know why we have so many people in the gold community who are constantly looking for a reason for gold to collapse in price. I have lived through and traded many, many bull markets in an assorted variety of commodities and I HAVE NEVER SEEN a market that has so many people who follow it and write about it who are ready to trash that market so quickly. It is almost perverse.
One more time – there is not a shortage of gold for the government to use in bringing a return of the metal to the monetary system. All that is needed is to let it rise to a natural price. That would be so staggeringly high that most will not believe it can happen.
Trader Dan
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