Do we really honest-to-God no-fingers-crossed cherry-on-top believe that the powers-that-be will simply allow us to mosey up to the cashiers cage and redeem or convert our Gold for whatever monetary unit reigns supreme or is created [should our current financial system and currencies collapse? As such,] IF there comes a time when the best move forward is to sell most of our Gold and switch to another asset class, one more likely to survive the transition intact, will we be able to see this as obvious and a no brainer? [Let me explain what could well happen and the effect such a development would have on all things Gold.] Words: 3037
So says Cognitive Dissonance (www.zerohedge.com/blogs/cognitive-dissonance) in edited excerpts from his original article*.
Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The report’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
The article goes on to say, in part:
This essay is directed towards those solidly middle class people who are converting their ‘wealth’ into Gold and Silver, even going so far as to cash out their qualified retirement accounts (IRA’s, 401(k)’s and qualified annuities) or mortgage their property in order to increase their Precious Metal stash. [This essay has been written to counter] the expression of avarice and lust, of rationalization and justification, of outsized egos and very little perspective. It has been written to ensure that we do not become so blinded by the Golden glow that we become nothing more than obsessed slaves kneeling in prayer to the almighty God of Gold and ignoring or dismissing the distinct possibility [that, should push comes to shove,] the governments of the world will confiscate our Gold.
The Case for Future Confiscation of Gold
I see and hear a great deal of cognitive dissonance among those who promote Gold as the way to salvation, all the while ignoring or dismissing the idea of governmental confiscation of said Golden chariots. It’s not like doing so would be totally unprecedented in the US since President Franklin Roosevelt’s April 5, 1933 Executive Order 6102 did precisely that, promptly followed by a revaluation of said confiscated Gold…
What everyone seems to forget is that the United States is not the only country bleeding from every orifice while simultaneously ripping open new ones. This is a global party we’re throwing here and everyone who is anyone seems to have accepted the invitation, something many are beginning to regret as they desperately click the ‘un-send’ button…[except] the blue blood families [who] play all sides against each other [and] then turn things around and transform former arch enemies into lifelong best girlfriends [which is] the only way this global Ponzi could have progressed to this point in the collapse countdown.
Who in the world is currently reading this article along with you? Click here
I guess my point is simple. Today’s (global) disaster isn’t Argentina from 1989-1990 and again in 1999-2002 nor is it Zimbabwe from 2004-2009 or even the Weimar Republic from 1920-1923. While the rest of the world was also (more or less) suffering during those turbulent times, Argentina, Zimbabwe and the Weimar were islands of disaster in a world of relative stability.
Remember that almost by definition disaster recovery requires relative normalcy somewhere nearby as the staging area from where you send in the life lines and supplies, as well as a place to evacuate the wounded…but what happens if the entire country is simultaneously ravaged by natural (Ponzi) disaster? Where does the help come from then? Not from overseas because they are running the same Ponzi as we are here so, if we go down, they go down just as hard if not harder and vice versa.
One of the staples of the Armageddon genre of disaster porn is the notion that, in a national/global disaster, there is no safe harbor from which to coordinate and launch the rescue ships. Thus everyone goes into survival mode and if you aren’t helping yourself then no one is. Social rules of order and decorum are quickly abandoned for survival of the fittest and suddenly it is game on Mad Max style. Ironically if you remember the original Mad Max movie, it begins shortly after a terrible global disaster. Max was one of several cops working with the ‘authorities’ in an effort to maintain some type of order in the rapidly decaying remains of society. It was all downhill from there.
In response to those who would disagree with my line of reasoning by saying, “CD, you can’t compare a global natural disaster, where there is infrastructure damage, to an economic collapse, where at least initially all infrastructure remains in place and functioning” all I can say is that I disagree. The active ingredient in my analogy isn’t the level or type of global devastation as much as the equality or uniformity of it.
External rescue requires a more or less untouched area that contains a surplus of resources, financial or otherwise, and the means to organize and deploy them into the underserved disaster area. Because the Ponzi disease is globally and uniformly distributed around the developed world, in the event of a total or partial collapse, essentially there are no substantial surplus resources that can be gathered and transported from one area to the next…[- other than] the people’s Gold which we’ll get to that in a moment.
So any rescue or recovery can only come from in-place assets and organized systems such as the existing military and governmental bureaucracy. Thus other than some shifting of leadership positions to create scapegoats and dispel slave anger, not much will change unless an armed and organized revolt is mounted. While that might eventually come about, it will not initially, thus allowing the military to disperse and dissolve any pockets of semi-organized resistance or even to prevent states from seceding so that they may create their own economic systems and/or preserve local and regional natural resources.
Anyone who doesn’t think martial law would be immediately declared and our remaining civil rights forcibly removed in the event of a partial or total economic/currency collapse has been brewing and taste testing their own brand of Kool-Aid. When order begins to break down, the existing power base WILL attempt to restore order and they won’t be gentle while doing so. For the most part the citizenship will welcome the intervention because they have not prepared for the chaos, having ignored all the warning signs because they relied upon their masters to protect them.
So once again let us circle back to the principal question. What will you do with all that Gold and how will you reintegrate it into any new currency system that is implemented? During the first few hours, days, even weeks after the partial or total collapse, on a local basis you will be able to use your Gold (and especially your Silver) in small increments to barter for the goods and services you need to continue to live but very quickly, most likely the same day of the collapse, the government will announce draconian banking, price, wage and possibly even barter controls and they will begin to implement unilateral decisions about what is needed where and when. If you have something the ‘greater good’ needs or wants and if others know about your good fortune, it could very easily be taken from you.
On a more practical basis, because the established control system will want to quickly put in place some type of replacement currency system, our Gold and other precious metals may actually escape any attempt at a quick governmental grab and go but within days, and at most a week or so, global decisions will be implemented (they have already been made) and, in my opinion, the priority will be to establish confidence in any new currency system or re-establish confidence in the old.
While one can’t know exactly how it will go down, considering that Gold and other PMs will probably have gone through the roof by this point, it is highly likely that Gold, along with other PMs or a basket of commodities (and possibly other new or old foreign currencies) will be used to back any new or renewed currency. The IMF’s so called Special Drawing Rights (SDR), essentially a global currency, is a perfect example of a cobbled together currency that might gain traction.
Now here is where I strongly suggest that, for several reasons, ‘they’ will feel compelled to confiscate Gold from the population…The principal psychological warfare technique they will us is to vilify and scapegoat those ugly Gold hoarders and evil speculators. There is no doubt in my mind that they will claim with absolute confidence, and with concocted evidence, that these evil Precious Metal terrorists destroyed the old system.
‘Truth’ will be immaterial at this point and actually counterproductive for those trying to beat back the resurgent Ponzi Hydra. Frightened people are not deep thinkers and they most certainly are not very reasonable. The emotional pain of collapse must be relieved, so any handy pain killer will be willingly ingested. History is replete with examples of this and a frightened and extremely angry slave population will gratefully latch on to the offered Gold hating piñata rather than soul search and examine their own role in the present disaster.
Depending upon the believability of various figures bandied about, less than one percent of the US population owns Gold as an investment (even less own the physical) and less than 2% own Gold miner shares. At the peak of the last Gold rush in the late 70’s and early 80’s I believe 8% of the US population owned investment Gold. Even if the present Gold love affair reaches that level of participation before the End Game commences, this group will still be a small minority and it will be very easy to turn the general population against them/us.
In addition, those who hold their Gold in bank safety deposit boxes or private vaults, at bullion banks or any other private, public or governmental storage facility will find that it will not be there for long. I suspect that the entities that own or control the facilities will be ordered to close their doors and to turn over the Gold. So even if we own Gold in ‘real physical’ fund companies such as Sprott, we will soon find that it isn’t available for withdrawal after the fall – and please don’t talk to me about the rule of law. We saw how the rule of law was respected when the US ran over the GM bond holders. Let’s get real here folks, under these circumstances the law is what they say the law is.
As well, country borders will essentially be meaningless because every modern country will be in the same predicament. So the smart play for the new political puppets will be to cooperate with every other country (even enemies) to re-energize the system as quickly as possible. The precious metal mining companies will probably be nationalized, even if that just means that all of the output from the mines will be directed to the vaults of the ‘host’ country. China is effectively doing this now. [the aforementioned being the case,] the only Gold you can count on is the Gold coins and small bars buried in the sand at the bottom of your fish tank.
Aside from the uncontrolled corruption and unrestrained fiat creation, if the old system collapsed because the general population lost faith in the financial system (ultimately the real reason behind any fiat collapse because it is not the unrestrained fiat printing, but the loss of public faith and belief the printing engenders, that destroys a fiat) and Gold in its role as the ultimate safe haven was the lightening rod that inflamed and focused that loss of faith, it will be incumbent upon the ‘new’ leadership to defuse and deflect any pockets of resistance to the new or reformed currency. By making a show of confiscating Gold ‘for the good of the people’ many non-Gold holding people will go along with the theft because it essentially helps pull their asses out of the fire.
In effect the reckless and imprudent will cheer on the confiscation because backing the theft of others increases the chance they will be rewarded, or at least not severely punished, for their bad behavior. Moral hazard works wonders for the general population as well as the too big to fail. Because the general population can (and will) be stampeded when the crisis gets ‘real’, this will allow the political puppets to set up tiered currency conversion systems and unfair Gold and other PM reintegration rules. The rich will get richer and the poor will……well, you know. We will hear a lot of crying by the rich and powerful about how they just can’t put their glorious talents to work unless they receive special ‘incentives’. I just can’t wait to hear the imaginative sob stories of the down and out crony capitalists…
Control of the System After Confiscation
1. I see Gold and PM dealers becoming highly regulated and required under heavy penalty of law to report any and all relatively large PM transactions, for example anything over two or three ounces of Gold, thus effectively cutting off Joe’s ability to feed his or her Gold back into the system and extract or convert the wealth they tried to transport from the old system to the new. It can be done, but only very slowly and at considerable time, money and labor expense. Most importantly, with no free floating Gold market to set realistic prices, we will once again be robbed in broad daylight. They don’t need to ‘take’ your Gold, just take its value through price controls.
2. I expect that one of the national and possibly worldwide changes that will be implemented after the collapse and rebuilding of the financial system might be mandatory electronic fund transfers for things such as paying taxes, utility bills, mortgage as well as insurance and/or rent payments, payments to any local, state or federal agency or contractor as well as any large purchases such as cars, homes, businesses or anything else above an arbitrarily drawn currency amount.
Once these rules and regulations are introduced into the system, most retailers will follow the lead and refuse most or all cash transactions, preferring to use lower cost and more efficient electronic transfers. Expect a higher price or penalty to use cash (which you received when you sold your PMs) to purchase just about anything. Remember that a vibrant black market can only exist if there is a way to launder the proceeds back into the main system or if there is a parallel alternative currency system that fits the needs of the local users…
Throughout history the key to forcing the public to accept new monetary and currency systems is to demand that all payments to the false sovereign master be made in the new script and/or using the new method of payment. This has the effect of forcing people to adopt the new system, thus validating it. Wide spread use by the general population for all their financial business usually quickly follows…This will have a two pronged effect on the system, washing out any chance of laundering larger quantities of our Gold by using it for large purchases and more effectively binding the indentured servant and wage slave to the new currency system. If the slave gets too mouthy and begins to complain, just cause a few problems with his or her electronic payment system and watch them quickly buckle. After all, we all have to eat, now don’t we? Never let a crisis go to waste, especially when you are creating it in the first place.
The Use of Silver Under the New System
I feel Silver will be more usable as an alternative unit of currency if this global collapse does transpire. Hopefully Silver is incorporated into any new national/global currency as part of its backing, for this will lend tremendous credibility to using Silver in alternative barter/currency systems.
Silver throughout the ages has always been used as money and not necessarily as a store of substantial wealth. This is why you might consider purchasing 1964 and earlier Silver U.S. coins, junk or not. It is important that we incorporate flexibility and diversification into our wealth transfer vehicles as this is the key to successfully crossing over. To assume, hope really, that our one and only method, that of Gold, will be successful is wishful thinking at best and foolhardy at worst. For the masters, Gold is a well known and understood escape mechanism and it will not be allowed to pass totally untouched. We must be different from the masses in order to survive while still being transparent enough that we don’t draw unwanted attention and that, in my opinion, is the more realistic path to dry land in this global disaster scenario.
The worst thing that you and I can do when preparing for tough times is to develop a severe case of tunnel vision and focus only on our Golden boat as the exit strategy. The bottom line is that we must try to own the same assets that will be owned and transferred by the financial elite and their henchmen and puppets. While one of those assets will most definitely be Gold, it will not be their only asset or their most valuable. While some of these elite alternative asset classes are out of our reach because of our much smaller stash – and there is little we can do to combat the planned inequalities that will be built into any new system – doesn’t mean we are helpless or that it is hopeless…
Tunnel vision can take many forms and can strike the best and the worst with the same crushing blow which means that if there comes a time when the best move forward is to sell most of our Gold and move on to another asset class, one more likely to survive the transition intact, we must be able to see this as obvious and a no brainer…[and not be] so blinded by the Golden glow that we become nothing more than obsessed slaves kneeling in prayer to the almighty God of Gold, seeing nothing but our beloved promised land. From my point of view our most valuable asset is, and will continue to be, an open and flexible mind.
Sign-up for Automatic Receipt of Articles in your Inbox or via FACEBOOK | and/or TWITTER so as not to miss any of the best financial articles on the internet edited for clarity and brevity to ensure you a fast an easy read.
This analyst sees the perfect storm of converging criteria almost perfectly timed and aligned with the 2012 election cycle. When the moment arrives, the financial earthquake will rapidly demolish the existing highly precarious financial system. Government will stand by helpless, unable to shield itself, much less its vulnerable citizens or private financial institutions from the tsunami of debt and currency destruction. 2012 is shaping up to be the blockbuster main event of the ongoing financial crisis. Massive amounts of new debt, vast quantities of additional digital dollars and the spark of higher interest rates will set off version 2.0 of the credit-driven financial implosion. Let me explain. Words: 1443
As economic and political matters become more desperate in the U.S., so will what the government considers acceptable. If a debt default cannot be engineered via continuous inflation as the Fed’s current money-printing is attempting to do, it will occur via a direct repudiation of obligations or a quasi-surreptitious one such the hypothetical one I present in this article. Here is… a look (not a prediction) at a series of not improbable events that could develop [and which] would change our economic world overnight[ – and your financial well-being too]. Words: 1365
A final or total catastrophe of the currency system will occur as a result of unlimited money printing that will lead to hyperinflation. Stock markets will benefit temporarily from this QE [but we expect that the] markets will fall 90% against gold in the next few years. The correction in the precious metals [will] likely [soon] be over and we should see the metals going to new highs in 2012. Words: 450
Everyone must be wondering where this “unprecedented global financial crisis”, (the World Bank’s words), is heading. What follows, for what they are worth, are my cogitations on this crisis. Words: 1641
The U.S. is headed inexorably toward a systemic failure, a complete and utter collapse of the financial system. TARP and all the other machinations have not improved the underlying insolvency of the banking system. They have, however, deferred a collapse and ensured that it will ultimately be worse. [Let me explain.] Words: 1385
I am increasingly confident that the consequences of fragile sovereign debt, precious metals market manipulation, insufficient physical supply, and the need for a safe haven investment refuge, will contribute to rampant price inflation and drive precious metals bullion and mining stock to a parabolic peak price of $10,000 sometime in 2012 or 2013 at the […]