Confiscation Anatomy – Part 2

Every few months or so a new farmer shows up here at FOFOA with a fresh vial of fox urine to scare the hungry bunnies away:

I hate to be the bearer of bad news but friends, we got problems! Phillips argues that we will face gold confiscation when a new currency is created to replace the US Dollar as the world's reserve currency and it will be backed, partially, by gold. He is probably correct. When FDR confiscated gold in 1933 the US was on the gold standard and in order to increase the money supply, the government needed more gold to allow them to create more dollars to fight the Depression. Since 1971 when we left the gold standard, there was no particular benefit for governments to own gold since gold was not needed to back a currency. But everything changes if a new currency is issued that IS GOLD BACKED."

If gold is confiscated, how will it affect FREEGOLD?

FOA had a good analogy to describe these Chickens Little. He said they were running forward while looking backward, and that they would surely run into something they didn’t see coming. That something being Freegold, the end result of an internationally induced movement away from using the US dollar as the global reserve currency. It’s hard to see (understand) Freegold coming right at you while focusing backward on the gold standards of the past and almost a century of dollars held as international banking reserves.

I call these guys Chickens Little because there are a couple more parallels with the Chicken Little fable. There’s Foxy Loxy, the unscrupulous fox that uses the fear spread by Chicken Little to lure the scared animals into the “safety” of his lair where he promptly eats them. Foxy is the financial advisors and “gold product” sellers that use the confiscation scare to sell you “gold products” with, sometimes, 60 times the markup of regular gold bullion. And of course there’s the lesson taught by the Chicken Little story; the necessity for careful deductive reasoning.

1933

Looking back to 1933 (but not running forward while doing so), we can see that a shortage of money existed at the time. This is what deflation is often called: “a shortage of money.” In a money shortage, the service of existing debt becomes more and more burdensome as debtors compete for scarce money to pay their creditors, often defaulting in the process. You also see falling consumer prices in a money shortage because products, like debtors, must compete for the money. And these falling prices deflate the profits of businesses that make the products forcing layoffs and downsizing, further burdening the – now unemployed – debtors.

Of course falling prices can be a good thing if you’re not in debt. Much of the 19th century was characterized by robust industrial and economic growth concurrent with consumer price deflation. This is when the economy is growing slightly faster than the money supply is expanding and/or circulating. In a healthy economy without too much debt this slight deflationary tension is a very positive thing.

But in 1933 it wasn’t. And when you’re the one running the global gold standard scheme, it turns out that the printing press is no solution to a money shortage. Prominent Swedish banker Marcus Wallenberg said as much in this 1957 Time Magazine article, The Capitalist Challenge: THE SHORTAGE OF MONEY. “Cranking up the printing presses is no solution, says Wallenberg. It would simply cheapen currencies.”

What FDR faced was a GOLD shortage! Not a dollar shortage. A REAL MONEY shortage! And as political administer of the global gold standard and the bank reserve fiat currency, his solution was to outlaw “real money” domestically, effectively eliminating the domestic money shortage, and to raise the official stockpile needed for servicing the “REAL MONEY shortage” internationally. He did this by calling in most of the circulating domestic US gold currency and melting it down.



And then, in January of 1934, with the stroke of a pen, he increased the US gold hoard by another 70% (in US dollar terms), thereby eliminating the international money shortage.

So he stole some gold from the US, and the rest from the rest of the world by devaluing the dollar. All to restock the gold standard vending machine.

This confiscation was really more of a forced monetization (sale) of gold assets, and a demonetization (melting) of gold coins. What made it particularly nasty was the 70% revaluation of the gold right after the forced sale. As gold was demonetized domestically, the citizens were forced by law to keep their tender legal by exchanging it in form.

But the people were allowed to keep up to 5 ounces in gold bullion or coin per person, in addition to their collectible coins and gold jewelry, even after the “confiscation.” So a family of four could keep at least 20 ounces of gold. If they had more than that it had to be sold to the government at the going price (which was raised AFTER the forced sale!)

Another nasty part of the “confiscation” was the enforcement clause that called for a fine of $10,000 ($170K in today’s dollars) and/or 10 years in prison for people that refused to turn in their gold. Of course not one single person suffered this fate, but the threat alone was (and still is) repulsive.

As it actually turned out, most of the gold collected was in the form of certificates, bullion and coins deposited and circulating in the banks. Many citizens who owned large amounts of gold quickly had it transferred to countries such as Switzerland before the deadline. And few in the general population had more than the five ounces to turn in.

In fact, many people turned in their last ounce even though they could have kept it, because they feared that it would no longer be legal tender and would therefore be useless. They failed to see how their gold could be worth more as a physical holding, a wealth asset, than it had ever been as a transactional currency. So they turned it in for $20. In total, only about 500 tonnes were “confiscated.”

Only one man was charged under the presidential order for not turning in 5,000 ounces of gold (worth $103K at the time). But the case was later dismissed and his gold was forcibly sold to the government. There were a handful of other cases through the following years in which someone was prosecuted for hoarding gold. In one case the hoard was 10,000 ounces! But those other few prosecutions were all for tax evasion or unrelated charges, not the “confiscation order.”

As it turned out, incredibly, FDR’s game-changing move seemed to cure the money shortage problem, at least temporarily. In March of 1933 the plunging CPI essentially “turned on a dime” and began to rise.


But here’s the thing. It wasn’t gold that caused the money shortage. There is no shortage of gold at the right price. There is only a shortage of gold when it is confined at a FIXED price.

So it was the US dollar’s fixed relationship to gold and the dollar’s use as an international bank reserve, equally interchangeable with gold, that caused a “shortage of REAL money.” And as we’ll see, this would happen again and again.

FDR’s confiscation and revaluation of gold did not increase its use as money as the solution to the money shortage. What it did was increase the percentage of the official US gold hoard as a portion of total US reserves to a level that would sustain centralized balance of payment clearing for a few more decades. In essence, it restocked the one-way gold market known as the international gold exchange standard. Gold is always a one-way flow (out) when the price is fixed. That’s why to get any “in-flow”, you have to force it!
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Sidebar: I am certainly not defending the actions of FDR. They were obviously hideous. But I am making the point that it is extremely important to view history as objectively as possible when deducing the future. Otherwise you inadvertently end up applying inductive reasoning, which leads to qualitatively different conclusions than deductive logic. Chicken Little used inductive logic.

Here is an example of inductive reasoning/logic:

1. All of the swans we have seen so far are white.
2. Therefore, all swans are white.

It is a form of logic that allows for a false conclusion even when the premises are correct.

Now here’s an example of deductive reasoning:

1. All fiat currencies are eventually worth no more than toilet paper.
2. The dollar is a fiat currency.
3. Therefore, the dollar will eventually be worth no more than toilet paper.

The difference is that deductive reasoning presents a conclusion that must necessarily follow the set of premises. Inductive reasoning, the kind that leads to fears of confiscation, does not.

I always try my best to engage only in deductive logic, because I don't like surprises.
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In hindsight, if FDR had instead declared the US gold window to be a two-way (buy and sell) physical gold exchange, open to all, not at a fixed price, but instead at a global market-discovered floating gold price, the economic and monetary results would have been the same, only without the nasty confiscation and repulsive criminal penalties… and it would have been perpetually sustainable.

The difference is that this act (had it even been considered) wouldn’t have had the same degree of perpetual deficit enabling/exorbitant privilege granting effect on the US dollar administrator. This is important because you can’t force the world to grant you perpetual deficits and exorbitant global privilege. It must be “the lesser of two evils” under consideration. Once it becomes “the greater of two evils,” it will end one way or another.

1971

Normally, a gold revaluation would be a dreaded mea culpa for a politician like FDR, something to avoid at all costs! But what made 1933/34 politically palatable was that it could be blamed on, well, the depression. But over the next 37 years there were no depressions to be found. And while a gold revaluation/dollar devaluation was warranted (and needed) a few times along the road, no politician with the necessary fortitude ever stepped up to the plate.

Then came Nixon.



Did you catch that? Yeah, he blamed it on “the speculators!” So much for fortitude.

So what led up to Nixon closing the gold window? Well, like 1933 it was another money shortage. I summed it up with this quote from Lamfalussy in "Gold: The Ultimate Wealth Consolidator"…

In 1969, shortly after the collapse of the London Gold Pool and the devaluation of the pound sterling, while the Bretton Woods gold exchange standard was imploding, Alexandre Lamfalussy gave a speech at the IMF titled The Role Of Monetary Gold Over The Next Ten Years. In it he addressed the fact that gold, being of relatively fixed supply, when also fixed at a specified par (price) with the inflating currency, automatically disappears as a source of new international liquidity. Here is a short excerpt:

"The striking fact apparent from this Table is that over the last ten years, gold has practically no longer contributed to the growth of international liquidity. In ten years, total foreign reserves rose by nearly 19 billion dollars; the greater part of this increase -- some 14 billion -- was due to increased holdings in foreign currencies, whereas the increase in the reserve positions with the International Monetary Fund was about 4 billion. The increase in gold stocks was less than one billion; in fact, there was a decline between 1963 and 1968 [thanks to the London Gold Pool]. Consequently, the share of gold holdings in total reserves, which was 66 per cent at the end of 1958, fell, to 51 per cent at the end of 1968.


"It is therefore right to say that over the last ten years and in particular since 1963-64, we have witnessed a gradual decline in the role of gold as a means of reserve and its complete disappearance as a source of new international liquidity. At the same time, the mechanics of the gold-exchange standard have ceased to function: the creation of reserves by the spontaneous holding of dollars or Sterling has come to a halt and has been replaced by the creation of negotiated reserves."

So this time it was more clearly just a gold shortage. And it was really, quite obviously, only a shortage of gold at the US Treasury gold window. (Remember, there is always plenty of gold at the right price. But there is NEVER enough gold at a fixed price.) And you see, the whole world was trying to buy gold at this particular window because it offered the amazingly low price of only $35 per troy ounce.

Certainly no one was at this gold window trying to SELL their gold to the US Treasury for $35/ounce. Why would they do that when they could sell it on the open market for $44/ounce? This is why gold is always a one-way flow (out) when the price is fixed. And it’s why, to get any “in-flow” of gold at a fixed price, you have to force it!
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Sidebar: The following quote is from ORO, one of the brightest hard money advocates that faced off with FOA. I think it sums up the flaw in hard money thought with one sentence: “In short: for a monetary system to work, someone, somewhere, must be able to exchange the currency for gold AT A FIXED RATE. We call this parity.” If you can detect the flaw in ORO’s statement you are well on your way to a surprising revelation.
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So why didn’t Nixon just force an inflow of gold like FDR? Well, for one thing, US domestic gold had already been demonetized, so there wasn’t any circulating gold currency to seize from the banking system like there was in 1933. So instead of trying to REPEAT the step of his predecessor, for which there was no rhyme or reason, Nixon took the next LOGICAL step following the direction set by his predecessor. He removed the NEED for a gold inflow. He closed the gold window.

Again, in hindsight, Nixon could have allowed the price of gold at the window to float with the market that was already pricing it at $44. Eventually the one-way outflow at the Treasury window would have stabilized at the price of golden equilibrium and the system would have become stable and sustainable for the first time in decades (if not centuries). But alas, he did not.

2010

The gold window of Nixon’s era was similar in many ways to the modern COMEX. It lent support to the illusion of a strong dollar (measured against gold) by providing a visible outflow of physical gold to certain parties in exchange for paper gold contracts (US dollars) that vastly outnumbered the physical ounces in the vault.

When global faith in this system started to wane in the mid-1960’s driving up the price of gold outside the system, official CB gold was deployed into the marketplace surreptitiously through the London Gold Pool. This was an effort to enhance the illusion of plentiful supply, both in London and through the US gold window. Ultimately this effort was abandoned in 1968 when some of the European central banks started taking in (exchanging their dollars for) gold.

This is not unlike what we have witnessed since the 1999 Washington Agreement to limit gold sales from European central banks. Since then, official gold sales have declined until last year when the trend reversed and the CB’s showed a net intake.

The WAG was a portent to the bullion banks in the same way the collapse of the London Gold Pool was to the US Treasury. In both cases it was a warning from the European CB’s to the Anglo-American paper gold printing machine to reverse the acceleration of fractional paper issuance or face the consequences of a REAL MONEY shortage.

And now that we know the bullion banks responded to their 1999 prodroma the same way the US Treasury did in 1968, by cranking up the printing presses, we can fully expect a similar result on the COMEX as we got with the gold window in 1971.

And using this analog as a roadmap, we can logically deduce some of the necessary and inevitable consequences, including the probability of an official “confiscation.”

The Future

In order to logically deduce the future we must first understand the past. And the applicable history here begins in 1922 when dollars were first accepted internationally as official bank reserves, equal to gold.

After 1922 the US slowly discovered that it was possible to run a perpetual trade deficit with the rest of the world as long as it had enough gold to trade with the few bankers who preferred heavy gold reserves to light and less filling paper dollars. This meant that the US economy, you me and the guy next door, could, in aggregate, import a higher value of goods from overseas than we manufactured here and shipped back to them.

In other words, unlike everyone else in the world, we would never face a balance of payments crisis because we could buy foreign goods with our own currency. We didn’t have to exchange our currency for that foreign currency in order to import stuff, a process that normally would have put pressure on the dollar to either devalue or increase real goods exports whenever a trade deficit went on too long.

This is the very definition of the “exorbitant privilege,” a term coined by the French in the 1960’s as the Bretton Woods system was starting to show a few wrinkles. And it can only apply to a national currency in use as a global reserve. It cannot apply to regional reserve currencies or supranational currencies.

As time went by, the US federal government also discovered that it had the ability to run a perpetual budget deficit in its own finances. This was an unexpected result of the perpetual trade deficit. As net goods accumulated in the US economy, net dollars necessarily accumulated in our trading partners’ central banks. These dollars had to go somewhere. And as it turned out, a lot of them were given to the USG in exchange for the rights to the future tax revenue of its citizens, a no-brainer swap for any short-sighted politician.

And the troglodyte (un evolved, undeveloped, simplistic) vision of a future US gold confiscation put forth by the Foxy Loxys and Chickens Little flows from a poor understanding of how these things (described above) actually work. And it goes something like this:

When the dollar loses its global reserve status TPTB in DC will lose their blank-check funding and will have to start paying for essentials like oil for the US war machine with gold from Fort Knox. This will quickly deplete the remaining US stockpile of gold and the USG will obviously fall back on its old habits like seizing its citizens’ gold to replenish the public purse.

This “early man-ish” view of reality ignores not only the way things actually work, but also logic, history and facts.

I have briefly addressed some of the history above. Now let’s hit a few of the facts.

Fact: Back in 1933 when physical gold was still plentiful within the system and circulating through the banks as a currency equal to dollars, the USG was only able to “confiscate” 500 tonnes. There were no “jackboots” going door to door grabbing gold coins. This has never happened. And it never will outside of total war where pirates (soldiers) grab coins for their own personal bounty.

If the USG (poorly/suicidally) decides it wants to steal some gold in the future, it will ONLY go after soft targets, like bullion bank accounts (most probably unallocated since there is no direct claim) and funds (like hedge funds, ETF’s, and other publicly reported/traded large hoards). It will also go after the gold mines to which it issues digging permits and therefore retains control. And it will not outlaw the physical gold trade. More on this later.

In the same way that bankers fear bank runs more than anything, governments and politicians fear civil unrest more than ANYTHING ELSE. Everything they do is to keep the public calm and sedate. And there’s no faster way to arouse your worst nightmare than ordering your underpaid forces to turn on their friends.

At the peak of the US-administered gold exchange standard, the US had 22,000 tonnes of physical gold. The 500 tonnes “confiscated,” at a time when it was easy because gold was circulating through the banks and could simply be swapped for paper dollars, was only 2% of that hoard. Any “jackboot confiscation” today would net much less than that. And it would carry significant (deadly) political risk.

Additionally… having New York City on US soil, those fancy funds holding OPG (Other People’s Gold) make a much softer target.

No. The US will NEVER confiscate physical gold directly from its citizens again.

Fact: There is plenty of gold at the right price. At the right price, there is no shortage of gold. At the right price, there is no profitable risk/reward calculation under which any major global entity would decide to steal someone else’s gold, especially its own populace. The risk would be much greater than the potential reward.

And if that “right price” is a FREE price, a FLOATING price, then there will NEVER be a shortage of gold to keep the gears of global trade lubricated. And as long as they are lubricated the USG will have international trade that can be taxed.

Fact: There can be no “money shortage” in a purely symbolic fiat currency regime that doesn’t fix its currency to gold. There can only be too much money, and/or a shortage of “asset valuations” if that currency’s debt-assets are mismanaged.

As I wrote in "Inflation, Deflation, Snails and 30 Days":

Just my two cents on Inflation/Deflation. If I buy a house on a street with 5 houses for $100,000, then later someone buys a house for $200,000, all of a sudden, all 5 houses are worth $200,000. My net worth went up $100,000. The street's net worth went up $400,000. But 400,000 dollars were not created. Asset inflation happened.

Asset deflation is happening now, which is the reverse effect. If I bought a house for $500,000, and now someone sells for $250,000, then all the houses on the street are now worth $250,000. So the net "loss" to the street is $1.25 Million. That is deflation.

This is happening with all types of assets, things that were assumed to be good investments. But as we bail them out, we take some of that phantom net worth, like the $400,000 in the first paragraph, and make it real, spendable cash.

That cash is no longer going to go into bad "assets" that were previously thought to be good investments, it is going to go into real things, like gas, oil, gold and milk. And because it is newly printed spendable cash, it is going to bid against the previously existing spendable cash. That bidding process will cause the cost of real things to go up. That is inflation.

So we can have both asset deflation and real world inflation at the same time. Necessities will cost more. Luxuries and Mortgage Backed Securities will cost less.

Fact: The purpose of the confiscation and revaluation of gold in 1933/34 was to weaken the US dollar; to stop deflation and to cause inflation. The confiscated gold was then used to pay off a few of the trading partners with a balance of payments surplus. This cycling of real goods into paper currency into gold only happens centrally (at the CB or Treasury) while the reserve currency is functioning.

A country or zone’s total reserves include international liquidity held anywhere within that zone by any entity, public or private. The official reserves are only part of the total reserves. The official reserves are the first line of defense in a balance of payments emergency. The total reserves are the last line of defense. The official reserves are effective in defusing a crisis as long as the international fiat currency system is still functioning. When it stops functioning, there is no longer a mechanism for funneling the international demand for international reserves into the central authority. At that point the demand must be met “where the rubber meets the road.”

The “gold liquidity” described in Julian Phillips’ piece is paper gold liquidity. He seems to be suggesting that countries running a trade surplus still prefer Treasuries over paper gold in a balance of payment function. This is the centralized decision of the CB’s. These CB’s still have this decision-making ability because dollars are still flowing to local exporters and then working their way through the local banking system into the CB. But when the dollar loses its global status this process will end.

Exporters “where the rubber meets the road” will require either their own local currency or acceptable international liquidity which at that time will be physical gold. This is the automatic and uncontrollable decentralization of the payment balancing mechanism. And this is the major flaw in most of the economic thinking today.

International liquidity schemes like the SDR only function at the centralized CB level. They still require a functioning international transactional currency like the dollar or the euro to cycle control of reserve composition from the marketplace back into the central authority. Without this mechanism the reserve par excellence will be decided by the marketplace. So let’s look at the possibilities that could unfold.

Possibility 1: Physical gold becomes the only acceptable international liquidity for a while. This is decentralization in extremis. And this is Freegold in extremis. It would likely be a transitory stasis followed eventually by possibility 2 or 3.

Possibility 2: Only local currency is accepted in international trade forcing all trading zones into a foreign (FOREX) currency exchange like I described in "Bondage or Freegold". But without the anchoring metric of a global currency like the dollar, this exchange would have to find a market-driven currency price discovery mechanism. And the logical (market) winner is the price of physical gold trading in each currency inside that currency’s zone to set the value of that currency.

This would be an extremely reliable and relatively foolproof mechanism due to the currency arbitrage that would happen whenever gold was underpriced in a currency. For example, if the US tried to keep the price of gold down, all the gold inside the US would flow out of the zone (purchased with higher offers). And if the US tried to prevent this outflow of gold, its currency would be ostracized on the global exchange. This would make it extremely difficult to trade for ANY real goods, including oil.

So the US will have the incentive to encourage a vibrant physical gold market within its zone with little or no restraints (like a VAT or sales tax) to increase the credibility of its printed fiat currency on the global FOREX exchange. If you add a VAT to gold it simply raises the price of gold in your zone relative to other zones without a tax, which lowers the value of your currency on the global exchange.

Possibility 3: A new international currency that embraces a free floating gold price for maximum international liquidity (no more money shortages) will replace the dollar when the dollar finally fails in its role as international liquidity provider par excellence.

This is what FOA meant when he wrote:

All of the many items ThaiGold posted today about government control of gold pertains to past policy in a different ""gold is official government money era"". The use of gold through that era is riddled with failure. In the future (see my latest Gold Trails) currency reserve competition will require a country to keep gold free for private trade. Making price discovery a physical affair only. This will come about in a completely different atmosphere from today where gold is still manipulated as a world "official currency" asset. Mostly now manipulated by a failing IMF/dollar system. The next reserve currency, the Euro will not compete with gold and will require it to find its FreeGold value level. The US will have absolutely no incentive to controlling gold to defend its currency in that era.

Price discovery will be “a physical affair only” because the dollar’s reserve status and the paper gold market are like conjoined twins sharing all vital organs. Their fates are inseparable. Once one of them goes, so does the other. And at that time there will be no incentive to control the price of gold like there was in 1933. In fact, the opposite will be true. There will be the ultimate incentive all over the planet for physical gold to quickly find its equilibrium price in each zone’s currency so as to alleviate the shortage of international liquidity that will follow the dollar’s demise as internationally liquidity provider par excellence.

At the right price, there is plenty of gold. When there is plenty of gold there is no good reason to seize gold. And with the right currency, there is plenty of money.

Sincerely,
FOFOA

See also: Confiscation Anatomy - Part 1

Postscript

Yes I am passionate about this gold confiscation issue. That’s because I view it as more insidious than even the mainstream paper-pushing BS we see every day on CNBC. This issue is targeted at those who are already so close to securing their future. And it is used to cut them off just before the finish line. As you can tell, I view those that spread this confiscation argument as belonging to two general groups; the Chickens Little and the Foxy Loxys. And within these two groups are five sub-groups:

Chickens Little

1. Individual gold bugs who tend to be genetically predisposed to paranoid psychosis.
2. Published gold analysts who insist on running forward while looking backward.

Foxy Loxys

1. Gold sellers that use this argument to sell more expensive gold numismatics to customers that have no business investing in numismatics, which requires years of experience to do well.
2. PM sellers that use this argument to steer customers into silver, platinum, palladium, rhodium or mining stocks instead of gold bullion. Akin to advising you to invest in socks, leg warmers, knee pads, garters and shoe factories when what you really need is something to protect your feet.
3. Gold haters that use this argument to scare people away from physical gold.

I find all of the above despicable, even when they stem from ignorance.

And I do realize that there is a whole ‘nother angle to this confiscation issue: confiscation through taxation. Not gonna happen. Not the way you think anyway. The phase transition/lightning (Freegold) revaluation cannot be taxed efficiently. And if it can’t happen efficiently, ain’t gonna happen. The risk/reward calculation facing any taxing authority will be as clear as this blog. 95% of the global private physical gold stock has no recorded cost basis on which to collect a “flash revaluation” capital gains tax. It is impossible. Only paper gold has such a widespread cost basis. And you can’t really collect taxes on a capital loss, now can you? But that is for another post. Perhaps it will be part 3.

I apologize if any of the above offended anyone. That was not its purpose, even though I used some biting analogies. I just think it’s important that certain normally private Thoughts are spoken out loud at least once before it’s too late. And IMO, it’s almost too late.



Have you ever been close to tragedy
Or been close to folks who have?
Have you ever felt a pain so powerful
So heavy you collapse?

No? Well...
I never had to knock on wood
But I know someone who has
Which makes me wonder if I could
It makes me wonder if
I never had to knock on wood
And I'm glad I haven't yet
Because I'm sure it isn't good
That's the impression that I get.

Have you ever had the odds stacked up so high
You need a strength most don't possess?
Or has it ever come down to do or die
You've got to rise above the rest?

No? Well...
I never had to knock on wood
But I know someone who has
Which makes me wonder if I could
It makes me wonder if
I never had to knock on wood
And I'm glad I haven't yet
Because I'm sure it isn't good
That's the impression that I get.

I'm not a coward,
I've just never been tested
I'd like to think that if I was, I would pass
Look at the tested and think there but for the grace go I
Might be a coward,
I'm afraid of what I might find out.

I've never had to knock on wood
But I know someone who has
Which makes me wonder if I could
It makes me wonder if
I've never had to knock on wood
And I'm glad i haven't yet
Because I'm sure it isn't good
That's the impression that I get.

Never had to, but I better knock on wood...
Cause I know someone who has
Which makes wonder if I could
It makes me wonder if I

Never had to, I better knock on wood...
Cause I'm sure it isn't good
Am I'm glad I haven't yet...

That's the Impression that I get.

FOA: It was pointed out that one need not invest in gold to negate the effects of inflation. All we have to do is buy real things that increase in currency value faster than the loss of buying power. True, in that light gold is but one of many things that should keep us at least even. However, we are in the process of experiencing a "breakdown" or at the very least a major change in the entire financial system. Not just an ongoing inflation during a phase of a longline expansion. Our goal for certain individuals, is to show this dynamic at work as the real life events unfold and document its progress. For private individuals that read these pages, historical purpose and present day logic will build further support for the holding of physical gold as these events reveal the true season. In this light I offer Another’s direction given some many years ago, “in this special season, let others buy things to hedge their present worth, let us buy gold in support of our future generations.”
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UPDATE:
Someone asked me to post the answer to Sidebar #2. Here it is...

“In short: for a monetary system to work, ANYone, ANYwhere, must be able to exchange the currency for gold AT A FLOATING RATE. We call this Freegold.”

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