Mike Ruppert on gold...

Discussion in 'Financial Cents' started by Tango3, Jul 14, 2010.

  1. Tango3

    Tango3 Aimless wanderer

    collapsenet...as an ardent supporter of the "potatos over metal" thinking I am officially ":oops:"


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    Michael C. Ruppert​
    © Copyright 2010, Collapse Network, Inc. – All Rights Reserved​
    July 9, 2010 – I have never said that buying gold was my primary strategy for surviving the collapse of human industrial civilization. My primary strategy for surviving is… SURVIVAL. I have never said that owning gold was the only thing that one should do to prepare. And I have just been amazed at how hard it seems for many to understand the most-simple fundamentals of gold. But that’s not surprising in a world where all the power of the media and public education have been focused on making people believe they can’t understand it. -- So I’ll try to explain gold the same way I explained derivatives in the movie.

    To put it simply: Gold is the bridge between the Old Infinite-Growth Paradigm and a New Paradigm which has not fully revealed or defined itself. That is absolutely not to say that in order to make it (or to give one’s children a chance of making it) one must own gold personally. Many are too poor to buy gold now. Yet they still have every reason to hope that those who understand the issues, who have vision, and who are committed to establishing a resource-based economy do. Otherwise the only people having wealth coming out of the Transition Phase will be the bad guys. And if that happens, then bad guys will get to define the New Paradigm because the Golden Rule will still be in operation: He who has the gold makes the rules. But rules will be made locally. Globalization is dead. It’s that simple.

    I’m not talking at all about how a stable human economic paradigm should look or function when the dust settles. I am not arguing that gold should be its foundation either. That’s not for us to decide. Whatever economic model emerges will have to be built and defined by the people remaining alive, with what they have left to work with, when things become stable again. Good guys should give a little thought to leaving something behind for their offspring as well.
    I am talking here only about how to survive the Transition Phase of collapse which may last between 20 and 50 years wherein each succeeding year is worse (and more unstable) than the one preceding it. I am talking about surviving a period of massive dislocation and instability that will take many, many lives – wherein fiat currency becomes progressively useless but remains essential because nothing has emerged to replace it.
    During the Transition Phase the only rules that will matter will be those in place in an ever-shrinking radius around where we live. Gold is a universal language, already in place and universally spoken.
    I am very sorry if you are too poor to own gold. I have none left myself, having had to sell all of mine to fight very nasty political persecution by the state of Oregon in 2008 and 2009. (We’re taking that to the Oregon Supreme Court where we will win. If not, we’re going to the U.S. Supreme Court.) -- But because some of you can’t buy gold that doesn’t mean that no one should. The bad guys are buying gold left and right because it will preserve their wealth. In the meantime, the naïve, gullible and brain-dead who oppose infinite growth without having something functioning in place only accelerate their own demise by not owning it.
    What is vitally important is that those who can afford it buy it. Then there will be people with the right values about our relationship with the earth who will be able to provide jobs and stability for people converting to a new, balanced paradigm that we hope replaces infinite growth on the other side of collapse. I’m not saying that we should continue mining gold at greater insult to the earth. We work with what’s already out of the ground.
    Following are excerpts from a dialogue I had recently with a good friend in northern California on the subject. I had to keep reminding myself that given the centuries of effort to hide simple truths about how money really works it is no surprise that what is really simple seems hard to understand. The work I have put into this really does make it simple. So I’m posting this in an effort to not have to address the same misconceptions over and over and over again.
    [Begin edited excerpts…]
    …Balance is always advisable. I've never said do nothing but buy gold. NEVER. Your so-called expert is absolutely wrong on one assumption, that there will be a flood of metals from private citizens that lowers the price in a significant way (permanently)... No way! Not too long ago a foreign central bank dumped 150 metric tons of gold on the market. The price dipped by around $40 to just under $1,000 for two and a half months (Dec 09 - March 10). Look at where gold is today. Since 2008 those who had gold jewelry have been dumping it hand-over-fist to pay the mortgage and credit cards. It's bs to think that with more than a MILLION metric tons of gold out of the ground, the sale of 5 to 20 metric tons from private hands is going to make a difference in the long haul.
    Price fluctuations occur all the time and always will. Every time gold hits a new high there's a profit-taking selloff that lowers the price maybe $30-60 but then the next rung up the ladder as fiat currencies flounder is $100 to $200. Soon the rungs will be $500 or $1,000 apart. $1200 looks to be a very solid floor for gold now.
    Even in your question you structured the conditions based on a premise that things will be one way one Monday and completely different (and stable) on Tuesday. Nonsense!
    Look, right now if you go to a store -- which we all have to do -- there is only one form of money that is recognized as legal tender for all debts public and private. That's U.S. Federal Reserve notes. Sure deflation is going to hit but that will be short-lived. It's hyperinflation that destroys wealth (the ability to buy things). Let's take a mild case of hyperinflation at 50% per year. In that case, what cost $1,000 in 2010 costs $1,500 in 2011 and $2250 in 2012).
    Hyperinflation could easily hit above 200% per year as it did in Zimbabwe. So, let's say you have $100 grand stashed in dollars (lucky you). Then hyperinflation hits (probably in 2011). Suddenly your $100,000 cash is worth only $50,000 in terms of buying power. But if you have gold, it always (ALWAYS) offsets inflation so gold may go to $10,000 or $15,000 an ounce. I've seen predictions from market analysts as high as $30,000 an ounce. We’ve posted those stories right here on Collapsenet. If you had 80 ounces of gold at 50% inflation and gold responded by going to $5,000, you would have $400,000 instead of $50,000 (out of your initial $100,000 in fiat currency) and you could still buy something with the money after converting (selling) it for cash which will still be used (in some form) for maybe five to ten years in many places. It might just be easier to trade the gold directly which will inevitably come to pass. During those very painful years (decades?) of transition it may be necessary to buy things with money that are going to be recognized as absolutely essential to survive the rest of the transition when new goods ARE NOT MADE anymore.
    All I care about is making sure that the people who have $100,000 today and who are building lifeboats, and who have earth and life-centered values have some capital to buy things with as society and the economy come unraveled. It's not possible to know everything that's going to be needed or that might break and need to be replaced.
    In that period of hyperinflation cash money will still be necessary to function in a world that hasn't settled out yet.
    Gold preserves wealth. Gold is a highly-portable form of concentrated wealth.
    (BTW, I am also a big advocate of buying silver for smaller purchases. Silver will act the same way gold does.) It's called diversification which is just as healthy with regards to money as it is in nature. What gold and silver have in common is that they cannot be printed.
    For the 7,000 years of recorded history gold is the only substance that mankind has universally recognized as money. It's instinctive with humans. It's in our genes I guess. Gold does not react with any other metals. It doesn't age. It is FINITE which gives it a tangible value. It will be trusted when communities and regions are trying to trade for goods, even from Sonoma to, let’s say San Francisco -- which may be in a separate state by then, with a separate currency. Trade cannot be carried out easily with regional currencies. It can be with gold. There is nothing to convert and there are no money lenders in between to take fees. And if Sonoma County suddenly realizes that without a functioning hospital in 2014 it needs an expensive piece of lab equipment, gold will make sure that it can be bought.
    You argue that a man with a potato will have more wealth than a man with gold.
    This is not rocket science. Sure the guy with a potato will have a potato. Whoopee. But he won't be able to buy, maybe a newly developed on-site hydrogen generator for electricity with potatoes will he? Or vastly improved solar panels that may last a hundred years and be much more efficient than state-of-art today. Or maybe travel to San Francisco for an emergency operation for a child when there's only one hospital left on the west coast that can do it -- for a million dollars cash! (Or 5000 ounces of gold that you bought for $100,000.)
    Over the years I have received maybe 250-300 letters from people who took my advice and bought gold. They're sitting pretty now. Gold is only going up. You cannot make any judgment from a one-day or one week sell off. Those people are still locked into the old paradigm. When I began recommending gold it was at $300 an ounce. It's around $1,200 today and that's just the beginning. I am firm in a prediction of $2,000 gold before the end of 2010. $5,000 gold (or much higher) by the end of 2011 is a distinct possibility.
    All fiat currencies are doomed. D-O-O-M-E-D. But they will die a slow and ugly death. Gold is the only insurance you have against that as long as fiat currencies are in use. And we all still live in a world where we have to use fiat currencies don’t we?
    Once you see it, it's really easy to understand. People are using the wrong arguments and belligerently naive in defending them. They are trapped by bad assumptions that I find very hard to overcome. Both a potato and gold have value. But the day when a potato will have more value than gold is maybe 10 - 50 years away. What the hell are we going to do between now and then? Hold our breath? Fast? What happens when a seed vendor has pounds of perfect organic seeds that Sonoma needs that he will only accept gold (or highly inflated cash) for as payment? Wanna trade a freaking potato (or a thousand pounds of potatoes for them? -- Oh, that’s right, potatoes rot. Gold will be gold forever.
    OK, those volunteering for Darwinian deselection can keep their cash, watch it lose value and be unable to buy what they need when they need it. Let me say it clearly: Gold is the monetary bridge between this dying paradigm and the paradigm that our grandchildren and great grandchildren will have to build out of the rubble we leave them. I would prefer that our offspring have a solid start. Would you rather leave them dollars, or gold… or rotting potatoes? What makes more sense? -- Because I can guarantee that none of us will be able to deliver them a nice pretty, well-balanced, harmonious, nature-centered world with a Kumbaya, humming economic system.
    On the other hand we could all just walk away from gold, in which case only the bad guys will have preserved their wealth and they will be in a perfect place to recreate the horrors, inequalities, wars and poverty of the old paradigm. They will have no competition at all and I’m sure that’s the way they’d like it – no competition. They will be able to offer subsistence and slave-like jobs while the best people are living like the Irish serfs in the potato famine.
    Being connected to the land, steeped in permaculture and relocalized for as many of our needs as possible is absolutely imperative. But it is not the only answer. If you grow your potatoes or wheat or corn and have some gold locked away as well, you have a much better chance of having your seed and beliefs survive the change and challenges that will be with us for the rest of our lives… and our children’s lives.

  2. SLugomist

    SLugomist Monkey++

    "Gold is only going up."

    Sounds like what was said about the stock market in 2000 before the tech stock bubble crash and didn't we hear real estate is always going up, what, just before it crashed???

  3. ISplatU

    ISplatU Monkey+

    I belive it is only going up because the dollar is only going down.
  4. UGRev

    UGRev Get on with it!

    There is a definite inflationary side to the price of gold as the ECB and the Fed play the "Who can debase their dollar first" game. Though commodities always play a large role too. Then you have the manipulation of the PM market which Eric Sprott through a monkey wrench into the other day with this new Silver Trust (Will Sprott's Brand New Physical Silver Trust Become JPMorgan's Biggest Nightmare? | zero hedge).

    If the phys was ever called, there would be a lot of mad people who wouldn't be able to take delivery and would probably get reimbursed with cash, which defeats the purpose of acquiring phys.
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