And You Haven't Bought Your Gold and Silver Yet?
By Bill Sardi
Why is the price of gold not rising in an era of massive money printing?
When money is printed with no significant economic growth to back it, it dilutes the value of existing money and the more money in circulation the more that retailers will ask for their products and services, creating inflation (paper money becomes increasingly worth less).
Any savvy investor know the value of the US paper dollar is flimsy (it is debt-based money backed by $17 trillion of debt) but as long as their is no alternative, it will continue to survive.
The alternative is gold.
The price of gold must be manipulated downward to keep it from becoming an attractive alternative to the US dollar. That is the current situation.
Have you followed me up to this point?
The US relies upon agreements like the PetroDollar agreement to return US dollars to the US. The US purchases oil, the US transfers US dollars to the oil-producing country and that country then returns it and gets an IOU in its place (US Treasury note).
The US coerces Japan to buy US dollars. The US buys cars and cameras from Japan. Japan then returns the money by buying US Treasury notes. If Japan doesn’t cooperate, the US curbs trade with Japan and sets import quotas, etc.
But now there is a big, big problem brewing………
You can see in the following chart that there is a growing gap between the value of paper money (the US dollar) and gold and oil. This means the paper money piled up by creditor nations (China, Japan, others) should be chasing gold, not buying more US dollars in the form of worthless IOUs called US Treasury notes.
Got this, so far?
Now China opens its Shanghai Free Trade Zone Sept. 29 which will offer Chinese yuan-denominated physical gold trading. (The yuan is the Chinese currency.) This means there will be a marketplace where gold cannot be easily manipulated by gold futures and options (paper gold) compared to physical gold as is the present situation. We are going to find out the real value of gold in an open market. The same goes for silver.
When China and Japan and other creditor nations begin buying gold rather than US Treasury notes, that is when US aircraft carriers head towards Shanghai. China is buying massive amounts of gold now.
Oh, and you haven’t bought your gold and silver yet?