The Secret Truth About Gold & Silver Money That Governments Hope You Don’t Find Out
The truth is that Gold and silver is the only true money that exists today. There are many reasons to come to this conclusion, shown by a tremendous amount of economic and historical data. These precious metals have been around for thousands of years, and will be around for thousands of years after this is written.
This article will briefly explain, by utilizing various charts and historical data, just why you should be sure to include a large amount of precious metals in your portfolio in order to protect and grow your wealth.
Fiat Always Fails
Maybe the most important piece of information to understand is that gold and silver will always be valuable and that all fiat money eventually fails. This is because of the inherent nature of fiat money vs gold and silver money.
Fiat money is a currency backed by nothing, which has no intrinsic value and is most often passed by government regulation. The word fiat means “by decree”, meaning that fiat money does not have any use value; fiat only has value because a government maintains and declares it valuable, or because parties engaging in the exchange of it agree on its value.
Gold and silver are virtually indestructible, but after enough time passes, all fiat money eventually becomes worthless. However, since August 15th 1971, for the first time in history, the entire world has been using (almost exclusively) fiat currency as the standard of exchange.
Because of the nature of the banking system and the money creation process, every fiat currency will continue to lose value to bullion over the long term. Below is a chart of the purchasing power of the consumer dollar, which illustrates this information:
Governments Know These Facts & Are Prepared To Take Action When Their Systems Inevitably Fail
As mentioned above, because of the nature of the financial system and the actions of the Central Banks, the value of gold and silver is guaranteed to rise over the long term. The central banks fractional reserve lending system creates fiat currency and fiat credit out of thin air, which has disastrous effects on the economy and their own currency. The central banks know this and are not stupid, which is why they take their profits and continually buy more gold bullion (officially and unofficially) year after year, because they realize that this fiat money is temporary and that gold and silver will always have value.
Current official figures show that governments own roughly 20% of all the physical gold that has ever been mined throughout history. However, if we add a very conservative amount of the officially yet to be declared Chinese gold reserves, which Chinese government owned proxies already own, it is far more likely that more than 1 in 4 ounces of all the physical gold that has ever been mined is held and is being saved long term by governments and their central banks to protect themselves.
New System, Same Tricks
Because as mentioned before, all fiat currencies fail, a new monetary system is going to come eventually. There will be a new reserve currency for the world and that currency is most likely to come from the International Monetary Fund (IMF) and their Special Drawing Rights (SDR).
The IMF is a very powerful organization and is defined as an international organization, consisting of 189 countries that work to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
The SDR can be understood to be a form of international currency, created by the International Monetary Fund, and defined as a weighted average of various convertible currencies. Since the 2008 financial crisis occurred, there have been various rumors behind the scenes and in mainstream media, as well as in large political pushes for the IMF’s SDR to become the new world reserve currency and next worldwide monetary standard when the US dollar fails.
However, it is crucial to understand that this is simply a new fiat system and will eventually fail as well. Additionally, since 1969, the IMF’s SDR has lost over 95% of its value to gold and silver, evidenced by the following charts:
How Does This Obviously Flawed System Perpetuate?
The best answer to this question is simply that most people and investors are simply unaware of the majority of this information. Because of various mechanisms of distraction and misinformation, the average person never investigates any of this information for themselves and, for the most part, simply relies upon what mainstream media and political figures tell them as their basis for truth.
On a more sinister note, the world’s largest precious metals exchanges have been accused for decades of systematically suppressing the prices of these precious metals, as well as other assets, in order to keep the current monetary system afloat, and to allow those who know about this information to accumulate these assets at historically cheap relative prices.
Exchanges like the COMEX and LBMA control the majority of the transactions that occur in the gold and silver market around the world, and they have been using computer derivatives and trading bots to rig the prices of these markets for many decades (allegedly).
Markets Have Not Been This Out Of Whack In A Long Time
The following chart shows that commodity prices compared to stock values have not been this problematic in a long time. This everything but commodities bubble is prone to pop and move back up to the positive side for commodities very soon. Because the bubble is so large, it is actually likely that this chart will go back beyond its mean average of nearly 4% and surpass or overshoot this target.
Aside from the underlying systemic issues mentioned above, this overshot of the mean average is likely to occur because of the aging Baby Boomer population, which is likely to begin selling their retirement savings for cash or commodities soon, as they hold the majority of their savings in the stock market.
It is also important to note that bullion prices usually go up or inverse to stock bear markets or other forms of monetary crisis, as investors tend to see bullion as a safety play and form of shelter from loses.
More Money, More Investors
In 2019, there are more wealthy investors across the world than there has ever been before. This is great news for long term holders and future investors in precious metals alike. This is because there is a significantly larger amount of money and investors in the world today who can accumulate gold and silver, thereby raising their prices.
Even though the following image looks counter-intuitive to the above statements, the data shows that the number of people with net wealth over 1 million dollars has never been this high before, and that number is continually growing.
However, further economic data shows that most of these high net worth individuals do not own a large percentage of physical bullion, meaning that this market has a tremendous amount of room to grow. These charts and graphs show gold and silver ownership as a percentage of the world’s financial assets, and demonstrate just how much room there is to grow, as these numbers are surprisingly small:
If only a limited portion of this growing worldwide wealth became interested in purchasing precious metals in the coming years, it would have exponential rising effects on each metals price. At this time, there are nearly 150,000 people across the world with net wealth over $50 million, more than 50,000 people with wealth over $100 million and over 4,300 with net assets over $500 million.
If any of these estates invested small to medium sized portions of their assets into gold or silver, it would result in much higher valuations. Many of these individuals hold large positions in gold and silver derivatives, maybe without understanding just how risky they are. Because of the various counterparty risks associated with derivatives, it could be easy to see why these people may choose to hold physical precious metals instead if presented this kind of information.
The chart below shows the sheer volume of derivatives compared to precious metals, and should give investors a true idea as to just how risky owning derivatives are compared to owning the underlying assets that these derivatives trade:
Buy Low, Sell High
Of course the key to profiting on investing is to buy an asset when the price is low and sell later when the price is high or on the rise. Great news for you is that the precious metals market is offering that opportunity to you right now. Looking at the 1980 consumer price index compared to the price of silver (pictured below), you can see that silver is at an all time low! If you’re a believer in silver, there has maybe never been a better time to buy then right now.
And while gold may not be at an all time low right now, it is still very much undervalued and has tremendous room to grow. With looming uncertainty in traditional financial markets and prices of precious metals at all time lows or below fair value, it is easy to see why you should be adding more of these assets to your portfolio.
Manipulation Of Statistics
It’s no secret that for decades now, the Federal government and Bureau of Labor and Statistics has been underreporting price inflation data, and after examining the data, it’s easy to understand why. The UNITED STATES debt level is at its all time high of nearly $22 trillion, but that’s not the worst part, it also has more than $210 trillion in unfunded liabilities!
This is all while the government claims to have an official inflation figure of around 2% annually; however, private statisticians (such as Shadow Government Statistics) claim that the government has been underreporting their price inflation by 5% to 7% annually for decades. By underreporting the official inflation data, the government can allow its debt to grow at a much larger rate than what is being reported.
Both of the silver and gold charts listed below attempt to use the most accurate private historical inflation data available to correctly represent the actual gold and silver dollar values per troy ounce over the history of the nation. There have been so many changes in the methods used to report official government inflation statistics over the years, which were most likely developed to alter the core price inflations (CPI) index from being an accurate measure of the average cost needed to have a constant standard of living.
The charts attempt to utilize the more accurate reporting methods used as of the year 1980 to show true price inflation. This chart reports that it is relatively cheaper to buy gold and silver today than it was in the year 2000 (the time when these metals were historically the cheapest). We have never had constitutional money like gold and silver on sale at such a cheap net present value compared to its past value, and we may never have an opportunity like this again.
All of this information is incredibly eye opening, especially for someone who has never heard it before. Even though these topics can become extremely complex at times, it becomes pretty easy to see that assets like gold and silver are truly undervalued and underappreciated. Now is one of the best times in modern history to be accumulating precious metals to both protect and grow your wealth.
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