Two and a half points really, and it’s more like everybody plus one who misses these simple points…
The first point (and a half) is a counter to this statement which everybody accepts as doctrine:
Anybody can buy gold with dollars at any time – no gold backed oil contract needed.
I won’t name names. We’re all on the same side here, but for some reason this topic is more polarizing than it should be.
Let’s think about “anybody can buy gold with dollars now” for a moment.
Dollars come from the United States. The benchmark global gold price in dollars comes from the United States.
It makes sense that if a company/country is selling a crap-ton of barrels of oil for dollars, said company/country would be most efficient in purchasing their physical gold on the COMEX with those dollars.
It’s not like a company or country can walk into some local coin shop with $350,000,000 in U.S. dollars and scoop up a 259,259 Chinese Gold Pandas.
They need the COMEX.
Here’s the problem:
If the U.S. futures market price of paper gold is nothing more than a debt based fiat currency price for something that never actually gets delivered, but rather, gets cash settled with more debt based fiat currency, then the company/country that just sold their oil for dollars is not really able to just take those dollars and buy gold as the “matter-of-fact” statement claims.
Secondary note to the first point (this is the half point):
We see what happens to world leaders when they announce or begin to sell their oil for something other than dollars.
Anybody who is not familiar with this, the answer is death of said leader and destruction/plundering of the country by the war machine.
There is a flip-side to the oil-for-gold proclamations that we are missing:
Say Oil producers Canada or Mexico, or pick some non-bedfellow countries that attract the war machine, such as Turkey, Syria, Iraq, or Venezuela, who all of the sudden decide, “We are selling our oil for dollars, but we will immediately take them and buy physical gold from the COMEX with all the proceeds.”
Are the neo-cons, the deep state, the ESF, the Fed, the gold cartel and the other nefarious players just going to sit by and say:
“sure dude, whatever floats your boat”.
Not a chance. Said groups will spring into action, most likely of the swift and violent type.
Back to the main first point:
While theoretically possible to just “take those dollars and buy gold”, in practice this does not happen.
Between the levered-up, fractionally reserved “paper gold” which the bullion banks can naked short with a supply of unlimited paper, what company/country is going to want to get a futures contract and jump into that firefight, with the full brunt of market manipulation and precious metals price suppression bearing down on them, and backed-up by the war machine when all else fails?
To say “anybody can buy gold now” with their dollars misses the point.
And that’s the point.
Theoretically I can build a vast array of underground cities connected by public transporton submarines, or I can build an office building 39,000 feet tall, with a rotating restaurant on top for a 360 degree view of the clouds, but in coming down to earth a bit, we all know that in both practice and for all intents and purposes, neither of those things are possible. Much less just converting massive oil revenues into physical delivery from the COMEX, which is probably the least possible of all the scenarios I just mentioned.
The second point is even simpler:
The bigger picture that everybody keeps missing has to do with one of the principle reasons that people will use an un-backed, debt based fiat currency:
Whether the oil for gold contract is true or false, myth or fact, it misses the point that China is looking for confidence in something other than the dollar.
Confidence builds very, very slowly, and it is bursts in a ball of flames.
Everybody understands what it means to have, and then to lose confidence in the currency. Loss of confidence is why un-backed, debt based fiat currencies always suffer death by hyperinflation.
No doubt we are in the growing pains of a paradigm shift in the global monetary system. Every single time, without fail, the world always goes back to gold and silver. We have been going through several years of pain, and perhaps, disbelief, much like the Brits went though a hundred years ago up until Bretton Woods.
This time is somehow different?
How ’bout a global twist in the “gold backed” story with President Trump ending the “temporary” convertibility of dollars for gold:
We do know that President Tump understands gold:
And we know Donald Trump accepts payment in gold:
Which is why, for the first time ever, Trump will accept today gold bullion instead of dollars for a lease deposit from his newest tenant in one of his marquee properties, 40 Wall Street, a 70-story skyscraper in Manhattan’s Financial District that at one time was the tallest building in the city until the Chrysler Building surpassed it. Trump will accept the gold at an event in the lobby of the Trump Tower at 725 Fifth Avenue.
And we do know that sooner or later, bullies (as in the US War Machine forcing the world to use dollars) will make a mistake, become weak, become complacent, or have opponents in numbers that band together.
There is a reason they say “Even a dog knows the difference between getting tripped over and getting kicked”.
It’s only possible to kick a dog so many times. At some point, the dog is going to get so angry that it will not take another.
The question is:
Is there one more kick coming, or is the dog about to bite?
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.