I hear you ask, “what is the difference?” The difference is that once this system starts failing and the people want out, they can be herded into gold so that the savings wont fail. Yes, hyperinflation in gold and not food etc.
There are two options now, the SDR route, that will require a big price hike in gold to work and that will mean a slow(er) transition. Or a shock, that would mean a collapse in the paper gold price (and thus silver).
Submitted by Hugo, The Wealth Watchman:
Of course, oil money/power is not stupid. They know the history of reserve, paper-money systems, and paper, fractional reserve, PM systems, before this one. Besides that, many in the Islamic world consider it their religious duty to go back to the (gold and silver) Dinar and Dirham. In the 1970’s, the leaders of OPEC openly stated that they didn’t want dollars, they wanted gold. In the 1950’s, they stated it in private and were heard and met. This is a great piece to read about that.
Until the introduction of the Euro, there were 2 kinds of currency systems. Gold and/or silver-backed currencies with a fixed price. As I have shown, they have proven to always fail. Then there is the new oil-backed reserve currency, that is also now failing. Both systems also create conflict on a massive scale since it puts the debtors against the savers. The savers save the debt of others. Since savers dont spend it, it makes the debts unpayable. That is the source of the conflict.
The EU bankers learned they could not bring down the US Dollar, so they needed friends. So Europe kept supporting the US Dollar, so that it would not collapse, and all this was done at great cost to the average European people. Their earned, purchasing power was partially transferred to the USA people. Japan did the same. Just when the Euro currency was ready, the Chinese took over the batton and transferred around 3 trillion Dollars of purchasing power from their people to the USA to keep this system going. Fortunately, now they have long-since stopped supporting the expansion of the US dollar.
Completely under the radar a whole new monetary system was designed and deployed. The difference is small but the consequences are enormous. They realized a gold-backing of currency at a fixed price will fail. Just as one based on treasuries. They also wanted to end the age-old conflict inherent in money until now, between savers vs debtors. The changing of the reserve currency always has always come with great wars. Now with nuclear weapons… they tried to change it witout the war. The ambitious project to go to the financial moon had begun.
Considering the fact that EU-member countries and central banks have many tonnes of gold, they logically made that the base of the currency. They all transferred an amount of physical gold to the ECB, and started to issue currency from gold! However, they didn’t do so at a fixed price, since they knew that the currency supply (aka debt) had already hyperinflated in the European countries, just as in most countries in the world.
They took a good look at how Indian people saved their money. For centuries they tried to subdue them with paper money (and the surrogates of them) but failed. In India, the biggest religion is Hinduism. That religion is over 3000 years old, and their creation tale of the world actually states the world was created by a golden egg (some variants say an egg made out of gold and silver). It can be also interpreted as an golden womb. Now you know why the Indian people gift gold at a wedding!
Many countries followed the European lead. Mr. Jim Sinclair did quite some research and posted this world map a few years ago on his site.
There are two options now, the SDR route, as Mr. Rickards says. That will require a big price hike in gold to work and that will mean a slow(er) transition. Or a shock, that would mean a collapse in the paper gold price (and thus silver). If the latter happens, the “metal-only” bourses we have seen born the last decade, will become the pricing mechanisms of gold and silver in the world.
One thing is sure, we will see a total departure of the debt and death model all humans suffered under the last many centuries. We warriors will all play our role in this transition! I am sure it is going to be one rough ride. Keep the pantry full, have some digital money, some physical paper currency, silver and gold. In this great transition, all have their place.