The Two Worlds Of Gold And Silver: East And West by Jeff Nielson, Sprott Money
For five thousand years, gold and silver have been humanity’s premier form of money; real money, not the faux-money manufactured by our central banks. During that same period of time, these metals have been our premier instruments of wealth preservation and therefore our “safe havens.”
There is nothing accidental about this phenomenon. Gold and silver have obvious aesthetic appeal. Indeed, silver is actually the more brilliant of the two metals. It is their aesthetic appeal that makes these metals “precious.” But more than simply their aesthetic appeal, they are also (relatively) rare.
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If diamonds were as common as pebbles, it would be impossible to impress one’s potential bride-to-be with such stones, even in a setting of gold. Diamonds have their value, both real and sentimental, not only because of their aesthetic qualities but also because of their perceived scarcity.
The situation is the same for gold and silver. If gold and silver were as common as iron, zinc, or even copper, they would not be coveted as greatly, regardless of their aesthetic appeal, because of their abundance. It is the qualities of being “rare” and “precious” which are essential in order for any commodity to be considered a suitable currency. It is these properties that make a commodity a source of value. There will always be demand for these metals; therefore, they will always have value. For these reasons, gold and silver preserve and protect wealth.
Gold and silver are both precious and rare, but they are more than that. As metals, they also exhibit uniformity. Once refined, any gold or silver coin is indistinguishable from any other. Conversely, diamonds lack uniformity, therefore they are not a good candidate to be used as “money.” Venders would complain that a particular buyer was using “low-grade” diamonds for payment. On the opposite side of the ledger, purchasers with stones of superior size or quality would seek to negotiate premiums on their “money.” It would wreak havoc for commerce.
Gold and silver are perfect money, but they are also more than that. They are forms of money that are available at what must be termed near-optimal quantities and fulfill two separate but equally important functions. Silver is rare enough to be valued for its scarcity yet plentiful enough to be the ideal Peoples’ Money. It can be the wages of the workers; the payment used in basic commerce.
Gold is more scarce than silver. Because of its greater degree of scarcity it derives greater value, yet it is still plentiful enough to be a tool of commerce. However, gold is not the Peoples’ Money. Rather, it is the money of nations or, alternatively, the wealthy. It is the money of investment and industry. This additional level of prestige makes gold ideal as a “standard” for a national or global monetary system.
A White Paper previously released on this topic explained how and why “a gold standard” was the optimal basis for a monetary system in our modern economy. That same paper then provided extensive empirical evidence documenting the horrific economic carnage that resulted from the loss of our gold standard in the early 1970s.
When our nations had gold as the money of governments and silver as the money of the people, we enjoyed a level of prosperity and economic stability that we have not seen either before or since that era. In the four and a half decades since these metals have lost their official monetary status, our economies have been destroyed, our governments have been bankrupted, and the currency in our wallets is fundamentally worthless.
Decades of relentless brainwashing in the West have convinced the vast majority of our populations that there is no longer a place or role in our modern economy for Perfect Money. Consequently, the masses in the West generally shun gold and silver by storing and protecting only a tiny percentage of their wealth with these metals, in comparison with any other era in our society’s history.
This is how gold and silver stand today from a Western perspective. What is continually forgotten beneath the veneer of our cultural arrogance is that the rest of the world, and the vast majority of humanity’s population, have a fundamentally opposite perspective regarding the world’s only Perfect Money.
Unexposed to the decades of monetary brainwashing directed at Western populations, Eastern populations have never forgotten the important role of precious metals in our societies and economies. Even the most humble peasant understands why we store our wealth in gold and silver money – not the diluted and debauched paper currencies of bankers.
Real money is a store of wealth. Mere paper currency is only a tool of commerce. As a store of value, these currencies are the equivalent of a “leaky bucket.” Over a period of thousands of years, gold has perfectly preserved the wealth of its holders. In the mere century in which the Federal Reserve was entrusted with “protecting” the dollar, it has lost 99% of its value and the wealth contained.
Now that is a big leak. And it’s getting worse. Thanks to the ever-increasing rate of Fed money printing, and thus U.S. dollar dilution, 75% of that loss in value has occurred over just the last quarter-century of Federal Reserve fraud and mismanagement.
We needed gold and silver for our financial protection a century ago. We really needed gold and silver 45 years ago when Paul Volcker assassinated the last vestige of our gold standard. And we really really need gold and silver to protect our wealth today – as the monetary crime of “quantitative easing” has rendered these faux currencies fundamentally worthless.
In the East, China and Russia are relentlessly accumulating gold, observing a “rule” which is now forgotten by the arrogant oligarchs of the Corrupt West: the Golden Rule. He who has the gold makes the rules.
Conversely, the Corrupt West has squandered its own once-vast reserves, both officially and surreptitiously. For the better part of two decades, Western governments were dumping hundreds of tonnes of gold per year into the market to suppress the price. Meanwhile, the central banks of these regimes were secretly dumping at least that much gold onto the market.
This process was done via what these crooked bankers call “bullion leasing”: (supposedly) ‘lending’ their gold. Regular readers are already somewhat familiar with such frauds. “Gold generates no income.” The bankers tell us this all the time. Thus there can be no legitimate commercial purpose to so-called bullion-leasing.
Instead, this “borrowed” gold is also dumped onto the market (i.e. sold), with much or most of that gold gone forever. Yet our corrupt central banks continue to register every ounce of gold on their books – pretending to continue to have legal title and possession of this gold.
No one has seen any of this gold in decades. In the case of the United States’ mythical “gold reserves,” there has been no public accounting of this gold in over 50 years. The farce has grown to such an extreme that any time any significant quantities of this Western “gold” is transported, it is done secretly so that no one outside of these corrupt regimes ever gets even a glimpse of this myth-gold, let alone a touch or an official audit.
The West’s gold is gone. Yet out of one side of their mouths, these rancid governments boast of supposedly gigantic reserves, while out of the other side of their mouths they continually denigrate its importance as a monetary asset. “Gold is a barbarous relic.” One would never hear such ignorance and idiocy emanating out of the East – or anywhere outside of the Corrupt West.
Western governments and their deluded populations are about to get a history lesson and economics lesson all rolled into one. It could and should also be a lesson in humility, though that is likely too much for us to hope.
Clearly China and Russia are not accumulating vast reserves simply to engage in idle boasting, as does the West. Both of these nations are deliberately understating their total reserves – significantly – though not declaring the gold they acquire domestically. With any gold acquired from domestic sources (i.e. gold mining) such declarations are entirely voluntary.
The purpose of such massive stockpiling can only be with the intent of resurrecting “the gold standard.” The difference would be that these Eastern nations could and will occupy the drivers’ seat of the new system, which will replace the fraudulent Western system of un-backed and totally debauched paper currencies.
He who has the gold makes the rules. The “world” in the East has never ceased to recognize the Golden Rule. The “world” in the West now contemptuously scorns this eternal wisdom. Another expression long forgotten in the arrogant West: pride cometh before a fall.