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James Turk - 2 Key Charts, Gold & The Destruction Of Money

OWoN: We track the price of oil in Au and have for years. It appears that Jim Turk gets it too.

Something fundamentally changed in that price in the third week of September. By that we mean that something that was anchoring that ratio ended. Every trading day since then, i.e., 27 of them as of last night, the price has closed on the upper side of the long-term average. That's a statistical impossibility at this point. (Those of you with a statistical background will know that 7 consecutive data points on one side of the mean is the usual flag to start looking)

James Turk - 2 Key Charts, Gold & The Destruction Of Money

King World News - Blog
By Eric King
27 October 2014

With continued uncertainty in global markets, today James Turk sent King World News two incredible charts that readers around the world must see, and he also discussed gold, the destruction of money and much more. Below is what Turk had to say in this timely and powerful interview.


Even though the referendum for the Swiss Gold Initiative is still a month away, Eric, the battle there is already heating up. The forces for sound money are lined up against those representing the status quo of central bank domination and control, which has resulted in the financial repression plaguing the global economy.

The vote is clearly of importance to the future of the Swiss franc. But it also has important implications for gold. A “yes” vote will increase gold’s visibility and lead to greater demand for physical metal. That in turn will increase the awareness of the critical differences between physical gold and paper promises purporting to represent that they are as good as gold.

Of course they are not as good because a tangible asset is fundamentally different from some promise. So the gold price will be impacted in a positive way by these developments. But a “no” vote will not hurt gold. The only thing a “no” vote will do is doom the Swiss franc to the fiat currency graveyard. I have prepared two charts of crude oil prices to illustrate this conclusion.

These are both base-100 charts, meaning they show relative changes in crude oil prices from the same starting point. Given that the same standard is being measured, namely a barrel of West Texas Intermediate, these charts compare and illustrate the purchasing power of these currencies.

So for example, the price of crude oil in terms of the British pound has risen 61 times since 1950. It is the worst performing of these national currencies. The price of crude oil has risen 35 times in dollar terms. In other words, there has been more inflation of the pound than the other currencies.

But note the red line showing the price of crude oil in terms of gold. It hasn’t changed. Gold has preserved purchasing power over the last 64 years. An ounce of gold today buys the same amount of crude oil it bought back in 1950.

While the euro and Swiss franc have preserved purchasing power better than the dollar and pound since 1950, we need to take a closer look because the euro only began officially trading in January 1999. The above chart shows the German mark before then, which was well managed by the Bundesbank and its policies that stressed the importance of sound money.

Further, the Swiss franc is now tied to the euro and its fate is dependent on that currency. So the following chart shows the purchasing power of these same currencies since January 1999.

This chart doesn’t look anything like the previous one and for good reason. The euro is being managed by the ECB, not the Bundesbank. And the ECB does not follow the Bundesbank’s sound money principles. It favors fiat currency and central bank control, just like the Federal Reserve and the Bank of England. So the loss of purchasing power in the euro, dollar and pound over the last 15 years has been similar.

So it is not surprising that the euro is losing purchasing power almost as rapidly as the pound and dollar. And the Swiss franc is tied to the fate of the euro. That puts the Swiss currency and therefore the Swiss people in a disadvantageous position. So a “yes” vote on the Swiss Gold Initiative will help turn the Swiss franc back in the right direction, which of course is toward sound money.

There is one other important point to be drawn from these charts, Eric. Central banks repeatedly say these days that they need to weaken their fiat currency in order to spur economic growth. But this conventional wisdom flies in the face of historical experience.

The two strongest currencies from 1950 to 1999 were the German mark and the Swiss franc. Yet both of these countries over that period of time had the strongest economies and lowest unemployment rates, meaning it is clear that sound money is good for economic activity. So this view that weak currencies are needed is just more central bank hogwash aimed to perpetuate the outrageous and unacceptable position of power they hold.

Every Swiss citizen should look at these charts before they vote. In fact, these charts are so meaningful, everyone can benefit from understanding the important message they convey -- that gold is sound money and central bank fiat currency is not.

The purchasing power of fiat currency is continually eroded by central bank mismanagement until eventually confidence in the fiat currency is totally lost, meaning people stop using it. At that point, the fiat currency’s purchasing power is lost. The currency has collapsed and becomes worthless. The dead currency then gets quickly buried in the fiat currency graveyard while the same central bankers that killed it then try to float a replacement currency.

No one wants the economic and financial outcome brought about when a currency collapses, but there have been dozens and dozens of fiat currencies which have collapsed. We can therefore learn from monetary history that the collapse of fiat currency is inevitable. Hopefully the Swiss will make the right choice and vote in favor of the Gold Initiative and for sound money.


1 comment :

  1. (PM) Precious metals is the key to watch for the final transition. Monetary system historically are either backed by fiat printing or hard assets of PM, oil, gas and commodities.

    So pin pointing the "fork in the road" thought process.

    1. Will china reprice the gold/silver (PM) markets forcing the actual shift direct into asset back?
    2. Will china reprice the gold/silver (PM) markets forcing a "new and higher level" of manipulation.

    The system has a "controlled exit". Is it ready to make the jump direct to hard assets?


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