ENDNOTE: You Should Own Gold — a reminder from Venezuela



You Should Own Gold
Posted on March 28, 2019 by Gary Christenson
Guest Post from David Smith, Money Metals Exchange

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Maybe you have some gold (and silver) but not enough. Maybe you haven’t added to your stash for quite awhile, and you kinda’ forgot why you bought it in the first place.

Or perhaps you don’t own any precious metals at all!

If one of these circumstances fits you, then it’s time to refresh your memory on the multiple reasons why you should own gold, assess your risk profile and unique financial circumstances… then act!

The oft-stated Gresham’s Law tells us that when a government dictates the exchange rate between different types of money, the “good,” or undervalued method of exchange gets chased out by the “bad,” or overvalued version.

Thus the “bad” money stays in circulation and, as debasement (inflation) picks up, is quickly spent.

Unbeknownst to most – for now – U.S. inflation (greatly understated by “official” statistics) is increasing across the board. It doesn’t need to hit double digits in order to move the dial on gold and silver prices. Invariably, the “smart money” sniffs out the potential well beforehand – which is what it’s been doing for the last 9 months!

The “good” money in the U.S. is in reference to gold after FDR’s infamous 1933 edict banning circulation… and later, the removal of silver from our coinage starting in 1965.

Today, a pre-1965 quarter at $16/ounce silver is worth about $2.75. Why would anyone exchange it for an 8% copper/92% nickel slug? As for a gold coin, don’t even bother doing the math!

In Venezuela, according to the IMF, inflation will rocket along this year at 10 million percent! How long do you think the ironically-named Bolivar Fuerte (“strong bolivar”) stays in someone’s pocket, bank account, backpack… or large cardboard box?

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Now anyone, who knows me, knows I’m a Crazy Old “Gold Bug”.

In my working life, I’ve met optimists and pessimists.  I learned from both.  From the optimists, never gamble what you can afford to lose.  From the pessimists, if you always expect the worst, every surprise will be a pleasant one.  (Like Murphy’s Law, I’ve egotistically named it “Reinke’s Rule of Negative Thinking”.  Maybe someday, I too will be famous or infamous.)

If you follow what pretends to be economic thinking these days on the both the Left and the Right, there’s something called “Modern Monetary Theory”.  Distilled to a nugget, it’s basically that the Gooferment can’t print as much “money” as it needs until it sees price inflation.  That’s it.  Stripped of all the mumbo jumbo and fancy pontificating.  The dollar “floats” untied to anything.  That’s the legacy of FDR and Nixon.

So sad.  Thankfully, I don’t think I’ll be around to see the crash, but this is one UGLY chicken coming home to roost.

For the skeptical, here’s a more mainstream confirmation of the sad prediction:


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