Signs of Wealth

[NOTE: this post addresses topics on which my own beliefs remain somewhat in flux. In general, I tend toward a contrarian and skeptical (often suspicious and pessimistic) on these matters. In my research and writing, however, I am always nonetheless focused on generating light, not heat. I am doing more research on the Federal Reserve, in particular, as much of what I say below about the "creature from Jekyll" is widely and sometimes hotly disputed. You may also want to see see “Warnings and Disclaimers”.]

“Do not meddle in the affairs of (bankster) dragons, because you are crunchy and taste good with ketchup.” [Dilbert (Scott Adams), parentheses added.]

A myriad of symbolic, iconic, and indexical signs and semiotic processes surrounds the concepts, roles, and behaviors pertaining to wealth as a human circumstance or situation. Throughout the greater part of human history, precious metals – especially gold (latin aurum) and silver (latin argentum) – have been the primary currency for storing and exchanging value. While other things may also serve that function (jewels/jewelry, fine art, real estate, etc.) fulfilling similar roles and functions in human societies and cultures, and some truly odd (purely symbolic) conventions have emerged to serve as ‘coin of the realm’ (such as Yap’s huge stone money), gold and silver are by far the most common currency for most of the world’s people throughout most of the world’s human history. Bronze, copper, zinc, nickel and other ‘lesser’ metals have appeared and recently a variety of ‘clad’ or alloy coins entered circulation, due to the increasing scarcity of the precious and lesser metals as monetary and industrial commodities.

In fact, gold and silver have held the primary monetary role and function virtually everywhere on the planet from ancient Old Testament times through the first third of the 20th century. Largely due to the clandestine birth of the Federal Reserve in 1913, the Great Depression, and President FDR’s Executive Order 6102, however, that financial cornerstone has crumbled. The causal chain of events leading through one financial crisis and efforts to address it to the next cycle of the same is a fascinating history that defines the semiotic context for the focus of this post. Some elements of that historical framework will be included here, but a full understanding may only be had through extensive reading and research beyond this post’s scope.

FDR’s Executive Order 6102 of 1933 essentially made it illegal for individuals to hold, buy, or sell all but very small amounts of gold, requiring US citizens to surrender virtually all of their gold holdings or face surprisingly severe punishment, especially for a ‘democratic republic’. As reported in the Wikipedia article on the order:

Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($167,700 if adjusted for inflation as of 2010) or up to ten years in prison, or both. Most citizens who owned large amounts of gold had it transferred to countries such as Switzerland.

FDR’s confiscation of US citizens’ gold proved ineffective, however, so it was overridden by the subsequent 1934 Gold Reserve Act, which again outlawed virtually all private possession of gold and forced the return of all gold bullion, coins, and gold certificates to the US Treasury, while at the same time locking the nominal price of gold at $35 per troy ounce (up from $20.67). Only some jewelry and collectible coins were exempt. This law of the land proved equally difficult to enforce, yet four decades would come and go before Americans could freely and legally own and trade gold in 1975.

The international agreement captured in the The Breton Woods Agreements of 1944 marked the beginning of the last period in history during which gold served as the foundation of currencies and monetary management in general on a global basis, establishing (among other things) the World Bank Group and the International Monetary Fund (IMF). This international agreement laid a strong foundation for a post-WWII gold/dollar standard which fixed the price of gold at $35/oz., implicitly pegging the US dollar to a fixed value in gold per se. This stable monetary ‘gold exchange standard’ persisted for a quarter century from 1946 until the ‘Nixon Shock’ of 1971.

Among the many nefarious actions undertaken by the Nixon administration prior to the President’s resignation under the Watergate scandal, the impact and effects of Nixon’s unilateral cancellation of dollar-to-gold convertibility have turned out to be perhaps the most devastating – and the full scope of those consequences has scarcely begun to gain attention in the public domain. The immediate impact of the abandonment of the gold exchange standard effectively destroyed the Breton Woods international financial system in a single stroke – surely thus establishing that action as an event of globally seismic proportion. Not the least of its shattering effects was to instantly transform all money into fiat currencies – essentially worthless non-government-issued Federal Reserve IOUs with no chance of redemption, whereby the ‘coin of the – global – realm’ became slips of more or less colorful paper of no intrinsic worth, whose illusion of value rested upon the US dollar, itself a totally fiat currency!

When I first grasped this 20th-century history of gold and fiat currency, I was overwhelmed by shock and awe – how could we sapient humans lead ourselves into such an obvious labyrinth of pending disaster? Yet in the four decades since Nixon’s shock, this collapse of a fairly rational financial system transported us to a new world in which both our individual finances and the world’s global financial systems and markets are based on exploding debt at every level and (another way of saying the same thing) and real money is replaced with sheer illusion. Economic reality somehow metamorphosed into an arbitrarily absurd paradigm of dogmatic convention with all the pervasive power and imminent efficacy of immutable natural law. You couldn’t even begin to make this stuff up – yet it has persisted as the irreal matrix of axiomatic financial truth for everyone everywhere for the past 75 years or more, and counting!

The impact of the Nixon Shock on the US dollar is clearly seen in the following graph showing the dollar’s value from 1954 through 2003:

Note from this chart that the (pseudo)value and (fiat)price of gold in US dollars increased more than tenfold from its nominal $35 ‘fixed price’ under the Breton Woods system in 1970 to $420/oz. at the end of 2003, as the gold-purchasing power of the dollar plummeted from 750 mg in 1970 to 50 mg in 1980, remaining under 100 mg for the next 23 years.

As of this writing, it appears this incredible house of paper cards is falling further and fast, on the verge of its own implosive collapse, hastened no doubt the the ‘Great Recession of 2008’, which is in fact still an ongoing financial debacle. In 1970, $35 would buy an ounce of gold in free markets in most countries in the world. Today, that same ounce of gold (current spot market at the moment) costs an eye-popping $1,735.50. In terms of the graph shown above, that means the dollar that bought 750 mg of gold in 1970 would buy less than 2 mg of gold today – a 99.7%  decline!

For a sense of just how pervasive, paradoxical, and absurd this ridiculous financial paradigm is, if you can manage to step outside it for a moment (which isn’t as easy as you may think), consider the following:

• Ben Bernanke, the current Chairman of the Federal Reserve quite casually and comfortably denies that gold is money during a House subcommittee hearing(chaired by congressman and Republican presidential candidate Ron Paul). [While Bernanke’s position may be very narrowly true since ‘money’ (fiat currency) is no longer based on anything but the Fed’s IOU, this prompted me to reflect on whether I’d rather own gold and sell it to ‘buy’ dollars, or rely on just those (fiat) dollars as a store of wealth … no-brainer when comparing long-term value trajectories of the US dollar vs. gold.]
• Some evidence suggests that fewer than 5% of investors have as little as 5% of their portfolio in gold bullion, coins, mining stocks, mutual funds, or the latest leverage derivative, exchange traded funds (ETFs). Understandable, since the prevailing dogma among the vast majority of investment and financial advisors is that gold and silver (in any of these forms) are “delusional gold-bug investments”, undoubtedly to be avoided at all costs.

• In a facebook exchange with a friend and former academic colleague who holds and deserves my sincere respect as an otherwise brilliant mind, he stated his position on these matters quite boldly and succinctly, as if it were axiomatically true: “gold is intrinsically worthless and you can’t buy anything with it … currency is the only reliable medium of exchange and store of wealth” (I’m paraphrasing the second half of that comment). As if fiat paper IOUs from a secretive globalist bankster elite had any intrinsic value at all or – especially compared to gold – could even be rationally considered as a reliable store of value! Sadly, his position in this matter is exactly that of the overwhelming majority of individual investors – and investment professionals and advisors! – everywhere all the time.
• Again, an overwhelming majority of US citizens naively and falsely believe the Federal Reserve is an agency of the US government, having no idea of its nefarious and clandestine origins by an elite handful of global bankers in 1913 (G. Edward Griffin’s The Creature from Jekyll Island: A Second Look at the Federal Reserve (1998, 3rd ed.) provides an excellent account of the Fed’s origins and operations. [Then again, 14% of registered voters (26% Republican, 6% Democrat) either actually believe Barack Obama is the Antichristor at least are comfortable spoofing Gallup pollsters toward that result.]
• Meanwhile, a little-known nonprofit watchdog organization, the Gold AntiTrust Association (GATA), has spent the past 20 years exhaustively monitoring and (thanks to the FOIA) striving to expose the global elitists’, bankster kleptocrats’, and sovereign banks’ worldwide illegal and undercover control and manipulation of the gold and silver markets, reaping obscene profits at the expense of the small but growing community of individual ‘retail’ investors in those metals. Despite the impressive and convincing evidence GATA has obtained, none of the regulatory agencies with oversight of those markets or the financial institutions involved in the illegal activities has shown the slightest interest in following through with their own investigation, much less filing and prosecuting the appropriate charges.
• Worse yet, the United States’ own gold reserves haven’t been physically audited since 1954 – 17 years before the Nixon Shock! Somehow, those (alleged) 1,800 tons of gold are being swapped, leveraged, bought, sold, and traded very quietly every business day among the elite Wall Street financial institutions and their cohorts around the world, including not only our Fed but sovereign banks throughout the Eurozone and Asia, being at least double- if not triple- or quadruple-counted to back those trades and their derivative progeny. Some evidence even suggests that all the actual gold and silver above ground in the entire world would fail to back as much as one third of those trades – i.e. the trading primarily consists of illegal ‘naked short’ positions for which no underlying security exists.

A new world order of global elitist design, construction, and automation appears to be coming to full fruition in our time. By that design, the rest of us may already lack the necessary semiotic fluency to symbolically unite, iconically recognize our common bondage, and indexically act in forceful concert with sufficient efficacy to make a genuine difference. We appear to be victims of a shared, carefully nurtured, semiotic nescience as the bitter fruit of being dumbed down through decades of quasi-education for indoctrination, multimedia disinformation saturation, and unrelenting subliminally forced cognitive dissonance. Thus reducing us to meaning nothing and making no difference in the new order of things … sheeple happily oblivious to our wolf-shepherds in sheeple-clothing as long as the synthetic bioengineered fodder shows up in our suburban stables and the never-ending fleecing and butchery fall only on sheeple in distant pastures (as we watch on the evening news).

Not a tranquil thought or pretty picture, eh? But perhaps I’m a hopelessly paranoid conspiracy theorist, another hapless victim of private and personal cognitive dissonance, lost in the semiotic fog of my own delusions, dreams, and nightmares. Or … perhaps not.

Am I a gold bug? Decidedly so. Should you be? Up to you – your choice and responsibility, not mine. Condescend and snicker as you like. But carefully and objectively study the charts below and  read the linked articles in this paragraph before you cast me out as a gold-bug pariah. Ask yourself which you’d really rather have in your hand right now – with gold closing this week at $1,732.20/oz.: a 1-oz American Gold Eagle or US$1,750? In light of that evidence, the minimally rational reply is, “both”. The irrational response is, “US$1,750”. The maximally rational position is, “both – and immediately take the US$1,750 and buy another Eagle” (admittedly the Eagle price would be closer to US$2,000, but nonetheless worth that additional out-of-pocket cost). [Sources: kitco.com and munknee.com.]

When is the last time you took a sharp U-turn in your brain and sent your mind with laser focus in relentless Cartesian-reduction pursuit of actual reality and and profound truth – objectively, open-minded and open hearted, without bias, dogma, or personal agenda? Are you overdue? Has your reality check bounced yet? If it didn’t in the fall of 2008, just wait ….

Ah well … never mind. Baaa … mmmmbbbbAAAAaaa …..