Gold and the Myth of DividendsVisit the finance section of any popular forum and you will invariably find a thread discussing credit cards, the available rates, the ones with the best interest free periods. The use of debt to buy household appliances and dinners out has become so ubiquitous that the average person probably has no idea that in today's world a credit card has actually become redundant.
Before the inception of the Debit card there was often no other option for the average person making purchases online or renting a car etc. Merchants insisted on a CC since it allowed them access to additional funds that might be incurred and it was a form of insurance for them, not just of money but also of the buyer's credentials. It is no oversight that Banks waited a few decades before introducing the debit card either, they make little profit off them and by the time they were introduced the vast majority of card users were so addicted to debt it was almost impossible for most to make the transition.
Billions of dollars are owed in Australia for CC debts (50 Billion in 2014 when I originally typed this), and often the people who owe these debts have little or no savings. The figure is actually lower today and that perplexed me until searches showed that many younger people have switched to buy now, pay later schemes, and many home owners rolled their CC debts onto their home mortgages. So the debt is certainly greater today. These people, these consumers, are trapped now, in the endless treadmill of paying hundreds of dollars a month in interest. Why are seemingly intelligent people trapped thus? Why can they not see the extent of their predicament, pay off their personal debts and return to the prudent habit of saving money, in an debit card account say, and using their own money to make their purchases? Instead they visit sites like creditcardfinder to seek a lower repayment or rate, an interest free deal, any relief from their dilemma.
The reason is obvious, but the obvious truth will not be palatable for those caught in the web of endless debt. They have, essentially, been 'trained' to accept Credit (which is really debt) as the best solution to maintaining a lifestyle beyond what they can actually afford. They are consumer slaves, unable to give up the cable TV and the dinner out. Sadly in many cases people are now using credit to buy their weekly groceries, in essence eating future income, or if you like, paying today for food they ate a year ago.
These personal debts debts are ever increasing as well, which implies that not only are people unable to stop this ruinous practice, but they are exacerbating the problem. Is this system of personal finance sustainable? Absolutely not! And at some point many will find themselves at the brink of bankruptcy or some other personal crisis and be forced to take a huge hit in living standards. The current and projected future state of our economy virtually guarantees this unfortunately.
What has this to do with Gold? That is not easy to see, and to see it you must first accept the fact that the corrupt economic and financial system that has enslaved generations to debt has used many underhanded methods to do so. A primary method employed is framing everything of value in terms of interest rates. Interest rates on a mortgage, on a car loan, on an investment. people today think in terms of interest rates yet over a century ago, back before banking became the octopus encompassing all, they though very differently.
Back in the 18th century America and many other nations as well I am sure, actually saw no inflation. That's right, prices actually fell for all goods and services because of innovation, competition, and expanding markets. That was an era of honest money, Gold and Silver. Back then no one hardly thought in terms of interest rates, instead they looked at price security, if you saved $x you knew what it would buy in the future. Land might go up in value, especially if improved, but food and horses and all the rest remained fairly constant.
In the era of inflation after central banks took their strangle hold on the world's economies everything changed. After the great depression there was general deflation, for a decade and more! This was caused by a scarcity of money, money controlled by reserve banks. Then came waves of inflation and people began to realize that if they put off buying a home it would be more expensive in the future, so they accepted high mortgages. Likewise they flooded into stock markets to get an inflation beating interest rate return on their savings. Everything became linked to interest rates, which were of course controlled by the central banks, who also controlled the issuance of the money. If they created more money, prices went up! If they pushed up interest rates then prices of major items like homes went down.
Everyone accepts this now as the natural order of business, and then they look at Gold, and what do they see? No interest rate. Gold doesn't provide a dividend, so they dismiss it as irrelevant, an anachronism of a past age. The media and the banks, especially the central banks, fuel this belief by making statements about it. "It's a fear hedge" "It's a dinosaur" "If you invest in Gold you are a doomer" But what the average person doesn't see, because generally they let other people do the research and do their thinking for them, is that the price appreciation of Gold over time is actually better than most other asset classes out their. Over time Gold's track record is better than houses, better than the general stock market, certainly better than the compound interest savings accounts in banks. You can see this for yourself simply by looking up a price chart of Gold over the decades.
The fact that it goes down a little from time to time and over short time-frames, 5 years or so, goes stagnant, is irrelevant, that can happen to home prices too and certainly happens to the stock market. But Gold isn't a portfolio of stocks reliant on cheap energy to make companies profitable. It isn't a house that is fairly illiquid and can see it's value diminished because of sea level rise or a freeway bypass or any number of other events. No, Gold is like a bank account, but one in which the bank can't default or limit your withdrawals in the event of a financial disaster.
But the simple truth is that the only reason the average person can buy Gold today is because no one hardly wants it. If all the working age people in America say, all 200 million, decided to buy an ounce of real gold, that would be 400 Billion dollars worth at today's prices. But there is only around $13T worth of gold on the planet, and nearly half of that is held in jewelry, as well as vast amounts in central bank vaults, so it couldn't happen. Add to this the fact the for every ounce of real gold on the planet there is roughly 200 times as many paper ounces traded we see that there
is a big demand out there but it is being satisfied with a paper promises, all of which are subject to default if you read the fine print.
In truth Gold really wasn't necessary over the past 80 odd years because we had cheap oil "Black Gold" that lifted the living standards of westerners and ensured the prosperity of companies, it allowed the paper promises to be honored. You could invest in
Coke or General Motors and retire confident that your life savings would be there to draw on. But that was then and this is now and we see that the wheels are falling off that oil-age economic model. There is a new model in place though, not dependent on cheap oil. The WEF have been promoting it for a couple of years and Billions of people across the world have already begun adopting it.
"You will have nothing and be happy"
And that's exactly what most will have when the mountain of paper promises the oil age has built collapses back in line with the remaining resources on Planet Earth.
https://au.finance.yahoo.com/news/devas ... 46372.htmlhttps://suttergoldmining.com/how-much-i ... rld-worth/https://www.moneymetals.com/news/2017/0 ... ket-001038https://www.channelnews.com.au/gen-z-sw ... -stuffing/
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Especially liked this part about how things normally worked and then got disrupted.
