Gold news


Why boom/bust cycles are common with fiat money and uncommon with a gold standard

  • 18 Agosto 2018
  • by Blogger

The key reason for boom-bust cycles is the loose monetary stance of the central bank. This loose stance results in the expansion of money out of “thin air”, which sets in motion an exchange of nothing for something.

On a pure gold standard, an increase in the supply of gold does not set in motion an exchange of nothing for something i.e. an act of embezzlement, but to an exchange of something for something. In the absence of an exchange of nothing for something, there is a very low likelihood of a persistent misallocation of resources, which culminates in boom-bust cycles.

What central planners always fail to understand: Real savings are the key for economic growth

  • 14 Agosto 2018
  • by Blogger

Contrary to popular thinking, the so-called strength of the economy as depicted by various economic data cannot counter the process of adjustment once it was set in motion by a tighter stance of the central bank.

If the central bank were to pursue an ever-aggressive loose monetary stance rather than reversing the loose stance, at some point in time the pool of real savings will start declining.

Can Gold Trade Above $2,000 An Ounce By June 2019?

  • 08 Agosto 2018
  • by Blogger


  • Gold sentiment is reaching for an extreme bearish low.
  • The drop in gold during the summer is largely explained by a stronger US dollar.
  • Lease rates continue to indicate tight short-term supplies.
  • The Dow-to-Gold ratio is very high, arguing for better relative gold quotes soon.
  • Gold is quite cheap adjusted to M-1 money supply growth and real-world inflation.

Admittedly, the idea of gold ever going up again, much less quickly, seems a little crazy today. However, when you look at the ultra-low valuations of gold today versus stock market prices, long-term paper money creation, and honest U.S. inflation rates, you start to see the potential for a big upmove in this “hard money” precious metal. While everyone is fascinated by the bitcoin mania of 2017-18, few are looking at the old relic of gold as a better investment alternative going into a future economic recession and/or stock market panic.

A storm is coming... Got gold?

  • 31 Luglio 2018
  • by Blogger

It's today news that Morgan Stanley sees major risks in the US stock market, paving the road to a new credit crisis. And after Facebook and Netflix, Amazon will be the next one. And when it comes to Apple stocks? Well, then it will be big trouble for the BNS, since its Cupertino firm stocks stake are huge. This is what a systemic risk is all about: liabilities of a side are assets of another. So it doesn't matter if short positions are rising in gold, central banks are still hoarding it. Why bother if it is an asset not worth to own? Don't listen to what central banks say, but pay attention to what they do. Precious metals, together with cryptocurrencies, will be the safe haven and the hedging needed by those who are worried about their savings. The latter are vanishing thanks to the QE and fake statistics about CPI and price inflation. A panic would be bad according to central banks. They follow this rule "Don't rock the boat". They need time to sort out a solution to get away with the enormous distortion introduced by their reckless monetary policies. The point of the matter is this: there is no solution to what they did since the Lehman crisis. They seeded the seeds of their own demise.

Francesco Simoncelli

Only sound money permits a healthy economic growth

  • 28 Luglio 2018
  • by Blogger

It is through the expansion in the pool of real savings that an increase in the stock of capital goods is possible. The increase in the capital goods once correctly allocated permits the increase in economic growth to emerge.

Loose monetary policy is the key behind the boom-bust cycles

On refuting main objections against a gold standard

  • 25 Luglio 2018
  • by Blogger

Last time we explained what is a gold standard. Today we explain why is not popular among monetary economists these days. In fact, monetary economists and macroeconomists are almost universally hostile to any sort of a commodity standard. Instead they prefer central bank–managed fiat money with floating exchange rates, and perhaps a monetary rule for the central bank if they’re particularly committed to non-arbitrariness in monetary regimes. Economists have raised several objections to the classical gold standard. None of them are very good. Here I will discuss only a few of the most prominent. George Selgin and Lawrence White have each dealt with similar critiques in depth. I encourage readers interested in exploring this question to consult their writings.

What is a gold standard?

  • 21 Luglio 2018
  • by Blogger

There is no such thing as the gold standard: there have been many gold standards throughout history, and they can function quite differently depending on institutional particulars. In general, a gold standard is any system in which there is some link between gold and money. This spans the range from physical exchange of gold with no financial intermediary institutions, to a system where gold-denominated bank liabilities are the day-to-day medium of exchange. Even the Bretton Woods system, the international monetary system set up following the Second World War, was a sort of gold standard. In that system, many world currencies were pegged to the dollar, and the dollar was pegged to gold, until the last vestiges of the system ended when President Nixon closed the gold window in 1971.

Keynesianism and gold: like oil and water in economics

  • 17 Luglio 2018
  • by Blogger

In the Keynesian framework, the ever-expanding monetary flow is the key to economic prosperity. What drives economic growth is a monetary expenditure. When people spend more of their money, this implies they save less. Conversely, when people reduce their monetary spending in the Keynesian framework, this is viewed as them saving more. In the popular — i.e., Keynesian — way of thinking, saving is bad news for the economy. The more people save, the worse things become. (The liquidity trap comes from too much saving and the lack of spending, so it is held.)

Observe, however, that wealth comes not from money, but from goods that have been produced. The chief role of money is as a medium of exchange. Hence, the demand for goods is constrained by the production of goods and not by the amount of money as such. (The role of money is to facilitate the exchange of goods). To suggest that people could have almost an unlimited demand for money that is viewed as an unlimited saving that supposedly leads to a liquidity trap would imply that no one would be exchanging goods. (It would mean that people do not exchange any longer money for goods).

Sound money doesn't need price inflation to grow an economy

  • 14 Luglio 2018
  • by Blogger

The positive association between economic activity and price inflation is not because of an expansion in real wealth but because of an expansion of the money supply. Real economic growth cannot be quantified — it is not possible to add potatoes to tomatoes to obtain a meaningful total that is required to calculate real economic growth. So-called economic growth is established from the monetary turnover, which is deflated by a dubious price deflator. This means that what is labeled as economic growth is in fact the growth rate of a distorted monetary turnover data, which is erroneously called total real production. According to mainstream thinking the stronger the monetary pumping is the stronger the pace of spending is going to be and consequently the stronger monetary income and the so-called real economy is going to be. In this framework, more money means more spending and this leads to stronger economic growth.

Gold will do its come back

  • 07 Luglio 2018
  • by Blogger

The international monetary system has gone through a series of changes since 1891. Prior to 1922, the United States and most of Western Eu­rope were on a full international (and domestic) gold coin stand­ard. Paper currencies were freely convertible into a stated quantity and fineness of gold or silver. Gold was the medium of payment in­ternationally. Because of this free convertibility rule, central banks and governments were partially restrained in the creation of paper currency and debt; if the value of the paper began to fall, due to an increase in the supply, domestic populations and foreign­ers rushed to convert the paper into special metals.


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