As you have no doubt heard me mention previously, there is no other market on earth that trades like gold and silver. When you understand that is because gold is a mortal threat to the supremacy of the fiat currencies that various regimes need in order to stay in power – you will be truly enlightened. Gold is the only currency on the planet that has no counterparty risk – it is NOT someone elses liability and as such is the ULTIMATE form of payment. It has functioned in this role for 5000 years because it is portable, divisible, and is recognized universally as a reliable store of value. You cannot say the same about any other currency in the world.

When things get uncertain, those with money seek shelter. Typically, the bond market (US Treasuries specifically) are where people prefer to park their money when riding out a storm, but, with each day that passes, more and more people realize that US debt is no safer than Greeces – or Zimbabwe’s. The US is spending money they dont even have – like a drunken sailor and there is no end in sight. And when there is no more money to spend? No worries – they will just auction off some bonds and raise more. And if there are no buyers for the debt they are auctioning? No worries – the Fed will come in as the buyer of last resort and buy it all – in exchange for some freshly printed currency (or its electronic equivalent).

These actions increase the amount of money in supply while simultaneously devaluing the currency already in supply – i.e. your purchasing power decreases as the extra currency bids up the prices of the limited amount of goods and services that are available. Consumers see this as price inflation – but very, very few understand the mechanisms that cause it.

Those with money – and the knowledge to retain it – see these things happening and shift their money into gold to protect their purchasing power. The problem is that if their money is in gold, it isnt in Treasuries (where the ruling elite need it to be to fund their profligate spending), so what do they do? They smackdown the price and keep it capped in every way they can – because gold is the only viable alternative to their fiat currency schemes.

The truth though, is that these smackdowns and other machinations only work in the short term – they systemically fail over longer periods of time because the smart money doesnt get shaken by the shorter term gyrations. When the price dips – they buy more. And so should you.

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