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Business/Finance See other Business/Finance Articles Title: IF YOU UNDERSTAND GOLD – YOU ARE NOT A GOLDBUG What is a Goldbug? If we look at Wikipedia, they define it as “a person who is extremely bullish on the commodity gold as an investment and or a standard for measuring wealth …… goldbug can also be used as a pejorative”. Investopedia states that “A gold bug is an individual who is very enthusiastic about gold as an investment and its prospects for significantly increasing in value.” Finally the Free Dictionary defines goldbug as “1. A person, especially an economist or politician, who supports the gold standard or 2. A person who believes in buying gold bullion as a personal investment or 3. A gold beetle.” Since less than 0.5% of world financial assets are in gold, most people neither hold gold, nor understand the purpose of gold. The people who understand the real value of gold could only agree with one of the definitions above – a goldbug is a gold beetle. There could be no argument about that clear definition. Many people use goldbug scathingly as a pejorative as they have never bothered to understand the significance of gold. IF YOU UNDERSTAND GOLD – YOU ARE NOT A GOLDBUG So why have I, and a few others, been advocating the ownership of gold for the last 17 years without being goldbugs? It is not because I am bullish on the gold price and want to make a quick buck. Nor is it because I believe in the gold standard (see my article about FreeGold). No, gold has a much more profound significance. The simplest definition of gold is JP Morgan’s: “Money is gold and nothing else.” But his statement requires further clarification. Of course money is gold. That is why gold is the only currency that has survived throughout history. All other currencies have been destroyed by rulers or central bankers by issuing endless amounts of credit and printed money until the currency has become worthless. And this is happening now again as all currencies have lost 97-99% in real terms since 1913 when the Fed was created. If we are not Goldbugs, what is the purpose of holding gold? In simple terms, gold is wealth preservation and insurance against a rotten financial system, inflated by $100s of trillions of credit and printed money as well as quadrillions of dollars of derivatives. If you understand the bubble that this has created in all asset and debt markets, you will also understand that gold is your best protection against the coming implosion of all these markets. For the ones who think it is different now, I beg you to study history. Every single major asset and debt bubble in history has always resulted in a collapse of the currency and the financial system, where it has occurred. The big difference this time is that the problem is global. World debt at $250 trillion is 3x global GDP – an all time record. And if we add unfunded liabilities and derivatives, total debts and liabilities amount to over $2 quadrillion which is 25x global GDP. So that is the risk that potentially could erupt into the biggest financial and economic collapse in history. Post Comment Private Reply Ignore Thread
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