Follow the Money

What is all the hubbub about gold? Most people don’t know and don’t care. But I will tell you this much: if you are smart, you will do what those who do know are doing.

What is that, you ask? They are gathering up their gold and sitting on it. If they loaned any out, they are getting it back under their own control.

The Telegraph’s James Delingpole points out:

Back in the mid-1920s, the head of the German Central Bank, Herr Hjalmar Schacht, went to New York to see Germany’s gold. However the NY Fed officials were unable to find the palette of Germany’s gold bullion. The Chairman of the Federal Reserve, Benjamin Strong was mortified, but to put him at ease Herr Schacht turned to him and said ‘Never mind, I believe you when you when you say the gold is there. Even if it weren’t you are good for its replacement.’ (H/T The Real Asset Company)

But that was then and this is now. In the eyes of the Germans – and who can blame them? – America has lost its mojo to such a degree that it can no longer be trusted honour its debts, even in the unlikely event that it were financially capable of doing so. Which is why, following in the footsteps of Venezuela’s Hugo Chavez (who may be an idiot but is definitely no fool), Germany is repatriatriating its gold from the US federal reserve.  It will now be stored in Frankfurt.

You and me, we aren’t central bankers. But if we pay attention, we will see that China, Germany, Venezuela, several mideastern countries and more are asking the United State, France and the United Kingdom to give back the gold that those countries have placed in protective vaults–the equivalent of a safety deposit box for you and me. The central bankers of the world are losing trust in each other. That means we should be wary of those “safekeeping” our “gold,” too.

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