The permanent relationship between money and gold as a wealth metal has always been a very delicate one. The efforts to sever the link between money and gold were always very dubious. John Law (1671), Nixon (1971) and the most recent by Wim Duisenberg (2002 Aachen acceptance speech).
“The euro, probably more than any other currency, represents the mutual confidence at the heart of our community. It is the first currency that has not only severed its link to gold, but also its link to the nation-state. It is not backed by the durability of the metal or by the authority of the state. Indeed, what Sir Thomas More said of gold five hundred years ago – that it was made for men and that it had its value by them – applies very well to the euro.”
Decoupling of gold and money
The decoupling of gold and money was always halfhearted and relatively short lived. Because, it was always a matter of debasing monetary expansion. Most probable it is different this time…
The old Euroland continent and the China Center Empire now definitely have a running gold affair. Both want to end the system of monetary gold. Monetary gold is worthless money-linked gold. Gold is not money, but a tangible wealth metal. Euroland and Middle East/Far East don’t want any money-tied gold standard to function as a monetary and financial disciplinary force. That’s why the ECB changed its central bank gold reserves formerly at fixed prices into a gold wealth reserve on its balance sheet, where it is marked at market prices. There is also no VAT on the yellow metal in Euroland! No one recognizes this yet as the most dramatic fundamental changes against the old dollar based gold standard principles… which by design were never disciplinary or store of value. The gold demonetization idea (or is it strategy..?) already lived under the Charles de Gaulle / Rueff decade and never faded away.
Speech by Robert D Sleeper, Head of the BIS Banking Department, to the South African Reserve Bank, 18 February 2005. Marking CB goldreserves to Market (BIS)
Free floating gold
The purpose of having gold decoupled from financial-monetary affairs is to decouple it from debt. A store of value can only float freely when completely dissociated from manipulative mismanaged debt. Gold was made for men and it must have its value by them (Wim Duisenberg). When non monetary gold is allowed to compete freely with other values, it becomes the best disciplinary force one can possibly imagine.
The debt & tax-o-mania system is increasingly becoming dysfunctional for the creation of durable prosperity. The founding fathers of the European Monetary Union recognized this already a long time ago (after World War II) when they started to draw the EMU architecture. But it still takes a lot of time and efforts to break loose from the Anglo-Saxon dominance.
Western Debt/GDP and monetary base evolved past the point of no return as the Freegold architects expected and anticipated with the new architecture. Monetary gold is on its way out… and welcomed by the Asian wealth producers and the Middle East wealth owners.
Why must monetary gold be demonetized!? As long as the gold pricing stays in the monetary system, its valuation will remain volatile and hectic. Three to nine kilograms of yellow metal for an average Western house, 10 to 35 barrels of oil for one troy ounce of gold, and a wild swinging gold price versus the expanding central banks balance sheet and monetary base.
These manipulative price swings can only stop when the physical metal is not artificially backing anything anymore in the financial/monetary complex. That’s what the ongoing official/central bank and private shifts in physical gold ownership are all about!
Physical gold must be properly redistributed on a global scale as to reach an international agreement on non-monetary gold revaluation. The ongoing central bank gold reserve turbulence during the past two decades must definitely have taken place for a purpose! The world’s pro-gold factions want Free Floating Gold Value (Freegold) without any monetary link. That is the valuation of demonetized physical gold and not unfree monetary electronic gold. The private market of physical metal is in progress to corner the manipulative priced electronic gold.
Written by 24 carat in January 2014