As the premium on physical gold remains above the cash spot futures contract including shipping and insurance to destination, the demise of paper gold is certain. The emancipation of physical gold from fraudulent paper gold is in process right now.
Emancipating physical gold is freeing gold. Free gold is the final product of this transition. Forget argumentation as the phoneme in process has its foundation in granite. This process is taking place in the world markets, today, right now!
It is an undeniable fact and shock to the paper trader as they manipulated the paper price of gold sharply lower kick starting this major monetary shift. These paper traders have initiated the transition to Free Gold. The paper gold traders have fashioned their own economic demise. For the COMEX that is what would be expected.
I do not hold too many of the tangential and political thoughts of Free Gold. Those are products of its new adherents. As a movement gains followers they usually destroy the truth, the teacher, or both.
Freegold – Preferable to a gold standard?
When people bring up going back to a gold standard, many – including the hard money advocates – want to return to a gold standard because of the disciplinary function of gold within the monetary system. Physical gold has proven a very good instrument against government debasement in the monetary system. However, what the gold standard advocates overlook, is the actual effectiveness of the gold as money, and the way to get to a gold standard.
Apart from gold being a cumbersome medium of exchange, gold – when in the hands of governments and central banks – has never proven to be a hedge against … that same government and central banks. For obvious reasons I might add, anyone should see the conflicting roles of "our" officials. Physical gold can only be a hedge against government and central banks when it is in private hands. Physical has a special meaning here too, as non-physical "paper" gold is just an IOU with counter-party risk, which might not function as a hedge, when push comes to shove.
Perhaps more importantly, actually getting to a gold standard will proof the most difficult goal for the hard money advocates. A gold standard is in every way the extreme opposite site of where we are standing today. You literally have to get rid of overspending governments, central banks backstopping everyone and everything, and the majority part of the global population addicted to cheap money.
Wouldn’t it be much easier to accomplish the same goal "bringing back the disciplinary function of gold to the monetary system", by leaving the ruling establishment in power, by leaving the current financial system in place? Everyone who likes to solve this global economic crisis, should answer this question with a definitive "yes". If it can be done without throwing the world into chaos because of changing monetary system, that should be the preferred route to a solution. So, how can this be done? Get physical gold to private hands …. this time for good.
Store of value to private hands
The idea is simple, and it has been this way from the very early days of money. Money is just a means to do transactions, to exchange, which we refer to as the function "medium of exchange" within money. Whenever a transaction is closed, the medium "money" has no longer a function. Economists are now expected to be jumping up and down, screaming "store of value" and "unit of account". Well you see, the unit of account doesn’t really need a medium. The prices on the counter of a shop, are just a communication method, to allow us to have a perception, whether something to be cheap, reasonable priced, or expensive. For that communication, you don’t need the actual medium "money". (Note that this is true in a digital world anyway – you can’t hold the money in your hands for it is an electronic abstraction in ones and zero’s.) For store of value, we have been taught that this is one aspect of money, but it is certainly not an aspect of current day government issued currency. The truth is, anything can be a store of value, from farm land, real estate, stocks in well run companies, to gold and silver or private issued money. All of them have characteristics of store of value, one better than the other. And government issued money is not one of them.
By cutting the "store of value" out of the function money, we could allow central banks to print all the money they need, without seriously impacting the purchasing power of savers. That is, for future spending savers are not setting aside their purchasing power in the form of currency, and currency derivatives (which includes government bonds). Consequently, without a pool of savings stored in currency and currency derivatives, debasing the money supply to surreptitiously devalue government obligations doesn’t work. There you have it: removing the function "store of value" from money is seriously disciplining the current day reckless borrowers, ranging from banks through fractional reserve banking, to central banks bailing out everyone and everything, to socialist governments spending the future tax revenue from unborn generations.
Traditionally, the best medium to store value long term has been physical gold. When physical gold was captured as function into the official money, governments had an incentive to demonize gold, to make it a barbarous relic of the past. Part of this strategy, is the depression of the gold price. Either through direct manipulation in the paper gold markets, or marketing propaganda. Up till today, people are discouraged to store their surplus of purchasing power in physical gold, but to rely on currency and currency derivatives, being "as good as gold".
By removing the function "store of value" from money, we can allow physical gold to discipline our money, while keeping our monetary system intact, keeping governments and central banks in place, and avoiding economic turmoil or social unrest. That is what freegold is all about, gold finally set free!