"Money as we know it… will simply disappear".

Posted at 11:47 AM (CST) by & filed under Bill Holter.

Bill Holter for Miles Franklin

Dear CIGAs,

"Money as we know it…will simply disappear".  Could this really happen?  I think that it can and believe that it will in some fashion.  This is a huge statement and one that certainly needs some explaining.  Before getting to this, I want to relate to you a couple of questions I received this past week and pass along a quote that is very pertinent, and in my opinion almost an exact roadmap to what we will soon experience.

  First, I was asked by a new client, "I don’t understand, if the markets and banks close, how will I sell my gold and who will have money to buy it?".  This is a good question with no set in stone answer because once panic sets in there will be so many parts literally moving at the speed of light.  Let’s look at a couple of historic events to get a little bit of perspective.  After Archduke Ferdinand was shot in 1914, World War I commenced and our (U.S.) stock market was closed for nearly 6 months.  Money in the U.S. back then was either gold coin or "dollars" which were receipts for gold coin, "money" still circulated even though the stock market was closed.  Stocks circulated privately between individuals as certificates were signed over from one party to another in exchange for a real item or a service.

  Another historic event was back in May of 1931 when the Austrian bank Credit Anstalt failed.  This was a black swan event in a series that led to many banks around the world folding and what drove the U.S. and world economy deeper into depression.  A description of the affair after the fact by Lord Revelstoke (Barings Bank) was; "It was amazing, how, in a fortnight, the credit system we had spent decades building……collapsed".  Our banking system saw many failures and was closed for a time but again, money remained and still changed hands.  But remember, "money" was different back then, it was "real" whereas today it more resembles Monopoly money.

  Back to the original question, "how will I sell my gold and to whom"?  Gold (and silver) "ARE" money themselves.  They are a store of value, they have "worth" on their own as opposed to dollars, euros, yen or any other paper currencies.  The paper currencies have "value" because a government "says" it has value and enforces what they say with legal tender laws.  Gold and silver need not be "sold" for currency, they may instead be exchanged for goods or services during a time of stress.  Actually, the part of the question that asks "who will have the money to buy it?" can be answered in one word, "you".  YOU will have the "money" that may be retained or "spent" at your discretion, worrying about who will accept it during a crisis and after is not necessary.