Gold and the Debasement of Currency Con / Commodities / Gold & Silver 2020

It is reasonably well known that many Romanemperors debased their currency (coinage). This was a very bad practice, sinceit is really a reflection of the debasement of the value of the kingdom (empireor country); going from a honest and just society to a corrupt and unjustsociety.

One of the reasons (effects) of debasing thecurrency was the transfer of wealth from the citizens to the ruling class. Whenthe gold or silver content of the coinage is reduced, then more of the officialcoinage can be made, with a similar amount of gold or silver; therefore,increasing the money supply without the input of more gold or silver.

The increase of the money supply leads toreduced purchasing power, and this is the mechanism whereby they are robbed,since it is the ruling class that essentially bags the difference in purchasingpower.

It is by this same or similar mechanism thatUS money printing is funded by the world (other nations) having a reducepurchasing power, since they use the US dollar as a reserve currency.

Below, is a chart that shows the extent towhich the Roman emperors debased their coinage:

source: By Nicolas Perrault III - Own work,CC0, https://commons.wikimedia.org/w/index.php?curid=67224989

Over a period of about 300 years, thecoinage was reduced by about 65%, according to this chart. If that is bad (andit was), then where does it leave the current society, where coinage have beendebased by 100% over a period of less than 100 years (this is since mostcountries have moved from a gold & silver standard to where their coins (orcurrency) has no precious metal content).

This is how the rich gets richer and thepoor gets poorer. This is is how the “too big to fail” gets bigger.

Note that (mathematically)the differencebetween going from 100% (or even, say 20%) to 0% is infinitely worse than goingfrom 100% to 35%.

If one considers what eventually happened tothe Roman empire, then this society is in for an experience that can only bedescribed as Hell.

The increase in credit that this debasementhas facilitated, has had a huge effect on how this society prices gold, forexample. The massive amounts of credit has deflated the price of goldsignificantly.

When this credit extension has run itscourse, then gold prices react violently to the upside, as explainedhere.

Here is a chart of the gold price relativeto the US M2 Money Stock (in billions of dollars):

Currently the gold price is just slightlyless than 10% of the M2 money supply (in Billions of dollars). In 1980 it wasas high as 45.4% of the M2 money supply (in Billions of dollars). If one goesfurther back, then gold was even more valued relative to the M2 money supply.

Interestingly, in 1913 when the FederalReserve was created, gold was priced at 131.4% ($20.67/15.73) of the M2 moneysupply (in Billions of dollars). At that ratio gold would today be around  $22 166 ($16 869*1.314).

Although debasement of the currency startedbefore the creation of the Federal Reserve, it does show to what significantextend the gold price has been suppressed by credit creation facilitated by theFed since its inception.

A prudent study of gold prices will lead oneto understand that the gold price will likely revert to historically highlevels relative to the M2 money supply. Owning gold at the right time is a veryeffective way to counter the effects of this debasement robbery. That time isnow.

For more on this, andsimilar analysis you are welcome to subscribe to my premium service. Ihave also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report.

Warm regards,

Hubert

“And it shall come to pass, that whosoevershall call on the name of the Lord shall be saved”

http://hubertmoolman.wordpress.com/

You can email any comments to hubert@hgmandassociates.co.za

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