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The Ethics of Gold

The Ethics of Gold

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Published by Ron Robins
The rising price of gold stands as the ethical barometer of the mismanagement of our fiscal, monetary, and currency systems. Gold is in the early stages of re-asserting its historic role of helping to bring order to monetary and currency chaos. Its price has risen more than fourfold over the past ten years as a result of investors anticipating the predictable financial and currency chaos we have today—and what is likely yet to come.
The rising price of gold stands as the ethical barometer of the mismanagement of our fiscal, monetary, and currency systems. Gold is in the early stages of re-asserting its historic role of helping to bring order to monetary and currency chaos. Its price has risen more than fourfold over the past ten years as a result of investors anticipating the predictable financial and currency chaos we have today—and what is likely yet to come.

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Published by: Ron Robins on Dec 26, 2010
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The Ethics of Gold
By Ron Robins, Founder & Analyst,Investing for the SoulBlogEnlightened Economics;twitter First published August 24, 2010, in his weekly economics and finance column atalrroya.comThe rising price of gold stands as the ethical barometer of the mismanagement of our fiscal, monetary, and currency systems. Gold is in the early stages of re-asserting its historic role of helping to bring order to monetary and currency chaos.Its price has risen more than fourfold over the past ten years as a result of investorsanticipating the predictable financial and currency chaos we have today—and what islikely yet to come.The central banks and government treasuries, particularly those of the US, Europe,and Japan, have been weakened and our trust in them eroded. For decades theyassured us that only they and their paper currencies and fractional reserve bankingsystems can keep our economies growing forever. They are now failing for all to see.And before the ships of state sink and economies further submerge they bail outtheir banking friends.The monetary and currency systems and organisations responsible for them aredeteriorating because they essentially lack an ethical standard. That is not to saythat most individuals in these organisations are unethical. It is that as organizationsthey implemented policies over the past several decades that knowingly—or theyshould have known—would eventually lead to great financial and economic hardship.One such policy was the encouragement of debt creation way beyond income oreconomic growth. When this policy failed, it led to tens of millions of people losingtheir jobs globally, millions losing their homes, and retirees in developed countrieslosing their savings as interest rates were reduced to near zero. It is in this sensethat these organizations were, and are, without an ethical standard.To rise to the top among many of these banking and financial organizations, requiresnot only brilliance, but usually subservience to base instinctual values of status andgreed.According to Dr Paul Ray’s research on Americans’ values, close to half the Americanpopulation’s primary values include those of status and greed. It could be arguedthat even Timothy Geithner, the US Secretary of the Treasury, exhibited thesevalues. Before his appointment it was divulged that he owed taxes that went backseveral years. He then hurriedly paid them to smooth his appointment to head theUS treasury, the most powerful treasury on earth. About those taxes—he says he just ‘forgot’ to pay them.When many in the financial, banking and political elites are motivated primarily bygreed, unethical financial behaviour asserts itself. ‘Moral hazard’ is the termeconomists give to this condition. Until we as a species are able to have an innercompass that is driven by higher ethics and consciousness, then some form of firmcontrol in regard to credit and debt creation has to be enabled. Gold is ideally suitedto act in this controlling capacity.
 
However, anyone who studied economics at Western universities and colleges sinceWorld War II, left with the understanding of gold as a ‘barbaric relic.’ This is howJohn Maynard Keynes, the ‘guru’ of today’s economists, famously referred to gold. Itis perceived wisdom today that we are capable of managing our monetary andcurrency affairs more wisely than having them subjected to the hard discipline of agold standard, or some system where gold acts to control the issuance of currency orcredit availability.What modern economists choose to forget is that during the late nineteenth andearly twentieth centuries while the world was on a gold standard, global economicgrowth was unprecedented.As is now obvious, the perceived wisdom of modern monetary and currencymanagement is shown to be false. Monetary conditions are increasingly calling forthe kind of control that only gold can offer. However, it is unlikely that we would goback to a traditional gold standard—where everything is linked to gold. What is moreprobable is the tying of gold to a new international currency or to some form of monetary or credit measure. It is known that because of the vexing issues with allthe four major global currencies—the dollar, euro, yen and pound—that theInternational Monetary Fund (IMF) is developing proposals for a new internationalcurrency.Countries such as Brazil, Russia, India and China (the ‘BRIC’ nations) as well asWestern countries like France are demanding the establishment of a new worldcurrency as well. Soon it will be realized that all paper currencies have the samehistorical deficiencies: their administering agencies and human governors lack thenecessary restraints on credit creation unless they are tied in some way to acommodity standard. And that is best fulfilled by gold.Jim Sinclair, one of the world’s greatest experts on gold, believes the US willeventually be forced to anchor the dollar to gold. He says the tie will be the gold heldby the US Federal Reserve and Treasury versus a measure of international liquidity(ie money and or credit).Already some central bankers are acknowledging the inadequacies of the presentsystem and beginning to resort to gold.After more than two decades of mostly gold dishoarding, central banks are againbecoming net buyers of the metal. They include China, India and Russia. ABloomberg story reported in June on a UBS survey of central bank reserve managersand other financiers, found that 30 per cent of them cited gold as being the bestperforming asset they could own for the balance of this year. That was the highestpercentage for any asset class.We are in the midst of major currency and monetary upheavals the like of which wehave not seen since World War II. Deep, fundamental fissures have been exposed.Most notably: the lack of an ethical compass by institutions managing our monetaryand currency systems, the policies of our monetary authorities who see the only wayforward as the promotion of excessive debt, and the increasing moral hazard amongbankers and financiers.Investors and the global public are viewing these developments with alarm. Gold’s

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