Dead 40 Years Ago, the Gold Standard Is Back

As this chart of the M2 measure of money supply shows, it has gone on to experience a gigantic surge in the past seven weeks. M2 has risen almost $420 billion since the week of June 13th, on average almost 60 billion per week. To put this in perspective, annual M2 growth has averaged about 6% per year since 1995, and growth at this rate would translate into about $10 billion per week. In other words, M2 normally would have grown by $10 billion a week, but instead has grown six times faster. M2 has never grown this fast in a seven week period for at least the past 50 years. No matter how you look at it, this is a major event.

This short blog, complete with an excellent graph, is posted over at scottgrannis.com...and I thank reader Bob Fitzwilson [who I had the great pleasure of meeting in person in London last weekend] for sending it along. The graph is worth the trip all by itself...and the link is here.

It's not often I get to post something by Carl Swenlin...who has been around since dirt. But reader U.D. sent me this short piece that was posted over at financialsense.com on Saturday.

Carl says that "Considering the rapid deterioration of both price and internals, I think that a continuation of the decline to much lower levels is probable. That is to say that we'll probably see support at pervious bear market lows tested before we'll see this year's highs exceeded."

That's a big 10-4 good buddy...and the link to this short read, which is headlined Percent Buy Index [PBI] Deeply Oversold, is here.

World Bank chief Robert Zoellick has said that investors have lost confidence in the economic leadership of several key countries, warning global markets were in a "new danger zone" as a result.

Zoellick said a convergence of events in the United States and Europe had rattled investors in countries already struggling to cap sovereign debt issues and unemployment...and I think that those events combined with some of the other fragilities... have pushed us into a new danger zone. And I don't say those words lightly."

This story was posted in the Sunday Telegraph...and I thank Roy Stephens for sending it to me. The link is here.

Here's a 14-minute therealnews.com video with everyone's favourite CFTC commissioner. It's worth the listen...and I thank reader Randall Reinwasser for sharing it with us...and the link is here.

German Chancellor Angela Merkel's coalition partners are threatening a withdrawal from government if she agrees to eurobonds or any form of fiscal union to prop up southern Europe.

The simmering revolt in the Bundestag makes it almost impossible for Mrs. Merkel to offer real concessions at Tuesday's emergency summit with French president Nicolas Sarkozy.

"We are categorical that the FDP-group will not vote for eurobonds. Everybody must understand that there is no working majority for this," said Frank Schäffler, the finance spokesman for the Free Democrats (FDP).

Well, with everyone at daggers drawn, it should be an interesting meeting. This story was posted late last night over at The Telegraph...and it's well worth the read. The link is here...and I thank Roy Stephens one more time.

In a SPIEGEL interview, German Finance Minister Wolfgang Schäuble talked about his opposition to euro bonds, the limits to European solidarity and the need for governments to reduce their debt burdens....

SPIEGEL: Mr. Schäuble, have you bought any gold yet?

Schäuble: My private financial situation is such that I don't need to worry about my investments. I don't have much to invest.

SPIEGEL: Many people are worried about their savings. They're losing their trust in their currencies and in their governments' crisis management, in the US as well as in Europe. The price of gold is rising as a result. Can you understand this mistrust?

And it goes straight down hill from there. This is another Roy Stephens offering from yesterday...and the link is here.

This Jim Rickards interview falls into the absolute must watch/listen category...and is imbedded in this GATA release. Chris Powell's preamble is also worth your time...and the link to all of this is here.

Raging gold prices are disrupting United States Mint gold coin sales. The bureau on Friday stopped selling commemorative gold coins just three days after a similar suspension was implemented throughout collector pieces, including the American Gold Eagles, American Gold Buffalo and each of the First Spouse Gold Coins. The suspensions came as melt values of the coins raced toward their retail prices.

"The United States Mint has suspended sales of commemorative gold coins for re-pricing," the bureau said in a statement. "Due to the current market volatility, we will be placing these coins on a ‘pricing grid’ similar to the structure we use to price American Eagle, American Buffalo and First Spouse gold coins. A new grid specific to these coins is being developed and will be posted when complete."

I thank reader 'Charleston Voice'...and the story is posted over at coinnews.net. The link is here.

Gold and silver sales on eBay had already been rising steadily over the past several years -- so much so that eBay Inc. created a special area in May to make it easier for buyers to find sellers.

Now, activity on that part of the site, the Bullion Center, is intensifying as consumers unnerved by the economic uncertainty flock to gold in hopes it will be a stable investment.

"When people are coming down to the question, `Do they want to have cash in the bank or gold in their hands?' the answer is they'd rather have gold or silver," said Jacob Chandler, CEO of Great Southern Coins, the largest seller of precious metals on eBay.

This AFP story was picked up by finance.yahoo.com on the weekend...and I thank reader Scott Pluschau for sending it to me. The link is here.

Here's a story from yesterday's edition of The Wall Street Journal that's headlined "SAC's Steve Cohen: Gold Bug?".

SAC Capital Advisors L.P., the hedge fund run by Steven Cohen, disclosed a new position in options on the gold exchange-traded fund, SPDR Gold Trust.

The investment, options that allow SAC Capital to buy shares of the gold ETF at a defined point in time, is valued at $628 million, the single largest value of equity positions disclosed by SAC Capital, according to the hedge fund's quarterly snapshot of its U.S. investment holdings.

Chris Powell's comment in this GATA release was as follows: Watch them expire worthless a day before gold's next explosion. The link is here.

Fresh from his appearance at GATA's Gold Rush 2011 conference in London, Hinde Capital CEO Ben Davies flew to Asia and ended up on CNBC Asia in Singapore, where he got a minute to explain to that part of the world the difference between paper gold and real metal and how demand for the latter is crushing the former.

I stole the introduction and the headline from a GATA release. The segment is a little less than four minutes long and you can watch it at the CNBC archive here.

Here's a Ben Davies double header. The preamble and title is also courtesy of Chris Powell.

Hinde Capital CEO Ben Davies, who spoke at GATA's London conference, was interviewed today on CNBC Europe about gold's likely reincorporation into the international monetary system. The recent sequential financial crises, Davies said, show a "huge dollar burden being passed around." Gold, he said, will be part of the reform of the dollar reserve system. The interview with Davies is eight minutes long and you can watch it at the CNBC archive here.

GoldMoney founder and GATA consultant James Turk, who spoke at GATA's Gold Rush 2011 conference in London last weekend, has been sticking his neck way out with price predictions all summer and seeing them come true. Today Turk does it again in an interview with King World News: Gold above $1,800 by the end of the month. Turk says he is "amazed" by the demand for real metal and thinks silver is about to play catch-up.

I just love it when Chris does my work for me...as he did here again.

In an audio interview yesterday with Eric King of King World News, geopolitical analyst James G. Rickards, who spoke at GATA's London conference, reviews President Nixon's severing of gold from the dollar in 1971...and speculates that gold will be officially revalued to $7,000.

Whenever Jim Rickards is talking, I'm listening. I had the privilege of having breakfast with Jim a week ago Sunday when we were both in London at the GATA conference...and he's one smart guy. The link to this must listen audio interview is here.

Here's a short article from yesterday's edition of The Wall Street Journal. For all you newbie gold bugs under the age of 60...this is an absolute must read...and for all us over that number, it's an excellent refresher.

The WSJ story is posted in the clear in this GATA release...and the link is here.

In the aftermath of World War II, international finances were tied to the US dollar, which was backed by gold. It was known as the Bretton Woods system and it helped stabilize the currencies of participating countries.

All in all, it worked quite well as growth increased throughout the world. Yet with President Johnson’s Great Society programs and the Vietnam War, the system started to fall apart as the US began to run deficits.

There was a growing fear that foreign central banks would have a run on gold. Since there was only a finite supply of gold — unlike dollars which could be printed to manage fiscal policy — there was significant concern. So it was on August 15th, 1971, that President Nixon radically changed the global monetary system by nixing the gold standard.

This story appeared in Forbes yesterday...and it's a short 2-page read which is well worth your time. As per usual, I thank Roy Stephens for sharing it with us...and the link is here.

Here's another story about the 40th anniversary of the death of the gold standard at the hands of Richard Nixon. This piece appeared in the Saturday edition of The Telegraph...and the link is here.

Gold has gone up for 12 straight years in a stealth market. In the last ten years gold has had a compound annual growth of 20.5%. This is an absolutely outstanding return but investors should not look at gold as an investment but as money. Gold reflects governments’ deceitful actions in totally destroying the value of paper money by printing unlimited amounts of it. With gold up 7 times since the bottom in 1999, is it too late to jump on the Gold Wagon?

The answer to the above question is a categorical NO.

I had the pleasure of meeting Egon at the GATA conference...and I'm more than happy to be able to post his latest offering in this column. It's a bit of a read...but very much worth your while. I thank reader Bob Fitzwilson for his second contribution to today's column...and the link is here.

Sprott Asset Management's chief investment strategist, John Embry, discussed gold, silver, currencies, remarks made at the conference by other speakers, and the gold and silver price suppression scheme.

I listened to this interview on the weekend...and it's well your time, if you have it. The interview is 26 minutes long and you can watch it at the GoldMoney Internet site here.