Patience is required first and foremost as these changes are resisted and take time to come to fruition. When the time is right they can happen overnight. Sometimes the changes never occur as the problem gets a workaround but that doesn't change the validity of the point Mr. Fekete makes.

The way in which backwardation will affect international trade is this. As has been stated by Mr. Fekete an individual cannot buy gold with Zimbabwe dollars. It matters not how high the offer is; no one will trade gold for Zimbabwe dollars.

Similarly, letters of credit for international shipping are currently not being accepted even though issued by major banks because no one knows if the bank will be around tomorrow to honor the contract.

Likewise, gold going into PERMANENT backwardation will signal major distrust in paper currency no matter what country is the issuer. People will be fearful of establishing a shipping contract in a paper currency; by the time the shipment reaches its port the possibility exists that the nation will have devalued its currency by half in order to jumpstart the economy. Who wants to take that risk. You can't insure against it because the insurance companies are all insolvent (if their liabilities were actually posted on their books). So the insurance companies cannot be trusted to honor their contracts.

This leaves only gold as a medium of exchange for international goods. And, as Mr. Fekete says, if the government try to stop that by making such contracts extralegal (not protected by law) the governments will reveal the weakness of their position further destroying confidence in paper currency.

P.