Below is Fitzwilson’s exclusive piece for KWN:

“Over the millennia, gold and silver have been the critical intermediaries between purchasers and providers of goods and services.  Having a sound standard for economic activity has been a critical factor in the rise of history’s most influential societies.  In our time, nothing seems to generate more heated discourse than the topic of a gold standard.  

The intensity of the controversy should be viewed as odd.  Gold and silver have been used as money for almost all of mankind’s recorded economic history.  Only in the last 40 years have calls for the return to some form of a gold standard invited such extreme ridicule from academics and popular media alike.  This is despite the overwhelming evidence that sound money is one of the critical prerequisites to sustainable, long-term economic prosperity.  It is also odd in that standards of all kinds are accepted in our daily lives....

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“One of the most interesting standards devised by human minds is for the meter.  Originally proposed by Christopher Wren and John Wilkins in the 1600s, it was for a decimal-based, universal definition of length.  The first concept relied upon a length derived from a pendulum, although the accepted standard had many bizarre attempts over the ensuing centuries.  Among those proposed and adopted were:

A pendulum with a half-period of one second to measure a standard length that was thought to be 3914 inches in length.

One ten-millionth of the distance between the North Pole and the Equator.

Another one began with measuring the distance from a belfry in Dunkerque (Dunkirk) to a castle in Spain.

As precision improved, a Metre Convention in 1875 settled upon the new standard being the distance between two lines on a bar made of 90 percent platinum and 10 percent iridium measured at a temperature of the melting point of ice.  Since 1983, it has been defined as “the length of the path travelled by light in a vacuum during a time interval of 1/299,792,458 of a second”.  Thankfully, most standards in our daily lives do not require such precision.

While standards are critical to modern life, transmission mechanisms for those standards are just as critical as the standard itself.  We cannot use the platinum-iridium bar to measure things in our daily life as we certainly cannot be using tools based upon the speed of light in a vacuum.  That is why we use more mundane transmission mechanisms such as rulers and odometers.

The problem with our current monetary system is not a lack of an understandable standard.  “Full faith and credit” has been good enough for most people.  The issue is that the transmission mechanisms of standards, also called markets, have been terminally marginalized.  Price discovery in markets based upon fiat currency is almost non-existent.  There are no believable financial “rulers” in existence to measure the level of money and derivatives to the standard upon which our money is currently based.

In the U.S., our leaders are even championing the elimination of the debt (spending) ceiling.  In such a world, among the remaining objective rulers will be the prices of commodities, gold and silver.  That is why smart investors are already making the conversion from paper to real assets.

Prominent names and organizations continue to berate and ridicule those who propose a return to some form of standard.  Compared to the various incantations of the standard for the meter, a gold standard seems almost simplistic.

We will give partial credit to those who say that expending resources digging the gold out of the ground to then rebury it in some other underground venue might seem strange to a Martian.  It is a very inefficient approach if it were a perfect world.  However, it has been a reflection of the inability of mankind to control the urge to profit from and debase the property and labor of others.

As we saw with the various standards for the meter, it really does not matter to the average person which definition is operative.  The issue is having a standard.  It does not have to be perfect, but there has to be one.  Clearly we do not have one.  The supply of money is very close to becoming totally unconstrained.  That scares people.  The first adopters of metals are already converting from their paper-based wealth.  When the masses realize that their money is being overtly destroyed in front of their eyes, there will be a panic.  By then, it will be too late.

As central banks and wealthy individuals relentlessly accumulate the remaining supplies of gold and silver, it is a reminder that the consensus knows that it is not a perfect world.  The powerful know that we are heading toward a very uncertain and tumultuous transition to a new financial world order.  While nobody knows what that will look like in final form, they know it always is underpinned with gold and silver.

It is imperative to accumulate the metals in anticipation of that event in our future.  It is not a coincidence that the Germans are taking back their gold.”

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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Eric King

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rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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