Below is Fitzwilson’s exclusive piece for KWN:

Fitzwilson:  “The reality of currencies is that they represent unfinished transactions.  Currency was invented to make the movement of wealth less hazardous and the storage of wealth more convenient and secure.  Transporting gold and silver in the past was cumbersome and dangerous. 

That said, it is critical to remember that currencies are not wealth, but simply a mechanism for the exchange of goods and services in the present, as well as a way to defer such exchanges to a later time such as retirement....

Continue reading the Robert Fitzwilson piece below...  


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Like any profession, we tend to use concepts and words that are unknown to most people not in that profession.  We talk about fiat money, velocity of money, all of the “Ms” for various calculations of the money supply.  We debate about inflation or deflation where the definition of those terms has different meanings to different people.

So let us try to simplify this.  Let’s assume that you have purchased a U.S. Silver Eagle coin, roughly 1 ounce of silver, for around $30.  You put the coin on a table as well as the equivalent of $30 in your currency of choice.  The two are very different.  One represents a mechanism to enable the holder to exchange goods and services, and the other can be used as both a medium of exchange and a store  of wealth.  The latter is the silver coin.

The currency has no intrinsic value other than the heat energy of the paper on which it is printed.  It does have “utility”, though.  Utility can be thought of as a tool, such as a utility knife or a sport utility vehicle.  In the case of the currency, the utility it provides is a convenient way to exchange goods and services.  We know the price it represents.  We know the issuer.  If we are the seller of the goods and services, there is a presumption that the currency received can be used to purchase other items or services now or be stored to do so at a later date.

The silver coin in most of human history has allowed the owner to purchase goods and services.  It has also been one of the primary mechanisms for the storage of wealth.  The amazing thing about the coin is that it also has tremendous utility.  Silver is the best conductor of electricity, so it is essential to our technology driven world.  Computers and solar panels all rely on the electrical properties of silver.  Silver also is one of the best natural anti-microbial elements in Nature.

There is an ever expanding list of potential uses for the metal.  At the same time, the surplus of silver that we had not too long ago has been consumed.  The ore grades that we are mining continue to decline.  At a time when supplies are tight and getting tighter, the demand for industrial, jewelry and monetary uses continues to grow.

Returning to the coin and currency on the table, you can see that they both have been used to exchange goods and services throughout history.  The currency has virtually no intrinsic value.  The silver coin has a great deal of it.  The supply of currency grows exponentially every day.  The supply of silver will stabilize and eventually decline as mines are depleted and the other uses for the metals increase.  Common sense tells us that one will get more valuable and the other will suffer a decline.

If you own the dollar, the value of it has been virtually destroyed in the last 100 years, all but 2% according to one estimate.  For currency that is saved for future exchanges of goods and services in the form of bank deposits and other forms of fixed income, the interest has been taken away through the zero interest rate policy.  There is now talk of completing the confiscation in the form of applying the Cyprus model to bank deposits.  Whether that is an imminent prospect or not, the legal mechanisms are now in place.

In a perfect world, the amount of the unfinished transactions, the currency, would be roughly equivalent to the amount of goods and services that might be exchanged now and in the foreseeable future.  As grotesque amounts of debt/currency are being created, these representations of unfinished transactions have completely overwhelmed any possibility of several generations being able to provide an equivalent amount of goods and services.  We know the currency has no intrinsic value.  We now know that the utility has been and will continue to be systemically destroyed, particularly if there is a new global currency or a new reserve currency such as the Chinese Yuan.

The choice between the wealth and the utility of the silver coin and the lack of wealth and diminishing utility of the currency should be an easy one.  Assets denominated in currencies are being destroyed at an accelerating pace while the safety and desirability of real assets such as the silver coin grow commensurately.

The recent run on silver is a sign that the general population is starting to understand the stark differences between the safety of sound money and peril of paper money.  We can only hope that more and more people reach that same conclusion before it is too late.”

© 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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© 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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