The gold mining industry is awakening to the reality of new base of
commodity pricing support. Gold in the modern era is classified as a "precious metal"
because of its inherent value monetarily. Historically, gold has been
used as a medium of exchange because of its scarcity, it's treasure like
aesthetic appeal, and its image biblically as a store of wealth as
money is described in scripture. The gold standard has been interrupted but perhaps not permanently.
Prior to 1971 when the Bretton Woods Agreement was in place, the Federal Reserve required Central Banks to maintain inventories of gold in proportion to the money supply. It was feared then that without a "gold standard", the whimsical printing of new money without an adequate reserve of bullion could create an unmanageable inflationary climate. In other words, a mechanism used to be in place to prevent U.S. politicians from digging the country into an insurmountable burden of debt from the uncontrolled printing of new money. The gold mining industry has been well aware of issues surrounding the fragility of a fiat based monetary system but is typically modest in its expression of these facts given that the financing of projects has everything to do with the paper money game. It is now debated that because of the removal of the gold standard, there appears to be a planetary shift in power resulting from the United States' exuberance in inflating the money supply at the expense of its citizens. The U.S government has now decided that it will cease releasing the statistic of M1 growth in the money supply. M1 refers to cash accounts and short term debt securities readily convertible to cash. However; Uncle Sam cannot refute the upward ascending spike in the chart of the U.S. National debt now pegged at over $15 trillion.
have failed to save and in fact have tapped into credit sources predicated
on rising house values. Although the 2008 financial crisis has passed, its effects lingers as the economy stagnates in spite of the government boasting of the creation of new part time low paid jobs. The gold mining industry may currently have a place in everyone's investment portoflio.
Are consumers and governments living in a state of denial with respect to debt management? Is it going to be quantitative easing to infinity? Will creditor nations begin refusing the uptake of new government bonds and bills in the face of U.S. politicians' intransigence, neglect, and forgetfulness of history? Will the gold mining industry renew its place as a resource for a peg to the monetary system?