I believe that gold will prove its mettle as the best wealth preservation asset in the world within the next 5 to 10 years. Yet in the past few months, the significantly rising prices of gold (and silver) assets have largely happened underneath the radar of most Westerners and completely escaped their attention. The contrast between affinity for gold over all other currencies in the East versus a negative sentiment towards gold in the West (except among Western billionaires) is a striking one as I’ve lived in three countries in the East versus one in the West. Furthermore, of the fourteen nations I’ve visited in the Pacific Rim region of the world, the only one in which I didn’t find people that valued gold as the best wealth preservation asset over all other currency options was the only non-Asian nation I visited in that area – Australia. I’ve attributed this massive disparity in attitudes towards gold as the ultimate preserver of purchasing power to one culprit – an academic system which never discusses the importance of gold as the best wealth preservation asset, or even as money, in Western nations, and in fact, regularly dispenses wrong definitions of a Gold Standard in academic textbooks versus Eastern cultures that constantly stress gold as the best money in the world.
Gold Is Considered the Same as Money in Multiple Asian Languages
Did you know the word for gold in many Asian languages like Korean, Vietnamese, Thai, Japanese, and Lao is interchangeable with the word for money, as gold as viewed as money in all Asian nations? In Cambodia, the Khmer word for money is interchangeable with their word not for gold, but for the other precious metal, silver. In the West, Westerners are educated (brainwashed) both through mainstream financial media and academic classrooms that gold is a barbarous relic and not money and that the digital nothingness called fiat currencies is “real” money.
In Western nations, Central Bank Chairmen like American Ben Bernanke testify before the US government and directly dispute the lessons of money, embedded in many Asian languages for thousands of years, by denying that gold is money and endlessly spreading anti-gold propaganda to the masses. Consider this 2011 testimony between US Central Bank Chairman Ben Shalom Bernanke and US Senator Ron Ernest Paul:
Chairman Ben Shalom Bernanke: I think people are — the reason people hold gold is as a protection against what we call tail risk, really, really bad outcomes. And to the extent that the last few years have made people more worried about potential of a major crisis, then they have gold as a protection.
Senator Ron Ernest Paul: Do you think gold is money?
Chairman Ben Shalom Bernanke: No. It’s not money, it’s a precious metal…
Senator Ron Ernest Paul: Even if it has been money for 6,000 years, somebody reversed that and eliminated that economic law?
During this conversation, Senator Paul would have been well within the realm of diplomacy if he schooled Chairman Bernanke by asking him why he considered the US dollar to be money when it is nothing but a piece of cotton cloth and simple digital bytes sitting on a hard drive on a bank’s server.
Up 27,880% in Five Years and Still No Love?
In fact, even though the nation of Argentina was derived from the Latin word argentum which literally means silver, I have not met any Argentinians that told me that their fellow Argentinians all value gold and silver as money over the Argentine peso. Given that gold has risen by more than 26,000% against the Argentine Peso (ARS) in little over 4 ½ years and is up more than 27,880% in the past 5 years, converting the national fiat currency into gold would have been about the only action that would have saved an Argentine millionaire from not only losing all of his or her wealth if it was stored in fiat currencies, but actually would have preserved and added to it.
And even though gold proved itself as the best wealth preservation asset in the world, I doubt if many Argentines actually converted the bulk of their domestic pesos into gold before the Argentine peso hyperinflated, an action that would have translated into a life-saving decision. On the contrary, doing so, even for people that have hardly any savings, let alone the equivalent of millions of USD saved in their domestic currency, is a regular event for citizens of China, India, Japan, and so on. In India, even citizens considered poor, exchange their domestic rupees into gold as frequently as possible because they understand that gold is sound money and the best wealth preservation asset over time. And I’ve found that those educated in the West, even Asians that go to school in the West and then return home afterwards, are all largely ignorant of monetary history in their own countries that have birthed a love of gold in their nations, unless they have made self- education an important component of their lives.
Even Some Asian Business Schools are Worthless for Teaching Real Monetary History
For example, when I spent time in Shanghai, I spoke to a handful of ABCs (American Born Chinese) that returned to China after graduating from university and graduate business programs in America. I was shocked to discover that I knew more about Chinese monetary history than them, especially China’s quit long monetary history of silver. I discovered that all Western-educated Chinese business majors were ignorant of the fact that Chinese currency had hyperinflated into worthlessness multiple times in their history, with an episode happening even as recently as 1948, in which citizens queued up in long lines and fought with one another in these lines to receive government handouts of a small amount of gold that amounted to less than 1.3 troy ounces per citizen. Back then, even this small handout of gold weight enabled citizens to buy quite a large amount of food to likely survive for at least another year until they figured out how to recover from the devastating hyperinflation. Of course, because gold is such an important part of Chinese culture and gold is the most valued gift in China during many of its nation’s most important holidays, all Chinese, even ABCs, still understand the value of gold. However, this understanding is certainly not due to their Western education about money and gold in business school, in which almost no valuable or truthful knowledge about money and gold is dispensed in classrooms.
Even though nearly all Western business academic classrooms will not teach true monetary history, I cannot fault the business-educated ABCs for their ignorance of their own monetary history. In fact, during the time I spent in China, I met some Chinese citizens that also graduated from business degree programs in their nation. When I asked them to explain what they knew about Chinese monetary history, a few of them were able to tell me about the repeated episodes of Chinese fiat currency hyperinflation into worthlessness. Furthermore, they explained these episodes of hyperinflation as the reason gold is valued in Chinese culture as the best wealth preservation asset and why almost everyone they know owns a least a little bit of gold. However, when I asked them where they learned about hyperinflation, none of them said they learned this in school, but rather they learned this critical information from stories told to them by their parents or grandparents. So it seems even in China, perhaps true monetary education is devoid in most business classrooms. As I only spoke to half a dozen Chinese business graduates, my sample size was much too small to make any definitive conclusion about the business school curriculum in China. In the future, I would definitely be interested in surveying many business students from China that graduated from various business programs throughout the country to learn if hyperinflation is a regular part of the business curriculum or not. Still, whether true monetary history was being disseminated through stories told by relatives that lived through periods of great economic hardship due to hyperinflation or through textbooks, citizens throughout Asia valued gold as the best wealth preservation asset to exponentially higher degrees than any Westerner I’ve ever met, with the sole exception of a handful of Westerners whose relatives had lived through periods of hyperinflation in their respective nations.
Hyperinflation Exists in American Monetary History
Curiously enough, the fact that most Americans do not view gold as the ultimate protector of purchasing power and the best wealth preservation asset does not stem from the absence of a period of hyperinflation in American monetary history. In fact, colonial Massachusetts experienced a period of hyperinflation with its fiat currency. Americans are simply unaware of this fact because it is an event that is not covered in business academic textbooks in any meaningful capacity. In searching American academic textbooks about monetary history, I have discovered this event on a couple of occasions but usually mentioned with nothing further than one sentence or paragraph. In other words, there is zero meaningful discussion about what caused the hyperinflation event. Furthermore, when Nixon ended the US dollar standard in which the dollar was backed by gold in 1971, for several years the dollar was at real risk of hyperinflating and this is why Central Bankers raised the Fed Funds rate to more than 20% during this time. Again, this fact is glossed over in business textbooks used in every business academic program in America. In fact, it is often explained incorrectly as well, with many academic textbooks stating that Nixon ended the Gold Standard in 1971, when Bretton Woods was definitively not a gold standard, but an international US dollar standard in which the dollar was merely backed by gold (an extremely important distinction if one is to understand anything truthful about the role of gold as the best wealth preservation asset). In any event, were the true monetary history of money in America known by most American citizens today, most Americans would value gold as much as Asians do. If Americans were cognizant of true monetary history, dating back to 1690 Massachusett’s issued fiat currency, I believe that all Americans, regardless of income demographic, would own some physical gold, much as is the case in nearly every Asian nation.
Learn from the Mistakes of South Koreans in 1998
In the next five years, just as Chinese citizens in 1948 were saved by the government handout they received of slightly less than 1.3 troy ounces of gold per citizen, this time as the Central Banker currency wars culminate, governments will not be handing out free gold to their citizens. If anything, history has shown us that bankers and governments will try to con their own citizens of their lifelines by duping them to hand over their gold to them, as we witnessed during the Asian tiger crisis in the late 1990s when thousands of Korean citizens, at the behest of their government, turned over their gold for “love of South Korea” and to demonstrate their good civil manners, often queuing in line for many hours to give their gold for free to the bankers that ruled their nations. Even though the government begged their citizens for their gold to save their nation, the government eventually handed over the collected gold (in the form of jewelry, gold coins, medals, and even “gold luck” keys, traditional gifts bestowed upon new business owners and citizens on their 60th birthdays) to bankers to which the nation was indebted). Thus, ultimately, South Korean citizens really received zero benefit from their gold “donation/theft”, bankers took it all as it was used to pay down national debt, and so much gold was collected from the citizens at one point that the South Korean government stopped publicly announcing how much gold its citizens had handed over, as they feared citizens would stop handing over their gold to them if they knew how much gold have already been turned over. To this day, no one but bankers and government officials really know how much gold was stolen from South Korean citizens during this campaign. Many articles during that time explained the mass number of citizens queuing in lines to hand over the best wealth preservation asset in the world to bankers as an “extraordinary” display of cooperation. International Monetary Fund managing director, Michel Camdessus, when informed of the gold collection program, described the behavior of South Korean citizens as “admirable”. Anytime global bankers describe a behavior as “admirable”, you know that they are benefiting from it and not the citizens. In my opinion, the behavior was neither “extraordinary” or “admirable” unless one described it as “extraordinarily” naïve in its demonstration of spectacular levels of blind obedience and compliance and lack of critical thought.
Given that this program ran in 1998, a South Korean citizen that only handed over less than $3,000 worth of gold back then at gold’s price of $280 an ounce for the duplicitous “give up your gold for the love of your country” program would have handed over 10 ounces of gold. Had he or she held on to those precious three ounces of gold, would now be sitting on more than $15,000 worth of gold at today’s prices. If you wonder why I’m so disappointed in citizens that so easily allow bankers to pillage their gold with sophomoric campaigns that prey on a citizen’s brainwashed status as a possession of the State that must always place the State’s needs over his or her own, if any of these people that so willingly handed over the most valuable wealth asset they owned to the bankers in 1998 now needed some of that money today, do you really think that bankers would return even one ounce of gold to a South Korean citizen that perhaps handed over 10 ounces of gold to the government in 1998. Even though that gold would now be worth $15,000 on the day I’m writing this article, and the appreciation of gold in Korean won, due to gold’s performance as the best wealth preservation asset in the world, may be the difference between survival and starvation for that citizen, does anyone among us believe that bankers would return any of that gold to that citizen in a time of her or his greatest need? We all know that answer is a resounding “NO.” Even my own grandmother was duped by duplicitous bankers and she handed over gold to the government in 1998 that she really could have used in the last years of her life. Had I learned that she was going to do this back then, I would have done everything in my power to have stopped her from doing so.
Luckily, we observed that Indians learned from the mistake of South Koreans, and when Indian Prime Minister Narendra Modi tried to run a similar gold scam on Indians few years ago, Indian citizens resoundingly laughed in Modi’s face and held onto their gold instead of handing it over to the bankers despite Modi’s duplicitous, immoral scheme that tried to turn Indians’ precious gold into certificates of worthless paper that only the most naïve of Indian citizens would have believed was a scheme to benefit them.
To learn about what asset will likely follow gold and silver much higher, sign up for our free maalamalama weekly newsletter today. I will reveal the identity of this asset in the next few days, only in my newsletter. Until then, if you don’t know global monetary history, one of the most important steps you can take towards ensuring that you are not devastated by the culmination of Central Banker global currency wars is to learn all you can about global monetary history right now.