Is Gold a Safe Investment for Australians?

If Australians think it is safe to buy gold, think again!

Some background: Why would people even consider buying gold.
Given the bleak outlook on the economy from Europe, and the US, the stock market is falling. But the biggest reason for actually buying gold is the deliberate devaluation of currency, US, Euro, China and others. What they call Quantitative Easing is actually printing money. In the end, this means the value of the currency is decreased. If this keeps up, think about, hyperinflation as in Germany 1920's, Argentina 1980's, Zimbabwe recently.

So avoid the devaluation of your money, people suggest to buy gold. The reason is gold is the real money - it is hard asset and recognizable as the default money for thousands of years. While currency or paper money is hyperinflated, then if people have already changed them to gold, then they can still hold the real value of their assets.

There is only ONE problem. In the 1930s the US government confiscated the gold possessions of its citizens. This is blatant seizure of private property. (This is well known and can be googled to confirm). Yet this was done. Perhaps one reason is to increase the legitimacy of the new US paper money.

But Australians should be safe right? The government would never do something like that? Even so, how many Aussie gold investors know that it is written in Australian Law, that the government has the right to, if it chooses, to require its citizens to surrender their gold. This is part of the BANKING ACT 1959 Part IV. An excerpt is shown below:


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BANKING ACT 1959 - SECT 42

Delivery of gold
             (1)  Subject to this Part, a person who has any gold in the person's possession or under the person's control, not being:

                     (a)  gold coins the total value of the gold content of which does not exceed the prescribed amount; or

                     (b)  gold lawfully in the possession of that person for the purpose of being worked or used by that person in connexion with the person's profession or trade;

shall deliver the gold to the Reserve Bank, or as prescribed, within one month after the gold comes into the person's possession or under the person's control or, if the gold is in the person's possession or under the person's control on any date on which this Part comes into operation, within one month after that date.

          (1A)  A person is guilty of an offence if:

                     (a)  the person fails to comply with subsection (1); and

                     (c)  there is no instrument in force under section 48 exempting the person from the application of this subsection.

Dethroning the US Dollar - Part II

Following the brief article Dethroning the US Dollar,
the present article continues to track what's happening in the world of US dollars and money printing.

A lot of the details of what is to be said here can be obtained from online media, just Google it. Basically, the market has risen dramatically in the last two years. Compare this with the rise in 1932 after the 1929 crash and the subsequent crash of 1937 which took longer to recover.

The situation now is on a much larger scale. Many major banks around the world was bailed out. A big Depression was averted for now. The solution was that the government saved the banks.
- Where does the money come from? They print them. The QE2 is nothing more than printing money to pay debts.
- How can the US do that? Because the US is the reserve currency and the real physical commodities are sold in US dollars.
These news are well known in the media to anyone who wants to read.

However, what many people are in denial about is that the risk of hyperinflation, in which the currency can become so worthless that it can cost billions of dollars for a loaf of bread. Is this ridiculous? Look at the history of Germany in 1920's, Yugoslavia in 1990's and Zimbabwe recently. Here is a potential way events can unfold.
US prints more money - Cannot pay off debt - inflation becomes hyper - people's life savings are worthless.

Why would a goverment do that? Why print money and make your currency worthless? Simply, there is no other way out. The solution is to declare bankcruptcy of your country or make your currency so worthless that everyone knows you cannot pay anyway. Rest assured, the people pulling the strings and controlling the monetary policy would have bought other assets before they devalue the nation's currency. THEY would not hold their savings in their own currency.

So is this devaluing real? Here are some evidences:
Geithner says "US will not Devalue Dollar" (they always say the opposite) -
China's holding of US Treasuries tumbles -
China cuts US Treasury holdings by the most ever -

The wold community knows the US dollar is losing its value fast. There are plans already to introduce a One World currency. Here is a document by the International Monetary Fund (IMF) entitled: Reserve Accumulation and International Monetary Stability.
http://www.imf.org/external/np/pp/eng/2010/041310.pdf
The world currency already has a name: Bancor

Some other articles:
Yes, China can choose to just say no to one export from America - inflation

World finances go topsy-turvey -