All About GOLD: Mining, History and Science (2)
what was out there. A lot of men with stable jobs and established families were nonetheless enticed
by the possibility of making a fortune in a short amount of time and so set off on what
was a life-altering journey, only to find that the work was absolutely grueling and the payoff was
not anywhere near the tall tales they'd heard in the papers and from the rumor mongers about town.
There was a great misconception that if you went to California and were willing to work hard,
you could have your fill of gold and would be able to go back home with great riches.
As most discovered, this was more often than not nothing more than a pipe dream. Men would toil all
day long suffering persistent injuries, as well as contracting scurvy and other illnesses, and would
dig up practically nothing at all. As reality set in for many, they grew angry and depressed,
not a good combination for men with a wild streak in a wild west type of land. In addition, the land
itself proved harsh and unforgiving, particularly on the journey to California for many settlers.
Livestock were lost to famine and disease and grass for the horses,
along with clean water, became scarce, causing diseases like cholera to take their terrible
toll. The native Indian population also found itself an unwilling casualty of the stream of
prospectors who now competed with them for resources. Before the rush, the California
region was home to a sparse 170,000 inhabitants, the vast majority being indigenous to the area.
As the pioneers marched forward, their consumption of the Indians food supply,
land, and water created a burden for their population that threatened their survival.
Attempts to push out foreigners from the rush began around 1850. There were approximately 80
thousand Anglo-American miners in California and competition was at its peak. Many of these men
had utterly failed in their quest for riches and as is often human nature, they looked for
something outside of themselves to blame for their misfortunes. As gold became scarcer and the number
of prospectors grew, white Americans started to band together and threaten Mexicans, Chileans,
and other so-called foreigners, even those who were originally born in the area.
The rule of these gangs was, if you weren't American, you didn't have any claim to the
gold. They use threats of violence, sometimes backed up by lynching to enforce mob rule.
Some of the best miners came from Latin America, as that region already had a storied mining
history and many of these men had previous experience. This caused a lot of jealousy and
resentment, so much so that the Anglo-American miners ended up convincing the recently formed
California government to levy a foreign miners tax on non-white workers. This tax was so prohibitive,
the Latin American miners ended up leaving in droves, as it ate too much into their profits
to make the endeavor worthwhile. Others were not so easily turned away however, and formed roaming
gangs on horseback that sequestered themselves in the hills and raided Anglo-American mining, camps
stealing everything in sight often with deadly force. As so often happens in times of turmoil,
violence begets violence, and the cycle feeds on itself until nothing is left but the ashes.
The strength of a nation's currency is based on the strength of that nation's economy,
and the American economy is by far the strongest in the world.
Accordingly, I have directed the Secretary of the Treasury to take the action necessary
to defend the dollar against the speculators. I have directed Secretary Conley to suspend
temporarily the convertibility of the dollar into gold or other reserve assets,
except in amounts and conditions determined to be in the interest of monetary stability
and in the best interest of the United States. That broadcast was from August 15, 1971
and in it, then president Richard "Tricky Dick" Nixon gave an order that would alter the fate of
the U.S. dollar forever, and of course it wasn't temporary. Today, as we approach the end of 2021,
inflation is rising at record rates and consumers in America and many parts of the world are really
feeling the pinch when they go to the grocery store, fill up on gas, or look to buy a home.
What if I told you this is all a culmination of that one order Nixon gave to decouple the
U.S. dollar from gold? As mentioned earlier in the program, gold is real money. It takes
effort and energy to extract from the earth and is scarce, and it used to be tied to the U.S. dollar.
In other words, U.S. dollars were promissory notes that could be exchanged for a certain amount of
physical gold, should the holder so choose. But in terms of the U.S. paying off its debts
and funding the war effort in Vietnam at the time, having the dollar tied to a real hard asset
was a pesky inconvenience that stopped them from just printing up more. The details of why the
U.S. was in a position where they desperately needed greater liquidity are very complex,
and entire books have been written about it but suffice to say, Nixon found himself with his back
against the wall and the government looked like it was going to default on its debt obligations,
which would have been catastrophic in the short term. So like a drug addict who is willing to
sacrifice the foreseeable future for the present relief from the dreaded symptoms of withdrawal,
Nixon effectively wrapped a rubber band around the arm of America and shot a monster bag of
liquidity into the system by removing the limitations of gold backing. The
effects on the American and global economy were nothing short of catastrophic. Since that day,
wealth inequality between the one percent and the rest of us has risen at unprecedented rates. Same
with the cost of living, particularly purchasing a home. Wages and benefits, inflation rates, number
of countries with a banking crisis, federal debt as a percentage of GDP, volumes of future trading
versus industrial production, U.S. personal savings rates, net savings as a percentage of
gross national income, U.S. goods trade balance, the cost of a barrel of oil, and on and on and on.
All of these have taken a massive turn in the wrong direction and continue to do so,
like the most nightmarish come down a junkie could ever imagine.
Yet so few understand this. As prices rise and society continues to collapse all around us,
we are distracted by the same evil forces that caused all of this in the first place,
as they line their pockets and seize more and more power, they try to tell you that climate
change and social justice issues are the reason your family will never be able to afford a home.
The truth is, they killed real money to benefit themselves at your expense and the lifeless pieces
of paper in your wallet and the digits in your bank account are a lie, and when the truth finally
comes to light, they might not be worth more than the corrupt government cartel that claims to
back them. But gold will still hold its value and that's why it remains as relevant as ever today.
When it comes to hard money outside the clutches of government intervention
or other third party obligations and risks, gold, along with silver, is about as good as it gets.
Recent innovations have brought forth a slew of cryptocurrencies trying to compete but in my view,
the vast majority are destined for the history books or the trash heap, to put it more bluntly.
However, Bitcoin, the original and the only truly decentralized cryptocurrency, does potentially
pose a threat to gold's dominance as the hardest money around. Debates are frequently sparked
online about which is superior over the long run but in my view, precious metals and Bitcoin are
complementary, and not adversarial assets. In a time of economic uncertainty due to government
overreach during the pandemic and central bank money printing accelerating at an unprecedented
rate, Gold seems poised to reclaim its rightful throne as real money in a world gone mad.
In addition to this, the space race is only accelerating, with corporate titans like Elon Musk
and Jeff Bezos seemingly determined to make space travel a reality for more people around the world.
Seeing as it's also essential for many electronics, gold's demand as an industrial
component, though no match for its sibling silver, still looks very bright in the years ahead.
From adorning the tombs of great pharaohs to being an essential component in spacecraft
that may extend the horizons of humanity's domain, gold has proven to be an incredible resource
that will continue to shine as civilization advances. With the advent of cryptocurrencies,
some of the younger folks in the audience may claim that gold is dead.
Not only do I disagree with that sentiment, but i believe that gold's best years may yet lie ahead.
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