Wed, Aug 21, 2013 - Page 8

Time to go for gold

The US has enjoyed the exorbitant privilege of having the world’s reserve currency through a monopoly on the cash that is used to trade international goods, such as oil, while supporting “friendly” oil-exporting dictatorships in the Middle East with completely predictable and disastrous results as seen in Egypt.

It is now clear that the US dollar’s illegitimate hegemony will soon end and workers, investors and central bankers would be wise to heed my advice on how to deal with this.

It was recently revealed by Tyler Durden that China and Japan are dumping US Treasury paper as fast as they can, looking for a “safe haven” that will stand the test of time (such as a 5,000-year horizon).

China and India have been importing gold at a tremendous pace amid sales of “paper gold” future contracts, of which there are billions of ounces traded on an exchange where only millions of ounces actually exist, to round off the numbers for simplicity’s sake.

JPMorgan is the chief perpetrator behind this insane criminal act, which will be revealed in the next few weeks when it becomes known that it does not have enough of the physical metal in its vault to satisfy the daily delivery contracts it has agreed.

In other words, paper “wealth” is rapidly going out of style and the “new normal” will inevitably involve financial chaos in economies around the world.

It is worth noting that China is making the renminbi more convertible in countries across Asia, and that it trades for oil with US archenemy Iran in — you guessed it — gold.

Here on this finite Earth, each and every country’s fortunes rely on a proper trade balance with regard to foreign exchange rates, as well as imports and exports of energy, food, technology and services, as well as international transportation.

Taiwan imports almost all of its energy and a large part of its food, while exporting state-of-the-art high-tech products like microprocessors and advanced solar and electricity management products and services.

It does not quite even out, but at least Taiwan has a functioning economy.

The central bank and the other banks, which are currently holding US dollars and Treasuries, are hereby advised to dump all their US paper “assets” and import actual gold that can be stored in their vaults.

Small-time investors can buy gold coins or segmented necklaces at their local jewelry shops, which is strongly recommended, or hit a bookstore and pick up a 24-karat gold “CROSS” pen, as I have done.

The crisis has arrived. There will be no escaping the future of our global economy nor the boiling fate of planet Earth.

The tornado of debt-based “money” used to sustain an ever-expanding economy has ended and precious metals will be the wave of the future (and maybe also Bitcoin).

Taiwan’s next administration needs to ditch all long-term debt and go “net cash,” like Australia is trying to do.

Owing money to foreigners and sticking Taiwan’s youth with the bill is the wrong way to go.

Torch Pratt

New Taipei City