With crude oil tumbling over $2 a barrel and the gold and silver rout continuing, today James Turk spoke with King World News about the ongoing smash in gold and silver and what is happening in the physical market for both metals. Below is what Turk had to say in this timely and powerful interview.
But that brings up the important point about whether gold is still a safe haven. The fundamental question we have to ask ourselves is whether gold’s 5,000 year history as money will end here? Just looking at it logically, it would be the height of folly to conclude that gold’s history ends here and that we can instead forever rely hereafter on government issued currency. Gold’s history did not end in 2008, and it won’t end here. The checkered history of government issued currency and the crises brought about when credit bubbles pop speak for themselves.
There are countless people in the world who understand that the attributes that made gold money pre-history have not disappeared. They’ve just been ignored or forgotten. For example, in the charts of crude oil prices in the blog we did last week, we can see that gold still provides two key functions of money. Gold is useful in economic calculation, in other words, for measuring prices. Also, gold preserves purchasing power.
Gold doesn’t serve the third function of money too much these days. It doesn’t circulate too often as currency in payment of goods and services. One can do two things with currency, and gold is saved instead of being spent. But gold does “circulate” in the sense that it is being exchanged 24/7 for national currencies.
So to turn to my key point, Eric, the safe haven reason for owning physical gold still makes good sense. And given the level of undervaluation we are seeing now, my strategy of continuing to accumulate physical metal remains the right thing to do.
Source King World News
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