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Historic Reports
Larry Myles Reports
True, governments can reduce the
rate of interest in the short run.
They can issue additional paper
money. They can open the way to
create expansion by the banks. The
can thus create an artificial boom
and the appearance of prosperity.
But such a boom is bound to collapse
soon or late and to bring about a
depression.
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June 15th, 2011
Gold
As
A
Reliable
Standard…
The Gold Standard as Inevitable
“If bank stocks are the best investments you
can find for your portfolio, you should fear
for your wealth.”
Value Investment Institute, March 2011
Who would have thought even a few short
years ago that investing in bank stocks and
sovereign debt would turn out to be
considered an exercise in risk and ruin!
Conversely, who would ever have imagined
that by practicing a disciplined due
diligence process and paying heed to
common-sense fundamentals, investing in
junior and mid-tier gold companies
could be perceived as offering increased
comfort and less risk exposure than banks
and bonds? And who would have thought that
reality-based investing in physical gold
would emerge as the wisest and most
unassailable of all the wealth-building
strategies?
Reality-based investing: The
irrepressible and insistent
principle that allows the investor
to create a realistic personal
investment environment leading to
rational decisions based on reason,
hard fact and solid market data.
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I am sure to many of you it has become
apparent our reality-based investment
discipline has
completely and utterly
trumped the under-producing,
faith-and-whim-based
Keynesian bakced
model hands down.
One recent example of our success can be
found in the opportunities, and
alleged
opportunities offered in the energy sector.
It makes no difference
now
that while the mainstream media and
moribund, formula-driven financial planners
collectively fell victim to the
“Nudge
Theory”, and touted bird-killing
windmills and a wasteland of tilted mirrors;
we
applied
reason
while investigating the hard realities
pertaining to both
current
and near-future energy needs. By living in
the real world, we discovered both
opportunity and profit investing in
traditional and proven energy sources such
as oil, gas and
coal.
During the same time period, many in the
mainstream investment community wrestled
over exactly
how
to present (and recommend) debt instrument
choices. My readers fully understand that
if you want to sell
any
dodgy product, language and presentation are
extremely important. Our reaction was to
ignore the forced style and temperament of
the absurd, and rely upon sane and simple
logic,
accumulating physical gold.
Owning physical gold has undoubtedly trumped
debt; as continuing crisis-events in America
and Europe have proven that owning debt
has
turned out to be an
ugly,
high-risk exercise in
financial futility.
As an undisciplined and unrepentant Europe
continues to deny financial
reality (Europe is bankrupt), the efforts to
sell debt will collapse; no matter how glib
the pitch and patter.
As I have pointed out to
anyone who would like to listen; we have one
of two choices when considering the
investment landscape:
-
We can embrace the conceit of the
mainstream majority and rely on an
investment formula that at best, will
allow us to barely tread water.
-
Or we can identify that the timing
remains right for initiating real change
by ignoring the rant and gush over the
increasingly elusive ‘recovery’ model as
we strive to enjoy the rewards of
personal
prosperity.
Embracing
The
Inevitable
It is now time to add meat and meaning to
our game by adding
inevitable
into the dialogue of our reality-based
investment stratagem. We must not only
understand
the importance of the
inevitable,
we must embrace it.
It was by accommodating
inevitable
into the overall thought process that
resulted in my early report on
thorium. To the best of my knowledge
there is not a single thorium reactor
currently in operation. Nor is there a
Canadian listed publicly traded company with
a focus on thorium; yet it was essential to
at least
introduce
the topic into our narrative. Reason:
Thorium as a
future
source of cheap and safe energy; will most
certainly become an inevitable fact of life
if we realistically expect to simply
maintain the standards and comforts of our
modern civilization. All political argument
and special interest group pressure will
fall by the wayside as thorium will evolve
into the preferred nuclear fuel of the
future.
Return to the Gold Standard?
Inevitable…
Even more
inevitable
- the demise of the most ambitious fiat
currency experiment ever devised by man;
followed by a return to fiscal
accountability based upon an internationally
accepted gold standard. Other than the
pretentious and inept followers of the
flawed and fractured Keynesian theory, most
of us have always been aware of the
inevitable and unavoidable consequence of
the willy-nilly expansion of credit. In
addition how this credit expansion
is
bound
to lead to the collapse of a fiat
currency system
that is
based solely upon debt as a
(false) measure of value.
The return to an international
gold standard does not require the
return to a national gold standard
by all countries. Embracing an
international gold standard, the
relevancy of gold becomes important
for international transactions
between countries. Fiat currencies,
such as the US Dollar and the Euro
will remain in use for domestic
transactions within their respective
countries.
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I remain convinced if we ignore the jeer and
scoff of the pro-fiat faction and study
only
the hard evidence provided by the markets
and the actions of many of the central
banks, reason and logic will inevitably
prevail.
 History
provides
3,000 years of lessons and examples
why fiat currency experiments always fail.
Although fiat currency enjoys a long history
of complete and utter failure, the first
important lesson did not involve paper
money, but the Roman (silver) denarius.
Obviously the Roman Empire could not
‘over-print’ the coin of the realm, but they
could
devalue
their currency by lowering the silver
content.
The denarius originally contained 4.5 grams
of silver and was considered the backbone of
Roman currency, used extensively for trade
within the Empire, as well as with foreign
trading partners. Over time the silver
content was reduced until the denarius
contained less than .05 percent silver. The
government wilfully debased the currency and
Rome became a bankrupt nation and harkened
the collapse of the Roman Empire!
Ancient China experienced the same
degradation of their fiat currency
(flying
paper); as in order to deal with a lack
of gold and silver, the ‘printing’ of paper
money was embraced by the government.
The Chinese government (Tang Dynasty)
initially guaranteed the worth of their
paper notes by making them exchangeable for
gold, silver or silk. But by caving to
temptation, the government over-printed
paper money and could not make good on their
promise of redemption. This led to a
complete and cataclysmic fiat currency
collapse.
The
heavy reliance upon fiat currency throughout
history
always
occurs during times of financial stress.
Consequently, history records that every
fiat currency experiment lead either to a
paper money collapse, or the affected
government pre-emptively shifting back to a
commodity-based standard.
In its day, the Roman denarius was the de
facto reserve currency for most of the
civilized world; not unlike how we currently
view the American dollar. The Romans by
debasing the denarius, created their own
markers for decline and destruction as a
world power. America does not have to follow
the same path if the country voluntarily
returns to a standard of gold.
I would hope that
before
the U.S. dollar completes the final leg of
its journey toward pariah status, lawmakers
in Washington will return to instinctive and
rational thought and reject the destructive
culture of over-spending. If there is a
return to rational thought and responsible
action, logic dictates it would be
inevitable
that America will make its way back to the
gold standard; thereby rehabilitating the
worth of the American dollar. This could and
would set the stage for national and
individual
prosperity,
and “American Exceptionalism” will once
again be the example for the world to
follow!
Gold, Silver Coins
Designated
Legal
Currency in Utah
May 2011, Gold as good as cash. Utah
became the first state in the
country this month to legalize gold
and silver coins as currency. The
law also will exempt the sale of the
coins from state capital gains
taxes.
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The Doomed Experiment
Nearly
Full
Circle
Hopefully it will not take an absolute
worldwide credit collapse to rouse the
global Keynesian-based power structure to
stand aside in favour of those who offer a
more reality-based financial blueprint.
That being said, the Keynesian idiot is a
stubborn idiot and will fight to the bitter
end before conceding defeat.
It is no accident that ever since the total
demise of the gold bond (August 15th,
1971) the world lost its most powerful tool
for stopping debt dead in its tracks.
Remember: The gold bond was the standard of
credit and credibility by which the worth of
all other forms of debt was determined.
Without the stability of the gold bond, debt
was allowed to grow by leaps and bounds.
Over the last forty-plus years, the masking
and movement of debt has accelerated to the
point where no one really understands the
alleged worth of many of the instruments of
debt. Case in point; sophisticated and
highly successful money managers are turning
away from bank stocks. Why? Because the
looming tower of derivatives has morphed
into an incomprehensible modern-day Tower of
Babel.
Again, we can trace the growth of an
increasingly dubious debt tower to the
removal of a benchmark of worth and value.
Without the bracing bucket of cold water
(gold bonds), the quality of debt
continues to debase. And without any
reality-based accountability, the growth of
all debt continues unchecked. Using only the
common sense we were born with, it only
stands to reason that this monster of debt
is even now, overwhelming the fiat based
financial system. And in so doing, creating
an ongoing series of crisis events
that will inevitably lead to a total
economic collapse. My goodness, even the
terrorist-loving, corrupt progressive
globalists at the United Nations are
sounding the alarm. (U.S.
Dollar Could Collapse)
Ignoring Opinion and Conceit
Is a return to a gold standard inevitable?
Perhaps we should allow the reality of hard
numbers to tell the story:
During the first quarter of 2011, an
increasing number of investors abandoned
gold exchange traded funds in favour of
physical gold! This lifted overall
bullion demand by 11 percent. Globally,
physical gold demand rose by a whopping 52
percent (125.5 tons to 366.4 tons).
Central
banks were also very active, adding
nearly 130 tons of the yellow metal – up
from 58.8 tons in the first quarter of 2010.
I am sure I do not have to remind you that
until recent years the central banks were
net suppliers of gold into the market.
This has been a rather dramatic reversal in
the core philosophy of the world’s central
banks. I am sure everyone is aware
that many countries, including China and
Russia are aggressively increasing their
gold-to-reserves ratio.
So on one hand we have every brand of fiat
currency losing ground against gold, coupled
with an ever-increasing robust demand for
physical gold on a global level; and what?
You think that somehow the hobbled fiat
currency experiment can continue to stumble
along? It simply will not happen and for a
rather simplistic and overlooked reason:
there are not enough wheelbarrows or
pilfered shopping carts to go around. And at
this rate, how long do you think it will be
before we see $1,000.00 and $5,000.00 bank
notes? Is it any wonder I continue to rely
on logic and common sense, standing firm in
my recommendation to buy physical
gold and silver!
Larry Myles
Larry Myles Reports
604-408-7600
1-877-405-7600
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Larry Myles is neither a
geologist nor a financial analyst. I do not
purport to offer personal investment advice
nor recommendations. While all statements of
fact are derived from reliable sources, and
are believed to be accurate, I make no
warrant that they are so. You must do your
own research and check statements of fact
for yourself. My opinions are precisely
that, my opinions. I do not accept any
responsibility for any gains or losses you
may experience resulting from actions taken
based on my opinions. If not otherwise
qualified, you should consult with your own
personal financial advisor before engaging
in any investment activities. Larry Myles
Reports does not provide individual
investment advice, act as an investment
advisor, or individually advocate the
purchase or sale of any security or
investment. Larry Myles may actively trade
in the investments discussed in this
publication. Larry Myles may have a
substantial position in the securities
recommended and may increase or decrease
such positions without notice.
I do not know
your personal financial circumstances. I am
not your personal financial advisor. You
must do your own due diligence. By entering
this web site, or reading LMR reports, you
acknowledge and accept the foregoing.
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