Ever since the tragic sinking of the Titanic on her maiden voyage, the word “unsinkable” has acquired a very cynical connotation in our society. Rather than representing unsurpassed seaworthiness, it has come to represent the arrogance and folly of believing one’s self to be beyond risk.
With a new tidal-wave of “gold bubble” propaganda having swept through the mainstream media as gold made its latest surge, quite obviously many market sheep have been duped into viewing gold as the new ‘Titanic’. Yet as we watched gold getting “torpedoed” last week still another time by the banking cabal there is only one word we could use in describing the performance of the yellow metal: buoyant.
The bankers (and their minions in the media) were positively giddy as they proclaimed mid-week that gold had suffered “its worst three-day plunge since 1980”. These deceitful bears were markedly less-exuberant as gold roared back with one of, if not the biggest two-day rally in its trading history – totally negating the significance of the prior plunge. It was a performance which could only be envied by the builders of the Titanic.
Readers are right in being skeptical about merely the “chart strength” which gold has demonstrated, however. As I continually remind people “technical analysis” is the least significant aspect of market analysis. This will naturally enrage the “T/A jockeys”, who like to pretend that technical analysis is all-powerful – simply because it is fast and easy, and requires no genuine comprehension, other than the ability to spot patterns in pictures.
This complete reliance upon charts rather than fundamentals is more than merely simplistic, it is dangerous. This is due to the fact that all technical analysis is based upon a long list of assumptions – all of which must be true, or all statistical validity of such analysis instantly evaporates. Thus the appropriate way to demonstrate the “unsinkable” status of gold is through fundamentals-based analysis rather than statistical “hocus pocus”. It is here that gold shines even brighter.
Ironically, gold’s remarkable buoyancy is a subject of great interest to silver-bulls. Why? Because of the gold/silver price ratio. Knowledgeable silver investors know that not only will the gold/silver ratio narrow to at least its historical average of 15:1, but because of the complete destruction of silver inventories (thanks to decades of bankster shorting) the ratio will likely narrow ever further than 15:1.
Given these parameters, cautious silver investors naturally have one burning question in their minds: why am I (and other silver-bulls) absolutely confident that the price of silver will rise up dramatically to close the gap in this ratio rather than the price of gold falling down to that price level?  Thus gold’s “unsinkable” fundamentals are every bit as important to silver investors as gold investors themselves.
Naturally the most important of these fundamentals iscurrency dilution. The equation is very simple. We have one form of currency (beautiful, durable, and precious) whose supply is increasing by roughly 2% per year. Stacked against that we have an assortment of paper currencies being diluted by double-digit amounts every year. Worse still, there is absolutely nothing “backing” this paper, and most of the nations issuing these currencies are rapidly progressing from mere insolvency to outright bankruptcy.
As I have pointed out on several previous occasions, un-backed paper currencies are literally nothing more than unsecured “IOU’s” of the governments issuing these currencies. It is a tautology that the “value” of an (unsecured) IOU from an insolvent debtor is zero – or nearly so. Conversely, gold is a currency which is not only free from any claims of debt but possesses its own intrinsic value (as a superior form of “money”).
Such a comparison is no comparison at all. We have more than a thousand years of history of “fiat currencies” (i.e. money backed by nothing) being inflicted upon various populations again and again – always with the same result: the paper currency system collapses. Meanwhile, gold has not only “stood the test of time” in being universally regarded as “good money” for nearly 5,000 years, but it has perfectly preserved its value over those millennia.
Read more: ‘Unsinkable’ Gold