The AIER lecture, Bullion and Beyond: A World of Choices for Gold Investors, was given at the E.C. Harwood Library. The event included: Gregory van Kipnis, Chairman, American Investment Services, Inc.: Introductory Seminar Remarks - What about Gold During Deflation?
In this video Chris Martenson - economic analyst and author of The Crash Course and James Turk, Director of the GoldMoney Foundation talk about the problems facing the eurozone as well as the global economy. Chris Martenson points out that the whole world simply has too much debt. This is why he believes that there won't be a real solution to the euro crisis. The big question will rather be who will take losses on the debt, which can't possibly be repaid.
The lack of political leadership and unwillingness to accept reality is contributing to this crisis. Additionally, the monetary tools central banks have traditionally used to revive economies are starting to show less and less effect.
In Martenson's view, the financial sector has become way to large and interlinked across borders, so that a default by one country could bring down the whole financial systems, because credit default swaps would get triggered and could bring down the writers of those derivatives.
James starts out by saying that there is so much money being printed by central banks, and its got to end up somewhere, and a lot of this money is ending up in what are perceived as safe-havens. For example, London and Singaporean real-estate, artworks, collectibles, and antique automobiles.
It's what you see in the early stages of what the Austrian economists call a 'crack-up' boom, the demand for the currency declines, and people move into things and out of the currency. I think the super rich get it, they're moving out of currencies because they aren't earning enough interest income, and safe-havens of all sorts are benefitting.
Speaking on the gold price, James' guess would be that the gold price will rebound quickly. Simply for the reason that gold has had so much downwards pressure, and that gold has been so undervalued. The recent downturn could be a short-squeeze, and if it is, then we could see a 'rubber band' effect in the price.
Next, James talks about the money bubble. People have generally lost sight of what money is, and the paper that's circulating as national currencies is not really money since it doesn't settle an obligation. If a shop receives a tangible asset (gold/silver) for the good of service that he's is giving in return, he has no lingering obligation or risk afterwards.
A currency presents payment risk, inflation risk, and bank risks. People are accepting those risks without realizing how severe those risks are. The risks of holding money in a bank today is quite large, the risks of inflation are large, and the risks of various promises being broken by governments are also quite large.
When asked on the future of currencies, and a possible gold back Russian/Chinese currency, James states that we can't predict the future, but he hopes that private currencies become dominant. What we're seeing with Bitcoin and other crypto currencies represent an important technological breakthrough, but at the end of the day, he sees gold emerging as the form of money, which it has always been throughout history.