As I’ve been sharing for many months, central banks around the world have been accumulating gold at a breakneck pace, knowing that the U.S. dollar’s days as the global reserve currency are numbered.
***Gold has been the asset of choice for China, Russia, Poland, Hungary, Turkey, Germany, France, Italy, and others as central banks have lost all faith in American debt notes.***
It’s not every day, however, that you hear about a central bank directly issuing a warning to the people of systemic risk – and a recommendation to buy physical gold as a safe-haven asset. Even as so many central banks are hoarding gold, they generally don’t publicly sound the alarm on the fragility of the global monetary regime.
A translation provided by Stebbing Heuer of the Dutch National Bank’s statement provides insight into the bank’s startling outlook: “Shares, bonds and other securities: there is a risk to everything… If the whole system collapses, the gold stock provides a collateral to start over. Gold gives confidence in the power of the central bank’s balance sheet.”
Perhaps the most amazing aspect of this is the Dutch National Bank’s temerity in admitting that bonds are at risk, especially considering that central banks are the ones that issue bonds in the first place. There’s also the phrase “start over,” which strongly implies an economic reset – certainly a possibility, but one doesn’t expect a mainstream financial institution to use that type of verbiage.
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Interestingly, the Dutch National Bank’s full statement also provides a very brief primer on gold’s value as a crisis hedge, including a point that Future Money Trends has made many times: “Gold is… the trust anchor for the financial system. If things go wrong, prices may fall. But, crisis or not, a gold bar always holds value.”
Now that’s what I call sound monetary policy: suggesting gold as a trusted store of value is, indeed, a sensible idea for financial institutions, as well as for individual investors like you and I. As you may know, I’ve been using both physical precious metals and mining stock shares to diversify my portfolio, as well as enhance my profit potential for many years.
I have to give credit where it’s due, as the Dutch National Bank’s statement actually makes a couple of valid points. I also have to credit them for putting their money where their mouth is, as the IMF has reported that the Dutch National Bank has accumulated 615 tons of gold (mostly in Amsterdam, but also in North America and the U.K.), worth $6.62 billion at the current gold price.
Whether the Netherlands is actually preparing for a global financial reset is debatable, as I never take a central bank’s word at face value.
Nonetheless, investors need to take this as a wake-up call: when the central banks themselves are sounding the alarm bells, it’s time to hunker down – and get gold.
I personally consider gold the ultimate cash position.
If you don’t own any gold or need to buy more, call Andy Schectman (800-255-1129) of MilesFranklin.com. He’s a great friend of this letter and my family.
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