India declares war on... Gold

A global repression against Gold is inevitable and is already in way. The first steps are made and the regime will become more fierce with time. Just as written in my fiction story "Jews" governments will declare war on Gold trying this way to hide their own incompetence and stupidity. Today I have read an article on Bloomberg that India is trying to improve its big trade deficit and its negative current account by... fighting the import of Gold.

This sounds ridiculous, because if Gold is coming to you country this means you become richer. This has been the same for centuries. Now Gold has become a problem and the paper fiat money, called rupee, becomes of higher priority. Is the Indian Government going mad?

No. They are not mad. Repression on Gold is a predictable and logical consequence of the stupid policy that leads the country to crash. Indian Government - just like most of Governments around the world, is printing money. It is printing much money and is a strong participant in so called "currency wars". All Governments are trying to devalue their currency in an attempt to gain competitive advantage on the world market. This money-print leads to inflation and to exactly what the Government wanted - currency (rupee) devaluation. People see this and try to protect their savings by investing in Gold. People lose confidence in rupee and exchange it for Gold.

And then the Government looks at the import of the country, sees the large share of Gold there, and... decides to fight Gold... :)))

Generally it is not only a problem of rupee. More and more people are throwing away their fiat money (dollars, euros, francs, yuans, etc.) and are buying Gold. Logically the price of Gold goes up. But in fact the real value is the same, it is just fiat money becoming cheaper. Gold is a proven from millenniums currency, it is stable, and the transient paper money is orbiting around it. A well managed fiat currency is just as good and stable as Gold. But a bad managed fiat currency is not Gold. So the real problem is with rupee (and also with dollars, euros, yuans, etc.) and is not with Gold.

So now the Indian government is imposing a regulation that stops the banks from crediting deals with Gold. The Government is also preparing a "competitor" of the Gold - some types of financial derivatives that will offer a return equivalent to the return of Gold. I.e. the Government will motivate people to sell the real and physical Gold and buy so called "paper gold"... But if the Government can guarantee the value of this financial instruments, then why it just don't guarantee the value of rupee?
The answer is very simple. It is not Gold the problem. It is just a war on Gold to hide the consequences of money-print.

India is not the first to fight Gold. Every time when the politics brings the economy to crash, they blame the Gold. In 1933 even in United States the possession of Gold was forbidden by a President Decree and Gold de facto was confiscated. In totalitarian states Gold ownership is generally forbidden.

So now India is in fact not fighting the current deficit. It is just trying to impose an initial repression on Gold and confiscate part of it. In future the repression will become stronger. And it will not be only in India. Most of leading Governments are doing exactly the same foolish policy. So all they will come to the fighting Gold ideas.

The real decision is to stop printing the money and to implement deep economic reforms, instead of crushing the money just to win some more time for the economic stupidity. But as the history shows, wisdom is a rear gift for politics before the entire crash. It usually comes after the crash.

Dobri
12.12.2012

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