Why bentral banks are starting to hoard gold.

Stansberry: Why central banks are starting to hoard gold
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Tuesday, September 15, 2009

By Porter Stansberry in the S&A Digest:

What's the real solution to the constant boom and bust of our credit markets? Simple: a sound currency whose price (interest rates) is set by the demands of the global market, not by any government. Calling our current system "modern" is a misnomer. Our current system is barbaric. It has proven to be a failure every single time in history when it has been tried. Paper money has been used for thousands of years to steal the wealth of the middle class, impose a secret tax on the productive, and swindle, through speculation, the fortunes of those who are honest and hard working. On the other hand, only one monetary system has proven to work, every single time it has been tried – gold. And yet it is the gold system that has been labeled "barbaric" by the politicians who fear it. Just because the U.S. is unlikely to ever return to the gold standard doesn't mean you can't. One year ago today, gold was trading for $635. Today, it sits near $1,000. There is a very good reason for this. Gold is no one else's liability. And it is difficult to produce. Over the last year, our Federal Reserve increased the size of its balance sheet by 126%. So far, this has only resulted in roughly 20% more currency in circulation. But eventually, all of this new credit will end up as money, greatly devaluing the value of the paper you hold in your wallet. The same thing, at various rates of growth, is happening around the world at every major central bank. And that is why, according to sources in the gold market, central banks themselves are for the first time in more than a decade net purchasers of gold. The politicians want you to use their paper money. Meanwhile, they've decided to stockpile gold. So should you.