Central Bank: If The Entire System Collapses, Gold Will Be Needed To Start Over

[Hydrogen]

It's not just "tinfoil blogs" who (for the past 11 years) have been warning that a monetary reset is inevitable and the only viable fallback option once trust and faith in fiat is lost, is a gold standard (something which even Mark Carney hinted at recently): central banks are joining the doom parade now too.

An article published by the De Nederlandsche Bank (DNB), or Dutch Central Bank, has shocked many with its claim that "if the system collapses, the gold stock can serve as a basis to build it up again. Gold bolsters confidence in the stability of the central bank's balance sheet and creates a sense of security."

While gloomy predictions of a monetary reset are hardly new, they have traditionally been relegated to the fringe of mainstream financial thought - after all, as Mario Draghi stated on several occasions in recent years, the mere contemplation of a "doomsday scenario" is enough to create the self-fulfilling prophecy which materializes it. As such, it is stunning to see a mainstream financial institution open up about the superior value of limited supply, non-fiat, sound money assets. It is also hypocritical given the diametrically opposed Keynesian practices regularly engaged in by central banks and official institutions worldwide: after all, just a few months back, the IMF published a paper bashing Germany's adoption of the gold standard in the 1870s as the catalyst for instability in the global monetary system.

Fast forward to today, when the Dutch Central Bank is admitting not only did gold not destabilize the monetary system, but it will be its only savior when everything crashes.

The article, titled "DNB's Gold Stock" states:

"A bar of gold retains its value, even in times of crisis. This makes it the opposite of "shares, bonds and other securities" all of which have inherent risk and prices can go down.

According to the IMF's latest data, the DNB holds 615 tons (15,000 bars) of gold mainly in Amsterdam, with other stores in the U.K. and North America; the value of this gold reserve is over €6 billion ($6.62 billion). Calling gold the “trust anchor,” the article details briefly why the hard asset is so important to wealth building and the global economy, claiming: "Gold is... the trust anchor for the financial system. 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."

Why this sudden admission of what goldbugs have been saying for years? Perhaps it has to do with the fact that on October 7, the bank announced it would soon be moving a large part of its gold reserves to "the new DNB Cash Center at military premises in Zeist."

Almost as if the Netherlands is preparing for the grand reset, and is moving its most valuable asset to a "military" installation just for that purpose.

As bitcoin.com tongue-in-cheek points out, "DNB is no stranger to playing along with the Keynesian, inflationary games of the global monetary system. A system which, according to some, is now more a Ponzi scheme based on force and blind faith than sound economic principle. That notwithstanding, the centralized financial powers of the world know the real score, and that’s why hard assets like gold are hoarded and locked down while everyday, individual residents of these geopolitical jurisdictions are encouraged to spend and spend, going further into debt to prop up ultimately unsound national economies."

It is hardly a coincidence that in its preparation for monetary doomsday, the Dutsch Central Bank is also set to begin cracking down on crypto exchanges and wallets, stating that "firms offering services for the exchange between cryptos and regular money, and crypto wallet providers must register with De Nederlandsche Bank."

While the push for greater KYC/AML transparency is a growing global trend, and is hardly surprising in a world in which trillions in assets reside in "tax-evading" offshore jurisdiction, the remarkable aspect of this latest crackdown against crypto - which many see as a modern, more efficient form of "gold" - is the fact that invasive regulations and restrictions by central banks can be seen as yet another means of stockpiling precious assets. This time, not gold bars, but bitcoin and crypto.

As for the timing of the "great monetary reset", which other central banks have already quietly hinted at themselves amid massive repatriation of physical gold from the New York Fed to various European central banks such as Germany and Austria, we are confident that the trust-keepers of the current establishment - such as other central banks and the IMF - will be kind enough to provide ample advance notice to the citizens of the "developed" world to exchange their fiat into hard assets. Or, then again, perhaps not.

https://www.zerohedge.com/markets/central-bank-issues-stunning-warning-if-entire-system-collapses-gold-will-be-needed-start

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Doomsday preppers have recommended hoarding precious metals like gold and silver for years in preparation of the big crash.

I remember a time when most might have agreed people hoarding gold were crazy. They would have said gold standards were flawed economic paradigms. Fractional reserve banking and inflationary currencies were our ideal standards. It seems the script has been flipped with a central bank admitting fractional reserve banking and inflationary currencies may not be the perfect economic policies professors at universities have long claimed.

Globally we've witnessed banks accumulating and holding gold reserves for some time now. There's a shift in the direction of the wind. These changes could be frightening to consider.

What should we think of a world where central banks behave like doomsday preppers, accumulating and hoarding gold as if in anticipation of global economic crash?

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[alyssa85]

The Dutch are unhappy at the way the euro is being managed by the European Central Bank.

See the following:

https://www.bloomberg.com/news/articles/2019-09-12/draghi-faced-unprecedented-ecb-revolt-as-core-europe-resisted-qe

European Central Bank governors representing the core of the euro-area economy resisted President Mario Draghi’s ultimately successful bid to restart quantitative easing, according to officials with knowledge of the matter.

The unprecedented revolt took place during a fractious meeting where Bank of France Governor Francois Villeroy de Galhau joined more traditional hawks including his Dutch colleague Klaas Knot and Bundesbank President Jens Weidmann in pressing against an immediate resumption of bond purchases, the people said.

But they got outvoted, and there is nothing they can do about it unless they exit the euro. Of course if they exit they'll need their own currency and they'll have to prove to the markets that the central bank can manage that currency well - and having a reserve of gold will be part of that.

[teosanru]

This actually is true! If we see history of economics the greatest of the economies fell because of introduction of fiat and after every downfall the reinstatement of economy was done by taking just one metric measure which was gold. Solely because of the fact that it can quantifiable and it's demand is never destroyed. I have the biggest example which is the greek or the Roman empire both started with gold coins as currency but with time and time they added other metals to their coins for years and after that the coins were having almost negligible gold and economy soon started to fell down but it was then reinstated by Gold Only. Now let's see if this time it would again be gold or maybe cryptocurrencies.

[Hydrogen]

The Dutch are unhappy at the way the euro is being managed by the European Central Bank.

Central banks all over the world with gold stored in other countries are requesting their gold be returned to home soil. The most publicized case may have been venezuela who asked that their gold be returned from the Bank of England, a request that was denied. Banks are also increasing their gold reserves as if in preparation of a crash. These have been ongoing themes for the last 5+ years.

There have also been big de-dollarization campaigns adopted by china, russia, turkey and other nations of the world who abandoned the dollar as if to insulate themselves from an expected crash of the US economy coupled with significant inflation of the US dollar.

It might be said these circumstances are not isolated and unique only to be found in the case of the dutch. But rather global trends that apply to nearly every nation on earth. If that is true, then what should we make of central banks across the world accumulating and hoarding gold reserves the way that doomsday preppers do?


Edit: BTW if anyone wants more info on central banks accumulating and hoarding gold keyword search:  gold repatriation.

[alyssa85]

There have also been big de-dollarization campaigns adopted by china, russia, turkey and other nations of the world who abandoned the dollar as if to insulate themselves from an expected crash of the US economy coupled with significant inflation of the US dollar.

It might be said these circumstances are not isolated and unique only to be found in the case of the dutch. But rather global trends that apply to nearly every nation on earth. If that is true, then what should we make of central banks across the world accumulating and hoarding gold reserves the way that doomsday preppers do?

Well China is desperate for the yuan to become a reserve currency, and Russia is wary of using the dollar because it exposes them to the Americans regulating them.

I personally think the big risk is the euro. It barely survived the 2013 eurozone crisis. It has negative interest rates of -0.5% even though the world economy is still growing. It's doing worse than Japan (which has base rates of -0.1% and a positive yield curve).

I think the eurozone will be the epicentre of the next financial crisis, not the US, China or Russia all of which have a good grip on their financial systems. If you are part of the eurozone, like the Dutch, it makes sense to prepare for the worst.

[Wexnident]

Doomsday preppers have recommended hoarding precious metals like gold and silver for years in preparation of the big crash.

I remember a time when most might have agreed people hoarding gold were crazy. They would have said gold standards were flawed economic paradigms. Fractional reserve banking and inflationary currencies were our ideal standards. It seems the script has been flipped with a central bank admitting fractional reserve banking and inflationary currencies may not be the perfect economic policies professors at universities have long claimed.

Globally we've witnessed banks accumulating and holding gold reserves for some time now. There's a shift in the direction of the wind. These changes could be frightening to consider.

What should we think of a world where central banks behave like doomsday preppers, accumulating and hoarding gold as if in anticipation of global economic crash?

Well, we could already expect the world to be rekt. Bloody banks only think of themselves, asking the people to spend more and more. They persuade the masses to spend, slowly increasing the global debt, and then this. Really. It's like we're fighting each other in war but one side is purely uneducated ones and the educated ones team up to bully the other side. US dollar has already been releasing more and more supply of it, saying it is for "economic growth" and yes, we could partly say that it is true, but at the same time it has also managed to damage the economic market sadly enough.

[CryptoBry]

Doomsday preppers have recommended hoarding precious metals like gold and silver for years in preparation of the big crash. What should we think of a world where central banks behave like doomsday preppers, accumulating and hoarding gold as if in anticipation of global economic crash?

In my own humble opinion (am not an economist, by the way), I believe that any fiat money should be backed by gold or silver but we know that this has not been the case for the past many decades because many bureaucrats thinks otherwise. Now, that we are seeing many shaky foundations of the global economy, some central banks are reversing their policy on this matter and so they are now in the accumulation of gold frenzy. In the case of a global conflagration, I am sure that countries that hold good amount of these valuable assets can easily weather the storm. And yes, in case of a reset, there is no question that gold and silver will be the top assets that countries will consider.

Can we consider the central banks that now opted for more gold to be doomsday preppers? Well, I don't think they really care as they think that it can be the most practical thing to do in the face of the economy based on fiat money backed by mere promises of the government. On the personal level though I won't be hoarding gold and silver as they are not needed to survive in case of a global crisis. I prefer to stock on foods, water and other related provisions for at least a year and so some farming so I can eat my own produce without the need to ask them from anybody else and to buy from anyone.

[dothebeats]

If the banks are moving away from fractional reserves and inflationary currencies, two assets that they so do love controlling to make more money then you know that the system is flawed and it simply isn't working out. They are always one step ahead of the laymen that they have started hoarding gold by the start of 2010 and are continuing to do so by now. Good thing we now have cryptocurrencies to at least have our own hedge against inflation and financial crashes that the economists and experts are expecting to happen before the turn of the decade.

[Ucy]

"A bar of gold retains its value, even in times of crisis. This makes it the opposite of "shares, bonds and other securities" all of which have inherent risk and prices can go down.

Can a bar of gold still retain its value in a prolonged global financial crisis or global disaster? I have my doubts.
Any wise person will stockpile other things like foods (with long-shelf life Ofcourse), small torch, batteries, herbs, etc. They will be in great demand if crisis is in global scale. Bitcoin/cryptocurrencies could be good way to store value if internet isn't affected.
Hopefully it won't be a global thing.

[Silberman]

snip

Doomsday preppers have recommended hoarding precious metals like gold and silver for years in preparation of the big crash.

I remember a time when most might have agreed people hoarding gold were crazy. They would have said gold standards were flawed economic paradigms. Fractional reserve banking and inflationary currencies were our ideal standards. It seems the script has been flipped with a central bank admitting fractional reserve banking and inflationary currencies may not be the perfect economic policies professors at universities have long claimed.

Globally we've witnessed banks accumulating and holding gold reserves for some time now. There's a shift in the direction of the wind. These changes could be frightening to consider.

What should we think of a world where central banks behave like doomsday preppers, accumulating and hoarding gold as if in anticipation of global economic crash?

They know their time is up, the distortions in the economy are getting too big to ignore and the next time a world crisis happens it will be impossible for the governments of the world to try to privatize those losses since they are heavily indebted as well, they had the opportunity to make changes to the system to solve those problems in 2008 during the crisis and they refused, now the problems are even bigger and there is no way to change things before the next crisis, they know their only way out of this is to print money but this will create huge inflation and they will steal the wealth of their citizens when they do this, so their citizens will lose confidence in their fiat and they will have to eventually back it with something like gold.

[avikz]

Doomsday preppers have recommended hoarding precious metals like gold and silver for years in preparation of the big crash.

I remember a time when most might have agreed people hoarding gold were crazy. They would have said gold standards were flawed economic paradigms. Fractional reserve banking and inflationary currencies were our ideal standards. It seems the script has been flipped with a central bank admitting fractional reserve banking and inflationary currencies may not be the perfect economic policies professors at universities have long claimed.

Globally we've witnessed banks accumulating and holding gold reserves for some time now. There's a shift in the direction of the wind. These changes could be frightening to consider.

What should we think of a world where central banks behave like doomsday preppersd, accumulating and hoarding gold as if in anticipation of global economic crash?

There's nothing called perfect world and no system can be flawless, especially in global perspective! So if Banks are accumulating Gold and slowly moving away from the debt based economy, it is probably the need of the hour! Similarly when the banking system moved out of Gold standard to debt based economy, probably it was required for that time! Global economy is was more diverse and dynamic than a human mind can think off. So every solution given by all noble economists, will have a temporal effect! Among these, Gold seems closer to the reality.

So I see no surprise element after knowing that Banks have started accumulating gold to hedge the upcoming slowdown risk! Because Gold is the only precious metal that has proved anti-inflationary characteristics. Gold is being used as an investment asset since centuries! There's no wonder Banks or even commoners will entrust their wealth on Gold to encounter the odds!

[yoseph]

"A bar of gold retains its value, even in times of crisis. This makes it the opposite of "shares, bonds and other securities" all of which have inherent risk and prices can go down.

Can a bar of gold still retain its value in a prolonged global financial crisis or global disaster? I have my doubts.
Any wise person will stockpile other things like foods (with long-shelf life Ofcourse), small torch, batteries, herbs, etc. They will be in great demand if crisis is in global scale. Bitcoin/cryptocurrencies could be good way to store value if internet isn't affected.
Hopefully it won't be a global thing.

When it comes to financial uncertainty that's when gold becomes even more valuable but when it comes to things like a global epidemic like the one which happened in the movie "2012" or "The day after tomorrow " Gold becomes irrelevant in the long run and things like food and water becomes the most important commodity.

[ecnalubma]

What should we think of a world where central banks behave like doomsday preppers, accumulating and hoarding gold as if in anticipation of global economic crash?

Gold is the common medium of payment for thousand years ago, I think the banks are aware of the incoming global economic crash that's why they are on the move of accumulating precious metals as much as they can. The game might be change if Bitcoin will outperform gold in the near future.

[NathanJB]

If the main foundation of the fiat system, which is the central bank, everything about the system will fall down to the ground. Everything related to paper bills and metal coins, their values, their denominations, and so on will be nothing. And there is going to be much confusion about which should take its place as a form of payment. Everything will go back to the good old days in which only valuable metals such as gold, silver, copper will be accepted. We will be going in that direction. After all, everyone agrees that such metals are valuable.

[airdnasxela]

If Central Bank collapses and fiat and paper cash loses it value, it is most likely that gold and other natural resources will be used. Since it is from the nature, it doesn't lose its value and are more stable. Just like what happened in Germany after world war one when they have hyperinflation and their currency loses its value, their way of paying other country for their debt is through gold and coal. People also start buying foreign currency since their currency loses its value.

[ChrisPop]

First of all GOLD does not retain its value in periods of crisis. I don't consider it to be a viable hedge against economic downturns. As an example in the 2008 recession, GOLD price plummeted by over 30%! After all it is just a metal with special properties and some use cases in industries. Why would it keep its value? - because it has been considered a store-of-value by population for thousands of year? - That could be a reason, but maybe there are better hedges out there like hmm.. food or even better.. BITCOIN. I believe that once GOLD won't be considered a store of value anymore its price will go down very fast.

[deisik]

What should we think of a world where central banks behave like doomsday preppers, accumulating and hoarding gold as if in anticipation of global economic crash?

I would say that this world came undone

Gold is mostly meaningless on its own (apart from its industrial use and value, of course). It is the economy, its strength and power, which matter in the long run, not some precious metal. The Soviets had enough gold (yet more crude oil), and it allowed them to last longer (for example, they started to buy wheat from Canada in the early 1970's in exchange for physical gold) but since their economic model was massively flawed (essentially suicidal), it was only a matter of time until they finally kicked the bucket

[Pearls Before Swine]

"A bar of gold retains its value, even in times of crisis. This makes it the opposite of "shares, bonds and other securities" all of which have inherent risk and prices can go down.

There is so much wrong with this article that I could likely write pages worth of rebuttals, but it would be a waste of time, so I will just comment on the above quote. 

A bar of gold does not *necessarily have to* retain any of its value, whether in time of crisis or not.  All of gold's value is what human beings assign to it, and this is the same for stocks, bonds, real estate, and cryptocurrency.  If you had bought gold or silver in any month of 2011 you would still be in the red right now.  This is because of free market forces which drove its price up to its all time high and the same forces subsequently were responsible for its plummet back to earth.

Be careful when reading articles from zerohedge, because they will pump gold and silver regardless of the state of the economy or whether or not it makes sense to buy either one instead of something else like stocks or crypto.  They will always tell you it's a great time to buy gold, the world is ending, everything is going to collapse, etc.  Those things might well happen, but I can guarantee you the people at zerohedge don't know for sure that they will.

[AniviaBtc]

"A bar of gold retains its value, even in times of crisis. This makes it the opposite of "shares, bonds and other securities" all of which have inherent risk and prices can go down.

Can a bar of gold still retain its value in a prolonged global financial crisis or global disaster? I have my doubts.
Any wise person will stockpile other things like foods (with long-shelf life Ofcourse), small torch, batteries, herbs, etc. They will be in great demand if crisis is in global scale. Bitcoin/cryptocurrencies could be good way to store value if internet isn't affected.
Hopefully it won't be a global thing.

I agree, there's so much more important things than a bar of gold. We can live without it, because the commodities are much effective in survival during crisis. But the sad part is that, we can't store them without buying those things. We can't get them for free before the crisis starts. So technically speaking, a gold is also a factor in surviving when system collapses.

[Mometaskers]

I'm no economist but if the system does collapse, then it is very likely that countries would go back to the gold standard, which was the system before the Americans managed to muscle their way. And it'll likely stay that way until a different currency becomes the reserve.

As for the value, we can't really say that it will "keep" it. It'll only have value if people believe it does, meaning that the economy will have to recover for those bars of yours to have any price. You can't eat gold.