Investors should consider the dynamic of precious metals ownership in Vietnam. A recent report from Swiss banks, who represent the majority of gold imports for Vietnam, claims that over 500 tonnes of gold entered the country over the past 20 years.

Lesson one – Own gold. It seems that Asian peoples are well versed in the reasons for owning gold. From the Near East to the Philippines, private stores of gold is a historically ingrained aspect of society. This comes from many factors, including its superiority as a store of wealth, portability, universal recognition of value and privacy.

As a nation that was once on a gold standard, American’s became accustomed to trading in paper that represented gold. Thus, when the dollar became a full-fledged fiat currency (greenback) in 1971, much of the training to accept the now worthless notes had already taken place. Furthermore, what choice did they have? It was considered legal tender. To refuse it was basically to refuse payment.

Now, just over 40 years later, we’re so accustomed to fiat that, as a society, we no longer even think of precious metals as monetary instruments. The arguments along this line, with claims that gold is simply a commodity like any other, permeate the blog world and even the writings of successful investors and traders.

This is where we learn lesson number two – The Central Banks do not have your best interest at heart. Again, we’ll look at what Vietnam is attempting.

In a recent Thanh Nein News article, Ngan Anh reports that the central bank is investigating ways it can mobilize a sizeable amount of the private gold in an effort to stimulate the economy. Of course, such a measure is simply another form of confiscation, though it will be couched in different terms.

One of the ideas is to issue gold certificates. Commercial banks would be allowed to receive gold in exchange for some sort of gold certificate. The central bank could then use the gold to either sell and offer loans or loan out at interest. Furthermore, investors could then purchase gold certificates instead of gold, which would supposedly be backed up by actual allocated metal, but would be more readily tradable.

Any consolidation of wealth by central bankers is just that, regardless of how “reasonable” such propositions appear. In the history of central governments, including central banks (private or government owned), never has such consolidation ever resulted in more liquidity for the public sector. Yes, that was an absolute. Central consolidation in any form funnels wealth from the populace into the hands of the ruling class.

This is where Americans failed a century ago. After years of successfully battling off central banks, even though they made some headway a couple of times, capitulation finally came under the leadership of Woodrow Wilson. Support was anything but universal. Charles Lindbergh Sr. was very vocal against the formation of the FED.

This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this bill, the invisible government of the monetary power will be legalized…. the worst legislative crime of the ages is perpetrated by this banking and currency bill (1913).

And later;

The financial system has been turned over to the Federal Reserve Board. That Board asministers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money (1923).

Unfortunately it was too little, too late, and today we pay the price. We can’t say we weren’t warned though.

I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.–Thomas Jefferson, U.S. President.

For your prosperity,

J. Keith Johnson
The Gold Informant