Marketwatch reported today about a company purporting to pay dividends in gold and silver coins. This might sound novel to some and perhaps even quaint to others, but it will appeal to many people and the idea will catch on. Over the years in private emails and public posts like this one I have stated many that I believe corporations will eventually begin listing gold and silver on their books as assets again. They will have to do it as a protection against government debasement of their buying power. It will be out of necessity, not desire.
There are other strategies whereby it will benefit corporations to carry gold on their books including those which choose to pay dividends in gold. If I were them, I would buy gold on the dips and store it as a corporate asset. But when it came time to pay dividends in gold coins, I would value it at current market prices. If the dollar price of gold had dipped below the corporate asset buy price then I would buy the gold used to pay dividends to shareholders on the open market. However, if gold was trading at a higher dollar price than what I paid, I would have the option of paying the dividend with gold that I bought at a lower price and then someone in the corporation (or the corporation itself) could pocket the difference legally and better still, tax free. After all, a penny saved is a penny earned but government cannot tax savings (yet). Corporations have staying power through asset price dips (they won't run out and panic-sell their gold if government temporarily manipulates the price down) and they love no-lose scenarios like this. Why wouldn't they hold gold on their books if that's what was needed to support this dividend payout mechanism?
Getting dividends in fake money is now being recognized as an illusion but when someone pays up in gold or silver coin then the value cannot be stolen by corrupt and greedy, and more importantly, desperate governments. I'm not just talking about the US here. Significant parts of Europe are now in a depression that rivals the great depression. Overall unemployment in Spain is 22% and for young people that number is 50%. Statements by public officials and intelligent estimates indicate it will be 24-25% by the end of 2012. In contrast, US unemployment during the great depression peaked at "only" 25% in 1933. Portugal is rolling over and Germany and France are getting very nervous as well.
The piece of work that France currently calls its "leader" (Sarkozy) is starting to blame foreigners and immigration for all of its problems. He is threatening to pull out of the so called Schengen Zone which currently allows passport-free travel throughout a large part of civilized Europe unless the EU "does something" to control immigration. All of this was foreseen by Prechter in his 2002 book "Conquer The Crash". He explained that the credit collapse would lead to nationalism and protectionism. And so today we see Sarkozy pushing his "Buy European Act" which is really a "Buy France Act" in sheep's clothing.
What he is basically saying is that people should ignore the best bang for the buck and just buy at any price from locals and Sarkozy himself will profit from the taxable portion of the difference. Of course, this type of unionistic/socialistic/nationalistic protectionism thinking only made things worse during the great depression and so it will only have the same effect today. But con men like Sarkozy don't care about that; they care about pandering to buy votes from powerful organizations. It is just another way that leaders will sell their country or company down the river for a few measly bucks even if millions of other people get totally screwed in the deal. All that matters to these con men is what they get and what their friends get TODAY. Long term viability or sustainability doesn't even enter the equation.
The only way out of the Global Debt Ponzi is the eventual arrival of massive inflation for much of the world. It has to happen. It's coming. Nobody can say when but when it does come then people whose retirement savings are locked up in federally controlled dollar denominated accounts will get creamed. Smart people will see it coming. They will not panic. They will stroll for the economic door like cool customers. They will buy gold and silver coins over time and store them physically lest government count dollar losses as taxable value gains.
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