A month ago, we published a report here titled "An 'ATM' Which Spits Out Money!!". It concerned a company in Germany which was planning to install ATM machines which accepted paper (Euros) and dispensed REAL money (Gold) in various weights starting with one gram wafers. Here's a quote:
"For a long time now, The Privateer has been stressing the absolute necessity for Gold to return as a circulating media of exchange. Any kind of an enduring return to sound money is impossible without such an eventual end outcome. As already stated, this "experiment" by the company providing the "Gold ATMs" was a one-day affair in Frankfurt. We have no follow up coverage of this story. We do not know if the experiment was a success or if ANY of the planned rollout of 500 of these ATMs will actually come to pass."
Well, the machines have been installed and there have finally been some follow ups on this story. Please read these:
Germans flock to gold bars vending machine at Frankfurt airport
'Gold To Go' vending machines could be coming to Britain
As you can see, the Gold "ATMs" or "vending machines" are a hit in Germany. It will be fascinating to see how they do if and when they actually are set up in Britain. It would be even more fascinating to see what would happen if they "crossed the pond" to the US (and Canada), although we won't be holding our breath there. The continental Europeans, the Germans in particular, have a recent historical memory of paper money turning into confetti. The English-speaking world has not experienced such a thing in more than two centuries (excluding Zimbabwe and other ex British colonies).
The thing that is certain is that there cannot be a viable or lasting return to sound money without Gold coming back into circulation as money. Historically, once Gold as money goes out of circulation, it is merely a matter of time before the paper which has taken its place ceases to be redeemable in Gold. And that, always, is the end of sound money. The reverse is also true. Gold as money is only viable when it circulates in everyday transactions. It is not viable when only banks and governments have the Gold and the public are left with paper receipts for Gold.
Again, it is significant here that these new "vending machines" are doling out Gold at weights of as little as one GRAM. Clearly, the gram and fractions of a gram would be the weight at which Gold re-emerges as a circulating medium of exchange. The traditional "troy ounce" simply won't do, given today's price structure, inflated exorbitantly by the decades during which Gold has played no part in the global monetary system.
At any rate, the success of these Gold "vending machines" is simply one more indication of the pent up demand for physical Gold which is out there. If this is, as we suspect it might be, the first step towards getting Europeans used to carrying Gold around as at least a quasi "money", it is succeeding.
Perhaps that is why we've seen no mention of this story in the Australian press, or the US press for that matter.
As for paper Gold - the stuff that is traded on global futures markets - things have quietened down considerably this week after a last surge downward to $US 927 on Monday (June 15). In fact, almost all markets have traded in a very subdued fashion this week as the world readies for yet another Heads of State meeting - the G-8 summit in Italy next month.
.(Chart appears here in original analysis)
A new low was hit on the chart when spot future Gold closed in New York at $US 705 on November 13 last year. This pushed the chart two "Xs" below the $US 715 support level established in late October and equalled early in November. Then came the first big turnaround - and upturn on the chart - of November 14. The region between $US 700-720 firmed as SOLID support for Gold. That support "zone" was emphatically confirmed as Gold rose by just over $US 110 between November 13 and November 28 last year.
On February 20, as you know, Gold made it all the way back to its previous all time highs. But it did NOT break through the $US 1000 barrier. Since then, Gold retreated to just below the $US 900 level in three moves down. What is being traced out on this chart is a gigantic "reverse" head and shoulders formation. The trading range between $US 900 and $US 1000 was broken early in April. Over the month of April, a tighter range between $US 870-910 was established. Since the start May, Gold has gone straight up on this chart. That is, until last week. The close below $US 955 on June 9 turned the chart down. And with the further fall below $US 930 this week, the downswing has now retraced about half of the previous rise.
We began the table below in 2007 and have extended it into 2009, even though Gold in all four currencies in the table remain well above their 2006 highs. The all time highs for Gold which occurred in 2008 have remained intact in US Dollars and in Yen.
But in terms of the Euro and especially the Aussie Dollar, the situation is very different. Gold hit new all time highs in both currencies on January 30 with situation being duplicated by Gold in terms of MANY other currencies. On February 20, those highs were taken out when Gold hit $US 1000. Right now, and even with the $US Gold price fall to end the week, Gold is much closer to its all time highs in $US terms than it is in terms of any other major currency.
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