Wednesday, July 27, 2016

The Future - "Derivative" of the Present

Western civilization lives each day in a world that does not exist ... yet.

Yes, inhabitants of the so called advanced economies "live" in the future. They make their decisions about the value of all tangible things that exist in their world today, based on how they predict thoughts will change tomorrow. And when tomorrow comes, a new future advances, which again forms these thoughts and predictions of an ever changing present.

This is not a concept that is completely lost on physical gold advocates, as they attempt to anchor their values upon a substance that has so well stood the test of time. But how many of us have actually thought about our advanced societies and systems, and how fragile they truly are, how subject to the inevitable change of time.

Another did sense this concept, in his own characteristic way:
"It's money of course but let's also call it a "commodity! Then we can place a "paper" value on it and denominate it in all forms of future contracts. It will lose it's true value as money in peoples minds and be priced in an unrealistic paper format." And here we are today!
This process mobilized free standing bullion outside the government stockpiles. The world currency gold price was kept down as large existing physical stockpiles were replaced by notes of future delivery from the merchant banks (and anyone else who wanted to play)"
So we look at another in an unending series of ridiculous headlines:

Gold Jumps Most Since Brexit As 'Hawkish' Fed Sparks Dovish Bond Buying Spree

Not a day goes buy that the "price" of oil or gold or paper assets do not "change in value" based upon today's event which "sparks" a future change. This is the nature of our paper market valuation system, spilling over into our physical world. And to the extent that globalization has "Westernized" the world, it can be said that all values today are derived from an ever changing future that never truly comes.

It becomes the present, and a new future always guides this present, as it inescapably changes each and every day.

Instinctively, we know that an ounce of gold is an ounce of gold, just as it always was, and always will be. A timeless substance, outlasting generations of civilizations over epochs, and thus "not subject to change". Yet we live in a world where the perceived value of an ounce of gold changes dramatically by the day, even by the hour, as financialization creates our derivative world based upon daily changing thoughts of value, making those values "real" for a moment of time in which we chase profits to lock in and grab, or roll over.
The "wealth of nations" are held as "thoughts of value" not real value! And even these thoughts are "in debt" as they are owed to other nations. As it has always been, time moves the minds of people to change, and with this, the thoughts of value also change. In this day, as not in the past, the loss of paper value as a concept will destroy the very foundation of wealth that this economic system is built on. This drama has started and is well underway!
It's no big deal really. Just a somewhat peculiar thought on an otherwise uneventful Wednesday afternoon. As we continually grasp for value based on an ever changing future, the only value we can extract comes from change. Expect more of it, as the system nears the end of its timeline. The absurdity of volatility on a daily basis is all we have left to grasp for.

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