Dear Arjay,

I agree that what is going on in the financial markets is wrong and immoral.

I agree that Australia should back the Australian dollar with gold - and we have enough gold for that in our soil.

We should either carry physical gold coins in our pockets, or their paper/electronic representation.

What I do not agree with is joining any block of common currency with other countries. I just can't understand why you want it.

Arjay, gold only has a value because of ancient myths and superstitions that made it "special" in the first place.

"Our fiat currency is now coming to an end"

Paper/digital money is a far too convenient and easily comprehensible form of valuation/exchange for it to "end" altogether.

Currencies may be severely reevaluated, but they won't vanish.

"3 things will become very expensive. Food, energy and precious metals."

And only two of them will keep you alive.
Try buying your groceries with precious metals.

"In other words it is gambling."

The trading of shares, not just the derivatives, is too.
Do you think any of those automated e-trades are "investments"?
Bull/bear = red/black.

"What I do not agree with is joining any block of common currency with other countries. I just can't understand why you want it."
Yuyutsu I said we should join if we are allowed to create our own money debt free which currently is not the case with our Govt.

Shockadelic, Backing currency by precious metals stops the production of too much fiat money. There has to be some limiting factor to bring back stability. Remember that the currency will only be backed by a small % of gold. The Elites in 1872 replaces all the cheap silver money with their gold thus bringing on the 1890's Depression. You don't make gold an absolute unit of money. It only backs the fiat money, limiting over supply. A ton of gold is worth about $50 million so there will have to be a ratio of say 50:1 gold to currency. Perhaps BITCOIN will refine itself into a more stable currency.

"There has to be some limiting factor to bring back stability."

I don't see what gold has to do with that.

You can limit inflation by printing fixed amounts of money and stopping fractional-reserve banking.

Gold is not itself immune to inflation.
As it becomes more difficult to find new sources, won't it's value go up, up, up?

Sure, if you like.

>>In other words it is gambling. They bet against their own stocks so if they go down they win on the derivatives.<<

In much the same way as insurance is gambling. You bet against not having an accident in your car, so if you do, you get a payout.

It's about exposure. If you do not insure your car, you will lose a bundle if you crash it. If you insure your car, you pay out some money each year, and only get any of it back if you have an accident.

Let's take the simplest possible example. If you buy a bunch of computers in US$ from Taiwan, you agree a price that gives you a profit margin. Until they arrive in Australia - bearing in mind you might commit to a year's worth of stock - you are exposed to losing money on the exchange rate if it goes against you. So you lock in an exchange rate - and your profit margin - by buying forward dollars at a specific rate.

It gets a lot more complex than that, of course. Your forward currency contract now has a value of its own, so if at some point you think there is a better chance that the exchange rate will benefit you, you can trade that instrument on to someone who - say - wants to hedge in the other direction. Think of that on a larger scale, and you have the essence of the derivative market.

But again, the key metric is always the difference between the put and call options, and not, as you insist on believing, the two of them added together.

Pericles I've checked the stats on world derivatives and $2000 trillion is not an exaggeration. This represents $285,000 for every person on the planet and they are woven into the real productive market.

What happens when infinite money meets finite labour, energy and resources ? Hyper-inflation, stagflation and worse. As Gerald Celete ,Max Keiser and many others say,it is not a matter of if, but when the really big collapse happens.

Shockadelic, nearly all the traditional forms of assets are over way over valued. Gold during the Great Depression was $35 per oz. We've had a 40 fold increase in inflation which gives us todays price of approx. $1400 per oz.However never before have we had so much money printing on a global scale and the pop is 3.5 times today. You have to start looking at other assets as your super will be worth nothing in a global monetary collapse. Also note that even money in the bank is not safe as plans for "bail in" are on the cards.

Other assets not over valued are farm land, some commercial, some artwork, some diamonds, opals, and precious metals. Gold and silver shares are not doing well because the cost of production is more than 50% of the market price. Our residential land is way over valued by at least 40-50%.Foods that can be stored are also a good investment.