What would happen to gold if there was a currency and market collapse?
Gerald Celente is predicting a currency crisis in the future and total market collapse. What do you think would happen to gold and silver?
On the short term, price of gold and silver (and indeed all commodities) will go through the roof, and will continue to rise fast. People won't figure it out right away. They'll think that it's gold and silver (in fact "living costs") that's getting more expensive/valuable.
The government will respond by blaming merchants for their "greed", and enforce price controls with severe penalties for non-compliance. Merchants will respond by adjusting down the quality/quantity/level of service to the new price.
Soon enough prices will rise so much that any money people have in the bank or on hand can't buy anything. People will realize it isn't gold and silver that's getting expensive, it's cash (fiat) money that's becoming worthless/losing value.
Paper money eventually returns to its intrinsic value - zero. --Voltaire
Their first reaction will be to try to spend their cash as soon as possible, effectively converting it from worthless paper money to a commodity. This will send the price of commodities further up and the worth of paper money further down.
Bank runs! Banks will respond by setting maximum withdrawal limits, and the government will back them up with a "banking holiday". Some banks may be nationalized.
The same will happen to currency-denominated paper assets such as stocks and bonds - people will try to liquidate them as soon as possible, and use the cash to buy gold, silver, or other commodities.
The massive sellout will cause a crash in both the stock market and the bonds market.
By now people will figure out that they're screwed and merchants will abandon cash and start using and accepting gold and silver as money. The government will see this as a threat and start threatening merchants who refuse to accept its (paper) currency with jail.
Merchants will take the cue and instead of accepting worthless money, will shut down shop. All meaningful trade and economic transactions will therefore be pushed to the black market zone.
The government will attempt to confiscate all gold and silver it can get its hands on (as what happened in
1933), making it a crime to hold on to your own gold. The first gold to go would be that in lockers and vaults in banks.
Eventually the government will send the army into the streets to attempt to enforce "law and order", perhaps simultaneously attempting to introduce a new currency (or reintroduce the old one).
Tyranny follows. How can we be so sure about the sequence of events? Because it's happened before - Rome, France, Argentina... the list goes on...
Ironically, it was Keynes who said this:
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose.
