Some Thoughts on Gold and Banking in the End Times

Unless you live in a shack somewhere unconnected to civilization’s “grid”, chances are you must be part of a banking system in order to live life day-to-day.

Banking Systems

By “banking system” I mean a system that allows an individual to receive an income whether wage, rent, royalty, dividend, or outside help. That income must be stored safely, and allow access by the individual to use the stored money to pay for bills, groceries, rent or mortgage payment, and everything else.

A banking system can be as small as serving only you and your family, where money is gold as it was for all the years in the US up to 1933. Or it can be global, covering the US and much of the West, and affecting much of the rest of the world. This latter system is what we are all used to.

Today in the West, the bank or credit union you use is part of a larger system governed by a Central Bank. In the US it’s the Federal Reserve, or “Fed”; in the European Union it’s the European Central Bank (ECB). If you use paper or digital money, then you are part of a larger banking system.

The Second Signpost Effect

In the Western banking system, banks hold a “toxic asset” known as derivatives. Derivatives are like futures in commodities and options in stock: they are bets as to the direction in price of underlying assets and indices.

Derivatives began in earnest in the late 1990’s (with the repeal of Glass-Steagall signed by President Clinton in 1999) and quickly became a bad habit for bankers. Trying to get rich with bets bankers hoped were good, the bets turned out wrong, costing the banks money. It was derivatives that almost toppled the banking system in 2008. Much of the derivatives market were bets made on mortgages and we know what happened with that in 2007-2008.

Today, the bulk of the $1.4 quadrillion (yes, that’s right, that’s 1,400 trillion and its going up; five years ago it was half that) in derivatives are bets on the dollar and interest rates. If a bank bets that the dollar will be worth a certain amount and the dollar is all of a sudden cut in half in value (again, due to the Second Signpost), the bank may owe many times more than it currently owes on the derivative.

In other words, the tiny fraction of real assets (cash, bonds, loans), which only needed to be 1% or less of all the debts (derivatives) of a bank, become an even smaller percentage when the derivatives blow up. Accounting rules were changed in 2008 to allow banks to need only 1% or less in fractional reserves. Therefore, the bank, not meeting the fraction of assets to keep the bank afloat, would go under.

This is the basic mechanism for how the western banking and credit system could go under, taking all checking and savings accounts of all people with it. (You don’t really think the money you put in checking or savings is your money do you? When you deposit funds in a bank, you are loaning the bank your money. The money becomes the bank’s money. The reason you are able to deposit and withdraw and move funds around and pay bills is because those funds in the banking system move around from bank to bank. The tight requirements on asset-to-debt ratios is why banks, after 2008, charge fees for moving money around.)

If western banking collapses, hundreds of millions of people in America and even Europe will no longer have a central banking system at their service, but will have to rely on a real money system of their own.

Gold as Banking

So when the banking system goes away, then what? You will still need money or barter to pay for things your family needs. This is where gold shines (pun unintended).

With no banking system for a time, the only money you will have is that which you can hold in your hand and have physical access to. That money must have inherent value. It cannot be inherently worthless like paper. Gold satisfies both requirements to be money: inherent value and physical mobility.

Before the 1920’s, that’s exactly what Americans had. Money was in gold and silver. Every American was his or her own banking system. One day’s wage for an average manual laborer was $2, and was paid in silver, which according to the Coinage Act of 1792 was exactly 1.5 troy ounces of silver. (Whether dimes, quarters, halves, or dollars, they all had the appropriate fraction of 0.75 troy ounces of silver per dollar.)

A person could earn his wage, keep it, hide it, and at an old age all the money he amassed would still be worth the same as when he earned it. A gold $20 piece and a $20 paper bill both put under a mattress in 1913, today would result in a $20 bill which could buy two meals at McDonald’s, and a gold coin worth about $1,500. Whatever that gold coin could buy in 1913 it could also buy today. There’s an old saying that an ounce of gold will always, regardless of the century, but you a really nice suit.

From 1792 to 1913 there was no net inflation. People weren’t paid more, but prices came down for everything due to technological innovation.

In the decades prior to the Financial Crisis of 2008, financial advisors would tell people to put 5-10% of their wealth in physical gold. Nowadays, the good advice is to put 20% in physical gold. With the Second Signpost looming, that is indeed good advice. Do not bother buying gold mining stocks or paper gold (ETFs) which will not be useable to buy your family food, but have real physical gold or silver you can hold in your hand. Do not bother with cryptocurrencies like Bitcoin either, which will have a high chance of disappearing with the internet.

Gold

The great majority of people don’t understand gold. It’s been demonized by the current banking system as a “barbarous relic.” Its price goes through some wild swings as the world’s bankers short it and buy it. Central banking leaders discourage people from owning it. But don’t listen to them. Whether you buy gold at $1,500 per ounce, or $900, or $3,000, don’t worry about the price swings. You own gold not as an investment (that’s what gold mining stocks and Gold ETF’s are for) but as a shelter for your wealth, so that when the paper money banking system you are in and use every day goes away, you don’t lose everything, but only lose that part of your wealth that was in the bank. Gold is the one asset that is not in a bubble, but in an “anti-bubble.” Its price should be way north of $10,000, but it is suppressed by central bankers.

Your wealth can be sheltered in more bulky things like land, or a farm, or silver, or barrels of oil, or anything that has value. But gold is the one asset that is measureable when in coin form and is compact.

The End Times

Having gold will help for a time, but ultimately your provision comes from the Lord. Gold ownership may be what He is calling you to do to help others. Gold is merely a device to carry out what the Lord may do. It’s a device to allow one to carry wealth from this current time, into the end time.

Those who live in Center Earth (Europe, Africa) can put some of their wealth in physical gold, but at the start of the Tribulation the Antichrist’s economic system of the mark will replace it.

Those who live in East Earth (India, Australia, Southeast Asia) can put some of their wealth in physical gold. However, at some point in the years before Christ’s return, if China takes over and rules as it looks like they are going to in that part of the world, they may discourage the ownership and use of gold. Right now China is looking both at dominating East Earth, and building a gold-backed currency for nations to use.

Those who live in West Earth (the Americas) can put some of their wealth in physical gold, and it would likely be a hedge for a time against the coming grinding poverty. Why poverty? If the banking system in the west goes down, everyone’s money in the bank goes with it. Then what will people use for money? Exactly, they won’t have any.

Acquiring Gold and Silver

If buying gold and silver is something you think you should do, educate yourself about it.

Gold should be in the form of coins (not bars), one ounce or half ounce, and 80-90% gold like American eagles. Pure gold like Canadian Maple Leafs and Chinese Pandas will wear, scratch, and break if used as money. You can get gold coins at coin shops, or from reputable dealers like these at here or here. You mail them a check and they discreetly mail you gold. Do not buy old gold coins minted many decades ago because there is a collector premium on the price.

Silver should be in the form of the US quarters, dimes, and half dollars dated 1964 and before. It’s commonly called “US junk silver.” Avoid silver dollars as there is a premium on those. Figuring the value of US silver coins is a bit tricky. Every dollar has three-quarters of an ounce of silver. So, four silver quarters would ideally cost $15 if the price of silver per ounce is $20.

Commissions of 1% to 5% on top of the price of silver or gold, is good. Greater than 10% is bad.

Conclusion

As always, do your due diligence, and seek the Lord’s wisdom. This article is a reminder that there is an alternative to having some physical funds on hand if or when the banking system goes down. Paper cash will be good for a short time until people lose trust in the paper money, but the value of gold can last until Christ’s return.



Categories: America in the End Times, China in the End Times, Europe in the End Times, Preparation

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11 replies

  1. “With no banking system for a time, the only money you will have is that which you can hold in your hand and have physical access to”

    and guard with your AR-15. 🙂

  2. “If western banking collapses, hundreds of millions of people in America and even Europe will no longer have a central banking system at their service, but will have to rely on a real money system of their own.”

    Vince Rossiter (1914-1990) was a commercial banker for the rural town of Hartington, Nebraska. He was active in the National Organization for Raw Materials, which teaches that farm and mineral production are a net plus to the economic system, because unlike money loaned into existence that has to be paid back with interest, products from Nature, though requiring work to obtain, are free. In his lectures Rossiter would cite this statement written decades ago: “When the nation’s economy boomed after the Civil War and until World War I, the markets developed a system to meet the needs for effecting, in a noninflationary way, the growth process. This basic principle of sound commercial banking evolved in free markets. The gold exchange value of [agricultural] things produced coming into the market were briefly monetized, as though they were so much gold, by the commercial lending process, which involved automatically self-liquidating short-term loans. When the loans were made, the banks created corresponding credits to the checking accounts of the shippers [of agricultural products], amounts not deducted from other checking accounts. In effect this made the gold standard flexible enough so that the great unforeseen increase in production and even greater need for transactional media [money] was accomodated. The newly created purchasing media were canceled by the repayment of loans as [agricultural] things were sold into the market. No economist invented the system. No government created it. Human beings, operating in free markets, coped with a problem for which no solution previously had been provided” (American Institute for Economic Research).

  3. If a community learns and is able to trade their own commodities (skills, material possessions, etc) with each other they will be fine as well. The Puritans and many others during the colonial age learned to do this.

  4. It’s interesting that Rev. 13:14-15,

    14 And he deceives those who dwell on the earth because of the signs which it was given him to perform in the presence of the beast, telling those who dwell on the earth to make an image to the beast who had the wound of the sword and has come to life. 15 And it was given to him to give breath to the image of the beast, so that the image of the beast would even speak and cause as many as do not worship the image of the beast to be killed.

    and comparing with Rev 9:20,

    20 The rest of mankind, who were not killed by these plagues, did not repent of the works of their hands, so as not to worship demons, and the idols of gold and of silver and of brass and of stone and of wood, which can neither see nor hear nor walk;

    and Isa. 2:18-21,

    But the idols will completely vanish.
    Men will go into caves of the rocks
    And into holes of the ground
    Before the terror of the LORD
    And the splendor of His majesty,
    When He arises to make the earth tremble.
    In that day men will cast away to the moles and the bats
    Their idols of silver and their idols of gold,
    Which they made for themselves to worship,
    In order to go into the caverns of the rocks and the clefts of the cliffs
    Before the terror of the LORD and the splendor of His majesty,
    When He arises to make the earth tremble.

    That the False Prophet is able to make “these” images come to life and speak, it seems. Robert Van Kampen brought this out in his “The Sign ” book. I think this is probably the correct interpretation although I don’t believe in all his conclusions-esp. about the last beast empire.

    That they are made of gold and silver shows it will be in huge demand. It looks like they are making one out of whatever is at hand depending on their economic status. Connection to the image of Daniel 2 is there too. Looks like it will be a big business like in Acts 19.

    I’m also thinking here in the USA, that not only for home protection, but owning a gun will be wise-like JT says, and if you can, don’t be around a major metro area where problems will be worse. And of course, if you can own a place to live with no mortgage-even a piece of raw ground, seems like it might be better “first steps” before going into gold.

    But it looks like we will have a civil war for sure when many people here convert to radical Islam. Rev 13:10, seems to speak of deferent “lots” for Christians in different areas. Could be this will cause great division in our country (more than even now), and bring about wars in every country that has Muslim populations.

    What do you think Mark?

  5. Gary,
    Agreed. In that case a single but whole community becomes a “banking” system.

  6. Steve,
    Those verses went through my mind as I wrote this post. Gold can be used until it gets thrown away on the Day. But I thought the post was long enough as it was.
    Responding to your various topics –
    1) Rev. 13:14-15 is quite clear it’s a single image (not several) that is given the power to speak, no other, just as there was a single image on the plain of Dura that King Nebuchadnezzar made everyone worship.
    2) We are not told in the Bible what the material of the image is, or even what the image itself is. I suspect it will be an echo of the image set up in Dura, but we are not told what that image was either.
    3) Owning a gun seems good, but again, consult your Lord. Getting out of a metro area seems good by our human understanding, but one never knows. A close friend of mine thought he was supposed to move to an empty red state, but the Lord showed him he had to stay miles away from the downtown of a major city in order to minister to people once the Second Signpost breaks out. This is why I cannot, like your average prepper author, say authoritatively that people should do this or that. The Lord may have other ideas for you.
    4) Having no mortgage is always best, but with just a few gold coins there will be a short time – perhaps weeks – where you can take a few 1-ounce gold coins when gold is $50,000 an ounce, convert the gold to something useable by your mortgage holder, and pay it off.
    5) I don’t think we will see a major conversion to Islam in the western hemisphere. As the research in Chronicles has shown, the west will be spared the Antichrist and the mark but will have to contend with other things. I do think civil war is coming, just for other reasons.

  7. I agree, Mark. A coming second civil war is indeed in the future, imo. Grinding poverty is one aspect due to socialism and the never ending narrative of having the political ruling elite trying to unseat Trump as President which is not as unlikely as it sounds. If that really succeeds and twitter rumors abound that both political parties desire this because of the threat against them over national power this will enrage a vast majority of Trump supporters. Hence, civil war ensues as armed revolutionaries to reset a corrupt government. It really is not as far fetched as it sounds.

    Blessings!

  8. I believe Van Kampen argued for a collective noun about the image? I no longer have the book. But it is weird that the FP would tell everyone to make a personal image (idol) of the beast, and have it at home to worship-Isa. 2 shows this in the end time context, and it might be like an “Alexia” that will be observing what you are doing-through demons.

    I do see everyone making an idol because that’s what the text says. But will all of them be given life? Not sure because I don’t know Greek. 🙂

  9. Just putting this out from real clear politics from the early state to state polling, Trump’s numbers look absolutely horrible in states he won in 2020. If he does lose, I tend to think that Wall Street could go into a massive sell off.

    https://www.realclearpolitics.com/epolls/latest_polls/elections/

  10. “I cannot, like your average prepper author, say authoritatively that people should do this or that. The Lord may have other ideas for you.”

    Mark, I agree. And I believe the best preparation is first to be a “spiritual prepper” since, if we haven’t done that, we can’t know what the Lord wants each of us to do. Physical prepping IMO is not unwise in and of itself (e.g., Joseph), and gold and guns might hold us for awhile, but not forever.

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