Posted on 12/06/2005 11:25:43 PM PST by Capitalism2003
December 5, 2005
The market price for an ounce of gold rose to over $500 last week, a significant milestone for economists watching precious metals and commodities markets. The last time gold topped $500 was December 1987, in the wake of the “Black Monday” stock market collapse earlier that fall.
Gold prices historically rise when faith in paper currencies erodes, as investors seek the intrinsic value of gold to protect themselves from inflation. It’s interesting to note that while the U.S. dollar has regained some of its value relative to other paper currencies like the Euro, it continues to lose value relative to gold and other hard assets. This shows the folly of using one fiat currency to value another.
Gold is history’s oldest and most stable currency. Central bankers and politicians don’t want a gold-backed currency system, because it denies them the power to create money out of thin air. Governments by their very nature want to expand, whether to finance military intervention abroad or a welfare state at home. Expansion costs money, and politicians don’t want spending limited to the amounts they can tax or borrow. This is precisely why central banks now manage all of the world’s major currencies.
Yet while politicians favor central bank control of money, history and the laws of economics are on the side of gold. Even though central banks try to mask their inflationary policies and suppress the price of gold by surreptitiously selling it, the gold markets always cut through the smokescreen eventually. Rising gold prices like we see today historically signify trouble for paper currencies, and the dollar is no exception.
President Nixon finally severed the last tenuous links between the dollar and gold in 1971. Since 1971, the Federal Reserve and U.S. Treasury have employed a pure fiat money system, meaning government can create money whenever it decrees simply by printing more dollars. The "value" of each newly minted dollar is determined by the faith of the public, the money supply, and the financial markets. In other words, fiat dollars have no intrinsic value.
What does this mean for you and your family? Since your dollars have no intrinsic value, they are subject to currency market fluctuations and ruinous government policies, especially Fed inflationary policies. Every time new dollars are printed and the money supply increases, your income and savings are worth less. Even as you save for retirement, the Fed is working against you. Inflation is nothing more than government counterfeiting by the Fed printing presses.
The great real estate Chicago BUBBLE, which burst in 1873, wasn't due to banks issuing more credit than they had gold to back it up with and the ensuing recession came on the heels of that bust BUBBLE.
The Panic of 1836-37 had nothing whatsoever to do with credit or loans. Like many other panics, recessions, and depressions, world affairs are involved.
And then, there have been the speculators, who have tried to or actually did "corner the market" on different commodities, which have fueled manias and then recessions and depressions.
In that case, you may want to consider SILVER, which has heavy demand from dozens of industries, and is in extremely short supply today. Some say there is less silver above ground than gold, yet despite the recent rally, it is still only 1/60 the price.
BTW...I don't shill for anyone or anything.
But thanks for the rest of your post.
But it was also partly fueled by events in England. President Andrew Jackson said so, as did others.
Well, I'm impressed :-O
Hoyt's analysis of this is indispensable and is also very helpful in understanding many other events; including Black Monday and the Japanese stock market crash of 1990.
It's true...how many here were on an exchange floor that day?
And NOT worth the M3 supply.
Of course there is something backing up the dollar that no one seems to think about. Ever wonder why there is so much federal land?
I just post facts and trash the goldbuggers. :-)
No, he's not. In fact, this article by him is rubbish. Goofball didn't even show up to vote against Murtha's "cut and run from Iraq" bill a few weeks ago.
I experienced it as a tourist activity, but if you check it out seriously, gold panning is legal on most federal lands. You can look for gold without a permit if you use shovel and pan and smaller equipment like rockers and sluices (I think). But dredging requires a federal permit.
In tourist areas, you can get a few dollars worth - at least that's what the owners of the place put the value on the gold flecks that you pan.
Panning is actually cold, back breaking work - you slosh around in cold gravel streams, bent over your pan looking for "color". It can be exciting, but requires patience, practice, and luck.
With gold at around $500/oz. I suppose it's more rewarding now....8-)
Wall Street is not a machine, and the tech bubble was nothing more than tech companies, one after the other, becoming publically traded companies. The tech industry has become completely saturated since then by either themselves merely existing, the fluidity of technological advancements, mergers, diversity (by companies like IBM for example) and bankruptcy.
And to be perfectly honest, the tech bubble was all driven by media hype over a new household luxury called "the internet". It's no coincidence, in my estimation, that this so called tech bubble started when the internet become a household luxury that anyone with a computer and a modem could readily enjoy.
So I've got some money looking for a home but I thought I'd hang out in cash for a bit and see what happens with bonds.
But I'll continue to keep an eye on it, thanks.
The assets of the U.S. government are certainly worth vastly more than a few tons of refined yellow metal in a safe.
And NOT worth the M3 supply. >>
Of course it is. By definition.
Of course there is something backing up the dollar that no one seems to think about. Ever wonder why there is so much federal land?>>
What do you think I meant by "assets"?
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