Posted on 08/21/2011 2:05:25 PM PDT by DaveinOK54
What would happen with the private ownership of gold coins/bullion if the $ returns to the Gold Standard?
Would the price be artificially fixed? Would it be confiscated? What about the ability to buy, sell or trade it? (I guess if confiscation happens, the last question is moot)
I hear a lot about the need to return to the Gold Standard, but have not seen anything about the affect on private ownership.
Thanks in advance wise ones...........
I would use it to pay some $$$ on my now worthless home.
total money in the world: $46.5 trillion (link)
total gold in the world: 5.3 billion troy ounces (link)
for the world's money supply to be gold based... gold would have to be:
$46,500,000,000,000 / 5,300,000,000 = $ 8,774 / oz
if the money supply were to be based off a commodity basket where gold was 25-35%, then the value per ounce would be lower.
technically, it's already based on some relationship with the various commodities.. the ratios are just not set
Thanks all for the great insights. I knew there would be some constructive and insightful comments here. I’m not advocating it at this point, just have been hearing chatter about it here and there and was wondering what the impact would be. I’m more worried right now about our IRA’s, 401K’s, etc. Theres a lot of $$$$ sitting there right now and I’m afraid that fruit may be too tempting to avaid taking.
And how do you dare reveal to the butcher, the baker, or the candlestick maker that you have a supply?
The problem, under the Mad Max scenario, won't be using it.
It will be keeping it.
Shortly after taking office sixteen years later, Franklin Delano Roosevelt signed Executive Order 6102 into law, prohibiting the “hoarding” of gold. Under this executive order, Americans were prohibited from owning more than $100 worth of gold coins, and all “hoarders” (i.e. people who owned more than $100 worth of gold) were forced, by law, to sell their “excess” gold to the government at the prevailing price of $20.67 per ounce.
Then, once the government had all the gold, FDR revalued the dollar relative to gold so that gold was now worth $35 an ounce. By simple decree, the government had thereby robbed millions of American citizens at a rate of $14.33 per ounce of confiscated gold, which is why most historians agree that the Gold Confiscation of 1933 is the single most draconian economic act in the history of the United States.
http://www.silvermonthly.com/government-confiscation-gold-happened-beforecould-happen/
I've seen estimates that a gold price of $7500/oz. would be the magic number. We may be there before long.
The worldwide average cost to produce an ounce of gold is somewhere around $500/ounce...some producers are in the $400/oz range, some near the $1,000/oz. No one is going to commit CAPEX to a new project based on production costs greater than $1k/oz...investors won't and are not going for it because of the obvious risk.
Two thirds of the people never turned in their gold.
It doesn’t matter how much fiat money is out there. There will be a complete revaluation of the currency and the current dollar will cease to exist. What value is actually assigned to gold will have nothing to do with the number of fiat currency units floating around.
The ideal situation is to get government out of the money business all together and allow free money to occur as a result of what people want to use. Silver will also be an integral part of the money system as well. The system could very well gravitate to digital gold and silver currencies, like goldmoney.com.
The point is that not only is gold possible to use, it is really the only thing that can be used to prevent the political class from using the money supply to buy votes and keep power.
There will be a G-20 treaty outlawing the conversion of gold to any G-20 currency.
You will need an export license to board an aircraft with gold, and, although you will still be able to sell gold for Thai bhat, getting it there will be a problem.
Yeah there is no way they could adjust the price of gold (say 25,000 an ounce for example) to meet with the money supply I mean that is just impossible!
The dollar would be defined as a weight of gold. For example, if implemented today, the dollar would be defined as 1/1800 oz. of gold.
Gold's value could fluctuate, but the dollar would always maintain its purchasing power vs. gold.
Would it be confiscated?
If gold were confiscated, it wouldn't be a true gold standard. The genius of the gold standard was that anyone could redeem his paper dollars for the defined weight in gold. It was this condition that kept banks (and governments) from over-inflating the currency.
If people started to doubt the soundness of the paper bills, they would redeem them for gold. Too many gold withdrawals would result in bankruptcy and economic collapse.
Numbers were posted in the thread. 9500/oz would be sufficient.
It can be done, there’s no question about that, the only question is whether it would, or should.
Yeah, if the cost to mine the stuff were the same as or more than the market price, the mines would simply shut down. It's a commodity. The miners want to make money, too.
Some people wonder what would happen if the gold supply remained stagnant in such a case. Would there be enough gold? Yes. Any amount of gold can work to back the currency of any nation.
It would become more valuable with the higher demand, but that would only mean that its purchasing power would increase -- or, in other words, that the prices of goods would drop.
We can’t tolerate that much inflation. It would literally destroy the dollar and all the life savings of most people.
You start you premise with - the dollar is worthless. So in that case, what can you do with dollars beside use them as toilet paper ? At least gold will retain its value. Worse case scenario, you sell a gold coin for paypal credits. Then go down to the local grocer and slide your paypal debit card for payment. My guess is we will have a gold or silver backed online service. How about paygold or paysilver ? Eventually you will be able to buy groceries with silver eagles. Otherwise known as, real money.
It sounds like a fantasy but when the dollar was backed by gold we had no inflation for decades at a time, and unprecedented economic growth
What an idiotic thing to write. The free-market clearing price for gold is $1,876 per ounce. Yes, that indicates massive inflation since we left the gold standard and gold was $32 /oz. But there's a price for everything. There is a price for gold that would make the gold standard work again. Seemingly, though, there isn't the political will to keep that price stable. That's why the gold standard is a non-starter in today's environment.
Your question implies a collapse of government currency. In such an apocalyptic case (which will not happen), you arrange for the gold to be held as collateral in a credit account with whomever. Exchanges would spring up in no time, probably organized by banking institutions. Local scrip would replace the dollar for small purchases, as it did during the Great Depression, only now based on gold held in trust by third parties rather than on full faith and credit of the goobermint.
There is an extra premium but there is also greater flexibility.
Also look at silver, especially junk silver. A mercury dime is worth about $3 in meltdown value of the metal at silver $40 an oz, a silver quarter (pre 1964) is worth about $7. That is maybe worth a loaf of bread or a gallon of gas or a bottle of aspirin.
Even pure copper coins are heating up- copper is $4 a pound but who gets to buy and hold industrial copper and who wants to try to trade in big bars of metal? Coins are $1- $2, have the chance to become the poor man's silver (as silver is the poor man's gold)
Our society is used to seeing gold silver and copper (esp coinage) as money and as having value.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.