Posted on 08/25/2011 7:08:12 AM PDT by Kaslin
Central bank and government actions around the globe increasingly prove that gold is the place to be.
Here is an interesting Bloomberg headline that shows what I mean:Central Banks to Retain Gold to Manage Debt in Crisis
(Excerpt) Read more at finance.townhall.com ...
I have been wondering what would happen if OPEC priced oil in gold.
You mean all the way back to the prices of two weeks ago. Wow, that’s scary. Look at gold 30 day, 60 day, 180 day, and 10 year trend lines and refute the up, up, up claim.
These last few days are a shake out brought on by Asian changes to margin requirements. It was a manufactured downturn to allow big investors to load back up.
You mean all the way back to the prices of two weeks ago. Wow, that’s scary. Look at gold 30 day, 60 day, 180 day, and 10 year trend lines and refute the up, up, up claim.
These last few days are a shake out brought on by Asian changes to margin requirements. It was a manufactured downturn to allow big investors to load back up.
While gold is the current speculative bubble, I don’t see it actually being used as a medium of exchange. The use of gold as currency would have a serious problem — the supply of gold does not readily respond to the economy’s need for currency to conduct transactions because gold supply for monetary use depends on gold discoveries, gold mining technology, and the changing industrial needs for gold. If we were to decree that gold is the official currency, we can expect continual deflation as the economy’s need for currency expands faster than the supply. (This happened in American history, leading to demands for silver coinage.) Sorry, Wall Street Journal editorial page gold advocates — there is no currency rule or formula that is going to keep the economy sound; an informed, freedom-loving populace is our only hope.
I cashed out a couple days ago... If it can hold 1500 I’m getting back in.
That is the same move the Fed and Carter's SecTreas got the CBOT to make in silver trading -- four times over (four changes) -- to force the Hunt brothers to start selling and crash silver (and gold). Story was, Lamar and Bunkie were fronting for the Saudis, building up a world silver reserve so that the Saudis could float a new petrocurrency against it and stop the Fed's repression game w/r/t oil prices.
Too bad for Lamar and Bunkie, they bet on the weak horse. As Osama used to say, everybody likes the strong horse. Who's the horse now?
See my last. They tried.
I’ve said it before, and I’ll say it again: when gold reaches $2,067 per ounce, the dollar will be worth exactly one penny from a century ago. Economists may call this an overly simplistic measure of inflation, but simple is not simplistic. We’re not talking about a dollar’s worth of an artificial ‘basket of goods’ which has different arbitrary contents from the end of one century to another; we are comparing two commodities, period. An ounce of gold a century ago was $20.67, by law. No ‘baskets’ were involved. The whole concept of comparing groups of commodities to get a ‘better view’ of inflation, or to use ‘average daily wages’ (another guess) serves only to make it seem impossible to measure wealth and inflation.
We have not been well treated by nearly a hundred years of the Federal Reserve system, nor have we done particularly well in the forty years of fiat money since Nixon closed the gold exchange window. A politically staffed central bank with the power to print money leads to politically motivated bubbles. At least the First and Second Banks of the United States were only chartered for twenty years, and couldn’t create money out of thin air.
Simple truth is currency has never been is not now or ever will be MONEY...
The rubes have been deluded and tricked by a RubeGoldberg shell game called central banking..
It has also WORKED!.. If the rubes ever find out they have been tricked..
Anarchy may be the result.. Some of the rubes may have been SLAPPED into conciousness.. lately..
There's this thing called Fort Knox, where the U.S. has gold already mined, refined, and put into ingots! Also, there's a handy arrangement called "notes" that was invented by the Italians in the Renaissance, whereby a person only needs a piece of paper instead of a bag of gold. You might have something similar in your wallet!
Sarcasm aside, you're giving the reasons that were given a hundred years ago for fiat money over gold. They are true, as far as they go. However, the advantage of gold over pure paper money is precisely the difficulty of producing more. Yes, long-term deflation may have some deleterious effects, but these are generally ameliorated by interest rates (i.e., low rates, and the avoidance of non-interest-bearing accounts). These are much less damaging than volatile spikes of inflation caused by political paper-printing.
I do agree that "there is no currency rule or formula that is going to keep the economy sound" as you say. However, as Adam Smith wrote, "Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things."
Yes, we have gold at Ft. Knox, but the amount of that gold is not going to grow with the economy.
Fiat money has its problems, but so does gold. The deflation problem would be much more severe than you predict. People would be locked into preexisting loans that they would find increasingly hard to repay for decades, and wages would remain downwardly sticky due to unions and minimum wage laws for quite some time. The result: a long period of depressed economic activity until the economy gets used to a new gold regime. I doubt that capitalism could politically survive the transition.
Actually, the American experience with fiat money, in terms of inflation rates, has not been all that bad — once the Fed got over its inflationary money creation of the 1970’s. There were frequent and severe depressions when America was on the gold standard.
The bottom line — Americans should be free to use gold as money if they want to do so; but neither gold nor fiat money is going to guarantee that governments pursue pro-growth economic policies.
We used to have gold certificates circulating back into the twenties. If gold was established at some ratio as the backing for currency, even fractionally, it would have a salutary effect.
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