Posted on 11/08/2009 11:35:23 PM PST by FromLori
The price isn't right, but it doesn't matter -- all that glitters won't be sold
Buried in the Treasury's International Reserve Position report is an intriguing bit of math. The document details the total amount, by weight, of the Treasury's gold reserves, plus a dollar value for said metal. But some fast division reveals something interesting: The Treasury marks the value of its gold at $42 an ounce, the price settled on in 1973, two years after the United States scrapped the Bretton Woods System, which had held gold at $35 an ounce for decades.
Wait -- what? Spot gold is heading toward $1,100 per ounce, and the Treasury is embracing a Cold War relic of a price? If the Treasury's bling were valued at the spot price, we'd be sitting on a literal gold mine of nearly $288 billion. Why doesn't the Treasury account for the huge run-up in gold prices?
For starters, marking the Treasury's gold to market would create a huge headache of an ever-fluctuating balance sheet as the price of gold rises and falls, pointed out Dimitri Papadimitriou, president of the Levy Economics Institute at Bard College. Plus, if gold tumbled, we'd lose our hypothetical wealth as quickly as we'd accrued it.
More important, the United States isn't selling its cache. Evaluating the Treasury's gold for the market would be like putting a price tag on the White House or the Statue of Liberty -- a possibly entertaining but pointless exercise. For the Treasury to say it suddenly has greater wealth in its coffers might make us feel better about the burgeoning deficit, but it doesn't really change anything. For revaluation to have any economic impact, we'd have to sell, according to Mark Calabria, director of financial regulation studies at the Cato Institute.
(Excerpt) Read more at washingtonpost.com ...
$288 billion is nothing.
Our deficit in one year is $1.44 trillion.
gold ping
There is a lot of controversy about how much gold is actually physically present in our “gold reserves”.
A European banker I talked to in Tokyo a couple years back said that it is commonly assumed (by Europeans at least) that the amount is far less than any figure bandied about — but that no one will ever know precisely because that figure is even more secret than missile designs.
Who knows?
I know exactly how much gold I am sitting on. That is what really matters.
About enough for one bribe in the Pelosi-Care bill.
The supply of gold failed to keep up with economic growth long before 1933 and even then backed only a minute amount of currency in circulation, much less demand deposits. Gold today would have to be valued at more than $10,000 an ounce.
Bard also has an "Alger Hiss professor of social studies." The president of Bard is not a marxist (he's one of the few sane liberal Democrats left) so why he appointed Joel Kovel to that chair, I have no idea but it gives an indication how much sanity there is at Bard today.
Papadimitriou comes out of The New School for Social Research in Greenwich Village. Frankfurt School crap. Foucault, Freud, Marcuse. John Dewey was one of the founders.
Dimitri is just the type of person the Washington Post would find to qive an expert opinion. Mark the price of gold to market? Mein Gott! East Germany never did it so why should we?
We should hang on to it. When our debt goes into the “quadrillions” that ammount (288 B’s) will grow in value to a trillion.
Obama renames cash value brings back the “mil”
http://www.theusmat.com/natldesksatire.htm
Sishhhhh, don’t tell the Dems. They don’t know how to do math, and they haven’t figured out there is another “Obama private stash” to hand out!
Why? Because it would, ironically, put us on a gold standard.
There would be nothing backing the dollar but the fiscal discipline of the government to stabilize the value of the greenback. Which, considering the piddling (in relation to the size of the US economy) $288 billion amount of gold the US holds, is actually the true situation now.
The point being that the US gold holding is an illusory stability.
This probably says more about the dollar than it does about gold.
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