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The Moment for Gold (Is now a good time for the US to return to the Gold Standard?)
New York Sun ^ | 01/28/2011

Posted on 01/28/2011 6:55:23 AM PST by SeekAndFind

The speed with which money is flowing out of gold — and American government bonds — and into stocks reflects the improving economic outlook, according to a telegram sent out this afternoon by the economist David Malpass. He notes that gold has fallen $115 dollars since its $1,431 intra-day peak on December 7, while the 10-year Treasury yield has risen to 3.4% from a low of 2.4% on October 7. He reported on a recent conference at which investors passed around “large gold nuggets” and at which Paul Volcker pointed out that a rising gold price is, as Mr. Malpass put it, a “negative assessment of a central bank.” But he thinks the trend in the past month reflects the economic outlook.

Not a bad moment to sketch this newspaper’s interest in gold. We look at it not with the investor’s eye or the speculator’s motives, though we respect both investors and speculators. Our interest in this beat has to do with the long struggle for monetary reform. It’s our view that the difficulties our economy have been going through have their roots in the un-soundness — the fiat nature — of what currently passes for American money. We comprehend that the dollar can gain in value even without a repair of the monetary system, as fiscal, political, and related matters and even the business cycle can change the outlook for growth.

If, however, we are to reduce the danger of future busts, the most important reform would be to restore sound money. By that we mean the kind of gold- or silver-based money contemplated by the Founders of America.

(Excerpt) Read more at nysun.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: gold; goldstandard; paperboy

1 posted on 01/28/2011 6:55:29 AM PST by SeekAndFind
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Comment #2 Removed by Moderator

To: F15Eagle

You’ll never know until Fort Knox is audited, as well as the Federal Reserve..............which isn’t Federal.


3 posted on 01/28/2011 6:59:17 AM PST by RC2
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To: F15Eagle

It’s just a matter of ratios.
They could fix it right where it is now.

$1 = 1/1300th of an ounce of gold.

Now, I’m not clear on the problems associated with the gold standard. Can someone post a 101?


4 posted on 01/28/2011 7:00:11 AM PST by MrB (The difference between a (de)humanist and a Satanist is that the latter knows who he's working for.)
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To: SeekAndFind

Paper money is based on faith, it has no intrinsic value.
Gold is a valuable commodity and an asset that never varies.
The “rising” and “falling” of the gold vs. dollar reflects the “faith” in the dollar, not the change in the value of gold................


5 posted on 01/28/2011 7:01:21 AM PST by Red Badger (Whenever these vermin call you an 'idiot', you can be sure that you are doing something right.)
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To: SeekAndFind

No time is a good time to return to the Gold standard.

Believe it or not, the U.S. currency has been significantly more stable in the last 80 years than it was when it was on the gold standard.

On the gold standard we had wild swings of deflation and inflation, sometimes as much as 25% in a single year. On the fiat system with the Federal Reserve in charge, we have had a low level of inflation each and every year.

It’s been much better for business and instead of severe deflationary depressions every 20 years, we’ve had only 2 depressions in 100 years.

Constant small inflation means you can’t store dollars in your mattress for 100 years, but who wants to? That’s not an economic goal that matters.

A small amount of inflation encourages investment of capital instead of unproductive hoarding. If you had invested those dollars you’ve done well because of the stable economic environment.


6 posted on 01/28/2011 7:03:07 AM PST by DannyTN
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To: F15Eagle

I don’t think the USA has enough gold to cover all of its paper money.

We really don’t have any much gold and it is not used to back the dollar any more. How would the US buy gold? They would have to steal it form the public otherwise it and the gold would be worth less.


7 posted on 01/28/2011 7:03:40 AM PST by mountainlion (The government is not my god no matter how much they preach.)
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To: SeekAndFind

funny how there are always stories touting how gold is about to crater, yet very few the other way

meanwhile, this will help dispel the bs that china will not dump the dollar, hurting it’s holdings:

http://www.freerepublic.com/focus/f-chat/2664585/posts

i’ll take hard assets over toilet paper any day.. and so will the chinese


8 posted on 01/28/2011 7:04:20 AM PST by sten (fighting tyranny never goes out of style)
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To: F15Eagle

That’s a self correcting problem, if it exists. A shortage of gold will drive up the price of gold, which will decrease the required supply to back the currency.


9 posted on 01/28/2011 7:06:45 AM PST by mamelukesabre (Si Vis Pacem Para Bellum (If you want peace prepare for war))
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To: F15Eagle

[I don’t think the USA has enough gold to cover all of its paper money.]

You don’t have to cover all the paper money, just some fraction of it. There are different ways of doing it.


10 posted on 01/28/2011 7:08:47 AM PST by DaxtonBrown (HARRY: Money Mob & Influence (See my Expose on Reid on amazon.com written by me!))
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To: F15Eagle

It would take more Gold than there is in Fort Knox to cover our debt.


11 posted on 01/28/2011 7:11:31 AM PST by Venturer
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To: DannyTN

[A small amount of inflation encourages investment of capital instead of unproductive hoarding. ]

That is hogwash. The only reason for inflation is to steal money from the sheep, period.


12 posted on 01/28/2011 7:12:42 AM PST by DaxtonBrown (HARRY: Money Mob & Influence (See my Expose on Reid on amazon.com written by me!))
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To: DaxtonBrown
Yup. A gold standard keeps a lid on inflation.

The thing is, some people like inflation. William Jennings Bryan gave his "Cross of Gold" speech because he opposed a gold standard, he wanted inflation, because inflation would benefit farmers who were in debt.

People who are in debt like inflation.
The political establishment likes debt, and likes inflation. The political establishment doesn't like a gold standard.
With a gold standard, government could not behave the way it has been behaving. Debt would be seriously bad, and so the government would have to spend less, and be smaller and more limited. That's pretty much the point.

I like a gold standard.

13 posted on 01/28/2011 7:20:55 AM PST by ClearCase_guy ("Borrowing a trillion is compassionate, cutting a billion is heartless." -- VDH)
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To: sten
funny how there are always stories touting how gold is about to crater, yet very few the other way

Here's a funny story about a president who liked using executive orders to get his way. He also found a way to stay in office for over 3 terms.

Executive Order 6102 required U.S. citizens to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 per troy ounce. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($167,700 if adjusted for inflation as of 2010) or up to ten years in prison, or both.

How would you like to wake up some morning to learn that Obama has done the same thing as well as seizing all records of gold transactions back to the 1970's?

14 posted on 01/28/2011 7:28:33 AM PST by Dixie Yooper (Ephesians 6:11)
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To: SeekAndFind

Going to the gold standard, at $1300/oz now, would require the US government have 1/5th of all the gold ever mined.


15 posted on 01/28/2011 7:40:36 AM PST by ctdonath2 (Great children's books - http://www.UsborneBooksGA.com)
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To: ctdonath2

The US will eventually get back to the gold standard, but it will probably have to go to the ‘lead standard’ first.


16 posted on 01/28/2011 7:48:06 AM PST by The Duke
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To: F15Eagle

“I don’t think the USA has enough gold to cover all of its paper money.”

“Do we?”

Nobody knows for sure but there has not been anybody allowed in Ft. Knox since the 60’s. So you be the judge.

I read an article last year that showed Obama quietly sold off most of the remaining gold in 2009. It was buried on one line in a report that was posted online. So who knows?


17 posted on 01/28/2011 7:50:45 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
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To: SeekAndFind

Not till we hit rock bottom.


18 posted on 01/28/2011 7:53:05 AM PST by Free Vulcan (Vote conservative! You can vote Democrat when you're dead.)
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To: SeekAndFind

A telegram?


19 posted on 01/28/2011 8:00:44 AM PST by AceMineral (World peace is the hog slop of philosophy.)
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To: DannyTN

It’s never a good time to return to the gold standard, but that’s what we need to do

The two depressions that we have had (one being now) have been caused by the Fed, so I don’t know why you are a fan of theirs. Inflated homes are coming crashing down because the Fed held interest rates too low, plus the various scams of the Federal Government.

Inflation kills the little guy and the Fed is now causing inflation by the buckets. Inflation always seems nice for a while, then it erodes your buying power.

The true value of gold will be determined soon. It’s much higher than $1300-1400.


20 posted on 01/28/2011 9:15:34 AM PST by cowtowney
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To: cowtowney
2 in 100 years, beats 1 every 20 years any day. Mortgages are not the problem. Mortgages take it on the chin in every economic downturn. The real problem was that the economy tanked, people lost jobs and couldn't pay the mortgages.

The reason the economy tanked is related to oil price shock which our country did nothing to avoid even though we went through this in the 70's. That plus the credit card rate hikes which also took money out of consumer's pockets. Yes the banks did it to themselves when they got greedy.

21 posted on 01/28/2011 9:25:01 AM PST by DannyTN
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To: DannyTN

I disagree with your view of history.

Mortgages are not part of the problem? They are a multi-trillion dollar problem for the US. Their losses have not been recognized on the corrupt bankster balance sheets yet.

Holding interest rates too low causes inflation in everything. The next to come will be colleges, where the interest rates have been held down and created a college education bubble.

Oil price shock? Give me a break. Our economy has absorbed higher oil prices.


22 posted on 01/28/2011 9:32:14 AM PST by cowtowney
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To: cowtowney
"Oil price shock? Give me a break. Our economy has absorbed higher oil prices."

When?


23 posted on 01/28/2011 11:16:21 AM PST by DannyTN
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To: Dixie Yooper

as the US currency at the time was backed by gold, there was some link for the legitimacy for the POTUS to do this. some. as that link was severed, the government has zero claims on any gold in the US.

if your statement is trying to imply they could demand forfeiture of private property, then anything is up for grabs, not just gold.

they could demand all bullets and guns be turned in. cars. sneakers. bacon. anything. why do you think they would care about gold?

and of course, there would be a revolt as mass confiscation of private property will make the majority of Americans freak out (at least those that ever intended on or currently owning the items being seized)

keep in mind, long before they would try to confiscate private property, they would go after the ‘low hanging fruit’... the money in bank accounts and retirement accounts. they’ve even discussed how they could confiscate 401ks in the last few months, and have been over the last 2 yrs.


24 posted on 01/28/2011 11:31:44 AM PST by sten (fighting tyranny never goes out of style)
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To: SeekAndFind

Gold is down $100/oz since December. Everyone who invested back then is under water now.


25 posted on 01/28/2011 11:34:07 AM PST by CholeraJoe ("I am second?" WTH? Buncha losers.)
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To: DannyTN

Your chart is not adjusted for inflation
http://www.fintrend.com/inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp

Second, if you think oil is the cause of our current economic woes then we are just going to have to disagree


26 posted on 01/28/2011 12:04:08 PM PST by cowtowney
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To: cowtowney

And what happened in 1981, the only time that even on the inflation adjusted chart that it was close? A severe recession.

We’ll just have to agree. It’s not that Mortgages aren’t a problem. They just weren’t the root problem. They are more of a symptom. There wasn’t much fraud in overvaluing houses or in overstating people’s incomes. It’s that the incomes fell. And every, every, every time that happens in mass since this country was founded, mortgages go into default.


27 posted on 01/28/2011 12:10:49 PM PST by DannyTN
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To: Georgia Girl 2
"Gold is valued at the statutory price of $42.2222 per fine troy ounce. The number of fine troy ounces was 261,498,900 as of September 30, 2010, and 2009." - Treasury Financial Statement Note 2. - Treasury Financial Statement Note 2.

261 Million oz * $1300 = $338 Billion. So no, clearly there is not enough gold to cover the dollars printed. But then they never claimed there was. And it's of no consequence, because the Fed has kept the dollar significantly more stable than it was on the gold standard.

By the way, there are only about 5 billion oz of gold in the world. So even if the US had it all, it would cap the money supply at $6.5 trillion. With 6 billion people in the world, going to a gold standard is a really stupid, stupid idea.

28 posted on 01/28/2011 12:17:40 PM PST by DannyTN
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To: DannyTN
261 Million oz * $1300 = $338 Billion. So no, clearly there is not enough gold to cover the dollars printed.

The assumption that the number of dollars in existence follows from the current price of gold leads to what might be an invalid conclusion. It might be more correct to assume that the price of gold follows from the number of dollars in existence, which I believe from earlier articles and calculations leads to a gold price upwards of $50K per ounce.

29 posted on 01/28/2011 1:22:14 PM PST by jiggyboy (Ten percent of poll respondents are either lying or insane)
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To: jiggyboy

Excuse me, Can you break a $50k piece?


30 posted on 01/28/2011 1:31:48 PM PST by DannyTN
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To: jiggyboy

Excuse me, Can you break a $50k piece?


31 posted on 01/28/2011 1:31:51 PM PST by DannyTN
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To: CholeraJoe

re: Gold is down $100/oz since December. Everyone who invested back then is under water now


I bought Gold when it was $880/oz just a few years ago. Sybsequently, it dropped to less than $800 if my memory served me right. Still I held on.

Had I said to myself -— “I have to sell because I am now under water” when it happened, I would not be in the profitable position I am in.

I held on because I saw the financial fundamentals were debasing the US dollar and there was no other place to turn to... the stock market was tanking, so was housing, so was the bond market... where else to turn to than the safe haven that gold is?

I was right.


32 posted on 01/28/2011 2:56:15 PM PST by SeekAndFind
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To: DannyTN
You don't have to have enough gold to back every single note in circulation, you just need enough of a reserve to be able to give gold to anyone who requests it from the central bank (and make the minimum amount high enough to make it inconvenient for most people). Then you follow sensible fiscal and monetary policies to ensure that you do not have a run on the bank.

You may think that this system cannot work, but it worked perfectly well from 1717 (When Isaac Newton put Britain on the gold standard) until World War One, when inflation and a refusal to pursue monetary policies to deflate money back down to its proper value reduced the gold standard to a hollow sham....

33 posted on 01/29/2011 2:06:42 AM PST by sinsofsolarempirefan
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