Skip to comments.The Moment for Gold (Is now a good time for the US to return to the Gold Standard?)
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 newspapers interest in gold. We look at it not with the investors eye or the speculators motives, though we respect both investors and speculators. Our interest in this beat has to do with the long struggle for monetary reform. Its 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 ...
You’ll never know until Fort Knox is audited, as well as the Federal Reserve..............which isn’t Federal.
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?
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................
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.
I dont 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.
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:
i’ll take hard assets over toilet paper any day.. and so will the chinese
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.
[I dont 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.
It would take more Gold than there is in Fort Knox to cover our debt.
[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.
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.
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?
Going to the gold standard, at $1300/oz now, would require the US government have 1/5th of all the gold ever mined.
The US will eventually get back to the gold standard, but it will probably have to go to the ‘lead standard’ first.
“I dont think the USA has enough gold to cover all of its paper money.”
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?
Not till we hit rock bottom.
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.
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.
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.
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.
Gold is down $100/oz since December. Everyone who invested back then is under water now.
Your chart is not adjusted for inflation
Second, if you think oil is the cause of our current economic woes then we are just going to have to disagree
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.
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.
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.
Excuse me, Can you break a $50k piece?
Excuse me, Can you break a $50k piece?
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.
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....