Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

The Assault on Gold
Paul Craig Roberts ^ | April 4, 2013 | Paul Craig Roberts

Posted on 04/07/2013 6:45:56 AM PDT by Bon mots

For Americans, financial and economic Armageddon might be close at hand. The evidence for this conclusion is the concerted effort by the Federal Reserve and its dependent financial institutions to scare people away from gold and silver by driving down their prices.

When gold prices hit $1,917.50 an ounce on August 23, 2011, a gain of more than $500 an ounce in less than 8 months, capping a rise over a decade from $272 at the end of December 2000, the Federal Reserve panicked. With the US dollar losing value so rapidly compared to the world standard for money, the Federal Reserve’s policy of printing $1 trillion annually in order to support the impaired balance sheets of banks and to finance the federal deficit was placed in danger. Who could believe the dollar’s exchange rate in relation to other currencies when the dollar was collapsing in value in relation to gold and silver.

The Federal Reserve realized that its massive purchase of bonds in order to keep their prices high (and thus interest rates low) was threatened by the dollar’s rapid loss of value in terms of gold and silver. The Federal Reserve was concerned that large holders of US dollars, such as the central banks of China and Japan and the OPEC sovereign investment funds, might join the flight of individual investors away from the US dollar, thus ending in the fall of the dollar’s foreign exchange value and thus decline in US bond and stock prices.

Intelligent people could see that the US government could not afford the long and numerous wars that the neoconservatives were engineering or the loss of tax base and consumer income from offshoring millions of US middle class jobs for the sake of executive bonuses and shareholder capital gains. They could see what was in the cards, and began exiting the dollar for gold and silver.

Central banks are slower to act. Saudi Arabia and the oil emirates are dependent on US protection and do not want to anger their protector. Japan is a puppet state that is careful in its relationship with its master. China wanted to hold on to the American consumer market for as long as that market existed. It was individuals who began the exit from the US dollar.

When gold topped $1,900, Washington put out the story that gold was a bubble. The presstitute media fell in line with Washington’s propaganda. “Gold looking a bit bubbly” declared CNN Money on August 23, 2011.

The Federal Reserve used its dependent “banks too big to fail” to short the precious metals markets. By selling naked shorts in the paper bullion market against the rising demand for physical possession, the Federal Reserve was able to drive the price of gold down to $1,750 and keep it more or less capped there until recently, when a concerted effort on April 2-3, 2013, drove gold down to $1,557 and silver, which had approached $50 per ounce in 2011, down to $27.

The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.

For now it seems that the Fed has succeeded in creating wariness among Americans about the virtues of gold and silver, and thus the Federal Reserve has extended the time that it can print money to keep the house of cards standing. This time could be short or it could last a couple of years.

However, for the Russians and Chinese, whose central banks have more dollars than they any longer want, and for the 1.3 billion Indians in India, the low dollar price for gold that the Federal Reserve has engineered is an opportunity. They see the opportunity that the Federal Reserve has given them to purchase gold at $350-$400 an ounce less than two years ago as a gift.

The Federal Reserve’s attack on bullion is an act of desperation that, when widely recognized, will doom its policy.

As I have explained previously, the orchestrated move against gold and silver is to protect the exchange value of the US dollar. If bullion were not a threat, the government would not be attacking it.

The Federal Reserve is creating $1 trillion new dollars per year, but the world is moving away from the use of the dollar for international payments and, thus, as reserve currency. The result is an increase in supply and a decrease in demand. This means a falling exchange value of the dollar, domestic inflation from rising import prices, and a rising interest rate and collapsing bond, stock and real estate markets.

The Federal Reserve’s orchestration against bullion cannot ultimately succeed. It is designed to gain time for the Federal Reserve to be able to continue financing the federal budget deficit by printing money and also to keep interest rates low and debt prices high in order to support the banks’ balance sheets.

When the Federal Reserve can no longer print due to dollar decline which printing would make worse, US bank deposits and pensions could be grabbed in order to finance the federal budget deficit for couple of more years. Anything to stave off the final catastrophe.

The manipulation of the bullion market is illegal, but as government is doing it the law will not be enforced.

By its obvious and concerted attack on gold and silver, the US government could not give any clearer warning that trouble is approaching. The values of the dollar and of financial assets denominated in dollars are in doubt.

Those who believe in government and those who believe in deregulation will be proved equally wrong. The United States of America is past its zenith. As I predicted early in the 21st century, in 20 years the US will be a third world country. We are halfway there.


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: dollar; fed; federalreserve; gold; goldetf; goldminicrash; goldprice; goldvault; paulcraigroberts; preciousmetalsetf; tinfoilhatbrigade
It's not just the Fed in the USA that is trying to corral the sheep into failing fiat currencies as the sovereigns steal the value of those currencies.

In January India raised the import tax on gold to 6 percent to curb purchases.

India vies with China as the top global consumer of gold, and with nearly all demand covered by imports, the country's purchases are a major factor in global prices.

There has been talk of India doing more to discourage its citizens from purchasing gold, but more tariffs only increase smuggling. So far, we have seen much official manipulation of gold prices from governments desperately trying to keep their citizens holding currencies and in the banking systems so that my be properly shorn of their value.

1 posted on 04/07/2013 6:45:56 AM PDT by Bon mots
[ Post Reply | Private Reply | View Replies]

To: Bon mots
Reinhart and Rogoff had an interesting graph in their latest book, "This Time is Different". It is how governments have been forever stealing the value of money over centuries. It used to be that money was backed by either gold or silver.

Now, your dollar bills and banknotes are only the 'wrapper' that money used to come in. People have been fooled into thinking that the wrapper is money. It's not.

dollar bills banknotes wrapper money people fooled thinking wrapper money
Silver content of money (grams) ⇧
Now, there is only some nickel in US coinage, as even copper has been stolen from your pennies.
The above chart would show ZERO for today.

In the USA, dimes, quarters, half dollars and 'silver dollars' were 90% silver up until 1964. Then they were reduced to 40% silver until 1969, when finally all the silver was taken out.

In 1982 they took the copper out of pennies and replaced it with zinc. Next will be the 'nickel' - which now has 7.5 cents worth of nickel with a face value of only 5 cents. They will steal this value from you next.

You see where this is going... you are going to be left with just the wrappers that your money used to come in. They don't want you buying gold or silver on your own, as then you can keep them from stealing it as they crash the old economy, currency and financial system.

2 posted on 04/07/2013 6:51:05 AM PDT by Bon mots (Abu Ghraib: 47 Times on the front page of the NY Times | Benghazi: 2 Times)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Bon mots; blam; dennisw; TigerLikesRooster

If the price of gold is being suppressed by the means discussed above, we should be seeing a divergence between the cost of ETFs and other “paper gold” and “stored in the vault (trust us) gold” versus the price for physical, delivered gold. Is this happening?


3 posted on 04/07/2013 7:03:08 AM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Bon mots; Mase; 1rudeboy; expat_panama
Who could believe the dollar’s exchange rate in relation to other currencies when the dollar was collapsing in value in relation to gold and silver.

Who? Anyone who saw the price of gold and silver in those other currencies.

Intelligent people could see that the US government could not afford the long and numerous wars that the neoconservatives were engineering

Which wars were those pesky neocons engineering in August 2011?

The Federal Reserve is creating $1 trillion new dollars per year, but the world is moving away from the use of the dollar for international payments

Moving away from the dollar to the Euro? LOL! The Yuan? LOL! The Yen? LOL!!!!

As I predicted early in the 21st century.....

You predicted Bush would set off nukes in the US in order to attack Iran, maybe I missed the cities that were hit?

Poor Paul, still crazy after all these years.

4 posted on 04/07/2013 7:53:05 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Travis McGee
60 day gold price:

ETF
3-MONTH CHART:

5 posted on 04/07/2013 7:54:34 AM PDT by Bon mots (Abu Ghraib: 47 Times on the front page of the NY Times | Benghazi: 2 Times)
[ Post Reply | Private Reply | To 3 | View Replies]

To: Travis McGee

10 Best Precious Metals & Gold ETFs for 2013

Top-Rated ETFs

Top Precious Metals ETFs as of 2/28/13

Fund Name Get Info Overall Rating Risk Grade
UBS E-TRACS S&P 500 Gold Hedged SPGH C+ C
ETFS Physical Palladium Shares PALL C C+
Direxion Daily Gold Miners Bear 3X DUST C D+
ETFS Physical Swiss Gold Shares SGOL C- B
SPDR Gold Shares GLD C- B
PowerShares DB Gold Fund DGL C- B
PowerShares DB Precious Metals Fund DBP C- B-
ProShares Ultra Gold UGL D+ C+
iShares Silver Trust SLV D+ C
PowerShares DB Silver Fund DBS D C

Source: TSC Ratings


6 posted on 04/07/2013 8:00:19 AM PDT by Bon mots (Abu Ghraib: 47 Times on the front page of the NY Times | Benghazi: 2 Times)
[ Post Reply | Private Reply | To 3 | View Replies]

[snip] The Federal Reserve realized that its massive purchase of bonds in order to keep their prices high (and thus interest rates low) was threatened by the dollar’s rapid loss of value in terms of gold and silver. The Federal Reserve was concerned that large holders of US dollars, such as the central banks of China and Japan and the OPEC sovereign investment funds, might join the flight of individual investors away from the US dollar, thus ending in the fall of the dollar’s foreign exchange value and thus decline in US bond and stock prices. Intelligent people could see that the US government could not afford the long and numerous wars that the neoconservatives were engineering or the loss of tax base and consumer income from offshoring millions of US middle class jobs for the sake of executive bonuses and shareholder capital gains. [/snip]

Ludicrous. But that’s not surprising:

Paul Craig Roberts: Archives
Past articles by Paul Craig Roberts on LewRockwell.com
http://www.lewrockwell.com/roberts/roberts-arch.html


7 posted on 04/07/2013 8:06:25 AM PDT by SunkenCiv (Romney would have been worse, if you're a dumb ass.)
[ Post Reply | Private Reply | View Replies]

To: Toddsterpatriot
PCR, still crazy after all these years.

The last time I saw an article from him he was singing hosannas to Julian Assange. We'll never know what caused him to jump the shark, but do we even care? He's nuts.

8 posted on 04/07/2013 8:34:52 AM PDT by Mase (Save me from the people who would save me from myself!)
[ Post Reply | Private Reply | To 4 | View Replies]

To: Travis McGee

I believe so, if I understand your question. And its quite annoying. Its reflected in the “premium” one must pay for the physical item. So for example, if a Silver Eagle is selling for $32.00 you can usually buy for delivery at about $34.00. A $2.00 spread. But last week the spread widened to more than $3.00. You can see this crap at bulliondirect.com; check the Nucelo Exchange, their trading market.

Then, there’s another odd spread; Silver is quoted at 27.30 an oz., but see sticker symbol SLV, (I-Shares Silver Trust ETF) and its priced at $26.39.


9 posted on 04/07/2013 8:57:02 AM PDT by Rich21IE
[ Post Reply | Private Reply | To 3 | View Replies]

To: Rich21IE
Good afternoon.

Then, there’s another odd spread; Silver is quoted at 27.30 an oz., but see sticker symbol SLV, (I-Shares Silver Trust ETF) and its priced at $26.39.

If I understand what you are looking at correctly, the "Bid" and "Asked" price always shows a spread.

5.56mm

10 posted on 04/07/2013 9:00:11 AM PDT by M Kehoe
[ Post Reply | Private Reply | To 9 | View Replies]

To: Mase
I'm sure the neocons found some way to give him Alzheimer's.
11 posted on 04/07/2013 9:01:40 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 8 | View Replies]

To: Travis McGee

Not yet but Jim Sinclair and Gata say it will. Plus Silver bugs want to bust the silver bank. Silver bank meaning those who trade in fictitious silver and those who drive down the price of silver. JPMorgan being the biggest villain. JpMorgan is one of the foremost banks (shareholder) in the NY Fed. JPM does the FReserves’s bidding, driving down gold and silver which compete with the Fed’s fiat currency.


12 posted on 04/07/2013 10:16:35 AM PDT by dennisw (too much of a good thing is a bad thing - Joe Pine)
[ Post Reply | Private Reply | To 3 | View Replies]

To: dennisw
JpMorgan is one of the foremost banks (shareholder) in the NY Fed.

They get 6% on their "shares" and 0.25% on their excess reserves, just like everyone else.

13 posted on 04/07/2013 10:32:35 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 12 | View Replies]

To: Toddsterpatriot

Name the other NY Fed member banks in order by the number of shares owned and order of influence. I read last week (true?) that JPM’s gold vault is right by the NY Fed’s, connected by a tunnel.


14 posted on 04/07/2013 10:38:50 AM PDT by dennisw (too much of a good thing is a bad thing - Joe Pine)
[ Post Reply | Private Reply | To 13 | View Replies]

To: Mase
PCR, still crazy after all these years.

Actually, this piece seems to show an accelerating split from reality. After first glancing at the list of PCR gaffes in Todd's post I'd thought to focus on the piece's main theme. There isn't one; just a ramble of disjointed nonsense. PCR seems to have hit a new low.

15 posted on 04/07/2013 10:47:29 AM PDT by expat_panama
[ Post Reply | Private Reply | To 8 | View Replies]

To: Toddsterpatriot
They get 6% on their "shares"

And is very nice risk free income....not to mention JPM and other Fed Resereve primary dealers who get a free gift in the billions each year by the Federal Reserve not buying Treasury debt directly. NY Fed buys (and have been a tremendous net buyer for a few years) Treasury debt from intermediaries such as Goldman and JPM. Amazing how JPM is a NYFed member bank and gets this free gift each year in the hundreds of millions from the NYFed. Maybe a billion? You tell me 

NY Fed's current list of primary dealers. Some are new but the older ones must be senior and get more action and free Fed money

Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies LLC
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA Inc.
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
SG Americas Securities, LLC
UBS Securities LLC.



16 posted on 04/07/2013 10:47:35 AM PDT by dennisw (too much of a good thing is a bad thing - Joe Pine)
[ Post Reply | Private Reply | To 13 | View Replies]

To: Rich21IE
Then, there’s another odd spread; Silver is quoted at 27.30 an oz., but see sticker symbol SLV, (I-Shares Silver Trust ETF) and its priced at $26.39.

Silver has been down. But when it is rising I think you will usually have to pay a premium to buy SLV. I don't follow SLV so cannot say for sure. Eric Sprott has a physical gold fund and a silver one in Canada. The premium to get in (buy) is higher when the precious metals are hot. If you buy an ounce gold Maple Leaf coin you will pay a higher premium over the gold price when gold is hot. If you bought now the premium is probably lower than usual.

17 posted on 04/07/2013 10:53:51 AM PDT by dennisw (too much of a good thing is a bad thing - Joe Pine)
[ Post Reply | Private Reply | To 9 | View Replies]

To: Bon mots

Like Texas, other states should start building their own gold repositories. However, they should do some things that would be gigantic confidence builders.

The first of these would be that the repository has a public section, for the gold owned by the state; and a private section for privately held gold kept there under contract guarantee.

In the first instance, the state would re-assay and purify all its gold to 24 karat. Specifically, .9999 millesimal fineness, like the Canadian Maple Leaf. The reason for this is that each 1-oz and 1-pound or more ingot would be laser engraved with a hologram, that would identify it as a unique thing, with a complex matrix code. Then it would be sealed in a transparent container, to further insure purity and prevent contact damage.

This would mean that all the state’s gold would be both verifiable and easy to inventory.

On the private side, the state could do the same with private gold, assigning it its 24k value after purification, and minting it as either sealed ingots or coins, which would then be kept for depositors, guaranteeing them *their* gold back, not just any gold.

Likewise, for a small fee, the state could insure their gold against federal confiscation, with a fixed, annual insurance fee in which they agree to pay ‘x’ amount for your gold, in which it becomes property of the state, not the federal government.

And if gold is again legalized, for that same amount, you can buy your gold back from the repository, instead of on the market.


18 posted on 04/07/2013 10:59:26 AM PDT by yefragetuwrabrumuy (Best WoT news at rantburg.com)
[ Post Reply | Private Reply | To 1 | View Replies]

To: dennisw
Name the other NY Fed member banks in order by the number of shares owned and order of influence.

Every member gets one vote, no matter how many "shares" they're required to buy.

19 posted on 04/07/2013 11:29:28 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 14 | View Replies]

To: dennisw
And is very nice risk free income....

Yeah, a couple of million, so what?

20 posted on 04/07/2013 11:31:13 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 16 | View Replies]

To: yefragetuwrabrumuy
Like Texas, other states should start building their own gold repositories.

That's a great idea. Illinois, which has no money to even pay their bills, should spend money on gold, and then lock it up.

That would make me more confident about the state's finances.

21 posted on 04/07/2013 11:35:35 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 18 | View Replies]

To: Toddsterpatriot

and who are the NY Fed member banks?


22 posted on 04/07/2013 11:46:48 AM PDT by dennisw (too much of a good thing is a bad thing - Joe Pine)
[ Post Reply | Private Reply | To 19 | View Replies]

To: dennisw

http://www.newyorkfed.org/banks.html

Adirondack Bank
Adirondack Trust Company
Alden State Bank
Amboy Bank
Banco Popular De Puerto Rico
Banco Popular North America
Bank of Cattaraugus
Bank of Millbrook
Bank of New York Mellon
BPD Bank
Chemung Canal Trust Company
Community Bank of Bergen County, N.J.
Depository Trust Company
Deutsche Bank Trust Company Americas
Empire State Bank
Five Star Bank
Goldman Sachs Bank USA
Gotham Bank of New York
Manufacturers and Traders Trust Company
Mizuho Corporate Bank (USA)
Northern Trust Company of New York
Orange County Trust Company
Peapack-Gladstone Bank
Solvay Bank
Tioga State Bank
Warehouse Trust Company LLC


23 posted on 04/07/2013 11:51:16 AM PDT by jjotto ("Ya could look it up!")
[ Post Reply | Private Reply | To 22 | View Replies]

To: Rich21IE

Last week I bought 220 American Silver Eagles and 100 Walking Liberty Halves. The US Mint has been selling ASE’s at a record pace and 90% silver is getting harder and harder to find.


24 posted on 04/07/2013 12:03:50 PM PDT by SVTCobra03 (You can never have enough friends, horsepower or ammunition.)
[ Post Reply | Private Reply | To 9 | View Replies]

To: Mase
PCR, still crazy after all these years.

Oh, really?

http://silverdoctors.com/jim-willie-zirp-the-death-knell/#more-24437

25 posted on 04/07/2013 12:08:38 PM PDT by SVTCobra03 (You can never have enough friends, horsepower or ammunition.)
[ Post Reply | Private Reply | To 8 | View Replies]

To: Travis McGee
If the price of gold is being suppressed by the means discussed above, we should be seeing a divergence between the cost of ETFs and other “paper gold” and “stored in the vault (trust us) gold” versus the price for physical, delivered gold.

Could you humor a financial naif and explain why?

Is the economy recovering despite the Fed buying its own debt? Are these two separate issues? Why is gold going down against the dollar if the value of dollars is going down too?

I just don't understand.

26 posted on 04/07/2013 12:10:30 PM PDT by papertyger (Blessed are the flexible for they shall not be broken....)
[ Post Reply | Private Reply | To 3 | View Replies]

To: dennisw

Why? Are you afraid Tioga State Bank is coming for your silver?


27 posted on 04/07/2013 12:18:55 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: SVTCobra03

Really. He’s certifiable.


28 posted on 04/07/2013 12:23:32 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 25 | View Replies]

To: jjotto

Just taking the San Francisco Federal Reserve Bank for example. It has at least 150 member banks http://www.frbsf.org/banking/institutions/bank-lists.html

Your list of 27 NY Fed member banks.... Most of them are a joke and provide cover for the real member banks. The ones that call the shots such as

Goldman Sachs Bank USA
Bank of New York Mellon
Deutsche Bank Trust Company Americas
Northern Trust Company of New York
Bank of New York Mellon

CitiGroup and JPMorgan should be there but are too cool for that. They are NY Fed primary dealers anyway and very “connected” to the FR money machine


29 posted on 04/07/2013 12:26:04 PM PDT by dennisw (too much of a good thing is a bad thing - Joe Pine)
[ Post Reply | Private Reply | To 23 | View Replies]

To: dennisw

It’s not my list. It’s the public record of the NY Fed Reserve itself.


30 posted on 04/07/2013 12:30:33 PM PDT by jjotto ("Ya could look it up!")
[ Post Reply | Private Reply | To 29 | View Replies]

To: Bon mots

The US$ centric view does not consider that gold is a standard by which all currencies are valued in a global economy. The relative valuation of the various major currencies has declined when measured against precious metals and other hard assets.

The valuation of the US$ is beginning to fall generally against real estate now that the mess is being resolved.

Inflation is the desired result and is not feared unless it hits a dangerous but un stated rate. We know that rate is in excess of the tolerable 2.5% stated this week.


31 posted on 04/07/2013 12:39:43 PM PDT by bert ((K.E. N.P. N.C. +12 .....History is a process, not an event)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Toddsterpatriot

Please. Illinois is becoming the Haiti of America, at least money wise. They could no more be trusted with gold than they could with grannies used undergarments.

I was talking about responsible red states who already have gold, will likely get more over time, and actually care about their citizenry.


32 posted on 04/07/2013 12:53:23 PM PDT by yefragetuwrabrumuy (Best WoT news at rantburg.com)
[ Post Reply | Private Reply | To 21 | View Replies]

To: jjotto

Yes I know that list is on the internet from the NY Fed and is what you make of it. Do you think member bank —Bank Of Tioga has the influence that Mellon bank has?

Check out the San Fran Fed list, very long list of member banks while the NY Fed only has 27


33 posted on 04/07/2013 1:13:19 PM PDT by dennisw (too much of a good thing is a bad thing - Joe Pine)
[ Post Reply | Private Reply | To 30 | View Replies]

To: dennisw

Probably the “member banks” are the foot soldiers not the commanders.


34 posted on 04/07/2013 1:15:29 PM PDT by jjotto ("Ya could look it up!")
[ Post Reply | Private Reply | To 33 | View Replies]

To: jjotto

The New York Fed is where all the action is. Controlling the money supply and interest rates... trying to at least. This is why they have a ridiculous list of member banks.


35 posted on 04/07/2013 2:04:57 PM PDT by dennisw (too much of a good thing is a bad thing - Joe Pine)
[ Post Reply | Private Reply | To 34 | View Replies]

To: yefragetuwrabrumuy
Why should responsible red states hold gold?

How does that mean they care for their citizens?

It would be better that they pay down their debt and keep their taxes low, unlike my joke of a state, than waste money storing gold.

36 posted on 04/07/2013 2:25:23 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 32 | View Replies]

To: Toddsterpatriot

The Constitution bans states from printing their own paper money or issuing their own currency. But it allows the states to make gold and silver coin a tender in payment of debts.

As of 2012, 13 states are seeking approval from their state governments to either issue their own alternative currency or explore it as an option.

What this amounts to is that if states *have* gold or silver, they can mint coins not as a currency, but to either back state debts or pay off existing debts.

In practical terms this means that their credit rating is sky high, so they can borrow money at much, much lower interest rates, because risk to the lender is reduced to almost nothing.

Say the state needs to borrow $10b dollars. If they can back that debt with gold or silver, instead of an interest rate of $1b, it might be just $50m. A much smaller bite on their taxpayers.

California, with no gold or silver, has to pay junk bond yields, if there is still anyone foolish enough to loan them money.

The other idea, that since they have a public depository, they can both snub the federal government, and help their citizens, by having it do double duty as a private depository.

This means we will hold your gold and silver “as is”, and give it back to you on demand; or, they will refine it to .9999 24K, and store it, or give it back to you on demand, but holographically make it numbered and very tamper resistant, and put it in a case, so that if you want to sell it, it is pretty much guaranteed as very pure.

They would likely charge you a small interest rate for doing this.

This idea really comes into its own if the federals decide to seize private gold again, offering to involuntarily “purchase” it at a ridiculously low price, as they did before.

Because the state can instead consider it a “debt”, pay you for it at the price of gold *at the time you deposited it*, not the ridiculously low federal price, then declare it the property of the *state*, so it cannot be seized by the feds.

Conversely, if and when the feds back off again, you can “repurchase” your own gold for exactly the same price that the state paid you for it, so you both come out “even”. Since the price may be considerably lower when gold has been legalized again, you got the better of the bargain in cash, but enough time will likely have passed that the sting is gone out of it for the state. And if the price of gold immediately skyrockets, you win again, buying your gold back at a much lower price than market value.


37 posted on 04/07/2013 4:52:19 PM PDT by yefragetuwrabrumuy (Best WoT news at rantburg.com)
[ Post Reply | Private Reply | To 36 | View Replies]

To: expat_panama
You're right. I went back and read the article again, and it's nothing but a mess of random thoughts that originated in his fingers, without any need for his brain.

Even though he's been one stamp short of postal for a long time now, I was really surprised to see him praising Julian Assange as a hero. Nothing he says/writes will surprise me any more. I think he simply needs attention.

Willie Green used to like the guy.

38 posted on 04/07/2013 6:39:21 PM PDT by Mase (Save me from the people who would save me from myself!)
[ Post Reply | Private Reply | To 15 | View Replies]

To: Toddsterpatriot

“Poor Paul, still crazy after all these years. “

Yeah, I read the posted article and it reminded me quite a lot of the writing style of “Mein Kampf”: large numbers of insane, but seemingly plausible assertions without one iota of evidence to back them up.


39 posted on 04/07/2013 8:39:19 PM PDT by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
[ Post Reply | Private Reply | To 4 | View Replies]

To: Mase
Willie Green used to like the guy.

Wow, Willie Green.

 

Now there's a name I have not heard for a very long time...

40 posted on 04/08/2013 2:22:16 AM PDT by expat_panama
[ Post Reply | Private Reply | To 38 | View Replies]

To: yefragetuwrabrumuy
What this amounts to is that if states *have* gold or silver, they can mint coins not as a currency, but to either back state debts or pay off existing debts.

They should buy gold, with tax dollars, and use the gold to pay off existing debt? Why the extra step? Just use the tax dollars to pay off the debt.

Not sure what you mean by "back state debts".

Say the state needs to borrow $10b dollars. If they can back that debt with gold or silver, instead of an interest rate of $1b, it might be just $50m. A much smaller bite on their taxpayers.

If they have $10b in gold, their interest rate drops from 10% to 0.5%?

California, with no gold or silver, has to pay junk bond yields, if there is still anyone foolish enough to loan them money.

True. How does borrowing more to buy gold make their lenders feel better?

This idea really comes into its own if the federals decide to seize private gold again, offering to involuntarily “purchase” it at a ridiculously low price, as they did before.

They seized it last time, because it backed the currency. Seizing it now is pointless. They might as well seize something easier to find, like bank accounts and retirement accounts. They aren't going to break down your door to seize the gold American Eagle you bought.

41 posted on 04/08/2013 5:36:09 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 37 | View Replies]

To: Toddsterpatriot

This makes sense when there is deflation based in a shortage of dollars, which happened at the start of the Great Depression. The saying was “You could buy a pound of hamburger for a nickel, but nobody had any nickels.”

Likewise, it makes sense when there is strong inflation or even hyperinflation of dollars. This is because the state is on something of a “fixed income”, getting the bulk of its tax revenues only once a year.

Gold, on the other hand, is not tied to a volatile dollar, and has its own value independent of federal dollar manipulation, and states, unlike people, are immune to federal confiscation of gold.

As far as slashing interest rates, the gold acts as an extremely fungible collateral, likely approaching or even exceeding 100% of debt. It goes back to the old idea that “The only people who can get credit are those that don’t need it.” If a loan is just a convenience to you, and one backed by 100% collateral, banks are more than happy to give you a loan, because their risk is tiny. Likewise, your interest rate is likely much lower.

Once again, by selecting an ill-managed state with awful credit, California this time, instead of Illinois, when I have already specified a well-managed red state, and one hopefully with a budget surplus to buy the gold, you present a red herring.

California nor Illinois could not possibly make a functional state repository for gold, because they have no gold and no one will sell them any except for cash on the barrel head, which they do not have. Thus they are not an issue.

Texas, right now, on the other hand, has an $8.8 billion budget surplus. And not only that, but they have recalled *their* state gold, which is kept in bank vaults in New York. And something that should concern us all, New York has suddenly become hesitant about returning this gold, which is not just being demanded by Texas, but also by Germany, and possibly other states and nations.

Those foolish New Yorkers might have sold gold that wasn’t their to sell. If that is indeed the case, the SCOTUS may order them to pay up by any means, even selling off state property.

There has been concern about gold for some years now, ever since the Forex gold market did something unexpected: instead of redeeming the same gold that depositors had left with it, when they demanded their gold back, they got a “Duke’s mixture” of generic gold. This sent up red flags all over the place.

In any event, a state repository would be the best thing that could happen to those that own gold, because it would not only help insure that gold is a fungible commodity in that state, but would provide them tangible insurance against federal bad behavior.


42 posted on 04/08/2013 7:15:03 AM PDT by yefragetuwrabrumuy (Best WoT news at rantburg.com)
[ Post Reply | Private Reply | To 41 | View Replies]

To: yefragetuwrabrumuy
As far as slashing interest rates, the gold acts as an extremely fungible collateral, likely approaching or even exceeding 100% of debt. It goes back to the old idea that “The only people who can get credit are those that don’t need it.” If a loan is just a convenience to you, and one backed by 100% collateral, banks are more than happy to give you a loan, because their risk is tiny. Likewise, your interest rate is likely much lower.

Yes, borrowing when you don't need to gives you a lower interest rate. Not as low as not borrowing at all, so I'm still not seeing the benefit.

I have already specified a well-managed red state, and one hopefully with a budget surplus to buy the gold,

Again, not seeing the benefit to buying the gold as opposed to cutting taxes or paying down debt.

Texas, right now, on the other hand, has an $8.8 billion budget surplus. And not only that, but they have recalled *their* state gold, which is kept in bank vaults in New York. And something that should concern us all, New York has suddenly become hesitant about returning this gold

New York, the state, is holding their gold? Are you sure?

ever since the Forex gold market did something unexpected:

There is no "Forex gold market". Forex is used when talking about foreign exchange, trading foreign currencies. You must mean something else.

In any event, a state repository would be the best thing that could happen to those that own gold, because it would not only help insure that gold is a fungible commodity in that state, but would provide them tangible insurance against federal bad behavior.

Gold isn't "fungible" now in Texas?

Are they really worried that Federal Agents are going to take their gold? Really?

43 posted on 04/08/2013 10:41:46 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 42 | View Replies]

To: Toddsterpatriot

If you’re truly this confused about so many things, and really need answers, there is this marvelous thing called the Internet. Specifically Google.com. If you use it, you might actually find the answers to all your questions, and dispel many mistaken beliefs and opinions.

Good luck with that.


44 posted on 04/08/2013 11:03:46 AM PDT by yefragetuwrabrumuy (Best WoT news at rantburg.com)
[ Post Reply | Private Reply | To 43 | View Replies]

To: yefragetuwrabrumuy
I'll admit, conservatives with silly ideas to expand government do confuse me.

Specifically Google.com. If you use it, you might actually find the answers to all your questions, and dispel many mistaken beliefs and opinions.

I don't need Google to dispel many mistaken beliefs and opinions of goldbugs, but thanks for the tip.

45 posted on 04/08/2013 11:24:39 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 44 | View Replies]

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.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson