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Back to the gold standard?
Asia Times ^ | May 16, 2006 | Peter Morici

Posted on 05/18/2006 3:30:56 PM PDT by Dazedcat

Gold is selling for more than US$700 an ounce, up from $258 in 2001.......

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


TOPICS: Business/Economy; News/Current Events
KEYWORDS: gold; goldbugs; goldstandard
This is very interesting reading. I can personally attest for the worth of gold over the past year, thankfully.
1 posted on 05/18/2006 3:30:56 PM PDT by Dazedcat
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To: Dazedcat

Gold is a commodity. It isn't money. Over an extended period of time it is a terrible investment.


2 posted on 05/18/2006 3:37:17 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62
Gold is a commodity. It isn't money. Over an extended period of time it is a terrible investment.

Not only is gold money, but it's legal money for the U.S., too. The fiat currency we have cirulating now is flatly unconstitutional.

3 posted on 05/18/2006 3:41:07 PM PDT by Stepan12
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To: Moonman62
Over an extended period of time it is a terrible investment

lead, in my opinion, in various denominations, is a better investment.


4 posted on 05/18/2006 3:42:52 PM PDT by Bear_Slayer (When liberty is outlawed only outlaws will have liberty)
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To: Dazedcat
Todays WSJ has an excellent article detailing this phenomena under the tittle In Gold We Trust.

Someone must have posted it by now.

5 posted on 05/18/2006 3:45:26 PM PDT by mmercier (delivered from the sound of archers)
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To: mmercier
Er.. editorial, not article.
6 posted on 05/18/2006 3:46:25 PM PDT by mmercier (delivered from the sound of archers)
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To: Dazedcat

The value of gold is a myth, huh? The value of the Dollar, on the other hand, is inversely proportional to the value of an ounce of gold. In a queer display of the dismal science, economists point to the trillions of dollars in foreign hands and declare that scarce gold is merely a "commodity". Gold goes up. The Dollar goes down. I would much rather have an ounce of gold than an ounce of dollars.


7 posted on 05/18/2006 4:27:46 PM PDT by ArtyFO (I love to smoke cigars when I adjust artillery fire.)
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To: ArtyFO

So you'd prefer that the US inflation rate be determined by Russia and South Africa than by the Fed?

If it comes to the point where dollars are worthless, you'd be better off having a lot of lead than a lot of gold (as a previous poster pointed out).


8 posted on 05/18/2006 4:31:14 PM PDT by Philistone (Turning lead into gold...)
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To: Dazedcat

I remember reading several articles in places like the Arab News soon after 9/11 urging Muslims to get rid of their dollars and change to gold in order to undermine the US economy and government. There are probably fatwas and Friday sermons proclaiming this part of the Muslim duty of jihad against the Great Satan. I worried about it at the time, but did not see a rapid rise in gold prices. However, $700 is more than twice as much as it cost in 2001, going on 3 times.


9 posted on 05/18/2006 4:38:20 PM PDT by tinamina
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To: Dazedcat

Internet search:

Total ounces of gold in the world = 4.28 billion ounces.
Total amount of dollars in circulation in the world = $55 trillion.

That comes to $12850.50 an ounce


10 posted on 05/18/2006 5:01:07 PM PDT by mjp
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To: Moonman62

Gold is not an investement, in the same way that a share of stock is. It is only a store of value, most clearly seen when viewed over long periods of time. Its value vs. paper money can obviously fluctuate in the short term (e.g. 20 year period from 1980-2000).

Gold is REAL money and it is most valuable when it is most needed. It's value rises when faith in fiat money falls. Golds rise is telegraphing trouble ahead for the $US.


11 posted on 05/18/2006 10:16:44 PM PDT by richalessi
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To: Philistone
So you'd prefer that the US inflation rate be determined by Russia and South Africa than by the Fed?

I don't disagree with your point, but in this particular instance the US has the distinction of being the #2 producer after South Africa, with Australia chasing our tail. Nevada is almost #2 all by itself. With the rapidly declining output of South Africa and solid reserves and production estimates of Nevada and other parts of the US, we will likely move into the #1 position eventually.

Thanks to sitting on what is pretty much the world's largest rift zone above sea level, the US has no shortage of heavy metals. Ironically, environmental regulations have restricted mining such that production is moving to places like South America.

The problem with tying currency to commodities is that the value of the currency has an almost arbitrary mapping to the economy. The effective value of the currency can fluctuate wildly with commodity supply, something we can control with fiat currency.

12 posted on 05/18/2006 10:30:26 PM PDT by tortoise
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To: richalessi
It is only a store of value, most clearly seen when viewed over long periods of time.

By that standard, bonds are a much better value, and diversified stocks are the best of all.

13 posted on 05/18/2006 10:42:56 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62

bonds and stocks are investments & gold is not. they are different. a $US bond is definately NOT a store of value


14 posted on 05/19/2006 9:11:40 PM PDT by richalessi
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To: Moonman62

Wrong.. commoditys are money, currency is not money..


15 posted on 05/19/2006 9:14:04 PM PDT by hosepipe (CAUTION: This propaganda is laced with hyperbole..)
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To: Stepan12

>>Not only is gold money, but it's legal money for the U.S., too. The fiat currency we have cirulating now is flatly unconstitutional.<<

Follow the yellow brick road....

Seriously , an examination of how money is created would be useful. If a bank recieves a deposit of $100 and loans out $80 of that then the money supply has just gone up by $80.


16 posted on 05/19/2006 9:22:55 PM PDT by gondramB (He who angers you, in part, controls you. But he may not enjoy what the rest of you does about it.)
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To: Dazedcat

Ding! Ding! Ding! Only three posts before the word "fiat" appeared.


17 posted on 05/19/2006 9:24:00 PM PDT by July 4th (A vacant lot cancelled out my vote for Bush.)
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To: Dazedcat

>>This is very interesting reading. I can personally attest for the worth of gold over the past year, thankfully.<<

It is interesting reading. And he's right about the problems with the Yuan. But its worth remembering the author is a Carter appointee.


18 posted on 05/19/2006 9:24:52 PM PDT by gondramB (He who angers you, in part, controls you. But he may not enjoy what the rest of you does about it.)
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To: hosepipe
Wrong.. commoditys are money, currency is not money..

Currency is a money substitute. It is gold that is legally money; the gold certificates are a form of paper currency.

19 posted on 05/19/2006 10:24:53 PM PDT by Stepan12
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To: Stepan12

What about silver? Is that a good investment? I'm new in the investing world but I'm thinking of investing in silver rather than gold.

Any advice?


20 posted on 05/19/2006 10:30:39 PM PDT by no dems (A Winning Campaign Theme for a Conservative in '08: "PUTTING AMERICA FIRST")
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To: no dems
What about silver? Is that a good investment? I'm new in the investing world but I'm thinking of investing in silver rather than gold. Any advice?

Actually, silver is doing pretty good and it costs a lot less than gold does, but I don't want to give advice since I'm not a financial expert.

Yes, I have gold myself and it's doing okay now, but when I bought gold at the beginning of the Clinton years I certainly didn't have any appreciation of fiat currency.

21 posted on 05/19/2006 10:33:27 PM PDT by Stepan12
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To: hosepipe
Definition from Websters.

1 : something generally accepted as a medium of exchange, a measure of value, or a means of payment: as a : officially coined or stamped metal currency b : MONEY OF ACCOUNT c : PAPER MONEY

22 posted on 05/20/2006 7:25:16 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: gondramB
Seriously , an examination of how money is created would be useful. If a bank recieves a deposit of $100 and loans out $80 of that then the money supply has just gone up by $80.

That's known as the multiplier effect. The thing about loans is they have to be paid back. Thus, they tend to be self limiting as far as being inflationary.

23 posted on 05/20/2006 7:29:26 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62
>>That's known as the multiplier effect. The thing about loans is they have to be paid back. Thus, they tend to be self limiting as far as being inflationary.<<

Actually the normal definition of the multiplier effect has to do with spending, not loans.

In the even of autonomous spending of $100, that hundred dollars goes to someone else who can spend it and so on.

If the system were a perfect consumption society then that $100 dollars would generate economic growth forever.

But there are leaks - the money can be saved or it can be spent overseas. The total of all leaks is called the Marginal Leakage Rate' (mlr).

The multiplier = 1/mlr

Money creation is a separate issue. Whether loans are inflationary depends on whether they are used for consumption spending or something productive.
24 posted on 05/20/2006 9:33:59 AM PDT by gondramB (He who angers you, in part, controls you. But he may not enjoy what the rest of you does about it.)
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To: gondramB
If the system were a perfect consumption society then that $100 dollars would generate economic growth forever.

Without loans, the velocity of money would have to be incredible.

25 posted on 05/20/2006 9:49:14 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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