Posted on 08/21/2011 2:05:25 PM PDT by DaveinOK54
What would happen with the private ownership of gold coins/bullion if the $ returns to the Gold Standard?
Would the price be artificially fixed? Would it be confiscated? What about the ability to buy, sell or trade it? (I guess if confiscation happens, the last question is moot)
I hear a lot about the need to return to the Gold Standard, but have not seen anything about the affect on private ownership.
Thanks in advance wise ones...........
Confiscated?? I wouldn’t want to be one of jackboots walking my driveway for that!
Not gonna happen. There isn’t enough gold in the world to back what the US alone has in cash floating around.
Nationalizing gold is always a possibility. Make it illegal to sell it. Wouldn’t put anything past the kenyan.
IMO they don’t need to confiscate anything to deprive owners. They can simply assess up to 100% tax on any transactions involving precious metals & impose outrageous prison sentences for any caught avoiding their patriotic duty.
Why in the world would “ they” engineer the collapse of fiat globally but allow escape pods via precious metals. They want it all and have a plan to get it. By all means hold physical but be prepared for it to be a potential liability too.
ivedone the math in the past... there is something like $70 trillion between M1, M2, and M3 supplies (of the top of my head)
using only gold as a standard, and not a commodity basket, gold would be just under $9500 / ounce
A gray area where people can just speculate, but for the point about the price being artificially fixed, it would have to be initially to say all dollars are worth x ounces of gold. You would also require some sort of centralized funnel to keep outside influences from messing with your currency, something like a Gold Reserve Bank. (Example, a country decides they don't like us, just flood the market with gold or withhold it depending on how they want to affect prices- just like what is done sometimes with oil.) You would also need to somehow re-start the gold industry in the US as most of the major suppliers are other countries, many of which aren't always the most politically stable. You would need to have a domestic lock on the sources if your currency is backed by it. There is a lot to consider.
I’ve heard that Obama has made clear his plans for gold somewhere around July 15 while we were all focused on the debt ceiling vote, according to Townhall Spotlight. I’ve also heard that the banks have been instructed to check all safety deposit boxes for gold or any other valuables; the same goes for storage rental units. Google Obama’s stance on gold.
“ivedone the math in the past... there is something like $70 trillion between M1, M2, and M3 supplies (of the top of my head)
using only gold as a standard, and not a commodity basket, gold would be just under $9500 / ounce”
That’s about 5 years out...so your point is?
Private ownership of gold is the normal state of affairs when currencies operate on a gold standard. It doesn’t make much sense otherwise, since the whole point of a gold standard is to make the currency unit fully and freely redeemable for a fixed amount of gold.
And that answers your second question. It’s not the price of gold that is fixed under a gold standard, it’s the amount of gold for which the currency is guaranteed to be redeemable. It only works well when the issuer of the currency has enough gold to redeem all the issued currency. The many failures of which you will hear happen almost exclusively because the currency issuer doesn’t have enough gold to redeem all the issued currency. The only other failure mode is for the issuer to have the gold, but refuse to redeem his currency for it.
Under an international gold standard, each currency unit is really just a different amount of gold, and any fluctuations in the exchange rates occur solely as a reflection of the market’s attitude regarding the risk that the issuer doesn’t have enough gold to back the currency, or might choose not to redeem the currency for the stated amount of gold for some other reason.
Depends on where you set the price of gold.
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I would bet that even f you set it at $10,0000/oz, there still wouldn’t be enough.
Why wouldn`t they then fractionalize it, say 1 USD = 1/8 or ounce Au ?
1 USD = 1/8 ounce Au *
using only gold as a standard, and not a commodity basket, gold would be just under $9500 / ounce
Which is the point of a gold standard: to keep the government from inflating the currency to the point that it becomes attractive to trade the handy dollars for cumbersome but more profitable gold.
At ten million dollars an ounce there is. It depends on how much inflation one can tolerate.
I'd agree that it's not going to happen, but for other reasons.
The main (and sufficient) reason is that nobody among leaders of governments that matter wants the gold standard. They benefit from fiat monies that they print themselves. They can't print gold. As the US dollar crumbles, the second-tier currencies are waiting in the wings to be picked for "currency baskets," global or regional.
With regard to the "not enough gold to back debts that had been made." Several processes will follow. First, it is possible and natural for the price of gold to increase a hundredfold to match those debts. But then there will be a huge incentive to mine gold from sources that today are not economically viable. There is still plenty of gold in California; there is a huge amount of gold in ocean water; there are many other locations where gold is present but mining it today is too expensive. As result, the volume of gold on the market will be increasing, and after a few years (5 to 10) the gold price will start dropping slightly. Still, it will be in the ionosphere and above, compared to what we have today.
But if the price of gold is allowed to rise (unavoidably, if the gold standard is returned to) then industrial uses of gold will be curtailed. And that would mean that electronic products will become unaffordable for yet another reason. Practically all ICs contain gold - it is used to connect the die (the silicon crystal) to the pads of the package. It's not much - micrograms - but there are many of those ICs in each computer, and there are many computers around, and telephones, and other essential stuff.
At this day the price of gold is close to the cost of mining the gold, as it is set automatically by the market. Speculation affects the price somewhat, but still it matches (in the order of magnitude) the labor that goes into mining it. Gold is relatively scarce, and it is an important metal in the industry. We don't really want to rock that boat.
The desire for gold standard (or any other precious metal standard) is coming from the fact that those metals are hard to mine, and the supply therefore is limited. Inflation under the gold standard is small; but it still exists because the volume of gold in circulation is growing as more gold is mined. Very little gold is "destroyed," though some is lost through scrap of products that contain too little gold to bother recovering, and through wear of jewelry.
The gold serves as a physical barrier to infinite printing of money. But there are other methods to achieve the same. We already know of the Bitcoin. It is a fraud, as it is implemented, but the idea makes sense. You can today create a math-based currency that can't be forged. For example, just "print" a billion of numbers, from 0 to 109-1. Replace USD with those, in whatever ratio. If you want to pay, just transfer one of your individually numbered credit "bills" to the other guy. Now he has them, and you don't. Ownership can be traced by a number of methods that I won't be mentioning here for brevity.
To summarize, it would be ill-advised to use gold as money today, and it is relatively easy to introduce a currency (country-specific or global) that is unforgeable and unemittable (or emittable at a certain rate.) All it takes is good people in political offices. But you already see where the catch is.
I think this whole thing of feeling secure because I gave gold to replace the paper dollar is kind of spooky and unreliable. In other words, hopeless.
I don’t think you want to be on a gold standard where you have to pay all your bills in gold.
They are not going to make dollars redeemable in gold, everyone would hoard the gold esp. foreigners.
Maybe a two tier monetary system, one currency based on some gold and other things to satisfy international debts and trades. The second currency for the little people to carry on with their daily lives.
Doesn’t much matter until spending is under control, the more debt incurred the lower the US$ will be worth and the higher the spot price of gold will be until the dollar is no longer the world’s reserve currency.
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