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What would happen with the private ownership of gold if the $ returns to the Gold Standard?

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...........


TOPICS: Business/Economy; Your Opinion/Questions
KEYWORDS: gold; goldstandard; vanity
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1 posted on 08/21/2011 2:05:30 PM PDT by DaveinOK54
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To: DaveinOK54

Confiscated?? I wouldn’t want to be one of jackboots walking my driveway for that!


2 posted on 08/21/2011 2:08:21 PM PDT by Oldpuppymax
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To: DaveinOK54

Not gonna happen. There isn’t enough gold in the world to back what the US alone has in cash floating around.


3 posted on 08/21/2011 2:13:13 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: DaveinOK54

Nationalizing gold is always a possibility. Make it illegal to sell it. Wouldn’t put anything past the kenyan.


4 posted on 08/21/2011 2:14:36 PM PDT by albie
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To: Oldpuppymax

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.


5 posted on 08/21/2011 2:15:01 PM PDT by 1malumprohibitum
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To: DaveinOK54

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


6 posted on 08/21/2011 2:17:27 PM PDT by sten (fighting tyranny never goes out of style)
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To: DaveinOK54
Would the price be artificially fixed?

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.

7 posted on 08/21/2011 2:18:19 PM PDT by mnehring
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To: DaveinOK54

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.


8 posted on 08/21/2011 2:18:59 PM PDT by Paperdoll (NO MORE RINOS!)
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To: sten

“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?


9 posted on 08/21/2011 2:19:40 PM PDT by BobL (PLEASE READ: http://www.freerepublic.com/focus/f-news/2657811/posts)
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To: DaveinOK54

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.


10 posted on 08/21/2011 2:21:06 PM PDT by sourcery (If true=false, then there would be no constraints on what is possible. Hence, the world exists.)
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To: Blood of Tyrants

Depends on where you set the price of gold.


11 posted on 08/21/2011 2:25:56 PM PDT by BenKenobi (Honkeys for Herman!)
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To: DaveinOK54
I found this gem buried in Dodd-Frank interesting.

Disclaimer: Reader must vet source.

12 posted on 08/21/2011 2:26:29 PM PDT by Aevery_Freeman (Obama - the Half-Black Plague)
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To: BenKenobi

I would bet that even f you set it at $10,0000/oz, there still wouldn’t be enough.


13 posted on 08/21/2011 2:31:42 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: sten

Why wouldn`t they then fractionalize it, say 1 USD = 1/8 or ounce Au ?


14 posted on 08/21/2011 2:37:20 PM PDT by Para-Ord.45
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To: Para-Ord.45

1 USD = 1/8 ounce Au *


15 posted on 08/21/2011 2:38:40 PM PDT by Para-Ord.45
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To: sten

using only gold as a standard, and not a commodity basket, gold would be just under $9500 / ounce


But there’s no reason not to apply the principles of fractional reserve banking. Banks don’t keep all the cash on hand, because as long as they are responsible and solvent, the depositors won’t come to cash out.

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.


16 posted on 08/21/2011 2:39:33 PM PDT by Atlas Sneezed (Government borrowing is Taxation without Representation)
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To: Blood of Tyrants

At ten million dollars an ounce there is. It depends on how much inflation one can tolerate.


17 posted on 08/21/2011 2:41:57 PM PDT by muir_redwoods (Somewhere in Kenya, a village is missing an idiot)
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To: Blood of Tyrants
Not gonna happen. There isn’t enough gold in the world to back what the US alone has in cash floating around.

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.

18 posted on 08/21/2011 2:44:06 PM PDT by Greysard
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To: DaveinOK54
Okay, say the dollar is worthless and gold is the standard metal for buying anything. Say I got some gold in the form of one ounce "certified" coins worth $3K each that I paid for. How do I buy groceries or purchase gasoline, etc with my gold coins? What if the cost of my groceries, gas, utility bill, mortgage payments get accepted and paid for with the one ounce pieces of gold? Remember, each ounce is supposedly worth $3K. Do I get myself an ounce scale and cut up the pieces of gold? Do I put the gold in an envelope and mail them with a stamp that has to be paid with gold as well? And how will the clerks at the grocery check out lane know what I'm giving them is the right amount when the value of gold keeps going up and down?

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.

19 posted on 08/21/2011 2:47:41 PM PDT by Evil Slayer (Onward, Christian soldiers, marching as to war)
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To: DaveinOK54

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.


20 posted on 08/21/2011 2:47:47 PM PDT by Razzz42
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To: Beelzebubba

I would use it to pay some $$$ on my now worthless home.


21 posted on 08/21/2011 2:54:33 PM PDT by madison10
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To: Para-Ord.45
(back home now... numbers were off a bit)

total money in the world: $46.5 trillion (link)
total gold in the world: 5.3 billion troy ounces (link)

for the world's money supply to be gold based... gold would have to be:

$46,500,000,000,000 / 5,300,000,000 = $ 8,774 / oz

if the money supply were to be based off a commodity basket where gold was 25-35%, then the value per ounce would be lower.

technically, it's already based on some relationship with the various commodities.. the ratios are just not set

22 posted on 08/21/2011 3:18:11 PM PDT by sten (fighting tyranny never goes out of style)
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To: All

Thanks all for the great insights. I knew there would be some constructive and insightful comments here. I’m not advocating it at this point, just have been hearing chatter about it here and there and was wondering what the impact would be. I’m more worried right now about our IRA’s, 401K’s, etc. Theres a lot of $$$$ sitting there right now and I’m afraid that fruit may be too tempting to avaid taking.


23 posted on 08/21/2011 3:18:29 PM PDT by DaveinOK54 (Freedom is not Free and I'll never quit defending it.)
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To: Evil Slayer
How do I buy groceries or purchase gasoline, etc with my gold coins?

And how do you dare reveal to the butcher, the baker, or the candlestick maker that you have a supply?

The problem, under the Mad Max scenario, won't be using it.

It will be keeping it.

24 posted on 08/21/2011 3:22:49 PM PDT by Jim Noble (To live peacefully with credit-based consumption and fiat money, men would have to be angels.)
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To: DaveinOK54

Shortly after taking office sixteen years later, Franklin Delano Roosevelt signed Executive Order 6102 into law, prohibiting the “hoarding” of gold. Under this executive order, Americans were prohibited from owning more than $100 worth of gold coins, and all “hoarders” (i.e. people who owned more than $100 worth of gold) were forced, by law, to sell their “excess” gold to the government at the prevailing price of $20.67 per ounce.

Then, once the government had all the gold, FDR revalued the dollar relative to gold so that gold was now worth $35 an ounce. By simple decree, the government had thereby robbed millions of American citizens at a rate of $14.33 per ounce of confiscated gold, which is why most historians agree that the Gold Confiscation of 1933 is the single most draconian economic act in the history of the United States.

http://www.silvermonthly.com/government-confiscation-gold-happened-beforecould-happen/


25 posted on 08/21/2011 3:27:40 PM PDT by donna (This is what happens when America is no longer a Christian nation.)
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To: Blood of Tyrants
There isn’t enough gold in the world to back what the US alone has in cash floating around.

I've seen estimates that a gold price of $7500/oz. would be the magic number. We may be there before long.

26 posted on 08/21/2011 3:33:38 PM PDT by BfloGuy (Workers and consumers are, of course, identical.)
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To: Greysard
Nice explanation; one error though..."At this day the price of gold is close to the cost of mining the gold, as it is set automatically by the market:.

The worldwide average cost to produce an ounce of gold is somewhere around $500/ounce...some producers are in the $400/oz range, some near the $1,000/oz. No one is going to commit CAPEX to a new project based on production costs greater than $1k/oz...investors won't and are not going for it because of the obvious risk.

27 posted on 08/21/2011 3:33:38 PM PDT by Cuttnhorse
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To: donna

Two thirds of the people never turned in their gold.

It doesn’t matter how much fiat money is out there. There will be a complete revaluation of the currency and the current dollar will cease to exist. What value is actually assigned to gold will have nothing to do with the number of fiat currency units floating around.

The ideal situation is to get government out of the money business all together and allow free money to occur as a result of what people want to use. Silver will also be an integral part of the money system as well. The system could very well gravitate to digital gold and silver currencies, like goldmoney.com.

The point is that not only is gold possible to use, it is really the only thing that can be used to prevent the political class from using the money supply to buy votes and keep power.


28 posted on 08/21/2011 3:34:26 PM PDT by appeal2 (Don't steal, the government hates competition.)
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To: Paperdoll
There is no reason to worry about confiscation.

There will be a G-20 treaty outlawing the conversion of gold to any G-20 currency.

You will need an export license to board an aircraft with gold, and, although you will still be able to sell gold for Thai bhat, getting it there will be a problem.

29 posted on 08/21/2011 3:35:24 PM PDT by Jim Noble (To live peacefully with credit-based consumption and fiat money, men would have to be angels.)
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To: Blood of Tyrants

Yeah there is no way they could adjust the price of gold (say 25,000 an ounce for example) to meet with the money supply I mean that is just impossible!


30 posted on 08/21/2011 3:44:33 PM PDT by DanielSilverman
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To: DaveinOK54
Would the price be artificially fixed?

The dollar would be defined as a weight of gold. For example, if implemented today, the dollar would be defined as 1/1800 oz. of gold.

Gold's value could fluctuate, but the dollar would always maintain its purchasing power vs. gold.

Would it be confiscated?

If gold were confiscated, it wouldn't be a true gold standard. The genius of the gold standard was that anyone could redeem his paper dollars for the defined weight in gold. It was this condition that kept banks (and governments) from over-inflating the currency.

If people started to doubt the soundness of the paper bills, they would redeem them for gold. Too many gold withdrawals would result in bankruptcy and economic collapse.

31 posted on 08/21/2011 3:49:25 PM PDT by BfloGuy (Workers and consumers are, of course, identical.)
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To: Blood of Tyrants

Numbers were posted in the thread. 9500/oz would be sufficient.

It can be done, there’s no question about that, the only question is whether it would, or should.


32 posted on 08/21/2011 3:50:42 PM PDT by BenKenobi (Honkeys for Herman!)
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To: Cuttnhorse
The worldwide average cost to produce an ounce of gold is somewhere around $500/ounce

Yeah, if the cost to mine the stuff were the same as or more than the market price, the mines would simply shut down. It's a commodity. The miners want to make money, too.

Some people wonder what would happen if the gold supply remained stagnant in such a case. Would there be enough gold? Yes. Any amount of gold can work to back the currency of any nation.

It would become more valuable with the higher demand, but that would only mean that its purchasing power would increase -- or, in other words, that the prices of goods would drop.

33 posted on 08/21/2011 4:10:29 PM PDT by BfloGuy (Workers and consumers are, of course, identical.)
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To: muir_redwoods

We can’t tolerate that much inflation. It would literally destroy the dollar and all the life savings of most people.


34 posted on 08/21/2011 4:13:24 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: Evil Slayer

You start you premise with - the dollar is worthless. So in that case, what can you do with dollars beside use them as toilet paper ? At least gold will retain its value. Worse case scenario, you sell a gold coin for paypal credits. Then go down to the local grocer and slide your paypal debit card for payment. My guess is we will have a gold or silver backed online service. How about paygold or paysilver ? Eventually you will be able to buy groceries with silver eagles. Otherwise known as, real money.


35 posted on 08/21/2011 4:15:34 PM PDT by justa-hairyape
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To: DaveinOK54
If the world went on a gold standard the price of gold would automatically skyrocket. There would be a period in which privately held gold could be turned in for a fixed price, thousands of dollars an ounce.

It sounds like a fantasy but when the dollar was backed by gold we had no inflation for decades at a time, and unprecedented economic growth

36 posted on 08/21/2011 4:21:23 PM PDT by hinckley buzzard
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To: Blood of Tyrants
There isn’t enough gold in the world to back what the US alone has in cash floating around.

What an idiotic thing to write. The free-market clearing price for gold is $1,876 per ounce. Yes, that indicates massive inflation since we left the gold standard and gold was $32 /oz. But there's a price for everything. There is a price for gold that would make the gold standard work again. Seemingly, though, there isn't the political will to keep that price stable. That's why the gold standard is a non-starter in today's environment.

37 posted on 08/21/2011 4:26:41 PM PDT by SSS Two
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To: Evil Slayer
How do I buy groceries or purchase gasoline, etc with my gold coins? What if the cost of my groceries, gas, utility bill, mortgage payments get accepted and paid for with the one ounce pieces of gold...

Your question implies a collapse of government currency. In such an apocalyptic case (which will not happen), you arrange for the gold to be held as collateral in a credit account with whomever. Exchanges would spring up in no time, probably organized by banking institutions. Local scrip would replace the dollar for small purchases, as it did during the Great Depression, only now based on gold held in trust by third parties rather than on full faith and credit of the goobermint.

38 posted on 08/21/2011 4:32:25 PM PDT by hinckley buzzard
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To: Evil Slayer
If you are concerned about using precious metals for barter in a survival scenario, then don't buy large value coins, buy small one- 1/10 or 1/20 OZ or even by the grain

There is an extra premium but there is also greater flexibility.

Also look at silver, especially junk silver. A mercury dime is worth about $3 in meltdown value of the metal at silver $40 an oz, a silver quarter (pre 1964) is worth about $7. That is maybe worth a loaf of bread or a gallon of gas or a bottle of aspirin.

Even pure copper coins are heating up- copper is $4 a pound but who gets to buy and hold industrial copper and who wants to try to trade in big bars of metal? Coins are $1- $2, have the chance to become the poor man's silver (as silver is the poor man's gold)

Our society is used to seeing gold silver and copper (esp coinage) as money and as having value.

39 posted on 08/21/2011 4:34:44 PM PDT by silverleaf (WS)
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To: DaveinOK54
You can't fix the price of gold, it's a global commodity. Second, you can set the dollar to a certain weight of gold and promise 100% convertibility. That's what the gold standard means. The price of the dollar in gold is currently ~$1800 per oz.
40 posted on 08/21/2011 4:39:30 PM PDT by Jabba the Nutt (.Are they stupid, malicious or evil?)
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To: sten
You should use M0, not M3 or whatever you're using. That will cut your gold price needed for the gold standard to 1/5 of what you're estimating.

Think of it this way. M3 includes checking accounts, money market accounts and the like. In order for someone to convert currency into gold, he'll have to take the money out of his checking account. When that currency shows up at the central bank and is exchanged for gold, it is taken out of the money supply. Merely withdrawing that cash from the bank reduces M3 by a factor of 5 or so. So please consider the reverse process of money creation you learned about in your Money & Banking class.

41 posted on 08/21/2011 4:41:30 PM PDT by SSS Two
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To: albie

Nationalizing gold is always a possibility.


The world will have already fallen in to unimaginable circumstances if our country nationalized gold. It would mean the U.S. dollar is worthless.(I know, they are trying)


42 posted on 08/21/2011 4:42:52 PM PDT by cornfedcowboy (Trust in God, but empty the clip.)
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To: Jabba the Nutt
You can't fix the price of gold

Uhh. Yeah you can. It's called the gold standard.

43 posted on 08/21/2011 4:43:03 PM PDT by SSS Two
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To: Jabba the Nutt
You can't fix the price of gold

Uhh. Yeah you can. It's called the gold standard.

44 posted on 08/21/2011 4:43:15 PM PDT by SSS Two
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To: Greysard
The gold serves as a physical barrier to infinite printing of money. But there are other methods to achieve the same.

Name one that actually has worked in recorded history.

The problem with digital currency is that some central body needs to keep track of who has what. That's way too much centralized power.

45 posted on 08/21/2011 4:51:21 PM PDT by slowhandluke (It's hard to be cynical enough in this age.)
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To: DanielSilverman

And the value of the dollar would be less than a tenth of what it is now. You want hyper inflation?


46 posted on 08/21/2011 4:52:44 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: SSS Two

If you want to hyperinflate the dollar, yes there will be enough.


47 posted on 08/21/2011 4:54:28 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: appeal2
It doesn’t matter how much fiat money is out there. There will be a complete revaluation of the currency and the current dollar will cease to exist. What value is actually assigned to gold will have nothing to do with the number of fiat currency units floating around.

You have a way with words. You've summed up (in a single paragraph) a point that would have taken me an hour to explain. Brevity man, you got it. :)

48 posted on 08/21/2011 5:03:55 PM PDT by Inspector Harry Callahan
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To: Jim Noble

I heard that anyone caught leaving the country with more than five ounces of gold will be fined $10,000, serve a year in prison and have h8is/her gold confiscated.


49 posted on 08/21/2011 5:20:03 PM PDT by Paperdoll (NO MORE RINOS!)
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To: Blood of Tyrants

NO I said you CAN’T adjust the price of gold to meet the monetary supply which ,of course ,would hyper-inflate the monetary supply (somehow) NOT something like the printing of the monetary supply by the FED. That’s how it works right? I am agreeing with you. And Gold is definitely not adjusting itself as we speak week by week day by day. It is just a bubble that will pop!


50 posted on 08/21/2011 5:21:51 PM PDT by DanielSilverman
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