Sell Your Gold, It's Not Backed By Anything

With all due respect, and with all intentions for this to remain civil. JSH's position is extraordinarily ignorant. Often times in history the paper monetary system has failed. The fact that the Federal Reserve has most people duped right now is merely a fad, albeit a long running fad. Whenever the paper system fails, whether it was the early US, Civil War US, WW2 Germany, Zimbabwe 2008, everything falls back to Gold and Silver.

And BTW, In the state I live, I CAN go to the grocery store TODAY with Silver Eagles and get current spot value worth of groceries for Silver or Gold by state law.

Money is Value, Gold and Silver are money. US Federal Reserve notes fluctuate in value by the minute just as precious metals do. The difference? Value of Dollars is always relative to some other fiat paper system. Only the Dollar value of precious metals fluctuates. Real value (purchasing power) doesn't change much over centuries aside from the occasional short-term manipulation.

I have don't have a problem with you calling me ignorant. Now I would take offence if you had called me stupid. Two very different words.

Let's look at failure of paper money first. During the Civil War and WW2 Germany people may have fallen back to gold and silver. That was when the major economies of the world still had currencies backed by gold or silver. Since the world has gone off the gold standard I see no evidence of a fall back to gold and silver in the event of the collapse of a individual currency.

Zimbabwe is an excellent example. I haven't personally been there since their currency collapsed but everything I've read does not show a return of the use of gold or silver. Instead they have reverted to a barter economy or the use of US dollars or Euros as "hard" currency. I have read some stories of people panning for gold, but I believe that has more to do with an unemployment rate of 95%. If you have no job and job prospect of ever finding a job, panning for gold is about as good a use of your time as anything. Especially since there is still a global market for gold.

Zimbabwe is a poor example for what would happen if the US dollar failed. When a small country like Zimbabwe fails, the effect on the global economy is tiny. Yes, it is bad for the people of Zimbabwe but if doesn't affect the rest of the world. Gold may be valuable in Zimbabwe because the person taking that gold can sell it on the world market and covert that gold to other goods. The key is this example is that there still is a functioning world economy with a demand for gold. What would happen if the US dollar failed? No one knows for sure but I would assume a global financial crisis worse than anything we have ever seen. I would expect to see the collapse of global commerce since global commerce is conducted in US dollars. Add in the interconnected nature of global finance and I could see a domino effect of bank and currency collapses. In that situation I predict the global demand for gold would disappear as people return to a focus on absolute survival.

Now to the topic of the use of gold and silver in your local grocery store. I assume you live in Utah since that is the only state I know of that has made US Mint gold and silver coins legal tender at spot price. My understand, again from reading, is that the Utah law does not require stores to accept gold and silver at spot price. As such, I doubt many stores will actually take your ASE. The effect of the law is, by making US Mint gold and silver coins legally money instead of commodities, gold and silver are no longer subject to state capital gains taxes.

My personal opinion is that putting all of one's savings in any one investment is a bad idea. My investments are spread between stocks, bonds, real estate, cash, and silver. Of these, I see silver as the most risky category so I only have "fun" money in silver. I predict that we are in for a repeat of the 1980's. The recession and fear drove gold up to record values that we still haven't passed yet. That peak was followed by a crashed when the economy recovered and the fear disappeared.

rjkingston:

In your scenario I would expect trade in the US to convert to that next strongest currency. That is what has happened in every currency collapse since the world left the gold standard.

JSH:

You have much to learn in regard to the subject of money. I'll do my best to educate you.

First, I see that you have apparently abandoned your position that gold has no inherent value, because you have ceased to mention it, since I addressed that erroneous argument in my last post. If so, that is a good thing, and would be evidence that you can learn something!

Second, among the many misstatements of fact and history you promote, the most egregious is that gold and silver are not money - they are commodities. In truth they are both. Again, not because I say so (and other forum members will agree), but because the facts are on my side.

Article 10 Section 1 of the US Constitution, and Section 11 of the Coinage act of 1792, both indicate that nothing but gold and silver coin are legal tender in payment of debts, (in other words - money). Article 19 of the Coinage Act, also mandates that death shall be the penalty for anyone who seeks to debase gold & silver coinage, or use anything else for that purpose. Neither the Coinage Act of 1792, nor article 10 Section 1 of the US Constitution have been repealed. So the question is settled, gold and silver are MANDATED as the ONLY lawful money for our country.

The Framers of the Constitution did not want anything BUT gold and silver to be a tender in payment of debt.

In US vs Marigold 50 USC 560 (1850), the Supreme Court ruled "The prohibition in the Constitution to make anything but gold or silver coin a tender in payment of debts is express and universal. The Framers of the Constitution regarded it as an evil to be repelled without modification; they have, therefore, left nothing to be inferred or deduced from construction on this subject" .

In light of what the US Constitution decrees, and the Supreme Court agrees upon, somehow your disagreement on this matter pales in significance.

You go on to indicate, in your last post to me, that you can go into any store and buy lots of stuff with the US fiat currency known as Federal Reserve Notes. You are correct, but not because the FRN's are money. They are legal tender (there is a big difference). And the US government mandates on each note "good for all debts public and private". THATS why they pass, not because of any inherent or intrinsic value. Those are the exclusive province of the precious metals. (gold & silver).

Honest money does not resort to legal tender laws to force people into using what the state deisignates as legal tender in payment of debt.

There is much much more, but the post is getting long - and the attention span of most will not generally allow for this much reading.

More will follow in rebuttal to your next post.

Best,

LastGold

If you put $1400 in the bank on January 1 2011 if you are lucky you would have received $20 in interest on that "investment". If you bought an ounce of gold on January 1 2011 you would have earned $235 on your investment even after it has fallen $300 from its record high earlier this year. At this time in history in my opinion gold blows conventional investments out of the water, and it is indeed functioning as a currency at this point. I know of a lot of store owners here in rural New York that would happily exchange merchandise for silver bullion. Most automobile dealers would gladly accept gold as a down payment on a new car. It is so easy to sell precious metals at this point in time a lot more people are savvy to the market and how to trade.

Junior e said....

"I know of a lot of store owners here in rural New York that would happily exchange merchandise for silver bullion."

I had one fellow offer me an entire carded set of all 12 original 1977 Star wars figures, all moc, (mint on card) most in solid shape and few with some card damage, for an oz. of gold....

I was like thanks but no thanks. I would have loved to had it, but not for that price....

I never see carded 1977 star wars figure go for less than two hundred each, unless the card is real rough. So to say one could have netted 2400 and cleared 2200 (lost 75 to shipping, 100 to ebay and some more to paypal) is not unrealistic, but I would rather have the gold....

Gold is fragile, but not as fragile as 30 plus year old cardboard and plastic, even though one seems to thrive when the economy is doing well, and the other when the economy is not doing so well....

Since some have thrown out what amounts to post apocalyptic scenarios/doomsday, I thought I would interject a few things.

1) Those with thoughts of their bullets taking others items, remember you may not be the only one armed. My Bushmasters all fire very fast and I have a lot of magazines. I suggest body armor with enhanced sapi plates or dragon scale if you decide to go that route. But, remember some ammunition is ap and I shoot for the T box first. Everyone in my family can put 10 5.56mm in a 4 inch target at 100 yards. I can put them in a lot smaller circle with my GGG sights.
My scope on my service rifle makes one hole and shots less than 1/4 moa on a good day. A little better after my second cup of coffee but worse if drink to much coffee.

2) Consider that everyone that is alive is armed after several months of riots, food riots, and other violence.

3) Medical supplies I think would be very valuable. Antibiotics, antibiotic creams, bandages, antiseptics etc.

4) Clean water and the ability to make water potable.

5) I would avoid large population centers. Unless I have an armored vehicle with a crew. Think Striker, up-armored vehicle with gunner turret or MRAP. Think about reliability, fuel economy, and agility.

6) Food, shelter, and clothing. Dress in layers. Don't look like you have anything worth anything. Don't be a target.

7) Ways to make fuel, either ethanol/white lightning(two fold payoff) or if you are in area with oil production or storage that would be valuable.

8) Let's all work on ways that our way of life, THE GREATEST COUNTRY ON EARTH, only becomes better and better. Not just for us, but for our children, their children and many generations to come. I expect our future to be better not worse and none of things above every come to fruition or become necessary.

I have been in multiple different war torn countries, I never want to be in another one. If our country were to fall, the rest of the world has all ready. The cliche used to be that the USA sneezes and the world catches a cold.

You can talk about BRIC, but I don't see those places as options if the USA were to stumble and fall. Plus, three are only by sea from here.