The Rumors Of My Death Have Been Greatly Exaggerated

When the Salvation Army bell-ringers outside Wal-mart every Christmas start posting signs that they accept only plastic, then I'll believe cash is doomed. Otherwise, it's here to stay, although it is a smaller part of our overall commerce every year.

Actually, we do not know this. Let's not compare the massively inflated dollar prices for everything and then say, "Nope, there just isn't that much gold in the world". OK, so there isn't. But does there have to be? If a decent car cost $36,000 in FRNs does that mean we need more than 20 oz. of gold at the current price to be its equal? Somehow, I don't think so. Same with silver. A $1 90% silver coin is now worth around $32. If you get a gas bill for $64, two silver dollars could pay that bill. Yeah, we would all have to get used to smaller numbers for our pay and our bills but that's not a big problem, is it?

Like paper money, circulated gold and silver money passes from one hand to the next, effectively doing more financial work than its amount would suggest. Some economists say that there is about a 7:1 factor in money expansion simply from its use. Consider this effect as well when thinking about whether or not there is enough gold or silver to do the job. If not, then we also have other metals that might be impressed... platinum, palladium, and even non-monetary metals, such as tin and titanium might be useful as money.

Another thought is that if paper money were to be partially backed by gold or silver, would this not be MUCH better than no backing at all? Say we were to back a new US dollar with 10% of its denomination in gold or silver. That would likely achieve the same results towards limiting deficit spending and the over-printing of unbacked money. Even that small amount of hard money backing would provide at least some control over the printing presses.

The governments of the world could always decide to revalue gold to a much higher figure when doing currency conversions. Yes, the likelihood of them all agreeing on anything is pretty remote... but it could happen, especially if they were faced with numerous currency collapses and a terrible worldwide depression as the immediate consequence of not doing it.

The recent strength in the dollar does not stem from any fundamental improvement in the US economy, rising US interest rates, or the removal of dollars from the US money supply. What we are seeing here are the small "relief" rallies that occur after individual economic problems SEEM to be fixed or at least addressed. These can come unraveled as fast as they came to be, so let's not pin too much hope for the future on what are likely to be temporary moves upward in the dollar. I don't see any reason at this time to be enthusiastic about holding US dollars, other than the amounts we need to pay our bills. That could change, of course, and most of us here hope that it will. Hope, however, is not a plan.

Are you saying we are headed for chaos?

I'm thinking that while the dollar is gaining ground it maybe a good time to open my savings account in a Canadian bank.

I believe you are confusing those folks who 'prepare' for hard economic times and a possible collapse for people who are wishing it true. I do not know ANYONE wishing that our world as we know it would end...but I do know good people who are preparing for many possibilities, as we all should.

Also, I wouldn't be investing in ANY fiat currency right now, unless you know what you are doing and it is for the short term.

Gold and silver are not printed by governments or made by man. They are free from political whims and that is why we own them.