Inflation, deflation, gold and currencies

[vincecate]

E-Gold has been providing electronic transactions based on metals for years: http://e-gold.com/

Several have, but I think the distinction is those are transactions between registered account users within the system whereas a legal tender law allows the issue of debit cards as a means of payment for any transaction.

I have a debit card with my brokerage account. I can use gold or silver as a store of value and use the debit card to buy anything. At the moment I have to do a few clicks from time to time to make sure there is enough cash in the account for a purchase, but this would not be hard to automate.

[Higgenbotham]

E-Gold has been providing electronic transactions based on metals for years: http://e-gold.com/

Several have, but I think the distinction is those are transactions between registered account users within the system whereas a legal tender law allows the issue of debit cards as a means of payment for any transaction.

I have a debit card with my brokerage account. I can use gold or silver as a store of value and use the debit card to buy anything. At the moment I have to do a few clicks from time to time to make sure there is enough cash in the account for a purchase, but this would not be hard to automate.

To make a transaction with the debit card under today's US laws, the brokerage account holder will sell some GLD or SLV or similar ETF, pay a commission (and a spread one way or the other as these markets aren't terribly liquid), and put US dollars in the account. Then the debit card is used to pay with US dollars.

I think under Utah's new law, the debit card would have so many ounces of gold or silver on it (as legal tender). Since the items are priced in US dollars, when the debit card is swiped at the terminal, the US dollar total will be automatically converted at the spot price and the ounces of gold or silver subtracted from the balance on the debit card.

The fee to make the conversion should be minimal compared to paying broker commissions and spreads to replenish a debit card with US dollars. Also, the depository storage fee should be minimal compared to the ETF management fees (I don't say will, but should) which cause the ETF to continuously decline in value against the spot gold and silver price.

Also, any Utah capital gain on the ounces of gold or silver used for purchase would not be taxable, as it is legal tender. I think you also mentioned this somewhere along the line. The Utah tax reporting requirements for all the transactions would be eliminated. I don't know what the IRS will do as far as capital gains and reporting requirements. That's a very key question and I'm going to look into it.

[Burton]

I think every thing related to Forex ,Gold goes high in prices,Many of the investors have earned millions and it is still not stopping and no hopes to cut down the prices.Its a very old post but the topic is still very important.

[vincecate]

dollarsingold.png (9.07 KiB) Viewed 5050 times

I think this chart is interesting. The dollar priced in miligrams of gold has periods of stability and then big drops. Looks like about time for a big drop. Of course with the dollar so close to zero that may be trouble.

dollarhalflife.png (11.28 KiB) Viewed 5049 times

This may be a better way to look at it. This line is with the value of the dollar having a halflife of 4 years, when measured in gold. The fit to the actual data for the last 10 years is rather good. Can't imagine a smooth fit for a long time into the future though.

Goldbugs are sure to love this site:
http://pricedingold.com/

[RDRUNR]

vincecate - I would not buy gold or silver purely as a speculative investment. I've been in the coin collecting business for 34 years and a coin is only worth what a collector will pay for it, it doesn't matter at all what it is MADE of. If you think so then I have a bag of pennies to sell you at 2.4 cents each.

Plus, gold bugs like you think people want gold over a US dollar, you are wrong. People recognise the value of a US dollar, it's easy to trade, easy to carry and people trust it, Gold on the other hand, few trust, is it real? What is it really worth? Where did you get it from? What do I do with it if I accept it?

Gold bugs think the end of the world will be there paradise. Where their gold will be worth trillions of dollars per once. What gold bugs do not realise is no one will trade food for gold; I wouldn't trade you a loaf of bread for an once of gold, sorry. They didn't in WWI or WWII and I don't see it happening in WWIII either.

Gold is speculative bubble and cheer all you want on the way up in value, just remember to not hord it and sell it if it starts to fall.

[vincecate]

Plus, gold bugs like you think people want gold over a US dollar, you are wrong. People recognise the value of a US dollar, it's easy to trade, easy to carry and people trust it, Gold on the other hand, few trust, is it real? What is it really worth? Where did you get it from? What do I do with it if I accept it?

One of the fun things about my gold coins (http://gold.ai) is that you can verify it is real by looking at a high resolution picture on the net. I make the coins by hand and engrave a number on them with a vibrating engraver. There are tiny defects in each coin and the position of the dots in the number I engrave depends on the speed I am moving my hand when I engrave them. I believe my coins are the easiest to verify and the hardest to counterfeit in the world.

What gold bugs do not realise is no one will trade food for gold; I wouldn't trade you a loaf of bread for an once of gold, sorry. They didn't in WWI or WWII and I don't see it happening in WWIII either.

What exactly do you mean by this? I would be happy to give you 2 loafs of bread for an ounce of gold. Deal? What historically do you mean about gold and WWI or WWII?

Gold is speculative bubble and cheer all you want on the way up in value, just remember to not hord it and sell it if it starts to fall.

Either gold and silver and all commodities are in speculative bubbles or the value of the dollar is going down. Time will tell.

[RDRUNR]

Plus, gold bugs like you think people want gold over a US dollar, you are wrong. People recognise the value of a US dollar, it's easy to trade, easy to carry and people trust it, Gold on the other hand, few trust, is it real? What is it really worth? Where did you get it from? What do I do with it if I accept it?

One of the fun things about my gold coins (URL removed for your own protection vs the FBI) is that you can verify it is real by looking at a high resolution picture on the net. I make the coins by hand and engrave a number on them with a vibrating engraver. There are tiny defects in each coin and the position of the dots in the number I engrave depends on the speed I am moving my hand when I engrave them. I believe my coins are the easiest to verify and the hardest to counterfeit in the world.

BECAREFUL! You may be joining Bernard von NotHaus in jail for conspiracy against the United States.

"Bernard von NotHaus, 67, was convicted today by a federal jury of making, possessing, and selling his own coins, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Following an eight-day trial and less than two hours of deliberation, von NotHaus, the founder and monetary architect of a currency known as the Liberty Dollar, was found guilty by a jury in Statesville, North Carolina, of making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States."

http://www.libertyandeconomics.com/2011 ... -jail.html

What gold bugs do not realise is no one will trade food for gold; I wouldn't trade you a loaf of bread for an once of gold, sorry. They didn't in WWI or WWII and I don't see it happening in WWIII either.

What exactly do you mean by this? I would be happy to give you 2 loafs of bread for an ounce of gold. Deal? What historically do you mean about gold and WWI or WWII?

I had an example I remembered. I spent 15 mins on google video looking for the post-WWII british gov't film on atomic/nuclear preparedness but couldn't find it (wish I could) as it was really interesting. It was made in the 1960's, B&W. In it a man is offered money for food (I remember it was about $10 for a loaf of bread) and he flat out refused, the gov't line was "people will not take money or gold for food in times like these". That was an eye opener as it proved people won't trade gold or money for food in a disaster if food is in short supply.

If you are willing to take a once of gold for 2 loafs of bread when YOU and ME are starving then I'll trade you!! Do you really think for a second in WWI or WWII they wouldn't do the same either (trade useless gold for food)? Gold is no good to you if you starve to death.

Gold is speculative bubble and cheer all you want on the way up in value, just remember to not hord it and sell it if it starts to fall.

Either gold and silver and all commodities are in speculative bubbles or the value of the dollar is going down. Time will tell.

No, just gold and silver mostly. You are lucky to have the US dollar as the world's reserve currency, it keep your standard of living up in the world, don't be so quick to drop it there. A rich man in Mexico with gold is not the same as a rich man in the USA with US dollars.

What amazes me about the gold bugs is they act like Gen-X'ers in regards to their gold/silver positions, never thinking the world has already done the gold/silver bubble thing and this time is no different than before. They wish for doom upon the world so they can profit and be kings in THE END. But the outcome that is most likely is if THE END happens and they have 10 tones of gold they will be hunted down for it and be dead before those without it.

[vincecate]

BECAREFUL! You may be joining Bernard von NotHaus in jail for conspiracy against the United States.

My gold coins look nothing like anyone else's and do not claim to be "dollars". That guy made many mistakes that I don't think I am making. I might be making others though.

I had an example I remembered. I spent 15 mins on google video looking for the post-WWII british gov't film on atomic/nuclear preparedness but couldn't find it (wish I could) as it was really interesting. It was made in the 1960's, B&W. In it a man is offered money for food (I remember it was about $10 for a loaf of bread) and he flat out refused, the gov't line was "people will not take money or gold for food in times like these". That was an eye opener as it proved people won't trade gold or money for food in a disaster if food is in short supply.

If you are willing to take a once of gold for 2 loafs of bread when YOU and ME are starving then I'll trade you!! Do you really think for a second in WWI or WWII they wouldn't do the same either (trade useless gold for food)? Gold is no good to you if you starve to death.

So your evidence that people won't trade a loaf of bread for an ounce of gold is a government movie? Some of us don't trust the government as much as you seem to. In any case, I have well over a year supply of food and the ability to test that gold I am buying is real. I plan to not be starving and be in a position to give people food for their gold.

What amazes me about the gold bugs is they act like Gen-X'ers in regards to their gold/silver positions, never thinking the world has already done the gold/silver bubble thing and this time is no different than before. They wish for doom upon the world so they can profit and be kings in THE END. But the outcome that is most likely is if THE END happens and they have 10 tones of gold they will be hunted down for it and be dead before those without it.

Hyperinflation happens many times, I think over 100 times if we count 5%/month or 80%/year as the cutoff. America has had hyperinflation twice already (revolution and civil war). This time will be no different, paper money will become worthless. In general crime goes up a bit but not nearly like what you seem to think. The breakdown of the currency does not mean the breakdown of civilization. Life goes on. Most people do not turn into violent criminals, they adapt somehow to the new economic reality. Maybe they become a security guard for a rich person in exchange for canned food, but usually something legal. Maybe they are just earning enough to feed their family and have to move in with relatives. Sure it will be hard but most will make it without resorting to violence. Some governments will fail (as we are seeing in Arab countries) and there will be a bit of lawlessness, but new governments will form and law and order will continue. THE END of a currency is not THE END of society.

It is NOT that we wish for the doom. I know that most of my friends and relatives are not really prepared because they don't really believe me. So people I care about will be in for a very hard time. I do not want the dollar to get hyperinflation, but it is not up to me. I am just looking at what I think is coming, not making it happen or wishing for it to happen.

Next thing, you will find that gold bugs also tend to be gun owners.

[Hesiod]

I read a great series of articles by Ashvin Pandurangi on the Automatic Earth about the future of Physical Gold and just wanted to share this here:
Part I - Dialectic Foundations http://theautomaticearth.blogspot.com/2 ... -gold.html

Part II - The Evolution of Value http://theautomaticearth.blogspot.com/2 ... -gold.html

Part III - The Final Realization http://theautomaticearth.blogspot.com/2 ... -gold.html

Part IV - Deflationary Canyons and Caves http://theautomaticearth.blogspot.com/2 ... -gold.html

Part V is not written yet, but I will post when available...

[CrosstimbersOkie]

vincecate - I would not buy gold or silver purely as a speculative investment. I've been in the coin collecting business for 34 years and a coin is only worth what a collector will pay for it, it doesn't matter at all what it is MADE of. If you think so then I have a bag of pennies to sell you at 2.4 cents each.

Plus, gold bugs like you think people want gold over a US dollar, you are wrong. People recognise the value of a US dollar, it's easy to trade, easy to carry and people trust it, Gold on the other hand, few trust, is it real? What is it really worth? Where did you get it from? What do I do with it if I accept it?

Gold bugs think the end of the world will be there paradise. Where their gold will be worth trillions of dollars per once. What gold bugs do not realise is no one will trade food for gold; I wouldn't trade you a loaf of bread for an once of gold, sorry. They didn't in WWI or WWII and I don't see it happening in WWIII either.

Gold is speculative bubble and cheer all you want on the way up in value, just remember to not hord it and sell it if it starts to fall.

Vincecate. I'll be happy to give you a loaf of bread for every ounce of gold you have. And if I don't have enough loaves, I'll find some.

True gold and silver are in a bubble and there will come a time to sell. But not before the US Government gets its house in order. The full faith & credit of the United States Government is pretty shaky about now, if no one's noticed. Gold & silver have been and still remain a better investment than a mutual fund or most stocks and bonds. Had I been smart enough to buy gold rather than mutual funds back in 1997 when gold was under $300 an ounce I would be much better off. As it is the gold I purchased at around $900 an ounce and the silver I purchased from between $12 & $15 an ounce have still outperformed nearly any other investments I could have made.

As for history and precious metals. WWII is not a parallel of where we are now. Where we are now is where we were in the early to mid 1930s. When was it that the US Government seized all gold bullion in private hands? Why would the government do that? Because no one had any use for it? Because no one would trade an ounce of gold for a loaf of bread? My grandparents were young adults through the Great Depression & WWII. They regretted having to surrender precious metals and hoarded what silver coins they could. My grandmother still does at age 96. People stopped trading with precious metals then due to the power of government edict, not by their own choice. Why will it be different this time????