Gold prices dropping - Page 4

At some point (it's already started in some states), there will be less and less money available for social supports as fewer and fewer taxpayers are supporting more and more recipients (at both ends of the wealth spectrum - politics are irrelevant). Benefits and price support programs will be cut. The winners will be those with the cash and means for self-reliance. Look around - welfare benefit cuts get the most press but think of all the old companies that are gone, states/cities bankrupt (and in the process), high-wage blue-collar jobs that are gone. The divide between have and have-nots keeps getting wider.

My opinion - It's only just begun.

Originally Posted by unknownk

Most wealth today is just a tax on the middle class who keep shoveling parts of their weekly paychecks to 401K/IRA that end up buying rich people more mansions. If that flow of money stops for a second then congress bails out the banks with your money anyway and just send you the long term bill. The stock market used to be where rich people invested money into mature companies for an annual dividend check (stock was priced by how much that dividend was annually), now its where mega banks rip off their customers selling worthless paper back and forth between "investers" while they take their cut every transaction and manipulate the price. It used to be if you owned 50.1% of the companies shares you called the shots, but these days those are common shares and even if you own most of them you control nothing (maybe a seat on the board), preferred shares came into being so owners could sell shares of stock but still run the company any way they wanted. Business schools teach MBAs how to fudge the numbers to make a company big enough for an IPO (cashout 1), then take out massive debt on that company (cashout 2), and finally raid the pension funds (cashout 3)before it implodes after they can't borrow against it anymore (just like the mob).

Sadly, I am only able to "thank" this post once.

Originally Posted by unknownk

You have no clue about history. Paper money was king during the great depression. It was the last great buyup of buildings and land for little money because everybody invested in worthless stocks and were cash poor. Being cash rich in a time where money is hard to come buy means you can buy everything cheaper then it was during the boom, people were desperate to sell valuable items to buy food (which also dropped in price). Major fortunes were made by people who could buy up properties (hotels etc) and wait out the depression because they had cash reserves.

[Marketviews] - What would you do if we had another Great Depression?

"During and after the Great Depression there were endless bargains to be found on almost every conceivable asset – stocks, whole companies, land, houses, machinery and equipment. History has shown that those who profited most from the Great Depression were those who bought assets at rock-bottom prices once the Depression was in full swing. In order to do this they needed to have cash on hand; and you would do well to do the same if we had another one. Hold lots of cash."

The great depressions started in 1929, initially caused by the stock market crash. People made runs on banks to withdraw their cash, or in many cases to exchange their paper money, for gold. Because we were on a gold standard, the more gold pulled out of the bank meant that less cash was available for people to spend. You can see how this would create a major problem with cash becoming more difficult to come by.

Back during the depression, a bank was required to hold 40% of the money it loaned, in gold reserves. Meaning, that if a bank loaned $100,000 they had to keep on hand $40,000 to back it. This prevented money from being created out of thin air, which is what the entire argument about gold back cash compared to invented imaginary cash is all about.

In 1931 commercial banks converted their federal reserve notes into gold, which reduced the amount of gold available to back money, which meant the federal reserve couldn't print enough money to supply the demand, and remember that the banks had to have 40% against what they loaned. So imagine, you have less gold, and instead of pumping cash into the economy you have to remove it.

To complicate matters, the Federal Government loaned out over 240 tonnes of gold to European Central Banks to help them out. Which made less gold available yet again, which in turn caused less cash to be available.

During this time people were making their runs on the banks not just for gold, but also to pull out cash, which caused all sorts of other problems and more a cash shortage.

It was also the fault of the Federal Reserve that the great depression continued for another 6 years after the US went off the gold standard.

In the early 1930s, the Federal Reserve defended the fixed price of dollars in respect to the gold standard by raising interest rates, trying to increase the demand for dollars, yes you read that correctly, the federal reserve was attempting to increase the demand for dollars.

in 1934 Congress enacted the Gold Reserve Act, the measure nationalized all gold by ordering the Federal Reserve banks to turn over their supply to the U.S. Treasury. In return the banks received gold certificates to be used as reserves against deposits and Federal Reserve notes. The act also authorized the president to devalue the gold dollar so that it would have no more than 60 percent of its existing weight. Under this authority the president, on 31 January 1934, changed the value of the dollar from $20.67 to the troy ounce to $35 to the troy ounce, a devaluation of over 40%.

But all this is history, what is far more interesting besides the manipulation of gold, the mistakes made in leaving the gold standard, the inflation and European bank busts, and huge amounts of credit that were actually more the cause of the great depression is why these things happened.

The root cause of the Great Depression was a concentration of wealth resulting in an increase of the number of poor, and lowering the standard of living for the poor and middle class. In an attempt to maintain and/or improve their standard of living these classes went into debt, resulting in the credit explosion of the 1920s. Eventually the debt load grew so heavy that it could not be sustained, resulting in the massive defaults and financial panics of the 1930s

Does this sound familiar at all?

Back during the depression, paper money was still backed by gold. Even when devalued it was still backed by gold. EVEN when we went off the gold standard, gold reserve notes were issues so people BELIEVED it was still backed by gold. Today it isn't. So how can we put a value on paper money, what backs it, what forces are manipulating it?

Banking institutions, and it's all invented money, remember where I stated above that the banks only had to hold 40% in gold what they loaned in cash? Today, banks keep on hand cash instead of gold to back the money they loan. And now, they only have to keep 10% of what they loan, on reserve. So if a bank loans out $100.000 they only have to keep $10,000 on deposit/reserve. Then when that $100,000 is paid back, they can now loan out $900,000, and when that money is paid back, can you see the problem?

We live in a very different situation in today's world. Not only is gold not fixed, but paper money is backed by nothing and there is a huge amount of it in existence. Not only that, it is not printed in regards to any standard, but instead to how much is required to transact business. What is it backed by? Not gold, not any precious metals, then what? And to make things far worse, there isn't even enough printed money to pay back the interest on money that is currently on loan, how the heck does that happen?

Fact is cash is not backed by anything, it's the perceived value of cash that makes it worthy of transactions, but literally it's not worth anything. And now that the Federal Government is making an effort to move towards electronic cash, instead of paper money, it becomes a very unclear concept what it's actual value might be. Currently people receive some forms of social welfare on debit cards, social security benefits will soon be on a debit card that will charge a fee for withdrawing cash or even making a purchase. So your analogy of keeping lots of cash on hand isn't even going to be an option in the near future. And in a world where all your "cash" is kept electronically, who is to say just how safe it may, or may not be?

No, I will keep my precious metals, my gold, specially silver, copper and any other metal of value I can reasonably retain. No longer are metals kept on a fixed price and soon you will not be able to retain physical examples of wealth in the form of cash. I utterly disagree with holding onto cash, it worked during the depression because it was being specifically manipulated to work, and in a specific way. I believe personally the banks and the Federal Reserve, manipulated things so that they were able to purchase huge amounts of physical assets for pennies on the dollar, and even people who saved lots of cash, spent that cash to purchase what, assets. What is gold, and asset. I also believe the depression very well could have been lengthened, on purpose, to create a situation where the top 1% were able to accumulate even more wealth. I don't believe even for one second that banks, nor the 1%, nor anyone else that is in power, and can manipulate the value of money or "cash" or anything of value is doing so for the benefit of you and I, but instead I do fervently believe they are doing so for the benefit of themselves. So when these very people are hoarding large quantities of precious metals, I stand up and take notice.

Perhaps when you talk about history, and about people having a clue about it or not, you should do your own due diligence and also learn about current events. In doing so you might be able to resolve what you know about history so that your posts make more sense. Suggesting in this day and age that people retain cash, and basing that belief on a totally different situation that happened over 80 years ago, is probably not the best advice to be giving people.

Scott

Originally Posted by Bear

"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin!
”You are a den of vipers and thieves. I intend to rout you out, and by the Eternal God, I will rout you out... If people only understood the rank injustice of the money and banking system, there would be a revolution by morning." Andrew Jackson - 1837

I believe Jackson was the last US President to have routed the bankers, and left office with no outstanding government debt.
He also never held another office ; ) The banks run(ruin? ; ) our economy in the form of the Federal Reserve (which is just a conglomeration of private banks )

If the government doesn't stop spending "our" money so fast (currently going farther into debt at the rate of 10 Million dollars a minute!) and if the "Federal" Reserve doesn't stop printing more paper money so fast, no matter how many "dollars" (which won't be worth a dime") one has, it isn't going to buy very much

Just my 0.02 cents ; )

If I might add

Andrew Jackson along with a few other of our most cherished presidents, was one of the only people of note to stand up to the banking system, and attempt to keep a central banking system from taking over banking in the United States.

I can truly appreciate your post, and the history it refers to. Thank you for posting!

Scott

Originally Posted by unknownk

Middle men who buy under spot and sell at spot+ fixed rate make money no matter what gold is doing, they DO NOT SIT ON COMMODITIES.

While I can appreciate what it is you are trying to say, you are wrong about the people you are calling "middle men". I consider myself a middle man. I purchase scrap that I can process for it's gold content, and then retain as much as possible. Matter of fact, I hedge. I am protected against the price fluctuation of gold in this way.

As a business investment I might purchase 1000 ounces of silver for example. Each time I refine silver, I assay it so I know it's value, I then immediately sell enough silver to cover the cost of the material, and once refined, I simply replace the amount of silver from the amount I was able to refine. My profit is in any silver left that was not used to cover what I sold. Or maybe a better example would be explained in this way.

I have 1000 ounces, I pay $875 for material that that when assayed will prove to produce 80 ounces of silver. At today's prices, $875 worth of silver would be around 42.5 ounces. So right away I sell 50 ounces of silver, to pay for what the material cost me, and processing costs. When I refine the metal, I replace the 50 ounces out of the 80 ounces the material will produce, which leaves me with 30 ounces of silver as profit. I retain as much of this silver as possible, and only sell so much as I need to in order to make up any cash required for bills at the end of the month.

I retain not only the 1000 ounces of silver as my hedge, but I also retain as much of my silver I keep as profit as I am able to hold. I know of several other professional refiners who also do the same, although they might retain the value in other precious metals, they still retain as much as possible.

And so far as your example is concerned, when all money goes electronic, and the computer systems are down, try to buy a bag of cheetos at wal-mart with your plastic card, I'll be at my local farmers market exchanging some of my silver for fruit, veggies and other food stuff.

Also, I have never had to beg anyone to buy gold from me, matter of fact it gets a little annoying seeing all the gold buying places that are springing up all over the place. These places don't want you to know that you could get spot prices for your material fairly easy if you just knew how. Regardless of having a hard time or not selling your gold, why would you sell it? Why not directly exchange gold for goods and services? You might be surprised how many people will do exactly that. I purchase scrap on a fairly regular basis by exchanging precious metals for scrap. I even purchase a lot of my consumables by trading precious metals for goods, and even for services.

As an experiment, take a piece of gold sometime that has a hallmark and a known value with you when you make a purchase from a entity NOT a major corporation. Ask if they would be interested in trading gold for goods, and show them your gold. If you have never attempted to trade gold for goods or services, then you cannot say how difficult it would be. I find it pretty ****ed easy to do myself.

Scott

Scott, you are quite knowledgeable and reasoned. However, that is also the flaw in your argument. Panic is neither knowledgeable nor reasoned. Cash, however devalued, will still provide the basis as a medium of exchange. Can you imagine buying a bag of groceries or a tank of gas with copper? How much copper is a pound of coffee worth? Even the term "worth" implies an amount of cash. While I do stockpile metals, the end result is to exchange it for cash.

Originally Posted by Mick

Scott, you are quite knowledgeable and reasoned. However, that is also the flaw in your argument. Panic is neither knowledgeable nor reasoned. Cash, however devalued, will still provide the basis as a medium of exchange. Can you imagine buying a bag of groceries or a tank of gas with copper? How much copper is a pound of coffee worth? Even the term "worth" implies an amount of cash. While I do stockpile metals, the end result is to exchange it for cash.

Mick, I understand your argument, but regardless of whatever cash may or may not be worth, gold and other precious metals are always worth something. And if the worst possible scenario were to happen, such as the US Government being overthrown or a complete and total economic melt down, or all electronic banking information lost, cash will serve no purpose yet gold, silver even copper will. And so far as cash being a medium of exchange, there is a real effort currently taking affect to make cash obsolete. The Federal Reserve as well as the US Government, sees a future where people no longer use cash, for many reasons, but instead use debit cards, and in the future perhaps a chip under your skin or even just your face, there is technology currently available for both of these solutions.

I currently pay for many things with silver, and gold for that matter. And do so to good affect. If I were required to, I could easily directly exchange precious metals for anything I need, it might be a little more difficult than exchanging cash for goods, but I can, and do, for most things I need.

Scott

90% of the stores most people shop at are corporate run, the person running the register has no authority to take gold as payment. If you are known to be wealthy in your community it doesn't matter what your wealth is, people will give you credit and work around your "craziness" since they know they will get paid. Come to my neighborhood where nobody knows you and you will have a hard time cashing gold in other then those gold for cash places. Keeping all your wealth in a commodity that is way over normal levels is just stupid, just as stupid as putting it all into one stock.

What gives anybody the idea that a piece of paper backed with gold is better then a piece of paper backed by nothing then the government issuing it? Do you think that the US government ever had enough gold and silver to cash out everyones paper money before 1932? You can make a $1 silver coin as small as you want, hell it doesn't even have to be all silver (ask a Roman soldier 2000 years ago how silver and gold backed currency works for the little guy). When it comes down to it the US paper money is backed by the US economy and the US army, if you want to trade goods with this country you will deal in Dollars or nothing. When both the economy and the army falls apart your gold will be worth less then my lead if you know what I mean. Also the government can grab all your gold whenever they want to, make it illegal to own or trade in, something they can't do with fiat money.

Originally Posted by unknownk

90% of the stores most people shop at are corporate run, the person running the register has no authority to take gold as payment. If you are known to be wealthy in your community it doesn't matter what your wealth is, people will give you credit and work around your "craziness" since they know they will get paid. Come to my neighborhood where nobody knows you and you will have a hard time cashing gold in other then those gold for cash places. Keeping all your wealth in a commodity that is way over normal levels is just stupid, just as stupid as putting it all into one stock.

What gives anybody the idea that a piece of paper backed with gold is better then a piece of paper backed by nothing then the government issuing it? Do you think that the US government ever had enough gold and silver to cash out everyones paper money before 1932? You can make a $1 silver coin as small as you want, hell it doesn't even have to be all silver (ask a Roman soldier 2000 years ago how silver and gold backed currency works for the little guy). When it comes down to it the US paper money is backed by the US economy and the US army, if you want to trade goods with this country you will deal in Dollars or nothing. When both the economy and the army falls apart your gold will be worth less then my lead if you know what I mean. Also the government can grab all your gold whenever they want to, make it illegal to own or trade in, something they can't do with fiat money.

I'm sorry, I still have to disagree with you.

Not only do I go out of my way, regardless if I am spending cash or spending a precious metal, to do business with the small business owner rather than corporations, if I am able. I don't support the corporate mentality that is only morally obligated to their stock holders, and not humans.

All through history, the only thing that has ever been readily accepted as a means of trading value, has been precious metals. It was first commodities like olive oil for example, and animals, but as people started to travel longer distances they needed to be able to exchange their commodities into a different commodity that was recognized and readily accepted by other people they wished to trade with regardless of where in the world they were located, what language they spoke, etc. It has been the longest standing and most stable form of monetary exchange the world has ever known, ever.

I also would debate what you base the dollars value on. If you follow what our economy is based on, it boils down to oil, we are an oil based economy period. Oil is what affects prices, oil determines the cost of trade, it's oil more than anything else that our monetary system is built on. If we were to take a country like Brazil, their economy is based on food production, which while being different is just as volatile. Considering we have already achieved peak oil, meaning we have plenty of oil in the ground by cannot pump it out of the ground fast enough to supply the demand, where do you think the value of the dollar is going to go? We hit a wall where we cannot produce anymore oil than we already are, no growth, which is exactly what our form of economy relies on for it's continued healthy existence.

In dealing in international trade, I came to realize regardless of what people may think, that commodities and goods are exchanged for not only the all mighty dollar, but also the Euro, and the HK Dollar as it's called as well as other currencies. But it really doesn't matter, it's all electronically transferred and really just amounts to numbers in a database on a computer system somewhere.

So if the world goes to crap tomorrow, everyone will still know what gold is, and recognize it as having an intrinsic value, and will deal with you based on their ability to in turn trade it for what they need, after all that's the entire point of any currency.

And what makes you think the Government cannot grab your money? What leads you to believe that the numbers you have saved in the bank are safe from the Government? Literally, each time you sign a signature card, or anytime you have signed for a loan, a credit card, anything to do with any banking institution like a home loan, car, etc, if you read the fine print what it states is that you are agreeing to pay back our national debt. This is called "Federal Tax", in fact the way the Federal Government is able to circumvent laws that were put into place to prevent exactly this situation. Since the Federal Reserve, which is owned by private entities, loans money to the US Government so it can operate, and since it also "federally" insures money on deposit at banks, you really have no say. So let me enlighten you to a scenario I have given a lot of thought to, and which bothers me a great deal. If our Government defaults paying interest to the Federal Reserve, that "we the people" owe due to our signing for a loan or bank account, the Federal Reserve could potentially confiscate funds in bank accounts to cover our governments debt. Just exactly the way gold was confiscated in 1933, and can replace the value of that money with whatever they desire. In 1933 it was paper money, with no real value. There is no law that exists that specifically prevents an action like this taking place.

But if our government doesn't know I have gold, or where I have it, I can take my gold, silver or whatever other precious metals, and leave this country before it's taken away from me and establish a life elsewhere. Try to do that with American Dollars.

I understand your arguments, and under certain conditions they might have merit. I am not expert, nor an economist, I just know people who are and have listened to what they say and even asked advice from time to time.

Originally Posted by unknownk

You are a value added manufacturer. You take raw material and produce a final product. If the cost of refining gold gets too expensive (not enough in the raw material you can scrounge to be profitable to extract) you are out of business. A middle man is just that, he buys a product for less then he can sell it for and makes a profit no matter what (unless he is unlucky to get caught in a crazy market or hold onto that commodity for too long). Middle men don't get their hands dirty, provide no added service, and create nothing of lasting value. Their whole reason for existence is to be the middle guy between 2 parties that for logistics can't do it on their own. If you have to do any work at all then you are more a value added service or manufacturer even if you happen to be in the middle of the food chain.

Actually, in the supply chain, a refiner is considered to be a middleman. Think of it this way, someone works to remove precious metals from the earth, then they sell it to a refinery. The refinery invests some labor and produces a refined product, or commodity. That commodity is then sold to someone else and made into goods. The refiner in this scenario is a middleman. Or in my specific case, I take recycled material someone else has collected and many times broken down, I purchase it, I refine it and invest some labor in doing so, then I sell to someone else who makes a good out of it. That's not my long term intent, but that's mostly what I do currently, that makes me a middle man. Sometimes I purchase metals from other refiners, and sell them to someone else strictly, and make money off the deal. Sometimes I broker a deal between a supplier and refiner. In all these ways I am a middleman. And I don't see anything wrong with being so. You are just really splitting hairs as to what a middle man really is.

mid•dle•man (ˈmɪd lˌmæn)

n., pl. -men.
1. a person who buys goods from the producer and resells them to the retailer or consumer.

In this case, I am purchasing from a someone who is scrapping, and producing recoverable material, turning it into something other people can use and selling to a retailer or consumer.

Scott

Enoch, in your example both individuals are sitting pretty; it's the poor schmuck who's holding the pound of paper that's left without the chair when the music stops.

If all you can find to put your hopes and trust in, are things which you can see, feel, or hold in your hand, and things which can rot, rust, or be stolen, you'll never have enough, of anything ; )

Originally Posted by NobleMetalWorks

I'm sorry, I still have to disagree with you.

Not only do I go out of my way, regardless if I am spending cash or spending a precious metal, to do business with the small business owner rather than corporations, if I am able. I don't support the corporate mentality that is only morally obligated to their stock holders, and not humans.

All through history, the only thing that has ever been readily accepted as a means of trading value, has been precious metals. It was first commodities like olive oil for example, and animals, but as people started to travel longer distances they needed to be able to exchange their commodities into a different commodity that was recognized and readily accepted by other people they wished to trade with regardless of where in the world they were located, what language they spoke, etc. It has been the longest standing and most stable form of monetary exchange the world has ever known, ever.

I also would debate what you base the dollars value on. If you follow what our economy is based on, it boils down to oil, we are an oil based economy period. Oil is what affects prices, oil determines the cost of trade, it's oil more than anything else that our monetary system is built on. If we were to take a country like Brazil, their economy is based on food production, which while being different is just as volatile. Considering we have already achieved peak oil, meaning we have plenty of oil in the ground by cannot pump it out of the ground fast enough to supply the demand, where do you think the value of the dollar is going to go? We hit a wall where we cannot produce anymore oil than we already are, no growth, which is exactly what our form of economy relies on for it's continued healthy existence.

In dealing in international trade, I came to realize regardless of what people may think, that commodities and goods are exchanged for not only the all mighty dollar, but also the Euro, and the HK Dollar as it's called as well as other currencies. But it really doesn't matter, it's all electronically transferred and really just amounts to numbers in a database on a computer system somewhere.

So if the world goes to crap tomorrow, everyone will still know what gold is, and recognize it as having an intrinsic value, and will deal with you based on their ability to in turn trade it for what they need, after all that's the entire point of any currency.

And what makes you think the Government cannot grab your money? What leads you to believe that the numbers you have saved in the bank are safe from the Government? Literally, each time you sign a signature card, or anytime you have signed for a loan, a credit card, anything to do with any banking institution like a home loan, car, etc, if you read the fine print what it states is that you are agreeing to pay back our national debt. This is called "Federal Tax", in fact the way the Federal Government is able to circumvent laws that were put into place to prevent exactly this situation. Since the Federal Reserve, which is owned by private entities, loans money to the US Government so it can operate, and since it also "federally" insures money on deposit at banks, you really have no say. So let me enlighten you to a scenario I have given a lot of thought to, and which bothers me a great deal. If our Government defaults paying interest to the Federal Reserve, that "we the people" owe due to our signing for a loan or bank account, the Federal Reserve could potentially confiscate funds in bank accounts to cover our governments debt. Just exactly the way gold was confiscated in 1933, and can replace the value of that money with whatever they desire. In 1933 it was paper money, with no real value. There is no law that exists that specifically prevents an action like this taking place.

But if our government doesn't know I have gold, or where I have it, I can take my gold, silver or whatever other precious metals, and leave this country before it's taken away from me and establish a life elsewhere. Try to do that with American Dollars.

You do business with corporations all the time even if you use a local middle man to do it. The house you own, car you drive, etc all came from large scale manufacturers. Its like saying you didn't support Walmart when you buy shirts because you paid Jimmy down the street for that shirt he purchased at Walmart.

People through history have used all kinds of things as cash besides metals. There are coins made of stone, leather goods, salt, spices, etc (anything convenient to transport that has a major use). You assume people still look at gold as currency when in the US most people under 50 don't even wear gold jewelry anymore. Perceptions change.

All large transactions today are done electronically, yet back in 1996 (first link I hit to Federal Reserve bulletins) stated that $200-250B out of $350B US circulating currency was overseas (more then half). So while banks deal with electronic funds the little guys outside of the US still deal in US banknotes. Before electronics transfers we used to print $100,000 banknotes (and other sizes) just to make inter banking transfers easier.

http://www.federalreserve.gov/pubs/b...6/1096lead.pdf

The government confiscated gold because it is a commodity, they can again if they want to. During WW2 470,000,000 ounces of silver (which backed silver certificates at the time) was melted into bars and used in the Manhatten Project (Atomic bomb) and wasn't remelted into bars until 1954.

http://www.roadtoroota.com/public/135.cfm

Try taking gold worth over $10K to any airport in the US on a flight going outside the country, you will be searched and detained until the local IRS agents come. I can paypal funds to anybody in the world under $10K a shot and nobody will even notice.

"In practice, if you're a US Citizen taking your own bullion OUT of the US, and its current value is more than $10k, expect to be detained at the airport and heavily questioned (and threatened) by the IRS... and don't be surprised if they audit you for the next 10 years. Under new US tax laws/IRS regulations, taking ANY assets out of the country is considered prima-facie evidence of tax-evasion."

You can put your money into anything that makes you happy, just don't cry when that nestegg shrinks down the road or you have a hard time cashing it out.