John Hathaway of the Tocqueville Gold Fund
Hathaway and Sinclair, and others say gold to trade in the 4 or 5 digits in the next two years. $12,500/oz is possible due to fall in US currency value.
FOLLOW THE MONEY. WHERE IS THE US GOLD, WHO OWNS IT?
ARTICLE BY ROGER VAVRINA JUNE 6,2011 TITLED
WHAT THE FED OWNS NO GOLD?
WHAT? YOU SAY THE FED OWNS NO GOLD?
They had to give it to the Treasury in 1934 by law.
Does the Fed use it to back our money? NO, ok, oh, the treasury owns it. It is valued by the treasury at statutory value of $42.00 per ounce, when the market is at $1,500 per ounce. Over a 35 times appreciation. (3,500 %) They do not use it to back our currency value, either. They cannot sell or trade it legally.
Well then, can we have it back now? Why not? If its not money, and not valued highly by the treasury, its not used to back the Fed currency, why not just give it back to us, the people who really own it. We paid for it with our taxes, way back then, in 1934.
Maybe we can do something useful with it, since the Fed and Treasury have no interest in its value or use.
We could us it to establish a gold and silver backed US Treasury Note, like JF Kennedy did. Real money, what's wrong with that idea.
The gold is valued at $42.22 per ounce. That amounts to $11.2 billion. Multiply by 35=$392 billion. If we use 10% backing, the value would be neary $4 trillion. $4 trillion of cash backed by gold that can only be redeemed by US citizens. Foreigners cannot own US Treasury gold, so they cannot own the US Treasury gold certificates either, or convert it to gold. They would have to convert any such currencies to Federal Reserve Notes at the market value of gold. Today a leveraged $100 dollar US Note would hold 100/1500 oz of gold, or 1/150th oz of gold. The Fed note would fluctuate over time, and be worth what the market place would pay for it, in gold or other exchange agreed on. Its ok to use a fiat currency like the Fed note, if it can be exchanged for something else in value at any time. IRS taxes for example could still be paid using Fed Notes.
The US treasury could increase the supply of gold by any means it has. It could use Fed notes to purchase gold reserves. Its gold reserves then could only grow as the need arises. Note, you would not get 1/150th oz of gold for your $100 bill, but you would get the equivalent value in US Notes. This is to insure that the real wealth of the US continues to grow and cannot be diminished by reckless printing of Fed Reserve notes as is the case now. T
he Fed would only have to use its tax receipts to first purchase the gold bullion. It then could create 10 times the value in Federal Reserve tax money, in US Notes. The current deficeit is on the order of $1.4 trillion. Assume we collect $1.4 trillion annually in taxes. The US gov would be able to create $14 trillion in new US Notes to pay its debts, if it first converted the gold value into US paper gold proxy notes. They could litterly pay off the $14 trillion debt now owed in one year. The act of paying of the entire debt in one year would have a huge effect on all mortgage debts. Interest rates would drop to new lows.
The influx of Fed money into the economy would create huge demands for goods and services, and wage increases would be needed to hire enough people for the increased demand of goods and services. Tax revenues would rise exponentially, and the Fed would no longer have to borrow money to pay its bills. The Fed would quickly have a surplus of funds. They could use the surplus to fix the infrastructure, create sub sonic cross country electric trains, for example. The trains could carry goods as well as people, much faster and safter and at lower cost than air travel.
The Fed could invest in solar energy, GIVING free energy to all homes in the US. Businesses could also invest in solar energy, by getting investment tax credits from the Fed. Soon the cost of electrical energy would be so low, that we could support a nearly total electric energy based transportation system. We could create subways, trolley cars, and electric buses, for public transportation.
We could use solar energy to desalinate the vast 97% of the worlds water in the oceans to clean pure water. We could use the sewer systems to grow algae based protein food. The increased use of water would create a more humid climate, but one that is better for food production. Food would be created locally and be much cheaper, since it would be related to the declining cost of energy. Petroluem based fuels would fall out of favor, except for ocean tankers and ships, and aircraft. The oil could be used for other better purposes, like plastics, that would get cheaper, and more available for more people.
When you make a purchase, the store would need to make a rate exchange calculation at the point of sale, so that you can use the US Notes or Fed Notes interchangeably. We do that with Canadian money now, without any problem. Most cash registers, automatically determine the change a purchaser gets already in Fed notes. The vendor has the right to determine what exchange rate he wants to use. If his exchange rate is too low, his business will suffer.
If Other world currencies continue to use fiat currency, our purchasing power in US Notes will likely grow over time. Their products will become cheaper with time, but our Fed Note currency will likely track the other world fiat currencies, simply by controlling the rate of money supply increase, which the Fed is very happy to do.
To keep the notes unique in appearance, the US Note would be green as is traditional, with a large red US Treasury Seal, and the NEW NWO Fed notes would have to be another color lke tan, with a green Fed seal or something like that. Both currencies would be deemed legal tender under law, but the government would not be legally able to determine the exchange rate, only the market place and the public can do that.
The US Notes cannot be taxed. That would diminish the value, and prevent its legal use, but the Fed notes can be taxed as is the case now. A vendor cannot choose to accept only US Notes, he would have to accept Fed notes as well. If someone wanted to store all of his wealth in US notes, he could, but no one, not even the government can exact a tax on real money, by constitutional law. If they were able to tax US Notes, they could put a very high tax on it, and its value would cease to exist. So the government cannot be given the power to tax real or US Notes EVER.
Every one would still get paid in Fed Notes, especially government workers. A private citizen however, could demand to get paid in US Notes. That is a right of private contract. The employer would decide whether he wanted to do that, as a condition of employment. By law, no government employee could demand to be paid in US Notes, only Fed Notes, else the large government employment base would swampt the system, and drive out the supply of US Notes.
If everyone chose to convert Fed Notes to US Notes, they could, but the exchange rate would go up dramatically, making that less desirable. Would they choose to accept only $1.00 in US Notes in exchange for $100.00 in Fed Notes? Maybe, eventually, but it would simply mean the Fed is printing too many notes and DEFLATING not inflating, its value in terms of US Notes.
Having US Notes available, would most simply put be a proxy for holding gold. The paper currency would be a gold substitute, and be a better measure of its intrinsic value over time. It would be tied to the world price of gold, and how much it cost to mine it, not how much it cost to print it.
There might be a mad dash by alll nations to use the US Note gold proxy model. More power to them. The price of gold would rise to new levels, The value of your US Note would rise also hased on the value of gold. If the price of gold gets too high, then the nations would not buy as much, but this is a self regulating effect that we do not have with Federal Reserve Notes.
The US has in ciculation about $14 trillion in dollars. The rest of the world has about the same in their currencies. A doubling in the cash supply would mean higher prices, but we would elimiinate much of our debt, which is even more crippling to a world economy as we can clearly see happening now. And even worse the debt is held by foreigh bankers which makes us less secure in the US. Higher prices mean inflation. Inflation can be checked by taking money out of the system, by buying more gold.
More cash into the economy would mean even more investment into things and systems that produce wealth, and security. Consumption would increase, and demands on raw materials would rise for a while, but level off, when nearly everyone has what they need to live, a home, and food. We would have less people working, less hours, due to technology. We can easily find ways to increase food supplies with hydoponic farms, etc, since most of the energy comes from the work of living plants, and the unlimited energy from the sun. But, Since the Fed would be running a surplus, they would not have to print more US Notes. Feb Reserve notes mught be printed however, by the central banking community to fund its lending.
This article on using US Notes redeemable in gold is by
Roger Vavrina, on June 6, 2011 and is copyrighted as such.
Anyone wanting to use this article is free to do so, if they simply give the author credits as shown.
WHAT WOULD GOING TO GOLD BACKED US NOTES DO FOR THE US ECONOMY?
| | | | | | |
| THE US HAS 8133 TONS OF GOLD IN THE TREASURY, | | |
| HOW MANY OZ, AND 10X US NOTES IN DOLLARS IS THIS | | |
| TONS G | LBS | OZ | DOLLARS | TRILLION | US NOTE | |
| 8133 | 16266000 | 260256000 | 3.90384E+11 | 0.390384 | 3.90384 | |
| | VALUE AT 42.22 /OZ | 10988008320 | | | |
| ANSWER | NEARLY 4 TRILLION IN US NOTES | | | |
| | | | | | |
| US NOTES COULD BE CREATED WHICH ARE BACKED BY GOLD, WITH A 10 TO 1 | |
| EXPANSION, OR ABOUT 1/150 OZ GOLD PER DOLLAR AT TODAYS PRICES | | |
| THIS COULD CREATE NEARLY 4 TRILLION IN US NOTES. | | | |
| WE COULD FUND THE ANNUAL GOVERNMENT SPENDING OF 1.4 TRILLION | | |
| WITH ONLY 10% INTITIAL GOLD COMMITMENT | | | |
| THIS WOULD MEAN WE NO LONGER NEED TO BORROW FRON THE FED RES | |
| THIS MEANS THAT THE TAX RECEIPTS COULD BE USED TO PURCHASE | | |
| MORE GOLD RESERVES. ASSUME THAT THE TAX RECEIPTS ARE $1.4 TRILLION | |
| WE COUD BUY $1.4 TRILLION IN GOLD, TO REPLACE THE GOLD COMMITTED | | |
| AND USING A 10 TO 1 EXPANSION, CREATE $14 TRILLION IN NEW US NOTES | | |
| IF WE WANTED AND PAY OF THE TOTAL US DEBT OF $14 TRILLION IN ONE YEAR | |
| WE SHOULD PAY OFF AT LEAST 10% OF DEBT EACH YEAR, UNTIL PAID TOTALLY | |
| | | | | | |
| GOLD AT 1500/OZ MEANS THAT A $100 BILL WOULD HAVE 1/15 OZ | | |
| BACKING IT AT 100% BACKING AND 1/150 OZ AT 10% BACKING | | |
| | | | | | |
| ASSUME 10% INFLATION, THEN THE GOLD WILL INCREASE IN | | |
| VALUE AT 10% PER YEAR, OR THE GOLD US NOTE WOULD | | |
| INCREASE IN VALUE AT 1%, MUCH BETTER THAN THE FED RES | | |
| NOTES WHICH WILL HAVE DROPPED BY 10% EACH YEAR. | | |
| WHICH NOTE WOULD YOU PREFER TO HAVE? | | | |
| | | | | | |
| INFLATION SHOULD DROP AS A RESULT ON NOT HAVING TO | | |
| BORROW FROM THE FED RES ANYMORE. | | | |
GOLD AND SILVER
is real money
And the dollar is dead.
The value of all of the world's currencies are falling. And the reason is....The world is awash in debt. Most countries are printing fiat currencies, to try to pay their debts. But the total world debt is so large, that it cannot be paid. Most countries cannot even pay the interest on the debts. Our money is debt based. That means that all dollars issued result in a debt owed to the banking industry, or the Federal Reserve held as treasurys note bonds and bills.. So as more money is needed, the debt also increases, most of it never getting paid off, just refinanced, and revalued in inflationary terms.
How did this happen? The International Banking industry has had a policy of almost unlimited financing to many countries, for many years. Due to the influx of borrowed money, the economies of the world increased directly as the result of increased financing available.
Just after the year 2000, when the US ecoomy fell, the banks started lending. Real estate was one of the main beneficiaries of liberal financing. Home and commercial property values increased dramatically, in some years and some locations, 20-30% increase in market value was not unusual. Home building became one of the largest industries in the United States. Jobs became plentiful, wages increased in proportion to the demand for workers.
The United States began a policy of encouraging foreign workers to enter the US job market, escpecially from Mexico. Millions of foreign families came to work and live in the US. There was little or no enforcement of immigration laws. The major companies did not want enforcement. They liked the unlimited supply of cheap labor. They did not have to pay any benefitss, like hospitablization, and retirement.
Then in mid 2006, many of the liberal loans made to the new influx of workers, started to be in default. Many workers would simply stop paying thier home mortgage, when their jobs went away at the peak of the building boom. They simply returned to where they came from. Eventually, the banks noticed that home defaults were increasing at the same time that new mortgages were declining. So they stopped lending.
Much of the real estate financing was coming from foreign sources. When they saw that defaults were on the increase, they stopped lending. The mortgage financing boom came to a sudden halt, as did the economy of the US and many other countries.
MAJOR DEFAULTS, LED TO THE CURRENT CURRENCY CRISIS. MORE LATER.
The value of the dollar has been falling since it was introduced by the Federal Reserve and we went off the gold standard.. Its value can be determined by how much gold or silver it can buy. For many years after its intruduction, the United States was on the gold and silver standard. The dollar was a silver certificate, meaning you could take a paper dollar, and take it to a bank, and they would give you one silver dollar, 99% silver, weighing one ounce of silver. The price of gold and silver vary considerably over time, and the price of precious metals is subject to market forces, but most recently a US Silver Eagle, one ounce of silver was selling for around $36.00 per ounce. Doing a quick calculation, 1/36=.2.78 cents. Under 3 cents. That's a drop in value of over 97.2 cents, or about 98% fall in value over one hundred years.
But, so what? What does that mean to us? Well it means, that on the average, we have been taxed nearly 3% per year on the value of our savings, by the Federal Reserve issuing more and more dollars, without being backed by anything.
Conversly, the interest earned at 3% over one hundred years would yield 339% appreciation. Or if we had a dollar in a 3% savings account for one hundred years, the account value should be $3.39 today, in purchasing power. But instead, it is only worth about 3 cents in purchasing value.
Put another way, the dollar has fallen by half every 23.33 years. At that rate, our current 3 cents will be 1.5 cents in 23.33 years from now. But it's even worse than that At current real inflationary rates of 20-30%, the value of the dollar will likely fall to half in only 2.33 years. So in only 2 years, four months, the dollar will only be worth 1.5 cents in purchasing power. Or only just over a penny. It costs more than that to print a dollar bill, and costs more than that in copper for a copper penny. Thats why they dont make any pure copper pennies anymore, and thats why the paper dollar is also dead.
Most people don't remember that a five stick pack of gum, sold for $5 cents years ago. What do you think of paying $5.00 for that same pack of gum? And it gets even worse. In the height of the depression following the stock market collapse of 1929, a dollar a day was a going wage, if you could get it. Todays minimum wage is about $7.00. At 1.5 cents per dollar, todays minimum wage is about a dime, or 10 cents. If you were to work 8 hours, you would earn only 80 cents, less than a dollar in 1929 money. So not only have we lost our savings over the last one hundred years, since 1929 we have lost 20% value in a minimum days wages.
How has gold fared during that time? A $20 dollar gold piece weighed one ounce of pure gold back in those days. Today, one ounce of gold costs over $1400 dollars. Thats a 700% increase in cost expressed in current dollars. Back then a one ounce silver dollar was 1/20th of the value of a gold ounce. Today gold sells for about 39 times the price of a silver one ounce coin. So either gold is too highly priced today, or silver is too cheap, by half. A silver ounce should be selling for $70.00.
We can expect the price of silver to rise to that value, if at true market pricing in the near future, or a 100% price increase in just a couple of years, OR LESS. We cannot know the future for certain, since the value of metals like all other things of value like food, clothing and housing are subject to great market siwngs and government manipulation Governments are buying and selling gold and silver, to maintain prices lower than market demand alone would result in. They can do this only by printing lots of dollars.
I remember back in the 1970's an ounce of silver sold for $5.00. Now it is $35,00 or so, or about 700% increase over that time period. Gold sold then about $34.00 per ounce, or 7 times the price of silver. If we use that measurement, silver should be selling for 1400/7=$200. Anyway you measure it, silver is a big bargain today. So you should thank the government and turn in all of the dollars you can get your hands on for silver one ounce coins.
But the government tells us that there is no way that we can use gold and silver again as money, because there is not enough gold and silver existing in the world to do that. Well actually there is, except the price would have to be much higher than it is today. Almost all of the gold ever mined still exists above ground today, because it has been held in such great value, that very ltitle of it has been lost or misplaced. Silver on the other hand, is an industrial metal. It is used in the manufacture of electronic circuit boards and many other industrial uses. As a consequenc, there is only about the same amount of silver above ground expressed in ounces as there is gold. So a case could be made that silver and gold should be about the same value, based on supply. If we ever were to go back to a gold and silver standard for money, that could very well happen very quickly.
The ratio of silver to gold mined is about 15 to 1. There is about15 times the silver in the ground compared to gold. Gold and silver often exist in the same mining structure, and the silver being ighter is usually on top, and the gold is in lower strata. So, it is unlikely that the prive of silver will deviate much from the ratio of gold to silver in the ground, or a 15/1 ratio. The 20/1 raio of years ago was probably a convenience, to use $20.00 for gold and $1.00 for silver, and the ratio was maintained by government and banking interests for purposes of standaridizing the value of money used for commerce.
The ancient Romans set up a similar weights and measurements standard in their day,about 2000 years ago, for the purposes of uniform commerce trhought their empire. They determined how much money, many other commoditeis were , such as wheat, corn, lamp oil etc, the more commonly used items of commerce.
I dont sell any gold ans silver. But I think that it is a much better store of value than paper money. Future money will have to revert to some form of gold backed currency if it is to replace the dollar. The new gold based dollar will be valued at 10 dollars, in current money, and the penny at 10 cents to keep in step with the supply of gold, silver and copper. Ww will have to turn in our existing old dollars for the new dollar, and will only get one new dollar for each old dollar.
The huge unpayable international debts will have to be revalued also. They may soon only be worth 10 cents on the dollar, at market settling prices. So if you have a $100,000 mortgage on your home, it will only be worth $10,000. And so on for all of the worlds existing debt, and more important to the goverment the government debt will be reduced accordingly, or even repudiated totally. Private debt may be continued for some time but at 10% of current value or less. A $1000 treasury bond will at best be worth $100. At worst, it will be worthless. I believe the latter.
All weights and measurements for commerce will be adjusted for the new currency devaluation. Wages, and prices will have to be ajusted, but prices will be much higher for a long time. The standard of living in the world will fall, especially in the United States. Everyone will work for the government in one way or another.
A socialistic form of government will be recognized, and most people will live off some form of government assistance, since private employment will not be possible. Food shortages will occur. Most housing will be owned by the goverment, when the Fannie May is disolved, and all loans called in by the government. Most of us will live in government subsidized housing, working at government subsidized jobs, for government owned companies.. Private home ownership will still esist, but due to estremely high taxes, will be affordably only by the very rich. Money will become digital, using debit cards for all purchases. Gold and silver will only be useable for barter, and may be outlawed. Only governments and the largest corporations will be able to use gold and silver for commerce.
Barter, even if outlawed will become common. Other forms of black market money will come into widespread use. Employers may have to resort to IOU's to pay their workers. The IOU's will be converted into digital money by some means not yet determined.