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Silver Money For Americans

Submitted by smartknowledgeu on 10/26/2010 05:05 -0400

Below I have extracted and reprinted some of the most important points of a fine article by Hugo Salinas Price called "Silver Money For Americans".

Fiat Money in the US is in an Advanced Stage of Decomposition

"Fiat money in the US is in an advanced stage of
decomposition and when money rots, the whole social, economic and political
structure of the nation rots with it. A return to sound money is urgent. More
and more people are aware of the perilous road ahead if nothing is done. The
problems facing the US are so gigantic in nature, that an all-round solution to
them is impossible when analyzed in practical terms. A return to sound money is
a return to gold and silver as currency. Gold is outstanding as money – but how
to realize that goal? Silver is great for popular use – but again, how to
regain it?"

"The only way open to regain a sound footing of real money
for the US economy must be by establishing a process through which there will
be a gradual and natural return to sound money. It is impossible to reform or
improve the present monetary system of the US any other way. The US abandoned
sound money in a series of gradual steps; the first metal out of the monetary
system was gold, in 1933; the second metal out of the system was silver, in
1965. The return to sound money would follow those steps, in inverse order:
silver would return first, because silver has always been the money of the
people; gold would return last, silver having opened the way."

It is Indispensable to the Health and Continuing Existence of
the US to Restore Silver Coin into Circulation

"The powers that be in the US Government must recognize at
some point that it is indispensable to the health and continuing existence of
the US as we have known it, to restore silver coin into circulation. At
present, its policy is to ignore public discontent; the results of the coming
elections will probably do little to change its policy. The discontent of the
American people will increase until the government hears the rumble of distant
drums. Perhaps then, it will be willing to turn to silver, to appease the
population."

"Silver went out of circulation because the monetary value of
silver coins was engraved upon them. When the market price of silver rose, and
the value engraved upon the coins was left behind and below the value of the
silver in the coins, the coins became more valuable as bullion than as coins.
The coins were melted down. The silver coinage disappeared. This gives us the
clue to restoring silver into circulation: eliminate the engraved value."

How Would Silver Coins Be Valued?

"In this case, what would be the monetary value of a silver
coin with no engraved value? The
answer is that – like a stock – its value would be a quoted value; however,
unlike a stock, the quote would not be a market quote but a quote coming from
the Treasury. The legal tender
monetary value of the silver coin quoted by the Treasury would take the place
of an engraved value. This monetary value would be increased to meet rises in
the price of silver, but remain stable at its last quote, during falls in the
price of silver."

"Stocks prices fluctuate, but the monetary value of a silver
coin cannot be allowed to fluctuate, because money must have a stable value. A
silver coin, whose quoted monetary value goes up and down, remains a commodity.
It cannot be used as money. The Treasury must issue a stable quote for the monetary
value of the silver coin with no engraved value."

"Should not the monetary value of the silver coin be reduced,
when the price of silver falls? The answer is: No! During the Depression of the
30’s, the price of silver fell drastically. This did not affect the circulation
of the beloved silver half-dollars, quarters and dimes. They continued to serve
the American people. During that period, the Treasury received a larger profit
from minting those coins, because the silver required to mint them cost the Treasury
less, but the value – the engraved monetary value – of the coins remained the
same. The rising value of silver, which will continue as long as the fiat
monetary system is in operation, will allow Americans to save in a very simple
medium which derives its value from its silver content and becomes more
valuable when the price of silver rises. This is the greatest possible
incentive to popular savings, so desperately needed in America today."

Silver Money Puts Wealth Back into the Hands of the People, QE2 Robs the People of Wealth

"QE2 is supposed to “stimulate” the economy by putting more purchasing
power in the hands of the public by creating more money. However, the effect is
inverse, because increases in the money supply diminish the value of the
dollars already in circulation and cause prices to rise. This is classic
monetary inflation and this is what the Fed wants. The monetized silver coin
will not be inflationary for two reasons. The first reason is that its
“velocity of circulation” will be near zero, because these coins will go
directly into savings (“Gresham’s Law”). People will use paper bills and bank
deposits to pay their expenses, and retain silver as savings. The second reason
is that the increases in the monetary value of the coin will reflect the
increased value of a tangible asset. Purchasing power that increases because what
you own - silver money - is worth more is completely different from increases
in purchasing power because you have more money that the Fed has created out of
nothing: such money will be falling in purchasing power and there is no reason
to keep it for savings."

The Healthy Consequences of Restoring Silver Coinage in America

"Can we know all the consequences of putting a silver coin
into circulation in the United States? Certainly, we cannot. However, we know that it will be good
for millions of Americans to be able to save silver money and prepare
themselves for any adversity; to be able to save in order to have a secure
basis for retirement and old age; to be able to save in order to have that
precious thing called “peace of mind”. We also know that powerful interests will not be happy with
this measure, because it will cause those interests losses and pain. The banks
will not be happy – they want the public to deposit their savings with them;
they will not be pleased with the idea that Americans can save excellently by
saving their ounces at home."

You can find the full text of this fine article here.

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Wed, 11/10/2010 - 06:33 | 715685 cheap uggs for sale

Tue, 10/26/2010 - 11:09 | 677670 Gordon Freeman

One basic problem would be simple introduction of the coin. I GUARANTEE you that the entire mintage would simply be sucked into private "savings", as fast as the coins could be produced. There would be no actual circulation. On the other hand, the attempt would make it infinitely easier for even the smallest of savers to acquire PM.

Tue, 10/26/2010 - 11:57 | 677811 AnAnonymous

Hoarding is the natural way to control the money supply when the currency is based on PMs.

Tue, 10/26/2010 - 09:55 | 677409 Silverhog

I can pay my barber in silver. I don't think he would want a wad of cotton.

Tue, 10/26/2010 - 11:10 | 677672 Gordon Freeman

Jump down, turn around, baby!

Tue, 10/26/2010 - 10:37 | 677563 Uncle Remus

I don't think he would want a wad of cotton

United States currency paper is composed of 75% cotton and 25% linen.

Tue, 10/26/2010 - 09:53 | 677400 MeTarzanUjane

So let me see, today I should pay ~$24 USD's for a $1 silver coin, when I can buy it in the future for $1.

Sounds smart. Strong buy recommendation from the team.

Tue, 10/26/2010 - 10:16 | 677488 Dangertime

Wow I hope that was sarcasm.

Tue, 10/26/2010 - 09:47 | 677372 Sudden Debt

By introducing the silver coins, silver WILL go up to 72$.

And in every crisis, this has indeed been the solution.

Time to load up!

Tue, 10/26/2010 - 14:35 | 678213 UncleFurker

http://www.bancoazteca.com.mx/PortalBancoAzteca/medios/plataLibertad.do

Also nice walking into a bank in the railway station in Nuremburg Germany and buying 1oz Canadian Maple's over the counter.

https://www.reisebank-gold.de/index.cgi/coins

I'm trying to get friends into the habit of buying a few coins a month and building a business at the same time. http://silver-dollars.com

Tue, 10/26/2010 - 09:42 | 677354 eigenvalue

Actually precious metals are not a very attractive investment at the moment. The cartel is quite strong. I wonder why few ZHers are interested in agriculture products. As I have mentioned before, cotton is a much better investment than silver. It has the strongest fundamentals among all the commodities.

Tue, 10/26/2010 - 16:04 | 678530 LowProfile

Yeah, farmland...

As long as it doesn't get punitively taxed, or outright nationalized.

Get your gold, wait for things to settle down, and THEN buy your farmland.

Tue, 10/26/2010 - 10:33 | 677543 The Navigator

Yes but, how and where do I store the 2,000 bales of cotton? Surely I wouldn't want another paper/fiat/ETF for cotton. Thus the allure for PMs over ags or oil - for the common man, PMs are easy to store and easy to value.

Tue, 10/26/2010 - 09:59 | 677431 MeTarzanUjane

Yes but. The anonymous nature of the forum keeps the true identity and motives hidden. For all you know your favorite bitchez could be the Sprott Physical Gold Bullion Trust itself or an organization with close ties to.

Get it?

Tue, 10/26/2010 - 09:55 | 677405 Azannoth

You cant buy farmland 20$ at a time

Tue, 10/26/2010 - 09:35 | 677337 proLiberty

""In this case, what would be the monetary value of a silver coin with no engraved value? The answer is that – like a stock – its value would be a quoted value; however, unlike a stock, the quote would not be a market quote but a quote coming from the Treasury. "

This is a bit too complicated for the average person and for the average cashier. A far more simple and time-tested way is to mint coins of various weights (in grains or grams). The US Mint would monitor coins as they passed through the banking system and replace coins that fell below a certain percent of loss.

To support this system, market quotes would become very common in stores. Ideally, the shelf price would be quoted in grains or grams of silver.

But this scheme raises the problem of bi-metalism, and when the price of silver in terms of what goods it will buy gets out of line with the price of gold, then market distortions result.

Returning to silver coins will cause great tension between that precious metal and a fiat currency dollar. I think that the supporters of fiat money cannot allow any commodity money comptetion and will fight to the death to prevent it.

Tue, 10/26/2010 - 16:06 | 678539 LowProfile

Err... Engrave it with the weight.

Tue, 10/26/2010 - 13:22 | 678024 XitSam

I've heard it mentioned that small items (bread, milk, big macs) would be priced in silver. Large items (refrigerators, cars, land) would be priced in gold.

Tue, 10/26/2010 - 10:04 | 677451 MeTarzanUjane

"This is a bit too complicated for the average person and for the average cashier."

I've got mad cashier skillz. When Timmah says that silver dollar is worth 1 dollar that's all my boss (Sal Sheckelstein) is going to get for it when the Brinks truck delivers his haul to the bank.

Tue, 10/26/2010 - 09:35 | 677335 waterdog

I am using gold and silver now to make purchases. My attorney reduced my bill by 20% when I offered him gold as a payment. I purchased firewood with a little bit of silver and repaired my stinking lawn mower with two silver eagles.

It works, you just have know how to use it and buy it.

Tue, 10/26/2010 - 16:05 | 678535 LowProfile

I've used both to buy and get paid.

Tue, 10/26/2010 - 09:35 | 677332 RobotTrader

Tue, 10/26/2010 - 17:45 | 678826 nuinut

For the record, as Robo has posted a LIVE chart, gold was at roughly US$1330/oz when it was posted. Where is it now?

Robo has no understanding of the the true role and function of gold. I imagine as a trader, Robo would eat me for breakfast. No question.

When Another wrote:

Many will "think long and hard on this", but will find little reason for this position. For it is in your history to know only "things valued in paper terms".

Your past holds little of knowing value outside of currencies, this does block the good view!

it was exactly this trader's mindset he was addressing.

Tue, 10/26/2010 - 15:41 | 678465 LowProfile

It took me a second, but I just realized "Oh... THAT debased...".

Tue, 10/26/2010 - 09:32 | 677320 Bartanist

Aren't we all being manipulated to believe that the US dollar is a failing piece of toilet paper, that there always inherent issues with exchange rates and the only solution is to have a global fiat currency?

Now, if we had a global emperor who is above corruption and apart from the political process creating all money and dictating its use wouldn't solve the problem in the same way that gold would (isn't that the same bullshit story that Woodrow Wilson was sold about the Fed?) The answer is that actually it might solve exchange rate issues, but it would create a whole host of other problems, such as the inevitable slavery of everyone to the central authority.

Precious metals as currency seemingly frees people from slavery. We cannot have that now, can we?

Tue, 10/26/2010 - 12:13 | 677843 Walter_Sobchak

The question is dude, will those f---ing amateurs be able to manipulate the gold market long enough to establish their world currency? Not likely dude, our plan is so simple, that's the beauty of it. We just buy up all the gold.

Tue, 10/26/2010 - 09:20 | 677300 The Alarmist

Can't go back to PM's, as it would soon become apparent to the broader public just how debased the currency has become.

Tue, 10/26/2010 - 09:36 | 677338 win

Very true.
The melt value of a 1954 silver dime is $1.71

The melt value of a 1954 silver dime is $8.56

What would the public reaction be to?

A coin one half the size of a dime being $1.00
A coin the size of a half dollar being $10

We do go on and on about inflation and how this debt based monetary system destroys wealth; but there are few that are will to dive off the deep end to do anything about it

Tue, 10/26/2010 - 09:21 | 677304 LowProfile

You write as if there is a choice in this matter.

Tue, 10/26/2010 - 09:35 | 677334 CH1

There is a choice. Unfortunately, it looks a lot like a wired North Korea. :(

Tue, 10/26/2010 - 09:06 | 677260 Bagbalm

First, there is not enough silver unless we have dime size coins for $100 pieces.

Second this gradual thing does not work because if two currencies exist side by side the one with value will be hoarded instead of circulated. What you have suggested we can do with current bullion - you are just suggesting it have a government guaranteed base price.

Third the Governmint has no interest in the people retaining wealth. They went to a great deal of trouble to make sure your money slowly loses value. Inflation robs you slowly enough you do not rebel.

Put down the damn conch fatty. Nobody cares if you are blowing it.

Tue, 10/26/2010 - 09:50 | 677381 Azannoth

The question is how much is enought? To know that you'd have to divide the number of people by the available silver and compare to the available cash(only deposits not credit and other funny money) and see what you get

than you would know what kind of multiplier to give to silver

Tue, 10/26/2010 - 16:07 | 678543 LowProfile

You mean divisor for silver.

The multiplier is used on fiat.

Tue, 10/26/2010 - 09:34 | 677328 CH1

Non-fiat currency can definitely be done. See page 8 here: http://www.dgcmagazine.com/index.php/past-issues/digital-gold-currency-m... And page 7 here: http://www.dgcmagazine.com/

The real issue is how much violence would be used against such an idea. The state will NOT give up the power of creating monopoly money.

Mr. Price has a good idea, but he seems to think of the state as a benevolent, semi-rational actor. The state is a predator, and creating sound money is the same as stealing their food.

Tue, 10/26/2010 - 09:34 | 677326 Dangertime

Silver is $23 an ounce.

A dime size piece of silver would not be worth a whole hell of a lot.......

Tell me again how that is unmanageable to use as a currency?

There is plenty of silver to use.

Tue, 10/26/2010 - 15:39 | 678459 LowProfile

Actually, $2.30

...Hey! You were right!

Tue, 10/26/2010 - 09:23 | 677302 LowProfile

First, there is not enough silver unless we have dime size coins for $100 pieces.

This is a problem because...? You are using a variant of the "not enough gold" fallacy.

There's plenty, it's just you don't like the price.

Second this gradual thing does not work because if two currencies exist side by side the one with value will be hoarded instead of circulated.

And if they both have value, are they both hoarded? Another fallacy.

Also, 'hoarding' is known by another word around here: SAVING.

What you have suggested we can do with current bullion - you are just suggesting it have a government guaranteed base price.

No, he's not.

Third the Governmint has no interest in the people retaining wealth. They went to a great deal of trouble to make sure your money slowly loses value. Inflation robs you slowly enough you do not rebel.

Not exactly slow these days, is it.

And the phenomenon you are referring to is that if you only inflate your fiat at the rate gold is mined and refined, your fiat is "as good as gold". Nobody minds if their money is as good as gold. The converse is not true.

Put down the damn conch fatty. Nobody cares if you are blowing it.

I get it now. You're a douchebag!!! That explains much, thanks.

Hint: You gotta give respect to get respect. Someone like you generally learns this in the 'hood rather quickly, I suggest you get yourself there quick for some educatin'.

Tue, 10/26/2010 - 06:54 | 677131 nuinut

A well written article; full of noble sentiment and the best intentions to be sure.

Trumped, however... It's Evolution, Baby

Tue, 10/26/2010 - 09:34 | 677330 Oh regional Indian

Nuinit, I've read A, FOA, FOFOA and you (if your avaatar is constant) on FOFOA and respect all of your collective insights etc.

But, and it's a big butt, more and more, I think A/FOA might have been one of the biggest psy-ops against the gold community.

And seeing your position (and in line with the poster below), you seem blinded by gold's lusture in exclusion to all else.

Silver money and gold wealth, that has been the equation for ever. The combination of these two functions into one Fiat whatever is the problem.

I think the article is excellent, timely and balances the PM story nicely, which Gold Bugs need to pay attention to.

Silver is the key now. As key as Au if not more.

ORI

http://aadivaahan.wordpress.com

Tue, 10/26/2010 - 15:20 | 678358 nuinut

ORI,

Many have read A/FOA/FOFOA, but it is abundantly clear that the number who have actually "got it" would be lucky to run to three digits.

Another wrote:

Many will "think long and hard on this", but will find little reason for this position. For it is in your history to know only "things valued in paper terms".

Your past holds little of knowing value outside of currencies, this does block the good view!

ORI said:

...you seem blinded by gold's lustre in exclusion to all else.

While I acknowledge the possibility, as I acknowledge all others, I think, on balance, that it much more likely that the easy money good times have blinded pretty much everyone to the differences between the terms 'price' and 'value'. The further my understanding deepens, and it continues to every day, the further I am astounded at the depths to which our misunderstandings run.

I am not expecting many to "get it", not until after the fact, but some do.

ORI said:

Silver money and gold wealth, that has been the equation for ever. The combination of these two functions into one Fiat whatever is the problem.

Freegold simply solves that problem, ORI. Gold will not, and should not in order to function properly, ever return to use as a medium of exchange. Understand that.

ORI said:

I think A/FOA might have been one of the biggest psy-ops against the gold community

I do not understand how you arrive at this conclusion, but we are all entitled to our opinions, no?

IMHO, the promotion of the return to PMs as medium of exchange (currency) is the anti-gold psy-ops.

One must always be careful to discern whether one is using facts to build a paradigm, or selectively arranging them to fit a pre-existing one.

Wed, 10/27/2010 - 11:56 | 680650 Oh regional Indian

Nuinut,

Thanks for the detailed response and I'll say it again, I really appreciate your collective insights.

My point and someone else pointed this out further below (or above), why not Freesilver?

You made the point that gold should not be a medium of exchange and I agree. That is what I meant when I said Gold Wealth and Silver money.

And it actually makes perfect sense to use a relatively abundant PM as money (not currency, money, real money) while gold does it's wealth preservation, nein? My opinion and I guess we are all going to live and die by them eh?

Last point to consider and this goes into "woo woo" territory, is that maybe, just maybe, this time the reset is going to be massive and maybe all this is moot bits and bytes for us to distract ourselves.

Let us see, eh? Good luck all around though.

ORI

http://aadivaahan.wordpress.com

Wed, 10/27/2010 - 17:44 | 681641 nuinut

why not Freesilver?

Because we only need one. CBs hold no physical silver reserves.

maybe, just maybe, this time the reset is going to be massive and maybe all this is moot bits and bytes for us to distract ourselves.

It's gonna be massive, for sure. Moot? Maybe.

The Aristotle said:

It is the mark of an educated mind to be able to entertain a thought without accepting it.

I dismiss nothing, I accept nothing; I simply weigh probabilities.

I have read your linked post, several times. In it, you said:

Land, farm land is one productive/appreciative/stable asset worth anything in this world. Especially in the coming time. Or water, if you happen to be sitting with mineral rights on top of an aquifer. Or you have access to a group of technologies so radical, that they change the very game itself.

With which I agree, and would add oil to that list, unless your new technologies render it obsolete, and do not require it in their deployment either.

My counterpoint though, is that gold finds its function as the master proxy for all of these, as well as being portable, liquid etc, so why not hold that instead?

Another Aristotle explained it thus:

Simply put, the world works like this: We all have needs to sustain our life, and we therefore all must endeavor from cradle to grave in the satisfaction of life's requirements. Wealth, you see, is anything that can be utilized in meeting our needs to sustain our lives.

Wisdom and experience show that some wealth assets are more reliable and universal. Some are so reliable, and so universal we actually give very little thought to counting them amongst our assets. Take oxygen. Most of us as we walk down the street give this nary a thought. We are oxygen rich! If you don't believe me, just think of what you'd say upon hearing of a scuba diver who ran out of air while exploring some underwater cave. "Poor bastard." At least, that's what I'd surely say.

So, unless we anticipate scuba diving, very few of us take any effort to mindfully or aggressively gather for later use the real wealth of oxygen. And to any primative, or to a resurrected ancient who had no concept of scuba diving, we would surely look like the perfect fool bottling air in preparation for the event.

To keep this short, let me come to the point. We have basic material needs of food, clothing, and shelter. Access to energy could be also be included in the list. To have more than you need for satisfying the immediate demands for survival is to be wealthy. To come up short in the ability to satisfy any one vital need quickly reveals you to be another "poor bastard" in the eyes of the impartial gravediggers.

Fortunately, from the earliest times of our ancestors we have discovered that we don't all need to be meticulous wealth planners like the modern scuba diver, Mt. Everest climbers, or astronauts taking a ride to the moon. We can generally blunder our way through day to day and year to year in the comfortable fact of life that, through the open market--through the ability to trade with others--we can generally obtain what we materially need in one facet in exchange for some of our own wealth in another facet. Food for clothing seems like a pretty reasonable medieval exchange, doesn't it?

We all know the inefficiencies of barter, don't we? As civilization and trade evolved from the dawn of man to the 20th century, Gold revealed itself to be the single most reliable, universal agent that could be traded in various quantities for anything anywhere on Earth. Maybe most remarkable in this is that Gold is not itself something that is needed or consumed in satisfaction of our basic material needs for survival. But due to it being perfectly and uniquely suited for this universal role in trade for any other person's available wealth as necessary to meet our own specific needs, Gold has become such a near proxy for the real wealth we require for life that many of us have permitted ourselves the casual inclusion of Gold into our otherwise strict definition of wealth.

Those in the financial industry have come to call this universal wealth asset (Gold) by the name "money," but that unnecessarily confuses the issue. In their efforts to facilitate various objectives in modern life, those in the financial industry endeavored to master the alchemist's craft--to methodically create "money" from such substances as worthless base metals or from paper. Even the village idiot can clearly see that "the bankers and others" didn't succeed in creating Gold. But the village idiots were never so sure that these nickel coins and paper notes weren't in fact successfully turned into this other thing that the experts called "money." As for me, I'm comfortable calling these lesser creations by the name "currency," and further, I recognize that they can and do serve a useful purpose in modern society. With this distinction I am not so easily baffled as the village idiots into thinking that these currencies created in the image of "real money" can actually attain the superior wealth function of the asset they sought to imitate--that being Gold. And you shouldn't be fooled either.

Every currency made in imitation of Gold goes hand in hand with the financial architecture that supports it right into the trashbin of failed efforts, and are logged into the collective wisdom of those who vow not to be fooled again. Based on the "conception, care, and feeding" of the various currencies and their supporting architectures, the lifespan--or timeline--of predictable rise and fall milestones may vary in length from one currency to another. They may serve a purpose while they last, but they all suffer the same eventual demise at the hands of inflation. Remember, these currencies are man's artificial attempt, time and time again, to imitate Gold for use in modern commerce. They are built for speed--built to be borrowed specifically, and spent rapidly! They are not suitable for saving. For that you must turn to the master--the near-wealth proxy upon which all currencies must bow down in inferior imitation.

So you see, learning how the world works is all about each man coming to the understanding about the real wealth we all require to best ensure our survival. Knowing that Gold is the master proxy for our life's day-to-day and year-to-year shifting requirements for food, clothing, shelter, and energy, it simply makes more sense to gather in Gold for later use than to gather in clothes (that we may outgrow,) food (that may spoil,) houses which are more than our needs, or energy (that we can't store.) You see, time bears witness to this undeniable fact: Gold can be called wealth because it is an enduring wealth proxy in exchange for our life's needs.

Currency, on the other hand, serves a specific modern economic purpose--to be borrowed and inflated in placation of man's immediate desires. It is not wealth, it fails as a proxy for the Gold it tries to immitate.

Do not confuse the two.

Understanding how the world works is easy as soon as you understand the Wealth Hierarchy. Like this: Earn money/currency, buy what you need, save Gold, enjoy what life has to offer.

Real wealth. Get you some.

I don't hesitate to post the whole thing here, as this thread is fairly stale already.

My apologies to SmartKnowledgeU for hijacking his thread.

Let us see, eh? Good luck all around though.

I'll second that.

Fri, 10/29/2010 - 07:55 | 685345 tip e. canoe

as i understand it, the main point of freegold is to separate the store of value & medium of exchange functions of money. as we have discovered, there can be no store of real stable value when there exists a counterparty. nonetheless, we cannot deny that modern day paper currencies (especially when digitized) have become a model of efficient & convenient exchange. so why throw the baby out with the bathwater?

with that said, not all of us can be kings, but that doesn't mean that we all can't be gentlemen (and women).

Tue, 10/26/2010 - 17:33 | 678802 nuinut

I'll say it again, a little louder this time, as it is my primary problem with Hugo Salinas Price's otherwise well reasoned essay:

IMHO, THE PROMOTION OF THE RETURN TO PRECIOUS METALS AS A MEDIUM OF EXCHANGE (CURRENCY) IS THE ANTI-GOLD PSY-OPS.

Wed, 10/27/2010 - 09:06 | 680187 LowProfile

IMHO, THE PROMOTION OF THE RETURN TO PRECIOUS METALS AS A MEDIUM OF EXCHANGE (CURRENCY) IS THE ANTI-GOLD PSY-OPS.

Could you elaborate a bit on this? I have tried and failed to understand how this could be.

Wed, 10/27/2010 - 15:05 | 681200 nuinut

Sure.

Keynes was correct: The Gold Standard is a barbarous relic.

When there is talk today of "sound money", which is sensible, gold and silver are inevitably arrived at. How many other realistic sound money options have you discussed?

Gold and silver are options because they have a long track record in this arena.

But were they used in the most efficient way?

We have had technology called the wheel for some time too. But we have tuned it up over the years. New materials, like metals and rubber. Internal combustion engine. Suspension, differential, gears, roading. And we expect to continue to refine this technology, and even to see it completely superceded, no?

Why, when talk is of sound money involving gold and silver, do we not expect the same?

What if humanity had dismissed as absurd and unworkable the blasphemous notion of adding an engine and tyres to the sacred wheel?

So why, on the topic of gold and sound money, must we cling to the notion of coins in our pockets as a medium of exchange? Why include silver? Why "back" money with a fixed quantity of metal?

Why, when the Thoughts of A/FOA/FOFOA have laid out the groundwork for an evolutionary leap in this technology?

Simple. It slows the implementation of Freegold to associate these ideas with gold. Red herring. Divide and conquer. The status quo is extremely beneficial to some, and they are happy to delay the inevitable derailment of their gravy train as long as possible.

Freegold, as you know, uses physical gold as the ultimate inflation protected wealth storage vehicle, in tandem with the super efficient medium of exchange properties supplied by modern digital fiat currencies.

Central Banks already hold the gold reserves. Both the Euro and Russia mark their reserves to market already.

CBs are busy acquiring more presently, whilst trying not to run the price and crash the market, thus ending their acquisitions on the cheap.

China is the world's largest gold producer currently due to their phenomenal rate of extraction. Their reserves are nothing special, and will be mostly exhausted within a decade. Why?

Time is purchased with the inclusion of silver, coins as currency, gold as medium of exchange being promoted into the debate.

Many sharp people are part of the ZH community, yet how many have engaged in a rational discussion about Freegold? They cannot, as long as they remain encumbered with the archaic ideas of the past. It is not a question of intelligence, but of incumbent outdated beliefs and assumptions blocking the good view.

This is a part of the reason I say "you don't own your stuff, your stuff owns you", with the stuff being mental.

But you cannot stop the market, en masse, from doing that which it deems necessary for its own survival, and the bulk of market participants don't necessarily need to understand all the ins and outs. Time will supply those.

It's Evolution, Baby

Thu, 10/28/2010 - 09:46 | 683054 LowProfile

Thanks, those italics in your first sentence were enlightening.

Agree about the rational discussion on Freegold. Seems we can barely have a rational discussion about *gold*.

I still wonder though... What would stop an individual country from using silver as money? It would seem to benefit countries like Mexico (silver producers).

You might consider using your response as a blog post BTW, it's quite good.

Tue, 10/26/2010 - 10:41 | 677586 Chappaquiddick

I don't know if we will ever see these metals used as money again - supply shortages suggest that a basket of metals rather than just one or two is the sensible and logical next step. If you're like me then you'll be a fervent silver advocate and I am most definitely a silver bull with BIG horns.

GATA have posted some YouTube material stating that silver is now heading towards gold in terms of abundance levels due to silvers industrial usage and failure to recycle (because of the current low cost). Market manipulation also appears to be having a marked impact on the price of silver. My best estimates indicate we have about 8-10yrs before we run out of silver and at some stage between now and then there is going to be a huge price correction that could push some of the banks on the short side of silver out of business again.

I recently wrote to GATA trying to estblish their research on comments regarding abundance levels and market short position and found them to be open and willing to provide further details.

Irrespective of the money dimension silver is a price accident waiting to happen and I am as long as I can be on this until the market price actually reflects the proper value of this increasingly rare and non-substitutable metal.

Tue, 10/26/2010 - 08:34 | 677185 LowProfile

Perhaps...

And while I read and grok FOFOA, he doesn't advance any argument for gold's preference over silver other than "...Because that's what the banks have always used.".

Except until recently, the banks have also always used silver as well as gold... And FOA/Another wrote after banks had liquidated their silver reserves, and before the massive depletion of silver started being uncovered...

So why not Freesilver alongside Freegold? I see no truly compelling reason why not, other than CBs hold no silver reserves, and perhaps that's enough.

...But that could also change, just as their stance on gold has changed (now they are buying instead of selling).

IMO you still need a little silver just in case, and both could be money once again... Although only gold's role is assured (and those of us who own should all thank God on bended knee that we have this terrible dilemma of 'how much silver should I own relative to gold!?!')

Tue, 10/26/2010 - 14:43 | 678224 nuinut

Low Profile said:

...CBs hold no silver reserves, and perhaps that's enough.

...only gold's role is assured (and those of us who own should all thank God on bended knee that we have this terrible dilemma of 'how much silver should I own relative to gold!?!')

Silver vs Gold

Silver Money For Americans

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