Home Forums Hunting & Shooting Hunter's Campfire The Gold Standard, Yes or No?

That would mean $1m would be worth $1,810 (current Spot).

And a $854 Social security check would buy 4 ounces of milk.

This is Mach 200 inflation rate.

FORBES: June 5, 2020 Emerging Technologies To Drive Silver Demand

The price of silver soared in May, jumping more than 19 percent on safe haven demand as well as increased expectations of a swift economic recovery, given its many industrial applications.
Not only was this silver’s best month since 2011, but it also marked an impressive turnaround for the white metal that just recently plunged to a more-than 10-year low.
From March 18 through June 1 of this year, silver soared more than 52 percent, erasing all of its losses due to the coronavirus pandemic.

The question now is whether the rally can continue along with economic improvement, or whether it’s too late to start participating. I believe there’s still a lot of runway left, especially when you consider the growing need for silver in emerging technologies such as 5G wireless networks and photovoltaic (PV) cells, the building block of solar panels.
…
Like copper, nickel, lithium, cobalt and other metals, silver is set to become a major beneficiary of emerging industrial applications.
That includes sources of renewable energy, and solar specifically, which continues to ramp up around the globe in response to a combination of carbon emissions legislation and a rapid decrease in the cost of “green” electricity.
According to a recent report by CRU Consulting, solar power generation will increase to 1,053 terawatt hours (TWh) by 2025, close to double the amount that was generated in 2019.
Amazon alone is planning five major solar projects around the world, including its first in China, as the retail giant seeks to reach 80 percent renewable energy by 2024 and 100 percent by 2030.
Once completed, these five projects will generate 1.2 million megawatt hours (MWh) of energy every year, or enough to power 113,000 average U.S. homes, according to a press release.

The Romans eventually had to impose a death penalty for refusing payment in debased Roman coinage and insisting on payment in actual gold or silver specie.

Since gold coinage was first used, what percentage of empire’s or world reserve currencies lasted past 50 years after coming off the gold standard?

Each time it happened, what percentage of the next empire or world reserve currency started with a gold standard?

How many of them said “It’ll be different this time” when their economies where at the same point as ours?

The vast majority of roman trade was not conducted with gold or silver, but clay tokens. However taxes were required to be payed in Gold inflating the price of gold on the open market vs. proscribed rate of exchange. It's a prime example of the preciousness nature of the multiple currency system.

Here's a good synopsis on the gold standard. The conclusion, quoted below shows much of where the perceptions of those advocating for a hard gold standard are lacking:

https://www.investopedia.com/ask/answers/09/gold-standard.asp#:~:text=The%20gold%20standard%20is%20not,of%20the%20system%20in%201973.

The Bottom Line
While gold has fascinated humankind for 5,000 years, it hasn't always been the basis of the monetary system. A true international gold standard existed for less than 50 years—from 1871 to 1914—in a time of world peace and prosperity that coincided with a dramatic increase in the supply of gold. The gold standard was the symptom and not the cause of this peace and prosperity.

Though a lesser form of the gold standard continued until 1971, its death had started centuries before with the introduction of paper money—a more flexible instrument for our complex financial world. Today, the price of gold is determined by the demand for the metal, and although it is no longer used as a standard, it still serves an important function. Gold is a major financial asset for countries and central banks. It is also used by the banks as a way to hedge against loans made to their government and as an indicator of economic health.

Under a free-market system, gold should be viewed as a currency like the euro, yen or U.S. dollar. Gold has a long-standing relationship with the U.S. dollar, and, over the long term, gold will generally have an inverse relationship. With instability in the market, it is common to hear talk of creating another gold standard, but it is not a flawless system. Viewing gold as a currency and trading it as such can mitigate risks compared with paper currency and the economy, but there must be an awareness that gold is forward-looking. If one waits until disaster strikes, it may not provide an advantage if it has already moved to a price that reflects a slumping economy.

AS, your providing historical examples of economies suffering after the gold standard was outlawed by the state doesn't exactly bolster your position, does it?

As stated above, you are confusing cause and effect. Read the entire article. It doesn't help you position.

Besides, if you like gold as a store of value, in our current system, you can own all the gold you can afford.

Keep some in physical form, and for convince keep some as GLD in a brokerage account. Convert your gold, or GLD to dollars as your need for the common currency of the real dictates, and you have your personal gold standard.

You can have your gold standard, and I'll have my NDX supplemented with GLD standard, and everyone's happy.

When obuma spent $1T+ in 2009 on the stimulus.................we had learned that Keynesian econ did not work on the depression and it does not work now.
But liberals just want bigger gov with kickbacks.

https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

But, but, Schiff is a Jooooo:
Schiff was born to a middle-class Jewish family[3] in New Haven, Connecticut. His father, Irwin, the son of Jewish immigrants..

Hawkeye that is a funny video..... they missed their calling they should have been comedians...... seriously though that pretty much sums up why I think so little of academia.... and now that politics and academia are bedfellows it has really become a clown show!!!

Wow! Really??

I had no idea (sarcasm).

And, to think, I donated to his Senate campaign. Totally ruins the antisemitism meme about me. Drat!

Indeed.

OK AS, you have identified the addiction (which is the government tit) that will politically prevent a sound money policy that would get rid of the system now in place and a return to hard asset backed money. Please tell us where this policy of increasing the money supply out of thin air takes us. Where does this end? Does not there have to be a day of reckoning like the world has never before seen? The banks are not extending credit with no hope of return, are they? The deficit is running at mind boggling speed. I have never seen a bubble not burst. Gravity is still an irresistible force unless maybe you have a rocket ship. Isn't the whole world teetering on economic collapse?

Man Hastings I was hoping for some answers to your questions. Perhaps w Sunday night coming upon us, AS will have time to read them.


Want to say I so enjoy healthy debate that doesn’t resort to junior high “nanner, nanner boo boo “ nonsense

So big thanks to all the participants of this thread

Not enough gold? Has anyone walked through the remote mountains and wondered just how much has been prospected? How many mines were dug that missed the big vein? I'm betting that there's a vast amount of gold out there that hasn't been and never will be found.

Most of it is at the earth's core.

I think Sniper got up early and went to church. He will answer after awhile.

Hastings,

Another good question. Let me try to expand a bit for you.

Within the confines of the U.S. Government, the two adults in the room as the U.S. Military, and the Federal Reserve. This chart will not imbed, but take a look. Our inflation has not breached 4% since 1991. That's almost 30 years ago. And since 1997, it's spent most of it's time below 2.5%.

Think about that for a moment. Despite all the capital injections following the housing crash of 2008-2009, there was no inflationary bubble as measured by CPI. Why is that? Remember that video on the Great Depression? Well Bernanke was a Scholar of the great depression, with several published papers on the subject, and understood better then anyone the mistakes of the 30's and did not repeat any of them. After TARP was passed, much of the money was "repurposed" in the form of direct capital infusions into the banking system to replace the destroyed base money. As a result, even though some banks went under, there were no serious bank runs, and no American loss access to their money in any banking institution for more than 24 hours. This, coupled with the follow on low inflation tells us the Fed did a very good job, under very adverse conditions, properly gauging the size and nature of the capital injections needed. In this instance the "money out of thin air" replaced the destroyed capital, in order to maintain liquid markets and prevented the total freeze of financial markets experiences in the 1930's.

Perhaps the biggest irony of all of this, is that the market operations conducted by the Federal Reserve actually MADE MONEY for the U. S. Treasury. I suspect there will be a similar profit by The Fed during this current go round. After all, they were buying distressed assets at artificially low prices...

Despite all the monetary injections, if anything Money Supply, as measured by M3 is falling behind our economic growth. The general rule of thumb is M3 should approximate your GDP. As you can see from the following charts, that's largely been the case for the U.S. since WWII:

https://fred.stlouisfed.org/series/GDP

https://fred.stlouisfed.org/series/MABMM301USM189S

M1's been mostly coming down since the 1960's,
https://fred.stlouisfed.org/graph/?g=dQQ

But that's offset by a significant decrease in the velocity of money as less in held in passbook/CD type banking accounts, and more is held in the form of stock. Keep in mind, in genera, the reserve requirement for bank assets is 10%, but brokerage accounts is 50%, and 100% for retirement type accounts such as IRS's and 401K's:

https://fred.stlouisfed.org/series/M2V

That was a long winded way of saying, you are worrying about the wrong players. The Federal Reserve and their management of the money supply is not the primary risk, our bigger risks are political.

As Far as, "what goes up must come down", that's a fatalist vision of financial markets that's not necessarily true. The Dow Jones industrial average started at 100. Today it's over 26,000. Do you really believe, bases on some parallax to gravity, the Dow is going back to 800 (today equivalent to 100 adjusted for stock splits and dividends)? Of course not, so lets dispense with that fallacy.

So lets talk about where we are relative to traditional conditions for a "debt bomb" relative to the U.S Federal Debt.

The historical figure for national "financial trouble" is a Federal Debt in excess of 200%. Recently, Greece, Italy and Portugal reached these levels and their economies nearly blew up, but Japans currently over 240% and their economy isn't blowing up. Why, and how does this difference relate to the United States?

The 200% number assumes "normal" interest rates. When Greece's debt approached 200% of GDP they were paying 8 and 9 percent, if not more, on their debt. The current rate on Japan's 10 year is .01%. Even though Japans total debt is high, their interest rate is low enough that their debt burden retaliative to their GDP remains low.

The same applies to the U.S. Although our Federal Debts been increasing, we've continued to refinance at lower rates decreasing our interest to GDP ratio. In other words, in a world of 0.625% interest on our 10 year treasury, the 200% "rule" does not apply. If it was possible to maintain a true interest rate on our debt around 5/8th of a percent, we could take out a truly absurd amount of debt before it became unmanageable.

Of course, reality is not that simple, and something would have to give. At what point would something give? Unfortunately, such calculation are not simple linear relationships, and involve some real math and coding that I'm not willing to do unless I'm getting paid for it. You can see in just our casual conversation how many variable I've introduced, and a proper econometric evaluation could easily require 10 times that many providing we are just using previously derived variables and not conditioning our inputs. This is why when the Nobel Prize winning Econometricians were asked about their views of the current situation, their basis answer was "we would need to evaluate the data".

In general, the current data does not support the hypothesis that without an exogenous shock, in the short term, the U.S is on the verge of a total financial collapse, or as you call it, "A day of Reckoning".

If did see such a "Day of Reckoning", what are the likely catalysts, or series of catalyst that would precipitate such an event?

For this I draw your attention to the recent events in Argentina. After the election of a socialist government, their markets dropped 40% over night and interest rates spiked from 20 to a high of 80%. It was a similar right to left power transition in France that allowed George Soros to become a billionaire. He shorted the Franc following the election of socialist in France, and literally made a billion dollars of the crashing French currency.

Now, imagine if four months from now Joe Biden wins the election? Major brokerage houses are predicting a 12% fall in S&P earnings just as a result of his tax policy alone. Democrats already hold the house, and what about the Senate? Republicans will be defending 23 seats to the Dems 12. That difference is enough to potentially swing the Senate. If we extend the 12% decrease in earnings across our whole stock market, that would destroy in excess of 3 trillion of assets on a straight line valuation alone. Keep in mind stock prices are leverage to their growth rate. As growth rates shrink so do P/E ratios, so this 3 trillion could quickly grow to 6, or 9 trillion is losses. With Biden's stooges at the head of all the three letter agencies, most of Trumps regulation cuts would be undone, and every regulation is a tax, thus further impacting earnings and market losses. Just sleepy Joe's proposed ban on Fracking alone could reduce GDP by 3%, and turn us from a net energy exporter to an energy importer, and crash the high yield bond market which is currently dominated by issuance from frackers and other oil issuers. Now let's throw a few hundred trading algorithms on top of that, and well, things could get real interesting.

And, we all know what a democrat controlled government would do. There would be a "stimulus package". I can imagine it being on the scale of 10 to 20 TRILLION (20 trillion under Speaker Cortez) dollars, and the single biggest transfer of wealth in history. There would be no money for banks to rebuild our capital structure, but plenty of money for "historically marginalized communities" and the like.

Twenty trillion for people to drink beer, smoke pot, and not work (i.e. stay unemployed), and that's not including the use of the crisis to pass "Universal Health Care", and in the process not only increase spending, but destroy a significant portion of our insurance industry, and their role in our capital structures.

So then what? Well, the Fed can't really cut interest rates, because they are already approaching zero. If we cut too close to Japan's rates, we loose the benefit of the previously explained "carry trade". A large source of demand for our treasuries would dry up overnight. So who's left to buy this 20 trillion in debt. Sleepy Joe's New Fed.

So, Trillions of market cap destroyed. We'd be in a recession, especially after the destruction of our oil and health insurance industries, and the Federal Reserve would be the only buyer for trillion in new debt, all of which would be wasted, and provide no real long term benefit for the economy.

While this is going on, lets defund the police, especially the FBI's domestic terrorist investigators. No assets of any energy or timber, or other resource company would be safe anywhere in any Blue State. Even in Red states you can imagine the FBI's civil rights division going after prosecutors for prosecuting eco-terrorist for "civil rights" violations.

I'm not sure how much of this the Americian people would tolerate, but that's what a politically created short sellers opportunity would look like.