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That must be new math. Not trying to be captious but if you eat your "investment" that's a 100% loss.



True but totally irrelevant unless you buy paper. Physical Gold is not fiat currency.



I can't say your point is moot but it is a bit myopic. In a worst case scenario physical Gold will have value, your Vanguard fund .....not so much.
Many stocks are at all time highs. Bond funds are very risky at this juncture. In either event I do appreciate the humor in your desire to overlook the fact that I wouldn't buy bonds or Gold here.
The only thing I see as truly obvious is that some folks learned very little over the last several years.

I would not advise buying Gold. But I would highly advise trading off things you don't have a need for anymore because of life's changes in the things you do to trade it for Gold. The miners need things but don't want to be involved in paper money or taxes so trading you will get double your investment. Things like you think are in the way now the miners need for digging and moving dirt. Also blasting chemicals and powder are good stock for trade.
If you are buying gold then you are making a middleman rich.

it's possible that you and i have more in common than i first thought.

good, productive farmland along river bottoms are worth their weight in gold. poor farmers, representing less than 2 percent of the population holds the future of civilization in their hands.

It�s not new math but perhaps you were never good at solving word problems. If the collapse doesn't come whatever food you eat from your stash you don't have to buy at the time, so you get your money back.



In the worst case scenario long shelf life food will be way more valuable than gold and could trade for equal weight of gold. If you don't want to trade at that rate the guy with food can wait until you change your mind or starve, in which case he can take your gold.

Apart from a collapse, funds like VIPSX will protect a person's assets regardless of the rate of inflation. If the economy comes back strong VIPSX and funds like it will still gain while you'll see your gold lose more than half its value.

People buying gold at current prices are taking a huge downside risk and many don't know it or want to believe it. Kind of like the people who were still investing in mortgage backed securities in 2007.

Sorry, it doesn�t work that way unless the entire world were to all change to gold backed money all at the same time. If just the U.S. made the change the price of gold would go to $15,394 per oz in the U.S. by law (fiat), but a person in Candida would pay nearly the same for gold as they did the day before the U.S. switched, so to him a U.S. dollar would only be worth 11.3 cents.

The day before the U.S. switched a guy in Candida with 2 oz of gold could only buy a cheap used car in the U.S., but a day later he could buy a nice new car for the same 2 oz of gold. The U.S. would make the world rich and ourselves poor.

People who have a bunch of gold might think they would get rich quick, but if they are in the U.S. that wouldn't happened because the government would confiscate most private gold as they have done before and at a price they set.

Who gives my money back? You? The Government?
I think perhaps what you meant to say was if a really sophisticated investor like yourself buy's groceries as an investment then if/when you eat those 25 year old groceries (Yum!) that you don't have to buy the groceries for that meal in the future. That's hardly the same thing as "getting your money back" ..... even with food inflation.
Maybe it's just me but I've never received a dividend from a can of peas....LOL




Fact check. The government does not track Gold sales unless you buy 10k or more in a single day making it a wee bit hard (just like the past) to collect what they don't know exists.

What would keep the U.S. manufacturers from raising their prices to compensate for the price of gold and demand gold only as payment?

Going out of business.

MacLorry-
You have come to some conclusions that are quite incorrect.

"Sorry, it doesn�t work that way unless the entire world were to all change to gold backed money all at the same time. If just the U.S. made the change the price of gold would go to $15,394 per oz in the U.S. by law (fiat), but a person in Candida would pay nearly the same for gold as they did the day before the U.S. switched, so to him a U.S. dollar would only be worth 11.3 cents."

Do you know the history of banking? Do you know that the USD is the worlds reserve currency? Do you know that all other countries currencies rely on the value of the USD to back their currency? Do you know that the US went off of the gold standard in 1971 when Nixon took us off of the gold standard? As the worlds reserve currency, when we went off of the gold standard, all of the worlds currencies became fiat currencies. In short, if the USD became worth 11.3 cents over night, all of the worlds currencies would decline to the same degree. Think about what you are saying. You are saying that if the worlds reserve currency, which is currently backed by nothing, was to become backed by gold, that its value would decrease?????????????? You are also saying that somehow all of the worlds currencies would be able to somehow ignor the value of the US dollar which is the only thing backing thier own currency????????????? Regardless of how the value of the dollar would change, all of the worlds currencies would change roughly to the same degree.

"The day before the U.S. switched a guy in Candida with 2 oz of gold could only buy a cheap used car in the U.S., but a day later he could buy a nice new car for the same 2 oz of gold. The U.S. would make the world rich and ourselves poor."

No we would not make ourselves poor. The value of all other currencies would change to the same degree as the US dollar, because its value is dependent upon the value of the US dollar. Remember, the US dollar is the worlds reserve currency. Yes the guy in Canada or anywhere else in the world, could buy a new car with 2 ounces of gold. This is the point in buying precious metals now!

"People who have a bunch of gold might think they would get rich quick, but if they are in the U.S. that wouldn't happened because the government would confiscate most private gold as they have done before and at a price they set."

I don't think that confiscation would work because they can't confiscate all of the gold in the world. With that being said, I suppose that they might try - - - - they have done alot of stupid things before! Check your history. They tried this once before and it didn't work out for them very well.

It took you long enough to figure out stockpiled food is not a 100% loss as you originally said. You recover your money when you eat it in lieu of purchasing food you would otherwise need. And no, we are not talking about 25 year-old groceries, we are talking about food that has a known shelf life of 25 plus years. You have the security of having an emergence food supply for 20 plus years and then recovering your investment by eating it in lieu of new purchases. Any loss is made up by the value of being prepared for 20 years, just like paying for insurance you never collect on.



The way they got most people to comply in the past was by making gold hoarding a federal felony. Every time you sold any of your gold you would risk detection or if it was uncovered during a fire, flood, or other emergency you would risk confiscation, fines and jail time. The risk outweighs the benefit of having gold, so most people give it up.

Raising prices would mean over 800% inflation, so what would be the point of going back to gold backed money? As for demanding gold, the answer is printed on every bill. It says "This note is legal tender for all debts, public and private". What that means is that no legitimate business can demand payment in gold or any other commodity.

Reserve currency doesn't mean what you think it means. Most of the world decoupled their money from the U.S. dollar more than 30 years ago. Now the value of each nation's money is set by the market. Some governments, like China, use the power of their central bank to manipulate the exchange rate of their money, but that only works to a limited degree.

If the U.S. unilaterally devalued the dollar by nearly 900% most nations that trade with us would eventually have to follow, but not until they used their gold reserves to by U.S. property and goods at fire sale prices.



As I stipulated, if the U.S. unilaterally went back to gold backed money, the rest of the world wouldn't need to follow. And yes, the U.S. confiscated gold in the 1930's and it worked very well for over 45 years until we came to our senses and got off the gold standard.

"Reserve currency doesn't mean what you think it means. Most of the world decoupled their money from the U.S. dollar more than 30 years ago. Now the value of each nation's money is set by the market. Some governments, like China, use the power of their central bank to manipulate the exchange rate of their money, but that only works to a limited degree."

What do you think that I think that it means? or better yet, what do you think that it means? I am sure by your answer, that it is you who does not know what it means.

"If the U.S. unilaterally devalued the dollar by nearly 900% most nations that trade with us would eventually have to follow, but not until they used their gold reserves to by U.S. property and goods at fire sale prices."

The US would NOT devalue the dollar by backing it with gold. To think so is folly. Think about what you just said. You really believe that a dollar backed by nothing is more valuable than a dollar backed by gold???? As far as buying things (anywhere in the world - - not just in the US) at firesale prices - - - - this is one of the points I made in my last post. This is why people are buying precious metals! The value of the dollar would decrease as compared with the value of precious metals, not other currencies.

SodFarmer,

You're wasting your time. MacLorry is a certified paperbug par execellance, and hates hard assets no matter what. He believes that inflation is a good thing, the Fed is the greatest thing since sliced bread, and that the world will not survive without fractional reserve banking. BTDT, don't waste your time.

Reserve currency doesn't mean that other nations peg the value of their money to the dollar, which is how you were using the term. Most major currencies float, which means the market sets the exchange rate. If these currencies were pegged to the dollar there would be a constant exchange rate, and it hasn�t been like that in nearly 30 years.



I posted the number using the most gold the U.S. Government ever held, and to have enough dollars to replace the current money supply the official exchange rate would need to be over $15,000 per oz. If it takes $1,700 to buy an oz of gold today and tomorrow it takes $15,000 to buy that same oz of gold, that's devaluing the dollar relative to gold, particularly if you then are backing dollars by gold. Remember, for the dollar to be backed by gold the exchange rate is set by the government, not by markets, so we would be locked in, but other nations could still buy and sell gold on the $1,700 per oz market price. There's no law saying other nations have to follow us over the cliff.

In order to be backed by gold the government must set the exchange rate by law (fiat) and be willing to both buy and sell dollars for gold at that official rate, at least with other governments. So Canada could use their gold reserves to purchase dollars at $15,000 an oz and then use those dollars to buy U.S. property and goods. The same for China, Europe, Russia and every other nation. If we increased the dollar price to compensate, that would mean something that sold for $1,000 would have to sell for $8,823 to represent the world market value of gold. If we didn't do the 882% inflation we would end up with lots of gold, but the world would own the U.S.

Don' pay attention to mike762, he's hopelessly stuck in the past and wanting to go back to using rocks for money. If there is a future without central banks it won't be based on gold or any other physical commodity, but on crypto-currency such as Bitcoin. Like gold, there's a fixed amount and there's no central control, yet it can be transferred electronically.

Heardan economist a few days ago who made some sense.

I forgot who it was, but he said the dollar will climb in value when the Euro starts tanking, because people who are invested in Euros will be looking for a safe haven and the dollar, with all its faults, is still the best bet in the short term.

He said that precious metals will drop in value at that time, but went on to say that the fundamentals for the dollar aren't sound enough to sustain it for long.

When the dollar starts going down after its rally, the stock market will rapidly fall and precious metals will spike.

He said that that was when the "decoupling" will occur between gold and stocks.

Makes sense to me.

Sounds like Peter Schiff.

could have been.

I listen to Jim Rogers a bit too. Although he's an investor, not an economist, he seems to have a pretty good handle on the situation.

"Reserve currency doesn't mean that other nations peg the value of their money to the dollar, which is how you were using the term. Most major currencies float, which means the market sets the exchange rate. If these currencies were pegged to the dollar there would be a constant exchange rate, and it hasn�t been like that in nearly 30 years."

MacLorry -
You are confusing two entirely different things. Yes other nations do in fact depend on the value of the dollar to give their currency its value. Yes, the market does set the exchange rate. The USD is what backs the currency of other countries. However, that is not the only factor involved in setting the exchange rates between currencies. Lets take Japan for example. When Japan recently decided to devalue their currency to enhance their ability to export their products, they simply printed more yen, thus devaluing their currency. They did not change their reserves, but they did increase the supply of Yen thus diluting the value of the Yen in the world market.

"I posted the number using the most gold the U.S. Government ever held, and to have enough dollars to replace the current money supply the official exchange rate would need to be over $15,000 per oz. If it takes $1,700 to buy an oz of gold today and tomorrow it takes $15,000 to buy that same oz of gold, that's devaluing the dollar relative to gold, particularly if you then are backing dollars by gold. Remember, for the dollar to be backed by gold the exchange rate is set by the government, not by markets, so we would be locked in, but other nations could still buy and sell gold on the $1,700 per oz market price. There's no law saying other nations have to follow us over the cliff.

In order to be backed by gold the government must set the exchange rate by law (fiat) and be willing to both buy and sell dollars for gold at that official rate, at least with other governments. So Canada could use their gold reserves to purchase dollars at $15,000 an oz and then use those dollars to buy U.S. property and goods. The same for China, Europe, Russia and every other nation. If we increased the dollar price to compensate, that would mean something that sold for $1,000 would have to sell for $8,823 to represent the world market value of gold. If we didn't do the 882% inflation we would end up with lots of gold, but the world would own the U.S."

I don't mean to be offensive, but it is obvious that you still do not grasp the concept of real money. Currency and money are not the same thing. Without backing our currency by something SOON, the rest of the world WILL own the US in the very near future. Our currency is well on its way to becoming worthless.

Let me explain by going back to something very basic. The purpose of the Federal Reserve is to keep the economy moving without going too fast which would result in massive inflation. The Fed is like the gas and brake peddals on a car. They lower interest rates (gas) to spur the economy, or raise interest rates (brake) to control inflation. The Fed has had interst rates set at 0 to .25% for about two years. They are trying to spur economic growth, but have been unsuccessful. Next the Fed tried to spur the economy with "Quantitative Easing" which is a politically correct way of saying that they printed more money. This has also failed to spur the economy. So lets look at the tools that the Fed can still use. Interest rates can not go lower, so that is not an option. The only thing they can do is print more money. Printing is a problem with the rest of the world because we can not sell our Treasuries. The Fed has been buying over 70% of all the Treasuries we have sold for quite some time. The rest of the world does not have faith that we can or will repay them. The Fed simply "creates" the money to buy our Treasuries, which is how we are financing our deficit spending. So when it comes time to pay up on maturing treasuries, we simply gin up the printing presses (or do it on a computer balance sheet) and hand over the money. If you were China, and bought a 5 yr treasury at 2% and waited to maturity, only to discover that the dollar that you invested 5 years earlier has been devalued by the fed by 20% as a result of Quantitative Easing, would you be anxious to invest again????? Probably NOT! With that being said, the Fed has already printed much to much currency, and the only reason the USD has not crashed, is because other countries have also been printing more currency. This is a major factor in why exchange rates are constantly changing.

In addition, because we are the worlds reserve currency, when we print more money, it dilutes the value of all of the US dollars in the world - - - - not just the dollars in the US. We thereby export much of our deficit spending. The rest of the world pays for part of our deficit spending when they hold US dollars. This is the reason that other countries are trying to create a new reserve currency. They are tired of paying for our deficit spending.

Now lets talk a little more about inflation. Inflation is a function of the amount of currency chasing products and services, and the velocity of that currency. The amount of currency is an easy concept to understand, but most people do not understand velocity as it relates to currency. In short, "velocity" is how fast the currency moves in the economy. In a healthy economy, dollars change hands quickly. In our current economy, people don't spend as much and velocity slows. If the US economy ever picks up again, inflation will be massive. So far, we have seen the price of the neccesities of life inflate very quickly. This inflation has been quite evident in all commodities. Just look at what has happened to the price of energy, cattle, hogs, metals, lumber, grains etc. etc.. This is what we can expect the price of everything we buy to do if the economy ever tries to recover.

As far as mike762 is concerned, I think he has done his homework and has a very good understanding of the subject at hand. I really hope that this exchange of ideas will remain in the realm of discussing facts and not dive off into personal attacks.

Bristoe -
I believe you've got it right!