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What if the
Government went back on a Gold Standard?
Do do that, they
would need to use their gold to pay off all their debt.
That would give a
price of gold if the U.S. Government backed the dollar with gold.
We only need to know
two numbers, and do a simple problem of division.
First number:
The national debt.
http://www.treasurydirect.gov/NP/BPDLogin?application=np
The government tells
us this is:
$10,656,119,227,403
That's 10.6 trillion
dollars.
Second number:
The U.S. Gold stock.
http://www.fms.treas.gov/gold/current.html
The government tells
us this is:
261,498,899 ounces of gold
That's 261 million
ounces of gold.
So
$10,656,119,227,403 divided by 261,498,899 = $40,750/oz. of gold.
In theory, if the U.S. government had the restraint to stop issuing any kind of new debt, and if there was a
runaway hyperinflation, the government could credibly stop any sort of
runaway gold price by offering gold at a price of $40,750/oz.
That's the price that
could cap the gold market if the U.S. government sold all their gold to all
their bond holders. At that point, all new taxes would have to be
levied in gold, not dollars.
It's important to
realize that any effort by the government to sell gold below that price will
ultimately fail, and will eventually cause the gold price to go even higher
than that price, as that would only deplete their limited stock of gold at
inappropriate price levels.
The main point is
that T-Bills, which are perceived as the safest haven around, are not
safe. They are only backed up by gold at a rate of $40,750 per
oz. With gold trading today at around $800/oz., the U.S. gold backs less than 2% of the value of the issued bonds, or stated another way, $800
is 2% of the price of $40,750. Gold, at today's prices, is clearly a
far superior safe haven.
And silver, which is
in short supply, due to relentless industrial demand that has consumed nearly
all world silver supplies, is even safer.
Clearly, the
government cannot offer gold at $40,750 per oz. today. There would be
no buyers. But, over time, the gold price may rise to such levels, and
beyond, as a generation of people slowly wake up to the monetary fraud of the
last 29 to 95 years, depending on whether you count from 1980 or 1913.
I am not an advocate
of a return to a gold standard, where gold backs up paper money. I'm in
favor of a return to using silver and gold coins and bars as money, as
measured by weight, and traded at their intrinsic value according to the
price in an open and free market place.
Sincerely,
Jason
Hommel
www.find-your-local-coin-shop.com
www.silverstockreport.com
www.miningpedia.com
www.bibleprophesy.org
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