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Very Hot Topic (More than 25 Replies) Why? (Read 2,121 times)
Possumpoint
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Why?
Apr 27th, 2017 at 8:25pm
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On average, Russia, China, and India have been buying the world's production of Gold. There are months where their acquisitions exceed production and that means they are drawing down some of the Western Countries holdings. This has been occurring over a number of years.

The United States holds about 8100 tons of gold as officially reported. That amount has remained static for a period of time. However, that amount becomes suspect when you hear that Germany has lent the US their holdings and on requesting that it be returned, we said we'd ship it back over 7 years.

Why does it make sense that we are printing paper when others are acquiring gold? It is my opinion that debt and the balloons that exist in various aspects of our economy will cause the self-destruction of this economic system.
  

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Re: Why?
Reply #1 - May 31st, 2017 at 2:04pm
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Posted April 27th and no replies. Here's a theory for your consideration. China, more so than anyone else, wants to replace the dollar with their currency as the world's reserve currency. Though their debt load is very high and has caused a recent downgrade of their banking system, they may want to back the Yuan with gold and thereby destroy the value of the fiat dollar.
« Last Edit: May 31st, 2017 at 2:53pm by Possumpoint »  

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Re: Why?
Reply #2 - Jun 26th, 2017 at 10:07pm
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I don't understand the economics of gold. But your theory sounds legit in this sense - if you were one of those countries, and were sick and tired of the US calling the shots, would you try to topple it militarily or by some other means? Gold seems to be one of those means, and especially, as far as I understand it, replacing the USD as the international standard would be the other way. I don't like that idea by any means, but just seems to make sense from the viewpoint of the other countries.
  
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Re: Why?
Reply #3 - Jun 28th, 2017 at 9:44am
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Possumpoint wrote on Apr 27th, 2017 at 8:25pm:
On average, Russia, China, and India have been buying the world's production of Gold. There are months where their acquisitions exceed production and that means they are drawing down some of the Western Countries holdings. This has been occurring over a number of years.

The United States holds about 8100 tons of gold as officially reported. That amount has remained static for a period of time. However, that amount becomes suspect when you hear that Germany has lent the US their holdings and on requesting that it be returned, we said we'd ship it back over 7 years.

Why does it make sense that we are printing paper when others are acquiring gold? It is my opinion that debt and the balloons that exist in various aspects of our economy will cause the self-destruction of this economic system.


Wouldn't the fact that China, Russia, and India are buying up gold indicate that they are worried about their own currencies collapsing?
  
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Re: Why?
Reply #4 - Jun 28th, 2017 at 6:32pm
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It seems to me they are positioning themselves for what happens when the petrodollar system comes to a close, which some say is not far away.

And gold could be one of the assets which acts as reserves for this new monetary system and in that sense it would take the place of the US dollar.

  

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Re: Why?
Reply #5 - Jun 29th, 2017 at 11:02am
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TowardLiberty wrote on Jun 28th, 2017 at 6:32pm:
It seems to me they are positioning themselves for what happens when the petrodollar system comes to a close, which some say is not far away.

And gold could be one of the assets which acts as reserves for this new monetary system and in that sense it would take the place of the US dollar.



That's possible but I don't think that will work. The US Dollar is the reserve currency because we've done everything we can to spread it around the world. You can't do that with gold.
  
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Re: Why?
Reply #6 - Jun 29th, 2017 at 1:05pm
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michiganFats wrote on Jun 29th, 2017 at 11:02am:
That's possible but I don't think that will work. The US Dollar is the reserve currency because we've done everything we can to spread it around the world.



I'm not sure I agree with that.

The dollar originally became the premier reserve currency after WWII. Britain lost dominance. The US was the strongest economy and nation in that era and investment flooded in from all over the world - including gold.

The world went on what we called the "gold exchange standard."

Since the US had most of the gold, and our dollar was backed by gold internationally (but not domestically) other nations treated dollars as good as gold. They did this because they knew they could redeem them for actual gold.

But they rarely did because they trusted the dollar.

So dollars became the reserves for foreign banks.

And after a few decades some nations suspected the US was creating too many dollars and so they started redeeming them for gold. That was leading to a crisis here so Nixon ended dollar convertibility and the world went on a pure fiat money regime.

And we seem to nearing the time when a new monetary conference a la Bretton Woods will again make over the monetary world.

Other nations are anticipating this and that is why they are hoarding gold. He who has the gold makes the rules, and all that jazz.

Quote:
You can't do that with gold.


Seems like that is exactly what is happening. China and Russia are hoarding. Germany and France are repatriating their gold held at the New York Fed, and so on.
  

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." J M Keynes

"In the first place, the dichotomy between "theoretical" and "practical" is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature "practical" ones as well." M Rothbard
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Re: Why?
Reply #7 - Jun 29th, 2017 at 3:01pm
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TowardLiberty wrote on Jun 29th, 2017 at 1:05pm:
The world went on what we called the "gold exchange standard."

Since the US had most of the gold, and our dollar was backed by gold internationally (but not domestically) other nations treated dollars as good as gold. They did this because they knew they could redeem them for actual gold.


Where are you getting this from? The reason to hold gold is in case your currency fails, not to exchange it for anyone who has dollars. If we were going to do that we wouldn't hoard the gold in one place under heavy guard.

If another country wanted to supplant us as the reserve currency, or more accurately one of them because the Dollar isn't the only one, they don't need gold, all they need is for the dollar to collapse and to have a strong currency themselves. Gold doesn't enter into that. Gold is for people who have debts to pay.
  
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Re: Why?
Reply #8 - Jun 29th, 2017 at 3:27pm
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TowardLiberty wrote on Jun 29th, 2017 at 1:05pm:
I'm not sure I agree with that.

The dollar originally became the premier reserve currency after WWII. Britain lost dominance. The US was the strongest economy and nation in that era and investment flooded in from all over the world - including gold.

The world went on what we called the "gold exchange standard."

Since the US had most of the gold, and our dollar was backed by gold internationally (but not domestically) other nations treated dollars as good as gold. They did this because they knew they could redeem them for actual gold.

But they rarely did because they trusted the dollar.

So dollars became the reserves for foreign banks.

And after a few decades some nations suspected the US was creating too many dollars and so they started redeeming them for gold. That was leading to a crisis here so Nixon ended dollar convertibility and the world went on a pure fiat money regime.

And we seem to nearing the time when a new monetary conference a la Bretton Woods will again make over the monetary world.

Other nations are anticipating this and that is why they are hoarding gold. He who has the gold makes the rules, and all that jazz.


Seems like that is exactly what is happening. China and Russia are hoarding. Germany and France are repatriating their gold held at the New York Fed, and so on.


True. Here's more on the origin but I suspect you know this already. Wink


The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price. That fixed price is used to determine the value of the currency. For example, if the U.S. sets the price of gold at $500 an ounce, the value of the dollar would be 1/500th of an ounce of gold.

The gold standard is not currently used by any government. Britain stopped using the gold standard in 1931 and the United States followed suit in 1933 and abandoned the remnants of the system in 1971. The gold standard was completely replaced by fiat money. The term fiat money is used to describe currency that is used because of a government's order — or fiat — that the currency must be accepted as a means of payment. So for the U.S., the dollar is fiat money, and for Nigeria it is the naira.



http://www.investopedia.com/ask/answers/09/gold-standard.asp#ixzz4lQB11hJH


  
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Re: Why?
Reply #9 - Jun 29th, 2017 at 8:18pm
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michiganFats wrote on Jun 29th, 2017 at 3:01pm:
Where are you getting this from? The reason to hold gold is in case your currency fails, not to exchange it for anyone who has dollars. If we were going to do that we wouldn't hoard the gold in one place under heavy guard.


I am talking about previous monetary regimes in history.

http://www.investopedia.com/terms/b/brettonwoodsagreement.asp

Quote:
If another country wanted to supplant us as the reserve currency, or more accurately one of them because the Dollar isn't the only one, they don't need gold, all they need is for the dollar to collapse and to have a strong currency themselves. Gold doesn't enter into that. Gold is for people who have debts to pay.


The world is awash in debt.

Gold is the only asset that has zero counter party risk. http://www.investopedia.com/terms/c/counterpartyrisk.asp

That's the main reason why it will play such an important role going forward.

  

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." J M Keynes

"In the first place, the dichotomy between "theoretical" and "practical" is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature "practical" ones as well." M Rothbard
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