around about way of explination of why not enough gold from previous thread. ignore the PPT. additions, ignore the forgotten attack on lybia, hear the words, there is no gold. check out the banter from intervewer, she gets smashed. http://forums.silverstackers.com/topic-8465-lybia-and-the-gold-standard.html
If the S were to HTF, obviously, it's rather impractical lugging around bullion. Furthermore, you have the problem that there are many types of bullion "out there" (ASE, Maple, Roo, Koala, Generic Rounds, Bars, Fractionals, Tigers, Pandas). This will lead to the problem of recognition. Think about it. In order to use any form of "money" to trade goods and services, it has to be recognisable, portable, divisible. Bullion is, and is not those things at the same time. Sure, we may recognise these various types, but even now we have folks asking from time to time "What is this?" "Is this genuine or fake?". The reality is that in SHTF, or, better to say, to extricate ourselves out of SHTF, what will happen is that a new form of legal tender will be designed - notes and coin as we have now, and lets HOPE that it's a case where it's fully, or at least partly backed by gold and silver. As for "not enough gold to go around" - it's simple. You assume that gold (and silver) will remain at its current "price" in the new scheme of things. I do not believe this will be so. Each of these metals is GROSSLY underpriced today (and also were grossly underpriced even at their recent highs). These metals WILL be revalued, and when that happens, I believe you will see their true worth. History is a good guide here! Silver - one ounce of it traditionally has represented a days wages... yet even at $50 per ounce, can one really tell me the weekly wage (even after tax) in this country is only $250.00 per week? <grin> I thought not. Consider the wage is near $1000 (considering mean income of around $66,000pa from my recollection), and realise this is - even at $50 per ounce, equivalent to 20 ounces of silver. For 5 days work. Should also give you a clue of how underpriced silver is (compared historically) ;-)
Your assuming that a deflationary event doesn't take place. Then in this case we could be working for a dollar a day.
We could, you're dead right! In that case, two things would be true, in my opinion. The value of $1.00 would be significantly - multiples more worth than it is today. And that 20 ounces of silver you bought with your paycheque today would be worth (again, compared historically) $20.00 - twenty days wages. Deflation, inflation, hyperinflation, or complete international monetary system collapse... either way I slice it or dice it, precious metals are the ONLY way to protect yourself against what's coming. It is easy - and I was caught in this myself until I did a lot of reading and thinking a few months ago - to get caught up in what many consider to be the "value" of a precious metal (let's take silver as an example). Many people will say "Oh, it's worth $30" (or $40, or $50). The trick is, though, that you're "conditioned" to think this way because society in general thinks that way - everything has a "price", and thus people think "That's it's value". Wrong. The ounce of silver you hold in your hand, though, is only temporarily exchangeable for an amount of fiat as determined by "the market". As I write this, "the market" will exchange your ounce of fiat for $33.03, which in turn will allow you to go to a store and purchase goods or services up to that amount of fiat. Tomorrow, "the market" may attribute a different amount of fiat to your ounce of silver, maybe it'll be $35.00. But these are all just fleeting moments of time, considering a conversion of your ounce of silver into something that a government has decreed shall have value, in order to use that instrument for further conversion into what you really want. It matters not what instrument you use in between these two transactions, and it certainly (in the eyes of a stacker) does not matter that "the market", as manipulated as it is, places differing prices of fiat on your ounce of silver from minute to minute - their days are numbered anyway, and the fiat they throw around like confetti has a very limited "use by" date inbuilt into it - it's just that very few sheeple out there can grasp/understand this. The true value of the ounce of silver you hold is a day's wages - not much more, not much less. In time, this true value will again be seen - but not today. And that is why we stack it aside, a store of value, a preservation of wealth for the time when the currently very rigged-and-on-life-support "markets" finally breathe their last.
I think we're basically going to do what the Chinese instate (since i assume once the USA lose influence, China will be the next super power). The Chinese currently are buying a lot of Gold and Silver, and i think their ambition is to get the yuan to serve as the new world reserve currency once the US dollar eventually dies (backed by PM's of course) The only reason countries use US dollars is because, well, America tell them to and they're helpless! Arguably, countries don't even want to use US dollars for trade, but just look at what happened to countries that tried to switch to alternative currencies for trade. Just as Libya announced they wanted to trade oil for gold: invaded. Iraq, when Saddam wanted to trade Oil for Euros. Go figure.
I think you will see a digital money system. These morons at the top have'nt been waiting for this collapse to happen they have engineered it to happen and its all going to plan very nicely. The cashless society girls & boys. Stack like never before.
So what? Gold doesn't just pop into existence like digital currency, it takes actual effort to mine. Shouldn't that real effort be rewarded with real wealth?
Exactly! It would be very simple and easy for even a country as dimwitted as Australia to go on a gold standard. All this talk of it being too hard or not enough gold to go around is rubbish. All it takes is an instant rerating. Step 1. Create a new currency and give that currency a relative "value" against gold. Ie if we have 67t of gold and we determine that the new currency (NewAUD $100 = 1 ounce of gold and $100 = 15 ounces of silver). So then the gov't can print $100 x 67t/1ounce. There is your starting currency and as usual government gets first use and buys back at a direct exchange rate relative to the amount of AUD in existence including all digital fiat available. This is an instant rerating of the "value" of gold and silver relative to the old AUD. If that means 1million old = only $100 new then so be it. Step 2. Make it law by constitution that the RBA can only print $100 when they "buy" 1 ounce of gold or 15 ounces of silver from the market. It would have to be made so water tight that future governments could not water this down under ANY circumstances. It may need a referendum. Step 3. Under the same LAW make it only possible to trade ANY good or service for the new AUD. Hence everyone swaps the old for new and This is where it gets good. The prices of goods and services would also get rerated but in the opposite direction. the average weekly wage may be only $50NewAUD. Under step three all countries that want to trade with Australia MUST purchase our goods using the NewAUD. So for example if China wants 1million ton of coal in a deal and 1million ton of coal is deemed to be worth $1000 NewAud then they need to get their hands on that cash. China then sends the RBA 10 ounces of gold and or a split of 150ounces of silver and the RBA prints $1000.00 AUD, China sends the $1000AUD to BHP and gets the coal. New fully backed AUD is in place. You don't even have to make it "redeemable" as long as the RBA gets audited every year to ensure that number of "notes" on issue is exactly the same as the number of ounces held then all is hunky dory. Of course this could only come as our banks are deemed insolvent (which they are) and fractional reserve banking is illegal for ever. It also means that our trade balance is also relative to our "net worth". If we run a trade defecit gold flows out of the RBA if we run a surplus gold and silver flow in. Very quickly we would gain support. The oil exporting nations will seize the opportunity to do the same as they have watched the relative value of every barrel of oil they export lose purchasing power even at the peaks, as the US has been hurting them by inflating the USD under a petrol-dollar standard. All it would take is OPEC to jump on board and everyone would be forced to follow, the resource exporting nations would be fools not to also. All of a sudden our currency has intrinsic value and inflation is moderated by small swings and roundabouts relative to the trade defecit/surplus as it should be. (edit) our gold/silver miners mining gold and swapping it for the NewAUD at the RBA will create inflation on top of the defect/surplus cycle. As our economy grows or or contracts so will the purchasing power of the NewAUD(but not relative to gold). So if the miners mine less in relation to the expansion of the economy the currency gains purchasing power as there are more goods and services chasing the less relative currency in circulation = deflation and vise versa. This can only be seen as a good thing and the swings and roundabouts will be much more mild and much much more predictable. Making trade and all other functions of society that much more immune to risks that are outside the average persona control. Sure there would be resistance and teething problems, but putting it in the too hard basket achieves nothing to get us out of our current monetary disaster and encourages the business cycle to erode our wealth.
If we went to a gold backed standard, would the price of gold be fixed or fluctuate in a free market like today? If it fluctuates then what's stopping inflation/deflation happening by the price of gold being manipulated as usual? But this time every country is affected (the ones using gold standard)
Sorry just edited the above as you wrote. Relative to the currency it will be fixed. The free market will decide how much purchasing power that fixed currency will have and hence the price of gold and silver at the same time. In my example the price of 1oz gold is $100.00 and that never ever has to or needs to change. (edit again sorry) - you are essentially making gold and silver currency again the only difference is instead of walking around with chunks of metal in your pocket you are using the very stable and 100% backed paper as a medium of exchange. No one loses under this scenario except the banks (who would have to go back to making money by providing a real service not through effective money creation) and those wishing to tax the population through the inflation of money printing. The inflation ebs and flows through the demand of all other commodities and services etc fluctuating through the supply and demand cycle.
SHTF means a Mad Max type scenario to me. Medicine, medical supplies, clean water (or a means to make it), food, fuel and firearms/ammo will be the most valuble commodities. Cigarettes, Booze, Sugar/spices and special skills will be good to have for trade too. PM's may not be as important as we might like or imagine...
Long term I can see the idea (or some ideas) from "Free Gold" taking hold. people store wealth in precious metals but do day-to-day transactions in cash. Both gold backed fiat and unbacked fiat have problems. A combination of both acts as a good balancer. I wonder if at some stage you can get a bank account that is measures in oz rather than $. This might be more complicated than many people want to deal with so it will take a long time to become normal if at all. Also most people are in debt and have no spare wealth to store. But nothing stops us from doing something similar now with our wealth.
Sorry I missed this post. Would you please elaborate on the problems a gold backed currency (not fiat) has? Other than of course the problems it creates for politicians and banksters.
How would you figure an exchange rate value for foreign currency fluctuation, foreign debt etc ? especially if you have a yuan that is deliberately undervalued .
If some disaster, or a war that becomes inevitable, happens and gov't can't fund its response with fiat money from nothing then that society would needlessly suffer while the gov't does nothing to help them. I am not going to defend the gov'ts right to make money from nothing but sometimes rarely it might be actually necessary.
