Gold Investment News

Gold Price USD and the Gold Rate Today will be tomorrows lows

We wish to welcome you to our site. We make every effort to give value to you by providing a site that concisely, thoroughly and accurately provides you with the current opinions and thinking from experts and our analysis. Through our discussion, we articulate the common and differentiating characteristics between “Money” and “Gold”.

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Money vs Gold

In a financial context money, i.e., currency can take many forms. Most often in economics and finance currency has three qualities (i) a medium of exchange for goods, (ii) a store of value and (iii) a unit of account. Further, three examples or forms of currency can take are; (i) a commodity, such as gold; or (ii) an officially issued coin or note redeemable into a commodity (gold), i.e., as “representative money” and (iii) “fiat currency”, such as the US Dollar.This fiat currency is the alternative to commodity and representative systems . Fiat system is defined by a central bank or government law, as legal tender who also determines its value. For example the Federal Reserve Note is legally the currency of the United States. Until recently most money was paper currency or base metal coinage, however, today money mostly exists as data on bank balances and records. Despite the popular believe to the contrary most money is created by banks when they loan money to customers not by governments.

Gold is a comodity which can be used as money. Yes, Gold at different times in history was used both as money and a commodity (Commodity system).But markets and Governments have changed that to our current fiat system. In other words, in the past the US Dollar which is currently a fiat currency, [not backed by anything other then faith and credit of the United States economy and Governemtnt] was backed by a commodity, gold. However, this is no longer the case [read futher for history of money]. So if your savings or retirement is only redeemable into or by money then when that currency falls in value or fails, you also will  fail. Diversification of your portfolio is critical and necessary for safety. Gold has proven its ability to hold its value. The chart below shows Gold prices over time. and how it has continually increased in price.

 The Chart Shows Spot Price Gold over Time-

Confidence

They are many current events of concern that con result in a world losing confidence in the US Dollar. For instance loss of US prestige,  involvement and leadership in world events is at an all time low. What this means is the world is no longer seeing US as an essential player of importance. You will see specific topics that show this as you read further. The reason I raise this is because the “Death of the dollar” will be caused by many factors but confidence is a one of the most critical.

Background-

Money (currency)

Qualities of Money (currency)

Most often in economics and finance currency has three qualities (i) a medium of exchange for goods, (ii) a store of value and (iii) a unit of account.

Money & Banking    defines money as:
“… Economists, however, have a language all their own when it comes to money. They define it as something that serves as a medium of exchange, a unit of accounting, and a store of value. …”  https://ww.shmoop.com/money-banking/economic-definition.html

Forms of Currency and different Monetary Systems

Further, three examples or forms currency can take are; (i) a commodity, such as gold; (ii) representative currency such as an officially issued coin or note redeemable into a commodity (gold),  (iii) fiat currency, such as the US Dollar, this is the alternative to the commodity or representative systems . Fiat system is  where the form and value is set by a central bank or by government, i.e., legal tender. In the case of United States the Federal Reserve Note is designated as legal tender for all bills and taxes. Until recently most money was paper currency or base metal coinage, however, today money mostly exists as data on bank balances and records, in computers. Despite the popular believe to the contrary, most money is created by banks when they loan money to customers and not by the US Government. However, the US Government can and does create money at will. This was factually demonstrated when the Federal Reserve bailed out the big banks starting around 2008 and then continued creating money by quantitave easing. The Federal Reserve is a private corporation owned by its member banks. There is some reporting to Congress by the Federal Reserve and the President does appiont  the Federal Reserve Chairman but it is important to note that the Presiedent makes that appiontment from a short list provided to him by the Federal Reserve Governors and the reporting is not subject to audit. We will discuss  these topics in greater depth with posts to this site and blog in the future. What is improtant now is to enlighten you about the need and advantages of owning gold and the risks of having no gold in your portfolio.

Three Monetary Systems

Let us further examine the three monotar systems: (i) Commodity System, (ii) commodity backed systems “representative system” and (iii) Fiat system where Government via laws or legislation establishes what is legal tender and established its value in that society or the world economy.

A commodity money system is one where the physical commodity is used as the medium of exchange and money.Of course if our system were to say use the comodity of gold then we would have to always carry gold to make purchases such as gorcieries, instead of Federal Reserve Notes and of course it be impractible to have gold on our persons for large purchases. This brings us to the issue of storage, safety and practicality of always having gold on our person. It is easy to see why markets and governments moved to something like representative money or fiat money.

A representatie money system, is where the currency, e.g., note, coin, is redeemable in a designated comodity, When that comodity is gold then it is referred to as gold standard. This gold standard existed until 1933 when Rosevelt took us off the gold system.

Again, a Fiat system is where the medium of exchange is not redeemable for a commodity and it is only the – issuers credibility – i.e., good faith and credit that provide it value and market confidence the money can be used as medium of exchange for goods and services. No fiat system has lasted more then a few decades.

In fact, President Rosevelt signed legislation taking us off the gold standard on June 5, 1933. ( see- http://www.history.com/this-day-in-history/fdr-takes-united-states-off-gold-standard ) Later after the end of World War II the Bretton Woods system was established and adopted to by United States, Canada, Western Europe, and Australia, Bretton Woods memorialized certain financial rules and regulations of behavior for finance and markets that after 1944 these Contries would all adhere to. One of the most important features of the Bretton Woods system was an obligation for each of these countries to adopt a monetary policy that maintained the exchange rate gold to currency (± 1 percent)  tying thier currency to gold. Bretton Woods further provided that the IMF would bridge any temporary imbalances of payments. In other word all these countries agreed to a commodity backed monetary system in 1944. This of course again made our currencey representative money for a short time. Despite Bretton Woods agreement being effective, President Nixon in 1971 unilaterally decreed that the US dollar would no longer be redemable for gold. This history will be topic of futher posts and blogs to this site so the reader can have historical prospective of money and to better understand the importance of owning gold.

So historically no resereve currency has lasted long term and neither will the United states system.

Reserve Currency

Wikipedia defines Reserve Currency as:

“A reserve currency (or anchor currency) is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves. The reserve currency is commonly used in international transactions, international investments and all aspects of the global economy. It is often considered a hard currency or safe-haven currency. People who live in a country that issues a reserve currency can purchase imports and borrow across borders more cheaply than people in other nations because they do not need to exchange their currency to do so.”

The US has enjoyed “reserve currency” status beginning with the Bretton Woods agreement in 1944. Current events and history show that the reserve currency status the Federal Reserve note (U.S. dollar) now holds will come to an end. Looking back over 500 years of time no reserve currency has remained more the a few decades. For instance the reserve currency status did not last for Britain, France, or the Netherlands, Spain, and Portugal respectively and neither will it last for the US. A study of over seven hundred currencies revealed that today only approximately twenty-three percent (23%) are still circulating.

For example the British pound once the world’s most successful enduring currency, which was originally valued at twelve ounces of silver saw a precipitous fall after the pond ended ties to silver in 1931. Today the pond is worth, only five percent of its original value while gold and silver’s value have continued to raise.

What the experts say about gold and the future:

 Jim Rickards-

James G. Rickards is the author of The New York Times bestseller Currency Wars: The Making of the Next Global Crisis, published in 2011, The Death of Money: The Coming Collapse of the International Monetary System, published in 2014, The New Case for Gold, published in 2016, and The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis, also published in 2016 And as an author and lawyer is a highly respected and regular commentator on finace. [See- https://en.wikipedia.org/wiki/James_Rickards ]

Jim Rickards- from “The Death of Money” –

Expect a sudden international monetary collapse: The things I am talking about are not ten year forecasts; they are more three to five year forecasts. When this collapse happens it will happen very quickly. That is not a guess but the conclusion you reach when you understand …” the dynamics. I recommend 10% in physical gold (not ETF’s or futures or other paper contracts), land or fine art could be part of your portfolio, and cash.”

“When I talk about the collapse of the monetary system, I base that premise on the fact that the international monetary system has collapsed already three times in the past 100 years. Each time it collapses, it does not mean we go live in a cage of wood. It does mean that the economic powers sit together and rework the rules of the game, like they did with Bretton Woods. In my book I explain what people can monitor to recognize that moment. I also explain how the future world could look like and what investors need to do in order to be prepared.” I am not saying that the US Dollar will disappear right away, I am saying that there are strong forces from China, Russia, Saudi Arabia, etc to undermine the Dollar as a world reserve currency.

Jims Rickards’s in his blog says:

There are many compelling reasons why gold should outperform over the coming months.

  • Deteriorating relations between the U.S. and Russia will only accelerate Russia’s efforts to diversify its reserves away from dollar assets (which can be frozen by the U.S. on a moment’s notice) to gold assets, which are immune to asset freezes and seizures.

  • The countdown to war with North Korea is underway, as I’ve explained repeatedly in these pages. A U.S. attack on the North Korean nuclear and missile weapons programs is likely by mid-2018.

  • Finally, we have to deal with our friends at the Fed. Good jobs numbers have given life to the view that the Fed will raise interest rates next month. The standard answer is that rate hikes make the dollar stronger and are a head wind for the dollar price of gold.

Gold vs Fiat Currency (paper) —

DERIVATIVES Calls— Today no one knows for sure what the gold potential redemtion ratio to paper derivative is. Hoever, we can reasonably estimate it is over 100 to 1. We also know any kind of crisis would create a run on gold and all producers of gold are currently sold out years in advance. Some experts using mathematically derived conclusion are arguing that ten thousand dollars per once is an easily justifiable prediction. Anything can be money, but when confidence in a fiat currenmcdy is gone then investors flee to things like gold. So how is ten thousand dollars an ounce a likely price for gold?

First we must answer the question,  what is the price of gold have to be to back the the current money supply in a crisis or demand scenario. Well the Amount of money and gold is known and if we assume gold will be used to back a mere forty percent of that money supply then $10,000.00 per once is the mathamatical result. So when there is a run on fiat currencues and only forty percent of the supply is redeemed then gold will raise to ten thousand dollars. If you use M-1 supply then gold would have to be $40,000.00 per once.

So the facts history presents us is that fiat currencies only last a short time, a few decades at best. Yet ninety to ninety-five percent of all physical gold ever mined still exists. Futher, even even if there is no run on fiat currencies, gold has held its value consistently over time.

Through mid-2014 gold’s median, nominal price gained approximately three hundred seventy four percent (374%) [see chart] while currencies nominal price increased only one hundred seventeen percent (117%). HOPE YOU NEDD NO FURTHER REASON TO INVEST IN GOLD. Contact Regale Asset Today ===>

Derivatives — China, India and Russia

COMMING SOON MORE ON CURRENT MARKET CONDITIONS