Gold Is Money

Lumi · May 12, 2010

Gold Is Money

12 May 2010
By Greg Hunter
USAWatchdog.com
The Western financial world is officially in full panic mode. A nearly $1 trillion bailout of Greece confirms that fact. Our very own Federal Reserve is providing billions to the effort, but this is much more than a bailout for Greece. It is a bailout for banks holding Greek debt and the debt of other European nations teetering on default.
This bailout is not a fix or a cure for too much debt. People on both sides of the pond are simply spending more than they earn. The ?fix? is a long painful road of consuming less and saving more, but that is not what this bailout represents. What the leaders of the Western World chose was the short painless path of money printing. You have to ask yourself where did they come up with nearly a trillion dollars in such a short amount of time?
If real assets were used for this bailout, it would not be done. Think about this for a minute. Let?s say for the American part of this rescue we had to put up half of New York State for collateral. Does the thought of that much prime land frittered away make you squeamish? How about putting up 500 million barrels of oil out of the Strategic Petroleum Reserve? Too valuable you say? Then maybe a couple thousand tons of gold out of Fort Knox would be okay to use, after all, it?s just sitting there (I hope). Doesn?t this sound absurd? It sure does because these are real assets and printed money is not. This is why the U.S. Fed is using dollars created out of thin air to help bail out its banking buddies in Europe. It is the easy way out, at least at the beginning.
In the end, this kind of reckless desperation will cause every dollar you spend and save to be worth less. If the Fed prints too many dollars, then they?ll be just plain worthless. What do you suppose will happen when California, Illinois, Florida or any one of more than a couple of dozen U.S. states all gets into the same trouble as Greece? Do you think the Fed will let them fail or print more money and bail them out too? I?m going with a giant money printing bonanza right here in America. I covered some of this in a February post called ?America Has Its Own PIGS.?
Gold buyers see what?s coming, and prices are being bid up. Gold set a new all time high this week. Why? Money, or the buying power of money, is systematically being destroyed by current and coming bailouts. The new money is gold and Congressman Ron Paul agrees. He said earlier this week, ?Gold, all of a sudden, started acting differently. It started acting as a currency rather than just reacting to the value of the dollar or other commodities . . . Gold has been money for 6 thousand years and it?s going to remain that way, and it will rule the roost . . . It?s telling us that the dollar is actually very weak . . . when you measure it against gold.? Silver is also rising in price. When gold rockets high enough in price, then silver will also be considered money.
This so called bailout will just extend the game. The question is for how long? To be frank, I do not know how this will finally shake out. The two things you can count on for sure: there will be some very big inflation?and gold is money.
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Lumi · May 13, 2010

Gold, Peace, and Prosperity: The Birth of a New Currency

Gold, Peace, and Prosperity: The Birth of a New Currency

Gold, Peace, and Prosperity: The Birth of a New Currency
By Ron Paul
The Ludwig von Mises Institute 2007
52 pages.
Gold, Peace, and Prosperity is the title of Ron Paul?s essay for a ?modern? gold standard. According to Paul, such a standard would end the relentless boom-bust cycle, and maintain the value of King Dollar. However, King Dollar would have to be founded on a monetary standard that eschews government tampering.
Paul begins his treatise by pointing out that ?Congress alone is responsible for inflation, and Congress alone can stop it.? Which means that the old scapegoats ? OPEC, greedy CEOs, labor unions ? are not the real cause of inflation. To support his contention, Paul relates a story told by Marco Polo in his travels through China. As Paul states, ?Abuse of paper money led to the expulsion of the Mongol dynasty from China.?
The same thing happened when the Continental Congress began issuing paper money during the Revolutionary War. Initially, one Continental paper dollar was worth one gold dollar. After a while, it took 1000 Continental dollars to equal one gold dollar. In other words, it literally took a wheelbarrow full of money to buy a loaf of bread.
Paul provides a short history ?of our monetary decline.? During the 19<SUP>th</SUP> Century, the U.S. operated on a gold standard. The economy was strong and healthy during that time. Then in 1913, the Federal Reserve Act established the central banking system. That was the beginning of the end.
Paul asserts the Federal Reserve Act made America?s entry into World War I possible. It was accomplished by inflation. And the end result of inflation was the 1921 depression. Further inflationary tactics ?caused and perpetuated the Great Depression of the 1930s.?
In 1934, the Gold Reserve Act ?outlawed private ownership of gold, prohibited the use of ?gold clause? contracts, and abolished the gold coin standard.? In effect, the U.S. went on the gold bullion standard. Paul points out that, contrary to Paul Samuelson?s declaration that ?the Federal Reserve System was formed in the face of strong banker opposition,? the exact opposite was in fact true. The biggest banks in the country were all for the new system because it promoted ?inflation that benefits bankers and big corporations.?
Bretton Woods ? in 1944 ? supposedly established a new gold exchange standard. In Paul?s opinion, Bretton Woods was ?nothing more than an international Federal Reserve System.? And of course, it didn?t do anything but cause more inflation. Then on August 15, 1971, President Nixon ?closed the ?gold window.?? This was the beginning of ?managed fiat currency.?
Paul states that since 1971, the price of gold has increased ?more than twentyfold.? The trade deficit has increased by 1146%, and the Consumer Price Index has increased 79%. Due to these imbalances, he concludes that the dollar is dead.
Rather than pronouncing the Last Rites over the dollar, followed by a mournful funeral and weeping and wailing, Paul views the death of the dollar as an opportunity. ?The time is ripe for the institution of a trustworthy monetary system.? And it?s not all that difficult. The way to stop inflation is to ?stop inflating the money supply.? Paul then cites the three main reasons politicians, bankers, etc., desire inflation: greed, power, and a way to pay the government?s bills without raising taxes sky-high.
Paul then proceeds to examine the roles of big business, banks and unions as the culprits responsible for inflation. He concludes that each is partially to blame, but only because fiat currency encourages active participation. If the Federal Reserve System were canceled, then ?legitimate profits? would be the order of the day. Which, according to Paul, is the way it should be.
Much of the guilt for the present interventionist monetary policy must be laid at the feet of the economists, says Paul. They ?endorse the process,? whether for power and prestige or because they actually believe ?it is in everyone?s interest.? Whatever their motivation, ?the results are horrendous.? For in the end, inflation destroys freedom.
The answer ? the only alternative ? to inflation is a moral society, along with honest money. Which means money based on gold and silver. Paul advocates ?free market money.? Such a system would allow ?consumers to decide about their money the way they decide about everything else.? This would mean the repeal of legal tender laws that ?force people to accept the government?s money.? Instead, a gold coin standard would be set in place, and banking would be ?an open, competitive business like any other.?
And as Paul points out, there is historical precedent for free market money. In 1879, Congress passed a law making greenbacks redeemable ?in gold on a one-to-one basis.? It could easily be done in today?s world.
Paul concludes his treatise by reminding the reader that ?government?s only legitimate reason for existence is to protect innocent life and property from aggression, foreign or domestic.? Therefore, when government deliberately causes inflation and destroys freedom, it commits an ?immoral act.? Essentially, inflation is nothing more than ?legalized counterfeiting.?
In Ron Paul?s opinion, failure to act ? to change the system as it now stands ? will result in chaos, war and the possible rise of a dictatorship. A gold coin standard ? and nothing else ? ?is compatible with the humanitarian goals of peace and prosperity.?
Gold, Peace, and Prosperity is a wonderful book, full of wonderful truths. It deserves to be read and considered. Paul?s persuasive arguments should dent the armor of even the most ardent Keynesians. Still, power and control ? the twin motivators for inflation ? are powerful opponents. It will be interesting to see what happens.

On the Read-O-Meter, which ranges from 1 star (pathetic) to 5 stars (extraordinary), Gold, Peace, and Prosperity generates 5 stars.
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Lumi · May 13, 2010

Junk silver coins

Junk silver coins

Junk silver coins
Why 90% junk silver coins are worth the investment?
Junk silver is actually a misnomer for coins with 90% silver and 10% copper content.

Junk silver coins may have no value for collectors in a sense that junk silver dollars can be bought without regard for their aesthetic quality ? it would not matter much if it?s nicked or scratched on the surface ? as long as its intrinsic value is still intact

Despite its misleading name, junk silver is the colloquial term for circulated silver coins in the United States that were minted prior to the Coinage Act of 1965. Enacted on July 23, 1965, the Coin Act stopped the minting and circulation of dimes and quarter dollars with 90% silver content.

Though they were struck with a 1964 mint date but in truth, some of the junk U.S. silver dimes were minted until 1966.

The year 1965 also marked a period of coin shortage in the U.S. coin history. Subsequently, the Coinage Act also signaled the rise of silver prices. Junk silver coins are also present in Canada.

Today, the circulated coins inside the two countries contain copper and nickel, which are of far lesser intrinsic value.

Junk Silver Coins in the United States and in Canada

The common junk U.S. silver coins are:

? 1916-1945 Mercury Dime
? 1932-1964 Washington Quarter
? 1942-1945 Silver War Nickel
? 1946-1964 Roosevelt Dime
? 1916-1947 Liberty Half Dollar
? 1948-1963 Franklin Half Dollar
? 1964 Kennedy Half Dollar
? 1965-1970 Kennedy Half Dollar
? 1878-1921 Morgan Dollar
? 1921-1935 Peace Dollar
? 1971-1976 Eisenhower Dollar

In Canada, most junk silver bullions are those minted before 1967 such as:

? 1920-1967 Dime
? 1920-1967 Quarter
? 1920-1967 Half Dollar
? 1935-1967 Dollar

The Scarcity of Silver Coins

It remains a fact that even though junk silver coins are in circulation, majority of the American population have not seen or beheld any of these silver dimes at all. Junk silver dollars have always been rare since the curtailing of its minting in 1965.

The scarcity of 90% junk silver can be explained through the Gresham Law. It states that when two coins of the same face value but different intrinsic qualities are circulated together, the coin made out of precious metal is more likely to be hoarded. Thus, the one with a lesser value will remain in circulation for the longest of time.

As it happened in American history when the 1965 Coinage Act was passed, the junk coins were instantly swarmed by the fortunate few. The less valuable cupro-nickel coins, although of equal face value with their junk silver counterparts, were the ones left for dispersion.

To counteract the hoarding of the 90% silver bullions, the Secretary of the US Treasury resorted to making clad coins. The latter are coins made by sandwiching a copper core with two metals. Clad coins were not dated earlier than 1965.

Junk Silver Bags

In buying junk silver, these coins are commonly sold collectively in cloth pouches otherwise known as silver bags. Inside the bag is an assortment of silver quarters, dimes, and half-dollars. Most U.S. junk silver bags have a $1,000 face value. Others are sold in $500 or $250.

Whether it?s a dime or a quarter on the vintage silver?s face value, its metal content remains the same: every piece of junk silver coin will weight 90% silver. Hence, a bag of sterling silver will weigh about 715 ounces of silver regardless of the par value of the coins inside.

Determining Junk Silver Prices

If you have a junk silver piece at hand, here?s a quick guide to determine your junk silver coin?s price.

Take note that all silver values are pegged at $10 per ounce of silver. So to determine the actual value, the silver weight is multiplied by the current spot price of silver.

Coin Silver Content Silver Weight Face Value Silver Value
1942-1945 War Nickels 35% 0.05626 oz. $0.05 $0.56
1916-1945 Mercury Dimes 90% 0.07234 oz. $0.10 $0.72
1946-1964 Roosevelt Dimes 90% 0.07234 oz $0.10 $0.72
1932-1964 Washington Quarters 90% 0.18084 oz. $0.25 $1.81
1916-1947 Walking Liberty Half 90% 0.36169 oz. $0.50 $3.62
1948-1963 Franklin Half 90% 0.36169 oz. $0.50 $3.62
1964 Kennedy Half 90% 0.36169 oz. $0.50 $3.62
1965-1970 Kennedy Half 40% 0.1479 oz $0.50 $1.48
1878-1921 Morgan Dollar 90% 0.77344 oz. $1.00 $7.73
1921-1935 Peace Dollar 90% 0.77344 oz. $1.00 $7.73
1971-1976-S Eisenhower Dollar 40% 0.3161 oz. $1.00 $3.16

So when the price of silver goes up by ten cents, a bag of 90% junk silver coins will rise by at least $70.

Investing in Junk Silver Coins

Would you rather choose a 100-oz silver bar or a bag of circulated 90% silver?

Either of the two will garner the same premiums. But loose silver coins are much preferred by seasoned investors because they can be readily disposed in allotments or in bags whenever the need arises. A junk silver coin has a legal tender.

Survivalists, who are ever on the look-out for sudden economic collapse, think it is wiser to devote their finances on silver bullions as well. In such catastrophes, the fiat currency (wherein money used as legal tender is not made of precious metals) will be deemed worthless. Silver, as one of the known precious metals since time immemorial, can then be used as money in exchange for goods and services.

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Junk Silver Coins Related Articles:

Rare US coins ? You?ll never look at your loose coins the same way again once you?ve read this article on the rare presidential dollar coins, silver eagle coins, bare-breasted liberty coins, and many other interesting coins.

Introduction to United States coin collecting ? A comprehensive guide to the numismatics history in the United States.

This topic is about:

Junk silver coin, is the best way to buy silver coins or junks silver price. Silver bullion coins and rare old silver bar bullion. Gresham?s law on the most valuable US coins like Roosevelt dime, Washington quarter, Kennedy half dollar series error, Morgan silver dollar and peace dollar value. The %90 junk silver bags $1000 face.

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