are gold and silver money?

I work for a geological services company in Japan, and have connections with a major metals research center.

 

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There is a big difference between drilling a few hundred feet in offshore areas for oil and trying to collect sulphide metal ores 4000 feet below the surface out of an undersea volcano.

 

Wow! You just made mining sound like a cool freaking job!

 

100 years ago under the Act of 1900, gold and only gold was money. The limited amount of silver could be exchanged for gold at the US Treasury.

 

all this is true.. but to defend my honor your honor, i never said it was easy to get i just said it's down there...

 

Collector66, since you are an international man of mystery, a collector and a genius.. can you answer my question about taking $3000 face value in gold on an airplane and declaring only $3000.

( know you are a genius because i'm a genius and you are smarter than me!)

 

If you are carrying the coins on a domestic US flight, you don't have to declare the value.

If you are carrying the coins on an international flight, say from Japan to the US, you have to declare the value if it is at least $10,000 when you arrive in the US. However, this is the sticky part. The US Embassy in Tokyo has told me that if I am bringing US coins into the US, I only have to declare the face value. However, some US customs agents interpret the law to mean convertible value. So if I have 10 double eagles, the face value is only $200 and technically I don't have to declare them. However, some customs agents might say they are worth more than $10,000 and tell me to declare them. I've run into both situations.

 

I am not sure about this much gold off the coast of Japan, but I do know for sure, there is no shortage of paper and printing presses.
Like oil, gold is getting harder to find, mining companies have to dig deeper and deeper to find the stuff.
An Australian miner recently suggested demand for gold is 30% greater than the amount of gold being recovered. It's only common sense that supplies are drying up. Similar to idea of peak oil.

 

Except that peak oil has been predicted now for 30 years I have paid attention to it. They always predict the peak about 8 years out, and some technology comes along. Some day there will be a peak, I am just warning you I have read peak oil for a long time.

Currently we extract oil from fields far longer than anyone could have imagined. High PM prices I believe will lead to new technology allowing recovery from PM fields long after they have been "played out". The ancient Egyptians had a gold mine they abandoned, and it stayed abandoned for 2500 years. They found it and with new technology is now a major gold producer.

 

There are some good thoughts here!

My only question is will they find new reserves of silver and gold (or find more efficient ways to mine silver and gold) causing an increase in the supply ... FASTER than they are printing fiat currency? My guess is no. Bottom line is I STILL think silver and gold is one of the better ways to protect your wealth.

Let's look at that U.S Dollar printing graph again ... hmmm

 

I understand your concerns Winged, but your original question on this post was "Are Gold and Silver money"? The answers lies in the answer to this question:

How much is silver today? Everyone, even on this board, will say XX dollars, (or Euros, etc). I bet no one will say, "silver is xx grains of gold, or a big mac is XX grains of silver". Everyone states something's cost, value, etc in dollars, (euros etc). That answers the question as to what is "money", and what is something bought with money.

I just cannot see any of us paying in gold dust, or cutting an ASE in half to make change for a purchase in the near future. PM is a store of value, and a commodity to me, pure and simple. Is it a good thing to own? Yeah, but without a firm tie to what everyone around you accepts as money, it is not money.

Btw, while the above graph is interesting, note aren't the major concern with the dollar. US Treasury obligations are the REAL dollars, and are how dollars are traded around the world daily. Notes are really only non-interest bearing "little brothers", and they could be 3 Trillion in quantity and still not be the major dollar concern.

Chris

 

Chris, you seem very knowledgeable. This is a little bit off topic. but do you have any conjecture on how it would impact the U.S. if the dollar lost it's world reserve currency status? Would that cause a severe drop in world wide demand for U.S Treasury Obligations? And how would that impact the value of the dollar?

 

Thank you for the compliment, but my opinion would not be more informed than many others here. I think you are already seeing in the dollar weakness a rollback of the dollar as the world's reserve currency. Many Eastern European countries have people trading in dollars for Euro's every day. If the Yuan becomes more convertable I expect the same to have in SE Asia and central Asia with people trading in dollars for Yuan. I believe we will just see more dollar weakness and costs of imports into the US going up, but the value of exports also going up. In short, we will not have the luxury we have had, and the US will start to drift back to greater exports and fewer imports like we were decades ago.

This is why I position my investments with exposure to other countries, even if its a US firm foreign sales will boost thier profits in dollar terms. If this scenario plays out, you want assets with sales exposure in the rest of the world, be them US or foreign companies, and owning hard assets that will go up in dollar terms. Any asset that is strictly a US asset, (like your house, or US stocks that only sell in the US), I believe will decline versus international assets.

Just an opinion and explanation of my asset strategy right now. Its probably worth what you paid for it!

Chris

P.S. On the numismatic front, its another reason I typically do not buy US coins now, but collect ancient and world coins. Ancients are denominated in Euros mainly, and world coins always have the ability to go up in their home country, and if that country's currency is going up against the dollar, a chance for a double gain.

 

Just saying here...

How are you finances going now, on the 40th anniversary?

 

Well do they just confiscate your $20,000 in gold.. do you get it back to they throw it in the garbage like my pin knife.

 

Doc, i was raised on a farm and plowed with a mule... Never in my wildest dreams, would I live in a world where I would have to say to a four year old boy " I don't have enough money to buy a watermelon".. In 1970 I made $300 a week .. the best tailored shirts cost $5 my car was the one they keep inside at the dealership cost $5000... The money I made on Monday paid all my bills and tuesday through friday was mine to keep.. In 1990 i realized it took Monday through Friday's pay to keep me afloat. And if I wanted any for "mad money" I had to work Saturday. Now I go in the hole $1000 a month just to pay the bills and can't work enough weekends to catch up.. Your chart Is right on the money.. so to speak. And the point where it crossed 25 cents was the point that most Americans who thought they were middle class became not middle class again. According to your chart a person who makes less than $90,000 a year is making less in buying power than I had just out of High School.

 

And I suspect it will get worse before it gets better.

 

No one would disagree that 15,000 silver dollars would build a nice 1800 square foot ranch style house in 1960 and where I live If one had put those 15,000 silver dollars in the ground and dug them up today you could still build a nice 1800 square foot ranch style house with them.

 

I believe a lot of Ft Knox is composed of "coin gold", gold that was from melted down US coinage. If gold was confiscated for US purposes, I would suppose it would either be melted into bars and stored or melted into bars and shipped overseas as payment of US debt.

 

I first read about Peak Oil in a National Geographic article in the late 90s and came to the exact opposite conclusion. I did a lot more research and subsequently invested in the industry with great results. It's still one of my largest investments. There is a lot of misinformation about peak oil. It doesn't mean the world is running out of oil or that production will fall substantially. Right now we are at something of a plateau in production where it is becomming more and more difficult to raise reserves and production world-wide. I believe light sweet crude production is already declining and a lot of the replacement oil is the heavy stuff, some of which is unsuitable for anything except asphalt, and some that is natural gas liquids with limited uses -- all barrels are not created equal. So despite the recession, the price is still multiples of what it was a decade ago. I don't expect the world to run out in my lifetime, but demand will probably continue to exceed the ability of the industry to raise production, and that's all it takes for prices to continue to rise faster than inflation in a volitile manner.