2011 GOLD high $1,500.00, SILVER high $24.00

There is much less money in circulation than you think. As of 1/3/2011, the total was $916.1 billion per the New York Fed. Contrary to what people think, it takes a relatively small amount of money to operate the economy because of the multiplier. Each dollar is used multiple times during the year. The US has gold reserves of 261.5 million troy ounces, so all of the money in circulation could be backed by gold at about $3,500 per ounce at the present time with no additional accumulation or the use of other metals as reserves -- not outrageous since the amount of private gold isn't included in the calculation. I agree with those who say that gold and silver will never be used as money again, but it isn't because of the scarcity of the metals. It is because of political considerations.

 

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Does your explanation include all of the "electronic" money that moves around (not sure what to call it, since I don't totally understand it..) If it does, then why are we in such a pickle? I "thought" we operated on a different system, hence the problem a "run on the banks" would cause. Maybe I am thinking apples to oranges instead of apples to apples? Forgive the question if so.
Thanks, Lucy

 

Son, they did it this way in the USA for 150 years. During this period the nation had it's greatest period of industrial and economic growth. There was also no inflation despite the growth. The only time the economy got into trouble was during the few periods of fiat money being introduced in various central banking schemes.

 

I am not very surprised that silver is going down since silver had a very nice run-up in 2010 (up 83% in 2010). Silver is just taking a breather but nobody knows how long this will occur. We will see.

 

That figure can't possibly be right, since that would only amount to $3,000 per man, woman and child in the US. Considering that the US budget alone exceeds a trillion dollars, and there is a ton of US currency floating around overseas, I take the figure with a HUGE grain of salt.

 

Maybe. Would like to see another big drop first.

 

Sounds good to me too! :thumb:

 

So I wake up this morning to see headline news about China saying that the dollar is the past, and the Yuan is today and should be the global currency...I mean...wow!!

http://www.foxnews.com/world/2011/01/17/chinas-president-calls-based-currency-product-past/

 

Was reading this last week, you might find it of interest as well:

Persons Of Interest – Friday Kitcommentary from CoinNews.net [1/14/11]

 

Interesting read. Premature end to QE2 eh?.....hmmm.....

You know I was thinking yesterday, what if all this bullion buying that we are doing doesn't matter or worse, we end up with less than someone who hasn't done a thing?

So for example, someone with $50,000 USD keeps it in the bank earning 1% interest if even. Meanwhile, we take our $50,000 and buy as much PM's as possible.

2-3 years from now, for whatever reason, PM's DROP like a rock and you end up with much less than $50,000 if you decide to sell.

Meanwhile, the other guy who spent zero effort into PM's, ends up with more wealth than you. (including the -4% he's losing from inflation)


I suppose anything can happen, but it's almost damned if you do and damned if you don't eh???

 

Kind of like the proverbial person that sits idle and watches the world come and pass before him while his neighbor went off to see and experience the world only to find himself come right back to pass by the guy that never moved. Who gained more, which route was of more value. We each have to make our own decisions and act accordingly. Striving to achieve or working to secure your path is as risky as doing nothing.

 

Exactly!!!! The one thing I can say about your comment is that the guy who goes around the world obviously has to spend more money and energy to gain those experiences.

I would have to compare him to us collecting our PM's and watching the PM prices on a daily basis.

Whereas the guy sitting at home doing nothing, maybe even meditating? haha, are the people who have cash in their banks and call it a day.


This is why I don't push PM's to my friends any further than the first couple of conversations regarding them. Because I can be wrong....they could end up with more wealth sitting on their hands than me thinking that I'm doing the right thing with metals....

 

But that guy has been a permabear since day one. I wouldn't put too much stock into what he says.

 

It wasn't meant to be taken as a single source of information to live by, but rather one amongst many views to consider on the nature of the topic.

 

As biased as I am with PM's, I try to step back and keep an opened mind from what others are saying. I think it's healthy to approach things objectively. We may not like what they have to say but it's important to listen to them too....now there are certain people out there that may not be worth listening to because they, as analysts, are too biased themselves so keep that in mind...

 

I thought I answered this, but the answer disappeared. Spooky!

Electronic money such as the money in your checking account is an unsecured loan to the bank, not money in the currency sense of the word. The loan is secured up to certain limits by the FDIC. It isn't currency and there isn't $1 of currency backing each $1 in deposits, but the entire balance is counted in the money supply. Without the FDIC backing, the chances of a run on the bank would be considerably higher.

 

Though not in keeping with the op subject, where would the FDIC get the $ if it had to cover all that it is backing? Just wondering; I pull cash occasionally for that reason. Lucy (oh, and thank you for your explanation )

 

Cloud could answer this better and more accuratelty, but my assumption is that they have reserves to back up failed banks for their depositors. That's why there was such hoopla last year and even the year before about how much the FDIC can cover failed banks....if they run out of funds, which I'm not sure where they are right now, then I think they just print money!?

 

You are correct. All member banks pay annual dues to the FDIC as sort of an insurance premium. Those funds are used to cover failed banks. But keep in mind that when a bank fails, it doesn't mean that all of the assets are worthless, so the FDIC only has to make up the difference between what the bank owes depositors and the value of the assets. Banks are usually shut down before the losses become a significant percentage of total capital. Failed banks are normally acquired by larger banks after the shortfall is made up. I believe Congress can authorize additional funding for the FDIC in the event their reserves are not sufficient.

 

I have my doubts about all this. Fractional and all. I do not believe they would be able to cover us all, and I do keep a list of failed banks and the list is growing. A doubting Thomas am I. We are in a mess. I am not easily swayed in this, sorry.