US Gold Stockpile in Fort Knox?

These two options, returning the gold to the people vs using the money to pay down some of our debt, are essentially the same thing, because who is ultimately responsible for the debt? The government? Nope. Congress? Nope.

And how would you determine who gets how much gold? And how would you distribute it? Would you give everyone slightly under a half ounce of gold, or would you send everyone a check for $600? Would you tax that $600 as income? I wonder how much it would cost us to do any of these options, especially the distribution of physical gold option. No thanks!

If I had a choice between the two options, I say put it towards the debt. If you return it to the people, it will basically be another failed stimulus program. People get the money and spend it on stuff that was made in China. How does that benefit our economy?

Using it to pay down the debt is not the same as using it to "fund government spending". Debt is already there and we're already responsible for it.

 

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Putting it toward the debt is a waste of the asset. Congress will just spend more. The debt will be defaulted at some point in the future -- either by inflation or outright default. There is no preventing this now, it's too late. Like Iceland, nobody will be held responsible for it -- I doubt people in the US will go down the route of Greece and accept an outrageous drop in standard of living to pay back the banks and foreign governments. At least I hope not. I don't know how the gold will be returned to the people. That is for a future generation to decide. Perhaps it will be as simple as putting it up for sale to citizens, or permitting people to buy it at post offices or through their tax refunds at market or discounted prices. Maybe it will be divided per US census headcount. There are many ways to accomplish this. Or maybe it will just be stolen by some government or international banking entity if people sit passively and accept it. Nobody knows the future, but we can hope for the best.

 

Of course they will, but anything could happen in the future. What if we demand the kind of legislative reform that was outlined a in an earlier post? What if we get spending under control and actually see a budget surplus, and then sell the gold to help pay off our debt even faster?

What? So I'm a dreamer...

 

....but your not the only one.

Sorry, had to insert my favorite quote. I bet most of us here REALLY wish that, but I fear we are in the minority nowadays.

 

I think that even if by some miracle the budget is balanced without economic chaos, the debt that has been built up will never be repaid and at some point won't be rolled over when interest rates move higher. I hope I'm wrong but I fear I'm right.

 

Here is 007 after finding out all the gold in Ft. Knox is platted.

 

Not Ft. Knox related, but a bullionist photo from today (BoE? GLD's Gold?)

 

She's thinking:

"What are you waiting for? Turn this stuff into coins and put my mug on 'em already!"

 

The gold the Fed holds for other nations is at the bottom of the ocean in a crazy secure vault under Manhattan. Fort Knox is the peoples' gold from the confiscation back in the day, and while there is a high level of trust with Manhattan, Fort Knox is just a specter at this point.

On the off chance there is still gold in Ft. Knox it would be ill-advised to sell it right now. The debt isn't going to be paid off, and the price of gold will rise over time.

 

Nobody is forced to, and virtually nobody is buying US bonds.

Treasury Scarcity to Grow as Fed Buys 90% of New Bonds:
http://www.bloomberg.com/news/2012-12-03/treasury-scarcity-to-grow-as-fed-buys-90-of-new-bonds.html

While this will continue to push interest rates down and likely propel the multi-century high bond market to new highs, it does not bode well for the health of that market. FWIW I sold my inflation protected bonds for emerging markets last year.

 

Good call, but WATCH OUT for any deflationary downdrafts in 2013. (US capital investment scaling back in 3Q 2012 might be a quiet harbinger.)

http://www.nytimes.com/2012/12/28/business/reading-pessimism-in-the-bond-market.html

 

When you factor in the probability that there will have to be a default of some kind, I don't know when, it might be advantageous to have a high percentage of the bonds owned by the Fed so they can be "retired" or converted into zero rate perpetual bonds. So this isn't a clear-cut negative situation in my opinion, and may be part of a longer term plan to deal with the debt.

 

How about J.G Wentworth? Need cash now?

 

http://www.coinworld.com/news/book-value-of-gold-held-by-treasury-tops-11-billion-dollars.html#