Will gold ever be profitable again?

Every coin struck by the US Mint is legal tender. Now a $50 face value on 1 ounce of gold is far below its economic value, but it

1. demonstrates completely Gresham's law and..
2. completely disproves your notion that gold is just a commodity.

It's USD just like the paper version. If not, then lets hear your definition of "money". And then let's put it to the test against toiler paper.

 

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Really? Show me how the government issued the $50 at face value but hoarding of it drive it from circulation. Your argument is a fallacy since you know darn well the notional value of a AGE is simply to call it a coin, not one AGE or ASE was ever sold at face value from the US mint.

Gresham's law worked on older gold coins, but AGE has never been subject to it, since it never circulated at face value in its entire history.

My basic definition of money is the medium of exchange that a society uses. When you go to the grocery store, how do they tell you what you total is? Do they tell you that you owe 4.36 grams of gold? 3.1 ounces of silver? 14 bushels of corn? 1.2 barrels of light sweet crude?

No, gee I guess they tell you its $86.78, huh? Yeah, right in that second they tell you what is "money" in the US. It is the "thing" that all of us agree to exchange goods based upon. That's all, nothing more or less.

We can get into other aspects of money, debate store of value, etc ad nauseum until everyone here is sick of it, but in the end "money" in any society is the commonly accepted medium of exchange that everyone accepts its value and denomination. I don't care if its USD, CAD, Euros, sea shells, gold, or twigs. If the price for a gallon of gas was 14 twigs, I would accept that twigs was our money, just like I would accept gold were our money if for a gallon of gas the gas station had on their sign they wanted 1.34 grams of gold a gallon for it.

Its not. I simply deal with reality rather than wishful thinking, wanting everyone to covet my little stockpile of PM more than they do.

 

Do you understand Greshan's law. It doesn't say anything about hoarding. It says the money will in hordes which is another word for collections.

When the AGE law was first proposed, it was put forth as an alternative circulating currency to the Federal Reserve Note. You can go back and read the original proposal to Reagan in the 1980s as it was not supposed to have a $ face value placed on it. At the last moment, a legal tender value of $50 was slapped on it which immediately made it useless for circulation. Gresham's law was proved.

 

Yes, as a matter of fact I do know Gresham's law, do you? It states bad money drives out good. For that to even be applicable, at some point in time the $50 AGE had to have circulated, which it has not. It cannot drive out of circulation that which has not circulated.

Btw hoarding is what happens to the superior money. Its another way to state the affects of Gresham's law.

Now, why don't you actually respond to my assertions in post #22 instead of trying to insult my intelligence. How many gas stations post how many grams of gold per gallon Fatima, (if gold is the only "real money"?).

 

Gold below $800 as priced in fiat US dollar currency would require money to stop being printed, and even a good amount destroyed. Neither of those will happen any time soon.

 

I hit end on my post too soon so I will answer this again.

When the AGE law was first proposed, it was put forth as an alternative circulating currency to the Federal Reserve Note. You can go back and read the original proposal to Reagan in the 1980s as it was not supposed to have a $ face value placed on it. At the last moment, a legal tender value of $50 was slapped on it which immediately made it useless for circulation. Gresham's law was proved and the people who did this, knew it.

I will try to address your other points.

"Gresham's law worked on older gold coins, but AGE has never been subject to it, since it never circulated at face value in its entire history."
Addressed above. The reason they didn't circulate is because Gresham's law prevented it. The original proposal to Reagan was for AGEs to circulate.

"My basic definition of money is the medium of exchange that a society uses. When you go to the grocery store, how do they tell you what you total is?" You give a general definition with a specific example. For your definition to be valid, it should be applicable to any society. Hence, there is no reason, based on your definition that in the future that toilet paper can't be used as a medium of exchange. The Native Americans used to use corn as currency as another example. If you mean what is currency TODAY, well I wasn't addressing TODAY.

"No, gee I guess they tell you its $86.78, huh? Yeah, right in that second they tell you what is "money" in the US. It is the "thing" that all of us agree to exchange goods based upon. That's all, nothing more or less." So now you amazingly change your definition in the next breath to that of money is defined in terms of what the buyer accepts. (not that I disagree)

"I don't care if its USD, CAD, Euros, sea shells, gold, or twigs. If the price for a gallon of gas was 14 twigs, I would accept that twigs was our money, just like I would accept gold were our money if for a gallon of gas the gas station had on their sign they wanted 1.34 grams of gold a gallon for it." You just contradicted yourself yet again. If you can accept twigs as money then you can accept toilet paper can be money. Hence, you just proved my original post. Your attempt to be literal about Gresham's Law just fell on its face.

Honestly you should not try to be so serious about a post of toilet paper vs the dollar. Dear heart, it was a metaphor. We all know you can read google results so you don't need to go out of your way like this to prove it.

 

A fair point. I guess what I meant to say was that fluxuations in the dollar do not necessarily equate to fluxuations in the value of gold.

 

Maybe this will help

www.metacafe.com/watch/2537590/school_house_rock_im_just_a_billMar 11, 2009 · America Rock

 

I agree. :thumb:

 

Good lord. ALl of my examples were identical to each other, there was no contradiction except what you wished to see. Every single time I was saying money is what everyone agrees to accept for sale and purchase of goods in society. Whatever "it" is, its money if accepted as the means of exchange.

Btw, I was reading Coin World back when they were talking about AGE and ASE programs. All I ever remember for the reason why denominations were applied was to make them acceptable as coins to coin collectors, since the mint had made gold medals for purchase for years and no one bought them since they were not considered "coins". Please provide a link to an authoritative resource for your assertion that Reagan wished for AGE's to circulate at such low face value. I find it an incredible assertion since I had never heard that ever before.

 

As I said before, your personal anecdotes including what magazines you read are uninteresting and the fact that you don't know about it isn't surprising as you don't demonstrate any inclination to believe much beyond the standard status quo, as demonstrated by your response.

Never the less, since you posed the challenge, a link with a complete summary of how the American Gold Eagle Act of 1985 was created along with its preceding history can be found http://joecobb.com/2008/02/08/public-law-99-185/. This was posted by a party who was there and participated in the process. As for being authoritative, he lists the individual bills and related legislation so you can go look them up for yourself if you are in disbelief.

 

I'd be interested as well in this claim.

 

That doesn't say anything about Reagan wished for AGE's to circulate at such a low face value? It only mentions Reagan once and refers to his Administration.

Here's some interesting reads on Reagan and how he handled the Gold Standard (sure he supported it, Gingrich said the same thing this past year, which quickly died off during his tenure in office):

http://www.nytimes.com/2012/02/03/business/in-rise-of-gold-bugs-history-repeats-itself.html
http://mises.org/daily/1544


From the second link,

Reagan never had any real intentions of going back or pushing for the "Gold Standard" again, it was just him playing politics, to say what was needed to get more votes, like most politicians do or say when it comes to economics.

 

It reads like one giant "personal anecdote" Fatima. Not believable in the slightest. What kind of mumbo jumbo gobblygook is that last paragraph? How the heck is the US supposed to prosper by issuing out ounces of gold for $50? Only a true moron would ever believe they would circulate worth more than 10x face value while FRN's circulated as well.

Btw, not one word about Reagan. It mentions Regan, but I seriously doubt he ever believed this either.

As to you insulting me, I guess its par for the course. You tend to find personal satisfaction insulting many on this board. I was merely saying I read all of the press at the time before AGE was ever struck, and no word of real circulation was ever mentioned, and they wrote about why there would be denominations on the AGE, but I guess that is enough cause for you to continue throwing out insults, huh?

 

Directly from the article.

The Reagan Administration responded to Helms’ request to move forward. (I was a close friend of Howard Segermark, who was Jesse Helms’ aide on gold and economic issues. Segermark was the person who drafted Helms’ amendment to the IMF funding legislation in 1978.)​

I assume you didn't bother to read it (no surprise) or you didn't comprehend it. No matter. The facts don't depend upon what you choose to believe in or not, nor does it matter to me. I said in my response that this blog was just a summary and it was on you to go and look up the articles and notes mentioned. Not all history is a simple web link. You have to do your own research and go get some education. There is enough there for you to this, but since you won't even bother to read it, then I suppose we are done with it.

In regards to what you call "insults" you insist on listing your own actions and behavior as some sort of proof that what you say is proof enough and that because you said it, it must be true. I only raise issues with these "qualifications" that you list for yourself including your reading material of the 1980s. If you can't present it here with the same authority that you demand of everyone else, then you are wasting our time.

 

Though I consider the NY Times to be nothing more than a mouthpiece for Wall Street, your article sums up exactly what I said earlier. The gold bugs were outraged when the proposal first put forth to Reagan was denied and the bill that Reagan actually signed into law introduced $ face values on the gold coins. This was completely unlike the Krugerrand they were intended to compete against.

 

Oh, That's right, one of the hundreds of thousands of people who work for an administration each have the ability to speak for Mr. Reagan personally. I forgot that rule. Duh.

 

NY Times the mouthpiece of Wall Street? One of the most liberally biased newspapers on the planet is the mouthpiece for business? Now, if you said the WSJ it may actually have ben believable.

 

I don't deny at all that the NYT is very liberal from a social perspective. You name a leftist social cause and they are right up there. On the other hand, in terms of economic and political matters they are extremely conservative in protecting the status quo of Wall Street. Of course I don't expect you to understand the difference as I suppose you assume that liberal vs conservative is nothing more than a simple line drawn in the sand and you stand on one side or the other on all matters. At least, this is what your question suggests.

When they are receiving huge amounts of advertising revenue from Wall Street firms, only the completely naive would assume they would bite the hand that feeds them.

 

Wrong again. The "administration" means the Executive Branch of the federal government. It does not include the 100s of thousands of people who work in the civil federal government. And if you believe there are 100's of thousands of people authorized to speak for the president, then you know less about our government than I even dared to guess.

You know, I think you have gone off on the deep end concerning that you brought up this entire matter on a comment made about using edited You really need to get some sort of grip on reality. I think several of you need to follow this advice , even this poster. You guys know the rules on politics and language. Get real! Do you think you will change anyone's mind let alone the political minds of the US and the Universe. Peter got rid of the Open section because of abuse and I would put this Bullion forum on life support.