ECON Gold right now

L

Line Doggie

Contributing Member
Banks are required to keep some percentage of collateral, or reserves, on hand to back up their deposits. When depositors show up wanting their money back, banks have to be reasonably prepared to meet those demands.
International banking is done in accord with a regulatory system called the Basel Accords, put out by the Basel regulators.
They're phasing in Basel III right now, which includes a provision that reduces the amount of unallocated gold that banks can claim as a reserve. Unallocated gold is 'paper gold', a claim on a holding somewhere that might have any number of other claims against it as well. Allocated gold, on the other hand, is gold that is being held in someone's name - it's claimed.
Banks therefore either have to increase their real gold, or allocated gold, holdings - or meet their reserve requirements some other way.
I'm certainly no financial whiz, but my guess is that the recent sogginess in gold prices has to do with banks realigning their holdings to comply with Basel III. The change in gold reserve reporting begins in July.
Staying with gold holdings or even increasing them might be the smart thing to do, especially given the inflationary or stagflationary world we're living in.
 
Bubble Head

Bubble Head

Has No Life - Lives on TB
Banks look at gold like Dracula looks at a cross. Tried it once to see what would happen. Put a small nugget down on the teller counter and said I wanted to cash it in. The teller backed up with eyes as big as saucers telling me I can't touch it. I knew that but it was still fun. It was a Wells Fargo Branch.
 
dstraito

dstraito

TB Fanatic
West said:
They will sell gold to buy the printers(FIAT)/computers(digits) until they can't.

Amazingly it's the wonderful Wizard of Oz in reality.
Click to expand...

And then they will come for yours

www.sbcgold.com

Home Page

Buy & sell coins, bullion, and bars from a reputable gold & silver dealer. Learn to set up a gold IRA with the experts at Scottsdale Bullion and Coin.
www.sbcgold.com www.sbcgold.com

If you’re like most Americans, you’ve likely heard the comparisons between the COVID-19 Recession and the Great Depression.

Looking at the numbers, there are a lot of similarities: the unemployment rate was 25% during the Great Depression. Even though it initially reported an unemployment rate of 14.7%, the Bureau of Labor Statistics later hinted that the real rate is closer to 20%. If it stays that high, we could technically be in a depression.1

And just like in the 1930s, the U.S. Government has resorted to massive spending (borrowing) to keep America’s economy from collapsing.

It’s understandable then that many investors who’ve diversified their portfolios with gold bullion are concerned the government could resort to Great Depression-era tactics to bail itself out. The President rewrote the laws and confiscated Americans’ gold bullion in 1933.

Could Gold Bullion be Confiscated by the U.S. Government Again?


theconversation.com

How the US government seized all citizens’ gold in 1930s

You’ve heard of compulsory purchase orders for houses, but few realise it has sometimes happened with the world’s favourite precious metal.
theconversation.com theconversation.com

How the US government seized all citizens’ gold in 1930s

With global financial markets in disarray, many investors are turning to classic safe havens. Gold is trading above US$1,750 (£1,429) per troy ounce, which is the standard measure – more than 15% above where it started 2020. Even after a strong rally since March, the S&P 500 stock market index is down nearly 10% over the same period.

Gold confers familiarity during downturns. Its returns are uncorrelated with assets like stocks, so it tends to hold its value when they fall. It is also a good way of avoiding currency devaluation. It therefore features in any well diversified investor’s portfolio, whether via gold-mining shares, gold funds, bullion or whatever.

Yet there are two slight caveats to viewing gold as a safe haven. Early in an economic downturn, gold prices often plummet with the rest of the market. This is from investors selling gold to offset losses in shares and other assets. We saw this in March, when gold fell 12% in two weeks, then quickly recovered. If the coronavirus causes more market panic, this could happen again.

During extreme crises, governments can also seize people’s gold. There have been some stunning examples of “gold confiscation” in the past. Most memorably, this occurred in the US in 1933 during the great depression – albeit it’s more accurate to call it a nationalisation than a confiscation, since citizens were compensated. The government of Franklin D Roosevelt seized all gold bullion and coins via Executive Order 6102, forcing citizens to sell at well below market rates. Immediately after the “confiscation”, the government set a new official rate for gold that was much higher as part of the Gold Reserve Act 1934.
 
coalcracker

coalcracker

Veteran Member
Southside said:
You are here! You are on a list. Probably quite a few. If you're not, you are doing something wrong.
Click to expand...

My guess is that the lurkers, you know, the ones who often read on this forum, but never post - the FBI probably has them on a double black list. “These sneaky little buggers think just like us,” Agent Sam exclaims. “We need a special list just for them!” :D
 
Dobbin

Dobbin

Faithful Steed
Line Doggie said:
I'm certainly no financial whiz, but my guess is that the recent sogginess in gold prices has to do with banks realigning their holdings to comply with Basel III. The change in gold reserve reporting begins in July.
Click to expand...
It's a "law of supply & demand" thing.

The stiffening of gold price has to do with "demand" for allocated gold caused by Basel III. Unallocated holdings have to be replaced by allocated holdings for the bank to retain the same "margin" - and this forces the banks into the gold market. Another buyer competing against a legion of buyers results in more competition for gold - which raises prices.

Of course another pressure on the gold market is the "security" it offers as a commodity.

Traditionally an ounce of gold has bought a high end man's suit, a cigar, and a good meal at a high end restaurant. This has not changed.

And the pricing of gold is not so much the rise of the golden commodity, but the drop in the dollar caused by Biden's inflationary destruction of the economy: too many dollars chasing too few goods.

Dobbin
 
Doc1

Doc1

Has No Life - Lives on TB
Note: What follows is HIGHLY abbreviated, but it is true nonetheless. I will be happy to engage with anyone who takes exception to any part of it:

If you are a Bible believer, you understand that gold and silver are God's money. Also, remember just weights and measures and the laborer being paid honestly for his work.

This has never set well with bankers, who like free money. The banking system as we know it began with goldsmiths in the Middle Ages. At that time people realized that carrying large amounts of gold was inconvenient and dangerous. People began depositing their gold with goldsmiths for which they received a receipt.

Over time, people began trading these gold receipts as "cash" instead of trading the actual gold. The goldsmiths also realized that all of their customers ever came to redeem their gold at the same time, so the goldsmiths began printing extra receipts for gold which never existed.

This, in very broad terms, was the beginning of our current fractional reserve banking system and is also the underlying reason for the existence of what today are known as bullion banks. It's also intimately tied in to what we now call fiat money. "Fiat" means by decree, so fiat money is money made legal tender by decree of the ruling government.

Formerly, currency was convertible into precious metals. If you had a $20 bill, you could go into any bank in the US and exchange your $20 bill for a $20 gold piece or twenty silver Dollars (or $20 in smaller silver change). Of course you can't do this today, due to a number of incremental legal changes over the decades.

In 1933, President Roosevelt confiscated American citizen's gold and made its use in domestic trade illegal (though foreign countries could still engage in gold trade with the US). In 1965, the silver content in US coinage was eliminated and in 1971 gold redemptions by other countries was eliminated. Today, the US Dollar is not backed by anything other than the "full faith and credit" of the US Government. The full faith and credit of our Dollar basically means full faith in paper and electronic digits. Mc Donald's food wrappers are paper, too and Mickey D's computers are full of electronic digits. Makes you feel all warm and fuzzy, doesn't it?

Throughout history, going back to the Roman's debasement of their coins up through modern times, in every case where governments and bankers eliminated the precious metal backing of their currencies (or monetary units), those currencies eventually failed. There are literally hundreds of examples.

A good case can be made that the US Dollar has already failed, as it will currently only buy one to three percent of what the Dollar would buy at the turn of the last century. Still, the Dollar does buy things and is widely used, so most people still have confidence in it. This confidence is waning though, as inflation is beginning to accelerate (much like it did in the 1970s), the government is creating more Dollars out of thin air at a staggering rate and fewer countries are using the Dollar in international trade. Eventually, if history and math are any guides, the Dollar will completely fail and become no more useful than Zimbabwe Dollars.

Do you want to be left holding the Dollar bag?

Best
Doc
 
Southside

Southside

Has No Life - Lives on TB
Note: My avatar.
I'm on a few lists.
Only one pisses me off
The "No Fly List"

And the class action lawsuit trudges thru court......
 
You must log in or register to reply here.
Top