Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: d:oug who wrote (37109)	7/14/1999 1:11:00 AM
From: Jim S	Read Replies (1) \| Respond to of 116791

Wow, Doug, you are going to give me a workout trying to answer your post. I'm no expert, just a novice here trying to figure this stuff out. But I'll try to answer with my opinions as best I can. First, Pres Nixon took us off the gold standard back in the 70's, so for the last 20-some-odd years, we've proven that a paper currency doesn't need to be backed by anything other than the "full faith and credit" (whatever that may be worth) of the issuing government. I've seen some really good arguements that a gold backed currency is almost inflation proof; I'm no historian, but I can remember near panicky headlines during the Kennedy and Johnson years about a rate of inflation above 5%. This was after the POG was allowed to "float" according to its international value (by Ike?). The floating value was required because our money supply was starting to exceed the amount of gold available. You ask for specifics about M1 and M2 relations to the quantity and value of gold reserves. These are far beyond my ability to answer. I simply don't know. It seems reasonable, though, that since gold couldn't pour into Ft Knox as fast as the treasury was printing dollars to support the war in 'Nam, that by the time Nixon threw in the towel, the gold "backing" for a dollar was mighty damn small. If POG were to determine the value of a gold coin used for currency, things could sure 'nuff get confusing. To know the 'value' of the coins in your pocket, you'd have to be tied in to a quote service to get current spot. Could be mighty embarassing to take your girlfriend out to dinner, thinking you had enough for chow and a tip, only to finish the meal and find POG dropped, and you and the lass wind up in the kitchen doing dishes. No, I think a stated value is probably a better way to go. I got a kick out of your stamp example. You are right, of course -- a 1980 $.22 stamp probably IS worth more than a current 33-center. But, try to convince a postal bureaucrat of that! <G> By the same token, a pre '66 silver quarter is also worth a lot more than one of today's clad quarters. But, I betcha you couldn't get a Federal Reserve Bank to give you more than one dollar for four of 'em. Same with silver and gold certificate paper money. All you could exchange those former items with "real" value for would be a piece of paper that says right on the face that it is worthless ("Federal Reserve Note") except as an IOU. I don't know enough about any of this to be certain of my answers, Doug, but that's my story, and I'm sticking to it! (Until someone changes my mind, that is <g>) jim