Why is gold making record highs?

Discussion in 'Commodity Futures' started by bearice, Sep 20, 2010.

  1. How did we get here?

    1) 1787 - The Constitution is signed, mandating that only dollars convertible into gold and silver are to be issued as money by the U.S. Government.

    2) 1780-1913 - Banks engage in fractional reserve banking. Repetitive boom bust cycles occur as banks expand credit during booms and subsequently contract it by writing off bad loans during busts.

    3) Banks often fail during busts as the public demands access to their money. The bank runs expose the fact that the banks are insolvent, having lent out multiples more money than they have on deposit.

    3) Despite these boom/busts, over time value of the dollar holds steady because it is tied to gold. Base money can only increase at rate of physical gold increases.

    4) 1913 - Powerful banking interests finally succeed at hoisting a banking cartel on the American public called the Federal Reserve System. Bank runs are no longer a problem for the insolvent banking industry as they can borrow money from the Fed to cover redemptions.

    6) The U.S. Dollar is still backed by gold but now instead of the Treasury issuing the dollar bills, they are issued by the Fed and called Federal Reserve notes. This arrangement somewhat obscures the nature of money creation from the public's eyes as it must go through an additional step. The U.S. Government borrows money by issuing bonds. If need be, the Fed can buy those bonds with money it has created out of nothing. This arrangement is popular among politicians because it allows the government to run deficits and be assured of a buyer for their bonds to finance this borrowing. The process of the Fed buying bonds from newly created money, now called monetization or quantitative easing, is held back by the dollar being tied to gold.

    Complete article-:

  2. there ain't much gold for sale.
  3. The total of all the mined gold in the world is worth $4 Trillion.
  4. As Peter Schiff has said "Gold is the canary in the coal mine".

    And the canary isn't looking so hot
  5. Gold is high yes but there is a cyclical trend around this time every year and is pushing it to records. It will get higher until the new year then fall in price. Silver will do the same.

    It will never be cheap again.
  6. emg


    doomsday is coming.
  7. My calculations put it at $6.779 trillion. (165,000 tonnes x 32150.75 oz per ton x $1,278 spot rate)

    Also...all the gold reserves in the United States = $334 billion and we have twice as much gold as the next biggest gold holder.
  8. Do you have the amount of that 165K that is still in circulation? I'm sure some of it was lost at sea, wasted in manufacturing, hidden and never found, etc...
  9. drcha


    Hey, do they still have those shows on middled-of-the-night TV where sailors go diving for ancient wrecks? I loved those.

    My 2 cents: people perceive that the world economy is recovering. Because of all the currency that has been put out there over the past 2 yr, massive inflation is expected, thus the rise in gold futures
  10. achilles28


    Why is Gold making record highs?

    Because Western interest rates will never return to moderate levels in our lifetime.

    When the US consumer recovers, SHTF
    #10     Sep 20, 2010