Gold was not confiscated - it was nationalised i.e. you were paid for it. (Hopefully in a future nationalisation you would be paid the market price, rather than the 'official price' of gold)
Only a small percentage of the privately-held gold was turned in. (As you alluded to, electronic traceability would make it easier for gold to be tracked down now, unless you are buying with cash.)
Gold jewellery has never been nationalised, so this is an option. (However, there is a considerable premium over the spot price of gold.)
Eannao-
If you want cheap gold jewelry (which is to say, only a small fraction above the melt value) go to asia. Last time I bought some, the gold content was about $600 and the premium for making the jewelry was about $18. When you turn it in for cash, you get pretty close to melt value - I think you might lose a couple of dollars.
Seriously. Gold jewelry in asia. Premium for jewelry there is LESS than on a gold eagle.
Of course…it is really, really important to buy from a reputable shop.
It is relatively common for people in asia to swap their gold chains for cash when they need money. Any shop that hosed its customers in that area wouldn't be around long.
Interestingly enough, that same sort of deal is available in Chinatown in the US, but the markup is a bit steeper. I bought a gold chain in San Francisco chinatown (cash, as I recall) for about $50 over melt. Know the price of gold per gram that day so you look like you know what you're doing - purity assessment is important too. Again, reputable shop is critical.
You could always think about going into the gold jewelry retailing business. That requires having an inventory prior to actually selling anything. Presumably you could store most of the inventory for your prospective business in a safe deposit box. Nothing to do with avoiding confiscation, of course.
Hi Dave,
thanks for that info - really useful. Do you know anything about the jewellery premiums in Dubai? I'll be flying through there in February and I know they've got a substantial gold market. I'm flying onward to Thailand, so perhaps I can get something there too.
The fact that Asians swap their gold chains for cash shows how much gold is viewed as money in Asia - certainly not the case here in Europe.
Also really interested in your retailing suggestion. I'm in a business in which retailing jewellery is a possibility, so I'll look into it. Thanks again.
Gold isn't money per se in Asia, but its most definitely a wearable store of value. I get the sense they treat it like a bank account.
If you compare Dubai with Thailand - I'd pick Thailand. I'd guess spreads are cheaper in Thailand - bars (92.5% purity) are 100 baht per .48 oz. Jewelry spread is larger. Bars are really only useful within Thailand.
Go to Chinatown in Bangkok. You can't swing a dead cat without hitting a gold shop. You probably want one with more customers rather than less. Hua Seng Heng is one possibility, I've heard good things.
There might be tax issues if you want to bring a big bunch of gold jewelry through customs. There would be in the US. You would know better than me. I suppose you could always look like Mr. T. "It's just fashion for me to wear 30 chains…"
[EDIT] It occurs to me that in Dubai they might have better prices on .999 1 oz bars that might be better accepted back in Europe. Thailand has its own funky bars that are the same purity as the jewelry that (as I said) are only useful in country.
The velocity of money may be dead,because of terminate hold.Debit card money transfer from my account to the store;no money changes hands , no velocity.
So I went to the vendor and we got chatting. He does the lecture circuit discussing gold and silver.
The tears of the moon has got more upward pressure on it than the sweat of the sun.
We agreed that air has to be let out of the Australian Real Estate bubble slowly. Further, we agreed that there will be many who will be found to be swimming naked as the liquid goes away. Expect forced sales of Australian Real estate. Expect silver to hit $300 from a base of $20. A 15 fold increase. If the market is allowed to express it's exuberance. I anticipate an unfortunate overshoot.
We found that the 1 kilo bars were sold out. This cannot be interpreted as a shortage of Silver but we can definitely say that Perth Mint cannot cast silver fast enough for the demand.
On reflection I should have got more. But I want that piece of land too.
I think if you go to the FRED site and check the US GDP data, you'll find that GDP has only increased a little over 7 times since 1952, not 17 times since 1970. This makes your case for the growth of debt versus GDP far more compelling than currently shown early in this excellent post, that is, the growth of debt since 1952 is 149-fold versus the 7-fold growth of GDP.
I'll be happy to send you the chart comparing the two series if you tell me to what email address you would like it sent. And the FRED data if you want that as well.
And interesting blog.
You are saying that things look even clearer if the debt/GDP ratio is taken from 1952 rather than 1972.
Let me compose my best counter argument.
Tricky!
I'll base my argument on the idea that there is a plan.
The FED could sweep all the gold off the table and produce many tungsten bars to discredit gold. Money may become an ancient relic. The new world order could distribute to each his need, bypassing the need for cash or computer digits other than for record keeping.
Population control could be effected by many devices. (Endocrine disruption and race specific phages )
Judging by the ennui that Cold Fusion has generated it is conceivable that TPTB have something much better in the wings. (Energy underpins everything, but it has negative consequences so it must be paraded for our inspection when we are far fewer and less unruly.)
Thank you for keeping a close eye on the data - data is the foundation of our work here.
What I did was compare apples to apples. Because the debt figures are all quoted in nominal dollars (that is, they are not adjusted for inflation) I thought the best equivalent comparison would be nominal GDP (also not adjusted into 'current dollars' or 'constant dollars').
That way, we're not comparing an adjusted data series to an unadjusted series. At FRED, any time you select "GDP" you are almost always selecting real GDP, which is an adjusted series.
If I've used the wrong data series, or you've got a better set of examples to use, I'm all ears.
Thank you, Chris, very good point. Debt is, after all, "adjusted for inflation," otherwise why would inflation be so beloved by debtors?!
Maybe I'll have to think of a better data series to dramatize the exponential growth of the monetary plane versus the linear growth, or lack of it, in the physical plane, e.g, digging holes, building houses, serving dinner at restaurants, etc. If you can think of a better one, then I'm all ears. I guess it would have something to do with all of the items people think of as monetary wealth. Adjusted for inflation, of course. I will work on that.
I certainly do not wish to be dismissive of this thread, as these discussions on PM's do make me pause and consider how best to protect wealth. I tend to share Arthur R.'s perspective that productive assets appear to sustain value in "real" terms as opposed to a "nominal" classification. I can't help but ponder the fact that it is generally agreed upon that pre-industrial agriculture returned anywhere between 5 and 50 calories of food energy for a calorie invested (human and/or animal assisted). Current estimates signal a ROI of 75 to 100 non-human calories invested for each calorie produced. That does not include the by product costs of disposal or of environment costs , commonly referred to as externalities. A simple equation for me.
Perhaps an investigation into land investment strategies might be a follow up editorial for you, Chris. Given that the world population is approaching 90% urban, the rest of us "schmucks" living out here in the wide open spaces (2-4%) would appreciate your read on the numbers. My bias is that gold is a hedge and land is an investment. Iron, right now, is a bit more precious to me than gold that is beyond my grasp. Given the activities of the Chinese and Saudi investors in acquiring agricultural based assets, in addition to gold; what can they tell us that we don't already know?
Thank you, Arthur.
I agree with you that there is such a plan, but I think the would-be controllers are losing control. The whole system looks to me like the Tacoma Narrows bridge and its collapse-wobble has begun. This is detectable not just in human-built systems–where an honest expert in almost any field can go on at length about how things are broken and corrupted in his or her field–but in natural systems as well where we see increasing earth changes, weather wildness, the accelerating decline of Earth's magnetic field, etc. It seems to me that lots of cycles of widely varying durations are coming to a close and no controller strategies will be able to withstand their effect.
Of course, the good news about the ends of cycles is that new cycles inevitably emerge, which is where we all step in, through admittedly very hard work and all the creativity we can muster, and create a far better world going forward as the unsustainable control systems crumble away. So there's that plan as well.
Thought experiment for you Chris. The US government comes to you and says, "OK, you got it right, our fiat currency is a shambles, the economy is crashing, we need to monetise gold and you are in charge".
Please describe how you go about this.
In enough detail for the rest of us to understand its effect on our lives, including those of us who are not Americans, the people of Oceania, of India, of China, Africa and Russia, the ME and South America.
No big hurry, by Christmas would be good, in case I need to add an ounce or so under the tree.
Aloha! Mahalo Chris … There is one chart that should be added to the discussion because the past is worth considering when trying to determine future paths to recovery. Recovery … meaning economic, political and moral. Everyone agrees it is too easy to create debt, but debt was around during the gold standard and even in the days of Rome so debt is part of the human condition. Problem is the "quality" of debt. Imagine if we spent the current debt on infrastructure instead of war and corruption. That mistake is catching up to us.
The one huge mistake we can glean from the past history of the US is the "central bank". Prior to having a central bank there were no income taxes per say and not much in government debt compared to the past 100 years of the Central Bank Era. God knows the "quality" of our money prior to central banking was more resilient. Why can I say that? Well, there is no denying the business cycle and all other cycles despite what modern politicians and bankers tell you. The following chart illustrates the recovery periods of past "busts". Note the period in the red box whereby no central banks existed here in the USA. What it shows is the gold standard era with minimal or no central bank influence. Now look … every market in the US and the world awaits what Janet Yellen will say. It seems nobody has a right to exist without a central bank and onerous government lauding over our daily life.
The above chart is from Stanford Economics professor John Taylor, the inventor of the Taylor Rule. The year 2009 shows a recovery that was 59 months. It was deemed ended by George Bush and Obama, by government decree. Many including Prof Taylor say that the 2009 recovery is still ongoing.
Note the average recovery time in months from current busts is double plus the recovery time of the lesser central bank era of our fore fathers who built this Nation's wealth base. I contend that the central banks are highly political and influenced heavily by politics despite their mantra of being detached from politics. Mainly because … who gave them life in the first place? Under what guarantees did the Congress of 1913 agree to the big bank dominated US Fed? They will deny it, but the US Fed got the guarantee that the Congress will always make US taxpayers liable for all debts of government and bankers. Is it a coincidence that Congress ratified Income Tax in 1913 the same year the US Fed started. Certainly we saw that unofficial guarantee in action right before our very eyes in 2008. Politics has ruined modern money and ruined the world economies only with the assistance of central banking. In a recent poll nearly 50% of millennials said the American Dream is over. Destruction of the US middle class … check!!!
Yes, certainly the "greater fools" have prevailed …
The "FEDS" not going to let people own Gold ! They are going to do what F D R did during the last great depression . They will OUTLAW its ownership and using it for purchases or for paying debts ! Along with a Decree that everyone who has any gold coins or bullion in their possession will be ordered to turn it in or face a long time in jail. And when its turned in , you will not get its face value more than likely you will get less than half of what its worth if that ! And don't even think of keeping it in a safety deposit box at your bank , F D R had those all opened buy federal agents and all gold was confiscated , so will the "FEDS" this time around. So the moral of that story is Safe deposit boxes are not safe !! Want to bury it in the back yard ? well the "FEDS" have metal detectors too, so good luck trying to hide it. Off shore bank ? Maybe , if that foreign government doesn't do the same thing. Any way you want to slice this we are going to loose a lot of money with out much hope of getting it back. Good Luck everyone, we are going to need it and very soon.
China is the top producer and the top buyer of gold. China is working to enhance its position in the gold markets by getting a yuan-denominated gold benchmark to be traded on the Shanghai Gold Exchange (or SGE). SGE would act as the central counterparty where the banks could settle their trades. This may eventually give more liberty to China as gold can be directly converted to the Chinese currency, which could pose a threat to London and New York gold markets.
