Author Topic: How do I invest in gold?  (Read 9824 times)

publius

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How do I invest in gold?
« Reply #25 on: March 10, 2006, 03:28:01 AM »
Try e-gold.

Art Eatman

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How do I invest in gold?
« Reply #26 on: March 10, 2006, 09:30:33 AM »
hey, think of the poor slobs who bought in December of 1979!

That Hunt brothers runup was a funny deal.  Nobody could figure out why the amount of rise.  No reason for silver to be climbing so high, so fast.  Or gold.  I was suspicious as all get-out.  I'd buy a collection, or from somebody who was behind the market, and then sell it off for a decent gain.

There was a gunshow in Austin on the weekend with gold's closing around $800 on Friday.  Lots of gun dealers were behind the curve.  I bought all the silver and gold bullion I could get hold of, just like a couple of other "sharp-shooters".  But, I'd get somebody to watch my table, while I ran up the street to a buddy's coin store and sold.

By 6PM on Saturday, I owned no gold bullion whatsoever.  On Sunday, folks who'd heard I was a buyer would come to my table and I'd just smile and say no, no more buying.

Then came Black Monday.  Gold and silver went way into the toilet.

I smiled a lot.

Smiley, Art
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How do I invest in gold?
« Reply #27 on: March 10, 2006, 11:16:23 AM »
Quote from: Nathaniel Firethorn
Art, I bought gold just before Iraq II. I'm glad I lost only a littlemoney.

- NF
I don't understand this post. Do you mean spring '03?

Nathaniel Firethorn

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« Reply #28 on: March 11, 2006, 01:59:21 AM »
Yep, thereabouts.

I'm not as erudite on investing as some of the others here, but basically I'd think that gold is worthwhile only if you think it's going to be more in demand than other currency or types of investment. Gold doesn't generate value; it just sits there. In a sane market that isn't being manipulated, other stuff would almost certainly go up faster. In a panicked or crooked market, you (as an outsider) can't really predict a thing.

- NF
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« Reply #29 on: March 11, 2006, 02:58:54 AM »
Quote from: Nathaniel Firethorn
Yep, thereabouts.

I'm not as erudite on investing as some of the others here, but basically I'd think that gold is worthwhile only if you think it's going to be more in demand than other currency or types of investment. Gold doesn't generate value; it just sits there. In a sane market that isn't being manipulated, other stuff would almost certainly go up faster. In a panicked or crooked market, you (as an outsider) can't really predict a thing.

- NF
The reason I asked, NF, is that it was selling for about $350/oz then and is about $540 now. I agree that it just sits there. I guess you bought some and then sold it soon thereafter.

Art Eatman

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« Reply #30 on: March 11, 2006, 05:27:56 AM »
Check out sugar and cocoa.  It's a supply/demand thing.  World sugar prices have tripled, recently, and are expected to rise more.

Asians have rather suddenly developed a taste for cocoa, and the price is rising accordingly.

Smiley, Art
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« Reply #31 on: March 11, 2006, 02:54:18 PM »
PW,

Don't give up on your question.  It's worth your while to work on getting the answers you are looking for.

Gold actually is money, in spite of all the Keynsian efforts to redefine it as a mere commodity.  Right now the concept of money in most of the world is that of a simple medium of exchange.  Not long ago we had a discussion here as to the definition of money, and my own preferred definition includes defining money as a STORE OF VALUE as well as a means of exchange.  That is unfortunately not a job assigned to what passes as money as far as many people today are concerned, even people who ought to know better.  Never fear, they will eventually learn the lessons of The Gods Of The Copybook Headings- people always do, over time.  The cyclical nature of those lessons is one of the things that can be counted on in human history.  We're coming due for another return, as far as I can see it.  Note of course that my academic background is history and not economics, so of course you can feel free to ignore anything I have to say on that dismal topic.  Just go to your favorite search engine, type in "central bank gold holdings 2006" and read for a while.

My first suggestion is that you look at owning physical gold _not as an investment_ but as insurance.  You buy insurance on your house, your car, your life, your health, all sorts of things.  Owning gold is simply insurance on your money.  Hey, it works for the Federal Reserve after all- they own more gold than anyone in the whole country, right?  Unfortunately the US dollar is no longer _backed_ by gold, as it was until 1933 for US citizens, and until the Nixon administration for other central banks.

If you want to buy monetary insurance gold, then you want the most metal for the money in conveniently available form.  Most of the time that will be in bullion coins.  Lots of countries mint them, I suggest you stick to the Eagles minted by the US Treasury ( http://www.usmint.gov/mint_programs/american_eagles/index.cfm?Action=american_eagle_gold ).  Any number of dealers handle them, shop around for the best prices and best service.  If you want my own dealer reco's, email me.  Of course you will have to store the coins safely, a trusted friend or relative might do that for you, or a safety deposit box at your bank might work.  The only real risk with physical wealth in a highly concentrated form is that someone might be tempted to relieve you of it, so you will have to store it safely.

If you want to invest in numismatic gold coins, then you are investing in COINS, not gold, and you need to learn the coin market- knowing the metals market won't help.

For actual investing you have several choices.  Note first of all that you have to do your homework with ANY investment and this one is certainly no different.  You can most easily invest in "paper gold" via ETFs (exchange traded funds), just through opening an account with any of the online brokerages.  Get familiar with some of the internet sites that focus on gold so you can keep up with the market and learn some of the technical analysis indicators.  One of my favorite sites is http://www.financialsense.com/metals/main.htm , note the weekly webcasts also at http://www.netcastdaily.com/fsnewshour.htm .  Also see http://www.the-moneychanger.com/entry.phtml , Franklin Sanders offers daily commentary with useful technical analysis of the metals markets.  Current news from the gold markets is easily found at http://www.321gold.com/ . Access is by subscription but is on the honor system, look at it and see if you want to subscribe.

You can also invest in gold stocks or even mutual funds if you want to go that route.  These are more indirect plays than the ETFs and require a LOT more work to keep up with.  IMO beginners have no business investing directly in gold stocks, even the pros blow it big time sometimes (there was this company called Bre-X... you can look it up).  But it can be lucrative if done right, and tragic if done otherwise.  I'd suggest using a full service broker to buy stocks in individual companies if you have enough of an initial investment to make it feasible, again I will share broker reco's via email.  The mutuals you can do yourself, again through an online brokerage.  Sites like http://www.eaglewing.com/ will help you track funds.

Everbank does indeed have a CD based on gold.  It is a  $1500 minimum (IIRC, call them to check) five year CD and its value is based on the spot price of gold, if that approach interests you then you might want to try it.  See their site at http://www.everbank.com/main.asp?affid=eb , I notice they are broadening their offerings to people interested in the metals markets.  I do business with Everbank, I have had various foreign currency CDs with them for some years, and I like them.

And in brief that about covers the field- physical bullion, numismatic coins, ETFs, mutual funds, CDs and mining stocks.  Happy (AND profitable) investing,

lpl/nc

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« Reply #32 on: March 11, 2006, 03:34:39 PM »
Quote from: Lee Lapin
PW,

Gold actually is money, in spite of all the Keynsian efforts to redefine it as a mere commodity.  Right now the concept of money in most of the world is that of a simple medium of exchange.  Not long ago we had a discussion here as to the definition of money, and my own preferred definition includes defining money as a STORE OF VALUE as well as a means of exchange.
I dont understand this.  No one gets paid in gold.  You cannot take gold to your local WalMart and exchange it for groceries.  Pace Rich Young, even in South africa that is the case.  Gold is a commodity, like silver, Palladium, or pork bellies.  It has value simply because people value it.  Guns are a store of value as well, but they are not money.

My interest in gold (and I have bought some recently) is more for historical reasons.  My wife's grandparents lived in Hamburg, where they had a business.  When the Nazis came they took the business and all the assets they had.  they were forced to flee with some minimal amount of money and when they got to America they were poverty-stricken.  If they had some store of gold they could have hidden and brought with them it would have made an enormous difference in their lives.
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Art Eatman

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How do I invest in gold?
« Reply #33 on: March 11, 2006, 07:30:14 PM »
Folks in the U.S. generally don't understand the value of intrinsic-value materials.  Our currency has been uninteruptedly usable for all our history.  e've not been invaded and subjugated by some army whose political leaders then instituted their own currencies, as happened all over Europe--more than once.

Bullion gold, whether fractional (the US 1/10th Eagle, e.g.) or as a one-ounce bar or a Krugerrand, can be bartered for something of value.  "Dead" paper cannot.

And, even in today's US, using a gold coin as money is merely a two-step process:  Sell the coin to a buyer; take the greenbacks and go to WalMart.

Art
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The Rabbi

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« Reply #34 on: March 12, 2006, 06:16:37 AM »
Quote from: Art Eatman
Bullion gold, whether fractional (the US 1/10th Eagle, e.g.) or as a one-ounce bar or a Krugerrand, can be bartered for something of value.  "Dead" paper cannot.

And, even in today's US, using a gold coin as money is merely a two-step process:  Sell the coin to a buyer; take the greenbacks and go to WalMart.

Art
Try buying your next car with a pocket of Krugerrands.  You can only barter with someone who values that item.  And that isnt a lot of people nowadays.
On the second issue, you prove my point that gold is another commodity and not money.  On your 2-step scenario, gold is no different from kitty litter or guns or diamonds or watches.  It assuredly is not money.
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Art Eatman

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« Reply #35 on: March 13, 2006, 04:04:43 AM »
Hey, I've never argued that gold isn't a commodity.  I've at least implied that, from the git-go of this thread.

Any coin store in any town will buy and sell gold.  There are coin clubs all over the country, with some of the members being gold bugs.  There are heaps, gobs and bunches of "vest-pocket dealers" like I've been who'll buy and sell.

Buying/selling gold is no different from buying/selling any company's stock:  You gotta know something about the market.

Art
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280plus

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« Reply #36 on: March 13, 2006, 04:08:56 AM »
I don't know. If I was a car dealer and I knew the value of a Krugerrand AND you were offering me enough of them. I'd probably take them. I could always cash them in if I needed to. Smiley
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« Reply #37 on: March 13, 2006, 05:32:37 AM »
I have to say that I find the amount of faith in the current monetary regime demonstrated by many of those here quite touching.  Unfortunately it is doomed to disappointment, as has always been the case with every fiat currency in history so far.  But of course this is the USA, and so the dollar is special, right?  We get special dispensation, we are allowed to violate all the rules with impunity, because we are the chosen country.

Ooooookay.

Several years ago I was reading a collectors' guide to Confederate paper money, and ran across an interesting note.  The companies which printed Confederate currency insisted on being paid in gold, according to the author.  Seems they had a good idea as to the amount of inflation they were promulgating by running their presses, and wanted no part of it.

So, gold is just one more commodity, and money is digits that are created on a keyboard with no more effort than it takes me to type this post.  That my friends is demonstrative of the value of belief.  And in fact it is simply that belief which allows the current monetary regime to continue apace.  Once it is just as widely believed that "the Emperor has no clothes" then it might come to pass that some new belief structure will arise and the dollar will be just one more footnote to history, joining the many others which were debased beyond survival by leaders who thought style would be an adequate substitute for substance.

It is not my intent to be argumentative, I hope to be merely informative.  It may be that some will perceive what I am doing as attacking them personally.  Not so, I am attacking a system of belief that, no matter how firmly it has held sway in the past, has always in the end proved a crashing and expensive disappointment to its adherents.   I'd hate to see anyone here included among that number the next time around, but it is certainly your right to allow yourself to be deluded by whatever authority figure you choose to embrace.  You want to listen to Keynsians, that's fine by me.  You want to dismiss the Austrian school and its views, that's fine by me.  As the old saying goes, you pays your money and you takes your chances.  Choices are seldom without cost in one way or another, after all.

http://www.mises.org/studyguide.aspx?action=subject&Id=11

lpl/nc
=======================
http://www.kipling.org.uk/poems_copybook.htm

The Gods of the Copybook Headings
--------------------------------------------------------------------------------

AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.
We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.

We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.

With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.

When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: "Stick to the Devil you know."

On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: "The Wages of Sin is Death."

In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.

As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool's bandaged finger goes wabbling back to the Fire;

And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will bum,
The Gods of the Copybook Headings with terror and slaughter return.

matis

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« Reply #38 on: March 13, 2006, 06:25:00 AM »
No wonder Kipling is so out of favor with the PC crowd these days.

Great poem, I've copied it to my collection.


Thanks, Lee Lapin.


P.S. I have only temporary faith in fiat money;  permanent faith in the barbaric metal.



matis
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« Reply #39 on: March 13, 2006, 06:35:09 AM »
Quote from: Lee Lapin
I have to say that I find the amount of faith in the current monetary regime demonstrated by many of those here quite touching.  ...etc..
Ignore this fine post at your peril, members.

Art Eatman

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« Reply #40 on: March 13, 2006, 11:42:20 AM »
The free daily emails from thedailyreckoning.com, everbank.com and therudeawakening.com give numbers about money-stuff.  I don't commonly see those numbers readily available elsewhere.  Foreclosure rates, money-supply increase rates, etc.

I'll leave the conclusions to others, but those folks' views are a bit difficult to merely ignore.

Smiley, 'Rat
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crt360

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« Reply #41 on: March 13, 2006, 01:34:38 PM »
Call 1-800-949-GOLD.  At least that's what my TV says all the time.
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« Reply #42 on: March 13, 2006, 04:41:22 PM »
Quote from: Lee Lapin
I have to say that I find the amount of faith in the current monetary regime demonstrated by many of those here quite touching.  Unfortunately it is doomed to disappointment, as has always been the case with every fiat currency in history so far.  But of course this is the USA, and so the dollar is special, right?  We get special dispensation, we are allowed to violate all the rules with impunity, because we are the chosen country.
"In G-d We Trust.  All others pay cash"

I get a kick out of the "one day this will come to pass" posts.  We see this in the "someday Congress will send agents to collect your guns."  We see it in "someday the UN will rule over us."  We see it all over.  Granted, it hasn't happened.  There is no indication it is happening now.  There is no proof it will happen in the future.  But by gosh trust me it's gonna happen.  Sure.
How do you refute someone claiming that something is bound to happen, when he has no proof whatsoever?  You can't.  That's what makes it so dumb.  It is like arguing with a paranoid--there is always a reason or hidden motive.
One time salt was money (thus the term salary).  If you had suggested that one say salt would be just another commodity you would have been laughed.  You would have been told it was touching to have faith in a useless metal.  No civilization ever survived without salt so it was central to life and therefore would always be currency.
And salt does still have value.  But don't go trying to buy your next car with it.
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Art Eatman

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« Reply #43 on: March 14, 2006, 03:35:23 AM »
"I get a kick out of the "one day this will come to pass" posts.  We see this in the "someday Congress will send agents to collect your guns."  We see it in "someday the UN will rule over us."  We see it all over.  Granted, it hasn't happened.  There is no indication it is happening now.  There is no proof it will happen in the future.  But by gosh trust me it's gonna happen.  Sure."

Yup.  But, after all, if you had lived in the South in 1865, you'd figure that the SHTF had really happened.  Folks who lived through 1929-1940 tend to be on the thrifty side, because they lived through a Real Event.  And then came WW II, which coupled with WW I showed a lot of Europeans just how bad life could get--particularly if you were Jewish.  Or Filipino or Chinese or lived in Singapore,etc.

I guess the South Vietnamese are the most recent example of the absolute utility of gold as a survival money...

"Unlikely" or "Improbable" isn't the same as "Impossible" to anybody who looks at history.  You don't even have to go back very far in time.  The problem arises when people devote undue time and emotion worrying about something that's "probably" is not going to happen in their lifetime.  Awareness, yes.  Worrying, no.  "We're all graveyard bound, and worrying just puts the whip to the horse."

Smiley, Art
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The Rabbi

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« Reply #44 on: March 14, 2006, 04:48:46 AM »
People tend to project their own experiences onto future expectations.  They also tend to be wrong about it 95% of the time, misjudging situations.  I see this in investing over and over.
I don't think I know 5 Jews who will tell you "it can't happen here."  While I do not think it is impossible (nothing is I guess) I think it is in the realm of fiction.  Like paper dollars becoming worthless in my lifetime.
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« Reply #45 on: March 14, 2006, 05:56:07 AM »
Someone tell rabbi that his dumb salt story disproves his own point.

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« Reply #46 on: March 14, 2006, 07:45:40 AM »
Quote from: mercedesrules
Someone tell rabbi that his dumb salt story disproves his own point.
You could do that yourself.  But then you would have to defend your statement, which I don't think you could do without appearing like a witless moron.
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« Reply #47 on: March 14, 2006, 09:41:02 AM »
Quote
One time salt was money (thus the term salary).
Now, paper fiat certificates are money. Rabbi advocates this current type.

 
Quote
If you (Lee Lapin) had suggested (to rabbi, conservative holder and advocate of the widely-accepted salt money) that one day salt would be just another commodity you would have been laughed (at by rabbi).  

You (Lee) would have been told (by rabbi) it was touching to have faith in a useless metal.  "No civilization ever survived without salt", said rabbi, so it was central to life and therefore would always be currency.
And salt does still have value.  But don't go trying to buy your next car with it.
But rabbi was wrong about salt remaining the most-used money. Precious metals became money for a long time until replaced by police/military force with fiat currency.

The Rabbi

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« Reply #48 on: March 14, 2006, 11:28:45 AM »
I think you've proved my contention.
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« Reply #49 on: March 14, 2006, 04:48:56 PM »
Teacher (Rabbi),

As I said earlier, it was not my intent to be argumentative.  Nor will I resort to namecalling.  But this discussion is an important one IMO, and it is worth continuing so long as it appears beneficial.  If it deteriorates further into ad hominem insults however I will not participate.

You said: "How do you refute someone claiming that something is bound to happen, when he has no proof whatsoever?  You can't.  That's what makes it so dumb.  It is like arguing with a paranoid--there is always a reason or hidden motive."

Yet you persist in making the same type of argument you accuse me of attempting to foist off on unsuspecting dupes here.  OK, let's turn that around.  YOU prove that the dollar will not collapse in your lifetime (or mine for that matter, with all my worries mine might after all be shorter than yours).  Even easier- _prove_ that you will in fact be able to buy your next car with dollars.  Can't do it? Yet you demand proof of the unproveable from me.  Sorry, no can do either.  

There is an interesting word that has been used by several well informed writers to describe various aspects of the current financial situation.  That word is "unsustainable."  If something is unsustainable, that means it can't be maintained forever.  It doesn't put a timeline or an expiration date on anything, it just says it cannot continue indefinitely.  That to me means it is a question of 'when not if.'  You of course are free to interpret it any way you wish.  Sources?
Alan Greenspan ( http://www.federalreserve.gov/boarddocs/testimony/2005/20050302/ )
Manchester Guardian ( http://www.federalreserve.gov/boarddocs/testimony/2005/20050302/ )
Brookings Institution ( http://www.brookings.edu/views/articles/20041201orszaggale.htm )
-for starters.

"People tend to project their own experiences onto future expectations.  They also tend to be wrong about it 95% of the time, misjudging situations.  I see this in investing over and over."

Unfortunately you again seem to be exempting yourself from your own rules.  Am I to take it that you don't project your own experiences onto your future expectations, and you are never wrong more than 5% of the time? 8^)

I'm only 52, and I haven't yet lived through a currency collapse, major depression, hyperinflation or other large scale financial unpleasantness of that nature (unless you count the Carter era stagflation)- so it's not possible that I am projecting my own experiences onto future expectations.  I have of course studied such events as the major dislocators they have been throughout human history when they HAVE happened, but I haven't experienced them myself first hand.  In truth I had just as soon not do so.  That does not mean I will be able to live out my life without difficulties imposed by external financial events, of course.  That isn't up to me.  

What IS up to me is to work toward not having to be overly concerned with what happens to the financial macro, and that is what I am doing.  And by the way, I am not working for myself.  It's for my mom.  She was born in 1927, and she has told me more than once, "I was born in one depression, and I don't want to die broke because of another one."  Since you seem concerned about reasons and motives, there's mine.  My dad died in 1998, and I have been helping her manage her money since then.  You will please forgive me if I do not engage you to take over that job, given your persistence of believing in form over substance.

You say salt used to be money, but that changed and it isn't money any more.  You say that gold used to be money, but that changed and it isn't money any more.  Yet you insist that the digital dollar IS money, and that it will remain so.  You persist in dismissing the historical fact that until 1933 the dollar WAS gold for any American who wanted to redeem paper dollars for the barbarous metal, and that until Nixon closed the gold window in 1971 the dollar was redeemable in gold for the central banks of other nations.  The dollar's acceptability all over the planet has coasted for a long long time on the reputation it established when it was commodity money (that is, redeemable in precious metals) and not mere fiat.  Yet it would seem that you think that reputation alone is capable of supporting the dollar through continued inflation, trade imbalances and debt of unprecedented proportions.

Sorry, Teacher, your logic escapes me.

lpl/nc