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Mr. Miyagi

Gold Backed Dollar?

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Crossing someone's palm with gold or silver could soon become more than just a figure of speech.

It has already become a reality in one state as Utah legislators became the first in the country this month to legalise gold and silver coins as currency.

The law will also exempt the sale of the coins from state capital gains taxes.

Riches: Utah legislators passed the bill to have gold and silver as a legal currency again as they believe Americans are losing faith in the dollar

Riches: Utah legislators passed the bill to have gold and silver as a legal currency again as they believe Americans are losing faith in the dollar

Craig Franco hopes to cash in on it with his Utah Gold and Silver Depository, and he thinks others will soon follow.

The idea is simple: Store your gold and silver coins in a vault, and Franco issues a debit-like card to make purchases backed by your holdings.

He plans to open for business June 1, likely the first of its kind in the country.

He said: 'Because we're dealing with something so forward thinking, I expect a wait-and-see attitude. Once the depository is executed and transactions can occur, then I think people will move into the marketplace.'

The idea was spawned by Republican state Republican Brad Galvez, who sponsored the bill largely to serve as a protest against Federal Reserve monetary policy.

Mr Galvez says Americans are losing faith in the dollar. If you're mad about government debt, ditch the cash. Spend your gold and silver, he says.

His idea isn't to return to the gold standard, when the dollar was backed by gold instead of government goodwill. Instead, he just wanted to create options for consumers.

He said: 'We're too far down the road to go back to the gold standard. This will move us toward an alternative currency.'

Earlier this month, Minnesota took a step closer to joining Utah in making gold and silver legal tender.

A Republican lawmaker there introduced a bill that sets up a special committee to explore the option. North Carolina, Idaho and at least nine other states also have similar bills drafted.

The U.S. and many other countries largely abandoned gold-backed money during World War I because they needed to print more cash to pay for the war.

Later, during the Great Depression, President Franklin D. Roosevelt took steps that essentially prohibited gold and silver as legal currency to prevent hoarding.

In 1971, President Nixon formally abandoned the gold standard.

Fifteen years later, the U.S. Mint began producing the gold and silver American Eagle coins, primarily aimed at investment portfolios and allowing people to trade them at market value but with capital gains taxes on profits.

Utah is now allowing the coins to be used as legal tender while levying no taxes.

At the moment, Mr Franco's idea would generally be the only practical use of the law in Utah, given the legislation doesn't require merchants to accept the coins, either at face value — $50 for a 1-ounce gold coin — or market value, currently almost $1,500 per ounce.

And no one expects people will be walking around town with pockets full of gold and silver.

Matt Zeman, market strategist for Kingsview Financial in Chicago, expects more people will start investing in gold as America's growing debt and bankruptcies in other countries continue to decrease the value of government-backed money.

He said: 'You've seen gold replacing these currencies as safety instruments. If I don't feel good about the dollar or other currencies, I'm putting my money in precious metals.'

Some supporters, including the law's sponsor, seek to push Congress toward removing the tax burdens that discourage use of the coins, such as a federal capital gains tax.

Opponents of the law warn such a policy shift nationwide could increase the prospect of inflation and could destabilize international markets by removing the government's flexibility to quickly adjust currency prices.

Carlos Sanchez, director of Commodities Management for The CPM Group in New York, said: 'We'd be going backward in financial development. What backs currency is confidence in a government's ability to pay debt, its government system and its economy.'

Larry Hilton, a Utah attorney who helped draft the law, disagrees and says the gold standard would restore faith in American money at a time when spiraling debt is weakening confidence.

He said: 'We view this as a dollar-friendly measure. It will strengthen the dollar by refocusing policy matters in Washington on what led to the phrase, "the dollar is as good as gold".'

Read more: http://www.dailymail.co.uk/news/article-1390207/The-dollar-good-gold-Utah-state-legalise-gold-silver-currency.html#ixzz1NLa7Uq7f

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Sounds fine to me. There idea is nothing new though, as bullion vault and goldmoney have been doing something similar for years.

I assume you can pay your taxes with it, if it is legal tender (ie. can be used to extinguish debts in court) then too? How is that going to work in terms of exchange rate? It seems to me that they just need to remove the taxation from the coinage, along with the legal tender laws (the courts can decide how to extinguish debts without this). People can then decide what to use*.

If people want to hoard money, it is a better idea to hoard hard assets than paper. Paper is needed by someone else to extinguish their debts, so hoarding it can be counter productive. Hoarding gold on the other hand, doesn't stop someone paying their taxes or their debts, but lets you save for the future. It also keeps the paper money moving, which is vital for the fiat economy to function.

* Capital gains taxes bugger up what can be used as money in general though. Why stop at gold and silver? Shouldn't anything be allowed to be used as money?

Edited by Traktion

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Craig Franco hopes to cash in on it with his Utah Gold and Silver Depository, and he thinks others will soon follow.

The idea is simple: Store your gold and silver coins in a vault, and Franco issues a debit-like card to make purchases backed by your holdings.

So this is the first port of call then if the govt seizes all privately held gold?

I wonder if this will become widespread in the states.

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The problem in the UK is that silver still has VAT on it. Gold is impractical for small purchases so silver would need to be used. Obviously no self-respecting red-necked fruitcake would pay his bills in electronic gold!

One could imagine a future where land and houses are bought in gold, and large savings are kept in gold, while silver is used for day-to-day transactions.

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If this becomes widespread, what will the impact on the price of gold and silver?

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The problem in the UK is that silver still has VAT on it. Gold is impractical for small purchases so silver would need to be used. Obviously no self-respecting red-necked fruitcake would pay his bills in electronic gold!

One could imagine a future where land and houses are bought in gold, and large savings are kept in gold, while silver is used for day-to-day transactions.

There is no VAT on silver stored elsewhere, unless you take delivery. That's how BV and GM get around the VAT requirement.

TBH, there is no need to carry around lumps of metal any more either. You can do digital transfers using even a smart phone - some you can do just by bumping the phones together... you don't need a VISA machine, notes/coins or cards for that.

Additionally, currency exchange companies with transparent interfaces could spring up too, converting from one currency to another as/when you like. You could have your smart phone work as a digital wallet, with many different currencies accessible, all converted to whatever you want on the fly. The technology is there - people just need to wake up to it.

My opinion is that it doesn't matter what people use as money. They should use whatever they are comfortable with. However, fiat will always create demand for itself through taxation (unless the government starts accepting alternatives too).

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The problem in the UK is that silver still has VAT on it. Gold is impractical for small purchases so silver would need to be used. Obviously no self-respecting red-necked fruitcake would pay his bills in electronic gold!

One could imagine a future where land and houses are bought in gold, and large savings are kept in gold, while silver is used for day-to-day transactions.

Surely that's just re-running what happened in the past?

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If this becomes widespread, what will the impact on the price of gold and silver?

They'll some how have to link X amount of £ and $ to each gram of gold and silver. Since the amount of gold/silver is finite. Since it is in the interests of the government to keep this ratio low they'll introduce controls so that silver/gold to each £ or $ is low.

Then somebody will bust them on it or will hoover up the gold/silver at such a low price fix. And the government will de link it as in 1971 and confidence will be lost. And it may go into orbit.

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One could imagine a future where land and houses are bought in gold, and large savings are kept in gold, while silver is used for day-to-day transactions.

You're describing Hong Kong, go there and sit in a bank lobby for a bit and watch. Quite often people will hand over huge wedges of money in exchange for Krugers. Unlike 'civilised' western nations you can pretty much go to any bank in China (inc the SARS) and buy gold bullion. Mainland China you're not allowed to export it though.

Because the US$ is pegged to all three Chinese currencies (HK$, RMB and MOP). This trend has been accelerating, with ZIRP in HK, and rampant uberinflation (such that electronics in HK cost more than they do in the UK my dad confirmed this even without VAT). People are turning to a 5000 year trusted metal.

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They'll some how have to link X amount of £ and $ to each gram of gold and silver. Since the amount of gold/silver is finite. Since it is in the interests of the government to keep this ratio low they'll introduce controls so that silver/gold to each £ or $ is low.

Then somebody will bust them on it or will hoover up the gold/silver at such a low price fix. And the government will de link it as in 1971 and confidence will be lost. And it may go into orbit.

They could just let the market price it as it does now.

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He said: 'Because we're dealing with something so forward thinking, I expect a wait-and-see attitude. Once the depository is executed and transactions can occur, then I think people will move into the marketplace.'

:blink: Perhaps he doesn't know the history of the Goldsmiths taking in gold for 'safekeeping' in the form of loans from depositors and issuing promissory notes (in the modern version a plastic card) and then of course relending multiples of these deposits in the form of loans to borrowers i.e. Fractional banking.

Or perhaps he does.............:P

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Not sure how it will pan out.

Saddam back oil with Euros.

Gadaffi backed oil with Gold.

De Gaulle demanded gold instead of paper from yanks, sent warships over to Yankeeland to pick it up, prompting Nixon to end gold backed currency in the US.

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Unbelievable, the mods obsession with gold has them move a thread, directly related to the economy, off of the housing market and economy board.

FFS!!!

When TSHTF and only then will the anti gold HPC crowd realise.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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