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Title: Rise of the Barter Economy and Gold and Silver Currency
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URL Source: http://www.marketoracle.co.uk/Article29066.html
Published: Jul 5, 2011
Author: Peter_Schiff
Post Date: 2011-07-05 14:37:04 by Capitalist Eric
Keywords: None
Views: 75175
Comments: 141
Imagine a day when you go to buy a quart of milk, ask the price, and the cashier says, "that'll be a tenth ounce silver." As the US dollar's decline accelerates, several efforts around the country are trying to make this vision a reality. Historically, paying for items in silver or gold was actually quite common. We happen to live in an unusual time and place where generations have grown up trading exclusively in paper. While my parents still used dimes made of silver, we have now gone several decades with no precious metals in any of our official coinage. But this system of money by government fiat is unsustainable. While the practice of bartering precious metals directly for goods and services has continued on a small-scale over the last few decades, the 2000s saw the beginning of organized efforts to revive gold and silver as money. THE LIBERTY DOLLAR One such effort was spearheaded by an eccentric mintmaster from Hawaii named Bernard Von Nothaus. He called his project the Liberty Dollar, and it centered on privately minted gold and silver rounds as well as deposit certificates for precious metals held in his firm's vaults. I had many reservations about how the project was implemented - coins were minted with a fixed US dollar amount at which they were supposed to circulate, the dollar amount was well above the spot price of the metal, and authorized "distributors" were allowed to pocket the difference (which often resulted in buyers paying far higher prices for their gold than what they would have paid had they simply bought, say, Canadian Maple Leafs instead) - but I believe Nothaus' idea was a good one, even if the product was over-priced. Tellingly, despite the obvious flaws, public participation grew steadily from 1998 until 2007, when federal agents raided the Liberty Dollar's offices on trumped-up charges of counterfeiting. Really, they were charging him with competing with the US dollar's monopoly privileges by offering a better product. It's important to note that the case against Nothaus was built around his coins looking similar to official US coinage (though no one actually mistook Liberty Dollars for US currency), and not around encouraging people to use precious metals as circulating money. DIGITAL GOLD Next came a crop of internet-based currencies backed by gold and silver. Most prominent among them are eGold and GoldMoney. Both were designed to allow customers to open online accounts that were valued in, and backed by, gold and silver bullion. eGold was perhaps the better known of the two until it, too, was shut down by the US government on charges of money laundering. eGold was positioned more as an online payment system than a means of holding bullion. Due to the anonymous nature of the transactions - it was akin to spending cash - the authorities alleged that it was being used by criminal enterprises to funnel illegal funds. But mostly it was being used by regular people to begin saving and trading in money that holds its value. eGold had a transparent system of annual audits and live transaction screening by any user to keep the system honest. It, too, was growing robustly, and was putting up strong competition against PayPal until the authorities intervened. GoldMoney, founded by my friend James Turk, has remained in operation by keeping its principal operations overseas and by cooperating fully with onerous US financial regulations. It offers similar services to eGold, but with an emphasis on long-term storage. GoldMoney improves upon traditional storage by locating offshore, offering real-time online account access, and providing extra liquidity. These services do come at a cost, however. Still, over the course of the last decade, GoldMoney has swelled to over $2 billion in assets. Clearly, many people want to trade gold and silver over US dollars. Digital gold is a niche service, but I think the public's rapid embrace of these projects - none older than ten years - shows that investors are viewing gold and silver as more than mere commodities, but once again seeing them as money. This could signal a paradigm shift back to tradition, which is good news for any precious metals holder. STRAIGHT UP BARTER While digital currencies are neat, in practical terms, nothing beats the resilience of traditional barter of bullion for goods and services. If you actually own the physical gold and silver that you intend to save or trade, then you can be sure it will be there until you're ready to sell. You don't have to trust anyone except yourself. In that vein, several efforts have popped up around the country to simply get people trading gold and silver rather than dollars. Since the transactions involved are usually small, such as buying lunch at a local diner, silver is typically the metal of choice. There are several hotspots for this sort of activity. Philadelphia has one group, DelValley Silver, that has fostered a local barter market there by encouraging merchants to accept silver coins in addition to dollars. DelValley is also a silver dealer, but they sell privately minted rounds, which can be harder to liquidate than well-known coins like the American Gold Eagle and Canadian Maple Leaf. Meanwhile, in New Hampshire, many merchants associated with the Free State Project have begun accepting gold and silver at their businesses. Innovation abounds here and the practice of encasing small amounts of silver in laminated cards seems to be the most successful. Shire Silver encloses silver and gold wire in their cards and measures them in terms of grams. It's much easier to trade a flat, plastic card containing a gram of silver than to carry around a 1 oz coin. However, even their website will admit that the premium on such a small amount of silver makes it less than ideal for investment purposes. Of course, when you're ready to barter, they'll be happy to take your 1 oz rounds in return for some Shire Silver. And that Shire Silver is being accepted by more and more merchants across New Hampshire and beyond. Another variation, from a group based in Phoenix, Arizona, encloses a pre-1965 US dime inside the laminated card. Before '65, every dime contained 90% silver, making them worth about $2.50 each in today's debased dollars. That's why you won't find any pre-'65 dimes in your change from the grocery store. However, one fellow had the clever idea of putting them in these cards so they could trade at their silver value without getting mixed in with the worthless dimes we carry around today. The same group even created a free iPhone app that translates US dollar prices into various amounts of silver (more info here). While I'll still be selling regular old bullion coins and bars at Euro Pacific Precious Metals, because these are the best way to invest in physical precious metals, I am energized by these efforts. The great thing about holding and bartering physical precious metals is that there is no central company running the operations, like with the digital gold currencies, and therefore there's no single person the government can go after. (My new offshore bank, Euro Pacific Bank, Ltd., will soon be offering Visa-branded debit cards back by individual holdings of gold or silver. Euro Pacific Bank customers will be able to purchase gold from the bank, have it stored, and then access their holdings directly using their Visa cards to either make purchases though merchants or withdraw cash from banks and ATMs. Unfortunately, due to the reasons described above, I cannot offer this service to US customers. For more information about my offshore brokerage and banking companies, please visit www.europacintl.com.) THE WRITING IS ON THE WALL Besides these grassroots efforts at building barter communities, I'm seeing a cultural shift in favor of precious metals. Utah recently passed a law establishing gold and silver as legal tender and abolishing state capital gains taxes on their appreciation. I was interviewed for a new animated film called Silver Circle that features a rebel group in the near future which mints silver coins in defiance of an even more aggressive Federal Reserve. More and more people are starting to watch the gold price as often as they watch the Dow. Overall, this bodes well for our investments and for our country. If gold and silver are successfully re-monetized, our children may know a rate of economic growth not seen since our great-grandparents were in their prime. And prices may never return to today's levels again. Regards,
Peter Schiff
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#1. To: Capitalist Eric (#0)
If paper money is worthless why do gold dealers accept it?
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
You don't know much about business, do you? Ever run a lemonade stand as a kid? Have you ever been a productive member of society, or have you always been a parasite?
Socialists & Democrats want you to do one thing: My view is that the collapse of the dollar will result in a system of competing digital currencies, delivered through your cell phone, and backed by gold or some other commodity. We're already seeing cash cards move to the smart phones. Hayek advocated for a system of competing currencies several decades ago. Now that we have smart phones, the Internet, and a collapsing dollar, it will happen.
Do he mean that privately minted coins are harder to liquidate than evil government ones?
They are required by law to accept the U.S. dollar as legal tender in the United States. No law will be able to force people to take the dollar once the hyperinflation starts. People will thumb their nose at the feds on the dollar, just like they are thumbing their nose at the feds with regards to medical marijuana.
Then why don't they price their gold well above the spot price as a risk premium?
Gold is priced based on the risks of holding U.S. dollars. That's why gold has shot up from $400 an ounce in 2004 to over $1,500 today.
During the evil Apartheid regime, The South African Krugerrand was the most sought after gold coin in the world. Today it's Maple Leafs and Gold Eagles. Yes, the U.S. government is a more well-known entity some small, private minting company, so it's coins are more easily recognized and accepted. I own a bunch of Silver coins. Some are privately minted "American Prospectors". Others are old U.S. coins. Silver is a better crisis material than gold and will be easier to shop with if a true economic collapse occurs.
Why would they sell their gold at all for worthless paper money?
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
I recall back then that Krugerrands could always be bought at a smaller premium than Gold Eagles or Maple Leafs. Perhaps that was the reason they were popular.
Or at least add a huge risk premium to the spot price, say 25% or so. I do recall that this gold/silver bubble happened once before in my lifetime. It didn't end well for anyone who bought near the top.
Yep. Kruggerrands were the cheapest and actually of superior quality to many gold coins. Buyers knew it was the most value for the buck at the time, a concept about which Jwpegler seems a little vague.
I loved those commercials on crazy right wing radio and TV spots where they scare the old white wussies listening into thinking the world is about to end so they should buy gold - in exchange for soon to be worthless dollars. I find that con game so funny. It's like the right wing kooks selling their old cow for beans thinking they will turn into magic beans.
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
The Goldline scam on Glenn Beck's show amuses me. Buy our gold at a 20+% premium to the market, then when you want to unload it we'll give you 80% of the current market price. There's nothing like taking a big bath on both sides of the transaction to separate a fool from his money, something that talk radio and Fox advertisers are very good at.
I'm glad you thought they were funny... Go ahead, keep laughing... 8^)
Socialists & Democrats want you to do one thing: Back when? Gold Eagles weren't minted until 1986. During the Carter inflation, Krugerrand's commanded a premium price.
Currently, the answer to that would be "yes." Such coins carry not only bullion value, but numismatic value, and are widely regarded throughout the world as "good" coins, i.e., the standard by which other coin values are measured... it's a wierd thing, on coin values. Interestingly, China has gotten into the act, counterfeiting silver Eagles. Because the price of "numismatic" coins (high collector value) are far in excess of the cost of minting, China is very busy fleecing the collectors of numismatics. OTOH, because the price of silver rounds from various mints is relatively low, there's not enough profit margin in it for Chinese fakes to be profitable. So I buy silver rounds... I don't give a rats ass about "collector" value, I buy bullion for its intrinsic value. I think no more of numismatics than I do of collecting stamps, or baseball cards. When I was in Russia two months ago, I gave my father-in-law a silver round, from a well-respected mint here in the USA. A few days later, he gave me a 1923 Russian ruble... 18g of silver in it. The round I gave him was worth maybe $40, but the collector value made the ruble he gave me worth ~$130. Go figure.
Socialists & Democrats want you to do one thing: The gold run was part of the Hunt brother's fiasco and had little to do with natural inflation from Carter or otherwise. Just another example of Texas oilmen and their insatiable sociopathic greed.
Yes, you're correct. My mother got caught up in the great gold/silver swindle of 1979-1980 and lost a bundle from dealing with the Goldline-type companies of the day. Funny thing is, years after she died I was still receiving mail from other fraudsters promising her new coin investments that would make her whole, and then some. Once on the sucker list, always on the sucker list.
Is your wife one of those mail-order brides? A friend of mine went over there about 5 years ago and came very close to marrying one - she was a knockout.
If the dollars are soon to be worthless. Wouldn't it be smart to have gold instead?
So why would the gold dealer sell his gold for dollars then?
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
Lots of reasons. Why do people trade stock? One thing they could use the money for is to buy land. Many more options. I find it funny that your view is if someone trades something. One of the traders is automatically no good. I'm sure you probably think cars suck too. I mean why would a car dealer sell a car for paper if the car is so good. That is an example of the way your brain malfunctions. Something just isn't there. Did you by chance have a major head injury in your past? Maybe an auto accident or falling from a tall building on your head?
All the gold dealing I see seems to rip people off on the value of gold.
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
Really. That is strange. Take everyone that bought gold for the last 50 years. If they held onto their gold all that time, if they bought it 50 years ago or last year. Is the gold worth more when they bought it or is it worth more now. Wow what a surprise it is worth more now. Do you live in bizarro world or is it a head injury as I speculated upstream?
If they held onto their gold all that time, if they bought it 50 years ago or last year. Is the gold worth more when they bought it or is it worth more now. Wow what a surprise it is worth more now. Thats a fairly simple minded way to look at investing. What else could you have bought and held for fifty years and how does that investment compare with gold?
Yes it is simple. 100 percent of the people in the last 5000 years that bought gold and held it made a profit if they sold it this year. 100 percent success rate.
Land would also have been a good investment. If you used your gold to buy paper dollars. You would have taken a severe beating. Like say you were one of the peons who had their gold stolen by FDR. If you held on to that 20 dollar paper note. It would still be worth about 15 double cheeseburgers from McDonalds. But if you hid your gold and didn't let FDR the liberal steal it. You would have what $1500 right now. I'd take $1500.00 over 15 double cheeseburgers any day of the week.
And all they had to do was live 5000 years.
Then they'd be nearly as old as earth is, according to stone.
You still could keep 100 dollars face value per person including kids. And soon most found out no one was being prosecuted for not complying. It was a policy that few agreed with as it robbed those who turned their gold in of another 15 to 21 dollars in value, but remember those 20 dollar gold pieces still only had about 14 dollars of gold in them so most got paid more than the basic gold value. Of course immediately the price per ounce was reset at 35 dollars per ounce and there was quite a stink about it from the public. Being one of those austerity measures that modern conservatives love to fantasize about it did help usher in the longest era without a depression or panic in our history. While making land a viable investment as during the previous panics and depressions it's value especially of farmland often went down to almost zero. Until the Bush's came along that is.
She's Russian. There's no such thing as a "mail-order bride." That's a term the feminists made up, to twist reality. Fact of the matter is, she had a very good position, was making excellent money, and had a higher net value (by far) than I. She did her best, to convince me to move to Russia. After I finish my doctorate, we'll see.
To LucysIDIOTmom, gobsheit, go56, skippy, bif and dummy-DwarF: You would rather die than think. Thanks for the clarification.
He's BSing as usual. There are tours abroad exploiting legal loopholes where the participants pick the girl of their dreams out of a lineup, then a scenario is created where they appear to meet randomly and spend a few hours getting acquainted, so the perps can legally declare the expressed purpose of their trip abroad wasn't for finding a bride. But I guess technically he's correct, no brides legally are mailed to the US.
I don't remember asking my buddy how he arranged his visit to Russia. I recall that he informed my dad about it in confidence - I guess he didn't want other folks to know. After the fact he did show me dozens of pictures and told me details of them, but that was about 5 years ago. I do remember she was a knockout. He got cold feet for his own reasons. Now he has six dogs.
For what purpose? I have no reason to lie, yet you leftists insist that I do. There was a time when that was true... about 15 years ago. The negative publicity, plus a Russian girl who came to America and was murdered by her new American "husband" caused the government to get strict on immigration laws, especially with regard to K-1 or K-3 visas. It is a very long and frustrating process. And one thing you'll never admit to- it's very expensive. IF a guy chose to go on one of those "tours," where basically an agency would introduce him to young and eligible women, the probabilities of finding an "ultra-Natasha," i.e., a gold-digger, are pretty high. The tours basically are a way for agencies to separate fools from their money, while having young girls (who for the most part only want to leave the Hell-hole they're in) act interested. In my case, when I take vacation, I prefer to go off the beaten path. I've never been to Hawaii, but I've been to Romania a bunch of times. Same with Ireland. My last major vacation, I decided to go to Russia... I talk with people from all over the world, so I had a standing invitation to Russia... took my cameras, had an itinerary which started in Rostov-On-Don, then Moscow, then St.Petersberg. I had friends at each location, waiting for me to show up. But I met this nice girl in Rostov... and never made it to Moscow. We've been married just over five years, and have two daughters. Oh, and there's one other aspect of the so-called "mail-order bride" propaganda... that somehow they're more docile or whatever. The fact is, my wife is incredibly tough, and savvy. Plus, she can stretch a penny until it's molecule-thin. I've learned a lot from her... and continue to do so. Your statements- for the most part- are. mischaracterizations.
To LucysIDIOTmom, gobsheit, go56, skippy, bif and dummy-DwarF: You would rather die than think. petey has been to Russia a number of times on vacations, so you two have something in common.
I'm sure sneaky would be confirm... generally speaking, girls in Russia are much smarter and tougher, than American men are used to... Any man who forgets this pays a heavy price. :-@ LOL.
To LucysIDIOTmom, gobsheit, go56, skippy, bif and dummy-DwarF: You would rather die than think. You said there was no such thing as mail order brides and I begged to defer. Not once did I accuse you of participating, yet you went right on the defensive.
You don't speak from a basis of experience and knowledge, while I do. You make insinuations, based in ignorance. I HAVE investigated such claims as you make, and found them to be gross misrepresentations. You don't like to be called out as a liar? Then quit lying.
To LucysIDIOTmom, gobsheit, go56, skippy, bif and dummy-DwarF: You would rather die than think.
Comments (41 - 141) not displayed.
Top • Page Up • Full Thread • Page Down • Bottom/Latest
#2. To: Godwinson (#1)
If paper money is worthless why do gold dealers accept it?
"You "say" the most iodtic things..." --our local dummy DwarF
#3. To: Capitalist Eric (#0)
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#4. To: Capitalist Eric (#0)
DelValley is also a silver dealer, but they sell privately minted rounds, which can be harder to liquidate than well-known coins like the American Gold Eagle and Canadian Maple Leaf.
#5. To: Godwinson (#1)
If paper money is worthless why do gold dealers accept it?
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#6. To: jwpegler (#5)
They are required by law to accept the U.S. dollar as legal tender in the United States.
#7. To: Skip Intro (#6)
(Edited)
Then why don't they price their gold well above the spot price as a risk premium?
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#8. To: Skip Intro (#4)
(Edited)
Do he mean that privately minted coins are harder to liquidate than evil government ones?
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#9. To: Skip Intro, jwpegler (#6)
#10. To: jwpegler (#8)
During the evil Apartheid regime, The South African Krugerrand was the most sought after gold coin in the world.
#11. To: Godwinson (#9)
Why would they sell their gold at all for worthless paper money?
#12. To: Skip Intro, Jwpegler (#10)
recall back then that Krugerrands could always be bought at a smaller premium than Gold Eagles or Maple Leafs. Perhaps that was the reason they were popular.
#13. To: Skip Intro (#11)
#14. To: Godwinson (#13)
I loved those commercials on crazy right wing radio and TV spots where they scare the old white wussies listening into thinking the world is about to end so they should buy gold - in exchange for soon to be worthless dollars.
#15. To: Godwinson (#13)
I loved those commercials on crazy right wing radio and TV spots where they scare the old white wussies listening into thinking the world is about to end so they should buy gold - in exchange for soon to be worthless dollars. I find that con game so funny.
"You "say" the most iodtic things..." --our local dummy DwarF
#16. To: Skip Intro (#10)
I recall back then that Krugerrands could always be bought at a smaller premium than Gold Eagles or Maple Leafs.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#17. To: Skip Intro (#4)
Do he mean that privately minted coins are harder to liquidate than evil government ones?
"You "say" the most iodtic things..." --our local dummy DwarF
#18. To: jwpegler (#16)
(Edited)
During the Carter inflation, Krugerrand's commanded a premium price.
#19. To: jwpegler (#16)
Gold Eagles weren't minted until 1986.
#20. To: Capitalist Eric (#17)
When I was in Russia two months ago, I gave my father-in-law a silver round...
#21. To: Godwinson (#13)
they scare the old white wussies listening into thinking the world is about to end so they should buy gold - in exchange for soon to be worthless dollars.
#22. To: A K A Stone (#21)
If the dollars are soon to be worthless. Wouldn't it be smart to have gold instead?
#23. To: Godwinson (#22)
So why would the gold dealer sell his gold for dollars then?
#24. To: A K A Stone (#23)
One thing they could use the money for is to buy land. Many more options.
#25. To: Godwinson (#24)
All the gold dealing I see seems to rip people off on the value of gold.
#26. To: A K A Stone (#25)
Take everyone that bought gold for the last 50 years.
#27. To: Thunderbird (#26)
#28. To: Thunderbird (#26)
What else could you have bought and held for fifty years and how does that investment compare with gold?
#29. To: A K A Stone (#27)
100 percent of the people in the last 5000 years that bought gold and held it made a profit if they sold it this year. 100 percent success rate.
#30. To: Skip Intro (#29)
#31. To: A K A Stone (#28)
(Edited)
Like say you were one of the peons who had their gold stolen by FDR.
#32. To: Fred Mertz (#20)
And because you have made this choice, you shall pay the price for being a mindless member of the herd....
They will shear you, until you have nothing left for them to take.
And then they will take your life.
Such is the way of tyrannical governments, like the one you welcome with open arms.
You celebrate your own enslavement, and happily scratch and beg, for each crumb they throw you...
#33. To: Capitalist Eric (#32)
#34. To: Fred Mertz (#33)
(Edited)
Thanks for the clarification.
#35. To: mininggold (#34)
(Edited)
#36. To: mininggold, Fred Mertz (#34)
He's BSing as usual.
There are tours abroad exploiting legal loopholes where the participants pick the girl of their dreams out of a lineup, then a scenario is created where they appear to meet randomly and spend a few hours getting acquainted, so the perps can legally declare the expressed purpose of their trip abroad wasn't for finding a bride.
And because you have made this choice, you shall pay the price for being a mindless member of the herd....
They will shear you, until you have nothing left for them to take.
And then they will take your life.
Such is the way of tyrannical governments, like the one you welcome with open arms.
You celebrate your own enslavement, and happily scratch and beg, for each crumb they throw you...
#37. To: Capitalist Eric, sneakypete (#36)
(Edited)
#38. To: Fred Mertz, sneakypete (#37)
And because you have made this choice, you shall pay the price for being a mindless member of the herd....
They will shear you, until you have nothing left for them to take.
And then they will take your life.
Such is the way of tyrannical governments, like the one you welcome with open arms.
You celebrate your own enslavement, and happily scratch and beg, for each crumb they throw you...
#39. To: Capitalist Eric (#36)
Your statements- for the most part- are. mischaracterizations.
#40. To: mininggold (#39)
You said there was no such thing as mail order brides and I begged to defer.
And because you have made this choice, you shall pay the price for being a mindless member of the herd....
They will shear you, until you have nothing left for them to take.
And then they will take your life.
Such is the way of tyrannical governments, like the one you welcome with open arms.
You celebrate your own enslavement, and happily scratch and beg, for each crumb they throw you...
.
.
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