Whether or not to eat gold or simply have a lot of it in your pocket is the question. Lets start with looking at the US Deficit, as of 4/13/12 it is over $15,704,000,000,000+ Trillion dollars. In 2011 the 30 largest US banks represent $11,017,000,000 billion dollars. Immediately we ask, does it look like the FDIC has $2,754,250,000,000,000 quadrillion dollars to represent those 30 largest US banks should your bank go insolvent? Or are they not able to cover your money in your account? The big picture is this represents 100 times the current US Deficit! That is not including the other non 30 largest banks in the US.
To look at that picture further is to look at what insures bank accounts, FDIC. On 7/12/10, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law raising the current standard maximum deposit insurance amount (SMDIA) to $250,000. The FDIC insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.
What was the response? Banking institutions responded to Dodd-Frank Wall Street Reform with their own policy enactments. One major Banking Investment Insurance institution posts “Any insurance or investment products purchased or sold through ############# or its affiliates are not insured by the FDIC. How does this effect those with long terms investments like CDs? With long term investments you are locked into a period of time and should there be a need to withdrawal the penalty rate is 30 to 90 days interest. Only age restrictions, death, or incompetence are the only aside to the penalty.
What has been the climate in response to all the federal bureaucracy of the economy with Americans? What we/Americans have not received or do not see, is that placing a fiat currency/paper money into an account is a form of “casino” investing. The stakes are high, the return may/may not happen but you can lose it all at their table. That is the risk many are assuming conscientiously or not. Evidence as we saw from 2007 though 2011 where 401Ks took major hits at state and government level retirement accounts was the fallout from bad economic decisions by the Feds.
We also have a governmental system in this country of which the fiat currency does does not back gold which is a violation of the US Constitution – “The Congress shall have the power to coin money, regulate the value there of, and of foreign coin, and fix the standard of weights and measures; No state shall make any thing but gold and silver coin a tender in payment of debts” – U.S. Constitution, Article 1, sections 8 & 10.
Gold in this country has been manipulated at the expense of the Federal Chairman and the Federal Reserve. All for the sake of leveraging the economy at the expense of the Fed Chairman’s floating loans into banks to stimulate boosting the economy. In reality causes the inflation rate to fluctuate and weaken the currency on the foreign markets.
With foreign currencies we see the Gross Domestic Product (GDP) has fluctuated significantly in India which buys their oil with gold. At the same time controlling import of gold caused major eruptions with jeweler businesses and local economic woes. With US Public Debt sitting as of 2011 at $8.9 trillion and it representing over 61% of it GDP, economically speaking we are no better off than India ($852+ billion public debt and 56% of it representing GDP).
So how can we compensate for dismal fiat currency performance? Gold. From a US historical point it is has not dropped during major historical events and continues to rise in value. Gold’s purchasing power has increased since 1930s ($20.65/oz average) to today’ spot price of $1668.30/oz. With the Euro gold gram price on LBMA up 4% to 9% since January 2012, we see even on the international market gold purchasing power has increased.
So what is the real comparison of the USD to the Euro gold market in buying power? Bread – $1.98 (little over a half loaf), Milk – $3.39/gal or 50 oz, Gas – $3.87/gal or 33 oz. Euro gold at 57.73/gram or $76 USD can buy over 38 loaves of Bread, over 22 gallons of Milk, and over 19 gallons of gas.
So you may not be able to eat gold or may be eating food with a gold crown. You have much more buying power with gold over the historical dollar.