US Gold Reserves - Preventing the collapse?

[MyLibertyStuff]

I was wondering how the Govt could prevent against a collapse of the dollar. Obviously, we couldnt raise interest rates to anything high enough to battle it, as we would be put back into a credit crunch.

However, the treasury has 147.3 tons of gold in its reserves. If the treasury sold this at current market value, it would take over 4.3 trillion dollars out of the system. As the currency inflates, the amount taken out will only increase, unless that amount of gold being put on the market is enough to drive the price to near zero. So, could this be used to battle the collapse of our currency?

Any thoughts?

[ctiger2]

However, the treasury has 147.3 tons of gold in its reserves.

Are you sure they have 147.3 tons of Gold? Our Gold hasn't been audited since the ~30's. The US Gold reserves are listed as Deep Storage Gold now. I'd bet it's allocated to some other country or entity or just plain gone by now.

Here's a good world Gold allocation link

[MyLibertyStuff]

Are you sure they have 147.3 tons of Gold? Our Gold hasn't been audited since the ~30's. The US Gold reserves are listed as Deep Storage Gold now. I'd bet it's allocated to some other country or entity or just plain gone by now.

Here's a good world Gold allocation link

Got my info from http://en.wikipedia.org/wiki/Official_gold_reserves and the treasury website. Although it could be wrong, I dont want to take a gamble on that when investing.

[sailor]

However, the treasury has 147.3 tons of gold in its reserves. If the treasury sold this at current market value, it would take over 4.3 trillion dollars out of the system.

But the government wouldn`t take the 4.3 trillion dollars out of the system. They wouldn`t burn them. They would just re-spend them on this or that.

It could delay the collapse, but it can not avert it. Spending is the problem, as long as there is such spending nothing else will help.

It`s like an idle apple farmer living off issuing IOUs for future apples he plans on growing but never does. It can`t go on forever. Even if he one day discover he stil has 50 cases of apples in the basement and decides to live off of those for a while. Sooner or later they are going to run out and he will go back to issuing worthless IOUs.

[MyLibertyStuff]

But the government wouldn`t take the 4.3 trillion dollars out of the system. They wouldn`t burn them. They would just re-spend them on this or that.

It could delay the collapse, but it can not avert it. Spending is the problem, as long as there is such spending nothing else will help.

It`s like an idle apple farmer living off issuing IOUs for future apples he plans on growing but never does. It can`t go on forever. Even if he one day discover he stil has 50 cases of apples in the basement and decides to live off of those for a while. Sooner or later they are going to run out and he will go back to issuing worthless IOUs.

Im not saying that it would avert the crisis permanently, but pulling 4.3 trillion out of the system would prevent a collapse of the dollar for at the very least 4 years.

[Dr.3D]

I'm having problems finding the amount of gold in the United States Gold Reserves. I did find some interesting information about the way they value the gold in the reserves though.

The gold and silver reserves are reported in this Schedule at the lower of cost or market value. Absent historical records to determine the acquisition cost of the gold and silver over the decades, the reserves are valued at the rates stated in U.S. Code Title 31, Sections 5116 and 5117 (statutory rates) which are $42.2222 per Fine Troy Ounce (FTO) of gold and $1.292929292 per FTO of silver. An offsetting custodial liability is also reported for these assets.

http://www.usmint.gov/about_the_mint...ule_00_ann_rpt

Seems the same holds true for the gold holdings of the IMF.

[sailor]

Im not saying that it would avert the crisis permanently, but pulling 4.3 trillion out of the system would prevent a collapse of the dollar for at the very least 4 years.

You keep talking about "pulling out". What do you mean by that? Do you really think the government is going to destroy "perfectly good" federal reserve notes?

[MyLibertyStuff]

You keep talking about "pulling out". What do you mean by that? Do you really think the government is going to destroy "perfectly good" federal reserve notes?

In the case that there was a collapse of the dollar, the Treasury could sell gold reserves for US Dollars and in essence pull that money out of the economy.

[Dr.3D]

Got my info from http://en.wikipedia.org/wiki/Official_gold_reserves and the treasury website. Although it could be wrong, I dont want to take a gamble on that when investing.

Would you please quote from those sites where you determined the amount of gold in the United States Gold Reserves is 147.3 tons?

[stag15]

In the case that there was a collapse of the dollar, the Treasury could sell gold reserves for US Dollars and in essence pull that money out of the economy.

Ummm, wouldn't that just make our dollar more worthless?

[specsaregood]

Got my info from http://en.wikipedia.org/wiki/Official_gold_reserves and the treasury website.

And for the tinfoil hat angle on the subject:
http://www.fgmr.com/unthinkable.htm
Did President Johnson gamble away our Gold Reserves?
Excerpt:

...presented Johnson with a scheme. They told him how he could 'defend' the Dollar as the grand deed to bolster his flagging popularity and win back the support of the American people.

All he needed to do was 'flood' the London market with Gold, thereby more than satisfying the growing demand for redemptions of the Dollar. They led Johnson to believe that once everyone realized how much Gold was available, the demand for Dollar redemptions would decline, and everyone would be satisfied holding Dollars again instead of Gold.

According to André, Johnson then concocted a secret plot. The entire US Gold Reserve, then over 400 million ounces (excluding the 15-20 million ounces of 'coin melt' Gold which could be determined to be Gold from US reserves), would be shipped to the Federal Reserve in New York and the Bank of England in London to be 'dumped' on the market to teach a lesson to the speculators. Not only would there be more than enough Gold to meet the growing demand for Dollar redemptions, the Gold price would drop. The Federal Reserve and the Bank of England would not immediately sell Dollars and buy Gold, thereby 'allowing' the Gold price to fall momentarily below $35. Once the speculators were 'crushed' in this way, the Federal Reserve and the Bank of England would step back in to buy the Gold under $35 per ounce and then surreptitiously return it to the US Treasury with no one being any the wiser. Only it didn't work out that way.

Over a period of several weeks in early 1968, the Gold was secretly transferred and 'dumped' on the market, but to President Johnson's shock and horror, the market absorbed it all. He had been duped. The people who concocted this plan knew that their group had more than $14 billion of resources (400 million ounces times $35 per ounce). They therefore willingly exchanged their Dollars for the Gold 'dumped' on the market. The rest of the story is already well known.

[MyLibertyStuff]

Actually I read the page wrong. We only have a few hundred billion dollars worth of gold in our reserves...

Back to a helpless collapse lol

[HOLLYWOOD]

I don't have time to recall the figures, but this number is way too high for US reserves.

I will research... L8R

Got my info from http://en.wikipedia.org/wiki/Official_gold_reserves and the treasury website. Although it could be wrong, I dont want to take a gamble on that when investing.

[jonahtrainer]

Actually I read the page wrong. We only have a few hundred billion dollars worth of gold in our reserves...

Back to a helpless collapse lol

Yes, your math did seem off quite a bit. Plus, I do not think you are taking into account the evidence from the Gold Anti-Trust Action Committee.

[sailor]

In the case that there was a collapse of the dollar, the Treasury could sell gold reserves for US Dollars and in essence pull that money out of the economy.

So when I sell a used car for $2,000 I pull out $2,000 out of the economy?

[NinjaPirate]

So when I sell a used car for $2,000 I pull out $2,000 out of the economy?

I think the gist of it is how you pay for it. If someone used their CC to pay for it, then no. But if they paid cash, then yes.

Am I right?

[sailor]

I think the gist of it is how you pay for it. If someone used their CC to pay for it, then no. But if they paid cash, then yes.

Am I right?

No you are not. I am not selling my car to take the $2,000 dollars out of the circulation. I am selling something (my car) because I want to spend somewhere else.

I am just exchanging my car for 1 ton of oranges and 1 ton of watermelons. That can not be deflationary. The dollars are just a medium to facilitate that exchange.

Someone buying on a CC is usally inflationary (due to fractional reserves banking), but buying for cash is not deflationary. It is neutral.

When you go to Walmart and spend 20 bucks, that money leaves your pocket, but that doesn`t mean it just disappeared into the thin air just because you can not see it anymore. It stil exists in Walmart`s accounts and will be spent again and again.

[MyLibertyStuff]

So when I sell a used car for $2,000 I pull out $2,000 out of the economy?

No no...if the US Treasury sold its gold for USD, then it would effectively take any money it received out of circulation, given that they didnt re-spend it, because the money would be out of the hands of the private sector and in the hands of the Government. Although It would be expected now that they re-spend the money received from the transaction, I dont think they would in the face of collapse. In the case of a collapse it would probably do this and anything else they could do to decrease the money supply.

But the collapse is still coming, because they dont have enough gold to battle the increase in money supply effectively, let alone the fact that flooding the market with that much gold could saturate the price.

[sailor]

No no...if the US Treasury sold its gold for USD, then it would effectively take any money it received out of circulation, given that they didnt re-spend it, because the money would be out of the hands of the private sector and in the hands of the Government.

Then say so. Yes that is correct. They would have to take the money out of the circulation and contract the money supply to battle the devaluation of the dollar.

But there is absolutely nothing indicating they are would even in their wildest dream contemplate doing this. Every year they expan the money supply more and more, they just announced they plan record budget deficits for the next 4 years. To think they would not just stop doing this, but actually start doing the opposite is unthinkable.

(And even if they were serious the way to do good stuff would not be to sell the gold but to denominate the dollars in what little gold they have.)

[acptulsa]

You're assuming they want to save the FRN. I'm not at all sure they do. The less it's worth, the easier to pay off the debt. When the twenty is suitable for wallpaper/outhouse use, we'll actually be able to afford what we owe.

[ctiger2]

Here are the ways to stop a collapse of the dollar:

1. Govt has to stop bailing anyone out
2. No more stimulus packages
3. Return to a Gold backed USD
4. Raise interest rates to 15-20%
5. Bring all troops stationed around the world home and give all military bases to the country they're on.
6. Start paying down debt.
7. A balanced Federal budget

Selling our Gold would be a disaster. That's the only real money we've got left.

[HOLLYWOOD]

#5 - The Senate is on floor for spending another $91 BILLION for WAR and STATE DEPT Foreign Welfare. Now there's a prefect example of the lies AND deceptions.

Like our nation is flourishing... THE EMPIRE CONTINUES

Here are the ways to stop a collapse of the dollar:

1. Govt has to stop bailing anyone out
2. No more stimulus packages
3. Return to a Gold backed USD
4. Raise interest rates to 15-20%
5. Bring all troops stationed around the world home and give all military bases to the country they're on.
6. Start paying down debt.
7. A balanced Federal budget

Selling our Gold would be a disaster. That's the only real money we've got left.

[theoakman]

Our gold reserves don't prop our currency up. If we sold them all at market value today, we wouldn't even come close to paying our debts. This is why gold is incredibly undervalued in terms of dollars. The only thing that prevented a dollar collapse was the worldwide debasement of all foreign currencies by all central banks to strengthen our own. This is what they have done for 10 years straight. It works temporarily. It's the primary mechanism that has allowed our consumer based service economy to survive. Over the long run, the smart people have been and still are dumping their dollars. The long term trend for the dollar is still going down and the crash will be really bad as long as we continue to do what we do because the only thing that can give a fiat currency strength is the productive manufacturing capacity that a country has to back it. The US has consistently destroyed US manufacturing and is even in the process of putting in stupid cap and trade laws to further undermine it. The dollar is doomed, no matter what. It's just a matter of how much of our $#@! does the rest of the world want to eat before it does. China and Japan have already publicly stated they are getting tired of it. So is Russia. Saudi Arabia is stupid and they do whatever we say. Europe is getting sick of us. You can't time these things because it all depends on how stupid the governments of the world are. Position yourself safely now...and sit back and watch the $#@! unfold. People who talk about timing gold, silver, and commodity plays to hedge themselves against inflation are full of it. The prudent investors positioned themselves in gold, silver, and oil ten years ago. There was a reason why guys like Buffett, Soros, Bill Gates, and many others had big positions in Silver in 1998. There's a reason Schiff, Rogers, and Faber have been buying oil for over a decade. If you were a market timer, you were in the market 10 years ago.