Originally Posted by
Steven Douglas
Yes, but a big difference is that a mutual fund is an investment in activity, with the possibility of a return, whereas this currency promises nothing but the existence of its underlying, privately owned assets, and would pay nothing. It's pure warehousing as bailments, with all holdings losing a fixed percentage of value (actual metal allocations) over time as bailment fees. (0.00002738% per day if the rate is 7/8 of 1% per annum). If you wanted to rent it out to someone at interest that would all be external, privately and individually handled. (banking, credit, finance, etc., will never be mixed with the storage, physical allocation and management of the currency itself).
I would say highly unlikely, but of course it could. A lot of people think precious metals are in a bubble, with a lot of different rationale as to why they believe that. Just not many here, as this place is chock full of metalbugs (yours truly included).
If you look at the long term, however, all the short turn ups and downs average out into an exponential curve that becomes undeniable and self evident. It has less to do with the exchange value of the PM as it does the loss of exchange value of the exponentially inflated fiat currency it's priced in. So if you're talking long term, not a chance. Not unless you're betting that the fiat currency supply is going to be choked. If that was ever the case, the price of gold would go down--for anyone with two dimes to rub together (read=hardly anyone)--in the midst of a massive deflationary depression where the entire Ponzi economy is catastrophically full of defaults and wrecked for a time.
By following a Keynesian policy (which Keynes himself viewed with favor at the time), by tying the fiat currency to promises that increased the national debt. Hitler appointed a man named Hjalmar Schacht to be the Reichsbank President in 1933, and together they created Germany's then-version of a deficit spending Ponzi scheme economy, with Germany's new Bills of Exchange. Unlike Fed dollars, that earn nothing, Germany's Bills of Credit circulated like Treasury bills circulating as currency. They were like Lincoln's greenbacks, in that they were a fiat currency printed out of thin air, but instead of promises to later pay in gold, Germany's bills promised to pay 4% interest (in that fiat currency, of course).
What many defenders of this scheme fail to acknowledge (or realize) is that any Ponzi economy, as this one was, can start out with a strong boom, with everyone believing in its magical powers to "create" wealth out of thin air and belief. But then the realities of its fundamentals kick in, and it ultimately ends in a bust. For Germany, there was a bust that covered that inevitable bust in the form of Germany's defeat in WWII.
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