Not Paranoid Just Prepared

The Gold Standard, Confiscation, and The Gold Window


There was a time when currency came in the form of silver and gold coins. Later, in the 1800’s, once paper currencies became the norm, the value of the paper was still backed by precious metal in the form of gold in countries agreeing to this standard- the gold standard. The gold standard included the agreement between the countries adhering to it that currency in circulation within countries accepting the standard could be exchanged for their face value in gold. England adopted the gold standard in 1817, and the US officially did so in 1900 with the passage of the Gold Standard Act.

Currency prices in the United States were fixed to the price of gold at $20.67 from 1834 (even before the passage of the above mentioned act) to 1933.  The gold standard was abandoned in 1933 when President Roosevelt “nationalised” privately held gold. Debts around the world were henceforth largely paid in American dollars. But there continued to be a sort of “gold standard” in place for nations wishing to redeem gold for their US dollars. The post-war world needed assurance that US currency was safe and stable, and between 1946 and 1971 this “gold window” allowed countries to redeem one ounce of gold for the fixed rate of $35 USD. This ended in 1971, with President Nixon’s closing of the “gold window.”

Having the price of gold fixed to currencies insured relative economic stability in countries adhering to the standard. Economic disturbances- production increases, inflation, increase in demand- in one country were in a sense buffered in other countries, keeping prices and economies stable throughout the world. Interestingly, during World War I when countries abandoned the gold standard, inflation became rampant. This was by design- without the international gold standard governments are able to manipulate their countries’ economies- for better or for worse. Again in 1971, when the US officially abandoned gold standard, we saw rampant inflation. Of course there are seemingly infinite other factors influencing the world economy today that would take lifetimes of study and writing to explain, especially in our ultra-complex, globalised, digital world. But suffice it to say that currencies backed by gold or silver created more stable, self-regulating, and prosperous economies around the world.

Today, January 1st, 2017, the current price for an ounce of gold is about $1,150 USD, an increase of over $1,100 from its 1971 fixed price. The price of gold has been higher, and of course much lower, but generally rising over most of that time to its present cost. Ups and downs occur, but gold remains a tangible, valuable asset that should not be overlooked.

For current prices, making purchases of metals, and a great radio program, visit the Patriot Trading Group. They are an honest, hard-working company who will answer your questions and help you make the right purchase.

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First post, so why not a few words about metals. It seems like a good place to start, with metal prices jumping around so much theses days. With the right metals in my “portfolio”, I feel I am prepared for any eventuality, as we used to say. Metals such as gold and silver have had and held value, in varying degrees, for many thousands of years. The chances are that they will continue to hold value, no matter what condition the world at large may be in. My thoughts on metals include:

1) Putting less money into my IRA and more into actual, physical silver and gold. That would be coins and bars, tangible items that can be stored locally. Or even junk silver, small denominations that can be used as coins at face value, or for their silver value as barter. I prefer to take possession of the metal, but there are precious metals IRA’s, where you can purchase it and have it stored for you, at a cost of course.
2) Rolls of coins from my local bank. Do you put a few dollars away here and there? Think about the devaluation of currency, and how many countries have had zeros dropped from the back of their bills. Now think about coins. It may be relatively easy for a government to remove and replace all it’s paper money. But how feasible is it for the same government to remove and re-mint all it’s coinage? Not very. Get rolls of nickles, dimes, quarters, and half dollars, 10 or 20 dollars every couple of weeks, or whatever you can afford. If paper money is recalled, chances are that coins will not be, and that their value will remain unchanged.
3) Brass and lead. Not the commodities, but the type that is manufactured to be used in bullet-throwers. Never considered paying for goods in 12 gauge shot shells or .22 rounds? Think again. Read William Forstchen’s recent works for an interesting fictional account of a world where it happened.
4) Blued steel. Um, yes, things to launch the bullets from. The safe should contain a variety of firearms if at all possible, for various applications- birds, deer, rabbits, and so on. If you can afford it, think redundancy (2 Remington 870’s instead of one)- you’ve got backup, spare parts, or a valuable tool that can be traded.

There you have it, a quick rundown of my metal investment strategy. Some may think it sounds kind of crazy, but I assure you I’m not paranoid, just prepared.