Originally published at: MORE BULLION "BACKED" "CURRENCY" NONSENSE
By now we should all be alive to the game being played with the state bullion depository-and-specie-backed “sound money” scams. But if you’re not, consider the following article shared by W.G., which outlines the scam in a way that leaves me, for one, fairly gobsmacked for the audacity of the word salad (the “pretzel-talk” as…
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"the representation of gold and silver specie and bullion held in the pooled depository account.”
Every time I hear “pooled depository account” I get ding, ding, ding in my brain, following fraud, run for the hills.
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Agree with your thoughts/comments. Here’s a hurdle to overcome though (that debit cards do mitigate).
The nominal value of the dollar (what goods and services are almost exclusively priced in) and the price of gold are subject to hourly manipulation / change. Back before the gold exchanges were created (the exchanges of course being vehicles for big banks to manipulate / exploit currency / metals price arbitrage) the value of gold and silver were very stable…‘inflation’ curves were very flat.
Today, the average clerk can’t even count change. How at the retail level can a transaction using a let’s say 1 oz gold coin (or state issued gold certificate) actually function? Only for purchases over $3300? When you present your ‘sound money’ to the clerk in what format do you get your change? And if trying to buy a new professional gas range (example of a spendy item to buy) that is priced in fiat dollars The amount(weight) of gold required to purchase it could fluctuate a significant percentage based on the gold price manipulation effective at that moment. The percentage of manipulation is well over the profit margin of many retail outlets.
Until inflation / metals prices stabilize like in the old days, there has to be an instantaneous adjustment mechanism between precious metals weight/price and the purchased item price in fiat dollars that the debit card facilitates.
Who would you trust to do this computation? The quickie mart owner down the street? Some international retail cartel? Or a state-authorized metals depository (via the debit card)?
I don’t really like any of these, but this is the reality of retail commerce/money until inflation is halted and monetary value stability and retail item pricing all become stabilized. And since the financial industry and government LOVE the power to skim from your budget via inflation this is unlikely to happen.
Like in most things, the optimum solution is not monolithic. So having an account at the bullion depository with a debit card and a say-monthly cash flow amount of bullion deposited to facilitate monthly purchases serves a useful purpose. It limits your risk.
Keeping the remainder of long term PM assets in some other medium (private vault, in-hand etc) but outside the state-run bullion depository insulates it from the shenanigans we both suspect will happen. Sooner or later some bankster or politician will figure out a way to manipulate the bullion bank it to get their ‘vig’ you can bet on that.
The point is, the bullion debit has a level of practicality, but don’t put all your eggs in that one basket.
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Very good questions and would love to hear Dr Farrell’s ideas on practical logistics