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Message: Gold Stocks - To buy or not to buy?

http://fofoa.blogspot.com/2011/05/return-to-honest-money.html

"In my mind, it would be infinitely better for the USG to acknowledge Freegold, declare a starting price of, say, $10,000/ounce, and then open the vaults and let the price float. They buy and sell at the market price through the banks, starting at $10K.

The price would soon stabilize, much higher than $10K of course, but the two-way market would be in effect. The gold would not be gone. The currency would be stable once again."

I'm having trouble understanding how this would work. If sales open at $10K and the price starts to rise as FOFOA suggests, wouldn't you get a rush of buyers at 10K, after which supply would dry up as people hoarded in expectation of higher prices? Then there's the issue of confidence. Gold owners aren't especially fond of government, so why would they trust them to do what they said they'd do when they've shown time and again in the past that they won't?

I can see gold and silver returning as "natural currency" - that is to say, outside of government control, probably in response to hyperinflation, but to expect anything from government in crisis other than jackboots and jingoism to me seems naive. I think it's more likely the government (meaning of course the USG) will find some pretext to start a war and use that as an excuse to remove dissidents and rule by decree. You almost have that now, and if the backdrop were a severe energy crisis leading to (more) war in the mid-east, you'd get a lot of support from the great unwashed who just love flags and marching music as long as they're part of the parade.

I'm still working on this puzzle but one thing seems clear to me: take away people's purchasing power and they just roll over - they don't even understand what's happening. Take away their gasoline however, and the bullets will start to fly.

ebear

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