Time to buy gold? There was some drop in the price of gold today. As the market hits its low, or near-low, stocks may now be a better investment than gold, which is never the safe investment that many believe it to be.
Many of us are old enough to remember the Hunt Brothers’ attempt to control the silver market during The Carter Administration. People realized that an old, silver dime was worth more than a freshly printed “Carter Dollar”. Many preferred to be paid in one silver dime rather than one paper dollar. A growing number of people who preferred real silver to paper “Carter Dollars” provided a real threat, not to reality, but to the system. A ten thousand dollar car could be purchased for a thousand dollars worth of silver dimes, a five dollar haircut for five old dimes.
The Carter Administration was worried that more people would start using the old silver coinage, of which there was then a lot more around, instead of their fake money. So, they changed the laws several times to destroy the Hunt’s holdings. Changes in laws drove the price of silver from $85.00/oz to a few dollars/oz.
It’s easy to see that any government can do the same thing with the price of any commodity. The Roosevelt Administration declared “war on gold” in the mid-thirties. First, they decreed that gold was worth twenty dollars an ounce. Then, men were sent to homes, banks, and businesses and confiscated all but “collectors’ coinage”, forcibly exchanging it for paper money.
Then, when they’d taken all the gold from private owners, and said they put it in Fort Knox, the Roosevelt Administration decided that gold was now worth $35.00/oz. They nearly doubled the value of their gold reserves by a simple decree. That allowed them to print endless reams of paper money for any number of progressive projects.
Any government can do that at any time. That fear of confiscation, more than anything, tends to keep a lid on gold prices. Few are going to pile up pounds and pounds or tons and tons of gold, knowing that it can be forcibly taken from them at whatever price their government decides to pay.
Mining advancements are also a lid on price. Modern mines and refineries are more automated than ever. Production costs, except for bribes to governments, are comparatively lower than at any time in history, except for the occasional discovery of surface gold in large quantities. When gold prices go up, more new mines are opened and old mines are re-opened. The flow of gold from the ground to market increases with remarkable speed, devaluing holdings with amazing alacrity.
