Several of you have expressed frustration with the direction the comments have been meandering lately. You've requested a more "Freegold oriented" discussion. I aim to please, so here is some Freegold fodder to get you started.
Do any of you remember FOA writing about "K-Rands" and the fact that they are a legal tender gold coin yet they have no indicated face value? Here is one such excerpt:
FOA (8/2/01; 12:52:55MT - usagold.com msg#87)
Walking On Solid Ground
I have tried to point out that the gold concept today is not one of just matching dollar price inflation in the future. If that was all we owned gold for, one could have covered that with several stock market games years ago. If $500, $700 or $800 was the goal, it becomes just another commodity bet and there have been plenty of other leveraged "plays" that already beat that. No, buying gold today is a political move; one that will add political sized returns to this gold advocate's wealth.
For this reason we outline the political "fiat against fiat money nature" of the battle more so than the gold to money battle. In the future, for any currency to compete against the Euro, native gold markets will have to trade at least in equilibrium with a Euro based free gold price. This will further pressure "political money posturing" to relinquish all fixed gold relationships with their moneys; fixed legal tender gold coinage included. This could become a very convoluted affair for gold coin investors. Especially if Euroland eventually mints a free floating gold coin; not dissimilar to the K-Rand! Not to be confused with Robert Ms 100 Euro or Germany's new offering; perhaps it will be called the "Euroland" gold coin? In fact, I bet it will (smile).
Coming to a nice clearing
While I am not unloading any of my various Eagles, maples, etc.,,,,,,,,, I want my involvement with gold to be as free of fiat involvement as possible. As an extension to this, all out of circulation, old gold coins make an excellent contribution to this thought. A powerful thinker once said that old gold coins will one day be treasured as forms of antiques in addition to their gold values. Few enough in circulation to carry extra value, but not rare enough to dissuade one from selling or trading them in the future.
To this end that same gentleman made a statement that embellishes the entire trail of Thought we walk today. It inspires countless large and small private gold advocates with a warning for a future we must prepare for and a call to stand guard!
I'll say the words again to end our hike.
--------
"when a thousand hungry lions fight over one scrap of food, small dogs should hide with what's in their belly"
"we watch this new gold market together, yes?"
-------
The sun is going down and it's time to camp here for the next speaker. Something about burning paper; I won't want to skip that one. Thank you each and every one for walking with me on this very fine day (smile).
TrailGuide
A side note: In the past I have mentioned the concept of "punctuated equilibrium." You can look it up if you don't know what it means. Basically, there are three phases through which we will pass. Our present (dis-)equilibrium, a nearing punctuation and the future equilibrium. It is helpful to understand the (sometimes subtle) distinction I (and FOA) make between these three discrete phases in all of these discussions. It is worth a little extra thought.
Anyway, my point of bringing this K-Rand thing up is to preface a two-minute clip in this video that someone sent me. (h/t HS) It is from 1983, a debate between a young Ron Paul and Fed Governor Charles Partee on the gold standard. The video has been set to start at 19:30. My reference is a little over two minutes, ending around 21:40.
In the video Partee said that he wanted the Gold Eagle coin as an "indicium of public attitudes toward financial conditions in the country" and that "you destroy that 'indicia value' when you have a gold standard." What do you think? Does this sound at all like Robert Zoellick's recommendation to use gold as a "reference point?"
Indicia—plural for indicium—comes from Latin for "sign," "clue" or "indication." In law it is sometimes synonymous with "circumstantial evidence." Partee elaborated saying he wanted gold to be an "indicator" and therefore the price needed to "vary" [Me: float].
Here's another SNIP of FOA speculating a bit about possible ways such floating "indicia coins" might be used in a Freegold world (following punctuation). This one ought to spark a lively discussion:
FOA (10/10/01; 07:07:06MT - usagold.com msg#119)
At the Trail Head parking lot
On most parts of this Trail, I could walk with my eyes closed; while in other areas I would need six maps and two GPSs units just to know north! Right now, I can tell ya what's most likely out there, but in those strange areas; not really sure?
Take this Euroland gold coin thing? My guess is we won't see this anytime soon. I suspect it will be something like a K-Rand, with no marked currency denomination, but different in that it will be a hybrid legal tender. If you look here in the US, gold coins are somewhat a currency as they stand. Just like IBM stock, real estate and most any other asset, we just have to sell it for currency first; pay our taxes and then use the money to buy something. The process only becomes illegal if you use the stock, land or gold to trade directly for something and don't pay your taxes.
Mr. Strauss pointed out that the current trend in motion is that all VAT taxes are being lifted or phased out on gold trading. Eventually, most of the world will have only some form of capital gains taxes on gold. This is fine and is bringing gold into focus as the one and only metal asset the official sector is trying to work with. But I think there is more to it than this.
As I said many times; Europe is looking to bring gold back into use as a very tradable asset. Perhaps "the most very tradable asset" but still outside the fiat money context. They want to keep the government's and socialist's hands off gold and its market function so it will serve everyone as a savings medium. But, they also want it to gain as a trading medium so the combination of the two will create immense demand.
To gain in the "use department" I suspect we will see some push to drop all gains taxes on gold used in official coin (Euroland) form. In place of that, there will be some form of excise tax charged on payments / trades done using these gold coins. Most likely, you will have a choice of paying completely in gold or Euros but not a combination of both. Probably, gold will be used for large purchases because gold will carry a very high price by then. And too, 1 gram coins will be the norm; being the size of our one ounce now, but with alloys. I doubt gold will ever be used in regular store / retail sales. In other words, I could go into my bank and use 50 Eurolands containing, say one ounce fine gold each, and pay off my $200,000 mortgage; minus some 15% excise tax on the deal? I could probably do the same thing with regular bullion, too, but would pay a somewhat higher gains tax rate; instead of the lower excise tax.
Anyway, this is all in the "for what it's worth area". Go ahead and take your hike,,,, I will be here giving the car a tune-up and changing the oil when you return. Then I want to talk some more about the words of Mr. Strauss (smile).
TrailGuide
Oh boy. I suspect I might have opened a can of political discussion worms here. But like FOA said, "buying gold today is a political move; one that will add political sized returns to this gold advocate's wealth." And let's not forget this recent move in any discussion about future political taxes:
"[Utah] would also exempt the sale of gold from the state capital gains tax."
And also remember the concept of "soft targets" when it comes to government's obeisance to the hungry collective. Here's a little "soft target" fodder to keep the discussion going, just in case the above was not enough. The first is an old comment by Costata. The rest are labeled with the author's name at the top:
Welcome to the FOFOA blog. In case you missed it the heading reads:
FOFOA
A Tribute to the Thoughts of Another and his Friend.
Clearly you haven't found the time to read any of the archived material available in the links on the right hand side of the home page.
As a favour to you I have extracted Another and FOA's predictions from 1997 and 1998 about taxes on gold under Freegold.
As an additional favour I will break it down for you.
1. The gold miners will be the targets for high taxes. For political and practical reasons they are the soft option.
2. Anyone holding paper gold when the transition to Freegold comes will be burned.
3. Personal holdings of physical gold will be encouraged by EU Governments and their allies.
4. No-one knows what the specific tax regimes will be on the sale of gold in other jurisdictions. At present it ranges from Zero to the equivalent of the taxpayers' marginal income tax rate.
If you cannot be bothered to read FOFOA's archive (BTW did I mention that this is his blog) you will bore the s#@t out of most people with your half-baked theories and predictions.
Date: Sun Dec 07 1997 18:45
ANOTHER (THOUGHTS!) ID#60253:
Try to live in this outcome and see how different the world will be. It will not be the end of all things, only the changing of most things in "western thought". The "Digital Currencies" will still trade, but we will value them as not before.
Anyone who has sold gold they do not have will not be allowed to cover that position. Anyone who has bought gold they do not have will not be allowed to cover that position. Many will lose all they have in a world without honor!
Looking back , one will ask, "how could I have thought that no one wanted gold, when more of it was being bought than existed"? Indeed, more gold than exists or will be produced in the next ten years! And some say, "only a fool would say the market was cornered".
During that time, gold in the hand will not trade on an open market! And the government of the country, of the land, of the mine, will no doubt speak with you of new taxes on GOLD!
Date: Sat Mar 07 1998 23:37
ANOTHER (THOUGHTS!) ID#60253:
Mr. Mozel,
The USA placed a special "windfall profits" tax on domestic oil during the last major rise in prices. I do think the oil stocks would have shown a greater value had this tax not been in place. Because gold will soon become a currency, mines will be taxed in a much greater way. Also, domestic mines will be asked to sell directly to the treasury at the "preceived commodity value" value of gold, plus an operating margin. As no private company will be allowed do your treasury job, "produce money". Gold in the hands of the public will be thought of as a good thing, as citizens are asked to "pull own weight" as the government is much under.
Date: Sun Apr 19 1998 15:09
ANOTHER (THOUGHTS!) ID#60253:
REPLY:
Date: Sun Apr 19 1998 14:18
OLD GOLD ( ) ID#238295:
There will be ample time for holders of gold bullion and gold shares to sell their holdings for huge profits. Drifter was right on target here. Let's worry about getting POG to $350 this year. We have a long way to go on the upside before confiscation and/or taxation becomes a realistic concern.
Mr. Drifter and Mr. Old Gold,
If you search the "thoughts" posts provided by Mr. Sharfin, many of your conclusions are addressed. Many do feel that if "the gold mines were safe in the past", "they will be safe in the future". I submit this person's thinking for your consideration:
"The Western public has always thought of gold as money. Even after the 70s and 80s, most private investors held a small side thought, that gold was still, somehow dollar money. It was only during the late 80s and 90s that people started to completely lose the connection of paper spending money and gold.
Clearly, all evidence shows that prior to the 90s and particularly prior to the 50s, the push was to change the public's thinking away from gold money, to paper currency as money. In this political climate, gold mine investments were the correct move, as the business of gold was encouraged over the usage of gold as money! That is why the metal was called in and the mines were untouched.
However, today, the change will be counter to the prevailing public opinion, that gold "is not money". The world debt system and currency exchange, as we have known it will implode and leave little room for political maneuvering.
The governments will revalue gold and "demand" that the public carry it and use it! It will be the source of all gold, the mines, that will be controlled! That's Controlled, with a capitol "C", not confiscated!"
8/10/98 Friend of ANOTHER
Michael Kosares,
Basically, this is the direction the Euro group is taking us. This concept was born with little regard for the economic health of Europe. In the future, any countries' money or economy can totally fail and the world currency operation will continue. What is being built is a new currency system, built on a world market price for gold. Michael, you are absolutely correct in that the USA will see a hyper inflation of its currency and a gold price in dollars that reflects it.
Unfortunately, for most investors, the gold price rise will be sudden and also hyper fast as it will occur just after a rapid plunge in dollar based assets including, stocks, debt and the entire banking system. This action will destroy virtually all gold based paper assets as they are also dependent on a functioning economic system. A local gold mine, in any country, must sell production to realize a profit. The contract system they deal with will not be functioning during this time. Contrary to many hopeful investors, local treasury officials will not allow miners to pay employees or buy equipment with physical gold. When the dust does clear for mining to continue, gold will be recognized worldwide as real money, and the mining of money will, no doubt, carry Extreme taxation. Stock prices of these operations, after being priced to zero, will then double or triple in price. Zero times three equals?
9/3/98 ANOTHER (THOUGHTS!)
Replies (9/3/98):
However, never before in history has gold been cornered in currency terms. Not physical terms. Never before in history, has a world reserve currency, the dollar, been forced from a high gold valuation to a low gold valuation, along with a destruction of world gold market. Because gold is traded today, worldwide in dollar terms, the transition will destroy the capital assets of 99% of all mines. Please place yourself in "context of future events". Physical gold will not reach $30,000/oz because no one is buying it! It will come to this level because the dollar, today, is already inflated to level that will bring this price.
The perception that this dollar is "no longer a good reserve", it will bring the flood of buying. This "already printed and in circulation today" currency will seek gold!
Governments will tax mines for the right to produce money and force them to sell production in terms of whatever "the new world reserve currency" is at that time. Euro? Because gold mines are the "unique" circumstance in world of investments, their owners will suffer a "unique" problem of defining what they really own!
Also, remember, gold will rise soon as world trading continues this course of change. However, at some point, when the dollar market is destroyed, no one will know the currency value of gold thru an official market. Paper gold will not do well as the currency world is at war! The true surge of gold in dollar terms will not show until perhaps a year has gone by. During this time of trouble, physical gold will prove to be "the investment and holding for a lifetime".
ANOTHER: Gw, I would say, all forms of physical gold is good to own. Even the rare ones offer the "art form", yes? Even in war, the art work is looted first, then the jewels, and always food. I prepare for not the war of men, but the war of currencies! This conflict will bring forth a new concept for many: "western governments will encourage people to hold physical gold"! When the Euro has defeated the Dollar, citizens will be asked to use gold as a savings, for holding the Euro will be frowned on. Gold will not bring your "capital gains tax" as the mines will be taxed to compensate.
Yes, rare gold will be good, but not as liquid as "bullion type" gold.
Thank You
Date: Sun Oct 19 1997 09:42
ANOTHER (THOUGHTS!) ID#60253:
You see, gold is not a commodity. The CBs have used every weapon to keep its price low . Understand me, Gold is now, today, a devalued currency being used in world trade!
Do you think the CBs are selling gold to keep the dollar strong? They don't have to sell to accomplish that feat! CB gold (one billion ozs.?) valued at its current commodity price is only worth 300 billion, it's nothing in that price range! They know what its US$ price is worth in terms of oil! They are not stupid as they show.
You should not think they are dumb! Invest in gold mines, will you? Notice how quick the Australian CB hinted at taking "gold in the ground" if needed. This was said after their sale! The nature of the coming crisis will make the taking of investor property a piece of cake. You see, because gold is a commodity, you will be compensated at the commodity price of return + a fair profit, of course.
How much further can they take this? The world private stockpiles that could be sold have been. The CBs are heavy into their own stuff now and are over their heads if they had to make good on all the private deals (read my other posts). The economic game is ending now and has been from the start of 1997! Watch closely as the world currencies and markets fall one by one. Watch in absolute wonder as the demand for oil plunges and its price goes thru the roof. Yes, oil stocks will crash with the markets. And gold? You will never know its price. It will stop all trading as it slices thru $10,000+.
Sincerely,
FOFOA
I remember when, I remember
I remember when I lost my mind
There was something so pleasant about that place
Even your emotions have an echo in so much space
And when you're out there without a care
Yeah, I was out of touch
But it wasn't because I didn't know enough
I just knew too much
Does that make me crazy?
Does that make me crazy?
Does that make me crazy?
Possibly
And I hope that you are
Having the time of your life
But think twice
That's my only advice
Come on now, who do you
Who do you, who do you think you are?
Ha ha ha, bless your soul
You really think you're in control?
___ no!
I think you're crazy
I think you're crazy
I think you're crazy
Just like me
My heroes had the heart
To lose their lives out on a limb
And all I remember
Is thinking, I want to be like them
Ever since I was little
Ever since I was little
It looked like fun
And it's no coincidence I've come
I'll die when I'm done
But I'm not done
Crazy
Maybe you're crazy
Maybe we're crazy
Possibly
