Dollar Alternative Anyone?

By Greg Hunter’s USAWatchdog.com 

Countries around the world have been actively seeking ways to not do business in dollars for the past few years.  The U.S. dollar is the so-called world reserve currency, but the big question is for how long?  China and Japan are beginning to shun the dollar in trade between the two countries.  Mind you, this is the 2nd biggest economy in the world doing business without dollars with the 3rd biggest economy in the world.  Russia and China, also, have an agreement to not use the dollar, and even India recently announced it would trade gold for oil with Iran.  Additionally, the International Monetary Fund (IMF) has been calling for an alternative to the buck.  The big push is not because the U.S. dollar is held in the highest regard but because it is losing its luster on the world stage.   After all, the debt debacle facing America is worse than what the Greeks are facing according to a new report from U.S. Senator Jeff Sessions.  (Click here to see for yourself.)  Senator Sessions says every man, woman and child in the country is saddled with $44,000 in debt.   

The difference is the U.S. can print money, Greece cannot, and that is the problem for the rest of the world.  Every dollar that is created devalues the other dollars in existence.  America spends 43 cents more for every dollar than it takes in every year.  There is a current $15 trillion national debt and future commitments that some economists say exceeds $200 trillion.  Last August, Congress raised the debt ceiling $2.1 trillion to $16.4 trillion.  That money is likely to run out before the November 2012 election, and then, Congress will need to raise it again or the U.S. will face default.  My money is on yet another debt ceiling increase.  Is there any wonder why the world wants to move away from the dollar?  The more you have of something, the less it is worth. 

Now, even some U.S. states want to do business in something other than dollars.  Wyoming is the latest to consider what some are calling the “Doomsday bill.”  A local news organization called Trib.com reported last week, “State representatives on Friday advanced legislation to launch a study into what Wyoming should do in the event of a complete economic or political collapse in the United States. . . . The task force would look at the feasibility of  Wyoming issuing its own alternative currency, if needed. . . . “I don’t think there’s anyone in this room today what would come up here and say that this country is in good shape, that the world is stable and in good shape — because that is clearly not the case,” state Rep. Lorraine Quarberg, R-Thermopolis, said. “To put your head in the sand and think that nothing bad’s going to happen, and that we have no obligation to the citizens of the state of Wyoming to at least have the discussion, is not healthy.”  (Click here for the complete Trib.com story.)  

Wyoming is just one of more than a dozen states that are exploring or passing legislation to have an alternative to the dollar just in case of some sort of calamity. CNN reported earlier this month, “A growing number of states are seeking shiny new currencies made of silver and gold.  Worried that the Federal Reserve and the U.S. dollar are on the brink of collapse, lawmakers from 13 states, including Minnesota, Tennessee, Iowa, South Carolina and Georgia, are seeking approval from their state governments to either issue their own alternative currency or explore it as an option. Just three years ago, only three states had similar proposals in place.  “In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System … the State’s governmental finances and private economy will be thrown into chaos,” said North Carolina Republican Representative Glen Bradley in a currency bill he introduced last year.  Unlike individual communities, which are allowed to create their own currency — as long as it is easily distinguishable from U.S. dollars — the Constitution bans states from printing their own paper money or issuing their own currency. But it allows the states to make “gold and silver Coin a Tender in Payment of Debts.”  (Click here for the complete CNN story.) 

Gold and silver coins could be exchanged for their bullion value.  That means, even though a one ounce U.S. Gold Eagle is stamped $50, it would be valued at its weight on the spot market.   As I write this, gold is trading for more than $1,785 per ounce.  Same would go for Silver Eagles and other forms of U.S. minted gold and silver.  They would be exempt from state taxes, but federal taxes would still apply as it stands now.  Some legislation, as in South Carolina, would allow any kind of gold or silver coin to be used.  That would include coins such as Krugerrands from South Africa, Maple Leafs from Canada and many others. 

This is all taking place under a backdrop of a sovereign debt crisis in Europe that could destabilize the U.S. banking system and runaway deficits and spending on wars, bailouts and Obama care.  There is a reason we keep hearing stories about alternatives to the U.S. dollar, and it is signaling bad news ahead for the world’s reserve currency.  The idea of an alternative to the buck is not coming from a few crazy people from the fringe.  It’s coming from world and state governments that fear a currency crisis of epic proportions that is well on its way.

Comments
  1. mark leiby

    In lieu of President Truman’s famous desktop plaque that read “The buck stops here”, perhaps BO should have a new plaque made for his desk. that reads “The buck dies here”.

    • Greg

      mark leiby,
      What a great first comment! Thank you.
      Greg

  2. TnAndy

    “…the Constitution bans states from printing their own paper money or issuing their own currency. But it allows the states to make gold and silver Coin a Tender in Payment of Debts.”

    Allows ?

    No, it > PROHIBITS < States to use ANY THING but gold and silver as tender…..go read it.

    And yet, not a single State in the Union pays their bill with any thing but paper.

    If the States were all that concerned about the FED or the Feds, they could simply follow the Constitution and lead the way.

    • Greg

      TnAndy,
      Amen to that brother.
      Greg

    • david smith

      Gresham’s law in opeeration–who would pay in gold or silver when they could use paper?

  3. jay

    Greg.
    Thanks for another great artical.
    As i see it. Its a good thing that other countries are getting away from the dollar. It helps gold go up in value. Even if i dont have any the usa sits on more gold reserves then any other country. The collapse will come , But it will not be as bad as other countries with little gold reserves.

    • Greg

      Thank you Jay.
      Greg

    • Terry

      Jay, Do you really think this Government is sitting on more Gold Reserves than any other Country, I bet the Cubbord is bare.

      • jay

        Terry.
        you could be right. I agree with Ron Paul we need to check the gold the fed hold to make sure its gold.
        Greg. when was the last time the countrys gold was checked for its purety? Could be fools gold.

        • jay

          I must add.
          Would any one in government ever tell he people if the gold reserve was fools gold..?

      • david smith

        Good point. I find Jay’s faith that there is 8300 tonnes of gold sitting in Ft. Knox touching, but misplaced.

        • Hoser

          Rehypothicated how many times over???????? When the music stops, you better be #1 in line. Everyone else gets nadda. Zilch!

          • Greg

            Hoser,
            I wonder if someday soon we will be calling Rehypothecation legalized theft. Think MF Global. Not a single charge has been filed. Good stuff man!!
            Greg

  4. Vess

    Bitcoins, anyone? :D

    BTW, the US gubmint isn’t helping, either. A Norwegian man buys Cuban cigars from a German distributor. Because he was stupid enough to pay in US dollars electronically, his transaction gets routed through a US bank. The US government, who monitors such things, sees “trade with Cuba”, screams foul, blocks the transaction and appropriates the money (all $20.00 of them). Guess the next time that Norwegian chap would pay with something else, eh?

    http://cphpost.dk/news/international/us-snubs-out-legal-cigar-transaction

    However, it bothers me that every Tom, Dick and Harriet is predicting the death of the US dollar. Not that I have a very high opinion of it myself, but when everybody thinks that a catastrophe is coming, it doesn’t happen. Remember the “euro to zero” a few years ago, when it traded at $0.83? That was the bottom. It proceeded to rise above $1.4.

    Now, with Helicopter Ben printing like crazy, the end of the US secular bear market doesn’t seem to be in sight. However, the fact that even the US states are shunning the dollar is a read flag to me. Perhaps a reversal is closer than we think…

  5. Ken-confused

    Greg…help. Logic dictates that USD is being devalued, and with each passing printing and treasury swap, to be devalued more. Yet, Harry S Dent, author of Great Crash Ahead, points to history to argue that the USD will STRENGTHEN instead of devaluing in the depression ahead. Do you agree to any degree whatsoever that it is possible for the dollar to strengthen? If so, how? Right now all I read about is: countries abandoning it, manufacturing becoming extinct, unemployment continuing to worsen, corruption running rampant. Do you see anything positive out there in the future for the USD? I value your opinion and would like to hear more from you on this topic. Thank you.

    • Greg

      Ken-confused,
      It may strengthen in the short term. but one flaw in Harry’s model my be underestimating to what lengths the Fed will go to the continue to save the Western financial system. I believe you can forget about any comparison to the Great Depression. Then the Fed let many many banks fail and there was no FDIC. How much will the Fed print money to monetize debt is anybodies guess. They pumped out $16 trillion in the last crisis, and you can bet the next crisis will be even bigger. Long term, I would not bet against Gold or Silver. We are clearly in uncharted territory.
      Greg

  6. edaqua

    Ron Paul is right again!

    • Greg

      edaqua,
      This is why both the Democrats and republicans loath him. He tells the truth and that is more dangerous than anything on the planet.
      Greg

      • jimbo

        Most dangerous thing on the planet is spot on!! Paul’s protectionist foreign policy would get MILLIONS of people killed. The man knows domestic monetary policy, but that is not enough to become President.

        • Greg

          jimbo,
          We keep going they way we are we will be broke and leave our military stranded and without supplies abroad. That too will get “MILLIONS of people killed,” so pick your poison. Thank you for your comment and your view. “Good men can disagree.”
          Greg

        • Neil

          Jimbo
          Do you realize how foolish you sound? how can you separate “domestic” and “foreign” monetary policy….complete utter rubbish!

        • slingshot

          jimbo.

          What would be your foreign policy? I am curious.

  7. Edward Ulysses Cate

    You know, you can have any currency you like; you can have gold and silver as your money; but if you’re not represented at the table, you’ll continue to be on the menu. That’s why we must have a REAL House of Representatives, both at the state and national levels. We were sold down the river when we had a gold standard and when silver was used as money. The root of the problem is that we’re being represented by career politicians who’s financial lifeblood depends on the financial sociopaths. Until that stops, we’re just jumping from one frying pan to another by changing monetary systems still controlled by financial sociopaths. Any system would work if we were honestly represented at the table. All this effort and expense about choosing which sock puppet will be our next president is of no consequence to the 99% still on the menu.

    • droidX-G

      Well said!

  8. Martin

    Greg,
    In the late 1960′s the U.S. was surreptitiously printing dollars to pay war expenses. The French (among others) called the U.S. on it by demanding gold instead of paper and forced the closing of the gold window. To this day we have no idea how much is left of the world’s largest gold hoard which was absconded from the American public by the Constitution crushing FDR.
    AS you stated, the American 1 oz. gold eagle is legal tender and issued from the mint and stamped with a ludicrous $50 dollar valuation. A true testimonial of denial and hatred of gold and it’s limiting of political abuses.
    The scariest article I have read in some time was in Drudge today quoting Pelosi as anticipating a Democratic retaking of the house. If that comes to pass the underlying take is that the majority of Americans have bought the dream that we will somehow escape THE DAY of reckoning that is surely coming very soon.
    Bernanke has committed treason as surely as anyone ever convicted of it. The road to H-LL is paved with good intentions ( I will give him the benefit) but to think that the world will forever accept a dollar that is backed by nothing is the height of arrogance and stupidity.
    Also,, if they think that they will get the American public to cough up their gold once again for these clumsy clowns to distribute to the non-tax paying citizens of this once proud country they are DREAMING.

    • Greg

      Thank you Martin for the analysis and comment.
      Greg

    • Arius

      No matter what happens we are in for a hell of a ride in the next five years. If the Democrats retake the House and keep the White House then it will be much worse. The Democrats will wreak all that is left, much like what Labor did to the UK after WW2. If after the November election the government remains split then it will be difficult but we can muddle through. If the Democrats take all control then go to ground, take a defensive position to survive and stay out of way of their statist steam roller.

  9. T Heath

    Greg, once again, thank you for having the courage to stand up with some backbone and speak the truth, you are a Patriot.

    Yes, loss of world reserve currency status is a financial nuclear bomb especially with 50% of dollars outside the US. This will cause huge loss is purchasing power for the dollar which means higher prices here at home especially when you consider our trade deficit. We import way more than we export. A weak dollar is good for exports but means much higher prices here at home. So QE1, 2 and soon to be 3 (money printing) increases supply of dollars and, even if demand stays the same, the value of dollar goes down. When you consider other countries are droping the dollar, you have increasing supply coupled with decreasing demand and as a result you get the exponential sling-shot effect in terms of the dollar loosing purchasing power. Inflation (weaker dollar) is an invisable tax. The Govt prints money and gets to spend it but the increase in money supply weakens the dollar and robs peoples savings accounts of purchasing power in the form of having to pay higher prices.

    The America People need to wake up and stop being so concerned about what Kim Kardasian is wearing on the Red Carpet and educate themselves as to what things really mean and as you have previously pointed out Greg, the American People cant rely on Main Stream Media to get the information they need to make educated decisions.

    Keep up the good work Greg.

    • Greg

      T Heath,
      Love this line, “loss of world reserve currency status is a financial nuclear bomb especially with 50% of dollars outside the US.” WHEN the U.S. looses reserve currency status we will probably be forced back onto a gold standard. It will be very ugly for most Americans.
      Greg

  10. Barry

    Excellent article Greg. I’ve really seen this in food inflation over the last year. We’ve seen a 15% increase in food prices in one year. Unfortunately, food on average travels about 1500 miles so when gas doubles, food will double too. I think that will be the straw that breaks our economies back.

    • Greg

      Barry,
      I think you are correct sir! Thank you for weighing in.
      Greg

    • david smith

      Re food inflation–right on! I got tired of paying $4 a loaf for “bread” with 50 ingredients, many of which I couldn’t pronounce, so I started baking my own with 4 ingredients for .40 a loaf. I suspect many others are doing the same. Now watch the price of flour go through the roof! :-)

  11. RUSS, CALIFORNIA

    Hi!, Patrons Of Greg Hunters’ USA WATCHDOG ET AL:

    Yes!, Article 1; Section 10 of our US Costitution calls for gold and silver coins to be used in lieu of payment of debts. In my humble opinion the United States should have never embarked on leaving its’ historical economic moorings, to embrace the sinking quick sands of debts we are undegoing today via the FED. The reunification of our Nation following the lead of the States herein mentioned will eventually create a massive exodus from the current US Federal Reserve notes system of money into specie gold and silver via the agency of Greshams Law sooner or later. The sooner the better! Sure there will be massive caos/disruptions which are already begining under the dislocating helmsmanship of our present FED but our already involved states are looking to put out our Nations’ monetary inflationary firestorms, before its’ flames engulf the entire planet and all goes down in inflationary flames.
    Thank you Mr. Hunter for placing us on notice, regards the dire straights our Nation faces and how some of our Stats presently are arranging plans to bring back our Constitutional moorings, before it gets too late to redirect the STATE of our UNION. May God bless you, sir, for your vigilance and may GOD pleae bless our United States Of America making it once more a strong, solid worldclass leader in its’ economic approach to its’ business in this world worldwide. Amen!

    RUSS SITH, CALIFORNIA
    resmith@wcisp.com

    • Greg

      Thank you Russ,
      Greg

  12. Sean

    I’m strictly opposed to any integration of the US dollar with another currency, like the Amero currency that some globalists have been floating for some while as a regional currency that replaces the dollar.

    On the other hand, I’m 100% in favor of local and state currencies. There is no Constitutional basis to prevent these types of currencies and they can be a great fallback for sub-economies within the United States in the event of a dollar collapse. But they need to be established and functional prior to a collapse. For example, one type of local currency might be representative of labor. So a community might prepare a currency that participating retailers use in exchange for local goods and services such as accounting, plumbers, electricians, merchandise sales, local fruits and vegetables, etc. If you work for my store, I’ll pay you a percentage in local currency (which you can use at all participating businesses) and a percentage in US Dollars, which you can use for your mortgage and everything else etc.

    There is no law against this and it can shield local communities from inflation and other national economic challenges. In my opinion, communities should have been doing this a long time ago, even when the national economy is great.

  13. droidX-G

    Greg,
    Thanks for bring this out. I live on NC and did not know about the pending bill. Got to love channel here where we used to see you. It went from hard hitting news to Lucky Charms. I don’t watch it any more.

    • Greg

      Thank you droidX-G for the kind words and comment!
      Greg

  14. norcar survivor

    Silver was up almost 4 bucks since last week as of last night, then this morning a $2 dip and as of 12:12 regained $1 back. What is with the fluctuation. Something happening this morning that I am not getting. I know all the usual suspects but was wondering if you have heard anything that I haven’t? Thanks for your work Greg.
    Phil

    • Greg

      NC,
      They are whacking it because the Fed wishes to remain in a fiat world as long as it can. It they were doing this to the stock market people would be rioting.
      Greg

      • teedaddy

        Who do you mean by “they?”

        • Greg

          teedaddy,
          I don’t understand the context. I need more info to answer. Not trying to be a smart a**.
          Greg

          • toserve

            Greg,

            I beleive teedaddy was refering to the above comment about the Fed wishing to remain in a fiat world. You refer to “They” are whacking it, and If “they” were doing this to the stock market people would be rioting. Who is the “They” you are referring to?

            On another note, I wish this kind of article would be in the mainstream news to inform everyone properly. It doesn’t feel right that just those of us that came across this (or any other on this subject) article can prepare for what is coming. My brother-in-law is a brilliant mind when it comes to finances, but is completely blind to the big picture. He feels we are too big to fail.

          • Greg

            toserve,
            Now I get it. Yes, I was talking about the Fed. So sorry. At some point people will be awoken with a cold bucket of water in the face but by then it will be too late. I hope I am wrong.
            Greg

      • Tod Nguyen

        I’m glad that silver and gold has gone down by a significant amount this morning! It’s just a buying opportunity for me. This will help drive out those who are using gold and silver as a get rich quick investment. Eventually, the only ones holding gold and silver will be ones who are holding it for what it is, a wealth protecting store of value. We’ll continue to do this until the financial mess we are in has passed, which may be never. Imagine what that will mean to the value of gold and silver then…

    • Daniel

      Yeah, I find it strange that it happens to all of the metals across the board (gold, silver and platinum). Same exact dip! And of course, these dips only happen when it’s on NY time. Go figure!

      -D

  15. bryan Jacobi

    Greg – I didn’t see any of this on CNBC. Could it be that they just
    weren’t aware? Or do they subscribe to the New York Times’s
    credo which famously said ” we don’t do blue dresses” ?

    • Greg

      bryan Jacobi,
      Whatever they are doing, they are no doing their jobs. This stuff is too big to miss and I think they miss it on purpose. Thank you for the comment.
      Greg

  16. Daniel

    Greg,

    Great article! I wonder how many articles like this need to be published before 90+% of our country wakes up from their ignorant respits.
    Truthfully, I am glad I don’t have much liquidity as of now. I am currently half silver and half 401K cash/stock garbage. When I worked at a local bank a witnessed a couple with two, one million dollar CDs. I always think back to this and wonder how it would feel to one day be able to buy and enjoy anything in the whole world, then the next day, have nothing; absolutely nothing! I don’t know how I’d feel, but it wouldn’t be good, that’s for sure. I laugh at those who purchase savings bonds and keep cash in a savings account only to find that in ten years, they have lost value due to the low int. rate paid and high inflation sucking the value up. Geesh, makes me squeamish to think about!! But anyway, thanks for the great article, it was very insightful!

    -D

    • Greg

      Daniel,
      Thank you for all your comments and participation in this site. I am happy this post inspired you weigh in.
      Greg

  17. bob

    atta boy, Greg,, now if all govts except eurounion would face the
    realities of good govt, is too late for eurounion who are defunct,
    kaput, bankrupt with none of their wizards and magician able to
    figure out the way out of their mess – they keep compounding their
    errors, sinking deeper into oblivion, now they are going to abandon
    the eurounion and institute euroland, who unfortuneately will be tinkered to death by the same magicians and wizards, some folks never learn…… dont bother posting this, none of our readers are ready
    for reality, but i thot you would like the newest news by the wizards
    and magicians of europe – your article is neat, nice, on point and a killer, keep it up -

    your program this comment site is having a nervous breakdown will not
    type what i type on keyboard, thus probably is losing comments, o well
    ye old buddy bob

    • Greg

      Thank you “old buddy bob.”
      Your buddy,
      Greg

      • bob

        Greg,

        i dont want the kids to think you, Greg, and i write as a
        mutual admiration society, it is that you weave your writings
        with factual exerpts and thus are more understandable than the
        common run of the mill writer, esp those who write merely of their
        emotional involvement

        but again, let us go back to euroland, newly dreamed up and instituted to cover the phantom eurounion who was created to fail
        so as to take the wealth out of europe, which it almost did, except
        the magicians and wizards of big banks, IMF, WB, WTO, etc etc,
        are still not able to grasp the niceties of money, financing govt,
        financing big banks, donating big bucks to IMF, WB, WTO, etc etc

        this is not to say all europeans are brain dead, on the contrary
        some are nice folks, some are even honest, but they huff and puff
        and still can not make the phoney eurounion work as they dreamed
        it ought

        i’ll quit for now, i hope you write more and that JSinclair sees your merit and outstanding writing and continues to give you space on his blog, no doubt he will… so let me say thanks for all the
        readers who get to read your critiques, writings, tomes, etc, thanks

        bob

        • Greg

          Bob,
          The big problem with the Euro common currency is the EU does not have a common debt. Savers and producers in the EU are subsidising the non-savers and non-producers. This is why Germans are pissed. Can you blame them for wanting to enforce some austerity? They needed to join the debts, but that would have been a sovereignty issue between all the members. It would have taken many years and maybe even war to accomplish. This is why people (IE: Greece, Spain) are pushing back. They do not want to cut and they know their sovereignty is up for grabs. I see no way to make the Euro work under the current way it is set up. Thank you for your comment and support.
          Greg

  18. bob

    greg, your program for comments is still not working,
    e.g. when i sent my last one you say “Duplicate comment detected; it looks as though you’ve already said that!”, which means you are not
    getting all the comments, that your program deletes what it feels like
    and thus if having hot flashes like today you are wasting a ton of time trying to catch up with your kaput comment progr, i thot you
    would like to know…. bob

  19. Ed Knittel

    How the States can solve the “Dollar” problem:
    The states can issue debt instruments (notes), but not coin money. Calafornia did it not long ago and there wore no federal suits to stop it!
    Any state can pass a law that says that all state officers must account for and tender to the state treasuer all federal reserve notes received by them. The state then prints and returnes to the state officers state notes with which they can make payments as requirer. All state banks must receive, account and pay state notes just like international banks do for differunt currencies or loose their state charter. This way state officers can still opperate through the banking system. Any debt owed to a state officer can be paid in state notes and businesses paying state sales taxes would get a 2% discount for taxes paid in state notes. This would encourage businesses to accept the notes. The notes would be denominated in dollars but the state could over print by 10% to cover costs and make a tidy profit. The notes would be redeemable in federal reserve notes at a few selected locations in person only. Redeemed state notes would be paid 90 days after being tendered. This would discourage their redeemption. A small amunt of reserve federal reserve notes could be held for redemption purposes (fractional reserve banking) and the rest be used to by gold bullion on the open market and stash it in the statehouse basement. State notes would then be backed by gold, all properly accounted for, unlike the US government or the Federal Reserve. The state notes would soon be prefered money but their hording would only help the state buy more gold and their payment to state employees and contractors would be mandated. It is the quickest, most effective and legal way to produce gold backed money, return power to the states and eliminate the Federal Reserve. Ed

    • Greg

      Ed Knittel,
      We are mainly talking about the use of gold and silver coins but they can be a local currency as long as it doesn’t resemble FRNs. Something is going to have to be done in time that’s for sure and I think there is a good possibility the government will be forced into backing the buck with some sort of gold standard maybe silver too. I don’t know exactly but we will need something new give the current trajectory. Thank you for weighing in you do bring up some valid points.
      Greg

  20. American Patriot

    So long as we use the wood pulp money of men we are hostage and but one step from slaves.

    Is anyone interested in a probable timeline for the collapse and likely cause of it’s initiation? Consider the following information:

    Step 1. Read the article “Greece Officially defaults march 23, banks close” You can find it by googling the title in quotations above.

    Consider that call from John Taylor of FX for $1000 gold by April-May time frame of this year. This is likely arrived at due to expected temporary dollar strength expected at that point in time. it will be caused by Europe as its slow motion implosion upon itsself steps into high gear and investors rush out of Euros and into dollars. As previously stated in these comments, this effect is TEMPORARY.

    Step 2. Google the title and read the article “Red Alert Credit Default Swaps Explained” This is just one of the many ways the ECB is preparing itsself for the government defaults that are on the way. By the way,to anyone out there holding Greek paper, it should be obvious you are S.O.L. after this maneuver by the ECB. This type of behaviour is why dollar will strengthen in the short term. The FED hasn’t done anything like this -YET- to US Treasuries.

    Step 3. Consider these experiences from the last global meltdown of ’08 that likely played out all over the country. Gold and Silver spot prices dropped but premiums rose. At one point in late ’08 (maybe it was early ’09) Silver SPOT touched on $10 per ounce. At that point I remember trying to buy. The local bullion store was practically empty, the displays had no product. They still had some old US silver but in very limited quantities and it was selling for $14-$15 per dollar face. This is huge markup because $1 face is only .715 ounce.

    Consider the fact that at that point in time we still had functioning commodities futures markets. Keep this knowledge in mind as you read the following article: Google “on sycophants process servers & decoupling” or “Posted by Ann Barnhardt – December 15, AD 2011 9:38 PM MST”
    to find it. Skip to the 3rd paragraph and read to the end.

    I suspect this next global market meltdown will at some point soon cause decoupling to occur as explained in that 3rd article due to our crippled futures markets and produce the parabolic spike in metals prices to the up side. This will be a good time for holders of physical but a bad time for society as a whole. Get it while you can because time is running out.

    AP

    • Greg

      Good stuff AP. Thank you for adding your analysis!
      Greg

      • norcar survivor

        You have the best readers Greg, and you’re known by the company you keep.

        • Greg

          Thank you NC!! The folks her (you included) are the some of the smartest and best read in the Internet.
          Greg

  21. Ed_B

    “America spends 43 cents more than it takes in every year.”

    Oh, would that were so! This line should read as “American spends 43 cents more for every dollar it takes in every year.”

    Great article, even so. :-)

    Ed

    • Greg

      Ed_B,
      Yes you are correct that is what I meant to say and I will fix. Thank you.
      Greg

  22. zag

    Greg,
    Good article. CNN says “the Constitution bans states from printing their own paper money or issuing their own currency”
    I hope that you know that CNN’s claim is not true. In fact, as long as other forms of currency don’t copy US currency, practically anyone or anything can print currency. Many towns make currency which is able to be used in local businesses. Stores make currency which can be used in their store. As long as the US dollar is not copied, it is pretty open. The Constitution is a bit vague on what federal money must be and pretty much anything is acceptable as long as congress says it is money. However, the constitution specifically says that money issued by states must be in gold or silver. Go figure. Seems to me, we are looking at a new “civil war” in a few years where the solvent states issue good currency and the debtor states are in trouble.

    • Greg

      ZAG,
      That is correct it cannot look like FRNs.Thank you for making that clear. Gold and silver would be the immediate alternative currency in my view.
      Greg

  23. Chuch Allen

    Feb 29, 2012
    Hi Greg,

    I believe the inflation that is about to overcome the world will be devastating, to say the least. That is why I trade a bunch of paper for two silver dollars each month, (all I can afford). The inflation factor is only one front on which our “elected representatives” are attacking our freedoms. The following are examples of their ongoing attacks.

    There is the Patriot Act allows for anytime anywhere surveillance of citizens with the need of a warrant.
    http://www.govtrack.us/congress/bill.xpd?bill=s112-990

    The National Defense Authorization Act (NDAA). The president now has totalitarian power over We the People and has shredded the constitution.
    http://www.govtrack.us/congress/bill.xpd?bill=h112-1540

    A strong consideration for implementing Shari a Law is underway, as part of the American legal system. Some American judges are already trying to implement this law of Islam.
    http://www.religioustolerance.org/islsharia.htm

    Then add in U.N. Agenda 21 turning over our country to this body of leeches. The Clinton’s got this started when Bill was president.
    http://www.crossroad.to/text/articles/la21_198.html

    U.N. Agenda 21 is being pushed by our “representatives.” If implemented we won’t have to worry about the price of gasoline, because we won’t be allowed to own cars; we will be told where to live. Under the U.N. we will not have individual property rights; everything is “Communitarian.” Oh, by the way, under U.N. Agenda 21; we also lose American sovereignty.

    So, which poison should we worry about first…OUR ELECTED REPRESENTATIVES?

    Get rid of them!
    VOTE THEM ALL OUT!

  24. sam

    the thing about a gold currency…how much does the US really have..there hasn’t been an audit since the 70′s ,,and that one was very quick and not at all thorough……if we did go to a gold/silver currency..they would once again attempt to confiscate it all from citizens,,as they know they have very little precious metals in reserve

    • Greg

      Sam,
      Good point. Thank you.
      Greg

  25. Jim H

    Thanks Greg
    What if the world is and has been for some time operating on the oil standard rather than paper fiat, gold or silver standards? That currency has increased in value quite a bit for a while. Who controls that?

    • Greg

      Jim H,
      Good question. Thank for asking it here.
      Greg

  26. David Conrad

    Great post. What a mess we have made of ourselves. Because of past good decisions, great natural resources and a stellar Constitution, the US dollar became the standard. Only to be subsequently ruined by idiots. I’m moving to somewhere that I can trap beavers …. bever pelts will become currency again! Keep up the good work!

    • Greg

      David Conrad,
      You may be correct man. Heck, you may even be able to trade shotgun shells. . . Oh wait, that’s from a Mad Max movie. Never mind.
      Greg

  27. Terry

    Curious to know your thoughts about possible gold/silver confiscation…better to move it overseas, before the gov. either confiscates, taxes it to death, or bans transactions?

    • Greg

      Terry,
      Who knows how bad it will get but I do not think outright confiscation is in the cards. High taxes paid on the transactions but not confiscation and definitely not confiscation for silver. The last time the government confiscate gold it was used as money in the form of a $20 dollar gold coin. Gold was revalued to $35 an ounce in 1933, so, the $20 gold piece was now worth $35 and had to be pulled out of use. (actually, the $20 gold piece is not quite an ounce) I am not saying this was right, but that’s basically what happened. We do not use gold as a currency today. Also, many rich people are loading up on gold, so I do not think the rich (who are the ones in power) are going to sign on to have their gold taken away. Again, who knows how bad things will get. We face a rang of scenarios from big inflation with lots of hardships and some social unrest on one end to Mad Max on the other end. I think it will be somewhere in the middle of that spectrum, and that is going to be pretty bad.
      Greg

  28. George Too

    Greg,
    In addition to bullion value, I think that a minted coin fee would need to be attached to the value. Coins are a finished product and offer a certainty that raw gold doesn’t. You would need to factor in this. No one is going to buy a gold eagle for spot plus 100 and then exchange for spot…but then again, when gold takes that moon shot who knows what will happen.
    I also believe that there needs to be a dual pricing in GOLD and in Silver so that the metals can float against each other. No one can set a fixed rate and have it not destroy them in the age of arbitrage .
    I have a three-tiered approach. God, guns, and gold. I guess what I am saying is be prepared. Have a 30 day supply of storable food (this is not hard or that expensive…not talking steak), some precious metals as a store of wealth, and some guns to protect your family while the police are protecting the government. If only the Police have guns and they don’t get paid or can’t get food do you really think they will not take yours? Think Katrina on a global scale.

    • Greg

      Good points George Too and D Smith. Thank you for making them here.
      Greg

  29. Brenton

    As I see it, Gold has two main benefits going for it as an alternative to US Dollars: 1) it pre-dates USD and most other currencies, so ‘going back’ to it maybe reassuring to some, and 2) its much harder to devalue than a fiat currency. However, things have changed since we last had a currency backed by gold. Namely, global trade at an individual level via the Internet. And in that environment, physical currency is useless. Until Gold can be traded electronically, I think its at a huge disadvantage. I believe we’ll see the rise of virtual currencies rather than a retreat back to physical gold/silver coin.

  30. Aj

    Silver and Gold coinage will totally prevent any more QE3 (Quantitative Weasel-ing). Each time the “not-so-Federal…nobody’s Reserve” fake prints up some more Monopoly money into existence, – it only weakens up the current purchacing power in your pocket today!

    • Greg

      Aj,
      Love this term “Quantitative Weasel-ing.” I am laughing as I write this. Thank you.
      Greg

  31. Davis

    Here we go again.

    The latest campaign issue (and source of distraction from the underlying problem) is the ever-increasing price of gasoline. Always eager to find a boogie man to lay blame upon the politicians and talking heads are again leveling their sights on market speculation as the primary cause of the problem, coupled with domestic refiners exporting product to overseas markets where prices are even higher than paid here for gasoline.

    Yes speculation and export rates (as a percentage of total production) do have an impact on the price we see at the pump, but looking at these two factors in isolation does a disservice to the consumer and the voter and ignores the underlying problem of inflation and what is causing it.

    It doesn’t take a genius to figure out that the pontifications of the Federal Reserve and their wholly owned subsidiaries in Washington and in the MSM that so-called “core” inflation is ”minimal” is nothing more than a propagandistic lie.

    Quite simply oil is a global market and it’s not that the price is rising as much as that the value of the US dollar in that market is shrinking. Nations all over are actively seeking ways to escape the “petro dollar” and finding other mediums of exchange in which to conduct the oil trade.

    The US Federal Reserve continues with its disastrous Zero Interest Rate Policy (ZIRP), and perpetual buying of Treasury Bonds to finance an ever-expanding national debt. The Europeans just simply crank up the printing press to finance the never ending bailouts of the PIIGS and accompany it by replacing elected democratic governments with unelected and unelectable banking technocrats. Then on both sides of the pond these elitists can’t figure out why their own populations start grumbling about fascism and foreign states are dumping their bonds and seek to find other ways to conduct trade.

    I’ve said it before and I’ll say it again, when the likes of Bill O’Reilly and Barac Obama are one the same page blaming speculators and not government collectivist centralization of control of free markets you might as well just bend over and grab your ankles because they are going to stick it to you deep and hard.

  32. Martin

    Hi Greg, first I’d like to thank you for such a beautiful, iinformative site.. I’ve been a follower for quite a while now :)
    I wanted to ask, do you gave any idea how much longer the dollar is going to stay alive? What will happen to the forex market when all this crashes?
    and because all the wealth in the world IS weighted in dollars, doesn’t it make sense to hold onto dollars? After all, whatever new currency we’ll be exchanging for, we’ll be using dollars..

    Thanks in advance

    • Greg

      Martin,
      I would not use U.S. dollars as a wealth preservation device and that includes U.S. Treasuries. I would only use dollars as a transaction device. In other words, hold what you need to buy what you need and make the payments ypou must make. The dollar is not going to disappear anytime soon but its buying power is going to be diminished, that’s for sure. Look at the rising price of fuel and groceries. Actually, you are witnessing the falling value of the dollar. I am not an investment advisor, but most people who comment on this site are investing in tangible assets. I’d say even a paid for house would be better than holding dollars, at least you can live in it.
      Greg

      • Martin

        Sounds like solid advice.. But we MUST have SOME money around..
        I’m guessing Euro’s are no better off?
        and what about my question about forex?)

        • Greg

          Martin,
          I don’t know what is going to happen to FOREX. In a systemic crash it’s probably toast, but I am not a trader.
          Greg

  33. Liquid Motion

    A new world currency indeed is in the making……been around for millenia.
    The “OLD” system is well past its use by date.
    The challenge for TPTB is to constrain the paper currency alternative sufficiently over as long a time frame as possible so as not to induce a “RUN” on paper and hyperinflation. To date that equates to approx. 12 years.
    China et all the others….may wish for an acceptance of their respective currencies (paper) to become the most widely accepted alternative…but when push comes to shove….there is only one alternative. You know this because they manipulate its price….China keeps buying it and encourages its citizens to do the same….and it continually reflects the ongoing distaste distrust in/for paper.
    The Dollar is Dead….Long Live the NEW Currency…!!!!!!

  34. Daniel

    Ken,

    One simple concept I remember from my economics class was that the more of something you have, the less it’s worth or valued. Kind of like plastic compared to silver.

    -D

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