Where's the gold? Buying gold vs. annuitiesArticle added by Paul Cross on December 3, 2010
Paul Cross

Paul Cross

Pekin, IL

Joined: December 21, 2006

The gold rush started thousands of years ago, and every nation and every generation thereafter has sought it. The Roman Empire conquered gold supplies and even the Vatican sent out monks who returned with huge supplies of gold to present to the Pope.

Will gold replace the monetary system or the monetary exchange? I think not, because the government cannot print gold.

Wars have been fought for gold. Gold has caused stock market crashes, and gold has financed wars, Ponzi and other modern day schemes. Could some of the gold exchange traded funds (ETFs) be a legalized Ponzi? It’s something we’ll talk more about as time passes.

Gold-related stock market crash

The first gold-related stock market crash dates back to Black Friday, Sept. 24, 1869, also known as the financial panic, when Jay Gould and Jim Fisk attempted to corner gold with major cartel purchases.

After the American Civil War, people commonly believed the U.S. government would buy back the “greenbacks” with gold. In 1869, a group of speculators, headed by Gould and Fisk, sought to profit by cornering the gold market.

The plan backfired when President Ulyssis S. Grant learned of the scheme and sold $4 million dollars of government-owned gold. As a result, the double eagle gold coin lost 27 percent of its premium price and helped bring about the financial panic and the Black Friday of September 24, 1869.

Presidential trivia
What U.S. President confiscated gold and made it illegal for people to own?

Franklin D. Roosevelt, in 1934, under the Gold Reserve Act.

What U.S. President took the U.S. dollar off of the Gold Standard?

Richard M. Nixon in 1971.
Was it a good move? Consider this and then reach your own conclusion:

Foreign countries were cashing in U.S. currency received in trade for gold. U.S. gold reserves had declined from $25 billion to $10.5 billion. Gold was an underpriced commodity, while the dollar was overpriced as a currency.

The price of gold had been set at $35 an ounce since the days of Franklin Roosevelt’s presidency; from 1945 to 1971, foreign countries acquired more dollar reserves, outnumbering the entire amount of gold the United States possessed.

"The American dollar must never again be a hostage in the hands of international speculators.” – Richard M. Nixon

Today’s question. Should I buy gold just in case there is a monetary collapse?

Consider this: Gold has triggered monetary collapses, and in the past gold has lost 50 percent of its value in a short span of time. Gold is easy to buy, easy to sell and has never been worth zero — or so the commercial goes. But in reality, gold is risky, and when the value of gold goes down during inflationary times, you have double losses.

What is the one historic money contract that goes up in value during all economic times, financial recessions and depressions, with guarantees and tax-favored strategies beyond all other contracts? Annuities.

The real question: Where’s the gold?

U.S. gold reserves, which include some foreign-owned gold, are stored in Ft. Knox vaults and underground in Manhattan. The U.S. owns 8,133 tons of gold reserves. Xia Bin, an adviser to the People’s Bank of China, reports that the U.S. should sell gold to balance the budget and fund its recovery. Has Xia Bin staked his claim?

He also says the U.S. should cut its government spending, reduce military expenses and relax some exports on technology. Warning!

China ranks as the world’s largest holder of U.S. Treasuries at $883.5 billion, as of Sept. 30, 2010, according to our own Treasury Department.

Who owns the gold? China owns 1,054 tons, Germany owns 3,408 tons and the U.S. owns 8,133 tons.

Okay, where is the ETF gold?

Some exchange traded gold funds buy and sell gold, while others operate purely on the price of gold without gold reserves. Could that be a gold ponzie?

Final question. If the U.S. sells gold to China, will it devalue gold and will the U.S. dollar — our only legal tender — lose value? I’m interested in your response.
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