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Jack Kemp and the Gold-Based Dollar

Many of you are very familiar with the late Jack Kemp (1935-2009) whether it’s from his several terms as a local Congressman or from his tenure as quarterback for the Buffalo Bills.

However, many of you precious metal followers, more specifically you “gold bugs,” are not aware of Mr. Kemp’s keen interest in the yellow metal.

Kemp’s Gold Standard

Mr. Kemp was sometimes referred to as “Mr. Gold Standard” for his ideas on the need to anchor the U.S. Dollar to both an enduring and recognized symbol of value.

Jack Kemp gold standard

Former politician and Buffalo Bills quarterback Jack Kemp (1935-2009) was known as “Mr. Gold Standard” for championing the gold-based U.S. dollar. By Austin Bonner (flickr user a.bonner) [CC BY-SA 2.0], via Wikimedia Commons

Despite criticism from the left, he knew the notion was sound at both the domestic and international level, an idea consistent with the political philosophy of Thomas Jefferson.

Mr. Kemp hoped that by linking the U.S. Dollar to gold, the U.S. could establish a new position of world leadership. He felt a return to the gold standard would lay the groundwork for a restructured international financial community consistent with our values of economic freedom and personal responsibility.

Nations willing to accept a gold based currency would be effectively committing to free trade and economic opportunity based on a level playing field. No longer would fluctuations in fiat currencies undermine competition and free markets worldwide.

Congress’s Role in Regulating Currency

Congress is empowered through the Constitution to “regulate” the value of money. Notably, that power is explicitly granted in terms of authorizing the right to “coin” money, not print it.

The duty of Congress was to define the U.S. Dollar in terms of a specific weight of gold or silver. Thomas Jefferson proceeded to do so, writing in 1784: “If we determine that a Dollar shall be our monetary unit, we must then say with precision what a Dollar is.”

By 1792, the value of the Dollar was fixed through the Coinage Act at 371.25 grains of pure silver or 24.75 grains of pure gold.

Furthermore, Mr. Jefferson argued that it would be a violation of the Tenth Amendment to empower the government to issue “bills of credit” to be accepted as legal tender.

Why The Gold Standard Matters to America

The need to provide a stable monetary foundation for domestic growth as well as forging an international monetary foundation devoted to free markets was the gold standard rationale often invoked by Mr. Kemp.

“Gold convertibility may not be fashionable,” he noted in remarks before the Atlanta Federal reserve in 1982, “but I am convinced that it is imperative, for the simple reason that if we do not remonetize gold, the international market could demonetize our dollar.”

Mr. Kemp had the foresight to comprehend that America’s leadership in the world should not be taken for granted. It requires us to adhere to core principles of integrity, which includes the reliability of our own monetary standard.

As Mr. Kemp affirmed in a 1988 presidential campaign speech, “I am a radical believer in the idea that the U.S. Dollar should be so honest, so sound, so trustworthy, so good, so predictable, so lasting in value, that it’s as good as gold.”

Championing the cause of the gold standard was more than good politics, though. It was a matter of commitment to the highest ideals of a nation dedicated to growth and opportunity.

From Mr. Kemp’s perspective, the dependability of the U.S. Dollar reflected the destiny of our country. He believed the U.S. Dollar should be as honorable and steadfast as the American idea itself.


How Would Precious Metals Perform If President Trump Were Forced Out of Office?

Donald Trump’s policy agenda, and his very presidency, are in jeopardy…at least if you believe all the chatter from the left-leaning “mainstream” media.

For weeks now, the big media outlets have been stirring up talk of impeachment. One story after another dealing with the likes of James Comey, Jared Kushner and Vladimir Putin are behind the impeachment talk despite the lack of concrete evidence of “high crimes and misdemeanors.”

Still, Democrats in Congress smell blood in the water, and they have readied articles of impeachment for introduction as soon as an opportunity presents itself.

Impact of a Trump Impeachment on Markets

But investors don’t seem particularly concerned about the implications of intensifying political turmoil in Washington.

The traditional safe-haven of gold is up modestly on the year but has yet to see any major sort of panic buying.

president trump gold markets

Precious metals markets so far have not been affected by the possibility of a President Trump impeachment or resignation. [By Gage Skidmore from Peoria, AZ, United States of America (Donald Trump) [CC BY-SA 2.0], via Wikimedia Commons]

Perhaps investors do not believe the Trump presidency is at risk…or perhaps they don’t think it matters if Trump gets pushed out of office.

How Markets Have Been Affected By Past Presidential Scandals

Consider the recent history of presidents who have gotten themselves into trouble.

Neither the resignation of Richard Nixon nor the impeachment (and subsequent acquittal) of Bill Clinton caused a stock market crash. Precious metals markets also showed little volatility around these momentous political events.

President Nixon resigned in August of 1974 with gold trading at $152.00 an ounce. Gold began that year at $117.00 and finished at $195.00 per ounce.

Nixon’s resignation occurred within a year-long rally and does not seem to have altered its trajectory.

Closure of Gold Window Had Bigger Effect

Far more significant than Nixon’s resignation was his decision in August of 1971 to close the gold window.

From that point on the U.S. dollar would be a fiat currency with no link to gold.

richard nixon resignation economy

The resignation of President Nixon had little effect on the economy compared to his decision to close the gold window.

As a consequence, inflation fears began to build, slowly at first, but then manically by 1980 with gold prices spiking to $850.00 an ounce.

The Watergate scandal that made Nixon infamous did not really have anything to do with how precious metals performed in that era. The real Nixon legacy is what happened to the dollar after he ended its ability to be redeemed in gold, the consequences of which are still playing out.

Gold Stable During Clinton Impeachment

Contrary to popular misconceptions, Nixon was never impeached. But Bill Clinton was.

The House of Representatives initiated articles of impeachment against President Clinton in December of 1998. However, in February of 1999 the Senate voted to acquit Clinton and leave him in office.

Around that time gold prices were in a long bottoming out process after having been in a bear market since January 1980. From the time Clinton was impeached to his acquittal, gold essentially did nothing but remain stagnant in the $290.00 range.

The bottom line is that political turmoil, in this case a possible Trump impeachment or resignation, does not necessarily translate into market turmoil or even a detectable reaction.

But major policy changes can have significant short term and long term effects on precious metal markets.


The Pros and Cons of Buying Fractional Gold

Here at Jack Hunt Gold & Silver we are frequently asked about the pricing and availability of “fractional” gold coins. By definition, fractional gold coins are bullion coins that weigh less than one troy ounce.

Types of Fractional Gold

The most popular fractional gold coins are the U.S Gold Eagles which, in addition to the popular one ounce unit, is also available in half, quarter and tenth ounce sizes.

The Royal Canadian Mint issues its popular Maple Leaf gold coin in half, quarter, tenth and twentieth ounce sizes along with the ever popular and liquid one ounce “Maple.”

Fractional Gold US Gold Eagles Canadian Maple Leaf

The popular U.S. Gold Eagle and Canadian Maple Leaf gold coin are available as fractional gold, weighing less than one troy ounce.

Numerous other countries and mints issue fractional gold coins. However, the U.S. and Canadian pieces dominate the world marketplace, so we strongly suggest focusing on them.

Benefits of Fractional Gold

So what are the advantages of fractional gold? The first advantage is flexibility/liquidity.

That is, if and when the time comes to sell gold for cash, you can sell the unit of gold most reflective of your cash needs. You may only need $400 for an unexpected expense, so why sell a full ounce of gold for $1,250 when a quarter ounce or a half ounce makes more sense?

For those of you who feel gold may someday be used as a currency for barter or trade, common sense tells us a smaller fractional gold coin may be more practical than the traditional one ounce coin. An analogy I frequently use is that whereas a tenth ounce gold coin might yield an adequate amount of beef and milk in trade, the one ounce piece may force you to take the whole cow.

fractional gold one-tenth oz US Gold Eagle

A one-tenth oz Gold Eagle coin, worth approximately $150, is a popular choice for a gift.

A second advantage of fractional gold is that they’re more appropriately priced for gift giving. I know of far more scenarios where a tenth ounce ($150 or so) or a quarter ounce (approximately $350) gold coin is more appropriate for gift giving than a $1,300+ one ounce gold coin.

A third advantage of fractional gold is similar to the aforementioned second advantage: cost. Even though one ounce gold bullion is far and away the most frequently traded size of gold, many investors don’t want to spend $1,300+ on gold at any given time. Fractional gold coins are not only cheaper for gift givers but for investors as well.

Why Not To Buy Fractional Gold

Unfortunately, there are several reasons not to buy fractional gold and those reasons revolve around cost.

Very simply, the smaller the unit of gold, the more it costs per ounce. It costs a refiner/mint more to fabricate ten tenth ounce coins than the equivalent one ounce coin.

As an example, using a hypothetical gold ‘spot’ quote of $1,250 ten tenth oz. gold Eagles would cost approximately $1,500 factoring in the higher fabrication charges. A one ounce gold Eagle, with the same net gold content, would cost approximately $1,330 due to its lower fabrication related fees.

Another factor is sales tax. In many states, including New York, the sale of gold bullion weighing less than one ounce is generally subject to state and local sales taxes unless you spend a minimum of $1,000 or more on bullion.

Many states conveniently feel that fractional gold is not bought for investment purposes but only as jewelry or as a gift and therefore should be taxed. To save nearly 9% in sales taxes, we urge you to combine smaller transactions into a larger transaction to legally avoid sales taxes.

Is Fractional Gold Right For You?

The ultimate decision is yours, of course.

If your motivation for buying gold is for gift giving or future barter or trade purposes, the added expense of fractional gold may well be worth it.

If you’re buying gold as either an investment or inflation hedge, then one ounce units with their most attractive buy/sell “spread” may be the more logical option.


Removing Capital Gains Taxes from Precious Metal Trades

Recently lawmakers in Idaho and Arizona have passed bills removing Capital Gains Taxes from transactions involving gold and silver bullion.

Normally, when individuals sell gold or silver they must pay capital gains on any increase of the value of their precious metal investments.

However, many consider precious metals, especially gold and silver, to be a form of currency, not an investment in the traditional sense.

It seems that lawmakers in Idaho and Arizona have now realized that their citizens shouldn’t have to pay taxes on their precious metal holdings simply because of the Federal Reserve’s questionable dollar related philosophies.

Gold & Silver Moving Toward Role As Currency

So now we have two states in the last few weeks that have passed bills removing capital gains tax on gold and silver. The Arizona and Idaho legislation is a noteworthy step towards the reintroduction of precious metals in their rightful role as both real money and as a high quality storehouse of value.

Gold silver idaho currency

Idaho and Arizona lawmakers recently voted to eliminate capital gains taxes on gold and silver trades, helping to move the precious metals toward their role as currency, rather than investments. [Image: Tenth Amendment Center]

In 2011 the state of Utah was the first state in 80 years to pass a bill that made gold and silver legal tender once again. Thus, citizens in Utah are legally allowed to use silver and gold to pay either taxes or for goods and services if both parties agree.

But what’s even more interesting is that Utah just recently introduced a bill for a State Gold Repository. This bill would build on the state’s Legal Tender Act, creating a foundation for further action to encourage the use of gold and silver as money.

This would be still another step toward breaking the Federal Reserve’s monopoly on money. The legislation would add several key provisions to the state law designed to encourage the use of gold and silver as legal tender.

Passage would set the stage for the expansion of gold repositories in the state and authorize further study on numerous sound money policies. Specifically, this bill authorizes the investment of public funds in specie (coins with precious metal content) legal tender held in a commercial specie repository.

Demand For Gold & Silver Will Increase When Dollar Falls

As I write this, we now have three states encouraging the use of gold and silver as real money. Not only does this legislation help to reintroduce gold and silver as sound money, it also sets the stage for new depositories across the states to house citizens’ precious metal holdings.

Granted, there are only three states onboard with plans equating precious metals with currency. However, I believe that this is just the start for numerous other states to follow suit. The dollar will eventually tumble due to massive monetary printing and staggering debt.

Americans are hopefully preparing for what may be on the horizon. Precious Metals are currently being valued in a manipulated highly leveraged gold and silver paper trading market, a system that cannot last forever.

When the paper markets finally crack under the massive weight of debt and derivatives, there will be a mad rush of investors looking for gold and silver. The overall demand for tangible assets will lead to shorter supplies and higher prices for precious metals.


Recommended Viewing: $1 Trillion & US Debt in Physical $100 bills

Here’s a stunning video that provides visual context of the massive scale of our National Debt. The United States owes a lot of money. As of 2017, US deficit is larger than the size of the economy. Currently there is no debt ceiling, it has been suspended. To see current debt live visit US Debt Clock.

Video courtesy of Demonocracy

IF THE NATIONAL DEBT WOULD BE LAID OUT IN A LINE OF $1 BILLS, IT WOULD STRECH FROM EARTH, PAST URANUS!!!


Recommended Viewing: Get It. Got It? Good.

Grant Williams’ presentation from Mines & Money in London in December 2016. A follow-up to Nobody Cares which focuses on gold’s performance in 2016, the reaction to Donald Trump’s election and joins a series of dots that may lead to the end of the petrodollar system and a new place for gold in the global monetary system.

Grant Williams is Portfolio & Strategy advisor to Vulpes Investment Management in Singapore and author of the financial newsletter Things That Make You Go Hmmm….. and principal of Real Vision TV.


The War on Cash: Implications for Gold & Silver

Government bureaucrats, central bankers, and Wall Street executives all have reasons for ridding the masses of their cash. It should be no surprise to anyone that they are working together to achieve that goal. But why? The self interest of bureaucrats is one factor, they don’t like privacy. They dream of the day when they can access all your financial information with just a few keystrokes. The knowledge will help them more aggressively tax and regulate.

Central bankers have a different motivation. Their policy of preference is NIRP….Negative Interest Rate Policy. Bankers in Switzerland, Sweden, Denmark and Japan have already launched NIRP. Their counterparts elsewhere, including the U.S., are planning for it. The plan is to create an environment where customers must either spend their savings or pay their bank interest to hold deposits. For this to work the government must coerce the masses into turning their cash into electronic money. Otherwise everyone will just withdraw their cash over time and literally hide it under their mattresses. When you have to pay a bank say, 1% to access your money, holding physical cash gives you a better return (0% vs. –1%). Those of you convinced that the Fed is set on higher long term interest rates should note the following: History shows that economic downturns/recessions lead to lower interest rates. With current rates near historic lows it’s not difficult to imagine a negative interest rate scenario. Already, U.S. banks are making it more difficult to withdraw cash. Most banks only keep nominal amounts of cash on hand and then make you jump thru hoops if you attempt to withdraw any quantity of consequence.

Do we take it for granted that we can keep physical cash? Photo Chance Agrella

Bankers are drooling over the profit potential for all transactions to be done electronically. They stand to rake in processing fees every time you use a card or cell phone for purchases as opposed to using cash. In a cashless society bankers will gain a larger customer base, as the public will no longer have the option of holding currency outside the banking system.

The public needs to remember the true reasons that the powers that be want to eliminate cash from circulation. You can be assured that politicians and bankers won’t be truthful as to their reasons for eliminating cash. Wall Street wants you to focus on the convenience of electronic payments. Bureaucrats are preoccupied with stigmatizing cash as a tool for drug dealers, tax cheats and terrorists.

If the public ultimately loses the ‘War on Cash’ here are some likely ramifications for precious metals investors. Negative interest rates should drive significant demand for gold and silver. NIRP is a testament to the fact that central bankers will try literally anything to produce inflation. Such a controversial policy should set off alarm bells for anyone who isn’t concerned about inflation, or who may be betting on deflation. If central bankers want inflation, they have the power to create it. As always, inflation fears will drive demand for physical bullion.

While politicians and bureaucrats can theoretically win the ‘War on Cash’ because they have complete control over the issuance of paper money, they cannot win a war on bullion. Physical bullion is private and ‘under the radar’, a nightmare for regulators.

If politicians attempt to tax and regulate precious metals they are likely doomed to fail. Gold confiscation had only marginal success in 1933 when the U.S. population consisted of approximately 85 million obedient patriots. A similar confiscation attempt today in our country of 325 million diverse individuals would likely be a logistical nightmare at best and chaos at worse.

Politicians and their allies in the banking industry aren’t likely to eliminate the masses desire, or ability, to transact privately using barter instruments such as gold and silver bullion. The drive to eliminate cash will inevitably push the public into cash alternatives, most notably precious metals.


Is Platinum a Better Buy Than Gold In 2017?

If your motivation for buying precious metals is primarily for speculative reasons, may I suggest that you consider platinum bullion?

Despite platinum being less liquid than gold and silver as well as the higher buy/sell spread associated with physical platinum, the argument could be made that platinum currently offers more profit potential than gold.

Platinum Now Cheaper Than Gold

Many investors are familiar with the gold/silver ratio and that the ratio recently suggested that it was time to buy silver. But platinum, the “rich man’s gold,” has also seen its price fall relative to gold.

In fact, platinum is now cheaper than gold, an extremely rare occurrence over the last 100 years. That fact alone suggests that platinum should outperform gold over time.

platinum great value 2017

The United States Mint sold out of its first run of 2017 1oz. Platinum Eagles (above) in a week earlier in January.

Platinum is the world’s third-most actively traded precious metal and there is substantially less of it than either gold or silver.

Platinum is arguably more useful than gold. It is used in jewelry, LCD monitors, dental equipment and has strategic and military related uses as well.

Increased defense spending under the Trump administration would likely increase demand for platinum and have a positive impact on its value.

However, the most significant source of demand is the auto industry. It uses about 40% of the global supply, primarily in the manufacture of catalytic converters.

Rarity of Platinum

Platinum prices fell over 25% in 2015 while effectively breaking even in 2016. Both gold (up 6%) and silver (up 16%) outperformed platinum in 2016.

Supply and demand ultimately determine commodity prices so it’s important to understand how much platinum is available and how much is needed. Platinum is quite rare, so the supply is very limited.

That explains why it’s historically been so expensive. Although figures are not yet available for 2016, approximately 6 million troy ounces of platinum were mined in 2015, a nearly 20% increase over 2014 figures and a five year high as well.

Valcambi Suisse 1oz. platinum bars are a popular option for platinum investors.

To put that figure in perspective, approximately 102 million troy ounces of gold were mined in 2015. The amount of platinum mined in 2016 was anticipated to be about 5% less than 2015 due to less production from South Africa.

South Africa accounts for roughly 70% of the world’s supply of platinum while Russia and North America account for most of the balance. This decrease in production may be offset by platinum recycling, mainly by the jewelry and auto industries.

The net result is that the above ground platinum inventory is expected to trend slightly lower in 2017 as it has from 2012-2016.

Higher Platinum Demand Expected

However, an increase in demand for platinum has been predicted for 2017.

Noted refiner and catalytic converter manufacturer Johnson Matthey recently issued a report forecasting a 2% increase in platinum demand for the automobile industry and a 5% increase in platinum demand for all other industries.

An approximate 800,000+ troy ounce platinum shortfall is anticipated this year, somewhat higher than prior year’s shortfalls.

2017 will be the sixth consecutive year that annual demand exceeds the amount of mined platinum for the year. Above ground platinum holdings are confirmed to be in decline based on published statistics from all known platinum databases.

With more platinum demand than supply, and prices at historic lows compared to gold, don’t be surprised if platinum outperforms gold over the short-medium term.


Diversification is the Key to a 21st Century Portfolio

It’s no secret that here at Jack Hunt Gold & Silver our focus is on buying and selling precious metals. Being confirmed Capitalists we hope that those who read this consider putting a conservative percentage of their wealth into tangible gold, silver or platinum.

However, unlike many financial “advisors,” our non-commissioned brokers will never suggest that one place a majority of their wealth into precious metals. The truth is, contrary to many of our competitors, we’ve persuaded some overly zealous hard asset fans to spend less on metals than they initially planned.

We encourage our clients to be thoughtful, deliberate and well informed before making any decisions about asset allocation. Our belief is that a properly positioned portfolio for this day and age will contain a mix of equities and cash (both domestic and foreign) along with a healthy percentage of tangible assets such as real estate and precious metals.

Why Invest in Gold and Silver

Why precious metals? At some point higher interest rates and inflation will become an issue both in the U.S. and abroad. In a rising interest rate environment, all dollar denominated assets (stocks, bonds, annuities, whole life insurance) could be at risk. That’s where precious metals come in.

Gold and silver are not correlated to conventional financial assets. Historically precious metals tend to gain, or at least retain, value during times when other asset classes are in bear markets. In fact, gold prices often move inversely to investor confidence.

gold silver diversification portfolio

Investing in gold and other precious metals as part of diversified portfolio can help reduce your financial risk. [Image: Precious Metals IRA]

Despite the obvious advantages of including precious metals in a diversified portfolio, the financial industry has, in the past, been institutionally biased against precious metals. Bankers, stock brokers, insurance agents and financial planners had an inherent conflict of interest as they did not profit when investors diversified into hard assets.

That trend appears to be changing though. We have recently seen a significant uptick in financial advisors foregoing their own economic interests. They are now suggesting that their clients purchase precious metals (even if they do not profit from such a purchase) as a safety net to offset the unpredictable nature of the stock market. In essence, they are advocating that their clients purchase gold and silver as a form of wealth insurance.

Precious Metals Reduce Financial Risk

A recent study found that investors who put 7% to 15% of their assets in precious metals enjoy superior risk-adjusted returns. Yet the average investor has less than 1% of their assets in bullion. If the average investor started allocating 10% of their assets in precious metals, imagine the shock to the financial system!

How much an individual allocates to precious metals is ultimately a personal decision that depends upon one’s life circumstances, goals, risk tolerance and future expectations. If you expect a currency crisis within your lifetime you may want to consider boosting your metals allocation.

Don’t underestimate your current asset allocation. Consider all your financial assets, from brokerage and bank accounts to savings bonds and life insurance policies. In the event of a currency crisis, your investments with these counter-parties (whose liability is your asset) could be at risk. Do you own enough tangible assets to offset that risk?

Please consider Jack Hunt Gold & Silver for all your precious metal needs. We’re locally owned and have been in the same location for over 35 years. Our “no pressure” non-commissioned brokers are here to answer your questions and execute your orders.


The War on Paper Money Part 2: India Recalls 500 and 1000 Rupee Notes

Many loyal customers of Jack Hunt and followers of this blog may recall our article from April of this year titled War on Cash. That article dealt with the potential for the future abolition of currency, both in the United States and abroad.

The speculative nature of that blog has suddenly become far more credible with the recent startling news from India.

India Eliminates High-Value Rupee Notes

Indian Prime Minister Narendra Modi announced a few weeks ago that 500 ($7 USD) and 1000 ($14 USD) rupee banknotes will be withdrawn from circulation, allegedly as part of a crackdown on rampant corruption and counterfeit currency.

As of midnight Tuesday November 1st, the country’s two largest banknotes were no longer considered legal tender after Prime Minister Modi’s surprise announcement just hours before.

Citizens will have 50 days to exchange the old money for new at banks, but only by providing ironclad identification. Individuals who deposit over 250,000 rupees ($3,700) face severe tax penalties starting at a rate 45% of the deposit value.

500 rupee notes

India’s elimination of high-value rupee notes (500 and 1000) has led some to speculate whether the U.S. could do the same, or eventually eliminate cash altogether. [By Agastya Chandrakant (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Impact of Removing High-Value Notes

The impact of such a policy becomes even more significant when one considers that almost 50% of Indians do not hold a bank account and over 80% of Indian transactions are conducted in cash including for large purchases like cars or a homes. It’s not uncommon to Indians to pay over 1-2 Million Rupees for a home in India.

The surprise step is purportedly designed to bring several billion dollars of cash in unaccounted wealth back into the mainstream economy. This move will also, allegedly, hit the finances of Islamic extremists targeting India who are suspected of using fake 1000 rupee notes to fund terrorism.

While abolishing these notes might reduce crime and tax evasion perpetrated by a few, the removal of the high denomination notes restricts economic freedom of all Indians.

Regardless of your country of citizenship, the more one is required to use a bank account the more the banks (and its partner the government) know about where and how depositors spend their money. Ultimately, it’s another form of a government stealing liberty from its citizens.

Could the ECB Kill the 500 Euro Note?

It is also reported that the European Central Bank (ECB) has begun planning the demise of the 500 EURO note, the one banknote which not only makes up 30% of total European circulating currency by value, but also provides the most cost efficient alternative to Europe’s effective money “tax,” better known as NIRP (Negative Interest Rate Policy). The prospects for NIRP to expand worldwide including to the U.S. have also been highlighted in previous blogs at this site.

Former U.S. Treasury Secretary, Fed Chairman wannabe and Harvard alum Lawrence Summers recently wrote a dissertation urging countries around the world to stop issuing high denomination banknotes, allegedly to deter crime and corruption.

Summers was quoted as saying, “Even better than eliminating the 500 Euro note would be a global agreement to stop issuing notes worth more than, say, $50.” In another recent blog titled “It’s time to kill the $100 bill,” Secretary Summers made it clear that the elimination of paper money is only in its infancy.

Elimination of Cash a Real Possibility

Not surprisingly, just like in Europe and India, the argument is that eliminating high denomination U.S. currency will somehow eradicate crime. Quoting the former Secretary of the Treasury, “a moratorium on high denomination notes will make the world a better place.”

If the Fed heeds the advice of Mr. Summers and EU Central Bank president Mario Draghi, or follows the actions of Indian Prime Minister Modi, eliminating all currency may be in our future. Currency is the only paper based alternative store of wealth to a negative interest rate digitalized future that is potentially in store for all of us.

That being said, what would be left as an alternative to a currency (or lack thereof) related to a potential economic collapse? Gold and silver, of course. Precious metals have been the one true tangible currency for thousands of years.


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