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Old 03-08-2013, 03:49 PM   #1
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Effects of a return to a Gold Standard...

As part of a diversification strategy away from 100% precious metals, I am interested in the potential opportunity that shorting the bond market may offer, but wanted to get a few opinions first...

My question is this:

If, as some seem to suggest, a return to some form of gold standard is ultimately likely, what would be the effect on pre-existing bonds?

Would there be any way these could be migrated over to a newly gold-backed currency?

Or would that not be possible / desireable?

Many thanks...

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Old 03-08-2013, 04:22 PM   #2
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A return to the gold standard will not occur under the Federal Reserve system; gold will return to its true role as money, but only after the current system destroys itself. Think of it this way: if you are short Treasuries and the bond market collapses, what is your reward? Sure, you made fiat profits--but those profits would be denominated in what (would be) now completely worthless fiat dollarz, because the value of those dollars is derived from debt. Basically, if the bond market collapses, it's going to take the dollar with it.

I think the best way to short Bernanke bonds is to own physical gold.
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Old 03-16-2013, 12:03 AM   #3
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Its a best way to invest in gold.Many countries like German converting their federal reserve into gold.In this way they can improve their economy more by trading it in future when the price of the gold rises in future.
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Old 03-16-2013, 09:15 AM   #4
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I like the idea of converting fiat paper/worthless bonds in to PM's when faith is still at nominal highs. Silver is my obsession, so I personally convert in to silver, but gold is nice too.
All things being equal, the simplest answer is quite often the correct answer - Occam
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Old 03-16-2013, 06:19 PM   #5
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Hard assets, PMs, land, etc. have intrinsic value that does not change over time, though there may be numerous hiccups in the meantime.

The intrinsic value of soft assets, like FRNs, is only the value of the underlying paper or electrons. EVERYTHING ALWAYS returns to its basic intrinsic value sooner or later.

So, do you want to GAMBLE with soft assets? Would it not be better in the long term to LOCK IN your intrinsic value with hard assets while you have a chance? Sure, when measured by a rubber yardstick (FRNs) you may APPEAR to lose, but in reality what you have done is to PRESERVE your wealth.
If you keep doing what you are doing, You will keep getting what you are getting.
If you don't like what you are getting, You must change what you are doing.

GOLD is the money of KINGS.
SILVER is the money of GENTLEMEN.
BARTER is the money of PEASANTS.
DEBT is the money of SLAVES.
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