Sunday, 27 May 2007

One Final Illustration

Relationship between gold & silver and the monetary system.

USD (Federal Reserve Dollar)
$ (Dollar as a defined, tangible unit based upon silver & gold)

Gold = 654 USD per troy ounce
Silver = 13 USD per troy ounce

The Dollar, or Unit as defined by the Coinage Act of 1792 containing .773 oz. pure silver
(True value = 10 USD)
The Eagle, or 10 Dollar coin per the same Act containing .564 oz. pure gold
(True value = 369 USD)
You will note that the relationship between gold and silver is no longer valued at the same ratio.

Yet interestingly enough, we no longer mint the same coins – they have been replaced with Silver Eagles and Gold Eagles as follows:

1 Troy Ounce Silver Eagle = 13 USD
Face Value = $1 (or 1.3, 1792-1964 Silver Dollars)

0.10 ounce American Gold Eagle coin = 65 USD
Face value = $5 (Note that 13 times 5 is 65)

0.25 ounce American Gold Eagle = 164 USD
Face value = $10 (The appropriate denomination should be $12-1/2)

0.50 ounce American Gold Eagle = 327 USD
Face value = $25 (Note that 13 times 25 is 325)

1 Troy Ounce Gold Eagle = 654 USD
Face value = $50 (Note that 13 times 50 is 650)

You can see immediately the relationship between the denominations. Now these coins are minted for investors and collectors, and they are composed of purer metals than coins made for circulation. As you can see, the quarter ounce Gold Eagle falls out of place with its denominational value of ten dollars, but the rest calculate pretty well to the current price of silver and gold. Now you'd be lucky to find these coins anywhere for the actual USD prices. The current selling prices are:

$1 Silver Eagle = 15 USD
$5 Gold Eagle = 75 USD
$10 Gold Eagle = 180 USD
$25 Gold Eagle = 350 USD
$50 Gold Eagle = 700 USD

I'd suggest investing in gold and silver since these metals will always hold their value. When the Chinese come knocking on our door asking to collect the One Trillion Dollars we owe them, you will still own something of value. Rep. Ron Paul before the U.S. House of Representatives addresses this very issue. I commend this article to you. By the way, Rep. Paul is a true Republican running on a true conservative platform. I'd vote for him. He is being marginalized by the media in he same way Kucinich and Gravel have been.

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