Congressman Anthony Weiner’s inane attacks on Glenn Beck and the gold coin dealer Goldline make me think there is some other agenda at work.
Though Weiner has named Beck and the company he endorses, Goldline, he has also made clear that Goldline is just one of several gold coin companies overcharging their customers. He argues that if an investor were able to smelt their gold coins, the actual value of the pure gold metal itself would be far less than the cost of the coins — sometimes as much as half the cost companies like Goldline charge.
Weiner’s view is naïve and ignores the fact that many of these coins have intrinsic value as a collectible, just as an antique would.
Those who own such gold coins — I am one — recognize the value of the coin is not just in the gold. Imagine saying an antique car that sells for $250,000 is really worth about $500 — because that’s the actual value of the metals that make up the car if it were ever junked.
One target in this controversy is Glenn Beck, who the Obama and Congressional Democrats don’t like.
But that’s just one part of the equation. They really detest gold, especially as an investment vehicle.
Beck could just be the convenient punching bag for their real target, the gold industry.
As Politico reported, Weiner plans to introduce legislation requiring “precious metal retailers to fully disclose all their fees, how much the price of gold would need to rise in order for their customers’ investments to yield a profit, and the purchase price, melt value and resale value of the metal that constitutes their products.”
Why the worry over gold coins?
Just turn on the TV and listen to the flood of ads selling such coins. Tune into the radio and hear the same. Upscale malls now have kiosks for individuals to cash in gold. Gold is all the rage – and its price of around $1,200 an ounce is hitting new highs.
Gold has become an enemy of the state.
It is an enemy because gold is an ancient store of value. It even can act like a currency. In fact, as currencies lose confidence, as we have seen with the dollar and the euro, investors often buy gold.
But unlike many other investments, gold is an unproductive asset. It sits in your home, in a bank vault, maybe buried in your backyard.
Meanwhile, even cash in the bank is not idle, as banks lend against your deposit.
Economic activity is spurred, unlike a stagnant gold investment.
The surge in the price of gold is a bad omen for the U.S. economy. It is also a vote of no confidence in President Obama by the investor class.
Gold purchases undermine the strategy of Obama and the Fed, both of whom are trying to inflate the currency. But, as Milton Friedman so artfully explained, simply printing money does not cause inflation. Inflation is caused when too much money actually goes into circulation and is used in the economy over a period of time. This is called the “velocity” of money.
Inflation has not ignited yet because the velocity of money remains low. This is so because consumers are afraid of President Obama’s fiscal policies. They are not spending to a great degree. They are hoarding cash. They are buying gold.
When governments decide to inflate, they usually get their wish over time. Gold also acts as a barometer of coming inflation.
So this precious metal is now an enemy of the state because it is competing with the dollar. Every time an investor purchases gold, they take money out of circulation. The velocity of money slows. The economy suffers.
Obama’s re-election in 2012 will also suffer unless he can get dollars circulating again.
It is important for Americans today to remember that in 1933, soon after Franklin Roosevelt became president, he confiscated almost all privately owned gold, including gold coins. Those who did not turn in their gold were subject to jail time, up to 10 years in prison. FDR did this without Congressional approval; he simply issued an Executive Order.
At the time, the nation was in economic crisis. With runs on the nation’s banks, FDR used extraordinary, some say unconstitutional, power to close down an enemy of the state.
More Posts by Christopher Ruddy Moneynews
© 2016 Newsmax Finance. All rights reserved.