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Should The United States Buy Gold and Silver
With all this talk about the United States printing money, and running 31 trillion dollars in deficit, should the United States buy Gold and Silver?
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2 Replies
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The National debt is not 31 trillion. It is more like 35 trillion. When Ronald Reagan was President of the United States, the National debt was nearing one trillion and President Reagan was worried about being one trillion in debt. You then get a bunch of comedians incompetent so called U.S. Presidents who do not know what they are doing and now we are 35 trillion in debt.
The idea of the United States buying gold and silver is a complex topic that involves economic, financial, and political considerations. Here are some of the key arguments for and against such a strategy:Arguments For Buying Gold and Silver
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Hedge Against Inflation and Currency Devaluation:
- Gold and silver are often seen as hedges against inflation and the devaluation of fiat currencies. By holding precious metals, the U.S. could protect its wealth from the eroding effects of inflation.
- Historical data suggests that gold, in particular, tends to perform well during periods of high inflation and economic uncertainty .
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Diversification of Reserves:
- Diversifying the country’s reserves into tangible assets like gold and silver can reduce the risk associated with holding too many paper assets, such as U.S. Treasury bonds and foreign currencies .
- Countries like China and Russia have been increasing their gold reserves as part of a diversification strategy.
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Economic Stability:
- Gold and silver are considered safe-haven assets. During times of economic crisis or geopolitical instability, these metals can provide a stable store of value.
- This stability can be particularly valuable for central banks, which need to maintain confidence in their monetary policies and overall economic management .
Arguments Against Buying Gold and Silver
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Opportunity Cost:
- Investing in gold and silver means tying up capital that could be used for other potentially more productive investments. The return on precious metals does not generate income like stocks or bonds, which can pay dividends or interest.
- The U.S. government could potentially miss out on higher returns from other investments that could contribute more directly to economic growth .
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Storage and Security Costs:
- Holding large quantities of physical gold and silver requires secure storage facilities and incurs significant costs associated with safeguarding these assets.
- The logistics of acquiring, storing, and managing these reserves can be complex and costly .
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Market Volatility:
- Gold and silver prices can be highly volatile, influenced by various factors including market speculation, changes in interest rates, and geopolitical events. This volatility can pose a risk to the stability of national reserves .
- Unlike fiat currencies, which are more stable and liquid, precious metals can experience significant price swings, making them less predictable in the short term.
Economic and Strategic Considerations
- Current Reserve Composition: The U.S. already holds significant gold reserves, with the largest stockpile in the world at over 8,000 metric tons. The strategic value of increasing this reserve further needs to be weighed against other financial priorities .
- Global Financial System: The role of the U.S. dollar as the world’s primary reserve currency means that the U.S. has unique responsibilities and privileges in the global financial system. Dramatically increasing gold and silver holdings could send signals about the stability and future value of the dollar .
Conclusion
The decision for the United States to buy more gold and silver involves balancing the benefits of having a stable, tangible asset that can hedge against economic uncertainty with the drawbacks of potential opportunity costs, storage logistics, and market volatility. This strategic decision would need to be part of a broader economic policy considering current reserves, financial goals, and the global economic landscape.
https://www.youtube.com/watch?v=92JmXjXjye8&ab_channel=CPMGroup
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There are pros and cons to the United States buying gold and silver as a way to potentially hedge against inflation or currency devaluation risks related to its deficit and money printing policies. Here’s a more balanced perspective:
Potential Benefits:
Gold and silver are traditionally viewed as safe-haven assets that can hold their value during times of economic turmoil or high inflation.
Building up precious metal reserves could provide a hedge against a declining U.S. dollar if its status as the world’s reserve currency is threatened.
The finite supply of gold and silver means their value is less susceptible to being inflated away compared to fiat currencies.
Potential Drawbacks:
The upfront costs of buying large amounts of gold and silver would be extremely high for the U.S. government given their currently elevated prices.
Storage and security costs for billion-dollar bullion stockpiles are non-trivial ongoing expenses.
Precious metals are non-productive assets that don’t generate returns like bonds or equities over time.
The U.S. dollar remains the world’s most trusted reserve currency, making a big precious metals stockpile arguably redundant.
More moderate inflation is actually the Fed’s policy target right now, not deflation.
On balance, most mainstream economists don’t recommend nation-states tie up too many assets in gold/silver as an hedge. More traditional approaches like controlling spending, raising taxes, or issuing new debt are more common for managing high deficits and inflation risks.
Reasonable people can disagree on this topic. But the U.S. already owns over $500 billion worth of gold bullion reserves dating back to the gold standard era. A measured approach supplementing that gradually if risks materialize may strike the right balance without going overboard on precious metals. But it’s a nuanced policy decision.
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This reply was modified 6 months, 1 week ago by William.
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This reply was modified 6 months, 1 week ago by
Sapna.
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This reply was modified 6 months, 1 week ago by Sapna.
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Understanding Gold, Silver, and Bitcoin as Investments - Robert Kiyosaki, Andy Schectman
In this episode, Robert Kiyosaki expresses his concern over the declining value of the U.S. dollar, citing rampant debt and irresponsible financial policies as the primary reasons. Kiyosaki dives into
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This reply was modified 6 months, 1 week ago by