KeithGram: Gold — Pieces Of 50

As we move forwards towards a gold standard, we will need many new innovations (as well as a rediscovery of old things that have long been forgotten).  At the Gold Symposium in Sydney Australia, I saw an exhibitor who has a new, innovative product.  They have thin sheets (almost like wafers, especially the gold ones). They are engineered and precisely scored that one can break off a small rectangle.  With one’s bare hands.  They guarantee that every rectangle will have exactly 1g of metal.  There is a gold product and a silver product.  The individual 1g rectangles are the same width X length, with the silver being about twice as thick.

I don’t believe that all, or even most, transactions will be conducted in gold coins passing over the counter.  But gold coins will certainly play a role.  The innovation here is that one can carry a sheet or a smaller-sized quantity, say the size of a credit card.  One only breaks it apart if one needs to conduct a small transaction.  1g of silver is worth about $1 and 1g of gold is worth about $54 at today’s price.

The product is manufactured by Valcambi, a Swiss company that is certified by the London Bullion Market Association as a refiner.  The distributor in Australia is Bullion List (www.bullionlist.com.au). —

I am very excited to see such innovations.  I think they are a sign that the cultural tide is turning and the illusion that is irredeemable paper money has been dispelled for more and more people.

There is no pun intended by “KeithGram” and these 1 gram monetary metal wafers.  I have been writing a series under “KeithGram” for about a year.

Keith Weiner is the founder DiamondWare, a VoIP software company, and has a PhD from Antal Fekete’s New Austrian School of Economics in Munich. He is now a trader and market analyst in precious metals and commodities. He is also president of the Gold Standard Institute USA.

© 2012 by Keith Weiner

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10 comments to KeithGram: Gold — Pieces Of 50

  • JR

    A more concise way of dispelling “the illusion that is irredeemable paper money” would be to promote the quality theory of money. To wit, that value is given by quality; the ‘assets’ of government chartered banks are junk, so are their obligations. When you accept $ in payment of debt, you are accepting junk, you are being passed a dud cheque.

    People are generally resistant to being ripped off, when they are actually aware they are being ripped off. The government is not literally forcing people to accept $ in payment of debt, they do it because they are ignorant, fed a load of bullshit about value being given by quantity & such.

    • Keith Weiner

      JR: good points, though the legal tender laws do force creditors (not merchants) to accept dollars.

  • GaryP

    While I expect fiat money to result in some sort of crisis soon…
    Is there any significant number of knowledgeable people in the world (much less the US) that seriously expect us to return to a economy where precious metals are physically exchanged in retail transactions?
    I am amazed that anyone would believe that governments, in their current bloated states, will ever allow their power to be diminished to the extraordinary extent that halting the issuing of paper currency would entail.
    I think it is much more likely that they will, once again, confiscate precious metals in a desperate attempt to buy themselves more time. Remember that FDR was able to pay for one year’s budget from the “money” generated by confiscating gold and then devaluing paper money.
    It is not that I think that returning to a gold standard is a bad idea, it is just that I cannot conceive of a world were the PTB will suddenly surrender the enormous power, and wealth, generated by controlling the currency.
    History has shown that governments always collapse before giving up seigniorage. In a Mad Max world, I would think bullets would be a more realistic currency than gold or silver.
    It’s not, please understand, that I don’t think a hard currency is a bad idea, I just can’t see, as a student of history, how we get from here to there without a period of total societal collapse or a totalitarian state.

    • Keith Weiner

      Gary: Think back to 1950. South of the Mason-Dixon line, blacks and whites were treated differently under the law. If you had asked people at that time if they thought a few short years later, Jim Crow would be abolished, would they have said it was possible?

      In fact, it was inevitable. Once people began to see it as outrageous, the movement to abolish it grew exponentially. Brown v. Board of Ed. of Topeka was the beginning of an avalanche.

      Don’t think of it as the government vs. the people. Except an occupation army (and that is temporary), a government basically is in line with what people expect and demand of it. Sure, Dems may quibble when a Repub has power, and Repubs may quibble when a Dem has power “if our gang were in charge, it would all somehow be better…”

      Few today demand the end of legal tender laws and irredeemable paper money.

      But they will.

  • GaryP

    Keith,
    You are certainly more knowledgeable in this area than I, but…
    Aren’t there huge, and powerful, groups that would be devastated by return to a hard currency?
    1. Government workers (8% of US jobs) whose jobs and power are dependent on maintaining a huge government financed by deficit spending. Wouldn’t a hard currency force significant shrinkage of a government currently financed (at the federal level) by 40% debt (70% of which is directly monetized). Without the FED could government continue to operate as currently for a month? I don’t think so.
    2. Government dependents (the famous 47% of the population) would not be paid for the same reason as above.
    3. Wouldn’t a hard currency make the current debt based economy untenable? Credit won’t be available if banks can’t create money by extending credit. Credit won’t be as attractive if the money to be paid back is expected to be the same value as that borrowed (unlike today).
    Etc., etc.
    Hard money is desirable but everyone in the US that supports that concept (see Paul’s performance in the primaries) would fit in a small stadium while the opponents are essentially the entire remaining population (with more tellingly everyone with significant wealth or power in the current structure included).
    How do we get from here to there without a revolution?

    • Keith Weiner

      Gary: No doubt there are entrenched interests today. I can only say that when people come to regard irredeemable paper money and legal tender laws as a MORAL OUTRAGE, then things will change. Faster than most people think.

      I agree that, today, most people don’t support hard money. I am proposing that when people wake up, attitudes will change.

  • mak

    GaryP has it right and you have it wrong, Keith, in my humble opinion of course. The thought of carrying gold and silver around in my pocket is as rediculus now as it was a millium ago. A gold/silver backed currency is the only way to go. It worked quite well for many a year. The problem of course, is controling the government, which is a problem no matter which way you go. So I say just reverse the process that occurred that started with fdr and nixon and get on with it.

    • Keith Weiner

      mak: The gold standard is a free market. Don’t assume that a gold standard means that the government will force you to carry coins, instead of today forcing creditors to accept dollars.

      If you don’t want to carry gold coins, don’t carry gold coins! There will be no lack of banks willing to take your gold on deposit and issue you paper notes, plastic cards with magnetic stripes or RFID chips in them…

      The difference is that it won’t be irredeemable debt piled on top of irredeemable debt which is never extinguished. Gold will clear each credit and then if the parties are mutually willing the credit can be reestablished.

  • mak

    Keith…I can’t begin to tell you how much I wish what you say would happen….but history has shown that where there is money to be scammed it will be. I know you know the history of gold/silver to paper as well if not better than me and how the banks/dealers issued certificates/notes. It was a mess after a bit because they started to get greedy and passed out more notes than for gold they had (sound familiar?)Again corrupt people. So I guess my next question would be, why is the fed going to let this happen? It’s my understanding they don’t care for anyone messing with their monopoly on currency and mail.

  • Gold as a standard will not happen until the collapse of the American currency. However, to preserve our own wealth, it is super wise to start collect precious metals like Gold and Silver – not as investments but as insurance against hyperinflation.