Tuesday, June 5, 2012

Precious Metals as Real Money


Banking Alchemy - Transforming Gold Into Paper

Throughout history, up to the 1700’s, all “real money” was either gold or silver. Gold was the money of the rich and silver the money of the poor.

Our present banking system finds its roots in the role played by goldsmiths in history. Mayer Amschel (Bauer) Rothschild (1744 -1812) was a German goldsmith turned banker who built a banking family dynasty that controls our economy to this day, by turning gold into paper.

Centuries ago, wealthy individuals who possessed quantities of precious metals would often store them with the local goldsmith for safe keeping. In exchange, the goldsmith would issue paper certificates as receipts that could be redeemed at a later date for various quantities of gold.

What the goldsmiths discovered was, very few gold owners would actually redeem their certificates for gold at any one time. This led some unscrupulous goldsmiths to issuing certificates to those who had no gold, but who were willing to pay back the loans with interest.

These conniving goldsmiths found they could issue many paper receipts and reap huge profits by collecting interest on made-up certificates when there was no actual gold backing them at all.  With this began the acceptance of paper money and the beginning of the modern banking system of fractional reserve lending and compounding interest.


The American Coinage Act of 1792

Section 9 of the Coinage Act of 1792 states the following denominations and values:

Ten dollar “Eagles” - to contain two hundred and forty-seven and four eights (247 4/8) grains of pure gold, or two hundred and seventy (270) grains of standard gold.
(Today's gold price = $909.90)

Five dollar “Half Eagles” - to contain one hundred and twenty-three and six eights (123 6/8) grains of pure gold, or one hundred and thirty five (135) grains of standard gold.
(Today's gold price = $454.95)

Two dollar “Quarter Eagles” - to contain sixty-one and seven eights (61 7/8) grains of pure, or sixty seven and four eights (67 4/8) grains of standard gold.
(Today's gold price = $227.48)

One dollar - to contain three hundred and seventy one and four sixteenth (371 4/16) grains of pure silver, or four hundred and sixteen (416) grains of standard silver.
(Today's silver price = $24.96)

Half dollar - to contain one hundred and eighty-five and ten sixteenth (185 10/16) grains of pure silver, or two hundred and eight (208) grains of standard silver.
(Today's silver price = $12.48)

Quarter Dollar - to contain ninety-two grains and thirteen sixteenth (92 13/16) grains of pure silver, or one hundred and four (104) grains of standard silver.
(Today's silver price = $6.24)

Ten Cent Dimes - to contain thirty-seven grains and two sixteenth (37 2/16) grains pure silver, or forty-one and two sixteenth (42 2/16) grains of standard silver.
(Today's silver price = $2.53)

Five Cent Nickles or Half Dimes - to contain eighteen grains and nine sixteenth (18 9/16) grains of pure silver, or twenty and four fifth (20 4/5) grains of standard silver.
(Today's price = $1.25)


Historical Prices for One Troy Ounce of Gold

1792 = $19.30
1834 = $20.67
1935 = $35.00
1973 = $120.00
1979 = $850.00
2012 = $1,617.10

Current Gold Prices as of June 5, 2012
1 gram gold bar = $51.97
1 grain of gold = $3.37

Current Silver Prices as of June 5, 2012
1 gram silver bar = $0.91
1 grain of silver = $0.06

[1 grain = 0.0648 grams]
[1 gram = 15.432 grains]

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