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Is the U.S. getting Gold fever?

One ounce gold bar.
Image via Wikipedia

Few can deny that Gold has had quite an interesting resurgence recently.  In just 10 short years, Gold went from $300 an ounce to the recent high of $1,400 an ounce.  That’s a pretty staggering number!  Critics will point to the fact that Gold did little outside of the last 10 years and, when accounting for inflation, really hasn’t had an impressive ROI.

Critics of those critics will tell you that the price of Gold has been artificially suppressed.  I’m not focusing on the investment qualities and merits of Gold in this article though.  What I have noticed more recently is politicians getting on board the Gold bandwagon.

Recently, Utah has been deliberating and the Utah House has passed the Sound Money Act, which would allow people to voluntarily use Gold and Silver coins issued by the US Federal government to be used as legal tender.

Big Deal, One State

If you’re thinking that it’s just one paranoid state doing this, then think again.  According to Fox News, Colorado, Georgia, Montana, Missouri, Indiana, Iowa, New Hampshire, Oklahoma, South Carolina, Tennessee, Vermont and Washington are all considering similar legislation.

I’ve mentioned the book “Tipping Point” before, and I really feel like we’re reaching that tipping point.  It’s only so long before everyone else wants similar options.  With China,and Russia considering to stop settling transactions in dollars, it seems like we’re on a path where the only Dollar customers will be U.S. citizens.

One Problem: Price

The biggest thing stopping this is peoples’ general perception that Gold and Silver are too expensive.  People have been so used to “cheap” Gold and Silver prices that they get sticker shock when they see how much it is now.  There have been a lot of postulations as to why this has happened, and it exceeds the scope of the article, but my opinion is that Gold and Silver are correcting to proper price levels.

The money supply can’t expand annually and still have prices stay the same, which is basically what happened to Gold and Silver for a long time.  You can look all over the place and see prices rising dramatically.  A few years ago, a 20 oz bottle of soda could be had for $1, now it’s averaging $1.50.  You can get a 16 oz bottle for $1.00 though.

I can see the future as well as you can, which means that most of this is postulation.  But, if you’re seeking my honest opinion, I do see a future for a resurgence in the demand for Gold, Silver, and Copper money.

What do you think about Gold and Silver as a voluntary currency?
What do you think about the current prices of Gold and Silver?  Are they undervalued, fair, or overvalued?

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