Futures Challenging The Fed

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To any of you who care about metal market and has kept up with my weekly trading posts, you will find The Bullion Report not strange any more. Information on the market has been carefully analyzed, collected and shared to help traders and investors in futures trading platform and other related ones. This week, we will listen to Gold Bullion Report talk about “Challenging the Fed”

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Futures Challenging The Fed

  1. 1. To any of you who care about metal market and has kept up with my weekly trading posts, you will find The Bullion Report not strange any more. Information on the market has been carefully analyzed, collected and shared to help traders and investors in futures trading platform and other related ones. This week, we will listen to Gold Bullion Report talk about “Challenging the Fed” Challenging the Fed
  2. 2. <ul><li>That gold and silver coins are legal tender in the eyes of the government and are now legal tender in Utah as lawmakers pass legislation to put an exclamation point on the issue is redundant action? How about your thinking? Maybe it is, but to consider this aspect on a deeper psychological level, the legislation is widely seen as something far greater in scope than spending American Eagles for goods or services. The action in the Salt Lake state is seen as a potential challenge to the Federal Reserve, and its stance on inflation and monetary policies. </li></ul>
  3. 3. Past performance is not indicative of future results. ***chart courtesy of Gecko Software
  4. 4. <ul><li>Ron Paul has frequently observed for the fact that precious metals have been recognized throughout history as a currency satisfying the basic needs of exchange. Among of the precious metals, gold and silver were the predominant metals of currency, being portable and pretty difficult to counterfeit. </li></ul>
  5. 5. <ul><li>These two metals are easily recognizable, they tend to cross many national boundaries and they are not tied to a government or other body that can manipulate them at a pen stroke. </li></ul><ul><li>With just a few conditions, the federal government actually recognizes gold and silver coins as legal tender. At this issue, legal tender refers to the potential for the coin (or currency) to be offered to settle debts and pay taxes. In the history, there was one stretch of time that gold bullion and coins were forbidden for non-numismatic purposes. </li></ul>
  6. 6. <ul><li>It is now permissible to privately own them and to use them for payment. Only United States coins and currencies fall under this allowance. This applies to Federal Reserve notes or other national bank notes, per the United States Coinage Act of 1965. No one is required to accept either form of currency, but they are considered valid if offered while foreign coins are not. </li></ul>
  7. 7. <ul><li>The tricky parts of the federal recognition and the new Utah legislation come in identifying the details of silver or gold coins as legal tender. The caveat for many of the US minted coins is that they are only legal tender for their face value. How can we understand this point? You know, that means a coin that weighs an ounce, but only has a face value of $50 can be legally tendered as…..$50. </li></ul>
  8. 8. <ul><li>With the fact that gold trading above $1,400 an ounce, the idea of paying for anything with that coin seems ludicrous. But the suggestion is there, the opportunity for Utah to explore the potential of putting assets into gold/silver coins. Several other states, in fact, proposed some kind of radical push towards precious metals as payments, however so far, most efforts have not been voted on. </li></ul>
  9. 9. <ul><li>Unfortunately, coins are considered as collectibles, so they are subject to capital gains tax. Ron Paul made a statement in the House in 2009 and in part of that statement , he lauded the removal of such taxation, and sales taxes on the same. </li></ul>
  10. 10. <ul><li>He also shared other point of view in other comments, Ron Paul has likened the levy to the idea of charging sales tax on the conversion of quarters into dollars at a bank. In his argument this was especially pointed that the devaluing of the dollar resulted in more taxes on the gold or other precious metals. </li></ul>
  11. 11. <ul><li>That accepting gold or silver as legal tender is also mired in the issues of daily price fluctuations. But the big deal to many gold bugs isn’t the infeasibility of paying for anything with the coins. The greater issue appears to be the outright challenge to the current monetary policy of the Federal Reserve and recent comments from Ben Bernanke. </li></ul>
  12. 12. <ul><li>To actively seek an alternative to paper money, specifically Federal Reserve notes, is seen as a big billboard against the current devaluation of the dollar with particularly active stimulus efforts and quantitative easing programs. </li></ul>

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