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Silver Wheaton Corp. Message Board

  • cmegladon cmegladon Oct 4, 2013 1:01 PM Flag

    Please read this article;

    Why Uncle Sam is hoarding gold
    The Treasury says it won’t tap its gold stockpile, even to avoid a default

    Brett Arends's ROI Archives | Email alerts

    Oct. 4, 2013, 7:31 a.m. EDT · CORRECTED
    Why Uncle Sam is hoarding gold
    The Treasury says it won’t tap its gold stockpile, even to avoid a default
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    By Brett Arends

    CORRECTION: An earlier version of this story misidentified a holding owned by the Appleseed fund.

    Grab any Wall Street trader in a bar, or any portfolio manager in his office, and he’s likely to tell you gold is finished.

    It’s silly, nothing more than a shiny metal, a substance with little use and little real value, a “barbarous relic,” and the stuff of nothing more than superstition. Only a fool would own any gold in his portfolio.


    After all, its value has plunged by $500 an ounce in the past year, and $100 just in the past month. Gold hasn’t even rallied during the budget crisis: So much for its “safe haven” status.

    There is just one nagging problem with this story line. One group of people disagrees. And I am not talking about wacko gold bugs in Arizona (“the ex-husband state”) with tinfoil on their heads.

    AFP/Getty Images Enlarge Image

    I am talking about the people running the United States Treasury.

    They remain firm believers in gold. Big-time.

    This week I asked them if they would consider selling some of the country’s gold reserves to pay the bills if the budget crisis escalates later this month.

    Their response? Not a chance.

    The Treasury has considered that option, among the many others, and rejected it. “Selling gold would undercut confidence in the U.S. both here and abroad,” a spokeswoman said, “and would be destabilizing to the world financial system.” She was quoting an official position laid out last year in a letter to Senator Orrin Hatch, but so far apparently little noticed on Wall Street.

    The Treasury’s position is, in a word, extraordinary. We hear all this skepticism these days about gold. Yet the Treasury itself considers U.S. gold holdings to be a key element in maintaining confidence in the country’s soundness—and the stability of the international financial system.

    I thought gold was a joke. Totally over. I thought no one cared about gold. But if that were really the case, why wouldn’t the government just dump the holdings for whatever it could get?

    To get the full measure of that statement, it is worth reminding ourselves of where we are now. The government has already shut down and there is a non-trivial risk that in just over two weeks it may actually default on its debts. I’m not saying it’s likely, but I am saying the risk is real. To prevent that happening, Congress, which can’t even agree to keep open the Bunker Hill Monument for tourists, must agree to hike the debt ceiling. If it doesn’t, the federal government will quickly run out of money.

    The Treasury has considered various scenarios and contingencies, officials say. They have concluded that delaying government payments across the board—from Social Security to debt interest — would be the least harmful approach.
    Click to Play
    What do gold prices do during a shutdown?

    On the second day of the shutdown, the markets were relatively stable -- but what about gold? Heard on the Street editor Liam Denning joined MoneyBeat to discuss. Photo: AP.

    In other words, according to the official position of the U.S. Treasury, the promises and commitments of the government, and its “full faith and credit,” are actually worth less than gold. They’d rather default than lose their bullion.

    The federal government has about 8,100 metric tonnes of gold, held in places like Fort Knox. At current prices that’s worth about $340 billion. That would only keep the government going for about a month, which tells you how little gold we really have in relation to our commitments.
    Then comment on it.
    I know I am preaching to the choir but this is not some gold bug we are talking about.

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    • metals have been volatile cuz traders are raising cash in this down trend. no worries long term. QE to infinity and beyond. yep am a choir member!! glad youre still around thought you sold. Im in to see where we go over debt ceiling talk THAT will be the fun stuff....been here on the last go around SLW did nicely look at the chart bottomed a tad then ran to the upside think that was July of 2011 EOM ish.........if we see 21 again buy buy buy!!

      Sentiment: Strong Buy

    • Looks like smokescreen propaganda to me.

      They can't sell what they don't have. There used to be an armored division tasked with guarding the gold at Ft. Knox. That armored unit has been moved elsewhere. Why is it that Germany has to wait years to get their sovereign gold?

    • Very interesting read.

27.54-0.28(-1.01%)Sep 26 4:02 PMEDT