Over the years, whenever I had put together a few shekels, I would purchase fractional ounce gold proof coins from the US Mint. While perusing the US Mint web site today, I came across this notice:“Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. Currently, all available 22-karat gold blanks are being allocated to the American Eagle Gold Bullion Coin Program, as the United States Mint is required by Public Law 99-185 to produce these coins “in quantities sufficient to meet public demand . . . .The United States Mint will resume the American Eagle Gold Proof and Uncirculated Coin Programs once sufficient inventories of gold bullion blanks can be acquired to meet market demand for all three American Eagle Gold Coin products. Additionally, as a result of the recent numismatic product portfolio analysis, fractional sizes of American Eagle Gold Uncirculated Coins will no longer be produced.”
FYI, gold bullion coins are coins that are marketed through dealers rather than the Mint itself, which only sells select coins to the public. These are usually uncirculated coins, or “proof” coins which are high gloss, and not touched by human hands. Note the notice says that the demand for gold bullion coins is so high, the mint will no longer sell fractional ounce gold coins; only the one ounce gold coins. I guess I am shut out.
Gold is notoriously a bad investment. It is subject to rapid fluctuations that can cause it to spike in value or lose value…and stay there not for months, but for years. But as I told my wife, the attraction is that you can physically take possession of the gold, and if the chips are down, hide it. The government can’t take it away from you notwithstanding the value. I surmise that many Americans are coming to that conclusion; hence the skyrocketing demands. That looks attractive in an era where the government is seizing private companies, dictating corporate governance, setting salaries, taking over the banking, auto, and health care industries, and overtly stating it will tax productive people who create the jobs in our country. If you believe that all that printed money will result in a huge inflation two or three years down the road…gold is the way to go. With Medicaid look backs going back 5 years, it also is a way to beat the system. It circumvents estate taxes when you die. The fluctuating value of the gold is secondary.
This portends badly for the United States. It shows that a growing segment of our society believes that government activity is bordering on illegitimate, and there is no faith in elected officials to either curb it, or in the courts to cut it off.
That is the attitude I found on my first trip to Russia before the collapse of the Soviet Union. There was the official economy. Calling it anemic would have been generous. The ruble was worthless. You could call long distance to the United States for 10 cents and talk all you want. You only had to schedule the call a week in advance and confirm daily that you still wanted to make the call. Then you had to sit by your phone in the hotel until the phone rang to place your call. When you were done, a Russian baba would knock on your door to collect the dime.
Then there was the real economy, operating under the radar of the government. Folks wore phony seat belts thrown over their shoulders while driving their cars because the cops made seat belts a priority while thugs ran through the streets unheeded. Kiosks were everywhere openly selling black market goods. Foreign currency was traded in hotel lobbies unfettered. If you wanted anything at all, you either lined up for hours at the legal stores, or bought what you wanted when you wanted it at the black market stores using hard currency, preferably the dollar, but anything would do. As to any government forms you had to file…it was irrelevant what was in the forms so long as they were filled out and timely filed. As my friend told me…we pretend to work, and they pretend to pay us.
This is the first time in my lifetime that I have seen faith in our currency and financial system faltering. People are cautiously optimistic about the economy, but are hedging their bets. Those of us over 50 understand the gas lines, cold houses, inflation, and high interest rates that stifled the economy under Gerald Ford and Jimmy Carter. While we are grateful that Barack Obama is trying to do something, his approach in viscerally un-American. Talk of the new world order, increase taxes, massive budget deficits…we have seen it before. It doesn’t work. But this time around, there are no checks and balances.
Loss of faith in our system can spell disaster. If the posting on the US Mint site doesn’t indicate a falling faith in our system, what would?
Are the storms clouds beginning to gather? (To be continued).
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