Home > Ron Paul Hates The Federal Reserve But Loves Gold (GLD, XOM, USO, UUP, UDN)
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Ron Paul Hates The Federal Reserve But Loves Gold (GLD, XOM, USO, UUP, UDN)

January 18th, 2012

Jonathan Yates: As detailed in a previous article on www.emergingmoney.com, Republic presidential contender Dr. Ron Paul wants to abolish the Federal Reserve.  Rather than a central bank with a fiat currency, Dr. Paul would replace this with a gold standard.

Dr. Paul’s contention, as outlined in an op-ed in USA Today, is that paper money is always debased over time.  In the op-ed in USA Today, “Fed causes booms and busts,” Dr. Paul wrote that, “Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar (NYSEARCA:UUP).  Since 1913, the dollar (NYSEARCA:UDN) has lost over 95% of its purchasing power, aided and abetted by the Fed’s loose monetary policy.”

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To many, the fact that Dr. Paul has never received a single co-sponsor from any other member of Congress for this legislation is ample testimony to the wisdom of these ideas.

However, whatever is done to a fiat currency can be done to any replacement. If the US dollar were replaced by gold (NYSEARCA:GLD) or a basket of commodities, that too could easily be manipulated by the public or private sectors.

An example here is the way oil (NYSEARCA:USO) fluctuates.

According to Rex Tillerson, CEO of Exxon Mobil (NYSE:XOM), about half the price of oil is due to speculation as it should be trading around $70 a barrel based on economic demand.

The rest of the price reflects speculation.

Written By Jonathan Yates From Emerging Money

Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.


NYSE:GLD, NYSE:UDN, NYSE:USO, NYSE:UUP


 

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  1. Daniel D
    January 18th, 2012 at 15:15 | #1

    This article was brainlessly written. So you point out that gold, like Oil fluctuates rapidly? You have your facts confused here;

    1) Gold can’t be compared to Oil. Gold is scarce and Oil is abundant.
    2) You’re measuring their values relative to the dollar which is the cause of your ‘fluctuating’ numbers. Gold and Oil fluctuate _MUCH_ less when you use an objective median to measure them, like other scarce commodities.
    Take a look at Kitco, they use an objective model to base the value of good relative to fluctuations in the currency.

    Precious Metals Date and Time Last (Bid) Change due to Weakening of USD Change due to
    Normal Trading Total Change
    Gold Jan 18, 2012 14:11 1658.20 +10.90+0.66% -4.30-0.26% +6.60+0.40%
    Silver Jan 18, 2012 14:11 30.46 +0.20+0.66% +0.20+0.67% +0.40+1.33%
    Platinum Jan 18, 2012 14:11 1518.00 +10.00+0.66% -11.00-0.73% -1.00-0.07%
    Palladium Jan 18, 2012 14:10 665.00 +4.30+0.66% +9.70+1.49% +14.00+2.15%

    http://www.kitco.com/kitco-gold-index.html

    It looks a lot to me like the dollar is having a bigger impact on rare metal prices than the buying and selling of those rare metals.

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