Excerpt from FOFOA

"
In fact, the current system is not fair to the savers of the world. It punishes responsibility and rewards reckless behavior.

This is all tied to interest rates. Before we went off the gold standard, there was no market for speculators to speculate on interest rate changes. That market has grown into a huge beast since 1971. And this is one of the main problems with the current system.

In a pure gold money system (and I'm just speaking hypothetically here, I'm not proposing this system) no interest need be charged for lending, nor earned by saving. In a pure gold money system, deflation of prices is the normal state of things as the economy grows. So if I loan you an ounce of gold for one year, when you return it to me a year later it will be worth more in terms of real goods because the economy has grown while the money supply has remained relatively stable.

On the other hand, if you save an ounce of gold for 5 years, then when you go to spend it, it will buy you more than when you started saving. So saving is rewarded. No interest is needed.

In the fiat system interest is a must, because the dollar is constantly losing value. But part of the problem is that interest does not keep up with inflation. And in order find a way to make interest keep up with inflation, you must put the principle of your savings at risk of loss. This is happening right now. Many savers are not only failing to keep up with inflation, but they are actually losing their principle. This is a major flaw in this system.

On top of that, governments actually MANIPULATES the rate of interest lower than the market wants it. This punishes savers even more.

So with Freegold, we don't have to get rid of fiat currencies for use in trade. But we the people will do our saving in gold. And since the world's economy will still be run on fiat, inflation will still rule the day, not deflation like in a pure gold money system. So the price of gold will float freely against all currencies and provide the stability of savings without the counterparty risk of stocks or bonds. And it will also act as a barometer against governments that print in order to fund their activities. It will expose the credibility of each currency in the world.

So as a borrower, you will still borrow fiat at a rate of interest. And the banks will still print through fractional reserve lending. But as a saver, I will have the choice to save in either Freegold or in the system that pays me some interest, but at a risk. I will have to judge the two options and decide which benefits me the most.

So no, the gold supply does not need to increase. It can, it may, or it may not. Doesn't matter. The free market will set the price of gold relative to the paper currencies in the world. And the key word is Free. With the US dollar gone as the world reserve, replaced by either regional currencies, or by a currency which benefits from a high price of gold, the price of gold will no longer need to be controlled. In fact, it can't be controlled once the dollar reserve system is gone. And that system is crumbling today as I type.
"
http://fofoa.blogspot.com/2008/09/freegold.html

Silver breaks $30, first time in 30 years. Sometimes the hype is right.

Dear Reader.

I've got a couple of things to say today. The first are a couple of quotes excerpted from today's 'Gold and Silver Daily',  Ed Steer's newsletter. The whole of which can be found here

1. Here's a GATA release from yesterday afternoon that bears the headline "New law lets Treasury diminish gold, silver coin production". The story says that the "current law requires the Treasury department to mint gold and silver coins "in quantities sufficient to meet public demand."... but the new law would require the department to mint gold and silver coins "in quantities and qualities that the secretary determines are sufficient to meet public demand." It's soon to be a whole new ball game out there, dear reader... so buy as many gold and silver eagles as you can, because you can bet your last nickel that the day will come [soon] when they just won't be available in "quantities sufficient to meet demand". The link to the story is here.

2. As I've been mentioning lately, the silver price [and especially the silver equities] are starting to leave their golden brethren far behind. At $60 silver, one can only imagine what some of these silver stocks are going to be bid up to. As our grand poobah [Doug Casey] is wont to say from time to time... when this bull market really takes the bit between its teeth, it will be like trying to get the entire contents of Hoover Dam through a garden hose. We're starting to get a sniff of that now. But, we ain't seen nothin' yet... so hang on tight. It will be the ride of your life before this is all over... and one for the history books.
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And the second is to let you know how I calculate what I call the 'Single Coin Street Price' for Silver Eagles - just so you'll understand the difference between spot price and purchase price.

Just know that even with the best dealer at the lowest premium it is still going to cost you (at the very least) 15% over spot and likely more, depending on your dealer. This additional cost covers three factors often overlooked when using spot price to gauge a good deal or not. These three factors are:

1. Since you always have to use a credit card to purchase small amounts, there's a credit card percentage of at least 2.75 percent, often more like 3%. I use 2.75 for my calculations.

2. There will always be shipping charges, often a minimum of $12.95, so it matters how much you buy. I add a per coin shipping charge of 65 cents - 1/20th of 12.95 (which is the charge for a tube weight).

3. And then there's the premium, which is the dealer's markup or profit margin, which is rarely less than $3/coin. So that's what I use.

So my calculation of 15% is the best possible scenario, a combination of the best possible circumstances. And it's what I or you MUST pay in order to obtain 1-50 coins. It's the basic cost of a coin.

Now add five percent to this 'basic cost' for my service of having done all the work and having the coin available for immediate purchase and sealed in an airtite plastic container, and the total 'over spot' percentage is very close to 20.

Soooo... I set my basic selling price for Bullion Silver Eagles at 20% over spot - with slightly lower rates according to increased quantity. It's not exact. I round up the spot price based on trend and expectation and knock down the overall total to the nearest buck or so for friendship sake.

So this is how I determine my 'single coin street price' and for small quantities (a few tubes or less) it is quite fair and saves you, the purchaser, the trouble of shopping around and waiting for delivery.  A coin in the hand is worth two in cyberspace. The whole point is to make you a convenient deal for a one-stop, no hassle purchase of a coin or two for your spare change. Kids are especially welcome. Larger quantities get better deals of course. Ask about co-op purchases for the absolute best wholesale prices.

At the moment I have 5 coins for sale at $35 each. (Spot 30 plus 20% or $6 = $36).

Also, I have a sophisticated spreadsheet for tracking profit margins daily, weekly and monthly. Just call me with your quantity, cost and purchase date, and I'll send you a weekly or monthly report on the rise in value of your holding.

For example: When we first started doing this in July 2010, our purchase of a box (500) of eagles was $9,840 at spot 17.92. (Don't you wish you'd been there then? :) That investment today is conservatively worth $15,000 - a profit of $5,160. That is 53% increase in 152 days, or 21.75 weeks, or 5.1 months. 50% in 5 months? Isn't that close to 10% a month? For all the accounts I'm tracking, that average holds constant.

Now in all honesty, there are potentially more lucrative investments, Junior Miners for example. And for large money, after having bought a sufficiently substantial quantity of physical, this is the way to go. There are some very good advisors available to help you with that and I'm happy to steer you towards them. But for the moment, and in the beginning, we should focus on physical, because, as mentioned above, there will be a shortage sometime soon, and the prices are skyrocketing as we speak, and there's literally no end in sight.

So now, my friends. Now is the time, at any quantity, large or small, to get started or increase your holdings to your capacity.  Sometimes the hype is right.

w/love
ali