RoyOrlando

Examining the "Unprecedented Demand" for Gold Eagle Coins

Sorry but the most sinister answer is probably the correct one.

Where do people keep their money in order to purchase coins from the mint?
Answer: In a bank

When people go nuts and purchase silver and gold coins from the mint, where does the money come from?
Answer: The Bank

Where does the money go to?
Answer: The Government. It leaves the financial system. They do not have to buy the physical gold.

What happens when the banks start losing their deposits?
Answer: They go out of business.


It is my opinion
1 – People hold most of their metals buying funds in a bank or other short term haven.
2 - The government has recognized that a silent run on the banks is happening.
3 - The government figures that they are adding to the problem by supplying gold and silver coins.
4 – I feel in the short term (2-3 years) the price of gold will fall. (I won’t give my reasons here)

House Price Datapoint of the Day

Borrowing has to be taken back to where it was in the late 1930's. A person may borrow 2.5 times their annual salary for a home with 20% down. The median wage (2007) is $50,233.00 (wikipedia) therefore the median house price should be 125,582.50 just slightly below the 203,100 listed in the article. Unfortunately, the dose of reality that faces the U.S. is when there is overshoot there will also be undershoot. In theory, the highest median house price was 262,600 in March of 2007 (investmenttools.com) This means that houses overshot the median by 137,015.50, therefore, the median average may undershoot the median by 1/2 the overshoot. This leaves house prices somewhere around the 57,000 range (lower if the median wage drops over time).