Photo: http://www.flickr.com/photos/11139043@N00/
The price of gold is soaring? Bring in your old gold and they will give you cash. Did you know that as broke as the U.S. Government seems to be, there’s one thing that we have that is not losing value and that is gold.
The Treasury Department of the United States has 261.5 million ounces of gold which is about 1/3 of the entire supply of gold worldwide. Our Treasure department has over 25,000 bars of gold stored in the New York Federal Reserve vault in Manhattan alone, five floors down, 80 feet below the street level.
Interestingly, other countries also store gold in our vaults, especially this New York Federal Reserve vault. Sometimes, when foreign countries buy and sell gold, they just take it in a wheelbarrow to another compartment in the New York vault.
The U.S. has other vaults scattered across the country. Other countries are buying up gold. Last week, India bought 220 metric tons of gold from the International Monetary Fund. Sri Lanka bought 5.3 metric tons that same week. Gold has remained stable for centuries.
The price of gold really doesn’t change a lot
In 1965, the U.S. had the most gold it ever has had, at 1.2 billion ounces. The treasury values our gold to be worth $42.22 per ounce. In 1973, the treasury also valued gold at that same price, $42.22 per ounce. Even though gold is valued at $42.22 per ounce, gold is selling for $1,100 per ounce right now. That means the gold that we, as U.S. citizens owns is worth $288 billion.
That’s a little reassuring when all we hear about is the poor economy, huge deficits, etc. But even with 1/3 of the world’s gold, we are talking about spending over a trillion dollars on healthcare. There goes the gold. Why don’t we sell the gold to pay off our debt or stabilize the economy? It is seen as a sign of weekends to other nations when a country starts selling its gold.
There could be implications stronger than just the money part of it. The experts say there is a psychological benefit to our keeping 1/3 of the world’s gold. So, it’s a good thing we own so much gold.
