How to Buy Gold Bullion

Federal Reserve Notes

Why are Federal Reserve Notes your best friend today?

The Federal Reserve is the central banking system of the United States. The Federal Reserve Act of 1913 created this body which is supposed to help keep prices stable with moderate interest rates and help maintain employment. The President of the United States appoints the board of governors or Federal Reserve Board. There is some oversight of the operations by the Government Accounting Office (GAO).

The Federal Reserve controls monetary policy in several ways. It buys and sells federal securities like bonds, sets inter-bank interest rates, sets reserve requirements indicating the amount of funds banks must hold in relation to deposits, and puts Federal Reserve Notes (dollars) into circulation.

Federal Reserve Notes are Legal Tender

The Federal Reserve notes are legal tender in the United States, They are pieces of paper backed by the full faith and credit of the United States.

In 1971 President Nixon dissociated the dollar from gold. Because there is nothing real backing them, Federal Reserve Notes are declining in value. A nice way to describe this is price inflation.

Inflation says that the number of Federal Reserve notes it takes to acquire goods and services is going up. But, in fact, what it means is that the purchasing power or value of the Federal Reserve Notes is going down.

Federal Reserve Notes Value

Why is the value of the Federal Reserve notes going down?

There are many reasons. The Federal government is spending more than it receives in taxes. Around 42¢ of every dollar the government spends is borrowed or printed. For example, Wikipedia indicates that for fiscal 2012, total revenues to the Federal government are estimated to be $2.627 Trillion. Mandatory spending will be $2.382 Trillion and discretionary spending will be $1.344 Trillion. Spending of $3.736 Trillion with an income of $2.627 Trillion means the Federal government is spending 1.418 times what they take in. Or, for every dollar they take in, they spend $1.418 or about 42¢ more than they take in.

The trade deficit is another problem for the Federal Reserve Notes. Since the 1970s the United States has worked to reduce tariffs (import taxes) on goods coming into the country. In the 1990s the North American Free Trade agreement went into effect allowing the free flow of goods across our borders with Canada and Mexico. This saw a large numbers of manufacturing jobs leave the United States for Mexico and other low wage countries. Increasingly, more and more goods are imported into the United States than are produced in the United States for export. In pre-recession years the annual trade deficit hovered between $700 and $800 billion a month.

The trade deficit and government borrowing work hand in hand. China and Japan are important importers of goods into the United States. Their payments, in dollars, for these goods are used to a large extent to buy United States debt.

But, many countries are starting to realize that the United States will never be able to pay off their debt in any credible way. Further, currency of the United States, Federal Reserve Notes, are backed by nothing but the word of the United States, which is rapidly losing influence in the world. Some world leaders have proposed that the dollar be replaced as a currency of exchange. Most notably, Saddam Hussein proposed using the European Euro for oil and Muammar Gaddafi proposed using gold in exchange for oil. The governor of the People’s Bank of China has indicated a desire to replace the dollar as a global reserve currency.

The tide of resentment against the dollar cannot be held back for long. As the dollar loses favor in the world, the value of Federal Reserve Notes for purchasing goods will decline dramatically.

Using Federal Reserve Notes for Safe Long Term Investment

Your Federal Reserve Notes are your best friends, however. While they are practically worthless in and of themselves, they can be traded for things of lasting value.

Compared to the currencies of other nations, gold and silver, for example, are and have been items of true, lasting value. You can look at the graph of gold prices and see that ever more Federal Reserve Notes are required to purchase an ounce of gold. The fact is, there is no end to this trend in sight.

As Federal Reserve Notes continue to lose respect in the world their purchasing power will continue to decline. This means that you now have an opportunity to exchange them for gold and silver that has for centuries been measure of value.

Exchange Federal Reserve Notes for Gold and Silver Bullion

We recommend gold and silver bullion in the form of bars and coins. Gold and silver bullion should be a part of your investment portfolio as a means of diversification.

Start accumulating gold and silver bullion slowly. As you see the potential for preserving your assets in the long term, increase your holdings.

Now is the time to exchange your Federal Reserve Notes for gold and silver bullion.

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