Gold and Silver at the Time of the Great Depression
Before the Second World War, there was the Great Depression.
It was a world wide economic crisis which started in 1929 in the United States when the stock market crashed October 29, commonly referred to as Black Tuesday, and lasted for more than a decade until the early 1940s.
Rich and poor were devastated alike as income, profits, prices and trade dropped and unemployment rose.
The ones that took the hardest hit were workers and those dependent on primary sector industries like mining due to a decline in demand and with almost no alternate sources of job.
The Great Depression is now used as a model to study and debate on how far world wide economy can decline.
Around this time, the value of gold and silver held firmly, as precious metals usually does if there is an economic crisis.
Precious metals provided liquidity and financial stability.
In this way, they are the only things that you can consider real money.
Out of real money, the Federal Reserve needed at least a partial backing of gold for issuing credit and with gold rapidly depleting in its vaults.
In a draconian move, President Roosevelt signed Executive Order 6120 that made private ownership of gold illegal.
Once confiscated, the gold was then revalued higher, from $20 to $35 at the detriment of those who lost it.
Although foreigners could still trade dollars for gold, this was the beginning of what is known as the fiat, non-backed dollar.
Over the years, the "promise of gold" words on the notes were slowly removed until in 1971 President Nixon completely removed the direct convertibility of gold to United States dollars.
Silver also maintained its own value, although it is often considered inferior to gold.
In a way, because people generally look down at silver, it might be that this very fact will eventually lead to its increase in value.
Most will consider trading in gold rather than silver, because of the higher price of the former.
Those who wanted precious metals, but couldn't own gold, often turned towards silver.
Silver, could be legally owned and its price was much cheaper than gold.
It might be the case that this encouraged the Hunt brothers to accumulate silver as a defense against possible future economic crisis in the 1970's.
It was a world wide economic crisis which started in 1929 in the United States when the stock market crashed October 29, commonly referred to as Black Tuesday, and lasted for more than a decade until the early 1940s.
Rich and poor were devastated alike as income, profits, prices and trade dropped and unemployment rose.
The ones that took the hardest hit were workers and those dependent on primary sector industries like mining due to a decline in demand and with almost no alternate sources of job.
The Great Depression is now used as a model to study and debate on how far world wide economy can decline.
Around this time, the value of gold and silver held firmly, as precious metals usually does if there is an economic crisis.
Precious metals provided liquidity and financial stability.
In this way, they are the only things that you can consider real money.
Out of real money, the Federal Reserve needed at least a partial backing of gold for issuing credit and with gold rapidly depleting in its vaults.
In a draconian move, President Roosevelt signed Executive Order 6120 that made private ownership of gold illegal.
Once confiscated, the gold was then revalued higher, from $20 to $35 at the detriment of those who lost it.
Although foreigners could still trade dollars for gold, this was the beginning of what is known as the fiat, non-backed dollar.
Over the years, the "promise of gold" words on the notes were slowly removed until in 1971 President Nixon completely removed the direct convertibility of gold to United States dollars.
Silver also maintained its own value, although it is often considered inferior to gold.
In a way, because people generally look down at silver, it might be that this very fact will eventually lead to its increase in value.
Most will consider trading in gold rather than silver, because of the higher price of the former.
Those who wanted precious metals, but couldn't own gold, often turned towards silver.
Silver, could be legally owned and its price was much cheaper than gold.
It might be the case that this encouraged the Hunt brothers to accumulate silver as a defense against possible future economic crisis in the 1970's.
