Sometimes I get accused of having “religious beliefs” in gold. Why is gold so valuable – because it’s rare, and expensive to extract from earth (ca $450 per ounce). However, it is impossible to calculate a “fair” price. I am the first one to admit that gold has no earnings, no dividend yield. You might make a little money by lending your gold to a short seller (but then you might never see it back). Gold is the ultimate anti-money. I could have chosen something else, like copper or historic stamps or art. It’s just impractical to have a metric ton of copper in your backyard, and having spent only $8,000. Stamps and art will perish in fire and have high transaction costs.

The dollar is the currency of the United States and has been declared legal tender (meaning if you take a quart of milk at the grocery store and you give the cashier the price in dollars you have no more debt towards him resulting from the transaction), I get that part.

You think the dollar is the currency issued by the United States? The Federal Reserve being controlled by the US government? Wrong and wrong. Look closely at a dollar bill:

It says “Federal Reserve Note”. What you are looking at is a note, or debt, issued by a Federal Reserve Bank:

Now look at the circle with the letter “L”; this bill is issued by the Federal Reserve San Francisco (one of 12 banks).

The two only references to the government are the seal of the Department of the Treasury on the front and the “Great Seal of the United States”:

However, the Federal Reserve is not a branch of the government; it is a privately held organization. It has a “.gov” website (www.federalreserve.gov), but all you’ll find there are mostly profiles of the members of the Board of Governors. This website acts as Potemkin village.

The “real” website is www.frbservices.org – note that it is not a government domain. I will spare you the details on how the system works, but it boils down to representatives of the commercial banks controlling the Fed.

You might say “But doesn’t the President of the US chose the Chairman of the Fed’s Board of Governors”? Yes, but he can only chose from the candidates presented by the Fed (they make it easy – it’s only going to be one). One last hurdle is the confirmation by the Senate. Bernanke was confirmed by the narrowest margin (70:30) for any chairman – with only 3 days left before his term was to expire. Even Times Magazine had to be recruited to declare him “Person of The Year 2009” (12/16/2009). How can you vote “no” on the Person of the Year?

Back to our dollar bill. The reverse features an unfinished pyramid of 13 steps, topped by the Eye of Providence within a triangle.

The Eye of Providence is a religious symbol (the all-seeing eye of God, the Christian Trinity), but has also been associated with Freemasonry. Engraved at the base of the pyramid are Roman numerals MDCCLXXVI (1776), the date of American independence from Britain. At the top of the seal stands a Latin phrase , “ANNUIT COEPTIS,” meaning “He (God) favors our undertaking.” At the bottom of the seal is a semicircular banner proclaiming “NOVUS ORDO SECLORUM” meaning “New Order of the Ages,” which is a reference to the new American era.

And, finally, the slogan “In God We Trust”. The US dollar shares this slogan with only one other country – Nicaragua (“En Dios Confiamos”).

Now who believes religiously in the value of a printed piece of paper issued by a private organization? The ownership of gold pales in comparison to this.