Dear Claude, I don't actually know whether the digital Liberty Dollar exchanges 1:1 with the paper warehouse receipt or the Liberty silver pieces (which look and act like coins). I think that's the intention of the press release, though.
The claim that the digital Liberty dollar is 100% backed by silver does not mean that it exchanges at the spot price of silver. Instead, it exchanges at a $10 per ounce price of silver. I don't think NORFED claims any responsibility for setting the spot price of silver. So, why should they be expected to redeem at that price? Moreover, I can buy Liberty silver pieces at a substantial discount to the $10 face value. I'm currently working with a buying pool to get a price of $6.15 per piece. As you know, that's comparable to the pricing on similar one ounce troy silver pieces such as the Silver Maple or the Silver Eagle. I happen to prefer a one ounce troy silver piece of .999 fine silver which has a useful face value stamped on it. As for paying $10 to get yourself $4.50 worth of silver at the current spot price, that's a silly argument. You know perfectly well that there is nowhere in the world where you can buy only one ounce troy of silver and pay US$4.50 in exchange. The fact is that the spot price of silver is based on an ingot, or loaf, or one might call it a pillow, which has a thousand ounces of silver. Now if you want 83.333 pounds troy of silver, great. But if what you actually want is just one ounce troy, you are going to pay a premium to the spot price. If, moreover, you want to get that one ounce in a useful shape, such as the disc-shape which most folks call a coin, you are going to pay for the cost of engraving the design of the coin, the cost of designing that design, and the cost of minting the coin. Necessarily, these costs impose a premium, which you pay when you buy just one Silver Maple. So, don't let's be silly. The Liberty silver piece makes no claim about being 100% backed by silver. It simply is silver. And it has a face value on it. The same, as Craig Spencer points out, is true of the Silver Maple. It isn't backed by silver, it simply is silver. And so is the Silver Eagle. Of course, the Silver Maple (available from Cambist for $7.25 each plus shipping while supplies last) is .9999 fine; the silver Liberty is .999 fine, and I think the silver Eagle is about .99 fine or less. But, we can argue that these are comparable items, of identical weight. Do I think an exchanger would accept a digital Liberty dollar for one-sixtieth of a GoldMoney goldgram? No, I don't. I believe John Kyle has set rates for exchange among Liberty silver and the other currencies we support, and may have them published on our Cambist site. I don't happen to believe in a fixed ratio between gold and silver. In that sense, I'm much like the market in general. Neither a 14:1 nor a 20:1 nor a 60:1 gold:silver exchange rate makes any sense, because both metals have different uses. Sooner or later, they will trade at a surplus or deficit to the fixed exchange rate. So it made no sense for Congress to declare a fixed exchange rate in copper, silver, and gold in 1792. But, the Congress was not filled with economists at the time, so they did it anyway. The Silver Maple Leaf coin has a face value of C$5. So it is foolish to use it at a cash register. You say, "Who cares?" but I care very much. You see, I enjoy using silver Liberty pieces because they have a useful face value. I am able to buy them at a discount to their face value, and spend them at a profit. That means that they operate as money should - they can be spent at face value at a cash register. By way of contrast, sticking with US dollars for the moment, we have the American Silver Eagle. This coin has a $1 face value. Of course, it has an ounce of silver in it, and it has some numismatic value, plus its useful size and shape, so it sells at a premium to the spot price of silver. I would be a fool to spend it at a cash register. Of course, there is a value to the fact that the Silver Eagle is legal tender. It was made legal tender by an act of Congress back in 1985. Their purpose was to avoid the duties on exporting silver and gold, while at the same time avoid having silver and gold coins compete with the Federal Reserve Notes issued by their friends in the banking cartel. To me, though, the value of the face value on the Silver Eagle is that I can sell these coins to folks who seek to contribute to candidates for public office in the USA. Because the actual face value of the coins represents the legal tender value of the coins, it is possible for a campaign contributor to donate more *value* while still contributing within the (foolish and unconstitutional) campaign law limits. I suppose there might be something similar up in Canada. Again, the Silver Maple has a face value which is absurd compared to its true value, but that might allow a campaign contributor to do somewhat more good for his candidate than the immoral election laws might allow. For my own part, I don't contribute money to candidates because I don't seek political power, and because I don't trust those who do. The question of whether a Silver Maple or a silver Liberty is worth more is a question for the market place. I am of the opinion that there are probably fewer Silver Liberty pieces in circulation, so it may have a higher numismatic value. However, if you were to buy a thousand of them, you could get them at a substantial discount to the face value. If you bought a thousand, you could get them at less than the US$7 price you identify for your silver Maples. As for "will you rather buy a 1000 ounce silver bar" I think the market has spoken. Most people would rather not, as they have very few uses for that much silver in one big bar. Instead, they would rather have the coins, which are of a more useful form and size. So, even buying a thousand at a time, people pay a premium to the spot price of silver, right? Further, I think the market is beginning to realize that having silver pieces which look and act like coins and bear a useful face value such as $10 is even better than having ones which bear a C$5 face value. As for whether the Liberty is worth $10, I don't think you have established credentials as the sole arbiter of worth. A thing is worth what it brings in exchange. Obviously, a Federal Reserve Note bearing the face value "ten dollars" is indisputably "worth" ten dollars because I can use it anywhere to buy ten dollars worth of stuff. The same is very often true of the Liberty silver piece. So, it is worth ten dollars if I can exchange it for ten dollars of stuff, and it is not if I cannot. I have receipts to prove both points. I have receipts for purchases made with Federal Reserve Note dollars, and the same for purchases made with silver Liberty pieces. In five years, let's say the system fails, what is the value of the piece of paper that says "ten dollars" and is issued by the Federal Reserve System? Not a thing. But, there is a different piece of paper (blue in color) which says ten dollars, and may be redeemed for an ounce troy of silver. It will always be worth an ounce troy of silver, even when the system has failed and ten Federal Reserve Note dollars is not enough to buy *any* ounces of silver. But, I gather that you posit a condition in which the NORFED system fails. How could such a condition prevail? What is there to fail? They sell the money at a discount. They pay the storage fees as part of the redemption of the paper warehouse receipts. What could fail? Where is the risk? Suppose, though, that your condition does come to pass, and no *more* Liberty silver is ever minted. Let's say that it is made illegal to mint such coins, Bernard is hauled off to prison (not withstanding the ex post facto provisions of the US Constitution), and while there he is executed by a prison guard for having long hair and a smart mouth. (I kid you not, it has happened.) So, the Canadian Mint (Royal or otherwise) goes on minting Silver Maples. The US Mint goes on minting Silver Eagles. No more Liberty silver pieces are ever minted. What would the comparative value of these items be? You have some knowledge of numismatics, right? Scarcity is one of the things that makes one coin more valuable than another, even if both have the same weight and fineness of precious metal. You are thus very wrong to suggest that the Liberty "will not be worth more than a Maple or an Eagle..possibly less." I think that isn't how the market works. The idea that coins are not suitable to be used as a reserve for a digital currency is very odd. Why not? I think that e-Bullion does so. I have a great deal of respect for the e-Bullion products in gold and silver. The Bullion Exchange and Cambist happily exchange digital currencies for gold and silver coins. What's the difficulty? What makes them not suitable? With regard to paying $10 for Liberty silver, I won't pay it either. That's why I'm working with a group of buyers to buy at a discount, so later I can spend at a profit. As for a store of value, yes, you can certainly store your value in other places with equally good or even better results. No doubt the gold stocks are a great value right now. Doug Casey and Adrian Day suspect that certain stocks in gold and silver companies might be purchased today at the future annual dividend if the price of precious metals goes up just a bit. However, for "the best hard money available" I am convinced that you cannot do better than the Liberty silver pieces. They are actual metal money, they have a useful face value, and you can actually spend them at a cash register. As I have not yet evaluated the user agreement for the Liberty digital dollar, I am not yet able to say whether it is a good e-currency. But I'll letcha know. With specific regard to your collection, Claude, I am quite happy to ship you a Liberty silver piece for US$10 worth of GoldMoney. Imagine that! The silver plus the shipping. Check out http://goldbarterholdings.com/bonds.html for our GoldMoney holding, and be sure to e-mail [EMAIL PROTECTED] with the spend information. (This offer is for Claude, and for Claude alone!) With regard to your question about the Liberty dollars when silver is $15 an ounce, this matter is discussed on the NORFED.org and LibertyDollar sites, I'm pretty sure. As I understand it, the Liberty is based on a "$10 base" concept. If the spot price of silver should benefit from another pair like Bunker and Herbert Hunt, and transpire to have a US dollar price above $10 an ounce for any length of time, a new issue of the Liberty dollar would be provided with a $20 base. Everyone would also sell their surplus silver pieces for $15 an ounce, and enjoy the benefits of having value backed currency. They would also quickly redeem their warehouse receipts and original issue digital receipts for silver at the stated rate of redemption (one $10 warehouse receipt plus redemption fees for an ounce of silver, as stated on the paper warehouse receipt), and then sell those silver pieces to a bullion dealer. You see, at no time does anyone who accepts or holds Liberty dollars have less than an ounce of silver coming to them for every ten Liberty dollars in hand (there are minor storage and shipping fees to account for, but that's the basic exchange.) Thus, while you can argue if you wish that Liberty dollars are not really "worth" ten dollars, they beat the pants off that Federal Reserve Note stuff, which doesn't even burn as well as other paper. Claude, I appreciate your comments. It is always a pleasure to read what you write. You are truly a learned man when it comes to precious metals. Regards, Jim http://cambist.net/ --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
