I was having a discussion recently and the idea of a gold depository came up. The person I was talking to said, well that's just a bank. I'm not sure, so I thought I'd see what others thought.
So far as I know they are not. They are just secure locations that hold gold. Seems to me I heard there was gold stored in the WTC on 9/11 for instance.
It can depend. It depends if there are other institutions which can withdraw that gold in exchange for bank notes or receipts. Depending on how the word is defined, it might also be required for the depository to make loans with interest rates for it to be considered a bank. You have to realize that a word like "bank" does not have one definite agreed upon meaning. So it could be both true to say that a depository is bank, and true to say that it is not a bank, depending on what exact definition a person means by using the word.
I guess the US Code would be helpful: https://www.law.cornell.edu/uscode/text/26/581 I assume the word deposit above means deposits of U.S money?
If they are being used for collateral to make loans, then yes, they're banks. If they are being used as assets to back up a currency, it's a treasury deposit, still technically a bank backing loans as fiat currency. If it's just being stored, it's nothing but a reserve. One of the reason the base wholesale price is so high is many countries continue to build their stockpiles up in their central banks. Gold is still the only truly global hard money.
A gold depository is where one can deposit their gold for safekeeping. Often, the depository will allow one to transfer ownership of some amount of one's deposits to another depositor. They don't involve making loans or "backing up" a currency. (US dollars are not "backed up" by anything. They are fiat money.)
You're wrong, but obviously you don't understand what I said, so no need to waste time and effort here explaining something so simple.
Not sure what you think I'm wrong about. I described what I meant by gold depository. If you are thinking of some other sort of business then we're talking about different things.
To clarify what I'm talking about when I say "gold depository": A gold depository is where one can deposit their gold for safekeeping. Often, the depository will allow one to transfer ownership of some amount of one's deposits to another depositor.
If it was being stored there it was being used as collateral for transactions and backing commercial paper, probably for foreign business purposes. Countries like India and some ME countries like gold linked assets and exchanges. Private gold reserves held by brokers and traders is never just sitting there, it's working 24/7.
No. I'm talking about a business that will store one's gold for safekeeping. And it will also allow one to transfer ownership of part or all of one's gold to another depositor. I was asking if such a business as I described would be considered a bank, by US law.
Then why specify gold??? A sock drawer wouldn't be a bank. Apparently you think there is something magical about storage; get a safety deposit box. If a business is specifying gold storage then it is using it for something, usually as a deposit for loan reserves purposes.
My question was about a gold depository. And by that I mean a business that will safely store one's gold. And that would also make it convenient to transfer ownership of part of one's gold to another depositor, possibly by using technology simliar to a debit card. My question was whether such a business would be considered a bank under US law.
lol your OP doesn't ask that. And, yes, it would be a bank, whether the law said so or not. They are taking deposits and issuing credit on those deposits.
I never said that they would be issuing credits. I said that they would store one's gold for safekeeping. As far as being a bank, I'm not sure. The US code says: I assume they mean deposits of US dollars? Not gold or wheat or some such?
It was the vault for the Commodities Exchange. Apparently the DEA/Customs Service had a vault with hundreds of pounds of drugs down there too. My dad said the WTC buildings had a massive footprint beyond what you would normally think just looking at them on TV. I guess they had a lot of basement and sub-basement to work with until, well that happened.
If you really want to screw with the government, pay your emploee with pre-1965 silver us coinage. Of course at today's exchange rate of about twenty fiat dollars to one legitimate dollar the tax benefits are obvious. You can get a good hand full time for a morgan dollar an hour.
Of course it probably wouldn't be so simple as that. When the employee goes to trade those old silver coins for currency which is more liquid to use, he is going to be under a legal obligation to pay taxes on that. If I have a twenty dollar US coin and try to spend it, most ordinary businesses are only going to accept it at its face value of twenty dollars, and even then are probably going to need a lot of convincing. Theoretically you might be right, but I think in practice it would be more difficult, which is why no one is bothering to use this strategy.
And then your employee can buy a pair of shoes with a few morgan dollars, and the shoe salesman records $3 of income, again screwing the government out of taxes. Because he paid $15 dollars in cost of goods sold, so he posts an income loss.
Probably correct. I'd think the regulations would be designed for institutions that take depositor's money and then lend it out to someone else.
Sounds like an excellent business opportunity. There are lots of folks who would prefer to do a job or sell a product for x grams of gold than for fiat. And the good news is that such a business would not fall under the onerous US gov banking regulations.
Yup, or in other words- how does the spot price on a physical peice of silver or gold compare to that of bills of credit, as expressed in bills of credit? In 64' gasoline costs 25 cents a gallon. And you can still buy a gallon of gasoline for a quarter dollar. . But only if it's a pre-1965 silver quarter dollar.
