Monday, March 30, 2009

All the Gold in China

So how much gold does China really have?

Occasionally a discussion in the 'comments' section is the genesis of a Thought that warrants a new post. Hat tip to Martijn and Max Keiser for this one.

Watch this 10 minute video. It is a good discussion about what is needed to create a new reserve currency...

In the video, Max Keiser essentially says China is not a worthy adversary to the dollar because it only has 600 tonnes of gold.

Max is referring to the World Gold Council's official accounting of CB gold when he says that China only has 600 tonnes. These numbers are based on voluntary reporting by the members.

If you go to the Wikipedia page, you will notice that China is the only country in the world with a nice clean number reported, 600.0 metric tonnes exactly. All the other countries have reported fractional numbers like 765.2.

While you are there, you can click on the History tab at the top, and then go to the earliest version of the page, which happens to be back in 2004. You will notice that the numbers haven't changed much. In fact, China hasn't changed at all.

And remember, China recently announced it's desire to obtain 4,000 tonnes of gold... officially.

Back in 1998 Another wrote about China accumulating a lot of gold through back channels that would not affect the price or show up on official records. According to Another, the special ongoing deal between the dollar faction (US and UK) and a few Middle East oil producers was noticed by China. And China wanted a piece of this deal. Here are a few references from Another...

Sir, Some think my thoughts are as "hogwash"? Several CBs use "agents" to buy gold. Some agents, small, some large, some "BIG". They buy much from $365 down, all last year. Even today, it does not show. This world, it is strange, yes? I would say "Big Trader" has little time for "washing the hog"! But you sir have a large shovel and dig very deep!

It is written, "all holes in earth lead to china"!

Any nation/state can put it's economy/currency on a gold standard. They only have two requirements. Own a stockpile of gold and raise the price very high!

In the past, when currencies were gold, a nation could not lower the amount of gold backing it's currency ( raise the price of gold ) because it lowered the currency unit worldwide and created payment imbalances. Today, no nation/currency is on a gold standard. The first country that starts will own the rest for some time.

Find me a country with many needed resources, little debt in relation to the assets and a national pride to lead? Let them price gold at many thousands not only in their currency but also in their resources! The world would buy from them, cheaply in gold but dearly in all other unbacked currencies. The markets would do the rest!

The large modern currencies, of today have only debt ridden economies to back them. They cannot change as debt blocks their path. "To change is to live and to live, some debts must die". The owners of much of this debt must lose if change is to occur. Even the new EURO will not be backed by gold! It will HOLD gold only as insurance against the worst outcome, war.

Yes, an oil state comes to mind! It could even be China!

I think, China was buying a great deal of gold and gold commitments ( paper gold ) thru a HK trader. They became much of the "not enough physical gold " problem for the oil/gold trade. China dumped much of this paper and continued to take in gold even today. Japan is a story of "no happy ending" as they are seen as "not aligned with Europe" or the BIS way of things. The EURO may send Japan down with the USA dollar! Asia will be lead by China, as they do understand a "Euro world". The ECB does know that "all holes in earth, lead to china"!

They brought the Chinese onto their side by neutralizing the rest of the Asian competition. China hates Japan and would like nothing better than to watch them die as they stick with the US and the dollar. China also picked up huge gold holdings these last few years with the help of the BIS. They will easily fit into the Euro world and enjoy a massive trading block with Europe!

Sir, I feel he is correct in this thought. Europe does grasp for a relationship with Asia as the US did have with the Japan. It would build a mighty economy on a foundation of oil and gold as backing for new money. As China and Arabia was once a part of the Europe economy, in a small way. They may now return with no fear of Russia. Britain? A lost nation. Japan? This one is "of the American Economy" and is to live and die by it! They will seek your Alaska oil before loss of face with gold. A dead Yen be a dead Japan.

Mr. Powell, In China, persons own gold for reasons that reach far from the past. They see the price of gold, in dollar and Yaun terms, not as gold value rising or falling but as these currencies rising or falling. As such, gold is viewed as "the stable wealth" and currencies as the "changing asset value"! Not unlike the Dow Jones stocks, always moving, so it is of the paper currencies of today. . Much is written of how gold does not come to China, as it is "expensive" and "citizens have no money to buy"! I say, they have money, just not your paper money, as they were taking in gold from before the birth of currency and will do so till the end of time! In that country, China, where gold was purchased in great quantities, from before the existence of America, this will not change if the Yuan is devalued.

What will change is the currency China uses in world trade. They have yet to "secure" the Euro against their US dollars held in Hong Kong. They will make this trade for the benefit of their "old trading partners" that ended with the "Orient Express"! If traders sell gold as the Yuan is devalued, I think that gold will ride this train route to Berlin, Yes?

Poland and China are good customers for the BIS. This is real physical gold they are taking out of circulation, not the pay me back when you have a chance lease deals. They really do have the IMF/Dollar countries over the barrel. Under these conditions it's easy for them to drain the Canadian gold reserves. Soon, these goldless countries will be left with nothing but high yield US dollar treasury notes. Later, when new issues of this paper is yielding 15%-20% these Central Banks will wish for the day when they held an assetthat offered no return! Gold!

The world currency crisis is heading for resolution. I think most of the reallocation of reserve assets is complete. Now the war can commence. The Dollar NEEDS a lower gold price to keep it up. London tried to use the Russian gold story as an excuse to send it down. My understanding is that whatever collateral was freed up from the USSR , the BIS picked up for others. It left the brokers selling leases for almost nothing or 1/2% or so. No one was buying them so the rate just fell on no volume. This was a lucky move for them as the perception was that massive sales were taking place. I don't think the BIS wants to be seen as a currency destroyer so they are doing the buying quietly.

As Martijn said, "the plot thickens..” Let's dig further, this is getting interesting... In 2001, FOA mentioned 'Big Trader' in this post...
Japan is a different problem. They have been locked into the US dollar economy for so long that they cannot escape. There is simply no way that China will let them into the Euro house. The HK / China central bank system, also known as Big Trader, simply wields too much economic sway between Asia and Europe. In historical precedent, the orient express always headed to Europe and never saw "The Japans".

Actually, Japan doesn't want to go there and has risked a decade of time waiting for some economic change in the US. I have said from way back, that Japan will go down with our (US) inflationary tide. They will waste away their dollar assets following our lead. Those that think that these peoples want to be part of a third world currency block do not know them. I do,,,, but that is another story.

With this in mind, let us jump back to 1997 and peek at a few times Another mentioned 'Big Trader'...
When everyone that has exchanged gold for paper finds out it's real price, in oil terms they will try to get it back. The great scramble that "Big Trader" understood may be very, very close.

Now my friends you know where we are at and with a little thought , where we are going.

If real physical gold trading dries up it's price will rise forcing down the value of oil. All this year physical gold volume kept drying up as paper short volume exploded. But,each time before a squeeze started to run the price the CBs would sell thru LBMA . You see, when paper trading ( of anything ) volume dries up it's a bearish sign but when real physical gold volume drops it's bullish! Thats because gold is being cornered on a scale never seen in history. LBMA is doing it's best to show real volume exists! The problem is, "if the CBs don't expand their roll as "primary suppliers" LBMA will implode and in the process create the greatest bull market in oil and gold the world has ever seen. That is why some "Big Traders" are holding ONLY gold as events unfold. Interesting, don't you think?

A big change in the gold market actually started last spring. You couldn't tell by the charts or news stories but it had the CB trading rooms going nuts. Up untill then they were using 3rd party transactions to sell, then the boomshell hit that the Merchant Banks were doing deals for 10 to 20 times what was offered! Well "boys will be boys" and someone is now stuck, big time! That's why "Big Trader" and his bunch closed out all paper and pulled in bullion. Don't worry about the CBs selling everything, the market is huge compared TO WHAT THEY HAVE! And Comex is nothing, if "only a silly game". Worldwide trading in gold could be cut in half and still equal all the metal in existance!

Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people ( middle east ) started to exchange their existing paper gold for the real stuff.

One more thing, Big trader left HK some time ago and is now in a waiting game.

Big Trader is ( was ) from HK and is in the business.

Date: Sun Nov 09 1997 21:58
Shek ( home ) ID#287279:
Another, 6-7 months ago, a poster ( BigTrader ) made similar predictions to yours. He even gave timeframes. His final and boldest prediction coincided with a big drop in gold prices. BigTrader vanished from this site.

Big Trader has vanished from view, but he and his gold still exist.

The great mistake by the BIS was in underestimating the Asians. Some big traders said they would buy it all below $365+/- and they did. That's what forced LBMA to go on a spree of paper selling! Now, it's a mess.

At some point the fire in Asia will drive all of them into gold. It will end at that time.

ALL: I do not offer to prove my thoughts. If what is written was easy for all to find, the information would be of no use to you.

"Today, the paper gold market only affects the physical as the price is pushed down! It is the physical market that destroys the paper gold as price rises. In a falling market, paper can be settled in physical gold or cash! In a limit up market, paper can only be settled in more paper or cash!"

It is of this knowledge that wealthy ones and some CBs are taking in physical gold.

Look to LBMA, for currency looking for gold! Compare the Comex average open interest with it's average daily trading volume. Now use average daily trading volume at LBMA and convert to open interest in London, using comex ratio. Here you will find "real currency" in "paid for" gold derivatives ( not futures ) ! This money is now looking to convert to physical! It is caught in this paper with no way out! Know that this amount covers not CB gold moved by big trader! That wealth is safe, as it is for the good of all in those countries!

On a closing note, I will point out that nothing at all happens in China without the blessing of the Communist Party elite. It is truly a two-tiered society in China. There are the people, and then there are the Communist Party insiders. These insiders live extremely well. And they use the Communist system for personal gain in any and every aspect of life. So if the "official" gold held by the BOC belongs to the people of the People's Republic of China, rest assured that the actual decision makers have also set some "unofficial" gold aside for themselves.



Martijn said...

Not really on topic, but here is a video of N. Taleb presenting an excellent summary of the flaws in the banking system.

Martijn said...

More on topic: we could consider the latest GM move to be also aimed at strengthening the position of Helicopterman et al. for the upcoming G20 meeting. With this move America tries to put out a signal that they have set limits, know what they are doing and are still in control.

So even though the dollar is diagnosed with a terminal disease, the doctors do not intend to make haste in pulling the plug.

In the meantime the various participants continue trying to reshuffle the cards.

Mark said...

When I read Another, I can't help but wonder if AGW is nothing but an attack on oil for economic reasons, under the guise of scientific "benevolence". That would help explain why "the debate is over" when not one can say when it publicly took place, and between whom.

Martijn said...

Currency swaps also starting to get interesting..{9229A1CC-3B26-4694-A82C-1D24927C4433}

Anonymous said...

Antal Fekete has another mind-blowing essay, but in the end cites and sides w/ Denninger(?)(!)
He states that Gresham's Law will result in a differentiation between old FRNs (real money) and "Bernanke Bucks" (Monopoly money). That outcome is just plain bizarre, no? All paper is "confidence" money, so splitting paper as "good" and "bad" when they are backed equally by the same issuer makes "usage" value impossible to enforce. A black market in "old dollars"? Seems impossible to spring up on its own from the masses.

FOFOA said...


I had that same thought about GM yesterday. Is GM going bankrupt or being nationalized? Those are opposite directions, yet it is not clear.


Hehehe... I had to google AGW to see what you were talking about. I had never seen that acronym before. I think it is very clear that the Global Warming "movement" is an affront to oil and a move in the direction of a one-world government. To me it is confirmation that the real PTB have splintered into many opposing factions.

Anon and Martijn,

Thank you for the links. I am slow on the uptake today. But it is always a special treat when I wake to a new piece by the good Professor.


FOFOA said...


Just read Fekete. I see what you mean about him and Denninger. But this idea about diminishing returns is completely valid. Neither Denninger nor Fekete are completely wrong. But they are both missing a couple ingredients.

Here is the very first paragraph of Fekete's article. "The paper mill on the Potomac is furiously spewing up new money. According to the manager of the mill, as indeed according to the Quantity Theory of Money, this should stop prices from falling and the economy from contracting."

This says it all. He is not differentiating between inflation and hyperinflation. He is looking for a rising economy to signal any inflation prior to hyperinflation. And he does not differentiate between asset deflation and monetary or price deflation. I wish Fekete would read those Amerman pieces and comment on them.

Fekete is clearly brilliant. But I think part of his weakness is that he is such an avid proponent of the gold standard. And as such, he looks only back to pre-1971 or 1933 for the solution to our problems. And he feels no need to consider other options like Freegold, a freely floating "price" of gold in parallel with many world fiat currencies.

An interesting distinction between Fekete and Denninger is that Fekete says that the marginal productivity of debt went negative in 2006. But back in November 2008, Karl Denninger warned that we were dangerously approaching that right now.

Reading his section on Hyper-inflation versus Hyper-deflation, it really feels like the good Professor has been reading too much Denninger. He makes the same arguments, missing key points that I have been beating to death in my many posts on the "flations".

In my humble opinion, his theory of Gresham's law relating to older dollars is pure fantasy. I would say it is laughable, but I respect Fekete too much to use that word. What people will actually hoard will be gold, silver, food, cans of gasoline and anything else of real value in a crashing economy.

I am truly disappointed to see Fekete quoting Denninger like this I'm afraid his independent thought process has been corrupted by some flawed ideas now. It is a shame.


Martijn said...

At this moment we also have the German minister of finance Steinbrück saying that the stability of the euro might come in danger if the budgetary agreements are not met (probably main reason for the euro falling today).
So we have Helicopterman printing like crazy and still the dollar did not decline that much against the euro.

FOFOA said...

Jim Sinclair alert...

Dear Comrades In Golden Arms,

1. The change is not abrupt. It has been cooking for years.
2. Yesterday the change was set in cement as completed.
3. GM is only the first.
4. From now on rather than public corporate management looking to stockholders, their vision will be towards Washington from whom they will take their clues to act.
5. Finance, having taken over government, now has taken over public industry.
6. It does not matter how you define this in terms of ism.
7. The American Dream is dead.
8. The US dollar is dead.
9. Gold is your only lifeline because investments are over (see Monty's comments on volatility). I mean lifeline in its most literal interpretation.


Having lived in India for a significant time, I am used to seeing pictures of living people with air brushed or light induced figures of halos over or beside their heads in their public pictures. Please see the front page IBD photo of the US President today.

I think this is the picture he is referring to... Halo


FOFOA said...


It is frustrating to watch how long it takes for reality to manifest itself visibly. But just remember, the dollar's strength is an illusion, created in part by panicked capital flows, and in other parts by Cayman Island-based accounts controlled by Goldman and JPMorgan and fed by the Fed. (See Jim Willie and his evidence of recent PPT actions).

The Euro on the other hand is based on some solid principles. It is not perfect and it has some real problems right now. It is even possible that those problems could collapse the Euro. But it is unlikely in my opinion. For one thing, the Euro is backed in part by required gold reserves which are marked to the market price of gold as wealth reserves for the member countries. Also, because it is multi-national, its controlling organization is much more independent from political pressure than the Fed. And it is therefore more likely to stick with its anti-inflationary mandate.

As Another once said, "Time will reveal all things".


Anonymous said...


I don't know if you have seen this link or not.!-Growing-Transatlantic-tensions-on-the-eve-of-the-G20-summit-An-illustration-of-Wall-Street-s-and_a2940.html?PHPSESSID=7f96eb38796490220a969131e62

FOFOA said...

Hi Anon,

Yes, I saw that LEAP/2020 back when they released it. Did you see the open letter to the G20?


FOFOA said...


Here's a hyperlink to the Taleb video you posted...
Nassim Taleb video

Nassim has a valuable perspective on the world. I incorporate his methods into the way I view the world.

Did you see my post on him and Benoit Mandelbrot?
Fractals, Chaos Theory and Black Swans

Then More on Chaos Theory.


FOFOA said...

And indeed, those new currency swaps should be hair raising to Helicopter Man!

FOFOA said...

Martijn, Just for you!

And one more.

FOFOA said...

Chris Powell on Fox News talking about the gold in Ft. Knox and the government rigging the gold market.

FOFOA said...

A very thoughtful comment over at EconomicRot...

The Stimulus package is a facade. It's purpose is to cover the US government's exit strategy, which is in the midst of being executed.

We know the USD is failing. We've known for some time. We also know the 'stimulus' approach can't work. It bolsters an economy for a short period, with the net result being inflation and lessened faith in the dollar. The government is counting on this.

At present, the US government is asset poor and debt ridden. If international creditors start knocking, the government is bankrupt. To combat this, the US government needs assets. But demand for the dollar is weak internationally, and the remaining buyers (China and Russia) are both expected to propose a world currency at the G20. International assets aren't for sale in USD, at least not in the volumes the US requires. Luckily the US doesn't need international buyers; Corporate America is at the bargaining table.

The government is converting free printed capital into assets under the guise of a bailout program. It's dollar conversion on the only remaining soil where the USD is still widely trusted. It's a brilliant and ruthless strategy. Major industries are being offered bailouts paid in failing funds, for which the government can secure ownership (assets), improving it's debt/asset ratio. If the government gains enough ground before major players catch on, faith in the dollar could be restored. The US lifestyle would still adjust, but the government would have returned to a viable operating position. If faith in the dollar is not restored, the US government's newly acquired assets can be divided up amongst the nations that own the credit notes. A restructuring of ownership occurs, and life resumes at the newer, more sustainable level.

The plan is brilliant. By simply siezing control of Corporate America, the government can fund an exit strategy. If OPEC flips to a new global currency, or if there is a bank run on the US government before the plan is enacted, it will fail. But if the 'stimulus' package buys enough time, the US government will be just fine. :)

Martijn said...

Helicopter Man is hilarious!
I've been following Leap2020 for quite a while, they have a rather good track record.
The other Taleb video is interesting indeed.
Choas theory is interesting too, but I need to study a bit more.

As one should always look for evidence of being wrong rather than information confirming being right here's a discussion of people not really adoring Jim Sinclair:

Martijn said...

I tend to agree with Taleb about the world being over optimized: small increases in demand can lead to major price jumps, espicially in agriculture these days probably.
Gold is perhaps facing some pressure too.
As for the "historical"gold/DJIA rate: I believe the rate has increased al the way since the 1900s where it was around 1:1 tot 1:15 or 1:20 these days, which we've already ducked...
So I believe gold is under some upward pressure from currencies possibly collapsing, but on the other hand either equities could go up a little or gold could decline in order for the historical (upward moving) ratio to restore.

Martijn said...

And for who's interested here's Schiff interviewing Marc Faber..

Although it's a bit of one kookiemaker asking another whether bisquits taste good it has some interesting quotes from Faber.

Martijn said...

As for the economicrot comment: interesting view indeed. However, I wonder whether the "assets" currently being bought truely deserve that term. The bailout and stimulus dollars large go into banks that are not very solvent, and especially banks that own quite some "bad loans". Although, as is argued by some, those loans are not as bad as thought, they do remain to be "future dollars", that by that time may have lost quite some worth due currency debasement/inflation.
So, what value is really bought?

Martijn said...

Posted a bit too fast, excuse me for the spelling errors in above post.
(..and stimulus dollars largeLY go into.. / ..worth due TO currency..)

FOFOA said...

Hi Martijn,

Jim Sinclair has a lot of haters out there. I recognize those comments. I think I saw them a while ago. The haters love to criticize him after he says "This is it, it is now" and then the world doesn't blow up immediately. But if you really understand what Jim is doing, there is nothing to criticize. He is not being an alarmist. He is not selling anything. He is only trying to help people protect themselves as he has protected himself. And in fact, when he has made his more dire announcements, some serious shit was happening behind the scenes.

Glad you liked Helicopter Man. It was tough to get my undercover PI inside the Fed building to snap those pics, but well worth the effort.

Regarding the Dow/Gold ratio, I ultimately expect it to revert to the mean and then to overshoot as a phase transition takes us to a new paradigm where we will remain for at least a generation. Regarding other gold ratios, I wrote a post called Ratios presenting an alternate view to the commonly accepted one.

Regarding Schiff/Faber... I laughed out loud at Kookiemaker! If you understand the difference in English between cookie and kooky you'll understand why.

And as for the comment posted on EconomicRot, think about this. When you sell something to an entity that can literally PRINT the money it pays you, is that a fair exchange? And does it really matter how much they pay? Imagine all the gold in Ft. Knox is gone but Geitner decides he wants to replenish it. So he's going to try to buy 8,000 tonnes of gold on the open market using newly printed dollars. How much do you think he would be able to buy? Note that it doesn't matter how much he pays because he can print for no cost. So he can bid any price at all. Do you think he could get all 8,000 tonnes?


FOFOA said...

Jim is not the best writer, but his thoughts are always clear...

"The key to the transmission of latent money creation such as the payment to AIG in bailouts which moves into AIG from bailout schemes out the back door to winners on the toxic OTC derivatives is velocity of money. As velocity of money increases, the latent M3 becomes present time M3.

Normally it takes a recovery in business activity to stimulate the Velocity of Money, which is an engine of inflation price wise.

These are not normal times.

Never has any government dared to create in one year monetary inflation equal to the GDP of that country. This is going to be an accomplishment of the USA in this year.

Every hyper-inflation that has ever occurred has happened when Velocity of Money was stimulated by a loss of confidence in the currency unit in the midst of a period of horrid business activity.

This is what will bring hyperinflation to the US dollar and price inflation in the midst of a deflationary depression. There is no means to drain this liquidity regardless of what the Fed would have you believe. There is no exit on this Highway to Hell as the president of the EU labeled it."

Martijn said...

Haha, that was a typo, but I understand kooky indeed.

As for the assets: what I ment is that the so called assets Geitner is buying are not really assets as well..
If we take it extreme dollars are toilet paper and worthless, so the exchange would be unfair, but on the other hand: banks and bad loans (the assets being bought by Geitner) are also crap.
Toilet paper for crap is not the best deal in the world I believe..

FOFOA said...

That is very true, the paper assets are junk like used toilet paper. But what the commenter was referring to is government control of hard assets, like buildings, land, factories, existing inventory and intellectual property like designs and proprietary knowledge.

The commenter is claiming that if the government can get enough hard assets behind it quickly, that can act as backing for debt (held by China?), then China may keep buying the debt knowing it could possibly be exchanged for hard assets at some time in the future (China taking control of GM??).

Worst case, he's saying, those hard assets could simply be surrendered to Chinese ownership now in order to keep the political machine going, even if the rest of the country falls apart. (Hillary's guarantee to China??)

It's a pretty cynical view of things, but so far the empirical evidence is consistent with his thoughts.

Notice that he mentions OPEC flipping to a new currency as a threat to this plan. Remember, as long as oil is priced in dollars, there will be a "usage demand" for dollars. And if oil is priced in something else on the global markets, there will be no need for foreigners to have dollars. Right now, countries must first buy dollars, then they can buy oil. So they keep some dollars in reserve.

But those currency swaps directly with China that you mentioned are a big step away from the dollar. Those countries and China are now holding reserves of each other's currency... no need for a middle man.

Martijn said...

Correct about the swaps.

About the empirical evidence you suggest... the first steps in the described direction have been taken, but it is by no means assured that the path the commenter sketches will be walked. So far the evidence is rather that the governement is replacing shit with toilet paper, without really taking control of hard assets. It is an option for the future, but not a given fact.

FOFOA said...

You are absolutely correct. Obviously I don't believe the path will be walked. In fact I don't think the dollar has a prayer. In my opinion, the commenter gives the morons in charge far too much credit. But still, the issue of hard assets is an interesting one.

This is a good article about inflation and the value of hard assets.

I liked this line... "politicians borrow money when it buys them a loaf of bread and they repay it when the same money is worth only a slice of bread!"

Think of it this way, America borrowed the money when it was valuable enough to buy an army and world domination. But it will pay back the same money when it is only worth a few Manhattan skyscrapers, some factories in Detroit, a couple pharmaceutical companies and maybe an airline or two.

So who wins in this deal? Power can be fleeting, but hard assets live on.

Anonymous said...

What about the latent gold held by Indian families? I believe that can be a a very sizable amount. Some estimates put it at 10,000+ tonnes (annual official consumption is around 600 tonnes.) Could be possible considering the Indian public's voracious appetite for gold. I think it is part of the Indian DNA to be attracted to and own gold.

How does all this factor in the equation of the giants and the kings of the east?

If the era of Freegold happens imagine the freedom and leverage Indians will exercise.

Truly, as the bible says, the meek shall inherit the earth.

Martijn said...

Well, although it is often argued that freegold is fair, the transition to that system would be far from it. Some people would be greatly benefitted, while others would loose most of their fortune.

FOFOA said...

Hi Anon,

True, the little ladies of India have a lot of gold. And as the Arab Sheiks went from riding camels to flying private jets in two generations, so the Indians will in one. As Another said, (something like this), "They have already gained so much, they just don't know it yet."


What is unfair about Freegold? Is it not more unfair the way wealth is divvied up in a forced paper currency? What we will see is a change in people's thoughts as to what money really is and what wealth really is. And this change in thought will affect the greatest transfer of wealth the world has ever seen. You say it will be unfair to some people. I say that when Freegold arrives, those people's wealth will already be gone and they will welcome Freegold, even if they have very little gold. Freegold will not be seen as the cause of their loss. But it will be seen as new hope. It will be more fair to the common man than anything the bankers have come up with in centuries.


Martijn said...


Well, about greegold in itself I did not have any remakrt (yet). It is just that in the transition to it some people (those with gold) will see their fortune increase dreastically, which to other might seem unfair.

FOFOA said...

If the transition was forced by government, it might be unfair. But this will be the most democratic transition in history. Finally, it will truly be the will of the people. It is only up to the people to decide what is real wealth. And paper is right now failing them.

Martijn said...

Yes you have a point in saying that a transition brought about by the people is generally fair. However, I still do not agree completely.
The problem is however that at this moment people are more or less forced to participate in a currupted system. Those who do so to in good will and have saved some capital, might still see much of the gone in the transition. That does not sound very fair to mee. So, perhaps the new situation and system brought about by the transition is fair, and perhaps even the collective gains and losses brought about by that transition add up positive, the transition in itself is not fair to all people.

Balancing individual and societal gains and losses is a very ancient problem, and even in this transition it will not solved it seems (not that it should per se in order to bring about a better situation).

FOFOA said...


You say, "Those who do so to in good will and have saved some capital, might still see much of the gone in the transition."

But is this the fault of gold, or the fault of a failed paper currency system?

I think you are focusing too much on the immense benefit a very few people will receive because they had the foresight to transfer their wealth ahead of time. That will be real, but it will only be a small blip in history.

The real change that history will record is the emergence of a more natural system that will finally be fair to the savers for generations to come.

In the current system, many people receive a benefit similar in scale to Freegold, simply because they make trades based on inside information. This is truly unfair. Freegold will be much more fair than this. Even the wealth that is transferred during the transition will be fair, because it is based on open-source information, not inside information.

There are plenty of warning signs out there now. And this information is free to all. Those who fail to open their eyes will suffer loss. But not at the hands of gold or gold bugs. They will suffer loss at the hands of the dollar masters and the mainstream media. I am doing all I can to sound the alarm.


Martijn said...


I did not blame anything on gold as I said: "The problem is however that at this moment people are more or less forced to participate in a currupted system."

So, I agree with you that the current (dollar based) system has shortcomings, and that better alternatives are thinkable. However, the dynamics brought about by a transition to a better alternative will not benefit all people equally.

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