Thursday, April 2, 2009

CB Gold Sales = Looting

Loot (1845) 1 a: to plunder... b: to rob especially on a large scale and usually by... corruption 2: to seize and carry away... to engage in robbing or plundering...

When Bernie Madoff realized the jig was up last November, he tried to quickly distribute the last of the till to his friends and family. There was about $300 million left at the time.

When Merrill Lynch went down last year they rushed through bonuses to the executives so that money would not flow through to Bank of America, Merrill's soon-to-be-owner.

When AIG realized there would be no way around going back to the government for more bailout money, they eased up on the negotiations with CDS counterparties, paying out more tax-payer dollars than necessary simply "to make friends and influence people".

The list of recent looting goes on and on. The basic idea is that when "the collective group" is in distress, individuals without morals will steal from "the group" for the benefit of themselves and their friends and family members.

There is no difference from a moral perspective between this and the looting during the LA riots in South Central LA.

Let's say I am the trusted manager of a Circuit City store that is going out of business in one month. I have received a liquidation plan from corporate headquarters that authorizes me to mark down all the inventory by 10% for the first week, 25% for the second week, 50% for the third week, and anything that is left can be marked down 75% for the final week of liquidation. So as the manager, I move a few 52" LCD TV's off the showroom floor and put them back in the warehouse. I keep them there until the final week when my friends come down and buy them at 75% off. I did not do anything I was not technically authorized to do. But did I do something wrong? Am I somehow less of a criminal than the South Central looters?

A Central Bank is the printer and controller of that countries' currency. And that priveledge is given by the confidence of the people of that country or group of countries. The gold held by a CB is the treasure of the people that gave that bank the right to print currency. In the case of the ECB (which recently sold some gold), the gold it holds was deposited by the countries which joined the union. And in the case of the IMF (which is planning a sale), the gold it holds was also deposited by member countries.

In the old days of the gold standard, when a certain currency was convertible to gold, that CB's gold could leave the vaults in exchange for the currency by anyone who held that currency. This kept the CB's honest and it kept their printing in check.

Today there is no such control and even though gold is still held by the CB's, it is also traded as a commodity on the open market. Under this setup, gold should flow INTO the CB's on behalf of the people. The CB's can actually print money to buy gold as a commodity on the open market now. There should be inflow, to protect that CB (and its people) against an unknown future. So why the outflow?

When CB's like the ECB or the BOE sell gold now, they say they are doing so "to raise funds". But why? They are the priveleged few who can actually PRINT new funds. So they say they are selling the gold to raise "foreign funds". But that is what currency swaps are for. If I am Argentina doing a currency swap with China, we both print the funds and exchange them at the current exchange rate. So with the ability to print unlimited paper, why would I part with the one FINITE asset that I hold? Is it an admission of the weakness of the paper I make? As a central banker, I am like that Circuit City manager, only my store is the CB. So am I distributing "the good stuff" to friends? Why? What's going on here?

Please give me your thoughts in the comments.



Mark said...

That Deutsche Bank gold cover in exact tandem with an ECB sale stinks in no uncertain terms. Helping their friends indeed. At least that gold ended up in the hands of unaffiliated buyers (I hope). Jim Willie is around the bend this week, but I say that with respect. This stuff is heavy, but history shows that what goes on behind the scenes would blow the public's mind. I remember the first time I heard the story about FDR and Stalin using a copy of National Geographic to divvy up Europe over the objections of Churchill. WTF?? was all I could muster. Sounds plausible to me now. Check out JW's latest:
G20: US$ Funeral, US Failed Debtor

FOFOA said...


Jim Willie has some controversial beliefs. But the value of Jim Willie is that he speaks the thoughts of the dollar's enemies. It's like reading their minds. Whether or not the events he believes are real, the thoughts are definitely real. And those thoughts will play a role in our future. The dollar's enemies are plotting behind America's back while Obama poses for photo ops and headlines. (They look drunk, don't they?) Obama's head is stuck in the sand like a big dumb bird.


Anonymous said...

Nice Theme !

Does not all the holes on earth led to China...

What would be in the essence to sell the IMF GOLD?

I could imagine the Chinese have lots of $, they see the value deterioration, day by day. They want now hard assets (to keep in their vaults) for this value. unfortunately the GOLD in USA has been (probably) gone, so the remaining GOLD is only the (probably on paper)IMF GOLD. That will not be enough, so after the transaction the price should rice to compensate the lost purchasing power.

I wonder what will happen the day the Chinese come to collect....
The varnish on the animal spirit could be evaporating immediatly

Anyway, it just a thought.


alek_a said...

If the IMF is indeed going to sell some of its gold, it is beneficial to them to see a higher gold price so they get more for it.

But, in this world of a virtual financial system, it will probably be just a deal to exchange virtual fiat for virtual gold. I doubt if it will ever see an open market that settles in physical.

I just cant see tonnes of gold leaving Fort Knox with an unknown destination. But, on the other hand, maybe they will all simply give up the physical foundation of the wealth of nations and arrange an extremely complex system of virtual checks and balances that can be used to pay and borrow in. Who knows?

In that way the financial masters of the universe win and will be able to keep the whole world in shackles since they posses the magic keyboards. Lets hear a 3 times Huraah! for the NWO.

Martijn said...


Did you already check out this link I posted from Max Keiser. It's about fiat currency systems and Max argues that we are currently not seeing a fractional reserve, but a negative reserve system. According to him the currency of the negative reserve system is the anit-currency called CDS. Only watch between 4:10 minutes onward.

And this one

"In the [gold standard] past, governments made some effort to make their money acceptable to foreigners, and capital flows were enormous even by contemporary standards,” the authors say. “Currency crises were brief and shallow – wholly unlike today. The money flowing around the world [in recent years] has been a claim on – well, on nothing at all. These monies are conjured by governments as pure manifestations of sovereignty. The vast majority of such monies are unwanted."

Might be an interesting book...

Mark said...

Let the IMF help pound gold down a bit, it is probably the last opportunity for the middle class to save and convert savings for ounce coins and bars. The 1 kg bar default is saying something to those who are listening.

Martijn said...

anit-currency should read anti-currency

Martijn said...

Would freegold mean a deflationary environment per se?

Al in all with an expanding gold base and fairly constant mining, the annual increase as a percentage of the base would decline, while world population expands at a constant percentage at minimum. Hence not enough gold would be mined for each new person. Correct?

Btw I am not arguing that a deflationary environment would be bad, just wondering whether it would arise under freegold.

Anonymous said...

The G-20 succeeded in getting everyone back on the $-standard.
They agreed on no competitive currency devaluations for the time being.

That's why gold has to be moved out of sight and remain under the radar.

Those who dare to challenge the benefits of the $-standard will experience financial/monetary terror.

The message is loud & clear : Stay all on the $-standard and let us fix the Crisis in the same way the Crisis has been produced.

Helmuth Schmidt today : We don't have a financial/monetary "system" anymore,...but a "constellation" !

Let's try to find leaders who can think & act out of the box.

Now we are all hostage of the global force of the $-financial industry that is bailing itself out of its own mismanagement (malgovernance) at the expense of innocent savers/productive workers.

We all walk in lockstep towards global devaluation with resulting hyper priceinflation. Emphasis on "lockstep".

FOFOA said...


Max makes some interesting points. Did you read The Quiet Coup? It's an excellent piece written by an ex-chief economist for the IMF. He talks about the oligarchs in third world countries that come to the IMF for help, and he draws many comparisons between these third world problems and America's current situation where Wall Street seems to be dictating to Washington.

Max talks about the dollar being backed by the indentured servitude of the American people. But with the tax base falling away now and debt defaults running rampant, the dollar is much more backed by the printing press now than by debt and taxes. I think the Chinese see this. And they know that backing the dollar by the printing press is nothing more than a giant Ponzi machine.

Soon the Chinese and other producing nations will want something real in exchange for their goods instead of paper with the ink still drying. All this talk about various world reserve currency schemes is simply skirting the issue that a real reserve already exists and is in wide enough distribution to power the system. And I'm not talking about SDR's. As Jim Willie says, the SDR issue is simply a straw man put up only to be later knocked down.

"Would freegold mean a deflationary environment per se?"

I don't think so. The major powers of the world are not going to give up their currencies or their printing presses. But what will happen will be a global recognition of gold as the only real "monetary" wealth reserve and the ultimate extinguisher of debt. So currencies will still be traded but trade deficits will be settled in gold. And people will save in gold for the long term.

So inflation will still rule the day and the value or "price" of gold will simply float with inflation. Gold will not be a currency, it will simply be a wealth reserve. If gold was the currency in the absence of paper currencies, then you could have a deflationary environment as long as the economy was growing faster than new gold could be mined. But that is not Freegold, and that will not happen.

By the way, Max looks like he just crawled out of bed. He's wearing a bath robe and his hair is a mess. Is he dating Stacy Herbert?


FOFOA said...

Randy posted this South Park over at EconomicRot. If you haven't seen it yet, you're in for a treat. LOL

alek_a said...


You write

Soon the Chinese and other producing nations will want something real in exchange for their goods instead of paper with the ink still drying. All this talk about various world reserve currency schemes is simply skirting the issue that a real reserve already exists and is in wide enough distribution to power the system. And I'm not talking about SDR's. As Jim Willie says, the SDR issue is simply a straw man put up only to be later knocked down.

Why do you think that the Chineese dont want in on the printing press business rather than gold?

I think that libertarians just got the biggest defeat so far on this G20. It was the beginning of the creation of the new financial order wher virtual money (SDRs) will be created (out of nothing of course) to support "industry and trade" BY THE IMF that answers to no identifible group of inhabitants (democracy?). I am quite pessimistic about freegold (fair value system) at this moment. What happened together with the FASB rules yesterday is an ESCALATION of the current ways and the rest of the world agreed!

Of course I would appreciate some counter-arguments from you (or other of our kind) just for the quiet of my thoughts.

Gargamel said...

Where did the gold come from in the first place?

Is some of it American Gold? If so then doesn't the American Congress and House need to okay the sale of OUR GOLD?

I am tired of the shams. This is our country and the FED has OUR GOLD. They Should not SELL OUR GOLD without OUR permission!

FOFOA said...

Hello Alek,

I wouldn't exactly say that the world agreed on anything. That little love-fest in London was little more than masterbatory in my view. A show for the press.

The underlying reality is that some countries produce more than they consume, and others consume more than they produce. This creates trade imbalances. These imbalances must be offset by the consuming country providing something of value to the producing country in return for allowing the imbalance to continue in perpetuity.

The SDRs are a scheme to make the producing countries think they are getting something new, by giving them a book entry of a credit in an accounting office run by a supposedly international body. This book entry is a potential claim on foreign currency, otherwise known as somebody else's paper money. It is a scheme because it does not solve the underlying problem of imbalances and it only appears to take some of the power of the printing press away from the Americans.

But as you know, the Americans control the IMF. The IMF has power over countries like Russia when they get in trouble, but it is the lapdog of Washington so it can't really say anything to its master. The IMF resides in America. America has the deciding vote in the IMF. The dollar is the largest part of the SDR. And how do you think they will give the IMF a trillion dollars? And if the IMF is going to get a trillion dollars, then why the need to sell some gold?

Meanwhile, we see China making some independent moves with its Yuan. Seems like it might want to get into the printing press business too, huh? There is even talk about the BOC issuing its own debt. Jim Willie suggested calling it the Dragon Bond. But think about this. Issuing debt is the exact same thing as taking a loan. And China doesn't need a loan. It has both a trade surplus and a reserve surplus. It's overflowing with surpluses.

What China needs is to paid with something honest for a change. Sure, China can print all the paper money it wants to. But what does it gain from that? It can ship that currency to Argentina and make Argentina buy goods in Yuan. But what does it gain? It is getting back the very paper it prints, plus a little more of someone else's paper.

It takes a lot of effort and capital to dig minerals out of the ground, refine them, mold them and make them into useful, valuable products. This is what China does for the world. And in return, the world manufactures paper and sends it to China. So for China to start making its own paper doesn't make a whole lot of sense, unless this new paper game somehow extracts real value out of the consuming countries.

This goes for all of the commodity producing countries. They are doing the work and shipping the goods, and getting paper in return. So what if they print their own paper only to exchange it for someone else's paper? What have they gained? Say they start pricing oil in a new middle eastern currency. So now the West has to make some new paper to buy the ME paper and then they can get the oil, right?

Do you see the problem? Paper can flow back and forth all day long, but what really matters is the flow of real hard assets and goods. That's where gold comes in. It can be exchanged as a hard asset. And once this starts, the price of gold will automatically rise so that the amount of gold in the world is enough to keep things flowing.

If a country runs out of gold, it will be forced to produce more goods and consume less, until it establishes a surplus with which it can start accumulating some gold. And in this new world, oil and other goods will always freely flow to those who have gold. You can produce real stuff to get what you want, or you can part with some gold. But printed paper will no longer settle the imbalance. It will work fine in trade up to the point of imbalance, then gold will be required.

A clearing mechanism for trade imbalances is what is needed. And SDRs simply won't suffice. In my post "The 100 year clearing", I quoted Fekete's story about a fair in the middle ages...

Let us look at another historical instance of clearing that was vitally important in the Middle Ages: the institution of city fairs. The most notable ones were the annual fairs of Lyon in France, and Seville in Spain. They lasted up to a month and attracted fair-goers from places as far as 500 miles away. People brought their merchandise to sell, and a shopping list of merchandise to buy. One thing they did not bring was gold coins. They hoped to pay for their purchases with the proceeds of their sales. This presented the problem that one had to sell before one could buy, but the amount of gold coins available at the fair was far smaller than the amount of merchandise to sell. Fairs would have been a total failure but for the institution of clearing. Buying one merchandise while, or even before, selling another could be consummated perfectly well without the physical mediation of the gold coin. Naturally, gold was needed to finalize the deals at the end of the fair, but only to the extent of the difference between the amount of purchases and sales. In the meantime, purchases and sales were made through the use of scrip money issued by the clearing house to fair-goers when they registered their merchandise upon arrival.

Those who would call scrip money “credit created out of nothing” were utterly blind to the true nature of the transaction. Fairgoers did not need a loan. What they needed, and got, was an instrument of clearing: the scrip, representing self-liquidating credit.

This story illustrates how currency works fine in trade. But if a fair-goer wanted to leave the fair with more goods than he arrived with (like America's relationship with China), then he had to bring gold coins to cover the imbalance or the difference.

Read my post. It ends with this...

And because this debt must now be cleared on the open market, the only outcome that I can possibly see is a world where FreeGold prevails. This debt will be cleared by the purchase of "real things", of which gold is a major component. I'll end with a quote from FOA which speaks about the "world's massive trade settlement":

During the events directly before us, any and all contracts will be swept along on this raging river of economic turmoil. Be they contracts for, gold, currencies, bonds, stocks or commerce, all of them will lose credibility as the worlds massive trade settlements shifts from one medium to the next....when the armies invade they grab the rare coins, art work and gold. Forget the currency!

All they accomplished at the G20 was a good press conference and some more printing to oil the squeakiest wheels. They didn't fix anything and they didn't change anything that will satisfy the producing countries for more than a week.

I am not counting on the governments to create Freegold. I am counting on them to fail at everything else they will try. And then Freegold will follow.

At least that's what I think.


Gargamel said...

We need to pay close attention here as the elite may try to use crisis as a means to create the new world order with a globally controlled currency. Watch how they use SDRs very closely. The next crisis might be a point for them to come "save us".

Anonymous said...

Do what those in power are doing: trade paper currency for gold and/or silver. Borrow if you can service the debt, and use the loan to buy metal.

That's what the central bankers are doing.

FOFOA said...

Hi Gargamel,

Regarding your first comment, I agree 100%. But the morons in control of the Treasury believe they have the right to do anything they deem to be for the public good. So if they deemed "selling gold to make the dollar stronger" to be in the public's interest, they might just do that. Or maybe they simply leased the gold to the big bullion banks who then sold it on the market and used the proceeds to buy US Treasuries paying them more interest than they were paying to lease the gold. This is called a risk-free profit, and is seen by TPTB to support the dollar and the Treasury market. The problem is, when it all falls apart the bullion banks will just go bankrupt and the actual leased gold will never be returned, or it will be returned as paper IOUs.

Regarding your second comment. Please see my response to Alek for my thoughts on the SDR developments.


FOFOA said...

Hi Anon,

I know two people who have done just that. One person took out a HELOC loan in 2007 to buy a bunch of metal. He is planning on walking away from his home with his metal. The other person I know used a credit card cash advance check to buy 20 ounces of gold.

I don't recommend these methods. They come with some risk. And as Jim Sinclair always warns, don't buy gold on leverage, which is what this is.

Personally, I am happily out of debt with a small stash of paid-off metal. I think I'll keep it that way.


Neo V1.0 said...

Commrcial Real Estate crisis has just started. (Soft Panic of 2009)so i think process of meltdown is now gaining critical mass.


Anonymous said...

Better to cash in a 401K or convert to GoldIRA vehicle. I have the option to take a loan against mine, with the worst that could happen being a conversion to taxable distribution if I got laid off. TPTB have already announced full intention to light my savings on fire, so why not preempt them? I can always pay myself back with toilet paper.

Frank said...


FOFOA said...

I finally watched The Obama Deception tonight, by Alex Jones. And what I took away from it is that people like us are so paranoid of the financial elite that we fear they will be able to pull of a miracle right now. They have been so successful for so many generations that we find it hard to accept that their reign is coming to an end. But the fact of the matter is that it has already ended. They just don't know it yet.

They have actually convinced themselves that the lies they taught the people are actually true. This can only happen inter-generationally. They now believe that paper wealth is the engine that drives the economy. This is evident in the G20 meetings. The only response they could come up with was to create more paper wealth and distribute it widely. But this does not help everyone. It only helps a few... temporarily. And unfortunately for them, paper wealth is NOT what drives the economy, no matter how many generations of Nobel Prize-winning economists have said so.

Just imagine what would happen if they printed up enough paper wealth to help everyone. Would it help? Of course not!

The system is dead and paper wealth is dying a painful death. It will take at least two generations for them to begin a new system. That is because this system depends on the confidence of the people. It does not depend on the decisions of leaders. That is a lie that you have been conditioned to believe. But it is patently false.

These financial elites are not the best and the brightest of our people. They are simply very wealthy people with a thirst for more. And in most cases, they are not so bright. They may very well have engineered this collapse intentionally. Or maybe they just created it out of greed and overreaching, unintentionally. It doesn't really matter. What matters is that they have destroyed the very platform on which they stand. They have destroyed the very machine by which they gather wealth. And they have destroyed the multi-generational work their forefathers did. They were too greedy, and they have collapsed the foundation of the system under the weight of their greed.

It is over. This collapse was already "baked into the cake" by the late '90's. That is why we heard from Another. It was not unexpected by those who knew. In fact, it has been fully expected for a long time now.

Gold is the ONLY currency in this world that is not burning right now, yet is still accepted on a global scale. So if you want to carry some of your wealth through this collapse and to the other side, get some. Paper wealth has been publicly exposed as the Ponzi scheme that it is. For the next two generations or more, people will know that if they want to store their hard labor of today for consumption at some time in the future, gold is the only way to do it.

And only once... only ONCE... will gold be revalued by the people in a way that will make some very rich, and others that were previously rich, very poor. This is only going to happen once. Not over and over for two generations. Only once... and soon.


Mark said...

To all my friends here, please indulge me one second...
FOFOA writes "They may very well have engineered this collapse intentionally. Or maybe they just created it out of greed and overreaching, unintentionally. It doesn't really matter."
I think it does matter, it matters very much, and you best hope with every fiber of your being that it is the latter, and not the former. For if it is the former, then there is a replacement plan "already baked in the cake" that will result in gold and silver not being the lifeline that we clearly see. If it is the former, then the power that has come with the wealth has reached its penultimate corruption phase, with the four horsemen to follow. I would like to think that we are still dealing with foolish greed, but caution everyone to ponder the difference.

Mark said...

PS - Denninger has been on fire this week. When he is good, he is like a laser guided missile.

alek_a said...


What Mark wrote above: that is why I have doubts - sometimes. When I posted I was feeling that way. We all have days like that I suppose... Sometimes a man needs some reassurance.

I cant be 100% convinced, beyond reasonable doubt, because I dont spend nearly as much time researching these matters as does FOFOA and others.

FOFOA: thanks. Even if the creditor nations get compensated in a form of virtual money (others call it "paper" but I like "virtual" more) that seems like the best compromise for them at that moment in time, the question of settling payment, either in hard currency (gold etc.) or in influence/power/resources, will be put on the table at the end of the day.

FOFOA said...


I do understand your thoughts. If we are witnessing a masterfully executed plan then that is truly frightening and truly evil.

But even under this scenario, which I believe has a relatively small probability, there are clearly opposing factions among "them". And I believe that while one faction desires control of a new world order, the other one is working behind the scenes to see that it doesn't happen. And that other faction has taken control of a very large amount of gold, knowing what the destruction of paper wealth by the opposition will ultimately mean.

The reason I believe this scenario has a very small probability is Occam's razor. The principle states that the explanation of any phenomenon should make as few assumptions as possible, eliminating those that make no difference in the observable predictions of the explanatory hypothesis or theory... When multiple competing hypotheses are equal in other respects, the principle recommends selecting the hypothesis that introduces the fewest assumptions and postulates the fewest entities.

Up to the point we are at right now, the observable collapse is consistent with many different explanations that fall on a continuum ranging from they have no control, to they have total control. And even weighing in the evidence that Alex Jones and others have gathered, the idea that they have total control over us requires a whole lot of assumptions spanning many decades and several generations.

Even granting them almost god-like powers, you still have to assume that they can hold back the rising tide of the oceans in order to pull this off. And that makes a plan such as this very risky, and therefore unlikely.

I'm sure the truth of the matter falls somewhere in the middle of that continuum. And when I say it doesn't really matter, I mean that the full force of the ocean is rising in one direction, opposite to their desire. If they set this in motion intentionally, then they have undertaken the most risky and difficult plan they could possibly come up with. Almost guaranteed to fail.

I have considered the worst case scenario, and based on everything I have seen, I don't think it can work. Recent developments may seem to dispute this, but I view them from a slightly different angle. I don't find them at all unexpected. I fully expect the powers that be to continue playing Santa Claus and for the recipients of their "good will" to continue support until things change for the worst in a big way. And we are definitely heading in that direction.

Then, we can assume they will use whatever happens to grab for more power from the people. But we can also expect that power grab to be opposed by many people who have nothing left to lose. This opposition is growing right now. I can see it in the mainstream media already. Many of the thoughts I had a full year ago are now spoken freely on TV.

From my perspective, things are not progressing in unexpected or surprising ways. To me, developments seem to be paving the way to the end result I saw coming.

Perhaps I just don't give "them" as much credit as others do. But from what I have seen, they don't deserve much credit. I haven't observed true genius at work, even if I assume the worst of them.

And a good deal of my focus is based on the Chaos Theory model, which says that seemingly chaotic events will ultimately reveal predictable patterns. And that it is much easier to predict where this will all end, than to predict each step along the way there.

This way of viewing things from a very wide perspective is shared by some of the people that I mention the most in my posts, like Peter Schiff, Gerald Celente, Jim Sinclair, Martin Armstrong, Jim Willie, John Williams, Eric Janszen and Nassim Taleb.

Did you know that in 1980, at the age of 39, Jim Sinclair made $15 million by not only recognizing the trend well in advance, but then getting out at the top? Jim predicted that gold would spike to $900 per ounce and he played this prediction with his own money, selling right near the top. But at the time, he understood the reasons why this would happen. And he understood that there would be a reversal which is why he sold.

This time he understands that we have reached an end. This time, he says, the value of gold will go up and stay up. He is now putting his target at $17K per ounce when he gives talks. On the website he doesn't write this, but instead refers to "Alf's number". Another knew this was developing over ten years ago. This is a mega-trend we are living through. It has the force of the ocean. And if such a world-domination plan does exist, it is in opposition to this trend. On the other hand, if there is a group of very wealthy, very powerful people who have amassed tons of gold in preparation, as Another suggested, then their plan is right in line with the trend.

So when I said it doesn't matter, this is what I meant. Mark, I'm honestly not trying to argue my case. Instead, I'm trying to share the confidence I have in my analysis with those of you that come here to read.


FOFOA said...

The way these cyclical waves work is that confidence will go in one direction farther than your analysis made you think was possible. This will take your self-doubt to, as Jim Sinclair says, "spiritual levels". But then, just when you have given up on what you thought you knew, things will EXPLODE in the opposite direction. And for the people on the other side of the swing, the sheep, the MSM, the government, things will challenge them at "spiritual levels". I observed four of these shifts last year. And over the course of a year, I watched them grow in intensity and frequency. There were actually five if I start in August '07. (See my post Connecting the Dots)

They were mostly all near the middle of the months. The first was in Aug. '07 when Jim Cramer made a plea to the Fed on live TV. Then in March '08 gold peaked and then headed down. Then in July '08, the dollar bottomed and headed up. Then in Sept. '08 the stock market collapsed. Then in Oct. '08 the commodities market bottomed and headed higher, among other things.

Notice that the first stretch was 7 months. The second was 4 months. The third was 2 months, and the last one was 1 month.

Then we had the election and a new President came into office. During the last 6 months we have had some minor cycles, but nothing really "spiritual". So from a confidence perspective, we are witnessing a build up. And this build up is based solely on spin, lies and false information. I fully expect an explosive move in the other direction.

On Oct. 10, '08, it really felt like the bottom was falling out. But things almost immediately stabilized and leveled off between the 10th and the 23rd. April 19th will be 6 months from that time. Alek, I would not be surprised to see your confidence come back soon after the 19th. Let's revisit these thoughts on April 26th (a week later) and we can see if your feelings have changed for any reason. It could be the news of the week. Or the stock market. Or the price of gold. But it will be an interesting experiment I should think.


FOFOA said...

Here is some light reading for those of you who are still with me here. I suggest that you read it twice.

The first time, read it as yourself.

The second time, read it as an Illuminati, as a financial elite. Replace the word "American" in the article with the word "Illuminati" or "Bilderbergs". Put yourself in their shoes, and discover what it says to you.


FOFOA said...


You also mentioned the FASB in your first comment as part of the escalation. But remember, every action has an opposite reaction. Private capital is repelled by the new rules. Only public capital will now flow into these lying institutions. And that means printing, lots of it, which is no longer being done covertly. These appalling actions are now out in the open. And the only cover they have now are the lies and spin of the administration and the media. Reality will soon take hold like a motherfu@ker, and the consequences of their actions will have to be realized.

This is a good article about the FASB rule change from Peter Schiff.


FOFOA said...

By the way, I don't have a link to my stats, but I can tell you that thanks to, the above post has now been read by 777 different people. That's a lucky number here in Las Vegas!

FOFOA said...

Looking at my stats, I see that I've had visitors from 122 different countries.

Some of you might find these interesting...

Mark said...

FOFOA - thanks for the thoughtful (as always) response. Without getting too involved or off topic, I just want to say that I view history through a certain "lens". I appreciate that there are good men out there who stand against the machinations, I really do. And there is strength in numbers, and I am ready to stand with the honest. Shifting gears, I find it interesting that in a "late Friday document dump", the White House has disclosed that the new Deputy National Security Advisor, Tom Donilan, sits on the steering committee of the Bilberbergs. The whole story is kinda grotesque, but at least Drudge has flagged it.
WH TARP ties

Mark said...

Those Harare visits? Gone Baby Gono :-)

Mark said...

Bil D erbergs

FOFOA said...

Those Harare visits? Gone Baby Gono :-)

Well, the Internet in Zimbabwe is expensive and not always reliable. It is also not exactly private.

The first visit, on Jan. 5, was from someone in Harare Google searching (this website was mentioned in my post).

The second visit, on Feb. 17, was from someone in Harare Googling "financial market essentials in a hyperinelationary environment" [sic].

I'm sure this is a hyperelationary environment for ol' Gid. Especially with all the other central bankers now singing his tune.

FOFOA said...


I think this is a good summary of what was accomplished at the G20: Junkets, Boondoggles, and Faith by Gary North.

And from his previous article, I think this sums up the state of mind of the G20:

"These deal-doers, these politicians, these seekers of power don't trust each other. That is the famous bottom line. They do not trust the common people, which means that they do not trust a gold coin standard. But they do not trust each other...

So, the G-20 nations' politicians will not come to any agreement that can be enforced institutionally. They do not trust the United Nations Organization...

Nobody in power trusts his peers. He knows how they rose to power. They all did the same untrustworthy things."

My conclusion: The G20 is an impotent organization with only one useful tool, Ben Bernanke's index finger which can create trillions of virtual credits.


alek_a said...

Thanks FOFOA for your Thoughts (yes, with a capital "T"). I am back on the path.

As to your expeiment (cycles in perception etc.), I wholeheartedly agree to be the guinee pig. But, you should have not told me!

From G. North's most recent article you linked to:

I regard this as not so much a promise as a threat. They really will do everything necessary to reestablish economic growth. The problem is this: the policies that governments adopt to establish economic growth will reduce economic growth. They transfer assets from the private capital markets to the markets for government debt. Then the money is spent by one set of government bureaucrats to fund the projects of another group of bureaucrats. There is no profit and loss system to assure the planners that they are in fact meeting the needs of consumers. The money meets the needs of incumbent politicians. Why this should lead to economic growth is a mystery, but Keynesian economics teaches that it will.

Have you seen the movie "Brazil"?

FOFOA said...


You may have already seen this video as it is plastered everywhere right now. It is a very good interview of William Black by Bill Moyers on PBS.

My question for you is this. When you watch this interview through your lens, does it confirm your suspicions of a grand conspiracy, or does it contradict them?

To me, if I take everything William Black says at face value, it absolutely confirms "they just created it out of greed and overreaching, unintentionally." And it contradicts the idea that "They may very well have engineered this collapse intentionally."

I like to visualize the collapse as a tall building coming down. It might be a controlled demolition, intentionally brought down by carefully placed explosives. Or it might be an uncontrolled demolition, as might happen if a meth lab exploded. To me, the above interview describes an uncontrolled demolition.

So my question is not at all rhetorical. I am curious if your lens shows you something different than I see.


FOFOA said...

Hey Alek,

I had to chuckle at this: "But, you should have not told me!"

Are you familiar with The Observer Effect in physics? The very act of observing a phenomenon will change the result. Even a thermometer in water must absorb thermal energy thereby changing the temperature it is measuring.

LOL. I guess I am the thermometer and you are the water.

But one can get around this problem by making a small allowance for the observer effect. In our case, I will assume that I have swayed you a little bit, and therefore I will have to observe a larger swing in confidence than I would otherwise expect if I am to confirm my thesis.

By the way, I love both of the "see also's" at the bottom of that page. Is particle-to-wave caused by observance in the double-slit experiment the same as Martin Armstrong's phase transition? And if Freegold is like a "phase transition", does my observation have an effect on the subject being observed?

As for Brazil, I think I watched it back in the 80's, although I don't remember much about it except that it was quite bizarre. I just checked the IMDB plot line and I think I see your point. But feel free to elaborate.


FOFOA said...


While I'm on the subject of physics, I've got a few more Thought experiments to twist your brain stem:

Heisenbergs Uncertainty principle

You can never know for certain the precise value of your gold stash. You can approximate it by looking at what other people are selling for, like looking at the Comex price. But until you offer yours up for sale and actually find a buyer, you cannot know precisely. As gold enters the market it adds supply to the supply/demand curve. And at the very moment that you consummate the sale, your gold is now off the market once again. So even though you think you now know the value, the act of observing the value has once again changed it. Therefore it is impossible to ever know for certain the precise value of any hoard of gold at any given time.

Schrödinger's cat

Imagine that all the gold hidden in Fort Knox is like Schroedinger's cat in a box. As long as the box (Fort Knox) remains closed, that gold is both all there, and extremely valuable, and it is also not there, and valueless. Both of these states are believed by various players on the global playing field. And therefore, both of these Thoughts influence the perceived (and real) wealth of the US Treasury. As long as the box remains closed, the real honest truth simply DOES NOT MATTER. Only probabilities matter.

However, once you open the box, all possible states collapse down to only one, simply because you observed. You looked inside the box.

So while the box is closed, we live in a world where probabilities rule the day, and all options are real enough to affect the world. But when the box is finally opened, all the probabilities instantly disappear and only one remains, and becomes certain.

Quantum Entanglement

The true value of gold and the true value of paper wealth are entangled with opposite spin direction. The reality of these two states resides in the collective mind of all people on the planet at any point in time. Measurements can be taken simultaneously at great physical distances and the probability distribution of the data will always mathematically prove entanglement.

Bohmians claim the hidden variable is the Internet. But the Copenhagen interpretationists point out that the phenomenon was present even before Al Gore invented the Internet.


alek_a said...

Ah, a little physics.

The wikipedia article on the Observer Effect somehow manages to be both confusing and informative at the same time.

There are two things. First is the classical case of two systems (thermometer and water) interacting and exchanging energy. Measurements thus must take into account this exchange and compensate.

I suppose this is not different then when dealing in the non-physical realm (with people). We interacted and my state was changed, thus the outcome of the measurement will be biased. The difference in the "people domain" is that states in the present are affected by our expectations for the future - we dont have this extra complication in nature. I amn ot sure if this last issue is relevant to our experiment.

The second thing is the quantum-mechanical "observer effect". Here, the laws define measurement as "projection of the infinite state space of the quantum particle on a finite measurement state space". This process alters the quantum state (collapses the wave function) as it reduces the possibilities from infinite to the finite number of outcomes of the measurement.

But, I am not very at home with QM and you will have to accept the above with a grain of salt.

Phase transition is my favorite subject. I work with superconductors. When cooled under the critical temperature, the charge carriers (electrons) condense in one state. They all act as one and you cant distinguish between them. A consequence is that there is no friction (resistance) when they collectively move as an electrical current. The material underwent a phase change here, where a high degree of order emerged from a previously disordered state.

To define a phase change you need a couple of things: a system; a critical point; some property that has a change in order; and an environment that interacts with our system where energy is exchanged at the critical point in a discontinuous fashion (jumps in either the energy exchange or the derivative of it).

Can you construct a thought experiment with this?

As to "Brasil": it is a very bizarre film indeed. That is because the whole society was bizarre and irrational. There were bureocrats determining "who wins and who loses" on obscure grounds, usually extracted from vague political goals mixed with the premieval urge for self-preservation.

Mark said...

Hi FOFOA, thanks for that link because I had heard about the Black interview but hadn't seen it yet. He does a great job of letting the Hope & Change crowd know that it's "meet the new boss, same as the old boss" when it comes to the banksters and coverup. When you read Willie and others like Deepcaster, it is easy to get carried away with visions of evil men plotting their moves two steps ahead, but Black is probably closer to the truth, that these men are scared witless of being exposed for the damage their greed is directly responsible for, (and Government culpability). That is not to say that there aren't evil men out there who actively try to manipulate all scenarios - we know there are.

FOFOA said...

"Can you construct a thought experiment with this?"

Ah. Well, QM intersects with your field in the area of the Bose-Einstein Condensate, or BEC.

I would say that absolute zero might apply to the value of paper. ;)

I can imagine the phase transition to Freegold as a kind of BEC, gold being the charge carrier, or VALUE carrier.

You say, "To define a phase change you need a couple of things: a system [got that, the dollar system]; a critical point [got that]; some property that has a change in order [got that, gold and the dollar]; and an environment that interacts with our system where energy is exchanged at the critical point in a discontinuous fashion (jumps in either the energy exchange [gold jumps UP in value] or the derivative of it [derivatives collapse in value])."

How'd I do?

Mark said...

PS - the cat is dead

FOFOA said...

Hi Mark,

Willie and Deepcaster do make very convincing and damning accusations. And actually, I can accept most of what they say within my view of the way things are.

Also Martin Armstrong's accusations about the manipulations that go on and Lindsey Williams' accusations about the oil and dollar barrons are believable.

So I guess I do believe in some "conspiracies", I guess I just don't give the conspirators credit for having evil genius, just a lot of money, and not much common sense.

"PS - the cat is dead"



alek_a said...

Oh wow, this is all getting very interesting.

I am very hard pressed to respond right now but, as reality dictates, I am pushing on 1AM here and although as a PhD student I dont have to punch a card tommorow morning (the best part of a PhD's life) I DO have lots of work to do with my little superconducting circuits that dont want to interact with the environment without beeing disturbed.

The First International Proceedings on The Shroedinger's Gold Principle will await deliberation tommorow.

FOFOA said...

"So, prepare yourself for a messy and poorer world for the foreseeable future.

The price of gold will be suppressed, until it can't. Disagreements among the world's trade surplus nations and trade deficit nations will become increasingly bitter. Finally, some nation or block of surplus account nations will simply say, “Enough! You want our goods, you pay in gold.” And that will be that. Hard to say when that will be, but it will happen."

From Consensus and All That Rot by Hugo Salinas Price

Mark said...

Price is another of those who agree that:
Silver = Money
Gold = Wealth

FOFOA said...

Yup. Did you read my 100 Year Clearing post? I wrote about Price's graph which was also in that article.

alek_a said...

FOFOA and dear Thoughters,

I forgot to take my QM book from work and rumbling through the stash of those that I keep at home for overwork pusposes produced a few interesting and surprising finds from the rarely used bottom layers, none of which unfortunately happens to further our issues here. So, wikipedia (urgh) will have to do.

I had to smile at the derivatives comment in the thought experiment you posted. It reminds me when I was a student and my roomates that studied law joked about my workbooks being full of small curly pieces of hair - they were looking at the "integral" sign - and the kept trying to blow them away.

It seems to me that we can find a resemblance between Armstrong's cyclical work and phase transitions, thought it is quite vague. A phase transition usuall involves a high degree of order where collectivness emerges. This is usually results in coherence of the entities (their sum is the same enity type but twice as big) making up the condesate (collective). Asmstrong's waves interfere and at some points produce lows and highs as a normal interference effects will produce.

The principle of uncertainty of the value of a given gold stash.

Well, to have an uncertainty priciple, you need a pair of mutualy commutative (or complementary) variables. Those variables are usually produced when you apply a certain operator (i.e. interact with the entity in any way) to the gold-stash entity GS. Physically, the variables represent a property of the entity.

You defined one property: the paper price of the gold stash. We need another one that is mutually commutative with this property VGS ("value of the gold stash"). Commutative means that if you exchange the order you "read out" the two properties one after another, the result is not the same.

Maybe quantity of the gold stash? Or a new pair: velocity and position, just as in QM for a particle?

The Fort Knox Cat Conundrum

Here we assume that the cat interacted with the environment in the past and its original state has now evolved in an unknown way since we are not aware of what those operations are. It may indeed be already dead but because we havent measured it, we are not sure.

However, it is a true fact that the state of the cat has been measured multiple times in the past but we are not told of the results. Thus, the cat is either dead or alive (or any degree in between) for sure and doesent exist in a true superposition of (all) those states. Which one of them is correct will have to be implied from its effect on the world ouside the Fort Knox Box.

GP (gold-paper) Entanglement

Here I can only say that if those two entities are truly entangled, then when we measure the value of one of them, the value of the other one will be known at the same moment in time.

alek_a said...


"Asmstrong's waves interfere and at some points produce lows and highs as a normal interference effects will produce."


"Armstrong's waves interfere and at some points produce lows and high just as the interference of any coherent entities (ex. lasers) would produce.

FOFOA said...

Hello good Doctor (to be),

You say, "A phase transition usuall involves a high degree of order where collectivness emerges. This is usually results in coherence of the entities (their sum is the same enity type but twice as big) making up the condesate (collective)."

But isn't that a description of phase transitions in only one direction? Cooling? When you heat something up, doesn't disorder and locality emerge (as opposed to order and collectiveness)? This is also a phase transition and when viewed far and wide as Another would, I would say this is where civilization is heading. Many localities, less collective, much disorder. Although, on the surface, it would appear to be the opposite.

The principle of uncertainty of the value of a given gold stash.

Good observation. It must be something you can only know one or the other with certainty at any given moment. And to know price, you must sell. So you could say that you cannot know with certainty, at any given time, the precise value and also the owner of any given stash. Because to know the exact value, the ownership must change. And to know the owner, the stash cannot be transferred, and therefore precise value cannot be known.

The Fort Knox Cat Conundrum

You hold my analogies to a very high standard. But you are correct. The observation by one will collapse the universe for all. For this reason, perhaps it is better if man does not observe some things.

GP (gold-paper) Entanglement

My understanding is that you still have to measure both sides. But that the statistical distribution of measurements will correlate when later compared. But yes, the measurement of one will collapse the other at the same time. So you should know it if you already know the correlation.

Applied to gold-paper... say that I have measured paper's true intrinsic value at absolute zero. What does that collapse the value of gold to?


alek_a said...


That uncertainty is, IMO, between the marked to market and actually sold asset. The uncertainty is limited by the size (quantity) of the asset as relative to the liquidity of the marked where the asset is traded.

You have more of the asset, it is worth more on your books that when sold. The more quantity you have, the more you reduce prices when selling due to demand/supply mechanical laws.

Stock investors have ways of circumventing this, i.e. exiting positions from (sell-rated) issues that are thinly traded. Also options etc. may profe usefull tools to circumvent the "uncertainty" principle. The stock investing readers here may want to comment on this.

You see, we created something new, at least to me. Lets hear 3 huraahs for us!

BTW, this uncertainty priciple is what keeps the Chineese from dumping their $-dervative assets on the market.

FOFOA said...

The uncertainty principle may also be the key to the failure of the PPIP. Now that banks can lie about value, they may not want to participate. Thanks to the FASB. The law of unintended consequences is rearing its ugly head. There is no coordination in Washington. Just ad hoc "solutions".

PPIP A Bust?

Martijn said...

About the quit coup (and also QM theory): what you measure is what you get.

Measure a countries wealth in financial terms (in the core perhaps wealth is really about happiness) and you will get (artificially fabricated) good financial performance (until it collapses).

Funny how people are generally equipped rather well for people (societal) matters. That's called mother wit, or common sense, but unfortunately it is hardly used when appropriate. Abstract and narrow trained minds all think alike it seems.

FOFOA said...

Martijn, Alek and Mark,

I realize that we have conversations going under several posts. It must be difficult to keep track of. Perhaps you already know this, but you can create a Blogger profile and then the system can send you email notifications that include the full text of subsequent comments and a hyperlink that takes you right there. You can set your profile to private or just leave it blank if privacy is an issue. It's quite simple.


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