Sunday, May 10, 2009

Stress Test Results Are In!

80 comments:

Anonymous said...

LESS "STRESS" ON GOLD :

China may cancel VAT on gold contained in crude copper imports
Beijing. May 11. INTERFAX-CHINA -

The Chinese government is considering ----canceling the 17 percent value-added tax it levies on the gold---- content of crude copper imports in order to boost the flow of copper into the country, a government official said at a conference on May 9.

>>> There is no VAT on bullion in Euroland. Many others are abolishing their taxes on bullion.

Nobody bothers to investigate the real meaning of this spreading measure.

Anonymous said...

Hi Anon,

Super great news !

On the poping leaves one recognizes the spring is beginning ;-))

Indeed maat some more patience till full blossom.

Just supprised aboud the copper...

Shanti

Martijn said...

In the Netherlands there is no VAT on gold bullion, but there is on physical silver (not on paper silver however).

Anonymous said...

Martijn :

Even the UK agreed with the EU rule to abandon VAT on bullion.

The US & China were (are) silver-sellers. Silver (industrial metal)will never be an official wealth-metal. The silverprice manipulative interventions only serve the goldprice governance.

When gold'revaluation goes to its finale (freegold),...silver will be left far behind as an 100% industrial metal.

Martijn said...

Perhaps so. However the blatant silver manipulation if found out should increase the price of real physical silver by quite a lot I believe.

And I still see a scenario where extremely rising gold prices pull silver up as well, as they have had some connection in being monetary metals in the past.

Personally I hold gold and silver in a ratio of 2:1, and should the gold price really start to pick up I might buy extra gold.

Jimmpy said...

Hello everyone, if I may post my view on the silverstory. I've read several explanations concerning the huge silver short positions (multiples of the Gold positions) but never one that satisfied my... euh gut feeling until I came across an article from Henry C.K. Liu last September with the Title "History of Monetary Imperialism".
Quote : The demonetization of silver stealthily turned the gold standard into a fiat paper money regime through the officially gold-backed pound sterling because the gold backing it was no longer priced in silver at a fixed rate, or any other metal of intrinsic value for that matter. Gold and only gold became a fiat unit of account set by the British Mint, a fact that made Britain the monetary hegemon of the age.
An asset that is priced by or in itself has no transactional meaning, even if it is gold. This is because a transaction must involve at least two assets of different value, expressed with different prices in exchangeable currencies. And there must be an agreed upon exchange ratio at the time of the transaction to effectuate a transactional outcome. Even in barter, an exchange ratio between the two assets to be exchanged needs to be agreed upon. For example, an ounce of gold can be exchanged for 15 ounces of silver. An ounce of gold that can be exchanged for another ounce of gold carries no information of transactional value.
Thus the pound sterling, even when backed by gold, was in fact a fiat paper currency because the monetary value of gold is set by fiat devoid of any relationship to any other thing of intrinsic value beside gold itself. Without bimetallism, specie money cannot have any meaning of transactional worth. Currency backed by gold turns into a fiat currency if it can be redeemed at its face value only in gold. The monetary value of gold is not separate from the commercial value of gold. Gold then can fluctuate in purchasing power due to any number of factors, including government policy, but is not fixed to any other metal of intrinsic value at an universally agreed upon ratio.
Unquote.
I believe Silver regaining its monetary function is 'THE' worst case scenario of TPTB and they will therefore accept this alternative form of Goldstandard (Freegold) with both hands once the current fiatregime collapses again.
Please feel free to reject of correct any holes in my reasoning.
Greets

Jimmpy

Martijn said...

@Jimmpy

Welcome! Interesting remark, I believe I'd better read the article before responding. In the mean time you might just hear from FOFOA, who has studied gold/freegold extensively!

However, when you say: "Without bimetallism, specie money cannot have any meaning of transactional worth", I wonder whether that is really true. As using money means exchanging it for something else I would argue that money's transactional value is set by its use.

Martijn said...
This comment has been removed by the author.
Martijn said...

@FOFOA

As the use of freegold is based on some form of idealism and it needs to be brought about by the people here is an interesting poem from a Dutch writer - Remco Campert - written in response to WOII (excuse my translation):

Someone asks a question

Resistance starts not with big talk
But with small deeds

As the storm starts with a gentle rustle in the garden

....

As a blaze
With the same match
That lights the sigaret
Or love with a glance
To ask yourself a question

That is how resistance starts

And then to pose that question to someone else



Which is basically what a lot of blogs are doing these days.
Keep up the good work!

FOFOA said...

Hello Jimmpy and welcome.

Martijn is right, your remark is interesting. It will require some more thought.

Martijn says, "However, when you say: "Without bimetallism, specie money cannot have any meaning of transactional worth", I wonder whether that is really true. As using money means exchanging it for something else I would argue that money's transactional value is set by its use.

I tend to agree with Martijn. I am not so sure that Mr. Liu is correct here, although I have great respect for him. It is possible that he is partly right with regard to metals being used as money and currency. It makes sense that in a full metal standard bimetallism has its advantages.

But I think the difference is that Freegold is not a new "gold standard" as the term commonly implies. We will still live in a fiat world with governments and their printing presses, but no one fiat currency will have the largesse to control the gold price, and it will therefore float freely among all fiat currencies. In this way, it will become the ultimate standard by which fiat currencies (and their printers) will be judged. No more will they be judged solely against each other.

And because of this, gold will become the wealth reserve par excellence. It will not become a competing currency, but a wealth reserve. Think of what the super-rich use today as wealth reserves; fine art priced in the tens of millions, antiques priced similarly, fine jewelry, etc... In the transition to Freegold, gold will reach par with those wealth reserves and then it will pass them by. In the end, gold will be on par with none. Par excellence.

In this role, gold does not need silver.

Martijn, nice poem. Thanks for the encouragement!

Sincerely,
FOFOA

Anonymous said...

The ideal purpose of freegold is to let all the world's gold (160.000 tonnes) represent the world's total wealth.

Today, all the wealth is supposed to be represented by the total volume of digits ($ xxx Trillion).

But how can a DEBT currency unit possibly represent the globe's wealth ? Just imagine 10% of the digit mass goes for tangibles !
Imagine people withdrawing 10% of their digits out of the banks and start buying tangibles with it ?
Imagine people start cashing stocks and bonds and buy tangibles...

We would have catastrophic hyper price-inflations all over the world. The digits' buying power would crash instantly,...Because of the astronomic debt overhang versus the proportionate scarce available tangible wealth.

Debt is now increasing exponentially. We need another wealth standard. That's why Duisenberg severed the link between gold (freegold) and the so called money (= debt).

Freegold must be able to buy you the 21th century wealth living standard all over the globe.

No currency unit can genuinly function as a wealth reserve. Because it is debt.


Goldmetal is nobody's debt.

All systemic debt-creation has its limits. That's why freegold was architected .

FreeGoldmetal pulls its valuation out of its wealth buying power. The more tangible wealth is created the more the Freegoldmetal gains in buying power.

It is the $-system that still competes with the wealthmetal by giving this exhuberant privilege still to the artificial debt-dollar.

Anonymous said...

Better News !!!

QuamNews:---- China will publish gold reserves regularly -----

10:13
QuamNews

People's Bank of China deputy governor Hu Xiaolian said on the 10th during the second Sino-British economic and financial dialogue held on the eve of the official media briefing that China would regularly publish the reserves of gold.

FOFOA said...

Hmmmm....

Thanks Anonymous!

Anonymous said...

CNBC : The case for gold

http://www.cnbc.com/id/15840232?video=1120487715&play=1

Anyway you slice this FI-media standard message...The mercantilist Asia gold-factor is "counting" ! The dollar's antithesis (gold > freegold) is growing with(in) a structure. But through the angloamerican media it must be presented only as a speculative opportunity. Just like all the other so called investments. The (absurd) - make money - mantra.

>>> Bernanke's BS about strong dollar/strong US economy is hilarious.

US deficit (2010) will reach 13%. Euroland's deficits will average 6%. Switzerland's monetary base doubled (!!!) since 2008.
What taxes from what stagflationarry economy are going to fill the holes in this debt-dike !?

The present running (promoted) theory that an organized stockmarket crash will organize a fligt into the dollar (rising bonds),...and making it stronger,...is ridiculous. We are crescendo living in a virtual environment.

Anonymous said...

* FREEGOLD *

The purpose of installing freegold is to force the systemic debt-driven financial industry (FI) back into a system of PRODUCTIVE debt where defaulting can do its sanitizing job.

Freegold is the (only) instrument for the creation of a global level playing field.

UN-Productive debt is always to the sole advantage of the force that organizes (governs) this system.

The productive mercantilists (wealth creators) are always at an disadvantage in such a fraudulent system ($-IMFS).
From the apple you save,...only the core remains.

The present (temporary) deflation will lure many back into debt-paper (apple),...and the next price-inflations (currency devaluation) will eat your apple and leave you with the core.

This abusive wealth creation-system is totally unproductive. Only the privileged reap the profits and leave the accumulating debts on the back of the collectif.

Freegold will break this viscious system !

Martijn said...

Now that the bless test is over, it's time to take a look at the real fundamentals again. And they're not so rosy. Here is some more on credit cards for instance, and as was long expected, it does not look all that good.

Martijn said...

And Asia Times is also rather realistic.

FOFOA said...

Jesse has a new post about the dollar crisis of confidence:

"The constraint on the monetization being done by the Fed and Treasury is the value and acceptability of the US dollar and bonds..."

Jim Rogers will never talk about the covert actions of the Fed. But you have to ask yourself, how did they stop the dollar's plunge at 71 last year?

They did it with a coordinated attack on commodities as Don Coxe proclaimed, which began on July 15th. Followed by an engineered "deflation" driven by the Fed as Jim Willie described. Followed by a PPT-driven market rally which is now drawing in the OPM money, as Zero Hedge has been exposing.

Then you have to ask yourself, can they do it again? Or does this kind of operation only work once?

You cannot fool all the people all the time.

FOFOA

FOFOA said...

A small and seemingly insignificant story drifted by on Sunday.

Anonymous said...

Good insight on the fundamental of the US&$ in the world :

http://www.marketoracle.co.uk/Article10619.html

The entire world stayed already too long on the path of least resistance...Vive la loi du moindre effort (the path of the lowest effort)

We all accepted to live under the $-rule and being derivatized by it.

The article suggest (inspires) that a dramatic black swan event is finally inevitable.

Look at oil-gold-euro (troika) that is resuming its uptrend in TANDEM ! Is it the $-regime itself or the $-counterparty coalition that is organizing this ?

The different blocks on this globe should stop fooling themselves.

Anonymous said...

Mineweb (snip) :

NY HARD ASSETS CONVENTION

GFMS warns of extremely negative fundamentals for gold, silver
GFMS Executive Chairman Philip Klapwijk reckons that fundamentals for both gold and silver are extremely negative, although he concedes that current government policies might prolong the bull markets a little further.

Author: Lawrence Williams
Posted: Tuesday , 12 May 2009

>>> This particular ABSURD NONSENSE illustrates how deep all the Klapwijk's have been sinking !

Avoid all papergold...Take possession of the metal.

FOFOA said...

Absolutely Anonymous!

The Holy Grail was never made of paper.

The Klapwijk's will have to learn this fact the hard way.

FOFOA

Anonymous said...

Qatar & Gold :

http://www.bloomberg.com/apps/news?pid=20601109&sid=aFxNERmPLLrc&refer=home

What good is it to generate and hold digital-wealth that evaporates as desertsand between one's fingers...!?

Qatar will have a look at some particular "tangibles" ...that can be firmly "holded".

FOFOA said...

Regarding Qatar & Gold,

You can only extend your purchasing power in the here and now so far. How many more private jets and foreign investment banks in the here and now will secure the future for your grandchildren and great grandchildren? The real secret is to extend your purchasing power into the future. This is what Qatar is learning the hard way. When you have "too much money" that needs to be invested in a hurry, the dollar system will happily relieve you of your "problem". Gold, on the other hand, will store your "potential energy" to be released at a later time.

“The reasonable approach for the prime minister of Qatar would be to look after its own needs and be less on the international market.”

“The key challenge will come as the wall of money hits Qatar in the next three to five years,”

“The money seems to burn a hole in their pocket,”

“I’m meeting Prime Minister Gordon Brown tomorrow here,”
[FOFOA: Good lord, better wear a condom]

“Qatar has a lot of investment in the U.K.”

“We will look at food, we will look at gold, we will look at minerals,”

“Most of the investments of all the sovereign wealth funds have pretty much gone wrong,”

“It is a disaster for Qatar, which made a bold bid to play in the big league of sovereign wealth funds,”


They will figure it out. Or they will continue to learn life's lessons the hard way.

Anonymous said...

BBC news !

Japan 'would avoid dollar bonds'

The move out of dollars would be a remarkable policy shift.

Japan's opposition party says it would refuse to buy American government bonds denominated in US dollars, if elected.

The chief finance spokesman of the Democratic Party of Japan, Masaharu Nakagawa, told the BBC he was worried about the future value of the dollar.

>>> Maybe Japan already figured it out...and already learned life's lessons the hard way !?
Smile FOFOA :)))

>>> What about those Japanese housewifes who were accumulating gold kilo's...?
Funny we never hear gold-news from Japan (World's record saver), since ?

Anonymous said...

Mind boggling cost ! (IMF stats)

Consider the chart below, courtesy of Niels Jensen, writing in John Mauldin's "Outside the Box" e-letter. Niels shows that according to IMF estimates, twelve governments around the world (the 'Dirty Dozen') will have to issue $10.2 trillion in bonds to cover future banking losses and funding requirements in the credit markets as a result of the ongoing financial crisis.

The 'Dirty Dozen' and $10.2 Trillion in New Bonds

Martijn said...

More Taleb.

Anonymous said...

$-rates !!!

May 13 (Bloomberg) -- The Federal Reserve may soon need to raise interest rates, said John Taylor, the former Treasury official who devised the “Taylor Rule,” a formula for rate- setting based on the outlook for inflation and growth.

>>> The coming $ 10 Trillion on new bonds at higher interest rates will inflate the ongoing monetary expansion parabolically. Idem for all the derivatives.

But what was the purpose of getting the IRs that low in the firts place ?

WHAT A GIGANTIC MESS !

Martijn said...

FOFOA,

Did you ever think of the "pyramid of wealth" as a sphere? The upper layer in the pyramid is the outher layer in de sphere, gold is the hart.

Kind of reminds me of an union. Looks nice and round at first, but the further you peel, the more you start crying.

Martijn said...

@FOFOA

The commodity manipulation is rather interesting indeed. We really are in uncharted waters. This might just continue for a while, but I do not see real investor faith picking up. No land in sight so far...

Still blowing up my golden life-jacket.

Martijn said...

@Anon

This is quite a mess indeed.

FOFOA said...

What is happening right now is not very difficult to understand. It was difficult to understand maybe a year ago, but not anymore. And the understanding is spreading!

FOFOA said...

Here is one more reason the Fed must go!

It is full of incompetent governance and oversight, cronyism, corruption, and now theft.

The world is watching.

Anonymous said...

Dubai, City of Gold :

http://www.business24-7.ae/articles/2009/5/pages/12052009/05132009_4d115a2aa5da4d69b8e7350a8875bd9d.aspx

Bringing the precious metal home from London.
All Middle East gold accumulators/traders will feel much more comfortable with the metal safely stored in "their" backyard !!!

Will other gold-owners follow this example !?

FOFOA said...

"If you have a single gold coin, you will likely buy a nice house with it"

From the new Prudent Squirrel newsletter...

SNIP:
"Our USD system is just about to collapse. Most people by far have absolutely no idea how imminent that is, which is a serious complication for us who do track this. Whether it is a gradual collapse, or a rapid one, is yet to be determined, but collapse is definitely the term to use. The rest of the world is rapidly following suit into bankrupting themselves fighting this relentless world financial deleveraging. Most people cannot imagine a USD collapse, and even we who research about it find it impossible to predict the many consequences.

But it's the general lack of knowledge in the general population that concerns me. They are sitting ducks. If you have a single gold coin, you will likely buy a nice house with it, I am totally serious. I made a prediction about 2005 that if you have ten ounces of gold only, you will probably survive the period of transition from the USD (with careful planning). Even two ounces would make all the difference in the world. Of course that prediction does not take care of the confiscation issue, but hell, no one strategy can cover all risks.

In short, the world is right in the middle of total change and revolution in every way. Remember how things used to be 20 or 10 years ago? Well, take all that and put it out of your mind. Most of our usual things we take for granted in our 'world' are either gone already or the remnants rapidly going away before our eyes. As I am sure most of you already know, it is next to impossible to convince others of the dangers.

Cocktail parties

I talk to people in cocktail parties and learned a lesson about that - that this story is scaring the hell out of people and is a party killer. From now on, I will only briefly bring up these issues, having seen the previous cocktail discussions rapidly end in gloom after we get done discussing all this-to the extent the discussion is even tolerated. I find that I can talk to doctors, airline pilots, millionaire businessmen etc, and basically they have nothing to counter my concerns THEY bring up at the party, when they ask me to comment. Then what seems to happen is they tune out. You can see a haunted look in their eyes. I never get over the fact that with all their hard earned money, they are acting like sitting ducks. Denial seems to work for them initially.

Typically, one of these parties has a few doctors, a few rich businessmen, and such people, and your average 401k persons, and when they find out their world is ending, well, I can't blame them for leaving the party. And me not being invited back. In fact, I'm not sure I even want to go to those parties either. Many of these people are hiding their heads in the sand, telling me they lost a lot of money and asking me what can they do, and then only having the stomach for a ten minute discussion before they wet their pants on what could happen if the USD fell- and cease discussing the situation. Maybe they are just giving in to fate. That is a very dangerous thing to do..."

FOFOA said...

Anon,

"Much of the region's gold that has so far been held in London may soon return.

The new vaults of DMCC will be a home to the gold allocated to the Dubai Gold Securities (DGS) Exchange Traded Funds (ETFs)."


When the dollar system finally collapses, gold will not move. It will stay where it is, and accounts will be washed away with worthless dollar payments. Entire nations and regions will be screwed over. The old saying "possession is 90% of the law" will come into play.

It is very smart to take possession right now. The smart ones are doing it, like Germany, China and the Gulf region. It is a smart move on the personal level as well.

The law only guarantees the dollar value of the gold. And that dollar value is tied to paper prices, not physical.

It is almost comical in a "thou-dost-protest-too-much-methinks" kind of way that they feel they have to justify taking possession. How many different arguments are they making? LOL They know the score. But they don't want to say outright, "if we don't take our gold now, we know you [London] will steal it soon!"

FOFOA

Martijn said...

Seen Geitners "confession"?

Martijn said...

John Nadler is not too bullish on gold though...

Anonymous said...

http://www.gata.org/node/7421

The Arabs want to bring their gold home from London. Is this Another's prediction coming true before our eyes?

FOFOA said...

Martijn,

Regarding Geithner, some very good reasons to abolish the Fed are piling up daily. I think that once the purchasing power of the dollar collapses it will be the rational response of Congress to do away with the Fed altogether. I don't know how that will play out exactly, but I think it has a better-than-not probability.

Regarding Nadler, he has long been thought to be a puppet of the gold price suppression crowd. This is partly because his company, Kitco, has engaged in business ventures that have left it out on a limb when it comes to being "short physical". Kitco actually profits by falling gold prices. This is fairly well known.

Nadler is a good contra-indicator. When they trot him out on TV like this, it is similar to a market signal from Jim Cramer. On average, you will profit much more by doing the exact opposite.

He says that the gold bulls are louder than the gold bears. Are you kidding? This is the most ridiculous thing to say. The gold bulls are about 1% and the bears are about 99% of the population. And his evidence is an ad for gold? Trust me, when everyone is bullish on gold, ads will not be necessary.

Nadler is like Arlen Specter. He has infiltrated the enemy camp and is pretending to be a voice of reason. He is basically a spy or a traitor.

Ask yourself this; What other salesman that you have ever come across in your entire life consistently talks down his own product? The only times Nadler ever says anything positive about gold is when sentiment is so far the other way that his words have little effect. But anytime "gold fever" starts to heat up, he's negative on gold. It is a clear pattern.

FOFOA

Anonymous said...

China's yuan 'set to usurp US dollar' as world's reserve currency.

The Chinese yuan is preparing to overtake the US dollar as the world's reserve currency, economist Nouriel Roubini has warned.

>>> Yuan in IMF-SDR and yuan as currency for bilateral settlements !

Roubini forgets to mention that China has now officially declared that gold is a monetary reserve and herewith copys the ECB's gold wealth reserve without a link to the currency (free floating goldprice & gold MTM).

WHY is there nobody suggesting that the US-Treasury starts marking to market its goldreserves !? Have been asking this question 1001 times. Still no answer.

Anonymous said...

@ FOFOA (about Kitco) : You nailed it brilliantly, Sir.

But the entire story is actually MUCH bigger than this remark...

Martijn said...

@FOFOA

I was indeed not having a very strong gut feeling this Nadler guy was lying. He knows that what he is saying is not correct. If I were working in the gold business and giving such a prediction in a time like this I would be quite convinced (as I would think trice before stating such a thing).

Abolishing the fed? That should have happend the day after they created it.

FOFOA said...

Anonymous,

You say, "WHY is there nobody suggesting that the US-Treasury starts marking to market its goldreserves !? Have been asking this question 1001 times. Still no answer."

My response is that for the dollar [reserve currency of the world] to mark its gold reserves to market is basically the same thing as monetizing the metal. Currency reserves that float essentially become legal tender... somewhere. Currency reserves that are "locked" or fixed will not be tendered. Who would tender their gold at $42 an ounce? Certainly not the US Treasury. Would any country pay its debt to the US in gold... at $42 an ounce? Would the US ever settle its trade deficit, current account deficit or budget deficit with gold... at $42 an ounce?

For the US Government to say that the Treasury now holds a monetary reserve of gold, the value of which is determined by its float against the dollar in the open market, would be to say that gold is as good as the dollar at some price. And then the market could declare, "no, gold is better than the dollar at any price". Then the dollar is toast. At that point the US will have to fund everything, including the military and social security, with its gold. The printing press would no longer work.

I made a call for this back in October. Of course mine was just a ridiculous Thought experiment.

Congress, Remonetize Gold (and Silver) NOW and Save America From a Terrible Fate

Remember, the first one to do the right thing will profit the most from this action.

By the way, I am not arguing for gold to be used as a currency. This will never happen. Freegold is the result of Congress NOT doing the right thing.

FOFOA

The Mad Scientist said...

FOFOA, words fail me to describe Nadler. How can a chief analyst of a bullion company act like a pimp for gold suppression? I almost feel down laughing when I saw his pic on kitco with "Join me in NY" written on it. Why would anyone want to see the lunatic in person?

In 18 months he is going to look incredibly comical.

Anonymous said...

@ FOFOA : Thanks for responding.

The entire globe is now confronted with the ongoing systemic failure of the $-system ...that embarked on (more) state capitalism .

There is NO exit strategy ! Simply because we don't know yet what we don't know (domino-theory).

The general idea, for the time being, is that there is no need for having any comprehensive exit strategy . Because everything will certainly "work out" the way this (systemic) Crisis is handled !?

A huge mistake,...IMVHO.

Because we all remain in a state of (happy) denial,...nobody even thinks (suggests) about installing freegold within the $-system.

But WHY isn't anyone of all the amateur gold-observers (writers-gold advocates) mentioning the ECB's example of gold-reserve MTM !? Is this a form of benign neglect (voluntary ignorance) ?

How can one advocate gold and at the same time believe the $-system will survive in its present form ...and continue marginalizing gold's role ? I don't get this duality (schizofrenia).

How can a debt-drive $-system continue without any reference value-standard ...when others (EU-China-Russia) are officially promoting gold wealth reserve ?
Is this $-hubris ?

Thanks for sharing your thoughts.

Anonymous said...

The (hilarious) Geitner confessions (snip) :

Geithner: “…I would say there were three types of broad errors of policy and policy both here and around the world. One was that monetary policy around the world was too loose too long. And that created this just huge boom in asset prices, money chasing risk. People trying to get a higher return. That was just overwhelmingly powerful.”

>>> The many staring dwarfs in front of the huge K3-Debt mountain,...and pretending NOT seeing it.

Simply because they all *believe* in the system. Collective hallucination.

Anonymous said...

When rats leave sinking ships...

HONG KONG (MarketWatch) -- Singapore's sovereign wealth fund Temasek Holdings Ltd. sold it entire stake in Bank of America Corp., that it received when the U.S. bank bought Merrill Lynch earlier this year.

>>> Smart rats (Temasek-*wealth* fund)

FOFOA said...

Anonymous,

"Is this $-hubris ?"

I honestly think it is dollar desperation. If the dollar marked gold to market as an official reserve, then it has to be prepared to ship or receive gold as an official settlement, just like the ECB. The problem is that the dollar system is suppressing the price of gold. So... not only will the Treasury not want to tender its gold at $42 an ounce, it won't tender it at $1,000 an ounce either. It knows this is a very bad price.

Sure it would love to RECEIVE gold at $1,000 an ounce, but the $-regime is a net debtor. Therefore it owes. Right now it can pay those debts in paper from tree pulp by simply printing some green ink.

As viewed by the $-masters, the benefits of marking the gold to market are far outweighed by the problems.

Although this concept may not be widely understood, still I think it is known. Perhaps this is why we don't hear goldbugs calling for it. The same way they are not calling for GM to start producing flying cars.

At least that is my take on it. I agree. It would be the right thing to do. But I am a realist. The exit strategy for the $-masters is only on a personal level. They have no systemic exit strategy because none exists. It is get the money in your [personal] pockets, convert it to gold, then cause hyperinflation so all the debtors are saved. Screw the creditors, savers and pensioners.

Sincerely,
FOFOA

Martijn said...

Alright, enough about this Nadler guy, he's good for a laugh but that's it.

Now Roubini is a bit more respected. However, this article of his is rather funny. He thinks of gold as a "still a barbaric relic", and argues that the demise of the dollar might take as long as a decade. The condition for that is howerver that the US "get their financial house in order".

Roubini normally is rather realistic, but I wonder how he sees America getting it together again.

FOFOA said...

Martijn,

At the risk of me starting to sound like a broken record, I can tell you that Nouriel Roubini is a little like Jon Nadler. He is sort of the "designated doomer" of the administration. He is a "respected doomer" they can control.

You don't really need proof to see this. All you have to do is follow Roubini's articles over the past year and a half. But if you would like to see some proof, how about a connection to Larry Summers for starts? Here's another clue.

I don't really like doing this. I prefer to simply be judged on the credibility of my words. And I try to offer this same courtesy to others. That said, I lost respect for Roubini through his words, long before I read about his conflicts of interest. His words just didn't sit right with me. Sometime around last September it felt like he had sold out to the establishment. I truly believe he did. Perhaps they told him it would be patriotic. Or perhaps they just paid him. I do not know.

FOFOA

FOFOA said...

It should also be noted that Nouriel Roubini was an advisor to Timothy Geithner when he was an Under Secretary of the Treasury from '98 to 2001. During that time, Geithner was under SecTreas Robert Rubin and Larry Summers. Summers and Rubin were both Geithner's mentors, and Roubini was an advisor.

Roubini is also a member of the Council on Foreign Relations and the Academic Advisory Committee, Fiscal Affairs Department to the IMF.

In other words, he is a card-carrying member of the dollar faction. Pigs will likely fly before Nouriel Roubini starts promoting for gold.

FOFOA said...

"...current deficit spending “unsustainable,”... skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,”... “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase... “It will have a dampening effect on our economy.”

- Barack Obama

WTF?

Anonymous said...

@ FOFOA : There are many Roubinis out there (as you properly describe). Let's call this : $-Loyalism.

Cfr. Kitco-Nathan article :

http://www.kitco.com/ind/Nathan/may142009.html

>>> The wet dream of a goldlocks exit strategy (procedure) !?

Exactly the same "spirit" is kept alive & kicking, where I live.

But,...We were all so blind and stupid to let this gigantic Crisis taking hold without making any effort to stop & reverse this system before it was too late !

Managing/governing stockmarkets and many other prices are not going to prevent the global economy to implode ! It is the system that is still in full denial. The real (concrete) bottom is still far away.

The gigantic DEBTBERG is crushing the (debt-driven) system on which it has been build.

Panic, will come after denial as night follows day.

Anonymous said...

FOFOA,

You have already earned your credibility with me.

And I do appreciate some help in placing other people (such as Roubini). Don't worry about what you say of them, I can think for myself (at least tell myself) and am luckily enough free to decide for myself what I believe or not.

So basically all information is welcome!

Martijn said...

This is quite open for Obama, he's actually telling something correct about the economy.

Should he be at Bilderberg btw? Or is he not invited?

Martijn said...

Well then again...

“Most of what is driving us into debt is health care, so we have to drive down costs,” he said.

He was quite ambitious on that topic and now needs an "excuse" for not being able to deliver on his promises.

FOFOA said...

Good Pritchard (from Qatar)

Anonymous said...

The perception building machines :
Snip -

May 15 (Bloomberg) -- The German and Italian economies contracted more than forecast in the first quarter, slumping the most on record after the global financial crisis crippled exports and investment across Europe.

>>> The dollar (system & regime) remains strong,...when others are percepted as being weak (weaker).
Is a *vital* $-support !

The purpose is to make Trichet (ECB board) to panic and maneuver the €/$ exchange rate ($-goldprice), down !

All the challenging $-competitors (including $-goldprice & $-oilprice) must be silenced.

Martijn said...

@FOFOA

In general it's funny to notice how we are starting to enter an "open source economy", where contributors like yourself are building the intellectual capital instead of the "regular" sources like the overpaid analysts from e.g. CNBC.

Wonder how long it will take before the major players jump in and start censoring, just as they did to wikipedia.

Martijn said...

@FOFOA

I was already triggered by Roubini calling gold a "barbaric relic".
Why should anyone would want to use such an (almost ad hominem) argument in logic thinking?

Anonymous said...

Dubai, better to repatriate the goldmetal, ASAP!

Mandelson called in to help recoup £400m Dubai debt.

Builders and engineers responsible for the luxury developments that turned Dubai into a desert boom town have called on the British government to help them recover hundreds of millions of pounds in unpaid debts.

Martijn said...

FOFOA,

Should interest rates rise anywhere, which is not unlikely given the trouble the US is in and the fed dimishing ability to manipulate rates downward, could that pose a threat to gold?

I would argue it would, although as a counter argument it could be said that if interest rates on treasuries were to rise the dollar might die.

Martijn said...

Obama does indeed need health care savings.
That is, some people thing "it" can still be saved...

FOFOA said...

Wow. They took down the Ambrose Evans-Pritchard piece. Try my link above. It's gone.

Luckily, Zero Hedge saw this coming and published the piece in its entirety.

After you read the original Ambrose piece, be sure to read Mark Patterson's letter linked on Zero Hedge.

It sure looks like someone got to Patterson and convinced him to do a 180.

FOFOA said...

Hello Martijn,

Yes! I am absolutely fascinated by the flow of information now. And I am very happy to be a small part of it!

The neurons have made many more connections. No longer does information flow only through central hubs. Now the ancillary neurons can make direct connections.

This is how the human brain LEARNS. So right now the macro organism is LEARNING. This is like artificial intelligence running the largest computer, the global organism. It is LEARNING and it is starting to THINK FOR ITSELF.

FOFOA

FOFOA said...

Speaking of flow of information, from May 8th through May 11th (four days), this blog had 5,119 unique visitors. The largest spike in traffic yet. 2,355 visits in one day alone. This was due to about a dozen sites linking to "Worst Case Scenario (12" Remix)", which was also reposted in its entirety on a few sites. So it had even more readers than I had visitors. And Big Jake's original piece, placed on several big sites, likely had five times as many readers.

Things have calmed down now, but we seem to have picked up a few more people interested in the overall theme of this blog. I have watched that number grow from 30 to 75, to 150 and now to around 300 who check in daily. It is an honor to have you all visit this blog. And I appreciate all of you who participate. I am not trying to get big numbers. I am much more interested in the few people who come back and check out the older posts and the comments. And especially the ones that go on to read Another and FOA. They are the ones who are receiving the message. Quality, not quantity. Gold, not dollars.

Martijn said...

Well, quantity picking up is not bad.

If the whole world were reading your blog me just might have had freegold already.

Martijn said...

How about Ron Paul? He is quite sane, isn't he?

He understands inflation, and in this movie states that Bernanke has doubled the money supply in the last eight months.

FOFOA said...

Yes. Ron Paul is very sane and very smart. Bernanke believes he can control the current system. But it is far too complex and turbulent to be controlled (especially now, see the Mandelbrot/Taleb video re: turbulence). Ron Paul argues for sound money. This is just as unlikely as my post "Congress Remonetize Gold...". It simply won't happen. Instead we will get just the liquidation of debt that Ron Paul is talking about, only we will get it to the nth degree. And we will end up with a completely broken down system in which only the stability of gold being used as a wealth reserve will allow responsible people to start to rebuild. All the wealth held in financial products will be wiped away along with the liquidation of debt. And holding wealth that way is simply irresponsible right now given all the evidence. (If you get a chance, watch Secrets of the Knight - Sir Allen Stanford & the Missing Billions. It just premiered on CNBC yesterday, so I don't know if you can see the whole hour online yet.)

"The Bezzel" is shrinking. Paulson and Geithner's antics are slowly being exposed in the MSM. The money supply is being exploded behind the curtain, and real capital is being stolen in the present from the global economy. The MSM and the administration admit they are testing the theories in Animal Spirits. This test will fail to deliver the desired result. It will make things far worse.

EVERYTHING, literally EVERYTHING is moving toward a much BIGGER FREEGOLD than even ANOTHER imagined. I have no doubt. I cannot say what all will happen between now and then, nor the timing. I can only guess at these things. But it won't be very long. The system is completely unstable right now.

FOFOA

FOFOA said...

MK (usagold.com 14May2009; 9:04)
Chris

Over the coming weeks and months the Dubai story may turn out to be bigger than it appears on the surface.

Anonymous said...

The new leap2020.eu report is available in French. Here's a google translated version:

http://74.125.19.132/translate_c?hl=en&sl=fr&tl=en&u=http://www.leap2020.eu/GEAB-N-35-est-disponible!-Crise-systemique-globale-Juin-2009-Quand-le-monde-sort-definitivement-du-cadre-de-reference_a3240.html&prev=hp&rurl=translate.google.com&usg=ALkJrhiWFHXiGNiohLrHJV0kgzGvDmO7bA

Martijn said...

Here is some more on insider trading at the SEC..

...The agency “has essentially no compliance system in place” to ensure employees don’t abuse the “tremendous amount of nonpublic information they have at their disposal,” Kotz wrote...

Once again trust - a necessity for the survival of the financial system - takes a blow...

Martijn said...
This comment has been removed by the author.
Martijn said...

Leap is interesting, using the movie the Matrix as a metafore for this crisis.

Coming months: crisis reloaded...

Martijn said...

On Ron Paul: be sure to keep an eye on the Daily Paul once in while.

Interesting to see how his campain is growing so fast. Also a reasonable indicator for the demise of the system, especially as we se Dr. Paul gaining media attention.

Martijn said...
This comment has been removed by the author.
Martijn said...

Here is a rather good Ron Paul video.

He states that this bubble has been growing from as early as 1971, and cannot hold much longer; it's all coming to an end.

And besides the interviewer reads out a statement from Ron Paul from 2003, where he exactly predicts this crisis.

Aleksandar said...

FOFOA,

The Dubai story. I just read the GATA link that you gave above. There are a few things that stand out, by order of importance:

1.

"We want to bring the gold held under DGS ETFs at the HSBC vaults in London to Dubai. What has been holding us back is the difference in gold specification between London and Dubai," a DMCC official told Emirates Business.I wonder what gold specification means.

2.

While the gold allocated to DGS is kept at HSBC's vaults in London, the gold reserves held by the Gulf Cooperation Council's central banks are held by various other vaults in London, market sources said. Gold vaults have existed in London for more than 150 years.The story's between-the-lines read is about the GCC (effectively the Arab Central Bank in some not-too-distant future) reserves and not really about some trading vehicle's warehouse like the DGS ETF.

3.

The bank that holds the ETF gold is HSBC. Although it is stated that GCC's gold is held at "other vaults" in London, I would think it is held in the vaults of similar banks. My question is: have these banks been practicing the "gold carry trade"? The last I define as this very simple algorithm: lease gold @ miniscule cost from a CB, sell at the market, buy treasuries and earn the interest spread. It is actually a very good manner for a central bank to "sterilze" excess cash in the market in good times and rein in inflation, while it can socialize the losses (by printing bailouts) in bad times when the bank (which went on a carry trade) fails and cant deliver physical but only cash. Phisical probably never leaves the warehouse at the CB or at least is not trasnported very far. This call from the Arabs is effectively asking for delivery of the physical. Scary stuff.

4.

"With the DMCC vault commencing operations, we can now further support this tradition by offering state-of- the-art infrastructure and storage facilities that are an essential feature of a successful commodities hub," David Rutledge, CEO of DMCC was quoted as saying. That sounds like a British or at least Anglo-Western name (do you remember one of your posts some time ago where you placed pictures and faces of people in power from the West and the East?). I know that Dubai has a lot of expats living and working there and that it is being developed (with slave-like labour, but that never changes) at the same pace that NY developed. But, is it possible that the "all-powerfull" are changing their home-base from London-Paris-Milan-NY to Dubai?

5.

Gold imports into Dubai jumped 15 per cent in the first quarter of 2009, the Dubai Multi Commodities Centre announced recently."Stand on the shoulder of Giants". Probably the time is nigh to do so, isnt it?

FOFOA said...

Alek,

Very astute observations. We get all worked up over "taking delivery" from the Comex every couple months. But how about "oil" taking delivery of 30 YEARS OF GOLD PURCHASES?

You are right. The shorts may have to cover. But will there be enough gold to cover? And if the CB's have to cover for the banks, will they? Another said they would not:

"The US$ has risen on a flight of fear. That will now end as the LBMA shorts are given to wolves. If this fire burns too hot, gold will turn and it's trading halted. The price of oil will explode as gold becomes the "world oil currency"! Even now oil has locked the IMFs gold, Asia will bid against them no more. We come to extreme times."

MK is fully aware of all these issues.

FOFOA

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