Monday, August 3, 2009

The Call of the Century

Making market calls, or "predictions", is a common practice. Timing is always the hardest part. If your sole source of income is derived from the success of these calls or predictions, it is advantageous to attach a timing that is far enough out that it allows for new information to surface that can be used to mitigate any damage done to your reputation should that call be wrong.

Normal market calls usually state that for fundamental or technical reasons, a trend line is due to change directions. But in the short run, where market calls normally reside, fundamental forces often take a back seat to momentum. It has always been this way, which makes fundamental-based timing more difficult. But now more than ever, it seems that fundamentals have taken a seat all the way at the back of the bus.

Generally, the purpose of market predictions is short term profits. For this reason, the business of calling markets has shifted over the last year, far away from fundamentals. I am not saying that no one is making fundamental calls, only that many newsletter writers who make their living doing this are saying two very different things out of two sides of their mouths.

On one side, they are saying "go with the flow for a profit" and on the other, "fundamentally we are due for a big change". So the way they reconcile these two different predictions is by setting up a boundary between the short and long term, a boundary which they will keep pushing forward through time until, unexpectedly and catastrophically, the short and long terms collide. Then they will finally claim magical predictive powers, even if their followers have lost everything.

This business of calling markets is a lot like the modern version of investment banking; totally focused on short run profits while long run catastrophe looms large.

Soft Supply, Hard Demand

It is often repeated that our markets are driven by supply and demand. In fact, supply and demand is probably the most closely watched fundamental of the market callers. They look for various signals that demand is rising, or supply is falling. Perhaps they are thinking too hard in a very soft world. Or could it be the other way around?

When we think about supply and demand, it is helpful to think of an ancient barter world, modern paper trading tends to muck it up a bit. So think about a supply of chickens at a Medieval fair. Let's say there are 10 chickens cooped up in a booth, with several buyers bidding for the chickens with their various goods. The first bidder take two chickens for the price of two bushels of apples. He hands over his apples and walks away with the two chickens.

Now, the rest of the bidders are faced with the hard reality that there are only 8 chickens left where once there were 10. This is called "hard trading" and the bidders are able to form "hard opinions" about the real supply and demand in front of them.

Next let's imagine that the first bidder only had to put up 5 apples as margin and then wait until the end of the fair to decide what he wanted to do with his purchase. How would this affect the rest of the bidding? Now the other bidders must make value assessments based on "soft opinions" relying on conjecture like "that first bidder rarely takes delivery of his chickens, he's just in it for the quick apple." This is soft trading.

Soft trading tends to draw in a lot of bidders (traders) who are willing to put down a margin requirement in the hope of making a small profit at the end of the fair. The seller of the chickens may have 30 different buyers for his 10 chickens, each putting down 5 apples (or whatever their good is). At the end of the day, 5 buyers will go home with two chickens each, 10 buyers will receive their 5 apples back plus 3 more apples in profit, 15 buyers will lose their 5 apples, and the seller will end up with 10 bushels plus an extra 45 apples while the "price" of chickens actually falls! This is because the seller, who had only 10 chickens to sell, flooded the market with 60 "paper chickens" driving the price down and at the same time making himself an extra profit.

Why More Buying means Lower Prices! (in paper markets)

In the leveraged market of paper gold, the more buyers that show up, the lower the price will go. Here is how it works. Let us say that we want to play on the front lines of gold price discovery; the futures market. We believe fundamentally that the price of gold must rise, so we become buyers of future gold. But let's say that we only have $5,000 to play with. So we pay our $5,000 margin to gain control of a $100,000 contract for 100 ounces of gold. If gold goes up $50/ounce while we hold this contract for future delivery, we will make $50 x our 100 ounces, or $5,000. A $50 rise in gold only represents a 5% increase, but our profit was 100%! We doubled our $5,000 turning it into $10,000!

Here's the problem. We don't have enough money to pay $95,000 more for the physical gold. And the bullion banks KNOW this. They know that there is a 90% probability that we will not take delivery. So when we placed our bid for 100 ounces of gold, they simply issued a brand new paper contract, not backed by real gold! This is pure paper gold inflation. And the more contracts there are, the lower the value of each contract. The same way supplying more dollars makes the value of each dollar fall. It really is the same thing!

This is how a million new paper gold buyers, or ETF subscribers can actually make the price of gold FALL! All the fresh demand is met immediately with fresh supply, inflation in the paper gold market. This increases the supply that is visible to new bidders, lowering the value of each unit.

Only the buying of physical gold, taking it into your possession, puts upward pressure on the price. All other buying puts net downward pressure!

The last 20 year record of gold prices clearly shows a gradual shift from the total confidence in the paper contract market of the early 90's (contracts were "as good as gold"), to the massive inflation of the paper gold market in the late 90's (falling price), to the gradual shift from paper to physical of the last 8 years (rising price), starting from the top (the "giants") and trickling on down to you and me, J6P.

Gold and the Dollar

The history of the dollar's relationship with gold has been extremely consistent. It is a tale of equilibrium followed by extreme disequilibrium, followed by a reset, over and over again, several times now. The distortion of equilibrium is ALWAYS caused by the dollar suppressing the price of gold while freely inflating itself.

From 1913 until 1933, the price of gold remained fixed at $20 per ounce. As paper money increased during those 20 years, the pressure on the system, seen in the growing knowledge that gold was becoming more and more underpriced, needed to be released. So in a drastic reset, gold was forcibly confiscated, outlawed, and then up-valued by 70%. Wow!

Then once again, pressure grew as dollars continued to multiply like bacteria while the international settlement price of gold stayed fixed at a constant $34 per ounce. In the 1960's, central bank gold became segregated from the public as a parallel "free gold market" emerged. Central bank gold circulated at $34 per ounce while private gold changed hands for as much as $45 an ounce.

This development was a free market step forward in the evolution of gold, called at the time "the demonetization of gold". But some economists noted that the price did not take off as they had expected it to in the 1960's. This was because the "soft opinion" of the time (rightfully) conjectured that the CB gold would not remain segregated forever. And sure enough, in the 1970's this came to pass.

In the 70's, of course, the demon(et)ization of gold became official policy. But as in all things, just because the government says it is so, doesn't necessarily make it so. And as the dollar's exponential, bacterial growth continued, so did the appetite for gold as a physical money to hold and store wealth as a reserve, a monetary function officially removed from legal tender currency by "the demonetization of gold".

But through this process of the 1970's something new emerged, "the dollar standard". It took a little while to iron out the kinks and figure out how things were going to work, but by the early 80's the whole world was sailing into the uncharted waters of plentiful international liquidity, growth of wealth and industry through leverage and other financial wizardry, and headlong into the harsh realities of an exponential growth storm.

All the while, the gold market was quietly reorganizing in its new, "demon(et)ized" role. Mining interests cozied up to the new powerhouse forces running the world. Barrick Gold was formed. Forward sales and hedging developed. And the paper gold market was born.

Throughout the late 80's and early 90's this new dollar standard and paper gold market seemed to be working to everyone's advantage. Europe and the US worked together to keep the price of gold steady and low and to keep the dollar "as good as gold" for oil and other global interests. This low and steady price also allowed longer term contracts to be established, promising the continued flow of the cheap oil that was necessary for this "new growth" economy.

Paper gold had not yet inflated like it did later under the official strong dollar policy, so these long term forward gold contracts seemed sustainable and paper gold traded "as good as gold" for the time being.

But then in the mid-90's, the central banks started to realize the extent to which their gold was flowing out in support of the dollar. They tightened up and traded mainly amongst themselves to create the illusion of heavy gold traffic. This was done to encourage the forward sales (hedging) of the mining interests, to support liquidity in the paper gold markets which were starting to inflate through naked short selling, and to lure into the market new physical gold from weak hands through a falling price.

Around this same time Larry Summers arrived on the official scene with a copy of his 1988 paper, Gibson's Paradox and the Gold Standard, and "The Strong Dollar Policy" was born.

The birthday of the Euro was also fast approaching at this time, and the US knew that the Euro would benefit from a rising physical gold price. So perhaps the Strong Dollar Policy was, in part, a preemptive reaction to the birth of a new competing currency. In any case, it is around this time that the paper gold market EXPLODES with "fresh (paper) supply" and its initial purpose, "to guarantee the continued flow of cheap oil necessary for a growing economy", begins to erode.

It is also around this time that Europe and the US part ways as a "gold alliance" in support of the "petro-dollar". Europe adopts a new policy of "Freegold" by quarterly marking its physical gold reserves to market bullion prices while the US pretends its gold doesn't matter and leaves it booked at $42/oz. The US also convinces London to join it in the printing of more paper gold to support the dollar. And the BIS sides with Europe.

Certain oil producers who have been accumulating gold through forward mining contracts don't like this new extreme paper gold inflation. It threatens their method of compensation and they stand ready to raise the price of oil. Europe and the BIS see this development and stand aside, endorsing the flood of paper gold knowing that the rebound effect can only be good on the day the Euro is born.

And then, on January 30, 1997, the daily volume of paper gold sales on the London Bullion Market Association (LBMA) IS LEAKED through an article in The London Financial Times (FT). Posted by "The Red Baron":

The London Bullion Marketing Association (LBMA) can only be adequately described as "a riddle wrapped in a mystery inside an enigma."

It shyly emerged upon the news airwaves on January 30, 1997. Its appearance was almost as an after-thought, deceptively innocuous with few superlatives to distinguish it from the daily diarrhea of financial news spewing forth from the bowels of the world's money centers. Few readers took note of it... most gave it little import. To my knowledge it was an esoteric select few at the Kitco Gold Chat group, who really zeroed in on the draconian significance of the news.

Was the news a bureaucratic slip of utmost discreet information - indeed top secret data - or was it a well-timed and methodically planned leak to the press. Or perhaps it was the "whistle-blowing" of an irate employee, who was passed over for promotion? Who really knows? In any case we will provide all the details surrounding this monumental announcement... and allow the reader to draw his own conclusions.

The LBMA Announcement -

Literally at the crack of London dawn on January 30, 1997, the London Financial Times printed the following:

The London Financial Times
Gold global market revealed
By Kenneth Gooding, Mining Correspondent

Deals involving about 30 million troy ounces, or 930 tonnes, of gold valued at more than $10 billion are cleared every working day in London, the international settlement centre for gold bullion.

This is the first authoritative indication of the size of the global gold market, and was revealed yesterday by the London Bullion Market Association.

The volume of gold cleared every day in London represented nearly twice the production from South African mines in a year, Mr. Alan Baker, chairman of the association, pointed out.

It was also equivalent to the amount of gold held in the reserves of European Union central banks...

For 8 months following this strange event, the chat room at Kitco (the ONLY gold chat room at the time) buzzed with intrigue about the meaning of this revelation. Then out of nowhere, someone started posting under the name ANOTHER, offering a plausible explanation for everything that had been happening in plain sight. But the real kicker was ANOTHER's call -->PREDICTION<-- of the END of the dollar as the global reserve currency! Back in October '97, this call was COMPLETELY UNPRECEDENTED!

It became apparent to those who followed ANOTHER that he was closely tied to the monetary faction that opposed the massive inflation of dollars and paper gold. It became clear that he was somehow associated with the ECB and/or the BIS. It also became clear that he had been writing through an intermediary, an American friend, in order to ensure his anonymity. This friend came to be known as "Friend of ANOTHER", or FOA for short.

Their "call" ended up being HUNDREDS of posts over more than FOUR years! And they did not just drop this bombshell and walk away. They carefully explained everything in great detail, taking the time to answer many of the questions that were literally HURLED at them.

Could this be "the call of the century"??

Can you name me ONE other analyst who had this conclusion, at this time, with this recommended course of action? Anyone?

Few would dispute this call today. Only the timing seems a little suspect. But let's explore this "timing" issue for a second. What is the ONLY important thing about timing on a call like this? It is being EARLY! That's right. When this happens, you are either early or you're late. There will be NO in-between. Granted, some others made this call in the late 70's. They were perhaps too early. But just to be sure, let us look at the results of ANOTHER's call so far.

If you had followed ANOTHER's advice to accumulate ONLY physical gold metal at the low prices of the day ($280-$320) you would not only have missed the pain of the "Dot Com" collapse, but also the real estate collapse and the recent stock market collapse. Not only that, but you would have seen your savings DOUBLE in Euro value and TRIPLE in dollar value. Not bad for a decade with so much pain!

Now, I'll admit that this is not exactly like getting in on Google's IPO, but wait a minute, not ALL of his calls, his -->PREDICTIONS<-- have come to pass yet! I know some of you have made a small fortune on last year's spike in oil. And others made a fortune in real estate over the past decade, as long as you CASHED OUT at the right time! But what ANOTHER's call means when it finally comes to pass is that all profits of the past decade could potentially be WIPED OUT over night if they are not positioned properly. It also means that some, the few people who understood what is actually coming, will be the beneficiaries of a ONCE-IN-A-LIFETIME transfer of wealth that is merely a SIDE-EFFECT of the natural adjustment process that all fiat currencies must go through when they resist nature.

Meanwhile we have some of the most famous market timers like Richard Russell now calling for a Bull Market in stocks based on Dow Theory. Russell is simply giving into the obvious manipulation to make a short term profit. Anyone who has followed this blog for a while knows that I think the markets are HOPELESSLY RIGGED right now and that anyone with any sense would not go near them. Here is another example I came across recently of someone who recognizes the paper game is totally rigged, yet still encourages playing ball:
Catherine Austin Fitts (transcribed)...

You know, I suspect that we're watching a market where the players who have inside information, because they are, you know, trading on behalf of the Plunge Protection Team, and they own the central bank, I mean you're looking at the firms who are members of the New York Fed, and own the lead central bank, and so, create the currency. So they have incredible inside information. And I suspect that they are using that information to make a lot of money in the markets both legally and probably illegally.

What we're advising people to do is essentially withdraw from a rigged game. And so don't invest in large corporations and large government securities. But rather, practice financial intimacy which is investing in who and what you know. So the reality is that this game is not to the advantage of the small investor, and the question is how can we switch out of it, and start investing in things where we can have confidence in either the ethical nature of the company and the products and services, or the ethical nature of the market in which we are participating? So generally, my recommendation is to stay away from large and mid-cap stocks and also to move out of the US markets. There are countries and areas of the world that are more ethical.

Why? Why not invest in the one asset that is a true monetary wealth reserve? An asset with a very limited downside and a virtually infinite upside! An asset that is a future claim on ANYTHING in the world, not just one specific local company. It is even a monetary wealth reserve FOR THE CENTRAL BANKS!!! This function [wealth reserve] of money has been STOLEN from us by the central bankers and their fiat currencies, in which ALL other investments are denominated! This function, the wealth reserve, was second only to the trade function of money for thousands of years. We lost this function of money when actual physical gold stopped being used as currency. But the idea of this function persisted, driven by the greed of the bankers to not only skim profits from trade, but to take the much larger skim that comes from savings!

This reset of value is going to be a one-time-event when it finally happens. After that, things will be in equilibrium again. And this event will have little empathy for your cricket-like jump-skillz as the shoe drops. Many skillful traders will be completely squashed.

The big debate right now seems to hinge on a slow collapse versus a fast collapse, and internal versus external. My gut tells me it is likely to be fast and external. What better time to take down Wall Street than while they are still long the dollar, short the Euro, and short gold? Wall Street is far too confident in its own manipulative power, and I imagine a strong movement sooner rather than later to take it down. The rest of the world has to be worried about an organized dollar devaluation from the inside, so why wait? The spineless parasites in Washington don't have the backbone to make a big move until they are SURE they can blame someone else. But whoever STARTS the panic, profits most!! "The early bird gets the worm", as they say.

I believe that the collapse of the dollar is directly linked to the paper gold market. Much is written about how gold will profit from the falling dollar. I think it is the other way around. It may just be a semantic difference, but I really think that gold is the key! And I feel privileged to have found the one explanation that makes so much sense. The call of the century, made less than 12 years ago, unfolding in front of our eyes today!



Tekin said...

Front running the Wall Street? Well... It will be a scene to watch, if it happens.

This post is somewhat like receiving an invitation from "The Count of Monte Cristo" to his place at Piazza del Popolo - to watch an execution...

Shanti said...

If some entity will make an offer the other(s) can't refuse, i only can imagine an - EXTREME - overshoot in the POG

Notice, that the POG now, is forced down by collaborating entity's, the price could be forced up by the same as well.

Just letting the mind flowing free and i would not be supprised if we will see the other end of the spectrum, instead of a the balance you are sugesting.

In any case GOLD in possesion remains the key

FOFOA said...

Hi Shanti,

I agree. All possibilities still carry a probability. Gold is the way to devalue the dollar back to equilibrium and this option is open to all who would use it.

Anyone with the power to print unlimited currency also has the power to increase his bid to whatever he feels like.


Jr Deputy Accountant said...


If I make you laugh, I'm grateful to know as much. But you make me stop, put down the caffeine and the newswires, disconnect from the chat program and the texting and the TV and even the iPod and just think.

This is a masterpiece.

I am so grateful you have an audience for this and thank you for being so... "detail-oriented" (I won't repeat the alternate phrase you used)

it is appreciated.

FOFOA said...

Grand Unified Theory of Market Manipulation - ZH

We WILL see financial Armageddon - Vlog

Expletive-laden Geithner - LOL

Dollar Collapse Imminent from Thurs., July 23 was updated last Friday, July 31: U.S. Dollar Collapse Starting Next Monday ?

Well, today being Monday, seems they may be on to something...

"What will happen next week ? Our guess is that the US Dollar Collapse could start as early as Monday next week. It is possible though that when Foreign Exchange markets open on Sunday in Asia, the EUR/USD might sell off very briefly, about 0.5 per cent, as big institutional traders might try to get in on the cheap by first selling EUR/USD in order to trigger some stop losses, and then building their EUR/USD bull-position during this short period of weakness.

But these are just meaningless details in what might turn out to be a historic devalutation of what is currently considered as the world reserve currency. Put your seat in the upright position and fasten your seat belts."

FOFOA said...


Thank you for your kind words. They are appreciated. I am just trying to pay forward what I believe I have received, in the best way I know how. And I'm happy that a few people like you are willing to read my long diatribes.

How about that Geithner? F--kin' A, huh? I would have never guessed.


Anonymous said...

A goldmetal-story (true or false doesn't matter) :

>>> There was a very similar story of physical goldmetal moving out of Irak at the time of the US invasion/occupation.

What is the real purpose of these stories ?

Anonymous said...

This monday detail : Monday, the troika (euro-oil-gold) started moving up, again.

For the time being, I keep calling these maneuvers " arbitrage " :

When $-papers rises, the $-index declines and the troika goes up !
(filter out the leads and lags)

This troika was born the day the euro was succesfully introduced and is "the" ultimate $-system challenger by its concept.

This troika is still alive and kicking,...whilst permanently under threath from the $-regime who wants the 3 horses (euro/dollar-oil-gold) being separated.

A troika that is bringing the $-standard back to its real (proper) proportions on the global scale, is much stronger than only 1 horse out of 3.

The troika continues to "erode" the 40 years old $-index 80-maginotline ! The monday action was a firm one.

One day the inverse arbitrage (out of $-papers into $-index) will be left totally alone ! Then the troika will travel freely and find many other troika travellers...

Anonymous said...

Central bank reserves - Forex and gold :

One of the main functions of the CB-reserves is to govern their fiat system through economic peaks and valleys mainly resulting from the floating exchange rates dominated by the one and only $-dominator.

Through the gradual demonetization of gold,...those who wanted to break free from this monopolistic global $-juke refound the one and only solution to reach that goal.

When we can eliminate the floating-addiction,...a lot of unproductive energy can be set free for "internal" development without risks of outside interference from competitors that cannot compete on the level playing field (anymore).

W're talking about a sterilized $-5Trillion and systemically increasing !

The floating exchange rate regime is a curse and not a blessing for all those that are doing better than the one and only dominant governer of this floating exchange !

Let's store the *earned* wealth in the proper universal tangible !

FOFOA said...

Anon, that's pure REASON!

Mantis said...

Brilliant work, FOFOA. You're on the bleeding edge of economics.

Anonymous said...

JS nails a practical point :

6. The gold banks cannot fight the dollar because even they are too small for that market.

...they "became" too small for a $-market they hyper-inflated themselves...

The more this $-hyperinflation exhausts itself,...the more the DIRECTIONAL DESIRE for a lower/devaluating dollar.

..." Directional Desire "...Says it perfectly :)))

Tablemaker said...

Just wanted to say how much I appreciate the time it takes to maintain and update this blog. I have been a loyal follower for several months now. Keep up the great work.

Jr Deputy Accountant said...


Seriously, my Going Concern editor sent me that last night and I was like "you have GOT to be f&#%ing kidding me. JACKPOT!!"

I am not sure what exactly happened... perhaps Geithner is reliving his elementary school days (he isn't really that popular, you know) and cannot control his juvenile outbursts.

I am absolutely thrilled!

Stay f^#$ing tuned, bwhahahaha!!


p.s. right there with you on giving back. So glad you understand that :)

S said...

Geithner is is the very definition of a fish rots from the head.

Great post again. I will only say that the dollar and fiat is a geopolitical formulation as much as a monetary invention. Note that in the past two weeks India has annoucned it will add 100 ships to its naval fleet. Russia remains committed to building its fleet in the Med 9Tartus). The Israelis are clamoring for JDAMs and the Us has suddenly turned very hawkish on Iran. Interesting that former Pres. Clinton is in North Korea (Hillary is unwelcome) and perhaps the clear calculation is NK is a no fire zone as it is in China backyard. Iran remians in the domain of the dollar in the ME. Could the Clinton visit be a move to assuage/deal with NK so as to break the Iranian nexus. Who knows.

One thing is for sure the US Dollar will not go down quietly. Read this morning that Paul Touraji (Bloomberg) a former Tiger trader and favoriote of JR has sold stocks and bought gold. This followes Einhorn and Paulson.

I have said before that the US will create an emergency scenario whcih will either set of a flight to dollar (akin to what Zerohedge posted yesterday in that paper discussing the trading pattterns in front of the auctions), or a flight ot other. it is the ultimate gamble.

A refutation of the dollar is essentially a free pass for the US to inflate its debt. So your point about quick and fast is exactly right. The more sanguine would say that you have described a MAD scenario and it will never come to pass. Perhaps that is the arrogance of empire...

Very interesting little story few days ago talking about hgow BAC has an internal team working on a china suba nd intends to apply for charter. One has to ask themselves why would China allow BAC under the robe? Simply defies logic at present for this move unless China has basically forced the US to claw down US barriers (as in Fed). Still it defies belief that China would actually allow this.

Seems like the US is about to find out who its real friends are.

As an aside have you charted spread premiums for coins historically? Wuld be a great chart to see juxtaposed against future gold price

Anonymous said...

Hello FOFOA,

Thank you for your writings. I've been acquiring both silver and gold for over a year now. For someone who only by instinct thinks paper will end up being used in the outhouse, when will a novice like myself know when to sell metal back to paper are will metal become the new monetary exchange?

Your very kind, as are all on this blog.


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


As gold and silver become a store of wealth, replacing fiat, there is no conversion back to a flawed wealth system. There is only conversion into fiat as spending requires.

FOFOA said...

I haven't read this yet, but it looks to be worth a read:

How ALL systems can collapse overnight
by Martin Armstrong
26 pg. pdf

"Collapse of the global economy as we once knew it can take place with such speed, it will leave the vast majority frozen like a deer in headlights..."

FOFOA said...

And one more from Armstrong:

The Goldman Sachs Conspiracy-- The Real Dark Pool

It is a sequel to this one.

Mantis said...

Armstrong is one of The Few. His numbers corroborate nicely with those of other cyclical historians.

Clinton is a fantastic negotiator. I don't know why he's in NK, but the fact that they sent him is revealing. Honor among thieves? Unlikely. Scoundrels every one of them!

Anon51,heed Siege. I'd also add that over time as you come to better understand gold, your apprehensions will vanish and you'll know what to do.

FOFOA, I've been searching for a long time: do you know what ever happened to Another?

FOFOA said...

Hello Mantis,

Thank you for your nice comments. Unfortunately, I do not know much about Another and FOA. But from close look at the archives, it is understandable why they stopped posting. The dollar's demonization of gold has left some nasty creatures in its wake!

S said...

Oh add to the drudgestory this am about russian subs off the coast. You can not transfer wealth on this scale and not expect conflict. The equity market is the prozac of America. Watch the sheeple be led off the cliff...

Steve B said...


I just found this blog lat night after a post on IV. I read until 1am. I am new to gold/silver and just started stacking in December.

I have a few questions, although maybe this isn't the place for newbies.

I read the D-I-V-O-R-C-E article but FOFOA you seem to say no on silver.

a) Will silver be as good as gold?
b) Won't there be a time that even physical gold will be no good, like with digital money and a global (bad) gov't? I think there will be a PRIME TIME for gold/silver and then there will be a time to get into the currency of the realm and OUT of gold.

Any help would be great.

FOFOA, wow this is an unreal blog. I can see how the geo-politcal and the macro-economic mix perfectly now. Thanks again for such great info, it will be days to read it all. This place makes IV look like High School, and this is the PhD of this topic.


PS I can't wait to find out why this A and FOA stopped posting, soon into the archives!

S said...

YTake note of the US Treasury announing intention to move to 30 yr tips. However the move is merely more window dressing. The foreign buyers are not stupid enough to buy an index linked bond that is pegged to a manufactured number. Note also the SPX breaking below the 100 level to be met with a sound further punishing of the DX/Y. The equity makret has become like a crack addict. If it doesan't continue to feed the habit it will crash. Look at the garbage that is rallying while GLD stays flat.

FOFOA said...

Hello Steve B,

I am happy that you made it here. It is why I blog.

The silver versus gold issue is a hot button. It raises an ire that may best be avoided. I think after you read some more you will understand more clearly how I view this issue.

If you would like to walk the gold trail that I and many others are walking, I think you have come to the right place. I recommend that you start by reading Another and then FOA linked at the right side of this blog. I found it helpful to print them on paper. They are quite long (about like a 300 page book), but they will provide a foundation (or filter) for the observations and interpretations that I and others make on this blog.

Again, welcome!


Steve B said...

Thanks for the fast reply and the welcome aboard!

OK, I will read more, I see the links on right that someone hosted post kitco, where it started.
So I am right so far; there are 2 camps on being in silver or not and you are in the not camp. My brother is more gold, I am WAY more into silver, over 3000oz of silver so far. I have some physical gold as well, but less than 10oz. I try to tell my wife it's not an investment it's a currency swap for an older currency than paper dollar. :)

OK, I will get at it here as well. Is this the only forum to ask you questions? I don't want to glog up anything.

"If ANOTHER's claims are true -- that a consortium of oil states has cornered the gold market (and given the impressive circumstantial evidence, this could very well be the case) -- these "footsteps of giants" become the most salient and persuasive case for gold ownership I have seen in the past decade, if not the full twenty-eight years I have been in the gold business." -- Michael J. Kosares, president of Centennial Precious Metals, Inc.; author of The ABCs of Gold Investing

IF someone does corner gold, can't they make the price whatever they want, ie zip? I hadn't read gold is cornered before.

LOL, I can't wait until I can ask a smart question!

thanks for the info and the site, amazing!

FOFOA said...

Steve B,

Gold's function in society is evolving into something new. It is being spread out among millions and millions of savers, to perform this new function. Only the SAVERS need gold! This evolution is less visible here in the States, but even you are part of it!

In Europe they can now buy gold at the teller window of the local bank, tax free! They are even putting it in vending machines! In China they buy gold chains by WEIGHT! In India they save weekly in gold. In Vietnam they are pricing houses in gold. In Thailand, gold shops are everywhere, and they post the daily buy/sell price right on the front window! In Russia the last two presidents have posed for photo-ops holding gold bars or coins. The CBs have recently slowed this redistribution process and have begun buying again (a sign that change is near). The writing is on the wall for all who have eyes to see.

The cornering of gold means only that small amount at the margins that is offered for sale at today's low prices. That marginal physical volume is being depleted rapidly at the same time as giant buyers stand ready to buy giant amounts. This is the "cornering", and it puts a lot of pressure on those who sell paper gold without the physical to back it up.

Money has always had two functions, trade and wealth reserve (actually three: means of exchange, unit of account and store of value; the unit of account function acts as a bridge between the other two). Fiat currency is an extremely inefficient wealth reserve because it can be created from thin air (see: Ben Bernanke and Gideon Gono).

But with our modern computerized banking system, it works great for overnight trade. Gold, on the other hand, is a little bulky for trade, but works great as a wealth reserve, especially once the dollar loses its global reserve currency status which allows >>only it<< the ability to suppress the price of gold. When that is gone, gold will float freely against all currencies as a wealth reserve!

It is the separation of these two functions that is happening today!


FOFOA said...

Here is an interesting collection of stories that, combined, seems to point to the Aug./Sept./Oct. time frame for some sort of organized global currency realignment.

Remember, the US dollar is only Monopoly money, a global accounting trick used to allocate (or MIS-allocate) real resources. A Monopoly money whose total value (quantity times current PP) is completely out of alignment with global REAL resources. A reset is required, one way or another.

Today we have a financial crisis, an economic crisis, and a monetary crisis. Three different crises, all happening at the same time! Financial is all the paper junk that is floating around at fantasy valuations. Economic is the collapsing architecture of the real world (unemployment, imbalance), and monetary is the accounting of it all. Together they form a SYSTEMIC crisis. A crisis of the WHOLE DAMN SYSTEM.

An accounting adjustment is needed, and WILL happen one way or another. THIS is inevitable!

Here is one more to add to the above.

Anyone notice a problem with banks lately?

"from 1921 to 1929 banks were failing at a rate of 600 per year, yet the stock market soared. This said, the failures picked up speed in 1930 to 1,352. In 1931 2,294 failed with 500 in the month of September."

Anonymous said...

You mean first stage of inflation,Fofoa? DOW soarimg? S&P?
Ben and Tim also had had a friendly dispute I've heard. Somehow I feel a kind of soaring nervosity ascending...Am I wrong? Hope not.


Anonymous said...


You say we have three crisis at the same time. I respectfully don't agree. We only have one and that is the dissolution of true capitalism. Everywhere in US, Europe, Russia etc. the goverments are interfering to stark into the market.Europe is almost socialist. They abolished the gold master to get free hand and become more powerful. It was the goverments and their debts to destroy the fiat money. The banksters worked for them.
I don't trust ANY gov't. Whatever they bring along will not be good. It will be a new experiment but I hope our insurance will help us to survive. For at least a while...

Steve B said...


Yeah was telling my brother this morning about the gold machines in Europe and around world, India, buying is up. I was trying to give him the big picture. He has a lot more gold he could get. I think I get the big picture. I am now trying to dig into practical details, if known.

I feel like this is Watergate and deepthroat is telling me to follow the money (gold).

If I may ask only two more questions today.

What happens PRACTICALLY when a bank holiday occurs? I understand WHY one may happen, but I do not get what practically happens DURING ONE.

Reading the July comments on "Open Forum" you talk about "90% stolen etc". Does ones bank account go from $5000 to $500 over night, the accounting correction that is needed?
I think it is more a dollar VALUE change and not a nominal change as I site above. I wonder if after the kids are in bed I will be reading until 1am again! This is great stuff.

2nd and last questions is this.

If someone would have predicted the below quote around 1975 how would you respond? Like "oh I see how that could happen" and then lay it out. Or, "no impossible this is nuts" etc.

"Those investing in this commodity, gold, hoping to find security are in for a tragic surprise. The price of gold is going to rise astronomically but will not be sustained over a long period of time. Silver will also become a very precious metal and it’s price will go wild. But neither silver nor gold will offer real security. The fluctuating and uncertain value of gold and silver will be a part of the economic confusion that grips the world. Believe it or not gold will not hold it’s value and gold hoarders will get hurt badly."

FOFOA said...

Hi Fauvi,

Your first comment is confusing to me. But yes, the Fed believes it can manage public perception of this crisis by simply stuffing the Dow and the S&P full of pure base money inflation. There is no economic inflation to back this up. It is a recipe for hyperinflation (a run on the >>currency<<), not inflation. And as I have said, hyperinflation is actually DEFLATION when viewed in real terms, gold!

In deflation, the purchasing power (PP) of money RISES! This will happen to gold. In inflation, the PP of money FALLS. This will happen to the dollar. Only it will not fall in the orderly manner that is associated with normal inflation (which is in the presence of an inflating economy). Instead it will fall dramatically as a currency event in the presence of a collapsing economy.

Add to the mix this 2001 quote from Journeyman:

"But shipping all those "dollars" overseas puts things out of "their" control and, in fact, out of any one body's control. You can stop a bank run if only you and a few friends know there's a problem. Once it "gets out," however, then it becomes a game of chicken. Once the first major holder PUBLICLY heads for the door, the rest will break and be close behind."


Anonymous said...

Tarpley on hyperinflation-
that's what I've meant. That was the same in the '30ies.


FOFOA said...

Steve B,

We are not in for a repeat of the 70's. I think this will become more clear as you read Another and FOA. But for one thing, if Bernanke raised interest rates now like Volcker did in the early 80's it would have the opposite effect. Eric Janszen touches on this point in Does USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity:

"Even as oil and other prices rise to price in future inflation from the Fed’s and Congress’ re-inflation policies, current chairman Ben Bernanke cannot in 2009 raise interest rates as Paul Volcker did in 1980. Conditions then—low unemployment, positive GDP growth, and high inflation—are the precise opposite of those that prevail here in the middle of our FIRE Economy Depression...

If Bernanke pulled a Volcker today, raising interest rates and cutting the money supply, he’d launch a process to send the U.S. economy into a hyperinflation.

The circumstances facing the U.S. today and in 1980 are apples and oranges..."

As for your first question, yes, any bank holiday would be a knee-jerk (or planned) reaction to a drastic change in the PP of the currency. Any such dramatic change in value can be internal or externally driven, planned or unplanned, controlled or uncontrolled, timed or completely unexpected.

They would temporarily close the banks (declare a "holiday") to prevent both a physical and electronic run on the banks. "Let the currency lie still as its value evaporates" rather than have everyone running around like headless chickens frantically trying to withdraw their cash and buy some gold... and probably killing each other in the process! Better to just shut it all down, let cooler heads prevail, and then reopen the banks after things settle down.

Enjoy your reading.


FOFOA said...

"Somehow I feel a kind of soaring nervosity ascending...Am I wrong? Hope not."

I don't think you are wrong. This is a high pressure situation for the dollar.

Steve B said...


Thanks, I read that article on Does "USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity:" before today.

That quote I gave was from 1974. It has not played out yet and wasn't meant to be financial investment information. With the light of 35 years now, don't you think that the statement will be true at one point? If I can square that statement with this blog, A and FOA, I am set! That is my goal.

Also, I read on here already about "Any such dramatic change in value can be internal or externally driven, planned or unplanned, controlled or uncontrolled, timed or completely unexpected." That quote was familiar, but what does it mean. Sure China could "exit" first and then everyone follows them and then ooops bank holiday Obama would HAVE to do. External. Check.

What happens? I guess that is why I read so much until I see it, I am a visual learner. What would I SEE. Does my bank account, what's left, go down or does bread/gas go up or both. I get PP goes SOUTH, like Argentina south. I live in Chicago so that is SOUTH. :)

I get that freegold and hyperinflation are different but CAN occur at the same time, read that too. What I HAVE NOT READ is what a bank holiday looks like in the 2010 range.

In 1933 it was give up your gold for paper, icky. What a shaft. Some first WEEK in office for FDR.

That devaluation was easily visible since the dollar was pegged to gold. So, for example, if it took $20 bucks to get gold and now it takes $35 to get gold my paper is worth less, that's easy for even silly me to see. What I am not getting is since today there is no basis for any "value" what is the measure of the deflation in the currency? How will one measure it since the value of our good ole USD is SUBJECTIVE today.
Is it that no one knows and that is why I never read it, or read it and miss it?
To me, and that's not so sharp, I can understand either a) LESS dollar balance in a checking account after a BH or b) prices are way MORE. OK LATE EDIT BEOFRE POSTING. or c) NOTHING changes (no bank balance or price changes) except gold is $2200/oz instantly afterwards.

I am sorry but I just don't know what I don't know.

Thank you for your patience.

Siege said...


Your bank balance won't change. It's the purchasing power of your dollars that will be reset. This assumes a simple bank holiday where the USD emerges again. There are other possibilities, such as the issuence of the Amero or an alternate currency to pull attention away from the devaluation. The net effect is the same; you will still have your currency or it's alternate currency's equivalent. It just won't buy as much.

Steve B said...


Yeah sent a few Amero links to friends months ago. They think I am nuts. 2+2=5 type stuff.

I am in the NAU/Amero camp.

Then regional currencies, (amero, yuan, euro) then a global one after "they" work out the kinks to go global.
When they have a global currency in place, gold is dead too. :( But until then, gold/silver is the place to me, in my newbie opinion.

I think, somehow, gold gets sucked in by bad gov't, but just new players, and won't help those who think it will remain automatic safety. I don't know how yet, but I am still reading up.

Thanks for the reply!

FOFOA said...


The only way I can reconcile your quote is to point to the negating flaw in the very first sentence: "Those investing in >>this commodity<<, gold, hoping to find security are in for a tragic surprise."

There is an important difference between gold and silver. Look at the last 136 year evolution of gold versus silver. Study it and find the difference.

We are in a DEFLATIONARY collapse when measured in real terms: gold! In a deflation, the PP of money (gold) rises in relation to all commodities. The HYPERINFLATION will be an accounting trick played on your mind as you watch prices rise in dollar terms yet fall dramatically in real gold terms. Gold metal will not trade at ANY price during this transition. It will be a complete mind-fuck!

My answer to your first question is not for several generations and certainly not in our lifetime.

My answer to your second question is that there are countless potential scenarios other than your China scenario, all with the same result.

All you need to know about a bank holiday is to have more cash and more food on hand than the average person, so that you can last longer. Remember Survivor's trademark "Outlast"! I do not have a crystal ball. It could play out a thousand different ways. No way to know how it will play out, even if you are the one that makes it happen.

I don't think you need to worry about a gold confiscation. Even if they DID do that (which is a vanishingly small probability), it would be different this time in that the confiscation would happen AFTER the devaluation and you would be compensated in paper at the new price. They will never try to force a confiscation at the rigged price, too many people know it is rigged. The confiscation would be as violently opposed as a home invasion robbery. If they confiscate this time it will be for a very different reason than last time. But I'll say it again, not gonna happen!


FOFOA said...

This "gold-angst" you feel is normal. It is the result of decades of gold demonization & marginalization. The gold PRICE rise of the last 8 years (3X) was an organized transition process. It demonstrates that the dollar's power to crash the price of gold ended 8 years ago. This phase is ending now as is shown by the CBs switching from net sellers to net buyers. The revaluation phase of this transition will reveal to the West the difference between price and VALUE!

The dollar regime is completely powerless compared to 1980, 1971, 1944 or 1933. You can see it clearly in Tim Geithner. This apprehension you feel is misplaced in my opinion. You will be surprised. I believe the US govt will ultimalely EMBRACE freegold out of necessity, and encourage all citizens to save in gold. Remember, my hoard of gold is most valuable if EVERYONE is using it and valuing it. And in the absense of a "dollar standard", the US govt will prefer its citizens holding gold to some other currency like the Euro. They can force what we use to spend, but they can only ENCOURAGE what we hold as savings.

I do not foresee the Amero nor do I foresee a global currency. There is nowhere near the global confidence or cooperation required to pull it off. And once revealed, freegold will fill the need for balance and the means to easily judge the credibility of your trading partner's currency. In my view, we will ultimately end up in a world of many regional and local currencies for trade, but only one for reserves.

As for a devaluation, again there are a thousand ways it could happen. I will give you one way (this is NOT how it will happen, it is merely a "toy game" demonstrating how EASILY it can be done). The Fed could announce tomorrow on CNBC that it is buying gold at $20,000 per ounce. It will buy as much as people are willing to sell it. In fact, it will buy all the gold in the whole wide world if it is tendered. Bingo. Devaluation done. The Fed would be LUCKY to get 1000 tonnes of gold out of the deal before others in the world raise the bid to MORE than $20K!


Anonymous said...

Gold's two tier pricing paradox :

30,000 Tonnes of CB-gold versus 130,000 private gold !?

How can these two completely different gold-(pricing)-circuits live harmoniously together without disturbing each other ???

Gold history (100 yrs) proves that they cannot live harmoniously together an function !

CB goldpricing is fr monetary purposes and private goldpricing (market) is "unfree" !
30,000 Tonnes of official goldmetal rules 130,000 tonnes private goldmetal through a gold-contract hegemonic goldpricing cartel.

This 30,000 leverage-power is now allowed to be challenged by private gold. That is the real meaning of the ECB's quarterly MTM goldprice booking. A license for private gold to let goldprices BREAK FREE !

Look at the long term goldprice in Indian rupee ! Private rupee-freegold versus official unfree $-goldprice, harmoniously together on one continent. What a perfect model for the changing balance monetary/demonetized goldpricing.

Soon central bankers can finally stop "organizing" the convenient monetary goldprice fitting in their fiat-system and leave the goldmetal-VALUATION entirely on the free private goldmarket.

The crescendo volume of unproductive $-debt to result in proportionate decreasing world GDP growth (already $6 to $1) is absolutely madness and systemically untenable for much longer because it goes exponential.
(cfr. Armstrong's Phase Transition through the Waterfall).

Freegold will materialize in levels : Gradually since 1999...then a JS-like goldprice adjustment in the uncharted goldprice territory above $1,000/Oz...then a totally breaking free floating pricing as collateral for a Systemic failing Debt System that only produces DEFICITS !


Shanti said...

@Belgian 12:20

"A license for private gold to let goldprices BREAK FREE !"

How - EXTREEM - powerfull is this quote !

Among the growing anti-propaganda, they put a good hart under the belt.

Anonymous said...

@ Shanti : Look @ Gary Dorsch the chart - China M2 (!08/'09) and Shangai yuan/Oz !

The monetary goldpricing nicely in sync with gold/M2 of other nationstates.

But the practical (reserve) functionality of this CB-monetary-goldpricing has been reduced to zero over the past 5 decades !

On the other hand, the $-standard is becoming dysfunctional as well.

When the $-standard has finally to go,...freegold stands ready to fill the void that the IMFS_fiat mismanagers have created.

The distrust in the $-standard will stop all $-liquidity flows, at once. Then freegold takes over...

S said...

Look at the way gold traded this am. It jumped ion the QE annoucnement and then was crushed back down. Another day at the paper shredder

Anonymous said...

hi Fofoa!
What do you think about Clinton's trip to Africa? Is she trying to get some barrel of oil? To bring about a bit of war? Some pressure? I hope it's just too late for arrangements as the Chinese have already got better connected.


Mantis said...

Shall I believe the official statistics for CB holdings of gold? No.

Shall I measure gold by its price in fiat money or by its weight? By its weight. "Dollars per ounce" will obscure your understanding of gold.

Tekin said...

Uncle Harry zooming in. From

"Jim Sinclair’s Commentary

I have the deepest respect for Dean Harry, but would normally not believe the potential for what dear Harry proposes.

However, with the present war between politically directed monetary policy and FOMC directed monetary policy I have to suggest serious consideration of the following.

There certainly is no harm to be done by doing what Dean Harry suggests.

Harry Schultz newsletter

Conclusion: Stand by for a possible bank run & bank holiday on Aug 26th, after the news breaks on the 25th. (FDIC 2nd Qtr. Report)

This is in line with the HSL prediction of a US bank holiday in Aug/Sept.

If you live in the US, get 3 to 6 months household expense money out of banks now."

Siege said...

Commodity Shortage Likely in 2010, Goldman Sachs

“We expect a redux of 2008... severe supply constraints... sharply higher prices” the analysts said.

Producers of corn, copper, petroleum, coal, wheat, coffee and zinc are using more than 90 percent of their capacity, according to Goldman Sachs.

Looks like a new spin on inflation to me.

Ishkabibble said...

I wonder what China's reaction would be to the US blatently monetizing. It's not the 'strong dollar policy' they were promised.

Steve B said...


Thanks for the reply. I have some concerns however.

Upon reading a little bit more here are my thoughts.

First, I am NOT a silver advocate. I just have more than gold thinking they are one in the same, as treated by my quote. It was not “picking” on gold since, as seen in the text, BOTH gold and silver aren’t gonna work after awhile it said.

As to the homework, I see the ratio increasing from the historical 16:1 around 140ish years ago. So it takes less gold to get the same silver obviously. I do see spikes in silver before and right after the gold freeze from ‘34-‘71. But that is neither here nor there. I think the ratio will close back to historical norms, or at least closer than 70+-1, which is when I bought.

I hope that was the correct answer for the homework. J

I certainly disagree on the “not for several generations answer”. We WILL get off the USD as the world reserve. Never again, after this, will there be a NATIONS currency as the reserve. We are entering into a period of global solutions.

My understanding is this USD “reset” will be a GREAT TIME to own gold, hard assets. I get that. The world market/political system is taking down the USD. When the WORLD has control of the reserve currency there won’t be anyone else to stop them next time. Free markets won’t really exist, financially, at some point (think global Fed, ouch). I am not saying right now, but this take-down of the USD is a step in the process down the path to the DESIRED global currency. I think we are 7-15 years away from one script and store of wealth.

Eventually, we will get to a point where the reply to this post below will be “WHY NOT”. ( I am sure there is a good answer now)
"They" can easily control what we earn and spend through legal tender laws. They can push that as far away from tangibles as they want. But they can't control what we save, buy or hold as a reserve as easily. They will have to let that function return to tangibles.
July 29, 2009 3:25 PM

Politics sadly enters into the financial equations WAY TO MUCH lately. It’s really all political now. I can’t wait to read A and FOA and see what they say on this political issue and issues going forward from when they wrote.

I mean “they” want the NAU in by 2010. I could fill up this post with NAU stuff. There is a great one I will include here from ’07..

World structures are being built, even here in the US. To say gold/silver will never be high-jacked NOW is PROBABLY true for this event, but maybe not next time.

I guess I can’t prepare for next time, but what I am looking for are the signs I CAN see NOW that would allow me to get rid of something that “they” won’t want you to have later anyway.

That is what I am trying to learn from great blogs like this, how gold works etc. It’s perfect for now but as someone posted, if it was that simple we are missing something. Someone had a great post on man I think I get this and it seems simple. If that were true I am missing something and what am I missing. I wish I could find that again.

I don’t think there is any doubt the world WANTS a global currency. It’s just making that happen that is difficult RIGHT NOW. It will be made easier as the dollar is yanked off stage and then more political arrangements can be made. At that point, look out. They can confiscate or do whatever they want.


Steve B said...

I think this is naïve.
“. I believe the US govt will ultimalely EMBRACE freegold out of necessity, and encourage all citizens to save in gold. Remember, my hoard of gold is most valuable if EVERYONE is using it and valuing it. And in the absense of a "dollar standard", the US govt will prefer its citizens holding gold to some other currency like the Euro. They can force what we use to spend, but they can only ENCOURAGE what we hold as savings.”

What makes you think the US Gov’t is EVER GOING TO LOOK OUT FOR YOUR BEST INTERESTS?
They will look out for what is best for the ruling elites. Look what they have done to their citizens and the POG already. What makes you think they do a 180?

If one country can wreck this much havoc on the global financial system, can you imagine what the globe can do to itself and everyone else on it?

Anyway, I think this unfolds in 2 phases. The first you have nailed and articulated nicely. Thanks for the info on the BH. We are stocked up and ready to go for that.
The second will be more sinister and I would think you will be changing your tune as well when we get closer. I guess it will be hard to find out how gold could be at risk in the future, outside of confiscation, now. That new system will have to be closer to implementation to read how it could/would break down gold.
I am just a guy saying, in 2009, that eventually gold/silver aren’t gonna help at some point. I am trying to figure out exactly how that mechanically COULD occur. We might not be close enough yet for that trickery to reveal itself.

Lastly, I like your post here a lot. I think it will pass but never be implemented. That is what you are saying right? I am 100% sure Cap and Trade is signed into law in the USA (as nuts as that is to say. I think I need to clean my keyboard).
I think as soon as it does pass you will see environmentalists mocked and ridiculed on talk shows and everywhere else. People will smarten up REAL quick.
Now everyone thinks oh great save the whales. Soon we might drop that crap and think about saving OURSELVES OR OTHER PEOPLE. I think that tide will turn fast, BWDIK. Anyway, nice quote on that if it means what I think it means.

"This scheme is destined to accelerate the trend. But I will be very surprised if we ever get far enough to see the implementation of cap and trade. I think we are too close to the end!"

July 12, 2009 3:27 PM

I hope this made at least some sense,


PS If you don’t see the Amero but DO see regional currencies, what do you see for our region?

Ender said...

@Steve B,

Silver is for spending, Gold is for saving. It is really that simple. I would encourage everyone to have a little spending money, but it’s probably more important to acquire the necessities of life and secure your means of production. Gold is useful to those that overproduce.

Above you say “They will look out for what is best for the ruling elites.” As if the Freegold concept is apposed to their system. If this is true, you may want to review the Euro system and, specifically, the Marked to Market functionality of their reserves. And, there is a puzzle in all that for where would the reserves get it’s ‘value’ if gold could not trade?

I look forward to reading your future posts.

Ender said...

@Anonymous 12:20.

So much for remaining anonymous. Welcome. Your insights will help many more.

FOFOA said...


Let me ask you this: Do you agree with the statement, "TPTB can control what we use for trade, for earning a salary and for spending on goods and services, but they cannot control what form we choose to save our EXCESS earnings in"? Let me elaborate, you may choose to spend all your extra money on collectable baseball cards. Or you may choose to spend it on rental properties, real estate. Do you agree they cannot control what you store your wealth in? What you use as a wealth reserve? That they can only ENCOURAGE certain things, with laws like tax deferred accounts, 401K's, long term vs. short term cap gains tax, etc...?

You see, this is not only true on the personal scale, but on all scales. Corporate, state, national, international.

What do you think is meant by the word "reserve" in the term "reserve currency"?

You say, "When the WORLD has control of the reserve currency there won’t be anyone else to stop them next time."

Are you saying that "the WORLD" is going to be able to control what sovereign nations hold as a reserve? Who is "the WORLD"?

If there IS to be a world reserve currency, which is certainly possible, it will not be forced. It will have to have CREDIBILITY!!

You say, " gold works etc. It’s perfect for now but as someone posted, if it was that simple we are missing something."

All throughout history money has gone through transitions. The result of these transitions often lasts for generations until another problem pops up and then another transition. I propose to you that we are at the brink of one of these transitions. And I propose to you that this transition is the separation of those two functions of money, trade and reserve.

You say you believe that "Those investing in this commodity, gold, hoping to find security are in for a tragic surprise. The price of gold is going to rise astronomically but will not be sustained over a long period of time... gold will not hold it’s value and gold hoarders will get hurt badly."

Yet you are buying gold. Why? Because you will be smarter than the goldbugs and you will know when to sell? Sounds a lot like commodity speculation.

I think you are expecting another CYCLE in gold, not a PHASE TRANSITION in the cyclical evolution of money. That is fine. I expect the same as you, only in silver, not gold.

You say, "I don’t think there is any doubt the world WANTS a global currency."

What the world wants (at least the PRODUCERS and SAVERS of the world is BALANCE! And also something with CREDIBILITY to hold as a reserve. An SDR could work if it had global CREDIBILITY!! And how could it get that CREDIBILITY?


FOFOA said...

Steve, I don't assume ANYONE is going to look out for my best interests. This is why I look at what is in THEIR best interest. Just because you feel somehow naughty buying gold coins when you know the US govt would rather you not, doesn't mean it will always be that way.

Try to imagine a point in time in the not-too-distant-future. The water under the bridge will be that the dollar is no longer the global currency, DC no longer has a blank check to spend, gold's global value is much higher than now, and Wall Street is all but dead. This is all water under the bridge, spilt milk. The tears have dried. Can you not imagine that gold's "public image" might have improved? THIS is the only 180 that matters!!!

"If one country can wreck this much havoc on the global financial system, can you imagine what the globe can do to itself and everyone else on it?"

The dollar standard is what allowed this. This statement makes you seem quite paranoid. It is understandable, but that doesn't make it true.

Just because it has been the dollar's desire to "break down gold", you seem to think this will always be "the WORLD's" goal. Why? If something works (as a wealth reserve) the world will embrace it! 75% of the world ALREADY DOES!!

"If you don’t see the Amero but DO see regional currencies, what do you see for our region?"

I think the dollar will probably remain. It may go through changes like the peso >> "Nuevo peso", or the Zimbabwe dollar, but that's about it. Maybe after hyperinflation we'll have Nuevo Dollars. After this storm passes I think there will be a lot of love for gold and a great distrust of paper currency. Paper will once again have to EARN the trust it needs. CREDIBILITY!

By the way, good job on the homework. Next, check out the "Crime of '73" and give me your thoughts. Also, what is the difference between copper and gold?

By the way, I do not hate silver, nor do I love gold. Indeed, I have a stash of silver similar to you. As Ender says... spending money!


FOFOA said...

A transition away from our dollar reserve world went a long way to defining the process we witnessed over this last decade. There is simply no possible way the dollar debt load could have been expanded to it's present scale without a massive worldwide helping hand. Yet conversely, to help explode dollar assets was clearly an end time maneuver that would destroy everyone's assets. Unless some other system was on the wind, ready to take over.

This is really where our modern gold trail begins, the early 90s. Mostly because this is when the logic began to leak out from behind closed doors. We can see the influence of "Old World" hard money in this new fiat reserve creation, where gold can be the fall back if the system fails. We can now openly see the slow destruction of our dollar's mainstay in creating it's value illusion; "the dollar based, world paper gold system".

Clearly, this system had full international support for many years as our paper gold pricing helped to maintain dollar demand and use through its illusion of dollar value. That mirage was always a steady to falling gold price that not only helped price oil, but strengthened dollar savings demand. Starting in the mid 90s, we began to see the very first cracks in this support as it became clear to us that paper gold market support would fall away as the Euro was born and grew. Once established and with the Euro "walking on its own legs" support for the dollar, in lower gold prices would fall ever more heavily upon our US financial structure. A structure that ironically is heavily built on the British LBMA. Perhaps explaining the struggle to keep England out of EMU for as long as possible.

Knowing full well that they could not sell US treasury gold into a BIS sanctioned currency reserve transition for fear that foreign CBs would simply consume all the gold, they opened the paper gold flood gates in a fashion similar to printing dollars prior to 1971. Today, our old disgraced system of non redeemable 70s dollars backed by insufficient vault gold has been replaced with "commodity market contract gold". Any increase in stress would require Paper gold to flood the markets in ever increasing amounts so as to stifle any rise in the system. A dollar gold paper system that sets the price of physical gold trading. Indeed, as our good poster on the USAGOLD FORUM (SteveH) (hello Steve, smile) notes it, they are using commodity gold markets to influence world monetary gold values and reserves.

Is all of this a surprise? No, at least not to Modern Physical Gold Advocates that have been watching "Events" these last few years, as Another asked. Clearly, this is the guide map for an ending currency system. You explode the currency substitutes (debt?) worldwide, to save your banking system for as long as traders will accept it. When international "political will" begins to walk away from your fiat, you take up the ball of last resort and run with it; "you inflate the gold issuance for all you are worth"! Indeed, you sell it into destruction!"

-FOA (10/14/2000; 10:30:03MD - msg#42)

Anonymous said...

Demonetization of Swiss gold ('97/'99) - BIS

Steve B said...


Thanks for the comprehensive reply.

Agreed on what we use to trade, not where excess production is allocated.

Agree on scale, but they can, and will, control the value of a monetary unit. Currency consolidataion is what this decade has been about. It will get easier and easier to control, like an ice skater pulling her arms in. The spin gets faster and faster. Adam Smith’s invisible hand in the market place has been replaced, or always was, something far more sinister.

Are you saying that "the WORLD" is going to be able to control what sovereign nations hold as a reserve? Who is "the WORLD"?

Absolutely. “The world” is the New World Order (NWO). What do you think the Trilaterals and the Bilderburgs have been up to? They are NOT twiddling their thumbs I can assure you.

If there IS to be a world reserve currency, which is certainly possible, it will not be forced. It will have to have CREDIBILITY!!


Just like the dollar HAD credibility. Just like the new currency, or regional currencies, maybe gold based, WILL HAVE. And then poof it will be hijacked again as well. A new gaming of the system WILL happen, just by a BIGGER organization. This will be much harder to stop since the power this group will have will be much more than what the USA had. To quote ANOTHER, “It has always been in the minds of men to make gains at the expense of others.” Same for countries I would add, with the biggest bully “winning”. Who can bully a global organization?

The more I think about it the more I see the same process repeating. First, it was a nation state’s currency as the “reserve”. After 1873, more on that later, we took over as king of the Hill. The Federal Reserve Act of 1913 just made it more easily corruptible. The USD was hijacked. It lost credibility but no one admitted it, or at least no one stopped it. This USD reserve has lasted a LONG time. The USD’s status, and the IMF, has destroyed many a nations economies or currencies and SOLs. But we don’t need to get into a rant on the IMF now.
ANOTHER said, “When the Euro has defeated the Dollar, citizens will be asked to use gold as a savings, for holding the Euro will be frowned on. Gold will not bring your "capital gains tax" as the mines will be taxed to compensate.” Today, I think the defeat could mean the Euro’s survival and the dollar’s demise. Anything tied to gold sure has a better chance of living thru this, although the Euro printing press is cranked up too. I think we get a new regional currency here and the Euro in that zone.

OK, moving on.

Yet you are buying gold. Why? Because you will be smarter than the goldbugs and you will know when to sell? Sounds a lot like commodity speculation.

I think you are expecting another CYCLE in gold, not a PHASE TRANSITION in the cyclical evolution of money. That is fine. I expect the same as you, only in silver, not gold.

Why? Because the USD is garbage and any financial instrument, solely created to soak up USD, is garb. I got that from the Peter Schiff book, Crash Proof. The more I read about gold, the more I liked it. I have only been doing this since Dec ’08. I am totally defensive and off the grid with 401k balanced with X mix of funds. It’s all a joke. I just look at the PM’s, gold and silver, as the same. I look at silver having a potential to out % gold. Both metals are affected by my quote. I loved when I made the transition of all liquid USD’s to metal and food.

Like I said, I am trying to harmonize current events with that statement I believe will happen about gold not solving all your problems. It’s all about learning how that can happen and I think I am closer than ever to knowing how.

Steve B said...

Like you are saying, and I think you are 1000% correct, at this next PHASE, gold, and to a lesser extent silver, will just be the only thing(s) to have. After that the fun begins again though.
After the reset, there will be a supra-national organization running the show, a Super Fed. It might be the IMF. We will hear about we need a new Bretton Woods and that THIS CAN’T HAPPEN AGAIN. Oh wait, we have heard those things several times now. Nothing good is gonna come out of this next WFO, world financial system, long term.

My guess is there will be this mothership bank that will replace Wall Street/Fed in terms of doing of being able to do financial damage. They WILL break down gold too by creating something else as a store of money.

What the world wants (at least the PRODUCERS and SAVERS of the world is BALANCE! And also something with CREDIBILITY to hold as a reserve. An SDR could work if it had global CREDIBILITY!! And how could it get that CREDIBILITY?

Agree on balance. Agree on credibility. The world might get that again soon, but alas that system will be touched by more “invisible hands” than the dollar. Sad how the dollar had that, credibility, but then lost it.
An SDR will NOT WORK unless you are right that money goes bimodal. The guy on the street will never touch the SDR but his bank will. That is what you talk about with PHASE shift. Any ole script will do, and then backed by a gold anchored SDR that is balanced. I don’t argue against that, that could happen. However, gold could be confiscated again by Obama as well. Once something is global though, I think by definition it’s bad.

Just because you feel somehow naughty buying gold coins when you know the US govt would rather you not, doesn't mean it will always be that way.

I don’t feel naughty at all. Maybe I don’t know enough to feel naughty but the thought never entered my mind. I like history. Gold has been around for thousands of years as money. Only now man is jacking around with what the definition of money is.

First gold AND silver were money. Well we decided to stop that in 1873.

Try to imagine a point in time in the not-too-distant-future. The water under the bridge will be that the dollar is no longer the global currency, DC no longer has a blank check to spend, gold's global value is much higher than now, and Wall Street is all but dead. This is all water under the bridge, spilt milk. The tears have dried. Can you not imagine that gold's "public image" might have improved?

Agree with all that. What happens after that? You are back to an honest weight, but is the scale legit? That is the next bridge to cross.

The dollar standard is what allowed this. This statement makes you seem quite paranoid. It is understandable, but that doesn't make it true.

Paranoid, who me, smile. Sure the dollar standard allowed this. Don’t you think the next “standard” could, will be, potentially worse?

Just because it has been the dollar's desire to "break down gold", you seem to think this will always be "the WORLD's" goal. Why? If something works (as a wealth reserve) the world will embrace it! 75% of the world ALREADY DOES!!

You almost have it. It is not the dollars desire to break gold but its required mission to survive. It MUST “break down gold”.

Steve B said...

Sure it will. The controlling power always wants more power. The dollar has kicked gold around. Gold MIGHT win this one. But next time? Next time something else might be show to work. Heck, just like you say, if it works as a wealth reserve the world will embrace it.
AS SOON AS SOMEONE SHOWS THAT GOLD WILL NOT WORK BUT A DIGITAL MONEY, or something else will, then there ya go gold is dead. Someone REALLY BRIALLIANT is gonna come along and show us how gold is old school and check out this system. This is gonna replace everything and nothing can go wrong with this system. Inflation is impossible etc etc etc.
Again, gold might survive the dollar collapse. I don’t think it survives a global currency implementation. No outside agency, ie gold, would be allowed to stand in the way of this GLOBAL SOLUTION. Just watch because this is going to happen sooner than you think.

I think the dollar will probably remain. It may go through changes like the peso >> "Nuevo peso", or the Zimbabwe dollar, but that's about it. Maybe after hyperinflation we'll have Nuevo Dollars. After this storm passes I think there will be a lot of love for gold and a great distrust of paper currency. Paper will once again have to EARN the trust it needs. CREDIBILITY!

The sheeple around the world won’t know any better. If you tell them toilet paper was money, they would start stashing it away. Wait, they already do that J The Americans will have to WANT to get off the dollar (think Hunt for Red October movie). Americans will NEVER give up their dollar. Well they will if it’s wrecked. This current crisis is ALL ABOUT getting the USD out of the way to implement global solutions. You just have to make them want to get off it. This crisis will do that one way or the other (read wars possible when you have this big of a sea change).

Next, check out the "Crime of '73" and give me your thoughts.

Thoughts = RIP OFF. We went from our constitution to off the thing. That golden cross speech was great, but the horse was out of the barn already. Anything not of the constitution is BAD. But again, it shows that we can get off what for WORLD HISTORY was money. Silver as money died in the 1800’s. Gold will have a RIP date, I just need to see what system they throw at us to know how it too can be a victim of a crime.

In more detail what basically happened was that london had cornered the world's gold market and then lobbied to have the mints stop free coinage of silver which effectively demonetized it, icky. The resulting DEflation crushed agriculture and main-street America along with it, what a surprise. We could not afford to repay the 26% civil war debt to london in only gold and not silver so london refinanced America with an issue of twenty year bonds that led to the 'panic of 1893'. See a pattern here. After another issue of bonds expired, London decided that there were only going to buy another issue of bonds if America again allowed for a central bank. Who knew Wilson would knock it out of the park with the Fed, NOT. Grant later commented that if he had realized the Coinage Act of 1873 would demonetize silver he never would have signed it.

In the end, the Crime of 1873 demonstrated that the center of gravity for the world's credit had shifted west — from Central Europe toward the United States. The current panic suggests a further shift — from the United States to China and India. Beyond that I would not hazard a guess. ANOTHER is Europe centered, it seems to me. I think China becomes a monster after all this. The Yuan will be the regional currency out East.

Steve B said...

Copper and gold? Perception and sacristy?. Hmm, you got me on that one. To me copper is the king of the base metals and is a good barometer of global economic activity. Of course gold SHOULD BE the currency barometer, but it has been knocked down a peg. It is either gonna get trashed, which I think eventually happens, or it gets put back on it’s pedestal, only to get knocked off for good at some point.

Anyway, I like this quote. A great question to ask is: what was the first important chapter written in nonsensical Economic Mythology? It gave powerful intellectual protection and coverage by economists, and resulted in widespread acceptance.(YOUR CREDIBILITY YOUTALK ABOUT PEOPLE WANTING) The answer is clearly the break in the Bretton Woods Accord, when in 1971 Nixon broke the gold standard and permitted the USDollar to float on a cloud of arrogance and on a wave of liquidity that is best described as debt mixed with counterfeit.

The article, Lost Control & Economic Mythology, by Jim Willie is great. I just starting reading it after I made this post, but it kinda fits in with this theme of "they can sell us anything".

Steve B said...


I am tending towards moving out of some silver and into more gold due to this site. I might trade a few hundred oz’s of silver for some gold. I think you guys are all over that one. We won’t loose with silver (PP), but might not hold as much value as with gold.

Financial change you can believe in from earlier this year.

1. Glass- Steagall Act still not reinstated
2. Uptick rule still not reinstated
3. No apparant accountability for Regulatory Bodies, WS or Washington regarding the current crisis... no one saw it coming? Are there really that many simpletons running the show?
4. Continued massive amounts of money being thrown on the Financial Fire willy nilly without a clear plan of action... mistakes will be made? As if enough haven't been made already!
5. No real change in appointees; part of the "establishment" that dug us into the current mess

It seems that the fox is still guarding the hen house and "borrowing" whatever they want. Is it any wonder things are not improving? Really!

You talk about M2M, Mark to Market.

It is just another tool that I am assuming you think it is NOT in their best interest. I would disagree 100%. I think M2M is the perfect tool for the here and now. It just makes the downside worse, which is what is wanted. In the death throws of a currency, “they” will pump out more and more units (dollars). That is exactly what is happening. I think ANOTHER said that, that at the end liquidity would skyrocket. I know I read that somewhere. Remember, most BAD financial decisions are made in “crisis” mode. See Weimar, 1933, Zimbabwe etc.

Here are some thoughts I cut and paste as background on M2M. Sure I saw idiots on CNBC squeal about repealing it etc.

Lastly, some thoughts on where the “value” comes from. Where is the value in the USD (world “reserve”) now? Don’t think gold is some universal judge of value. It ain’t. IT SHOULD BE, and you guys know HOW it should be. But it ain’t right now. You guys are saying it going to make a come back. Fine.
What makes you think it will always be there in the future? Fool me once, shame on you. Fool me twice, shame on me.
Who knows what the next store of value is. They just bastardized gold right in front of you. And you guys are in the .01% of people who know what is going on. Most people are clueless, and the system will be made for the clueless, not the folks like you, and hopefully me.
Again, politicians are making the rules, not smart guys like you that know how gold works. I would rather know how the world works and adjust accordingly then trust gold and then be surprised when it is sold down the river for some other “new age”, “next generation” or “wiz-bang idea” that will have “all the benefits of gold but without the disadvantages etc. It will be marketing to the masses pure and simple. Just like the dollar was. The WORLD will swallow this next time, hook line and sinker. And then smart guys like you are going to me like “ut oh”, I can see how this could get messed up REAL FAST. And as soon as YOU see it, you can bet “they” have already prepared for it.

I don’t need to be able to ID the next “store of value” as you say now, I just need to be able to see the next system and figure out what they want it to be. It is 99% likely it’s gold this time around before we get something new. This coming step (dollar collapse) is the reset step, not the final version of what we are going to live with.

Steve B said...

Anyway, some thoughts on M2M. The last paragraph is the money one.

“Mark-to-Market” Accounting and the Origins of the Financial Crisis

Mark to market accounting (also known as “fair value” accounting) means that companies must value their assets on their balance sheets based on the latest market indicators of the price that those assets could be sold for immediately. Under such a rule, declining housing prices don’t just reduce the value of defaulting mortgages. They reduce the value of all mortgages and all mortgage-related securities because the housing collateral protecting them is worth less. Moreover, when a company in financial distress begins firesales of its assets to raise capital to meet regulatory requirements, the market bottom prices it sells out for become the new standard for the valuation of all similar securities held by other companies under mark-to-market. This has begun a downward death spiral for financial companies large and small.

More foreclosures and home auctions continue to depress housing prices, further reducing the value of all mortgage-related securities. As capital values decline, firms must scramble to maintain the capital required by regulation. When they try to sell assets to raise that capital, the market values of those assets are driven down further. Under mark-to-market, the company must then mark down the value of all of its assets even more.

The credit agencies see declining capital margins, so they downgrade the company’s credit ratings. That makes borrowing to meet capital requirements more difficult. Declining capital and credit ratings cause the company’s stock prices to decline.

Panic sets in, and no one wants to buy mortgage-related securities, driving their value under mark-to-market regulations down toward zero. Balance sheets under mark-to-market suddenly start to show insolvency. This downward spiral shuts down lending to these companies, so they lose all liquidity (cash on hand) needed to keep company operations going. Stockholders—realizing that they will be wiped out if the companies go into bankruptcy or get taken over by the government—start panic selling, even when they know the underlying business of the company is fine. The end result for the company is stock prices driven towards zero and bankruptcy or government takeover. The criminal liabilities imposed under Sarbanes-Oxley have driven accountants to stricter and stricter accounting evaluations and interpretations and have prevented leading executives from resisting them.

The Problems with Mark-to-Market Accounting

William Isaac, Chairman of the FDIC in the 1980s under President Reagan, recently wrote in the Wall Street Journal, “During the 1980s, our underlying economic problems were far more serious than the economic problems we’re facing this time around….It could have been much worse. The country’s 10 largest banks were loaded up with Third World debt that was valued in the markets at cents on the dollar. If we had marked those loans to market prices, virtually every one of them would have been insolvent.”

Isaac continues, “But what do we do when the already thin market for those assets freezes up and only a handful of transactions occur at extremely depressed prices?...The accounting profession, scarred by decades of costly litigation, just keeps marking down the assets as fast as it can.”

Steve B said...

Isaac concludes, “This is contrary to everything we know about bank regulation. When there are temporary impairments of asset values, due to economic and marketplace events, regulators must give institutions an opportunity to survive the temporary impairment. Assets should not be marked to unrealistic fire sale prices. Regulators must evaluate the assets on the basis of their true economic value (a discounted cash flow analysis). If we had followed today’s approach during the 1980s, we would have nationalized all of the major banks in the country and thousands of additional banks and thrifts would have failed. I have little doubt that the country would have gone from a serious recession into a depression.” (emphasis added).

Similarly, University of Chicago Law Professor Richard Eptstein, among the best in the country at law and economics analysis, recently wrote about mark-to-market accounting for today’s mortgage-related securities, “Unfortunately, there is no working market to mark this paper down to. To meet their bond covenants and their capital requirements, these firms have to sell their paper at distress prices that don't reflect the upbeat fact that the anticipated income streams from this paper might well keep the firm afloat.”

Alex Pollock, former head of the Federal Home Loan Bank of Chicago, explains that when the economy is in the midst of a severe downturn, the use of mark-to-market accounting “reinforces the downward cycle of panic-falling prices-losses-illiquidity-credit contraction-more panic-further falling prices-greater reported losses-no active markets. Fair value accounting adds momentum to a destructive downside overshoot.”

FOFOA said...

Hello Steve,

You say, "but they can, and will, control the value of a monetary unit."

Please read "The Judgement of Value". The makers of money have no control over the value of that money.

I won't go too deeply into your world view. I can respect it even if I don't share it. But I would caution against being too confident about some of the things you know. My world view revolves around many different probabilities. Take the Bilderbergs for example. I have never been inside a meeting. Yet I have seen evidence on both sides of the conspiracy argument about the Bilderbergs. So I try to construct a view that allows for both possibilities. A world view is important in planning for the future, but knowing the absolute truth about some things is not as important as you might think.

For example, politicians lie a lot. It is difficult to know when they are lying and when they are telling the truth. But it is still constructive to listen to them, as long as you are aware of this. And it is not essential to your personal life that you determine with 100% certainty which are the lies and which are the truths. It is only essential that you are aware that BOTH possibilities exist every time they opens their mouths.

"AS SOON AS SOMEONE SHOWS THAT GOLD WILL NOT WORK BUT A DIGITAL MONEY, or something else will, then there ya go gold is dead. Someone REALLY BRIALLIANT is gonna come along and show us how gold is old school and check out this system."

I haven't yet seen you grasp the concept that money has different functions, and that they can be separated. Digital money might work great for trade, but not for savings. This is the NEW truth this crisis is teaching the world. Again, please read The Judgement of Value.

I hesitate to be too harsh on your "foundational quote" because you seem to carry it with you as a core belief, and I don't want to scare you away. But what makes you so sure it wasn't fulfilled in 1980? You said it was from 1975. It seems perfectly consitent with what happened four years later.

"The sheeple around the world won’t know any better. If you tell them toilet paper was money, they would start stashing it away."

It is true, as Ron White says, "you can't fix stupid". But I think it is more constructive to consider the sheeple as asleep rather than stupid. Decades of calm have lulled them to sleep. But there is a fix to sleep.

FOFOA said...

Onward to silver...

First of all, let me say that I think the silver versus gold argument is really minor once you get to a certain point on the Gold Trail. It is almost not worth having, especially with the furor it drums up.

You say, "I look at silver having a potential to out % gold."

This is a speculative investment. It requires getting out at the right time. If you can stay on this Trail for a while I think you may begin to see the difference. There are two types of value you will possess. Eventually, you will not want to use your wealth for speculation.

"Thoughts = RIP OFF."

That is certainly one way to look at it. The 16:1 ratio of gold to silver was a construct of law, not of the marketplace. It created an imbalance similar to the 1971 imbalance between international dollars and the gold that backed them. At the legally defined 16:1 ratio, foreigners turned in their silver to the US Treasury for gold, creating an outflow of gold, much like 1971. Here is a comment from the USAGold archives:

"The long calm rational view doesn't see this as a "crime", as the silverbugs claim, but rather as another step in a long evolutionary process by which the role of gold travels a colorful Trail along with which we now approach its final, fateful powerful consolidation of both personal and national (CB) wealth.

On a price performance basis, during the time ahead silver will be left behind like buggy whips even as it was following the "That's Life (not crime) of 1873".

At the risk of boring you with repetition, I'll say again nonetheless, you will ignore this to your financial disadvantage."

Ask yourself this. Why have TPTB, the global central banks, dishoarded their silver but not their gold? What are they preparing for? Do they (TPTB) view silver like "buggy whips" in the age of automobiles?

"Gold will have a RIP date"

Don't count on it. Jim Rawles of has a fictional book called "Patriots". He makes a point in it after he describes gold going to $5,100. The people who sell their gold at that point end up losing everything to Zimbabwe-like inflation.

Another is not the only one who talks about gold entering a new phase that will remain. Jim Sinclair does as well. So do many others. It is the very definition of a "phase transition".

"I just need to see what system they throw at us to know how it too can be a victim of a crime."

I believe this is looking into the future well beyond our lifetime.

"The current panic suggests a further shift — from the United States to China and India. Beyond that I would not hazard a guess. ANOTHER is Europe centered, it seems to me. I think China becomes a monster after all this. The Yuan will be the regional currency out East."

You said you started with Crash Proof. On this point, Peter Schiff is dead on! Yes, Another was Western, but he had not lost his old world sensibility. And on this, he spoke highly of China. "Big Trader" was Chinese. And China was the straw that broke the camel's back in 1997. It was the big money that wanted in on "the deal". China and India BOTH value gold highly. Not just their powers that be, but their PEOPLE too!

FOFOA said...


I asked the copper and gold question to get an idea of where your perceptions lie. There are many different answers to this question. Right now China is accumulating BOTH copper and gold. But it is doing so for two very different purposes! This is a good example of how >backward< and confused our Western system is, driven by (Jim Willie) mythology. In the US, copper is still used in legal tender, yet gold is merely a speculative commodity.

Lastly, since Ender has not replied yet, I will tell you that he was talking about the MTM (mark to market) of gold within the Euro CB system.

The complete "demonetization" of gold is actually the key to the Freegold wealth reserve concept that Another taught.

The dollar-regime keeps gold "monetized", locked in price with the perceived value of the dollar. It does this in two ways. The dollar's own gold reserves are locked in at $42 per ounce. They are "monetized" at this price, recorded on the books at this price. It also tries to control the commodity price of gold through the paper gold market. An attempt to keep the (two-tiered) pricing of gold "monetized".

The Euro, on the other hand, has chosen to "demonetize" gold by quarterly marking its gold reserves to the market price of bullion. This may not seem like much, but it is an important clue to the plans of the rest of the world!

You too can demonetize your WEALTH by buying gold (or any real thing for that matter). As long as you hold your wealth in dollars or dollar derivatives, it is monetized. It will follow the fate of the dollar. When you trade it in for gold it becomes demonetized. When you sell your gold it becomes monetized again.

Think hard on this one. The dollar regime keeps gold monetized for a reason. This system is failing! The rest of the world is in the process of demonetizing its gold to be uses as a wealth reserve, just like the Mona Lisa!


FOFOA said...


Here is a good article about silver. I have no argument with this article. It is speculation, and it could happen. But this concept deals with silver in the commodity speculation realm. If silver spikes like this article portends, I will gladly take that opportunity to change some of mine over to gold. The "giants" are not speculating with their reserves in this way. This is because speculation is not the purpose of your wealth reserves. That we should always speculate with our savings is one of the longstanding myths of the dollar-reserve system. Does the Louvre mortgage the Mona Lisa to speculate in the markets?

The thing is, this phase transition which I describe will be exceptionally good to physical gold holders at one single point in time. It will be a one time event, as described by Another. This particular event is not a commodity event and it is for gold and only gold. The clues to this truth are well laid out. There may be many other surprising and cyclical events in the commodity realm, but nothing like the phase transition in gold, for which the entire non-dollar world has been preparing for more than a decade.


Anonymous said...

FOFOA, I just cannot get the chicken example. Can you explain it to me? How do all the apples end up where they end up? Thanks

Steve B said...


Wow just have to chime in tonight that your reply was totally awesome. Thanks!

I mean wow I was like this is cool as I was reading. I already have some posts to change some silver into gold. Funny in the past I made some trades to go my gold for their silver.

I will reply more later and read the articles you recommend for sure. I like to learn. Thanks for your patience, I feel clueless when I type all this stuff. You are the lifeguard and I am the punk kid in the deep end of the pool, but it seems right what I type.

But I loved this line.
"I hesitate to be too harsh on your "foundational quote" because you seem to carry it with you as a core belief, and I don't want to scare you away. But what makes you so sure it wasn't fulfilled in 1980? You said it was from 1975. It seems perfectly consitent with what happened four years later."

First it was 1974. But interesting, I thought about that 1980 scenario hard as I was posting. But when I look at the quote and then the context it was given it wasn't fulfulled or else you and A and FOFOA are wrong. So I don't think it has happened yet since everything else from around it is just starting up. The context for it seems to be now (big time), but I want to be flexible.
I am operating under the statement will be true in the future but it will go nuts and thus A/FOA are correct with this upcoming move. But then something will happen to kill it.
I agree, you have me thinking even more about 1980. We'll see.

Also, I don't scare easy. Please be full throttle with your posts, I am not going anywhere. This is good stuff.

FOFOA said...


The chickens and apples were a point to be made, not mathematical magic. If you don't like the point, then you will repost your question I am sure.


Now is the time you share the full story surrounding your quote!


Mantis said...

Former Fed Governor Lyle Gramley mentions an upward revaluation of gold in this interview.
Fast forward to 11:50.

FOFOA said...

Hello Mantis,

Personally, I think your graph is more impressive than that video.


Anonymous said...

FOFOA, I like the point. I like your writing. I like the whole piece, I am just trying to understand who gets what apples and in what way, so I can explain it to my kids by using real apples. Thanks

Anonymous said...

Read ANOTHER. He has good examples in simple terms.

Steve B said...


Will do. I lent the book out that it was in and I need to get it back. When does the window close for posting here? The end of the month? That will be fine.


FOFOA said...

Hi Steve,

Of course there is no expiry on posting in any of the threads. I get email notification of all comments.


Steve B said...

OH, ok.

I thought I looked back in prior months and this comment box to make a comment was not there.


August 8, 2009 3:45 PM = If that is the case re: big boys why are they loading up on silver and PUSHING it on their folks? I know why they are pushing it on their citizens but it's silver too, not just gold. I just traded some silver for gold, about 1000oz, so I am not some silver nutty.

I like gold and silver and i am past trying to determine if one is better than the other.

I am just saying China is not out of silver and in fact are going the other way. They are even running ads on state TV about how there are 8 ways to get it at any bank. I know they are just trying to get out of the way of the USD collapse and throw their folks a bone (PP), but BOTH these PM's are gonna rock. Gold will do better if not confiscated.


Steve B said...

The book is "The Vision and Beyond" by David Wilkerson.

The original was written in 1973 with addition chapters added recently.

I have highlighted what has happened and what seems likely and it is almost all of it.

It talks about how the envirnmental movement will grow, affect damaging taxes and then be looked upon with scorn. The gay rights agenda will really take off. I gave the quote on gold.

A lot in there and I take heed to it. Sorry I forgot to post this but it does read and reread like it is accurate. The gold quote can not be 1980 since we are past that peak so you would not have been that badly hurt. No the big rise is coming but it won't stick.

I know we get to one world currency, biblical prophecy which has been 100% right so far, and that gold won't help in the end.

The world seems to be in for 2 rounds of economic turmoil. One pre-rapture, the one now I have to deal with and steer my family through and the one at the end when the global currency melts down. The one you have to have the mark to use. DO NOT TAKE IT! Not trying to turn this into a heavy thing but the bible says you can't be saved, born again, if you take the mark at the end when Anti-Christ and his spiritual partner (pope?) are running the show.
I know I won't be around to see the Jewish Temple in Jerusalem be put back into operation (would need to be rebuilt first), but I hope you are not here either.

Anyway, that is the book. I just blew it when you first asked to post about it. At least it is not too late :).

FOFOA said...

Hello Steve B,

I take no issue with those who employ Christian prophesy into their macro analysis, so long as they state it for what it is.

In 1973 when Wilkerson published his book the average gold price was $97.39. The previous year, when he was likely writing the book, the average price was $58.42. In 1980 gold spiked to $850 and then fell back to around $350 in a couple years. In percentage terms that was about a 1400% rise followed by a 60% collapse.

In terms of "the gold bull market" since 2001, that would be the equivalent of a rise from $360 to $5,000/oz. and then falling back to $2,000/oz.

Since you apparently hold great stock in David's words from 36 years ago (he has written some more recent economic pieces), how can you be so sure that he wasn't describing what happened in 1980? Have you asked him? Did he say so?

To apply an "end times" motif to a macro analysis is to substantially lower the associated probabilities by a very significant margin. It cannot be shown that we are currently living the end times any more than 2050 will be the end times. Or 2100. Or 2150. In every era there are those believers that present very convincing evidence that "this is it". It is part of the fallibility of human perception that we are heavily biased by our own overwhelming perspective of the present relative to all other times, past and future. I, too, am guilty of this.

Additionally, the application of further "conspiratorial themes" to a macro analysis multiplies the probabilistic damage to that analysis. I am looking for the analysis that transcends the various low probability scenarios. The mega-trend. The sea change within which all other "theories" must play themselves out.

I don't buy the idea that an evil cabal can reign in the tide as it moves. Even if we are facing the end times. Gold may not help in the end, but that may be long after we and our children are gone. As God said, "the gold is mine".


tdfxman said...


I never saw this comment. I will read it right now. I just saw your reply when you posted a link to it.

tdfxman said...


I have been thinking a lot about it. I am coming to the conclusion that the recession in the early 80's is what he refers to in some part. I think there are many waves he is seeing. Clearly a lot of it is at the very end.

After wondering about it I have found myself finding a lot of folks talking about how the 1980 time frame was similar to these days in a lot of ways, with of course major differences. I am happy to come to that conclusion.

Great point on folks always think this is it. I had a long talk with my pastor one night and I was asking him "what were you guys thinking back in X?". I mean the stars were not aligned, many things had to happen that had not etc.
As you say, as things were "slipping", people want to think this is it.

I am just a trend guy. When I see he world moving towards what the bible predicts, I get excited. But I try to remain analytical.

Several prophecies have been fulfilled in this generation and the generation that sees them happen is the last one.

So I am either right and the predicted events are coming or I am like everyone else and more has to happen. The next step is the Rapture, no more biblical prophecy has to be fulfilled (thus live in expectation etc) so if I stop posting and various conspiracy posts around the net are saying folks are gone, you know where I am. :)

lastly, I agree when you say the satanic cabal, it is, can't reign in the tide. They will use the tides to get them where they are going. If you are around when it happens, DO NOT TAKE THAT MARK FOFOA that they will want you to take, Biblically speaking that is an eternal death sentence.

I hope I am stating my positions openly for what it is. It is a fascinating time. I could go on about why I think we are "closer" than others said back in 19xx but this isn't the forum for that. But man there are a LOT of them. I agree with you, I think alot about what were you guys thinking back then.

tdfxman said...

Forgot to add.

Based on the signs of the times and how things are matching up with end times descriptions, 2 years or less for USA judgment, or as Billy Graham said "God would have to apologize to Sodom and Gamorrah, and 10-15 years or less to Rapture.

Too much stuff has lined up, but there is more to go, but not much.

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