Saturday, November 21, 2009

Gold is Wealth


Why should we own gold? What is gold good for? What does it mean to say "gold is wealth"? And what exactly is wealth? We have contemplated the pure concept of money. [1][2][3] How about the pure concept of wealth?

We all have needs. In fact, we all have the same needs in sustaining our lives. In some things, some of the most essential needs, we are all equally and extremely wealthy. We could even build a pyramid of these needs and their supply relative to our demand for them. In many cases, the most needed things are in such complete supply as to overwhelm demand. No need to hedge against a future shortage of these things through derivatives or swaps. You see, wealth in fact is anything that helps us in meeting our future needs. To have more than you demand for immediate survival is to be wealthy!

Take, for example, the Higgs Boson. Assuming this particle actually exists, it is the foundation of all things, of all life. It is something we all need in order to survive! We would simply disappear (or not exist) without it. It is what makes matter matter, so to speak. And again, assuming these things really exists, then there must be plenty of them around. More supply than we demand. Or at least, theoretically, the perfect supply to meet demand at all points in time.


Another essential need we all have is gravity! What would you do if you ran out of gravity? Float away? Thankfully we have a plentiful supply of gravity that "outweighs" demand. ;)


How about sunlight? Are you wealthy in sunlight? Well, we may not all be equally wealthy when it comes to sunlight, but there is no doubt that we all need it to survive. And amazingly enough, supply seems to always meet demand without the need for hedging or storing sunlight for future use.


Moving on up the pyramid we come to oxygen. Yes, there are some situations in which it pays to store oxygen for future use. If you are planning a trip to outer space or, perhaps, to the bottom of the ocean then it would make sense to hedge your bets and load up on more oxygen than you think you might need. The risk:reward ratio highly favors a surplus of oxygen in situations where it is possible for demand to outrun supply!


Topping off the pyramid we have the needs we humans all strive to secure, food, clothing and shelter. And in our modern world of electronics and internal combustion we could also add energy to this list. Under the most extreme conditions, we could probably find wood to burn in the forest for cooking and heating. But who wants to live like Ted Kaczynski (pre-arrest)? Even Mad Max had fuel for his car!


But luckily for us, 5,000 years of trade have taught us that we don't need to plan as meticulously for survival as an astronaut or a deep sea diver. As Aristotle [4] explains:

We can generally blunder our way through day to day and year to year in the comfortable fact of life that, through the open market--through the ability to trade with others--we can generally obtain what we materially need in one facet in exchange for some of our own wealth in another facet. Food for clothing seems like a pretty reasonable medieval exchange, doesn't it?

We all know the inefficiencies of barter, don't we? As civilization and trade evolved from the dawn of man to the 20th century, Gold revealed itself to be the single most reliable, universal agent that could be traded in various quantities for anything anywhere on Earth. Maybe most remarkable in this is that Gold is not itself something that is needed or consumed in satisfaction of our basic material needs for survival. But due to it being perfectly and uniquely suited for this universal role in trade for any other person's available wealth as necessary to meet our own specific needs, Gold has become such a near proxy for the real wealth we require for life that many of us have permitted ourselves the casual inclusion of Gold into our otherwise strict definition of wealth.


Those in the financial industry have come to call this universal wealth asset (Gold) by the name "money," but that unnecessarily confuses the issue. In their efforts to facilitate various objectives in modern life, those in the financial industry endeavored to master the alchemist's craft--to methodically create "money" from such substances as worthless base metals or from paper. Even the village idiot can clearly see that "the bankers and others" didn't succeed in creating Gold. But the village idiots were never so sure that these nickel coins and paper notes weren't in fact successfully turned into this other thing that the experts called "money." As for me, I'm comfortable calling these lesser creations by the name "currency," and further, I recognize that they can and do serve a useful purpose in modern society. With this distinction I am not so easily baffled as the village idiots into thinking that these currencies created in the image of "real money" can actually attain the superior wealth function of the asset they sought to imitate--that being Gold. And you shouldn't be fooled either.

Every currency made in imitation of Gold goes hand in hand with the financial architecture that supports it right into the trashbin of failed efforts, and are logged into the collective wisdom of those who vow not to be fooled again. Based on the "conception, care, and feeding" of the various currencies and their supporting architectures, the life span--or timeline--of predictable rise and fall milestones may vary in length from one currency to another. They may serve a purpose while they last, but they all suffer the same eventual demise at the hands of inflation. Remember, these currencies are man's artificial attempt, time and time again, to imitate Gold for use in modern commerce. They are built for speed--built to be borrowed specifically, and spent rapidly! They are not suitable for saving. For that you must turn to the master--the near-wealth proxy upon which all currencies must bow down in inferior imitation.

So you see, learning how the world works is all about each man coming to the understanding about the real wealth we all require to best ensure our survival. Knowing that Gold is the master proxy for our life's day-to-day and year-to-year shifting requirements for food, clothing, shelter, and energy, it simply makes more sense to gather in Gold for later use than to gather in clothes (that we may outgrow,) food (that may spoil,) houses which are more than our needs, or energy (that we can't store.) You see, time bears witness to this undeniable fact: Gold can be called wealth because it is an enduring wealth proxy in exchange for our life's needs. Currency, on the other hand, serves a specific modern economic purpose--to be borrowed and inflated in placation of man's immediate desires. It is not wealth, it fails as a proxy for the Gold it tries to imitate. Do not confuse the two.

I think we can chop off the bottom four "foundational" layers of our pyramid now, since they are in full supply. Let's think of them as the solid ground upon which this wealth pyramid stands.


Now that we have established a solid pyramid of life's necessities and the need for a pure wealth concept in order to secure a future supply, let us take another look at John Exter's inverse pyramid of paper products based on wealth derivatives. I first introduced this concept on my blog in the post called All Paper is STILL a short position on gold. And by the way, George Washington himself [5] helpfully pointed out that the image I used, from Wikipedia, may not be the correct Exter pyramid. Perhaps Trace Mayer's pyramid [6] is better. In any case, let's make a fresh one for our conceptual purposes:


Next, let us place this paper derivative inverse pyramid atop the real wealth pyramid. Let's see how it looks!


Does it look a little like an hourglass?


Now picture this. The inverse pyramid on top is actually ten (10) times larger than the pyramid on the bottom. And it is 100 to 200 times larger than the golden capstone!


In ancient times gold was the very best item for trading and as such, it became the very best wealth reserve. Later, gold became currency and came to be known as money. Today, gold is commonly believed to be only a commodity and is traded as such.

I propose to you that we can estimate that as a mere commodity today, gold is relegated to a trading range of between $700 and $5,000. As a currency, which it has not been since at least 1933, it would be range-bound between $4,000 and $11,000 according to Jim Rickards. [7] And set free to fill its ancient role as a wealth reserve, gold will rise to somewhere between $10,000 and $100,000 in today's dollars.

Be wary of the "men's suit comparison". Just a couple hundred years ago a wealthy man amidst 1 billion others on this planet might have had a handful of fine men's suits, a nice house and a large plantation. Today a wealthy man would have dozens of fine suits, a couple mansions, a large yacht, 29 flat screen TV's, an iPhone, and a sizable paper-wealth trading account. And that is among 6.75 billion souls on the planet. Compare wealth with wealth, not suits with suits.

Can you imagine a gold price of AT LEAST $100,000 per ounce? How about a real purchasing power increase, measured in today's dollar purchasing power, to somewhere between $10,000 and $100,000? In the bell curve below we can see that the most probable PP landing zone is between $25,000 per troy ounce and $85,000 per troy ounce. Can you think of a better reason to invest in physical gold coins right now? How about protection from hyperinflation? $100,000 is the bare minimum in this case. The top is infinite! Imagine $12 trillion per troy ounce... the size of today's US national debt reduced to one single gold coin you could buy tomorrow! Can you imagine it? It doesn't really matter if you can't see it like I do, as long as you buy the coin. As JFK liked to say, "a rising tide lifts all boats", not just the ones that believe in rising tides.


You don't have to buy my story as long as you buy gold!

Sincerely,
FOFOA

[1] Gold is Money - Part 1
[2] Gold is Money - Part 2
[3] Gold is Money - Part 3
[4] Full credit goes to Aristotle for his acute clarity of Thought. Sir Ari, where are you?
[5] The first president of the USA converses with FOFOA
[6] The Great Credit Contraction Liquidity Pyramid - By Trace Mayer
[7] Jim Rickards on CNBC's SquawkBox, 11/19/09

222 comments:

1 – 200 of 222   Newer›   Newest»
Anonymous said...

Compelling construct FOFOA. Closely akin to Maslow's pyramid of human needs where gold would be part of the base. Funny after all these centuries that alchemists's have once again reared their ugly, sallow heads with tungsten... and of course FRN's since 1913.

No need to worry though, Mish/Shedlock on Max Keiser tells us that things wont be nearly as bad as the Great depression because the "strength of the social services safety net." He cites the widespread provision of food stamps (did I recently read 25-50% of US children "nourished" by foodstamps today?) and the announcement that fannie will lease housing to the homeless etc.

What a bizarre claim, even Kaiser challenges the food stamp rationale with incredulity. Beware false prophets like Mish!

Vis a vis "other" hard assets such as agricultural land, I came across the statistic (thecomingdepression.blogspot.com) that 60% of farms were seized by banks in the 1930's when the shtf. Look for far more this time around.


BGR

Anonymous said...

FOFOA: I didn't know this was a religious blog...Read again, substituting God for Gold. Funny, isn't it...only one letter difference. Your hour glass could easily be the symbol for infinity when placed on its side. Gold (God) is the center point, the beginning and the end. Alpha to omega. As Einstein said, all things are related. Cheers.

SatyaPranava said...

update: Still nothing firm from anyone re: the Joseph Moshe & Ukraine situation, but one of my israeli sources told me he's skeptical, but looking into it. he didn't provide more information.

Anonymous said...

Yes,

here is an article written in Sept 2004 - about Gold during the Medici banking days of the 15th century.

http://www.safehaven.com/article-1922.htm

1 ounce back then had the purchasing power of $35,000US in 2004 dollar terms.

Gold has been there before and will return.....

there is nothing new under the sun.

SatyaPranava said...

it's amazing how prophetic mr. aristotle was in his comments in blue!!

somehow, i'm thinking mr. aristotle's quote is indistinguishable from your subsequent commentary. :)

SatyaPranava said...

since we're into paradigm busting on this site, I thought I would share some of my own thoughts about things that are essential:

anthroecology a term which many have coined, but I use it often quite differently, referring to our bodies' ecology. In other words, we can't live w/out the very complex and intricate forest ecology that is our bodies. Bacteria, "viruses", parasites, fungi, and other things which make up our intestinal micro-flora and fauna. too often we think that we are these autonomous beings based on our external observations, and too often forget that this is simply a nice myth that has been inculcated in all of us since very young. Different people might debate the ramifications for how important what is overlooked actually is. It is important to remember that out of the 100 trillion cells we have in the body (and this number is constantly going up every few years in what researchers discover) 90 trillion or so are bacteria, and are at the core of helping "each of us" live.

Because of many of the diets we choose to eat, and the stresses we put on our bodies (and the stresses put on our body by various particular interests, as well as natural environmental stresses), as well as the genetically modified foods, anti-biotics, the acidic diet, chem-trails, polluted air, water, soil, and food, in addition to sooo many other things, we destroy much of that biotic "supply" unnecessarily (and often without understanding that have and its impact on us) most of the time, and often are left under-supplied not from a life sustenance/maintenance standpoint, but from a life-thriving standpoint.

food / plants are stored sunlight (among phytochemicals, and many and other things)

Anonymous said...

Haggai 2:8

"The silver is Mine, and the gold is Mine, Saith the Lord of hosts."

Brilliant article FOFOA!

costata said...

Excellent piece FOFOA

To BGR
November 21, 2009 3:45 PM

Re: Child poverty/hunger USA

The US Dept of Agriculture conducts a study each year on "food security" to determine the number of people at risk of experiencing hunger at some point over the year. It is released in September.

The rate of YOY increase in the latest numbers is appalling.

2008 36 million
2009 49 million including:

17 million children.

SatyaPranava said...

@costata: i'm an organizer of food security in my city, can you provide a link to the 2009 data?

thanks,

satya

SatyaPranava said...

also, i'd like to see food stamps as a transition step into turning lawns (and other green space) into food, esp in urban areas.

then you have a freefood movt!

Anonymous said...

@ costata; yes, I referred to an AP report (11/2) which stated that almost 50% of all US children and 90% of black children will be on foodstamps at sometime during childhood.... and with the
r(d)epression worsening these data will worsen.

http://www.courierpress.com/news/2009/nov/02/half-us-kids-will-get-food-stamps-study-says/?partner=RSS

Anonymous said...

PS. what happens when foodstamps slashed as "prudent" cutbacks to crushing federal debt?

BGR

Martijn said...

FOFOA: I didn't know this was a religious blog...Read again, substituting God for Gold.

Makes sense to me. The wealth pyramid (inverse pyramid of paper products) where gold is the foundation does too btw, but that was from a previous post.

Museice said...

I needed to be reminded of this.

"In Austrian teaching, money originates in the market: …all money has originated, and must originate, in a useful commodity chosen by the free market as a medium of exchange. The unit of money is basically just a unit of weight of the monetary commodity – usually a metal, such as gold or silver. Government has no role in the definition or selection of money, let alone its creation, price or quantity. That is the market’s function.

In Keynesian theory, by contrast, money originates in the state. Government has a total monopoly on money, starting with its very definition. It is not chosen in free exchange, it is imposed by force."
http://www.goldensextant.com/

Museice said...

Here's the link without 'frames'.

'Viva la Restoration' Remarks of Robert K. Landis

Reminds me of a speech you would give FOFOA

Tekin said...

Revisiting Exter's Pyramid with estimated layer values:

http://www.creditcontraction.com/images/affiliate/Great-Credit-Contraction-Liquidity-Pyramid-Large.jpg

My understanding of the latest FOFOA post is that the upper layer (Derivatives: 1600 Trillions) shall not be honoured as wealth.

Disregarding the upper layer (1600T) and recalculating the "equlibrium" gold price:

(125+100+65+4)*1e12/(150000*1e6/31.10348)

yields an answer of 61,000 Dollars per ounce which is quite close to FOFOA's midpoint estimate of 55,000 Dollars per ounce.

Then one naturally asks; how shall the derivates be resolved?

Martijn said...

Interesting remark on money, Museice.

Martijn said...

Did any of you guys ever consider the idea that we did already see the great depression - or the potential start of it - in 2001?

Perhaps Greenspan's medicine prevented it from happening; he may have postponed it.

Now we're leaving it again. That would defenitely set this time apart from 1930.

Anonymous said...

Tekin,

Loven' that math bro!

TomB said...

FOFOA: How would the FFPPDC look like in EUR?

stibot said...

Tekin> i followed your formula which fits FOFOA's prediction. But i simply do not understand it, well perhaps you too. :-)

Imagine there's village ("the World") of 5 people, each has 1 gramm of gold in possession but you have 1 kg. So according to formula: all the wealth in the village costs 1,004 kg, which is aprox. 1 kg.

But you can not expect you put your 1 kg on the table and you become the owner of all the things in the village. Apart from the fact there is also silver (and this and that..) as money, not all the wealth is for sell at this price. Maybe they agree to sell for mere gramm but maybe they are not going to sell at all.

So i consider such formula as a flaw.

Anonymous said...

Fofoa, you wrote in a piece on “deflation or hyperinflation” in dec. 08’
One other thing I'm 95% certain of is that we will see what I am calling "hyperinflation" within the next 24 months. And I say 75% by next fall. 50% chance of it by summer. And 25% by spring. There are just too many black swans/pins in the room.
Does the “big unfold” take langer than you expected? There’s still 13 months left on the hyperinflation prediction but between the lines I can read that you thought things would move faster.
Thanks for sharing your insights! Cami.

Blindweb said...

I agree with Fofoa and have learned a lot from him, except there's one important thing missing. The civilizations of the earth are already in overshoot in terms of their resource base. Real wealth is going to be in permanent decline for at least century. The real wealth curve will provide an ever falling upper bound for gold. The population will peak and decline as well due to resource scarcity. Understanding peak oil is at least as important as free gold. It's always the thing you don't see that gets you, not the thing you're an expert on. This is the best peak oil blog I know of http://thearchdruidreport.blogspot.com/

Anonymous said...

A word about Greenspan.

I am sure you all know that Greenspan was an impressed student of Ms. Rand. You all know what was his own thesis with regards to gold and inflation and common man.

Supposedly, at some point after this, he was offered big money and power position at the FED, and he sold out his ideals.

Did he?

I am asking myself, what would have been my own choice in his situation? Refuse, and allow some other careful manager to make sure that the dishonest paper regime lasts not merely few tens of years, but few hundred of years?

Because, if there was a manager to see to it that they steal just their 2 percent, it would definitely last longer.

So, someone had to introduce the largess. Someone had to show them how to get so hungry for indiscretions as to hollow out the main concept that supports all of the thieves, - the confidence.

I think that Greenspan understood it perfectly. He could not be caught blabbering about gold anymore, since if the fascists had any slight suspicion about him, he would be gone and replaced.

So, Greenspan did it perfectly. He manned the bridge in full disguise of being "their best man", all the while gaining the speed and aiming for the narrowest of ice passages.

When the first of the ice struck, it was too late to do anything about it. They couldn't change their direction because they have built whole new petro-dollar system based on the direction that things were developing. Whole generations of powerful people were grown up on this scheme, and they had extensive families. Yet, they couldn't have slow down either, since the whole machine requires so much each and every day, the inertia was too great to be countered.

The disaster that Greenspan planned, is perfect. They can't turn, and they can't slow down. Their only one future is to crash and due to the narrowness of the passage, they can not even turn to crash the strongest part of the ship, but all they can do is to witness the gentle sides being ripped open.

If there was no Greenspan, we could still be in "the eighties", barely realizing the significance of having suffered all ties with honestly.

Ender said...

Sir FOFOA,

The other day Sir Topaz stopped in with a tidbit that should be understood on a broader basis. His website is http://time-currency.blogspot.com/. Upon visiting, make sure to read the first few posts (mid September) before tracking through.

Sir Topaz has been around for years and has thoughly studied the words of Another and his friend, yet, he has a background that gives him a unique point of view from which to build upon.

From his first post: “If we concede there isn't any "value" in money then, let's take a look at "things" from a rather unique perspective ...TIME!”

Time plays a key role in the pricing of everything. Everyone gathers things and, with their suplus, puts off the gathering of more things for some TIME – typically holding a currency. Ultimately, they will find a time in the future to cash in that ‘holding’. All the while, there must be trust that what is being held will have the same – or more – value in the future.

In his third post “The $US and $Gold” we see:


As the "players" quietly exit the "game" , the role of assuager will be taken up by 'ol Buck I feel ...which is in keeping with US T-bill market action of late ie: less "yield" the market demands over the short-term implies an ever-growing desire to hold ONLY $Cash.

Buck you see, is the sole representitive of here 'n now in Fiat-currency speak, a role which Gold and Silver play admirably "under NORMAL circumstances" ...for, when all is said and done, they've had 6000Yr's practice!

There will be a (short) period, depending how the PM delivery window is biased at the time, where we'll see Gold and/or Silver marching up the Charts in unison with El Bucko as the world stands agog, transfixed in time (as per the Deer in the Headlights imagery)

Currently, our two Hard-money champions aren't traded in the absolute "here 'n now" are they?



Now fast forward to the last couple November posts “Say what?? … 3mo gone negative??” and read on. It may be that some investors are thinking there is no TIME left – thus only $US.

Will be worth watching, for if yields say non-existent (or negative) TIME will be forced into the present and the dollar will find support, big time. While, at the same time, to satisfy demand, someone may have to print like there’s not tomorrow to keep up with demand.

I am not an expert in this field, I watch attentively with my gold foil hat snuggle secured.
Ender

Martijn said...

@Cami

After the collapse of Lehman I have been thinking things would develop faster for a few months too, as did FOFOA. I still argue that there was quite a chance they would back then.

Now I believe there might be a bit more time, although things still have not settled a new things keep popping up. Who knows where the audit-the-fed movement will lead us.

Tekin said...

@ stibot

One cannot make a perfect model of reality. All models have assumptions and simplifications. In the Exter's inverted pyramid model, creditors try to move down the debt pyramid.

In Exter's own words:

"[Debt is] what my upside-down debt pyramid is all about...The debt burden at some point becomes unsustainable...creditors in the debt pyramid will move down the pyramid... Creditors will try to get out of those weak debtors & go down the debt pyramid, to the very bottom: currency (dollar bills), even though they pay no interest. Next above currency are Treasury bills, issued by the government & backed by the Federal Reserve, which supports the market through its open market operations. They are by far the largest component of Reserve Bank credit, so are really as safe as currency notes, plus they pay interest. Still, you can’t buy anything with Treasury bills; you have to liquidate the bills to get money of some sort to buy something...The final step down is out of the debt pyramid altogether into gold."

I am trying to investigate the logical results of the model. Namely, if the model is true, what would be consequences.

FOFOA said...

@ TomB,

I do not know about the Euro. But perhaps this will help to disambiguate a point illustrated through a poor yardstick.

Sincerely,
FOFOA

SatyaPranava said...

this is a tough question (at least for me). But presuming we're in the wild west, and we're looking out the upper window and we see our rival has 2 full revolvers, each with six bullets.

Considering all the paper that is being pushed (and we know it's at least 23.7 trillion), how many bullets is that? what can that money really buy (if not just about everything), and when can we have a good indication our rival is down to the last bullet or two?

costata said...

Satya,

Re: Food Security

http://www.commodityonline.com/news/49-mn-Americans-food-insecure-USDA-study-23012-3-1.html

Sorry for the delay in getting back to you. I had to earn my daily bread.

You might consider visiting another site from time to time. Eric deCarbonnel does a great job aggregating news about the commodity (food) markets. This could give you an early warning system for your food programs.

http://www.marketskeptics.com/

costata said...

BGR

Gun and bullet sales are at all-time records since Obama was elected.

"PS. what happens when foodstamps slashed as "prudent" cutbacks to crushing federal debt?"

I think we will answer this question:

Q. In which direction will the guns be pointed?

costata said...

Tekin,

I tend to view Exter's pyramid as part allegory and part model.

To me Exter's pyramid says "a big number for gold" and "the current price is NOT a big number". So it tells me to keep accumulating (while I can) and hold. At present, do I need to know more?

I think the key words you quote in your post are:

"Creditors will TRY to get out...."

I think that some of the perceived "wealth" will simply evaporate (counterparty risk etc) before the holders can exchange their paper for something with a greater perceived value.

I think the "choke point" will be legal-tender-currency. For some (most?) of the sellers in the upper layers a "sale" will only get them "digital cash". At some point the folding stuff may be the only way to make the transition to a lower level of the pyramid.

Q. At a time when gold is US$55,000 per ounce would a gold owner accept a transfer from the buyer's Bank of America account to the seller's account?

Or will it be a time of "in god we trust" ALL others pay cash?

Tekin said...

Exter was anticipating deflation - however we have TARP etc. Central Banks are monetizing all the assets at the upper layers. Perhaps, the formulation should be: "Gold will reach 55,000 dollars in todays dollars and, additionally, we shall have %600 cumulative inflation"?!

Anonymous said...

Mortymer:
About the last article...
- The oil is missing from it and it gets the whole stuff very complicated.
- Oil = gold? Same level?
- Please lets not be too gold centric and leave the space for black gold as well.
- One note: the dollar market for oil goes down but there are other markets rising,.

Martijn said...

Doesn't this graph show you how far we've traveled and how much there is left to go?

Martijn said...

@Mortymer

If ANOTHER and FOA were right we should indeed not loose sight of oil

Martijn said...

Money is anything that society accepts to carry out the exchange of goods and services. (?)

Martijn said...

From that we could argue that the dollar is only a denomination of money, but money itself can have a myriad of forms: cheques, cash, coins, digits, and the like.

SatyaPranava said...

@costata:

i've been folowing EDC's site for well over a year now. but he tends to focus more specifically on harvest projections, etc.

thanks very much for the link, and also for the for the suggestion!

satya

Anonymous said...

Gold is not just wealth, it´s health too!
Not just because you feel more secure and safe having some gold but indeed if you eat gold(not nuggets) but kollodial gold you become more healthy.
The Egyptians and ancient Chinese people used gold as medicine.
/The Confused Man

Martijn said...

Watch out for the religious trap...

Martijn said...

As I am always on the lookout for signs that indicate my position is false:

Auditing the Fed en now this:

But there are troubling signs that Obama has joined the ranks of the deficit hawks and is planning a policy-reversal that will pitch the economy into a nosedive. Here's what he said on his tour through Asia:

"I think it is important to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession."

Martijn said...

Would that stop the presses (printing)?

Anonymous said...

Mortymer:
Martinj, please note that the amount of banks changed so better would be the percentage change. Then, people started to use credit cards -> and sooner or later got to minus -> which is kind of default itself => banks were melted dispersed into impersonal personal plastic card/credit creators eating them alive. It is funny, like Lenin once told that capitalism will sell the rope for hanging itself :o)
Once my professor of markets told really smart thing: "Unless those Rating Agencies stand all stands." They shake now but they stand.
Treasury still stands and sells its paper.

Anonymous said...

Mortymer:
Remember that the best players are also best observers. It goes in everything. Gardeners know (they say they feel what plants want) when it is the time to seed, water, when to harvest.
Obama´s administration may not be the best to lead us through this time safely, look at their objectives, goals.
The oil is set at certain price for purpose.
I still try to decrypt the latest huge spike. Speculation was only secondary.

Anonymous said...

Mortymer:
FED, ... Hmmm... The result depends on the quality of the plan one has in the beginning; if you stay focused you shall succeed. I see only ad-hoc fixes in a chaotic dance of beheaded chickens. Those on FED board suddenly fight another enemy, worse then gold, oil sheiks, worse then Russia or China combined, worse than anything else. They fight themselves, not united, they fight against the time and public is just watching, which explains the stillness of citizen´s missing action. Like a fish in a net, too fast moves just tighten ropes cut already too deep in the body.
Somebody mentioned god, I heard today one allegoric question: "When He returns, what will be the price of fish?" (religions will rise unfortunately but perhaps they may help from worst uniting, supporting).
No, what happens does not depend now on FED, the external gravity of actions put into motion will crash any resistance, there is no other way round.
The system is broken, the only way how to fix it now is to make new legal laws and implement them very very fast but judges and law authorities work too slow, there is no political will.

Martijn said...

Who knows, perhaps it is true indeed.

Martijn said...

Funny: Luxembourg also is a tax paradise by US standards.

Seems they've bought of some criticism by doubling US paper held

Anonymous said...

I think you misread it Martijn; it's the UK who bought more (different color of green)

Martijn said...

I did indeed, thanks for noticing.

UK makes more sense, interesting to see.

Martijn said...

Funny thing is how they always trick national debts: they're never net position. Japan i.e. has a massive national debt, but also an enormous holding of US paper. Basically all countries hold stuff from the US, and the US is presumed to hold the biggest gold reserve in the world.

Anonymous said...

Mortymer:
Biggest tungsten gold coated holder?

Martijn said...

Iran, oil and dollars. Who thinks this is relevant?

Martijn said...

Found a matching chart that explains what I mend when I said that perhaps this recession started in 2001.

Martijn said...

Now add these two together.

Martijn said...

Would you guys say that rising interest rates are a threat to gold?

SatyaPranava said...

@martijn:
rule #1 from my lobbying days on capitol hill: pay attention to policies not politics, i.e. actions not words.

Martijn said...

@Satya

That makes sense.

/

Does any of you guys know if Sinclair has ever mentioned ANOTHER/FOA?

Anonymous said...

@ Anonymous who said: "The system is broken, the only way how to fix it now is to make new legal laws and implement them very very fast but judges and law authorities work too slow, there is no political will."

That may be the way, but I don't think it would be a good thing to do.

I think repairing the system now, would be no different than bailing out banks. Why? Because those who trusted the paper (the most evil souls who are the most guilty it existed so long), must take damage. If you repair the system, they will survive without damage.

No, they must answer for their trust in false prophets. They have bet 100 percent on paper, - then 100 percent they shall lose.

If such a grandiose scam is ever constructed again, it would be the fault of those who saved the previous system, allowing the gene of trust to survive and to create a new population of gullible.

If you were on the deal, then obviously, you would want system to crash as soft as possible, claiming that "you care for those suffering", but in truth you'd simply preserving the stupidity gene, the gene of trust, so that your kids could repeat the scam you once pulled.

Anonymous said...

Mortymer:
So Another then was right; it was just postponed; the inevitable by few years; by interes rates spike, some behind the door deals, some war, etc.

S said...

@martin

Would you guys say that rising interest rates are a threat to gold?


As an aside, Israel central bank raised rates this am on inflation fears / activity. head of central bank is a BB acolyte.

Debating rising rates is a bit like wondering whether the Pancreatic Cancer patient is going to die if you stop Chemo? Some have argued that a balckj swan could be the Fed sneaking in with a 25 bps hike to choke the short dollar trade and risne people out of the carry trade. Always a risk, but the implications for gold seem rather muted. Gold is decoupling to reflect itnrinsic value. The intrinisic value of the dollar is the full faith and credit of the USG, whcih is de facto the ability to tax and theredore a proxy on the productive potential of the economy itself. thAt productive potential is so massivily overstated that its ability to service the debt under a rising rate scenario is without question untennable. Is it not a tautology?

Even a healthy US economy (use your own definition to define that) is insufficient to service the debt at normalized rates structure. Consequently the debate about rates is merely a distraction. Rising rates would put a final nail in the coffin and would ushger in the mellonite solution. In other words gold would be all the more valuable in such a scenario.

The only real question is how does JPM get out from under their shorts?

Anonymous said...

MOrtymer
Martinj: I gave that long time for thinking, evaluating...
IMHO the moment the US rises significantly rates...
- the carry trades unfolding creates quite a mess
- this kills many struggling companies which survived
- think what does it do to credit...
- and Japan restarts their carry trade
...and here we go again.
May happen but things are interlocked, policies cornered.

Martijn said...

@S

Always a risk, but the implications for gold seem rather muted. Gold is decoupling to reflect itnrinsic value.

That is true. What you say about the ability of the US to service its debt under a rising rate also.

Still, I feel as if the moment to "come clean" has not yet totally passed. Don't mistake me for saying that it will happen, but I believe that if the right actions were taken even as late as now, it might buy the system some extra time, and hence keep gold from bursting out.

Auditing the Fed, replacing Geitner and or Bernanke and some other actions if done right might help to restore confidence a bit.

I am again not saying that I have much believe any of those will happen, but I think it is wise to hypo-these on these things along side trying to pinpoint possible (likely) downsides for the US and their Thaler).

SatyaPranava said...

governments, megalopolises, large institutions, ocean liners, and anything very large will always have a hard time making a hard turn and reversal of direction. It's the nature of p = mv, where p is momentum, m is mass, and v is velocity. when you have huge monstrosities, traveling at warp/light speeds, they don't have the luxury of stopping on a dime, or a hard turn. however, each of us individuals does.

My advice is to stop relying on a system which is heading for an iceberg. get in the life raft w/several other people around you and begin to live in a way that can be sustained if/when the boat is shredded from bow to stern.

Anonymous said...

I read somewhere - when Gold goes up $25US the banks lose billions.

Can anyone explain this further.

thanks.

Anonymous said...

Martijn- consider that anything dollar positive, like an interest rate hike, will be hyper-negative for equities, the housing market, and all the insolvent bank's balance sheets. This alone could cause the collapse of the inverse pyramid. It's called a catch-22. A lose-lose situation for the Fed and the USG.

Martijn said...

Yes, Bernanke et al. have truly become tightrope walkers.

As there is no end point in sight yet, they seem guaranteed to fall. The question is how far they will make it before they fall. They have so far beaten at least some expectations.

costata said...

Anonymous
November 23, 2009 12:42 PM

"I read somewhere - when Gold goes up $25US the banks lose billions.

Can anyone explain this further."

There are large "short" positions in the gold futures market eg. the Comex. The shorts are betting on a fall in the price of gold. If it rises they lose money (in theory). There are ways to offset their risk so it is not possible to know with certainty the size of any loss they face.

Many people believe that the gold and silver markets are heavily manipulated. I think we can say with certainty that the achilles heel of manipulators in the paper market is physical demand. Jim Sinclair (jsmineset.com) claims that Governments and other Giants have entered the fray and are going to soak up every ounce of physical gold they can get.

Anyone who holds paper "promises" is at risk of counterparty default. We witness a "battle royal".

Martijn said...

Here 1938 is mentioned. Funny to come across this after I've just begin to think that perhaps this recession did start as early as 2001.

Not saying it's '38 all the way though, I do see the differences, and they're plentiful, I know.

SatyaPranava said...

martijn, i think i've written about this before, but i was stunned when we didn't fall into depression after 2000/1, no matter post-9/11 centralization.

it took me until summer of 2003 to figure it out, that we really were in it, but that the housing bubble was created and was masking it somehow (i figured it would be resolved in a couple of years, not 4-5). point being, i think we really were in recession back then, and it may have been even earlier than that. again, this whole deal is a big ponzi scheme that seems to go back to 1971....but then we can go back to the 1950s, and to 1933, and to 1913, etc. we're just dropping rungs on a really tall ladder, in free-fall.

recession is framed in GDP. Fekete has done an excellent job of showing the marginal productivity of debt, which might just be a better indicator of recession (lack of growth), or just how much growth has been slowing all these years.

i'm sure someone can go more into what i'm trying ot say here...as i'm off for a final exam :)

satya

costata said...

Satya,

Denninger has a graph and commentary on Market Ticker that addresses this issue. I have seen the graph before but it is not attributed by Denninger (could be from Chris Martenson).

EVERYONE the article linked below could be a must read.

http://www.zerohedge.com/article/albert-edwards-calls-next-black-swan-expect-yuan-devaluation-following-deep-2010-downturn

The Soc Gen analyst posits a yuan DEVALUATION in 2010. Tyler Durden calls this a black swan that would completely confound the forex algorithms of traders.

Does anyone think this is credible?

How would this impact on the progress to Freegold?

Would this be a desirable development from the perspective of the Euro project sponsors?

I am mulling this over and I will try to contribute if anyone thinks this is worth discussing.

SatyaPranava said...

@costata - wouldn't a yuan devaluation be positive for gold? show that all fiat currencies are worthless? is this why the chinese have been pushing gold/silver onto their population in preparation for such a move (just thinking out loud, which, come to think of it, is all i ever do :) ).

also, the fekete article is from 2009-03-30 and entitled: The Marginal Productivity of Debt

I do recall denninger saying something similar with a slightly different graph, and it was basically the same thing fekete was saying last march.

satya

SatyaPranava said...

also, if they're going to devalue, i can only imagine what's going to happen to the dollar. i would think we would move in turn.

it makes me wonder about the timing of this news, on the heels of a nice US visit. Is this some type of chinese currency shot fired across the US bow?

I'm certainly not educated enough to answer these complex questions, only ignorant enough to think of them :)

Museice said...

It appears people with massive amounts of wealth like Gold.
New gold bugs making gold investments mainstream
John Paulson is one of the few people who profited from the subprime meltdown. His move towards Gold is huge.

costata said...

An Austrian economist's perspective.

Frank Shostak has an article on the Mises Institute web site here:

http://mises.org/daily/3868

Extract from the article. Please note the final sentence.

"At present we are observing a repetition of the past boom–bust policies of the Fed. Thus the yearly rate of growth of the Fed's balance sheet jumped from 1.5% in February 2008 to almost 153% by December of last year.

Afterwards, the yearly rate of growth has been in steep decline, closing at 0.3% by mid-November this year. It seems that notwithstanding pronouncements by various Fed officials that the US central bank will keep its easy stance intact, the Fed in fact has already drastically reduced the pace of monetary pumping.

As a result of the wild fluctuations in the pace of money pumping by the Fed, the yearly rate of growth of AMS jumped from 0.8% in January last year to 33.1% by November of 2008. In early November 2009 the yearly rate of growth of AMS stood at −9.1% against −6.2% in October. In short, the Fed has already set in motion another economic bust." (my bold type)

Cui bono? (who benefits?)

As a former blogger called London Banker says "Wash, Rinse, Repeat".

Satya,

If Shostak and the Soc Gen analysts are correct (China joins Japan in trade deficits in 2010) then IMHO it suggests a few probable outcomes.

1. Reversal of the recovery in world trade to some degree.

2. Stock markets - big drop in the first half of 2010, if not sooner.

3. Big sell off in industrial commodities (NOT food or at least not for long as shortages loom).

4. Sudden reversal of the carry trade as players seduced into re-leveraging since the last sell-off are forced to divest and buy USD and Yen.

5. US real economy takes another massive down leg after Christmas.

6. Commodity currencies take a hit and fall rapidly.

7. If the above speculations are right then Silver takes a hit along with industrial commodities (but not as severe or not for long because of 8).

8. Gold's response depends on how the Giants react. My gut feeling is that they let the price ease off a little but put a floor under gold somewhere around US$1,100 to $1,150 rather than risk allowing a big fall.

A big fall would create a buying opportunity but it may have too much potential for collateral damage to their overall plans.

9. Rapid resumption of the US$ carry trade once the already highly overpriced US$ peaks and the resumption of its' falling trend guarrantees their profits.

10. War, pestilence, blogging, commenting, tin foil hat wearing, gold coveting ...........

Jeromer said...

costata,

"At present we are observing a repetition of the past boom–bust policies of the Fed. Thus the yearly rate of growth of the Fed's balance sheet jumped from 1.5% in February 2008 to almost 153% by December of last year.

Afterwards, the yearly rate of growth has been in steep decline, closing at 0.3% by mid-November this year. It seems that notwithstanding pronouncements by various Fed officials that the US central bank will keep its easy stance intact, the Fed in fact has already drastically reduced the pace of monetary pumping.


I love Shostak, especially on theory, but I'm not a huge AMS fan. I wonder about his use of a yoy figure instead of what is really happening. Consider:

from 11/19 - "The Federal Reserve's balance sheet hit a new all time record of $2.19 Trillion in assets, after an unprecedented spike of over $70 billion in MBS purchases pushed the number over the previous record from late April."
http://www.zerohedge.com/article/fed-balance-sheet-hits-record-22-trillion-assets-71-billion-increase-mbs

Here is a different perspective than Shostak's yoy money creation - The FED printed a bunch of money last year and has been spending it on garbage assets. Last week the spent more than they have in a long, long time. This is what Bernanke means by credit easing- expansion of the balance sheet so the FED could use the new balance sheet to buy bad assets.

It would appear the FED is having trouble keeping pace with deflation, if anything. They are pumping money.

costata said...

Jeromer,

This issue of trying to select the appropriate money aggregate is always contentious. I've bounced between Rothbard's TMS, AMS and a couple of other flavours.

Gary North gave his "followers" a sell advice on gold and silver right at the last top based on the Fed's official MZM or M1 chart (can't recall which).

He picked up that the Fed had drained (I think) around $180 billion from the cash in circulation and within two months the SHTF and Paulson was pulling his extortion routine in Congress.

I think tricks such as the Fed Res paying interest to the Banksters on their reserve deposits distorts the picture.

Soooo
"........ after an unprecedented spike of over $70 billion in MBS purchases pushed the number over the previous record from late April."

Maaaybeee
"... and then the sellers, as part of their secret deals with the Fed, rotated the cash into short maturity Treasury paper."

And theeennn
"....the cash from the Treasury paper sales was handed to the proprietary trading desk for use in their currency and carry trade plays."

Nascent inflation perhaps but no leakage into the real economy. So we have continuing "deflation". In Argentina the PTB flipped the switch from deflation to inflation PDQ when it suited them.

A few things I have heard/seen lately make me feel something is imminent.

1. Reports that US banks are taking lower all cash deals on RE foreclosure sales in preference to higher offers from pre-qualified "subject to finance" buyers.

2. The silver price and gold/silver ratio stubbornly refuses to confirm a new high for silver.

3. Max Keiser maintains that the Wall Streeters will make the next extortion play after they have scored their bonuses (paid at the end of December).

The RE inventory held off-market, zombie CRE portfolios etc all seem to fit with his view.

4. Some big money currently moving into short maturity US debt at negative interest rates.

I think the 2nd installment of the great credit crunch might be just around the corner.

Anonymous said...

"You can observe a lot by watching>" - Yogi Berra

SatyaPranava said...

costata:

so you think gold's going to pull another '08, or do you think it's going to hang in there and soar as a result of people losing confidence in the system, esp now that hedgies and CBs have moved in.

Or do you think that the news about these guys moving in is an intentional head-fake hand gold bugs their ass?

or something else? :)

Anonymous said...

Satya,

Thats the real question. Can they skrew the gold bugs like they did at the end of 08'?

Would China a communist regime, be advocatng their citizens to buy gold if they were going to let the US slam gold again?

Communist regimes the size of China dont like to have "pie in their face" concerning the US skrewing their citizens by slamming the gold price.

China has a firm floor placed under gold. And with central banks now buying. Im really not worried. Id still be much more worried about paper promises, when this next down turn/black swan happens.

Anonymous said...

Mortymer:
On Sunday I had an interesting conversation with a typical factory poorly educated worker (but street wise) who realized things go to hell and started to educate himself in markets. With knowledge of no foreign language (no English, just his mother one - minor EastEurop.) he correctly deducted that gold is now best investment and will soar and he was able to say me what I can study from different sources by concentrating on basics.
So conclusion? Normal people realize that there is no big recovery and that it is time to create plans B.

SatyaPranava said...

thx for the perspective, anon. i was wondering if this was a shot across the bow of some sort in the rhetorical war.

but you make a very good point.

satya

Anonymous said...

Mortymer to Satya:
I had the same question around 1034 and it did not happened so I bought, you are thinking about the same I believe.

The clip has only restricted amount of bullets and then one needs to refill. How much ammo FED still has? Not many, otherwise public will not be alarmed, and many cards were already called bluff.

Dollar has the best years over and like old man will just lives from sentiment of once being the greatest of currencies. There will be users, those who live still in past, those conservative ones and those whom it simply suits and will hold on it and support it by using it but those Young Currencies (Euro, Yuan, Gold Dinar?) have high potential, vitality, maneuverability and seem to gain in time. They are still pegged for purpose and will also be in future but dollar has osteoporosis and big fast moves could break the bone.

The big money which are innocently sleeping slowly wake up being threatened by echoes of future hyperinflation , being jealous to joys of new wealth being made in the non-dollar healthier environment.

The gold breathes freely under those new currencies and moves into that direction inevitably, it likes it there, it loves to shine.
This part is not realized yet. Think 1971, the move had been made to stop the gold outflow, right?
Interest rates hike, dollar strenghtening and such talks... before each tsunami, the sea moves out and lures those silly ones to explore fruits of sea. Do you want to be foolish or do you think you are faster than wild water?

I respect the nature and its power, I do not resist, oppose, I learned to swim in this liquidity (adjusting my cash flow) where there is too much of oxygen but I am aware that the lightness of it will not hold those who are too heavy. After the rapids are over I will anchor with the little gold I have, but that is enough for me to continue on my journey.

Thank you

Martijn said...

So my uneducated interpretation is that the bond market is sending its strongest signal in history that deflation is coming while the equity market is showing the strongest signal in history that inflation is coming.

Based on the bond market being much larger its usually the bond market that is correct. So equity longs are going to get raped at some point.

But both markets are so distorted by government actions that everything has lost its signalling ability and price discovery mechanisms are completely broken.

The Fed has destroyed free markets in order to save the free market system. Or a more cynical interpretation, the Fed has sacrificed the free market system to preserve the wealth of the oligarchs
.

My idea. Exactly what spv has the Fed created to hide the misery?

Martijn said...

So the St. Louis Fed published this in 2006.

It asks: "is the US bankrupt", and answers: "yes".

Anonymous said...

Mortymer:
Martinj, you are right, bankrupt, in debt and under water.
I think that the problem and the issue is that it is not so easy to define what the "the empire is bankrupt" means from within the system since the dollar is global reserve currency. If bankrupt enough, evaluated as irrepairable that is the right question here. External entities will define that; (and oil and gold are thermometers).
It has defaulted many times in history but still somehow stood up on its legs like a durable boxer but lately it is locked in a corner being massaged from all sides, bleeding, loosing slowly power. It is harder and harder and there is long time waiting for the ring signals the next break time.
Look at similarity with Trump empire, his prestige, good name and ability to withstand hard time gives him not second but many other chances. His ability to function amazes me, his drive is like nobody´s elses.
The biggest problems and challenges are these which are not seen yet so clearly. Like shortages, underfunded infrastructure, privatized basic needs, school system which will not bring in new healthy blood, loss of ideals, corruption of mindsets and changes in values.

Martijn said...

Modern economics is a highly successful confidence game run by bankers.

Anonymous said...

Mortymer:
Correct but it seems that quite few are tired of loosing so they choose not to play and go off buying PMs. I see news from many countries about acceleration of demand for physical delivery. This is a world trend and will be here for some time.
Note: Do you remember how Fofoa mentioned once in a quote to someone else (something like this): "The verbal manipulation works just the way trend goes"?
After few big news we now have time where gold went over some of the historical tops and slowly becomes the discussion topic.
The more this is in news the more people are actually buying, well informed or misinformed, it is just fuelling itself for growth.

Anonymous said...

Mortymer:
Correct(2), from another point of view,... Basic rule if you own casino is to set the machine return rate enough for keeping customers interested.

Martijn said...

Basic rule if you own casino is to set the machine return rate enough for keeping customers interested.

You have pinpointed exactly where those boys in charge misfired.

Anonymous said...

Today's WSJ (paywall) has a story about HSBC kicking retail allocated gold holders out of the vault space. "Pick up your stuff and go" seems to be a strange development.
http://online.wsj.com/article/SB125902295608261455.html

Martijn said...

HSBC USA currently holds the second largest short position in gold, so I can understand this move.

The want people to sell.

Martijn said...

Nice to notice how the US became quite profitable over the past decades while consumers where indebting themselves through houses and credit cards.

Those debts off course where were the profits of the US corporations and their CEOs really came from.

Martijn said...

And it were those debts that fueled the stock market bubble.

Now the government is taking on those debts on behalf of the US citizen.

Anonymous said...

Mortymer
Martinj -> The casino alegory - that is I believe why there is the carry trade - to create higher demand for dollars to keep players in their game.

Anonymous said...

Mortymer
Fofoa, please let me know your view.
-> `The future of gold depends now also on the price of oil, if it drops significantly gold falls.`

Anonymous said...

Mortymer:
YOu most likely noticed but still: Ethiopia signed a deal on Tuesday for a Saudi firm to extract an estimated 20 tonnes of recoverable gold found in the Horn of African country last month, the mines and energy minister said.

SatyaPranava said...

FOFOA, did enjoy the glen beck story, despite my not trusting him at all. But i was so disheartened by the fact that he doesn't even try to talk about derivatives.

Now, were I attempting to run interference on the american people, and push them back into the arms of the wonderful republican party, i would do a 30 min show talking about all these bubbles, and completely forget to mention derivatives, or the set of legal, and political decisions necessary to create them.

that makes what Beck has to say, not only not very helpful, but actually, downright slick, slippery, and scary!

Martijn said...

So, no deflation?

Or deflation?

..The "lesser chimps", lost in Western thought keep waiting for the fed to induce their deflationary policy. (I was monkey - ing around in this area for a while myself) (grin) It is not coming. To do so now would commit the dollar to non reserve status in a hurry and produce a massive price inflation at home (right now) as all these unneeded dollar reserves come racing home. Remember, the ECB does not need dollar reserves!....If the Euro went to .10 to the dollar the EuroZone economy would not stop. But all international dollar trade would grind to a halt. The USA could not sell anything internationally, at all! Every other nation would simply abandon the IMF protocols and use their native currencies to trade directly with Europe. Even Arabia would break their SDR basket peg and trade oil for Euro goods, either using their currency or directly if needed..

.."Deflation is everywhere and always a monetary phenomenon."

The "Traveler" was absolutely right with the above remark. This perspective has been around for some time and describes to an extent our paper money dilemma. However, reading from a different angle would require another question; what kind of "monetary" are we dealing in"? Even better to ask; do credits in any monetary system always try to deflate?..

..So here we can say that "deflation most likely is waiting around everywhere, all the time", but it becomes most apparent just as soon as banks begin lending too far beyond the fractional limits that gold places on them..

..At this point, one the dollar world has been past for some time, deflation is no longer the consequence of over debt creation. Deflation is now determined by our hand as we adjust the fiat reserve supply. Often, in order to slow things just a little before we start again the fed stops it's manufacture of deeds (err,,,,,, currency reserves). It becomes a cycle that many have identified as the inflation / deflation cycle. It seems to have no limits to it's life in our modern world..

..But it does. At some point, deflation becomes a socially impossible event because the credibility of the money system is rendered second behind recognition of real wealth loss. Here, we will lose the wealth anyway, but our books will still balance. This is our future in a currency at the end of it's timeline.


Are we at that point yet?

Martijn said...

This ending process becomes a natural "next event", not only in our minds but in our culture's actions. We no longer think of the currencies credibility as being at stake or even an issue. Now, well into an expectation that "expanding credit" is natural and acceptable because the world (and ourselves) needs more of it; just the act of slowing the increase is enough to trigger deflation talk and thoughts of economic slowdown. The whole process of what we once knew as "real inflation" the monster, becomes an acceptable, wanted event.

We might have arrived at that point.

Martijn said...

=====However, in the real hyperinflation that's coming, as it follows our current credit inflation phenomenon it's not the borrowing class that's liquefied, it's the lending class!========

Indeed, Sir!

Main street is not getting any credit. I have posted enough on that.

Wall street, however, is.

Martijn said...

This transition from "credit expansion" to "credit buy outs" acts to place real numbers into the economy and those real digital numbers will start bidding in the marketplace.

Nice read again what I already knew.

Martijn said...

I could use some help here: When the world begins to abandon a currency at the end of it's reserve timeline, deflationary gains on debt instruments are an illusion of bookkeeping.

Would treasuries selling at ridiculously low levels be related to this in any way?

Anonymous said...

Re: Martin

I could use some help here: When the world begins to abandon a currency at the end of it's reserve timeline, deflationary gains on debt instruments are an illusion of bookkeeping.

Would treasuries selling at ridiculously low levels be related to this in any way?


I would say yes personally. We know the buyers are largely fictitional.

Tablemaker said...

Incentive to buy real estate in Thailand - A gold bar.

http://www.sovereignman.com/finance/what-thai-real-estate-can-tell-you-about-gold/#more-1037

FOFOA said...

Hello Mortymer,

Gold has two driving forces. The more powerful of the two is gold's shifting function in society. As I say in the post above, gold is wealth. This force trumps all others as we head into Freegold. Inflation/hyperinflation is a secondary force. Relative to inflation/hyperinflation, gold and oil will rise together, but not relative to gold's paradigm shift. So in answer to your question, no, gold does not rely on oil. Another's very first line in his first post was:

It was once said that "gold and oil can never flow in the same direction". If the current price of oil doesn't change soon we will no doubt run out of gold...

We know that oil is a consumed wealth of a momentary value that is lost in the heat of fire.

The stars blink and it is oil wealth no more!

It has become "the debt of nations" now owed to you [if you hold Treasury's in exchange for your real oil]. Gold on the other hand is not a commodity as many assume, as it is truly "the wealth of nations " meant to last thru the ages! A wise oil nation can strike a deal with the paper printers and in doing so come out on top. Go back a few years to the early 90s. Oil is very high, you offer to lower the US$ price in return for X amount of gold purchasing power. You don't care what the current commodity price of gold is, your future generations will keep it as real wealth to replace the oil that is lost. Before the future arrives gold will be, once again valued as money and can be truly counted on to appropriately represent all oil wealth!


I know it is confusing, but the original oil for gold deal that Another described had the Saudi's replacing their oil at 30 barrels per troy ounce of gold. As the physical market for gold became cornered and illiquid, and large physical exchanges harder to do off market, this price shrunk to 10 barrels of oil per troy ounce of gold.

At this rate, in order to keep the oil flowing at cheap $-denominated prices, the central banks themselves had to become gold suppliers. But this has stopped now. And from here, there is only one possible outcome.

FAIL THIS AND WE WILL PRICE GOLD IN DOLLARS AT THE TRUE VALUE OF OIL TO THE WORLD!

You see, gold is not a commodity. The CBs have used every weapon to keep it's price low . Understand me, Gold is now, today, a devalued currency being used in world trade!

Do you think the CBs are selling gold to keep the dollar strong? They don't have to sell to accomplish that feat! CB gold ( one billion ozs.? ) valued at it's current commodity price is only worth 300 billion, it's nothing in that price range! They know what it's US$ price is worth in terms of oil! They are not stupid as they show.


There is no way for gold and oil to rise in commensurate fashion from here. Gold and oil will rise together under the inflation force, (or hyperinflation), but not under the force of this phase transition, the shift in gold's function. In order for the world's economy to become sustainable (balanced), the oil/gold paradigm will shift. 1 ounce of gold will bring 500 to 1000 barrels of oil. This may seem like a reduction in the price of oil, but think about the offsetting explosion in the value of the gold accumulated up to this point. And from this point forward, gold and oil will remain at that ratio stasis through thick and thin. It will be a fair price for oil, and for gold. It will be a sustainable price.

Cont...

FOFOA said...

...

Did you see my second FFPPDC? It is priced in bbl of oil. Don't expect this particular revaluation to come in ANYTHING else. Only gold. That is why it is called Freegold, and not Freeoil. This EPIC adjustment in only one thing is what will put the world back in balance. Back to a sustainable meritocracy. And remember that Another warned that when this happens:

The money system will start over, from scratch.... No form of paper wealth will survive the financial crush once the CBs stop selling!

From the Saudi perspective, this gold revaluation is their insurance against the carnage that comes at the end of an unsustainable debt system...

It is easy to know that gold could not have been traded for all oil sold. This was never the intent. They only wanted to pull a small amount out of circulation on a regular basis... They only need 200 million ozs. When the system breaks that gold would be worth all the oil in Arabia and then some.

The Asians are the problem, by buying up bullion worldwide and thru South Africa they created a default situation on all the paper for the oil / gold trade! Now the CBs are selling in the open to calm nerves but it's known that they will never sell enough. It was never their intent to provide the gold, only the backing until new mining technology could increase production. Over time the forward sales, such as ABX's should have worked. But LBMA went nuts with the game and the whole mess has now accelerated.


Isn't this interesting with the ABX reference? Remember, this was 1997. In 2009, this has all been reversed! The CB's are now net buyers. ABX is now closing its hedge book for good. And gold is rising, not falling. But the system hasn't fully cracked up yet because somehow gold is still being delivered. Somehow they have allowed gold to rise slowly enough for the marginalization of gold to be continued throughout the rise.

Now the CBs will have to sell 1/3 to 1/2 of their gold just to cover what's out there. To use the Queens English "it ain't gona happen dude"!

Everything is now upside down and reversed. The more the CBs sell outright the more the price will rise.

It's not a bearish sign anymore. They will now sell to keep the price rising slowly.


Again, this was 1997. Remember Brown's Bottom? England DID sell 1/2 of their gold in 1999! So perhaps Another was wrong about the "Queen's English"! Perhaps this and other efforts were enough to allow the slow rise of gold. But for how much longer? This is the $100,000 question!

Cont...

FOFOA said...

...

ANOTHER: As for the old agreement of oil/gold ratio, it went out the window... a mismatch in value of epic proportions!... Indeed, oil will become very cheap for those that can supply physical gold...

This would require a high value for gold. For gold to trade with oil on a physical basis would also require perhaps a small fraction of gold/bbl.

All would gain from this. The intent is not to destroy the oil market.

oris >> ANOTHER ID#238422:
Would you please explain today's action when gold went up $9.00 and oil dropped $0.30. According to your scenario gold and oil should move in one direction.

ANOTHER >> oris
Mr. Oris,
Oil is by far a much larger market than gold. Many times over. Oil may be taken to $12/US, but this is not a trading move. Only business. $12 oil did not require gold to drop below $320 or so, as gold must stay above perceived production cost. The drive to $280 was by the paper market outside. The intent is for long term asset balance not destruction! However, the currency market is close to taking extreme moves. That will over ride intended results.

We will no doubt see a mass run of CBs into gold at ANY price! This I know!

What is really interesting is how gold is being viewed and traded in some areas. Some people are using it's future "reset price, in terms of oil" as a value discount.

In a very real "currency sense", oil will be devalued in terms of gold. As one makes a currency weaker by increasing the money units per ounce of gold. Oil will become very cheap in gold, as the amount of gold paid per barrel will fall dramatically as compared to today's ratio. There will be much more than enough gold worldwide to quantify a "world oil currency"...

So as not to rewrite what is already an excellent piece on this coming readjustment, I will repost part of Mr. Allen ( USA ) 's perfect article on the subject along with his requested changes per his:

Allen ( USA ) ID#246224:
Date: Sun Dec 14 1997 18:59
Allen ( USA ) ( More ruminations re: ANOTHER's recent posts ) ID#255190:
Last one on this topic until more ANOTHER posts. I'm not sure that it would be necessary to have that large a cabal in on the "offer" of oil for gold. Given the rather small market in gold in comparison to oil/currencies it would only take one or two well endowed oil states to pull this off. Here's why.


Cont...

FOFOA said...

...

Let's say the Saudi's have been accumulating gold through the back door ( approx. 5,000 tonnes ) . They sell say 20 Mln Bbl oil a day. Close enough. At one ounce of gold per thousand Bbl oil that's 10,000 ounces of physical gold per day. That's a lot of physical gold.

The first few moments after the Saudi's proposal to trade oil for gold at a very steep discount of 1000 Bbl/oz ( approx. 1.5% of current US$ price ) there would be roars of laughter. One fast thinker after another would think "Hey. I buy some gold at $300/oz, trade for oil to receive 1 Mln Bbl, then sell the 1 Mln Bbl for US$ 10 Mln. Net profit is

$10,000,000-$300,000=$9,700,000. Easy money." .

Everyone at once turns to the gold market to buy, which promptly shuts down. Now no one is laughing. Because everyone realizes that gold is now worth at least $10,000 per ounce and no one is prepared for that revaluation. Whoever has gold now has 66.67 times the purchasing power in that stockpile. What appeared to be a stupid offer has now become a complete revaluation of all gold stockpiles vs all currencies.

Who has the gold?...

Date: Mon Dec 15 1997 10:49
Allen ( USA ) ( Quick Note to JTF re: 23:05 post - US$ oil float ) ID#246224:
US$ price of oil is floating. The "proposal" to offer oil for gold at say 1000 Bbl/oz is far below the present float price in US$. The gold market is SO SMALL that if the oil nation that made this proposal was pumping enough oil the gold market would be swamped by oil buyers who were looking to make a few ( !! ) US$ on the discrepancy in price. In effect this would revalue gold by inserting an entire different group of buyers into the gold market who have ALOT of money.

ANOTHER: Why is it the oil nation would not just buy at market? Same as above. Their effect in the open market would basically shut down the market thereby frustrating their efforts to buy gold. Conversely, why would they then make the "proposal"? Because either they have enough gold to buy the world at the new price, there is a crisis in which they feel it is to their advantage to do this ( such as a US$ crisis ) or they might have a geopolitical rational. In the new valuation the US$ would still be intact. But its monopoly role would be altered. Its not that currencies would become worthless but that gold would become worth much more in relationship to paper currencies.

To answer the "military" question, asked at the beginning of this article, I say:

The massive increase in the "reserve currency" price of gold would, no doubt be ushered into the USA house of congress as a godsend answer to Americas debt problems. With the "full production" of oil, now viewed as a sure thing, The world may well see the USA send the military into the Middle East just to ensure that this "deal" is not disturbed. After all, it is oil that will be massively devalued by gold.

Thank you


End.

FOFOA said...

$50K gold mentioned on CNBC (without drawing roaring laughter.)

"...yeah, Jim Rickards said $11,000, but if you actually do the math, it comes out to $50,000..."

Jump to about 7 min in.

Museice said...

This gentleman thinks the Comex will be tested NOW

Anonymous said...

What will the world look like with $50,000 gold? Wouldn't it be pretty scary?

Anonymous said...

Re: What will the world look like with $50,000 gold? Wouldn't it be pretty scary?

No not really...50,000 weak dollars for one ounce of fine pure Gold sounds about right.

Anonymous said...

Canada says that the reason for missing gold is a first-grade mistake:

""Senior government officials say there was a colossal error at the mint itself," said CTV Ottawa Bureau Chief Robert Fife on Tuesday night.

Mint officials double-counted some gold bullion they sold, and also underestimated the shrinkage of the gold during processing.""

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20091124/mint_mystery_091124/20091124?hub=Canada

Who are they kidding? Lol! Let me guess, this was also a reason behind missing pentagon money, and Bernie Madoff money! That explains everything!

If numbers do not match, recount!

Anonymous said...

Bill Bonner says,

'Now, the question we must ask ourselves is an old one: is this the final, blow-out phase of the gold bull market that began 10 years ago? Or is it a trap...intended to catch the Johnny-come-latelies in the gold market? Of course, we don't know any more than any other human being knows. But we've been watching Mr. Market for a long time. And we've come to the conclusion that he's an SOB. Trouble is, you never know exactly what kind of an SOB he's going to be.

Is he going to lure investors into the gold market and give them a good whack? Or, is he going to drive the price of gold all the way to $3,000...and leave us behind?

The old-timers, the scarred and battered confrere of gold bugs, in which your editor humbly confesses membership, are a bit skeptical of this latest run-up in gold prices. We bought gold years ago. Heck, we bought so many gold coins so long ago that we've forgotten where we buried them. So, we wouldn't mind seeing gold race right up to its rendezvous with monetary destiny - without stopping for red lights or little old ladies in the crosswalks.

Trouble is, we don't think the world is ready for it. What do we mean by that?

We were hoping you wouldn't ask. It's complicated and confusing. In many ways, it's more of a feeling...an instinct...and a hunch...than a hard analysis. But here goes:

Look, here's the hero of the financial crisis, David Einhorn. In 2007, he figured out that the banks were going to get killed on their mortgage debt. He shorted them - particularly Lehman Bros. He made a fortune for himself and his investors.

Well, what's he doing now? Guess. He's buying gold:

David Einhorn, quoted in MarketWatch, said that given the present situation gold was the bet he felt most confident to make:

"If the chairman of the Fed is determined to debase the currency, he will succeed," Einhorn said. "Our instinct is that gold will do well either way: deflation will lead to further steps to debase the currency, while inflation speaks for itself."

In other words, gold is a one-way bet. But wait. It's not like Mr. Market to offer investors one-way bets. There's usually more to the story. And the twist is probably this:

Deflation will surely lead to more steps to debase the currency, but those steps don't necessarily or automatically take the feds where they want to go. We have no doubt that the Fed chairman is determined. What we doubt is that he is capable. We doubt, too that a 3.5% downturn over 24 months corrected 30 years of credit excess. There's still Hell to pay. It means another big takedown in the stock markets...crashes in China and emerging markets...and collapsing commodity prices. Investors won't like it.

Will they turn to gold for safety? Or to the dollar? A year ago, they dropped gold and ran to the dollar. Will they do the same this time? We don't know, but we doubt that SOB, Mr. Market, will make it easy for us, either way.

Anonymous said...

In general, I agree with Bonner, but I more strongly agree with David Einhorn.

It is true that Helicopter Ben might not have enough balls to unleash an inflation big enough to not only negate any deflation, but to significantly outpace it. However, it is clear to me that if Helicopter Ben won't show enough balls, then the USG will find someone who will.

It is the will of the congress, not the FED governor, that will give the last order. This is a cornerstone of understanding, in my mind, of why there is only inflation as our one choice of the future.

Inflation robs common people, but not in the way that is blatantly obvious. Deflation robs rich people and then hurts common people in the way that always points to a governmental neglect.

I don't think there is a government on earth, that would chose to be blamed for a crisis, rather than to lay the blame on something else. This certainty comes from the fact that any politician is a liar first, and everything else second. If you think that there are "good" politicians, then what are you doing in the gold camp? Get out and vote.

In case of inflation the government will blame everyone but themselves, while it will send cash left and right, to help "those in need'. It's own debts, however, will dissipate.

In deflation, the government will have to default on many of it's promises, and no amount of blame will turn the angry eye of John Q. Public off the government's back.

The will always choose inflation, if they couldn't make it a "normal" rate, then they will always go for the hyperinflation.

Anonymous said...

Bill Bonner always seems to be paranoid on what Mr Market will do.....

Bill was right to buy Gold in the early 2000 when it was alot cheaper.....

but hasn't the game - since 2008really started to heat up?

Aren't we in uncharted waters..?

Aren't things out of anyones control now?

FOFOA said...

"Will they turn to gold for safety? Or to the dollar? A year ago, they dropped gold and ran to the dollar. Will they do the same this time?"

It is important to understand that few persons or governments hold US dollars! Look at any investment portfolio and what you will find are "assets denominated in US$". This sounds simple, but it is not. You have heard the phrase, "money is moving into real estate, land, oil, stocks or bonds". It is a bad meaning, as it does not what it says.

All modern digital currencies do not go into an investment, they move THROUGH it. The US unit is only an exchange medium to acquire assets valued in dollars. US government bonds are the usual holding. No CB holds any currency! They hold the bonds of that currency. The major problem today, is that digital currencies have erased the currency denominations of all government/nation debt holdings! Even though a debt is marked as DM, USA, YEN, they are in "real time" / "marked to the market" and cross valued in all currencies! No currency asset, held by CBs today are valued in the light of a single issuing country, rather "all currencies are locked together". To lose one large national currency, is to lose the entire structure as we know it!

There is an alternative. Gold! It is the only medium that currencies do not "move through". It is the only Money that cannot be valued by currencies. It is gold that denominates currency. It is to say "gold moves thru paper currencies". Gold can be used to revalue any asset, and not be destroyed in the process! --ANOTHER 1998

Anonymous said...

FOFOA

do you see ALL currencies going into a hyperdeflation against Gold?

here in Australia - people are wrapped our dollar is getting close to parity to the US dollar.

I've told people it won't last as how can trade occur if the Aussie gets stronger than the US?

Surely the Aussie is in for a devaluation?

Won't all currencies soon devalue causing bullion to cost more in weak paper ocross the globe?

FOFOA said...

Hello Anon,

The simple answer is yes, I do. They are all pure fiat at this point. Obviously they won't all be the same. Some will survive in much better shape. But not such that it is worth riding the waterfall in a barrel. Infinitely better to hold on to physical gold.

Sincerely,
FOFOA

Anonymous said...

If you think that modern currencies are backed by something, then you must examine that something in order to see which currency will hold better during a crisis.

The propaganda insists that this or that crisis is of liquidity or of credit. They all are of one thing, they are all crises of confidence. All currencies are scam and there are no qualitative differences between them.

I believe that all currencies are backed by confidence, and as such the speed of the spread of awareness will determine how quickly they fall fall one after another. This will be modulated by free media and a level of unsound and unwarranted trust of the people in the bedstories their governments tell them.

For instance, currently, the bedstory that we must bailout the banks and insurance to survive the crisis, makes successful rounds in US due to largely unsophisticated population and largely controlled mass media.

I wouldn't be surprised to see Japanese yen holding out longer than one might expect, as the citizens of Japan fanatically support any story their government may tell them. Same goes for China. You be the judge of Australian currency future forecast.

Anonymous said...

India Negotiating Purchase Of Remaining IMF Gold As Spot Hits $1,177/Oz

From the Financial Chronicle of India:

India is open to buying more gold from the International Monetary Fund (IMF). It bought 200 tonnes for $6.7 billion on November 3. The Reserve Bank of India (RBI) may well buy IMF’s remaining hoard of 201.3 tonnes on acceptable terms, which are now under negotiation.

...

http://www.zerohedge.com/article/india-negotiating-purchase-remaining-imf-gold-spot-hits-1177oz

Why India and is there no other bidders to be found? Something smells.

SatyaPranava said...

i've been biting my tongue for soooo long now about this...but i finally figured out what seems like a perfect way to call tops and bottoms. it's very easy. read below for the secret:






just go read one of Peter Cooper's articles at goldseek, and whatever he says is going to happen, NEVER does!!! now isn't that a cinch?

can someone answer me? he's way too obvious to be some insider hack, bc even they come up wiht some sophisticated arguments to fool someone a bit. But this guy just seems to be calling for the biggest black swan every week, and he's always wrong.

does someone have some insight on him? (btw, Peter, if your'e reading, please, take a break from writing for a while...bc i know i don't know jack, but man...it seems like you don't know him either).

ok...rant over...presume daily FOFOA activities.

Martijn said...

As Bill Bonner says: I also don't feel like this very moment is it yet. There must be some tricks up the sleeves of Bernanke et al.

Such a feeling would however allow Mr. Market to take me by surprise.

I have bought some yellow tickets for that just in case, but still...

Anonymous said...

Mortymer:
FOFOA - thanks again, words are like leaves on autumn, change color and fly away, once you read them some Thoughts get stuck in your mind more some less but some need to be heard/read more often to be understood fully on bigger scale.
I believe that I read well but the confirmation/proof can be done only if one gets all the aspects correctly as there are many gray spots to fill and the scene is quite complex to be seen from first few glances. I like to hear the same words as Another has with your words as they complement, you give it the up-to-date flavour so much needed to feel the right spices.

Ticket,... Hmmm... Yes, indeed. Really thrilling story we watch together, indeed. Personal involvement gives you unique chance to be part of the players side, understanding that without ticket players take you as an object, it is nice not to be the shocked amazed public.

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

words are like leaves on autumn, change color and fly away, once you read them
Nicely said.

On a side note: here is Mish again. I'm not trying to promote him, but I am beginning to feel that he does sees many things roughly the same as we do.

The reason I was reading Mish is because I am on the lookout for falsification (rather than confirmation) of my - our - ideas, but lately I am not finding it with Mish.

So far I have taken that as an extra warning signal.

FOFOA said...

Martijn,

Mish is inspecting the trees to determine the future status of the forest. But to see the true danger, you must be above the forest on the mountain top. From there you can see the forest fire that is coming. Mish doesn't know it is coming because the winds are blowing the smoke away from him. But those winds, while they can hold back the smoke (the forewarning), they cannot hold back the fire. In fact, they feed the fire the oxygen it needs to accelerate!

FOFOA

Martijn said...

@FOFOA

I can see what you mean. Mish has a blind spot on the exact location of ANOTHER/FOA and your thoughts.

I do however believe that he somehow knows that this system will collapse, and also knows owning gold will protect one from it.

Faber: The capitalistic system 'as we know it today' will collapse.
Mish: Agreed. The credit based fiat model of fractional reserve lending and fabrication of money out of thin air has reached its pinnacle...When and how it finally blows up is the only issue.


I guess he somehow smelled some smoke but does not yet know what it is. The "issue" he mentions is where this blog comes into play.

Anonymous said...

Mortymer:
Isn´t it beautiful how those simple symbol allegories could clearly explain something much more complex, complicated which was grasped by mind but translated like this to be shared among others. Then once said it looks quite simple actually. The process of thinking is what we lack we lost which I consider the finest of all wealth. The language is an amazing tool and that is why I value mathematics as a king of sciences; numbers just do not lie, they are brutally honest.
FOFOA, please if you have some personal free time, read the book I recommended you, you will find there a lot of wisdom you seek, there are deep Thoughts there comparable to those of Another. If I was in US I would send you that as a gift as appreciation for your effort to work on this Tribute.

FOFOA said...

Mortymer,

Please remind me what book it was you recommended. I do remember you mentioning a book, but I have no idea where it was in the sea of comments that have come in lately.

Thanks,
FOFOA

Anonymous said...

Mortymer to Fofoa:
Levy, Stefan
Artificial life : the quest for a new creation
(http://en.wikipedia.org/wiki/Stephen_levy)
- It is basically a great study book for those who want to know how processes work/envolve in nature, transmissions from phase stages, changes in entropy, etc. It has great examples but like this deep subject of yours one starts to understand from about 1/2 of book what it is about and its impact, really great value.
I have a feeling it may give you some nice material for thoughts since it will widen your horizon as it did mine. Applied on Freegold issue it could help to understand how things inevitably change into a direction which suddenly pops up as the only solution possible.

Martijn said...

One more thing on the Indian gold buying: Marc Faber said about a half a year ago that he did not like any central bank, as they were (and are) all money printers, except for the Indian one, that he argued was doing a reasonable job in these rough times where others were loosing their heads.

Anonymous said...

Mortymer:
I personally like Mish as he likes gardening, (somehow poetic lately, incuiring minds wander why, eheh), he shows clearly how the forest has a lot of flameable dead wood, how it is infected by worms of debt, etc. I do not blame him for what he is not saying, he may know but his intentions, objectives and directions are different. He does good job from his perspective.

Martijn said...

We are not going to see inflation or deflation again. What we are now seeing is the "destruction" of our paper monetary system.

At present - as we are somehow seeing them occur at the same time - perhaps we are not seeing them indeed.

Anonymous said...

Mortymer:
One question is bothering me. Kitco has a nice system of breaking price into buying/selling and currency change.
We are in the competitive currency debasement and gold shoots up.

***How do we evaluate/reflect in price of gold the fact that ALL currencies move in union down?***

Predominant fact is that they are interlocked but since they all want to go down they all will go down - deflation/inflation signs measured in realities, other wealth assets, etc. So not only gold and oil will go up but that could explain that stock market goes and will continue going up, correct?

So could the conclusion be a bit disapointment that gold price will no go so much up as it will be dispersed in other assets?

I agree that gold big move up will depends mainly on CBs and on supply to the market and its problems and many small issuers and we see if backwardation shooth in or not but imagine that it could be again postponed if the masking of it is good enough.

Martijn said...

Mortymer,

You should study the inverse pyramid of wealth. Then you'll understand how with each collapsing layers, the ones beneath will grow.

As gold is at the bottom, gold will grow most.

Anonymous said...

@FOFOA; a most charitable and diplomatic refutation of Mish and his analysis. While he inspects the cobblestones on his hands and knees with a magnifying glass for signs of scuffing, Rome burns and the Tiber boils! Mish concerns himself with the consuming detail of individual facets of the mosaic... but is blind to the horrific scene depicted thereupon. Ditto for Denninger.

These boys are far too sophisticated to consistently draw the WRONG conclusions which makes me suspect a hidden motive. Got to have a few contra-contrarians to keep the sheople confused after all.

@martijn; "On a side note: here is Mish again. I'm not trying to promote him, but I am beginning to feel that he does sees many things roughly the same as we do. The reason I was reading Mish is because I am on the lookout for falsification (rather than confirmation) of my - our - ideas, but lately I am not finding it with Mish."

Martijn, you are a gentle and inoffensive soul but your endless advocacy of Mish is now getting beyond shameless... as the above cyclical self-justification attests. You have apologised to FOFOA bloggers for your role as "mish tout-in-chief" before. You are entitled to read/respect whoever you want. Just spare the rest of us...PLEASE!


BGR

Martijn said...

@BGR

Perhaps it would be appropriate if you asked yourself if you are not the one being obsessed here.

I was trying make the point that even somewhat contrarian people are also seeing the end of the USD-system and illustrated that by Mish and Marc Faber.

If you want to see that as advocating Mish your are welcome to do so, but it will be at your peril.

Anonymous said...

Mortymer:
Martinj, +10, very good answer, makes sense. Silly silly me.
Ok, you got me laughing now, I shy now, full in the deep forest I could not see the top of my nose - the last article. Heheh.
I am still trying to find some issues which could be working like breaks (with gold it is gold paper, BBs, mirrors, etc). The thing is I wander if there are some other ways how to stop the leak of real wealth down the pyramid. They certainly are and I wander how much they can hold.

Concerning Mish, he does great work in his field and if you connect that with the fractal theory you get results. The implementation on the bigger scale is very tricky and more variables (+ unpredictable politics) are involved and since he does not understand such fully he does not go to that field and this he (I believe) knows. So you can not blame him for what is he not doing, the work he does with his subjective point of view is par excellence. It is you who should compare to other views, make conclusion, gather more same quality information to challenge him.

This is also why the press has so many problems lately, people can do their research themselves.

Keep on mind that there is no objective truth, only perception of reality, you can well approximate sometimes but that it all you can do.
http://en.wikipedia.org/wiki/Truth
I prefer logic and validations but sometimes that is not the best way.

Martijn said...

Now here is some inspiration, and a rightful judge - a specialty these days.

Re Mortymer
I tend concur with your remark on objective truth, although it is a deep philosophical topic...

Martijn said...

The flow of gold and oil: is peak oil the way they're going to bend this?

It is a good excuse for rising oil prises that - should ANOTHER be right - in reality result from the rising price of gold.

Anonymous said...

Mortymer:
I am happy you move the discussion back to wealth-oil-gold-currencies-world economy instead of inflation/deflation/stagflation/~flation (thought they relate).
We are at the Era of "Cheap oil" (Yep, measured in dollar denominated gold, far from running out).
I have not even started to think what happens before there will be issues like states running oil explorations (unlimited budgets funded by taxes, etc), higher VAT on energy, isolation material standardization, etc...
Forget the oil peak the ratio measured in joules is still ok for us to use fuels for much stuff we know.
Have you ever thought why we concentrate so much in "reducing CO2 footprint" instead working with Joules?

Martinj - yeah, I agree, just wanted to make point, bad idea the philosophy, to crack that one needs lifetimes not 1 short discussion/comment taken out from context.

Anonymous said...

@martijn; do shut up about mish... its all you ever talk about anyway. its seems that most bloggers here do not agree with you on this. just drop it comrade.

alex

Anonymous said...

shedlock would be ashamed by you martinj... I feel sure of that. its just too much. enough of mish i say.

lemming T

Anonymous said...

@martinj; embarrassing, tortuous, and unconvincing explanation for your already and apologetically (a week or two ago?) self-declared mish infatuation. That is now in the record. I dont have the time/inclination to look for it now. sorry.

"Perhaps it would be appropriate if you asked yourself if you are not the one being obsessed here."

Do you mean "the one being obsessive here?" For, since you are clearly mish-obsessive, I am sadly still being "obsessed" by you.

"I was trying make the point that even somewhat contrarian people are also seeing the end of the USD-system and illustrated that by Mish and Marc Faber."

There you go again, you falsely elevate your messiah through faber-association. Can you not see why others are still irked by your mentioning bloody mish in every second post? It is clearly pathological. You ignore all requests to stop mish proselytising.

"If you want to see that as advocating Mish your are welcome to do so, but it will be at your peril."

Clearly I choose the perilous path.


BGR

Anonymous said...

JEROME876; mish is useless sack of sh$t. most everyone knows this

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

6martin is a mish-DORK@#$%$##$%

Martijn said...

Well guys, if that is the case why don't you bring your very own original thoughts to the table.

I'm sure there is still plenty of room for that here.

Anonymous said...

jumpin jackflash ez; hey martinj, dont be suck a
f$%ktard an mish's bitch. they are already talkin' 'bout you on zerohedge. lol.

Martijn said...

There you go again, you falsely elevate your messiah through faber-association.

I don't really mind a bit of bashing as people sometimes feel differently on stuff. However, that association was in the very link I pasted and hence not mine initially. It would be nice to keep discussions a bit more to the content, although I know that is sometimes difficult when one lets himself become enraged.

Anyway, I guess you had your say and hope you feel relieved by it. Let's pick up the in-debt-focus from where it was lost.

Anonymous said...

martin dude, you CANNOT still be serious about mish... can you? if you didnt keep on kissin' him up, the folks would get off your back. wake TFU martinnnnnnnn. hahahahahah

Anonymous said...

martinj = mish

Anonymous said...

Dear Martijn; it has come to my attention that you are successfully denigrating my work on FOFOA through hyperbolic and cloying false-association. Please cease and desist your strategy immediately.

Things are tough enough for me without your transparent attempts to besmirch me through false attribution and other nefarious tactics.

Yours revoltingly,


Mike "Mish" Shedlock

Martijn said...

@Mish

You do such a wonderful job in analyzing the world that I just had to help you spread the word on FOFOA. Glad you came to take over now things are heating up.

I'll leave it to you for now.

Smiley

Anonymous said...

martijn though doth protest too much!!!!!

this is the umteenth time you have pulled this mish Sh$$$$$$$$$$$t. knock it the f$ck off. you are an annoying little distraction from a really important exchange of ideas.

if you aint really mish (which i doubt... EVEN he would prostitute himself more convincingly than you try to pimp him)go see your freakin' analyst. NO REALLY dude... you have a problem with this. yo mamma need goin' to spank yu good.

alphaDAWG

Martijn said...

FOFOA,

Both ANOTHER and FOA mention the Euro as the opposing force to the dollar enabling freegold.

What if the Euro were broken before the dollar falls? Would that be a black swan?

Anonymous said...

What makes you think Euro will suffer any different fate than the rest of fiat?

Just that A and FOA thought so? They based their thoughts on trusting the euro government, and as any thin, this one will break when push comes to shove.

All there is to single out euro, is that SUPPOSEDLY euro has a gold backing. Really? You'd trust the same government scum in europe that you wouldn't trust here? Where is any proof that there is a grain of gold behind euro fiat?

Wait, they said that! They declared! They printed paper listing how much gold they have!

What you don't see is that they are trying to pose euro fiat as the best fiat, while all it is a fiat.

You will not be able to receive any gold by surrendering your eurofiat, i.e. there is no difference between dollar fiat and euro fiat! Both fiats are able to be traded for gold on the free market, for the time being only.

If you want to trust euro bureaucrats about their supposed reserves, then I say trust the us bureaucrats about Fort Knox supposed reserves, being perfectly equally illogical, at the very least the latter is more patriotic than the former. (Not that I trust either).

I predict that it will become clear, that there is no gold behind euro fiat, wether because "they had to use it all to support the failed economy" or because "there was a tremendous miscalculation". Whatever. The truth is and will be revealed, there is no and will be no gold.

Anonymous said...

Faber: The way communism collapsed, capitalism will collapse.
Mish: I disagree on a technicality. Capitalism will not collapse, because we are not practicing capitalism. Instead, we are practicing a perverse blend of corporate fascism, socialism, corruption, and padding of the pockets for and by those running the country. Yes, that will collapse.

Faber: “No decent citizen should trust the Federal Reserve for one second. It’s very important that everyone own some gold because the government will make the dollar (in the long term) useless."
Mish: No decent citizen should trust any central bank anywhere. The problems go far beyond the Fed and in the long run all fiat currencies are worthless. Fiat currencies do not float, instead they all sink at varying rates.

(link provided above)

Agree with mish agreeing with faber and agree with FOFOA's analysis of mish analysing tree rings during forest fire etc (I am obviously being v. agreeable!).

to stick up for poor old martijn, mish/denninger do good microforensic analysis and are therefore worthwhile now and then. I agree with others above who judge them worthless in extrapolating this to the big picture..... mish's kindly agreeing to faber's opinions notwithstanding.

see latest from the consistently excellent Jim Willie on tungsten and coming volcanic changes for AU etc. You simply cannot compare Willie/kirby/gata gang/sinclair/chapman et al with mish/denninger/roubini etc. the latter do have an economic darwinian role but lets say.... it is lower down the digestive tract in the colon and probably lower if you get my drift and nearer the point of termination!

however if the 4 letters M-I-S-H fly off martijn's key board again, I may not be so understanding. christ, what a load of mish, this has all BEEN!

Bucani

Martijn said...

What makes you think Euro will suffer any different fate than the rest of fiat?

Just that A and FOA thought so?


Their thought is what started mine. As all governments benefit from (or even need) world trade, I can understand why they've all supported the dollar in the past. According to A and FOA it was the creation of the Euro that allowed them to (slowly) retract their dollar support. Gold has been rising since the start of the Euro, so I would not deem a correlation nonsense at first sight. Perhaps a break up of the Euro would drive many governments back into the dollar.

You seem to believe that this process cannot or will not be stopped now that it has started?

alek_a said...

Martijn, why dont you just let it up a bit and do some actual work in the real world? Hanging all day at blogs reading about one specific subject is not only physically unhealthy but also gets under your skin in an unhealty way.

I know that students in their mid-20s have a lot of spare time but there is a line drawn at obsessivity.

This goes also for Satya, mortymer and some others who produce so much verbiage that I begin to wonder if they have anything else to do all day.

The blog has enough followers now that if we all restrain on the quantity, say to one post per 2-3 days, every thread will have just enough comments of relevance and substantial quality.

There are visitors who read this blog as a professional interest and I assume that they are not very interested in most of the comments.

All, post your Thoughts sparingly!

Martijn said...

@Bucani

Thanks for doing a bit of analysis before reacting, and thanks for noticing I was not praising anyone there, but only trying to make a point.

I just didn't know it was such a sensitive issue. Perhaps my lack of tact or insight. Guess I'm only human too.

Anonymous said...

I believe that euro fiat is simply a consequence of the end of the game, not a cause. Like others, they (europe) are concerned and are trying to fool others into thinking there are better than the rest.

Talk is cheap. There must be walk, if there to be any trust.

When you can walk in the euro bank and exchange your euro fiat note for gold on demand, then I will know they have it. Can you do it?

Not any better qualitatively than you can already do with us fiat!


Moreover, the idea that the people will be able to value any currency basing their judgment on corresponding statements by bureaucrats is a nonsense.

People can not do that because there way too many unknown variables. Does the government lie? Can we trust the auditors? Who's on the take? Is there a "national emergency that dictates the government to secretly fool us for the common good"?

This is no different that why the people can not have a good economy based on democratic decision making as in US, there are just too many unknown variables!

The only way to prove that your fiat is worth anything beyond reasonable doubt is to offer a no question exchange to gold.

Whoever does that, has the gold. Everyone else is just talking.

Anonymous said...

For this matter, as Fekete says, whoever "opens a mint" will be the king. Everyone else will do the same, AFTER they have suffered irreparable damage to their economy by losing the capital to the minting state.

The opening a mint would be the end of game. To do that, one must have gold.

I humbly (because there isn't much verifiable information) think that it will be either Saudis or Chinese.

Ender said...

@Anonymous 10:30

You ask “What makes you think Euro will suffer any different fate than the rest of fiat?” And, I am quite sure that you will find a good answer. I, too, once asked the same question and eventually found what I believe is a reasonable answer.

The foundation upon which currencies are built is the union between a political organization and a bank. The banks role is to manage the currency upon which the political organization uses in its economy AND provide credit to the political organization. The US Government and the Federal Reserve Bank is a perfect example of this relationship.

Looking through history, you will find example after example of currencies that were destroyed by the political organization borrowing unlimited amounts of currency from their Central Bank. Zimbabwe is a perfect example. It was the government barrowing unlimited amounts of currency to buy support from the military (and, I’m sure, other places) that reduced the currency’s value to nothing. They could only do this because of the link between the two.

Now take a second look at the structure of the Euro. The Bank in charge of managing the Euro is NOT subject to the wills of the political organizations it serves. Thus, the ability of the political organization to destroy the currency through barrowing is in the hands of the Central Bank, rather than the elected (non-elected) officials.

The Central Bank also holds a physical asset (as a reserve) that is ‘Marked to Market’ against what is typically considered a political object – the currency. This market valuation becomes a true measurement of the management of the currency. It also provides a measurement to how well the Central Bank is managing the currency. Note that it’s not a measurement on how well the political organization is managing the currency. For if a political organization managed the currency, they would hide the ‘marked to market’ functionality (to hide the political borrowing).

The Euro tracks other currencies to buy you time to buy gold.
Ender

Martijn said...

@Alek

Tanks for the advice. It's ok though.

Bigger news (from Sinclair): is Saudi taking delivery?

Martijn said...

@Ender

That is a thoughtful reply, tanks a lot!

Anonymous said...

Mortymer:
It is my silly speculation but what are those "verbal soft anti EU attacks" about? The eastern European wave of bancrupcies collapsing the system, about norh of EU splitting from south, now about Ukraine making the cards fold; before it was the Spain problems in S.America, etc., etc. strange? And nothing big changed, currency rates speak on behalf of Euro while dollar related European countries fell almost off the cliff - Iceland, Ireland, Scotland, England. Those events mentioned in the beginning are still minor if you look at volumes they represent.
Yes, EU will take some collateral damage, nobody can expect it will be smooth but the system seems to me healthy and integrating more (in case of threat) rather than desintegrating. Please note the protection and support of agriculture sustainability, protection to real estate markets, many tough rules show that EU has the ability to excersise the power easily and the central is followed. This is very different from the shocks&mess Katrina and 9/11 caused.
Please I am not defending one system over the other one, I just point out few differences, you are the one making conclusions...
I am more worried about the liquidity swaps, about unseen deals the new administration did in haste. That perhaps may make some difference.
Note: What distinguishes this blog from others is the factual level of communication. I am very curious to know why that or that idea should be rethought.
There is a finnish saying which I fully agree: If you do not have something smart to say, just be silent and listen, you can learn something.
So I appologize beforehand if someone did not got my intention; I try to learn and share the little I know.
To the Martinj case: It is amazing skill to consider even the wrong theory and try to proof why it is not so and only time will show how thigs turn out.

costata said...

Martijn,

You seem to have taken a few blows in earlier posts. I hope you have not suffered any mortal wounds.

I wont mention the "M" word but I would like to make a few comments about deflationists. Many of these guys are strong gold advocates. If they are right for the wrong reasons so be it.

By entering into the debate they challenge the inflationistas to critique the deflationist arguments and perhaps avoid "confirmation bias".

Let's be realistic. FOFOA could be blogging from a cave in Pakistan with Osama Bin Laden leaning over his shoulder saying: "Yes Akmed, use Exter's pyramid to lure the infidels to their golden doom."

Eternal vigilance.

FOFOA said...

Hello Ender,

Thank you for elevating the discussion. Also, to Anon (10:54), who said, "When you can walk in the euro bank and exchange your euro fiat note for gold on demand, then I will know they have it. Can you do it?"

The answer may be surprising, but yes you can. Duty-free gold is available through your teller in Europe.

The construct of Freegold is such that the price of gold will float freely to the point that supply always meets demand. Therefore, you will always be able to exchange your depreciating paper for some appreciating gold!

The difference between this and a fixed exchange rate system is that as time goes by you will most likely get less and less grams of gold for your fiat. Is this a bad thing compared to a gold standard where you always get the same amount? No it is a great thing. It means that all your previous gold has gone up in value! And it is a sustainable system. And it encourages saving in gold!

It separates the functions of money!! In a gold standard you are encouraged to hold the paper, since it will always be exchangeable for the same amount of gold. But we have seen time and again how that always ends. Sooner or later you get NO gold. And in the mean time, your gold savings show no appreciation against paper even though the managers are inflating the paper money against the real world of goods.

There is much elegance in this system. And it is built into the very architecture of the Euro. You can still admire a fine building even if its current inhabitants are doing a poor job maintaining it. There are many homes of fine architecture in Los Angeles by the likes of Eames and Wright that have fallen into disrepair by their private owners. Yet they are still admired by true connoisseurs. And for this reason alone they carry a premium value which will eventually land them in the hands of a caring custodian.

Sincerely,
FOFOA

Ender said...

Sir FOFOA,

Did you happen to catch my comments above regarding Time-Currency? Nov 22, 12:57. Just curious.

FOFOA said...

Hi Ender,

Yes I did. I am still exploring the wonderful Topaz blog. Infinite candle sticks and gutter-balls! He certainly is a gifted writer. I have yet to really dig into those first few posts though. I'll let you know my thoughts once I have digested it all.

Sincerely,
FOFOA

Desperado said...

I have been banned twice by Mish from his blog for expressing opinions contrary to his, so I well understand the disdain expressed by many here for him. However, IMO, those who have lambasted Martijn for linking to him are off base for 2 reasons:

1) Mish offers many insightful and provocative posts on the cutting edge of analysis. I certainly don't object to links and discussion of his threads discussed politely in the light of the philosophy of FOFOA.

2) A few of these with negative opinions of Mish have also violated the gentility of A, FOA, and FOFAO. This is one of the many great features of this blog, and I would hate to see it cheapened.

Alex_a suggested: if we all restrain on the quantity, say to one post per 2-3 days, every thread will have just enough comments of relevance and substantial quality. I agree wholeheartedly.

On the subject of the Euro, I have also been following it closely. I agree that the CB is independent of the EU commission, but the big problem is profligacy of the individual states. West Germany has been subsidizing the ex-East Germany for 20 years, and has very little to show for it. The entire EU is top heavy with freeloaders and socialists and an aging population, and is just as unsustainable as the US. IMO, Spain is is worse off than California, because it lacks the innovation and dynamism. One can find parallels across the EU. If a countries fundamentals are unsustainable, so too will it's currency be.

Anonymous said...

Yes, FOFOA, the teller will buy the gold on the free market for you, and as the time goes and the eurofiat is used more and more to confiscate the purchasing power from it's bearer, you will receive less and less gold for the euro.

I am not quite sure what is it, may-be I am not wording myself clearly, but I actually mentioned this very thing in the my post you were quoting. I said that to this end there is no difference beween the euro fiat and the us fiat. You can do exactly same thing in US, except it may be Kitco "teller" who will exchange your fiat for gold at a current "mark to market" price.

What is the qualitative difference then? There isn't any.

The market for gold in US provides us with exactly the same separation of monetary functions, if this is how you choose to phrase it. As the time progresses, you will receive less and less for your fiat, same as with euro.

I hope I am being clear, I am not comparing us fiat or euro fiat to gold standard certificate, I am saying that there is no difference between the euro fiat and the us fiat.

Anonymous said...

Again a record goldprice...

And more good news for goldprice:

http://www.brisbanetimes.com.au/business/miners-were-running-out-of-gold-20091125-jqqy.html

But also please debunking this:

http://www.reuters.com/article/americasRegulatoryNews/idUSN2326961920091124

And these also:

http://www.ottawacitizen.com/news/theft+Mint+RCMP/2261182/story.html

Greetz

Jimmy

FOFOA said...

Hello Anon (1:20),

You say, "As the time progresses, you will receive less and less for your fiat" as if this is a bad thing. It is not a bad thing when you are talking about a wealth asset par excellence. This is exactly what you would expect, even with a fine stock like Google, Apple or Microsoft. You want to always receive less tomorrow than you did today.

As for a qualitative difference, have you read my posts Your Own, Personal, Freegold and Freegold? The qualitative difference is that one is structurally built to embrace, encourage, and profit from a wide distribution of equity positions among its people. The other one must embrace and encourage a wide distribution of debt positions among not only its people, but the entire world.

I am not a Euro bull in the floating exchange rate arena. You are correct that the Euro is just another fiat. They all are! I believe the Euro will collapse in value right along with the dollar when that happens. They are all fatally entwined at this point. See this comment. "all currencies are locked together". To lose one large national currency, is to lose the entire structure as we know it!

The Eurozone will likely experience a price hyperinflation right along with the US. I have never said "hold gold or Euros". Neither did FOA. Paper money is for earning and spending in the here and now, gold is for saving over the long haul.

Sincerely,
FOFOA

Ender said...

@Anonymous 1:20

It’s good that you focus on the aspect of time with regards to the currencies. For in the present, you can use Dollars or Euros to acquire gold and they are both relatively stable. Will that hold true over time?

You write, “…As the time progresses, you will receive less and less for your fiat, same as with euro.” And “…as the time goes and the eurofiat is used more and more to confiscate the purchasing power from it's bearer, you will receive less and less gold for the euro.” Both cases may be true, but at what rate for which currency?

If you had to choose between holding/using a currency that is being expanded at a rate of 20% or one that is being expanded at a rate of 5%, which would you choose? What happens to the value of each currency over time? As each currency is expanded, what should the price of gold do in that currency?

Also, if the rate at which the economy grows absorbs the function of the expanding currency, will the purchasing power of that currency go up or down? This should be contemplated independent of multiple currencies.

Looking at this a different way, if you could choose your rate of taxation, what taxation rate would you choose?

Here is a starting point for some more background information: http://fofoa.blogspot.com/2008/09/freegold.html.

The Freegold Concept, which is unfolding, provides the promise to the businessman that investments will not be taxed away via inflation relative to gold.

Anonymous said...

Russsian's snub Obama

He probably forgot to bow first...

Justin_n_IL

Anonymous said...

Hi all!

I think the whole discussion about euro, Europe and Germany has been too euphoric for quite too long a time. Lies, price inflation, no transparency and more LIES. We in G are no sovereign people, are dumb and intoxicated with PROPATGANDA even worse than you. Corporatism is everywhere. Liberties even L E SS than in USA. So, who can believe that a country like that has better chances? Yes, we have industry and exports and Mittelstand, but for how long? The Us ambassador is a Goldman Sucks!!!
Our gold is GONE!!! Who cares? People here a less educated in finance and politics than in USA! We don't even have CNBC (yes, I know, but still useful when hearing some Schiffs, Rickards aso)! No newspapers, JUST L I E S!All my means of education and information are on WEB, and even that is subject to censorship and observation! We can't work out a sustainable currency because that' s also a case of MORALITY and we aren't. So, f**k Germany and ECB or BIS.
Sorry for my strong words, But I can't stand it any longer!

Anonymous said...

Ender,

I understand what you are saying. But, I do not understand how is it possible.

This impossibility was explained in one of my earlier comments on earlier topic.

If, as you say, the euro bank is actually independent from the government, then how is the government going to take the purchasing power from it's citizens? By which mechanism? By taxation alone?

Further, if such a government existed, then what are they gaining by even tolerating the central bank? They give it a charter precisely in exchange for the CB being their instrument in the extraction of the purchasing power.
Such a selfish government would then be:

a) perfectly fine with 100 percent gold standard (as it is not abusive, then there will be no reason for it's gold to ever be out of the balance with it's certificates).

b) restricted in it's means. How are they going to make sure the members of the government have unlimited assets? How are they going to fund wars? The welfare state?

c) rely solely on taxation, but there is a limit to that. You can't tax 80 percent openly, no one is going to tolerate that.

It is in light of these arguments, that I suspect that the independence of the euro bank from it's government is simply an illusion postulated on paper, but having no grounds in reality.

Do you agree? Do you agree that if euro bank is independent and not inflating in favor of government, then the government can not exist as a tyranny?

Anonymous said...

Anonymous at 2:24 PM just said it:

"We can't work out a sustainable currency because that' s also a case of MORALITY..."

I think this is precisely what I am saying. There's just no magic to it. You either steal or you don't. You can't have thieves being fat from their success in stealing, and yet have nothing stolen!

Fauvi said...

Europe lives under tyranny - tyranny of the stupid masses and of the feudal class of politicians but sheeple don't SEE it! As long as they aren't hungry and have their TV they enjoy life!We have a one party system - just lke you. How about our taxes???? Theft! The euro in G halved our income! We are best friends with US thugs (Afghanistan!!!who cares here (G) about that?!
France!!! Look who Sarko is! A CIA man! How about that EU prez? A bilderberger! Best friends even with Brown! Look what EU has done to Iceland! Neocons and oligarchy. We copy the worse from you and don't even have a CONSTITUTION.
Wether you believe it or not, I am quite afraid my websurfing would be somehow dangerous for me and my family. They have asked for 2000 webcops to keep us under surveillance!!!

Anonymous said...

A funny essay of Greenspan...

http://www.321gold.com/fed/greenspan/1966.html


He was a goldbug! Why change?

Martijn said...

@costata

I'm quite alright, thanks for asking.

The link I posted seems dead.
Here it is again.

The total value of the bullion exported in these operations approached $430m at current market prices, and it weighed 10.4 tonnes.

The other distinguishing factor was the identity of the recipients, or “consignees” as they are known. According to documentation seen by The National, they were all companies associated with the al Gosaibi family of Saudi Arabia.


I would deem that significant.

Martijn said...

Relevant especially as: Each side denies it was responsible for the shipments. Despite being regularly ranked among the world’s billionaires, neither the family’s controlling partnership, Ahmad Hamad Al Gosaibi and Brothers, nor Mr Al Sanea’s Saad Group has any previous known involvement in the bullion business.

Martijn said...

That involvement seems to have been know by A and FOA though...

FOFOA said...

Have you all noticed the two camps here? We have the defeatists who always sound so angry and so down in the dumps. But gold's rise right now says anything but defeat. These defeatists refuse to study A/FOA because they see no hope at all. I unfortunately must ignore the defeatists, because I have found it to be too frustrating and unproductive to engage them in conversation.

In any case, I am not writing about "the hope and change we can make happen", or "fighting the good fight", or surrendering to defeat. I am simply observing the changes we are going through and writing about what we can each do right now to get on the profitable side of it. It is the most simple message in the history of financial writing: "Buy gold bullion".

This was also Another's message 12 years ago. Buy physical gold. And it resulted in thousands of pages of the very best reasons to buy gold ever articulated. As Michael Kosares called it back then, "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."

Those, like Belgian, who followed Another's advice back in 1999-2001 have seen their wealth quadruple in 10 years or less. And they are still anticipating and writing about the real paradigm shift that is coming. Yet we still get comments like this, "There's just no magic to it. You either steal or you don't. You can't have thieves being fat from their success in stealing, and yet have nothing stolen!"

Well, with all that has been stolen over the past 10 years, how much has come out of Belgian's savings? His savings have increased 4-fold and he is expecting an even bigger move yet to come. The answer is that the only theft which Belgian has endured is that his wealth didn't increase 100-fold yet. I think he can live with that.

If you hold someone else's debt as your savings you will be robbed. If you hold positive equity that is no one else's liability you will have a much better chance of avoiding theft. And eventually, others will follow your lead.

By the way, the Freegold post that Ender linked is a different one than I linked. I should change them to Freegold 2008 and Freegold 2009. Ender's comments under the '08 one are at least as important as the post, by the way, which presented my early understanding of Freegold.

Sincerely,
FOFOA

Ender said...

@ Anonymous 2:25

I see it as slightly different (maybe). I believe the Euro is being inflated – not to benefit the state – but to save the economy. There is a difference. Will it work? We shall see in time…

I’m sure that the inflation tax is not the only tax you pay. And, if you deal with the US currency, you’re not playing an inflation tax into the Euro system. Yet, because they deal with the US currency, it is the other way around.

There is a little thing called balancing the budget upon which the Euro was founded. And, I am sure all governments get to share in the inflation pie – in a proportional way.

Ultimately, one has to think long and hard about WHY the governments of the Euro system bought into the project. Is there a historian amongst us that would like to comment here? I am sure there will be compelling reasons exposed …

In either case, as I’m sure you know, all Central Banks that do not mark their gold to market stand opposed to gold. They will do everything in their power to keep confidence in their currency and discredit gold. Yet, as Another mentioned years ago, the gold market has been cornered. The Central Banks all know this and have organized to prevent disclosure. The trick will be to get through the defaults/inflations with a working currency. Any currency with gold as an asset on the books will fare better than those dependent on the workings of their economies (that are goldless). The Euro hints that there IS physical gold held on its behalf. In time, we may see how many other currencies hold gold.

Keep in mind that my stand is, gold is for saving, currency for spending. As FOFOA says, currency is a means to something physical. The Dollar IS going through a crisis and it will not play out well. The Euro will be forced to complete (race to the bottom) as long as possible. When it’s no longer possible, we will see changes happen openly.

Ender

alek_a said...

Ender said Ultimately, one has to think long and hard about WHY the governments of the Euro system bought into the project. Is there a historian amongst us that would like to comment here? I am sure there will be compelling reasons exposed …

There are leaked proceedings from a Bilderberg meeting in Aachen from 1980-something on wikileaks. There is an essay or two about economics and a mention of a european monetary union. It is conceived in the 80s, as a response to the inflations and oil schocks of the time. The contributors are old-school people, they are liberal democtrats and the whole ECB idea was born then.

EU governments have not much choice at the moment, the eurosystem exists and was set in stone before their time. Besides, they got their share of the pie when they decreased our PP (only in north-west europe) at the euro's trade function introduction 9 years ago. This is public secret here in the EU, one of the reasons why some citizens rejected the EU costitution in various referendae. However, the parastitic leeches I refer to as polititians have squeezed in a variant of the constitution (lisabon treaty) against the will of the people. We shall see how things go from here, especially with the Freegold monetary system taking shape.

I have reason to believe that there are some powerfull groups in the EU who dont like what is happening with it or, at least, take notice of happenings. The recent euforia with the "EU president" tells me that the blind are becoming decadent and over-confident in their beliefs. A sure sign that their end may be coming.

The US is the most liberal-democtratic society in the West. Even with Obama this is true, compared to EU govs.

Anonymous said...

John Paulson does very like to own physical gold...

http://thereformedbroker.com/2009/11/24/john-paulson-likes-gold-more-than-a-friend/

gold, your wife's best friend ;-)

Jimmy

Anonymous said...

Midas:

A default on the COMEX or elsewhere will be in fact a "run on the bank". A physical default will lead to the loss of confidence in anything and everything paper. I believe you will see runs on banks, insurance companies, brokers, pension plans and many sovereign debt and currency markets including and especially aimed at the U.S.. The pieces to this puzzle were on the table some 12-15 years ago, some of us looked at it and felt we knew the "big picture". Over time we became more and more sure as the pieces fell into place. NOW even CNBC is putting pieces together because if they don't they will look like idiots to the sheeple. The problem for the establishment banksters is, the majority of "sheeple" are all reading newspapers, watching their TV's and surfing the internet. The commoners are all beginning to see the "picture" of this puzzle at the same time. The mental picture I have is a bag full of Krugerrands, Maple Leafs, Eagles, and Bars (not tungsten) piled on the back of an exhausted and sprawled out Uncle Sam. I am sure others have a different but similar picture that is coming into focus more and more every day! "Truth" is becoming a very BIG problem. Regards, Bill H.

Fauvi said...

" The US is the most liberal-democtratic society in the West. Even with Obama this is true, compared to EU govs."

100% and chapeau!

Anonymous said...

$1650 Gold Is Upon Us

Please accept all of our sincere thanks for the many years of your support.

Gold will shortly trade at $1650 and then on to Alf's and Armstrong's numbers.

The only thank you we want is in the form of your protection.

Our purpose here is your family's financial safety.

Our total reward is knowing you are all ok.

Thank you all for having trusted us. It is the greatest of possible compliments.

Happy Thanksgiving!

Respectfully yours,
Jim and the JSMineset Team

Anonymous said...

FOFOA,

Respectfully, I want to say this: with all the time you are probably spending concentrating on delivering the message of A&FOA, I can see that you don't have enough left to follow our little squabbles here, in the comments. With this in mind, I am not blaming you.

You have completely misunderstood my comments and posed me as a "defeatist", quoting my "stealing" analogy while refuting it with "save in gold" thesis and Belgian example. Tossed quite a salad here?

What we were talking about here, was the relative strengths of us fiat and euro fiat, or actually any fiat to any other fiat.

The fact that the gold is the only vehicle for savings, is undisputed. I haven't actually seen any defeatist on this board, who would say that paper is better than gold.
But then again, I may have missed it.

In particular, Mr. Elder here was kindly showing me why euro is different from usd. Neither he nor I were comparing it to gold.

My "stealing" analogy was posted to illustrate to Elder, that the difference between euro fiat and us fiat was quantitative, and that it is impossible for these two to be qualitatively different. This echoed with a gentleman from Germany, who posted that it is actually a moral choice.

Again, nothing to say that gold isn't the best thing to hold.

My only other disagreement with you and A and FOA, is that while I completely agree on gold being the ultimate haven, and welcome gold over ANY fiat, I do not see freegold as a possibility. But, I wasn't discussing that right now.

I posted my doubts for freegold in another topic, and there was no one who would refute them. May-be you didn't see that. Or may-be you had nothing to refute them with. So, I take it as no one knows exactly why would freegold came to exist, until shown otherwise.

No disrespect to you or A or FOA, but I have lost my virginity long time ago. I doubt anyone and everyone. Just because A and FOA thought something, matters little to me without the argument supporting their case. I question them just as I would question Ben the Helicopter, even though I highly enjoyed reading Another's posts.

If you wish to have only those who agree with you, I'd understand. If you, on other hand can and wish to show how my arguments are foolish, I would like nothing more than that, because it is not about who is right, but about what is right.

Knowing right from wrong wins you everything whether it is you or someone else that found you the truth.

Anonymous said...

Only John Paulson does own 110 tonnes physical gold...

Read my older post on 4.45pm...

Unbelievable...

Jimmy

TomB said...

> The answer may be surprising, but yes you can. Duty-free gold is available through your teller in Europe.

I live in Belgium and the fastest way to get gold is not the banks but the exchange offices in Brussels, there are a couple of them that have specialized in gold.

Most of the small banks don't deal in physical gold, the large banks do but you can't just walk to the bank and exchange fiat for gold. You need to order the gold and it can take up to a week (or more) until your gold will be available. Not sure how easy it is to get gold in other European countries, but I don't think there will be many where you can get it without ordering it first.

Ender said...

@Anonymous 5:02

You posted “doubts for freegold in another topic”. Can you provide a link? (I would like to revisit if I didn’t already visit.)

It would also be nice to see a signature on your posts (of some sort) to differentiate them from all the noise.
Many thanks…

Anonymous said...

.....and you get registred when buying and sometimes even have to be client of that bank otherwise they sell you nothing and they are all far more expensive than dealers.

Swissman said...

Just for anyone interested,

here in Switzerland, you can buy gold in most larger banks. UBS is my favorite (not favorite bank, but favorite gold seller ;-)) They have numismatics in the larger swiss cities.

You just walk into the UBS building, go to the numismatics area and buy anything you wish.

They usually have most coins (Kruger 1oz, 1/2oz, 1/4oz, Eagles, Maples, Australians, Austrian Philarmonics) and any bars between 1 gram and 2 kilograms available immediatelly, without preordering.

You can pay in cash anonimously for up to CHF 100 000 (=$100 000) in one transaction. No VAT is applied for gold, while for silver there is.

Such a transaction takes less than 5 minutes.

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