Thursday, November 26, 2009

Happy Thanksgiving!


Martijn said...

Extra proof of how that Turkey is stuffing the world.

Anonymous said...

Some Bullion people believe Gold might run all the way to $3000 and then drop down like in if Gold will shine for only a minute.

Isn't the system broken now?

FOFOA please write a piece on the differences between this bull market and the 1970s.

Anonymous said...

A bullmarket implies you'll have a fallback eventually.
This ain't a bullmarket cause the price will stay UP.
Gold is being repriced to its fair value and will stay there.

Martijn said...


As I believe this was not asked before: do you consider Iraq to be related to the oil-for-gold deal as mentioned by A and FOA?
Did Saddam's intent to switch to the Euro had anything to do with it in your view?

Anyone else?

Anonymous said...

Another interesting powerpoint:

The first phase of recovery:



Anonymous said...

And the history about Amin El Husseini:

So you do know what happen now with Iran...


Anonymous said...

Also read this:


Anonymous said...

Stick a fork in that turkey. He's done.

Anonymous said...

I just have to send FOFOA a quick smile and thanks for the turkey. I read so much serious stuff, it was really good to get a laugh. I needed it.

( ) ( )


DiverCity said...

Anyone have any thoughts on Dubai's apparent default? It's rattling world markets pretty badly. The FTSE was shut down for around 3 hours, the dollar is rallying, etc. 'Course, that last one is more evidence that stupid is as stupid does.

DiverCity said...

Should have specified that it's Dubai World, a state-owned company with approximately $60-80 billion in liabilities, which is doing the defaulting....

alek_a said...

Diver, you may already know this but still: read zerohedge for intelligent current financial commentary.

Anonymous said...

diver. isnt dubai world de facto the same thing as state/state backed with full faith/credit etc? not sure one degree of separation changes the impact of this story. any one of these rolling stones can/will trigger the avalanche we expect....

having spent time (2008) in dubai, agree that this is just a VERY big and glitzy house of cards waiting for somebody to sneeze or a camel to break wind! what a bunch of idiots the gulf arabs are. true the idiocy is indeed global, but one just has to see the obscene hyper-excess that IS dubai to put these narcissistic primitives on their own special pedestal.

primitive + western veneer = primitive

agree, zero hedge first rate.


Anonymous said...

freakin camel jockeys.. hahahaha.

and to think sheikh mohammed used to (still?) affect such a studious and delphic expression as if he had any clue to what a disaster he was building. this will wipe it off his face pronto insh' allah!

real justice would see sheikh "mo" beheaded for this.

abdullah the confessor

costata said...


From what I have read Abu Dhabi is the banking and investment centre of power (+Riyadh).

Isn't Dubai merely one of the Emirates that make up the UAE?

Given your first hand knowledge I would appreciate anything you can share about the Gulf States.

costata said...


I am wondering what silver is telling us. It seems to have abandoned the role of leading the upward price moves in our favourite yellow metal.

I recall that Another was adamant that silver was not going along for the Freegold ride. Professor Fekete makes a good case against the return of bi-metallism.

To summarise the situation:

1. While gold makes new record highs silver sits around 25% below its' last peak.

2. The gold/silver ratio has moved from around 55:1 to 64:1 in the past few weeks. Almost a 20% devaluation in terms of gold.

3. China has opened up a huge potential retail market for silver during this period.

4. The positive fundamentals for silver appear to be unchanged.

Is this the parting of the ways for gold and silver?

If so, what do you think will drive the silver market going forward?

FOFOA said...

Hi Costata,

I answered you on the last post. After 200 comments, blogger creates a 2nd page of comments. I didn't know that until yesterday.


Anonymous said...

Is something strange is going on in the gold and silver price right now?

Never had I seen perfectly horizontal lines on the kitco website, as if trading was halted

FOFOA said...

Look at the title of this post.

costata said...


Thank you for the reply. I didn't realise there was a second page. I assumed that I had pressed the wrong button.

BTW we have used the gold/silver ratio as an arbitrage opportunity to increase our gold holding in the recent past. Marginal benefit for tiny fish like us.

In an earlier post you mentioned two camps. FWIW count me among the cautious optimists.

Anonymous said...

costata; I am no expert just an observer of the human condition. as I landed in dubai in early 2008 I finished a long FT piece exclaiming ominously (and accurately as it has just transpired) just how endebted dubai was, of all the 7 emirates (debt/GDP ratio close to that of the US, if I recall correctly).

please do read excellent depth of current zerohedge posts for real data on dubai's comet-like financial trajectory and default.

abu dhabi has all the oil and its flashier sister dubai really just a shimmering oasis, a mirage if you will, in the desert.

even then in the boom times, a casual observer could see that the foundations of dubai were made out of... SAND. poorly functioning hospitals, basic services, corruption, inefficiency, utterly idle emiratis state-subsidised to the gills, massive expat workforce etc.

ashes to ashes, dust to dust... we are witnessing the realisation of the arab saying "I ride on a camel, my son in a car, my grandson in a jet, my great-grandson on a camel etc."

with the incipient collapse of "affordable" global tourism, dubai is kaput and now really has a snowball's chance in the sahara.


FOFOA said...

Jesse on the gold phenomenon:

Why do so many people continue to turn their noses up at an investment with returns like those listed below? And not only that, why do the many either not care, with small groups that aggressively attack the very notion that it is genuine, a real trend, a development with appeal across many nations and people, a sustained market trend that is telling us something?...

This is a phenomenon, a generational occurrence. Personally, it is fascinating, and worth having retired early to see it unfolding day by day.

I have analyzed it repeatedly over time, from many different dimensions, and have listened to every argument, pro and con. It holds water, it makes sense, adds up; it seems grounded in free market principles, historical trends, the invisible hand of the market...

The rally in precious metals sparks fear and envy in many; it makes them genuinely angry, even normally intelligent and rational people. And one must surely ask, "Why?"...

The tide of history rolls in, and does not conduct focus groups, or popularity polls, or honor the consensus of the crowd. The smart money tests it, and then moves early with it, or at least does not fight it. The only traces of the trend are what the few are doing and where their money is flowing. The tide moves slowly, inexorably, but is there for any and all to see if they would just look past their preconceptions, their ideologies, their desire for what once was, but can no longer be.

At this point in history, gold is a harbinger of change. People of the status quo fear change and change agents, always. And despite their best efforts to stop it, to discredit the messenger, obliterate its effects, to silence the message, the tide of history comes and washes over them, and the landscape is changed. And the familiar is a thing of the past.

We live in remarkable times. If you do not like to hear about change, if it upsets you, then do not read this blog...

FOFOA said...

Trader Dan on Dubai:

Dear Friends,

Overnight news out of Dubai has sent global equity markets reeling and generated a safe haven flow into the US Dollar as carry trades are unwound and a flight away from risk occurs. Dubai has asked for a 6 month moratorium on its debt obligations, which for all practical purposes is a type of default. Needless to say, this came with little to no warning and has sent the markets into quite a tizzy.

Gold shot higher on the news and touched a record $1,195 before some light long liquidation connected with carry trade unwinding got underway. Look for it to be well bid on any setbacks in price as this sort of news is extremely disturbing. After all, we are talking about the financial hub of the Middle East. Imagine the repercussions that would occur should London have announced this sort of news and you can understand why stock markets were pummeled overnight.

Stocks have been floating higher and higher for the reasons described yesterday (increased profits due to expense cutting plus easy money and lots of liquidity) but this is the kind of news that could cut off all such rallies right at the knees. The reason – it creates fear and uncertainty, two of the prime ingredients in a selling binge. If Dubai could go under, then who or what might be next becomes the nagging question hanging over the markets like the proverbial sword of Damocles.

We are in a period in which we could experience price swings across the markets of the magnitude which will parallel those that we witnessed as the Japanese Yen Carry trade was unwound last year. Huge leveraged bets employing the Dollar as the borrowed currency have set up a situation in which billions of Dollars in one way bets are once again on the table. These idiots never learn as their greed will be the ruin of them all but unfortunately, it is always the innocent and those who play by the rules who get caught in the crossfire generated by the pond scum hedge fund community.

Be careful out there and be thankful that you own gold. Things are coming unraveled at an alarming speed. Just imagine the kind of losses that are now on the books of those banks who hold Dubai sovereign debt. Then again, that should not be a problem. The Central Banks can just print them some more money to replace those losses. Heaven help us all…

SatyaPranava said...

jimmy, don't forget that Haj Amin al-Husseini was put in power by the British, the same British who put Herbert samuel in power on the jewish side, the same british who pulled the same BS in Rhodesia, South Africa, Nigeria, Bangladesh, India/Pakistan...the point being, the israeli-palestinian conflict is quite similar to their other colonial/imperial scripts. Moreover, the same british (anglo-american alliance) who was about to JOIN hitler in the middle of WWII to fight stalin. the nazis were bankrolled by the same wall-streeters that we have been. we have the same stooges in power here, and sadly, the same sort of stooges who following imperial stooge-lemming leaders off the cliff.

in other words, husseini was just another radical imperial puppet...same as they all are.
also, the british-backed labor zionists also made deals w/the nazis and flushed their more spiritual, less-literate and "backwards" jewish bretheren straight down the deathcamp toilet.

there is no good/bad side, only allied interests and agendas.

Anonymous said...


FOFOA you probably have to get some FORUM account and redirect the discussions there ;).

Current format is very hard to follow, especially when there is alot of comments OR when you want to follow further some older discussion.

just my 5c

costata said...

Has anyone experienced hesitation (opposition?) from a spouse or partner to committing heavily to gold and/or continuing to accumulate when the gold "price" is "getting expensive" in your local currency?

If so, this strategy may help you.

A couple of years ago I took my wife to the bottom of the Kitco home page where they show the gold price in a range of currencies. I pointed out that gold is the constant as all prices represent 1 oz. So the table really shows fiat currency PRICED IN GOLD.

I then asked her to look at the list of currencies and visualise them as Fiat Currency Unit (FCU) 1, 2, 3 etc rather than Australian Dollar, Yen, Euro etc. I then drew her attention to the fact that in one FCU gold was about 800, in another it was around 30,000 and in yet another it was close to 100,000 per oz.

She said: "I get it. Buy more."

We have been saving in gold ever since.

PS. We had already discussed fiat currencies and fractional reserve banking over a long period.

PPS. We had also agreed there was no gold mania happening. No-one she knew was talking about gold except me. (BTW That is still the case today.)

GoldFreak said...

Dubai defaults on paper but will still be the playground and financial center for the super rich Arabs once Free Gold takes over.

FOFOA said...

Hi Raptor,

I do realize this format is a little hard to follow. And blogger is certainly far from perfect. But this is what we have going now, and for this I am thankful on Thanksgiving day! But also, I do kind of like the single thread format. It tends to keep discussions focused, everyone sees every comment, and every comment should be written with this in mind, which tends to keep things focused. Much like the old USAGold forum.

I'm also not crazy about the newer comment formats that put responses right below the comment they are responding to. The responses get missed by people who have already passed that point in the thread.

There are plenty of multi-topic forums out there. Not sure we need another one just for this narrow topic. And I'm not sure I want my name on all of the topics that would emerge in such a forum. Like I said, this blog is about the simplest message in the history of financial discussions... buy gold coins! Now!! Before it's too late!!!


Kewl said...

Dubai defaults and precious metals fall. I thought they were supposed to rise on rising fear. Can anyone explain please?

Martijn said...

Interesting black Friday so far regarding the sell-off in gold, not really what I would have expected after the Dubai news.

Anonymous said...

This kind of volatility in anything is not a good sign for the dollar-financial-industry.

Raul said...

This is a hail mary pass by JP Morgan and Goldman. A volume play. Overwhelming volume to the downside at 3AM NY time. They must be under high orders to get up this early after Thanksgiving L-tryptophan.

Written Wednesday: "The outstanding December open interest (o/i) is quite large given that Monday is 1st notice day. Anyone who does not want, or is not capable of taking, delivery needs to be out of December by end of trading Friday. We'll know a lot more about what's happening in December when today's activity is updated (not sure if it will be updated last this afternoon or on Friday morning). My hunting-dog nose is telling me that we may well see an inordinately large amount of contracts holding for delivery, and we'll know for sure Monday morning.

The amount of gold being listed as "registered" (not that we trust that number) is a little over 2.1 million ozs. If o/i on Monday is any where over 21,000 contracts, December could be a very interesting month for gold."

They are trying to force the longs to liquidate for less cash tomorrow (Friday), rather than wait til Monday for delivery. They are trying to scare them out of their positions. Someone who held a contract for 100 ounces of gold at $1180 was in the money yesterday. They either planned to sell for cash tomorrow or to wait til Monday and pony up the extra $$ for physical. The BB do not want them to do that. Most cash players were out by now, yet there was more than enough o/i to bust the comex as of last night.

This is a very dirty trick, and it lost credibility (as a real market move) when it passed $20 to the downside. Don't expect it to work, instead expect it to backfire. Blowback!

I bet we will see some out-of-the-money contracts for $1200 gold holding out for delivery. This smells like a battle royale to me.

Jimmpy said...

Relax Kewl we've witnessed these "shaking the tree" tactics only about a thousand times before, the numbers just get bigger.
Remember eventually the conex pricing of paper gold needs to fail . . .

Martijn said...

Selloff in gold today: people expecting Dubai to liquidate some yellow metal to pay off outstanding debts, or Dubai themselves already selling some gold?

Martijn said...

Dubai, defaults, dollars and gold - markets and gold price slump


Anonymous said...

Dubai debt move 'carefully planned': top official

Dubai's move to suspend payments on its Dubai World conglomerate's debt was "carefully planned" and done in full knowledge of how the markets would react, the chairman of the Supreme Fiscal Committee said on Thursday.

"Our intervention in Dubai World was carefully planned and reflects its specific financial position," Sheikh Ahmed bin Saeed al-Maktoum said in a statement.


Martijn said...


Another said (Sun Oct 12 1997): This was not far from the time that "Big Trader" said that "if gold drops below $370 the world would see trading volume like never before seen". The rest is history. Now the CBs will have to sell 1/3 to 1/2 of their gold just to cover whats out there. To use the Queens English "it ain't gona happen dude"!

Yet gold was below 370 until 2003.

Could we argue that he did not have all the knowledge one might think?

Anonymous said...

From Raul:

[This is a hail mary pass by JP Morgan and Goldman. A volume play. Overwhelming volume to the downside at 3AM NY time. They must be under high orders to get up this early after Thanksgiving L-tryptophan.]

One simple comment:
Have you noticed that large moves occurred at exactly the same time (down to the minutes) and in exactly the same direction (i.e., USD gaining value) in the EUR/USD, AUD/USD, USD/CAD currency markets?
Do you think that this huge move in favor of the US dollar, simultaneously, in all major markets, was all part of a Goldman/JP Morgan conspiracy?

Not saying that the commercial shorts will not or have not engineered something in the gold market, but just to add a bit of sanity to the debate...

FOFOA said...


The BOE also DID sell 1/2 its gold less than two years later. You can argue whatever you want. You certainly won't be the first one to do so.


Martijn said...


I'm not interested in discrediting A or arguing anything.
I'm only trying to see things in perspective. ANOTHER did have an original and plausible case, but his timing - which is always the difficult part - seems to have been a bit off. Perhaps there were other factors in play that he did not take into account. If so, perhaps they still are today, hence my question.

What is your idea? Was the BoE trying to buy even more time at the cost of its gold?

FOFOA said...


You are completely misunderstanding the context in which he wrote that. Just prior to that statement he was talking about what happened between 1992 and 1996 into early 1997 that led to the LBMA volume explosion, which led to this, which led to Another posting 8 months later. Big Trader was posting on Kitco in '96 and '97. Then in January of '97 the volume DID explode. In fact, on Oct. 12, 1997 when he wrote that, gold WAS below $370 and had been all year. He is saying THAT is what caused the paper volume to explode which led us to where we are today. Read the above link. That is what Another was talking about. Here is the full context of what you posted...

Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people ( middle east ) started to exchange their existing paper gold for the real stuff. From that time, early 1997 LBMA was running full speed just to stay in one spot! In other words paper volume had to increase to the physical volume on a worldwide scale, and that was going to be one hell of a jump. It could not be hidden from the news any longer.

This was not far from the time that "Big Trader" said that "if gold drops below $370 the world would see trading volume like never before seen". The rest is history. Now the CBs will have to sell 1/3 to 1/2 of their gold just to cover whats out there. To use the Queens English "it ain't gona happen dude"!

Look at the 1996 charts on Kitco. Gold dropped below $370 for the first time all year on Dec. 3, 1996. 6 weeks later the huge volume surfaced!!

Anonymous said...

@Satya: Thank you for explaining it. Could you also send a link about this real history, about the jews and the allies...

So you means that Henry Ford did an inside job for the allies to serve Hitler for banking activities. So he caused hyperinflation to bankruptcy the Thirth Reich...

What the Chineses (or Jews or Muslim Brotherhood or... , I don't know more...) are doing NOW with America?

What a sick history...


Martijn said...


Thanks a lot!!

I didn't know Big Trader also posted. Are his posts still there?
Did A refer to him when he spoke of HK people?

Martijn said...

Quite relevant for the current market: Gold has retreated following the rebound of the dollar, thus leaving USD1,200 untouched this time around. Momentum in bullion remains strong however with increasing speculation that central banks could get into a ‘bidding war’.


FOFOA said...

I don't think Kitco saved Big Trader's posts. I have never seen them. But there are a lot of other good posts in the Red Barron series. A must read.

Here is the timeline:

Sometime prior to Dec. 3, 1996, Big Trader says on Kitco: "if gold drops below $370 the world would see trading volume like never before seen"

Dec. 3, 1996: Gold drops below $370

Jan. 30, 1997: Volume explosion on LBMA leaked

The rest is history... as Another said.

Martijn said...

Looks like a great source, thanks for the tip.

FOFOA said...

It is also in the list of links to the right under "Red Baron".

Anonymous said...

Defaulting of debt, in millions:

Russia: 08/1998 debt: 72,709 million $

Ukraïne: 01/2000 debt: 1,064 million $

Argentina: 11/2001 debt: 82,268 million $

Uruguay: 04/2003 debt: 5,744 million $

And Dubai: 26/2009 debt: 60,000 million $ --> hyperinflation?

And the next is Britain? (most infected by debt of Dubai...)



Anonymous said...


Russia 1998: 148 million, since 1998 declining (now 142 million)

Ukraïne 2000: 49 million, since 1994 declining (52 million till 46 million now)

Argentina 2001: 36 million, and is growing (now 41 million)

Uruguay 2003: 3.4 million, and is stabilizing: 2008: 3.477 million

Dubai: Was growing, and now? Most of them leaved Dubai... Bye bye Dubye...



Martijn said...

Great article on the 1920s contraction.

The point illustrated here is that have difficulty in understanding what we do and do not see, and that we are not aware of our selectiveness.
Some people falsely believe that "crime does not pay" as the only criminals they witness are the convicted (or arrested) ones, while the successful spend their time unseen on the Bahama's.
Same goes with recessions: according to the article there has been one in the 1920s. However, as the government did not mess things up back then, the problems healed, and the downturn was not very severe. As a result we tend to overlook this excellent example when comparing past experiences with economic downturn.

Martijn said...

Max Keiser claims that the Bundesbank is soon to announce a gold bullion purchase.

Anonymous said...

SatyaPranava said...


i cannot point you to a specific site on the internet, but Israel, Zionism, and the Middle East is where my first degree was earned, and I spent several years living over there. But if you get any good comprehensive history book, I'm sure it'll give you most of the dots you need for this. This degree was obtained before the internet took off, and i've never really gone too much into depth on the subject (as there wasn't many sites with excellent perspectives on the subject then).

The secret to figuring any good piece of investigative / historical work is to collect as much information as you can, then get off the ground, i.e. come look at it from a macro trend and consider motivations, etc. but the high vantage point is always good for seeing the surrounding hillsides (think firetowers here).

Also, think of any subject as wire sculpture. The corporate-owned media, most of your friends (who learn from the corporate owned media), and even alternative media (which can too often be only a hair's length or two away from the mainstream media, in their imagination and understanding) seeks to draw your attention to the wires, as that defines the physical space that you think represents whatever you think you see. The truly gifted investigative journalists and muckrackers are truly special at this.

However, as FOFOA's site surely shows and Loftus & Aarons demonstrate, the true history, or substance, lies in the spaces that connect the wires, not in the wires themselves.

I am not expert on the specifics of Germany, so cannot describe the mechanism there quite as well, but i Anthony sutton (many books) does a good job exposing some of that work, as does Edwin Black in the Transfer Agreement (or Protocols, I don't remember what he called his book).

In any event, based on some of the messages i'm seeing on here, and wanting to be respectful, I'm not sure these kinds of conversations are desired here (and sadly, i don't know of any FOFOA for each of these topics). My personal take on it is this site is an excellent site with some serious intellectual depth, breadth, and marksmanship, so it'll attract those with similar characteristics. Thus, many of us have some amazing insights into various topics that I think, if shared, might help others understand the bigger picture. but that is my bias, and this is not my blog.

In any event, good luck in your search!


Anonymous said...

@Satya: Okay and thank you very much. If I've more time to react, I will place good long posts and analysis. But now, I'm very occupied, so I place only interesting links or small comments. Sorry. I like the FOFOA's blog...

Also this is an interesting sound about Dubai:



Anonymous said...

Last sentence is a dangerous sentence: "Dubai's debt might be higher than the generally assumed $80 billion to $90 billion due to potential off-balance sheet liabilities, it added."


Anonymous said...

I read a couple of years ago that flash Mercs and BMW cars were being left at the Dubai airport carpark by people who could not pay their personal debts.....these expats were just getting on the planes and

I think Dubai has pretty stricy debt laws - like a little jail time? I might be wrong on that.

But i recall a message by someone who live there telling how these huge apartment buildings - 50 floors and more.....

you would drive by these places at night and if you were lucky you would see just one light on in the whole building!

Anonymous said...

see this on;

'Don't say Mineweb didn't warn you! Writing back in April in an article entitled Unwarranted post G20 euphoria drives gold downwards, but perhaps not for long we said - "What was described to me today as the world's biggest Ponzi scheme, which makes Bernie Madoff's activities just appear as small change, has yet to implode, although it looks as though it may be beginning to do so. In one word that is Dubai where feverish attempts are apparently being made by the sheikhs to ward off total economic collapse. Expatriates are deserting the Gulf state almost as quickly as they can find seats on airplanes out. Huge swathes of apartment blocks lie empty and, my source tells me that those wanting to sell out are being pushed into time-controlled sales, supported by the government, not that there are any buyers, as too much coming on the market at once would lead to the equivalent of a run on a bank. And given the trillions of dollars in investment that have gone into the state a run on Dubai would be disastrous for the global economy and the banks that are involved." '

That about sums it up.


Anonymous said...

This is what is believed:

1999 - 2002, Gordon Brown sells 60% of UK gold for $275 a fine ounce average price.

Idiot? He created the "Brown Bottom" event, right?

This is what the conspiracy theory says:

From 1988 to 1996, they sell 60% of UK gold off the books for an average of $450 a fine ounce. To cover, a "foolish" "Brown Bottom" is executed. In effect, close to 25% of UK gold is taken for free.

However, this is only a fantasy, a conspiracy theory. After all, it is only for one's unbelievable stupidity that he can be elevated from a humble bean counter to be the Prime Minister.

FOFOA said...

Hello Anon (12:23),

Your scenario is certainly possible. But according to Another's perspective at the time, it went something like this...

From 1983ish to 1993ish the gold market was maintained in a certain range ($300 to $500) using other people gold (not CB gold), and gold in the ground through the forward sales game. Remember, Barrick was created in 1983.

In 1993, (right after the Gulf War as Another says), we have the Larry Summers Gibson plan kick in on Aug. 5, 1993.

So we have a relatively wide trading range of $300 to $500 in the 1980's, which settles down to its median around $400 after Summers comes in.

Then in 1996 something happens. According to Another this is when additional pressure is put on "the deal" as some non-oil-producers get in on the action, but only on the dips. This causes renewed volatility and the gold managers take the price down just like they did last night, to show these "bulls" that they are buying a losing asset.

Big trader (one of the non-oil-producing giants) warns that if they take it below a certain level that they are going to have to greatly increase the paper volume just to maintain the facade of the paper market.

This happens.

Another then warns that this paper volume explosion is going to have to be followed by a commensurate physical volume. In other words, either the CB's will have to become primary suppliers or the whole charade will blow up.

18 months later Gordon Brown announces the BOE sale. But the actual movement of gold is spread out.

4 months later the POG is rising again and the GOFO is approaching backwardation. There is an incident about which Edward A. J. George, Governor of the Bank of England and a director of the BIS later wrote:

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K."

This "event" was the only known case of backwardation in the gold market in a generation. It can be seen in this graph, about which Lance Lewis wrote:

"Some entity with physical gold bullion was willingly taking losses to induce bullion borrowing, even as prices rose."

This massive intervention (by the BOE?) in Sept. 1999 somehow managed to keep the trend under wraps for two more years, at which point gold resumed its rise to its current level.

Frank Veneroso's independent research of the CB gold actions during the mid-90's corroborates Another's story. It is nicely summarized here and shows that the CB leasing spiked from the mid-90's through 2000.


costata said...

Ambrose Evans Pritchard has a post up referring to a client note by Stephen Jen.

Jen mentions that there is no effective valuation method for gold. AEP argues that there is ie. the spot price.

Jen also offers the view that the large holders of reserves (China, Russia etc) are moving out of Western currencies in favour of gold.


I note that the gold/silver ratio just went over 65:1.

Is there a ratio that would prompt you to pick up more silver?

Re: Crimex

Plenty of rumours that there will be buyers standing for delivery on Monday with out of the money contracts at US$1,200.

Would this not "set the cat among the pigeons"?

I, for one, am going to be very interested in finding out how many of the silver contracts seek delivery. If the number is in keeping with historical norms I think it adds a little more weight to a parting of the ways scenario with gold.

Re: Nonsense about gold jewellery

Don't you find it extroardinary that pundits keep talking about jewellery demand being a dominant factor in gold's price?

My take on this is: of course the jewellery trade will get priced out of the market. Are people going to become more or less price sensitive when they see layoffs and foreclosures all around them?

I liken this to the "imminent collapse" in gold price warnings that were touted when scrap sales surged a while ago. A surge in scrap was inevitable at some point was it not? Only to be regretted later.

So can we create a checklist of Milestones on the path to Freegold:

1. Scrap gold flushed out of drawers when the gold price got people's attention. (Tick!)

2. Central banks move from net sellers to net buyers. (Tick!)

3. Trinket jewellery trade priced out of the gold market. (Underway?)

4. Paper markets get busted. Jim Willie claims that October delivery month was the first battle and the London market and Comex will get hit again in December with the coup de grace in March or June. Plausible?

5. Weak hands at the retail level forced to divest due to economic pressure. (Any signs out there?)

BTW Jason Hommel reported a few weeks ago that buying and selling through his sales outlets was "about even". Are these PM owners selling willingly?

6. On to Freegold or are there other milestones to be passed before this begins in earnest?

Anonymous said...


Thanks for an interesting and different perspective on Brown Bottom.

As for freegold, here is a thought about what will be the next stage after freegold or whatever this revaluation will bring.

I think the govts. will concentrate their efforts on finding the industrial use for gold, subsidizing research for that. Here I mean a use where gold is destroyed irrecoverably.

Once found, the technology that requires such use, will be forced into acceptance by govt. mandate under whatever cover suitable.

Once accepted, it will convert gold into a commodity, just like silver is today. There no longer will be any measure by which to gauge the plundering nor a vehicle by which to escape it.

At that time, a new "Thousand Year Reich" of paper slavery, will begin, with results that the prior state of affairs will disappear from any history horizons, meaning that future doubters such as ourselves, wouldn't even have anything to the contrary (as we use thousand year of gold money) to base their thoughts on.

Anonymous said...

@Satya: And I know the books of Antony C. Sutton, I also recommended it, a time ago, on older posts in Fofoa.

This is interesting:

And BOfA is also in the peanuts with DW and Nakheel...

It's bigger...



Anonymous said...

Also very good post on zerohedge:


Anonymous said...

Here's a hyperlink and a 2nd for Anon 8:32's post>>

It is about a potential credit default swap derivative implosion on a Dubai default.

costata said...


"There is a ratio range, however, that will prompt me to exchange some of my silver for gold."

You may have hit on the reason for the recent behaviour of the gold/silver ratio. Perhaps this is a plain vanilla arbitrage.

When the ratio was approaching 80:1 there were a number of analysts in the blogosphere and newsletter world recommending reducing gold holdings (very risky IMHO) to load up on silver.

So as the ratio drops to around 55:1 the trade switches out of silver into gold gradually pushing the ratio back up.

Risk? I would think low unless you think the silver price is likely to collapse.

A big player could easily pull off this type of manipulation by massaging an existing trend rather than employing brute force like the bullion banks have done in the past.

I wouldn't sell gold to buy silver but this arbitrage could be a useful tool to use to increase a gold holding (depending on movements in your local currency).

costata said...

Gold lease rates from Kitco as of a few minutes ago.

1 m -0.2676%
2 m -0.2801%
3 m -0.3176%
6 m -0.3926%
1 y -0.4976%

Pardon my ignorance, is this backwardation?

costata said...

Gold Lease Rates

Sorry, in that last comment I should have said:

Pardon my ignorance, is this warning of backwardation?

TomB said...

>I have also written in the past about the disappearance of gold's industrial uses once we have the value reset on physical bullion.

Which post was this, I'm interested in learning a bit more about what would happen in freegold to the few industrial uses gold has.

FOFOA said...

Hello Costata,

Look at the second chart down on the Kitco lease rate page:

Notice it is only updated through Nov. 18th, not the 27th like the first chart. But also notice that it lists two things, 1) the LBMA-reported Forward Rate (GOFO), which is a positive number and 2) the "Lease Rate", which is negative and small on the shorter timetables.

Now go look at the LBMA GOFO quotes and you will see why the second chart is only updated through the 18th:

You will see that the LBMA reports the GOFO (which is the interbank lending rate for gold/dollar swaps), the LIBOR, which is the interbank dollar lending rate, and "LIBOR - GOFO" which is the difference between the two. It is negative right now because it costs more $-interest to borrow gold than to borrow dollars in the short term (1 to 3 mo.). But going out 6 mo. or a year, it costs more to borrow dollars than gold, strangely enough.

This "LIBOR - GOFO" seems to be what Kitco is reporting as "Lease Rates".

Here are the GOFO rates for 1999. Scroll down to Sept. 29th and check out the pattern leading up to the temporary backwardation. Be sure to look at all three, GOFO, LIBOR, and GOFO - LIBOR...

Again, here is the chart of that... 1999 Chart

Now go back to Kitco and on the left side click on "Current Lease Rates - Gold (detailed)".

Now scroll down to the "Gold Long Term" chart. Notice that on Sept. 29, 1999 Kitco shows an UPWARD spike at the same time as the LBMA shows a downward spike.

Can you explain this riddle? Anyone?


FOFOA said...


I'll have to look for that. I think it was in one of the comments sections and not in a post.


Anonymous said...

Can anyone explain what is going to happen to Gold jewelry as all this unfolds. We spend most of our time talking about .999 bullion on here, but what about Jewelry?

Im only saying because I was thinking of getting a few pieces as gifts. But the premium for jewelry is crazy, I found myself wanting to go buy a couple .999 coins and tie a string around them and use them as jewelry gifts.

So do I buy the Jewelry now, or is the Jewelry price going to go down a bit in the future as demand goes full force towards bullion?

I asked a couple Jewelry shop owners what they are going to do when Gold prices go much higher?

They said there will always be people with enough money to buy Jewelry.

How is it that people that work with physical Gold everyday have no clue what is happening?

Anonymous said...


I think there is no riddle. From

Positive minus a negative = positive plus a positive
Two negatives make a positive
3- (-1) = 3 + 1 = 4
5- (-7) = 12

Look at September 28:
1 month GOFO = 0,87
1 month LIBOR = 5,38
LIBOR – GOFO = 4,51

5,58 – 0,87 = 4,51

1 month GOFO = -4,53
1 month LIBOR = 5,4
LIBOR - GOFO = 9,93

5,5 – (- 4,53) = 9,93

GOFO went negative, while LIBOR was stable. So lease rates went very positive!

Paul said...

Jewelry = labor = less gold for your money

Martijn said...

Ambrose - if I may - seems to be also shifting his mind.

He was a gold basher in the past, but never a dumb man.

Martijn said...


Do you happen to have an opion on the Rothschild article by Markus Angelicus?

Martijn said...

As for my personal take: should freegold arise and the Rotschilds have foreseen that as the article suggest, they could become unimaginably powerful.

Anonymous said...

So you know more about Rothschild to form an opinion...



Anonymous said...

The only places in the world that Rothschilds doesn't control the central banking:

Iran, Cuba, North Korea, Sudan and Libya... All the enemies of the States... You see...


TomB said...

Paul: Only in the West. In countries like India and Dubai you can buy gold jewelry at the same kind of premiums that we pay for krugerrand or maple leaf coins.

TomB said...

I'm not sure what to believe about the Rothschilds, if some sources are to believed this family already owns half the wealth of the world :)

costata said...


Re: GOFO, Libor etc

I think I may have wasted everyone's time with my question about lease rates. For example I understand that Libor basically amounts to a telephone survey. No evidence is provided on actual transactions.

At the height of GFC Stage 1 it was widely suggested that the official Libor rate was a fiction as no-one was lending at any rate.

I re-read Professor Fekete's essays on basis and backwardation and his latest work talks about ways in which the true state of the market is being obfuscated eg. cash premiums above the strike price to avoid delivery on futures contracts.

So, this "information" may not be able to tell us anything useful.

Thank you for taking the time to respond.

Anonymous said...

Here is another article about the possible blow off top at $3000 - $4000 worthless dollars.

I mean why would Gold blow off like in 1980?

Even if the CBs dumped 100 of tonnes of it on the market surely China would exchange its worthless US notes and buy it all at in blink of an eye?

costata said...


Re: ".....the Rothschild article by Markus Angelicus"

I read parts 1 to 3. It was interesting to see how many of his questions remain topical 12 years later. Sadly there still seem to be more questions than answers.

A few things in MA's essays did leap out at me.

1. He described the Euro as a "weak" currency (in 1997) while it is now considered a strong currency.

2. He laments the suppression of gold's price while we can now look back at US$290 per oz from the vantage point of US$1170+.

3. We see the formal announcement of attempts to create a one world currency in the form of a revised SDR by the IMF.

4. Gold has increasingly come into market and geopolitical calculations.

5. Another and FOA's exposure of the gold for oil deal indicates to us that gold was never a "babaric relic" that was ignored by the Alchemists.

With the benefit of hindsight on these issues I think they lend weight to the Freegold theory.

costata said...

November 28, 2009 2:18 PM

"I mean why would Gold blow off like in 1980?"

From everything I have read only in the final stages of a mania that pulls the herd into a final parabolic upward thrust.

I suggest you read Jim Sinclair's observations at about a "Swiss Stair" pattern forming in a market. He claims they only form when the buyers are big enough (FOFOA's Giants?) to overwhelm any trader opposing them.

FWIW Let's assume you have accumulated a large position in gold when it was shunned by just about everyone.

Once it becomes harder to obtain the only way to acquire more is to raise the bid in order to bring more gold to market. Also you introduce volatility to encourage leveraged traders (weak hands) to try their luck in the market.

At some point this strategy ceases to work so well because more strong hands notice the upward price trend and begin to enter the market.

How do you lure the stronger hands into selling? Perhaps you do it by creating price spikes that are big enough to convince some of the players that this is "THE BIG ONE" and it's time to take their profits off the table.

This phase could also last quite a while. Consider Alf Field's numbers archived at Jim Sinclair's Further down the trail he predicts up and down movements in the 100s of USD culminating in swings of 1,000s while STILL remaining in a long term uptrend.

FOFOA said...

Hi Martijn,

You must be reading The Grand LBMA Expose! Yes, definitely the House of Rothschild is a Giant among giants that will profit in Freegold.

Isn't it interesting that NM Rothschild & Co. left the paper gold casino operating business in 2004?!

When subjects like this arise, I find it enlightening to search the nicely archived single thread comments on USAGold immediately following such events. Here are some comments from 2004 at the time the Rothschild sold its casino...

Belgian: Indeed Sir, CM correctly stated that the Rothschild pull out is "News"...! But note, that some time ago, other London Gold fixers left *the room* already, before the boss. So, this is a re-confirmation of old news.

More important is,... or better, was... the Rothshilds' traditional activities on the "arbitrages" between Oil and Gold ! Old habits are dying and Big Change is coming !

Remember the recent sale of GFI participation by AA to Norilsk. AA is a Rothshild proxy.

IMVHO, it all boils down to the following fundamental change: The American "style" of paper-wealth is getting stiff competition from FreeGold-Physical-Wealth !!!

Aragorn III: We can surely picture FOA smile "I-told-you-so" with validation to hear David de Rothschild say, "When the bank gave up on gold, oil trading had to go, too."

MK: "But that leads me to your good question, and as always, it does not surprise me that you are the one here (among some others) who senses that the Rothschild move might be important. As you know, I have been a student of the Rothschild dynasty for a good many years and I certainly appreciate them for what they are - one of the first and most significant investment banking houses...

And through it all they managed to remain a private firm owned by the family - an achievement I admire...

I am neither a defender nor a critic of the House of Rothschild, just an observer.

With Rothschild the motivation is the lack of returns on the simple commission gold business - which trades at very thin margins. The bigger profit gold carry trade business - which included loans and hedging operations (and all the management fees attached) - is dying, if not already dead, as mine companies go to the demand side of the gold fundamentals ledger. It signals the future of gold. The death of the gold carry trade/mine hedging businesses has come to fruition as I predicted a long time ago with the Rothschild retirement from the Fix being a final and highly symbolic milestone. Others will follow, as they go on to what they deem to be more lucrative businesses.

But what is the City's loss will be the physical owners gain because what the Rothschild withdrawal signifies is a reduced role for the banking functions - the operations as Aragorn and FOA pointed out here long ago that became anathema to higher prices. What is ironic about the whole thing is that the seeds of Rothschild's self-styled withdrawal as the lead firm in the London trade were planted a few years back by the firm itself when it pushed hard for more transparency in the gold market. NMRothschild played lead dog in an effort that ultimately led to the first Washington Agreement and the beginning of the end for the gold carry trade and mine company hedging programs...


FOFOA said...

...I accept what NMRothschild is saying at face value. I do believe that they do not do enough business on what they call the "commodity" end of things to support the infrastructure required to do it right. I note that they were careful to let their mine company clientele know that they would not be abandoning the business completely, and I'll tell you why I believe they went to those lengths: The trend now is for miners to buy back their hedges.

I would not be surprised to see that firm end up in this market as an investor, as opposed to a broker - a move in keeping with their long history of exploiting major opportunity...

Does that include assuring their clientele that they will be buying gold for them? Let's turn the coin over. Maybe it is precisely because they have to buy for their clientele that they no longer want in on the London fix and the daily trade AS THE KEY PLAYER!

There is, of course, much more in the archives. Whether or not you view Giants like the House of Rothschild to be the Devil himself, you have to admire their generational accumulation of REAL WEALTH, positive equity positions as opposed to someone's debt, that can weather any cyclical financial calamity and be passed on for centuries. From your article...

"The acumen and the accumulated wealth of Mayer has been continually passed down to the next male generation of Rothschilds, without dilution.

Studying the Rothschild family acumen for stock markets, gold trade, and financing of nations provides an insight into how 'Smart Money' survives.

No single corporation or business entity has survived with so much accumulated wealth intact.

To appreciate the Rothschild's ability to sustain and increase their wealth and avoid the scrutiny of both the public, the markets, and the state taxation system...

In a world awash in debt and unsustainable fiat currencies subject to implosion, the power of gold and the preference of the Rothschilds to gold cannot be easily ignored.

Could it be that the Rothschilds through their involvement in daily London gold trades are quietly amasing more of the precious metals in their private vaults, while the confidence game of the Central Banks tries desperately to avoid what Soros calls "unsustainable" fiat currency built on unsustainable debt? It was Mayer Amschel Rothschild who kept a secret subterranean vault full of gold beneath the House of Rothschild in Frankfurt in the 1770s.

Could it be that the LBMA is being used as a testing ground for the establishment of a new gold-backed world currency system? If so, the Rothschilds are in a position of enormous influence over such a genesis process.

The Houses of Rothschild, more than any other players, knows the historical power of gold and importance of a gold-backed currency system. The English system they helped engineer remained resilient and sustainable for over 200 years until the early 1900s. The Rothschilds believe in gold as the ultimate store of value; always have and always will Undoubtedly they do not consider the metal a barbarous relic of the past.

their diminutive "presence" in the world... Their continued bullishness on gold... confidence in the this barbaric relic."


costata said...

Bob Chapman makes some pretty dramatic claims in this latest bulletin from the International Forecaster.

One of the pieces of "intel" from his "highly placed source in Banking" is an imminent USD formal debasement.

He writes: "Major and semi-major banks are being told to obtain secure storage for new currency-dollars. They expect official devaluation by the end of the year."

Bob Chapman's claims about the FDIC having not 552 banks on death watch but 2,000+ are entirely plausible IMHO. He states that the deposit insurance scheme will close down in 2010. In Sept. 09 they did withdraw the guarrantee for money market funds so I think this lends some support to this claim.

I read a scenario comparing the recent treatment dished out to Argentina and Zimbabwe by the international financiers. The author posits that the Argentina strategy could be applied to the USA.

(Apologies if I have already provided this link in an earlier comment.)

The Royal Scam

The Royal Scam sounds disturbingly close to what Bob Chapman claims to be imminent.

Does anyone have an opinion on the credibility of Bob Chapman and/or on the validity of his predictions?

If something like this happens to the World Reserve currency how could anyone with an IQ above zero trust a fiat currency as a store of value ever again?

Is it going too far to say that any moves of this nature would make Freegold inevitable?

FOFOA said...

Hi Costata,

If something like this happens to the World Reserve currency how could anyone with an IQ above zero trust a fiat currency as a store of value ever again?

Obviously they couldn't.

Is it going too far to say that any moves of this nature would make Freegold inevitable?

Not at all.


Anonymous said...

for the dwindling band of pandering mish groupies, the following SHOULD be the last nail in the coffin of mish "credibility;"

and no, martijn, I shall not soil myself by debating this further with you. you either will see it plainly for what it is.... or you will not.

I consider GATA to be beyond reproach and so rest my case on the ever so mendacious and squalid mish.


Anonymous said...

WOW! In your face Mish!

Anonymous said...

*Important news*

It's maybe game over for the States. The income taxes will raise... The date is 9/12...

Watch out with Iran, they would build more nuclear reactors... They've said to Baradei to fuck up. They refused inspections...

And yet, Michael Moore shown his new capitalism-movie. But I find 'fall of the republic' of Alex Jones much better...

Own physical precious metals... You never know, it's a black swan...


Anonymous said...

Saw on a comment on

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Tim Geithner refuses to answser Brad Shermans question:
HQ version:

Rep. Alan Grayson asks the FEDERAL RESERVE Inspector General where the money is gone..:
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Anonymous said...

Some useful sites:

Sovereign wealth funds:

Good blog:

another good info:

Anonymous said...

& from Bob Chapman via Schultz;

"One of our Intel sources, highly placed in banking circles, tells us that on 1/1/10 all banks that have received TARP funds have been informed by the Federal Reserve that they must further restrict any commercial lending. Loans have to be 75% collateralized, 50% of which has to be in cash, which is a compensating balance."

More and more question's.......

Anonymous said...

[If something like this happens to the World Reserve currency how could anyone with an IQ above zero trust a fiat currency as a store of value ever again?

Obviously they couldn't.]

Disagree. Do not measure the world by yourself. The very fact that you're here, means tat you're far from normal, I'll live it up to you to decide on how to describe the deviation - genius or idiotic.

Most people, which is what matters, have no time for the truth. Life, properly lived, does not have the time for truth, and this is why the world is so screwed and beautiful at the same time.

Most people have no idea why gold, what's wrong with fiat or what the American Revolution meant. Majority did not, does not, and will not understand any of this, and they will make changes through voting or by force, nevertheless.

It is virtually guaranteed, that the crowd will gladly accept any paper scam that the authorities will introduce as "significantly more reliable", or "inherently different" or "naturally stable" or "fully transparent", etc.

It would not matter that you and I will be screaming and kicking in our furious nonacceptance, and explaining to all who would listen, how this is just another scam, and that it will take decades at best to realize that there is nothing good in new paper fiat.

Again, I say that IMHO, Freegold has no chance, other than may-be for the bankers, hidden from a public view. The crowds would much rather listen to authorities.

Notice also, how the very same people who you have warned that they will lose their homes and turned out right, now do not listen to you, but continue to perpetuate the rumors of recovery. So, they did not learn anything? They listen to failed experts even though you proved to them that the experts are fools?

That is right. Most people are fools. Well, let me explain. They are not fools per se, but they are choosing to stay fools, because as strange as it sounds, most people would rather lose everything while thinking that they are doing good, then do good, while thinking they are losing everything. And thinking for them, always equates repeating the words of authorities, and authority is determined by societal status, which is based on stupidity of masses, so there you have it.

Trust Another if you wish. But I suggest you heed my words, and realize that Another was idealist. Therefore, prepare for another paper fiat, even while waiting for Freegold to "imminently" take the crown.

Anonymous said...

Does anyone have an opinion on the credibility of Bob Chapman and/or on the validity of his predictions?

Well here is my OPINION.

He is either playing to be not so bright (which puts me on alert as to his real goals), or he is.

He constantly blabbers about major conspiracies. (I am a conspiracy lover myself, but there is a difference in acknowledging 9-11 and in blabbering about dynasties).

He is constantly speaking in favor of blue collar worker, and American worker. Again, is this politics or naivete?

He doesn't like the idea of free trade. How is that for you? How would you like to listen to an analyst who colors world events from the point of view of someone with a desire to sustain the american welfare state zoo?

So, I do read him, just as I read Mish. To filter and check for new rumors. That is it. I do not base my expectations on his warnings.

By the way he already did warned in exactly the same way before, that the world is going to end on Sept 9 2009.

Anonymous said...

Watch this:

Old swine flu propaganda in 1976:

Don't take vaccins! I went in Argentina in August when the swine flu was high risk in this period. Weell, I've seen nothing and asked to the local people. They said also there is nothing. It's a hoax.

It's all about medical industry:


Anonymous said...

chapman OK. things that cannot go on forever wont. when chart trends go parabolic paradigm shifts imminent. comming $$$ paradigm shift will need preparation/coordination so one day one of these WARNINGS/leaks will prove prescient. we will only know in hindsight. 9/30/09 was much heralded as an inflexion... didnt pan out. mish is dogsh$t... polar opposite of bob chapman. one of these days of these days. look for an asymmetric (nonfinancial) domino (dubai notwithstanding) in my opinion to start the fun. not long now!

Anonymous said...

And a very nice graph of the States


MichaelB said...

Right, not long. Chapman former intelligence officer in Germany been around for decades and decades. Tuned in on many important wavelengths. Many Radio shows. He's not perfect but not kidding when he says the PTB hate him. Likes Jim Willie, hunkers down, sees the big picture.

Anonymous said...

Steve B said...

Anon 11:22.

How would you prepare differently than A/FOA/FOFOA?

I agree with you 100000% re:Freegold, as I have stated here before.

But what would you do differently than this blog suggests?

I just think they can make the "game" where they win and we loose. I don't even know if gold can win but that is where I am at.

There will be a world digital currency at some point that I know melts down, but this event is different. It almost seems more dollar judgemental and thus maybe gold can win, for now.

I think gold will do well in the short term but then be useless and will crash.

Thanks again Anon 11:22, you said it better than me.

Anonymous said...

That Lew article at TSBC is a joke. Show a picture of Rogers as if it is an interview, then instead talk about him and read his mind. What a clown. If Rogers isn't buying at this price, could it be that he is nicely positioned? "All big investors are these days selling gold." No kidding? Oh noooo. Thanks for that inside tip, Dave.

costata said...

November 29, 2009 11:22 AM

"The very fact that you're here, means tat you're far from normal, I'll live it up to you to decide on how to describe the deviation - genius or idiotic."

I would describe myself as being somewhere in the middle of the offered range of deviations.

Anonymous said...

Anon 11:22,

You and FOFOA are both right. Freegold will not happen exactly the way FOFOA believes it will. But it will happen. How will you convince all those people in India, China, Vietnam, and else where to exchange their Gold for something else? Gold is going to become much more valuable to man kind.

But if the Golden rule is: He that has the Gold makes the rules than where does that leave Rothschild? Has Rothschild cornered the Gold market? How much real Gold did Rothschild keep and then exchange tungsten bars for before 2004?

Rothschild knows how to run a successful and exploitive world monetary regime. Now if Rothschild has most of the Gold, and China, America, Middle East have thousands of tungsten bars in their vaults, who will get to make the rules about what kind of money the world uses after the dollar collapse?

Remember the Golden Rule. And Rothschild's got the Gold now.

Anonymous said...

Well (I am Anon 11:22) guys, it seems that quite a few see it the same way I do.

I have to say it, I do not know anything about Rothschild. I am a conspiracy believer, as I for instance, think that 911 was such. But, It seems illogical to me that one family would not degrade and stay in control. This contradicts the general view that everything must decay.

That the man was, is, and will be pulling it's tricks on another man, is certain. However, I feel it will always be another man.

Costata, I hope you did not take my words in the wrong way. You claim you're "normal"? As in "normal people who run into dollar and bonds"? Come on. I don't think we are any smarter than the normal people, I just think we are forward looking and have a sense of coming change. Like a dog is no better than a horse even for his sensitive nose. Just different.

Anyway, what do I expect to happen? I expect the world to return to normalcy, and that means plundering and stealing. This allows for the affairs of men to look good, and as I described above, as strange as it sounds, this is what men prefer above all.

Besides, I have promised to repeat my argument against Freegold to Ender. There really isn't much to repeat, but here it goes:

Paper currencies are here to stay, until better and more hidden way to plunder the majority is invented. I do not believe that we went from gold standard to paper fiat by mistake. Sure, it took several tries to get it right.

The dollar is falling. So what? How many generations lived fat and died fat, thanks to dollar scheme? I think it did very well.

A little hiccup, new dollar will be introduced and called something else. It may no longer be the America, it may be China, but that won't change anything about the system.

If you want Freegold to come true, then you need to abolish the welfare state. Right now, it is impossible, because we haven't been preparing for this. And I think nobody wants to prepare for this.

The paper fiat serves a purpose, - to steal 90% of people's wealth, and give it to PTB, to wage wars, to fund pet projects like NASA, to run Welfare State, to stay in power and to have huge army, to have women and to live in luxury.

Does everyone really understand this?

Anonymous said...

So, now let's remove paper fiat and replace it with Freegold. How then do you continue to steal all that wealth?

Taxes? Anyone seriously thinks that people will be fine with 95% taxation? I doubt it!

Well? If not then how do you fund all the largess?

This is what I meant by "you can't have thieves and have nothing stolen". Something has to give.

Of course, if you call me cynic, and pretend that the paper money debacle is not a design, but simply a trainwreck, then yeah, we just going to stop all the wars, disband the armies, land the satellites, stop the dope checks, close governmental schools, and resurrect George Washington.

We are not prepared to remove the thieves, because the people are rotten and have no education besides brainwashing.

So, we can't. This means that Freegold can't stay, because PTB will spare no effort to create new plundering system.

Oh, but doesn't Freegold already suppose this? Doesn't Freegold already say that there will be a paper fiat and Freegold, parallel, but different in their purpose?

Yes, FOFOA, it does. There is only one tiny problem. In Freegold as described, the paper currency will not be able to provide any plundering!

I consider this argument above sort of E=mc^2 argument. Because it does deal with zero sum game. It's either going to be in m or in c square. It's either we are going to stop killing Iraquis and Afghanis for gold and drugs, or there is not going to be any Freegold.

Now, as I said above in an earlier post, the banks and nations can be on Freegold. Sure. Except they already are. Like France in 1970, and Soviet Union in 1941 have illustrated.

I would like nothing more than to see this properly refuted, and to rest in peace knowing that there is the light at the end of the tunnel, because I am pro gold.

Anonymous said...

Anon 12:51,

You are right when you say we are no different from the "fools and the genius'" The same as a horse and a dog are still animals. The only thing that separates us from one another in this world of "fools and genius'" is Character.

Also, I honestly dont know how Rothschild's past on their fortune and power from generation to generation without losing it or diluting, but I believe they have. And I believe the biggest hiest in human history has taken place by one family or a small group of families and we are just now waking up to the reality of it.

Anonymous said...

Freegold !?

Snip from Anon : ...This is what I meant by "you can't have thieves and have nothing stolen". Something has to give....

What happens (must happen) when plundering/stealing goes through the roof !?

Plundering/stealing = The systemic production of Debt that dwarfs the real tangible wealth that can be stored intackt.

Soon, the plunderers will wonder what there is left to steal.

What unit of account is going to value the existing real wealth, correctly ? And are the many plundered wright to unite around the freegold concept as wealth valuator ? Why won't they be succesfull ?


Anonymous said...

"Why won't they be succesfull ?"

They wont be successful in the long run because the worlds Gold has been systematically stolen and hoarded by Rothschild since at least 1930's. When Rothschild's exited the Gold market in 2004 it was because they had all the Gold they needed to do what ever it is they have planned.

What happens when one person or family corners the Gold market and all the other giants around the world are holding tungsten in their vaults?

When the paper fiats go away and the masses learn that paper is not wealth and that Gold is?

When one family sets the price of Gold in the future because they have the majority of it, and others are left with tungsten?

I guess some people just havnt thought this whole tungsten/gold story through to its conclusion.

Desperado said...

Niall Ferguson has a fantastic piece out predicting deflation and high interest rates, titled: An Empire at Risk.

In his scenario, interest rates rise and interest payments consume 20% of the budget, leading to military and "empire" collapse. Few Europeans understand that they are an integral part of this very "empire", and they will get sucked into the collapse too.

If war can be avoided, high interest rates and deflation is what would be required to pull wealth back out of gold, causing money velocity to increase and bringing about recovery. The longer TPTB delay this transfer back out of gold (through free gold restriction), the further any recovery will be pushed into the future.

Already, the federal government's interest payments are forecast by the CBO to rise from 8 percent of revenues in 2009 to 17 percent by 2019, even if rates stay low and growth resumes. If rates rise even slightly and the economy flatlines, we'll get to 20 percent much sooner. And history suggests that once you are spending as much as a fifth of your revenues on debt service, you have a problem. It's all too easy to find yourself in a vicious circle of diminishing credibility. The investors don't believe you can afford your debts, so they charge higher interest, which makes your position even worse.
The precedents are certainly there. Habsburg Spain defaulted on all or part of its debt 14 times between 1557 and 1696 and also succumbed to inflation due to a surfeit of New World silver. Prerevolutionary France was spending 62 percent of royal revenue on debt service by 1788. The Ottoman Empire went the same way: interest payments and amortization rose from 15 percent of the budget in 1860 to 50 percent in 1875. And don't forget the last great English-speaking empire. By the interwar years, interest payments were consuming 44 percent of the British budget, making it intensely difficult to rearm in the face of a new German threat.

Call it the fatal arithmetic of imperial decline. Without radical fiscal reform, it could apply to America next.

Anonymous said...

I pray for it (that "Europeans" get sucked into the collapse together with the American oligarchy as soon as possible), better yesterday than tomorrow. All people in Europe HATE TPTB! N. F. actually mentions "g" Britain but that damned island is definetely NOT EUROPE!!! Nor are the f***d politicians in "Europe" real Europeans, (damned lackeys they are) and as soon as USA is down, people everywhere will wake up for their future and their childrens! I hope that's just a matter of time and we all are eager to hear and excited when will this happen! As I say, better yesterday! With or without Freegold!

Anonymous said...


Why post quotes with such silly ideas as:
"...and deflation is what would be required to pull wealth back out of gold"

How do you pull wealth back out of real wealth?

Martijn said...

You are right when you say we are no different from the "fools and the genius

The difference between a fool and a genius is merely the rate of success. Both take actions outside of the normal, but as they pay off we consider them to be genius, while we otherwise tend to think of them as stupidity at large.

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

Here is rather nice analysis of some factors in play in the economy these days: high debt levels, the burden of servicing that debt, interest rates, and the possible effects of a deflation.

Martijn said...


You prefer gold over silver a lot, based partly on the writings of another, if I'm not mistaken.

He did say however: No single asset class or segment of the economy, by itself is more valuable than the supply of oil. This brings us back full circle, to the problem of "digital currencies" and the "mind set" of much of the simple ( and rich ) third world persons. To many of these people, wealth is the surplus of life's work that you pass on after death. Currency is something you, spend, trade or hold for a few years. It isn't wealth. Gold ( and silver ) is "on the list", so to speak.

Anonymous said...

Okay, I would buy a superfast printer to make my own gold-backed currency...

Steve B said...

Anon 12:51 - "I would like nothing more than to see this properly refuted, and to rest in peace knowing that there is the light at the end of the tunnel, because I am pro gold."

Exactly, I read this blog to see if I can find an answer to my/your concern.

FOFOA are you going to try to "properly refute" it or are you letting the entire blog stand as an answer by simply saying "buy gold coins." Which would then mean freegold is not your core argument but it is one of simple gold appreciation and thus protection in the coming storm that we all agree is coming.

Desperado said...

Anonymous (@7:43 AM) said...

How do you pull wealth back out of real wealth?

Fofoa discusses in length gold as THE store of wealth in freegold. My guess is that most commentors here realize that even in complete collapse, there will be other stores of wealth besides gold, two of which are land and art (jade and diamonds being two others).

If freegold floats freely, and fiat money is used for exchange, then these other stores of wealth will likely be denominated in whatever fiat currency is in use at a given moment in time.

Other assets, especially those producing income, will also be a store of wealth to the degree that income flows exceed costs and depletion (i.e. oil wells or gold mines).

Bonds and sovereign debt will also always be with us. The attractiveness of storing wealth in sovereign bonds or goldmines as opposed to gold is directly related to the degree of return and the degree of risk.

Once the collapse of fiat has been constrained and real interest rates rise sufficiently, wealth will flow from gold back into other types of investments. There will be an ebb and flow up and down Fofoa's wealth pyramid, in the direction of gold and back into the direction of leverage. There always has been and always will be. Gold will never have a monopoly on being THE store of wealth, and I doubt Fofoa would ever say it would.

Siege said...

The link below might be useful for those that look to the USDX as a measure of stability.

The incredible shrinking USDX

Desperado said...

Anonymous (@6:07 AM) said...

All people in Europe HATE TPTB!

ROTFL! Are you talking about those "All people" who are voting for the Treaty of Lisbon? One thing is sure, a large proportion of "All people" of Europe believe the propaganda that the EU elite are constantly spewing in their direction.

Fortunately in last week we have two big milestones indicating the change in European sentiment. One is the exposure of the worst scientific scandal of our generation. The other is Switzerland Says “No” to the Bayonets of Islam. I find it interesting that the Swiss polls predicted that the initiative would be defeated by 60%, when in fact it was approved by 60%. The internet appears to finally be piercing the veil of EU propaganda and deceit.

Anonymous said...


funny, I can't remember voting for the Lisbon treaty. Perhaps that's because as a Belgian, I could not vote for it. Our elected parliament did that for us...

Martijn said...


Any loss of perceived control by the CBs will trigger a bid by oil. It would be better for time to pass and allow a natural change to the new oil currency ( perhaps 1 1/2 years ) . However, it is now my view that the CBs have lost control! I expect a break above $360 to create an allout run to infinity, before year end. Physical gold should be purchased for a lifetime holding, not a trade.

So oil did wait for the Euro to be formed, as they saw an advantage in that.
At this moment one could argue that CBs are somewhat losing control of gold, although so far real panic has not been seen.
Did you ever ask yourself whether oil would see benefits in the formation of SDRs with some form of gold behind them? Could that be the reason why oil has not bid for gold yet?

Anonymous said...

"Switzerland voted for a blanket ban on the building of minarets across the country, backing an initiative by far-right politicians."

This is a dark day for the Swiss. The day that the fascist returned. What next? Banning dark skin?

Interestingly, what this shows is that the intensity of the insanity keeps going up around the world, as we keep sliding towards the WWIII.

May-be we should ban old Cadillac cars here in US to get rid of crime, or the see-through high heels to get rid of the prostitution?

S said...

"Rothschild knows how to run a successful and exploitive world monetary regime. Now if Rothschild has most of the Gold, and China, America, Middle East have thousands of tungsten bars in their vaults, who will get to make the rules about what kind of money the world uses after the dollar collapse?

Remember the Golden Rule. And Rothschild's got the Gold now."

Whatever you belive about conspiracy, it takes no"value" whatsoever to launch a MIRV/EMP etc. Sunk costs are a bitch.

Desperado said...

Anonymous (@ 10:32 AM) said...

This is a dark day for the Swiss. The day that the fascist returned. What next? Banning dark skin?

Bwaaaaaaa. Stop it, you're killing me!

I am Swiss, and I voted to ban the minarets. My wife and daughter did too. And it has nothing to do with religious freedom, since mosques are still allowed. It has to do with the left (TPTB) and the Muslem extremists trying to cram sharia law down our throats.

As far as "an initiative by far-right politicians" goes, there is no such thing in Switzerland, let alone Europe. The entire continent has been taken over by communists and socialists who brand anyone who believes in private property and individual freedom "far-right".

This is why I am so enamoured with FOFOA's freegold. To me freegold is independence from financial control and manipulation by socialists, environmentalists, NWO's and the illuminati, who are blatantly pushing the Treaty of Lisbon.

Martijn said...

This was discussed in places I cannot mention here. However, this is an interesting article on credit card use and debt attitudes. Attitudes seem to be on the move lately.

Martijn said...

And Reggie Middleton argues that there is no way the US economy can survive a rise in interest rates and that bank problems are very far from being solved. I would not be surprised by more default and debt destruction. Unless Bernanke will hit the presses again - which he most likely will - debt destruction (deflationary by some definitions) will occur.

Martijn said...

Max Keiser speculates that both China and Germany have been buying gold recently.

No sources provided, but Max has occasionally made a good prediction in the past. Guess we'll have to wait and see, but it might get interesting if this turns out to be true.

Martijn said...

In the Max Keiser vid from above also an interesting conversation on derivatives, which still form a problem and are still overvalued. As they are overvalued, they cannot be moved, just as the USD in national reserves.

Martijn said...

For completion of the Keiser story the subsequent part.

Martijn said...

Nice from a geopolitical perspective: markets are quite sensitive to Iran.

Martijn said...

Regarding my post above and the oil/gold/USD relationship: a spike in oil prices might not be regarded a great event by Bernanke et al, for multiple reasons (inflation/interest rates, gold prices, etc). There might be some financial arguments to having let Iran proceed so far. Then again, I do believe they begun trading oil in euro's.

Anonymous said...

martijn dude... you're on a roll. back off on the coffee though. take a walk, get some fresh air now and then! would ya?


costata said...


"Gold will never have a monopoly on being THE (only?) store of wealth, and I doubt Fofoa would ever say it would."

100% agree. Gold sits at the pinnacle of the heirarchy of wealth storage for BOTH technical and historical reasons well understood by many who visit this blog.

Some of the people posting comments seem to think that Freegold precludes other things being lesser stores of value.

There also seems to be a persistent misunderstanding that Freegold = no fiat currency. Unless I have completely misunderstood the Freegold theory it does not herald the disappearance of fiat currency.

To the Freegold naysayers:
I read your opinions and respect your right to hold and express them.

At the same time can we also try to identify FACTS derived from actual events to inform this debate?

For example:

1. Look at the HARD evidence of Zimbabwe. Clearly all faith in the Zim fiat dollar was destroyed. When the Zim dollar was withdrawn from circulation ALL PAPER assets, debt etc denominated in Zim Dollars evaporated.

But as Alf Fields and others have reported as soon as the Zim people were allowed to trade in other FIAT currencies (such as SA rand) the crisis abated.

Question for anyone with Zimbabwe contacts:

Do the Zim people treat the fiat currencies they are using in transactions today as a vehicle for storing wealth?

If not, what is most prized as a store of wealth?

If the answer is "gold is most highly prized" what would that tell us about Freegold? If it is something else it could give us some useful data to evaluate.

2. In the same vein. Does anyone have any contacts in Vietnam?

From personal experience I can say that to the Vietnamese people I have dealt with gold is the ultimate form of wealth.

Their COMMUNIST Govt was recently forced by MARKET forces to resume gold imports because the demand was creating huge premiums despite ALL attempts by the Govt to defend the Vietnamese fiat currency.

3. I recall Another or FOA indicated that a lot of Big Trader's gold accumulation was done through Australia. (Once again back in the No. 2 spot of gold producers behind China.)

A senior executive in the Nat Australia Bank's PM and currency division was recently quoted in the local press as saying "China will shortly announce a large gold purchase."

I concede that I may be delusional but the events I see unfolding seem to be following the Freegold trail very closely albeit later than predicted by Another and FOA.


Again, thank you for providing this forum for discussion.

raptor said...

Charlie Rose November 15 1994
Sir James Goldsmith, Member-European Parliament/ Laura DAndrea Tyson, Chair-Presidents Council of Economic Advisers

very interesting perspective from 1994 ... you can see the real thinking and keynsian views of this lady ;)

Anonymous said...

To the Swiss man whose family voted on the minaret issue, you have no need to apologize. As you said, the new law inhibits no one.

Anonymous said...

Here in Melbourne Australia - i was talking to a Vietnamese guy in a computer shop - he told me 'back in Vietnam you have to buy your house in Gold'.

I asked why?

He said 'No one trusts the currency'.

Perhaps there is alot of counterfeit floating around?

Anonymous said...

What is a "Minaret"? A type of building, IIRC, a pointy tower. So, the swiss had voted to ban others from building pointy towers on the land they buy?

Does this sound pro property rights or pro statist to you, guys?

J said...

I may be going to Vietnam in a couple of weeks. Did you have any specific questions?

costata said...

Hi J,

Nothing specific. I was really just looking for other anecdotal evidence to support or contradict my experience of Vietnamese attitudes to gold.

November 30, 2009 3:56 PM

"He said 'No one trusts the currency'.
Perhaps there is alot of counterfeit floating around?"

Perhaps J could confirm on his visit.

I believe that the main reason they don't trust the currency is because of currency debasement and attempts by the Govt to create artificial pegs to other currencies. Giving impetus to a healthy blackmarket.

Many people in SE Asia learnt and remember the lessons delivered by the currency turmoil of the late 1990s.

costata said...


"Charlie Rose November 15 1994
Sir James Goldsmith, Member-European Parliament/ Laura DAndrea Tyson, Chair-Presidents Council of Economic Advisers"

I have watched this vid. Goldsmith was prophetic. At the time I had no idea GATT etc would lead to this social disaster we are witnessing.

Incidentally, the agribusiness giant Tyson (Foods?) is/was a huge Clinton backer.

The Mad Scientist said...

FOFOA, thanks a lot for that (the new pyramid of course)! Sorry I was away for a few days and did not see that till now.
I always felt SJ's busom for more essential to life than Higgs Boson.
Now remember to give me credit when it gets you a major science publication.

S said...


I suspect what has people hostile to freegold is the very same thing that has the new Chief Econ for Citi and former editorialist for the FT messr Buiter so agitated about gold, namely the constraints it places on a sovereign's ability to print money and pursue their inflation mandate. Afteall that is the very essence of fiat: paper for consumables. Therefore watch the consumables. Indeed the blow off in gold may be a practical consequence of BB thinking better the yellow stuff than the black stuff.

Anonymous said...

Where do you see the people that are hostile to Freegold? I haven't met anyone even using the term, anywhere but on this board. Essentially no one else is even discussing it.

costata said...

November 30, 2009 9:08 PM

"Where do you see the people that are hostile to Freegold?."

How about here.

November 29, 2009 11:22 AM

"Again, I say that IMHO, Freegold has no chance, other than may-be for the bankers, hidden from a public view."

"...........Trust Another if you wish. But I suggest you heed my words, and realize that Another was idealist. Therefore, prepare for another paper fiat, even while waiting for Freegold to "imminently" take the crown."

November 30, 2009 9:08 PM

"I haven't met anyone even using the term, anywhere but on this board. Essentially no one else is even discussing it."

I haven't heard the term Freegold used on any other site.

However, if you look at the numerous threads of the discussion about the future role of gold many of them have elements of the Freegold thesis.

To me FOFOA's signal accomplishment is the way he has built upon the work of his predecessors to create a coherent set of arguments for this theory.

He also does a great job of identifying and presenting circumstantial evidence as it comes to hand.

PS. Anonymous - FWIW I am genuinely interested to read counter arguments to the Freegold theory. I am merely suggesting that people try to present some facts to flesh out their opinions/arguments.

Anonymous said...

@ costata:

How defensive of you.

If I say I would love to go to heaven, but I don't think it will ever happen, you'd call me "hostile" to the idea of heaven?

Let's just all sing kumbaya, and don't ask any questions. As they say "don't question the leadership".

BTW, FWIW, I haven't seen any contra arguments to the anon 11:22 post yet.

Martijn said...

Article on China and Dubai.

"That could give China a buying opportunity to put some forex reserves into gold or oil reserves," Ji was quoted as saying by the paper, which is widely read by Chinese officials..

.."If the gold price comes down for a while, we might take the opportunity to buy a bit," the Economic Information Daily, run by Xinhua news agency, quoted economist Li Yining as saying.

Although verbally backing away from the States ever more, they did not want to drive the price of gold yet. They've also continued buying Bernanke paper over the last year. However, this article does confirm a change of attitude.

Anonymous said...

me thinks that FOFOA will have to admit that freegold idea unquestionably means the end of big government and the welafare state.

Gary North is saying that the end of those is coming.

Desperado said...

Anonymous (@4:35 PM) said...

What is a "Minaret"? A type of building, IIRC, a pointy tower. So, the swiss had voted to ban others from building pointy towers on the land they buy?

Does this sound pro property rights or pro statist to you, guys?

Anybody who has dealt with a Swiss Baukommission is under no illusion as to the extent of their property rights and what can be built on their own land.

As for sloughing off a minaret as a "pointy tower", so could one call a rocket. Sharia law is no less threatening, and there are many who would gladly impose this on all of Europe if it would allow them to consolidate power.

Anonymous said...

"me thinks that FOFOA will have to admit that freegold idea unquestionably means the end of big government and the welafare state."

Government is broke!! In REAL terms! This is the defining news story of the 21st century. Get used to it.

Martijn said...

Governments do seem to be broke.

Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months, according to a client note by Morgan Stanley.
That makes timing so difficult. The comex remains somewhat stressed and another big event - of which chances are plenty but none is guaranteed - might give it the drop that causes it to flow.

Martijn said...

The ingredients for bankruptcy are there for both the US and UK:
-cost overrun spending by far
-interest payments make a large part of costs, sensitivity to increased rates is enormous
-debt is increasingly being shifted into shorter maturity
-no improvement in underlying fundamentals

Any company in those circumstances has little chances to make. Companies do however lack bearded men with money printers, hence the timing may vary, but the final outcome might be the same.

Desperado said...


Gold was briefly scraping $1200 per oz, as you are writing about default.

Porter Stansberry agrees: The bankruptcy of the United States is now certain. Just as described in Niall Fergusen's piece, Stansberry says that it is a rise in interest rates and all the massively reckless short term borrowing is going to blow up in Bernanke's and Geitner's faces.

I had been waiting for a dip below $1100 to add to my freegold, but it appears that so is everyone else. It looks like today may be the last chance to get in under $1200...

Martijn said...


If I'm to believe the article on China linked above, China will definitely buy on every dip there is. Some volatility will remain and a little pull back would not surprise me that much, but should we see 1100 again you'd better be fast...

Martijn said...

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion. Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy.

I recently saw some graphs indicating that much of the freshly printed Bernanke Bucks went oversees. I guess some of those dollars will eventually land in treasuries again, and besides there is QE. As the US has learned the printing business, and prints the world currency, the Greenspan-Guidotti rule might be a bit different for Bernanke.

So where will the money come from? The printing press. The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt.
Posing the question is answering it.

One thing they're not going to do is buy more of our debt. Which central banks will abandon the dollar next? Brazil, Korea, and Chile. These are the three largest central banks that own the least amount of gold. None own even 1% of their total reserves in gold.
That might not be the right perspective. China already nows half of its reserve (all its dollars) is at high risk. They also no that it is better to use dollars that would otherwise turn worthless anyway continue to buy treasuries if that keeps the gold market relatively quiet and allows them to continue buying on the dips.

Besides none of the major players would want to (temporarily) halt world trade by collapsing the dollar.

In short: the argument that countries will not trust US debt holds some water, but we should not forget that they probably have already calculated their losses and prefer to keep the current system alive for now as that will impact world trade the least and it enables them to continue buying gold.

I tend to believe Max Keiser when he said China and Germany have already been buying again. If so, they will wait to announce as to not drive the price further.

Martijn said...

Also interesting: the Aussies have raised interest again.

Martijn said...

The plot thickens: Banks are worse than Enron.
By an ex-Goldman employee.

Off course we knew this already, but as I said before: timing remains difficult. However, future turbulence seems guaranteed.

Martijn said...

I've read statements like these a hundred times, but so far the COMEX has held its ground. However, the developments in the gold market remain interesting:

And for gold... it's now official. In living, breathing black and white... the net short position in gold [at the end of trading last Tuesday] is now sitting at 30.6 million ounces... as the bullion banks increased their net short position by an obscene 31,297 contracts [during the last reporting period] to a total net short position of 306,104 contracts. A back-of-the-napkin calculation shows that '4 or less' bullion banks are short around 17 million ounces of gold... and '8 or less' bullion banks are short around 26 million ounces of the stuff. The concentrated short position in gold has skyrocketed to almost the same obscene levels as silver... as fewer and fewer bullion banks hold larger and larger amounts of short positions..

..As Ted Butler has said many times, it's how this "crime in progress" on the Comex is going to resolve itself that will determine where the price goes to from here. Yes, the bullion banks may get over run with this monstrous short position in place... an outcome that I'm cheering for. But, if/when it does happen, it will be for the very first time. The other outcome is an engineered price decline by these same banks. The one that was attempted during Friday trading in Hong Kong didn't turn out the way they would have hoped... as both gold and silver came roaring back to almost unchanged within 12 hours.

That might have been China. As I said before: the plot thickens.

Martijn said...

More on the Comex

Martijn said...

Interesting thought: if people start using substitutes for money, that could be a source of inflation.

This is a rather deep one I reckon, but all the more interesting.

Martijn said...

Many good links today.

A working paper by professors Carmen Reinhart (University of Maryland) and Ken Rogoff (Harvard) called “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises,” (below) advises that major default episodes are typically spaced some years (or decades) apart, creating an illusion that ‘this time is different’ among policymakers and investors.

The authors also point out that there’s been far too little attention to how much domestic debt (as opposed to foreign debt that’s owned by offshore investors) influences the general trend in defaults and restructurings.


Anonymous said...


Good piece you found at Jesse's Cafe.

" Conclusion: guess you can no longer get bullion via using comex contracts. This apparently is the next step in the evolution of gold trading. "

So is that the way they will try to maintain gold prices where they are?

Will they succeed?

Anonymous said...

Yeah Baby! Get Some!

Anonymous said...

Au breached $1200! congrats... now on to Alf's and Martin A's numbers.

The scheissesturm is upon us. The Dubai sheikh's bewildered expressions are the only amusing part about this very grim and unfunny phase we are entering.

The Dubai Finance minister lectured creditors for their lack of due diligence in investing in state-owned Dubai World. Incredible really.


Martijn said...

So far nothing has been solved. Housing, commercial real estate and credit card are still in terrible shape, banks are window dressing their balances, and the fundamentals for the UK, US and some countries are in an awful shape, as I've indicated above. And although we haven't heard too much about it lately, there is still the derivative market.

As was proven by Japan today the main medicine the doctors continue to use for curing for this mess is QE. Needles to say that it won't work, but it might buy some time.

Although things continue to degrade, the world will also learn to adopt to this new reality. Ask any Russian or Argentinian for that part.

I do not believe we shall get out of this mess without doing some major remodeling to the financial system - be that voluntary or not.

Still the timing is the difficult part. It might take five year, but it might already come as soon as next year.

Anonymous said...

A government that is close to bankruptcy is not the same as the government about to disappear.

Governments do not have any money, they collect money from us, the people. The amount that is sitting in their coffins is determined by the ratio of their collections to their spending. The closer this ratio to 1 the better government it is (it spends every dime it collects), meaning that the good government is on the brink of insolvency every day.

Now, that was just the ratio of collections to expenditures. However, what determines the level of life is the ratio of goods produced to the goods collected by the government. The closer this one is to 1 the worse and more tyrannical is the government.

So, to say that the government is on the verge of bankruptcy is to say that things are normal. Our government needs only to change the collection ratio by either increasing the collections or decreasing the expenditures.

A simple default on bloodsucking boomers who created the whole boondoggle of fascistic entitlements (social security, etc.) will do wonders. Likewise, a default of foreign debt will help.

There is nothing indicative of the end of the government when it is broke. Broke - is what governments are and supposed to be. This is a continuous illusion to think that broke government is a change.

The government has been broke in 1920s, 1930s, 1970s, 1980s, 1990s, and yesterday. Every time it needs to readjust it simply raises the collections or defaults on some promises.

This is the whole point of government, to be able to legally default on promises.

Anonymous said...

Yes, I know. It's stupid an racist. HhHaHa. But some smart people here should maybe read "The Protocols of th Elders of Sion". Of course ridiculous.

Martijn said...

Ted Butler has something to say about the comex.

Martijn said...

According to Butler, China is the real short behind the COMEX, not JP of HSBC or some other bank.

Martijn said...

Quite a story from Ted. If China is the main short they might have been doing it in order to draw in some bullion at low paper prices.

Anyone familiar with this story?

He is mainly talking silver btw, but does mention gold as well.

rajah said...

Anonymous (@11:39 AM) said...

The government has been broke in 1920s, 1930s, 1970s, 1980s, 1990s, and yesterday. Every time it needs to readjust it simply raises the collections or defaults on some promises.

There is a big difference between being broke with total debt 10% of GPD and and tax rates of 10% and total debt being 200% of GDP and aggregated tax rates at 60%.

In the latter case, the system has already discounted all future income flows at current interest rates, and there is no room to manoever, especially once interest rates start rising...

Anonymous said...


Yes, there is. So, the next step is to default on some debt, that's it.

Default on foreign debt, default on some domestic debt, devalue the currency against assets...

Nothing that can not be fixed...

Exchange first 10,000 for a new currency at 1:1, then up to 1 000 000 at 5:1, the rest at 10:1. Easy.

Anonymous said...


"In the latter case, the system has already discounted all future income flows at current interest rates, and there is no room to manoever, especially once interest rates start rising..."

Yes. I agree. But, you're thinking as an economic player. The government is not a player, it is a ruler. Where a player will have to fold, because he has come up against a set of rules and has no where else to go, the government will simply change the rules.

This is why it makes no sense to say that the government is broke.

A better question to ask is "Is the government about to lose it's legitimacy? (it's mandate to change rules at will)"

Siege said...

@ Anon 1:28

I would agree, however the US has used liquidity to fuel consumption for nearly 100 years. The USD was originally accepted through the creation of OPEC and on the US's good strength as a creditor nation. Today, the only things keeping nations in the USD are convenience, the challenge of change, the pool of green paper nations once saw as wealth, and fear mongering.

You are correct that the US can choose to default, but in doing so it loses two things. The first is the excess currently flowing into the boarders. This means a drop in quality of life. An instant drop. The second is the military might. The US's armed forces are sustainable because the US can print currency to maintain them and have it accepted abroad. Can you imagine trying to run the military engine if said currency was worth it's weight in paper abroad? That's what revaluation would do to an international currency. That's why remote embassies were told to have a year worth of local currencies on hand. The USD won't be accepted if or after a revalution happens.

You are right that pulling the trigger is easy. But to assume revaluation would be so comfortable... well that's assuming too much.

The US government's wealth has never been money. It has been power, credit worthiness, and the system it designed to create a systemic need for USD. Break this and break the gov't. We all know this is broken, therefore... government is broke.

Anonymous said...

"Maybe it is just me, but I am increasingly worried over what is coming this way. The market action in gold tells me that it is something ominous… hopefully it is just a bad pepperoni pizza that has me on edge! To see a stock market that is oblivious to the real world continually chugging merrily higher and higher while its underlying currency is teetering on a precipice is like watching something out of the movie, “the Matrix”."


Ominous disconnect indeed. I am worried too. Animals are starting to head for higher ground....
TS is about to HTF big time! I feel it in me bones.


Anonymous said...

@ Siege:

Agree. That's the proper way to see if the government is broke or not.

I also agree that the default will be followed by a sharp readjustment.

I wonder in they are (the govt.) have already figured it out that the newly placed dictator learns to dislike the green paper faster that his country can be inflation-taxed to repay for the war effort of the replacement of previously placed dictator. This might be the problem in Iraq. It could be that it is immediately clear that any new dictatorship will drop the usd as soon as us pulls out.

Anonymous said...

North Korea and Currency Devaluations
Tuesday, December 1. 2009
Posted by Karl Denninger in Musings at 15:48
(Page 1 of 318, totaling 1589 entries) » next page
North Korea and Currency Devaluations

Here's what just happened over in North Korea:

TOKYO -- Chaos reportedly erupted in North Korea on Tuesday after the government of Kim Jong Il revalued the country's currency, sharply restricting the amount of old bills that could be traded for new and wiping out personal savings.


The revaluation replaces 1,000 won notes with 10 won notes, but strictly limits the amount of old currency that can be exchanged, news reports said.


You had $100,000, you now have $1,000.

You had $100,000,000 (one hundred million), you now have one million.

Oh, and if you tried to cheat by taking it out of the system, only $40 of it is exchangeable - the rest is worth nothing.

Yes, this is North Korea, and Kim Jung-Il isn't exactly a nice guy.

Now let's ask the question nobody wants to ask:

Is America proceeding inexorably down a path where "the wise guys" - that would be Bernanke, Obama, Geithner - have such a plan "in their back pocket" if the dollar should happen to decline precipitously? If the market refuses to buy bonds and they can't finance spending $1.5 trillion more than they take in via taxes?

Remember, Henry Paulson had drawn up the "TARP/EESA" plan in his back pocket six months before he locked Congress in a room one dark September night in 2008 and used it to extort $700 billion of taxpayer money to bail out the banksters on Wall Street, coordinating that with $11 trillion more of Fed and Treasury "commitments." He lied about it being a "necessary immediate response" to an "unforeseen" circumstance - the truth is that he drew up his evil plan and then waited for an appropriate time when he could ramrod it through Congress under threat of martial law.

I'm sure you think it won't happen again, right? We got "change" in November of 2008, yes?


If such a plan was in place the winning strategy would be to take every possible dollar in credit you could - all of it - and intentionally default. If they do something like this you win huge.

If you don't do it - even if you're nominally rich right now - you're broke.

Given how obstructionist, intentionally deceitful and opaque The Federal Reserve and Treasury have been up until now, how certain are you they wouldn't try something like this?

Something to think about, and for those who say that no government would do something like that, remember this: In North Korea, they just did.

PS: No, gold won't save you if that sort of thing happens.

Museice said...


Thanks for the links!
Keep drinking the coffee if it helps your contributions to the conversation.

SatyaPranava said...

do you have a link (preferably from "official" media) to the paulson story? i remember reading it, but coudln't find it when i looked for it again.

also, why do you say that gold (and presuming silver) wouldn't help in such a massive devaluation.

i think most on this board believe that many if not all govts are capable of that, and in fact the most greedy/desperate...either way, we "lose" :) as our govt is both.

also, in your estimation, since you advised running up all credit, presuming they couldn't do a deflationary headfake first, what do you suppose they spend all their reserves of credit on before massive default?

SatyaPranava said...

@protocols of the learned elders of zion:

those protocols are a known forgery of freemason protocols from teh 1850s/60s. but who knows if the original mason documents weren't forgeries as well. i doubt the jews or masons are stupid enough to put such blatant propaganda into writing for all to see...even the nazis were smart enough to avoid that.

Anonymous said...

Maybe in the coming chaos Karl Denninger will be able to exchange his wig for something useful...

like a fridge magnet?

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