Friday, December 4, 2009

Green Shoot Alert --> Nov. Unemployment Down!

ZH - Unemployment Drops Amazingly To 10%, NFP Down 11.000 Much Higher Than Consensus, 17.2% U-6 Unemployment


willdue said...

Unless you want to live under a UN led dictatorial, unelected global government, diluting powers of nation states, seizing control of the global economy, eviscerating the middle class with a raft of new regulations and laws, shutting down industry with impossible CO2 reduction mandates, while erecting environmentalism, which is really a thin veil for global fascism, as the new universal religion,

read and sign the petition in the following link opposing cap-and-trade and an email will be automatically sent to President Obama, your US Senators and your US Representative. Then forward it to everyone you know.

The site is easy and I imagine it will be effective. You may choose to send e-mails AND printed hand-delivered letters which you are free to edit how you wish.

costata said...


As I mentioned in an earlier comment I am operating on the assumption that the trinket jewellery trade will be priced out of the gold market at some point by competition from investment demand.

(NB I exclude the bullion jewellery markets of Asia and India.)

If you agree with this idea do you have any sense of the price level that would be required to accomplish this?

I speculate on this matter because I imagine that release of the extra supply would push the gold price into a period of consolidation.

The anti-gold shills would likely sound the death of the bull again.

Then when gold resumes its upward rise what arguments would they have left?

BTW do you have an earlier post, or links to other posts, describing obstacles that would need to be overcome on the way to Freegold?

FOFOA said...

Hello Costata,

"I speculate on this matter because I imagine that release of the extra supply would push the gold price into a period of consolidation."

The consolidation is happening right now as gold jewelry is traded in through Cash4Gold and melted down into bars and coins.

As the price rises further the jewelry left in private hands will be in stronger hands, and will begin to be viewed as very valuable.

Also, new gold jewelry production will dwindle as the price of raw material rises and investment demand soaks up that which previously went into jewelry.

The premium value on jewelry will dwindle in percentage terms relative to the bullion value the same as the premium on coins, numismatics, etc... This will also slow jewelry production and sales, but it won't necessarily draw existing gold jewelry out of hiding as it becomes valued as wealth. The bullion value will rise faster than the premium (percentage) disappears. Gold jewelry will not lose value. It will simply gain it at a slightly slower pace when compared to its retail cost. Premiums will not fall in nominal terms, only in relative terms.

I don't see jewelry as an obstacle to Freegold. In fact, I don't see any obstacles to Freegold. I personally see Freegold as a certainty. I will expand on this Thought in my next post. I see hyperinflation as slightly less of a certainty, or as I call it, a near-certainty. This is why my focus on this blog is primarily on these two extremely high probability events, and why I shy away from making predictions on less probable scenarios which, in my mind, will have to conform to realities that have become unavoidable.

Right now gold is still trading as a commodity. But even so, I don't see jewelry as a major factor. Remember that new mining supply and jewelry demand are small factors compared to the sum total of wealth gold, which is a non-consumed commodity.

Did you read Muse's link? It is very good. Not exactly on target, but as close as I have seen in a long time.

Hope this helps.

FOFOA said...

From Muse's link: Unqualified Reservations...

I especially liked the last line:

"When the impossible is eliminated, the improbable becomes a certainty."

It is a variation on an old Sherlock Holmes quote:

"When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth."
(from The Adventure of The Blanched Soldier)

costata said...

Hello FOFOA,

I did read the article at Muse's link. I think the author's theory is plausible. It certainly has positive implications for Freegold.

It struck me as somewhat akin to the human behaviour described as "spontaneous organisation". You can often see this at work in emergencies.

Thank you for sharing your thoughts on the jewellery segment.

PS. I have been at a couple of blogs earlier today where the latest employment numbers and non-manufacturing statistics are being discussed. No good news I'm afraid.

Museice said...

I apologize if this has been linked before.

Greenspan-Guidotti Rule

"The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.

So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default."

DiverCity said...

Mencius Moldbug is quite the character and entertaining if verbose writer. I credit him in no small part with piquing my interest in the yellow metal.

dojufitz said...

so if the USA is going to default....what happens to the price of Gold and Silver?

Do they double? Triple?
Or stay at about $1200?
Please explain. Thanks.

FOFOA said...

Well you sure came to the right place. See "Blog Archive" for more.

And welcome, Dojufitz. I see you are already on the trail...
"Gold $5000+"

FOFOA said...


Another great article. Belgian also posted it the other day (somewhere else), as such...

The bankruptcy of the United States is now certain

From Porter Stansberry in the S&A Digest:

It's one of those numbers that's so unbelievable you have to actually think about it for a while... 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. Where will the money come from?

But remember that there is more than one way for the US to default! This it the key!!

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

All modern digital currencies do not go into an investment, they move THROUGH it. The US unit is only an exchange medium to acquire assets valued in dollars. US government bonds are the usual holding. No CB holds any currency! They hold the bonds of that currency...

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

The so-called monetary economists all focus on the transactional currency when predicting inflation or deflation, while the real dollar hyperinflation of the past 38 years has happened in dollar-denominated debt "assets". It is when they save these assets (which they ARE doing) that we get practical hyperinflation in the transactional currency. FOA said it...

"My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationists get their direction. Not seeing that hyperinflation is the process of saving debt at all costs..."


Callistenes said...

Hey Fofoa, just got back from Thailand, the TMB banks there have atms that will give out gold. I ran out of time the last day but next time I'm there I'll will try it out.
Couldn't read the whole thing (Its in Thai obviously). The other thing I noticed is that the currency exchanges in Pattaya for TMB absolutely will NOT take US $100 bills with a date before 2006.

Kewl said...

And in Bangkok they won't take 100$ before 2003 if I remember well. And if they do you'll get lower rate.

rajah said...


That the Saudi's are satisfied is worrying. Do you think there could be a resumption of Another's "gold premium" in the oil price?

Saudi oil minister calls current global oil prices of around $75 a barrel 'perfect'

SatyaPranava said...

can one of you please eplain why a paper currency would only be accepted before a particular date?

new stuff to easy to counterfeit?

new stuff considered illegitimate?


FOFOA said...


I think you have it backwards. The old stuff has been heavily counterfeited and they only take the new stuff. It lowers the risk of ending up with counterfeits.

costata said...

Hi All,

Does anyone have an opinion about his conclusion that the Indian Govt will ultimately start dumping forex reserves to buy food?

Eric deCarbonnel reports at his site

1) India is bracing itself for nationwide protests against spiralling prices, which will lead to instability if left unchecked.

2) In a desperate bid to hold the prices in line, the government has already banned export of all food items, including wheat and rice.

5) Food prices are rising at unforgivable 17.7 per cent for the third week of November.

6) Food prices are rising faster than any other commodity and food prices hit the poor the most.

Conclusion: I can just picture someone at the US treasury/Fed being in constant contact with the Indian government while begging/threatening them not to start dumping their Forex reserves. However, it is simply a matter of time before domestic anger over soaring food prices forces the government to start dumping their dollar holdings."

costata said...

In my earlier comment about India for "forex reserves" please read US debt instruments as per FOFOA's insightful post about "passing through currencies".

Bombshell from Max Keiser's On The Edge program.

In the first 4 minute segment he shows a clip of a guest analyst on CNBC by the name of Jim Ackland claiming that the "countdown to an attack on Iran by Israel has begun". He claims it will be March or April, 2010.

I have seen other clips of this analyst and he never struck me as hysterical. Which, I hasten to add, does not mean that I think he is correct.

Also the investigative journalist Wayne Matson claims that US Special Forces are training in the Nevada Desert in cold war era nuclear bomb test facilities. He claims this training is to prepare for assaults on fortified, underground complexes.

One of Jim Sinclair's longstanding predictions is that "Israel will make a miscalculation".

Any views on how this economic and monetary crisis evolves?

Can anyone see any advantage to the Giants in engineering a large scale war?

FOFOA said...

More on Dubai...

How Dubai's burst bubble has left behind the last days of Rome

"...Ross, who asked not to be identified, is one of countless expatriates who have been caught out by the collapse in Dubai’s once-booming property market.

Like many he bought a flat off-plan in what was a red-hot property market. Today he is trapped, his passport confiscated until he repays bank loans he used to invest in a property that may never exist. If his work dries up before he can clear his debts he will go to jail...

Borrowing from family to supplement his savings, Ross, in his early thirties, moved with his family to Dubai from South London in late 2006, put down a £60,000 deposit and arranged a £30,000 loan to help to cover the initial instalments on a £350,000 two-bedroom apartment in the Dubai Sports City development.

“The plan was to let the place out to cover the loan and mortgage but it was scheduled for completion by the end of 2008 and they haven’t finished the ground floor yet,” he said. Without the apartment to boost the family’s income, the high cost of living forced them back to Britain. The debts became overwhelming in a city where non-payment is a criminal offence. Ross returned for some contract work but he was held on arrival at the airport by the police..."

Dubai Wipeout

"...Dubai has nothing but space and desert. I was shocked when they spent tens of billions of dollars, on the world's biggest dredging operation. Just so they could create islands shaped like palm trees -- and then build mansions and luxury hotels on these islands. Talk about insanity. Now you can have your pick of them for 20 cents on the dollar. They built the world first 100 billion dollar deserted islands..."

raptor said...

Did you guys also read the Muse's sublink-link :

DiverCity said...

Here's an interesting article on Dubai with a lot of good background on the insanity of the whole thing:

Disclaimer: The guy is a loon with respect to gold and oil. He strikes me as an anti-gold Jim Willie.

DiverCity said...

Meant to add that the article is noteworthy for the pictures of the incredible waste, opulence and largesse of the building binge there.

DiverCity said...

Sorry FOFOA. I see now that the link I posted is the same as one of yours. I hadn't clicked on your second link -- thought it was the same as the other.

costata said...


I read the John Law article. I have heard a similar argument from another source.

This is the first time I have heard of any developed country Central Bank "fessing up" on leasing.

From the John Law article:
"Some analysts estimate that since the 1980s, central banks have lost more than half of their gold through leasing. Portugal released this figure, perhaps accidentally, in 2001; it had lost 70% of its gold."

I have seen nothing on GATA's site about this. FOFOA, Is this old news?

FOFOA said...

Re: Portugal


...but last month the Bank of Portugal made an announcement that shocked those who credit official gold-reserve data and added fuel to the contention of the gold bugs that the "gold-cartel" manipulation is in meltdown.

What the Bank of Portugal revealed in its 2001 annual report is that 433 tonnes [metric tons] of gold -- some 70 percent of its gold reserve -- either have been lent or swapped into the market.

...The Bank of Finland and the Bank of Portugal also confirmed in writing that the swapped gold remains a reserve asset under IMF regulations.

...The recent release by the Bank of Portugal is important. When a central bank has 70 percent of its gold loaned or swapped, I don't think it is operating independently, and I suspect there are an awful lot of them that have loaned out much more than has been reported."

costata said...


Thank you. You are a font of knowledge in matters shiny, yellow and metallic.

"...The Bank of Finland and the Bank of Portugal also confirmed in writing that the swapped gold remains a reserve asset under IMF regulations."

I laughed out loud when I read that paragraph. On a positive note I guess the "written confirmation" wouldn't hurt as much if you dropped it on your foot.

FOFOA said...

"...The Bank of England and the Federal Reserve Bank also confirmed in writing that gold plated tungsten remains a reserve asset under IMF regulations."

FOFOA said...

That's a joke.

or is it?

Desperado said...

Holy Cow Fofoa, that is a great piece on Portugal.

A NWO conspiracy follower would immediately realize that Timmy Geitner was director of the Policy Development and Review Department (2001-2003) at the International Monetary Fund right before Portugal admitted that the gold was gone. Geitner then went to the NYFRB and became Vice Chairman of the Federal Open Market Committee. Geitner was at the center of this entire gold leasing debacle.

It is now clear that the financial system is completely screwed up, but this article is proof that Timmy and TPTB had already broken the system in 2003. I just can't comprehend the lunacy of something like leasing or renting gold. All I can think of is "what kind of idiot...". Well Timmy is either that big of an idiot, or there is something much more nefarious going on.

SatyaPranava said...

@desperado...great info. why don't we call Geithner...

timmy tungsten :)

Martijn said...

Well Timmy is either that big of an idiot, or there is something much more nefarious going on.

If you were running scams at the "NWO"-level, would you have them headed by an idiot?

Martijn said...


Interesting article from DeCarbonnel indeed. I tend to believe he makes a valid point. Should India start dumping the bear is loose...

Martijn said...

According to a September assessment, if the United States or Israel decide to bomb Tehran's nuclear sites, Iran's naval modernization and maritime capabilities have reached a point where it can shut down the Strait of Hormuz, through which nearly 40 percent of the world's oil supplies pass.


idi said...

desperado/martin. good posts. I think his name is jim rickards. search him on youtube. asymmetric event like attack on iran is perfect for next phase of collapse. global public fully innoculated/prepared so i think its likely.

Aleksandar said...

To all europeans reading this board, I have a Q:

Do you pay capital gains tax on gold in the EU? Or, if it differs between member states, in The Netherlands?

idi said...

fofoa; what is your considered opinion on John Williams' latest (12/2) hyperinflation report? I think it is unassailable but would value your thoughts.

Desperado said...

Aleksandar: Switzerland has no capital gains tax on gold sales, but it has a wealth tax that is highly dependent on your Kanton's tax rate. Interestingly, Switzerland charges a 7.6% VAT on silver, but not on gold...

Some Swiss Kantons also make "Pauschalabkommen" with the ex-pat rich where they pay a fixed amount every year and never even have to declare all their worldwide assets or income. This is very popular with the jet(owner)-set, but I think it is great even though I am not even close to being able to benefit from one of these tax-agreements.

Kanton Schwyz has the lowest tax rates in Switzerland, and it has been able to accomplish this by attracting corporations and individuals by keeping rates the lowest in Switzerland. Tax competition is a critical communal freedom, close in importance even to free speech, and it is what the world should have been fighting for long before buying into the global warming fraud.

FOFOA said...

Hello Idi,

Is there a public version of the update? It looks like the new updated report is for subscribers only, which I am not. The original 2008 report was quite influential in my thinking at the time. And I agree with Williams that the outlook remains mostly unchanged a year and a half later. If anything it is much worse now, even if it doesn't feel so on a visceral level.

Here is all I see that is a public update. Please let me know if I am missing something.

Williams: "How has the hyperinflation outlook changed since the Hyperinflation Special Report was published in April 2008?" Such is the most frequently asked question I receive these days.

The answer is that the outlook is little changed, since the following report outlines the basic issues and limited options for the U.S. government that were in play well before the current crises broke. The actions taken since by the federal government, U.S. Treasury and the Federal Reserve, in response to the still-deepening recession and ongoing systemic solvency woes, just exacerbated the long-range problems described in the report. The official actions likely have advanced the timing of the hyperinflation to the much nearer future, perhaps within the next year or two. Since September 2008, the Federal Reserve has been attempting to debase the U.S. dollar at an extraordinary pace, and such now is recognized widely among the major U.S. trading partners."


Martijn said...

You guys might like this article arguing that the Fed will be ended in return for some new currency.

FOFOA said...

Speaking of taxes, did you guys see the new "Google Financial Translator" at Zero Hedge? Hilarious and tragic at the same time. Here are the two sample images...

Image 1
Image 2

Aleksandar said...

Thanks Desperado. I like Switzerland.

We have here in NL "vermogensbelasting" which is I believe different from what the western world calls capital gains tax.

I just want to establish if gold, as a wealth (now still "investment") asset, already has some "freegold" properties here in the EU, at least on the fiscal side.

It is also worth watching when or if those rules are challenged by hungly government parasites.

idi said...

FOFOA; thanks. My shadowstats subscription is priceless and I would highly recommend it to you and others. The 2008 hyperinflation report was seminal. It kicked me out of my trance into pre-emptive action. I have not read any criticism whatsoever of this profound and unemotional analysis.

FOFOA said...


I agree. I have a printout of the original report and I have shared it with relatives that stay at my home. Seminal is a very good description.


FOFOA said...


That article presents an intriguing thought. That they would deliver the final death blow to the dollar with Ron Paul's signature right at the top. A kind of "be careful what you ask for" irony. Sounds plausible if not probable. I still thing Mr. Market will beat them to it, but what the hell do I know?

If that IS the plan and any of it leaks out then Mr. Market WILL beat them to it and steal most of the benefit from them. Mr. Market can make it happen in the blink of an eye, but an organized plan takes time and airtight secrecy. This makes such a big plan quite risky and therefore less likely. Remember The Virgin's Lover?

"She shook her head in silence. “We are calling in the coins and issuing new,” she said. “It is Gresham’s plan -- you know of it yourself. We have to make the coins anew.”

Robert let go of her hand and walked to the center of the room while she sat and watched him wondering what he would do. She realized that the sinking feeling in her belly was apprehension. For the first time in her life she was afraid what a man was thinking of her -- not for policy but for love.

“Robert, don’t be angry with me. I didn’t mean to disadvantage you,” she said and heard the weakness in her own voice.

“I know,” he said shortly. “It is partly that which amazes me. Did you not think that this would cost me money?”

She gasped. “I only thought it had to be a secret, a tremendous secret, or everyone will trade among themselves and the coins will be worse and worse regarded,” she said quickly. “It is an awful thing, Robert, to know that people think that your very coins are next to worthless.”


tdfxman said...

A kind of "be careful what you ask for" irony. Sounds plausible if not probable.

And then when "they" give us the next solution who are the "elected" to challenge what we do.

It just sets us up to be less able to stop the next game. I am sure of that part, the next game will be the last.

I guess we can't post now as before. No anon. at least my page is different and don't see the choices I used to have.

I hope Mr. Market beats them to it.

It is sad we loose a lot of give and take with no anon's.

I await your reply to all the folks, and anon's, who think that freegold has "no chance".

FOFOA said...


You are confusing the "hot lead" game of forced transactional currency use with the "confidence game" (con game) of global wealth reserve capture. Right now the dollar has both. Even if Mr. Market does NOT beat them to it, the new "dollar" will only have one, not the other. This is the very essence of Freegold. The separation of basic monetary functions in global consciousness.

Such an in-your-face move as is suggested in that Whiskey and Gunpowder article would not only deliver the deathblow to the dollar, but also to the idea that any fiat currency can ever again be a reliable wealth reserve. Kim Jong-il doing it is one thing. But the United States doing it proactively is quite different.

I have said it many times that they can always force you to earn and spend their currency. But they cannot force you to save it for future value. Savings capture is a confidence game, not a hot lead game. Always has been, always will be.

BTW, anyone can still post, you just have to create an identity so we can identify you from comment to comment. It's free, easy and anonymous. And it eliminates 90% of the trolls.


Shanti said...

Gold bars/coins can be seen as an (art) collection ;-)

Museice said...

My favorite quote from the SafeHaven article 'Why the Global Financial System is About to Collapse' is:
"Absent significant transmutation or extraterrestrial trade, the number of gold atoms on Earth is fixed. All humans can do is move them around for our own convenience - in other words, collect them. So we can call gold a "collectible."

Because it cannot be produced, the price of a collectible is arbitrary."

Anonymous said...

@Callistenes - Are you sure about TMB ATMs dispensing gold? I live in Thailand and can read Thai to a limited extent. TMB has a promotion where you can receive gold when you buy life insurance, though I have not read anything about their ATMs dispensing gold. Here's a link to the life insurance promotion if you want to take a look. Maybe it's what you saw promoted on their ATM machines?

@FOFOA - Great blog by the way. I've been lurking for several months and visit daily.

Mike in Thailand

raptor said...

I expected the dollar to strengthen i.e. bear rally from around 3-4 weeks.. it never materialized ... 300b monetizing stopped, ty's unwinded 200b support .. the only thing left was 300-400b! from 1.2T MBS fed support... but it seems it just stopped the drop at ~75 USDX temporarily..

If ECB is tightening we may not see this $ rally at all.
What do you think ?

Scroll down to :
ECB to unwind support for banks

The European Central Bank’s emergency financial market support measures are set to be unwound from this month after Jean-Claude Trichet, ECB president, rebuffed International Monetary Fund calls to err on the side of delaying “exit strategies”. The ECB moved on Thursday to limit demand for one-year liquidity in an operation that will take place later this month and told eurozone banks that other, shorter-term liquidity-boosting operations would be scaled back in 2010. Mr Trichet cited improved financial market conditions and said liquidity would remain “extremely abundant” for many months. A final, unlimited offer of six-month liquidity in March will tide banks over until at least September 2010. The ECB also took account of the continuing weakness of some eurozone banks.

costata said...


"If that IS the plan and any of it leaks out then Mr. Market WILL beat them to it and steal most of it from them. Mr. Market can make it happen in the blink of an eye, but an organized plan takes time and airtight secrecy."

Beg to differ. The biggest pile of cash left in the US is the remaining assets of the little people - around $12 Trillion by one estimate I read before the latest stock market rally.

This new for old currency exchange would aggregate these individually small amounts right down to the level of the coins in Joe Sixpack's couch.

It also rips off any remaining holders of USD outside the states to the tune of 100s of billions if not trillions.

As you have pointed out the US has done this twice before in gold. Why not a continuity of policy in this area as well?

Last but not least: instead of "Mr. Market" I think the term should be Mr. Manipulation.

FOFOA said...

Hello Costata,

If I understand you correctly (after a bottle of very fine wine), then you are misunderstanding my comment.

It is the issuers of this "new currency" that stand to benefit (steal) the most in this move. If the news (of the plan) leaks out prematurely, then "Mr. Market" will arbitrage down the value (of the old currency, pre-exchange) that is being stolen by "the issuer".

Mr. Market = "the aggregate of all participants in the marketplace". So if Mr. Market gets a credible leak, then "he" will arbitrage himself right out of "the dollar", driving the real value of the dollar way down before the planned exchange.

In this case, "Mr. Market" (which includes you, me and all those little people with $12T in savings as well as the foreigners with 100's of billions) will "steal" the bounty that TPTB ("Obama/Geithner" etc.) planned to confiscate in the devaluation.

Mr. Market is us (so to speak). We still lose, but not as much if we get a credible leak.


Martijn said...


I agree that such a plan would require airtight security. I also deem it an option; the US has done so in the past, they are moving all the trouble into the fed which makes sense if it is to be killed, and we have heard of a new coin being issued before. In my book it constitutes an interesting scenario at least.

FOFOA said...


Agreed. But just for the record there were some serious credibility issues with the Amero coin stories. I am well aware of Hal Turner, his issues and his background, and I don't hold much stock in him or his version of "the Amero plot".


J said...

I have not seen the Gold dispensing ATM's in Thailand either.

If you know the location I'll be sure to check it out.

Martijn said...


I agree on that as well. These days one can read almost anything imaginable and the fact that some stories on the Amero were published does not make them true. So far I did not deem them very credible, but let's say it's not impossible.
There have also been some stories on a bank holiday which were off the same credibility. They would also fit this scenario quite well although that does not make them or the scenario any more true.
Let's keep the possibility in the background and remain open to more clues.

FOFOA said...


Agreed. Assuming these stories have a truthful beginning, I imagine they were scenarios discussed at the highest level. It is protocol to anticipate and discuss every possible scenario when you are in charge. And then some details of the discussion leak out and a few people run with it. It becomes a story with imminent implications but low real probability.


Martijn said...

Will the dollar rally further?

Fundamentals might not look that wonderful, but as long as the paper game remains, many of the general market rules might remain. The dollar has been massively oversold for quite a while and that has now been corrected a bit. The correction might however gain a bit more ground this week.

So far Sinclair's timing on the death of the dollar seems to have been a bit off, hasn't it?

idi said...

martijn; would not get hung up on precise timing of these events (JS prediction). notoriously difficult in an unrigged market..... impossible when it is otherwise. the thesis remains bulletproof in my opinion.

Martijn said...


It is difficult indeed, even for more experienced people than myself such as Jim. Him being off could indicate that Bernanke et al. might still have a bit more power over the market then many would like to admit - at least on the short run.

And before people start yelling that I am a Bernanke-admirer or the like: above I did not say that the situation looks all that wonderful or that Bernanke is in total control. On the short run there might however be a bit more to international monetary games and the end of the USD then the mere fact that Bernanke has a printing press. For the long(er) run I have not seen all that many positive developments at all.

GOLD FREAK said...

Every action has an equal but opposite reaction. I expect to see some huge up days in the next couple of weeks.

if they exert "power" over the market, the market will eventually snap back or the paper market will default/collapse

allen said...

FOFOA, I would like to see your comments on this or maybe even a new blog entry...

How will hyper inflation in this country unfold? When one starts to think about it, there are many possible catalysts and outcomes. For one, if you follow a pure academic model of, too much money chasing too few goods, how does that play out in a world of massive exporting and importing. From what I have uncovered, Germany’s massive hyperinflation after WWI was due more in part (or at least ignited by) to currency manipulation and slamming of the Mark. I guess this too could happen in the USA, but what about countries that try their currency to ours? Would a collapse in the dollar also collapse the price of the Yen? Does being the world currency change things?

A further point to study would the actual progression of massive inflation. What comes first (the whole chicken and the egg thing), do prices rise and then wages rise to keep up or do wages rise first. If one rises without the other, can you have hyper inflation? If prices go to the moon and employers don’t raise salaries, then you don’t have hyper inflation (although you have a lot of misery).

Personally, I believe that a high inflation rate will be triggered by again having high oil prices. As the dollars weakens, oil gets more expensive. As oil gets more expensive you will see fuel surcharges (just as we did in 2008). With the addition of new surcharges, you might see a rising of salaries to keep pace with everything being more expensive and then the crazy dance just takes off from there.

Anyone else have some insight?

Martijn said...


I believe hyperinflation would at some point be triggered by a loss in confidence in mint-green paper. That could be triggered by many things. A raise in salaries to compensate for any price increases is something I deem highly unlike outside of the banking sector.

Problems with states could further undermine the trust in de US economy, which by itself could at some point trigger high inflation. I could also cause inhabitants of those states to start withdrawing cash from banks and then later to start spending that cash on tangibles, which could also be inflationary.

Martijn said...

More on troubles with states.
Please don't hate me for the source this time.

Martijn said...

For those that find this funny.

Martijn said...

They do keep trying on those green shoots though.

Martijn said...

And for some fun in relation to those green shoots, read about the short squeeze in truth halfway across this article

raptor said...

Very good overview :
Marc Faber Presentation, Oct 17

costata said...


"If I understand you correctly (after a bottle of very fine wine), then you are misunderstanding my comment."

I did misunderstand your comment.

By way of confirmation I re-interpret your meaning as follows:

If it became known that this devaluation was definately going to happen the market would "front run" the move and capture most of the benefit from the issuer by devaluing the USD in advance.

Digitally speaking, are we on the same page now?

If so, I am not sure this is a reason to disbelieve the new-for-old scenario for the following reasons:

1. The people in control of the issuer may be acting in their own self interest rather than acting in the interests of the issuer.

2. The vast majority of US citizens (J6P) are not in a position to use the market to protect their interests by front running the devaluation.

3. By manipulating the markets, it seems likely to me that TPTB could keep most people guessing until they are ready to act.

Just to be on the safe side should we consider buying some gold ...

... or should we wait for written confirmation from Finland and Portugal?

FOFOA said...

Hi Costata,

I agree with your #1. I have long talked about a scorched earth retreat by the bankers, which includes Geithner and perhaps a few Senators as well. I also agree with #2 to an extent, because I wasn't thinking about J6P being the driving force. Mr. Market will collapse the dollar from the inside out if and when he expects it is going to happen anyway. #3: I agree this is what has been ongoing for the past year. It almost all came down last year in October/November. (See my reply to Allen next)

But I am more inclined to believe that TPTB are actually stupid enough to believe that they can manage perceptions and control "animal spirits" and keep things levitated under the status quo until it turns around, all the while planning their own personal retreats. I still find it much less likely that a big game changer is planned because it would be too difficult to keep it secret with the dollar being a global currency. Why stick your personal neck out to have it chopped off for being the one who killed the dollar, when you can simply plan your own escape to a life of luxury?

And yes, to be on the safe side, buy gold and don't wait for written confirmation of anything. Like I say, at some point you won't even know the price of gold. You won't get ANY written confirmation as it passes $20K and $30K....


FOFOA said...

Hello Allen,

I think it is less likely that we will see high inflation progress into hyperinflation with salaries being the distribution mechanism. What seems likely to me is that some event (there are many potential triggers) will cause the dollar to be shunned, to be repudiated around the world. This will spread very quickly, in a matter of hours or a day at the most. Cab drivers in Europe will start refusing dollars because they heard that their bank is no longer exchanging them, etc...

This even will freeze up global commerce, especially to and from the United States, but everywhere else as well. Ships will not be unloaded, some will anchor where they are. Stores will not be resupplied and prices will skyrocket based on limited supply, high demand, and a belief that the dollar is finally dead.

The government will face an existential moment where it must shut down or print outright to pay its bills and its cronies. The printing will begin and government itself across the country will be funded by the printing press in an already highly inflationary environment. Just to keep the power on and public workers going to work the government salaries will have to rise weekly and then daily. And so ends the dollar.

Something along those lines.


FOFOA said...


For those that find this funny.

Do you not even look at my posts anymore? I've had that video up there since Friday. It had 400 views when I posted it. Now it has 62,000 views (not all from here of course!)

Martijn said...


I usually read everything you write and generally check out the links too. Guess I've missed out on this one though.

costata said...

From the Times Online

"Bankers are furious that two defaulting Saudi conglomerates that owe $20 billion (£12.2 billion) appear to be favouring local banks over foreign creditors. State-owned Royal Bank of Scotland, HSBC and Standard Chartered are all understood to have exposure to Saad Group and Ahmad Hamad Algosaibi & Bros (Ahab). Dozens of other Western banks are also owed money, including Citigroup and BHP Paribas."

Perhaps Max Keiser is right in suggesting that GFC 2 will be ignited by credit issues emanating from the Middle East.

Is it contraversial to suggest that the USA has been able to get away with its recent antics because of USD hegemony?

Who else has the clout to play the big game? Oil holders? Oil AND Gold holders?

FWIW On a lighter note isn't it pure joy to witness thieves fulminating about being cheated. "Bankers are furious ...." HO HO HO

English Banker to colleague:
"You're not going to believe this Cedric. The ruddy towel heads have had the unmitigated gall to tell Lord Davies to go eff himself.

In fact, they said it in the Queen's English rather than that bloody gibberish they call a language. Can you believe their effrontery?

We need to teach them a lesson they wont forget in a hurry. Tell em to keep their bloody oil, I say. You mark my words they'll come crawling back."

FOFOA said...

Hi Muse,

That John Law article is fantastic. I, too, liked the quote you picked. Here are a few more great quotes appropriate to the discussion about a gov't planned devaluation versus a market-driven one...

"Dogs have nothing on hedge funds when it comes to smelling fear. And it's an illusion to think that the US and its allies own the global financial system.

...And yes, if the Trilateral Commission was still in charge, this never would have happened. But in reality, the US government is not a single big conspiracy, but an enormous jumble of individually gigantic agencies, each of which has its own internal culture and is utterly convinced that its own goals are identical to the public good.

...Washington certainly has its secrets, and one man's secret is another man's conspiracy, but there is no such thing as an interagency secret.

If the US federal government was a perfectly executed and utterly malevolent conspiracy to dominate the world, let's face it. The world wouldn't stand a chance.

In reality, it's neither. So a lot of things happen in the world that Washington doesn't want to see happen, and that it could easily prevent. Anticipating surprises is not its strength.

...In the end, gold is a democracy. The gold price is not set by the LBMA or the Comex. It's set by the opinions of all the people who have savings. If you could buy an ounce of gold for $1, pretty much everyone would buy all they could. If you could sell an ounce of gold for a villa in Portofino, pretty much everyone would sell all they could. Somewhere in between is the current price of gold, and all that sets it is public opinion. Of course, peoples' opinions are weighted by the size of their savings, but that's the free market for you.

The dollar is a democracy, too. I'm indebted to Dallas Fed President Richard Fisher for the phrase "faith-based currency." As we've seen, all money, natural or artificial, is faith-based. Gold is only different because no one can print it. The price of gold will never fall to zero because gold is good for capping teeth and plating plumbing fixtures. The price of dollars will never fall to zero because a dollar is made from fine rag pulp with quality recyclable fibers. But everything else is faith.

What can change this faith? And how fast can it change?

Right now, our assumption is that the answers are "very little" and "very slowly." But this may no longer be true."


FOFOA said...

This part is important...

"Of course, peoples' opinions are >>weighted<< by the size of their savings, but that's the free market for you."

In the "global democratic vote" on the value of gold, everyone doesn't have an equal vote. J6P has almost no vote while the giants of the world have the real significant vote. And those giants have turned from net sellers into net buyers for the first time ever, this year... favoring physical over paper or tungsten-filled.

Martijn said...

Some of the lesser voters have also casted a ballot.

Martijn said...

Greece is not too healthy.

UK tax payer is not too healthy.

Martijn said...

And those giants have turned from net sellers into net buyers for the first time ever, this year... favoring physical over paper or tungsten-filled.

I second that, look at OI declines on friday.

FOFOA said...

Yeah, I saw that earlier on Harvey's Organ.

Martijn said...

Honest markets...?

costata said...

FOFOA and Martijn,

"And those giants have turned from net sellers into net buyers for the first time ever, this year... favoring physical over paper or tungsten-filled."

Jim Sinclair reports that over the last two trading sessions an "Angel" (his term) has been vigorously defending the US$1,156 level.

Martijn said...


Indeed looks like there has. I wouldn't know who or what that is, but it could be one of the big votes casting a ballot there.

Martijn said...

Here is the guy from the gold coin again.

SatyaPranava said...

that guy's an ass. instead of educating people to the facts, he actively steers them in the wrong direction, even when their intuition tells them not to sign.

so he's dumbing people down, turning people who think that hyper-inflation is not good into thinking it's good, and all so he can sell some books to people who already get it?

so sad.

Martijn said...

I agree on that, although I found this clip a bit more illustrative for the uninformedness of part of the public than the previous one.

Jimmy said...

@Martijn: Thank you for the very interesting Harvey's blog. It's now one of my favorites...

Here also a very good blog:



Ps How could you make the links blue and having a direct connection without copy and paste?

Jimmy said...

Some video's about Dubai:

Jimmy said...

Gold Isn’t the Best Protection Against Inflation: Matthew Lynn

Martijn said...


Nice links. Here is how, you have to type the "a href" thing that is singled out.

Martijn said...

Could be labeled inflationary..

DiverCity said...

I missed the intitial discussion of the John Law article and thus don't have the link. Please provide a link.


Martijn said...

This is not John Law, but does provide some perspective on consumer loans:

Numbers from the FDIC reflect this shift over the past decade. At the end of the third quarter of 1999, the assets of the nation's banks totaled $5.5 trillion. As of September 30 of this year, bank assets had grown to $13.2 trillion. But commercial and industrial loans outstanding barely budged, only growing from $947 billion a decade ago to $1.27 trillion by September 30 this year. Meanwhile, loans secured by real estate increased from $1.43 trillion in the fall of 1999 to $4.5 trillion this fall. And investment in securities doubled, rising from $1.03 trillion to $2.4 trillion.

Martijn said...

And the part of the explanation shows that regulatory changes can carry more influence than perhaps was intended.

Banks increasingly have the incentive to make long-term amortizing loans secured by long-term assets because the threat of bank runs has been taken away by increases in FDIC deposit insurance. Deposit insurance started at $2,500 in the Great Depression and has increased in fits and starts to the current $250,000. With the increase in deposit insurance there is no need to maintain liquidity. So instead of making short-term, self-liquidating business lines of credit, bankers have opted for making real-estate loans.

Martijn said...

FOFOA has explained this quite well already, but here is some more for those interested in money, credit and products.

Martijn said...

A bit more on the open interest situation; it seems a bit strange..

S said...


Few links of interest


3. "Moody's fingers the U.S. and U.K. among top-rated sovereign borrowers, saying they must prove they can reduce their bulging deficits or risk a downgrade to their AAA credit ratings. Under its most pessimistic scenario, the U.S. could lose its rating in 2013 if economic growth lags, interest rates rise and the government fails to shrink the deficit or recover its loans to the financial sector"

I completley agree with you as per the trapping affect of any operation. Stealth is the name of the game (


The tunnel is narrowing at an accelerating pace

Jimmpy said...


This Dutch site might be usefull to you :

Note that the law makes a difference between commodity Gold (Tax) and Investment Gold (no tax)
Here in Belgium there are no taxes on Capital gains ("meerwaardebelasting") either. I assume this rule goes for the other EURO countries as well.

JR said...


The John Law article is in two parts:

Martijn said...

If have said this before.

The bubble is in bubble calling.

DiverCity said...

Thanks JR.

Aleksandar said...

Thanks Jimmpy.

I cant find anything on the belastingdienst site about gold for private persons (particulieren), only about businesses (zakelijk). It just says that the VAT is not applicable to investment gold. That we know already.

But for private persons, I didnt find it mentioned anywhere. This does not mean that you dont pay a tax on the profit when (if!) you sell it, just that they didnt mention in on their site. But I find it interesting that it is not mentioned in the categories where stoks, savings etc. are also mentioned, although gold went up 3x in the last years. You would think that the state will look in that direction to collect any extra property from the citizens, but no they dont!

Martijn said...

Real estate is still not healthy, according to this article. At the same time the Fed is talking about decreasing aid. They most likely won't.

Jimmy said...

Meredith Whitney: The U.S. Has Run Out of Bullets: Video

@Martijn: Thank you for the tip!

Jimmy said...

@Aleksandar: Here in Belgium, we don't pay VAT (0%) on gold as private persons. Only on silver and platinum: 21% VAT.

Jimmy said...

CHART OF THE DAY: The Amazing Spiraling Mortgage Delinquencies

The 10 Countries Most Likely To Default

Jimmy said...

Morgan Stanley: Fed to Raise Rates in 2nd Half of 2010

Jimmy said...

Global Growth Forecasts - Seeing is Believing?

Museice said...

If you haven't read 'JohnGaltFla' site Shenandoah try it (especially his The Day The Dollar Died series).

Here is his latest piece on Gold & Silver

He puts this latest price dip in perspective.

Museice said...

and Jimmy... nice links:)

costata said...


Thanks for the links.

In regard to the Top 10 it is hard to see how Venezuela made the list while it sits on so much oil etc. Is there any info on their assessment methodology?

SatyaPranava said...

@costata...i thought that was interesting as well...I realize we may not be at the top, though if the question were posed as most deserving we might.

but when i saw venezuela at the top, and thought about the gold they nationalized too, i immediately called BS (in my mind). i'm open to it being true, but suspect political influence of the list, now. But if the latter's the case, then at least they were smart enough not to make it plainly obvious by putting Cuba at the #2 position :)

Martijn said...

Back in those days if have asked and looked for a follow up, but the story seemed to have died.

Would it still be alive?

Same goes for that story on the Japanese bonds. Does smoke always mean fire?

Martijn said...

In my book it's a bit more complicated, but still...

For good measure, we believe that the U.S. Federal Reserve, watch dog of the dollar’s
purchasing power, no longer seems displeased to see a rise in the metal’s price. Their game is
reflation and they are not terribly choosy about which assets become overvalued as a result.
They are happy to inflate any and all asset classes that would serve as collateral for a renewed
binge of bank lending.

Make of it what you want, here is the source.

Martijn said...

I think those guys from above are stealth paper bugs, but still:

Cultural lag far outranks rational analysis in explaining valuation of asset classes. Once popular
mythology and the public mood become deep seated, they acquire generational roots that become
the “default” mode to set the context and assumptions of analysis. Investment behavior is slow
to reflect fundamental change that contradicts embedded beliefs. Generational shifts in outlook
and mood cause markets to overshoot within a secular, not cyclical, framework. Cultural lag is
the key to understanding why gold, ridiculously undervalued for an extended period, could be on
its way to becoming an investment bubble, perhaps several years from now. In our view, public
expectations are about to pivot in a way that will ultimately take gold to valuations that cannot be
explained by dispassionate and reasoned discourse.

Isn't that what we are seeing? That in combination with all those smart assess that have recently learned that markets sometimes produce bubbles and are all trying to beat each other in bubble calling and contrarian thinking.

I would say it is finally time for the sun of logic and original thinking to set once again. Those bubble callers are about to learn.

FOFOA said...

"The only way for a purely symbolic fiat currency to survive the sudden, self-reinforcing and complete coup de grâce (death blow) from its nemesis, gold, is for the central banker to get ahead of spontaneously exploding interest rates without completely demolishing the economy on which it feeds like a mutant parasite...

...Interest rates will rise with a vengeance, and soon. And the Fed will have no way to get out in front of them, and no desire to do so either, which would make itself look like the entity that destroyed the economy and the government's golden egg-laying goose. No, the Fed will prefer to let Mr. Market destroy its currency scam with the Chairman's remote aspiration of avoiding the hangman's noose-wielding angry mob outside with nothing left to lose."

Martijn said...

Nice quote!

Two more things explaining why recovery is not so very like but reinflation all the more wanted.
Here is a report from the world bank stating that a drastic pension crisis is imminent. Here it is argued that pensions were often used as collateral for mortgages.
Add those two and wrap it in a nice derivative layer and than try to argue that the financial system in its current form can be maintained.

FOFOA said...

The quote is from my next post.

Jimmy said...

Any knows about this? It's today teaparty...

Jimmy said...

@Fofoa: The government will possible raise the taxes with 65%. The first shot to injure the animals (people). But wounded animals could turn into savage beasts... (so my fears of 9/12)

And u writes: Interest rates will rise with a vengeance, and soon.

Yes and very high... Maybe double digit raise...

Martijn said...

Interest rates cannot raise. Not without damaging the housing market, banks, indebted countries and derivatives.

Martijn said...

With all eyes on national debts, I believe municipal bonds are in a much worse condition and have been so for a while already.

Please mind yourself that the following link is from someone who's name I must not mention here, so please do not feel obliged to hit this link, and if you do, don't start yelling at me.

Jimmy said...

@Martijn: Could you give me an example in the history why interest rates haven't raise? It's inevitable...

A quote of Voltaire (1729): “Paper money eventually returns to its intrinsic value – ZERO”

Hyperinflation is not an economic event, but a political choice... So they will do it, because they haven't any choice to blow their debts away... Like North-Korea (latest hyperinflation) or many other countries in the past...

Martijn said...

Rates can rise, but not without doing much harm. Should they rise as a result of hyperinflation the harm has already been done.
So it is possible, but it won't make people happy.

Jimmy said...

@Martijn: Yes and they will not be happy...

Jimmy said...

Again a link to read... :o)

Jimmy said...

Rick Santelli for president... :oP

i'm joking... :o)

FOFOA said...


The Fed does not actually control or set rates. It can only defend a target rate. This is why there is currently a range from 0% to .25% as the target. The Fed can offer fresh dollars at a certain rate which will affect the market, or it can pay a rate for reserves. It can also print money to buy rate-setting securities in order to manipulate market rates.

But at some point this defense of a low target rate becomes a self-defeating exercise. If the Fed buys long bonds it drives down the rate. But if it does so with printed money, it also creates an upward force on the rates which at some point passes equilibrium and takes over. It's a catch 22 for the Fed. It can't afford to raise rates for economic and political reasons, but it can't keep them down much longer either.

In the early 80's Paul Volcker stopped defending a low rate and let Mr. Market determine (raise) the rate. He could afford to do that then. Ben Bernanke does not have that option today. When Volcker stopped defending the rate he had to stop all printing. He basically stopped the presses and said the buck stops here.

Ultimately Bernanke cannot stop Mr. Market from raising the rates. But he can't get ahead of it by stopping the printing either. Obama and Congress won't let him. They would have to shut down the govt. So we will surely get hyperinflation. When you eliminate the impossible, whatever is left no matter how improbable must happen.

Jimmy said...

Owwww.... i see it yet: it was in september :-s

Here in Belgium we write 12/09/2009

And in America they write 09/12/2009

STUPID, now I'm feeling like a donkey... :o)

Martijn said...


Could we say that Bernanke et al. can either aim at saving the dollar at the expense of the financial system and most that goes with it, or try at saving financial system at the cost of the dollar and all that comes with that?

In both options he is likely to loose control somewhere as one cannot really survive without the other, but he might favor one over the other despite.

And as discussed there are some alternative options - such as abolishing the fed - for when control is lost.

Jimmy said...

@Fofoa: Thank you for "the monetary upgrading" of my knowledge. I didn't know that Volcker has the choice to stop the printing and to let Mr.Market to determine it...

So you say: "Obama and Congress won't let him." --> It's just a pollitical choice...

FOFOA said...


I have said exactly that in several posts. And FOA was saying it too back in 2000. And it is simply a foregone conclusion that Bernanke et al will save the financial system over the dollar. There is no contest. It's not even a question. It's not my opinion, it is fact.

They will save the financial system at all costs, including the loss of the dollar, which will in turn destroy the financial system.

The same thing would happen if they saved the dollar, both would fail. But they will always opt for saving the system because it is the ONLY politically palatable option.

FOFOA said...


They won't let him because it would be suicide for them. They would have to stop all payments to social security recipients, to soldiers, to IRS agents, and to themselves. They would have to shut down govt to let Bernanke save the dollar. Won't happen. Never ever.

Martijn said...


Thanks for the reassurance.

Sometimes I need some time to let stuff sink in before I really see it. It's quite clear now.

I know FOA said it too. I believe he spoke of deflation and inflation at the same time precisely because of this.

Martijn said...

Japan beating the US: GDP overstated by 300 percent

S said...


Anothe rbanker confab at the White house on Monday or so. While the MSM may fawn over the appointment of the goldne child Dimon, it will in my view be the final nail in the coffin. Read Yves this am on Wolf;s editiorial on Free trade (FT). Wolf argues the Chinese are at fault for the peg and the US obviously as well. He argues for a cooperative reset. This is a bit likte the save the financial system or the dollar problem. China has already made it clear that their market will be dominated by homegrown comapnies. Wold fails to mention that the US has a trade surplus with exactly 1 country (maybe 2 or 3). Where is the US goping to get the capital to support this position if not for the derivatives and financial complex. Is that not why the derivatives legiclation will never see the day of light in any restictive form? The derivatives complex is as importnat as the primary dealer network (ie the banks). Now the Us might argue with good reason they can;t let it fail becasue it would mean collpase, but to position the issue as a choice is nonsence. The US is in zutswig. (interestingn aside in a thread yesterday on ZH duscusing as lomng rumored move to capture capital and that would be in the 401K complex). The gov't will have to go after captive capital (both by keeping super secret any plan for fx/banks as mentioned a lot here and by looking for capital that is trapped already).

Jimmy said...

@Fofoa: Yes that's the problem of the choice between cancer and ebola... They chosen to treath cancer with radiation...

Sprott's Oliver & Horvat: Hard Assets Should Continue to Appreciate

Also they say in this article: "If you go back to the 1970s, the U.S. was going through a period of huge stagflation. And then one man sort of stood out of the crowd—Paul Volcker. When he got religion and raised interest rates and did the right thing, people absolutely hated him."

Jimmy said...

More news about Dubai:

Dubai Derivatives Financial Nuclear Blast Shockwave to Hit

Are they stupid or what? Give Dubai derivatives a price for best innovation??? Yeah, best innovation to destroy...

Leo Wang: One mystery of the Dubai debt crisis is the extremely limited information about derivatives contracts for Dubai debt.

Dubai debt crisis is not over...

Martijn said...


Great links.
From the same blog, and relevant to the above: Banana Ben needs to print again as Obama is running out of toilet paper and jobs have still not recovered.

Jimmy said...

Will Ron Paul vote against auditing Fed???

Voting against his own proposition to audit Fed??? How is this possible???

Jimmy said...

@Martijn: Yes and I wanted also to post it, but you're the first :-)

I see your comments on many blogs. You're really a blograider like me... :o)

But, it's the best method to discover the real economic world... So I predicted/foresaw the great crash... And I'm convinced you did it also...

Jimmy said...

And I'm far away of Wall Street or other bourses, because is wasting your expensive time and money.

Reading books, blogs, articles,... is not wasting your time, but investing in invaluable asset: Knowledge... And with knowledge, you could invest in the best assets/choices...

Warren Buffet does it also at his home: reading, reading, reading and is far away of the bourse. Maybe he reads also FOFOA's blog... :o)

Jimmy said...

Haha, poor idiots who invested in islands of sand in Dubai

This is really funny, investing in sinking economy and sinking islands...

They wrote on this article: "The island, dredged from the Gulf's seabed, is sinking by an average of 5 millimeters a year and may flood in the future if ocean levels rise, according to an executive at leading European ground survey company Fugro NPA Ltd."

Jimmy said...

critism on Michael Moore's movie

Martijn said...


That might not be me; I only occasionally comment on other blogs, but I tend to read from multiple sources indeed.

On the dollar vs. the system discussion, I'm sure you all read this:

Recalling a conversation with Mr Paulson, he said: “It was a political calculus. I said, ‘We don’t know how much is enough. We need as much as we can get . What about a trillion?’ ‘No way,’ Hank shook his head. I said, ‘Okay, what about 700 billion?’ We didn’t know if it would work. We had to project confidence, hold up the world. We couldn’t admit how scared we were, or how uncertain.”

Holding up the world? That is quite a thing to admit.

It's the paper world that lost its touch with the physical one as I remember discussing with FOFOA a long time ago. And they will hold it up by printing at the cost of the dollar, as there does not seem to be another way.

Jimmy said...

@Martijn: Yes i've just read it and it's a nice article...

They really doesn't know what happens and how much they need...

Like BB says: "I don't know who gets the billions..."

Jimmy said...

Analysis of Jan Hatzius, he doesn't worry about inflation risks

Chris said...

Analysis of Jan Hatzius, he doesn't worry about inflation risks

This looks less like a GS report and more like propaganda. The risks section is absurd.

Forecasting a 3% GDP rise this quarter. By what measure? Certainly not what Shadowstats will show.

Significant deficits over the next two fiscal years. What nation will buy the treasuries? This is money printing, pure and simple.

I think someone in GS took a jiffy marker to what could have once been a credible report. Doublespeak is most common when someone has a lot to lose, or a lot of fear. Still, I got a chuckly out of the fact they mention possibilities like dollar destruction. It was only a few years ago such thoughts would have never hit paper.

Jimmy said...

Interesting thougths of Shamus Cooke: End the Fed? Or End the Market Economy?

So these are good points to discuss about it:

"For example, if the U.S. were to return to the gold standard — another policy of Ron Paul — would giant corporations cease to dominate social life? Would the undemocratic power of the super-rich be somehow restricted? Would workers wages increase, enabling them to consume all the goods produced? Paul never asks such questions, but the answers are obvious — mega-corporations and the billionaires who own them will continue to wield more than votes to steer society in their favor, at the continued expense of workers’ wages."

"The goal being an un-regulated market economy, where there would be no limit to the mega-employers greed for profits, no minimum wage, no social security, no workplace protections, no social safety net, etc."

Jimmy said...

Seeking for a safe bank? Take a look in Canada:

Canadian banks are typically leveraged at 18 to 1

U.S. banks at 26 to 1

European banks at 61 to 1.

Or having a good tip for a safest bank in the world? Not the Rothschild bank please... An old bank, many generations in families hands, lowest leverage or no debts,... It would be great to know it...

robert said...


How do you feel about owning real estate right now?

I've read one of your earliest blog posts and you said that you were unclear about how well real estate would perform after the U.S. experiences hyper-inflation.

Great blog. Thank you very much!

Robert Campbell

Martijn said...

We've been talking about interest rates and saving the financial system.

Jim Sinclair today called it "PRETEND and EXTEND".

In conclusion you must know that whatever the cost in terms of continued and increased stimulation, all that is required to infinity will be provided. There will be no serious attempts to drain any liquidity. Interest rates will be held at practically zero for as long as it takes or even if the economic recovery fails.

There you have the rates. They cannot be raised, which means more printing at the cost of the dollar.

Martijn said...

Fundamentally, PRETEND and EXTEND will create an ever increasing supply of dollars and demand for borrowing, both of which stand as the last pillar in the erection of gold as a permanent building.

The only thing I have been having trouble with over the past year is that in the end it all is pretty simple.

We are talking about the system guiding the world at least partly.

Martijn said...


You were correct when you said that Sinclair did agree more with you than appeared.

In a sense hold my hand as we go through these outrageous machinations, as the price that gold is going to is much higher than I have anticipated.

Martijn said...

What's up with Volcker?
Here is more.

Martijn said...

Five minutes to midnight for Greece.

It might get nasty now.

Mind you that Christmas is coming. Should anyone want to change a couple of things with no sunlight, Christmas will be the time.

I'd say this might come rather well timed.

Martijn said...

And the UK is no different.

They must have seen this coming as did we. Would there really not be a plan B, or will those stories on bank holidays and the like turn out to make sense after all?

Martijn said...

Gold: Da boyz are back in town

Well, the bullion banks appear serious this time... but the only question is... how serious? As you are more than aware, dear reader, they were sitting on this mega-short position that had to be dealt with one way or another. As Ted Butler and I have said countless times, this short position was going to be resolved one of two ways... they were either going to get over run and the price would explode; or they would engineer a sell-off to cover as many short positions as they could. Now that we have the answer, the next two questions are; where's the bottom and how soon are we going to get there? I'll deal with that in my closing comments...

...As far as December deliveries go, the open interest for December delivery in both gold and silver declined once again. Gold o.i. fell 423 contracts to 4,833 contracts... and silver o.i. was down a smallish 81 contracts to 809 contracts. Not much chance of a delivery default here.

Martijn said...

And finally some good fun.

Martijn said...

Who said money can't keep you warm?

FOFOA said...

Hello Robert,

Real estate prices have come down a lot since I started my blog. I own my home. I am not one of these who says you should sell your home, rent and put all the money in gold. Although if you are already renting, I would not necessarily recommend buying just yet. There is a certain value in owning outright a home you are already comfortable in. You may be stuck there for a while.

Leveraged, underwater ownership is a whole different story. I would rather see those people start renting than to modify their mortgage changing it from non-recourse to recourse. This is the road to permanent slavery.

I think shelter is one of the basic needs and it is a good idea to have as much control over your own domicile as possible when heading into a chaotic time. Free and clear ownership is a good start.

I would not recommend commercial real estate or rental properties as an investment yet, although there are some unique situations in which one absolutely cannot invest in physical gold. It is simply not an option. In these cases I would say real estate is a good contender. You will likely lose some purchasing power over the long run, unlike gold where you will gain much PP, but at least RE is a physical item which makes it likely to survive a paper burn and hyperinflation. And your primary home is a physical item in your direct possession, a good combination in a paper burn.

So I would say I like outright full ownership first, renting second, and leveraged ownership least when it comes to RE.

For large amounts of money that absolutely cannot be put into physical metal, the options for safety are extremely limited right now. Bonds are at the bottom. Cash, CD's and Money Market Funds are as risky as stocks for different reasons. Real estate, if purchased well, is a reasonable option. It may even be a better bet than the GLD ETF.

Hope this helps.


FOFOA said...


You write: "Not much chance of a delivery default here." -Ed Steer

Here is a different (somewhat cynical and conspiratorial) take I just read...

"Knowing that the banking cabal controls the COMEX metal prices, ask yourself when the best time for a large market crash, a position clearing type of default would be. The kind of default that is so large as to stop exchange trading, settle the huge naked short positions and enable the COMEX to "start fresh" with a cleaner book instead of the current lopsided commercial short structure.

A basic fact of the manipulation... the banking cabal shorts gold and silver contracts into rising prices to keep the price down and covers their shorts on the rigged price drops. There is no credence given to the supply/demand aspects of the underlying metal (as we can see with the latest gold and silver smash). As a matter of fact, when the gold and silver attacks happen the prices plummet and the supply of retail physical gold and silver becomes very scarce. There is abundant proof of that fact today and the CFTC refuses to explain that phenomenon because it points a big, red, flashing sign at the obvious market manipulation.

So if you were the person pulling the levers for the banking cabal when would be the BEST time for a default to happen if it was going to be cash settled?

At END of a gold/silver take down but BEFORE the cabal has to short into the next rise!

In that way the cabal is out the FEWEST short contracts and the prices are at their LOWEST.

I don't know if we are at that point but early December just so happens to coincide with the CFTC revamping rules on position limits and the passing of Barney Frank's Financial Reform Bill."

robert said...


re: whether it's wise to own real estate or not

If we get the hyper-inflation that you are expecting, it seems to me that owning real estate with a fixed rate mortgage would be a good investment to own.

I say this because you'd pay off the mortgage with cheap or maybe close to worthless dollars, and then you would own the physical asset outright.

The lender would lose and the mortgage borrower would win.

Robert Campbell

SatyaPranava said...

@robert: don't forget about a very broke state or county who is desperate for cash trying to generate cash from the "rich" (i.e. people who own their houses with hyperinflated dollars). not saying tht would happen, but i can't put it past someone in desperation.

FOFOA said...

Hello Robert,

I do understand that bet. And it is a good one with good odds assuming you are able to cover the carrying costs of the loan through thick and thin. But I still consider it a bit of a gamble, much more so than outright physical gold ownership.

Consider this email I received from a financial book author you probably know of...

"...It wouldn't be surprising if some historical novels of the French Revolution or Roman Empire had some monetary intrigue though. And here's something that a friend just sent today, in [ ] s:

[ Hi ___,

Today I read a short little book titled "Fiat Money Inflation in France" by Andrew White (published 1912). My general impression is that there is no law so insane that it can't be enacted during a hyperinflation. As you may know, they even passed a law such that debts increased along with the issuance of further currency, so that for every so many additional assignats printed, one's debts increased by 25%. Thus they took away the one silver lining of currency debasement for the middle class. What a nightmare. I liked this bit:


All this vast chapter in financial folly is sometimes referred to as if it resulted from the direct action of men utterly unskilled in finance. This is a grave error. That wild schemers and dreamers took a leading part in setting the fiat money system going is true; that speculation and interested financiers made it worse is also true; but the men who had charge of French finance during the Reign of Terror and who made these experiments, which seem to us so monstrous, in order to rescue themselves and their country from the flow which was sweeping everything to financial ruin, were universally recognized as among the most skillful and honest financiers in Europe. Cambon, especially, ranked then and ranks now as among the most expert in any period. The disastrous results of all his courage and ability in the attempt to stand against the deluge of paper money show how powerless are the most skillful masters of finance to stem the tide of fiat money calamity when one it is fairly under headway; and how useless are all enactments which they can devise against the underlying laws of nature.


I am sure Bernanke will fare no better! ]

And yeah, we've been blessed to live in a time of apparent monetary stability. Our kids won't be so lucky -- unless we move them to New Zealand or Costa Rica :-)

Regards, ___"

I do favor outright ownership of your primary home for reasons other than profit or PP appreciation. And the debt-hyperinflation bet is a decent one, with pretty good odds under the right circumstance. But it still has risks. It is a leveraged bet on hyperinflation which makes it dangerous, whereas I view the leveraged portion of the gold bet to be on physical separating from paper gold, not on hyperinflation. And you need not carry any debt to achieve that gold leverage. The hyperinflation protection of gold is in addition to freegold and it is 1 to 1 coverage, it contains no leveraged PP profit like the fixed rate home-loan bet does.

If you have enough money now to pay off your fixed rate mortgage you could put most of that in gold and it would be a nice hedged bet. But if you don't have enough to pay off your home loan you are still at risk of losing your present equity.


Larry said...

the usual Mish content:

OT Mish or anyone else, why do the big banks still have huge shorts on Gold? It seems like they'd be loosing their, uh, shorts.

They are probably not losing a damn thing.
Stop reading that gold conspiracy crap.

They are probably short on behalf of clients, and those clients may be (probably are) hedged.

Look, banks have been short since 250 and they wil be short at 2,000 if we get there. If there were huge losses on this stuff, it would show up somewhere.


Museice said...

From Bob Chapman (I don't agree with everything he says but I understand this).
"Our government continues to do its best to suppress gold and silver and commodity prices. Their ham-fisted presence was quite evident this past week and it was only marginally successful. All they accomplished was to make an unnatural correction in a market that could have needed a natural correction. The underlying fundamental factors are still very bullish. The technicals and the long-term charts as well as pro-gold and silver psychology are still in place. The reality is that gold, silver and commodities are still in bull markets and intervention by the President’s “Working Group on Financial Markets” cannot and are not capable of stopping what are going to be the biggest bull markets in history. In both gold and silver bullion and shares the shorts eventually have to cover and that could prove to be one of the biggest bloodbaths of all time and the American taxpayer will get to pay for the losses. What else can one expect with the world financial system collapsing and hyperinflation on the way. Today’s strength in gold and silver have nothing to do with inflation and everything to do with a flight to quality. It has nothing to do with a falling dollar and a great deal to do with a loss of confidence and trust in the G-10."

robert said...


What a great response to my question.

Thank you!

Wow. So that's what those rotten bastards did back then, eh? They changed the rules to defeat even the borrowers who should have profited from the hyper-inflationary event.

Am I surprised?


I do understand your point.

Property values have fallen so far in some areas - and I'm talking good areas - that it's now possible
to get 5% to 10% cash flow with a 10 to 20 percent down payment.

Based on those facts, even though I know you still prefer gold as your #1 asset choice, would you lean a little more favorably toward buying some good cash-flow real estate now in anticipation of future hyper-inflation?

Robert Campbell

FOFOA said...


Here is the way I see it. I would consider your proposal to be speculation, while I consider gold to be core savings. As long as you have your core savings secure, you can certainly speculate with money that you don't mind losing if things go bad.

The present cash flow is certainly a promising sign, but it is also a variable you cannot control. If rents fall and you lose your tenants then the formula could turn against you. And then, if things don't go right you could lose your equity (your down payment, improvements and maintenance you put in) if you do not have the capital to meet an unexpected "margin call", like hyperinflation-pegged debt would bring.

I think it is still a risky time to make leveraged bets. But as long as you understand that you could lose your principle, feel free to give it a shot. But I wouldn't do it with my core savings. Physical gold will pay off better with much less risk in my view. Even Robert Kiyosaki, the RE "cash flow" king is now recommending metals!


robert said...


I understand your thinking completely - especially in light of the fact that you think gold is a bet that is almost a sure thing. ;o)

Seriously, I like your thinking as well, and you convinced me to change my asset allocation quite dramatically in the last two months after finding your blog.

While I'm a real estate man, one of the things I'm worried about is the visibility of property.

When push comes to shove, I have no doubts that TPTB could easily target property owners who won the hyper-inflationary game as bad guys and recipients of "windfall profits" and tax them accordingly.

All said, I like gold too - I just want to dig more deeply into your thinking and I thank you for your thoughts.

Best wishes,

Robert Campbell

FOFOA said...


I appreciate your questions and thoughts!

What you are seeking in your "hyperinflation bet" is leverage. Another talked a lot about the strong desire investors have to seek leverage and how now is not the time for that.

By seeking leverage you are exposing yourself to several uncontrollable risk variables, like rent levels, rule changes, property taxes, fire, earthquakes, hurricanes (in hyperinflation home insurance will be non-existent), etc...

With 20% down you are hoping for a 5X leverage that will be handed to you in exchange for "weathering" the above risks. If you invest that same money in gold and it goes up 5X you have won the same amount as on your RE hyperinflation bet. Of course with a property you will have an income stream as well. But do the math. If gold goes up 10X, that will cover something like 40 years worth of income stream.

The beauty of physical gold owned free and clear in your possession is that you get all the benefits of a highly leveraged bet with none of the exposure to a margin call.

The high leverage has already been "baked into the cake" over centuries of forced parity and suppression. It's truly a once in a lifetime opportunity. This is my humble opinion and also Another's and FOA's.


robert said...



Now I understand the thinking more clearly - from both the aspect of taking a hyper-inflationary bet on leveraged real estate, and from the fact that you feel gold has inherent leverage already built in.

I believe it was your explanation why most businesses go broke during a hyper-inflation.

It was because they can't perform on their existing contracts - where they had to provide a future product or service at a set price based upon old prices - prices that were set before hyper-inflation set in.

I'm starting to get it.

Best wishes,

Robert Campbell

Martijn said...


It would indeed be possible that the large players short the COMEX and try to crash it at the moment they have covered most of their shorts in a decline.

Ted Butler recently suggested that China was the player backing the shorts. I do not deem that the most likely scenario but it might be possible.

Harvey Organ suggested that COMEX figures are unreliable anyway.

I think that latter observation holds the most water, the rest is a bit speculative until time proves anything. However, those speculations clearly indicate that owning physical is the only way to own gold.

And as for being "there" yet: I don't really believe so. I even doubt that it would be possible to clean up the COMEX without separating paper and physical and as a result blow up the gold price. Would you deem it possible?

Martijn said...

Harvey: The open interest on the gold comex fell by only 3000 contractes to 505,000.
With a huge drubbing that gold got, the OI should have fallen by 30,000.

To tell you the truth, I now have no confidence in the OI reporting. It seems it is too far off the wall.

I am now having doubts that silver and gold inventory exist in any of the registered vaults on the comex.

Who could clean that up?

Martijn said...

The COMEX is not the only vehicle used, GLD might be in as well:

Please note the huge 13.719 tonnes of gold leaving the GLD. Also you should note that the GLD is short many millions of oz of gold short. By this we mean, that the sponsors of the GLD issued shares and no corresponding inventory increase.

When an investor went short by supplying paper, no gold was issued or supplied to the GLD.
This is an open fraud, and the reason for the massive $100.00 fall in the price of gold and 1.50 per oz in silver.

FOFOA said...


A "Comex default" means that all positions will be settled in paper dollars. I think the point of what I posted is that they would want to do that at this point in the cycle, not at the top when it costs more $$.

The big banks like JPMorgan are "stuck" in these short positions (they inherited from Lehman Bros) which they keep rolling over. If they could get out of this prone position taking it up the a$$ while the gold price soars, then they could finally get back on the winning side. I think that's the point. To clear the concentrated short position with paper instead of physical gold, which is much more difficult. That's the way I read Bix.

Martijn said...

They might already been doing that:

Today, financial analyst Rick Ackerman disclosed to the world today, that he was offered a premium of 125%
on the LBMA for his gold contract in Sept.

Here is his article:

The Rick Akerman piece dispatched by GATA today is another brick in the wall.

Martijn said...

Here it is.

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