Friday, November 26, 2010

Black Friday Open Forum


Happy Black Friday to all! (I will be sleeping in)

Wikipedia: Black Friday is the day following Thanksgiving Day in the United States, traditionally the beginning of the Christmas shopping season. On this day many U.S. retailers open very early, often at 5 a.m., and offer promotional sales to kick off the shopping season.



Also thanks to Tyrone and "MrJohnbrown56" for this short FOFOA advertisement:

32 comments:

DP said...

Nice piece of Freegold porn, and few people are IMO more worthy of a tribute for their contribution to knowledge.

Happy Black Friday FOFOA, enjoy the lie in.

M said...

Hello FOFOA et al

I was just wondering why FOFOA thought gold equity investments will do bad in the transition or even in the next 10 years of dollar life.

I don't mean leveraged positions, I just mean solid equitable positions is large cap mining companies. They could pay themselves in gold and put the rest into the market.

Also, Austrians like Peter Schiff simply say there is no way of getting rid of interest baring money. There is no president in history.

Thanks for all you do.

julian said...

Happy Black Friday then.

I celebrated Yellow Thursday yesterday - I think I have the fever.

Somebody posted a link to yahoo finance article/video in the Thanksgiving Week open forum discussion. During the video they show the image of this awesome toy!

http://www.wastelandchic.com/wp-content/uploads/2010/02/bernanke-helicopter.jpg

Dave said...

@M

Can't remember FOFOA's reasons offhand, but miners run the risk of being nationalized.

'Interest bearing' (debt!) money is fine, and under Freegold will continue, that's just not where you'll store your wealth.

DP said...

No such thing as interest bearing money, only interest bearing investments

DP said...

Miners are likely to be nationalised, or taxed out the wazoo

M said...

So that would mean that mining equity will be where the new problems start. Rather then banks,that is where the government and the corruption will go. To the miners. I have to wonder if that could turn into as big of a problem as the banks are now.

Plus, gold was never confiscated, it was purchased by the government. I expect the same would happen with mining equity.

Museice said...

Question:

I'm still hung up on how Russia and China will exchange their currencies without the Dollar. (Ingo Bischoff comment on Daily Bell) If gold is not used as a mutual reference point how would the process work? (I want gold to be used but since I don't want to be bias I need to understand how their new system would work with out Gold or the Dollar).

Any ideas?

Aleksandar said...

@Museice

There will be an interbank market in both countries where banks (and businisses) can bid/offer on the foreign currency. Additionally, both CBs open swap lines.

Where Bischoff gets gold into this I dont know. Most I can think of is that metal is to be used as collateral in trade agreements.

intuitivereason said...

This is a bit of a thought experiement, and I will frame it in terms of Australia, as that is where I am and what I am familiar with.

Rule #1. All international accounts are to be settled in physical gold, delivered to our local embassy. To restate this, Australian dollars will only be exchanged for physical gold already located at an Australian embassy or on Australian soil.

Rule #2. All Australian dollars purchased with gold externally shall be newly created money. All Australian dollars used to purchase gold for the settlement of external debts shall terminate.

Rule #3. Internal purchases of gold shall not be made with newly created money, including government purchases.

intuitivereason said...

This is a bit of a thought experiement, and I will frame it in terms of Australia, as that is where I am and what I am familiar with.

Rule #1. All international accounts are to be settled in physical gold, delivered to our local embassy. To restate this, Australian dollars will only be exchanged for physical gold already located at an Australian embassy or on Australian soil.

Rule #2. All Australian dollars purchased with gold externally shall be newly created money. All Australian dollars used to purchase gold for the settlement of external debts shall terminate.

Rule #3. Internal purchases of gold shall not be made with newly created money, including government purchases.

costata said...

Muse,

I picked up on the same point from the Ingo Bischoff comment. I cannot find confirmation of gold valuation as the reference point for currency valuation between Russia and China. Can we construct a rationale for this to be true? Perhaps, yes.

It appears that Russia is running a trade surplus with China. Could the gold link in this tale be that trade settlement of net balances will be in gold? Put another way (in currency terms) the current gold purchasing power of each currency in lieu of physical gold.

I read that Russian sales of military hardware to China have fallen off in recent years. So the bulk of Russia's exports to China must be energy related, with the remainder being raw materials and agricultural commodities.

For some reason A/FOA's comments about the oil/ME seeking military protection from Russia (if necessary) just jumped into my mind.

I'm wondering if China just bought itself a nuclear security umbrella priced in gold while Russia gets the PLA to protect their eastern energy (oil and gas) deposits. Let's not forget the PLA is the largest standing army on the planet.

Another reason for referencing a floating gold price could be to allow China to keep their currency peg for now. Otherwise I think a free floating exchange rate would be needed to prevent the Russian's being short changed by an artificially low Yuan and vice versa on the Ruble (China over paying for Russian exports to them).

If they used, say, the Forex market as their reference point then the implied exchange value of each currency would be impacted by the Forex market view at any given time. This could make their Yuan/Ruble exchange rate highly volatile. That would run counter to both countries' policies.

FWIW I think Bischoff is on to something here. As the saying goes "The enemy of my enemy is my friend". A gold backed military industrial Sino-Russian alliance. I realise I'm doing a lot of speculating here but the implications are enormous.

costata said...

Hi Muse,

Put the China Russia deal together with Putin's comments in Germany in the last couple of days.

http://maxkeiser.com/2010/11/26/rt-putin-ditches-dollar-keiser-predicts-germany-new-superpower/

Putin says openly that he favours the Euro as the new reserve currency.

Fauvi said...

Russia and Germany/EU are preparing some kind of a stronger alliance. I've just read an essay in Süddeutsche Zeitung where Putin includes all the future collaboration between the two blocks. Quite funny, Putin sustains the euro and is quite vocal against the dollar... I think this cooperation is already a fact, this has been just an anouncement in due time because of Ireland. He speaks a lot about energy and resources, bilateral exchanges in technological sector, trade and etc.

Museice said...

costata: I read the Putin remarks also but having any currency as a "reserve currency" goes against Freegold (or for that matter the mysterious/wishful Bischoff Price System). I think Putin's statement about the Euro was just a slap in the face of the Dollar.

So how do Putin's remarks about the Euro being The Reserve Currency answer the gold-in-the-Ruble/Yuan-equation question?

Fauvi said...

Putin's op-ed is very much in favor of a continental Europe and he says he's looking for ways where trade could take place without the dollar! NO MSM except welt online writes that. Now i've seen exactly which German papers are under elitist influence.
Here is sth from Spiegel, which is not half what Putin said and wrote!
http://www.spiegel.de/international/europe/0,1518,731370,00.html

ShamefulPath said...

Question for all,

Ok so I was wondering if currently there is a tax on bringing gold into the EU or selling it there? I see that there is no VAT applied. For example, could an American wander into Europe with a pocket full of maple leafs or philharmonics and sell them for Euros at no tax? Other then the cut to my pimp Uncle Sugar of course.

Help and links to the relevant laws would be appreciated, thanks!

ShamefulPath said...

Fauvi,

Historical animosity aside, wouldn't a Germany/Russia alliance make a lot of sense? Germany has a lot of manufacturing and tech know how, Russia has large energy reserves. It's why a Russia/China pairing is more attractive. I wouldn't know what the Kremlin's preference would be for future allies but looks like they have options. Go figure they have oil and nukes! It looks to my ill informed eyes that Russia is really trying to position itself for a post Dollar world.

Fauvi said...

I think he wanted to say that the euro is to stay and remain a currency, not take the dollar's place. We have lots of discussions about the break of the euro and wants to keep the EMU and the EU. He is looking for posibilities to trade oil in "some other currency". He doesn't say which, he only mentioned that Russia has no power to determine in which currency oil is to be traded!
That was really quite funny, the way he spoke about oil!

Edwardo said...

http://www.zerohedge.com/article/surge-after-hours-selling-takes-gold-volatility-index-all-time-low?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

If you sprechen sie Deutsch you may enjoy this one where the EU invited Russia into the club.

http://www.welt.de/wirtschaft/article11235590/Ackermann-will-Russland-in-die-Eurozone-holen.html

Fauvi said...

ShamfulPath,
of course I would embrace this alliance! Europe would be lost in the next decades, no resources,some countries with schools on life support and the rest of the misery. I only hope there won't be more freedom restrictions.
About gold imperts, have no idea myself, but if nobody answers your question I would call on Monday the customs office.

costata said...

Museice,

I agree with Fauvi.

"I think he wanted to say that the euro is to stay and remain a currency, not take the dollar's place."

Bear in mind also there are countries who have pegged their currencies to the Euro. For those countries the Euro is most definitely a reserve currency at present.

I don't see this detracting from progress toward the Euro Freegold transition from the $IMFS. Look at the pace at which Russia is building gold reserves.

So how do Putin's remarks about the Euro being The Reserve Currency answer the gold-in-the-Ruble/Yuan-equation question?

I wasn't suggesting that Putin's statements in Germany had any bearing on the Sino-Russian accords. I was simply noting that here we may have two major alliances emerging in the East and the West with Russia as the pivot.

Putin's comments in other reports about some kind of free trade zone and currency union with the EU also make sense if the Euro Freegold plan is going ahead. Who cares which currency is used for trade (provided it is well managed) if your wealth reserve is in gold?

Fauvi said...

Costata,
he said he is ready to join the WTO 2011. Do yout think he would do that under the predatory rules we have now? I believe not.
About the euro: he said "Weltwährung"(world currency) and reserve currency, nothing else mentioned in German.

Casper said...

@ Shameful

As far as I know (I checked with customs office) the customs rate for gold import is 0%. Though they differentiate what kind of gold is imported (dust, half-finished products, numismatics,...). Bot coins and bars fall in the 0% bracket.

But there is a question of VAT! Which stands at 20% if the value of import exeeds 150 EUR
I think.

Casper

costata said...

Fauvi,

The Russians have been pushing to join the WTO (or its forerunner) for around 17 years. The USA and their allies have been blocking them. Entry to the WTO is a prize from the Russian elite's perspective.

For the China watchers:

Incidentally China started buying US Treasury notes and bonds in quantity around the same time the USA agreed to back their entry into the WTO. Despite having a trade surplus with the USA since 1986 up to early 2001 China only held an average of $50 billion of USG debt in their reserves. I admit this may have been coincidental.

By way of further background China was granted most favoured nation trading status with the USA on a loophole that required annual renewal by the President. If memory serves MFN was first granted in 1979. Think about the stakes riding on that annual signature for China and the USA corporates who were profiting on the flow of cheap goods out of China. Nice leverage over China as well in any trade policy discussions.

After Tiananmen Square the MFN was renewed right on schedule! One of Bill Clinton's campaign promises was to rescind it on the basis of China's human rights record. As soon as he was elected he broke that promise.

China's entry to the WTO meant they could operate an independent trade policy without the threat of losing some (all?) access to the US market every year.

David said...

@M

FWIW, post-freegold, except where there is no rule of law, I can easily see governments establishing gold recovery quantity limitations, in addition to abundant environmental rules.

Perhaps, similar to the idea of carbon credit trading, a fixed annual quantity of "gold recovery credits" could be competitively bid upon or resold in an open market for perhaps tens of thousands of dollars an ounce - with proceeds going to the government. Ounces recovered might be determined at smelt and assay time. 

To answer your question, even with gold in the tens-of-thousands of dollars, mine sites and companies that today are not low-cost producers probably would not do very well. Maybe even go bankrupt.

Just my $.02.

Museice said...

I received an answer from Ingo Bischoff regarding his source for his comment, "No longer will they go to the FX markets to find the price of the Ruble or Renminbi in terms of USD/FRNs. Instead, they will go to the precious metals markets to find the value of the Ruble and Renminbi "priced" against gold."

http://www.thedailybell.com/1552/Global-Depression-Just-a-Dodge.html (very end)

It appears to me he is a fan of Freegold and FOFOA and although his source is his own conclusions they do lead towards a common solution.

Desperado said...

Hungary Follows Argentina in Pension-Fund Ultimatum, `Nightmare' for Some

"Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.

Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.

“This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.” "


Coming soon to a theater in your town...

M said...

@ David

Gold is not expensive to mine out of the ground. It is simply hard to find. A CNBC anchor said recently

"Why should gold be at $1400 when it only costs $400 to mine it out of the ground?"

Yeah, well that's great, it only costs $400 to mine it out of the ground after you have found some.

This is why you should buy gold stocks !

David said...

@M

It should be obvious how desperation for revenue will prompt governments to tax the gold and silver miners, depriving them their windfall. That is, tomorrow's mining profits may be no greater than today's. 

I think this failure to disclose is what King World News and Puplava's Financial Sense Hour have most in common. An allegiance to their mining sponsors, and not you.

Edwardo said...

If one subscribes to the Peak Oil thesis, which I do, because the arguments against it are so weak, then, going forward, the cost of mining gold, or any other mineral resource, is going to become prohibitive. This is just one more factor that is liable to cause the paper currency value of gold to go vastly higher.

M said...

@ David

These profits will be realized before the government has time to act on them. A gold sector lobby would arise from this too, which will steer the government in the direction it wants, just like the banking lobby does.

The brains and money behind the mining sector would not keep at it if they knew that they would not keep anymore of what they make then the people in the tech sector. They just went through a 20 year depression. The western world will still function when they lose all their revenue, it will just function more like a 3rd world country does. I have been to Thailand, it functions well.

The reason there has been some mining company adds on KWN and Financial Sense lately because that is the only place the gold sector can afford to advertise. There is not enough gold being sold to advertise anywhere else. Unless you rip people off like Goldline does.

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