Friday, December 31, 2010

Happy New Year!

2011
Year of the RPG


That's Rocket Propelled Gold, or as Robert Zoellick, president of the World Bank suggests, Reference Point Gold. Same outcome either way.

The Year in Musical Review

As some of you may have noticed, I often put a song at the end of my posts. Generally it is both a song that I like, and one that in some way relates to the post. And now I present a few memories from what I consider to be the musical highlights of the past year. Enjoy!

From I can feel it coming... on Jan. 5, 2010, here's Phil Collins in a great live version of his 1981 song 'In the Air Tonight':



From Greece is the Word on Feb. 12, here's the opening of the 1978 movie 'Grease':



From my little allegory titled The Dukes of Wetton on May 6, here's a very sexy Jessica Simpson reviving Nancy Sinatra's 1966 hit song 'These Boots Are Made for Walkin':



From The Old Hyperinflation Question on June 9, here's Alanis Morissette singing, "but this is not allowed, you're uninvited" in 'Uninvited':



From Confiscation Anatomy – Part 2 on Aug. 13, here's The Mighty Mighty Bosstones asking, "Have you ever had the odds stacked up so high, you need a strength most don't possess?" in 'The Impression That I Get':



From Just Another Hyperinflation Post - Part 3 on Sept. 13, here's a rockin' version of Phil Collins' 'In the Air Tonight' from the Miami Vice soundtrack, performed by the Miami-based metal band Nonpoint, set to a montage of hyperinflation-related pictures:



 From One Tin Soldier on Oct. 13, here's the song 'One Tin Soldier' from the 1971 film 'Billy Jack':



From Happy Halloween, here's Danny Elfman of Oingo Boingo singing "We Close Our Eyes (and another year has come and gone)," a great song from the Boingo Farewell concert which I attended:



From Dilemma 2 – Homeless Dollars on Nov. 5, here's Joss Stone looking oh so sexy singing Dusty Springfield's classic 'Son of a Preacher Man' at the UK Music Hall of Fame:



And last but not least, here's a video from Priceless, way back in Sept. 2008. As yet, this video is my unrivaled favorite on this blog:



Bonus Video: The video above, 'Take a Load Off Fannie' was created by the same guy that made the "Quantitative Easing Explained" video that I posted here. At the time I put it up it only had a couple thousand views. It's the one that introduced the very funny term, "The Ben Bernank," and it has since gone viral with over 3.8 million views. Because of that video, Omid Malekan has made a few TV appearances on CNBC, etc. He is a creative and talented guy, and he now has a music video version of Quantitative Easing Explained. Enjoy!



Happy New Year to all of you and all the best in 2011... year of the RPG we like to call Freegold!

Sincerely,
FOFOA

67 comments:

David said...

Happy New Year Fofoa, and to all that make valuable contributions here.

DY

oldinvestor said...

Neil Young - Rockin' In The Free World

http://www.youtube.com/watch?v=PdiCJUysIT0

costata said...

Happy New Year to all. Many thanks for the blog FOFOA.

Cheers

radix46 said...

Happy New Year to everyone. Thanks FOFOA for The Best Blog On The Internet, yes, capitalisation for a real noun.
Thanks also to costata, I enjoy your comments. I come here nearly as much for you as for FOFOA. There are many other awesome people here too.

I have been reading James Dines' book 'Goldbug!', which is a fantastic history of money, with gold in its correct place, at the centre of the chessboard. James Dines, however, is a hard money type character. His analysis of the markets is still very interesting.

He presents a different reason for the drop in the gold price after the 2nd oil crisis as the one presented here and on the gold trail, ie the future gold for future oil deal. He shows through very complelling charts that it was simply the onset of a vicious deflation due to the huge preceeding inflationary boom, similar to the events of the 30s preceeded by the 20s.

How can we know if the A/FOA story is true? Where is the hard (not circumstancial) evidence? I think that it is quite important to determine which is the truth. Dines, as a result of his viewpoint, recommends the gold miners. If he is correct, then this would offer much greater returns than the physical. If he is wrong and the future gold for future oil deal is in place, he'll be wiped out.

I am not attacking either viewpoint, I'm simply a minion, lacking data, having to rely on others for info, attempting to discern the true state of affairs. I use this as example to highlight a problem for the average lay person. How does one go about separating true facts from compelling heresay/opinion, when one has no primary source evidence?

radix46 said...

*proper noun

FOFOA said...

Hello radix46,

You ask, "How can we know if the A/FOA story is true? Where is the hard (not circumstancial) evidence?"

Well, what I can tell you is that one of the regulars from this blog has embarked on a major research project. He hasn't commented in a while because he's been busy. I have seen some of the evidence he has collected and paid for. A lot of it was newspaper archives for sale. I know he's working on a major presentation to be made in Europe in a few months, so I don't want to step on any toes. But I did send him an email hoping he would respond to your question. What I can tell you is that the evidence is everywhere, it's just not highlighted by anyone.... yet!

Sincerely,
FOFOA

radix46 said...

FOFOA,

A tantalising repsonse! Thanks.

I look forward to seeing that. I understand that the evidence is everywhere, but the crux of my point was as much about the general concept of discerning truth in a sea of second hand info in an essentially anonymous (for intents and purposes) modern electronic world, awash with mis/disinformation. Can newspaper evidence be trusted? The only reliable element of the laughable nonsense that I see in newspapers, that I can trust, is that it isn't true.

It can all get a bit confusing for those non-experts without access to first hand, primary source info, even if considerable research has been undertaken and by a rational thinking intelligent person. Anaylsis paralysis is the phrase I believe.

This tends to lead to a hedged position. I would love to be able to arrive at a level of understanding that would allow me to comfortably go 'all in', but I'm just not there yet (I'm at 80% and that percentage tends to go up with each of your blog posts!).

This isn't even about making the most money in the coming transition, it is more about freeing up the mind so that a normal life can go on without feeling the need to be constantly adjusting, hedging, worrying etc. That is the nature of such turbulent times though, I suppose.

I still look forward to further data, mind you.

PS, sorry for the extended, jumbled sentances, I'm not quite all there yet today.

Patrick said...

2011 IN 2011

the fofoa :-)

radix46 said...

FOFOA,

On the subject of the future gold for future oil deal... surely this would only apply to companies that were around back in the 80s and 90s. Does this mean that some of the junior miners would possibly be safe buys?

Regards
Radix

costata said...

Radix,

"... considerable research has been undertaken and by a rational thinking intelligent person ..."

That is as good as it gets in this imperfect world we live in, my friend.

costata said...

Radix,

"... considerable research has been undertaken and by a rational thinking intelligent person ..."

That is as good as it gets in this imperfect world we live in, my friend.

radix46 said...

Costata,

Absolutely. You pays your money, you takes your choice.

I was simply interested in how people approach a world in which all second hand info is suspect, due to incomplete knowledge (mathematically proven so) and still arrive at an unhedged position, emphasis on the unhedged (I couldn't work out the HTML) :)

Museice said...

Happy New Year FOFOA!

I hope everyone has their seatbelts tightly fastened in what ever way is individually comfortable.

2011 will be a wild ride.

Thanks to all who post for making FOFOA a yearning learning experience. I am grateful.

Andy said...

The expanding Euro.

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

by Hugo Salinas Price:

Some thoughts about the manipulation of gold and silver prices.

Carl said...

Happy New Year and thanks for your time and effort.

Aleksandar said...

Happy New Year everyone.

FOFOA, can we attend the presentation? Is it someone from Belguim maybe?

Brian said...

I am so glad I stumbled in here. I have a troubling question I cannot find the answer to.

Obamacare had that sneaky little part that requires business owners to file a 1099 anytime business transactions exceed 600 bucks. Will this apply to PM dealers? I wrote a little bit about this here...

http://thecivillibertarian.blogspot.com/

julius-casper said...

The official ratio of oil to gold which has been 12 to 25 bbl/oz for most of our lives and earlier,
http://wjmc.blogspot.com/2010/12/gold-to-oil-ratio-1946-2010.html

In what you are saying is in all probability going to be closer to 500 bbl/oz when gold revalues because of the debt.
http://1.bp.blogspot.com/_cvdgPlEKW9k/SyB1Vhf83oI/AAAAAAAAA84/18MLxAikwcg/s1600-h/Freegold_bellcurve_oil.gif

You have also said that gold is traded on a secret market possibly similar to the 500 bbl/oz ratio - "I'm going to tell you about a secret market that maybe only 100 people in the whole world know exists, because they transact in it." - FOFOA, which means the actual oil/gold ratio has already been trading closer to 500bbl/oz all this time.

Now that we have seen 5 years of oil production leveling off 2005 - 2010. http://www.theoildrum.com/files/Oilwatch_august2010_5.png
The 'reference point' for the global economy may shift towards oil, as oil is the very basis of the global economy with two thirds of the worlds energy or work is done by oil.

With global oil production likely to start shrinking in coming years this could make oil very expensive like gold, possibly even bringing the ratio to something similar to the 'official' 12 to 25 bbl/oz level.

When the paper burns we will be left with the exchange of actual goods and services again but with new numismatics and freegold will depend on the economy which depends on the oil which is shrinking, how can freegold work in a shrinking oil world when oil becomes a vital and growing economic reference?

Welcome 2011

JR said...

Hi radix46.

How can we know if the A/FOA story is true?

Why does it matter?

What matters is their message, their expression of compelling and persuasive economic arguments. Sure that's "part of the story" in one way of looking at it, but IMO its more important to see the underlying economics which they illustrate through real life examples.

Facts and historical accounts enlighten and bring a touch of reality to the theory, but its the economic understanding that drives the show.

He presents a different reason for the drop in the gold price after the 2nd oil crisis as the one presented here and on the gold trail, ie the future gold for future oil deal. He shows through very complelling charts that it was simply the onset of a vicious deflation due to the huge preceeding inflationary boom, similar to the events of the 30s preceeded by the 20s.

That deflation is in part why the oil for gold problems happened. Deflation is an inevitable feature of our systemically flawed debt/credit driven monetary system, and is why the system is changing. This is the central part of A/FOA's message. Oil for gold deals are a function of an understanding of our money system and its systemic flaw.

Its not about facts, people, data and truth as much as it is about understanding the economics, understanding why our system is flawed, why it must change, and how it will change.

Everything else falls into place from that.

radix46 said...

JR,

Thanks for that reply.

Perhaps I have put too much emphasis on the story itself. I expect that comes down to a lack of understanding of real economics - despite having done a degree in it! They certainly didn't teach me any of this stuff.

I would be grateful if you could please explain further what you wrote here:

"That deflation is in part why the oil for gold problems happened. Deflation is an inevitable feature of our systemically flawed debt/credit driven monetary system, and is why the system is changing. This is the central part of A/FOA's message. Oil for gold deals are a function of an understanding of our money system and its systemic flaw."

Especially, please expand on how oil for gold deals are a function of the systemic flaw in our money system.

Thanks

radix46 said...

Actually, JR, I do understand why gold for oil deals are a function of the flaws, I am more interested in the why you say
"That deflation is in part why the oil for gold problems happened."

I thought that this was because of an inflation, ie losing oil in the ground whilst gaining depreciating paper? If there was deflation, they would be getting paid in appreciating paper right?

FOFOA said...

Hello Aleksandar,

I believe the answer to your question is yes, but I really don't know much, so I don't want to say much. What I have seen represents an impressive amount of research covering the mid-1960s through the time Another was posting. Hundreds of clippings from random local newspapers throughout the 60s, 70s, 80s and 90s. I imagine he's using LexisNexis to confirm much of what Another wrote from casual memory. It pretty much dispels any notion that Another was a hoax. But I don't think that's the purpose of the presentation. It's more like the due diligence behind the presentation as far as I know.

Sincerely,
FOFOA

Wendy said...

Best thing I read today:

"The Daily Reckoning offices are closed today in observance of rules stipulated in the Post-New Year's Eve Recovery and Rehydration Act. "

Very, very bad brain today. I think it was fun, and I don't think I did anything REALLY bad!!

Happy New Years to all.
Wishing you good health, strong families, good friends, and lots of gold :)

Wendy said...

BTW,
I NEED a big mac and my daughter has my car. Don't suppose one of you guys could deliver one to me???? PLEASE!!

babygirlboomer said...

great info everyone, esp fofoa, thx so much, happy new years

Wendy said...

From USA gold news Dec 29:

"RS View: Somewhat similar the situation with Switzerland that I discussed yesterday, here we see other examples of countries that are not pleased by the domestic currency strength resultant from inflows of international money seeking higher returns in their emerging economies.

Hmmmm… if only there were an alternative… What the world basically needs is ANOTHER sort of non-national emerging asset that could — like a golden lightening rod — attract and absorb this flow of hot money, effectively taking all the heat and pricing pressure into its own market. In attracting this flow of surplus international money it would spare the various nations so much exchange-rate related economic angst, and would itself be not diminished/consumed in the process but rather bolstered (affirming its attractive financial place/role in the world) and furthermore able to provide an improved buffer to any/all national central banks that have appropriately girded themselves. Gold gold?"

costata said...

My apologies for not remembering the name but someone posted a question asking how the new IMFS might be opposed and thwarted.

Vietnam may be a case study worth noting. The government has made several attempts to push back against Mr. Market.

h/t Dollar Collapse

http://finance.yahoo.com/news/Vietnamese-seek-safety-in-apf-3562184512.html

"Jewelry shops and black-market money changers have overflowed with customers in recent weeks, desperate to unload their Vietnamese dong for greenbacks or gold nuggets......"

Wendy said...

For the first day of the new year with a really bad brain, I spent my evening nostalgically digging through some of the archives. I've decided to offer a "cheat sheet" to those who are either new here or lazy and haven't read through all the posts.

First and foremost the post in Sept 08 "freegold" is a must read. Not just the post, but especially all the comments below. Every time I read it, I have to pick my jaw up from the floor.

Back in those early days, it appears as though there had been a void in time when "freegold" wasn't discussed openly. I don't know the details, maybe FOFOA can fill in the blanks, but something happened with the USAgold site and reference to Another. But really I'm in the dark in this regard.

I do know that FOA at the insistance of Another "quit" USAgold, as his associatin with Another was more valuable than his freegold voice on the forum. (although I think he did cheat)

Anyways .............. during the early days of this blog, there were many with decades of experience and an insatiable appetite for discussing the concept of "freegold", the discussions were awesome, and the knowledge imparted, frankly priceless. FOFOA hadn't even dug his man cave yet in those days, and was entirely out there. You will better appreciate his sharpness in the older comments sections.

The following is a list of posters that when they speak, you really want to listen closely, and most especially in those early posts:

Ender - forgive him when he uses the word "irregardless" he really didn't mean it

Ivo

Alek or Aleksander

B. or Belgian, although it started as an "anyonomous" post

Any "poster" that uses HA. or ha.

And there are certainly others that I've failed to mention, but if you follow the comments of the above you will get the freegold concept.

I have seen that many who comment do so supportiing their "dogma", I would humbley suggest that before you explore the archives you drop the dogma and "pretend" that you are completly uninitiated.

Sorry guys for blowing your cover, but honest to god, we are demanding transperancy in gov. etc, yet we remain opaque even in a blog.

The rains have come, the ground is swollen and the green shoots are visable. It is time (as in the lion king)

The best remedy for a bad brain day? End it. Goodnight ;)

Wendy said...

For the first day of the new year with a really bad brain, I spent my evening nostalgically digging through some of the archives. I've decided to offer a "cheat sheet" to those who are either new here or lazy and haven't read through all the posts.

First and foremost the post in Sept 08 "freegold" is a must read. Not just the post, but especially all the comments below. Every time I read it, I have to pick my jaw up from the floor.

Back in those early days, it appears as though there had been a void in time when "freegold" wasn't discussed openly. I don't know the details, maybe FOFOA can fill in the blanks, but something happened with the USAgold site and reference to Another. But really I'm in the dark in this regard.

I do know that FOA at the insistance of Another "quit" USAgold, as his associatin with Another was more valuable than his freegold voice on the forum. (although I think he did cheat)

Anyways .............. during the early days of this blog, there were many with decades of experience and an insatiable appetite for discussing the concept of "freegold", the discussions were awesome, and the knowledge imparted, frankly priceless. FOFOA hadn't even dug his man cave yet in those days, and was entirely out there. You will better appreciate his sharpness in the older comments sections.

The following is a list of posters that when they speak, you really want to listen closely, and most especially in those early posts:

Ender - forgive him when he uses the word "irregardless" he really didn't mean it

Ivo

Alek or Aleksander

B. or Belgian, although it started as an "anyonomous" post

Any "poster" that uses HA. or ha.

And there are certainly others that I've failed to mention, but if you follow the comments of the above you will get the freegold concept.

I have seen that many who comment do so supportiing their "dogma", I would humbley suggest that before you explore the archives you drop the dogma and "pretend" that you are completly uninitiated.

Sorry guys for blowing your cover, but honest to god, we are demanding transperancy in gov. etc, yet we remain opaque even in a blog.

The rains have come, the ground is swollen and the green shoots are visable. It is time (as in the lion king)

The best remedy for a bad brain day? End it. Goodnight ;)

costata said...

Brilliant post Wendy,

Thank you.

Museice said...

Thanks Wendy:
Here is a link to FOFOA's September 2008 FreeGold

Museice said...

Let us hear powerful men tell us peasants about gold.

Adrian Douglas's 2010 Moron of the Year Awards

mortymer said...

Just looking at some older Zoelling posts:
1/ Interesting
http://tinyurl.com/5qocqu
Old concept of “Third World” outdated, Zoellick says:
“For decades, students of security and international politics have debated the emergence of a multipolar system. It’s time we recognize the new economic parallel. If 1989 saw the end of the “Second World” with Communism’s demise, then 2009 saw the end of what was known as the “Third World”: We are now in a new, fast-evolving multipolar world economy,”
Washington, April 14, 2010
2/Humorous:
http://tinyurl.com/3a2xggx
"...The Economic Council of the CDU honored you with the Ludwig Erhard Memorial Coin in 1997. I understand, Minister Schäuble, that you received a silver coin, which in recent years has been awarded in gold. I hesitate to speculate, but one has to wonder if the alchemy that changed silver into gold is a subtle commentary on currencies and commodities..." + more about his view on EU/Germany
Berlin, June 9, 2010
3/ other page about dev. world:
"Developing world imports have accounted for more than half of the increase in world import demand since 2000. The developing world’s share of global GDP in purchasing power parity terms is now over 43 percent. These countries are now a $30 trillion economy in terms of purchasing power, with a growing middle class.
This development is part of a much larger tectonic shift, and international policies and institutions have been slow to adapt."
4/ His predecesor:
"So the toughest dilemma comes when you have a project that is doing some good work but you know there are some problems in it. And people say, well, are you going to hold up the 80 percent that's good for the 20 percent that's bad? And I think we have to -- it's a dilemma, but I don't think we can settle for 80 percent. I think we have to move to a gold standard; maybe not overnight, but with time. And I think if people come to understand that this is not the way you do business anymore, I think a lot can change."
Remarks by President Wolfowitz, December 7, 2005

Syafrin Djohan said...

Fiat currency holds laborers hostage to the government, who has the triplet weapons of mass destruction: the legal tender law and the central bank act and internal security act.

Non reserve-currency governments are hostage to reserve currency government, through the need to allocate the wealth in the reserve currency for international trade and to pay the executors of the reserve currency's global plundering need: IMF and World Bank (who lend neither gold nor silver, but paper created out of thin air).

(Instead of lending to the reserve-currency country's corporations to take risk worldwide, they lend to the foreign governments and demand in the clauses that the money has to be paid to the corporations of the reserve currency's origin; because by doing so, they have a very safe collateral: the taxing and judiciary power of the government; while the money has gone back to the country of origin long ago.)

But even the dollar government is hostage to the private money creator (the Fed).

So, the world countries in 5 continents are hostages to the private central bankers who hold almost all power in world's central banks, except some "assumingly notorious" countries such as Iran and North Korea.

***
When the central bank prints more money into the system, the gold price rise in Freegold. When Nero clipped the coin, the gold content lowers. These two instances are actually the same 'revolutionary' concept to fill the empire's treasury with more value by selling less quality money to the public.

The keyword is DEBASEMENT.

The only benefactor of debasement is always the CLASS IN POWER. Why bother about debtors and savers, while in the end, it is the savers (read: laborers) who are held hostage to pay the ransom for the "CENTRAL PLANNERS" (the ultimate saver), while the politicians only assumes 'limited liabilities' (as long as he still has a chair in the office).

In other words: "People do not worry whether they are savers or debtors, their government will sincerely help them, their children, and their grandchildren fully commit to servicing the expanding debt of the country"

***
The only solution is End the Central Banks. Then you get your really-Free Gold and Free Silver.

Kaboom said...

Ha! Happy New Year to you, FOFOA!

radix46 said...

Would Peak Oil cause a problem in the future gold for future oil deal?

costata said...

radix,

Cheap gold for cheap oil is history. There is no "future gold for future oil deal". It served its purpose and it is no more.

costata said...

A thought experiment for gold and silver:

Private investors stop buying both metals tomorrow and they never buy another ounce. What happens to the price of gold and the price of silver?

radix46 said...

Costata,

So, at this point with no incentive for giving future oil, oil wants its higher priced gold, pronto?

Private investors stop buying gold, this frees up the flow, so $IMFS can continue rumbling along. Price, um, dunno.

Private investors stop buying silver, price reverts to industrial use level.

Enlighten me.

mrbeyond said...

India drops petrodollar in Iran. http://english.ruvr.ru/2011/01/01/38523281.html

Museice said...

"I think the key to FreeGold is that gold valued in the 10's of thousands or higher does not require hyperinflation as many people think. It simply requires a default, or freeze-up in the physical flow of gold.

This is because those that have what the world needs, oil, want gold in exchange. And they don't care if they get 1/10th of an ounce per barrel valued at $100, or if they get 1/1000th of an ounce of gold also valued at $100. It's all the same to them. And with higher valuations they will have no problem getting physical gold.

So when physical gold no longer flows in the opposite direction of oil, oil will say publicly "we want physical gold". And then the worldwide value will rise to a level that releases physical gold in a constant flow once again. It won't matter that it is less gold, because less gold will actually have more value on the world stage."

From: FreeGold

costata said...

mrbeyond,

If the claims in that link you posted are true it paints an interesting picture.

How would India obtain sufficient dirham to trade for oil? A currency swap perhaps.

According to a report I read, around 12 months ago, some of the ME oil producers asked Japan to pay for their oil in Yen.

So the choice of dirham and Yen would be an interesting combination.

Mike said...

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/3_Is_the_Worlds_Richest_Man_Getting_Into_Silver.html

is he making a big mistake, or is he in for the short term to make big profits by moving the price and then exit in a timely manner.
he surely must have studied the hunts case.

it seems though he might move into silver stocks and not all into physical.

costata said...

radix,

Re: Oil

I can only offer an opinion.

The price of oil began rising along with the price of gold early last decade. At the same time gold miners began to slowly reduce their forward sales and hedges.

Based on the information provided by A/FOA the response by the ME oil producers was predictable. If no more artificially cheap gold was available to them then there would be no more artificially cheap oil (in US dollars).

In the late 1970s the flow of Petrodollars almost blew up the world economy. The ME producers had so much cash they were pushing up the price of every asset class they sought. The inflation unleashed was highly destructive.

The ME investors preferred asset classes in the 1970s and early 1980s were Real Estate, gold, fine art and collectibles. The amounts of money that the bankers were handling were mind boggling. Of course, nothing compared to the past 10 years or so.

IMO Petrodollars, regulatory lapses and leverage were the "fuel" that drove the epic asset price inflation that we experienced since the late 90s.

costata said...

radix,

Private investors stop buying gold, this frees up the flow, so $IMFS can continue rumbling along. Price, um, dunno.

Would the currency wars cease? Would the US$ suddenly become stronger when the Fed is very openly attempting to weaken the US$?

IMHO the need to diversify sovereign reserves would still drive demand for gold. The price might be lower or it might plateau. The miners might begin hedging and forward selling again but I think that the accumulation of gold would continue.

costata said...

Mike,

In previous mining booms in Australia at some point some of the big money players outside the mining industry start calculating the price differential between inground resources and the spot/contract prices.

If you are confident that the ore will be mined, prices will be firm and the cost differential can be converted to profits then it looks like a deal.

The miners themselves begin aggressively pursuing reserves through takeovers following the same logic. If the cost of buying a defined resource is cheaper than developing a new mine then the logic becomes compelling. The miners have to replace their reserves at some point.

From what I have been reading lately it's not just gold and silver that are attracting this type of interest. Commodities, such as metal in the ground, are attracting attention across the whole spectrum.

What else can you buy at this point in the cycle if you have big money to invest/protect? Bonds? Currency?

The Ben Bernanke may succeed in creating another asset bubble after all.

That's my 0.02 FWIW.

littlepeople said...

Mike:
You said,
"is he making a big mistake, or is he in for the short term to make big profits by moving the price and then exit in a timely manner.
he surely must have studied the hunts case."

First, Hunts were trying to corner silver through futures. That was a big mistake--they thought that paper trading was above board, and the rules would not change. Their bad.

Second, Slim is not just considering stock as the final destination. If he buys controlling shares, he can own the silver that gets mined as well. Nobody says the miner has to sell it to others . . .

littlepeople said...

By definition, silver was worth about $1/ounce when we had US silver coinage.

Then, about the only use for silver, other than money, was photography and mirrors. In 1950, 14 years before Johnson took us off the silver standard, there was some 10 billion ounces of silver in coinage or investment grade.

Just due to inflation, silver would be worth a large multiple of the 1950 price. However, today there is less than 1 billion ounces of silver, so the scarcity issue has not been priced in as of now. Or, at least very little of it, though silver has looked pretty good lately.

Freegold makes sense long term. How long is anybody's guess, but we are certainly closer to it every day that passes.

However, even if silver is never a monetary metal agian, the fact that it has fewer years of mining reserves than gold is an eye-opener. It has value that is differently viewed than that of gold.

Someone here recently spoke of its value as that of a rare earth. Could be, but I believe there is less silver than most rare earths, as per USGS.

I am a freegold beleiver, but also beleive silver has an investment future in the same general direction of gold--up.

littlepeople said...

By the way, believe, not beleive. Haste makes waste.

costata said...

littlepeople,

I don't think you will find many people here arguing that silver isn't a commodity metal with good fundamentals.

costata said...

For the China watchers: Is this a Black Swan?

http://www.zerohedge.com/article/china%E2%80%99s-grey-swan-changing-colors

And a brilliant essay from John Butler.

http://www.financialsense.com/contributors/john-butler/the-year-of-the-silver-hare

costata said...

Last comment for a while (someone else can have a turn).

Can anyone explain why Silver Eagle sales by the US Mint were down in December compared to November?

"The U.S. Mint didn't have any further sales to report in December, but there is a remote possibility that they will update their December sales either today or tomorrow. At the moment, gold eagles sales stand at 60,000 ounces for the month of December... and silver eagle sales totaled 1,772,000." (My emphasis)

http://www.caseyresearch.com/gsd/edition/inflation-hyperinflation-oneor-both

"The Silver Eagles sales total for November 2010 will set a record for the highest monthly sales at 4,160,000 ounces. This breaks the previous high of 3,696,000 set all the way back in December 1986."

http://mintnewsblog.blogspot.com/2010/11/silver-eagle-bullion-sales-break.html

Rui said...

littlepeople

Annual silver mining output is about 9 times of that of gold so scarcity issue can be solved as long as it's priced high enough.

With the debt situation across the world getting worse and government just cannot stop adding more of it, they are increasingly relying on CBs to monetize the debt. No amount of free gold tweaking can solve the debt problem. Only a good ol' fashion chapter 11 can do the job.

This is when silver will return to be money again regardless what CBs plan for it as ultimately money is what savers and producers choose to use. Debtors have very little say about it.

Wendy said...

A nostalgic stroll through the archives brings me to remind us of this:

"oldinvestor said...
FOFOA,

The central truth is this I believe;

Everything that you , ANOTHER and FOA see and understand, all of the governments and central bankers also see and understand.

I want to repeat this for effect.

Everything that you , ANOTHER and FOA see and understand, all of the governments and central bankers also see and understand.

Thus, they see and understand the necessity for a new revision of our economic arrangement if we are to avoid a world financial catastrophe.

So what have they been doing to effect this?

They have been effecting a transformation in the ability and opportunity to spread gold ownership out among the worlds population, just what would be necessary for freegold to come into existence.

I quote from your post in “The call of the century”

"Gold's function in society is evolving into something new. It is being spread out among millions and millions of savers, to perform this new function. …

In Europe they can now buy gold at the teller window of the local bank, tax free! They are even putting it in vending machines! In China they buy gold chains by WEIGHT! In India they save weekly in gold. In Vietnam they are pricing houses in gold. In Thailand, gold shops are everywhere, and they post the daily buy/sell price right on the front window! In Russia the last two presidents have posed for photo-ops holding gold bars or coins."


None of this would be possible without the tacit consent and facilitation of the world’s governments. Even in this country (US) they have passed a Law that the mint Must mint enough gold and silver coins to satisfy market demand.

What more stark evidence do we need to deduce that the actual aim of the worlds countries and central banks is to widely distribute gold ownership among the population, thus facilitating the transition to freegold?

I can only see the intent of those countries who are as of yet still buying gold by their central banks, (India, Russia, etc) to have the wherewithal to distribute gold yet more widely among their population.

The bottom line is this;

We are ending the era where gold is a dead asset ensconced among the vaults of the world’s central banks, and we are entering the era where gold is widely dispersed among the worlds population as a store of wealth.

QED

We are seeing it happen. Why? The central bankers see what you see, and they have no choice.

February 14, 2010 6:24 PM "


I wish I had the good sense to copy and paste more in the few days that I have been reafing through it all. Can you guess what this mean????

I have to go through it AGAIN ....OMFG

Rui said...

Wendy,

There's this bill H.R. 6162 just recently signed into law by Obama stating "... (e) Notwithstanding any other provision of law, the Secretary (of Treasury) shall mint and issue, in quantities and qualities that the Secretary determines are sufficient to meet public demand ..." So now it's government deciding how much gold and silver is good for the public. You can search online for its details.

Also don't forget gold and silver are already classified as collectibles in the States and face a 28% appreciation tax, even higher than the capital gain tax. It does NOT look at they are planning a smooth monetary transition for the public, does it? Welcome to USSA.

If you need some proof why thou shall never trust the central planning, self-serving government the above two are the starting points. Never and ever.

costata said...

Rui,

In case you haven't noticed the USA is the primary beneficiary of the $IMFS. They may be a little slower in joining the party.

A/FOA indicated that the USA wouldn't come on board until the very end of the process of destruction of the $IMFS when Freegold would be greeted by the politicians as a way out of the mess. They have the largest gold reserves of any country in the world.

You could also interpret this change in the law as anticipation of an increase in demand that overwhelms the capacity of the US Mint to meet their statutory obligations. Under the previous wording of the Act the US Mint had very little latitude.

Rui said...

COSTATA,

The entire world is trapped in an ever growing pile of debt from US to Japan to Europe, no new monetary system could be adopted before this debt is defaulted away. Have we seen any sign government is willing to address the debt problem swiftly and decisively? None so far. Every time sth is broken, they just print some money to patch it up. Fiscal discipline be damned along the way.

Technically given that foreign countries holding huge amount of Dollar reserve, I just don't see how US could adopt Free Gold and then ship a truck load of gold to them to settle trade imbalance. Imagine the outrage the public would react to it, "Wait a minute, my social security is not covered and yet you guys give China all that gold?!!"

We will have a hard money standard after all is said and done. I know people here seem to have a somewhat Stockholm syndrome that you want this transition to be smooth. I don't see that happening unfortunately. If IMF/BIS/WORLD BANK were anywhere near as capable they would not have created this mess to begin with.

On the flip side a world w/o central banks, fractional reserve lending, FDIC and so on is a much safer and prosperous place, trust me. I personally wouldn't mind some short-term pain in exchange for a real clean sheet.

radix46 said...

Costata,
You wrote:
"Would the currency wars cease? Would the US$ suddenly become stronger when the Fed is very openly attempting to weaken the US$?

IMHO the need to diversify sovereign reserves would still drive demand for gold. The price might be lower or it might plateau. The miners might begin hedging and forward selling again but I think that the accumulation of gold would continue. "

I think that the accumulation of gold would definitely continue. CBs don't follow private gold demand, they lead it.

However, oil will bid for a currency that not only has gold, but also still works in the world. It will only store its profits in gold and the rest goes to greasing the wheels in the fiat world, so the currency must function.

So, the currency wars would take on a different slant - there would be a need to strengthen the currency.

Which is the bigger problem - the bankruptcy of the nations states of the Euro area, or the bankruptcy of States of the US? At the moment, it looks as though the $ could easily rise against the euro.

No doubt it is hugely overvalued against the yuan and I think that is where the problem will occur. This won't show up in the USDX though, so I think Western investors, at least, will be piling into the dollar when more CDS attacks happen on the euro states' debt (using Fed printed dollars?).
Sure, the Fed is diluting the dollar, but it is the world reserve currency, so there is still massive demand. If the euro was printed in the same way, it would already be dead.

No doubt this situation will change as further bilateral trade agreements are put in place, but the tipping point is hard to see.

I just don't understand enough about the unseen strategic relationships between the major trading blocks to properly guess how it will play out.

Your questions seemed to be leading somewhere, care to share where?

DP said...

@mrbeyond/costata

(Thanks for sharing the link) Very interesting indeed, considering the Dirham is a silver coin. Hmm...

radix46 said...

DP,

Dirhams are struck in bronze, with higher denominations in cupro-nickel.

http://en.wikipedia.org/wiki/United_Arab_Emirates_dirham

GOLD FREAK said...

Silver in color not content. I have a few 1 Dirham coins sitting on the table beside me right now

DP said...

Apologies, I realise now that I confused UAE Dirham with Islamic Dirham. UAE Dirham are cupronickel coins, like "silver" coins elsewhere around the world — i.e. intrinsically worthless.

I'll go back to my hole and shut up again! :)

costata said...

Rui, radix, DP

I will respond. Some delay required for sleep and work.

Cheers

Syafrin Djohan said...

(Thanks Wendy for bringing such an important info (for me at least) up.)

***
IMO, government will only allow their population to buy gold (such as China's last year open call) only while still in its infancy, say for the first 157 years of its being.

When that government evolves into something like a very old super-organism, the altruistic purpose has been lost in transition (with sound economic policy lost in immediate urgencies such as huge promises to deliver, huge interest to pay and huge power to change the rule itself).

Furthermore, privately-owned central bankers' chairs can all be legally passed down to their heirs. That makes it intensely central issue for the owners to safeguard all the family’s gold for family safekeeping, especially if they are the same group who invented the fractional reserve paper lending idea and who have invested heavily in political industry.

Governments always meddle into monetary affair, because the control of money makes them easier to abuse power for their expansionary self-reward (“in the name of the people we represents”). Otherwise, for any market to function, neither all powerful government nor central banking is necessary.

With gold in people's hands, private central bankers have no job to do and neither interest nor big bonus to earn, except to become the modest safekeeper of people's wealth (gold and silver). But then again, why bother distribute the metals, if finally they will call themselves the safekeepers of people's wealth? (which then they can so profitably fractionally monetize out and earn them huge interest to eventually outright buy off the gold they keep?)

Floating exchange rate system has done magic for the CLASS IN POWER, and it will be family suicide if they ever support Gold Standard again. What they will do with their current power and wealth is to invent the Floating Fiat 2.0, with gold’s shadow making a comeback as a buffer/stabilizer for exchange, but NOT ENOUGH PHYSICAL GOLD to let the mob rewrite Economics 101. The mob has to accept that whatever amount the physical gold is available in the market that is the final figure that they have to price all the future wealth in. The old gold will never again see the sunlight, because every old atom has all been used in the fractional paper system.

So if people do come to their senses, they have to start revolting with silver and vote (no ethical question asked as that with guns).

radix46 said...

Costata,

Sleep? What kind of Aussie are you?!

Do you like cricket? ;)

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