Saturday, May 14, 2011

Costata's Silver Open Forum - Part 2


Costata has been working on a few detailed responses to some of the comments in the last thread. But with the comments going over 600 in four days, and then Blogger swallowing about 140 of them on Thursday, I thought it would be a good idea to start a fresh open forum for Costata's replies and for all of you to continue the discussion.

Sincerely,
FOFOA

813 comments:

1 – 200 of 813   Newer›   Newest»
costata said...

A huge thank you to everyone who read and responded to my post. As promised I have collected the comments that, in my opinion, demanded a more detailed reply. I will be posting the comments gradually and here's one to help kick off the discussion.

Bron Suchecki nailed one of the key points of the post with this comment.

Bullion banks are like spiders in the center of a web. They can feel the twitching of the flies in the web and determine the mood of the market better than anyone else and often in advance of others.

One of the perspectives I was trying to highlight is that a rigged market and a cornered market have similar qualities. I think we live in a time when many markets are rigged for the benefit of the few at the expense of the many. For the record, my personal opinion is that the silver market is rigged in the manner that Bron's analogy depicts, not cornered in the traditional sense of a corner by a single operator.

I see the bullion banks as multiple spiders at the centre of each of their webs sensing each tiny vibration from their subtle connections into the silver market and using that knowledge to profit at the expense of their prey. Occasionally one of them gets an edge over their peers. Then predator becomes prey. Bron also highlighted a couple of points that I hadn't thought about.

”For example, if Mints are starting to see an increase in demand and begin running down stocks, they will start to take delivery ex-bullion banks, who as a result now have intel that retail demand is picking up before anyone else sees it in reported coin sales.

I think you also missed out that bullion banks also provide hedging and banking to industrial uses as well as miners. As they sit on both sides they can, again in advance of other market participants, feel the sentiment of those two sides by their flow/level of interest in hedging.


Again, thank you Bron. That second point filled a big hole in my narrative.

Motley Fool said...

@Desperado

Michael H pointed me towards one of the gaps in your knowledge. I forget at times that things I know, is not known by others.

I would like to make a suggestion to you. Buy yourself a copy of Atlas Shrugged and Capitalism : The unknown ideal( the non-fictional companion to Atlas Shrugged).

I think this knowledge should prove to be worth at least 5 oz Au to you. For one thing it will show you there are giants and then there are giants. ;)

Peace

The Fool

jthenewer said...

Standing in line for the comments...
J The Newer

Vincent Cate said...

I posted my thoughts on silver:

http://howfiatdies.blogspot.com/2010/10/silver-vs-dollar.html

Paul said...

Rui

...to continue

you didn't adress the morality issue anymore, certainly deserves some more thought. lot's of people struggle with those same projections.

I stated freegold couldn't be bothered by morality, because it was moral by itself, actually that was a bit to vague, I should have just said plainly that freegold is morally superior. I don't like to use the word superior I guess, but when is, it is.

I followed up with some quotes I took from "Pirsig, Robert M., Lila. An inquiry into morals. New York (Bantam Books) 1991", but I adressed them to desperado. so you might have missed.

so before you go raving about immoral banksters again, you might want to look into them and save you some steam.

"Cultures are not the source of all morals, only a limited set of morals. Cultures can be graded and judged morally according to their contribution to the evolution of life.

A culture that supports the dominance of social values over biological values is an absolutely superior culture to one that does not, and a culture that supports the dominance of intellectual values over social values is absolutely superior to one that does not."
Pirsig, Robert M., Lila. An inquiry into morals. New York (Bantam Books) 1991

or

"It's not the "nice" guy who brings about real social change. "Nice" guys look nice because they're conforming. It's the "bad" guys, who only look nice a hundred years later, that are the real Dynamic force in social evolution."

and

"Morality is not a simple set of rules. It's a very complex struggle of conflicting patterns of values. This conflict is the residue of evolution. As new patters evolve they come into conflict with old ones. Each stage of evolution creates in its wake a wash of problems."

so when you use words like "sales pitch" and "hollow promises" where you can not see harmony in equitability(smile), it is because you use an inferior moral pattern of values to judge with.

sean said...

A few comments raised the subject of the gold-silver ratio (GSR). Finally, here is a sensible discussion of what it really tells us. Brief quote: "Speculators should remember that the GSR is merely a ratio of two prices often driven by different forces. It has limited, if any, predictive power."

Regarding the massive knock-downs in silver, which are blatantly obvious if you watch live prices and volume (using netdania for example), and seem to strongly suggest active manipulation, I wonder how much of this could be accounted for by high-freqency trading algorithms (HFTs) or other robotic trading. I'm not really sure how these work, but could they not account for these wide swings simply by chasing and adding weight to momentum?

Wejn said...

Comments...

gary said...
This comment has been removed by the author.
Ash said...

The Future of Physical Gold (Part I - Dialectic Foundations)

Part I in a series about the likely role of gold in the monetary/financial systems of our future (this one is focused on abstract theoretical foundations of the dynamics in an industrial-financial capitalist economy)

Jon said...

Just read the original post, but not once is Ag backwardation mentioned. According to Wikipedia, PM backwardation is a rare event and is alleviated in days or even hours. Yet Ag has been in backwardation for many months and still exists today. If Ag backwardation is real, would someone care to explain this? TIA

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/21_James_Turk_-_Silver_in_Backwardation,_Set_to_Explode.html

J said...

...

mortymer said...

@Jon:
http://goldchat.blogspot.com/2010/07/when-does-backwardation-matter.html

Anyway, its about Au backwardation, hope it helps to understand mechanics, read also connected articles, more you can find here, it was discussed in here few times before, just pls search archives.

costata said...

Part1/2

‘Stefan Pernar’ raised the issue of the quantity of aboveground silver, and its availability at a given price point, with this comment.

One particular claim I have an issue with is that Costata is linking to a post that claims that there are 19 Billion oz Silver ground today while a) citing a 20 year old study and b) failing to mention that only about 2.2 Billion oz of that amount would become available at $20 / oz Silver.

Given the fact that according to the US Government Minerals Survey total above ground stockpile depletion from 1991 to 2009 was about 4.8 Billion oz - more than twice the amount deemed to become available according to the 1991 study at $20 / oz - the current price of $35 / oz seems a pretty good entry point. Especially considering that any additional stock depletion would have to come to a significantly degree from silver currently in the form of silverware and art.”


May 8, 2011 5:15 AM

Firstly he casts doubt on the estimates of aboveground silver put forward by the analysts I linked in my post. I have no argument with that. We can’t even seem to get agreement on the total annual supply of silver. It’s not unusual to see gaps in estimates in the order of 100-150 million ounces between the lowest and highest figures.

Stefan opines that “the current price of $35 / oz seems a pretty good entry point”. In my thought experiment I was careful to couch the issue of price in these terms “at some price”:

At some price level, some of the stock of silverware and all the old coins will begin to flow into bullion. The SLA will have to absorb this flow and bid the price up. At some price the silver fashion jewelry market will collapse. There are other white metals and alloys and there is no silver bullion jewelry market to speak of. The SLA will have to absorb this flow and continue to bid the price up.……..

Continued/

costata said...

Part 2/2

\Continued
As I said: I’m not a trader or a technical analyst (more on this in a response to another comment). That’s why I discussed price in the most generalized way.

I tried to make three main points about the stock of aboveground silver. Here are the first two:

1. There is enough silver aboveground (the stock) to break a corner in the flow. This is an issue of size and mobility of the stock versus the flow.

2. There is enough silver in the world for it to become the pre-eminent monetary metal because, as Michael Maloney pointed out in the video I linked, we can divide it to the level of atoms if necessary. We have the technology to do so for gold or silver or any other metal designated.

(The caveat I placed on point two is that IMHO, under a silver 'standard' the annual mine supply would need to be sequestered for the industrial silver users in order to placate them. This would also be necessary in order to satisfy one of the other conditions for a commodity ‘money’ to be successful as a circulating currency.)

I also acknowledged, in the comments about the post, that I think that silver + Real Bills would be a superior new monetary system for the average citizen. Superior to the one that is discussed at this blog. Despite strident claims to the contrary this blog is not promoting or evangelizing a particular new IMFS. it is simply discussing the one that many here think, on the information we have unearthed, is in the pipeline. As FOA observed: if you hate the current system you are certainly going to hate the next one, or words to that effect.

I think FOA was talking to a group he dubbed "the hard money socialists". It is not the best of all possible worlds ahead of us but, in my opinion, it will be definitely better than the IMFS we have now, for everyone, including Americans but the transition will be hell-on-wheels for a lot of people.

I addressed a third point about the stock of silver, the supposed shortage touted by other storytellers. If there is a shortage I have yet to see a watertight case to prove it.

costata said...

Part 1/2

Stefan Pernar was on a roll in the comments. He also made this point:

”The fact that the silver inventory at the CME has shrunk to only 32 Million oz makes a significant squeeze still very much in the cards. Also the fact that the COMEX cannot be cornered is irrelevant. Once the physical silver becomes scares putting an upward pressure on price and increasing the cost to the shorts.”

May 8, 2011 5:15 AM

I have to disagree with Stefan, the Comex position of the ‘shorts’ is the visible part of their trading. We have no idea how the rest of their books are structured. The short position at the Comex is also central to the narrative of some of the other storytellers I referred to in my post. I also pointed to a silver market analyst and trader who had questioned the basic premise of the naked short storytellers:

One of the tactics recommended by some analysts to break the Comex shorts is for all of the longs to stand for delivery. So readers may be interested in this explanation of trading between longs and shorts on the Comex from Metal Augmentors’ ‘silverax’. Here are a couple of snippets:

“…. the longs cannot force delivery on the shorts, but the shorts can force delivery on the longs. Yes, most everybody has it bass ackwards!”

“…..the delivery timing is almost entirely dependent on the short. It is the short that announces an intention (notice) to deliver and it is the long that is obligated to accept delivery. Not the other way around.”


If any reader, with an intimate understanding of the Comex, has the time to read the ‘silverax’ essay and post a comment here I’m sure we would all appreciate an explanation of how longs standing for delivery could force the shorts to deliver. Assuming, of course, if anyone did try to force the shorts into a physical default that the Comex would not intervene on behalf of their most powerful members - like they did with the Hunts.


The offer still stands. Is Tom Szabo wrong about the trading between the longs and the shorts at the Comex?

Continued/

costata said...

\Continued
Part 2/2

Bron Suchecki quoted from this report by Ben Davies of Hinde Capital. I’m reposting this because I think this whole report should be read by anyone with an interest in the silver market. Now I want to warn you, if you are the sort of person who needs to be warned “This is long”, we are not going to get along. Ouch! I meant to say “We will get along just fine” because I am still on my best behaviour.

Ben Davies:
"Concomitant with this manipulation is the belief that there is now not a readily available supply of physical silver. We sincerely believe that participants do not fully understand the dynamics at hand. We have believed the market to be run as an oligopoly with all that price controls potentially entail. So, yes, one of the US banks has too large a Comex position relative to Comex open interest and also annual supply. But investors misinterpret the nature of the short. We have never believed this to be a naked short. We believe that the short Comex is against unallocated long positions, ie OTC vs COMEX."

Bron then made this observation about the Comex:

What those who micro analyse the COMEX data fail to consider is that bullion banks KNOW their actions in that market are being watched, while knowing that their actions in the OTC markets are not visible. Where are they going to hold their real position - where everyone can see it? Would they not paint the visible tape to make market participants think what they want them to think about their position?

May 7, 2011 7:48 PM

jgb said...

@Costata

Page 1/2

Thanks for your cogent discussion on silver. You have put a whole lot of thought in to this which I appreciate. Sadly, the last threat got rather sidetracked. But what I am interested in some more ideas from others about what silver is really worth and what amount of physical silver (if any) a ‘shrimp’ should own.

You make the case that the silver price could be being manipulated both up and down, rather than solely suppressed down, by traders doing a pump-and-dump and then wash-rinse-repeat. And you also make the case that silver will never be allowed by the central banks and giants to threaten the dominance of gold. (Your thought that gold would be redundant if silver became the premier monetary metal was new to me – does gold have an Achilles heel in silver?) Whilst you’ve shown that some of the hype by the SLA is way overblown, it doesn’t necessarily follow that owning some physical silver is a bad choice for a shrimp – even if it is not the optimal choice for a giant.

For a while I have thought of gold vs silver ownership in terms of optimists vs pessimists. My initial views were that: if you are an optimist, and believed that the future world will be a place of high-tech electronic gizmos and lots of renewable energy from solar panels, then silver can only increase in value from its industrial uses, and gold wouldn’t have much function because the paper dollars would remain sound; in contrast only a pessimist would anticipate a collapse of paper money and so seek to preserve their wealth with gold, and silver wouldn’t have much function without a strong industrial activity.

Goodness, how my thinking has changed and those roles have (somewhat) reversed!

What I now understand is that since 1694 paper money has financed all of the wars of modern history and so increased their scale and horror. That alone makes gold, rather than paper, the money of choice for optimists. And there are plenty of other examples discussed here about how Freegold will effect positive change. But silver is often described at this forum in terms of ‘Mad Max’ scenarios where barter reigns, or to get you through the transition of a coming hyperinflation episode (along with a shoe-box of paper money for the early stages).

Continued/

jgb said...

Page 2/2

Here are my key questions. After the coming hyperinflation episode, and after the transition to Freegold, what will ‘normal’ life look like? And how might silver work for the benefit of a shrimp then?

What I see is a world that is on the downwards slope of the ‘peak oil’ curve; and where there is no viable alternative source of cheap energy. Without massive amounts of energy to produce fertilisers and run agricultural machinery, there is no way that our current world population of 7 billion people can continue to be fed. I sincerely hope that these unsustainable population numbers and western lifestyles can be unwound in an orderly fashion over the next century, but that may just be wishful thinking. Assuming that we don’t go into a complete ‘Mad Max’ breakdown, the next few decades might look a lot more low-energy like our great-grandparents’ way of life. This is discussed at some length by people such as John Michael Greer in his book ‘The Ecotechnic Future’, 2009.

So, getting back to the new ‘normal’ way of life after a hyperinflation and going down the peak oil slope (maybe with some ‘bumps’ or even abrupt ‘steps’). From history, as money in a low-energy society, 1/10-oz silver was once worth a day’s wages. So, assuming weekends, 1-oz silver would then be two week’s wages; a tube of 25 x 1-oz silver Maples would then be about a year’s wages; and a monster box of 500-oz could be wages for a generation. Could that be what we have in store? Could an energy ‘transition’, beyond a financial ‘transition’, last for most of your lifetime depending on your age? Again, I hope not. But it might be smart for a shrimp to at least consider.

That might sound pretty gloomy, but I do try to take the optimist’s view if I can. I don’t claim to know what the future holds, but I think that there are plausible scenarios (both optimistic and pessimistic) where silver can come in to some importance. This graphic (although dated) indicated powerfully to me that as an industrial metal, silver could be worth a lot more in future decades http://www.science.org.au/nova/newscientist/ns_diagrams/027ns_005image2.jpg &http://www.science.org.au/nova/newscientist/027ns_005.htm. How much of a percentage increase? Maybe it ‘only’ goes from $50 to $500, which wouldn’t be as much as if gold moves from $1.5 k to $60 k. Whether a 10-bagger is worth going for depends upon how old you are and how much wealth you have to preserve. I suspect that for a shrimp, who being more vulnerable needs to prepare for several alternative scenarios, the answer may be up to a monster box (or maybe two) of silver, accumulated alongside an equal dollar value of gold would be prudent (as well as their shoe-box of paper money and sorting out all the other stuff like food). Admittedly this may not be the most efficient approach to preserving wealth and giants will undoubtedly stick to gold.

Thoughts please?

jgb said...

That should be 'thread' - no 'threat' intended.

Robert LeRoy Parker said...

@mortymer

Here's an IMF article.

IMF head accused of sodomy

costata said...

themagicbusguy,

In a genial and clear comment, ‘themagicbusguy’ welcomed the opportunity to participate in “a civilized forum for discussion” and reminded us that “the original US Constitution mandated bimetallism”. His comment reminded me of something I read a long time ago.

In this extract (p27/28) from "The Case For Gold" (co-authored by Ron Paul) Dr Paul explains why gold and silver were mandated as currency under the Constitution. You can find the PDF of the book here.

If you haven’t read this excellent book, please read all of this extract, the punch line is right at the end but the context has enormous relevance to our times and the discussion here at this blog.

”Unfortunately, the same policy was not applied to another important device that Congress turned to after its Continental paper had become almost worthless in 1779: loan certificates. Technically, loan certificates were public debt, but they were scarcely genuine loans. They were simply notes issued by the government to pay for supplies and accepted by the merchants because the government would not pay anything else. Hence, the loan certificates became a form of currency, and rapidly depreciated. As early as the end of 1779, they had depreciated to 24 to 1 in specie.

By the end of the war, $600 million of loan certificates had been issued. Some of the later loan certificates were liquidated at a depreciated rate, but the bulk remained after the war to become the substantial core of the permanent, peacetime federal debt.

The mass of federal and state debt could have depreciated and passed out of existence by the end of the war, but the process was stopped and reversed by Robert Morris, wealthy Philadelphia merchant and virtual economic and financial czar of the Continental Congress in the last years of the war. Morris, leader of the nationalist forces in American politics, moved to make the depreciated federal debt ultimately redeemable in par and also agitated for federal assumption of the various state debts. The reason was twofold: (a) to confer a vast subsidy on speculators who had purchased the public debt at highly depreciated values, by paying interest and principal at par in specie; and (b) to build up the agitation for taxing power in the Congress, which the Articles of Confederation refused to allow to the federal government.

The decentralist policy of the states’ raising taxes or issuing new paper money to pay off the pro rata federal debt as well as their own was thwarted by the adoption of the Constitution, which brought about the victory of the nationalist program, led by Morris’s youthful disciple and former aide, Alexander Hamilton.


Morris went on to form the first Central Bank of the United States (modeled on the Bank of England). Ron Paul goes on to explain that the biggest client of Morris’s central bank was the federal government.

Plus ca change, plus c’est la meme chose. (The more things change, the more they stay the same.)

It would seem that the bankers won that round too.

Rui said...

@ Paul

Morality is not a simple set of rules. It's a very complex struggle of conflicting patterns of values. This conflict is the residue of evolution. As new patters evolve they come into conflict with old ones. Each stage of evolution creates in its wake a wash of problems."

so when you use words like "sales pitch" and "hollow promises" where you can not see harmony in equitability(smile), it is because you use an inferior moral pattern of values to judge with.



I called those promises "hollow" for good reasons.

Take this "reference point gold price" for example. Paul, I don't know if you live in US or not. If you do you'd notice government is rigging the consumer price index to hide the true state of inflation. With gold price being the most sensitive to inflation do you think the same CPI-hacking govt under FG would give you an honest gold price?

They cannot. They won't. Govt is addicted to the FIAT drugs to bankroll their agendas. They want the drug to keep coming so they will fight anything getting in the way. If they have to rig the gold market they do it, be it a FG system or not.

This is why Peter Schiff asked why FG is different when someone here (MATT?) brought the concept up to him.

Printing FIAT is a privilege to steal. It always leads to the ones having the privilege becoming oligarchies while everyone else becoming peasants being ripped off by the oligarchies.

Aaron said...

Hello JGB-

While Costata considers your question, perhaps I might offer some ideas.

When I read your thoughts I see a few themes in there and I’ve tried to capture their essence in quotations below. If I am mistaken please feel free to correct me.

JGB's thoughts as I see them: "Given Peak Oil we may not be able to sustain the current human population. As it stands we haven’t discovered alternative energy sources with an equivalent EROEI as we enjoy today with fossil fuels. Our agricultural systems as they exist today are unsustainable.”

Fair enough, but it seems your focus revolves more around economics rather than energy.

"what I am interested in some more ideas from others about what silver is really worth and what amount of physical silver (if any) a ‘shrimp’ should own."

You need to be really specific here about what you mean when you ask “what silver is really worth”. Do you mean to ask what silver is really worth to the industrial users? Or do you mean to ask what is silver really worth to the folks that value it as a store of wealth? Or do you meant to ask what is silver really worth as a barter-able asset for people within a 100 square mile radius of your house? As a transactional currency for your state? What is silver really worth as a component of an antimicrobial cream around the globe? As a paper weight in your office?

What I suspect you are asking is this: “what silver is really worth [in US dollars] on global financial markets? That’s a whole different question since silver’s valuation in dollars depends upon whatever various segments of the market place think about those questions I've listed above as well as the value the global market places on the US dollar. Getting more to the point I think you are looking for:

"After the coming hyperinflation episode, and after the transition to Freegold, what will ‘normal’ life look like? And how might silver work for the benefit of a shrimp then?"

“Normal life” will or won’t change depending upon your scope. Are you thinking about “normal life” in your neighborhood – or in your country – or across the planet in aggregate?

In a hyper-inflation silver will benefit the shrimp the same as any other commodity in a barter economy -- a benefit based on its demand by the participants in your market. Just like corn and cotton, silver will ride the hyperinflation wave, but the real question is, who will want it and for what purpose?

All I’m trying to say is that if you want to understand the value of silver in a post hyperinflation environment, you have to look at the market segments that will want it and consider the dynamics of each segment.

Gold? We already know the people that value gold. Start with the ECB ConFinStat and go from there.

--Aaron

Indenture said...

"This is why Peter Schiff asked why FG is different when someone here (MATT?) brought the concept up to him.
Peter Schiff didn't know that one of the definitions of Freegold is the elimination of Fractional Gold Lending or Encumbered Gold.

Wendy said...

FOFOA,

Is ART still allowed in the play ground seeing as though technically we are still commenting on costata's post?

Wendy said...

ooops forgot to click the box :)

Rui said...

@ Wendy

"I agree with you in theory Rui, but in practice that's exactly what they are doing by depositing their excess production in the system as digital dollars."


Those who know what's going on like the Saudis are not, right? That's why from the get-go they demanded the payment to be in gold according to Another's PetroGold story.



"And honest to god Rui, Darwin (natural selection) has been replaced by modern medicine and modern hedge funds, unless you are a fruit fly.

There is nothing naturally selected anymore, welcome to the casino!!"



It takes two to dance. If everyone lives on borrowing then who's gonna be the lender? What can we borrow if no one is interested in producing wealth any more?

Economy is driven by producers willing to produce rather than debtors willing to borrow. Call it Darwinism, invisible hands, natural selection or anything. That's how it works. It never changes.

Running a system on the assumption that everyone has to borrow is like putting the cart before the horse. Ain't gonna work out.

Wendy said...

Rui,

without unnecessarily nit picking on specific details, just let me say I agree we are coming to the end of a monetary system that is simply unsustainable: the east produces and saves and the west borrows to buy the stuff.

And I do realize this is an oversimplification of the situation but I am tiring of the complicated theories ad nauseum. I prefer the KISS approach (Keep It Simple Stupid) btw I am not calling you stupid, it's an acronym.

Clearly it's out with the old and in with the new, and I've heard many times the phrase "if you hated the old system, you won't like the new one either".

I suspect that is true for many westerners. I guess we'll just have to wait and see.

Aaron said...

@Rui

"Running a system on the assumption that everyone has to to borrow is like putting the cart before the horse."

Rui, replace the words has to with wants to. If you can overcome the idea behind this one simple exchange the entire thesis of this blog will instantly reveal itself to you.

If you do not see the difference between “has to” and “wants to” in this context, you will miss Freegold entirely over and over again. You are so close.

--Aaron

costata said...

Part 1/2

radix46,

Raised this question in his comment:

”You didn't happen to entirely expect, predict and understand this collapse in its proper context and timeframe, preparing, then unleashing your message with precision timing for full effect now did you?”

I accepted the notion that the gold and silver markets were being manipulated a long time ago. My suspicions that the rigging of the silver market was not simply an attempt to suppress the price were fueled late last year. (BTW I don’t think the manipulation of the gold market is a one way affair either. However, FWIW I think the aims and objectives of the manipulations of each of these markets are quite different.) So I decided to focus more of my attention on the silver market. At the time I was holding silver, as well as gold, so I had ‘skin in the game’ too.

In early January I became convinced that there was a kind of “corner” in the physical silver market. Not exactly like the Hunts but a manipulation that could accentuate the moves in both directions as a traditional corner would.

Once I had assembled enough of the elements of a corner narrative FOFOA challenged me to do a guest post on it. I agreed with one condition. I had to ‘put a peg in the ground’. Make a prediction based on my theories and if it was sufficiently accurate then the guest post would go ahead. That prediction was made, if memory serves me, back in February. I said there was a pump and dump in progress in silver that would be completed by June. Edwardo thought I was “top calling” when I nominated $26.00 as the floor and a GSR of 65 as the ceiling based on my reading of the work of technical analysts covering silver and my rigged market dictum. That was my test. It didn’t matter whether these exact numbers were reached. I was more interested in the timing, direction and force of the downturn. In the weeks since that ‘peg in the ground’ I continued working on the open forum post.

Now I have a fresh opportunity to test my theories about the silver market, thanks to Martin Armstrong and this paper which I read a couple of days ago. It also fits in very neatly with an allegation by a noteworthy monetary scientist that I will be re-visiting in a reply to ‘victorthecleaner’ which will emerge in due course.

Continued/

costata said...

/Continued
Part 2/2

Now radix46, if you had a corner-like hold on the silver market how would you exploit your ability to profit in both directions from this point forward? Here’s what I would do. If they are only playing the down moves they cut their profit opportunities in half. As Woody Allen once observed: “I can’t understand why more people aren’t bi-sexual. It doubles your chance of a date on Saturday night.”

Also every dollar that silver falls to the downside reduces their potential for profits. In other words let’s say that the absolute minimum price for silver is now $9.00 (the “post” GFC low). If I have silver at $26.00 I only have an absolute maximum profit range of $18.00. You are probably way ahead of me by now radix46. There is still a huge amount of bullishness among the silver bugs and speculators to tap into once this downside play is over. The world is also awash with ‘liquidity’ and there are oodles of speculators willing to try their luck.

Here’s the prediction. The “spiders” wont let silver penetrate Martin Armstrong’s $23.50 - $26.50 primary support range. They will throw everything they have at putting a floor under silver if it breaks through $26.50 because as Armstrong points out “a MONTHLY closing BELOW this range would signal that we have a serious near-term change in trend” (his emphasis). The big money play for the “spiders” is to take silver into a new top in the $70.00 to $80.00 range which Stewart Thomson recently nominated as a potential top in the next move up in silver.

Do you remember that part of my narrative where the ‘Blythe’ character was “watching gold very, very closely”? Perhaps it was because of this paper from Tom Szabo called the Gold Silver Ratio Reconsidered. I think one can make the case that the move up into a new trading range by gold wont have anything at all to do with silver. In my perspective the manipulations in these metals march to the beat of different drums.

Now radix46, here’s a tantalizing prospect. This would not prove my silver story but if it comes to pass it would surely blow the silver-price-suppression-only storytellers right out of the water, wouldn’t it?

Of course, if the transition to the new IMFS occurs suddenly, if the “spiders” run out of time it might behoove those who are intending to hold their profits in gold to follow Stewart Thomson’s oft repeated advice to traders and “sell strength and buy weakness”. I don’t want to put words in his mouth but he has, for a long time, said similar things to what I am about to close this comment with - Don’t forget to book your profits where it counts, in ounces of gold.

Rui said...

@ Wendy

Yeah, we have to wait and see. This thing works like physics. Since we have overshot in that loose borrowing direction we are looking at a proportional unpleasant snap-back in the austerity direction.


@ Aaron

It's a good point to state it as "want to". We may want to borrow but we have to be reasonable. We hard-camp guys believe if the money is hard enough then it forms a natural constraint on how much can be borrowed. With FIAT around we doubt Govt / CB can discipline themselves on it.

That's all. I've run out of time, sorry. Will be busy for a while. Would like to expand my thinking a bit perhaps later.

Have a good one folks.

Wendy said...

To all,

I do agree with those comments that suggest we have "freegold" now. Freegold was nudged into existance by the events that led to the washington agreement. The alternative at that time would have been catastrophic. It's not the freegold that many beleive that we've come blog about.

I think we can all agree that the USD system has amazing staying power and adapts rather well to crisis after crisis with the cooperation of many and the manipulation of many more.

Will we have an absolute crash of the paper market?? I kinda think not.

I beleive the world will continue to cooperate and support the $USD until a suitable alternative is found.

And I don't mean they are actually talking to each other and like each other ...... it's a matter of survival!!

I believve freegold will be incorporated into the need to survive by default.

Is silver part of the equation? I believe yes.

from this point forward I have sworn off the S word on this blog.

Please don't nit pick me on the details ..... and do not tell me that the devil is in the details!!

Wendy said...

Waiter may I have another glass of wine?

radix46 said...

Costata,

I thought as much.
I had considered having a gamble on silver with some spare cash (whatever that is).

I'm still thinking about it. I would consider a speculative position if it went below 30 and perhaps lined up with some SLA/KWN feverish buy talk. I think this plays very well into your trading range theory. I have had similar thoughts myself.

I am not a trader, simply an armchair theoriser (and long term investor), so I am a bit timid when thinking about diving into markets with this sort of volatility. I'm much happier to sit and wait for the long term and see all this sort of talk as intellectual curiosity. However, on this one, I am intrigued and am considering a small wager. We shall see.....

Thanks for the post and it was very interesting to hear about the events and the stake in the ground leading up to it.

FOFOA said...

Wow, Robert LeRoy Parker,

Thanks for the heads-up on the story about Dominique Strauss-Kahn of the IMF getting in trouble for sticking his "SDR" where it was not wanted. I don't know where you get your news, but your comment here beat both Drudgereport and ZH for getting it out!

After reading a number of accounts and updates, here is my summary:

Dominique Strauss-Kahn (DS-K) is scheduled to check out of the Hotel Sofitel today. It is about noon and a chambermaid enters the room to clean it for the next guest, not realizing that DS-K is still in there past check-out time. DS-K emerges from the bathroom buck-assed naked and moves directly to the maid, throwing her on the bed.

Here's where the accounts I've read differ. The MSM headlines say he is accused of sodomy, which I believe is forced anal sex. The more detailed stories tell of a forced blow job. How do you do that? Sodomy sounds more forceful to me. Let's go with that. So he forcefully sodomizes her on the edge of the bed.

Another divergence in stories occurs here. Some accounts say she "escaped" from her forced blow job. Others say he let her go, presumably when she protested.

So... the writer in me is trying to come up with a funny postscript...

While New York's finest are busily talking to air traffic control to halt the take-off of the Air France jet with DS-K sitting comfortably in first class, a lone cop stands guard over the hotel room crime scene. And in walks a maid. Or at least it's a hot blonde dressed like a "French maid". She sees the cop and pauses to "think", says, "sorry I'm late," sticks out her wrists and asks, "did you want to cuff me?"

Sincerely,
FOFOA

Paul said...

that is some serious "greek" problem for DSK :D

DP said...

@FOFOA, you're not suggesting that the US media are getting desperate for distractions, I mean 'news'? :P

Desperado said...

@jgb

"After the coming hyperinflation episode, and after the transition to Freegold, after the transition to Freegold, what will ‘normal’ life look like? And how might silver work for the benefit of a shrimp then?"

Once again we have freegold suffering from the UGS (Underpants Gnome Syndrome). It is the phase between hyperinflation and freegold that is so critical to determining if we can ever get there.

This recent scandal with DSK illustrates how corrupt and depraved the central bankers are. And they have spent years scheming and plotting their plans A,B,C...

If we accept FOFOA's arguments that we will have HI then the question is what next? After the HI all those muni's held by the elderly will be worth nothing. The vast majority of pensions will be worth nothing. All those people who used to make a living providing services to the elderly will out of luck. Unemployment will be at least double what it is now. Demand for oil and other commodities will collapse as credit disappears. Orders for aircraft, heavy machinery, and most non-essential manufacturing will collapse. Peak oil will not be an issue, it will have been pushed over the horizon into the future.

Undoubtedly they will try to start a war to rally the people behind them. It won't work. The federal government will either collapse or it will tax and use force to seize what wealth remains in order to fund its survival. FOFOA would likely contend that they will create a new gold-reserve backed dollar using the stolen gold in Fr. Knox. Just look at DSK and ask yourself if you trust these guys to do the right thing, even assuming the gold is not encumbered and not MIA.

All those who will have profited the most from the HI will be the ones still in power. They will come after all that private gold one way or another (and all other wealth not bolted down). This is where Utah and Virginia both declaring gold and silver legal tender gets interesting. Are these states going to allow Federal government agents to come into their states and walk out with the gold and silver? I don't think so. Can we have freegold as long as the states are refusing to relinquish that critical control of money? I don't think so. Will the federal government resort to violence to maintain power? I think so. Will some states, say Nevada, go on a silver standard? Quite possibly. Could SoCal or Arizona fall under the sway of a new South American silver zone?

FOFOA said...

Desperado,

After all you've read here, after as long as you've been with us, your obsession with "that critical control of money" is laughable. You really don't get it, do you? The primary medium of exchange does not matter. I don't care what it will be (silver, debt-free MMT money, debt-backed money, whatever). All I show you is what it most likely will be. But even if I'm wrong, that has no bearing on Freegold. Freegold is like nature's wrath. You seem to think that by controlling the primary medium of exchange they can hold back the tide. You don't get it at all.

Sincerely,
FOFOA

sean said...

Desperado, as hard as it is to conceive, I think you must also consider the possibility that what happens within the US borders becomes less relevent to global finance. If the USD is no longer the reserve currency, and no longer required for international commerce or (most importantly) the oil trade, will tiffs between tin-pot leaders in ex-U.SA have any influence on the introduction of freegold?

Paul said...

In lockup: "And who the hell are you?" "I'm the IMF head" "No shit! Can ya bail me out?" :p

Jeff said...
This comment has been removed by the author.
Aquilus said...

His highest duty is to fight inflation in all forms.

miked said...

Strauss Kahn jokes have already begun.

- He thought he was a made man. Seems he was just a maid man.

- He will get off. She swallowed the evidence

- Seems he was being a good elite socialist and screwing the working class

Paul said...

Rui

I do not live in the USA. lucky me.
Dutch. true land of the free. where sex and drugs are still legal. sort off. ;-)

you just put on the same record again. I have heard about your immoral bankers. again and again. I argue that your judgement is wrong. you use outdated glasses.

you did not adress at all

Desperado said...

@Fofoa,

You write: "Freegold is like nature's wrath. You seem to think that by controlling the primary medium of exchange they can hold back the tide."

Controlling the medium of exchange is the icing on their cake. They accomplish this through their TSA and Homeland security goons, IRS, drones, communications taps, state controlled media, and brainwashed citizenry.

Hitler, Stalin, Mao, Castro, and so many others consolidated power by banning the private posession of gold. You insist that this won't (or at least "most likely" won't) happen again and that they will miraculously be forced to respect our private property. I beg to differ, these guys have been causing wars and genocide for generations.

"You don't get it at all."
Instead of reasoned debate from any freegolders, all I ever get is condescention and insults. Its like arguing with a gnome.

Klaverius said...

I am not a freegolder, but I see it in terms of a Pascal's wager. I do not know if fofoa is right, but he he may be. I bought gold solely because of his arguments. However this still leaves open the questions of why and how. For all fofoa's wisdom, even he cannot foresee this. Considering it has been fourteen years since another, the move toward freegold unquestionably is taking longer than the FGAs anticipated.

Physical silver owners will benefit greatly in HI, whether it is through price appreciation or barter/spending. I would be sorely disappointed if I had to sell my gold in HI and didnt make it to the revaluation with my hodings intact. Further foa's quote about $.50 silver is just not credible. Why on earth would silver's price drop below face value of an ASE while nominal prices of everything else are skyrocketing in HI? It wouldn't. Even attributing the statement to polemics and hyperbole, it does nothing to give weight to his
argument.

If freegold is inevitable, it begs the question as to how one should prepare. Without being able to answer when and how freegold occurs, merely buying gold may ot be the most beneficial.

miked said...

Desperado surely it doesn't matter what one government does? Only a coordinated effort by all governments of the world could prevent gold reaching a market value through confiscation. But even then some other asset would take its place ......because it would be necessary.

miked said...

>>Further foa's quote about $.50 silver is just not credible. Why on earth would silver's price drop below face value of an ASE while nominal prices of everything else are skyrocketing in HI?

Apologies to those people who have read FOA's comments in details. Just my speculation. Doesn't FOA refer to the paper silver price? Since paper silver quotes are short positions and a debt to the counter party they probably would be worthless going into a hyperinflation because the counter party would likely be insolvent.

Klaverius said...

Could someone explain to me what, if anything is different between the paper silver and paper gold markets? Fofoa stated earlier in the comments that they would not respond the same, but didn't go into detail. I cannot see why that would be the case. Anyone have any answers?

Desperado said...

@miked,

If you assume that the elite's plans for OWG will continue unabated on their current trajectory, then yes, only a giant among giants could hope to resist a world wide move to RPG. It would be a move towards a Nash equilibrium

If you assume that there is another depression coming with strikes, riots, capital controls, trade wars, trade blocks and totalitarian takeovers, then I am not at all convinced.

The entire western civilization has been on an unsustainable path for decades and is now financially and morally bankrupt and facing major upheaval. I just don't see how this anywhere but in tears. Gold as a sound investment strategy? Sure. RPG as a hoped for ultimate destination? I am fine with that. But I have weapons, food supplies and silver because I don't think we will get there.

Gabriel said...

@Klaverius - The meaning of deflation

There are two kinds of gold revaluations, which have to be separated.
The first one is the direct outcome of our perception today of gold as money (already monetized). Deflation has to occur given the extent of global debt, this is a given. This deflation will occur in all commodities, related to money. The relative value of all commodities will decrease in relation to gold. What the Dollar will do is another story altogether, because its perception as ‘money’ evaporates. Under this context, silver at (todays) .50$ is very well possible.

I believe deflation is not yet on high drive. For example, the gold price simply reflect its current price in oil: in 2000 oil was at 20$, and gold at 300$, today oil is at 100$ and gold is at 1500.
So once this deflationary storm arrives, gold will soar. How much? As much as needed. According to housing in the US, it could be well another 50-70%, but not all commodities will experience the same deflation. In dollar terms, some commodities will rise/fall in price much faster than others. Of course, the dollar is heavily prone to manipulation, therefore in the current paradigm the mathematics become seriously convoluted.

The second appreciation of gold will come from its ubiquitous recognition as reference point, what is described here as freegold. Of course, an interesting question is what are the timelines and chronology of events.

DP said...

Hey Desperado? Yer an apple!

Knife!

DP said...

Why're ya such a sourpuss?

Hahahahahahaha

mortymer said...

Section 8. Immunities and privileges of officers and employees

All Governors, Executive Directors, Alternates, members of committees, representatives appointed under Article XII, Section 3(j), advisors of any of the foregoing persons, officers, and employees of the Fund:

(i)

shall be immune from legal process with respect to acts performed by them in their official capacity except when the Fund waives this immunity;

(ii)

not being local nationals, shall be granted the same immunities from immigration restrictions, alien registration requirements, and national service obligations and the same facilities as regards exchange restrictions as are accorded by members to the representatives, officials, and employees of comparable rank of other members; and

(iii)

shall be granted the same treatment in respect of traveling facilities as is accorded by members to representatives, officials, and employees of comparable rank of other members.
---

http://www.imf.org/external/pubs/ft/aa/aa09.htm

miked said...

Hi Desperado

Who knows, you could be right about the strife, but it won't stop money collapsing and something else being used as a reference point.

In the hyperinflations of this century countries could always fall back on the USD when their own currency collapsed. In a general hyperinflation scenario if gold is seized people will just use something else. They will have to because the alternative is a barter economy, and even the elites won't want that.

Not saying I agree there is an elite conspiracy. I don't. Just phrasing it in your terms.

miked said...

sorry, should have said hyperinflations of the last century. Showing my age :))))

JR said...

Desperado,

Your posts are as good as gold! (oops, I meant "good as silver"). Too bad English is such an imperfect, idiomatically confusing language.

Instead of reasoned debate from any freegolders, all I ever get is condescention and insults.

Yes, the nice and overly courteous and helpful people (they are a "gold mine of information"...oh wait I meant "silver mine of information") who keep pointing out what is painfully obvious - that you don't understand really anything about Freegold - are merely insult tossers who lack reason.

While too some it sure seems like they have a heart of gold (oops, I meant "heart of silver") too keep offering your the courtesy of a reply, I guess all that glitters is not gold (oops I meant "all that glitters is not silver").

Its like arguing with a gnome.

Actually its the opposite, because gnomes don't communicate too good, while FOFOA and the more eloquent posters here come at it from the opposite side of things.

But be that as it may, yes Desperado, you are on to something here. You would be much better off arguing with a gnome, as they are the gold standard (oops, meant "silver standard") of respectful audiences. Gnomes won't call you out and challenge the ideas that flow from your golden tongue (oh wait I meant silver tongue").

Clearly, an audience displaying some gnome-like tacit acceptance would be "as good as gold" (oops, sorry, meant to say "good as silver") for you, no?

Oh and how convenient, you've struck gold (opps, meant "struck silver") with this idea - a guy down the street has a gnome in his lawn out in front of his house!!! But every silver lining has a touch of grey, and sadly, some drunk kids kicked it over and pissed on it the other night. But I'll see if the gnome is now back up and kicking. Maybe we can set up a date, this is not fool's gold (oops, meant "fool's silver")!!

Cheers, J.R.

Jeff said...

CBs aren't listening to Art.

Russia to buy 100 tons of gold this year, from the moscow times, no link or it will get stuck in spam folder.

The bank's ongoing efforts to buy gold are taking on a new shine now that many economists spell doom and gloom for the U.S. dollar, which could weaken further as the U.S. government struggles with an enormous $14 trillion debt.

There's a chance that the United States will opt for a currency emission to ease its debt burden, which would further reduce the value of the greenback, said Alfa Bank economist Natalya Orlova.

"This risk is considerable," she said.

The argument against putting too much gold in the reserves is the limited liquidity of the commodity, Orlova said.

International Monetary Fund data released last week show that the Central Bank increased its gold reserves by 18.8 tons to 811.1 tons in March. The World Gold Council ranks the regulator as the eighth-largest holder of the metal among central banks worldwide.

The Central Bank bought 136.6 tons of gold last year. Its first deputy chief Georgy Luntovsky said in January that the regulator looked to buy at least 100 tons of the metal every year.

Gold also beckons other emerging economies that are wary of the dollar. Mexico boosted its gold stock in February and March by a massive 93.3 tons worth more than $4 billion, adding to holdings of a mere 6.9 tons, according to the IMF.

A Central Bank spokesman declined comment Thursday.

miked said...

Art

you are so prolific perhaps you ought to start your own website?

I neither agree nor disagree with you but I think it would be better to push your opinion positively though your own forum rather than dissenting in the comments section of someone else's blog.

It's much harder to build than destroy.

Paul said...

art

buzz off

Aquilus said...

Art trying to save people from being brainwashed is like the communist state where I grew up trying to talk down any other economic system through very loud declarative sentences.

Or if you prefer, like preventing people from reading and debating philosophy on account that they might get brainwashed and believe they live in Plato's cave.

Shouting down ideas this way has a long and illustrious pedigree

Jeff said...

If any silverbug can explain the coming freesilver monetary standard in the context of CBs buying and holding gold while having no silver, I would like to hear it.

radix46 said...

Exactly, Art!!
We call it like we see it, not how we wish it might be.

Jeff said...

Art,

You are the advocate; you explain why silver coin will work this time when it never has in the past. Also, you did not address the CB question; how do you have a silver standard with no stockpile? Who will coin it?

radix46 said...
This comment has been removed by the author.
Jeff said...

Art,

The government has a monopoly on making currency. Go ask Baron von NUTHaus what happens when you mint your own.

CBs have gold and fiat currency, art has silver and a copy of Plato's republic.

Your argument is a non-starter. Try again, and don't think you can eliminate CBs and turn the clock back to the age of Darius, Art.

radix46 said...
This comment has been removed by the author.
Jeff said...

Any system that requires the elimination of the CBs is a daydream. You don't have a system, Art.

FreeGoldAdvocate said...

Arbitrage. If I was holding gold worth $10k or more per ounce and silver was less than $100 per ounce, I would trade a lot of my gold for silver. I think a lot of people would, until the GSR was at least 20 to 1.

Art said...

SILVER IS GOING TO SOAR AFTER NEXT WEEK!

BUY GOLD!

BUY SILVER!

DON'T BUY FREEGOLD!

TAKE CARE!

Art said...

SILVER IS GOING TO SOAR AFTER NEXT WEEK!

BUY GOLD!

BUY SILVER!

DON'T BUY FREEGOLD!

TAKE CARE!

Gabriel said...

@freefoldadvocate

This makes no sense. What the GSR has to do with anything? why the magic number of 20? I mean, if you invest in something (as you seem to imply here, that if the GSR jumps too high you will purchase silver, supposedly to make profits) there must be some logic behind it. Why do you think the GSR could give you a hint on the value of a commodity?
Remember, that silver is no more than a commodity. Its industrial use is tenfold its use as ornament or hoarding.

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

Desperado said...

"Hitler, Stalin, Mao, Castro, and so many others consolidated power by banning the private posession of gold. You insist that this won't (or at least "most likely" won't) happen again and that they will miraculously be forced to respect our private property. I beg to differ, these guys have been causing wars and genocide for generations.

The entire western civilization has been on an unsustainable path for decades and is now financially and morally bankrupt and facing major upheaval."


These are good points, and along my general train of thought as well:

"As a consequence, those who are invested in various forms of money, including the U.S. dollar, physical silver and/or physical gold, will not be able to store their wealth outside the broader system of industrial production and finance until they have fully broken down, and that process could last for some significant period of time. This fact implies that no monetary store of wealth can be insulated from the manipulative forces of capitalist production, systemic finance (leveraged speculation) or the sociopolitical leverage at their disposal during such a period.

Through political control, money can be transferred between segments of society at will by means of redistributive policies, capital controls or even outright confiscation, and it could also be made much more available ("liquid") to those with "adequate" economic influence over those with little or no leverage whatsoever. If the Freegold system were to take root in certain parts of the world soon, then it would most likely consume itself rather quickly, since none of the underlying structural instabilities of the system would be absolved by its presence. These instabilities stem from the mechanisms of value creation, realization (profit taking) and speculation in the financial capitalist system.

Such instabilities escape the imagination of Freegold advocates because, along with the flawed dialectic foundation, they base its prospect on a fundamental misunderstanding of economic value in a capitalist system. The broader inevitability of financial capitalism is ignored to make room for the perceived inevitability of a global and gold-based monetary paradigm."


Most of the "money" in the world is debt, by sheer size of currency-based markets, and debt is not just an economic mode of conducting transactions or a convenient medium of exchange. It is a cultural, social and political means of exerting discipline and power. All of those systems have become tools of the financial elite class, and they will respond to financial deterioration accordingly... needless to say, that does not bode well for the prospects of Freegold.

gary said...

I'm sure many subscribe but, a chuckle, From GATA:
WASHINGTON -- After an emergency meeting of its Board of Governors on Sunday afternoon, the International Monetary Fund announced that it would sell gold to raise bail for its managing director, Dominique Strauss-Kahn, charged Saturday with raping a hotel chambermaid in New York.
The IMF's first deputy managing director, John Lipsky, taking over while Strauss-Kahn was held in a lockup in Harlem pending a court appearance, defended his boss. "The maid was Argentinian," Lipsky said, "and you know how those people are with their international loans. Dominique probably couldn't help it. Force of habit, you know."
Lipsky would not quantify the IMF's new gold sale but he said it would be enough both to obtain the release of Strauss-Kahn and "to ensure orderly transactions in gold, the dollar, the euro, the pound, the yuan, the Swedish krona, the Brazilian real, the South African rand, the Mexican and Argentine pesos, the Mongolian tugrik, and any other currencies in which a market might threaten to break out."
Gold in Asia fell more than $5 to $1,489.20.

Robert LeRoy Parker said...

@Ash

People store their wealth in gold, silver, and dollars in their safes at home right now. How is that not outside the broader system? How do you know your statement is a fact? Are you trying to say the purchasing power of those things will be influenced by the broader system?

Can you explain why the dialectic foundation is flawed again? And what is the broader inevitability of financial capitalism?

And the idea of freegold is all or nothing right, because if their is still paper gold influencing physical gold, then its not really free.

Indenture said...

Hey DP: How do you do a hyperlink to a particular comment in a post like the one from the last post where our host told a certain guest that he was free to continue posting on that thread only? I think it might be needed to remind people because it appears they are having a one sided conversation in this thread.

Aquilus said...

Ash,

Could I please have one or two concrete example of what you describe in this quote?

If the Freegold system were to take root in certain parts of the world soon, then it would most likely consume itself rather quickly, since none of the underlying structural instabilities of the system would be absolved by its presence. These instabilities stem from the mechanisms of value creation, realization (profit taking) and speculation in the financial capitalist system.

Ash said...

Robert,

Think about it this way - do you exist outside of the broader system when you are inside of your home? Even you, as a supposedly free human being, are subjected to extreme forces of influence in the economy/society/political body that you live in, which happens to operate at a global scale right now and has for some time. Money, as a more abstract concept and one that is usually strictly defined by law and/or social norms, is even more influenced and dependent on those forces.

I'll let Marx explain why the debtor/saver dialectic is flawed:

"My dialectic method is not only different from the Hegelian, but is its direct opposite. To Hegel, the life-process of the human brain, i.e. the process of thinking, which, under the name of ‘the Idea’, he even transforms into an independent subject, is the demiurgos of the real world, and the real world is only the external, phenomenal form of ‘the Idea’. With me, on the contrary, the ideal is nothing else than the material world reflected by the human mind, and translated into forms of thought."

Ok, I'll admit it's not the clearest explanation, but I'm not sure my words are much better... I'll give it another try:

The "choices" we make with regards to monetary systems (i.e. pure credit fiat currency vs. gold-backed currency) are not a result of social or political will and/or reasoned confrontations with each other. Instead, all of those things are the result of our material circumstances and, in direct relation, our economic forms of organization (i.e. financial capitalism).

The broader inevitability of that organizational form is, in the simplest terms, systemic collapse of our modern civilization. Rainbows and lollipops? No, not really. Realistic? Yes, I believe so.

From my understanding of Freegold, it carries certain implications for relative purchasing powers of currency and money, but that's not what it's fundamentally about. It is about survival of the global financial system for a significant period of time through a gold-based recapitalization process, which also gives the "savers" of the world an ability to insulate themselves from the reckless habits of "debtors".

Personally, I really like the sound of that... it would at least be much more equitable than what we have had to deal with so far. BUT, I don't think it's very likely.

Aquilus said...

Ash, upon further reflection, in this quote:
”Such instabilities escape the imagination of Freegold advocates because, along with the flawed dialectic foundation, they base its prospect on a fundamental misunderstanding of economic value in a capitalist system. The broader inevitability of financial capitalism is ignored to make room for the perceived inevitability of a global and gold-based monetary paradigm."

1. I assume the “flawed dialectic foundation” would be the conversational style of A/FOA
2. Would you be so kind and expand in concrete terms on the “fundamental misunderstanding of economic value in a capitalist system” because quite honestly I would hate to make assumptions about what you mean
3. As for “financial capitalism” I’m not sure that I subscribe to Ravi Batra’s theory of the final stage of capitalism. Some concrete backup would really help there as far as what exactly this blog ignores so we can have arguments based on concrete items.

Robert LeRoy Parker said...
This comment has been removed by the author.
Robert LeRoy Parker said...

Ash,

That was much clearer but it still seems to be opinion rather than fact.

It almost sounds like you are saying we have no control of our future, and that our destiny is predetermined based on our present circumstances. Or that we might think we are able to choose how we organize our lives/societies in the short term/present, but over the long term it is the organization that dictates our choices, so in reality we really aren't choosing at all even if we think we are???

Or maybe you are just saying life is more abstract than inevitable and Fofoa is overconfident in your opinion because of the infinite variables that are possible when calculating the future...


Perhaps I'm muddling myself up here, but even if I accept the premise that Fofoa is putting the cart before the horse, his/Anothers/Foa's ideas still have plausibility because of their dialectical nature.

As for total collapse of the system being the inevitability, couldn't it be argued using your premise that society functions based on material circumstances, that our massive infrastructure will not allow for total collapse barring something like nuclear war?

Ash said...

Aquilus,

1. I assume the “flawed dialectic foundation” would be the conversational style of A/FOA

Well, in so far as their conversational style reflects their philosophical understanding of economic/financial evolution. I obviously can't get into their heads or anyone else's for that matter, so I rely on the logical progression of their arguments.

2. Would you be so kind and expand in concrete terms on the “fundamental misunderstanding of economic value in a capitalist system” because quite honestly I would hate to make assumptions about what you mean.

The specifics of that point will be discussed in part II of the series that I am writing. Basically, I'm referring to the marginal utility theory of value used by Neo-classical and Austrian economic schools of thought.

3. As for “financial capitalism” I’m not sure that I subscribe to Ravi Batra’s theory of the final stage of capitalism. Some concrete backup would really help there as far as what exactly this blog ignores so we can have arguments based on concrete items.

That's a very broad topic... it covers everything from abstract views about the evolution of complex systems to concrete views about energy/resource scarcity. I feel both of those things are being ignored or misconstrued in some way. The series I am writing probably won't even cover the latter in depth, though, because I want to focus specifically on the former. Part I was setting the abstract theoretical foundation I am arguing from, the next parts should hopefully provide some more specific "backup" for my argument.

Ash said...

Robert,

It is opinion, not "fact". I believe it is opinion based on sound theory and observation, though.

I can't really say whether we have any capacity for "free will" or that everything is pre-determined... and that certainly has nothing to do with my argument. It does seem like we are always talking about what could have been though, right? Meanwhile, we keep our foot on the pedal, pressing it all the way down to the metal, while the proverbial brick wall approaches.

Our lives are abstract, but certain things we know for sure. For instance, current levels of industrial production cannot continue without access to increasing net energy, right? There's no two ways about that. It's when you get more specific that things become much more unpredictable.

Our massive and aging infrastructure makes collapse more likely, just like it makes death more likely in a human being. The latter, so far, is inevitable to occur. Nuclear war is a part of that infrastructure... it is not an independent possibility.

Indenture said...

Zimbabwe Says Days Of The US Dollar Are Numbered, Pushes For Gold-Backed Local Currency

Robert LeRoy Parker said...

Ash,

And what of julian simon's theories that human ingenuity will overcome energy scarcity?

Indenture said...

Ash: how does Freegold "consume itself which I infer to mean die/disappear/gone after a short time?
For this statement to work Freegold must be in place so what does 'consuming itself' look like?

Aquilus said...

Ash, I wish you good luck in writing the next part.

For what it's worth, so far the theoretical part has not managed to make me question anything.

It could be that it was a lot of lofty theory with no backup, it could be something else.

I look forward to the concrete backup for the theory in the next part.

Robert LeRoy Parker said...

@Indenture,

Sounds like Zimbabwe wants to give away their gold on top of already hyperinflating their dollar. Genius!

Art said...

Freegold = Power to the bankers

Wendy said...

Art,

That's a thought I consider worth pondering, insofar as the foundation of freegold was built by bankers.

I kinda had an aha moment when I said nothing is naturally selected anymore, I have lots of new stuff to consider.

Wendy said...

Art,

Before you get tossed out of the playground again I have a question:

Suppose for the sake of argument the alternative system you describe is monetary nivana. How do you see "us", the universal us going from here to there.

You are suggesting tossing out the central banks, referendums......

Forget the universal "us" for a sec. Do you really think the under educated, super-sized, just getting by joe/jane-6-pack are going to just wake up and demand bi-metalism? Remember we are now 4 generations away from the day to day use and thought of silver and gold as money.

btw no offence to my american neighbors, canada education system is seriously dumbing down.

Wendy said...

Let's say they did just wake up. Now that Bin Laden is out of the way the US gov can now focus on domestic insurgents (read something today). Those that behave in an "unamerican" way.

??????

Sounds ominous and shitty to me.

FOFOA said...

Wendy,

Art is now banned from all threads on this blog thanks to his belligerent spamming on this thread today. I am deleting all of his comments as soon as I see them, regardless of content, and will continue to do so. In case you didn't notice, he has his own blog where you can go discuss his favorite topic with him. Just click on his name. But be forewarned, Wendy, he is not who you think he is, and you know what I'm talking about.

Art,

Here's a simple concept for you. Let me spell it out. You are not being censored like you proclaimed in CAPSLOCK. You are being BANNED. Can you see the difference? No? No worries, the effect to you personally will be exactly the same regardless of your level of understanding. Just like buying physical gold and holding it in your personal possession.

Sincerely,
FOFOA

Art said...

peekaboo!

Wendy said...

FOFOA,
Thanks for reminding me, I never think to click on the names. I think the last one I clicked on, at your promting was topaz.

Ash said...

Aquilus,

"It could be that it was a lot of lofty theory with no backup, it could be something else."

I'd inclined to think its the second one. I think it's pretty clear to most people here by now that we (you, me, other hardcore FGAs, etc.) are not necessarily writing/responding to each other with the purpose of winning over the other side. Personally, I write for those other people who are on the fence and may be reading these comments.

Far from this back and forth being a waste of time, I think it's very necessary for those who want to see the logic/perspective behind our arguments so that they can then evaluate them on their own. That being said, I appreciate that you are considering my arguments and I will let you know when Part II is up.

Then, we can take it from there... or wherever it needs to be taken from.

Ash said...

Robert,

"And what of julian simon's theories that human ingenuity will overcome energy scarcity?"

Bogus. All of the facts/data/models/common sense say otherwise, so if he's holding on to some secret anti-gravity free energy machine stolen from the aliens then just come out with it man! I suspect he's not though... so give me something more scientific and a bit less vague and dogmatic than "human ingenuity will overcome X,Y,Z..."

Ash said...

Indenture,

Yes, the argument was that Freegold is unlikely to take root in global society, but even if it does, it is unlikely to last for any significant period of time.

It "consuming itself" would look like a bunch of desperate financial cannibals clawing and gnawing at the flesh of savers worldwide, in gold or otherwise, as they realize most everyone else has been "extraordinarily rendered" broke and they have very few markets left to sell their techno gadgets and professional financial services into. In addition, they see that oil is becoming harder and harder to get, industrial resources the same problem and rapidly changing weather patterns are disrupting basic economic activity all over the world.

Freegold, if and when it takes hold, will be shortly sacrificed at the altar of desperation and greed, of an empire lying on its death bed but refusing to take its last breath... not until it brings down many other segments of human society with it.

Robert LeRoy Parker said...

Well, there was a lot of energy scarcity talk in the 70s and simon got it right then.

Simon Ehrlich wager

I found The Ultimate Resource to be compelling as well although I didn't read all of it. One thing I like about freegold is its independent of resource scarcity and other end of the world stuff.

Jamesneo said...

Hi Ash i am only posting here my second time so pardon me:
I think that you are thinking too far ahead: My view is that either a gold backed currency or freegold will be the ultimate conclusion of the current financial breakdown of the western world within this 10 years.(The deciding factor in my opinion will not be the western powers but what the rest of the world like the SCO and the BRICS wants). For a while(a few years or a decade if very lucky), the world economy can be stabilized and over-leveraging, derivatives will be eliminated at least for the bullion market. In a way the collapse of the more complex financial system we have now of derivatives and fractional reserve bullion banking into the less complex system of freegold whereby the fractional reserve bullion banking is eliminated is just the first stage.
The second stage will involve the main effects from peak oil and agricultural disasters will come later around 2020s if we do not solve the energy scarcity problems.

costata said...

Ash,

It would be a big help to the economics 'students' here if you posted a comment setting out the economic school(s) you feel most closely reflect your understanding of the field and nominate the economists, texts and theories that inform your thinking.

If you do this it may be easier for those of us who have been studying economics for a long time to get some sense of the theoretical foundation of your thinking and writing.

JR said...

Re: Julian Simon/Ultimate Resource,

Economics is broadly the study of the interaction between humans and physical scarcity, its a study of societal organization in light of physical limitation, of human action in the face of real scarcity.

One of the basic ideas is that "prices," among other things, in part reflect relative scarcity of items in light of relative demand.

In real simple terms, all Julian Simon (not to diminish his legacy) did was go OMG this is LDO, when something that is highly demanded becomes scare it gets real expensive, and thus society is highly incentivized to find a substitute.

Who coulda knowed?

And because people are silly and most lack even a rudimentary economic understanding Simon made a career out of explaining the basic idea of the substitution effect, with a little "invested capital seeks big real returns and high prices mean big returns" for replacements and/or substitutes.

Cheers, J.R.

jthenewer said...

Ash, I find your posts and your comments very difficult to understand (I'm assuming there is something of substance in them, but it's not readily accessible to me if that's the case), and I am not especially stupid. People like me would be more easily 'reached' if you were to post your predictions / opinions in more concrete terms.
J The Newer

JR said...

Hi RLP,

YMMV, but why don't we leave the narcissists to their own devices.

Cheers, J.R.

jthenewer said...

Ash:
For example, what exactly do you mean by your comments about Freegold "consuming itself", and by your explanation above? I still don't get what you mean, I'm afraid.
J The Newer

JR said...

Wiki is fun:

...In modern usage, sophism, sophist, and sophistry are derogatory terms, due to the influence of many past philosophers.

A sophism is taken as a specious argument used for deceiving someone. It might be crafted to seem logical while actually being wrong, or it might use difficult words and complicated sentences to intimidate the audience into agreeing, or it might appeal to the audience's prejudices and emotions rather than logic; e.g., raising doubts towards the one asserting, rather than his assertion. The goal of a sophism is often to make the audience believe the writer or speaker to be smarter than he or she actually is; e.g., accusing another of sophistry for using persuasion techniques.

A sophist is a user of sophisms, i.e., an insincere person trying to confuse or deceive people. Sophists will try to persuade the audience while paying little attention to whether their argument is logical and factual.

Sophistry means making heavy use of sophisms. The word can be applied to a particular text or speech riddled with sophisms...

costata said...

Part 1/3

victorthecleaner,

In the comments on the post victor made more of an effort to describe a ‘yes-it-could-happen’ scenario than I have seen from anyone in the silver community. So hats off to victor for the effort he made. By the way victor, I agreed with the arguments presented by others against your scenario. I will return to some of your other comments shortly when I tackle bimetallism and other topics.

For anyone who missed victorthecleaner’s scenario in that previous thread, it is here.

In my opinion the key flaw in victor’s scenario, and his most recent arguments for silver, is that he keeps trying to present possibilities. I think that is a total waste of his time and ours. Anything is possible, what we are seeking to discover here are probabilities. The outcomes most likely to come to pass regardless of the claims that the material presented at this blog is merely groupthink. (I’ll respond to those claims as well in another comment.)

I meant what I said in the preamble to the thought experiment in the post. I was disappointed that I could not find anyone in the silverite/silver bug community who had articulated a credible ‘game plan’ showing how silver was going to deliver on their lofty ambitions for that metal. You may recall I summarized those ambitions in the post:

“Many of team SLA, and other vocal advocates for silver, seem to be convinced that it will return to prominence in a new international monetary system. Others simply see it as “real money” returning to its rightful place in the world economy. Some, like Bix Weir, seem to see that rightful place as the pre-eminent “money”, the “people’s money” that will lift the yoke of a corrupt monetary regime from the necks of the citizens. I can see how firmly held beliefs such as theirs lead them to such passionate advocacy for silver.”

So the silver bugs still lack a credible game plan and once more it is down to poor old costata to do the heavy lifting. I’m going to present the silver bugs with a theoretical scenario (based on BS but hard to categorically disprove). If it came to pass this scenario would get them over the line in silver’s contest with gold. (Attn. Gregor Macdonald and others, please holster your weapons. When I tackle bi-metallism I’ll be discussing Gregor’s charge that my ‘silver or gold’ perspective is a “false paradigm” as well as other arguments along similar lines that were put forward.)

Continued/

costata said...

\Continued

Part 2/3

Some of the silver bugs are the willing-est suspenders of disbelief this side of Alpha Centauri (if you are telling them what they want to hear). (So are “Freegolders” I hear you cry! I suggest you hold your fire until I present a clear target for you when I respond to the groupthink allegation. It will save on ammo.) There are sections of the silver investment community who maintain a healthier skepticism so I’m going to have to do a little work to prepare them to suspend disbelief in this tale.

This could actually work BTW and as I said earlier there is no way to categorically disprove that this isn’t ‘in the pipeline’ to those who focus on possibilities rather than probabilities. There’s also something in this for everyone. The “and silver” crowd would be vindicated as well. This might actually be welcomed with open arms by the more credulous silver bugs. So read on and witness the birth(?) of a new silver conspiracy theory.

Let’s lay the foundation. Something was troubling me about the behaviour in the price of silver and the GSR during the period when there was a massive overhang of silver. You may recall I presented that as the explanation for the lacklustre price of silver for decades and the reason silver was a natural short play. I’m surprised that no one raised this in the comments: Why was there so much volatility in the GSR during that period after silver was demonetized while there was still an overhang in the supply of silver to depress the price?

Enter Professor Antal Fekete with an interesting allegation in a paper published in May, 2006. If I understand him correctly, he alleges large physical silver holders (physical longs for the stragglers) could have been using a short strategy to profit on their metal over many, many years.

That recent paper on silver from Martin Armstrong certainly supports the notion that manipulation of the silver market has been a deeply entrenched practice for a long time. So let’s assume that there is a huge cache of silver out there and that the holder of this cache is China, as Antal Fekete has speculated elsewhere. Now why would China be increasing their imports of silver while holding a massive hoard already? To fool us all about their true intentions, of course.

There are high level meetings held annually between the governments of China and the USA. They are secret in that everyone knows about them but not everyone is invited to them. (It’s probably a catering issue.) Well here’s the totally BS “scoop” that kicks off our conspiracy theory. One of the items on the table is a demand from China that silver be included in the new monetary system when the existing regime fails. Dominique Strauss-Kahn, the head of the IMF, is aware of this plan and fighting it tooth and nail because he wants SDRs to be the core of the new system. That’s why he was set-up for a fall.

Continued/

costata said...

\Continued

Part 3/3

The EU obviously want gold to be the main asset reserve and store of value because they have lots of the stuff. But the pragmatists in the USG also recognize that the US dollar’s days are numbered and the USA has lots of gold too. But China is saying: “Not so fast round eye.” You see some people claim China doesn’t have enough gold to be an equal partner in a new IMFS. (That notion could be quite wrongheaded, by the way.)

India is also watching this keenly and warmly supporting China’s play on silver. As mentioned in that Casey Research interview I linked in this comment in India silver is the savings vehicle for poor people. Here’s the extract again:

Jeff: Is there much interest in buying silver?

Shanta: The key is gold. The rich and middle class normally buy gold, not silver. Silver is very common among the poor class, so if you are not rich, then you will buy silver. The poor people buy silver for the same reason the middle class buy gold.


So despite the fact that India hates China’s guts and has a rich tradition of taking the same attitude to their poor and lower castes that informs the honey badger’s world view (Warning Crude Language) India has broken with tradition and backed China’s position on silver. Of course, this will give the poorer souls in both India and China a leg up. It would leave England totally out in the cold until they coin their silverware, but let’s face it, no one really likes the Poms anyway and they’re lousy at cricket.

Now this scenario presents a problem for the ‘shortage-and-hardly-any-silver-stock’ crowd who want to believe this BS scenario. Let me help them out as they slam that gear stick into reverse and push the pedal to the metal. They can argue that Bob Moriarty was right for the wrong reason and that they were only “wrong” because the Chinese were concealing their gigantic hoard of silver. A perfectly natural mistake given the available evidence.

The other BS scoop from these ‘secret’ talks is that the USA is demanding that the mine supply of silver is sequestered and excluded from this deal to safeguard the interests of their military-industrial complex. Luckily China and India don’t have a problem in agreeing to that. It suits their industrial aspirations as well.

I realize this is an improbable scenario but I hope you’ll concede it is one of the possibilities. A possibility and 5 bucks will still buy you a cup of coffee in a lot of places.

ad said...

What happens to silver if it is part of a "new energy" application, like thorium?

Desperado said...

@Costata,

You start your rebuttal to VTC with this comment:

"the key flaw in victor’s scenario, and his most recent arguments for silver, is that he keeps trying to present possibilities. I think that is a total waste of his time and ours. Anything is possible, what we are seeking to discover here are probabilities."

In one of your typically nasty replies to one of my comments you wrote:

"4. If you want to promote a multi-metal strategy here expect to draw criticism."

When you so vehemently argue against a multi-metal strategy you are essentially telling readers that pure freegold is a certainty and that any other possibility is so minute as to be dismissible.

Now that various posters have presented cases and scenarios where silver could not only do better than gold but where the GSR could invert you change your argument to "probabilities vs. possibilities". Aside from this entire argument being extremely fuzzy and weak, you have in effect conceded that pure freegold is a "probability", not a "certainty". I guess you just don't understand freegold any better than I or else you would never admit to such heresy.

Any cautious investor will immediately recognize that "probabilities" can and should be hedged against, in this case by pursuing a "multi-metal" strategy. This is the point that I have been making for months and have received so much abuse from you for. I certainly don't expect you to be gracious and concede.

RM said...
This comment has been removed by the author.
radix46 said...

Desperado,

You wrote:
"In one of your typically nasty replies to one of my comments you wrote:

"4. If you want to promote a multi-metal strategy here expect to draw criticism."

When you so vehemently argue against a multi-metal strategy you are essentially telling readers that pure freegold is a certainty and that any other possibility is so minute as to be dismissible."

Non sequitur.
Your conclusion is a risible fallacy. 0/10

Drawing criticism is in no way the same as entirely denying the possiblity of something.

This fallacious premise that you clumsily crowbarred into your narrative destroys the rest of your argument.

You said:
"Aside from this entire argument being extremely fuzzy and weak..."

That is just about as perfect an example of the pot calling the kettle black as I have ever seen.

The reason that you have received so much abuse is not for your "multi-metal" strategy, it is for your utter inability to understand simple concepts and your constant repetition of the sort of sophistry seen above.

You seem oblivious to the meaning of these accusations and indeed seem to use them to support your position sometimes. It is like arguing with a child - frustrating. This is why you draw abuse.

gary said...

Costata - am I getting this right? You have given up on refuting real Silver posibility posts - and simply created a ridiculous one of your own to say 'look how stupid Silver Bugs are'. Wow - this is a new form of debate, no? As bad as choosing Bix, Max and Rich Dad as the trifecta of "see they are dumb - so Silver sucks" position.

Now why would China be increasing their imports of silver while holding a massive hoard already? To fool us all about their true intentions, of course.

Why are they also doing this with Gold? same reason? Your faux-scenario seems to state that China has minimal Gold holdings and the US is loaded. I'll stick with Jim Willie and believe the US has hardly any Gold still remaining in Fort Knox. I'd love for anyone to prove me wrong.

At the risk of being banned myself - I don't think removing Art or his comments is particularily just. He has actually been more civil recently - he just doesn't believe in FreeGold. If you are afraid of his arguments convincing people of the same - well, that's too bad. That is what Forums are for - discussion - not exporting only one philosophy. How you get a strong conclusion? You get lots to choose from.

I love FoFoA - but I don't like where this has been going. I see folding up his tent so as not to bother dealing with this - I say, let people determine for themselves who they want to side with. That would be accepting we are adults. What does it matter if a few people are suspicious of FreeGold? How does that affect you? It shouldn't. This isn't a contest where one dominant theory wins out - or it shouldn't be. Art isn't flinging poo on your guests - he may be attacking your core - but, so what? Isn't FreeGold strong enough to overcome him? If not maybe it is not as forceful a conclusion. Banning people who disagree doesn't help support your opinions - it weakenes them, imo.

I'd like to hear more on that if CB's are holding more and more Gold - and they collude - can't they keep the price suppressed (thereby enslaving us) forever? Using vast propaganda can't the powers that be - sway people from buying Gold indefinitely. So the US greenback collapses - won't there just be a paper substitute? SDR? Nordic Euro (although initially backed by Gold) Asian RMU? Cn't this charade go one for the rest of our lives?

What I am struggling with is Costata's ineffectual (and getting weaker) argument against Silver. His evidence and timing are both suspect. Bias is smelled by myself and others - and we should be allowed to state as much - even if it means questioning FreeGold in the process.

DP said...

Indenture: Hey DP: How do you do a hyperlink to a particular comment in a post like the one from the last post where our host told a certain guest that he was free to continue posting on that thread only? I think it might be needed to remind people because it appears they are having a one sided conversation in this thread.

Hi Indenture -- I hope you enjoyed the weekend, and are refreshed and ready for yet another week of swinging at that damn persistent tree stump? I must say, I was hoping that it was by now cut out and would no longer be obscuring the view down the valley... but I see you're right. It's still right there after all and we're still going to have to waste some time on it I guess. :.-( I don't know about you, but I've really got better things to do and I look forward to not needing to do it any more. Maybe we can hope that CandyMonkey might come back and bring a friend or two to help. He seemed like he might be pretty good at flinging some poo when he felt like it too. Oh, wait now a moment, there is still more for me to wade through this morning... Ahhh, sweet rapture after all. But when you look around you realise there is just always another tree stump waiting for us to take it in turns to swing at it, eh? It seems like we're just destined never to be able to move the conversation on to the next level. :-\

Anyway, I have to tell you it was pointed out to me by someone smart that I should proof all of the links I ever use, because I had put up one or two links to people's comments that were not on the first page of a post -- and they don't work "as normal", unfortunately. However, the nice chap who highlighted this to me wasn't just nice, but also real smart. He also went on to subsequently point out the (obvious, once he had said it -- too obvious!) solution too.

The solution is that you copy the URL of the comment you want to reference, as usual. At the end of the URL you can see the #commentID. If you get the URL of the page that actually does display this comment (eg: ?commentpage=3 or whatever) and then append the #commentid to it, then it'll work as you intended. As I say, obvious once it's been said (if you know anything about HTML anchors).

So, for example:

http://fofoa.blogspot.com/2011/05/costatas-silver-open-forum.html?commentPage=3#c6374461099212252083



H/T and thanks again, to "SmartPerson". ;-)

radix46 said...

Gary,

Art was not banned because of his opposition to Freegold. He was banned because of his constant spamming.

If you like his arguments, you can speak to him over at his blog. He hasn't been dragged off in the back of an unmarked, blacked-out windows secret police car. He still has his own forum. If you want to discuss his views, you can go and do it.

If he had done what he did on any other forum on the internet, he would have been moderated out long before FOFOA did it.

gary said...

Art was not banned because of his opposition to Freegold. He was banned because of his constant spamming.

So, if his repetitive messages were Pro FreeGold or anti-Silver - he would still have been banned? This is what you believe? Okay. I thought he was supplying a wealth of informative - contrary certainly - posts, but it is not MY Forum... I though Art was good for discussion and was looking forward to FoFoA debating him further. I felt I was learning a lot - maybe others were too. The only way I am going to underdstand FreeGold is to question it. I hope any passion I display in that regard is not considered 'spamming'.

DP said...

@gary, the problem isn't that the arguments of people like Art (to name just one) are strong and must be removed to stop them from breaking the damn retaining wall that Freegold is built behind. If you understood Freegold I am confident you wouldn't have doubt about this in your mind; certainly, I don't.

The problem is that while someone presenting differing ideas and having a debate to demonstrate the manners in which Freegold is not superior and/or more likely to come to pass than their scenario, which is a useful vehicle for people wishing to learn and understand, often the goal of the people bringing their alternative ideas and scenarios isn't to seek the truth, but to come and "win an argument" and perhaps steal some traffic to their blog. Art ran from one window to the next with his bag of stones, didn't bother to stop and listen to the people at each window telling him why he should stop with the stones already, just ran on to the next. People like that are of no value to the people visiting this site and attempting to understand the concepts of Freegold. The concepts are fairly straightforward, but difficult to see. The frustrations of many here are that they have to waste so much of their valuable time and effort, just trying to help those visitors coming and trying to understand the ideas expressed by the blog owner. Believe it or not, we have better things to do with our time. However, having understood Freegold, it becomes important to some that other people can understand it too. People like Art, well they just aren't helpful to anybody.

If people just came here and said "I disagree -- if you want to understand the basis of my disagreement and see my alternative and superior concept, please visit my blog at XYZ.ORG", then that would be all fine and dandy. You can talk about your alternative idea elsewhere until the cows come home, and there isn't a damn thing anyone can do to stop you. Art has a blog -- if you think his idea is perhaps superior to Freegold, then knock yourselves out and click on his profile to find the link to his blog. But don't defend his right to hold court here in FOFOA's front room and waste everybody's time. Thank you.

gary said...

@DP

I thought, being adults that we could make that decision ourselves. The argument that 'it (FG) is so hard to understand that we just can't have certain dissenting views' makes my hackles sit up and turn red (something you don't want to see).

People like Art, well they just aren't helpful to anybody.

Respectfully, I suggest speaking for yourself in this manner. Others may have got something out of his rhetoric if only a contrary view - some more than that.

Desperado said...

@radix46

"Non sequitur.
Your conclusion is a risible fallacy. 0/10"


Non sequitur.
Your conclusion is a risible fallacy. 0/10

See how easy it is? Obviously you don't understand freegold and you don't understand value. See, aren't I smart?

Drawing criticism is in no way the same as entirely denying the possiblity of something.

"This fallacious premise that you clumsily crowbarred into your narrative destroys the rest of your argument."

Gosh, I am really starting to love being a freegold guru. All you do is throw around insults, treat other posters like idiots and avoid ever addressing the issue.

DP said...

@gary, in case you missed it, I actually told you Freegold is simple, and that debate about it is a useful vehicle for people reading along at home to come to see it. Now, if you read that as an insult to your intelligence then I'm sorry.

So, you can put your hackles up and turn them red all you like my friend, but it will make no difference to me. Unless, of course, you're going to start with a bag of stones of your own of course. Which would be a little tedious and yet another waste of my time and yours, as well as everyone else reading at home. All I was asking you to do was to stop defending the right of Art to perform his mental masturbation in FOFOA's front room and at the great waste of time and effort of people like me trying to help people like you.

radix46 said...

Gary,

I will repeat, using your phraseology:

It was not his dissenting views that were the problem, it was the manner in which he shouted them at people, with cotton wool stuck in his ideas.

Others here have dissenting views. They have not been banned because they do not employ the same tactics as Art (although some have too, aparently).

Are you saying that you see absolutely nothing wrong with Art's posts and do not understand the criticisms he drew?

Perhaps you could sum up the criticisms that he drew, so that we can get a better understanding of why you disagree with them?

radix46 said...

Desperado,

I am no Freegold guru, believe me.

All I have done is pick holes in your argument. It was quite simple, they were huge.

If you find people dissecting your arguments to be insulting then perhaps you should examine the source of this tetchy defensiveness?

Do you think that a non sequitur deserves more than 0/10?

If you do, you should go and work for the school exam marking board, there are plenty of others who share you views, judging by standards as of late.

gary said...

@DP

...must be removed to stop them from breaking the damn retaining wall that Freegold is built behind. If you understood Freegold I am confident you wouldn't have doubt about this in your mind; certainly, I don't.

Gotcha - "if you knew FreeGold, like I know FreeGold - you'd be happy with Art's ban". But what IF the "retaining wall that Freegold is built behind" is breakable? Or are we not allowed to find out?

Motley Fool said...

Hi Ash

I must applaud your for your skillful use of sophistry. I am sure the ancient masters would be proud.

A tribute to you :

It seems to me that the basis of your argument might be less sound that it at first appears. Taking into mind the obvious conclusion of our current path, one cannot help but agree that your speculation may be incorrect. While the methodical basis of your argument could be interpreted to be sound, it should be noted that your lack of taking into account all the aspects would lead to a possibly false deduction on your part as to the real conclusion of the situation. I am sure you would agree that we must take into account all variables before we apply our judgment, lest we err in our summation.


How's that Ash? Can I get an A for Sophistry 101? Pretty please?

Lmao

The Fool

Ps. @others : If you are struggling to find substance or meaning in Ash's arguments, it is because there is none. That is the whole point. ;)

Motley Fool said...

Hi Gary

It is sad that I have to waste more of my time on Art's antics.

May I suggest you reread the comments since he has arrived and all responses to him.

My experience was that any logical response showing the flaws in his reasoning was ignored. He merely continued repeatedly posting the same arguments, that had already been refuted. Is it unreasonable at that point to discontinue a conversation? Or should one allow another to repeatedly scream his arguments without any heed to the responses?

I do not wish to waste my time to go looking for all the refutations and reposting, that would be a imitation of what he has been doing.

Constructive conversation requires that both parties are willing to listen.

I think you may find that those who understand Freegold, having read Art's responses, will not go over to his blog to terrorize and victimize him, to tell him how wrong he is.

I will paraphrase a previous reply to him. Repeating bullshit does not make it anything else., it remains bullshit.

If you find his opinion instructive, please feel free to go to his blog and learn. None of us will say you shouldn't. We ask only that you make up your own mind, using any and all available sources of information. If you were to ask Art if he thinks you can learn anything here, his reply would be that you are only being brainwashed.

I think this difference should show whose position is weak.

There are many great sources of knowledge to learn aspects of this story. Pick those that appeal to you and make up your own mind.

This is all we ask.

Do not however berate us for discontinuing a conversation where the other party is disrespectfull, rude, unwilling to even acknowledge our replies, or willfully ignoring them.

Peace

The Fool

Ps. I hope other Freegold advocates do not mind me speaking on their behalf on this issue. The use of 'we' felt more apt, but feel free to read it as only this fools' opinion.

Indenture said...

jthenewer: I'm glad you stated it also because as I read Ash's piece I began to question my own ability to understand complex subjects. I enjoy pie, I meant Pi, so I like challenges but I had to go back and reread multiple sentences because when I reached the end I had no idea what I was suppose to learn from the words placed together. Nice big complex words that I couldn't follow.

Ash, sorry but I was lost and even when I tried to find a direction I felt like I was twisting around the edges of a Gordian Knot. I look forward to your follow up piece and hope I can understand your direction.

radix46 said...

Gary,

DP wrote:
"@gary, the problem isn't that the arguments of people like Art (to name just one) are strong and must be removed to stop them from breaking the damn retaining wall that Freegold is built behind."

You wrote "But what IF the "retaining wall that Freegold is built behind" is breakable? Or are we not allowed to find out?"

Do you see that DP has said exactly that you are allowed to find out, and that this is not the problem?

Capitalising the 'IF' does not change DP's statement into an ominous threat of censorship.

gary said...

@DP

...a little tedious and yet another waste of my time and yours, as well as everyone else reading at home

Thank you for determining what is a waste of my time - and everyone else's as well. We are lucky to have you around.

Jeff said...

We have dissenters here; I think Desperado easily qualifies. Art was just trolling, and FOFOA was very patient. If you want free-for-all insanity read the comments at ZH. That's not discussion, it's stupidity on display. On the other end of the spectrum, Denninger will ban anyone who disents. The internet provides a range of options.

On another note, I see Pimco has disclosed gold as a top holding. Note the theme, huge funds and CBs are buying gold, not silver. Would any silverbug care to tackle this conundrum? I would like to see it explained.

DP said...

@gary, yeah - of course! I'd want to know, just as much as you. I think I might be right to say, FOFOA and everyone else here would want to know too.

While we're about it, you said So, if his repetitive messages were Pro FreeGold or anti-Silver - he would still have been banned?. My opinion on that is yes, he should be if he had persistently gone about it in the same manner. Why? Do you perhaps wish to see me banned now, because of my sometimes aggressive defence of FOFOA's content here lately? OK, well if you can get a consensus on that then be my guest. IMO it's hardly going to be me that loses out from this arrangement, and my wife will thank you just for a start off.

BTW I liked the way you chose to take only the back half of my sentence to you in your quote of me, so that it might imply a different context. But let's not quibble over split hairs... ;-)

DP said...

gary: Thank you for determining what is a waste of my time - and everyone else's as well. We are lucky to have you around.

It really is no problem sir, all part of the service and there will be no extra charge on your bill at checkout. I hope that sir will not mind, but I have other more pressing engagements to attend to.

Sincerely,

Your Genial Butler, DP

ps: Ahem. (whispers) Your fly may be undone, sir.

Aquilus said...

@Motley Fool re Ash: very well put.

The very reason why I asked again and again for concrete facts to go with the lofty word-salad.

DP said...

It's all filler, all the time... in Caveat Central...

Where is the beef?

Pete said...

@indendure, jthenewer

"I'm glad you stated it also because as I read Ash's piece I began to question my own ability to understand complex subjects. I enjoy pie, I meant Pi, so I like challenges but I had to go back and reread multiple sentences because when I reached the end I had no idea what I was suppose to learn from the words placed together. Nice big complex words that I couldn't follow."

Me too! It's annoying as hell.

"Easy reading is damned hard writing." - Nathaniel Hawthorne

"One of the really bad things you can do to your writing is to dress up the vocabulary, looking for long words because you're maybe a little bit ashamed of your short ones." - Stephen King

"Those who write clearly have readers. Those who write obscurely have commentators." - Albert Camus

Greyfox "It's the Debt, Stupid" said...

Hedge Funds, Central Banks, and now Pimco, the world’s largest bond fund have now purchased silver assets, oops I meant gold.

PIMCO's Largest "Equity" Holding – Gold
…..So in an interview recently granted to Fortune by Gudefin, we were not very surprised to hear her response on what her largest investment position is in: "The largest position in the fund is gold, which we think is a very good form of protection against what can go wrong. We were encouraged by the fact that a lot of the central banks, especially in Asia, are big buyers. We think that's an underlying trend that's very favorable for gold."

http://www.zerohedge.com/article/pimcos-largest-equity-holding-gold

Paul said...

I have just quit reading Ash, few sentences were enough, nothing to find there.

“Any intelligent fool can make things bigger and more complex... It takes a touch of genius - and a lot of courage to move in the opposite direction.”

matrixsentry said...

I have been reading this blog since discovering it in 2009. I have read every post but only recently started reading the comment sections.

I have a suggestion for the sophists: Know thyself. Most of us on this blog come here to expand our awareness and not to demonstrate our intellectual skills. There are many other places suitable for that pursuit. For myself, I care not how complex your sentences can be made or abstract your references are. I care about substance, meaning, and the insight it engenders.

Freegold is really an easy concept that can be difficult in translation. I requires patience to describe it to someone who is new and is trying to gain a foothold in this confusing arena of Keynesians, MSM, inflationists, deflationists, goldbugs, silverbugs, Kramer, and everything in between. FOFOA has the patience of a saint.

matrixsentry said...

...Simply, the task at hand is difficult enough without the games being played by Ash and the like. We get it. We know why you are here. If you do not have anything productive to add and find yourself writing missives to de-bunk Freegold, by all means write them. Then post them on your own blog and simply reference them in our comments section. Then we can choose whether we would like to read them, or treat them as pollution.

I read many blogs with differing viewpoints, many times radically different, and I rely on myself to discern which view best mirrors my understanding and experiences. If a viewpoint becomes incompatible with my conceptualization of reality, I simply move on and delete the blog. I do not take it upon myself to save the poor misguided souls apparently trapped in a world of erroneous dogma.

I simply ask you to know thyself, and return the favor most of us would naturally extend to you, just move on.

Desperado said...

@Radix46, you have not picked any holes at all. Instead of spewing bla-bla, why don't you precisely state what was a non-sequitur and why? Please include the exact quote and try to be specific and please try to avoid name calling and condescension.

matrixsentry said...

...Simply, the task at hand is difficult enough without the games being played by Ash and the like. We get it. We know why you are here. If you do not have anything productive to add and find yourself writing missives to de-bunk Freegold, by all means write them. Then post them on your own blog and simply reference them in our comments section. Then we can choose whether we would like to read them, or treat them as pollution.

I read many blogs with differing viewpoints, many times radically different, and I rely on myself to discern which view best mirrors my understanding and experiences. If a viewpoint becomes incompatible with my conceptualization of reality, I simply move on and delete the blog. I do not take it upon myself to save the poor misguided souls apparently trapped in a world of erroneous dogma.

I simply ask you to know thyself, and return the favor most of us would naturally extend to you, just move on.

DP said...

(For those reading along later, this is in reply to a post just put up by "Art", a clueless idiot troll who was banned by the host after much encouragement to change his approach and behave like a civilised Internetbeing. Art's comments are now deleted on sight as a matter of policy. However, if you would like to find out more about the views of Art, you can go and visit him playing with his doll's house HERE. Make up your own mind. But please do it there and not here. Thank you.)

Freegolders spend their whole time writing concretely. It is the people wallowing around in the sh!t that these concrete structures are built atop, who are writing with whatever they find in their hands.

DP said...

Here is the webcam view of the lobby at Art's blog. You can join him for a cup of tea and a slice of cake if you like. I hope you enjoy visiting him.

Click ----> LobbyCam <-----

DP said...

Actually, while you're looking for alternative points of view, please also check out Ash's compound at the AutomaticEarth


HERE

gary said...

@Jeff

...Note the theme, huge funds and CBs are buying gold, not silver. Would any silverbug care to tackle this conundrum?

Firstly, I am not a Silver Bug (well, don't consider myself one) but should we emulate what funds and CBs are doing? I mean should we also have a huge balance sheet of toxic assets too? Sun Tzu - you don't want to imitate the enemy - but do the converse.

I thought Art was on to something when he stated that the powers that be will use their Gold holdings to manipulate us as they have done in the past - or rather keep the price supressed - just as JPM did after taking Buffet's 127 million ounces of Silver to create SLV. They are out now - the supression will end sooner than it will for Gold. I thought that we would want Silver simply because the CBs don't have any. Isn't this the way to bring them to their knees?

Why would Gold be considered money in the future when so few people have it? or is that why? Won't barter be a bigger concept. Either paper, Silver or Gold suffer from the 'Tinker Bell effect' - in that they only have value because people believe they do. Gold has a history on its side but it has no industrial use - where Silver has both. Sorry, I have drifted so far from FreeGold that I need a good talking to.

On an occasional Friday night - a groups of my buddies and I partake in a game of poker. To simplify our rewards and losses - we utilize plastic chips identifying them with specific values. Then - like males have been doing since the dawn of man - we compete. We create this very controlled atmosphere with specific rules to avoid conflicts - although they inevitably arise in our interpretations of the dynamics. Ludwig von Mises may have actually termed our 'chips' as a 'tertiary medium of exchange'. As the game concludes at a specified point we hurriedly tally and cash-in our faux-money (chips), which deteriorates back to zero, for dollars - which we have come to accept as more universal in exchanging for goods and services (today).

The 7 of us believe that for the next 4 hours that the chips have value - hence - they DO have value. What will transpire to allow 6 Billion people to believe Gold has universal value (ever see that video of the guy in Florida trying to get $50 for a 1oz Gold Canadian coin? - no takers). If, because nothing else does have value - okay - that is kind of acceptable. Why else? History?

DP said...

Who is "disingenuous"? Us, or Art?

You decide.

DP said...

Please, somebody, anybody go and visit Art and chat with him there? He clearly has too much time on his hands, and no audience at home to share it with. I am so done with engaging with him here.

Jeff said...
This comment has been removed by the author.
Biju said...

@Motley Fool regarding ASH

Thank you for clarifying about Ash's sophistry. For sometime, I was trying to figure the exact thing Ash was saying - it felt like mostly, nothing can be deduced.

For sometime, I felt lost.

Jeff said...

DP, you are encouraging Art.

Gary,

Thanks for your reply. CBs can take toxic assets on their balance sheet because they print the money to buy them. If you could print money to buy stuff, doing so wouldn't hurt you, but it would hurt the currency you print. This is the road to HI, socializing the losses.

If you like card analogies read FOFOA's post, The Bermuda Triangle of Currency. Here is a taste:

When you first sit down at a table, you must exchange your dollars for plastic chips. This exchange of "real money" for play money is made possible by the faith of the players that at the end of the game they will be able to turn in the plastic chips at the same exchange rate. And also because of the expectation that, with a little luck and skill, the players will be able to gain some chips prior to cashing out.

In the real world, this same exact faith-based system is used to entice people to exchange real, valuable goods for paper notes. The expectation is that later, someone else will take those paper notes from you and give real, valuable goods in exchange. And while you are holding the mere paper, the real world "casino" offers you many games in which, with a little luck and skill, you MAY be able to gain some more paper notes before cashing out.

Terry said...

Gary said:
On an occasional Friday night - a groups of my buddies and I partake in a game of poker. To simplify our rewards and losses - we utilize plastic chips identifying them with specific values. Then - like males have been doing since the dawn of man - we compete. We create this very controlled atmosphere with specific rules to avoid conflicts - although they inevitably arise in our interpretations of the dynamics. Ludwig von Mises may have actually termed our 'chips' as a 'tertiary medium of exchange'. As the game concludes at a specified point we hurriedly tally and cash-in our faux-money (chips), which deteriorates back to zero, for dollars - which we have come to accept as more universal in exchanging for goods and services (today).
The poker chip analogy works wonderfully to explain the need to separate medium of exchange and store of value properties to grease the wheels of commerce.

Ash said...

Robert,

Sorry if I sounded derisive in my last comment to you, I was trying to direct that derision at Julian Simon's "ultimate resource" argument. The evidence for peak oil is overwhelming, and even the IEA said in its report last year that conventional crude oil production peaked in 2005, as they keep lowering their projections for future oil production every year. It is not easy to develop alt energy sources and infrastructure in the middle of a global depression, esp when much of that depends on heavy use of oil, land and/or water, not to mention political and social stability.

The semi-religious neo-classical propaganda that we can always substitute resources for similar ones when the price gets too high is simply ridiculous. Anyone who studies the issue for more than two minutes can probably see that... but I suspect some people here are too arrogant for that (once again, not directed @ you Robert).

Ash said...

James said...

For a while(a few years or a decade if very lucky), the world economy can be stabilized and over-leveraging, derivatives will be eliminated at least for the bullion market. In a way the collapse of the more complex financial system we have now of derivatives and fractional reserve bullion banking into the less complex system of freegold whereby the fractional reserve bullion banking is eliminated is just the first stage.

The second stage will involve the main effects from peak oil and agricultural disasters will come later around 2020s if we do not solve the energy scarcity problems.


Alright, that's a reasonable argument at least... one that most other FGAs would not dare to make. I may not agree with the timeline or the likelihood of FG taking root in the first place, but I credit your for not simply ignoring issues that are inconvenient.

gary said...

@Jeff

That is why we like the poker game. The environment is controlled and we know the value of the 'currency' will not alter. Outside of the basement - things complicate. As one grasps the concept of the 'secondary media...' as a substitute for real value as it fluctuates wildly between other similar 'dollars' around the globe as well as the value of its, ever shifting, purchasing power. Despite our lifetime usage of 'dollars' as currency - it is not too hard to start to question its validity. All rely heavily on the 'Tinker Bell principle' in that no matter what is used as 'money' - it only works if enough people believe in it. This extends from the lowliest currency all the way to the reversed apex of Exter's pyramid; Gold. So this battle of confidence rages on. This is really only heading in one direction at an less-constant speed - but the transition period is usually 40 years. Those in control of the money supply shift from the discipline of being backed by a standard - to dismissing it - where the eventual results are... historically obvious.

Simply understanding and accepting that everything inflates - is a worthy principle lost on so many. Ex. You have 1 dollar - with it you can purchase a hot dog from the vendor outside your employment. Being the studious pragmatist you instead decide to put that 100 cents in the bank and accrue interest. One year later - your dollar is worth $1.0125 yet the hot dogs are now at a, not unusually increased, price of $1.10. Extrapolating this truism ala Ayn Rand - the 'saver' is eventually destroyed - and the hot dog vendor out of business. No one can save fast enough unless interest rates rise above inflation and unless purchasers accept the inflation - otherwise we sit and patiently wait as businesses around us fail. As commodities rise - so do the cost of buns, the dog (beef, pork and.... raccoon meat - whatever) and the condiments. The price can't do anything but increase and wages more gradual rise are less effectual to our bottom line. We are being bled dry, folks. When enough people catch on we have the first stage of the 'Crack Up Boom' (maybe we are in it).

So - most agree the system is unsustainable (for a whole pile of reasons) and we wish to know what the heck is gonna happen. Bi-metalism, FreeGold? King Silver, SDR, RMU, Nordic Euro... somebody tell me what is going to happen in 6 months, 1 year, 2 years and 5 years. Please. Thank you. I appreciate your opinions.

Jeff said...

Art,

Bingo! I agree with you. The poker dealer is the central bank, and you are forced to play with their chips. They can't lose the game because they have an endless chip supply. They dilute the value of your chips.

But your solution is to limit the number of chips. If a new player sits down at the game he can only buy chips that someone else will sell. But the dealer and the house won't go along! They want more players, and they control the game. You say, fire the dealer. The house throws you out, it's their game and their rules! You lose Art.

What if you could cash in your chips until the next time you want to play, Art? Then no matter how much dilution goes on at the game, you won't get hurt.

Ash said...

costata,

In terms of economic schools, I would not lump myself into any of the traditional ones. If I was forced to choose a label, it would probably be "Post-Keynesian", which actually finds a lot of "value" in the ideas of Karl Marx, as well as Paul Davidson, Hyman Minsky and Sraffa. Dr. Steve Keen is an Australian economist who is probably the most recent and comprehensive analyst of this school, and he has produced dynamic models of Minsky's "Financial Instability Hypothesis" - www.debtdeflation.com

Basically, I am focusing on Marx and Keen in Part II, and rebuttals to economists such as Say and Menger. I do believe that the Austrian school has many advantages over Neo-classical economics, but still believe they are both heavily flawed.

Indenture said...

jgb: Adding the "peak oil slope" to the after HI lifestyle picture is a lens that, as I see it, doesn't change the core because once the Freegold switch is flipped (in what ever way you want to imagine the beginning of the event catalysts to be) the placement of Value in Unencumbered Gold as the Ultimate Store of Wealth will not diminish as energy supplies in whatever form are diminishing. Your other question, you might want to try this. Buy a Monster Box of Silver along with your gold and other prudent provisions and sit and be happy. This is what Freegold allows because there is no where further to go, there is no 'investment' and watching numbers is a fallacy. If you can go about everything else in your life and not care about the fluctuating dollar amount of the Monster Box and when you should sell it, to take profits (and do what with the profit?) you're doing fine. If however you constantly think about that Monster Box as a fluctuating dollar amount riding the waves of international sentiment and you find yourself thinking at what moment of what GSR of what full moon reason is the right time to sell your silver then you probably placed your Savings in the wrong storage unit.

Jeff said...

I disagree, Art. If I cash out I stand outside the system. You can't dilute my gold, only my chips. I won't gain in real terms, but I won't lose.

Gary,

Based on the evidence I think the decision has been made. Freegold.

Ash said...

Motley Fool,

Speaking of flawed... you, JR and the "substitution effect". See, I kept that sentence short and tidy for you both. Wouldn't want my logical arguments to turn into sophistry after they contain more than ten words and hurt your delicate sensibilities towards Freegold.

Seriously, though, what don't you understand? That a flawed theoretical foundation can take your logic in the complete wrong direction to an equally flawed conclusion? Maybe if FOFOA says it, you won't consider it to be sophistry:

Today we have many fine, intelligent and exacting analysts all looking at the same economic data and coming up with vastly different analyses of the present global financial crisis. What sets them all apart from each other is not intelligence, or math skills, or even popularity. What sets them apart is the foundational premises on which they operate. And a false premise can skew a brilliant analysis 180 degrees in the wrong direction.

Why don't you ask FOFOA for some "facts" to back up his arguments? Oh wait, they are contained in numerous articles written over a few years... but you expect me to sum up every fact or data point I have ever written about in terms of financial instability, complexity theory, sociopolitical instability, ecosystem degradation, peak oil, etc. here in the simplest terms so you don't have to put any effort into evaluating a different a perspective?

No thanks... I think I'll pass and just be a sophist in the minds of "ants". Meanwhile, I can continue discussing the broader reality with people who actually care to know about it.

Jeff said...

Art, I don't know what you mean. I'm talking about my savings, store of value. Of course I understand that I am losing in real terms when I am paid in fiat. Is that your point? Because my counter-point is that I don't save much in fiat.

Your argument that we stop the game just won't happen. It may be a good idea, but it isn't realistic.

DP said...

Ash: Why don't you ask FOFOA for some "facts" to back up his arguments? Oh wait, they are contained in numerous articles written over a few years... but you expect me to sum up every fact or data point I have ever written about in terms of financial instability, complexity theory, sociopolitical instability, ecosystem degradation, peak oil, etc. here in the simplest terms so you don't have to put any effort into evaluating a different a perspective?

No, Ash, we don't expect you to do that here. We expect you to do it at your place, but clearly you have to make a clear and valid point here if you want people to go back home with you. If you chose to do it using plain English then it would make your own job easier, as well as that of your audience. Your audience might be bigger too, who knows? You are looking to expand your audience, right? I don't see what else you're looking to achieve with what you're doing so far here. If you wanted to show us the flaws here, you'd get to the point instead of driving around it in a fancy car with a lot of superfluous verbiage all the time.

Neverfox said...

But with the comments going over 600 in four days, and then Blogger swallowing about 140 of them on Thursday

I hope you will consider migrating to Wordpress or something more robust. Blogger (and especially the comment system...ugh) just doesn't cut it for the kind of activity this blog is now getting. Like it or not, you're prime time now.

gary said...

Hi Jeff,

You can't dilute my gold, only my chips. I won't gain in real terms, but I won't lose.

How can you be sure Jeff? Can you guarantee Gold will be worth more... tomorrow? What is the CB's keep the price supressed with their massive quantities as they prefer to force us the play the dollar game 4ever... until we go broke?

Based on the evidence I think the decision has been made. Freegold.

It's a leap - but that's okay. So what should I do? JUST buy physical Gold?

A friend came by this morning (yes, I have one who believes!) - he has more Precious Metals than I (bas-tard) and both of us have more Silver than Gold at this point (we probably both have more than you think) - we are waiting for it to rise more dramatically than Gold (lower GSR) before converting. But maybe we should hold onto Silver right up until? I tell you why I like Silver - it seems a better way to hide from the Government. I know a guy in Florida with bags and bags of Junk Silver - when he needs money he cashes some in. Does he declare? LOL. I have a feeling that Gold purchase/selling will be restricted (how, when, I have no idea).

Won't mining stocks dratically rise too? See I am looking for the best bang for my buck. If I go 100% into Gold - I would like to maximize the amount I can buy with funny-money. 100oz may not be enough. I don't know. Do you?

Truly, I can't imagine a time (call it FreeGold) where Gold is the equavalent of $60K/oz (this, I believe) and Silver is $.50. Help me FoFoa. Help me. Econ philosophy is grand - I'd like a roadmap of what is ahead. We know what has passed - tell me where we are going...

Michael H said...

FOFOA,

Thank you kindly for banning Art.

Art said...

GARY,

What will happen is Asia, the Middle East, Africa and the rest of the world will repudiate the dollar and the Euro and the Yen as MONEY - as anything more than mere units of account based on their value at some fixed point in time, why not that of today.

So the rest of the world will buy Airbuses from Europe and Caterpillar equipment from us and electronic gadgets and cars from Japan based on what their respective currencies' values were at some point in time, in relation to gold and silver and other commodities and other currencies.

HOWEVER, the rest of the world will stop SAVING in Western currencies and SELLING for Western currencies.

The rest of the world will stick it to US in the West big time, just like we did it to them.

HOW?

They will simply require LOCAL or REGIONAL currency from us if we want to buy their stuff. So we will be forced to go into debt to them this time in order to borrow and buy what we need from them. Otherwise, we'll have no choice but to retool our heads and our hearts, to start with, and make the things that we need HERE.

Which will not happen before a crisis of proportions hitherto unheard of hits our shores, in my opinion. Because we're bad. The Freegolders and the bankers are only the reflection of our collective consciousness. We don't have a problem; we ARE the problem.

It was our fault.

Ash said...

DP,

I'm just pointing out the double standard here, in terms of telling people to go through scores of archived material if they ever want to have a chance at understanding Freegold, or at least re-read certain long-winded articles a few times and then come to established FGAs with respectful questions, as a student asking a teacher.

You realize that FOFOA's anti-deflation vs. HI article last month was not the easiest material to digest, right? Unlike many others, I have never really criticized him for that because a) it's the writing style that is most comfortable with and what he feels is necessary and b) it is indeed a complex argument that cannot even really be summarized in a few short sentences.

If you are not familiar with my writing or my arguments, then I don't think I can cleanly lay it all out for you in a few posts. That's why I would rather post links to my articles, and engage in a specific question/answer dialogue in comment forums. And I don't expect other people to only read my stuff or ask my questions... I am happy to read other views and ask questions about them myself. If we all just lay out long-winded theses in the comment forum, it becomes very difficult for anyone to follow the logical progression of our arguments and contrast them with others.

So Robert, for example, asked me about why I think the Freegold dialectic between debtors and savers is flawed, and why the material dialectic of Marx is a more accurate representation of reality. I answered him twice in the best way that I could. I can't "prove" something like that to anyone with facts and data, but I can try to convince you that it better explains historical and present-day events.

If you don't understand something that I said, then just ask me to clarify it, like Robert did. He may still not agree with me about economics or limited energy, but at least he understands my position. That's what logical debate is all about... or, you could just dismiss anything that is unclear as non-substantive sophistry and take solace in your own superior wisdom regarding all things related to the human experience. That, of course, is up to you.

miked said...

>>Zimbabwe Says Days Of The US Dollar Are Numbered, Pushes For Gold-Backed Local Currency

Hmm, perhaps I should get Zimbabwe dollars then as they are far less likely to be confiscated than physical...

What say you FOFOA? :))

Ash said...

Jthenews,

Ash:

"For example, what exactly do you mean by your comments about Freegold "consuming itself", and by your explanation above? I still don't get what you mean, I'm afraid."

Alright, I'll admit I got a bit carried way explaining this concept in vague analogous terms. Frankly, that phrase was included at the end of Part I in my article series to set up the theme for part II. Freegold would "consume itself" for the same reason financial capitalism in general is now consuming itself with a fiat currency as the reserve asset.

Regardless of what acts as the reserve asset from here on out, the system would have already rendered billions of people hungry, cold, broke and/or desperate. The financial elites need to accumulate wealth for the global economy to keep growing, and they cannot do so if there is not enough real or imaginary (credit-based) capital to buy finished products or services in global consumer markets. That is why the system is breaking down now, and that cannot be reversed by switching to a theoretically more stable monetary system (especially if the switch means wiping out trillions in dollar-denominated savings).

After HI, they could try to re-leverage the consumer population through the Freegold system, but there are numerous factors making that nearly impossible - everything from structural unemployment and unfavorable demographics to environmental degradation and the likelihood of systemic resource wars. There are just some fundamental instabilities that cannot be rectified by inflating dollar debt via printing and switching to another global monetary system.

DP said...

Plain English. Very clear. Thank you. :-)

Aquilus said...

Ash,

That's very pessimistic, with no confidence in human nature whatsoever.

In every hyperinflation I have read about including the one I have lived through, after the inflation "magic" wears off, you have the actual hyperinflation which flattens the standard of living for the middle class, followed by the end-game currency reval and deflation and then a new cycle after the "clean-up".

To me the amazing thing has always been how fast human nature re-bounds (after a few years) and how credit returns, but in much more balance fashion (obvious given what everyone just went through).

Now I really look forward to why this time it's different (yes, dollar is reserve and global, but..).

Honestly, I wait for you to bring good arguments.

Indenture said...

Ash: That was a voice I understood. Question: You said, "financial capitalism in general is now consuming itself with a fiat currency as the reserve asset." Basically, the global economy is breaking down because no more credit can be created to sustain the growth demand of the financial elites. And, big punch line, that this 'breakdown cannot be reversed' with/under Freegold.

You make it sound like this momentum is in a frictionless environment and that the downward trajectory will continue until... what? I don't get it. If there is no bottom then 'Yay for worthless shiny rocks' and Captain Caplocks can dance as we all free fall together towards nothingness. However, because there are outside forces acting on this descent, and because Freegold is available, I tend to think someone will pull the emergency rip chord allowing the economy to find some sort of equilibrium.

Paul said...

Comming from Marx, could Ash be else but pessimistic about human nature ?

Aquilus said...

@Paul

Touche - very funny.

Oh, and I come from Marx too, but from the opposite direction (running away from it that is).

Ash said...

Aquilus and Indenture,

I appreciate you guys bearing with me on these issues. I have to say, though, that it sounds like the default counter-argument always becomes some version of "you are too pessimistic and humans have always found ways to overcome..."

First of all, nation-states initially and then global civilization has not been around for very long at all...I think we can all agree on that. The socioeconomic system has become very unique in its structural organization since the discovery of fossil fuels, which was only about 150 years ago. Global finance only really took off over the last 40 years or so. It's hard to say that examples of economic breakdown or HI within that time frame show us anything about an inherent human ability to overcome fundamental predicaments.

Second, I disagree that we have really overcome anything, even within that limited time frame. I don't view revaluing currency and restarting financial markets after HI as some fundamental victory, but as simply kicking the can down the road (or snowball down the hill as Ilargi from TAE referred to it). We are truly extending the story and pretending that our problems have gone away, in a classic ponzi fashion, and I don't mean just since 2007-08. What did any of those countries that experienced and emerged from HI really accomplish, except temporarily alleviating some domestic economic instability and tying themselves to an even larger ponzi scheme? Even the so-called "socialist" countries who talk trash about the IMF and nationalize industries once in awhile still depend on that financial structure just as much everyone else.

Don't get me wrong, I'm not arguing that it's a linear process by any means. There are periods of concessions by elites and triumph for the common man, and short-term economic developments have been very unpredictable, but generally the broader trend has been towards systemic collapse. Pulling the parachute open only helps when you are far up from the ground, and the available evidence suggests to me that we are not very far at all. Regardless, I look around and see academics, policymakers and everyday people attempting to defy gravity and climb back up through the atmosphere, instead of even thinking about pulling the rip chord... but if you guys are right, and it gets pulled via Freegold, I still feel that it is way too little, way too late.

Jeff said...

Art,

You say "the rest of the world will buy...from Europe and...from us... based on what their respective currencies' values were at some point in time, in relation to gold."

No argument here, but I left off the part about silver and other commodities. You don't think local fiat will be measured against more than one reference point do you? That would be confusing.

You say "HOWEVER, the rest of the world will stop SAVING in Western currencies and SELLING for Western currencies."

Ok, but there has to be a currency exchange mechanism, right? And a reference point.

You say "YOU will fall. Not the rest of the world who are productive."

The biggest HI will be in dollars and in the US. I don't see much argument here.

You say "It's fiat against fiat".

Agree, but just as there is a reference point now (US dollar) there will be a reference point in the future (gold). Not multiple reference points, just one.

Art, you are sounding more like a Freegolder every day. :)

Ash said...

And it should be clear that the reason we don't agree is that our theoretical foundations of societal evolution are fundamentally different. My conclusion is simple to understand, but difficult to accept when you adhere to concepts of "human action", "substitution effects" and the "marginal utility theory of value". That is why I started the articles about physical gold with abstract theoretical discussions. I should have perhaps included more specific and "relevant" analogies/examples of "dialectical materialism" and complex systems theory (instead of the quantum decoherence analogy that I used), but those can obviously distort the underlying reality as much as they illuminate it. I'll see what I can do for part II...

Aquilus said...

Ash

In your last answer, I understand that you argue that the present system is a series of bad failures and re-starts and that this time it really will get cleaned up.

I am really waiting to understand why is it that this time is a special time?

In other hyperinflations I and everyone that lived through one comfortable simply found the store of value (dollars at that time in the 90s) move to that early enough, waited hyper inflation out and then at the height of it bought items that have intrinsic value (rentals in good areas for example) at extremelly low prices with part of the dollars.

Then, once the currency is re-valued/stabilized/replaced, the game starts again.

This time, it looks to me it's not the dollar but gold that is that universal store of value. So be it.

Again, why should this time be different?

Jeff said...

Art,

I don't think it is unacceptable, and based on the evidence central banks and large private gold holders don't think it is unacceptable.

Silverbugs seem pretty overmatched by these groups. Not one country proposes or is preparing for your system. Only Carlos Slim is even talking about silver. Even silverbugs are divided into camps; some of you plan to desert into gold when the 'ratio' is right. Others just want to sell silver for fiat profit.

I don't see an emerging silver or bi-metallic system. It's not necessary or even desirable (except for some silverbugs). What is the advantage of a bi-metallic system? How will it be achieved?

Ash said...

Aquilus,
"Again, why should this time be different?"

Without getting into environmental stuff, I would say this time is financially different because the weight of financial instabilities from past times are still present. In complex systems theory, that means the likelihood of a major and chaotic tipping point is much more likely than it was in any other time over the last few hundred years.

It is an exponential (accelerating) process that becomes increasingly difficult to overcome, and by this point any monetary tactics used to keep the game going would be very temporary if they work at all.

Again, there are a lot of different reasons why the above is true, and it requires a certain theoretical foundation to understand. For instance, I cannot explain to you why physical gold cannot retain value independent of paper finance, structural unemployment must keep getting worse or why consumers cannot re-leverage without talking about theories of dialectic evolution, economic value and financial instability first. If you don't buy into those initial foundations, then it is very easy and perhaps even necessary for you to dismiss the resulting conclusions.

sean said...

Hi Gary,
you raise very valid questions, but it's difficult for anyone to answer them in a better way than FOFOA has already in previous articles. For instance, the question of "What will transpire to allow 6 Billion people to believe Gold has universal value", which can be answered in different ways. Simply put: "hyperinflation", although if you are asking why gold in particular then refer to FOFOA's, "focal point:gold" article. It's worth remembering, though, at least 1 billion (the population of India) already believe gold has universal value.

Recently the "trail" here has been getting so overgrown with fast-growing weeds it's difficult to follow, so perhaps if you pause for a bit, then ask what is your single, most pressing question, we can get a more thoughtful discussion going.

Paul said...

Don Quitchotte at least took Sancho panza with him to stay in touch with reality. ...

Aquilus said...

@Ash

Regarding: "Again, there are a lot of different reasons why the above is true, and it requires a certain theoretical foundation to understand. For instance, I cannot explain to you why physical gold cannot retain value independent of paper finance, structural unemployment must keep getting worse or why consumers cannot re-leverage without talking about theories of dialectic evolution, economic value and financial instability first. If you don't buy into those initial foundations, then it is very easy and perhaps even necessary for you to dismiss the resulting conclusions."

please, I absolutely insist that you do so, in great detail, and with concrete examples in your series on your site. Please let me know when I can go there and read it.

@Paul
Poor Sancho almost lost it on the journey though...

@All please excuse me if I partially highjacked the thread and went on more tangents than our host might/might not wish to see here. I will now be quiet for a little while, and I honestly look forward to more of the gold/HI discussion that this blog is dedicated to.

Art said...

FOFOA aka the THOUGHT POLICE is back and I'm being censored again.

See you all later when the beast is back in his den.

Art said...

FOFOA aka the THOUGHT POLICE is back and I'm being censored again.

See you all later when the beast is back in his den.

Art said...

FOFOA aka the THOUGHT POLICE is back and I'm being censored again.

See you all later when the beast is back in his den.

raptor said...

'Inflated: How Money and Debt Built the American Dream' - Freedomain Radio Interviews Chris Whalen

http://www.youtube.com/watch?v=gTIt3x747Ak&feature=feedu

Gold by weight, not with stamped value ;)
Sound familiar.

raptor said...

'Inflated: How Money and Debt Built the American Dream' - Freedomain Radio Interviews Chris Whalen

http://www.youtube.com/watch?v=gTIt3x747Ak&feature=feedu

Gold by weight, not with stamped value ;)
Sound familiar.

Ash said...

Aquilus,

OK, well if you haven't looked at Part I already, it is up on The Automatic Earth and deals with the issue of dialectic foundations:

The Future of Physical Gold (Part I - Dialectic Foundations)

I recommend you start with that and let me know if you have specific questions about what I'm saying. Part II will discuss economic theories of value and fundamental financial instabilities of capitalism. Not sure when it will be up, but hopefully not too long.

Of course, all of it is discussed in the context of physical gold as a monetary asset, and its prospects of becoming and remaining a global reserve asset.

The Engineer said...

Sorry... it`s just nonsense to believe that silver will not have a role after the end of the dollar.

It will... maybe not as gold, but I would strongly advice to have some silver. The future ahead of us is completely unknown. Why not have a little more protection?

Here`s a interesting video with Eric Sprott, saying that demand for silve is HIGH:

http://www.youtube.com/watch?v=PM-LrMimRys&feature=player_embedded

Art said...

FREEGOLD is against FREE SPEECH!

Art said...

Freegold is fraud.

costata said...

gary,

I'm not ignoring the comments in the current thread or the arguments for silver presented in either thread. I am doing exactly what I said I would do. That is, responding in more detail to some of the 600 comments in the previous thread. It will take some time but I am determined to do it howwever long it takes.

Ash,

Thank you for pointing me toward your economic "founding fathers". I understand your reluctance to identify with a particular school.

It would be doubly helpful to my understanding of your thinking if you could also point to a few texts and papers that you agree with (or disagree with). Some here may have read them too. It might help us to find some common ground or illluminate the reasons for our differences.

Robert LeRoy Parker said...

@Ash,

And it should be clear that the reason we don't agree is that our theoretical foundations of societal evolution are fundamentally different. My conclusion is simple to understand, but difficult to accept when you adhere to concepts of "human action", "substitution effects" and the "marginal utility theory of value". That is why I started the articles about physical gold with abstract theoretical discussions. I should have perhaps included more specific and "relevant" analogies/examples of "dialectical materialism" and complex systems theory (instead of the quantum decoherence analogy that I used), but those can obviously distort the underlying reality as much as they illuminate it. I'll see what I can do for part II...

So can your conclusion be summarized as freegold is too simple, therefore it will not happen, but if it does, it will not last?

@JR,

I'll take it over to AE if I desire to continue with this.

gary said...

Cool Costata - take your time. No one is expedcting miracles...

Art said...

FREEGOLDERS,

You don't need to read a library in order to prove a point wrong. And if you prove that a point is wrong, then you don't need to read a library about how the point is right.

How stupid is that.

Indenture said...

Engineer: "Sorry... it`s just nonsense to believe that silver will not have a role after the end of the dollar."
I don't remember reading anything about the end of the Dollar?
I remember "The definitive comment on all fiat currencies post-Freegold:
From Paul: "A bit tattered and shell shocked, and missing a few zeros. It'll probably be found wandering through ... (insert name of city), dazed but still defiant.""
If there is no Dollar (and no other fiat currency is used in The United States) well then, silver is a fine asset.
But Freegold requires a fiat currency for a medium of exchange so if there is no Dollar (no currency/ no medium of exchange) then we don't have Freegold.
A world without Freegold or Currencies would most definitely require silver.

Aaron said...

"Freegold requires a fiat currency for a medium of exchange so if there is no Dollar (no currency/ no medium of exchange) then we don't have Freegold.

Excellent point, Indenture. It needs repeating from time to time.

--Aaron

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