Sunday, August 7, 2011

Forum 1700



Tuesday, January 1, 2002 - Launch of euro notes and coins
Friday, February 8, 2002 - GOLD ABOVE $300
Monday, December 1, 2003 - GOLD ABOVE $400
Thursday December 1, 2005 - GOLD ABOVE $500
Monday, April 17, 2006 - GOLD ABOVE $600
Tuesday, May 9, 2006 - GOLD ABOVE $700
Friday, November 2, 2007 - GOLD ABOVE $800
Monday, January 14, 2008 - GOLD ABOVE $900
Monday, March 17, 2008 - GOLD ABOVE $1000
Monday, November 9, 2009 - GOLD ABOVE $1100
Tuesday, December 1, 2009 - GOLD ABOVE $1200
Tuesday, September 28, 2010 - GOLD ABOVE $1300
Wednesday, November 9, 2010 - GOLD ABOVE $1400
Wednesday, April 20, 2011 - GOLD ABOVE $1500
Monday, July 18, 2011 - GOLD ABOVE $1600
Monday, August 8, 2011 - GOLD ABOVE $1700



Technically I need a London fix or Comex close over $1,700 to update the list. But what the heck. Feels like a Forum 1700 night tonight. Enjoy the show! $1,701 right now.

Sincerely,
FOFOA

Update: Well, I guess it's official now. $1,718 at the close.





Photos from The Onion

234 comments:

1 – 200 of 234   Newer›   Newest»
Aaron said...

Yeah baby! Gold at $1700!

ok, bedtime.

Where did I park the car? Tyrone?

Hawks5999 said...

Gold still has an AAA+ rating.

Wendy said...

I have to guess the song won Aaron .........

Tyrone you're asleep at the wheel tonight :)

Aquilus said...

And so the ascent continues...

asdfadsf said...

$1764.00 a transitional price, Jim Sinclair on the loss of confidence.

http://www.youtube.com/watch?v=IF24atvNkSo

Aaron said...

No kidding Wendy. And I left him with the last 12-pack. TYRONE! Get your ass back to the car! We've got some gold to pick up downtown -- and my wife is going to kill me if I'm not back in an hour!

FOFOA said...

Actually King's Highway won because few had heard Firework on the radio yet. But I voted for Firework. Ari was the one that suggested Firework as an appropriate Freegold anthem, FWIW.

Aaron said...

Ariii!!!!!!

Wendy said...

I'm not surprized that king's highway won, there's tons of old farts here!!
;)

Nick said...

Wendy,

I'd be interested to see the age breakdown from the regulars. and what walks of life they're from.

Wendy said...

Nick, I would be as well, although I don't think we would get accurate numbers.....people tend to over represent themselves.

Having said that I don't mind being first with an accurate representation.

I'm 51 years old
I have a good "job" that pays well, although I work in hell for it.
I've spent most of my adult life single and raising kids.
I started to pay attention in 2007 when the subprime shit hit the fan. I didn't know what subprime meant, and I thought fiat was a car an an acronym for "fix it again Tony"
So I bought gold and silver, and have never looked back
but my holdings are small...11 ounces of gold and 460 ounces of silver.

Better than nothing!!

M said...

Silver actually went for the ride more then I thought

Gold is in backwardation at the moment.

Nick said...
This comment has been removed by the author.
Pete said...

I'd love to respond to the demographic thing, but i'm a little bit paranoid about privacy.

Perhaps FOFOA can do a poll/vote thing for demographics?

I'd click a button.

FOFOA said...

The poll is up, Pete. Quick, click first so we know it's you! ;)

Nick said...

the real question is how old is FOFOA ;)

Wendy said...

holy cow Nick, I have kids both younger and older than you and they don't have a clue about global econommics. Kudos to your dad for guiding you, I haven't been as successful with my kids.

Pete............ I think we are quite safe in terms of ou annonymity here.

Nick I would guess that FOFOA is one of us old farts ;)

Pete said...

Argh, I was too slow ;)

I'm in there now though. Thanks for putting it up so quickly.

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

Comments (forgot to check them off)

Falcon15 said...

Fortysomethings FTW!

The Dork of Cork said...

Congratulations FFFOA - when this is all over you will perhaps be known as the most precient of recent observers

Michael said...

As the elder statesman...do I get a prize???respect???
It ain't easy having one foot in the grave and raising an 11 year old...he just refuses to let me die peacefully in my sleep.

costata said...

A couple of interesting "tug of war" situations developing IMVHO.

Silver around the US$40.00 mark - perhaps a "tug of war" between expectations about the impact of an economic slowdown on the industrial users and the silver perma-bulls.

And the USDX around the 74 mark - perhaps a "tug of war" between "What's China up to now?" (see link below) and demand for US dollars to meet margin calls etcetera.

http://www.zerohedge.com/news/china-isnt-exactly-floating-yuan

A higher exchange rate is one way to put a dampener on China's inflation problem is it not?

It would be rather unsporting of China to aggressively revalue against the US$ hot on the heels of the Swiss announcement about their intention to issue more currency to arrest (reverse?) the rise of their Franc. And the BOJ is right in there as well trying to get the Yen down.

Plenty of cross currents to keep the FX guys and gals on their toes.

Texan said...

Costata, fx tonight was orderly and very little movement within bands. I think we have a temporary "fixing" by the G7 and they are hoping everyone just chills out and resumes the carry trade.

radix46 said...

All,

So, if a downgrade can't cause the run out of US paper that everyone is expecting, then what can?

This paper system is not fragile. All the players are so fixed within the paper frame of reference that they have no option but to keep playing the game. There is no realistic alternative to US paper in terms of market size. Paper giants have nowhere else to go. To them, gold is a commodity and can't handle the size they would throw at it.

It is not fragile from a paper point of view. The only thing that can bring it down is when an obvious contradiction with reality presents itself. Something like: What? No gold? Where's my gold? I want my gold!

Until there is a high profile default on physical metal, this monster will keep on truckin.

Unfortunately, we can never know when that might be, and if there are giants with the will (for whatever twisted reason) to keep supplying emergency physical, it can go for much longer than we all think...

Paul said...

I agree with radix46

We have what Armstrong calls To Big To Trade. It will take a while for smart giants to switch positions.

look at the big wall in china, when faced with problems, china takes all the time it needs ...

DP said...

I hope this forum came prematurely, I have a bit more cash to burn. At this rate, we'll soon be getting a new forum every week...

@Falcon15: +1! :)

DP said...

Wendy, when are you ever going to get with the f*&k!n@ program and ditch all that silver?? :)

The Dork of Cork said...

If credit money truly dies this could be regarded as the greatest artistic statement of the 20th century.............


www.youtube.com/watch?v=2_GjZ7i4A6M

Jeff said...

Everyone talks about the ECB taking debt on its balance sheet. No one mentions that gold is 150 euros higher than five weeks ago. ConFinStat revaluation in 7 weeks.

Bernanke, where's your gold revaluation? QEIII and no offsetting asset increase? :(

mortymer said...

Sweden
Finland
Estonia
Latvia
Bulgaria

http://www.tavex.eu/ - offline.

mortymer said...

tavex...
Now only a buying side is visible, no selling.

Motley Fool said...

comments...

Motley Fool said...

You dont have a option for under 20's FOFOA? Not that I am, but who knows eh, there may be some. :)

Indenture said...

40ish and in case you're wondering why I constantly remind people about manners I'm from the Southern United States. My Momma taught me right.

costata said...

Hi Texan,

Thanks for the reality check.

Cheers

Indenture said...

Question: If the Pan Asia Gold Exchange was open today what would be happening? Flight to safety thought.

Indenture said...

radix: The question was kind of for you because you said, "There is no realistic alternative to US paper in terms of market size. Paper giants have nowhere else to go. To them, gold is a commodity and can't handle the size they would throw at it."

radix46 said...

Indenture,

I don't think that PAGE would change anything for these paper giants. They don't see the difference between paper gold and physical gold.

To them, gold is a commodity, not a viable alternative to treasuries. The market is still tiny compared to US the bond market and they would see the amount of capital that they need to allocate as too much of a distortion to the present tiny gold market. Imagine if $trillions came flooding into gold, with the market where it is, the players as they are, the volatility would be unbearable for asset managers who demand a stable return.

That is of course assuming that the gold price was the same as it is now, with PAGE up and running. Obviously, if it opened and the gold price soared, disconnecting from the paper price etc, then that is a different scenario, but it is speculation. Over time, I'm sure it would be a catalyst for rising gold prices and so eventually would draw capital away from treasuries. However, ceteris paribus, I don't see any major immediate differences if it were to open today.

costata said...

http://market-ticker.org/akcs-www?post=191681

AIG Intends To Sue BAC?

A.I.G. faced some limits on the lawsuits it could bring, because during the bailout the company signed a waiver that it would not sue big banks over mortgage bonds it had insured.

Debtors please clear front lawn - cash dump in progress - savers not included.

radix46 said...

Indenture,

If they wanted a contract backed by physical so much, they would just buy physical.

The type of contract is not important, it is perception of the nature of risk and the perception of the nature of the securities available to deal with it that is important.

radix46 said...

Indenture,

One other point: would the time difference be an issue?

If someone has assets that they want to move to safety outside of the trading hours of PAGE, how would they move out of, say, US equities into a PAGE contract?

Indenture said...

radix: "Obviously, if it opened and the gold price soared, disconnecting from the paper price etc, then that is a different scenario, but it is speculation."

I'm trying to understand why the 'PAGE' wouldn't disconnect from the fractionalized paper price listed by COMEX.

J said...

Regular long time reader but infrequent poster as of late

I'm in the under 30 crowd and working a job I dislike in a country I'd rather not be.

Congrats to all who have stood strong and welcome to the newbies who are starting to take notice. It's not too late to buy.

radix46 said...

Indenture,

I'm sure that over time there would be a disconnect and that this disconnect would change how gold is perceived.

However, right now, if it starting trading today, I don't think all those treasury buyers would suddenly go for PAGE contracts.

M said...

@ Costata

"A higher exchange rate is one way to put a dampener on China's inflation problem is it not?"

That is deflation in itself. It is the only real deflation because all commodities are priced in USD. Higher RMB, cheaper everything= deflation.

JR said...

radix46 says

"This paper system is not fragile. All the players are so fixed within the paper frame of reference that they have no option but to keep playing the game. There is no realistic alternative to US paper in terms of market size. Paper giants have nowhere else to go. To them, gold is a commodity and can't handle the size they would throw at it."

FOFOA from Who is Draining GLD?

"And let's take a quick look at the results thus far:

Tuesday, January 1, 2002 - ***"E-Day" Launch of euro notes***
(with reserves of about 12,500 tonnes of gold)
Friday, February 8, 2002 - *** GOLD ABOVE $300 ***
Monday, December 1, 2003 - *** GOLD ABOVE $400 ***
Thursday December 1, 2005 - *** GOLD ABOVE $500 ***
Monday, April 17, 2006 - *** GOLD ABOVE $600 ***
Tuesday, May 9, 2006 - *** GOLD ABOVE $700 ***
Friday, November 2, 2007 - *** GOLD ABOVE $800 ***
Monday, January 14, 2008 - *** GOLD ABOVE $900 ***
Monday, March 17, 2008 - *** GOLD ABOVE $1000 ***
Monday, November 9, 2009 - *** GOLD ABOVE $1100 ***
Tuesday, December 1, 2009 - *** GOLD ABOVE $1200 ***
Tuesday, September 28, 2010 - *** GOLD ABOVE $1300 ***
Thursday, October 14, 2010 - *** GOLD ABOVE $1375 ***

The physical portion of the paper gold market is cornered, plain and simple. Too many dollars out there in the world, not enough physical at these prices. It is opinions like the one that believes physical supply is subservient to the popularity of paper GLD that enable the physical to flow out of the West at ridiculous prices."


**********************************

Radix46, you are right that "Paper giants have nowhere else to go," for as FOFOA points out "The physical portion of the paper gold market is cornered, plain and simple." Thus there is "not enough physical at these prices."

Accordingly, we are posting in forum 1700!!!

Cheers, J.R.

radix46 said...

JR,


You wrote:
"Radix46, you are right that "Paper giants have nowhere else to go," for as FOFOA points out "The physical portion of the paper gold market is cornered, plain and simple." Thus there is "not enough physical at these prices." "

Are you suggesting that all of those investing firms, pension fund managers etc are buying treasuries and not going into gold because they know that the physical is not available?

M said...

@ Radix


"I'm sure that over time there would be a disconnect and that this disconnect would change how gold is perceived."

Are you aware that gold fell by $50 and $100 the early days of the 2008 crisis ? Are you aware that the gold stock indexes crashed just as hard as financial stocks in 2008 ? Gold is making all time highs and the gold stocks, XAU and HUI are in the green this morning even though the DOW is down 300. There is already a disconnect. The dollar barely has a bid. It is anyone's guess if the treasury/paper market will have orderly unwind. So far it has been orderly but it is unwinding.

Joel said...

Interesting article providing some info on the question I posed in an earlier post on the big swings in required bank capital caused by Treasury downgrades:


http://www.zerohedge.com/news/sp-about-start-cutting-corporates-well

I think this could be huge...

radix46 said...

M,

I think that Indenture was talking about a disconnect between the physical price of gold and the paper price of gold.


Yes, I am aware of all the things that you mentioned.

Just because (paper) price action in gold is not behaving the same as 2008 does not prove the paper/physical disconnect that Indenture was talking about.

This disconnect would likely be characterised by a plummeting gold (paper) price and a disappearance of physical for sale - similar, but more pronounced to/than 2008.

d2thdr said...

I'm in the under 30 crowd and working a job I dislike in a country I'd rather not be.

Hi J,

I am just over 30. But everything else is the same.

M said...

@ radix

Between paper and phys. Got it.

It is my opinion that another double in price could be contained within the current system before that happens. It's not like gold stocks have been lagging the metal for the last 3 years because everyone is pricing in freegold. The reason they are lagging is because their is no interest in gold. Gold stocks probably have a run left in them and I am not sure that FOFOA is 100% right on the stocks anyway. Giants are buying gold miners. Jim Sinclair has 60 million of his own money in his mine because he figures its the best way for him to claim the most gold. Carlos Slim also owns a small mine. China has been scooping small energy companies all over Canada, they will probably start scooping mines. Why wouldn't China be interested in something like this ?

Exeter Resource
Market cap 370.6 million USD

Value of gold in the ground(NI43-101 compliant resource) 2,945.3 million USD

JR said...

radix46,

While you maintain:

All the players are so fixed within the paper frame of reference that they have no option but to keep playing the game

I'm telling you the price is rising because "The physical portion of the paper gold market is cornered, plain and simple" thus there is "not enough physical at these prices." The game is already over, we are watching the denouement.

Who are these "players" you speak of? Do you know of the giants?

If you are one of "small worth", can you not follow in the footsteps of giants? I tell you, it is an easy path to follow!" --ANOTHER (THOUGHTS!) 1/10/98

"If ANOTHER's claims are true -- that a consortium of oil states has cornered the gold market (and given the impressive circumstantial evidence, this could very well be the case) -- these "footsteps of giants" become the most salient and persuasive case for gold ownership...

Cheers, J.R.

J said...

APMEX is getting cleaned out

http://www.apmex.com/Category/9/Gold_Bars__Gold_Rounds_1_gram___400_oz.aspx

radix46 said...

JR,

I agree with you that we are watching the denouement.

It will be interesting, if gold keeps rising roughly at the rate we are seeing, at what price would it start to be seen as a viable safe haven for Western asset managers?

That's if it could reach such a price before the cornered gold market unequivocably reveals itself to the whole world.

burningfiat said...

Mortymer,

Same story with my local tavex.dk

They (as the other tavex shops) have a message under "News":

"World biggest gold factories are running out of physical gold and cannot satisfy increased demand.
In this context, Tavid/Tavex group suspended now gold sale with spot-price.
Please do not hesitate to contact gold dealer by phone +372 627 9900 in case of any question.

The news will be amended."

Scary shit, I was hoping for a few more years of gold purchases.

Hopefully we'll soon return to normal conditions with gold available at the inexpensive paper prices we all know and love.

/Burning

Jeff said...

What happens when John Paulson has to dump a massive amount of GLD shares to meet margin calls this afternoon??

DP said...

... you & me are ready on the buy? :-)

However, kinda looks now like $1700 is going to stick today, doesn't it...

Jeff said...

Paulson has over 31 million GLD shares. This should be interesting.

DP said...

It'll be like a teenager being passed the cheese board at the restaurant for the first time ... but I'll never eat all of this!

DP said...

... but by the end of the night, sure enough, between us we'll have polished off the lot.

asdfadsf said...

Shocker: JPM Sees Gold At $2,500 By Year End

http://www.zerohedge.com/news/shocker-jpm-sees-gold-2500-year-end

M said...

@ Jeff

I don't believe the Advantage fund is on leverage. He has a better chance of saving the fund by adding gold, not subtracting it.

M said...

Jim Rickards is at it again

On an interview about gold on CNBC, where he said the United States is a gold superpower and, as currencies collapse, well might confiscate the gold it vaults for other nations.

http://video.cnbc.com/gallery/?video=3000037455

He said the president has the power to take Europe's gold.

Motley Fool said...

I like Jim Rickards in general.... but he should get his nads cut off for even suggesting that.

The Dork of Cork said...

Oil down , silver quiet , Gold surging...........
FOFOA could become a legend.

Me thinks the CBs are buying.

costata said...

TDOC,

FOFOA could become a legend.

Could?

Cheers from economic colony south!

DP said...

@costata, I think that was footage of FOFOA leaving the Lancome counter in disgust?

No offence.

mr pinnion said...

First time i ve seen the kitco scale in increments of 20.
How long before its 100?

Regards
Ozzy

Edwardo said...

A few thoughts.

The action in the shares of C and BAC suggests that these two behemoths are "on the brink."

And

I'm not sure what to make of it, yet, but I notice that on a day when Gold is up $50 and silver is up approximately a $1 that CEF is up a measly .24 cents.

DP said...

@Edwardo, supply and demand?

g. said...

Hi all,

I'm a long-time reader, but an infrequent poster.
I'm 36. I have two young boys, aged 4 and 2. My girlfriend is 31. I own about 25 ounces of gold and 200 ounces of silver. I currently work at a big bank (of all places) but I've just bought an insurance-brokerage, so I'm saying goodbye to the paper-money-banking world. Although I underwrite the notion that gold is money and nothing else (sic) I will hang on to the silver because as a hard asset it will buy me stuff paper will not. (never underestimate the stupidity of people in a SHTF-scenario, generally speaking that is. In that scenario, silver WILL BE money, but it will likely not REMAIN money. By that time my silver will have been traded for "better" goods, such as arable land).
My main concern right now is assessing where we are in the whirlwind of all-consuming debt, are we living the end of the beginning, or the beginning of the end?
That said, together with The Daily Bell, Lew Rockwell, Zerohedge, the archives of Another and Friend of Another, the Mises Institute, and various other free-market oriented websites FOFOA to me is a guiding light in these dark ages.

The Dork of Cork said...

@Costata
I come from a different monetory perspective ( simple full reserve banks & using Gold to square external surplus & defecits only outside a fractional reserve system)- See Libya and its Gold reserves that are useful outside the banking system.
(But we seem to be moving from a US treasury world towards a BIS world.)
But it is only a belief system and not likely to become a reality.

So it sticks in my gut a bit - but congratulations to FOFOA , this shit seems to be going down the free gold route , I am enjoying the Bullshit on Bloomberg & CNBC though.
Still thinking of shifting my interest bearing Euros to physical Dollars (they seem almost like greenbacks now) because of geopoltical risk - just to hedge a large relative Gold position.

Jeff said...

Price of AU = platinum.

mr pinnion said...

I hope none of the clowns on CNBC threw their DOW 10 000 hats away.

Regards
Ozzy

Unknown said...

When I first found FOFOA in about April my physical holdings were heavy in silver and not quite where I eventually wanted them to be in gold. Due to his influence I sold all but some keepsake silver coins and put the silver funds into gold. It is the underlying unifying hypothesis the FOFOA has stated that has allowed me to do what I have done and to be able to do it AND sleep well.
I believe that the insights obtained on this site are the best. They are consistent, well thought out and as yet have not been successfully challenged.
As we enter theses serious times that appear to be unfolding before us I'd like to thank FOFOA and all the regular commenters for giving the clearest, most logical and thus far most profitable advice to be found on the web.
Lets continue to 'watch' together. Even when things are going badly I find that understanding WHAT is happening is quite soothing. Michael

Robert Mix said...

I have bought gold for decades. I started buying a bit more heavily about 2005 during the Housing Bubble aftermath. I started buying MUCH more heavily after encountering FOFOA in 2009.

Without the man himself, I would have considerably less gold than I own now. Best investment advice I have ever received.

Long may you run FOFOA!

The Dork of Cork said...

Back in the 80s the Americans hired this team to hyper inflate the dollar without inflation…..
http://www.youtube.com/watch?v=_MVonyVSQoM

But now Dee Germans have hired them to eliminate the dollar cuckoos withen Frankfurt.
http://www.youtube.com/watch?v=qse31E-7DXw

Now America must reley on a different team with a very special skill set……….

http://www.youtube.com/watch?v=VX3XoU3g0h4

Indenture said...

For any Newbie: I would consider these past FOFOA posts as suggested reading.
The Waterfall Effect
‪The Return To Honest Money‬
All Paper is STILL a short position on gold
Gold is Money - Part 1
Gold is Money - Part 2
Gold is Money - Part 3
and Freegold: Blondie

holdinmyown said...

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

Must watch

Biju said...

I was a buyer of Gold before I found FOFOA and ANOTHER. But ever since I read FOFOA, I have bought more Gold with conviction. Kudos to the service of FOFOA and other unselfish freegolders in this forum.

Motley Fool said...

Perhaps some of you should consider tangible thanks. ^^

and just for kicks.

But you can't eat it.

TF

M said...

What I like about today is the hard money socialists got burned too. Jim Rogers is probably overweight wheat futures. Even Marc Faber was saying that gold was over bought at $1590.

You can buy a tailored suit for an oz of gold all through time. That is the problem. That is what is changing.

Indenture said...

that would be and Freegold: by Blondie

Wendy said...

DP: "Wendy, when are you ever going to get with the f*&k!n@ program and ditch all that silver?? :)"

I just bought more when it dipped under $35 :P

Jeff said...

I am amazed at the lack of attention this blog gets. 90 comments on a day like this? Not to mention that several well-known figures have read and commented on FOFOA's work. Still, these 'celebs' don't discuss freegold, euro architecture, etc. and when they do discuss gold they inevitably make some simple error, like expecting a gold standard, or gold confiscation.

Why? Why is FOFOAblog, the best online gold forum, also the best kept online secret? Why do outspoken critics of our governments decline to mention the obvious, the things we have discussed here for years? Dare I say there seems to be a conspiracy of silence? Or a conspiracy of self-interest as everyone in the know acquires as much cheap physical as possible?

RogerW said...

Credibility, Jeff. Renowned people are afraid to suggest such an untried and fairly novel mechanism.

It's easy to criticise and be a goldbug, but endorsing a lone blogger's outlook requires courage among 'faces'. It takes character take a line publicly that might be ridiculed. There is a goldbug trend, and an anti-gov trend, but no publicly known freegold trend.

Billy C Vinson said...

@Jeff,

I seldom comment, but I (and certainly many, many more) are out here paying laser sharp attention to this blog.

Alas, I'm among the shrimpiest of shrimp, buying gold by as little as a gram at a time, so I would be happy for this pony ride to keep going for quite some time.

Cheers,
BCV

Aaron said...

@ Jeff

I would add to that I believe many people simply do not want to know the truth -- about anything. It's very easy to stick with what I know and not challenge my own beliefs. When I challenge my own beliefs I must also be willing to take responsibility for my own complicity -- and perhaps even change my behavior putting myself beyond my comfort zone. Call me pessimistic, but I believe a great deal of the population actually wants to be lied to if for no other reason than to avoid discomfort.

We have a very special community here at FOFOA. We are people that actually want to understand the world around us. From what I see in my geographic community – and remember I work at an institution chock full of PhDs -- in their own minds these people already know the world around them. They are no longer searching – because they either believe they already know – or they believe the knowledge they seek is unknowable.

Why are main stream folks not discussing FOFOA? I believe the reason is because most of them really don’t understand. Think of how much work it took you to get this far. Understanding what Another, FOA, and our host are describing took a lot of effort to understand and I’m still constantly learning. The further you go the easier it gets, but taking that first step is a bitch and I believe many people (in my locale at least) aren’t willing to take it. I can, however, think of one economist and one political scientist that while watching the markets today probably thought of me. It will be interesting when I next see them to hear what each has to say. Markets crashing, gold making higher gains; “Hmmm…didn’t Aaron say something like this would happen?” Not to mention the sociologist that after many many discussions with me decided to buy gold – and he bought way more ounces than I could ever afford (he also drives a Boxster Porsche -- and he didn’t buy it with credit).

--Aaron

Aaron said...

@BVC

You may be a shrimp, but you are far out ahead of 99% of the plankton around you. Be thankful for that. The value of understanding cannot be priced in currency. Knowledge is invaluable.

Which reminds me -- one more week until the 15th people.

Paul I said...

After watching Exeter's Pyramid billowing smoke for 3 years, it looks like it's finally about to collapse, layer by layer.

15th? 40 years since Nixon? Quite the anniversary.

costata said...

DP,

Lancome - very funny.


TDOC,

This system we are (IMO) evolving to is a long way from my personal ideal. FWIW I agree about the 100 per cent reserving for demand deposits and I think that will come in some form or perhaps a compromise along the lines of the credit union model. But I'm over the desire to try to influence the outcome.

Awstraylya will walk on stage, read the lines scripted for it by others and walk off stage until its called for the next act. I wish it was different but it is what it is AFAIC.

In regards to the discussion here; these days I try not to get overly emotional and just tell it the way I see it on topics that interest me.

Indenture said...

Paul I: The 15th is the day of the month we recognize the impact FOFOA has had on our lives by making a contribution to his 'Don't Flip Hamburgers Fund'. Watching the markets today felt like cheering on a race horse and at least for me that is part of the gift FOFOA has imparted.

NoEscape said...

less than 30yrs old

Much to my chagrin, I found FOFOA only a few months ago as I started reading increasingly (obessively?) much about the economy since the 2008 bail-out shocked the hell out my conception of the world.

It takes time to reach this state of mind: being done with careless youth, starting to work and feel responsible about your own survival, learning the value of money and that odds are against you, go through one crisis (it felt like nobody cared about its background except me), etc...

I'm not surprised to see so many of you 30+ around here. You had time to understand, believe and prepare. I appear as a lunatic in people of my age group... Rethinking the internal value of fiat and believing it was another psychological step too.

In any case, it's really sad because I only lately joined the party and the little I accumulated feels little, very little...

Time is short for people of my age ! You never really had much time or savings to adapt if your parents never understood what is happening.

(I won't claim to fully understand either but I think I have seen enough to switch)

Hard times ahead...

Indenture said...

‪Jim Sinclair interviewed by James Turk‬

Sinclair explains the math used for his 'Angel Numbers'.

Michael said...

There were a few comments about Jim Rickards on the last comments section. I watched 2 hours of a speech he gave in some industrial/military facility I believe the dates were 2009 and 2010. After watching Lindsey Williams on a recent Alex Jones program I'm struck how both allude to secret info and high up friends. Williams is the more obvious but even Rickards gives a healthy does of "there is a lot of science behind this" (Implied message: "so don't try to figure this out for yourself without an adult physicist nearby") and "talk to me later if you have a higher clearance than 'no clearance' " (message: this stuff I'm talking about now is nothing, if only you had the top secret clearance I do you might be able to grasp it").
Both are interesting but I feel like I'm being sold a stock hustle. Williams is just entertainment. I know Rickards has followers, but I'm just not one...yet...maybe..?

Aaron said...

@NoEscape-

All of us have peers that think we are nuts. Don't sweat it. Go out with them, have a good time, talk about what they are interested in, and in your private life do what you think is right. Do not let the opinions of others shape your actions, and conversely when you see they are uninterested, don't force it. FOFOA can tell you a story or two about how I learned (am still learning) this lesson.

And agreed the first time you stumble across FOFOA obsession quickly takes hold. After burning though A/FOA, I read FOFOA's entire blog and find I still have so much to learn. As I go back and reread previous posts with each pass I gain deeper understanding. But the more I learn, the more the fire subsides allowing me to move on to the most important task of getting back to living life. I think I saw that somewhere in the Archives. ;-)

Michael said...

@NoEscape
I'm mid 60s and I cannot find anyone either (other that a few captive audiences) who will listen much less engage. I was emailing one of my sisters and she shared with a friend; the friend say...your brother ,"he's new at this isn't he". My sister asked where I was wrong and the friend says" Oh he's not wrong , he just does not understand that NO ONE wants to hear this!
That is why this site is great! Good info, well thought out, serious comment and not one "Silver Bitchez!!!" comment or troll accusation.
It provides a forum for those of us without serious audiences to bounce ideas and come to the conclusions that I believe will be the difference between success and abject failure in the world that is rapidly coming.

Billy C Vinson said...

@NoEscape

I feel your pain. I am 50, and my whole family continually tries to talk me out of the crazy tree. Eventually, we just have to accept that this is a message that many refuse to hear.

Keep piling up the PG. This is like the cartoon character that has run off the cliff but didn't noticed yet. The ultimate result is certain.

Cheers,
BCV

Nick said...

I wonder if Jim Sinclair's 'angel' of $1,764 actually does have meaning. If it does, at the rate gold is currently moving we will arrive there in short order. As in within 24 hours. We'll see if he's correct about it being fought with fraught resistance.

Aaron said...

@Nick-

I can't say too much on this as I'm still absorbing some ideas I recently encountered, but they way I see it Jim's numbers are working off of a historic gold standard of backing national debt with gold. Gold is going to go higher no doubt -- and then much lower as we all know -- but I'm starting to think JS is using mathematics which fail to take certain dynamics into account.

Gold may reach a USD price he describes, but I don't think it is going there for the same reasons he thinks it is.

--Aaron

Michael said...

Holy Smokes...HK down 7.3% China down 3% BUT (or should I say AND) AU up 23$. At this rate when I open my eyes in the AM we will have passed Sinclair's 1764. I'm not a big T/A guy but a lot of people listen to him. This could give a lot of folks courage and fear all at once and provoke some serious buying.

I have a theory about why FOFOA does not get the full respect he deserves: Freegold sounds like a cult. We are "following the prophecy of Another and FOA". We speak of gold in the stratosphere (and that sounds like wishful thinking.)
At first glance I can see why those who do not stick around might go away with that impression. Those of us who treat FOFOA like homework though realize that he took a lot of time, reading and rereading a body of knowledge he had the wisdom to see was important. Then he did some great analysis. The final product will stand on its own. If there were a few Sigma signs and a couple of complex (looking) equations this would be required reading at serious institutions.
His opinion of Marx ("Debtors and Savers") is a serious essay that challenges one of the most influential economic thinkers in history...unrefuted.
When the dust settles and a new economy evolves there will be a LOT of folks who wish they had found FOFOA early enough. And there will be some who wish they had listened to the "ravings" of his "followers"
I'm just grateful (even though the homework is a bit much) dare I say medical school was easier...

Nick said...

Aaron,

The only thing that makes me think he is somehow on board with FO/FO/A's viewpoint is that he stated in his recent interview with James Turk that "$1,764 is the loss of confidence, $1,764 is 'the king has no clothes.' $1,764 is the transparency of the depth of our problems and the duration of our problems."

However you may be exactly correct that he just views this as the next stage of gold shooting higher, but not necessarily RPG. Just found his wording very interesting.

Paul I said...

45 year old father of one, and thanking the Goddess I stumbled on FOFOA. Wife and son good naturedly humour my evening rantings. I shall be paying homage on the 15th.

There's a monumental unwind going down right now. Aussie dollar collapsing as gold screams higher.

Paul I said...

Oh to think the unthinkable.

Australian CB buying gold?

MnMark said...

NoEscape:

Don't feel bad about just having arrived at the point you have. Most people haven't learned the hard economic lessons by the time they're 50, much less in their 20s. 30 years from now, think of the knowledge you will have acquired from paying attention to what will have happened in the interim. I began to pay attention in the early 1980s and I can say that as time passes you really do start to develop a sense for how human nature (and thus markets and governments) work.

I think the reasons more people don't comment here are:

(1) Very few people have the spare money to buy any gold. I have friends like that. They don't have any interest in the subject because they couldn't scrape $1800 together to buy one ounce of gold even if they wanted to, and it wouldn't seem worth the bother to them for just one ounce.

(2) Most of those who do have the spare money to buy gold don't want to buy at the nominal all-time high price.

(3) Most of those who have some money and might be willing to buy even at these prices don't understand the Freegold concept. I've been reading this blog for six months or more and I have two masters' degrees and I still don't think I understand it well enough to explain it to someone else.

(4) Of that tiny fraction of people who have the money to buy gold, are willing to buy at these prices, and give creedence to the Freegold concept, only a small percentage actually write comments. Most just read.

M said...

@ Paul

Aussy dollar is down but so is the US dollar.

@ Roger W

I know of a RogerW at the Korelin economics report.

?

Indenture said...

"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" said Greenspan on NBC's Meet the Press.

MnMark said...

Regarding Jim Sinclair:

He predicted $1650 and he was right (though a few months early) and he deserves big credit for that. He made a fortune with gold and that speaks for itself.

I would point out however that back in 2008 - in August of that year, I believe - he repeatedly posted warnings that "THIS IS IT", advising people to sell all paper assets and have only physical gold. (That is my recollection - if I am wrong, I am willing to be corrected.) Well I don't think you could qualify 2008 as "IT". It was bad, but it was not the end. He got that one wrong.

Aaron said...

Hi Nick-

Well, the way I see it we have two events to consider; Freegold revaluation (JS’s perspective) and Hyperinflation. Remember these are two separate events. What is Freegold? The dollar’s collapse against gold. What is hyperinflation? The dollar's collapse against goods and services (I should be using quotes at this point). If gold goes to the moon, US Treasury gold balances US external debt. But setting aside monetary balance of debt, the debt we’ve taken on obliges us to deliver future goods and services needed in real life. Remember, we are talking about real humans here, not machines.

The dollar must not only collapse against gold (Freegold), but it must also devalue against an American loaf of bread (hyperinflation).

This is all I can say for now as this is as much as I understand, but suffice to say I think JS is only looking at one half of the equation, the gold standard (Freegold valuation). I believe Gold can go much higher. In fact the top may be infinite.

--Aaron

Paul I said...

@M

Aussie is down against the US dollar (10% in 5 days), both are down against gold.

Nick said...

Thanks Aaron,

I can see your thinking much more clearly with that analysis.

- Nick

NoEscape said...

Thanks for the feedback, guys.

There are a few things you start worrying about after acquiring physical though:
1. secure storage and physical integrity
2. resale sizes (bullions vs. smaller weights)
3. the taxman
4. acquiring more

If I may add a humourous touch in an increasingly serious topic: did I contract gold fever ?
:)

The Dork of Cork said...

@Costata
Well 100% demand deposits showing up on the base is a very Austrian view of things and works in a debt based system where term loans to a bank are a real risk to a depositer.
But I was thinking of full reserve banks where Goverment produces all of the credit.
My problem with greenbackers & what I consider their achilles heel is how they deal with external trade outside their monetory borders - they clamp up everytime when you ask them how two equal powers can settle final accounts.
I imagine Gold would be even used in a hypothetical greenback world without a imperium - eventhough it is more closely tied to the bankers arcane fractional system now.
But these are the idle musings of a Dork.
Its as if I was a gold bull during the 80s dollar credit inflation period - interesting to some sad farts but very unprofitable.

Aaron said...

@NoEscape-

There are a few things you start worrying about after acquiring physical though:

1. secure storage and physical integrity

YMMV, but for me? I would place 50% in a safe deposit box and bury the other half.

2. resale sizes (bullions vs. smaller weights)

Wait for it. Merchants are coming. You’ll figure it out when it comes. Buy whatever meets your needs.

3. the taxman

FOFOA/FOA/Another believes capital gains tax will be a thing of the past wrt Post FG. I agree.

4. acquiring more

If you have savings which need not be deployed anytime soon, go for it.

If I may add a humourous touch in an increasingly serious topic: did I contract gold fever?

Nope. You are becoming a PGA.

--Aaron

boricuadigm-shift said...

I just wanted to post $1760 and thrust is just getting warmed. The $1764 (42^2) fundamental from JS is about to become history.

Michael said...

damn I was premature... I did not even get to bed...

Aaron said...

Mm ba ba de
Um bum ba de
Um bu bu bum da de
Pressure pushing down on me
Pressing down on you no man ask for
Under pressure - that burns a building down
Splits a family in two
Puts people on streets
Um ba ba be
Um ba ba be
De day da
Ee day da - that's o.k.
It's the terror of knowing
What the world is about
Watching some good friends
Screaming 'Let me out'
Pray tomorrow - gets me higher
Pressure on people - people on streets
Day day de mm hm
Da da da ba ba
O.k.
Chippin' around - kick my brains around the floor
These are the days it never rains but it pours
Ee do ba be
Ee da ba ba ba
Um bo bo
Be lap
People on streets - ee da de da de
People on streets - ee da de da de da de da
It's the terror of knowing
What this world is about
Watching some good friends
Screaming 'Let me out'
Pray tomorrow - gets me higher high high
Pressure on people - people on streets
Turned away from it all like a blind man
Sat on a fence but it don't work
Keep coming up with love
but it's so slashed and torn
Why - why - why ?
Love love love love love
Insanity laughs under pressure we're cracking
Can't we give ourselves one more chance
Why can't we give love that one more chance
Why can't we give love give love give love give love
give love give love give love give love give love
'Cause love's such an old fashioned word
And love dares you to care for
The people on the edge of the night
And loves dares you to change our way of
Caring about ourselves
This is our last dance
This is our last dance
This is ourselves
Under pressure
Under pressure
Pressure

Nick said...

welp, $1764 just happened, let's see how this plays out...

Michael said...

1764.80...do these people never sleep, never sell? Not me complaining though

M said...

The Euro is up as Asia crashes.

limits said...

looking like a straight nose dive shortly after 1764 was breached...

costata said...

TDOC,

Obviously I was on a different tack with the reserve issue. On this point:

My problem with greenbackers & what I consider their achilles heel is how they deal with external trade outside their monetory borders - they clamp up everytime when you ask them how two equal powers can settle final accounts.

Exactly. Their MMT only works in a vacuum. As soon as you ask about the exchange rate issues etc they start to fall apart or offer nonsensical responses. Their math is superficially appealing because it "works" from a double entry accounting perspective.

Steve Keen allowed them to become very outspoken on his blog and I think he regrets it now.

Ironically their "political money", as I refer to it, would probably work OK under Freegold-RPG where you have an indicium for the currency in the price of gold. So it can offer feedback on the government's currency management and exchange rate differentials.

mortymer said...

Scandinavia, Tavex should be online in 5min.

mortymer said...

There are no comments here, strange:
Ok one post here:
http://goldchat.blogspot.com/2011/08/mint-is-humming.html

costata said...

Hi mortymer,

I dropped in to post this link to the Perth Mint blog for the same story. The lead in on the blog is quite arresting (my emphasis):

On Monday the site had its biggest day since launching in October 2010, setting a record for the value of gold and silver bullion sold online.

In contrast to a few months ago when investors were piling into silver, gold is now accounting for more than 75% of the money invested in precious metals via the site.

Currently, nine out of our top ten selling bullion products by revenue are gold!


According to one trader’s TA which I saw recently the 200 DMA for silver is around US$34.00. If the BBs can punch it through that it could make life interesting for the silver bugs.

DP said...

$1764. Done.

DP said...

IMO $1782.53 is a more interesting level to watch though.

Michal said...

What's interesting for me is that there seems to be a sort of a disconnect between the general spot price and physical only spot. At the moment bullionvault cites $1772 and kitco $1750. Could this be important? Or have this happened a few times already?

DP said...

The BullionVault price is the price seen among private transactors within that market. It does tend to follow the "official" spot price, but it also deviates (both above and below) from time to time.

DP said...

@Wendy, good luck to you. But at what point do you concede that the price action, when comparing say the 1 year or 5 years charts of the two metals, clearly demonstrates silver is NOT "a leveraged play on gold"? They are entirely different markets and there will be entirely different outcomes.

DP said...

(See also: Jeff's comment about Au:Pt earlier. Gold is right now $1764.90 while Pt is $1723.00. This is not your father's "precious metals market".)

Xavi said...

German government urging Spain and Italy to further privatise or sell their gold reserves.

http://noticias.terra.es/2011/economia/0809/actualidad/cdu-y-fdp-piden-que-espana-venda-parte-de-su-reserva-de-oro-para-atajar-deuda.aspx

Just came out 15 min ago, I could not find it in English. Sorry.

PS: It seems tomorrow we will be posting in the Forum 1800!

Xavi said...

By the way. I'm <30 years old, also in a job I don't like and in a country with no future. I guess we are not alone though.

If it's difficult for you to understand Freegold imagine if English is not your first language. It has been a great reading experience so far, and also a journey to jump from source to source until you get here for the first time, move on, and then go back here and start to understand and walk the trail.

Enough off-topic. Kind regards everybody.

DP said...

@Xavi, thanks -- and here is the rough-n-ready translation for the rest of us

Courtesy of Yahoo Babelfish

DP said...

Hmmn, don't quite know how I managed to munge that so badly, but let's try again...

Edwardo said...

Yesterday I tried to swap out of a bag of (aptly named) junk silver into some low premium gold coins but my local dealer didn't have enough of the aforesaid to allow me to exchange most of the fiat from the sale of the junk bag into gold.


According to this particular dealer, as of yesterday, he could acquire bags such as the one I was trying to sell for forty seven cents under spot. I bought some gold anyway.


I see Jim Sinclair is something of a topic of discussion here lately which is understandable. A little while ago he offered that when gold surpassed his technical level of, I believe it was somewhere in the neighborhood of $1760-1775, that we would start to see gold move in 50 to 100 dollar increments daily. Well, clearly, that process has started a little sooner than he anticipated.

Texan said...

I am starting to wonder if at some point the Chinese may ask or demand to swap their USTs for US gold at a rate of say $5000/ounce. I would think they would do that only after they had amassed a lot of gold.

Would it not be better for the UST to go ahead and monetize the stuff? Just so there is argument about the "value" later on?

Jeff said...

Texan,

Why would the US agree to give up their gold? That decision was made in 1971.

Af for 'monetizing' gold that would destroy dollar confidence, either through gold flowing out of the US (price too low) or ushering in freegold (price high enough).

JR said...

"Here is something you need to understand about the US gold. The Fed does not own it. The US Treasury does. Following the Gold Reserve Act of 1934, the Treasury gained title to the entirety of the US monetary gold (including $3.5 billion which was currently being held by the Federal Reserve banks). From that point on, the Fed has received [from Treasury] private issues of new-fangled gold certificates in $100, $1,000, $10,000 & $100,000 denominations -- not to be paid out and not for circulation.

So the Treasury took 175 million ounces of gold from the Fed, paid the Fed in DOLLAR-DENOMINATED certificates for this gold at $20 per ounce, then revalued gold to $35 per ounce. So if the Fed had even been able to redeem those certificates for gold in 1935, it would have only gotten back 100 million ounces. The windfall of 75 million ounces of gold ($2.6 billion), in this case, went entirely to the US Treasury and not the Fed.

The entire Treasury windfall was $2.8 billion and was the reason and the funding for the establishment of the ESF, the Exchange Stabilization Fund in 1934. So following the Gold Reserve Act of 1934 100 million ounces of gold were already automatically monetized. The rest of the US gold was eventually monetized through the Fed. The way this happens is the US Treasury issues fancy new non-negotiable, dollar-denominated gold certificates to the Fed and the Fed credits the Treasury account with dollars.

Today, all of the US gold has been "spent" in this way, but only at the price of $42.22 per ounce. That's 261,511,132 ounces of gold monetized at roughly $11 billion, money that was spent long ago.

So you see, the Fed cannot mark the US gold to market. It cannot even revalue the US gold. Only Congress can. And even if Congress DID revalue the gold, it would not change the Fed balance sheet by one penny. The Fed only holds dollar-denominated certificates worth $11 billion, payable in gold, but not really. It's kind of like Aramco in 1945 who owed the Saudis $3 million, payable in gold.

If Congress DID decide to mark the US stockpile of gold to market today it would find it had a new stream of revenue. At today's price of $1,328 per ounce, the US gold would be worth $347 billion. Subtract the $11 billion already on the Fed balance sheet and Congress could immediately ask the Fed to credit the US Treasury with $336 billion new dollars to be spent.

It’s the Flow, Stupid

cont.

JR said...

One more:

And so far the Fed only carries $11 billion of the Treasury's gold on the asset side under the gold heading. Today we have room to add $370 billion more, and that means fresh Fed liabilities—also known as US dollars—accruing as fully paid-up credits to the Treasury account for the government to use however it deems appropriate.

Again, I realize this doesn't solve any of the big problems, but it does buy some time. And furthermore, it is not a bad or reckless thing to do. It is the right thing to do! America has an untapped asset. You can use it without selling it for gosh sake!
And just like the old gold certificates, the new ones will NOT be redeemable by the Fed or any other banks in physical gold. They will simply be an accounting entry on the Fed balance sheet. In the future, that gold can be mobilized, if necessary, in defense of the US dollar. But only with the approval of Congress. The physical gold remains the property of the United States. It will simply be monetized by properly revaluing it as the monetary reserve asset that it is, and placing it—at its proper valuation, updated quarterly—on the asset side of the central bank's balance sheet, just like the ECB.

That's right, it jumped again. From $336 billion in October, to $355 billion in January, to $370 billion in April. And guess what it is today. $390 billion! That's the amount of untapped equity the US Treasury has in its gold today. And that equity can be monetized without selling the gold, by the simple act of Congress ordering the revaluation of the gold.

This is simple logic, Dr. Paul. It doesn't take a room full of lawyers to figure out if it is feasible.


Open Letter to Ron Paul

Cheers, J.R.

Indenture said...

Ok DP, I'll bite. "IMO $1782.53 is a more interesting level to watch though." What's the ‪magic‬ behind this number.

MSC said...

Hi,
I only found the site 2 months back, and although I have held since Oct 08, this site is helping me to fully understand the importance of gold. I'm 30 something and in average job - where no-one listens if I mention gold or paper burning.

I finally succeeded in persuading my partner that I wasn't crazy about one month ago, and since Saturday's downgrade, she has, herself, been frantically spending her savings acquiring coins from every dealer in town. Today's efforts have been in vain though as most of the buy/sell gold guys have shipped their stock off the premises in fear of a fourth night of rioting (even though the nearest problems were over 10 miles away).

Ultimately I can only see two outcomes - a Freegold 'rescue' or a full-on civilisation meltdown. Hopefully it is the former.

Thanks for the site FOFOA - and all, for the comments.

DP said...

@Indenture, $42 is the SQRT of JS' $1764.

So I figure $1782.53 is the square of $42.22 :-)

Nick said...

DP,

I love it.

Nick said...

I also find it ironic how it fell 3 cents short of your target DP ;)

DP said...

@Nick, you'll lvoe this too then I suspect.

www.bulliobypost.co.uk are once again red-bannered.

"No More Orders. Due to unprecedented demand and the current situation, we are not currently taking any further orders. All orders that have already been placed will be dispatched as soon as possible. Thank you for your understanding."

Mummy

whiteelefant said...

Hi,
I am 4. something, have a job that I like (I am self employed) and live in a country that I like (I moved here recently and chose it for its stability).
I have been reading FOFOA for some time now, the only thing I am sure of, is that I still don't fully understand freegold. But, I still see a large crisis looming, and whatever happens, Au will be one of the very few items of value that will keep their value through this crisis.
If Freegold happens, all the better!

I don't think we are there yet, if you look at gold in CHF, it is moving sideways for a year now.

Jeff said...

The market treats CHF as a gold proxy so measuring CHF vs AU is like measuring AU vs AU. Flat.

The Dork of Cork said...

@Costata
I think people have much to learn from modern chartalists as they focus on the internal payments / debt / money interface in a coherent manner.
The Eurosystems problems are very real - I live on a Dollar / Euro tectonic plate and things are very unstable recently.
W.Mosler has proposed a very simple solution to the Eurozone debt crisis as it would be not favour a particular country & therefore be poltically neutral.
Basically giving electronic Euro cash to each country on a per capita basis , even if Ireland for example has more debt then core countries it would be able to export to Germany which would now have a higher demand while Germans can holiday in Greece - rebalancing trade.
As most of the debt withen the Eurozone is internal it could work.

www.youtube.com/watch?v=riz-1pUqPXs

If they don't do this in my opinion the eurozone will collapse & the dollar bitches will win again.

DP said...

@TDoC: they focus on the internal payments / debt / money interface

What he is suggesting (to highly oversimplify now) is like doing a two-for-one stock split. Everyone has more stock, but it's only worth half. No?

You can't just look internally in the world of today.

Externally, people measure the euro against the market price of gold. You issue twice as many euro and have the same gold reserves: the currency is worth half on world markets. Simples.

You haven't solved the problems like this, the price of everything has doubled - and it won't be long before everyone riots for a payrise after maxing out their creditcards. Again.

The Dork of Cork said...

@DP
Yes , but lets look at the payments / debt system.
The banks are no longer producing credit on the edge of the eurozone and now Spain & Italy.
The ECB has a policey of non default on shadow bank deposits which are very large in the eurozone but mainly held in the core and now the ECB itself.
So debt servicing costs on the existing deposits builds up over time.
The only normal method to provide money to pay this private debt is increasing fiscal debt - but that has already reached its limit , so whats left if you accept the concept of non default ?
You provide cash to goverment to pay debt which introduces cash into the private domain.
If this is not done the payments system breaks down creating bigger economic losses down the line.
The Euro debt is internal for the most part so that is not a problem but oil is imported & will rise , but the transport culture needs to change in Europe , the Germans and the rest of us have a irrational cultural love affair with cars but its time is over.
Massive tax increases on private transport is needed to peserve the value of the currency.
If the ECB does not provide cash to Goverment the Euro experiment is over.
The ECB needs to double its base, to buy goverment debt and then sterilise it just will not work now.
Thats 2 T to 4 T easy

DP said...

TDoC: The only normal method to provide money to pay this private debt is increasing fiscal debt - but that has already reached its limit , so whats left if you accept the concept of non default ?

This is "normal" in the current monetary paradigm, where money is debt and debt must therefore be issued in order to pay the future interest on today's debts, like a snake eating its own tail and just hoping it can grow faster than it needs to eat. But it's not "normal" in the longer history of man. "Normally", before the present system, you kept your reserve wealth in assets, not debts. When you ran into trouble you sold assets in order to cover your debts.

So, since the debt-backed system has gone beyond the point that it can be sustained much longer, we will necessarily have to return to an asset-backed system. Fortunately, the ECB have a currency up their sleeve which can cope gracefully with just such a change. Oh! There it is! They already pulled it out of your right ear after all. Well, that's a godsend.

What we don't want is a "solution" like Mosler's, where everything will quickly return back to the same (dis)equilibrium but at higher nominal prices. We need to revalue gold against everything else, so that we can return to basing the system on assets instead of just unpayable debts, finally pay down the (nominal and finally repayable after all) debts using revalued gold (and only gold), and then continue with the economy relatively intact (to varying degrees, depending on where you are in the world).

The good thing is that the ECB can easily revalue gold (and gold alone) by issuing more euros and using them to buy gold in the market. This will influence the price higher for gold. Handily, this will not only keep them even because they printed more euro but have more gold too, but in fact the euro will be net stronger because all previous gold reserves were also revalued higher by the market. This provides them with the ability (need!) to print YET MORE euros and spend them however they see fit (buying struggling debts, perhaps?). The more they print and buy gold, the stronger their currency and the more other euros they will need to print and spend as they please just to bring down the exchange value of the currency and prevent deflation setting in. The debts were repaid. Oil continues to flow at affordable prices. Nothing else got more expensive but gold. Nobody maxed their creditcards again. Nobody demanded a payrise due to cost of living pressures.

Now THAT'S what I call a solution! :-)

M said...

@ TDOC

The "dollar bitchez" (US money market funds) are still sitting on $360 billion worth of European bank short-term debt. That leaves open a trans-Atlantic channel for Greek turmoil to play havoc with United States markets.

While the biggest U.S. money funds have minimal direct holdings of Greek government debt, they hold roughly $1 trillion of debt issued by big European banks such as BNP Paribas SA, Barclays PLC and Deutsche Bank AG, according to industry analysts.

The Dork of Cork said...

DP
"However they see fit " - I am disturbed by your Puritanism & faith in mythical but flawed men whose faith based actions has always been grounded on strange belief systems rather then empiricism.
The euro system wants to peserve the debt system - Gold is near useless in non debt systems - it is merely a extinguisher of bad debt.

The euromasters can bid up the price of Gold so that they will have the cash to give to goverment so that they can pay down "debt" - but fiscal debt is not really debt , it is but another accounting mechanism - it is goverment money that may or may not have a interest /time period on its face.
The private credit is the problem in the eurozone , the fiscal debt ratio has fallen relative to private credit since the inception of the EMU , now there is little goverment money to pay private debt that the ECB refuses us to default on.
This is irrational at best and at worst........
This subtracts the medium of exchange still further from commerce & productive debt payment - this creates further inefficiencies.

If the euromasters wish to destroy the 400 year nation state concept which was a synthesis of bankers & princes they may do so and keep their euros & Gold but they will have nothing to buy in a new dark age.
Money whether gold or paper is a mere utility , you seem to have been corrupted by the precious - I feel sorry for you.

www.youtube.com/watch?v=-qTA6ndc51w

DP said...

Maybe it's because
I'm an aetheist,
that I looove
Puritanism soooo.

Oh, maaaybe it's...


Everybody now, sing along!


BTW gold isn't money, it's just another asset like a bottle of wine, a lump of coal, a loaf of bread, a supersaver pack of matching toga and slippers, or perhaps a cased stuffed ex-Central Banker preserved in formaldehyde. Except just more universally valued than any of those other things.

sean said...

Silver showing its true colours today...
But I'm worried about the CHF. How am I ever going to be able to afford Swiss chocolate now? Oh that's right! With gold :)

M said...

@ TDOC

You said "If the euromasters wish to destroy the 400 year nation state concept"

This is the list of the Federal Reserve foreign primary dealer banks.

Barclays UK
BNP Paribas France
Credit Suisse Switzerland
Deutsche Bank Germany
HSBC UK
Mizuho Japan
Nomura Japan
Royal bank Canada
Royal bank Scotland
Soc Gen France
UBS Switzerland

victorthecleaner said...

All, especially FOFOA,

please see the paper by Reginald Howe on the BIS reports, especially regarding GLD and the spring 2010 BIS gold swaps. On a few issues, Howe disagrees with FOFOA:

http://www.goldensextant.com/commentary37.html#anchor56351

DP,

the euro will suffer inflation from its bad debt in exactly the same fashion as the US$. Their only advantage is that their total credit volume per GDP is a bit lower although the public debt per GDP is similar. Good luck.

Victor

DP said...

Hi Victor,

only advantage

You're sure on this? :)

victorthecleaner said...

DP,

only advantage

Just wait and see who is right. It will most likely be less than another decade. And make sure the wishful thinking does not cloud your judgement.

Victor

DP said...

Well, it's not euros I'm buying, so let's wait and watch this new currency battle together... :-)

mortymer said...

Few looks from the other side:
http://english.farsnews.com/
http://www.chinaview.cn/

The Dork of Cork said...

@M
And your point is ?

This 400 year chain of command cannot be destoyed and expect everything to go smoothly.
The banks have made much money from chaos by waging war against previously sovergin entities using financial city states as secure nests but there comes a point when somebody comes knocking on the door.
www.youtube.com/watch?v=pzz9WuUdfQM

Ore em' said...

30 y.o., lawyer with MBA. Sadly, to pay for said quasi-useless letters, I have had to forgo gold acquisition in favour of debt repayment!

Terry said...

Bumping 70 and converted 1000 slv eagles into 25 buffaloes two weeks ago. How lucky was that?

mr pinnion said...

Hi, my names Ozzy, and i m a FOFOAholic.
Early forties, semi-crap job as fabricator/welder.
Started waking up about 2005 when my house was valued at twice what i bought it for.Started reading Housepricecrash.com and after the credit crunch moved on to sites like Market skeptics which made me focus on gold.
Sold house and paid off ALL debts (great feeling), and bought gold and silver with what was left.Stumbled across this wonderfull site about two years ago and have been hooked on it since.
Swapped the last of my goldmoney.com silver for gold on friday which is looking like a good decision.Love the Goldmoney.com site, it was tough pressing the redeem button,but FOFOA has me convinced.
What physical i have is buried in a hole so dark and deep, an army of hyperactive aardvarks on perfomance enhancing drugs could nt find it.
DP also has me convinced so i ll be selling all my cased stuffed ex-Central Bankers preserved in formaldehyde as soon as i can find a buyer.

Regards
Ozzy

JR said...

Hi Victor,

You say:

"the euro will suffer inflation from its bad debt in exactly the same fashion as the US$. Their only advantage is that their total credit volume per GDP is a bit lower although the public debt per GDP is similar. Good luck."

*********************************

In contrast, FOA commented:

FOA (10/5/01; 10:55:19MT - usagold.com msg#112)
Discussing the World with Michael Kosares

"...The world is heading towards a huge financial / currency crack up, but it won't work out with gold coming back into the money game. This very long term transition is playing on a move away from dollar domination with Europe preparing to suffer less than us by pulling in as many other political trading blocks as they can.

When you look at who they are reaching for; every one of these blocks wants gold moving higher to shelter their dollar trading losses.
None of them expect to unload dollar reserves because our end time trade deficit won't permit it. They can't just send the dollars to each other, buying their own goods that would never exhaust the external dollar float. Hell they now have their own money to do trade with, the Euro.

The game is to let the US economy suffer from its own bloated expansion by moving slowly away from supporting foreign dollar settlement with CB storage."


**********************************

Either way, you are quite correct in that as Another said, time will reveal all things.

Cheers, J.R.

M said...

@ TDOC

My point is, the banking system is not separated with borders now, so the ECB is not, as you said, reversing the nation state concept.

M said...

Casey Research is doing some reading on here it looks like....From their dispatch today-

Economists have observed this phenomenon for decades; it's known as "sunspots" or "focal points."

If everyone agrees on the focal point, they will end up in the same place. Over the years, Treasuries and the U.S. dollar have been the strongest focal points

this spike is obvious to every trader in the market. In my opinion, we're seeing the birth or perhaps rebirth of a new focal point: gold."

DP said...

Ozzy, funny thing - they're not as liquid as you'd think...

B-bmm tshhh!

The Dork of Cork said...

@M
OH yes I agree but the EU / Euro is the most advanced of these new poltical / monetory structures , the old CBs have a more symbiotic relationship with their host whether they like it or not.

Wendy said...

WOW the plunge protection team's gotta be exhausted and poorer after today on the job ...... pushed the DOW up 600 points in the last 1 1/2 hours of the market. INSANE!!

DP, I do what I do, because that's how I want to do it. I am well read and old enough to understand the potential consequences of my decisions.

Also I'm not on a fixed income. I'm securely employed and plan to continue working for the next 10-15 years. And finally after raising kids for 30 years I'm done, all that's left is college tuition etc. So I have a bit of wiggle room in terms of financial decisions. =8o)

Wendy said...

Oh yeah!! I forgot the best part: I am not accountable to anyone so I get to throw my currency at whatever I want ;)

Indenture said...

"Silver fell $1.50 to $38.00 as silver is trying to assert itself as money and not just an industrial metal." Harvey Organ
I just thought it was funny because I can see silver trying to push to the front of the line while gold is being carried above everyone else's shoulders.

Jeff said...

Speaking of parabolic blowoffs in things that would like to be money, how about bitcoins? From 30 to 10 in 2 months. Did googcoin get introduced or something?

Texan said...

Jeff,

Yes, why doesn't the USG just go ahead and usher in freegold?

I have previously posted that I thought it would result in a doll collapse, but that's using today's price. Why not use $5000 as the bid? Or $10,000?

That would monetize 7000 tons nicely. They don't have to sell. Just be the bid for gold until it starts flowing in size.

They don't have to sell it to monetize it.

Michael said...

In the 3 months I have been reading FOFOA I have not encountered a discussion of the problems of going ALL INN. I know Defending the Precious does deal with part of the problem namely making certain that you have enough currency to pay the bills until gold increases up in value to the point at which one might consider cashing in a bit to enjoy the fruits of ones foresight.
I have considered 2 other issues and I'm wondering if I'm missing a few more.
One other problem potentially encountered when most of ones wealth is in physical is showing assets if one wants a loan. It is easy to show a lender your last investment statement from TR Price. Just how are you going to show that you own a significant amount of gold? I am supposing that before you do go ALL INN that you increase the amount of conventional investments you do not convert to gold for just such a purpose. It cuts down on the physical you are able to hold though doesn't it. Once you are ALL INN it would be a drag to have to schlep off to the coin store with a bunch for redemption (and pay taxes) just to prove you are a good risk.
The other idea is a bit more esoteric but: suppose gold does decrease in value by a significant amount due to destruction of the paper market. We here are aware that such an event is likely. But I suspect that it will be emotional wrenching. One would feel very much poorer and actually BE poorer by most standards. It will be the point at which the physical gold advocate is most vulnerable.
These are just a few thoughts on the issue of converting a significant portion of ones wealth to gold. If there are other Thoughts! or unseen dangers you have considered I'd be most appreciative in hearing from you.
Finances are always tricky and those on this site need a different kind of advice than you get most places.

Indenture said...

Perhaps ‪this‬ is why the Swiss will mint 0.1 gram gold coins.

M said...

@ Wendy

I have my doubts that this was the work of the PPT. The Canadian dollar jumped by over 1%. This looks like a flight out of currency risk to me. US bonds gave up their entire gain which flowed directly into stocks, commodities and currencies. Stocks share more of the same qualities as gold then bonds do. You may be right though, because financial stocks where some of the strongest which has PPT written all over it.

Edwardo said...

"Once you are ALL INN it would be a drag to have to schlep off to the coin store with a bunch for redemption (and pay taxes) just to prove you are a good risk."

You wouldn't need to do that. You'd simply arrange for the bank's loan officer to come and view your physical gold holdings privately.

M said...

@ Micheal

I am ALL INN, Been reading FOFOA since late 2008.. I have some debt on physical gold. It all depends on the loans officer. My LO photocopied my bullion receipts from earlier purchases and has them as collateral. They also have my stock portfolio as collateral. They have no control over either but they trust me.

If you are even considering cashing in on foresight then you are just speculating. Keep 6 months cash on hand. Lose the easy money attitude man.

JR said...

Michael,

I am perhaps misreading you, but concern you may be financially limited by owning gold (like unable to get credit?) maybe suggests a misapprehension of the discussion at hand:

From Deflation or Hyperinflation?

The whole point of the deflation versus hyperinflation debate is about the denouement, the final outcome of this 100-year dollar experiment. It is about the ultimate end, and the debate has been going on ever since the 70s when the dollar was separated from gold and it became clear that there would be an end. The debate is about determining the best stance someone should take who has plenty of net worth. And I do mean PLENTY. People of modest net worth, like me, can of course participate in the debate. But then it can become confusing at times when we think about shortages or supply disruptions of necessities like food. Of course you need to look out for life's necessities first and foremost. But beyond that, there is real value to be gained by truly understanding this debate.

FOA:

-- Note: The reader has to understand that these discussions were directed towards people and investors that had plenty of net worth. And I do mean Plenty! The argument wasn't about how to survive; rather how to balance a truly conservative estate portfolio. --

cont.

JR said...

cont.

Michael, you also comment:

"suppose gold does decrease in value by a significant amount due to destruction of the paper market. We here are aware that such an event is likely. But I suspect that it will be emotional wrenching. One would feel very much poorer and actually BE poorer by most standards. It will be the point at which the physical gold advocate is most vulnerable."

But "today, your wealth, is not what your currency say it is"!

********************************

5/26/98 ANOTHER (THOUGHTS!)

Understand, all value judgments today are as subject to "exchange rate competition"! It is in "this exchange rate valuations" that the private citizen does denominate all net worth! A safe way to hold the wealth for your future, yes? You should ask a Korean or the Indonesian ?

One should grasp that "today, your wealth, is not what your currency say it is"! In this world, paper currency is for trade, only! It is for the buying, selling, earning and paying, not for knowing the value of your family holdings! Know this, "the printers of paper do never tell the owner that the money has less value, that judgment is reserved for the person you offer that currency to"! Again, I ask, how can we know a true value for our assets, when they are known only in currency that finds it's worth, as in the exchange rate for another currency


**********************************

One more:

Don’t sweat the small stuff — it’s here today and gone tomorrow. However, and this is vital, when your needs turn instead toward consolidating those various nondimensional incomes and/or bank accounts into true wealth suitable for mid- to long- term savings, for reliability and soundness nothing beats financially-unencumbered unfractionalized/nonderivatized physical gold. Get you some. — Randal
Bye RS

Michael said...

I detest Blogger...I just wrote a detailed response and blogger ate it when I hit preview.
anyway thanks to all for the comments.

JR said...

I feel your pain - like you can't imagine. :)

I often write it in word, save it and cut and paste (but LDO not much spellchecking).

JR said...

I was conversing with a friend and we got into the idea of how common it is to see the misleading meme of dollar repudiation as a driver of price inflation/ hyperinflation. The idea being as the world rejects dollars, they return to their origin and expand the domestic US dollar supply, aka "exported eurodollars coming home to roost."

Anyway, here are a few thoughts to consider if you entertain this "dollar repudiation" idea or see it raised elsewhere.

*********************************

FOA:

"The world is heading towards a huge financial / currency crack up, but it won't work out with gold coming back into the money game. This very long term transition is playing on a move away from dollar domination with Europe preparing to suffer less than us by pulling in as many other political trading blocks as they can.

When you look at who they are reaching for; every one of these blocks wants gold moving higher to shelter their dollar trading losses. None of them expect to unload dollar reserves because our end time trade deficit won't permit it. They can't just send the dollars to each other, buying their own goods that would never exhaust the external dollar float. Hell they now have their own money to do trade with, the Euro.

The game is to let the US economy suffer from its own bloated expansion by moving slowly away from supporting foreign dollar settlement with CB storage.
This is more than enough to end the dollars timeline as we are already stretched to the leverage limit. They know that Greenspan has but one policy to use and that will be super printing. He is doing it now, right on que!

The ensuing domestic price inflation will waste away all buying power of dollars overseas."


**********************************

and then go read miner49 on "dollar repatriation" and the "less obvious take" quoted in Dilemma 2 – Homeless Dollars. Here is a little sample, but please read the whole post and quote to get the fine detail!

"Regarding your musings re: dollar repatriation, it can be a tough one to answer. The obvious take is of course as you express, that without use for dollars, they would simply find their way back to US shores, and help drive (hyper-)inflationary pressure. Yet, if you will permit me also to think out loud for a moment ;->..."

So, do these orphaned dollars eventually come home to roost in the US domestic markets? We will be told that.......

The strategy of the level-headed is to slowly remap the globe financially. This involves as much as possible a SLOW transformation from one currency paradigm to Another. These dollars en masse will not return home. They were born in exile and will die in exile. We will hyperinflate ourselves, and won't need help from overseas...


Cheers, J.R.

mortymer said...

Goldrush & some music:

Source: http://en.wikipedia.org/wiki/Goldrush
&
http://www.youtube.com/watch?v=st09w_WDEbA&playnext=1&list=PL250830085E95DAF7

...for more see AFB. :o)

Alan2102 said...

Michael said...
"I detest Blogger...I just wrote a detailed response and blogger ate it when I hit preview.
anyway thanks to all for the comments."

Never ever EVER trust these flakey little edit boxes on blogger or any other forum/system. EVER. At least not with any significant amount of text. I've learned this the hard way.

Level 1 security (minimal):
Periodically, during composition, hit edit->select_all->copy. This saves a copy of the text, up to that moment, on the windoze clipboard -- which is volatile, but at least it is a copy (some protection). ALWAYS do this, at the minimum, before hitting "preview" or the like.

Level 2 (better):
Copy the text and paste into notepad or equivalent, and EDIT IT THERE. Notepad is better for editing than the flakey little edit boxes, since -- though it is volatile, like the windoze clipboard (i.e. in the event of a power loss, you will lose your unsaved text) -- at least you cannot suddenly lose your text with an accidental strike of the backspace button or other key. With the flakey little edit boxes, any number of minor accidental hand-brushes against the wrong key or mouse/pad cause migration away from the page, with (usually) total loss of your work.

Level 3 (bullet-proof):
Do Level 2 and then WRITE THE FILE TO DISK. This should be done with any post requiring more than about 10 minutes of work. (Unless you don't mind losing your work.)

The problem is actually one of poor software design. Text under composition should NEVER be lost, and indeed IS NEVER lost when using a well-designed system. I use an old (1980s) emacs variant editor which never loses text -- never ever, no matter what, not even if power is lost and the system shuts off. Among many other great features, it saves TO DISK literally every darn keystroke; you cannot lose a thing. That is the way that software should be designed. Would that Microsoft and others start incorporating critical features of software from 1985!

In the course of writing this post, I copied and pasted the whole thing 3-4 times to my emacs editor (running in a dos window), just to be sure I didn't lose it. It only takes a couple of seconds, which is cheap relative to the pain of loss. These days, after being burned so many times, I REFUSE to allow loss of text by grossly deficient software, no matter how short and trivial that text may be.

Indenture said...

Text Editor!!

and just because I feel like it needs to be said again, JR, you are a mad man with past details. You have the ability to sum it all up with quotes from some strange 'where-the-hell-did-he-pull-that-out-of' dimension.
Thank You for your time.

Indenture said...

Forum 1800 :)
Fun to watch!

Jeff said...

1800. suggested song, we are the champions

Jeff said...

or Once in A Lifetime. Talking Heads fan here. :)

Ore em' said...
This comment has been removed by the author.
Ore em' said...

I would also add that, while I don't personally own any gold, I have been successful in "converting" a few others to the Physical Gold Trail, but not without a lot of effort.

Of course, many look at me with glazed eyes, but that is fine. For every person I've converted, I'd say there are at least 100 who look at me with disdain/disbelief/pity, etc. Ironically, but perhaps not surprisingly, the closer to the center of the financial universe the person is has tended to correlate inversely with their willingness to hear me out and/or at least consider the idea. That cognitive dissonance sure is a bitch sometimes!

JR said...

If I was gonna be reborn as a woman, being Tina Weymouth would be pretty high up on my list.

Unknown said...

Alan 2102 and JR
got my first Mac in 80 something so ya think I'd a learned. Often I have a simple thought that gets long enough to "save" but since it was short when I thought it I just don't....lets just say I accept "operator error" as a contributing cause...but I like 'design flaw' too...it soothes the ego...
Michael

DP said...

$1780 retest and off to the races?

Feel So Close.

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