On Saturday, I'll Have ANOTHER won the Preakness in Baltimore by a neck. Preakness is the second of three races that comprise the US Triple Crown. I'll Have ANOTHER also won the Kentucky Derby two weeks ago. If he wins the Belmont Stakes on June 9th, he'll be the first horse to win the US Triple Crown in 34 years. The last Triple Crown winner was "Affirmed" in 1978. Oh, and one other thing, the runner up in the first two races, Bodemeister, will not be competing at Belmont.
One of the musicians in this next video is one of the commenters here and a supporter. He wrote a song for the band called 'That Barbarous Relic' which he tells me is still in rehearsal. Here's a recent write-up in NPR Music. The band's new album, Safety Fifth, will be out June 12th.
593 comments:
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"Germans should import more stuff with their current surplus...
For instance gold"
who can save in gold, if the government taxes you into infinity to bail out loosers? And the people left with some money are obliged to "save" in government bonds? See, NO FREEGOLD IN EUROPE!!! Once and forever, forget about it.
The obligation to save in gov.bonds is about to be even EXTENDED in these days:
http://www.sueddeutsche.de/wirtschaft/plaene-von-arbeitsministerin-ursula-von-der-leyen-selbstaendige-muessen-kuenftig-fuer-die-rente-vorsorgen-1.1314255
"Welchen Vertrag der Selbständige abschließt, ob Lebensversicherung, private oder gesetzliche Rentenversicherung oder Rürup-Rente, bleibt ihm überlassen. Die Versicherungsansprüche dürfe nur "nicht vererblich, nicht übertragbar, nicht beleihbar, nicht veräußerbar und nicht kapitalisierbar sein". Diejenigen, die nichts nachweisen können, will von der Leyen in der gesetzlichen Rentenversicherung pflichtversichern."
Greets, AD
Trolls gotta troll, eh AD? Of course we don't have freegold in Europe or anywhere. It's all or nothing. But you know that.
FOFOA: The ECB has set up gold in its forex reserves. [4] That means that it plans to use gold to DEFEND the value of a euro at some point. That's what forex reserves are for...
Eventually the ECB plans to use its gold reserves to manage the value of the Euro. Not to exchange euros for gold, but to use the gold to manage the euro, manipulate it if you will. But the big difference is that it will not start doing this until it is competing in a physical-only marketplace for gold. So in a way, even though it will be manipulation from TPTB, it will be fair manipulation! It will be "hard trading" with "hard opinions" available to everyone. [5]
This is how "forex" gold reserves are much more powerful than the gold backing the dollar once had. [6] They require less gold, they never run out, and they don't require the currency to compete in an unfair way with gold. And they can be managed at one central location yet their affect will be felt wherever virtual euros exist. Under the dollar's gold standard the Treasury had to restrict the entities that could come to the gold window.
Under freegold, everyone in the world can come to the gold window! Everyone that uses your "virtual euros" has the confidence that you are DEFENDING their value against the most versatile real world physical trading thing; gold. And also that you are allowing gold to float freely, so that anywhere in the world, they will be able to buy physical gold with your euros. They are perfectly convertible at all times and places, because the ultimate institution backing them makes sure they are credible against gold, and that there will never be a physical shortage of gold priced in euros.
Martin Armstrong trashes FREEGOLD:
http://www.martinarmstrong.org/files/Coming%20Commodity%20Boom%2005-29-2012.pdf
Martin Armstrong is railing against FreeGold in his latest piece: http://www.martinarmstrong.org/files/Coming%20Commodity%20Boom%2005-29-2012.pdf
He conflates it with the gold exchange standard throughout and has clearly not given the subject any serious study. For someone who strikes such an erudite tone, this is weak stuff indeed.
Industrial and Commercial Bank of China Ltd is seeking membership of overseas exchanges and aims to become a major global bullion market maker, a senior executive said on Monday.
The world’s biggest bank by market value, ICBC is the top player by volume on China’s gold and futures exchanges, but its participation in foreign markets is limited to over-the-counter trading, which reached a total $90 billion last year.
Emboldened by Beijing’s ambitions to have a bigger say in global commodity prices, ICBC now has an eye on bourses such as COMEX and on joining the 11 market makers of the London Bullion Market Association (LBMA).
These quote continuous two-way bid and offer prices for gold, silver, platinum and palladium throughout the London day, providing a liquid market in which to trade.
“We hope to play a bigger role in the global precious metals market and become a major market maker, like Barclays,” Shen Shisheng, ICBC vice-general manager of financial markets, told Reuters on the sidelines of a conference in Shanghai.
Barclays Capital is among the gold fixing members on the LBMA. The newest LBMA market maker, Merrill Lynch, was appointed in January last year. ICBC became an ordinary member of the LBMA late last year, the first commercial bank in China to join the association.
http://business.financialpost.com/2012/05/28/chinas-icbc-has-big-dreams-for-bullion-business/
Re: Martin Armstrong;
It would be nice if Marty could multiply. He expects $1,312,500
gold. He gets that by multiplying 8.75 (the ratio of gold's rise
from 1972 to 1980) by $1500. Oops. off by a factor of 100. We
could only hope!
I think Armstrong makes a good point about hyperinflation in the core economy vs hyperinflation in a peripheral economy. Confidence is more fragile when there is an better choice out there that everyone recognizes as an obvious better choice. When there is no obvious better choice, inertia is stabilizing. Especially when CBs coordinate to manage exchange rates. If the dollar ever goes into hyperinflation, what will happen to the rest of the world's currencies? Will they step back and watch the spectacle as uninterested bystanders? Of course not. Is it possible for all the world's currencies to hyperinflate simulatenously? It seems very very unlikely because there is no alternative store of value that everyone recognizes and feels comfortable with as the 800lb gorilla. Gold could theoretically fill that role, but 90%+ of the population has never purchased a gold coin before and would probably feel uncomfortable with the whole idea -- everyone would be worried about buying a counterfeit. Will the masses go on a crash course? Maybe. We are in uncharted territory because we have never had such an integrated interdependent worldwide house of mirrors monetary system before. What if cash was outlawed entirely and we were all required by law to make all transactions in electron credits?
I think Armstrong misunderstands or misuses the term Freegold. He says "The idea that somehow Freegold will emerge as a solution is just absurd. Governments will NEVER give up power until they are forced to do so." In the sense that governments will never rush to Freegold as a conscious policy choice, he is correct, isn't he? Isn't one of the themes of this blag that easy money never gives up power until the system collapses? He also says "It is not FREEGOLD we should be concerned about, but free capital in general." He recognizes that the sovereign debt is the big issue and that "Nothing will take place until we begin to see pressure put on the debt markets." Do we not agree with him on this point? As long as people have confidence in government debt, there will be sufficient confidence in the fiat currencies as a store of value. When the pendulum starts to swing and savers abandon government debt, where will they go? Into equities? Into gold? Into both? We will all find out in due time. As Marc Faber says, both gold and equities will go up, but not necessarily in the same amounts at the same time.
Martin Armstrong Fail:
Are Commodities Preparing for a Major Rally?...
All commodities are prone to dramatic
advances and decline..
All commodities will rise. This is inevitable. The idea that somehow Freegold will emerge as a solution is just absurd...
Consequently, what we are looking at is a wholesale advance in the commodity sector and this implies a very broad based decline in the
currency purchasing power rather than a single isolated capital concentration. Thus, this is not about just gold, it is about a systemic decline in the way Western government has functioned since World War II...
Date: Sun Nov 02 1997 21:52
ANOTHER (THOUGHTS!) ID#60253:
Western thought is still linked to gold as a commodity. That thinking is going to change! The world will witness an almost instantaneous run into this commodity the likes of we have never seen before! It will not be "a trading rally" or "a two way street". Bullion will have become a holding for "the lifetime" never to be sold. "Sell and spend everything but not gold"!
Do you think in these terms: "if gold goes up $100+ next week I'll sell my futures, gold stocks and 10 K-rands for a fat profit and laugh all the way to the bank" If the gold market was the same as in the 70s and 80s, that might be a good move. But this market is not the same. The world has changed and left most goldbugs fighting the last war! Only this time they are much smarter and have many more tools to work with. But, what if you do battle with your modern missiles pointing the wrong direction?
For us to understand what is about to happen we must pull our minds out of the paper trading world. Instead enter the world of real things! Here we will see concepts more clearly.
All currencies and most treasury debt are little more than digital units of perceived value. You don't own them, your account is "credited" with this value. Foreign governments, such as Japan are no better off than American citizens, they don't own anything either! What is really owned is "the right to offer what is credited to you, to a bidder in exchange for real things or other credits". It is a strange way to hold wealth. One might say "my net worth is the intention of others to pay me a credit from someone else". This thinking has worked well until the late 80s. It was at this time that a few wealthy and very smart people started to see the end of this. They understood that the US$ was not going to crash, it already had.
Martin Armstorng says all commodities will rise, that this is not about just gold, but a very broad based decline in the currency purchasing power rather than a single isolated capital concentration.
But unfortunately for Martin, gold is not just a commodity. Its different, because it specializes in doing on thing - storing value, aka a single isolated capital concentration. Like a "Focal Point" for Value (http://fofoa.blogspot.com/2010/12/focal-point-gold.html).
Here is FOFOA echoing Another's point from above - gold is not just a commodity:
Gold
One of the unique characteristics of gold that sets it apart from commodities is that its primary use - store of value - has no weight or mass requirements. In commodities, where industry is the primary user, weight is critical. If you are a builder who needs a ton of copper, then your need for this specific weight is more important than, and independent from, the price of copper. If copper rises in price, then darn-it, you must pay more. If copper falls in price, hurray, you just saved yourself some money.
But if your need is to store $100,000 worth of present value in gold, it doesn’t matter how much gold you get. All that matters is that whatever weight you get reliably and efficiently stores your value. One ounce could do just as good of a job as 100 ounces. In fact, one ounce would do a BETTER job than 100 ounces! The less gold it takes to store your value, the better it does its job. This particular “gold dynamic” sets it apart from all commodities.
One ounce would store your value more efficiently and stably than 100 ounces because A) your storage and security costs would be lower (efficiency), and B) if one ounce is worth $100,000 then that infers gold is being valued by many more people relative to when it was $1,000 per ounce. This wider distribution brings with it a more stable base of valuation and less relative volatility in price (stability).
Comparing this “gold dynamic” to any industrial or food commodity we can see a stark difference. What commodity could perform its job BETTER at a price 100x higher than today? Can you name one?
http://fofoa.blogspot.com/2010/08/relativity-what-is-physical-gold-really.html
Cool that Martin Armstrong tries to address Freegold directly. Too bad he fails making any arguments against the core arguments of the Freegold hypothesis.
He is simply arguing against the people who thinks money should be tangible/gold. Well that's pretty uninformed if it's intended as a critique against Freegold.
It is not FREEGOLD we should be concerned about, but free capital in general.
Yeah, but really free capital should have the choice of gold, right?
They then argue that today gold is really paper gold, and the market have multiplied that many times. They argue that the real gold is only about 5 billion ounces. They then argue that the paper gold depresses the price of gold and this is why it is not where it should be right now. All this sound nice, however, you can make the same argument about anything traded
today from wheat to stocks and bonds given the derivative markets. Some see conspiracy behind everything.
That was perhaps his most relevant argument. Too bad it doesn't take into account gold's coming role as SoV par excellence. Also I don't see the paper gold market as the fundamental reason gold isn't priced right currently. Fundamentally it has more to do with savers choosing to save in debt. Whether that be gold debt, sovereign debt or bank deposits.
If someone could just get him to think through the need for different SoV and MoE.
Robert,
It doesn't matter what 90% of the people do, and it doesn't matter if they ever buy a gold coin. Freegold is about the big players. As for the smaLler currencies, well, it's a dollar world, so yes, they can all burn. That's why the euro was made differently.
ANOTHER: Today every digital money is a product of the US DOLLAR by nature of "it being the book keeping reserve". To this extent, the US DOLLAR is the only world currency! To this end, no one can see the true size of the "mismatch" in gold as money in US DOLLARS.
You also say: What if cash was outlawed entirely and we were all required by law to make all transactions in electron credits?
You should read FOFOA's hyperinflation posts, 1, 2, and 3.
FOFOA: This is what BACKS the whole entire system… that the Fed prints cash. Cash backs the system. Physical cash. It is the reserve, just like gold used to be the reserve. There is NO SUCH THING as digital money that has replaced physical cash. It is an illusion!
And just because we have all bought into the modern banking system illusion of "digital currency" does not make it any more real. How real it is or isn't will be revealed when the system starts getting stressed!...
Cash is the reserve, and cash can be created at will!!
Did anybody notice that totalitarian regimes tend to outlaw gold?
Sure, JR will now C&P about "confiscation", before he does so, he should consider the following:
Guess what, if you think that "your" central bank acts in your nations interest, you are an idiot. If you think that "your nations" politians are acting in your interest and care about you or any kind of fiscally balanced budget of your nation, you are an idiot.
how do you place freegold in that scenario?
Greets, AD
AD, your question is 'Soon the world will turn into a prison camp and we all work at gunproint to be paid in worthless money that is confiscated by the NWO. How do you place freegold in that scenario'?
No one places freegold in that scenario. No one except you, Desperado, and a few other cranks believe in that scenario, so why do you keep asking this question? Maybe you would be better served asking your question to a mental health expert than in the comments here.
Jeff, yes, cash *currently* and theoretically backs the system, but suppose that the government changes the rules and says we are not going to a completely cashless system not backed by anything? This is not so far-fetched as you may think. The Scandanavian counties are leading the way. What is to stop it?
You say it does not matter what 90% of the people do because Freegold is about the big players. True enough, but even if you count portfolio value rather than heads, the problem is similar: 90% of the big players are institutions, not individuals. And institutions are not prepared for freegold. There is no system in place for institutions to take delivery, and even if they did, you still have the problem that their ultimate beneficial owners are only holding pieces of paper. So I think inertia can carry us a long long long way before any loss of confidence among the big players.
Robert, these institutions you call big players; do they have something you need, or are they just saving in other peoples debt?
FOFOA; The banking system sells all kinds of packaged debt to net producers, the savers. It creates this stuff at will to meet demand. And if necessary, it drums up new debtors one way or another to keep this stuff financially funded. Even corporations can dilute their paper shares to take in new claims from the savers without giving up a commensurate marketplace contribution.
This is the process of paper savings hyperinflation. It is a self-feeding, self-fulfilling, self-sustaining, self-propelling system that will ultimately lead to real price hyperinflation. When you produce capital and decide to leave it in the marketplace, postponing your earned consumption until later, and you do so in any paper investment, you are feeding this process of capital destruction through paper savings hyperinflation.
Jeff,
can you name me any of your civil and financial rights that have been emphasized the last 10yrs and can you name any that have been limited in the last 10yrs?
Greets, AD
Robert,
I think you are not realizing or thinking big enough when you consider "big players". To me, you are describing just bigger shrimps.
And delivery is not a big issue in FG either.
In my mind there are only 2 things that can prevent Freegold; kicking the can down the road further (which is to delay it, not prevent it) and the discovery and/or utilization of a equal or superior monetary reserve SoV.
The can itself is falling apart, and I don't see how it will continue much longer. But the kickers are resilient.
As for an equal or superior alternative reserve SoV, within the physical plane, there isn't one that I can see. If I have learned one thing from this blog, there can be ONLY ONE. Gold has the upper hand to all others in that it is and has been used in that role in varying degrees from the beginning of the money concept. Only a blind fool can look at gold and not see that the ROW has been hedging the Keynesian experiment with physical gold all along.
As for Armstrong, his unadulterated love of the long cycle is to me like not seeing the trees for the forest. The FREEGOLD that he knocks down is a strawman, and I hope that FOFOA kicks the crap out of it in a dedicated post!!
Robert,
If paper money is outlawed, how will people pay for their drugs and hookers? Serious question. Drugs & hookers make the world go 'round to some extent.
Many such transactions require a physical MoE. What do you think would emerge as the physical MoE in your system? Would the demand for said physical MoE not skyrocket upwards once paper money, which had served that purpose, can no longer be obtained?
Greets AD
jojo, I do not understand the first comment. What does it matter whether a pension fund is a giant or a big shrimp? As long as big institutions continue to maintain confidence in the system, we will continue to limp along, won't we? Whose lost confidence will make the difference?
On delivery, I agree that once you get to freegold, physical delivery does not matter so much. But that is an issue for the future. For now the issue is getting to freegold, and for that question I think physical delivery matters quite a lot. You cannot bring an end to fractional reserve bullion banking until enough people (or institutions! - and therein lies the problem) demand physical delivery.
jeff, I understand the paper savings hyperinflation part. I am having trouble seeing how the institutional holders are going to change course, and where they will go when they do try to change course. What is their alternative? Is the Euro an obvious choice that they will all find compelling so that it affects the collective psychology of the market? Or will it be something else? Please elaborate.
poopyjim, is this a serious question? Barter will always be a second practical option. But if you are waiting until so much confidence is lost that we all switch to a barter economy, I submit that day is probably still a long way off.
Armstrong: The idea that somehow Freegold will emerge as a solution is just absurd. Governments will NEVER give up power until they are forced to do so.
What power are the Governments giving up under a Freegold system?
National fiat currencies will also serve as the means to satisfy the various governments' unrestrainable inclinations to "manage" their economies to the extent that they are able. -- Ari
Armstrong: So let’s get real. There is no role for gold to play in the future and the whole idea of a fixed exchange rate has been attempted many times and it has always failed.
If Armstrong thinks Freegold is the same/close to fixed gold standard, he has no idea what he is talking about.
Well said AD,
The CBs and Gs look out for themselves, not you. So don't give your savings too them, get paid in full.
We are all like ants in an ant farm when we patronize Wall Street. Our contributions to society, should they exceed our day-to-day needs, are deployed by a system that does not care how they are deployed, just that they are deployed ASAP. If you would like to make a real contribution to the future of civilization then please buy physical gold and find a way to keep it close. Hoard your efforts outside of the system and watch as they receive a tremendous power boost just in time for deployment. You will be rewarded with the freedom to choose when and how your saved effort will be deployed and in so doing, you will help shape the future.
http://fofoa.blogspot.com/2010/04/life-in-ant-farm.html
The U.S. dollar and gold will both be massively expanded to recapitalize the system, and life will go on. The difference being that the dollar will be expanded in volume while physical gold bullion will be expanded through value. And through this process, all ambiguous claims, both dollar-based and metal-based will become virtually worthless, while unambiguous gold ownership will literally explode in value.
This is an historical first. Today is the first time in history where a massive transfer of wealth will transpire through the conversion of all gold on the planet into unambiguous ownership. Think about this long and hard. More than 90% of all the gold stock has been mined in the last 200 years. During that time, unambiguous, discrete (and discreet) ownership has entailed an unnecessary expense. During the gold standard years gold was the money, so it was all unallocated and ambiguously owned. Even today, most of the gold in the BB system is still on pallets, a remnant of the gold standard years. But that is changing.
It is more important than ever, right now, to make sure that you unambiguously own discrete pieces of gold. You don't want to just own "a bar of gold" at the bank, you want to own bar number JM4835 or whatever. And you certainly don't want to own a fractional interest in a bar when you can own coins down to one gram. Better yet, have your gold unambiguously in your possession, or at least under your control outside of the banking system that is still struggling to cope with this change.
http://fofoa.blogspot.com/2011/12/unambiguous-wealth.html
This is, of course, the problem with holding your "wealth" in the system. This is an extreme example, where the wealth being held in the system was presumed to be unambiguous—and physical—and yet the system itself imputed ambiguity onto the ownership of that asset, which was only discovered once someone went bankrupt. Possession is the timeless attribute of wealth because true possession is unequivocal. But the system apparently equivocates its own illusory version of possession when it comes to bankruptcy. Therefore nothing held within the ($IMFS) system can be unconditionally qualified as "wealth" under FOA's definition.
This guy, Jason Fane of Ithaca, New York, simply wants to get his gold out of the bank vault and into a non-bank vault at Brinks. Remember, this is one of GBI's big selling points. Your gold bars and coins are stored in non-bank vaults that have no reason or even ability to use them for other purposes like rehypothecation. But even better than that, with gold, you can actually take true possession of your wealth yourself! A million dollars in gold can easily fit into a small box. If that sounds dangerous or risky to you, just take a look at what's happening inside the system today! HSBC's hands are tied until a judge rules on whether Jason can move his own gold that he thought he already "possessed."
http://fofoa.blogspot.com/2011/12/unambiguous-wealth-2-mf-global.html
Trail Guide (02/11/00; 09:49:21MDT - Msg ID:24996)
The Gold Trails
[...]
Only today, the end of this "time line" will find many holding their wealth in this same system, for a purpose it should never have been intended to perform. That being, to represent one's life long accumulation of real wealth as their money wealth things. Most will understand the impact of this well after the fact as we are indeed in transition to yet another paper system. One we must have, and will use. Just as everyone used the old one to their own private advantage, we will indeed grasp the next one. Just as you point out, Aristotle, fiat exists more so because it does "what societies economic function wants", not because it's a function of "what society is forced to do"! Still, some will bark against this in an effort to stop people from following human destiny. Fortunately, relative to our lifetimes the world evolves quickly, with or without our agreement.
In this period however, we will return back in time much further than many can see. This time gold will be pulled away from its strained attachment with "fiat contracts of currency" and again take its place as the ages old "wealth money holding" it always was. It will occupy its rightful place on the shelf with all our other "wealth things". And here it will, "for the first time in modern context" show its true value in relation to modern paper settlement money. A value no one today will believe!
[...]
This my friends is why so many today, "Walk In The Footsteps Of Giants". They walk a trail that takes them further and further from derivatives of gold and the present currency it's (gold) priced in.
From Yesterday, through Today and onward into Tomorrow" ,,,,, we say buy Physical Gold for your future ,,,,,,, doing so will write your personal history in the palm of your hand!
Possession is the timeless attribute of wealth because true possession is unequivocal. But the system apparently equivocates its own illusory version of possession when it comes to bankruptcy. Therefore nothing held within the ($IMFS) system can be unconditionally qualified as "wealth" under FOA's definition.
http://fofoa.blogspot.com/2011/12/unambiguous-wealth-2-mf-global.html
Hi Robert,
Institutions saving in dollars won't kick off the HI. here is a teaser from Inflation or Hyperinflation.
FOFOA: "Wake me when the managers of trillions of OECD pension assets panic out of their own currencies, and their own sovereign bonds." Me: They may well panic out at some point, but again, will that be a cause or an effect? I will show that it is 100% effect and that, if that's what you're waiting for until you're willing to entertain the risk of hyperinflation, you will be a day late and a dollar short to make any preparations that were contingent upon entertaining the risk.
Jeff, I think you are trying to answer questions that I have not asked. I think it is common ground on this board that wheelbarrow hyperinflation comes long after the printing, and is triggered by a sudden lack of confidence. So my questions are (i) whose lack of confidence is going to trigger the wheelbarrows? (obviously not yours and mine) (ii) can you see it happening as long as most institutions have confidence in sovereign debt? (iii) when it finally happens, what are institutions going to want to exchange their dollars for? Where is the money going to go? To another currency? To commodities? Into physical gold?
Robert,
I assure you that this is indeed a serious question. You are aware that drugs & prostitution account for a massive amount of economic activity, all conducted in cash, right? The participants in these transactions MUST use a physical MoE because of their overwhelming desire for the transaction to remain anonymous and unrecorded. In your cashless society, how will these transactions be conducted? Will people just stop frequenting prostitutes and buying drugs (lol)? Do you think hookers and drug dealers will start taking debit cards? I hope you see my question has nothing *directly* to do with the entire economy being reduced to barter (though I think this would be an inevitable consequence of any attempt to actually implement such a cashless society).
Yes the junkies, johns, and anyone who just wants to conduct a transaction off-the-radar, would barter. Since they can't use cash for this, a lot of people would want to convert those imaginary electrons they're paid into some real physical item of value that they can exchange for drugs and/or sex. I don't know exactly how it would all pan out, but ultimately the removal of cash from the system would cause demand for good barter items such as physical gold (the best barter item) to surge and $IMFS would be doomed right then and there. So yes, cash backs the system, and frankly this is a critical part of what is keeping the whole farce together, IMVHO.
-Poopy J
(i) whose lack of confidence is going to trigger the wheelbarrows? (obviously not yours and mine)
For another currency block to be built over years, the current world economy had to be kept functioning. To this end the dollar reserve system had to be structurally maintained; with its IMF agenda intact, gold polices followed and foreign central bank support all being part of that structure. Truly, the recent years of dollar value was just an illusion. An illusion of currency function and value, maintaining the purpose of holding the world financial and economic system together for a definite timeline. Politically, the world does not hate America; rather they hate the free lifestyle our dollar's illusion value brought us yesterday and today.
Now that the Euro block is passing a point where the Euro currency is viable; this same past dollar support that built America's illusion wealth will now fall away. In its place we will see the beginnings of a currency war like no other in our time.
[...]
China was admitted into the World Trade Organization on December 11, 2001, one month after these posts. And it wasn't until 2002, after FOA stopped posting, that China really began to ramp up its trade with the US and to purchase US bonds in size [mop up the deficit flow of dollars keeping dollar prices low and stable]. From '99 to '01 China's Treasury holdings were flat at around $50B, but from 2002 they began a parabolic rise that has now ended and is once again flat.
So if China has backed off from supporting the dollar today, in the same way that the European CBs had backed off right when FOA wrote these posts, well then perhaps they are more relevant today than the day they were written.
Here is Ben Bernanke from a speech in 2005 noticing the shift in dollar support from "industrial countries" (Europe) to "developing countries" (China) which took place sometime "between 1996 and 2004":
[...]
Gregor is correct about the "benign" inflation we've had, not just for the past decade, but for the past three or four. This is what FOA was talking about. "Yes, we got our little 3, 4, 8 or 9% price inflation rates in nice little predictable cycles." But hyperinflation "never showed up because the world had to support its only money system until something could replace it." The euro was born, then came China, and my call is that hyperinflation "is now being 'structurally' set free to run."
[...]
The point is that the premise rests on 90 years of history which only makes sense if viewed properly. It rests on 50 to 60 years of political support followed by 20 years of structural support from Europe and another 8 or 9 years of structural support from China. Today both political and structural support are gone, and the "solid foundation under any and every discussion" of monetary matters in America is what I am generously terming the "willy-nilly support" of the rest of the world. In other words, we have no say in the matter. Our fate is in their hands.
and that leads to this:
Back in the 30's, gold was the reserve, but gold could not be created at will. If it could have been, then they would have just closed the banks long enough to truck enough gold out to the banks. And it's not just the customers lining up outside the banks that forces this action. It’s the interbank settlement process and the interbank confidence that lubricates this process. And eventually it will also include the larger retailers, who operate with a huge degree of confidence in the bank clearing system.
Think about the amount of promises a large grocery chain takes in every day with the confidence that settlement will happen before it needs to pay its obligations. The whole economy is like this. Whether one realizes it or not, the whole economy is operating on the confidence of the ultimate delivery of physical cash in the clearing process.
How about a gas giant like Shell? Think of all the "digital money" promises it takes in with faith in the clearing system to clear all imbalances each night.
There will come a point very quickly after confidence is shaken by some event, that physical cash will start to carry a small premium over digital money. This will be the time factor rearing its ugly head. I know of one cigarette shop that advertises a "cash price" in the window! This store charges less if you pay cash! That's not because of the time factor, of course… yet! But at some point those signs will start showing up at more places.
http://fofoa.blogspot.com/2010/09/just-another-hyperinflation-post-part-2.html
Deflationists often refer to "foreign-denominated debt" as the cause of hyperinflation and also as their ace-in-the-hole reason why the dollar can never experience a Weimar-style hyperinflation. But this is a complete red-herring. The foreign debt was not the cause of the confidence collapse. It was only the fuel that forced the government printing... the second stage boost in hyperinflation. In our case we have a different kind of fuel, the most over-sized federal government the world has ever known!
http://fofoa.blogspot.com/2010/09/just-another-hyperinflation-post.html
A purely digital currency without a trade surplus needs an ultimate backing. This is actually possible in Freegold but not today. So don't look for hyperinflation in digital units. Look for wheelbarrows of physical cash! The government will print that which commands goods and services from the physical plane. And because hyperinflation is driven by fear of money by the physical plane, not greed, that will be physical cash.
The way digital currency works is by tether. It is always tethered to a counterparty. Without that counterparty, there is no value in it. The value comes from the counterparty's obligation to supply SOMETHING to the entity you paid with your digital currency. Usually it ends up being just another transfer to a different counterparty that is supplied. But without that "SOMETHING", digital currency can't work. There is no way in today's technology to have an untethered digital currency, like a bearer bond or a dollar bill, that can circulate untethered. So the tether requires a counterparty, which requires something promised, which requires a "SOMETHING" other than the digital credit itself.
So it all comes down to the solvency and credibility of the counterparties. And most of the digital currency that circulates today is tethered to insolvent counterparties running trade deficits. We don't see this. We don't even realize it, and that's how we end up with fantasies like this "all digital currency" nonsense.
But when faith collapses, this "SOMETHING" will come to the forefront. And today, that "SOMETHING" is physical dollar bills. When the currency collapses, it is the sellers of physical goods that are in the driver's seat. They will not simply raise prices to get more digits unless there is "SOMETHING" limiting those digits. That "SOMETHING" is physical cash.
Remember this: in hyperinflation the physical plane FEARS the monetary plane because it is crashing. It is not GREED that drives the prices up, "give me more credits for this apple." It is FEAR of the credits, "get those credits away from my apple"... "but wait, sir, here I can double my offer, two wheelbarrows of cash for your apple."
http://fofoa.blogspot.com/2010/09/just-another-hyperinflation-post-part-3.html?showComment=1284851586451#c3123648084112141752
By retaining the Floating Exchange Rate System where by the Free Markets will dictate the value of a currency relative to the Global Currency Unit and Gold for the private sector, this will help to keep the politicians honest. -- May 2009, Martin Armstrong
From http://www.martinarmstrong.org/files/One-World-Currency-509.pdf
The idea that somehow Freegold will emerge as a solution is just absurd. Governments will NEVER give up power until they are forced to do so. -- May 2012, Martin Armstrong
Guess every man has a viewpoint until he takes a new.
lol,
well played burningfiat!
I think Martin Armstrong is showing that he's a bit of a lightweight.
For example, this gem:
'Historically, hyperinflation just has never taken place in the major economy. The closest we have ever seen such a collapse was that of Rome and there money fell by debasement and its value collapse to about 1/50th of its former purchasing power.'
So, Rome collapsed its currency to 1/50th of its former value, and he calls that 'the closest we have seen to a collapse in the major economy'. What a load of puerile crap.
He expects interest rates to rise and that to be the end of the game for governments, so it appears he can't see the blatant manipulation of the yield curve. He says governments will NEVER give up power until they are forced to do so, and yet he thinks Bernanke/USGov will sit back and whimper while the bond vigilantes do a Greece on them?
He's lost the plot, and his piece isn't worthy of an Fofoa response.
Meanwhile in the UK, overpaid doctors with pension entitlements (all provided by the state) are to go on strike over the prospect of pension benefits being slashed to £68k in today's money. Oh, how I look forward to the day when these leeches have reality thrust upon them.
And just caught Krugman on TV predicting the end of the Eurozone when the ECB refuses to supply Euros to the Spanish banks.
All that on 3 mins of socialist news on the BBCm funded by......yes, taxes on every viewer, even if they never watch the bloody channel.
The day of reckoning when it comes will be a sight to behold in the UK, hopefully the BBC won't be around to cover it.
Armstrong has some interesting comments but I dont like how he always references this model of his. He gives all this qualitative stuff then oh my models tell me 2017 etc but know one knows what his model is. If his models are so accurate why wasnt he and why isnt he now running a billion dollar hedge fund instead of consulting and giving conferences for 1000 bucks a pop.
@somanyroadsinvesting
LOL, I love rhetorical questions that expose hypocrisy.
For the accuracy of his model, check out the cover page of his
It's just time reference paper from the time he was in jail. I never took him seriously after seeing that huge miss. based on his "I call the crisis accurate to the day" model.
Thank God I was and am no trader, but I had an acquaintance that did because in his eyes Armstrong was the guy with the "secret sauce". No need to tell you what happened...
Well said Gary.You summed up things in the UK spot on.
MA is way too smart to believe the crap he s talking.
The only question in my mind is why is he pretending not to get it?
He was treat like shit in prison for a long time.Maybe this new opinion was his get out of jail card.
Regards
Ozzy
Robert,
I strongly urge you to consider ideas presented in Moneyness.
(i) whose lack of confidence is going to trigger the wheelbarrows? (obviously not yours and mine)
FOFOA: I can't say what will trigger the shift from fear of running out of dollars to fear of dollars becoming worthless. It could be anything. It could very likely be Rick Ackerman's inevitable "catastrophic collapse that could conceivably run its course in a week, if not mere hours"!
It is very hard to precisely identify what will cause the eventual spark because we are talking about a highly non-linear event, but the structural factors leading to such a confidence collapse are all still intact.
FOFOA: That inflow of free goods that is structural to the status quo operation of the US government is more dangerous to a monopoly currency issuer than the war reparations debt in Weimar Germany. The USG is incapable of reducing that inflow of real goods voluntarily and so the non-hyperinflation of the dollar requires it to flow in for free. And it has been, up until recently. Today we are debasing our monetary reference point in defense of that inflow of goods from abroad. And, at this point, it is entirely attributable to the USG alone, and not to the US economy at large which has contracted, unlike the government.
IMHO, as more and more reckless spending continues on by USG, it increases the flow of currency down the Exter's pyramid .
This will look very confusing as it will look like a strong dollar and negative yields at the shortest end of the Treasury curve, but in reality the system is getting more and more stressed.
Wheelbarrows is really just the fulfillment of the obligations to print-more-cash. These obligations are already there, in the form of electronic base money.
(ii) can you see it happening as long as most institutions have confidence in sovereign debt?
This is where reading Moneyness will help your understanding.
Here's a question to ponder: You say loss of confidence in sovereign debt -- is this the effect or the cause?
(iii) when it finally happens, what are institutions going to want to exchange their dollars for? Where is the money going to go? To another currency? To commodities? Into physical gold?
Physical Gold is the wealth reserve and there is universal credibility for gold and money will flow into gold.
Yes it can go to an alternative currency, if the institutions think there is credibility in this currency.
For the average people, their currency will really go mostly into serving the immediate needs such as food.
JR,
Further to your comment at May 30, 2012 6:09 AM about the ICBC's ambitions in the bullion market and ICBC's acquisition of the Bank of East Asia retail network in the USA I thought you might find this interesting.
BEIJING—Citic Securities Co., China's largest brokerage firm by market value, is seeking to enter the U.S. market, according to people familiar with the matter, to secure a bigger role in helping Chinese companies expand abroad.
Fresh from its $1.7 billion initial public offering in Hong Kong in October, Citic Securities has applied with U.S. regulators for a securities license that would allow it to underwrite stocks and bonds in the world's largest economy, the people said.
The step, they said, is in keeping with the firm's overseas strategy, which focuses on raising capital for Chinese companies looking to branch out ...
http://online.wsj.com/article/SB10001424052970204795304577220673415187802.html
When they move they move together.
Saw this roll on twitter, complete heresay but interesting:
Here is what Biggs writes about his conversation with the Saudi man:
"You have to understand our geo-political equation and vulnerability,” he said calmly but intensely.
“Our two most dangerous enemies are Iraq and Iran. Both are Shia, and both are trying to destabilize the Arab world and our Sunni kingdom by funding terrorism. Our only weapons against them are our wealth and our oil. Their current vulnerability is their financial fragility. Their financial reserves are a fraction of ours, and they desperately need money to prop up their economies.
The ruling council has decided that over the next two years we have a brief window of opportunity to impoverish and weaken them by driving down the price of oil. Iraq and Iran need to produce and sell their oil at well over one hundred dollars a barrel. In the next twenty four months, we will gradually increase our production with the objective of breaking the price of crude down to sixty dollars a barrel.
http://www.businessinsider.com/barton-biggs-saudi-arabia-bankrupt-iraq-iran-2012-5
Since Nassim Taleb doesn't live in Germany I guess he should STFU too.
Taleb recently delivered a paper at an AIMA conference and discussed why he would invest in Europe in preference to the USA.
Europe's lack of a centralized government works in its favor, he said.
"The best thing Europe ever did is managing to have members bickering with each other, so you don't have the big government," Taleb said. "Centralized government doesn't work. In Europe they tried to have a powerful Brussels, but what happens when you have a powerful Brussels? You have lobbies hijacking Brussels."
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/05/29/bloomberg_articlesM4T8611A74E901-M4TAP.DTL#ixzz1wP7mxfoQ
IMHO same goes for Washington, London, Canberra etcetera, etcetera, etcetera.
Costata,
Interesting link.
Specifically I liked this part:
Europe is like someone who is ill but is conscious of it. In the United States we are ill, but we don't know it. We don't talk about it.
Regarding Martin's piece - it is worth looking past the errors.
Firstly, I'm intrigued that he felt the need to engage Freegold directly. I wouldn't have thought that Freegold was a sufficiently dominant meme to need to be 'addressed'.
He understands 'Moneyness'.
From his perspective, the relative value of storing value through time changes. Possibly better put the relative value of storing value against the failure of government changes. As such he rejects the concept of a unit of value being fixed to gold, even physical gold.
I suspect he would reject the 'upsidedown water fall'.
It's a different perspective.
I sort of look at his work as the opposite side of schrodingers equations - he certain about the timing, but uncertain about where the response will flow.
Here, there is certainty about where the response will flow, but uncertainty about the timing.
A perspective worth observing and pondering.
e_r,
Taleb always seems to come up with a challenging remark or three.
Re: Renminbi
This might help to explain the "dollar shortage" that has been discussed by Izabella Kaminska and other journalists at FT Alphaville in recent months.
This article discusses the use of Letters of Credit (LIC) raised in HK to arbitrage deposit interest rates in Mainland China against lower interest rates on borrowings available elsewhere.
http://blogs.ft.com/beyond-brics/2012/05/29/renminbis-mysterious-rise-trade-finance-or-interest-rate-arbitrage/#axzz1wP9MiDfx
Dear Mr. Armstrong,
You don't know me, but I feel that in some meaningful way I know you. Do you recall the Longwaves Group, which, on occasion, you contributed to? For a while I regularly read the musings of that collection of economic theorists, market sages, and such, and you, among others, certainly made an impression with your ideas about "how things really worked."
I guess I've followed you, in a manner of speaking, admittedly, more off than on, for quite some time. Speaking of time, and the passage of said, I'm sure that the period of your incarceration was exceedingly difficult. And understandably, it seems to have informed a great deal of your writing during and after that unfortunate period, as the tenor of your polemics contains a distinct bitterness where government, particularly the judicial branch of government, is concerned.
Fair enough I say. Who am I judge not having walked in your shoes down what must have been a most inhospitable path. However, given your deep dismay at what you perceive to have been the egregious failures of the judges who found you in contempt, I feel it is only fair, and, after all, fairness is what we are after, is it not, to point out that your assessment of the freegold thesis is not only unfair but errant.
Clearly, you are a man who prides himself on his erudition, and yet, you let yourself down rather markedly with a variety of misconceptions regarding the fundamental nature of freegold. I invite you to become better acquainted with freegold by visiting this blog and discussing the matter with its host and some of the other informed regulars who, I believe, have something worthwhile to offer you.
Hi everyone, I've got a question:
the Comex spot gold price, is it really the price at which gold bullions/bars are traded at some exchanges/market? Or, is it a derived price?
If there is a physical gold spot market, how do the market players settle? I know banks settle net balances each day at night. Do the spot gold market players settle their trades in gold? in dollars? every day? every week?
many thanks
somanyroadsinvesting,
I am not sure they told Biggs the true story (or whether Biggs would relay it if they had told him).
I don't think the Saudis have a big problem with Iraq or Iran - all this sounds a lot like American imagination. Iraq has a US puppet government which basically guarantees instability. If anything, then this instability is a threat to SA.
Secondly, during the late 1990s, Saudi Arabia tried to improve relations with Iran - they are quite pragmatic, and the Shia vs Sunna issue was not a major obstacle. It is basically the U.S. that divides Iran from SA. Iran must view the U.S. presence at the Gulf as a threat and SA as an accomplice.
Finally, let us think about prices. The oil price has been high, I'd say artificially high, for several years. The last time this happened was during the 1970s, and it enabled a lot of new non-OPEC production (Alaska, North Sea, Mexico) to come online. As a result, OPEC lost their pricing power and was marginalized for most of the 1980s.
If anything, than SA will want to avoid repeating this mistake. This means if they act to lower the price, then they do it in order to render all the new expensive production including the new Canadian oil uncompetitive. So they would act in order to protect their position against the West, but not against Iran or Iraq.
Iran and Iraq in contrast can both easily benefit from increased production provided they get the required upgrades. I am not saying it is a nobrainer, but I can indeed imagine a joint OPEC price policy favouring lower prices in the near future.
Take a look at Brent in order to see that the price change may have already begun. If I were Biggs, I would not only be excited about the effective tax cut (this may be one of the reasons why the next round of QE is being delayed), but I would also watch the gold/oil ratio. It seems that someone is stabilizing the gold price around $1550 (down only about 9% since the end of February), but oil keeps falling (Brent down 17% from $125/bbl to $103.5/bbl). And you can already hear the UK establishment press (Financial Times) being concerned about the falling oil price. Every other commodities article is full of wishful thinking about why the oil price will soon stabilize...
Victor
tintin,
there does not exist any COMEX spot price. COMEX is a futures exchange and they trade only futures.
The spot price that you usually see quoted is the loco London spot price, i.e. for gold traded in London. This is the price of unallocated gold, i.e. bank credit denominated in ounces of gold. As long as the banks allocate gold on demand, this price automatically agrees with the price of physical gold loco London.
There is no "the spot market", however. Many institutions around the world (mining companies, banks, refiners, mints, coin wholesalers) trade gold, both physical and credit, and each time they transact, the price is negotiated 'over the counter', i.e. case by case. If you have a broker for your COMEX trading, you can for example phone them and tell them you'd like to buy some physical gold in the COMEX warehouses. They will quote you a price. That's a spot price negotiated between you and your broker.
Victor
Thx for the response Victor. However, not sure I get one pt. You mention:
"As a result, OPEC lost their pricing power and was marginalized for most of the 1980s."
Perhaps my logic is wrong but if they always have to lower the price to prevent new supply from coming on board then how would they ever capture any gain from higher prices? If they let prices rise then new supply comes on board which lowers the price, if they lower it then the new supply doesnt come on board but then they are making less anyways?
Hi Victor, thanks for your response.
But I thought London has got only an AM Fix and a PM Fix?
if each "spot" transaction is negotiated between the buyer/seller and the broker, then whose bid/ask is quoted as the Comex Spot that changes continuously as seen via kitco website?
e_r, while others treat me as a new arrival (I am not) and advise me to read earlier posts (I have, several times) and suggest all of the questions have already been answered (which is probably not the case), your response is different. Thank you! Even JR's snippets show that the questions have never squarely been answered. Maybe they are unanswerable?
You quote FOFOA that nobody knews what event will trigegr the loss of confidence, and you refer back to the pyramid. Fair enough. Nobody knows the future. However, can we say anything about WHOSE confidence matters? Can we identify the persons or entities who, if they lose confidence, would trigger the rush down the pyramid? Who is(are) the lynchpin(s) in the system? If the answer is "the giants" I think this is no answer at all. Are we talking individuals or institutions? If individuals, then the path to freegold and the run on the bullion banks is clear. If institutions, then it gets murkier because institutions are just not set up for physical gold delivery, which is necessary on the path to get to freegold. That is the only way to bring an end to the fractional reserve gold lending.
You suggest that institutions can and will consider alternative currencies such as gold. And perhaps eventually they will. But for wheelbarrow hyperinflation and the collective loss of confidence, there needs to be an obvious alternative to turn to when fear strikes. For individuals, gold is an obvious choice. For institutions, no way. At least not now. And if institutional confidence is the lynchpin, then I think freegold is still a long way off.
You pose the question about loss of confidence in sovereign debt -- is this the effect or the cause? As I see it, this is an academic question of little practical relevance for someone who already has physical gold and is not trying to time a switch. I do not care if it is the cause or the effect. When the signs that we have reached the turning point become visible, holders of sovereign debt will be dumping it left and right, no? Perhaps currencies wil strenthen as the system becomes more stressed, but once the system breaks everyone dumps the debt, right?
Robert,
For individuals, gold is an obvious choice. For institutions, no way. At least not now. And if institutional confidence is the lynchpin, then I think freegold is still a long way off.
Bear in mind most of these institutions (such as pension funds) only require nominal performance in currency terms. We may get to the end of this road without any institutions of that ilk pursuing any gold at all. The same could be said for other organisations who only require nominal performance in currency terms. Gold is irrelevant to them.
I would argue that you can forget the Giants in your deliberations as well. They have already secured their gold insurance or they have missed the boat. One of the motivations for the Euro project was to secure international trade against the failure of the US dollar. You can tick that box too. The Giants are invested in global commerce (they have no choice from a risk perspective). So this is another reason for the Giants to bide their time and let nature take its course.
You can progress quite far in your exploration of these matters through a process of elimination. Four actors seem to survive every cull - governments, CBs, individuals and the banking system. These four actors, at minimum, will be vested (whether they know it or not) in the outcome of this Euro Freegold-RPG transition. These are your ultimate Freegold supporters/welcoming committee IMHO. Again whether they realize it at this time or not.
Costata, I think you hit the nail on the head that many institutions only require performance in nominal terms and might never pursue gold at all. And most of the giants already have their gold insurance. So the big players who will play the key role when the transition comes have little incentive to initiate a rush for the exits, little incentive to start migrating down the exeter pyramid. The individuals managing all this institutional money might buy physical gold for themselves, but it is hard to see them plowing institutional money into gold anytime soon. All they need to worry about is relative peformance in global commerce. In that sense they are less susceptible to fear than individuals, and they have a vested interest in keeping the system going as long as possible. So if institutions' hands are tied, who is going to finally hit the panic button? I think we can rule out goverments, CBs and banks.
Robert said: ”...holders of sovereign debt will be dumping it left and right, no? ... but once the system breaks everyone dumps the debt, right? “
So who are the buyers of this debt? Are there necessarily any? No bid?
If the bonds of these “sovereigns” are not bid, what is the value of their currencies?
Perhaps this should have been called the rhetorical open forum.
Whose confidence matters?
The confidence of anyone willing to exchange physical gold for currency. Ultimately the entire system is a short position on gold, so once physical gold is no longer offered for currency, currency has no value, and the system stops. Who wants the debt then? It is denominated in currency. The debt won’t change hands, its value will simply evaporate, as will the real value of “savings” in currency. Currency in hand represents for the holder an uncompleted barter transaction, one that can no longer be completed if no one is willing to take that currency in exchange for real goods or services. Caveat emptor (for the buyer of currency with their goods that is).
The system restarts when gold is available in exchange for currency again, obviously at a level somewhat differing from its former. At this new rate everything has been devalued in terms of gold to whatever level it needs to be for the system to be whole once again. Technically speaking, gold collateralises the system. It does now, and it will then. The break occurs when the collateral is sought and found to be wanting, at which point it is clear that the collateral has been grossly undervalued.
This is why MAC (mutually assured collaterisation) is no joke, despite the fact that it sounds funny. Gold at Tier1 is the point at which it is clear. Other “Tier1 capital” has counter-party risk. WTF? It’s not fit to be in the same room. Gold at Tier1 is the point at which gold is officially “de-commoditised”.
Institutions will still be nominally whole. Their holdings will simply have little to no real value. Boo hoo. Caveat emptor.
I feel that technically speaking (this one’s especially for Nickelsaver) the term “sovereign debt” is a misnomer as one with debts is no longer completely independent or free, thus no longer sovereign. Just sayin'.
Victor,
Is it your contention that OPEC can drive prices very low for a long time, like the 80s? The view here is that the oil price then had as much to do with means of payment (gold) as with new oil sources coming online. Also, those sources (North Sea, Alaska, even Cantarell) are largely pumped out and in production decline now. Production cost of canadian tar sands oil is relatively high so the Saudis won't have to bring prices down that much to undercut them.
Opec may be increasing supply to bring prices down now but it could be for a shorter time, at higher prices than the 80s, and they have less competition from non Opec producers this time around. If they really want to effectively cut oil prices for the west they have an easier way to do it, and everyone on this blog should know what that is.
VTC wrote:
"This means if they act to lower the price, then they do it in order to render all the new expensive production including the new Canadian oil uncompetitive."
Another area to look at that seems to be signaling what you are describing-across the board lower oil prices-is equities. See the action in the companies that were formerly known as the CanRoys.
DP,
This video shows that in a match up between the Germans and the Greeks it's not always the Germans who win.
http://www.youtube.com/watch?v=i2TicMbH4OY&feature=fvsr
Cheers
Robert,
I think we can rule out goverments, CBs and banks.
I don't old chum. I think we can "rule them in" right along with individuals. If governments in the major gold producing countries start grabbing the gold in the ground how long do you think the lid would stay on this "pressure cooker"?
When I talked about a "process of elimination" I meant ruling out the irrelevant, the disinterested and so on in order to define the remaining potent actors in this process. There may well be others. It depends on how you design the cull.
Cheers
Robert,
You said: Who is(are) the lynchpin(s) in the system?
Blondie's reply: The confidence of anyone willing to exchange physical gold for currency.
I think Blondie is spot-on. Please consider All paper is STILL a short position on gold.
FOFOA: Trust is a delicate thing. It can take years to gain someone's trust, but only a fleeting moment to lose it forever.
Another: All modern digital currencies do not go into an investment, they move THRU it... There is an alternative. Gold! It is the only medium that currencies do not "move thru". It is the only Money that cannot be valued by currencies. It is gold that denominates currency. It is to say "gold moves thru paper currencies".
FOFOA : Gold bids for dollars. If gold stops bidding for dollars (low gold velocity), the price (in gold) of a dollar falls to zero.
Robert: But for wheelbarrow hyperinflation and the collective loss of confidence, there needs to be an obvious alternative to turn to when fear strikes. For individuals, gold is an obvious choice. For institutions, no way. At least not now.
I suggest to read Synthesis to understand important differences between ECB and Fed. Euro is the obvious alternative.
Robert:When the signs that we have reached the turning point become visible, holders of sovereign debt will be dumping it left and right, no?
Exactly. The reason I asked that question was because Gregor kept bringing that point (psychological tipping point is what he called it) and noted that to be an eventual spark.
Consider Inflation or HI post to read more of what I'm talking about.
In all honesty, government debt dumping would be the effect of loss of trust, not the cause. And Government debt dumping en masse will not be a spark, it will be fireworks.
Bill Gross nails the subject of transition, stops short of screaming 'freegold':
"...the willingness of creditor whales – as opposed to debtors – to support the existing system may soon descend. Such a transition occurs because lenders either perceive too much risk or refuse to accept near zero-based returns on their investments. As they question the value of much of the $200 trillion which comprises our current system, they move marginally elsewhere – to real assets such as land, gold and tangible things, or to cash and a figurative mattress where at least their money is readily accessible. “There she blows,” screamed Captain Ahab"
http://www.zerohedge.com/news/bill-gross-global-monetary-system-reaching-its-breaking-point
Hi Robert,
You wrote:
However, can we say anything about WHOSE confidence matters?
Why did you not like this excerpt I posted yesterday from a comment to Just Another Hyperinflation Post - Part 3? I think its quite a Gangsterous insight:
And because hyperinflation is driven by fear of money by the physical plane, not greed, that will be physical cash.
[...]
Remember this: in hyperinflation the physical plane FEARS the monetary plane because it is crashing. It is not GREED that drives the prices up, "give me more credits for this apple." It is FEAR of the credits, "get those credits away from my apple"... "but wait, sir, here I can double my offer, two wheelbarrows of cash for your apple."
http://fofoa.blogspot.com/2012/05/ill-have-another-open-forum.html?commentPage=3#c4219002039604809639
===========================
And here is an idea for context on the idea of dollar collapse and how gold plays in:
FORCE, FULCRUM, LOAD!
"I cannot see a dollar collapse without a simultaneous revaluation of something else. It's a seesaw. The dollar isn't collapsing against gold. It is collapsing against the physical plane of goods and services. That's the fulcrum, not gold. Dollar collapse is the force, goods and services the fulcrum, and gold the load. So gold is revaluing against goods and services. The gold revaluation is against the physical plane so as to fill the reserve void left by the dollar's collapse."
http://fofoa.blogspot.com/2011/12/unambiguous-wealth.html
And 10 year T yields are at all time lows, and 30 year is back to 2008 levels. The singularity approaches.
FOFOA: Two Historic, World-Class Bubbles are About to Pop
Bubble #1: Government Debt (with a nominal value in the tens of TRILLIONS)
Bubble #2: Perceived Wealth, denominated in purely symbolic, un backed, unsustainable-Ponzi-debt-based currency (with a nominal value in the HUNDREDS of trillions)...
It is the 28-year hyperinflation of the US$-denominated debt asset bubble that is about to pop...
But the thing about THIS bubble's rise that is so different from any rise in gold is that the price of past issued debt has a natural upper limit. And the "lowering of interest rates scheme" has a physical floor, an inevitable and unavoidable dead end... call it ZERO.
Yes, we have seen a couple ventures into negative interest rate territory lately. But this is simply anathema to the very concept of money, period. It is the ultimate froth, the last breath of air you can blow in before a bubble pops. It is the sure signal that the end is nigh.
When interest rates hit ZERO, they only have one way to go. And that means that the value of past issued debt, the very kind of TRASH that China is sitting on a land-fill mountain of, only has one way to go... DOWN. This is the very definition of a bubble that is about to pop. As Peter Schiff calls it, this is The Mother of All Bubbles!"
Hi Robert,
When the signs that we have reached the turning point become visible, holders of sovereign debt will be dumping it left and right, no?
Nope.
Miner49er killed it, so I keep re-posting it, over and over again. Maybe one day someone else here will read it too and then they too can be be like, oh snap, my brain just got infected with the smarties!!. Snip:
So, do these orphaned dollars eventually come home to roost in the US domestic markets?
[...]
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...
For more on the homeless dollars, Dilemma 2 – Homeless Dollars
For more on how we have hyperinfaltion without a flood of dollars from overseas but rather "do it to ourselves," see for example:
Moneyness
Peak Exorbitant Privilege
Inflation or Hyperinflation?
@costata,
I see that even Schelling couldn't guide them to the right outcome that time.
Guys and Gals,
having a bust day but lets try to make sure we're on board on two fundamental points that many seem to struggle with:
1) HI happens because the physical plane fears (aka has no confidence in) the $. As FOFOA wrote, That's the fulcrum, not gold. - the physical plane.
The dollar is collapsing against physical plane while gold is simultaneously revalauing against the physical plane. I think about it sorta like physical plane is devaluing the $ and the reference point is gold.
================
2) The dollars will not return in Mass - the USG will hyperinflate itself as it tries to compete in the physical plane:
"So the US private sector is actually living below its means by $835B if we isolate it from the government sector. The government sector, on the other hand, is living way above its means with 60% domestic support and 40% foreign support. Stated another way, the US private sector is providing the USG with $835B in goods and services in excess of taxes, or 60% of USG's "deficit consumption."
Viewed this way, there's only one way to reduce that trade deficit (inflow of free stuff): reduce the size of the USG monstrosity. Unfortunately, the USG is totally incapable of voluntarily shrinking itself, especially because it issues its own currency! The real problem, the heart of the matter, the reason why the dollar will and must hyperinflate, is that the US trade deficit, on the physical plane, is structural to the USG who issues its own currency. Simple as that.
[...]
The dollar is the global reserve currency, so it is the physical plane that is the biggest threat to the dollar in the same way the FX market was a threat to the Weimar Mark. And it is not the nominal debt service that is the threat like it was in the Weimar Republic, but it is the structural (physical plane) trade deficit. To the USG, that is the same threat as nominal debt service denominated in a foreign (hard) currency was to Weimar Germany.
As the German Mark fell, there was "not enough money" to pay the debt. And with a little inflation, there is "not enough money" to buy our necessities from abroad.
http://fofoa.blogspot.com/2011/11/moneyness.html
So the dollar basically died in the late 70s and the ROW has kept it on life support by developing a hedinging market (cause the SoV function is the key). But this was only temporary, it could not last forever, so no body has to break it or down the comex or dump US bonds. They just have to wait. The US will do it too itself, they will be forced to print out. What happens to $100T in $ SoV if price level doubles See?
6/4/98 ANOTHER ( THOUGHTS! )
The last small gold war ended in the early 1980s, as the choice was to use the US$ or go to a gold based economy. No other reserve currency existed, and gold lost the war as all continued to buy dollar reserves.
But by 1980, Europe was working with the BIS to implement a new "reserve currency".
The ECB/BIS understood gold would rise when the $ collapsed and they needed to buy time build a new currency compatible with this.
5/3/98 ANOTHER (THOUGHTS!)
The urgent drive to create a new "reserve currency" began in the early 80s, after the last small "gold war". The road to making this new Euro did never include gold in large amounts, until the last few years! Even one year ago, the news would say, 5% or less. Today, we speak of a much greater amount! This is interesting, yes? The BIS did "hatch" this deal in a very late fashion! The future of the Euro was found to be "weak", as the Middle East oil imports onto the continent would continue in dollars! This was so, from the dollar being made strong in gold. Gold priced in dollars at near production cost offered a "no switch currency" position, for oil. This position has been unstable for the last year, and the alternative of a switch to gold was in progress! You have read my "Thoughts" before. Now the BIS does offer to "change the rules of engagement", a real reserve currency is offered!
d oil crisis
The euro architects were not trying to force a reserve currency on the world. There is a big difference between creating a government product with sovereign-monopoly backing that everyone must use, and creating a product that the marketplace must freely choose. In this case, the marketplace consisted of sovereign nations that chose to give up the privilege of printing their own money in order to join in the benefits of the euro.
[...]
The European plan was to support the $IMFS at least until a new fiat "reserve" currency could be established, one large enough to absorb the shock of a failing reserve currency, to avoid being forced back 100 years into a physical gold-based economy which would have been very traumatic. This effort took 20 years from 1980.
http://fofoa.blogspot.com/2010/03/synthesis.html
And thus, in 1980, began the modern era of Credibility Inflation.
Salting the Mine
Most simply stated, credibility inflation is the expanding confidence in the fiat financial system to always deliver a higher payoff tomorrow than today. And through credibility inflation we ultimately destroy the currency structure by believing it can somehow deliver more than reality will allow.
Credibility inflation is the exact antithesis of price inflations like the 1970's. It is why we saw low consumer price inflation for the last 30 years relative to the massive monetary and financial product inflation. It is partly why we saw gold stagnant or falling for 20 years. Yet it is just as much a product of monetary inflation as regular price inflation is (more on this in a moment). And it is much more catastrophic in the end.
http://fofoa.blogspot.com/2010/08/credibility-inflation.html
FOA on currency war: We will see the beginnings of a currency war like no other in our time...
Several years ago, many gold bugs and gold advocates missed the path as the trail turned. Something I pointed out at the beginning of these "message" talks. As most of you will no doubt agree, almost all gold discussion still centers around "the dollar's war with gold". Truly, the evolution of this story will be how that war ended then and now the dollar's war with the Euro began! A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market. Inflating the gold market place with so much "paper gold" that we would eventually have to bankrupt ourselves just to keep the dollar in the war game against the Euro.
Yes, the war now is between the Euro and the dollar! The Washington Agreement placed gold "on the road to high prices" as it signaled a phasing out of Euro support for our American gold values. How fast gold can, now, rise will gauge how much staying power the dollar has in all this. If there is any gold war now, it's to be in just how fast the dollar gold market can disintegrate into worthless IOUs! So, don't count on this destruction of our paper gold market to mark the real value and availability of physical gold; that ratio will split somewhere down the goldtrail. This action will scare most harden gold investors to death; especially the ones in leveraged gold stocks and lesser white metals!
The war between gold and the dollar has been over for a while now. The action, today, is between the dollar and the euro arena and this is what will break the price lock on gold. Leaving gold bugs with a lot of questions that ask why this: both systems will strive for a higher currency price for gold; one doing it because they have to; the other doing it because they want to! The casualty on this battlefield will be the world gold market as we know it. A market caught between how Western perception thinks gold's price should be "discovered" and at what price level trading in physical gold craters the entire paper structure. A structure of American based "paper gold".
We have been saying for some time that this will be "the" show to watch unfold; but only if your holdings allow you to stay still in your seat as it happens (smile).
They shifted their war on gold to become a war on the Euro,,,, only too late. Now, knowing that the Euro is a fact, we must have a super gold price if the dollar is to stay in the game! The question becomes one of supporting a cheap paper price for the sole function of keeping the market and all its bullion players alive. With the war on gold over, they need to turn their tanks around to face the real enemy but cannot.
FOA (10/3/01; 10:21:26MT - usagold.com msg#110)
Now that the Euro block is passing a point where the Euro currency is viable; this same past dollar support that built American's illusion wealth will now fall away. In its place we will see the beginnings of a currency war like no other in our time.
http://fofoa.blogspot.com/2011/11/discussion-forum.html
FOA (2/26/2000; 11:13:56MT - usagold.com msg#7)
Foundation
A Day Walk
[...]
Not long after the US defaulted on its gold loans,,,, dollars held as gold certificates,,,,,, major thinkers began the long process of forming another world currency. One that would not maintain the fiction of a gold standard with the somewhat fixed gold prices inherent in such a system. The creation was distorted, to say the least. Just as the River in my first post was often seen in distortion, so too was this currency issue. It began with the European Currency Unit (ECU) and has later progressed to its present state of the Euro.
After operating on a fiat system for 20+ years people are starting to realize that the only thing that backs a currency is the real productive efforts of their people. Yes, over time we always borrow more than our productive efforts can pay back and proceed to crash the money system.
But what else is new? (smile)
We call this a money's "timeline" and it's as new an idea as life, death and taxes! Time and debt age any money system until it dies. The world moves on. Only this time gold is going to play a different part in the drama. We will all watch it unfold.
FOA (03/10/00; 10:51:52MT - usagold.com msg#10)
A Fireside Talk
[...]
As paper debt increases, it ages the currency by always generating more "fiat receipts" than human production can ever service. Then, at the end of the "currency timeline", in a great flood of human emotions, we reach for "natural conclusions" to a non retractable financial problem!
FOA (4/26/2000; 7:45:41MT - usagold.com msg#19)
The Euro is part of this trail!
[...]
Breaking the dollar's hold on world reserve status means forcing it into a major price inflation at the end of it's timeline. This is done by tying the hands of policy makers so they can only create (pump) more dollar assets into the world system. That "tying of hands" is done by creating for the first time an alternative currency structure that does not fail from continued dollar "crisis strength" or "crisis weakness". The world economy will run to just such a system as their current system (the dollar) fails.
The US is now trapped because they cannot lower rates to bring down dollar exchange rates without gunning their stock market and economy into an obvious hyper inflation. Yet, they cannot raise rates any further without causing a complete landslide of investors into using the lower cost Euro system.
The world will run to the new system when the old one fails a natural, inevitable death. Not the old system will fail when the world runs to a new system.
FOA: We call this a money's "timeline" and it's as new an idea as life, death and taxes! Time and debt age any money system until it dies. The world moves on. Only this time gold is going to play a different part in the drama. We will all watch it unfold.
==========
As paper debt increases, it ages the currency by always generating more "fiat receipts" than human production can ever service. Then, at the end of the "currency timeline", in a great flood of human emotions, we reach for "natural conclusions" to a non retractable financial problem!
"FOA (10/3/01; 10:21:26MT - usagold.com msg#110)
In its place we will see the beginnings of a currency war like no other in our time."
oh yes, I am really confident, that the GoldmanSachs-Crew with the PIGS will fight that war in the best interest of europe, that's for sure.
Victor,
To clarify; If the oil/gold ratio is broken by OPEC, is it a deliberate push for freegold? With the alternative producers of the 80s effectively in decline and no new North Seas coming online, Canadian oil competition easily marginalized, what is the gameplan here?
Pumping for lower prices is a giveaway, and we know producers would rather have oil in the ground than money in the bank. Pump more oil to get less gold per bbl? Not likely. If it is a push for freegold then we might see very low oil prices indeed as an attempt to break the paper market. If it's a more temporary situation, prices should stabilize higher, maybe the 80s?
Is someone pulling a USSR on the USA?
'The third thing I learned was that the BIS had two ironclad objectives. Both were so bold that they would take your breath away:
1) To destroy the Soviet Union, as a threat to world peace.
2) To destroy the dollar as the worlds reserve currency.
We all know that the Soviet Union collapsed in 1989. This was done by the BIS without firing a shot. They simply loaned large sums of money to the Soviets, and then called the loans. Just a routine castration! A simple foreclosure. This is how they got the Russian gold.
The second goal, of bringing down the dollar as a reserve currency, has not yet been reached, but I believe it soon will be. This brings us to the present sting operation..."
I went to the BIS website. Looks like Bernanke and NY Fed are on the board of the BIS. Would they not have influence? Hard to to believe they would not understand what is happening to them.
Robert - the turning point in my mind, was the idea that no one has to start selling dollars/bonds to trigger the collapse in confidence. All that is needed, is for those outside of the United States, who are soaking up our dollars/bonds in trade, to stop soaking them up. If the flow of dollars stops leaving the country, then that is the point where inflation and printing start to really take off in dollar-terms.
The main buyer today is China, along with several other countries. I think it is clear that China has signaled that they intend to slow/stop absorbing US dollars, and China, along with other major trading partners (Mexico, South Korea, etc), are ramping up their savings in the form of gold in its place.
For me, this simple connection is all that's needed. I personally find the idea of gold bidding for dollars, as eloquently described by Blondie above, a little too removed from my own experience for me to readily accept it as “the” trigger, even if it is true.
Maybe, maybe not somanyroads. If you did want to pressure the $IMF, it would be less confrontational to lower the oil price than to bid for gold. Give the US what they think they want, cheap oil, and let them decide to bring down the gold price to try to maintain the ratio (and find the physical to back it up) or let paper/physical decouple. Ok, that's enough speculation from me.
So the ECB/BIS supported the dollar after it collapsed during the Second Oil Crisis in the late 70s. But what about the "next" oil crisis?
From Ari's GOLD & MONEY: More Than Meets the Eye via FOFOA's Flow Addendum
Jelle Zijlstra, who became head of the Bank for International Settlements, said while with the Bank of the Netherlands in regard to the 1971 severing of Gold from the dollar, "When we left the pound, we could go to the dollar. But where could we go from the dollar? To the moon?"
As I continue this tale, I hope it becomes clear that not only have we gone to the moon, but that Gold is going there also.
[...]
Remember Jelle Zijlstra with the "moon" comment earlier? As head of the BIS in 1980, he confidently predicted that the Second Oil Crisis could be worked through, slowly, but that the System (international financial system) could not survive a Third Oil Crisis--the inflation would make it impossible to recycle the petrodollars to the oil importing countries with any hope of repayment, trade would crumble, and the System would be brought to its knees. On that grim note, we need to take a quick look at how the world reacted to the Second Oil Crisis. It opens the door to everything that follows.
[...]
Gold. Heading to the moon at a world near you. ---Aristotle
Can someone please point me to an article or 2 on this FOFOA blog in which I can learn what exactly Freegold really is? I'm new to this blog and these discussions of gold, hyperinflation, etc.
Sarah,
Here's JR suggested reading list, which is merged in a single PDF (thanks to Ron).
I'd say Debtors and Savers, Credibility Inflation and Freegold Foundations are pretty good starting points for your exploration.
Our friend, Mr Armstrong, has another "interesting" piece out today. I would enjoy having him as a part of our discussion, but only AFTER he becomes much more familiar with the concepts we embrace here.
That's two in a row where he (sort of/lamely) addresses Freegold! Seems he's lookin' for an ass-kicking, FOFOA style?
The same thing that has given the dollar exorbitant privilege all these years is now bringing it down. And that thing is the self-referential foundation on which it is built. It is the mountain of debt, highlighted by China's pile of Treasuries, but also including every dollar denominated savings in the world. That pile of "implied dollars" no longer has a recoverable relation to reality. Freegold provides this base, this stable foundation, for the fiat currency system of the future.
Gold trading behind the scenes at a much higher price was never the CBs way of excluding us from the fun. It was their way of protecting their assets from what is inevitably coming. For the CBs to redistribute their gold among themselves in preparation, it made sense that gold's value (future price) was more than its present price. What Another described was never a parallel trading universe. It was merely preparation for what is coming to everyone.
Nothing is gained for the masters of fiat (the CBs) by having gold trade at a suppressed price, fractionally reserved by bullion bankers, except systemic instability. This is why Another told us that in the future your government will ENCOURAGE you to save in gold. That's because this will bring monetary stability back to a world that has just experienced (past tense used for a future event) the worst INSTABILITY ever.
It's not a gold standard. It is saving your earned credits by buying a physical asset, outside of the currency. Buying a currency asset provides a temporary privilege to the currency issuer, but it ends in collapse. Buying a physical item transfers that purchasing power to the physical plane by exerting upward pressure on physical things and downward pressure on the currency. Buying gold isolates, contains and focuses that pressure on one point for the benefit of all.
The Free in Freegold
Okay, here it is. What you've been waiting for patiently, I presume. This is what gold will be freed from: The fractional reserve banking practice, which is a carryover from the gold standard.
This is the free in Freegold.
http://fofoa.blogspot.com/2011/01/freegold-foundations.html
Here is FOFOA's summary of Freegold, aka a brief attempt to distinguishing Freegold from "what we have now?" - How is that different from Freegold?
...for this post I simply wanted to lay out the many ways Freegold is different than what we have today.
So here is a quick cheat sheet of the differences covered in this post (which really only superficially scratches the surface as I said I would do for Peter):
Stable physical-only supply
Stable, wide, awake and global demand
Much higher price
The end of captive savings
The end of gold traders
Unambiguous ownership
Supply resumes its role in fiat interest rates
The return of prudent lending standards
The return of capital ratio relevance
The retreat of Socialism
The reversal of regulatory capture
Meritocracy
This is not a dream or utopia. It is simply the swing of the pendulum. If this list seems to you to be too good to be true, then I suggest you spend some time in the archives and give it a little more Thought. As FOA wrote, "This not only has everything to do with a gold bull market, it has everything to do with a changing world financial architecture. And I have to admit: if you hated our last one, you will no doubt hate this new one, too."
"Return to a gold standard" advocates like Peter Schiff have a really hard time wrapping their heads around Freegold because they are so focused on monetary currency that circulates when what really matters is monetary wealth that lies very still. I think the simplest way to express the separation of these two monetary roles to the gold standard advocate is the application of Gresham's law. "Bad money drives good money out of circulation." In other words, the bad (fiat) money circulates while the good (gold) money lies very still… and floats in value relative to the circulating bad money.
Hi Sleeping Village,
That's two in a row where he (sort of/lamely) addresses Freegold! Seems he's lookin' for an ass-kicking, FOFOA style?
Seems like he is already doing a bunch of reading about these parts - lets hope he is a quick study!
somanyroadsinvesting,
if they always have to lower the price to prevent new supply from coming on board then how would they ever capture any gain from higher prices?
There are two issues here. One is potential competition, and the other is revenue. I think you can take the 1970s as the blueprint for what is going on now.
The issue with the competition is that you need high prices for several years in order to induce exploration and development elsewhere. Once the new sources are online, they will probably produce full steam, simply because they are private enterprises and have to earn their capital costs, and even if the original explorer goes bust, someone else may take over and continue to pump at a loss.
On this count, the damage has already been done because the Canadian oil had 5-6 years of high prices in order to get developed.
The second issue is revenue. So what did they do with all their fantastic revenues during the 1970s? They stockpiled paper dollars. If you take this effect away, then perhaps OPEC would be perfectly fine with about $60 oil in today's purchasing power.
tintin,
But I thought London has got only an AM Fix and a PM Fix?
This gives you two semi-official reference prices per day. But the banks quote a spot price around the clock. You can see it on Bloomberg or Reuters.
then whose bid/ask is quoted as the Comex Spot that changes continuously as seen via kitco website?
There does not exist any COMEX spot price. I am not sure which price exactly is quoted by Kitco. It might be their own bid/ask or it might be an average loco London bid/ask. COMEX has nothing to do with the spot price.
...
...
Jeff,
If they really want to effectively cut oil prices for the west they have an easier way to do it, and everyone on this blog should know what that is.
This is why I am so interested in oil now that the SA oil minister has said that oil was too expensive for Europe (and did not mention America once in that article).
I don't think they love to cut the prices, but there will be a point at which they have to do it, and at which they have to accept a lower price in terms of gold (which means they don't get the extra fringe benefits of dollar settlement such as basically free squadrons of F-18s, and that stuff).
I don't think it was the Saudis who wanted lower oil prices in the 1980s. Yamani lost his job over it. It just happened that during the 1970s only the increase from $1.20/bbl to about $10-$15 was fundamentally justified whereas all the crisis pricing beyond $15 was political and not sustainable and eventually disappeared.
I don't know what is a fair price today. I just know that Qatar has purchased put options which are rumoured to be around $45/bbl. Perhaps $60/bbl in today's purchasing power would do for everyone?
And if the dollar loses some 40% relative to the Euro, even the Canadians will remain competitive and will be able to ship their stuff to the U.S. Everyone's happy?
If the oil/gold ratio is broken by OPEC, is it a deliberate push for freegold? With the alternative producers of the 80s effectively in decline and no new North Seas coming online, Canadian oil competition easily marginalized, what is the gameplan here?
Is someone pulling a USSR on the USA?
If you did want to pressure the $IMF, it would be less confrontational to lower the oil price than to bid for gold. Give the US what they think they want, cheap oil, and let them decide to bring down the gold price to try to maintain the ratio (and find the physical to back it up) or let paper/physical decouple.
These are definitely the right questions to ask. I don't have the answer either.
Sarah,
my favourites for a start are "It's the Flow, Stupid!", "Flow Addendum", "Once Upon a Time" and "Return of Honest Money". But ask JR, and he might give you hundred others. Ask FOFOA, and he will tell you he doesn't want to bias you. I do. I suppose you want to take a week off and read.
Victor
MA said: In December they passed a law saying if a foreign company dealt with an America, they had to report what that American was doing to the US government of suffer the confiscation of all their assets in America. If you are an American, you cannot go overseas and open a bank account. Foreign banks are
refusing to deal with Americans. Every step they take is designed to force all wealth into the form of electronic deposits – not even paper. Italy has stationed agents in front of jewelry stores monitoring who is buying what. Why does anyone think other government would love gold as some monetary unit. They have the same problem and see the solution as the same thing. Eliminate tangible forms of money and they will eliminate the underground economy and at last collect all the taxes they ever dreamed about.
Desperado, is that you?
Jokes aside, I think Martin is turning around. He's not nearly as Freegold-negative in this peice, compared to the last.
For instance this comment: We are not likely to see a FREEGOLD market anytime soon prior to a collapse and there may be more of a risk of seizure before the end game plays out.
Not necessarily at odds with the Freegold hypothesis...
I think Martins big "beef" with Freegold in this piece is again a strawman. Namely that governments around the world needs to "allow" Freegold for it to happen and they wont do that.
Government don't need to do anything for Freegold to emerge. It will emerge by itself (market driven) and coincidentally most CB's in the world are in alignment with this event. See :
http://en.wikipedia.org/wiki/File:Freegold_Distribution.svg
JR,
Yes, let's hope. He's a smart dude and I respect his way of thinking. It sort of bothered me to witness his shortcomings, but at the same time I realize Freegold understanding is a process. It sure the hell was for me! haha. You guys, in the comments section, helped me a lot. Thanks for that:)
MF, if you're out there... I finally got myself liquid! Moving to the All In most likely today? Too much coffee and a big purchase makes me feel all jittery.
Taking Some Time On
Well, it seems as though I managed to get Martin Armstrong to think a bit more deeply about Freegold, based on his latest missive. An email exchange with him yesterday:
Gary
10:13 PM (21 hours ago)
to martin
'Two things.
Firstly, you wrote:
'Historically, hyperinflation just has never taken place in the major economy. The closest we have ever seen such a collapse was that of Rome and there money fell by debasement and its value collapse to about 1/50th of its former purchasing power.'
Call me old-fashioned, but a 1/50the value sounds very similar to a collapse/hyperinflation to me. You think that was 'close' eh? Really, what a crazy example to try to make that argument work, really just confounds your own argument.
Secondly, you think ALL governments in the world have the same/want the same? Only the US has the exorbitant privilege of the reserve currency, and the other players are lining up against them. The tap is being turned off. You clearly have no idea what freegold is based on your latest article, but just wait til gold is tier 1 capital for banks (already there for central banks). You have to be blind or wilfully blinkered not to see where the world is headed.
You state that the US government will 'NEVER willingly give up control', and yet you expect the bond market to be allowed to cause their demise and interest rates to rise. Do you forget Bernanke has a QE button on his keyboard, he'll just buy it all, it won't be rates that will go up, it'll be the dollar plummeting.
Regards.'
His response:
Martin Armstrong m.armstrongxxx@gmail.com
10:41 PM (21 hours ago)
to me
'Hyperinflation is in the billions of percentage gains.
The worse COR economy was Rome. Germany & Zimbabwe are not cores but the fringe.
Gold is an asset. It is “free” from the standpoint you can buy or sell it.
Why would you ever want gold to be “money” by government?
They will only screw it up.
The reserve dollar will collapse, but it will NOT take hyperinflation to do that.
The Fed cannot buy everything.
Once real capital starts to shift to private assets, interest rates will rise and the debt will crash.
You just do not know government. They will NEVER go for freegold. Why would they?
That is a loss of THEIR power.
Who cares what is money. You just buy gold for yourself. Why do people always demand to force their views on everyone else?
The VAST majority of people do not know what gold even is.
You are judging everyone by yourself
That is absurd to assume you will ever convince the majority to give up power. They will NEVER do it.'
Sleepingvillage
Congratulations. :)
When my understanding finally reached that level, I had sleepless nights about my electronic digits in the bank and was only able to get a good nights rest again after I went to bed at the All Inn.
I hope your understanding brings you the same peace.
TF
And my response to that:
Gary
11:09 PM (20 hours ago)
to Martin
'Why do you think I (we freegold advocates) want gold as money. We don't. You clearly have no understanding what freegold will be, hence you just make yourself look stupid criticising something when you have not a clue what it is.
And again, you refer to 'government' as all of the world wanting the same. Why, only this week Japan and China announce bilateral currency arrangements, bypassing the dollar to reduce risks.
Even my two cats can see that the dollar is already on its last legs, and yes, the Fed can and will buy everything, just look at the Japs, that's where the US (and possibly the Uk) are all headed, it's the natural way this weird currency system has to end.
Freegold is not loss of government power, only loss of the US's exorbitant privilege. ALL other governments will benefit from a physical only price for gold.
Anyway, someone wrote this in 2009, but has mysteriously changed his tune since then:
By retaining the Floating Exchange Rate System where by the Free Markets will dictate the value of a currency relative to the Global Currency Unit and Gold for the private sector, this will help to keep the politicians honest. -- May 2009, Martin Armstrong
No need to reply thanks.'
Good of him to post a response at his site I guess, but I still disagree with a fair bit of what he is saying, and he still doesn't get the HI part of it, thinking the system will collapse before that happens.
Well, we got Isabella going since she picked a fight on twitter..
http://ftalphaville.ft.com/blog/2012/05/31/1023571/debunking-goldbugs/?utm_source=dlvr.it&utm_medium=twitter
She picked a fight with me.. @freegolds
http://ftalphaville.ft.com/blog/2012/05/31/1025161/golds-anti-social-behaviour-order/?utm_source=dlvr.it&utm_medium=twitter
Gary, just a thought, but MA might find your arguments more persuasive if you don't accuse him of making himself look stupid.
Gentlemen (and Ladies!)
I do believe MA is right - the state sits atop the 'perfect' deficit financing banking system.
It won't be voluntarily made transparent.
Sorry, just aint gonna happen.
Sean, MA has immediately posted a response to the world where he accepts and addresses that very point I was making. I rejoice that I seem to have finally got through to MA after many attempts.
Therefore you are actually wrong with your 'thought' (in the loosest possible sense of the word), and I suspect you are perhaps stupid. Does my argument persuade you that you are stupid? Or does me calling you stupid make me less persuasive. You tell me as you're clearly the expert in this field.
Anyhow, useful comment (or it would be on an 'email etiquette forum', please keep up the good work.
Hi, I have read this blog for 4 weeks now and find myself knows so little.. I have sent the links to some of my friends, and I think average people like me really need to spend time reading and understanding this..
Sorry for my long post..
I wonder if anyone can shed some lights on our situation. My wife and I are in late 30s, we live in Great Toronto area, where housing market still very hot.. We currently rent a one bedroom condo, for $1300 per month. Our before tax income is 120k/year, and we have 20 ounces of gold coins and some silver as well, all physical and bought recently after reading this blog. All other savings are in paper assets.. We both have stable jobs ( at least for now). In FOFOA’s definition, we are savers.
We are in a stage that we need to move to a 3 bedroom home due to family reasons; we saw a semi detached house recently, listing price is 430 k. My wife really loves it..I don’t mind bidding for the asking price since my wife really loves it; but she says she can go to 440k; however, our agent told us that the house already has an offer, and we saw another buyer was looking the house as well when we were there. So it will be a biding war, and our agent suggests us bid 450k if we really wants it. (FYI, the house next door was sold 435k last year).. talk about sign of bubble!!
We both agree real estate market here is over priced, and this house may crash down to 300k. However, we need a house to live and we can stay in a house for a very long time, 20 + years.
Although I like this house and I love my wife and want her happy. Being a logical person I am, I think we can rent a house for a few years (1800- 2000/month) and then wait for the housing market to crash, wiping out credit money and we may be able to buy a house for 10 gold coins? And I am sure there will be many houses on the market that my wife loves..
My argument is: The housing market is way over priced. If we are under water in 3-5 years and any one of us loses a job due to economic crash and hyperinflation, we will be screwed.
But my wife’s arguments are:
1 - our income is not low, we already got pre- approval mortgage of 570k, we are not over stretching ourself for 440k house.
2-yes, real estate is over priced, but it can stay high for a very long time; as long as the mortgage rate is very low (variable rate about 3%), and the Canadian job market is stable, there are always cheap money buying real estate, supporting the price. What if in 3 years, the price is even higher, and in 5 years, the currency still not crashing, will we still wait?
3- even if we buy it and the market/currency crashes in 3-5 years, we may be able to pay off the balance principle in gold.
4 - if we rent, we are paying 1800-2000 / month anyway.
5- She wants to put 50k down if we can win the bid, in her own words” if paper money is worthless, spend it now” … Plus, the money will be worth less in the future, which is good for people who carries debt. She even thinks that if the Hyper inflation happens, we can pay off balances with worthless money! ( which I told her that banks will never let us get away from the debt easily even if under hyper inflation..)
The seller wants all bids come in this weekend; my wife wants to bid for 440k, (she is cool enough, not bidding 450k that our agent suggests). Right now, I don’t know how to convince her not to buy a house now..as I ve tried but failed..
If she wins the bid, then I think I will sell some paper assets and exchange at least another 20 ounces of gold right away just in case.
I apparently don’t understand HI and Freegold enough yet to be all in gold..
Any thoughts and comments are appreciated..
Thanks
Actually MA fully understands most of the aspects of Freegold , he just doesn't realise it yet!
Three of the goals for an international monetary system from that linked article of his:
(1) retain individual sovereignty and the liberty to create asociety that we choose to live in
(2) isolate the economic effect s of domestic policy from the consequences of international responsibility
(3) ensure that international trade flows without restriction
calculated with in the single international currency of account.
For this he invokes a "Global Currency" (GC), while each nation retains its local currency that must be converted for international transactions.
"The free markets will dictate the value of a currency relative to the global currency unit"
Highway,
Welcome, and congratulations on your decision to see where this path leads!
Now some thoughts:
Are you gonna do as your wife suggests just because she "loves" a house?
Clearly, you need to tell her that _you_ are in charge of the economic affairs, and she should trust you, THE MAN.
She's not gonna respect or love you more just because you buy an overpriced house on credit.
Just my 2 cents :)
highway
There is no right answer.
I'd like to quote some FOFOA :
"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."
Things like buying houses is part of the difficult decisions us mere shrimps have to struggle with.
There are some here that have bought houses, some who are paying a minimum mortgage and some who have sold houses to buy more gold.
At the end of the day no-one can proscribe what is right for you.
It is good to own as much gold as one understand, but not more.
My thoughts are thus. One must live life. What sacrifices one wants to make, can be made. Keep reading. Things will work out as they must.
Personally I agree with your logic of not buying, but my circumstances are not the same as yours, so perhaps my opinion is not as valuable.
If you feel you have more time, I would say perhaps consider reading for a few months more while looking at more houses.
The choice of course must remain yours.
I wish you luck. These things are not easy for us shrimps.
Peace
TF
I think Armstrong is getting pretty close to our thinking.. he is not quite there yet.. but he will walk the trail..he has a bit of trouble with free floating gold
highway: Do you think our current system will last another three years? Would you rent for a year and then buy? Dancing around the moment of 'Transition' is dangerous.
Hi Highway,
I apparently don’t understand HI and Freegold enough yet to be all in gold..
You are in luck because this answer does not require much understanding of Freegold and HI, but it does interpose a question as an answer:
Do you like being married?
just kidding
===============================
Randy Strauss has offered words I find comforting in dealing with the "bigger" issue you put forward (I love my "she" too), perhaps quite reflection with his words will offer a bit of solace and insight to you as well:
Various policy signs over the past several years had indeed pointed toward 2010 to be the watershed point in the international monetary transition, but the depth of the current commercial banking crisis likely argued strongly for a delay under the thought that calmer waters would facilitate a better transition. As such, the existing infrastructure and policy is largely in place at the present time, so a timeline for this store of value transition can be every bit as short as that for invoicing — essentially, no time needed for flipping the switch.
But in light of the current crisis and some of the policy efforts underway to restore calm to the commercial markets, it looks to me that the new timeline for significant transitions is mid-2013 consistent with the current policy talks driving the permanent European Stability Mechanism to that timeframe, but with that said, it could be set into motion at any given moment between now and then, and between your breakfast one day and breakfast the next. Hence, it is best that you work to actively establish your desired gold position without undue delay, and then with peace of mind you can turn your full attention to the business of living your life as it was meant to be. Spending significantly further time obsessing over currencies and investments is a fool’s errand.
R.
http://fofoa.blogspot.com/2010/12/kicking-hornets-nest.html
============================
Gold's for peace of mind. Get you some and get back to living your life as it was meant to be - as a husband loving your wife and family.
Gold is not the end in and off itself, it is a means to an end. Life is what matters, gold simply affords you some latitude in terms of options for how you choose to live it.
@highway
I went through a similar experience... except she wanted me to sell all my gold... ended in a breakup.
You know that buying that house would be a bad idea. And I'd wager most here would agree with you. But if you don't go along with it, your wife could make your life a living hell, maybe even end the relationship. Only you can gauge the dynamics of that particular situation. It could be a long time... years... before you're "proven right" about gold.
Armstrong is right.
He is not turning aroumd. Not by a long shot. Good to see him respond on freegold. and bash it.
A one world currency it will be.
Highway,
Only my opinion :
If canada offers 30 years fixed interest rate mortgage like USA, I say take it and buy house.
Spend money(and other paper assets) on things and use the remaining savings to buy physical Gold. No one know when freegold sets in, though "Ari" had hinted 2013 and USA Govt has recently become a huge monster sucking up real goods.
JR,
In an earlier re-post by you from Fofoa regarding physical cash versus digital, he said:
"They will not simply raise prices to get more digits unless there is "SOMETHING" limiting those digits. That "SOMETHING" is physical cash."
In what way does the physical "limit" those digits? If they are hyperinflating via the printing of physical cash, is it really "limited" by anything?
highway
buy that house, the nest for your wife, have some children, spend your gold and see what you get when you'll need money, currency, reserves exactly in 18 years. Where do you get it from???? What about the education for your children?
Sorry, most women are unfortunately to short sighted for long term plans. Hormones now or future living standard?
Gold is gold whatever theories.
Hi Jman1959,
FOFOA's comment was in response to someone who said why couldn't the US just create more electronic credit and not print physical cash.
FOFOA's response:
Hi Raptor,
Your questions:
Q. Could this extend the life of $$ ?
A. No
Q. Would this cause a split it to two different currencies in a sense : electronic and physical.
A. Perhaps
Q. Would $$ in general benefit from such a move.
A. No
Q. Why not ?
A. Because when you deny a currency its reserve, it falls in value. Look at '71. Cut off the reserves (gold) and the dollar tumbles. Today the reserve is physical dollars. Separate that reserve from the currency and the currency will tumble.
A purely digital currency without a trade surplus needs an ultimate backing. This is actually possible in Freegold but not today. So don't look for hyperinflation in digital units. Look for wheelbarrows of physical cash! The government will print that which commands goods and services from the physical plane. And because hyperinflation is driven by fear of money by the physical plane, not greed, that will be physical cash.
The way digital currency works is by tether. It is always tethered to a counterparty. Without that counterparty, there is no value in it. The value comes from the counterparty's obligation to supply SOMETHING to the entity you paid with your digital currency. Usually it ends up being just another transfer to a different counterparty that is supplied. But without that "SOMETHING", digital currency can't work. There is no way in today's technology to have an untethered digital currency, like a bearer bond or a dollar bill, that can circulate untethered. So the tether requires a counterparty, which requires something promised, which requires a "SOMETHING" other than the digital credit itself.
So it all comes down to the solvency and credibility of the counterparties. And most of the digital currency that circulates today is tethered to insolvent counterparties running trade deficits. We don't see this. We don't even realize it, and that's how we end up with fantasies like this "all digital currency" nonsense.
But when faith collapses, this "SOMETHING" will come to the forefront. And today, that "SOMETHING" is physical dollar bills. When the currency collapses, it is the sellers of physical goods that are in the driver's seat. They will not simply raise prices to get more digits unless there is "SOMETHING" limiting those digits. That "SOMETHING" is physical cash.
Remember this: in hyperinflation the physical plane FEARS the monetary plane because it is crashing. It is not GREED that drives the prices up, "give me more credits for this apple." It is FEAR of the credits, "get those credits away from my apple"... "but wait, sir, here I can double my offer, two wheelbarrows of cash for your apple."
I honestly feel like I'm talking to a pile of rocks here. NO ONE gets it. Hyperinflation today will look just like Weimar and Zimbabwe in this respect. WHEELBARROWS! Or their modern equivalent. A quick devaluation of the dollar like Argentina or Iceland will not be enough to change the fear of the physical plane back into greed. Instead it will begin the long fall of a currency that is too old and too large to do anything else but fall very, very far.
The only way to eliminate physical currency altogether is to have a central authority backing the digits with SOMETHING ELSE. And the only thing that can be is a FLOATING RESERVE like Freegold. It doesn't actually NEED to be gold, but it must be something. And in Freegold they truly could eliminate cash. Because all digits will ultimately be backed by the floating reserves of the central monetary authority. You can walk in anywhere and change them in for gold at gold's current floating price. The reserves NEVER RUN OUT because they float. It won't matter how many credits are issued, the reserves will just rise in price and never run out.
Continued...
September 18, 2010 4:13 PM
Today the reserves are physical dollars. If you eliminate physical dollars you don't get hyperinflation, you get instant worthlessness. I suppose that COULD look like hyperinflation for a very brief time, but the idea is so ludicrous it simply won't be tried, NWO paranoids notwithstanding.
If a smaller country tried this experiment domestically there would have to be some central authority backing the digital credits with something OTHER THAN CREDITS. There would have to be. Even if the backing was simply euros or US dollars. It would have to be something harder than credits. That's what a reserve backing is. Something relatively "harder" than the circulating medium.
Ever heard of a black market? If the US government tried something like this with the dollar it would send everyone into black market mode almost immediately. Yes, gold and silver would THEN become transactional currency once again. As would cash and even foreign currency. This is one of the worst-case scenarios ANOTHER spoke of.
If you are really interested in understanding this the way it actually is, then you must think like a central banker, not like a NWO paranoid that thinks he knows how they are sticking it to the little guy.
In a currency, the little guy DOESN'T MATTER. What matters are the people who matter. The EXTERNALS. You can't have a domestic currency unless it provides "SOMETHING" to the externals.
That SOMETHING must be either a solid trade surplus (goods) or else a backing OTHER THAN THE DIGITS. And it must be something HARDER than the digits. Otherwise the digits won't be accepted by the externals because you are running a trade deficit.
When you run a trade deficit you ship out more digits than goods. So there must be SOMETHING to back those extra digits, other than more digits.
The dollar is still backed by gold through the paper gold market. The externals that matter most (oil) are still cashing it in for physical gold. It is also backed by oil supporting it through pricing because trade surplus nations like China can use some of their surplus credits for oil that doesn't come from the US. And then oil uses those credits for physical gold from the paper gold arena. But this backing is breaking down now. For others, the dollar is backed by physical cash and Treasuries which are promises to pay physical cash. If the dollar was only a digit, then those Treasuries would be worthless to the externals.
The paranoids think "well the sheeple bought this digital-everything scheme, so I'm sure the banksters will take it to the next level and REALLY screw us now." But if you think like a central banker, you'll realize that THE SHEEPLE DON'T MATTER in the big picture. Sure, they are the domestic backing for the currency, yes. But they are the backing as it is reflected EXTERNALLY. It does no good to you, the central banker, as a purely domestic medium. It must have MEANING (VALUE) in a broader context to do you any good.
Continued...
September 18, 2010 4:19 PM
If you create a truly honest currency then the SHEEPLE will create a trade surplus and you will not need trickery through your currency to gain profit. If you create a deceitful currency, then the SHEEPLE will create a trade deficit and you will need a reserve that is AT LEAST a little harder than your currency. What a miracle the Fed has such a reserve that it can ALSO create, albeit with a little more effort!
When the circulating currency was dollar bills, the reserve was gold. When that reserve was cut loose, the dollar plunged. Today the currency is mostly digital (tethered) credits and the reserve is dollar bills. If you can't understand this principle, then you can't understand money.
Fooling the sheeple is the easy part. SATISFYING THE EXTERNALS IS THE HARD PART. And without some sort of backing, either a trade surplus or something HARDER than your currency, you don't have a prayer. The dollar bill is harder, and amazingly it is still accepted as harder. This is why they (physical dollar bills) will be printed in GREAT QUANTITIES when faith in the symbolic currency collapses.
When confidence in your currency collapses you must inflate it just to keep functioning yourself (i.e. the USG!) If you have a reserve, you will revert back to that reserve because THAT is what the EXTERNALS want and it will give you more purchasing power to inflate that reserve, if it is inflatable. This is why when faith in the dollar dies the Fed will print cash like crazy. Finally cashing in on the miracle scheme of the inflatable global reserve! Tethered credits will lose value much faster than cash and cash will be demanded by the physical plane. If the Fed doesn't print cash (which is a ludicrous notion) it will be retired and the Treasury will print cash. It's really not that difficult of a logical progression to follow. And no one has shown me another way it could play out. When I see one, I will let you know.
Sincerely,
FOFOA
September 18, 2010 4:23 PM
If its just electronic cash, its instant worthlessness. Electronic cash needs a counterparty:
The way digital currency works is by tether. It is always tethered to a counterparty. Without that counterparty, there is no value in it. The value comes from the counterparty's obligation to supply SOMETHING to the entity you paid with your digital currency. Usually it ends up being just another transfer to a different counterparty that is supplied. But without that "SOMETHING", digital currency can't work. There is no way in today's technology to have an untethered digital currency, like a bearer bond or a dollar bill, that can circulate untethered. So the tether requires a counterparty, which requires something promised, which requires a "SOMETHING" other than the digital credit itself.
Get that shitty little currency away from my apples.
Love it.
Highway,
I agree w most its a difficult decision and personal. I have read some good data to show that certain areas in Canada are in a bubble range. I have never owned a house in my life, also never been married so maybe they go hand and hand. I never wanted o be tied down. I have moved many times and traveled when i wanted. Always felt freer but again i am not married and do not have a family. Personally i would rent. Housing is hard work, you need to maintain it, mow the lawn, paint, taxes, insurance. What if you guys get new jobs and need to sell it, or your neighbors start bothering you. Just easier to look for a rental in a different part of town.
hi burningfiat, - thanks, I certainly won't buy it just because she "loves" it.. She is open minded as she agrees that we should hold some gold. If I were alone, I would rent for sure, I just need to figure out how to counter her arguments..
hi Motley Fool - thanks for your thoughts, I sure will continue to read here; the more I read, the more scaried I feel. On the way to my home today, I drove my car, looking around, everything seems so peaceful, and normal.. What we average people have been taught since we were born about money, governement, investment.?
hi Indenture - I honestly don't know how long the system will last.. I would think the system will fight for its survival till its last breath... who would give up money and power easily? I prefer to rent for a few years..
JR - still enjoy being married, for 13 years, (smile).. thanks for Randy Strauss's comments.
wish I could go through all the archives right now..
poopyjim - I believe buying or not buying the house will not affect our relationships.. She trying to bid her comforable price, she will not raise her bid as suggetsed by the agent..
Biju - that's part of her arguments: spend some worthless fiat money now..
but I said to her spend on gold, not on house..
Alien - thanks..
You're kidding alien ..... right?
GAWD
Highway, I'm canadian, and right now we are experiencing unprecedented low interest rates. They will not last! Your 3% variable is probobly a five year term today. Today is not the time to buy into a variable mortgage, and if you shop you can probobly get a five year fixed for 3%.
BUT we can not buy 30 year fixed mortgages like the US, and interest rates on our ten year fixed are stupid. You may have been approved for your mortgage at 3%, can you still afford the payments at 6%? (still a very low rate historically) or how about 8%, and for the next 25 years?
First time home buying esp in Toronto or Vancouver is a dangerous business right now, proceed with extreme caution, and spend alot of time on a calculator determining the many likely senarios you mmight encounter in the forseeable future.
If you decide to go for it, make a final check ... if your mortgage/taxes are much more than what you would spend in rent on an equivalent home, you are paying too much.
highway,
It's a tough call. We have lived in our home for a long time and we created the garden from just about nothing. The adult (most of the time) "kids" would hate it if we sold I'm certain. We would not consider selling it now regardless of the potential profits. But that's purely a lifestyle decision.
We are on the fringe of a similar decision that you and your wife are grappling with because the youngest son is looking at buying a house with his partner. Aussie RE (like Canada) is vastly over-priced but the figures showing that prices are coming down are becoming so obvious that even the MSM here is having to admit that it is so.
If you chose to I think there are a couple of arguments that might carry some weight. One; is your wife happy to lose the $50K deposit? That's what is at stake here in a falling market. Two; no one owns a house while they have a mortgage. The lender owns it until the last payment is made. The only way to be a true "homeowner" is to own the house free and clear.
If you can delay your purchase I think you will avoid the kind of situation that jojo described. Like I said it's a lifestyle decision and good luck with your decision.
Cheers
Of course you should also make other preparations to ensure that your bare necessities of food, clothing and shelter are taken care of. Some silver and even some dollar currency makes sense in this regard. This whole "gold thing" is really just for those people that have more money than they will need to live on for about a year. And it is for those that would like to store that excess wealth in the most universally liquid vehicle since they don't know exactly what they will be needing a year from now.
Perhaps they will need a generator. Or maybe a cow. Or maybe a gun. Maybe a new Ford F150. This is where gold comes in handy. You can store your wealth securely now in a universal package that should be convertible into the most needed things later. It can cost a pretty penny to be totally prepared now for every possible eventuality. Instead, it is best to prepare for the most probable events and keep a universal reserve for the unexpected!
http://fofoa.blogspot.com/2010/02/greece-is-word.html
JR,
Thanks for the clarification, but I still have a question. I see how digital might be shunned initially in favor of cash because of settlement delays, and the desire as a seller to quickly exchange those dollars for something else (a nice single malt for me) before they drop in value further. But from a personal perspective, I might be saying "get your digital AND your cash away from my apples." I am guessing the answer is this: When all the digital volume/value has deflated to almost zero (which will happen as all credit is cut off), then there is initially a huge shortage of cash to perform the MOE function. So it is during this initial onslaught that the cash carries the premium. I am thinking though, that as the USG continues their printfest, eventually people will start to say, "keep your (USD)cash away from my apples", or "I only take Euros for cheeseburger". Am I looking at this correctly?
burningfiat,
I wonder whether you should remove the UK from the green zone. Or perhaps someone can explain to me where the gold is:
http://www.bankofengland.co.uk/markets/Pages/balancesheet/default.aspx
http://www.bankofengland.co.uk/publications/Pages/bankreturn/2012/default.aspx
Victor
A pretty solid crap may carry a "premium" in terms of not being as disgusting as diarrhea, yes? One bad thing not as bad as another is preferable, or carries a relative premium, yes?
You will be saying "Get that shitty little currency away from my apples" because digital is *already* toast and the base is hyperinflating.
If you are not the seller but a buyer, you will want physical because digital is worthless, but the reason you will want physical cash is so you can use it to buy something (digital is worthless) real that isn't devaluing like the physical cash you are now trying to dump ASAP.
Balance
While catching up with the comments I notice that a few people are perhaps expecting too much (and too little) from this Euro Freegold-RPG architecture. Let's take a look at what it won't do.
1. End the fiat currency regime (in fact it will cement it in place).
2. Governments will still be able to borrow.
3. It won't stop governments from applying the inflation tax (though it will provide a way to ameliorate it).
4. Currency issuers will still be able to mismanage their currencies.
5. It won't correct trade imbalances quickly. There will still be deficits and surpluses in global trade (perhaps for a long time to come).
Here's a few things this new architecture can do:
1. Give savers an alternative to debt intruments and currency for wealth preservation.
2. Provide a brake and spur in international trade that encourages trade balance over time.
3. Redistribute some purchasing power (and wealth?) from the West to the East.
4. Provide a benchmark and reference point for currency managers (and citizens) on the health of their currency reflected in exchange rates.
5. The Euro will ensure that international trade can continue despite disruptions from a collapse of the US dollar. Once the dollar has completed its revaluation the world will have two international trade currency options.
6. Compensate gold holders for losses on paper they hold (willingly or unwillingly) through a once-off revaluation and for countries who experience HI gold should carry them through that as well but, perhaps, no more or less effectively than other stores of wealth.
Oh, and one other thing. After the transition politicians will still be shitheads.
More details on FOFOA's point on view on GLD:
GLD - The Central Bank of the Bullion Banks
Victor
JR, I love it when you type like you. Costata I always learn lots from your typing. Carry on :D
Quick question: Is the current situation going on in Europe (governmental deficits growing to bail out banks and banks gorging still on governmental bonds) a set-up by US to maintain dollar domination and limit support/confidence for euro? Too many GS-ex are in key positions in European banking industry, GSK out due to a cheap set-up. Devide an conquer, the old saying, keep them devided and still enjoy the benefits of reserve curency. Everybody else that tryed to decouple from dollars and was relevant (oil related = Irak, Libya, etc.)is dead...does it smell like a setup? GS was advising Greece on budgetary issues, to meet EU targets, same ca se in Italy..who knows Spain? For sure US, Ireland...what FOFOA and the rest of the readers think?
First time offender...
Sorry for dumb remarks, I'm waiting for my daughter to have a baby. Better said, I'm waiting for my daughter to tell me that my grandson has arrived
Cris,
here is a shortcut to the answer. Look at the actions (of central bankers) and ignore the words (of politicians and journalists).
Does anyone in Europe keep interest rates on government debt artificially low? As low as they keep them in the US, UK and Japan? (perhaps you see it best in the UK as the US and Japan may still have some 'save haven' feeling however misplaced this is).
I think the answer is a pretty obvious no.
So your suspected GS conspiracy looks pretty lame to me.
Victor
Cris,
Welcome!
The Euro and the EU itself are "big picture", long range endeavours. To us shrimps the day-to-day machinations and politics assume an importance that they may not have for the architects of such an ambitious undertaking. Ask yourself this:
Even if Mario Draghi is a GS "agent" could he singlehanded derail the agreements between the 17 nations who are members of the EMU? If you are tempted to answer - yes - consider the representation on the ECB boards. Could GS suborn all of them?
One of the reasons why Desperado, AD, Paul and the other conspiracy theorists tend to get short shrift around here is because not one of them can offer an explanation how you could steer any of the massive conspiracies they allege through to success.
Get yourself some popcorn. If history is any guide before this is all over you will get to see the banksters turn on each other in order to save their own hides. There's no honour among thieves as the saying goes. Meanwhile get yourself some (more?) gold and get out of the way.
Hi Wendy,
Thanks. Is this your first grandchild?
costata,
"Even if Mario Draghi is a GS "agent" could he singlehanded derail the agreements between the 17 nations who are members of the EMU? If you are tempted to answer - yes - consider the representation on the ECB boards. Could GS suborn all of them?"
just think of a drug dealer, no need to "suborn" a junkie or 17 of them....
Highway: I think the real concern is how much probability is there that you will not be able to pay up on the EMI.
Yes the property will retain its value, and maybe you will win the lottery, and don't have to pay the remaining amount. But it is pretty risky.
Gold currently is probably going to make you much richer, and is completely safe. Why take a risk?
@ highway
Your 'love' interest seems to want you to go short fiat and long houses and your alternative is to go short fiat and long Gold. Thus if you go long houses you are effectively short Gold.
No reader of this site would do that just before the 'transition' where there is an extremely high chance that Gold will be revalued by up to 30 times versus nearly everything else.
I would have thought your decision is a 'no brainer'. Easy.
Never ask a barber if you need a haircut, or a gold forum if you should buy gold.
http://www.youtube.com/watch?v=DMWMCbQxEsE
Vtc, the BoE transferred the gold to the UK Govt over a period of many years.
I asked them why they'd done that, and they denied it had happened, I haven't had time to point out that it was in their figures.
Here's some of their email re gold holdings:
'The gold reserves which form part of the UK’s reserves are held in a government account administered by HM Treasury (‘HMT’), called the Exchange Equalisation Account (‘EEA’). The Bank acts as HMT’s Agent for the day to day management of the EEA.
The Bank publishes month end figures relating to the management of the EEA at http://www.bankofengland.co.uk/statistics/Pages/reserves/2012/Feb/default.aspx
At the bottom of the page click on ‘Detailed Current Data’ (available as a pdf document or excel spreadsheet). The latest figure for gold can be found by clicking on ‘Time Series Detail’, item 4.'
highway,
maybe like good old Ari's suggestion: Live your life and save the rest in gold.
Just like Jeff stated, making a decession that will effect your next >20yrs. of life based on some speculation of an anonymous blog, based upon some crazy and wrong proven predictions made 13yrs. ago, is simply stupid. PERIOD.
Being "short" whatever versus "long" whatever, says it all, already by the wording: SPECULATION.
My personal take on what you describe: You and your wife are both right, I only say the house appears (too) expensive, but if that is what you know that you really really want, I say go for it, just be aware of every possible consequence and read the very fine print of the mortgage contract!!! And considering all different outcomes into it: Loosing your job, rising expenses, changing your job to another location....
Having said that: I was once in life in debt but the debt was easy to service, but this is something you never can be 100% sure. In your case having a free choice, if it was me, I would not go in debt again, especially not for consumption (<=your house is a liability, not an asset). But as costata said: It's a lifestyle decision.
Greets, AD
'making a decession that will effect your next >20yrs. of life based on some speculation of an anonymous blog, based upon some crazy and wrong proven predictions made 13yrs. ago, is simply stupid. PERIOD.'
I wonder, would the definition of stupidity include someone who believed the above and yet still wasted that most precious of commodities (time) in posting day after day at the very same blog, knowing that 99% of readers have grasped the level of stupidity on display.
Yeah, I think it would. Really very stupid.
Gary,
with all your wisdom which shines through your posts, any explanation why today we have exactly the same price for physical gold, like one year ago?
Greets, AD
Further proof, if any were needed.....
AD,
..any explanation why today we have exactly the same price for physical gold, like one year ago?
Maybe it's a conspiracy.
Well said AD:
'making a decession that will effect your next >20yrs. of life based on some speculation of an anonymous blog, based upon some crazy and wrong proven predictions made 13yrs. ago, is simply stupid. PERIOD.'
Indeed! Instead, follow the sage advice MF offered above:
It is good to own as much gold as one understand, but not more.
Don't trust the crazy internet speculation, but look to your own understanding.
Have you read Victor's latest GLD – The Central Bank Of The Bullion Banks?
Then what are you waiting for!?!
Yes costata, first grandchild :D I was in Vancouver last weekend for the baby shower (loonnggg), and hopefully this weekend to meet the baby.
JR
Thanks, though you could have at least corrected my simple typing/spelling mistake when quoting me. Haha. :)
/sarc on
@cosata
Yes, a conspiracy. There must be something special about today. I think there is a special star alignment that is very rare, and on this day the evil central banker cabal is practicing a arcane ritual that can only be done on this day, and only if gold is at the same price as a year ago.
/sarc off
TF
Canadian housing bubble info:
http://soberlook.com/2012/05/soberlook.html
@MF/costata,
Maybe your friend should consider a course of Ormus Miraculous.
DP, perhaps he tried already? #BongEconomics
Check out the video at the end of that blog post i posted on the Canadian housing bubble. Amazing to see human nature in real time, this time its different, new paradign etc. The guy says he can see 14 cranes from his window in his apt, then says who knows maybe this is sustainable. pretty crazy.
VTC,
Very impressive analysis on the "Central Bank Of The Bullion Banks". Take a bow. Bravo!
Wendy,
Great. Best wishs to you and the family.
Victor,
Without investigating further, you're most probably right about BOE preparedness for Freegold.
I just linked to the map, originally included in:
http://en.wikipedia.org/wiki/Freegold
Dunno why England is included...
Is original author of map around?
England is using MTM gold
Glad I pulled the trigger yesterday - Makes me Happy Happy Happy
Excellent Phil-osophy from my long-lost uncle Phil.
Flore,
can you show me where the gold is? Please see my posting of May 31, 2012 9:38 PM and Gary's of June 1, 2012 3:04 AM.
Honestly, I don't understand where it shows up on their balance sheet and how its increase would compensate for losses on financial assets.
Victor
/SleepingVillage/,
Congrats on bad-ass timing skillz.
Nice link, I like Phils Osophy a lot!
/Burning
From what I can gather
England's treasury owns the gold:
The Exchange Equalisation Account (EEA) is the account that holds the UK's reserves of gold, foreign currencies and International Monetary Fund (IMF) Special Drawing Rights (SDRs). It was established in 1932 to provide a fund which could be used for "checking undue fluctuations in the exchange value of sterling". Subsequent legislation has extended the possible use of this fund; and under the consolidating Exchange Equalisation Account Act 1979, it may also be used:
to secure the conservation or disposition in the national interest of making payments abroad; and
for certain purposes arising out of the UK's membership of the IMF, including the holding, purchase and sale of SDRs.
http://www.hm-treasury.gov.uk/ukecon_eea_index.htm
---------------
The treasury appoints the BOE as its agent to conduct its foreign reserves activity. The tresury sets policy (in conjunction with the BoE) and the BoE carries it out.:
1.6 The Bank of England will act as HM Treasury’s agent in issuing and managing any foreign currency liabilities associated with the reserves and the Debt Management Office will issue any sterling financing required for the reserves.
1.7 The EEA is under the control of HM Treasury, which appoints the Bank of England as its agent to carry out the day-to-day management of the international reserves (‘the reserves’). An annual Service Level Agreement (SLA) between HM Treasury and the Bank of England specifies
the parameters under which the reserves are managed. It remains in force indefinitely and is
reviewed annually.
[...]
1.11 HM Treasury’s role is to:
- ensure that its choice for the strategic composition for the benchmark asset allocation of the reserves, including gold, meets the policy objectives of the EEA. Subject to meeting those objectives, HM Treasury will make that benchmark asset allocation choice to balance risk, return and liquidity in line with its risk preferences, taking advice from the Bank of England as required. The performance of the
reserves, including financial outturns, will be reported in the annual accounts; and
- set an active management return target for the Bank in managing the reserves against the benchmark, subject to the limits detailed in the Service Level Agreement. This target will be set to at least cover the costs of the Bank in managing the EEA.
[...]
1.18 In accordance with the SLA, the Bank of England manages the Official Reserves consistently to ensure that the reserves are fit for purpose in order to meet the Government’s current policy objectives and any potential future changes in policy.
1.19 The prime objective is to preserve the liquidity and security of the reserves and ensure that the Government maintains its capability to intervene in the foreign exchange market if required. Subject to this, the aim is to minimise the overall cost of holding the reserves, while ensuring exposure to financial risk is limited through the appropriate choice of portfolio and risk management practices.
http://www.hm-treasury.gov.uk/d/management_official_reserves.pdf
and re: MTM from the last link:
Disclosure of financial data
1.23 Since April 2000, the UK has published reserves data in accordance with the IMF/G10’s
Special Data Dissemination Standard (SDDS). These monthly releases set out the value and
composition of the UK’s foreign currency and gold assets, liabilities and derivatives on a markedto-market basis (that is, using current market valuations).
http://www.hm-treasury.gov.uk/d/management_official_reserves.pdf
Foreword
Introduction
1. The Exchange Equalisation Account (EEA) holds the United Kingdom’s reserves of gold,
foreign currency assets and International Monetary Fund (IMF) Special Drawing Rights
1
(SDRs). Combined with the UK’s Reserve Tranche Position (RTP) at the IMF and bilateral
loans to the IMF, these assets comprise the UK’s official holdings of international reserves
(“the official reserves”). The RTP and IMF bilateral loans are held in the National Loans
Fund (NLF).
[...]
7. Under the Exchange Equalisation Account Act 1979, the EEA is permitted to invest its
funds in any assets denominated in the currency of any country, to purchase gold, and to
acquire SDRs
[...]
13. The Treasury’s role in this is to ensure that its choice for the strategic composition for the
benchmark asset allocation of the reserves, including gold, meets the policy objectives set out
above. Subject to meeting those objectives, the Treasury will make that benchmark asset
allocation choice to trade off risk, return and liquidity in line with its risk preferences.
http://www.hm-treasury.gov.uk/d/eea_accounts190711.pdf
re: MTM
Analysis of returns for the period
40. The EEA’s accounts for the year ended 31 March 2011 are given on pages 21 to 44 and
show total comprehensive income for the year of £1,764m (2010 restated: £962m). This
profit was largely driven by gains on gold holdings.
41. The price of gold rose from £735 to £898 an ounce, an increase of 22%, giving rise to a
revaluation gain of £1,620m.
[...]
Gold
Gold and gold assets are treated as being similar to a financial asset and, as such, are reported
at fair value. Gold holdings and gold assets on deposit are valued at the sterling equivalent of
the London Bullion Market Association (LBMA) dollar denominated spot price as at 31
March 2011. Revaluation gains and losses on gold assets are recognised within fair value
changes of gold in the Statement of Comprehensive Income
http://www.hm-treasury.gov.uk/d/eea_accounts190711.pdf
Nice job SleepingVillage!
I'm an avid duck hunter myself...love the links.
FYI under British law, the treasury can tell the BoE how to conduct monetary policy:
(1)The Treasury, after consultation with the Governor of the Bank, may by order give the Bank directions with respect to monetary policy if they are satisfied that the directions are required in the public interest and by extreme economic circumstances.
[...]
(4)Unless an order under this section is approved by resolution of each House of Parliament before the end of the period of 28 days beginning with the day on which it is made, it shall cease to have effect at the end of that period.
http://www.legislation.gov.uk/ukpga/1998/11/section/19
Max Keiser interviews Hugo Price starting at 12:40
http://maxkeiser.com/2012/05/31/kr295-keiser-report-with-hugo-salinas-price/
"If they put a silver coin in circulation, parallel to the Drachma, that will change the whole situation (lack of confidence in the Drachma)." Price
Thanks, /Burning. Timing/luck? Worked great for me when I dumped a few hundred ounces of silver just before the drop last year. Hey, your luck improves when you get advice from the smartest blog around and follow your instincts. True story. The GLD puke thingy was my cue to act quickly(thanks Victor - I caught a post you made a few days ago somewhere?) Then refreshed myself with the concept from there.
Friday Fish
Right on, Jojo. You gotta watch the whole season - They're a cool bunch of bearded dudes.
come my Kingdom Come and then I will be done
I hope you all have a great weekend.
http://www.usagold.com/publications/importantevent.html read the mundell part.. I give this an A+
It's hard to say for sure what was behind today's (paper) gold fiesta, but my best guess is that it was about the expectation of some major money printing exercise by the usual suspects. They are, after all, fast reaching the point, what with the plummeting share market and other concomitant evidence that recession is in process, where they will have cover to "act."
Edwardo,
I was thinking the exact same thing. In fact after I read your comment, this post by Contrary Investor came to mind.
Bull markets in any asset class “breathe” as they both inhale and exhale. It’s all about rhythm. For now, gold is simply exhaling. Just remember, it ain’t over ‘til it’s over.
I believe that normally, expectations of QE also have a positive effect on the stock market. Yet, today the stock market is not looking too happy. I don't think today's rise in gold price can be attributed to expectations of QE. Instead, I think it's gold showing it's status as a safe haven, alongside US bonds.
It's hard to say for sure what was behind today's (paper) gold fiesta, but my best guess is that it was about the expectation of some major money printing exercise by the usual suspects.
Hmmm
FOFOA said...
FYI – Lance Lewis reports "GLD puke indicator triggered today"
Updated chart
May 22, 2012 3:40 PM
http://victorthecleaner.wordpress.com/2012/06/01/gld-the-central-bank-of-the-bullion-banks/
Hello Doc Oc,
It's true that the stock market got clobbered, but, then, paper gold's a risk on asset and paper gold did quite well. And, with pardons to the SLA, silver isn't a safe haven either, and, yet, it also had a decent move. So, though I have a bias about what the action could be attributed to, I am far from sure.
http://ferfal.blogspot.com/
This is a neat blog. Ferfal used to (until about 6 months ago) live in Argentina. He survived 2001. He describes life and living from then till when he left- basically street level view of living through a HI.
When I first found it, I started at the beginning of his blog (2008 i think) where there's the most posts about that hyperinflation.
This story reminded me that I hadn't visited his site in a while:
http://hosted.ap.org/dynamic/stories/L/LT_ARGENTINA_ECONOMY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-06-01-16-46-16
jojo,
Yes FerFAL's blog is really good information. Jeff I think linked it sometime back.
There's also a Chris Martenson Podcast with FerFAL.
Re: Gold
If this is a short covering rally, what sparked it? I would be looking for the other side of a position that could be hedged in gold.
Well, hello Mr Zoellick:)
“may be nearing a 'break the glass' moment: when one smashes the pane protecting the emergency fire alarm.”
Sounds strangely delicious to me...
Long time reader (mostly) non-contributor here... I enjoy trying to follow and understand the comment section here, along with the major themes and ideas of this blog (not always easy!). So I was wondering...
This blog has often made the point that one of the Euro's strengths is its being severed from the nation state. Does the threat of the introduction of eurobonds represent the disappearance of this strength? And if they were to be used, would this materially change FOFOA's argument that the Euro is in fact destined to be a superior alternative to today's USD?
Thanks,
Jesse.
Sorry, couldn't finish about Hugo Price. I was listening to him with a FOFOA filter and was amazed at how backwards his statements were. He has basically a four point plan.
1. "Introduce silver coins by weight along side currency (apply filter)"
2. "If the price of silver rises in drachmas because of a drachma devaluation then the Treasury, or the Central Bank, gives it a higher value and they can do that because only the weight is stamped on it not a value." Can someone explain this to me? The citizens are suppose to give more value to a weight coin because the government says so?
3. "Now suppose the price of silver falls, the monetary value remains the same, which is something people have a hard time wrapping their minds around." But it doesn't because there is no monetary value stamped on the coin, so?
4. "The people are going to use these coins for savings. They are going to put them away. And they are gong to use the drachma for every day work. And the government can continue it's Social Programs with the Drachma. And the Drachma will devalue but their saving will remain the same. And they will be used outside the banking system."
It sounds like he wants to give the Greeks a new coin and then the Treasury will tell them what it's worth.
Thanks e_r.
RJPadavona,
You said:
"So when the true price of gold is realized, I think it will have an affect on Moore's Law. Maybe the timeline goes from two years to four years or longer. Or maybe humans will be resilient enough and find other ingenious ways to keep the trend intact without cheap capital. Who knows?"
If two world wars, one global pandemic, numerous economic crises had no effect on the rate of doubling, I doubt the price of gold will either, even if it explodes. And it's not just Moore's Law. That's only for integrated circuits. There were other computing paradigms before that and they all followed the same trend. Whatever replaces Moore's Law will probably follow the same trend.
And whether a doubling takes 2 years or 4 years, either way, that's an explosive growth. Even worst case of 4 years, once we can create a computer that's 1/1000th as smart as a human, it's only 40 years (10 doublings) until we can build one just as smart as us. After that, the doubling will probably accelerate.
Hugo (almost) reinvents Global Freegold as Greece-only Freesilver. Because it is more compatible with his book. Good luck with that!
"One of the reasons why Desperado, AD, Paul and the other conspiracy theorists tend to get short shrift around here is because not one of them can offer an explanation how you could steer any of the massive conspiracies they allege through to success."
On the contrary costata.
I do see the conspiracies and the corruption, that part was true, one has to be blind as a rat no to, but I don't see a way it could lead to succes. They don't know what they are doing. We will enter a crisis like never before because of this mess. we have already lost democracy. we will enter war.
http://www.youtube.com/watch?v=wFXSj5WofYA
and reason for not staying around is obvious. I don't share perspective. I'm with Armstrong.
and with Farage ...
http://www.youtube.com/watch?v=BRx-CBlEIcA
Paul
I can respect that (and I think I speak for others too). What doesn't make sense is those that disagree yet keep sticking around to tell us so.
Personally when I got here I did not agree. So, because I was not outright able to see obvious flaws, I decided to read the blog and find the mistakes.
I started at the beginning and read everything including comments. I failed in my plan of disproving FOFOA though, and was won over to his point of view in the process.
Sometimes failure is rewarding. :)
TF
MF,
so that you finally get it: When you talk about Europe, it is basically just as smart, as if I would talk about the great rainbow nation of SouthAfrica and I would reason so, by quoting some speech 20yrs. ago from Nelson Mandela.
Got it?
Greets, AD
AD
I get it. I have gotten it for a long time. I have even said so at times.
However.
You need to understand that the economic system creates reality. It took me a long time to realize that economics causes politics.
So.
Yes, I get it. But as long as the current structure remains in place, all of this will not affect the final outcome.
and that, my friend, is the point.
@Sarah
Haha, of course not. Bars are fine, hell even jewelry is fine if you can find it for close to spot, which isn't that hard actually. :)
TF
Fool
I am not sticking around, I left a comment, it's the polite thing to do to check if someone responds or asks a question. never leave without saying goodbye ;)
I have no intentions to open old discussion. been there done that. I just came back to check comments on the Armstrong article mentioning freegold. No surprise I drew same conclusions a little while ago. And also no surprises about the reactions over here. Things are as they are.
Time will tell.
good luck and good bye
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