I know we have a few people here who don't find them credible, so this question goes both ways. We don't know who they were, so we can only judge them on their words which were sometimes cryptic to say the least. So I want to know why you find them credible (or not).
This is a follow-up question to one I asked the group that gathered in Las Vegas. I asked them if there was anything fundamentally different about A/FOA's story that seems to lead certain people to take personal action, people who would otherwise not take action, even given a similar, hypothetical pitch that advises buying something else that's about to explode in price, all else being equal. "All else being equal" includes both the credibility and style of the messenger, as well as the probability of success that you personally give the proposition.
That question obviously doesn't go both ways like this one does, so it was more suited to be asked of a group in which every member finds the story and its messengers credible. But now I want to know why you find them credible (or not), and it's not as simple of a question as it seems.
The following are excerpts from email exchanges I had with two different people. Both of these people were following ANOTHER/FOA in real time in the late 90s (true gold forum "old-timers"), and they each had a different take on A/FOA from the beginning. The first one is from someone who appears in the archives, talking about his initial impression of ANOTHER which he still holds today:
FOFOA,
I think you're enamored with Another and see him as far larger than other do.
I never saw him as a big catch - just another guy with lots of opinions and in most all cases his rhetoric was up to the reader to discern. He talked in riddles and rhymes and led people up the garden path. His intent was marketing the USAGold forum when he was on Kitco. He was trolling Kitco [for readers] while MK was trolling for [other popular commenters like me and *****].
He sure attracted those who didn't know, yet wanted to know. But I don't think he was a teacher nor did he have a special message to tell.
If I went back to the LongWave forums I was on back in the 1990's there where dozens of brighter minds with good credentials talking about what was unfolding.
It was known back in 1996 that the end of the LongWave was due - well documented and the unfolding was very well discussed by intelligent cohesive minds who knew what they were talking about and could clearly discuss concepts.
I told my wife when I bought physical in 1999 that we couldn't be selling till 2012-2014 when the end of the LongWave arrived. So much of what has unfolded has been predicted by intelligent people that it just makes a mockery of Another and his ramblings.
Sorry if it sounds harsh but it's my perspective from being around and active on these forums from years ago.
You never met the guy - saw the daily surroundings and subterfuge. It was a game being played.
This second one is from "Solitary Monk", a name adopted from Woland's comment: "So a solitary monk preserved our "Library of Alexandria" from destruction! We owe him a great debt of thanks." SM was reading A/FOA at the same time as the writer above, only he saw something different:
I stumbled upon A/FOA in early 1998, quite by accident. At first, it was totally incomprehensible. I really don't know why, but I felt compelled to understand these writings and kept at it. I followed the postings at usagold in real time. I started acquiring physical with a disciplined approach. In the end, I was pretty much all in at an average cost under $300. With the help of cheap wine and day old bread, I still have every ounce.
In order to keep my emotions in check, I read and reread the archives. Over and over. Again and again. During one of those passes, worried that they might someday not be available, I copied every posting.
I think that there are "threshold levels of understanding" required to 1) buy, 2) hold until the transition begins, and 3) hold through the transition. Each requires a greater level of understanding. I can see from your writings that you know some people will make it through 1) and 2), but not 3). I've been working for a long time to prepare myself to get through 3). Your blogs are one way to help with that.
[…]
RJPadavona wrote, "I pride myself on having a good bullshit detector based on all the cons I've been around in my life." This is important. There is something about A/FOA that gives their entire story credibility. An interesting question to the forum might be why people judge it credible. I think it will be hard to answer because it's really a Gestalt effect.
I should note that both email writers went "all in at an average cost under $300," but only SM credits A/FOA with his decision. Another difference is that the first writer above is planning to "catch the top" by selling his gold at the top, which he expected at the writing of the email to be between 2012 and 2014. (That email was written in Sept. 2011, right after gold had just kissed $1,900 and fallen back to $1,800.)
Here's a link for Gestalt psychology which says that our brains may have the ability to perceive a whole that is greater than the sum of its parts, perhaps even before we identify and understand all of the visible parts. I think this may be similar to what I call "infinite resolution" when referring to what I see as the fractal nature of the Freegold story.
As I wrote in Four, something in ANOTHER's words immediately caught my eye and stood out for me against all of the other gold writers I had been reading:
"It was a strange quote, but something in it caught my attention like a beacon as bright as the sun, so I clicked on the link. And for the next two months I stopped reading everything else I'd been reading while I worked my way through maybe a thousand-pages-worth of USAGOLD archives."
Not only did it catch my eye, but I must have found something in his words to be immediately credible because I went "all in" within six months of stumbling upon his decade-old cryptic comments. And even after six months I was still relatively clueless about Freegold compared to today.
I know my answer to the question in the title of this post, and I think it explains why some people find A/FOA credible and some others don't. But I don't think it quite explains everybody on both sides. So I'm looking for something else, something that will complete my answer. And that's why I want to know why you find A/FOA credible or not.
Notice also that I'm not asking why you find me credible or not. I must remind everyone that my blog is merely a tribute to them. So if you haven't read ANOTHER (THOUGHTS!) and The Gold Trail, then please feel free to refrain from projecting your opinion of me onto them. And besides, if you don't find me credible, then what the heck are you doing wasting your time here? ;D
Sincerely,
FOFOA
330 comments:
«Oldest ‹Older 201 – 330 of 330Re" Gold Miners savings.
Pardon me as I am usually a week behind, but I wanted to weigh in on the topic of gold miners saving in gold.
As someone who lives in the Western US, I have some knowledge of gold mining. Most gold miners have a good knowledge of their ore bodies. They know where their high grade ore is and where their low grade ore is.
During periods of high gold prices, they will horde their high grade ore, and mine their lower grade ores, in order to keep their business stable. During periods of lower gold prices, they will go into their higher grade ores in order to keep their margins up and keep their business profitable.
Thus, they in effect horde or keep gold in the ground as an asset during times like these.
What the effect this will have after the transition, I will let brighter minds discuss.
The China dilemma.
However, in China, things are just the opposite as I have heard (unfortunately no links I can remember)
In China, the exact opposite is happening. There, they are going all out to mine as much gold as fast as possible. They are concentrating on mining all the high grade ore first, and as fast as possible. They seem to want to get as much gold above ground as soon as they can. It seems to make sense to me.
Alex in Montana,
Spot on. This administration is unlike others before it. We could lose the whole f***king American dream to this bunch.
If I had my wish, it would be for more Americans to wake the F**k up and put on their big boy pants. Rome (hometown America) is burning.
Interesting times we live in. Indeed.
Good luck getting my gold, or my guns. I'd die in support of both.
Cheers
TF,
It will mean that, in a cooperative economy, you will be forced to provide a minimum input before claiming that bread (unless someone else has mercy and shares his bread with you).
Right now it the system is designed so one (or few, if they agree not to compete against each other) can benefit of the input of all without giving nothing in return. Rothschild's will never allow FreeGold to take this away from them.
ToTP
"Frustrated (or closet) silverbugs,
I have started a new blog at freegoldandsilver.wordpress.com and am using it as a repository for my freegold-plus-silver posts. Some of them were responses to or dialogues with others;"
Good luck with your new blog. You seem to have the right disposition to deal with:
1. Commenters who have obviously not read your fucking blog but feel the need to discuss the possibility of petrified wood as the SOV du jour as fiat is devalued.
2. Bloggers who become emboldened enough to request an inventory of your assets to determine your credibility.
Good luck, KP
bBY,
This guy is my hero du jour!
http://www.youtube.com/watch?v=26dQkNsAQr0
@ Burningfiat “If you believe silver is part of that, good luck to you!” “Selling your gold in times like this?”
I pretty sure you’ll sell your gold for food if gold is ‘all’ you have and you are starving. I’m pretty sure by your call sign that you aren’t a big fan of holding paper either.
Could you please enlighten us with what SoV we should hold that isn’t gold or paper but something one could use if the need arises? The key is to make it into a Freegold world with your gold intact is it not?
I believe that silver may be an important stepping stone to that period of time. Silver may also be a great diversification strategy after Freegold as well. 500oz of silver for 1oz of gold sounds really good to me. Pick your number, at an ever increasing stuff/gold ratio one gold holder after the other will seek to at least diversify into other ‘lesser’ SoV if not party like its 1999. After all you can’t take it with you.
In fact this is at the very heart of how world trade will be continually rebalanced under a Freegold system. For example, German gold (greater SoV) being exchange for Drachmas to buy Greek olive oil (lesser SoV). In this scenario the purchasing power of gold exchanged into German Marks doesn’t have as much purchasing power as that same gold shipped to Greece and traded for olive oil. Besides olive trees don’t grow to well in Germany and variety is the spice of life.
If this is true for trade between nations then it will also be true for ‘all’ other goods and lesser SoV exchange between individuals as well, will it not? Silver is a good example of something that is both a good that also just so happens to share a close kinship with gold ‘throughout’ human history as a durable SoV. The fact that silver is now a critical element of the digital age adds too rather than detracts from this history.
@ Tyrannyofthepresent & Alex in Montana
Governments routinely do stupid and counter productive things even during good times and can become down right suicidal during chaotic times. I fully suspect that when the monetary crises arrives at a nation near you our respective governments will do all kinds of stupid things. Some that our poor logically minds can’t even begin to predict.
FOFOA point is that if governments force physical gold into hiding they’ll just be shooting themselves in the head. A point I agree with; yes it is very stupid to do that but so are governments, your point? Stupid is as stupid does.
I may be more than willing to send few gold oz to China in order to pay off my mortgage but my government will stop that trade in a full blown currency war (ie capital and trade controls).
So I think you can absolutely count on some period of time in which the exchange of shrimp gold will be seriously controlled if not outlawed. In addition, really stupid governments may attempt to steal their citizens gold in order to keep the ponzi scheme of living beyond its means alive just a little bit longer. Regardless, at some point the world will effectively be in the largest Mexican stand off in human history with massive social disruption, starvation and even World War staring everyone in the face.
My hope is that something like Freegold will then emerge as the sensible solution out of the crisis.
Replace Steel with Gold in the script below, enjoy.
http://www.youtube.com/watch?v=MKMG-FdCGtM
The riddle of gold is that it neutralizes all things ponzi. We have learned its secret, pass on what you have learned.
Anyone have a metaphor for what the Fed is doing with the ball of string here
http://www.zerohedge.com/news/2013-02-09/feds-bailout-europe-continues-record-237-billion-injected-foreign-banks-past-month
Mircea
Ok. I have tried and failed to make sense of yours words. Your latest reply is still devoid of any rationale to me. I do not think this is the venue to continue this conversation, and I have no desire to continue trying.
Best of luck with your paranoid worldview.
TF
nods, shakes head up and down at "paranoid'
and thinks WTF!!
JR? Are you there or have you abandoned us?
Spaul67,
My question was not rhetorical or polemical but serious. Where do you consider it most likely that they will draw the line? If it ever happens I expect jewellery and >100 yr old coins to be safe. Bars and Krugers fair game. Art probably safe too. I guess you have thought about this.
Knotty Pine,
On your first point, I do expect unblemished oak always to maintain a premium, as long as the petrification is flawless. Nevertheless if you want to pop in and discuss the ratio, I have little doubt that you will find others who share your preference for your namesake asset.
If any intelligent and serious conversation occurs at my blog (or indeed anywhere else) on the integration of silver into a Freegold paradigm I will be so delighted that they can speculate about the value of my wedding ring, comment before reading the entire blog, capitalise the word "thought" or "another" inappropriately, use the phrase gold-and-silver injudiciously or commit any other mortal sin - a number of times - before I will be even mildly annoyed.
ToTP
Change is hard eh. Most people dislike letting go of the baggage they have gathered along the way, because it is Theirs.
You need to seriously look at what you are saying. You want to hold on to your previously held notions so badly that you are willing to forgive anyone else who would entertain it and succor your beliefs any transgression they would make. Think about it.
I wish you luck.
TF
@ Motley Fool
After stepping over your ramblings about wriggle room etc. I notice you would like to know what I consider proof.
If a person takes it upon themselves to discuss their acquisition of Gold and in which form, I would be inclined to believe in their words. I'm not interested (well I might be) in going around to their house and demanding I see it for myself because the question was only about why I personally think A/FOA are credible. I'm not interested in whether you find them credible or whether you find my answer credible because I don't read this blog because of you or anyone else. I find all the "one-upmanship" / "put-downs" and the "my knowledge is better than yours" in the comments tedious. I only read it now because it is FOFOA's blog. If you want me to engage in a conversation with you then open your own blog and I might visit it. Don't hold your breath though.
Motley Fool,
You are talking to an inveterate early adopter and ridiculously enthusiastic aficionado of change. So your (psycho)analysis misses the mark. I may have screwy motivations but those are not they. Metacognition is well up there in my list of virtues, so I will embrace any other suggestions you may have.
If I believed I could see drivers of petrified wood becoming the next SOV, despite its lack of a track record, I would embrace it. If I do not have a truly open mind, then I am deeply deluded on that point, since subjectively I cannot perceive any difficulty in trying out the various perspectives.
My willingness to forgive the "sins" of blog commenters is partly congenital - I am looking for the substance and generally hate intolerant orthodoxies - but much more than that it is born of desperation at the fact that there are really only two reasonably active fora of debate on precious metals that I can think of; one is monometallic with a tendency to be intolerant on that point and to refuse debate on the key points, while the other is distracted by conspiracy theories, gun culture and technical charting.
Because of this I think both are failing to grasp the actual "shape of things to come".
What I see is something similar to Freegold, but with other real assets - notably but not exclusively silver - playing an important part, and with more chaos, diversity and conflict. Something in which the Superorganism decides more and the "Giants" run scared.
This morning I posted my "google trends" research on freegoldandsilver - the response to this here was along the lines of "their opinion does not matter". "They" being the entire internet-using global public.
I would submit that "they" are the Superorganism, and the opinion of the Superorganism does matter. The flow of influence between Giants and the Superorganism is bidirectional.
ToTp
We do have differences of opinion.
The thing I am most interested in responding too in your last reply is this : "one is monometallic with a tendency to be intolerant on that point and to refuse debate on the key points"
Where you have stated your opinion in terms of difference (one blog post so far, where there was a 'promise' of many), I and others have discussed such. I disagree with your claim of our refusing debate, or the implication that we are closed minded.
Will other assets help preserving wealth once the current fiat system collapses? Of course, we never claimed otherwise. Will some assets change in function during such? We think so. Will all assets be affected the same? We think not. How will what things be affected?
The position offered here is clear. You are free to disagree, but not in such vague terms as 'something similar but different' paraphrased.
Also. Of course the opinion of the masses matter. Their still held opinion is the reason we are in this predicament to a large extent.
However. The few innovate, the masses follow. Their opinion will be shaped by the way things unfold, and here we have some insight into what is likely.
Why? Because most do not think about such things, and will simply react.
The Superorganism is simultaneously relevant and irrelevant for this reason.
TF
Ps. I can think of at least 10 or more distinct flavours of goldbuggery that I am aware of. Why you only reference freegold and tfmetals, as if they describe the entire universe of such I do not understand.
TOTP,
I generally quite enjoy your comments, what with you being a practicing linguist and all. And I sincerely welcome all attempts to understand our fate.
I also don't fault you for gratuitously hawking your blog. Everyone's got one, it seems.
I would, tough, humbly suggest that as you comment, you consider another ratio... that of content value to syllables.
Cheers
Dubai considers expanding existing physical flow into creation of spot gold market:
Just one tidbit:
"The move to introduce a spot gold contract is expected to further underpin Dubai’s growing importance in the global gold trade as almost a third of all the physical gold traded in the world passes through the emirate."
1 Possible spot gold contract trading
2. Futures market there no slouch already
spaul67,
Of course I don't think gold is 'all' you should have! Gold is only for the longer term needs on the MoE->SoV time continuum.
I think it is good practice to have a large stash of everyday necessities, and a cash reserve for maybe 6-12 months just in case...
Optimally gold is only for storage of excess wealth after the basic stuff has been taken care of. To skip some of your short term preparations to buy gold is a gamble IMHO. Maybe it will pay off, OTOH it could also punish you in the case you would have to sell some gold for food/rent/tax before the transition were complete...
So despite my alias, I actually don't mind holding well-managed paper for the short/medium term.
You lost me in that whole German gold <-> Drachmas <-> Olives fairy-tale. After reading FOFOA for many years, I have come to the conclusion that the Euro will be the primary MoE in Europe before, during and after the transition to Freegold.
I refer to the many pages of prior discussion on this blog to account for the apparent paradox that silver's industrial use is actually not an advantage regarding its potential as a SoV...
I'm not saying that it's wrong to hold a small amount of silver if that makes you sleep better at night, I just have doubt that it will be more effective in defending your gold, than say a stash of Euros...
Also, nearly everyone always talks about using silver to defend gold, NOT the other way around. What does that tell us about about silver's price potential in that "defending period" where we would perhaps need to sell it? If everyone else also needs to defend-sell in this period, I'm not sure that is bullish for the silver price...
Motley Fool,
Attempting brevity, you are as fair-minded as they come, but still see only infinitesimal possibilities. Please reference the other venues!
Byiam
Point taken. When the issues raised on my blog are effectively discussed here - not just parried - I will close it. This blog has not yet put silver to rest.
" This blog has not yet put silver to rest.
It has for me.
As one who sought to understand "why not silver", when I was convinced that it was simply the little brother of gold, this new understanding came about, not in contemplating silver, but in understanding "why only gold".
You may as well ask, why not SDR's, or why not Bitcoin's. You may as well ask, why not oil, or why not real estate.
It is in understanding freegold that one truly comes to understand "why not silver" or anything else.
TOTP, silver has been put to rest for many here, myself include. I, like FOFOA, and others have a little, but just a little ratio-wise. Per BF above, there are other immediate necessities
one should at least consider stashing, but for me gold is the SOV par excellence.
I read all the blogs, most for pure fantasy enjoyment ( love me some Jim Willie for Hunter S Thompson gonzo journalism; a few reasonable takes mixed with some acid-trip "insights" )
The problem with most blogs is the signal to noise ratio, but I have a pretty quick filter so better than watching TV in any case.
Best of luck with your blog.
Pat,
Thanks for the good wishes. It is good to know who is satisfied with the silver coverage.
Anyone,
If a given bar 'lies very still' for a hundred years, does it, in terms of influencing price, exist?
If not, how does the high stock to flow ratio transmit to price?
I've been thinking about how to answer the question, of if I find Another & FOA credible. I'm not sure that I can say yes. It has been a long time since I read the archives, so I'm taking the opportunity to re-read them with a fresh perspective. By the time I finish them, I'm sure several more posts will be up and this topic will be long gone, so I figure I'll post now.
The main points I took away from Another and FOA were the links between oil and gold, and the unsustainability of the paper gold market. Other than the obvious timing issues, I don't know of any evidence that refutes their stories, but I also haven't really spent the time to try to find much evidence either way. So I am aware of their stories, and believe that they are a possible explanation for the current oil/gold/currency interactions, but I can't say that I accept them as fact.
One other difference between me and I think the vast majority of the people here is that I did not come to this site via the hard-money community. The sites that Another and FOA were posting to were the primary gold forums of their time, and I believe the audience was made up of gold bugs and other believers in hard money, Austrian economics, etc. People who had a special place in their hearts for gold before Another/FOA came along. I am not one of those people. Instead, I'm reading these archives and the discussions here from the mainstream Keynsian point of view.
I'm in full agreement that it's a mistake to view fiat currency as a viable place for long-term savings, and that gold is by far the best alternative. I agree with most of what's discussed here, and I have learned a lot from reading along, but I don't have quite the same conviction for gold that is held by most here, and I don't think that the messages from Another/FOA speak to me in the same way as a result.
TOTP, I'll try a wee brain answer while we await others ( very good question by the way ).
The first thing that occurs to me that all the gold ever mined ( and to be mined for that matter ) is finite. So every bar withheld from sale limits the available flow, and should in theory raise the price in a steady-state demand environment. Raise even higher when demand goes up, maybe have no/little impact when demand goes down. Obviously not taking about one given bar, but all gold held off market to make a measurable difference.
Said another way, if there is less gold bidding on dollars, the "price" is higher.
This is all distorted today as we have a non-pure physical market, with "gold-like" derivatives diluting immensely the above simplistic scenario.
I guess the other distortion is the recent, in broad timelines, acceptance of debt as payment in full ( for certain producers, not for the smart ones ), being "good as gold".
TOTP: Forgive my banal vernacular but when you said, "When the issues raised on my blog are effectively discussed here - not just parried - I will close it" for a moment I thought this forum existed because you were present but if my 'being' is dependent on your observations then I will continually hope in the background that your forward progress is aided.
TOTP,
For my part your comments are welcome here. The point I was trying to make in my sideways (sorry) comment last night was mainly: Have you RTFB?
FOFOA " You see, the very key to understanding Freegold may actually lie in understanding the difference between gold and silver with regard to their commodity versus monetary wealth reserve functions."
This is from a 2010 post called "Focal Point: Gold."
http://fofoa.blogspot.com/2010/12/focal-point-gold.html
How is it possible for this blog to "put silver to rest" to your satisfaction if you haven't read it?
Indenture said,
"Anyone have a metaphor for what the Fed is doing with the ball of string here
http://www.zerohedge.com/news/2013-02-09/feds-bailout-europe-continues-record-237-billion-injected-foreign-banks-past-month"
I wondered about this article, too. Does anyone understand what is going on with this fed action?
Cheers
@Tyrannyofthepresent
I really don’t know how to predict where any government will draw the line when the chips are down.
I guess it will depend upon whatever the complex interaction of stupidity and desperation is near you. What happens in the USA could be very different than India or Germany for example, especially during the transition period from now to Freegold.
In the past ‘some’ governments allowed shrimps to hold on to some gold, wedding rings and/or collector pieces that have a significant value above their melt value. If I remember right citizens in the USA were allowed 5 oz per person even during FDRs unconstitutional crime wave in order to cover this. Above 5 oz and you were deemed to be more of a gold investors than just the typical shrimp. Silver wasn’t touched BTW and rarely is, important safety tip.
Regardless, there is only one person in the USA that was brought up on charges for not obeying what was clear an unconstitutional law, the charge was dismissed in the end. Given how many gold coins still exist from this era, the level of non-conformance must have been very high among those that didn’t keep their gold in the banking system, another important safety tip.
The simple fact is nothing is safe from an unaccountable unconstitutional unconstrained government. Your Life, Liberty and Property all need to fought for and then reestablished anew.
“That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it.”
@burningfiat
I think we are closer in thinking than it would appear; though I would put the cash out to about 2 months max and the balance of SHTF money in silver. All excess as you say goes into gold. It goes without saying that you should be self-sufficient for an extended period of time as well so none of your PMs need to be deployed. The longer you can sit tight the better the return. The is key not to sell your gold or have your paper burning all around you from hyper-inflation. That in my mind leaves silver as the logical SHTF SoV. Even now very few shrimps have silver or even two weeks of food for that matter.
“I have come to the conclusion that the Euro will be the primary MoE in Europe before, during and after the transition to Freegold.”
I’m on the fence with regards to the Euro. As long is the Euro is a claim check for gold it will survive even though the nations using it for currency will break away from it one by one IMHO and go back to their former national currencies. The Euro as designed is still hard money, and socialism hates hard money with a passion. To get around this significant amounts of Euro debt has been issued and yet all Euro debt will burn in the end or the Euro will be decoupled from gold and printed into oblivion in an attempt to save the ponzi scheme, take your pick. The best case scenario is that ‘only’ physical Euro notes will be a claim check on gold. I as a lowly shrimp would rather just hold the gold all things considered. Why have claim check for gold when you can just have the gold. Especially true at these low interest rates.
The simple fact is that nations of Europe are ‘not’ I repeat ‘not’ one nation and will never be short of a dictatorship the likes of which held Yugoslavia together for a time only on a much larger scale. The second the boot was lifted from their throats they broke apart and promptly started to kill each other.
spaul67,
Maybe our thinking are close in some areas (e.g. importance of preparedness).
In others we are seemingly planets apart.
As long is the Euro is a claim check for gold
This is really far from the Freegold PoV...
The euro, probably more than any other currency, represents the mutual confidence at the heart of our community. It is the first currency that has not only severed its link to gold, but also its link to the nation-state. It is not backed by the durability of the metal or by the authority of the state. Indeed, what Sir Thomas More said of gold five hundred years ago – that it was made for men and that it had its value by them – applies very well to the euro. - Duisenberg (ECB prez), 2002
I will ask you to please read Euro Gold (or explain your view of the Euro as hard money in a better way), and then let us discuss again.
Knotty Pine,
Thanks for the link to "Focal point gold". I read it several times prior to first referencing it on my blog last November, and have read it again a couple of times since then, since it is apposite to the discussion on silver. I disagree with it.
I have not read all the comments on the blog but I have read all the FOFOA posts I think, many of them twice or three times, and everything from Another and FOA (some of it quite quickly). Everything relating to silver (my main area of interest in this blog, since it is a major disagreement) I have read five or six times I would guess.
Indenture,
Through your comment, for which I thank you, the purpose of this blog (to promulgate Freegold) - and of mine (to attempt its reconciliation with bimetallism) all saw their quantum states resolved.
Spaul67,
Many thanks for that. In the UK I am simply expecting the capital gains tax exemption for sovereigns to be removed, and CGT may generally be raised. In the US, just as you say. In European countries possibly more wealth taxes and the usual evasion.
Pat,
If a bar "lying still" affects the flow, it must be close to the offer stack (it must be for sale at close to the current price".
The idea that gold "lies still" and especially the narrative around "oil" suggests that the gold will not be offered close to the offer stack. It is lying very still. So it does not affect the flow. So its contribution to the stock to flow ratio is zero. So the stock to flow ratio theory is incorrect.
In this case, what matters in a given year is the shape and size of the bid and offer stack down to the minimum price that year and up to the maximum price that year. The rest of the gold effectively does not exist.
So much for the stock to flow ratio.
PS Pat,
This applies obviously only prior to HI. But the arguments made concerning the stock to flow ratio and the gold price use dollar-era data.
The bid and offer stacks for gold to other commodity ratios during and after a hyperinflation are a matter of supposition at present, will depend on many other political and socioeconomic factors, and will most probably vary regionally (resulting in arbitrage flows as FOFOA has often pointed out).
TOTP,
I'll have a swing at that stock to flow question.
You said, "If a given bar 'lies very still' for a hundred years, does it, in terms of influencing price, exist?"
In terms of influencing price, I suppose in one sense it would not. But to think of it that way is missing the critical point, I think.
The stock to flow ratio of gold is important in relation to supply and demand. If 100 times the amount of wheat is grown in a year than is demanded by the marketplace (okay, not realistic, but just go with it), the price would plummet. That's because the growers of the wheat need to sell all of that wheat to earn their living.
The holders of all of that "still" gold don't need to sell. Only dishoarding savers and miners need to sell their gold. So, gold has a teeny, skinny bid and offer stack, precisely because of all that still gold. So, in that sense, the price is affected after all.
At least that's how I understand it.
Cheers
"Those Revolutionary Days" - holy cow, what a masterpiece Tejo Bolten wrote in 2007, full of passion!
http://www.mecano.ws/
BR,
KG
ByiamBYoung,
Thanks for that. In my view the durability of gold and silver eliminate the significance of metal outside the stack to price. So the marginal bar far outside the stack means nothing. So gold has no advantage over silver on grounds of the stock to flow ratio. Variable demand does give gold an advantage - currently enhanced due to silver's low price induced industrial popularity. But the stock to flow ratio differential confers no advantage.
TOTP,
Ah, now I see where you are headed. I think that the far bars are meaningful in your context this way:
Because of such a high stock to flow ratio, gold is in essence "dug in" as the supreme SOV. Like a golden plant with a very deep tap root, versus the rather moss-like silver plant with more shallow roots. One will endure more reliably.
Which do you think it would be?
Cheers
By the way ToTP,
I noticed, and quite enjoy, your recent tamping down of the swirling mists of words.
At risk of appearing to be a word hater, a particular rub of mine is the word "apposite," which to us unwashed looks like a typo :D
I do, though, sincerely acknowledge your command of the written word. Props. I'm just a bit more colloquial.
Cheers!
For all the physical gold lying still, thus representing "stock", it's primary importance is that cumulatively it increases by about the same small percent each year.
Physical gold stock to physical gold flow is one thing. Physical gold stock to physical and paper gold flow is another (there is no paper gold "stock" it is the leveraged flow of the physical).
If one is referencing the current "price" discovery system (for what it matters) paper must be added into the stock to flow ratio, thus making the stock exceedingly rare and growing exceeding slow. Yes, brother Young, quite a supply and demand dilemma.
I do recall Another commenting upon how the "great minds" of his time thought to increase this % of mining production (through better price and tech efficiencies?) but the age old yearly average still prevails despite the runaway paper game (something like that).
IMHO a run on physical may shake loose a few more bars that lied still for a long time just trying to get where they belong. Like the HI of the dollar, that run is well underway.
When the music stops, the stacks of tons on each chair score the new system. The paper counts for zero.
I think the music has been playing for quite a while, that is the continuing current flow. But I think the question here is, why be concerned about the curreent price discovery system? It is flawed, that is the point, besides the fact of how small the bid/offer "stack" is, because there is a runaway percentage of paper affecting "price" that simply burns in the end.
Maybe there's a different point I'm missing ???
Perhaps to be more precise ...
If one is referencing the current "price" discovery system (for what it matters) paper must be added into the stock to flow ratio, thus making the PHYSICAL stock exceedingly rare and growing exceeding slow, WHILE THE PAPER STOCK BECOMES EXCEEDINGLY COMMON AND GROWING RAPIDLY.
Plug this into "stock to flow" in terms of price discovery.
WIl,
"But I think the question here is, why be concerned about the current price discovery system? It is flawed, that is the point, besides the fact of how small the bid/offer "stack" is, because there is a runaway percentage of paper affecting "price" that simply burns in the end."
Very compelling, indeed. In fact, (gulp!) apposite.
Cheers,
Brother Young
Brother Wil,
Golden Eagle make large shadow on fiat scrub-bush in valley of fleeting wealth.
May your loinsack be full of non-fiat wampum.
Cheers,
Brother Young
Russian crude bids for oil.
I do see gasoline prices in my city rising in recent weeks to what is probably a record high for this time of year, around $3.52/gallon.
I wonder if gas at $4.50 to $7.50/gal. (and relative industrial costs) in the U.S. (and relative currency increases elsewhere) could ignite a dollar crisis?
$10.00 gallon ??
Brother Young,
When happy cloud from peace pipe escapes wigwam and many squaw seek the warmth of gold, your shadow will stand long and tall against the setting red sun.
Brother Wil
Squaws- an excellent (short-term) store of value.
Yes ... risk of counter party claim. As you say a (short term) trade more often than not, though there's always that rare store of value.
That one you do hope to "lie still" with.
;0)
Or not so still, but that's probably another blog... :D
@Tyrannyofthepresent
I suspect that the degree of self-sufficiency in critical goods, central bank gold and mining rate will play an important role on just how aggressive various nations get with regards to their citizens gold and the pace at which the finally adopt Freegold and step away from the ponzi scheme.
Some may think they can force a sale at an elevated shrimp price of say 5K/oz and then use it clear trade at 50K/oz. We have had any number of two tier gold price systems for almost hundred years now; perhaps the TPTB will just morph into some other variant of that? Other nations may choose to dispense with all the games and just unleash their citizens gold resulting in ever increase fiat/oz rates until the trade flow reverses.
Keep in mind that Freegold ends the Ponzi scheme that has been used as a hidden tax for over a century on net producers the world over. Gold will now be outside their ability to steal without disrupting critical trade flows. I suspect those suckling on the tit of socialism won’t go quietly in to that good night as Freegold sets up a whole new state of affairs between individuals and nations. It’s the dream of every net producer and therefore a nightmare for all parasites.
In the end everyone will be better for it, both individuals and nations; as trade flows and lifestyles will once again be coupled to hard work, innovation, productivity and natural advantages.
Another thought about credibility (two meanings there) ... it is the credibility of Freegold that makes A/FOA credible.
A and FOA no doubt held significant physical, and what they had to say did serve a certain self interest. But they were not "selling anything" in the sense that they needed their audience to "buy their ideas" as in a "made off" with your wealth SCAM.
And I think that is what is beautiful about Freegold (which in turn lends credibility to A/FOA). It is one of the only things in this world in that when you turn others on to it, it helps them as much as you.
The inevitability of Freegold, from a historical perspective, was never the question, only the timing.
But what a beautiful thing it is to be able help people understand that we are all in this solution together, vs. the solution of letting politics decide worth ... that we can all be protected from the coming paper inferno by simply saving in the right medium, rather than by betting paper against one another, one man's gain always at the expense of another's loss.
Yes spaul, I do see meritocracy as a religion worth preaching against this long, dark season of political witchcraft.
And I think further proof of the above lies in the very attitudes here. Yes, we all have a vested interest in Freegold, yet ... with a very few odd exceptions ... no one here feels compelled to jam it down anyone elses throat.
At least that is what I sense. When it is time, it will come, and if you have seen the inevitability of it enough to act, we'll all be able to buy another round or two.
So Cheers!
TOTP:
On the Surface Stock to Flow ratio gives no advantage to gold, but if you look at why the stock to flow ratio exists, yes there are enormous advantages.
The precise reason why Giants would prefer gold over silver is the vastly different storage needs, exactly 50 times of it :-).
When we come to normal people, yes the same 50X still applies. 100gm gold chain is easier to store, while a 5Kg bucket more difficult to store.
This is why people have been storing gold as a store of wealth. Silver is just not in the same ballpark.
The only point that matters is whether Silver will continue to act as the smaller store of wealth.
Lots of people have been storing silver to use during the crisis. What happens when the crisis comes, we will be flooded with silver, and not a single person buying it :-). The price of silver will plummet vastly.
Gold has always been the last to be sold. The same will apply in the crisis also. Lots more gold will be sold still, but there will be people buying it. Precisely because giants will want to get more of it. Currently they are not buying because it destabilizes the system. After the system is already crashed there will be no such restraint.
Just think why gold has such a high stock to flow ratio. It is not the stock to flow ratio that gives it the advantage. It is the advantage that gives it the high stock to flow ratio. The advantage is the minimum storage cost. Nothing else beats that aspect of gold.
I have had difficulty understanding A/FOA. They write their stuff in a very concise manner. For me who does not really understand the basics of these things its very difficult to understand. So I cannot really comment on their credibility.
FOFOA on the other hand I can understand readily, and it makes a lot of sense. I wasn't very impressed with Gold Standard, when I learnt of it. I was already aware of the Dollar Standard's problems. FOFOA provides a third way which to me makes complete sense. I also like the absence of conspiracy theories. This makes FOFOA very credible. Since FOFOA says that all this comes from A/FOA, this would impart credibility to them as well.
I am probably much easily swayed, but I get swayed by logic, not by authority. So I would give nearly similar weight-age to an anonymous blogger and to a widely known person. I might not come across the anonymous person though :-).
I have been thinking a lot about the end game. That is what I am basically interested in. Not the past not the future, but the end game. Past is only useful for learning. The future is pretty clear, as defined by Freegold. The murky part is the end game :-). And that is the part that affects us the most.
I think that we are still away from the final bubble. The bubble in currencies. Yes the currencies cannot rise all at once. But USD is the currency that should rise, because it is still the currency in which the majority of traders are looking for nominal or better performance.
There should come a time when traders get panicked out of their sovereign debts, and into currencies. This would probably happen when Japan or UK start to lose their currencies, due to high inflation. When their debt would start failing to perform nominally in USD terms.
Then these traders will move into USD, Euro, and other safer currencies. But these countries will not be able to accept the appreciation of their currencies, and will resort to printing, like Euro is going to do currently.
There are still two currencies that will not have such problems, paper gold and paper silver. These should rise pretty fast at this time. Silver much more than gold, owing to the smaller capitalization.
But there is only so much money that will go into gold and silver, and the very fast rise will stop at some level. At that point traders will realize that they have got the top. And they will try to encash. At this point the gold and silver will both crash, below the production costs, just like FOFOA predicts.
There will be a discontinuity at this point and physical will disappear from the market, and the gold will need to be revalued.
If I am to guess what the peak would be at the high point before the crash, I would think 2-3X. After the crash it should revalue to somewhere around 5-6X. And start its rise from there.
What do you think about it? Does it make sense?
Anand,
I agree with you that "Stock to Flow ratio gives no advantage to gold". This is an important point. If it is true, it should always be made clear. No advantage from there.
You refer to storage needs. This is a circular argument and supports positive feedback: if the GSR drops, the relative compactness of gold will deteriorate.
You said that "silver is not in the same ballpark" but I am currently writing about jewellery substitution. The biggest UK high street jeweller, which has basically just substituted silver covered with 10% 9 carat gold for three-quarters of its nine-carat gold range in stores. People want something that weighs a few grams and costs under £100 and this is causing substitution since 9 carat gold no longer allows jewellers to deliver that and make a profit. I am going to investigate this phenomenon which I guess is happening all over the West (apparently it started in the USA). It is called "bonded gold". I would expect it to continue and intensify.
You said:
"Lots of people have been storing silver to use during the crisis. What happens when the crisis comes, we will be flooded with silver, and not a single person buying it :-)."
I would characterise this as a belief about a future event. I cannot see the drivers of such an event and do not expect it to happen as you described.
Many thanks for responding.
byiamBYoung,
You said:
"Because of such a high stock to flow ratio, gold is in essence "dug in" as the supreme SOV. Like a golden plant with a very deep tap root, versus the rather moss-like silver plant with more shallow roots. One will endure more reliably."
I think it is interesting that you began using metaphor at this point. Once the mechanistic discussion of transmission from the stock to flow ratio to the price reveals that there is no mechanism, what is left is essentially a qualitative belief. We are both entitled to those, but they are obviously less deterministic and it becomes important whether others share them (hence my emphasis on cultural salience).
Totp
"If a given bar 'lies very still' for a hundred years, does it, in terms of influencing price, exist?"
Yes.
TF
Oh...and "If a bar "lying still" affects the flow, it must be close to the offer stack (it must be for sale at close to the current price"
No.
Anand,
They won't just run out of sovereign debt will they? Other investments won't look good, either. That's another reason to print and save those investments. Front lawn dump!
FOFOA: A spiking demand for currency because of instability in some markets and the economy, as well as earthquakes and unrest in the Middle East, jacks up the price on the currency exchange and drops the price of other assets which is instantly met with quantitative printing (supply increases) to ease the pain, raise the price of assets, and recklessly counter that which is actually in the driver's seat today, demand.
[...]
If the financial system collapsed tonight and wiped out everyone's assets, their 401Ks and IRAs, their pension and trust funds, the US dollar would spike on the currency exchange like never before. I could imagine it rising well above 100 on the USDX, maybe even to 150, as all that financial sludge frantically unwinds. As you say, many will simply be wiped out as much lower valuations are imputed onto their 401Ks. They will never see it coming; never get the chance to withdraw that retirement money and use it to bid up real goods. So what? Do you really believe this will cause the dollar's purchasing power to rise?
What do you think will be the Fed's response? I'll tell you. It will make sure that the supply of dollars matches the demand. It will do another emergency $500 billion swap with foreign CBs to calm the foreign exchange market. It will expand its balance sheet once again to make sure there is plenty of liquidity here at home. And it will start buying whatever crap the primary dealers bring to its window. It will flood the markets with fresh Fed liabilities (obligations to print more cash) in a futile attempt to quell demand as the dollar goes to 100, 110, 120… up, up and away.
But no matter what quantity of financial assets are wiped out, the cash in the system will remain. And the obligations for more cash printing will remain. And that's all the cash it will take to spark the most amazing hyperinflation the world has ever seen, as the fear turns from 'running out of dollars' to 'running out of food' in the wake of a devastating financial collapse."
TOTP
The storage needs argument is not circular, it does create a virtuous cycle. We only talk about both presently in the same way because both are linked to paper. In the paper world storage differences do not matter. If paper market disappeared, the difference will become clear as day.
If gold becomes too expensive, yes it will not be used for jewelry, but then people will start to store coins. The coming revaluation will show the difference between the two very clearly and nobody then would be stupid enough to store anything substantial in silver.
The important thing is what happens during this crisis. Later things will definitely change. But by that time Gold would have taken up so much of mind share that it might be difficult to overcome.
Also remember that the majority of investments will come from giants. The people who cannot afford gold will always be a very small minority.
Indians import only 5 times as much silver by weight, but 10 times as much gold by currency. And India is comparatively a poor nation.
Motley Fool,
Many thanks for your brief answers. Would you mind outlining the mechanism for me? Thank you.
Anand,
Indeed, the argument is not circular, but the situations are circular (positive feedback).
If the GSR declines, the relative difficulty of storing silver is reduced, which will tend to make it more attractive as a stored asset and lower the GSR.
If the GSR rises, the relative difficulty of storing silver is increased, which will tend to make it more attractive as a stored asset and raise the GSR.
These are both circular, self-promoting "positive feedback" mechanisms. That is what I meant.
Anand,
I very much liked your comment:
"by that time Gold would have taken up so much of mind share that it might be difficult to overcome."
This is very important. "Mind share", or the attention of the Superorganism, trumps everything else. A lot more work needs to be done on actually observing and calculating, rather than simply guessing and speculating, how that "mind share" is evolving as the present goes into the future. My Google Trends research elsewhere is a tiny tentative step in that direction.
Anand,
Please excuse my typo. Silver is LESS attractive as a stored asset on wealth density grounds as the GSR rises. Although possibly MORE attractive on value/arbitrage grounds, depending on perceived future stable GSR in the mind of the decider.
TOTP
That is what we are doing here. Trying to predict how the superorganism will evolve. Given the current status, its highly unlikely that Silver will amount to anything. This has been dealt before on this blog. There are benefits to reading the comments :-).
Tyranny,
I just had a silly image in my head of all those giants (including CB's) sitting there in front of a monitor and watching the GSR for the next target-price at which to trade out of gold and into silver!
BTW, good idea with that Freegold n'silver blog of yours. Perhaps we can move most of the silver/GSR-related discussion there...
TOTP:
You are thinking like a trader. The future of store of wealth will not be decided by traders. So stop thinking like a trader and start thinking like a giant.
TOTP,
Here's my point, without the metaphor:
So many powerful holders of vast wealth, along with countless holders of more modest savings, again combined with the world's central banks, all have decided long ago that gold is the SOV that they will hold.
Nothing else matters. The world works this way. Regardless of how badly you or anyone else wants silver to be the preferred store of wealth, the contest is concluded. Gold won.
An event or series of events that would incite everyone to dishoard their gold and swap it fo silver is inconceivable.
Yes, some may save in silver. Some may save in deck chairs. The real money is now, and will be in the future, stored in gold.
Cheers
By the way, TOTP,
http://www.bloomberg.com/news/2013-02-10/putin-turns-black-gold-into-bullion-as-russia-out-buys-world.html
That wasn't 570 metric tons of silver old Vlad bought. A snippet from the article:
“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,”
-Evgeny Fedorov, member of Russia's lower house of Parliament
That's a glimpse at the tap root.
Cheers
Anand,
Thanks, I shall be watching the comments for updates on the thoughts of the Superorganism. But I shall also ask around as before.
Byiam,
That was a buy. The tap root and the mossy tendrils are supposed to consist of untraded metal.
I do not want silver to be the preferred metal, I just expect it to be one of the two metals. I am perfectly happy for it to be petrified wood, as discussed with Knotty. There is little point pretending to expect something I do not expect.
Burningfiat,
Yes, the computer screen is comical. And scary, if as I suspect it is a reality. Let us hope Hugo continues to fail in Mexico and the Malaysians (and all the other Dinar and Dirhamites - that pesky bimetallic religion) never allow the former Prime Minister back into the room. The 100x smaller market with its 30x stock to flow could not take it.
http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=199
totp
outlining?
gold values fiat.
it not moving is value not given to fiat.
it being allocated as wealth and not being unallocated for a long time means it has not changed in function for the owner, and this owner has not needed to allocate other currency to this function, taking other gold off market.
which bar am I selling if I have 100 bars? The first, the last, is there a difference? If I sell no bars is it because I find my holding without value? If the price rises and I still do not sell, what does it tell you of my opinion of fiat and the likely future value of my bar?
gold values fiat.
If I have enough gold and the price rises, do I sell some, only to then not have enough gold?
what is the purpose of wealth/excess savings?
do I sell my castles to go on holiday if I am still a super-producer?
...
"integration of silver into a Freegold paradigm"
-1
awwwww....
MF,
what you neglect is that besides SoV, Gold is also a women jewelry commodity. At least for far more than last 50yrs in the west, so probably far more than >>40% of total stock lies around in old grandma's bedside locker waiting for her death to be sold regardless of price by her daughter for some holiday vacation or mortgage payment.
BTW what happend to the stash of Walter Samasko Jr.? Bet, his cousin is still partying.
Until all golden grandma's are gone, lot's of scrap to enter the market.
Motley Fool,
You asked a philosophical question:
"what is the purpose of wealth/excess savings?"
so I will ask one:
If a bar of gold (or a bar of silver, for that matter) is not offered in the market, where is its value?
But it was rhetorical, so I will answer it: in the mind of the owner.
So let us leave aside all these stocks and flows; we are in fact just chasing wealth psychology.
And whence our certainty on wealth psychology?
From the writings of one Arab and one American. See elsewhere for the Google Trends research. Even billionaire wealth psychology could probably be properly polled if we wished. We are deceiving ourselves with all this "certainty".
Milamber-
My dirty smelly slippers are valued by me tremendously because they have the hair of my favorite dog who died 5 years ago on them. Do you value them like I do?
AD,
I posted an update on Mr Samasko in a prior thread.
Your view of the west selling through Cash4gold may be correct. How long has that selling been going on, and how much is left to sell? IMO most who wanted to sell would have; also with the price stagnant to falling, the rising price isn't a driver any longer.
The eastern wives of course, don't seem to sell into a rising price.
Motley Fool,
PS: on "gold values..."
Wrong.
People value gold. People value fiat.
People value petrified wood.
ALL value is in the human mind.
The rest is mythology.
Jeff,
"gold" at a major shopping centre in the UK yesterday was mostly 3.75% gold, 83.25% silver, remainder other. I counted the offers and did the calculations.
If this continues, expect impaired jewellery sales imminently, followed by impaired scrap supplies - at least in this neck of the woods.
Three point seven five percent. Still yellow.
People certainly do like deceiving themselves (yes, I know, me too).
TOTP,
If a tree falls in the forest and no one hears it ... it still fell.
The psychology of wealth lies in the universal understanding and acceptance of gold as true wealth.
If oil did not consider gold to be true wealth, if giants did not consider gold to be true wealth, if sovereigns did not consider gold to be true wealth, if emerging markets did not consider gold to be true wealth, then ... something else would do.
But sovereigns, oil, emerging 3rd worlds and giants did not all (to my understanding) secretly "stick it" to, say, China, with "worthless relic gold" in order to "come out on top" with silver ... or hairy dog slippers. Or cold fusion.
It is indeed good to leave aside consideration of stocks and flows (especially of paper gold) and we are indeed agreeing upon (if perhaps not still chasing) a "wealth pyschology".
Wherein lies the certainty of that wealth psychology?
Bernanke will say "tradition", governments will say "sovereignty", oil will say "sustainability", giants will say "heritage" 3rd worlds will say "insurance" but all these psycholgical reasons do point to gold.
Or as Cheif YOUNG Bear say:
"Even white man in distant lands sees Golden Eagle soaring high above black pit of fire mud."
(Great eagle always soars AWAY from flow of black mud river)
@JOJO
No.
FOFOA:
“Your wealth includes all of your owned possessions, from the air you breathe down to your comfy, worn-out slippers. Value is subjective—it's in the eye of the beholder. “
Now go try and use your slippers to balance out international trade and the BOP structure and let me know how that goes (smile).
How do govt’s & CB’s value gold without using its currency price in order to settle trade disparities? Doesn’t that (by definition) mean that price is used to assess value in the marketplace?
In rereading the blog & archives over the weekend, I feel like I am going in a circle in regards to gold being valued intrinsically because humans value it & gold being used as the unseen master because it can be priced at whatever price it needs be in order to balance trade or rise to whatever the ultimate level of the final front lawn dump will turn out to be.
As it relates to gold, as I try and define the difference between the objective (price) and the subjective (value), I am not seeing how the former doesn’t define the latter in the marketplace.
Milamber
TOTP,
Impaired gold is relatively easy to refine, and as pure gold is removed from the chattel it is only pure gold that makes it to wprld class wealth reserve status.
(reason number 452 for why gold is the preferred psychological reference point for wealth reserve asset)
The entire point of freegold, as it relates to these self deceptions we all fall prey to, is that the dollar, as a global wealth reserve asset, is the grand self deception of the ages.
Such deceptions will be eliminated, as are all other adulterations of gold (or silver for that matter). When value is finally measured, the truth will out.
And it will no longer be a "psychological illusion" as paper wealth is today.
Milamber,
The former is an illusion, that latter waits to unfold.
The way price is discovered WILL change, and with it the way the latter is defined.
It is paper that clouds the way ... paper that will burn.
And finally, value is subjective to the individual. It is universal to the superorganism.
Wil,
I really enjoyed almost all your comments above, and the world view to which they testify.
Another joy today has been my review of
http://fofoa.blogspot.co.uk/2009/03/some-thoughts-from-foa.html
and most especially the comments by FOFOA and a number of sceptics on my favourite subject.
The atmosphere on this blog has evolved since early 2009. At that time extreme GSRs were confidently starting to be bandied about, but in a more diffident, uncertain and frankly charming atmosphere.
The 50 cent idea from FOA "as gold passes its first grand" - it had just nudged the grand twice at thirty times that when that debate took place - did not do very well in the commentary. FOFOA defended his own ideas modestly and courteously, no-one was mocked, and the co-heir status of silver got a very good hearing and came out of it pretty much evens.
It is a post and commentary that I had missed, so thanks to all who participated (if any of you are still around). Such things are timeless so I couldn't really care less if it doesn't happen in 2013.
"Value is subjective to the individual. It is universal to the superorganism."
NICE!
(but, but I like silver so it must be included because I am part of the organism:)
Wil,
PS: I was unclear; by "impaired" I meant reduced in volume. So the pressure on the physical gold market - of great concern here I believe - will be alleviated for a while if the pattern is being reproduced across the Western world, while scrap will still be arriving from the 9 ct era. Meanwhile the pressure on the physical silver market will be exacerbated.
In a few years the only gold scrap arriving will be from now-ish, so the supply of physical gold from scrap will be impaired (in volume) at that time, pressuring the market.
All this is assuming that the volumes of jewellery gold sales and scrap from Western countries are significant - and I have not done those calculations.
TotP: I don't know what you would count as significant, but here's a little scrap(!) of info just to give you a number to work with. Boliden, by far the biggest gold refiner in Sweden, produces about 15 tonnes of gold every year. Of these, 10 tonnes are from recycled electronic scrap (and the rest from mining, of course). Now Sweden is usually world-leading in all kinds of recycling, and I would expect in this area too, so the numbers may not be representative of Europe or the Western world in general. But still - if nine million Swedes can squeeze out ten tonnes of scrap gold every year, then at least the potential if not the actual amount of scrap gold from the West should be fairly considerable. And that doesn't even include jewellery and the like.
@ Will
So when the paper gold markets implode, and the current BOP trade settlement scheme of buying (and hedging) ever increasing amounts of US debt is radically altered, we will arrive at a new price of physical gold of let’s say around $50K/oz.
Won’t the individuals that make up the superorganism use that objective price information to reassess the value they place on (physical) gold?
And paper will burn as a SoV, but not as a MoE, correct? FIAT (electronic or paper) will still be used to conduct day to day transactions and for those that hold (physical) gold and can trade it for said FIAT, won’t they be making a subjective determination that the objective price that they are receiving for their gold is a good value?
I think that FOFOA has already answered my question (noun, verb and direction), I just have to take some more time to wrap my head around it.
Milamber
GSR?
FWIW - I think it's important to understand that technically and fundamentally (IMHO), Ag has potential to outperform Au "in this-here current(cy) environment".
MY Silver(for trading) ...and MY Gold (as a SoV)are incomparable ie: Perception of MY Ag is "price" dependent ...whereas that of MY Au isn't.
The GSR uses "currency" as the unquestioned common denominator ...whereas most of what is discussed here questions the validity of same ...that seems rather odd to me.
I fully expect Ag to "outperform" Au as the current system unwinds and she (Aggie) will be the great "trade" going down - IMHO.
"If a bar of gold (or a bar of silver, for that matter) is not offered in the market, where is its value?
But it was rhetorical, so I will answer it: in the mind of the owner."
Well that is plainly incomplete. Because if you were to ask any other person about the value of that bar they would have some opinion...and I do not think single one would opine it to be worthless.
As jojo pointed out, gold is not old slippers.
"ALL value is in the human mind."
I will go along with this. Inanimate things cannot act.
@AD
We have recently been discussing scrap flows, and their apparent relative decline.
TF
I linked an article sometime back that had the annual world total scrap gold at 1650 tonnes. And I recall the point of the article was that gold production visa scrap is waning worldwide.
Cheers
Milamber, if I may. After the reset, there will be actors who want to buy something, and will gladly trade in some gold for fiat, but only to use the currency to then buy what they want- land, cars, young pussy ( OK strike that ).
So the subjectivity to be towards the end purchase, not the medium of exchange fiat.
Word around my parts of USA is that no one comes in to sell their gold anymore. I see barely any signs out by the road sayin CASH 4 GOLD where a year ago, really ever since 07-08, they were ubiquitous.
Their radio spots, also ubiquitous.
Today, seemingly no more radio (at least I haven't heard one in ages).
No more mope in some animal costume out by the road waving his "cash 4 gold" sign.
2 months ago when I went to trade out most of my remaining silver I took all the gold he had available and he was lamenting trying to get more.
These are just my observations.
Talking about scrap gold though....isn't that the mark of a shrimp?
Do Giants consider or even think of scrap?
Pat,
What's wrong with young pussy?
I apologize I did not want to lower the level of discourse here. My wife and I discovered Louis C.K.'s show, Louie, on Netflix last night and watched first 5 episodes. That's my excuse, poor as it may be.
One Bad Adder,
"The GSR uses "currency" as the unquestioned common denominator ...whereas most of what is discussed here questions the validity of same ...that seems rather odd to me."
I can trade one gold for fifty-two silver or vice versa. Where is the currency? I must be missing something.
If I do it in the coin shop they may riffle some papers around with currency symbols on them (and give me a worse ratio) but what do I care? If not, then not.
Börjesson,
Thanks for that, you can certainly extrapolate that up with a population multiplier (< 1, since as you said Sweden is exemplary)...
Cheers.
Motley Fool,
You are right.
The value of that bar has two drivers:
1) The value attached to it by its owner
2) The value attached to it (in abstract, if they do not know of its existence) by others. I would submit that this is largely composed of their perception of the value attached to it by the Superorganism as a whole and to their ideas about gold in general.
These are very soft mechanisms.
They make Giant holders at least partly dependent on non-Giant Superorganism participants (pro rata according to their aggregate wealth?) for part of the resulting value.
Bonus question: does the Superorganism know enough about the stock-to-flow ratio to value the gold because of that ratio? (tip: Google searches for that idea mostly just come back right to this blog)
Or do they have a complex cultural, historical and societal mesh of shifting values, influenced by media narratives and other societal subsystems?
Please excuse the loaded options.
TOTP, it doesn't matter how ignorant you are of the mechanism by which the GSR is calculated, it is defined as the ratio of G to S in dollar terms.
TOTP,
I submit that your experience in the coin shop is a big outlier. The ability to swap without having to liquidate first is by no means a common practice at retail bullion and coin dealers.
Tyranny of the percentage,
Ever hear of folks talking about a "silver to oil" ratio. Or perhaps a "dow to silver" ratio?
In fact there some. A quick google search yielded BrotherJohnF's name, as well as Bullion Baron, 2 HMSilverbugs. Outside of those types, you really don't see those ratio's discussed very much, if at all. And why is that?
Perhaps it is because the Super O doesn't think of silver, the same way it thinks of Gold.
From my perspective, in terms of the GSR, silver is an abstraction. Whereas Gold is concrete.
And that because Gold is the thing that all else is measured against. And all the wishing on the part of the silverbugs won't change that.
Edwardo,
I have no problem swapping silver for gold at my dealer, in fact always at a better GSR than the official one. It is simple, he buys silver every week, so I offer him mine and ask for payment in gold coins he already has lying around (sovs, double eagles, krugs, etc...).
Check if you wish the GSR he presents in his web site ,compared to the kitco one, right now for example: kitco: 53, ciode: 40347/856 (per kg of course) = 47, you can also check it with individual coins, try american eagles and krugs, 1294/27.26 = 47.
Maybe I am lucky...
Sean, Edwardo,
I am not sure how a published ratio figure, nor the method of its calculation, changes the fact of my exchange at a different ratio - the one that matters to me. In any case the difference hardly appears to be world-changing.
Clearly I am lucky to have routinely had such experiences at coin shops and with dealers, but nevertheless it is a fact. I do remember people riffling paper around but have always insisted on a quote in terms of a ratio.
It occurs to me that on occasion I have been ignorant of the currency in which any calculations were being made (it could have been local GBP or off dollar spot - honestly don't know). I have always only cared about the ratio, and on another occasion I have been quoted a ratio, haggled and agreed another ratio, then been given the necessary paperwork afterwards (in Sterling - is not the GSR in dollars "by definition"?).
I prefer them to make a percentage profit on the whole transaction similar to what they would normally make on just one leg of it, since it is simultaneous. A deal is generally possible.
Nickelsaver,
http://www.24hgold.com/english/gold_silver_prices_charts.aspx?money=GBPound&p=argent
Ranked around 18,000 in the world.
This one: 575,000.
So there is more dow:silver ratio in the world than stock:flow ratio, by a long chalk.
And please do not screw with my handle.
Tyranny of the Comments:
I can trade one gold for fifty-two silver or vice versa. Where is the currency? I must be missing something.
What have you missed? As far as I can tell you've missed almost everything about Freegold since you started commenting here.
If dollars did not price your silver at $31.05 per ounce and dollars did not price your gold at $1650 an ounce, then how would you arrive at this 52 to 1 ratio?
Here's your question again:
I can trade one gold for fifty-two silver or vice versa. Where is the currency?
Do you see it now?
Börjesson,
Boliden serves as a refinery for both its own mines and from scrap sold to it by Stena AB and Kuusakoski, covering a decent chunk of Scandinavian and Baltic scrap.. Swedish, yes, but a wider feed than just Swedish scrap.
Step aside FOFOA, I'm takin' the lead
Postin' lots of comments and links to 100-page blog posts thatcha never read
I'm Tranny
An unbiased silverbug teachin' ya wisdom
Rockin' the foundations of ya freegold system
I'm Tranny
Filling any silence with another comment
Makin' all you freegolders vomit
I'm Tranny
I'm Tranny
I'm Tranny
Yessssssssss!!!
Hi there everyone. I have penned a piece rebutting everything on this site. I have read all the content on this site multiple times, so you cannot refer to anything on this site to rebut what I have set forth because I have already considered it and understand it fully. Here is part of the piece I have written. I hate to be RUDE by not posting the whole thing here in the comments section, but there is a character limit unfortunately, so you'll just have to click the link. =/
The Transgendered Dimensions of Gold and Silver
There is a school of thought, held by group of rabid anti-silver heretics at the FOFOA blog, which states that silver is not poor man's gold. This has given me a serious case of diarrhea of the keyboard, which is about to erupt all over the place. Here goes nothing.
The Transgendered Dimension
The conclusions reached by the FOFOA cultists are erroneous because they do not adequately consider the needs of transgendered super-producers, who are likely to favor silver, giving it super-duper cultural salience. As we know, gay marriage is trending to become legal in all 50 states. This means that the cultural power and influence of the transgendered is soon to become overwhelming. This means incredible cultural salience for silver. How can freegold survive the transgendered dimension? I submit that it cannot. We will all be sucked into the vortex of the transgendered dimension.
These factors simply have not been considered. Therefore we must dismiss everything set forth by FOFOA and submit to a totally random void of anti-knowledge where all possibilities are equally probable, including dancing bunnies with top hats.
The most relevant thing to determining the performance of silver is its historical performance relative to gold and its ratio within the earth's crust. In determining the future gold to silver ratio (yo) you must consider cycles. So it is helpful to stare at the number Pi for long periods of time. I have reproduced this here for your convenience...
Uber LOL
Is this a pukeadilly circus or what?
Tranny, err Tyranny (whatever your handle is)
I don't recall talking about stock to flow, so good job moving the goal posts.
And did you notice on that link you sent that Gold:Silver and Dow:Gold there to the left of your silver charts. Hmmmm
T(y)ranny of the Peyote,
I think it's time to change the bong water ...
Milamber,
Everyone will have varying opinions (i.e. subjective) about value. And certain events can change those opinions drastically. But we all do strive to get the best value in life, and feel somewhat cheated when we don't.
Freegold simply takes that thing which most people in the world recognize as an objective universal store of value (GOLD) and leaves currencies to bid for it without intervention or "cheating".
I think most people will begin to see that in a freegold world, currency values are much more objective because the money is much more "honest".
For example, you won't need a secret gold "kicker" for oil to maintain the reserve status of a dying dollar. All currencies will already be free market priced by gold.
It will be a great day when markets are free again. I'm sure most REAL Giants are sick and tired of the all the derivative nonsense.
Laughing so loud right now. How loud? So loud I can't even hear my uncle plowin' my sister in the next room...... and sis is a howler!
So the response to thoughtful peer review is mockery and bullying? Interesting that you only see this sort of "response" from certain posters, and that rarely if ever do original or creative thoughts stem from those same mouths.
Well, I WAS going to suggest TOTP was suffering from taproot envy, but in light of the full scale spectacle above, I'll stand down.
Cheers
TotP:
The point I (and others) are making is the GSR is derived from their respective current(cy) evaluations. I'm sure your dealer will (may??) negotiate a "swap" at c 16:1 when the respective $ cost ratio is there or thereabouts - yes?
The REAL issue we who gather here try to contend with has to do with the veracity of the common denominator ie: the Currency du-jour.
To take this train of thought one step further, (and this may test your powers of perception?)...MY Silver (in Physical and unallocated form) is a Physical Gold proxy - a PaperGold substitute, which I anticipate will outperform PaperGold as and when TSHTF ...and will be "converted" to Physical Au "all the way down".
$1200Au:$60Ag is a Ratio to look forward to however I'll personally be divested of the bulk of my Ag by then.
This might become entertaining ;)
athrone-
You are
right.
TOTP,
Okay, we sweathogs turned on you. The takeaway is that this is a place where new ideas are welcome, but they are tested. Sometimes brutally.
Most of your thoughts are quite valuable here. Some seem trapped in a bubble of academia, where polysyllabic blather somehow trumps horse sense. I, for one, strongly prefer horse sense.
Academia can present complex reasons why you are in a ditch, or why ditches exist. Horse sense keeps you out of the ditch, or gets you out if you go in.
I truly humbly suggest you take your lumps, refocus, and rejoin us with the intent to discover rather than to outmaneuver.
Cheers
Why do I find A/FOA credible?
Because they saw beyond the yellow brick road
And were absolutely correct!
TOTP: Do you believe there is a two-tier gold system currently in place?
There is a new post by FOFOA. So a final post to TOTP.
TOTP, you are a trader. Traders cannot understand gold. Because they cannot wrap their minds about saving for their grand children.
What will you save in if you have to save it for your grand children. Would you really care what the price of it is currently. Or would you care whether it will be delivered to the children safely. Does storage cost enter into the picture when you are thinking of the grand children?
The amount in the earth crust does not matter. The stock does not matter. The current Ratio matters.
Think about giants who want to save for their next several generations. Think about the Sovereigns that want to keep a stable reserve. Think of the farmers and businessmen who want to store away some amount as a safe keeping to be used if the rainfall doesn't happen or business goes down. In India they do use gold for that purpose, yes it is jewelry, but the purpose is to use it in times of need. You cannot use a bank account in the times of need. It has lost value even after the interest. Those people are not traders that have to time to follow the market looking for how to make the most money by playing in stocks, and other instruments.
You have to put on a giants hat to understand gold. It is a store of wealth, not a commodity that can be traded. It must lie still for centuries. This same used to apply to silver. But will not anymore. Think of the coming crisis, which will change the whole dynamic. There will no longer be two metals. There will be only one.
Re : GSR
Ratio's are dimensionless numbers, as such the GSR does not reference currency, or anything else for that matter. However, legally we are required to sell items for cash first, before buying others, even if doing such a transaction in one go. Part of the reason for that legality is to make barter illegal so people cannot escape capital gains taxes. It's not fair, but transitioning from one asset to another in extremis does (legally) do so by way of currency.
TF
@ Wil
You wrote,
"Everyone will have varying opinions (i.e. subjective) about value."
I am not arguing that people don't have subjective opinions about the value of something (how can an opinion be anything but subjective?)
What I had asked FOFOA was in relation to his quote concerning MSFT stock,
"Dollars bidding on MSFT stock set the value of that stock..."
I was arguing that the value of MSFT is what MSFT produces (Windows, Office, Blue Screens, etc). The price of the stock is the marketplace's collective recognition of said value. If the price of the stock is low relative to the perceived value of what MSFT produces, then, theoretically, the price will rise as that value is recognized.
If people stop bidding on MSFT the price will fall to ZERO because collectively people decide that MSFT has no value.
FOFOA has since explained that comment in greater detail & I am still processing his answer. But I also see that there is a new post too. Sigh.
So much to read, so little time…
Milamber
I'd like to get some thoughts on gold mining companies here. Why wouldn't you want to own a select few? If I wanted to diversify my holdings who in the business can I trust to give me the proper mining companies to own??
I appreciate the help.
Iron Lotus
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