Tuesday, March 12, 2013

Checkmate 2 - Slow History


Building a coherent and cohesive narrative around events of the past is a natural part of our process of understanding. And every good story has a beginning, middle and an end. But what if the end of a particular narrative is still in the future?

Mencius Moldbug coined the term "slow history" in these two posts to describe his hobby of reading really old books and diaries (especially ones written by those outside the political mainstream of their time). He writes: "The student of slow history, who has no faith at all in consensus wisdom, official truth, and 'everybody knows' chestnuts, is willing to rest enormous judgments on a single, indisputable, authentic primary source."

He draws an analogy with fast food versus slow food. Fast history is consensus history. It is that history which "everybody knows" because it has been homogenized for the masses. It is like fast food in that it is theoretically the same as slow food because it contains the same initial ingredients, and yet it has been processed, filtered, packed and shipped, each step of which does its small part to reduce the initial ingredients to little more than flavored styrofoam.

I like the idea of reading that which was written at the time history was unfolding (slowly, as it seems), in addition to the narrative put together by consensus after the fact. They both have their uses of course, but the story you uncover while reading what was written at the time might just be a little different from what you'll read in a history book that has been processed and filtered through societal biases and the consensus perspective.

Since it is in our nature to seek out neatly packaged stories with clear conclusions as part of our process of understanding, the consensus view of individual past events tends to be one that fits a narrative that was also concluded in the past. For example, the Great Depression which ended the gold standard is the conclusion of a story that begins at the end of World War I with the middle being the Roaring 20s. The Nixon Shock is the conclusion of a story that begins in Bretton Woods with the middle being the London Gold Pool in the 1960s. And gold's parabolic blow-off top in 1980 is the conclusion of a story that begins with the Nixon Shock.

These neatly packaged stories, stacked one on top of the other, allow us to view the present as if it was merely the result of the most-recent past, and to look forward to "history repeating" (or at least rhyming as the saying goes). With this kind of a consensus view, we might expect history to repeat the 1970s with regard to the miners, silver and a boom followed by a bust in the metals. Or we might expect to go back onto a US government-sponsored gold standard after a new "Bretton Woods 2" conference.

But what if the end of a particular narrative that begins after WWI is still in the future? If that's the case, then we are still living through history (slowly, as it seems). And that's the case with ANOTHER's narrative as I see it. So perhaps a better way to view events that play an important role in this narrative is through words written at the time those events happened, rather than the summary encapsulation (after the fact) by someone who views those events as part of a story from the past rather than part of the present.

With this view, I read ANOTHER differently than I read other gold analysts. When I see a consensus view held by other gold analysts that differs from ANOTHER's view, I know I am reading a form of "fast history". But when I read ANOTHER it feels more like I'm listening to an old-timer explain the slow history he lived through, observed with his own eyes, made with his own hands, with a special emphasis on why and how reality sometimes differs in monumental ways from the consensus view. To me, reading ANOTHER is like I imagine it is for Moldbug reading the diaries of Ulrich von Hassell, Thomas Carlyle or Clarendon's Great Rebellion.

So I thought I'd give you a few bite-sized pieces of slow history—in the form of really old newspaper clippings—to chew on while you are still holding the Checkmate view in your mind's eye. These are a few random selections from a much larger hoard of news clippings that were given to me. In other words, there are plenty more where these came from. To the Moldbug purists (and to MM himself who was kind enough to explain his precise meaning to me by email the other day), I realize I am taking some liberties by using his term "slow history" in this way, and so I apologize.

1947

To begin, we'll start with a short clipping from the Leader Post, a Canadian daily newspaper, from October 9, 1947. The headline is "Britain sells gold". You'll want to click on the newspaper images so they open in your browser, then you may need to click on them a second time to make them readable at full size because some browsers will automatically fit the image to one page.


I hope you noticed some of the neat details in that short article! In Checkmate, I called the period from 1950-1957 "the top of the hill" in terms of the dollar's finite timeline. This was the period in which the US had about 20,000 metric tonnes of gold. For the first five years of the new Bretton Woods monetary system which began in 1945, the US experienced an inflow of gold, including that British gold in the article. This inflow raised the US stockpile from 17848 tonnes in 1945 to 20279 tonnes in 1950. Then in 1958 it started rapidly draining away.

For reference, here is the size of the US gold stockpile during the years from 1945-1972:

YearTonnes
194517848
195020279
195120326
195220663
195319631
195419367
1955 19331
195619602

YearTonnes
195720312
195818291
195917335
196015822
196115060
196214269
196313860
196413749

YearTonnes
196512499
196611761
196710722
19689679
196910539
19709839
19719070
19728584

1960

Next we jump to November 23, 1960, with an article from the Reading Eagle, a daily newspaper in Reading, Pennsylvania. The headline is "U.S. Action About Gold Is Explained" and it is referring to actions taken while attempting to stem the bleeding-out of US gold.


More fantastic details in this article! One that especially caught my eye was that it was common knowledge in 1960 that $11.5B of the US gold was never going to be shipped as it was the required reserve backing the US money supply. That left only $6.5B, or 36%, of the remaining stockpile for the rest of the world, as long as the price remained $35/ounce. And at the rate it was draining away in late 1960, it would be game over in a little more than a year.

No wonder so many people were betting on a gold revaluation all throughout the 60s. It was simple math, and it was in the newspapers as early as 1960, even in Reading, PA. Talk about overdue! If I pull out my calculator, I see that the US stockpile in 1972 (8584t) had fallen to only $9.66B at $35/oz., well below the $11.5B limit. But let's see, if I revalue that same amount of gold up to $42.22, well then it's back up to $11.65B. Voila!

1961

Here's a quick little article from the New York Times on January 13, 1961. You may have clicked on my link in Checkmate to US Mints ‘Gold Disks’ for Oil Payments to Saudi Arabia. I included this article because it mentions the Aramco fleet of three DC-6s carrying "8,000-pound cargoes of gold to Saudi Arabia's late King Ibn Saud, who distrusted paper money."


1967

Our first newspaper clipping from 1967 comes from The Miami News on July 17. The headline is "U.S. Pushes 'Paper Gold'".


And the second one comes from the Modesto Bee on December 13, 1967, the beginning of the end of the London Gold Pool.


1968

This next one is a great article that was written only three months after the London Gold Pool came to an abrupt end. It comes from the Milwaukee Journal on June 27, 1968. It talks about France dropping out of the pool and the US picking up France's 9% share which raised the US share to 59%. It details several meetings leading up to the end of the gold pool, including one at the BIS which it says cost the US $210 million in gold for the simple mistake of having a Treasury official fly to Basel which is a central banker sanctuary where the US Treasury would not normally be present. And it explains how it all ended just four days after the US said it would defend $35/oz. "down to the last ingot", when the US Senate passed an emergency bill on March 14 making the dollar a strictly fiat currency.


1969

This next one comes from Henry J. Taylor, former US Ambassador to Switzerland and a syndicated columnist in the 60s and 70s. It is titled "Our 'Paper Gold' Quite Uncomfortable" and comes from the Herald-Journal on March 16, 1969. It talks about the new "two-tier paper gold system" and concludes that "paper gold is no remedy."


1973

We next jump to 1973 with a short article from the Vancouver Sun on June 27. In it we find Treasury Undersecretary Paul Volcker speaking to Congress about the "free market" for gold in the context of—and giving his tacit approval for—foreign central banks selling gold directly to the free market. This would, of course, happen at the free market price which was $122/oz. at that time, making foreign central bank gold reserves de facto worth the free market price in dollars rather than the official price of $38. The official price was changed one last time, four months later, to $42.22 where it remains today.


1974

In the first of six newspaper clippings from 1974, we hear from Rene Larre, the general manager of the BIS who also happens to be French. This one comes from The Morning Record in Meriden, Connecticut on January 19, 1974. In it, the general manager of the BIS says he sees a time coming when the CBs will trade gold "at the free market price" as opposed to "the fixed monetary rate of $42.22 an ounce." Furthermore, he says that by trading at the free market price, "the central banks will be able to revalue their reserves" which will help their countries pay for oil.


Next we go to the Montreal Gazette on March 1st where we learn that an "Arab buying spree increases gold prices" when three Arab countries plus Iran buy about a billion dollars in gold in only two weeks. At the going price of $167/oz., that would have been about 186 metric tonnes flowing from the West to the East in exchange for their oil. To put that into perspective, annualized that would have been a West to East flow of 4,842 tonnes of gold going to only four Middle Eastern oil producers, not including Saudi Arabia!


On the same day, March 1, 1974, we get a similar article from the New Straits Times, an English language paper out of Kuala Lumpur, Malaysia.


This next one comes from the Wall Street Journal on April 23, 1974. The poor quality of the scan makes it difficult to read, but I'm including it for the headline alone as it mentions European gold for ME oil: "Gold Price Rises as EC Nations Get Closer To Using Official Holdings to Pay for Oil."


A day later, on April 24, 1974, in the St. Petersburg Times, we learn that European Finance Ministers led by Wim Duisenberg have tentatively agreed that central banks should be allowed to buy and sell gold on the free market and thereby settle official debts at the going market price. The article also notes that by the simple act of selling gold on the free market, central banks will be able to quadruple the worth of their gold holdings. Can anyone say MTM gold? The price of gold on April 24th was $170/oz., quadruple the official price of $42.22.


On November 12, 1974, from the Montreal Gazette, we learn that OPEC revenues have increased even more than the price of gold. While gold has risen from $35 an ounce to $180, the revenues of the oil producing countries have jumped from $15B to $110B in two years. In oil terms, gold hasn't been revalued at all.


I don't know about you, but when I read this article it is just so obvious that Freegold is the solution to the problems explained in the article. The article talks about vendor financing, "a common enough practice," but even the Fed chairman Arthur Burns admits that with a consistent net-producer like OPEC, vendor financing equates to "piling debt upon debt and more realistically piling bad debt on top of good debt." And yet the real problem is that the consistent net-producer is consistently accumulating excess currency that needs to be recycled. Two solutions: lend it or spend it. How about if they spend it on a physical asset with no counterparty, so there's no piling up of liabilities? And how about if that asset can simply float in relative value without ravaging the economy with inflation or deflation since it is only used as a reserve asset? All of the currency will still be recycled, whether they lend it or spend it.

1975

On January 10, 1975, from the Windsor Star in Windsor, Ontario, Canada, we learn of the very first Snapshot day (January 7, 1975, when the London afternoon gold price fix was $169.50) and its subsequent MTM party!


1979

Finally, I thought I would conclude this post with a secretive "gold for oil" deal in 1979. This one comes to us courtesy of the Gadsden Times out of Gadsden, Alabama on February 5, 1979. This paragraph in particular caught my eye:

"Officially, the [South African] government refuses to say where its oil is flowing from. But Western diplomats here believe that gold-for-fuel deals were struck with Saudi Arabia and other conservative Middle East states 'at a high premium.'"



I called this post Checkmate 2 not because it details the checkmate scenario, but because it is meant to be a companion piece to my last post which explains the narrative. Perhaps I will do a Checkmate 3. I don't know, because I never plan future posts ahead of time. I just do them as I please. But like I said, there are a lot more newspaper clippings where these came from, and I haven't even gone through them yet!

As for the slowness of history, it would be a mistake to think that my intention with this post was to imply that it will continue unfolding slowly. At the end of the line, change transpires in the relative short term:
FOA: Over time, one could never compare the returns of investing in stocks and bonds to owning gold. This is simply because when gold is entangled in currency schemes, its fiat value is falsely presented while the currency system ages. Only the commodity use of gold is reflected, not its much higher wealth "reserve asset" function.

However, this present era has become one of those unique periods in paper money history when gold will take a great leap in value during the relative short term.

One day this blog will end with little or no notice, just like The Gold Trail and the USAGOLD forum. One day I will grow tired of doing this, or perhaps I will find a better use of my time. Bear in mind that I am not selling anything, and so far I've been here for 4 ½ years, longer than ANOTHER (THOUGHTS!) and The Gold Trail combined. But unlike the original Gold Trail, here you can at least cast your vote to postpone the arrival of that inevitable day by clicking on this button. If, on the other hand, you'd prefer to vote for me to move on to something else, that's even easier… don't click the donate button. ;D




Sincerely,
FOFOA


478 comments:

1 – 200 of 478   Newer›   Newest»
Aquilus said...

Slow history... Very enjoyable to see the history unfold in the words of people living it. To see their questions, their attempt at putting together the implications of what just happened...

I for one cast my vote to continue this blog.

Aquilus

A PIIG said...

Love the newspaper clippings, can you share more about where they come from?

PS

I will cast my vote as soon as I can, cash is very tight at the moment for me.

Nickelsaver said...

A very coherent narrative indeed.

I found this tidbit rather interesting.

"If I pull out my calculator, I see that the US stockpile in 1972 (8584t) had fallen to only $9.66B at $35/oz., well below the $11.5B limit. But let's see, if I revalue that same amount of gold up to $42.22, well then it's back up to $11.65B. Voila!"

One might be tempted to write this off as perhaps a last effort on the part of USG to have their gold valued at the legal minimum to meet their legal obligations, as it were. But what is surprising is that it is after the closing of the gold window.

I had always viewed the Nixon Shock as the last vestige of USG looking to match their gold hoard to their obligations. So I wonder now, what was it in 1974 that made them freeze it. Did those obligations suddenly skyrocket? Or was there maybe a consensus (of those that understood what price to set gold at and why), that the dollar would soon be done. And maybe they never changed the official price within the two tier system from that point forward, because they thought it would be a matter of years or even months until the ROW would revalue it for them.

I'd bet anything that the Nixon era folks didn't see the unbacked dollar lasting this long. And now we've come so far, most don't even see that it has to be, eventually, reconciled with gold. To think otherwise, is to say that all those actions they took back then were for nothing.



Woland said...

Mr. Coffin, meet Mr. Nail.

As I read through all the wonderful newspaper clippings which you assembled, I could only think of Dorothy's line from the Wizard of Oz;

"Yes, I guess you're right...it's that - if I ever go looking for my heart's
desire again, I won't look any farther than my own back yard".

Of course, it's all in knowing where, and how to look (telescope,
microscope, sigmoidoscope) that makes all the difference. A great
companion piece to Checkmate! Greeeeeeetz!

ein anderer said...

I cast my vote to continue this blog too. But FOFOA should be happy with it. He deserves it.

Flore said...

And I casted my vote also..

Polly Metallic said...

Reading these articles makes me all the more certain that Another and FOA fully understood the gold/oil/dollar relationships and the inevitable outcome of modern gold history.

We are truly watching monetary history unfolding and it is important to follow in the Footsteps of Giants.

Lisa said...

FOFOA

Thanks for the articles! What an interesting way to view history.

I am struck by the honesty and detail of the reporting, even in local newspapers. Complex ideas are explained in easy to understand terms.

For example, the 1968 article from the Milwaukee Journal which states "The dollar, as a store of purchasing power, became less and less attractive...The gold price would go up. The dollar would be devalued."

And the 1967 article from the Modesto Bee which states "When financiers rush to swap money for gold they are saying that American dollars are not as good as gold."


How different things are today. Instead of honesty, we get fudged numbers and management of perception. It gives me hope for the future, that gold in the system again will help restore that honesty.

Hobgoblin said...

A real pleasure to read those clippings. I do enjoy my slow history.
I echo and second the sentiments of Aquilus and will endeavor to do my part to keep it so as miniscule as that may be.

michael3c2000 said...

Another innovative work FOFOA. Looking forward to the sequel of this great presentation and the fun, lasting and joyful repurcussions.
Gold market "historians" and analysts are resurrected or presented almost willy-nilly these days. We can and do make the most of the void they leave behind, and no ersatz titles.
Like gold itself, your blog recovers bearings, leaves a basis or foundation and facilitates enterprise and discovery.
One animated gold standard proponent/politician, recently failed to penetrate beyond (some very good)economic observations towards simple, practical gold solutions that haven't failed in the past:

http://www.theatlantic.com/business/archive/2013/02/why-does-virginia-want-a-back-up-gold-currency/273288/

And a small "rant" I just posted on another site:

"Just as there are off-budget items and two sets of books to choose when reporting deficits, spending and debt,
a bullish case for the economy is readily at hand from amongst two competing, essentially contrasting sets of options.
The main stream media is not describing risky, ephemeral assets such as the ever-changing Dow whose components are substituted like football players when they underperform, by upstart, fresh meat.
They are pretending to describe risky, ephemeral assets, ascribing those of hard assets to "snake oil" alternatives in which they have a vested interest and hidden agenda.
If today's markets were not supported this way by "recovery" chatter throughout the day, and gold and silver were acknowledged or recognized for just a moment, the words "risk", "fraud" and "failure" would come to life, rather than being tools of deception and injustice.
Should financial statistics deviate one moment from the spin,
the insolvent, bankrupt system would soon be unresponsive to HFT's, quants, shadow banking, dark pools of liquidity, off-balance sheet accounting, war chatter or political theatre, to infinity or not. Interest rate swaps, credit default swaps and mortgage backed securities have been Fed fare at the grand monetary smorgasborg. Cyber feast, sovereign debt the main entree, masking an epic culinary constipation.
So there are no lack of reasons why sentiment in the precious metal sector is dragging along the floor.
The technical picture is similarly drawn, with extremes in many cases not seen in a generation, or more.
The fundamental outlook for PM's combines all these elements and more, traditionally rallying most when least in popular favour."

Franco said...

So what exactly is it that prevents the US Treasury from valuing its gold at the current "market" price? And moreover, what prevents the Treasury/Fed from printing money just to buy gold and drive its price to, say, $10k/oz, and that way be able to value the 8000 tons at $10k/oz?

Wil Martindale said...

Fascinating.

burningfiat said...

Hey, I had crafted a good comment earlier (or so I thought myself :P), but blogger ate it.

So I just want to say, thanks FOFOA! Without you many of us wouldn't have this grand perspective providing a coherent explanation of over 100 years of monetary history (including current events).

And actually, the coolest thing is that the grandest part of the story is yet to play out! In a way, we're lucky to witness these times (the grand finale).
How boring if one would have had to make sense of this finale from the viewpoint of consensus history.
After seeing the world through the Freegold perspective, I can never go back.

RJPadavona said...

A great addendum to Checkmate!

I enjoyed the newspaper clippings. Just more proof of what sets this blog apart from all the rest. Most in the gold community paint a narrative of victimization: "The evil bankers have been plotting to enslave us with their paper money for centuries!"

But the story we get here is one of the efforts that have been taken to keep global commerce from completely collapsing and sending us back to the Stone Age. And I'm confident that efforts will be taken once again to keep us from devolving into a barter economy. If you've read this blog then you know most of those efforts have already been taken.

No, it won't be a pretty transition for a lot of people, but life will go on and the ascent of man will continue. So, buy some gold, and go to sleep ;)

The best of the free life is still yet to come
And the good times ain't over for good.



RJ

M said...

I watched the Antal Fekete interview with Max Keiser and it looks to me like Antal is basically taking Austrian economics and changing the definition of money. I e, separating the store of value and medium of exchange characteristics of money and calling it the " New School of Austrian Economics".

I think he's onto something.

milamber said...

FOFOA,

Great perspective re slow vs fast history.You will have my vote by the end of the month :)

Milamber

milamber said...

@ Robert,

"But the current political opposition arises not to the idea of the Euro, but because of all of the collateral consequences of the internal imbalances that the Euro has caused over the last 14+ years."

The Euro has caused?

Or the Euro holds accountable?

the ECB's mandate is to target inflation at 2%. No dual mandates. If spendthrift politicans spend too much, then they have to deal with it. ECB may give them some wiggle room, but not at the expense of rising inflation.

Or maybe the ECB should structure things like America and have the ROW denominate their savings in Euro debt only. I mean American Fed debt is only at $16 Trillion and rising.

No imbalances there, right?

yeah, that's the ticket! :)

"Is this what A/FOA envisioned when they said the politics is a "sideshow"?"

I think what A/FOA were saying is that what politicians say and do is irrelevant compared to the flow of oil. and to keep the oil flowing, gold had to flow.

And if you stop & think long about it, they are right.

Does that mean politics is always a sideshow? Of course not. If things get bad enough to devolve into revolution or war (for whatever reason), then obviously that changes the calculus. But even if that happens, don't you still want to be holding gold? I mean eventually the revolution will end. I know what I want to hold if it gets that bad!

Rmemeber that what happens in the political arena is simply the cover for what is decided behind closed doors.

"Regardless, I think it is superficial to simply say that becasue A/FOA told us 14 years ago that "the politics is just a sideshow", we can completely ignore the political develoments now"

I dont think we should ignore it, it does make for entertaining comedy at dinner time. But we should remember that the tail doesnt wag the dog.

In the final analysis, Oil drives the world. Does that mean Apple is unimportant? Of course not. But think about this: Where would you be right now without oil? Where would you be without an iphone?

I understand & sympathize with your position. I was there myself for a while. But I think that you have to strip away the minutiae and focus on the fundamental truths. If you do that, then you will see that the political arena is truly a sideshow.

The real game is oil. And oil still likes gold.

Milamber

milamber said...

Alan2012,

What do you make of this?

"Adrian Ash of Bullion Vault on This Week in Money podcast (19:32 minute mark):

"Silver is a very interesting case at the moment, there is an awful lot of talk at the moment about silver supplies are very tight, London’s got no silver. I don’t know where this idea comes from - London liquidity in silver has never been so strong, you know there’s plenty of silver around in London right now."

Then Eric Sprott on King World News on his recent PSLV unit issue:

"It’s around nine million ounces. For the most part we will have purchased that already. I don’t know that we have all of the delivery yet because we just had the green shoe exercised on Thursday night. So that purchase has been made, but obviously we wouldn’t have delivery yet. I don’t think we’re going to have delivery problems. As you know, I’ve always hoped we can’t get that last bar (of silver) because we’ll publicize it. But so far the silver has come in"



Plenty of Silver?

And if there is a lack of supply in silver (which I am not agreeing with), why on earth would you want to use it as currency?

Or if you wanted to hoard it as a wealth reserve, what will you tell industry that needs it to use?

Just curious.

Milamber

milamber said...

@woland,

Your humor is priceless!

Here is payment in full :)

Bend over Mr. Babar

Milamber

Michael dV said...

burningfiat
Freegold perspective...I'm sure I've read it many times but I couldn't quite think of what I should call Freegold (in spite of fofoa's use of the lens image)...but yes 'perspective is a much better word than 'theory' or 'system'.


milamber...you are on a roll! Again the idea that the Euro is the problem is the common idea. I sometimes drift back that way in thinking....but you are correct...the ECB is just doing it's (ONE!) job.

Robert Mix said...

Since FOFOA's post was about ideas as well as history, please let me recommend a couple of excellent books that present ideas on why things are the way they are and why it is so hard to predict how they will go:

1) N. N. Taleb's "Antifragile" (he wrote "The Black Swan" a few years ago. He believes that most prediction is a waste of time and that we should be look at RISKS and plugging those holes. Of interest to me was that he did not mention GOLD as a antifragile investment, which I think it mat be, certainly golf is a robust investment...

2) Nate Silver's "The Signal and the Noise" explores how SOME forecasters are getting it right (or better than before) and related topics.

Both are excellent books and are new (2012 in both cases). Neither book requires advanced knowledge on numbers, and they both write excellently in an intelligible way.

***

Taleb raises the idea that Old Ideas are typically better then New Ideas (eg, the 10 Commandments will be long remembered after Jay Z). Reading good history has solid value that is hard to quantify, but it has been of great value in my case. I have seen that "there is nothing new under the sun."

Silver's book is mostly about the slow history we have made about prediction. WHEN will gold make its big move, for example. Amount of data, understanding all of the variables involved and complexity of the system in question all play a role in progress in prediction (forecasting).

Both books are available at bookstores near you.

***

FOFOA is an invaluable source to most of us here looking to protect our loved ones through the generations. He asks us to think like the Giants! I had not run into such thinking before. Nor had I run into many other ideas of his/FOA's/ANOTHERS'S until arriving here in 2009.

The slower students (like me) need additional insight. I have voted for FOFOA to continue in the trenches of gold analysis at the macro level. I hope that as many of you all will as well so he continues to educate us and keep himself out of a boring job.

Motley Fool said...

Alan2102

Thought you might find this interesting

http://screwtapefiles.blogspot.com/2012/08/so-how-much-silver-is-really-out-there.html

Short answer...about 20 billion ounces above ground.

So much for the much vaunted shortage.

TF

sean said...

Hi Franco,
on the surface of it, that's an excellent question.
In fact FOFOA has written a detailed explanation of why the US Treasury can't revalue it's gold:

Checkmate! ;-)

MatrixSentry said...

It strikes me how slow history becomes fast history. It has been my observation that people are largely indifferent to history, fast or slow. A void results, where consensus of past events is determined by whoever gives a damn. To the victor goes the spoils so to speak. The winners always write history, at least the commonly taught and accepted version. This process takes time and slow history must unfold first. Then bastardized and highly spun fast history can be engineered and constructed. But, in this world of lightning fast transmission and assimilation of information we simply dispense with time and cut to the chase. We know who the winners are before we even contest, and we defer to them and their inevitable version of truth and events. All history seems to be fast history now, even the history that is unfolding before us.

This blog is going to be seen as a curiosity in the future. A true window we used to observe slow and real history of the past, along with the present. In this way the blog will be seen as unique, literally a one off in a largely homogeneous blogosphere and at odds with the nutritionally bankrupt versions of history that were the consensus of the day. Of course the manufacturers of fast history will be on the job to make sure that the outcome we call Freegold will be seen as an outcome that was never really in doubt. We will know better.

So I cast my vote as well in favor of this fascinating blog, where we watch history unfold. Someday it will all end as an ongoing endeavor and FOFOA will be off doing something else. But, the material posted here will live on in the same way as the material posted by Another, FOA, and Ari. Some future connoisseur of slow history will treasure this material and that will be enough for a time misallocating, brainwashed, and evil gold hoarding jerk like me.

Thanks FOFOA. I hope someday does not come any day soon. That is my selfishness coming out I fear.

Jeff said...

http://blogs.telegraph.co.uk/finance/ianmcowie/100023337/budget-2013-fears-rise-as-cost-of-living-soars-four-times-faster-than-earnings/

ein anderer said...

… and here comes another Wall Street Journal clipping: but from 2013 and 13th (!) of March:

"U.S. regulators are scrutinizing whether prices are being manipulated in the world's largest gold market, according to people familiar with the situation."

ein anderer said...

I remember FOFOA’s only one interview. Quote (my emphasis):

What will change the confidence that people have in the dollar? Will there be some catastrophic event?

That’s the $55,000 question. It is impossible to predict the exact pin that will pop the bubble in a world full of pins, but I have an idea that it will be one of two things. I think the two most likely proximate triggers to a catastrophic loss of confidence are a major failure in the London gold market, or the US government’s response to an unexpected budget crisis due to consumer price inflation. Most people who expect a catastrophic loss of confidence in the dollar seem to think it will begin in the financial markets like a stock market crash or a Treasury auction failure or something like that. But I think it is more likely to come from where, as I like to say, the rubber meets the road. And here I’m talking about what connects the monetary world to the physical world: prices. I think these “worlds” are connected in two ways.The first is the general price level of goods and services and the second is the price of gold.If one of these two connections is broken by a failure to deliver the real-world items at the financial-system prices, then we suddenly have a real problem with the monetary side. So, I think it will be a relatively quick and catastrophic event, but maybe not as dramatic as a major stock market crash. It will be confusing to most of the pundits as to what it really means, so it will take a little while for reality to sink in.

Bjorn said...

I´ve cast my vote as well.

On a side note, a strange phenomenon has started to appear in the housing market in my city... Unsold properties suddenly raise the prices.

This house for example has been on the market for at least a year, and now the asking price is up 11%.

Reminded me of something FOFOA wrote in "Deflation or Hyperinflation"

FOFOA: You see, living with real serious price inflation goes something like this:

---- "Honey, I talked to Fred again, he can't sell his house! Poor guy, he has had it up for two years now and has to raise his asking price again. No takers, yet. The last couple was just about to close but took a month too long; they almost got the cash together, too. He backed out to raise the asking price, again. Oh well, that's not so bad, we had to jump ours up three times before selling." ----

At the same time, a large newspaper had a headline proclaiming that we have deflation in Sweden. In the article you could read that we have deflation despite rising prices on everything, except interest rates and home electronics.

Crazy times!

Beer Holiday said...

It's great seeing these old clippings, I really enjoy this "slow history"

Thanks ein anderer. That was a really great quote from the interview

Beer Holiday said...

You have to wonder just how the CTFC is going to investigate the gold market, given it's opaqueness.

But good luck to them, and here's hoping (dreaming) that they can make some new information public.

And why are they so keen now, after all this time?

Lisa said...

FreeGoldTube

Levon is beautiful. Thanks

I did not notice immediately it was a new FGT video. The paths and the views are amazing just like the words of A/FOA/FOFOA

Franco said...

sean said:

"Hi Franco,
on the surface of it, that's an excellent question.
In fact FOFOA has written a detailed explanation of why the US Treasury can't revalue it's gold"


sean:

I read the blog entry that you linked, and maybe I'm stupid and can't read between the lines, but I couldn't find anything about why the Treasury CAN'T revalue its gold. FOFOA seems to be making the case that marking the gold to market is the right thing to do, and it's beneficial.

ein anderer said...

@FreeGoldTube:
The mountains with lake: Switzerland? Lake Lucerne? Fronalpstock?
Anyway: Very beautiful.

Woland said...

Hi Beer Holiday;

I suspect the CFTC will find exactly what they are looking for (which
is nothing). If they couldn't find anything at Comex after 2 years,
they sure won't find anything in London. You might enjoy a look at:

Teller, The Art of Misdirection (Teller is of Penn and Teller fame)
It is both funny and an apt metaphor. (hey,.....look over there!)
Cheers.

One Bad Adder said...

Good addendum to C1 FoFoA - Thanks for all your efforts here - enlightening.

In this chart we are "just beginning" to see a divergence in DX vis-a-vis $IRX ...which (if it continues) could indicate that "finally" we're to make an assault on the Zero Yield / FreeGold inflection point ...FWIW!

michael3c2000 said...

Some of you will like these recent primers:
FOFOA Quick Answer Guide
https://docs.google.com/document/pub?id=1YKVMTJpGApL33bdIBXc-DxiNyOV4QA_DzOYeoxkDA_g&pli=1

FOFOA: Freegold Foundations
http://fofoa.blogspot.com/2011/01/freegold-foundations.html

Jim Willie just did another interview. Links to excerpts and/or audio: http://www.golden jackass.com
http://www.silverdoctors.com/jim-willie-the-collapse-is-at-our-doorstep/
Two (written)parts are available, but the 16 minute mark is where the best information begins IMO. Go FOFOA, go freegold, way to go...

iflyme said...

I don't comment here at all, but I read every word. You have my thanks and my vote.

ampmfix said...

To me this blog looks a lot like a private club, to which I like belonging, so, since I view that FOFOA is writing basically for us (he never tried to spread the message actively outside of here), a fee is due as often as possible. My 3rd vote in 2 years is in.

Indenture said...

freegoldtube presents Levon (the Gold Trail)

Edwardo said...

physical gold positive? Um, yeah.

Wil Martindale said...

It's beginning to look more and more like the giants are ready to kill paper gold. I mean, having their mainstream minions compare "suspected gold rigging" to "Libor rigging" is WAY too obvious.

I suppose the bullion banks agreed to be crucified, the commercials were already paid off anyway and they've had plenty of time to convert since.

The pigs on THIS side of the revolving door can now pretend to bitch slap the pigs on THAT side of the revolving door, true to script as always.

The Fed alone can kick the legs out from under the dollar, but they'll have plenty of global support and the Weimar moment will only last long enough for the BIS to come to the rescue with revalued gold.

QBAMCO called it (I posted the link in the last post) in the most beautifully "matter of fact" piece they've ever written. And I think they nailed it.

After decades of mainstream media gold manipulation fact suppression, this sudden epiphany is borderline ludicrous, and obviously orchestrated.

I'll risk looking dumb again by saying it's coming ... soon, and "all at once"!

KnallGold said...

Papergold is dead!

Edwardo said...

Wil,

I don't share your view that QBAMCO has "nailed it", but then I can only guess at what you have in mind that warrants such a glowing assessment. They are, despite what has the patina of freegold, advocating for an old fashioned gold standard. For my money, literally and figuratively, they are so close, so close and yet so far.

As for the MSM gold rigging = Libor rigging talk, that may indeed be the first of some number of not so subtle journalistic pieces designed to function as part of a larger strategem to pave the way for the imminent emergence of a physical only market. That would be nice.

GrumpsLabastard said...

One of the few sites that challenge the gold thesis:

http://www.cyclesman.net/audio-commentary

I've followed these guys since 2008. Tim Wood will never get it, but it's been fascinating listen to technicians John Grant & Chris Wilson go from anti-gold in 2008 to understanding gold's function in a debt saturation scenario. They did their homework.

Anyway the Feb 15th audio is very interesting in that the Frank DeBaere and Chris Wallace understand that the system wants to deflate, but they recommend holding physical cash in a safe out of the bank. They posit that it will be dollars, euros, and yen that will be in demand to settle the outstanding debts, not gold. AARRRGH! How can professionals in the industry have such a blind spot. All the currency that is needed will be provided by the purchase of gold at whatever price it takes. They don't understand that the currency will be devalued against gold if the deflation takes place.

Wil Martindale said...

Edwardo,
Your counterpoint to my comment has caused me to in fact re-read the 4 page article I referenced in the last post, and it brings up a topic I've been menaing to clarify for some time, so thanks for that.

I believe the point you are making is in reference to the following:

"The global system would revert to the gold/dollar exchange standard used between 1945 and 1971 (i.e., Bretton Woods). Currency devaluation against precious metals has long precedent (including the USD in 1933)."

Because I feel they got everything else right, I probably just dismissed this as yet another residual effect of the most misunderstood monetary concept that still plagues many otherwise "unburdened" thinkers of present day rationale.

Yes, to wit: is a gold for dollar exchange standard that is artificially "fixed" to a set ratio truly the "gold standard" they literally refer to a return to? It appears so, and I give you that.

Will Q & B realize that the gold for dollar exchange standard that they haven't quite been able to articulate will be set by a free and unmanipulated true market for gold? Perhaps not, but they are getting close.

When Max Keiser (I know, I know, bear with me here) said that the world is "always on a gold standard" he was not referring to the Bretton Woods "fix" either, but by invoking the words "gold standard" some might have misconstrued this. What he meant was, gold is the universal standard by which value is the worlds' reference point.

Lest you think I digress (which I do) this is not meant to be an apology for Q & B's single glaring affront in an otherwise, as you say, "glowing" realization of future events about to transpire.

They do specifically reference Bretton Woods ( as I acknowledged in "giving you that") which upon re-reading it is truly disappointing (cringe).

I only fall back to the truly monumental misunderstanding of the concept and use of the phrase "gold standard" and all the historical baggage that misconception entails.

Because when freegold does in fact come to pass, it will be universally accepted as "the new gold standard" which it always was, and always should have been, if only the fiat planners had not adulterated it by an artificial "fixing" that worked for a time, and thus enjoyed immense popularity as the great success it never really should have been.

That said, I offer the link again, for those who haven't read it, since it was referenced at the tail end of the last post (and then this excellent new post came quite quickly thereafter).

Your retort is well taken, and I acknowledge the refernce to Bretton Woods is a blunder, but I think the rest of the article is quite spot on, and stands apart from the "usual fluff".

I thank you for your feedback. -Wil

ein anderer said...

@michael 3c2000
Thanks for this work.
It would be nice to have consecutive numbers for easy referring to a specific point.

"Q How does COMEX price discovery work and will it telegraph “the end” for all to see?" the link followng is dead.

Edwardo said...

You are very welcome, Wil, and thanks for the clarification of your thoughts.

Robert said...

Regarding QBAMCO, I have never heard them advocate for a return to an exchange standard before. I have always understood Brodsky to suggest that the revaluation could be initiated by putting a new floor on the gold price. In other words, the U.S. bids $10,000/oz. The price could go higher than that, but will not drop below that. It is a one way exchange: We will buy your gold at this price. But without any reciprocal obligation to sell at that price. AT least that's what I understood them to propose before.

Wil Martindale said...

I guess I might add, from this:
“Today, the Federal Reserve System announces a program of gold monetization in which the Fed offers to tender for any and all gold in qualifying forms at a price of US $20,000 per troy ounce. The program will be conducted through participating U.S. chartered banks, which will be instructed to properly assay gold and exchange it for U.S. dollars to be placed in customer bank accounts as deposits. Deposit holders will be entitled to make withdrawals in the form of dollars or gold at the fixed exchange rate.
By establishing the fixed exchange rate substantially above past market prices for spot gold, the Board of Governors believes enough gold will be tendered to produce a supply of new base money sufficient to adequately reserve the stock of U.S. dollar-denominated deposits in the global banking system. The Fed will monitor the tender process to ensure the soundness of the exchange rate and the ongoing viability of the US dollar.”


Who is to say that the US, seeing the inevitable end, and seeing the only politically expedient "win-win" scenario in this attempt, with their military and ego's still intact, would not try to trump a truly free trading gold exchange (as the East is erecting the pillars of today) by "blessing" its citizens with a pre-emptive lunar hike "fix" in order to create an inflow of private gold before the true dollar free-floating international "price" unfolds?

Still mirky here, but it does acknowledge the US hegemony clinging to it's "traditional" role. I wonder if Q and B have perhaps thought it through further ... to this end ??

Well ... time proves all.

We of course could ALL be completely wrong and my relative meager investment in a few shiny little round discs will only provide the following 2 diversions.

1) As I look at them from time to time, some of them being much older than my Father, I often wonder how they were used, what utility they may have provided to their holders, as time and possession passed through the years.

and ...

2) Despite an unclear furture, it is CERTAIN they will outlive me, and my children's grandchildren, and long after every one of us is worm-turd dust for centuries to come, they may well survive in their present form, looking nearly exactly as they do today, or if melted into some other form, their base constituency completely unchanged.

It is a marvel to possess things of such permanence, and how to value them may always elude us.

DP said...

@OBA,

A fair translation of your view on that chart? (sustained phases of:)

$ down, IRX up: it's only right
$ down, IRX down: risk-off, world stayed home
$ up, IRX up: USA Inc - a future you can believe in!
$ up, IRX down: global dollargeddon econohypoxia

Not that anyone will be allowed suffocate for very long of course.

Michael dV said...

Wil
How much of your gold would you tender @ $20k per ounce? I'd do a bit but certainly not most. One would need a definite plan to deploy those dollars in a hurry as such an offer would herald the demise of the dollar in short order.
When the ROW sees the value the USG places on the dollar vis a vis gold they would rapidly see that end was near.
In addition to it's efforts to shore up the dollar in the short term there are the threats of old, never ending claims of other nations that the US would have to consider. FOA discussed these claims as being one of the reasons that the current dollar system cannot be saved. Apparently France and other countries can still claim gold at $35/oz based up their pre 8/15/1971 holdings.

Wil Martindale said...

Michael dV,
What an astronomical mind read. I'm going to copy here the EXACT WORDS I emailed to a friend of mine earlier today before well your comment:
"This is where we think they are wrong. The US will never be able to return to a fixed rate exchange, though they may attempt it nonetheless. Russia, India, China and the Middle East will establish the exchange rate at a much more equitable rate of say 55K per ounce, but many people will cash out at 20K (perhaps even a little myself if expedient)."

So we are of like minds here I do believe. :)

GrumpsLabastard said...

Guys , tyrannyofthepresent just went Luther on ya. He pretty much demonstrates why gold cannot be in an isolated circuit. Thank God, because if you look under the hood FG is a monstrosity.

burningfiat said...

MdV and Wil,

If my hunch turns out right, you guys are gonna have to be some pretty quick ninjas down at the coin shop to offload while the bid is still 20K! Why not wait an or a day or two and maybe it's 55K or 100K (who's counting?)... :D

IMHO, the reval. itself is the moment were we shrimps will see the biggest bid-ask spread of our lives.
Yes, maybe some moderate amount will be filled at 20K, but in the grand scheme of things we will race past 20K at lightning speed...

Personally I'll want to see some sort of plateauing before offloading any significant amount. I'm not stepping out of my bunker before the storm has cleared and an equilibrium is reached.

In the Freegold-transition it is all about the MoE and SoV par excellence finding their right balance. We shrimps are a side show in this. Let's wait until the big guys battle this out in volume (in the new market). Credit vs. wealth, printers vs. super-producers.

GrumpsLabastard said...

Thesis 75. However important the secret knowledge they may have shared, any fixed forecast based on the historical observations and expectations of one or two individuals at a given time in history is vulnerable to both obsolescence and narrowness of perspective.--ToP








GrumpsLabastard said...

Sov and MoE can't be separated and exclusive of each other.

What would the world look like today if FG was implemented 100 years ago?

If FG were implemented today, how would a Space Elevator be built? Mars colony?

Freegold is the Golden Elixir, a stagnant vision of humanity "that reckons not with movement of Infinity as expressed through life."

Exter's Pyramid with gold at the bottom is the "Secher Nbiw". Capital/Savings can't be isolated. It would be dragged kicking and screaming back into the physical world if FG were forced unto the world.

byiamBYoung said...

Grumpy,

"any fixed forecast based on the historical observations and expectations of one or two individuals at a given time in history is vulnerable to both obsolescence and narrowness of perspective."

True, but the same fixed forecast bolstered by actual unfolding events becomes more and more indelible.

Ever play Jenga?

Cheers

Trannyofthepresent said...

Guys , tyrannyofthepresent just went Luther on ya. He pretty much demonstrates why gold cannot be in an isolated circuit. Thank God, because if you look under the hood FG is a monstrosity.

I'll isolate that circuit under the hood anytime for you, big boy. :-*

At least someone around here appreciates my impeccable analysis! It is so difficult to convince these cultists of the wonders of silver. If only they could see the light of my silver wisdom.

And you're right, if you look under the hood, FG is a monstrosity. Because if it's true, what would happen to all my silver and mining stawks?! Therefore it can't be true. Argumentum ad consequentiam FTMFW! HI-HO SILLLLVERRRRR

/SleepingVillage/ said...

Gramps,

The only "monstrosity" we've had around here is the pretentious ramblings of the tyranny and some others from time to time... thankfully I don't have to scroll past that shit anymore :)

I saw a moonbeam

Ohwhoawhoawhoooah

GrumpsLabastard said...

I'm reposting this from the previous comment thread. It was towards the end so it was probably missed.

"As I go thru the old posts I see FG as flawed model that assumes that value in gold during the transition can be kept there in a perpetual K-wave Winter state. That won't happen and it would not be healthy for civilization for a FG system to be forced on it by a radical faction of central bankers.

It is understandable why such a concept would arise after the greatest credit expansion in history. Yes, savers have been screwed, but FG would be too radical a swing the other way--a tyranny of the Saver.

Gold is going up. The value in debt will decant into gold. A debt/equity swap to delever the system. Gold will float afterwards tracking global M3, but it will remain in Exter's pyramid at the bottom. The value impulse that flew to gold at the height of the crisis will leak out upwards the pyramid for the next K-wave. So we will have to use our brains to catch this value impulse as moves amongst the asset classes."

Gold is just a lifeboat in a debt deflation and afterwards the source of credit creation. Freegold is a misnomer, it should be called GoldBondage, a monetary Dyson sphere to suffocate the physical sphere within.

Beer Holiday said...

Hi Woland,

You may be right. It might be interesting to watch, anyway. I like how they mentioned "transparency" as something they might look at.

I wonder how relevant is the fix these days anyway? I would have thought it less relevant today that before.

BTW I'm a huge Penn and Teller fan of all of their shows :-)

Nickelsaver said...

Grumps,

We all saw your comment on the last post. It didn't get a reply because you have chosen to play the role of instructor rather than student. If and when you say anything worthy of a reply we'll let you know.

Here's a little music to ponder while we wait.

K-LOVE

Motley Fool said...

The discussion with Tyranny I am aware of and will have in time. As stated in his post it was simply a private discussion that I suggested we have in public, as others may find some value in it.

Of course in private discussion he had listed perhaps five points to discuss, and I notice it has snowballed into 95, haha.

Anyways.

ein anderer said...

Bruessel demands higher taxation of Gold and Silver. Germany will follow 2013 (german).

GrumpsLabastard said...

Boundary conditions. Step back and look at the boundary conditions of GoldBondage.

Diabolitio283 said...

How can we say the Euro has strength right now? Cyprus just got a bail out this morning, and all accounts at banks had 10% stolen from them to help pay for it.

Yes, Europe has slowly acquired more gold, but their debt to GDP ratio is as bad as the US, and they have much less influence in the world. The dollar, even though it's weak at its core, is still stronger than other currencies and required for most oil transactions.

"The euro zone struck a deal on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risks of a wider bank run... In a radical departure from previous aid packages, euro zone ministers forced Cyprus' savers, almost half of whom are believed to be non-resident Russians, to pay up to 10 percent of their deposits to raise almost 6 billion euros."

http://www.reuters.com/article/2013/03/16/us-eurozone-cyprus-idUSBRE92E02220130316

poopyjim said...

@Grumps

If FG were implemented today, how would a Space Elevator be built? Mars colony?

LOL what about the Martians? Think of the children! XD

It's clear that the rationale underpinning your criticism of freegold is the appeal to consequences fallacy i.e. argumentum ad consequentiam. You're essentially citing what you perceive as negative consequences of freegold as a means of arguing against it.

You are not the first to do this of course, but you should be aware that (1) you are engaging in a logical fallacy and (2) the alleged consequences are not what you think they are.

Freegold will not be the death of stock and bond markets. You average Joe simply won't be compelled to put his surplus in those markets. Come freegold, investing in stocks and bonds will once again be the realm of the speculator, as it should be. There may be less dumb money floating around in those markets for traders to shear, but I don't see that as a bad thing.

Freegold is simply a pressure release valve. Without it, in an environment where everyone must put their capital at risk, we have massive credit bubbles, big government, and all sorts of explosive malinvestment all over the place. Gold is simply a place for capital to rest, separate from all that other nonsense.

Diabolitio283 said...

One last things, there will be a BANK RUN in the Eurozone on Monday as a result of this.

You heard it here first. Look for USD to surge, and GLD to puke ;)

One Bad Adder said...

DP - The Dollar : $IRX managed to do its "look away now" thing on Thur and Friday ...once again.
One Friday (soon) ....it WON'T! ...;-)

GrumpsLabastard said...

Fed's balance sheet increased 57B this week.

China's been buying treasuries again, 37B in Dec and 44B in Jan.

Total Foreign holdings match that same increase in Dec & Jan.

Japan, ME oil, Brazil, Russia, India aren't adding. China's gain matched by drop by Caribbean Pirate hideyholes.

KnallGold said...

:-)

ae44bf5a-2cce-11e2-94ad-000bcdcb8a73 said...

Any thoughts from Euro area, especially PIIGS countries, readers on the likelihood of the Cypriot deposit confiscation to cause bank runs?
ZIRP has turned the risk free return into return free risk.
DM

One Bad Adder said...

All - FYI.
This Chart (toggle the time period to - All Data)shows Bitcoin Price history. Similar to a 30Yr $PoG Chart eh? ...c'ept the Bitcoin "period" is only 30 MONTHS! Pretty amazing.
This ...from CNN gives a bit of background and AlJazzera has recently put out a good article as to why this time (price spike) it IS different.
For those interested, a search will locate it.

dieuwer said...

Let the Eurosystem bankrun begin: haircut of 6+% FORCED UPON Cyprus depositors!

http://www.forbes.com/sites/karlwhelan/2013/03/16/cyprus-depositor-tax-genius-plan-or-the-end-of-the-euro/

Indenture said...

Gold is just a lifeboat in a debt deflation

KnallGold said...

You might remember the Rosetta Stone music clip I posted, just found out that former RS singer Porl King was still actively experimenting in the underground, finding a new sound. The best so far is children of the poor:

http://www.youtube.com/watch?v=1fn4JpS2G9Q

BR,
KG

PS: oh and that Gold thing, looks like the stars have aligned in an irresistible manner ;-) :-)

GrumpsLabastard said...

I'm having difficulty in finding a way to keep gold insulated from the long term credit markets. See theses 8 and 9.

Ask yourself if China or India are going to sit still with this credit restraint while 300 million in each country want a middle class lifestyle.

It just won't work. It's not stable.

Winters said...

It is interesting reading reactions to the Cyprus bailout on non economic forums. The outrage, the incredulity. With A/FOA/FOFOA under ones belt the inevetibility of actions like this is of no surprise.

I've come to expect nothing remarkable in the ensuing days as everything just keeps blowing over...mortgage mess, MF global, etc. Maybe this will be an interesting week, maybe it will be same old. Best get out the popcorn anyway.

If actions taken due to readings of FOFOA are serving you with a serene sense of calm while other depositors take a haircut and fume, don't be remiss to send him some votes :)

dojufitz said...

I don't know if this has been answered already.

FOFOA, what are your thoughts on the 'known' Gold above ground....the old it fills 2 Olympic pools.....

how would something that has been mined for 5000 years be known?

I would have thought it would be alot more as most has been hidden?

ein anderer said...

#Cyprus and Cologne: 1.1m inhabitants each. Cologne’s overall budget/year: 3.2b …

Woland said...

It's good to know stuff like this Cyprus thingy couldn't happen here.
(oh, wait, didn't Indy Mac, that $10 billion failed California bank, and
WaMu have bank runs in 2008?) Weren't depositors misled about the
separate insurance coverage across multiple account #'s? OK, that was
an isolated incident. Yeah, MF global wasn't a bank, and the customer
funds (were)(supposed to be) segregated. And wasn't there a run on the
giant money market fund for Florida municipalities where those in the
know got out whole, while the stragglers had their funds frozen as the
"assets" couldn't be liquidated. I also remember a story about "auction
rate securities", which were sold to customers as "just like money in
the bank". How true. Until the market collapsed, and the poor slobs
had no way to access their money. The moral: a promise is a promise,
until it's not. Greetz!

Sir Tagio said...

Grummps, 300 million or more in India and China are not going to acheive a middle class life style. If they do, it's going to be quite transitory. The oil and other resources don't exist at a price level that will permit that to happen. It would be better for all including the "middle class" in the US (rapidly becoming the peasant class) to not have access to cheap credit.

Woland, the possibility of outright theft of deposits as well as commodities represented by actual warehouse receipts has been there for those who pay attention to see for a long time. Nothing is more obvious at this point that one must keep as much wealth as possible in physical form outside of the financial system.

Whether or not Cyprus accepts this, the repecussions of the fact that the EU tecnocrats consider this an acceptable technique to save the banks and bondholders is going to have huge repercussions, as their measures finally effect every common man and woman. Next week is going to be very interesting.

ein anderer said...

"So, you can see, this little decision to seize a little money from bank depositors in the little island of Cyprus could be a much bigger deal than you think.

It could conceivably precipitate a run on weak European banks.

And a run on weak European banks could hammer the European economy and then the economy of Europe's trading partners. And it could cause global markets to crash.

So keep an eye on what's going on over there in Cyprus.

It's potentially much more important than it seems."

Nicely said by Business Insider.

sean said...

I have a feeling history is about to speed up...

Diabolitio283 said...

From a forum I just read:

"CENTRAL BANK OF CYPRUS SENDS MESSAGE TO CYPRIOT BANKS: FREEZE EVERYTHING

JUST NOW
HAPPENING

EVEN INTER-BANKING EXCHANGES ARE FROZEN

http://www.skai.gr/news/finance/article/226595/epistoli-dioikiti-kedrikis-trapezas-pros-trapezites-pagoste-ta-pada-/

Other select posts in reply to this to give an idea of public opinion:

"i'm going to withdraw all my motherfucking money"

"I don't see what's wrong with it. The benefit of destroying the laundry machine that is cyprus today is bigger than the damage done."

"The PIIGS are going to withdraw there money, they are on the same level as Cyprus. That will be whats 'wrong' with it."

"It's not about destroying the laundry machine you idiot, it's about moving it to Luxembourg. How naive do you have to be to think that the EU or Germany cares about destroying the laundry? They just want to get the Russians to use their own banks. It's like you missed the fact that Germany rushed to escort Siemens executives to Germany and grant them German citizenship and asylum while they are being prosecuted for massive corruption in various countries, including Greece."

"If the PIIGS, especially the Spanish panic over this and empty their bank accounts, we're going to see a category 5 happening."

"[This will cause] collapse of the EU and end of the euro. No seriously, its the return of the Deutschmark."

"I would suggest anyone who has money in European banks takes out the maximum. I'm about to go take out 500 euros in Paris right now."

KnallGold said...

Hmm, with that 7-10% tax on paper savings, that makes, well, let's put it this way: given the fact that Gold bears zero interest (as they use to say correctly) and the savings account only minus 7-10% - gives physical Gold an advance of, holy cow! OK, without emotions, this is a simple mathematical calculation. It even competes with the long term mean performance of the stock market.

Given the safety of physical I would say this makes a very good alternative!

One Bad Adder said...

Yes, the Bitcoin price seems to be reflecting the on-going Fiat Hyperinflation far moreso than Fiat-Gold and Silver is currently.
The Non-Fiat Cyber-currency could well have a ways to go (on a Fiat - NonFiat exchange-rate basis) given Bitcoins built-in Deflationary Bias.
Meanwhile ...back in the Asylum it's a pity we can't dial up our own scalings, for if that was possible, what appears to be the alt-currencies "catching-up" to $PoG, would show $PoG as (still) the Laggard.
...and what appears to be driving the alt-currencies? why $IRX ...of course!

Michael dV said...

I wonder if allocated gold in the banking system would be 'taxed' in a global cyprus type situation. It certainly did not prove itself to be any advantage at MFGlobal.
I do feel good about my few coins in my various hidey holes though.

Luke said...

You guys got any good links that explains money supply growth in our current financial system. You know, where banks create liabilities and assets on their balance sheet and how it all works.

Thanks

tintin said...

Does bank runs lead to deflation?

Deposits out of the banks into/under mattresses, banks even more short of reserves, money printing, currency devaluation, ,,,

Is the ECB/BIS/IMF trying to trigger something bigger, like FG?

Jesse McL said...

Cyprus has no central bank to call its own, so they get 10% 'taxed' off their purchasing power. The UK does have its own, so they 10% QE'd off theirs. So what's the difference?

Bastard, I don't think FG restricts credit creation per se. But it does give savers the option of whether or not to participate in said creation. It's not a panacea, it's just the best you're gonna get.

Cheers,
Jesse.

Dr. Octagon said...

I'm fascinated by this Cyprus bailout. I also noticed that an ECB central bank recently chose to increase their gold coin stock: http://www.ecb.int/press/pr/wfs/2013/html/fs130312.en.html

I think the ECB is telling everyone that holding savings in the form of currency may not be the best idea, going forward. I wonder if people will get the message?

KnallGold said...

Adding gasoline in the backyard, I remember...or even white Phosphorus ;-) , hey I like its color, especially in the night, and also when it burns. White phosphorus btw self-ignites in air and when it burns, it burns!

http://www.youtube.com/watch?v=GcdfqPGKUU0

And from who was that song which started "Fire ... ?

GrumpsLabastard said...

Luke, try Paul Singer

http://www.zerohedge.com/news/2013-01-30/elliotts-paul-singer-how-money-created-and-how-it-dies

GrumpsLabastard said...

Sir Tagio,

I've always been suspicious of Peak Oil. It was rather convenient how wells were capped here just as the Gold Window closed and the Petrodollar was born. And it's curious how a significant portion of oil flow has a bottleneck in the Persian Gulf. A convenient throttle for the purposes of geopolitics.

Wil Martindale said...

Screwing investors is one thing, robbing depositors is another. It's almost as if they WANT to start a run on the system.

I can't think of a better way to do it on purpose. And they certainly aren't stupid enough to do it by mistake.

Beware the ides.

Herb said...
This comment has been removed by the author.
Seacher1578 said...

I was sent this article/site by a lifelong friend.I have had my mind challenged more here than by any book or article in the past decade. I have cast my 1st vote for this blog to continue. What a better way to vote than by a Free Market choice financial contribution. Regards to FOFOA and contributors!

/SleepingVillage/ said...

Knall,

You've fought hard and you've saved and earned...

Every single day I got a heartache coming my way...

Am I getting warmer? ;)


I dig that Miserylab song you put up there.

M said...

Ok I will say it.

This will amount to nothing. Cyprus president will retire and be an adviser to John Corzine's new hedge fund.

anand srivastava said...

It seems to me that with the Cyprus deal ECB has indicated that they are interested in crashing the system now. It seems German finance minister didn't care about small depositors being taxed, and neither did IMF.

But ECB and Cyprus govt decided to go ahead with it. Possibly ECB and Cyprus did not want large depositors to shell out 40% as tax. Might have caused damage. But this will cause a bank run. And ECB cannot print as much money as will be required to backstop the run on the bank.

Or maybe the printing is required to create the liquidity for the massive Gold revaluation.

Mircea said...

http://oi50.tinypic.com/20iicxt.jpg

Mircea said...

http://upload.wikimedia.org/wikipedia/commons/a/a1/Executive_Order_6102.jpg

ein anderer said...

@Luke:
Very often it is wise to carry your question over to Google. Like this:
https://www.google.de/search?q=money+supply+growth+FOFOA&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:de:official&client=firefox-beta

ein anderer said...

@Diabolitio283: It’s quite easy to step into the discussion with some FOFOA friendly english remarks ;)

ein anderer said...

We know Sudoku.
The figure interdict twins in the same row or columne.
Wondering if there is a Sudoku kind of a Freegold matrix showing its unavoidableness at a glance.

ein anderer said...

Following a discussion in Deutschlandradio regarding Catholic Church. Wondering if this huge system has got it’s Checkmate too, long time ago: If they stay "pure" they do not cope with evolution of society and will get forgotten. If they become "modern" they polarize and will be beaten (or will beat, but this is not allowed anymore). Structural Checkmate since very long. When the checkmate will become obvious? Either in the long run after beeing forgotton. Or is the short run soon a Pope is not indifferent anymore and becomes megaphone of some kind of modernity.

It seems as if our time is a climax of many historical trends …
More than ever if one is reflecting the Vatican’s Gold: may be the second biggest Gold volume worldwiede

Wil Martindale said...

anand,
On the surface, I tend to agree, though as I have dug deeper into what appears to be an increasingly selective tax on "wealthier accounts" it may take a week long bank holiday to sort it out.

Then there's Sinclair's idea that it's a stab at Russian black money (wondered why they made an immediate military posturing move). Perhaps by the end of the week, they'll have a list of account numbers and a percentage of what they are "nationalizing" from each account according to its "means".

In the end run, "money" today is becoming less and less an "earned wage" and more and more a "controlled subsidy". Wage earners have a right to be furious over theft of wages, but do those who receive handouts (or bailouts) have a say in whether some of it is "clawed back"?

As we attempt to understand the thinking in these terms, gold becomes the clear store of value for wage earners (producers big and small) even as the role of "money" continues to lose that utility.

As paper money continues to break down, it will continue to diverge in utility comparable to gold, until gold is widely seen as the more superior form of "money" in the minds of many simply because those who truly understand it's role in today's world DO NOT have it stored outside their own possession (I know I never would, as I trust NO country, NO bank and No ONE other than myself with my own wealth).

As for cause and effect, intententions and consequences ... really ... who can know the minds of men (and their poitical constructs) as the paper burns?

Mikehy said...

People have been predicting the imminent demise of the Roman Catholic Church for approx 2000 years. One of these millenia someone will be right.

Sam said...

http://www.nbcnews.com/business/power-shift-energy-boom-dawning-america-1C8830306?ocid=msnhp&pos=1

Does enegery indepedence mean the US is ready for freegold (if we are the super producer why trade our wealth for paper) or will this defend the life of the dollar

Franco said...

One Bad Adder:

I just wanted to point out that the total amount of Bitcoin in circulation is currently growing at a rate of about 13%/year. I wouldn't call that "deflationary" quite yet.

Franco said...

Also, I agree with Wil Martindale that this looks like a decision made with the purpose of starting an avalanche.

sean said...

Hi Franco,
Read this post starting from the words "Gold is off the table"...

enough said...

Goldman Bearish Gold Call Overrun by Inflation: Argentina Credit-

Argentines are buying more gold than ever to protect their savings from the Western Hemisphere’s fastest inflation as the country’s bonds suffer the worst returns in developing nations

http://www.bloomberg.com/news/2013-03-18/goldman-bearish-gold-call-overrun-by-inflation-argentina-credit.html

enough said...

Official GLD puke

13.55 tonnes or 1.09%

KnallGold said...

@/SleepingVillage/ , yess, it was that decisive Fire! from Charlie Brown! Didn't even remember that culty fire woman, good to have some "external brain cells" :-)

The title track "An Eye for the Main Chance" from Rosetta Stone used to give me cold shivers and goose pimples, particularly at 3:30. Very much liked the cover of the CD, even put it on a pullover! My favorite Old School Goth Rock band...

Though "When the Levee Breaks" is still my favorite track there (just found out it goes back to Led Zeppelin and roots in fact in an old blues song, wow!). Jesus, Porl brought this song to brutal abrasive and orchestral perfection, this still has such much power today! Porl is King!

http://www.youtube.com/watch?v=iHw57fVRVdU

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

Oh and all appropriate titles for the current time. One word you'll read more often the next days is DEFAULT! , I'm sure.

But Good Night now!

Edwardo said...

GLD now leaks physical almost every day, regardless of price movement, but, today, on a day when "gold" was up wire to wire, it "puked." Connect the dots.

byiamBYoung said...

It's quiet here... too quiet....

Luke said...

WHere do you guys follow the puke indicator?

/SleepingVillage/ said...

Knall,


I think a lot of my brain cells were melted by misadventure, but it sure was fun... hah!

Cool version of When the Levee Breaks. I'm still pretty partial to the Zep version, though:) I do enjoy the dark vibe of goth and industrial music, but I naturally lean more to the crossover stuff to satisfy the rocker in me.

Years ago, I used to really dig Ministry - KMFDM - NIN - Chemlab - Skinny Puppy - Front 242 - etc...

Type O Negative will always be my favorite goth band - Pete did it well and had a great voice.

Christian Woman

Black No. 1

Okay, I guess that's enough from me. We're bunging this place up with wicked tunes:)

The Dow Theorist said...

To Luke:

here you find it:

http://www.spdrgoldshares.com/assets/dynamic/GLD/GLD_US_archive_EN.csv

One Bad Adder said...

Hey Franco: -
Fair comment - Where I see a deflationary bias (with Bitcoin) is related to their well defined "planned" issuance compared to current observed (and presumed future) uptake. When considered together ...I get uber-D-Bias ...FWIW.

ein anderer said...

My today’s readings: FOFOA’s clear and concise posts

Confiscation Anatomy - A Different View

Confiscation Anatomy – Part 2

The Waterfall Effect

Each day I am getting more and deeper insights is worth for a donation.


One Bad Adder said...

This is what we'd expect to see (divergence) when $IRX starts to plumb the depths of Zero (yield) ...and beyond.
Yesterdays little mini-separation was (probably) exacerbated by the Euro / Cyprus thing, as we're not (again) there ...yet.

One Bad Adder said...

Curiously, these two (alt$ - Gold) are also showing a mini-separation a-la $-$IRX.

Maybe something they put in the water ;-)

TristramBoris said...

Interesting viewpoint on Cyprus bail-in for discussion.....

If you are a depositor in a periphery Eurozone country, then this haircut sets a precedent which in effect is a fairly low premium insurance policy against losing all of your savings.

With that perspective, would you be so keen to withdraw your savings? Where else would Mr Average consider a possible destination particularly at €100k?

TB


ein anderer said...

A small tribute to ANOTHER, FOA, FOFOA, Aristotle and many others on SPIEGELonline, Germany.

Sir Tagio said...

Indians are putting "too much" of their surplus into gold, and limiting credit growth. Bloomberg article: Credit Growth Imperiled as Gold Lures Deposits.
http://www.bloomberg.com/news/2013-03-18/credit-growth-imperiled-as-gold-lures-deposits-corporate-india.html
Nice evidence of the discipline function gold will play as it becomes the preferred SoV, as the savers "starve the beast."

Pierre Don Denirio said...

Sorry everyone hoping for gold to be the money game changer but unfortunately for you it is actually Bitcoin. Yes Bitcoin is the answer please try again in a few decades when there's a new crisis.

Agent98! said...

dojufitz said...
"I don't know if this has been answered already.
FOFOA, what are your thoughts on the 'known' Gold above ground....the old it fills 2 Olympic pools....."

...older watery events:
http://www.newscientist.com/article/dn23284-gold-seams-form-in-an-earthquakepowered-flash.html

Tony said...

@ Wil

I have to tell you, your post of a few days ago has had more air time in my mind than I care to admit. I've been contemplating the idea of a hypothetical $20k revaluation pitstop on the way to full blown Freegold and how I might react to such a scenario.

I have worked through plenty of "what-ifs" in my day, but that whole concept was new to me. Just had to thank you for the additional food for thought. I really enjoy your posts.

Herb said...

It looks like the powers-that-be in the Eurozone have gotten the worst of all possible outcomes from their loot-the-depositors scheme in Cyprus. First, they shined a very bright spotlight on a cookie jar that they had theoretically promised to never raid. Second, they confirmed what the Icelanders found out: if you hold your breath until you turn blue you will get a better deal, at least for the scads of little people who vote.

burningfiat said...

Pierre,

BTC market cap.: 10920425 BTCs * 46 EUR/BTC = 502 * 10^6 EUR

Gold market cap. (approx.): 170,000 tons * 40,300,000 EUR/ton = 6.85 * 10^12 EUR

So bitcoin only has to do a ~13,600-bagger from here (while gold stays stationary) to store the same amount of value as gold does right now... Like realism much?

ampmfix said...

Bitcoin might become a good MOE but it is a meaningless SOV. I might use it to buy and exchange stuff but never to hold it for ages, it means nothing, it is just pure convention (mined in a computer, wtf does that mean and how that fact gives it value...??!). Gold is convention AND a supreme physical entity, admired for ages, its wonderful physical qualities will never change.

Alan2102 said...

Motley Fool said...
Alan2102
Thought you might find this interesting
http://screwtapefiles.blogspot.com/2012/08/so-how-much-silver-is-really-out-there.html
Short answer...about 20 billion ounces above ground.
So much for the much vaunted shortage.

Hi, Motley!

Of course there is no *absolute* shortage of silver on this planet, any more than there is an absolute shortage of gold. There's megatons of it out there. You say 20 billion ounces, and that sounds reasonable to me. (That would put us at a ratio of about 1:3, gold ounces to silver ounces; interesting.) The issue is: how much is available in inventory-able and exchange-able, commercially-available forms and stockpiles? How much is actually available to be exchanged, right now, today, for dollars at the current spot price?

Surely you knew that. Didn't you?

At such time as the commercially-available stockpiles become depleted, then it is a matter of how high the price must go to coax metal out of the hands of the holders of all that metal out there. And of course there is a LOT of metal out there -- both silver and gold. In the case of gold, leaving aside obvious large holders (central banks et al), perhaps 20-30 thousand tons (maybe more) in the hands of Indian and other peasants, and other people of modest means, around the world, in the form of small pieces of jewelry and other objects, closely held. (Likewise silver: vast amounts, held in small quantities in the form, usually, of personally-meaningful objects, by individuals and families around the world.) At what price would they relinquish their gold? And by "price" I do not necessarily mean dollar price, though dollars are a useful way for us to think about things for obvious reasons. Maybe they will hold out for $100,000/ounce. I really don't know. Or, maybe they will Think Like Giants [tm] and refuse to sell their gold for anything, ever.

/SleepingVillage/ said...

Shitcoin seems like a yuppie fad to me...

Maybe we'll watch them disappear faster than light:)

Spooky action!




Pierre Don Denirio said...

Bitcoin is an excellent MOE due to its extremely low transfer fees and untracability.

It's main economy is online hard drugs and its valuable characteristics are 1. impossible to seize 2. impossible to tax and 3. impossible to trace.

Currently the value of 1 bitcoin is 60 USD with only a small economy. If the economy in Bitcoins will increase (expected) one can foresee that the value of a Bitcoin can go to the tens of thousands of USD per 1 Bitcoin.

The problem with Bitcoin is that its value is derived from use in trade while it is actually deflationary, thus hoarded and coins taken out of circulation (reducing its MOE value). However because it is nowhere near equilibrium it will be long before deflation sets in and by then the value would have increased many folds from where it stands today.

An opportunity of a lifetime has passed many (10000+% wealth increase in the recent years for Bitcoin holders) but perhaps there is still some to profits for current people that enter the Bitcoin market.

milamber said...

Since it has been awhile since I have posted a GLD update, I figured I would do one today.

Why?

Because GLD grew in tonnage today!

Go Go Go Gadget arbitrage, right JdA? :) (JK)

Anyhoo here is the latest:

67 trading days since the high of 1353.35 tonnes on Dec 10 2012

28 of those days were zero change days.

5 days were positive w/ an avg gain of 1.988 tonnes

34 days where was a loss.

-141.13 total tonnes lost on the down days

-4.15 tonnes lost on avg down day

But only two confirmed pukes during this time period (loss greater than 1%)
Feb 20 2013
Mar 18 2013

27 trading days between last GLD up day (Feb 7 2013) and today.

Milamber

Nickelsaver said...

P Diddy Denirio,

So if I understand you correctly, you are simply offering up bitcoin as an investment opportunity.

Fantastic! I got a better one...

milamber said...

Yes BitCoin is an excellent MoE. I wonder how the printers of other MoE will react to it?

How many divisions does BitCoin have, anyways? :)

Milamber

milamber said...

@ Wil

regarding Cyprus

I think the Cyprus situation will be seen as a crossing the Rubicon moment.

Thinking back to Keynes discourse on inflation, particularly this passage,

”There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

But this decision by the ECB is allowing millions (billions?) to see & diagnose that they are losing "wealth".

This is transparent.

It is also thought out.

And it is being done for a reason.

So, what are some of those possible reasons:

- Punish Russian oligarchs for laundering money in Cypress (because we are shocked, SHOCKED, to find out that is happening)

- Help Merkel win an election?

- Make the EU flush with Cypriot funds?

Or..........possibly.......

- Send a message to those that chose to store their excess purchasing power in paper? Maybe they are being given on object lesson that their money truly is “not what they think it is” (Thanks Ender!)

It is almost like the ECB is doing a reverse front lawn dump; IE we will not save all debt at all costs. We will simply make sure that we fulfill our mandate. The rest is up to you.

It will definitely be interesting to watch this play out, but I think that this was done on purpose for a purpose.

Date: Sun Jan 11 1998 01:52
ANOTHER (THOUGHTS!) ID#60253:

...Nothing is assured! Life is a risk and subject to many changes...The risk is to each person and how they hold their wealth. The concept of what wealth is, is going to change. Concept is but a thought and a thought of what value is, changes thru life. Time will prove all things.


Pretty smart feller :)

Milamber

Victory said...

I found this article by Eric Sprott on JSmindset interesting although I favor an alternate conclusion.

http://sprott.com/markets-at-a-glance/do-western-central-banks-have-any-gold-left-part-ii/

Eric is tallying net US gold exports via U.S. census bureau annual reports going back to 1991. Over the past 12 years since the reporting was calculated it would appear according to Eric's calculations that the US has net exported 4,500 tonnes.

The source of this gold would seem to be either private holdings or the US treasury. Eric speculates its the Treasury, I think its more likely private stock.

My next inquiry was well what kind of 'Gold' is included in the category. Is it only physical, which makes sense if its export goods appearing via census bureau stats, or is it something more.

The only think I found was this addenda:

'Gold exports, nonmonetary - This
addition is made for gold that is purchased by foreign official agencies from private dealers in the United States and held at the Federal Reserve Bank of New York. The Census data only include
gold that leaves the U.S. customs territory.'

Not much, but this seems to imply through deduction that we are talking 'physical only' from within the U.S. boarders.

So no LBMA allocated or unallocated.

Do others agree or disagree with this interpretation?

4,500 tonnes is a lot of metal

-v



milamber said...

@ Victory

What did you think of Mr. Sprotts decision to not include the roughly 170,000 TONNES of above ground gold in his calculations?

Before you spend too much time reading Sprott, I would rec re-reading ANOTHER gold analyst who unfortunately doesn't write anymore.

I started Sprotts letter, but got so frustrated I decided to read through the archives. Again :)

Date: Sun Nov 16 1997 10:20 ANOTHER (THOUGHTS!) ID#60253:
...
Date: Sat Nov 15 1997 20:14
Crunch ( Question for Another ) ID#344290:
Another, a question, please: When gold is borrowed from CBs, what collateral is required by the CB to be assured the loan will be repaid in full?

Crunch,

If you will allow, I will add to your thinking. In todays time the CBs do not sell physical gold with a purpose to drive the price down. They sell to cover open orders to buy what cannot be filled from existing stocks. Look to the US treasury sales in the late 70s. They sold 1 million a month using open bid proposals with much fanfare. If the CBs wanted physical sales to drive the price they would sell in the same way.
The sales today are done quietly with purpose. The gold must go to the correct location. That is why these sales do not impact price as they occur, there is a waiting buyer on the other side. As all of these transactions are done thru certain merchant banks, not direct CB contact, the buy side does hold hedges.
When actual delivery takes place, months later ( and usually at the same time as the CB sale statement ) these hedges come off and affect the market price.
It is important to understand that none of these CB sales of physical need to go to the open market at all! The BIS could take it all. You see, for them to take all of Canada's gold would have been as "cool water on a hot day". That small amount of currency was nothing to them.
All currencies, today, are locked to the US$ for value. In a very real sense, no country can own it's gold as the BIS has ties to all of it. Canada, Australia and others say openly "what is the use"? The BIS, instead of taking it outright, places it where it's needed!
As long as there is an open market for gold, it will not be allowed to trade above it's commodity price! It has far to much value for that to happen. You see, in much the same way that a zero coupon bond trades at a discount to face, gold is traded for it's discount of " money value to commodity price! Think that I a fool, because I trade gold for thousands US an oz.? You will think much on this in the future.
Banks do lend gold with a reason to control price. If gold rises above it's commodity price it loses value in discount trade. They admit now to lending much where they would admit nothing before! They do this now because of the trouble ahead. Does a CB have collateral to lend it's gold? Understand, they only lend their good name on paper, not the gold itself. The gold that is put on the market in these deals belongs to someone else! The question is not "Are the CBs worried for the return of gold?" but, "Has our paper been lent to the wrong people?".
The BIS will not allow the distribution of all gold to settle claims. The mines of the world will be forced to sell to the BIS at the "locked" existing commodity price of gold. This will happen over many, many years as no other "official" market outside the BIS will exist.
"You see, oil will flow but oil and gold will never flow in the same direction!"


Granted it is from 1997, but I bet you that even today (ESPECIALLY TODAY) the CB’s are just as involved in the gold market as ever. Not the same deals (the barbarian Asian’s screwed that up), and not the same methods (GLD anyone?), but the same mindset: get the gold where it needs to go when it needs to go there. Do it for as long as possible until we have to (or are ready) to jettison the current $IMF IMS.

Milamber

Victory said...

Milamber,

I'm familiar with that quote from Another but I'm not sure the implication.

If we take the 4,500 tonnes on its face where is it coming from. I'm not discounting above ground stock, I believe that is what Eric is referring to with 'private investor bullion.'

Are you suggesting that the 4,500 tonnes came from private stock that was not sold by it's owners but rather by it's custodians and replaced with CB certificates, presumably euro area CB certificates, since UST doesn't play that game?

In that case we would be talking about LBMA unallocated being sold, but from the WGC paper in 2001 they estimated unallocated reserves (the bullion reserves behind the credit system) holdings a little over 1,000 tonnes if I remember correctly. So that wouldn't make sense then since it would wipe out the whole reserve stock.

In fact that's something I've always wondered about from Another, he said 'The gold that is put on the market in these deals belongs to someone else!'

I get that the forward sale repayment is coming form someone else (the mine), but where is the spot sale coming from? Is it more unallocated credit? I'm a little fuzzy on that.

But in regards to the US census bureau's cumulative net export figure of 4,500 tonnes - I am imagining it is private bullion holders who have gold stored domestically in the USA divesting of their bullion for $$$

-v

milamber said...

Victory,

Sorry. I will try and be more clear.

I am saying that if Eric Sprott and all of the other metal heads were in charge of analyzing icebergs, they would apply all of their focus on the top of the iceberg and ignore everything under the surface of the water because they can’t see it and they can’t quantify it. So they ignore it & pretend that it is not there.

But Another told a different tale about gold than what you (generic you) see reported by Eric Sprott. He talked about the part of the berg under the surface. He talked about a world where Giants roamed. Where deals are made to make sure that oil goes where it needs to go and gold goes where it needs to go.

Remember him mentioning that in the 90’s, he was trading gold for thousands when its spot price was $300?

What reports did that show up in?

Did you see that on CNBC?

How would that appear in Eric’s detailed analysis of public exchanges?

Or Harvey's breathless reports on the COT?

Or Turd's hyperventilations about the Cartel doing another raid of the poor set upon metal paper trader trying to live the right way in the trading pits?

If you believe Another’s story is valid, then you have to believe that gold traded (and probably still does) for amounts vastly different than what is quoted on an exchange.

The price it trades at depends on who wants it and when do they need it.

That’s why I reposted Anothers quote. If you read it, and then read Sprott again, I think that you will see that there is no way in the world to know exactly where the gold comes from.

And that is the point about gold I was trying to make.

Trying to analyze the gold market using publicly available figures and make the case that the CB's don't have any gold is the epitome of absurd IMO.

Sure, we can (and do) speculate about where the gold is, but without knowing the size of the berg under the water, who is chipping how much off of it each day, then I submit it is impossible to prove what Sprott is attempting to prove.

Hopefully that is a little clearer

Milamber

Motley Fool said...

I would like to give our mini-superorganism the opportunity to critique and hopefully improve a recent estimate I made on the gold of the world and where it resides.

I am working with a total of 170,000 tonnes as it is one often bandied about.

Official : 36000
Europe private : 20,000
India private : 20,000
China : 5000
Saudi royalty : 20,000
Arabian private : 7000
Africa private : 10,000
America private : 10,000
Australasia private : 4000
Russia private : 5000
Israel private : 10,000
South America’s private : 10,000
The ETF's : 2000
The Rothchild's : 3000
The Vatican : 7000
Industry : 3000

This totals 172,000 which is close to the estimates out there for total, and perhaps more likely yo be accurate as that estimate is a bit dated.

I can provide reasoning for each guess (mostly) if requested, but prefer to leave it as is so as to not affect your thought processes. I will note however that the official total includes an estimated 6000 tonnes holding for China, based on Nick Laird's recent work, just because that number might seem odd.

So, what do you guys think?

TF

JC said...

For anyone that has come here with mostly an interest in bitcoin then you perhaps also have an interest in what money really is, this blog is an excellent place to find more about this thing we use called money. Welcome.

The credibility of bitcoin comes from it's cryptographic integrity, this judgement comes mostly from those that appreciate technology. The focal point of bitcoin is in it's libertarian anarchic decentralization monetary aspects. These are not mainstream views and so bitcoin will never be a true mainstream currency yet there is a strong niche for crypto-currency which means this new form of money is here to stay, currently in the form of bitcoins.

The current problem with bitcoin is it's trying to be a medium of exchange to replace or supplement fiat currency and also function as a store of value like items of hoarded wealth and these two functions are causing some tension between the two camps of bitcoin users, those that want bitcoin for transacting regular payments and those that want to store bitcoins as value over time.

For more information on these ideas I recommend FOFOA's posts:
- The Debtors and The Savers.
- Focal Point: Gold.
and perhaps,
- Credibility Inflation, for a bit more background.

One thing I have noticed on the bitcoin forums is many people are waiting for the right timing to 'cash out', this reminds me of a similar outcome that people with silver are also trying to achieve. The silver thing has been discussed many times on this blog and I believe those discussions would also be relevant to timing bitcoin as well.

Alan2102 said...

Motley: a lot of private holdings. How much of that is shrimps? A third, maybe?

Motley Fool said...

Alan2102

That's as good a guess as any. It would be in the right ballpark.

TF

Wil Martindale said...

(thanks Tony for your kind words)
All,
I believe we live in a world of perception management. I like Milamber's iceberg analogy but submit another image of an inverted iceberg of massive perception management above water, buoyed up by a tiny tip of reality in gold possession and flow, and the instrumants that affect it, i.e. the "real world".

We here are part of that tiny tip, exchanging thoughts about the real world, whereas the VAST majority of people dwell in the realm of perception management, the fantasy world of fiat, of centrally planned Potemkin economies and of controlled subsidy "money".

Cypus, desperation aside, is another form of perception management, an intended consequence to bring about a little more reality "above water".

In our world today, gold is VERY powerful indeed "under the water" but how the masses "view it" is far, FAR more powerful in this realm above water, where perceptions are managed, by Goldman and MSNBC, CNN, Cramer, the FED, Obama, etc...

Gradually, the masses will begin to think as we do and the iceberg will right itself against the fantasy of "managed thought".

When that happens, so does Freegold. Cyprus is another step in that direction, as was MFG, PFC Best, Sentinel and other unfortunate intrusions of reality upon a centrally managed fantasy of "all is well, INVEST, spend, drink from the cup of debt and live forever on borrowed wealth" and all manner of Pollyanna sustenance for the sleepy lotus eaters.

Reality is still a very hard pill to swallow. Just talk to your friends and family about the coming hyperinflation and watch the fear and terror in their eyes, the subject will change VERY quickly.

Only when reality INTRUDES upon fantasy will the belief and change in thought occur. Until then, "hope and change" the mantra of Wall Street's shiny 2 term mascot, will keep the iceberg inverted while the perception managers buy their bullets.

Biju said...

Motley Fool. : I think the Indian private alone maybe in the order of 60,000 tons.

For past years we see india, importing around 1000 ton/year , then add historical accumulation, hidden temple hoards, smuggling imports which does not show in official records( you can add most of Dubai imports as gold on transit to India)

KnallGold said...

OBA, not there ...yet, hmm, but I think we are marching faster than we might think! Today I read in then news ticker that the French state attorney has initiated a case against IMF(!)'s Lagarde and raided her home. Reason for the investigation is her role in that old Bernard Tapie affair- probably not relevant here but relevant is the timing!

http://www.independent.co.uk/news/world/europe/imf-chief-christine-lagarde-is-investigated-over-compensation-paid-to-tycoon-8466024.html

Yesterday, German finance minister Schäuble was interviewed in the news. Journalist said, "but then Cyprus is insolvent! As for the timing, that would already be in June as it's said that they have to go into the credit market about then to get the first billion?".

Schäuble corrected that Cyprus would actually be already insolvent NOW because the only thing holding them solvent is the ECB's emergency facility.

"So it will be insolvent the day when the banks will re-open in Cyprus". The interviewer responded, short pause "so that would be tomorrow- thank you for the interview!". Interesting is that the journalist didn't insist further on the date, simply concluded it.

Its just factual now!

ampmfix said...

MF,

China might very well be up there already, but I find odd that Israel is that high, and Russia.

Edwardo said...

It's been illuminating to read the masses of ink being spilled all over cyberspace about the meaning of the Cypress situation. Very few have made the obvious conclusion that a major takeaway, perhaps the only takeaway, from this ongoing event is that one shouldn't keep one's savings inside a bank. Banks are for other things, and one should only use them to facilitate certain kind of activities. By all means, have a checking account and keep some cash in that account for very modest day to day expenditures like groceries and the heating/cooling bill. However, do not try to "save" your stash, legally obtained or not, within a banking account. This applies to Russian oligarchs, active duty members of the British Military, retirees, and, last, but not least, your average working stiff.

Most of the commentary I have read on the Cypress situation amounts to fulminations that the proposed remedies for this particular collapse-which has well known components that set it apart from other "events" of a seemingly similar cast- are all informed by dark NWO/Eurocrat takeovers or the more quotidian, but equally obnoxious and well worn bankster treachery theme. No doubt there may be a variety of strains actually informing what is now transpiring, but, whatever merit one ascribes to these other narratives (not a whole lot from where I sit) regarding "what is really going on" they shouldn't overshadow the very practical kernel of reality that is on display for everyone's consideration.

Woland said...

Hi Milamber;

I've been reading a lot about Cyprus these last few days, and like you
my main reason for doing so is to try to arrive at some plausible
explanation for the decision of the 3 parties (ECB, IMF, EU) to propose
the "solution" they did, which has now, for the moment, been rejected.

The possible explanations fall into 2 categories; 1. it was stupid, which
should be obvious, or 2. It was very clever, but not obvious. Since most
of the writing has been about the former explanation, and since most
Fofoans probably agree that the ECB at least is not stupid (though that
does not rule out stupidity of IMF or EU) I will confine my little thoughts
to the second category.

You have suggested above that one explanation could be a message of
the risks to saving in paper deposits, in favor of something more
tangible (and possibly yellow). That certainly could be an intended
message. I have another candidate to propose. It goes something
like this:

The world is filled today with offshore tax havens, usually in physically
small societies with little to offer the world except these special services,
and easily dominated by the large amounts of outside money which
seeks haven in them. The bulk of the wealth is neither the property
of, nor should its insurance be the responsibility of, the relatively small local population which acts as host. In any case, just like Iceland, the
local population's productivity (catching cod) would never be able to
make up for the losses arising out of a global banking crisis in which
fraud played a significant role.

So, when push came to shove, the British savers who had sought the
high returns with Ice Save were bailed out by THEIR government, which
then went after Iceland (unsuccessfully) I think that something like
that is playing out with the Cyprus situation, and a message is being
sent that, in these tax haven domiciles, don't count on the locals to
bail you out- they can't - you are going to have to look to the State
where the depositors money comes from. That certainly gets further
complicated when a foreign billionaire buys (and the local jurisdiction
sells) its citizenship. Deposit insurance was always intended to have
limits, in the Eurozone 100,000 euros, in the US $250,000.

So one lesson which (might) be intended from this manufactured
crisis, (because it could have been avoided for a few billion euros), is
that one shouldn't count on the ECB to back the deposits of non
ECB member states' citizens or their banks, particularly when they
are located intentionally to avoid the taxation which supports the
ECB's ability to provide the insurance in the first place. Anyway,
those are my thoughts for the moment.

Herb said...

Maybe this is a stupid question, but what value will Bitcoin have if someone creates Bitcoin clones? You could call them Litcoin, Sitcoin or Witcoin. You could call them Bitcoin 2, 3, 4, etc. Wouldn't they be equally rare (or unrare) as Bitcoin? In other words, what is special about Bitcoin aside from being first?

Franco said...

JC said:

"The current problem with bitcoin is it's trying to be a medium of exchange to replace or supplement fiat currency and also function as a store of value"

Why do you say that bitcoin is trying to function as a store of value?

ae44bf5a-2cce-11e2-94ad-000bcdcb8a73 said...

I would propose a test. If any giants are listening, I would propose that I buy a 20oz sleeve of eagles, maples or another recognized form of coin from Tulving or another major internet retailer. I will email a copy of the invoice to you or your designated representative, and if you wire me a mere 3 times the invoice price, I will send the physical gold to you.

Small potatoes? I am willing to do it continuously, and double the volume with every iteration. If each transaction takes a week, in three months, we should be able to deliver ~27 tons of physical gold at the bargain basement of only three times the paper price. Or at least all of the available supply from all major internet retailers. Significant quantities, and everything available on an ongoing basis.

If you are concerned about drawing too much attention, I will build to any steady state rate you like, and keep doing it as long as you like. I am confident I can find a large number of friends to join me if you would like to spread it around. There really is no need for you giants to pay 5, 8 or 10 times the paper price. Large amounts of physical, even by giant standards, for only triple the paper price. A bargain for those who understand the value of physical.

Takers?

(If there are...FOFOA, expect a very, very large donation once this gets going. For those looking to join my network, once verified by me and my soon to be rigorous diligence process, you get 2.5 times the invoice, I get 0.5 times the invoice)

Daedalus Mugged

milamber said...

Snips From David Kotok's latest letter. For those that don’t know him, David is a successful asset manager steeped in $IMF orthodoxy. Said another way, he can only perceive value in paper currency terms. :)

I recommend reading the whole letter for a feel for how he perceives what is happening in Europe. It really drives home the huge disconnect between the mainstream view and the lens that Another/FOA/FOFOA provide. Maybe someday David will see that the Euro really is severed from the Nation state. But probably only after the revaluation.


David Kotok’s comments (All emphasis mine),

…During secret weekend meetings, the Eurogroup, finance ministers of the Eurozone, and other powerful leadership concluded that they could take portions of bank deposits from everybody – foreign or domestic, small or large – and confiscate them. They could confiscate them because of a crisis resulting from their own failure to supervise and regulate one of the member central banks that is part of the Eurosystem. They did that, and the consequences are going to be enormous.

Unless there are systemic changes for the better, you cannot trust a Eurosystem deposit in a Eurosystem bank in a Eurosystem country. Unless there are systemic changes, you cannot trust and depend on sovereign debt promises of a Eurozone country. Unless there are systemic changes, the Eurosystem, Eurozone debt, and Eurozone bank exposure now carry a risk premium of some amount. That risk will vary by country, bank, and structure. In every case, there is a premium.

When you consider the total debt and total size of the troubled countries in the Eurosystem and the Eurozone, you can reach only one conclusion. This system is sick. Its political leaders are making a crisis situation worse by making decisions that they claim to be single events, and without a pattern or overall policy approach. No one believes them anymore. No depositor who is capable of avoiding this exposure will seek the exposure. Instead, depositors will seek alternatives.
…”


So, the ECB appears ready to let the chips fall where they may. The ECB wants there to be a risk premium tied to Sovereigns spending (whoda thunkit!)

It will be fascinating to see how this plays out. Will Cyprus (and the other profligate govt’s) be able to force the ECB to bail out all bad debts? Or will the ECB be able to say no? Or will Russia be able to get a port on Cyprus and oil/gas rights for cheap?

Regardless of the outcome, I don’t see why anyone wouldn’t want to hold physical gold.

Kotok’s letter just reinforces to me that we have crossed the Rubicon towards the death of the current $IMS and the birth of a new IMS. When you have a faith based system of saving wealth, once you show that the faith is misplaced, I don't think it can be taken back.


Milamber

Biju said...

Last time, Iceland had a bankrutpcy problem, I remember seeing them spurned by US/UK and they turned to Russia/scandinavia.

We see the same thing with Cyprus, which is turning to Russia.

wikipedia
In 2008 Prime Minister Geir Haarde sent a delegation Russia to negotiate a £3bn (€4bn) capital injection into the country's finances, after the country's traditional Western allies refused to help the collapsing banking system. [6] The loan was later renegotiated to $500 million after Iceland managed to secure loans from Scandinavian countries and the International Monetary Fund, but finally Russia refused to borrow any amount to Iceland. [7]


BBC
For its part, Iceland said Russia was not its first choice for saviour - they had expected significant help from the US and the UK.

"Considering the fact that many of our friends were not willing to help us, we had to discuss [the loan] with Russia," Prime Minister Geir Haarde told Finnish daily Helsingin Sanomat.


FoNoah said...

Motley - thanks very much for your estimates above, an extremely valuable contribution IMHO. (I find I can only really grasp things when numbers are involved).

The big surprises for me in your list are Africa and Israel, especially Israel? Without giving too much away, can you point us in the general direction of where that number comes from?

Now that Israel might soon become an energy exporter, I have been reading much about Russian-Israeli co-operation, and in fact when I was working in Saudi I remember a great newspaper headline that caught my eye: "Bear hug for the Barmitsvah".

Given that much Gold and that much oil/gas, this surely puts Israel on the map - a prime target for a "takeover" perhaps?

Cheers - FoNoah

One Bad Adder said...

JC: I think there's merit in "timing" a FiatAg - BitCoin asset migration if/when the sucker (BitCoin) next dips ...an opportunity for which should present itself well before (lets call it) "Another Day" ;-)

One Bad Adder said...

PDD: Oh it's Deflationary now ...and into the future my friend.(BitCoin)
We may well see an exchange rate retrace(s) but whilstever Demand outstrips (a clear and concise) Supply we'll see this D-Bias vis-a-vis Fiat.
Looking a bit toppy here so "Buying the Dips" seems an appropriate strategy at this stage ...IMHO.

One Bad Adder said...

The Divergences identified previously (above) are persisting today ...and will bear watching as the week / weak sentiment advances FWIW.

jojo said...

Coin shop report:

I dropped of the last of my Phyz. Silver that is.
I had been hanging onto a bit to play the ratio still but a series of things convinced me to just swap it out already.

Now that I have, I can about guarantee we have another year + to go ;)(and silver will rocket past 50 for a while too... finally). At least I no longer have that silver hanging over my head though.

Anyway, today my guy was the busiest I've ever seen him in almost 4 years...which was unexpected.

A couple were asking about diamonds and the rest were guys lookin/talkin silver. The first 2 guys were discussing "banksters stealin our money" while looking at pre 64 stuff. Another guy next to me got big eyes when I was handed some gold eagles: "Is that gold?" "I have 1000 ounces of silver at home but no gold, maybe I should get one"...

When I asked how business has been, he said he's been selling more gold than silver (I have a ton of silver he said) and gold has been a little difficult for him to get from his "supplier" and he runs out quick.

Those are the highlights of 20 minutes in there. I sure realized how much deeper the view being shared here is and how much my view has changed. My small donations here are TOTALLY worth it.

Also, when I took a bunch to him a couple months ago to swap for gold, he first did his price (spot - premium) x my ounces= $ then gold $ price (including premium)/my $ "credit"....well dooh!
That took a bit of weight off the table didn't it.

Anyway, today I asked him if we could maybe make that total premium a little less and he agreed. In the end I got spot x my ounces and my eagles were spot plus only $100 total! I thought that was pretty decent as I've seen $60-80 premium usually for 1 gold eagle before.

That's it though, no more will I be selling (or buying) silver unless it's that time and I'm trying to get stuff with my last 20 ounces of silver. There's gonna be so many guys at the same time as me though trying to dump their hundreds or thousands of ounces...it's not gonna be pretty.

Wil Martindale said...

DM,
There will be no takers, as giants do not do such deals. They have no need to risk dealing in an unknown with so much at stake. Who are you and what is your good name? What do you have at risk as you journey into this new realm? Your life? So what?

There are many "deals" that giants could save "a lot of money" on. The premium they pay is for discretion, credibility and 100% (no less)dependability. This is why CBs "worry for their paper being lent to the wrong people". Indeed they should.

In this world of giants, credibility carries a heavy premium. We know how this ends.

And BTW Roths hold 3000 MT? In those vaults? Think again.

My friends, in the video OBEY I posted a while back it was purely mauldlin in it's perspective toward "capitalism" ... BUT ... there was one moment of reckoning I fully agree with.

Today, armies are commanded and wars are waged by CORPORATIONS. Governments are merely puppet proxies. Hedge's inverted totalitarianism is truly a reality, it's only the civic attitude toward that reality that is naive.

ae44bf5a-2cce-11e2-94ad-000bcdcb8a73 said...

Will, given the incremental nature of the scaling, there would not be much at stake, from a giant perspective. And the iterations would build trust over time with consistent performance. And I assure you, if I, or anyone else was making a 2x $POG profit, we would perform flawlessly. And if they don't trust me, they trust somebody else who could do and arrange the same thing.

DM

JC said...

Franco said:

"Why do you say that bitcoin is trying to function as a store of value?"

I have personally spoken to some people with bitcoins and they hold them more as a store of value to cash out later, rather than as a currency to spend on goods and services.

Also from Bloomberg,
"Jittery Spaniards Seek Safety in Bitcoins"
"This is an entirely predictable and rational outcome for what’s happening in Cyprus," says Nick Colas, chief market strategist at ConvergEx Group. "If you want to get a good sense of the stress European savers are feeling, just watch Bitcoin prices."
http://www.businessweek.com/articles/2013-03-20/jittery-spaniards-seek-safe-haven-in-bitcoins

anand srivastava said...

DM

Why do you think giants care about coins?

Can you supply them with good bars?

And why would they believe that you are providing them with real good bars.

Also how do you get them to notice you?

They are giants and you are an ant. They can't even see you.

anand srivastava said...

Bitcoin is useless.

It is worthless as a Store of Value, because of the negligible market capitalization. Incidently this is the reason why Silver loses against gold.

It is worthless as a Medium of Exchange, because the supply is not limitless. People will tend to hoard it due to its fixed quantity, when the supply becomes constricted, causing it to become unavailable for use. The medium of exchange needs the ability to be created at will.

It cannot be a unit of account, because its value is not controlled by a Central bank via monitoring CPI.

In short it is useless.

Jesse McL said...

Anand, FWIW I'm neutral on Bitcoin (certainly don't own any).

On your three points above, seems like MoE and UoA are fundamental issues, ie. insurmountable in the sense that avoiding gravity is insurmountable. But SoV is more of a practical issue, ie. insurmountable only in that walking up Mt. Everest barefoot is all but impossible. So you never know, MoE or UoA, not gonna happen, but SoV... it's practically impossible, but not, strictly speaking, physically impossible.

Focal pointed-ness would be needed, at least, and that's hard to come by I'll give you that.

Cheers,
Jess.

anand srivastava said...

Jesse McL,

Agreed SoV is not theoretically impossible, but practically it is. And then there is also the case of alternatives. If it became sufficiently popular there will be alternatives. I suspect there are infinite such algorithms :-), even though Bitcoins are limited.

I can't imagine Central Banks holding Bitcoins. The computer storage is only convenient to us. For them it wouldn't make a difference. And unless giants step in to buy bitcoins, it cannot really achieve that kind of capitalization. So the feat is practically impossible.

anand srivastava said...

Biju, I think your estimate of 60,000T in India is way too high. 30,000 is probably the max that we could have, including the gold in temples.

I would place it somewhere around 25,000T. But 20,000 is a good conservative estimate.

Motley Fool said...

Hmm, for the moment my list is meant to be ownership by individuals in that area, though the actual physical may be stored elsewhere such as with the Swiss.

I have updated my numbers a bit based on the feedback thus far, I am sure more improvements can be suggested.

Official : 35000
Europe private : 20,000
India private : 20,000
China private : 5000
Rest of greater asia private : 15,000
Saudi royalty : 15,000
Arabian private : 4000
Africa private : 2,000
America private : 10,000
Australasia private : 4000
Russia private : 4000
Israel private : 8000
South America’s private : 8,000
The ETF's : 2000
The Rothchild's : 2000
The Vatican : 5000
Industry : 3000

Totaling 162k then.

As for the specific question as regards israel, the reason is the holocaust, and effects from that. One being : http://en.wikipedia.org/wiki/Ashkenazi_Jewish_intelligence

TF

Wil Martindale said...

It is interesting to note the common meme in this Cyprus outrage du jour. I keep reading that the great "lesson" to be learned is that you "do not store your money in a bank".

I disagree completely. The lesson here is that "it's not YOUR money".

It's not YOUR car, and it's not YOUR house which you are led to believe you "own". Unless of course you have title "FREE AND CLEAR".

The lesson for the world is that NO PAPER MONEY IS FREE AND CLEAR". Only GOLD (in YOUR possession) proves this claim.

The theoretical revenue stream of your home loan and you car loan has been sliced and diced a thousand times over, repackaged and rehypothecated and resold to the world by banks at a GIANT profit, which even more greatly encumbered money is bailing out and being dumped on your front lawn to be repaid by YOUR earned wages.

Except that, you do earn these wages my friends. You BORROW them.

And this paper money is and represents nothing more than vastly encumbered debt, ennmired in this inflationary process to the point of multiple counterparty claims which are an order of magnitude beyond "face value".

This paper money you hold in your wallet or store in a bank account is a fractionally reserved unrepayable loan. Think of every dollar as "1000 dollars you secretly owe to 10 investors" except that you and they don't *QUITE* realize it yet.

My God you can spend it or burn it - but by all means be rid of this debt while you can. Buy gold with it? The unencumbered "asset of last resort"? By all means YES!

The iceberg shifts, and many miles away something crawls from the slime ... Your coffee tastes funny, youtube no longer works with explorer ... we know that something somewhere has to break..

Gold resumes it's rightful "tradition".

Edwardo said...

Predictability is just another word for stability. And there's nothing more stable than physical.

MnMark said...

I read the talk about how if Cyprus leaves the Euro then that means the end of the Euro because it will show that the Euro isn't the invincible entity that its founders make it out to be.

But even if Cyprus and some or all of the PIIGS left the Euro, wouldn't that just make the Euro more stable and thus more appealing? A Euro made up only of northern European countries could still mark gold to market on its balance sheet and have all the traits of a Euro that includes the PIIGS, without the drama.

It seems to me that if Cyprus and the PIIGS leave the Euro, there would be short period where people expected everything to fall apart...and it wouldn't...and then the new more-German-than-ever Euro would be the clear favorite world currency for its stability.

ae44bf5a-2cce-11e2-94ad-000bcdcb8a73 said...

Anand,
I am not of the opinion that the giants care much about the exact format of the physical they possess. Format counts for trading in and out of positions on the exchange...if they are superproducers accumulating, why would they care which format they are storing away? Why would a giant with ~100 tons of gold really care whether it is 6,000 LGD bars or 2.4mm eagles? Hand it to them in a US Treasury monster box (500 oz) and the box is not appreciably different than a LGD bar...with less concern with paying for tungsten, less necessity for trust. Is 4,800 monster boxes really different than 6,000 bars?

And I recognize I am an ant unworthy of their notice, but why wouldn't someone they already trust do the same thing? Surely they trust their accountant, or their banker, or their body guard or head of security or someone.

ein anderer said...

Somewhere FOFOA said: Things like Bitcoin are practically impossible because the burning of the paper will be of such a huge impression to the mind of everybody that mankind will not trust paper value (as SoV) again. For a very, very long time. For many, many generations.
And Bitcoin is nothing but paper value. They may say "we have your gold here, backing our promise that you have paid for the real". But you will never know. You will never trust. It’s a kind of bond, nothing more.

And it is so idiotic complicated. Why not buying gold directly on the market and take it home? Why asking somebody to buy it for you, to store it for you, to keep the books for you?
I can sell the physical gold anytime anywhere, get some cash, pay with it, keep a book by myself.

BC is nothing but the reflection of the distorted western mind which is thinking that something which is looking like a bank and behaving like a bank is of 100 times bigger value than the humble, simple coin in your own hand.
No. Never again.

One Bad Adder said...

anand:- Not that I (particularly) want to champion BitCoin, but none of the anti-BitCoin points you made (above) are valid IMHO.
In it's (albeit short) lifetime, BC have proven to be an excellent SoV - yes?
...and as far as "competition" goes ...why would anyone bother to crank up a competing Unit when the thing is (a) worthless and (b) infinitely (almost) devisible.
As for CB's holding same? WTF cares?

I see them as an excellent adjunct to PGiP ...and on par / probably better than Ag.

KnallGold said...

Game changer.

http://finance.yahoo.com/blogs/daily-ticker/texas-may-start-hoarding-gold-secession-next-192407075.html;_ylt=AtneGSzqGP3ce3GOhKhXECiiuYdG;_ylu=X3oDMTQ0djJkNHBwBG1pdANGUCBUaGUgRGFpbHkgVGlja2VyBHBrZwM2YTA3OGZiYy1lMjRjLTNlMzgtOGZhMy05OWQxMWVlMTMwOTEEcG9zAzEEc2VjA01lZGlhU2VjdGlvbkxpc3QEdmVyAzdhNmM5MTIwLTkyNWYtMTFlMi1iZTdmLWExMDgxMmZjYTAxYg--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

GrumpsLabastard said...

In two weeks, Fed balance sheet up 100 billion.

Franco said...

anand said:

"And then there is also the case of alternatives. If it became sufficiently popular there will be alternatives. I suspect there are infinite such algorithms :-), even though Bitcoins are limited."

I mostly disagree with that argument. The only way I think another digital currency can come along and unseat bitcoin is if it is resoundingly superior to bitcoin. Otherwise, it will be "just like bitcoin" except that the exchange trading volume will be much less than bitcoin, so nobody will care for it. I present to you as an example ebay. Shortly after ebay started, other "online auction" websites popped up. I recall "Yahoo auctions", and there was at least one other big online auction website that was supposed to challenge ebay. But what happened? Because ebay was first, most users were already there, and there was no compelling reason for a buyer or seller to move from a high-volume venue to a low-volume one. When you want to enjoy the beach, you find the beach with the least number of people (at least I do), but when you want to trade something in a marketplace, you want the most crowded marketplace. Bitcoin is the biggest digital currency and no other "like-bitcoin" currency will put a dent on it unless it is markedly superior.

Franco said...

Motley Fool:

I think that it's very cool that you are trying to estimate where the gold is. I will just give you one opinion: South America private cannot be 50% of Europe private. It has to be a lot less. If Europe is 20000 t, South America has to be less than 5000 t, maybe 2000 t. That's just a hunch. I have nothing to back my claim up. Well, maybe I have a little to back it up: I know that South America is mostly poor people, and they don't own gold (unlike Indians who own gold even if they are poor). The middle class, which is small, also doesn't own hardly any gold. Then there is the tiny rich class, which surely owns gold, but the number of rich people in South America has to be no more than 10% of the number of rich Europeans.

milamber said...

@ KnallGold

It is a game changer IF we go back to a gold standard or Texas secedes. And speaking as a Texan, I can tell you a snowball has a better chance of living in Hell (or El Paso) than either one of these happens.

I saw this in the Dallas Observer last week & didn't post anything on it because I read the bill.

Line 21 is the only important one IMO (emphasis mine),

"(f)AAPrecious metal deposited with the depository by any person is the property of this state and is held by the depository outside the state treasury"

So in a meltdown scenario where Texas secedes, the State Depository (which is holding your gold) is going to give you your gold back.

If you believe that, I have Ocean Front property in Amarillo that you will Love! :)

Milamber

milamber said...

@ Daedalus Mugged

Get in line if you want to service Giants by doing this. It is called managing a Cash4Gold store

Milamber

milamber said...

Got an interesting email from a friend who also holds gold (but does not subscribe to Freegold thinking). We have been discussing Cyprus via email, and he sent me this:

"double-blind study - an experimental procedure in which neither the subjects of the experiment nor the persons administering the experiment know the critical aspects of the experiment; "a double-blind procedure is used to guard against both experimenter bias and placebo effects"

Another explanation -- Cyprus may just be a relatively safe "double blind" study where the EU just wants to see (a) whether the gov't would actually try to take the peoples money overtly if the EU said they had to; (b) whether the Cypriot's would burn the house down when they found out; and (c) would the Spanish / Italians drain the accts when they see it happen.

I were going to try this, I can't imagine a better place than: (a) a small island country with a small economy and a relatively small impact on the rest of the EU and (b) an easy solution if the experiment goes wrong. If IRRC, the delta fixed by the levy was only 4 billion EURO. This is a rounding error in the big picture of current funding crisis issues for the EU.

Interestingly, it appears that the gov't failed the experiment and the Cypriots (and greater Southern European Populace passed with flying colors.

This has to be encouraging to the EU / ECB / FED / BOJ etc.


Milamber

milamber said...

More on the first company to default on a bond in the Chinese Bond market.

My fav quote is,

"Being in the solar manufacturing industry over the past eight years has been an excellent way to turn a big fortune into a small one,” said Jenny Chase, lead solar analyst at Bloomberg New Energy Finance in Zurich."

www.bloomberg.com/news/2013-03-20/china-s-solar-billionaire-undone-as-banks-push-suntech-to-brink

Milamber

Edwardo said...

Wil,

It's not your (our) money and it never has been. By definition, it has always been someone else's, but we are allowed, encouraged even, to traffic in it, to feel that it is ours, and to sense, falsely, that it is imbued with qualities it does not, indeed, it can not, have.

The ugliness that is embedded in the truth that it is not our money tends to be muted and masked for long periods of time. Clearly, or so it seems to me, and others here, the timeline of the life of this "product" is growing very short, because, among other pieces of evidence, we are now moving from the long standing and somewhat subtle "theft via purchasing power" stage to one characterized by unvarnished broad daylight robbery. Of course the language surrounding such obvious theft is as euphemistic as ever, what with the labeling of the theft as a tax and the employment of phrases like "Stability Contributions."

At the risk of overly dramatizing the condition under description, it sounds like The Matrix where the victim's bodies are effectively not their own. This is, of course, achieved by managing the victim's minds in such a way as to preclude them from ever rebelling against their
captivity.

As ever, art imitates life.

Biju said...

Anand : Here are the numbers for "Official" Indian import for past 14 years

Year
Global Gold Supply $ (Tonnes)
Gold Demand from India @ (Tonnes)
Growth of Global Gold Supply (%)
Growth of Gold Demand from India (%)


1999 4206 486 … …
2000 3704 462 -11.9 -4.9
2001 3764 471 1.6 2.0
2002 3667 467 -2.6 -0.9
2003 3953 367 7.8 -21.3
2004 3426 537 -13.3 46.1
2005 4034 792 17.7 47.5
2006 3559 707 -11.8 -10.7
2007 3554 716 -0.1 1.3
2008 3657 679 2.9 -5.1
2009 4146 743 13.4 9.4
2010 4274 871 3.1 17.2
2011 4030 975 -5.7 11.9
2012 4130* 1079* 2.5 10.7

=======================================
Total 9352 tons
=======================================

Now this is just official. During this period, we don't the unofficial imports to hide black money.

Also add the historical imports of Gold to India, including per-independence period and it should be astronomical in my opinion. I will look for historical "official" data and see, WGC has these details, but I don't want o register at site to look at their data.

Wil Martindale said...

Edwardo,
When the cloud father gave the sun to walking bear, he thought it was his own, and slept in the cave of darkness for many moons.

He awoke to find that soaring eagle had taken the sun, dancing with cloud father for the rains of the great harvest. He knew the sun was never his to keep.

This we learn from the pipe of understanding.

Aaron said...

Edwardo said...

It's not your (our) money and it never has been. By definition, it has always been someone else's

Thank you Edwardo -- a point that deserves more frequent mention. Money in its purest form is simply credit – a thought of an IOU or a YouOwnMe in our own or someone else’s head. As such the value of cash or credit in printed form is constrained like all credit by the fleeting emotions that coincide with human expectation about market behavior with greater and greater volitility as the trades approach the margin.

What we call money today is nothing more than thoughts in our head which we use to quantify our claims against the market place and their claims against us -- and these thoughts can (and often do) change in an instant.

/SleepingVillage/ said...

Eloy said..

"One day when you wake up in the morning
you'll never forget that day
you feel that there is something in the air you've never seen before
something tough, Something Yellow"


Wil Martindale said...

Giants have many straws in the dike which "suck at spot". There is no need to pay a premium for "one more straw". When DM has ammassed his first 5 tons, safely stored, ready to ship, securely and discreetly, he should call his favoite giant and collect his premium.

But as I have said here many times before (in one way or another) the world has learned what a country can do when it has ammassed 20,000 tons of gold, a great army, a solid economy, a hardy people and the respect of a war torn ROW. With that edge, fiat policies may come to pass, which a Frenchman will say "was a huge mistake" but a mistake for who? - not for the holders of such gold. What a deal, the deal of a century. An experiment that even giants can derive affirmation from.

And prawns like Soros can practice destroying currencies in the light of day, like the piker he is.

So now a new wrinkle unfolds. It is the destruction of this almightly dollar that now presents "the deal of the century". It is about having governments in the palm of your hand, to do your bidding.

It is still always about the largest holder of gold, or consortium of holders, in the end, under a single will, political or otherwise.

Behind this we will never know what surprise awaits, but again I say the Roths have always believed in gold.

For centuries their every action was always of a mind to ultimately be paid in gold, even the LBMA was a way to increase it for them, and they are patient, and they wait, and they DO marry into other families of like mind and wealth. And their hand WILL be in this new policy, this new OLD world order.

Though we will never see it, just as we never saw it the last time. My friend Anand is right.
Giants do not see us. Nor will we ever truly see them.

But we few do know at least that they are there. Otherwise we might be talking about a caliphate, not freegold.

Motley's exercise, even if not completely accurate, is a good way to connect the dots. A UNION does await. Will it be the European Union?

I do not know ...

anand srivastava said...

Biju:
A couple of points to remember.
1) early 90s import duty on gold was reduced, and made small enough that smuggling became less profitable. It has only recently with the increased duty has become profitable again.
2) The British did take away a lot of Indian gold with them, through several means.
3) The prosperity after liberalization in the 90s helped increase the gold imports. Gold import was quite a bit less before that time.

I don't see how we would have 60,000T.

anand srivastava said...

This is a fairly good article on Indian Gold. The author also estimates 25K-30K.

http://2ndlook.wordpress.com/2007/11/10/india-the-worlds-richest-economy/

Jeff said...

GLD leaked again, despite the recent price rise. Price managers not able/willing to raise enough to stop the flow?

enough said...

Perry, Some Lawmakers Want State's Gold Back in Texas

http://www.texastribune.org/2013/03/21/perry-some-lawmakers-want-states-gold-back-texas/

Pat said...

As we approach the Q1 MTM party, no indication as yet for Euro paper gold support. 1241 as I type, below the 1246 FOFOA threshold. Connecting all the dots; ongoing GLD pukes, Cyprus, paper gold, etc. Hmmmm...

Biju said...

Amand : As you indicate , the 25-30K tons in Indian private possession may be nearer to the correct estimate.

In a way when we read/see about Indian accumulation, I prefer freehold to take place far out in the future and not now, so that ordinary poor people can accumulate. Just imagine in FG had happened in year 2000 as ANOTHER was forecasting , I would not have been able to accumulate anything, since many of us were just starting to work then. I remember the sad stories in 2011, when Indian parents/daughters had sticker shock when they came to buy Gold for marriage and there were a few instance where they cried that could not buy the amount considered nominal.

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