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458 comments:
«Oldest ‹Older 401 – 458 of 458Yes Sam.
I'm glad that fallacy exists, it's so widespread and so easy to deconstruct that it's very helpful when demonstrating to people that things may not be as they seem.
Bro Wil-
(Breathing in a deep bouquet from the from FOU)
True dat. Yo Giants, do us a solid!
Cheers
In terms of the "supply overhang" in gold, I think it is helpful to think of the warehouseman. This is from a 2004 A.E. Fekete paper:
"The proper way to view the futures markets is a place where warehousing services are traded. Contango is the premium from which the warehouseman derives the fee for his services. If there is no contango, no warehousing is possible. Accordingly, it takes not two but three to contango: the producer, the speculator, and the warehouseman.
"This is especially clear in case of the monetary metals, of which a supply many times larger than annual demand for consumption exists. We have expressed this by saying that the stocks-to-flows ratio for a monetary metal is a large multiple (it is estimated to be greater than 50 for gold), whereas the same number for a non-monetary commodity is a small fraction (it is estimated to be less than 0.25 for copper)."
We can easily imagine the "warehouseman" for a variety of commodities, some of which are destroyed when they are consumed (like corn and oil) and others which are simply changed in form from the raw material into a specific part which is then installed (like copper plumbing). The latter can of course be recycled to some extent, but as an installed part it does not directly compete with the warehouseman's stock of ready-for-market raw material.
This is why a futures market for gold is not necessary and makes little sense, because almost all of the gold in the world is still in the same form as the raw material held by the warehouseman. So "end users" can compete directly with the warehouseman for the available demand if they want to. That's the "60-year supply overhang".
In a commodity that gets consumed or at least altered for its end use, the warehouseman expands his stock when supply exceeds demand and then he depletes his stock when new supply from producers is lower than demand, thereby acting as a shock absorber. You can even think of GLD as a warehouse and the BBs as the warehouseman for GLD. Only in the case of GLD the warehouseman has passed the carrying cost on to the GLD investors, so it's not the best analogy. Also, the gold inside the LBMA system does not have quite the same level of supply competition from your coins and small bars as the "outside" supply does, because the LBMA is a closed system of pre-authenticated LGD bars.
But, very generally, most gold is basically fungible, even after it reaches the end user. So all of the gold in the world essentially constitutes one giant warehouse of raw material, which can't be said about commodities, which is why a futures market makes sense for commodities so that the price risk of producers and end users from the possibility of supply shocks can be absorbed by the warehouseman. But it does not make sense for gold since all of us are essentially gold warehousemen.
Sincerely,
FOFOA
Athrone,
Yes, what FOFOA said.
Cheers
Thanks for fertilising my own flower of understanding Fofoa.
FOFOA,
WOW! So I guess what you are saying is...
http://youtu.be/au3wfKFIXVo
""Thus, the goal of the rational actor is to choose the X that everyone else will choose (assuming they choose right), but choose it first. In standards terms: pick the winner, be an early adopter." -Moldbug
"In game theory, a focal point (also called Schelling point) is a solution that people will tend to use in the absence of communication, because it seems natural, special or relevant to them... Salience: the state or quality of an item that stands out relative to neighboring items." -Me
"One of these things is not like the other..." -Big Bird " FOFOA 'From the Treasure Chest'
I'm still stacking as I can. Hope prices will stay "suppressed" for a little longer so I can keep stacking.
Thanks FOFOA, it's good to hear from you in the comments every so often.
And BTW I am ready, willing and able to help offload that 60 year supply overhang. It's probably the only reason I still watch the Kitco paper price with a certain bittersweet satisfaction that we are not yet seeing 100 dollar intraday swings.
By the time it gets THAT volatile, I may be shut out.
But the next time we have a mid-April like plunge, if it's no more "dippy" than that one, it will have dipped below my starting point, and that is where I trade unsecured debt for gold.
It's the only way to assuage my remorse for not buying earlier. The banks LOVED the holes I dug out of all those years before, now I dig a hole for them, perhaps all the way to China?
Breathe deeply brother Young, the carbon dioxide you exhale feeds the flower.
FREE THE GOLD !!!
@Athrone - have you considered this?
Another said:
"Gold! It is the only medium that currencies do not "move thru". It is the only Money that cannot be valued by currencies. It is gold that denominates currency. It is to say "gold moves thru paper currencies"
If this statement appears the least bit cryptic, if it does not make 100% crystal clear sense, then little else written on this blog by either the contributors or the scant few commenters who do understand it will make complete sense to you, despite your best efforts.
Now, substitute "copper" or "housing" etc for "Gold", in the above quote and see if it still makes sense to you.
@ grumps
I think our definition of dark bullion might differ. By dark bullion i mean..
"Dark Bullion - A bar previously known and registered, re-appearing after an absence (dark bullion). Technically this bar ceases to be dark bullion once it appears back on the bar list, but once the two points are known, we can assign a value for how long it has been 'dark'. Scientific name is H. Organis Nemesis (named so after a precious metals blogger famous for penning many words in criticism of how SLV can add so much inventory so quickly")
To put it more blunt dark bullion is GLD bullion that is registered goes dark and the same bullion reappears at a later date back in the GLD bar list. It is simply an alternative hypothesis of what could be happening to GLD and could quite possible explain the lance Lewis "puke" indicator. We know that this accurance happens, however it will be interesting to see if any significant amount of Dark Bullion comes back on line before we go sub $1000 GLD.
https://www.goldbroker.com/news/interview-jim-willie-about-manipulation-gold-silver-paper-markets-266.html June 7 Written interview on gold, bonds, dollar, Comex, LBMA changes due in a few months
Hi michael3c2000, thanks for posting the link. Very good interview, JW's view seems to convert with FG.
I should have made the distinction b/c I follow screwtape as well. I was referring to the gold that's not even on the books that the Roman Cult/Asean Brotherhood has accumulated over centuries. The gold anchoring the BIS system is mere pocket change.
Grumps
Long necks.
@not grumps
I realize not everyone would catch that reference, especially those that haven't been around that long.
So in concession to that... http://fofoa.blogspot.com/2011/02/wendys-open-forum-part-2.html?
TF
"Randy (@ The Tower) (01/28/01; 15:38:58MT - usagold.com msg#: 46755)
auspec...another read-through may prove more luminescent
You said:
"Trail Guide has several times mentioned he was going to weigh in on the Black Gold issue, but I have yet to see anything of substance."
Have another look at FOA's latest (msg#56 "The Gold of Troy!") at the Gold trail. While he does not explicitly state that this commentary is to address the "Black Gold" issue among other things, it clearly forms the foundation of thought that more thoroughly builds the necessary historic context that I myself so failed to impress anyone with in several commentaries during recent weeks.
His skill of presentation in this effort greatly exceeded my own attempts, and I was quick to call attention to this fact in my early morning post Friday the 26th. Again, (but perhaps to my rooftop eye only(?)) this post serves to prepare the reader for engaging in critical analysis as to whether such magnificent tales of great storerooms of "black gold" can stand upon their own firm legs in a real world historically shaped by human motivation. For reasons I have previously expressed (however poorly), it remains my objective view that such tall tales must have long bodies and necks because they certainly have no evolutionary (historical) legs to support them."
Wendy's Open Forum - Part 2
Look how corrupted the history of the twentieth century is. Even after the recent events of 12 years ago we've seen in realtime how proganda is sewn into the historical narrative. If we can't get an accurate record of the last 50 years what do you think that says for the last 2000? Do you think the Custodians have limited their influence to the financial sphere alone? Archeaology won't go near some subjects that would challenge the consensus view.
JR said...
spaul67 ,
"So the US has to issue a new dollar because...
That's ein anderer point, because the current dollar system is a golden outlaw. So yeah, the post FG dollar will be at a floating, not a fixed gold exchange rate. "
Yes which is just like the Euro is it not? In fact in a Freegold world all currencies will be like the Euro will they not? Isn’t that one of the key features of Freegold?
My basic point is that while the Euro design is ahead of all other currencies, the Euro’s features can and likely will be copied widely in the post Petro-dollar by any nation that needs to engage in world trade. Which is a good thing. Finally, a neutral arbiter for energy, production, trade and capital allocation, what a concept.
My key disagreement with Another is that the Euro will somehow become the new petro-dollar post petro-dollar collapse. It won’t. The new ‘petro-dollar’ will be gold. Nations that are reconciled to this fact will trade with one another, those that don’t, won’t. Thus all the nations on the Earth are free to engage in whatever social theft and various paper ponzi schemes the wish to unload on their subjects/citizens while the ROW is isolated from their reckless behavior by gold.
Right now we have a very complex interactive brew of various ponzi schemes and price/trade manipulations that have created a seriously unstable and schizophrenic world both inside nations and among them.
We are witnessing first hand how no group of individuals no matter how powerful, well intentioned or intelligent is even remotely clairvoyant enough to manage a problem so large that it can only be addressed by trillions of decision made by billions of individuals focused on their own perceived best interests.
spaul67: "My key disagreement with Another is that the Euro will somehow become the new petro-dollar post petro-dollar collapse. It won’t. The new ‘petro-dollar’ will be gold."
Are you saying the Unit of Account for Oil will be 'ounces of gold'?
Sounds like oil for gold.
Indenture said...
“Are you saying the Unit of Account for Oil will be 'ounces of gold'?
Sounds like oil for gold.”
In the end the Unit of Account will be ‘whatever’ the net energy producers wants it to be post petro-dollar. If they want bananas for oil, so be it, the world will start producing and shipping bananas to them like crazy.
Given that the leading net energy producer at present is sitting on a pile of physical gold though the more likely scenario is that they will play the gold for oil card that in turn will unleash a significantly increase in their purchasing power in a Freegold world.
If they are really savvy they’ll also front run the world and dishoard some gold and acquire silver and/or other lesser SoV on the sly at the now low low freegold GSR and then down the road ‘also’ switch to accepting silver for oil thereby getting a double purchasing power whammy. Remember that Islamic nations have a dual currency system mandated in the Koran for both Gold and Silver.
Now the ROW will have counter moves to all the above and beating a path to energy independence one way or the other will certainly be among them but not all that fun for net energy consumers, wasteful practices, inefficient products and distribution systems.
Thus all kinds of serious disruptions in the production and flow of goods between and within nations will occur if the two tiers in the gold market are allowed to merge too quickly. In the end Gold will essentially become the proxy for all the 'remaining' net energy on the globe. In the bigger scheme of things this will be a good thing as long as the transition is not too abrupt as the energy associated with a particular activity or product/service will finally be incorporated into production, trade and capital allocation decisions rather than whatever the net result of Statist manipulations the world over happens to be today.
Thus I think it is in the best interests of even a net energy producer to ‘temper’ arrival of in the 'open' gold for oil. Thus I would suspect that we will have a coordinated move in the both the gold and oil price. It would also be in their best interest to ‘diversify’ their capital base away from gold and into other maybe lesser SoV as well. Certainly before the world becomes more energy independent and less addicted to their oil.
I think the key danger is that the world is very complex place and random events have a way of up turning even the best made plans, however conceived and for whatever purpose good or evil, completely on their head.
In short, may you live in interesting times.
Spaul said
"and then down the road ‘also’ switch to accepting silver for oil thereby getting a double purchasing power whammy. Remember that Islamic nations have a dual currency system mandated in the Koran for both Gold and Silver."
Just switch it up huh??
After FG has arrived and gold is THE focal point, the Saudi's would think it a good idea to hang out a sign saying "Silver accepted here"????...I disagree.
"To "set the price" of anything, you must either buy or sell that thing. Governments cannot just "set" prices. Whenever they try, the items just disappear or go into hiding. If the price you set is lower than the value, then you will have to sell. If the price is too high, you will have to buy. More from Mundell:
"[In the 1870s] France pondered the idea of returning to a bimetallic monetary standard, but with American production of silver going up and Germany dumping silver as the new German Empire shifted to gold, France realized it would have to buy up all the excess silver in the world on its own."
So... if your standard is going to overvalue something, you must buy it. If you undervalue something, you must sell it. And what was the US doing with gold throughout the entire Bretton Woods system? That's right, it was SELLING gold through the gold window. So it wasn't the gold that the US monetary authority was overvaluing for profit. It was the cotton-pulp paper in the FRNs! Cotton pulp! That's the overvalued commodity today!"
"The US quit bimetallism during the Civil War, prior to the Silverite movement. [6] This ended the government's "overvaluing" of all silver for use in money. After the Civil War, there was a difference between commodity silver (what the miners dug up) and monetary silver (overvalued silver in US coins) because in order for the US to sustain bimetallism (or a silver standard) it would have had to value (buy) ALL the excess silver in the world at the overvalued price of the coins.
This meant it would have to BUY any and all commodity silver that was offered for sale (to prop up the price). You see, silver needs its price propped up (huh? why?) while gold appears to need its price suppressed (see: The London Gold Pool). So rather than actually "valuing" silver, the government compromised with the Silverites and agreed to buy a specified quota of commodity silver. At least it did until it ran out of gold in 1893. Something must have been wrong with that 16:1 ratio in the 1800s, huh?"
"Today silver would be "harder" money than cotton-pulp. This is why there will NEVER be a big enough political movement of the people that will bring back a silver standard. We have now discovered easier money than silver!!!"
http://fofoa.blogspot.com/2010/12/focal-point-gold.html
I don't see how FOFOA can claim that a futures market "does not make sense for gold since all of us are essentially gold warehousemen". First of all, only some are warehousemen; others are strong hands who will keep the gold buried deep no matter what. Also, what about the miner's need to hedge against price fluctuations? Now somebody will say that the price fluctuations are caused by the paper market, and that's true, but that's only part of the story, right? The price of gold also fluctuates based on players' appetite for risk, and that would remain after a paradigm shift. What about this: what if a "delivery-only" futures market were implemented for gold, basically a futures market as it was originally conceived, so that a producer can lock in the future price. Every contract results in a delivery. No cash settlement. Would that give the producers a hedge while limiting the speculation?
I guess what I don't agree with is that post RPG the price of gold would be steady.
Franco
What, theoretically, is the purpose of the futures market for say maize?
Consider other commodities.
Consider gold.
Notice, that it doesn't make sense.
Franco,
Don't you think the 'delivery only' futures market is exactly how gold futures started out? Kind of like dollars were redeemable for gold in the beginning.
Aristotle (2/7/2000; 7:15:24MDT - Msg ID:24589)
The harsh slap of reality and the soothing touch of Gold:
*** History reveals time and time again that this seemingly "perfect" gold-only system naturally evolves into fractional-reserve lending because it is what the people want.
FOA: Our modern gold market price illusion is little more than a product of the fiat dollar system; a design that denominates gold credits in a contract form. Is it a free market? Why yes, very free. But... TOO free, in the sense that contract supply is totally unlimited. Investors bought into this market even though they fully well knew 90% of the volume was represented by only cash equity on the other side. Knowing that, they somehow expected that those contracts were limited in creation by the fixed amount of gold in the world. Their mistake, not the market's.
FOFOA,
Thank you for your reply. I do not want to draw too much of your time on this issue as I agree with byiamBYoung that it is only a wisp of a point as the implications either way are probably quite subtle.
I do like your description of warehousemen as I think it does a better job of describing the situation. I also recognize why the idea of a "supply overhang" became so widespread -- it is very simple and explains the situation in only a few words and in a language that people with a commodity background can understand. This simplicity however, can lead to a misconception about the actual details, which was really my only point.
Some common misconceptions one might identify are:
1. A Supply Overhang in this sense implies a larger supply than demand (whereas demand and supply are equally matched with ownership)
2. Gold is somehow unique in this (Housing is another example that seems to fit)
3. The presence of a Supply Overhang is what makes Gold a monetary metal, as opposed to a commodity (only partially true, or Housing would be a monetary instrument as well. Although in some sense, people do use their house as a "savings account" so perhaps that illustrates a shared requirement). Again, more accurate is your description of warehousing.
4. Secondary ideas such as those describing the price action of gold e.g. “a commodity with a 60 year supply overhang would have price tending to zero” which further conflate the meme of a large excess of “readily available” supply (ignoring the large “excess” of present demand)
Maybe these points are not significant, but as I said, I never really felt comfortable telling others "Gold is a monetary metal because it is the only 'commodity' with a 60 year supply overhang" -- even if it is a simple statement that conveys the gist of the situation.
http://www.reuters.com/article/2013/06/07/shanghai-gold-bourse-idUSB9N0B802120130607
Night session added for trading, beginning July 7
Motley Fool:
But it does make sense. Pretend you are a miner. You own two mines: a copper mine and a gold mine. You want to reduce your price risk by locking in today the future price of your production. How are copper and gold different TO YOU? What do you care that one is "used" while the other is merely stored? You just get the stuff out of the ground and you refine it, and then you have to sell it into the market. Tell me why, for you as a miner, a copper futures contract is useful but a gold contract is not.
Franco
"Pretend you are a miner."
...and there is the problem. Future contracts are primarily about demand, not supply....or more technically demand relative to supply and arbitrage in variation.
jojo said...
Spaul said
"and then down the road ‘also’ switch to accepting silver for oil thereby getting a double purchasing power whammy. Remember that Islamic nations have a dual currency system mandated in the Koran for both Gold and Silver."
“Just switch it up huh??
After FG has arrived and gold is THE focal point, the Saudi's would think it a good idea to hang out a sign saying "Silver accepted here"????...I disagree.”
Jojo, I don’t think you understand the gambit here? Say Freegold arrives and the GSR goes down to say 500. So 1oz of gold gets you 500oz of silver. That ratio being based on the energy required to make silver in direct relation to the gold for oil relationship. Note all other ‘commodities’ will align to this common association. Gold-Oil-Energy-Stuff.
Now I, net oil producer, have plenty of gold and without disturbing the silver market gradually exchange gold for silver at 500/1. A decade or so goes by and I announce to the world that I will still ship x barrels per oz of gold but will also accept silver at say a GSR of 50. I have just increased my purchasing power again by another 10x.
Gold is the ‘focal’ point because the net energy producer says it is. Change either condition and even Freegold can fall away and planet ponzi re-emerge.
Energy is the ultimate focal for ‘all’ living things not gold. It’s only because a net energy producer currently values gold over paper that the conditions are in place for Freegold. It’s ultimately the modern world dependence on the king of energy (oil) that gives them the leverage to set whatever form of payment and under what terms the exchange will take place.
They also know that if the press their position too hard it will drive energy alternatives as well as a general reduction in consumption.
Franco
Consider it another way. Futures markets create smoothings in price.
Does this matter for maize? Yes, it creates security in future pricing of an essential good.
Does this matter for copper? Yes, it creates security in pricing for an essential industrial good.
Does this matter for gold? Well, no. Since we don't use it for anything essential.
TF
Re: The Reuters link I just posted on the large Shanghai Exchange, the night session is for gold and silver and starts July 5, not the 7th. Also, there is mention of oil trading added. Petrodolla challenge?
"Gold is the ‘focal’ point because the net energy producer says it is."
No.
It was a focal point before oil. And will remain so after.
This is not the reason it is the focal point.
Motley Fool:
Let me ask you this question, then: can freegold exist as FOFOA formulated it, and still have a futures market for gold (even physical settlement only), or does freegold require no gold futures at all?
Dave Kranzler with a nice long term chart and some current fundamental attributes and "discrepencies" that fit in...
http://truthingold.blogspot.com/2013/06/the-revival-friday-chart-porn.html
Franco
Let me allow FOFOA to answer. :P
http://goldchat.blogspot.com/2011/12/my-thoughts-on-freegold.html
Also relevant this section "Gold lending and collateral use in Freegold"
from : http://fofoa.blogspot.com/2013/05/glimpsing-hereafter-2.html
as you contemplate what gold futures contracts are exactly.
TF
Just noted that:
http://www.freegoldclock.org/
, now links to this post and FGT's video! Nice! Thanks Nand!
A silly little project I did on some time misallocation ;) Timing is pointless in a critical transition, especially this scale, but it's always fun to try to guess!
Please share if you have ideas of stuff to put in it.
Nand,
Well done, I've been thinking of doing something similar, or graphing other correlations with GLD data. Good to see another open source developer following the trail.
Motley Fool said...
Spaul67 said….
"Gold is the ‘focal’ point because the net energy producer says it is."
“No.
It was a focal point before oil. And will remain so after.
This is not the reason it is the focal point. “
At one time gold and silver where almost exclusively produce using ‘human’ energy. Thus they were a perfect proxy for ‘human’ energy and yet easier to carry/exchange than all other goods that also required ‘human’ energy. Now in the industrial age human energy is amplified via machines that run on…………………wait for it…………………energy. The king of energy in the present age being oil.
All life requires energy does it not? See that big glowing orb in the daytime sky, you guessed it energy. Without it we would be colder than Pluto. I’m pretty sure they don’t do a lot of gold mining on Pluto either because there are no they.
Sorry, energy and not gold is the focal point of life. Literally ‘nothing’ happens with out, unlike gold. Life on Earth got along just fine without hoarding gold before humans showed up and yet life is everywhere water and an energy source are present.
So if you are a net energy producer you control life and thus will be paid in whatever you want to be paid in. Gold is the obvious choice but you need to think deeper into ‘why’ a net ‘energy’ producer has this leverage in the first place. In short you confusing cause with effect.
After all if you produce the king of energy why not be paid in the king of SoV. But at no point should you place gold ‘above’ energy, its energy that prices gold not the other way around because energy is essential for life. This is why gold and energy can’t flow in the same direction regardless of whether it’s human energy (past) or oil energy (today).
Nand,
Love the chart. Nice work!
Here's a suggestion, what if there were a few lines, based on different theories of how these things play out? For instance, you could look at the waterfall effect (from the FOFOA post of the same name), and another line drawn on patterns observed in various collapses from history (Weimar? Zimbabwe? Argentina? etc?).
I personally think your line is a tad too orderly as it gradually flies into terrain. I bet there will be an acceleration (and a whopper of one) when the group mind suddenly recognizes the S approaching TF, with H being the likely outcome.
Cheers
spaul67 said:
"At one time gold and silver where almost exclusively produce using ‘human’ energy. Thus they were a perfect proxy for ‘human’ energy"
This sounds a lot like Labor Theory of Value.
Spaul, how do you feel about Capitalism?
...also, it would be helpful to know, what are your thoughts on Socialism?
spaul
"In short you confusing cause with effect."
Irony...gotta love it.
Yes, stores of value is a proxy for energy. That was not being disputed. What I did dispute was your bullshit about banana's, aka your imaginings that net energy producers have the sole discretionary power of choice about what that store of value is. They don't.
Hence your silver bullshit, is just that, bullshit.
I was not denying the importance of energy. I was pointing out that this is not the reason that gold was and is the ultimate store of value.
Anyhow. I think I am done wasting my breath. Your goal is not to further understanding, it is to impress upon all here that you are clever. Congratulations, you win...and still don't understand jack shit.
TF
Check out CSPAN, they've got this Sino-American meeting at Palm Springs. The US side looks like a bunch of whipped dogs. Terms of a default being ironed out?
@athrone: Is housing easily divisible? No. Is housing low maintenance? No. Is housing portable. No. Does housing have low transaction costs? No.
Gold has all of these characteristics AND *AND* a "supply overhang". That's why it's the monetary metal.
18.92 (1 oz of Au) invested in 10 year treasury w/ coupons sent to zero certificate until maturity of bond, so compounding rate is 10 years.
Date of Annual Total Total at Avg Au
Bond Yield yield Maturity Price@Mat 1/1/1913 4.45% 44.5% 27.33 21.32
1/1/1923 4.31% 43.1% 39.11 26.33
1/1/1933 3.31% 33.1% 52.05 33.85
1/1/1943 2.47% 24.7% 64.91 34.84
1/1/1953 2.83% 28.3% 83.28 35.09
1/1/1963 3.83% 38.3% 115.18 97.39
1/1/1973 6.74% 67.4% 192.81 424
1/1/1983 10.46% 104.6% 394.49 360
1/1/1993 6.60% 66.0% 654.86 363
1/1/2003 4.05% 40.5% 920.08 1650
So $18.92 in 1913 would be $920 in 2013 even if you just let the coupons rot at zero interest for 10 year intervals. In fact by 2003 the dollar had beat gold nearly 2:1, $650 vs. $363.
I wish the hard money community would stop trotting out that graph that shows dollar debasement since 1913. It's intellectually dishonest. It doesn't account for interest.
Column one date of bond
Column two ann yield
Column three total yield after 10 years
Column four subtotal upon maturity
Column five avg price of gold
Motley Fool said...
spaul
"In short you confusing cause with effect."
“Irony...gotta love it.
Yes, stores of value is a proxy for energy. That was not being disputed. What I did dispute was your bullshit about banana's, aka your imaginings that net energy producers have the sole discretionary power of choice about what that store of value is. They don't.
Hence your silver bullshit, is just that, bullshit.
I was not denying the importance of energy. I was pointing out that this is not the reason that gold was and is the ultimate store of value.
Anyhow. I think I am done wasting my breath. Your goal is not to further understanding, it is to impress upon all here that you are clever. Congratulations, you win...and still don't understand jack shit.”
I can’t really add anything; the contradictions in your profane laced response destroys your argument just as quickly as it proves my point.
Profanity in the face of reasoned debate never wins the argument and only serves as a clear sign of the under classed and under educated.
Aaron said...
spaul67 said:
"At one time gold and silver where almost exclusively produce using ‘human’ energy. Thus they were a perfect proxy for ‘human’ energy"
“This sounds a lot like Labor Theory of Value.
Spaul, how do you feel about Capitalism?”
I’m all for ‘market’ based capitalism and don’t agree at all with the Labor Theory Value of Marx. All human labor is not equally beneficial or even necessarily productive. In fact the more powerful the state gets the less productive human labor becomes. Hence the best systems are based on minimal government, free markets and the private accumulation of capital.
What we have in the world today though are various forms of oligarchy. Some are imposed at the point of gun others use democratic socialism as a veil of legitimacy but the net result is that free markets are destroyed along with the private accumulation of capital outside the oligarchy.
spaul
"In short you confusing cause with effect."
Irony...gotta love it.
Yes, stores of value is a proxy for energy. That was not being disputed. What I did dispute was your nonsense about banana's, aka your imaginings that net energy producers have the sole discretionary power of choice about what that store of value is. They don't.
Hence your silver imaginings, is just that, fantasy.
I was not denying the importance of energy. I was pointing out that this is not the reason that gold was and is the ultimate store of value.
Anyhow. I think I am done wasting my breath. Your goal is not to further understanding, it is to impress upon all here that you are clever. Congratulations, you win...and still don't understand anything.
....
My use of profanity was irrelevant. It was simply used for emphasis, not to insult. But hey, if it gives you something to focus on to attempt some weak reply, good for you I suppose.
Dumbass. (See this time it is relevant and an insult)
TF
Spaul67
You say, "After all if you produce the king of energy why not be paid in the king of SoV. But at no point should you place gold ‘above’ energy, its energy that prices gold not the other way around because energy is essential for life. This is why gold and energy can’t flow in the same direction regardless of whether it’s human energy (past) or oil energy (today)."
So water is clearly more essential for life than oil energy so does water price oil energy and gold? So water can't flow in the same direction as oil or gold? How many directions are there available?
lola said...
Spaul67
You say, "After all if you produce the king of energy why not be paid in the king of SoV. But at no point should you place gold ‘above’ energy, its energy that prices gold not the other way around because energy is essential for life. This is why gold and energy can’t flow in the same direction regardless of whether it’s human energy (past) or oil energy (today)."
"So water is clearly more essential for life than oil energy so does water price oil energy and gold? So water can't flow in the same direction as oil or gold? How many directions are there available?"
Water is a renewable resource; energy due to the second law of thermodynamics is not.
Regardless it’s those that have net energy that ‘set’ the terms of exchange. Gold is the best and obvious choice if you have more than enough paper and lesser SoV already. My whole point, and one that is obviously above the capacity of our resident fool, motley or otherwise, is that it’s net energy that moves ‘through’ gold just like gold moves ‘through’ paper.
I was merely pointing out that a savvy net energy producer could front run the world and accumulate a lesser SoV, say silver, and increase their purchasing power 10x again as long as the world is in dire need of the net energy they sell. Change either condition and the pricing power of gold or any other proxy for ‘net’ energy ends.
Which leads to my advice that diversification into SoV ‘closer’ to its actual energy content yet are still portable, durable and fungible would not be a bad idea. I have said repeatedly that exchanging 1 oz of gold for 500 oz of silver would be an exceedingly good trade should that occur from an energy perspective. The first is based on the particular desire of a current ‘net’ energy producer the second is based on physics. My bet is that second law of thermodynamics wins in the end.
Not that I’m not a big gold bug, in fact I could very likely own more gold than some 100% gold holders on this board and hold it for the exact same reasons as they, but I’m not so blinded by its appeal to not recognize that the world is very complicated place with a multitude of forces in constant conflict.
The same forces that could align to bring freegold to fore front can just as easily remove it as well. In short the greatness of an idea has proven throughout human history to insufficient for it to be sustained indefinitely. Great ideas emerge; have their day in the sun, subsequent generations take it for granted in their prosperity and it eventually dies, to remerge some time later.
Dumbass
"My whole point, and one that is obviously above the capacity of our resident fool, motley or otherwise, is that it’s net energy that moves ‘through’ gold just like gold moves ‘through’ paper."
I don't think this was anywhere near the points you thought you made thus far, but hey let's look at it.
One way to consider the way gold moves through paper is imagining the same bit of paper running through the same bit of gold and changing ie. increasing its price all the while as the exchanges happen. So err, we have the same bit of oil running through the same bit of gold and changing its price all the while huh? What do I know, I'm just a fool and don't understand much. I'm sure it makes perfect sense somehow.
(sidenote - As our current resident dumbass has pointed out energy is finite in the time dimension. Fiat and gold is not, so this is where it breaks down.)
While we are taking a little stroll, why don't we look at your silver fantasy in more detail.
We would have to start by imagining some serious giant who shares the shrimp mentality you would ascribe to them, whereby they are out to profit on their profit and idk win @ the world. Sure, why not, since we are in fantasy land.
Next up is the little problem that doing so would deprive the world of industrial use of silver. But that's no big deal right, it's not like it has any use, or that anyone might object to such. Besides if they do, they are just standing in the way of their simple plan 1. Buy silver 2. .... 3. Profit, and they don't care to much for those who stand in their way.
Ok, ok. So they spend a few decades to buy up excess silver on the sly, with the intent to revalue it at some point. Remember we are in the big leagues now, we would need a player who would have energy reserves for many decades and would be large enough to affect the market.
Consider for a moment the purpose of these holdings...wealth to deploy once the natural energy reserves run out.
Here we encounter another small hiccup. It was illustrated by the hypothetical example of Mr. X above, but I am sure you ignored that too. You seem to like ignoring things, like consistent thinking that clashes with the fantasy you would like to come true.
The hiccup is that for a few decades they supported the silver price while buying it, then they supported it with revaluation, still buying. Now comes the day of profit. Question is, who is supporting the price now so they can extract their profit?
See in the first few decades the miners got loads of profit. Then after freesilver the miners and say governments got loads of profit from all the support by big all, but come the day of their supposed profit, well who is going to provide them with it? That's right.
Now see, gold doesn't have that problem. But hey, everything is all good in fantasy land isn't it.
Another hiccup which I glossed over, is that their biggest opposition would come from other superproducers, since revaluing silver would devalue everyone else's gold holdings. But hey, this isn't a problem either, is it.
I suppose your hope is that after freesilver the other superproducers would share in the glory of silver and start buying it by the truckload, to make it a sustainable alternative for the long run and the far off day of 3. Great profit. No sour grapes about not taking part, and in the long run providing our supersmart rogue with their profit at the end of the day, eh.
What a beautiful world it is when we don't think, and others share in our passion for not thinking. :)
"Great ideas emerge; have their day in the sun, subsequent generations take it for granted in their prosperity and it eventually dies, to remerge some time later."
It has happened. Who can know the future. What I can tell you is that it won't happen in your, or my lifetime, though it may break down eventually.
Have a nice day now.
TF
How free is freegold if those who hold it now are still in power after we get "free"?
Floesh,
Before I answer, can you tell me what you think the free in Freegold means?
Milamber
The problem is that TPTB will not give up the power to print money without a fight, a massive WW3 style fight.
That won't stop me from stacking though.
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