Wednesday, June 19, 2013

Ohh nooo!!! Gold so low!


Another day, in another time, gold had plunged to a 20-year low, plumbing the depths of $250 an ounce at the same time as the Dow was hitting a new all-time high of 11,300, even as astute followers, just like some that I have today, were then following Another and FOA. Some threw in the towel in disgust, some turned on the messenger, and everywhere you could cut the tension in the air with a knife.

I was following the thread of a particular (unrelated) discussion in the old USAGOLD forum archives (I do that occasionally) and I came across a few comments that reminded me of some of the recent comments here. So I picked out a few of them that I thought you might find interesting.

I want to note a couple of things. The first is that I don't think we are seeing quite this level of desperation yet. I think another $100 lower and we might start seeing more of this kind of towel throwing. Also, note that these few days below marked the last time that physical gold would ever be that cheap. So the very time at which some who had been following A/FOA in real time were throwing in the towel was perhaps the best buying opportunity in all of history. If you understand why I, personally, welcome the recent decline, then that's something to keep in mind if the falling price of gold ever starts playing tricks on your mind. If you don't understand, then please feel free to ask in the comments and I'm sure that someone will direct you to some of the posts that explain my view.

All of these comments came from this page, and they are just a few selections that I picked out especially for you today. :D

Skip
Overcoming discouragement
#11907
8/23/99; 22:59:27

I've avoided posting for some time because of discouragement. As of right now, I am regretting that I ever invested in gold or gold stocks. Something that is worse than losing hope and cutting your losses is losing hope and capital and then to have someone lift your hopes...only to have those hopes trashed, again and again and again and again and again and...endlessly trashed.

If I think of all the growth I could have had in the stock market rather than the losses in gold and gold stocks, it is almost sickening and totally depressing. Somehow I know that I'm not alone in feeling EXTREMELY depressed at this latest attack against the POG by the rich big boys. Somehow it seems very unholy to keep getting financially bled to death simply for making the right decisions at what SHOULD be the right time. Maybe I'm over-reacting, but I sure hope that GATA can help bring the POG back to at least its 20-year average. This current price level of gold and gold stocks is totally absurd and complete discouraging.

Long have many of us ardent goldbugs waited and waited and waited, witnessing almost every reason possible to trigger an upturn in the price of gold...only to see apparent collusion drive it down further.

I'm in too deep to sell, and too scared to buy anymore. Somehow I can't help but wonder whether I'll someday die in my old age with tens of thousands of worthless gold stocks and many ounces of worthless gold coins. Am I being somewhat paranoid? ...actually, I'm just plain TIRED of losing!!!

Can someone out there provide some GENIUNE hope for us disillusioned gold bugs? I'm so tired of the misinformation that prevails on both the internet and the news media that it's impossible to know WHO OR WHAT to believe anymore. Some of us would love to start overcoming discouragement, and I'm one of them.

--Skip

The Stranger
Skip
#11909
8/23/99; 23:09:10

Boy, are you going to get a whole wave of responses on this one. I, for one, would be happy to address your predicament in the morning if you like, but, right now, I have to go to bed. For starters, however, let me suggest this: tell us more about what you have been through. Just how bad has it been? What do you own, and how long have you owned it? Don't worry about giving yourself away. Nobody here knows who you are. When I get up tomorrow, I hope to hear more about what you have been through. You will get lots of help here, but first, you need to talk.


Aristotle
Response to FOA
#11917
8/24/99; 4:22:15

[…]

Some people prefer to disregard the fact that the Gold market has spent 20 years coming to this point in time and price--a price that could NEVER exist now except under the special circumstances that have been put forward in many carefully considered posts. Some of these same people might suffer a bruised ego because their own careful and astute choice of Gold as an investment has yet to pay off huge in a timely fashion. Or else they might feel that Gold should be performing for them with obvious gains each and every day. Don't these people ever go home from work and sleep, or must they always be on the job and getting paid? My point is that "productivity" need not be an around-the-clock affair. As ANOTHER has said, "Gold will be repriced once in life, and that will be much more than enough." The bottom line is that you will either HAVE Gold when events turn, or you won't. It's that simple. As Beesting recently reminded us (or was it Turbohawg or ET?), this isn't just a showdown between the dollar and Gold. There's a whole world of currencies that have been suffering at the hands of their national dollar-debts.

[…]

Gold. Get you some. ---Aristotle

PS. for Skip: I don't know if this will help you out. Maybe it'll make you smile if nothing else. I had a chat with a friend the other day who was second guessing his Gold bullion investments after watching the price fall while the DOW powered upward in half frustration. He asked "What if I die with a drawer full of coins before the price of Gold goes higher?" (He's under 50 years) I laughed and said, "Then, congratulations!" I suggested to him that anyone who checks out with Gold coins remaining in his drawers (at any price) obviously had adequate means with which to meet his life's needs. Only a deathbed ego would consider any distinction between the remaining Gold weight and the Gold price during one's last breath. He laughed loud and hard and said that was for sure.

Aristotle
Skip, another thought for some additional perspective
#11932
8/24/99; 8:43:41

You said, "If I think of all the growth I could have had in the stock market rather than the losses in gold and gold stocks, it is almost sickening and totally depressing."

I don't believe a particularly infamous trader who was actively IN the markets had a single Gold investment. His name was Mark Barton, he lost half a million, and killed a dozen people. Just because you see the DOW index climb is no guarantee that your particular choice of stocks will be gaining too (unless you bought into an index fund.) I can't even begin to recall the vast number of times that I've heard the financial reporters announce decliners outnumbering advancing issues despite a higher DOW on the day.

Further, try to recall your original rationale for choosing your current suite of Judy's. (As in "Punch and Judy" shows...taking a beating. A term-use I coined to lighten my own dismay over a mistaken purchase of a mining stock years ago that went south and now vies with postage stamps in value.) Chances are that whatever compelled you to make those decisions would constantly act to sway you to do so again, and are probably more compelling now than they were then. If you couldn't resist Gold or Gold stock purchases before, could you resist them now? Hopefully, as time has passed, you've come to see a distinction between owning a world class asset (Gold) versus stock in companies that try to earn a paper profit by mining for this world class asset. Don't get me wrong...I love mines (I have a professional attachment to them), but I'll never again make the mistake of investing in a paper generator when there is real money (Gold) to be claimed. As a productive person, I invest in myself and make (earn) my paper directly. Then I cash it in for Gold, month after month. It's a One Way Street for an enjoyable life. I never did enjoy fretting over whether IBM or AT&T would be the better performer. I AM the performer, and all that I ask of my money is that it really be money--payment-in-full.

Unlike some people that are fully invested in stocks, with Gold you actually have real savings. You are a sovereign individual, immune to the fiscal mismanagement of your nation's leaders. Also, think of the sector of the population that lives paycheck to paycheck, unable to dabble in the stock market, and unable to save either paper or Gold. Is their life for naught because they aren't "in" the stock market? Wouldn't they be thrilled to have an all-Gold savings? Travel to some other countries and your perspective will change in a hurry. Adopt the larger view, my friend.

Gold. Don't work for anything less. ---Aristotle

FOA
Reply
#11935
8/24/99; 8:57:04

[…]

From my standpoint, most of the gold paper market will revert to forced cash settlement at the last trade! That's for long investors only because it's the inability of the shorts to deliver that will precipitate this. They will be taken out and shot because the CBs will be clearing the deals. If it's dropped to $100 and established trading markets halted worldwide because of sudden delivery demands, everyone will settle at $100 cash and walk away! People that are waiting to sell their hedged gold into their counterparties (mines included ABX?? to the BBs) would have to sell their gold at the new settlement price. Remember, when big international bankers are in trouble on this grand of a scale, the rules are changed into the banks favor. Always has been, always will be.

Understand, that the BIS clears all trade in CB gold. If that gold is tied up in private Bullion Bank deals, it will come under their rule. The BIS tells the Government what needs to be done and the Governments tell the mines. In perspective, this will be happening in every industry, worldwide, not just gold. Everyone will lose some skin…

FOA
Comment
#11943
8/24/99; 9:47:21


---CoBra(too) (8/24/99; 9:08:34MDT - Msg ID:11936)
Endgame among not so clearcut adversaries?!?---


CB2,
Good point. I have one view for what you write:


-----So why hold on to bad debt paper scrip if the endgame between $/IMF and Euro/Bis was so clear-cut policy as FOA feels, all along.---------

There is no possible way that the CBs could ever sell or unload all of those dollars. Presently they are held in the form of US treasury debt. It's owned by the CBs not their public / private interest. So, the CBs would not be looking to "spend" these reserves in the usual sense. They obtained these reserves as their local economy generated excess sales to the US (for them a trade surplus) and their private citizens wanted to hold local currency assets, not dollars. The Cbs printed Marks (example) and traded with their citizens for these excess dollars. Then they traded these dollars for US debt so as to earn interest.

Now, exactly what good are these debt holdings as long as their country continues to carry a trade dollar surplus? Not much, if the locals don't want to hold dollar assets. In the end, if the CBs were to sell these treasury holdings it would crater the US debt markets long before any value was received. And, to add further, that value could only come from using the dollars to buy something. Now what does a Cb use its reserves to buy, cars, TVs, other currencies??

No, the only avenue to balance currency value is through the age old asset of gold. Indeed, if you already hold enough gold, one just uses the dollars to bid for gold until the dollars become worthless (price of gold spikes to the sky). Usually only the intention to bid is enough?

Yes, No? FOA

FOA
Reply
#11947
8/24/99; 10:20:59


---- Al Fulchino (8/24/99; 9:12:26MDT - Msg ID:11939)----
------what I was grasping for is the connection with this analogy to the gold industry is how the industry wasn't wary like OPEC with their own product. This manipulation could have been prevented had they OPEC'ed themselves. Do you agree?------


Al, it's true that the mining industry could have done a better job of managing their product. But, would they have been allowed to? Just prior to OPEC and the 1971 gold window close, all the major nations were still trying to work out a common ground with respect to gold. The price was so low that few mines were making anything more than subsistence. The governments were finding that they could no longer use gold as money because they needed to cheat on the currency. The US wanted the price of gold to run up so as to spike the oil price and obtain more local production. Something they couldn't do competing against the nickel a barrel ME producers. As gold rose, the mines didn't need any production agreements so no one sought one. Throughout the 80s everyone was expecting gold to regain its trend, so again , no need for collusion. It's only been in the 90s, especially during and right after the gulf war that the industry began to smell a rat. Hell, even two years ago, Another's Thoughts about manipulation were dismissed as crazy. Now, the industry sees they are in a battle for their lives as their asset is at the center of a realignment of world currencies.

Truly, if gold is repriced high enough, as a competing currency, the falloff in jewelry demand will negate the need for any additional supply. At extreme prices, the CBs could supply the market for years to come without impairing their asset reserves. Production curbs on the mines could again restrict them to minimal profits even if gold was in the tens of thousands. A mess indeed.

FOA


Canuck
Sorry to all, I quit.
#11987
8/24/99; 18:40:45

Sorry to all, FOA, Aristotle, Aragorn, ET, Steve H., Gandalf, Peter A., The Scot, canamami. I'm done.

We talk of an upward swing that I don't think is going to happen. We endless surmise on the possibilities, Sachs is 'working' 15 mt. and BOE is selling 25 mt. in 4 weeks, yadda,yadda. The USA gas 7,500 mt., BOE still has 680 mt., the IMF, the Swiss, many other CB's. The 'overhang' is monstrous compared to this 15mt. and 25mt here and there. Who is really going to control gold?? I don't understand the 'paper' end of it but I will take your word for it that it will blow up, and then 'physical' will rule. So then, you controls the 'physical', the holders with thousands of onzes or the one with thousands of tons? Did the 59 page article not allude to the fact that CB's WILL sell down the price of physical. Gold has been dropping for 20 years, if I am a country in need of quality, value-oriented reserves, given that it is 1999, do I want gold or do I want the currency of choice. Fifty years ago, gold was a 'reserve currency', today it is not. With today's global infrastructure I can 'switch' my reserves very quickly. Investors are 'switching' investments into Japanese equities, and tomorrow it might be England or Germany. Tell me why a federal bank needs to hold gold? Why does a central bank hold gold? For a few years now CB's WANTED USD as reserves because it represented stability and wealth.
And it is as plain as day that CB's want out.

In regards to the message above, I have read it 10 times and two phrases stand out, "all that I ask of my money is that it really be money--payment-in-full." I'm investing in gold and I'm not getting paid in full, I feel brutally sorry for for the folks who have been investing in golds for years and years. I wish gold a turnaround for their sake. Secondly," Adopt the larger view, my friend" confuses me. I think the CB 'overhang' is the larger view.

Again, I apologize to all, I am throwing in the towel, I wish all gold investors multitudes of luck and fortunes, I won't be there; perhaps I am scared, short of time, impatient, 'fiat' hungry, I don't know. But again best of luck, sincerely.

Canuck

SteveH
Canuck
#12003
8/24/99; 20:58:06

You will be missed. We all feel your pain. I would offer that the pain is most always the greatest before change, but we all live our own lives to our own rythm.

Good luck. Keep in touch.


FOA
I'll be back later.
#12004
8/24/99; 21:06:47


----Cavan Man (08/24/99; 20:06:51MDT - Msg ID:11996)
FOA
I see there are a couple of posts here this evening that are not pro-gold and perhaps for good reason(s). Do you have a repartee?-----


CM,
Yes, it is sad when someone gets hit without a clear knowledge of why. Unfortunately there will be more of this because investors are unprepared for the times ahead. We could see gold go through tremendous swings as this is unwound.

Long term booms (20 years +??) always die with major losses inflicted on the most leveraged positions. Add to this a once in a century destruction in the most popular currency, and we produce an economic earthquake the likes of which no one has ever seen.

Most investors retain their life savings in a fully invested mode and would not get off these train tracks if they saw two engines coming. They will stay there because it's impossible for them to believe they occupy the wrong position! Who can lay blame or call them fools? These typical western savers have been educated to believe in a money system that serves no purpose, except a medium of exchange. Yet, they perceive that all of their assets are correctly valued by this system.

The gold market suffers the same fate. The same ideals that hold us in bank accounts, using credits to indicate what is on deposit, also drive us to invest in gold assets that must be sold to realize a profit. Modern gold bugs travel from bank accounts into paper gold and back into the same bank accounts. All the while pointing out the weakness of the system, yet needing the same system to keep score. Without the modern paper gold market, gold bugs, as we know them are lost to place a value on their holdings. That is why they gravitate into familiar gold holdings. Ones that still retain some connection to their paper currency. Mine stocks (and various option / futures) are a likely choice as they sit squarely upon the financial system we know most.

Great swings in asset preference always bring monumental profits. However, these profits will be shared by only a very few. And those few will have to endure gut wrenching blows to their assets when this storm hits. Gold will by no means be safe and it will not be secure. But in comparison to every other form of wealth, it will be the most well-known and sought after asset on the planet.

I think, many will be weeded out from this market as events unfold. Most of them never expected the fluctuations occurring now and they would be horrified at what may come. However, what they retreat into will be completely cleaned out. Completely! As for those that are sharp enough to buy when the proverbial blood is running in the streets? Time and events will prove that they were not as smart or quick as they thought.

Having said that, paper gold may rally, gold stocks could storm up and physical could just sit there. But that won't be the end of it and such an action would simply draw more into the fire. I remain steadfast to what Another once said:

"when a thousand hungry lions fight over one scrap of food small dogs should hide with what's in their belly"

This dog is well fed with gold and hidden deep in its history. Thanks FOA


The Stranger
The Post With No Name
#12005
8/24/99; 21:34:29

Last night, somebody calling himself Skip posted a sad commentary of his experience in the gold market and issued a plaintiff call for reassurance from this Forum. Tonight, Canuck, in an act hardly anybody could fault him for, suddenly jumped up and made a run for the exits. The last time we were at these price levels (and after years of pie-in-the-sky forecasts) ANOTHER and FOA suddenly reversed themselves and announced that the POG was very likely to collapse. And now, just to be sure we are all scared as hell, Farfel shows up tonight to remind us that the world economy is about to slip down a blackhole, taking gold with it, of course. (Needless to say, I think such pronouncements are as looney as they are facile.) But there must be something about $250/oz. that brings out the fear in even gold's most devoted enthusiasts.

Forgive me for being presumptuous, but I think times like these are apt to be hardest on those who have the least confidence in their own research. I doubt anybody here has a higher proportion of his own assets in gold or gold-related investments than I do. Yet, I have absolute confidence in my position. There is a worldwide reinflation taking place. It is quantifiable here in the U.S. It is, in fact, quantifiable in many countries around the globe. It is the very reason, in fact, the FOMC raised rates today (despite having committed three coupon passes in the last month). One doesn't need to be a PhD. in economics to understand the meaning of these things. But, because it takes time for the masses to come around, one needs to have patience.

I think it was Ben Franklin who advised never putting all of one's eggs in the same basket. But somebody else must have said, if you ever want to get rich, putting most of your eggs in one basket is just about what you're going to have to do. The trick is to watch the basket. I don't know who might have said that, but, whoever he was, he convinced me. Apparently, he also convinced Bill Gates, Aristotle Onassis, Michael Dell, J. Paul Getty, etc., etc. etc... None of those guys ever gave a darn about classic portfolio theory, and, frankly, neither do I.

I have always been a "plunger". When I find the right thing to do, I just can't bring myself to do much of anything else. But, over the years, my efforts have paid off handsomely. That's why, as much empathy as I feel for someone like Skip, I also feel respect. No, I don't know what he owns or when he bought it. I also don't know how much homework he did before he risked his money. But I know this: Skip had a dream once that I can relate to. He wanted to be rich and he had the courage it takes to get there. Now, that's my kind of guy.

Skip, if you are still out there, remember these simple words: If at first you don't succeed, try, try again. You may be having a low moment, buddy, but the future belongs to people like you. You will learn from this and go on to do great things with your investments. Believe me.

And as for you, Canuck, get a good night's sleep, my friend. Tomorrow is another day!

Skip
The Stranger
(08/24/99; 21:34:29MDT - Msg ID:12005)
#12020
8/24/99; 23:26:52

I'm still out here, and have frequently lurked on this forum although I rarely post.

True, gold approaching the low $250 range struck fear in my heart, as I've been bleeding financially all the way from the high $300 range down to the present pits of despair. Nonetheless, my concern is how much lower gold will go before it finally turns, and whether or not I can hang onto what stocks and coins I currently own before the POG returns to at least normal levels. I'm building a cash account through working two jobs and very long hours in case such a slush fund is needed to get me through the next few months without having to liquidate at great loss.

I'm sorry for Canuck that he threw in the towel. Also, I do appreciate your praise of my courage... and I once heard that the TRUE test of courage is having the ability to do the right thing during a time of fear. Right now, I believe that keeping my gold and gold stocks IS THE RIGHT THING TO DO.

My thanks to all who have responded to my posting from last night.

Sincerely, Skip


FOA
Comment
#12064
8/25/99; 11:29:26


---------The Stranger (08/24/99; 21:34:29MDT - Msg ID:12005)
The Post With No Name
Last night, somebody calling himself Skip posted a sad commentary of his experience in the gold market and issued a plaintiff call for reassurance from this Forum. Tonight, Canuck, in an act hardly anybody could fault him for, suddenly jumped up and made a run for the exits. The last time we were at these price levels (and after years of pie-in-the-sky forecasts) ANOTHER and FOA suddenly reversed themselves and announced that the POG was very likely to collapse. And now, just to be sure we are all scared as hell, Farfel shows up tonight to remind us that the world economy is about to slip down a black hole, taking gold with it, of course. (Needless to say, I think such pronouncements are as looney as they are facile.) -------------

(to see the rest, read his post)


What do we conclude from the above post? Stranger, I appreciate your presenting your thoughts and perceptions. They validate my own perceptions of how westerners feel about gold. I also used to read Another's Thoughts as an observer when they were presented by someone else. The one common thread in all of them was his council to buy only gold, physical gold. Yet, it never failed to impress me that every time those considerations were given, all discussion immediately turned to buying gold options, futures and mine stocks. It was like an automatic response that was ingrained in investor psychology from years of indoctrination. Your conclusions fit the same pattern.

Why is it that professional brokers and investment councilors in this country lead the public to this end? Is it because they have no depth of history to draw from or is it that they have "no fear" of losing others' money? Mention that gold may rise and could become a bedrock for your life savings and not one paper pusher tells his clients to buy real gold. Yet, we let the facts speak for themselves. The gold price having fallen from manipulation has literally destroyed a large percentage of portfolios invested primarily in gold stocks. Some of these mine stocks have gone to zero and are in bankruptcy, never to return.

All the way down Another (and later myself from association) said to buy gold for the long haul because in the long term it may go very high. Then in typical like form, traders said buy gold stocks for the long term also. Don't listen to Another, it will never go that high and with these paper items you will get rich if it only goes up $100 bucks! Indeed, leverage ruled the day all the way down with little regard to the fact that the "little guy" could lose it all with no hope to run for the final payoff. Now, here at $250 gold, Another presents a case for the destruction of the pricing market mechanism and still says, buy gold for the long haul. A concept, I might add that fundamentally offers the most bullish case for physical gold, while posing a worst case scenario for mine stocks. Yet, intelligent thinkers and admitted white collar investment professionals, such as yourself, lay the blame of loses to mine stock investors at the doorstep of physical gold advocates.

The whole philosophical reasoning for buying physical gold was always to negate the possible total loses to ones assets from a breakdown of the world's modern derivatives pricing system. A system that spans our entire financial structure, not just gold. Even with this risk in mind, I submit that it is still the current system advocates that present a "pie in the sky" council to new, unseasoned savers. Just as you use Bill Gates and other "risk takers" to portray an "American Spirit" of "plunging in", it hides the hideous failure rate inherent such accomplishments. Had Skip not listened to the sirens song of great wealth, he would still have had a chance today to benefit from a centuries old investment, real gold. So consider this, the next time you drum the march for the average person's savings to the tune of "paint your wagon and come along". For myself and many others, long term playback and asset safety are more important to our family than the bragging rights of day traders.

Please continue. (frown) FOA


The Stranger
Sorry, FOA
#12068
8/25/99; 13:46:23

I didn't make the point to offend you. My intent was merely to share my confidence in the gold market at a time when people were obviously getting nervous.

As to your comments about white collar professionals and "westerners", I suppose you mean well. I would emphasize, however, that, out of respect for our host, I have specifically avoided discussing the merits of stocks vs. coins. I intend to keep it that way.

Finally, as to who is misleading whom, all of our (your's and mine) posts are a matter of record. I hope I need say no more.

Farfel
Five Lessons I Have Learned Late in Life as a FORMER Goldbug
#12069
8/25/99; 13:47:35

1) With the exception of Barrick Gold, ALL gold mining companies are run today by maleducated, sub-moronic, good ol'boys from Hicksville. After all, just take a look at all the formerly unhedged gold producers who finally decided to hedge today some $200 an ounce below Barrick's hedges. True idiots! Talk about shooting yourself in the golden foot! Oh, well, what the hell, might as well tank the gold price another 100 bucks or so.

[…]

2) Unlike other commodity producers (like OPEC), there is ZERO co-operation amongst gold producers... and so they are doomed to die their own individual respective, deaths (except for Barrick Gold).

These guys couldn't get together to throw a birthday party, let alone figure out how to coordinate a de facto cartel designed to curtail gold production and enhance the gold price...

3) All Gold mining company managements operate on automatic pilot, following a pre-determined path to oblivion (excepting Barrick Gold)…

4) There is NO notable difference between South African golds or North American golds or Antarctica golds, for that matter. They all share one thing in common: a plunging gold price below 200 will ultimately bankrupt the entire lot of them (except for Barrick Gold)…

5) There are NO gurus in the gold market (except Peter Munk). It is impossible for any single technician, chartist, fundamental analyst, astrologer, etc. to predict the arbitrary path of gold in the short-term with any scintilla of success, although it is a usually a pretty safe bet to say "It's going down!"

Gold's arbitrary behavior stems from its oligopolistic control by the Central Banks. Upon any given day, there is at least a 50% chance that some Central Bank will pre-announce its decision to dump its entire gold reserves in order to MINIMIZE its profits on the sale.


FOA
Comment
#12083
8/25/99; 16:45:26


------The Stranger (8/25/99; 13:46:23MDT - Msg ID:12068)
Sorry, FOA I didn't make the point to offend you. My intent was merely to share my confidence in the gold market at a time when people were obviously getting nervous.------


Sir Stranger,
no need to be sorry and your post did not offend me. I felt the offense was directed towards intelligent physical gold advocates. When you publicly interpret my posts as a reversal of thinking, you are wrong and send a false signal. To say that I expect the (physical) price of gold to tumble, is a misleading statement that subordinates my reasoning by talking out of context.

I understand how our gold market presently trades as a paper derivative and in physical form. Every day, new evidence comes out to confirm this concept. TownC offered the excellent work of John Hathaway to further explain this evolution. When Another pointed out that the derivative side could fail and be discounted in price from the effects of that failure, you obviously did not grasp it. Others did. If you had then you would have noted that I expect the physical gold price in the dealer community to explode as its supply falls. A process of rejecting the current price setting methods.


--------As to your comments about white collar professionals and "westerners", I suppose you mean well. I would emphasize, however, that, out of respect for our host, I have specifically avoided discussing the merits of stocks vs. coins. I intend to keep it that way.-----

Again, I present a balanced observation that helps to account for the much larger percentage losses to investors that have followed the "established paper rout". Nervous people have a more pressing need to learn why their strategy has failed. Without balanced input, we often repeat our mistakes. I learn from my mistakes also.

As for merits of stocks vs. coins? There is no valid comparison. Apples and oranges have never had the same taste. The percentage of loss for one or the other is but a function of the risk one takes when placing savings into that vehicle. Coins will never be as risky as stocks of any kind. Nor will gold bullion in one's hand. The very simple laws of nature dictate that gold cannot fall to zero as stocks have and often do.


-------Finally, as to who is misleading whom, all of our (your's and mine) posts are a matter of record. I hope I need say no more. ------

I believe we come to this forum to offer our Thoughts for everyone to view and discuss. No one is right, wrong or misleading as only events can and do prove all things. To date, cash invested in gold bullion has lost value much less than if it was placed in mine stocks. All of us can grasp that fact. Indeed, no more need be said.
Thanks FOA


AEL
ha ha ha
#12085
8/25/99; 17:07:52

did anyone catch the unintended double entendre in FOAs latest? --- "... the much larger percentage losses to investors that have followed the "established paper rout"

i.e. rout, or route?

:)


FOA
Come what may?
#12506
8/31/99; 16:15:01

ALL:
I do thank everyone that have voiced support for the continued sharing of my insights. Anyone of you that have been alive for a while must also understand the frustration of explaining a difficult topic. Truly, I (like all of you) am not a machine and the process of walking a fine line between two worlds of thought is a major energy drain. This unique forum gives all readers an opportunity to expand their viewpoints by observing the "real world of money" through different eyes. As such, I deplore any direction that takes us into the ego world of "traders calling the market". It is an accepted fact that many aspire to make that role their life's work as there are plenty of other net sites and forums to confirm it. As popular as this may be, it offers little in the way of gaining insights to the perspectives that drive world investments. As a group, the trading society often loses the concept that feelings and viewpoints are the driving forces that shape those little chart patterns so many follow. Because many give up in trying to decipher the meaning of these forces they degrade themselves to a level of "follow the leader investing". True, it works sometimes, but one's spirit of understanding develops little from the process. As a result, when a major change does impact world thought, people are lost to grasp why the trend reversed, and more importantly, cannot change their strategy with it. Perhaps, something we have seen in the gold market these last many years? So, "let the world have its way, come what may", I will try to present my insights as seen through others. I hope many will join us on this journey.

Further:

I completely understand (as do you) that many people become upset when someone attacks the validity and purpose of their favourite investment strategy. Indeed, if most of your savings are installed in said discussed vehicle, the urge to find a flaw in the reasoning becomes overwhelming. Often one does not have a factual explanation, but we do have the ability to "think out loud" in the form of a rambling discussion. Perhaps, this is how many view my posts? I offer that this form of "rebuttal" is preferable to just stating "he/she is faceless and doesn't have the facts"??? If I do this, I apologize and will try to change. I think Mr. "PH in LA" had it very right when he observed how some internet writers, "come wading in with both barrels blazing" as they present their thoughts! I add that this could be an offshoot of our modern society. Hope we can get past this, soon! Thanks PH.

Onward:

Most investors that have assets in this broad arena called the gold market, have also come to appreciate just how large an "impact area" gold has had. Not only throughout history, but right up to today. The ongoing battle over the "gold concept" has won and lost fortunes, built and destroyed empires and in general has warped the human senses about what money and savings should be. This conflict continues today, even onto the pages of this forum. As the stress builds on our world financial system, the lines of thought concerning gold are becoming more clear. Let's examine some of what I perceive to be some of those lines.

Of course there are those that do not even consider gold as a viable contender on the world money / investment scene. The have lately been a major vocal class that have prospered in the realm of the current financial system. Myself nor anyone else should blame them, as they follow their reality in a world that presently benefits their ideals. I think few of them have given themselves a full study of how world currencies have come and gone throughout the years. If they had, the fact that they "have lived in a period of little change" should hold for them that things can reverse without notice. History is full of recounts that describe the rise and fall of entire social groups at the hands of a sudden rethinking of what has economic value and what doesn't. In any event, ingrain monetary ideals usually do not change during one's lifetime, so the past lessons may be worthless for some. As a result, a large mass of society must always return a great portion of their wealth into the hands of some "historical event".

Also included in the "gold perspective" are the true "physical gold advocates". They have seen through history how the destruction of various "money systems" always leads to the destruction of the "economic system" built upon the fiat concept. The efficient money system present in those fiat times, help to create the need (and therefore increase the value) for many real assets. The ensuing breakdown of the money always destroys the "efficiency" factor that society used to up-value the assets. Usually, any enterprise built upon the current functioning money contract system is impacted as it cannot change quickly enough to the evolving money system. It's hard to grasp that even real assets like houses, land, equipment, vital necessities and even food, can lose value as their trading pipeline is disrupted because no medium exists to fairly create "market value"! We have seen, time and time again, that real gold can gain value against "everything" during true money destruction. During these times, the human spirit need for using a familiar process is all consuming. The exchange of goods and services continues, with or without a valid medium of exchange to express it. Still, values become so conflicted and lost during this process that the marketplace reaches out for the most tradable of things that can act as a medium. In that need to replace "efficiency", lost with the medium value of paper money, it upvalues any store of value thing as the new "medium of exchange". Yes, within a large marketplace, the human need for trade gives any "efficiently" attribute more valuable than food.

This is why I smile when someone says, "how will anyone be able to know if the gold is real and what will they value it as"? I say, that the marketplace dynamic will ram this education home very quickly. The above question is asked by someone that accepts and uses paper dollars every day. Yet, these dollars are paper (how do you know they are real? as often they are counterfeit) and hold value only because the marketplace is using them. During a money breakdown, you will observe trading in the marketplace and quickly come to accept anything, ANYTHING, that even could be gold. Believe it!

Finally, we also have the "in-between gold advocates" in the "gold perspective". Usually, their view of the market is such that it is an industry built within the confines of the present monetary system. They do not hold an extreme view about paper money, and believe that today is different and our currency will only fail "somewhat"! So far, in concept they have been right for many years. Yet, in investment practice, their "gold perspective strategy" is failing. I say this in contrast, in that by holding physical gold, the "physical in your hand money insurance factor" is never lost, even as the quoted gold price falls. Especially, in today's new market dynamics we require the question:

"does the paper security in your hand give you an absolute claim to physical gold, or does it more so give you a "right" to receive dollars that match the increased value of gold?"

This "in between gold perspective" strategy, calls for placing money in various forms of paper gold. All based on the convenient factor of holding paper that gains in price as the demand for gold increases during a controlled slow burn of the world money systems. These paper investments are expected to all gain because their value is "derived" from the quoted price of gold on established major exchanged, London, Comex, etc. Whether you hold "gold certificates" , mining stocks, gold options or gold loans, an observer can readily correlate their increase and decrease in value to the world quoted gold price. They are derivatives by nature, because their very worth requires the observation of another price setting market.

It is here, in this "in-between market" that I believe most gold investors will first see the breakdown in the world money system. Yet, for them, this breakdown will bring the loss of performance to their paper holdings, because, from necessity, our financial structure cannot allow the established quoted price of gold to rise. To honour the present contracts, would require the supply of millions upon millions of ounces of gold that simply does not exist. In as much as these players expect a huge payoff on their holdings as the gold market must run skyward to balance delivery, the opposite action will most likely be delivered. Because all of their holdings are valued upon a marketplace that establishes a price with even more derivative trading, the expected failure of those contracts will crush the quoted price. Just as most men will not hang themselves with a rope, the shorts that actually create the quoted price of gold today, will not trade it higher. In fact, I believe they are trying to gather physical gold (taking delivery everywhere) while it still trades in relation to the low derivatives price. Unless you are a major entity in world affairs, holding something the world must have, I doubt any form of gold paper securities will escape the burn. Indeed, over time, in a up and down fashion, most of the paper gold holdings will be destroyed first, then the physical gold price will zoom in a matter of days if not hours!

How will mining shares respond to this "POSSIBLE" event?
More (sometime?) later. FOA


______________

I included portions of Farfel's comment above because I thought it was funny. In fact, gold mining stocks were sucking so horribly on 8/25/99 that I thought it would be interesting to take a look at how some of them are doing today after having almost 14 years to recover alongside a gold price that has risen 550%. Barrick (ABX) appears to be the worst of the bunch (at least of the ones that I looked up). It is one of the largest gold mining companies in the world, yet its share price is the same today as it was at gold's lowest bottom in 34 years. Barrick was $18.52 on the day that Farfel wrote that comment, and today it's $18.90. Why's that, you ask? Well, for one thing, in 2009 Barrick diluted its shares in order to essentially spend $5B of its shareholders' money to buy back those hedges that Farfel was raving about. ;D

Sincerely,
FOFOA


643 comments:

1 – 200 of 643   Newer›   Newest»
Robert said...

This is the comment that stood out to me: "Most investors retain their life savings in a fully invested mode and would not get off these train tracks if they saw two engines coming. They will stay there because it's impossible for them to believe they occupy the wrong position! Who can lay blame or call them fools?" Especially in light of the Kyle Bass video presentation making teh rounds today where he makes the observation that our financial memory has shrunk to about two years. No wonder the world seems so blind to the future staring them in the face. After the fact there will be a lot of wailing as people realize it was obious all along.

Robert said...
This comment has been removed by the author.
Polly Metallic said...

The current lower price of gold is no more important than one's stock portfolio in a retirement account being down some years while up other years. It should be surplus money saved for later use, not last week's grocery money invested in a get rich quick scheme. Anyone who is distressed over a price of gold that is lower and probably will go lower still before the revaluation has probably overextended himself.

I have money in a retirement account. Yes, I took out some to pay off our small home loan and buy a bit more gold, but I still have money at risk in the system that may burn along with all paper. I currently am short silver and the miners via DSLV and DUST as I understand that gold will most likely continue lower with brief counter trend rallies. So I play the ETFs as a proxy for declining gold and I may later withdraw some funds at a penalty for early withdrawal and buy more gold on sale. I am happy to have the chance to buy in the $1300s again. This is great! I bought gold on sale after the big correction in 2008, too. People were whining then about gold being down from $1000 which sounds pretty funny now. Compared to those $700-1000 levels only a few years ago $1300+ still feels like a very high price to me!

vizeet srivastava said...

This is soo true.... I don't know how much pressure I will have to bear to remain logical when the whole world will tell me that I am a big fool. And one mistake of believing that I am a fool will ruin me.

Wil (from another account) said...

I used to LOVE Mr. Bill, and all the SNL comedy was so original. The SNL crew were truly LEADERS in comedy, not followers.

Sometimes it is hard to be a leader in a world of followers, and it is sad to see some people who, despite having much evidence of logic and reason presented to them, still believe that the paper price of gold and physical gold are one in the same.

They believe this because for all practical purposes in their lives today it is true, Gold today is priced in debt, there is no escaping this fact.

But can you think of anything more ridiculous than this upside down world we live in where the core asset of our financial system is actually denominated in its diametrical opposite?

Do you really think that Giants will continue to accept the soon to be worthless hyper-inflating un-repayable promises of derivative debt,as "payment in full" when the system finally collapses? Or do you believe, as our central planners do, that debt can expand infinitely for generations to come?

When you hear the cries and laments of the weak hands playing into the inexorable decline of paper gold, do you not see that it is they that drag this out?

Can you not take comfort in the moral position that you are doing the right thing by holding gold to help bring about a more equitable system whereby again gold finally "prices" debt, rather than where debt "prices" gold?

If you cannot put food on the table, then - you bought too much. Your desire for a windfall overcame your reason.

But if at least you do your small part to bring about FREEGOLD, even if it never comes in your lifetime, you can rest easy in your grave knowing that you did right by your children.

I myself have just secured a 4th revenue stream to be able to live comfortably with my debts and buy more physical, judiciously, if I can.

You might say I work 4 jobs, yet I still take the mid-day sun on the deck on most of these sunny Florida afternoons, with a cool drink, and peace of mind.

Peace of mind that I am doing the right thing to bring about a better world, where a marketplace of working classes truly has a stake in the system, a more equitable asset-based system whereby gold again prices debt.

As the paper burns I feel no loss at all, only gains immeasurable toward a new era that I am a small part of.

This peace of mind ... comes from the flower of understanding.

MatrixSentry said...

Spot on Burningfiat, harden the fuck up S P.

You're wasting your time writing what you may think amounts to a dagger in already tender wound. You write to a different crowd here that should not be mistaken for a more common one swept away by Goldbuggery.

We watch here. We do not subscribe or prescribe. We happily walk a trail without knowing what awaits across the next rise or around the next turn. However, we are secure in the knowledge that the trail ends at a very certain destination. It could be over the next hill, or in the next valley.

Unlike the Goldbug, we do not despair that world does not "get it". We do not get discouraged when the price of gold makes our physical gold (valued by debt) lose value. We do not question ourselves, then thrash about trying to sooth ourselves. We simply satisfy ourselves by knowing that we walk in the footsteps of Giants.

I for one have been buying physical gold at these discounted prices. This makes me really happy.

jojo said...

SP reminds me of a certain tweeter followed by some who recently tweeted the following:

when will you all come to terms with reality? Gold bull market? Really?

Freegolds ‏@freegolds ah, the man who thinks the world is fond of the dollar. Must be American for sure

the $$ - yes, it’s a beautiful thing.
his cool chart


Gorgeous chart, eh???

Freegolds ‏@freegolds the only one getting rich drawing lines is an architect


if it was a gold chart, you’d be jumping for joy.

Freegolds ‏@freegoldsI dont care about price now, only weight counts. And I jump for you indeed

let’s see if you sound that cavalier at sub $900/oz next year. Or sub $600/oz in three years.


:)
Good stuff there!

Indenture said...

"...the TRUE test of courage is having the ability to do the right thing during a time of fear." Thomas Jefferson

Beer Holiday said...
This comment has been removed by the author.
M said...

This post doesn't address the gold mining shares. Another was incorrect about the gold miners back then. The mining shares wasted the DOW in the years after that.

I'm buying today. Franco Nevada, Gold Corp, Premier, Pretium.

I am not saying that Another will be wrong in the end but I just don't see enough of a divergence in the price of gold and silver or gold and mining stocks or anything.

There is no evidence that paper gold is going to collapse

M said...

@ poll y metallic

So you are putting on mineing stock shorts today?

I've never been more comfortable underwater then I am now. I was underwater with Dow stocks in 2008 and worried as hell.

I think it's a little late to get on the short mining stocks trade.

Michael dV said...

SL if you are right you can dance on our graves...isn't that enough?
No one here is forcing or even encouraging anyone to do anything. We are looking at information and drawing the best conclusions. You make statements of opinion with no effort to refute any given argument. What is your purpose here? You are not adding anything to the discussion.

MatrixSentry said...

SugarLover is a troll. As such he is one of the few that have been banned from the site. His posts are always deleted by FOFOA. Therefore, addressing this individual amounts to addressing thin air. IOW, it is best to ignore him.

poopyjim said...

@MdV

Obviously SL is still massively butt-hurt from the Internet smackdown delivered by FOFOA when it was uncovered that SL was in fact FakeAnother. In my long and storied journey on the Internet, I have never witnessed anyone's Internet shame cause quite as much damage to the rectal area as Gary Morgan's. That he constantly returns here to troll is a testament to a massively torn up and damaged anal cavity, which is dire need of reconstructive surgery to prevent its contents from flooding into this comments section.

Gary: seriously, go find something else to do. It is not healthy to maintain a grudge against someone who hasn't done anything to you except justifiably call you out over your own inappropriate behavior in the comments section of an obscure blog that no one you know in real life reads.

"Holding on to anger is like grasping a hot coal with the intent of throwing it at someone else; you are the one getting burned." --Buddha

GREETZ!

Luke said...

M if you were wanting to buy the miners why wouldn't you go with more streamers like FNV rather than the regular producers?

M said...

@Luke

FNV is just a loved stock. That's mainly why I am interested in it. Fundamentals don't matter. Plus I think the CEO has ties to the giants/TBTF/TPTB ect

Polly Metallic said...

M,

Yes I will continue to be short silver and miners since I think both can and will go lower. I learned my lesson in 2008. Prices can go far lower than seems possible and stay low far longer than you think possible. I lost about 80% during that crash and never sold a thing, so eventually made back most of my former gains, only to watch my portfolio crash again in the last long correction. I decided to dump the shares before I gave back all my profits. You may have my share of the mining stocks and welcome to them!

Edwardo said...

I would turn your attention to the bond space where the Ten year has just hit 22.87.

Grumps LaBastard said...

M,

Hang on. This criminality is unbelievable.

Nickelsaver said...

SP,

You sound like a whinny-ass baby. The only folks getting slaughtered are idiots like you that think that paper gold is supposed be like real gold. And you don't use it for preservation, but for yield. Its all the yield seekers that are getting slaughtered, cause they don't get the fact that the system doesn't got anything left to give.

Do us all a favor and go get yourself some blue chips and some salsa. Stuff your face until your tongue burns. We'll see you on the other side. And hey, hope it don't burn to much when it's time to let it out.

M said...

@polly

I made a lot of money on silver stocks in 2011. Bought AXR for $3, sold it for $10. It's at $1.10 now. I also sold SVM for 14. You are right though. The market will never cease to amaze. I just don't think that there is much upside left in going short now.

I'm more inclined to average down in some of the scrap I kept. What are you under on?

My gems.. Adventure gold, Kinross, Pretium, Intl Tower Hill,

Polly Metallic said...

M,

I did well over the years with the royalty plays such as SAND, SLW, FNV, RGLD and also some smaller companies like ARNGF, RIOM, FSM, EXK and others. But I also gave back big gains on ones like RBY, MUX, TNX, PZG. I had a large portfolio with some small companies that did well, particularly in 2011, as you experienced. I expected a correction, but not so long, and I expected a mania stage in mining shares before any scenario like a gold revaluation played out. Sadly, that was not to be, and I don't think now that it will EVER be.

I think Freegold will end in nationalizing or implementation of crushing taxes and/or royalties on gold miners. Even the environmental constraints and high operating and financing costs of mining are enough to kill many of these companies. As for silver, I believe that once Freegold arrives and the Gold and Silver investors discover there is no "and silver," only gold, there will be a big sell off in silver that will result in a surplus stockpile that could last for years.

I understand the mindset you are coming from as I have been there myself, but I believe you will be disappointed in the end. If you must hold miners, trade them mercilessly, which is a lesson I failed to learn. I was in for the long haul, afraid that if I sold, the shares might run away from me and I would miss out on my big chance to be a "gold stock millionaire," LOL. I could have been a gold stock millionaire if I had TRADED successfully over the last several years rather than held, but it's not worth playing that game at this point in time IMO. That era is over. The only thing that saved me from being totally annihilated was that I heard a commentator say that if prices didn't turn around soon, 50% or more of the small companies would go bankrupt. Hearing that, I sold virtually all of my speculative plays and bought mining/royalty companies that paid dividends. They were solid players and I made some money in dividends in the meantime.

I am grateful I stopped putting money in my retirement funds a few years ago and thereafter we only bought physical gold (and some silver, and we have traded some of that for gold.)

The charts are still extremely bearish for Paper gold, and for silver. I can nearly guarantee that silver is going to $15-18. Gold could easily go to $1000 - 1200. Yes, the miners can go A LOT lower from here. I'll save my money to buy gold on sale for as long as any is available.

ein anderer said...

SP,

you’re starting your comment on the post before with a wrong premise.

You say:
"In theory one holds gold for wealth preservation, right?"

No, that’s not right at all.

The mantra goes:
Gold is for long term wealth preservation. "Long term" means many years: decades and generations.

See, the market of futures was born 1864, just one second ago, compared to gold’s existence, and the same is true for the market of gold futures (mainly GLD, 2004).

Yes, nowadays the price of GLD overshadows the value/price of the real. And yes: In theory this could result in big sorrows for those who have bought with their overhangs physical gold.

But in practice the momentary decline will not effect them in any way. Because: They have decided for gold as a long term store of value. And because: Out of logical reasons this (paper) decline will not last very long (definitely neither generations nor decades). So they will stand this situation cool, calm and collected (and "with some popcorn").

"Definitely"? Yes, as far as I can see it. Please try to understand the logic behind the Freegold theory.

M said...

Polly

Yep. I should have traded the market more too. By shear luck, I wasn't totally killed but I still took a fair beating. I'm guessing it was Rick Rule that talked you into changing your portfolio. When you hear guys like him now though, he says that he is buying with his own money.

I figure I'm willing to take a total loss on my mining positions if the worst case for them hits.

I don't think they can go a lot lower. Nor do I think gold can go to 1000. Remember that this is the third major hit for gold. Everyone forgets that gold was above $1000 before Bear Sterns went under. That was the spring of 2008, not the fall of 08.

Polly Metallic said...

M,

You may be right that it was Rick. Glad that you didn't get bludgeoned too badly. You have the right viewpoint that you only gamble on what you are willing to lose. I will feel very badly for folks who sincerely believe mining stocks are a sure thing and will all be five or ten baggers.

Never underestimate how low gold can go as the global financial system falls apart. These are not normal times we are living through, and the next financial catastrophe may be far worse than 2008. Add to that the scenario of investors realizing that paper gold is a fraud and belatedly trying to exit positions in order to buy the real metal. "Gold" could fall very hard and fast before markets lock up and cease trading. If a period of economic turmoil continues in that aftermath, many of these poor mining companies will not be able to hold on, and they will go bankrupt.

Polly Metallic said...


M,

You may be right that it was Rick. Glad that you didn't get bludgeoned too badly. You have the right viewpoint that you only gamble on what you are willing to lose. I will feel very badly for folks who sincerely believe mining stocks are a sure thing and will all be five or ten baggers.

Never underestimate how low gold can go as the global financial system falls apart. These are not normal times we are living through, and the next financial catastrophe may be far worse than 2008. Add to that the scenario of investors realizing that paper gold is a fraud and belatedly trying to exit positions in order to buy the real metal. "Gold" could fall very hard and fast before markets lock up and cease trading. If a period of economic turmoil continues in that aftermath, many of these poor mining companies will not be able to hold on, and they will go bankrupt.

Wil Martindale said...

Ahhh $1350 paper gold, a little ahead of schedule by my calculation, but no matter, it will do for now.

You will not see the paper at $1250 tomorrow. Not yet. It will wiggle up a bit in it's sideways tunnel and perhaps next week we may see < $1300

Don't you just "heart" the paper gold, as in "I <3 PAPER GOLD" I think it should be posted on everyone's Facebook page as we waddle on down to our little coin shops to trade less and less debt paper for the wealth of Kings.

I already have my little stack that I "paid too much for" (really??).

Now we here "the savvy" starting to talk about starting to think about buying their first quarter ounce.

Better hurry. A FIRE SALE is coming and it won't be gold burning when the doors to GOLD-MART slam shut.

I <3 PAPER GOLD !!

Wil Martindale said...

I meant say "we hear the savvy" not we, here, the savvy, one little typo is sarcasm, the other an insult.

Tony said...

+1 poopy

It appears your comment sent SL running to Screwtape to wage his anti-FOFOA war. You'd think the resident Yeti had eaten SL's children or something. So much venom....Simply pathetic.

Grumps LaBastard said...

Gld went under 1000

Knotty Pine said...

@Tony

Yes he does seem miserable. I thought ignorance is bliss. Nah, all of us who have taken the time and effort to understand the freegold concept are much better for it. This is something we all must remember as paper gold dies.

M said...

@ Wil

At this point, if you had $25,000 to move into gold , would you buy 5 ounces per week ? Or 5 oz every couple weeks ? 2 oz a week ?

I get a better exchange rate and commission on 5 oz bars.

Just wanted a second opnion...

Michael dV said...

M
remember FOA and Another mentioned very low gold prices before 'gold going into hiding'. One does not need to believe this but as I see the predictions of falling gold prices coming true at a time (Bernacke and Abe printing trillions) when gold should be soaring I am inclined to believe it.
PM mades some good points.
These are not normal times by any standards. We are in a 'depression with money'. Imagine where the DOW would be without the half trillion BB has kicked in so far. What I wonder is who is keeping the paper gold price UP. The BBs seem to enjoy bear raids making 30% in a few days by some estimation. If they know that there is no more support for 'gold' why would they not continue? Even if they do see a 'physical only' market in the near future I'm sure they can apply their fiat winnings just fine before the final wistle blows.

Grumps LaBastard said...

It appears the BB's are building a net long position. It is the Specs who are on a suicidal short mission. This goes for the shares as well as bullion.

Quasimojo said...

I believe the falling price of gold may be playing tricks on my mind, so I'd appreciate it if some goodhearted FOFOA/freegold aficionado would be so kind as to direct me to any FOFOA posts that clarify why recent declining gold prices should be viewed as a welcome development.

Alan2102 said...

Wow, I got quoted, at 8/25/99; 17:07:52
I was "AEL" in those days
SteveH, Farfel, Canuck, The Stranger... and
many others.... brings back memories...
I always wondered why USAGold shut down
that forum

jojo said...

Quasimojo-

A good start

Sam said...

+1 TO MATRIX SENTRY. It seems the post from someone named SP that you responded to has been deleted... but honestly I don't need to read it to know its contents. It is as predictable as the rising sun in the East.

Thanks for the post FOFOA. I find it amusing that the same concerns and misunderstandings perplexed gold "investors" so many years ago as they do today. It seems only a tiny few learn the true lessons to be taught by freegold.

Gold is the store of value for a coming new monetary system. To value it in today's fiat is absurd.

The formula is simple. Work, trade your excess production for gold, and wait. Continue to repeat for as long as you can. Ignore the price while you smile at the continued flow. Thank the lord for every month at the function of the dollars you trade for it.


Quasimojo said...

Thank you JoJo

The Dow Theorist said...

Technically, gold my making a crucial lower low (previous primary bear market lows violated),reconfirmed today the ongoing primary bear market in "paper" gold and silver. The odds favor lower paper gold prices. Is paper gold going straight to its intrinsic value? Technically, it seems so.

Grumps LaBastard said...

Has it occurred to anyone that a short is a future cover?

M said...

@ Micheal DV, Dow theroist

As much as I wish the COMEX would default and this whole 100 to 1 thing would collapse, I just don't think it is.

I think there will be sightings of freegold when the price of paper silver and paper gold decouple a bit. We seen that in the run up to $1900. We are not seeing that now.

This looks like a typical financial asset market groping for a bottom. Nothing more, nothing less. And I don't think its going to 1200 or 1000.

If there was any signs otherwise, I would average all of my dry powder into physical rather then average down on some gold miners.

We are too far ahead of the time

gull_mann said...

In terms of buying 1oz gold (all I can do little by little) should I go for bullion coins or just get generic bullion bars?

Beer Holiday said...

I'm no expert, but the premium on 1 ounce coins to bars is a significant percent. I believe it's from the cost of manufacturing coins. Cast bars seem would have the lowest manufacturing cost, I guess.

Gold is gold, the cheaper the premium, the more ounces at the end of the day.

Robert said...

gull mann, I agree with Beer Holiday that it is best to go for low-premium items. I want my cash to go into gold, not the premium. If the FG revaluation occurs, the gold will get revalued but the premium will not jump by the same multiple.

When I go into a coin shop, I ask about the unloved items with the lowest premiums. Dealers often have items that they are happy to unload. In my part of the world, the low premium items are often Sovereigns, French/Italian/Belgian/Swiss 20 Francs, German 20 Marks, and Persian Pahlavi. In the U.S. the cheap gold -- but still widely recognized gold -- is often Mexican gold.

I only buy well-recognized coins that all coin dealers are familiar with. You might not want to buy an obscure limited edition gold medal made by an obscure mint -- dealers will often buy this stuff and melt it because there is literally no demand. Yes, gold is gold, but you do not want a dealer telling you that they need to melt it and test it to verify the gold content.

jeb said...

Gull_mann, get that gold and get it now. anything with .999 fine

Dante_Eu said...

Now we breached another 1.000 level. 989 € per oz as we speak (down 35 € or 3.3 %).

Down 4.2 % in US$ (-57$). 1309 $ per oz at present.

Now...c'mon babe, let's take it down for real!

PS I know, I must sound delusional to ordinary folks. :-)

Dante_Eu said...

And now we are in 12's...1296 US$ per oz (-70 bucks or -5.1%).

@M:

What you say? :-)

tintin said...

cash cost of settling those gold accounts are getting lower.

Grumps LaBastard said...

Ben has messed with the primal forces of nature. This looks like a margin call rolling across the globe. The prices of US Treasuries are falling which means there is great stress in interest rates swaps. I would calmly go to the ATM today. This could get out of control.

Archer said...

Did someone say something about Ben messing with the primal forces of nature? The Fed Chairman could've said something different from his fairly bland address and the markets still would've cratered, because it's time. I'll grant there is a correlation, but the long end of the curve has been acting unwell for quite some time now.

So, perhaps the Bernank provided a nudge, but the beast that has been unleashed is coming from The East. China's interbank lending has gone haywire and the PBOC isn't rushing in to save the day. The time to free gold draws nearer.

Robert said...

Jeb, why .999 fine? Why not .900 or .916 (which together account for the vast majority of the world's circulating gold coins over the last 200 years)? Are you worried about the rules for your IRA?

Beer Holiday said...
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Beer Holiday said...

I agree with Robert, and I assume Jeb is referring to the higher taxes on lower purity gold in some parts of the world.

dieuwer said...

GLD tonnes in trust below 1,000 for the first time. Let the accelerated redemptions begin.

Grumps LaBastard said...

Ah poor Ben. A gallant central banker whose affairs beat upon high shores. He sought to break the Kondratieff deflation but he reckoned not the movement of infinity as expressed through the market. Yes, Ben, even your empire must fall.

Wil Martindale said...

M,
My advice is, the quicker the better. It's all about delivery at this point. We have just seen 1285, a bit ahead of schedule by my calculations, and the Nank's remarks notwithstanding, I do believe the Giants have spoken.

It is TIME ... get you some. Don't think, ACT.

Jeff said...

They are carrying the gold bug gurus out feet first. Now who wants to buy a compedium? A $50 lecture? Anyone?

Tintin, the GLD disclaimer is on the inventory spreadsheet. Go to GLD website and downlonad the excel file.

Wil Martindale said...

Jeff,
Good one, HAH. Bring donuts at least eh, good for Krispy Kreme stock?

What kills me is the TBTFs going long on paper, or was that purely a fallacious diversion? You can never know from this side of the fishbowl what piece of info to extrapolate is real or a false flag diversion.

In this paper world, you guessed it, the only thing REAL left is GOLD.

gull_mann said...

Thanks guys. I already have a few gold Eagles, Maple Leafs and AUS Kangaroos. For my next purchase I think I will get some of those RCM 1 oz bars. Seems like a good price.

M said...

I am buying a minimum of 5 oz today guys.

Still hasn't hit 1200 so bah

M said...

Schiff radio is on the air. Listen

gull_mann said...

What is Schiff saying about this? Same stuff he usually says?

Dante_Eu said...

I have been on downturn regarding fiat coming my way, so no more purchases from this PGA.

For next couple of months I am truly just an observer.

Let's watch and let her go her own way. ;-)

Michael dV said...

Krispy Kreme
That! is the best idea I've heard in a while!

M said...

Im thinking about blowing the whole 25k today. why not... I don't care if it goes down more. Im too lazy to go to the BBank a bunch of times

Walter Sobchak said...

Quasimojo,

Longtime reader, but infrequent poster here...

In my mind, while the drop in "price" is a great opportunity to buy, and welcome in that respect, I prefer consistent, climbing prices - not at all because it means my phys is worth more $'s, but because it makes me think the revaluation must be a longer way off... buying more buying time, which I prefer to buying value.

These falling prices of paper gold have me thinking as Michael said, who is keeping the price UP?

Indenture said...

M: Just do it and be done with the thought!
gull: 1 oz. Gold Bars will do just fine.

I have been waiting for my last purchase.
The wait is over. A lower price means nothing.

What am I worried about? Delivery!

jojo said...

Quasi-

Here's another good read if you haven't already. First a snippet:
There is no such thing as a physical gold bubble.

So, to wrap this beleaguered post up, let's just say that we have the distinct makings of a parity break between paper and physical gold in the works. The supply of paper gold must rise while the supply of physical is withdrawing (deregistering). The flow must also rise, at least in nominal terms, so the price will skyrocket to take up the slack. And as expanding paper competes with a rising price for the "slack taking-up" role, who do you think will win?

Could they each have their way? Could the price rise to take up the extra demand while supply contracts at the same time as easy paper dilution wins itself a lower price? Confused yet?

Well, this situation leaves us with an uncomfortable question. If the only price of gold we know today is the price of paper gold, what is going to happen to "the price of gold?" Will it skyrocket? Or will it plummet?

And if we apply the principles learned in John Law's amazingly long piece in a logical way to this uncomfortable predicament, we'll find ourselves at the conclusion that the true Nash Equilibrium is to take possession of physical gold. And, if you already have some, not to sell it while the price is rising OR falling (this time).

And with the supply of paper gold rising to meet demand while physical is being withdrawn, the only conclusion we can come to is that the gold buyers **IN SIZE** will have to stop buying from the price discovery marketplace because, if they do their due diligence, they'll clearly see that subsequent physical delivery has become impossible at the present price.

So, in conclusion, the price of gold will plummet!

That's right. At some point in the future, after the price of gold rockets upward, it will fall like a box of rocks! And right about that time you'll see more of Robert Prechter on CNBC than you ever thought was possible.

But here's the challenge. When the price of gold falls to $200 per ounce, try and get some physical. I'm sure that Kitco will sell you some from their pooled account. And GLD will be standing ready to sell you a share at $20. But just try to take delivery. I think you'll find it will be impossible at that point.

And that's why you've got to take delivery NOW, at the current "high" price of $1,300. Don't wait for the dip. Oh, yeah, the big dip is definitely coming. A **BIG** "correction." But will there be any physical available? Perhaps at $1,200 if you're really lucky. At $200? No way.


http://fofoa.blogspot.com/2010/09/shoeshine-boy.html

jojo said...

I wish I had cash for Gold now. I'm trying to corral extra cash to defend the Gold I already lost in the lake.
No matter. If I don't get to buy any more phys, I'm good with that. I think I will always kick myself for not listening to myself enough back around 2001/2001 though. Coulda shoulda woulda. :)

Beer Holiday said...

My last post 2 weeks ago on NCM @ $12.50 , I mentioned they were not value until 6 or 7 $ if ever. Today they are 10.75. The AUD is also down about 5 cents in 2 weeks. They are the largest publicly listed Aussie gold miner, they're suppost to be blue chip.

I welcome the contrarian view on the miners, but IMHO get out of Aussie gold stocks NOW.

jojo said...


Dooh! I see Quasi has read SSB :)

Grumps LaBastard said...

How does the short figure into the collapse of paper gold? Is this price action the result of longs seeking delivery leaving the market or big players putting on shorts that will be covered later?

gull_mann said...

Any chance delivery will be an issue in the upcoming weeks if prices stay <$1300 or even drop to <$1250?

Grumps LaBastard said...

M,

somebody covered in GCM

gull_mann said...

Reading some guys online are saying there is no support below $1250 for gold? Is it worth trying to catch a falling knife at this point? Maybe I should load up on a few oz's today just in case and save the rest for later.

Stuart Unger said...
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Stuart Unger said...

Is Tulving really sold out of gold?

http://tulving.com/goldbull.html

athrone said...

So if Gold stops around 1100-1300 and continues to climb back up to 1500-2000, what does that mean for the Freegold thesis? The same thing as 10 years ago?

gull_mann said...

@ Stuart- I called Tulving, they are not selling until they figure out what to do regarding spot prices and what to charge for premiums.

Dante_Eu said...

@gull_mann:

Yes, that would be wise.

Although, in case you are danish, there is no worry about delivery. Because, there is you and one more guy who are buying physical gold in all of Denmark.

The other guy use to post here to. His posts are burning. :-)

Stuart Unger said...

Also interesting to see ebay gold going for at least $150 premium to spot.

@Gull_Mann You mean a seller is withdrawing their gold from sale? Not bad!! STF baby!!

Grumps LaBastard said...

The long view

Rangold's dividend has gone from 12 cents to 48 cents in 4 years. Patience. Let the story unfold.

burningfiat said...

Dante haha! xD

I actually went to my local shop today.
No worries, plenty in stock :D
I even got a really, really good price compared to spot @ moment of trade...

Denmark: The fairy tale land that'll never run out of gold!


(Because its retarded inhabitants (minus ~5 persons) don't want any :P)

M said...

I think even the anti gold crowd is even a bit perplexed with the drop in gold. Crazy times.

M said...

Scotia has lots of stock but there is a lineup behind me at the moment. An East Indian looking trophy wife just walked up. Damn she is hot

M said...

Can't a gold miner who has no debt and millions in the bank still operate even if the stock trades down to ZERO?

Grumps LaBastard said...

It makes them a takeout candidate. I worry if an Apple or IBM wants to diversify their cash by buying a Yamana or Agnico. They wouldn't break a sweat gobbling up a major or midtier.

We're not going to zero, but maybe 50 on the xau or 150 on the hui.

Dante_Eu said...

@burningfiat:

Your local coin shop?

Like there's several... :D

Besides, if Danes were buying physical gold, there would be no krone left over for those fancy condos down town Copenhagen.

@M:

I would exchange my precious for the hot east Indian lady any day! ;-)

Indenture said...

Dante: Levity, keep it up :)

gull_mann said...

@ Dante, not Danish. Actually Norwegian living in States. Picked up some 1 oz RCM bars for $18.50 over spot today.

DASK said...

burningfiat: is there a shop in CPH? Don't know any here in Göteborg but I am down there every couple months; have to buy from tavex or another online shop. Depending with timing on swings, it is sometimes cheaper to buy from Germany. I saw a stat last year that Tavex group (the largest in scandinavia) sold about 600 kg last year. About 0.03g per inhabitant. This year, apparently it has tripled. At 0.1g/inhabitant per year, that is the per capita mining rate, so I would think scandinavia has to be at least average in PGAs now..

On the other hand, Swedes think I'm crazy for buying gold. At least my partner is on board. Getting a couple ounces on payday to 'top up'-.

Dante_Eu said...

gull_mann,

Even better!

From my humble experience, you are the first Norwegian to buy an actual ounce of physical gold! Ever!

This is cause for some celebration, so enjoy: 17. mai potpurri

:-)

burningfiat said...

gull_mann could actually end up richer than the Norwegian Sovereign Wealth Fund, which doesn't own a single ounce, LOL!

DASK, I know Tavex has a couple of physical shops in Copenhagen... Other than that!??

Sam said...

@M

Those that find value in gold by measuring it in fiat will be perpetually perplexed.

gull_mann said...

@ Dante, thank you for that youtube link. You made my day even better. Not sure that is possible as I bought some gold. But I think you did!

@ burningfiat: Yeah the Norwegian Sovereign Wealth Fund would have been smart to have bought physical gold instead of what they did with the oil money.

Biju said...

Gold has still not made any new low in Indian Rupees because Rupees has crashed from 1 US$ = Rs. 53 to 1US$= Rs.59 in past 45 days.

Paper Gold market is still valid until Gold crashes in Indian Rupee terms, which has not happened so far.

Dante_Eu said...

Biju,

You few Indians are not as important as you think. ;-)

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

I feel bad about this crash of Gold price because some of my cash is going to buy Euros and Swiss Franc for a 1 week vacation on way to native country India and I cannot take any advantage of this price drop.

Damn those Euros are expensive - Bank of America giving 1 Euro for 1.39 US$, a 5% margin over 1.32. Swiss Francs for 1.13 US$. ZeroHedge was saying Euro will be finished by this time more than 2 years ago.

I recently brought the 50x1 gm combibars and they are just magnificent. just a thumbs up from me for that product.


Dante_Eu :

Let us see. I have not seen any Giant bidding for Physical Gold as Indian's do. if anyone can supply Gold when other Giants bid for Gold(away from UST debt), the only people who can supply are Indians and they will not do at lower Indian prices

Walter Sobchak said...

Please go back up. Please go back up. It can't be happening now. I'd rather buy at $1900 knowing Freegold was years away, than the stress of trying to rummage up more cash to buy now because it feels like TOMORROW!

jojo said...

LOL @ Walter....imagine how Ari, et al must feel :)

Walter Sobchak said...

@Sam,

"Those that find value in gold by measuring it in fiat will be perpetually perplexed."

Ever tried explaining it? What's so confounding is that they're not perplexed! They're convinced you're perplexed! HA! Haven't really tried in years.

I remember listening to some guy call in to Schiff asking him what he thought about/if he had heard about/and trying to explain freegold in a few minutes. Got a good chuckle out of that...

Strelnikov said...

Speaking as someone who only began buying PMs after the '08 fiasco, this is a trying time, indeed. All the stops in my Keogh (all metal ETFs, we're not allowed to own physical in this type of account) were hit today, liquidizing the lot with a 10% loss across the board. Of course, I still have the physical I've been accumulating but my stomach hurts. Unfortunately, I made big buys when it dropped below $1400 so have no extra to spend now, or I would. In for a penny, in for a pound.

Biju said...

Dante_Eu :

I know you meant "few Indians" as joke, but to let people know Indians are so numerous that we are more than a billion in number.

The Indian ant super-organism is unique in it's characteristics - it does not like to build great tunnels/highways inside it's hive,spend etc but just wants to save however small it is. This also has social class structure for each Job - working, fighting, trading, ruling, so when fighting takes place against other ant superorganisms, only the fighting sub-class involves and so fewer numbers perish as a whole and ant population goes on, unlike we see in other ant colonies. Just different priorities.

burningfiat said...

If I was the Norwegian Sovereign Wealth Fund manager I would go in an buy the rest of GLD inventory now (if it is even possible). It would be pocket change for them (around ~5% of their total net worth)...

Dante_Eu said...

Biju,

Yes, you are correct, I'm joking.

We Scandinavian PGA's are like fart in outer space in comparison.

It's you guys together with Chinese and other Asians that are going to decide this new gold marked system.

gull_mann said...

@ Dante: Are you in Sweden?

@ burningfiat: I agree 100% regarding the Norwegian Sovereign Wealth Fund. But we know that won't happen.

Have you guys seen the Kyle Bass talk from end of May? Not about gold per say, but about world financial situation. If anything, it is another piece of evidence to support the fundamentals of gold.

http://youtu.be/gJfvLADP3HE

Dante_Eu said...

gull_mann,

Jepp, det stemmer.

Men, jeg har bodd et par år i Noreg. Fint land og hyggelig folk. :-)

M said...

@ Walter Sobchak

Quote:"I remember listening to some guy call in to Schiff asking him what he thought about/if he had heard about/and trying to explain freegold in a few minutes. Got a good chuckle out of that... "

That was me you were listening to. It was mumbo jumbo for the most part but I got something out of him. FOFOA made a post about it.

http://fofoa.blogspot.ca/2011/02/how-is-that-different-from-freegold.html

I usually call him and try and trap him into agreeing with freegold without realizing it. I called a couple weeks ago and asked if he thought gold would comprise over 50% of the worlds savings like it used to. He went on some tangent about the gold standard but he agreed. Gold will be the primary holding of the majority of savers in the future. Then I was going to ask him why he thought gold at $55,000 an once was not possible. But told the show came to an end. I am going to call him again and ask that.

Luke said...

GTU, physical gold fund, is trading at a 5% discount at market close.

Michael dV said...

Biju
I have always been in awe of Indian necklaces. I love that the are elaborate and are made of gold.
I would like to find a dealer who would trade me a necklace for gold. I would pay for the manufacturing cost in extra gold. I have not really tried to work this out but I do have physical and I do love the necklaces. If you are aware of an Indian gold jewelry dealer who might be interested let me know. I'm in Las Vegas.
I see most are in the 3 to 5 ounce range and the workmanship is usually a thousand dollars or so.

Grumps LaBastard said...

What a grand opportunity in the miners. It's like Xmas!

Grumps LaBastard said...

April 4, 2013 3,259,033
April 11, 2013 3,271,458
April 18, 2013 3,337,082
April 25, 2013 3,360,754
May 2, 2013 3,358,835
May 9, 2013 3,366,277
May 16, 2013 3,396,059
May 23, 2013 3,440,615
May 30, 2013 3,426,619
June 6, 2013 3,442,333
June 13, 2013 3,453,003
June 20, 2013 3,512,791

Biju said...

Michael dV :

I know the markup for manufacturing in USA is high.
The only time I bought a 12 gms chain for my cousin 2 months ago, I paid 30% markup to spot price in local jewellery(http://www.bhindi.com/) in San Francisco Bay Area. some price haggling involved also.

Back in India, I usually pay 8% markup for simple jewellery like Bracelet, simple Bangles, chains. For necklaces/intricate Bangles the markup may be higher because of more workmanship/wastage etc...In South India, our Elders always used to discourage buying anything with stones in them(though they are more beautiful) because they have less resale value. Only some jewelers price the Stones and Gold separately.


I think Bhindi Jewelers are OK and the nearest for you will be their Los Angeles office, even though I prefer our local jewelers(http://www.joyalukkas.com), but they don't have office in USA. They are mostly in Middle East and South India (http://www.joyalukkas.com/Store_Locator.aspx).

I don't know any shops in Las Vegas.

Biju said...

I bought the following for my wife in 2010 in their Indian stores. I paid 30% markup because they would not budge and said it was imported from Turkey and that they had to pay Tax(who knows the truth?). Even though it has stones , since my wife loved it, I bought and she likes it the best of all her collection.
It cost around $1500 then.

http://www.joyalukkas.com/ProductDetail.aspx?hCID=1&hId=32

Grumps LaBastard said...

CME hikes margins...short squeeze on the knuckledragger hedgies anyone?

Biju said...

All Indian Jewellers will do the exchange from Gold bullion to Jewellery. But you cannot do that in Internet shopping (Currency is still king !!!), but then you can always do Bullion==>Currency==>Gold Jewellery

jojo said...

Walter-
"I remember listening to some guy call in to Schiff asking him what he thought about/if he had heard about/and trying to explain freegold in a few minutes. "

Was that a year or so ago?? I think someone from here did that...M maybe??

Walter Sobchak said...

I wish I knew.. God bless him. A year ago sounds about right. The caller mentioned gold freely floating against currencies or something, and Schiff wanted to know how that was different that what exists today...

I also wish I participated more with all of you over the years (**cough**no FOFOACON invite***cough**). We'll have to have a larger meetup sometime.

gull_mann said...

@ Grumps and anyone else that wants to answer, what does the CME hiking up margins by 25% mean? Just trying to make weak hands fold and screw with those going long?

M said...

I have a feeling that the price action in the gold market is just a knee jerk reaction to rising interest rates.

Rates are still nowhere near positive but the yahoo traders and specs think its a smart move to get out of gold because its 1980 all over again. Little do the yahoos know that rates have to persistently be positive by 5% to have any effect on gold.

Polly Metallic said...

On the topic of gold jewelry, who will dare wear visible gold jewelry at $50,000+/oz.? Even in India where it is customary to wear a great deal of gold, I would think post Freegold it might become dangerous to do so.

James Galt said...

In other news, more than 500,000 take the streets in Brazil. 300,00 only in Rio.

Luke said...

gull

CME hikes margins according to volatility, that's it.

Grumps LaBastard said...

Raising margin requirements is the responsible thing to do when price become volatile either up or down. The goldbugs always cry foul when prices are rising, but not when dropping. It's the house making sure nobody gets overextended b/c in theory the clearing house is supposed to make good if somebody defaults. But this was not so for MF Global.

By raising margin now it forces the knucklehead hedgies chasing momentum to post collateral or else trim the position. So in this case the weak hands would be the leveraged shorts. They would be getting screwed not the longs.

Many on this blog are under the mistaken impression that the fall in price is due to longs vacating the paper game. No, it's the momo HFT machines of the hedgies keying off headlines such as "taper to begin in september" and putting on a short bet and if the market responds favorably they add to the position with leverage. The bullion banks are taking the other side of this trade. GS and JPM are building a huge net long position.

Grumps LaBastard said...

M brings a good point about the positive rate has to high to have an effect on gold. Gibson's rule states that for every percentage point the real interest rate is below 2%, gold will increase in value by 8%.

If you think about this relationship, this is what makes FG null and void. This is what the FG model ignores. At certain interest rate it will pay to be short gold.

M said...

@ Grumps

Quote"Gibson's rule states that for every percentage point the real interest rate is below 2%, gold will increase in value by 8%.

If you think about this relationship, this is what makes FG null and void. This is what the FG model ignores. At certain interest rate it will pay to be short gold. "

Econ 101 states that the quality of a countries issued debt diminishes when the economy is imploding. The real economy is what services the debt through taxes.

If you think about this relationship, this makes Gibsons rule null and void. This is what the Gibsons model ignores.

Rates are positive in Greece. Are you selling gold to buy Greek debt ?

Sam said...

Grumps if I had a gold coin for every time you said, "this is the what makes FG null an void" after proclaiming some unthoughtful statement, I could stop stacking now and retire. You know little and learn even less because you spend most of your time as a teacher and very little as a student.

Quasimojo said...

Thanks again, JoJo.
I found the excerpt you provided especially relevant. After reading it I was able, for the first time, to offer my mother a plausible explanation as to why dollar-denominated, virtual gold prices might plummet just prior to a great reset, or revaluation, of actual gold. Many thanks!!

Knotty Pine said...

Grumps you've got to stop thinking like a trader!

Grumps LaBastard said...

M, what you describe is HI. That's when the solid state of the bond market tied down by time deposits sublimates to the gaseous state when it is apparent that the debt will not be paid back in real terms.

But what about when the system has little leverage in the early stages of a credit cycle? We are about to enter a rising interest rate epoch once the debt has been purged. Until then rates will rise b/c of concern for default.

Walter Sobchak said...

@ Grumps

I read an article by written by a troll in Wired or something, reminded me of Perkins' Confessions of an Economic Hitman... but Confessions of working for a trolling contractor.

Basically talked about being recruited to work in a small inconspicuous office with a dozen or so other trolls, each assigned a specific website, and given an angle and data for use in refuting, misdirecting, or lampooning the discussions taking place.

So Grumps was assigned FOFOA, given Mankiw 101, and have at it?

milamber said...

finally caught up on comments and posts. a few thoughts/responses:

1. China may actually be reigning in the its banking and bond market. This may be the beginning of the end of the current IMS. IE China may be ready for paper to burn.

2. The Kyle Bass video at the Altegris investment conference is definitely worth the watch. If you have been paying attention to KB for any length of time, no new information in his prepared remarks, but the Q&A was worth listening to. Gives more color regarding Hyman Cap recent experiences in Japan. Conclusion: The bug has officially met the windshield and Mrs. Wanatabe will see a 40% writedown in her net worth. If she is lucky. if she is not lucky, then she gets the writedown followed by war.

3.Pay attention to the Edward Snowden dealio, its pretty huge what he has leaked, & can leak considering his former position.

4. CME margin hikes simply mean that it costs more for traders to play in the Comex. Nothing more, nothing less. Instead of worrying about the hype, read the rule book, Specifically http://www.cmegroup.com/rulebook/NYMEX/

sections 7a,7b,8 112,113

(h/t Kidd Dynamite)

5. @ Athrone. I think it means that paper gold still has life (IE significant players still see value in supporting the current IMS/gold structure).

Why do you ask?

6. Grumps, any takers on your business plans yet? Any of them? I would have thought by now you would have moved on since you have already so thoroughly debunked Freegold.

Maybe next you could tackle gravity and why it sucks.

Milamber

M said...

@ Grumps

I am describing the workings of a normal bond market in the real world. Normally , market forces will starve a government before it gets too out of control. And even if it gets too out of control, there is usually a currency crisis that will remedy that without having hyperinflation.

So do you really think that US interest rates will tick positive a few percent which will kill the phony economy even further (the only thing that services the debt legitimately) and the net result will be a flow back into bonds when the debt wasn't even purged at all ?




Grumps LaBastard said...

I talking about the Hereafter when I refer to my conundrum with interest rates. I'm on board with gold being revalued. There's no denying that's how a debt-saturated Kondratieff winter is resolved. I'm looking ahead to when the globe is delevered. I see holding gold as holding a share of base money. I see it tracking a monetary aggregate but not keeping up with the cost of living.

For instance, at year 1 of the reval Au 12K Dow 12K.
I would sell 1 oz of gold for 1 DIA.
At year 10...Au 15K Dow 120K
I would sell 1 DIA for 8 oz Au.
At year 20...Au 60K Dow 60K
I would sell 8 oz Au for 8 DIA.
At year 30...Au 75K Dow 1500K
My heir would sell 8 DIA for 20 oz Au.

After 30 years my single ounce will have become 20 ounces plus I would have gotten dividends while I had equities. The freegolder will have already spent his single ounce problem many times over and his progeny debt serfs. I think this is what Giants do.

Wil (from another account) said...

Paper says 1275 do I hear 1250? 1250, 1250, 1250 going once ... going twice ... SOLD to the man in the white bandana!!

Michael dV said...

Grumps rather than just going off half cocked why not try this: "I understand that the party line (the orthodoxy) is X but I believe that X might not be the case because..." and then give your speech...
As it is I never know where you are starting from or where you are going.

Michael dV said...

Biju
the leaf pattern is beautiful.
I'm thinking of a breastplate that would flatten Dolly Parton.
Something nice and big and gaudy and all gold.

Phat Expat said...

Even though we are mentally prepared for this drop, I can imagine the pain others are experiencing. As I have stated before, very few will be seeing this through to the end. And that includes some in our very own FG community. I hope you can steel yourselves against these nefarious games as the death spasms will be unlike anything ever witnessed.

ein anderer said...

athrone,

So if Gold stops around 1100-1300 and continues to climb back up to 1500-2000, what does that mean for the Freegold thesis? The same thing as 10 years ago?

Yes, exactly: Some powerful forces have managed it again to support paper gold still a bit further. Goal: "buying time".
So let’s see if they do it again!
And: Be prepared for the case the don’t!
In a week from now the ECB has its next mark-to-market-meeting. Will they fight against their main reserve being down by 30% (compared to Dec. 2012)?
If not, will there be any statement about this decline of their reserve, and how this statement will look like?

ein anderer said...

Nice FAZ-chart: Who is buying Gold? 2000 vs. 2012.
Go green!

Dante_Eu said...

Will ECB fight? ECB is all about price stability, but maybe not when it comes to its own assets.

Last time, 5 minutes to midnight, there was a Dark Knight who helped them out.

Now, they need whole Justice League.

Or a magician who can pull a rabbit out of a hat... :-)

vizeet srivastava said...
This comment has been removed by the author.
vizeet srivastava said...

Polly Metallic,

Exactly. Probably we will see cultural change and world will know India is rich. Probably India will attract goods and services. It all depends what steps govt takes. India has lot to gain and lot to lose in this transition like all other countries.

Wil (from another account) said...

Ein Anderer,
Go Zentralbanken!! But what is the Schmuck industrie?
In the US that would be Wall Street, the industrie that fuckkes Schmucks.

Walter Sobchak said...

@M

Good for you. That sounds like fun! Schiff's a cool guy. Hopelessly hard money, but he's out there tryin...

Michael dV said...

a move to all in accounting, making the true cost of gold recovery more obvious
http://www.theaustralian.com.au/business/opinion/goldminers-in-real-trouble-as-price-dives/story-fnciil7d-1226667835032

Michael dV said...

yeah ea
schmuckindustrie??
one site shows pics of jewelry is that it?

MatrixSentry said...

Sinclair says this is total war.

LOL.

I thought last time was "total war".

Maybe what we are seeing is total total war. To be followed by total total, no shit it is on, all out war?

Gold price being manipulated lower by agents of the Fed of course. yadda yadda yadda. He's flushed whatever influence Freegold had on him. Back to the same old same old.

M said...

@ Sugarluva

So you think the US will manipulate prices up ?

For all the heat that GATA and all of those guys here take, they do have some valid points. Just watch this interview on Russia Today. Starts at 3:10

http://www.youtube.com/watch?v=omVd1dY2010


I wish anyone luck who tries to take on Chris Powell.

Sam said...

We wanted a free market and a free market is what we got: -- but it doesn't move the virtual price toward the gold bull's favor. Now they are mad because their bets are countered while physical gold advocates scoop up an almost free metal: -- using the liquidity that dollar inflation is producing. Truly, if ever there was a way to profit from gold mining, today, it's by buying this almost free physical gold the mines are producing; while mine players and paper gamblers pound their wealth into the dirt. This is what PGAs call benefiting from the leverage in mining (smile).

In a convoluted stretch of reason, "virtual" gold bulls wanted these markets to be regulated so the supply side of these paper creations would pay off on their bets. The bulls wanted to be able to create all the buying leverage they wanted while the bears would be locked into delivering a metal who's total world amounts are fixed. The bulls wanted free leverage without the using full amounts of real cash but wanted the bears to mark to the market with real gold buying power for every wager they made. If there is manipulation in our paper gold arena, it's in this area of investor understanding. What these markets "truly represent" is the misconception about gold in our time.
-FOA

anand srivastava said...

@SugarLover

Any particular reason why US has not acted till now. Are they waiting for the mines to go bankrupt before acting.

That would be a very peculiar point to step in, and one where they will have to pump a whole lot more money.

US Gov/FED DOES NOT matter any more. The Exorbitant privilege is no more.

M said...

@ Sam

Quote:"What these markets "truly represent" is the misconception about gold in our time.
-FOA "

GATA wouldn't argue will that. That is what they are saying. Its not like the guys at GATA don't own any physical gold.

Grumps LaBastard said...

"... but also far larger direct producer deals being struck outside the paper markets."---Andrew Maguire

Brady said...

Sugarlover wrote:

"You and Sinclair are very alike, just at opposite poles."

A distinction if I may; and that is, quite frankly, Mr. Sinclair does his readers, in my opinion, a disservice for not discussing/debating freegold theory. Or at a minimum, recommend that his readers take the time to read this blog at length and for readers to make up their own minds.

Matrix has taken the time to ponder and read the writings of a/foa/fofoa and understands Mr. Sinclair's opinion/perspective/reocmmendations. Matrix has made a decision accordingly.

Matrix and Sinclair are not very alike in this respect.

Mr. Sinclair recently recommended selling everything to buy miners and continues to promote gold will shoot up to angel like paper prices. A/Foa/Fofoa have, at length, discussed their views of the opposite: paper gold prices down, buy shares in miners at your peril.

On this, matrix & sinclar are on opposite poles.

One may be right of this view - paper prices may shoot up and miners may turn out to be a good bet. Here's fofoa:

"I'm not trying to scare anyone, quite the opposite actually. I want to help people have the same strong hands and peace of mind that I have, even if the price of gold continues downward. And those things come from understanding a well-reasoned scenario that looks a lot like what has been happening so far this year. I don't want anyone to take my advice. I only want you to understand the scenario and make up your own mind."

gary said...

GATA wouldn't argue will that. That is what they are saying. Its not like the guys at GATA don't own any physical gold.

I believe Bill Murphy's biggest holding was a stock called ECU (Silver) - it was $.50 when it got bought/merged with AUM - which, at the time, was $28.00 (memory - could be wrong) - so ECU holder got 1/56 the same # of shares they had in ECU. AUM closed today at $1.73 - it was $28.17 in Nov 2011.

Grumps LaBastard said...

But what price will it be 7 years from now?

milamber said...

Congrats Grumps. You just made your most devastating argument debunking freegold by listing Andrew Maguire as a corroborating source for FO(A).

I will have to revisit the thesis in light of this revelation.

Milamber

gary said...

But what price will it be 7 years from now?

If it is still around, then - GrandLandBasel, it could be worth 100 trillions dollars (which will be compact in one convenient currency bill) and you can use those massive profits to go to the grocery store and buy 1/2 loaf and 2 eggs! Party on!

tristramboris said...

I see that AEP has caught up with the Cyprus template thought pattern


http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10135734/Another-shameful-day-for-Europe-as-EMU-creditor-states-betray-South.html

TB

ein anderer said...

Wil & Michael & all:
Yes,
Schmuckindustrie = jewelry industry.
schmücken = to bejewel, to bedeck, to decorate, to robe.

ein anderer said...
This comment has been removed by the author.
ein anderer said...

Headline of the mentioned FAZ graph:
WHO is buying Gold
World’s demand for Gold (part in percentage)

Grumps LaBastard said...

I think this is more likely to occur than FG:

" Financial markets plunge. Banks inform the Fed their loan books are deteriorating. The Fed triples QE and yet employment rolls continue to drop. The Fed informs Congress and the President that the monetary system must be reset. The public grows angry that, just like in 2008, banks and the government gained funding through newly created money but it, the public, did not. (Civil unrest?). The State Department concurs with the Fed; foreign exporters to the U.S. no longer want US dollars in exchange and the system must be changed. At the urging of the President, Congress directs the Fed to devalue the Dollar to gold, and to reset a fixed exchange rate."--Brodsky of QBAMCO

Either that or the BRICS will do it for them.

Indenture said...

Grumps: Did you just say that someone (FED or BRICS) will reset gold to a fixed exchange rate? I must have read that wrong! You have been here too long to suggest a 'Gold Standard'.

Grumps LaBastard said...

Yes, the pendulum might swing all way to the other extreme. It's a possibility.

byiamBYoung said...

Grumps,

No chance it swings that direction.

Cheers

Grumps LaBastard said...

Here's something interesting:

Drastic New Information From Pastor Williams’ Elite Friend…
Yesterday, June 20, 2013, 8:27:05 PM | Lindsey Williams dot net
Pastor Lindsey Williams received two emails today (20th June 2013) from his elite friend bearing some startling news that could mean collapse.



Email #1
‘A large Chinese bank just last night ran out of liquidity and was bailed out by the government. Furthermore: “The seven-day repo rate, the benchmark rate for funding costs between banks, surged to 12.33% Thursday afternoon from the 8.26% rate at Wednesday’s close. It had averaged around 3.30% this year before the liquidity crunch began at the end of last month.” This is the same phenomenon that occurred globally in September 2008.’

Email #2
‘The U.S. market has DECLINED over the past month, the Japanese stock market has recently dropped 20%, the U.S. bond market sold-off, gold (GLD) is down 20% year-to-date (YTD), Chinese stocks (FXI) have fallen 19.69% YTD, emerging markets stocks (EEM) have depreciated 11.3% IN THE LAST MONTH, copper—a premiere asset considered to indicate growth or contraction, has contracted 18% YTD, etc… Investors should not ignore this massive deflation in global markets and assets.’

Telephone conversation last week
Pastor Williams also spoke with his elite friend last Thursday 13th June 2013 and said “Some very significant things are happening in the Derivative market and with interest rate and gold, at this time.” After pressing the issue he stated “As for gold – J.P. Morgan announced yesterday that their vault gold has dropped by 28.4 % over night. Nations are demanding physical delivery. Within a month and a half JP Morgan estimates their vault will run out (Be empty) Other vaults are probably running out also. WHAT HAPPENS THEN? Startling when supply dries up. This has many of us very concerned. Be sure that everything you own is in your posession. Crash – I don’t know. Be ready for a public reaction. Interest rates are the greatest factor controling the Derivative market. This could be violent”.

Biju said...

Michael DV

said:
I'm thinking of a breastplate that would flatten Dolly Parton.


you are a lucky man. ;-) if I have to buy such a big one, I would have to see it personally before I buy. No internet thingy for high purchases. you get better deal in Asian countries if you can. Thai Designs are also great.

Aaron said...

Indenture said...

Grumps: Did you just say that someone (FED or BRICS) will reset gold to a fixed exchange rate? I must have read that wrong! You have been here too long to suggest a 'Gold Standard'.

Grumps Bastard said...

Yes, the pendulum might swing all way to the other extreme. It's a possibility.

Aaron said...

Grumps Bastard, if you cannot understand why the world will never return to a gold standard -- you have no hope of understanding Freegold.

Thank you for finally making your perspective crystal clear.

Tony said...

@ Grumpybastard

Lindsey Williams??? Really? Sorry but I can't buy into that lunacy. IMO, his whole game expired years ago. He got the oil prices right a few years ago, but that holster has been wrong ever since. Oddly enough, he keeps tapping the same key on the keyboard and people keep listening.

byiamBYoung said...

Grumps,

Pardon me for missing prior references. WHo are you talking about when you reference "Pastor Williams’ Elite Friend…?"

Cheers

Grumps LaBastard said...

Aaron, there's a guassian distribution of possible resolutions. I like to look at the problem from the perspective of different players and ask what would they do. Perhaps the Custodians don't want a trade balancing mechanism such as a Gold Certificate Ratio. Maybe they would like imbalances between trade zones to continue in a different configuration. Even with a gold standard they could get around settling trade.

Tony, Lindsey still gets good info. I see it as the perspective of a lower level insider that may get wind of something before us proles. The concern over IRSwaps is valid. That's your real paper gold that's held the dollar/USTreasury market together. The comex drama is Frankie Pentangeli, small potatoes. The real timebomb is Barzini, the IRSwaps. Maybe Jim and his wee Willie's dollar kill switch has been tripped.

michael3c2000 said...

Did someone mention Andy?
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/21_Maguire_-_World_Just_Witnessed_Massive_Shift_In_Physical_Gold.html

Floesh said...

We are reading back of the USAGOLD forum from 15 years ago and see the story and arguments didn't really change. Even if someone fully understand the markets what can you do about it? So ask yourself, are you willing to wait another 15 years with highs and lows not knowing if "it" will happen. I know I am. Just hold your gold and silver and go to bed without worrying and live your life to the fullest. I think gold is the best solution and silver is the best bet.

Sam said...

@M

I don't doubt the folks at GATA own some physical gold. However to listen to them speak they seem obsessed with the fiat price of gold as determined by a paper market that used to once track the price of gold and now determines it with derivatives. Strong hands that own gold should not be interested in a gold bull market on paper. Your ownership should mean an understanding that gold's true value will not be determined within the system itself but outside of the system. A system that by design has always had a mathematical time limit.

Paper gold is the AIG CDS that has prolonged investor interest in the subprime mortgage known as the dollar reserve system. Anyone buying anything but physical gold is buying into the very financial asset mix they think they are hedging against.

michael3c2000 said...

http://www.globaltimes.cn/NEWS/tabid/99/ID/691153/SHFE-gold-futures-jump-44-this-week.aspx

/SleepingVillage/ said...

Grumps,

By the grace of gawd! You can get the same intel a week or two earlier from godlikeproductions.com or lunaticoutpost.com, etc. You just have to sift through a pile of crazy-ass bullshit to get to the goodies... kinda like LW. The DHS insider (deep inside 'er) says that it's about to tank when "they" take the metals down. And now FEMA and co. is on high-alert, calling up the reserves in preparation for coming "events" in the next 10 or so days. The Cryptic Mole says we should prepare for many more revelations and secrets revealed, as well as a total economic collapse into late summer, fireballs and other nasty shit.

I guess we'll soon find out...


Most People I Know Think That I'm Crazy


Long live Billy Thorpe!!

gary said...

But what price will it be 7 years from now?

How eerily timely GruntLimpBlastoid. After you asked what AUM (Golden Minerals)would be in 7 years - they released this:
Golden Minerals Announces Suspension Of Production
PR Newswire
GOLDEN, Colo., June 21, 2013
GOLDEN, Colo., June 21, 2013 /PRNewswire/ -- Golden Minerals Company (NYSE MKT: AUMN); (TSX: AUM) ("Golden Minerals" or "the Company") announced that it has suspended operations at its Velardena mine as of June 21, 2013, in order to conserve the asset until operating plans and prices for silver and gold indicate a sustainable cash margin for operations. The employees at the Velardena mine were informed of the Company's decision in the afternoon of June 21, 2013. In February 2013 the Company anticipated the Velardena operations would achieve operating cash neutrality during the third quarter 2013, assuming gold and silver prices of $1,600 per ounce and $30 per ounce, respectively. In May 2013 the Company projected a $5 million negative margin from the operations for the remaining three quarters of 2013 at prices of $1,500 gold and $25 silver. Metals prices have continued to decline and remain below these levels.

Michael dV said...

Biju
It is not that I have to flatten a chest like Dolly Parton's, I just want a necklace/breastplate that could do the job.

Grumps LaBastard said...

Gary, buddy, you've made my point. They will hibernate like a bear. I wish all the miners would do that. Just sell enough metal to keep the lights on, but keep the excess as an asset on the balance sheet in lieu of cash.

SleepingGiant, I'm aware of those sites, but I don't have the time unfortunately to wade thru the crazy crap. What I do miss is the RickyRay site. He would go on and on about the Custodians. Great stuff. He's been missing in action for over a year. Anybody know what's up with him?

gary said...

you've made my point

What point is that GreatLakesBeerLemon?

Something about throwing money at high risk assets on the very slim chance of reward? Investing in a dead sector... with no hope of turning for years? if ever? Gambling on miners that have a high probability of being totally wiped out? Going to zero? That one?

Tony said...

Quick question...much has been made of buying recognizable coins. Any opinions out there as to whether or not Swiss Franc 10s count? You see the 20s all the time, but not so much on the 10s. My LCS has a sale on both types for spot + $5 and I'm debating the merits of the two. Sure would appreciate some thoughts beyond "gold is gold" if any have something to offer.

Grumps LaBastard said...

Gary, I think you've called the bottom for the miners.

gary said...

Zero?

Michael dV said...

Floesh
I have not seen your name before so I will assume you are new.
You should know that the consensus amongst 'true believers' here is that silver will not do well. There are LOTS of comments to that effect.

M said...

@ Sam

Quote "However to listen to them speak they seem obsessed with the fiat price of gold as determined by a paper market that used to once track the price of gold and now determines it with derivatives. "

I disagree.

The paper gold market is what stands between us and freegold. If you listen to Chris Powell, his main point is that the cartel (JPM/G8CB's/Fed) stand ready to operate in any market to support government bond prices and suppress interest rates.

Barsky/Summers wrote the paper on gold.

So I don't see any good reason to kick GATA around on here. We should support them.

Alex Hillock said...

@ Floesh: " I think gold is the best solution and silver is the best bet."

I agree with your statement but I thought we couldn't talk about silver on here. :)

M said...

@ Gary

From what I have read, the GATA guys are rich. They consider physical gold cash.

AUM might have been Murphy's biggest speculation but he probably has a pile of physical that's bigger then most of ours put together.


Bill Murphy passed away last year. RIP

michael3c2000 said...

Tony, yes the 10"s DO 'count'. Recognizable, yes. The odd dealer who doesn't will usually consult his Krause catalog of coins or something else like the 'grey sheet', also known as the coin dealers newsletter or CDN. There are online resources also but some coin shops prefer to sell such coins as scrap.

michael3c2000 said...

M, Bill Murphy is alive and well.

michael3c2000 said...

Those of you who haven't read the blog, that's ok by me but FOFOA has updated his already extensive case for gold vs silver in the main sections and the comments.

Wil (from another account) said...

Freegold has a LONG way to go, perhaps in terms of TIME but definately in terms of CIRCUMSTANCE. Circumstances could change dramatically tomorrow, or remain relatively the same for the rest of our lives.

What circumstances must change? The MoE functionality of the USD must materially change in a way that "use value" diminishes to ZERO.

Can you envision a world in which dollars have no use value as a means of exchange? What might cause the masses to abandon dollars in favor of gold?

Hyperinflation? Confiscation? What else??

We see the people of India beginnng to abandon the rupee for gold, but in a very small way compared to what lies ahead.

Think now of a world where all peoples, from shrimp to giants, collectively abandon dollars due to ZERO use value as a means of exchange.

In the present derivative casino, it is a hard world to imagine. When all central banks devalue together, what existing currency remains strong in gold to retain use value? Or will only a "new" currency do?

The FED issues more playing chips to sort derivative winners from derivative losers, but the chips do not lose use value through supply dynamic as long as demand remains static, for as long as the players agree to play each chip at face value, the demand, or use value, remains static.

In the end, hyperinflation and confiscation are one in the same. When dollars must be issued in the amounts needed to satisfy trillions in derivative debt, they will expand to a level whereby use value will fail in all practicality because the sums that will be needed to keep Giants "affluent" will render the relative amounts held by the middle class "useless".

It will be a combination of general price hyperinflation and massive confiscation to save the debt, that will render the means of exchange use value of the dollar untenable.

The flower has spoken, but it's words give no comfort. Your gold may save you, and you may like this new system more than the last from your changing position within it ... but you will SURELY not like what it will take to bring us there.

FREEGOLD is coming, let us hope the period of chaos that preceeds it is brief, and as non-violent as possible.

gary said...

Bill Murphy passed away last year. RIP

I could tell you a heck of a lot of things about Bill, but I'll leave you with two - he is an incredibly positive person - even after all he has been through and the other thing is... he ain't dead.

gary said...

and a third thing - he categorically does not believe in Freegold.

M said...

(I got these guys mixed up)

Adrian Douglas passed away last year. RIP

M said...

Peter Schiff thinks he doesn't believe in Freegold either ;)

Agent98! said...

http://www.macrobusiness.com.au/2013/05/gold-is-different/

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