Thursday, December 5, 2013

Public Service Announcement

Beware of fake gold being sold on eBay. I received this email from a reader yesterday:


I purchase the vast majority of my gold coins and (in-assay only) bars on eBay. I have had much success. eBay buyer protection has saved my butt on occasion, not just for gold purchases. I authenticate every coin I buy. For every purchase, regardless of source, I use a Fisch for Eagles & Krugerrands and a jeweler's scale and calipers for other coins, plus a detailed visual comparison to known-genuine coins (and bars). Anyway...

About a year ago I purchased a 1/10 oz. gold Philharmonic (10 euro). It was an obvious counterfeit. When I reported this to eBay it stirred up a brief hornet's nest: there were other buyers who got taken...they actually traced discovery back to me and thanked me. I remember someone asked you, a year or so ago, whether forgers would consider counterfeiting small gold coins. Answer: Yup!

But what happened earlier this week has, I believe, the potential to compromise the integrity of the slabbed coins certified by the major numismatic coin grading companies. I, for one, will never again knowingly purchase a slabbed coin. If I can't personally authenticate the actual coin (per the above) I don't want it. I purchased two generic 1/4 Krugerrands from a seller with 100% positive feedback (mostly small, non-gold transactions). The seller also sold at least 7 other 1/4 Krugerrands (I watched). The seller stated the coins were located in California. A few days later I received the tracking information: the shipment originated in Shenzhen, China. Hmmm! On Monday (12/2) I received the coins. They were NGC slabbed:

Wow! NGC certified proof gold coins a great price! To the casual observer, everything would look fine. Except, they are counterfeits! The obverse and reverse sides are supposed to be perfectly aligned. These coins were offset about 20 degrees (I could tell based on prong locations). Ooops! Then I examined both coins under 5X magnification next to a known-genuine 1/4 Krugerrand: there were many engraving quality discrepancies, especially with the border engraving shapes and overall lettering crispness and shapes. Bummer! I also compared the NGC slab to the website photo and another NGC slabbed coin I owned. Results: the slab was either stolen or (more likely) an incredibly accurate forgery, including holograms. I could not discern any defects whatsoever. Very disturbing.

I then 'opened a case' with eBay buyer protection for both coins, describing what I had found, including the above links to the NGC website. That's when things started to get really interesting! The next day I received a message (for each coin) from eBay stating that the seller had agreed to provide a full refund when I returned the coins. Then, within an hour, I received another message (for each coin) from eBay stating that I would immediately receive a full refund with no strings attached, which was done. Then something happened that I have never experienced with eBay before. Everything about the purchases (purchase history and seller account information) completely disappeared (poof!), as if the transaction had never occurred and the seller never existed. Bizarre! So, as of now I have possession of two forged NGC proof 1/4 Krugerrands until someone (?) tells me what to do with them. In the meantime I will play some show-and-tell guessing games with friends.

FOFOA, please warn your readers that buying certified slabbed coins no longer assures authenticity. Apparently the Chinese have started producing high-quality forgeries of the coins and slabs.

Take care. Merry Christmas and a happy and golden New Year.

God bless you and thank you for your efforts,

I asked him a few questions and also if he could take pictures of the actual coins he received. Here are the pictures, front and back, which you can compare to the photos on the NGC website:

The most obvious difference is that the coins seem to have shifted orientation inside the fitting, which shouldn't happen. But more remarkably, it seems that the reverse side of the coins shifted more than the obverse. Imagine that!

And if you look closely at the labels, they are clearly not the same labels as in the pictures on the NGC website. Look at where the printing intersects the background watermark. Notice how the P on the real one just butts up against the scale bowl, and on the fake one it overlaps the bowl. The M on the real one rests on the inside of the bowl, and on the fake it rest on the edge of the rim. Above the KR on the real one, there is a gap between the KR and the scale arm. On the fake there is no gap. And look at where the point of the 2 intersects the circle on the left.

Here is how he answered a few of my questions:

Were they advertised as slabbed? Did he include a picture of them?

"They were not advertised as slabbed. Just a generic (obverse) picture, which I can no longer access. I was surprised and very briefly (very briefly!) pleased that that they were slabbed...I paid $319 for each (including S&H). He had listed 3 at that BIN price; one had sold, so I bought the other two. He advertised later coins (3 at a time) at $329 BIN. I tried to buy more, but for (again) some strange reason I never encountered before on eBay, I was not allowed to buy any more for at least 10 days...the message said only a single purchase of up to 3 coins/buyer allowed per 10 days. Very strange."

Was the 3 coin limit imposed by the seller or by eBay? And was the limit apparent before you bought your first coin, or only when you tried to buy more?

"I don't know who imposed it or how. I did not know about the limit until I tried to make the second purchase (I tried again over several days to see it it was real...yup.)"

Did the seller appear to be an individual or a business?

"The seller is an individual (I even have his name & address in California). I have not tried to contact him. I don't know what would happen if I did. I'll let eBay worry about him."

What advice would you offer for people shopping for gold on eBay?

"My advice for buying coins from anyone, not just on eBay...immediately authenticate your purchases like I described earlier. For eBay, 'open a case' with Buyer Protection immediately for any perceived irregularities. Stay clear of slabbed coins unless you have the necessary expertise to evaluate them, since they cannot be weighed and measured.

eBay is quite diligent about tracking down forgeries, especially with regard to precious metals. I had several discussions with their precious metals fraud team after I discovered the fake 1/10 Philharmonic I told you about. They traced all the eBay purchases of that batch of coins (~200; some were resold several times) back to the original seller, shut down open listings, and contacted buyers. I think everyone got their money back. As I said, buyers traced discovery back to me and I got thank you's for identifying the fakes. What really surprises me is that so many buyers didn't realize the coins were poor quality fakes...they only weighed 2.4 grams. Scary."

I have always advised people against buying gold on eBay, and I have never done so myself. Stories about fakes originating in China and sold on eBay have been around for years. My advice is to buy your gold from a reputable dealer. If possible, I prefer to buy in person from a local dealer who has been in business for a long time, but I have also had good experiences with APMEX.

I also think that coin shows are a great place to buy bullion coins. I can usually negotiate a good deal, often better than what's offered online, and meet lots of local dealers at the same time. It's also an easy way to swap your silver for gold! ;D Here are a couple of websites to help you find coin shows scheduled in your area:

As for slabbed and graded coins, I prefer to avoid them, for precisely the reasons above. I do have a few, but only because that was all my local dealer had at the time, and he sold them to me at the bullion price.



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Tyrone said...

Been waiting for some new FreeGold.

Michael dV said...

Tyrone you quick devil...

Franco said...

This is just one man's opinion, but I think that ebay is a "den of thieves".

Zebedee said...

Thanks for this FOFOA.

I never used to think about how fortunate I was to have a guaranteed minting operation and combined retail outlet going on a mere 20 minute drive from my home. All of my collection has been purchased at the Perth Mint, both coins and bars and although (sometimes) there may be better deals on eBay (I watch too) I much prefer to be able to walk in off the street and do business. I just don't know where else I would go if I didn't have that little gift up the road. Certainly not eBay anyhow. I never really trust people when it comes to money.

I recently got ripped off on eBay for another useless item which never showed after 4 months and it was too late to do anything by then. Once bitten twice shy.

Another thing too which may be of help to Aussies - I recently got laid off from work and have been for some 3 months now and was looking at claiming some unemployment benefits. I was quite surprised to find that you can have as many coins as you want but when it comes to bullion, you have to declare bullion as part of the means assets test and hence may be required to sell them prior to getting any benefits - obviously depending on how much you had invested/stacked.

This may come as common knowledge for some here but for little ole me it was a huge smack in the face.

For me I can't think of any other reason why you would buy bullion over coins other than the 'bang for buck' scenario.

Oh, I forgot to mention I had this terrible boating accident last year then a bastard of a recurring drug habit since. See, what happened was ........................

Phil_O_Dendron said...

Regarding testing of coins: Some time ago i got a "coin balance" from

You can use it to test one ounce Krugs, Buffalos, Eagles, Philharmonics, Kangaroos and Pandas.

I use to do the test with calipers and a scale but the coin balance is much easier and quicker. It really does work and I think the $24 it costs is worth the price.

I have no relationship with the manufacturer other than I bought one and use it.

Gary (tEON) said...

You can use it to test one ounce Krugs, Buffalos, Eagles, Philharmonics, Kangaroos and Pandas.

and Maples!

KnallGold said...

The Saint Mario

DASK said...

The gold coin balance is great.

If there are any giants (or jumbo shrimp) here that need to be able to instantly and non destructively verify arbitrary amounts and shape/sizes of gold, the correct technique is using an ultrasonic weld tester/imager (it will set you back 3-5k USD). There is and never will be any way to fake the sound speed and reflections inside (any) pure material. Tungsten salt or discs will produce early reflections and noize, and any alloying will change the speed of sound in a 100% predictable manner.

MatrixSentry said...

It may just be me, but the last thing I would ever consider is buying gold utilizing eBay.

My first gold purchase was a bit scary in the sense that it was a totally new concept, buying this barbarous relic. Where to go, who to trust, how to know if it was real, etc. My solution was to ask a friend who had been buying and preaching physical gold since 2001. He recommended ColoradoGold and said he had been using them for years and his father many years before him.

I checked them out on the internet and they had an impressive store front website. I was a bit apprehensive about receiving gold through the mail. I called and had a good conversation regarding the process. I then ordered and the whole thing was a breeze. I have used CG ever since.

Well, then there was the time that I didn't use them because I was tempted by a slightly lower price (stupid really). I went with Tulving. Big mistake. To say this guy had crappy customer service would be an insult to crappy customer service. He displayed negative customer service skill. He went out of his way to be a belligerent asshole. He lied numerous times and delivered his product long after he had promised. I am convinced that he only delivered when he did because I lodged a complaint with the California Attorney Generals office.

As part of that process, I discovered that Mr. Tulving has quite a reputation for taking money and not delivering product as advertised. In fact he has a reputation of taking money period. He was found guilty of fraud and had a judgement against him by the state of California. He filed bankruptcy in order to gain relief from the judgement. In addition, there have been many complaints to the California AG and the Better Business Bureau regarding Tulving. Message boards are littered with horror stories relating to customer experiences with Tulving.

So I will add my own little public service announcement to FOFOA's. Tulving is a fraud waiting to happen. Buy from this sub-human at your own risk. When it is transition time, this guy will sell you gold he doesn't have, and in this case gold he will never have. Good luck getting your money back.

Börjesson said...

There's an Android app that tests if a gold coin (or silver) is genuine by analysing the resonance you get when tapping it. I haven't tried it myself, but I've heard from various sources that it actually works, and can e.g. tell the difference between a gold coin and a tungsten replica. Each type of coin has a particular resonance, so the app needs to be familiar with your specific coin type to be able to test it.

Jeff said...

Americans may feel more secure by buying US minted coins; the US government takes as dim a view of counterfeited coins as they do of counterfeited currency. As always, DYODD.

Aurora said...

Hello Free Gold Friends,

Gently balancing a gold coin on one's finger and lightly tapping the edge with a pencil or pen will cause the coin to "ring". No App required, just good ears, If the coin does not clearly "ring", they most likely are NOT genuine. Counterfeit coins do NOT "ring", they make a dead "thunk" sound: Only "struck" coins clearly "ring" due to "striking" process under great pressure in conjunction with the purity of the metal. As a successful coin dealer for decades, this is a little trick you learn to help "indicate" authenticity. Weighing, measuring, and "tap" testing are good initial ways of helping to indicate authenticity. Only experience and study of both genuine and fake examples allows one to develop the acute skill necessary to visually determine authenticity of coins as well. Through my hobby career as a collector and dealer, we helped many friends and customers determine real and fake coins. It might be prudent to be-friend a local and trusted dealer who will be willing to "talk" with and "advise" you regarding your coins. Coin shows are a great place to meet trusted dealers as well. Befriending a seasoned dealer is a relationship that will be extremely valuable to you. Fake slabs do exist unfortunately. Hence the rule "Always buy the coin", NOT the slab. Trusting the slab and imprinted info to be your guarantee value may be fool hearty at best. Lastly, purchase of United States bullion coins (although more expensive given the hefty premiums) may make sense in the long run because the United States takes counterfeiting of their currency VERY seriously. So typically there is a order of magnitude greater assurance that United States Eagle coins are genuine. Eagle ownership also provides other benefits as well over foreign manufactured coins. Education and knowledge are powerful tools if applied correctly. As a Free Gold friend, student and believer, I wish all of you a very shiny, very prosperous, and very golden New Year in 2014!!

Reality Show said...

You can't eat gold, so it should be easy to test.

BaronSilverBaron said...

Interesting tip "ringing the coin".

By the way i'm in the UK so American coins are "foreign" manufactured.

Aurora said...

Please, no offense intended to any our friends in other places, just helpful coin info for all to benefit from. Foreign minted coins of all types, that are genuine, are excellent and desirable as well. Not implying that any are "better" or worse than any others, just different benefits possibly due to most likely to location. Respectfully Aurora.

BustinStones said...

2014... The year we will reference when we tell the story to our grandchildren they will grow tired from hearing! (large smile) -foa-

Beer Holiday said...

Thanks for the helpful tip, Aurora.

I guess that's why they say things have a "ring of truth". Actually I just looked it up - seems to be where the saying comes from.

Wish you a good 2014 in return.

Aurora said...

Best wishes and cheers to you as well Beer Holiday.....We'll be enjoying some of that "beer" this holiday as well my friend. Nothing like suds, family,and friends to make for a great time!.......I like that....."Ring of Truth"......That makes sense........Aurora

Harpua said...

Fascinating that at the top of its assessment of Bitcoin, Bank of America makes a clear distinction between MoE and SoV.

On topic, I count myself lucky to have married into a family with a dealer. Without that, not sure if/when I would have taken the plunge, especially on my biggest purchases.

Edwardo said...

Regarding the ping thing. FWIW, I have observed that Maple Leafs don't ping nearly so readily or resolutely as, for example, GEs Krugs, or Mex 50s.

burningfiat said...

Edwardo, that's because the ones you have are all fake!? :P

Biju said...

matrixsentry :

I have bought from Tulving before. But your warning, like a year ago made me rethink Tulving and never looked at them again. If I need to buy, I will use local dealer(who takes a small advance and delivers on balance payment) or use APMEX. once stumped me in late 2008, when I had their version of paper Gold called "Kitco Pool Account"(I never knew FOFOA and nether heard of ANOTHER/FOA). When the crisis hit and paper Gold went all the way down to $700/oz, I was not able to convert this pool account to physical Gold for 1 month because they were sold out of anything. Even after this period I was able to convert to Philharmonics, but it took them 8 weeks to deliver. A scary moment indeed and I learned that internet buying is hazardous when things get ugly.

ampmfix said...

You are absolutely correct Edwardo, when I first started buying I spent a lot of time ringing them, Mexican 50s rang definitely very nice. And yes I was very disappointed with the maples, I really have no explanation except the fact that two 50gs bars I also have (999.9) also lack the crisp ring mentioned. I thought it had to do with the purity, copper mixed coins ring nicer (mex, GE, Krugs). Maybe somebody can add to our discoveries and certify the purity vs ring? or it could also do with shapes?

ampmfix said...

Forgot to mention a definite characteristic of gold coins ring is the sustain, the ring lasts longer on a good coin than in a fake (also gold vs silver), on account of the density.

t au said...

While we are on the subject of fake gold, then there is of course



InowB4 said...

Why buy it on Ebay when you can buy it from it's source:

Edwardo said...

Yes, BF, that's what I thought. No need for a boating accident anymore.

One Bad Adder said...

In the FWIW Dep't - There seems to be quite a marked difference in Spot Au daily volitility compared to Spot Ag ...and by this I don't mean huge swings, just ...what one might call - trading intensity!
The other point of note is that this intensity is limited to trading hours OUTSIDE the New York window.
Whilst the GSR hasn't done much lately, could this activity be a precursor to an assault on 50 ...40 ...and even down to the fabled 16?
Of course it could! ;-)

In case the Hyperlinks don't stick, this is the recent Ag Chart -

Harpua said...

Four years later, the Metamorphosis slowly continues

spaul67 said...

@ InowB4 and/or FOFOA board

InowB4 said...
Why buy it on Ebay when you can buy it from it's source:

“Has anyone ever bought these coins and done the ring test?” It seems to me this type of coin is closest to being able to fool the weight and dimension checks, just not sure about the ring test?

I agree its a good idea to buy from a dealer that is close to the mint, the closer the better in my book. IMHO It’s worth the $25-50 more per oz for an GE to make sure you have a genuine ticket to ride the Freegold wave.

Phil_O_Dendron said...

With all the discussion about buying from retail dealers whether local or online it brings up a question that I have had recently. Namely, I wonder what the retail buy/sell gold business will look like after the reset.

Currently, you can walk into a local coin shop/dealer and exchange a few thousand for some gold coins(or vice/versa) and be on your way. After the reset when gold is selling for
20000-50000 per oz I suspect the transaction is going to look differently but I have not yet settled on how. I suspect that cash transactions will be controlled or eliminated along with any hoped for anonymity.

Walking around with $200,000 in cash is a bit different than walking around with $5000. Clearly, things will be different - just wondering how different.

Michael dV said...

Phil O
I suspect that fofoa is correct (and A/FOA) in that the governments attitude toward gold will change too. If they encourage us to hold and to use gold it may not be a big deal. If there is a period during which they are still trying to get theirs...well it is nice that gold can be tucked away into a small space. Surely one could travel somewhere that gold is appreciated.

Börjesson said...

Regarding the ping thing: Maples supposedly ring less because they're thicker (and thus smaller in diameter). The sound is individual for each coin type, depending on the shape and (for less pure coins like Krugerrands) the composition of other metals used.

A completely different topic: This new piece over at Peak Prosperity was a very interesting read, I thought. If I understand correctly, it's not commonly believed here at FOFOA's that the Western central banks have less gold than they say, that they have squandered a part of their gold trying to defend the failing system. But even so, it's useful to get a different perspective sometimes. And in other ways, the text does sound kind of freegoldish.

byiamBYoung said...

My personal Ebay experience,

I bought from a seller with thousands of transactions and a 100% positive rating.

Upon taking delivery, I took my (2.5 gram) bar to a jeweller/gold buyer, and had it tested.

It was genuine.

I think common sense has a role to play here.

An established seller who clearly makes great effort to advance their Ebay store presence would be committing business suicide by selling less than the advertised item.

Imagine a single feedback that read "Tested this product, and it was gold plated tungston."

How long would that seller be on Ebay? And don't think these aren't committed, entrenched merchants. They are. And their reputation is their life blood.

Then consider that Ebay would suffer tremendously if, under their watch, bogus gold product was being sold. Clearly, this must be prevented at all costs. And Ebay goes to great lengths to ensure that the precious metals sold on the site are legitimate.

They have no other choice. They absolutely MUST maintain demonstrable credibilitiy.

I trust the vendors who have sold me proven goods on Ebay. And some of those vendors are APMEX and similar dealers.

I watch the tracking history. My stuff never comes from China.

It is prudent to be careful, but it is simply not logical to be hysterical. The boogie man doesn't make his living with regular sales on Ebay.


Nickelsaver said...

Maples are .999, krugs and eagles are actually alloys or .90 coins which would explain the difference in ring.

I never bought gold on eBay. But I did buy silver in my pre-fofoa days. I'm not worried about any of those coins being fake because I have sold them all. In fact the only silver I have left is the sterling flatware.

One thing that doesn't make any sense to me is how anyone can make a legit profit on eBay due the fact that eBay squeezes 9% on every sale.

Best to stick with the local dealer. I'm sure that in FreeGold, gold testing will become as routine as going thru the scanner at the airport.

Have a good flight and happy landings to everyone, that is, Merry Christmas and Happy New Year!

byiamBYoung said...

So , Baidu leaves BTC at the alter, following the China Central bank bitch slap and BTC is clobbered. Now down to $770.00.

What a show!


And Y said...

As a drummer with a cymbal fetish I can't wait to try out this "ring" test. Like tiny golden finger cymbals.

Phil_O_Dendron said...

"Maples are .999, krugs and eagles are actually alloys or .90 coins which would explain the difference in ring."

Actually Krugs and Eagles are 22K which is 91.666%

Lisa said...

Phil O Dendron

Here's a partial answer to your question about buying/selling gold after a revaluation - from "More Freegold Fodder" in a comment FOFOA posted on 3/18/11 at 3:58pm:

Remember from Indicium that FOA wrote, "1 gram coins will be the norm; being the size of our one ounce now, but with alloys." At other times he also wrote about how gold is divisible to ANY size necessary. Well here we have three Swiss politicians proposing a constitutional amendment to make a new set of official Swiss gold francs down to the smallest size of.... wait for it.... 0.1 grams of gold!

And from the wording of the initiative it sounds like they would be meant to float in value with the price of gold, without a fiat face value. I get this from the use of the term "fixed gold content" and the later reference to the value of the coin relating to the "cost" of its gold.

It also app pears to be a vessel designed to absorb "hot money inflows" directing them away from, and to prevent the unwanted appreciation of the fiat Swiss franc: "an attractive alternative to the Swiss franc as a safe haven…"

For reference, 0.1 gram of gold today would be $4.57 at spot. A Freegold valuation of such a coin would be in the ballpark of $175. Furthermore, the references to safe haven use and the attractiveness of Switzerland as a financial center tell me that the intended purpose is as a store of value more so than as a transactional currency. Also, they want it to be commercially (privately) minted and distributed through commercial banks, yet licensed, monitored and the gold content guaranteed by the Swiss government.

And as logic can reveal to even the most hard-headed among us, a monetary store of value need not have denominations as low as a five dollar bill; for those with only $5 are not in need of a monetary store of value! (I remember opening my first savings account. I recall the minimum starting balance was $100. And that was a long time ago!)

So I suppose one could be forgiven for running wild with theories as to the agenda behind the official proposition of what would surely be an overly-expensive minting at today's gold prices. Our 1/10th ounce coins (the size of a dime) are 3.1 grams. So if this coin were that same size it would need a special mix of one part gold, 30 parts something else. Of course this would be much more economically meaningful at $55,000 per ounce, $1,768 per gram, $176.80 per 0.1 gram (which is about what a 3.1 gram 1/10th ounce Eagle costs today)!

Nickelsaver said...


Ty for correcting me.

Pre-64 silver coins are .90 and 22k gold is .913.

You can take the silver out of the man, but not the man out of the silver. ;)

Phil_O_Dendron said...


thanks - interesting stuff out of Switzerland

Franco said...

If FOA said "1 gram coins will be the norm; being the size of our one ounce now, but with alloys.", I don't think he thought that through.

Lisa said...


Would you explain further? I thought that FOA quote meant that after a revaluation, a typical coin would be about the size of a current eagle or maples, but would only contain 1 g of gold, and the remainder of the coin would consist of other metals.

I must be dense, since that made sense to me. :(

Daniel Yu said...


1 gram gold bars are already readily available in assay cards by many producers (e.g. Pamp Suisse, etc.). However, 0.1 gram (1/10th) gram gold bars can also be easily produced by these same manufacturers, after FG revaluation, as it would be what would be affordable by the average person.

Gold is very malleable and can be easily 1 micron thin, remaining intact. I have a key chain, which I bought maybe 10 years ago, for about US$15. It contains a plastic body, about 1" x 2" with a thin gold foil sandwiched inside. One side shows a fat cat and the other has chinese words of luck. Both sides state 999.9 pure gold, in chinese characters.

My point is, depending on the price of gold after FG revaluation, even 0.05 grams of gold bars can be easily produced, sealed in assay cards, like the 1 gram bars today.

As you stated, at $55k/oz, 0.1 gram is $176.80. What if the USD suffers a 30% depreciation, it would bump the 0.1 gram to $200+. Well worth any manufacturing cost, in the premium.

Phil_O_Dendron said...

Franco said "If FOA said "1 gram coins will be the norm; being the size of our one ounce now, but with alloys.", I don't think he thought that through. "

I don't think the size of the coin matters too much as long as it is similar in size to the ones used in common circulation today but I agree that a 1 gram coin the physical size of a one ounce Eagle would probably be a mistake. It certainly does not have to be that large.

Silex Crow said...

Hello everyone - firs time poster
The site Lisa writes about is here.
To the production of the coins there is this to say. Imagine Néstle or any other company can use the backside of the coin for advertisement (Not for coffee but for its company name ☺). Think “a Néstle gold coin”. It would be nice for savings, but tourists would take them home (Gresham’s law) and it can become as popular as the Swiss knifes or watches. J6P might take them home even if he did not plan to “buy” gold. – Anyway for those interested, have look at the site. FreeGold is not in their vocabulary.

Aurora said...

Post Free Gold ~ RV, one's universal wealth position will likely be measured in grams and ounces. Might the alloy 1 gm coins being discussed here of larger size be more geared toward ease of handling, durable, and not "losing" them out of one's pocket?

Woland said...

Weekend gold brain teaser;

In the second week of March 1968, in which the London
Gold Pool collapsed, an estimated 1000 tons of U.S. gold
was said to have been moved from Fort Knox to London.

Something unusual happened while it was being received
at the B.O.E. for weighing.

1. What?
2. Why?

One Bad Adder said...

THIS is a look at alt-currency / $PoG.
"Normally" they meander Hand-in-Hand with only little differences occasionally separating them (as per a Husband and Wife;-)
This current divergence however has all the hallmarks of a serious separation ...which MAY end up in the divorce courts.
Perhaps Gold and the Dollar "FALLING" together might well prove to be the FG Canary??

One Bad Adder said...$ONE:$USD&p=W&yr=1&mn=0&dy=0&id=p86374775628

Link didn't stick ...grrr!

Phil_O_Dendron said...

Aurora: it would seem to me that a 1 gram coin the size of a US dime would be appropriate. Having 10 dimes in your pocket is a lot less inconvenient than having 10 coins the size of Eagles in your pocket.

Besides post Freegold fiat money does not disappear. It would still be used for most day to day transactions. This would mean that in most situations you would not be carrying around lots of gold coins.

DP said...

Wot Phil said

Lisa said...

Silex Crow

Welcome and thank you for the link to the Swiss Gold Coins site

Has the proposed legislation ever been approved in Switzerland? The FOFOA quote I mentioned yesterday was 2 1/2 years ago, so it is good to see that the idea is still active in Switzerland.

Roacheforque said...

I think AG those "old tenths" will really be prized at 5K in "old dollars". Like 3 ounces today but a little less ring to the jingle.

Ho ho ho!

It does take over 125,000 yen to hold an ounce of gold today does it not?

The Google exchange rate tool is quite plaything ...

Why should 55,000 old dollars surprise anyone?

Is a Camaro THAT much nicer than a Camry?

Roacheforque said...

Well ... more like 4 oz.s ,,, soon to be 5.

One Bad Adder said...

Let's try the Hyperlinking AGAIN!
This is a look at $PoG underperformance alluded to above.
Whilst $PoG OUT-performed as it rose from $300 - $1800 never got this much out-of-kilter with the alt-currencies - FWIW!

One Bad Adder said...[user]=134654126&filters[recent]=1&sort=1&o=0

The Chart referenced above.

Lisa said...


Click on this link for directions on clickable links. I always preview my comment to see if it worked, before I publish. If I did it correctly, the link shows up in blue writing rather than black.

Here is the link for your chart

I am not a techie, so there could be an easier way, but after you get used to this method, its not too bad

Silex Crow said...

Lisa, thanks for the welcome.

There are no dates fixed as of now, but here is how it works: Once they get their text for the constitutional amendment in place it has to be accepted by the Federal Chancellery. Then the Chancellery will translate it in the other languages and the referendum comity will be allowed to collect signatures. They have from then on 18 months time to get the needed 100’000 signatures. If they get them together the initiative will be accepted and a few months later the Swiss will be asked if they want to accept the initiative.
Hm.. hope you understand how it works… only 13 out of 100 initiatives have been accepted by the Swiss.

Franco said...


I said that he probably didn't think that through because let's say that you put 1 g of gold in a 30 g coin, now who's to stop a counterfeiter from producing the same coins but with 0.8 g of gold instead of 1 g. What technique could anybody use to discern between a coin that has 3% of Au and one that has 2%? No weight, size, or "ring" test would tell you. Not even a "speed of sound" or x-ray machine would tell you.

Sam said...

testing Lisa's linking code. Will 2014 be the year the savers get back their store of value from the beast?

Sam said...

Gold does not need to be smaller for it to be used as a store of value if we can trust a source to hold and protect our wealth for us. I know that sounds crazy in today's world. However, post revaluation gold will be very stable in price so it will be good business for someone to offer a much needed, highly transparent, and highly regulated service for storing gold free of counterparty risk. This means they must offer allocated vaulting services only and are prohibited from lending the notes leading to fractional reserves. We will still have fiat for that so there will be no disturbance to lending and economic growth. If you have $2500 you want to put into long term savings (gold ownership) the vaulting service can credit you with .01 ounces fully backed by actual gold in the vault. No need for the invention of new coins or the trouble of risk of home storage.

If you think about what gold coupled with gold lending and paper gold is, I think you will find that it is not much different than a hard asset backed currency like a gold standard. Gold standards will always fail so it is not too much of a stretch to say that our current paper gold system was DESIGNED to fail at some point. Those of us that have read the blog know why the paper gold market was created and why it logically wasn't meant to last forever. Gold is not wheat after all =). Freegold is just the next step in a clearly designed path. A step forward that won't find us needing to design something for future failure like lending out and fractionally reserving a hard asset.

Gary (tEON) said...

I'm having trouble understanding this theorizing about future Gold coinage and miniscule sizes/amounts. Wouldn't that only be necessary for a MoE? Gold won't be a Medium of Exchange - it will be a SoV. So why would we need dime-size gold coins? Paper will be the MoE... just like now. No? Will the Western masses try to save in Gold? I highly doubt it. Perhaps only us. 'They' will save in whatever financial instrument is promoted at the time (let your imagination run wild)... I have never considered FG as meaning people waking up to Gold as a SoV. They will probably consider it 'missing the boat' and 'no point in buying at the top' attitude. Is this contrary to, my understanding of, FG? I mean, Gold has historically been the best SoV - but still no Westerners accept that. Will the paradigm shift alter them to think about wealth the way Asians do? Hmmm... something to ponder.

Phil_O_Dendron said...

People that want to save but do not have 50000 for a one ounce coin may want to save a gram or two at a time. This in view is what necessitates the need for 1 gram coins. In addition, when it comes time to "dishoard" it would be more convenient to dishoard in smaller increments.

Sam said...


I would say, for a very long time now, gold has not been a good store of value. Even today it is just an investment. However this investment gets its worth from its future role as a store of value. Because Gold was first used as money backing meaning the government kept it from floating freely in a sort of confidence game. Then it was demonitized but the dollar had to scheme to suppress gold's true value in order to be strong in oil. Propaganda, paper gold, ect. You have to go back to "antiquity" as FOA called it to see gold acting as an unmanipulated wealth asset. A true store of value par excellence. FOA knew this and spent a lot of time trying to change a mindset in the west that had been developed by many decades of this.

In the future I think people will learn to understand gold again in it new and best role. People that don't want to be investors (90%) of us will have a store of value that does not fluctuate, currently only accessible to the very wealthy. There will still be "investments" for investors that will chase a yield far better than gold. But your grandmother, that doesn't know how to check her e-mail and has no business knowledge, won't be forced to own $80,000 in APPLE shares to keep some semblance of her purchasing power into the future.

One Bad Adder said...

Thanks Lisa - I DO preview my posts and make sure the Hyperlink is highlighted ...but "most-of-the-time" when I actually post it, the Link disappears.
I don't know whether it's a my end malfunction ...or what?

Polly Metallic said...


I agree with Sam. People will want to save in gold once they understand its new role. I think one of the more profound concepts I leared from FOFOA was exactly this truth. I can't remember the name of the blog post, but some of the others here no doubt know the post that addresses this topic. Like you, my initial reaction was "Who would buy gold once it has been revalued? They will have missed the windfall." But FOFOA explained the concept perfectly. It will be wonderful to simply park savings in gold not worry about our savings being eroded by inflation. Much of the need for "investment" today is to find a means of earning a yield that will keep pace with inflation. Many people would rather not have money in stocks or bonds or anything they think is the least bit risky, but they're forced to place savings at risk just to preserve their purchasing power.

Even as a person of "small net worth" compared to Jumbo Shrimp or Giants, I have wished for a way to hold savings safely without the fear of stock market crashes, bank failures etc. Pre-Freegold, even gold isn't "safe" in currency terms. I'm sure that people with more savings at risk than myself would be delighted to have a means of safely parking money designated for retirement or which they some day wish to leave as an inheritance to others.

Franco said...

That majority of westerners that would naturally have been "savers" but have been either brainwashed or forced to be "investors", it would take a true cataclysm for them to change their ways, I think. ALL paper would have to burn. That's a scary thought. How many here subscribe to the thesis that "all paper will burn"?

victorthecleaner said...

Warren James has a new article at Screwtape.

His chart on the "missing bars from GLD" makes perfect sense if you believe that GLD inventory buffers (part/much of) the flow of gold through the London BBs. It makes less sense if you think it was all arbitrage. Why not put in the same stuff you took out a few days earlier? Best leave it in the same vault, don't move it, just reallocate it. No, this is not what Warren is seeing. There was a 1000 tonnes additional turnover through GLD since 2009 to what you see from current inventory.

With the arbitrage picture, I would have expected more "dark bullion" (Warren's term).



burningfiat said...


Nice arguments against low-grade gold alloys! I certainly wouldn't buy 'em. I usually don't go lower than 90% purity as it is when buying now, pre-freegold. I don't see that behaviour changing in myself or others. I'd rather buy smaller pieces than lower purity pieces after revaluation.
Also, I can't imagine Asians going for lower purity stuff.

ALL paper would have to burn. That's a scary thought. How many here subscribe to the thesis that "all paper will burn"?

I do! :D ALL paper will burn!

LOL, now let me qualify that. All debt (aka paper in my vocabulary) will be A LOT less worth in real buying power in the future!
Good unencumbered equity will perhaps keep its buying power or even rise a little. Most equity positions today are unfortunately entangled in a big clusterfuck with the debt system these days. I see very little so called "savings" coming out of this crash with positive real gains. Other than real physical wealth, of course! ;)

Jeff said...

a 2fer for the haterz: FOA for the umpteenth time on what the Euro is really driving at:

FOA "Surely the Euro will carry some of the same political agendas the dollar currently does. Only, it will be controlled more so by the cross currents evident in the various old world countries. Let's face it, we all need a dollar like currency if our modern economy is going to function. What we don't need is a single reserve currency that precludes any avenue of escape if it hurts other countries.
If gold is trading in a free physical market, no one is going to run to gold as a single currency and leave the Euro entirely. Indeed, a free world economy needs and demands a currency that can expand and contract with changing conditions. The curse of the old gold standard was that it didn't allow this latitude and always created a crisis when needs required this flexible money supply. Only a separate gold market can offer a means to truly measure the success of the money creating treasuries. This is the direction we are heading, for better or worse."

and anyone who wants to twist FOFOA's words should read Euro Gold until they understand what he means by the word 'stable'.

FOFOA: The point is, all the market wants is a stable currency, not too hot, not too cold. It is like a sleeping giant. Give it a stable currency and it will keep sleeping. Wake it and you (the printer) will lose control of the value of your currency and everything else you try to control. The market is the demand side of the equation. And the market is by far the more powerful of the two sides in this tug-of-war. If this isn't making sense, please read my post linked in the paragraph above because I'm not going to explain it all here.

To summarize, there is a whole menu of options for the aspiring money printer to choose from when stepping into the supply side shoes of the monetary game. And as a supply sider, his job is providing a service to the demand side, the market, which wants one thing and one thing only, a stable currency. And if he wants to keep his job, he'd better give his clients what they want, because if they wake up to an unstable currency, they can easily take the reins of control away from him. So if his mandate is—or evolves into—anything other than a stable currency, he will not be long for this monetary world. And one last thing; instability means quick changes both up and down. The client doesn't want drastic inflation or deflation.

Gary (tEON) said...

Thanks you for the responses Phil, Sam, Polly, Franco!
Perhaps my skepticism lies in my own limitations in accepting the enormity of a paradigm shift - the dramatic, forthcoming, change in the world financial architecture. FoA's words echo in my head "If you hated our last one, you will no doubt hate this new one too." I have more faith in accepting that most things will remain status quo and after 'all paper burns' the general populace of the west will be told it was a 1-in-1000 year event. Not dissimilar to my own bank flunkey who described 2008 as a 1-in-100-year event (I think the original quote on that might be Warren Buffet). I never underestimate the blanket ignorance of the masses, or being less harsh - how easily they are manipulated. So these new Gold Coins won't be currency, right? Because Gresham's law would take over. No amounts on them, only weights? I still have my doubts that the masses won't simply go back to being convinced of a new, bank-friendly, financial instrument (requiring professional oversight, no doubt) for 'saving for retirement' purposes. Decades of indoctrination won't fly out the window fast, will it?
Pre revaluation Gold will be the most hated asset. It will have cost many paper hedgers and mine shareholders fortunes (already true) and then the financial community (what is left of it?) will embrace AU? The public simply being an extension of their MSM headlines. While I expect that those who truly understand Gold will hold it forever - we are definitely a minority. Does that mean the Indians, Chinese etc. become the 'new Americans' while the US sinks into the third world (Detroit a foreshadowing?)... that's one massive wealth transfer. A scary thought for sure.

FoNoah said...

Hello Woland - you're not alluding to the "Crimes of Mena" affair are you?

That fraud evidently involved 10,000 mt of gold and occurred in the 1990's?

So pray do tell what happened back in March 1968?

Michael dV said...

after reading When Money Dies about the Weimar I was left with the impression that equities, good ones (strong German companies that were there on 1914 and are still with us) lost about 50% of purchasing power if you held them through the wars until 1950.
The value of equities will depend upon the fundamentals again someday and if they are able to crank out a profit great if not, oh well.
I am not taking a chance. I see them going up like in Zimbabwe and then most going down to '3 egg' value. I'll stick with gold. Even if reval never comes gold holds it's own in HI.

Aaron said...

Earlier tonight Edwardo and I were in Cambridge, Massachusetts attending Jim Sinclair's latest speaking engagement at the Boston Marriott Cambridge and during the Q&A someone in the back of the room stood up to speak about FOFOA, gold confiscation and the idea that gold would be revalued 30-50 times post Freegold.

Would anyone like to claim responsibility for being this rather astute gentleman?

Sam said...


I'd love to hear the response/reaction to this speaker

Aaron said...

Hi Sam-

If you mean to say you'd love to hear the response/reaction from this speaker, I would too and hope he reads the comments.

If you mean you'd love to hear the response/reaction to this speaker [from the crowd at the Marriott] the response/reaction to this person was interesting to say the least. Edwardo and I counted some 200 folks at the venue and at one point during this person's comments a few folks from different locations shouted in unison, "What's the question?!"

Biju said...

Gary(TEON) said
Does that mean the Indians, Chinese etc. become the 'new Americans' while the US sinks into the third world (Detroit a foreshadowing?).

No, I don't think this is possible. This reasoning is just based on hunch. I find it hard to believe suddenly that poor people can become rich. This is one consequence of freegold hard to believe.

Phat Expat said...

I too find it very difficult to believe. If you think the banking system is in shambles in the West, can you possibly believe the East is any better off? Also, though the potential for a confiscation is benign in the West, it is certainly possible in the East.

However, that being said, the world is a funny place. Just as many in the ME found themselves rather wealthy as a result of oil, and assuming no chicanery, it may be possible in the East (no matter how hard to digest).

Greetings from Germany but soon in Holland. Good to be back. Now where is my liquor list...

Jeff said...

How can you believe in a revaluation and not believe that the people who see gold as wealth will benefit from it?

FOA: The gold market is made up of a very broad spectrum of investors. At the very farthest ends of this spectrum lie the persons with the largest influence on the physical bullion. The super wealthy at one end and the "third world no ones" at the other. The middle is occupied, mostly, by the "investors with western thought". The far ends buy bullion. And they don't buy it as a gamble or a game! It is a way of life that has worked, through thick and thin, even before the West was "The West".

FOFOA: But we are not all Giants, are we? Some of us are likely to want to "upgrade" our lifestyle if our gold is suddenly revalued, right? Will we do so in drips and drabs as needed, or will we decide to dump it all at once to catch the top and lock in our profit? Well, let's look at this "upgradable lifestyle" portion of the vote. In the West it will be an extremely tiny contingent. In Eastern countries like India, it is likely to be a fairly large contingent.

In the East they already view gold as wealth. So even though they will have the ability to improve their standard of living, they will likely continue to accumulate, only choosing to dishoard as needed.

Woland said...

Hi FoNoah;
The floor in the weighing room collapsed. Why?

Pat said...

Woland a Sunday morning cliff-hanger. I have no idea, other than in a movie it would be a planned heist. Very cool question for us to ponder, can't wait for the answer. I love the gold history lessons we learn here; just wish i had access to the flower of understanding. Sigh.

Indenture said...

"How can you believe in a revaluation and not believe that the people who see gold as wealth will benefit from it?

Think Like A Giant
Think Like A Giant 2

Biju said...

Phat expat said :
Also, though the potential for a confiscation is benign in the West, it is certainly possible in the East.

I do not beleive confiscation is possible in East and it has never happened. Only wars and colonialism(read extreme taxation by indirect feudal agents) can do that in an indirect way.

I agree that people in east won't sell Gold to convert into other assets even if it goes to a $1million/oz. This is because they already have a fetish with Gold and they rarely sell it now. They mostly get currency loan by placing Gold as collateral. Even if it goes up, they will continue doing that. My only thought is that - how can poor people become rich instantaneously. It has never happened before, usually it is gradual.

Biju said...


One of my favorite prognosticators (other than FOFOA) has predicted 5 days ago, a bitcoin crash and price of $20. So just watch out.

Biju said...

As phat Expat said - Except people in Middle East. They became instantaneously rich. Look at the good fortune that fell on Qatar- highest per capita income in the world.

KnallGold said...

When a currency falls out of favor, it goes down, with its proxies. OBA nailed it in a chart, indeed it happened more often the last days. The reasons and implications for falling out of favor, once realized, could spark the fuse to, ahem, unbenign volatility.

Well anyway, if there's not any intervention taking place soon, acceleration will increase substantially. I love the smell of Nitromethane...

Aurora said...

Edwardo and Aaron,

I am not the person who attended your Q & A meeting however I too attended a different seminar with Jim recently. As a Free Gold advocate, I wanted to listen to Jim’s presentation and have the opportunity to respectfully ask him face to face a well thought out and concise “Free Gold” question regarding revaluation of the price of gold in nominal terms. Sounded like fun actually!!

During Jim’s opening comments, he spoke of, and uses, the term “Free Gold” frequently. At least he did so at the event I attended. It became clear to me after listening to him that his reference to “Free Gold” entails his theory of gold price assent post “emancipated physical gold from paper gold price manipulation” along with all other commodities, a very different perspective than ours on this forum. It also became apparent to me that he was personally familiar with the “Free Gold” community here, since he acknowledged our collective existence in his remarks. He did not mention Another/FOA/FOFOA by name specifically, but did acknowledge the existence of a sizable group of people who follow a “Free Gold” thesis, as Jim referred to it, which I interpreted as, similar to, but “different than his”.

When I asked if he would please comment on a one-time significant upward revaluation in real terms of the price of gold only, he indicated that my comments were the very reason we were all at his seminar. My take on his response and his further comments thereafter was that he advocates a “Bull Run” appreciation of physical gold, post paper gold emancipation with all commodities rising in price together, in conjunction with gold’s price assent. Whereas this community advocates a one-time upward revaluation of gold in real terms against everything else, currencies and commodities alike rather than rising only in nominal price along with other commodities that have historical price correlations with gold.

Therein is the difference in philosophy, a “blended” thinking of how things might unfold as this process matures. There really is no picking and choosing or blend of the two in my opinion. You either understand the "Thoughts" of Another/FOA/FOFOA thru application of the “Free Gold” lens, or you are thinking something else.

Knotty Pine said...

This family got rich and still ate grits and possum stew!

Indenture said...

Sinclair has a space: 'Free Gold'
Another/FOA/FOFOA are complete: 'Freegold'

One word. One inevitable outcome.
Paper must burn to be reborn.

One Bad Adder said...

Knall: - Yes, we might well (finally) be on the cusp of a $PoG washout as it decidedly breaks away from it's Currency kinfolk.
Love dem Top-fuellers mate - apropos too ;-)

Franco said...

The floor in the weighing room collapsed. Why?

Because it wasn't designed to handle 1000 tons?

Woland said...

Nice. The Bank of England sits 2500 feet away from the
bank of the Thames, whose subsoil is clay, unlike the
underground vaults at the New York Fed, which sit upon
bedrock. When the "monetary mass" of 1000 tons of new
gold met a room with "feet of clay" the result was inevitable.
Source: Edwin Green, banking historian hat tip; mortymer

Sam said...

Most of the "Mr. Gold's" out there today are salesmen. Entrepreneurs focused on marketing and profits. I don't write these words with a negative tone, its just what the job is. If you know anything about sales you will know that Freegold is too complicated to sell. Rather than playing on people's emotional baggage it attacks it. It can't be broken down into sound bites because it is based on defined concepts rather than defined words. So don't expect your favorite salesman to start selling Freegold. The dumb ones either won't take the time or can't understand the material and the smart ones know better. Everyone that understands the Freegold concepts, even if they disagree with them, has had to sell themselves on putting in the work to learn it.

Reality Show said...

I lifted this straight off that chinese tungsten website:

"Tungsten alloy golden bullion is real, honest money and many say the best form of money the world has ever known."

Hehehe. Almost laughed as much as when RJP admitted he'd begun to discern a preference for defecation over ejaculation. Led me to seriously consider my own pleasure hierarchy.

On the small denomination gold thing, rather than an alloy how about the bi-metallic method used on the 2 Euro coin?

OBA, sounds like you're still having trouble with your new mac. Do the links also fail when you use a different browser?

@VtC Thanks for posting the link, I've been interested to hear what Warren's research might reveal.

Reality Show said...

Yes Aurora, because a rising commodity gold price means a rising oil price. There was a time when I would have travelled a great distance to hear JS speak, but when he was just down the road recently I didn't even bother. Kind of regret it though as different perspectives help focus my own.

One Bad Adder said...

Good point RS - In ass'n with the new 'pute, I've also started using G-Crome - maybe that's it!
Next time I try, I'll use Safari and see how that goes.
It's weird how it comes up OK in the "preview" ...but fails to make the cut in the actual post.

One Bad Adder said...

Hmmm! - Browser-Wars ...Safari won't accept my Google ID the World will have to do without my Hyperlinked input ...or so it seems ;-)

Motley Fool said...


Try Opera or Firefox?


Aurora said...

Reality Show. You are correct. The exact reason I attended, for clarity of focus.

Knotty Pine said...

OBA, this link may help.

Re Apple: About a year ago we decided to see what the Apple Zombies were raving about and bought an Ipad tablet. Nothing seemed to work right for me and if I tried to research the problem I was having there was usually a solution offered (for $3.99 in the apple store of course). I tried a couple of solutions and after they did not work I aggravated the staff at BestBuy until they gave me a full refund. We ended up buying a Samsung tablet for half the price and it works fine. My advice is unless all your electronics are Apple take that shit back and get something that works!

Phil_O_Dendron said...

I had a similar problem with logging into Blogger. I can't do it from Firefox but I can log in using Internet Explorer.
I finally gave up trying to figure out why so now I use IE for posting to this blog and Firefox for everything else.

Knotty Pine said...

This article may be of interest. From the BRICS post back in May. (ht Mortymer)

Roacheforque said...

"how can poor people become rich instantaneously?"

Perhaps they were never really "poor" to begin with, only perceived as such.

This has happened many times in history - my favorite analogy is the lifeboats on the Titanic.

Before the berg was struck they were seen as "worthless", and a mere hour after, "priceless".

I liken this to gold ... it's perceived value is managed, but once it breaks free from its paper blinders, WATCH OUT!

Sam said...

I like the lifeboat analogy Roacheforque. Earlier in the comments you said you thought China was cutting back a little on gold imports. Where did you get this data? Zerohedge has an article from Dec 8th showing record imports for October.

KnallGold said...

I've predicted the bloated, incompetent and chaotic IT construct will some day face its day of reckoning. First gradually, then maybe suddenly.

Got also my fights with it actually. And no Dante, you're not stupid, you're just smart and know what quality, functionality, efficiency and reliability is. The traditional virtues of Old Economy.

Another breed coming out of (mostly) USA. Inflation, image, consumerism and sales numbers, the American model of the last years. With lots of action, noise, gimmicks and spin.

It worked like this: mention a number, and the number must be higher than the last number. As simple as that, try it. Inflation generates value. The contradiction of a century.

I'm ending the rant with The Future Sound of London going Pink Floydian dadaism, "sells electric ego, slo mo on the dildo" couldn't catch it better...with an excuse to Jo-Jo

Hyperlink, is that a link to hyperspace?

jojo said...

Nice song!
Hyperlink, LDO, is a loss in confidence in one's links.
See this for examples a plenty:

KnallGold said...

Mello Hippo Disco Show

Already learned making one, wow (coming from scratch). Yes I'm really an ignorant on such things, my focus is just on content, and not on winning maybe 500 microseconds in one's life.

But my rant erupted from several other troubles with whatever inappropriate programs, improper connections, flawed electronic stuff etc pointing to maybe something more systemic becoming prevalent. Nothing seems to be built to last, now what will last of a society then? CD's already losing content. No wonder Vinyl is back with a vengeance, (ok I made it again straight to the philosophical...)

Franco said...


Are you the one who purchased a sonic probe or whatever the device is called that measures the speed of sound through a solid?

ampmfix said...

Hi Franco, yes I did, but it is only good for relatively thick materials, a coin is too thin and uneven. I tested it with a 10 ounce brick of silver and with steel and it worked fine, but is not terribly precise. I think it is good to discard tungsten filled gold, but not much more, you still need to do some density calculation on coins. What do you need to know?

ampmfix said...

This is what I wrote back then:

I received my TM-8811 ultrasound device, 129 euros, from Hongkong, took about 11 days to get to me after internet order (eBay).

I tested a Johnson Matthey 100 gram silver bar and a ICC 50 gram gold bar and an american gold eagle. Both were above the minimum thickness measured value of 1.2mm.

They all worked ok, taking into account that the accuracy of this device is +-5%.

So, if you look into the sound velocity tables, silver would overlap with tin and platinum.

So, this measuring method is not 100% good, first you need to know the dimensions of your test sample, then weight it, and hence calculate density. After that is done, you can rule out tungsten (for gold) or molibdenum (for silver) by checking the speed of sound in the material.

Bottom line: you need both methods of assaying (density and speed of sound), then it is fool proof. In my case, I think both methods are necessary if you buy bars (1 oz and above). For smaller coins the accuracy of the tester is not enough, IMO.

Phil_O_Dendron said...

The following concering counterfitting gold coins of one ounce of less is conjecture on my part since I have not actually tried it but the reasoning seems to be sound to me.

Suppose one were to try the method of stamping a tungsten blank and then gold plate it. Since tungsten is so much harder than gold it would be difficult (impossible ?) to stamp the blank with equivalent detail as an original gold coin. Therefore, it should easily be spotted with a visual test.

Then suppose one were to try to machine the blank into a high quality forgery and gold plate it after machining. Without significant effort in polishing machine tool marks would certainly be evident and would once again not pass a visual exam.
Even if one were to try to polish a machined coin this would take enormous effort to try to make a passable coin.

Bottom line is that I think that trying to counterfit a gold bullion coin would only work if it were passed off to a real novice.

For this reason I think using the density test and visual inspection should be sufficient for determing whether a coin is genuine. None of this would apply to gold bars however which is why I don't buy bars.

Your milage may vary.

Gary (tEON) said...

I bought two, older RCM 1 oz bars from a friend and questioned their authenticity. I thought 'easy - they have serial numbers' so after scouring the Net and finding zilch I phoned the Royal Canadian Mint and they said the serial numbers are meaningless production numbers that are not kept on file. There is a potential safety link shattered.

Franco said...


Thanks for the response. So you don't think that your ultrasonic device would be suitable for telling apart a 1 oz gold coin (American eagle, Krug, Maple, etc.) from a fake made out of tungsten with gold plating?

Roacheforque said...

Here is an excellent answer to your question showing both sides of the slant. I must admit there was more than one article out there pointing to slowing demand in September, but the trend long term appears to indicate that they still either need or desire more:

Robert said...

While on the subject of fake gold coins, I would like to share what I learned from a European dealer I frequently buy from. I only buy older circulated gold coins rather than modern bullion coins. I was surprised to learn that among the older circulated coins, there were many unofficial issues. He called these "honest fakes." They are coins with the correct gold content and purity, but they were not official government issues. He identified several French 20 Franc, Swiss 20 Franc and U.S. Double Eagles in this category. When laid side by side an official issue, they look a little different, but it is hard to pinpoint exactly what is different. They just don't look right. He buys them and melts them down and then sells the bars. He said some unscrupulous U.S. dealers buy these fakes and sell them for a numismatic premium back in the U.S. I tried to press him on who produced these and when, but he said it is a matter of speculation. But probably other governments. I still find it a bizarre concept: An "honest fake" with the correct gold content.

ampmfix said...

Franco, you are welcome. I have not tried that but What I can tell you is that aside from the depth limitation (a 1 oz coin is just on the edge of that minimum depth) there is a mechanical problem: the probe tip is a flat surface that has the area of maybe a US dollar dime (10c) coin and you have to put some glicerin or oil to make contact with the sample to be tested. The contact has to be as perfect as possible, that is, like to very flat surfaces touching, if the coin has 3D irregularities (like most do) then the contact is not good.


I came across another type of "fake" over here in Spain, which is that the coin, called a "reproduction", is 18 carats instead of higher, otherwise identical.

Dr. Boer said...

For Euro bills, any counterfeit can be identified. That is, by the attentive expert. The way to exchange counterfeit is to mix one or two with a pile of good bills and/or to exchange the counterfeit with unsuspecting people and/or divert the attention of the victim (the "patter").
Once upon a time, there lived a clever Dutchman. He had mastered the art of producing 2,5 guilder bills! He purchased a small item, payed with one of his own, and pocketed the change. For good measure, he had a two-compartment purse: one labeled "good", the other "less good". They never caught him.
Alas, one day, an incidental officer wondered about the difference in quality ... and the clever Dutchman decided to confess.

Phil_O_Dendron said...

Robert - I am aware of the fake double eagles. these have the correct gold content so they will pass the density test. The reason these are made is to sell them for sometimes significant numismatic premium.

anand srivastava said...


20$, that would be something I would like to see. Even Baidu's bail out has not caused that much impact. It went down a lot, but then it has come back up.

What would it be now? Any reason that prognosticator gave for the drop?

anand srivastava said...

I haven't got much invested in Bitcoins. Actually I missed the boat when I decided to buy a miner instead of bitcoins directly :-(.

Anyway I do intend to invest some money till Jan end/early feb. I expect it to go up considerably by June. I have some money that I can play with at the moment :-).

KnallGold said...

Beware of McAfee, after being charged on an expired(!) credit card the usual nerve consuming stuff begins. Of course you'll get a gift from the company, to make the checkmark on the MORE and the gimmicks (see rant above). To be fair, the lady on the low end did fine.

My credit card company confirmed several similar complaints hanging around anti-virus programs (Norton). Just scanned the net and the aha comes. One example:

Plus making a couple of own thoughts, finding out to what companies they are linked, where they have their teams, subsides, this is all again a bloated netscam ripoff scheme, possible fraud.

The software itself is imho kinda virus itself and I even don't want to know if the USG has also its stinking feet in it. Yes, confidence is gone, the smell of Enron and Madoff won't go away whatever electric ego-job#'s they wanna sell.

Btw, the only virus I caught years ago sneaked in via an anti-virus program, fact.

I've heard the big US IT companies face large losses of sales in ROW because of the NSA affair and begin to go against the gov.. I hope its more than just worry for less $$$'s.

Fertile ground for Europe et. al, to make it with Old School values!?

KnallGold said...

A day with a laugh is a good day :-)

Although my biggest worry is for how much I'll get my 2014 Goldpanda (Dantes Peak looming ;-), checked a couple of places and I still see ridiculous prices on older coins. A 1oz Silverpanda for 2000$'s, I thought the Gold- and Silverbubbles have popped. Pandas though are hype sensitive.

FOFOA's article renewed my criticism on the slabbed coins, never really seen its sense, besides again the sales spin gimmickry. For true numismatics, yes, but 99.6% of plain Goldeagles are >69 anyway ( per USAGOLD ).

Some slabbed Silver coins I have had white spots on them which is a real no-go if you have a mirror proof coin intending to show around.

Biju said...

KnallGold : sorry to say - but I don't think Europe can compete with USA in High Tech sector and compete dynamilcally. Old school values are too slow for tech stuff. Hence USA is able to compete with diverse talents like in Silicon valley here. Hard to replicate.

Look how Nokia was displaced, so fast. And any new tech, USA has an advantage - like Tesla or similar.

Michael dV said...

Here is Dan Amerman's take on the interest rate derivative risk:
He is a bright guy who I have followed for years.

Biju said...

"Anand said"
What would it be now? Any reason that prognosticator gave for the drop?

He did not have much theory, but just that is a bubble mania and it will go away. He is a chartist(which I don't take seriously), but he has an excellent record. better than anyone I have seen. He had picked the bottom in US stocks in March 2009 and called it stealth bull market then, picked the housing bottom correctly 1 yr ago in UK,USA.

Lisa said...

this is a realy interesting article on the periodic table and why we value gold

h/t Mortymer tweet

Lisa said...

Just to clarify the article I linked above - I found the periodic table portion of the article interesting, and posted it since comments are pretty slow lately.

I am not suggesting that gold should be a currency

MatrixSentry said...

From Jesse's latest NAV Premiums Of Precious Metal Trusts and Funds post:

Interestingly enough another 19,200 ounces of gold bullion were redeemed from the Sprott Gold Trust. Apparently the premiums on physical gold make this an attractive proposition. There is no leverage in the Sprott fund that I can determine, so I doubt it is a risk factor that prompted the redemption.

Physical gold bullion is in tight supply judging by a number of factors including the forwards rates and the inventory levels at the ETFs and exchanges.

If I had unallocated gold at a dealer or a bullion bank, I would be inclined to move it to a storage only facility where I had very clear title and access if it was a long term holding.

And based on my own experience I am not sure I would trust an active bullion bank or dealer with the storage of even allocated gold. MFGlobal showed us how 'sacred' customer assets can be when the biggest claimants start lawyering up.

If the rehypothecation in the gold bullion market starts unwinding quickly it could get a bit muddy with cash settlements and crossed claims.

This is the 2nd goodly sized withdrawal from the Sprott Physical Gold Trust. PHYS has now lost 1.134 tonnes of bullion since November. Jesse spoke of a 17,256 ounce redemption here and now the 19,200 ounce draw down. Does it make sense that some folks are deciding that there is a difference between PHYS shares and an equivalent amount of bullion in hand? Have they also put two and two together, realizing that a concerted effort to redeem shares for gold will quickly deplete the fund of its gold, and then cause a cash liquidation of the remaining shares as a result of a termination of the Trust?

The very thing that has been keeping the NAV close to "gold" is the Fund's Achilles heal. People have been giving PHYS credibility because an owner of shares equal to or greater than 400 oz.s can redeem for bullion. But, this is a conduit for gold bullion to quickly leave the Fund. Ironically, this threatens the Fund and the owners of shares because they may be cashed out at the worst possible time.

Smart owners of shares are getting out it seems when the getting is still good.

Tick Tock. A bit muddy says Jesse, LOL! Ya think?

Polly Metallic said...

More trivia regarding Fake/Replica/Copy gold coins:

What we have heard about these is that back in the 1960s and 1970s many were made in the Middle East such as Pakistan, Turkey etc. and they were typically cast copies. Common copies we have seen or owned and melted are sovereigns, US gold coins such as $2 ½, $3.00, $5.00 Indians, and various Liberty gold coins up to $20.00. They were sold to tourists when it was illegal for US citizens to own gold bullion in the United States. Since the coins were minted/cast with dates before 1933, US citizens were allowed to own these “fakes.” Many coins are exceptionally good quality and are the correct purity. In a few cases the purity of the copies exceeded that of the real coins.

Franco said...


So are you mining Bitcoins? Which miner did you buy?

Aurora said...

As for the "fake" gold coins that exist out there, the ONLY ones that "ring" are the examples that are "struck" under high pressure....The cast counterfeit copies from where ever made, even though high gold content/purity ~ just clunk.......A good indicator of the real article vs the "fake", if one does not possess other numismatic skills or equipment to ascertain the difference.. Hence, seek out a trusted expert if you are unsure.

anand srivastava said...


The above at 60GH/s

Yeah it was a bad investment. May not be so in Currency terms, but very bad in Bitcoin terms. I would never be able to mine as many as I would have been able to buy at the time :-).

I am afraid the guy does not understand the Asset nature of Bitcoin. He is applying his charts to something that is not like the things his charts are made for.

It is like saying Rare Art and Rare precious stones are in a bubble and they will be very cheap very soon.

Roacheforque said...

Yes I have enjoyed Amerman in the past so thought I'd take your link for a spin. He does seem to have been show the "Kirby-esque" path to Armageddon, and now walks the talk.

I read so many things, and try to injest it all in a way that filters out that which appears indistinct through "the lens" but someone recently noted, "we are managing derivatives of derivatives" (or something of that nature).

This is quite true, in the context above. We are now managing the "expectations" of tapering, not the tapering itself.

So in essence, the Fed (and its propagandistas) is now managing "thoughts blowing in the wind" (expectations) of tapering the rate of printing paper (again mere thoughts ...) rather than actually changing the flow itself.

And we have arrived at this place in time and space, where again, managing expectations is equally effective to managing the underlying activity.

The hypothecated expectation of tapering now creates the reaction of the tapering itself.

Does this not sound familiar in Stockman's assertion, "market valuation has lost any anchor to the real world."

When people's thoughts suddenly turn to "we must regain that anchor" I suspect it will quickly become remonetized.

spaul67 said...

@ Roacheforque

One of many things I like about Amerman is his suggestion that there might be third way between the status quo forever camp and a collapse of the status quo followed by monetary reset camp. On the latter I really like FOFOA’s well reasoned arguments that physical gold is the logical choice as the next ‘gobal’ monetary focal point (ie the instant rise to 55K/oz scenario), though I’m clearly biased by all my gold.

At the same time, I can’t put out of my mind the possibility that the TPTB won’t just do a global Cyprus on the 99.9% thus resetting their ability (ie the 0.01%) to just continue the status quo of theft via various paper ponzi schemes designed to lure net production of the 99.9% towards them. Rinse and repeat forever.

My only hope is that such an act would very likely change what many micro to jumbo shrimp net producers (ie the 99.9%) do with their excess paper going forward (ie post Global Cyprus). What we lack in positive cash flow we more than make up for in numbers. I know many of you don’t like/understand silver but if everyone in America purchased just two oz it would equal the entire world’s global mining supply. Even micro shrimps on welfare can come up with less than $50/year to save away. All most of them they lack at present is a compiling reason/understanding to do so.

Anyway this third path (ie a global Cyprus event) would likely result in bringing about a global China/India understanding of the unique ability that ‘physical’ precious metals provide the 99.9% as a way of protecting their purchasing power from theft by the various ponzi schemes of the 0.01% in the future. Even gold and silver at current prices does that with higher net producers logically favoring gold over silver due to its naturally higher value density. Regardless even if gold doesn’t attain its 55K/oz global reserve focal point status it still represents a better way even at current prices to store value ‘outside’ of the 0.01% ability to ‘easily’ steal with just a key stroke, swipe of a pen or barrel of the gun.

The direct result is that 99.9% would have a monetary mechanism of exchanging net production among themselves inter-generationally bypassing the parasitic 0.01% running the status quo running the various paper ponzi schemes. In fact the reason the 0.01% own gold is because they of all people understand that there is no honor among thieves.

At the same time it’s also clear that the status quo understands the truly liberating power for the 99.9% if gold and/or silver where to re-attain their historical roles as the foundation of an honest monetary system among true net producers. Point of fact is that if the 0.01% suddenly went missing the 99.9% would be just fine in fact better off. The same is not true in reverse. Who is it that needs who again?

Perhaps it’s not so much ants vs giants as much as its ants vs grasshoppers.

Roacheforque said...

Truly, the fact that all central (and non-central) banks have one single, common non-paper asset in reserve is quite telling of what the 1% do expect to come.

So here we have 100% of all central and sovereign banks holding a single non-paper reserve asset, and we have what percent of the 99% holding what?

I hedge my bet with the 100%, the only thing I cannot bet against, or with is TIME.

There is no hedge against it, including the futures market, when all bets on paper valuations are "OFF".

TampaMark said...

I see no mention of using rare earth magnet to test for tungsten. They are cheap (not rare) and if it sticks or attracts to the metal then it is tungsten or some other magnetic metal.

S P said...

I think it's a bit of a mistake to think of it in those terms, because the elite and the masses are firmly in the creditor/debtor camp.

Savers are different as has been pointed out on this blog. Savers just produce and accumulate, sometimes for generations. Savers have no business mixing their wealth with the debtor camp.

I myself don't associate with the symbiosis of the elite and the masses, both of whom favor expanding debt, which is a dishonesty. Nothing is ever good enough for them, the elite want infinitely expanding currency "wealth" and the masses want infinite debt. Savers understand that this always ends in tears for both parties.

KnallGold said...

Tungsten is just paramagnetic:

KnallGold said...

GCC states getting closer with Iran?

spaul et al., the status quo, which status quo? Maybe we should summarize again why the status quo is a status mutatio. Just wait for next week...

Woland said...

LBMA/LPPM 2013 Conference, Rome, Sept 29 - Oct 1
Transcripts of presentations are now up:
Session 4, Official Sector
Managing Gold as a Central Banker, Alexandre Gautier
Director of Market Operations, Banque de France, 4 pages
in particular, sections 4,5, and 6 {;<)>>

jojo said...

Franco said...

Does anybody know where to buy a fake gold coin, made out of tungsten and gold-plated? I'd like to get my hands on one.

Woland said...

Hmm. Well, we now know what Larry and Ben's former
professor at MIT will be doing, in lieu of a quiet retirement.
Perhaps now, as was the case in Israel, the "front lawn
dump" will include buying stocks. (hint: while at the ICB, he
bought Apple. jes' saying)

spaul67 said...

@ S P

Good points; perhaps its best to clarify that the 99.9% are net producers not the total population in general? Thus separating out the net consumers (i.e. debtors) that make up the voter base (+50%) that help keep the kleptocracy in place. A perfect marriage between the two primary forms of totalitarian government if there ever was one.

A compromise if you will between Communism (the Fusion of Social and Political Power) at on one end and Fascism (Fusion of Economic and Political Power) at the other. Between the two camps all the net producing shrimps responsible for almost all net wealth creation are over taxed, underpaid and over charged (i.e. fleeced) on regular basis. All given legitimacy in the eyes of most net producers by the ‘democratic’ process. Add a number of misdirection’s as to the root cause (over concentration of social and economic of power) of all the above and you have a perfectly compliant population blaming this or that group for what is causing the problem.

That is why the fast approaching ‘bail-in’ should come as no surprise. It’s the only way to keep the two totalitarian camps happy by keeping the Ponzi scheme rolling right along. I just don’t see how net producers stop this cycle ‘until’ they stop attempting to save net production in paper or worse IOUs for future paper.

Now FOFOA believes, and I hope he is right, that we will have a fairly rapid reevaluation of gold relative to paper as it reassumes its proper role as the foundation of the world monetary system. Amen.

I still can’t shake the possibility though that it will take a broader awakening of the net producers the world over towards understanding the power of gold and/or silver to take back the money power. I would think/hope a global Cyprus event would be sufficient to do that?

Even now when you buy/sell physical gold or silver you are engaging in a freewill transaction between net producers current/former. Basically both parties to the transaction are circumnavigating the debtor class altogether and rendering the paper ponzi schemes of the kleptocracy ineffective all at the same time; a nice feeling.

Regardless, until the time of the great reset or great net producer awakening occurs I’m happy to accumlate gold simply because I don’t want to be part of the coming bail-in. Everything else is icing on the cake. So either way it makes sense to store net production in gold.

Life, Liberty, Property.

Knotty Pine said...

Franco, Try this site

Aquilus said...


Yes indeed: the world is his oyster. Especially the entire asset portfolio of the entities that make up the financial system (including insurance companies) - even buy it wholesale if needed.

Debt's nominal price must be maintained at all cost, even if buying it outright for cash, if I remember my FOA...

Fun times


P.S. U.S. budget deficit at $135.2 billion in November

Biju said...

Aquilius :
US budget deficit for Nov 2013 is 21% less than Nov 2012. Improving - I would say.

Aquilus said...

Hello Biju,

Yes, my friend, of course you bring the correct figures as usual, but is that the story or the headline number?

Think back to PeakExhorbitant Privilege: where does the dollar get support to compensate for the budget deficit?

From the trade deficit and from foreign CBs recycling those trade deficit dollars back to us so they don't end up being spent in the real economy.

Now have a look at the foreign Treasuries purchases. By my calculator they increased by 5653B-5472B=181B FOR THE WHOLE YEAR.

Our trade deficit is also down, so there's a whole slice of debt that only the Fed can absorb.

Ever ask yourself why they still need to pump 85B/month of base money in such an improving economy, when we even had one month of surplus this year?

"Think long and hard on that one" as we've been told before..


Michael dV said...

Here is a company that makes tungsten, gold plated coins...

Aquilus said...

I would definitely also add Moneyness as a must read for the concepts above.

A highly recommended post to read and re-read for all of us .

Franco said...

Yo, the website "" seems to be the website of a manufacturer, no retail sales. Any other suggestions?

ampmfix said...

Franco, it is not easy to get your hands on such coins (I tried to find a retailer some months ago with no luck) unless you order from those guys a large amount (100?). Think about it, who must be their customers, maybe souvenir shops?, practical joke shops? gift shops? it is so fringe that probably there are no small retailers that do only that. I did not buy them because they don't look too good and many have "copy" stamped on them (to avoid being prosecuted as counterfeiters but that also deters from using them as thief bait).

KnallGold said...

Europe getting close to banking union, finds compromise on failed bank rules.

Germany should have its new gov. next week, America maybe not facing again a shutdown, budget compromise, GCC forms, Ruble getting the P with a HORIZONTAL line:
Risks for disorderly markets lessened. (and Barrick starts hedging, hmm...).

And bear markets in stocks do happen, oh well, seen that insider sales have spiked. Maybe taper is simply irrelevant.

Still wondering if reval can happen without US HI, well, a "HI" by stroke, orderly devaluing $/debt. As isolated an event as possible. ROW write downs of $debt neutralized by Gold. If one had the choosing. Always wondering what really is the tune in the USG these days.

Hmmm from here

GLD bleeding slowed, but what gives 1350 divided by 2 ? And does it matter for the mines how MUCH the Gold price is under production cost?

Roacheforque said...

I see the Turdites being handed their paper ass this morning as they all flocked to the JPM net long prayer meeting.

Koolaide was served.

And more weak hands will throw in the towel.

And strong hand deliveries met.


Edwardo said...

Knall Gold asked:

does it matter for the mines how MUCH the Gold price is under production cost?

Every miner is different with regards to how much adversity they can withstand, but from what I've read concerning the "all in sustaining costs" model which is now the industry standard, all things being equal, paper gold selling a mere ten percent below present levels represents a breaking point for all but a few operations.

KnallGold said...

Thanks Edwardo. Barrick is said to stand at ~900$ I've read, so it would make sense to sell forward here as they stated. And just add more pressure on $POG, maybe they have some takeover plans to bring home (gov.?) more ounces. The market is eating itself...

No followthrough on 2. day's, bad Thursday's, rinse and repeat, yawn... But we get our ounces, good to be a shrimp. Anyone here who can confirm Goldpanda prices of 4000-5000$ for 1982, 2000$ for 90'ies? Haven't watched that pot since years, my dear.

I know that they are in strong hands and its my most loved collection as well. A tip, the most difficult one is the 1995 year, should you ever come across one from a liquidation from a frustrated holder, take the opportunity very silently...

BustinStones said...

FYI... Au on sale today ;)

Sam said...

That $900 figure for barrick is misleading. That is their pure extraction cost. Global gold 'all-in' cost curve incl. extraction, capex, corporate, exploration costs, etc. Barrick, and companies like them, can survive short term only by cutting their throat long term. They can reduce most exploration costs, cut pay, stoping buying new equipment, researching, ect. Hedging is also a pipe dream. As gold continues its plunge who is going to take the other side of that trade?

Polly Metallic said...

The miners have so many strikes against them right now. IAG just discontinued it's dividend. Other companies have reduced dividends and/or started hedging production. I really pity people who assume this must be the bottom for the miners, as we are about to hit the next wave of tax loss selling, and new lows are all but assured.

Roacheforque said...

A good use for all those empty containers in Peak Exhorbtant Privilege...

Tom R said...

Off topic... This made me think of Life in the Ant Farm. Perhaps some Giant will do this with gold.

Phil S. said...

"As gold continues its plunge who is going to take the other side of that trade?" --- the same who did from the 80s until the late 90s, those who have a use for a low gold price? BIS/BB etc..

Sam said...

In the 80's and 90's there were "recycled petrodollars" taking the other side of that trade and they lost a whole lot of money while miners only scraped by. Now, because of our friends, we know why they made this terrible bet. To buy time for the creation of the Euro. The Euro is here so the incentive to buy time, burn money, keep gold at the cost of production, and save the dollar reserve system is gone.

Sam said...

Here's a public service announcement:

Our current monetary system stores future purchasing power in debt. Ever since 1922 we have followed a design allowing for unlimited growth of debt, so as to allow for unlimited growth of the global economy. Of course the system did not devise an unlimited means of paying this debt, but nature did. Debt can start out with a profitable rate of interest but if left unsettled it's returns are forced to slowly drop until it goes stagnant with interest rates that only keep even with inflation. With no means of settlement and no mechanism to force the chronic debtor to switch gears and start over producing and under consuming, interest will then become unprofitable at lower and lower and eventual 0% interest rates. It doesn't even stop there, as ever increasing inflation will continue to exponentially eat away at the real value those storing their future purchasing power are entitled to. This concept is not lost on trading partners that aren’t ok with having their stored purchasing power eroded away. This is why further action to delay the planned final outcome won't be taken this time. Although the middle of this long story can still be mysterious and intriguing at times, the ending is crystal clear. Settlement will come and the only possible mechanism for this settlement is already in place. If not for their knowledge of the end game, producers would have stopped trading their hard earned surplus for debt long ago. They certainly wouldn't have wasted any time and money propping up an unfair system.

So what is the built in mechanism for the endgame that every real systemically important producer and CB already has in stock? Gold. When unlimited debt finally becomes too much for the world's players to service in this monetary system, the debts get paid, in real terms, with the revaluation of Gold. Producers/savers get paid in real terms with real value. Debtors/consumers get out from under their insurmountable debt. The world avoids global war and or a global economic depression. Important trade nations and super producers get settlement on years of imbalances and can then rollout the next system to manage global trade and prosperity.

How much stored purchasing power has been accumulated over the last century? A lot. Get some gold, and keep your hands and feet inside the ride at all times until it is over.

M said...

@ Aurora said...

Hello Free Gold Friends,

Gently balancing a gold coin on one's finger and lightly tapping the edge with a pencil or pen will cause the coin to "ring". No App required, just good ears, If the coin does not clearly "ring",

Hey it works. I'm doing it on one of my Scotia rounds. Gold sure rings...

Delusional Investing said...

In the spirit of Public Service Announcements, there is a vaulting service in Melbourne & Sydney called Guardian Vaults that is having some.. let's just say.. Management Issues. The rumor is that the husband/wife owners are no longer husband/wife, and that ownership may change as a result of divorce proceedings.

Prudent PGAs in this region may wish to consider storage diversification ratios.

This is all via the grapevine, so consider also taking with a grain or two of salt.

Gary (tEON) said...

Worst Year in History for Bonds - Investors have pulled out $72 billion from bond mutual funds this year through the first week of December, according to data from TrimTabs, US College Grad works 4 jobs – makes 20K/year and supporting the fact that we are living in unprecedented times - check out THIS graph at the St Louis Fed.

DP said...

Nice graph!

Polly Metallic said...

Can anyone point me to the post that dealt with the topic of why the paper gold market can never have accurate price discovery since it is unavoidably tethered to correlated assets/commodities?

jojo said...

Polly- you may be thinking of the My Candid View series from earlier this year (part 1-9 in August 2013).

I am searching for the post that details about the budget deficit more deeply than in some of the other posts like Peak Exhorbitant Privledge and Euro Gold.
Scanning "My Candid View " it seems I'm in for a long re read and maybe that's what you are thinking of too.

Jeff said...

My candid view 4, keyword 'chained'.

Dante_Eu said...

@Polly Metallic:

My Candid View – Part 4


"It is, in fact, traders that are driving the price of gold. It is those who are buying and selling it as a commodity, while the real insiders are buying physical gold as "money" as Another put it. So the outsiders are the massive pool of traders, and the pool of "trading money" on the FOREX is larger than that in any other segment of the "gold" market, so that is the primary driving force in the POG.

This brings me to why gold stays correlated with oil and silver and everything else. It is not, as some people believe, a manipulation run by the USG intentionally stirring up trouble in the Middle East. It is because of something very similar to Mises' Regression Theorem. Correlated commodities are correlated today because they were correlated yesterday. And they were correlated yesterday because they were correlated the day before. As long as they trade in relatively free and open markets, their ratios or correlations will not change quickly.

Why? Because traders expect them to stay correlated due to the Regression Theorem and therefore they (the traders) act on that expectation. We normally call this arbitrage, but it's more of an effect of the Superorganism than it is the individual act of a conscious "arbitrageur".

If, say, silver is heading higher while gold is not, traders will tend to sell silver and buy gold because they see opportunity in the GSR being stressed. And at that point, it in fact becomes a democratic process. If more traders expect the GSR to remain static, then they win. If more expect it to widen, then they win. If more expect it to narrow, then they win. That's where TA comes into play in predicting what the majority of traders will expect at any given time.

So ratios do change slowly over time through this democratic process, but they never change abruptly as in a revaluation which Freegold predicts.

Now think about this in terms of the "gold thesis" of almost every gold bug in the world. They all have it basically right. They all think that gold should be much higher. But how can gold get there when it is chained to all of these other commodities through the regressive expectations of a massive Superorganism of traders that far outnumbers the gold bugs? It can't!

So in this case, all of the publicly traded commodities in the world constitute a weight around gold's neck holding it under water. If the gold bugs try to drive gold higher in isolation, the rest of the trading world will see a profit opportunity in selling gold and buying whatever their favorite correlated commodity is. This will keep gold correlated with all of the commodities it was correlated with yesterday. And if those commodities are not ready to explode in price, then neither will gold. The only way we get $3,500 gold is with $230 oil and $70 silver. And that's not a revaluation. That's either a commodity bull run or inflation.

So when we look at all of these other poor gold writers throwing in the towel, we should feel sad for them because they have the basic thesis correct—that gold should be much higher—but they are missing the bigger picture of how it will get there. And that's where the Freegold lens comes in very handy!


Knotty Pine said...

Hi Polly M,

You might try this one.

Dante_Eu said...


"Think back to the Austrians (including Ron Paul) in the early 60s. They fully expected a revaluation of gold, because they clearly saw how Bretton Woods was unsustainable as it was. If the revaluation had come as they expected, it would have been only in gold!!! Very important!! If the US had chosen to revalue its gold reserves to, say, $200/ounce in order to extend Bretton Woods, it would have been only gold that was revalued. Not oil. Not silver. Not copper.

That's because revaluations always happen overnight and by surprise, which doesn't allow the traders (the army of unwitting arbitrageurs) the opportunity to act on their perceived profit opportunity as gold inches up. It takes their power away from them.

So what was expected in 1970 didn't come. Something else did. Likewise today, what is expected by almost every gold bug won't come. Something else will. Again, this is where the Freegold lens comes in very handy.

So that was the "market support" over the last decade. Everything else was rising, so gold went along for the ride. If there was "official support" it was probably a combination of providing physical, cutting deals to keep some big interests out of the public arena, and also possibly buying XAUEUR at key points in time.

Make sense?"


Happy upcoming holidays you lazy... :-)

BustinStones said...

Fact: If the world bids up the price of gold, all deals will be off! It would be every nation for themselves.Oil would explode in price! -ANOTHER-

Polly Metallic said...


THANKS. That was exactly the passage I was remembering. Thanks also to Knotty Pine for another good suggestion. I will reread that post as well. In the meantime, I recommended to the person with questions about paper gold pricing physical gold: Gold as a Forex Currency and also Checkmate. We'll see if they have the motivation to read my recommendations.

BustinStones said...

Looks like some weekend reading lies ahead... thanks

jojo said...

I've only gotten into the middle of 3 but this was in there as well:

"Today gold is chained to both commodities and foreign currencies like the AUD through the paper markets. This is why we see gold moving in lockstep with either other commodities or as the inverse of the dollar. And what this means is that it would be virtually impossible to control the price of gold in isolation. If you even attempted such a feat, you'd have a world full of paper traders working against you no matter which direction you were trying to move the POG. "

Polly Metallic said...

Good one, jojo. Thanks. I am cutting and pasting these segments into a Word doc so I can find them again!

Börjesson said...

It's all very well to laugh at the hapless gold bugs. But if gold is so inevitably correlated with oil and silver and other stuff, then isn't it equally futile to expect paper gold to plunge to $1000, $800, $500 etc, as I believe many here are waiting for (and hoping for)? Because gold that cheap would mean oil that cheap, and that's just not going to happen.

MatrixSentry said...

Oh I think "gold" can plunge that far easy enough. Now remaining that low with a fully functioning market where paper claims can be cleared with physical gold is another thing altogether.

jojo said...

I don't see why not Börjesson:

"So was there even a "gold bull market" at all? Or was it a commodity bull market that has now ended because global economic deflation is a real thing and a real effect of the winding down of the dollar-based international monetary system? "

Roacheforque said...

I believe the argument is that said plunge would be part and parcel to the breakdown of those correlations. But as part of that breakdown, increasing volatility may well precede said plunge.

Phil_O_Dendron said...


thanks for posting. I read that before but re-reading is always helpful.

Dante_Eu said...


I really think sad for you still taking KW seriously. I occasionally read headlines and it's allways:

"Fantastic charts"
"Gold to spike to new All-Time highs"
"Used car salesman A.M. explains golds super spike" (gold up like Twenty bucks)
"Used car salesman A.M. explains blatant manipulation of gold price" (gold down Thirty bucks)

Sadly, it's worse than Main Stream Media or even Jim Cramer. You may find some gems on the way, but they are far between and in the meantime you are walking through pile of sh*t.


@Phil O Dendron:

Practice makes perfect. :-)

KnallGold said...

Who's going to take the other side? Right now some are still taking the other side, don't know how much volume they can absorb though. When none on the other side's gonna show up the market will have its Wile E Coyote moment. The specs are usually fast when the name of the game becomes exit.

This night I have seen 1200 and 1190 numbers on two different channels, must have been glitches as it didn't show up on kittyco.

Agree Gold can plunge much lower, the disconnect to reality is already here. But what matters is the flow, I'd say the $POG just won't say. Maybe FOA over dramatized a bit when he said "the minute the Gold flow stops ..." but I glanced that this must be very important for them.

Michael Collins said...

"unable to source gold". Sounds to me like we are entering the twilight before the gold price goes dark.

spaul67 said...

On the gold re-value event.

I don’t see that happening ‘prior’ to the crisis event. It’s the crisis that will bring forth the need to re-establish some means of maintain critical trade flows, with physical gold at an elevated price relative to paper as the obvious choice. Prior to that re-value event though I predict we will see a compression in the GSR ratio for a limited time (say less than six months) as various means of saving, gaming, and redirecting the existing monetary system are employed by all nations in order to gain or maintain their advantage relative to one another. Assuming/hoping sanity regains a foot hold and gold achieves monetary orbit (i.e. 55K/oz) as the obvious point of truce for the world community the opportunity to lock in those gains by getting ‘closer’ to the energy content of a closely related dual commodity/money like silver may present itself.

In short, buy Silver at GSR 50 (Pre Crisis), Trade Silver for Gold at GSR 25 (Crisis), Trade Gold for Silver at GSR 1000 (Post Crisis).

Starting with 1,000 silver you can trade up to 40 Gold and then to 40,000 silver for a 40x return; the future purchasing power of which is now locked in via physics and not governed by the whims of nations or men. That fact that we once were and yet are not now on freegold exchange system should be a clear warning that what can come could just as easily go way.

The same is not true for energy………” the stars twinkle and it is no more”; second law of thermodynamics BTW. As long as a critical commodity will take increasing amounts (due to lower and lower ore grades) of increasingly expensive energy to produce (Chris Martenson, EROI) the stored energy value (and thus its relative purchasing power) it represents will continue to grow well into the future.

Who says that some precious metals can’t be an income producing asset? Easy to store commodities that need to be continually replaced via increasingly expensive energy will grow in purchasing power value naturally. While other metals like copper fit the bill, they are significantly more bulky for a given energy content than silver. I would also be interested in the platinum to gold ratio post crisis as well, an even more compact form of energy than silver. It is true that gold contains more energy than silver but since it isn’t consumed and is assumed in freegold world to well above its incremental cost of production the ebb in flow in its relative purchasing power should stable over long time frames. At least while it remains the center of the monetary system anyway.

jojo said...

"On the gold re-value event.

I don’t see that happening ‘prior’ to the crisis event. It’s the crisis that will bring forth the need to re-establish some means of maintain critical trade flows, with physical gold at an elevated price relative to paper as the obvious choice. "

Ehh... to that I say this.

Fofoa says this:

"Freegold is a top-down phase transition, IMO. The minute there is not enough physical gold flowing at the top level in which it flows, the phase transition will be complete. It will be instantaneous, and when it happens there will be no going back. We will have crossed the event horizon of the black hole."

spaul67 said...


Jojo nothing would make me happier than for FOFOA to be correct. To wake up one morning and find that I’m freegold multi-millionaire would be like a kid waking up Christmas morning, I can’t wait. None the less I’m prepared for a multide of scenarios ranging from a smooth and rapid transition (fingers crossed) to global monetary chaos that lasts at least a year. I think it’s instructive to look at the political, financial and energy chaos that happened between Nixon taking us off what was left of the gold exchange standard and the emergence of the Petro-dollar. This didn’t happen overnight and given the significantly higher level of financial dysfunction and interdependency in the current system, the level of energy that will be released when this baby snaps will be one for the history books for sure. I hope the world is smart enough to channel this pent up energy into physical gold, but human history coupled with game theory 101 councils me otherwise.

As I have said in prior post I have more gold than I should because I used the natural fluctuations in the GSR to acquire thru trade more silver on GSR upswings and more gold on the down swings, not unlike how a ratchet wrench works. Just plot the price of silver vs. the GSR and you’ll see for yourself just how strong this correlation is. I have seen scientifically collected data with lower correlations than this. Just a simple rule, sell or buy when you hit a 1.5-2x shift from the GSR you purchased/exchanged it at. Thus every gold and silver coin has an exchange trigger. Now when the big event happens you need to change the rules above but according to FOFOA it should be more than obvious when we have entered the freegold monetary era.

Is it possible to be caught in a rapid transition scenario argued by FOFOA with some now ‘worthless’ silver (i.e. GSR 10,000) under a pure freegold scenario? Sure, but that is why I also have a lot of gold. Bear in mind the higher the GSR goes up in a pure freegold world (i.e. silver crashes and burns) the more leveraged I can achieve with converting gold back into silver in terms of the energy I can store for the long term. That is what is so interesting about this trade. Either side produces a winning hand, provided you have the means and knowledge to react to the opportunities that present themselves.

Besides, by my count we have been waiting for the arrival of freegold for some time now. Why not acquire more gold while waiting for the transition to take place? It’s a lot more interesting than just sitting and waiting for the kettle to boil. As far as I can see, as long as you always protect a good portion of your trading profits in physical gold you can’t go too wrong. I don’t do timing either.

At the same time I entirely understand pure savers that just cut to the chase and stick to buying only gold and don’t want to have anything to do with risk and timing. Perfectly understandable; if a nearly instant transition to freegold happens tomorrow or in the near future that approach is far better than what I’m doing. This is exactly where I started out BTW, with just gold.

For what it’s worth, I’ve also run into a lot of silver only people as well and I always tell them to make sure and buy gold. Besides I say, even if you like silver, freegold offers the best opportunity in lifetime to acquire more silver post freegold than you will likely ever need.

Gary (tEON) said...


Why not acquire more gold while waiting for the transition to take place?

I don’t do timing either.

These statements, in the same paragraph, conflict each other. You, obviously, are anticipating that a transition won't take place next week... or a day before you sell/trade your Silver. You obviously do 'time' with this GSR philosophy, whether you want to admit it to yourself or not. I'm not debating you whether this is a good bet or not ... just that it is a bet.

acquire more silver post freegold than you will likely ever need.

What do you suspect you will need Silver for, in the first place? Same thing the BTC gang says we might need IT for - some form of MoE? or do you have some other reason?

If you want to use Silver as a hedge, to buy more Gold - you don't need to convince us. All the silver you buy in this gamble is savings not devoted to physical Gold (despite that you already own some). No matter how you slice it you need to have totally traded all the AG right before FG. And if you have read FoFoA - you know that there is no way you can do that.. unless you get very lucky. So, I wish you good luck.

BtW, I think this:
To wake up one morning and find that I’m freegold multi-millionaire would be like a kid waking up Christmas morning,

is really the wrong attitude, IMO. I shuddered when I read this. You may not appreciate what the world will be like post-FG. You achieving, what you might consider, 'material wealth' may not be as joyful when everyone you know is desperately struggling... and you can't help them all. I suggest you beware of avarice... and unrequited desires. I frequently hope that things remain status-quo in my life - I'm employed and enjoying the benefits of exorbitant privilege. My practical side knows this can't continue but a part of me hopes it does. I fear the, potential, ugliness of a paradigm shift... especially in the west. I'd be very surprised if you actually did feel like a kid waking up Christmas morning.


Luke said...

But jojo I thought the entire theory was built around gold ALREADY being revalued at the highest level.

Sam said...

Only the printer of paper cares about the price of gold. People at the top leves only demand that gold FLOWS

Sam said...


If the flow is disrupted the two-tier price you mention will become one.

Luke said...

Why would the flow be disrupted at the higher end price? The whole point of it being a much higher price is to keep the flow moving. The higher end price is not a fixed price. If you are saying there will be a time gold will stop bidding for dollar because they are worthless, then it would follow that gold can only be "revalued" after HI.

Woland said...

Quid; meet Quo
"Iran cancels Pakistan Gas Pipeline Loan"

and from the dept. of "we're all connected" ………

Jesse links to GATA's link to Gautier - via Costata?

Greetz {;<)>>

Indenture said...

Luke: If the mines and recycling were supplying the necessary flow for Giants and now mining isn't profitable and weak hands have disgorged their holdings then where will the flow of gold come from the Giants demand?

KnallGold said...

And seizing the mines at this point in time would not be a good sell, all those poor hardworking miners etc...
Military action to go after Gold? No, we have cleared this.

The stuff must be available short term and that leaves now only GLD, right now at 827t's. JR speculated awhile back of 100t lots taken, so far it hasn't happened, at least not at once. Would a 100t withdrawal signal a nearing interruption of flow?

(@China: is there really an American flag on the moon?)

Luke said...

Indenture - My point is, existing stock must be flowing now at the higher level. Miners would not be going out of business if their flow was going to the higher level. The dollar price would only be going higher and gold will continue to flow. The only way existing stock would not flow is if gold completely stopped bidding for dollars. While dollars have value, a higher price will allow gold to flow.

I will add, I do not believe in the whole two tiered gold price.

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