"Gold is so old. Such a rich history.
An educated western mind cannot begin to understand it!
We live in a time of closed thought and controlled perception.
How could we have known that two thirds of humanity
would still think of gold as wealth?
It’s not that they are right or wrong to think this way,
it’s that we want them to work for us! That is the problem!
And when they worked for us we paid them!
And who in the hell would have thought that they would have
used so much of that pay to buy gold! Some bought in tiny amounts
and some bought in large amounts. This started with the new
world trading order that came into being about six years ago.
By now that gold is so spread out it would take 20 years
and 5 small armies to get it back, I think." –Another
An educated western mind cannot begin to understand it!
We live in a time of closed thought and controlled perception.
How could we have known that two thirds of humanity
would still think of gold as wealth?
It’s not that they are right or wrong to think this way,
it’s that we want them to work for us! That is the problem!
And when they worked for us we paid them!
And who in the hell would have thought that they would have
used so much of that pay to buy gold! Some bought in tiny amounts
and some bought in large amounts. This started with the new
world trading order that came into being about six years ago.
By now that gold is so spread out it would take 20 years
and 5 small armies to get it back, I think." –Another
Much of the Western gold flowing eastbound to China and down to the Middle East and India passes through Switzerland on its journey. And just last week, Switzerland released its import-export numbers for the first quarter of this year (h/t Flore). More gold flows into Switzerland than out, probably because Switzerland is a good place to store gold, but most of it just flows through. Currently, according to the data, gold exports are about 80% of gold imports. Last year it was 90%, and the year before it was 70%. But what's most interesting is where the flow comes from and where it is going.
More than 50% of the flow, about 270 tonnes in the first 3 months of this year, or 90 tonnes per month, originated in the UK. Projected annually, that's about 2,150 tonnes per year flowing through Switzerland, of which half is coming out of London. For comparison, 2013 was a little higher with 2,777 tonnes flowing through Switzerland, and 2012 was a little lower with 1,570 tonnes, which was down from 2011's 1,819 tonnes.
I can't tell how much of the 2,777 tonnes came out of the UK last year because Switzerland only started including information on its trading partners in 2014, but if it was close to 50% like this year, that would be about 1,390 tonnes. Adding the first quarter of this year's 270 tonnes, that would be about 1,660 tonnes drained from London in 15 months. For comparison, GLD was drained of about 560 tonnes. If all of that gold drained from GLD made a stop in Switzerland to be recast as kilo bars, then one could imagine GLD accounting for roughly a third of the London drain.
Frank Knopers made this nice chart yesterday, for his Market Update site, of where the gold flow is coming from:
But what's more interesting than where it's coming from is where it's going. 438 of the 537 tonnes, or 82% of the gold that flowed through Switzerland in the last three months, went to Asia, India and the Middle East. 281 tonnes, or 52% of the flow, went to Hong Kong and mainland China alone.
Apparently Mr. Chang still likes his gold, very thank you. So not much has changed, except that structural support is now negative, for the dollar and for gold. By the way, did you know that the same year the CBs ended their 21-year gold selling spree, Saudi Arabia made the single largest one-off purchase of gold by a CB? I guess that whole "special-deal-to-buy-time-for-the-dying-$IMFS" thing is over. It's almost as if no one is trying to buy time anymore, so maybe something really big has changed. Meanwhile, the physical is loaded up and truckin', eastbound and down.
Sincerely,
FOFOA
778 comments:
«Oldest ‹Older 401 – 600 of 778 Newer› Newest»@Jeff
“Freefiat is a policy of disdain.”
With all due respect, in my opinion, FF is too perfect of a system to be plausible in the Kondratieff spring and it is quite possible in Kondratieff autumn as a sign of FG degradation.
Cheers,
BA
I'm not sure how GATA comes to view todays renewal of the Washington Agreement as a "secret coordination on gold".
This is a publicly available policy statement, no more, no less.
And with that comment .... GATA promptly pulled the article. Not that I agree with GATAs hard money stance, but ...really?
Has anyone here read the book Capital in the Twenty-First Century by the French economist Thomas Piketty? It seems that it is becoming popular. Would like to get some opinions from the bright minds around here before I decide to buy it or not. :-)
Joe
Krugman gave it a glowing endorsement. :D
From what I know it is in essence Das Kapital as per Karl Marx, rewritten for the present day.
Hope the above helps inform your decision.
TF
Ps. Fwiw, I have a copy of both Das Kapital and Mein Kampf. I like the rule of knowing your enemy. ^^
I guess its not the book I'm looking for... I have a problem reconciliating environmental issues with capitalism. In principle I am all for capitalism and free markets (not the current "crony capitalism" though), but I cant really see how it can work in a future world subject to supply shocks in most finite resources. The consequence of rising prices will just provide the incentive to exhaust those resources even faster, while making most of the world population very angry for not being able to afford said resources. How can we avoid a centrally planned economy in such a scenario?
Joe
If you are looking for something to read, try here :
https://freedomainradio.com/free/
I think Practical Anarchy covers the problem of environmental degregation in the context of DRO's.
At the least it will give you some other angle to consider the problem from. :)
There are some other interesting books there too, such as On Truth.
Let me know if this helped. ^^
TF
Since comments are slow lately, here is a link to a discussion of the 4th Central Bank Agreement on Gold from the USAGold site.
http://www.usagold.com/video/20141905.html
and a portion of the summary of the half hour video:
"Yesterday (May 19) marked the signing of the 4th Central Bank Gold Agreement. While such an agreement appears superfluous as Central Banks have been net buyers of gold for 4 years now, and the limits on sales from the 3rd agreement were functionally meaningless, it was the statement that 'Gold remains an important element of global monetary reserves,' that caught our eye. Here in the US, and in western economies in general, we've spent the better part of most of our lives hearing that gold is a 'barbarous relic' that serves no functional role in modern finance. It would seem that Central Banks around the world disagree with such a notion.....31:29 Minutes, with Jonathan Kosares, Peter Grant and George Cooper"
Joe,
For a well-written account of how standard economics thinking doesn't deal particularly effectively with a world of finite resources, I would recommend these two
articles by Herman Daly. They are behind a paywall, but you may be able to access them via a University.
A book that I would recommend is The Wealth of Nature: Economics as if Survival Mattered.
That Greer book is awesome. And plus many for Daly. Herman Daly: Beyond Growth is one of the best economics books that I have ever read, full stop. It will only cost you a tenner or so and has everything in those paywalled articles.
http://armstrongeconomics.com/2014/05/21/demand-for-gold-in-china-india-collapses-by-55/
"Meanwhile, there remains the insistent forecasts of some who still argue that Gold, and nothing else, is going to $50,000 while retaining its full purchasing power, based on arguments on the Central banks balance sheets how they are accumulating Gold and SDR in their assets holdings. This of course is just insane. It does not even grasp that government is going in the opposite direction raising taxes, hunting money, and by no means would ever adopt a gold standard for then politicians would have to stop rolling out unfunded programs. This nonsense will continue to cause massive losses among the naive and once they lose their shirt, they do not return so easily."
Of course Armstrong is right en the poor FOFOA clan will wait for the $ 50,000 in vain... Good luck!
Perhaps Sir Martin should do a little reading in the FOMC
archives, and what Alan Blinder, Alan Greenspan and a Mr.
Edwin Truman had to say about the "felicitous consequences"
of an improvement on the asset side of the balance sheet.
Reading.......do you some, Sir Martin. {;<)>>
That Armstrong link sure seems a bit spiteful. Yes, of course the whole point is to continue spending, but the issue is what happens when said spending disconnects from goods available. They can raise taxes on income, reducing cash flows available to service debt, they can raise taxes on capital, but that will deflate the many asset bubbles. Or they can continue spending without taxing, bidding up the price of necessities until free income collapses and the bubbles deflate. And then what? ;)
"This of course is just insane. It does not even grasp that government is going in the opposite direction raising taxes, hunting money, and by no means would ever adopt a gold standard for then politicians would have to stop rolling out unfunded programs."
Yup, this insanity will simply continue forever, until taxes are 100% and all hidden money is found and seized or taxed.
There is no instance ever in history of a society reaching a peak in one direction, and a stunning reversal following...ever.
Do I even need sarcasm tags? xD
This is the level of stupidity that would explain a car always going in one direction, since it is observed to be currently going in that direction, with no thought to the processes involved or reason behind the movement of said car.
TF
Thanks MF, Totara and Dask for the reading tips. I will definitely take a look.
Cheers
Hey Frans,
Tell us more about FOFOA's gold standard.
Cheers
Martin Armstrong and his spite, if that's what it is, doesn't much concern me, but the ex-con man's unerring propensity to publicly commit unseemly acts on his straw man arguments does. He proves yet again that, despite all his semi-literate bloviations to the contrary, he doesn't adequately understand gold, the monetary system, or freegold. He can continue to go on and on ad nauseum about such things as Roman monetary history and ancient coinage, but he might as well be discussing the relative merits of the toaster oven versus the microwave for all the light he sheds on the matter at hand, namely, what will the next monetary system look like.
Meanwhile, even as profound changes are occurring almost on a daily basis, Marty Armstrong feverishly rips the clothes from his favorite straw man victim by pronouncing that there will be no return to a gold standard. This conveniently avoids the fact that, at least here, no such assertion has ever been made. It also conveniently avoids the fact that, even as the world won't return to some previous iteration of the gold standard, the world, (and that includes the U.S. Government, since its Treasury still possesses 8,000 tons of physical) never stopped prizing physical gold as its primary SOV.
In fact, things got so bad where physical was concerned, that some forty odds years ago, the paper gold market was constructed to keep the now thoroughly decrepit system from entering, once and for all, the annals of history. This bit of human endeavor is either unknown to Mr. Armstrong or he simply refuses to admit that it ever happened.
Sad to say, at least for Mr. Armstrong and those who hang on his every word, I'm just getting started on the shortcomings of what passes for his deep analysis of where we were, where we are, and where we're headed. However, further disquisition on Martin Armstrong's, sophomoric, inaccurate, and generally badly written diatribes will have to wait.
Marty's Contradiction?
Sympathy For The Devil
Bravo, DP! And there's plenty more (internal contradictions) like that if one can be bothered to look.
Archer
After 4 years of interested reading I have come to the conclusion that fofoa alone has a clear vision of the events unfolding. He got his clarity from some pretty insightful folks.
I think that the fact that other gold analysts have something to sell is the telling sign and the source of their blind spots. If one sells silver or miners or paper gold then freegold can't be accepted. It destroys the sales pitch. It destroys income.
Some writers just do not see the big picture. They understand the problems from a very technical point of view (Taleb and risk for instance) but they don't step back and see the foundation is cracked and policies and techniques that once worked are now less relevant.
I read lots of folks who have grasped much of the problem. I just have not read anyone else who can put it together like fofoa does....now if only he could work on his timing.
@Michael dV
+100
But timing will work itself out ;)
http://www.youtube.com/watch?v=BdWB5YY-UDs
Gold is hoarded in China. Max Keiser and Stacy Herbert report in the first 3 minutes, how Chinese prefer only silver to exchange for houses because they won't part with their gold, and why? Because it's a store of value unlike anything else among other reasons...
Very appropriate as 16 days seem to have have passed since one in 6.5 billion thought it worthwhile to make a comment here. But really it so OBVIOUS that all the hangers on here are waiting with baited breath for the moment of free gold and yet no one can give a comfort to these anxious souls hoping for fiscal redemption. Good luck. This is not even in the hands of the chosen banker few or the Rothschilds.
That is the 1st bit of Martin Armstrong Ive ever read. Anyone who mentions freeegold, 55k and gold standard in the same sentence clearly doesn't have the slightest clue as to what freegold is.
Martin Armstrong is a joker.
Dear FOFOA
Greg Hunter on USA Watchdog wants to get in touch for a possible interview.
http://usawatchdog.com
Greg is a very sympathetic and honest interviewer.
http://gizmodo.com/the-world-is-running-out-of-gold-1579512815
May 21, 2014 Short article combining nice photography, original gold research
Having read all the important and interesting articles by FOFOA (and being deeply impressed by them), I nevertheless have come to the conclusion that FOFOA's theories are wrong. It is just what it is: a theory, with zero backup.
I started to smell a rat after finding out:
1. FOFOA has no clue what causes hyperinflation;
2. FOFOA has no clue about basic economics;
3. FOFOA has no clue how markets work;
4. FOFOA has no clue about capital flows;
5. FOFOA totally overstates the 'value' of gold and it's future importance.
The harsh truth is that Martin Armstong's insight is by far superior to FOFOA's, which can be easily proven: Martin's predictions are mostly 100% correct, while the events FOFOA is predicting do not happen (and will not happen).
Of course the FOFOA fans - arrogant as they are - will jump all over me, but hey, that's no problem. If there is ANY truth about gold lovers, it is their sheer inability to being OBJECTIVE :-).
My final comment: forget $ 50,000 gold, it is total and utter nonsense. The only reason you are here, is that you hope you will be rich. Just admit it :-).
Hey Frans,
Since you call for introspection, how about a little dose for yourself. Perhaps you can admit it takes an utter fucking freak show of a human being to go out of his way to post a drive by on a blog it obviously disagrees with. Why your at it, why don't you hold your breath in anticipation of one of us showing up on your favorite blog, or Martin Armstrong's, to spew forth the virtues of Freegold in contrast to your favored viewpoint.
Get it you sick fuck?
I even forget the most important FOFOA mistake: the euro project. If you cannot grasp that the euro is in deep trouble and an accident waiting to happen, well, you simply have no clue what you are talking about.
For the arrogant FOFOA diehards, just a very simple article that shows how incredibly ignorant you are about the dollar and the euro:
http://armstrongeconomics.com/2014/05/22/historic-trade-deal-russia-china-will-this-dethrone-the-usd/
So I read all of the material here and was deeply impressed even though it is all nonsense? Go away!
@ Knotty Pine: start reading armstrongeconomics DOT com and be REALLY impressed. It will open your eyes and give you a clue about who REALLY knows what he is talking about.
It would be very interesting to host a 3 hour discussion between FOFOA and Martin Armstrong. As I have read almost EVERYTHING both gentlemen have written, I know the outcome will totally disappoint you: Armstrong will easily win this discussion.
Smit, the difference between you and those on this blog is that you appear to already know everything.
Frans,
You and Martin Armstrong certainly have a right to your own opinions, and I don't think anyone here, including FOFOA considers Martin clueless.
Yes, we do on occasion challenge one another, as well as those outside the scope of the Freegold lens.
If there's a particular point you can cite, to back up your 5 contentions above, I'd be willing to counter argument it, time permitting, as I disagree with each of them, but these are bold statements with nothing backing them but "go read Martin Armstrong".
Touche to that, as some here will often end with nothing more that "reread effing FOFOA".
But will spar with a valid counterpoint, even on a bad day.
Happy Trails
- R
"As I have read almost EVERYTHING both gentlemen have written..."
Well, then, Smitty, why don't you seem to understand it?
Not sure...
… but now on a serious note (rather than Smitting away): Govt's have the power to confiscate wealth by taxation, inflation, emergency measures. When forced to chose between (1) letting go of their system and their power or (2) saving the system and their power by letting existing wealth pay; they will take the latter avenue. Q: When will that avenue cease to be viable? Knowing that timing is impossible, I rephrase the question: What will block that avenue?
Yes, I am aware that a (partial?) answer is "when nobody supports the dollar anymore". Which is the previous post. As we all know, the void left by Russia and others is suddenly filled by… Belgium! Apparently, the dollar has (many?) emergency exits we didn’t know about. Which brings me to the question: How viable is this emergency exit, and what other emergency exits could there be. (Shouldn't we ask the FED?)
In more relevant news, it appears that the withdrawal of foreign support for the dollar is accelerating at a pace a bit faster than "slow history" prescribes ... as in "gradually at first, then, all at once".
I'm sure I don't have to post the dozens of links proving this point that the "understream" media provides.
Seeing that the current Gazprom deal with China was ten years in the making helps to underscore the pace at which global change proceeds.
That, and the fact that a 30 year "deal" crossing over into a new paradigm is quite a ballsy move. If a gold collateral kicker is not embedded in the fine print, I may have to investigate the darkest corners of the wine cellar to find a most unusual vintage ...
- R
Dr. Boer
Are you familiar with the concept of the Laffer curve?
While there is some argument of the value of the point of decline, the concept itself is sound.
That takes care of taxation.
As to inflation...well there are limits too, which if not respected leads to loss of confidence and hyperinflation.
As to emergeny measures...that is what remains. Belgium( rather the euroclear system which is doing the buying) is most likely a front for the the Fed itself. The problem here is that at some level of base level creation, the monetary and physical planes diverge. So again limits exist.
Hope that helps.
TF
Dr. B,
The only exit the dollar has is it's own supporters, namely and primarily not much more than it itself. So to answer, "how long is the circular shell game viable?"
I would suggest: "until a competing system is ready".
As I have often stated, globalism has no competition in it's current form on planet earth, because it encompasses all of planet earth. Globalism is the ultimate monopoly with ZERO competition.
However, smaller systems can decide to break free from it, and challenge it on a smaller scale.
This has begun.
- R
Motley,
I'm sure you've probably at least skimmed the Brandon/ alt/ ZH precept that the euroclear system is a front for the Fed, IMF, BIS, ESF and all other nefarious dark forrrrrces combined (it appears ZH will publish anything these days) but it brings up a point worth repeating.
The BIS is not an advocate for Freegold. They, and their mutual interests, will do all to support the FIAT advantage for as long as possible, in any way possible, short of nuclear Armageddon (if possible).
They merely understand the inevitability of Freegold, despite and and all measures to delay it.
At least that is my understanding of the matter.
Will
"The BIS is not an advocate for Freegold."
I think Another disagrees with you there. Myself you can put me in the 'maybe/maybe not' camp.
TF
"Martin's predictions are mostly 100% correct"
Except his biggest 'miss' - predicting that he'd rub the system the wrong way resulting in his own lengthy incarceration. Bet he wish he knew that was coming... and altered course (as he has, kowtowed, and done in recent days).
tEON,
An obvious plus 1 there
Motley,
A fine line eh?
I have always wondered about that. And of course any body of people is bound to have divergent views within it ranks.
Both the BIS and EU, yes?
- R (or Wil if you prefer :)
Seems as though somebody missed it so I will repeat. Martin Armstrong is a joke.
Martin Armstrong has come out with this shocker – Dow 32,000 by 2015! His reasons are quite simple. The rest of the world is crumbling, even China. As a result, the money is flowing to the US. Where’s it going? Treasuries and the Stock Market.
^ Funny how people get bullish at the top. Top ticking USA Inc. How insightful..
Roach: Thanks for your double response. Permit me to digress on a particular point: the point of taxation. Yes, taxation on income is limited (thank you for the Laffer curve) but there is also (anyway for us Europeans) a host of indirect taxes such as: VAT on almost every purchase (all prices in shops are +21%; shop-keeper pays back to gov't); tax on your home (€ 1000/year); 1,2% tax on your savings (1,2%/y); tax on your car (€ 52/month); excises on gasoline, alcohol, tobacco, cars, soda's.
Revenues from indirect taxes surpass the revenues from direct taxes: k€ 74 vs. k€ 46 (data The Netherlands, 2013). What's the limit for indirect taxes?
The limit is within your control. You don't have to buy a home, car, save in currency, buy alcohol, tobacco. These are voluntary taxes on those who can afford to pay them.
Poor people don't pay them all, do they? Get in touch with your inner tax avoider, put down the smokes and take a walk; you'll live longer.
Apologies to DP, as I understand he is required to drink expensive wine on doctor's orders. But for the rest of you, that's a voluntary tax.
Jeff, "Voluntary tax", LOL!
If someone didn't drink wine or drove cars or lived in houses .gov would just tax breathing and shitting.
Tax is only voluntary in the sense that you can choose to stop breathing (forever), then you'll be free of taxes.
It's true, if I don't drink at least moderately expensive wine every day something bad will happen to someone.
Because cheap wine makes we real cranky. You wouldn't like me when I'm cranky.
DP,
The alcoholic/ex-drinker in me is "green" with envy.
I'm sure you'll find something else to fill the time and burn through all that green you're saving.
+1 Burningfiat. Someone needs to lose their (not so) inner commie.
Dr. Boer
The Laffer curve as concept does not refer to any specific form of taxation. It is rather a matter of human nature.
If 100% of everything you earn is taxed...well fuck working. If 99% is taxed, see above.....
I agree that most people are not too attentive to calculating how much taxes they pay when all forms are added... however...if you see for example only 10% of the value of your nominal salary....you don't need to be a rocket scientist to figure out something is fubar.
@Jeff, it is way beyond such simple response imo. Drivers licence - tax, tv licence - tax, VAT - tax on tax, Capital gains - tax on tax, etc.
Take the time and add up all the things you pay to conform to government regulation. Consider that you pay that out of income that has already been taxed. Do some sums...you will be amazed at what your real rate of taxation is. :)
TF
burningfiat
The problem with that is that if you stop breathing you cease being you and so the question of taxes becomes irrelevant. This is no freedom that you attain, if you do not exist.
TF
BF,
Sounds scary! However, until those luxury homes, cars, and fine wines go wanting for buyers I won't live in fear of the Bodily Function Tax. It seems the people with the means to buy them agree with me, you see, plunking down wads of cash and (happily?) paying the tax. They don't seem to want to avoid it badly enough to (gasp) rent a home, fly coach, or drink domestic. They certainly haven't decamped for a low tax paradise like Zambia, UAE, or East Timor:
http://www.therichest.com/expensive-lifestyle/lifestyle/the-10-countries-with-the-lowest-tax-rates/
But keep your eyes peeled for those dastardly commies...you know what to do if you find them!
https://www.youtube.com/watch?v=sglyFwTjfDU
DP,
Yes indeed. For the insidious mass of insipid derivative foliage will soon burn as an unquenchable inferno in the midst of a raging flow of hydroponic intent.
This we learn from the flower of understanding.
Jeff said:
It seems the people with the means to buy them agree with me, you see, plunking down wads of cash and (happily?) paying the tax. They don't seem to want to avoid it badly enough to (gasp) rent a home, fly coach, or drink domestic.
Yeah, but just because I go out at night sometimes, doesn't mean I happily have to enjoy the butt-rape I happen to receive in the dark alley on the way home. And it certainly wasn't voluntary!
I don't do anything to commies, I'm just an observer in that regard.
Now what commies in power do to the citizens who happen to be productive, that my friend, we could write long posts about...
You sound like AD or his sidekick Desperado, but when those uber-capitalist supermen like Buffett got in trouble as their wealth went up in smoke, who did they run to? Big daddy government. Yes, we're all communists when the chips are down, for a good reason. FOA showed us that very clearly.
Better to ask yourself whose ideology you're buying into and whether it serves you or someone else.
Then you sound like Ash or something?
I'm very much down with FOA and the whole human tribe thing. A good currency should serve all its users.
Nothing you can say are going to make me happy that I need to involuntarily deliver 70% of my income to the grubby horde instead of handing it off to productive members of society who actually made some stuff I found worth buying.
We could also write long posts about the many exterminations that were carried out by commies. All piously done in the name of some holier than thou art rationale. You can readily identify leftists by their moralistic bleating, as being holier than thou art is the 'tude copped by all leftists, said 'tude being readily observable in Jeff's comments in this very thread.
What should one do with a Red
Some say they all should be dead
While that seems a tad cruel
It might be quite cool
To send them to Neptune instead
Ah Nickel, the flower. I remember that scene well. I had thought the mere mention of it was a curse upon this blog, even though it has NOTHING to do with any illegal substance (outside of Denver) but rather it is merely a metaphor for the knowledge imparted by FOFOA's garden of wisdom.
Also, btw, I really own no gold.
;0)
Sorry Wil,
I thought it was trASH your fellow cult member day.
My bAD
I'm being facetious and sarcastic of course - don't feel trashed at all {smile}.
But I still don't have any gold ... really.
In any case, no paper trails to this roache ...
The nice thing about freegold is that the Commies and the Nazis don't have to fight over the injustice of the currency system anymore. They can concentrate more important things like whether it's better to subordinate the masses via social welfare or simply sterilize them so that they don't reproduce.
Isn't life grand?
@ Wil
I don't have any gold either ... really, particularly if the swat team from the Secret Service is monitoring this blog (or for that matter the swat team for the Department of Agriculture, or the Railroad Retirement Board, or the Tennessee Valley Authority, or the Office of Personnel Management, or the Consumer Product Safety Commission, or the U.S. Fish and Wildlife Service).
How about paper gold and physical gold both tanking when the Super Organism unleashes Focus Fusion on us. A meritorious achievement in anybody's book. Another and FOA could not have anticipated this graceful exit from their golden nightmare. Take a peek and then go ahead and turn a bit of that old Element 79 stash into Element 74 for this world-historic cause. https://www.indiegogo.com/projects/focus-fusion-empowertheworld--3/x/7616742#home
And the I. R. effin' S. With all this talk of taxation, the half gram I was holding I threw into lake Talquin, and made a wish for Freefiat.
Happy Trails!
- R
@ dragonfly
before I click on your link will it somehow explain how the world won't need settlement and savings? If so I suppose ANOTHER and FOA didn't anticipate that at all....human beings have wanted to settle trade, go into debt, and or save their excess production since the beginning of time up until today. Our next monetary system will use physical gold to achieve the savings portion of this human need that is currently being poorly maintained as overvalued debt instruments. What we use for energy doesn't have much to do with that I'm afraid...although I'm also going to say for the record that there isn't a doubt in my mind that we will be using oil and gas for quiet a long time into the future.
DF
try alchemy.org or transmutation R US. A nuclear reaction can create new elements I don't think crowd sourcing or wishful-Tesla-thinking will get us there. Gold seems safe for now...though stars form and die all the time...maybe that new big meteor will have some goodies in it.
Is that the truth, er, the whole truth, er, and nothing but the Truth-er? It is need for every man. you are rite. Fifa World Cup
On the strength of a recommendation by Trail Guide, I bought a book last fall, entitled "A World In Debt", and written by Freeman Tilden. It was published in 1935, but was privately
re-printed in 1983. Fofoa cites it in "A Reply to Bron".
Trail Guide:
Hello Elwood; you write,
Was Freeman Tilden truly correct when he wrote the following
in his book, "A World in Debt?"
"Nothing, has been more amply demonstrated during the past
three thousand years than this; That the great majority of
men do not esteem, or understand, or even desire personal
liberty. What they value is the semblance of liberty, coupled
with indulgence."
"Oh boy! Tilden said it right..........
I can say that, having read the book, and after sharing it with a friend whose opinion I value, the other 268 pages are equally worthwhile. In the ( unlikely ) even that you would like to do
the same, I think that can be arranged via a PDF, unless it
would violate copyright laws. {;<)>>
Woland,
What you have quoted here seems to me to be the great difference between the "great majority" and the "evil gold hoarding jerks, et al".
I for one have foregone much indulgence over the years (it's called personal discipline) in order to acheive the truist form of personal liberty obtainable.
And of course the reward for this is in no way "materializes" in the fashion of our derivative world masters. It is more a spiritual, personal form of enlightenment.
No doubt, that corporatist narrative both incemtivizes and rewards this "semblance of liberty, coupled with indulgence" and therefore most do aspire to that end, in that circular nature of rewarding the behavior you want repeated.
But liberty is not the easy path, by which easy money clears the way.
Our forefathers new this, and many died for it.
To what extent we give our lives over to this paradigm defines the slow death of a nation, or the sprirtual re-awakening of personal liberty.
We live in an age of personal empowerment through technology.
I remain hopeful ...
@Woland
1935. What copyrights?
I'm not a lawyer. Just a commenter. Don't know what rights
may exist under the 1983 reprint agreement with (any?) Tilden heirs. Greetz!
Anyways.... With all the articles on ZeroHedge recently which prove that the paper gold price has been manipulated , by the banks own admission, does this not make GATA right all along about this ?
I recall a couple years ago people on here were kicking GATA around about this. Think what you want about them but in this particular subject, it looks like they are right.
@M
I recall a couple years ago people on here were kicking GATA around about this
The rub against GATA (Murphy and Powell) has to do with them being hard-money advocates... wanting a return to Gold Standard. FG'ers understand the flaw in this stance. GATA also will link posts to almost anyone suggesting a rise in the paper price of gold. The general consensus here is that the paper price should really only be irradiated on the downside.
Re: 'Manipulation'. As Rickards states - it is obvious that the price of gold is manipulated by CBs. And you can take the meaning of 'manipulated' in many ways (paper disproportionately traded?). So GATA are really tilting at windmills and haven't done anything for gold advocates - except incessant whining... which does nothing. They also indirectly endorse mining shares (AUM is Bill Murphy's biggest holding - a stock that has gone from $7.00 to $0.63 in the past couple of years).
Looking at this practically, what have they accomplished? Sounds like those who were 'kicking GATA around' were in the right. Just because you see some headlines on ZeroHedge don't think it will evolve into imminent changes. Zerohedge has their own agenda inferring, such things as, a Euro collapse. And again, FG'ers know different - and will continue to be right about that one as well.
'M' I thought you were aware of all this - you have been around here a long while, no?
tEON,
An excellent answer to "M's" (playing the devil's advocate?) question. It does get old, this "re-proving" over and over of something any "jerk" already knows.
The more salient question is, "what does this continuing admission of manipulation in "Libor, Shibor, and Gold - Oh My" portend"?
Oh, I think I can hear them in the coming H.I. saying, "You wanted free markets, well, now you have them - see what you've done?"
And the rich and powerful will be exonerated as they "teach the little people" the wisdom and power of their manipulations for the good of all, once and for all!"
But the derivative world of managed expectations can only serve the systemically important for as long as the little people agree to serve as slaves to the fanasy.
Indeed, forever if they could.
Alas, the real world beckons ...
I wonder if there is an alternative to hyperinflation if the Rest of the World co-operates. May be something like this. If this is the case we may be at a position analogous to 1966.
http://666kb.com/i/conuixd5w82rtu5b9.png
Of course there is a real possibility that, this is not the case and the market experiences a "phase transition".
The wisest approach I can construct is that, one should be materially prepared for a phase transition, while mentally prepared for a drawn out resolution.
If the 1970s scenario plays out and if I were orchestrating this circus, I would mark up the paper price now; then wait a couple of years for the manufactured oil shock. Who knows? We'll see!!
I just finished chapter 6 of Rickard's The Death of Money.
I started taking notes in areas I thought might be interesting differences between what Rickards sees and what we see here.
I gave up.
This book is far more detailed than Currency Wars. It is a great summary (so far) of the various world monetary players, their interests, allies, strategies and possible moves.
I still may go back and try to formulate a he says/ we say kind of comparison but a summary is out of the question. There is just too much detail and seeing how it all fits together is key.
So you'll all just have to read it yourselves if you want to know more than just what the title.
I enjoyed CW, it was an easy read. This one is more detailed and one can't just give it 'easy Summer reading' treatment. I think I'll be better informed when I'm through. If the remaining chapters are as good as the first 6 it will be one of the best monetary system analyses I've read.
Just finished chapter 10. Unfortunately Rickards has not altered his view on the gold standard. Even more disappointing is the fact that he has not discussed the structure of the balance sheet of the ECB. He sees a possible gold standard but it is still in classic form with gold at a fixed price.
He says gold is not a commodity but seems all commodities following gold in an upward rising price scenario. Somehow this does not result in hyperinflation…just 600 oil.
His failure to address gold revaluation and mark to market gold on central balance sheets is a glaring omission from a freehold perspective…and a glaring omission from anyone addressing new monetary system structures.
His faith in the IMF's ability to sell the SDR is also curious…why does a world recently jilted by paper wealth suddenly decide to trust the SDR? Jim makes it seem a conspiracy of central bankers anxious to save the system could make it happen. Maybe if there is so much weakness in the producers of the world they might be willing to go along…after all the result of Genoa 1922 and Bretton Woods 1944 were not exactly intellectually perfect. Things can be adopted in a panic that do not work out in the long haul.
My view remains the freegold view. The Euro was structured they way it was (and by some of the very people Rickards quotes) for a reason. Rickards sees the Euro is stronger than generally perceived. He should spend more time thinking about why that is.
…if the last 2 chapters are worth it I'll post a final review later.
The book is definitely worth reading for historical perspective alone. It cleared up the role of several players and constructs that had been only vaguely understood by me. He is obviously smart and has been around. He should come around here and at least defend his ideas to this group.
The latest note from Epsilon Theory, while not gold related specifically, is very interesting. It looks at "common knowledge" and how long the market can go on before breaking, http://www.salientpartners.com/epsilontheory/notes/When%20Does%20The%20Story%20Break.html
Michael dV
I have read and thought about both books you reference and found them well written. I'll be interested in your comments after you digest the last chapter. The end of the book is thought provoking via proposal of potential dominoes (black swan events - in his opinion) that might severely impair global confidence. Those seven or so events in political & financial discourse offered in the book (and there could well be others) as catalyst for major global economic change may well ripen the environment for RV and FG to emerge.
Best regards..........Aurora
Aurora
still a few pages from finished.
JR does not consider some issues we here consider very important.
We see the Euro as a challenger to the dollar. He does not consider it even though it is the currency of the largest block in the global economy and is now maturing. The ECB has a relatively clean balance sheet.
More importantly JR clings to the classic gold standard and uses the silly 163,000 tons of gold stock to do his calculations for a future price of gold. That is silly because it seems obvious that it would be the amount of gold that could be mobilized (the flow) and not the existing stock that should be considered.
Even more importantly he utterly fails to see the way gold could be used in the future to defend a currency. A/FOA noted that gold used in this way (at FG prices of course) is a much more powerful way of protecting the value of a currency that using it at some declared value.
He also seems to assume that countries will behave in the future vis a vis printing currency to excess, than they do now.
This is disappointing as these are glaring facts that NOBODY sees! The structure of the largest currency group on the planet is assumed by Rickards and every other gold and monetary writer to be 'just like the fed'. It is not and failure to make this observation has led to much confusion.
To JR I would strongly suggest he at least consider reading a primer on FG.
It has been said that JR just doesn't want to confuse readers with the details and that FG is just too many details.Well now he has had 2 books to detail any concerns he might have with the topic and he has said nothing.
Just because FG is considered marginal (OK nonexistent) by many does not refute the arguments contained in it.
Those who fail to address these issues will be caught flat footed when that last snowflake hits the pile and Rickards avalanche starts.
Michael dv,
As a longtime A/FOA/FOFOA student, I also do not agree with JR specific hypothesis of where this all ends up. His immediate goal is to sell books, our goal is to survive the pending hurricane. However, his snowflake analogy may have some merit regarding instigation of the FG phase change we all await and anticipate. Failure to deliver physical somewhere is going to be a problem. JR is well educated and politically connected, and his perspective from a "catalyst" stand point may have validity, even though we all subscribe to a different outcome regarding the one time upward revaluation of physical gold price (only) and the FG implementation we discuss here.
Respectfully. Aurora
Aurora
I think missing the significance of the Euro is a glaring problem. The Euro is an international currency, it is uniquely structured and was only recently introduced. Why was a new currency created? It was a lot of work just for 'harmony'.
Of course it is not just Rickards it is EVERYONE!!! (cept one unknown non-proselytizing blogger). It is the elephant in the room.
I have yet to read a single gold genius who has even mentioned or alluded to the fact that the Euro has a different structure than the fed. It's international ownership and management is not discussed either.
I can accept that FG is a tad wonkish and yes may seem cultish...but to ignore these very important factoids is just something I find hard to understand.
Is there a conspiracy of silence? Is this something 'all the big guys know but just don't talk about?' I do not think so. I think it is a major element of the coming monetary system hiding in plain sight.
Besides JR should know that his ideas for gold in a new system are really just a gold standard in a cute new dress. The world will not allow it's economy to be dictated by the availability of gold rich dirt. Fiat is here to stay. Storing wealth is what will change.
However, his snowflake analogy may have some merit regarding instigation of the FG phase change we all await and anticipate.
I wonder where I first heard that snow pack analogy? Oh, that's right. FOFOA used the same analogy almost four years ago.
FOFOA said...
...The best analogy I can come up with is a steep, avalanche-prone ski area. The ski patrol knocks down some of the snow after every snowfall. Because if you let it pile too high, and get packed, the whole lot will come down all at once. Either by gravity, or by a ski patrol cannon, or by skier, or by a deer farting. Any way you cut it, it all comes down if there's too much of it packed on the mountain. Gravity does all the work.
This snow pack is to the mountain what global debt is to the dollar. There's no way to do a centrally controlled devaluation of the dollar at this end stage of its life. It prices and denominates too many things, too many contracts, too much debt in the world today. This is the real essence of the dollar. Its "unit of account" function is, not its medium of exchange quantity.
And the physical plane that underlies it is completely unaligned with this precarious 'snow pack'. It is not representative of reality, therefore it has no sticking power. It's ready to come down on its own, so shhhh... be quiet and very still and let's hope the wind doesn't blow.
June 9, 2010 at 12:17 AM
@ tEON
Why the hell doesn't Apple's safari work with blogger.. uggh, I wanted to reply to you so bad but I couldn't.
"The rub against GATA (Murphy and Powell) has to do with them being hard-money advocates... wanting a return to Gold Standard."
That's not what I was talking about. There was some people here , that were saying that GATA was wrong about the way they thought the paper markets were being manipulated. The FOFOAns were saying that the slam downs in the paper markets had something to do with the GLD, the pukes or something. I don't know the details but that was the gist of it.
" So GATA are really tilting at windmills and haven't done anything for gold advocates - except incessant whining... which does nothing."
I don't agree with you here. They put in a freedom of information request against the Fed. They had some good segments on RT. Nothing wrong with these guys.
"They also indirectly endorse mining shares (AUM is Bill Murphy's biggest holding - a stock that has gone from $7.00 to $0.63 in the past couple of years)."
There is nothing nefarious about gambling in the mining shares if you want to. And if the price of his shares tell you anything, it is that the price of paper gold is way below the production cost. I am not sure as to why it is purported here that the price of gold is at the cost of production. Any arithmetic I see suggests strongly , that the price of gold is below the price of production.
" Zerohedge has their own agenda inferring, such things as, a Euro collapse"
I am on Zerohedges ass all the time about their anti Euro BS. How anyone can compare the US and EU and claim that the dollar is "the cleanest dirty shirt" is delusional.
@all commenters
Premises:
1.) Russian oligarchs seem to be banned from buying gold outside Russia even at FG prices.
2.) The situation in China is as ominous as reported with all that bad debt failing and freeing up collateral such as gold to flow in larger amounts within its borders. As a result, lesser imports are required.
3.) It looks like gold for oil deal between Iran and Turkey is going sour and Indians are still heavily taxed for buying gold through the official channels.
4.) Confidence inflation still goes strong in the West.
Result:
Moar gold for the Saudis. GLD, London gold market, COMEX survive to live another day.
Where am I wrong?
@ Roachefork
"An excellent answer to "M's" (playing the devil's advocate?) question. It does get old, this "re-proving" over and over of something any "jerk" already knows"
I find the balance of payments, bond market, history, oil and Euro side of freegold more interesting then the paper, derivatives, forex, GLD, side of the subject. The latter is more complicated, it doesn't follow any historical precedent and its more conspiratorial.
So yeah, I am playing devils advocate but I also don't get too involved in the aforementioned.
I am pretty sure though, that some FOFOAns were basically saying that the paper gold market was not manipulated full stop.
Bright aurum,
Source for number 1?
Unrelated, Draghi speaks:
http://www.nytimes.com/2014/05/27/business/international/president-of-ecb-warns-of-euro-zone-deflation.html?hpw&rref=business&_r=0
"The Governing Council is still debating what action to take, Mr. Draghi indicated. But all the members — the central bank governors of the 18 countries in the euro zone plus the six members of the central bank’s Executive Board — agree that inflation is too low, he said.
“There is no debate about our goal,” Mr. Draghi said, “which is to return inflation toward 2 percent in the medium term.”
@ Brite arum
The London gold pool lasted from 1961 to 1971.
The classical gold standard lasted from 1873 until World War I(43 years).
The gold exchange standard between the two world wars(21 years)
The Bretton Woods 1 system from 1944 until 1971 (27 years)
Since 1971, the entire world has been on the Bretton Woods 2 system or the dollar standard.(43 years and counting)
The LBMA started in 1987 to present (27 years)
Historically are we overdue for a change are we not ? Or does the state of affairs in the world today indicate that the system should last longer this time ?
@M
They put in a freedom of information request against the Fed.
And why do you think that was a good thing?
Do you think 'exposing' the CBs - you will somehow get Freegold?
You seem to be falling into their trap thinking that the Fed is your enemy. This isn't far from the Silverite stance... "we vs. they - and we'll win - the common man will rise up against the evil banksters!" Not.Gonna.Happen.Like.That, 'M'.
I actually see GATA as defenders of the paper price. That same paper price that needs to separate from physical. Logic says it will do it on the downside. You can't get a little pregnant. They whine when the paper price drops citing physical demand stats like CB purchases or coin sales. How out-of-touch is that? Tell me that they have not yet realized that the two (Phyz-demand / paper-price) have almost nothing to do with each other.
'Manipulating' can simply mean massive disproportionate paper trading. In that case you would have to say they are manipulating it up - not down So let's use the word "Supported" (I prefer the past tense). The paper price - that controls price discovery - should be zero, not $1200, not $1000, not $700... ZERO. Then it won't denominate the physical price - the marketplace will. Tada.
There is nothing nefarious about gambling in the mining shares if you want to.
No, just plain old bad advice. Perhaps they should have listened to A/FoA/FoFoA the past 17 years. Doncha think? How about the entire Gold community in on that one, too.
Nothing wrong with these guys.
Well, nothing wrong with them that a good RTFB kick in the ass wouldn't do to help straighten out their delusions.
And let's ditto the mining calls with the paper price drop the past two years. Only one respectable blog I know, predicted it (essentially his only one regarding timing and it was a multimillion dollar prediction if you were a gambler).
Previously on this Blog somewhere, I've already listed all the GATA-esque proponents and their miserable failed predictions (Turk, Sinclair, Embry even Hathaway - all grinning at the GATA Gold Rush Conferences like too many clowns exiting a mini-car in the center ring). Saying it will come true - won't make it. Any practical investor should classify these guys as 'TOTALLY out of touch'. And you can put Sprott in that category as well (although it's his business model to extol, even short-term, AU and miners.) Misinformed or salesman (you can choose) - all in support of each other. I don't know exactly how I would classify GATA - stubborn?, irrational?, idealistic? but I suspect their following is dwindling with all their misunderstandings... and Gold-Bug propaganda links.
It will be a little more encouraging if we see some widening of buy/sell spreads for the shrimps` physical, while both go an inch higher in comparison to POG in the USD ,Br. Pound, Yen world, will it not?
@ G. tEON
+1
Who pays GATA?
Not the goldbugs for the game they are.
Wow Jeff,
That's a serious blow to VtC's FF premise.
@ Nickelsaver
It is far more important to see what Draghi does. The $IMS gives pretty little wriggle room for any kind of „positive“ currency manipulation.
Pointing out that silver hasn't been a monetary metal since China quit in 1935 hasn't lessened the enthusiasm of silverites.
Pointing out facts about the euro does not seem to change the conversation about the way it will evolve and be used.
I am at the point of just not caring what others believe. I cannot save them with facts or logic. I can only observe and even that is becoming a chore.
How about the European CBs restoring their gold holdings to the maximum point after the gold pool ended. They are certainly allowed to do that. Ah, I must be daydreaming!
Teon, you paint with a very broad brush.
@ eON
And why do you think that was a good thing?
Do you think 'exposing' the CBs - you will somehow get Freegold?
No. But as a result of it, we got the 100 to 1 comment out of Jeff Christian which helps in understanding the paper market a bit. I didn't see anything wrong with it.
" I actually see GATA as defenders of the paper price. That same paper price that needs to separate from physical. Logic says it will do it on the downside. You can't get a little pregnant. They whine when the paper price drops citing physical demand stats like CB purchases or coin sales. How out-of-touch is that? Tell me that they have not yet realized that the two (Phyz-demand / paper-price) have almost nothing to do with each other.
'Manipulating' can simply mean massive disproportionate paper trading. In that case you would have to say they are manipulating it up - not down So let's use the word "Supported" (I prefer the past tense). The paper price - that controls price discovery - should be zero, not $1200, not $1000, not $700... ZERO. Then it won't denominate the physical price - the marketplace will. Tada."
You have probably seen the charts that show thousands of COMEX contracts dropped onto the market in seconds that results in a drop in the paper price. How does this support the paper market ? Why are they doing this at all ? If the price of paper doesn't matter ? Westerners will not hold an asset that is not gaining in value in paper terms. Apparently they know this. Volker says that it was a mistake that they didn't control the gold price in the 80's.
"No, just plain old bad advice. Perhaps they should have listened to A/FoA/FoFoA the past 17 years. Doncha think? How about the entire Gold community in on that one, too."
Some of these guys have made killings in the previous "paper/physical" bull markets in years past.
"And let's ditto the mining calls with the paper price drop the past two years. Only one respectable blog I know, predicted it (essentially his only one regarding timing and it was a multimillion dollar prediction if you were a gambler)."
The price of paper gold went up for 12 years before it went down. Any chartist or contrarian can say something is going to go down just because it went up.
@ Brite arum
"It is far more important to see what Draghi does. The $IMS gives pretty little wriggle room for any kind of „positive“ currency manipulation."
The Euro's biggest near term threat is political. If the European people are not made aware of the positives for being part of the Eurozone, then they will no longer want to be a part of it.
This is the problem with the ECB and BIS letting the IMFS die a slow death. It appears that the IMFS will out-live political support for the Euro. They will have a choice to make. Either the nuclear option against the IMFS or watch the Euro project get consumed by populism and nationalism.
It would not surprise me to see the Europeans give up the whole Euro project just to afford the US a few more months of expriv.
Why are they doing this at all ?
To generate currency. It is being done in all markets. Does it affect you? Are you a paper trader? The fact certain things are visible should be a sign to rejoice as it is closer to ending than ever before.
Know it will end. Know that all paper will burn.
"The current system is old and fragile, like a crumbling edifice with minimal, but necessary, structural support.
"If you hated our last one (system), you will no doubt hate this new one, too..."
A FG scenario is not going to transpire like things played out like the 70s.
Unfortunately, GATA and the rest of the Gold community have lost credibility by not understanding some basics of Gold that FoFoA has been interpreting and writing about for over 5 years. I don't have much sympathy for them. They offer nothing new - it's the same (incorrect) story they have been touting for years. It just seems so impractical and... rigid. They want to squeeze the square peg into the round hole. If you have been here soaking up knowledge feel both fortunate and privileged. Appreciation to the host is always a great gesture.
Regards,
Schaeuble lives!M,
not as long as Schaeuble lives! Hope he does, he and Helmut Schmidt have THE insight.
Nickel,
I don't think so. Parsing every statement, picking out the useful bits and extrapolating them into the future to bolster a theory is playing Victor's game. I take the statement at face value; Draghi is talking about the medium term in the current arrangement. I don't see anything that points to orthodox freegold or heretical thought here.
@ tEON
To generate currency. It is being done in all markets. Does it affect you? Are you a paper trader? T
It is not being done in all markets. Only gold craters at certain times on no news, for no reason. How does this generate currency ?
I trade gold mining shares just for the chance that there will be another paper run. I just don't see how paper can burn now, considering all the momentum on the downside has been exhausted. At this point, the market has just as high of chance as breaking on the way up.
If everything stayed static, the way it is now, then eventually over time, the buyers of physical at the paper price and miners of physical that sell at the paper price will break the market.
Jeff,
You might want to reread what I wrote. I was merely pointing out that according to VtC's reasoning, current policy will dictate future policy, and that your quote is a blow to his conclusion, since it contradicts the premise that the ECB has and will chase a sub 2% rate.
I have always maintained that you can't draw the conclusion that current policy will dictate future policy.
@simplemined
Wolfgang Schäuble,German Federal Minister of Finance
-Schäuble is of the view that Europe's problem is not the European Union, but rather certain national governments that cannot resist the temptation to make the EU and Europe the scapegoat for their own national problems.
On 21 November 2011 Schäuble said the Euro would emerge stronger from the current crisis, thus leaving Great Britain on the sidelines unless it signed up. He said Great Britain would be forced to join the Eurozone faster than some in the UK thought.
Seems like an interesting guy but do you think this kraut has any leverage against Draghi ? Why didn't he become the ECB head...
@M
Only gold craters at certain times on no news, for no reason. How does this generate currency ?
Someone, in-the-know, shorts it, I suppose. Honestly though, I don't concern myself with the, illogical, shenanigans that go on in the Marketplace. I find it funny that those in the market are basically the ones who bitch about its irrationality - instead of just exiting. I guess there are reasons why Volumes are so low.
I didn't realize you were a trader, 'M'. So this is your concern. Disregard my 'don't worry'-tone advice and... best of luck!
M.
Germans are almost excluded from any big international institutions- WWII anyone?
For Schaueble the euro is a political project he will fight for by all means. I don't see but cooperation between Draghi and Schaueble. I believe they are both fighting for Europe as far as I can see.
Schaueble is a cynical person but I admire him a lot. It's rather Merkel the person I am suspicious of.
When trading people wish to buy low and sell high (although they rarely do). The narrative that something is “manipulated” down insinuates that you should buy NOW at the manipulated low price. This is because the second part of the narrative that always follows is that the manipulation will soon end.
In the end all paper markets are largely manipulated. In the short run they are casinos designed to take your money. If they don’t take your money on a particular bet it’s because you got lucky and more suckers were on the other side of the bet and had their money taken. The best part is that it makes you feel smart if you get one of your bets right and then you are hooked. For the long run investor they use your capital to distribute risks and mellow out shocks and disasters for the primary. Overtime you will likely point to the wisdom of investing in paper investments because everything moved up with inflation and your nominal gains compounded with interest look really nice. Your glorified forced savings account was used to make a lot of other people really rich. I speak for most of them when I say “thanks” for the relatively free capital and risk reduction.
Look at stocks. Any company can buy back shares, issue new shares, or change their dividends on a whim. Retail buyers can buy more shares than they have money for and sell more shares of stock than exist and that they don’t even have. Isn’t all of this manipulation of the share true fair price? Of course it is.
Then along came commodities markets. Now that has to be a fair market because there is actually a physical thing behind the paper game. Really? That’s all it took to fool you.
@ tEon
"Someone, in-the-know, shorts it, I suppose. Honestly though, I don't concern myself with the, illogical, shenanigans that go on in the Marketplace"
I try not to either. But doesn't it start to piss you off that we don't really have a clue what the real price of physical gold is ?
And considering we are in the middle of biggest experiment in behavioral economics and coordinated central bank monetary expansion in history, it doesn't seem too illogical to me that the banking interests would want to manage the visible price of gold.
These degenerate Keynesians really do believe their own BS. They really do believe that negative interest rates, suppressed inflation indicators and a rising stock market will get an economy going.
I don't hate bankers or anything at all. But I cannot stand stupidity. And the longer these keynesian numbsculls keep this game going , the more it legitimizes their stupidity. If we had hyperinflation 1 or 3 years after the keynesian stimulus and bailouts, Keyns would have been totally discredited. Instead, we just keep muddling along to the point where anything bad that happens can be blamed on something else. They will just say it was a one in a million event. Or they will blame the weather like the Soviets always did.
What good does this do anyone ? Do you like being a part of this experiment ?
@M
But doesn't it start to piss you off that we don't really have a clue what the real price of physical gold is ?
Not in the least. We should, actually, thank the expanded paper market because it allows us shrimps to stock up. I only need to know the discount is 50-100 times the actual value... and where the trail, eventually, leads. I don't even need to know when. Timing - and its related stress - are for traders.
@M
you wrote:
„The Euro's biggest near term threat is political. If the European people are not made aware of the positives for being part of the Eurozone, then they will no longer want to be a part of it.
This is the problem with the ECB and BIS letting the IMFS die a slow death. It appears that the IMFS will out-live political support for the Euro. They will have a choice to make. Either the nuclear option against the IMFS or watch the Euro project get consumed by populism and nationalism.
It would not surprise me to see the Europeans give up the whole Euro project just to afford the US a few more months of expriv.“
Perhaps you are right. It may take a country threatening an exit (in a serious way) to set things in motion.Overregulation and subsidies/taxes are reasons good enough for any country to leave. But I don`t see it happening in the short run. Then, maybe, you presume the $IMS has another 4 years to live for the European elections have just taken place and no major turbulence is expected from within the newly elected European parliament (my country send 0 eurosceptic MPs over there, by the way). 2017 – the year of the referendum in Britain is a key turning point. Chances are FG arrives before that year. The biggest threat in the interim is Europe gives way to the American interests and pays the bill in the Ukraine / – Nato –/ Russian conflict.
@ simpoleminded
He's a hope. How long is his term ? Do you think he will run for Chancellor ?
The Eurozone is at a crossroads. When the next rounds of riots start and the nationalist parties get some serious traction, it will be up to the the guys in the know (possibly Wolfgang Schaeuble) to pull the pin on the IMFS.
This gold market feels like the calm after a storm, as it has been trading in an ever narrowing band. The question then is, are we simply in the eye, or has the current threat to the paper market collapse passed in favor of a resumption of the bull run?
Thinking outloud here, it seems to me that all the MMT'ers need to bolster their resolve, would be, for an order of magnitude of debt, higher than what exists now, to become an exceptable notion, to the surplus generating economies.
But what we know is, that a proportional amount of physical gold would need to flow to them in order for that proposition to have any teeth.
Also, I wonder if the giants are aware of and calulate (I think they do) a ratio of the paper price to the upper tier price. Such a ratio might have (for many years) fluctuated within a band. If we assume that it has, then we might conclude that as the paper price rose, the upper tier price rose too.
Now perhaps you see the problem for a declining paper price? The upper tier price would need to contract to stay within that band.
But then, if real gold is needed to flow in proportion to debt growth, there is no way that upper tier price is going to decline if even the same supply is maintained. It would need to increase.
Another ratio, stock (physical) to flow (paper + physical), is being pressed upward. As the stock increases, the flow must increase in order to keep the ratio in its own band.
All this points to the need for an influx of paper longs, at a mangnitude great than the last influx, which was back in '08.
There is a very good essay up over at Salient about the question of timing:
http://www.salientpartners.com/epsilontheory/notes/When%20Does%20The%20Story%20Break.html
Together with a great hats photo from the 1930s.
http://eng.kremlin.ru/accreditation/7244
"The Supreme Eurasian Economic Council will meet in Astana on May 29
May 26, 2014, 13:30
The Supreme Eurasian Economic Council will meet in Astana, Kazakhstan on May 29.
The presidents of Russia, Belarus and Kazakhstan plan to sign the Eurasian Economic Union Agreement, which will come into force on January 1, 2015. The Eurasian Economic Union’s establishment will take the three countries’ integration to a new level. The three countries will guarantee free movement of goods, services, capital and labour, and coordinate economic policy in key sectors such as energy, industry, agriculture, and transport. This will complete the formation of the biggest common market in the CIS (170 million people), which will become the central new driver of economic development..."
See link for 2nd part
Grand cross alignments in Ur anus and Ur face
Behold they come and continue apace
Body armor and Alfani suits
Too little too late for Jesuits'
Fractal tatoos of the space race
Last week, the gratis msm newspaper celebrated that Lady Gaga and Conchita Wurst will be on one stage! Gaga is(s)t Wurst and Wurst is Gaga *peak decadence*, sheeeez.. FreeGold must be imminent, I thought.
The less obscure indicator GLD holdings is back at the level where the Ukraine Gold heist was started, hmmm. Maybe those 7xxt's are indeed held by silent strong holders which make the operators of the $Gold system sweaty.
We should be marching again...
"What's up now? Draghi said he expected inflation well below 2% for an extended period of time. So he acknowledges his failure to implement the target of 2003, yet no action follows. Surprised?
I guess Blondie and myself not so much."
- Vtc
"The Governing Council is still debating what action to take, Mr. Draghi indicated. But all the members — the central bank governors of the 18 countries in the euro zone plus the six members of the central bank’s Executive Board — agree that inflation is too low, he said.
“There is no debate about our goal,” Mr. Draghi said, “which is to return inflation toward 2 percent in the medium term.”
We wait and see what, if any, action follows eh?
TF
h/t - Jeff
Sean,
Thanks for the heads up.!
"sean said...
The latest note from Epsilon Theory, while not gold related specifically, is very interesting. It looks at "common knowledge" and how long the market can go on before breaking, http://www.salientpartners.com/epsilontheory/notes/When%20Does%20The%20Story%20Break.html
May 26, 2014 at 3:55 AM"
M,
"Why the hell doesn't Apple's safari work with blogger.. uggh, I wanted to reply to you so bad but I couldn't."
I assume you're talking about the mobile version of Safari. Yeah, it sucks with Blogger. But there's a workaround.
Open Mail, type your comment like you're sending an email. Instead of sending the email, just C+P what you wrote into the comment box on Blogger and click 'Publish'. You won't be able to Preview what you wrote, so do your proofreading before you publish.
MF:
I don't think they can do much, even if they want to. I guess VtC wins this round. Because he says that don't look at what Draghi says, look at what he does. I don't think he can do anything.
The only thing he can do is to say ok, we want to flood the market with money, to increase inflation, but the only recourse for us to print money is to buy some assets from this money. Lets buy some useless pieces of yellow shining metal that nobody wants :-).
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This is the year that Bretton Woods 2 turns 43 years old. That also happens to be the age that the classical gold standard ended.
Any over and unders on how many years longer the Nixon shock will go on ?
Well, how soon will all the tarders out there stop playing along?
Did you read this article M?:http://www.salientpartners.com/epsilontheory/notes/When%20Does%20The%20Story%20Break.html
More ET:
"But here’s the crucial point … whether these opinion-leaders and Narrative creators thought open-ended QE was a wonderful thing or a terrible thing, they ALL agreed that Fed policy had been responsible for the current stock market level. It was J.P. Morgan and William Jennings Bryan all over again, just arguing the merits of more QE versus less QE instead of the merits of the gold standard versus the gold + silver standard. But just as the debate over Free Silver only intensified the Common Knowledge that gold was money in 1896, so did this debate over the merits of open-ended QE only intensify the Common Knowledge that Fed policy was responsible for market outcomes in 2012. This was a positive informational inflection point in the Narrative of Central Banker Omnipotence, and as a result the price of gold has not had a good day since."
So for "gold" to rise again, goldbugz, among others, need to dispel the Central Bankster myth. Anyone think that'll happen soon?
http://www.salientpartners.com/epsilontheory/notes/How_Gold_Lost_Its_Luster_How_the_All_Weather_Fund_Got_Wet_and_Other_Just_So_Stories.html
Still think the bull will rise?
The gold market is encumbered by a 100x tag along paper companion. A bull market in 'gold' just isn't possible. There isn't enough money on the planet (I know they could fix that little problem) to push up all that paper. As long as it is around the POG will languish. That's why I have some puts to protect my phyz. If heaven forbid I should need to redeem some gold I don't want to feel pain.
I found the Epsilon Theory article on timing interesting, but question whether the examples of clothing customs are really analogous to something like the loss of confidence in the dollar. And maybe this was the point the author was making in the last paragraph of his article distinguishing Common Knowledge in fashion vs investments. But its always good to hear FOFOAs words again
FOFOA explains in 2011 in Big Gap in Understanding Weakens Deflationist Argument that confidence can (and has) turned on a dime:
So what are you afraid of? And what is everyone else afraid of? Could other people's fears ever affect (or change) yours? What are you more afraid of, running out of dollars or dollars becoming worthless? This is the problem with fear; it can turn on a dime without ANY notice.
Here is part of a comment I wrote on March 15th, following the initial response of the markets to the Japanese earthquake:
Fear is the main emotional motivator in any currency collapse, just like it is in financial market meltdowns. And as we saw even just last night, the herd can stop on a dime and reverse course 180 degrees overnight, from greed to fear, based on a single news item.
The initiating spark of hyperinflation (currency collapse) is the loss of confidence in a currency. This drives the fear of loss of purchasing power which drives people to quickly exchange currency for any economic good they can get their hands on. This drives the prices of economic goods up and empties store shelves, which causes more panic and fear in a vicious feedback loop
Just food for thought - I’m not sure, but I wonder if the customs of men wearing wigs and men wearing hats (or women wearing gloves, aprons, hats, etc) ended on a dime.
@ Jojo
Yes, I read the article. My take... What I didn't like about it was how much it focused on the US equity market. Fed printing and Fed rescue also applies to equity markets all over the world but we don't see the froth in those markets. Why not ? We did in 2001 to 2008.. This just confirms that the US market is in a bubble. And the mental case Keynesians use this bubble to reassure themselves that the economy in the US is doing good when it is not. But like usual, the rest of the world is grappling with reality while the US lives in fantasy.
Anyway, the main gist of the article is that everyone thinks that everyone thinks Fed will have the (US equity) markets back if it crashes. So it keeps going up. We know this. Peter Schiff has been saying this for 5 years. He was never bearish on the DOW or the S&P. This all will work but it will simply come to an end when price inflation gets out of control. And it will. It always has. Its so dirt simple. As FOFOA says, the market is still pulling for $'s and the Fed is still releasing some rope. But the very act of the Fed giving the market rope means that the market will eventually let go. And the Fed will try and pull back when the market lets go of the rope, but it will fall on its ass. Just like when the Asian central banks raised interest rates when the market let go of their rope in 1997. The Asian Cb's landed on their ass and the currencies dropped like a rock.
So all we do is wait, until that time comes.
JoJo said
"So for "gold" to rise again, goldbugz, among others, need to dispel the Central Bankster myth. Anyone think that'll happen soon?"
Gold bugz need to dispel nothing. Just like when Wiemar Germany was buying foreign currency with printed marks, it worked for a good while, but eventually, the forex markets got flooded with marks and the exchange value of them fell and it was all over. Don't kid yourself... What Wiemar Germany was doing before the inflation kicked in was working. Just like it appears to be working for the US now.
Rudolf von Havenstein was the president of the CB of Germany before the hyperinflation
He was lauded as a public hero, decorated with honours and even nicknamed "der Geld Marschall"
“Herr Havenstein honestly believed that the continued issue of new notes had nothing to do with the rise of commodity prices, wages and foreign exchanges. This rise he attributed to the machinations of speculators …” Speculators always get the blame don?t they?
Epsilon theory explains a lot - but there's this little thing called real world physical supply and demand.
In today's over produced, highly deflationary/depression there seems to be enough of everything to go around for everyone who needs it ... who matters.
There seems to be enough oil to run the world, and enough gold to keep Chinese jewelry stores well stocked. There's enough food on shelves at stores, and gasoline at pumps to keep everyone satisfied ... that matters.
It's not a fashion statement phenomenon, rather it's a wrold where central planners have unlimited supply of "future sentiment" to control an underlying asset, while at the same time, the asset itself is plentiful enough to maintain the illusion of unlimited supply.
We do live in a world of finite resources, but there are enough of these essential resources to go around to maintain the control of all prices (equities, interest rates, inflation, fx rates, dollar index) within the derivative realm of unlimited supply of future sentiment, a.k.a. "managed expectations".
Only a real world supply shock (IMHO) of a critical commodity such as oil or gold will crash this derivative confidence grid (or "fad" if you will).
This is how we come to the conclusion that when physical gold flow is disrupted by supply constraint in size ... the derivative construct fails.
An abrupt oil or food shortage could likely topple the system (of unlimited oil or food "plentiful supply sentiment") as neither can function in the real world, anymore than paper gold can satisfy the real function of physical gold.
We may not all have gotten to the "this ends when gold in size stops flowing" route by this same path, but it does lead to the end of our derivative "fashion statement" nonetheless.
http://roacheforque.blogspot.com (more there, by some coincidence it seems) ....
@ RoacheForque
Gold is not a commodity, so that's a tough one. Just the paper gold price action of the last 48 hours probably put another gold jr under. So if what you mean by supply is the current arrangement then there probably isn't a whole lot of time.
I have a doubt. Anyone remember what Buffett said about gold?
For all the gold in the world you could buy Exxon Mobil 16 times over, all the farmland in the US. A century later both will have produced trillions in valuable product. Gold will have produced nothing.
Doesn't he have a point?
Hey Brad,
Check it out.
http://fofoa.blogspot.com/2012/02/yo-warren-b-you-are-so-og.html
Brad
yes he has a point...farmland can grow food and oil companies can produce oil. Those are their functions. Gold's best use is as a savings vehicle. It can be worn or even eaten but its best use is for wealth preservation.
In a FG environment we anticipate it will not need to produce an income stream to very adequately perform.
@ Brad
No. That is one of the dumbest things Buffet ever said. I dedicated a blog post to tearing that apart. You can read it here:
http://freegoldobserver.blogspot.ca/2012/07/warren-buffet-and-his-gold-delusions.html
It goes almost days without new comments on here, when the paper price of gold is falling. This is what kinda pisses me off about people who say the paper price doesn't matter. It effects the physical market, so it does matter.
People think there is no inflation because the price of paper gold is not going up. We know that the banking interests are manipulating the paper price of gold down.
People think there is no inflation because the price of paper gold is not going up. We know that the banking interests are manipulating the paper price of gold down.
No.
You might be able to make an argument for this type of manipulation during a bull run, but not a bear market. This thing has gravity, and. Requires no help downward.
If anything, they are trying to support a collapsing market. But, they can't do it forever.
@M
People think there is no inflation because the price of paper gold is not going up.
What people?
We know that the banking interests are manipulating the paper price of gold down.
How do we know this? GATA?
I see it differently. The Fed wants inflation and we have 'price inflation' / 'asset' deflation. The paper price of gold is not being manipulated down, but supported to stop it falling... but it will fall, eventually.
. This is what kinda pisses me off about people who say the paper price doesn't matter.
I don't know that this is true. It matters immensely. It's collapse will be the most prescient indicator of Freegold.
It effects the physical market, so it does matter.
What are you basing this statement on? And how do you feel it effects the physical market?
@ tEON
"I see it differently. The Fed wants inflation and we have 'price inflation' / 'asset' deflation. The paper price of gold is not being manipulated down, but supported to stop it falling... but it will fall, eventually."
The flood of sells drives the price down. Not up. We can see that. If there was spikes up, then you have a case. I understand your point of view. I just don't think the price of paper gold is falling because the market participants understand what you understand.
"What are you basing this statement on? And how do you feel it effects the physical market? "
Simply because the only price of gold we know, is the paper price. The only price of gold anyone knows is the paper price. So that is the number people use when they are deciding to buy, sell or save in gold. Even you are basing your decisions on the paper price, be it falling or otherwise.
If we use the contrarian model (ex. most shorted stocks have been rising the most), which is a popular model these days, then you tEON should be bullish on the paper price because you have sound reasons why paper is worth nothing.
I'm usually able to appeal to my end the fed, crash JP Morgan, Austrian/libertarian friends by taking this angle. The elites in government and banking want everything to go up except gold. In their minds they represent the people, pensions, retirements, ect. If you are buying gold you are betting against them. You are like the guy betting double zero at the roulette table. Everyone hates you and glares at you if you win and smiles when you lose.
Now recognize that you are making this bet, this act of treason, anarchy, and evil against the collective in THEIR paper markets under THEIR rules. If you lose everyone will smile. If you win....if for some damn reason you are allowed to win...and paper shorts are squeezed and you get a big paper pay day....and your paper isn't worthless because you were just betting price movements and didn't actually have physical gold.....who's going to cry for you when the rules are changed and the evil jerk that bet against the people has his ill gotten gains redistributed.
Physical gold. Get you some. Privately.
If I may offer one other point. The paper price needs to go up and down (volatility) to keep this game afloat (bullion banks shaking out stock where and when possible).
I still await the "hundred dollar intraday moves" that someone we know well once spoke of.
Perhaps paper gold will spike to 1350 tomorrow, and the goldbugs can have their pure Bolivian for the long rock chopping weekend ... only to experience the crash that always follows those curiously twisted cocoa puffs from the banana boat.
I like to see the price of gold go down because I'm still in saving mode. This is like when my vitamins go on sale, or my favorite cigars. I wish some of my favorite single malt scotch would go on sale. Unfortunately supply is apparently not keeping up with demand and I have no affinity for paper scotch.
I know the $IMFS is going to end some day. It will be a sad day for many. The $IMFS has given me some pretty crazy opportunities, and I will have to switch gears and get used to not using 100% of someone else's money, while getting paid to do so. LOL! I guess a part of me will be sad as well.
Costata just posted over at Screwtape. Apparently he is not a Freefiater after all.
What did Costata post at Screwtape ? Can someone post a link to Screwtape ?
Btw for iJunk users... The Blogger app doesn't work for comments here. Neither does the Opera mini browser. But the Dolphin browser works good. It's a free app.
RT @costata001 A post about the "FreeFiat" concept that has led 2 a couple of heated arguments in the comments over at FOFOA's blog: screwtapefiles.blogspot.com.au/2014/05/the-freefiat-fracas.html
Just saw on TV "Some kind of monster" documentary. They do have awesome intro to their concerts.
My gut tells me we gonna soon see sub 1.000 US$ gold. So, buckle up and take some chips off the table if you dare and can. :-)
Dante_Eu
That just was not long enough - so longer versions of Ecstacy of Gold for the Metallica fans and for the Ennio Morricone fans
I do admire the concept of freefiat, just as I admire Pinnochio's desire to "one day become a real boy".
But when it comes time to marry off my daughters, I will still hope that they choose the "real thing" over some "man made substitute".
Cheers!
- R
Other than Freegold, my other passion is generational cycles. Mish Shedlock has posted a thoughtful and well written article about an ongoing generational shift that has dire implications to the status quo of the Wall Street. Clash of Generations - Boomers vs. Millennials: Attitude Change Will Disrupt Wall Street and Corporate America.
I found it very interesting that millenials have a high distrust of banks, corporatism, and Wall St. They tend to be very conservative when saving, often preferring shorter time horizons in cash. They seem to be ready made for the idea of saving in gold versus a debt obligation or a paper claim to ownership in a company.
Millenials also are more likely to look to the State to enforce a social contract. In essence goading the printer to print. At the same time they are less interested in making money for money's sake or to get ahead. This means no trimming of the social obligations, perhaps an increase, in the face of a declining tax base. Add to this the fact that Boomers will be drawing down what investments they have as they begin the process of departing this world in mass.
I see a perfect tailwind for economic depression. Freegold is coming.
Pure awesomeness Lisa!
@ Matrix
"At the same time they are less interested in making money for money's sake or to get ahead."
It might appear that way. Only because the millenials didn't step onto the scene in the first years of a 33 year long bond bull market. Boomers couldn't lose. They were snapping up assets and building businesses when assets and capital was cheap. The more interest rates fell, the more their assets would appreciate. My dad told me when I was 18 to wait until interest rates fell so I could do what he did. Im 30 now and there is no end in sight...
Round and round and down she goes - where it stops?
Another knows ...
http://www.macrotrends.net/1380/gold-to-oil-ratio-historical-chart
Dante
your joke about savers sits at the #199 position and I see it every time I come here to see the latest comments...I do not get the joke...few and many ...is it Russian humor??(ie notoriously oblique?)
In case anyone wants to take a whack at GrumpsLabastard or AdvocusDiabloi, they are both commenting at www.freegoldobsever.blogspot.com.
The London Silver fix is ending in August.
The new daily fix will be based on NY and Chicago contracts.
Silver will now be a proxy for the US dollar.
Page 91
http://www.federalreserve.gov/releases/z1/current/annuals/a2005-2013.pdf
http://www.treasury.gov/ticdata/Publish/mfhhis01.txt
http://www.census.gov/foreign-trade/statistics/historical/gands.pdf
Bright Aurum
Pg 91 of .PDF ?, or pg 91 of report ??
Or to be more specific, what the hell am I looking for ?
Why is the POG declining?
My FOFOA inspired simplified theory in short:
It's ALL about OIL and the flow of gold in the direction of oil.
The by far most important economic factor is Oil. Oil is the engine of economics. And oil is priced in physical GOLD. Yes, oil is priced in currencies as well, but they are anchored to Gold, because values only exist in comparison to other values and need an anchor to stay stable.
This anchor was, is and always will be selected by the OIL producing states (He who has the oil makes the rules).
Today it is GOLD!
Furthermore the creation of interest comes with the appearance of an ongoing inflationary impulse, because interest has to be paid from newly created money. This inflat. impulse makes OIL much more expensive over time depending on the amount of interest, in other words: it takes more and more money to buy a barrel of oil.
In today's environment of near-zero interest the inflationary impulse is neutralized but NOT its Momentum (consequences) from "yesterday".
The money is already out of the bag. The reflow of U.S. Treasuries from abroad creates even more inflation.
In this environment I can see two outcomes only:
The value of OIL has to increase OR the value of the currencies (anchored to GOLD) has to decrease.
An increase in the value of OIL would easily kill the entire world economy. A decrease in the values of all currencies together can easily be created by "managing the paper value of GOLD lower".
So the practical choice is obviously the second one!
The more inflationary pressure on the price of oil the more (managed) pressure on the paper price of gold.
Is there a flaw in my thinking I do not recognize?
Any comments?
1/2
@InowB4
Interesting analysis.
A decrease in the values of all currencies
You are referring to the idea of inflation in everything, except Gold.... through some 'management' of the paper price, right? This would be suspending the "gold for oil agreements that link the price of gold to the price of oil.
While some things are denominated in the paper price of gold (ex. miner-to-refiner contracts), I'm suspicious that 'real world' Gold-to-Oil is. I thought I recall reading that Oil can be paid for with Gold in high AU prices (transparent - $5,000/oz sticks in my head, Another? no?) not lower prices.
makes OIL much more expensive over time
When paid for in Gold that would require a higher currency POG. This is what you are saying, correct? And Central planners are attempting to avoid this by suppressing the price?
the value of the currencies (anchored to GOLD) has to decrease
Meaning, again, a higher price of Gold (in currency) - ditto for commodities. Can this relationship be managed... in the long run?
Also if the supposition that the paper Gold price is not being manipulated down but, rather, 'supported' to slow its decline - then this decline in the POG is because of removed, or lack of, support.
This is how my simple brain prefers to see it; Why would the (paper) POG go up? It gets further and further disconnected from physical, seemingly, all the time - certainly the past few years it seems more obvious. The only direct relationship left may, eventually, be shrimp buying - and that will be temporary after flow ceases at the upper levels. So, 'high physical demand', or even 'low physical demand', is no reason to move the POG.
2/2
So in your theory (which I think I get now) the paper price must be 'manipulated' lower to support the economy (ie Oil purchase), but this is structurally unsustainable - only a, limited, stop-gap solution (ex. asset deflation / price inflation cannot go on indefinitely). Oil is the lynchpin - but Oil can cease flowing too. I don't see how it can be maintained without moving drastically one way or another (it will be lower, IMO). The real way to minimize this economic discrepancy is a very high price of Gold. But a consistent rise would also be no good for the economy (maintaining its relationship to commodities - also consistently rising), so the solution would be an overnight revaluation - breaking any relationships to Oil or other commodities and establishing a new, but flexible, benchmark ratio. I don't see this as an option, but, by acclimation, the only course - nothing else is structurally sound enough to last long-term. The physical Gold price has no direct link to 'the marketplace' as it is, essentially, useless (NOT a commodity) - and hence its price rise can be irrelevant - excepting that it can't be too low (paper Gold needs physical - not the reverse) because then the paper price mechanism is wiped out and the physical market will denominate price.
I don't *think* any entity is 'managing' the paper price lower. If it had no support at all it would be even lower, faster. Over time it will continue lower (top level physical flow freezes up), IMO. Until the last separation (hopefully, shrimp buying - save some cash!) is no longer available. Then, hopefully, we wait a short period of time (weeks, months - not years).
So, what else happens in this scenario? We do have one facet of the marketplace affected by a FG revaluation. A lower paper price closes medium / small miners. I'm sure that we will see this - don't own miners. The handful of large ones, left open (Goldcorp, Barrick Gold, Newmont Mining, Polyus Gold, Yamana Gold etc.), have "temporary shut-downs" and become primed for Nationalization. Many are 'in bed' with the government already. 'Gold in the ground' is mandated to belong to the state. So there are a few steps to go - but I see these sequence as reasonable.
POG drops continuously - miners close - physical stops flowing (first top levels and trickles down to shrimp 'coin store' level) - waiting period - large miner Nationalization - FG pricing! (and a lot of other ugly sh%t in between)
P.S. I think that a system should be set up for the diversify-ers out there. Perhaps FoFoA could do it. You subscribe and you will get an automated call or email at around 2:00 AM EST the day before FG so you have time the next morning to liquidate your Stock holdings and buy physical gold. There will be a cost for this service.
Thursday, June 5, 2014: the next meeting of ECB’s Governing Council.
FRANKFURTER ALLGEMEINE ZEITUNG (Sunday, June 1st) is commenting this meeting in a remarkable manner:
»Something unsual will happen. Because: Seldom before the central bankers, usually quite close-lipped, gave so many interviews as in the past weeks. All prepared us: Something will be declared on June 5th, which was never seen before at ECB.«
Here’s the link to the FAZ-article mentioned above:
http://www.faz.net/aktuell/wirtschaft/ezb-mario-draghi-macht-alles-neu-12966209.html
EA,
very interesting. We came across a second similar comment (don't know if you follow people on twitter), by Ives Mersh if I remember correctly.
He said in an interview (from memory) that the ECB could implement plenty of measures, including some that would be far beyond the imagination of the financial press.
Without these unusual remarks, I would have guessed that this Thursday, the ECB would come forward with some measures, perhaps a negative deposit rate or some sort of "funding for lending" scheme that makes people, especially finance professionals, feel more comfortable that the ECB is decisive about fighting deflation. This would then help stabilize inflation expectations. I don't think the ECB would implement anything that actually does create significant inflation. I find it quite obvious that they are happy with the situation as of today, and they keep stressing that they don't see any risk of deflation.
What they "ought to do" is something different though. Since the second half of 2012, the Euro area has had an increasing current account surplus, now about 2% of GDP. Since gold imports by the private sector are included in the balance of trade, this current account surplus is a surplus after private sector gold imports into the Euro area (at the London price). The ECB should therefore sell dollar reserves (or whatever currency area the current account surplus is with) and purchase gold. Suspense!
Victor
@farmersteveg
„Pg 91 of .PDF ?, or pg 91 of report ??
Or to be more specific, what the hell am I looking for ?“
Page 91 of what directly follows of course.
@InowB4
„Why is the POG declining?
My FOFOA inspired simplified theory in short:
It's ALL about OIL and the flow of gold in the direction of oil.“
It is about oil, and much more for that matter. That`s why I posted a link to the historical gold-oil ratio chart ( I could have done so with the silver/gold ratio or anything else that relates to other commodity groups by means of the energy needed for the extraction/processing), see above. What happens is that on the downside the broad relation with other commodities breaks (because commodities are needed for the live of the economy and they will not be produced/extracted below certain price levels). And it is to the downside that physical gold ceases to flow and crystallizes as something entirely different, entirely separated from the commodities by its future function as well as by its use.
@VtC
„Since gold imports by the private sector are included in the balance of trade“
.... or rather:
Since 1.) the 10 000 EUR cash rule = no questions asked. 2.) 10 000+ EUR in your pocket = bad things may happen. 1.)+2.)=smuggling.
and of course it will be 10000+ because of bad tax avoidance habits.
About the ECB proposals
The only thing that these gimmicky central bank ideas accomplish is blow air into asset price bubbles. They do not cause banana republic style inflation. As long as the bond bubble lives, there will be limited money velocity and limited price action that will pose a threat to the dollar. As long as the bond bubble lives, everything will just continue to trade on sentiment and word clouds from the Fed. Sentiment could even change in the gold market and we could get another gold bull market within Bretton Woods 2. But that still won't be the main event or even a sign that the main event is upon us.
Silver will be the canary in the coal mine. It will be released later this summer. It will launch before gold. Silver will absorb repatriated dollars. They need to flow somewhere and they will flow to silver before gold.
Why do the SilverTards feel compelled to post on this blog?
Mental illness I think.
Matrix
If what candy says is true he may have a point. I don't own any silver and I assumed it was a hard metal. However it sounds like it can absorb dollars! If this is true and a bar of silver absorbs $1000, I'm thinking it will be worth something like $1025!
Paul Volcker, recently. Interesting read...
http://www.brettonwoods.org/sites/default/files/publications/Remarks%20by%20Paul%20A%20Volcker%20_21May2014.pdf
"Where was an effective adjustment mechanism? Was the
“exorbitant privilege” of the dollar as a reserve currency also
a “dangerous temptation” to procrastinate - an impediment to timely policy adjustments, risking eventual breakdown?"
"There is effort underway to achieve a common approach toward the resolution of failing financial institutions of systemic importance; it is hard to perceive of any successful resolution process that proceeds only nationally."
Rofl Sam, ima gettin me some silver! Maybe it can absorb coffee stains too?! I made some reading your comment just now.
There was a rarely seen comment on the fraud that is the U.S. dollar in the WSJ today. In an article about why Bitcoin would never be a currency, Lawrence Parks wrote:
"With neither debate nor anyone voting for it, the dollar has been transmogrified into an ethereal concept of money without any tie to the physical world, created out of nothing, and forced into circulation with legal tender laws. As Australian comedian Michale Connell so brilliantly put it, what we used to call money has been transformed into 'the idea of money.' Mr. Connell's metaphor is that it's like playing musical chairs, but instead of chairs there is the 'idea of chairs.' It is absurd."
Matrix
We all start from somewhere. Some of us wind up here. Silver folks have a lot to learn/unlearn. Unless they have troll characteristics (mostly repeat, offensive comments) I'll usually try to answer with logic.
I was once there myself (and accidentally made a bundle). There is still time to be saved and even though the waiting is wearing on everyone we can still do our best to explain or at least suggest a starting point for the lost.
Today in When Worlds Collide:
http://www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1203&MainCatID=12&id=20140602000001
Pity poor Wall Street, the Chinese do not view the precious as a plaything with which to earn currency.
I discovered another freegold-esque blog a few months back and checked on it infrequently since that blog was also infrequently updated.
Anyway, as I was checking it again today, the latest post leaves me a bit at a loss for words:
http://lcn.freedgold.com/2014/06/roacheforque-doing-what-roaches-do.html
Well, I give a few minus points for foul language but in spite of that, is there any credence at all to any of the claims to what this blog author is positing?
@Björn,
not only coffee stains! :D Bought some few coins these days, putting them into the water to be cooked. Ayurveda says, this is good for health. Some gold coins are used like this too.
I like the daily effect: Silver is looking ugly, Gold stays shiny and nice. Uneffected. The old. Ever the same. Like it!
But, ok, to be honest: A very short time I had this (unreflected) thought too: Gold and Silver are kind of the same. »Precious« metal, right? One for the bigger values, the other for the small. Liked to buy some paninis with it, when the big crash hits! ;)
But now—no silver in the store anymore. Only these 4 coins for water cooking.
Thanks to FOFOA. His =>clear<= mind did the trick for me.
Warning: The following falls under the heading of Technical Analysis.
In a world where there is a surfeit of noise that serves to distract one from keeping one's eyes on the bouncing ball, long term charts can sometimes be quite helpful in maintaining perspective.
With that in mind, I suggest you pull up a chart of of the U.S. ten year bond and take a peek. As you'll see, the ten year has had a nice run since yields eked out their highs late last year.
However, consulting even a weekly chart, one can see that there has not been all that much of a dent made in (what I now am retrospectively biased to view as) a secular trend change that commenced in late July '12. The entire rally in bonds (rallies are marked by yields falling) since Autumn of last year looks corrective of the sell off in bonds that began in midsummer of '12.
The now several months old rally has managed to drive the monthly stochastic to nearly oversold levels even as the rally has done little to erode the lion's share of the rise in yields that took place from July '12 to September '13.
What might it all mean?
For the first time in a very, very long time, the pattern of higher highs and higher lows in the ten year bond complex looks to be under threat. In fact, the monthly chart now sports an immense inverse head and shoulders that (should it play out) projects yields to rise to approximately 4.5%
With that in mind, I note that in September of 2015 a Fibonacci 34 years will have passed from the epic bond low of 1981. Obviously, none of these bits of data are guarantees of any particular outcome but, one thing is clear, irrespective of their putative predictive value, they are not bullish.
Edwardo,
Gustafson, using Kondratieff wave analysis, sees US dollar crisis based on the 10-year rate late 2014 early 2015. He correctly foresaw the current further decline in the rate, while consensus was that the rate would start rising.
His chart is here: http://deflationland.blogspot.com/2014/03/kondratieff-fall-and-10y-treasury-note.html
@ Sir Tagio
Gustafson named his blog deflation land. I guess he means deflation priced in something other then USD. Rising rates aren't typically bullish for the currency. Circa the 70's in the US or even Euro land in 2010/11
I'm not sure how he squares a dollar crisis with his projected bond high. The two are at odds with one another by my runes. In the meantime he may need to revise his count to show that the high is already in. The matter ( low in or pending) shouldn't take much more time to resolve in any event.
A Martin troll challenged us to admit that the reason we are here is for our longinging of riches. This is true, but not because gold will be priced at 55123.56. It is true because it represents a return ( if that is the right word) to meritocracy.
Here the super producers will be rewarded and the result will be all humanity will be lifted up even the commies to heights heretofore unimagined. That is why I gave my last half gram to a beggar. There is no need to hold gold to be rewarded in the freegold regime.
Diamond saint Jack.
Yes ein anderer, most of us has been there with the silver. Even FOFOA. I still have some coins to remind me. Perhaps I will start using them in my water like you do. :-)
Sam
:D !
I really could care less whether one chooses to believe silver has a future as a monetary reserve or as a speculative plaything. What causes a bleeding ass is when one of these silver bugs arrive here and pollute the blog with proclamations addressing the self evident wisdom of stockpiling silver. Theses proclamations of course are never supported by rigorous analysis and thesis. They are offered as a gift to the poor misguided Freegold clan, drive-by style.
No doubt we have silverbugs here, lurking or even posting. They may not be as certain as they once were in holding silver. They likely are looking to this blog to either learn why they are uncertain about silver or to confirm their view that silver is the superior play. This kind of person is looking to improve his view and is not here to announce to the world how intelligent he is and to bestow the gift that somehow eludes all of us after 5 years of study.
Bozos like the Monkey are a dime a dozen. Dipshits that are routinely dismissed in person, but have their pulpits courtesy of the wonder that is the world wide web.
I saved 6 silver ounces. 5 just because, the 6th I use in my colloidal silver generator ;)
Boiled water:
Source 1
Source 2
One might expect that movements in financial markets would reflect these expectations. However, so far, by and large, they have not. The dollar has been ailing for months, defying analysts’ expectations that the currency would strengthen in anticipation of higher US interest rates. What is going on?
The answer is that market expectations seem to count less than current conditions, which still support the euro.
http://www.zerohedge.com/news/2014-06-03/former-bundesbank-head-explains-lull-vix-storm
@ Edwardo
He's correctly calling for a dollar crisis because the only reason bond yields will rise is because they have to. Only when iflation or capital flight driven by money velocity happens, will the fed raise rates. Then it will be too late and the dollar will breath it's last. Hardly deflationary
@ Edwardo
I agree with him that higher rates will kick off the dollar crisis. Because the only reason the Fed will raise them is to stop capital flight. Money velocity via capital flight will be the end of it. And high inflation will cause the capital flight. This is the kind of inflation/capital flight that Bernanke thinks he can stop in 15 minutes. He's dreaming. And none of this is dollar deflationary
M,
My issue isn't with the notion of a dollar crisis coinciding with rates skyrocketing, but with the idea that a dollar crisis would kick off as rates were making a lower low which, at least initially, is what the analyst in question seemed to be suggesting.
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