Friday, October 31, 2014

Happy Halloween


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burningfiat said...

Hello weeeeeeeeen :-)

Jim Okefenokee said...


Halloween. Bah humbug. A group of poppets just came to my front door and asked: "trick or treat?". I said "bugger off. I'm watching the cricket".

Have my iPad beside me updating that Kitco plot.

Jeff said...

Bring out your dead.

FOA: As Another tried to explain and I tried to refine,,,,, gold has historically represented it value as a function of the total world wealth and economic activity. Over time, our known gold supply has grown by leaps and bounds, but our economic structure and goods creation ability has literally exploded a thousand times that gold creation.

In doing so our wealth relationship with gold has seen it's ratio degraded to a tiny fraction of where it would be in a physical only market. Paper gold and the examples above of the human dynamic, have played an incredible roll in creating a mismatch of wealth value unknown in man's time.

I would guess that Michael Kosares, the owner of this gold site, has traded tonnes of gold over his lifetime. Yet, from the time of his start he has never sold gold coins for their physical worth. Truly, he has only sold them for the supply and demand market price of paper gold banking.

Further, as Mr. Paul Eaden's (spelling?) research piece in USAGOLD's opinion site shows, the derivatives market makes the price of gold. Using his view to look over the Gold Trail, we can see that paper dervatives can not reflect the "value" of gold that Another said was comming.

It is from here that we can understand the awesome leverage contained in holding but one ounce of gold. Here, on this ledge overlooking the entire golden valley, we can see this truth! Yet, it is a revelation to gold buyers as much as a curse on gold industry and leveraged paper investors. They spend their days, consuming their wealth, betting on a price that cannot represent gold until it fails. Destroying all they wait for.

From here, we understand why the current prices for gold do not have any bearing on the buying habits of the major players that walk this trail. As Another has said " The price you know, it be your price, not my price".

It is true, we are buying gold, not to trade for a paper value created today. Rather, to hold it beyond the paper destruction that must come tomorrow. Gamblers, traders and gold substitute players will all witness a colossal shift in world wealth that degrades their holdings. Even as their bet on half the process is proven as a folly very typical in human nature. Only unseeable as it exists.

Let's make camp and wake in this new position a while. It will be proven as well worth the hike

Edwardo said...

Bo Polny said gold would go higher
"The bottom is in", what a liar
The support on his chart stinks worse than a fart
And the mining shares look rather dire

KnallGold said...

Happy Halloween! Ironically, its also my mothers birthday...
And I was born on Good Friday...sounds like the return of the dead, the Cult's not dead! So let's compliment Dead Man's Party with a good dose of deathrock (they really rock!):

Catholic Spit - Devils Pact

Edwardo: ...said bottom might be from where it will fall out ;-)

And Silver trades at 15.x, not so far anymore from FOFOA's 10$ as a reasonable commodity price.

Not sure if the looming Swiss Gold referendum (which is actually an initiative) is beginning to have an impact!?

Motley Fool said...

Hahaha, excellent.

Happy halloweeeeeeeeeen. :D

ein anderer said...

Impact of Swiss Gold referendum (Nov. 30th):
If people say Yes to it, Switzerland has 2 years time to adjust the law. Buying of the 1'500 physical tonnes would have to start 2017. Imagine the impact then! ;)

ein anderer said...

FOFOA readers know: He does not care about the smaller ups and downs of curves and charts. That means: IF he cares (as the posting of today’s chart is suggesting; Gold dived under the 4-years-line of 1'180), this could be interpreted twofold:

(1) It’s Halloween. »Sweet or sour?« Don’t mind.
(2) It’s relevant. Fasten your seat belts!

What to do? Go out and fasten your seat belts! Buy physical! By this you can escape from both: Halloween AND wealth destruction! ;)

Edwardo said...


Trust me. It's relevant. All things remaining equal, another $100-150 off and some big gold producing operations are going to be forced to shutter production.

ein anderer said...


few things are as easy as trusting you ;)
Today it’s me to say: »From your lips to the universe's ears.«

Yet to shutter production seems not to be such a great thing? Every industry is facing things like this, here and then. Isn’t the question: How *long* they can afford to do so? And how much physical is needed in the market at today’s price?

Happy Halloween!

Testing said...

Damn.... my mining shares are up for ass whoopin´ today (and yesterday, and the day before, and the last 2 years)....

One Bad Adder said...

Happy Halloween -
Could very well be a Red-letter-day today for the "Here-n-Now" Prognosis.
$PoG, $IRX ..and DX obliging already, just the SM's needing to get with the program (and REALLY get going to the downside)

Phat Repat said...

"...just the SM's needing to get with the program (and REALLY get going to the downside)"

Something evil this way cometh. I believe next week will be quite interesting indeed. Still lucky to pick up physical at what will be seen as incredible bargain prices in the not too distant future. Thank you for the gift.

Actually in Shanghai right now but not changing the moniker since planning to return in December. What a show!

M said...

I think we are going to see bailouts for the miners. Especially the ones in Nevada and Canada.

Just like the trip to the upside, I feel like buying more gold. But what if... this isn't it....

M said...

Ok so when should physical start to dry up ? Because unless that happens, this isn't what we think it is.

Im going to be calling the "bullion bank" in Toronto over the next few days to see what they have for inventory. The last big crash in paper seen regional physical dry up for months. But Toronto never really ran out.

KnallGold said...

But who is going to be the seller of the 1500t? GLD has only half that figure and that would be its death-puke.

It would be quite ironic when a HMS initiative killed the paperGold market. Personally, I gave the initiative small chances to go through, particularly since the voting in the parliament revealed that the SVP (from where it originated) couldn't even get half of its own party behind it. I thought it finally dawns also on them that this fixing thing is not the way to go anymore.

But the polls suggested a slight advance of the yes camp, to my surprise. It also explains the growing nervousness in official circles. We'll see how it evolves, usually the yes camp loses during the campaign when all arguments are on the table.

Hypothetically, if FG would arrive within the next 30 days, well it might make the initiative obsolete, the 1000t's would def. be more than the 20% of reserves called for, IF the voters still favored a yes. Albeit the stack would then still not be allowed to sell. So, maybe, we'll have FreeGold within 30 days (at least someone said it).

Another thought is that when the price falls strongly now, the Gold initiative might be less popular.

Archer said...

Bailouts for the miners? Just when I think I've lain all the bricks possible into the large and unattractive structure that says, "M hasn't read the blog" I see another one lying about that needs to be placed.

Physical is likely drying up as I write. When does it pass the critical, system breaking, threshold? We won't know until we get there.

Indenture said...

"I think we are going to see bailouts for the miners."
I apologize to people who have read the blog, but, M, can you please explain how your bailout would work and what the benefit would be?

Brady said...

There is a very remote chance one will know if the "this is it" moment has or will arrived. Most proponents of A/FOA/FOFOA only hold physical gold. There are various forms of gambling; owning paper shares, mining or otherwise, is one form and taking the risk this isn't it is another form.


"In the comments section, it often seems like the Freegold holy grail is to be able to predict the proximate cause, and therefore get some advance warning, and therefore be the first to make a correct timing call on Freegold, even if it's only by days. But if you follow my reasoning, then it is most likely a waste of time trying to gain some advance warning. The advance warning is in the logic, and in the A/FOA archives. And the holy grail is simply buying physical gold now, before it happens. That alone will make anyone look like a genius in hindsight."

M said...

I was just saying something for the hell of it. We don't know. Maybe they have plans to keep the two tiered price going.

jojo said...

M going backwards, plus demonstrating how little he has read here, is entertaining.
Please keep it up.

(+100 to Archer)

If I thought M would listen, I'd suggest the 9 part series from two Augusts ago- probably, especially numero quatro.

M said...

I'm just playing devils advocate. I measure my physical holdings in pounds.

burningfiat said...

M, have you heard of the metric system. It's really cool, try it!

I use kilograms to measure my physical gold for instance. Like: 0.165 kg


Biju said...

WHOAAA, Gold at $1167/oz. This ride is certainly stomach churning. can I hold myself or will I vomit ? I have like 50% of my assets in Gold(percentage wise it dropped from 80% because other assets went up, unlike Gold). I hope to hold on to some railing.

Sam said...

Mining is an unnecessary practice because gold is not consumed. An increase in the "gold for sale supply" can always be had without mining but simply raising the price until there is an equal amount of buyers and sellers. Therefore the private mining industry will not be saved as it is the definition of a nonessential business.

We often call it "paper gold" but it is really a much worse product than that. It's really just become a paper market designed to track the paper price of gold with the contractual and lawful option to pay you out in currency. Today physical still uses the paper market to establish its price. Tomorrow, if there is separation, the paper market will not try to use the physical price to establish it's price. There is no upside for paper gold. The paper gold market was designed with a life span, supported for decades with a purpose, and then left to die by design. This is fundamental to understanding why you should hold physical gold vs. paper promises designed to track the paper price of gold . One is on it's way to the moon, the other is on its way to zero.

M said...

A break below 1000 and then this could be for real.

Brady said...

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

Testing said...

Yes, you could increase price, but at any given price, newly mined gold would be like having a "store of value printing press". If X amount of gold is priced at XXXX (dollars/euro/whatever you want), why leave it underground?. If X amount of gold is priced at "XXXX + 1", more reason to dig it out.
Mining might not be necessary on a global basis to make the system work, but on a regional / country basis, it would be like having "a world class asset printing press". A country with gold reserves would definitely want to take advantage of that highly priced resource. Especially third world countries that could trade that mined gold for production infrastructure and technology or highly indebted countries to cancel fiat denominated debt. Or maybe countries that had little or no reserves before Freegold and need to build up their reserves.

Sam said...


"Therefore the "private" mining industry will not be saved as it is the definition of a nonessential business."

M said...

The Fed did not reach escape velocity in the economy but credibility wise, it did. This is cult like credibility inflation. After the 2008 crash, I didn't think this was possible.

Biju said...

In my "retirement deferrred comp account", which is dead money until retirement, I just moved some cash like $14K to a Gold & Spec miners fund. Feeling bored, so playing.

I saw volume for GDX was like 347 million one day , today was like 250 million, absurd numbers while I see in Sep 2008, it was 1/10 of the volume for same scenarios. crossing my fingers.

Dante_Eu said...

30 bucks is nothing, wake me up when it's falling 300 or something. Convulsions in $ or €.

BTW M, you are one lousy devils advocate. Besides, you ought to know that role is reserved for Germans only. :-)

Happy Halloween and may we witness 3-digits soon!

Jim Okefenokee said...


I was casually scrolling through Trader Dan and noticed that in the last 7 days you posted 22 comments, but last Saturday all 5 of your comments were " removed by the blog administrator".

What were you saying at TD on Sat to make him do that? Just curious.

judie toy said...

"I think we are going to see bailouts for the miners. Especially the ones in Nevada and Canada."

I think you may be onto something. The last thing the big boys want is bankrupted miners. I suspect the gold pool is drying up and they need to replenish the pool. The bailouts would likely be backdoor in the forms of acquisition or roll over financing which would not make sense under ordinary circumstance.

The miners have to dig up more gold in an attempt to make the balance sheet respectable as the price drop, not less.

TheRealWorld said...

Where is the update?

M said...

@ Jim

Just some very basic freegold commentary. And some of his fans responded with"brilliant comments m"

He's stuck in a hard place. Like we all are. I just hate the way he's been dissing gold "bugs" lately

dojufitz said...

Just got another Krug....still buying....

Thundering Heard said...

In Dirty Float, you posted a July 7 excerpt from the FT in which the Airbus CEO called for a Euro devaluation from its then current 135 to the "120-125 range." Which happened within the next three months, and now we still sit at 123. What say you? Dirty Float from the EU? Thanks much.
(sorry if this got double-posted)

Thundering Heard said...

Sorry, my numbers were a slightly off, Euro went from 136 on July 7 to 125 by Oct 3 and is still at 125 now.

john said...

Gold in yen is holding fine, I don't see a problem ;)

Michael dV said...

TH clearly the Euro fell compared to the dollar but unless it was central bank intervention (which I don't think it was, at least not by the usual methods) then the change would not be considered 'dirty'....just market reaction. If the EZ is having problems in the economy then the Forex market will sell more euros and buy those dollars.
Do you know of intervention by the ECB?

Thundering Heard said...

No, I don't. But I have some skepticism that all Dirty Float ops would be easily detectable these days when one of DB's regulators found derivative positions placed by national treasuries with zero margin/collateral on DB's books. It seems to me that there are currency interventions like those of Japan and Switzerland where they want as much publicity as possible to scare all traders away from challenging them. And then there are the politically sensitive variety where stealth would be valuable. Thus, the US Treasury issued a statement saying they "noticed" the fast decline of the Euro. To me that sounded like an unsubtle warning to the EU to cool it with the intervention. Given the propensity of governments to operate behind closed doors these days, of course we can only guess about a lot of stuff. said...

It would be ironic if gold were to slip back into a long bear market, pressured in part by a strong dollar that is set to thrive on years of expanding US exports--principally commodities. There's a fresh 10 bcf/day of LNG exports from the US that will come online over the next five years, in addition to our advancing petroleum *product* (not crude oil) exports. Add to this that our coal exports are still pretty steady, and that the US has the cheapest electricity rates in the OECD--thus spurring manufacturing, and you have the recipe for a sustained period of USDollar strength. This is not 2004. This is 2014. Americans are consuming less, producing more. I would never have believed it myself.

Who here is ready for a sustained period of USD strength, lasting as much as five years?

Aaron said...

Hi Gregor-

"Who here is ready for a sustained period of USD strength, lasting as much as five years?"

The US Govt each and every year spends more than it collects in taxes.

Can you tell me who you see as the primary purchasers of USG debt over the next five years to further support this USD strength?

The rest of the world may purchase petroleum *product* on large order, but if the rest of the world is unwilling to support USG debt issuance over the same period then nothing has changed. We are slowly transitioning away from the USD as a global reserve to something else. Will that transition take five years to complete? I doubt it. Just take a look at the price of gold.

Michael dV said...

So much of the USA story is based upon (lies) faulty data.
The GDP is a fairy tale with about a 20% overestimate (compared to it's 1980s calculation). The deficit does not include money needed to fund Social Security. The fund is solvent only in that it holds treasuries. These will need to be redeemed by the government even though they don't show up on the books.
The fracking thing is just wack. Yes they have increased output but it is not economic. The LNG export bit was commented upon by the CEO of one of the bigs in that industry 'No one takes this seriously' he said.
So while they can talk up things and back it up with numbers, when the bills have to be paid it will be another story. Just keep an eye on the debt, the treasury purchases, the trade balance and we'll see what actually happens.
One must also ask why Japan stepped up to the plate right when the Fed stepped back. Seems clear lots of help is needed to keep things looking OK. Things actually becoming OK...I just don't see it happening.
As Jim Rogers said: 'sell everything and run for your lives.'

BaronSilverBaron said...

'Happy Halloween' I would suggest has a very short shelf life.
Can we expect a new 'deep thought' soon?

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

Well said PS

@M you don't suck, but mining stocks do :-)

You know the Einstein quote about fools and repeating mistakes... that said I think most Einstein quotes are made up...

Good luck with the stocks ....

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


If you like to earn your living via bonds and stocke: That’s fine! You only have to know that there are risks -- as in every other business.
Savings are meant for counterparting future risks. You’ve put enough savings into something which is independent from economic cycles and mortal currencies? So that you can survive breakdowns of economy and currency? Then you’ve done well!

vizeet srivastava said...

Happy Halloween!!!
I hope next Halloween will be scarier with paper dead and its ghosts are everywhere.....
My thinking is gold will take time to fall because gold bugs will buy more paper when physical disappears. So I think we will have next Halloween with FOFOA and that will be much more scary....

M said...

Lol Gregor

Funny how people always get bullish at the top.

Obama is killing coal and the US doesn't have a hope in Competing with Russian gas prices.


Roacheforque said...

I think the crux of the biscuit is that our derivative world of make-believe faulty data (lies) produces what it so intrinsically needs: CONfidence.
If the whole of the Western mindset somehow suddenly and miraculously transformed into the rational and informed mindset of the typical freegolder, I think we'd hear the crash tomorrow all the way to planet X.
In that regard, our paper world surprises us all here with an absurdly advantageous gift on a daily basis - the ability to acquire real things like food, oil and gold with nothing more than paper promises.
The increasing insanity we witness on a daily basis continually redefines the measures which the systemic sustainers will take to prove that those promises will be redeemed "at any cost" to keep the fantasy train of CONfidence on it's illusive rails.

The front lawn dump takes many forms indeed.

BaronSilverBaron said...

@PS, ein anderer and Beer Holiday
I have often wondered how religions got started.
Don't be so defensive and touchy. I only asked.
If every time a person stops by this site and sees "Happy Halloween" after Christmas they might wonder what the message is or where the messenger is.

Nickelsaver said...

"Funny how people always get bullish at the top."

Some ppl get bullish at the bottom. But the bottom in paper gold will be too late to get into physical.

Robert said...

For those looking for the meaning in FOFOA's Halloween post, here's a hint:

I looked death in the face last night
I saw him in a mirror and he simply smiled
he told me not to worry
he told me just to take my time

Michael dV said...

I don't have a problem with mere paper promises. Fiat works just fine. As fofa's Honest Money essay points out, the problem with fiat is not its ability to function as a medium of exchange. It is the silent promise to be worth the same in the future...kinda like gold...the the long run.

Luke said...

GTU at a near 10% discount to NAV. Some people REALLY don't want to hold gold right now.

M said...

what is GTU ?

M said...

the USD is doing the same thing gold did in 2011.

All I see everywhere is dollar bulls doing victory laps.

Bright aurum said...

Petrodollar revisited:
Some charts:

Jim Okefenokee said...


me again - hope you don't mind. Trader Dan is still being so rude to you. And he calls himself a Christian! Some people just don't get it.

MatrixSentry said...

GTU (Central Gold Trust) is an interesting close ended fund. It is indeed trading at a massive discount to NAV. Being a close ended fund, it is quite different than an ETF like GLD.

Another close ended fund is PHYS (Sprott's Physical Gold Trust), and it's trading very close to NAV. My take is that for some reason the market rewards PHYS for the ability to redeem shares for bullion. Of course this is not an option for GLD unless you can redeem a basket through an authorized participant. PHYS requires enough shares to take delivery of 400 oz good for delivery bars. Both GLD and PHYS excludes most shrimp from exchanging shares for bullion.

GTU is interesting in that there is no way for gold to actually leave the fund. No authorized participant withdrawals, no shareholder redemptions. The fund is controlled by a Board whose members are elected by the shareholders. PHYS is controlled by Eric Sprott, who retains the ability to close the fund at any time. Of course GLD can be closed at any time. Both GLD and PHYS can leave shareholders holding fiat when all shares are cashed out.

Now, knowing what we know about the vulnerability of the flow of gold, which funds and ETFs provide a ready source of gold to augment gold flow? That's right, GLD and PHYS. We are seeing redemptions at PHYS and a dwindling stack of gold at GLD as baskets are redeemed for bullion. The gold at GTU remains untouched.

Does the market have it wrong? Is the perception that PHYS is more credible and somehow is a better proxy for physical gold in hand correct? Could someone (including a billionaire named Sprott) make a move on the gold in that fund? Would such a move lead Sprott to fold the fund at some point, cashing out remaining shares at the prevailing price of paper gold? Absolutely. Could GLD be drained of its gold and then shutdown, cashing remaining shares at the prevailing price of paper gold? Absolutely.

What about GTU? Nope. The only way the gold goes anywhere is if the shareholders vote to close the fund and cash out. The way I see it, GTU is the safest paper proxy for gold and will be the fund that is most likely to survive the transition to Freegold.

It is said that the market is always right. That may be. But always is a loaded word. Maybe always does not include a once in history event such as Freegold.

Seems to me the biggest risk related to GTU is confiscation by the Canadian government post transition. We have debunked confiscation many times here, but it remains a possibility no matter how unlikely.

The biggest risk of proxy gold is that you are forced to fiat during the transition to Freegold, when the price of paper gold is collapsing and the flow of physical is undergoing a huge spike in demand. All gold goes into the strong hands at that point and goes into hiding. The chumps get fiat.

Robert Mix said...


Physical Gold Advocates might be interested to know that Fisch Instruments has a new product called "The Ringer" now for sale. It is essentially a clamp that holds a gold coin (K-rand for example), and has a built-in hammer that strikes the coin. A gold alloy coin will ring loudly (as will a .999 coin, but the pure coin less so). Tungsten will not ring at all.

I have just ordered one.

There is a video and an audio there at their home page:

Edwardo said...

The fiat will go to the chumps
Confetti for paper bug Grumps
When you're cashed out try not to pout
Buck up and just take your lumps

Zebedee said...

Trouble for Aussie gold mines.

Kelvyn Eglinton from Newmont Asia Pacific says gold production in Australia is 'quite threatened' by low gold prices.

Australia's largest gold miner has warned that its future in the country could be under threat if the gold price continues to slide............Mr Eglinton says Australia is the second most expensive country for gold production and Newmont could be forced to look for investment opportunities overseas if global gold prices slump further.

Michael dV said...

gee...less gold from the mines, increased demand from Europeans and Chinese (and almost everyone at these prices) GLD losing inventory and yet the price of gold falls....fascinating...

M said...

@ Jim

This is why this keynesian credibility inflation is so dangerous. The markets are aligned perfectly to discredit Austrianism and pump up keynes.

Even a guy like Dan Norcini gets sucked into the vortex of insanity. He's been on this anti gold tirade for a couple years now. And he thinks that anyone who recommends it is a lying huckster. (even though he owns physical gold) The most marketable good in the world needs a salesman I guess. Talk about an oxymoron.

MatrixSentry said...

Actually M, Dan Norcini is quite sane. The problem is the two of you speak different languages. To Dan Norcini, gold is a trade. As such, gold is a contract, a digital marker in a betting game. Dan cannot conceive of a trade in physical gold, and rightfully so. Why would anyone do something that foolish? Why not just trade the digital contract?

I presume from your posting here that you view gold as contractual gold derivatives plus physical gold. As such, you see utility in gold for saving (physical) and trading (mining shares, ETF, etc). Your grasp of the Freegold concept, as I glean from your posting here, leaves a lot to be desired.

Dan Norcini gets frustrated with people who see gold as a trade. People like you who believe they are insulating themselves against the evils of fiat by going long in the paper gold markets. To him this does not make sense. Why would someone go long in a trade when that market is displaying bearish trends across virtually all timescales that rational traders would utilize? Worse, why would someone be perpetually bullish for the gold trade?

He is spot on as far as I am concerned. I wouldn't touch digital gold with a ten foot (long) pole. I would short the shit out of it however. Dan Norcini would have zero problem with a saver of gold bullion, who is stacking it away as a reserve. He would likely scratch his head in bewilderment at my actions. I have far more physical gold than I need. He would wonder why I do this and would see a huge opportunity cost in my actions. Why not put some of that reserve into the markets to generate more fiat, and then convert that fiat to gold in reserve? My only response to that line of logical inquiry would be to say that I see a collapse of financialization on the horizon and cannot possibly predict the timing. Therefore, I am being as conservative as possible in order to preserve as much of my wealth as possible.

MatrixSentry said...

Dan Norcini would not agree with me that a collapse of financialization is likely. He makes his living in the market, trading digital contracts. He is a very successful gambler who uses TA to sheer sheep in the market. He would not consider a fracture of the physical gold market from the overall gold market as likely. He sees the two forms as parts of an inseparable whole. Dan believes that the stock of gold is nearly unlimited (he's right). He believes that regardless of how low or high the gold price goes, there will be physical that flows in order to keep the physical and digital market joined. That is where I differ with him.

Your credibility is shot with him. He sees you as a babbling troll. Too bad. You might have asked him what he saves in, while making the distinction between saving and investing. My bet is that he would acknowledge holding physical gold for this purpose. Further, you could have asked if now was a good time to buy physical gold, to be held over the long haul, and to be called upon after one's productivity has ended? I suspect he would say sure, a bear market is great time to acquire long term gold for this purpose.

Owning mining shares is irrational at this point. Owning GLD shares is quite mystifying. Going long gold futures is suicidal. Owning physical gold for the trade, to stick it to a gold short is just plain stupid. This is Dan Norcini's perspective. I agree 100% with him.

The only hit I have on Dan is that he doesn't understand how GLD works. He believes that if gold is going down, GLD stock must decline. He sees this as confirmation of his bearish stance, when no such confirmation exists. He does not need confirmation from GLD. There is enough of that in the charts. He does not see that physical gold is flowing from GLD for a specific reason, namely to augment a flow that is experiencing increasing demand. His view is that flow will always be present from stockpilers of gold at any price point. He would reject that idea that stockpilers are less likely to cough up gold as price declines. In fact, I suspect he would say that as price declines, more would part with their gold in disgust. He sees gold as a trade, therefore this would make sense.

Motley Fool said...

What he said ^


Roacheforque said...

Indeed. I can't speak for Norcini as I have never read him or spoken with him, but you certainly have artfully expressed what I consider to be the prevailing mindset of the "investor class". A class not wholly responsible for the current "market action" but certainly helping it along its merry way - oblivious to the greater purpose they serve, as influenced by higher powers they do not perceive.

M said...

@ matrix

He is the most against people who advicated buying lots of physical. Because he feels bad for the ppl with lots of physical because they didn't have the chance to sell it earlier in the bear market. He knows nothing of freegold and he thinks we are the worst of them all.

My position has always been the same. I've understood freegold for a long time now. But I've also been playing the miners just in case we get a bubble in PAPER gold. I maintain that position now because we have no proof that this is a freegold move in the paper markets. The run up in paper may still be in front of us. If it is, then I'm getting in at the bottom. If it's not, then my physical gets revalued. And in that case, I don't care what happens to the miners.

MatrixSentry said...


As I said, he would scratch his head if he saw my stack. Opportunity cost. He cannot understand the saver's mindset. He thinks he does. He thinks that saving entails risk. I do not. He confuses saving with investing. He believes they are one in the same. Everything he sees in the world says this view is correct.

It will be correct until the day it isn't. Then Dan will have an education. He simply cannot see that day ever occurring.

I do not hedge my gold. I hold as much as I understand. Which as it turns out, is quite a bit. I understand enough to see very little utility in a hedge or opportunity to make a killing in miners.

Indenture said...

M: You have now used the word 'miners' sixty-nine times since you first visited FOFOA's site.

M said...

@ indenture


My physical position is about 3 times the size of my miners position.

We still don't know if this is the move. ANOTHER said the move would be quick. This has been a slow meltdown. So the paper run and subsequent crash could be in front of us. I hope it's not.

ein anderer said...

Why don’t you hope it is? I mean, as far as the FG lens is concerned, your physical position would be 120 times the size of your miners position. Whatever mines are doing: It will be irrelevant for you (1%).
Not a bad deal, yes?

ein anderer said...

BTW: It should be no problem for anybody here if somebody is trying to earn his livings by paper speculation or stocks. Others try to earn their living by this or that, and not everybody succeeds, right?
Who we are to condemn? Main thing is that everybody owns enough physical (gold) for saving at least his wealth.

Bright aurum said...

M, Matrix, Will
I posted your little discussion on Dan`s blog. Hope you don`t mind.

Michael dV said...

hedges can be useful especially for those overextended in physical. If one is 'all in' but knows they may have bills coming in before transition then an inverse fund...just enough to say cover the loss that might be sustained (to even out the tax impact) if physical had to be sold.
This could happen if one went 'all in' but knew that transition might be years off. One would buy physical but then a 3x inverse gold fund for however much they might anticipate needing to sell.
If a guy though ' I might need to sell 30 ounces' he could buy 100 shares of DGLD. DGLD would rise at about 3 times the rate physical was falling (each share represents about 1/10th of an ounce).
In this way he would have the gold in possession but would be able to painlessly redeem if he needed to cash out before transition.
It allows one to gamble a bit more on the timing that one could be comfortable with in the absence of the hedge.

Bright aurum said...

@ M

You wrote:

...ANOTHER said the move would be quick...
In my opinion Another didn`t envision the advent of the gold ETFs as the $IMS shock-absorbers.

Phil_O_Dendron said...

M I think that I mentioned that I too have some miners that I bought before I understood the reasons not to. However, at this point since they are down so much (about 75%) I am not going to sell and lock in my loss. I am making the bet that miners will catch a bid soon after the reval on gold and I can recoup some loss.
I do have a good stash of physical that I won't need to sell. Even if the miners go to zero I can still pay my bills and not live under a bridge. My physical will sit very still until either the transition or I die ( in which case my family will get it)
It would be "nice" if the miners caught a bid because then I would sell and use the money to do things I would like to do before I croak. In any case it is annoying to know that if I had read some of the information on this site before then I would not thinking about it.

Bright aurum said...

@ all and hopefully Bron
Is there any updated chart that shows (superimposes??) POG and shrimp physical premiums for the western market? So that stress fault-lines can be observed.

Sam said...

Excellent points Matrix. Matrix is a unique person. He understands freegold on a very high level and understands trading on a very high level. These are two very separate camps. There are a lot of people on this blog that understand freegold because our host is a very good teacher. There are very few here that are good traders, including myself. I have no idea if paper gold will go up or down tomorrow. If I wanted to know I would consult someone good at trading because freegold knowledge wouldn't help me a bit. People good at trading have agreed that miners were a bad play for some time now. People that understand freegold know miners won't participate in the wealth created by a revaluation. So both camps agree that miners aren't a good play. If you have owned mining shares for the last couple of years it is my opinion that you have a poor understanding of the concepts taught on this blog AND you are a bad trader. The two are mutually exclusive. A sure fire way to make a freegolder and/or trader's head explode would be to use a loose understanding of freegold to guide trading decisions. That would be like using your knowledge of river rafting to help you navigate a cruise ship.

Finally, holding mining shares tomorrow because you already lost money on them yesterday is like betting black on the roulette table because red hit on the spin before. It should not factor into the decision at all except it does for some people…because of emotion. If you are the type of person that is driven by emotional things like that I recommend you don't trade anything, ever, at all. Have a professional do it for you. The concept of "sunk costs" was invented just for this purpose. People would rather never lose than win. If your mining shares have gone down you have already lost the money. If they go back up tomorrow you would then make money. You wouldn't be getting your money back for a great big long break even. It may sound like the same thing but it isn't. You are alive today and can only affect today so you should make your decisions based only on things that are relevant. Accept the fact that you lost today and you have a chance of thinking straight and setting yourself up to win tomorrow. I'm not saying to just buy physical gold. If you want to trade, go trade, but don't hold miners for any other reason than you think they are set to go up very soon.

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

ANOTHER said the move would be quick. This has been a slow meltdown.

Cherry picking scripture again are we? Consider the condition of paper gold as being akin to an unusually laborious terminal illness and you (and the rest of the readership) will be considerably better off. Take on board the notion that Another would likely have allowed for events to have played out over a substantially different time frame than the one originally scripted.

In the meantime, if miners are as trifling to your condition as you assert, I can't help but wonder why you impose them on the conversation (69 times?) so often.

P.S. Matrix has done you a considerable service just now.

M said...

@ Brite arum

I see that lol... I don't mind.

If anything this just goes to show how small the gold world is. Bubble in 2011 my ass.

I've known of Dan for a few years. I only went to his site to get a read on the technical side of paper gold. To my surprise, I seen someone who is getting way too emotionally tied up in it. Maybe I'll have to pay a visit to Dennis Gartman.

M said...

@ Sam

"If you have owned mining shares for the last couple of years it is my opinion that you have a poor understanding of the concepts taught on this blog AND you are a bad trader. "

That's horse shit. I made and realized 40 and 60% gains in my gold miners from 2009 to 2011. I'll post the screen shots on my blog. (I hate saying things online w/o proof.)

BTW I have a better then loose understanding of freegold thank you very much.

Ever noticed the dash for trash in the stock market ? Or the most shorted stocks rising the most ? Greek banks, Spanish bonds, US housing stocks, Govt Motors, Candy crush, BP.

I throw all logic out the window when it comes to gambling with miners. It is strictly a sentiment/contrarian play. Nothing more, nothing less.

Sam said...


Where I come from "couple" means 2. Since we are less than 2 months away from 2015 I'm not sure how posting 2009-2011 mining stock profits counters what I said.

Was it a contrarian play back then....or does that justification only fit now because you have ridden that horse all the way down the hill?

PS said...
This comment has been removed by the author.
Jeff said...

Now hold my beer and watch this...

Archer said...


I throw all logic out the window when it comes to gambling with miners. It is strictly a sentiment/contrarian play.

Truer words may have never been more unwittingly spoken.

You think it's a contrarian play, but it's anything but. The contrarian play, in this case, is not to get sucked into the foolish belief that just because this asset class is desperately unloved one should be backing up the truck.

Save for the occasional, spectacularly gossamer levitation, mining shares go down relentlessly because everything about their business screams Stay away!

To wit, no matter how discounted these outfits may seem, with few exceptions, company metrics that attempt to present balance sheets as models of financial rectitude are rubbish. By the same token, these same companies that show assets as possessing, literally and figuratively, the mother lode are not to be trusted. Certainly one can find this condition in other industries as well, but that's is hardly an argument to buy a sector that has been well and truly found out to be fools gold. The only contrarian play with mining shares is to fade that which seems like the contrarian play.

M said...

@ Sam

It was a contrarian play in 2009/10 yes. You are aware that gold was over $1000 in the spring of 2008 and then it went down to a 600 handle. Most analysists were bearish the whole way and they were right. So was the public. So I guess this time was diffrent. Especially if the last paper bull market is behind us. Time will tell...

Zebedee said...

Given Trader Dan's response to Bright Aurum's measured post over on TD's site I thought it possible to add "off the wallers" so as the description of members here reads...........

'Evil gold hoarders, jerks, time misallocators, off the wallers and brainwashed cult members:'

Having read TD's commentary over at JS Mineset then KWN and now his current site since 2009, something happened that completely changed his tune back in 2011. Likely it was some sort of rift between JS and himself but I find I can no longer visit his site on any regular basis given his consistent gold bashing tirades and one eyed TA.

I deem TA is simply looking into the past to gain an insight into what future trends may hold, sort of like living in the past tense and I guess IMO that just doesn't do it for me given this somewhat bizzaro economic world we now endure.

"Everyone knows where we have been. Let's see where we are going!" This I much prefer. As someone mentioned here TD just doesn't get the paper/physical separation thing.

Thanks for your recent posts too FOFOA and the many regular commenters here. Always such a great mind-bending read.

As an aside, I have noticed quite a bit more SDR talk recently in the blogosphere particularly with the G20 meet in Australia next week. Prompted me to go back and read FOFOA's 'Special Drawing Rights' post again for a refresher. Good stuff I might add too!

Xcsler said...

TA, looking at the past to predict the future, reminds me of Nassim Taleb's story of the turkey who was analyzing his life and came to the conclusion that the butcher who was feeding him for the past 1000 days really loved turkeys. Until one day around Thankgiving...everything changed.

Although we as Freegolders aren't sure when "our Thanksgiving day" is, at least we understand that we're turkeys and are taking the appropriate protections. TD doesn't even realize he's a turkey!

M said...

TA. Like analyzing your own shit to try and predict what you are going to eat the next day.

Jim Okefenokee said...

TA. Like analyzing your own shit to try and ...... assess what perhaps you should eat the next day.

BaronSilverBaron said...

Halloween is over and so is Gold according to Armstrong.
Hey, don't shoot me I'm only the messenger!
I'm sure all of the smart guys here can dissect the article and make me feel not so stupid for owning Gold.
Maybe even FOFOA can wade in as well.
Just saying.

InowB4 said...

The price of physical gold is determined throught paper gold.
Paper gold certificates do not represent the physical price of gold, they reflect the dollar aka printing press because they can be created out of thin air in unlimited quantity. The more dollars will be printed the more the physical price of gold will rise and advertise the devaluation of the dollar sending bond yields and stocks higher to.
Unless the BIZ-Boys continue to save the dollar system by creating ever more paper gold certificates to suppress the paper gold price and bond yields.
This does only work until the physical is sold out top down and the physical stuff has to be marked to market to detect its price.
Then all paper gold will be worthless and vanish and gold will be revalued to its concurrent market price.

Cash settlement of the contracts serves to remove price determination from the physical market! This mechanism changes the scale of the paper gold price to the opposite. The less paper gold is valued the more physical is worth.
This understanding helps you to keep your bullion tight!

Also read Kranzler and Roberts on this one.

tEON said...

“In our current dollar gold market, the less gold is supplied, the more it pressures the price down! Players must create and sell not just more contracts to cover expiring ones, but also sell enough paper to force the price down further. In a market that’s becoming shorter of physical gold, this is the only way they can add equity to cover rollover positions.” FOA – The Gold Trail

Zebedee said...

Easy come, easy go. Sold into weakness at a huge discount.

'A gold nugget found near Ballarat and weighing more than 3.5 kilograms has been sold for $292,800 at auction in Melbourne......

....The nugget has been on display at the Sovereign Hill Gold Museum in Ballarat and staff had set the value at $500,000.......

......The Destiny nugget - named as such because the trio believed it was their destiny to find it - is the size of two fists and weighs 3.663kg............It's a bit of a surprise when you put it in your hands, you think you're going to sink through the floor he said.......

One Bad Adder said...

This can't last much longer methinks:$TYX:$IRX&p=W&b=5&g=0&id=p55885674824
The Ratio is now hovering around the 200 WMA @ 171 ...and thats the BEST they can do!
The absurdity of this situation beggars belief.

One Bad Adder said...

Hold the presses! They're throwing everything but the kitchen sink at it this AM.
DX sub-88, $IRX uptick ...Yawn ho-hum!
Wake me when it's over - and I don't intend to be asleep much longer!

BaronSilverBaron said...

Notwithstanding Armstrong's take on Gold, I now find according to the 'BSB' valuation of Gold to Bottles of Malt Whisky that I can buy more for my ounce of Gold in Japan and Australia since the beginning of November.

Just saying.

PS said...
This comment has been removed by the author.
burningfiat said...

Yes, who cares about the opinions of trader Armstrong and his mythical computer? Dude's so confused about the money concept that it's really embarrassing. Are teenagers with smart-phones going to decide the Store of Value par excellence of the future?

Who cares about whatever trading-blog and their little paper-bubble of perception?
All of these views may work now, but they will soon seem simple minded and utterly wrong once things really start to collapse.

Hone your logical sense and calibrate your bullshit detectors, people! Think about the big picture.

That's what Freegold and FOFOA's blog has always been about. A logical, realistic narrative of the last centuries of monetary history, leading to a strong sense of where we're heading! Forget political correctness, not all viewpoints are born equal!

Pick up your favorite graph of the last decades of debt expansion. Think about how that debt hasn't even begun to circulate for real. Look at the stock market bubble. Look at the evidence showing that foreign official dollar support has been withdrawn. Look at the structure of gold-demonetized institutions like ECB.

And then rationally explain away the Freegold scenario. I dare you! :)


Wil Martindale said...

Burning? Channeling McKenna - world renowned proponent of the Flower of Understanding??!!

Indeed FOFOAN's, get your affairs in order.
The end is truly near ...


BaronSilverBaron said...

@ burningfiat
I watched this on your 'recommendation'.
I presume the speaker went on the say "make sure you take your Ebola vaccine when it's offered because it's the logically, mathematical, scientific way to go." 'Oh and by the way science tells us that genetically modified crops are completely harmless and good for you."

burningfiat said...

Bsb what can I say? That was certainly not the intended take away.
I'm pretty sure mckenna (rip ) would never have said that.

All I'm trying to promote is: study hard and trust where ever your own logical skills are leading you. Don't be thrown off the track by the unstudied babbling of commentators that won't even touch the big picture…

Steve said...

And another GLD puke, 727.15t left.

Delusional Investing said...

That's only 50T off 50%.

Dante_Eu said...


Here's my response to Martin Armstrong:

Yo Yo Ma


MatrixSentry said...

Martin Armstrong is a salesman. As a salesman, your main job is to be a promoter. You must promote a product or an idea that the consumer needs to listen to what you have to say and that what you offer is uniquely valuable. Nothing wrong with that IMO, a man has to make a living. You could say he is filling a need to those who support him financially. They have a need to hear what Martin offers to tell them.

Martin understands the money concept. He has revealed this a number of times when it was useful for him to articulate it. He rightfully says the gold standard is a farce. He has said that money is what ever man says it is. He has said that money as a thing is flawed idea. He has said that gold is an asset, not money. He has said gold is a hedge against governments and their inevitable destruction of currency.

I think most of his "freegoldish" commentary comes when gold is either in a bull market or a sustained up trend. His useless commentary regarding gold comes when gold is under pressure. Armstrong is a flag flipping on a pole. He shapes his commentary to align with what is happening in the world. How else can he pass on the uncanny predictions of his fictional talking computer, Socrates. Socrates seems to always peg any point in any market, usually to the day. Funny thing though, Socrates always proves accurate after the fact.

Armstrong says gold is going down. Wow, that is a tough call right. Pull up a chart and take a look. A happen to agree with that call. He says there is going to be a big move into gold somewhere in the future. Again, that's a tough call right? Let's assume he thinks that the paper gold market can survive into perpetuity. Would it be a huge leap of faith to say gold is going to rally after a 40% correction to a previous bull market when the hot money returns to the sector.

Forget whether paper gold can ever regain the credibility of the previous bull market. I say it won't. It won't matter to Armstrong. He will crow about how Socrates is always right while paper gold collapses. Then when Freegold emerges he will say "we told you so", and then point out how Socrates had provided the forecast to the exact day of revaluation.

The odd thing about it all is how oblivious MA is to the ridiculousness of his story regarding Socrates. He apparently has no clue how he is perceived as hopeless huckster. That tells me he is likely a sociopath or a psychopath. Notice how he always posts reader comments and questions that first and foremost thank him for his powerful intellect and unique insight. He always responds that yes he is all knowing, rather than deflecting the flattery like a normal person would. His ego is monumental.

He is calling for a collapse of the global economy. He says gold will emerge at that point as a the hedge against collapsing government credibility. Somehow he calls for a moon shot in stocks as well, while saying governments will not print to save debt. As far as I can tell, he thinks money will panic out of debt into gold and and the stock market. Two focal points of value? Excluding that difficult point, one could say he will mold his view to align with Freegold post-transition. "I told you so." He can crow about how smart Socrates is when perpetual printing drives the global stock markets higher and higher pre-transition.

Now what he does to reconcile his call for the death of the Euro? Who knows. Likely he will say Socrates saw it all along as a possibility. Who is he to question the all knowing artificial intelligence that is Socrates? How convenient..

Edwardo said...

I've commented quite a bit on the monstrosity that is Alarmstrong eCON, so while I will refrain from adding to other's comments, I will offer this:

There once was a dude with a service
Whose name wasn't Nelson or Purvis
Have you heard of Armstrong if you toke from his bong
Won't be long 'til your feeling quite nervous

Beer Holiday said...


Awesome comment :-)

I should start a "favorite comments/ hall of fame" word pad doc or something....

jojo said...

JJ said...

Regarding Armstrong or other people: When judging others and their actions, I find it nice to remember that had I been born into his shoes - I would have made the same decisons.

I find more and more articles about a reset/revaluation of gold. A couple of months ago there was none and last week at least 5 on various blogs etc. The closer to the Swiss referendum we come, the lower gold should (IMO) go so closing out the shorts if it is a "yes" becomes cheaper. The funny thing is, should it be a "yes" vote, the Swiss won't need to buy any :-).

vizeet srivastava said...

I think paper gold death does not need PoG to become zero. Paper gold can also die because of revaluation.
I think as PoG goes gown mining companies will shutdown. This will cause gold shortage and investors/gold bugs will buy paper gold this time causing PoG to jump. But price jump will fade in few months and it will fall. But there will be always some support coming and leaving at lower level as it happens with any shares. So probably it won't cause paper-gold to die just because of price drop.
When PoG is low and OPEC doesn't get gold for oil it will stop selling. So PoG must be fixed in order to get the oil. This will cause 100x price jump that time. This will kill Paper Gold. And Governments will rush to acquire gold mines and may be confiscate gold that time.

vizeet srivastava said...

The above scenario only applies if US or Japan does not get into HI before the events.

Stan Eversham said...
This comment has been removed by the author.
Stan Eversham said...

I'm new to the FOFOA blog and I'd like to ask you all a question: What time frame do you see Gold being valued properly (paper pricing disappearing)?

BaronSilverBaron said...

@ Stan Eversham
Don't want to be a kill joy Stan but that's an answer you will never find here. There is an immense amount of information on Why and How but never When.
There are hours of "trail" to follow and mounds of comments but after all of this (if you have the fortitude) you will never find the Holy Grail... WHEN.
There are countless experts on Why and How but no experts on When. There are some who will give a vague hint at When but as each year passes the When is always "just around the corner."

burningfiat said...

Hi Stan!

I agree with BSB a bit. It's hard to do exact timing on stuff like this, so most refrain...
I believe it was FOFOA that once said that you can view it as an overdue earthquake.
When is the next big one going to to hit California? We can't say precisely, but it's overdue... Just because a year or two passes without that quake actually happening, it doesn't mean that risk of that earthquake hitting on any giving day diminishes. In fact the likelihood increases...

Edwardo said...

When tell me when will Freegold arrive
Stride through the door and say, "Hey, I'm alive"
Contrive me a date, provide us a year
Oh how I wish it was already here

What will I do when I wake up the morn
That long foretold Freegold has finally been born
Why I'll tap dance and boogie and quaff fine Champagne
I'll puff a Cohiba and never complain

Cause things will be grand, shiny and yellow
The world will command that this fellow be mellow
What were once problems will melt into air
Travails once felt deeply will scarcely be there

Excuse me my daydream my fantasy wild
I do get transported just like a child
Now I'm back in the present the quotidian now
I shan't ask again, I promise, I vow.

Beer Holiday said...

Timing: I find it odd that people expect timing for a financial;l market prediction.

No one complains when Kyle Bass' Japan predictions are roughly out. Would you guys like some lottery results with timing too?

Here's a smart guy who though WW3 was on the cards

PS i personally think a couple of years - but I could be wrong - and I don't care if I am as it happens....

anand srivastava said...
This comment has been removed by the author.
Stan Eversham said...
This comment has been removed by the author.
Stan Eversham said...

I think Japan’s latest “Hail Mary” monetary move leads me to believe the day is close when Gold will be an integral part of the world monetary system. Once the Yen goes up in smoke the world’s faith in fiat currency will be severely shaken. It will only take a small percentage of people ditching fiat in favor of Gold to radically change the monetary landscape.

PS said...
This comment has been removed by the author.
jojo said...

Stan- nothin wrong with fiat at all. You've got a lot of reading ahead of you though.
Maybe start with going forward to kinda get the gist?? I don't know.
It would be wise to put your baggage down first. To leave preconceptions behind for a while.
What you read here is vastly different than anywhere else regarding money, gold, wealth, and credit.

jojo said...

"Where does the silly notion of gold lending even come from? Well, pre-1971 gold was money to one extent or another. Money is credit/debt which means that debts were more or less denominated in gold ounces, off and on, from 1971 going back to cavemen. So when money was gold, people lent gold, even if they didn't have physical gold to lend. They simply extended credit to credible people and the repayment was denominated in gold ounces, even if it was paid back in other ways. That's gold lending. Freegold is different because gold isn't money. "

Thank God for fiat.

Indenture said...

Stan: Try
Super Producers are far more important than a "small percentage of people ditching fiat".

Reality Show said...

Hi Stan, you sound like you might be coming from the "sound money" perspective. To understand Freegold you have to put aside previously held views, imagine you know nothing and start again. It is worth it.

We don't think fiat is evil, it's just that saving in the same medium as that used to extend credit for a growing economy is problematic. We don't think that gold is currently being manipulated by the Fed, rather that gold, the digital commodity, is realising its true value. We see silver as a fantastic commodity that is far too useful to be a wealth reserve. Oh, and we don't think gold is money, it's far too valuable for that function.

Basically, the Gold Standard is the complete monetisation of gold and FreeGold is the total demonetisation of gold. Polar opposites really. Good luck with your studies.

Reality Show said...

I could write some poems myself
On Freegold and financial health
Wasting both your time and mine
Forcing those couplets to rhyme
When everyone here really knows
There's more poetry in Fofoa's prose

Indenture said...

Stan: If you have any questions please don't hesitate to ask. There are people here that will point you in the right direction.

runninggloves said...

the question of when is um....
well its a pretty safe bet to say 21st century, but that wont help much.

how about narrowing it to the decade.
that depends on how much tricks TPTB going to pull out of their sleaves

which year? if someone want to take a crack at it, please add to it.

consider this
when was the last time a fiat kondratiev winter did not result in paper going up in flames before winter is over? how far can authorities stretch the winter timeline? is it time and/or event driven?

Bright aurum said...

A crappy article that does supports the coat check room theory though:

Bright aurum said...


BaronSilverBaron said...

@Stan Eversham
Dear Stan, I got 'into' Gold because I liked the way Gold coins could be dug up from the ground after thousands of years and still be valuable (and not tarnish).
I bought Gold long before I stumbled across this site and trotted merrily down the 'trail'. You'll need many hours for this pursuit. My own experience was that I ended up just as confused but at a higher level. Knowledge of Freegold might give you a warm glow but it will do nothing to improve the value of the stuff at this moment. It might do next week, next month or the next century.... who knows?
I buy Gold because saving in a bank is dodgy, shares will crash as soon as I invest and I can't see the point of bonds.
GoldMoney'dot'com is a good alternative to a savings account at a bank.
I pop in here from time to time to see if everyone is still talking with each other and waiting for another FOFOA article which can be quite educational.
My own "red neck" conclusion is the only real thing I need to know is how many 'things' Gold will buy in ounces at this moment. So the price is the only day to day indicator for me.
Still reading about my favourite thing (Gold) is always entertaining whether it's FOFOA, Armstrong, Sprott, KWN etc. Just take it all with a big pinch of salt.

Roacheforque said...

"It" is happening right now, just in slow motion. Things could accelerate further with the increase in volatility, but the first acceleration (on a very slow time line) began in 2007.
The bailouts were replaced by QE and Fed QE is now replaced by the primary dealers (just another shell game).

Debt cannot bail itself out forever. Thoughts are changing.

ein anderer said...

Regarding the »when« question, FOFOA wrote 5 years ago:

As I have explained many times, freegold and hyperinflation are separate events. Freegold is the establishment of a physical gold market after the paper gold market is arrested through default, breaking the dollar's grip on gold, and also breaking the dollar's international settlement function.

The first way this collapse could play out is a quick devaluation of the dollar, say, over a couple weeks, followed by the emergence of freegold. Think of it as the riverbed at the bottom of the waterfall.

The second and more likely way this will play out is with hyperinflation thrown in, perhaps lasting many months or years after the initial plunge/devaluation. The overwhelming evidence that this will be our path is the political control the Executive Branch is exercising over dollar monetary policy.

Testing said...

Does anyone know why GLD didn´t have any major pukes since January until recently? It had been dropping constantly until late December and it wasn´t until late September that it was resumed...

One Bad Adder said...

What BSB Said -
I got 'into' Gold because I liked the way Gold coins could be dug up from the ground after thousands of years and still be valuable (and not tarnish). the key to a deeper understanding of (Physical) Gold.
You see, because of it's unique suite of properties, Gold neuters Time ...ergo - Monetary immortality.

One Bad Adder said...

@BA - Your correspondent is (I think) correct in assuming a Bond rout (first and foremost) ...although he doesn't have a good handle on the dynamics IMHO.

farmersteveg said...

If you do a review of Zerohedge round that time, I think there was article regarding late night visit w/ helicopters and Ukraine gold.
I think.

Michael dV said... we do not know. As mentioned there was rumor of 30 tons or so coming from the Ukes and some Mali and (well before that) Libya.
This recent decrease in GLD inventory has been steady and slow. Maybe it is going to the usual suspects. Maybe rappers are buying heavy bling.
Interesting, this time the flow is steady down. There have not been significant increases.

Testing said...

Might be, but the amounts don´t quite add up.
Since late September, GLD gold stock has dropped like a rock, from 772 to 722 today. That´s 50 tons, in less than 2 months (1 ton / day approximately). Seemingly out of nowhere, since the big decline in gold price started in mid-October, GLD resumed its drain. If the gold you mentioned coming from Ukraine and Mali was used to supply the physical market, it should have been something like 200-300 tons (1 ton / day, from January 1st to Mid-September = 285 tons). I understand the amounts from both countries where not even close to that.
As you mentioned it´s a steady but constant drain, without any physical re-stocking of GLD vaults.
This plain speculation, ASSUMING the physical demand was constant during that while. Those are big IFs, but nevertheless, it seems like something big started happening a couple of months ago that changed the new normal that had started in January.

Michael dV said...

I share the frustration in doing any good analysis. As Another said, central bankers do not operate in a fishbowl for all to see.
Gold supplies from ming might be dropping even as physical demand from China was rising. We don't have good info on either the supply or the demand side for physical gold movement.
I guess that's why I watch the GLD inventory. At least it gives me something to observe and thus allow me to feel I have some control over my environment. Otherwise I'm like Dilbert's tie, just floating around and anywhere but where it should be.

Michael dV said...

'ming' of course should be mining....freaking off brand keyboard....

Testing said...

Yep I feel the same thing. Like Jay Sherman would say... "It STINKS!!!!"

InowB4 said...

“In our current dollar gold market, the less gold is supplied, the more it pressures the price down! Players must create and sell not just more contracts to cover expiring ones, but also sell enough paper to force the price down further. In a market that’s becoming shorter of physical gold, this is the only way they can add equity to cover rollover positions.” FOA – The Gold Trail

If the banks buy physical gold, there can be no arbitrage, but if the banks buy back there own certificates, they need only pay what the sold them for (large joke just made) which is GLR = (LIBOR – GOFO). However this cost becomes an arbitrage profit when GOFO > LIBOR. Thus there exists an arbitrage whenever GOFO is either sufficiently large or small relative to the risk free rate LIBOR – and only when LIBOR = GOFO does there not exist any gold arbitrage at all.

Summary of Conditions for Bullion Bank Arbitrage

Selling gold certificates GOFO < LIBOR

No arbitrage GOFO = LIBOR

Buying back gold certificates GOFO > LIBOR


Bright aurum said...

A MUST READ utopian article that attempts to find semi administrative and demand driven measures to create a monetary free float in an intirely fiat system (screw the savers kind of thing).
Very much thought provoking though.
And by the way since energy prices are falling thus supporting the debt based $IMS and the gold extaction by the margin, forget about the reseves of the gold ETFs burning faster.$gold:$brent&p=W&b=5&g=0&id=p83482723640

ElaisaKasan said...

Here is an update on the IBRD physical gold distribution plan, and how it affects freegold.

PS said...
This comment has been removed by the author.
Frank Lloyd said...


You should consider signing up for so we can pay you to give us more blog posts!

I would sign up and give you $1 for every new post. I know it's not much, but if enough people sign up as patrons, perhaps it would be sufficiently motivating.

Edwardo said...

Frank Lloyd Write?

BaronSilverBaron said...

@ Frank Lloyd
Unfortunately Frank I think the well is running dry.
There is only so much you can say about Freegold and there are copious amounts of writings on this site to last someone half a lifetime.
The hard fact is that talking and writing about Freegold might bolster the 'troops' morale but doesn't bring it any closer.
Even the original writers of the 'trail' didn't seem to live to see their dream come true.
However on the brighter side I always use to think Bix Weir and his Road to Roota were complete unhinged ramblings but now with Greenspan going back to his Ayn Rand roots there maybe something in it.
Greenspan promoting Gold could be the first signs of the "WHEN" happening soon.

Jeff said...

But there is no limit to how much one can complain. Say it with me, BSB. OMG FOFOA WHEREZ TEH FREEGOLD.

The silverati need a date; not just one date, but many. Many meaningless dates please FOFOA. Use the lunar cycle, the long wave cycle (winter is coming!) your 'gut', your secret supercomputer, secret insider whisperings, charts, anything, just give us a date. And when that date is wrong, give us another one! And another one! Like KWN, Bix Weir, Armstrong, a million silver warriors, Mo Baloney, etc. etc. We won't hold it against you; in fact if you add price targets and promises, animal photos and outrageous subscription fees, we like that even better.

Still silent? Fine, let me help out all the poor dateless slobs.

PS said...
This comment has been removed by the author.
Roacheforque said...

Actually I hear that FOFOA can communicate with the departed, tell fortunes and even improve your love life. Perhaps a virtual psychic netwrok is the next move? After all, it's simply amazing how many people want to be "told what to do next" instead of just being informed, connecting the dots, be prepared and wait for the inevitable.

It's this gullibility and "follow the prophets" mentality that fuels the current system and delays the inevitable - through the effective use of propaganda, as well as sheer confusion.

I would challenge FOFOA to think about that one and perhaps there's some fodder in it for the next post, as there's no end to the need to illuminate that topic, even when the crux of freegold has been "worked to death".

As Jeff rightly asserts - the lemmings need more detailed directions to the cliff's edge on a regular basis!

BaronSilverBaron said...
This comment has been removed by the author.
Robert said...

We close our eyes
... and the world has turned around again
We close our eyes and dream
...and another year has come and gone...

PS said...
This comment has been removed by the author.
BaronSilverBaron said...
This comment has been removed by the author.
jojo said...

"This comment has been removed by the author."

That's more like it BSB!

One Bad Adder said...

$US complex (DX, $IRX) showing good strength this AM we've been anticipating ...that is until the SWAT-team contrived to throw the kitchen-sink at it...again! $PoG, oS etal used to hose down DX pretty well from NY open.
For the whenistas - anywhere north of DX90 is systemic quicksand methinks.

One Bad Adder said...

...also G-20 Summit in Oz (Brisbane QLD) this weekend might produce some food for systemic thought?
Normally pretty benign events "for public consumption" ...BUT - one never knows!

gull_mann said...

Up up up we go.

Steve said...

Puke! :-)

Attitude_Check said...

Ok for the dating inclined, As long as there is gold in COMEX and LBMA eligible for redemption, then freegold "ain't yet". It does appear that the amount continues to decrease, and so we patiently wait, and stack.....

Indenture said...

Attitude: Try thinking bigger.

"I was emailing with a friend yesterday about this whole MF Global thing, and he had a great analogy for this. Compare these big money folks to the average guy who rides the bus. You miss a bus, so what? It's inconvenient but another bus will come. It takes a long time to sink in that another bus isn't coming. It's not until there is such a big crowd waiting at the bus stop for the next bus that people start thinking "even if a bus comes there are too many people to fit on one bus." In that mindset the surest way to cause a riot is to send one bus i.e., not enough buses. You have to fight to get to the front of the queue. This is a bank run mentality.

And this is a key difference between the average guy and the big money. Big money isn't used to being kept waiting. Big money owns the "bus company". They know the buses aren't going to run before the little guy. They panic early. There was an electronic bank run around the time of the Lehman collapse. That was one of the reasons why governments around the world stepped in with fresh deposit guarantees. But there were no lines outside the banks to alert the average guy to what the Giants were up to."

M said...

As was surmised a year or 2 ago, there is no hope in logic based structural support being removed by creditor central banks. They will watch their own currencies fall and their own people suffer before they deploy their dollar holdings in any meaningful way to defend their own interests. Because they are all Keynesians or ex Goldman shills.

But there is a physical limit to the ability of the creditor economies to be able to support the dollar regardless how badly they starve their own people. As bubble growth within the creditor economies exhausts itself, the only thing they can do is roll over existing positions and reinvest the interest.

It looks like that time has come. The oil creditors are clearly suffering and so are the mercantilist creditors. I suspect that these creditors will slow down or halt their gold accumulation while they try and figure out their next move. I wouldn't rule out selling gold. because maybe they thought they could support the overlord while accumulating gold at the same time. Now they have to choose, the overlord or gold.

From ZeroHedge:

Mission Accomplished - if the goal was crashing Russia's Ruble - but the consequences of the collapsing Petrodollar flows (as we noted here) may wellcome back to bite...

The implications of reduced recycled petrodollars has significant ramifications for financial markets, loan markets and Treasury yields. In fact, EM energy exporters will post their first net drain on global capital (USD8bn) in eighteen years.

Paul said...

None of you actualy read Armstrong's gold report did you ?
what's that ? donations for fofoa cost too much ?

(I did. Good money spend too.)

It should deserve your attention (and admiration). Instread you prefer too stay ignorant for real analysis. Suit yourself.

Edwardo said...

Good money spend too.

Instread you prefer to stay ignorant for real analysis.

And you clearly prefer to ignorant of this. In the meantime, I feel duty bound to point out that clear thinking precedes clear and competent writing. Feel free to pass that along to a certain ex-con.

Motley Fool said...


I will assume english is not your native tongue, since if it is your (grammatically horrifying) message does not make you a good ambassador.

I've read plenty of Armstrong. Nothing he has written has impressed me to the point where I would care what he thinks. I doubt the latest is any different.

Edwardo said...

If any remotely objective observer needed evidence that Marty Armstrong was full of crap, even as a trader, let alone an analyst, all they would need to do is examine this blog entry from November 7th, and compare it with this one posted today.

The lengthy entry on the 7th is entitled, "Gold-Falling From Grace."

Here is a key quote that sets the (usual) tone whenever MA discusses gold. I can't help finding it both ironic
and revealing
that Armstrong spends so much time and effort attempting to make the case that gold is in no way special.

The Gold Promoters are just desperate for bullish news and will craft whatever they can to continue their delusional bubble in which they live.

Desperate for bullish news? Quite possibly. However, given that the very first line of Armstrong's November 15th entry entitled, "The Precious Metals - The Bounce?" is

The metals bottomed during the week of November 3rd on schedule. It now appears if we achieve that rally

one can't help but wonder why, on the 7th, Armstrong didn't take advantage of a truly golden opportunity to display his market prescience by observing that the recent low in the gold market was, as per his oft vaunted system, a meaningful one.

Now, before one rushes to defend The Wizard by stating that the absent forecast was(?) in MA's paid service, I'd just like to point out that Mr. Armstrong routinely offers short and intermediate price and time based turns. It shouldn't come as a whopping surprise that many of these turns don't pan out. His missed calls are routinely glossed over if not entirely forgotten, while those that can even remotely be portrayed as accurate are given great prominence. But here we have what is being touted as a direct hit without so much as a shred of evidence that any such call was ever made. But wait. It gets better. The proud owner of the alleged great call has attached a question mark to the supposed great call. What gives? "Look at my -um, provisionally- great call." This sort of slippery, steaming horse crap captures quite well the quality of Armstrong Economics. If folks want to fork out for such obvious fertilizer, well, what can one say except this.

simpleminded said...

Reading the comments part nowadays is an exercise in futility.
There used to be some mindful people around.

I wonder why are they gone...

tEON said...

There used to be some mindful people around.

And who did you consider 'mindful'?

Edwardo said...

If you really want to see a certain someone truly misunderstand the implications of what he's observing, I suggest you go here.

One Bad Adder said...

Whilst an understanding of the Freegold concept is clearly a good thing going forward, it may well be imperative to understand the subtle but important differences between FRN's, $-denominated bank-digits, and Treasury issued short-term (< 3-month) Bills the Weeks and (perhaps even) Months directly ahead,
Horse-before-Cart stuff ;-)$TYX:$IRX&p=W&b=5&g=0&id=p72515169741

KnallGold said...

In the discussions about the Swiss Gold initiative, arguments about speculators are coming up, either that they contribute directly for the yes campaign, resp. that they are going to profit in the case of a yes vote.

While I don't think that was the intention of the originators I see that it might offer the desperate hard bugs/mining camp a, well, gold rendered parachute. And other specs jumping also on the train. Of course, we just watch - and already see signs.

Personally, talking to different people and seeing the leading discussion rounds, I don't expect a yes to the referendum anymore. Besides all the other well brought up negatives, the key flaw is that the Gold cannot be sold anymore. You can practically write it down to zero then, one astute lady said. Whats the point of your balls hanging dry in the cellar ;-)

Of course the Gold is never safe from attacks of the spenders, wouldn't be surprised if they'd start a "sell the SNB Gold" initiative some day. But right now, they will provide the main part of the no votes.

The HMS faction otoh is just too small and some I've heard are still undecided themselves. I can relate to the emotions going back to 1999, mind you, but its an old battlefield.

Interesting is the surprise of folks asking me when I tell them that I will vote no...FreeGolders have a hard life in western culture.

So we have scenario #3, paper Gold rallies, the Swiss say No in the vote and then ?

Motley Fool said...


No is what I would vote, due to the second provision, for one. I don't know that the general populace's understanding is as nuanced though?

If they vote no, but yes is expected, then there should be a nice drop from the current speculative high (and perhaps higher high closer to the time).

Frankly I have no idea what the result will be.

Personally, since I am not swiss, I wouldn't mind them voting yes, since I won't be the one getting screwed, and it will put some more pressure on the physical market.


Michael dV said...

my thoughts too...
I think a lot of people think of the central bank as a profit center rather than as the currency manager it is supposed to be. They also think of gold as it was used in ye olde golde standarde dayes....
I once again see the invisible hand of the Hard Money Socialist at work. If they really care about gold then they should encourage the Swiss people to get some. There seems to be little to be gained (for the libertarian lot) in having an arm of the government acquire more.
This is akin to wanting the government set the price of gold as it does in a gold standard regime.
In reality I don't think many have thought this through. They just want the POG to rise which it of course would if the Swiss scooped 1500 tons off the market.
I think a lot of commenters probably do not understand the role of reserves in central banking. Some probably think gold backs the dollar (yeah crazy right...ask your friends, many of mine have no clue.)

xcsler said...

Motley Fool:
Why would you vote no?
The 3 provisions I've read about are:
Gold reserves of the SNB must not be sold.
Gold reserves of the SNB must be held in Switzerland.
Gold reserves of the SNB must be ‘significant’ and must not fall below 20%.
Specifically, which provision are you against and why?
If buying gold is the right thing to do for an individual why wouldn't it be the right thing to do for a nation? I don't see any provision of going on a gold standard. That
is to say that the franc represents a fixed weight of gold.

Michael dV said...

This from Ambrose Evans-Pritchard at the Telegraph last week: country can stand idly by as neighbours dump toxic deflationary waste on their front lawn. Korea has threatened to force down the won, pari passu with the yen. The central bank of Taiwan has been intervening.

just thought Ambrose used some interesting imagery

Edwardo said...

Yes, that is an interesting turn of phrase from AEP. I wonder where he got it from? Speaking of toxic deflationary waste, Mr. Evans-Pritchard might ask himself what the dollar rising against every other currency amounts to. Lawn meet animal waste.

M said...

@ xcsler

I agree with you.

Nobody knows what will happen. But a Yes win has a way higher chance of rocking the boat then a No win. So vote Yes.

A No vote is a vote for the status quo.

In the event of a Yes win, the Swiss CB will just Enron it anyway. But still, that is better then the status quo.

M said...

@ Micheal DV

I am sure sick of hearing about this fallacy that a low value currency is good for exports.

I just made a quick post about it :

anand srivastava said...


Gold reserves of the SNB must be ‘significant’ and must not fall below 20%.

Wouldn't this be killer for Swiss economy?

If you believe in Freegold, do you think this will be manageable, considering that we think that the price of gold will go very low, precisely when it will not be available.

What will the govt do, and what are the consequences defined by the provisions, in case the govt cannot do it.

It would probably be good for non-swiss freegolders :-).

Motley Fool said...


The wording of the second provision is that no gold may be sold under ANY circumstances. This is what I take the most issue with. As I remarked on twitter the other day, what does one call reserves you cannot sell in any scenario? Dead weight. Knallgold also referred to this problem allegorically.

This does not even touch on the difficulty of maintaining such a ratio through the transition as Anand mentioned above.

The third provision, that all reserves must be in the country, also makes it more difficult to deploy them in crisis situations, but at least there is the workaround of gold swaps.

As Michael dv noted people seem to have a general misunderstanding of the purpose of central banks. I have been saying from the start that if the Swiss people want more gold reserves they should buy it, individually.

But, as you would have noted from my comment I am in two minds, since regardless of how foolhardy this referendum was composed, it would have an effect on physical demand...and that part I like.


Motley Fool said...

Ps. From some recent FOFOA posts you should be aware of the concept of a CB having too much gold reserves in serving its purpose as CB. Personally I think the Swiss have enough in their CB for currency management.

John said...

I would vote YES if I were a Swiss voter. I have always admired Switzerland as a country and have personally liked all the Swiss people I've known. What better group then to benefit from the coming windfall that is physical gold? At least we know this country won't be spending their wealth dropping bombs on innocent people. As to the misplaced concerns about never being able to sell their gold...they would never have to. They can (and will) simply issue new currency against their newly stepped up equity. Same as how you will likely be spending yours post FG.

One Bad Adder said...

Seems (to me) the Swiss are caught between a Rock (Gold) ...and a Hard place (too strong a CHF)
Golds days of basking in the currency sunshine are long gone - a fact which has seemingly escaped the attention of the Swiss.
10 odd years of effort on their part to engineer an acceptable Euroesque CHF (achieved these last several btw) will all be undone overnight should the "people" deem YES is apt. (Big-picture BAD - IMHO)

M said...

No such thing as a too strong CHF.

The Euro went from .85 to 1.50 and German exports rocketed up.

PS said...
This comment has been removed by the author.
M said...


I see very limited real world evidence that a low value currency is good for long term exports anywhere.

The US was the biggest exporter in the world and held the strongest currency at the same time. So I highly doubt that it will be any different for the Swiss and their dealings with the rest of Europe. And I don't see how it is entirely different for the Swiss then it was for Germany when the Euro went up.

One Bad Adder said...

Agree PS.
It would be such a shame to jeapordise the cosy EUR:CHF relationship currently being "enjoyed".

The term "Freegold" is a bit of a two-legged Stool (IMHO).
Physical Gold should be thought of as Time-free Gold, and consequently letting the various Fiat currencies grapple with "time" as best they can.

Xcsler said...

Well we expect the price of gold to go low but we don't know how low. Maybe COMEX defaults tomorrw. Also, isn't the current falling paper price controlled and calculated by the Oil Giants and Producers. What happens to their accumulation plans when a Black Swan is added to the mix? Perhaps if the Swiss vote in favor of the gold initiative it would lead to an overnight revaluation.

@Motley Fool
It may be difficult to maintain the 20% ratio through the transition but it would mean that the Swiss have to accumulate even more physical than at current prices. If the Swiss were another buyer in size wouldn't this hasten the arrival of Freegold? Also, there is nothing preventing the Swiss from having other votes post Freegold arrival thereby tweaking their holdings and where they are stored.

I'm not familiar with CBs having too much gold. I'm still learning. I'll have to re-read the prior posts.

vizeet srivastava said...

In freegold, gold is free. It competes with currency. CBs are currency managers. They need gold only for emergency. For freegold to be successful gold should move freely. If CBs hold large volumes of gold then gold will not be free and so there can't be freegold.

Jack Tarragon said...

Does anyone really think any decision on gold is going to be left to a vote by the people?

Remember, it is the bus owners that make the decision, not the bus riders, but punch your bus ticket if it makes you feel better.

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