Each day I spend an hour or two scanning the stories and memes that are circulating that day, and then maybe another hour thinking about how they fit into the big picture. Everything is, of course, connected, and aside from filtering out the nonsense and the noise, putting it all together into a single comprehensive and cohesive picture is, IMO, the only way to understand what is really happening.
Without such a context, it can seem like nothing makes sense, like we live in a madhouse where inexplicable things just happen out of the blue. But of course it all does make sense; you just have to tune out the nonsense and understand how the rest fits together. You can jump down to the conclusion now if you'd like to see my big picture, or you can bear with me as I explain and then string together a few different memes on the way there.
A recent meme has been how a number of countries are running down their dollar reserves. As we've seen in the monthly TIC reports, official support is basically flat, but now we see a few primarily oil producing countries like Saudi Arabia, UAE and Russia running down their reserves. This is, of course, related to the decline in the price of oil which has made otherwise-strong net-producer currencies weak relative to the dollar. But the declining oil price is only half of the equation. The other half is the rising price of the dollar. They are not just two sides of the same coin, but two different-yet-related things that are happening simultaneously.
Russia has recently declared a clean float while Saudi Arabia and UAE both still peg to the dollar, yet all three are now supporting rather than weakening their currencies due to the double whammy of weak oil and a strong dollar, which means selling dollar reserves to buy back their own currencies. Back in early 2008 when oil was strong and the dollar was weak, both the UAE and Saudi Arabia considered adjusting their pegs and revaluing their currencies upward, but they didn't, instead planning on a GCC monetary union by 2010 which still hasn't happened. So, for the time being, everyone is responding as they see fit to the current state of affairs as if it is a temporary state of affairs, which of course it is.
Another recurring meme over the past few months has been this $9T in foreign, dollar-denominated debt. The problem with this debt is a little more complicated than just the lack of dollars available, and it cannot be solved with a simple currency swap. The problem is that most of this debt was contracted on the basis of an emerging market growth story that is now failing to play out as expected.
This is non-bank debt, meaning the borrowers are not banks, and most of the borrowers are not in the financial industry either. They are real companies, mostly in emerging market countries like Bulgaria, Brazil, Chile, China, Colombia, Czech Republic, Estonia, Hong Kong SAR, Hungary, Indonesia, India, Iceland, Korea, Lithuania, Latvia, Mexico, Malaysia, Peru, Philippines, Poland, Romania, Russia, Singapore, Slovenia, Thailand, Turkey, Venezuela and South Africa, that borrowed in dollars over the past five years because it was cheaper than borrowing in their local currencies, and they did so by issuing bonds.
About half of this $9T was borrowed from private bond investors, and ¾ of it came from lenders outside of the US. And now a few different things are happening to this debt all at the same time leading to a vicious feedback loop that could blow the whole thing up. One thing is that the strong dollar means these companies' local currencies are relatively weak, so you can imagine the impairing effect on their balance sheets as their debt burden grows relative to their local currency-denominated assets and income. Add to that the fact that their growth prospects have diminished over the last five years as well, and you can understand why Western asset managers are now pulling money out of these emerging market bonds.
Pulling money out of these markets means selling bonds, which drives down bond prices and drives up their effective yields. These higher effective yields then compete with new bonds being issued which drives up borrowing costs to the same rate as the effective yield on old bonds. This rise in borrowing costs eliminates credit growth, and exacerbates already-sluggish real growth by causing these companies to tighten their belts and cut back on capital expenditures, which causes more asset managers to pull more money out of these markets, and therein you have the basic vicious cycle. You will find it explained with more detail in this BIS presentation pdf.
Another meme that has been making the rounds is an increase in US oil production even as the price of oil is tumbling, some say contributing to the glut that is causing the price to tumble. It certainly makes sense that a glut or oversupply of a commodity would cause the price to tumble, but I want to explain to you a different causal relationship, where a declining price actually causes some producers to increase production, leading to another vicious feedback loop.
The curse of the commodity producer (as opposed to the producers of end-user products) is that the price you can obtain for your production is out of your control, determined on global markets, and thoroughly detached from your input costs. If your expenses exceed your income because the price of your product drops below your costs, then you're simply out of business, right? Well, not necessarily. That's probably true for a rational operator like yourself, but not necessarily true in the irrational world of the $IMFS with debt-addicted publicly-traded corporate shells operating on slim profit margins and beholden to both creditors and shareholders.
In the $IMFS, many companies not only operate at a loss, but they actually increase production when operating at a loss, and they do so for different reasons. One reason is government subsidies. The rational thing to do with a company that is operating at a loss is to shut it down and liquidate it, selling it off cheaply enough to someone else so that it, or at least its capital, can become profitable once again. But for some industries, primarily labor-intensive industries like auto making, governments will often subsidize losing businesses just to keep people employed in what become, essentially, make-work jobs if the company is operating at a loss. But I don't think that's the case with US oil.
Oil, unlike cars, is a commodity and is not as labor intensive to produce, and in the US, unlike in Saudi Arabia, it is a debt-addicted, publicly-traded industry operating on a relatively slim profit margin. Now, even if you can't turn a profit for your owners, you can still at least service your debt while running at a loss. And even though your reserves are limited by definition, you can actually reduce your short term losses by increasing your long term losses, i.e., running down your limited reserves faster at a loss than you were at a profit.
We see this in the gold mining industry as well, where the large, publicly-traded and debt-financed mines ramp up production on their lowest-hanging fruit right when it is least profitable to do so, because the alternative would be bankruptcy. I think this is why we saw new mining supply rise when the price dropped below their cost of production.
This has been happening in China in a whole slew of different industrial sectors for a few years now, ever since emerging market growth potential within the current $IMFS peaked and the commodity bear market began. The Chinese government itself has identified nine key sectors that are now operating at a loss in China just to service their debt, some with the help of government subsidies. Those nine industries are steel, aluminum, rare earths, cement, electronics, pharmaceuticals, autos, shipbuilding and industrial agriculture.
Think about this for a minute. Would you buy a business whose price is so high that it would not be profitable for you to operate? You might, but only with the intention of reselling it to a greater fool and not with the intention of operating it indefinitely at a loss. I actually did this once, and barely got out alive! Any of you who have bought or sold a business know EBITDA, which is often used to compare the relative profitability of comparable businesses. It's kind of like a P/E ratio.
Imagine buying a car wash that's priced so high that it would take you decades to break even, or if the operating costs associated with it were so high that you'd be operating at a loss and never turn a profit. Imagine you had to pay your car dryers $50 per hour as per union rules and couldn't reduce their numbers or hours. That's operating a business at a loss. It's not that a car wash isn't necessarily a good idea in that neighborhood, but just that its price or its related expenses simply make it unprofitable.
My point is that prices determine what is profitable and what is not. In the car wash scenario, maybe you go bankrupt with your unprofitable car wash and it is liquidated for pennies on the dollar. The new buyer who gets it for a song could then operate it profitably because his income will exceed his costs. In this latter case, isn't the neighborhood better off having cleaner cars?
This is an overly-simplified example, but just consider whether or not much of the world today is completely priced out of profitability. Think about my simple example of a neighborhood car wash. If owning the business itself is priced too high, either its purchase price or its operating costs (not the price of getting your car washed), then it will probably either fail or never get started in the first place without a government subsidy. If the employees have to be paid too much, there will be either fewer jobs or no jobs at all, so few in the neighborhood will even be able to afford a car wash, let alone a car.
To what end does such a system lead, in which asset prices are driven so high that the businesses themselves are not profitable in the real economy? It's called a Ponzi or pyramid system, in which profits are made not from the real economy but from the greater fool, the greater fool in aggregate being the savers. Which brings me back to these companies that should be going out of business but are instead ramping up production to service their debt and stay in business long enough for the insiders to get the hell out and pass on the greater losses to the savers.
This ties in to my next and final trending meme, which is corporate buybacks. The buyback meme is a true sign that we're in the final Ponzi phase of this system, in my opinion. Buybacks are a way for corporate shells to fall on the grenade while the insiders get out. They are also a way to juice stock prices that would otherwise be falling.
I'll get into this more in the next section, but if we look at specifically who is profiting from the most recent outrageous buyback trend, it is not the oil companies. Some companies are really profiting from the outrageous buybacks. From the top-ten list of buybackers, Apple is at the top and its stock is up 40% YoY. Others in the top ten are Cisco Systems, up 35% YoY. Oracle, up 20%. Intel, up 53%. Microsoft, up 30%. Wells Fargo up 27%, Home Depot up 30% and Pfizer up 6%. Exxon Mobil is third on the list, and it's down 7%, which I read as it would have fallen harder than that if not for the buybacks which were to slow the decline giving the insiders time to GTFO.
It's not that I think US oil production will end, just that it's currently unprofitable even as production ramps up at record rates, presumably to service the debt and keep the shares trading while their shell corporations borrow more money to buy back some of the shares (from insiders?) even as the share prices decline. Or maybe it's a conspiracy by the USG to hoard a bunch of cheap oil in old tanks so that it can continue to wage war and dominate the ROW even after the ROW turns against us (j/k ;). Exxon (the shell corporation and its employees) is not giving up, BTW, but that still doesn't mean its shares are a good store of value right now for its owners. There is a difference.
And that brings me to my final meme or story that is just starting to circulate, which is these corporate buybacks, where debt-addicted, publicly-traded companies are taking advantage of extremely low interest rates to issue bonds and then use the borrowed money to buy back their own shares. Sounds positive for business, right? I don't think so, but it's probably helping to levitate the stock market.
Buybacks have been happening at the incredible rate of $46B per month for the last year, nearly the same rate as our trade deficit!
(Bloomberg) -- The biggest source of fresh cash in American equities isn’t speculators or exchange-traded funds -- it’s companies buying their own stock, by a 6-to-1 margin.
Chief executive officers, who just announced the biggest round of monthly repurchases ever, executed about $550 billion of buybacks last year, according to data compiled by S&P Dow Jones Indices. That compares with a net $85 billion of deposits by customers of mutual and exchange-traded funds, the biggest gap since 2012, data compiled by Bloomberg and Investment Company Institute show.
If you sell a share of stock in the U.S. market, there’s a fair chance the buyer is the company that issued it -- and it’s buyers who’ve been on the right side of the trade since 2009. Buybacks are helping prop up a bull market that is entering its seventh year just as investors bail out and head back to bonds.
“Buybacks have come up in every meeting with clients and always have, because of the observation that the largest buyers of stocks have been companies themselves,” Dan Greenhaus, chief strategist at BTIG LLC in New York, said by phone. “For the last few years, that’s been the right call.”
Repurchases by U.S. companies averaged $46.1 billion a month in 2014, compared with $7.1 billion in ETF and fund inflows. Investors have pulled more than $10 billion out of equity funds in January and February and sent $38 billion to bonds -- even as companies announced $132.7 billion more in buybacks. February’s total of $104.3 billion was the highest on record, according to TrimTabs Investment Research.
Buyback Index
Companies with the most buybacks are beating the market. The S&P 500 is up 1.6 percent on the year after falling from a record on Monday to 2,092.21 as of 11 a.m. in New York. The S&P 500 Buyback Index, which contains the 100 companies with the highest repurchase ratio, has climbed 4 percent this year.
“It’s amazing that people are still sitting on the sideline getting zero-something percent returns,” Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said in a phone interview. “Usually when you get where everyone says we’re in a bull market you see big money coming out of lifeboats and chasing yield, yet we haven’t seen the mass money come in.”
The reluctance of investors to pile into equities has left corporate America the larger source of cash throughout the bull market. [thanks to capital inflows from the ROW which financed low interest rates for corporate bonds!] Buybacks exceeded inflows [from actual investors] by $468 billion last year when the S&P 500 climbed 11 percent and $318 billion more in 2013, when the gauge had its biggest advance since 1997.
Companies in the S&P 500 have spent more than $2 trillion on their own stock since 2009 [$2T is comparable to the $9T borrowed outside the US], underpinning an equity rally in which the index has more than tripled. They were on pace to spend a sum equal to 95 percent of their earnings on repurchases and dividends in 2014, data compiled in October showed. [Why not all on dividends?]
Buyback Incentives
Not everyone is convinced buybacks are good. They’re used to boost per-share earnings in a way that enhances the pay of chief executives, according to William Lazonick, a professor of economics at the University of Massachusetts Lowell.
“Companies use a phony ideology saying if you maximize your shareholder value you somehow increase the efficiency of the economy,” Lazonick said in a phone interview. “But the only justification for doing it that holds water is that executives [who are employees, not owners, other than the restricted portion of their compensation that is locked in shares] get a lot of their income from buybacks.”
Home Depot Inc., Comcast Corp. and TJX Cos. were among 123 companies that disclosed repurchases in February. The increased buybacks came as plunging oil and a strengthening dollar threaten to stall five years of earnings expansions. [So they borrowed at almost no cost and used the new debt money to buy up the publicly-traded share price which increased their bonuses even as earnings stagnated or declined? Brilliant!]
Profits from S&P 500 members will decline at least 3.2 percent this quarter and next [but hopefully not share prices!], according to analysts’ estimates compiled by Bloomberg. For the full year, growth will be 2.3 percent, down from 5 percent in 2014.
Profit Contractions
Buybacks will boost per-share earnings, with the potential of helping avoid the first back-to-back profit contractions since 2009, according to Yardeni Research Inc.
“In the last earnings season, the strength of the dollar clearly had a negative impact on earnings guidance by a lot of companies,” Dan Miller, who helps oversee $23 billion as director of equities at GW&K Investment Management, said by phone. “In some cases, the announcement of buybacks was perhaps meant to soften the blow a little bit. It shows the management is committed to their own stock.” [Yeah, sure. That's the interpretation "management" wants its owners to think. ;D]
Switching Positions
Corporations and investors have switched positions as the bigger buyer of stocks. Inflows from equity funds exceeded corporate buybacks every year in the late 1990s, contributing a total of $640 billion over the three years through 2000. That compared with $418 billion from share repurchases. [So the roles have reversed in this particular stock market run-up. It's not being driven by actual investors like all rallies were in the past!]
Companies have since taken the lead, with buybacks setting a record $589 billion in 2007. Last year, corporations beat all other groups as the biggest source of fresh [-ly borrowed] cash to the stock market, according to a January report by Goldman Sachs Group Inc., which tracks money flows from pension funds, foreign investors and ETFs.
The S&P 500 will increase about 7 percent to 2,238 by the end of 2015, according to the average of 21 equity strategists surveyed by Bloomberg. The Nasdaq Composite Index closed above 5,000 for the first time in 15 years on Monday and is within 2 percent of a record.
S&P 500 companies hold $1.75 trillion in cash and marketable securities, data compiled by Bloomberg show.
“These companies do this because they can,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a phone interview. “So many have tremendous amounts of cash historically and the investment rates on short-term cash are not too attractive. It’s good for the company and good for stockholders.”
Here's my take on buybacks. The shareholders are the owners of these companies, and if the company is making a profit it should go to the owners. If the owners agree to take on a new interest payment in order to concentrate the shares by reducing the number of shares outstanding, those interest payments come out of profits, so total profits go down by the amount of the new interest payment. So a bond-financed buyback is a transfer of some portion of total profits from owners to creditors at the very least.
If a company buys back its own shares with cash profits, in essence it is using its profits to reduce the number of shares outstanding rather than paying its owners a dividend (a profit). So the owners see their percentage of ownership in the company increase while the liquidation value of the company declines (because it either used up some of its cash for the buyback or it contracted some new debt). That's what owners (shareholders) actually own, the liquidation value of a company as well as the right to the profits (dividends).
As outsiders (non-shareholders), we see the price of the shares rising, but that's an illusion because what has actually happened was the equity (the liquidation value) of the company was reduced by either decreasing cash or increasing debt, and the number of outstanding shares was also reduced at the same time, a net-neutral operation. A company holding its own shares is like a bank holding its own liabilities, or like me holding an IOU to myself. The net asset value remains the same, only the percentage that each share represents has changed.
Think about it in reverse. If a company that bought back shares decides to reverse that action and sell them for cash, that is essentially the same thing as diluting its outstanding shares to raise capital. So buybacks are essentially reducing capital (actually reducing liquidation value, either by decreasing cash or increasing debt) in order to concentrate shares.
The problems with this, as I see them, are manifold. Since this is really just a rebalancing of net liquidation value versus share concentration, the optics of a rising share price send a false signal to the market. And if this is the driving force "underpinning an equity rally in which the index has more than tripled," then perhaps the rally was an illusion.
If a company has surplus cash, why not just pay out dividends to the owners? It doesn't matter how many shares are outstanding because their price can change, just like it doesn't matter how much gold exists. From a net asset value perspective, nothing is gained in a buyback, just like from a market capitalization perspective nothing is lost in a stock split.
In fact, these buybacks are done for a purpose. They are done to boost employee compensation at the expense of the owners. The answer to cui bono in a buyback is certain employees, not owners, of the company, more specifically the executives (the CEO etc...), the managing employees. This is a way to convert net asset value into executive bonuses right under the noses of the owners, even at a time when the business is not profitable. It is also done to boost share prices more than they would otherwise rise, or keep them from falling as fast as they would otherwise decline.
In my view, buybacks are little more than a bookkeeping trick used by CEOs to fleece their unsophisticated owners (shareholders), kind of like a body that begins consuming itself and concentrating its energy in the core while starving the extremities, just to maintain the status quo of its heart a little bit longer. Yet if it happens en masse as it has been, due to cheap corporate debt financed by a flood of foreign capital, it's not just the shareholders who'll end up getting hurt—it's everyone invested, saving or speculating in any kind of paper.
Conclusion
What is happening is a massive inflow of private capital into the US and the dollar. This is not new surplus revenue being invested in the US right after it is earned, nor is it (any longer) the result of structural support or the systematic weakening of foreign currencies, also known as neomercantilism. This is, as far as I can tell, a massive shifting of existing private investment funds from other places into the US and its dollar. The simplest way I can put it is that it seems to me like the world is running into our bomb shelter that's rigged to blow up once everyone is "safely" inside. I suppose from another angle, still using my own past imagery, we could call it the head-fake.
The reason for this massive capital inflow is, I think, quite simply that the rest of the world has become unprofitable under this dying $IMFS, so you want to move toward the focal point where presumably everyone will be moving in order to capitalize on being early to the bubbles that will ensue. And in this case, the dollar and the US markets are the perceived focal point, with AAPL at the very center.
What we've seen with foreign currencies is that, whether loosely or strictly pegged to the dollar, their foreign reserves tend to correlate inversely to the strength of the dollar. Whenever the dollar is weak, their foreign exchange reserves rise, and when the dollar is strong, they decline. Comparing a chart of the USDX with Russia's foreign exchange reserves shows this quite clearly.
An inflow of capital into the dollar makes the dollar strong, and an outflow makes it weak. This is a function that is peculiar to the $IMFS, because in a different system the dollar's capital account would be subservient to its current account or physical plane trade balance. But similar to how paper gold drives the price with the physical gold market being subservient to the paper one, so too is the US physical plane trade balance and the price of the dollar subservient to the paper markets and capital account flows.
When capital is flowing, it affects two things in combination. It affects the US trade deficit and it affects the price of a dollar on the DX. It is a combination of these two that is the result of the flow in the capital account. If the DX is not moving, then the trade deficit represents the entire net flow in the capital account. If the DX is moving, then the capital flow is either more or less than the trade deficit. If the DX is rising, then the capital inflow is greater than the trade deficit, and if the DX is declining then the capital inflow is lower than the trade deficit. And, of course, in the past, structural support worked in tandem with private sector capital flows to keep the DX and the US trade deficit more or less stable, but right now it's private sector flows that are driving everything.
As private sector capital moves into the US, it needs dollars to buy US assets. So first it sells its foreign assets for foreign currency, then it uses that foreign currency to buy dollars needed to buy US assets. This drives down the local currency and drives up the dollar. The local CB can absorb some of that pressure by providing the dollars its locals want to buy from its foreign exchange reserves. This neutralizes the locals' effect on the FX, and this is how countries like Saudi Arabia and the UAE keep their currencies pegged to the dollar.
Any reduction in their foreign exchange reserves represents a net outflow of private capital, since their currencies are hard pegged to the dollar. These are still strong currencies, it's only the $IMFS that is making them appear weak. Even though the oil price has declined dramatically, all three of the countries I mentioned are still running a positive balance of trade, but in the $IMFS as I said, the capital account is in the driver's seat.
Even the dramatic decline in the price of oil is attributable to the $IMFS. As I've said in the past, speculative paper markets (futures markets in particular) when properly subservient to the physical market, absorb and reduce the risk and price volatility that real producers and real consumers do not want to be exposed to. But in the $IMFS the opposite is true; the paper markets actually cause the risk and volatility, simply because this system promotes saving in money and its derivatives.
"Capital flows" is really just another way of describing all this paper money sloshing around from one thing into another, causing the risk and volatility that real producers and real consumers would rather not be exposed to. It's just that when it crosses foreign exchange currency boundaries, you have to be careful when thinking about it because the currency effects can be confusing.
Many things changed through the financial crisis in 2008, and one of them was the driver of dollar-denominated credit expansion outside of the US. Before 2008, non-US dollar credit growth (sometimes called Eurodollars) was driven mostly by banks making the loans, but in 2009 the banks pulled out of that sector and private sector capital flooded in. That's why half of that $9T in foreign dollar denominated debt is held by private bond investors today, and why "capital flows" or "all this paper money sloshing around from one thing into another" is such a dynamic problem for that debt and those stagnating economies. If that debt had all been bank credit like before 2008, then interest rates would move slowly in concert with interest rates elsewhere. But because today it is private money, capital outflows can cause interest rates to be much more volatile and deadly.
Now think about how that $9T in debt meme—$4+ trillion of which is in private bonds which asset managers are pulling out by selling those bonds—might relate to the corporate buyback meme. As that money is being pulled out of emerging market corporate bonds, where do you think it is going? Could it perhaps be going into US corporate bonds?
The article above says that US corporations have bought back $2T of their own shares since the stock market started rising in 2009, and a quarter of that, half a trillion, was bought back last year alone. And it was largely financed by issuing bonds and borrowing that money from the bond market. So you see, everything is connected! A massive capital inflow into the US bond market can result in crazy-low interest rates while also, as the article says above, "underpinning an equity rally in which the index has more than tripled." Isn't the $IMFS great? ;D
Sincerely,
FOFOA
The picture's far too big to look at, kid.
Your eyes won't open wide enough.
And you're constantly surrounded
By that swirling stream of what is and what was.
Well, we've all made our predictions,
But the truth still isn't out.
But if you wanna see the future,
Go stare into a cloud.
And keep trying to find your way out
Of that maze of memories.
It all sort of looks familiar,
Until you get up close,
And then it's different, clearly.
But each time you turn a corner,
You're right back where you were.
And your only hope is that forgetting might
Make a door appear.
Well, is it your fear of being buried
That makes you so afraid to speak?
An avalanche of opinions,
Like the one that fell that I'm now underneath.
It was my voice that moved the first rock,
And I would do it all again.
So, I mean it's cool if you keep quiet,
But I like singing.
So, I'll be holding my note,
And stomping and strumming
And feeling so very lucky.
And there is nothing I know,
Except this lifetime's one moment,
And wishing will just leave me empty.
So you can try and live in darkness,
But you will never shake the light.
No, it will greet you every morning,
And it will make you more aware with its absence at night,
When you're wrapped up in your blankets, baby-
That comfortable cocoon.
But I've seen the day of your awakening, boy,
And it's coming soon.
So, go ahead and lose yourself in liquor,
And you can praise the clouded mind.
But it isn't what you're thinking, no,
It's the course of history,
Your position in line.
You're just a piece of the puzzle,
So, I think you'd better find your place.
And don't go blaming your knowledge on some fruit you ate.
Cause there's been a great deal of discussion, yes,
About the properties of man.
Animal or angel, you were carved from bone,
But your heart, it's just sand,
And the wind is gonna scatter it,
And cover everything with love.
So, if it makes you happy,
Then keep kneeling, momma,
But I'm standing up.
Because this veil, it has been lifted, yes,
My eyes are wet with clarity.
I've been a witness to such wonders.
Oh, I've searched for them all across this country.
But I think I'll be returning now
To the town where I was born.
And I understand you must keep moving, friend,
But I'm headed home.
Yeah, I'm gonna follow the road
And let the scenery sweeping by easily enter my body.
And I'll send ya'll this message in code-
Underground, over mountains,
Through forests and deserts and cities.
All across electric wire, it's a baited line.
Yeah, the hook's in deep, boys,
There's no more time.
So you can struggle in the water-
Be too stubborn to die.
Or you could just let go
And be lifted to the sky.
Your eyes won't open wide enough.
And you're constantly surrounded
By that swirling stream of what is and what was.
Well, we've all made our predictions,
But the truth still isn't out.
But if you wanna see the future,
Go stare into a cloud.
And keep trying to find your way out
Of that maze of memories.
It all sort of looks familiar,
Until you get up close,
And then it's different, clearly.
But each time you turn a corner,
You're right back where you were.
And your only hope is that forgetting might
Make a door appear.
Well, is it your fear of being buried
That makes you so afraid to speak?
An avalanche of opinions,
Like the one that fell that I'm now underneath.
It was my voice that moved the first rock,
And I would do it all again.
So, I mean it's cool if you keep quiet,
But I like singing.
So, I'll be holding my note,
And stomping and strumming
And feeling so very lucky.
And there is nothing I know,
Except this lifetime's one moment,
And wishing will just leave me empty.
So you can try and live in darkness,
But you will never shake the light.
No, it will greet you every morning,
And it will make you more aware with its absence at night,
When you're wrapped up in your blankets, baby-
That comfortable cocoon.
But I've seen the day of your awakening, boy,
And it's coming soon.
So, go ahead and lose yourself in liquor,
And you can praise the clouded mind.
But it isn't what you're thinking, no,
It's the course of history,
Your position in line.
You're just a piece of the puzzle,
So, I think you'd better find your place.
And don't go blaming your knowledge on some fruit you ate.
Cause there's been a great deal of discussion, yes,
About the properties of man.
Animal or angel, you were carved from bone,
But your heart, it's just sand,
And the wind is gonna scatter it,
And cover everything with love.
So, if it makes you happy,
Then keep kneeling, momma,
But I'm standing up.
Because this veil, it has been lifted, yes,
My eyes are wet with clarity.
I've been a witness to such wonders.
Oh, I've searched for them all across this country.
But I think I'll be returning now
To the town where I was born.
And I understand you must keep moving, friend,
But I'm headed home.
Yeah, I'm gonna follow the road
And let the scenery sweeping by easily enter my body.
And I'll send ya'll this message in code-
Underground, over mountains,
Through forests and deserts and cities.
All across electric wire, it's a baited line.
Yeah, the hook's in deep, boys,
There's no more time.
So you can struggle in the water-
Be too stubborn to die.
Or you could just let go
And be lifted to the sky.
473 comments:
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Fun. ^^
Nobody does Big Picture better. Timely.
From the last thread, referencing "Keynesians" willingness and ability to prevent Freegold:
When previous global monetary systems have become unsustainable and commenced collapsing, have the "Keynesians" been able to prevent the transition to a new system? History shows that the system will be adapted to facilitate the continuance of global trade.
So the question should be whether gold can be useful in the new IMFS. Can gold be part of a antidote to the fatal malady that plagues the $IMFS? If the answer is yes, and more importantly yes to the exclusion of all other can kicking exercises designed to preserve the $IMFS, then how and why would the "Keynesians" exclude it?
If the "Keynesians" could and would prevent gold from ever being a part of new global monetary system, why do they hold so much of it? Seems to me those CBs would have long since rid themselves of something that serves no purpose.
Please remember that FOFOA freely gives his time and energy so that we may understand the financial world using the Freegold Lens. There is a donation box at the top of the page if you would like to express your gratitude.
Thank you.
Indenture…just did
This was exactly my comment in 2015 Year of the FIre post:
"QE does support the USD ex-rate, only not directly. QE + ZIRP have greatly helped (if not outright induced) a humongous increase in stock prices and financial products, specifically in the USD markets traded stocks. US investors have had lots of free money to place in the only game in town that practically guarantees a respectable ROI. The rest of the financial world has been on a non-yielding rollercoaster while the DOW and S&P500 have been steadily climbing practically non-stop. This attracts foreign investors WORLDWIDE, seeing that US markets are a sure bet, which forces them to SELL their local assets priced in LOCAL CURRENCY and BUY USD because USD are required to invest in this sure bet in US markets. This has of course overvalued the dollar in real terms vs other currencies in the FOREX markets, and I think has been the main starter of the latest USD rout vs other currencies.
This also creates a positive feedback loop worldwide, involving not only “big” financial investors, but also the general population. Small shrimps do not directly invest in foreign stock markets (it´s far too complicated and not worth the risk), but we DO invest in strong currencies when we see ours go down in price (ask any Russian worker). We also invest in stock portfolios denominated in foreign currency, which has the same effect..."
Inflation (an excess of money in the system as compared to wealth held in less liquid assets) cause the markets to rise. More dollars chasing the same amount of stock supply. This would be an expected type of boost to the DOW.
What we are seeing now seems different. The markets rise because there is simply no where else for savings to go....so it seems to the average saver and his advisor.
In the first instance we could see prolonged periods of market rise without a lot of risk of a drop because the excess funds were committed into the monetary system. The inflation was not only boosting stock prices but the prices of goods sold by the companies that issue stock. Everything rose together in a happily inflating economy.
Today the market rises as the dollar gains strength. Goods prices are, for now, stable. The only assurance savers have is that the markets are rising. They will get capital gains even if the companies are not doing all that well in terms of GAAP income.
Eventually the idea of a hugely over valued stock market, even with very low interest rates, is going to frighten savers.
2001 was not that long ago and any prudent investor has to have his eye on the exits. They can already see that valuations are reaching those heady prices of the tech bubble.
Where they will go is the question. Cash seems good today to most people even if they feel some pain of 'missing out'. It won't take much of a scare to send the masses into safer holding patterns. This will aggravate the deflation problem by further strengthening the dollar. This will make debts harder to pay. This will lead to collapse followed by bigger collapse. Finally there will only be a few dollars left on the planet (cuz surely the Fed would not just print more.?) And there is your SOP deflationary collapse.
hmmm...if only there was something the Fed could do to help.
The world is a mess. The message of this blog is that holding gold is a reasonable way to preserve wealth through all the insanity of our current monetary system's crisis. One does not have to dance while the music is playing and be willing to shove granny to the floor as we rush to the exit. We can hold physical and wait for the smoke to clear.
We do not have to be part of the current insanity that the rest of the world feels compelled to participate in. We can do this because we understand the long line of history and the way the giants of the world must think. We can sleep at night and not worry about loss or missing out. All that is required is patience and understanding.
The fiat system burns from the periphery to the core. The dollar dies as it climbs ever higher because the supply of USD money & credit contracts. Dollars are dying and the result is an ever higher DXY.
China was "propping up" USD during the 2000s by pegging to the dollar, yet the dollar fell continuously. Now China has begun selling USD and the dollar has begun an epic rally, it rallied 20% in 6 months, hasn't had a negative month since June (best monthly streak at least back to 1980). China's outflows are very small now, but the trend has turned and outflows will increase.
Excellent, thanks. Re buybacks you could add two things. 1) Raising debt to buy back shares does not (or should not) change the EV (enterprise value) of the company. However, it boosts the share price (to which mgmt remuneration is linked). Yes, shareholders benefit, too. But only some shareholders, not all. Some shareholders have to sell their shares in order for buyback to happen. So those sh are not going to benefit from earnings concentration per share. Also, bondholders could be paying the price as the coverage ratios suffer and corp spreads rise. Effect could be small, but still. Also larger debt makes company more vulnerable in case of financial crisis.
Modigliani-Miller says it should not matter if you finance your company with debt or equity (which is complete bullshit). Corp Finance Divisions then calculate a "cost of equity" (which is actually free assuming no dividends) and convince mgmt that it is rational to buy back "expensive" equity with "cheap" debt. OK, interest is tax deductible, but cost of equity is an imaginary value; it's non-cash. So you don't "save" anything. You actually reduce net profit (as you point out). But, I guess, in ZIRP environment those considerations take the backseat to the insatiable greed and self-help mentality of management. However, those who buy back shares now (at the top) will have to revert to rescue rights issues during the next financial crisis.
On the strength of the dollar: I am not satisfied with the explanation of lower oil or the lower US trade deficit. My theory until now was that Core European banks, especially German, traditionally have excess savings due to high savings ratio and lack of domestic credit demand. So they venture abroad into regions where there is growth and credit demand. Usually $-nominated. (German banks are the usual suspects in all major banking crises). So when the SHTF, those non-US banks recoil. Their customers cannot pay back USD loans. The bank refinanced in USD. Those borrowings have to be unwound. Bank needs to buy USD's in order to repay borrowings. Hence a global risk-off period is generally coupled with USD strength. But I might be wrong.
Interesting post but do you people realize the implications of all of this?
There is no way out anymore, freegold or not. It's too late. And nobody is interested in a solution precisely because there is no solution.
Unlike many of the people here I just don't think very highly of the human species. We'll see who turns out to be right.
"And in this case, the dollar and the US markets are the perceived focal point, with AAPL at the very center."
Funny as AAPL was just included as a component of the Dow; that driver of all things technical, a jewel of a company (I know I'm not at ZH but I hope I don't need a /s).
Interesting how a line in the lyrics are bolded and a size or two larger than the others; Hmmm... ;-)
A company pays taxes on its profits, then pays dividends, then the shareholder pays taxes on the dividends. So there are two levels of taxes on dividends.
If a company buys bank its shares this reduces profits. So it saves on taxes. A shareholder can sell his shares for more money, or borrow against those shares and not pay any taxes.
From a tax perspective, dividends are crazy bad.
Once again, taxes have distorted the real economy.
...
With stocks just some 2% off their all-time highs, now is a good time to GTFO of some positions... I agree that [b].management[/b] of many US companies are doing no one but themselves any favors buying back shares. If the insiders are selling, ahh...
You cannot (hardly ever anyway) go bankrupt by:
1) Selling at a profit and/or
2) Staying out of debt
* * *
Chinese bearing producers (including and especially new ones) have been offering us VERY CHEAP prices lately for bearings and hub & bearing assemblies. My latest reading seems to lead to a "China is screwed too" theme...
And while Peru is not suffering like Brazil is, I think that is just a matter of time. Iron ore is under $60 in China now, and copper inventories are very high. Both of the above are bad news for Peru's export economy.
And that will affect Peru (much more periphery than core). Our company there is trying to batten down the hatches (tightening credit to customers, etc.).
Beware. The US economy may be running on fumes. Time for safety. Safety = Gold.
Excellent
I've always thought of stock ownership as a fleecing scheme. It creates "owners" out of outsiders so that insider owners can pay themselves as executives an above market rate. The executives maintain enough of the shares to maintain control and make all the decisions (primarily executive compensation) while using what would be the "owners" profits to pay themselves.
People instinctively know they are an outsider owner with the way they talk about companies with which they own stock. They will say "they" instead of "we" should borrow money and buy back shares because then "they" instead of "we" can pay less in interest expenses than the expense of dividends. If "we" was properly used in context then the fallacy would be revealed. Why would you as an owner pay a creditor "less" to save yourself from paying an owner (yourself) more?
@ Vincent,
that makes Australia seem relatively enlightened (for a change). We have dividend imputation/franking credits whereby the shareholder pays tax on the dividend (dividend here means the sum of the cash dividend + the tax the company paid (max of 30%)) and then receives a rebate (franking credit) equal to the tax the company paid in relation to that dividend.
I'm no tax accountant but I can see why dividends would not be so popular in the US.
@Sam
many people for a long time have regarded publicly listed companies as a financial arrangement that allows senior management to rip off both employees and shareholders.
Vincent Cate
Afair, there is no taxes on dividends where I am, exactly due to the problem of double taxation.
China has begun selling USD and the dollar has begun an epic rally
Ask yourselves now, what is sold to cause USD to rise?
USD?
Excellent. It is indeed exceptionally difficult to cut through the noise and see 'the big picture'. I know I do not know everything, but I do know this: there are way, way too many people on our planet and something must give to enable a cull of not thousands or millions, more like billions. It just has to happen. What this has to do with FOFOA, Freegold and economics: search me......
swaps?
Some of you may like this
https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_Me_8_14_13.pdf
I didn´t read any comments about this, but I believe these are significant news. HSBC is the custodian of GLD...
"HSBC Just Shocked Clients By Announcing Closure Of All London Gold Vaults!
The other big news this week was HSBC giving only 2 months’ notice to clients that they are closing down all 7 of their London gold vaults!"
http://kingworldnews.com/andrew-maguire-smashed-gold-today-hsbc-shocks-clients-closing-london-gold-vaults/
Testing
KWN has no credibility. I wouldn't even believe it if they reported the sun will rise tomorrow.
Andrew Maguire has even less, if that is possible.
Are there any reliable sources of information for this?
TF
Luo Zhen
I found your comment interesting.
This latest ZH article relates : http://www.zerohedge.com/news/2015-03-08/global-dollar-funding-shortage-back-vengeance-set-surpass-lehman-crisis-levels
From the ZH article above:
Who would have ever thought that a stingy Fed could be sowing the seeds of the next financial crisis (don't answer that rhetorical question).
Triffin's Dilemma strikes again. One of these times the haymaker will be a knockout blow.
MF: see @ronanmanly Mar. 5 retweet of @NedNL
closing = relocating, not KWN BS
@MF
Honestly, no, I have no other sources. I was hoping someone could confirm or deny this. According to Maguire it isn´t speculation, it´s a fact and it´s coming right out of HSBC´s own mouth...
2005: still more dollar weakness and alot of gold strength to come. 2015: still more gold weakness and dollar strength to come.
The new secular bull market in the dollar is not difficult to understand. It's much more fundamental than the current amplification of its strength, via weakness in other currencies. I expect the dollar bull market to last another 5 years, and it's mostly related to energy flows.
What's harder to understand is why gold doesn't do better. In one sense, gold is mostly hanging on to all the gains from the repricing of the planet, starting in 2000. So in that sense, gold is doing ok. However, the freegold concept is now clearly off the table. It didn't come true when it had its better chance in the hot years of 2000-2010. Now, gold has entered much rougher waters. At least until 2020, there's no need to hold more gold than dollars.
I still think gold should be held. But, it's the small case for gold, rather than the big case for gold.
G
Hi G
I suspect we will see more and more towel throwers as we get closer and closer. I have a tip for all of you guys. Try and understand that the "freegold concept" defines the monetary system we expect to follow the dollar reserve system. The mere fact that we continue to operate under the dollar reserve system does not damage the concepts developed to explain how things will work once we aren't. That's like saying the sun rising concept is off the table because it's still dark outside.
I love it. I think its so hilarious. Its such silly logic. "Well, it hasn't happened yet, so clearly something completely different is coming"
I don't agree with it but gregor's analysis is not completely off. Again, it's not so much "freegold won't happen because it hasn't happened" as it is "it's too late and when freegold happens everything is messed up beyond repair" It doesn't make me happy, but it's worth thinking about.
It's like gaining and gaining pounds and not taking care of your body and then one day having a heart attack, and you have significant heart damage. It doesn't matter if after the fact you suddenly get it...I need to stay in shape. The damage is already done and you should have stayed in shape 10 years ago.
Same concept.
Having said that, I still think there is time, but it's getting less and less. 5 years give or take. Beyond that, if freegold didn't happen I would say we're screwed. Everything having to do with misallocation of resources and capital depletion that is beyond the scale of human imagination.
I for one thing gregor's analysis is completely off, and I think its because of a fundamental understanding of what freegold is all about. Freegold is what you get when the bullion banks suffer a run, when the paper market collapses, when the entire financial plane collapses into the physical plane, and when gold can finally serve its function as store of value par excellence.
Gregor speaks of gold entering "rougher waters" -- but what does that mean? From the context of his message, it sounds like he is talking about the $POG, and is not addressing the long term sustainability of the $IMFS itself. You cannot talk about the freegold concept being "off the table" unless you have a reason to argue that there is no existential systemic risk to the system we have. Gregor has no made any such argument, except to suggest that the dollar will remain in a bull market for the next 5 years. But anyone who has read this blog knows, there is a good probability of a deflationary collapse (with a strengthening dollar) before the hyperinflationary switch flips.
In case anyone is interested, Warren James over at Screwtape makes a better case for throwing in the towel.^^
Freegold or not doesn't matter. A revaluation of gold will IMO happen. If the new value is free or governed.., I think governed.
2 simple ideas support this view. First - CBs need to be capitalised and second - I don't see politicians giving up even imaginary power.
DP: selling US Treasuries is a bid for $'s.
Very good article as always FOFOA. One thing is still not clear though. Are the insiders and the execs that are getting TFO are doing it for a F (selling equity => coming backdoor as bondholders/ bondholders of the USG)? Or are they out at the physical plane to buy stuff?
Cheers.
Discounting the Future (Longer-dated OS and local Bonds, stocks etc) ...in favour of the Present, is what's driving DX ...and it's closely related shorter maturities (<$IRX)
Everything else is "noise" IMHO.
The short T's have it over "Cash" in that they're backed by the full faith and credit of the USTreasury ...whereas holding Dollars (other than literally) exposes oneself to third-party risk.
Watch closely now: -http://stockcharts.com/h-sc/ui?s=$TYX:$IRX&p=D&b=5&g=0&id=p58451744768
...further to above, one can actually look upon "Cash" (the folding stuff - as opposed to a short-dated UST-bill) as a form of "future" ... with it's own perculiar "risk" profile.
Maybe a topic for discussion In the upside-down "future" world of negative IR's.
So the gossip would have it that the Fed is on the cusp of raising IR's.
The last time they tried, (in '05 as I recall) the "credit" side of the ledger promptly sent $IRX into a tail-spin ...and the Fed, realising they'd lost control of the short end of the curve, promptly cut the FFR.
Ever since, their modicum-of-control has been via long-end shennigans.
Realistically, the Fed currently have NO CONTROL over the Credit side of the Ledger ...and consequently are spectators IMHO.
and, Hot off the Press - GM to buy back $5 billion in shares
FOFOA,
There's a tax angle to this financial engineering. This link illustrates what's going on.
http://www.gordontlong.com/Articles/art-2014-07-A-Analytic_Insights-Buyback_Tax_Ruse.htm
I know these last 6 years have been frustrating. To watch the Dow go from 6,469 to 18,288 for nearly a triple, a 200% gain has truly been a sight to behold. Goes to show you gold/gold stocks are inversely correlated to general equities. Our time will come when things reverse. Margin clerks will be our best friends as the long S&P/short HUI is unwound. Think of it. Gold contracts and gold shares will have to be bought twice. Once to cover and again to go long.
I think one reason gold was knocked down from 1600 was so that gold shares couldn't offer a dividend yield to compete with bonds and blue chip stocks. Would you rather own a 10Y UST at sub 2% and a great chance of capital losses ( if rates rise) , or shares of Goldcorp with a 2% dividend likely to increase on top of capital appreciation in the stock?
Random man, I suppose I agree to an extent. I some times wonder how much of what is going on is "posturing". Or, How close is the world to full on war? That would postpone free gold. Freegold is a pretty good solution if not inevitable, but these things can be delayed when bombs start falling. It would be really interesting to hear what fofoa has to say about war and freegold as I haven't seen him touch on that much.
I remember foa saying the BIS WANTS to do this without war. I'm sure through out history most people WANTED to do things with out war but sometimes people are pushed passed their control.
I guess I'm just not sure what the BIG PICTURE is around war. I understand it economically and politically (as much as I can).
Maybe everything has already been discussed and the world was OK with " putting it on" to make the transition easier to take. (We've decided to change the monetary system as oppose to going to war with each other)
My conspiracy mind also wonders if the new apple watch is a way to get a little gold to everyone. Seems like convenient timing for apple to introduce gold into a product they know every western person is going to buy.
In the case of Apple, they have enormous overseas cash reserves that they can't repatriate without paying big tax penalties. Borrowing against their cash for a buy back is the most efficient way they can return value to shareholders.
From Forbes:
Apple initiated its shareholder returns program in 2012 and has been steadily bolstering its share repurchases and dividends. The company has authorized a $90 billion share buyback program, and had repurchased about $68 billion worth of shares as of September. Apple also raised its quarterly dividend by about 8% earlier this year to $0.47 per share. This has meant that the company’s total capital return program has increased to about $130 billion, and the company may need more cash to fund the program given that a bulk of its cash reserves are located overseas. Over 85% of of Apple’s cash reserves are held with its overseas subsidiaries, and the company would face repatriation taxes if it were to bring the funds back to the United States, which would be very tax-inefficient. The company has been steadily increasing its debt load to fund its shareholder returns. Raising debt to repurchase shares is also attractive from a cash flow perspective, since the company’s borrowing costs (for the European issue) are lower than its trailing dividend yield, which stands at over 1.7%. Additionally, since interest payments are tax deductible, the company would be able to potentially lower its tax burden.
Let me share with you what stanley druckenmiller said to his american audience gosh over a year ago now,,,,,,he said and I'm paraphrasing because he was talking kinda mocking what someone else had said back in 2007 who I won't mention,,,,,,he said you gotta keep dancing if the music is still playing,,,,,I can be out in a week, make sure u have a chair,,,,,Then he continued And keep this post from fofoa in mind,,,,,,,,,,STAY LIQUID For heavens sake don't go buying any old bonds from Zambia,,,,,,and at some point I'm just going to disappear,,,,,,,,,
Now has anyone filed their taxes yet state side?... And have u gotten your refund yet? It's important because they said delays were coming around feb 1 I find that interesting ,,,,,
At and y I enjoyed your post on the last feed thought it was pretty spot on
At bright they have beach houses to finance
At Gregor,,,,I can't stop laughing,,,,give us something your theory makes doesn't even follow political cycle
Remember folks druckenmiller closed his stuff and bought a pile of gold in 2010
At canada rob,,,,your conspiracy mind could be just flip flopped on cnbc today they said its like starting at 10k with a release date early April,,,,,I can't afford that and maybe just maybe that's the free gold price that's already worked in there because fofoa has said and I've always questioned things myself there is no free lunch and I know they ain't handing out free gold phones,,,,,anyone know exactly how much gold is in each apple item ,,,,,I don't do the technology thing, except for work I don't even post here with my own stuff
U guys and girls do realize there is only about five to six months outta the year where this kinda thing can go on,,,,,I know October is traditionally Wall Street crash season but they will take a lot of people's livelihoods away if this is done in the wrong month.....imho
I'm sorry should clarify last comment just generally speaking there are a lot of seasonal and big events in real economy that they don't want even a temporary crisis messing things up
Speaking of corporations has anyone noticed the at and t commercials since jan 1st has same theme music fofoa did in his debriefings it's a very attention getting theme song
Where comes this idea from that Apple somehow has altruistic motives with the apple watch and want to put gold in peoples hands.....er, on their wrists?
Anyway, the watch is supposed to have up to 2oz gold.
I think the 2oz is more to justify a high price. At the $10K level they are competing with Omega, Breitling and even Rolex. Except for the very wealthy who can buy several watches, how are you supposed to take share of the market if you don't have a differentiator?
The alternative story I thought of was that it is a way for Apple to hoard some yellow metal without drawing attention.
2 oz doesn't compute with the math,,,on what I thinks coming,,,,I like that 2nd thought,,,,,,
Has anyone ever been to a site called coinmill,,,,shows currencies, it converts them it shows the US dollar at what it's at but it show 315,000.00 next to GLD we all know gld is a ghost but I can't figure out how it comes to thAt number or why,,,,seems like a pretty comprehensive exchange that number next to gld is for 1 ounce of gold maybe I'm just missing something basic
2 oz Apple gold watch is ridiculous. That is 62 grams only the gold content if it is pure. Its not going to happen. It is simply too heavy for a watch.
Cheers.
I haven't seen it confirmed but a few articles have mentioned there at least will be some edition of the wtch that has 2oz gold
http://tidbits.com/article/15443
Having that said it is 18k and it is an Apple special alloy.
Don't know how hard it would be to separate the metals again if someone later on wanted to extract just pure gold from the watch.
I wonder how much gold is in the $8 watch that I bought from Big Lots. It seems to keep pretty good time so there must be a lot of gold in it.
Why did Zerohedge only ever post 1 FOFOA article... The one that was posted got lots of hits. It would add to ZeroHedges credibility. Right now, ZH isn't really explaining anything and a FOFOA post like this would go a long way.
https://www.youtube.com/watch?v=POzSXzwbwIc
The gold Apple Watch, $10,000 to $17,000
The tech world doesn't understand what they are seeing.
This reminds me of how western savers are similarly unable to see past their pre-conceptions. Tech people will eventually come to understand that the gold Apple Watch is intended to be timeless.
Unlike cellphones that have evolved in our hands from black and white numerical displays to color touch display and are now overshooting in size, Apple Watch display is already at the right size, a full color retina display from the outset. Future generations of gold Apple Watch will only vary by style, the tech inside no longer matters. The tech world doesn't understand that yet.
The only time the tech will matter with gold Apple Watch will be during servicing. Just as a luxury gold mechanical watch needs $700 servicing every couple of years, so will the gold Apple Watch need it's $700 service, new battery and upgraded S3 system on a chip electronics mechanism with smaller more efficient Nanometer scale chips. The end user will barely notice the tech change, upgraded health sensors may be the only tech upgrades people really notice.
We don't yet know exactly how much gold is in the watch alloy, my estimation is about 1.5 pure Troy Oz in the casing section of the 42mm model not including buckle or the likely exclusive solid gold link bracelet, or about $80,000 in 2009 purchasing power.
It intrigues me to think of how the freegold transition will affect this watch and future releases by Apple and what the tech world will then understand. Ironically there are probably many tech people invested in AAPL, if only they knew that a gold Apple watch is a better investment for their savings, and of course gold itself the best for savings.
In this post FOFOA in his usual erudite manner describes the current perceived 'focal point' of the $IMFS with AAPL at the very centre. A couple of days later Apple releases dollar prices of their solid gold watch, made of the very material at the focal point of our freegold viewpoints and discussions. A fascinating crossover to think about.
Sovereign gold bonds? More paper or smart choice?
"Jaitley had also announced the development of an alternate financial asset, a Sovereign Gold Bond, as an alternative to purchasing metal gold. The bonds will carry a fixed rate of interest, and also be redeemable in case in terms of the face value of the gold, at the time of redemption by the holder of the Bond."
@PeaknikMicki
This will do it.
I wrote to ETF Securities who run the PHAU fund and have HSBC in London as Custodians about the vault closures.
Here is their reply
Dear Robert,
Thank you for your email.
Please note that HSBC PLC have informed ETF Securities that the rumours suggesting that HSBC vaults based in London would be closing are incorrect. HSBC have confirmed that they remain fully committed to its precious metal vaulting operation in London and worldwide.
We can therefore confirm that arrangements for the storage of precious metals used to back securities issued by ETFS Metal Securities Limited remain unchanged.
If you have any further questions regarding this matter please do not hesitate to contact us.
Kind regards,
ETFS Client Support
Rob
Nice.
Rob -1
KWN & AM - minus one million.
JC said " the tech inside no longer matters. The tech world doesn't understand that yet."
That reminds of Bil Gates saying computers will never need more than 64kb internal memory.
We simply don't know where technology is going and it is not just processors/chips that get replaced during upgrades. Just look at PC; 5 1/4 floppy> 3.5 floppy > CD ROM > DVD > DVD Burner > USB > USB 2 and 3....(I mean, not many burn DVD's anymore, now it's put on flash drives etc). Screens went to LCD to touchscreens and TV's as remote screens. And now of course PC's are being phased out in favor of tablets, phones etc.
What awaits a couple of years down the track might not be known except by the labs where they are developing new tech.
Thanks for the new post Fofoa, thought provoking work as ever.
On all the watch bollocks; Apple currently use gold because they want up-market versions of their new device to look like jewellery, not because they understand gold's true utility! How many Dollars do they sit on, and they want to educate savers?Wearable tech is in its infancy, the skinny graphene/platinum edition with quantum computing and tactile holographic projection or whatever may date v1.0 a little.
Reality show,
IMO its not what apple wants or doesn't want. I can't really imagine someone walking into the gold market and taking 1/3 of the physical flow without it having to be "allowed" by TPTB. Of course this is only if that is the amount of gold they will actually be using. (Which I doubt).
I'm sure apple doesn't know what golds true purpose is. Otherwise they would be in the gold hoarding business.
All I can think of is, the super producers sitting at a table discussing how the gold is going to be equally dispersed and in comes a company wanting a huge chunk of it.
If I were at that table my main concerns would be retaining my power and purchasing power, through and after the transition. And if it comes at the cost of throwing the hungry collective a small bone it may be worth it.
Im barely on board of my own speculation here, but like everyone here, when looking through the FG lens, events and decisions may have alterior motives. And when that much gold is in play, its hard to imagine that this is just "another cool apple product".
Why THAT much gold?
Why right now?
Again, (I think the number I read was 700 odd tons) the tonnage could be complete bull shit, and I'm just thinking out loud.
In regards to the Apple watch, a more realistic sales estimate I've seen is 10,000 gold watches per year. Assuming there's two troy ounces of gold in each watch, that's 20,000 troy oz of gold per year (622 kg, or slightly over half a tonne).
AAPL's biggest market to penetrate next is India. They will have massive sales growth into most emerging markets, where. I hear they actually place an intrinsic value on gold.
Gold kiwi. That would make more sense. Maybe I got my info from king world news.....
@Kiwi: - That (sales estimate for the Gold Apple Watch) seems over the top mate - I think they'd be more likely to be anticipating sales in the 100's rather than 1000's.
On Another (related) note, acquiring old mechanical Gold Watches can be a doubly-rewarding persuit. These can usually be purchased for somewhat less than nett Gold-content ...AND you get the pleasure of having a nice time-piece to enjoy.
So here we are at the first date indicated by the arrows on the Economist cover. What happened? As far as I can tell the big event was the Euro reaching parity with the USD. Who'd thunk it? Was this orchestrated? The accelerated move the last few days is suspicious.
Mar 15th debt ceiling moratorium expires
Mar 20th China gold fix takes another step
May 11th the next day on the cover. Is March 11th thru May 11th a time frame in which something BIG will manifest?
For me I'm just going to tattoo a 555 chip on my wrist and never need a watch again. My body's built-in nano program will hopefully just incorporate the chip into my circuit and I can get rid of that clumsy circadian rhythm thingy. No gold needed.
I'm confused. Why is pretty much every comment about "gold Apple watch"? Is that an inside joke? Cos for the life of me I cannot see any link between FOFOA's blog entry and a gold watch.
@Franco,
Agreed.
@PeaknikMicki
Maybe the watch can be upgraded while preserving the outer gold shell. Kind of like upgrading a PC and keeping the box.
Question for those who entertain the possibility of a two-tiered Gold market (when traded in size): Why would a central bank perform a swap (or even outright sale) at or near spot price when they could potentially sell a smaller amount of their holding at a much higher price for the same funds?
Story on Venezuela was the prompt for the question:
http://www.reuters.com/article/2015/03/10/us-venezuela-gold-idUSKBN0M62CO20150310
@Bullion Baron
I wonder if not all central banks are "in the know" about what lies ahead, or perhaps they're being taken advantage of in order to shift supply elsewhere? Certainly there are some central banks with zero gold reserves.
Hello gold kiwi,
Last year Ecuador also made a gold swap with a commercial bank. Seems strange given that ANOTHER said 'I would say the BIS is best broker, always.' and 'The BIS is the gold broker for all interbank sales/purchases.'
So what do Ecuador and Venezuela have in common? You guessed it, they both are not members of the BIS. It seems membership has its privileges doesn't it? Such as not swapping your ultimate collateral at fire sale prices.
Will it work to support their currency? They should ask a korean, yes?
Date: Fri Dec 12 1997 21:33
ANOTHER (THOUGHTS!) ID#60253:
"Even Korea will find out that oil is all that counts. Their paper will die! Gold would have helped them in a different world, but for now gold is in the background..."
Maybe someone should tell those outsider nations to read some FOFOA.
@BB,
"Under the swap, the central bank would provide 1.4 million troy ounces in exchange for cash, said a central bank source. After four years, it would have right of first refusal to buy the gold back, added the source, who asked not to be identified."
So basically, this is a loan with gold as collateral.
"Venezuela would have to pay interest on the funds but the central bank would most likely be able to maintain the gold as part of its foreign currency reserves."
Yup, a loan.
@byiamBYoung, right, but there are some who've sold.
On a side note, if you were hard up for cash and owned an asset worth $50,000, would you pawn it (adding counterparty risk) for $1,200 in funds?
@BB,
"On a side note, if you were hard up for cash and owned an asset worth $50,000, would you pawn it (adding counterparty risk) for $1,200 in funds?"
I'll consider that a thought experiment, and think on it. If I come up with anything post-worthy, I'll get back to you.
I would, though, point out that Venezuela is definitely looking like a motivated seller. Time is running out for them. So, they are playing a very weak hand, and the other players at the table know this very well, and have all the leverage.
I remember a few times in my life when I was desperate to raise cash. I've made a few deals under which I knew I was getting massively screwed. But at the time, the cash was king, and so I voluntarily submitted to being screwed.
Venezuela is in a very compromised position, as I see it. And I bet they think they will buy that gold back once they are fixed.
Just my take, FWIW.
BB, I think you are leading bit too much with your question.
Just leave it at 1) what is the loan amount they get for the collateral and 2) what is the perceived counter party risk.
If the loan amount equates to say >$1000 per oz in collateral, then even with some counter party risk it may be a preferable arrangement to outright selling.
With a swap there is at least a first right of refusal option.
Would also be interesting to know if the swap agreement allows for early repayment. Given that the metal is held as collateral (should not be shorted by the counter party?) Venezuela could negotiate for a better deal and cash out the lender should POG rise.
Have the actual loan details been published for Venezuela's swap?
Why pledge gold as collateral and borrow against it? All gold is the same. Why not sell it and then with the money you would have used to pay back the loan buy more gold to replace it? You may even save some money not having to store the stuff in the meantime. Pawning is for unique items that have extra value to you. You don't pawn fungible things because it's more practical to just sell and buy more later. Gold collateral lending is done by CB's in part because the seemingly plentiful shrimp gold market we all play in is anything but.
Hi Gold Kiwi
On the subject of whether all countries hold gold, consider the following sources of information.
1. Latest Official World Reserves published by the Wold Gold Council. Date published is 11 March 2015. http://www.gold.org/research/latest-world-official-gold-reserves
The list identifies the top 100 countries with gold holdings.
In the Notes accompanying the table:
The table does not list all gold holders: countries which have not reported their gold holdings to the IMF in
the last six months are not included, while other countries are known to hold gold but they do not report their holdings publicly. (my emphasis in bold)
So a country can hold gold and not publish its holdings as stated by the information published by the World Gold Council.
Of the ~ 190 countries in the world, 60 are members of the BIS.
Methinks the BIS has a good idea of the actual gold holdings of the countries of the world.
Of course a sudden upheaval in the next few years might make right of first refusal a moot point. But they can always sue. ;)
FOA: Canuck, you are "'poised' (cash) to enter into gold very quickly (15 minutes)". That's fine, but a "fantastic financial crisis" may, this time, lock up the very system you use to function in. Your order may book in 5 minutes, but if the other side of your deal can't close, you will receive nothing! During these few times that events reverse "big time major on a world class scale", everybody holds onto what is considered "most dear". You will hear this often: " Yea, I owe you 5,000 barrels of oil. Yes, I have it, but it's going somewhere else because your deal with me is not as important as my deal with this other guy. He has something I need more, so get in line and kill me or sue me! I'm bankrupt anyway!" This is the way business dealings are resolved during war, natural disasters and major international disputes. Your, so called "lightning fast trade", is killed by a much larger breakdown involving much larger players.
Truly, I don't expect most people to change from this current line of thinking that embraces a "western style" of secure economics. If they did, it would negate thousands of years of natural human behavior. Most of the time, people will continue to play with paper contracts right up to and during the "burning of Roam". The Hunts thought they had "big" oil in Libya. They even borrowed against those assets as banks clamored to lend against these secure in ground holdings. Right up to the last day, traders booked contracts against delivery of those producing wells. Then, in a split second, it was nationalized. All gone! The same will be seen with gold stocks one day. Traders will buy them right down to .05, and still say, "I know it will come back with the demand for gold because the asset value is in the ground". Heard this before Carl? Gold goes from $100 to $10,000 during the crisis, and someone bigger (the local government?) then the shareholders says:
"Yes, I have it, but it's going somewhere else because your deal with me is not as important as my deal with this other guy. He has something I need more, so get in line and kill me or sue me!"
None of this is anything new. It's just that most "westerners" haven't been defaulted on recently, in a big way. Think about it. FOA
Thanks for your efforts Jeff. Ever reliable.
DX currently head-faking with 100.
Given it's exponential...ish rise of late -http://quotes.ino.com/chart/index.html?s=nybot_dx&t=&a=&w=&v=dmax - I'd be expecting it to drive on through ...up ...Up and AWAY!
$PoG watchers would have been getting excited Nov '14 thru mid Jan '15 as it climbed in unison with DX ...however that l'il situation has since reverted to the norm.
http://stockcharts.com/h-sc/ui?s=$ONE:$USD&p=D&yr=0&mn=6&dy=0&id=p14522796477
Maybe the Shanghai Spot-Gold Exchange will change all this - hope so!
test
Practice what one preaches. RRTFB.
A classic that is as viable today as it was in 2009.
http://fofoa.blogspot.com/2009/03/all-paper-is-still-short-position-on.html
Feb. 18, 2015, via Yorkshire Post, Naomi Rainey
"Banks Withdraw from "complex" safe deposit sector"
"The banking sector has largely withdrawn safe deposit services in recent years, despite reported rising demand
from the public." ( odd )
"Increasing costs and complexity have been cited as reasons
for the move, which has left many High Streets without secure
custody facilities."
"HSBC became the latest bank to withdraw the service, which
allows customers to store high value items within the bank's
high-security vaults."
pretend, for a moment, that you are the customer. next step...
In the very same mind set, that people buy the best value for the lowest price (Japan cars in the late 70s), and leave an established producer to die, so will they escape the wam embrace of the bankers and accept any competitor that offers a better deal
?
http://i00.i.aliimg.com/wsphoto/v2/1111878966_1/-font-b-Fireproof-b-font-font-b-gun-b-font-font-b-safe-b-font.jpg
http://www.safestore.co.uk/images/stores/store110-20110627-085820.jpeg
… Oooooorrrr…
Just "deposit" that useless gold in your bullion bank account, and trade it with them for a nice, convenient forward with an income.
The USD is doing a gold Sept 2011. But the USD hasn't shown any actual weakness since the 70's.
Zhou Xiaochuan give a timetable: Complete the interest rate market is a high probability event this year
http://finance.jrj.com.cn/2015/03/13034218957450.shtml
Reading a straight translation is painful.
What is the Chinese article actually saying?
Opening some new market? Capping interest?
"open year deposit interest rate ceiling is a high probability event. And during the last two sessions, Zhou Xiaochuan has said that the interest rate market in 1-2 years is expected to be completed."
Increasing cost is never a reason to get out of a business if said increase in cost is willingly paid by the end user. If they could site necessary price increases due to rising costs that were met with a fall in customer demand that excuse would make more sense.
Fast food warning:
http://www.bloomberg.com/news/videos/2015-03-12/the-incredible-turnaround-of-the-u-s-dollar-explained
3 reasons given for US$ turnaround : economic recovery, reduced trade deficit and low oil price.
Total time required to view the video: 1:12 minutes.
Total time taken to read and understand this FOFOA post: a lot longer. And you have to think and connect the dots as you read.
Consumption of economic information using the fast food approach can be hazardous to your future financial health.
This has been a public service message brought to you by a member of the brainwashed cult of evil gold hoarders, jerks and time misallocators.
@Woland, DP: - Given the (ostensibly Terrorist related) raids on High street "safe' deposit boxes in London a couple of years ago, I'd suggest ANY 3rd-party SD storage comes with a question-mark nowadays.
LD
you should consider adding 'pot watching' to your resume.
It has no function, wastes time and leaves you feeling no smarter…but it does fill the lonely hours and you'd be in good company.
Wow!
http://www.theguardian.com/us-news/2015/mar/13/white-house-pointedly-asks-uk-to-use-its-voice-as-part-of-chinese-led-bank
This was probably the March 11th event but was kept quiet for a day. I would have thought Japan or Oz would have joined first.
http://www.ft.com/intl/cms/s/0/ada19498-c898-11e4-8617-00144feab7de.html#axzz3UGYaSvtF
MdV
I included pot watching in the category of time misallocation. Other activities in this category include reading the current blog, RRTB, and pot watching, listed in order of importance.
Although I am a time misallocator, I am a strategic time misallocator.
Apple Engineer Talks about the New 2015 Macbook
How much do you make?
Can we find you in da club?
Yuan settlement gains popularity in Gulf region
http://www.ecns.cn/business/2015/03-13/157881.shtml
"Tian quoted a global clients' survey as saying that over 50 percent of the interviewees believe the cross-border renminbi settlement will account for 20 to 30 percent in the next five years, and 61 percent intend to use the renminbi in cross-border trade or increase the proportion of renminbi settlement."
New BRICS bank to change world's financial system
http://english.pravda.ru/business/finance/12-03-2015/130027-brics_bank-0/
Will the new Development Bank be an alternative to the IMF for developing countries? Pravda.Ru asked this question to experts.
"I do not think it will be big competition for the IMF, as the IMF, as a rule, does not finance structural projects. It does not fund separate business projects. The IMF is a sovereign structure. The IMF, as we know, comes to the rescue when the entire financial system of this or that country is standing on the verge of collapse of great difficulties. Yet, the new banks of the BRICS countries will be a good replacement to the EBRD" European Bank for Reconstruction and Development (EBRD)...In turn, Vladimir Rozhankovskiy suggested that the work of the New Development Bank will work especially well at the junction of joint projects, such as Chinese projects in South Africa, Brazil and Russia... officials at the Ministry of Finance of Russia expect the new New Development Bank will be operational already by the end of 2015 and will work in full force in four or five years."
http://finance.jrj.com.cn/2015/03/13165718961729.shtml
http://finance.sina.com.cn/china/20150313/195821718253.shtml
@DP: - The glaring weak-link (pun) with the Apple GW speil is that it doesn't come in His and Hers versions ...;-)
https://www.pinterest.com/iceboxjewelry/his-and-hers-rolex-watches/
There's a concerted effort toward parity with several (many) of the currency-pairs currently ...as we creep up (down) on $1000 $PoG - coincidence? ...Yeah right!
http://stockcharts.com/h-sc/ui?s=$EURUSD&p=W&b=5&g=0&id=p32845188706
Time is pretty hard to put into a rational perspective.
Apple is a gadget-company.
They need to build and sell new gadgets to flourish.
Anyone remember the Casio Watch with a built in Calculator? All the rage.
iWatch? - same deal - only to be out-of-date, and essentially forgotten, in the future.
6 months, 9 months a better version will come out. Guaranteed.
I suggest buying an Apple Watch and keeping it unwrapped in the original box and sticking it in a drawer for 25 years. You could see some real value as a collectable.
Anyone remember Texas Instruments in the 70s and 80s?
You could drive on the highway outside Houston and see huge TI plants on both sides of the road, on and on...
This is Apple. When you are at the height of the trend, it's hard to see that there will be a downfall.
People will get-over standing in lengthy lines to buy a slightly better cell phone every few months. For now the fad is strong. This too shall pass, IMO.
This is mostly publicly available information but as far as I know it hasn’t been widely disseminated (hummm?).
BACKGROUND (briefly)
New IMF/SDR Multilateral Arrangement
The G20 is now the main global assembly regarding major international trade/economic issues. The IMF/SDR arrangement is reviewed/modified every 5 years. In 2010 it was UNANIMOUSLY agreed that work needed to be done to reform the IMF/SDR arrangement towards facilitating more international financial/economic STABILITY. To that end in 2010 the agreement called for the inclusion of China into the IMF, ending the IMF US veto, and the inclusion of Rinmembi (yuan) and possibly some ‘commodities’ into the SDR for 2015.
For that to happen China needed to provide for certain facilities, as follows:
- China needed to promote greater international Yuan trade and converability. Accomplished - the Renmimbi/Yuan is now the #7 international trade currency. China has arranged many new yuan trading centres and currency swap arrangements (e.g. Frankfurt, London, Toronto, Sydney, Swiss, Russia, Brazil, India etc)
- China is the centre of a new Brics Bank and payment system, along with Russia.
- China needed more physical gold in relation to her size. Ah haa! (accomplished?)
- China needs to float the yuan (coming - currently on a loose peg)
The agreement also called for the removal of the US veto at the IMF, and the inclusion of Russia.
The US congress has failed to ratify the agreement so far.
Currently the SDR has 4 members in the basket (US, Eur, Japan, UK). For China to be included, the 2 higher trade currencies will need to be included also (Canada and Swiss) So the new SDR arrangement will be 7 strong and has attained the nickname “the Magic Seven”. As for ‘commodities’, there is reported to be a very strong likelihood that, (ta da) physical GOLD will be included. It can be easily appreciated that if STABILITY is the goal, a stabilizing ‘Reference Point’ (RP) is needed that can’t be manipulated/printed by any one/group of SDR members! Of course, as we all know, Gold is the only ‘perfect’ choice. It is already a major element in the current IMF. I expect a gold arrangement somewhat akin to that currently required for inclusion into the Euro. Also, again regards the STABILITY goal, can anyone even imagine that the SDR ‘RP’ Gold price will be allowed to be ‘yanked’ around by mere leveraged ‘paper gold’ futures players? Can anyone say By By (I mean Sell Sell!) Comex gold futures, et al.
So, as we close on the time for these agreed international Stability proposals to be formalized, there is great and powerfully increasing ongoing global INSTABILITY in currencies/interest rates/debt, including serious geopolitical tensions. This would seem to me to preclude any idea that the US may entertain to veto/block these new arrangements in order to hold onto her dollar reserve status/power. The international pressure for a fix is too great (and surely growing).
‘RESET’, anyone!!!
Got Gold?
CURRENT CALENDAR FOR TRANSITION TO IMF/SDR MULTILATERAL
April 2015 – IMF & World Bank meet to discuss US veto and 2010 reform options
May 2015 – Informal SDR basket review
May – June 2015 – Yuan de-peg initiation + China Gold reserves announced to the IMF
June 2015 – Greece extension expires
Sep/Oct 2015 – SDR basket review formalization
Nov 2015 – G20 meeting in Turkey
More Details; http://philosophyofmetrics.com
If I had a dollar for every post about the "new"fangled salvation known as the SDR, why, I'd have many ounces of gold :P
@Don: - As per my previous post, there certainly seems to be a good deal of currency-pair convergence going on at the moment ...which ties in well with a move toward establishing a Global Currency.
They'd want to hurry tho, the clock is ticking - loudly!
Hey jojo, the interesting thing for me is not that the SDR will be any form of salvation, but that the process of getting the yuan into the SDR requires that the yuan be de-pegged. After all, what's the point of adding a currency into the SDR that is pegged to another already there?
If the yuan does remove it's peg from the USD (or the basket that is very heavily weighted in USD), I don't think that the USD could survive the subsequent devaluation.
All in all, it's just another prick in the ball-oon. (but this one has a time-frame). We watch...
You think some people have a bit of a understanding and nous, even if you don't agree with them.
Then they do something like this.
http://www.parismatch.com/Actu/Economie/Avant-la-bataille-Yanis-Varoufakis-725030#
What a tit !
An Economist, possibly.
A Politician, certainly not.
@don
It's not the currencies/SDR thing that will change the monetary system. It's the store of value thing and JC does not get that at all! (hint at "FOFOA's dilemma")
Whether it's one world currency or a SDR basket of currencies ... it does not matter as long as the medium of exchange and the store of value are separated and the store of value-medium is marked to market and freely traded.
Medium of exchange provides liquidity.
Store of value provides solvency.
You cannot solve a solvency problem by providing more liquidity or renaming the medium of exchange.
A "stable and fair for all" monetary system first and foremost needs a freely traded and floating store of value as an anchor.
The geopolitical big picture:
https://www.youtube.com/watch?v=oaL5wCY99l8#t=1m40s
Although we have a string to pull the clothes of the rotten old king...
Greenspan speaks:
"Remember, we're -- the exchange rates in the global economy are a zero sum game. As the dollar goes up, someone else goes down. What we are seeing is a significant weakening obviously in the euro. We are seeing it in the ruble; we're seeing it in the yuan. So it's a very, very complex problem of international trade and international capital flows. And it's not altogether clear that the U.S. can readily make major changes in the dollars exchange rate, because it's such a critical currency that the types of actions that we would have to take are probably are outside the realm of where we would think it's good policy."
"And then the question is -- where does the crude go? Because everyone's forecast as to what was going to happen when prices collapsed was a sharp curtailment in shale oil production. That has not happened...
So that the West Texas Intermediate price is running $10 a barrel on the Brent crude, which is the global price. And that basically means that we are creating great abnormalities in the system. And unless and until we find a way to get out of this dilemma, prices will continue to ease because there’s no place for that oil to go except for into the markets. And spot crudes are especially vulnerable because of so-called contango is a very high level, and that implies that there’s a very, very significant set of pressures on the spot price...
And I think that that’s going to continue unless and until prices fall below the cost of crude production from shale, which is very significantly above where, for example, the Saudi crudes. There’s some Saudi crudes which can be lifted at less than $1a barrel in the Ghawar fields, the huge Ghawar field in Saudi Arabia. We're lucky if we can get $40.
http://www.bloomberg.com/news/videos/2015-03-13/alan-greenspan-oil-price-hasn-t-hit-bottom-yett
Rob,
he said that the text of the article was important for him to get published—and he is regretting the pictures.
But why regretting? Because he proofs to be a man of taste? Because he proofs to enjoy life?
At least, the reason why he is able to live this standard is his intelligence, eloquency and diligence. Not the worst attributes IMO!
The pics, yes, are kind of ridiculous. But that was the job of ParisMatch.
fftastic +1 And you can throw Rickards and Armstrong into the mix.
I'm coming out of my mostly lurking mode based on Don's post and some of the responses. In my mind Don has described a controlled mechanism for implementation of freegold without authorities having to call it freegold.
He describes a basket currency SDR with gold as a component. FOFOA has described how gold in an SDR doesn't stop currency devaluation as gold becomes a larger and larger fraction of the SDR (euro style!). But what if gold in the SDR wasn't meant for stability of the currency but was instead meant as a mechanism to enforce the ending of paper gold.
Now if currencies are unpegged and paper gold has to be eliminated doesn't this force freegold? Sure the SDR is just a unit of account, but doesn't it also provide a mechanism to force currencies to float against each other compared to a gold reference point.
Additionally it could provide, through SDR management, a controlled glide path for surplus countries to trade in their dollars. If Another is correct and people have been planning this for many years is it not possible that this is the controlled transition that has been worked out? Or from a different perspective, if Euro creators were so far sighted to see the end of the dollar system and start a 20 year project to build the Euro with freegold as the final step we might expect that final step is a managed transition. To me this is an intriguing idea that fits freegold while being consistent with what the SDR contingent has been discussing. Freegold doesn't require the SDR, the SDR doesn't require gold as a portion, but does gold in the SDR provide a controlled transition to freegold? Now it wouldn't prevent hyperinflation and it would still destroy the dollar reserve value held by other nations but if the mechanism for trading in stockpiled dollars was the SDR it would force sharing of the loss of stored dollar value across all members of the basket. ...I'm off to read POM.
Thanks fftastic and Edwardo. I was tempted to read the article. Now I don't care anymore.
Ein Anderer,
Haha, Yes, I'm sure the voters of the radical left Syriza, appreciate that he deserves this lifestyle, because of his eloquence and intelligence.
That is Socialism, isn't it ?
Likewise, I'm sure he now has MORE credibility with the Greek Pensioners, who are about to see their funds robbed.
Maybe if the Germans paid their reparations then all Greeks could live the Varoufakis lifestyle, yes ?
:), Rob.
We should not forget that YV is not living in Greece, since a very long time. Australia, USA, France…
Syriza asked him for help. And therefore he should shut down his lifestyle?
As far as I know they’ve cut a lot of things: f.e. expensive cars for government leaders…
If nations are thinking of stepping down to the level of the poorest, they are toast anyway.
Where has Putin been lately??? Perhaps making a film. Remember where you read it first. {;<)>> Mar. 15, 3:31 PM
What sort of film, Woland? Drama, documentary docu-drama, sci-fi-fantasy, sci-fi-thriller? I can't old Vlad delving into comedic forms, though some sort of dark satire is conceivable.
Tiger Porn fo sho
If he can ride a weasel flying a bird he could easily do that!
vas
Interesting..I'll have to spend time understanding first but it sounds plausible.
I don't understand the criticism of Yanis in the pictures. Is that a luxury lifestyle? Are they drinking a EUR 500 bottle of wine? Or a EUR 5 bottle of wine? Is the problem that he is drinking wine instead of tap water? The food on the table looks simple enough to me. Are those German sausages? Doesn't look like anything expensive. Is the problem that there is a table set up on the rooftop? This is not a big deal in many parts of the world. Is the problem that he is enjoying a break and smiling? I really don't get it. What is the problem?
Vas
SDR pegged to gold is another form of paper gold. Freegold cannot arrive as long as paper gold exists.
I don't think the intention is to peg SDR to gold.
The idea is that gold will form part of the basket.
Gold would then help offset currency fluctuations. i.e. if USD drops, then Gold goes up. The limitation with this though is that, unless the quantity of gold is substantial, it doesn't address global currency debasement
I don't think SDR is meant to solve today''s financial issues. It is meant to remove USD as reserve currency and to function as a more stable currency than any individual nations currency.
As such I don't see any contradiction between SDR and Freegold. If anything I am thinking that the SDR is picking up where Euro should have been....
Please correct me where my line of thought is erroneous.
@Robert.
I think you do understand the criticism of Yanis.
http://www.theguardian.com/world/2015/mar/15/greek-minister-yanis-varoufakis-i-regret-paris-match-photo-shoot
http://blogs.wsj.com/brussels/2015/03/13/greeces-yanis-varoufakis-paris-match-photoshoot-twitter-reacts/
Would you feel the same in a Greeks shoes with no job, hungry children and about to lose your home ?
Do you think the Greek people voted for Syriza through ideology or desperation ?
My fear, is that the lack of understanding between the 'Haves' and the 'Have Nots' is what leads to worse things, like revolutions and the rise of Fascism, when Syriza fails.
Without reading the text and just looking at the pictures, the title in Paris Match could have been ' Let them eat cake'.
Rob, I really don't get it. Yanis is an professor. He could easily afford a meal like that on his salary as an academic. There are a lot of places in the world where you can enjoy a meal like that for under $30 if you cook at home (and that looks like a home rather than a restaurant). Doesn't look extravagant to me, at least in comparison to politicians everywhere else in the world. If anything, it looks more humble than what you would expect from an academic turned politician. I wonder if the twitter uproar is just a propaganda ruse to discredit the new government?
Robert, you do get it.
This is politics, not academia.
Perception is far more important than reality.
Do you think he has more or less credibility in the eyes of the Syriza voters ?
Do the Greek people now think that Yanis feels their pain ?
Do you think the good looks and swagger of Yanis and Alex helped or hindered their election and perception on a world stage ?
Do you think Paris Match want to do a photo shoot with Wolfgang Schauble next ?
Maybe it is I, who does not understand.
I think basket of currency is equal to no reserve currency is equal to freegold. No single currency reference means no reference currency. I think talks of SDR is just a noise.
I think in future we will see more currency unions similar to Euro to simplify region specific trade and economics. I hate concept of WTO or IMF. Regulating trade and money at global level need to stop. Strengthening of regions is the way forward I think.
Are SDRs a currency or an UOA?
If they are a UOE they should be paper only.
If they are UOA, why should they incorporate a savings medium (fluctuating around the world`s propensity to save) at a POG (an universal one?).
In freegold there will not be an universal POG rather there will be local PsOG with diminishing opportunities for arbitrage.
SDR are a stupid exercise. How can one cement a percentage portion of the currency pie made out of currencies so different in network use, depth, width. Representing so different populations both in size, culture, spending/saving patterns. SDR stalls change at the margin so they are useless.
UsOE while being currencies themselves are not equal to one another because they are used differently around the world the same applies to the other uses - UOA and savings (gold being the focal point or not). A system that allows for change to happen is the best of them all and it should not be a worldly hotchpotch solution for nothing.
Yes Robert. From where comes the sudden criticism again?
Those intriguers...
Aside that Yanis did a good job yesterday on German TV. Of course you cannot mention default risks if you are in office, this is mostly the game of the hot potato which is being played the last weeks, by officials.
Btw, Tsipras officially denied such risks: “There is absolutely no liquidity dilemma” ;-)
Worth noting in my view was the sneaky shortening of the time frame to Greece from 6 to 4 months by the euro authorities. Anyway, main point is that everyone can see and act now. Don't complain afterwards.
And don't tell me that there's no plan for a default, since the inclusion of Greece in the euro we knew of its problem.
Now that it's known how the losses are being spread, banking union effective, one can act accordingly.
Plus, Greece had that primary surplus uncle costata told us to watch for. Importantly, Yanis defended that again yesterday, they wanna stick to it. Its a source for the strength of his arguing imo. On the shrimp level I sense a switch of opinion towards poor debtor Greece. Bankrupt, says everyone except a few politicians (not that they don't know it ...).
Of course, then there are those poor debt savers not able to see the big picture. #debt epiphany
#oh I shouldn't have saved in debt!
Bright Aurum
Why should there be a single UoA for whole world?
There shouldn`t be any single UoAnything even gold being the focal point. It is preferably so but not obligatory (taking the consequences for straying). So what is the purpose of the SDR if not to substitute gold as a devaluation hedge in international contracts? You can do that now by using derivatives. => SDR are USELESS!!!
@Woland,
This film?
http://finance.yahoo.com/news/putin-comes-shadows-bang-131300430.html
@Peaknik
The purpose of incorporating gold into the SDR basket is not to constantly compensate for debasement of currencies, but to have a component that goes up in value during financial repression. It's the SDR interest rate that will compensate and then some for debasement unless certain conditions manifest.
An interesting article on the SDR, China, gold and the SDR
My observations are that 1. China will have to reveal its gold holdings to gain incorporation of the Rnminbi, I'm sure this will raise a few eyebrows given their rapid accumulation.
2. Gold will likely be incorporated and China has been pushing for this to be the case, to move counter cyclically to the dollar
Like all paper, SDRs are a derivative of .....
Xavier
It might not be necessary for anyone to reveal their gold holdings. In a system in which settlement is even then...no need. If settlement is done by gaining or losing value of the currency in the FOREX...not needed. If gold is used for settlement the as long as you have the required amount you are fine.
I suppose in a new system it might be customary to declare your holdings but buying or selling gold for your currency could effect rapid changes that could alter your stash quickly.
If China restructures to a Euro-like currency they would probably fund the currency with some quantity and yet keep an off the books quantity 'til needed.
Reporting gold holdings was important when you declare that gold is worth 'X' in your currency and you had 20% X to back up your assertion. That was how the gold standard worked. I do not believe anyone is thinking of re-doing that disaster.
I was just noting what was written in the article, it seems counter intuitive that such effort has been expended to construct the SDR when it is superfluous in freegold. Why would China be so keen to join and be making all the correct moves needed to allow the Renminbi to become a part of the SDR if is to be ditched? Why go to the bother if only for an interim solution?
Seems that the SDR is a unit of account that could ultimately be comprised of both an MoE (freely floating currencies) and a SoV (gold). A fairly elegant solution, no? That admixture could allow member IMF countries to exchange their SDRs for either foreign exchange reserves or physical gold, depending on preference or need. I seem to recall FOFOA stating that even if the end-game is the SDR, the same would require “high-priced” gold. The SDR is even more compelling giving the various news accounts of countries re-visiting the composition of the same in 2015 as well as China’s desire to have the yuan enter the basket.
It seems counter intuitive that such effort has been expended to construct freegold, when they could have just used SDRs? SDR, the appendix of the monetary body. Superflous.
http://fofoa.blogspot.com/2013/10/special-drawing-rights.html
Jeff -
“[The SDR] is for accounting, not settlement.” - FOFOA
True. But the point is that it can be re-constituted so that it could be used for settlement. If the SDR contained physical gold, then it could be used for settlement as member countries could exchange an SDR for physical gold, i.e., achieve settlement.
Not sure I get it.
"The purpose of incorporating gold into the SDR basket is not to constantly compensate for debasement of currencies, but to have a component that goes up in value during financial repression. "
But debasement and negative real interest rates are the cornerstones of financial repression. And if gold goes up in response to such debasement, then it is compensating, no?
"It's the SDR interest rate that will compensate and then some for debasement unless certain conditions manifest."
So you are suggesting that if an individual SDR basket nation, say US as example, debases currency, then the SDR interest rate will go up? That would be like EU on a global scale. i.e. individual nations run their own fiscal policies and then there is a globally impacting interest rate affecting anyone having SDR based loans or savings.
Did I misunderstand anything?
Blake, I suggest you read Motley Fool's comments on 3/24/14. You're welcome.
Jeff –
Thanks but what’s with the attitude? I read MF’s thought experiment and quote his conclusion:
“Over time the end result remains though, gold will become the whole of the basket as currency values are eroded due to inflation.”
Fair enough. But isn’t this exactly how the Euro is structured and one of the primary reasons why it is lauded for the same, namely, that the medium of exchange is separate from the store of value? In the exact same way, a reconstituted SDR would similarly separate the medium of exchange and the store of value but critically, impart these virtuous aspects of the Euro to all the other member countries.
@ Rob
Syriza is only failing because Yanis has the brains to know that they have to keep the Euro currency. But maybe Syriza will drop Yanis in favor of someone who is either willing to drop the Euro in negotiations or someone who actually thinks that dropping it is a good idea. Maybe they will consult Paul Krugman. And he will tell them to drop the Euro currency for one that they can print.
From what it looks like, the ECB was willing to give Greece the boot. Otherwise why would Yanis be backing down ?
But as he said in that interview, its not over.
@Blake
you mean SDR being redeemable for their respective components?
speaking of SDR who will be using the SDR? citizens, businesses, CBs, sovereigns? will taxes be payable with SDRs?
Blake
That conclusion is only relevant with the assumption that all the other problems I noted are ignored and it is used anyway.
Things such as the redeemer having the choice of what to redeem SDR's in, and this then becoming a call option on someone's gold similar to the gold window, which was closed for this reason in 1971 if you recall. Minor things like that.
TF
TF
Would anything be redeemable?
Isn't more likely it is traded in a market place. i.e. if you want to convert your SDR to AUD/Gold/SEK or whatever, this is done in a FX manner.
If SDR became a regular medium of exchange between nations and if there was a perception that SDR's value was fairly stable, then there would also be demand for SDRs and it would form part of nations fx reserves.
Gold in this case would only be there to provide some stability for SDR.
PeaknikMicki
I have found that most people who join the discussion on SDR's don't bother to do any research as to what they actually are, before joining the conversation, which is interesting to say the least.
This is a good starting point.
http://en.wikipedia.org/wiki/Special_drawing_rights
TF
Ps. I did in my comment of a year or so ago try to simplify how they could be viewed ie. a call option, and sure those are tradeable, but that does not change their nature.
Point taken but the SDR structure and function is being re-worked. From what I see the plan is for SDR to act as a currency.
@PeaknikMicki
You mean no gold component, yes?
Last night I dug up these very interesting Chinese articles. There's bowel-aquivering stuff in them.
http://news.cnyes.com/20150316/%E4%BA%BA%E6%B0%91%E5%B9%A3%E5%9C%8B%E9%9A%9B%E5%8C%96%E6%98%AF%E2%80%9C%E4%B8%80%E5%B8%B6%E4%B8%80%E8%B7%AF%E2%80%9D%E6%88%B0%E7%95%A5%E9%96%8B%E5%B1%95%E9%87%8D%E8%A6%81%E5%89%8D%E6%8F%90-120138767535910.shtml
http://club.mil.news.sina.com.cn/thread-706739-1-1.html
And then I wake up to find Italy, France, and Germany have flipped East. They are joining the AIIB! Jim Willie is God!
Offtopic ;-)
Jeff: SDR, the appendix of the monetary body. Superflous.
Lets not call appendix superfluous :-). It has evolved twice separately.
Its a very important organ. It is the incubator for gut bacteria. Without this a person may not be able to recover sufficiently from a bout of loose motion. It repopulates the gut flora, after dysbiosis (when the gut flora have been killed due to various reasons, one of them is loose motion).
Lack of proper gut flora is behind Crohn's and IBS.
Its function has only been recently discovered. Yeah knowledge moves very slowly in Medical circles. You need to have internet savvy doctors for the internet age.
Uh, OBA, are you watching the $IRX? Hmmm...
Lol @ Anand....who would have thought the appendix would have such a friend around here?
So, what should we substitute? I vote for the Male Uterus.
SDR, the Male Uterus of the monetary body. Superfluous.
http://discovermagazine.com/2004/jun/useless-body-parts
So, what should we substitute?
Males nipples. ...as useless as tits on a bull.
@anand srivastava
Aside from the fact that we all understood Jeff's reference (but thanks), I did investigate your claims of assuming that I, personally, had poor Gut Flora because I am Ketogenic. So, I had a Hydrogen Breath Test administered and despite your generalization about people with low-carb lifestyles - my own Gut Flora is fine and dandy - thank you. This isn't the place so I'd love to discuss more with you if you'd like - garyAT2zedotcom
http://www.reuters.com/article/2015/03/17/us-europe-asia-bank-idUSKBN0MD0B320150317
So the US can't even get itself perform "very mild and reasonable" reforms to keep the herd interested in the IMF venue?
Good luck pushing the SDR, USA!
@phat repeat.
I saw that too. I thought oba would have been on here in seconds with some updates.
The pendulum seems to be swinging
With China the 'peans are singing
Jack Lew's not amused saying don't get abused
While Uncle Sam's butt gets a stinging
is it possible for freegold to arrive while there is still confidence in paper gold?
is it possible for confidence in papergold to be lost before confidence in fiat bank deposits get lost?
unless someone is suggesting that paper metal breaks before government currency breaks?
and does government currency break after major wars for industrialized countries?
but then again a couple regional wars are definitely brewing
@Canadarob
To me it must mean some desperate institution is going to be squeezed hard or is perhaps being redirected.
But OBA might have a different viewpoint since this is his baby, and his baby ain't behaving. ;-)
@Phatso, Canadarob: - She's acting a bit ornery eh?
I think we're seeing a market reaction to the touted Fed raising the FFR ..aided and abbeted by "them" I might add...;-)
The recent Auction was the first to have dipped below Bid-to-cover 4 in recent memory.
http://www.treasurydirect.gov/instit/annceresult/press/preanre/2015/R_20150316_1.pdf
I think the collapse into the Here 'n Now scenario is still in-play and this little uptick may well be looked back upon as the Systemic Last-hurrah ...maybe?
Let's see where we go from here.
I might add the last time the Fed "tried" to drive the market via short-end FFR (Debt-side) IR increases, they were very unceremoniously given short shrift by the Credit-side.
That was back in '05 ...10-odd Yr's ago!
Have they finally regained control of IR's via short-end management?
Doubt it!
@OBA
And how did this "short shrift" play out in the market? i.e. What is the evidence of that? Do you have a graphical representation you can point to?
Given a consensus is beginning to form of "bad things" in the market being pushed out to 2017, I could see how the here-n-now is still in play.
Oh, and I love the talk of the Chinese to the rescue. I wonder the level of dealings those who posit this have had with the Chinese. ;-)
@Phat: - I had identified in daily graphs ($IRX:FFR) ...but deleted them years ago. The available weekly ones don't capture the capitulation too well but I'll go see whats available ...and link same.
Give me a day or so.
A piece of the puzzle. Yes, yes, I know, its KWN and Eric Sprott, but still worth checking out.
http://kingworldnews.com/billionaire-eric-sprott-just-made-the-most-terrifying-prediction-of-2015/
Something's gonna give now, if gut instinct had (still) any say.
At least the esoteric fits, we had a bright meteor over central Europe on the Ides of March and there were Auroras visible in mid-Europe. Then Europe joins AIIB. Friday 20. March is a solar eclipse. If magic still would work like in the old days ;-)
SDR, the Sick&Decaying Relic...
BIS Quarterly Review Mar 18,2015......"Oil and Debt"
interesting details, esp. re: hedging
at bis.org
Oba,
"She's acting a bit ornery eh?"
Is that a crack at Canada? ;)
Hot-air-R-Us: -http://www.federalreserve.gov/newsevents/press/monetary/20150318a.htm
https://legiscan.com/TX/bill/SB1245/2015
What the bill essentially does is create a means for intergovernmental transactions to occur in precious metals. Taxes could be paid in precious metals and it would allow people who receive payments from the government to elect precious metals for payment. It would also allow normal citizens to open an account and deposit their precious metals in the state depository. They could then use the electronic system to make payments to any other business or person who also hold an account.
FOMC statement:
blah
blah
blah blah
blah
We are never going to raise interest rates.
blah
@Tom: - I think you've got it!
The "interesting" thing is that the "market-reactions" are implying Fed-credence is still intact - which IMHO it isn't.
Lots of tape-painting going on before and after the Announcement methinks.
Let's see whereto from here.
Engaging in efforts to parse FOMC statements is a fool's game. The dictum, "Watch what they do, not what they say" is never better applied than towards the folks operating out of the Marriner Eccles building.
And, yet, there is a certain contingent amongst the vast yield chasing hordes that earnestly hangs on each and every word, as if each word, and its placement, were something other than an impossible to navigate labyrinth of ambiguity and obfuscation.
In my estimation, Fed cred, such as it is, ultimately has very little to do with how the market, such as it is, behaves. This is simply because the yield chasing hordes, as creatures of the present (but now rapidly expiring) system instinctively feel the urgency of deploying their paper derivatives into yet more paper derivatives. Like a creature that must always remain moving, lest it perish, the yield chasing hordes much always be advancing towards the next paper derivative product or risk their boodle's annihilation. That there might be some other way to navigate isn't even on the radar. It simply does not compute. And this is why deployment into paper derivatives will continue even as the numeraire itself fails. I suppose if a monetary authority like The Fed were to earnestly and unambiguously announce "Sorry folks, but we've totally shot our wad, run don't walk to the nearest exit" there would be the proverbial panicked stampede, but, for very good reasons, that's never-and I do mean never- going to happen.
I hasten to add that while they will never admit it, I agree that The Fed will not raise, indeed they can not raise, administered rates. In fact, while the mis and disinfo MSM talking heads were yammering on about whether a rate hike was off the table for June, the question they should have asked is when will the next iteration of cash for trash rear its ugly head. The reason "they" can't make money more expensive, and are stuck at the zero bound is that everything, and I mean everything, "financial" is dangerously levered. But that's what the $IMFS was destined to do, put everything into an desperately untenable position vis a vis debt.
The Fed lost whatever control they may have had a long time ago, and we are well into the it's being held together with bullshit, bailing wire and duct tape part of the narrative.
Edwardo:
Someone agrees with you about rates not EVER being raised...at least in this currency's lifetime...
http://www.zerohedge.com/news/2015-03-18/here-why-fed-cant-hike-rates-even-025
KnallGold
I follow Suspicious 0bservers on Youtube.
He noted a significant 'storm' following a CME (coronal mass ejection. It gave rise to auroras and radio blackouts as well as electron flux (whatever that is.) It is a daily habit and has introduced me to solar weather and several interesting new ideas about magnetic connections between the Sun and the planets and potential mechanisms by which these might impact not only weather but also earthquakes. Here are comments from yesterday: https://www.youtube.com/watch?v=hfhHMPuHK_Y
About the Matrix: Great satirical reality about Yanis' middle finger:
https://www.youtube.com/watch?v=Vx-1LQu6mAE
What is real, what is trolling? At least we should not lose humour :-)
Edwardo and M dV:
For the Full Monty: Zoltan Poszar: "Shadow Banking: The
Money View", ( the abstract and 1st few sections are enough)
Tomorrow (Mar 20) is a big day.
Will Greece call the ECB bluff and default, or find two billion euros in the couch cushions.
http://www.24hgold.com/english/news-gold-silver-greece-is-just-the-tip-of-the-iceberg-for-the-100-trillion-bond-bubble.aspx?article=6563867058H11690&redirect=false&contributor=Phoenix+Capital
The new global gold fixing begins.
http://www.24hgold.com/english/news-gold-silver-the-new-london-gold-fixing.aspx?article=6555175314H11690&redirect=false&contributor=Julian+D.+W.+Phillips
Popping some popcorn, and preparing to sit tight and watch.
As much as we all despise the old gold standard or any form of artificial "fixing" to gold, I wonder if HSP's recent "silverbug" solution for Greece isn't a Godsend in disguise for freegold?
Not the same approach, but an inspiration from him along those lines here:
http://roacheforque.blogspot.com/2015/03/to-fix-or-not-to-fix.html
Unfotunately I'm way too busy and fragmented to fully think this through ... but sharper minds than mine may want to think about it.
Anand, I withdraw my thoughtless jibe at the noble appendix. Further, I have the deepest respect for everyone still sporting wisdom teeth, tonsils, a conjoined twin, a unibrow, or vestigial tail.
http://en.wikipedia.org/wiki/Human_vestigiality
We who are without tails salute you. :)
Jeff:
The article does not list tonsils as vestigial. I think sometime in the past, scientists realized that tonsils is an important part of the immune system.
Appendix will take some more time, as the research is pretty recent.
The fact that we touch our mouth part and lick our lips is a very integral part of immunity. It provides the Immune system early samples of viruses and bacteria in the environment, via the tonsils. Without this the Immune system would not be prepared for the virus/bacteria. Hand Sanitizers will actually impair your immune system.
I have nothing against the concept of vestigial parts of the body. It is a natural consequence of evolution. Just some things might be considered vestigial because of a lack of understanding of their function.
Science has as yet not discovered everything. I think what we know to be true is faulty in a whole lot of places. Case in point is the understanding of Gravity in General Relativity.
@Phat: - Re: $IRX leading FFR, This 3-mthly chart isn't what I hoping for, ...but it identifies the gist of what I was referring to.
http://pigphilosophy.blogspot.com.au/2011/04/breif-history-of-fed-and-financial.html
It was actually early / mid 2006 (thought it was '05) when $IRX began to "seriously" control FFR ...and IMHO ...still does.
Hello to everybody. Just wondered if anyone else is having difficulty getting their hands on Krugerrands? I ordered some from a local dealer here in Johannesburg, South Africa, around 25 February and only half the order has been delivered so far. The message from the dealer is that the refinery is busy with end of year stock take.
I'm trying to figure out if there really is a shortage of supply, the dealer is being evasive or what.
Well tails may not have withered away completely, but literary license certainly has!
https://www.youtube.com/watch?v=Zb69JHm1XP4
Science has its limits that's a fact
We have an outline but it's not exact
Tonsils are a boon we toss them far too soon
I for one like leaving things intact
Jeff: Sorry, never had much of a sense of humor :-).
Literary license is good and all, but sometimes the oft repeated myths need to be straightened out.
I appreciate your educational posts Anand... they cause me a lot of googling :)
I'm surprised nobody has mentioned what was announced last night.
A sense of humor is as essential to good health as an appendix. Humor transplants are still in the early stages.
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