Tuesday, January 1, 2013

Happy New Year!

Year of the Window

It is tempting to believe that extraordinary events must have been carefully orchestrated by someone. This is the main ingredient in conspiracy theories—denial that extraordinary events are caused by the ordinary.

The reason I bring this up is to help you put Freegold in the proper perspective to understand my use of the term "window" as in "window of opportunity". Freegold will certainly be a high impact, extraordinary event as I understand it, and completely unexpected by most people. But that doesn’t change the fact that it could be, and was, seen coming a mile away.

Extraordinary events are caused by the ordinary all the time, and Freegold will be a good example. It has been rolling in like the tide longer than most of us have been alive. If there was a "conspiracy" surrounding Freegold, it was a conspiracy to forestall the inevitable, by those who had the most to gain, until structural foundations could be retrofitted enough to withstand the storm of transition.

With a long view, we can see several times when massive amounts of resources were expended to keep the wheels on the bus at times when it looked like they were falling off. A popular view is that central bankers do this to retain their own power and influence. But a different view exposed by the Gold Trail reveals that it was being done for a purpose: to buy time in order to retrofit the system to withstand the inevitable transition to Freegold.

Look at this chart of the 1980 spike in the gold price. Notice the steep climb in September 1979 with a spike on October 2nd.

(Click to enlarge)

The wheels were coming off the bus. The general fear among European central bankers gathering on October 1st for an IMF meeting in Belgrade was that the global financial system was on the verge of collapse. You might recognize the names of some of the central bankers at that time. Jelle Zijlstra was the President of the Dutch central bank (DNB) and the BIS, and Alexandre Lamfalussy was an advisor to the BIS, soon to become its General Manager.

Fed Chairman Paul Volcker arrived in Belgrade early and left early, departing on the first day of the meeting, "his ears still resonating with strongly stated European recommendations for stern action to stem severe dollar weakness." [1] But don't think this was about the price of gold. Gold is the linchpin of the system, but that spike in gold was to the collapsing system like a fire alarm is to a raging inferno. You can't put the fire out by simply turning off the alarm.

Those central bankers looked into the abyss, and then took emergency measures to buy the time needed to retrofit the global monetary and financial system so that it could weather the storm they saw coming. One thing was that Volcker was pushed to take quick action that, reportedly, was not embraced by the Executive Branch. But that wasn't even the half of it. Those European central bankers also decided to support the dollar's exchange rate by buying dollars:

FOA: "My point was that their actions can only be justified from a position of "buying time". Most of the major World and European countries had economies and currencies that could stand on their own in a competitive world. Yes, their transition from a dollar reserve would have been painful. But, compare that loss to the percentage of lifestyle gain they paid as a tax to the US by artificially maintaining the dollar exchange rate. Their Central Banks support polices were a decision to waste their citizens' productive efforts in a process that held together a failing currency system.


It seems the only explanation for the continued support of the dollar came in the form of "buying time": time to recreate a world reserve currency. But this time, make it subject to a whole group of diverse nations of conflicting political wills. In this format no one country can call the shots for the world. In addition, take away the need to compete with gold. Let gold be a supporting "reserve asset" that trades in a free market, unlent and non monetary so as to circumvent its manipulation."

You can see that post-1980 European CB support for the dollar in stark relief here. And the other thing they did was to encourage and support the development and expansion of a vibrant and explosive paper gold marketplace for the purpose of absorbing the demand for gold in support of the dollar. Again, this was the European central bankers supporting the status quo in order to buy time for...

FOA: "On January 1 1999, the Euro was born. On the headlines of almost every paper, the new Euro currency immediately became the topic of speculation. How high or low would it go,,,,,,, will it last,,,,,, what good is it,,,, and on and on. Yet, completely hidden from view and outside most speculator interest, one important item was overlooked. Once this competing reserve currency was formed, the two major power blocks of the world no longer shared the purpose of maintaining a paper gold market! Established, maintained and supported for the purpose of absorbing the demand for gold, its price damping effects were no longer needed."

This is a good example of a major, multifaceted, coordinated, long term (20 years!) European central bank effort to forestall the inevitable transition for the good of the entire global monetary and financial system, and by none other than those who stood to gain the most from the transition. Evil bastards! ;D

ANOTHER: "The CBs were becoming the primary suppliers by replacing openly held gold with CB certificates. This action has helped keep gold flowing during a time that trading would have locked up… Westerners should not be too upset with the CBs actions, they are buying you time!"

Then came the 90s when, as ANOTHER stated above, those European CBs became suppliers to the gold market as the whole "paper gold thing" didn't work out quite like they thought it might:

ANOTHER: "The BIS and other various governments that developed this trade ( notice I didn't use conspiracy as it was good business, as the world gained a lot ) , thought that the paper gold forward market would have allowed the gold industry to expand production some five times over! Don't ask where they got this, as they are the same people that bring us government finance and such. But, without a major increase in gold supply, the paper created by this "gold control operation" will either be paid by, 1. new supply. 2. the central banks. 3. rollover existing. 4. cash? 5. or total default! As the Asians started buying up everything last year ( 97 ) , number 5 and 5 started looking like the answer! When the CBs started selling into this black hole of demand, the discussion of #5 started in their rooms also."

For example, Wim Duisenberg, who followed Jelle Zijlstra as the head of the Dutch CB and later became the first President of the ECB, oversaw the sale of Dutch gold in two significant tranches of 400t (announced January 1993) and 300t (announced January 1997), and by decade's end had allowed for the lending of up to 15% (150t) of CB gold reserves.

But then, in a surprising policy reversal, he led the European central bankers in their Joint statement on gold, also known as the CBGA or the WAG. This statement was a very simple press release which, in essence, reversed the gold policy of the previous two decades and put the paper gold market makers on notice that they (the European CBs) would no longer be the lender of last resort for gold:

In the interest of clarifying their intentions with respect to their gold holdings, the undersigned institutions make the following statement:

1. Gold will remain an important element of global monetary reserves.

2. The undersigned institutions will not enter the market as sellers, with the exception of already decided sales.

3. The gold sales already decided will be achieved through a concerted programme of sales over the next five years. Annual sales will not exceed approximately 400 tons and total sales over this period will not exceed 2,000 tons.

4. The signatories to this agreement have agreed not to expand their gold leasings and their use of gold futures and options over this period.

5. This agreement will be reviewed after five years.

One could say that a window of opportunity for something had just opened. That was 9/26/99. On 9/29/99 the paper gold market imploded. The price of gold quickly rose 22% over a two week period (which would be like gold spiking to $2,030/oz. next week) and, for a brief moment in time, the lease rate spiked and the GOFO plunged signaling backwardation in the gold futures market.

There was a rumor that the Fed and the BOE were active in silencing the fire alarm that time:

"In front of 3 witnesses, Bank of England Governor Eddie George spoke to Nicholas J. Morrell (CEO of Lonmin Plc) after the Washington Agreement gold price explosion in Sept/Oct 1999. Mr. George said "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake.

Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."

In 2004, the European CBs renewed their "Joint Statement on Gold" as promised, but for some reason the BOE didn't participate this time:

In the interest of clarifying their intentions with respect to their gold holdings, the undersigned institutions make the following statement:

1. Gold will remain an important element of global monetary reserves.

2. The gold sales already decided and to be decided by the undersigned institutions will be achieved through a concerted programme of sales over a period of five years, starting on 27 September 2004, just after the end of the previous agreement. Annual sales will not exceed 500 tons and total sales over this period will not exceed 2,500 tons.

3. Over this period, the signatories to this agreement have agreed that the total amount of their gold leasings and the total amount of their use of gold futures and options will not exceed the amounts prevailing at the date of the signature of the previous agreement.

4. This agreement will be reviewed after five years.

Then, in 2008, something happened.

2013 – Year of the Window

I'm pretty new to this trail. I only started hiking it in 2008, a year that, like 1979 and 1999, the wheels almost came off the bus. Were massive resources expended at a loss just to keep the wheels on the bus that year? You be the judge.

I have relayed my own personal experiences buying gold from my local dealer in October and November of 2008 as anecdotal evidence of a tight supply (that I encountered) while the price was plunging from $900/oz. down to a low of $713/oz., and then plentiful supply at the bottom. I don't know. Did someone go massively short physical and long paper gold (or futures) in November of 2008 in order to support the paper gold market as the linchpin holding the wheels on the bus? Did somebody willingly take losses in order to delay the inevitable a little bit longer?

These charts are like a seismograph that records an earthquake, an explosion or some abrupt disturbance in the force. I do not think they are predictive. I do not think they are even descriptive enough to tell us what happened. They simply show us, in hindsight, that something happened. It is up to us to decide what we think happened.

So what happened in late 2008 as a result of the financial market collapse that began two months earlier? And did the European CBs do anything to forestall the transition once again? I don't know. But it is noteworthy that when they renewed their Joint Statement on Gold eight months later the #3 line about limiting gold leasing was gone and in its place was a line about IMF gold sales:

In the interest of clarifying their intentions with respect to their gold holdings the undersigned institutions make the following statement:

1. Gold remains an important element of global monetary reserves.

2. The gold sales already decided and to be decided by the undersigned institutions will be achieved through a concerted programme of sales over a period of five years, starting on 27 September 2009, immediately after the end of the previous agreement. Annual sales will not exceed 400 tonnes and total sales over this period will not exceed 2,000 tonnes.

3. The signatories recognize the intention of the IMF to sell 403 tonnes of gold and noted that such sales can be accommodated within the above ceilings.

4. This agreement will be reviewed after five years.

One thing that I was missing back then (2008-2009) was the wider perspective of someone who had been hiking this trail a lot longer than I had been. Then, in late 2009 or early 2010, Belgian put me in touch with Aristotle and we started emailing.

Ari had been following ANOTHER and FOA since their very first comments on Kitco back in 1997, and he is also the only person I know of who exchanged private emails directly with FOA during the Gold Trail years. He is also the one commenter from "back then" who, in my opinion, "got it" better than anyone else.

Somewhere around the turn of the century, or perhaps even right after FOA disappeared, Ari decided to subscribe to the Central Banking Journal, a quarterly trade publication put out by and for central bankers. It costs about $800 per year to subscribe. He has read every single issue of this boring trade publication, cover to cover, for more than a decade now. And I mention this simply to illustrate for you his extreme focus on central banking policy discussions, at least since FOA went away.

Ari has been hiking this trail a lot longer than I have, he understands it better than I do, and he thinks that central bank policy discussions are relevant to the potential timing of FOA's "changing world financial architecture" aka Freegold. As I mentioned just last week, my July 2010 post Timing Is Everything came directly from a curious email exchange in which Ari introduced me to the idea that, perhaps, the European central banks are somehow supporting the paper gold market at certain times.

Then, later in 2010, he introduced me to another idea: that 2013 might be the new "window" being targeted by the central bankers for transition to the new "world financial architecture" (aka Freegold). So, yes, I have had my eye on 2013 for two years now, and I decided on this name (year of the window) back in November. Fonoah can vouch for that since I mentioned it in an email.

What I'm trying to do here in this post is to share with you the nuances of my perspective and my reasoning behind the chosen name. Being a "window of opportunity" does not mean that I think they plan to "pull the trigger" or "push the button" or whatever. Nor does it mean that I think the wheels will fall of the bus this year. It's more a question of whether "they" will sacrifice valuable resources in an increasingly costly attempt to forestall the inevitable next time the wheels start to come off this 100 year old bus. And as I mentioned last week, we may get a glimpse of their state of mind in this regard by the end of the week.

If you think that the IMF can unilaterally forestall the inevitable with more gold sales, consider that the IMF has "pledged" gold, similar to the ECB and the BIS. It is not a sovereign nation with its own reserves. When we see sales by these types of entities, they are likely the visible result of a group decision rather than a unilateral action, which would explain the mention of IMF sales in the most recent CBGA.

Could the Fed do it? No, only the U.S. Treasury could, and as FOA said they eventually would, that would be the sign we are looking for—the U.S. Treasury selling U.S. gold to defend its dollar! What about the BOE? What's Gordon Brown up to these days?

I'm going to share with you Aristotle's thoughts on this, beginning with that email back in 2010. I haven't heard a peep out of Ari in a few months, so I can't speak to his latest thoughts, but the following covers roughly the last two years on that ever-elusive topic – "timing":

ARI (via email Dec. 2, 2010) - For the past half-decade, many international policy stirrings gave every indication to me that 2010 was to be the targeted year for assertively rolling forth the freegold paradigm. But as I've said previously, I feel that the ongoing financial crisis that began with the subprime fiasco has caused instability of such magnitude that the central bankers have been forced to delay briefly and "play it safe" -- one does not dare rock the boat (if there remains any choice in deciding the matter) when the financial waters have become so turbulent and choppy. As for the new timeframe, I'd say that the reported EU plan "to make private bond holders shoulder some of the pain from any sovereign debt restructuring after mid-2013" is as good an indication of a benchmark as any I've seen. Plus, that timing nicely accommodates my additional view -- embracing a culturally significant standpoint -- that the December 2013 conclusion to The Hobbit will forever cement the desire for gold into the minds of all western moviegoers, resulting in a perfect storm of the golden variety. ;-)

On the point of the midyear "benchmark" mentioned above, it's almost spookily funny that the song lyrics mention "You just gotta ignite the light and let it shine; Just own the night like the Fourth of July". Indeed -- 2013. (Or sooner, if *necessity* precludes all freedom of choice in the matter!)


ARI (hinting at his "timing thoughts" in a comment on Mar. 14, 2012) - Gather up the last easy bits of your treasure seeking exploits... the next 24 months will bring reverberations through our (global) culture as profoundly as is yet possible in this largely jaded and detached age of ours. Even now, can you hear the distant pulsing of air beneath the dragon's wings?

Gold. Get you some. --- Aristotle

FOFOA (via email May 11, 2012) - In that 2010 email, I believe you had your eye on the ESM set to begin in July 2013 when the EFSM is set to expire. But did you know that the ESM is expected to be ratified this July and run concurrent for a year?

I was curious if you still had your eye on the ESM as a “window of opportunity” and if this hastened timeframe portends an earlier window.

ARI (via email May 20, 2012) - Spurred on by the inquiry of your May 11th email, I took some time to read the latest progress on these treaties (both the 2011 original and lately amended 2012 ESM, plus the auxiliary Treaty on Stability, Coordination and Governance in the Economic and Monetary Union) last weekend, but somehow failed to get back with you on my thoughts. Probably because I came away with nothing very sound or profound as a result of my reading. I can't bring myself to imagine that the hastened timeframe for start of the ESM necessarily portends a more imminent transition to our freegold environment so much as it strikes me as a sign of how much the ongoing European ructions have kept the euro area member states focused and in frequent contact. Avenues for earlier-than-expected adoption were thus available and easily taken.

I took (and still do take) the facility of the initial European financial stability programs to make somewhat expedient new loans for the benefit of distressed euro member states until mid-2013 as an emergency measure and temporary bridge to give legacy bond holders (especially the banks) some time and space to regather their wits and come to better grips with the new reality. With the sunsetting of these expedient funds, the relatively cushioned ride of old bondholders on the backs of the stronger taxpaying populations should be nearing its end as any new funding (to be arranged now through the ESM) will come with stricter conditionality and will ensure the ESM holds preferred creditor status -- secondary only to the IMF.

Thus, banks (and any other sensible parties) who hold, or are potentially in the market for, European sovereign debt will be well advised to consider their place in the overall pecking order going forward, and of the real risk posed by national bonds after all.

A snip from The Telegraph today shows the likes of HSBC and Deutsche Bank still trying to think through it all and work out how to cope...

(Telegraph.co.uk) -- A note from HSBC staff this week said they are increasing their holdings of the yellow metal in the face of “deteriorating” economic momentum, in addition to adding cash and Treasuries (US government debt).

“In the continuing absence of plausible alternative growth drivers, we believe that this increases the chances that central banks will engage in further QE,” explained Fredrik Nerbrand, the bank’s global head of asset allocation.“This is likely to be accompanied by increased inflation expectations; hence, we increase our exposure.”

Not all are convinced gold is about to climb again, however. Analysts at Deutsche Bank think the increasing speculation about a Greek exit from the euro adds to the downside risks.

The argument is that, with gold showing a strong opposite correlation with the US dollar at the moment, if the euro falls, the dollar rises and gold drops backs.

However - stay with it - they see an actual 'Grexit’ as bullish for the euro. By implication, it would be for the gold price too.

The City is not singing gold’s swansong yet, but it is certainly braced for more volatility.

FOFOA (via email May 27, 2012) - Here’s a passage from your 12/2/10 email:

"For the past half-decade, many international policy stirrings gave every indication to me that 2010 was to be the targeted year for assertively rolling forth the freegold paradigm. But as I've said previously, I feel that the ongoing financial crisis that began with the subprime fiasco has caused instability of such magnitude that the central bankers have been forced to delay briefly and "play it safe" -- one does not dare rock the boat (if there remains any choice in deciding the matter) when the financial waters have become so turbulent and choppy. As for the new timeframe, I'd say that the reported EU plan "to make private bond holders shoulder some of the pain from any sovereign debt restructuring after mid-2013" is as good an indication of a benchmark as any I've seen."

Regarding the highlighted portion, check this out:

Sweeping reforms to shift the burden of rescuing failing banks from taxpayers to bondholders

It's from this…

Fresh fears as EU finalises reform plans
May 25, 2012 7:08 pm

Sweeping reforms to shift the burden of rescuing failing banks from taxpayers to bondholders are to be unveiled by the European Commission, despite fears it will further rattle nervous bank investors.
When a bank is deemed to be failing, regulators will win extensive powers to write down non-guaranteed deposits and senior unsecured bondholders, according to draft proposals obtained by the Financial Times.

While the broad thrust of EU bank resolution reforms are well known, its publication has been delayed for more than a year over fears the so-called “bail-in” tools would make it even harder and more expensive for banks to raise money.

There remain extreme sensitivities over the details. The FT has seen three recent drafts that show fundamental elements of the scheme are still being rewritten, with just a few weeks before the expected publication date.

The latest version includes one big political concession. Rather than forcing banks to raise an EU minimum of debt that can be “bailed in”, national authorities will have discretion to tailor requirements.
If approved in the final version, the increased flexibility could leave a patchwork of different regimes and requirements across Europe.

However, it would placate some countries opposed to the original commission measure, which forced big banks to raise bail-in debt covering 10 per cent of their liabilities. To meet this, Barclays Capital estimated listed banks would need to issue €600bn-€1tn of debt that can be bailed-in, which is more risky for investors.

Michel Barnier, who oversees EU financial services, is determined to unveil the plan in early June, within days of the Greek elections and at a time when most European banks are shut out of funding markets. He said the plans were “well thought through” and would not unsettle markets because they were “long term”.

“This is not a bad framework,” said one big European bondholder. “But it’s not going to be well received. This is a terrible time to release it.”

Experts on the reforms say the response will be unpredictable. “The commission may have decided that things are already so bad that nothing can make them worse,” said Bob Penn, a partner at Allen & Overy.

“But it is not going to help share prices or funding. It is not going to help ratings or funding costs. It will help the regulatory arbitrage business, as people duck and dive to avoid things.”

Under the plans, when a bank is judged to be failing and at the point of collapse, regulators will assume emergency powers to sack the management, restructure the bank’s assets and write down unsecured creditors.

EU members will also be required to establish resolution funds, which would be mainly bank funded and could include existing deposit guarantee schemes. National funds would, under normal circumstances, be required to lend to other country’s schemes if necessary.

Other draft changes include setting bail-in implementation for 2018, a later date than expected. Short term debt of less than a month maturity is protected, along with guaranteed deposits.

Regulators are also given some leeway in sparing derivatives counterparties should closing out positions during a debt writedown threaten financial stability or put a clearing house in danger.

ARI (via email May. 27, 2012) That article is a good catch, FOFOA. Much more so than the considerably less-consequential ESM treaty timeframe and implementation that we knocked about a few days ago, this article truly bites at the meat of the original matter mentioned in that 2010 email. And here we see how interminably these things can remain in flux, such that there is now in draft an extension of the timeframe from 2013 to 2018 as cited near the conclusion. You know... I can see where language to that effect could be more popular (among the banks and bondholders) from a simple delaying standpoint, but I would seriously question the likelihood that such a stretch could/would actually be made -- given the greater benefits to be had with fully-fledged freegold in the meanwhile coupled with the favorable cultural and political inertia to be had respecting the timeframe that commences mid- to late 2013 and into early 2014. But if we're looking at a serious attempt to hold the current course for five more years... jesus, that's a lot of stimulus and geopolitical rhetoric and nonsensical economic posturing just to get there -- not to mention five whole more years of the same ol' jaggedy march higher in MTM gold... (which is surely great for the young acquisition-minded, but equally frustrating for the established/retired gold holder.)

-- Ari

Well, there you have it, the full extent of my "timing" discussions with Ari. As most of you should know by now, I don’t do timing anymore. But seeing as the beginning of a new year is the traditional time to make (mostly failed) predictions, I do dip my big toe into the hazardous river of broken crystal balls once a year. And now, hopefully, you understand my reasoning for calling this The Year of the Window.

As for my specific prediction, here it is again from last week's post:

If the recorded price on Friday, January 4th, 2013 is EUR 1,246 or lower, it's game on for Freegold meaning that the window of opportunity is now open because official support for paper gold has apparently ended. In other words, there may be no system support the next time something breaks. But if the recorded price on January 4th is EUR 1,389 or higher, it's six more months of kick the can. And if it's anywhere between EUR 1,246 and EUR 1,389 (which it is today) then the €PoG will be too ambiguous to be predictive one way or the other.

For the full explanation you'll have to go read the post. But even if the €PoG doesn't hit one of those targets, whatever it does between now and Friday is still interesting to me (and I normally couldn't care less about the price of paper gold). So once again, here's a chart of euro gold so that we can keep an eye on it this week:

Once in a great while, perhaps, extraordinary events, say, caused by a century of the ordinary, cannot be delayed anymore, even by the most extraordinary efforts.

[1] federalreserve.gov/pubs/feds/2005/200502/200502pap.pdf


New Year's Party Music!

This year I'm featuring the videos of Freegoldtube that I used in posts throughout the year. If you watch only one, make sure it is his magnum opus, The Ecstasy of Gold, at the bottom. And if you appreciate the very time consuming work he puts into these videos, please be sure to let him know because I think that his drive to continue making Freegold videos may have stalled. How many blogs have someone like Freegoldtube making videos like this?

From Peak Exorbitant Privilege:

From Fallacies — Paper Gold is like Paper Anything:

From Four:

From Deutsche Bank explains why we hoard gold:

From An American Horror Story:

From What is Gold?:

Happy New Year to all of you and all the best in 2013... Year of the (now open?) Window!



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FOFOA said...

Also for the New Year I want to acknowledge Jesse McL and Go!

Fantastic job, both of you, organizing the massive USAGOLD forum archive and thanks also to RLP for having the foresight to download it all before it vanished!

Go, yours looks awesome and it's very easy to read: http://www.usagdfa.com/

Jesse, I added a link to yours in the sidebar, not only because it's already complete, but mainly because each comment is individually linkable! Wow! That's even an improvement on what USAGOLD had up before they took it down and will be a huge help to me and anyone else who wants to link to a specific comment: http://ubercraftorg.ipage.com/usagold/

Jesse's is in the sidebar as "USAGOLD Forum Archive".

Thank you and HAPPY NEW YEAR!!!


Anonymous said...

FOFOA a great start to 2013. You certainly have my attention and modified my intentions as never before!

Tyrannyofthepresent said...

FOFOA and all here: Happy New Year and thanks for being here and sharing your thoughts and insights.

Costata: See above; also I have posted my response to Bernholz and your thoughts on the previous thread to avoid cluttering this festive one.

costata said...


I have read your comments that you reference above. I have had too much to drink to respond, politely in detail, tonight. Suffice to say some of your assumptions seem somewhat doubtful to me.

Was that OK Wendy?

The Dow Theorist said...

Happy new year Fofoa.

Jim Sinclair seems to be little by little embracing Free Gold tenets (save his faith on the miners):



Gary Morgan said...

I feel very sad for Aristotle. He has been deeply involved with this internet freegold discussion for years, and was eagerly awaiting its arrival when corresponding with Foa many years ago. Imagine how exciting it must have been back then, feeling as though you had advanced warning of an imminent major change to the world's monetary system from an insider. Thrilling I would imagine. Also, highly disappointing when the insider vanishes, along with his friend, and their predictions of imminent change prove to be, shall we say premature, to be charitable. I can imagine Aristotle feeling somewhat lost and deserted. The start of his frustrations no doubt.

And now, 15 or 16 years later, he is still waiting, scouring central bank journals and the mainstream press for any little piece of evidence that something is imminent. Does he really believe that central bankers are going to give him a heads-up in their quarterly journals, like his insider contact did all those years ago? He is left corresponding with a newer version of himself, a mirror, but this surely provides some comfort one would hope, better than being alone with ones thoughts and disappointments.

His comment 'frustrating for the established/retired gold holder' may have made any that are impatient for freegolds arrival to stop and think for a moment, will that be me in 15 years time? So sad to see, one can imagine the time this man has devoted to try to recapture the intrigue and excitement of the Trail days.

Lots of talk about bank bondholders shouldering the pain of bank failures in 2013. Good news, but how the correspondents in these emails link that development to the paper gold markets is a mystery to me.

Ari must be elderly by now, and I hope he goes to his grave having seen the transition that has occupied his mind for perhaps a quarter of his life. It is nice that he has someone to email with who shares his interest, and can keep his spirits up. It would be sad if he did not live to see the day, but perhaps not as sad as if change arrived, and it was not as predicted.

At least he would have made a handsome profit on his gold holdings though, and will continue to do so if things drag on for another 20 years.

H. M. Socialist said...

Yes, it will surely be the year of the window... the window of opportunity to buy phyz silver and mining stocks! GSR & "low cost leverage to $PoG" FTMFW! I pity you freegolder fools who ain't playin' the ratio yo!

Happy New Year freegolder scum!


Indenture said...

Brian: That was very rude. You can pick on the probability of Reference Point Gold but what you just did was classless. We respect our elderly.

How was that Wendy?

Anonymous said...

And if you appreciate the very time consuming work he puts into these videos, please be sure to let him know because I think that his drive to continue making Freegold videos may have stalled.

Freegoldtube... is this true? Say it ain't so man! I love yo material! You know you got it goin' on!

Gary Morgan said...

Indenture. Ari wrote some good pieces back in the day, I respect him enormously for those. For comments more recently, for example...

'the December 2012 conclusion to The Hobbit will forever cement the desire for gold into the minds of all western moviegoers, resulting in a perfect storm of the golden variety.'

I think is perhaps evidence of Ari losing the trail somewhat at best. Does it not reflect on your current trailguide's level of objectiveness that he sees fit to publish these musings as evidence of what may lie ahead?

Rather than take offence at my comment, perhaps consider the strength of a view based on the release date of the Hobbit movie! Surreal to say the least.

Victory said...


There is nothing sad about living in awareness....quite the opposite in fact


Gary Morgan said...

Victory, do you think the Hobbit release date comment of Ari's indicates awareness? Or do you think these are the words of someone very elderly scratching around for crumbs to keep his dream alive. Having seen the three Lord of The Rings movies, I do not recall any mention of the ring being gold at all. Again, wishful thinking on Aristotle's part it would seem.

Tyrannyofthepresent said...


Watch "the Hobbit" and then comment again. The whole thesis of the book and the visuals in the film are incredibly gold heavy, unlike LOTR. And it is coming out in three parts over three years.

These are the threads that weave the cloth of cultural salience. And I am a "bimetallibug".

One Bad Adder said...

Hello Brian ...and welcome to the discussion (as I don't recall your seeing "handle" before?)
Ahh!~ well I remember those halcyon days c '99 as the Euro sashayed centre-stage and later (c'01?) as she gained "currency".
We Goldhearts were indeed full of expectations that this new "pretty-young-thing" would toss the "old-hag" Buck under a bus right there and then.
What then happened? Basically 911 happened ...which in turn threw all those naive expectations out the window.
The ensuing 10 years has demonstrated a couple of things (a) the "current" system has been extended well past it's timeline / use-by-date (witness sub-prime, GFC and the current state of the Bond / Bill Market)
...and (b)the down-side / short-comings of the introduction a Continental currency a-la Euro which some of us identified at the time are and have become glaringly apparent.
Will this year see a break-up of the Euro-zone?? ...or will the Euros current dilemma turn out to be nothing more than a bad case of adolesent Acne?? Time will tell!
As far as Sir Ari goes (and most that gather here for that matter) he appears to be seeking an "official" stamp-of-approval from TPTB for the "introduction" of a FreeGold regime ...and that may well turn out to be the case, but not one I'm necessarily counting on.

Gary Morgan said...

TOTP, I do plan to see the movie, and I just read this from a review in the Newyorker, which appears to paint a different picture of Tolkien's views....

'But there was more to the novel than that—something that squirmed in the murk of its motivations. In “The Lord of the Rings,” the errand of Frodo, though epic in execution, was plain enough: to destroy what would, in the wrong hands, cause irreversible harm. It was like stopping the Nazis from building an atomic bomb. But what the dwarves want, in the pages of “The Hobbit,” is gold, and their lust for it corrodes the quest and tarnishes its valor. That is what lusts do. Tolkien, a devout Catholic, who deplored the vanishing of the Latin Mass, believed in the existence of evil and in the struggle to be delivered from its claws. It is there in every shimmering scale of Smaug, the dragon; deprived by a mouse-quiet Bilbo of a single precious cup, he falls, Tolkien writes, into “the sort of rage that is only seen when rich folk that have more than they can enjoy suddenly lose something that they have long had but never used or wanted.” Ouch. The dwarves, in their small way, are no less possessed, and the joke is that a hobbit, who wishes nobody ill, should help to lead them into temptation. So many twists of the spirit, in such little space.'

Interesting, but sounds more anti-gold than pro-gold, and in keeping with the socialist anti-wealthy themes we see today. I saw this interview on Youtube recently, a fascinating piece of history, a line being crossed no less by ordinary men facing their perceived oppressors in the street....


byiamBYoung said...

"Far over the misty mountains cold
To dungeons deep and caverns old
We must away ere break of day
To seek the pale enchanted gold."

“The Hobbit: An Unexpected Journey” follows title character Bilbo Baggins, who is swept into an epic quest to reclaim the lost Dwarf Kingdom of Erebor, which was long ago conquered by the dragon Smaug. Approached out of the blue by the wizard Gandalf the Grey, Bilbo finds himself joining a company of thirteen dwarves led by the legendary warrior Thorin Oakenshield. Their journey will take them into the Wild; through treacherous lands swarming with Goblins and Orcs, deadly Wargs and Giant Spiders, Shapeshifters and Sorcerers. Although their goal lies to the East and the wastelands of the Lonely Mountain, first they must escape the goblin tunnels, where Bilbo meets the creature that will change his life forever… Gollum. Here, alone with Gollum, on the shores of an underground lake, the unassuming Bilbo Baggins not only discovers depths of guile and courage that surprise even him, he also gains possession of Gollum’s “precious” ring that holds unexpected and useful qualities… A simple, gold ring that is tied to the fate of all Middle-earth in ways Bilbo cannot begin to know.

Fun fact...Making The Hobbit used up all of the gold paint in New Zealand:

Gary Morgan said...

OBA, thank you for your kind welcome. I am all for seeking offical confirmation, and have found none better than this, from Mauritius of all places.....

'The nominal value of that gold we controversially purchased from the IMF in November 2009, has risen by some Rs 570 million, perhaps the best investment the bank has ever made in its entire history; no wonder there is international talk about moving back to gold as a reference value, if no longer as actual backing, for paper currencies. The platinum coin we launched last year has increased 16% in terms of platinum value. The gold coin we launched here in 2007 did even better, its value increasing by 42%. That “barbarous relic of a bygone age”, as Keynes dubbed gold, has not lost its shine over the centuries and may still be pressed into monetary service! So in this initiative we are ahead of the game, brickbats notwithstanding.'

Full piece is here..... http://www.bis.org/review/r101203a.pdf

He is a prolific speaker, I must scan his recent words.

But Hobbit movies, not so sure.

Gary Morgan said...

Following a very quick scan of one item, from Mauritius again, this central banker is leading the pack I would venture.....

'Let me come to my final point – the Gold Bar project that H.E. The President, will be
launching later tonight. We have witnessed the domestic savings rate halving from 29% in
1992 to 14% currently. This is partly in response to continued negative real interest rates on
saving deposits. The outlook for normalising rates in the near future is not encouraging. In
the absence of attractive financial saving instruments, it is the domestic property market that
draws speculative investment with the risk of a real estate bubble. More generally, there is
demand for a “safe haven”, away from paper currencies as we are living under the threat of
the depreciation of paper money and, particularly of reserve currencies, from quantitative
easing. This is the rationale for the Bank to introduce physical gold as a new asset class. The
Bank, which already sells industrial gold to jewelers and gold coins to the general public, has
partnered with Rand Refinery of South Africa for this Gold Bar project.
There are two features to this new savings instrument that enhance its attractiveness. We
are offering a buy-back option to make the investment as liquid as possible; and we are
proposing custodial services in our vault to mitigate the risk of loss through theft. We are
initially proposing gold bars in three denominations, 10g, 50g and 100g, and they will be put
on sale at competitive prices, set as close as possible to those prevailing on the international
bullion market. We now wait with bated breath to see how the market reacts to it!'


Anonymous said...


Thanks for demonstrating to us all your lack of tact and class. If you are surprised or somewhat offended by this comment, perhaps you should consider some introspection.

If not for Ari and others who participated and stoked the discussion of Freegold all those years ago, we would likely not be here today reading and writing on a blog solely dedicated to the idea. Since this is the only blog I am aware of that discusses the concept, my assumption is that Freegold would have quietly passed undetected by us ants. I for one thank Ari and respect him immensely. So much so that I have a level of compassion for him that apparently eludes you.

Compassion is a form human wealth, it must be possessed and held close and in a very intimate and personal way. It cannot be held at arms length, examined, put aside and then called upon when it is personally convenient. People see it for what is, either a genuine display of grace or a contrived display to bolster a weak ego.

Compassion, get you some.

I find myself in a similar position as Ari was years ago. I have about 15 years before I have to retire as an airline pilot (mandatory age 65 retirement by law). Then I will have to draw upon my savings for the rest of my life. Like Ari then, I see the $IMFS system as a unsustainable system on the precipice. I personally cannot envision it enduring for another 15 years. However, if it does I am extremely confident that my savings will be as protected as Ari's have been for the last 15 years. In fact, I am certain my wealth grow like his has. I want all of my wealth to remain intact, the rest is gravy.

I am on pace to end my career with enough gold at today's purchasing power to retire. Freegold will be an avenue for me to be able to give away my wealth to those who need it. I will have a large surplus and will not be able to use it before I die. So I on one hand hope Freegold happens sooner rather than later. On the the other hand I know that so many people will be wiped out when they discover the "wealth" they possessed was not wealth at all. Some of these people I love dearly, most I do not or will never know. This empathy thing is a bitch right?

I sleep soundly knowing that the world does not care what I think or want. The super-organism will decide when enough is enough and when the transition takes place. I sincerely hope to see it and hope Ari sees it. If I never see it I can say this trail, discovered by accident, has enriched my life in so many ways that I consider the trade complete, I have been paid in full for the time I have sacrificed to learn what I have. I feel I have received the deal of a lifetime. I do not need to see Freegold to be "paid in full."

Anonymous said...


I like to research things. I love deep analysis that many find tedious.

My passion as young man was math and physics. I always wanted to be a theoretical physicist and a fighter pilot, but practicality and my thirst for beer and girls led me astray. I realized that I needed to make a living to satisfy my "physical needs" and could not live on intellectual nourishment alone. In addition, I was not aware of any fighter pilots that happened to have a passion for quantum theory. So in my junior year of college I transitioned to Aerospace Engineering so that someday I could be an astronaut (after my retirement as fighter pilot!). Ah, the dreams of youth.

I managed to get a B.S and M.S. in Aerospace Engineering and promptly entered the Navy the day after graduation! I have never used my engineering education, fulfilled my dream to fly, and almost became an astronaut. Not so bad really. I still love physics and have not closed that door just yet. You never know...

I like to ride my Harley and just recently moved to the north Georgia mountains where some of the best riding in the country can be found. I live on the side of a mountain and have live "deer ornaments" in my yard year round.

I love good beer and mechanical watches.

I suppose that is about it.

Can't wait for the LV get together!

LZ said...

It looks like ambiguity because the factors working on the euro and gold are moving in opposite directions. The euro price of gold will be less volatile than the dollar price this week.

Tyrannyofthepresent said...


I think you will enjoy it. The ambivalence is inherent in Bilbo's quest and ours, in Middle Earth, Middle England and the Middle Kingdom - if not in the Midwest. As for Tolkien's Catholic or moral negativity about gold, not sure where to start. Perhaps with the golden Saxon and Norse grave-goods he read about and pored over, the gold and silver patens and monstrances in church, the love of all things substantial, wholesome, mediaeval and English. If there was a metal he hated, it was the iron of the Industrial Revolution. The Elves wore amulets of silver and Aragorn was crowned ... the voices of the Elves at Rivendell... ah forget it. I would have to write out the complete works and the whole life. Actually I was in his house near Birmingham the other day. Someone sells antique violins there now. But no, JRRT definitely wasn't anti-gold.

Gary Morgan said...

matrixsentry, I am careful not to mix admiration and compassion, and indeed other emotions you display, with objective analysis in the present.

You are clearly more of an expert than me on the subjects of tact and class however.

mr pinnion said...


Why do you feel sorry for Ari?
Some people study and talk about football all their lifes, and find enjoyment in it.

Ari seems to be interested in gold and economics.He more than likely enjoys the subject.
I bet he enjoys seeing the value of his gold go u every year! For all you know life might be one big party for him. U presume too much.


Alan2102 said...

Setting the Way-Back machine to the what-is-gold thread:

This is a reply to costata [very near the tail end of the thread]:

costata said...
"Alan2012 and athrone,
There have been a very large number of readers of this blog over the years who bought gold before becoming aware of A/FOA or this blog.
We (it was a joint decision) initially bought gold for one reason - to lessen our exposure to counter-party risk. After becoming aware of the A/FOA/FOFOA material we increased our target level of saving in physical gold.
We haven't bought a gram since then (aside from a paper gold currency hedge). We had to make personal sacrifices to acquire the gold and now we are spending on the things that we postponed. None of us know how much time we have. This (life) isn't a dress rehearsal.
It's simply outrageous to characterize "90 per cent" of the people here as gold speculators. Many readers, and some of the discussants, are from India and Asia. Buying gold is merely saving for a large number of people around the world."

All right! Thanks for setting me straight. I did not know that. I apologize for my misunderstanding.

I will ask, however: how large is that "very large number of readers" relative to the total number? 30%? 60%? 80%?

My GUESS is that it is a large minority.

My other GUESS is that the more recently-acquired readers -- and there may be a lot of them -- have been attracted because of the promise of a large capital gain in gold, in the near future -- perhaps 30X or 50X. This is a speculative interest.

Costata, again: "I also want to say something about this 20-30 times revaluation of gold. I'm wondering if both of you are Americans. Can you grasp that the rest of the world are collectively on the other side of this (Anglo-American) $IMFS deal? In other words, the ROW picked up the cumulative bill. (With most people completely unaware of it.) And I acknowledge some Americans will lose just as much as the ROW as a result of decades of this $IMFS "exorbitant privilege" but others can speak to that issue. Collectively the ROW were shortchanged 20-30 to 1 in, as yet, unrealized losses. The events many here anticipate will allow gold holders in the ROW to break even or better compared to their fellow citizens. But for others holding paper these events will crystallize those 20-30 to 1 in unrealized losses. To be crystal clear, the past losses will become a present reality."

Yes, I am an American, and I am very well aware that the Rest Of the World (what you mean by ROW, I am assuming, though you did not define it) picked up the tab all these years. WELL aware of it -- probably much more aware than most people here.

I am also well aware, and more than bemused, by the prospect of gold holders such as peasants in India suddenly becoming quite affluent, at the expense of paper-holders elsewhere, in the event of a dramatic FOFOA-ian gold revaluation. I like the idea... less for reasons of special love for peasants in India, and more for reasons of special dislike for paper-mongering thieves and cheaters (unlike some of the denizens on this forum).

Costata: "The revaluation of gold IS one of the central themes of the discussions here. But this discussion is not informed by speculation about the future. It is informed by analysis of the present and the past. We may attempt to extrapolate into the future but that is part of the fun and one way to test the predictive power of theories."

Human nature being what it is, Costata, I'd be willing to bet a lot more than I could afford to lose that most of the participants here are very concerned about their future financial health, and pay attention to these discussions with a keen interest in ensuring (they hope) a MUCH more healthy financial future (like, large capital gains) than they could have had otherwise.

One Bad Adder said...

MS: -

"I love good beer and mechanical watches."

Me too MS!
My PdeR is a c50's Ulysse Nadin Auto 18K I married to a faux Rolex 18K Band.
Ever so slight difference in the 18k's ...grrr!

One Bad Adder said...

Yes Brian, your "official" has the bit well and truly between his teeth eh?
What we as "individuals" have however (as opposed to CB'ers etc) is the "exhorbidant priviledge" of NOT having to think of Gold as a "balance-sheet" item.
Your champion is humming the "Gold is performing well in Currency Terms" tune, which is not necessarily seeing Gold in it's best light my(new)friend - FWIW.

Anonymous said...

Happy New Year all, I am still struggling with my issues around mechanisms and systems of freegold implementation, and there for level of conviction in freegold as an outcome. Re-reading the last few posts make me realize that I do not want to swamp this community with what is obviously my issue, but I wanted to take the time to express appreciation and gratitude to our host as well as all the commenters who tried to help me better understand.

Any other links, posts or comments as suggested reading to help me with 'my issue' will be appreciated.

Again, sincere thank you.

Daedalus Mugged

mr pinnion said...

I also didnt think much of this part of Aris comment "that the December 2012 conclusion to The Hobbit will forever cement the desire for gold into the minds of all western moviegoers, resulting in a perfect storm of the golden variety."

Your not thinking big enough Ari.
If you want to cement the idea of gold into peoples minds in a perfect storm of golden variety; forget 'greedy' dwarfs stomping around , looking for gold.

I would arrange for a bloody big commet to soar across the heavens for a few weeks; as bright as the sun, with a golden tail thousands of miles long .. Oh hang on , what we got ere?



One Bad Adder said...

OT - oh! ...and MS.
The Seiko Spring-drive mech has IMHO taken "mechanical" Watches into a whole new orbit. I (unsuccessfully) moved Heaven and Earth (a few years ago) to acquire a 25th Anniversary Platinum SD - (they didn't make a Gold version)- ALL however went to "locals".

Placidus said...

Thank you, Costata, for the clarification you provided on the timeline for dollar support (at end of the last comment section). Very helpful. Your comment, together with this excellent post by FOFOA, covers this topic nicely.

Dante_Eu said...

Happy new year everyone!

Let it be a prosperous and a freegoldish one.

As of discrepancy between your timeline vs. human superorganism timeline, regarding Freegold outcome, a saying comes to my mind:

“The dogs bark but the caravan goes on.”

I included from time to time. :-)


YOU ROCK my friend! I have most of your YouTube videos saved on my smart phone. Really good music in all of them and really educational. I hope you keep up the good work!

Wendy said...

+1 costa and Indentured ;)

Happy New Year to all

To those freegold timeliners: Don't worry, be happy :D

Looking forward to lv as well matrix

Woland said...

Hello Matrix;

When the Henry Graves Jr. tonneau case Patek Philippe
wristwatch, lot 8 in the June 2012 sale of watches from the
collection of the late Reginald H. Fullerton, held at Sothebys
NY, came up for sale this year, I only wish i had known then
of your interest. Regrettably, I was unsuccessful. Oh well,
che sera sera. Perhaps "next" time? HNY!

Knotty Pine said...

Hello Evil Gold Hoarders etc., etc.,
I have been lurking here for about a year and a half. I ended up here by watching my "safe" retirement accounts go to hell for the third time since I bought into the Dave Ramsey "buy yourself a good mutual fund and just let it sit. This is America, man!!!!!" horseshit. I started reading about all things economic as I was determined to be a sucker no more. I found the "Peter Schiff was right" vid and started looking at gold and silver from an investment perspective. I found this blog via Yukon Cornelius Silver and Gold Blog and started reading (for about 1- 1 1/2 hours before sleep takes over) about every night. The posts that have had the biggest impact have been "debtors v savers" & "OG Warren" but they are all good (kind of like sex or pizza, some is better than others but their all pretty damn good.) This may sound a bit strange but this blog just feels right. The logic is sound and with a few notable exceptions seems like a great bunch of folks. My biggest irritation with the blog is the tedious arguments of some of the naysayers (not that they disagree but that they continue to pound the same point over and over.) A recent example is the discussion as to whether FG is wealth preservation or about cashing in at the top (an investment vehicle). For me it is simply the only place for me to put my excess production. Savings with potential for appreciation. I have no certainty that freegold will be realized but I truly could care less. There is simply no other savings vehicle besides physical gold that makes sense to me at this time. Thank you FOFOA for your awesome work (yes RJP I will get off my narrow white ass and send the man some fiat soon). I am 52 and live in the lowcountry of SC. I am married with a son, 2 horses, several cats, 2 dogs, and a yardful of carb loving deer (my wife feeds them leftover bread) I view them as easy meat if times get tough. Happy New Year All!

Mircea said...

Happy New Year and a small gift from me:


Victory said...


Have you considered the possibility that Ari may have a dry sense of humor. I remember thinking FOFOA believed in 'white gold' the snake oil cure-all until he pulled me aside to let me know he was kidding.


Unknown said...

To those who are no "all-in" with gold, where else are you? I am pretty close to all-in, whether it is PHYS/GTU in my retirement accounts or physical at my house. My other investments include some Canadian oil plays, a nuclear power "spec" play and a Chinese engine maker. All current "excess production" goes to physical gold simply because I do not see anywhere else to go. To those who are not doing this, where are you putting your excess production?

Unknown said...

And I would add I do not consider myself as a true believer in freegold, but I certainly see it as a possible outcome. I do consider myself as a true believer in the collapse of the dollar and much higher prices of gold.

Anonymous said...
This comment has been removed by the author.
Stel said...

Happy New year! Gott Nytt år!To everebody

Aquilus said...

Hello and Happy New Year everyone.

I have not commented much lately but seeing the discussion above regarding Ari, I feel the need to add my 2c.

My outlook is that focusing on anyone else's views is the completely wrong perspective. To me what FOFOA’s blog presents is a certain perspective for how the monetary world works. Based on the comments of Another/FOA and their insights into this world of course.

Now to me, it is all about considering this perspective, the facts that it presents, the logical implications that can be deduced and/or inferred from it, the careful checking using 20/20 hindsight of all the 12-15 year old claims as "time reveals all things" :D

Given all that, it is all about BUILDING MY OWN PERSPECTIVE, not about being told what to think. Or in more familiar terms, being taught how to fish instead of just having fish given to me.

Not to say that interactions with others, debating new facts that come to life, considering others’ opinions is not very (sometimes extremely) helpful! But in the end, it’s not about Another, it’s not about FOA, it’s not about how well FOFOA writes: it’s about me taking responsibility for learning and researching enough to be confident in making my own decisions.

And if I make the right or wrong one, or I change my mind, or new information comes about that changes things, it’s my own responsibility, not FOFOA’s, not anyone else’s.

So what does all this have to do with the Aristotle comments above?

Well, don’t you think Aristotle deserves to own his own decisions? And if he is still on this trail, don’t you think that this is the perspective that still suits him? And what makes any of us so special as to decide what is good for him, or what makes him happy?

I say: look at yourself, examine your own perspective, find out what makes you happy, live your life accordingly, ask questions, ponder different views, but don’t presume to know another person’s mind – that will just not do.


costata said...


I'm glad it was helpful.


It's very difficult to determine the break down into various categories from speculators to savers here. Of the many thousands who visit the blog very few comment.

I acknowledge that some here are looking for reassurance that a windfall lies ahead. I think Robert nailed it above. His 3-5% is IMHO the right insurance "premium". If the debt Ponzi scheme implodes a 20-30 to 1 devaluation (in real terms) is a distinct possibility.

If we were still accumulating I would be of the same mind as Elizabeth Tucker. Where else do you go today? (If you value peace of mind.)

Happy New Year to All.

Anonymous said...

We have some watch connoisseurs on this blog! Who would have guessed?

So many fine watches, so little gold.

Anonymous said...

Thanks FOFOA.

I guess it comes with the territory. This blog is becoming well read and is emerging as the go to place to get unique content that cannot be found anywhere else. It will attract trolls.

Good work. I am looking forward to the Year of the Window and hiking the trail with you and all of our friends.

Happy New Year to you and to all Freegolders!

Edgar said...

Happy New Year to all.

"Could the Fed do it? No, only the U.S. Treasury could, and as FOA said they eventually would, that would be the sign we are looking for—the U.S. Treasury selling U.S. gold to defend its dollar!"

How long would that last, 24 hours?
Don't forget that with the current FED pledge to keep rates low, the Treasury will be fighting the FED by selling gold to defend the dollar.


Because when the dollar starts to weaken dramatically, foreigners with large US T-bond holdings will be forced to dump them. Onto the FED that is. Which in turn will need to print money to buy these bonds. Which in turn will tank the dollar even more. Trying to forestall this "dollar plunge" by selling gold, is fools work as the Treasury will run out of gold asap. In fact, the best thing the Treasury could do is to wait until AFTER the dollar dump has completed. THEN stabilize the dollar.

Victory said...
This comment has been removed by the author.
byiamBYoung said...

Just two shopping days till Goldhog day!

I'm going to be busy all day tomorrow putting up the wicker goldhogs in the front yard!

"On Nibbler, on Scrappler, on Hoarder on Diggem..."

FOFOA said...

As for Ari's mention of The Hobbit back in 2010, that was a light-hearted addition to his main observation about 2013, as was the line from a song. Ari is a keen observer of the evolving gold meme in popular culture, like TV advertising, TV shows, movies, music, music videos etc… Also, the Lord of the Rings trilogy was an influential theme at the old USAGOLD forum with the release of the first one in 2001, the second in 2002 and the third in 2003 coinciding with the end of an era at the forum and the beginning of the price of gold leaving its decade-old trading range forever in the dust:

December 10, 2001 - Release of LOTR: The Fellowship of the Ring
December 16, 2001 - FOA's final comment
January 1, 2002 - Launch of euro notes and coins
February 8, 2002 - GOLD ABOVE $300
December 18, 2002 - Release of LOTR: The Two Towers
December 1, 2003 - GOLD ABOVE $400
December 17, 2003 - Release of LOTR: The Return of the King
December 1, 2005 - GOLD ABOVE $500
April 17, 2006 - GOLD ABOVE $600
May 9, 2006 - GOLD ABOVE $700
November 2, 2007 - GOLD ABOVE $800
January 14, 2008 - GOLD ABOVE $900
March 17, 2008 - GOLD ABOVE $1000
November 9, 2009 - GOLD ABOVE $1100
December 1, 2009 - GOLD ABOVE $1200
September 28, 2010 - GOLD ABOVE $1300
November 9, 2010 - GOLD ABOVE $1400
April 20, 2011 - GOLD ABOVE $1500
July 18, 2011 - GOLD ABOVE $1600
December 13, 2012 – Release of Hobbit: An Unexpected Journey
2013 – Release of Hobbit: The Desolation of Smaug (the Golden)
2014 – Release of Hobbit: There and Back Again

Anyone who has spent any time in the old USAGOLD archives is aware of the LOTR influence going back at least as far as 1998 when it was announced that the film was well into development and casting was about to begin. Aragorn, Gandalf, Smaug and Smeagol, all characters from the series, were regular commenters on USAGOLD.

Hopefully this adds a little color and context to that light-hearted comment. ;D


Walter Sobchak said...


"can't wait for LV" ?

Is everyone getting together in Las Vegas? Sounds fun to me...

milamber said...


Thanks for you response. I was going to respond, but the old internet adage of "Don't feed the troll" held me back.

I didn't realize that B=G. Makes sense though.


Outstanding work on the archives! That is what I was going to do, but since you have done it, I will shelve my efforts. :)

Kudos to you!

And for those of you who want FOFOA (or anyone else) to tell you WHEN, the $IMS system will fall apart or how much of your currency you should convert into gold, here is the ONLY correct answer:

The One Thing


Ken_C said...

@ Fofoa

Concerning Brian, Fakeanother, 90days;

I personnally do not understand why someone delights in coming to a blog and "trolling". I know that I don't have enough time in my life to devote trapsing around any blog where I do not have some affinity either with the people there or that which discussed. It just baffles me why someone feels it necessary to cause difficulty for others for no apparent reason.


I got a late start on understanding the "gold trail" I am trying to catch up so I don't need to be side tracked by trolls.

Happy New year.

Aaron said...

Happy New Year everyone.

Freegoldtube - Your videos rock!! If FOFOA were to share the various IPs I post from with you - you'd see in your stats how many times I've watched all of them over and over and over and over and :')

Unknown said...

Here is a thought for 2013:

The world is truly always on a "gold standard" as all people of all countries still do perceive gold as the value benchmark in most "hard to price" concepts.

It is not so much the "price" of gold that is manipulated (price being relative, i.e. to GOLD) but rather the "perceived value" of gold that is manipulated.

If all peoples of the world would perceive the value of gold as freegolders do, everyone would rush to it and its true value would be revealed.

If mere gold can avert a global conflict as damaging over years as WWII then (say) half the world's above ground stock is surely viewed as "priceless" by the BIS.

Perception management, as a tool to maintain the collective confidence, is as indispensible as it is priceless.

In the Gentlemen's club of CB reporting, transparency is as a "cards face up" game of poker that a few strong hands refuse to play.

In Truman's report, we see transparency fading.

One Bad Adder said...

FoFoA: - Thanks for the heads-up re: Brian - in hindsight his "first post" was a bit abrasive to say the least!
Ari as we all know needs no apologies ...here or elsewhere.
As far as Movies go, (in the USAGold era) "Three Kings" demonstrated an example of an alt-western mindset (for mine anyway) in the manner "Saddams Gold" was viewed / treated by his countrymen ie: there was no question of usurping it for their own - that "priviledge" went to the victors ...who in turn distributed it "to the locals".
Whilst I'm also keen to see the Hobbit Movie (mainly because the Actor playing Baggins is a favourite from The (British) Office) TV show ...I'd highly recommend "Life of Pi" in 3D.

It also grants an insight into (in this case) the sub-continental mindset referencing Myth / Reality in juxtaposition to "our" way of thinking. FWIW.

costata said...


Sooo .. is our old pal Trace Mayer simply cashing in on the Bitcoin phenomenon or is there some substance in this post:


J said...

"So many fine watches, so little gold."

Put me down on the watch list. It may not be the best place to put your money but it's physical "savings" that I enjoy. We can't have all of our worth buried down in a hole somewhere.

costata said...

I know a lot of people are looking for indicators that a transition is approaching. Perhaps we could try a process of elimination of traditional indicators and zero-in on the best remaining candidates.

This post makes some interesting observations about interest rates:


A few snippets, firstly the observation that interest rates are unlikely to be the leading indicator of the change in sentiment (from expectations of deflation to inflation).

Normally, we would expect to see the reality of increasing inflationary pressure in rising domestic interest rates. This was exactly the expression of the market’s displeasure with inflation in the 1970’s.

But unfortunately in our current circumstances, we’re not going to see this even as the deflationary mindset ultimately shifts to an inflationary bias as the Fed controls short term interest rates and is now the largest singular buyer of longer maturity US Treasuries, helping to artificially keep longer term interest rates low.

As Jim Grant has opined, the interest rate risk management traffic lights are out. Do not expect to see the ultimate mounting of inflationary pressure in headline interest rates.

Commodity prices are unlikely to be the canary in the coal mine because:

1. There has been a huge build up in long-only investor money flowing into commodity "investments" in recent years.

2. Price discovery is a sick joke in many markets due to the greatly enhanced opportunities for market manipulation.

3. The difficulty in obtaining reliable information and fact-based analysis e.g. the US shale gas/liquids bonanza? myth?.

4. Government intervention and market manipulation.

5. Weather impacts.

So there's my two suggestions for the non-leading-indicator list:

(i) Interest rates
(ii) Commodity prices

(I think OBA's favourite indicator should be excluded from this list. IMHO his indicator is more of a how-much-abuse-can-a-bondholder-tolerate indicator. If that blows up it may give no advance warning. Correct me if I'm wrong OBA.)

I guess we could add a couple of others.

(iii) Paper gold
(iv) Paper silver (although I think this is covered under (ii) Commodity prices)

Does anyone else have a suggested addition to this list?

One Bad Adder said...

Will M: -
Priceless is right on Sire ...in a currency context anyway.
This highly anticipated Freegold transition (as we call it here) will be looked back upon as perhaps "The Great Restoration" ...and if you think about it, it may well be termed "The Great Wrest-oration"!
...and thinking about "that", is it any wonder it's taken nigh on a 4 Decades to get done?

One Bad Adder said...

Hi cos: -
Your correspondent is misguided IMHO my friend.
The Yield curve (at the short end) is not the domain of the Fed, it's Market driven. He is however spot-on about "Bonds".
They ONLY leading indicator of merit (IMMHO) is $IRX ...or specifically same going to Parity ...and beyond.

...Unless of course the Euro-bloc goes to "Plan-G" ;-)

One Bad Adder said...

whatsmore mate: -
There is no Deflation ...yet. there IS disinflation. There will never ever again be INflation ...there will however be HyperINflation. FWIW.
...and yes, I've had the odd coldie ;-)

ChrisF said...


1/. Backwardation tendency in futures markets.
2/. Premia for bullion coins rise above 3-5%.
3/. Physical spot/GLD ratio starts to rise.

Unknown said...

Number 2/. caught my eye ... been thinking about that.

Interest Rates? About 600 trillion in interest rate derivatives controls the rate grid and it's not just the FED, it's their primaries and the ESF.

You screw utiities, cities, states and entire countries with that counter-intuitive scam just as a sideshow to misprice debt.

Notice I said debt, not capital. Capital is nearly completely transformed into debt and what we have in the US today is an Orwellian but Triffinesque fascist regime based on debtism.

With capitalism rendered obsolete by debt, what will be the "new capital"? That is, what will we use to recapitalise the system?

Oil appears to favor gold over single malt scotch. Why fight the incoming tide?

Woland said...

Would any of our "sharper knives" care to opine on the
significance of the Dec. 3, 2012 Ted Truman paper,
"International Monetary Cooperation", and what appear
to be the thinly veiled "threats" contained therein ?

(Hat tip Mircea)

Unknown said...

Actually, in retrospect, the "pricing" of debt is in fact oddly accurate in the reflection of its true discount rate.

It's real worth is becoming more and more a reflection of the coming paper inferno. That so called non-interest bearing asset with no counter party interferance will be shown to earn all the interest bound up by the massive accumulation of worthless debt.

Dump all you want on front lawns across the planet--there is nothing in the houses that rest upon them to repay it with but more debt.

Unknown said...

The big take away from Truman is that China and Saudi-A are not playing the cards face up poker game.

If the CBs loose control of the "orderly and civilised" cooperation among global monetary central planning, then war of at least WWII proportions is inevitable.

The BIS has always had gold as a way to prevent this. When it gets ugly, they qill use gold as the monetary nuclear option.

My take on the intent of the report.

Unknown said...

It is odd somewhat, that freegolders, having embraced the Euro, have not said much about the Amero, or the Trilaterals (and banking dynasties) intention to further consolidate the Americas into another economic and monetary union.

This is the intention of the Mundells and the Triffins and the Duisenbergs of the world, as well as the Roths and Warburgs, and it does play into the freegold transition without any problems.

I would be interested to hear our hosts thoughts on that aspect of the coming transformation.

Pat said...

2013- The Year of Ambiguity

Unless Euro-gold breaks down hard between now and end of day Friday

Knotty Pine said...

Are the shrimps getting restless?


Knotty Pine said...

On the lighter side (with all the recent discussion about the hobbit/lotr)


Indenture said...

Freegoldtube: I know it can't be easy to produce those videos but they are sweet. Please don't stop.
Check out the latest Ecstasy Of Gold

Alan2102 "most of the participants here are very concerned about their future financial health, and pay attention to these discussions with a keen interest in ensuring (they hope) a MUCH more healthy financial future (like, large capital gains) than they could have had otherwise." So what. From my perspective you are missing the time variable in your thought. First you have the need for gold, then you have the desire for wealth because gold will go up in price, then you are told gold will go up 30x, and then you have to study, and listen, and read, and drop prior baggage, and then, if you're patient you will realize why gold has to rise 30x.
Rubbing your hands together dreaming about a high price of gold is speculation.
Understanding hyperinflation, the loss of America's exorbitant privilege, and the importance of the Euro architecture is a bitter sweet feeling for this American. Making money while others lose theirs isn't always a good thought. I have noticed a trend in responses from those who 'understand' when asked what they will do after the transition. Charity and Altruism are on the list.

DM "I am still struggling with my issues around mechanisms and systems of freegold implementation" There is no implementation because the Euro is already in place and oil can ask to be paid in any currency. However an international law declaring no debt can be forced to be paid in gold does need to be passed/ratified/implemented so there is 'something' that needs to be done. When I think abut the law, from my peon perspective, I just imagine exit's done and then I'm on the other side of that hurdle but for all I know it could be very difficult. Others here seem to think it will be accomplished easily when the time comes.

costata: I thought the Fed Interest Rate was locked at ZIRP because an increase would blow up the Credit Default Swap Market.

Unknown said...

Fed interest rate is locked at ZIRP to prevent U.S. from defaulting "sooner". Fitch and Moody are for still for sale.

Southern Euro sovereigns are already defaulting.

KWN's aticle about public demand for gold ushering in a 15 year "stage 2" bull run is ludicrous (where do the formulate this BULL$HIT ??).

The law passed last year does indeed specify that defaulting members may repay debt in gold, but at what price in Euro?? Spain Greece and Italy will never part with it at the pre-transformation price.

Every time the window narrows, the under the counter derivative markets intervene. Keep your eyes on Generali.

Indenture said...

"Obama also warned that he would not bargain with Republicans in Congress or offer spending cuts in return for lifting the government's borrowing limit, known as the debt ceiling, in the coming months.

"While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they passed," the president said.

"Let me repeat. We can't not pay bills that we've already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic, far worse than the impact of a fiscal cliff."" link

When I listened to this last night I thought, "Deflationists have no idea how far it can go".

The Dork of Cork said...

I am sorry but I don't buy this altruistic euro market state banking good guys meme.

The experience of Ireland coming out of the Sterling zone is a very bad one.

In particular its loss of internal redundancy as although it had no monetary control it had some (albeit limited) physical nation state systems which cushioned it from external shocks.

On the physical plane the euro & western market state especially post 1986 needed a equity extraction via Nat gas & later LNG shipments.
This meant it could export its capital to China & the other Brics as Nat gas power stations were very capital light.

In 2002 (the year of physical euro introduction China coal consumption spiked)

This global arbitrage system is about extracting labour value......nothing more.

All of the CBs have worked to create a global Barbell economy with one weight (western nat gas) linked via marine Bunker fuel to the Chinese Coal weight.

But this market state construct is very delicate - it has no nation state redundancy.

With the help of the Japan nuke shock this very long supply chain is now breaking down.

The only thing that can save Europe from decaying further into this entropy loop is a return to national credit & Dirigisme polices.

The Dork of Cork said...

The dramatic effect of the Jap Nuke crisis is feeding into the entire global LNG market.

You can see this when you look at UK energy trends.

Japan is outbidding Europe for LNG
Even sov UK.
The UK imported most of its LNG from Qatar & sometimes from Norway.

Dec 2011 (third quarter) UK energy trends publication.

“The UK started large scale commercial imports of
LNG in Q3 2005. While LNG imports accounted for
a significant proportion of all UK imports in 2006,
they fell sharply in 2007 and 2008. The trend was
reversed again in 2009 with LNG imports increasing
virtually every quarter to reach a peak in Q2 2011 at
81.5TWh. Imports of LNG accounted for nearly half
of the UK imports in Q3 2011.
Total imports in Q3 2011 increased by 34 per cent
compared to the same quarter a year ago.
Total exports increased slightly over the same
period, up 5 per cent.
The UK imported 58TWh of LNG from Qatar in Q3
s imports in Q3 2011 compared to 38 per cent in Q3
The UK imported 48TWh and 14TWh via pipelines
from Norway and the Netherlands, accounting for 39
per cent and 11 per cent respectively of the UK total gas imports”

see chart 4.5

Now Japan is bidding for LNG as far as Norway.

The above report contrasts with the dec 2012 report (third quarter)

“Total imports in Q3 2012 decreased by 22.9 per
cent compared to the same quarter a year ago.
The main bulk of this decrease was with imports of
Liquefied Natural Gas (LNG). LNG imports
decreased sharply by 42.1 per cent falling from 60
TWh in Q3 2011 to 35 TWh in Q3 2012. LNG
imports accounted for 37.0 per cent of total imports
in Q3 2012 compared with 49.3 per cent a year ago.
Pipeline imports also decreased but to a lesser
extent – from 62 TWh in Q3 2011 to 59 TWh in the
latest quarter. The majority of this was with imports
from the Netherlands due to planned maintenance
work at the Dutch Balgzand terminal in September.
However, Norwegian pipeline imports were also
impacted by planned maintenance work at St
Fergus associated gas terminal in September.
Total exports also decreased by 16.2 per cent in Q3
2012. This was largely due to Bacton – Zeebrugge
interconnector switching from export to import mode
during September of this year. Energy Trends table
4.3 – Natural Gas imports and exports.
As mentioned above there was a sharp decrease with
LNG imports. The majority of LNG imports are
sourced from Qatar which were lower by 42.4 per cent
in Q3 2012 compared with the same quarter in 2011.
The fall in LNG imports is likely to be a combination of
factors, such as the decline in UK gas demand and
the strong competition for LNG in the global market,
especially Japan following the closure of their nuclear
facilities in 2011.
Pipeline imports from the Netherlands were 24.2 per
cent lower in the recent quarter compared with the
previous year falling from 13.6 TWh in Q3 2011 to
10.3 TWh In Q3 2012.
A complete country breakdown for pipeline and LNG
imports are provided in Energy Trends table 4.4 -
Supplementary information on the origin of UK gas”

If the US were to export LNG less US coal would be available to export………catch 22.
We are really dealing with a catastrophic energy situation. , a crisis caused by a lack of nation state redundancy in world energy systems which was & is used to increase short term profits.

However Japan is now sucking imports from as far away as Norway with I believe one LNG ship even travelling the Arctic route with the help of a icebreaker.

The Dork of Cork said...

The UK and indeed the rest of Europe must now switch to coal..............
But this has dramatic affects on how capital is allocated.
As a example Irish savings are exported to the four corners of the world by global bankers looking for a wage arbitrage return....

The savings are not internal to its hinterland.

But new coal plants are much more capital intensive and local to a western countries hinterland....
The money must come home if basic life support is to be sustained.

Europes gas / renewable thingy is breaking down as wind energy and stuff cannot work in a base load system of coal or Nuclear.

So we see that Nat Gas is the great enabler to the modern market state.
No Nat gas , no market state.

It looks like a return to the nation state from where I am standing.
Although they may just decide to wipe out large sections of the european population to keep their dream alive.

Who really knows what these guys plot in the dead of night.
In reality they lust for the nation state yet can never have it so they seek to destroy it.

Their plans are however unravelling


Knotty Pine said...

Hello Wil Martindale,
My interest in the KWN article was a 30+ yr veteran of the physical gold market (who, whether you agree with his POV or not, seems to be a straight shooter) using a word
like "monstrous" to describe the physical buying in a short week. I get the concept that us shrimps (krill in my case) wont usher in freegold but I am hopeful more will become aware of the advantage of saving in phys gold.

Anonymous said...


thanks for drawing our attention to that paper by Ted Truman.

I liked (page 6): The IMF collects data on international reserves ('Reserve Template') as part of their SDDS ('Special Data Dissemination Standard'). Neither China nor Saudi Arabia report their reserves to the IMF.

(page 8): The IMF COFER ('Composition of Foreign Exchange Reserves') now covered merely 55% of international reserves, simply because many developing countries do not report, but have large reserves.

Furthermore, it is funny if he praises the U.S. transparency in reporting their reserves, given that they hardly own any (as long as their gold is at $42.22).

LOL. Page 11: First, excessive reserve accumulation, in the form of safe or near-safe assets, distorts the international financial system and adjustment process.

Someone should explain to him which assets are safe... and which ones can be bought in arbitrary (dollar) amounts without distorting anything...

I think that his comments on principle C (page 4) reveal that he doesn't get it at all. Why complain about China accumulating dollars more than a year after they stopped doing this??


Tommy2Tone said...


I'm way behind and trying to catch up. I just had to ask about the wood splitter. In the video it shows him splitting all those little rounds and it looked like very dry hardwood.
I split rounds that are that size on the small end and then up to 3 foot wide. I often get willow and poplar which is not hard and brittle like the ash and oak I also get.
So, I'm lookin at this little stick splitting these tiny rounds and thinking hmmm...not so sure it could handle my real world application.

Can you offer any more insight? And also, why are you splitting now? I always split in march and april for the following fall (so it's nice and dry (more btu's)) yet I do routinely see people around me split their winter wood at the start of winter , which makes no friggin sense to me.

Michael H said...

New post up by Lan Pham at Economics Voodoo:

The Federal Reserve Bank is Naked: QE 10T Dollar ‘Loans’ Swaps and Trillion Dollar Naked Mortgage Bonds of QE 1

The post deals with the FED dollar swaps during the 2008-2009 crisis, as well as some anomalies in the QE 1 Fed MBS purchases.

The post links to the following in 'current events':

Fed, central banks extend dollar swap lines

In a statement, the Fed, the European Central Bank, the Bank of England, the Bank of Canada and the Swiss National Bank said they were extending an existing temporary U.S. dollar liquidity swap arrangement for another year, through Feb. 1, 2014.

Without the action, the swap arrangement would have expired on Feb. 1, 2013.

The banks are also extending, for another year, temporary bilateral liquidity arrangements that would allow the banks to provide liquidity in any currency if needed.

The Bank of Japan will consider an extension of both arrangements at its next monetary policy meeting, the statement said.

Go said...

Thanks for the ack FOFOA. I have completed uploading the archives 98-07 to www.usagdfa.com. Also the comments are individually linkable like so: http://www.usagdfa.com/1998/09.html#43
Ill try to run back through and make the #s links so they are easier to copy.

Unknown said...

I was not sure what constituted "excessive reserve accumulation" nor "safe or near safe" assets.

But more to the point, the current system begets excessive reserve accumulation of the current reserve currency, which is the U$D, which is not safe, by virtue of distorted accumulation - by design.

A bit circular that argument - if it is one.

If gold was the "safe reserve" and those darn non-reporting Saudis and Chinese were accumulating it excessively on the sly, wouldn't that disrupt the status quo just a bit?

Woland said...

Thank you, Victor. If you would not mind, it would be of
interest to also hear your view of an article to which Truman
referred in his paper, by C. Fred Bergsten and Joe Gagnon,
both of the Peterson Institute. It appeared as an op ed in
the FT on Sept 4, 2012, & is entitled "Time for a Fightback in
the Currency Wars". It also appears at the Peterson Institute
for International Economics. It seems quite aggressive in its
tone, IMHO. Oh, and HNY!

Michael dV said...

I have to confess I am not familiar with the Peterson Institute but it was heavily referenced today at ZH in a GATA related article:
Apparently one Edwin M. Truman is on the GATA radar and is accused of being CIA and evil market manipulator. He is with the PI.

Anonymous said...

Daedalus Mugged,

Just wanted to let you know that I echo your concerns regarding the probability of Freegold and the certainty assigned to it by some posters. There is a difference between theory and practice, and I think the latter has not received sufficient airtime on this blog or in the comments. There are a number of significant gaps, leaps of logic, or "magic" as you describe it, regarding the steps for the transition to Freegold.


In the last thread you said: "Gold is already the primary reserve asset in the current system for 2/3rds of the world's population and the majority of central banks."

Could you provide the evidence which supports this claim?

Unknown said...

Knotty Pine,
There is no doubt that Western minds are FINALLY waking up to the reality of debt, and the logic of gold.

And yet, most people will completely refute the reality of fractional paper gold, and argue that anyone believing in this is a misinformed conspiracy quack.

A large number of U.S. debt holders will even deny the very existance of a fractional reserve banking system as something evil and "surely illegal".

I kid you not.

I suspect that this vast contingency of people who are rushing to gold now are doing so with the same motivation that most gold dealers are selling, "Gold is going up in price, buy now, sell the top later."

So when I hear the many predictions of things like a new stage II 15 year bull market in gold, just getting ready to make it's next big upward push, I get all queasy thinking that at best we are going to have a 15 month hugely volatile PAPER GOLD market, followed by a dislocation between paper and physical with many fools buying in at $1700 and selling in desperation at $800, $700, $600 .... just what COMEX NEEDS and WANTS.

As they told Kyle Bass when he asked about a 3% redemption precedent they countered, "Oh, price will take care of it".

Meaning no disprespect to you, the goldbug mentality is setting people up for that. I wish they would just come around to the freegold mentality and stop feeding into the "gold as a bull run investment" mentality. That is the easy way to sell gold. Easy come, easy go.

These buyers, for the most part, are not ready for what is coming.

I could be wrong about the timing, but paper gold is GOING DOWN with the rest of the paper, and these present generation goldbugs are fixated on the pricing mechanism and unerring validity of PAPER GOLD!

As Another said, "throw away all your charts and graphs" the pre-conceived notions of the gold market and how it performs cannot be projected forward from a 50 year fraudulent past.

I wish GATA and Embry and KWN and that whole goldbug armada all the best as long as they hold through the storm and tell all their customers to do so too.

But how can they do that "the easy way" with a thousand pitchforks burred up their asses as the paper gold market crashes to ZERO ??

They put their money where their mouth was on the way up. Let's hope their testicles hold firm on the way down.

Sometimes I wonder ...

Woland said...

Link is iie.com/publications/interstitial.cfm?ResearchID=2302

Title: "Currency Manipulation, the US Economy and the Global
Economic Order" Authors: Bergsten and Gagnon

Unknown said...

If I remember correctly, the "nonpartisan" Peterson Institute was heavily entrenched in the last debt ceiling breach, and their recommendations, which neither party seemed to warm up to, seemed a bit republican leaning to me. It's a little confusing as there are 4 different domains, plus the Pete Peterson Institute.

This argument that everyone is a currency manipulator but the poor USA is not new, and seems in keeping with Truman's argument that the USA's voluntary transparency in central bank reporting is just one more shining example of exceptionalist altruism.

No exhorbitant privilege here, just currency manipulation all around us. As if ... EVERY currency isn't firmly locked in a predictable race to ZERO ...

Knotty Pine said...

Wil Martindale, I agree. I have a close friend who began buying physical gold (and silver) in the late 90's and has continued adding to his stack recently. I have sent him numerous links to FOFOA blog posts but he says his head starts swimming after a few sentences. I am trying my best to prepare him for the probability of a collapse in the paper gold markets. That morning he gets up and that KITCO SPOG widget on his smartphone says G- $850.00 S-$10.50 and his reaction is sell this crap before it goes to zero. I think I have convinced my wife to prepare for this also. From a practical POV this is probably the most important piece of info I have internalized from this incredible blog. Thanks

costata said...


Thanks for the correction. So interest rates on very short durations are still an indicator.

MnMark said...

I found this pretty interesting. The Chief Scientist of NASA's Langley research center has put out a news release confirming that LENR (low energy nuclear reactions) AKA "Cold Fusion" is real.

He says there is a promising theory explaining the hundreds of experiments demonstrating LENR energy generation. The theory focuses on the "weak" nuclear force as the focus of the effect, rather than the "strong" nuclear force, which he says skeptics were correct in doubting could be overcome with 'cold fusion'. He says that there is something real going on - that labs have blown up and windows have melted during experiments - and that the NASA Langley center is actively engineering and working to confirm the theoretical foundation of the effects.

He says that the theory suggests there could be energy densities millions of times stronger than chemical energy processes could explain, and that already experiments have demonstrated energy release 100s of times greater than chemical reactions.

The release makes it sound like this is for real. And you'd have to say that the Chief Scientist of a NASA laboratory has credibility. We may be within reach in our lifetimes - and maybe the not-distant future - of an infinite cheap energy source.


Anonymous said...


first, if you google "Time for a Fightback in the Currency Wars", you get a link to the Bergsten/Gagnon article in the FT even if you don't have a subscription.

Honestly, I have no clue what's the point of this article. Since it's so weird, here's some of what they write:

The most overlooked cause of the economic weakness in the US and Europe is what we call the “global currency wars”. If all currency intervention were to cease, we estimate that the US trade deficit would fall by $150bn-$300bn, or 1-2 per cent of gross domestic product. Between 1m and 2m jobs would be created. The eurozone would gain by a lesser but still substantial amount. Countries that were engaged in intervention could offset the impact on their economies by expanding domestic demand.

China is by far the largest currency aggressor but has not been the major perpetrator of late. Three distinct groups are now involved. First are other Asian countries, including Japan, Singapore, Taiwan, Korea, Hong Kong, Thailand and Malaysia. Second are major oil exporters including the United Arab Emirates, Russia, Norway, Saudi Arabia, Kuwait and Algeria. Third are rich countries near to the eurozone, most notably Switzerland but also Denmark and Israel. If Mitt Romney is elected US president, he will be able to label many countries as currency manipulators on his first day in the Oval Office, not just China, as he has promised.

These countries all exhibit rapidly growing levels of foreign currency reserves as well as significant current-account surpluses. They buy US dollars and euros to suppress the value of their own currencies, keeping the price of their exports down and the cost of their imports up. Thus they subsidise exports and tax imports, enabling them to maintain or increase trade surpluses and pile up foreign exchange reserves. These tactics, in effect, export unemployment to the rest of the world. China has largely curtailed its currency aggression, at least for now, but many other countries remain highly active.

The currency wars started a decade ago and led to record trade imbalances.

This does not make any sense at all. If the U.S. didn't like it that China, Japan, or Saudi Arabia purchase additional dollar reserves, the U.S. could easily counter this by
a) printing dollars and buying gold (give them the reserves they want, just don't allow them to influence the dollar-yuan (-yen, -rial) exchange rate
b) printing dollars and buying the other currency (tell them to shut up)
c) enacting some sort of capital controls, for example, void any US treasury debt held abroad or even held in selected countries.

In any case, the U.S. have millions of different ways of stopping this 'currency manipulation'. So why haven't they done it? They must be enjoying it :D LOL

So then what is the article about? I don't get it. When I hear Rickards tell everyone that the Fed wants the dollar lower, create imported inflation, and accusing the Fed of playing with fire, I can see why he is saying this.

But why Bergsten/Gagnon? The only interpretation I can think of is that these two are thinking about international imbalances for the first time, and that they haven't made much progress in this new field.


costata said...


The theories informing that Bergsten/Gagnon paper are conventional economics - "the paradox of thrift". The imbalances are, according to this reasoning, the result of excessive saving. If currencies were allowed to adjust without intervention then trade imbalances would simply disappear according to these "economists".


Thanks for you contribution.

Anonymous said...


Yes, this is what I've been hinting at in previous posts:) This is only the beginning of a whole new realm of scientific understanding. This world will change. LENR and a host of other interesting things going on...

mmm... entropic dark matter particle sandwich.

One Bad Adder said...

Thanks cos: -
$IRX is THE primary driver for all futures-markets contangos and the (what some may term) simplistic point is that if it goes underwater ie: to parity and lower, futures markets across the board ALL go into backwardation and effectively cease to exist.

From thereon out - bad things happen!

Once one accepts the absolute fact that Gold (the 24K variety) OWNS the Zero IR realm to the exclusion of EVERYTHING ...the Gold "futures" concept looks rather silly ...Yes?

RJPadavona said...


I very easily split oak and pine logs the other day that were 12-18" in diameter with that splitter, but I can't vouch for anything bigger than that. And yes, those logs were already pretty dry. I'm not sure if that splitter would split green wood or not because I don't ever split green. I just cut it down and let it sit for at least a month or two before I split it.

And yes, it's best to burn wood that's already very dry. I don't like to burn anything that hasn't been drying for at least a year. Mainly because I burn pine sometimes and if it's not good and dry it's more prone to causing creasote buildup than other types of wood.

I generally cut and split wood all year round except summer. I just like doing it for exercise and for something to do. It's also a great stress reliever that carries less jail time than beating my wife :D

byiamBYoung said...

Dammit. Now I want to go get s log splitter.


Michael dV said...

I wonder how green woos would burn in a large Rocket stove. They claim high burn temps and that might take care of the moisture.

Unknown said...

Like I said, partisan shades of red ...
"If Mitt Romney is elected US president, he will be able to label many countries as currency manipulators on his first day in the Oval Office, not just China, as he has promised."
This has been the Republican rallying cry for some time now. It doesn't need to make sense, it's designed to get votes.
Unfortunately, the "eat the rich" rallying cry of the Dems won out due to the promise of a free lunch (and breakfast and dinner). That obviously doesn't make sense either, but propaganda is designed to trigger an emotional response, not a logical one.
The undertone current is clearly that 'excessive saving" like excessive reserve accumulation is "bad".
Spending is good. Consuming is good. Debt is your friend. Take your medication now. Be a good debt robot. That is all....

Anonymous said...


The theories informing that Bergsten/Gagnon paper are conventional economics - "the paradox of thrift". The imbalances are, according to this reasoning, the result of excessive saving. If currencies were allowed to adjust without intervention then trade imbalances would simply disappear according to these "economists".

Sure. And they are even right as far as flexible exchange rates with no-saving-in-other-currencies'-debt would be concerned.

The point is, however, that the U.S. (and the IMF) have always promoted the accumulation of U.S. debt as international reserves and thereby the perpetuation of the imbalances. They have done this voluntarily, not to say deliberately. Quite obviously, it has been their position that this is a winning strategy, and they obviously view themselves as one of the main beneficiaries of these imbalances. Otherwise, they would have stopped this whole business decades ago (or raised the official gold price in 1971 rather than closing the gold window).


Anonymous said...


I am seeing your link to the other Bergsten-Gagnon only now. They write

If they do not do so, however, the United States should adopt four new policy measures against their currency activities: (1) undertake countervailing currency intervention (CCI) against countries with convertible currencies by buying amounts of their currencies equal to the amounts of dollars they are buying themselves, to neutralize the impact on exchange rates, (2) tax the earnings on, or restrict further purchases of, dollar assets acquired by intervening countries with inconvertible currencies (where CCI could therefore not be fully effective) to penalize them for building up these positions, (3) treat manipulated exchange rates as export subsidies for purposes of levying countervailing import duties, and (4) hopefully with other adversely affected countries, bring a case against the manipulators in the World Trade Organization that would authorize more wide-ranging trade retaliation.

Which is pretty close to my points (b),(c) above.

Someone should tell these two that the Euro zone holds gold as a reserve and ask them whether one could use gold in order to accomplish the same (or better) ;) LOL in particular given that China is buying a lot of gold these days ...

It seems the assessment that these two are largely clueless was the appropriate interpretation :(


Wendy said...

"there's no place like home"

there really is no place like home .... did the all day drive today in beautiful weather and i'm HOME!!!!


I'll catch up tomorrow

Wendy said...

Mikedv, it's not the water content that is a concern. Green wood has resins and gums that when burned, completely coat a chimney with "creosote" Also green wood burns really cool and inefficiently. When the wood dries and the resins and gums are cured you have the opportunity (depending on your heating unit) to access maximum BTUs per unit of wood.

costata said...


It seems the assessment that these two are largely clueless was the appropriate interpretation.

The truly amazing thing is that the policies they advocate are right in line with mainstream economic theory.


Thanks for spelling out your $IRX theory again. I think it helps the readers to understand your thinking. Sometimes saying the same thing in different words can help people to that "Okay, now I get it" moment.

costata said...


Whenever Alf Fields puts (digital) pen to paper it is automatically a must read for me. Jim Sinclair is hosting Alf's latest offering here:


Gold Analysis 2013

costata said...

Discussion of China's dependency on the US:


Anonymous said...

Hi costata,
I noted your suggestion on Screwtapes and took a look. Alf Field says
"It seems that gold is well set up for a spectacular year in 2013."

A nice possible confirmation of my decision to really "go for it" between Christmas and New Year.


Woland said...

Victor & Costata;

The ONLY question worth considering re: Bergsten/Gagnon
is whether the 4 "remedies" proposed, coming to us as they
do via Ted Truman, represent USG thinking, and therefore
potentially USG actions. Of course their ideas are wrong,
turning Triffin on its head, mistaking cause for effect. They
ARE advocating, if USG threats fail, an all out currency war.

Unknown said...

Is it paper gold, the perception of gold, it's intended use, its flow, or the actual physical properties of gold that are "changing" from year to year?

Which of these will make 2013 a spectacular year for gold?

Edwardo said...

A little update on what's going on in Greece.

Knotty Pine said...

China kind of "gets it" India doesn't?


Anonymous said...


The ONLY question worth considering re: Bergsten/Gagnon is whether the 4 "remedies" proposed, coming to us as they do via Ted Truman, represent USG thinking, and therefore potentially USG actions.

I keep wondering how the U.S. will "do it". They somehow need to get rid of their dollar denominated obligations to foreigners with minimum (further) damage to their own economy and without compromising their start into the post-dollar financial system. Of course, hyperinflation could just "happen" to them, kind of God's work, and then everything else would follow simply because it's the only and the obvious way out.

On the other hand, they can always speed things up by enacting capital controls. But that would need some careful political preparation because the USG certainly wouldn't want to be seen as the idiots who triggered it.

As I said before, there will be a natural scapegoat on whom they will blame it. When I listen to Rickards, I think it will be the Fed who played with fire, who went too far and who then destroyed the dollar. Good old daddy Treasury Department will eventually take over the evil Fed and steer the country into the new financial order. Sounds nice and is presentable to the public, isn't it? With the capital controls, I am not sure how I would spin it. You just don't wat to draw attention to the fact that it was you who asked foreigners to accumulate trillions of dollars in the first place.

Knotty Pine,

India has kind of a luxury problem with their traditionally huge inflow of gold. One day, many will suddenly be filthily rich with all the problems that follow: overconsumption, incentives to import, no incentives to produce and to export. They will initially be rich, yes, but they may also have trouble with seriously unhealthy and unsustainable financial incentives after the transition.


Biju said...

VTC said

India has kind of a luxury problem with their traditionally huge inflow of gold. One day, many will suddenly be filthily rich with all the problems that follow: overconsumption, incentives to import, no incentives to produce and to export.

Add to that - Indian have a high liking for all thing foreign like Electronics. Especially the new midddle class - who love the recent fads of Pasta, Vodka, Johnie walker whiskey, Pizza, even fried Chicken aka KFC. The new rich love KFC.

DP said...

Hi Victor — & HNY2UBTW ;-)

You just don't wat to draw attention to the fact that it was you who asked foreigners to accumulate trillions of dollars in the first place.

Were they asked to by the US? Or were they branded evil currency manipulators for doing it, USG having no choice but to pump more debt into the system to plug the "leaks" created by those evil foreign hoarders?

MMT made me do it.

OMG! Those pesky furnurs broke teh system.

Indenture said...

Victor: "I keep wondering how the U.S. will "do it". They somehow need to get rid of their dollar denominated obligations to foreigners with minimum (further) damage to their own economy and without compromising their start into the post-dollar financial system." I'm curious about the same thing and especially the timeline involved between hyperinflation, to wipe out the debt, and transition to normalization. Is it possible for you to share what you have been wondering? When I try and think about it I keep throwing in the ECB gold's being marked to market every four months and I get stuck.

Knotty Pine said...

Thanks, Vtc & Biju

I tend to lump India & China together: i.e. 2 rapidly developing, populous countries, but the mindset of their citizens is different regarding gold. (BTW I share the Indians affinity for pasta & pizza!)

Unknown said...

I can see where playing the FED a patsy has some political value, and there has been some movement in the direction of that "set up", but the US vs. the BIS and all it's CBs seems like a desperation senario almost equal to dollar hyperinflation.

The Fed and its gold certificates from the Treasury, the Treasury and its allegiance to the IMF, the ESF playing derivative counterparty black ops behind it all.

What a cluster ...

No doubt, all "rules of engagment" will be broken as the paper burns.

I think this is where we come full circle back to dollar hyperinflation as the one and only outcome that makes any sense from a standpoint of likelihood.

The dollar and gold will rise together toward the end (has this already happened?) and then the paper gold market will crash to dirt-zero.

That is the stunner, when people suddenly realize that the dollar denominated "price" of gold they've been chasing is not based on gold at all, but rather a synthetic derivative, 199 parts paper and 1 part gold (some will say 100:1 but I tend to agree with J.S. Kim).

It will be easy to understand then how a .5% gold / 99.5% paper derivative burns with the rest of the paper, you just cash out with a loaf of ass-wipes and a salt-grain of metal.

But today, most see this derivative as being pegged 1:1 to physical.

Because ... it is.

I mean, think about it. Gold dealers will release today, in trade for paper currency, real physical gold on a 1:1 relationship (plus marginal premium) to a worthless hybrid used to obfuscate the dollars strength in oil, while masking the true value of gold, in order to vaidate the baseless dollar, and create a currency trading arena, within that scope, to create false volatility which produces paper gains and losses based on bets of future volatility.

That will be the paradigm shift of a millenium, considering that not one man in a million truly understands the half of it.

At least the "surplus population" will be dealt with as the lemmings leap en masse onto concrete and asphalt.

Christ, I hope they don't put me on cleanup duty.

Pat said...

Wil, quite the cluster indeed. As to your gold dealers comment, yes the shrimp gold dealers do indeed use the paper price to buy and sell ( with the attendant spread so they make their vig regardless )real, physical gold "not in size".
We all wish we knew what buyers and sellers "in size" use. All we have is speculation.

byiamBYoung said...


"The dollar and gold will rise together toward the end (has this already happened?) and then the paper gold market will crash to dirt-zero."

Reading this, I recalled this article:


Right now it seems the money is flowing into the Hong Kong dollar, but maybe (one last?) zombie sheep stampede into USD is on the horizon?


Edgar said...

I already noticed this in the recent past: local "mom and pop" coin shops were pretty low on gold but had plenty silver. The last time, I actually has a hard time locating bullion in my town. Finally, I found one store that had TWO gold eagles left and hundreds of ounces of silver.
In contrast, larger outlets like APMEX and Tulving still seem to have thousands if not tens of thousands of ounces of bullion available at the moment. They cater to both "the little guy" and the smaller giants. I suggest watching these two businesses.

enough said...

Paper gold may very well close above Euro 1246 tomorrow but regardless, it appears to be very unstable at present

byiamBYoung said...


I was wondering if all the Washington fiscal cliff antics are putting an unnatural spin on the numbers...

Indenture said...

Switzerland and Britain are now at currency war

tintin said...

Hi OBA, please excuse my ignorance but would you be able to elaborate on the following? Or could you point me to where this has already been explained?

many thanks

You said: "$IRX is THE primary driver for all futures-markets contangos and the (what some may term) simplistic point is that if it goes underwater ie: to parity and lower, futures markets across the board ALL go into backwardation and effectively cease to exist.

From thereon out - bad things happen!

Once one accepts the absolute fact that Gold (the 24K variety) OWNS the Zero IR realm to the exclusion of EVERYTHING ...the Gold "futures" concept looks rather silly ...Yes?"

Jesse McL said...

I did have a quick go at making those cleaned-up archives I did look a bit better, but have to admit, not really my forte. Go's is a bit easier on the eye I have to admit - still I'll leave mine there in case it's useful.


enough said...

GLD lost 9.64 tonnes today....

Less than 1% inventory reduction but interested to know if it triggered a buy signal?

The Dork of Cork said...

There is a mechanism to prevent hyperinflation of fiat currency while printing "unbacked" paper.

We all live in a petro economic ecosystem.

Imagine the UKs energy consumption system.

"In 2011, the road transport sector accounted for 39,775 thousand tonnes of oil
equivalent, 72 per cent of total transport energy consumption in the UK. The air transport
sector consumed a further 23 per cent (12,802 thousand tonnes of oil equivalent), the
water transport
sector 3 per cent (1,597) and the rail transport sector 2 per cent (1,012)"

Road transport is 72% of oil energy consumption , cars account for 60 % of this.

So HMT produces loads of 10 shilling notes (this time without interest)
All new private cars are taxed to the max - with minimum future production.
The surplus normally spent is taxed and spent on Tramways & Nuke stations......

Where does the hyperinflation come from ?

One Bad Adder said...

Hi Tin-tin,
I'm not too sure what you are asking my friend but here goes -
In a word "Interest"(whether it be on the Debt OR the Credit side of the Ledger) can be defined as RISK!
The other known factor inherent in the futures / Bonds etc equations is TIME (referred to as "duration")
In a simplistic sense, a futures price is primarily derived from (a) general market expectations re: the specific product (b) the "prevailing" s/t interest rate ...and (c) the duration.
Time is a constant however IR is a critical determining factor in whether a "future price" is (in the case of a positive IR) in contango ie: the future price gets higher and higher as time passes ...or backwardation ie: the FP gets lower. ...and lower into the future...
...in the New Normal, a TRUE DEflationary bias then takes hold.
Gold futures will I feel be the Canary-in-the-coalmine when and if this transpires as Gold per-se has virtually no extraneous market activity and as such is totally dependent on IR and Time as it's "futures-price" determinant.

Hope this helps mate.
As time permits I'll flesh this out over yonder ->

Biju said...

OBA : I understand that you are articulating that paper IRX controls other papers(futures).

But if IRX goes through the floor to sub zero, is it not possible that US Govt can print unlimited amount of 13 week Treasury bills and sell to Foreigners/Investors and bring it's yield above 0% ? Also they could give the FED also and FED can continue their twist ?

Anonymous said...


yes, it's not quite a GLD puke according to Lance Lewis yet (13.4 tonnes required), but it is a buy signal in my strategy (about 7.7 tonnes required).


Edwardo said...

Will wrote:

"Gold dealers will release today, in trade for paper currency, real physical gold on a 1:1 relationship..."

In amounts suitable for acquisition by shrimps, yes, but not in the sort of size that would be suitable for giants. So, the "gold market" such as it is, is the result of massive amounts of paper that dwarf the available stock of physical and, as part and parcel of that dynamic, features bifurcated pricing for physical such that folks doing their shopping on, for example, AMPEX, and folks doing their shopping via the BIS and friends get very different deals.


Your comment regarding paper gold interests me since, where you see the paper gold market as displaying instability, I see it as simply moribund. Then again, most of the markets that are open to viewing and participation by average Joes and Joesephines, stock, bond, and select "commodities" like the world's greatest non-commodity commodity, gold, are, in essence, out of service, zombified entities that are now just simulacrums of that which they once were.


I have to admit I'm flummoxed as to your regard for Alf Field, not so much because he's an E-waver-which may be the most damnable type of TA ever devised- but, because, whatever his gifts as an E-waver may be, Mr. Field is, to my knowledge, wholly informed in his attitude towards gold's prospective performance by the "Gold is in a bull market" paradigm.

One Bad Adder said...

Hi Biju: -
You're right, they "could" ...but I doubt they will.
The Bill $-issuance has been pretty constant for the last several years however the Yield and Bid-to-Cover have both been indicative of a very high degree of activity into the short end.
The MAIN problem they are currently trying to address is maintaining a respectible "Yield-curve-ratio" given the on-going thrust into the shorter maturities IMHO.
Were they to ratchet up s/t issuance to any great degree, the Fiat "game" would be well and truly up I feel.

enough said...


paper gold has been range bound for many months, even years but within this range it has been extremely volitile. A round trip from $1650 low on friday 12/29 to a high of $1698 wed. 1/2/13 and now one day later touching $1654 right now after hours....

These moves completely uncorrolated to any commodity, fx or equity mkt....

IMHO, frequent verticle moves in both directions with no macro catalysts define instability and especially in an asset where supply and demand of the metal are very stable, not effected by rising or fslling industrial demand.

Watching the action in small time frames one can see paper gold gapping up and down in $5 increments continuously. This is characteristic of a thin unstable paper market....IMHO

One Bad Adder said...

Biju FYI:-

This is the latest Auction result for 3mo T's.
Note 4 is (or will be) the Canary IMHO.

enough said...

Interestingly, if you were watching closely yesterday, the very moment the Moody's comment was released regarding the need for the USA to reduce it's budget deficit or a ratings downgrade could occur, S&P's gapped up 5 point and gold fell $10 !! System Managers saying see everything is fine. Mr. Mkt says so....

My reading of gold's strange and violent moves is this: Systems managers saying, you dont want to be involved with this gold stuff. Too unpredictable, unstable....find some other sandbox to play in......

costata said...


I have an ambivalent attitude to TA. I see some of these folks trading based on what the charts are telling everyone to do. Others appear to use TA as a method to discipline their intuitive feel for markets.

IMHO Alf Fields is a "market sensitive" kind of fellow. To my eyes it's the same skill/ability/talent that allows people to "read" landscapes, football matches, the weather, battlefields, a particular market, the future demand for products, social memes and trends and on and on.

Call it a knack if you will, some people have it and some don't.

Anyway, that's my 0.02

One Bad Adder said...

Oh and BTW - Hat-tip Nickelsaver for placing the Treasury-direct data at my Finger-tips.

Where IS that guy anyway?

enough said...

Moribund ?.....currently $1648, down 3% from yesterday noon EST

Unknown said...

Oh my friends, you are so right! The inconsequential shrimp can have his little fling with gold whenever he comes up with spot plus $50/oz. (though it's been a few years now--things may have changed at my little iron fence store, but paper gold was priced around todays $$ last oz. I gained).

But if gold in size is called in, I can only imagine what kinds of paper would be thrown at it if the requesting redeemer is "systemic" or otherwise important to satisfy.

I do think it works both ways, these deals, as Another was paying "many thousands per ounce" when it was on the market for under $300/oz.

You might even mobiize a standing army to seize gold in size, even if from a dark continent sovereign, if the political will, or cover, exists, and these calculations include lives, not just paper in cost.

The relative strength of the dollar, while all other paper still remains interdependent to it, may be best read as it's weight upon paper gold, dragging the COMEX SS pricing mechanism down.

As they both rise together, you should see the "range bound" volatility perceived as "golds failure to launch" against all fundamental predictions of hyper-printing.

As for the Yen, Kyle Bass has pretty much nailed the death Knell of Japan, and it's demise could be the first domino to topple in the current IMF$ $Y$TEMIC collapse.

He has researched the demographics so well, this could be a self-fulfilling (and rather quite fulfilling for Hayman) prophecy, except that he does seem worried about the aftermath and is surely hedged in physical after her statements regarding Univ. of Texas and that conversation with COMEX so well noted on YouTube.

I sometimes get a jittery feeling that the headlines I'm reading (none of them mainstream) are coalescing into a perfect storm ... but ... I've had that feeling before, and the system just keeps slogging along.

2013, a good year for popcorn and lawn chairs...

tintin said...

Thanks OBA, thanks.
What I wanted is to put on the flesh on the "gold owns the zero IR realm" frame I suppose.

I'll be checking your Den from time to time, and in the meantime keep reading here.

I think I understand your theory in principle but not the details like a mathematical deduction or the logical steps.


byiamBYoung said...

EUR POG is dropping toward 1246!


Everyone get to bed early. You don't want coal in your gold toe stockings!


tintin said...

Ok let me try:
$IRX goes negative = no faith in future everyone rushes to HN = future prices lower = deflation ---> gold futures lower = backwardation = gold price discovery moves to physical only = true supply/demand reveals itself = freegold.

Am I getting anywhere?

Unknown said...

I like your attitude toward TA, almost mystical, yet correlations can exist between a fraudulent and imperfect "reflection" of reality, and reality. I can see that some do get a feel for it beyond the surface level which gives off generally bad signals.

Kind of like a "TA to reality" synchronicity in the background.

It's when they preach this dogma, as if their God is the one and only true God, and all other forms of TA are falsely prophetic, that makes me vomit.

When we're supposed to swallow up these cycles and waves and graphs as though they are infallible by virtue of some introspective complexity, I think about Anothers's comment, "throw away your charts and TA" as being the revelation that all these yechnicals are built upon a false foundation --- from a standpoint of the typical analyst.

I concur that a more "allegorical" corelation to TA has its worth, but I cannot explain it. Call it that "jittery feeling" maybe.

Unknown said...

Did I just type "yechnicals"? I didn't mean to, yet I like it. Thanks for bearing with my 2-fer. Night all.

Edwardo said...
This comment has been removed by the author.
Edgar said...

I really don't get the "Shrimps are stupid, Giants are clever" attitude on this board.
In fact, it irritates me as by the measure of my wealth I am a shrimp. Not a tiny one, but still.
And do not want to be a shellfish. I don't like shellfish.

Besides, if you really think that people are born like Giants think again.

Wendy said...

bBY if the Euro was where is was less than a week ago, we would be at Euro gold = 1249

Edgar said...


by the same author of "Switzerland and Britain are now at currency war", I found the epistle: "Europe's dream of toppling dollar fades as Asian Tigers dump euro".
Interesting to read: http://www.telegraph.co.uk/finance/financialcrisis/9778899/Europes-dream-of-toppling-dollar-fades-as-Asian-Tigers-dump-euro.html

One Bad Adder said...

Go to the top of the Class Tin-tin ;-)

OK - Gold (24K), because of its "unique" Suite of Properties, is essentially "time-less" ie: it transcends "time".
In so doing, it also trancends money ie: whatever the "current" born-live-die Currency system du-jour is ( ALL Systems, Gold Standard inclusive.)
This FACT renders it the ONLY candidate suitable for the status of "RISKLESS" ie: Zero Interest (read risk)
Know this, and it's easy to understand WHY they dig it up and store it in Vaults.
It's DANGEROUS to those who deem it their Right / Duty to "manage" we the great unwashed.

Get it?

byiamBYoung said...

Hi Wendy,

So close! I'm setting out an extra plate of pot o gold cookies!


Freegoldclaus is coming...to town!

I'll never get to sleep tonight.


enough said...

Edwardo, let me ask you...

Do you think that those that are considering purchasing gold are soothed by the calm, moribund 2 year trading range or un-nerved by the whipsaw action within that range? You look at the long run with the calm that comes with understanding....

For the 99% of global wealth that does not have any savings in gold and is considering it, I bet this action scares the crap out of them....

This game of daily spikes and watefall declines, induced by the system managers is not intended to have an effect on FOFOA readers..........

It is intended to scare daylights out of all those others that have a "feeling" that things are wrong but cant put the pieces together. That want to protect themselves but are made to feel afraid to take the plunge.....all IMHO of course

costata said...


I don't ignore TA or downplay its predictive capabilities but, as you noted, there is a "mystical" quality about it.

At the most fundamental level if the currency unit the charts are based upon is the result of the market's failure to discover prices then at some point I expect the superorganism (Mr. Market) to assert itself and correct the error.

Edwardo said...

I just got rid of my comment to you, enough, because I saw that I missed one of your replies to me which clarified your view. However, I now see that you responded to my last post before I deleted it, so here I go again.

You may be right about "global wealth" being scared off by the action of late. There's just one problem, your chosen demographic is, I suspect, quite diverse, encompassing individuals from cultures as different as The U.S. and India to name just one disparate duo. For that reason I'm just a tad reticent getting on board with your assertion.

tintin said...

Thanks OBA.

Now I am wondering about another thing: how do I relate this to Larry Summers' research paper "Gibson's Paradox and the Gold Standard".

costata said...


"Shrimps are stupid, Giants are clever"

There is an element of that thinking here but it is not universal. Some here have dealt with "giants" (often with inherited wealth) and realize that they are, overall, no smarter than other people.

However, when you can afford to enlist the best mentors for your offspring, have outstandingly good connections in the corridors of power and you can afford the best hired-help it does give you some advantages over the rest of society.

That said, the huge amount of effort the mega-rich invest in structuring their affairs to prevent their offspring from blowing the family fortune is instructive. And some of the spectacularly unsuccessful attempts to achieve this goal are even more instructive.

enough said...

I agree that there are cultures that have a deep understanding of gold as a wealth protector that are not fazed by system managers buzzsaw.

Simply stated, I believe the system managers are attempting to scare out as much physical as they can and at the same time scare as many of those that are thinking of taking the plunge from doing so.....

It is a successful strategy with some individuals and cultures and not others. What physical the system managers can shake out and new entrants they can block...is all gravy

The strategy of buy and hold is dead, haven't you heard? We're all traders now !! But here you say that you buy and hold....a heretic :-)

You really think more potencial entrants into physical gold remember the rise from 12/08 to 3/11 or remember these sickening spike and waterfall declines of the past 2 years?

Remember, the current investment horizon is now 46 seconds :-)

One Bad Adder said...

Tin-tin: -
I've in all probability read it but unfortunately can't recall the details.
There's been a lot of litiary / financial water gone under MY bridge over the last 30 odd years mate ...before finally becoming content with my hypothesis / prognosis / outlook.

Michael dV said...

I believe I mentioned in a comment that one of the things I saw as a possible trigger in the Spring of 2012 was the failure of Spain and Italy to fund their bond needs. September came and went and not a ripple was caused by bond issues. Now I have a partial reason:
It seems Spain was buying its own bonds with money from its Social Security system. The thing I find most odd is that their SS has actual purchasing power in it. They actually were setting aside something of value that now shows up being used to buy bonds. Imagine that!
In the US that could never happen because our system has nothing but IOUs from the Treasury. We take the money that is supposed to fund SS and spend it immediately and then give the folks at SS paper that promises to be good when SS needs the funds:
Dumb and Dumber does not begin to explain what we have done.

Edwardo said...

enough wrote:

"Remember, the current investment horizon is now 46 seconds :-)"

Confuse us say:

"When everyone is a trader-despite engaging in semantic games regarding their actual market posture - the ultimate contrarian play is to be, unmistakably and undeniably (with pardons to OG) a saver, saving in the single best instrument available for saving."

enough said...

Hi again Edwardo,

I am absolutely sure I do not understand what you just wrote but I was kidding....I save in gold too......like all inn style...

I'm speaking of the current meme....buy and hold doesn't work....dont you watch CNBC? :-)

costata said...

Michael dV,

Speaking of Dumb and Dumber here's a perfect example of why the gold bug and silver bug camps have so little credibility. From Ed Steer's newsletter here:


There is also a tax issue to consider in the December-January sales period but look at the way Ed responds to the published figures (my emphasis):

However, I find it very disturbing that the mint is now obviously playing games with their sales numbers. But, having said that, this is the third December/January time period in a row where I've seen them shove December sales into January. You have to wonder if there's any adult supervision going on at the mint.

I'll provide an alternative perspective on the data below. This is the data he is responding to (my emphasis):

The U.S. Mint had a rather strange, but eye-opening, sales report yesterday. They sold an absolutely stunning 50,000 ounces of gold eagles...along with an equally impressive 8,000 one-ounce 24K gold buffaloes...but zero silver eagles.

If you're wondering how this can be possible on the first sales day of the new year, it's my guess that these gold sales actually occurred in December, but were pushed into January in order not to make the sales month look as good as it obviously was.

The bullion dealers all over the U.S.A. were reporting almost record sales figures in December...and the U.S Mint sales in gold, although strong, didn't come close to matching the rhetoric from the dealers.

Now I know why. When we see the first true sales numbers in January for gold...and especially silver eagles, they should be equally as impressive.

Okay, now for the alternative explanation from:


(My emphasis)

The 2013 American Gold Eagle bullion coins will be available for authorized purchasers to order on January 2, 2013.....

... The 2013 American Silver Eagle bullion coins will be available for authorized purchasers to order on January 7, 2013....

Earlier this month, the US Mint informed authorized purchasers that all 2012-dated Silver Eagle bullion coins had sold out. Since this time, there have been no Silver Eagle bullion coins available to order. This gap in availability will last until the Mint begins accepting orders for the 2013-dated coins.

The 2013 American Gold Buffalo bullion coins will be available for authorized purchasers to order on January 2, 2013.... This release date is earlier than previous years.

Edwardo said...

What old confuse us was trying to say is that when things get turned so upside down that the word invest is used to describe activity that is, objectively, trading, it's time to drop it all and become a true, blue, saver.

The first place the liars hit is the language itself which is why when I watch CNBC, which is very rarely, I only watch. I don't listen.

In the meantime, this evening feels like an election night when I really care which candidate wins. If you catch my drift.

Unknown said...

Rubin brought "sleepy" Summers in to manage the interest rate ties to gold directly as a results to his work on Gibson's paradox.

You might like Rob Kirby's work here:
Really worth reading, ghets good about half-way through. I seldom quote the goldbugs here unless quoting their research on true gold value manipulation and perception management.

I guess we see now what happens when the debt is dumped on the lawn of a sovereign. Ole'

So much interesting discussion, thoughts and news tonight, it's hard to go to sleep. Not just the waiting to puke, but other things converging.

It's that old black magic feeling again, like we're about to float into the mystic.

M said...

So I was going through the list of Casey Research Jr mining picks today. I noticed one highly touted stock that was too hot for me a couple years ago so I didn't buy it. I noticed that it had a bad year and the price is down to where I would give it a shot. Its a Jr explorer with no revenue, sales or anything. I did a little more research and found out that the CEO was the third highest paid in Canada at 16 million dollars in 2011.

"Topping the list in 2011 was former Magna CEO Frank Stronach at $40.98 million. He's followed by Valiant Pharmaceuticals' Michael Pearson at $36.31 million and Pretium Resources' Robert Quartermain at $16.91 million."

What a joke. If there wasn't enough reasons to go all physical...

Anonymous said...

I don't know about you guys but I'm diggin' the view through the window up there:) I really dislike winter, in a big way.

If anyone's interested, I stumbled onto the newest gold show I mentioned in my reply the other day to what's-his-many-names (bryan,gary,smri,etc)AKA fucktard.


Winters said...

Freegoldtube's Ectasy of Gold blend is awesome. Love the mix of the classic vs metal. Interesting visuals too. First time I've watched his stuff actually.

ampmfix said...

Concerning the comment about Spain, the reserve funds of the SS have been tapped many times in the past and were always replenished back, we'll see this time...

Yesterday I watched a TV shows that made my hair stand up, as you may know:
- Total population in Spain is around 47M
- 8.7M pensioneers (retired and disabled, lot of fraud in the last category)
- 5.8M unemployed (lot of fraud too, many people work undercover and still earn the unemployment pay)
- around 16M work force paying SS fees (to pay pensioneers and unemployed)
- Of the unemployed 1.5M homes have all their members unemployed.

And they say we will recover in 2013, hah! I would rather say 2023, if ever.

I am almost 54, after new law was passed I will retire at 67, after paying into the system for 40 years, I should earn 2900€ per month (today max retirement pay) from the SS, CPI adjusted in 2026.

Obviously I don't count on this pay to be meaningful, first it will be reduced greatly on account of not having enough money, then the CPI adjustment will also fail, maybe the whole thing will amount to paying the monthly water bill if lucky...

What is really disgusting is that I cannot choose to save otherwise and SS payments are compulsory, so they essentially robbed me for 40 years, and now, who vouches for being a good citizen and not trying to cheat the bastards in any possible way?

Vive la democracie!

Pat said...

So here we are early on Goldhog day and lets see where we finish. The "action" though begets a question for FOFOA. Certainly there has been not been much if any attempt to support Euro-gold price. So is 1246 a true magic number, or will "close enough for government work" apply, again, taken in context with the no-support action.
I have to go with Wil on this; get your popcorn and lawn chairs folks.

enough said...

Good Morning Edwardo,

Do you still not agree with this statement? emphasis on "at present"

"Paper gold may very well close above Euro 1246 tomorrow but regardless, it appears to be very unstable at present"

also I will from now on put asterix where I am attempting sarcastic humor, such as:

"buy and hold doesn't work....dont you watch CNBC? :-)"

"haven't you heard? We're all traders now !! But here you say that you buy and hold....a heretic :-)"

"Remember, the current investment horizon is now 46 seconds :-)"

Best wishes, E

Edwardo said...

Enough asked,

Do you still not agree with this statement? emphasis on "at present"

I agree, I just can't tell if this behavior represents a harbinger of a new and lasting and, most importantly, profound change in the "gold" market.

enough said...

I wrote to Jim Sinclair a few weeks ago and I asked him about his gold $3500 prediction...

I asked him: when you use the term "gold", are you refering to physical gold and paper gold synonimously or do you forsee the much discussed break between physical and paper.......

His answer: both will rise to $3500

Edwardo said...

Jim Sinclair is either with Belgian, whose thoughts he posted a few days ago, or he isn't. He can't have it both ways. That's what I'd be e-mailing Mr. Gold presently, were I of a mind to communicate with him.

ein anderer said...

May be FOFOA is pointing to Grimm’s fairy tale "The Hare and the Hedgehog" …

ein anderer said...

@FreegoldTube: Good work, indeed! Some of the videos are not viewable in Germany, but others too, and they are fine!

byiamBYoung said...

Sounding kindof Freegoldish over at ZH...


burningfiat said...

Woland und Ein anderer,

Maybe I'm being Capt. Obvious here, but maybe this hog is not a hedgehog with a hedge fund, but a goldhog with a gold fund?


Aquilus said...

Or perhaps "Happy GoldHog Day!" as in MTM Party? :D

burningfiat said...

Exactly Aquilus,
Happy GoldHog Day to you! So it ended in limbo, huh?

byiamBYoung said...

[Wearing my goldhog hat and waving my big gold foam finger back and forth]

There's always next quarter!

Tommy2Tone said...
This comment has been removed by the author.
Unknown said...

I wonder what is causing the spike in US consumer physical demand. Has the mainstream pulpit (which I NEVER watch) gone rogue ??

byiamBYoung said...


If, by mainstream pulpit, you mean these sorts of folks:


It appears that they are not quite going rogue.


Biju said...

I heard Bron's interview in his blog and he did mention about strong Gold demand from Private Wealth management managers.

Biju said...

FOFOA mentioned that looking at Euro price of Gold as a precursor to physical/Paper Gold divergence.

I think looking at supply of Gold in Indian Jewellery market will also be a good indicator of that. Even if Euro price of paper Gold falls, for now we are assuming only certain giants(arabs, CB's) will be willing to sell paper and demand physical. I think a much earlier organic "giant" indicator will be the indian market. Even if Euro/Dollar price of paper Gold falls, if Rupee depreciates against Euro/dollar, the price of Gold in Indian Rupees is still held high and so demand will still stay constant. No Freegold then.

On the other hand if it is pure paper Gold selling, the price will crash in Rupees also and I think Indian demand will spike concurrently with the Jewellers withholding their supply. This will be clearer, I think since Indian demand/supply is purely physical with no "giants" leasing etc.We will get Freegold here.

Unknown said...

Yahoo is certainly about as main a stream as there is, but surprisingly, most of the commentators seem to see through the garbage-speak.

Truly, the mainstream speaks of paper gold without even realizing it. And YES, the outlook for paper gold is EXTREMELY bearish.

Once people realize that most of the technicals relate to the paper gold market (which has been with us for quite some time) they will understand that 99.9% of the time what is written about gold, good bad or indifferent, is inadvertently written about paper gold.

We know better here, yet ... not one man in a million understands the half of it.

And even if we evil jerks are just brainwash-dead wrong. Hey, WTF, it's only money :)

tintin said...

Hi OBA and Wil, thanks for the help, and I will read Kirby's long article.

regarding capital flight out of China, I suggest it's mainly spin, an effort to talk down China. Have a look at the Shanghai stock index, have a look at the H shares in Hong Kong, or the New York listed China Xinhua 25 Index, stock code FXI. Just as the China capital flight story gets repeated louder and louder, a nascent bull market in Chinese shares is born. Capital flight? it looks like a fly-in, not out.

On the phenomenon of incessant "China collapse" talks in all form and shape: A big part of this is ideological war, a propaganda war to discredit the "Beijing consensus" in support of the "Washington consensus": Beijing/RMB vs Washington/$IMF$. How can a authoritarian no democracy china keep doing better than the free world? Continued China success will continue to discredit the western theory. It is a hearts and minds war at work.

tintin said...

6 months FXI chart: http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=fxi&insttype=&freq=1&show=&time=7

3 year chart: http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=fxi&insttype=&freq=2&show=&time=10

Unknown said...

Right on target again, the layers of manipulation run so deep even the lies are lies.

There was an article about widespread mistrust of government, probably at ZH, although it may be more an understanding that banking and government are conjoined.

It is a sad truth that the world has become so dishonest, but quite predictable, as in a family, a company, a country or a planet ... when there is ROT at the top, it quickly spreads below.

It is my heartfelt wish that the freegold "cleansing" will finally drain the worldwide swamp of that foul smelling rotting pile of corrupt and criminal failed leadership.

tintin said...

In my view the effort to discredit China is not dissimilar to the effort to discredit gold.

tintin said...

More about China/US,

Remember Washington's invitation to form a "G2"? It is the US trying to entice China to backup the virtue $IMF$ with China's real producing economy. Of course, China rejected the notion of G2 outright. The downramping of China ensued after China rejected G2.

Next time some "China collapse" theory emerges, it should be treated the same as the "barbarous relic" or "can fondle no eating" theory about gold, at least with great suspicion about the motives of such talk.

Anonymous said...

Is it possible for the $USD to hyper-inflate without the divergence of the paper/physical price?

byiamBYoung said...


I read that topic addressed at length in one of FOFOA's posts, but I'm not sure where.

They are two distinct events,, though, hyperinflation and paper/physical splitting.

THey could happen independently.


byiamBYoung said...


One additional thought. Although the two are distinct, they probably will happen in parallel.


Aaron said...

Hi Athrone-

Is it possible for the $USD to hyper-inflate without the divergence of the paper/physical price?

Hyperinflation is when the users of the USD lose confidence in it. They spend it like crazy trying to acquire things in the physical world before the dollar finally goes tits up. Ok, that's hyperinflation. Set that idea to the side.

The splitting of paper gold and physical gold is when the holders of physical are no longer willing to part with physical -- the only thing making the paper gold market credible. The window dressing as FOFOA often refers to it. Physical supply meeting marginal demand in the paper gold market.

Imagine a bunch of paper longs coming to the market only to find that no one is willing to short physical.

Market lockup. Price of paper falls as everyone tries to get what cash they can. There's no physical to be found.

Paper and physical valuation for gold ARE going to diverge, but for different reasons than why the USD will likely hyperinflate.

I say likely because the US Treasury does have an option to try and minimize the impact of hyperinflation. Will they use it? I don't see why they would.

Edgar said...


I guess hyperinflation could be forestalled depending on the amount of gold the US Treasury has left.
Imagine for a moment that all foreign holders of treasuries decide to dump them onto the FED. Having no choice, the FED will be forced to print $$$ to buy the debt. As a consequence, the amount of dollars in circulation skyrockets and threatens hyperinflation.
IF the Treasury has enough gold left, it could buy ALL those dollars back, and finally swap those dollars for debt at the FED.

Of course, for this to succeed the Treasury would have to have billions of ounces of gold. Don't think they have that amount lying around ;)
Also, the borrow and spend mentality of Congress would need to stop right then, as a continuation of that policy would lead right back at a renewed hyperinflation and/or economic collapse.

I suggest you read "The Economics of Inflation" by Costantino Bresciani - Turroni.
It explains very nicely the endgame of the Weimar hyperinflation: only by stopping the printing presses, instill confidence in the (new) currency, AND by refusing to discount the debt of the government thus forcing the government to live within it means, was it possible to stabilize the Mark and return to a healthy economic situation.

byiamBYoung said...


"Imagine for a moment that all foreign holders of treasuries decide to dump them onto the FED. Having no choice, the FED will be forced to print $$$ to buy the debt."

I ask because I don't know: is there really a recourse of holders of treasuries to dump them and demand their money?

Edgar said...


byiamBYoung said...


...other than redeem them at maturity, I meant...


Edgar said...

I don't think foreigners own long dated bonds anymore. At last check, China seemed to have only T-bills left.

byiamBYoung said...


Okay, so you are speaking of redemption at maturity?

JUst trying to understand...


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