Thursday, May 2, 2013

The Dukes of Wetton – A Bedtime Story

Three years ago today I wrote The Dukes of Wetton, and tonight you are in for a real treat. Dixie barber and storyteller extraordinaire
RJ Padavona reads this FOFOA classic for you and your kids.

Freegoldtube started this project a couple months ago, and he's asking a few of my readers to read their favorite post aloud and send him the MP3 file. Unbelievable, isn't it? I mean how many other blogs have anything like this? Soon I'll add an audio posts link to the sidebar, but for now you can enjoy Lisa reading The Debtors and the Savers here, right after you're finished with Boss Hogg and his damned HoggBucks…


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Michael dV said...

Strictly professional voice over work!!!

Knotty Pine said...

M said: "^34 years later and the world is still extending unlimited monetary credit to the USA."

Then why is the Fed holding almost 2T USG debt on it's balance sheet ?

M said...

@ Knotty Pine

Point taken.

But the world is still extending as much credit as it is capable of. At least that is what it looks like to me.

The only reason the Fed is doing QE is to effectively allow the status quo to continue. The world is playing along by pretending that the 2 billion of debt on the Fed balance sheet isn't there.

Indubitable said...

Wow! I had read "The Debtors and the Savers" twice previously, but Lisa's audio was very impressive. Both of these were very well done.

Phat Repat said...

Yes, this label of "ExPriv" has been wrongly applied. It is the ROW that has benefited the most and especially the BRICs. Though painful at first, the transition will ultimately be positive for the US; and the sooner the better.

Aaron said...

"My money" proclaimed Hogg, "shall be redeemable in my gold"

M said...

@Phat Expat

"this label of "ExPriv" has been wrongly applied. It is the ROW that has benefited the most and especially the BRICs. "

How so ? Explain in simple terms how the BRICs have benefited so much from this. The Soviet Union used to be the second biggest economy by GDP and they were the US's biggest enemy.

michael3c2000 said...

Trade wars and currency wars are ruinous and destabilizing features of our commercialized landscape that Americans take for granted, another "necessary evil" towards a recovering economy.
Systemic dislocations and imbalances miraculously healed, markets suspended in euphoric animation, and competitive currency devaluations scoring par on the world's gold course. Pegged or not, some countries gather the golden balls, buy up the greens and machines and talk of winding down old scores.
Xinhua - April 29, 2013
Time to widen Yuan's daily trading band- experts
Snippit: "...Analysts also point out that it is not enough to simply widen the yuan's trading band, the central bank should also make efforts to make the formation of the yuan's exchange rate more market-oriented.

"At present, the formation of the currency's exchange rate is not fully marketized, so the rate can neither reflect real market conditions nor serve as an effective policy tool," said Cai.

The country should integrate the expansion of the trading band with reform of the exchange rate mechanism, Liu added."

Phat Repat said...

Much of the 'advancement' of these economies is not the result of 'sweat equity' (not including slave labor) but rather the ExPriv granted to them through a perverted fiat/globalist system/agenda. Do you believe these BRICs could have gotten to their current state on their own? If so, how? And please keep it simple.

M said...

I believe the BRIC's would be in better shape now if it wasn't for the USD. There wouldn't be all these mis-alocations of capital and worldwide housing bubbles. Its a disaster.

We don't know what would have taken place if Paul Volker lost all control in the 80's. Probably freegold after a rough couple years.

michael3c2000 said...$100-bill-ready-by-october/

Pete T said...

Like it v much!....

michael3c2000 said...

A deadline for FED transparency about it's risk positioning looms this week:
"Fed withholding ‘exit’ documents, Republican lawmaker says
April 23, 2013, 3:44 PM
"The Federal Reserve is “willfully” withholding documents related to their exit strategy planning, says Rep. Darrell Issa, Republican from California and chairman of the House Oversight Committee.

In a letter sent to Fed Chairman Ben Bernanke that was released to the media on Tuesday, Issa repeated a request for internal Fed studies of how it plans to unwind its balance sheet, now well over $3 trillion. Read how it may take a decade for balance sheet to return to normal.

If the Fed does not produce the material by May 6, the House panel may consider “the use of compulsory process,” Issa wrote.

Some Fed officials have raised concerns that the exit will be politically unpopular. The Fed could lose money on its holdings as interest rates rise. In addition, the Fed plans to raise the interest rate that it pays banks to park their excess reserves at the central bank..."

michael3c2000 said...

Holy month of May moly, premium oily:
April 13, 2013
"Global Finance in Transition conference to take place in Istanbul
"On May 7-8, 2013, Istanbul (Turkey) will host the Global Finance in Transition conference. The event is organized by the Central Bank of the Republic of Turkey jointly with the Reinventing Bretton Woods Committee and the Russian Ministry of Finance.

Representatives of G20 finance ministries and central banks, international organizations, research institutions and businesses will take part in the conference. Head of Turkey's Central Bank Erdem Basci, Deputy Minister of Finance of Russia Sergei Storchak and Executive Director for the Reinventing Bretton Woods Committee Marc Uzan will give the opening remarks at the conference.

Five panel discussions are planned as part of the event. They will cover the international financial architecture, in particular, changes in the flow of global investments, local bond markets and growth in emerging economies, incentives and determinants of investment and other issues. In addition it is expected that new instruments and incentives for making the global financial system safer will be suggested during the forum."

Wooly bully doesn't shock me:

From foxy lap doggy:
"Exploring partnerships..."

From April 16- Time is slippery (Re: final paragraph):

Gold is glittery:

Phat Repat said...

Yeah, really like the vibrant color of the inkwell and the number 100. Coincidence? Hmmm...

Phat Repat said...

Better shape based on what? Their technical prowess? Their world-class innovations? Their adherence to the rule of law? How about human rights?

I'm afraid "ExPriv" isn't what was bestowed upon the American people, quite the opposite in fact. Aside from that, does anyone really believe Freegold will be advantageous for the BRICs (and other so-called up-n-comers)? Hmmm...

michael3c2000 said...
Modern arrangements of ancient musical tradition fused to jazz, classical and pop. Each musician is classically trained and masters one or more traditional instruments. The Twelve (or 12) Girls Band has morphed over the last decade into several additional bands- Viva Girls, Beauty Six, solo artists, and at least one which disbanded. All of the groups make regular public appearances and release recordings. Touring recently has excluded USA because of travel hassles and declining interest. The link samples some older performances.

Dante_Eu said...

Really good job Freegoldtube and RJ! Impressive!

Here's nice clip from good old Peter:

May 2, 2013: Prescription for monetary rehab

Phat Repat said...

Schiff "I don't think anything is going to be accomplished constructively as long as the Fed is spiking the punch bowl. ... We're going to have to sober up. We're going to have to check into monetary rehab, we can't keep drinking and expect to solve these problems."

I'll drink to that! Prost!

Edgar said...

"Gold buyers forced to go on waiting list"

"Gold buyers are having to wait up to six weeks for their bars and coins after a price dip led to increased interest."

Dante_Eu said...

Phat Expat,

Skål! :-)

JR said...

re: ExPriv,

Valéry Giscard d'Estaing, who was the French Finance Minister under Charles de Gaulle and would later become President himself, coined the term "exorbitant privilege"

What d'Estaing was talking about can be described in general terms as "the monetary privilege that comes from the rest of the world voluntarily using that which comes only from your printing press as its monetary reserves. It started as a privilege, grew into an exorbitant privilege 35 years later, and then peaked 45 years later at something for which, perhaps, there is not an appropriately strong enough adjective."

This privilege "was and is, as Jacques Rueff put it, "the outcome of an unbelievable collective mistake which, when people become aware of it, will be viewed by history as an object of astonishment and scandal."

The privilege "has been supported by foreign Central Banks buying U.S. debt for the better part of the last 30 years. But as I [FOFOA] wrote in Moneyness, and as Ms. Pomboy has noticed above, that ended a few years ago. From Moneyness, the blue that I[FOFOA] circled below shows the Fed defending our exports **of empty containers** with nothing more than the printing press and calling it QE"

We can posit and hypothesize about couterfactuals all day, but what is objective and clear is the US sent paper promises and got real stuff in return. FOFOA: "Here's my thesis: that the U.S. privilege which began in Genoa in 1922, and was so complicated that only one in a million could even fathom it in 1931 and 1960, became as clear as day for anyone with eyes to see after 1971. And so, to see it in real (not nominal) terms, we can very simply look at the percentage of our imports that is not paid for with exports."

"Clear as day" graph =

The above is excerpted from Peak Exorbitant Privilege, check it out.

Lisa said...


It's really great to have you back!!! I have always appreciated your insight and ability to quickly locate the perfect FOFOA/FOA/A references. Hope you stick around.

KnallGold said...

Ah yes, all eyes on America ;-)

Dow to make new high! Wow!

onedayfly said...

My man FOFOA, baddest boy in goldtown I bring you many greetings from Holland.

Love your work. The logicaliness (is that a word?) of it all .

To celebrate life I bought myself 10 dutch guldens today, gold ofcourse..

Wonder what they will be worth in the next paradigm..


RJPadavona said...

Thanks for all the compliments on the voiceover. All I did was talk. Freegoldtube and FOFOA did all the heavy lifting.

It's good to see our favorite tutor/sheriff back from his sabbatical. This place hasn't been the same without him!


Dante_Eu said...

@Lisa & RJP.:

Second that!


Eventually, it will be "All eyes on us" PGA's!

Phat Repat said...

Well heck, if some French dude coined the phrase ExPriv and ascribed it to the US then by golly it must really have been to our advantage. ;-)

Hey, I'm all for Freegold, and the sooner the better. But to think the ROW, and especially the BRICs, didn't derive a substantial benefit from this ExPriv is preposterous.

And yes, as always, all eyes on the US. There must be a reason for this, hmmm... Oh yes, that's right, ExPriv. :-)

KnallGold said...

...and then it will be all "The Power and the Glory"

Many will remember Ultravox' Hymn, from a time when music still had great melodies. Kudos to Sir Midge Ure!

Dante_Eu said...

Good one! ;-)

Sam said...

Phat Expat. How does the rest of the world benefit from a currency that they must earn but that we can just print?

michael3c2000 said...

Real interest rates may be negative but that doesn't mean spread traders cannot use them to their advantage, in whatever country they trade, whatever their digital exchange and exchange rate.
As the Dow is within a few points of 15000, the US 30 year is obliging mightily:

JR said...

But to think the ROW, and especially the BRICs, didn't derive a substantial benefit from this ExPriv is preposterous.

Do you mean to say the ROW reaped a benefit from the decision to continue to support the privilege, and to allow it to become an exorbitant privilege.

A central tenet is the Euro/BIS supported the dollar and the paper gold market in the 1980s (and the ROW has joined in, ala China in 2001) because the alternative, the failure of the international reserve currency and a collapse into the hard money gold starndard days, was unthinkable.

Sure if you view that as a dilemma, they benefitted from that decision. But lets be honest, that is not a dilemma (two unpleasant options), that is a Hobson's choice - the false illusion of chocie. There was only one thing they could do: support the privilege and allow it to becomes an exorbitant privilege. Letting it all fail was never a real option on the table.


If the Euro does fail, gold will become the "world oil currency". We do know this full well, "the Central Banks will hoard all gold and buy any offered if this new European currency does not work" and "debt currencies fail". If this does come, no paper asset of world economic system will survive, nothing! Not a good thought, no? Thank You

See this - support the easy money $IMFS or go back to a hard money gold based economy.


The last small gold war ended in the early 1980s, as the choice was to use the US$ or go to a gold based economy. No other reserve currency existed, and gold lost the war as all continued to buy dollar reserves.

But by 1980, Europe was working with the BIS to implement a new "reserve currency".

The ECB/BIS did not want to go back to hard money again, they wanted to move forward with the euro:

The European plan was to support the $IMFS at least until a new fiat "reserve" currency could be established, one large enough to absorb the shock of a failing reserve currency, to avoid being forced back 100 years into a physical gold-based economy which would have been very traumatic. This effort took 20 years from 1980.

From Checkmate:

So the second leg of support for the troubled $IMFS, the inorganic and intentional one that began around 1980, was a two-pronged effort by the European central banks to give both the Americans and the East what they wanted in order to buy the time needed to launch the euro. The two prongs of the approach were 1) supporting US debt and 2) promoting and supporting changes to the gold market that would allow the physical to flow where it needed to go without a premature gold revaluation that would have blown up the current fiat system and disrupted international trade as it reverted back to a hard gold standard.


Re: counterfactuals, how about this one. If we didn't have the dollar as an international MoE, all the stuff the ROW made and shipped to the US would have been returned in kind with goods and services. Yeah maybe they would have shipped less to the US if the US had to pay in real goods and servcies, but regardless, all they got for what they did ship was paper claims on future prodcution that they will never be able to redeem at anywhere near par in real terms.

Some stuff >>>>> "monopoly-money" like claims on stuff you will never collect on. And the extra productive industrial capacity expansion from shipping real stuff for paper claims doesn't really alter the fundamental calculus.

Knotty Pine said...

Bravo RJP, Lisa, & Freegoldtube! Well done! I tend to absorb the written word best but my contrarian spouse really enjoyed the audio! She says you guys (FOFOA,FOA,Another) explain this stuff better than I do. Go figure. Thanks!


Nickelsaver said...

The privilege that the ROW has had, running concurrently with the one that the USA has had, is simply the ability to store value CHEAPLY in gold.

The price that the ROW has paid for this long running differed consumption has been generations of low standard of living. The price that the USA will pay is a sudden decrease in standard of living evolving into equilibrium with the ROW.

Given a choice between the two, I think most would say the length of the privilege is what one would consider exorbitant.

JR said...

Hi Nickelsaver,

The privilege that the ROW has had, running concurrently with the one that the USA has had, is simply the ability to store value CHEAPLY in gold.

Isn't it more most of the world is stuck in crappy paper gold, which is better than $ paper, but still pretty crappy, while the EURO/BIS made sure the select super-producers (aka the OIl nations) got the physical?

From Checkmate:

So the second leg of support for the troubled $IMFS, the inorganic and intentional one that began around 1980, was a two-pronged effort by the European central banks to give both the Americans and the East what they wanted in order to buy the time needed to launch the euro. The two prongs of the approach were 1) supporting US debt and 2) promoting and supporting changes to the gold market that would allow the physical to flow where it needed to go without a premature gold revaluation that would have blown up the current fiat system and disrupted international trade as it reverted back to a hard gold standard.

We agree, yes, that a consequence of the 1980's BIS/ECB paper gold market creating actions was gold was driven too low, and a corresponding inability to get physical gold in quantity at these prices emerged.

From VTC via "Today's (quote-unquote) "Gold"," nobody can get physical in quantities in today's market, so the ROW can't/couldn't benefit from storing value in cheap physical gold, because they couldn't get that cheap physical gold. The only thing avaiable was/is cheap "paper gold":

Let us stress that as of February 2012, there exists no liquid private market for physical gold in € in which bid and offer would be quoted for tranches of 10 tonnes or more at any time. In fact, this is apparently not even possible in the London market in which gold is traded in US$:

James G. Rickards, Currency Wars, page 26:
In ordinary gold trading, a large bloc trade of as little as ten tons would have to be arranged in utmost secrecy in order not to send the market price through the roof [...]

JR said...

Hi Max De Nero,

I dunno where you are but I think you tweeted about this book before. OMG the promo campaign for the film adaption of Orson Scott Card's classic Ender's Game is starting up -

And OMG Ender is posting again too.


JR said...

Sorry Max De Niro,

C its realy em I spill kant speel to goot

Nickelsaver said...


The ROW is a loaded generality, I agree.

Yet physical gold has flowed away from USA. If most to the oil states, fine. But I don't think you can argue that physical gold hasn't flowed to private hands in India and China.

It was never my intention to argue in the absolute. After all, I am an American who holds physical gold. And as such, the change of standard of living I will soon go thru will not be the same as most of my countrymen.

The same can be said at every level, each country and each person. And paper gold, which is just another manifestation of hoggbucks and the accrued debt it represents, will be extinguished with the flow of gold.

Let it rain

JR said...

Yeah Nickelsaver,

Sure, private hands in the "east" have recieved the flow of physical from the "west," but not in quantities to offset the flow of goods for paper in the other direction.

Little peoples can follow in the footsteps of giant (us shrimps hide in those footstep quite easliy), but its a lot harder for giants to do the same (becuase giants are bigger).

Those giants held paper gold as the next best thing, becuase there is/was no market for physcial gold in the size they need it.

Ender said...

Sir JR,

Thank you for the link.

A little disclosure: I read Orson Scott’s book many years ago. If any have wondered, I was inspired by this story. When selecting an alias for the USAGold forum (and carrying over to this blog), Ender’s Game is what came to mind.

Hopefully, the movie won’t be cheesy, for I do like this alias!

Now, where is that good monk? “The answer to your question is inside of you.” I would add, you just need to be quiet enough to hear it!


Dr. Octagon said...

JR said: "Sure, private hands in the "east" have recieved the flow of physical from the "west," but not in quantities to offset the flow of goods for paper in the other direction."

That may be true at today's spot price, but if gold is valued by the east at higher prices, then perhaps it offsets better than it appears at first glance.

Edwardo said...

JR wrote:

...False illusion of choice...

That's a contradiction in terms old boy, but I think I know what you mean.

Edwardo said...

Conversely, and pardon my pedantry, "false illusion" could also simply be a redundancy.

M said...

@ Nickelsaver

"But I don't think you can argue that physical gold hasn't flowed to private hands in India and China."

Yes but at piss poor devalued exchange rates. They were never able to buy gold at a decent exchange rate relative to their labor. They subsidized our purchases of gold. They are still subsidizing our gold by working for less and exporting to us which gives us more discretionary income to buy more gold.

Unknown said...

Pretty good Southern accent there RJ. Poor old Boss Hawg. I bet he hal big guns backin' those circulatin' IOUs to help that Ponzi along.

Later in the story I think most of the towns people started mocking old Hawg and talking up how if he keeps a printin' it'll "ruin the economy."

And then I think ole' Hawg stops printin'.

And there never was a ruckus like the yellin' and a stompin' for him to print some more, a gazillion times louder and more frantic than before when they were screamin for him to stop.

Oh well, them Wetton Brooders needs to be careful what they's a wishin fer.

Unknown said...

Not to worry, the pendulum swings slowly from East to West and back again, but it does swing, with full momentum.

Aaron said...
This comment has been removed by the author.
Nickelsaver said...


I understand.

I wonder if it will ever be revealed exactly what gold in size was going for during the paper gold era. I have to think that the closer we get to the transition, the higher the cost for that physical becomes.

I also wonder (and I'm guessing you know where in the A/FOA/FOFOA archives it is discussed) if physical gold flows under the table to giants at a much higher price, what happens to the fiat on the other end of those transactions? Is debt extinguished, or did someone else agree to hold it? I understand as far as the physical gold holder is concerned, they have been paid in full. But what giant counter party would agree to hold credit money in exchange for physical knowing it was soon coming to an end. And if it is Uncle Sam, then we should see debt being extinguished (but I don't think we are). I would think they would want to show that on the books. Or is it just that this gold flows in order for USG to merely tread water.

Seems to me Fort Knox might not have what they say it has. We would really need to know how much oil is really going for in gold. The physical GOR.

Phat Repat said...

ExPriv is a fallacy when applied to the US and quite deliberately so. The gains for the BRICs are a result of ExPriv; to their benefit, not the US. And one should question the motives of those attempting to obfuscate this simple fact.

As the transition to whatever is next transpires, let's watch how ExPriv is trotted out to explain away the pain. It might even be Racist to disagree. ;-)

Nickelsaver said...


Can you explain what exactly the BRIC's ExPriv is? What are they getting and how are they getting it.


Phat Repat said...

Through their ExPriv, the BRICs were able to acquire technology and IP that they would likely not have been able to develop on their own; especially in such a brief span of time. The wealth of any nation is its ability to harness ITS intellectual capital for the benefit of ITS citizens; first and foremost. After that, we can look to help others help themselves but not provide them the means to go against us.

The law of unintended consequences is in full effect, and not to the benefit of the US (or most Western nations). Obviously I am not a Globalist though I do support "free" and "honest" trade between nations as we are all better for it. I am hopeful that FG is the right step in that direction; but remain suspicious considering the starting point.

The ExPriv label, not unlike other labels (Racist, Sexist, Prepper, etc...), is used to control dissent. Ultimately, we will be much better off as we get back to focusing on OUR citizens. Having traveled and lived abroad, unlike many 'contributors' on this board, there is something rather unique about the US and hint, it ain't ExPriv. ;-)

Nickelsaver said...


Im pretty sure you're going to hate the next system just as much.


Phat Repat said...

LOL Since it's derived by Man, you're probably right.

Nickelsaver said...


Who else would it be derived by?

Beer Holiday said...


Don't hate the players, hate the game?

In the case of China, Aziznomics has a good recent article on China benefiting from the $IMFS.

I reckon China was always going to go through an amazing transformation regardless of the financial system. The balance is just being restored today between population and GDP, and it has a long way to go.

@RJP This is so awesome it made my week.

Beer Holiday said...

Also Freegoldtube, great job :-)

Nickelsaver said...


"Don't hate the players, hate the game?"

Don't hate either one. Just know the rules of the game and play well.


Phat, there is no chance you could say the BRIC populations received the better end of the deal compared to our population. The majority of their populations live in near poverty by US standards. Yes, a lot of them have jobs because of us, but having jobs for the sake of having a job means nothing.

Phat Repat said...

Well, I believe there is a higher power; call it what you will. Making me a Deist, to use a label.

Good catch. From the article:
"But ultimately, the present system is very favourable for the BRICs, who have been able to build up massive manufacturing and infrastructural bases as a means to satisfy American and Western demand. In that sense, the post-Bretton Woods globalisation has been as much a free lunch for the developing world as it has been for anyone else. And why would China and Russia want to rock the boat by engaging in things like mass Treasury dumpings, trade war or proxy wars? They are slowly and gradually gaining on the West, without having to engage in war or trade war."

And there's your ExPriv in a nutshell. The importance of manufacturing to a nation cannot be overstated. It is not so much the process itself, it is what is learned along the way that is crucial (which spawns other products/ideas). And that is what we lost. And what must be recovered. And is being recovered. ;-)

I have no moral obligation to ensure the BRICs live better than my countrymen. I am an American and consequently the US comes first in everything I do. Deity, Country, Family; in that order.

M said...

@ Phat xpat

"Through their ExPriv, the BRICs were able to acquire technology and IP that they would likely not have been able to develop on their own"

How does a devalued exchange rate aide in acquiring technology ?

The US wasn't going to be a closed country if the BRIC's didn't buy into this.

Phat Repat said...

You're kidding, right?

And what does this mean:
"The US wasn't going to be a closed country if the BRIC's didn't buy into this."

Woland said...

via Bloomberg; "Gold Volatility Fueled by Structured Note Trades,
BNP Says"

anatomy of a bomb = explosive + detonator

If a bank sells an income product (a Reverse Convertible Note linked
to an ETF of commodity) with a "knock in" reference price at a long
term support level, then, when that support is breached, losses of
principal occur, because such an instrument has par value only to
the extent that the reference price remains above the "knock in"
price at maturity. At that point, the only investor option for loss
mitigation would be to short the underlying, exacerbating the loss.
A nice chain reaction, if you can trigger it, for whoever has sold these instruments, as the muppet kills his own investment as he enriches
the seller.

Did this happen? I don't know, but I suspect more will be heard
from investors in these "goldfish" instruments, (or Ari instruments)
as I think he called them long ago.

Unknown said...

ExPriv gave the world cheap oil. All benefitted from this, including BRICS. It was good business ... simply now coming to the end of its timeline, at which time "the privilege" is stretched out to the extremes that inure to the benefit of the subject privileged.

Yes, the next system will strive to widen the wealth gap, as many hold no physical gold, and their paper will offer no solace.

This we learn from ... you know where.

Unknown said...

As Another has said, the major currencies of the IMF$ are "locked together for value". They "race to the bottom" now only to maintain relative collapse with the dollar ... again for "relative" (stable against one another) value.

When one currency fails all fail. It does not matter which comes first, chicken or egg. Because relative value must be weighed against what?

Comparable value. The monetary comparable value of gold repriced. The BIS will organize the relative values of trade settlement in gold when currencies relative values collapse against IT.

The way forward for a shrimp is simple. The way forward for Giants among Giants, more complex. We watch and see the preparations ...


GLD down another 18 tons this week. Holdings are dropping every day.

michael3c2000 said...

Dave (Kranzler) in Denver, the regular contributor to Bill Murphy's Lemetropole Cafe and proprietor of The Golden Truth blog (linked by Trader Dan among others)at, has recently linked to this excellent gold and dollar analysis:
I also recommend his responses found in the article's subsequent comments.
Coincidently, Dave's estimable entry from April 29th appeared yesterday in Jim Sinclair's blog at

byiamBYoung said...


I'm watching, too. The steady drip-drip-drip everyday does not appear to be organic, but rather quite managed. It seems apparent to me that two things are clearly happening:

-A hell of a lot of entities want their gold
-Someone has their foot pressed down hard on the brake, to keep the snowball effect from kicking in.

I'm wondering if there might be a mad scramble going on behind the scenes, where the powers that manage GLD are trying to get their hands on enough physical to satisfy the (managed?) drain?

Maybe the more informed members of the hive could shed some light?


Roacheforque said...

Yes, Brother Young,

I think we are seeing some supply constraints amidst a flurry of redemption requests (or were those "demands"?).

But as for the mad scramble things are indeed not always so transparent.

For example, did Cyprus "sell their gold" on the open market to raise cash to retire it's losses (as was spun) or was their physical gold accepted as debt collateral ... or did any of their physical move at all? Do we really know?

In a world where their "sale of gold" was spun as being bearish for the metal as part of a coordinated take down?

Where to begin?

byiamBYoung said...

Ah yes, brother Wil,

The flower of understanding seems so far away from this deep in the rabbit hole.


M said...

@ Wil and Phat Xpat

Is the oil really that cheap for the BRIC's after it is forced through the petrodollar ?

"ExPriv gave the world cheap oil. All benefitted from this, including BRICS. "

I knew someone was going to say that but I don't totally buy into it either. The Soviet Union was the second biggest economy until 1989. They sent man into orbit before the US did. Were they buying US debt to get oil the whole time up until 1989 ?

Maybe they where, I don't know.

The German/Japanese/Italian war machines seemed to have no problem getting oil in the 2nd world war.

Qwert said...

Hello. Please check out this blog post on Neuroscience.

Phat Repat said...

I don't know. But, would they be consuming as much if not for their ExPriv?

"The Soviet Union was the second biggest economy until 1989."

Source? And economy for what? Vodka? Heck, I'll drink to that! Pass me a Stoli; a chilled Stoli citros please! ;-)

Phat Repat said...

Yep, this reset is gonna be painful for many. Wish it weren't so...

M said...

@ Phat Xpat

They are consuming way below their means because of it. The government of Thailand subsidizes the gas and Diesel that enters the country because the currency isn't worth enough to buy it at world prices. As far as I can tell anyway.

The Soviet Union was actually second till 1980 then 3rd till 1986.

Twenty Largest Economies by Nominal GDP at Given Years

John said...

Hello freegolders. I'm a long time goldbug but new to freegold. i've been reading up on the theory a bit and I find it very interesting. Have a question that I hope that I hpope someone can answer.

According to What I've read a lot of central banks sold gold in the late 90s in order to save the gold market form a collapse. England being one of them. I can buy this but I'm wonderring why nations keep selling gold if they "know" the real price is so much higher. Central banks sold gold last year (not net sellers) and European nations sold gold as late as 2011 if my information is correct. I really don't see how this fits into the theory.

Secondly the large gold sales in the 90s weren't only done by England. There were a lot of nations like Canada, Switzerland, Sweden, Australia etc. does the freegold theory say that all these nations were in on the deal? I have an easier time seeing nations like England being in on it than nations like Switzerland being in on it since they aren't even in the EU.

I'm not here as an enemy I'm just really hoping someone can give me a good answer since I think freegold seems wonderful a part from this problem I have going in my head.


Kieran O B said...

John, Canada and Australia have no need to worry about having little gold, they have a clear and easy route to get gold back by nationalizing mines as have Sweden. Switzerland have a huge amount of gold per capita, selling a little isn't a huge deal for them.

Kieran O B said...

This world of money, it is a fierce one! I ask all, does anyone know a money manager with money for loan at 2%? No? Does not even the bank of Canada sell gold outright and receive "high" interest on cash? Is a CB that sells/leases gold dumb? NEVER!

If they sell gold, a way is clear to "bring gold back" for the nation! Canada has local mines, Australia has local mines, Belgium has South African mines! If they lease gold, it is for a purpose to buy "something" for the new supply to the market! The interest on the loan is for public view, as a "free gold loan" is not acceptable!

KnallGold said...

I think the snake has shed its old skin. Pun intentional :-)

KnallGold said...

Don't feed the "synthetic posters", if you get my drift...

Woland said...

"The purpose of the evolution in "paper gold trade" is offered
in many reasons. At first, it was the "deception" to hide the
"life age" of the dollar. Much as your Hollywood actors obtain
the "facelift', yes? This "deception" (low gold price in US $) ,
to the surprise of many, was created by the "Euro makers",
not the "dollar makers". To their advantage, world traders
and dollar investors were greatly fooled and, as you say,
"jumped on bandwagon" to help sell paper gold down!
This action did prolong life of dollar as was needed, for the
Euro was taking much time to complete."

"The intent of "large paper long positions" (me: oil states
holding future delivery contracts) was to create FUTURE
LEVERAGE against "dollar gold price". The cost of
positions is of little concern, as as any present or historical
dollar gold price will be "of little meaning!" These positions
will not be "physically covered' in any great way as this
will never be needed. The final conclusion of this action
will lock the Euro into a gold price, always moving less
high than (the) dollar. The world gold swap market will
complete the rest (LBMA volume)! In time, the favor of oil
settled in Euros will force the unwinding of dollar/gold,
(dollars used to buy gold in open market) Gold will be
purchased, delivering metal for Euros to settle old lease

"It has always been the desire for the "hard currency" (gold)
to settle old dollar debts. Dollar debts made "unreasonable"
by the loss of "honest commerce" by "dishonest exchange
rates". As has been from the past, and will be in the future,
Gold does always settle the score! Thank you".

(11/17/98) Msg ID 1012

JR said...

And what does this mean:
"The US wasn't going to be a closed country if the BRIC's didn't buy into this."

I dunno, but it echoes of the ghost of David Ricardo:

Comparative Advantage

Although Adam Smith understood and explained absolute advantage, one big thing he missed in The Wealth of Nations was the theory of comparative advantage. Most of the credit for the theory is attributed to David Ricardo, although it had been mentioned a couple years earlier by Robert Torrens.

The theory of comparative advantage is essentially the idea that even though one entity may be better at producing a good than a second entity, it still may be beneficial to trade with the second entity if they have lower opportunity costs. Comparative advantage is most easily explained with an example.

The key is even though you may have an absolute advantage when compared to potential trade partner (you can make all the stuff cheaper than the potential trading partner can), there is still an opportunity cost in not trading.

Adam Smith developed the notion of "absolute advanatge," which in effect is is the logical refutation of mercantilism. Ricardo took it a step further and showed its not just absolute advantage (aka production costs comparison) because there is another cost involved in everything we do - the opportunity cost of our forgone choices. Ricardo is credited with developing the notion of comparing the opportunity cost of trading or not trading, as opposed to simply comparing the production costs (aka absolute advantage).

The main concept of absolute advantage is generally attributed to Adam Smith for his 1776 publication An Inquiry into the Nature and Causes of the Wealth of Nations in which he countered mercantilist ideas. Smith argued that it was impossible for all nations to become rich simultaneously by following mercantilism because the export of one nation is another nation’s import and instead stated that all nations would gain simultaneously if they practiced free trade and specialized in accordance with their absolute advantage. Smith also stated that the wealth of nations depends upon the goods and services available to their citizens, rather than their gold reserves. While there are possible gains from trade with absolute advantage, the gains may not be mutually beneficial. Comparative advantage focuses on the range of possible mutually beneficial exchanges.


JR said...


Absolute Advanatge: "What is prudence in the conduct of every private family, can scarce be folly in that
of a great kingdom. If a foreign country can supply us with a commodity cheaper than
we ourselves can make it, better buy it of them with some part of the produce of our
own industry, employed in a way in which we have some advantage. The general industry
of the country, being always in proportion to the capital which employs it, will not
therby be diminished... but only left to find out the way in which it can be employed
with the greatest advantage."
(Adam Smith, The Wealth of Nations, Book IV:2, Modern Library edition)

Comparative Advantage: Nobel laureate Paul Samuelson (1969) was once challenged by the mathematician Stanislaw Ulam to "name me one proposition in all of the social sciences which is both true and non-trivial." It was several years later than he thought of the correct response: comparative advantage. "That it is logically true need not be argued before a mathematician; that is is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them."

What did David Ricardo mean when he coined the term comparative advantage? According to the principle of comparative advantage, the gains from trade follow from allowing an economy to specialise. If a country is relatively better at making wine than wool, it makes sense to put more resources into wine, and to export some of the wine to pay for imports of wool. This is even true if that country is the world's best wool producer, since the country will have more of both wool and wine than it would have without trade. A country does not have to be best at anything to gain from trade. The gains follow from specializing in those activities which, at world prices, the country is relatively better at, even though it may not have an absolute advantage in them. Because it is relative advantage that matters, it is meaningless to say a country has a comparative advantage in nothing. The term is one of the most misunderdstood ideas in economics, and is often wrongly assumed to mean an absolute advantage compared with other countries.

So yeah, remember to put the idea of "comparative advantage" in your couterfactual pipe and smoke on that for a bit. Regardless of how "undeveloped" you may view the BRICs and their putatative inability "to acquire technology and IP" on their own, mercantilism is whack.

As the smart guy wrote "The wealth of any nation is its ability to harness ITS intellectual capital for the benefit of ITS citizens," and that first and foremost requires, as Adam Smith first postulate and David Ricardo developed, an understanding of how you get wealthy. Here's a hint, you don't go it alone.

Michael dV said...

rather than just drop a suggested read into our laps please explain it's relevance.
You gave us a link to a lengthy article about the brain. I assume this is of interest to you. In what way might it be of interest to a group interested in the evolving monetary system?

Motley Fool said...

Michael dv

Fwiw, I read it. It's slightly interesting, and wholly irrelevant to the topic at hand.

Dante_Eu said...

Here's an interesting article from ZH:

May 5, 2013:
Guest Post: A Short History Of Currency Swaps (And Why Asset Confiscation Is Inevitable)

It talks about pre 1922 Gold standard (free movement of gold), pre and after WWII Gold Standards, flow imbalances (i.e. savings, trade), gold *the ultimate reserve*, 1922 International Monetary Conference in Geneva (not Genoa?), JR (the real one ;-)) etc.

It's too complicated for my liking but maybe some of FOFOA:ns find it interesting.

PS He even mention one of my favorite expressions: ex nihilo. :-)

Unknown said...

Man, I can't understand this guy either. He seems to wander, and the charts are unfamiliar and non-intuitively formatted for me, so no help there.
I think I'm missing the point as to how a failure of the FED dollar swap facility inevitably leads to confiscation.
There are a few jewels here and there, which give rise to some anticipatory conclusion, but I cannot see it ever being reached.
True the FED does act as a creditor to the ECB if dollar settlement demand outstrips current means, but more to the point is impending failure of demand vs. failure of the facility.
The Euro plays into this scenario as the FED swaps/prints to infinity only to see these dollars come rushing home in a "use collapse" scenario as being promulgated by the East with it's replacement systems of exchange, arbitrage, reserve allocation and collateral quality.
In the end it seems to be a more complex way of pointing out what A/FOA/FOFOA have said very simply: dollars cannot remain an indefinate proxy for gold.

We here know all the worthwhile reason why, whereas this treatise tends to focus on one complex symptom of all that.

But as I say, there are a few select jewels within, including the 1922 reference to central bank's intentions to “… centralise and coordinate the demand for gold, and so avoid those wide fluctuations in the purchasing power of gold which might otherwise result from the simultaneous and competitive efforts of a number of countries to secure metallic reserves…”
My God, Greenspan apparently had some serious like minded predecessors did he not??

Victory said...

Hi Woland,

That's a really interesting quote by FOA that I've never read before, thank you.

"The intent of "large paper long positions" (me: oil statesholding future delivery contracts) was to create FUTURE LEVERAGE against "dollar gold price".

What does this mean to you?


These positions will not be "physically covered' in any great way as this will never be needed. The final conclusion of this action will lock the Euro into a gold price, always moving less
high than (the) dollar. The world gold swap market will complete the rest (LBMA volume)! In time, the favor of oil settled in Euros will force the unwinding of dollar/gold, (dollars used to buy gold in open market) Gold will be
purchased, delivering metal for Euros to settle old lease contracts."

Can you break this down, I'm not sure I follow?



enough said...

Sunday, May 05, 2013

The Daily Bell is pleased to present this exclusive interview with Antal Fekete:

byiamBYoung said...

So, a slight aside for a moment. I know how I am envisioning the transition: with trepidation.

I am fearing for the health of the company I work for. I wonder if the ripple effect of economic disruption is going to cause some of us to lose jobs...a certainty, by my guess.

I understand that there are a few amongst us who are already shielded from this fear because their life events have resulted in an amount of insulation from the disruption. (I mean no disrespect, nor do I mean to disparage their disposition. We all play the hand we are dealt, and we all would accept a fortuitous hand.)

My question is to the members of the audience who depend upon their vocations to pay their way in life.

Do you expect to have your job post transition? What are you doing to ensure your viability post transition?

Worth pondering? I can't help but think so.



My question to the group

Unknown said...

Brother Young,
Having had that same concern, I prepared for, and inevitably "helped along" that transition 2 years ago (from a company whose leadership could not cope with the deleveraging economy) to flying solo.

And believe me, flying solo in a deleveraging economy is turbulent ... but I have no one to blame for failure beyond myself.

And I'm still standing.

I think what you are expressing is a recognition of the true state of the U.S. economy. So many layers of commerce depend upon the US functioning as a MEGA CONSUMER nation, and that is rapidly reversing.

We no longer have the means to consume. When Freegold transitions us, the shock will finally will us to PRODUCE again. Until then, we will slog about with Bernanke printing up the old reality until it pops.

So I think these years PRE Freegold as we get closer to it, are (and have been) the worst. And the longer it takes for Freegold to occur, the worse it will get, as Freegold is the only cure for our particular U.S. of A-ness.

There will be MUCH wealth in the East, ready and eager to buy FINE Americam made products, and they will be CHEAP, and the EAST will become the new consumer economy. And Giants will make much profit skimming the desires of these new Eastern shrimp who dream to be giants, as we Western shrimp once did.

Just imagine, India, Russia and China developing their own Jersey Shores mentality as we return to the solid foundation we lost when WE sat for so long on a mountain of gold. The irony is staggering.

Those are my thoughts ... embrace the inevitable, as what does not cause you to perish does make you stronger.

In Gold We Trust !


BYoung, that is something I have thought about. I am sure we all have.

I work as an analyst right now for a big bank, so I am sure the turmoil that will come through HI will take my job with it. My wife is a nurse, so she should have a better chance at staying employed than I during the transition. I am hoping the transition is quick, so we can move to buying rental properties(I am expecting to buy at pennies on the dollar) and undervalued stocks(stocks like MLPs) with some of the new found wealth. Then I would be content living a simple lifestyle on that passive income. Moving back home(Panhandle of FL). Maybe become a missionary.

One Bad Adder said...

enough: - The good Professor is nothing if not tenacious ...and I think he gets it ...almost.
His "effect" is spot on, his "cause" OTOH...well, that remains to be seen.
Real Bills seem like a good idea post-debacle though and I feel his "neo-Gold-Standard" is generally dismissed all-to-readily as simply a "Forward-to-the-Past" reincarnation ...which IMHO it isn't.

Mike said...

i noticed VTC shared this link on his Twitter account

pay close attention to this interview. Sound familiar?

JR said...

Hi Wil,

Just imagine, India, Russia and China developing their own Jersey Shores

So you're saying you've never been to Russia?

Just kidding, but in my experience Russians already love bad flashy fashion, fake opulence and bad taste. Who do you think loves Dubai - its not the Brits!

Edwardo said...

Fekete has lost the plot completely. The idea that global commerce is going to devolve into barter town as the result of the actions of the central bank is silly at best and fear mongering lunacy at worst. Equally, the errant notion that silver and gold can or should act as MOE and SOV simultaneously seems to be one that is near and dear to his heart. However, as I parse his statement on the matter, it appears that even as he briskly strides right up to the idea he somehow manages to avoid shaking its hand. I wonder why? Some folks are marginalized by the status quo and others just do it to themselves.

Tommy2Tone said...

"Just kidding, but in my experience Russians already love bad flashy fashion, fake opulence and bad taste."


Unknown said...

Hah, JR and jojo you got me there.

Flore said...

The Dukes are at Sinclair his site

Edwardo said...

Not that this would suffice to make up for his massive conceptual limitations, but it would make a nice start if JS could at least master some basic writing and editing skills.

These presentations sum up where we are, why gold was bombed, why technical analysis is in gold a major waste of time and the direction we are without any doubt going.

And then there's this gem:

Free Gold is an interesting school of thought with which I agree on the emancipation of gold from paper gold as natural development and its implication, but not the entire thesis which runs in various directions in application of their basic and correct thesis.

Dear Jim,

Save for a few select and spectacular data points, you've offered no evidence that you actually understand freegold. Please take that observation as a hint.

Motley Fool said...

They say there is no such thing as bad publicity....I have always had an issue with the abstract concept of 'they'. What they hell do they know, and why should I care unless 'they' can show it to be true. :P

MatrixSentry said...

Jim Sinclair's latest references the Dukes of Wetton. It is the last video link. His initial post had a bad link for the video and I sent him an email. He corrected it immediately.

I think Jim really likes the Freegold thesis. However, he cannot reconcile the Freegold view of mining equities as well as the ascendancy of the Euro. I believe this is what he means when he says "Free Gold is an interesting school of thought with which I agree on the emancipation of gold from paper gold as natural development and its implication, but not the entire thesis which runs in various directions in application of their basic and correct thesis."

Also, I recognize an important step that Jim has taken, because I took it myself:

"These presentations sum up where we are, why gold was bombed, why technical analysis is in gold a major waste of time and the direction we are without any doubt going."

He has been the consummate technician for all the years I have followed him. Now he acknowledges that it is a waste of time. Bravo Jim! This is an important realization and represents an important marker on the trail. It marked the point when I became a believer and when I focused on developing the deepest understanding of Freegold that is possible. Hopefully Jim will focus as well.

Freegoldtube said...

Thanks to RJP for his excellent excellent vocal renderings, and to FOFOA for continuing to do what he does (going on 5 years).

Those interested in being immortalized in an FOFOA blogpost video, feel free to contact me directly.



MatrixSentry said...


Understanding Freegold is a process that takes time. Not so long ago I was confident enough in my understanding of Freegold to teach it. It is clear to me that my understanding was superficial as compared to today. Yet, the ones I taught have benefited greatly from the rudimentary and ultimately flawed introduction of Freegold that I was able to articulate.

Jim Sinclair has come a long way. I think we should encourage him and be patient. Considering his age and his position as an "elder" in the gold community, I think it is quite remarkable that he has embraced us to the degree he has.

He passed on an important piece of wisdom to his CIGAs today and it will serve them well even if they do not fully understand Freegold:

"These presentations sum up where we are, why gold was bombed, why technical analysis is in gold a major waste of time and the direction we are without any doubt going."

Motley Fool said...


I'm sorry. I know I should not be engaging Art. When you delete his posts, would you be so kind as to delete mine too, so I don't look a complete fool. :P

Thanks in advance. :)

Roacheforque said...

Ahhh semantics. We can argue endlessly about what we call something, when in fact we agree upon its topical and functional meaning.

I also caught Sinclair's latest iteration (of the abbreviated version):

"These presentations sum up where we are, why gold was bombed, why technical analysis is, in gold, a major waste of time, and the direction (in which) we are without any doubt going."

It does sound a bit like:
"Everyone knows where we have been. Let's see where we are going!"

But I took the liberty of correcting punctuation and awkwardness.

They say imitation is the sincerest form of flattery.

But thinking back to "what has changed" I must say that more and more "goldbugs" are beginning to "cite landmarks from the trail".

They may not quite see the final destination (do any of us truly??) but they do see the path leading to it, and it is quite a different journey than what we have been reading from similar sources between 2008 and 2012.

2013 is truly the year that A, FOA, FOFOA and FREEGOLD have been given the serious respect deserved, whereas in the prior 5 we have been labeled "evil gold hoarders, jerks, etc..."

That does tell me that the sources I have followed, mostly US, though definately not "mainstream" are coming around. And I even see glimmers of a "pre-freegold awakening" within the more mainstream outlets.

It may be my own bias, but the main stream seems to be in that state of questioning those "givens" that I did just before seeking out and finally discovering FREEGOLD.

These are positive signs indeed.

"The cloud father smiles in peaceful slumber as the shining golden sun makes bright a new day."

We sow seeds for the later harvest, then rest and wait ....

Motley Fool said...


I will leave you with a quote. Something to think on.

"In working on this project, I was personally shocked when I discovered that we absolutely NEEDED paper currency in order to set Gold free. In the perfect world you lapse into in your comments, everything you say is well and good. We don't live in that world, however. My biggest challenge in piecing together my proffered solution was to accept what this real world had to offer and avoid foisting my own preferences onto the world like a square peg in a round hole."

From here :



Nickelsaver said...


No use arguing with and idoit that thinks that ppl are going to be walking around with gold and silver in the pocket in order to buy their groceries, pay their morgages, gas and electric bills, buy a new car, or take the family to the movies.

LOL. Most ppl dont even walk around with greenbacks/basemoney anymore, or even write checks. They just pull out the debit/credit/EBT card or log onto their bank account to pay bills.

What aa idiot!

Nickelsaver said...


Motley Fool said...


Yeah, probably....but a few years ago I would have argued the exact same as money ftw. :P


Motley Fool said...


I guess I have a little more sympathy for the position, as I was there myself.

It is hard of me to think too badly of goldbugs...their intentions are pure, even if they are prescribing the wrong medicine due to ignorance.


Anonymous said...

Pretty much corroborates Jim Willie's assertions.

One Bad Adder said...

FYI: - Todays 3 mth T-Bill Auction ...grinding ever-lower @ 4.96 Bid-to-cover.

We watch - intently.

Anonymous said...

From Jim Sinclair: "It is the heart of the emancipation of gold from paper gold which releases physical gold and those entities with physical gold easily available to naturally rise in to prices we dare not even consider. It is the freeing of gold which is Free Gold."

burningfiat said...


Found this in your link:
- 5% of the amount of accepted competitive tenders was tendered at or below that rate (0.010%).

Hmmm... Someone seems more and more desperate to get into that short term secure parking space for their money...

We watch, yes! Here:

Reality Show said...

Fofoa, Sinclair is promoting the video of The Dukes of Wetton.

Knotty Pine said...

Art said
"My wealth WILL be stolen under Freegold because Freegold empowers bankers to print money and induce inflation. Just like today."


One Bad Adder said...

Burning: - based on the BtC, the short end is about to get VERY crowded IMHO ...which may see the DX:$IRX divergence I'd been expecting actually materialise.
So far the relationship has been pretty close showing DX lagging $IRX by 6 odd weeks and it'll be a sign of uber-stress if it goes that way.

Getting warm in the Kitchen mate.

Tony said...

@ byiam, Will

I've had the same itch to break away and have been thinking of ways to become a shrimp producer. So many ideas are dependent on the longevity of supply houses and I'm inclined to think that my best bet is to foresake my marketing/project managment background for the likes of a blue collar skill or open a pawn shop!

Edwardo said...


I hope to be proven wrong, but I think you and I may be destined to disagree on the usefulness and efficacy of Jim Sinclair's "interface" with the Freegold thesis. I'm put in mind of Alexander Pope's poetic observation that "A little knowledge is a dangerous thing." I believe that, presently, Jim Sinclair's understanding of freegold captures the spirit of Mr. Pope's insight. To wit, were the moment of truth to arrive tomorrow would his followers be properly armed with the necessary information to allow them to act in their own best interests? I say this is doubtful, especially given that he has not adequately covered (if he's covered it at all) the crucial "gold collapses to the floor before a revaluation" part of the narrative. The condition of inadequate thesis transmission may change going forward as the result of prospective efforts by JS to better understand freegold (and transmit a putatively improved understanding to his followers), but, as things stand now, unless his loyal listeners have taken it upon themselves to self educate, (and as we know this kind of education doesn't, at least for must of us, admit to a successful crash course absorption of the material) I see at least as many potential pitfalls to his efforts to transmit the freegold thesis as I do potential benefits.

One Bad Adder said...

@ Burning: - ...and THIS might be where the other 3.96 who lucked-out @ the Auction might seek short-term sanctuary.

KindofBlue said...

Reality Show

Also of importance is the video Jim links of the presentation by Jeffrey Sachs. That is a Taibbi scale rant on the systemic and rampant corruption in our political and financial life by a thoroughly main stream economist.

I think Jim is a bit taken aback by how large and blatantly arrogant the hypocrisy and corruption is -- I know I am. And it extends to US geopolitics, if one bothers to really look.

MatrixSentry said...

So there we go, MF seems to be conversing with thin air.

The Troll's posts deleted, just as FOFOA said they would be. Do we really have to endure this time and time again?

Thank you FOFOA.

Anonymous said...

Motley Fool,
I missed ART's comments, so have no opinion on their content, but I want to tell you broadly that I appreciate you interacting with people further back on the trail. As Another indicated in many ways the path is circular and we will pass the same points again, but with more understanding, and at least I find teaching someone else often leads to better understanding for myself as a reward (broadly, not FG specific). I appreciate your taking the time to interact with people, including me as well as others. Thank you.

Daedalus Mugged

MatrixSentry said...


You are mistaken if you think the Troll is further back on the trail. He is not on the trail whatsoever, nor does he intend to be. He has been banned from this site and all of his posts will be deleted on sight by FOFOA.

It is a waste of time to respond to this Troll because his words will disappear when FOFOA hits the delete button. Your appreciation for interaction with him will not change that fact.

It takes quite an effort to be banned from this blog. It does not happen by accident or because FOFOA dislikes arguments that do not support the Freegold thesis. It happens because the individual fails to observe a basic level of decorum where all posters are offered a minimum level of respect.

Anonymous said...

The thing with ART is that he never really brings anything new to the table. What he does bring, it reeks of disrespect and crazy. There is no reasoning with such a creature, and therefore no benefit in engaging him. If he was capable of bringing something other than crazy, semi-retarded, repetitive rambling... then maybe we could all learn something from the exchange. As it stands, he's way too disruptive and useless to be of any value... and so he and those of his kind will be removed like they should be.

I did like MatrixSentry's suggestion of removing the crazy-talk and all of the posts responding to him. Bring something real or fuck off.

Review your Choices

Roacheforque said...

The last time I looked at TRUE unemployment figures for the U.S. it was only 22%, so it is slowly increasing as expected.

As I am not counted, I am not sure as to whether I "have a job" or not.

I think what we will find going forward, at least until FG breaks FREE is that the definition of "a job" will continue to change.

If by "a job" we mean the traditional job with benefits like health care insurance, vacations, sick pay, etc... I would ask, how many real estate agents have that? How many of us new "independent contractors" coming from massive layoffs have that?

Of course, there is a much rosier picture over here and over there, but what can you believe in, hope and change?

Anonymous said...

MS, my post was appreciation for Motley Fool and his contribution to interaction in comments; I already said I didn't even read what was posted before it was deleted.


JR said...

So no luck for FC Basel as they got smoked in London in the second leg of their Europa league semifinal in a 3-1 defeat that was capped off by David Luiz (again) with a stunning curler. Chelsea is now on to play Benfica in the final, who was behind on away goals in their second leg against Fenerbache until Gokhan Gonul got kicked in the face and left motionless for several minutes on the pitch with blood oozing from his mouth before being carried off on a stretcher. Crazy images there!!

They say causation is not correlation but Oscar Cardoza scored just 5 minutes after play resumed and the Turkish side Fenerbache could not recover. The Portugese side Benfica is through to meet Chelsea on May 15 in Amsterdam in the final.

But before that, Chelase have a HUGE London derby in the midweek with Tottenham. With three games to play for Tottenham and Chelsea and both clubs locked in a tight race for the last two EPL Champions League spots with Arsenal, tomorrow's match should be a real cracker. Spurs manager Andre Villas-Boas' return to the home grounds of the club he was sacked from just 14 months ago will only deepen the intrigue.

So yeah, lotsa eyes will be on London tomorrow for the huge midweek kickoff. The notion of eyes on London reminds me of the theme of "Euro Conversion" focusing on London, specifcally the notion of a "euro conversion" of the LBMA paper gold market's converting dollar gold liabilities/credits into Euro gold liabilities/credits!


JR said...


And Daedalus Mugged's comments about returning to an old place along the trial, but you having further progressed since the last time you were there, also seems fitting at the moment. I too appluad MF's efforts to educate others, and the implicit recognition that its not only the student who benefits from the re-told lessons.

So think of London tomorrow, even if you aren't tuned into the footy, and the possibility that:

The moment the paper market stops trading, physical gold is now $55,000 and you have 220 "ounces" in your BB trading account. Each of those "ounces" is only worth $250 now. If you could get that cash fast enough, you could buy one single ounce on the new physical market. But it takes time for them to cash everyone out and for everyone to go buy that physical. And during that time, the dollar is collapsing. So your physical gold-denominated purchasing power is going to decline rapidly from a single ounce, to 3/4 of an ounce, to half an ounce and so on.

If, on the other hand, the BIS/ECB and the BBs agreed to do the euro conversion, there would be no rush. You (as a BB customer) would still only get a single ounce of physical for your 220 "ounces" of BB credits, but at least you would now be locked into that full ounce and the BBs could cash everyone out at a more leisurely pace since I'm sure there will be plenty more pressing concerns at that moment.

How could this conversion be facilitated by the ECB? Easy! Print the new euro for the banks in exchange for their derivative "assets" which are mostly dollar-denominated. The next step, I guess, would be to unwind and liquidate the derivatives. The banks are getting a great deal here, so the ECB could easily instruct them to liquidate them on behalf of the ECB and return the proceeds in EUR. This would put further downward pressure on the dollar and upward pressure on the euro.

Of course there would be some loss and the result would be a net-increase in euro base money. But the ECB could easily mop that up with a small sale of Eurosystem gold. Like I said, I have no idea what the actual stock of these BB ounce-denominated credits is, but let's say it's 10,000 "tonnes". Divide that by 220 and you get 45 tonnes, and let's say the derivative loss is 50% from the time of the euro conversion until liquidation. Divide 45 tonnes by 2 and the Eurosystem would have to sell about 23 tonnes to mop up the extra euro that were created by the conversion.

Today the Eurosystem has about 10,800 tonnes, so the cost of the conversion would be about 0.2% of its gold, wholly absorbed in real terms by the revaluation.

And remember, its not only the student who beenfits for the re-telling of prior lessons learned. Even if its a lesson you feel like you just learned, or perhaps you feel everyone else should know too!

ampmfix said...

Yes, recapping is needed with difficult concepts (learning is mostly done by repetition)

Michael dV said...

unemployment gets a lot of clever statistical treatment. ZH yesterday pointed out that while the BIG NUMBER was OK at 165,000 there was a small problem: the hours worked was down .2%. If one extrapolates and converts to equivalent full time jobs represented by those fewer hours worked one could state that about 600,000 jobs were lost! (The actual number they found was even higher. I am underestimating because the results are so staggering.)
So...pick what you want to believe...I believe that things still suck in the labor market and will continue to be bad until some really, really fundamental issues are resolved.

M said...

Just some thoughts..

In 80's , couldn't Paul Volker have done the same thing Bernanke is doing now ? Provided that he started buying before the bond bear market started.

We would probably be seeing real price inflation in the US and a bond bear market if the Fed wasn't buying.

JR said...

Yes ampmfix,

It requires years and years of practice to be world class at anything—acting, music, sports, medicine, and yes, public speaking. Great presentations are not planned and designed overnight and great speakers are not made overnight.

10,000 hours to mastery. The 10,000 rule is a guideline based on a study by Dr. K. Anders Ericsson and popularized by author Malcolm Gladwell. In a study published in the Harvard Business Review in 2007, Ericsson said excellence is not just based on practice, but deliberative practice: “Improving the skills you already have and extending the reach and range of those skills.” That’s why mastery requires practice, observation, refinement, and more practice.

One Bad Adder said...

M: - The Fed (and those Sovereigns complicit with the "program") are buying "Bonds" to maintain a semblance of "normalcy" in the curve.
The "real" issue is that the Market is hell-bent on retreating to the Here-n-Now ie: abandoning the long-dates in preference to the shorter maturities.
Without this buying, the curve would currently be approaching verticality.
...and still eventually may IMHO.

ein anderer said...

Regarding Jim Sinclair:

What do we think – how much time he needs for reading until he has grasped the whole story? At least English is his mother tongue, so he would have not so many problems like others …

And yet it's quite a task. The core arguments are so scattered, in this huge amount of five years writing and five years often "high end" comments!

• If I would be an English man and
• if I would have read and understood the whole story quite well already just from the beginning and
• if I would be a man of some wealth who has learned by FOFOA how to protect it –

I would certainly take my next holiday for writing a landscape kind of piece in as simple and clear and down to earth words as possible. And every sentence or paragraph would be footnoted to the most important posts backing up this sentence.
I would include a lot of professional drawings and graphs.
»Freegold for the rest of us.«
Published via amazon (print / Kindle) and iTunes as well.
And I am sure:
This would help a lot of people to grasp the whole thing more easily.
This would evangelize the story just as it deserves it.

Only one humble example:
Journalists! We fail if we think that some "RTFB" would ever be working things out for them.

So from my opinion: We are in an urgent need of a slim, easy to grasp, road capable, comprehensive layout of the Freegold thesis, backed up with the few most important and best point by point arguments.
The whole thing should take less then 100 pages.
Something of a volume like Time for Outrage of good old Stephàne Hessel.
An appendix for deepening the understanding would be another story. This could be online only.

Isn’t it that the main points are said long ago? Now we are watching only and trying to interpret things in the light of FG. But the FG dome is standing neat and clean.

If I would be an English man …

M said...


"The Fed (and those Sovereigns complicit with the "program") are buying "Bonds" to maintain a semblance of "normalcy" in the curve."

The Euro is in place now. There is no reason for these sovereigns to continue to throw good money after bad.

Dante_Eu said...

Just a tip for newbies reading this.

If you are going through FOFOA's material then be sure to read the comments also. In many cases I learned more from comments (JR, Blondie, Costata, Motley Fool and many more) than FOFOA's original posts. Comments also help when rereading the blog.

And yes, thank god for Internet! :-)

MatrixSentry said...

Another 4.5 tonnes are gone from the GLD inventory.

That is 144,675 Gold Eagles.

362 LGD bars.

Since the peak on Dec 10, 2012, GLD has lost 295 tonnes of gold.

That is 9,502,254 Gold Eagles.

23,755 LGD bars or 295 pallets.

The last time GLD had this amount of gold was March 13, 2009. Gold traded at $928 per ounce.

Unknown said...

Though it was probably not meant literally, will it indeed be the case that, "The moment the paper market stops trading, physical gold is now $55,000"?.

I think that could be a very long and protracted moment if Europe's trading partners cannot get rid of Bernanke's liquidity-swap copter-drop as fast as they can acquire physical with it.

With those flows in check no one will gun the dollar fire sale. Perhaps the actual flow of dollars back to US shores is a more telling sign than shrinking physical.

Or perhaps we should be waiting for a sudden parabolic increase in the premium on physical bought with dollars, on not one, but seemingly all of the new Eastern physical gold exchanges.

Now THAT could raise some eyebrows over there in Basel. But no one wants to cry wolf, because everyone benefits from a gentle, gradual unwind of the dollar, not a sudden collapse.

Here's another thought about a stale topic, but maybe a new wrinkle, Germany's repatriation.

Much has been speculated upon about it, but has anyone thought that if the BIS wanted Germany to have it's gold tomorrow, it would have its gold tomorrow?

Ah, the things we do not know, and yet which open doors to even deeper possibilities.

I do not know what the Fed and Treasury have agreed upon behind closed doors, nor do I even know if it matters.

Such is the sophistry of the flower of understanding. In our world of rampant disinformation, "the fallacious" could just be the truth.

byiamBYoung said...

I think it's time for an office pool:

At what point does the jog on GLD turn into a full run, ending with GLD having to faceplant and start cashing clients out instead of delivering physical at redemption?

999 tonnes? 950? 750?

I'm going to go with 885 tonnes as the point where the redemptions spike alarmingly.


Roacheforque said...

But brother Young, what will GLD be trading at when 885 T is breached?



Sam said...

MATRIX. What do you make of the GLD drain?

Thom Ketring said...

Brother Wil,


OT, but imagine, for a moment, the contorted church lady look on my wife's face when the gold she didn't want for us to buy in the first place goes sub-$1000.00 :o

Hoo-boy. The transition to freegold will take place with me sleeping on the couch, I bet!

Edgar said...


"The moment the paper market stops trading, physical gold is now $55,000 and you have 220 ounces in your BB trading account. Each of those ounces is only worth $250 now."

No they are not worth $250.
If you own 220 ounces you own 220 ounces, unless you are so stupid as to have 220 'electronic ounces'.

JR said...

HI Wil,

"Though it was probably not meant literally, will it indeed be the case that, "The moment the paper market stops trading, physical gold is now $55,000"?.

I think that could be a very long and protracted moment if Europe's trading partners cannot get rid of Bernanke's liquidity-swap copter-drop as fast as they can acquire physical with it."

Th euro zone already has a lot of gold, right?

And "worth $55,000" and "generally known to be worth $55,000" are all not the same, yes? We can make the case gold is now, before the transition, worth $55,000 or some other huge number, even though it is not "generally known to be worth $55,000 or some other huge number."

If gold is valued by the number of claims against, that value exists today even if not "known widely":

5/3/98 Friend of ANOTHER

Merrill Lynch, et al, don't grasp the gold valuations by the BIS. Gold is valued by the number of outstanding claims against it. Kind of like a house for sale with ten bidders. Each bidder thinks the house is in the bag because they have a valid bid ticket. Each one thinks he can have the house at any time, even though nine others want it too, because all I have to do is bid a little higher and take it! Insane, but that's what is going on! Somehow, the BIS and the major private gold holders know the total claims, as does Another. The Euro group is going to force those claims into real bids instead of just claims!


An idea:

Here's the scenario: Imagine that we have another financial market collapse like September, 2008, only this time the price of gold keeps falling even as there is no physical to be found. The market collapse leads to an emergency print-fest by the USG in an attempt to "stimulate" or shock the economy and markets back to life. Trading is stopped to interrupt the free fall atmosphere. "Gold's" free fall is stopped at $500 per ounce and over the next few weeks, anyone holding a claim that was previously exchangeable for physical gold is cash settled in the spirit of fairness. At the next quarter-end MTM party we find out that the Eurosystem has marked its gold reserves at the equivalent of $55K per ounce in constant dollars. We also find out that this price (in real terms) was derived by averaging actual trades mediated by the BIS and ECB during the blackout after the paper markets crashed.

So we have a sudden step up in the (real) price of physical gold from $500 to $55,000 dollars. It is basically an "overnight" revaluation, even though it wasn't literally overnight, because $500 was the only known price in the interim. Any trades of physical gold that happened during the interim ("gold in hiding" period) happened locally and did not affect the price of gold because it was technically frozen at $500.

I'm happy to conclude that this news (the new MTM price) will be a shock to almost everybody, especially to those who missed out on the revaluation, and that their initial reaction to the shock will certainly not be to rush out and buy tiny gold bars at $55K per ounce. That particular change in demand will take some time to manifest in any scenario I can imagine. So I think it is really more a question of supply as to whether this new price range can stick in the immediate aftermath.

The price was known among those in the know whose trades were intermediated by the BIS and ECB, until that price became "generally known."

We also find out that this price (in real terms) was derived by averaging actual trades mediated by the BIS and ECB during the blackout after the paper markets crashed.

So we have a sudden step up in the (real) price of physical gold from $500 to $55,000 dollars. It is basically an "overnight" revaluation, even though it wasn't literally overnight, because $500 was the only known price in the interim.

JR said...

Hi dieuwer ,

Good instincts! Indeed, they are paper ounces as you seem to suspect. The whole hypothetical is rather insightful, I must say. It sounds like maybe you haven't seen it. It is from FOFOA's post "Euro Conversion"

Take a peek and let us know what you think, okay?

Knotty Pine said...


Thank you for the stats. Your efforts are greatly appreciated.

MatrixSentry said...


Well, in the spirit of this blog I can say that I simply observe. The facts speak for themselves. For some reason the Authorized Participants have found it to be either beneficial or necessary to remove gold from the SPDR Gold Trust. The gold entered the Trust via these same APs.

I have learned quite a bit about gold, markets, and money in general over the last 5 years. I can say that much of what I now know I wouldn't have been able to envision back then. With that said, I cannot envision a situation where APs have found a better way to generate a yield on the bullion. So I will have to go with the idea that they simply need the gold back because their customers are redeeming gold, or that they fear for the return of that gold for some reason and would rather give up whatever profit the bullion generates in order to guarantee possession.

The latter would seem to suggest that there are more claims for the gold (baskets) then the actual bullion itself. I think this is possible I suppose, but unlikely. I also tend to believe that the bullion itself didn't move very far, if any at all, when it left the APs and went to GLD. So this "get a hold on the gold" meme is how an ant like me would act and probably doesn't apply that much to pallets of LGD bars and APs.

I completely discard that idea that the APs are locked into action, either to supply or remove bullion, in order to ensure correlation between the price of GLD and the price of gold.

I think it comes down to either there is a better use for the bullion or it is going back to where it came from. Either way, the gold is needed somewhere else and it speaks for demand for physical instead of demand for GLD shares.

A trend is definitely in place. Most trends give way to reversals and follow a cycle. However, some trends remain intact until completion. Linear trends that end are associated with death or discontinuity. Life is a good example, so is bankruptcy and liquidation of company and its equity shares. As they say, the trend is the trend until it isn't. Right now the trend says GLD is going to be toast within a year from now at the latest. GLD started with 8 tonnes of gold, but I think it is unlikely the world will sit by and watch a fund, that once held 1353 tonnes of gold, dwindle back to 8 tonnes without concluding something is very wrong with the paper gold market. This conclusion will motivate the market to act and will cause a very rapid, if not instantaneous redemption of whatever bullion remains in GLD. So I think the trend is saying that we are looking at weeks, perhaps months, but almost certainly less than year.

The trend could reverse and give way to another trend where gold either remains in the fund or flows into it. Strange shit has happened before. We made it out of 2008-2009 when I thought the shit show was over for good. I won't discount that for one second. So I guess I will have to be content watching it unfold. I will also be content with saying I haven't a clue when GLD will give up all of her gold. I only know that she will give up her gold.

The coat check thesis works for me. It explains what I am seeing. I guess I am content with that as well. It took quite a bit of credibility to pry the dollars from my brokerage account. It is going to take a lot of credibility to pry the gold loose from my death grip. There is a lot of credibility in this blog and it was 5 years in the making. It is why I always ask people to RTFB and then RRTFB.

Edwardo said...

From another site.

Why does Sinclair have 2 posts saying TA in gold is a waste of time followed by a post from a "CIGA" with his TA on gold?


michael3c2000 said...

Ein Anderer
There are at least two good Freegold summations.
First, FOFOA deftly bypasses all the contrivances of financial presumption with freegold defined financial terms, "foundations":

Here is another from an anonymous brother; there must be others...

michael3c2000 said...
No confusion says Confucious.
"Do not be desirous of having things done quickly. Do not look at small advantages. Desire to have things done quickly prevents their being done thoroughly. Looking at small advantages prevents great affairs from being accomplished." No Chinese currency competition would mean the peg, Yuan (Renminbi) to the Dollar (Federal Reserve IOU), were inviolate and sacrosanct- I'd better be careful I don't cross the line into hate speech- nothing to see here, move along. Not investment advice. For entertainment purposes only. And Bitcoins for giggles...

michael3c2000 said...

There was a land called headache.
Only overloaded boats could float on it's lake.
Until gold men came along,
And the brightest families in throng,
Exposing the beast and it's headfake.
GATA has this May 6 Financial Times Bitcoin article that inspired my whimsical limerick. Because as things get more surreal, the direction of official effluent gets more swirreal.

michael3c2000 said...


"U.S. regulators eye Bitcoin supervision
Submitted by cpowell on Tue, 2013-05-07 01:27. Section: Daily Dispatches

By Tracy Alloway, Gregory Meyer, and Stephen Foley
Financial Times, London
Monday, May 6, 2013

Senior officials at a top US financial regulator are discussing whether Bitcoin, the controversial cyber-currency, might fall under their regulatory remit.

Bitcoin "is for sure something we need to explore," Bart Chilton, one of the five commissioners at the Commodity Futures Trading Commission (CFTC), told the Financial Times. A person familiar with the CFTC's thinking said that the regulator is "seriously" examining the issue.

Said Mr Chilton: "It's not monopoly money we're talking about here -- real people can have real risk in these instruments, and we need to ensure that we protect markets and consumers, even in what at first blush appear to be 'out there' transactions.""

One Bad Adder said...

M: - they (M'gt) are bidding (buying) the Euro curve as well with the Continental short maturities already marginally underwater.
Discount Currency competition Sire - they're ALL IOU nothings.

michael3c2000: - The Bitcoin phenomenon firstly and foremostly mimics our current fiat-based digital currencies sans the soon-to-be- redundant folding stuff however, it's trump-card IMHO is its well-defined "float" .
BitCoin also highlights / exposes a grass-roots desire to conduct affairs anonomously and cost-effectively.
The cyber-FreeCurrency is so far removed from the currency Status-quo as to guarantee attempts at regulation / control.
We can only wish Bart / CFTC - good luck with that!

tintin said...

Gold flow:

Net imports from HK in 2012 were a record 557 tonnes (114t in Dec alone)

Then this year:

Jan - 40 tonnes (from memory)
Feb - 97 tonnes
March - 223 tonnes

I wonder what April figure will be.

One Bad Adder said...

Curiously, what the BTC phenomenon MAY do is prove to be the driver necessitating a return to a global Currency regime with Gold an intrinsic component thereof, a-la FreeGold...

...and thereby neutering BTC as a viable alternative to raw-Fiat.

Personally I don't mind if FG is CB OR Market-driven.

ein anderer said...


thx a lot.

Both sources are valuable. Yet they are missing what is necessary for those who would step into the theme quickly:

(1) Point of Departure: Short description of those facts of $IMFS (see Glocary) which gave rise to the Euro.
(2) Set of problem(s)/dilemma(s) which the $IMFS was facing from that time on.
(3) Set of theoretical dilemma exits.
(4) Probabilities: Why the FG exit is most probable.
(5) Set of 2-3 most probable scenarios how the FG transition would run.
(6) Set of 2-3 most probable situations how the IFS(FG) (international financial system after Freegold transition) would look like.
And last but not least:
(7) Conclusions: How to react to these outlooks and probabilities (privat, comunity, state, nation, federation).

The main principle of this sutra like collection of statements should be:
No long arguments. Only statements with short hints to arguments. Arguments backed by URL-footnotes linked to the most relevant posts of ANOTHER, FOA and FOFOA.

What do we get by this?
We get a compact map, a shape, a silhoute of the main FG body.
The wheelwork as it looks from distance.
Footnotes would guide to the details and in depth.

Take an academic thesis. There you have an introduction, the body of facts and arguments and a conclusion.
If you want so I am dreaming of a piece which is introduction, main headers of the body and conclusion.

Every journalist who would have to describe FG in a comprehensive way would have to write something like this. So why not do this job by ourselves first? This would define the staff gauge (Germans: "Messlatte") for every other publication.

Like I said: If I would be an Englishman I would write it by myself.

ein anderer said...

… and if I could be convinced having understood FG completely I would like to write this piece at least in German. But unfortunately there are still a lot of blank areas in my FG knowledge …

One Bad Adder said...

It's a funny old world isn't it?

Almost to-a-man, the recent $PoG price drop ...and its nascent "recovery" has been reported as the "cause" and "effect" of an upsurge in Physical off-take ...well, I'd posit the "cause" was an increase in Physical off-take over and above the accepted "normal" in the first place ...and the "effect" was the $PoG price-drop.

...and I'd be expecting more of the same any old day now IMHO.

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

Your recall of relevant FOFOA posts is amazing and your words are wise. I would only say that the "getting" to "all at once" is hampered by the systemic resilience of the dollar-centric status quo.

But of course that has always been the case. Incredible (and resourceful) patience is the true mettle of the TRUE long.

You have pre-empted my very thoughts on the matter. So many see a coordinated "smash down" when in fact, that is a precarious position to fumble.

Too big a crash in too short a time effects the credibility of the staus quo. The collapse of the paper gold market does not need much help from the Oracles of Paper.

It may well be in their best interest to try and reverse course to stabilize. Though the "tell" is obvious to anyone who can visually see the simple truth of all currency being "locked together for value" yet always and forever that "value" is placed in the context of gold.

Trepidatious Indeed for the Oracles! In the end, it was gold from Xerxes that led them to betray their countrymen.

Unknown said...

And here again:

"This is quite out of expectation as all these imports were done before the market slump in April," said Qu Mingyu, a trader at Bank of China, one of the country's three largest bullion banks.

Cause and effect? Reverse them and expectation follows suit.

kobajashi said...

Do you know FOFOA IS IN CONTACT WITH SINCLAIRE thanks to the efforts of flore and belgium (2 Guys from belgium were i also live!)

We have a terrific forum
Its in dutch but if you give it 10000 learning houres, you can all partitipate :-)))

Grtz koba

Jeff said...

RIP structural support 1981-2001

FOA: So, dollar hyper inflation never arrived and gold did not make its run because world CBs bet your productive efforts on supporting the dollar reserve. In the process, the US standard of living was raised tremendously on the backs of most of the world's working poor. But this is not about to last!
Central banks gorged themselves with worthless dollar reserves and prevented a hyperinflation of the dollar in the process. They did this, because they knew that gold had the ability to completely replace any and all loss of dollar reserve value once a new system was in operation.
We are only just now arriving at a time period that will bring about "The Currency Wars". Everything prior to this was only a preparation period to build an alternative currency. The years spent traveling this road were done to prepare the world for an escape medium when the dollar finally began its "price" hyper-inflation stage.

Few investors can "grasp" that in reality, our dollar has already been hyper inflated, but without the higher price effects. Years of deficit spending, over-borrowing, debt expansion have created an illusion that the dollar was immune to price inflation. This illusion is evident in our massive trade deficit as it carries on with no negative effects on dollar exchange rates. Clearly other investors, outside the Central Banks were helping in the dollar support process without knowing they were buying into a dying currency system.

The only thing that kept this process from showing up in the prices of everyday goods was the support other Central Banks showed for our currency through exchange intervention. As I pointed out in my other writings, this support was convoluted at best and done over 15 to 20 years. Still, it's been done with a purpose all this time.

Our recent American economic expansion has, all along, actually been the result of a worldly political "will" that supported dollar use and dollar credit expansion so as to buy time for Another currency block to be formed. Without that international support, this decades-long dollar derivative expansion could not have taken place.
For another currency block to be built, over years, the current world economy had to be kept functioning. To this end the dollar reserve system had to be structurally maintained
The game is to let the US economy suffer from its own bloated expansion by moving slowly away from supporting foreign dollar settlement with CB storage. This is more than enough to end the dollars timeline as we are already stretched to the leverage limit. They know that Greenspan has but one policy to use and that will be super printing. He is doing it now, right on que!
Again; this all works as long as the world "buys into" using our dollars. As I said; an expanding fiat works to grow the economy thru expanding credit buying power because the fed can support the system with credit creation that has no "inflation premium". That lack of premium only exists as long as Americans can exchange free credit for real physical goods. Once this perception changes it's over. Once the world understands that it's not local US goods that stands behind dollar growth, but less expensive foreign goods,,,,,,,,,, the stage is set for our "supporters" to sell to themselves!
The evolution of Political will is now driving the dollar into an end time hyper inflation from where we will not return. That is our call. Bet your wealth on the other theorist's call if you want more of their last 30 years of hard money success.

Edgar said...

About those Chinese gold imports...are we talking book entries here or real truckloads of bullion crossing the border?

Woland said...

Via Marketwatch:

"Gold buying fever continued unabated among the untutored masses
last week." I guess there's a shortage of tutors in the East. We seem
to have a surplus in the West. opportunity??

Dante_Eu said...


"The evolution of Political will is now driving the dollar into an end time hyper inflation from where we will not return. That is our call. Bet your wealth on the other theorist's call if you want more of their last 30 years of hard money success."

I think FOA said that in 2001. Today, we say the same thing with one minor change:

"The evolution of Political will is now driving the dollar into an end time hyper inflation from where we will not return. That is our call. Bet your wealth on the other theorist's call if you want more of their last 42 years of hard money success."

And soon, we may finaly celebrate with a well deserved cold beer. ;-)

KindofBlue said...


FOFOA and Sinclair talking is confirmed? I've been thinking FOFOA's next post would/should be about Sinclair's evolving viewpoint.

ChrisF said...


I distinctly remember Sinclair in approx. 2004/5 at gold $400/500 saying that the gold price would rise to extremely high levels and this time stay there! He must have known about the writings of FOA/A then to make such a radical statement which at the time I had great difficulty understanding.
Since then we have been privileged to be able to read FOFOA here and thus start to comprehend how this is all possible and even probable.
So, I believe Sinclair understands and knows more about this whole subject than many of us think. It may be that he simply can't be bothered to try to explain it all to us sheeple. Thankfully FOFOA has been a major help in this regard.

KindofBlue said...


"So, I believe Sinclair understands and knows more about this whole subject than many of us think."

I've made a similar observation in the past and have wondered about his apparent, unnecessary obfuscation of the subject. I've tended to attribute it to his pedigree as a trader.

We'll see. I certainly understand people's frustration at this lack of clarity.

MatrixSentry said...

Now I know where the gold from GLD went!

JR said...

Hi KindofBlue,

"I've made a similar observation in the past and have wondered about his apparent, unnecessary obfuscation of the subject. "

I suspect he knows on some level that if he acknowledges "that the FOFOA fella" got it all figured out, it sorta admits his trading pedigree ain't worth much and further it doesn't bode well for the growth of the ranks of his "Comrades in Golden Arms." Indeed, he does appear to profit from his CIGAs and most folks like to get paid.

His trading pedigree

Knotty Pine said...

Yes MatrixS, you might be on to something.

One Bad Adder said...

@Wil: - It is noted the Flower of Understanding blooms well in your garden this Spring ;-)

Unknown said...

Isn't it funny how the closer we get to FREEGOLD the closer we get to REALITY?

Paper gold: volatile, unpredictable, unstable
REAL gold: scarce, desirable, "price"less

Reality would be SUCH a wonderful breath of fresh air after so many decades of this debt-paper fantasy system.

KindofBlue said...


It certainly worked for him in the 70s bull market. An example of where an earlier success can get in the way?

We watch this equivocating together, yes?

JR said...

"It certainly worked for him in the 70s bull market. An example of where an earlier success can get in the way?"


The problem with gold mining shares is that people get into them for the same reason they buy lesser commodity metals, to gain "leverage" on the coming move in physical gold. But most of these "leverage seekers" don't understand the true scale of this coming move.

This "leverage concept" they are after entails exiting the position at the peak (if that peak ever comes). The problem is, when the time comes to exit you will only be able to exit into inflating paper. You won't be able to exit to physical gold.

FOA explains that he personally holds a specific gold stock only for its DIVIDENDS... after we get to Freegold! He clearly states that the real leverage this time around is in the physical metal. The leverage argument for the mining stocks comes from the experience of the 1970's, which is a flawed analogy. Remember that stocks, even gold stocks, are only a paper promise of things to come. Gold is wealth paid in full, in your hands! Please do your own due diligence of course...

byiamBYoung said...

So, I'd like to shake the flower for an answer to this question:

The daily share volume of GLD (per the puke indicator), does that include redemptions + basket creations, or shares traded, or redemptions+new baskets+shares traded?

Any blooming answers?


Biju said...


Based on your links for china.

(1) Looking at cumulative Chinese Gold imports
of 1500 Tons over 13 year period - they
are too late to the party compared to India.

(2) Combining India + China imports , at
current price of Gold and if Gold appetite
stays same from these nations, I am thinking
their total imports may touch 2500 tons
this year ie nearly the yearly mined
production. Now what happens to usual CB
purchase of approx 500 tons, Rest of the
world 400 tons ? who is going to fill the
gap. Again all this depends on appetite/price
remains the same.

michael3c2000 said...

Jim Willie has just stated in this new interview, he believes the Hedge Funds are not massively redeeming/fleeing GLD, but instead it's the bullion banks trashing the price and then redeeming the shares for gold.
I agree with most everything here, and considering he's in his sixties, he sounds much younger. Must be that equatorial sunshine. :)

byiamBYoung said...


Thanks. Yes, he certainly does sound chipper! Watching the daily notching downward of GLD, it does smack of some organization in the shadowy background. Maybe it is indeed the BBs...hard to say.

BTW, bonus points if you can answer my (above) question!


Knotty Pine said...


How is this going over in India? Also interesting that silver demand is dropping with the price.

tintin said...

Hi OBA and Wil,

Regarding "cause and effect" on recent smash, is this the correct line to think along:

Physical gold was flying out fast, which means the reserve of the paper gold credits declined, thus the total amount of paper gold needs to be reduced accordingly so as to reduce the stress.

if that is correct, then the more gold the Chinese housewives buy plus other drains, the smaller the real gold reserve for the paper gold market, then the greater pressure to "sell down" paper gold which is just over leveraged credit based on ever dwindling reserve.

Am I on the right track?


Edwardo said...

Regarding JR's comment at 11:51 AM.

Upton Sinclair (oh, the irony in the name) put it thusly:

It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Biju said...


I think this article is false or exagerrating. RBI is trying to reduce loans to import Gold except for Jewellery exporters.

Even if True, no one in India is scarred of RBI or anyone. The import of official channel may go down but smuggling channel will pick up. I suspect it has already picked up because of the current 6% import duty. Now Indian movies based on smuggling mafia may return also ? :-)

RBI tightens screws on gold loans

Loans restricted to gold jewellery exporters

Amid a steep fall in gold prices recently and the resultant risks to the system, the Reserve Bank of India (RBI), on Friday, further tightened screws on gold loans by banks, restricting them to finance import of the precious metal only for gold jewellery exporters.

The RBI also restricted lending against gold coins up to 50 grams only.

“With a view to reducing demand for gold for domestic use, it has been decided to restrict gold import on consignment basis by banks only to meet the genuine needs of exporters of gold jewellery,” the RBI said in its annual monetary policy review for 2013-14.

The apex bank also said detailed guidelines on the same will be issued by the end of the month.

“While there may not be any objection to giving advances against specially minted gold coins sold by banks, there is a risk that some of these coins would be weighing much more, thereby, circumventing the RBI norms regarding curbs on advances against gold bullion,” the RBI said.

Biju said...


one of your points in IB times

1. To decrease gold imports, they aim to restrict local banks gold consignments.

RBI need not bother with doing this. I suspect they are already smelling that imports via MMTC/authorized banks is slowing down due to smuggling. Now they will put out this statement just to make show their action is the cause of reduced metal intake by these official entities.

These are just drama by Govt as people in India are attuned to. Now they "offially" say people who buy lots of Gold need to provide PAN card to jewellers (like SS# in USA), let me see them implement that.. never going to happen. people are not fools.

Ender said...

“The School of Free Gold”… Interesting concept. I get the feeling CIGA Sinclair is starting to realize that things are a little different this time around.


Ender said...

Link for the above comment:

Unknown said...

I have a very simple way of looking at it, perhaps too simple, but here goes ...

Culminating events like MFG, Cyprus and ABN/Amro (which may be a bigger tipping point than most realize) along with other events we may have not yet learned of (and may never) caused an unprecedented spike in both physical gold demand and redemption (in March).

The impact of this demand and redemption impacts GLD/Comex in much the same manner as massive naked short selling, except that one interpretation is "no one wants the barabarous relic" whereas the other interpretation is, "we can't redeem the real stuff and we're gonna be cashed out in paper".

I believe that we have crossed the rubicon now where the first interpretation has morphed into the second.

I believe that physical demand began to impact the credibility of paper gold such that it's value began to plunge due to lack of credibility (a.k.a. CONfidence) vs. perception of "future value decline of physical".

When that truly happens, Giants will have no further fear of "gunning the market". Not when the bear's teeth are already nipping at your belt loops.

I believe the "plunge protection team" is now challenged to protect against a sudden massive crash of paper gold in dollar terms (rather than just "the dollar") in order to maintain the status quo.

And that can only be done by supplying physical. And thus begets the further drain, and so on, and so on.

As I said some posts ago, it eats it's own tail at this stage, this paper gold market, does it not? You must supply the physical just to maintain stability of the "price discovery" system.

A tall order, one that cannot be filled. As we shall soon see.

But I defer to OBA for a more learned response, as his knowledge of these things is far more advanced than my own. I am just a simple man, hoping endlessly for simpler times as I tend my humble "garden of knowledge".

Aaron said...

I’ve gotta go with JR and Edwardo on this one. I think JS is more concerned about leading the pack than he is trying to understand where gold is going and most importantly, why it is going there. I don’t think he understands much about Freegold, but to his credit he definitely understands he’s on to something BIG -- and that something BIG is of course, FOFOA’s Thoughts on Another and his friend. ;D

But who knows, you could be right Ender!

Unknown said...

Not sure where Sinclair gets:

"Even they do not see their predictions have come true today as what above ground gold not already hoarded is heading for hoarding."

He must not be delving too deeply into the comments section. I think he's on booard with the gold factor in the equation, but perhaps not the currency side of the equation, which frankly is much more difficult to grasp.

In any event the future is unclear to us all. Event the present is enshrouded in a cloak and dagger mystery.

byiamBYoung said...


Gentle and respectful nudge: my question is still desperately seeking an answer...

The daily share volume of GLD (per the puke indicator), does that include redemptions + basket creations, or shares traded, or redemptions+new baskets+shares traded?

Any scents of wisdom forthcoming from our all-knowing flower?

Hopeful cheers

tEON said...

My opinion: After decrying TA (Technical Analysis) then trotting out ex-porn star Bo Pony (or whatever) and his charts upon charts Jim seems totally lost. I agree with Aaron, JR and Edwardo that I think JS is more concerned about leading the pack than he is trying to understand where gold is going and most importantly, why it is going there. I don’t think he understands much about Freegold, but to his credit he definitely knows who has been most correct....f&ck if he had just read Another and FoA, he'd know full-well what shelf the prescience trophy is sitting... with one guy dusting it off diligently.
It's my opinion that this old dude is a cross between confused and desperate. With most of his wealth in miners (my guess) his personal balance sheet is... devastated. So much so that he is running his glad-handing seminars for XX,000 a pop...
And if ES has the courage of his convictions - bowing to the paper-price metal Gods that helped establish his Billionaire status, we may see Sprott join him on the 'circus' circuit (Google "Sprott Q1 profit retreats 88%"). No matter what this pair say about Gold - they are traders - not savers. Lesson?: Be a saver, not a trader.

tintin said...

Hi Wil, thanks for your reply.

""plunge protection team" is now challenged to protect against a sudden massive crash of paper gold in dollar terms (rather than just "the dollar") in order to maintain the status quo."

My thought: if this is the case then the PPT can't afford a very low gold price so will have to support POG by buying up the papers themselves further extending the leverage higher.

At end of 2011 Chinese private savings account has RMB 36trillion, and can only be higher today. USD/RMB exchange rate is about 6.16 now. 5% of that for gold at $1450 will eat up 6000tons.

The PPT looks stuffed.

Hill C said...

Apr 18 1998:

"Noone can know how this world change will come about, in specifics. The gold market may lock at $400? Or $4,000! When the public perception does come to understand, many entities I know of will not be buying "at the market" as your broker will. These ones, they will be "above the market", "well above the market"! Will you bid $1,000 when your broker screen shows $475? I myself, as a country will be "there"! You sir, will stand well behind most in line.

I tell my children, as you may tell yours:
"when a thousand hungry lions fight for one scrap of food, small dogs should hide with what's in their belly"

Knotty Pine said...

@Gary: +10

Knotty Pine said...


Thanks for you insights.

Regarding your "movies based on smuggling mafia", maybe the real deal as well?

Ender said...

Sir Wil Martindale,

Sir Ivo Cerckel comes to mind… Most western minds see gold as a hedge – they are investors. Sir Sinclair is an investor. It’s always about the price of gold.

What we are living though now is the rise of gold as wealth. Wealth is something that can be redeemed later regardless of price.

Sir Sinclair is one smart cookie. I would not doubt that he figured out how things were going to unfold independent of Another. And, it might not have occurred to him to look deeper to see how this ‘play’ was designed. Or, it might not have been interesting at the time. I’m willing to bet that he will get interested.

We are not at the end of this story.


Unknown said...

Such is their delemma IMHO. It is a lost cause. The paper will burn to zero, but they will fight with all their might to bring it down slowly and gradually, perhaps the exact opposite of "trader Jim's" heavy hammer.

I am sorry brother Young but the flower of understanding brings no scent of satisfaction to your query. I am honestly unfamiliar with the composition of the daily share volume at that level of detail.

But knowing your depth of understanding, I sense that you will reveal to us a pearl of wisdom once you get this answer??

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