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Central Banks No Longer Selling Gold (Duh Factor: 10/10)

Tyler Durden's picture


Something funny (and quite revolutionary) happened during the CBGA's (Central Bank Gold Agreement) year ending this Sunday - the group of 15 signatory banks sold a mere 6.2 tonnes of gold, a massive 96% decline from the year earlier, according to provisional data.This means that unlike in the past, when it was central banker prerogative #1 to sell some gold and every year just to keep all the longs on their toes, this year the trend has finally changed. As the FT reports, "the sales are the lowest since the agreement was signed in 1999 and well below the peak of 497 tonnes in 2004-05." And yes, we do love the FT's brilliant summation of the change in mindset: "In the 1990s and 2000s, central banks swapped their non-yielding
bullion for sovereign debt, which gives a steady annual return. But now,
central banks and investors are seeking the security of gold." Hm, when all of Europe (as well as America) is a smoldering heap of bearer bonds that will never get paid, and China is putting up a building today, only to blow it up yesterday, and boast a GDP growth rate of one gajillion, the FT may want to change the bolded assumption. Back to the Captain Obvious narrative of the original article: "The lack of heavy selling is important for gold prices both because a
significant source of supply has been withdrawn from the market, and
because it has given psychological support to the gold price. On Friday,
bullion hit a record of $1,300 an ounce." So market zero supply, and demand that is growing exponentially, means higher prices, eh? All those Voodoo 101 classes, and Poison Ivy college loans sure are paying off in droves...

More from the FT, on why CB sales are now and will be, a thing of the past:

European central banks are unlikely to sell much more gold in the new CBGA year, according to a survey by the Financial Times.

Although many central banks declined to detail their sales plans, the responses of some, along with numerous interviews with bankers and consultants, suggest it is unlikely there will be a return to the trend of the past decade, when CBGA signatories sold on average 388 tonnes a year.

The central banks of Sweden, Slovakia, Ireland and Slovenia said they had no plans to sell, while Switzerland reiterated a previous statement to the same effect.

The CBGA was first signed after gold miners protested that central banks’ rush to sell was depressing prices.

And here is a purdy pretty chart that confirms what every regular reader of this hyperventilating website has known for almost two years now. Also it turns out "fettle" does not mean 'exponentially surging prices' in UKish, even though it should.

h/t JBH


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Mon, 09/27/2010 - 00:27 | 606527 williambanzai7
Mon, 09/27/2010 - 06:49 | 606784 MarketTruth
MarketTruth's picture

My only main gripe with the above article is that it does not mention the hundreds of tons central banks purchased during the same time period. Yes, of course central banks are net buyers to a very large extent now.

Mon, 09/27/2010 - 13:30 | 607501 midtowng
midtowng's picture

True. The Washington Agreement countries are largely just Europe. The Asian CB's were net buyers over the last several years.

Mon, 09/27/2010 - 00:32 | 606529 samseau
samseau's picture

gold, bitchez

Mon, 09/27/2010 - 00:33 | 606530 Hammurabi
Hammurabi's picture

you work hard TD, time to sleep thanks

Mon, 09/27/2010 - 00:36 | 606534 Nihilarian
Nihilarian's picture

Money never sleeps.

Mon, 09/27/2010 - 00:44 | 606544 Threeggg
Threeggg's picture

2nd that

I see the news on the tape and come here to see you already have it.

wtf !

No rest for the ..................?

Gold up against "everything" right now and this news will cause trouble for expiry tomorrow


Mon, 09/27/2010 - 01:12 | 606583 MsCreant
MsCreant's picture

this news will cause trouble for expiry tomorrow

I beg your pardon. Don't mean to be rude. I am savoring this statement. If it drops, I'm gonna laugh my ass off as I go to my dealer for more. Hell, maybe I'll "buy on margin." 

Mon, 09/27/2010 - 03:09 | 606673 umop episdn
umop episdn's picture

You, me, and a whole bunch of other people! The shorts are screwed as the fear of currency collapse has taken root in many minds--too many to cover over with bankster paper. Burn, paper, burn! I can haz party!

Mon, 09/27/2010 - 04:12 | 606707 Hephasteus
Hephasteus's picture

No he's saying that this could be the first month that it expires in a position they don't want and can't handle. If it expires above 1300 then a bunch of shorts have to sell at 1300 while the price is above 1300. Which means the naked shorts gotta go out in the market and buy up gold at 1350 1400 and sell it at 1300. Which means no more bribing with 1350 to 1450 dollars to settle in dollars. They have to up to 1700 range to get people to take failed delivery. The gold market has become a viable legal blackmail market that enough people will jump into it that there's not enough hit men to stop.

Mon, 09/27/2010 - 05:39 | 606755 Snidley Whipsnae
Snidley Whipsnae's picture

Either way, we win. I would love to see JPM/GS shorts taken to the wood shed.

Watching the chart...buying on the slightest dips is strong...Especially in silver where JPM shorts are concentrated.

What was it Dick Fuld said?..."I'm gonna skull f**k those shorts".

Mon, 09/27/2010 - 07:38 | 606832 gookempucky
gookempucky's picture

As the woman with the wooden eye said-

I will keep an eye out for you.....  ;)

Mon, 09/27/2010 - 07:57 | 606866 MsCreant
MsCreant's picture

This discussion is heady stuff.

Mon, 09/27/2010 - 00:36 | 606535 What_Me_Worry
What_Me_Worry's picture

Chart should be titled:

"Top 12 Liars of World Gold Holdings"

Mon, 09/27/2010 - 01:48 | 606616 anonnn
anonnn's picture

"Holdings" does not equal ownership. It is "holdings", as "in account for". Nor is it necessarily unencumbered .

So... US 8134 tons means?... 

Where is Kingdom of Saudi Arabia? My guess their gold is stored [holdings] in NY/London/Schweiz?

Mon, 09/27/2010 - 04:14 | 606709 Hephasteus
Hephasteus's picture

Yes but the allocated accounts are just as empty as the unallocated accounts. Which puts holders of GLD and PYHS on the same ground as kings and sovereigns.

Mon, 09/27/2010 - 06:27 | 606772 Bendromeda Strain
Bendromeda Strain's picture

Why would you equate Eric Sprott with HSBC? The whole point of PHYS is that it isn't GLD.

Wed, 09/29/2010 - 18:52 | 613953 Geoff-UK
Geoff-UK's picture

The amount of FRNs needed to short the shit out of PHYS is orders of magnitude lower than amount needed to short physical on the commodities exchanges.


Expect Bernake et al to fist Eric Sprott soon.  Figuratively and/or literally.

Mon, 09/27/2010 - 00:56 | 606543 truont
truont's picture

Yup, there is now only one central bank now selling gold.

Only one central bank with enough blatant contempt for the people it professes to serve.

Which one?

Hint:  IMF selling 400 tonnes this year.

Which central bank does the IMF receive the lion's share of its gold pledges from????

Mon, 09/27/2010 - 01:23 | 606545 DoChenRollingBearing
DoChenRollingBearing's picture

I have formed my own little Central Bank w/gold as well as my own Hedge Fund (FOFOA-style).  Buy gold and never let it go (except maybe to your children).

Mon, 09/27/2010 - 00:46 | 606546 straightershooter
straightershooter's picture

Show me the Gold!


Rumors running wild that central banks do not have any gold left for sale.

Call your congressman/woman/senator/whatever and ask, no, demand that Bernanke show the gold held in some funny place named notsville?


Show me the gold, stupid!!


Mon, 09/27/2010 - 00:48 | 606550 truont
truont's picture

I just love the chart showing the composition of world reserves.

It used to be 60% gold/40% FX.

Now it is about 10% gold/90% FX, and it has bottomed, and starting to climb in favor of gold.

Mean reversion is sure a bitch, eh Bernanke?

Mon, 09/27/2010 - 00:59 | 606563 Temporalist
Temporalist's picture

How strange that the CBs timed the sales when the POG was the lowest, and are buying at all time highs.  For those that can't read into the sarcasm - either they are stupid or suppressed the price intentionally.

Some economic leaders.  Only lemmings would follow these "Masters of the Universe" - and right off the cliff.

Mon, 09/27/2010 - 10:57 | 607196 doolittlegeorge
doolittlegeorge's picture

$1300...must prevent 1300...must prevent 1300...must prevent 13000 oops...1300.

Mon, 09/27/2010 - 23:08 | 608950 tip e. canoe
tip e. canoe's picture

that is, if the CB's are paying the same price as the advertised spot.

Mon, 09/27/2010 - 00:59 | 606565 Eric Cartman
Eric Cartman's picture


Mon, 09/27/2010 - 01:03 | 606571 truont
truont's picture

"In the 1990s and 2000s, central banks swapped their non-yielding bullion for sovereign debt, which gives a steady annual return. But now, central banks and investors are seeking the security of gold."

What is the point of swapping "non-yielding" gold bullion for sovereign debt that provides a nominal rate of return, but a negative real rate of return?

Looks like the world's central bankers just woke up to the smell of burning toast.

Mon, 09/27/2010 - 11:02 | 607209 doolittlegeorge
doolittlegeorge's picture

interesting.  and when the Japanese went "yen deval" nobody jumped in.  It is the opposite of the 80's and 90's when currency interventions were exclusively a coordinated affair.  This is economic war medieval style as it's "every trading bloc for itself."  Worst path to prosperity but, hey, welcome to "bailout nation" and its consequences.

Mon, 09/27/2010 - 01:06 | 606575 Perseid.Rocks
Perseid.Rocks's picture

Jim Rickards had some interesting discussion about gold recently when he was interviewed by Eric King.

Starting at about 13:35 here

Starting at about 12:43 here

Mon, 09/27/2010 - 01:21 | 606592 sinner
sinner's picture

I am reminded of the words said by ANOTHER, many years ago:

One last note: No form of paper wealth will survive the financial crush once the CBs stop selling!


Mon, 09/27/2010 - 01:28 | 606599 StychoKiller
StychoKiller's picture

Ya gotta wonder just how much real/tangible vs. origami wealth/value there is in the World Economy, what with China blowing up perfectly good buildings and all...

Mon, 09/27/2010 - 01:55 | 606628 anonnn
Mon, 09/27/2010 - 02:03 | 606637 sinner
sinner's picture

Thanks anonn. Looking at the date for those words, October 09 1997, just under 13 years ago!

Mon, 09/27/2010 - 01:56 | 606630 AUD
AUD's picture

"central banks swapped their non-yielding bullion"

This is a load of bull, central banks have been loaning up to every last ounce in their vault for years, earning interest in gold.

If the gold doesn't circulate, the lights go out.

Mon, 09/27/2010 - 04:35 | 606720 fresbee
fresbee's picture

"On Friday, bullion hit a record of $1,300 an ounce." So market zero supply, and demand that is growing exponentially, means higher prices, eh? All those Voodoo 101 classes, and Poison Ivy college loans sure are paying off in droves..."


Again you guys get it wrong. If that CB bank news was so relevant then Gold would already have rocketed.

Gold prices are not free to move as they wish. They are very much under tight control of FED and the cabal and there are many back hand channels through which they control the prices. 


As a citizen, I simply do not ever want to see Gold at $2000 or whatever other stratosphere numbers that are thrown. Gold can destroy trade and bring down the whole system of prosperity that the world has enjoyed. I am great believer in controlling Gold prices and pegging it to the reserve currency. The ECB does this exercise annually which is why I have the greatest amount of confidence in EURO. 


Coming back to Gold, Gold will never freely trade as its very existence is dangerous to human society. 


But shorterm it is being allowed to go up in steps and no one knows till what price. 1400? 1500? 1600? Noidea but it will stop rising the day the CB and BIS decide to enough is enough. 


Mon, 09/27/2010 - 06:06 | 606760 Snidley Whipsnae
Snidley Whipsnae's picture

People that think like you...that the Fed is a benefit to human society and gold a menace...are exactly what is wrong with human society.

The Fed is a human construct gone awry. Gold/Silver are naturally occuring elements. It's the human constructs that cause the problems.

Mon, 09/27/2010 - 09:04 | 606964 Pining for the ...
Pining for the Fjords's picture

"Gold will never freely trade as its very existence is dangerous to human society"

This is the signal that you are joking, right?  The very existance of a substance used by people to store wealth and facilitate trade for 6,000 years is anathama to human society?  Are you sure you are not thinking of the ring of power there, Gollum?

Mon, 09/27/2010 - 09:45 | 607048 Womb Service
Womb Service's picture

...and the quantitative cheesing of Zero Hedge continues. Bates? Is that you?

Mon, 09/27/2010 - 11:08 | 607228 doolittlegeorge
doolittlegeorge's picture

damn ZH'ers trying to cause the price of gold to soar.  who on earth could possibly support such an evil plan!

Mon, 09/27/2010 - 04:38 | 606722 fresbee
fresbee's picture

unfortunately you guys will never agree. You think Gold can keep going up cause M3 is rising and QE2 and all other apparent reasons. 

But once the cycle is over, Gold will crash like rock to the bottom even while there will 100s of zerohedge kind of sites shouting for $100,000 and $200k  for Gold. Some will also be holding the physical. They will be the worst hit.



Mon, 09/27/2010 - 05:58 | 606763 Snidley Whipsnae
Snidley Whipsnae's picture

Your glorious Fed and the bullion banks are going down in flames and you are predicting that gold holders will be hit the worst?

Perhaps you understand less about what is happening to the world of paper fiat than you think? You believe that another round of QE will heal all? You believe that world currencies competeing for bottom of the barrel is going to work out well? People and soverigns are buying gold because they are scared of fiat...and they should be. All paper is a short on gold. People holding physical will fair for better than those holding any form of paper.

'It ain't what you don't know that hurts you, it's what you are sure you know that just ain't so.' Mark Twain

Mon, 09/27/2010 - 23:54 | 609045 fresbee
fresbee's picture

That funny.


Bullion Banks will never go down. They are more powerful than all of us put together. If not US, European Bullion Banks will continue to control the price of Gold.

Am backing the banks here. 

But I do believe the FED will allow the Gold to keep creeping to 1500 and that is the end of the gold run. Not a chance in the world for Gold to get out of control. Am woring for a hedge fund and I know that FED/ECB/BoE/BIS are determined not to let it get out of the bag. 

Now you can write emotionally charged articles of how Gold is a measure of wealth and how it will expose the FED and all that BS. 




Mon, 09/27/2010 - 06:35 | 606777 Bendromeda Strain
Bendromeda Strain's picture

Instead of the humorous "Jon Nadler", it would appear that the real deal has finally arrived. Enjoy your Rentendollars, paper man. Read Greenspan's 1966 speech Gold & Economic Freedom, with an effort toward comprehension.

Mon, 09/27/2010 - 08:12 | 606888 EscapeKey
EscapeKey's picture

Is this the new angle?

So, MasterBates disappeared, the JB disappeared, and now we get a new "angle" on Gold takedown? Claiming the FED has brought stability, etc, when in actuality, it has brought with it inflation, inflation, insider dealings, and more inflation.


Mon, 09/27/2010 - 08:17 | 606898 MsCreant
MsCreant's picture

You forgot moral hazard and the ruin of civilization itself.

Mon, 09/27/2010 - 11:21 | 607264 RockyRacoon
RockyRacoon's picture

...and the sun will go dark.  I think you left that part out.

Mon, 09/27/2010 - 05:49 | 606749 Paper CRUSHer
Paper CRUSHer's picture



"Sergeant Tyler,they've stopped firing........i think they're outta ammo,SIR"


"You're forgetting one thing"

"What's that Serg'?"

"THE GLD ETF,............over 1000 tonnes of .9999(Fine)Caliber Munitions baby"

"Shit Serg',d'ya seriously think they'll deploy all o'that shit?"

"Why sure soldier,why not"

"But Sir,that Gold belongs to many of our american patriots Sir,remember"




Mon, 09/27/2010 - 05:41 | 606757 Goldenballs
Goldenballs's picture

You can,t see the Gold and Silver for the smoke coming from the Comex.As for nations reserves you can,t see those as your not allowed to.Very interesting time we live in.

Mon, 09/27/2010 - 06:04 | 606765 Snidley Whipsnae
Snidley Whipsnae's picture

Today is expiry. The battle began last night in overseas trading and will rage throughout the day today.

Whoever wins today, and I am pulling for the longs, must remember that this is but one battle.

PMs are the safe haven now. They are returning to their historic role as a store of value and they can be a transactional currency. PMs will win the war, regardless of who wins the battle today.

We need some cheerleaders...dressed in skimpy gold and silver...with matching pom poms. :)

Mon, 09/27/2010 - 06:17 | 606766 Silverhog
Silverhog's picture

Buying Gold is my way of giving the Federal Reserve the finger. All of the give aways, freebies, bailouts and endless spending programs that my vote has never be able to stop continue. So I'm changing money, the dollar is dung in my view. It's not just investing in Gold, its my hope that the dollar becomes completely worthless and removes the spending power from these crooks.

Mon, 09/27/2010 - 06:35 | 606776 Snidley Whipsnae
Snidley Whipsnae's picture

Silverhog...good on ya. I feel the same way and have taken further steps. I stopped using banks as much as possible and have not used a big bank in 20 mandatory banking services are through a local credit union.

Flock Wall St. Starve the beasts.

Mon, 09/27/2010 - 06:18 | 606767 GoldbugVariation
GoldbugVariation's picture

Gold price is in a 5 year ascending triangle - pinnacle at $1400 in the first half of 2011.  This is such a strong chart formation that it would be extremely surprising if it goes beyond that level in the timescale, regardless of fundamentals.  Expect some pullbacks on the way to getting there.  Timing these will be difficult of course, but reasonable to predict that gold will be rangebound $1260-$1400 for the next 6 months.



Mon, 09/27/2010 - 06:32 | 606774 Snidley Whipsnae
Snidley Whipsnae's picture

Your predictions about the price levels gold will reach and the dates of the highs/lows, the pull backs, etc, are as good a guess as anyone else's. I don't doubt your analysis.

However, I do have a question. How can you expect technical analysis to work when the Fed is backstopping the bullion banks to make huge short bets on gold and silver?

Unless you have a crystal ball I don't see how you can have good analysis with so much intervention by those printing paper fiat money ongoing. Just curious.

BTW, I am long physical and would not consider purchasing paper claims on PMs.

Mon, 09/27/2010 - 06:48 | 606783 GoldbugVariation
GoldbugVariation's picture

All holders can see the chart.  I do not claim to know, any more than anyone else, exactly how charts influence individual buying and selling decisions, but it must be true that at some point a level is reached where those who are long - which includes gold producers (many of whom who are no longer hedged, but will eventually hedge again), central banks in many countries, Paulson hedge funds, the general populace of most countries in the world with all their jewelry, etc, as well as ZH membership - decide individually that the price has reached their target level and it would be good to have some cash instead.

Or ... Fed QE2 program will come to an end, Fed policy will switch to preventing rampant inflation, because they will feel "the dollar has been weakened enough" - again that is really saying the XUA/USD level has reached a level they are comfortable with.

It doesn't matter what the precise cause is - and it could be simply self-fulfilling.  My point is, it's such a strong chart, over such a long timescale, that I do think it's valid to say it has some predictive power in this case.  Also bear in mind one possibility is a breakout to the upside, which would flag $2000+, but I think that is less likely.

Mon, 09/27/2010 - 07:24 | 606809 Snidley Whipsnae
Snidley Whipsnae's picture

I do not agree that charts have predictive value during periods when massive intervention is taking place by central banks around the world in all asset classes.

In engineering parlance what is happening now is called a 'go no go' test. If central bank intervention to control asset markets works the outcome is 'go' for the item being tested. If the opposite occurs the outcome is 'no go'. In this particular case a 'no go' means that the CBs lose the battle and PMs find a natural trading range against other assets.

Chart analysis is backward looking, like P/E ratios. I can look back at a chart of the N Atlantic iceburg count and distribution and claim that it was inevitable that the Titanic was going to hit one. Of what value is that prediction now? none.

I believe that the limited correlation of chart analysis vs predicted outcome in an environment when central bank intervention in all asset classes and in unpredictable ways/times is useless at best and detrimental at worst.

We know what the central bankers are going to do in the PM markets (we understand the parameters of the test). The CBs will continue to provide fiat to the bullion bankers to short the markets until they cannot. At that time gold will move in an unencumbered manner to a natural level based on what Mr Market believes it is worth in relation to other assets.

I would as soon consult an astrologer or a reader of tea leaves as consult a chart during times where the forces working on an asset class are well known and the outcome is inevitable. The central bankers are going to lose the battle, in time...maybe a short time...maybe a long time.

That said...people believe what they have to believe, when they have to believe it. Good luck to you and may all your investments turn to gold...or, your favorite asset.

Mon, 09/27/2010 - 06:58 | 606788 Pegasus Muse
Pegasus Muse's picture

... it would be good to have some cash instead.

Why would anyone trade their gold for worthless fiat dollars (or any other non-gold backed currency)?

Mon, 09/27/2010 - 11:11 | 607241 doolittlegeorge
doolittlegeorge's picture

because even though the paper is worthless they don't give that away either.

Mon, 09/27/2010 - 07:11 | 606795 Silverhog
Silverhog's picture

Reason I came to ZH is because I liked Tyler's views, his sarcasm is right on about these carnival workers we call government. It's great to see so many others here who don't drink the cool aid.   

Mon, 09/27/2010 - 07:16 | 606802 unum mountaineer
unum mountaineer's picture

hi.  first time posting a comment. long time lurker though. shheesh it takes a whiel to get a log on here...must be all the popular people already in the club. anywho, what's the play here? Undesrtand and can see that stocks, bonds and commodities will rise from here. Am amassing pm's..but am not sure about being long pm's. i mean, if it increases to let's say 3000-5000/oz. I want to be able to go right out in mountaineer country and purchase farmable land, maybe even expand acerage for hunting and growing purposes. do I transfer to fiat and buy up what I need..or just hold off till this plays out a bit more clearly? if my family is to survive this depression, I would need that land. Does it make any sense? any recs or suggestions? I don't think many own pm's around here..that could be an issue too.

Mon, 09/27/2010 - 07:47 | 606847 Snidley Whipsnae
Snidley Whipsnae's picture

You have asked a lot of questions. You have also announced your plans to become more or less self sufficient.

No one can answer, with absolute certainty, the questions that you have asked.

No one can answer, with absolute certainty, whether an attempt to become self sufficient will be a winning strategy in the coming malestrom.

If you read some history you can garner clues that might or might not lead you to a winning strategy.

I suggest for starters: The Fall of the Roman Empire, The Rise and Fall of the Third Reich, Wealth of Nations. Those will lead you to other history/philosophy/economic texts that you will find helpful...including Austrian School Economists, Ricardo, Marx, and many others. They all had something to say that was worthwhile. They all had something to say that is yet to be proved or disproved, they all said some things that have been proven wrong. Don't bother reading Keynes...what he said and what people are currently saying that he said are not the same.

No one here has a crystal ball...we are all seeking solutions to the many possible futures that could become the one reality. 

Glad you joined us. We are the seekers. We don't buy into the bs gov propaganda. Read, think, try to filter out the bs, and good luck to you.

Mon, 09/27/2010 - 11:26 | 607275 RockyRacoon
RockyRacoon's picture

No one here has a crystal ball...

Our only crystal-baller has jumped ship:  Johnny Bravo.  Seems that his technical analysis told him his technical analysis was technically unanalytical.

Mon, 09/27/2010 - 08:23 | 606884 Paper CRUSHer
Paper CRUSHer's picture

Well regarding land,in Nebraska and Iowa farmland prices have increased to $7000 per acre in recent months.Around 7% annualized.

Compare this with prices in the United Kingdom aka.51st State of America where farmland rose 20% over the last 12 months,almost matching the move in gold.

BTW,your room is on 2nd floor along the corridor to your 13.

I hope ya have a nice time........MUHUHAHAHAHAHA.........MUHUHAHHAHAHHA.



Mon, 09/27/2010 - 08:24 | 606907 unum mountaineer
unum mountaineer's picture


Mon, 09/27/2010 - 08:24 | 606908 Snidley Whipsnae
Snidley Whipsnae's picture

True...and if you read the Fall of the Roman Empire you will find that the next step by the gov was to jack up taxes on the farmers so high that they abandonded their farm.

Then the Roman powers made abandoning farms a abandoned anyway.

There is a lot in history that is worth knowing.

Mon, 09/27/2010 - 08:34 | 606921 unum mountaineer
unum mountaineer's picture

armaments?  use the lay of the land? always keep the sun to your back...what about creating a small scale economy replete with security forces? what a world it would be at that point. enforcement could be a tactical aint like the city in any event. these hillbillies pack.

Mon, 09/27/2010 - 10:18 | 607107 PhattyBuoy
PhattyBuoy's picture

Read Patriots by James Rawles for your tactical nightmare exemplified.

Tue, 09/28/2010 - 00:10 | 609076 Real Estate Geek
Real Estate Geek's picture

Hey unum, another school of thought holds that you're better off in the city/suburbs than in the boonies (i.e. the direct opposite of Rawles' recommendations).  Have you heard of Ferfal?  He lived through the currency collapse in Argentina and his experience was that the rural folks had a higher risk profile than urban/suburban folks. IIRC, he said that rural dwellers were more subject to horrific risks like home invasion gangs because the government lost control of the countryside and deployed its limited police resources in urban areas.  Surprisingly, he also said that there was a higher incidence of hunger in the rural areas, but I can't recall the details.

Just Google up "ferfal" and you'll find a number of documents he wrote; look for his "urban survival guide."  By the way, his writings were so well received on the web that he published a book called "The Modern Survival Manual" by Fernando Ferfal Aguirre.  It's on Amazon. 

Regardless of where you are, it sounds like you're ahead of almost everyone because you're getting clued in.  Good luck to you, sir.

Mon, 09/27/2010 - 11:13 | 607246 doolittlegeorge
doolittlegeorge's picture

oh, hey--look!  a bubble!

Wed, 09/29/2010 - 19:02 | 613978 Geoff-UK
Geoff-UK's picture

Unum mountaineer:

First off, stockpile some rifles/ammo, water purifiers, medical kit, and mega food before PMs.

If you have ability, set up near a national forest (free hunting when govt can't afford to pay the forest ranger who'd ticket you).

Don't buy real estate.  It's still way overpriced, and you'll be able to buy for a song if you convert PMs to real estate later (and FRNs are going through the basement--treat them like they're stolen merchandise and get rid of em).

Finally, recommend buying PMs only at coin shows, and for cash with no receipt.  Uncle Sugar doesn't need to know that you DIDN'T lose it all at Hooter's casino 2 months ago.


Mon, 09/27/2010 - 07:32 | 606825 Silverhog
Silverhog's picture

Welcome Mountaineer, yeah takes a while to get Tyler's attention and open the gate. Well worth it though. I'm betting on using Gold & Silver in direct barter, screw the paper crap. See where we are in another year, may need a wheel barrow to hall around enough dollars to buy 1 ounce of Gold.

Mon, 09/27/2010 - 07:55 | 606860 Snidley Whipsnae
Snidley Whipsnae's picture

Currently gold over $1301, Silver $21.59... Some longs out there with deep pockets battling the tide of fiat arrayed againt them.

David vs Goliath.

Mon, 09/27/2010 - 07:59 | 606868 Ace Ventura
Ace Ventura's picture

Therein lies one of the problems for those of us who understand the nature of PM's as money. If we reach a point where the dollar has become useless and a barter economy has emerged, gold is going to be scary to maintain on your person, not to mention try and barter with. I say that because you can imagine the sort of 'price' gold will be fetching in 'dollars' once we are in that situation. Naturally silver will be better suited towards more routine everyday barter, particularly pre-1965 coinage.

Another significant concern is what the establishment will do in order to supress such a system. When you consider that the fiat-based system is literally the source of ALL their power, influence, and control.....its pretty reasonable to assume they're not going to just shrug and say 'oh well' and head off silently into the night. More likely they are going to drop the hammer in some fashion, in such manner that not only examples will be made for the rest of the proletariat to see....but which will cause that very same proletariat to begin turning on each other in order to avoid the iron-fist of the establishment.

So Mountaineer, I'm not sure what the answer is, but I do agree that if you have the ability to acquire a homestead far off the beaten path with access to clean water and arable soil...then that's a hell of an advantage. The other super-duper-deluxe-crucial need is to identify like-minded folks in your local area who you can trust. That for me is proving to be the most difficult objective to achieve.

Mon, 09/27/2010 - 08:23 | 606905 unum mountaineer
unum mountaineer's picture

"The other super-duper-deluxe-crucial need is to identify like-minded folks in your local area who you can trust. That for me is proving to be the most difficult objective to achieve."

Message: Ace, that's my quandary. Seen the same same thing posted in as many words on here. Where and how is the confidence loss going to materialize? I can't / don't talk with my peers about these matters...They're still stuck wondering why they can't do online banking with JP morgan..some got a mortage in these hellish years...shheessh!...too destablized and demoralized to focus on the important matters of the day. this also extends to some family. Although in the boonies I have to say, there is much more of a sense of community..many contractors and small businesses in eastern panhandle barter as it is now. Father-in-law drilled a well for a guy..guy was short on cash and paid up with 2.5 acres he had in his portfolio.nice lay of land and there was definitely water on property..a little too close to people (not fan of the sprawl or the prospect of having neighbors 30 feet from you..makes me flightly!!) It's not like barter ever died... I just don't know if I could walk up to a guy and say I'll give you X amount of 1 oz. coins or bars for x amount of land...has anyone become privvy of this happening in a rural local?

Mon, 09/27/2010 - 08:49 | 606936 Ace Ventura
Ace Ventura's picture

"It's not like barter ever died... I just don't know if I could walk up to a guy and say I'll give you X amount of 1 oz. coins or bars for x amount of land..."

Precisely. Not to mention the sort of environment that may exist when you make that offer. What move will the establishment make to prevent/discourage you from conducting such a transaction? Are you willing to make it known to a stranger that you even have PM's in sufficient quantity to barter for land? Believe me when I say I am astounded that I even have to think within such a paranoid mindset. Hell ten years ago I would have said you were nuts if you told me Uncle Sam would fork over trillions of dollars to wall street and banking interests, and turn around and casually hand the bill to the american taxpayer. They would never do that! People would revolt!

Yet, here we are. So I think we've reached a point where NOT considering the worst-case scenario and at least trying to prepare for it is an unacceptable gamble. To your point about family-members refusing to accept reality, I too see it and am astounded by how it is that grown adults actually convince themselves that the 'Ostrich Method of Crisis Management' is the way to go.

Mon, 09/27/2010 - 08:32 | 606919 Snidley Whipsnae
Snidley Whipsnae's picture

" If we reach a point where the dollar has become useless and a barter economy has emerged, gold is going to be scary to maintain on your person, not to mention try and barter with."

This is true throughout all of human history yet people found ways to cope with the least, most did. 'A fool and his money are soon seperated'.

"More likely they are going to drop the hammer in some fashion, in such manner that not only examples will be made for the rest of the proletariat to see....but which will cause that very same proletariat to begin turning on each other in order to avoid the iron-fist of the establishment."

Tyrannical governments have arisen throughout history. None has lasted.

"identify like-minded folks in your local area who you can trust. That for me is proving to be the most difficult objective to achieve."

Trust no one with all of your secrets. Another piece of history...Look at how the Stazi evolved in East Berlin. After the fall records showed that 75% of the population were ratting each other out...and a lot of the rats were telling outright fabrications to gain favor with the Stazi or put a competitor out of business. Why would you want to trust anyone completely? For a big enough reward anyone can be turned against their neighbor.

Mon, 09/27/2010 - 09:33 | 607025 Pining for the ...
Pining for the Fjords's picture

"The other super-duper-deluxe-crucial need is to identify like-minded folks in your local area who you can trust"

Ace, you have hit on the one toughest problem, one that I cannot see a solution for. On the one hand, it would be suicidal to advertise that you are well-stocked, have a nice 500 gal cistern for freshwater collection buried next to the barn, a root cellar stocked full of cans, etc.  Many sites out there dealing with this sort of preparation emphasize that it is crucial to maintain "OpSec" - operational security- so that you do not become target #1 in your nieghborhood when things go south.

On the other hand, I am not John Rambo, and I know I'm not. I am equipped and am mentally prepared to defend me and mine, but I know I will not be able to protect my wife and children standing 24-hour posts on my property in perpetuity. How do I identify and make connections with like-minded nieghbors without making myself a target, or at least getting a rep. for being some sort of survivalist nutjob? In my area of south-central Pennsylvania I can hear people target shooting, often with semi-autos, on the weekends in all four directions from my property, so I know so folks out there are going to be able to defend themselves... but are they potential friend or potential foe?

If you ever find an approach to this, please post.

Good luck, and stay alive.

Mon, 09/27/2010 - 07:48 | 606848 unum mountaineer
unum mountaineer's picture

yeah, thanks silverhog. Interim plan was to have dollars in the proverbial left and gold in the right and see how this thing plays out, but now I'm reassessing strategy to "get the f outta dodge with fiat currency". Been in nyc  since '05 but knew preparations had to be made back in '06-'07. I go down to this place on right off wall st on bond street in an old basement vault of bygone bank for PM's..kinda funny knowing around the corner that the smoke and mirrors continue while this lesser known out of the way place exists and thrives.

Mon, 09/27/2010 - 07:52 | 606854 unum mountaineer
unum mountaineer's picture

so the wealth effect and defiant nature of the power centers in USA are starting to lose steam. NYC is about to have a major public sector layoff flurry...time for some renewed country living..woudl be nice to have thigns set up prior to the cluster bombs levling what's left of the economy.

Mon, 09/27/2010 - 11:22 | 607269 doolittlegeorge
doolittlegeorge's picture

a barter economy is skills based with "negotiations" made over the relative value of skills.  to give an actual example i have a friend is an auto mechanic with friends who own a farm.  he provides services to keep the tractor running and they provide food since neither has money.  to call it "inefficient" is an understatement but the freedom is real since you're not "one of the 150 million Americans on the dole right now."  another example in the city space that i've noticed is called "guerilla gardening."  that's taking a vacant piece of urban real estate and--well, planting food in it.  sounds kind of stupid but,'s the world we're living in.  gotta eat.

Mon, 09/27/2010 - 23:02 | 608936 tip e. canoe
tip e. canoe's picture

did some 'sidewalk squash' this year...unfortunately the dogs peed it to death...made some good cover for the sweet potatoes while it lasted tho.

Mon, 09/27/2010 - 08:34 | 606922 antidisestablis...
antidisestablishmentarianismishness's picture

I'm trying to decide whether it's closer to giddy or frothy around here. 

Mon, 09/27/2010 - 09:16 | 606985 gwar5
gwar5's picture

Gold never sleeps, so neither shall I....

Mon, 09/27/2010 - 09:48 | 607057 szjon
szjon's picture

Hi guys, first post. greetings from soon to be IMF Ireland. I'm an uneducated nobody who saw this coming in 2007 (unlike the masters of the universe, or did they?)and invested our savings in physical metal. I've been topping up since, now have a decent stash but will continue buying all I can afford. Cash is a curse word in our household. We spent our last €2000 on food that will keep for a while. Like many said above me, we learn from history yet we always believe this time to be different. I'm personally preparing my family for something worse than I can imagine. This is going to be a big one IMHO.


Anyway, just wanted to introduce myself, good to know there are others out there of like mind.







Mon, 09/27/2010 - 10:08 | 607088 Pining for the ...
Pining for the Fjords's picture

Welcome szjon- this is a rowdy group but there are some truly fine minds posting here.  Congrats on your PM purchases- this, and the fact that you see what is coming, puts you ahead of 95% of the rest of the population. I hope you feel free to post occasionally on conditions in Ireland, your local economy, etc.  Ireland, IMHO, will be a significant bellweather for most of the rest of the Western world- what you see today many of us will see tomorrow. Let us know, if you can.

And keep your spirits up. Every age, no matter how difficult, has its survivors. Best of luck, sir.

Mon, 09/27/2010 - 10:26 | 607121 MsCreant
MsCreant's picture

I ditto this and hope you post more too. Welcome.

Mon, 09/27/2010 - 11:30 | 607281 RockyRacoon
RockyRacoon's picture

Welcome to the Fun House.  2007 was a good year to start your journey.  Too bad the bankers didn't ask your advice.  They didn't ask mine either.

Mon, 09/27/2010 - 11:31 | 607282 Snidley Whipsnae
Snidley Whipsnae's picture

Also ditto and welcome.

I am in Florida and can tell you that this state is nearing crisis in many aspects. Housing, pensions, state revenue collections, jobs, jobs, jobs...did I mention jobs?

Anything you can tell us about what is going on in Ireland will be greatly appreciated...since our main stream media is nothing but gov propaganda. Good luck to you...

Mon, 09/27/2010 - 17:08 | 608224 szjon
szjon's picture

Thanks for the welcome to all above. I should add, I'm no professional investor or economist.


Sit-rep from Ireland, where to start?


Approx 25% drop in value, (those that are selling) long way to go but shored up by government tax breaks for the first 7 years interest on the mortgage. Lots of folks in arrears, government trying to stop repossesions. Thousands of new builds abandoned all over the country, (these are big numbers for Ireland) in fact out of my front window are 3 apartment blocks half finished slowly rotting. Developers are gone, bankrupt, loans taken on by the government (NAMA) who tell us they will make us a profit. I don't share their optimism nor their fancy ideas of aerodynamic swine.

Latest idea is to demolish most of the housing stock built in the last 5 years so supply dries up and prices will magically rise again. At least this may create some jobs in the bulldozing sector.




Unemployment figures are 13.7%, if you believe this then let me tell you the one about the hog with a jet pack. My own estimate would be closer to 20%. The government has a policy for back to education, the same as unemployment benefit but you get to study, takes you off the unemployed register, universities and colleges are bursting at the seams with mature students. Where we used to have 16 pages a week of jobs in our local paper, now we are lucky if there is one full page. The other forgotten (conveniently) factor is migration. Ireland has been a net importer of workers from eastern europe for some years, they built the houses and also rented them. maybe half have gone home since 2008 due to lack of construction jobs. it's like a snake eating it's tail. Many people have been forced into part time work and short hours. These are the silent problem.



Shops are closing daily, most have sales with prices falling across the board for consumer goods while food, fuel and the usual necessities sky rocket. Petrol (gas) is €1.30 a litre. I just did the conversion, I think that's $6.62 a US gallon. People are not spending and you can see it everywhere.


Government measures.


Austerity is the buzz word. Public sector cuts have been severe, everyone has had an extra 2% 'levy' taken from the weekly wage. Benefits have been cut, mainly ones aimed at children. Young unemployed get half the payment they used to, very harsh. More to come in the December budget. €3bn cuts minimum. for a population of 4 million these numbers are astounding. Tax take is plummeting due to less house sales and less workers while the expenditure is rising due to paying unemployment benefits etc.

Oh, and any bad loans, anywhere are being handed over for the taxpayer to deal with, now call me a cynic but why would you bother paying it back the minute it is guarenteed, estimates I have read point to a third of these loans 'not performing'.



Public sector pension liabilities are HUGE and nobody talks about this elephant in the room, but the dung is beginning to whiff and questions are bound to be asked soon. Private pensions for non-governmental workers are something we have to buy ourselves. Most treated their house as their pension, planning to downsize with those crazy ever rising prices or releasing equity. this could be a problem as most are now in negative territory. So, that's the ticking time bomb for another generation to worry about.



Not much to say, technically insolvent, announcing profits by laying off workforce, not lending to small business etc, usual stuff. Anglo irish to be split in two. I would prefer it was Sean Fitzpatrick that got this treatment, (google him) but he is laughing all the way from the bank. People are angry, I'm angry. They were running these banks like casinos and were corrupt to the core in collusion with government.



IMF, pure and simple. We can't go on like this much longer. the downward spiral of austerity, more unemployed, more mortgage defaults, less spending etc. is just knocking down the house of cards. It's bleak here, people are ready to take to the streets, It's ok for America. ben just blows his bubbles and puts it off a while longer. We can't devalue as a euro member. Oh, that €1tn ECB rescue fund does not exist. It's just a confidence boost/trick for the markets. It's just an agreement the other members will chip in if one gets in trouble. There is no actual money down. My belief in this fund is equal to my belief in gravity defying pork. With Greece, Belgium, Portugal and Spain with similar problems it's only a matter of time before Germany and France pull the plug on this.


Bleak, dire, depressing, anger building. Ireland is on a hair trigger folks.


Disclaimer. This is all my own outlook. The government and the banks would put it another way and they must be right huh? After all, they saw it coming, who better to get us out of the mess than those that put us in it?

P.S. I'm from the UK and my wife Poland. We are economic migrants not Irish. If anyone wants any opinion on these countries don't hesitate to ask.





Mon, 09/27/2010 - 23:10 | 608918 RoRoTrader
RoRoTrader's picture


Soon the Europeans - read ECB - will be printing. Walt Disney understood; it's a wonderful world after all.

Mon, 09/27/2010 - 23:12 | 608958 RoRoTrader
RoRoTrader's picture

Just curious, but is this the Zero Hedge Irish office?.........for real, or what being from the UK.

Tue, 09/28/2010 - 05:14 | 609452 szjon
szjon's picture

Not sure I understand. I'm just an ordinary guy. Came to Ireland from UK as pay was better, stayed 2 years, went home, met Polish girl, came back to Ireland and started a family. Moved to Poland in 2007 to open a coffee shop/english school, started reading about economics early 2007 as research for business. Saw this coming and dropped our money for the business into a plot of land and pms. No zero hedge connections, came back to Ireland to weather the storm. Still waiting but see it on the horizon.

Tue, 09/28/2010 - 06:15 | 609473 szjon
szjon's picture

Interesting piece about the european 'rescue' fund.

Wed, 09/29/2010 - 19:11 | 613998 Geoff-UK
Geoff-UK's picture

How do you defend yourself in Ireland?  Have you bought some high-speed lead-delivery devices?  Strongly recommend acquiring some--legal or no.

Mon, 09/27/2010 - 11:03 | 607212 Crispy
Crispy's picture

So the last time there was net buying was the top(according to your pretty graphs)? Okay..just making sure we are all on the same page here...

Mon, 09/27/2010 - 18:50 | 608456 Buck Johnson
Buck Johnson's picture

They have crossed the Rubicon in regards to this fiat economy, and know are looking at trying to save as much of their state economy as they can.

Tue, 09/28/2010 - 07:24 | 609510 V07768198309
V07768198309's picture


Tract on Monetary Reform


Credit is Like Nostalgia: It can lead to procrastination and prevent us to go forward! __________________

Our economy is slowly dying, your job, lifestyle are dominated by anxiety. The economy is kept alive artificially.

No one is proposing a solution because no one has the slightest idea of why it is happening and many have vested interest in the present system.

However an objective observation of the phenomenon can help us understand it and provide us with an innovative solution.

Of course we can't solve the problem with the tools that brought us there in the first place and we need a new ideology.


- Do you feel that your ideology pushed you to make decisions that you wish you had not made?

- Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.

- You found a flaw in the reality...(!!!???

- Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

- In other words, you found that your view of the world, your ideology, was not right, it was not working.

- That is -- precisely. No, that's precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.


In order to alleviate those economic woes wee need to create, as fast as possible, a new credit free currency that will solve the credit crunch and bring incremental jobs, consumption and investments to the present system.

An Innovative Credit Free, Free Market, Post Crash Economy
Tract on Monetary Reform

It is urgent if we want to limit social, political and military chaos.

Is the fulfilment of these ideas a visionary hope? Have they insufficient roots in the motives which govern the evolution of political society? Are the interests which they will thwart stronger and more obvious than those which they will serve? I do not attempt an answer in this place. It would need a volume of a different character from this one to indicate even in outline the practical measures in which they might be gradually clothed.

But if the ideas are correct — an hypothesis on which the author himself must necessarily base what he writes — it would be a mistake, I predict, to dispute their potency over a period of time.

At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly ready to receive it; eager to try it out, if it should be even plausible.
But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.
Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.


Credit Free Economy
More Jobs, No Debt, No Fear.
Prosperous, Fair and Stable.

Tue, 05/03/2011 - 08:45 | 1233376 JohnsonSmith
JohnsonSmith's picture

Central banks exchanged their non-yielding bullion for sovereign debt, which gives a steady annual return, but now  central banks and investors are seeking the security of gold.

Fri, 06/17/2011 - 07:28 | 1376975 JohnsonSmith
JohnsonSmith's picture

Great post and excellent viewpoint.

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