Chart Of The Day: Currency Devaluation, Old School Style

Our chart of the day comes courtesy of Dylan Grice, and his fascinating "Hyperinflation in Japan" presentation given at the CFA annual meeting in Edinburgh which we will shortly share with readers, which shows that currency devaluation is not a Ben Bernanke, nor even a central bank, phenomenon. As the chart below shows, and as most monetarists know too well, it was the Romans who engaged in the first act of voluntary currency devaluation-cum-dilution, by progressively reducing the silver content (yes, even back then currencies were backed by precious metals: and guess what - no CDOs squared, cubed, or quadratic, were conceived by the local office of Goldmanus Sachus) until such time as it hit zero... and the Roman empire was no more. Ironically, the nearly 100% devaluation of the currency in Roman times took just over 2 centuries. This compares somewhat favorable to the 97% drop in the purchasing power of the US currency since the inception of the Federal Reserve.

Comments

[Long-John-Silver]

Violins Bitchez!

[Dingleberry Jones]

There's no sex your in violins.

[FunkyMonkeyBoy]

Everything Zen Bitch'z.

[fuu]

bravo

[Long-John-Silver]

Nero played one while Rome burned.

[topcallingtroll]

propoganda from his enemies who accused him of orchestrating the fire so he could seize the lands.  Besides the violine wasn't invented yet.  He was probably playing a lute, according to the original propaganda which has been lost in antiquity.

[Spirit Of Truth]

And Obama is playing the ukulele....literally with his pitifully photoshopped birth certificate (the local registrar that purportedly signed it signed "U.K.L. Lee"): 

http://thespiritoftruth.blogspot.com/2011/04/welcome-to-my-world-obama-releases.html

[Spirit Of Truth]

Holy crap, the ukulele is classified as a plucked LUTE!

http://en.wikipedia.org/wiki/Ukulele

WTF?!

[chumbawamba]

Impromptu cultural lesson of the day:

http://en.wikipedia.org/wiki/Oud

al oud ==> lute

Check out the origins of Flamenco.

My fellow monkeys, We all came from the same place.

This has been your impromptu cultural lesson of the day.

I am Chumbawamba.

[chumbawamba]

Maybe he was playing the skinflute?

<ba dumb dumb tssssssssssssss>

I am Chumbawamba.

[Budd Fox]

Violins were not even exixting then, he played a string instrument called "cetra" or "Lyrae"

[Manthong]

Hmm.. at the end of that chart they all got religion.

Constantine came along - note the reversal.

[bbq on whitehou...]

Is there sex with silver? Or do i need violins?

[hambone]

Diztortionz Bitchezzz!

Allz aboutz uz iz Distortionzzz.  Allz fearz de resetz butz de fartherz wez goz from de groundz, wez fartherz da dropz.

Iz all about propz, dropz, and flopz.

[treemagnet]

Well maybe, but the quality of our linen is really, really improved.  We're all fuked.

[Gene Parmesan]

If we don’t learn from the History Channel, we are doomed to repeat the History Channel.

[WizDumb]

There's re-runs...didnt'cha know??

[faustian bargain]

I DVR the History Channel and play it over and over again, at my leisure.

[Argentum]

Oh, this going to bring out some excellent Romen twists on names...

Agentumus Minimus.....

[Tracerfan]

To the guy who posts on ZH all the time and says "paper" is more important than "real", get real.

I'm referring to RobotTrader, who wrote this nugget only a few minutes ago:

"Proof positive that 'Paper' rules over 'Physical.'"

At least the Romans substituted other base metals for their silver.

Paper is what you wipe your ass with, fool.

[Lets_Eat_Ben]

haha nice.

Paper as a store of value is a hard sell, but they pulled it off. Imagine a common Roman citizen in the modern age, scoffing at the idiocy of paper money.

[Guy Fawkes Mulder]

I am reminded of this anecdote, from Chapter III ("Banks") of J.K. Galbraith's "Money: Whence it Came, Where it Went":

Under a royal edict of the second of May, 1716, [John] Law, with his brother, was given the right to establish a bank with capital of six million livres, about 250,000 English pounds. The bank was authorized to issue notes. This it did in the form of loans, and, as might be imagined, the principal borrower was the state. The government used the notes in turn to pay its expenses and pay off its creditors. The notes were declared legal tender for payment of taxes.

Initially the notes were eminently acceptable not only for taxes but for all purposes. This was because Law, apart from holding that any banker who did not keep a sufficient reserve in good coin to redeem his paper was deserving of death, promised redemption in the currency of the weight of metal it contained at the date of issue of the paper. The kings of France, in accordance with long-establish practice, had been steadily reducing the weight of the metal in the French currency, hoping as always that less gold or silver would do the work of more. Accordingly, Law seemed to be providing security against royal malversation. For a while, as compared with the coins of the same denominated value, Law's notes commanded a premium.

...

Law opened branches of his bank in Lyons, La Rochelle, Tours, Amiens and Orléans; presently, in the approximate modern language, he went public. His bank became a publicly chartered company, the Banque Royale. Had Law stopped at this point, he would be remembered for a modest contribution to the history of banking. The capital in hard cash subscribed by the stockholders would have sufficed to satisy any holders of notes who sought to have them redeemed. Redemption being assured, not many sought it. It is possible that no man, having made such a promising start, could have stopped.

The first loans and the resulting note issue having been visibly beneficial -- and also a source of much personal relief -- the Regent proposed an additional issue. If something does good, more must do better. Law acquiesced. Sensing the need, he also devised a way of replenishing the reserves with which the Banque Royale backed up its growing volume of notes. His idea was to create the Mississippi Company to exploit and bring to France the very large gold deposits which Louisiana was thought to have as subsoil. To the metal so obtained were also to be added the gains of trade. Early in 1719, the Mississippi Company (Compagnie d'Occident), later the company of the Indies, was given exclusive trading privileges in India, China and the South Seas. Soon thereafter, as further sources of revenue, it received the tobacco monopoly, the right to coin money and the tax farm.

The next step was to place on the market the stock in what was now a primeval conglomerate. In 1719, this was done with a more visible, audible and at times violent response than ever bbefore or possibly since. The jam of people seeking to buy the stock was dense; the din of the sale was deafening. Transactions were in the old bourse in the Rue Quincampoix. (Later they were moved to the Place Vendôme and finally to the grounds of the Hôtel Soissons.) The value of adjacent property rose sharply from the demand of people seeking to be close to the action. The shares rose phenomenally in value. Men who had invested a few thousands early in the year were worth millions in a matter of weeks or months. Those so transformed were called millionaires; it is to that year, evidently, that we owe this useful French word. As the year passed, more and more stock in the conglomerate was fed out to the investors.

Meanwhile the Banque Royale was also steadily increasing its loans and therewith the notes in which they were taken away. In the spring of 1719, it had some 100 million livres in notes outstanding; by midsummer there were 300 million more. In the last six months of 1719, another 800 million were issued.

The sale of stock, it might be assumed, was creating a vast fund for the development of the Louisiana wilderness. Alas, it was not. By a beneficial arrangement with the Regent, the proceeds of the sale of the Mississippi stock went not to the Mississippi but as loans to pay the expenses of the government of France. Only the interest on the loans was available for colonial development and to mine the gold that would go into the Banque Royale reserves. To simplify slightly, Law was lending notes of the Banque Royale to the government (or to private borrowers) which then passed them on to people in payment of government debts or expenses. These notes were then used by the recipients to buy stock in the Mississippi Company, the proceeds from which went to the government to pay expenses and pay off creditors who then used the notes to buy more stock, the proceeds from which were used to meet more government expenditures and pay off more public creditors. And so it continued, each cycle being larger than the one before.

...

The notes, needless to say, were the problem. Early in 1720, the Prince de Conti, offended it is said by his inability to buy stock at a price he considered right, sent a bunch of the notes to the Banque Royale to be redeemed in hard currency. They were a sizable package; three wagons were sent to carry back the gold and silver. Law appealed to the Regent, who ordered the Prince to turn back a considerable share of the metal he had thus received in exchange. But others, acting out of a deeper insight, were busy getting Law's paper into metal and the metal into England and Holland. One, a jobber named Vermalet, "procured gold and silver coin to the amount of nearly a million livres, which he packed in a farmer's cart, and covered with hay and cow-dung. He then disguised himself in the dirty smock-frock, or 'blouse', of a peasant and drove his precious load in safety into Belgium."

Presently it was neccessary to restrict the payment of specie in return for the notes -- the enduring signal that the boom was over. Later Law took a further and far stronger step -- in his new official capacity he forbade, except in small quantities, the possession of gold and silver and extended the prohibition to jewelry. Informers were invited to share in any hoards they might report. Meanwhile at the Banque Royale in Paris there was now an even greater jam of people, these wanting not securities or notes but hard money; on one day in July 1720 so great was the crowd that fifteen people were squeezed to death. Or so it was said. Law was no longer a financial genius; exposed to the paris mob, it was now known, no sizable fragment of him would have remained. Accordingly, the Regent kept him out of sight, then got him out of France.

So... class... what have we learned today?

Are you really a millionaire if you have a million bank notes or bank-note-denominated equities?

How safe are ponzi bank note - stock schemes?

What happens to gold and silver when the government ponzi music stops?

[buck4free]

+1,000,000

Thanks for the excerpt. That was great.

[duo]

there you go, cover your stash with cow shit and drive to Belgium

[magpie]

Thanks a lot, you have identified the structure of the New Europe.

[narapoiddyslexia]

Which road to Antwerp are we taking?

[Harlequin001]

the one via Zurich... I hope...

[Tedster]

Bovine Excrement, Bitches!

[Sudden Debt]

Actually, these are still story that also run in my family.

My family consisted out of cow merchants and it was well know that they took their cows all over Europe and bought them also all over Europe so they had to do exstensive traveling.

And the story my grandfather used to tell us goes like this:

Twice a year, they went to the live stock markets in brussels looking for particular cows from certain sellers.

Those cows had their ass stuffed with wax and where actually "sealed".

And than it was their job to take "buy" those cows and ship them to Paris, London... to be "sold" to very particular sellers.

Once my grandfather took his walking cane and broke one of those seals because one of the cows couldn't move anymore because of constipation.

And according to him, when he broke the seal, gold coins mixed with the cow shit kept comming out of the ass of the cows.

It sounds a silly story, but my family made a fortune in this way by organising these transports.

So whenever you hear the saying: "MONEY STINKS" , you know where it comes from :) money actually smelled like shit back than.

[Guy Fawkes Mulder]

lmfao

mad props, I love it!

[cowdiddly]

1. The smartest millionaires of 1913 watched the Federal Reserve being formed with great interest. They sold a million paper dollars and received 50,000 ounces of gold.

2. Today’s paperbug millionaire of 2011 barely knows what the Fed is, let alone what an ounce of gold is. If he sells his million US dollars today he gets about 666 ounces, based on gold at $1500 an ounce. A very interesting number indeed.

3. I’d like you to tell me whether you would rather have 666 ounces of gold, or 50,000 ounces of gold.

[A Nanny Moose]

At today's prices, it is doubtful I will ever own 50k oz. I would settle for 66 at this point.

[shortus cynicus]

In the long term, paper is much better because all this unproductive crooks from gov agencies will kills anyone who is refusing voluntarily to exchange physical against paper.

So paper makes you save. Country without resources is save.

Just ask why Alexander The Great attacked the Persians? Because of some political issues, or because of huge gold amounts decorating persian temples ?

[Harlequin001]

best to just remain poor then eh, just so that no one will attack you...

[DoChenRollingBearing]

In 1933 they took away the gold (from US money).

In 1965 they took away the silver.

In 1982 they took away the copper.

What took Rome and England (Gresham's Law) a long time to do, they did it quick here.

[Flakmeister]

Whats the over under for Nickel?

[nevadan]

For your edification....

Todays value of a nickel is....$0.062764.

http://www.coinflation.com/

[Flakmeister]

Down a bit.... traded as high as 0.078....

[narapoiddyslexia]

A 1942 Silver War Nickel is worth $2.00 fiat, today.

[DoChenRollingBearing]

But you will not find any in circulation.  You will have to pay the going rate for a War Nickel at your favorite coin shop.  OK, MAYBE one in circulation.

Although a month or so ago I got a 1964 silver quarter back as change in Cozumel, Mexico (the part of town next to the cruise ships).

---

Also re nickels, Tyler posted something a month or so ago saying that The Mint has asked for public comment re changing our coins (presumably the metal content).  That is what they did in 1964 and 1982...

It is almost a LOCK that soon they will make the nickels out of something cheaper than the Ni/Cu alloy used now.  They will probably try to find something cheaper than the zinc slugs painted with copper for the penny too.  What's cheaper than zinc?  Stainless steel and maybe aluminum?

[akak]

Here's my public comment on pennies and nickels:

STOP FUCKING MAKING THEM ALREADY!

We absolutely do NOT need these worthless, ultra-low-value coins anymore --- and they should have been phased-out years ago.  If we had kept our circulating coins and bills updated for inflation since 1930, our smallest coin today would be the quarter-dollar, and our smallest bill would be the $20.  I note that we did not need a 1/25 or 1/5 cent coin back in 1930, so why do we need their functional equivalents today?

[Urban Redneck]

But your proposal presumes the Treasury is willing to admit to the debasement of the currency that has taken place. 

[Tracerfan]

This country is dead.  It just doesn't know it yet.

[Rhone_Ranger]

That's right, the blade has dropped but the eyes are still blinking!

[Lets_Eat_Ben]

followed shortly by: nickel, zinc, manganese then...dirt and whatever is lower than dirt

[shesalive]

bankstas, politicians

[Flakmeister]

Bickus Dickus, bitchus...

[Franken_Stein]

:-) Nice.

[idea_hamster]

"quadratic" != x^4, but I get your point.

[Flakmeister]

Yeah... should have been quartic....

[rosiescenario]

......anyone have a chart of the cost of bread during that Roman period???

[hedgeless_horseman]

No.  The Romans didn't include bread or hay in their CPI as the prices were too volatile.

Roman CPI was "reportedly" around 2% per annum during the reign of Marginhikus Maximus.

[hedgeless_horseman]

[Tyler Durden]

+1

[magpie]

Aureus delivery, bitchez

[goldfreak]

HA HA HA

[XPolemic]

+1 ROFL

[sabra1]

the romans ate matzah!

[Eternal Student]

Keep in mind that bread was given out freely during Roman times. First in Rome, then later in Constantinople. The Emperors learned that it helped tremendously to quell the citizens, and keep them from revolting. Not everyone was entitled; it was done on a per household basis. I.e. the homeless still had to beg.

So the impact of the cost of bread was mitigated significantly.

IIRC, Constantinople was turning out 80,000 loaves per day for free, during the time of Justinian.

You can still see the impact of this via Google maps. There's a portion of the old Roman walls which goes across the Tiber river. It's an odd formation, in comparison to the other walls. It turns out that, during the seiges of Rome, they used this portion to keep the grain mills grinding the flour, by water power. It was an obvious attack point if you wanted to starve the city.

[magpie]

Lest we forget, the ancient Greeks knew the "parasites" who ate the bread of the public and thus invented the welfare state.

[Flakmeister]

Funny thing about the Roman silver.... part of the "devaluation" was a physical scarcity of silver... because, you are gonna love this, the Chinese demanded it for their goods....It was called the Silk Road, silk went one way and silver went the other...

China not running a trade surplus is not a new development.... 

[john39]

took opium to eventually settle that score.  and it just to happens that the miltary industrial complex is now growing tons and tons of opium in Afganistan...  hmm....

[magpie]

ah, but the silver was always for the plebs and the mercs. and originally Rome had a copper standard.

Gold on the other hand...

[Quinvarius]

And notice how not having the silver circulating in Rome did nothing to stop the inflation.

[tmosley]

That isn't exactly true--the Romans didn't make contact with the Chinese until the third century, though they had trade relations with China via India and Sri Lanka (ie indirectly).  Trade with those nations was always carried out with gold.  Indeed, because it was used for foreign trade, the gold solidus was never debased, as foreigners would not accept such coins.

It's a good trick that we got them to, lol.

[topcallingtroll]

Have you read about the roman amphorae found in brazilian waters?

The archeological consensus is that ships get occasionally blown off course.

I suppose that makes the romans the first to discover america, but they didn't get back to tell anyone.

[magpie]

They knew the Carthaginians sailed the Atlantic, so the Romans sailed around Africa and killed every Carthaginian.

[topcallingtroll]

There is an interesting stone statue at least 700 years old of a Chinese man in Peru.  It is obviously a chinese man.  No doubt about it.

They also dug up some 15 foot tall tillers, or whatever you call that thing in the back of the ship that steers it, in China.  They had some massive ships at one point.

[magpie]

Those ancient people sure got around.

Indians or Eskimos landed in Roman Gaul, Roman artifacts in Southern India and Indochina, Phoenicians / Egyptians sailed around Africa in 600 BC, Zheng He's fleet in the Indian Ocean. And the Pope even tried sending emissaries to Vikings in Vineland a few years before Columbus set sail.

Only Portugal/Spain/England had the Guns & Germs to follow.

[Eternal Student]

Also keep in mind that the main trade only lasted until about the 6th Century. I.e. for Silk. It was during Justinian's time that he managed to procure the secret to making Silk, and obtained both silkworms and the Mulberry tree that they fed off of.

The Romans lost considerable interest in the trade routes to China after that. As well as fighting the Persians for access to the Silk Road to China.

[faustian bargain]

end fiat currency.

[Rhone_Ranger]

Don't worry everybody, the Newt is running for president!!!!!  All will be OK!  (sarc on)

[Flakmeister]

I can wait to hear that shit-bag lecturing me about moral issues and the lack thereof being responsible for the downfall of the country....

[mynhair]

+1 for shit-bag

-1 for partisan hack

total: no junk

[espirit]

Old joke - Who would elect a character to office from a Dr. Seuss novel?

My appologies to Dr. Seuss.

[nah]

2 kinds of people... people with silver and people with luck

[AZSovreign]

thought it was, those who have silver, and those who dig?  :)

[A Nanny Moose]

Those with guns, and those who dig.

Lead Bitchez!

[Money Squid]

its not all bad, there is a dead cat bounce at the very end there just after 268.

[AldoHux_IV]

Inflation is more the product of desperate policymakers looking to maintain their power and control by all means necessary until the end inevitably makes them obsolete.

Thus, I would argue it is the fault of central banks and politicians because these are the modern day versions of the people responsible for driving a society into the ground thanks to the greed it helped perpetuate at the soul of society.

[SuperRay]

let's pray for a continued paper selloff - thank you JP Morgue, for allowing me to buy all this physical at a discount...

[Long-John-Silver]

Looks like $35 is the double bottom. I hit the dip today at (spot) $35.25. I bought Apmex "scratch and dent" industrial Silver at $37.45 plus shipping. I love getting that stuff. You never know (other than it's 999 Silver) what they are sending you. Last time I ordered it I got a nice selection of bars and rounds.

[6 String]

Something very weird is going on--silver is marginally up in the non-manipulated part of after Western world trading...again.

Just so strange I tell you.

[RobotTrader]

Poor David Duvall was probably putting out more fires today.

Not only was General Jim's fax machine ablaze today from angry CIGA's sending in hate faxes,

But some hedge funds who "bet the farm" on $1,650 and $1,764 tried to self-immolate themselves in the parking lot.  Or, they were blowtorched by Uncle Gorilla.  So the fire department had to be called.

By the way, for those hedge fund managers who were fully invested in:

- Abercrombie and Fitch

- Limited Brands

- Netflix

- Apple

- Amazon

They are going to have a huge summer out at The Hamptons this year.

[Bastiat]

Maybe you can get yourself invited out there for some jock-sniffing?

[wirtschaftswunder]

Is that what goes on?

[Bastiat]

"jock sniffing" is american slang for someone sucking up to pro athletes.  It seems Robo has a similar attraction for "pigmen." 

[espirit]

Robo, get your digs in - the library closes at 9PM.

[Jendrzejczyk]

May it be their last.

[topcallingtroll]

I'm doing what I do best.  Changing my mind about changing my mind.

Back in all cash again.  I am calling a top in everything, cept cash of course.

[topcallingtroll]

and maybe bonds.  Though they will likely stay mostly flat.  Not interested in small gains.  Waiting to short.

[Muir]

"Back in all cash again"

Troll, you are obviously a blasphemer of the precious holy one, an idolatrous, apostate  of the one. You have turned your back and now follow the dark Lord of currency and of deflation.

May The Almighty strike you down.

-

[topcallingtroll]

I voted for silver before I voted against it.

[Muir]

And now for your viewing pleasure.
The Mistress of the Macabre. The
Epitome of Evil. The most sinister
woman to dance on the face of the
earth. Lowly dogs, get on your
knees, bow your heads and worship
     at the feet of SANTANICO
          PANDEMONIUM!

                     -

               blasphemer

[darteaus]

Yeah, heard you already.  SM was at her best in that scene.

[mynhair]

Bottom in silver, top.

Top in ODammer's AP BS union poll.

[faustian bargain]

Well, at least the angry mobs know where to go.

[Rynak]

If we only had to deal with meth and RT, it would actually be funny. Thanks RT :)

[akak]

RobotShitforBrains, you will always have ZERO credibility and respect here until you refrain from cowardly hiding behind your shallow, inane shitbombs and engage others in this forum directly in back-and-forth debate.  Until then, you will remain just another pathetic and puerile troll with NOTHING substantive to add to this forum.

Come on, I dare you, asswipe.  Jump in or SHUT THE FUCK UP!!

[FrY10cK]

RobotTrader,

You don't care about the human being in the photo you re-purposed. I get it. This is for those  who care. The photo apparently happened in South Africa in 2008:

"There was a concrete pillar lying near him, splattered with blood. We can only imagine what was done to him before he was set alight. The police stayed with him until the paramedics arrived, doing what they could But residents gathered at the scene were laughing. Kim Ludbrook, a photographer, admonished them, and we reminded them this was human being and that what had happened was barbaric."

RobotTrader is akin to one of those "at the the scene laughing."

[akak]

No, it is worse than that --- RobotLemming is akin to those who lit the match.

Keynesians: applying lit matches to necklaced Western economies since 1935.

[wirtschaftswunder]

But silver is up 14% this year

[Smartie37]

Govt dictums for gain:

If money is an asset, then devalue to absorb populace wealth

If money is a LIABILITY, then Inflate to absorb populace wealth

[Muir]

Just BTFDs, how hard can it be?

Today, well, actually any day, is a great day to buy silver!

[Franken_Stein]

What happened to wheat today ?

Down 15 %.

[RobotTrader]

What do you think happened?

It was blowtorched by Uncle Gorilla with huge shorting with paper contracts.

You guys need more proof that "Paper" trumps "Physical" when TPTB decides that inflation is not in the best interests of the stock market and the economy?

[Muir]

Blasphemer apostate of the precious.

Your punishment will be mighty indeed.

[akak]

You are nothing but a mindlessly shallow and antagonistic troll with NOTHING worthwhile to add to this forum.  Fuck you and die.

[RobotTrader]

You are obviously one of those coin-clutching, overmargined perma-scroomers in dire need of some cash.

If you happen to live in the Los Angeles area, I will pay you $34/oz. cash for any silver maples or eagles you have on hand.

We'll meet in person.

How's that?

[akak]

If we ever meet in person, you pathetic son of a bitch, the only thing you are going to take away from the encounter is a black eye and a fat lip --- if you are lucky.

It is shallow, blinkered, conformist, spineless, venal, amoral cowards and collaborators with evil such as yourself who are responsible for the moral, financial and political decline of this nation.  My contempt for you could not be greater.

The ONLY feeble arguments that you can ever muster to bolster your hopelessly blinkered and subservient defenses of everything propping up the corrupt financial and monetary status-quo are highly selective and invariably highly short-term factors --- but in the longer run, you are as wrong and dead as wrong and dead can be.

But I gain satisfaction in knowing that pigs like you are going to be far more burned by the coming fiat implosion than was that man in your photo above.  And for you and all the other willing and loyal defenders of the sociopathic power elite, I will shed not one tear, nor feel the slightest trace of pity --- on the contrary, I will celebrate your pain and anguish, and I hope you die the lonely, destitute and agonizing death that you so richly deserve.

[Muir]

And now for your viewing pleasure.
The Mistress of the Macabre. The
Epitome of Evil. The most sinister
woman to dance on the face of the
earth. Lowly dogs, get on your
knees, bow your heads and worship
    at the feet of SANTANICO
          PANDEMONIUM!

                 -----

   Blasphemers will be punished!

[Bastiat]

shallow, blinkered, conformist, spineless, venal, amoral cowards and collaborators with evil such as yourself

Now that was a blowtorch!

[rocker]

+1

[tmosley]

lol, now he wants to buy.  Weren't you selling just the other day?  I wonder how much taxable gain you realized?

Or do you not pay taxes either?

[RobotTrader]

I sold one Monster Box at $46/oz. for a huge gain.

It was absolutely stupid not to sell something into that huge price spike.

Now I'm back in the market to buy silver again somewhere under $35.

[RobotTrader]

Taxes will be about 28%, plus state taxes.  Lucky I don't have to pay them until 2012.

I will gladly pay taxes on an item I sold for $46 that I purchased for less than $7 back in 2004.

[akak]

I believe that you actually purchased physical silver, in 2004 or ever, in the same way that I believe that Ben Bernanke is acting as Chairsatan of the Fed with only the best interests of the American people in mind.

Beat it, you pathetic troll and coward --- you have no credibility in this forum whatsoever.  The double-digit numbers of junks virtually every laughable, pro-Establishment comment of yours made in this forum receives are proof enough of that.  Your time would be better spent joining Leo in making animal sacrifices to your bearded god under the portico of the Mariner Eccles Building.  I suggest you use lemmings --- they would be very appropriate.

[espirit]

Gerbils would be more appropriate.

[tmosley]

You do realize that after taxes, you will need to buy those coins back for $32.35 in order to get the same number that you sold, right (assuming state tax is 7%)?

And you do realize that premiums have exploded (lowest I can find ATM on a monster box is $10 over spot), so spot would have to decline to $22.35, assuming that premiums don't rise any more, which is a pretty dumb assumption.  In reality, spot would have to fall to around $10-12.

Sounds like you got screwed.  No wonder you are trying to buy below spot.  Good luck with that, idiot.  EVERYONE is paying way over spot for coins from the public.

lol.  You should have paid attention to old tmosley.  That guy seems to know what the fuck he is talking about.  You're not getting taxed on MORE, you're getting taxed on the SAME, and now you have LESS.  This is the peril of trying to get cute with your wealth.

[tmosley]

*STUNNED SILENCE*

lol

[akak]

You expected anything else?

[RobotTrader]

You're claim on premiums is BS.

CNI's premium has never exceeded $1.60/oz. on most silver items.

Anyone who pays $10 over spot is just plain stupid.

I've dealt with CNI for 10 years, and I've never had any problem getting product the day I walk in there for a decent price.

http://www.golddealer.com/bullionpage.html

[tmosley]

Yeah, except when they don't have them, which they don't.  They sell out fast, and their website often fails to reflect that.  But right now, their website says they don't have any.  That means AT ANY PRICE. 

"Most"--lol, most silver items aren't Eagles or Maples, are they?  Premiums have skyrocketed.  You are living in the past, and now you will pay the fucking price.  You will NEVER be able to take the "money" you made from selling your eagles and buy back more of the same material.  NEVER.

This is what happens when you apply dumbshit trader mentality to real investments.  You get cute, and wind up losing big.  Good job.

[Orly]

Can I interest you fellas in some tulips?  Imported from Holland...

[tmosley]

Can I interest you in some real money?

I guess not.  You'd prefer scrip made from old linen.

[rocker]

Bought in 2004. Wouldn't that be a long term capital gain at a 20% tax rate.   Whoops.  Gotcha!

[tmosley]

Silver gets taxed at the confiscory "collectables" tax rate.  It is NOT taxed as a capital gain.

I would only sell in order to move into something else.  Selling some now to buy back in lower is utter madness--like climbing back aboard the Titanic because you felt the lifeboat was too crowded.

[Rynak]

What you for obvious reasons fail to mention, RT, is longterm consequences :)

Paper certainly trumps physical shortterm.... perhaps even midterm.... but when i think about such timespans, i wouldn't think about PMs anyways..... i'd think in food, defense, equipment and yes, paper.

[rich_wicks]

You guys need more proof that "Paper" trumps "Physical" when TPTB decides that inflation is not in the best interests of the stock market and the economy?

And when will it be in the interests of TPTB to reduce tax revenue, increase the interest payments on the National Debt, and to let the banks eat all their bad loans?

Just when will it be in the interests of TPTB to destroy themselves when they can print up as much funny money as they need to, in order to buy literally anything?

[hambone]

Speaking of collapzez - good time to look at the hiztory of levered ETF short vehiclez (as we approach short seazon again) -

DRV (triple short RE): launch ---> launch March '09 and hit $325 and now tradez @ $12 (down 96.5%)

TZA (triple short Ruzzel 2000): --->launch Jan '09 and hit $2400 and now tradez @ $34 (down 99%)

FAZ (triple short Financialz): ---> launch Jan '09 and hit $10,000 and now tradez @ $41 (down 99.996%)

Of course theze have all had multiple reverse share offeringz along the way (otherwize they would all be trading az penny stockz) but just zo thoze of you thinking of uzing theze know what you are dealing with.  Long term, mid term, and uzually short term theze puppiez makez you poor. 

No concernz from the senatorz about theze levered lozerz.  Theze have done in 2 yearz what it took the dollar nearly 100 yearz to accomplish.

[Biosci]

Is your keyboard broken?

[hambone]

Nope - I've determined s's look too much like the dreaded $ zymbol.  Thiz thing iz dead and it'z name should be dead to uz...zo, in an act of defiance (and potentially inzanity) I've decided to avoid z'z...will continue to move all assets from theze dead paper thingz to real thingz that hold value or have utility.

[darteaus]

You used three s's in 'assets'.  Did you have a momentary relapze?

[Fiat2Zero]

Emperor Diocletian's Reforms

History has something interesting to say about price controls:

Pull quote from:  www.cato.org

-----------------------------------

Finally, the very survival of the state was at stake. At this point, the Emperor Diocletian (284-305 A.D.) took action. He attempted to stop the inflation with a far-reaching system of price controls on all services and commodities. [10] These controls were justified by Diocletian's belief that the inflation was due mainly to speculation and hoarding, rather than debasement of the currency. As he stated in the preamble to his edict of 301 A.D.:

For who is so hard and so devoid of human feeling that he cannot, or rather has not perceived, that in the commerce carried on in the markets or involved in the daily life of cities immoderate prices are so widespread that the unbridled passion for gain is lessened neither by abundant supplies nor by fruitful years; so that without a doubt men who are busied in these affairs constantly plan to control the very winds and weather from the movements of the stars, and, evil that they are, they cannot endure the watering of the fertile fields by the rains from above which bring the hope of future harvests, since they reckon it their own loss if abundance comes through the moderation of the weather [Jones 1970: 310].

Despite the fact that the death penalty applied to violations of the price controls, they were a total failure. Lactantius (1984: 11), a contemporary of Diocletian's, tells us that much blood was shed over "small and cheap items" and that goods disappeared from sale. Yet, "the rise in price got much worse." Finally, "after many had met their deaths, sheer necessity led to the repeal of the law."

Emporer O'Bottom Wears No Clothes.

[Franken_Stein]

Simply briliiant.

So here Bernanke can take a clue from the past to get a glimpse into his own future.

Ave Bennus, morituri te salutant.

[Eternal Student]

Diocletian's reign had far more important, and lasting, impacts than price controls. Namely, it set the foundation for serfdom later on, which lasted over 1,500 years. Diocletian also issued an edict which restricted labor mobility. That is, if you were a farmer, you remained a farmer. And so did your children. The same applied to the guilds, such as blacksmiths.

Later on, even more stringent laws were placed on those working the farms. They were forbidden to leave the farms upon pain of death (presumably because of banditry, is my guess).

The problem is, most attitudes and views lasted far longer than did the Western Empire. People still held on to them long after the Empire was gone. Indeed, it was about 50 years after the sack of Rome in 476 that someone first looked back and wrote "You know, the Western Empire is gone, and it probably ended back in 476". I kid you not.

Talk about not being able to see a bubble when you're in one.

The point here is to beware during hard economic times, of the restrictions upon freedoms. They can have far most lasting impact than anyone ever dreamed of at the time.

[darteaus]

Very interesting read.  Thanks.

[M.B. Drapier]

Roman silver? I see you and raise you. From Reid Goldsborough's article on the Lydian Lion, likely the first coin anywhere (at least outside China):

Perhaps the most intriguing debate deals with why the Lydians minted these early coins in electrum, an alloy of gold and silver. [...] Though some scholars disagree, the evidence, though not conclusive, suggests that the Lydians already possessed the technology to refine pure gold and silver and that if they wanted they could have produced pure gold coins, as they did shortly later during the rule of Kroisos (Croesus).[47]

The reason they didn't is debated. One theory, famously proposed by Sture Bolin in 1958, is that the first coins were the first numismatic deception. The Lydian ruling authorities may have deliberately and surreptitiously debased naturally occurring electrum as a profit-making enterprise, to put it politely, or as a state-sanctioned racket, to put it less politely. Bolin used the phrase "an imposture, a large-scale swindle."[48]

Coinage: a gold-debasement wheeze since Day One, apparently.

[magpie]

http://en.wikipedia.org/wiki/Persian_daric

[M.B. Drapier]

If the date ranges given in both articles are correct, then the Lydian Lion pipped it by about 80 years or more, though.

[magpie]

Wasn't about primacy, only that the Persians minted gold instead of electrum (afterwards).

[tmosley]

Perhaps, to people without the means to chemically and sonically test said coins.  We have that ability, and the knowledge won't be going away any time soon.

[UncleFester]

Another theory, infamously proposed by Uncle Fester in 1913, is that the Lydian ruling authorities had access to ancient mystery religions which taught that the magical Gold-Silver-Ratio was 1:16, the same ratio found in electrum.  This ratio was critical to tune their 'radios' to the proper frequency to communicate with their gods, now thought to be extraterrestial beings.  When  silver stumbled just before reaching its all-time high in 2011, Fester used the phrase "pass the electrum and give me another bong hit, I've got to phone home."[49]

[Oh regional Indian]

Excellent!
And perhaps you meant 1:1.6, and I see it there.
ORi

[Smartie37]

Way back then, issuing more money meant Producing more (real) Assets

Nowadays, issuing more money means recording more (paper) Liabilities

Government motivations and actions are clear in each context

Too bad for them that global markets recognize "cheap" assets !

[spekulatn]

Great post TD.

[M.B. Drapier]

Ironically, the nearly 100% devaluation of the currency in Roman times took just over 2 centuries. This compares somewhat favorable to the 97% drop in the purchasing power of the US currency since the inception of the Federal Reserve.

On the other hand, the English silver coinage managed a 67% drop in the 9 years from 1542 to 1551, the peak of the Tudor Great Debasement. (That book is apparently Glyn Davies' A History of Money: From Ancient Times to the Present Day.)

[UncleFester]

Is he saying the English are faster than Americans...Davies is a fraud!

[legal eagle]

I bought some roman coins, you can see which are which.  And, at least the old coins still held their worth - unlike fungible dollars.

[Rocket-Man]

Similar dip... another buy.

At the closer metal store. A bit more expensive.  100 oz bar at $1.60 over spot out the door.

My son went to the larger less expensive metal store.  100 oz bar at $1.20 over spot. 

We both got out the door at under $37 per oz. with metal in hand.

Another guy at work is probably headed out tonight to pick up 300 to 400 oz.

Smaller store said, "We are looking online at broader inventory at many locations and it is running low"    Seems like people are still buying the physical.