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Dylan Grice Explains Why He Likes Gold, And Why $7,500/Oz Makes A Gold Standard Possible

Tyler Durden's picture


Three months ago, there was some confusion when SocGen's Dylan Grice, one of the brightest big picture strategists out there, released a report profiling the long-term real return on commodities (which was zero), leading some to speculate he was bearish on gold and/or other precious  metals. Today, Grice puts the matter to rest with his latest Popular Delusions piece: "Why this commodity specific value investor likes gold." To wit: "In the hard sciences knowledge builds cumulatively. It propels the relentless growth in man’s ability to do more with less, which makes commodities such a lousy investment in the long term. Yet in the realm of social decision-making mankind is a fool, unable to learn the wisdom of posterity and doomed to repeat its mistakes: the first credit crunch occurred in the Rome of 33AD and the ancient Greeks lived with high inflation. Confidence in central bankers’ ability to learn from past inflation is as likely to be misplaced as it was in their ability to learn from past credit booms. Gold remains the cleanest insurance against such overconfidence." And confirming gold's very unique position in the investment pyramid, Grice's conclusion borders on the ontological: "Shorting mankind’s ingenuity isn’t a smart thing to do. But ingenuity isn’t wisdom. And shorting mankind’s ability to absorb wisdom … well, aren’t you silly if you don’t? With less of the technological risk you’re taking when you buy any other part of the commodities complex, gold is the oldest, purest and simplest way." It appears ever more are starting to agree with this perspective.

Grice's summary observations on gold, explaining why to so many the concept of precious metals is sufficiently inexplicable to be analyzed through the prism of religion:

I recently showed that the long-term real return on commodities since the 1870s has been zero (Popular Delusions, 15 December 2010), and so I am sceptical of long-only commodity investing. The history of our species has been one of adaptability and innovation, and I argued that to buy commodities was to go short human ingenuity. But some thoughtful observers - see Sean Corrigan profiled on zero hedge for a good example - questioned exactly how “ingenious” humanity really is. They suggest that shorting human ingenuity might not actually be such a bad idea!

This is a valid point and one that I want to explore in more detail this week. In the original note I explicitly excluded gold from my analysis, as I have done in subsequent writing. But I have never properly explained what, on the surface at least, appears to be a stark contradiction: how can such a commodity-sceptic as I be so comfortable owning physical gold? What follows is such an explanation. I’ll let you decide whether it’s any more than an elaborate attempt to relieve a particularly nasty case of cognitive dissonance.

Gold is not like other commodities, and other commodities are not like gold. That difference is central to the reconciliation to come. But it is actually much more. It lies at the heart of the absurd contradiction innate to the human condition: how can a species as capable of the creative resourcefulness embedded in space travel, wireless communication,  genome mapping, Viagra, be at the same time, so hopelessly incapable of learning past wisdom, and apparently doomed to repeat past follies?

Previously, when we discussed Bernanke's hubris when testifying in Congress that it would be impossible to get a gold standard back because there is not enough gold, we countered with the simple argument: just raise the price of gold. Indeed, as Grice points out (again) at $7,500/ounce all the dollars in circulation would be backed by gold.

And Dylan brings the thesis full circle: gold is nothing but insurance, but not so much against deflation, inflation or the end of the world: it is insurance against pure human hubris, such as that exhibited by Central Planners, pardon, bankers, each and every day.

Two thousand years ago, Marcus Cicero said “any man can make mistakes, but only an idiot persists in his error.” By such logic our species is idiotic indeed. For our ability to pass knowledge down through the generations applies only to the physical sciences. In the realms of the social decision making, where humility and realism are so often the dupe of hubris and self-delusion, each generation is condemned to relearn the mistakes of generations past.

The abuse of political power, wars and popular uprisings are as prominent in ancient history as in today’s newspapers. In the 5th century BC the helot serfs tried in vain to overthrow their Spartan masters. Today the Libyan rebels’ struggle to topple Gadaffi may be going the same way. Harry S. Truman once said “there is nothing new, only the history you don’t know.”

Financial history is no different. Indeed, it is the systematic tendency towards precedented folly which is such a fascinating feature of our financial heritage. During the South Sea Bubble, as the stock of the South Sea company entered stratospheric proportions, John Martins of Martins Bank bought stock at the ludicrous price of £500 and justified it thus, “when the rest of the world are mad, we must imitate them in some measure.” Nearly three hundred years later, the then CEO of Citigroup, Chuck Prince, echoed identical idiocy with the now infamous utterances “ … as long as the music is playing, you’ve got to get up and dance.”

Tacitus refers to what may be the first recorded credit crunch in 33AD. An edict on usury from the Emperor Tiberius forced money lenders to call in loans and borrowers to sell property at distressed prices, during a “great scarcity of money.” Only when the emperor advanced 100m sisterces to distressed debtors to borrow for three years without interest (the world’s first ZIRP) did the crisis pass. So the credit crunch of 2008 wasn’t the first, and it won’t be the last. Yet only a few years ago we were told that financial crises were a thing of the past.

Central banks knew better. They’d learned the lessons from the past. But history shows that in the realm of social decision making such confidence is rarely warranted. Hubris plays the lead role in all great financial tragedies.

And what is an inflation crisis if not a financial tragedy? Today our central bankers are as confident in their ability to control inflation (Mr. Bernanke claims 100% confidence) as they were in the soundness of the financial system in 2006. Yet history suggests they shouldn’t be, for inflation goes back almost as far as we do. In the ancient Greek comedy, The Frogs, written in 405BC, Aristophanes writes that “the full-bodied coins that are the pride of Athens are never used while the mean brass coins pass hand to hand”. His reference to Gresham’s law predates Sir Thomas Gresham’s first observation during the medieval inflation of Henry VIII’s England by around two thousand years. As the play was written during the closing years of the epic Peloponnesian Wars which would have stretched the government’s budget, we can assume that Aristophanes and his audience witnessed inflation first hand.

Like credit crunches, there is nothing new about inflation crises. It’s not something which happened in the past but which we now understand well enough to ensure it never happens again, any more than systemic banking crises were. Yet when we talk about past inflationary episodes, whether in classical times, medieval times or industrial times we read of the same two villains of the peace each time: financially pressured governments and the politicised issuance of money. With the festering off-balance sheet liabilities threatening public sector solvency throughout the developed world, and central banks little more than fiscal puppets and economic cheerleaders (with the exception of the ECB, for the moment), we’re set to reacquaint ourselves with those villains in the flesh.

Shorting mankind’s ingenuity isn’t a smart thing to do. But ingenuity isn’t wisdom. And shorting mankind’s ability to absorb wisdom … well, aren’t you silly if you don’t? With less of the technological risk you’re taking when you buy any other part of the commodities complex, gold is the oldest, purest and simplest way.

Brilliantly put.


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Fri, 03/25/2011 - 10:07 | 1099239 buzzsaw99
buzzsaw99's picture

$7.5K? $7.5M is more like it, Eventually an ounce of gold will be worth a billion clownbux.

Fri, 03/25/2011 - 10:08 | 1099251 LRC Fan
LRC Fan's picture

Yeah, reminds me of all these analyists who exclaim "I see gold going AS HIGH AS $1,600 this year and silver UP TO $41 or even $42 per TROY OZ!!!!!!!!!!!"  Lol. 

Fri, 03/25/2011 - 10:29 | 1099352 Harlequin001
Harlequin001's picture

What a complete load of total and utter bollocks...

Fri, 03/25/2011 - 10:33 | 1099364 Harlequin001
Harlequin001's picture

I live in a different timezone to the US which means that I go to bed when the US goes to lunch. I therefore miss much of the later discussion and commenting the following morning is old hat. How many of you re read old articles?

This morning I saw fit to comment on the article about interest rates and gold. Would be keen to hear any objective and intelligent discourse on the subject if you're interested either here or in the article, which I will check on periodically...

Fri, 03/25/2011 - 10:40 | 1099397 schoolsout
schoolsout's picture

the system here for commenting on a reply to your comment or whatever is a little lacking.  Makes it hard.

Fri, 03/25/2011 - 10:51 | 1099456 grey7beard
grey7beard's picture

>> the system here for commenting on a reply to your comment or whatever is a little lacking. 

So it's not just me.  Good.

Fri, 03/25/2011 - 11:27 | 1099646 dark pools of soros
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I complained and the sys admin that i don't see around here anymore said some crap about it makes it better for you to read all the comments or some such nonsense..  the old site would send you emails on just the replies..  here you have to track the whole stinkin thread and use your search commands and come back and check over and over..   total waste and also why we now have 90% drive by comments and less discussions

Fri, 03/25/2011 - 11:47 | 1099700 Harlequin001
Harlequin001's picture

I know what you mean, I've tried the filters and resort but they don't work.

I posted this because of the time issue I have with full discussions on various matters. The issue being that many ZH'ers seem to visit comment for a short while and move on. By the time I get to see the article in the morning it's fully commented up.

It's difficult to have a proper discussion in very few words because some of the issues in play are quite complex.

Fri, 03/25/2011 - 15:13 | 1100809 LowProfile
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Note you can link to a particular comment (click on the number link under the date/time).

I suggest you send the above link to tips at zerohedge dot com.

Fri, 03/25/2011 - 14:51 | 1100685 Tail Dogging The Wag
Tail Dogging The Wag's picture


Fri, 03/25/2011 - 11:07 | 1099547 BigJim
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I tend to keep tabs open of ongoing discussions, and then update the page with <F5>, then read through the various replies to my posts by searching with <Ctrl-F>.

Bit laborious... there's probably a better way but I haven't given the matter any thought til now.

Most tabs get closed after a couple days - there's just so much shit coming down the pike now, my machine would run out of memory if I kept open all the tabs I wanted to.

Fri, 03/25/2011 - 11:27 | 1099652 dark pools of soros
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there isn't - that's what we do.   unless they go back to the old site or figure out the features better

Fri, 03/25/2011 - 13:33 | 1100273 Temporalist
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Here is a suggestion for searching for replies to your comments.  After loggin in click on "My account" on the left nav bar.  Open any post that you've commented on and want to check for replies.  Do a "Find" on page (in Firefox Ctrl+F opens the Find command) and type in your username.  You can search the whole page for your comments in just a few clicks.  If there are more pages of posts get to the end and click next or go to a specific page.

That is the fastest way I've found so far to search for replies to comments.

Fri, 03/25/2011 - 11:16 | 1099592 JLee2027
JLee2027's picture

Yeah, reminds me of all these analyists who exclaim "I see gold going AS HIGH AS $1,600 this year and silver UP TO $41 or even $42 per TROY OZ!!!!!!!!!!!"  Lol. 

I don't understand those predictions either, as money is being printed much, much faster than that and price suppression efforts are failing. Eventually we hyperinflate.

Fri, 03/25/2011 - 10:18 | 1099283 schoolsout
schoolsout's picture

CNBS has this from Grice

Buying Gold = Shorting Mankind's Wisdom: Analyst

Commodities are not a good investment over the long term because of man's ingenuity in discovering new ways to use existing resources or new technologies to replace depleting ones, according to Dylan Grice, a research analyst at Societe Generale.

Fri, 03/25/2011 - 10:25 | 1099325 buzzsaw99
buzzsaw99's picture

Is that the same soc gen that had the "rogue trader" who caused the bernank to cut the ffr by 75 bps?

This is the horse and the hound and the horn
That belonged to the farmer sowing his corn
That kept the cock that crowed in the morn
That waked the priest all shaven and shorn
That married the man all tattered and torn
That kissed the maiden all forlorn
That milked the cow with the crumpled horn
That tossed the dog that worried the cat
That killed the rat that ate the malt
That lay in the house that the Bernank built.
Fri, 03/25/2011 - 10:46 | 1099432 Eagle1
Eagle1's picture

Love it! Takes me back to my childhood memories in the late 40's and early 50's. Sadly, those days are long gone and so is our country in the not too distant future. I pain for our grandchildren who will live in the midst of the turmoil that is coming.

Fri, 03/25/2011 - 11:11 | 1099557 Dan The Man
Dan The Man's picture

gonna teach that to my daughter when we're skipping...just a phase

Fri, 03/25/2011 - 10:28 | 1099335 Caviar Emptor
Caviar Emptor's picture

He was against it before he was for it.

Shorting mankind's "wisdom" is the essence of Jevon's paradox, is the essence of economic cycles, is the essence of free markets......

Fri, 03/25/2011 - 11:12 | 1099561 BigJim
BigJim's picture

Wow, nice selective quoting there by CNBS. Anyone sheep reading just the headline would think the conclusion was anti-gold.

Fri, 03/25/2011 - 11:20 | 1099607 schoolsout
schoolsout's picture

That's what I was thinking

Fri, 03/25/2011 - 11:20 | 1099616 A Texan
A Texan's picture

Doesn't this estimate of the price necessary to back every dollar with gold assume that the US Treasury ACTUALLY HAS THE GOLD?  As in all 261.5 million troy ounces, some 8,200 tons.  No one (apparently) has audited Ft. Knox in about 50 years, so how do we know it is still there...and if it ISN'T, then we'll be looking at far more than $7,500/oz.

Fri, 03/25/2011 - 14:28 | 1100560 gosseyn
gosseyn's picture

No, this estimate doesn't rely on the U.S. having the gold.  Did you read the last sentence immediately above Grice's chart? 

"Indeed, as Grice points out (again) at $7,500/ounce all the dollars in circulation would be backed by gold."

Fri, 03/25/2011 - 10:08 | 1099252 Dr. Richard Head
Dr. Richard Head's picture

Smells like $500 silver to me if this were to transpire.  FU-JP

Fri, 03/25/2011 - 12:02 | 1099852 False Capital
False Capital's picture

Yep. $468.75 assuming a 16:1 ratio :)

Fri, 03/25/2011 - 10:12 | 1099254 cowdiddly
cowdiddly's picture

Quit Pumping dang it. Im still trying to buy more. BTFQ (Buy the f-ing quiver). Every time I look at a Maple I feel like busting out in the Canadian National Anthem.

Fri, 03/25/2011 - 10:14 | 1099268 Long-John-Silver
Long-John-Silver's picture

Today's spike is tomorrows dip

Fri, 03/25/2011 - 10:12 | 1099258 falak pema
falak pema's picture

At that price my grandmother would sell all her teeth proxy, from her her sole inheritor I would sanction that.

Fri, 03/25/2011 - 10:13 | 1099262 Dr. Richard Head
Dr. Richard Head's picture

The government will be willing to provide her assistance in the FEMA camp.

Fri, 03/25/2011 - 10:12 | 1099263 cowdiddly
cowdiddly's picture

I got some needle nose pliers and some whiskey. Where did you say your Grandmother lives?

Fri, 03/25/2011 - 11:14 | 1099573 tired1
tired1's picture

Might give grandma a shot of that whisky, too.

Fri, 03/25/2011 - 11:13 | 1099568 BigJim
BigJim's picture

I'm sure your grandmother doesn't need them now.

Fri, 03/25/2011 - 10:15 | 1099264 Cognitive Dissonance
Cognitive Dissonance's picture

As long as the financial masters of the universe are able to distort the minds perception of how the financial universe works and fiats true value denominated in sanity (3% of what it was worth 90+ years ago) the price of Gold will never be allowed to reach its real value. Never. Not so much because it is being suppressed, which it is, but because of the vast number of ordinary Joes who support the fiat by using it.

Notice that nearly everyone here on ZH that believes that Gold should go much higher, of which I am one, understands that the system must break down, even if not fully, in order for this to happen. So long as the fiat alchemy can me maintained Gold will have a tough row to hoe.

But I have plenty of time on my hands. They must keep the plates spinning. All I need to do is wait them out while remaining above water, not an easy task but easier than theirs.

Fri, 03/25/2011 - 10:18 | 1099285 Long-John-Silver
Long-John-Silver's picture

Every Fiat currency throughout history has attained zero value. The US Dollar will not be an exception.  It will be backed by Gold and Silver again or it will disappear as all others have.

Fri, 03/25/2011 - 10:31 | 1099362 Cognitive Dissonance
Cognitive Dissonance's picture

I agree. The system will eventually collapse or morph into something else that instills in the public some sense of value. PMs may or may not be part of that equation depending on who is in control and how the new system can benefit those in control.

But, knowing that the financial elite will have their asses pulled from the fire by any new system (history shows this to be the case every time) usually through an uneven or unequal exchange rate (the better one for them, the worse one for 'us') how exactly do we convert our PMs back into whatever currency is used in the new system that retains the majority of it's pre-collapse value?  

Fri, 03/25/2011 - 10:47 | 1099435 Sean7k
Sean7k's picture

I recommend having enough of a cushion in fiat to handle the transition without resorting to your physical. As the wealthy use gold just as we do, that exchange rate will increase in value once their gold needs to be at it highest value. 

The wealthy always have more reserves- I recommend a similar strategy.

Fri, 03/25/2011 - 11:00 | 1099494 Cognitive Dissonance
Cognitive Dissonance's picture

I agree.


We ZHers are recommending to average Joe's to purchase Gold and Silver. These average Joe's have no capability to accumulate substantial reserves. Yet we require them to accumulate PMs in order to leverage the system apart.

Are we not using people just like the fiat system is if there really isn't a way for them to keep their heads above water without using their PMs during the worst of the crisis to survive and most likely at the worse time for them?

It's a philspohical and moral question that I ask.

Fri, 03/25/2011 - 11:08 | 1099548 Sean7k
Sean7k's picture

Personally, I would "recommend" to average joes to use silver and gold to game the fiat system for short term gains. Hopefully, they can acquire enough gains to buy and put away wealth. This would require they have the ability to time the market to some degree- not likely, but it is an opportunity. 

More important, to the average joe: never invest in something you don't understand.

Fri, 03/25/2011 - 11:46 | 1099741 Cognitive Dissonance
Cognitive Dissonance's picture

But we are not telling people to 'invest' in PMs (at least I am not) but rather to preserve some of their 'wealth' in PMs because the system is collapsing. Is not FRNs promoted in the same manner when it comes to 'long term' investments, as a means to preserve (and grow) wealth by using your FRNs to purchase stocks, real estate etc.?

Fri, 03/25/2011 - 12:30 | 1099977 Sean7k
Sean7k's picture

You know CG, we can only provide information. People must make up their own minds and investment strategies. The system is not collapsing, it is trying to defend itself and evolve past a disease that attacks all fiat currencies. This will allow for a greater and greater transfer of wealth from the lower class to the Elites. 

Gold is a way to protect yourself that is simple and easy to deploy. However, it has some caveats- especially the change over if the system does break down. 

The promotion of other investments whose value is closely interlinked to fiat currency is another choice. A dubious one in my opinion, but a choice that can garner respectable gains PRICED IN FIAT. If the currency fails, then the investment will reflect that. It could be further devalued through bankruptcy, bond haircuts, or government theft through backroom deals (GM, etc).

To buy any investment, based on the imminent collapse of the US economy, would be naive and show a total lack of understanding of the resources and capabilities of the ruling elites.

This could go on for twenty years or 2 months. You could have huge dollar gains, but zero wealth gains in the wash out.

Personally, I look at it this way: the US economy is the largest in the world. We are a productive people with a sizeable amount of wealth. America will not collapse into a heap. It will slowly degrade, slowly impoverish, change perceptions and dreams of living standards. It will do what europe has done- fall to a level of sustainable wealth it can afford to maintain through tax policies that fail to incur rebellion. It will garner greater and greater degrees of control that fail to incur rebellion. It will be careful measured, tested and rolled out in ways the people always choose the status quo over revolutionary change.

Gold and silver may provide a way to better determine your eventual class status. It will always return to the those that understand it's true value and proclivity to purchase liberty. 

Fri, 03/25/2011 - 13:30 | 1100253 Cognitive Dissonance
Cognitive Dissonance's picture

You know CG, we can only provide information.

Yup. Something about bringing a horse to water. I see so many here on ZH frantic with the idea that they must wake up their friends, family and neighbors. We can only trickle knowledge upon them. Only they can decide to absorb it. However, we must continue to trickle even when it appears hopeless.

The key is to accept that we are powerless in getting them to accept our message. Ironically once we reach this inner peace and are no longer forcing the knowledge upon the listener, suddenly those we are talking to will begin to listen because they will no longer be frightened by us, the messenger.

I was only trying to provoke thought and discussion on this thread and I wasn't attacking you. I hope you see that.

Fri, 03/25/2011 - 13:53 | 1100361 Sean7k
Sean7k's picture

Of course. I was only providing some additional ideas to push the discussion. I think the distinctions are important, especially for those new to pm's.

Fri, 03/25/2011 - 21:21 | 1100405 Cognitive Dissonance
Cognitive Dissonance's picture

I agree. Many years ago when I was beginning to wake up I wish there had been somewhere like ZH for me. It would have made the transition from LaLa land to some semblance of reality less jarring. Or at least less lonely.

The problem for most newcomers is the violent whipsawing between finally seeing some sane talk and deep depression. Talking openly and honesty is the only tonic for manic behaviour as we battle our inner cognitive dissonances.

Thank you for the poltie and informed discourse.

Fri, 03/25/2011 - 11:14 | 1099584 BigJim
BigJim's picture

Maybe... but can you think of a better alternative?

Fri, 03/25/2011 - 11:36 | 1099687 Cognitive Dissonance
Cognitive Dissonance's picture

No I can not.

I think it all comes down to the concept of "informed consent" and whether we have a duty, or maybe to what degree are we obligated to inform them in order for them to offer their informed consent.

I can tell people anything. If they have no desire to learn or if they only wish to gain advantage where does my duty begin and end? Again, just asking tough questions. I don't pretend to have the answers. That's the advantage of being an armchair pundit. :>)

Fri, 03/25/2011 - 11:37 | 1099692 Captain Kink
Captain Kink's picture

But they make it through because they have something of value that they can use for trade.  Better than FRN toilet tissue.

Fri, 03/25/2011 - 11:51 | 1099777 Cognitive Dissonance
Cognitive Dissonance's picture

So PMs aren't wealth preservation, but simply a vehicle to get to the other side where they can be converted (either by barter, trade or conversion back into some type of currency) into something that is usable at that time?

It's one thing to bring to the other side of a financial system collapse enough PMs to supply you with food etc for a year or two, another entirely to bring over enough wealth to last 20 or more years. What are we talking about here, survival for a year or two or continuation of a life style similar to what you had to start with? What about those who are retired or near retirement? How do they carry their life savings to the other side and then convert the vehicle (PMs presumably) to whatever is being used on the other side?

Again, just asking questions.

Fri, 03/25/2011 - 12:57 | 1100131 Dr. Porkchop
Dr. Porkchop's picture

An idea that has formed itself in my mind is that this may take more than my lifetime. The metals I accumulate now, may not reach their true value until much later. The money changers may hang on and come up with new schemes, or they may collapse, only to have what follows them be a climate in which moving out of metals is unwise, or even unsafe.

The idea is that I may be part of a transitional generation. The generation that lays the foundation blocks of the great cathedral that may not see completion in my time. What to do then? You must build and store wealth that can be passed on, and try to educate the next generation to be wise.

Fri, 03/25/2011 - 14:05 | 1100436 DoChenRollingBearing
DoChenRollingBearing's picture

+++ Dr. Porkchop!

Thinking ahead, putting down assets that will be good for a long time for our descendants.  Even if gold is not worth what it ¨should¨ be now, it will (likely) be worth so later.

Your idea of course can be expanded to include NOT consuming, and using those savings, in a variety of asset forms ideally, for your children and grandchildren.

Fri, 03/25/2011 - 13:00 | 1100141 Nacho.Libre
Nacho.Libre's picture

CD, can you take this topic and start a discussion in the form section.  I'd like to discuss it in more depth also, but updating and searching the comments section is difficult. 

Come back and post the link so all those interested can join.


Fri, 03/25/2011 - 13:24 | 1100229 Captain Kink
Captain Kink's picture

It would have to depend on one's situation.  I had not considered this, as self-centered as i am.  We each look out for ourselves and our families.  "Winning the Future" means something different in each case--for some it is coming through alive, for others it means long term maintenance of a standard of living (though this will be difficult).

Fri, 03/25/2011 - 12:17 | 1099916 A Texan
A Texan's picture

What is "substantial?"  Does it mean having enough to buy a new car?  House?  A lifetime sipping margheritas on some Caribbean island, with a harem of cute 21-year-old blonds?  To buy and sell Bill Gates?

I look at anyone recommending that friends, family and acquaintances buy gold and/or silver (myself included - silver only) as simply trying to help those people out a little bit.  That their added buy-side pressure may help to drive prices of PMs higher, or help to finally force the market to realize the true value of these metals is, for me, simply cream on the cake.  I'm doing it because I care about these people, not because I'm talking my book.   Face facts, our monetary system is self-destructing (or, perhaps, being willfully destroyed by a few plutocrats for their own self interest), and anyone with SOME hedge against the destruction of the value of their home, stock & bond portfolio, cash, etc. is better off than someone else with no such hedge (even if only by a little).  Better some hedge than...wait for hedge.  Sorry, I couldn't resist - but, seriously, isn't it better for someone to invest some money into an asset that won't depreciate in value than nothing?  Maybe it'll make a few house payments, pay the tax man, put some food on the table and gas in the car, etc.  Beats the crap out of having nothing but fiat.

Fri, 03/25/2011 - 11:04 | 1099527 IBelieveInMagic
IBelieveInMagic's picture

But by God the USD reserve currency has given us a 40 year free ride -- if it can hold a little longer until peak oil/peak commodity comes to pass, it would have served it's purpose. Imagine getting commodities for supplying bits of colored paper/electronic digits -- it's a frigging deal!!

Fri, 03/25/2011 - 10:19 | 1099300 chumbawamba
chumbawamba's picture

That is exactly correct, brother.  Just bide your time and keep accumulating.  Eventually us inmates will bust simply walk out of this asylum.

I am Chumbawamba.


Fri, 03/25/2011 - 11:39 | 1099707 DaveyJones
DaveyJones's picture

an articulate soldier

Fri, 03/25/2011 - 11:46 | 1099744 nevadan
nevadan's picture

Along the same lines as the video, this link to a short story written by Mark Twain changed my perception of the author from only a humorist to one that was much wiser than he is commonly given credit.

Fri, 03/25/2011 - 11:53 | 1099794 Hook Line and S...
Hook Line and Sphincter's picture

Chumba, I used to hear his exact sentiment coming from all sides late sixties and early seventies. Then, the voices were re-absorbed into poverty consciousness. So many of us need to have our asses constantly beat to keep just one eye open (I'm not excluding myself).

When the shame is real caustic, perhaps we're more encouraged to get a backhoe to cover it up.

Fri, 03/25/2011 - 12:06 | 1099858 Cognitive Dissonance
Cognitive Dissonance's picture

This is why I constantly talk about looking within for answers. I can never stop being the manipulated puppet until I understand the reasons why I always submit to being a puppet. To know this answer is to gain true freedom. Once mentally/emotionally free and in the very small minority, I will be ignored since there will be a vast sea of more easily manipulated around me to hassle.

Fri, 03/25/2011 - 12:23 | 1099942 Hook Line and S...
Hook Line and Sphincter's picture

CD, when my daughter was 3, she said the most pure, intense, beautiful thing that a soul without a polluted mind could bring to life. It burned deeply in many ways and was the hot ember of spirit that can only be covered up.

She said, seemingly out of the blue before she went to sleep, 'daddy, why is everyone afraid of's just going back to the same place you were before you were born.'

My goal since has been to assist her keeping at least a small % of her perceptive abilities (the half-blind leading the sighted!). Anyways, what I really wanted to say is that you (as well as pitbullchumba above) have put to electronic text very poignant insights. I have been archiving (and printing out some), and am hopeful that one day, she will have the opportunity to get to know your thoughts. A worthwhile education indeed.

Fri, 03/25/2011 - 14:09 | 1100457 DoChenRollingBearing
DoChenRollingBearing's picture

Hook and Cog Dis, great dialogue.  Yet another reason why I value ZH so much.

Fri, 03/25/2011 - 12:36 | 1100015 Campagnolo
Campagnolo's picture

Chumbawamba are you a racist?

Fri, 03/25/2011 - 13:07 | 1100178 pirea
pirea's picture

this is a stupid question

Fri, 03/25/2011 - 17:57 | 1101327 Campagnolo
Campagnolo's picture

mmm....always refering as "Niggas" brown, dark or colored that a allowed here too?, interesting..

Fri, 03/25/2011 - 18:59 | 1101521 StychoKiller
StychoKiller's picture

Does valuing Intelligence above stupidity make me an Elitist?  How do such labels help anyone?

Fri, 03/25/2011 - 21:25 | 1101872 Campagnolo
Campagnolo's picture

you are right, of course a label as racist does not help anyone, however, keep using once and again the same idiotic word as "niggas, dick sucking, you are my bitch", etc...dont help either.

Chimbawamba is right in his debate points pretty much, but he need to think about his language...only if he is intelligence enough.

Fri, 03/25/2011 - 10:37 | 1099387 johnQpublic
johnQpublic's picture

the price of Gold will never be allowed to reach its real value.


as you stated...not that i'm against gold,just playing devils advocate

isnt the true value of gold pretty close to the cost to mine it?

very little industrial value as opposed to silver after all

its pretty, its heavy and comforting to hold but has little true value, or uses other than jewely and as a contact in electrical components

silver has more actual value than gold

just sayin...

Fri, 03/25/2011 - 10:55 | 1099475 Sean7k
Sean7k's picture

It would behoove us all the realize what wealth is: the value of our production and labor held as a reserve against future needs or ready investment. It is that part of our savings we have no intention of spending. It is what we hope to pass on to guarantee the opportunities for our children.

Thus, the value of gold and silver lie in their ability to retain this value in a small transportable format that doesn't degrade. That it is universally treasured. 

It is not capital, it does not yield a return. It is insurance. 

People who price gold and silver in fiat are missing the point. That value is relative and changing according to points of view. 

Fri, 03/25/2011 - 11:03 | 1099519 malikai
malikai's picture

As a buyer, the price of physical gold and silver is very important to me.

Fri, 03/25/2011 - 11:16 | 1099586 Sean7k
Sean7k's picture

Your price is a reflection of manipulation and a fiat currency whose value is faith based. Price your gold in other commodities for a better understanding of it's value and the value of the fiat substitutes. 

For example, 1 oz of gold has generally bought 1 cow. In the 1700's, 1 oz of silver was a day's pay for the average worker.

Fri, 03/25/2011 - 11:22 | 1099631 malikai
malikai's picture

I fully agree. I just point out the fact that since real money is now purchased with linen, the ratio of linen to money is important as a purchaser of money. At the moment, I would hope that it takes less linen to buy money. When I become a seller of money, I will worry about its value in cattle or manual labor.

Fri, 03/25/2011 - 13:49 | 1100350 Inibo E. Exibo
Inibo E. Exibo's picture

It is a conundrum, isn't it? Knowing full well the paper stuff is ultimately worthless, but having to work so hard to get enough to buy something real. I keep enough cash in my checking account to buy a decent used car and cover rent and expenses for 3 months. Everything else is going to silver as fast as I can get it.

Fri, 03/25/2011 - 13:12 | 1100187 potatomafia
potatomafia's picture

For example, 1 oz of gold has generally bought 1 cow


I even think that this thinking is a little scewed.  For example;  100 years ago, it was much harder to maintain 1 cow..  Today we are multiple times more effecient at maintaining a herd of cattle.  The whole system has become more efficient, we can do more in less time. 


This should mean the 1oz gold should buy MORE than what it did in the past... Not just maintain it over time.  Because as we become more efficient, our money should gain value.


My .02c 

Fri, 03/25/2011 - 13:56 | 1100377 Sean7k
Sean7k's picture

Depends on the quality of the cow. Commercial feedlot or grassfed organic? Efficiency is only one aspect of product quality. 

Of course, efficiency should yield more product at a lesser price. 

Fri, 03/25/2011 - 11:07 | 1099542 Cognitive Dissonance
Cognitive Dissonance's picture

Ultimately value is measured in credibility. And in this case credibility is measured by how long its credibility has been perceived by the general public. Gold has been credible for thousands of years. Dollars for decades.

It is always a matter of perception. This is why the powers always engage in mind control techniques. Perception is reality because we only act upon what we believe is real. We don't act upon things we believe to be fake or not real. And what is 'real' can be influenced by manipulating perception. It is 'real' because we believe it is real. Federal Reserve Notes are "real" money because the masses believe they are real. That is where our real 'natural' power comes from, our belief.......which is controlled by our perceptions.

Fri, 03/25/2011 - 11:11 | 1099558 Sean7k
Sean7k's picture

Your comment needs a reference to your excellent series of commentaries on this point. 

Fri, 03/25/2011 - 11:32 | 1099671 Cognitive Dissonance
Cognitive Dissonance's picture

Thank you for asking.

Folks these are not short reads, but rather 5 chapters of what is really a 100 page (short) book. No one chapter explains my views so all I ask is that you read it all before smacking me in the mouth. At the bottom is all 5 chapters in one .PDF file for portability.

Welcome to the Insane Asylum – Our Collective Psychosis - Chapter One

Welcome to the Insane Asylum – Our Collective Psychosis - Chapter Two

Welcome to the Insane Asylum – Or How We Learned to Stop Worrying and Love the Big Lie – Chapter 3

Welcome to the Insane Asylum – Making Reality Fresh Daily – Chapter 4

Welcome to the Insane Asylum – Seeking Moral Courage – Chapter 5

Welcome to the Insane Asylum – All Five Chapters Downloadable on



Below is a two chapter discussion that might be of interest to some.



End of Empire – Propaganda and the American Myth

End of Empire – Waking Zombie Nations – Psychology, Consciousness and the Egoic Mind


Fri, 03/25/2011 - 11:40 | 1099720 malikai
malikai's picture

CD, do you have a non-scribd link to the PDF? I'm not down with sharing my every personal detail with them to get the file..

Fri, 03/25/2011 - 11:56 | 1099802 Cognitive Dissonance
Cognitive Dissonance's picture


But I'm ignorant to what else is out there. What other sites allow me to up load a .PDF for sharing?

Or I can just send it to you if you wish. Up to you.

ZHCognitiveDissonance at gmail dot com

Fri, 03/25/2011 - 12:25 | 1099952 malikai
malikai's picture

PDFCast seem cool. They allow anonymous uploads and downloads. Registering gives additional abilities beyond the basics. They are a good way to distribute PDFs without the hassle of running your own site or dealing with another site's controls.

Fri, 03/25/2011 - 12:51 | 1100112 Cognitive Dissonance
Cognitive Dissonance's picture

Here you go. Only the 5 chapter "Welcome to the Insane Asylum" document for now.

Fri, 03/25/2011 - 13:13 | 1100195 malikai
malikai's picture

Awesome. Many thanks. I hope that site works better for this sort of thing.

Fri, 03/25/2011 - 12:20 | 1099928 Yardfarmer
Yardfarmer's picture

We don't act upon things we believe to be fake or not real.

an absolutely stunning piece of naivete coming from a self-acknowledged philosopher. of course people constantly, and almost exclusively sometimes, act upon things we believe in, which in the end have proven to be only an illusion. nothing undertaken is real from the outset. it exists only in our imaginations. the process of making it real consists in the fruition of ideals and ideas as found in our conceptions.

this of course involves the admission of something beyond our mere perceptions; in other words, conception. without the ability to conceive of something, in other words the ability to imagine and above all, understand, perceptions are but the ephemeral impressions arising and just as quickly disappearing upon the tabula rasa of consciousness and the essence of avidya or unknowing.

thus our facilities of perception by their very nature are limited and partial and incomplete representations of the world and without our facility of conception, by themselves amount to nothing, much less providing a basis for "belief" or the basis of "our 'real natural" power" whatever that is supposed to mean.

in the final analysis, only perceptions united to the ground of conception can provide any lasting and absolute foundation for philosophical and spiritual activity which alone can lead us to the truth which after all is the basis of freedom.  

Fri, 03/25/2011 - 13:00 | 1100146 Cognitive Dissonance
Cognitive Dissonance's picture

I'm delighted that I was able to entertain you. I provide shows 24/7/365 right here on ZH for your reading pleasure. Please come back often and make sure to tip Tyler to pay for the bandwidth.

Fri, 03/25/2011 - 11:49 | 1099765 Gigliola Cinquetti
Gigliola Cinquetti's picture

Why would you ever use gold as a contact in electrical components ? Silver is the best electric conductor in the table of Mendeleyev  Using gold would be worse performancewise and way costlier

Fri, 03/25/2011 - 12:37 | 1100034 johnQpublic
johnQpublic's picture

its used in computers and chips that you are using right now


its value, however, is equally as arbitrary as paper money, excepting that more cant be printed

i would argue that the only items of true value involve ones life,liberty,freedom and the food shelter and clothing one uses on a daily basis


of course i keep a pile of silver and gold to attempt to preserve that

Fri, 03/25/2011 - 12:49 | 1100101 malikai
malikai's picture

As I understand it, the reason gold is used for those applications is because of its very good oxidation resistance, translating to stable performance of the connections made. Silver on the other hand is much more reactive particularly in the presence of high humidity. Think about silver tarnishing vs. gold.

Fri, 03/25/2011 - 22:19 | 1101987 StychoKiller
StychoKiller's picture

Gold does NOT tarnish.

Fri, 03/25/2011 - 10:45 | 1099430 malikai
malikai's picture

Considering the laws of thermodynamics and supply and demand are what they are fighting, it seems destined to calamity. Every one of them must know this simple truth. I believe their philosophy on the matter is something like "it can all end, but not on my watch".

In the end, you can't eat bullshit.

Fri, 03/25/2011 - 11:32 | 1099618 B9K9
B9K9's picture

There are many analogies to describe not just the inevitability, but the level of control over the outcome. One being the pilot who knows the plane is going down, so the question is not when it's going to crash, but where. Another is the poker player who knows all the other players' hands and need only focus on betting strategy.

To paraphrase your comment, it would read "it can all end, but only @ a time/place of my choosing". It sees like we go over this over & over again, but here is the general playbook that has been utilized for millenia:

  1. Engage credit bubble - drive the madding herd
  2. Liquefy first - go to cash
  3. Withdraw credit - crash system
  4. Acquire productive assets for pennies on dollar
  5. Initiate war to cover your tracks

We are still @ stage 2, with some testing of 3 (bot crashes) & 5 (MENA, et al). Since they couldn't get out in time, they're using the equity pump (ie wealth effect) + UI + SNAP to keep the crowds @ bay while they complete their liquefaction process.

For people who engage in gold hording/speculation, they seem to be counting on being a player during #4 and being able to survive step #5. On this regard, Denninger is correct - you'll never get to spend you FRN x10 valued gold simply because the social situation will become untenable. Don't think the thugs won't have their spies out in force snitching on those who look well provisioned & healthy.

Keep you eyes on the playbill - how well you utilize all your skills/resources to navigate yet another chapter in history's long exercise in 'enslave the sheep and take all their women' depends on knowing the score.

For the chosen, it is critical to weed out the odd alphas that can upset their plans, and replace them with a new generation of complacent, easily led peasants. Oh, you thought illegal immigration and the outright substition of the current group of citizens who have living memories of what it "used to be like" was merely a human right's issue?

Fri, 03/25/2011 - 11:53 | 1099701 malikai
malikai's picture

Everything you mention here is well rooted in history, undoubtably. I can only hope that the Denninger calamity is a bit farther than it will actually go. Either way, my escape plans are worldwide and secured. Also, at risk of saying "this time is different", there are signs of this situation being beyond the control of our masters in NY and London. As you point out, the steps have not occurred in order. The opposing forces are numerous and preparing accordingly. Mass communication may have enabled mass disinformation, but it also enabled groups to organize external to their influence. The hedge is a great example of both.

Only time will tell the outcome.

Fri, 03/25/2011 - 10:57 | 1099482 DosZap
DosZap's picture

I certainly hope it does not go to $7k+,anything over $2,500/$3500oz, and their will be Gvt'Collection.

They never met a commoners dollar, they would not , did not steal.

Fri, 03/25/2011 - 11:17 | 1099602 TGracchus
TGracchus's picture

+1 CD

Fri, 03/25/2011 - 12:08 | 1099870 eddiebe
eddiebe's picture

I disagree. It will be to the bankers advantage to have gold at a vastly higher price. They will manipulate everything so they are holding even more of it than they do now. They will link when it suits them, when credibility in fiat is lost to soak up liquidity, and to re-set the fractional reserve money system. They will also manage interest rates to astronomical amounts so after the link we get to pay much higher rates in real money terms.

Fri, 03/25/2011 - 12:21 | 1099930 Cognitive Dissonance
Cognitive Dissonance's picture

That is a very plausible end game that I have proposed myself. The question really is how will it work out when the system begins to destabilize and the herd begins to panic? I see them as trying to position themselves for a wide variety of endings. As long as they make the rules, I guess it doesn't matter how it all comes apart as long as they can control how it's all started back up again. 

Sort of the reverse to the Golden rule.

Fri, 03/25/2011 - 12:36 | 1100012 eddiebe
eddiebe's picture

The bankers will manipulate perception that cash and bonds are trash and the herd will bid up the price of gold to astronomical levels. The bankers will soak up the dollars, that the herd cant get rid of fast enough. Then when they are good and ready they will announce that the dollar is now backed by gold. The dollar is saved, the bankers are richer, the herd is finished and totally enslaved for their next dollar and meal, while they hold a few grams of gold they bought at thousands of dollars.   Perfect.

Fri, 03/25/2011 - 13:22 | 1100221 Cognitive Dissonance
Cognitive Dissonance's picture

Sounds like something I would do if I was a sociopath with the power to exercise my insanity. Ultimately they all depend upon our obedience. Until humanity has the courage to resist these madmen we can only hope to survive them.

Fri, 03/25/2011 - 10:14 | 1099265 unclebigs
unclebigs's picture

Does this mean I should buy gold and eat silver?  Ah Fuck It.  I'm buying puts on silver and going to Hawaii.  Later SHEEPLE.  LOL!!!


Fri, 03/25/2011 - 10:13 | 1099267 TradingJoe
TradingJoe's picture

Hilarious! I have one hand full of gold coins and one hand full of sliver coins and thats

Enough! This hyper mania wont end well for NONE! I regard is as a storage of value,

Not a means of exchange!

It becomes indeed a "fool's gold"!

Fri, 03/25/2011 - 10:25 | 1099327 tmosley
tmosley's picture

I'm not sure what you mean by "hyper mania".  He is just pointing out the price required for the US to be able to go back on a gold standard in a responsible and sustainable way.  He could have written that article at any time in the last hundred years and shown the same thing (save for the brief period when the price was higher required, at which point he could have said "Why the Current Price Makes a Gold Standard Possible".

Fri, 03/25/2011 - 12:31 | 1099463 DoChenRollingBearing
DoChenRollingBearing's picture

tmosley knows very much that I like gold.  But not a gold standard.

Should they decide to do what I prefer they don´t, $7500 is not the right number.

$55,000 / oz seems about right!

EDIT: mispelling above.

Fri, 03/25/2011 - 10:58 | 1099471 TradingJoe
TradingJoe's picture

We have long ago embarked on a dangerous path of self-destruction and believe firmly

that GOLD is the only "currency" able to save ("US"), we sincerely don't know what 

the current or future government in whichever country or form of power will attempt

to do to save themselves never mind us, the unwashed masses!

Raising gold to such "status" has driven us onto a dangerous platform, we simply have it all in gold and we are safe...really?!

I do hold gold and silver coins but have stopped buying when my portfolio physical PMs ratio had reached 10%! Beyond that I also own other stuff that will be more then capable to insulate myself agains any gov scheme!

Many people will be left holding the bag, again, for following "the herd"! I can understand this hype but won't bless it for it sure is a one way street!

PS $50,000 per oz seems so far fetched imagine the consequences of interest rates, debt payments truly is a huge hype to me! It is as if we'd go back to exchanging PM coins for goods and services, Middle Age again?!?! Sorry cant buy that!

Gold is indeed a speculation nothing else! And as usual the ones initiating it will make money th rest will just feed those profits!

Fri, 03/25/2011 - 12:10 | 1099878 tmosley
tmosley's picture

Why do people feel the need to equate the exchange of physical gold and silver to the middle ages?  We traded physical gold for goods and services up through the 1930's, and physical silver through the 60's.  And it's not as if that means we all have to go throw out our computers and late model cars to do that, any more than we had to do that to trade in anachronistic paper currencies (with the first paper currencies being printed in the 800's, and collapsing soon after).  It's just that trading in gold and silver creates a far more stable environment, as attested to by the great length of time the "world" was controlled by the Byzantine Empire (well over 1000 years, depending on how you measure it, with circulating gold and silver the whole time).

Fri, 03/25/2011 - 12:03 | 1099854 spankthebernank
spankthebernank's picture

I tend to agree with the above mumblings.  Too much talk of the PM's being the be all and the end all.  The people who are destroying the system now already know what the end game is. It won't involve joe sixpack sitting on a mountain of gold and silver in his basement.  Power and wealth will still hold sway when the system comes crashing down and the current manipulators have a plan for when it does and I have a hard time believing its gold and silver to the rescue, no matter the history.

Fri, 03/25/2011 - 12:17 | 1099910 tmosley
tmosley's picture

It's not about "gold and silver to the rescue", it's about "when paper collapses, gold and silver will command goods and services".

That's all there is to it.  

Further, there is no-one in charge.  Not really.  Our "leaders", including those at the Fed, drank their own Kool-aid at least a generation ago.  They REALLY BELIEVE they are doing what is right, but are too arrogant/cowardly to admit that they don't really know or understand what is going on.  Even if they didn't, it doesn't matter, because it is easy to see what is happening.  Gold and silver will be the last ones left standing.  Own them or starve.

Fri, 03/25/2011 - 13:39 | 1100307 eddiebe
eddiebe's picture

 'They REALLY BELIEVE they are doing what is right'

Sure they do: What is right in their best interest, and their best interest is to take from you to enrich themselves. The essence of selfish greed.

Fri, 03/25/2011 - 12:18 | 1099919 eddiebe
eddiebe's picture

Because the elite amongst themselves can't trust each other, they need a solid store of value. That is why gold will always be that final store, as long as human nature does not change radically.

The system does not need to come crashing down at all, but the fiat game will need to end at some point. Paper is paper and wealth is wealth, there is obviously a limit to the game.

That is why I believe a PM link is already baked in the cake. Of course it will be in the bankers best interest regardless, all the more reason to think the link will occur at vastly higher prices. 

Fri, 03/25/2011 - 10:16 | 1099275 Greenhead
Greenhead's picture

George Soros doesn't want a gold standard, he wants a Global Central Bank which will emit fiats to his friends.

Fri, 03/25/2011 - 10:20 | 1099303 gwar5
gwar5's picture

Yes, Soros already has our solution ready for the engineered post-Apacolypse. 

Fri, 03/25/2011 - 11:13 | 1099577 A Texan
A Texan's picture

...except that in his ideal future, many of us will not be stealing his oxygen.  Yes, he's that evil, along with the rest of his cabal and minions.  No, I don't like George the Terrible, he makes George III look like a cuddly teddy bear in comparison, and we revolted against that sumbitch.

Fri, 03/25/2011 - 12:22 | 1099944 gwar5
gwar5's picture

Agreed. I think his final solutions were gleaned as a 15 yo Nazi collaborator. 

I would not be unhappy to see the actuarial tables suddenly catch up to him.

He has nothing to lose and is not the type to leave before he triggers Armageddon.  

Fri, 03/25/2011 - 11:12 | 1099566 LawsofPhysics
LawsofPhysics's picture

Why haven't our black ops guys taken Soros out yet?

Fri, 03/25/2011 - 11:14 | 1099581 A Texan
A Texan's picture

Bought and paid for by Soros - why would you take out your boss?

Fri, 03/25/2011 - 11:21 | 1099621 BigJim
BigJim's picture

Exactly - our Black Ops boys are really their Black Ops boys.

Fri, 03/25/2011 - 10:17 | 1099277 Abitdodgie
Abitdodgie's picture

The graph ends in 08 so for gold to cover dollars I think it's at $60,000

Fri, 03/25/2011 - 10:17 | 1099281 gwar5
gwar5's picture

All the numbers guys seem to agree on a fairly tight range of gold/oz for a gold standard, $5-10K with $7500 smack in the middle. I assume that's gold standard to 40% like a Swiss model.

The $$ number seems to be drifting up, and by the serious people. It might take $9000 after QE 3 and so forth.

But at least there are people coming out of the closet for a gold standard to help put a restraining order on fiat gone wild. 



Fri, 03/25/2011 - 11:07 | 1099537 DosZap
DosZap's picture

We don't need no Steenken Gold Std!.

That just means they get the gold mine, and we get the shaft yet once again.There is no way they are going to pay US anywhere close to the value it gets reset to.


There is a handful of politicans in D.C. I would spare.

 Anyone of them in office past their 2nd term deserves a mandatory retirement at 50% benefits, and 25% if they are worth more than 5 million dollars.

Fri, 03/25/2011 - 12:15 | 1099897 gwar5
gwar5's picture

If there's a gold standard the central banks would be compelled to compete to buy gold.

The market discovery price would be very high as it would be the preferred store of value.

Physical gold could conceivably be used as currency again, ala Utah, and like it is in some other countries.

Sharia compliant banking already bans usury for 1.5 billion people, encourages gold.

Fri, 03/25/2011 - 10:16 | 1099282 Dexter Morgan
Dexter Morgan's picture

I have concluded that It is a mistake to put a paper dollar price on gold.  What really matters is the purchasing power of each, which is accelerating away from each other. If paper is intrinsically worthless then I am not interested in how many paper dollars my gold is worth. I do like the article, though.

Fri, 03/25/2011 - 10:20 | 1099293 Savonarola
Savonarola's picture

Back in the 1970's I read about a young man who worked at the World Bank.

Each time he got paid he would go to the bank and buy gold coins.

He told his wife: If society breaks down you can take these to a farmer and buy a bag of potatoes.

I own PM's and always will, but as a farmer, I worry more about my potato crop.

Fri, 03/25/2011 - 11:41 | 1099719 werealldoomed
werealldoomed's picture

Food > Anything else.

Fri, 03/25/2011 - 10:19 | 1099294 RobotTrader
RobotTrader's picture

How's this retort?  Just to keep things a little more balanced......


"You must realize that the economic and political damage is already done."

Meanwhile, WFMI and SBUX are still skying, pinned at 52-week highs.

"You must realize that the mountain of OTC derivative paper is not going away."

Gold producers are stuck with these huge derivative positions foisted upon them by Canadian investment banks, they will never be able to get rid of them hence, their gross underperformance.

"You must realize that this means the mountain of OTC derivative weapons of mass financial destruction can only grow."

The higher the price of gold goes, the OTC Derivatives losses on major gold miner balance sheets gets even bigger, leading to even worse underperformance.

"You must realize the monumental change in the Middle East is NOT positive for the West in any manner, shape or form."

Retail, restaurant, and REIT stocks are pinned near highs on
anticipation of westernizing this region with fast food, shopping malls,
and office parks

"You must realize that the change in the Middle East is from some form of government to chaos."

Chaos will come to those shorting the Middle Eastern stock
markets. They will be the biggest percentage gainers the next 5 years,
just like Argentina and Russia after they blew up.

"You must realize that the beneficiaries of chaos in the Middle East are Iran and Russia."

Like I said, these markets will absolutely skyrocket the next 5-10 years.

"You must realize that the peak production of energy is behind
us.You must realize that the production of energy in chaos will be less
than under some form of rule. You must realize that this combination of
monumental Middle East change and peak oil means peak oil is no longer a
consideration 10 to 15 years from now, it is now."

Peak Oilers have been harping on this for years. So far, no gas lines yet, no shortages, either.

"You must realize that the Angels (gold prices) are not simple talk
but rather a method used by the great market maven, Jesse Livermore.

You must realize that on the next trip to $1444, that price will
fall to the long term bull market on gold. You must realize that $1650,
a place where gold will trade, is so low it will be comical looking
back from 2015."

The Angels lost all credibility, same with Alf, Armstrong, E.T., and Buzz Lightyear

"You must realize no sovereign country needs to go broke."

They won't. PIIGS bank stocks are among the best performers in
2011, despite skyrocketing credit spreads being gunned and gamed by
hedge funds

"You must realize that the point of correctness in the article "How
and When" that is true is his $5000 to $12,500 figure and not the
prognostications of the next 90 days."

So far, $1,650 has been missed, and we are $200 away. Let's see if we can reach that first.


Let's see if $1,650 can be hit.  Then we can talk about higher numbers.

Just sayin'....



Fri, 03/25/2011 - 10:24 | 1099314 Muir
Muir's picture

Well Mr. Robo, you obviously do not understand.

Those with a couple of dozen ounces will be rewarded and be the new financial elite for their foresight.


Fri, 03/25/2011 - 11:04 | 1099511 TradingJoe
TradingJoe's picture

Sorry but I highly doubt that! owning gold and/or silver in ANY economic/fiscal environment is a smart thing but this hype...please!

Fri, 03/25/2011 - 10:35 | 1099378 Caviar Emptor
Caviar Emptor's picture

No mystery Robo: Fed policy is to inflate all paper. Paper is going up, the domestic economy is getting sicker. That trend will continue. And since the money printing disease has gone global, you can see the same pattern in most developed economies and spreading fast. 

And like everything paper, it can all change in a nanosecond if the money spigot is even potentially closed

Fri, 03/25/2011 - 11:58 | 1099776 zerozulu
zerozulu's picture


Fri, 03/25/2011 - 11:50 | 1099785 zerozulu
zerozulu's picture

I know a very rich person. He is buying gold and any thing made of gold with paper crap. Sooner these elite and bernanke's friend will convert their toilet paper in to the gold and than a new currency. You can find these people on eBay if you know how to look and what are they buying.

Fri, 03/25/2011 - 12:45 | 1100074 Arttrader
Arttrader's picture

Sorry to double post, but I got pushed to the bottom of the convo at login.  Here's the deal.

If you look on eBay, you will largely find that the people making those purchases (at about 85% spot for the silver content in sterling items and about 95% spot for the gold content of 14K items) are not extremely wealthy investors holding physical.  The buyers are primarily refiners.  I've sold scrap, often to the same buyers.  The shipping addresses are VERY close to some the refiners.   They make excellent profit from the spread of selling .999 troy to PM enthusiasts who like shiny things. 

And anyone that holds scrap will either need to get the equipment and skills to refine, or take a big hit when you eventually sell to one of these guys.  You're not going to find a bargain there.  These guys know better than to buy higher than market price.  If you don't know better, you'll learn when you sell them your high premium retail scrap. 

If you think scrap gold will become an exchangeable currency and everyone will walk around with acid-test kits and electronic testers you should probably be stocking up on bullets, beans, and band-aids.

Fri, 03/25/2011 - 13:14 | 1100199 zerozulu
zerozulu's picture

The particular person I am talking about is not a refiner. he is very rich and contributes a lot to the political people (HC) one of them. Buys from eBay and other places to keep a legal record. I don't want to disclose his name. Converting paper to gold.

Mon, 05/02/2011 - 09:45 | 1229171 Arttrader
Arttrader's picture

Last weeks ebay sales were GREAT.  Even with priority mail, these guys will be getting thinner margins by the minute as the correction ensues!

Fri, 03/25/2011 - 10:38 | 1099396 Sophist Economicus
Sophist Economicus's picture

You love to stir the pot, don't you....LOL

Fri, 03/25/2011 - 11:18 | 1099605 LawsofPhysics
LawsofPhysics's picture

"Peak Oilers have been harping on this for years. So far, no gas lines yet, no shortages, either. "

That is not what I remember about the 70's.  Gas was less than a dollar per gallon then too.  It is about perspective, buying power, and supply chain issues.  44 million on food stamps already.  the economic model we use today only works if energy and labor are cheap.  Sorry, those days are gone, thermodynamics are a bitch.  However, it does not mean that people can not do well on the way down.  Rally on.

Fri, 03/25/2011 - 12:23 | 1099939 tmosley
tmosley's picture

Sorry kid, idiots like you don't get to quote thermodynamics, because you don't understand them.

You don't need energy from oil.  There is energy fucking everywhere.  You can synthesize oil for high energy density fuel, and for chemical feedstocks, even if such things are energy negative.  New technologies will provide all the energy you could ever want, and will continue to do so until the universe grows another dimension, and probably longer than that.

Our problems are not being caused by expensive oil or expensive labor, they are being caused by over regulation and over taxation (including the inflation tax).  That's all there is to it.  If this was an oil crisis, oil would have lead money up in price.  It hasn't.  QED.

Fri, 03/25/2011 - 12:35 | 1100026 DoChenRollingBearing
DoChenRollingBearing's picture


Fri, 03/25/2011 - 14:44 | 1100648 LawsofPhysics
LawsofPhysics's picture

Sure fucknut, oil is infinite, just like the earth.  What a total retard.  Folks like you make my silver, gold, arable land, biotech business, and rentals all that much more valuable.  Keep it up, you make me richer every day.  Thanks.

Fri, 03/25/2011 - 15:22 | 1100846 tmosley
tmosley's picture

You think that death is law.  It isn't.  

Get over yourself, death worshiper. 

Fri, 03/25/2011 - 15:21 | 1100753 LawsofPhysics
LawsofPhysics's picture

"There is energy fucking everywhere" - Sure there is, unfortunately it is being used to move several vital biochemical cycles, like the nitrogen cycle, the sulfur cycle, the phosphorus cycle, and the carbon cycle.  Take energy away from these vital processes and it is game over for little fucknuts like yourself.  Sure, we can divert energy from one form to another, but at the end of the day, it ALL comes from the sun, and even that will go out one day (just like your precious X-Box son).  Again, keep making me rich with your flawed economic theories, I can't wait to buy another property in Deer valley, life is indeed good.  Good as gold in fact.

Fri, 03/25/2011 - 15:30 | 1100862 tmosley
tmosley's picture

This is where you are stupid (in addition to everywhere else).  

You think that the values in these cycles are set, fixed, permanent.  They aren't.  BUILD MORE.  How much light is wasted by heading concrete, or the roof of your home?  Screw solar panels, flow water over your roof and experience air conditioning that is better than a high grade industrial system.  But hey, no need to think.  Just assume that everything must remain as it is now until everything is dead.  There is plenty of wasted plant material in the world.  Cut that shit down and replace it with bioreactors producing finished products.  Recycle plastic to oil.  Learn about graphene, which can now be mass produced at about the same cost as newspaper.  Space elevators are possible, as both transportation and energy sources.  Mass produced, super cheap solar panels.  No big deal.  All we need is the capital investment, which WILL be driven by higher oil prices.  

Death is not law.  Get over yourself, death worshiper.

Fri, 03/25/2011 - 15:44 | 1100937 dumpster
dumpster's picture

 copy on tombstone

death is not law   RIP

Fri, 03/25/2011 - 17:05 | 1101186 LawsofPhysics
LawsofPhysics's picture


The funny thing is that all the things Tom mentions, either I or my company are doing.  Recylcing takes a tremendous amount of energy Tom, especially depending what you are recycling.  In fact, I do use a swamp cooler to cool my home and business.  What is so funny about this fucknut is that he says some brilliant things, then turns around and contradicts himself.  He knows economic "models", but really needs to take a REAL course in thermodynamics.  Fucking halarious.  Again, my life is great, and well hedged to be so for a long time (for my children too). 

Fri, 03/25/2011 - 18:03 | 1101365 tmosley
tmosley's picture

I took thermo as part of my chemistry curriculum.  It was my best class, and among my favorites.

I say again, you don't know SHIT about thermodynamics.  You're like a damn "intelligent design" advocate telling me that having life form and evolve is like throwing a bunch of wood and nails together and getting a chair.  Those idiots quote entropy at me, but they don't understand that complexity arises as a result of huge energy inputs.  YOU on the other hand, keep quoting thermodynamics saying we can't make energy, and then conflating that to mean we can't GET energy.  You'd think you had never been outside.

You don't know shit about physics, you don't know shit about economics.  If you did, you would know that there is ALWAYS a way forward.

Sat, 03/26/2011 - 08:37 | 1101775 LawsofPhysics
LawsofPhysics's picture

There is indeed always a way forward, but when the energy (for whatever reason) is not there to fix nitrogen to make fertillizer or no clean water to sustain life, then that way forward always involves a lot of death and destruction, which I am guessing you would think is "good" for the economy.  I apply my knowledge of physics and took my company public in 2001.  What have you done troll?  I mean besides waste time blogging?

Fri, 03/25/2011 - 20:48 | 1101780 LawsofPhysics
LawsofPhysics's picture

Boy, you really are a troll.  I never said we can't get energy.  We certainly can, but how it is allocated becomes very important when dealing with 7 billion people.  Energy is neither created nor destoryed don't you know.

Fri, 03/25/2011 - 17:53 | 1101342 tmosley
tmosley's picture

Who made the tombstone?

Death is not law.  We are not all going to die next Thursday, no matter how many times your masturbate yourselves while watching "The Road" and "Mad Max".

Fri, 03/25/2011 - 17:07 | 1101197 LawsofPhysics
LawsofPhysics's picture

"Death is not law.  Get over yourself, death worshiper"

Once again you prove your stupidity and break down to cursing and nonsense.  I take a month off every year to heli-ski, rock climb, and surf.  Quite the contrary, I worship life.  Sorry the market burnt you. 

Fri, 03/25/2011 - 17:56 | 1101351 tmosley
tmosley's picture

Exactly which market burned me?  I'm 95% long physical silver.  We are headed into a storm, but it will end.  You peak oilers are like a fucking Cthulhu cult.

Fri, 03/25/2011 - 20:40 | 1101764 LawsofPhysics
LawsofPhysics's picture

95% long physical silver?  Is that your entire portfolio?  How big is your your house?  If 95% of my entire portfolio was in physical silver, I would need a bigger house.  I certainly would not trust a bank with it.  Hope you have a good security detail to help you gaurd it through the storm (which I agree is coming).  Mine is pretty good, mostly guys I knew from Iraq in 1988.


You are indeed one twisted little prick.  Just remember Gold and silver are indeed good stores of value, but they don't do much for you if you don't turn them into physical, revenue-bearing, assets at some point.  I dumped half my paper gold holding (still have all my physical) in November and bought another 40 acres of arable land.  Tell me phucknut, do you talk to your PMs every night?  Ah my..   ...precious.

Mon, 05/02/2011 - 09:50 | 1229181 Arttrader
Arttrader's picture

Well, sucks to be you then.

Fri, 03/25/2011 - 11:23 | 1099626 lieutenantjohnchard
lieutenantjohnchard's picture

as mentioned yesterday, and confirmed today, the old catfish mouth now is resorting to changing his mind within the same post. at first, it was monthly when he changed his mind. then weekly, then daily, then post to post. now he can't present a clear non-contradictory thought within the same post.

next he'll be changing his mind word to word, then letter to letter. and before long the "war games' whopper computer will take over and he'll be in such flux that his posts will appear blank without the written word.

Fri, 03/25/2011 - 10:20 | 1099297 nobusiness
nobusiness's picture

Why does the price of good matter can't we simply say total US gold in oz./total dollars outstanding = gold per dollar.  What every that equals becomes the gold value of a dollar.


Obviously this would require accurate data on how much gold the US owns and how many dollars are in circulation both of which would be lied about.

Fri, 03/25/2011 - 10:48 | 1099443 pacu44
pacu44's picture

Yes, but Ben doesnt want that answer for several reasons...


To me, and someone correct me if I am wrong, would stop that maddness as long as the printing press was taken away from helicopta ben....

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