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

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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
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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
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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
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>> 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
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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 http://www.zerohedge.com/article/dylan-grice-explains-why-he-likes-gold-... (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
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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
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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
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At that price my grandmother would sell all her teeth fillings...by proxy, from her grave...as 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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+++ 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
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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.


Do NOT follow this link or you will be banned from the site!