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FOFOA On Gold's "Focal Point", Or Is Silver Money Too?
All those who believe there is sentiment of complacency within the precious metals camp may be forgiven. After all if one likes gold, one should like silver, and/or vice versa. Today FOFOA presents a counterargument. "I don't write about silver very much. Just like I don't write about copper or pork bellies. But, in fact, I have addressed many of the standard arguments for silver over gold in various comments on this blog and others. I'm sure someone will dig them out again and post links as people pose these arguments once again in the comments. But here's a new one. One of the argument for silver that we hear often is that it is "the poor man's gold." So I guess gold is "the rich man's gold." Well, what is the main difference between rich men and poor men? Is it that the rich have an excess of wealth beyond their daily expenses? In fact, the really rich have "inter-generational wealth," that is, wealth that lies very still through generations. The poor do not have this. So what do you think is going to come of all that "poor man's gold" that the silverbugs have hoarded up? Is it going to lie very still for generations? Or will it circulate, to meet daily needs? Note that circulation velocity is the market's way of controlling the value of any currency. Faster circulation = lower value. Lying still for generations = very slow circulation." Thus, today's question - is silver money too?
Via FOFOA
Focal Point: Gold
In game theory, a focal point (also called Schelling point) is a
solution that people will tend to use in the absence of communication,
because it seems natural, special or relevant to them. The concept was
introduced by the Nobel Prize winning American economist Thomas
Schelling in his book The Strategy of Conflict (1960). In this book (at
p. 57), Schelling describes "focal point[s] for each person’s
expectation of what the other expects him to expect to be expected to
do." This type of focal point later was named after Schelling.
Consider
a simple example: two people unable to communicate with each other are
each shown a panel of four squares and asked to select one; if and only
if they both select the same one, they will each receive a prize. Three
of the squares are blue and one is red. Assuming they each know nothing
about the other player, but that they each do want to win the prize,
then they will, reasonably, both choose the red square. Of course, the
red square is not in a sense a better square; they could win by both
choosing any square. And it is the "right" square to select only if a
player can be sure that the other player has selected it; but by
hypothesis neither can. It is the most salient, the most notable square,
though, and lacking any other one most people will choose it, and this
will in fact (often) work.
Schelling himself illustrated this
concept with the following problem: Tomorrow you have to meet a stranger
in NYC. Where and when do you meet them? This is a Coordination game,
where any place in time in the city could be an equilibrium solution.
Schelling asked a group of students this question, and found the most
common answer was "noon at (the information booth at) Grand Central
Station." There is nothing that makes "Grand Central Station" a location
with a higher payoff (you could just as easily meet someone at a bar,
or the public library reading room), but its tradition as a meeting
place raises its salience, and therefore makes it a natural "focal
point." [1]
Salience: the state or quality of an item that stands out relative to neighboring items.
There are two simple, but seemingly, apparently impossible-to-comprehend concepts. The first concept is why money not only can
be split into separate units for separate roles, one as the store of
value and the other to be used as a medium of exchange and unit of
account, but why it absolutely must and WILL split at this point
in the long evolution of the money concept. This means no fixed gold
standard, or any system that attempts to combine these units/roles into
one, making easy money "less easy" and hard money "less hard." And by
"must" I do not mean that we must do this, I mean that it is happening
today whether we recognize it or not.
And the second concept,
once the first is understood, is how and why gold and only gold will
fill the monetary store of value role. Not gold and silver. Not precious
metals. Just gold. People often ask why I don't mention silver. They
assume that when I say gold I really must mean gold and silver, or
precious metals. So let me be clear. When I say gold, I mean gold and
only gold.
Money's most vital function in our modern world is
lubricating commerce, or more specifically, keeping the essential supply
lines flowing – supply lines that bring goods and services to where
they are needed. Without it we would be reduced to a barter economy,
eternally facing the intractable "double coincidence of wants." This is
the problem whereby you must coincidentally find someone that not only
wants what you have to trade, but also, coincidentally, has what you
want in return. And in the modern world of near-infinite division of
labor, this would be a disaster. [2]
So we need money, and lots
of it. In fact, we need money in unrestricted amounts! (I'll bet you are
surprised to see me write this!) Yes, I said it, we need unrestricted
money in order to fulfill this most vital function in our modern society
– lubrication! But here's the catch: we need the right money in order to perform this seemingly impossible task. Let me try to explain.
Money
is debt, by its very nature, whether it is gold, paper, sea shells,
tally sticks or lines drawn in the sand. (Another shocking statement?)
Yes, even gold used as money represents debt. More on this in a moment.
For
this reason, the money used as a store of value must be something
completely separate and different from the medium of exchange. It must
be so, so that the store of value unit can expand in value while
the medium of exchange unit expands in quantity and/or velocity. You may
be starting to encounter my thrust. Expand… and expand. Unrestricted by
artificial constraints.
Compare this concept to a gold standard
in which you fix the value of gold to the dollar at, say, $5,000 per
ounce. The assumption is that this is where the price of gold will stay
for a long time, if you manage the system properly. So what is the
result? You artificially constrain the expansion of the medium of
exchange fiat currency while also restricting the value expansion of the
store of value. You are locking the two together. Do you think this
works and makes sense?
I said we need unrestricted money in order
to ensure the lubrication of the vital supply lines in our modern
world. This is it. This is what really matters. If we have a major
monetary and financial breakdown, what do you think will be the worst
consequence? Do you grow all of your own food? Do you make – or know
someone who does – all of your own stuff? How long could you survive
without any stores? Do you trust your government to be sufficiently
prepared to take care of you with no supply lines flowing?
Have
you ever stretched a rubber band until it breaks? You can feel the
resistance grow gradually and observe the smooth thinning of the band
until finally it loses its continuity and the two parts snap back
stinging your fingers. A tiny observer of this exercise, perhaps a flea
resting on your thumb (or an economist), one who doesn't really
understand rubber bands, might swear that it could be stretched forever.
The smooth change in the stretching rubber gives little warning of the
abrupt (sometimes painful) deformation that is coming.
This is
where we are today. The dollar standard is like a stretched rubber band.
It has been stretched and stretched, but it cannot provide the
unrestricted money that we need today. They think it can. And that's why
they are spewing it out in quantitative easy money boatloads. But it's
not the right money. As I said above, we need the right money in order to perform this seemingly impossible task.
That
resistance you feel is the artificial restraint built into the dollar
system. It appears to be infinitely expandable, but it is not. It is
just like the rubber band. Oh sure, you can print all the dollars you
can imagine, to infinity and beyond! But it won't work. It won't do the
most vital job, beyond a certain point. And yes, we are beyond that
point.
I want you to imagine a tiny micro economy. Just two guys
stranded on a tiny island. Let's call the guys Ben and Chen. They have
divided the island in half and each owns his half. They each have a tree
which bears fruit and three tools for fishing, a spear, a net and a
fishing pole. For a while they both fished often. Fish were the main
trade item between Ben and Chen. Sometimes Ben would take a vacation
from fishing and Chen would provide him with fish to eat. Other times
Chen would take a break.
But after a while Ben got lazy, and Chen
got tired of giving Ben free fish to eat. At first they used sea shells
as money to keep track of how many fish Ben owed Chen. Then they
switched to leaves from the tree. Finally they just broke a stick off
the tree and drew little lines in the sand. If Chen gave Ben a fish, Ben
drew (issued) a line in the sand on Chen's side of the island. There
were only two of them, so it was easy to avoid cheating.
These
lines sort of became Chen's bank account. Each one represented the debt
of one fish that Ben owed to Chen. But after a while they started adding
up, and Chen worried that he would never get that many fish back from
Lazy Ben. So Chen cut a deal with Ben. Chen said he would keep accepting
lines drawn in the sand for fish, but he wanted to be able to use them
to purchase some of Ben's other stuff (since Ben didn't like to fish).
At
first he used them to purchase fruit from Ben's tree. But after a while
the pile of fruit just rotted on Chen's beach. Next he started
purchasing Ben's tools. First the spear, then the net and lastly the
fishing pole. But at this point Chen realized that Ben would NEVER be
able to repay those fish without his fishing tools. So Chen rented them
back to Lazy Ben.
Of course Ben was still lazy, and now he owed
rent on top of the fish he already owed. The lines in the sand grew even
more rapidly as lines were added to pay for rent even when Chen hadn't
given Ben a fish. Then Ben had a great idea. Why even go through the
charade of selling the fishing pole and then renting it? Ben could just
sell Chen some "special lines" which had a "yield." For ten one-fish
lines, Chen could buy a special "bond" that would mature into 11 lines
in a year's time. They tried this for a while, but all that happened
were more lines in the sand. So many lines! Nowhere to walk. Chen's
"bank account" was taking up all of his real estate!
Finally Chen
had had enough. He called Ben over and said, "Okay, since you refuse to
fish for yourself, let alone to pay me back, I want to use these lines
to buy some of your gold coins." Oh, did I mention that Ben had a
treasure chest of gold coins that had washed ashore? Of course these
gold coins were the last thing that Chen wanted, because what good are
gold coins on a tiny island with only two inhabitants?
But
actually, they turned out to be an excellent record of the debt Lazy Ben
owed to Chen the fisherman. You see, at first, Chen bought half of
Ben's gold with the lines he had already accumulated, transferring his
"bank account" over to Ben's side of the island and consolidating his
"wealth" into gold. It worked out to 100 lines for one gold coin, or 100
fish per ounce.
But after a while, Ben realized that he was
running out of gold. He knew it would only be a short matter of time
until he ran out, so he closed the gold window. And once again, Chen
started accumulating lines and special yielding "bond" lines. Finally,
they agreed that the value of the gold coins had to be raised higher
than 100 fish per ounce. Ben suggested 500/oz., but Chen saw the
short-sighted flaw in his thinking. So Chen said that the value of
ounces should float against the number of lines issued by Ben. This way,
Ben would never run out of gold, and his lines would always and forever
be exchangeable for gold coins. Finally, a sustainable accounting
system!
Now I do realize the glaring flaws in this analogy I
cobbled together. So spare me the critique. It is far, FAR from perfect.
But it does help with a few good observations.
First, the lines
in the sand and the gold coins are both money on this island. One is the
medium of exchange/unit of account and the other is the store of value.
The store of value is quoted at any given time in units of lines, but
its value floats, it is not fixed, so it never runs out. This
method of accounting forces Lazy Ben to part with something more
substantial than simply issuing more lines via line-yielding "special
bond lines."
In this case it was the accounting of transactions
between a consumer and a producer. But it works just as well between any
two actors with unequal levels of production and consumption. Some
people just produce more while others can't stop consuming. I'm sure you
know a few of each type.
Also, notice that gold coins and lines
in the sand both represent the debt owed from Ben to Chen. And with
gold, Chen can wait forever to be paid back (which, on this island, is
quite likely). The gold doesn't spoil, and Chen's possession of it
doesn't interfere with Ben's ability to fish or eat fruit. But notice
also that the more lines in the sand that Ben issues, the more the value
of the gold (representing a debt of fish) rises. So the longer Ben runs
his trade deficit, the more debt he owes for each ounce of gold that
Chen holds.
This is not so dissimilar to the special bond lines,
with a few notable differences. The bond values are not only quoted in
lines, they are also denominated in lines. So the principle amount paid
for the bonds drops in value as more lines are issued to lubricate the
vital trade. To counteract this "inflation," interest is paid by drawing
more lines without the reciprocal delivery of fresh fish. But these
additional "free" lines also dilute the value of lines, which leads
ultimately to infinity (or zero value) in a loop that feeds back on
itself.
The more fish Chen supplies to Ben, the more lines he
receives, the more bonds he buys, and the more lines he receives in
service to interest. Eventually Chen will be receiving two lines for
each fish, one for the fish and one for the interest. And then three,
and then four. And so on. Wouldn't you rather just have one gold coin
that floats in value? I know Chen would.
Another observation is
that the medium of exchange on our island devolved into the most
insignificant and easy to produce item. A simple notation in Chen's
"account." Is that so different from what we have today? And Ben could
issue them with ease as long as Chen let him. Once Chen had so many
lines, he wasn't about to just abandon the system, was he? Wipe the
(beach) slate clean? No, Chen wanted to get something for his lines.
Something compact that didn't interfere with Ben's ability to work off
his debt should he ever decide to do so. Something durable. Something
physical from Ben's side of the island. Something… anything other than those damn-stupid lines!
I
hope that this little analogy helps you visualize the separation of
monetary roles, because those talking about a new gold standard are not
talking about this. I understand that sometimes you have to speak in
terms familiar to your audience in order to not be tuned out, but I also
hope that my readers come to understand how and why a new gold standard
with a fixed price of gold, no matter how high, will simply not work
anymore.
The full explanation of why it will not work is quite
involved, and I'm not going to do it here. But the short answer is that
the very act of defending a fixed price of gold in your currency ensures
the failure of your currency. And it won't take 30 or 40 years this
time. It'll happen fast. It wouldn't matter if Ben decided to defend a
price of $5,000 per ounce, $50,000 per ounce or $5 million per ounce. It
is the act of defending your currency against gold that kills your currency.
You can defend your currency against other currencies… using
gold! Yes! This is the very essence of Freegold. But you cannot defend
it against gold. You will fail. Your currency will fail. Slowly in the
past, quickly today. If you set the price too high you will first
hyperinflate your currency buying gold, but you won't get much real gold
in exchange for collapsing the global confidence in your currency, and
then you will have to empty your gold vaults selling gold (to defend
your price) as your currency heads to zero. And do you think the world
trusts the US to ever empty its vaults? Nope. Fool me once…
If
you set the price too low, like, say, $5,000/ounce, you will first
expose your own currency folly with such an act and have little
opportunity to buy any of the real stuff as the world quickly
understands what has gone wrong and empties your gold vaults with all
those easy dollars floating around. You will sell, sell, sell trying to
defend your price, but in the end, the price will be higher and you'll
be out of gold. Either that, or you'll close the gold window (once
again), sigh, and finally admit that Freegold it is.
Yes, the
gold price must… WILL go much higher. The world needs MONEY! And by
that, I mean recapitalization. Unfortunately the dollar is not the right
money. And printing boatloads of it will no longer recapitalize
anything. Today we are getting a negative real return on every dollar
printed. That means, the more you print, the more you DEcapitalize the
very system you are trying to save. Less printing, decapitalized. More
printing, decapitalized. Freegold… RECAPITALIZED. Yes, it's a Catch-22,
until you understand Freegold.
There Can Only Be One
A
"focal point" is the obvious, salient champion. But for many reasons,
some things are not as obvious as we would think they should be. Mish
ended his recent post, Still More Hype Regarding Silver; Just the Math Maam, with the following disclosure:
As a deflationist who believes Gold is Money (see Misconceptions about Gold for a discussion), I am long both silver and gold and have been for years.
Now is it just me, or did he say that because gold is money, he is long both silver and gold?
Here's another one from a recent article on Zero Hedge:
Part 3. People lie…..
“…I want to make it equally clear that this nation will maintain the dollar as good as gold, freely interchangeable with gold at $35 an ounce, the foundation-stone of the free world’s trade and payments system.”
-John F. Kennedy, July 18, 1963“That we stand ready to use our gold to meet our international obligations–down to the last bar of gold, if that be necessary–should be crystal clear to all.”
-William McChesney Martin, Jr. (Federal Reserve Chairman) December 9, 1963Lesson: When someone says you can exchange paper for precious metals – make the swap before they change the rules.
Whoa.
Wait. Did he just take two quotes about monetary gold and extend the
lesson to all precious metals? Is this right? Should we all be assuming
that "gold" always means "precious metals?"
According to Wikipedia:
A
precious metal is a rare, naturally occurring metallic chemical element
of high economic value, which is not radioactive… Historically,
precious metals were important as currency, but are now regarded mainly
as investment and industrial commodities…
The best-known precious
metals are the coinage metals gold and silver. While both have
industrial uses, they are better known for their uses in art, jewellery
and coinage. Other precious metals include the platinum group metals:
ruthenium, rhodium, palladium, osmium, iridium, and platinum, of which
platinum is the most widely traded.
The demand for precious
metals is driven not only by their practical use, but also by their role
as investments and a store of value. Historically, precious metals have
commanded much higher prices than common industrial metals.
Here's how I read the above description. Precious metals have a high economic
value. But because of investment demand, they also tend to have a price
higher than it would be on its industrial merits alone. Gold and silver
carry some additional sentimentality for their past coinage. In other
words, precious metals are industrial commodities with an elevated price
due to levitation from investment demand. Fair enough?
Now to
understand Freegold, I think there are two issues that need to be
addressed. The first is the difference between money, or a monetary
store of value, and an industrial commodity levitated by investment
demand. And the second, once the first is understood, is whether silver
belongs in category with gold as money, or with platinum as an elevated
commodity. You see, the very key to understanding Freegold may actually
lie in understanding the difference between gold and silver with regard
to their commodity versus monetary wealth reserve functions.
So
from here, I will explore the valuation fundamentals of money versus
levitated commodities. And then I will explore the history of silver as
money and ask the question: Is silver money today?
First, money.
Money is always an overvalued something. Usually a commodity of some
sort. But it can be as simple as an overvalued line in the sand, or a
digital entry in a computer database. But the key is, it is always
overvalued relative to its industrial uses! That's what makes it money!
If it was undervalued as money, it would go into hiding, just like
Gresham's law says, be melted down, and sold for whatever use valued it
higher than its monetary use.
It is fair to also say that
commodities levitated by investment demand are overvalued in a similar
way. But there are a couple of important differences. First is that all
of our experience with commodity markets during currency turmoil
happened while the two naturally-divergent monetary functions (the spur
and the brake) were rolled into one unit, namely the dollar. This left
only the commodity markets as an escape. Second is that monetary
overvaluation usually has official support while commodity overvaluation
often has government disdain.
There is this idea out there that
if you have a paper investment market for a commodity that is larger
than the physical units backing it (fractionally reserved, so to speak),
that the commodity's price must automatically be suppressed by the
market. This is simply not true unless we are talking about money
masquerading as a commodity.
A paper market brings in investment
demand and leverage (borrowed money), two levitating factors that would
simply not be present if the paper market disappeared. And these two
factors, "the speculators," can take a commodity's price well into
overvalued territory. Just look at oil for an example. Even the sellers
of the physical stuff say they prefer a lower price than right now, not
to mention during the all-time high in 2008.
You'd think the
sellers of a physical commodity would love a higher price driven by
speculators. But they don't, because it is only a real price if all the
investment participants have a real use for, and ability to take
possession of, your physical commodity. Otherwise it's just a casino.
Back to the Zero Hedge piece:
At
today’s prices, a million dollars in gold weighs less than fifty
pounds, but a million dollars in silver weighs more than 2,300 pounds!
So ask yourself, how many rich people are storing their own silver? How
many hedge funds hold physical silver in their own storage facility?
Cool!
So a million in gold only weighs 50 lbs.? Sounds like low storage fees
and easy delivery! 2,300 lbs. for silver? Wow, that sucks. How many rich
people are taking possession of their silver? Not many, I'd guess.
To
be honest, I really don't know if silver is overvalued or undervalued
today at $30/ounce. But if you are counting on the industrial
fundamentals of silver for your moonshot like the Zero Hedge article is,
or on a busted paper market like the "vigilantes," you may be in for an
unpleasant surprise. The same fundamental arguments that are used today
were also used back in 1982. [3] In gold, at least, we know that
jewelry demand rises and falls opposite the price of gold. [4] But then
again, gold is money, right? So, is silver still money?
Easy Money
Silver
was certainly used as money in the past. So why not again today? Maybe
the people will rise up and demand silver money! Maybe China, or
somebody else, will remonetize silver and start a new silver standard,
right? After all, China was the last to use a silver standard.
I
don't mean to pick a fight with silver. In fact, I write this post with
a heavy heart. But there is so much silver hype right now that I feel I
owe it to my readers to at least try to spell out Another perspective.
And China is certainly on the minds of the silverbugs these days. How
often have we heard about China encouraging its citizens to buy gold and
silver lately? (There's that "gold and silver" again.)
But did
you know that China was practically dumping its silver a decade ago? And
to this day it is still a large exporter of silver. Not gold. Just
silver. In 2009 China exported 3,500 tonnes of silver. That amount will
probably be cut in half for 2010. The drop is due to increases in both
industrial and investor demand, but also due to China's recent move to
stem the shipment of all natural resources leaving its shores.
I'm
sure many of you know that China was the last country on Earth to end
its silver standard back in 1935, in the middle of the Great Depression.
But do you know why? And would China ever want to start a new
silver standard? Does it make any sense now that they've sold most of
their silver? And what has changed since 1935 that would make them want
to go back?
Something very interesting happened after Jan. 30,
1934 when Roosevelt devalued the dollar against gold. The price of gold
went up 70%. What do you think happened to silver? Did it go up more
than gold? Did it shoot the moon? Was it leveraged to gold? No, it
dropped like an unwanted rock.
In response to the falling price
of silver, on June 19, 1934 (four and a half months later) the U.S.
Congress approved the Silver Purchase Act of 1934 which authorized
President Roosevelt to nationalize silver holdings (to buy silver). This
decision resulted in an increase in the world price of silver, which
forced China to abandon the silver standard in November 1935.
The
US Silver Purchase Act created an intolerable demand on China's silver
coins, and so in the end the silver standard was officially abandoned in
1935 in favor of the four Chinese national banks "legal note" issues.
Remember what Mundell wrote (See Mundell in The Value of Gold).
The use of a commodity as money is the overvaluing of that commodity
for profit by the monetary authority. When the US started buying
commodity silver on the open market (to prop up the price artificially)
the Chinese people found it was better to sell their silver coins for
melt value than to use them in commerce for face value (which was lower
than melt).
This effect to China's base money (silver) in 1934
was similar to what the US felt in 1933 and 1971 with gold. The main
difference being that the demand for silver in 1934 was artificial (from
one single entity, the US govt.) while the demand for gold has always
been real, global and market-driven. This price supporting move (not
unlike the Agriculture Adjustment Act and other destructive price
control measures) by the US caused the "Shanghai Financial Crisis" which
lasted from June 1934 until November 1935, finally ending in Currency
Reform on Nov. 4, 1935.
So, in 1934, the US govt. wanted to
devalue (set the price of) the dollar against gold and silver. In order
to do so, it had to influence the market of each. For gold, it had to
inflict capital controls internally and sell gold externally at the new
higher price. For silver, it had to BUY silver at the new higher price.
Sell gold, buy silver. The same exact thing that happened 45 years
earlier with the Sherman Silver Purchase act of 1890.
Pushed by
the Silverites, the Sherman Silver Purchase act of 1890 increased the
amount of silver the government was required to purchase every month. It
was passed in response to the growing complaints of farmers and mining
interests. Farmers had immense debts that could not be paid off due to
deflation caused by overproduction, and they urged the government to
pass the Sherman Silver Purchase Act in order to boost the economy and
cause inflation, allowing them to pay their debts with cheaper dollars.
Mining companies, meanwhile, had extracted vast quantities of silver
from western mines; the resulting oversupply drove down the price of
their product, often to below the point where it was profitable to mine
it. They hoped to enlist the government to artificially increase demand
for, and thus the price of, silver.
Under the Act, the federal
government purchased millions of ounces of silver, with issues of paper
currency; it became the second-largest buyer in the world. In addition
to the $2 million to $4 million that had been required by the
Bland-Allison Act of 1878, the U.S. government was now required to
purchase an additional 4.5 million ounces of silver bullion every month.
The law required the Treasury to buy the silver with a special issue of
Treasury Notes that could be redeemed for either silver or gold.
That
plan backfired, as people turned in the new coin notes for gold
dollars, thus depleting the government's gold reserves. After the Panic
of 1893 broke, President Grover Cleveland repealed the Act in 1893 to
prevent the depletion of the country's gold reserves. [5]
To "set
the price" of anything, you must either buy or sell that thing.
Governments cannot just "set" prices. Whenever they try, the items just
disappear or go into hiding. If the price you set is lower than the
value, then you will have to sell. If the price is too high, you will
have to buy. More from Mundell:
"[In the 1870s] France
pondered the idea of returning to a bimetallic monetary standard, but
with American production of silver going up and Germany dumping silver
as the new German Empire shifted to gold, France realized it would have
to buy up all the excess silver in the world on its own."
So...
if your standard is going to overvalue something, you must buy it. If
you undervalue something, you must sell it. And what was the US doing
with gold throughout the entire Bretton Woods system? That's right, it
was SELLING gold through the gold window. So it wasn't the gold that the
US monetary authority was overvaluing for profit. It was the
cotton-pulp paper in the FRNs! Cotton pulp! That's the overvalued
commodity today!
Remember what Another wrote? "Any
nation/state can put its economy/currency on a gold standard. They only
have two requirements. Own a stockpile of gold and raise the price very
high!"
Why do you think you need a stockpile of gold to
start a gold standard? In the case of France in 1870 above, they
realized they would have to buy all the excess silver in the
world to keep a silver monetary standard. You don't need a stockpile to
do that! Yet you don't need to worry about buying all the gold to have a
gold standard. You need to be prepared to SELL! That's why you need a
stockpile. So what's the difference?
Could it be that silver is
only a commodity today (and for the last 150 years at least) and because
of this, any monetary use is not backed by the free market? Any silver
standard is an unnatural levitation requiring BUYING of silver by the
monetary authority. While a gold standard gives the free market what it
really wants, gold, requiring SELLING of gold by the monetary authority.
Can
you find an example where the opposite occurred? Can you show me where a
government ever had to buy gold and sell silver (at whatever price or
ratio) in order to maintain its system?
The US quit bimetallism
during the Civil War, prior to the Silverite movement. [6] This ended
the government's "overvaluing" of all silver for use in money. After the
Civil War, there was a difference between commodity silver (what the
miners dug up) and monetary silver (overvalued silver in US coins)
because in order for the US to sustain bimetallism (or a silver
standard) it would have had to value (buy) ALL the excess silver in the
world at the overvalued price of the coins.
This meant it would
have to BUY any and all commodity silver that was offered for sale (to
prop up the price). You see, silver needs its price propped up (huh?
why?) while gold appears to need its price suppressed (see: The London
Gold Pool). So rather than actually "valuing" silver, the government
compromised with the Silverites and agreed to buy a specified quota of
commodity silver. At least it did until it ran out of gold in 1893.
Something must have been wrong with that 16:1 ratio in the 1800s, huh?
70 years later, when the price of commodity silver finally
overran the value of the coins in 1964, it was because of cotton-pulp
printing (inflation) only, not global monetary demand! This is exactly
how commodities act. They respond directly to monetary inflation until
the commodity value overruns the face value.
So it seems that the
free market wants to exchange its "money" for gold. But "the people"
(at least in the late 1800s) wanted silver to be money. They wanted to
SELL their silver to the government while the government SOLD its gold
to the market. This is a one-way flow that tends to end in a vault full
of silver with no gold. So why did the US Government intervene in the
silver market and support this folly?
The government caved
primarily because of politics (pressure from the Silverites – the
farmers and miners out west), and tradition secondarily (past use of
silver as money, the US Constitution, etc.). Politically, "the people"
will always want easy money. And silver was their easy money of the day.
Price
deflation in the late 1800s was hurting the farmers. The farmer
business cycle is seasonal. Borrow money for equipment and seeds to
plant in the spring. Then grow your product. Then harvest and sell in
the fall and pay off your debt with the proceeds.
The effect of
causing an inflationary environment through "easy money" means that it
is A) easier to pay off your debt in the fall than it was in the spring
(or the year before), and B) you get more money for your crop than you
did last year. The effect of a deflationary environment is the opposite.
Your debt gets harder to pay and you get less money for your crop. It's
the same for all businesses actually. But farmers were a big political
group in the 1800s that were all roughly on the same business cycle.
This
bears repeating: "The people" wanted silver back then (late 1800s)
because it was the "easy money" of the time. "The people" NEVER
want harder money. Today silver would be harder money, so it will never
have the support of "the people" (other than the silverbugs). 16:1 was
quite obviously an artificial monetary ratio, because whenever
they maintained it, there was a run on the gold. The market wanted to
push the ratio much wider, and the government, in service to "the
people," fought that market force.
Today silver would be "harder" money than cotton-pulp. This is why there will NEVER be a big enough political movement of the people that will bring back a silver standard. We have now discovered easier money than silver!!!
If
you want harder money, it's gold. If you want easier money, it's
cotton-pulp. So where does silver fit in? Well, it's just another
industrial commodity with a lingering sentimental mystique as the old
"easy money."
And where does gold fit in? Freegold of course! The monetary wealth reserve as demonstrated by the Central Banks of the world!
So
what if gold really is the wealth reserve of choice for the giants that
A/FOA said it was? That means silver is nothing but an industrial
commodity today, being somewhat levitated by the lingering hype. What if
silver is just a commodity, like copper or oil?
Monetary value is a self-supporting, self-sustaining levitation. Money is the bubble that doesn't pop. The price of money is arbitrary. Not so with commodities.
So... is silver really money today? I know gold is. Here's the evidence:
Does anyone have any evidence that silver is still money today?
Yes,
I am aware that the stock of silver is disappearing into our landfills.
These "properties" of silver have been with the metal since the early
80s, through decades of single-digit prices. [3] So, is jacking the raw
materials from industry and holding them hostage for ransom at a higher
price the real play today? (Hint: this tactic often ends badly for the
speculator.) Or is the real play front running the new global monetary
wealth reserve during a transition in our international monetary system?
Here's
one silverbug who is starting to put two and two together! I think he
might also be reading FOFOA. ;) (Hi Joe. I think you are confusing me
with FOA in your video. But that's okay, it's a wonderful compliment to
me! Tip to others: If you mention me in a video include a link in the
description and I might just find your video.)
Did you hear him at 6:35? "Only one metal in the world that fits the
bill for money, and that's gold!" That's right Joe! Good job from the
"Silverfuturist". There can be only one! Did you see my subheading? And
please read the description of a "Focal Point" again. It's the first
thing in this post. Can you put two and two together like Joe?
I
don't write about silver very much. Just like I don't write about copper
or pork bellies. But, in fact, I have addressed many of the standard
arguments for silver over gold in various comments on this blog and
others. I'm sure someone will dig them out again and post links as
people pose these arguments once again in the comments. But here's a new
one.
One of the argument for silver that we hear often is that
it is "the poor man's gold." So I guess gold is "the rich man's gold."
Well, what is the main difference between rich men and poor men? Is it
that the rich have an excess of wealth beyond their daily expenses? In
fact, the really rich have "inter-generational wealth," that is, wealth
that lies very still through generations. The poor do not have this.
So
what do you think is going to come of all that "poor man's gold" that
the silverbugs have hoarded up? Is it going to lie very still for
generations? Or will it circulate, to meet daily needs? Note that
circulation velocity is the market's way of controlling the value of any
currency. Faster circulation = lower value. Lying still for generations
= very slow circulation.
So as you contemplate which commodity
will be the monetary focal point of the future, I'll leave you, as I
often do, with a little music.
Sincerely,
FOFOA
»
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You are mistaken. Gold and silver DID hold their value and DID protect from inflation in Wiemar Germany.
I will answer your question in the spirit it was asked. Gold is not currency, it is money. You trade your money for whatever local currency is in use and then you conduct your business with the limited amount of local currency you traded a bit of your gold for. In the middle east, Bedouins buy gold wire with their profits and travel from country to country. When they need to make a purchase, the Bedouin woman removes a bit of gold cord wrapped around her arms and sells it for the local currency.
In Argentina, the Euro and the US dollar were the preferred currency, but gold is still a well accepted form of wealth. So much so that there are gold markets in every neighborhood (the "we buy gold" kiosks). You just sell a bit of gold ( a piece of chain, a wedding band) for the local currency at today's exchange rate, and do your shopping. Don't believe me, here is from Ferfal himself:
http://ferfal.blogspot.com/search/label/gold
In Zimbabuwe, the population pans for gold so they can eat. It is the only form of money accepted outside of the cities.
http://www.youtube.com/watch?v=7ubJp6rmUYM
It doesn't matter why the use it, it matters that in order to eat, they use it as money.
So, what do I believe and why do I save gold and silver. I believe we are heading into a lost decade or two. The economy will slug along with the occasional shock that the Fed wil print more money to fix. 35-45% unemployment will be papered over by the government with eternal UI. rising commodity prices will double the cost of living (including energy) within 2 years. Those with paper savings will burn thru their savings much faster than those with metal savings. Eventually, 70-80% of the population will be in some form of Federal Government assistance (whether energy vouchers, or food cards).
At that point, those with metal will be able to either purchase real wealth (farms, homes, buildings) at deeply discounted prices. Those with metal will be like the rich gringo in poor south american countries.
Eventually, either the currency dies ( no oil for dollars, therefore no use for dollars) or the political forces force a change. Either way, a new fiat currency is issued at the other side. Those with metal savings, transition to the new currency first. Those with nothing, take a generation to recover.
Junk this
Now junk this
Maybe I'm wrong after trying to decifer the long rant, so please correct me:
FOFOA's argument is that silver is not a good store of value. I totally agree due to market forces such as industrial demand. FOFOA is trying to crap on the silver parade though, because we all know that silver is undervalued far more dramatically than gold. Silver isn't just a store of value right now, its an investment that will prove far wiser in the medium term than gold. Yes, many of us silver lovers will eventually convert into heavier gold holdings -- but that day isn't today.
One thing we'll all agree on for now is dumping the fiat immediately for everything except the small amounts we need for daily consumer transactions such as food, utilities, mortgages, guns, ammunition, etc.
Chen should've taken the spear and stabbed lazy Ben, used the knife to cut him to bits, then placed the bits in the net to chum fo Treasuries. What the hell was he thinking?
Perhaps... if he was a banker by trade.
"Normal" people would not choose to cannibalize society and live alone, in isolation, counting their "lines in the sand" to pass the time.
Gold will always be a store of value - not silver for all the reasons FOFOA mentions.
That said, silver will have a short window where it does become a store of value (above its industrial usage) and we are seeing the beginning of that window. It is in this short window where silver will shine and increase in value and demand. The trick is to know when that window ends and when best to convert or exchange silver for items that will outlast the silver monetary storage window (ie real estate and... gold).
FOFOA is right but it doesn't matter because if you're buying silver you already why you are.
"Gold will always be a store of value"
For what reasons? If gold is not used by at least 99% of the population in a given territory to make purchases, then it is not a currency.
People will always need real estate, salt or steel. Gold? What for?
If this is your first time at Fight Club...
"Gold? What for?"
"Gold will always be a store of value"
You answered your own question in your post...
Gold is not meant to be a currency, you must not of read the article. In fact we NEED fiat digital/paper currency seperate from a store of value.
Have you traveled to ME, India, or Mainland china? Do they store they excess work (savings) in paper promises?
Or do they use something more "elemental"?
View the world through myopic western thoughts at your own peril.
Families with generational wealth (do you think they post here?) believe in golds value at preserving wealth THROUGHOUT generations, and really do not care what you or I beleive.
Talking about that, the only method to know if gold will indeed protect from hyperinflation is trying to find if generational wealth families (I'm talking about big ones, such as the Rothschild) are currently buying gold by the ton.
If they are not, I'd recommend panick.
"generational wealth families" don't need to be buying gold by the ton currently - they own tons already.
You clearly don't understand how free floating physical gold recapitalizes physical gold owners.
They don't need to purchase more. That would crash the system. They currently find the functioning monetary system as it is has more utility (to them) than additional gold and a crashed system. I have previously described this recapitalization process here: Gold is not Money and more briefly again here: Synopsis: Gold is not Money.
I understand that reading the FOFOA article above (Focal Point) without the context of his previous work may make his points a little tough to comprehend. Especially if one has just been purchasing silver in the "crash JPM" excitement. These things don't make his points less valid, however, just less accessible for some. Cest la vie.
nuinut,
I am always very happy to see people here at ZH who understand FOFOA better than I do.
I 100% agree that those who have not followed his work for a rather long time will have problems understanding his logic and arguments as I have only recently really gotten to.
FOFOA said in his last column that it really does not matter whether you believe in Freegold or not. You will benefit anyway just buying the physical. Almost a free lunch.
We who can (or better yet did) follow the 'Giants' will likely win big, but as always my disclaimer: No one can predict the future.
they've already stolen most of it
Well, you can't eat gold or silver, but I guess fiat paper builds bodies 12 ways like wonder bread, and is quite tasty with a little salt and pepper I hear.
PM's have at leat 3 uses I can see - in a SHTF scenarion where fiat paper would be just paper, you could likely trade some PM for things you needed - value as a currency. If the PM you acquire happens to be wisely purchased coinage, there can be additional numismatic value besides currency value.
I recently traded some PM for a 5 acre piece of real estate, so I guess you could say I used it as currency? And that isn't even in a STHF scenario.....yet.
And there is the commodity value of PM's, silver in particular, as more industrial uses are being discovered than there is silver to cover them.
Why do I get the feeling Ponzi is working overtime to keep the PM values low as he acquires it by the bushel full?
Having followed the gold & silver markets for many years (about 26 to be exact), I feel obliged to add my 2c worth to the discussion. To say that "gold is the real store of wealth and the like" obscures from the specific dynamics in play at the time. To wit, today we are undergoing 'finacial pumping" by the Fed to reflate asset prices and hopefully(lessly) the economy at large. And specifically, in the gold/silver arena we're witnessing a revaluation of silver versus gold from the cockposterus levels (thanks McBags) that existed during these last 27 years. That this ratio ran at these ludicrous levels (of an au/ag ratio ranging from 46 to as high as 101) during a time of general prosperity is quite an accomplishement. Now, though, we are seing the unwinding of this terato-genesis. Moreover, this unwinding (drop of the ratio in favor of silver) is showing very strong impulsive-type momentum. I personally do not remeber such momentum combined with staying-power ever. My educated guess is that only a sharp flash-crash could reverse this (and by no means with certainty). Looking at the action of the tape, it looks like silver has quite a big hard-on. Basis Fridays Crimex close, we broke the flat/rising trendline in the ratio slightly. I would think the odds favor a further collapse of the ratio to a min. of 35-40 from today's 47-ish level. And that for starters. Of course you can hedge against this by being short the equity indeces - the classic winning trade of the past decade.
Brief and insightful. Thank you for your comment.
Windsocks have more insight.
I agree with 'shuswap', although reading FOFOA is one of my favorite habit. Who knows? Maybe silver can be a next kind of diamond in 25th century?
I've found personally that I only consider something money if my weed dealer will take it... in exchange for weed. does anyone know if dispensaries take credit cards? or coins? never found the need to go so i don't know.
Never understood the dispensaries in CA, geez, get some seed and grow it yourself.
I liked the little island story (Admittedly, that’s about as far as I got through this article). But frankly, I don’t see how either Ben’s gold or his lines in the sand have significant economic value to Chen. Neither provides food, shelter, power, transportation, entertainment, or any of the things that Chen is likely to want most under his circumstances. I say, if Ben won’t get off his ass and help produce some of these things then Chen should just kill him and eat him. Cannibalism is part of modern economic theory too.
It could become our unknown unknowns....
fofoa is a con
Any one make any shit out of this article??
Lets get back to buying silver and crash JPM..
There's 12 minutes of my life I'll never get back.
Silver, bitches.
REALY
Come to together right now over me..
I've been a gold bug for many years now and i also used to play dungeons and dragons.
When i see all these people talking earnestly about gold and silver coins...
i can't help thinking - are we all really thinking about going back to those happy loin-cloth days rolling a saving throw?
Not that far. Just a top hat, monocle, and a good scotch. Perhaps a brace of pistols for a stroll downtown.
The Gold/Silver ration will be determined by how healthy Globalism is.
If Globalism in the new market refers to something shipped a few hundred miles, Gold will pay for it. 10 miles and it will be paid in silver.
My gut feel is that 1 ounce of silver will buy a mini-van full of Ben's toilet paper.
"My gut feel is that 1 ounce of silver will buy a mini-van full of Ben's toilet paper."
And the guy with the TP is 50 miles away...
I have TP when none can be gotten and you think i will give it up for silver?
lol . Its really gonna turn heads aint it? I am used to a simple , frugal life. But america is so spoiled i think there will be many killings for small things.
potatoes, salt sugar etc. all so easily to be had this moment and few imagine a disruption in the supply chain. But it will come as sure as day follows night. Few are warned and we are among them and even we have not fully come to grips.Zerohedge readers have a definite leg up on this sitiuation. Thank you.
that would suck, a big pile of silver buried in the yard, and get killed for a roll of toilet paper. maybe I could trade it for a blowjob first, the t/p not the silver
Lets connect the dots ...
It has been widely reported that intense lobbying was directed towards the CFTC as the policy regarding position limits was being discussed.
Hundreds of complaints from retail speculators has not gained traction among the poo bahs at the CFTC, so its stands to reason that this lobbying - call it bribery - has come from the larger commercial participants.
Big surprise!, we hear that no formal decision has been reached and the issue has been delayed.
Who could see that coming?
Obviously the threat of pending sanctions did not deter the fine traders at JPM from running over the market again. This is very similar to the market performance ahead of the CFTC hearings in March, when JPM continued their intervention in full view with not a care that they would be under any additional scrutiny or subject to reprisal.
The system is CORRUPT, bought and paid for, and they could care less who sees what they are up to. Not that it matters because even as they carry on with their manipulative trading, there are many apologists that continue to deny anything unsavory is ongoing at all.
JPM is the largest participant in the paper silver market, and the largest short by far. SLV is marketed as a vehicle to own physical bullion, and its reported holdings have been growing rapidly, in some cases expanding faster than the rate silver is being mined throughout the world.
Meanwhile the documented physical bullion inventories are gradually being drawn down, and investors around the world are competing to buy the metal.
Eric Sprott reported that his funds have accounted for more silver buying than was estimated for the entire world for the year. And we know buying has increased in China, India, and even in the United States as reported through record silver eagle sales.
Retail bullion shops are having trouble keeping stocks to meet the increased demand. Where is all this silver coming from? It does not add up.
JPM claims that their short exposure is a hedge against physical bullion. JPM is the custodian for SLV, which itself is supposed to be backed ounce for ounce with physical bullion, but in all probability is not fully leveraged to the metal.
Now CFTC caved in to delay and minimize the requirements for position limits on the big players like JPM.
Is it the bullion owned by SLV investors that JPM is hedging through its short exposure?
What kind of custodial relationship involves taking the other side of the trade for that bullion you hold in trust?
What if the investors in the SLV are using this ownership as a hedge for their own outstanding short position at the COMEX?
How many times can the same metal stand as a hedge against multiple trades?
What if that metal does not exist in the first place?
SLV can NOT secure such large additions of silver bullion even as many other worldwide buyers are finding it very difficult indeed to take delivery?
The regulators do not care a rats ass about maintaining an orderly market, or they would have acted long ago to restrain JPM.
There is a monumental conflict of interest on many levels.
There is no legitimate inventory of actual silver being hedged at all in these trades. It is paper hedging paper, hedging more paper!
There are a lot of people trying real hard to pretend its all above board and sustainable.
Some high profile articles have appeared in the media recently to suggest that silver is abundant, the institutions are playing by the rules, and its all just myths that would imply otherwise.
Meanwhile, short term lease rates for silver remain negative across the board. Is that just myth too? And somehow in the midst of all this, silver has been capped and driven lower for yet another week and only the tinfoil hat crowd seems to notice or care.
via Lemet!
"JPM is the largest participant in the paper silver market, and the largest short by far. SLV is marketed as a vehicle to own physical bullion, and its reported holdings have been growing rapidly, in some cases expanding faster than the rate silver is being mined throughout the world."
Precisely; the above is one reason I moved all of my IRA SLV to Sprott PSLV.
Silver is not only money, its a form of protest against the crimes of state. Real money does not rob from those who hold it. In my opinion buying PSLV for IRA's and physical silver for non- Ira is the answer to the massive and on-going paper manipulation by those above the law or anything resembling ethics.
+hugely good comment
I sold a few bars at the shop the other day... not much fanfare as you describe
I call bullshit on this article. No way someone this smart and clearly well informed could come to such a conclusion on silver unless he writes for JP Morgan. This is written by someone who owns a shitload of gold but most likely not enough silver to take over the world.
Let's see - 98% of all the world's gold is still sitting above ground in a vault somewhere (be it central banks, Crimex, ETFs, or Yamashita's gold) yet nearly all silver reserves have been depleted at the same time that industrial uses are exploding? It doesn't matter that FOFOA thinks silver is money or not. Clearly there are very powerful forces that are extremely afraid of silver's competition with their shitty fiat. Love to see who's payroll FOFOA's on.
ok i get ya.
and i like the idea that the next decade will be silvers like the last was golds.
but i need to know - what are the industrial uses that are increasing? i know its used in industry but is silver like rare-earths and used in high-tech?
i think gold will continue to rumble along with the support of central bank purchases(amongst other things, ben) . silver i doubt will get this
i want to pile in to silver but need more info - go on make me a silver bug.
rfid, antimicropbial, next generation zinc/silver batteries, super conducting materials,mirrors, solar, many others
This might help.
http://www.silverinstitute.org/silver_uses.php
Very well said. Silver is far more rare than gold and it is both money and an irreplacable technological metal. US mint is eating up almost every ounce of US domestic production just making silver Eagles. If silver isn't money, someone needs to tell the mint.
If silver isn't money; someone needs to tell the people on this planet; they thought it was for the last three thousand years.
i think it is best to describe silver as the common man's honest currency.. a lot of those industrial uses can be replaced by other metals; just not as good.
the main point is this: when higher % of gold is needed for oil trade, a ton of industry will nosedive.. so all those great uses for silver won't be asked for..
but silver will still be a solid form of currency - but gold will dictate the pricing
+1
Double post.
The Bearing (with a hole where the brain should be) offers his thoughts, with out long arguments:
1) For wealth preservation, I agree 100% with FOFOA re gold.
2) I also believe that silver will be very useful in a SHTF scenario.
3) FOFOA typically does not describe SHTF scenarios, and who really knows if one will occur?
4) I agree that trying to tie a fiat to a PM ("gold standard") etc. is always futile.
5) Even worse is trying to manage a gold / silver ratio.
6) I have NO PROBLEM holding any / all PMs, I do! Most is in gold.
7) Lead moving at high velocity can be awfully precious!
8) Nickels bitchez! (a nickel right now has $0.065 metal value).
9) You ALL forgot 52100 carbon steel in highly engineered components, the Bearing hopes this will not happen again!
...
I like FOFOA's material a lot, but it is difficult to wrestle and understand. I do not think he has problems with holding silver.
But, if you are RICH, or want to become really really RICH, then gold is your place.
No one can predict the future. That's why I diversify. But, I have bought FOFOA's well thought ideas that gold is where the wealth will go.
9) You ALL forgot 52100 carbon steel in highly engineered components, the Bearing hopes this will not happen again!
If memory serves me correctly grade 52100 is an alloy grade. Anyways at one time I made a lot of money from 52100 and the mod 1 and mod 2 varieties. I turned a fair amount of that into gold. Sure glad I did.
Indeed 52100 alloy steel (something like 1% carbon and 1% chromium -- meaning NOT enough chromium to make it stainless steel) is what most rolling bearings are made of. Stainless steel (perhaps 10% chromium) is too weak to serve as rolling bearings, who, sigh, have a rough and boring life, just going around in circles, under pressure even...
52100 is damn special to us rolling bearings, precious even.
The Bearing is pleased that you were able to turn your 52100 earnings into Au. A great trade!
A great trade but I miss those days. I also participated in the carburizing grades of 5120, 8620, 4320, 9310 and the rarest of all 3310. Some were even vacuum arc remelt. Sold my business in 2001.
Be well my bearing friend!
#7 - LOL
Perhaps I should have included lead delivery devices as well?
Like the 7x39 mm AK-47 and the 9 mm Beretta I own?
Glad you liked the humor, but you have to admit: it's true!
Is that weirdo in the youtube video the best he could come up with to support his point?
Dear FOFOA, MISH
In spite of your both negative feedback, at that time on silver, I recommended to my mother to buy in Oct. 2008, 97 000 oz of silver through Goldmoney.com
Presently, in my country, I can sell this silver at $42/oz. My mother paid about 9oz an ounce, then.
The return is phenomenal 466%, today. And that in 2 years.
With due respect, swimming against the current (Mish, FOFOA), provided my mother with this respectable return.
Is silver money? I guess it is.
Is it better money? I guess it is.
Can it be confiscated. I guess it can not.
Can it be forbidden to use. I guess it can not.
I drink to all of us Silverbugs, we suffer like nobody else, but:
Buy Silver Kill JP Morgan.
+ 50 to 1
ZHfan,
FOFOA is speaking of gold and silver in respect of an event which has not yet happened, in which gold will massively outperform everything, including silver.
The exchange of some of that high performance (so far) silver for some gold as the ratio falls may be a very good hedge. As The Bearing commented above, no one can know the future. Past performance is not necessarily indicative of future performance etc etc.
I believe a number of investments have performed well when benchmarked from Oct 08, so using your criteria I guess they are all money too?
Yeah, you are right.
When gold to Dow will hit 1:1 and later Gold to Silver will get parity, then I will recommend mama to confiscate some gold from goldbags.
Now, back to booring 466% return every 2 years.
I like FOFOA and Mish. Read them a lot. But later, we are all on our own.
On the long enough timeline the survival rate of any shenanigan drops to zero
http://www.youtube.com/watch?v=y2X7VpgLxWY
"Presently, in my country, I can sell this silver at $42/oz. My mother paid about 9oz an ounce, then."
Really? What country is that? I have a whole bunch of silver I want to sell you for ~40% over market!
here you go:
http://allegro.pl/srebrna-moneta-1-uncjowa-31-1-g-czyste-srebro-999-i1339784506.html
From time to time, I sell few of my own coins to buy food.
In Poland $1 =3 polish Zloty.
124.70/3=$42 US, and that was when silver was $27
Prices are even higher in other Eu countries.
Remember, flying to Eu bring few coins, we need SILVER.
Silver @ $500, EASY!!!!!
http://www.youtube.com/watch?v=SSQv_Ynomoo
delete
Don't disturb the sheep; they're pretending that "dollars" are okay. And; correct, silver is the most underpriced thing on the planet; today. not yesterday. today.
A bit west of you are bullion dealers who will sell silver few percent over spot plus 7% VAT for coins and 19% VAT for bars.
eg. westgold.de or proaurum.de
you can buy silver wholesale in Poland at close to spot.
Min 300kg from KGHM
http://www.kghm.pl/index.dhtml?category_id=1&lang=en
Thats where most silver sold in Germany is.
Retail, much cheaper is silver from Swiss. Only 8% Vat
He looks Belgian to me.
The real trick of any decent economy is to get money to circulate.The problem today is to get it to circulate at all especially amongst people who will actually spend it instead of hoarding it abroad.Large corporations paying more and more workers less and less as they make bigger profits and invest them anywhere but where they make their money is an impending disaster for all western economies.The time bomb has been going on long enough and it certainly appears as if the fuse is nearing detenation,time for governments to act,forced investment in home industries,import controls,cut down on tax havens and tax avoidance,cut down on migration and immigration and this should just be the start.
I don't give a shit whether it circulates or not; I just want to be filthy rich and pass that on to my grandchildren, like my ancestors did.
The article fails to recognize that silver is substantially more rare than gold. There is is less of the stuff every day and much less than in the days when the Hunts cornered the market.
Silver is money. This year the US mint pretty much used up all of the silver mined in the United States. The world over mints are selling out of silver coins as well.
Paper dollars have no value other than the value people perceive them to have and the same goes for silver. The argument that silver weighs too much falls apart as soon as you realize that silver should actually being trading at or above the value of gold given the demand and supply situation and the fact that silver is not only money but an irreplacable technological metal and it is even more the object of supression by the various monetary authorities and their bullion banking minions.
Silver is money and to me it already has a lot more intrinsic and perceived value that Bernanke Bucks and Bonds, which have only each other to back themselves up. BBB = Bernanke Bucks and Bonds. I give them a BBB- rating.
To be honest, it must be recognized that silver is only "substantially more rare than gold" when it comes to above-ground, refined bullion form. In terms of annual mining production, silver is still, and always likely to be, multiple times (roughly 10 times) more common than gold. That takes nothing away from the arguments in favor of holding silver.
Waiting patiently for the day when Silver doubles in price; and no, I'm no joking.
Fundamentals now are not as they were in the past. I think someone is blowing smoke in our eyes. Silver is money if you want it to be.
Yeah, well I want it to be. And 240,000 Indians want it to be; and 800,000 Chinese, and 140,000 Europeans, and what the fuck are you gonna do about it?
I think FOFOA assumes the complete destruction of the financial system and thus the Freegold concept unleashed. Until such time the elitists and TPTB are destroyed and the world truly cries out for a more equitable system, we are doomed to this existence dominated by the big banks and their masters the central banking system.
living,
I have read little or no FOFOA postulating a TEOTWAWKI, and I have even read that gold could reach its $55,000 without horrible consequences (at least to the general economy under certain circumstances, certain parties of course could be in a world of pain).
He does speculate on a hyperinflation... Which many of us could agree on. But, he says, and I agree, that gold's value would increase FASTER than such inflation.
I have postulated that TEOTWAWKI is assumed in FOFOA's assumptions because until such occurs the Freegold concept is impossible. He never describes such a scenario but the likes of Bernanke and Geithner would make such a scenario impossible. If Freegold should occur it will be late and the situation shall be dire.
living, I know it is very late and that you probably will not see this, but the Master himself (FOFOA) said in an email to me that TEOTWAWKI is NOT necessary for Freegold.
That was comforting!
I'll mention this again in a future thread.
When I was five years old, glass marbles were like money to me. I could trade them for anything my friends had and vice versa.
"Gold is Money and Nothing Else"...
JP Morgan understood this simple fact.
Silver has played an important role next to its big brother throughout history. Remember the Spainish Empire, Comstock Lode, Jesus' betrayal, etc...
However, Silver's value is measured against Gold, just like oil, wheat, and diamonds. The author is not claiming that Silver has no value, just that it is not "money".
are you people actually serious about Gold and Silver? I can never tell if you are being sarcastic or not.
I see a huge bubble just months away from bursting.
Rates are moving up! Cash is king!
I see a huge bubble just months away from bursting.
Are you sure the bond market can last that long? Perhaps you are talking about IR swaps?
I don,t think you really understand the problem is not with Gold and Silver it is with paper money and debt driven economies.Silver and Gold are intrinsic the inherent value or wealth is in the finite supply as well as the industrial process of thos metals.You talk about rates,lets be brutally honest about this shit here there are 2 short term options, hyperinflation or default,either one is a lack of confidence in a joke situation but until either one happens there is no short term way out,deflation and bouncing along the bottom will take decades and the political,social and economic fallout for this is unthinkable.You talk as if the system is not broken,let me tell you the system is totally and absolutely f**ked.Paper fiat money is a bet without knowing the odds,the idea is you are never supposed to know the odds,but more truth drips out everyday,knowledge is power.The days of bank vaults stuffed with silver dollars no-one wants are history,how much is out there,probably a lot less than people think,whats the true price,probably not been seen for maybe 50 or 100 years.Debt has killed the self sustaining economy,banks,central banks,governments are bankrupt,they have to take more to give less everyday,you buy Gold and Silver to protect yourself because once the dominoes start falling the paper is worth less and less everyday.Don,t think the mega rich have safes full of banknotes anymore,they have more sense its all in bars the real wealth,look at what the banks don,t tell you and do it,buy G & S while you can because WTSHTF it won,t be for sale.So if rates are going higher put your cash in it but remember when it goes wrong no one will touch the stuff at any price.Paper fiat crap is for the everyday shit,Gold and Silver is Insurance against legalised theft of wealth.
Fool.
Fool.
U.S. constitution article 1 section 10
Long. Boring, yet fascinating. And, almost convincing......until you think it throuh a little bit.
FOFOA sounds a lot like Gary North's perspective. We will find out soon enough.
Silver rocks!
A million dollars will also buy one some milligram-quantity of californium. Is californium therefore the better form of currency, or wealth storage, than gold?
Methinks FOFOA has an agenda. The guy is so wrong, dead wrong, it really makes you wonder.....
Find out what's really going on and come watch my new video, The Silver Conspiracy:
http://www.youtube.com/watch?v=jQgYn4cZ2yg
Blah, blah, blah....
My plan:
Hold what metals I have now. Buy equal amounts silver and gold, in dollar terms.
Wait. (That's where the profit is after all....)
The Gold/Silver price ratio will begin to compress shortly.)
At 20:1, convert 1/2 silver to gold.
At 15:1 convert 1/3 silver to gold.
Done.
Take delivery at first sign of serious! problems, civil unrest, etc. Keep checking ZeroHedge.
Adjust accordingly to your individual risk profile.
And buy as much gear as you need to prevent being carted off to FEMA camps.
$42 for 1oz silver round in Poland is not exaggeration. It's the fair market price there. Latest silver price in China:
1) 1oz 2010 Silver Panda Coin Version 1: RMB 390 = $ 58.56 per oz
2) 1oz 2010 Silver Panda Coin Version 2: Sold Out
3) 1oz Pre-2010 Silver Panda Coins: RMB 450 - RMB 600 = $67.57 ~ $90.09 per oz
4) 1kg (32.15 oz) ICBC (Industrial and Commercial Bank of China) Silver Bar Year of Tiger: RMB 12,300/kg or $57.43 per oz
Wait time in a crowded coinshop or jewelers: 1 hour
Source: I actually went to ICBC Shanghai Branch, as well as a retail outlet of China Gold Coin Corp., a subsidiary of the official government Mint. Silver is traded on the Shanghai Gold Exchange (www.sge.sh) at a price slightly higher than the US spot. However, anybody who wants to buy physical silver pays a hefty (90%-100%) premium above spot, ostensibly because of the "artistic", "collection" or "memorial" value of these silver products. China is the worlds third largest silver producer after Mexico and Peru, and the government has determined to reduce export by 60%
In the US, the 2010 1oz Silver Panda Version #1 sells for about $39.00, and a similar American Eagle sells for $33.00. The bottom line is this. Count it an absolute blessing that you can still buy silver at $30.00 an ounce. And if you still think there is a silver or gold bubble (in China, gold is RMB 400/gram on street = $1,867/oz), think again and think harder. 1.5 billion Chinese folks would gladly pay $60 an ounce to buy all the silver on earth, on Moon and on Mars.
People here fail to realize the great value of Eagles, Maple Leafs, Koalas, Libertads and Kookaburras. They are cheap at 33.00.
People here fail to realize the great value of Eagles, Maple Leafs, Koalas, Libertads and Kookaburras. They are cheap at 33.00.
Silver is grossly undervalued. In ancient Roman Empire, a manual laborer received a daily wage of 0.1 ounce of silver. Judas betrayed Jesus for 33 pieces of silver, which (assuming each piece weighed 2-3 ounces) equals 2-3 years of salary. He even bought a piece of real estate with it.
Assuming the minimum wage worker makes $64.00 a day. 0.1 oz of silver = $64.00, silver is worth $640.00 an ounce!
The United States is absolutely not in better financial shape than Roman Empire under Caesar Augustus (Octavius)
Judas didn't buy the real estate, the Jewish authorities did: "Field of Blood"
Interesting. The Bible tells two versions of the story: you are referring to Matthew chapter 27, in which Judas returned the silver to the Jewish authority out of remorse and then hanged himself. Afterwards the Jewish authority bought the field.
I am referring to Acts chapter 1, which says Judas bought the field with the silver, and one day fell to the ground with his abdomen burst open and guts spilled all over.
In either case, 30 pieces of silver (100 oz?) could have bought some real estate back then. I don't know if a farm, a house or an empty lot was bought. According Matthew chapter 27, the Jewish authority appeared to have bought an empty lot ("potter's field", doesn't sound like arable land), which they converted into a cemetery. In Acts chapter 1, Judas appeared to have purchased a farm ("a field"). Moreover, Judas appeared to live on that farm, according to the prophecy:
Act 1:20 For it is written in the book of Psalms, Let his HABITATION be desolate, and let no man dwell therein: and his bishoprick let another take.
Sounds like a farm with a house on it.
You're goddam right; and you dollar worshipping retards better get with the program.
I think many are missing the point about silver as a currency. Because of its rarity and usefullness, it will most likely be used up in industrial aplications in current and in developing countries. Its sad but there are so many uses for such a rare metal, to squander it for monetary purposes would be a crime.
You cannot really have a circulating currency that is in deflation because of industrial demand, the results would be catastrophic. Imagine if fed notes were also of limited supply but needed for heating homes or as insulation because there was no alternative. This is the case of silver, we NEED its industrial applications, and there is only so much of it.
That being said, its relative "value" should only increase with demand and new applications, so it's still a great investment.
Why not let the free market be the judge? You need silver for big-screen TV and cell phone production; and I want to hoard silver for investment. Let's just bid on a fair market, whoever willing to pay more money gets more silver, that sounds like a fair game. I don't see anything wrong about $2,000 i-phones. Why do we have to upgrade the stupid gadgets every 6 months and destroy the earth at the same time. If big screen TV costs $40,000 apiece, the world will become a much better place. The brainwash junk on the idiot box poses a grave threat to a free People
silver= strategic metal.
silver= strategic metal
Suppose I were the government, I could declare that your house is at a "strategic" location, that your gold and silver are strategic materials, and that you possess some strategic knowledge vital to national interest. Therefore, i can take your house through eminent domain, confiscate your metal by an executive order, and lock you up as a "material witness". Any life could be ruined by this single word
So what do you think is going to come of all that "poor man's gold" that the silverbugs have hoarded up? Is it going to lie very still for generations? Or will it circulate, to meet daily needs? Note that circulation velocity is the market's way of controlling the value of any currency. Faster circulation = lower value. Lying still for generations = very slow circulation.
This article is complete rubbish as is the quote above. He's no doubt using the equation M*V = P*Y or M*V = P*T in the above excerpt. For constant money supply (M), increase monetary velocity (V) and the price level (P) will increase, provided the number of transactions (T) stays constant or decreases.
But if you replace M in dollars with M in ounces of silver, obviously T (# of transactions in silver) will increase also, so you can't conclude P will increase or the monetary unit's value will decrease. If anything silver's value would increase as people would stockpile it for daily needs.
Guys, bottom line, they are on the ropes. Look at their desperation:
1. Keiser announces crash JPM campaign
2. JPM grabs 80% of LBMA copper
3. JPM signals that it is "reducing" its silver short
4. CFTC mysteriously suspends its position limit hearing
5. FOFOA posts his nonsense on zerohedge
6. Geniuses of ZH shred his arguments like so much dog meat
silver and gold going to one to one parity, mark my words...
http://www.youtube.com/user/BrotherJohnF
i think it comes down to people and their desire and
need to have control of something important in their lives.
this is the attraction and the driver for markets. ideas.
it could be anything that is agreed upon. shells. silver.
gold or housing or fiat currency. but there needs to be a narrative,
people need to accept it, it needs to be available or within reach,
it needs to be affordable. so the focal point cannot be something
beyond reach, like a carrot on a stick to a jackass. the focal point
cannot be something some few others have access to but not the
majority. imo.
silver is a physical asset that common people can control, or influence, can corner
the market and then influence collectively the pricing. "rules" of transaction,
self respecting, could be followed to maintain - influence pricing and "value".
the idea is only considered because the currency is being abused/threatened.
Wow. This is such a pile of CRAP it boggles the mind.
"gold and only gold will fill the monetary store of value role. Not gold and silver. Not precious metals. Just gold."
Sorry bud, human history up to our present time shows that you are DEAD WRONG. Silver AND gold ARE money and have ALWAYS BEEN money. It is true that silver has been used up and today is rarer than gold (above ground) but one should not assume that this means it is no longer money. Silver is simply rarer than gold so it will be valued more highly than gold when the shackles of manipulation are loosed, to the chagrin of the Masters Of The Universe who for more than a century have hatched their schemes to use up and demonitize the common man's gold.
"Money is debt, by its very nature, whether it is gold, paper, sea shells, tally sticks or lines drawn in the sand."
Gold is not debt. The balance on my credit card which I used to buy gold is debt not the gold I purchased with it.
Regarding your analogy of the two guys on an island: Chen would simply cut Ben off since he is non-productive and good for nothing. Just as America will be cut loose by China.
I stopped reading your article at this point.
As the desperation of The Masters Of The Universe increases, another name comes to my mind: Failure Of Failure Of All {Failures}.
So, although TPTB have ultimately succeeded in destroying silver's function as the money of the common man, it is not destroyed to date. Non-elites can still buy silver at outrageously suppressed prices and hopefully those who are wise will do so and put their fortunes to good use. Unfortunately, human nature being what it is most will simply become like those who oppress them now.
But what happens if a country can control agriculture prices, and it will only accept silver in exchange for goods?
Gold is money and nothing else.
why didn't judas get gold? if the bible is steeped in symbolism, and mentions gold many times? silver best reflective element, silver best thermal conductor, silver best electrical conductor. silver best spiritual energy conductor? I'm going to have to meditate on this, although, since I've been carrying a 1 oz coin in my pocket lately, I've been feeling pretty good,considering the fact, that the whole economy is collapsing.
why didn't judas get gold?
Judas betrayed Jesus for 30 pieces (shekels, 1 shekel = 0.35 oz) of silver (instead of 2 pieces of gold) because the Old Testament prophesied so. And it had to happen that way so that the prophecy could be accurately fulfilled.
Why did the Old Testament prophesy that the Messiah would be betrayed for 30 shekels of silver instead of 2 shekels of gold?
Because in Jewish tradition and culture, daily financial transaction are conducted with silver, and in Jewish courts of law, all debts, compensations and penalties were paid in silver. They practically had a silver standard.
Gold was mentioned 336 times in the Old Testament. It was used for 1) storage of wealth 2) Jewelry 3) Ornament , decoration and religious worship. However, one can't find a single incidence in the Old Testament in which gold was used as money in a financial transaction.
Silver was mentioned 264 times in the Old Testament. It was used for 1) storage of wealth 2) Jewelry 3) Ornament , decoration and religious worship 4) money
Let's analyse the some random financial and legal transactions mentioned in the Old Testament:
1) Gen 23:15. Abraham bought a graveyard from Ephron. with what? 400 shekels of silver
2) Gen 37:28. Judah and his brothers sold Joseph into slavery. for what? 20 pieces of silver
3) Gen 45:22. Brothers went to Egypt to buy grains. with what? Sacks of silver
4) Exo 21:32. Damage paid in a court of law for injury caused by an ox. 30 shekels of silver
5) Deu 22:19 Damage paid in a court of law for taking someone's daughter's virginity. 100 shekels of silver
6) Jdg 9:4 Wage paid to unspecified number of assassins. 70 pieces of silver
7) Jdg 16:5 Compensation paid to a special agent for a seduction/assassination mission. 5,500 shekels of silver. Wow!
8) Jdg 17:4 Commission to a sculptor for a statue. 200 pieces of silver
9) 1Sam 24:24 David bought a threshing floor and some oxen. 50 Shekels of silver
10) 1Kin 10:29 Price of Egyptian Chariot (=Bradley fighting vehicle), 600 shekels of silver, Egyptian horse (Harley) 150 shekels of silver
Interestingly, even very large transactions (say 5,500 shekel) were settled in silver instead of gold
Strange thing:
assuming 1 shekel = 0.35 ounce,
in biblical times, 1 horse sold for 50 oz, today a horse is worth 1000 oz
bodily injury, 10 oz then, > 3,000 oz now
virginity 33 oz then, ???? oz today
burial plot for a family of 7, 133 oz then, 1,000 oz now
slave 7 oz then, ??? oz today
threshing floor + oxen 17 oz then, 1,000 oz now
seems to me that silver doesn't hedge against inflation at all
For starters, silver was MORE VALUABLE THAN GOLD for a good portion of the history of Egypt, which includes a not insignificant amount of the old testament. For quite some time after that, silver traded much closer to the price of gold than it does today. Further, the current price is very much suppressed.
In addition, a few other things have changed between then and now.
Horses are far rarer today than they were then. Bodily injury costs much more to treat (due to medical fascism), plus it doesn't say how much injury, nor does it mention how much the salary of the injured person was. Virginity can probably be had from a new worker at a brothel for as much as there, however that was a PENALTY, which tends to be much higher than a price. Burial space is more limited now than it was then due to overcrowding and the contract for hundreds of years of maintenance. 7oz was what the brothers sold their brother to slave traders for, not the amount he was worth on the open market. I don't know about threshing floors, but oxen are practically unavailable today, so their cost is bound to greatly exceed the cost back then when they were common. Better to compare to a time share of mechanical thresher. I don't know much about hte prices of such things.
For starters, silver was MORE VALUABLE THAN GOLD for a good portion of the history of Egypt, which includes a not insignificant amount of the old testament.
that sounds reasonable. The old testament , in about 200 occasions, mentioned the 2 metals together. It always said "silver and gold" instead of "gold and silver"
That Fofoa discourse reminded me of an undergrad epistomology lecture in Philosophy 101, or a Federal Reserve Economics paper. I think Fofoa has been having to many socratic dialogues with his anacronym friends 'A' and 'F.O.A.'. Sometimes a little common sense saves alot of high falutin obfuscation.
1. banks are mega short silver
2. industrial users are experiencing silver shortages
ergo, silver goes up in price.
The speaker in the attached video is a poor advocate.
Nothing new here. I've already gone through hundreds of PM war games in my brain too and the outcome is different every single time except for one thing...the irredemable paper money always goes to zero. My personal preference is a tie between my lust for gold and platinum however my vast holdings are in silver and I'm personaly fond of it too. That being said palladium does not do it for me on a viceral level when I hold it in my hand but I have respect for it's freakish properties and intrinsic value and don't mind making lots of money on it either. So once again we did not re-invent the wheel on this thread but still had a good time thinking about shiney, heavy, rare, enduring, useful, and valuable PM's.
Platinum: pant, pant, pant! My favorite of the lot, though I do hold a lot more gold.
I have a nominal (10 oz) of palladium for its exotic properties as well as an interesting speculation. That was a fine observation about Pd not really doing it on a visceral level, me either.
But, Au, Pt, and Ag (in that $ value order) are my real holdings.
Hey Shithead,
You really should consider spending more time reading, comprehending, and thinking and a whole lot less time slapping the keyboard.
Next time you attack my work, you should really put out the effort to understand it. I spend a lot of time boiling points down so they can't be misconstrued. And then a fucktard like you comes along.....
Sorry, but that's all the response you get from me. I wouldn't wipe my ass with your "work."
Granted brevity isn't FOFOAs strongsuit, however I suspect the bulk of the
negativity here stems from folks having committed some of their savings
to silver and thus having a protective attachment that hinders FOFOAs argument.
Does this means Silver won't appreciate? I don't recall FOFOA saying that.
Could FOFOA be more concise? Certainly, however that's just his style
and why let it detract from the merits of his reasoning.
Separating the store of value from the unit of transaction makes sense in
that it provides a means to adjust liquidity to changing economic conditions
while providing citizens a means of evading the effects of inflation.
If I understand FOFOA correctly, he envisions Gold to be a means of international
settlement while each country remains free to manage the issuance of their respective
fiat. Note that excessive fiat issuance will result in ones paper buying less foreign
goods (e.g. oil). That should act as a throttle on governments baser habits
and provide an incentive to be more financially responsible.
As most of you are well aware, fiats are on a collision course with reality
and the world will soon need a replacement for the USD/reserve currency meme.
There's no way to feed and care for 7 billion people using simple barter so
we'd better start serious discussions on our future monetary system.
The real issue is how to transition without the big multinational banks
corrupting the process and setting themselves up for a millenium of rule.
OK I'll talk to you.
People don't have much silver. Not rich people, not poor people, not governments and not JPM. It's gone, get it? It's usefulness has made it more scarce than gold.
The only reason peasants can get it is that rich people, governments and central banks (and probably this dim-witted author) have long favored gold because it was percieved as a more dense storage of wealth. The fact of the matter is what's left of the world's silver supply is more valuable to the world than the world's gold supply.
We can settle international trade imbalances with weapons grade plutonium if we have to pick "one thing" (personally I think that would work better than gold). But we don't.
What you have here is someone trying to rationalize a less than optimal decision, by saying the better choice "just won't work." In short, he's an idiot.
Trust me on this, the powers that be are way more afraid of silver than gold, because they don't control it anymore. They gave it away, and now they are trying to convince people it isn't important. Fine. Keep beating down the price...
When the game blows up, we may being calling gold "the poor man's silver"
Obviously you are passionate about Silver.
I have some silver, gold too. Can't get too excited holding
either in my hands, but both have a history as a store of value
and having stored as much food and supplies as practical, I need
something concentrated (and I can't imagine 'taking delivery' of any plutonium).
I will note that Silver is far more bulky than Gold, and lack of portability
is one aspect of Silver I consider a liability (if things seriously degrade,
I might have to relocate).
FOFOA, and the guy behind the flowofvalue site having gone into
detail about the wisdom of having a transaction unit separate from
the store of value. They've covered it extensively from a multitude of angles.
Having read and pondered their words, Gold seems the strongest candidate
as that store of value; however if you can articulate in depth why it should instead
be Silver, by all means I'll listen.
Regardless of our collective future choosen 'store of value', I repeat what I stated earlier, the owners of the big banks will be working to skew the process so that
they continue to come out on top.
Keep your eye on the donut and not on the hole.
+ 1
The skewing of prices is what the silver movement is based on. I'm going to say this one more time, silver is more scarce than gold. Yes the silver is still on the planet, but the expense to recover and re-use it would be enormous.
The notion that one ounce of gold is worth fifty ounces of silver is laughable. Downright comic. And anyone willing to make such a trade is a fool.
And FYI - what I'm passionate about is reality.
@"Having read and pondered their words, Gold seems the strongest candidate
as that store of value; however if you can articulate in depth why it should instead
be Silver, by all means I'll listen."
in the future if you would like to make a transaction using money you might
need / want change and it might just be silver.? or it could be links from a
chain of gold or silver ... the possibilities are endless.
i think there are also infinite potential stores of value, the imagination
being the only limit.
300 comments, and almost nobody getting freegold. Hopeless. I agree, FOFOA is loooooong, and reading this post alone won't let you understand this. You need days of reading.
People talking about paying with gold coins make me laugh. People talking about a new gold standard make me laugh. People saying that we are right now on freegold make me laugh. Come on, make some effort, read and think realistically.
In short, under freegold you will still have dollars/euros or whatever currency. You will still pay and be paid in these currencies. With some 1-5% annual inflation rate like today, you won't care for daily shopping. It is only for long term savings, several years, that you will convert your currency into gold, which will be naturally hedged against the inflation of the currency -- The currencies will float freely against physical gold (not paper gold).
took me a few weeks actually ...
me thinks, besides sex, never spend any better time, it changed my world, but saved my life. me thinks for myself again. will make up for lost fun after recapitalization, until then, me waits and smiles ...
+++
Spending the time to read and ponder FOFOA is about the best you can do (outside the bedroom and doing Tai Chi...).
The battle against stupidity never ends.......
You're re-inventing the wheel, and the sad part is you think you've discovered something new.
Pathetic.
Please, develop.
I have not laughed enough today.
Wealth is production beyond subsistence, i.e., production saved for future consumption and/or exchange for the saved production of another. Money is wealth that facilitates the latter, gold having stood the test of time in this regard, with silver not far behind. Regardless of what form of wealth money takes, however, if it is genuine money, it is not, as FOFOA claims, "debt, by its very nature," since one cannot simultaneously owe what one owns. For if this were so, then the more wealth one had, the more in debt one would be.
What complete nonsense.
the dollar is a small part of the entire mountain of debt the usa has...
the more wealth you'll have, the more debt is owed to you
almost there, just around the corner, keep going !!
OK, let's see: Sam the Squirrel works overtime storing up nuts for the winter, which Willy the Weasel then steals. According to FOFOA, Sam is now out of debt but starves to death, while Willy takes on the debt, which he fattens himself up with all winter long.
What a crock of shit.
sam is not out of debt, he never was in debt either, after willy's visit sam did lose his wealth though, next time he will be more carefull who he invites or he will lock his doors much better me thinks ...
but you probably think I assume willy is in debt now, so please think and assume for yourself, and let others with clearer view be the judge. we might be better off ...
"sam is not out of debt, he never was in debt either..."
That's my point. Contra FOFOA, (real) money is not debt, nor can it be, as it is surplus (saved) production used as a medium of exchange, gold (and silver) being the historically preferred medium.
What? I am "going to buy" someone's services, so I am owed them? How about somebody exchanges a service that he accordingly owns in exchange for the good (money, if used as a medium of exchange) that I own?
Looking at it that way, as in the common sense way, ownership of one thing is exchanged for that of another, and all the parties "owe" each other is the good faith -- i.e., the reciprocity -- that lies at the heart of all market transactions. If one party doesn't reciprocate -- if one party accepts the other's good or service but does not exchange his good or service for it -- then he is committing theft, in which case he is in debt, the payment of which is called restitution.
Is the path getting clearer?
you are helpless and lost, better try to understand what someone is trying to tell you instead of digging in and making it a definiton question of something you really don't understand. you might learn something. a lot actually.
good luck and since you probably want to be the last to say something, good luck with trying to be smart too ! you'll need it ...
OK the euro has a free floating gold standard.
It is also very possible that Europe has most of the Gold both public and private but espescially private.
If Gold goes on a upward trajectory towards the monetory base value of currencies wether on a free or standard mechanism then Europe will have the first call on the worlds resources in terms of its monetory wealth.
Fair enough but will America and Asia allow this monopoly of wealth to reside in a continent with little physical resources ?
If we get free gold America will be a big loser.
When Germany lost the great game in 1919 - after a decade or so there was a reaction and a terrible one.
While America is now in a sorry state unlike pre Great war Germany it still has something of value.
A poltical / economic and possibly military backlash could occur if America wakes up and especially if the FED is removed from Washington a new system could emerge.
I think a new silver monetory union between US , Canada and Mexico could be a possibility given their large share of the worlds silver resources.
This could prevent Gold owners in Europe and inside America gaining a monopoly of power.
This could operate a bit like the old Latin Monetary union but instead of having a Franc or Lira standard price / weight they would just have a recognized weight - this currency would be goverment sanctioned and trad able withen this monetory zone on a weekly , monthly or yearly changing price scale.
The price could be based on the total money in cash and deposits withen the three currencies or maybe just the dollar divided by the number of official silver coin - a yearly revision may be appropriate.
This would be inflationary over time but would enable America to industrialize as the surplus created from industry would not flow to the bankers.
However America is deficient in oil resources - if it refuses to develop natural gas for transport and continues to waste this energy on electrical generation then it would remain a second world state as it would have to pay for oil via Gold or expensive military projection.
This may have been impossible in 1870 with 10 billion-ish ounces of silver floating around and little industrial consumption, but today with 1 billion oz of silver left above ground and huge and growing industrial demand makes this a totally different situation. Silver is a 30 billion dollar market. Just one or two of the very rich could (theoretically at 30/oz) buy the worlds above ground supply.
Didn`t we just spend 600 billion on something?
"The road will seem so straight and fair to travel, you will kick yourself for stumbling through the brambles for so long, and wonder at your neighbors who still can't see the path, though it is truly a freeway." (Aristotle -- the blogger -- courtesy of FOFOA)
"Them that don't know don't know that they don't know." (An old song courtesy of Joe Bagent)
Normally the discourse here at ZH is quite good. Today? Hmmm....
1) These essays are not policy prescriptions, but an attempt to turn our gaze in the direction of highest probability, i.e., where we are going, not where we've been.
2) "All money as debt" is a reference to the fact that all monies saved are a claim on future production. If one saves in the same medium that one spends it's akin to driving a car while applying the gas and the brakes (on the economy) simultaneously. Typically, not very efficient (and by "efficient" I mean fuel consumption, not winning NASCAR).
3) Hoarding gold as savings is by no means the only way to save, simply the most efficient. Hoarding items other than gold (with some exceptions, to be sure) impacts the efficient functioning of the economy.
4) All fixed values and ratios are eventually overcome by human nature and experience.
5) People may very well choose silver as money and savings, but it is not likely the best use of silver. Disclosure: I own some silver.
6) We use fiat currencies because they are so damned efficient, and that is unlikely to change anytime soon, if ever.
Brazil's CB is buying gold?
Just found a GATA video by a nice Mexican man - Hugo Salinas.
This man has perhaps a more elegant solution then my suggestion.
The Goverment sanctioned coin will have a minimum value above the present market value of silver.
If inflation causes the price of silver to rise above the minting cost then the Central bank will be obliged to increase the official price of the coin.These price rises could be acheived ever few years
The coin price is never allowed to fall.
The video comes in three parts and is a refreshing antidote to the FOFOA elitist bias.
Silver rewards work.
www.youtube.com/watch?v=k7DHz6O1xPo
Forget coins (whether silver or gold). They just won't scale.
As stated above by several posters ...fiat is efficient.
Even FOFOA admits there's a vital role for fiat.
Sure we're all gun shy of fiats due to central banks having been
corrupted and politicians using inflation as a backdoor to vote buying,
nevertheless.... fiat is likely here to stay (although I'll throw in the cavet
that if things totally meltdown and we end up in a 'Mad Max' style world,
then barter and PM coins might be all we have).
These debates are worthwhile and need to be held publicly on a worldwide
level so that some sort of consensus can be reached. I'm hoping that someone
the likes of Jim Rickards will get wind of FOFOAs freegold ideas, give it some
thought and weight in on how it might work out.
One thing is for sure, we don't want a new currency standard jammed
down our throats by the likes of Rothchilds or Rockerfelles (working
through their bought off government minions).
I would have no problem visiting Canada with a tube of maples in my pocket if they were worth 500 loonies rather then the official 5.
Your point is redundant if the "Face Value ?" monetory silver is worth more then its intrinsic value.
Wall Street’s Pentagon Papers: Biggest Financial Scam In World History
$12.3 TRILLION in taxpayers’ money.
by David DeGraw
http://www.globalresearch.ca/index.php?context=va&aid=22291
.
Attack of the Shills!
http://www.youtube.com/watch?v=k-y9Bn0tPJg
FreeGold -> Gold Moonshot -> Silver moonshot
Real global growth -> growth in end demand -> Silver moonshot
QE -> loss in confidence in fiat ->Commodities moonshot -> silver moonshot
CBs stop monetizing deficits, austerity for the whole world -> paper silver goes to toilet -> physical disappears
Forget gold vs silver for a while but can anyone make a negative argument for the price of silver over the long term?
It gets somewhat disconcerting when its so one way.
http://www.youtube.com/watch?v=1MoThDp_DWs&feature=related