Gold & Silver - This Time it IS Different

smartknowledgeu's picture

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Holden Caulfield's picture

I totally agree. The present banking system is a bubble making machine.

And anyone who thinks we can do business as usual is living in a bubble.

A resource based economy may be a viable solution.

In the meantime North Dakota has a state banking system that seems to be working fine.

Inflate Or Die's picture

I find it amusing that everyone is trying to call a bubble.  All one has do is look at the amount of Federal Resrve Notes and Treasuries that are in supply to get a guage of where things are going.  We have gone from millions in deficits, then we have into billions in deficits, now we are talking trillions.  See a pattern here people?  Debts are never meant to be paid back.  It is impossible to pay the debt back since interest is excluded when money is created.  Since interest is not included in the equation, there is not enough money in circulation to pay off the debt.  This leaves to perpetual debt and an erosion of purchasing power.  We are screwed!!!  For all you bubble talkers out there, if you really want to find a bubble I recommend that you follow the money namely Federal Reserve Notes.  Cash is Trash!!!

CustomersMan's picture

 

 

If we were to see where the total amount of world gold is at present moment and who actually owns it (at the end of all the counter-party games) the farce that is the FED would be exposed.

 

AUDIT ALL GOLD>

 

CHECK THE PAPERWORK< ITS NOT JUST THE MORTAGES THAT ARE FRAUDULENT.

CustomersMan's picture

 

Excellent points regarding the propaganda being generated to keep investors in the market ie 401K's etc.

 

If they knew they were getting negative returns they would bolt EVEN MORE.

 

 

Cyan Lite's picture

Also, our gold isnt' stored in Fort Knox.  I quit reading/watching at that point.

The Federal Reserve has several vaults in its branch locations around the country, most notably in New York.  I guess he didn't see the Die Hard With A Vengeance movie about it.

smartknowledgeu's picture

I provide rebuttals and clarifications to all people that claim my information is not accurate on my blog here www.theundergroundinvestor.com.  Please do a search for "gold and silver" on my blog and you will see that I PUBLICLY started advocating gold and silver and predicting huge runs in gold and silver due to my predictions of a deepening monetary crisis since 2006 (and even earlier privately to my clients). I've been writing about this for 5 years now so often I condense and omit information in my current articles that I've already discussed dozens of times in previous articles. In addition, if you are aware of Ron Paul's efforts to audit the US gold reserve that have been repeatedly denied, since no independent audit has been conducted of the US gold reserves since 1955, no one, not even the movie Die Hard, can tell you where exactly the US gold reserve is stored and how much of it we actually have. So all guesses about where it is held and how much we have are pure speculation. I will concede that.

 

 

rapacious rachel wants to know's picture
rapacious rachel wants to know (not verified) Cyan Lite Oct 6, 2010 12:19 PM

sure they do

after all it's been regularly and thoroughly audited

 

zot23's picture

Watched the 6 min video, it is misleading and duplicitous.  He cherry picks facts and adds components to his scenario that have no bearing on what sort of currency (fiat, gold backed, or even physical gold payment) you are paid in.

For example, he cuts off 35% of your dollar due to taxes.  So when we had a gold standard no one paid taxes?  If I wish paid in golden dracmas instead of dollar, the govt wouldn't still take 35%?  Of course they would, that's how we have roads, schools, regulatory institututes, firemen, a police force, etc.  The payment form is not relevant, if you like civilized society you'll be paying taxes.  So that part of his presentation is crap.

Social Security as well is a very tenuous if not outright load of BS.  Again, even if paid in golden dracmas, a retirement transfer system is a retirement transfer system.  It doesn't matter a lick if it's a gold standard, fiat, or physical metal.  

Now inflation is a valid argument, but that's maybe 1/2 of the video.  The rest of his post is OK, just please pull these videos.

 

 

 

smartknowledgeu's picture

We were going to post a lengthy reply to this comment because in no shape, way , or form do we "cherry pick[] facts" as you accuse us of doing or is the video "misleading and duplicitous" as you claim. Thanks to the replies of meatiershower and crocketalmanac, we can cut some of our rebuttal short.

If money is not printed as debt under a true gold standard there is no need for any citizen to pay tax to pay off interest on the national debt. This is by far the largest chunk of the 33% we cut away in the example. The other portion of the 33% chunk consists of gov't transfer payments, which would be unnecessary under a gold standard. If there is no need to pay tax to pay interest to bankers on all money that is created, then people would have more money AND a steady purchasing power that they do not have under our current system. Thus, nobody would need the services provided by any transfer payments. Other "transfer" payments just consist of taxes that serve as a "wealth transfer", transferring money from citizens to the owners of the Fed Reserve that could be abolished under a true gold standard. Remember when Kennedy backed US dollars with silver? The money was printed with the words "United States Note", NOT "Federal Reserve Note". The tax we say would not exist under a gold standard actually disappeared under a real life example (though Kennedy unforunately was also "disappeared" along with this tax and after he was disappeared, the tax was reinstated). As far as the SS tax, it's a Ponzi scheme, and again, because we did not snip it out of our "gold standard" example, we are saying that if you didn't have to pay the tax that pays interest to bankers, people wouldn't need SS because their wealth would soar and SS would become obsolete. So it's a reality that there would be no need for SS under a TRUE gold standard.

If you watch the long version of the video, we mention the dozens of other taxes we pay for which we do receive some benefits like highway construction, education, etc. but we did not snip away these taxes from the first example either, so when we don't snip it out of the gold standard example, we are still comparing apples to apples. So we never said that there would be no taxes under a gold standard. You drew an inaccurate conclusion about this (probably because you watched the short version of the video and not the full version). We say the full dollar you end up is the dollar you will have to pay your other taxes, your mortgage, your food, and all other expenses from. The tiny piece that you're left with in the first example is still the portion that you will have to pay your other taxes, your mortgage, your food, and all other expenses from...so still comparing apples to apples here.

Finally to those that sarcastically state, oh, everyone is a "currency expert" all of a sudden, no, if you read our blog, www.theundergroundinvestor.com, we had predicted this monetary crisis and its harmful effects upon the people since 2006 due to the big picture we were seeing back then and were among only a handful of people that predicted the onset and deepening of this monetary crisis that early. We have printed dozens of articles telling people that gold was going to soar since 2006 and even when it increased significantly in price to  USD $850 a troy ounce from $580 (when we first started publicly advocating purchases), we unequivocally and adamantly stated that gold was NOT a bubble and was a solid buy even at that price point. Furthermore, for our paying members, we privately have provided an elevated level of guidance in gold AND silver in which we called exact tops (to the day) several times and exact bottoms several times in the past few years during corrections in a continuing gold/silver bull. We are definitely NOT a gold/silver "bandwagon jumper".

 

 

 

 

 

 

 

 

 

 

CrockettAlmanac.com's picture

Income tax merely services the interest requirements due to the Fed for the privilege of using their paper notes as currency. They print up paper with numbers on it which Americans must use and apart from having to earn our living through wages we must also pay income tax to pay the interest on the notes which were borrowed into existence (at very little cost to the Fed).

Meatier Shower's picture

Prior to the New Deal when the U.S. was still on the Gold Standard, the tax rate for the average American was less than 5%.

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

Hook Line and Sphincter's picture

Gold is like the sun, and FRN's are revolving around it.

Two years from now, Uncle Ben's space probe will reveal the final verdict on the Geocentric view.

How fuckn Zen.

 

Clint Liquor's picture

Excellent post, Zero Debt.

One caveat, Gold will crash when 'real' interest rates go up. The FED stated in the last minutes of the FOMC, they want negative 'real' rates by keeping nominal rates near zero and using QE to facilitate price inflation.

Goldenballs's picture

Bu Physical and Stash it under the bed next to your GPMG.

Cyan Lite's picture

No, the top is official because I just put in a market order to buy 1000 shares of IAU; filled at 13.18 (~1318 spot price of $GOLD).

Now watch it collapse 50% in the next two weeks.  Thankfully I got some Jan2011 puts to go along with it.

BTW, if the gov't last confiscated gold in the 30s, what's going to stop them from doing so in the future, this time in the form of ETFs and paper assets. (E.g., your GLD shares just got removed from your brokerage account).

Zero Debt's picture

Gold is a currency that competes with alternative currencies. The deal is:

  • No interest rate payments (no counterparty)
  • Little/no debasement (1-2% mining at most)

With fiat, the deal was to have some debasement but reasonable interest rates. Thus, if you can't get an interest rate and still have debasement, then gold is better than fiat. But if fiat currencies have interest rates above the debasement, they would be preferable to gold.

In summary, gold will crash when interest rates go up. Which looks like it will never happen unless all those Bond vigilantes can print junk bonds faster than the Fed/BOE/BOJ/... can monetize them.

 

Clint Liquor's picture

The comical part of the 'Gold Bubble' argument is; this time is NOT different. It has happened very time a fiat currency collapsed. Remember Gresham's Law.

tamboo's picture

"For about a hundred years, bankers have imposed an absolutely immoral, fraudulent monetary system upon the people of the world."

er, see christ vs. money changers.

CrockettAlmanac.com's picture
Jewish law required donations to the temple to be made in Hebrew coinage rather than Greek or Roman coinage which had a pictures of emperors and foreign gods on them. Palestine had been under Greek and then Roman control for three hundred years at the time of Christ. The economy was thoroughly Hellenized and Latinized and so the Jews who went to the temple had to change their Greek and Roman money for Hebrew money in order to make an offering.

The act of money changing allowed for the hypocrisy of Jews living a Roman lifestyle six days a week but still being able to ostensibly be good Jews on the sabbath. An acceptance of the foreign lifestyle and the corruption of temple offerings were the sins to which Jesus objected, not a particular system of banking.

tony bonn's picture

kim for secretary of treasury!!

gold is not overbought.....gold is in severe and permanent backwardation - the paper markets tell you nothing of this...(of course there may be short term price decline but i doubt it will be of substance).

Goldenballs's picture

Brought Silver every day this week,I am building the bubble.Hang on why are people selling,because they are skint and we are in a depression and the arse is falling out of ponzi paper.Sorry about that,just remembered why I,ve been doing it.

cyclemadman's picture

If gold and silver are in a bubble and I sell.  What would I buy that can survive the currency and government bond collapse?  I'm not buying gold and silver to make my fortune.  I'm buying gold and silver to have something on the other side.

RockyRacoon's picture

You are buying as a hedge.  What sane analyst can argue with that technique?

http://www.cmegroup.com/trading/metals/e-micro-gold-futures.html

Got a hankering to trade gold futures, but can't stomach the prospect of margin calls on a standard 100-ounce contract? Are the COMEX miNY 50-counce contract and the NYSE-Liffe 33.2-ounce contracts too rich for you?

Not to worry. The good folks at the COMEX (now owned by the parent of the Chicago Mercantile Exchange) have got you covered.

Welcome to the world of micro trading. Beginning Oct. 3, speculators now have the opportunity to trade 10-ounce COMEX gold futures contracts.

For one-tenth the original margin of a standard contract, or just $574 (at the exchange minimum), the world of gold futures trading will open up for ... for ... whom? Let's put that aside for the moment and consider the contract's mechanics.

The COMEX marketing folk are keen to let us know that, other than its size, the new micro gold future replicates the standard contract. Well, they're right when it comes to metal fineness, tick size and depository locations at least. There are differences, though. Deliveries will stretch out only two years to include just the traditionally active February, April, June, August, October and December contracts. No five-year rolls and no serial deliveries.

Oh, there's one other distinction. Don't expect to stand for delivery of a 10-ounce bullion bar if you're long one of these babies. You'll need 10 contracts for that. That's because each micro contract delivery of an accumulated certificate of exchange (ACE) provides 10 percent ownership in a standard COMEX 100-ounce gold bar.

You'll need to cobble together 10 ACEs and convert them into a COMEX warrant to get your hands on an actual bar of gold.

While you're holding your ACEs, you'll be responsible for the pro-rata storage charges on the gold represented by the certificates. Storage for standard bars runs $12 to $15 a month, so if you're holding three ACEs, you'd pay $3.60 to $4.50 monthly.

It's a safe bet that commercials aren't going to be providing liquidity for these contracts. They're just too small for hedge use, so this is bound to be a market populated solely by speculators. That can make for some pretty thin trade. And that raises the possibility of premiums and discounts to the standard contracts' pricing.

http://seekingalpha.com/article/228364-micro-gold-futures-coming

Spigot's picture

No bubble yet. The sheeple are selling it at "gold parties". When you see Time magazine with a cover story about how Gold is the only real investment worth having, THEN you'll know to sell. Till then, enjoy the ride.

augmister's picture

When the market tanks, so will the shiny shiny....it will be on sale!   Buy some then.

Temporalist's picture

Clearly you don't understand why people are buying physical and holding it.  Buyers now are holders not sellers.

Bagbalm's picture

Gold is only a bubble if the economy really is healing and next year will see unemployment down and commodities stable and business activity picking up. Sound reasonable?

Kina's picture

I think there is a bubble in people saying gold is a bubble, for a long while. I guess if they say it long enough they can hope for a correction to hide behind.

The fact that every man and his dog has been worrying about gold being a bubble, should tell you it is nowhere near that phase yet.

 

Anyway this isn't like buying a stock investment, Gold is getting stronger because everything else is looking riskier. When that stops gold will quieten.

Temporalist's picture

Thanks RR I tried to share some links with charts above but that is a good one!

GFORCE's picture

"This time it's different?" The mark of all tops.

Everyone's suddenly a gold and currency expert. Shame that many don't have the elusive contrarian ability to separate ego and emotional bias from their trading decisions.

Is silver 50% undervalued? or gold 50% overbought? Time will tell. Let's vary the content. Every post is literally the same. Devaluation, blah!

RobotTrader's picture

Copy of Ras e-mail to Boomer peer "Les"
Rasputin - Wed, Oct 6, 2010 - 04:29 AM


For those readers not familiar with "Les" (not his real name) and his
story, Rasputin's dear Boomer friend has been caught up in every hoopla
of the previous three decades.

Les had his portfolio destroyed by the NASDAQ collapse.

Les nearly jumped into McMansion flipping in 2005, before Ras was able to talk him out of it.

Les piled into GLD and SLV two years ago, after being again
devastated in that particular stock market crash. (And he made this move
WITHOUT first consulting with Ras, as he promised to do.)

With that background in mind, below is a copy of an e-mail that Ras just sent to Les.

Will Les heed the call?

Unlikely.

Anyway, here goes:

Date: October, 6th, 2010

From: Rasputin

To: Les

Subject: Hmmm, does this seem familiar?


Body of e-mail:



Are you paying attention to the gold bubble?

I hope so.

In case you haven't had time to look at the charts of gold, below is a link to Kitco.com:

http://www.kitco.com/charts/livegold.html

Please note that EVERY SINGLE CHART, from the one-day, to the
one-month, to the two-month, to the one-year, to the five-year, to the
ten-year shows a parabolic move upward.

Kinda like tech and Internet stocks did in the mid-1990s.

In fact, gold has gone up in price by nearly one-hundred dollars
just in the few months since I started dumping all of mine. And fifty
dollars in the last two weeks since I finished dumping mine. (which both
of these upward moves are MORE than gold prices went up in entire YEARS
back in the early 2000s!)

Of course this kind of exponential rise in price can go on forever, right?

Just like the NASDAQ did in 2000-2002, right?

And just like housing did in 2007-2010, right?

Furthermore, Uncle Gorilla and the Fed would NEVER do anything to crush the speculators, right?

I mean, really, millions of goldbugs (who hold physical gold),
paper-trading GLD/SLV/futures traders/miner-stock-holders and other
gamblers would never all bail out all at once, crashing the prices of
precious metals, right?

"This time it's different", right?

LOL.

Of course, like way back in 1996--when I was warning you of a stock
market bubble and back in 2005--when I was warning you of a housing
bubble--I could be wrong and gold and silver could run up for years and
add thousands of dollars to the price of gold and hundreds to the price
of silver (predictions I have heard over and over from the goldbug
crowd.) However, as I have noticed through the years, it's better to be
years early than weeks late.

In any event, please save this e-mail. Because if I'm correct in my
warning, I want you to understand that you have been warned."


(Ras Conclusion): Ras is shaking his head in utter disbelief as he
witnesses his buddy Les (and a whole bunch of other people) ONCE AGAIN
succumbing to YET ANOTHER mania.

These "gambling fever" instincts are clearly hard-wired into the human psyche.

Yet each and every time, time-after-time, without exception
throughout history, these manias/bubbles ultimately burst/collapse,
leaving the participants financially devastated.

And each and every time, the proles TOTALLY IGNORE the previous bubble/mania and dive head-first into the next one.


essence's picture

robo

your posts have degenerated such that the only redeeming feature to them is scantily
clad women.

JS Kim has posted a number of sterling articles on various Internet sites.
He has proven himself with insightful posts.... (without resorting to soft porn). I listen & ponder to JS Kim ... while I only preruse your posts for the visuals.

robo...you've become the Larry Flynt of zerohedge.

BobWatNorCal's picture

Gold will stay up as long as interest rates are at 0%
When savings start to pay a return, then people will need to thing again and gold _might_ retreat.

Temporalist's picture

NOT ONE OF THOSE CHARTS SHOWS A PARABOLIC MOVE UPWARD...yet.  You are full of shit.

These links show charts with a comparison to RE and dotcom bubbles. Gold is not even close to "parabolic":

http://online.wsj.com/article/SB1000142405274870439470457549620066194789...

http://online.wsj.com/article/SB1000142405274870479210457526486306956578...

 

David Rosenberg said gold to $3000 on Bloomberg just now.

 

Here is more:

http://www.gold-eagle.com/editorials_08/kosaresj092710.html

CrockettAlmanac.com's picture

Robot says "This time it's different. Paper is as good as gold -- hell, it's way better than gold! The fiat currency regime will not collapse like every other debased currency in the history of mankind."

 

Hulk's picture

My guess is that Les will take Ras's advice for one reason: they are both loosers.

Who in their right fucking mind could think that gold is in a bubble when fiat is in a race to the bottom? Unfuckingbelievable....Throw Ras in with the "can't eaters", they're all toast...

RockyRacoon's picture

Gold cannot be equated with housing nor NASDAQ stocks.

They just are not equal to each other in any respect. 

Looking for the similarities will yield some valuable results, as will looking for the differences.

Spigot's picture

Well, no market goes straight down either. If you are detached enough you'll recognize the break in the uptrend and the subsequent failed attempt to regain the trend. Then you sell.

There is always time to sell pretty close to the top. Getting out before the chart breaks down is ridiculous.

Diogenes's picture

This Kim guy is a total nitwit.

Geoff-UK's picture

Allow me to retort on his behalf, and proclaim my certainty that you like the cock.

 

RockyRacoon's picture

Thank you for your in depth rebuttal.

smartknowledgeu's picture

<sarcasm>Now that's an intelligent argument against my presented position! </sarcasm> It's guaranteed that the next correction in PM stocks and gold/silver prices will be met with "the gold bubble has burst" banker propaganda although Central Bankers will be unable to engineer anything remotely close to the Oct/Nov 2008 correction again.

hbjork1's picture

Having been through the first gold run in 1979, I don't think that the gold run is over.  In that era, a man named Paul Volker was appointed by the oft maligned Jimmy Carter to FED chairman.  His strong dollar policies took CD rates to a max of ~18% and created a mini-recession. But the longer term effects, no doubt helped the Reagan administration.  Personally I approved of his policies even though I still have a container of gold powder that I recovered electrochemically from some electronics scrap sitting in a drawer.  (Didn't finish soon enough.) 

IMO, this run will be over only when the FED begins a stronger dollar policy.  As long as they pursue weak dollar, gold (or silver) will appreciate.

tradermonkey's picture

But if I'm 100 cash, in Sterling, should I buy gold here?

Famous Futures Trading Quotes #101: why not buy one, sell one at the same time, and then just ditch the loser?

MarketTruth's picture

Thanks JS Kim, excellent article and those of us in the industry for a long time know exactly what you mean on all accounts. Great article!

hbjork1's picture

This to echo the thanks to JS Kim for the excellent article from a "retiree" still somewhat stunned by the general cluelessness of the so called "professional" financial management community. 

 

 

groucho_marxist's picture

"This time it is different."

 

Now you know to think "bubble" for certain. Everytime someone says this, that's when you know the bubble is either here or it's coming soon.