Gold Special Report: Erste Group Says Foundation Of A Return To Sound Money Has Been Laid, Expects Gold To Hit $2,300

Tyler Durden's picture

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GetZeeGold's picture

 

Looks like I'm early. Glad I packed a lunch.

 

Sudden Debt's picture

I wish I could type as fast as you...

 

maybe if I used both my hands?....

 

but how would I jerk off and smoke at the same time?

I tried it once....

DAMN THAT WAS PAINFULL!!!!

I guess I'll only figure that one out when I gain as much experience as you do... :)

 

tictawk's picture

There are two ways to resolve today's debt problem.  Our currency is created from DEBT. The choice is very simple.  The Fed can either MONETIZE all the debt thereby rendering the currency worthless or we have a DEFAULT on all the zombie loans and unpayable debt.  If it is the latter, many banks will go under and people will lose their money that is in those banks.   The default occurs when credit effectively dries up for most everybody and cash becomes king.  We are seeing the initial stages of that currently.    After the collapse of debt, the govt may try to monetize future liabilities.  The debt monster is so huge, that the FED at this point is powerless.  This is demonstrated daily given that nothing is working.  All the money they throw at the problem is sucked up by the equity market and does little for the economy where it really counts.

Spitzer's picture

No, cash does not become king in the latter, the cash is backed by the full faith and credit of the US govt. Without the credit, the dollar will sell off, not rise.

The quantitative theory of deflation is dead wrong. If it where right then the Euro should have rallied in the summer of 2010, when Greece was on the cusp of default, instead it fell from 1.49 to 1.19(incipient hyperinflation)

Also, why didn't the Thai Baht rise is 1997 when Thailand defaulted on debt ? It crashed by 40% within days. There was no huge rise in the printing of Thai Baht when that happened.

DoChenRollingBearing's picture

A little off topic, but I know Spitzer will enjoy this.

I was rooting around in older FOFOA articles and encountered the below quotation, which matches almost exactly what ZH-er "Acidtest Dummy" once wrote, a brilliant comment.  FOFOA wrote in Sept. 2008:

"The way "the deal" was supposed to work was that the CB's would have to use little to none of their own gold, but instead keep the price just above production costs for mines so that "oil" could take it's gold right out of the ground. The supply from the mines would be supplemented by gold going from the private sector to "oil" as well."

Acidtest Dummy wrote words to the effect that Au uses carbon, in both hydrocarbon and human forms, to gather itself together in ever larger lumps.  When I first saw Acid's remark, it electrified me...

Hephasteus's picture

Ya good points. But when the curve on oil and gold production collapses it's going to be a stair step ride. Right now gold should be about 3k an ounce. If it doesn't go ahead and stair step then when we hit another peak oil curve bump it'll go absolutely nuts. Since it's based on production right now as gold get's harder to get and oil to get gold get's harder to get it's game over.

Quinvarius's picture

Raising the price of gold so that there is a financial asset to counter the debt solves everything with no haircuts. 

grekko's picture

You got it backwards.  You don't raise the price of gold, that never changes.  The only thing that can be done is to devalue the Fiat!

KlausK's picture

"New Deal" for Europe:

Google translated:

The "New Deal" was a U.S. reform program has been boosted by in the thirties of last century, massive state investment, the economy. The euro zone could also collect on the issue of EU bonds funds "to finance the economic recovery, rather than saving measures carried out" according to SPIEGEL information in a declaration, inter alia, the former Prime Minister Guy Verhofstadt (Belgium), Giuliano Amato (Italy), Michel Rocard (France) and former Portuguese President Jorge Sampaio support.

http://www.spiegel.de/wirtschaft/soziales/0,1518,771996,00.html

We know how to print, too!

Popo's picture

Apparently I missed the "return to sound money".   When did that happen exactly?

Michael Victory's picture

The return to sound money.. escorted in with the shovel ready jobs.

Believe that..

I've got a bridge to sell you. 

(link = Why we're freggin doomed.)

 

fredquimby's picture

 

I asked FOFOA to make this post into a book as it is the best piece of gold writing I have ever read

http://fofoa.blogspot.com/2011/05/return-to-honest-money.html

 

DoChenRollingBearing's picture

+ $55,000

His "Return to Honest Money" is his summation to everything that I have read before at his blog.

Note everyone that FOFOA has called for a price that could be as high $100,000 / oz!

Ahmeexnal's picture

Yes, and silver will be three times as valuable as gold.

DoChenRollingBearing's picture

Ahmeexnal

Would you be interested in writing a "Guest Post" at my blog on silver?  I direly need an expert on silver to write "The Case for Silver" or similar.  If you might be interested, send me a gmail at my name, I will send you the link to mt blog, you can take a look around and decide for yourself.  My blog uses my real name, so I do not post the link here.

sskid's picture

You should watch these videos, or link them to your blog

if you want a case for silver vs fofoa.

http://www.youtube.com/watch?v=QTAO_M9mexw

http://www.youtube.com/watch?v=zJ-QU2EBIds&feature=related

These are the first two, you can find the rest at his ytube channel

 

DoChenRollingBearing's picture

THANKS, sskid!

I will go look at them, and if they are sound, up they go!

I still need someone to write something for me though...

DoChenRollingBearing's picture

@ sskid, I just put five of the videos up at my blog as well as the below comments:

"I still wait for a silver expert to come and write a Guest Post on the case for buying silver.  I do not know silver well.  I like gold better, but I hold about twice as many ounces of silver as I do of gold and platinum combined.


I have seen a very few, but they are there, at Zero Hedge make a case that the price of silver could actually go HIGHER than gold.  I believe those who say that are basing that on fundamentals (usage of silver is higher than what is being mined, etc.).

While I plead for a silver expert to come and write here, Zero Hedge contributor "sskid" sent me the below links to YouTube videos which basically critique FOFOA's Guest Post's (author "costata") column on silver not long ago.  There are eight of these, at the moment, I have only watched one (the first).  I post the first five, the rest are there at YouTube right along these.  To watch them all would require over two hours...  That is one reason why I need an expert to step and write a cogent article on silver!"

sskid's picture

The first one is very slow, should maybe skip it, watch this one

http://www.youtube.com/watch?v=kyJH_-npRLg&feature=related

 

 

 

Oh regional Indian's picture

;-) Gold bugs hate that kind of talk Ahmeex.
I happen to agree.

I also think that a move to real hard money (ie. land/edible/security) assets by the end of this year is highly advisable.

We are entering final phase. Such a ride.
ORI
http://aadivaahan.wordpress.com/2011/06/30/desiderata/

SWRichmond's picture

$10,000.00 gold wouldn't surprise me one bit.  The gold investments I have is for moving wealth forward into the next currency regime, whatever it is.  Silver is for profit potential.  Gold is safety.  Silver is fear and greed.  Simple.

gosseyn's picture

And a gold/silver ratio <1 for the first time in history?  Dream on, my friend.

HungrySeagull's picture

Actually it may be a possibility provided that Silver is a industrial metal. Gold may do well as a subistute when it becomes cheaper than silver.

Copper? Forget it. Wheat? Rots. Corn? We burned it all as fuel.

Iam_Silverman's picture

"Copper? Forget it"

Please elaborate.  In many cases, Copper has been used as a monetary metal.  It has many industrial uses, as does Silver (and to some extent, Gold).  Rumor has it that China has been considering a tri-metal backed currency.

I am interested as to why you think that copper might not be a useful Semi-PM to hold.  What about Nickel?

Copper Bullion Coins:

http://www.bullioncopper.com/20--2011-One-AVDP-Ounce-999-Fine-Copper-Rou...

They are attractive, but are they worth holding?

XenoFrog's picture

Copper bullion has storage issues that Silver/Gold do not.

Iam_Silverman's picture

"Copper bullion has storage issues that Silver/Gold do not."

Again, I am a novice.  Please elaborate.  Does it have to do with the price per unit weight issue - as is often used by Gold buyers to disparage Silver purchases?  If it does, well that's no real issue here.  I have acres and acres to store stuff.

DosZap's picture

Check the Premiums on this rip off.......and you will change your mind QUICK.

Iam_Silverman's picture

"Check the Premiums on this rip off"

I wasn't looking to buy from these folks, actually.  I was just looking for an image of Cu bullion (generically).  I know that like other metals, you should shop around and educate yourself before you buy.

DosZap's picture

These folks foreigners?, FRA was not 1914......Dec 22nd 1913.

Spitzer's picture

That's right.

Ben Davies is a distant second at $30,000+ but he said that on CNBS. He might have been thinking $100,000 but didn't want to say it. He could be FOFOA for all I know.

Cognitive Dissonance's picture

What are the implications - enter the Shadow Gold Price.

I love this term. If we can have a Shadow Banking System and a Shadow Government and a Shadow Military why can't we have a Shadow Gold Price.

I spent some time this weekend with the extended family and I was asked many questions about the banking system and precious metals. When I began talking about "paper" PMs as opposed to physical they suddenly became confused. Isn't it the same thing? When I talked about the leverage used in paper, meaning that the physical backed up only a small fraction of all the paper PMs, there was shock and outright disbelief.

They simply couldn't understand how the government, that bastion of wholesome goodness, would allow this to go on. When I explained how the Fed (not a gvt agency - surprise) and the gvt were involved in this they stopped listening. The Big Lie was too big to be believed.

Can't blame them really. No one wants to believe their Daddy is a serial rapist or a child molester. Best just to close the eys, cover the ears and scream "I can't hear you".

mayhem_korner's picture

Nice post, CD. 

And as we come to understand how small of a minority it is that understands the Big Lie and how it is going to play out (yes, several permutations but all end the same), it becomes clear that the collapse is going to yield an incredible concentration of wealth housed by that same, very small minority.

I expect there will come a time when all those nuggets of ignored wisdom come to roost, and all those who've cast us aside as "paranoid nut jobs" will come pounding on the door in repentant fury.  For that potential I keep my banter to a very close few - immediate family and trusted friends.

-in my sopwith camel

dark pools of soros's picture

that's why TPTB do not care how water down the fiat gets..  they know it is debtmoney not wealth..  but to manipulate it to force the public into such debts as to give away the farm so to speak, then the wealth is transferred

They have already crippled the working-class private unions and are on the warpath vs the working-class public unions.  And the main thing against those unions aren't the pay scale as it is the security and benefit/healthcare factors in those contracts.

DosZap's picture

I stopped the FACTS and the Save your butt routine about a year ago.

NO one wants to hear it, and no one (I know owns any physical).

So  be it..........

If the entire scenario was resolved and it dropped back to $300.00 an oz, I would lose a wad.

Since that is impossible in the real world,I continue as most here do to have insurance against the almost certain.

doggings's picture

CD I have these conversations too, and youre exactly right, the Big Lie needs 64bit processing power, and most of these people are Amstrads or Commodore 64's.

curiously every single one Ive managed to make take the sheeple quiz has scored 2 or more but always take offence to their verdicts.

"its not me, I can see clearly, its everyone else.."

 

DoChenRollingBearing's picture

My score was -2.  

Nice quiz!  I recommend to everyone here.  But ZH-ers need this quiz less so than our clueless friends and family...

Bleeaat!   Baaa-aah!  Baa-aah-aah!

Ahmeexnal's picture

"E' Meglio Vivere un Giorno da Leone che Cent'Anni da Pecora"

RockyRacoon's picture

Question 4, but who is Max Keiser one would ask?   If you gotta ask....

My score was -4.    I have a mixed wardrobe of hats in assorted metals.

Needless to say, I don't venture forth in electrical storms.   I may be crazy but I'm not stupid.

Iam_Silverman's picture

" I have a mixed wardrobe of hats in assorted metals."

Sadly, all I can afford right now is my Aluminum foil beanie....

MagicHandPuppet's picture

Awesome quiz!  It's nice to get a good laugh, even in such a dark topic.

wandstrasse's picture

imho, the mainstream NOT asking and answering how money is created is collective self-hypnosis or psychological repression. Why? Because the answer to that question is too dire and momentous. Our wealth (individual and as a society) has merely been PRINTED since decades now, at the expense of our children, of sweatshop slaves in Asia, of industrial stock breeding, of victims from oil wars etc. I can hardly bear this, so I do not expect anybody else to bear this.

Cognitive Dissonance's picture

Our wealth (individual and as a society) has merely been PRINTED since decades now......

This is something the average person has a very difficult time understanding for some very simple reasons. Push aside the deliberate obscuring of how the system works. On a personal level it is easy to understand why they are confused, particulalry if they believe what they are told by the MSM.

I must expend my own labor to receive printed pieces of paper. Thus that paper has "value" which is derived from my expended labor. While people understand in a general way that the govt/fed/treasury "prints" money they tend to think it is only printed when value is somehow created somewhere out there to back the newly printed paper.

When I explain that there is no value created to back the extra printed paper they are very confused since the only way they receive the paper money is from the exchange of their labor. I use the example of counterfeiting and how the counterfeited money "steals" the value of the existing money, thus diluting the value of their own paper money (aka inflation) and this is what is done when the Fed creates money out of thin air to purchase Govt treasuries.

The bigger picture is often lost because they are still struggling with the concept of paper money printed into existence without labor behind it (or Gold since many people still think the currency is backed by Gold). Until that hurdle is jumped, everything else said after that point it is just words with no real meaning or understanding.

I spent some time this weekend talking about how the US removed itself from the international Gold standard during the Nixon administration and how the world financial system (with the US syaing do it or else) replaced it with the international oil standard (aka the US Dollar as the world's reserve currency) where every industrialized country (eventually) agreed to buy and sell oil only with US Dollars, thus creating an artificial demand for dollars, allowing the US to print like crazy because those extra dollars were soaked up by the world wide increasing demand for oil to feed growing countries. This was totally foreign to everyone, who had no idea the dollar was no longer backed by Gold. The Fort Knox myth is still very much alive and working it's delusional magic.

And my family is for the most part professionals, doctors, lawyers, architects, engineers etc. While everyone understood small parts of what I was saying before I started, no one ever tried to understand the bigger picture. While their egos would never admit it, they profess ignorance because they don't really want to know, not that they couldn't understand it which is what they say. The ignorance is staggering and not isolated to my family. I see this in my clients as well and they for the most part are also professionals.

NotApplicable's picture

So, you're saying that they are still 'happy.'

Cognitive Dissonance's picture

No....actually many of them are profoundly unhappy. They know that something is coming round the bend. And while they don't want to know what it is they also know it is coming. So while they can pretend to be happy because they don't know the specifics they can't deny it all.

I offer as proof the one third of the population on prescription antidepressants or pain killers, the two thirds that use alcohol and other various stimulants and depressants, the 10% of the population who are alcoholic and another 20% who abuse alcohol. I could go on, but I think you get the picture. They aren't happy in their ignorance. They are just afforded the opportunity to pretend they are happy and then die a slow death inside.

On a short time scale wilful ignorance is bliss. On a long time scale wilful ignorance is suicide.

firefighter302's picture

 

Brilliantly stated posts, Cognative Dissonance.

Happy 4th. Cheers.

Firefighter302

dark pools of soros's picture

CD - try to sum things up more like that last line instead of trying to train people to think with a detailed map. Think poetry instead of user manual. There is a place for the long journals, but if you are talking to people in person, it has to resonate quickly

 

I tell people that the money we use is just 'Depreciating Promises'

That seems to generate an anxious anxiety and a need for them to seek answers instead of just asking curious questions

 

 

 

 

 

Cognitive Dissonance's picture

You must live in a part of the country where the people still has some independent brain functions. I live and work close to Washington DC, the heart of the beast. And while the population on a whole is actually very educated and several of the counties surrounding DC are in the top ten for personal income and net worth, their jobs, careers and loyalty is intimately tied to the US Govt., Congress, the lobby, the US military, Govt and military contractors, sub contractors and suppliers etc....not to mention all the various people and businesses who support those systems.

It's a very different world here near DC. Very dogmatic in their thinking......though they would vehemently argue otherwise. That doesn't mean everyone. But most certainly the majority. It is extremely difficult to get people to think "B" when they are paid to think "A".

Normalcy bias is everywhere and the trends I see here in DC are everywhere in the country. But the force is extremely strong within 50 miles of DC.

DC, the strange attractor.