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Guest Post: Gold Market Is Not “Fixed”, It’s Rigged
Submitted by Adrian Douglas of Market Force Analysis
Gold Market is not “Fixed”, it’s Rigged
In 1919 the major London gold dealers decided to get
together in the offices of N.M. Rothschild to “fix”
the price of gold each day. While this was notionally
to find the clearing price at which all buying
interest and all selling interest balanced the
possibility for market manipulation and self-dealing
is inherently systemic in such a cozy arrangement.
This quaint anti-competitive procedure continues to
this day. In no other market in the world do the
major players get together each day and decide on a
price. Imagine if Intel, AMD and Samsung were to meet
each day to “fix” the price of microchips, or if the
major oil companies were to meet each day to “fix”
the price of crude oil; wouldn’t there be a public
outcry and a flurry of antitrust violation lawsuits?
The “fix’ is not open to the public, there are no
published transcripts of each fixing, and there is no
way to know what the representatives of the bullion
banks discuss between each other.
The current London Gold Fix is conducted by the
representatives of five bullion banks, namely HSBC,
Deutsche Bank, Scotia Mocatta, Societe Generale, and
Barclays. The “fix” is no longer conducted in an
actual meeting but by conference call.
The London Gold Pool that was instigated in the
1960’s was incontestably established with the sole
purpose of suppressing the gold price. Several
central banks furnished gold to sell into the market
with the aim of keeping the gold price at $35/oz.
This was overt market manipulation. How was this
achieved? The internet site
www.goldfixing.com
explains
here as
a historical fact that “1961 - Gold Pool of US and
main European central banks set up to defend $35
price, by selling at fixing to contain it”. So the
London Gold Pool sold into the “fix” to suppress
the price and no doubt the bullion bankers making
the “fix” were party to this scheme.
The London Gold Pool disbanded in 1968 when it
suffered massive outflows of bullion trying to
frustrate free market forces that were manifesting
themselves as insatiable demand for the metal.
As there is no London Gold Pool anymore does this
mean that this mechanism of selling into the fix to
suppress the gold price, that was pioneered by the
London Gold Pool, is defunct also? Absolutely not!
Analysis of the gold price data shows quite clearly
that the price of gold is being heavily suppressed by
the exact same mechanism.
Fortunately the bullion bankers added the AM Fix in
1968. This means there are two times in the day when
we know for sure that the gold price is being set in
a clandestine procedure that is controlled by just
five bullion banks.
Figure 1 Gold Market Timeline
We
will examine the characteristics of the prices
determined by the London Daily Gold Fixings to
demonstrate unequivocally the gold price is
suppressed. To do this let’s examine what happens in
a typical twenty-four hour period as illustrated in
figure 1. We have chosen to start and end the 24 hour
period with the PM Fix. Three and a half hours after
the PM Fix the Comex closes and gold trading is then
predominantly conducted in the eastern hemisphere
where the western bullion banks have much less
influence and the market has a much higher proportion
of physical metal trading than does London or the
Comex. The period from the PM Fix to the following AM
Fix is labeled “overnight” trading (indicated by the
blue double-headed arrow). The period from the AM Fix
to the PM Fix has been labeled “intraday” trading
(indicated by the red double-headed arrow). The
intraday trading includes most of the trading day on
the LBMA where 90% of the world’s gold trading
occurs. It would be fair to say that this is the time
of the day most influenced by the western cartel of
gold bullion banks. The “overnight” trading is the
least influenced by the gold cartel. But without
question the AM Fix and the PM Fix are determined by
a process under the direct control of five bullion
banks.
The London Fix data used in the analysis presented in
this article can be found at http://www.kitco.com/gold.londonfix.html
For purposes of demonstration let’s consider just a
small sample of gold price Fix data as shown in Table
1. It can be seen that if a trader bought gold on the
PM Fix on 7/26/2010 and sold it on the following AM
Fix on 7/27/2010 he would have made $0.5/oz on the
trade as shown in the “Overnight” column. If he were
to repeat this trade every day then his gains and
losses are listed in the column and would sum up to a
cumulative total gain of $22.5/oz over the seven
trades. If a trader bought on the AM Fix on 7/27/2010
and sold on the PM Fix on the same day he would have
lost $16/oz as shown in the “intraday” column. If he
were to repeat this trade everyday his daily gains
and losses are as shown in the intraday column and by
8/4/2010 he would have cumulatively lost $6.5/oz. The
cumulative gain or loss is recorded for each day in
the columns labeled “Cumulative Intraday” and
“Cumulative Overnight”
Table 1: Sample of Gold Fix Data
Figure
2 shows the cumulative gains/losses for “intraday”
and “overnight” daily trades since the start of the
current bull market in April 2001. This chart is
astonishing. The cumulative price change between the
AM Fix and the PM Fix in the last 9 years is negative
$500/oz while from the PM Fix to the AM Fix it is
positive $1,400/oz. What this means is that if a
trader had each and every day purchased gold on the
AM Fix and sold it the same day on the PM Fix he
would have lost $500/oz. If he had instead bought
gold every day on the PM Fix and sold it the
following day on the AM Fix he would have made
$1400/oz. (these calculations exclude fees and
commissions). One could go further and say that if a
trader had shorted gold on the AM Fix and covered the
short on the PM Fix and then bought gold on the same
PM Fix and sold it the following morning on the AM
Fix and repeated this every day over the last 9 years
the trader would have made $1,900/oz; a buy and hold
strategy by comparison would have gained only
$950/oz. ($250/oz gold price in 2001 to $1200/oz in
2010).
Figure 2: Cumulative Intraday Change & Overnight
Change 2001-2010
The
change in price between the AM Fix and the PM Fix are
cumulatively making a trend which is increasingly
losing money in a very strong bull market! Clearly
the fixes are not being set to “clear the market” but
are being manipulated to suppress the gold price. In
figure 3 the same chart as figure 2 is shown but with
the right-hand scale inverted.
Figure 3: Same Chart as Figure 2 with Right-hand
Scale Inverted
What
this shows is that the more gold rises over night in
essentially Asian markets the more it is sold down
into the PM fix. This was exactly the modus operandum
of the London Gold Pool but now it is being done
covertly.
Figure 4: Cross-plot of Cumulative Intraday Gold
Price Change & Cumulative Overnight Gold Price
Change (2001-2010)
Figure
4 is a cross-plot of the cumulative intraday gold
price change against the cumulative overnight gold
price change. The chart shows that the cumulative
amount that gold has declined between the AM Fix and
the PM Fix at any time in the last nine years
displays a linear correlation with the cumulative
amount that gold has risen from the PM Fix to the
following AM fix for the same period. The correlation
coefficient R2 is
0.95 which is very close to a perfect correlation of
1.0.
This shows that someone is consistently selling down
the PM Fix and the amount of the cumulative sell down
is almost perfectly linearly proportional to the
cumulative amount by which gold trades up overnight.
That can not happen by chance.
Table 2: UP & DOWN Days for Intraday &
Overnight
Table
2 shows the total number of up days and down days for
both the intraday and the overnight trading from 2001
to 2010. There is a striking contrast. In fact there
is almost a mirror image where the number of up days
overnight is very similar to the number of down days
intraday. The probability of getting this contrasting
result at two different times in the same 24 hour
period, in the same commodity market, and over a 9
year period is approximately one in 2.6 x
1031.
In
other words it is practically impossible for such a
divergence of data to occur by chance, let alone for
the divergence to have a nearly perfect correlation.
This is in fact a very sophisticated market
manipulation that is conducted to minimize the
chances of being noticed by a casual observer. In
Table 1 it can be seen that gold is not
systematically sold down the day following an
overnight rise. It is programmed and executed over
several days which is why it is only clearly revealed
by looking at the cumulative changes over time. In
figure 5 it can be seen that the AM Fix data and the
PM Fix data appear to almost overlay. This is because
the average difference between them is managed.
Figure 5: AM & PM Fix
(2001-2010)
Figure
6 shows the daily difference between the AM Fix and
the PM Fix charted as a percentage change from 2001
to 2010. It shows that a staggering 88% of the data
fall in the minus one percent to plus one percent
range. Equally surprising 98% of the data lie in the
minus 2 percent to plus two percent range. This also
can not happen by accident. The gold price has
increased 400% in nine years yet the percentage daily
price range between the AM and PM Fixes remains
locked largely in a 1% band. This is why the AM &
PM fix price data appear to overlay in figure 5
because the daily variation is tightly controlled.
This could only be achieved by market interference.
Figure 6: Intraday Percentage Price Change
(2001-2010)
The
inescapable conclusion is that some entity or
entities are deliberately suppressing the gold price
between the AM Fix and the PM Fix and that this
suppression is calculated to proportionately counter
the cumulative gains in price achieved in the Asian
markets that trade at some time in the period after
the prior day PM Fix until the following AM Fix. Such
a consistent manipulative effort would necessarily
involve entities with access to large amounts of
gold; this implicates central banks as they are the
only entities with large hoards of gold and
furthermore they have a motive for suppressing the
price of gold which is to hide their mismanagement
and debasement of their national currencies.
Furthermore the five bullion banks who conduct the
Fix would have to be complicit because by definition
they are responsible for determining the clearing
price on the Fix so they must be aware of the impact
on price of the selling activities of the entity or
entities who are offering gold in such large
quantities that it causes such price aberrations. As
the central banks do not trade themselves it is more
than likely that some or all of the banks involved in
the Fix also act on behalf of Central Banks. What is
irrefutable from this analysis is the gold market is
not “fixed” it is “rigged”!
The suppression of the gold price is achieved in
three main “theaters of war”:
1) The LBMA unallocated gold dealing is a fractional
reserve operation with a reserve of probably less
than 3%. This is largely a paper gold market that
masquerades as a physical gold market. Palming off
the unsuspecting investor with unallocated gold with
a very low reserve ratio prevents the investor’s
money from chasing real physical bullion which
inherently acts as a price suppression mechanism (see
my recent article
Proof of Gold Price
Suppression for
more details).
2) For the investors who insist on having physical
bullion it is important to suppress the price to
dissuade them from thinking it is a good investment.
As demonstrated in this article this is done by
selling gold into the PM Fix to counter the rise in
the price that occurs in the physical markets of
Asia. This is exactly the same tactics as employed by
the London Gold Pool of the 1960’s.
3) The large bullion banks, most notably JPMorgan
Chase and HSBC sell short on the Comex inviting other
commercials to join in the short selling binge to
create frequent waterfall drops that wipe out
speculators and serve as a cold shower for those who
are bold enough to make leveraged bets that gold
prices will rise.
Additional and complementary measures include the
establishment of largely unbacked Gold Exchange
Traded Funds (ETF) that serve to divert demand away
from the real metal. OTC derivatives that are used to
hedge the essentially naked short exposure that
exists by virtue of the fractional reserve nature of
the massive unallocated gold market.
The London Gold Pool failed due to insufficient gold
to meet demand. In those days the paper market was
not as dominant. By contrast it is through selling
massive amounts of paper gold that the gold cartel
has managed to keep the lid on its current price
suppression scheme. But therein they have unwittingly
planted the seeds of their own demise. I estimate
that 45 ounces of gold have been sold in unallocated
accounts for every one ounce that exists in the
vaults. When just a fraction of these investors ask
for their gold there will be a run on the bullion
banks of epic proportions. When 45 claims go looking
for one ounce of physical gold the rise in bullion
prices will be breathtaking.
If you own unallocated bullion you likely only have a
claim to about 2.3% of what you think you own. The
window of opportunity to get your investment to be
100% bullion is closing rapidly.
This article has shown that physical gold is being
dumped into the PM Fix to contain its price in a
covert version of the 1960’s London Gold Pool. The
result of the failure of the London Gold Pool to
suppress gold was an appreciation of the gold price
from $35/oz to $850/oz; a similar percentage today
would carry gold to almost $30,000/oz. This is not a
price forecast but an indication that when free
market forces have been frustrated by market
manipulation for a very long time the equilibrium
price can be many multiples of the suppressed price
and the rise is typically rapid when the suppression
is overcome. There are many growing signs that
suggest the
gold manipulation scheme is coming
unraveled.
The onset of an epic “gold rush” is fast
approaching.
»
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Rigged markets. What's new? Starve the beast, don't play by their rules. Get out of the markets. If you like Gold, take delivery. If you have money in the bank, pull it out, go to a Credit Union. If you have stocks, sell them. The only message these scoundrels will understand is when the retail investors leave entirely leaving them to cannibalize each other.
Yeah. VK has it right! Keep what little self respect you have and quit trading with the enemy. Cheers to that.
Yeah, that 3% of the market going away will sure "stick it" to the "big boys" with 97% of the market!
401(k) assets and other retail assets form a much greater portion than 3% of the markets. To think that a all-on withdrawal of retail participation will have no effect is a shitty attempt at helplessness.
Copied from my challenge in the last gold thread you were trolling:
You wanna man up about it, JB? I'll tell you what, one year from today (August 12th, 2011) you can give me one American gold eagle for today's price from APMEX, including delivery, which comes to $1297.84. You can cover this bet at any time you wish, but I will deliver payment (say via paypal, or a similar service), which will be credited to your account upon my receipt of the gold.
This bet is perfect for you and your fellow gold trolls, because it rewards or punishes based upon how right or wrong the given party is. Know that I will only accept physical delivery of an American Gold Eagle. This means that even if spot is $250, and you find that you have to pay a $7000 premium to get physical bullion, you still must pay it. Of course, if spot is $250, and an eagle is available for $50 more than that, you will profit handsomely.
What do you say? Are you man or coward?
Sorry I missed your challenge.
Gold is 1300 with delivery right now? GD what a ripoff! You're losing 8% out of the gate.
How about I give you 92 dollars and you give me a hundred dollar bill? LOL.
I'll do it as many times as you want, right now.
Holy shit. Somebody is losing 8% the second that they buy gold. That's what's crazy to me. Why not light 8% of your dollars on fire?
You COULD just buy GLD, and not lose 8% today.
Wow, you used a lot of words just to say that you're wimping out.
Such ignorance is to be expected from a fool like you. You get the premium back when you sell it, numbnuts. No-one gets spot when they sell a premium coin like an AGE. They get something like spot+$100, more if they sell on Ebay.
But seriously, take the bet, or live the rest of your life knowing that you are a coward. Which is it going to be?
Sell it to who?
Who is going to give you 1300 bucks for something valued at 1220?
A fool?
And now, somebody who claims not to be concerned about short term price is making a bet based on short term prices.
Wow, what a hypocrite.
I'd take your bet, but how can I be certain you'd even pay or be here in a year? It's essentially not worth doing because there's no guarantee that you'll even honor your deal.
Who would I sue when you lose your money, your screen name?
My god, you're stupid. Look on Ebay. That is the MARKET PRICE for and American Gold Eagle. 1220 is the price for an ounce of gold hidden away in a vault somewhere in the middle of a 400 oz good delivery bar. You can't take delivery at that price.
And who said short term prices? I said we would settle in a year. That is medium term.
Paypal is a perfectly reputable service for transactions such as this. I will send you the money via paypal, and you can take it out of your Paypal account upon my receipt of the gold. I can send you my full name and contact information via email if you choose to accept the bet.
As an alternative, if you don't feel comfortable doing that, we could simply make it a theoretical bet, and the loser must close his Zerohedge account and never post again. Now THAT would be worth it for me.
I'll take the bet on the zerohedge account. You'll just come back under a different name though, I'm sure...
But yeah, I'll take THAT bet. I'm not sending anybody on the internet my personal information.
If somebody comes to my house, they'll get shot in the face, but I'd rather not have things come to that. I don't think that you would, I just don't trust strangers.
Ok, sounds good.
I give my word that if the cost in dollars of one American Gold Eagle delivered is less than the amount posted above, I will abandon my account, and never post on Zerohedge again (though I may continue to read if I so desire), not as Tmosley, or as any other person. I will endeavor to have Tyler ban my account if possible.
The bet will be set if you make a statement similar to the one above.
I will bookmark this page. My only regret is that I will have to put up with your shit for another year. But then, maybe the price will go boom or bust before that, so one of us can choose to concede at that point.
You'll just come back under a different name though. I'm sure...
Like changing his name from Master Bates to Johnny Bravo?
"If somebody comes to my house, they'll get shot in the face, "-Johnny B
I don't think you'd shoot anybody, or that you even have a gun. Pussy.
"If somebody comes to my house, they'll get shot in the face, "-Johnny B
I don't think you'd shoot anybody, or that you even have a gun. Pussy.
I'd like to make the same bet, J.B.
Put your money where your mouth is or STFU!
I have (and have had) the same screen name and real life nickname everywhere and would never change it.
Find it on ebay and check the feedback.
There you go again, JB. Missing the point of the post AND getting combatative right out of the chute. My God what a Fucker you are.
3% + 3% +++++ eventually adds up to something. Gotta start somewhere.
Funny thing is, for what a partisan douchebag you tend to be, my guess is you'd cheer on the "Yes WE Can" crowd, but ridicule a grassroots movement against the banksters???
Fucking Douche.
"getting combatative right out of the chute."
"what a Fucker you are"
"Fucking Douche"
And there we have it, a hypocrite in form and practice.
Let me ask you something... do you think it MATTERS if you leave the market? Do you think that you, or even all 200000 people on zero hedge will make any bit of difference in world markets where 6 billion people trade?
Also, you seem to forget that it was the BUSH administration that bailed out the banksters. You know, TARP, passed before Obama was even elected?
I guess facts elude you totally.
Ha ha!
And here I am, having the stupidest person alive responding to my posts. That's what I get when I come here.
I suppose that it will be worth a laugh later.
Holy strawman argument Batman. Who brought up Bush? Or Obama? Not me. I'm no Bush fan.
I'm talking about a guy who simply says that he wants to break the system by getting the fuck out, and encourages others to do the same.
You ridicule him for being ineffective,
"YES WE CAN" motherfucker. You just don't get it.
"Funny thing is, for what a partisan douchebag you tend to be, my guess is you'd cheer on the "Yes WE Can" crowd"
So you used Obama's slogan, but you weren't talking about Obama. Okay. That makes sense.
Also, the word partisan implies that you're talking politically.
incredibly sexually frustrated again, as we can see.
... "That's what I get when I come here."
I forgot. Why DO you come here?
Adrian Douglas
www.marketforceanalysis.com
Bill Murphy
www.Lemetropolecafe.com
(2 week Free trial)
Chris Powell
www.GATA.org
Jim Willie
The Golden Jackass
Just my short list...
Read the BEST... Junk the REST
+ fofoa.blogspot.com
http://fofoa.blogspot.com/
brilliant site
You are right about that. FOFOA has been bookmarked. Brilliant essay on confiscation, or the possibilities thereof, and the "types" that bring that message for their own gain.
FOFOA is the man!
+ $1210 to all of you just above!
Okay, so if it's "rigged" or "manipulated" as the people here claim...
1. How would buying physical gold (as opposed to paper gold) make any difference in the price that you receive for it when you go to sell it, except that it is less liquid?
2. Why would you keep buying an asset that you claim is manipulated downward?
Doesn't make sense on even a basic level of logic...
Okay, here come the replies:
"gold is real money. when the United States becomes Zimbabwe, it will be 54000 an ounce."
"I screw TPTB every time I buy gold! Then I bury it under my porch next to the canned ham!"
"Gold bitchez! Derrrnnnhhh!!!! *hits chest, bites ear*"
Hey, it's I Don't Know History or Economics but I Sure Can Type an Insult Boy!
Nice to see you.
Yeah, and how many history and economics classes have you taken?
And no, I don't mean in middle school in 1934.
In post #518804 Bravo said:
Without inflation, there would be no growth. Without growth, there wouldn't be a growing economy. It's simple really.
Inflation = growth. Deflation = recession.
In post #518860 Bravo said:
Inflation IS growth. Without inflation, prices would never increase, and neither would profits.
In post #518870 Crockett said:
There was price deflation in the United States throughout the nineteenth century. So you believe that the American economy was smaller in 1900 than it was in 1801?
In post #518887 Bravo said:
Looks about even to me in terms of inflation versus deflation:
http://upload.wikimedia.org/wikipedia/commons/thumb/2/20/US_Historical_I...
.
In post #518959 Crockett said:
Yes, it looks "about even" but there was a slight deflationary trend. But let's give you the benefit of the doubt and say it's "about even" -- that there was no net inflation or deflation. Where does that leave you?
You said: Inflation IS growth. Without inflation, prices would never increase, and neither would profits
and
Without inflation, there would be no growth. Without growth, there wouldn't be a growing economy. It's simple really.
So are you still insisting that there was no progress in the United States during the entire course of the Industrial Revolution? If there was no growth or profit, what specifically do you think made it so industrial and so revolutionary?
In post #518965 Bravo said:
Also, the industrial revolution didn't really take off until the end of the 19th century. You see a huge amount of inflation in the early part of the 20th century.
And what does that have to do with anything?
It's the truth, first of all. (Prove it isn't, which you never did and can't.)
Second of all, how many economics and history classes have you taken in the last 20 years?
Zero?
I'm enrolled in five ECON, FNCE, ACCT classes, and one HIST class this semester alone.
That would be six this semester alone, as opposed to your zero.
In post #518965 Bravo said:
Also, the industrial revolution didn't really take off until the end of the 19th century. You see a huge amount of inflation in the early part of the 20th century.
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transport and technology had a profound effect on the socioeconomic and cultural conditions starting in the United Kingdom, then subsequently spreading throughout Europe, North America, and eventually the world.
http://en.wikipedia.org/wiki/Industrial_Revolution
What is the difference between "didn't take off" and "didn't occur"
"Didn't take off" (it really started increasing)
"didn't occur" (didn't happen at all.)
GD you can't read, or something.
And what about the MASSIVE advances that occurred from about 1880 forward? Those arguably changed the world far more than anything in the 1700s or 1800s.
And please, use something academic to cite your sources. I'm not saying that you're wrong, but it's not like wikipedia is an accepted source anywhere. I could go on there and change that right now if I wanted to.
I'll ask again. What was the last economics or history class you took?
It's only the third or fourth time I've asked now.
.
Yeah, I'd delete my post too if I realized that I was totally wrong in every argument I made in it and above it.
The delete post was meant to be in response to a different comment so I removed it.
Yeah, I'd delete my post too if I realized that I was totally wrong in every argument I made in it and above it.
So when are you going to delete your posts that claim no one made a profit in America until 1913?
Do you really think your classes now are worth more than mine twenty years ago?
Okay, here it comes: Go get some fucking zit cream. Kid.
"Do you really think your classes now are worth more than mine twenty years ago?"
First of all, did I say that they were? You're arguing against an argument I never made. Wow.
Second, yes.
Global economics is much different than it was 20 years ago, dumpster.
Second, I wasn't talking to you, I was talking to the guy who said I didn't know anything about economics or history, when I'm taking SIX classes that have to do with the subjects.
How many did he take? I don't know. I've asked him several times
Taking classes? HAHAHAHAHAHAAH
They're essentially free, paid for by trading.
How much did you make on gold since the beginning of the year?
Oh wait... nothing. Damn.
Nothing is free.
But my foreign dividend-yielding non-USD denominated gold mining stocks have done quite well for me this year, as a matter of fact. Thanks for bringing it up, I think I'll have another cocktail in celebration. As for physical holdings, it's not the gold that changes in value, it's the value of the currencies it's priced in that constantly change, minus of course the lovely suppressive interference described in this post. But maybe you haven't gotten to that chapter yet.
Any other ignorant assumptions you want to make?
From now on maybe you should just start waiting to be called on before you open your mouth. Isn't that how it works in your 6 classes?
About 14% if I am being conservative. Buy the dips eh! or check @spotgoldprice to get a bead on the current gold price...
ha ha. Taking classes, oh my god. Most of the folks here have life experience, age , time and experience make a hell of a difference.
Shools and what they teach, oh shit , your better off not going or take a few beers with you! Much love to you, i envy your naivety and ability to get lost in the play. Ah yes, youth is so wasted on the young
Groundhog day again here at zh
Buried canned ham in the backyard biatchies!
Ground penetrating radar, bitchez!
Ground penetrating radar , only works till like 8 ft !!!!
Make a wisecrack, get a substantive response. Awesome, thanks.
However, it appears that the depth of penetration depends on how wet the soil is.
http://en.wikipedia.org/wiki/Ground-penetrating_radar
This is acutally pretty good info for people who want to bury stuff.
God I admire you.
lol, yes, taught by fuckwit FED PHD approved know-nothing's for sure.
remember dickwad, Economics is lies
good luck with that
.
(1) I guess you can use this logic to people who have been accumulating for the past 10 years. When people demand more in physical, shortages happen and price suppression cannot work as see in the past decade
(2) see above (1)
(3) we have been buying for a long time primarily to convert to Jewelry and store of wealth. A ounce of Gold or silver purchases a commodity or labour the same more or less for the past many centuries.
An Dinar of Gold(approx 5 grams) buys you 2 goats and 1 dirham of silver buys you a chicken in all countries for the past 1400 years. I think it held the value even before that.
Whoa, somebody actually answered my question! Kudos to you sir!
I don't agree, but at least you have some reasoning there.
I guess what I mean is if demand can't keep going higher than the suppression, what is to keep the "manipulation" from bringing the price back down again?
And why would you buy something that you know is actively rigged?
That doesn't make sense to me, although I do understand what you're saying.
At least you answered the question though, instead of pulling up a thread from six weeks ago about the industrial revolution or something.
I appreciate fiddler's response and he is correct. However what he said is common knowledge which is frequently propagated in these forums, often in response to this self same question which you raise time and again.
By tomorrow you will have "forgotten" the answer and you'll be braying once more.
Hey, I'll give you 92 bucks for a 100 dollar bill right now! Wouldn't do it?
Then why would you buy gold?
Crockett is a retard. I should make that my signature or something.
Okay, so it's common knowledge that it is manipulated downward. And yet, you buy it.
I like buying things that are rigged against me too. Wait, actually I don't.
JohnnyRetardo asked:
The answer is pathetically obvious --- or at least is obvious to anyone who is not an evil, hate and lie-spreading troll and paid disinformation agent:
Because like our corrupt and doomed Ponzi financial and monetary systems, the manipulation of the precious metals markets is unsustainable and fated to fail sooner or later, with a violent correction to true market values inevitably to follow.
You wanna man up about it, JB? I'll tell you what, one year from today (August 12th, 2011) you can give me one American gold eagle for today's price from APMEX, including delivery, which comes to $1297.84. You can cover this bet at any time you wish, but I will deliver payment (say via paypal, or a similar service), which will be credited to your account upon my receipt of the gold.
This bet is perfect for you and your fellow gold trolls, because it rewards or punishes based upon how right or wrong the given party is. Know that I will only accept physical delivery of an American Gold Eagle. This means that even if spot is $250, and you find that you have to pay a $7000 premium to get physical bullion, you still must pay it. Of course, if spot is $250, and an eagle is available for $50 more than that, you will profit handsomely.
What do you say? Are you man or coward?
I'll bet you a Morgan he won't even answer.
I'll take that bet (but only because he already replied above, but he has pussed out so far).
Who the fuck am I even betting? A screen name? LOL. Sure, yeah, I'll bet. And then I'll never see you again when you lose.
Are you the stupidest person alive or something?
Who the fuck am I even betting? A screen name? LOL. Ever hear of ebay ?? Do they use screen names ???????????
Bravo, I think you and tmosley have some serious man on man lovin' issues to reolve. You guys need to clarify who is givin' and who is receivin'. After you sort that out come back and post again but please, for the love of God, spare us the details.
Paper gold is used to keep price suppression going. It is believed GLD is backed, at least partially, by leased gold because there is not enough supply to back the longs because the price has been suppressed, cheating mining companies out of growth capital for many years. Not playing the paper game would force the suppression to come to an end.
If an asset is manipulated downwards it creates a margin of safety on the downside. Unlike paper gold, which has counterparty risks.
The most important looting sources are pension funds.
The next good places to loot are insurance companies.
Retail investors are not big players since they overwhelmingly losing their "investment" money pretty fast.
All good ideas, to be followed with hanging the traitors.
Surperb analysis!!! No one in their right mind can dispute these findings. I agree with VK. Pull your money out and buy physical gold and silver.
And how exactly would buying a less liquid form of gold have any bearing on whether or not you receive a lower price because it is "manipulated"?
Less liquid form? I can trade gold for cash in hand in less than 15 minutes. How long does it take you to get cash from a sale from a brokerage account? 3-5 business days?
Why bother reasoning with the unreasonable?
Oh, he is not unreasonable at all ---- try slickly disingenuous and disinformative.
Spreading hate, lies, distraction and obfuscation is the hallmark of every JohnnyRetardo post.
Great piece. Definitive proof the market is rigged.
Kudos, Adrian, for a remarkably well-researched and insightful piece.
I can't wait to see how the AGAs attempt to discredit this one...
Since all my "gold investments" have now already been redeemed for actual physical, I don't find myself watching the PM prices every day since it no longer matters and my pulse remains calm no matter what happens in metals or equities.
What will most likely develop in the future has pretty much been laid out by "Another", "Friend of Another", and now adroitly carried on by the blogger FOFOA (Friend of a Friend of Another) in his blog that is now getting very wide distribution.
I'm no longer a speculator or even an investor. My simple choice now is wealth preservation through some future cataclysmic monetary dislocation. This will happen when the time is ripe and unpredictable. I'm content to sit back and enjoy my life in the meantime. Please pass the popcorn ............. the show will start shortly. Meanwhile, enjoy the upfront cartoons and laughter. We're all going to need to be relaxed when the main feature begins.
As the Ponzi scheme unravels Gold will become harder to manipulate and control and also as the movements of the market fail to reflect the real world the market will be shown as the freak show it really is.Who can objectively say that long term an honest investor is not fleeced by Governments,Central Banks,Investment Banks,Insurance Companies and General Banks.Gold is a reflection of the total lack of confidence in the markets and the organisations within them.
and people actually think they are represented by government. A government owned lock , stock and barrel.
European banks use gold reserves to raise cash
http://www.ft.com/cms/s/0/e3ed5836-8949-11df-8ecd-00144feab49a.html
another classic by ZH. thanks again adrian.
all i can say is. i hope the price goes up in the next 2 weeks because i'm selling most of my physical gold ( bullionvault) to buy a large plot of land and be a chicken farmer,
its been a fun ride though and part of me wants to 'hang in there' . but life is meant for living and i am excited about the future. thanks to sites like this and a few others i have been educated in the way the financial markets work and why gold has been such a good investment for me. gold has gone up enough to buy the land without borrowing money.
thanks everyone (i will still be watching. mainly to 'junk' johny bravo )
Sounds like a rational move. Congratulations and good luck to you in all your endeavors.
Yours is a gold success story and there's no refuting that fact.
I might get junked by a chicken farmer!?! That's really gay.
I guess that shows who knows what they're talking about. If my junks are coming from chicken farmers and mouth breathers... well, I welcome them. Anything to distance myself from the retarded.
Johnny, I'd never call you retarded because that would be an insult to some fine folks.
But please tell us again that wacky story of yours about how there was no Industrial Revolution in the US in the 19th century. That one always makes me laugh.
Wow, you just lie your ass off, don't you?
I believe I said that there was no deflation, which I proved with a graph.
Chicken farming is honest work. What do you contribute to society? Please graph your usefulness.
I get paid eight million dollars a year to help manipulate the price of gold downward by posting on the internet, remember?
By keeping the price of gold low, I help society in numerous ways.
Oh, and I tripled the profits of my last company, adding four employees over my tenure as manager.
Four people are still employed because of my sales skills.
What do you contribute to society?
I cant see any reason to believe anything said by Bravo. Ficticious most likely. blabfest fodder
If you could formulate arguments instead of insults you might learn something here. I think you are wasting your time on this blog.
When I am confronted with arguments, I will make arguments.
Who would I really learn from anyway?
I learn plenty, but it isn't from people like you, who never contribute anything substantial and only make insults yourself.
And why do you have a Vandals CD as your avatar?
It is rash to condemn where you are ignorant. - Seneca
But really, look at who is saying I am ignorant. Ignorant people.
I said the sky is green, and yet it isn't.
Johnny Bravo: I learn plenty, but it isn't from people like you....
That got my attention... please share these sources from which you learn.
I explained his particular retardation mechanics in the Are gold bugs=apple cyborg fans. Thread. It's interesting how these idiots are made. So read the last response about how the energy aggregators work and then watch this.
http://www.youtube.com/watch?v=LA-AvBjBm5k
lol, haven't heard that song for a while. Thanks Heph. I generally only scan through the gold comments once in a while because they are the same over and over again.
Added: "...it's fun to unfuck them back into their raw state of dissatisfaction." hilarious.
Well, business school, technical analysis books, the articles here, on mish's site, on seeking alpha, on tpc, and on, and on...
I don't learn anything from the posters here though. Well, not most of them anyway.
Everyone likes a fight once in a while, but seeing you get beaten on by about 20 people week after week... Reminds me of when I was a kid and there was another kid - Chris who used to yell insults at me when he was out of my reach. Anyway, I chased him for about 5 miles one day and after about a half hour of him looking back over his shoulder terrified that I was going to catch him he couldn't run any more. As he was struggling to get his breath bent over I put my hand on around the back of his neck and tried to get my breath too. After a few minutes I looked at him and said why do you always yell shit at me then run? You must have known I would chase you down one day... He couldn't answer and instead of beating him I just asked him to stop and we shook hands. The next time I saw him I called over "Hi Chris!" and he said hi back. That was about 20 years ago and I still see him around, we chat on the street and everything is fine between us. I hope you get the point of this - that there was no point to him just agitating me and we were both happier off just saying hi.
Similar story here Frank, sixth grade, only when I caught him I beat the shit out of him and about that time mom caught up with us and beat the shit out of him with a broom!
Same result though, we became friends and the nonsense ended...
lol - I was going to beat the shit out of him for the first 3 miles... the other 2 I just wanted to never have to run after him again. I hope Johnny reads this and figures out he's being used as a teaser pony for kicks and isn't going to change any minds. Would sure love to get back to more intelligent gold threads rather than the usual shit throwing contest of late. Hey - helped a guy up north with a farm for a couple of weeks... learned to run a back-hoe, excavator, dump truck and some 50+year old bulldozer putting in a road through a forest and a couple boat launches.... a farmer's life can be physically demanding but very satisfying.
Excellent Frank! Sounds like you will be working on hydraulics sooner or later. The exhaustion at the end of the day makes for a good nights sleep. What part of the country were yo working in?
Funny you mention hydraulics - the return line on the dozer blew off and I was covered in hydraulic oil... Northen Ontario, Canada. I don't want to be too specific. Beautiful up there but the horse and dear flies are evil.
In post #518804 Bravo said:
Without inflation, there would be no growth. Without growth, there wouldn't be a growing economy. It's simple really.
Inflation = growth. Deflation = recession.
In post #518860 Bravo said:
Inflation IS growth. Without inflation, prices would never increase, and neither would profits.
In post #518870 Crockett said:
There was price deflation in the United States throughout the nineteenth century. So you believe that the American economy was smaller in 1900 than it was in 1801?
In post #518887 Bravo said:
Looks about even to me in terms of inflation versus deflation:
http://upload.wikimedia.org/wikipedia/commons/thumb/2/20/US_Historical_I...
.
In post #518959 Crockett said:
Yes, it looks "about even" but there was a slight deflationary trend. But let's give you the benefit of the doubt and say it's "about even" -- that there was no net inflation or deflation. Where does that leave you?
You said: Inflation IS growth. Without inflation, prices would never increase, and neither would profits
and
Without inflation, there would be no growth. Without growth, there wouldn't be a growing economy. It's simple really.
So are you still insisting that there was no progress in the United States during the entire course of the Industrial Revolution? If there was no growth or profit, what specifically do you think made it so industrial and so revolutionary?
In post #518965 Bravo said:
Also, the industrial revolution didn't really take off until the end of the 19th century. You see a huge amount of inflation in the early part of the 20th century.
Yeah, and is this not the truth? Prove it isn't.
The real industrial revolution started in the very late 19th and early 20th century.
Electricity, the telephone, etc, etc, etc.
What happened in the 1800s? Railroads? Okay, what else?
And the funny thing is that this guy says:
“But please tell us again that wacky story of yours about how there was no Industrial Revolution in the US in the 19th century”
And uses this line to prove it:
“Also, the industrial revolution didn't really take off until the end of the 19th century. You see a huge amount of inflation in the early part of the 20th century.”
Which said nothing about there being no industrial revolution, only that the REAL boom didn't come until the 20th century.
I can't believe that somebody wasted like 45 minutes copying and pasting shit that obviously doesn't even prove their point.
Now tighten down your thinking cap real hard, Johnny.
You said that there is no growth or profit without inflation. Then you said that there was no inflation in the 19th century and to square those arguments you concluded that the Industrial Revolution, which was strictly an 18th and 19th century phenomenon actually occurred in the 20th century.
In post #518804 Bravo said:
Without inflation, there would be no growth. Without growth, there wouldn't be a growing economy. It's simple really.
Inflation = growth. Deflation = recession.
In post #518860 Bravo said:
Inflation IS growth. Without inflation, prices would never increase, and neither would profits.
.
In post #518887 Bravo said:
Looks about even to me in terms of inflation versus deflation:
http://upload.wikimedia.org/wikipedia/commons/thumb/2/20/US_Historical_I...
.
In post #518965 Bravo said:
Also, the industrial revolution didn't really take off until the end of the 19th century. You see a huge amount of inflation in the early part of the 20th century.
Crockett replies:
The era known as the Industrial Revolution was a period in which fundamental changes occurred in agriculture, textile and metal manufacture, transportation, economic policies and the social structure in England. This period is appropriately labeled “revolution,” for it thoroughly destroyed the old manner of doing things; yet the term is simultaneously inappropriate, for it connotes abrupt change. The changes that occurred during this period (1760-1850), in fact, occurred gradually. The year 1760 is generally accepted as the “eve” of the Industrial Revolution. In reality, this eve began more than two centuries before this date. The late 18th century and the early l9th century brought to fruition the ideas and discoveries of those who had long passed on, such as, Galileo, Bacon, Descartes and others.
http://www.yale.edu/ynhti/curriculum/units/1981/2/81.02.06.x.html
Therefore it is obvious that revolutionary growth can and does occur without inflation.
There was inflation during that period, as the graph earlier in my posting indicates.
http://upload.wikimedia.org/wikipedia/commons/thumb/2/20/US_Historical_I...
You can't read the net inflation/deflation on that chart. If you were any kind of trader you would know that.
A much better chart (which also disproves your whole worldview): http://mises.org/images/SeanMaloneRiseFallDollarLarge.jpg
There was inflation during that period, as the graph earlier in my posting indicates.
http://upload.wikimedia.org/wikipedia/commons/thumb/2/20/US_Historical_I...
Johnny,
Yesterday you claimed there ws NO net inflation eveident in that chart:
In post #518887 Bravo said:
Looks about even to me in terms of inflation versus deflation:
http://upload.wikimedia.org/wikipedia/commons/thumb/2/20/US_Historical_I...
Dear Johnny Bravo, 1800s was a great century of achievement.
To name a few things: dynamite, the Suez Canal, the telephone, incandescent light, the sewing machine, photography, the telegraph and the electric Battery. Many of these innovations were prerequisites for the industrial revolution (in mining, coordination of work, shift schedules, garnment factories, etc.)
Wow. You'd really insult a guy for chasing a dream of being a farmer? You have officially hit a new low.
I'm sorry, you raise your own chickens? Or are you a Vegan? Would you have chastized him (in your ultimate wisdom gained through your whole seven years of life) if he had said he was going to be an organic vegetable farmer?
Or don't you eat at all? Live off some fucking cyborg ass saline solution?
Fucking pus bag.
Your youth is showing. You have yet to learn any of life's important lessons, the most important of which are to do what one loves and enjoy testing oneself. You probably still think anybody on this Earth gives a flying fuck what titles or awards you or anyone else achieves in this short life. Maybe chicken farming isn't your cup of tea, but the man you criticize is living his dream. Would that all of us could live our dream. This, you will learn, and it will not come from any of your 6 economic courses this semester.
On another matter, I read your "buy at 100 and can only sell at 92" argument and it raised a question: Can you point out ANYTHING that does not have a bid and ask? I'm afraid that using your argument I can never buy an equity (bid, ask plus commission), a bond, a gold coin, a new car or even a new house. Goldman Sachs, god's Earthly emissary, may operate in such a world, but the rest of us are always confronted with an ask AND a bid.
Boiow : ".. i hope the price goes up in the next 2 weeks because i'm selling most of my physical gold ( bullionvault) to buy a large plot of land and be a chicken farmer.."
This is exactly the kind circumstance I would sell my gold too. In exchange for land and physical objects which produce income and food. You have done well sir!
Hey boiow,
Can you let us know how the "cashing it in" process goes for you at BV?
I would love to hear if there were any issues with getting your cash back out?
Thanks!!
its a simple process. 1/ you put your gold up for sale on bullionvault at your own price.
2/ someone buys it (bullionvault member) took a few hours last time i sold. 3/ currency is transferred to your account ( normally within 3 days).
i chose' bullionvault' over 'goldmoney' because its easier to open an account with bullionvault.
personally i think it is a very professional company and have recommended them to all my friends and family. sadly they never took up the offer and while my savings have grown. ( bought in at $780 in late 2008) their's have shrunk inflation adjusted.
you also have a choice at where you keep your gold ( government hedge) i chose zurich.
the storage fees are minimal and the sell/buy commission is well worth while paying in this economic climate .ie, gold bull market.
i am particularly happy because the piece of land was for sale 2 years ago for £140k. but thanks to the crash it has come down to £95k and with my original £ 65k investment in gold( appreciated approx 40% in £'s i can now buy free from debt. where as before i was looking at a loan of approx £ 75k.
as a mark of respect to my american cousins ( who woke me up to the truth of the financial crisis reasons - peter schiff in particular) we will be breeding jersey giant chickens ( rare breed even in jersey) and will accept silver and gold for payment as well as normal currency. but thats next year . this year i will be cultivating a love affair with a tractor and chainsaw.
Thanks! Good to hear you have worked for a while with BV and have got your cash out OK...
" I am particularly happy because the piece of land was for sale 2 years ago for £140k. but thanks to the crash it has come down to £95k and with my original £ 65k investment in gold( appreciated approx 40% in £'s i can now buy free from debt. where as before i was looking at a loan of approx £ 75k."
I am very happy to hear that. Great news for you! My investment of 18 months ago is now up over 30% too....unfortunately my starting point was a tad behind yours, so I can now buy something worth about £3,000 more than I could before starting to read ZH, FOFOA et al.
I managed to tempt about 4 or 5 people into BV. All are v. happy so far!!
We have reached the point of no return. Gold is being viewed as the ultimate safe haven. The coming financial turmoil and the loss of confidence in the dollar will propel the price to much higher levels.
The long term outlook for PM's is very strong. Short term we have powerful and desperate financial institutions upside down on their bets against gold and silver. I believe true price discovery will be a reality in the coming months or years. Manipulations usually end badly for the manipulators.
hey ZH...members.
I checked the link as I posted above....LOL
as the hacks in the MSM will hack you to pull your $$$$ out of your hands..try this....LOL
FT.com articles are only available to registered users and subscribers.
the NYT and others will post this....LOL
copy the title.....go to google or yahoo..
relink from them...
they will let you in....LOL
what a bunch of hacks....paladin
copy the link... search for it through google or yahoo... click the link in the results...they will let you in without registration.
I'm impressed. I hope it works with all FT articles. Thanks.
Accordingly, when the supply of gold runs short, the security behind the notes is diminished, the loaning of notes is restricted or suspended, and the panic follows.
John Buchanan Robinson
http://www.gulfinthemedia.com/index.php?m=economics&id=531028&lim=&lang=en&tblpost=2010_08&PHPSESSID=72c3bfde6a7c902fff88860b8af74859
Tons of gold imports turn to dust on arrival
Emirates Business 24/7 - 15 August, 2010
Several tons of gold imported into the UAE by traders and investors turned out to be fake on closer inspection, resulting in millions of dirhams in losses and high levels of stress to the victims.Speaking to Emirates 24|7, Mohamad Shakarchi,, Managing Director of Emirates Gold, said: "A lot of people in the UAE who tried to import gold at lower prices or through dubious overseas companies have been cheated.
We have inspected many consignments from African countries, especially Ghana, and found that there is not an ounce of gold in them.
For importing pure dust or other metals with yellow colour, these traders have paid several million dirhams.”
Dubai Customs sources confirmed the incidence of fake gold imports, but did not reply to a questionnaire sent by Emirates 24|7 ten days ago.
“The concerned official is on leave,” said a spokesman.
Emirates Gold has stopped examining gold imported from Africa. "We send specialists to examine a gold consignment only if it is routed through a local company.
We don’t have time to waste because most of these so called gold imports are fake. The traders got greedy. They thought they were getting gold at a discounted rate.”
Mohammed said that at least five tonnes of fake yellow metal is lying with Dubai Customs.
A tonne of gold will cost approximately $ 40 million. Merchants estimated that the minimum loss of fake gold imported by local traders is nothing less than $ 200 million. more at link
Shit, if you don't LIKE the AM fix, you can always buy at that price. Look at it as a gift from them to you. It sure beats whining and bleating like a bitch.
Price fixing is a gift? How so?
They're keeping prices low, but they presumably can't do it forever.
Still, I don't see why they are keeping prices low. Except for the very straight forward explanation that they are liquidating their reserves, while doing a whole lot of pumping to create demand. In short, that they are artificially raising prices in spite of the surplus supply.
Why do that? Because they realize that gold is essentially a worthless commodity. Scarcity rent doesn't mean much if people don't need the scarce resource. And, I suspect they realize we will never go back onto the gold standard. It makes gold holders rentiers, a fact obvious to anybody who has studied resource economics.
Flag it junk. But promise you will take a class in resource economics. Thanks!
If you can't see the value of sound money it is no concern of mine. Let Ron Paul's plan for competing currencies come to fruition and I'll hold currencies backed by tangible assets and you can hold Federal Reserve Notes.
Makes no difference to me.
"Sound money" is rentier money. Labor performed in the past is worth less than labor performed today. This is simple: the products of labor decay. If money is supposed to be a proxy for labor, the value of money must decay in time as well. Otherwise, old money is rentier money.
For example: a king raids a kingdom 1000 years ago. He captures their treasury. The gold never decays entropically. Did he do anything to add "value" to the world? No. He caused a society to fail in order to steal gold.
A modern example: a baby boomer works for a company that ultimately fails. His savings OUGHT to be worth exactly 0$, since the product of his labor is worthless. But if he managed to keep a few bills, he lowers the value of my money and labor.
Yes, obviously, holding rentier money is more desirable than working for a living.
Working for Federal Reserve Notes to make a living is hardly sensible considering the fact that the purchasing power of one's savings are cut in half by the time one has made it to retirement age.
In any case, what difference would it make to you if I chose to use a gold backed currency as long as you are free to use your thin air backed currency? What harm can come to you by allowing me the freedom to make my own financial choices? I don't want to force you to do anything you do not wish to do and yet you seem to be mighty fired up about denying me the same courtesy. Why's that?
I am not particularly fired up about denying you the right to buy gold. I would like to buy some, in order to make some Mr. T.-like gold chains.
The problem with a gold-backed currency is that using it as a legal tender legitimizes the scarcity rent, through arbitrary national law, not natural economic law. Consider the example of the king again. His gold would be utterly worthless, except for the fact that people must use it for trade, by law. And he holds the biggest sum in the kingdom. It's quality does not decay at anywhere near the same rate as labor, so his descendants become rentiers too. This is where the Aristocracy we Americans are supposed to hate came from.
Ron Paul is rent seeking.
The problem with a gold-backed currency is that using it as a legal tender legitimizes the scarcity rent, through arbitrary national law, not natural economic law.
In a free market -- the only natural market -- people are free to employ the money of their choice. I do not request that a gold backed currency be declared to be legal tender. Let those who wish to use it use it, that is all.
Do you really believe that a fiat currency, literally a currency by government command is not an act of "arbitrary national law?" That is simply bizarre.
Consider the example of the king again. His gold would be utterly worthless, except for the fact that people must use it for trade, by law.
You conveniently forget that fact that me and lots of other folks would voluntarily use a gold backed currency if it were permitted. Where do you get this "people must use it for trade, by law?" Once again you are describing fiat, legal tender currency and not free market money.
You can go on saying that white is bad because its black while black is good because its white all day but I fail to see the point.
If a currency was voluntary, as opposed to legal tender, it wouldn't be worth anything.
In a society with only gold backing currency, we would run out of gold and also run out of currency.
If a currency was voluntary, as opposed to legal tender, it wouldn't be worth anything.
THAT is going on the Crazy Johnny Bravo Quote List. You really don't have a clue, do you?
Let's go with an obvious example. Johnny says that Freddie the Fish can't use a carton of cigarettes to buy protection from Chester the Molester because all the chain smoking prison tough guys would say, "Hey, smokes ain't legal tender!"
In a society with only gold backing currency, we would run out of gold and also run out of currency.
You can never run out of enough gold to back your currency. You may occasionally have some deflation and that's a good thing for savers. And what is good for savers is good for borrowers because interest rates drop when savings increase. This leads to improvements in manufacturing capacity and spurs on the economy in a healthy, sustainable way.
What if Chester the Molester didn't smoke? I know that prison analogies are your thing and all, but you didn't prove anything with your analogy whatsoever.
Sure it isn't legal tender, and sure SOME people would take it as a trade. Yet, to people that didn't smoke or trade with smokers, your currency would be totally worthless.
Could you take the cigarettes to walmart and use them to trade for cheap chinese crap?
What if an Indian society used glass beads as currency? Yet I use dollars.
What the hell would glass beads be worth to me?
(Hint: Zero)
"You can never run out of enough gold to back your currency"
I guess gold just falls from the sky then, doesn't it? God, the more I argue with you, the more I realize that you don't even make sense.
Bravo said If a currency was voluntary, as opposed to legal tender, it wouldn't be worth anything.
and
Bravo said Sure it isn't legal tender, and sure SOME people would take it as a trade.
So, if you admit some people would take cigarettes in trade how can you maintain that cigarettes "wouldn't be worth anything" as a currency?
What if nobody smoked?
That's why you need a mandate that it is currency.
You can use whatever you want, but if the other people don't agree to trade than it doesn't take the form of currency.
What if?
What if?
You're kidding, right? Go ahead and base your life on the premise that X is true and continues to be true but if it wasn't, Johnny would be correct.
I did not make the mistake which you ascribe to me. I specifically said "The problem with a gold-backed currency is that using it as a LEGAL TENDER [emphasis mine] legitimizes the scarcity rent, through arbitrary national law, not natural economic law." Obviously, using gold backed currency means not using fiat currency. But legal tender is legal tender. The government must pick a currency. Using gold for this purpose makes the entropic deflation of the value of labor worse than using a fiat currency. Every generation of gold owners is richer than the last, as the world population grows and competes for your limited supply of gold. Wonderful. A new Aristocracy. If you want to buy non-legal-tender-but-still-currency-gold, great. That's what the laws of supply and demand are for. And there might even be some scarcity rent due to real, economically productive uses of gold. But I strongly suggest that you are empowering your own enslavement.
This fellow doesn't really attribute any statements to the people who make them.
Don't worry about it.
Johnny you said that the Industrial Revolution did not occur in the US until the 20th century when every school child knows that it was an 18th and 19th century phenomenon.
I've already posted your quote twice in this thread, would you like to see it again?
I said it "didn't take off"
That's a hell of a lot different than "it didn't occur."
You want to paste the quote again? You can just post the last sentence again, where I said that it "really didn't take off until the 20th century."
You don't have to post your 20 pages of worthless drivel again.
Why do you believe that "government must pick a currency?"
If an chicken farmer wants to sell a dozen eggs for two Federal Reserve Notes, that is his choice. If a chicken farmer wants to sell a dozen eggs for two silver dimes that is his choice.
The fact that you can not comprehend this simple arrangement and demand that "government must pick a currency" while simultaneously railing against "arbitrary national law" is nonsensical.
Some arbitrary national laws are worse than others. A currency that inflates at the entropic rate of labor decay is ideal. Gold is not it.
But only those who voluntarily use gold and take this supposed risk of inflation at entropic rates would suffer the consequences. You and all others who chose to hold money backed by nothing can continue to do so and remain free of danger.
It is no concern of yours.
Because if there was no legally mandated currency, there would be no way for the chicken farmer to trade his eggs unless people wanted eggs specifically.
What if his landlord didn't want eggs? Whoops, he'd be fucked.
He could sell the eggs to somebody who wanted them, and trade his currency for rent though.
THAT is why you NEED government mandated currency.
Trade is more inefficient on the barter system.
But I guess you think you're smarter than every society since the beginning of time, which have all mandated currencies.
That makes no sense. People have used money for thousand of years without legal tender laws. Gold and silver coins from various realms circulated in many nations and trade was carried on effectively.
Not only do you seem to believe that there was no industry or growth in America until the Federal Reserve was founded in 1913, you appear to believe that no one ever bought anything from anyone until 1913.
But we all know that isn't true, Johnny.
"Gold and silver coins from various realms circulated in many nations and trade was carried on effectively"
I guess that nobody made the coins for trade then? No, nobody in the government made them. They were just magically there and magically accepted by everybody.
"Not only do you seem to believe that there was no industry or growth in America until the Federal Reserve was founded in 1913, you appear to believe that no one ever bought anything from anyone until 1913."
Wow, using something I never said to make an argument that doesn't make sense - against the argument I never said.
So you're saying that there was no government mandated currency before 1913? Is that your argument against something I never said in the first place?
Johnny, coins made in a government mint and legal tender are not the same thing.
Above you said:
And now you just said that it didn't matter whether he does or not for the cigarettes to still have value.
Get it? You have contradicted yourself. Chester can still trade the cigarettes for what he wants especially because he does not smoke! The cigarettes have retained their wealth value. There you have the gold argument in a nutshell.
Not one ounce of fact in JB's comment above. Just ignorance.
Gold has been money for 5000 years. Your ignorance can't change that FACT.
It is very debatable that deflation is worse than inflation. Nevertheless, the concept of freegold solves the problem of using gold as currency. FOFOA is your friend.