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Guest Post: The Screaming Fundamentals For Owning Gold And Silver

Tyler Durden's picture


Submitted by Chris Martenson

The Screaming Fundamentals For Owning Gold And Silver

This report lays out an investment thesis for gold and one for silver.  Various factors lead me to conclude that gold is one investment that you can park for the next ten or twenty years, confident that it will perform well. My timing and logic for both entering and finally exiting gold (and silver) as investments are laid out in the full report.

The punchline is this: Gold and silver are not (yet) in bubble territory, and large gains remain, especially if monetary, fiscal, and fundamental supply-and-demand trends remain in play.


In 2001, as the painful end of the long stock bull market finally seeped into my consciousness, I began to grow quite concerned about my traditional stock and bond holdings. Other than a house with 27 years left on a 30 year mortgage, these holdings represented 100% of my investing portfolio. So I dug into the economic data to see what I could discover. What I found shocked me. It's all in the Crash Course in both video and book form, so I won't go into that data here.

By 2002, I had investigated enough about our monetary, economic, and political systems that I decided that holding gold and silver would be a very good idea, poured 50% of my liquid net worth into precious metals, and sat back and watched.

Since then, my appreciation for and understanding of the role of gold as a monetary asset and silver as an indispensible industrial metal have deepened considerably.

Investing in gold and silver is still a good idea. Here's why.

Why own gold and silver?

The reasons to hold gold and silver, and I mean physical gold and silver, are pretty straightforward. So let’s begin with the primary reasons to own gold.

  1. To protect against monetary recklessness
  2. As insulation against fiscal foolishness
  3. As insurance against the possibility of a major calamity in the banking/financial system
  4. For the embedded 'option value' that will pay out if and when gold is remonetized

By ‘monetary recklessness,’ I mean the creation of money out of thin air and the application of more liquidity than the productive economy actually needs. The central banks of the world have been doing this for decades, not just since the onset of the great financial crisis. In gold terms, the supply of above-ground gold is growing at roughly 3% per year, while money supply has been growing at nearly three times that yearly rate since 1980.

Now this is admittedly an unfair view, because the economy has been growing, too, but money and credit growth have handily outpaced even the upwardly distorted GDP measurements by a wide margin.  As the economy stagnates under this too-large debt load while the credit system continues to operate as if perpetual expansion were possible, look for all the resulting extra dollars to show up in prices of goods and services.    

Real interest rates are deeply negative (meaning that the rate of inflation is higher than Treasury bond yields). This is a forced, manipulated outcome courtesy of central banks that are buying bonds with thin-air money. Historically, periods of negative real interest rates are nearly always associated with outsized returns for commodities, especially precious metals. If and when real interest rates turn positive, I will reconsider my holdings in gold and silver, but not until then. That is as close to an absolute requirement as I have in this business.

Monetary policies across the developed world remain as accommodating as they’ve ever been. Even Greenspan's 1% blow-out special in 2003 was not as steeply negative in real terms as what Bernanke has recently engineered. But it is the highly aggressive and ‘alternative’ use of the Federal Reserve balance sheet to prop up insolvent banks and to sop up extra Treasury debt that really has me worried. There seems to be no way to end these ever-expanding programs, and they seem to have become a permanent feature of the economic and financial landscape.  In Europe, the equivalent would be the sovereign debt now found on the European Central Bank (ECB) balance sheet.  

Federal deficits are seemingly out of control and are now stuck in the -$1.5 trillion range. Massive deficit spending has always been inflationary, and inflation is usually gold/silver friendly. Although not always, mind you, as the correlation is not strong, especially during mild inflation (less than 5%). Note, for example, that gold fell from its high in 1980 all the way to its low in 1998, an 18 year period with plenty of mild inflation along the way. Sooner or later I expect extraordinary budget deficits to translate into extraordinary inflation.

Reason #3, insurance against a major calamity in the banking system, is an important part of my rationale for holding gold. I’m not referring to “paper gold” either, which includes the various tradable vehicles (like the "GLD" ETF) that you can buy like stocks through your broker. I’m talking about physical gold and silver because of their unusual ability to sit outside of the banking/monetary system and act as monetary assets.

Literally everything else financial, including your paper US money, is simultaneously somebody else’s liability, but gold and silver are not. They are simply, boringly, just assets. This is a highly desirable characteristic that is not easily replicated.

Should the banking system suffer a systemic breakdown, to which I ascribe a reasonably high probability of greater than 1-in-4 over the next 5 years, I expect banks to close for some period of time. Whether it's 2 weeks or 6 months is unimportant; no matter the length of time, I'd prefer to be holding gold than bank deposits.

During a banking holiday, your money will be frozen and left just sitting there, even as everything priced in money (especially imported items) rocket up in price. By the time your money is again available to you, you may find that a large portion of it has been looted by the effects of a collapsing currency. How do you avoid this? Easy; keep some ‘money’ out of the system to spend during an emergency. I always advocate three months of living expenses in cash, but you owe it to yourself to have gold and silver in your possession as well.

The final reason for holding gold, because it may be remonetized, is actually a very big draw for me. While the probability of this coming to pass may be low, the rewards would be very high.

Here are some numbers:  The total amount of 'official gold,' or that held by central banks around the world, is 30,684 tonnes, or 987 million troy ounces (MOz). In 2008 the total amount of money stock in the world was roughly $60 trillion.

If the world wanted 100% gold backing of all existing money, then the implied price for an ounce of gold is ($60T/987MOz) = $60,790 per troy ounce.

Clearly that's a silly number (or is it?), but even a 10% partial backing of money yields $6,000 per ounce. The point here is not to bandy about outlandish numbers, but merely to point out that unless a great deal of the world's money stock is destroyed somehow, or a lot more official gold is bought from the market and placed into official hands, backing even a fraction of the world's money supply by gold will result in a far higher number than today's ~$1,500/Oz.

The Difference Between Silver and Gold

Often people ask me if I hold goldandsilver as if it were one word. I do own both, but for almost entirely different reasons. Gold, to me, is a monetary substance. It has money-like qualities and it has been used as money by diverse cultures throughout history. I expect that to continue.

There is a chance, growing by the week, that gold will be remonetized on the international stage due to a failure of the current all-fiat regime. If or when the fiat regime fails, there will have to be some form of replacement, and the only one that we know works for sure is a gold standard. Therefore, a renewed gold standard has the best chance of being the ‘new’ system selected during the next bout of difficulties.

Silver is an industrial metal with a host of enviable and irreplaceable attributes. It is the most conductive metal known, and therefore it is widely used in the electronics industry. It is used to plate critical bearings in jet engines and as an antimicrobial additive to everything from wall paints to clothing fibers. In nearly all of these uses, plus a thousand others, it is used in such vanishingly small quantities that it is hardly worth recovering at the end of the product lifecycle -- and often isn’t.

Because of this dispersion effect, above-ground silver is actually at something of a historical low point. When silver was used primarily for monetary and ornamentation purposes, the amount of above-ground, refined silver grew with every passing year. After industrial uses cropped up, that trend reversed, and today there are perhaps 1 billion ounces above ground, when in 1980 there were roughly 4 billion ounces.  

Because of this consumption dynamic,  it's entirely possible that over the next twenty years not one single net new ounce of above ground silver will be added to inventories, while in contrast, a few billion ounces of gold will be added.

I hold gold as a monetary metal. I own silver because of its residual monetary qualities, but more importantly because I believe it will continue to be in demand for industrial uses for a very long time, and it will become a scarce and rare item.


If we cast our minds forward ten years and think about a world with oil costing 2x to maybe 8x more than today, we have to ask how many of our currently-operating gold and silver mines, or the base metal mines from which gold and silver are by-products, will still be in operation, and how many will close because their energy costs will have exceeded their marginal economic benefits.

After just 100 years of modern, machine-powered mining, nearly all of the good ores are gone. By the time you are reading stories like this next one, you should be thinking, 'Why are they going to all that trouble unless that's the best option left?'

South African Miners Dig Deeper to Extend Gold Veins' Life Spans

Feb 17, 2011

JOHANNESBURG—With few new gold strikes around the world that can be turned into profitable mines, South Africa's gold miners are planning to dig deeper than ever before to get access to rich veins.

The plans raise questions about how to safely and profitably mine several miles below the surface. Success would mean overcoming problems such as possible rock falls, flooding and ventilation challenges and designing technology to overcome the threats.

Mark Cutifani, chief executive officer of AngloGold Ashanti Ltd., has a picture in his office of himself at one of the deepest points in Africa, roughly 4,000 meters, or 13,200 feet, down in the company's Mponeng mine south of Johannesburg. Mr. Cutifani sees no reason why Mponeng, already the deepest mining complex in the world, shouldn't in time operate an additional 3,000-plus feet deeper.

"The most critical challenges for all of us in South Africa are depths and depletion of reserves," Mr. Cutifani said in an interview.

The above article is just a different version of the story that led to the Deepwater Horizon incident.  By the time exceptional engineering challenges are being pondered to scrape a little deeper, it tells the alert observer everything they need to know about where we are in the depletion cycle.  We are closer to the end than the beginning.

We are at the point in history where we can easily look forward and make the case for declining per capita production of numerous important elements just on the basis of constantly falling ore purities and gold and silver fit into that category rather handily. Depletion of reserves is a very real dynamic and it is not one that future generations will have to worry about; it is one with which people alive today will have to come to terms.

The issue of Peak Oil only exacerbates the reserve depletion dynamic by adding steadily rising energy input costs to mix. Should oil get to the point of actual scarcity where we have to ration by something other than price, then we must ask where operating marginal mines fits into the priority list. Not very high would be my guess.

Supply and Demand - Gold

Not surprisingly, the high prices for gold and silver have stimulated quite a bit of exploration and new mine production. With over decade of steadily rising prices, there has been ample time to bring on new production. Which leads to a real surprise: in the case of gold, relatively little incremental mine production has occurred.

The analytical firm Standard Chartered has calculated  a rather subdued 3.6% gold production growth over the next five years:

Most market commentary on gold centres on the direction of US dollar movements or inflation/deflation issues – we go beyond this to examine future mine supply, which we regard as an equally important driver. In our study of 375 global gold mines and projects, we note that after 10 years of a bull market, the gold mining industry has done little to bring on new supply. Our base-case scenario puts gold production growth at only 3.6% CAGR over the next five years.

(Source - Standard Chartered)

Of course none of this is actually surprising to anyone who understands where we are in the depletion cycle but it's probably quite a shock to many an economist. The quoted report goes on to calculate that existing projects just coming on-line need an average gold price of $1,400 to justify the capital costs while greenfield, or brand-new, projects require a gold price of $2,000 an ounce.

This enormous increase in required gold prices to justify the investment is precisely the same dynamic that we are seeing with every other depleting resource: energy costs run smack-dab into declining ore yields to produce an exponential increase in operating costs. And it's not as simple as the fuel that goes into the CaterpillarD-9s; it's the embodied energy in the steel and all the other energy-intensive mining components all along the entire supply chain.

Just as is the case with oil shales that always seem to need an oil price $10 higher than whatever it currently is to break even, the law of receding horizons (where rising input costs constantly place a resource just out of economic reach) will prevent many an interesting, but dilute, ore body from being developed. Given declining net energy, that's forever as far as I am concerned.

The punchline of the Standard Chartered gold report is that they think $5,000 gold is a realistic target and go on to note the most important shift in gold accumulation of the past 30 years:

The limited new supply comes at a time when central banks have turned from being net sellers to significant net buyers of gold. The result, in our view, will be a gold market in deficit, even assuming flat growth in demand.

With the supply-demand balance so out of kilter, we see the gold price potentially going to US$5,000/oz.


The emergence of central banks being net acquirers of gold is actually a pretty big deal. Over the past few decades central banks have been actively reducing their gold holdings preferring paper assets over the 'barbarous relic.' Famously, Canada and Switzerland vastly reduced their official gold holdings during this period, a decision that many citizens of those countries have openly and actively questioned.

The World Gold Council out of the UK is the primary firm that aggregates and reports on gold supply and demand statistics. Here's the most recent data on official (i.e. central bank) gold holdings:


Note that the 2009 data is lowered by slightly more than 450 tonnes in this chart to remove the one-time announcement by China that it had secretly acquired 454 tonnes over the prior six years, so this data may differ from other representations you might see. I thought it best to remove that blip from the data. Also the data for 2011 is for the first four months only, so we might expect 2011 to be a record-setter if the current pace continues.

Overall, world supply and demand are a bit out of alignment right now with supply increasing by 2% last year and non-official demand increasing by 10%:

The summary of the fundamental analysis is that with mine production seriously lagging the price increases for gold, coupled to increased central bank and investment demand, we have set the stage for some hefty prices increases irrespective of any fiscal or monetary shenanigans.

However, once we put those back into the mix, I forecast a quite volatile but upwardly sloping price for gold over the coming years. Possibly a very steep upward slope at points.

Supply and Demand - Silver

Silver demand is growing by double-digit percentages, being led primarily by industrial uses and investment demand. The Silver Institute does a fine job of tracking and reporting on these matters.

First demand:

Total fabrication demand grew by 12.8 percent to a 10-year high of 878.8 Moz in 2010; this surge was led by the industrial demand category. Last year, silver’s use in industrial applications grew by 20.7 percent to 487.4 Moz, nearly recovering all the recession-induced losses in 2009, and is now seeing pronounced advances in 2011.

Jewelry posted a gain of 5.1 percent, the first substantial rise since 2003, primarily due to strong GDP gains in emerging markets and the industrialized world’s improving economic picture. Photography fell by 6.6 Moz, realizing its smallest loss in nine years, as medical centers deferred conversion to digital systems. Silverware demand fell to 50.3 Moz from 58.2 Moz in 2009, essentially due to lower demand in India.


Now Supply:

Silver Production 2010

Silver mine production rose by 2.5 percent to 735.9 Moz in 2010 aided by new projects in Mexico and Argentina. Gains came from primary silver mines and as a by-product of lead/zinc mining activity, whereas silver volumes produced as a by-product of gold fell 4 percent last year.

Mexico eclipsed Peru as the world’s largest silver producing country in 2010, and Peru is followed by China, Australia and Chile. Global primary silver supply recorded a 5 percent increase to account for 30 percent of total mine production in 2010.


Again, we are comparing double digit demand increses against low single digit supply increases.  After a decade of rather dramatic price increases for silver, the alert observer should be asking exactly why this is the case.

In table form, we can clearly see that the silver balance for the world requires both dishoarding from government stockpiles and from the recycling of scrap silver. That is, shortfalls from mining have to be made up from above ground stocks:


There's only so long that such an imbalance can continue before the shortfalls require much higher prices to cool off demand.

One of the reasons that I originally invested quite heavily in silver is precisely because I came to the conclusion that the price was far too low, artificially so, and that it would therefore be a great investment. So far so good.

Given the above fundamentals, I project that prices for the precious metals will be many multiples higher - in today's dollar terms - by the end of the decade.

Part II of this report: How to Play The Greatest Gold & Silver Bull Market Of Our Lifetime delves into the specifics of how much of your net worth to invest and in what forms, what price targets gold and silver are likely to reach, and what indicators to look for that will indicate it's time to sell out of your precious metal investments.

Click here to access Part II (free executive summary, enrollment required for full access)


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Wed, 06/29/2011 - 10:20 | 1411685 Flore
Flore's picture

Why should you own silver if you can own gold.. It's a mystery to me why people want to invest in things people eat with...

Wed, 06/29/2011 - 10:25 | 1411698 TomJoad
Wed, 06/29/2011 - 11:20 | 1411861 66Sexy
66Sexy's picture

Silver is consolidatin'.. fixin' to spike.

Wed, 06/29/2011 - 13:59 | 1412640 HungrySeagull
HungrySeagull's picture

I can accumulate silver easier and faster than Gold at my humble income when thought of in terms of ounces.

At some point I am making a bet that Gold is weighty and massive. Thus harder to take off from 1500 to 5K By then I should realize gains in Silver and use some of it to one ounce of gold every 16 of silver.

We will worry about 60K later. Much later.

Little by little wins the race. No hurry on the Gold just yet and accumulating silver when we can. It can also be used to make bullets in a very bad pinch.


The Market is People who want profits TODAY! Even in one hour or less. Nothing else is acceptable. Why do you think there is such a war with hardware and fast fiber optic to literally suck the decimal amounts so small right out of the markets. There was a movie about that once.... the one with the big glasses worker mumbing... that is my Stapler... My stapler... someday I burn this place....


While the Boss flits from one flower to the next quickly (Pun intended) the slow one plans carefully in span of months to years ahead. Even if he was stuck in the Subbasement level surrounded by Storage.

Wed, 06/29/2011 - 11:22 | 1411868 JW n FL
JW n FL's picture  Treasury Direct $14 Trillion Debt   $15 Trillion in Loans  ='s $29T 3 Years 300% More Dollars Printed Out of Thin Air!


in 3 years.. NOT! including TARP / TALF / FED SWAP Windows.. and / or any other.. than what is sourced and sited above..

$18 Trillion in 3 years! $18 TRILLION! on top of the other $14 Trillion up top!!


this is why you should be in tangilbles! like silver & gold.

Wed, 06/29/2011 - 11:31 | 1411938 JW n FL
JW n FL's picture


and please lets NOT! forget that since Jan. 1 of this year (a month ago so its is a larger number now) that the FED has added another 20% to the Monetary Base.


Plainly, since January 1st your money is worth 20% Less!


that is just this year so far, this number is NOT! inclusive of the numbers since 2007. At some point people will demand "X" amount of paper for "X" amount of goods in relation to the true value of the paper being offered.

Wed, 06/29/2011 - 21:07 | 1414146 SamuelMaverick
SamuelMaverick's picture

Whoever junked JW's post is an idiot.

Thu, 06/30/2011 - 19:44 | 1417355 mkkby
mkkby's picture

Plainly, since January 1st your money is worth 20% Less!

It's not that simple. My cost of living has barely budged.  Neither has yours.

Wed, 06/29/2011 - 16:23 | 1413246 XenoFrog
XenoFrog's picture

It'll be good to have some real money around when they decide to officially devalue the FRN for the NEW FRN*


*Patent Pending

Wed, 06/29/2011 - 10:32 | 1411710 Troy Ounce
Troy Ounce's picture



Wed, 06/29/2011 - 10:36 | 1411721 Re-Discovery
Re-Discovery's picture

Gold Teeth?  Ever heard of Flavor Flav?

Wed, 06/29/2011 - 10:33 | 1411724 Clueless Economist
Clueless Economist's picture

I advise NOT owning gold and silver.

It makes much more Keynesian sense to own fiat paper money. 

As I lectured in my Nobel Prize speach the fact that with the printing pressing running full time, it will be much more easy to accumulate newly printed federal reserve notes. 

Gold and silver are archaic elements - avoid them at all cost.

Wed, 06/29/2011 - 10:54 | 1411760 Cone of Uncertainty
Cone of Uncertainty's picture

Jesus christ you fucktards junking this most excellent post are idiots.


I hereby unjunk you Clueless Economist and banish all fucking dickbeaters to a week long Paul Krugman economic seminar.

Wed, 06/29/2011 - 10:58 | 1411773 Pladizow
Pladizow's picture

To: Clueless Economist (Krugman?)

Agreed - I continue to only accumulate processed cotton pulp.

Why would anyone think gold or silver with a finite supply would ever be more valuable then government produced linen or binary code that is infinite?

Silly gold bugs!

Wed, 06/29/2011 - 12:35 | 1412317 Confuchius
Confuchius's picture

"Clueless economist"

An oxymoron

Wed, 06/29/2011 - 14:26 | 1412797 mayhem_korner
mayhem_korner's picture

I think you meant "redundancy."

Wed, 06/29/2011 - 14:32 | 1412803 mayhem_korner
mayhem_korner's picture


Thu, 06/30/2011 - 16:21 | 1416780 kimjongil
kimjongil's picture

an oxymoron is a contradiction of terms.  joke execution fail.

Wed, 06/29/2011 - 10:58 | 1411785 Greeny
Greeny's picture

Grow and accumulate weed! :)))

Wed, 06/29/2011 - 11:09 | 1411820 MsCreant
MsCreant's picture

I want ugly, retarded, Keynesian babies with you, and then I want to go broke and not be able to feed them.

I want your ugly, I want your disease,

I want your everything as long as it's free...

I want your horror, I want your design,

'Cause your a criminal as long as your mine...

Wed, 06/29/2011 - 12:07 | 1412161 MsCreant
MsCreant's picture

For the junk and run types, if you imagine Lady Gaga in a pointy bra singing this song, "Bad romance" to this guy, it really is quite funny and fitting. I don't think he would get it, even as it was happening to him. Do you get it, even as it is happening to you?

Fiat is the bad romance. Once you know that, you're a free bitch baby.

Wed, 06/29/2011 - 15:22 | 1413021 nuinut
nuinut's picture

Silver's ultimate impotence will disappoint too. Must be the steroids.

Wed, 06/29/2011 - 16:13 | 1413197 downrodeo
downrodeo's picture



 I busted out laughing when I saw that. Well done!

Sat, 07/02/2011 - 09:04 | 1421111 MsCreant
MsCreant's picture


Wed, 06/29/2011 - 12:44 | 1412386 Tenma13
Tenma13's picture

lol good one :P

Wed, 06/29/2011 - 19:36 | 1413881 Al Gorerhythm
Al Gorerhythm's picture

Can the silver institute please advise on how year after year, magically, silver is the only commodity where demand equals supply, right down to the very ounce. It's as if the miners and recyclers know exactly how much to drag out of the ground or put through the furnace, right down to the last investor's demand. Freakishly well managed. Put these guys in charge of treasury.

Fri, 07/01/2011 - 01:47 | 1418005 Jack Napier
Jack Napier's picture

Did you read the chart? It's because the difference is being made up by above ground available scrap, which Chris Martenson (generously) estimates around 1 billion oz. Some others think closer to 500-700 million oz. Point is, mine supply does not meet demand, so they're using up hundreds of years of reserves. Get ready for silver to be worth MORE than gold.

Wed, 06/29/2011 - 10:21 | 1411688 SheepDog-One
SheepDog-One's picture

What? Well this will certainly be a shock to bigmouth PM mockers such as 6 String, Robo, and Greeny.

Wed, 06/29/2011 - 11:00 | 1411790 redpill
redpill's picture

The problem is that despite the longer term fundamentals being solid for PMs, it's hard to get a lot of folks to listen when there are huge price swings, paper market manipulation, margin hikes, all of which cause short term losses (in terms of fiat USD, albeit). It's a rough rollercoaster ride.

Wed, 06/29/2011 - 11:15 | 1411831 Temporalist
Temporalist's picture

RP it's mainly because their "financial advisors" make no cheddar on advising PM as insurance.  People are convinced that any interest they "earn" on their savings is better than none even if it's actually negative returrns that they don't realize.  Even with dividend paying stocks they've been sold on the premise that getting a few percentage points after inflation is ideal without considering the counterparty risk and volatility that a stock has and that the initial investment can plummet or even disappear.

The financial media, Wall St. and central banks have had decades to promote their products and propagandize; it's going to be a long, tough march uphill to change popular opinion.

Wed, 06/29/2011 - 11:19 | 1411870 redpill
redpill's picture

I hear you, I can't even get my company to offer a money market option in our 401k plan, much less anything as "extreme" as precious metals exposure.

Our 401k administrator insists that "it's better to offer fewer options so people don't become overwhelmed."  And of course the choices are a bunch of crappy mutual funds.  What a bunch of self-serving bullshit.

Wed, 06/29/2011 - 13:58 | 1412672 HungrySeagull
HungrySeagull's picture

Not to mention there is just one 401K administrator making 54 thousand per year managing a few thousand boring 401k accounts that are generally fed by computer deductions off the willing sheep baa'ing as they slave away in the texile factory.

Wed, 06/29/2011 - 11:15 | 1411847 MsCreant
MsCreant's picture

Not so rough if you just buy and hold. I admit I got nervous and studied the 2007, 8, and 9 charts carefully this time and asked "how low can it go?" Knowing the dip always happens at options expiration and summer kept me firmly on the bull.

Wed, 06/29/2011 - 11:42 | 1412041 redpill
redpill's picture

Oh I did quite some time ago, so I'm not worried. It wasn't that long ago that I would have never dreamed about complaining about silver in the $30s!

Wed, 06/29/2011 - 12:12 | 1412201 Ranger4564
Ranger4564's picture

And when there is the imminent threat of the collapse of all of human civilization on a global level.  I own G / ; almost my entire portfolio is in G/ S but I too wonder what the hell is it good for, if the financiers are going to confiscate all real assets and enslave us in feudalism.  I do not have the $1mill minimum required to be considered a human being per the Dodd Frank bill / FX determinations.  I'll be a peasant, apparently. :)

Wed, 06/29/2011 - 13:49 | 1412622 LongBalls
LongBalls's picture

Hang on to it. When we go to the cashless society PM's will be the black-market currency. Look at Gaddhafi. If it were not for his gold reserves he would already be dead.

Wed, 06/29/2011 - 11:06 | 1411809 Greeny
Greeny's picture

Silver trades with the Market and Economy.
So, if you want 60$/oz silver you better cheer what
Robo has to say. DOW 15000 = Silver $65/oz and gold
$1700 or so. I know, "Physical" blahh-blahh, but it's
still priced in $USD, that's how we know, how much
is actually worth.

Wed, 06/29/2011 - 12:30 | 1412291 iLoveMisesToPieces
iLoveMisesToPieces's picture

That is until sound money makes its return (and it will).  All it takes is one currency to be fully backed by gold and Gresham's law will take over.  The price will explode on supply and demand issues.  Right now, gold and perserving purchasing power as fiat currenices depreciate.

Wed, 06/29/2011 - 10:28 | 1411694 RobotTrader
RobotTrader's picture

Actually, with deep cyclical stocks like AKS and X exploding higher today, gold has an excellent chance of reaching $1,650 if the stock market continues to advance and start pricing in a global economic boom starting in 2012.

Wed, 06/29/2011 - 10:28 | 1411705 SheepDog-One
SheepDog-One's picture

Go swim in your worthless paper Momofader, we all know you dont actually own a bit of it anyway.

Wed, 06/29/2011 - 10:29 | 1411708 oddjob
oddjob's picture

Did Gold ever go bankrupt like X?

Wed, 06/29/2011 - 10:41 | 1411738 SheepDog-One
SheepDog-One's picture

Robo now loves KKD at $10, of course he never had anything to do with it at its $70 peak though. Just another example of Robos cherry picking to pimp his pathetic ride.

Wed, 06/29/2011 - 10:40 | 1411735 6 String
6 String's picture

LOL, Robo. You're right. Gold might have an awesome 10% + move. Chris annoys me with eentire statements that are hypocritical:

Various factors lead me to conclude that gold is one investment that you can park for the next ten or twenty years, confident that it will perform well. My timing and logic for both entering and finally exiting gold (and silver) as investments are laid out in the full report. The punchline is this: Gold and silver are not (yet) in bubble territory, and large gains remain, especially if monetary, fiscal, and fundamental supply-and-demand trends remain in play.

Anyone remember when Fuk happened and he sent out his ALERT THIS IS IT message? ROFLMAO. BTW, TWJCTR on Gold and Silver when they do specular, which they will. WHich is why owning the R2K is the ONLY way to go for the next 20 years. BTW, I love 10-20 year calls. How can one go wrong with analysis like this is a nation with attention deficit syndrome?


Wed, 06/29/2011 - 10:46 | 1411741 SheepDog-One
SheepDog-One's picture

Who the hell is 'Chris'? Doesnt matter what kind of a 'move' PM's make. Idiots thinking PM's are for daytrading....what what a bunch of total morons.

6 String now pimping 20 year calls? WTF OMFG AHHH HA HA HAAAAA HA HA HAAAAAA!!!!

Wed, 06/29/2011 - 11:16 | 1411834 TheDriver
TheDriver's picture

I beleive he's referring to Chris Martenson, the author of this article, and his "alert" here:

Wed, 06/29/2011 - 11:07 | 1411802 r101958
r101958's picture

I don't recall him ever saying 'this is it'. He said it is best to prepare and if you haven't started to prepare then now is the time to start (i.e. food storage, water, etc). In my opinion, the Crash Course is the best, most accurate presentation out there that addresses our current situation.

Wed, 06/29/2011 - 11:51 | 1412074 Raymond Reason
Raymond Reason's picture

"Anyone remember when Fuk happened and he sent out his ALERT THIS IS IT message? ROFLMAO. "

@ six string:  I don't think the Japanese are rolling on the floor laughing today.  Probably not much roflmao in any of the Pacific Asian countries. 

Wed, 06/29/2011 - 18:00 | 1413543 akak
akak's picture

Why is it that when I even try to access the profile of this poster "6 String", I receive the message "Access Denied"?  I've never seen this happen before while trying to look at any poster's profile here.

Needless to say, though, I strong suspect that "6 String" has been a member for a whole 6 or 8 days, and is merely the latest incarnation of Methman, Dangertroll, or WilliamTheBastard/RedNeckRepugnicant/TexasGunslinger et al.

Wed, 06/29/2011 - 20:27 | 1414047 Vlad Tepid
Vlad Tepid's picture

Could be a 'Tyler' proxy/devil's advocate and they just forgot to flip the access allowed switch...

Wed, 06/29/2011 - 11:25 | 1411882 Crack-up Boom
Crack-up Boom's picture

There'll be a "boom" in 2012, but I doubt it'll be economic.

Wed, 06/29/2011 - 11:25 | 1411914 lieutenantjohnchard
lieutenantjohnchard's picture

whereas yesterday you mocked jim sinclair and his $1650 target.

robottrader: the ultimate dumb money indicator.

Wed, 06/29/2011 - 12:01 | 1412132 Escapeclaws
Escapeclaws's picture

Is AKS the company that makes Depends? X makes anal suppositories?

Wed, 06/29/2011 - 10:25 | 1411696 Mercury
Mercury's picture

Now I don't know but I been told
it's hard to run with the weight of gold
Other hand I heard it said
it's just as hard with the weight of lead

Wed, 06/29/2011 - 10:28 | 1411709 Bay of Pigs
Bay of Pigs's picture

"Fundamentals for silver are very weak. We expect silver to continue its downward move".

Suki Cooper, Barclays Capital, 6/29/11

She just this on BNN. I shit you not....

BTW, nice post by Martenson. Factual and to the point.

Wed, 06/29/2011 - 10:32 | 1411719 oddjob
oddjob's picture

The amount of banker peter Suki Cooper has sucked can be measured in miles. She is a morally broken human being.

Wed, 06/29/2011 - 10:33 | 1411728 SheepDog-One
SheepDog-One's picture

Suki suki banksta long time...

Wed, 06/29/2011 - 11:03 | 1411786 tmosley
tmosley's picture

It's true, actually.  The fundamentals for the paper silver market are so abysmally bad that it is quite likely they will hit zero in the short to medium term.  Literally endless supply, and not a lot of demand.

Physical silver, of course, is a different story.  This is likely to become quite clear over the coming month.

Wed, 06/29/2011 - 10:33 | 1411725 PaperBear
PaperBear's picture
"The final reason for holding gold, because it may be remonetized." ?

Screw having governments remonetize anything, governments should allow the free market to have competing currencies. Then good money wins over bad money - Gresham’s Law.

Wed, 06/29/2011 - 10:39 | 1411732 SheepDog-One
SheepDog-One's picture

Yes but too bad theyve totaly taken control to a few central planners. All your lives are belong to us.

Wed, 06/29/2011 - 10:37 | 1411739 baby_BLYTHE
baby_BLYTHE's picture

Has anyone on ZH actually sold out of their physical PMs (no ETFs)?

Wed, 06/29/2011 - 10:38 | 1411742 Deo vindice
Deo vindice's picture

Would they admit it if they did?

Wed, 06/29/2011 - 12:00 | 1412147 JW n FL
JW n FL's picture

there a few people (smart people) here that have sold out of some or "X" amount of their holdings and as far as I know have been buying back in or have bought back in already.


But understand.. some people here have their holdings, a certain amount that they are comfortable with that never moves (EVER! for any reason) and a certain amount that they trade / sell to grow their stash.. for lack of a better word.


Lots! of people here trade in and out to grow their pile of treasure!


I just buy.. but I have income that must be protected for the long haul.. think going forward generations.. so moving in and out on 10% - 20% swings doesnt make me want to pay for the back office plus manage it all and then listen to people bitch about better uses of our time and energy.. bla bla bla! Family Offices dont work like normal offices.


So! YES!! Sell some when its high and buy some more when its low! if that works for you personally!


Please Profit and have more and more and more! its good for you!


as for the perma bull salesmen here.. ignore them and make you pile grow any way you can!


But! BUT!! make sure you always have a stash that you never touch.. that way no matter what happens! you will always have that stash.. you would not want to be caught all the way out! that would suck! having a fist full of paper dollars instead of a pile of gold when the price decides it would like to be in line with the massive amount of printing that has gone on?! Please use good common sense!


Trading pile to grow your stash and the DO NOT TOUCH! pile for the safety of you and your loved ones!

Wed, 06/29/2011 - 12:07 | 1412178 slewie the pi-rat
slewie the pi-rat's picture

that one guy, dangertroll or somebody, posted that he was off to the coin dealer's and the porsche dealer's and came back w/ no silver and still driving the '68 VW.

Wed, 06/29/2011 - 10:40 | 1411746 SheepDog-One
SheepDog-One's picture

Fuck no Ive only bought more!

Wed, 06/29/2011 - 11:30 | 1411952 DoChenRollingBearing
DoChenRollingBearing's picture

Same.  I will never sell.  I will give it away at the right time though.

Wed, 06/29/2011 - 10:46 | 1411750 Momauguin Joe
Momauguin Joe's picture

Not selling.

Wed, 06/29/2011 - 10:47 | 1411756 fredquimby
fredquimby's picture

It's a "Veblen Good" dontcha know....


Wed, 06/29/2011 - 10:53 | 1411758 wombats
wombats's picture

I haven't sold any PMs, but I did give some away... necklace to my wife. :)

Wed, 06/29/2011 - 13:04 | 1412450 Beam Me Up Scotty
Beam Me Up Scotty's picture

You wasted perfectly good PM's on a necklace?  You shoulda just gave her a pearl necklace!! 

Wed, 06/29/2011 - 10:54 | 1411761 MrBinkeyWhat
MrBinkeyWhat's picture

NO WAY. DUH...I want more.

Wed, 06/29/2011 - 10:55 | 1411769 Clay Hill
Clay Hill's picture

Still buying every payday B_B.

Shut off the cable, renogotiated insurance and telephone service to free up a little more cash.

Just waiting for G/S of 20-1 to switch half to gold.

Wed, 06/29/2011 - 10:55 | 1411777 achmachat
achmachat's picture

I never bought gold, except for the two ounces that I had from before...

But I kept buying silver from the beginning of March this year, when it was around 34 USD per troy ounce.

The stash has grown to around 2500 troy ounces now, and yes, it cost me more in Fiat currency than what spot is at the moment, but it's stashed away, and I don't need it to be "liquid" at the moment. So there's your answer: there is no way I'd sell the "precious", mainly because it wasn't supposed to stay liquid.

Wed, 06/29/2011 - 11:01 | 1411794 Pladizow
Pladizow's picture

To: baby-BLYTHE

Your almost there - Buyers of physical will not SELL their gold, but they may TRADE it for something - a subtle difference.

You dont buy gold to make money, you buy gold because you have money!

Wed, 06/29/2011 - 10:37 | 1411740 Deo vindice
Deo vindice's picture

The fundamentals have (always) been there.  They're just more pronounced now than before.  And silver will undoubtedly outperform gold. I expect the ratio to get to the 20-to-1 mark.

Wed, 06/29/2011 - 10:40 | 1411745 ebworthen
ebworthen's picture


Endless stream of propagandistic bullshit spewing from talking suits on CNBC = bullish for Gold and Silver.


Wed, 06/29/2011 - 11:22 | 1411886 r101958
r101958's picture

They have a firm grasp of the obvious......sometimes.

Wed, 06/29/2011 - 12:01 | 1412152 JW n FL
JW n FL's picture

I am right all of the time..... most of the time!

Wed, 06/29/2011 - 13:14 | 1412493 RockyRacoon
RockyRacoon's picture

I thought I was wrong once.  But it turned out to be right.  So, does that mean I was wrong in thinking I was wrong?  That means I was wrong once, right?

Wed, 06/29/2011 - 18:06 | 1413561 akak
akak's picture

... error, error ..... Norman please coordinate ......

Wed, 06/29/2011 - 20:54 | 1414115 ebworthen
ebworthen's picture

"What's the frequency Kenneth!?!?"

Wed, 06/29/2011 - 10:45 | 1411749 monopoly
monopoly's picture

All aboard. This train will soon be leaving the station. I have a long term ticket.

Wed, 06/29/2011 - 10:44 | 1411752 monopoly
monopoly's picture

Sold physical. I think not. I buy on every dip. Lately the dips have been few and far between. I mean gold is 3% off of its all time high. Sell physical. That is funny.

Wed, 06/29/2011 - 10:51 | 1411765 SheepDog-One
SheepDog-One's picture

Gold 3% off its all time high, yet the mockery of golds 'pathetic performance' is also at an all time high. Just an insane world.

Wed, 06/29/2011 - 11:29 | 1411920 Bay of Pigs
Bay of Pigs's picture

Yes Dog,

Just like the silver bears (douchebags) who scream "it's off 30%!".

No, it's up 86% yoy....and in a 10 year Bull Market that started before the Iraq and Afghanistan Wars, a Housing Bubble, the Great Recession, TARP, TBTF, QE, QE II, etc....

But I digress...

Wed, 06/29/2011 - 11:34 | 1411985 DoChenRollingBearing
DoChenRollingBearing's picture

^---  All correct observations on this subthread.

NONE of our financial problems have been solved.

NO ONE of significance has gone to jail.

OK, silver has always been a rocky ride, more volatile than gold.

But, in the end, it's going to all be about the ounces, held right there by each of us.

Wed, 06/29/2011 - 12:07 | 1412181 JW n FL
JW n FL's picture

Unless Greece stops them (bankers) then we are not going to see and end.. just more extending..


The Irish are all talk.


The Spanish did NOTHING! after weeks of sit ins and holding hands and non-violently asking the Bankers to stop raping them.. the more the Spanish cried the more the Bankers seemed to enjoy raping them.


so! unless Greece steps up and makes some head way.. America! the home of the lazy and ignorant.. (and divided.. where was the middle income people when  the poor where being raped? no where and the poor remember that shit.) will end up doing NOTHING as well!


and even if! Greece steps up.. America has been successfully fragmented so I doubt that the Koch Brothers Tea Party is going to help America right itself or make the top 1% pay anything let alone a fair share or what you and I pay.

Wed, 06/29/2011 - 10:49 | 1411754 DaveyJones
DaveyJones's picture

these days, seems like all the fundamentals are screaming 

Wed, 06/29/2011 - 10:47 | 1411757 MrBinkeyWhat
MrBinkeyWhat's picture

Beans, Bullets, and Bullion. In that order.

Wed, 06/29/2011 - 10:56 | 1411768 MrBinkeyWhat
MrBinkeyWhat's picture

Hey junkster...I'll see you on the other side. I'll be well armed.

Wed, 06/29/2011 - 11:23 | 1411869 XenoFrog
XenoFrog's picture

You're more likely to shoot yourself than anyone trying to steal your beans. :)

Wed, 06/29/2011 - 11:26 | 1411927 Crack-up Boom
Crack-up Boom's picture

Not true if you know how to shoot.

Wed, 06/29/2011 - 11:41 | 1412012 Urban Redneck
Urban Redneck's picture

It is significantly more likely that the average gun owning natural person will die at some point in their life than that they will accidentally shoot themselves.

Wed, 06/29/2011 - 11:44 | 1412056 XenoFrog
XenoFrog's picture

Yes, it is very likely that we will all die at some point in our lives. :)

Wed, 06/29/2011 - 12:14 | 1412194 JW n FL
JW n FL's picture

I would have you caged and brought forth to entertain me while I ate.. when I was in the mood for your mouth.


you better hope the lights stay on.. equal rights will be one of the first things thrown out the fucking window.. or should I say that equal rights will be embraced.. talk like a man and get treated like a man.. bend over and bare it!


the moral is, Death is a release.. not punishment.

Wed, 06/29/2011 - 16:18 | 1413202 XenoFrog
XenoFrog's picture

You'd probably get kicked out of the Idaho compound by your neo-nazi friends if they found out you were keeping an Israeli Jewess around.


Wed, 06/29/2011 - 18:20 | 1413614 malek
malek's picture

Don't worry Frog, we'll shoot that bastard if he tries to.

Wed, 06/29/2011 - 23:05 | 1414405 JW n FL
JW n FL's picture

shoot me with what? your red ryder? or do you wanna shoot me with that lil thing your wife settled for?


i only ask becuase you come across as like you have a lil sugar in your tank.. nothing wrong with that.. but thats not how I get down.

Wed, 06/29/2011 - 10:57 | 1411770 SheepDog-One
SheepDog-One's picture

Damn right. Im glad to see a few Zerohedge types around who havent gone with the Necromongers for their transformation and re education to chant about the 'R2K' all day long.

Wed, 06/29/2011 - 12:01 | 1412151 Sunshine n Lollipops
Sunshine n Lollipops's picture

Sigh . . . . another acronym to decipher. I googled R2K and turned this up:


R2K (ForeSkin Natural Restorer 2000) is the most unique and effective foreskin restoration product available on the market today.

I'm speechless.

Wed, 06/29/2011 - 22:11 | 1414313 StychoKiller
StychoKiller's picture

R2K == Russell 2000 index.


Wed, 06/29/2011 - 11:36 | 1411997 DoChenRollingBearing
DoChenRollingBearing's picture

+, + and +

I did it in reverse order, and have not finished with the beans.

But, I am working on it.

Wed, 06/29/2011 - 10:51 | 1411766 DoctorGold
DoctorGold's picture

Buy as much as you can at these prices, especially silver.

Wed, 06/29/2011 - 10:53 | 1411772 Monedas
Monedas's picture

Yesterday was travel day ! I renewed my three month free subscription to Sirius for a whole year when they dropped the price to $6 per month ! I listened to CNBC for over half an hour......never heard a word about PMs except for a sponsor's commercial ? Monedas 2011 Cruisin' in my black Kia Soul ! It looks like a hearse for babys and feti ?

Wed, 06/29/2011 - 10:59 | 1411776 AldoHux_IV
AldoHux_IV's picture

Owning physical is the only real investment-- when Crimex can manipulate the futures market then you know paper ain't worth a damn-- just need to get my paper accounts up in order to make the real investment.

Wed, 06/29/2011 - 11:00 | 1411781 SheepDog-One
SheepDog-One's picture

Meanwhile Frankenmarkets stumble along directionless....Dr Frankenben better hit him up with another sedagive or he might plunge down the hill and mangle the village!

Wed, 06/29/2011 - 11:04 | 1411788 Sean7k
Sean7k's picture

The banksters can't make the money they need without volatility. The market is being inundated with news from both sides to create fear and apprehension. The constant chasing of potential returns and profits by all participants could be useful, if they weren't being frontrun.

Thus, you freely give your wealth to the banksters in return for the chance to step up and spin the roulette wheel. 

Caught up in the games of wall street, people fail to see the ramifications of policy and law being created around them. They worry about income, but fail to protect their liberty. What value is there in $5,000 an ounce gold, if your are taxed on the profit or limited in your ability to exchange it? 

Everything Chris says is true and useful for planning, but what good is it if you must then live in greater and greater tyranny? I for one, would love to see people put liberty first. Don't misunderstand me, the holding of gold and silver are a necessity, but so is the ability to live free and unshackled by the machinations of the Elites.

Wed, 06/29/2011 - 11:05 | 1411796 SheepDog-One
SheepDog-One's picture

Not me, these degenerate gamblers can talk up their worthless paper stocks and phony markets all they like while I continue to stack gold and silver....they havent gone down for me at all, still weigh 1 oz each.

Wed, 06/29/2011 - 11:27 | 1411900 Temporalist
Temporalist's picture

Here is an article about a law to remove the tax on PMs in the U.S.:

Lee: Gold, silver should be treated like currency

"Utah Sen. Mike Lee joined with fellow Republicans on Tuesday to introduce legislation that would jettison federal capital gains taxes for gold or silver coins."


A First Step To Sound Money


Thanks to GATA for sharing these links.

Wed, 06/29/2011 - 11:39 | 1412020 slewie the pi-rat
slewie the pi-rat's picture

thie is great!  just like in the US Constitution (assuming this is for US coins)!!!

i wonder if the dems will object to this sanity:  Difi!  Babs!  this is good!  go w/ Mike on this, ok?  these coins are m-o-n-e-y, by l-a-w.  there.  maybe they will understand.  cali is a tough place to roll, sometimez...

Wed, 06/29/2011 - 11:40 | 1412032 DoChenRollingBearing
DoChenRollingBearing's picture

Ridding PMs off the capital gains tax is clearly a great goal.  Hard to see it happening very soon though.

It likely WOULD happen if the Rs take take the White House and Senate next year.  That is actually the 12 cents worth of difference between the Rs and Ds I have mentioned before.

Thanks Temporalist (and GATA) for the news!

Wed, 06/29/2011 - 11:06 | 1411799 JJSF
JJSF's picture

Been adding $200k per month to my stash since 06.

Wed, 06/29/2011 - 20:30 | 1414061 Vlad Tepid
Vlad Tepid's picture

So what do anonymous posters like you who have $12 mil to drop on PMs do for a living?  I'll either call BS or suggest you take your finger off the '0' button...

Wed, 06/29/2011 - 11:07 | 1411801 XenoFrog
XenoFrog's picture

Your authority is not recognized while i'm in my fort consisting of silver bars.

Wed, 06/29/2011 - 11:09 | 1411804 JJSF
JJSF's picture

double post

Wed, 06/29/2011 - 11:04 | 1411805 cpnscarlet
cpnscarlet's picture

This is all well and good (been there, done that, have the green box), but I wish Santa Jim would explain why his 1650 Au predictions - first for Jan 11 and then for Jun 11 - have not come to pass.

Wed, 06/29/2011 - 11:11 | 1411824 Sean7k
Sean7k's picture

Because he was wrong. Why would anyone base their investment strategy on the musings of another? People need to learn monetary theory. From there, it gets very easy.

Wed, 06/29/2011 - 11:43 | 1412046 DoChenRollingBearing
DoChenRollingBearing's picture

Predicting the future is hard.

For me, predicting the SHORT TERM future is very hard.  I am usually wrong.  When I buy gold, it is usually a BTFS(pike)!

I get the longer term trends better.

Wed, 06/29/2011 - 16:55 | 1413344 cpnscarlet
cpnscarlet's picture

Becuase people claim to be "experts" in certain areas. And have "seen it before". That's how most of us market ourselves in any business. So when you are dead wrong about something, a gentleman tries to clearly explain what he did wrong. He does not ignore it or talk around it. As a research/aerospace engineer, you have to make sure you can stomach humble pie once in a while. 

Wed, 06/29/2011 - 11:17 | 1411811 Janice
Janice's picture

And, the number one reason for holding gold.....drum roll please!!!!

The government cannot easily control your golden assets.  For example, if you piss off an IRS agent, they can garnish your wages, place a lien on your house , seize your bank account and other financial, tangible and intangible assets.  And all from the comfort and security of their high-rise offices.  If you don't pay your property taxes state income tax or numerous state & local taxes, same thing.  However, if you own a gold coin or several coins, the the IRS has to send in the SWAT team to beat down your door and get your assets.  This becomes a PR nightmare and very cost prohibitive to beat down the doors of all the citizens.  With gold, if you have an IRS problem, you take a gold coin to the nearest coin dealer, trade for cash and feed your family.  The government no longer has the ability to "starve" you out.   


And that, my dear friends, is priceless.

Wed, 06/29/2011 - 11:24 | 1411903 r101958
r101958's picture


Wed, 06/29/2011 - 11:29 | 1411919 Temporalist
Temporalist's picture

Yea just ask the ex-leaders on the Middle East what it's like to be chased down by the banksters and learn from what they did...carry your gold with you.

Wed, 06/29/2011 - 11:51 | 1412067 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1500 today

+ $50,000 by 2013?


If they ever try a confiscation where they get to the point of raiding people's homes, that would STOP after about 20 - 50 cops / IRS thugs were shot dead.

EXCELLENT point about them not being able to starve you out.

Wed, 06/29/2011 - 12:19 | 1412215 JW n FL
JW n FL's picture

I wonder if someone too the time to put together a chart.. with the slower rate of increase (the first 5 years of gold moving) and trend that line forward.. what it would be in 1, 3 & 5.. and then again 5, 10 & 15.. and then again 10, 20 & 30..


then maybe the last 5 years of increase velocity.. for the same and a mean of the two.. I wonder what the actual speed is of take off?


I know that now matter what the FED prints that it has no effect on prices.. monetary base is not effecting the price, YET!.

Sat, 07/02/2011 - 02:20 | 1420861 HungrySeagull
HungrySeagull's picture

50K gold and divided by 16x ration silver will create a one hell of a real estate market.

Wed, 06/29/2011 - 12:08 | 1412166 Raymond Reason
Raymond Reason's picture

The IRS is presently on a witch-hunt.  And you're a witch unless you can prove otherwise.  My CPA says he's never seen them this aggressive, or this unorganized. They know their levers (liens and siezures), and pretty much start the threats with the first letter. 

The old strategy of "just pay them what they want, and make them go away" isn't working anymore.   Because then you are put on the "patsy" list. 

PM's are the only defense. 

Wed, 06/29/2011 - 14:16 | 1412761 everycentometal
everycentometal's picture

Tyranny always uses the words 'protection' and 'security' to come to and amalgamate power. Ever heard of the Department of Homeland .... Security? There is a strategem behind the stories you hear that humiliates Americans who abide by the law and searches and seizes things without warrant or cause. What is that stratagem? To evicerate your rights... all of them in favor of government 'security'. What is the enemy of this new definition of 'Government security'? The US Constitution and the Bill of Rights. That is what they are going after. Little by little, bit by bit. (


you have to do more than sit inside your gold and silver towers. become active in your community, try to make a difference. unless you are a part of the inside they will come for what you have in ways that you cannot imagine.

Wed, 06/29/2011 - 20:39 | 1414073 Vlad Tepid
Vlad Tepid's picture

This is how I view 'becoming active in my community:'

I'll bet every vote counts too, huh?  No thanks.  I'll take my tower and let them try and imagine ways to take it while keeping a step ahead.

Wed, 06/29/2011 - 14:02 | 1412671 everycentometal
everycentometal's picture

are you kidding? the police are doing exactly that right now. people are dying every day from the jack boots busting down the wrong door. one state had their supreme court declare that people could not forcibly resist unlawful intrusion by the swat militia. oh, I know your gonna let 'em have it with your big arsenal. last guy that did that was a just returned home iraq veteran, they shot 72 times and hit him 65. they used a swat team to go after someone who did a fraudulent student loan and you dont think that the IRS or any other government body wont do the same thing to take your physical assets when the time comes?


macho replys may now ensue..........

Wed, 06/29/2011 - 16:47 | 1413335 Janice
Janice's picture

Well, since you asked.  How did FDR confiscate the gold in 1933?  They didn't beat down doors.  The government passed a law and people either willingly sold their gold OR they were escorted by an agent of the government to their bank safety deposit box.  There was a date when the government agent would be positioned at your bank and you could either willing open your box in his presence or the box would be opened in your absence and all gold converted to greenbacks. People were allowed to keep five gold coins or coins that were "collectible".  It is not feasible for the feds to kick in every door.  They didn't do it during prohibition did they?  There's an old joke....My wife said that she was going to cut me off.  I told her that she couldn't, she didn't know where I was getting it from.  Same thing, the feds don't know where it's hidden, especially when you have multiple homes.  Dude, there was an underground railroad for will survive.

Wed, 06/29/2011 - 11:07 | 1411812 gwar5
gwar5's picture

Chris.... preaching to the choir again here, but we don't mind.

The mother of all bubbles are still the fiat and sovereign bubbles. There is nothing securing either.

China and the central banks are clinging to gold again and that tells you what real money is. 

Physical gold is real money. Better Getcha some. 

Wed, 06/29/2011 - 11:22 | 1411864 swissinv
swissinv's picture

Silver is on the best way to be remonetized in Mexico and this may come before people even start talking about a gold standard.

Wed, 06/29/2011 - 11:20 | 1411872 shortus cynicus
shortus cynicus's picture

There is ONE MOST IMPORTANT ARGUMENT MORE: PM prices are strongly manipulated down, but this manipulation is constrained by physical market. So any significant, real, long term move down is impossible.

So if you can't loose, you must win !!!

The only threat to PM/fiat ratio could be severe deflation, but it's impossible because it would shout down all western governments and banks around the world.

Wed, 06/29/2011 - 13:20 | 1412517 Raymond Reason
Raymond Reason's picture

You're right!  They have to maintain some sense of credibility because their system is held up by faith.  If they manipulate the price too low, they not only risk shortages, but risk the mass herd losing faith in "their" price discovery system. 

Wed, 06/29/2011 - 11:24 | 1411907 slewie the pi-rat
slewie the pi-rat's picture

the "depletion cycle" also works for sheep, where it is called the QE fleece cycle:  wash.  rinse. repeat X 1.5 tril = fiat value depletion.

Wed, 06/29/2011 - 11:28 | 1411909 YesMaybe
YesMaybe's picture

I have a serious question.  I know almost everyone here thinks the fed will inflate the dollar away into oblivion.  I'm not looking to convince anyone otherwise, I really don't know all that much about it myself.  My question concerns the deflationist views advocated at The Automatic Earth, and whether you can link to serious arguments against theirs.  I don't mean stuff like "the fed will print a ton of money."  This is a point that has already been made and which they address, so even if you think it's true and they're wrong it's not adding anything to the discussion.  What I'm looking for is a rebuttal explaining where they go wrong.



Wed, 06/29/2011 - 11:32 | 1411975 Crack-up Boom
Crack-up Boom's picture "Deflation or Hyerpinflation" posted in April of 2011. 

Wed, 06/29/2011 - 12:01 | 1412133 YesMaybe
YesMaybe's picture

Thanks, that does serve well to clarify what the two sides differ on. 

Wed, 06/29/2011 - 13:45 | 1412567 jimmyjames
jimmyjames's picture

What I'm looking for is a rebuttal explaining where they go wrong.


They are wrong because they do not understand that Gold is a currency ie: money-

Money is king in deflation-

The AE is a group think site and when you try to rebutt their arguments-you get deleted-

I agree with much of what Ilargi says about deflation-but they are dead wrong about gold and so is Prechtor and so are the hyper-inflationists-

last link is a PDF--it explains golds behaviour during a "global" deflation and gold when only one or a few countries were in deflation (Japan)


Wed, 06/29/2011 - 15:31 | 1413046 Augustus
Augustus's picture

The Homestake Mining chart could be quite misleading.  Recall that the price of gold was fixed at a steady price by the US Govt.  With all mining costs decreasing, profits would have been very good.  Silver miners were in a different situation as silver prices fell, in line with other commodities.

Wed, 06/29/2011 - 16:05 | 1413168 jimmyjames
jimmyjames's picture

The Homestake Mining chart could be quite misleading.  Recall that the price of gold was fixed at a steady price by the US Govt.


There were other mining companies that did well during that period-Placer Dome was another one-

There were only about a half dozen majors back then-

Unfortunatly there is no downloadabe charts--

What's most important about the Homestake chart is the "year" that it went parobolic-there was something much more important that happened--

Rosevelt confiscated/made gold illegal to hold and then doubled the price-that was what goosed gold miners balance sheets--

So what did people do when they needed to hedge for risk?

They did what they always do-they ran to gold through the only avenue left open--

Silver did not do well because there was no danger of a currency crises and the world was in deflation so it fell with commodities-

Today is different in that sense-I believe we are heading for a currency crises and it does not matter which major currency starts to collapse first-when/if it happen-the only choice left to save it is-to weight it to gold and as soon as it happens-traders will dump all other currency and head for the gold backed currency and it will be that-which will force all of them to weight with gold and it will force central banks and governments into the open market-bidding the price of gold up in order to build reserves and it might all happen in a panic-

I think we see deflation and a currency crises/high gold prices ahead-add on a currency upheavel and silver will join the party-imo--

Wed, 06/29/2011 - 15:10 | 1412984 Augustus
Augustus's picture

It is not a question with a perfect answer.  If you read the seemingly logical hyperinflation literature, it seems easy.  Then there is a contrasting set of fairly logical arguments for the collapse in currency and banks to lead to massive deflation.  Consider, if potatoes are in shortage and unavailable, so that a grand piano will only get you a three month supply in barter, was there inflation or deflation?

In both cases, currency has little value.  People simply will not accept it for the goods.  However, I expect that the normal case of productive assets holding value will prevail.  It is a consideration of Relative Value.

I really recommend that you get the book "When Money Dies" by Adam Fergusson.   It describes the situation of Germany in the early 1920's.  When reading it, consider that a dollar crash will be quite a bit different.  It will be accompanied by Euro crash and economic freeze up.  In the German situation, and the recent Argentina meltdown, there were still remaining somewhat stable money systems in other countries with mostly unaffected functioning economies.

Wed, 06/29/2011 - 11:25 | 1411913 earnulf
earnulf's picture

Silver and Gold for the long haul, Lead for the security, Leather belt for the ride coming up.

Wed, 06/29/2011 - 11:44 | 1412053 Juice Box
Juice Box's picture

Two words - Peak Resource.

Too many people demanding resources and at the same time most resources are at max or declining production.

Wed, 06/29/2011 - 12:00 | 1412127 Temporalist
Temporalist's picture

From Paul B. Farrell

Population bomb: 9 billion march to WWIII

"First World citizens “consume 32 times more resources such as fossil fuels, and put out 32 times more waste, than do the inhabitants of the Third World.”

So the race to 2050 rages on: “Low impact people are becoming high-impact people” demanding “First World living standards.” But unfortunately, if all nations in the world consumed resources at the same rate as Americans, we’d need six Earths just to survive. Today."

"Pentagon warns of ‘desperate all-out wars for food, water, energy’"

Wed, 06/29/2011 - 11:56 | 1412105 Max UK
Max UK's picture

If I am not mistaken, FOFOA believes that the gold price always spikes up briefly at Quarter end, something to do with European Central Banks contriving to get the gold component of their reserves valued higher, at the point in time when it counts.

I am watching this time to see if this is indeed a trend.

Wed, 06/29/2011 - 11:58 | 1412135 economast
economast's picture

Does it concern anyone that gold is as popular a search term as "Charlie Sheen" and "Toy Story 4"?  I'm going to start researching rare earths.



  1. Megan Fox
  2. Raven-Symone
  3. Airline baby ban
  4. Christine Lagarde
  5. Anna Chapman
  1. Charlie Sheen
  2. Toy Story 4
  3. Gold
  4. Credit cards
  5. Intercontinental…

Wed, 06/29/2011 - 12:45 | 1412356 I_ate_the_crow
I_ate_the_crow's picture

Airline baby ban? I can only imagine what kind of stellar bullshit that involves.

Re gold: maybe some housewives are searching for "gold credit cards"

Wed, 06/29/2011 - 16:20 | 1413215 XenoFrog
XenoFrog's picture

Keep in mind those trending lists are about as scientific as putting a wet finger up in the air to study the wind.

Wed, 06/29/2011 - 12:20 | 1412227 firefighter302
firefighter302's picture

The same insane policies that produced a 10 year bull market in PM's are still in place.


Wed, 06/29/2011 - 12:24 | 1412251 apberusdisvet
apberusdisvet's picture

The key fact that Chris exposes re silver is scarcity; it may disappear from the planet within 20 years.  What do you think the price will be in year 10?  Year 15? Year 20?

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