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    Here’s a question that might have you pondering: Is gold a commodity? More importantly, are we doing a disservice to the gold industry by calling gold a commodity? These may sound like silly...

Guest Post: Things Are Spinning Out Of Control

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Wed, 05/25/2011 - 12:00 | 1309288 mynhair
mynhair's picture

What goes up, must come down.

Spinning wheel goes round n round.

Wed, 05/25/2011 - 12:26 | 1309382 silberblick
silberblick's picture

Fear is why the want to controll everything. This is what motivates the CFTC too. Read below why the CFTC has done nothing to prevent price suppression on the COMEX:

http://thesilvergoldhedge.blogspot.com/2011/04/reason-why-cftc-is-doing-...

Wed, 05/25/2011 - 12:43 | 1309463 Miss Expectations
Miss Expectations's picture

What you gain on the round-about, you lose on the swings.

Wed, 05/25/2011 - 12:48 | 1309479 PulpCutter
PulpCutter's picture

Smith is profoundly ignorant to assume that it's just a few "pension and mutual funds" that are exposed to GSE mortgage debt.  It is, instead, virtually every bank in the US - large and small. 

Check the books at the banks where you have your money.  You will typically find they have a substantial portion of their assets held as GSE bonds (that portion was about 1/3rd at my banks). 

We must let the banks bear the consequences of their risky bets; until we do, things will simply get worse.  But don't be lulled into some false sense of security as to what this means in terms of your assets - it's virtually certain that your bank will either 1) go under or 2) be bailed out with what will by that time be fairly worthless US dollars.

Wed, 05/25/2011 - 14:01 | 1309729 the rookie cynic
the rookie cynic's picture

Of course more bailouts are in the offing, but don't forget to factor in the inertia of the "petrodollar" and the hegemony of the U.S. military.  People viewing the dollar just through the lens of government debt and deficits sometimes forget this.  The dollar is backed by oil and if anyone tries to sell oil for something other than dollars (Sadam Hussein-Euros, and now Gaddafi-Gold Dinars) , the CIA jackals and the U.S. military will go in for the jugular.  Without the "petrodollar/CIA/MIC put" the dollar would have been toast long ago, but it still has legs, therefore a sudden death spiral collapse to zero over a few months is much less likely than a slow steady decline in the dollar.

Wed, 05/25/2011 - 15:14 | 1309963 ibjamming
ibjamming's picture

Agree...and let me add...war baby!  War is coming...war in the ME...for the ultimate control over the oil.  The next WW is on it's way.  WWIII will be for control of the ME oil.  We'll use the same excuse the Palestinans are using about Israel...it USED to be our land...and we're taking it back.  I'd say $50 oil...not paying all the ME middlemen...will be cheap enough to get the global economy going again.  If China decides to be on the wrong side...it will be a nice gift to the world when a pen stroke eliminates all the debt owed to China.  China would be fucked in a REAL war...they don't have nor can they control enough resources.  The US has Canada and Mexico to supply us with everything we need.

Wed, 05/25/2011 - 15:36 | 1310071 Stormdancer
Stormdancer's picture

Be sure to include Cantarell in your calculations.  That Mexican "supply" is drying up remarkably fast.  Venezuela better be modernizing their defenses if Chavez expects to keep his place in a supply crunch.

Wed, 05/25/2011 - 18:50 | 1310766 Geoff-UK
Geoff-UK's picture

His ignorance coupled with his licensing to post his rants here is maddening.

 

Someone remove his posting privileges key-card.  Stat.

Thu, 05/26/2011 - 17:18 | 1314459 1inchRacker
1inchRacker's picture

I'm always amazed to see some people slate well-written articles, with throwaway one one or two liners, just because of one point they disagree with: "Smith is profoundly ignorant" ??? C'mon PulpCutter, give us a lengthy article someone can toast if you're so knowledgable.

Wed, 05/25/2011 - 12:59 | 1309528 eatthebanksters
eatthebanksters's picture

"If the thunder don't get you then the lightning will'.  Jerry Garcia, 'The Wheel'.

Wed, 05/25/2011 - 14:33 | 1309829 Imminent Collapse
Imminent Collapse's picture

Nice Garcia (actually, Robert Hunter) reference.  Here's another:

I don't know, but I've been told

That its hard to run with the weight of gold

Other hand, I have heard it said,

It's just as hard with the weight of lead

One way or another, this darkness has got to end.

Wed, 05/25/2011 - 15:00 | 1309921 JoeSexPack
JoeSexPack's picture

'One fist of iron, the other of steel.

If the left one don't get you then the right one will.'

 

Maybe Jerry got that from 16 Tons by Tennessee Ernie Ford.

Before my time, but a catchy tune.

Wed, 05/25/2011 - 16:39 | 1310295 Abiotic Oil
Abiotic Oil's picture

That's actually a Bobby song but yeah...

The wheel is turning and you can't slow down,
You can't let go and you can't hold on,
You can't go back and you can't stand still,
If the thunder don't get you then the lightning will.

Wed, 05/25/2011 - 12:01 | 1309290 Sophist Economicus
Sophist Economicus's picture

OK, I'm no longer hip -- what is a "Guest Pops"?   Please don't tell me Chuck adopted you....

Wed, 05/25/2011 - 13:07 | 1309542 Confucious 222
Confucious 222's picture

Guest pops are the European version of otter pops. They have kind of a mayonaisse and Swiss Chard taste. Fairly popular among the unemployed and student crowd in Benelux side of town.

Wed, 05/25/2011 - 12:05 | 1309293 Fancy Bear
Fancy Bear's picture

Gold, bitchez.

Wed, 05/25/2011 - 12:14 | 1309325 GetZeeGold
GetZeeGold's picture

 

+1 

 Is there a silver lease rate analyst in the house?

 

Wed, 05/25/2011 - 12:17 | 1309354 JW n FL
JW n FL's picture

 

do you have a contract in hand?

delivers when?

insurance?

the costs of leasing.. or buying silver.. are more expensive than the backwardation / disconnect at the dealer(s).. becuase of the scope and scale of those larger orders!

you would think, or you here about the great bulk price which is still more than what we lil monster box buyers pay!

Wed, 05/25/2011 - 13:03 | 1309541 MarketTruth
MarketTruth's picture

Buying physical silver IN BULK can be relatively cheap and easy through dealers like www.Tulving.com . Delivery is free, too. Silver at lowish over spot and gold AT SPOT pricing. Not sure where you are getting your information, yet obviously you may be dealing with bad dealers... or trusting COMEX/LBMA paper.

Wed, 05/25/2011 - 13:16 | 1309570 JW n FL
JW n FL's picture

I buy eagles.. maybe I should have been more clear.. the disconnect for eagles is ugly.. there are cheap garbage coins to be had at sub-par pricing.. or sub-spot pricing.. bars are cheap..

 

Given that those items are prone to be considered commercial and not collectable.. I will pay the premium and sleep well at night.

 

Monex and Mike's place seem to have good pricing for bulk silver / gold eagles.. I will check out Tulvig and see whats the deal there.. I remember more than one person waving me off of tulvig in the past.. here, that I trust.. thats why I never checked tulvig out. 

Wed, 05/25/2011 - 13:22 | 1309585 JW n FL
JW n FL's picture

http://catalog.usmint.gov/webapp/wcs/stores/servlet/TopCategoriesDisplay?storeId=10001&catalogId=10001

 

I only buy from people who are U.S. Mint Direct.. as paying anyone in the middle does not appeal to me.. but to each their own.

 

http://www.usmint.gov/mint_programs/american_eagles/?action=lookup

 

So its not that my dealer is robbing me.. Rechant is a U.S. Mint Direct Dealer and they do NOT! do any on-line sales or phone sales for people they do NOT know very well.. so I am not advertising for them unless you are in Palm Beach or you want to drive to Palm Beach! so all you online guys can stop before you start. Brick and mortor people, like me.

Wed, 05/25/2011 - 13:20 | 1309588 zuuuueri
zuuuueri's picture

your friends might have been turned off by tulving's minimum orders (which aren't all that big.. iirc 20oz au/ 500oz ag). the guy is 100% business, totally legit. i've bought from him maybe half a dozen times over a decade, always short and to the point and everything exactly according to the deal. 

Wed, 05/25/2011 - 16:55 | 1310345 JW n FL
JW n FL's picture

I have not heard anyone step up and say anyting bad.. thats just as good as a recomendation here! LOL!!

 

I will check his pricing.. v. Monex and Mike.. Mikey is just so cute in his video's though! its hard to not want to support the guy! traveling the world selling bars!

 

on that note the little guy wins! I always route for the little guy (route, drive to and / or map a way too) (on purpose, for the fun of it!)

Wed, 05/25/2011 - 16:55 | 1310354 JW n FL
JW n FL's picture

I am a coin (eagle) or bar guy.. but these look really kool!

http://www.tulving.com/bullion/opm_1_oz_9999_gold_bar.htm

Wed, 05/25/2011 - 17:00 | 1310364 JW n FL
JW n FL's picture

2006 buffalo proofs are cheaper than 2011 direct from the mint proof buffalos! $109 over spot of $15--.00 v. $18--.00 U.S. Mint.

http://www.tulving.com/American/proof_1_oz_gold_buffalo_in_original_mint_packaging.htm

Wed, 05/25/2011 - 12:13 | 1309327 JW n FL
JW n FL's picture

gold and silver.. and if you have lots of that.. the paldium / platinum / rhodium.. coins are kool too! just for shits and giggles!

Thu, 05/26/2011 - 01:54 | 1312140 Carbon Penguin
Carbon Penguin's picture

Meh, I prefer mah Bitcoins...

Wed, 05/25/2011 - 12:03 | 1309299 LawsofPhysics
LawsofPhysics's picture

And your solution is...  (cue crickets). 

Wed, 05/25/2011 - 12:08 | 1309306 Tyler Durden
Tyler Durden's picture

The right solution was a global debt to equity recapitalization - something that has worked forever in all corporate bankruptcies. Alas, that meant wiping out the status quo.

Wed, 05/25/2011 - 12:11 | 1309331 LawsofPhysics
LawsofPhysics's picture

I agree.  Bring it.  Now the status quo gets wiped out in a way that is much less user friendly for everyone.

Wed, 05/25/2011 - 12:43 | 1309459 hedgeless_horseman
hedgeless_horseman's picture

He said, "was."

Wed, 05/25/2011 - 12:50 | 1309485 LawsofPhysics
LawsofPhysics's picture

Yes, I saw that.  Does this mean that solution is no longer available?

Wed, 05/25/2011 - 13:11 | 1309553 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Magic 8-ball says: Ask again later...

Wed, 05/25/2011 - 13:12 | 1309555 hedgeless_horseman
hedgeless_horseman's picture

Does this mean that solution is no longer available?

Yes, so now we must simply learn to do more with less.

Wed, 05/25/2011 - 16:49 | 1310316 RockyRacoon
RockyRacoon's picture

All well and good, but you can't do anything with nothing.

A rising tide lifts all boats, assuming you have a boat.

Wed, 05/25/2011 - 12:11 | 1309333 zero intelligence
zero intelligence's picture

Bingo -- just convert the bank debt to equity.

Wed, 05/25/2011 - 12:17 | 1309357 LawsofPhysics
LawsofPhysics's picture

Now how does one buy some of that equity if that turns out to be where we end up anyway?  

Wed, 05/25/2011 - 12:21 | 1309356 Ethics Gradient
Ethics Gradient's picture

You'd end up banks being owned by banks that they own! The snake would eat itself.

Once it'll all netted out, you'd end up with nation states owning everything. You didn't blow up the credit card companies to achieve that, did you?

Wed, 05/25/2011 - 16:53 | 1310349 RockyRacoon
RockyRacoon's picture

Is that a Wankel rotor?

Wed, 05/25/2011 - 12:18 | 1309361 wombats
wombats's picture

So how could that be implemented today?  What would the impact be to the economy and to individuals if a recapitalization were to take place today?

Wed, 05/25/2011 - 12:32 | 1309404 FreeNewEnergy
FreeNewEnergy's picture

You are correct, sir. And what we now have is a rapidly-growing underground economy which is hastening the collapse.

Been oddly quiet in Washington, DC. Aren't they supposed to be working to fend off a default and planning the budget for 2012.

I am getting the distinct impression that our 9%-approval congress and out-of-touch president are planning to sit back and watch it all come undone in August, while they will be on "vacation," and still expect to have control and their jobs when SHTF.

I see dead people, shot by our own militias.

Wed, 05/25/2011 - 12:56 | 1309515 Ruffcut
Ruffcut's picture

Not an IF, but a When.

No shit will hit the fan,unless they want it to.

The status quo is more of slow destruction and power grab.

Wed, 05/25/2011 - 12:48 | 1309469 illyia
illyia's picture

Ya, So BTFD?

Until you can't?

Wed, 05/25/2011 - 12:49 | 1309471 Cassandra Syndrome
Cassandra Syndrome's picture

Creative Destruction. Let the crash happen, a new system will evolve, we still have our stock and knowledge, just need a proper medium of exchange.

Wed, 05/25/2011 - 14:38 | 1309852 Imminent Collapse
Imminent Collapse's picture

+ 1

Wed, 05/25/2011 - 13:31 | 1309617 bbq on whitehou...
bbq on whitehouse lawn's picture

They could have recapitalize debt in '07/08.
Of course that will happen anyway.
Its how that is done and with what money.

What combination of PMs and paper will it be done?
The market will choose if governments do not.

If capitalization is done with existing money you get deflation.
If capitalization is done with new money you get high inflation. Even hyper.

Revaluing gold works but at what prices will capitalization work?
Will everyone with a day job rush off with pans to the nearest stream because the cost/benefit is greater then their day jobs?

Of course this all will work its self out in time. Its just how much damage will be caused in the process.
If entrenched interests are unwilling to agree and set policy, markets will set policy for us all.

Fireman sometimes keep a burning house from spreading to others, instead of putting it out.

Wed, 05/25/2011 - 13:33 | 1309626 Whatta
Whatta's picture

The right solution was a global debt to equity recapitalization

Not as long as there is a middle class left to pawn bailouts/taxes on.

Have chillun's bitchez, we needs the future slaves.

Wed, 05/25/2011 - 16:58 | 1310352 RockyRacoon
RockyRacoon's picture

LAGNAF!

Wed, 05/25/2011 - 14:05 | 1309732 YHC-FTSE
YHC-FTSE's picture

"The right solution was a global debt to equity recapitalization - something that has worked forever in all corporate bankruptcies. Alas, that meant wiping out the status quo."


I like this site, but WTF! Debt to Recapitalization. I am sure you don't mean changing the corporate structure of every publicly traded company but injecting capital into corporations by replacing one capital for another. Isn't that what Bernanke is doing right now, locally in the US? The nation's toxic debts were bought by the Fed (aka the great bailout), and the equity market is being recapitalized by the 18 odd (haven't checked recently) primary dealers in the POMO. That kept the status quo, not wiped it clean. That is just monetizing debt, isn't it? And even if it was desirable, how would you do it on a global scale? Sorry mate, but that's rubbish imo. (Plus did I mention I like your site? :))

http://www.marketoracle.co.uk/Article26235.html

http://www.chrismartenson.com/blog/shell-game-how-federal-reserve-monetizing-debt/25806

Wed, 05/25/2011 - 14:10 | 1309753 Tyler Durden
Tyler Durden's picture

There is no capital injection in a debt for equity. You replace equityholders with debt holders.

Do NOT follow this link or you will be banned from the site!