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Guest Post: Today's Gold Myth "Its Topped, There Is No Inflation, Get Out Now While You Still Can"

Tyler Durden's picture




 

Today's Gold Myth "Its Topped, There Is No Inflation, Get Out Now While You Still Can"

By Alex Stanczyk - Oct. 1st, 2010

About the Author: Alex Stanczyk serves as an Executive Vice President for the Anglo Far-East Bullion Co.

I am starting to hear this mantra parroted through 'internet rumor' that because there is no inflation, gold has hit its high, and you're better off selling now while you still can, and certainly not buying any.

To address why this view is unfounded, let's start off by taking a look at history:

"Prices in Germany temporarily stabilized and remained rock-steady during fifteen months in 1920 and 1921, and there was therefore no surface inflation at all, but at the same time the government began again to pump out deficit expenditure, business credit, and money at a renewed rate." -The Dying of Money, Jens O. Parsson 1974

These events preceded the hyperinflation of 1923 in Germany when the German Reichsmark plummeted in value versus gold to the point that an entire city block of commercial real estate in Berlin could be purchased for just 25 ounces of gold.
This entry sounds eerily familiar to today.

Clearly, a drop of inflation does not mean anything in terms of if it's safe or not safe to buy gold - rather it could actually be a precursor to a hyperinflationary event.

In 2008 the Federal Reserve pumped trillions of dollars into the US economy in order to prevent a deflationary depression - just one week ago Federal Reserve Chairman Ben Bernanke went on record indicating he was willing to pump in trillions more. The reason he is willing to do this is because he has no other choice - the fact that there is no inflation is actually far more ominous for the global economy than many realize - it means the first few rounds of paper printing didn't work. It means that if Bernanke pumps another two trillion dollars into the economy to prevent a deflationary collapse that it almost guarantees gold will continue to go up, not down.

This argument about "there is no inflation so don't buy gold" also assumes that gold's role is as an "anti-inflation trade" only, and does not take into consideration the primary reason gold is currently rising.

Simply put, gold is a currency. It is the ultimate currency against which all other currencies are measured.

The reason it is currently rising has nothing to do with gold being in a bubble, and everything to do with the fact that all paper currencies follow the same historic pattern, which is a pattern of debasement - when debasement reaches certain levels gold does not "go up" in price, currencies "go down" versus gold.

Gold is not acting in any way like a commodity that is non-correlated to inflation. It is in fact acting like a currency, and the counter-balance to what the world sees as an inevitable devaluation of the dollar as Bernanke once again turns the Quantitative Easing pumps (aka printing more money) on full blast. This massive debasement of the currency will be quickly followed by other nations, not because they want to, but because they have to.

According to Brazilian Finance Minister Guido Mantega, we are currently witnessing an "international currency war" - a war where countries continue to devalue their currencies against each other to improve their respective competitiveness in the global export market.
At AFE, we have spoken about this pattern for years, calling it the "Race to the Bottom".

I have used this example to illustrate:

Imagine a group of ships in the ocean, these ships represent the various currencies of the world. In the middle of this group is a ship, slightly bigger than the rest, that is currently the worlds reserve currency.

The funny thing about the saying "rats from a sinking ship" is that the rats instinctively know when a ship is going down, and flee from it.
So in today's economy, we are seeing the rats jumping ship, and swimming to another ship as the big one in the middle sinks.

The problem here is, when they arrive at another ship, they realize that the ship they are climbing onto is also sinking...in fact its Captain and crew are sinking it on purpose in order to compete with how fast the big ship in the middle is sinking.

Finally, as this pattern continues, the rats start to realize that none of the ships are safe, and instead start swimming over to a small island nearby, that isn't sinking at all. On this island as the rats arrive, they find a few very very smart rats who have been there for a while already, sitting under a nice shady umbrella and drinking iced refreshments. By the way, this island is made up of gold.

History shows that towards the end of a fiat currency's life cycle, there is massive volatility in markets and currency values - we are seeing exactly that today.

As each country continues to debase its currency, gold will continue to rise against all currencies.

In the words of former Federal Reserve Chairman Alan Greenspan speaking before the Council on Foreign Relations in September:

“Fiat money has no place to go but gold...If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.” - Alan Greenspan

Until some sanity is restored to our monetary system, the fact that gold is acting as a currency will continue in trend. People might be wise to start thinking of gold not in terms of its price rising, but rather that all of the paper monopoly money of the world is actually devaluing against the ultimate currency.

Kind regards,

Alex Stanczyk

 

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Fri, 10/01/2010 - 20:12 | 619870 Hulk
Hulk's picture

Sell Bitchez!

Fri, 10/01/2010 - 20:23 | 619888 nmewn
nmewn's picture

LOL.

"The problem here is, when they arrive at another ship, they realize that the ship they are climbing onto is also sinking"

If not for the courage of the fearless crew the Minnow will be lost!

Sigh...we can't get any bitchez to sell ;-)

Sat, 10/02/2010 - 16:11 | 621183 Popo
Popo's picture

Other ships sinking?

Sell and buy oil.   If inflation alone were driving gold to all time highs, we would see it in oil.  If you believe inflation rules the day, it's a no lose trade.   If gold is rising on something else, buying oil is a flight to safety.  Either way it's the right trade.

Gold will go much, much higher -- That is certain.  But anyone who thinks there won't be massive crashes along the way is a neophyte goldbug.

 

 

 

Sun, 10/03/2010 - 15:00 | 622555 morkov
morkov's picture

all oil claims/buys depend on US$ dominance...or are you expecting a smooth transition to another currency??, comrade... are you betting on the outcome from the coming war??

Fri, 10/01/2010 - 21:44 | 620083 Hephasteus
Hephasteus's picture

I want to sell but I can't find a buyer!!!!

Fri, 10/01/2010 - 23:10 | 620228 rocker
rocker's picture

The U.S. Mint will buy. They ran out !!!  Got Silver !!!

Sat, 10/02/2010 - 10:02 | 620710 breezer1
breezer1's picture

get to an eye doctor immediately. 

Fri, 10/01/2010 - 20:16 | 619881 Dr. Engali
Dr. Engali's picture

I need a bigger island.

Fri, 10/01/2010 - 20:23 | 619889 TooBearish
TooBearish's picture

Yup - The CNBS commodities guru, Dennis Fartmen, of the Fartmen letter says gold is "overvalued" and also went short Crude oil 3 session ago before its 5$ tear.  The "experts" are ripping it....

Fri, 10/01/2010 - 20:27 | 619897 Glaucus
Glaucus's picture

Where's the Mogambo Guru when you need him?

Oh there he is!

Hahahahahahahahahahahahahah!

Fri, 10/01/2010 - 20:33 | 619909 nmewn
nmewn's picture

Silver/gold ratio @ 59.6...what we need is a 20yr. chart on this...I have been unsuccessful finding one.

Fri, 10/01/2010 - 21:14 | 620000 nmewn
nmewn's picture

Thanks...something to peruse.

Looking at mid to low fifties to switch ;-)

Sat, 10/02/2010 - 00:37 | 620371 ATG
Sat, 10/02/2010 - 13:05 | 620958 janchup
janchup's picture

Just do exactly the opposite of Fartman who has nearly a perfect record of being wrong on gold.

Sat, 10/02/2010 - 15:23 | 621141 akak
akak's picture

Yes, "nearly perfect".

Now, if you want absolute perfection in the being-wrong-on-gold arena, you need look no further than the good (sic) Jon Nadler, Kitco.com's resident gold permabear, permabullshitter and bankster shill extraordinaire.

Just a few items that you might like to peruse regarding this amazingly INaccurate, dishonest, dissembling and shrill spokesman for the gold-hating status quo and financial elites:

 

"The Nadler Retort: What Jon Nadler doesn't want you to know about gold":

http://www.tomaveni.com/Commentary/Nadler-01.htm

http://www.tomaveni.com/Commentary/Nadler-04.htm

http://www.tomaveni.com/Commentary/Nadler-05.htm

http://www.tomaveni.com/Commentary/Nadler-06.htm

 

"Kitco's Nadler Problem":

http://silverenthusiast.com/kitcos-n...-1/#comment-16


"What's Eating Jon Nadler?"
:

http://www.miningmaven.com/blog/51-b...ng-jon-nadler-


"The Idiocy of Jon Nadler, Gold Permabear"
:

http://forums.silverseek.com/showthread.php?8632-The-Idiocy-of-Jon-Nadle...

 

 

Fri, 10/01/2010 - 20:29 | 619900 NOTW777
NOTW777's picture

well in case no one noticed it just ran from 1160 - 1320 in 2 mos.  didnt notice all these recent gold lovers a couple hundred points lower

"topped" is a relative term. 

 

Fri, 10/01/2010 - 21:14 | 619999 johngaltfla
johngaltfla's picture

I stand by my call: Top around $1350 (range was $1300-1350 in my book) maybe a little slop over intraday by 10-15%. Then we roll and hard.

The entire Financial sector stock complex is sending a message and those charts look like (to quote an oldie but goodie) smoking, hulking, rotting death.

I'm just sayin'.

Sat, 10/02/2010 - 09:39 | 620699 hettygreen
hettygreen's picture

I enjoy following gold and the commentary it inspires but am a member of the prosaic gold as insurance, not to win the lottery camp. Someone I read and listen to on a regular basis (Bob Hoye) is calling for a modest technical correction in the metal (and shares) within a still growing bull market. Again this is based on what happened previously when gold and silver prices reached current RSI levels. What I found interesting was he could not rule out the possibility of a further manic run-up to RSI levels in the high 80s low 90s. This would be consistent (imho) with the Dollar collapse envisioned by many here and elsewhere. Unfortunately this action would in all likelihood signal the beginning of a new bear market in the PMs says Bob (and attendant Dollar moonshot says me). Gold enthusiasts and Dollar nay-sayers be careful what you wish for! And yes I very much agree with your observations on the Financial sector technicals (which few seem to be paying much attention to these days). Also the bond market action is suggesting an SPX "reconciliation" around 750.

Sat, 10/02/2010 - 10:08 | 620718 mrgneiss
mrgneiss's picture

Investors and traders who truly understand the Precious Metals market realize some truisms:

a) By holding physical gold/silver we are hedging against a deteriorating economic situation and/or sudden crisis, we hope it will not come to pass but it looks more and more inevitable, and merely look to protect wealth not reap a winfall by holding it

b) as a result of more of the global population realizing a), a bull market in precious metals ensues

c) there are various ways of reaping outsize gains from b) such as the extremely volatile - buying futures on margin, or the less volatile (less volatile in a PM bull market that is, otherwise extremely risky) investing in junior/small cap/explorers in the PM mining sector, though with c) if you believe in a) you must transition your profits from c) back into a) or other hard assets such as land

d) There will be no bear market in precious metals until the world has its economic house in order and somehow limits the ability of central banks to print infinite amounts of money, however that is accomplished

Sat, 10/02/2010 - 22:21 | 621624 Xedus129
Xedus129's picture

I was thinking about that the other day, most of us essentially are making money (or keeping value) off of other people's ignorance as to the blight we are facing.

Fri, 10/01/2010 - 20:33 | 619906 Shameful
Shameful's picture

Yep the Fed is looking to be the #1 holder of US Treasury debt, food prices have a rocket on them, nations are getting into a competitive devaluation, no reason to buy gold here.  So long as houses are cheap and Apple products fall from the sky.  I'm sure most everyone buys homes and electronics far more then they buy food...

Sat, 10/02/2010 - 05:27 | 620539 Freewheelin Franklin
Freewheelin Franklin's picture

Funny you should mention food prices. I just noticed in the supermarkets, they switched the price/unit from lbs. to oz. A box of cereal I bought was $0.118/oz. WTF? I guess it makes it more difficult for people to realize how much they are actually paying. Thankfully, my cell phone has a calculator on it. Duh. 1 lb = 16 ozs.

Sat, 10/02/2010 - 22:24 | 621628 Xedus129
Xedus129's picture

I was talking to this rodent exterminator who only works for them for the health insurance, and he works mainly on a farm in upstate NY.  He said, if milk were to be priced without controls it would be around $6.00 for a HALF GALLON.  Food prices are breaking the bank for many people apparently.. I notice it too but I'm also trying to lose weight so I spend less (actually about the same, or more healthy stuff is freaking expensive).

Fri, 10/01/2010 - 20:39 | 619921 Midas
Midas's picture

I am disappointed.  I read this whole thing and no where did it state "you can't eat gold."  It's a drinking game...

Fri, 10/01/2010 - 22:10 | 620111 Troy Ounce
Troy Ounce's picture

No, you CAN eat gold: www.ediblegold.com & www.aureapassion.com

 

Fri, 10/01/2010 - 20:43 | 619925 enobittep
enobittep's picture

Food, guns and gold - what are the similarities?

The federal government will have to pry each from our cold dead hands.

Fri, 10/01/2010 - 20:46 | 619932 bigdumbnugly
bigdumbnugly's picture

Finally, as this pattern continues, the rats start to realize that none of the ships are safe, and instead start swimming over to a small island nearby, that isn't sinking at all. On this island as the rats arrive, they find a few very very smart rats who have been there for a while already

 

substitute 'chicago' for 'island' and it isn't even allegorical.

Fri, 10/01/2010 - 23:38 | 620273 Jaacyn71
Jaacyn71's picture

If the island is "green" is it "Al Gore" ical?

 

Sat, 10/02/2010 - 15:17 | 621126 ANewUSA
ANewUSA's picture

We've still got time to get out.

Limbaugh is hawking gold to the Alzheimer Republicans, that should be good for 3 - 6 months.

Fri, 10/01/2010 - 20:48 | 619934 ruffian
ruffian's picture

with all due respect Tyler, when I saw that greenspan quote in the NY Sun, I knew it would be of historic significance. Surprised that you didn't recognize it as such. Shows you are human after all and that's a compliment !!!

Fri, 10/01/2010 - 20:53 | 619942 Millivanilli
Millivanilli's picture

Asssssshoooooole.

Asssssssshoooooole

Asssssssssshoooooooole.

Get the point.   Speak to the idea.   Central bankers are devaluing their currencies.  Get it?!

Fri, 10/01/2010 - 21:35 | 620052 Hephasteus
Hephasteus's picture

Girl you know it's true.

Sat, 10/02/2010 - 04:10 | 620518 nuinut
nuinut's picture

Blame it on the rain.

Sat, 10/02/2010 - 19:45 | 621482 RockyRacoon
RockyRacoon's picture

Let me add a junk to your rapidly accumulating pile.

...and a pile it surely is.

Fri, 10/01/2010 - 20:53 | 619941 Bringin It
Bringin It's picture

Wow! An entire city block for 25 ounces!! 

Wait a minute ... is this Detroit?

Fri, 10/01/2010 - 21:01 | 619945 Michael Victory
Michael Victory's picture

East Coast Inflation Report:
Tonight at the grocery store in the Philadelphia suburbs...
Average price for a loaf of bread: $4 and change.

People talking about gold at all time highs..
"$1,300 vs. the old $800 time to get out."

So many, still unable to understand the paper game underway.
The size of which is incomparable to anything seen in the past.

~MV

Fri, 10/01/2010 - 21:47 | 620089 THE 4th Quadrant
THE 4th Quadrant's picture

"The size of which is incomparable to anything seen in the past."

That is a flat out lie. Do you have any idea what happened during The Great Depression? You must be a ZHill. Are you paid for each comment or hourly?

Sat, 10/02/2010 - 12:02 | 620850 DebtBasedCurrency
DebtBasedCurrency's picture

Yep, the ol' great depresion had goverment debts of 54 trillion world wide plus trillions more of unfunded liabilities. And for sure that ol' great depression had 600 trillion++ notational value of synthetic derivitives to settle also! so truly, this is much smaller than that ol' great depression.

Sat, 10/02/2010 - 19:47 | 621484 RockyRacoon
RockyRacoon's picture

Junk!  And marked as such.  There.

Fri, 10/01/2010 - 23:10 | 620229 JLee2027
JLee2027's picture

99 cents for a loaf of Blue Ribbon bread (On sale from 1.99) here in Maryland.

Sat, 10/02/2010 - 13:05 | 620956 geminiRX
geminiRX's picture

That's a steal from where it will be in a few months....  

 

Fri, 10/01/2010 - 20:56 | 619948 trav7777
trav7777's picture

how fucking stupid are these writers?  Do they not look at production figures?

Gold has been in production decline since 2001, although the numbers out for 09 suggest a banner year if they are to be believed.  Are people conditioned to believe that gold cannot go up except for on account of inflation???

Fri, 10/01/2010 - 21:00 | 619960 Millivanilli
Millivanilli's picture

You are correct.

Fri, 10/01/2010 - 21:25 | 620028 Fred Hayek
Fred Hayek's picture

But the silly corollary is that the same people all know that the consumer price index is a load of crap and that there's much more inflation than the official gov't lie admits.

Sat, 10/02/2010 - 01:22 | 620421 merehuman
merehuman's picture

but ascerbic, harsh, as time itself.

Fri, 10/01/2010 - 23:31 | 620260 Blindweb
Blindweb's picture

Anyone who doesn't understand peak oil and peak various other planetary resources at this point is just embarassing.

Fri, 10/01/2010 - 23:46 | 620287 THE 4th Quadrant
THE 4th Quadrant's picture

Anyone who ignores how supply can be constrained in order to inflate prices is stupefyingly obvious.

Sat, 10/02/2010 - 00:44 | 620383 tmosley
tmosley's picture

People who change their usernames after being humiliated rather than just fucking off are annoying.

Fuck off, Johnny.

Sat, 10/02/2010 - 12:19 | 620886 tamboo
tamboo's picture

http://www.free-energy-info.co.uk/

see also:

http://www.rexresearch.com/1index.htm

oil is not made out of dinosaurs, get a clue.

http://www.greencar.com/articles/5-things-need-fischer-tropsch-process.php

look into wood gasification and clean diesel from coal, we only

have about 800 gigatons of coal on the planet.

 

Sat, 10/02/2010 - 05:36 | 620541 Freewheelin Franklin
Freewheelin Franklin's picture

"Next they'll be telling us the grain crops are good this year."

Moscow on the Hudson

Fri, 10/01/2010 - 20:58 | 619950 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

I just ruined my MacBook pro,
but got C O I N
,, dumb ass troll that I am.

Sat, 10/02/2010 - 01:36 | 620439 merehuman
merehuman's picture

I just sold my bitchen paid for, no trouble diesel crew 350w/heated leather seats,4x4,fullbed,6cd player,great speakers and Very comfortable seats.

My ego can hardly forgive me even while i laugh at it. Why are there 2 of us in this body?  Oh, yea, now i remember. lol.

failure to disclose.. new tranny after 3rd year and then a starter and batteries.No trouble since then, got it cash and new in 01. My dogs miss it , i can tell. Now i am a walker again . I like the xtra freedom from the responsibility of caring for it, license,tags, insurance, gas,hitchhikers. Its also humbling, much needed . In a few months i doubt i could sell it.

Sat, 10/02/2010 - 07:47 | 620642 mrgneiss
mrgneiss's picture

Should get a new tranny after one year.

Sat, 10/02/2010 - 13:14 | 620974 Hephasteus
Hephasteus's picture

Why do they ripen after that much hormone usage?

Wait what are you guys talking about.

Fri, 10/01/2010 - 21:03 | 619969 blunderdog
blunderdog's picture

Well, maybe the boats are sinking, but a rising tide lifts all boats, and the current sea volume can be increased infinitely by the man behind the curtain.

Just to be safe, dump all ballast and blow all tanks.

Bubbles float.

Fri, 10/01/2010 - 21:03 | 619970 CitizenPete
CitizenPete's picture

By Apple TVs....  Hoard the fucking things in pallets - just think when others are bitching and moaning about gold this and food that -- you my friend can have the corner on some sweet Apple technology -- screw the freeze dried (it's a food bubble)... screw the Ammo (it's a damn bullet bubble) -- Apple TVs 

 

It's where it's at...

http://www.youtube.com/watch?v=c5M3chPv4v0&feature=related

Sat, 10/02/2010 - 19:26 | 621461 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

that was a most excellent BECK sound and see, thanks.

new word of the day, telepathy, i now am a firm believer. so what should we call this new senses

Fri, 10/01/2010 - 21:05 | 619975 umop episdn
umop episdn's picture

As the currency ships sink, all the crap that was floating around in the bilgewater starts coming up thru the hatches. The filth gets into the crew's store of supplies, and mutinous rumblings are frequent, especially since storing supplies in the lifeboats is officially discouraged. If the ship TVs should ever fail, things could get ugly.  :/

Fri, 10/01/2010 - 21:06 | 619976 max2205
max2205's picture

Rinse repeat

Fri, 10/01/2010 - 21:09 | 619985 Treeplanter
Treeplanter's picture

Let the myth spread.  We need a little more time to earn more trash cash we trade for this over bought relic.  Let the geniuses dump on silver as well. If I had 500 more Maple Leafs I would be ready for the moonshot.

Fri, 10/01/2010 - 21:30 | 620040 RobotTrader
RobotTrader's picture

Gold and stocks seem to be joined at the hip.

If stocks go higher, gold will be dragged with it.

If gold rockets up, then it's "Risk On" for the Algos and they will buy stocks.

It's all one trade, so might as well own some dividend paying stocks.

Fri, 10/01/2010 - 21:38 | 620064 nwskii
nwskii's picture

WoW! You are right! I never thought of it, but now that you set me straight I would much rather own a dividend paying stock than physical 1 ounce Gold Buffalo's!!! Im going to the coin dealer tomorrow to sell ASAP!!!! Thanks

Fri, 10/01/2010 - 22:12 | 620125 THE 4th Quadrant
THE 4th Quadrant's picture

Why not spread your risk? Buy one Dec e-mini and ride it out till expire-1, see what happens. It's all a gamble.

One guarantee I can make is the USD will not go to zero no matter what kind of conspiracy nut you are. Like it or not too much hope from around the world is BANKING on the USD.

To me Robo wants to maximize returns and he see's things with that perspective.

Fri, 10/01/2010 - 23:32 | 620263 Punderoso
Punderoso's picture

"One guarantee I can make is the USD will not go to zero no matter what kind of conspiracy nut you are."

--------------------

(1991 Angola) One guarantee I can make is the Kwanza will not go to zero no matter what kind of conspiracy nut you are.

Yep that was correct 1 new Kwanza = 1,000,000,000 pre 1991 kwanzas

------------------

(1861 US) One guarantee I can make is the Confederate Dollar will not go to zero no matter what kind of conspiracy nut you are.

Yep, they are now collectors items.

------------------

(1923 Germany) One guarantee I can make is the Mark will not go to zero no matter what kind of conspiracy nut you are.

------------------

(1993 Ukraine) One guarantee I can make is the Karbovantsiv will not go to zero no matter what kind of conspiracy nut you are.

Yep you are correct again, it went out of circulation in 1995 replaced by the hryvnya at an exchange rate of  100,000 karbovantsivi = 1 hryvnya

--------------

(Early 1770s US) One guarantee I can make is the Continental will not go to zero no matter what kind of conspiracy nut you are.

 

Yep but it was "Not worth a Continental" as the expression goes.

------------------

(1989 Yugoslavia) One guarantee I can make is the dinar will not go to zero no matter what kind of conspiracy nut you are.

Your correct again: in 1994 the exchange rate to the new currency was 1,300,000,000,000,000,000,00,000 dinars to 1 novi dinar.

-----------------------------------

Do I need to list 100s of more examples?

Your technically correct, a currency like the US dollar does not go to zero, it tends to go asymptotically to zero.

 

I will always remember your quote when I am at the AM/PM getting my gas putting my $1 change in the penny jar.  Oh wait, I forgot, you claim people like me are conspiracy nuts... I forgot we will all have government RFID chips embedded in our flesh as the new government currency....paper is so slow to debase....cannot be done as quick as inside the RAM of a computer.

 

Fri, 10/01/2010 - 23:53 | 620296 THE 4th Quadrant
THE 4th Quadrant's picture

So your mom never taught you not to compare apples with orangutans? Yawn.

Sat, 10/02/2010 - 00:48 | 620389 tmosley
tmosley's picture

Johnny thinks it's going to be different this time.

Go back to doing your Grandma's taxes, Johnny.  The adults are talking.

Sat, 10/02/2010 - 02:40 | 620487 Hephasteus
Hephasteus's picture

Well the dollar is backed by the guarantee of a bunch of jew bankers. So I guess you buy men's wharehouse suits because a different jew guarantees that.

Oh my love dollar, hate jew. logic bomb.

Now you be sure and run back in here real quick be passive-aggressive on the internet about something you hate stuffed inside an enigma of something you love. And remember not all jews are bad. Just the ones you think you need and try to protect without knowing what the fuck is going on. Oh and watch out for polar transformations they can turn your cartesian coordiate system all kinds of screwy.

Sat, 10/02/2010 - 00:09 | 620321 gwar5
gwar5's picture

The USD doesn't have to go to zero to devastate.

If you look at Soviet and Mexican collapses of the 1990's they were on the order of 80% -- plenty bad enough. That would mean oil min. @ $320 USD/bbl, or $11/gal gas, for starters, perhaps less given lower demand, but you get the idea. That was during relatively good times for the USA and the rest of the world to pull them out of it. What is different is that may not be so this time around.

The Fed says it's different, they're in uncharted waters. I believe them. Call them up with your hope for the USD. Ben needs to hear from you. 

Sat, 10/02/2010 - 01:39 | 620444 merehuman
merehuman's picture

LOL JB  LOL

Sat, 10/02/2010 - 16:28 | 621205 hardmedicine
hardmedicine's picture

jb? 

Sat, 10/02/2010 - 19:54 | 621494 RockyRacoon
RockyRacoon's picture

My guess:  Johnny Bravo

Sat, 10/02/2010 - 20:25 | 621528 akak
akak's picture

Did anyone REALLY think that disingenuous, lying troll was really going to leave ZH for good?  Like a moth to the golden flame, he simply cannot help himself.

Fri, 10/01/2010 - 21:54 | 620102 nmewn
nmewn's picture

Do what you want Robo...but no one ever went to the poor house owning gold ;-)

Sat, 10/02/2010 - 00:57 | 620399 ATG
ATG's picture

If stocks go higher, gold will be dragged with it.

And if either goes lower?

Sat, 10/02/2010 - 13:12 | 620969 geminiRX
geminiRX's picture

Then stick your head between your legs, because it will be Sept 2008 all over again. In that case wait for maximum blood then buy all the gold and gold stock you can

Fri, 10/01/2010 - 21:35 | 620054 LePetomane
LePetomane's picture

Any bets on the country(ies) involved in the next proxy war?

Fri, 10/01/2010 - 22:02 | 620108 seek
seek's picture

South America is getting pretty ripe, and Venzuela has oil, a government we don't like, and is in a nuclear alliance with Iran. Though we could also go in to "help" Columbia, Ecuador, the list goes on...

But not Paraguay.  That's the secret elite hiding spot, so it'll be left alone.

God knows there's ample room to play 1950's retro in Korea as well. China might not like that tho.

 

 

 

Sat, 10/02/2010 - 01:01 | 620404 ATG
ATG's picture

God knows there's ample room to play 1950's retro in Korea as well.

http://en.wikipedia.org/wiki/Davy_Crockett_%28nuclear_device%29

Fri, 10/01/2010 - 21:47 | 620087 papaswamp
papaswamp's picture

this is called we want to bring the price down some so we can buy more before rockets through the roof.

Fri, 10/01/2010 - 22:50 | 620197 BearishFeijoadaSushi
BearishFeijoadaSushi's picture

All I want is that Mantega gets into the race to the bottom too as I'm already on such golden island waiting for his rats to come in. Unfortunatelly, the only rats I've seen so far keep bringing their USD which is worthless to me as I spend in BRL. Tell your benny to make some holes on the BRL ship. Stop flooding bovespa with USD too!

Fri, 10/01/2010 - 23:17 | 620240 Lionhead
Lionhead's picture

The author of this article has his facts & history correct; those that would jawbone precious metals down are un-informed people who have been dumbed down by decades of fiat money myths. Gold, silver, platinum are climbing the "wall of worry" in stock market parlance. The bears have no argument other than overbought, barbarous relic, no commercial purpose, et al. In fact, there's is a huge wall of worry in the fiat currency world. As that wall looms larger with impending QE 2 fraught & peril, precious metals will climb ever higher. In a panic, no price is unreasonable.

Consider the Chart of the Day comparing home values to gold:

http://www.chartoftheday.com/20101001.htm

Home values have plunged to mid-80's levels when valued to the price of gold. Devaluation of the fiat currency is all around us, if one chooses to see it.  As in the 1930's the S&P 500 will never keep up with the gold mining stocks, dividend or no dividend. Only fools would suffer the next leg down for the equities markets.

Sat, 10/02/2010 - 00:46 | 620387 thegr8whorebabylon
thegr8whorebabylon's picture

Lionhead wins 'sounds most like Soros post'.

Fri, 10/01/2010 - 23:44 | 620282 gwar5
gwar5's picture

I want to be a smart rat.

Fri, 10/01/2010 - 23:59 | 620306 anonnn
anonnn's picture

Very early in my lifetime, there was no official Reserve Currency.

 The plan to establish such using the USD was a  deliberate act, but the "why" is not necessary to know in order to understand the present scene.

Consider:  The fact that all currencies have this relationship with the USD  means the USD host can cause enormous global effects.

A corrollary, seldom mentioned on ZH, is that liquid petroleum [oil] also has such power to influence globally...and it existed earlier than a Reserve Curruncy.

Both oil and USD/ResCur are certainly connected. How they are linked is arguable, but linked they are.

Oil can be controlled via source or distribution. In short, there exist only 4 giant distributors, 2 Anglo and 2 American [BP,Shell,ExxMob,Chevron]...and only 1 giant source [Kingdom of Saudi Arabia, also known as the swing-producer.].

It is not a great leap to postulate that KSA must be linked to oil and USD/ResCur. While that fact can be surmised, explaining how is arguable.

Thus, to understand global financial activities, I submit the linkage of all 3 must be considered...USD/ResCur, oil, KSA.

[Gold is a 4th linkage I conveniently omit.]

Surely Ben,Larry,Tim,Lloyd,Jamie et al know this; and a lot more.

Are they operating off a game plan that rhymes with all 3 ?

Note that any, yes any, actions and issues  that impinge on KSA are as vital as the other 2.

The enormous collection of ships-of-the-line that so obviously menace Iran...are equally poised to control any unfavorable mood swings within KSA that will efffect the established linkages. Coinkydink?

Sat, 10/02/2010 - 01:12 | 620413 ATG
ATG's picture

Both oil and USD/ResCur are certainly connected. How they are linked is arguable, but linked they are.

Submit that they are linked as you suggest via the 1000 US Military bases around the world projecting firepower, some of them moving in the air, space, on or under the water or earth

Sat, 10/02/2010 - 00:01 | 620310 robertocarlos
robertocarlos's picture

I honestly don't see how gold will save you.

Sat, 10/02/2010 - 00:13 | 620335 delacroix
delacroix's picture

gold is the most acceptable manner, to store the fruit, of my past labors.

Sat, 10/02/2010 - 00:16 | 620341 robertocarlos
robertocarlos's picture

I have a bottle of red wine. That's good too.

Sat, 10/02/2010 - 04:56 | 620530 StychoKiller
StychoKiller's picture

Wine won't last forever, especially if you have Lush friends.

Sat, 10/02/2010 - 19:31 | 621467 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

i had a bottle of absolute shit RED last night, go all over my macbook pro keyboard. sucked.

Sat, 10/02/2010 - 21:17 | 621574 Hephasteus
Hephasteus's picture

Get an iWank Pro. They are spill proof.

http://www.27bslash6.com/jason.html

Sat, 10/02/2010 - 01:14 | 620414 ATG
ATG's picture

gold is the most acceptable manner, to store the fruit, of my past labors.

Not if it goes down or is stolen

Sat, 10/02/2010 - 13:15 | 620978 geminiRX
geminiRX's picture

Likely not as fast as Benny is stealing and devaluing your paper cash. Gold is not going up....your currency is going down:)

Sat, 10/02/2010 - 03:47 | 620508 Troy Ounce
Troy Ounce's picture

 

Gold has been used in the past few hundred years as the ultimate store of value in times like these. Smart people turned to gold. What is so difficult to understand?

Now read what Greenspan had to say 2 weeks ago:

"Fiat money has no place to go but gold" and "..he’d thought a lot about gold prices over the years......concluded that gold is simply different....If all currencies are moving up or down together, the question is: relative to what....? "

http://www.nysun.com/editorials/greenspans-warning-on-gold/87080/ 

Note there is only 160.000 tons of the stuff which is 20x20x20 meters. With no counterparty risk, easy to carry, liquid and scarse it is an easy decision to make.

Gold is the ultimate enemy of the State: it is either gold or them: you chose. However, you can bank on it that our financial and political leaders they will make sure that gold prices will fluctuate to scare off small investors.They will use msm to misinform.

Read about monetary history: it is all about gold (or silver). Gold prices will do down again when trust in our financial and political leaders has been restored. My guess: 20-30 years.

And then the whole story starts again:

  1. gold standard in order to restore trust
  2. watering down of gold standard by politicians and bankers (f.i an ETF becomes "as good as gold")
  3. new reserve currency
  4. abolishion of gold standard to pay for stuff, wars and political ideas
  5. stuff becomes stuffs, war becomes warss and ideas become ideass
  6. reserve currency becomes worthless, people flock to gold, etc.
  7. zzzz....zzzzz

Do what you think is right, but there is no better argument that 1000 years of history.

 

Sat, 10/02/2010 - 04:58 | 620532 saulysw
saulysw's picture

+1. Hear, hear.

Sat, 10/02/2010 - 05:47 | 620544 fresbee
fresbee's picture

Every day brings new levels of "intellectual inferiority" by the ZH Gold posters. I dont know how old you are but frankly you will never see a day when you can make money even if all those dreadful events come to pass. Infact the state will confiscate the lil Gold you possess. So you might as well better off trading the shit than hold physical. Infact Golod trading is the easiest given it obeys key levels beautifully which again proves that Gold is nothing but speculative traders gem. 

 

Sat, 10/02/2010 - 06:14 | 620548 saulysw
saulysw's picture

Fresbee, please enlighten us as to where you are sinking all your wealth then - treasuries?

Sat, 10/02/2010 - 07:12 | 620629 fresbee
fresbee's picture

It is divided and transitionary but Gold forms only 5-10% of it and that too is trading allocation. US Treasury forms 0% in my wealth allocation. Infact am just waiting for model to give me a sell signal and I will short the shit.

But maximum of wealth is in euro bunds. I dont care for periphery EU problem. I infact consider that to be a non issue. Infact if they default, PIIGS will be kicked out of EURO which will only strengthen euro. If they perform well and implement austerity even with all the protests, EURO will still be the winner. You see it is a WIN WIN for EURO. The chinese have been stealthly diversifying into EURO BUNDS. The fall from 1.5 to 1.18 has scared a lot of people and that is good. But I clearly see eur/usd surpassing its all time higs and until then folks want believe that EURO is here to stay.

 

What surprises me is that ZH normally pretty prompt with insider reporting has not even found this news yet. That is what happens when you are so biased to one side. Infact when ZH first started, I think it was purely devoted as a no holes barred critic of US policy. Some where down the road ZH decided to take a side route and married the gold crowd which I consider to be dumbest in the entire investment arena. None of the big guys nor funds have allocated more than 20% of their portfolio to Gold and the resaons are simple it will not be a winner. 

 

But my wealth allocation:

Gold:5-10%

Emerging markets:30-40% (BRICS).

US treasury: 0%

EURO Bunds: 40-50%

Silver: 5-10% (Am playing a short squeeze here) I think there is spike coming in silver to maybe $50 but maybe after a pullback.

 

Sat, 10/02/2010 - 11:28 | 620799 mrgneiss
mrgneiss's picture

Speaking of "dumbest", why don't you learn how to spell better than a sixth grader; infact is in fact two separate words, and its "no holds barred" not "no holes barred", even as funny as it sounds.  We are not gold bugs, we favor hard assets to worthless pieces of paper that can be abused by inept politicians and greedy corrupt bankers and central bankers; gold just happens to be one of the best hard assets, but other will do such as land, silver, etc.

Zerohedge has actually presented many articles on possible bearish cases against gold, and destroyed each one with reason and logic (these may be foreign concepts to you), go back and search for them.

If you think ZH is biased and "married to gold" why do you read these articles and respond to them?  Do you always waste your time on blogs and issues that you insult and criticize?  Wouldn't you rather be on an "anti-gold" blog with like minded people or are you just anti-social?

Sat, 10/02/2010 - 11:53 | 620837 fresbee
fresbee's picture

why don't you learn how to spell better than a sixth grader

- Am not too sure blogs demand high degree of grammatical accuracy. That is the standard. So if that is becoming an issue, you should not be reading my comments at all. 

 

If you think ZH is biased and "married to gold" why do you read these articles and respond to them?  

- Am hoping ZH will transform and be back to what it used to best which was attack policy matters and report insider stuff. Counter question for you: Why do you read my comments?

Zerohedge has actually presented many articles on possible bearish cases against gold.

- Really? Post one please. Am not searching any. From the time I have been reading, I have not found any bearish one as such. It is fine to be bullish as long as it is logical and rational arguments like inflation or anti dollar etc. It is when it starts trumpheting the Gold bug language of end of fiat system that it becomes buggy. 

Do you always waste your time on blogs and issues that you insult and criticize?

- I am not sure if I have insulted anyone except the "Gold bugs". I think bugs need to be insulted to such an extent that they never write about Gold again. They are the scum of the Investment crowd. I do not think I can ever stand a Gold bug who talks of his Physical Gold as the end of the world currency. They need to be weeded out. You see my hatred ffor these fools stems from the fact that I lost money holding physical as paper was taken down in 2008 crash. If I was trading, I would have a ton by shorting and longing both which is what I have done for the last 13 months. I not only have recovered my losses but made for more than I would have made by holding. And now I have made it a mission to make sure to insult, criticize, mock the bugs. 

I am highly appreciative of the other stuff here.


Sat, 10/02/2010 - 18:43 | 621415 mrgneiss
mrgneiss's picture

"why don't you learn how to spell better than a sixth grader

- Am not too sure blogs demand high degree of grammatical accuracy. That is the standard. So if that is becoming an issue, you should not be reading my comments at all."

I just think its ironic that someone who uses the word "dumber" to describe people doesn't know that in fact is two words and uses the phrase "no holes barred" instead of "no holds barred".  People make typos on this blog, in cyberspace, no big deal, but to repeatedly spell a common phrase wrong such as in fact or use the wrong word in a common cliche shows a degree of a lack of knowledge to the extent one with such shouldn't accuse others of being dumber.

 

"f you think ZH is biased and "married to gold" why do you read these articles and respond to them?  

- Am hoping ZH will transform and be back to what it used to best which was attack policy matters and report insider stuff. Counter question for you: Why do you read my comments?"

I did not make an extra effort to find a blog that I claim not to enjoy anymore nor search out articles on subjects I loathe as you have done, I was merely visiting a blog that I find highly revealing and stimulating, reading an article I find interesting, reading through the comments of many like-minded people with some good and interesting viewpoints, and merely took 15 seconds to read your post.  A better question would be why did I bother to respond to your post?  I have to agree that it is probably a waste of time responding to close minded people who are set in their ways, you wouldn't be the first on this blog and not the last, but we are inclusive.  I guess I just took exception to your comments and may achieve nothing other than some small satisfaction at venting my feelings.

Zerohedge has actually presented many articles on possible bearish cases against gold.

- Really? Post one please. Am not searching any. From the time I have been reading, I have not found any bearish one as such. It is fine to be bullish as long as it is logical and rational arguments like inflation or anti dollar etc. It is when it starts trumpheting the Gold bug language of end of fiat system that it becomes buggy.

If you are too intellectually lazy or cowardly to conduct a search of articles that may refute your arguments its not my problem, it just furthers my point that you are close minded.

 I am not sure if I have insulted anyone except the "Gold bugs". I think bugs need to be insulted to such an extent that they never write about Gold again. They are the scum of the Investment crowd. I do not think I can ever stand a Gold bug who talks of his Physical Gold as the end of the world currency. They need to be weeded out. You see my hatred ffor these fools stems from the fact that I lost money holding physical as paper was taken down in 2008 crash. If I was trading, I would have a ton by shorting and longing both which is what I have done for the last 13 months. I not only have recovered my losses but made for more than I would have made by holding. And now I have made it a mission to make sure to insult, criticize, mock the bugs. 

I don't know of many places where it is acceptable to harbor so much rage and use so many insults to get your point across, so I must assume you got kicked out of school, probably fired from your job, and not able to date any members of the opposite sex. 

Sat, 10/02/2010 - 20:04 | 621503 RockyRacoon
RockyRacoon's picture

That, my paddle-tailed friend, was a superb reply.  The main point was the obvious lack of a broad education (or failure to assimilate education when presented).  He is listener rather than a reader, and they always get things wrong.  The improper usage of common phrases indicates a slovenliness that permeates everything, without doubt his investing prowess.

Sat, 10/02/2010 - 20:23 | 621524 mrgneiss
mrgneiss's picture

RR, that truly means a lot coming from you, and you stated it much better; I manage a decent comment once in a blue moon but you hit it out of the park almost every post.  And I think we would both agree that learning doesn't necessarily have to occur in an institution of higher education but however acquired is essential to successfully moving along on our journey.

Sat, 10/02/2010 - 20:37 | 621537 akak
akak's picture

.

 

And hopefully not to sully this wonderful dialogue of both Rocky and MrGneiss (good one, that!), but it still leaves unanswered the very fundamental question of WHY these ranting, foaming-at-the-mouth gold-haters such as Fresbee even bother to waste significant amounts of time bashing the views of others while adding nothing constructive or positive to the conversation.  I do not troll pro-Fed, pro-fiat, pro-statist forums haranging the members therein on their "stupidity" and "cluelessness" and "lack of sophistication" ---- in fact, I never visit such sites PERIOD, even out of morbid and anonymous curiousity.  So what compels the anti-gold, anti-liberty trolls to do what they do? 

Just think, for example, of the HOURS and cumulative WEEKS, at least, that the troll MasterBates/JohnnyBravo spent shitting on every gold-related thread in this forum.  That was clearly either the work of a mentally unhealthy and/or sociopathic person, or else the work of a paid disinformation agent.  In either case, I find it revealing that never, not ONCE, have I ever heard or read of anyone in the pro-gold camp doing the converse within an anti-gold forum.  There is a phenomenon here that simply cries out for an explanation.

Sat, 10/02/2010 - 21:56 | 621609 fresbee
fresbee's picture

This is what I meant that this blog has become the place for losers like you 3 to gather and exchange notes on how to write the perfect comment to somebody who is highlighting some real issues like the "hold and hold" strategy of Gold bugs is dumb. Obviously I did not know I was speaking to old ladies who got too hurt with the style. You ladies should not be reading ZH as I guess it is not a place for the week hearted. 

 

Look in simple terms all am saying Gold bugs need to b e weeded out as they are a danger to simple retail investors who get taken in by their style of "end of world" writing by the bugs and then when the crash happens,, not one is around to explain what happened. 

Sat, 10/02/2010 - 22:34 | 621619 akak
akak's picture

.

 

Your grammatical, semantic and typographic errors merely mirror the flaws and holes in your logic. 

It is almost exclusively only you rabid, disingenuous, gold-hating trolls who keep bringing up these insulting "end of the world" strawman arguments.  Your ilk continually posit a false dichotomy in which if one sees ANY significant risk to today's (crumbling) financial paradigm, to whatever extent or nature, and would dare to try to protect themselves with age-old tactics such as holding precious metals, then they are automatically "End of the Worlders" and "Armageddonists" and "Crazy-Eyed Survivalists".  A classic and disingenuous tactic of sophistry to derail the argument and ridicule your opponents. 

You fail to acknowledge that significant fiat currency debasement (always ongoing to some extent in any event) is not only the likely outcome of the current "financial crisis", but that it is even of any concern.  You appear enraged that anyone would seriously question or challenge the status-quo power structure, and dismiss as "kooks" anyone who believes that serious reform of our financial, political and monetary systems are in order.  You consistently jump to ad hominem attacks instead of addressing the real points of discussion, when you do not slink away from well-argued rebuttals altogether.  And you pointedly ignore or refuse to acknowledge the broader historical perspective in which fiat currencies have invariably failed or suffered serious debasement, to the detriment of the average citizen who is FORCED by the gun of the State to use them to his or her disadvantage, instead invariably falling back on appeals to authority or power: "We're AMERICANS, that can't happen to us!", "The US Government will never let that happen", etc. etc.

And again, I will point out that your hysterical rage and unconcealed and total contempt for the advocates of gold, while posting in a generally pro-gold forum, put into question your motives as well as your moral integrity.  I am as open as anyone to arguments that question whether holding precious metals in today's financial and economic environment is a wise choice, but I am NOT open to the spreading of disingenuous disinformation, puerile snark, and intellectual cowardice.

 

Sat, 10/02/2010 - 22:41 | 621641 RockyRacoon
RockyRacoon's picture

Simple question to any anti-gold adherent:

Why the fuck are Central Banks buying gold?  Why were CBs up to a little while ago major sellers of gold.  Why does the IMF use gold to move money around the world?

Review the answers to these questions and you have the whole picture.  Not really more obvious than that. 

Sat, 10/02/2010 - 22:46 | 621649 akak
akak's picture

.

 

 

Rocky, I will bow down to those who say "Gold is not money, but just another commodity" when world central banks start stockpiling cotton, and wheat, and copper as a matter of official policy.

Sun, 10/03/2010 - 04:53 | 621897 mrgneiss
mrgneiss's picture

Hey akak, welcome to the party!  Wow, what awesome posts! (the first one was merely great, the second a defining classic!)  You destroyed him!  Let's see if he can attempt to counter your points or just changes the subject as trolls are want to do when presented with logic and reason. I guess I went out too early and missed all the fun!  Its hard to tell if this latest troll is a recycled JB just disguising himself because every call he made since July turned out to be wrong, it must be very humiliating, I mean it wouldn't be the first time he turned up with a new identity pretending to be someone else and then finally admitting it was him.  Or it could be just another new socially awkward coward who gets his rocks off reading our posts and being a troll.  But hey, they're always good for a laugh!

I think we should save that post so we don't have to waste anymore time on these nutjobs and trot it out everytime they start ranting their nonsense.

 

Sun, 10/03/2010 - 05:11 | 621909 akak
akak's picture

.

 

 

Thank you for your kind words, MrGneiss (too bad you didn't chose "Pyrites of the Caribbean"!), and I have to say that your posts above were quite well-spoken and reasoned also ---- you are more thoughtful, logical and expressive than you may be giving yourself credit for.

As for the trolls, I do not of course expect Frisbee to boomerang back, so to speak, to actually respond to my longer post above --- that is not in the nature of the typical gold-hating, liberty-hating troll.  I used to imagine that they were all sociopaths or paid disinformation agents, but more and more I find myself wondering how many of them may just be knee-jerk pro-establishment, conformist types who are either A) beginning, on a subconscious level, to recognize the truth of what so many of us here on ZeroHedge are saying about the crimes, corruption and perversion inherent in our financial, monetary and political systems, but cannot allow themselves to embrace that which deep down they know to be true; or else B) are actually fairly aware of the truth as most of us here see it, but have chosen to throw in their lot with the Dark Side. 

If I were a psychiatrist, I think I would find this phenomenon of rampant, fervent trolling to be a fertile and fascinating field for deep psychological study.  Not being a psychiatrist, however, I merely find it to be highly annoying, and morally and intellectually repugnant.

Sun, 10/03/2010 - 05:58 | 621921 mrgneiss
mrgneiss's picture

Yes Akak, I agree that the motivation of the trolls to spend so much time and energy debating and insulting a large number of people with whom they disagree, it is truly perplexing, not to mention their other issues.  They are just schist disturbers.

I actually used to be apathetic to gold and silver, until about two years ago when the bailouts happened, thinking that China would probably want to get rid of some of its US reserves, and I realized there was really nothing else other than gold, I didn't think they would pile into Euros and be exposed to the same risks, people even speculate that the Euro may not be around in the future, whereas the dollar will be around in the future, no doubt about that, but it will be devalued, and maybe partially PM backed.  Anyway, I started reading more articles about the whole situation, and learned about the manipulation, the FED, Greenspan, the ETF's, the outsize future postion's, hedging, GATA, CB sales, IMF..... it just was really interesting and there was overwhelming evidence of what had happened (manipulation) and where we were headed.  I think that anyone who is anti-gold hasn't really read through much of the info and backstory, its all well laid out and factual and impossible to refute.

Sat, 10/02/2010 - 23:28 | 621696 truont
truont's picture

+1.

Akak is right.  There is something wrong with the trolls on ZH.  I don't get why they waste their time here.  Maybe they just enjoy tweaking our noses a bit, eh?  Must get off on it, the sickos.

Sun, 10/03/2010 - 04:28 | 621888 fresbee
fresbee's picture

Am not gold hating troll. I do believe Gold is in an uptrend. But so has the AUD, EUR,JPY and guess what? even the worst currency in the world GBP too has been racing away. So why does a rise in Gold indicate end of fiat currency? All am saying it is just a piece of anti dollar trade and it is in rise to as long as CBs allow it. Am against the idiots who preach the end of fiat system. And you frankly seem to be the ring leader of that pathetic crowd. Instead of putting some rational arguments which can have some level of foundational strength to it, you are busy finding grammatical errors. I dont think you belong here. You should call it quits and probably teach at Harvard.

Sun, 10/03/2010 - 13:59 | 622434 dogbreath
dogbreath's picture

you approach this topic as a trader.  this is not a traders forum as the opinions here prove.   The legitimacy of fiat is by force enforced.  It would not be here for any other reason. Fiat will end as all fiat does.

Sun, 10/03/2010 - 13:52 | 622420 dogbreath
dogbreath's picture

retail investors are sheep to be fleeced by brokers.  gold bugs are not investors per say because they are real honest to goodness cash and do not contribute to the pump and dump ponzie that is the investment market.

Sun, 10/03/2010 - 00:42 | 621762 Mariposa de Oro
Mariposa de Oro's picture

akak,

They insult and denigrate because deep down inside, they know we're right, so they try to kill the messenger.

Sun, 10/03/2010 - 15:25 | 622603 RockyRacoon
RockyRacoon's picture

Just my 2c worth:  They are victims of the system and have a vested interest in perpetuating it.  Really simple stuff.  By vocalizing a hatred for real money they are self-confirming the bias.   It sounds good in their own heads and alleviates the need for critical thinking.

Sat, 10/02/2010 - 20:08 | 621505 Hephasteus
Hephasteus's picture

Waaa. Gold is a storage of wealth, not an investment vehicle. If you don't know how to use it, read the instructions. If you want it to behave in a manner not conducive to it's nature, fuck off. It ain't happening.

I bought near the top in June 2008. Then I held onto it and it went back up before my cash ran out.

Sat, 10/02/2010 - 21:21 | 621582 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

store of wealth

show of wealth

hell, im going for it. you only live once. then again, can't be to sure about that statement.

Sat, 10/02/2010 - 18:19 | 621387 BigDuke6
BigDuke6's picture

i aint junking ya.

Sat, 10/02/2010 - 00:20 | 620339 delacroix
delacroix's picture

4th quadrant= tempest in a teacup . beware: your woman may be spending serious couch time, with a goldbug, in the near future.

Sat, 10/02/2010 - 02:14 | 620471 Real Estate Geek
Real Estate Geek's picture

Yeah, but only if she's one of those spoiled chicks who wants to eat and be warm in winter.

 

Sat, 10/02/2010 - 01:23 | 620422 fresbee
fresbee's picture

Unknown author preaching the goodness of his worthless piece of crap, yella metal. You  will hear 100's of such idiots preaching how Gold is rising and every currency is going down. Ha ha what a joke. Even when YTD performance of Gold is nothing parabolic except that it has been anti dollar trade and hence risen 22%. But pace of rise is quite clearly diverging and it is being purely being driven by euro rise. 

 

Excess Chinese capital has now slowly started to flow in EURO bunds. It was a slow phenomenon last year but now has just picked up. The gold speculators had hoped for the chinese to keep their reserves in Gold but to their utter dismay, they hate Gold and have infact decided to keep their wealth in one of the least understood currencies of all time: EURO.

 

I have written over 100 comments that EURO will be a reserve currency and the final trigger for that event has been pressed with the Chinese visiting ECB this weekend. EURO move is not pure technical but smackdown for the Gold crowd. Only a matter of time before Gold crashes against the EURO here. It already has made a double top in euro terms. So while against the dollar it will rise. Infact even Pound rises against the dollar but we know that Pound has no value. 

Sat, 10/02/2010 - 02:12 | 620469 Rusty Shorts
Rusty Shorts's picture

 - yeah, Chinese "johnny come lately" capital hates gold, albiet, gold is well understood, and solid, sturdy, and can withstand the heat of the fire, yet, the Chinese "johnny come lately" capital has "decided to keep their wealth in one of the least understood currencies of all time: EURO."  - this is good.

Sat, 10/02/2010 - 03:56 | 620513 Troy Ounce
Troy Ounce's picture

 

Currencies are based on trust, not technical charts.

Sat, 10/02/2010 - 04:44 | 620527 doggings
doggings's picture

fresbee, you win funniest comment on this article, hands down.

The gold speculators had hoped for the chinese to keep their reserves in Gold but to their utter dismay, they hate Gold..

this bit, seriously I spat coffee here.. :)  thanks for the giggles.

Sat, 10/02/2010 - 05:35 | 620540 fresbee
fresbee's picture

ur name fits ur style. 

 

I think u will spill a lot more when u see ur beloved investment Gold, underperform every other anti dollar thesis available. 

Sat, 10/02/2010 - 05:22 | 620528 bob_dabolina
bob_dabolina's picture

Well...

The U.S has the largest nuclear arsenal known to man kind. So, the dollar is backed by intra-solar balistic missles that are capable of wiping out all of man kind.

The euro zone has nice watches and good skiing.

We also have...the worlds reserve currency. 

Than again. The euro-zone is our ally, so I guess they have (some privilage) but I wouldn't go toooooooo far.

Still not sure why the euro region is so great, or why the euro should have any purchasing power whatsoever (other than techincals of course, just so something can trade against the dollar)

I guess people forget that nuclear weapons are commodities that back currencies and cultural status. It ain't always about economics...bitchez ;)

BTW...The U.S government is the largest holder of gold in the world...so the stupid metal that no one can eat MUST BE WORTH SOMETHING.

Sat, 10/02/2010 - 11:14 | 620787 Fat Ass
Fat Ass's picture

You're right that the Usa has a spectacular collection of superb nuclear weapons. However the US nuclear power industry would be incredibly funny if it wasn't so incredibly sad. In contrast France (for goodness sake) is far and away, without anyone in second place, the world's leader in nuclear power. Germany which is the size of a farm in Texas, has BMW, MB, Audi, Porsche and all the world's robot toolmaking. Usa manufacturing .. um .. better not mentioned.

On the other hand the Usa makes big money from film production and, in California, from the marijuana industry. So, most (successful) countries have "something good" behind them.  Australia has minerals galore, even Portugal has tourism, etc.

(The only country that has absolutely nothing, zip, zero - absolutely no leadership or achievement, whatsoever - is "the Uk". It's astonishing how long they have been able to survive (20, 30 years?) as a tax haven.)

Regarding military power - it's worth remembering that while the Usa has superb, stunning nukes, satellites, and other materiel, the current Usa military failure is basically total. 10 years of nothingness. They can't even symbolically find and shoot that "osama" guy.  Usa military achievements, Usa manufacturing achievements, about the same sadly.

So, don't expect that the Usa will be able to, say, for example, err, run out and shoot osama to provide a confidence boost to "the Dollar."

After all, the USSR had a good amount of fine nukes. Didn't do a lot for the ruble.

Sat, 10/02/2010 - 11:15 | 620789 UnRealized Reality
UnRealized Reality's picture

If I am not mistaken, the Euro is back by

Gold.What's the Gold reserve for the Euro???

Sat, 10/02/2010 - 07:17 | 620631 Fix It Again Timmy
Fix It Again Timmy's picture
Waiting For Higher US Interest Rates

Last week, we reported on the trade-weighted US Dollar index, the USDX, dropping below the 80.00 level for the first time since March 17. This week, the "rot" has continued as the USDX continues to slide. By October 1, the index stood at 78,31 points. It is down 1.62 percent for the week and is now almost back to the level at which it started 2010. The entire US Dollar gain which was the other side of the European sovereign debt crisis has now been all but wiped out. Gold continues to forge upward in US Dollar terms, but is treading water in terms of most other major currencies.

Meanwhile, yields on US Treasury debt, especially at the longer end of the curve, are at or near their historic late 2008 lows. The mainstream financial media in the US seem utterly oblivious to the correlation between these fantastically low yields and the increasing weakness in the US Dollar. The situation is potentially very volatile indeed.

There is absolutely NOTHING in the way of a price premium - a component which allows for the risk of the depreciation of the currency - built into today's Treasury yields. Nor has there been one worth mentioning ever since the Fed first lowered its controlling interest rate to 0.00 - 0.25 way back in December 2008. When the Fed did that, Gold stood at $US 832. It is now $US 1317. That's a rise of 56.4 percent. What would happen if US rates DID start to reflect the dive of the US Dollar, and the certain prospect that the mountain of Treasury debt will NEVER be repaid?

To get the answer to that, we have to go back to late 1979. At that time, US interest rates were multiples of what they are now while the US Dollar was weakening fast, just as it is now. What Paul Volcker as US Fed chairman at the time is famous for is taking his hands OFF the interest rate levers in an attempt to save the US Dollar from extinction. It took almost three years, until mid 1982, but his attempt worked.

What happened in the immediate aftermath of that late 1979 decision is most instructive. US Treasury rates surged upward AND SO DID THE US DOLLAR GOLD PRICE. Between October 1979 and January 1980, the Gold price more than doubled in $US terms while Treasury yields soared. What it took to lure the rest of the world out of Gold and back into US Dollars was more than two years of the highest interest rates ever experienced in the US.

In 1979-1982 the US was still the biggest net creditor nation in the world and had an accumulated funded Treasury debt of about 7 percent of its present level. The US economy could still "afford" high interest rates in the late 1970s. They cannot afford any interest rate rise at all today. That is the difference.

As we have emphasised many times, the real impetus for Gold to explode upwards is ALWAYS rising interest rates. The interest rate rise reflects increasing doubt in the purchasing power of the currency in question plus increasing doubt that the debt instruments can be serviced and/or repaid in future. This doubt was rampant globally at the end of the 1970s. It has never emerged since in anything like so virulent a form, especially inside the US itself.

Yet the fiscal and financial position of the US today is HUGELY worse than it was 30 years ago. This situation CANNOT last. In essence, despite their seemingly unstoppable if slow rise against the US Dollar recently, the $US precious metals prices are all but dormant. A REAL "gold rush" like the one seen between October 1979 and January 1980 has not even started yet.

from "The Privateer" - http://www.the-privateer.com

Sat, 10/02/2010 - 10:46 | 620760 Lionhead
Lionhead's picture

For all readers who weren't around during the last bull run in the late 1970's - early 1980's, review these two charts. This is what happens when the dollar collapses & interest rates spike. Put these charts on your bathroom mirror if you have to. When international capital flows move away from the US dollar & it's derivative, US Treasuries, the PM's will run in a buying panic. There are no alternatives to hard assets of all types in a currency collapse. People will buy anything of tangible value just to get rid of the fiat monies. This is repeated historical fact.

Gold:  http://www.chartsrus.com/chart.php?image=http://www.sharelynx.com/chartsfixed/GC1982btm.gif

Silver:  http://www.chartsrus.com/chart.php?image=http://www.sharelynx.com/chartsfixed/SI1980.gif

Be patient, as the run up to the parabolic will be slow, just as we are seeing currently.

The short of our lifetime will be the reversal on US Treasury bonds. Time is running out on low rates & fiat currencies worldwide.

Sat, 10/02/2010 - 08:42 | 620665 Fat Ass
Fat Ass's picture

This article is somewhat badly written. The grammar is poor. Sentences don't flow. There are pointless funny! and badly-expressed analogies. Et cetera, et cetera.

It's a shame, poor writing reflects badly on ZH (or any site trying to achieve or do anything). There's always a thin line between crap English, and nutcasery.

There's this wonderul thing called "A Copy Editor," check it out.

 

Sat, 10/02/2010 - 10:07 | 620716 merehuman
merehuman's picture

Fatass, if i saved you from drowning you would complain my grip is too tight. Be thankful for what you got while you still got it

Sat, 10/02/2010 - 10:54 | 620768 Fat Ass
Fat Ass's picture

Poor writing reflects badly on this blog, on blogs in general, and on the topic at hand.

Is that what you want? No, of course not.

Your drowning analogy is not very relevant. Rather, say you and I were trying to attract attention to a danger we knew about, by giving talks on the subject.

No matter how solid our ideas, if one appears an idiot because of poor grammar and bad writing it's easy for the enemy, as it were, to dismiss the presenter.

This is very basic and, moreover, if you are a poor writer then for the cost of a hot meal you can hire a copy editor to bash your text in to shape. There can't possibly be a financial reason to not do this, so, it's silly not to.

Sat, 10/02/2010 - 09:09 | 620681 belsebub
belsebub's picture

If you can't trade commodities, what's the best proxy for gold? Until yesterday, I think CHF was a brilliant proxy, but now I am afraid it lost it's mojo due to the new agreement between Germany and Switzerland about disclosing tax refugees. Any good idea anyone?

Sat, 10/02/2010 - 12:25 | 620895 gwar5
gwar5's picture

Other PM's -- palladium, platinum, silver, oil related.

Miner stock plays eg., GDX, SLW, etc

If you really like Swiss, could buy (or the ADR) stock in SUI corp., eg Neztle, which is an international food inflation hedge in SUI francs, and tracked gold fairly well for long time. (lately may be lagging, I haven't checked or updated for months)

If you're Jason Borne, just buy physical PM, coin or bar, and carry with you for fast get aways. Good luck.

 

 

Sun, 10/03/2010 - 09:35 | 622039 belsebub
belsebub's picture

Unfortunately, I am not Mr Borne. Having his capability solving problems wouldn't be a bad skill.

I'll just continue to shorten the USD. Has work out just fine so far!

Sat, 10/02/2010 - 10:29 | 620744 fiftybagger
fiftybagger's picture

"Numerous factors have conspired to lift the Gold price, which has broken the $1300 target level. It has much more to run, since nothing is fixed, much money has been squandered, and great volumes of additional debt will be monetized in a cancer stroke. Silver has also breached the important $21.5 level of resistance. Rather than show a chart of the Gold price or Silver price, check the Gold-Silver Ratio. Great strides are soon to come in the Silver price, breath taking moves toward $30. The Powerz are losing control of silver, as the shortage is acute. Endemic Big Bank behavior has changed radically in the silver price suppression. They are losing control. Lack of physical metal does that!! One should always remember that central banks own no silver, thus silver wins on the supply side. Also, industry makes almost no demands of gold, thus silver wins on the demand side. Its volatile price should not deter the investor in times of crisis and grotesque shortage, but rather give courage."

 

http://www.gold-eagle.com/editorials_08/willie092910.html

 

got silver?

Sat, 10/02/2010 - 16:00 | 621180 The Disappointed
The Disappointed's picture

50bagger,

Bought some silver Liberty's @ APMEX a month ago @$20 spot and 1.79 premium each. Went back yesterday and saw the premium is now 2.29 (on spot 2.00 higher).

Glad I didn't wait to buy. I expect to be saying that a lot in the coming times.

Sat, 10/02/2010 - 11:40 | 620820 JonNadler
JonNadler's picture

THis is what I said in October 2009

 

Crigger: So based on fundamentals, where do you think gold should be?

Nadler: Ultimately, I think there's a lot less mystery in gold that adds up. If you dissect it all, you can come down with something more realistic. That realism compels me to say "reversion to the mean." We're trading some 30 percent above long-term averages. But if we take away the fear premium, take away the funds and the ETFs, and put in fundamentals, you're left with a range of $680-880—which isn't a bad level, by the way. It still gives producers double the return on their cost of production.

 

 

 

O obviusly gold is wrong because I don't make mistakes

Sat, 10/02/2010 - 22:29 | 621632 RockyRacoon
RockyRacoon's picture

...and put in fundamentals...

Those damn pesky gold fundamentals:  greed, fear, theft, prevarication.

We have all of these in abundance.

Sat, 10/02/2010 - 12:28 | 620905 Grand Supercycle
Grand Supercycle's picture

Updated GOLD monthly chart:

http://stockmarket618.wordpress.com

Sat, 10/02/2010 - 12:30 | 620909 gwar5
gwar5's picture

As long as all Western countries are broke, and 20k leagues under the sea using fiat currency, currency has no place to go but gold. This is not a tulip mania.

I would carry around 150,000 bbl of oil, but local zoning house prevents me from distilling it.

Sat, 10/02/2010 - 23:34 | 621703 truont
truont's picture

Thus saith the former Chairman of the Federal Reserve himself:

Fiat money has no place to go but gold,” the former Fed chairman said at the Council, according to economist David Malpass, who quotes Mr. Greenspan in one of Mr. Malpass’ emails on the political economy. Mr. Malpass writes that the former chairman of the Federal Reserve’s board of governors was responding to a question in respect of why gold was hitting new highs.

Mr. Greenspan replied that he’d thought a lot about gold prices over the years and decided the supply and demand explanations treating gold like other commodities “simply don’t pan out,” as Mr. Malpass characterized Mr. Greenspan. “He’d concluded that gold is simply different,” Mr. Malpass wrote. At one point Mr. Greenspan spoke of how, during World War II, the Allies going into North Africa found gold was insisted on in the payment of bribes.* Said the former Fed chairman: “If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.”

http://www.nysun.com/editorials/greenspans-warning-on-gold/87080/

 

Sun, 10/03/2010 - 11:18 | 622190 GoingLoonie
GoingLoonie's picture

Bought some gold and silver for a friend on Friday, two days ago.  When I entered the Gold and coin shop, it was very busy.  About ten others there, so I sat back and watched.  All were there to hawk old silver and gold items.  They wanted the cash now.  No one was buying. I spoke to the owner as I have been a big buyer since the election of W (his daddy did a number on the $ and I figured he would also).

The shop owner said sales of the gold and silver coins were way down as no one seemed to have enough cash to be a buyer.  He also said he did not see how this wave of selling gold and silver items could keep up, as it was massive.

In my opinion, there is no other way to interpret this than very bullish for gold and silver.

Sun, 10/03/2010 - 15:27 | 622608 RockyRacoon
RockyRacoon's picture

In my opinion, there is no other way to interpret this than very bullish for gold and silver.

Make that bearish for the economy in general, which reinforces your thesis:

Bullish for gold.

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