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Guest Post: Uncle Scam
Submitted by David Galland at Casey Research
Uncle Scam
The latest data on global gold trends, Q2 2010, just popped into my email box from the World Gold Council.
The bad news is that the higher nominal price of gold has caused a 5% decrease in jewelry sales over the prior year.
If you’re thinking “Hey, that’s not that bad!”, you’d be right. On this
date last year, gold closed at $950… which is $286 below where it
trades as I write. In other words, a 30% rise in price has resulted in a
decrease of just 5% in jewelry sales.
And even that number is skewed, because the currency value of the gold
purchased is up – way up. For example, India – the 800-pound gorilla in
the global gold jewelry market – saw total gold jewelry sales fall
only by 2%, but in local currency terms, there was a 20% increase in
the nominal value of the gold trading hands. China, which only
relatively recently reauthorized private gold purchases, saw a 5%
increase in jewelry demand, but that translated into a 35% increase in
local currency terms.
So, that’s the bad news.
The good news – at least for fiat money skeptics – is that total
physical gold demand in Q2 rose by a whopping 36%. More tellingly, the
increase was 77% when you take into account the dollar value of the
ounces purchased.
As you’ve already figured out, the bulk of the physical demand is
coming from investment – with the amount of gold held by ETFs growing
414% over the previous year.
Too far, too fast? I don’t think so.
In my opinion, as the fiat money monsters are brought to bay, the price
of gold can really only go higher. Overly confident? I don’t think so.
That’s because when people lose faith in a currency, as they will
before this crisis is over, they unfailingly rush to exchange the
unbacked paper money for something more tangible. While pretty much
anything with an intrinsic value will do – real estate, antique cars,
old masters – for all the reasons that Aristotle enunciated, gold is
viewed in a class of its own, and so has an unblemished history as a
universally accepted store of value. And, thanks to its portability,
divisibility, durability, and consistency, it has also always been
looked upon as a convenient form of money.
The most pressing macro-observation I’d like to make – an observation
that’s critical for investors to understand (though most don’t or
won’t) – is that the tectonic monetary shift now underway is truly
global in nature. And it’s not going to be over until a new and
markedly different monetary regime has been implemented.
It’s like this: Throughout history governments have experimented with
fiat money. They have done so because the benefits to the government
and the insiders that invariably latch on to power are just so damn
attractive. The Romans did it by debasing their coinage, but the modern
version goes one better by completely disconnecting a currency from
any value whatsoever, and then wantonly printing as politically
motivated needs or wants arise.
The latest fiat system kicked off in earnest in 1944 when Uncle Scam,
in Bretton Woods, NH, got the leaders of the world’s war-weary
countries to agree to accept the U.S. dollar as their reserve currency.
In return, the U.S. agreed that the currency notes it would
subsequently issue would be convertible into a corresponding amount of
gold. Then Tricky Nixon came along in 1971 and canceled the right of the
bearer to swap the notes for gold. Overnight, the link between the
currency and anything tangible was lost.
That, of course, opened the door to all subsequent politicians to
engage in the whole print, print, print thing. The keystone asset of
the former system – gold – soon became a distant memory for the new
crop of central bankers and, remarkably, to the bearers of the notes.
For any number of reasons, most of which related to the illusion of
increasing prosperity, people simply stopped paying attention to what
Uncle Scam was up to. Of course, that illusion was largely based on the
increase in nominal wealth: if one year you’re worth $100,000 and
three years later you are worth $150,000, the tendency is to feel
richer even if your actual purchasing power has gone up by far less or
even has declined due to a debasement of the currency.
Today’s dollar is worth just 18 cents in 1971 terms.
But all scams must, in time, come to an end. And that’s what’s going on
now. It ends here. Before this is over, the current iteration of the
U.S. dollar – the vaporous construct with no actual value – will lose
its value as money.
Which brings me to an important nuance in this discussion.
Most failed fiat money experiments involve a single currency. The most
convenient recent example is provided by Mugabe’s Zimbabwe. Rather than
actually supporting the creation of marketable goods and services in
what he sees as his private fiefdom, he took the low road of
energetically abusing his fiat currency to the vanishing point.
In a situation such as that, the local citizenry suffers – as well as
anyone foolish enough to be holding bonds denominated in the debased
currency. But that’s about it.
In the current scenario, the keystone of the entire global monetary
system is the U.S. dollar. Which means that the primary reserve
holdings of virtually all the world’s significant central banks are at
risk of going up in smoke.
And it’s even worse than that, because the dollar is also the number
one trade currency – which means corporations around the world are
sitting on huge holdings or are dependent on commercial contracts
denominated in dollars.
And even that’s not the end of it. Because Uncle Scam has long served
as a role model to other world leaders, those leaders have
enthusiastically followed suit and universally launched fiat monetary
systems of their own. It’s bad enough that the world’s reserve currency
is a fiction – but the situation becomes really dire when you accept
as fact that all the world’s currencies are a fiction.
Man, we’re in a lot of trouble.
If you have so far resisted our constant urgings to make gold – which
is to say, real money – a core portfolio holding, it’s not too late.
Just start buying on the inevitable dips. I can assure you that as the
fiat monetary structures continue to crumble – and they will – more and
more people will be turning to gold. The latest World Gold Council
data is just a straw in the wind.
In fact, thanks to the convenience of the gold ETFs (which you should
make an effort to understand before blindly investing in them – there
are important differences between them), once the show really gets
underway, the relative trickle of investment funds moving into gold
today will quickly become a torrent, completely outrunning available
gold supplies and sending prices much, much higher – and in a hurry.
While no one can say when the big spike in gold will occur, one can say
accurately that, given the systematic frailty, it could literally
happen on any given day. That’s what happens when scams are unveiled.
Remember Bernie Madoff? How many people do you think tried to give him
money the day after he was arrested, versus desperately scrambled to
get their money out of his sticky web? The answers are “No one” and
“Everyone” – that’s what happens when people lose faith in a currency.
Of course, gold bullion, and gold bullion proxies, aren’t the
only asset classes that will do well in the coming currency collapse.
The chart below shows what looks to be a trend change in the gold
stocks. In previous recent stock market corrections, people thought of
gold stocks more in terms of being stocks and overlooked their direct
connection to gold. That appears to be changing, with a divergence
between gold stocks and the broader markets. The leverage in gold
stocks to gold bullion could make them especially attractive.
Regardless of what you do, do something – because to stumble on as
if this crisis will end with a whimper would be a dire mistake.
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It just gets better and better...
http://www.reuters.com/article/idUSTRE67Q5BW20100827
Now, on to Uncle Scam. A lot of this is common knowledge, simply re-stated. Below, however, is my favorite paragraph:
"For any number of reasons, most of which related to the illusion of increasing prosperity, people simply stopped paying attention to what Uncle Scam was up to. Of course, that illusion was largely based on the increase in nominal wealth: if one year you’re worth $100,000 and three years later you are worth $150,000, the tendency is to feel richer even if your actual purchasing power has gone up by far less or even has declined due to a debasement of the currency."
This is the most insidious part of our government's plan to enslave us. Under the illusion of wealth, the government has confiscated our wealth. Under the illusion of helping the few through redistribution, they have destroyed the lives of many.
An owner of Fox news is funding this project. Ironic? I think not. This whole tale is not only creating a distraction to real issues, but it is dividing people with the tried and "true" Hegelian dialectic.
Hi, Jimi. I hope you are doing well.
Gold is still "in the box" we've discussed. Massive efforts to contain it below 1245 and then 1265 but the time is drawing near for its breakout. Keep the faith!
I have next months trading range at $1207 to $1299...maybe it breaks $1300 heading into October, we'll see. As you can tell, the spread is wider than the previous month and that is because I think volatility will persist as it is the driver of the shakedown. Coming into the winter months though, gold is going through the roof; no hedge books to sell off this December.
Oh no no it is very important for Tea Party members to be reminded about freedom of religion. For them.
WTF?
Halvord, you should go to a Tea Party rally and pay attention. Right now you just embarrass yourself with your ignorance.
What the fuck do you know of German Idealism. Back in cave fool.
Tyler,
ZH is losing its USP - the quality of comment backing up the quality of the original post. Please start deleting the accounts of people that add nothing to the place. And do it without warning.
Would you rather have 1 Cheeky or 5000 Turds?
If you want, start with me. I'll still read - and certainly be better informed.
EG
Ouch, I resemble that remark and I, too, miss Cheeky.
And no, I didn't junk you.
I junked him.
Tyler doesn't need anyone telling Tyler what to do, especially about how to fix the place.
Me too.
I tire of tyrants and their supporters who demand protection.
Me three.
Douche.
+ 165 Dow points, closing at the high of the day.
What, you want a cookie?
I hope you have cookies enabled.
http://www.collegehumor.com/video:1886349
http://www.youtube.com/watch?v=VLnWf1sQkjY
Johnny, Johnny, Johnny, YOU'RE BACK!!! There is joy at ZH. By the way, I have a piece of a gold filling for you so you can start your hoard. You know, this like getting a call from the Fort Sill animal shelter saying they have your lost dog.
Can you please show me the chart of Zero Hedge's USP? As for commentators who come and go, seeking a deeply intellectual discourse, they are the first to know (or should), that a proper debate is not generated de novo (or on a platter if you will), but by example.
is this one of those late to the party and miss the unruly commenter as he has been junked to the curb??
OK, but I don't have access to the raw data and so you'll have to do the running. Plot average junks per comment for the past three months. Then run a series of Google queries for references to Zero Hedge on target websites (I am of course assuming you find external positive references to Zero Hedge appealing). Plot by date and then work out whether there was any truth in what I said.
I agree with your proper debate comments. It takes effort. In general I have tried to make my comments constructive and well thought out. I admit though I have certainly posted some wine fuelled rubbish.
You have a rapidly changing demographic on your hands (a pictoral representation shouldn't be required to prove that). That said, it may well be desireable for you to replace knowledgeable traders for survivalists and conspiracy theorists. I am not to know.
As your website gets bigger and you get more 'contributors' it will take more management than your reply suggests you expect. If you continue growing and your infamy spreads you are going to have to start moderation in some form and that takes time, effort an money. My suggestion wouldn't, although it would bring its own issues. This isn't a philosophical comment or one that is designed to effect a desired outcome. It merely reflects the reality of running a successful website.
You can label other fellow debaters as 'contributors', conspiracy theorists, or whatever. But what mattes in the end, is, are the posts correct in substance.
The need for so-called proper debate comments is nothing more than a form vs substance argument. One can type gold bitchez and be totally right. More delicately expressed, simple expression of complex timeless ideas are highly appealing. What is the point of being proper if you are right anyway, as Hugh Hendry (the best macro fund manager of the year 2010) once said, we are all suckers for respectability.
Most likely the ZH crew is aware of the dynamite contained in the ideas on the site. Technically in terms of search volume Zero hedge is on a consistent upward trend since Q3 2009 and on track to reach yet another all-time high in Google Search Volume Index.
http://www.google.com/trends?q=%22zero+hedge%22&ctab=0&geo=all&date=all&...
In the process, a lot of emotions will be stirred up in debate. Yes, topics such as HFT, interest rates and M1, M2 and M3 lend themselves well to technical analysis and this is always a good thing, but it is far too important to be left to traders only and there is no denying the fact that much of what is happening has bigger implication for society as a whole and that the financial world is highly intertwined with the real world.
Firstly, for the amount of amazing free knowledge I've received from ZH, far be it for me to say anything even remotely critical. I love all that ZH is, and have since its blogspot days. For me it's been a lot like Wikipedia: I'm a consumer, not a producer, of that information.
Having said all of that, one thing I have noticed in the past 12-18 months that finding the "gold" in the comments is much more difficult, and that much more comment "ore" must first be mined to find. Now, I don't mind doing that when I have the time, but often times the volume is such that it's simply not possible. Again, this is a fantastic fucking problem for ZH to have, because it's the truest sign that its popularity has reached a broader reader. On that note, I estimate that I've sent hundreds of emails to friends and family linking stories, so its not surprising. In other words, I want my cut of your ad revenue. Just paypal it to my email account.
On a more serious note, I think there need not be paid moderators of the comments. Instead, I think a reddit-style comment karma, upvote/downvote mechanism would be more effective at capturing the talents of the hive mind than the current junking tool. Add in some type of "super-user"/quasi-moderator function on a volunteer basis, and you're well on your way to sorting the wheat from the chaff.
That's just my two cents, and regardless of what you do, keep the thought-provoking information headed my way, and thanks again.
What's your problem? Constipated?
Flatulence is the expulsion through the rectum of a mixture of gases that are byproducts of the digestion process of mammals and other animals. The mixture of gases is known as flatus, (informally) fart, or simply gas, and is expelled from the rectum in a process colloquially referred to as "passing gas", "breaking wind" or "farting". Flatus is brought to the rectum by the sameperistaltic process which causes feces to descend from the large intestine. The noisescommonly associated with flatulence are caused by the vibration of the anal sphincter, and occasionally by the closed buttocks.
Said noises can also me mimicked by the online gibberings of one JohnnyBravo, with the substance of those gibberings easily mistaken for the expelled fecal material of certain domesticated bovines.
ethics, you have WANTS, what are you here to give? Start with yourself indeed.
Re: Off Topic NYC Mosque comment
Public financing is always a drag, but in this case I assume that the tax breaks are local in nature and not Federal so it doesn't really effect me.
But check this out folks:
Oh, those tolerant Muslims. How they do love diversity!
http://en.wikipedia.org/wiki/Muslim_majority_countries
15 countries are at least 97% Muslim. Turkey is 99.8% Muslim. Saudi Arabia is 100% Muslim.
Where the US is fighting: Afghanistan: 99%. Pakistan 97%. Iraq 97%. And of course we are surrounding Iran: 98%.
Oh, yes, everyone should believe them when Islamic leaders and spokesmen talk about how much they respect other religions. Watch what they do, not what they say.
Exactly. Useful fools like Crockett see Lebanon as some jewish sanctuary when in reality the only respect Hizballah has for Jews is as history. Try to find the population of jews in lebanon; it's so small as to be not recorded, but probably 'a few hundred', down from thousands in the past. The propaganda temple is a museum, not meant for use.
http://lexicorient.com/e.o/lebanon.religions.htm
Please cite references regarding my alleged "jewish sanctuary" comment.
If you read the quote I presented you'll see that it specifically states that there are only a few hundred Jews in Lebanon. That was one of the main points in the article -- that even Hezbollah can better express tolerance for religious minorities than can those who decry the NYC Muslim center.
It would really be nice if once -- just once -- you could reply to the actual substance of a post rather than rabidly posit some strawman argument instead.
To me this reads like the government built it for them since 500 souls are unlikely to spend the money to build such an edifice in hostile territory; and this pretty much implies an ulterior motive on the part of said government, given the history.
I believe that Muslims did help fund the synagogue. And you see this as a bad thing? If you think some Muslims are bad when they attack Jews and you think some other Muslims are bad when they support Jews, just what must a Muslim do to get off your shit list?
I did not say it was a bad thing, I said it bears the markings of an agenda. No less than acts of the the republicans, the democrats or goldman shitz. I have become intolerably sensitive to such hidden agendas as I find, increasingly, that they are scarcely hidden and almost always contrary to my best interests. Not that this is always the case, but the odds are listing heavily to port.
Well, you're definitely on to something there. But I prefer to see such agendas play out in such a way that civil and property right are respected. The Hezbollah/Beirut synagogue story leaves a much better taste in my mouth than the Gingrich/ NYC Islamic center story does.
Amen!! Milestones
Those numbers mean nothing when it's illegal or a death sentence in most of those countries to NOT be Muslim.
Do you believe that American citizens who profess the Muslim faith should be penalized for what you see as failings by some other Muslims in a different country on another continent halfway around the world?
Not quite sure what you mean but I think it is disrespectful to put a mosque so close to ground zero, which was a blatantly religious attack.
Weren't they:
1. Angered by the presence of 10,000+ US troops on Saudi soil?
2. Against the treatment of Palestinians by Israel?
(Next up, WMD in Iraq)
But most American Muslims, and specifically the Imam who is running the NYC Islamic center project, believe that terrorism is opposed to the principles of Islam. Why should American citizens who believe that God does not ask believers to commit terrorist acts suffer for terrorist acts committed by others?
Should all Christian churches be removed from America because Christian missionaries accompanied the Conquistadors? If not, why not?
Watch what they do, not what they say.
Did you read the article excerpt which I provide? It relates precisely what the Lebanese have done as well as what they said. A synagogue is being built in Beirut, a city which has been bombed into rumble on multiple occasions by the Israelis. Neither the population at large nor the Hezbollah leadership have attempted to stop the project. Did you somehow miss that? They have expressed tolerance of the Jewish minority.
Does your negative attitude about this story mean that you believe that this synagogue should not be built?
Islam has a whole vocabulary to specify all the different ways to deceive the infidels. They love to nourish useful idiots among non believers. Meanwhile Hezbollah is dedicated to the destruction of Israel. Get it? See Micheal Totten's recent post about the Soviet style totalitarianism of southern Lebanon.
And the Talmud is a comic book right? Give it rest! Milestones
Part of the reason the recently enslaved feel better and better about themselves is bracket creep. Oh, wow, I'm in the highest bracket, that must mean I'm really making it! Not. You've just been conned into giving up wholesale percentages more of your pay to Uncle Sam.
"SUSPICION TOWARD A CURRENCY, ONCE AWAKENED, BECOMES INSOMNIA." - James Dines.
I'm so into this I named my FF team "Gold Bitchez!"
CEF...all-time closing high today
Cool...PHYS is obviously on a tear as well. Exter's pyramid is collapsing:
http://4.bp.blogspot.com/_cvdgPlEKW9k/Swhu9b60zoI/AAAAAAAAA5w/Wf5OLd-66K...
http://fofoa.blogspot.com/2009/11/gold-is-wealth.html
See, here's the thing.
"The dollar is only worth 18% in 1971 terms"
Yet, people get substantially more dollars than they did in 1971 to perform the same jobs.
What was the minimum wage in 1971? $1.60.
That would equal about $8.00 an hour today, if the dollar was only worth 18%.
The minimum wage is only slightly less than $8.00 today.
You can act like dollars are worth less, and they are, but we get many more of them than we used to as well. Sure there isn't parity with the decline in the value and the amount of dollars we get, and people do get bit a little bit on inflation.
But it isn't like somebody lost 82% of their standard of living or something...
So the first world has a lot to lose, living standard and what not. You are wrapping cow dung in Xmas paper and stamping it with a bow.
Johnny is a little "premature" in his analysis.
http://www.youtube.com/watch?v=VLnWf1sQkjY
JB,
Agreed with your comments as all too often people like to quote how the USD has lost purchasing power in relation to real goods. This is correct but only half the story as earning powers have increased substantially over the past 50 years. The real question may be more appropriately based in how long does it take an individual to earn enough to purchase one loaf of bread, one gallon of gas, etc? A much more detailed/complete analysis of this issue needs to be completed to have a clear understanding of how much value the USD has really lost taking into consideration fully burdened wages, productivity improvements, etc.
Don't get me wrong in that I'm not a big fan of gold, silver, and commoditites of value. Been in since 2000 and have no interest in leaving. However, I've reviewed too many of these simple references to the USD losing purchasing power over the past X years which are not telling the entire story. And BTW, isn't the real issue confronting investors not so much based in the past but rather the future? We're dealing with economic problems today that for the most part, have never been dealth with before. So while history may provide some valuable data/reference points, the real challenge is watching this massive re-balancing of global economic interests unfold and how to be early and quick enough to prosper.
This is an extremely difficult subject to study. The technological advances in the past 30 years have made it almost impossible to do an apple for apple cost analysis, even regarding housing, transportation, and other seemingly easy equivalencies. Even food is disarmingly difficult; we have very different distribution systems now, and different streams of food (organic, local, additive-laden, etc.)
On a rough basis, it's relatively easy to do a comparison. When I was a senior in high school, the roach coach that came to our school charged $1.15 for a shrimp salad sandwich on white bread (nobody ever offered whole wheat back then--1970), and a normal sized yogurt (8 oz.) was 35 cents. If you can find a similar sandwich offering today, it will surely be over $9.00, and the yogurt, half the size, will be $2.00. And that is without sitting down anywhere!
You just touched on another pertinent topic; size deflation. That 'normal sized' (fill in the blank) is no longer normal sized. Blatant inflation clumsily disguised so the average kid raised on Bill Clinton will not notice.
.
OK, lets make a deal, JB. Next time you think the market is going to go DOWN, say when that is. For equities, I mean, lets leave gold out of this. I'll listen. What pisses people off is the 'I told you so' for bull moves only.
I'm not an intraday punter. What I will say is, I am currently long selected equities, commodities, cash and protection. No bonds. And I am sure as I can be that I will either sell those specific equities in the near future, or buy more downside protection.
If you don't have a view based on more than intraday TA, then so be it. Would be interested to see if you understand the bigger picture though.
JB, you overlook the fact that the increase in the number of fictional fiat dollars that we receive in payment for our labors always lags the increased number that are required to buy the necessities of life, or to maintain a stable standard of living. My father as a public school teacher could comfortably afford to maintain a family of five of us on his sole income, while giving us 2 1/2 months of travel each summer across North America for ten years in a row during the 1970s (in a trailer, sure, but still). I dare you to find me ONE such person or family for whom that could be said today.
More insidiously, inflation has ravaged the savings and pension incomes of the average person, and perverted the very nature of investment and the structure of our markets. Attempting to earn a positive net-inflation return on investment has become more and more difficult over the decades, and involved more and more elaborate risk-taking and "financial management" to acheive what was simplicity itself in 1900, a 3-4% annual real rate of return on savings. This has in turn fostered and fed the blinkered, short-term thinking and diminishing attention spans and inability or unwillingness to focus on the future that increasingly prevails in modern society, along with the attendant general irresponsibility and other innumerable social ills.
So-called "inflation", which should really be labeled "fiat currency depreciation", represents nothing but the siphoning of wealth from the productive and the savers to the government and financial elites. It is wholesale thievery on the grandest of scales, diabolically sold to the ignorant masses as a "social necessity" if not an outright economic positive. It is evil, pure and simple, which even Alan Greedspasm acknowledged in his early days as "the shabby secret of statists of all persuasions", in a rare display (for him) of honesty and clarity before his unfortunate tumble into the pro-statist, pro-fiat intellectual and moral abyss.
What akak said.
Exactly right, akak. And furthemore, it was not government or central banks that brought forth whatever prosperity has come to us all, but in spite of government and central banks. One can only wonder how much better things would be if people had been left alone and not been forced into participating in various wars (poverty, drugs, foreign, etc.) and into taking on excessive risk just to keep afloat.
But it isn't like somebody lost 82% of their standard of living or something...
Folks loose the value of their savings due to monetary inflation -- like little old widows who saved for their golden years and never had the knowledge (or stupidity) to invest in speculative markets which might keep their purchasing power even but which also might crash and burn.
Those folks lost 82% of their blood, sweat and tears.
Until you look at the cost of housing as a percentage of income over time...
You are completely failing to account for (at least, off the top of my head) two things:
1. Wages always lag inflation. If you think those extra dollars are created and then immediately distributed evenly to everyone's pocket overnight by the Inflation Fairy (excluding bonuses for Wall Street bankers, of course, which pretty much work that way), then I'm at a loss.
2. Retired persons living on fixed income from their savings get the shaft. Do you really need someone to explain this to you?
I'm sure there's more, but I feel I've already wasted 60 seconds of my life and shall waste no more.
In short, you say wages have increased in tandem with inflation. You are wrong, period.
In 1957 the minimum wage was .90 an hour.
" " a pack of cigarettes was .19
(One could get roughly 5 packs of cigarettes for an hours work)
In 2010 the minimum wage is $7.25 an hour.
" " a pack of cigarettes is $8.00
So, there is one item that currently costs more than five times as much in real earnings. The numbers for gas are almost exactly the same. In any comparisons the amount of tax, hidden and otherwise has to be taken into account also.
it gets funnier and funnier...
http://truthingold.blogspot.com/
breezer: That is an amazing find. Thanks for posting.
Jeff Nielson is a good dude. His own site is bullionbullscanada.com. Worth adding to you favorites list.
jeff does a lot of detail work and the site is a good resource for PMs and the can juniors.
I figure I'll die of oxygen debt from uncontrollable laughter before septermber ends.
And the Vietnamese, who have seen currencies come and go (i.e., fail), seem to manage to monetarily grasp what the average American cannot.
Demand for Gold Stiffens as the Fiat Dong Droops:
http://www.bloomberg.com/news/2010-08-27/gold-demand-to-soar-in-vietnam-...
Gold say, "Love you long time."
lol-"I love you no shit, GI."
haha, you said "dong droops"
Nice article Breezer1, Thanks for the link.
breezer1: Gold star for listing that. Smoking gun...the insiders know better.
I would assume the same for SLV.
Change the SLV to SLW and you got something.
THAAat sure makes me want to go out and buy some GLD.
this Galland guy... i like what he's got to say.
what a nice day for the miners
I'd love to know if those floated rumors about a Gold raid on the LMBA last month are accurate.
Harvey Organ has been deducting that from his data and experience. Check lemetropolecafe, that is GATA's home turf and gold bug central, get the trial membership for free.
Good article.
I have two quibbles. First, it isn't a "scam" in the sense of Madoff. All the information on the antics of the gov't/Fed are publicly available. It will blow up one day, but that isn't as close as one might think.
Second, I wouldn't invest in real estate, or antiques (or lots of other tangible things). In addition to the reasons enumerated by Aristotle, there are others. In times of crisis, markets can go "no bid" (gold, of course, will go "no offer" instead, yet one more way in which gold is different). People will not be thinking about nostalgia, but how to get food and energy. They will liquidate antiques, artwork, cars, houses, boats, planes, swiss watches, etc. to get money with which to buy food and oil.
This is actually even more bullish for gold and silver, which of course *are* money with which people can buy things, or save for the future.
it isn't a "scam" in the sense of Madoff. All the information on the antics of the gov't/Fed are publicly available.
Not so. We can't get an audit of the Fed or Fort Knox. And that's just the tip of the iceberg looming off the bow of the ship of state, Titanic.
There once was an Uncle named Sam,
Who always was running a scam.
He promised folks freedom,
But when he didn't need 'em,
He lined them up, bam-bam-bam-bam!
Bearster,
As for your first quibble, I would agree that the information is public with the only issue being to people really want to access, understand, and accept the facts. Most don't and continue to live under the belief that even though problems exsist, eventually it will get better, return to some form of prosperity as after all, the US is the largest and most powerful economy in the world. For me the real issue is that in ten years, the same result will be present. The USD will buy substantially less value, the US will have to move from a consumer nation to producer, and our standard of living will decrease. The only question is will it be an "orderly" liquidation or "forced" liquidation (your blow up day).
As for purchasing tangible items, I've actually been in the market for various items during the past two years including international art, entertainment and sports memorobilia, and other select mobile assets (with global appeal). Agree on the real estate as I have no real interest. But with absolutely rock bottom prices available (e.g., at BK auctions) and the willingness to carve out a small portion of my portfolio for these types of items (which are usually one of a kind) for a long-term buy and hold strategy, I view this current environment as once in a life-time for certain items. When the opportunity is present, I'm definitely applying the logic of "buying when there's blood in the street". And worse case, I really enjoy the pieces I'm buying so if all hell does break loose, well at least I'll have some great art to look at and fine wine to drink to help pass the time.
No substitute for gold and silver which I continue to accumulate but just a slight diversification strategy, that's all.
!ZEHCTIG DLOG
I have a question. What if the FED suddenly said fuck this and just raises rate to like 20-30%? Wouldn't that strengthen our dollars and savings?
Rising interest rates would shore up the dollar but if the Fed raises rates even a couple of percent then the US government will not be able to service the debt. The US is trillions of dollars in debt and pays interest on that debt. An increase in interest rates would make those interest payments larger and would sink the government deeper and likely capsize it.
That's the conundrum Bernanke faces. Damned if he does, damned if he doesn't.
Yeah, it’s “dammed if we do and dammed if we don’t” as far as interest rates go.
I’d like to offer one reason why the PTB can’t raise rates and keep them up for long. Stop thinking in terms of currency and think in terms of physical goods. For an example consider wheat. The PTB can’t (indefinitely) give a lender 120 bushels of wheat a year from now for 100 bushels of wheat today. The American economy simply doesn’t have the ability to increase physical production (or export!) of wheat by 20 percent per year for very long. The PTB would have to throw some large parts of our population under the bus via starvation and at some point they would no longer be willing to go quietly. As Mr. Bravo and many others point out the PTB can’t default on their IOUs because they can create as many FRNs as they please. This is true enough if you only look at the math but it terms of physical goods this sort of thinking reduces the economy to a game of musical chairs where somebody is bound to lose. If the PTB keep rates at basically zero for a long time the Chinese wind up without the chair and if the PTB raise rates and keep them up American consumers wind up without a chair.
So why couldn't George Soros make his retirement trade by forcing long bond yields to 12%? Its not like he would have to do anything more than scare the piss out of Bertwinkie and the remainder would fall into place r.e. Lira's piece Thursday.
I understand the govt would be forced into default, but it would curb it's spending and growth, as far as the banks are concerned so what if they blow up? They would be liquidated and bought by healthier firms. Further a rise in rates would encourage savings and discourage consumption.
Finally at the end of the day we know this gonna happen whether through the Fed or the refusal to buy t-bills.
they would immediately blow up every bank in the world and the whole fiatsco system through the wonderful invention of derivatives, there's shitloads of interest rate swaps out there.
interest rates are an auction. Ben would have to slurp in a whole bunch of M3 (open market operations, selling bonds)
Ring up "all stop."
Tell the engine room "done with engines."
Off to Martha's Vineyard, cuz it would all come down.
Nope, he's not going there.
- Ned
IF Q4 of 2009 GDP was 5%, and Q1 of 2010 was 3.2% and Q2 of 2010 was 1.6% as reported....
doesn't that mean we are back in "recession"? The Definition of recession is 2 consecutive quarters of the GDP going backwards.
The traditional definition is three consecutive quarters of negative GDP growth.
Nope. It is 2 consecutive quarters from the BEA website that does this stuff:
"In general usage, the word recession connotes a marked slippage in economic activity. While gross domestic product (GDP) is the broadest measure of economic activity, the often-cited identification of a recession with two consecutive quarters of negative GDP growth is not an official designation. The designation of a recession is the province of a committee of experts at the National Bureau of Economic Research (NBER), a private non-profit research organization that focuses on understanding the U.S. economy. The NBER recession is a monthly concept that takes account of a number of monthly indicators—such as employment, personal income, and industrial production—as well as quarterly GDP growth. Therefore, while negative GDP growth and recessions closely track each other, the consideration by the NBER of the monthly indicators, especially employment, means that the identification of a recession with two consecutive quarters of negative GDP growth does not always hold. For information on recession, or business-cycle, dating, see: http://www.nber.org/cycles/jan08bcdc_memo.html."
http://faq.bea.gov/cgi-bin/bea.cfg/php/enduser/std_adp.php?p_faqid=485&p...
john williams definition of recession and depression well explained...
http://www.shadowstats.com/article/depression-special-report
Funny how economic strength is defined by how closely it follows the path of a Ponzi scheme.
No monetary system... whether fiat or commodity-based can ever adequately do the job its expected to do.
That's not to say currencies aren't necessary... or that there's anything faulty about the conclusions of this post...
It's just that when looking for solutions its important to realize the true root of a society's success or failure...
A civilization is (quite literally) the product of a vast interplay of individual and collective decisions operating within the bounds of natural law and the environment.
When you think about it... you'll realize it's nothing else.
Decision Technologies: Currencies and the Social Contract
http://culturalengineer.blogspot.com/2010/07/decision-technologies-curre...
Side Note: Kim with the TS/SCI. Burn bitchez' burn.
The world is tip toeing toward the edge of the precipice each and every day. And even though many know it, many more can just sense the malaise, the anxiety. Current events and discussions about world affairs are increasingly painted with dramatic colors. The political discourse has suddenly become more strident, more urgent and more confrontational. There's the growing sense that's "somethings gotta give".
Every week in the news there's increasing evidence of loss of faith in the US dollar. This week alone we've discovered that several large European banks are laying the foundation for settling transactions in Renminbi. Citi and BofA are testing the waters. We already know that China's major trading partners have for over a year. Central banks have been hoarding gold as have wealthy people all over the world. In the middle east, that other outpost of mountains of dollars, gold hoarding turned comical when the Gold ATM was unveiled. After a year of decline, India's gold imports are reaching records again.
There's writing on the wall. The Fed is trying it's best to ignore it, pretend it's not there. The markets are responding to the growing malaise by alternately going through depressive multi-day sell-offs followed by manic "phoenix from the ashes" rallies. Not the picture of health.
And that's why it can all turn in a day. People are already aware and on alert. Fewer and fewer have faith or patience that real estate is going to turn. Stock trading volumes are vaporizing. Even treasury holders have a high index of suspicion. So the scene is set for a stampede. The tinder is dry, all it needs is a spark.
Well said. Ninety five percent of the paper I have is mining shares and I'm still nervous. Although miners have increasingly cut loose from the rest of the market since the May Flash, an elevator drop to the parking garage could take miners down as well. That is, unless a very strong break out happens in gold and silver. Options expiration Thurs. and Fri., the bullion banks are said to have thrown well over a hundred million $ in shorts at the PMs--and failed. Gold hardly budged and silver closed above $19. That is the most bullish thing I've seen yet. One of these days the only PM for sale is that coming straight from new ore, and the Chinese are going after a bigger share of that already.
I missed a couple of days and don't know if this has already been brought up, and imho this is Very Important....understand what is being said here, and consider its the approved version:
http://www.ft.com/cms/s/0/182a2b70-b130-11df-b899-00144feabdc0.html
Banks back switch to renminbi for trade==============================================
i put the above together with this from about 2 weeks prior
http://www.ft.com/cms/s/0/81500cea-a9fc-11df-8eb1-00144feabdc0.html
Beijing looks to broaden renminbi useI have a serious question. I'm small fish who beleives in gold. Now, whether it is stupid or not, if I decide to sell one of them kroogies, mapies or eags to a coin shop, what will the process be come 2011, with the tax reporting requirement of $600 etc? enlighten me as my knowledge is limited here. thanks.
there will be a thriving black market for gold and silver by then.
Theres a thriving cash market for PM's right now.
You pay your taxes and have some money left over. You buy an ounce of gold to protect your savings. The state debases the currency. You sell the ounce of gold for double what you paid. Well thats capital gains so you pay more tax. Rinse and Repeat and eventually you have nothing. Vassall of the State.
I'm sorry, I am selling the oz I bought yesterday, not the oz I bought three years ago (the one form three years ago is more valuable!), or is it the one Uncle Ernie left to me? What is the rule on cap gains on a physical object with variable appreciation? Do you even know?
That Obamacare 1099 requirement is something different. Business to business expense, mainly. And yeah - it's putrid. Anything that requires a hiring glut at the IRS (plus a Request for Quote on a bunch of new 14" shotguns for them) is going in the wrong direction.
When I lived in Vancouver the federal Goods and Services Tax was 7%. The BC sales tax was 7%. Unemployment was 10%. When they added your bill at Midas Muffler they would ask, "Do you want the price with an invoice or the price with no paperwork?" They threw in an extra discount if you went the tax free route.
Asian Fiat Facts:
1949 after war: 40000 old taiwan dollar=1 new taiwan dollar.
1945: 15 korean won=1 US$, 1951: 6000 won=1 US$.
1945: Japanese Yen lost most of its value.
1980: 5 cents Chinese Yuan bought a good breakfast, now 5 cents buy you a piece of bath tissue at entry of public restroom to wipe your ass.
2010: Any American is billion in term of Viet Dong.
"And, thanks to its portability, divisibility, durability, and consistency, it has also always been looked upon as a convenient form of money."
In addition it is tarnish-proof and dense. The latter quality means: 1) that banks need only a reasonable sized vault to store it in, and 2) that detecting a counterfeit is easy, since all will be less dense than gold.
Gold a flitting beauty,available one minute,gone the next and when you really need her she,ll be gone just like her lovely sister Silver.Buy while you can because you can.
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