This page has been archived and commenting is disabled.

How To Gold Bear Vadim "Chart Of The Day" Zlotnikov, The Undilutable Precious Metal Is Merely Another "Fiat Currency"

Tyler Durden's picture





 

A few minutes ago we ridiculed Bloomberg's use of Vadim Zlotnikov's opinion on gold as the basis for the otherwise reputable firm's chart of the day. Below, we present a statement from the actual research report that indicates that the man does not have the first idea of what gold is all about. To wit, and we quote: "Gold, which is effectively just another fiat currency, has recently benefited from its perceived ability to hedge against a variety of potential economic outcomes that are currently foremost in investor's minds: inflation, sources of economic growth, downward spiral in fiat currencies, etc." While there is no point to even discuss any part of this report further, we ask: are such flagrant example of stupidity the best that the anti-gold crusade can come up with?

And while we will refrain from commenting further out of courtesy for the intellectually challenged, below we present Mike Krieger's observations on the presented report by Bernstein:

He wrote. Gold, which is effectively just another fiat currency, has recently benefited from its perceived ability to hedge against a variety of potential economic outcomes that are currently foremost in investor's minds: inflation, sources of economic growth, downward spiral in fiat currencies, etc.
 
My two cents.
 
Clearly he failed to look up the definition of fiat currency.
 
Fiat money is money that has value only because of government regulation or law.
 
Definition of Fiat:  An authoritative or often arbitrary official order or decree.  THIS DOES NOT EXIST TO GOLD AS MONEY TODAY AT ALL.  In fact there are laws to prevent its use as money in many countries.

 
Anybody with any simple understanding of money or who had bothered to look up what fiat money is would know how ridiculous such a statement is.  Gold is not money under “fiat” in any country at the moment.  Rather the market is making gold as money today which is the OPPOSITE of fiat money.
 
It is one thing to be negative on gold.  I can have a great debate about anything and I can always be wrong just as anyone can.  It is entirely another to make shit up.

Pretty much says it all.

And for the funniest thing you will read all day, heeeeeere's Vadim:

 

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 01/04/2011 - 18:01 | Link to Comment Stoploss
Stoploss's picture

Yes.

Tue, 01/04/2011 - 18:34 | Link to Comment Pladizow
Pladizow's picture

Saying - "Gold takes the stairs up and the elevator down."

I dont think this holds true in this fed induced market party.

More like - "Gold takes the stairs up and the up escalator, down"

Tue, 01/04/2011 - 18:58 | Link to Comment midtowng
midtowng's picture

Did he say anything about eating gold?

Tue, 01/04/2011 - 19:21 | Link to Comment terryg999
terryg999's picture

Yeah, he say 'Try eaing your twenty and see what that gets you'

 

/actually, I said that.

Tue, 01/04/2011 - 19:23 | Link to Comment carbonmutant
carbonmutant's picture

Hey, fiber is good for you...

Wed, 01/05/2011 - 00:05 | Link to Comment Thomas
Thomas's picture

"A witty saying proves nothing"

Voltaire

*That one is rich in irony.

 

 

 

 

 

Wed, 01/05/2011 - 04:47 | Link to Comment Mentaliusanything
Mentaliusanything's picture

Yes - fear is a great leveller.

They defiantly and never are going to make any more.

so we have a a small problem.

paper, scissors, rock, gold.

they fear - you win.

Buy the fucking dip -brought to you by the dip sticks. 

Tue, 01/04/2011 - 18:15 | Link to Comment Sudden Debt
Sudden Debt's picture

When people lose faith in paper they turn to something more solid they can sell.

Gold, silver, copper, nickle, iron, cotton, wood, ... anything BUT paper.

and money isn't even white paper where you can write on.

They are printing masses, and they will keep doing so for years to come. At least till 2015 so what will be the outcome of that?

And because money keeps devaluating, they even need to print more JUST TO KEEP UP!

Tue, 01/04/2011 - 18:37 | Link to Comment Pladizow
Pladizow's picture

Suspision towards a currency, one awaken, develops insomnia.- James Dines.

Tue, 01/04/2011 - 18:42 | Link to Comment mikla
mikla's picture

When people lose faith in paper they turn to something more solid they can sell.

 

Gold, silver, copper, nickle, iron, cotton, wood, ... anything BUT paper.

Agreed.  And that's what's going on:  The "gold is fiat" assertion represents truly mind-numbing stupidity.

The only possible rationalization for that assertion is that the CRIMEX GLD shares are printed with no relationship whatsoever to the physical, so they themselves could possibly considered "fiat currency".   Allocated accounts are not respected, and all Central Bank reported holdings and transactions are *highly* suspect.  However, that's only due to definitions in today's market.  In yesterday's market the term used would have been "fraud", and people would go to jail.

Tue, 01/04/2011 - 19:16 | Link to Comment Don Birnam
Don Birnam's picture

Hear, hear. Agreed.

Tue, 01/04/2011 - 20:12 | Link to Comment Don Birnam
Don Birnam's picture

( Removed/duplicate posting )

Tue, 01/04/2011 - 18:44 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

I've just read the first paragraph of the PDF, and I stopped there.

This 'Milton Friedman' he quotes apparently didn't understand why metals were more practical to use than stones and cigarettes, and why currencies with intrinsic value were safer than currencies without intrinsic value. Counterfeiteing the first is hard to impossible, counterfeiting the second is child's play.

I guess the rest of the PDF, and the entire "work" of Milton Friedman is the same gibberish.

"perceived ability to hedge against a variety of potential economic outcomes that are currently foremost in investor's minds:"

Ahum. Why doesn't he say straight that he is a big bull with big horns?

Tue, 01/04/2011 - 18:07 | Link to Comment mynhair
mynhair's picture

My ability to laugh at stupidity was exhausted when the Squirrel was elected.

http://www.youtube.com/watch?v=KmQ_1sXZJxI

Tue, 01/04/2011 - 18:08 | Link to Comment Waterfallsparkles
Waterfallsparkles's picture

I happen to agree with him.  Gold only has value based on the value of Fiat Currency.

Other than pretty jewlery what use does gold have?

Tue, 01/04/2011 - 18:09 | Link to Comment mynhair
mynhair's picture

Looks good in booze.

Tue, 01/04/2011 - 18:40 | Link to Comment Pladizow
Pladizow's picture

Do some reading!

Tue, 01/04/2011 - 18:52 | Link to Comment downrodeo
downrodeo's picture

a-huh...

 

peek down the thread a bit. Hamy Wanger cracks this joke as well, although his delivery is better, imho...

Tue, 01/04/2011 - 20:03 | Link to Comment AmericaRacket
AmericaRacket's picture

I'll actually answer his question.

Gold isn't money because it has value.

Gold has value because it is money.

Gold is nature's perfect store of value.  Durable?  Lasts till the next supernova hits it.  Scarce?  It all fits in Madison Square Garden.  Divisble?  Does the phrase "Gold dust" mean anything?  Authentic?  Unless you have a supernova handy, faking it (in such a way that would fool anyone) costs more than the value of the fake.  Stable?  Gold has no other utility that cannot be substituted at lower cost, so there will be no supply gluts.

There is one substance on earth that is a perfect store of value.  There is thus one substance that can truly represent wealth in the cosmic balance sheet.  That is the value of gold.

 

Tue, 01/04/2011 - 23:24 | Link to Comment RockyRacoon
RockyRacoon's picture

Thanks.  That was interesting.   I've about burned out on the anti-gold crowd.  The chasm of misunderstanding has led me to just about ignore the gold-trolls.   It isn't my job any more to argue with them or try to reason with them.   They undoubtedly feel the same about the "gold bugs" but at least there is a couple thousand years of history backing up gold's story.

Wed, 01/05/2011 - 00:09 | Link to Comment trav7777
trav7777's picture

well I mst disagree...gold "is" not money.

There is no universal decree or edict from God that can make this so.  Gold can be used AS money, but it is not money in the absolute.

Gold, like ANYTHING else, has value only because people want it.  There need not be any objective utility...what use is a flawless diamond or a work of art?  You can't eat either of these, but people desire them.

What use is a beautiful women vis a vis an ugly one with a better attitude?  Yet, the former is considered far more desirable.

Anything can be used as money and anything can have value, irrespective of utility.  Gold's historical allure versus rarer metals such as rhodium or platinum or palladium is that due to relativistic effects, it is yellow.  It may rub bugz wrong to hear this, but that's it.  Gold is significantly less rare than a number of other metals I can name off the top of my head, but it has a combination of sufficient rarity plus that golden color.

The average cretin cannot distinguish Pd from Pt or even either of these from sterling silver, but they can immediately spot gold.  Iridium and Osmium are rarer and denser, but they look like every other metal

Wed, 01/05/2011 - 00:00 | Link to Comment trav7777
trav7777's picture

it gets pussy.  Fortunately there are billions of people, maybe primitive sure, but billions who like it a lot

Tue, 01/04/2011 - 18:13 | Link to Comment Cdad
Cdad's picture

While there is no point to even discuss any part of this report further, we ask: are such flagrant example of stupidity the best that the anti-gold crusade can come up with?

Yes.  It is probably the best they can do.  Keep in mind that these folk that you call the anti-gold crusaders are criminal syndicate Wall Street bankers, and those guys--including all of their layers of analysts and brokers and options junkies--are not the brightest bulbs on ye ole Christmas tree.

This is, of course, why I raised funds to purchase hockey helmets for NYSE traders and various bankers to wear so that they remain healthy and safe as they await their court summons on the day that the SEC finally figures out:

THAT CAPITAL CANNOT FORM IN BANKS AND WALL STREET FIRMS AS CORRUPT AS THESE!

Tue, 01/04/2011 - 18:10 | Link to Comment HamyWanger
HamyWanger's picture

Actually, Bloomberg is right.

As gold is not used to purchase tangible goods and services anywhere in the world, I'm sorry to inform gold bugs that it is a fiat currency -- a fiat currency based on nothing, except jewerelly and its shiny color. The US dollar, at least, is backed by the assets of America.

Tue, 01/04/2011 - 18:10 | Link to Comment mynhair
mynhair's picture

Poseur.

Tue, 01/04/2011 - 22:02 | Link to Comment Monkey Craig
Monkey Craig's picture

Harry Wanger is wrong and perhaps deceitful. The US dollar is not backed by the "assets of America." The US dollar is a liability of the Federal Reserve. Read the green piece of paper in your wallet. The first line of that contract says Federal Reserve Note.

 

So, instead of saying that assets like Google or US farmland give value to the US dollar, first turn off ABCBSNBCFOX, and then read ZH or Grant's. Then start looking up what's on the Fed's balance sheet. And, you will find that it is detritus from the mortgage meltdown.

Tue, 01/04/2011 - 18:22 | Link to Comment traderjoe
traderjoe's picture

Dumbest post of the New Year. You didn't even read the article. 

Definition: Fiat money is money that has value only because of government regulation or law.

That is a different question then whether gold has intrinsic value. 

And the Federal Reserve Note - issued by a private corporation - being backed by the "assets of America"? Really? What a dumb comment. Can you exchange dollars for assets? No? So, how is it backed? And how about the fact that the US has already defaulted on the currency at least twice in the 20th century?

Tue, 01/04/2011 - 22:10 | Link to Comment Monkey Craig
Monkey Craig's picture

well said. everyone on this site needs to recognize that Harry Wanger and  HamyWanger  are tools for the administration or  trolls. what they are is posting is blatantly false and misleading to those on ZH trying to learn.

Tue, 01/04/2011 - 22:12 | Link to Comment akak
akak's picture

I just noticed that the above poster, although he used HarryWanger's exact avatar, is in fact named "HamyWanger".  It's bad enough to have disingenuous pro-bankster trolls routinely shitting in this forum, but a real outrage to have IMPOSTER trolls now doing the same thing!

Tue, 01/04/2011 - 22:47 | Link to Comment StychoKiller
StychoKiller's picture

Don'tcha just hate it when a different zookeeper pokes you in the ribs with a sharp stick? :>D

Tue, 01/04/2011 - 22:58 | Link to Comment akak
akak's picture

I wouldn't call him a "zookeeper" --- more like just another habitually masturbating, poo-flinging monkey.

Wed, 01/05/2011 - 13:22 | Link to Comment Diogenes
Diogenes's picture

I thought they called it Fiat because it depreciates like a rusty Italian car?

Tue, 01/04/2011 - 18:23 | Link to Comment Richard Head
Richard Head's picture

Ok, I'll bite: "assets of America"?  Please expound on exactly what those are.

Tue, 01/04/2011 - 18:25 | Link to Comment mynhair
mynhair's picture

Moochelle's behind.

Tue, 01/04/2011 - 18:27 | Link to Comment HamyWanger
HamyWanger's picture

Factories, workers, innovation, wealth: you know, the real world out there, far from your doomers' cave.

Tue, 01/04/2011 - 18:44 | Link to Comment Pladizow
Pladizow's picture

DONT ENGAGE!

DONT ENGAGE!

DONT ENGAGE!

JUST JUNK!

JUST JUNK!

JUST JUNK!

Tue, 01/04/2011 - 19:11 | Link to Comment Clampit
Clampit's picture

See though, that's just the problem. It's the connection of this paper to those assets that's in jeopardy. This isn't just a dilution by printing phenomenon, it's the sovereign credibility premise that's being increasing shown irrelevant. I know why a jeweler needs gold; physics and mother nature won't let him make gold jewelry without it. Other humans are the only thing stopping me from crafting jewelry without your paper, and though you *can* side with humans over mother nature ...

Tue, 01/04/2011 - 20:57 | Link to Comment akak
akak's picture

Factories, workers, innovation, wealth

Oh, you mean all those things that are being offshored or outsourced to Asia?

 

Harry, oops, I mean James Kostorhyz, I hate you with every ounce of my being.

Wed, 01/05/2011 - 10:16 | Link to Comment Hephasteus
Hephasteus's picture

Oh ya we got innovation out the wazoo. We got ford gm and chrysler. McDonalds buger king and Wendy's. Wal-Mart, Wal-greens and Safeway. Army, Navy, Air Force. Windows, OS-X or Linux. Intel, AMD or VIA-nano. ATI, Nvidia, or Via (S3). John Deere, Caterpillar, or New Holland. All these things are monopolies with insignificant competetition to pretend they aren't monopolies.

Miller, Budweiser, or Coors.

You better stop me because I can do this shit ALL DAY.

Tue, 01/04/2011 - 18:31 | Link to Comment Gigliola Cinquetti
Gigliola Cinquetti's picture

That's a tough one . Lemme think : a huge manufacturing apparatus ? No ?

Tue, 01/04/2011 - 18:29 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

oh my holy gaucamole!

What are you talkin' 'bout Harry?

Tue, 01/04/2011 - 19:01 | Link to Comment Johrny Bravo
Johrny Bravo's picture

You Bitchez been hammied!

Tue, 01/04/2011 - 20:01 | Link to Comment Bill Lumbergh
Bill Lumbergh's picture

Johrny, you are back!

LOL

Tue, 01/04/2011 - 18:29 | Link to Comment downrodeo
downrodeo's picture

+1   tehehe--- nice

I always have to look at your name first instead of just your avatar. Good work man.

 

Next we'll hear that owning gold has been linked to prostate cancer....

Tue, 01/04/2011 - 18:30 | Link to Comment Selah
Selah's picture

As gold is not used to purchase tangible goods and services anywhere in the world, I'm sorry to inform gold bugs that it is a fiat currency

 

Let me get this straight: Gold is a fiat currency because it is not used to buy stuff?

And, how does one get this stupid in a single lifetime?

 

Tue, 01/04/2011 - 23:40 | Link to Comment RockyRacoon
RockyRacoon's picture

It's hereditary.

Tue, 01/04/2011 - 19:03 | Link to Comment Missiondweller
Missiondweller's picture

Assuming that wasn't a joke, let me educate you:

 

Gold For Bread - Zimbabwe

http://www.youtube.com/watch?v=7ubJp6rmUYM

Tue, 01/04/2011 - 19:06 | Link to Comment tmosley
tmosley's picture

Damn, Hamy got me again.

Tue, 01/04/2011 - 21:28 | Link to Comment Bill Lumbergh
Bill Lumbergh's picture

How many Harry posers do we have on this site now...I actually have to look beyond the flag and spell check the name.

Tue, 01/04/2011 - 21:57 | Link to Comment DocLogo
DocLogo's picture

Wasn't the "assets of America" supposed to be the gold it has in reserve or did you mean the asshats of America, which, in this case, would be you?

Wed, 01/05/2011 - 00:14 | Link to Comment trav7777
trav7777's picture

good troll, but in South Africa, you can pay in krugerrands

Tue, 01/04/2011 - 18:09 | Link to Comment traderjoe
traderjoe's picture

For amusement, I actually read/skimmed a lot of this. Why do they feel the need to bash gold (yea, I get the answer, but still...)?

Modeling the price of gold? Modeling the price of any asset class? Economists are soooo stoopid, thinking they are actually scientists that can use equations. 

And then comparing to farmland and timberland? Sure, would love to own both, but can't really put those in your pockets, now can you...

Tue, 01/04/2011 - 18:11 | Link to Comment mynhair
mynhair's picture

Ah, but farmland and timberland keep you in reach of the tax Nazis...oh, that was your point.  Never mind.

Tue, 01/04/2011 - 18:18 | Link to Comment NotApplicable
NotApplicable's picture

We need a new word to differentiate between math-based "economics" and those who recognize it as a social science.

Or perhaps I should say we need to use the word that Mises coined, praxeologist? It is so unknown (spell-check says "duh..."), that it can't be denigrated without first having to be defined.

 

Tue, 01/04/2011 - 18:13 | Link to Comment Oso
Oso's picture

ohhhh, its Bernstein - makes sense, their research is just awful.  we stopped trading with them simply because their uber-non-stop-forever-and-always bullishness to all things equity was mind-numbingly stupid and one-sided.

Tue, 01/04/2011 - 18:11 | Link to Comment NotApplicable
NotApplicable's picture

Speaking of the definition of fiat, over the weekend I was surprised to see its definition displayed on my wife's online Scrabble dictionary. As far as she new, it was just a car.

Perhaps that's what the report writer thought also?

At least my wife doesn't write research reports!  (and never encountered the word while becoming an RN)

Tue, 01/04/2011 - 18:26 | Link to Comment mynhair
mynhair's picture

Have her check the defintion of Yugo, ok?

Crap, meant Paygo.

Tue, 01/04/2011 - 18:12 | Link to Comment LoneStarHog
LoneStarHog's picture

we ask: "are such flagrant example of stupidity the best that the anti-gold crusade can come up with?"

a.k.a. Karl Denninger

I thought it very indicative that he was WRONG about precious metals in his forecast for 2010 and CONVENIENTLY left it off when reviewing his 2010 forecast and subsequent 2011 forecast.

The man HATES gold/silver...PERIOD!

Tue, 01/04/2011 - 18:27 | Link to Comment mynhair
mynhair's picture

Doucheinger is also a political neophyte.  Outside of traded stocks.....never mind, he's all wrong in a trading period.  According to that Obamavoter, S&P should be at 400.

Fugger doesn't really pay attention to anything, but his 'charts'.

If he did research, he never would have voted for the Squirrel.  All that was needed to know was out in the open, but he listened to TOTUS crap before TOTUS was TOTUS.

http://www.youtube.com/watch?v=du07ZUsnIcI&feature=channel

Tue, 01/04/2011 - 18:25 | Link to Comment Misean
Misean's picture

KD's a Benthamite utilitarian, and also an engineer.  As such he views government as a machine that can do good so long as the people twisting the nobs are held to "the law" and "the law" is rational and logical...like machine code.  It's a silly faith.  Lots of terribly clever people have succumbed to this view of the state...Walrus, Pareto, Smith...

Tue, 01/04/2011 - 22:53 | Link to Comment StychoKiller
StychoKiller's picture

"If at first you don't succeed, try again.  If you fail again, give up -- no need to make a damn fool of yourself!"  -- W.C. Fields

Why do those that think of gold as a "barbaric relic" persist in trying to convince others that know better?  Just who are the insane ones again?? :>D

Tue, 01/04/2011 - 18:15 | Link to Comment AUD
AUD's picture

Yes but currently it seems to be working.

Tue, 01/04/2011 - 18:18 | Link to Comment breezer1
breezer1's picture

And while we will refrain from commenting further out of courtesy for the intellectually challenged, are you fucking kidding me???

Tue, 01/04/2011 - 18:25 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

Fiat paper might be good for garden mulch... once you wash the filth off of it.

Tue, 01/04/2011 - 18:29 | Link to Comment mynhair
Tue, 01/04/2011 - 18:28 | Link to Comment Silverhog
Silverhog's picture

History of Money: Gold & Silver 5000+ years

History of  Fiat: Ahhh.... the total time in use?...Ahhh... 1000 years? NO, Ahhh... 500 years?, NO, 200 years?  your getting close.

Tue, 01/04/2011 - 18:27 | Link to Comment notadouche
notadouche's picture

Gold is wrong, I don't want to be right.  So I guess Soros and Paulson are the biggest idiots on the planet.  I wonder what the author's performance compares to these guys.  Of  course gold sucked and was over valued at 600 as well.  Whatever dude....Jealous much?

Tue, 01/04/2011 - 18:50 | Link to Comment Pladizow
Pladizow's picture

You do well at repeating what you have HERD elsewhere!

Tue, 01/04/2011 - 18:43 | Link to Comment topcallingtroll
topcallingtroll's picture

Bears make money. Bulls make money, but pigs get slaughtered. Precious metals are taking the elevator down. Be prudent and lock in your gains before you lose everything you worked so hard for. Dont say the troll didnt warn you.

Tue, 01/04/2011 - 18:49 | Link to Comment Pladizow
Pladizow's picture

You do well at repeating what you have HERD elsewhere!

Tue, 01/04/2011 - 19:07 | Link to Comment TradingTroll
TradingTroll's picture

Right, sell gold as its in a bubble for 10yrs and lock in gains to FRNs which are not in a bubble? You must look up what Nixon ddid in 1971. It has been a 40yr bubble for FRNs. That's why every month I 'lock in gains on my fiat'.

Tue, 01/04/2011 - 18:45 | Link to Comment jakethesnake76
jakethesnake76's picture

well i can see that Squid Face is a nice man and very smart so we should listen to all his gold and silver advice, oh wait a minute never mind.

Tue, 01/04/2011 - 18:53 | Link to Comment mogul rider
mogul rider's picture

Same old noise from a whole host of idiots who thought in August 2008 that the world was a beautiful place and Subprime was a nothing issue and Bernanke was a f'in genius.

I remind everyone here that maybe 5 of you and I actually had a fucking clue what was going on and knew something was wrong. We didn't know quite what it is was but it was fugly and we expressed those opinions.

I love the fact a bunch of dipshits are caught in the 400 dollar Apple trade stuck like shit with no where to go is what this is all about.

Thankfully you sold your gold postions today so thank you , I and a bunch of my buddies backed up the fuckin bus today as we do every fucking January.

I will tomorrow, the next and next.

In 2 months when you realize you were fucked over by CNBC dipshits and banksters you'll come back here whining what morons we are. 

Well listen up! You just got bent over today.

One more thing, you fuckheads don't even see the bomb going off this year. Fuckin cannon fodder.

 

I feel better now..................... Sorry Marla and Tyler for my abruptness but sometimes...

 

Well you know...........

Tue, 01/04/2011 - 19:41 | Link to Comment Temporalist
Temporalist's picture

That made my day.

Tue, 01/04/2011 - 18:49 | Link to Comment swissinv
swissinv's picture

fools!

Tue, 01/04/2011 - 18:59 | Link to Comment DavosSherman
DavosSherman's picture

Bloomberg reporters are a tool to have even written or quoted such an effing moron

Tue, 01/04/2011 - 19:08 | Link to Comment freedmon
freedmon's picture

Vladim's position is even sillier when you consider that his last name is all about gold! "Zlotnik" is Polish for goldsmith. I guess he's far from his roots.

Tue, 01/04/2011 - 21:07 | Link to Comment akak
akak's picture

"Zlotnikov" his name may be, but he is still a total dupajasz.

Wed, 01/05/2011 - 02:31 | Link to Comment Zerohedge fan
Zerohedge fan's picture

That's why Russian women cannot have sex with Russian men like Zlotnikov. He is not only DUPAJASZ (an asshole) but shill.

Tue, 01/04/2011 - 19:09 | Link to Comment DoctoRx
DoctoRx's picture

Here's a better explanation for gold's rise post-2008 crisis.  From a book published 2007 (pre-crisis) titled Gold:  The Once and Future Money by Nathan Lewis.  (Note the final sentence of the excerpt refers to the 1997-98 crisis involving Thailand, S. Korea etc. which fell victim to currency problems.)

Even the best governments . . . have oppressed their citizens with printing press financing throughout the centuries, but the practice became much rarer during the twentieth century. . . Using the printing press to pay the government's bills has been so thoroughly discredited that even the world's sorriest and most corrupt governments shrink from the notion.  (Devaluations today are justified by other means.)  The Asian governments never for a moment considered the option, nor did they need to since they were in fine financial health. 

Maybe the rise in gold post the 2008 bottom has something to do with monetizing the debt in an amazing fashion?

Tue, 01/04/2011 - 19:10 | Link to Comment Calculated_Risk
Calculated_Risk's picture

and gold sucks cause it's yellow, like pee. Cause pee is waste, from the human body. So gold is waste from mother earth! And besides, we won't allow gold in our FEMA death camps!

Wed, 01/05/2011 - 12:40 | Link to Comment Nootropic
Nootropic's picture

Funny story, pee actually contains small amounts of gold, to the point where there exist some waste treatment plants that have a loop for extracting gold.

Tue, 01/04/2011 - 19:34 | Link to Comment The 22nd Prime
The 22nd Prime's picture

Here is the definitive proof [cough] that gold becomes a tulip on exactly June 14, 2011

p(t) = 1220.41 – 570.35 (2011.45 – t).267 { 1 + 0.036 cos[15.86 ln(2011.45 – t) – 34.8] }

http://arxiv.org/ftp/arxiv/papers/1012/1012.4118.pdf

Check it out. Purdy pictures, fancy formulas and Ruskie references.

Tue, 01/04/2011 - 22:48 | Link to Comment spiral_eyes
spiral_eyes's picture

hahaha! the problem with log-periodic oscillation analysis is that it does very little to look at the underlying material picture. all these delusionists who have such great talent at working with platonified abstract models, and who believe that you can tease the underlying reality out of mathematicized models. i hope gold goes to $1 an ounce on the greatest naked short of all time. i look forward to "buying the fucking gold dip". so too will the chinese central bank, and anyone else who understands economics is not about maths.

Tue, 01/04/2011 - 19:29 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Vadim Zlotnikov was probably paid $350K for his little essay.  He gets the last laugh. 

I'll bad mouth gold for $250K.  Any takers?  I expect to be paid in gold, please.

Tue, 01/04/2011 - 19:53 | Link to Comment Silversinner
Silversinner's picture

Think a lot of these anti gold people are

secretly loading up on gold.They are just

paid to keep the illusion of fiat afloat

for their masters.Masters already loaded

up on gold with the sales from central banks.

With the dollar loosing wold reserve currency

status,gold and silver are the most sensible

and riskfree liquid assets to own.Do not

listen to fools we were wrong all along.

GOLD IS MONEY is quality,Fiat is currency

is quantity but not for you.In India gold

is extremly liquid and used for transactions

in China gold is sold and bought in every

bank.I would not bet against the east wich

are much better savers nowdays then the

west.With their historic affinety for gold

and increasing income(rightfully so because

of their increased productivity)this historic

bullmarket has a long way to go.

Tue, 01/04/2011 - 22:51 | Link to Comment spiral_eyes
spiral_eyes's picture

i would like to see paul krugman's real investment portfolio. 

Tue, 01/04/2011 - 20:18 | Link to Comment Client 9
Client 9's picture

I love the Zimbab comparison. So many similarities. Rule of law, market economy, personal freedom, non-military presence in the supermarket, electricity, running water 'n' stuff. Gold is on its way down. It's rise has far exceeded the M2 rise as has been demonstrated here. It's probably worth <$800 but I'll give you dummies $1000 for now. A better hedge for you idiots is to buy a few cartons of smokes that are freshness sealed. They will do you more good in time that the gold coins you bought at the Wally vending machine. Suckers.

Tue, 01/04/2011 - 21:09 | Link to Comment akak
akak's picture

It is one thing to be utterly ignorant of monetary and political history, but quite another to smugly and arrogantly wallow in that ignorance, as you seem content to do.

Tue, 01/04/2011 - 20:20 | Link to Comment Charlie_Day
Charlie_Day's picture

Cramer just talked about how there was a shortage of gold coins at the US Mint, or how there wasn't by their officials reports, or something. I dunno, I don't speak shitstorm.

As such he recommended buying more gold on these dips.

Fuck my life.

Tue, 01/04/2011 - 20:30 | Link to Comment Mark Medinnus
Mark Medinnus's picture

Fools, tools and intellectual stools *flush*

Tue, 01/04/2011 - 21:06 | Link to Comment Stuck on Zero
Stuck on Zero's picture

By definition fiat money's value is unrelated to the value of any physical quantity.  Gold cannot therefore be a fiat currency because it is related to the value of gold!

Tue, 01/04/2011 - 21:20 | Link to Comment drwells
drwells's picture

"Bloomberg's use of Vadim Zlotnikov's opinion on gold as the basis for the otherwise reputable"

Boomberg? Otherwise reputable? LOL! They were cheerleaders for the housing bubble to (and past) the bitter end.

Tue, 01/04/2011 - 21:38 | Link to Comment lolmaster
lolmaster's picture

Milton's blunder. 

 

I'd like to get my paws on that fiat gold recipe.

Tue, 01/04/2011 - 22:43 | Link to Comment spiral_eyes
spiral_eyes's picture

gold is another fiat currency. it is just extremely inflation resistant because it is physical. 

Tue, 01/04/2011 - 23:59 | Link to Comment akak
akak's picture

My cat eats peas.

Wed, 01/05/2011 - 00:09 | Link to Comment MagicHandPuppet
MagicHandPuppet's picture

"Gold, which is effectively just another fiat currency,"...

...and, there's no point reading any further.  Clearly the words of a complete idiot.  Hopefully, he'll be fired for this and live the rest of his life in shame until he finds another career in a subject that he can actually comprehend.

Wed, 01/05/2011 - 00:25 | Link to Comment trav7777
trav7777's picture

everything is a fiat currency.

What did I say last time, if everyone decided to commit suicide, everything except CYANIDE would be valueless

The people who MISSED the gold "bubble" are the ones saying it's a bubble.  They never thought .coms were in a bubble, nor houses.  In fact, they argued to the point of mortal combat that these things were NOT in a bubble.  But now these same morons see a gold "bubble"??  GTFO here.

They missed the train and so it's going to crash.

Wed, 01/05/2011 - 04:36 | Link to Comment boogey_bank
boogey_bank's picture

I've read the post #847880 and the arxiv link.

My conclusion is: time will tell. The showdown is set in june 2011.

If at that time gold will still be standing, it's value is expected to reach infinity (the singularuty) in 2014. This could mean only one thing: by 2014 the dollar could be dad. What in the hell are becoming world? A John Titor's alternative universe? ;-)

Wed, 01/05/2011 - 23:14 | Link to Comment yellowbr
yellowbr's picture

I've written Vadim Zlotnikov to ask for clarification, here's what he answered. It clarifies what he was intending to say:

Since the textbook definition of "fiat money" is often quoted as being in direct contrast to physical commodities (gold, copper, oil...), the issue is what do I mean by "effectively". It was an attempt, which judging by the responses unsuccessful, to highlight that many of the reasons for viewing "gold" as being a superior repository of value are tied to its being a  "superior fiat currency". In the end, value of "gold" is dependent, much like a "fiat currency" on confidence of the commodity or currency holders. The value of any single "fiat currency" can drop dramatically (as it happens with some regularity), as one's trust in the issuing entity declines. Similar drop has been observed for gold (e.g. 1980-1999). In the modern, global, electronic society, the value of gold is determined by its convertibility into a fiat currency (or some equivalent global note-issuing organization), rather than a direct medium of exchange. Thus, there has to be a consensus (market-driven) exchange value for gold into a particular currency. However, if that is the "true" value of gold, than it is no different from a system of floating currencies, with gold being one of the currencies. Let me try to illustrate this by example. Lets assume that the current crisis leads to formation of a global government agency that will print universally accepted currency notes, with initial supply of notes roughly equal to 10% of global money stock. It will also print new notes at a rate of that can never exceed 0.3% to 1.0% of existing stock. This new "fiat currency" (intrinsically worthless and reliant on gov't agency for credibility) could be used in any country via conversion into local currency and would have a function that is largely equivalent to gold. Its value in any given currency would rise or drop depending on investors confidence.

I suspect that you take issue with use of "gold as a fiat currency" in part due to fact that gold supply is not controlled by any single government and has an intrinsically low rate of growth. Thus, is not government edict, collective wisdom that drives valuation. My use of the word "effectively" is an attempt to point out that in practical terms you still need to convert gold into some exchange medium to realize its value and that exchange medium will mostly likely be a fiat currency.

All the best, Vadim

 

Thu, 01/06/2011 - 00:09 | Link to Comment mikla
mikla's picture

I give him points for trying.  And, I give him points for being rational -- the convertibility issue is a real one.  So, he raises a real topic (mainly that gold as a "storage of value" is entirely dependent on its popular demand, which can be quite capricious).

However, if we substitute "gold" for "any commodity", could the argument be made?  I must similarly convert my board-feet of wood, or my tons of copper, or my high-quality Moonshine to some fiat currency in order to purchase iPods.  Does this mean those things are similarly, effectively, fiat currencies?

One house is worth one house, one chicken is worth one chicken, and an ounce of gold is worth an ounce of gold.  The "convertibility" issue is that we sometimes have difficulty figuring out how many chickens are required in trade for that ounce of gold.

In contrast, one fiat unit is similarly worth one fiat unit, but that doesn't mean anything.  It's an entirely arbitrary, abstract, and (in today's world) volatile concept of some unit-in-time (since they are constantly debased and revalued in an arbitrary manner, often outside any concept of supply-and-demand).  So, while my three tons of "High Quality Pet Rocks" are probably not worth much, they are actually *something* that is understood.  Only the fiat unit ranks by itself -- something absolutely *not* understood, with no inherent value, and a value that is constantly (infinitely) debased.

My pet rock can never be debased -- tomorrow it will still be a pet rock.  And my bottle of Moonshine will be gone.

Still, I concede that I might "own" toxic waste that may have a net negative value (because it implies storage and disposal costs, and potential liability).  My toxic waste is understood.  And, it will similarly still be here tomorrow.  At least the fiat unit is worth a far greater amount than my toxic waste when the fiat unit is merely worth zero.  ;-)

Thu, 01/06/2011 - 00:39 | Link to Comment akak
akak's picture

I give him points for trying.  And, I give him points for being rational -- the convertibility issue is a real one.  So, he raises a real topic (mainly that gold as a "storage of value" is entirely dependent on its popular demand, which can be quite capricious).

In an extremely abstract way, I can possibly see the point that he was trying to make, but I still find it an irrelevant if not specious point anyway.  It is analogous to stating that a bushel of wheat is fundamentally worthless, and is only worth what somebody is willing to pay for it.  Well, no shit, but that is just tautological sophistry.  Does anyone REALLY think that wheat is suddenly going to crash in price, or become worthless,  just because people are suddenly going to realize that it is only worth what others will pay for it?  I will not be holding my breath waiting for that day.

I still believe that his original argument that "gold is just another fiat currency" was too ignorant and illogical to not have been outright disingenuous.

Thu, 01/06/2011 - 02:03 | Link to Comment Grand Supercycle
Grand Supercycle's picture

Gold monthly chart looks parabolic and is a long
way from the long term trend line.

Long term price action is also converging.

http://stockmarket618.wordpress.com

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