This page has been archived and commenting is disabled.

Jim Rickards Tells CNBC's Joe Kernen Gold Is Going To $5,000

Tyler Durden's picture




 

Ealier today Jim Rickards of Omnis, formerly LTCM's GC, was on CNBC and was subjected to some "probing" questions by Joe Kernen in which the anchor asks Rickards if he is a "conspiracy theorist" for his recent insights into the potential investigation of JP Morgan's market rigging behavior by the DOJ. Rickards replies that he isn't, and follows it up with some gold price target observations based on "8th grade math": the former LTCM man sees gold going up by at least 10 times, and hitting $5,000 rather easily. We wonder if to CNBC there is any uglier word than "conspiracy theory" even when the "theory" is backed 100% by facts.

Full exchange between Kernen and Rickards:

Joe Kernen, “Jim, some of the craziest viewers I know send me stuff that I think is from you. I’m just wondering if it’s the same Jim Rickards? Are you a conspiracy theorist on silver manipulation, that it’s being controlled by JP Morgan?”

Jim Rickards “I’m not a conspiracy theorist. I gave an interview I was asked to respond specifically, I’m a lawyer also and I was shown correspondance from the Justice Department, Anti-Trust Division of the Justice Department to someone who wrote in enquiring...my comment was that it was an unusual communication because the Justice Department specifically named JP Morgan. Instead of saying thanks for your letter, they said we’re looking into the JP Morgan alleged actions and they went on to say we are not going to refer to the CFTC, we’re going to look into it ourselves. I thought both of those things were unusual.”

Joe Kernen“So you’re not necessarily saying that gold and silver would be 1,000 times higher if free market forces...?”

Rickards “No I am saying 10 times, I am saying gold will get to $5,000. It’s 8th grade math. Just look at the amount of gold and the amount of paper money, do the division, that’s where gold has to get to.”

For those who wish to hear Jim Rickards
recent must-hear interview with Eric King of King World News, in which
Jim shares his insight into the DOJ investigation of JPM,  here is the link.

Full clip here.

 


 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 05/05/2010 - 11:04 | 332584 Mako
Mako's picture

I hate to tell the dumb ass but the amount of paper is shrinking... see Fed Reserve Z1 report... duh.

If the price of gold was set by the amount of paper... gold wouldn't have went from $850 to $255 from 1980 to 2000, where the amount of credit was expanding at a huge rate at a 5-14% rate per YEAR!

"This ain't no disco" -Sheryl Crow

People expecting a repeat of the 70s are in for one rude ass awakening.

 

Wed, 05/05/2010 - 11:06 | 332598 lookma
lookma's picture

Hi Mako,

Sorry to interrupt your regular scheduled spamming, but paper money = credit inflation.  Duh.

 

 

Wed, 05/05/2010 - 11:10 | 332607 Mako
Mako's picture

Sorry credit creation has been negative for a year... credit is being destroyed.  Get out of the trailer park.  You have read too many stupid books by people trying to sell you something, they did, they sold you the lie.  

Credit creation has been negative for almost a year.  Let me see you think people are taking on more credit?  Strange, stay off the booze.  Stop reading the stupid Peter Schiff books, he has no idea how the freaking credit market operates, neither do you if you believe credit is expanding. 

Wed, 05/05/2010 - 11:15 | 332624 BrianOFlanagan
BrianOFlanagan's picture

I think you forgot about local, state and federal government credit and exponentially increasing unfunded liabilities.  Please recalculate.

Wed, 05/05/2010 - 11:26 | 332659 Mako
Mako's picture

Doesn't matter they will never get funded because enough credit is not being generated to fund them.  Sorry. 

All the unfunded liabilities are going to have to be wiped off the map.

Wed, 05/05/2010 - 11:31 | 332678 43 Steelie
43 Steelie's picture

So the alternative is to raise rates, defend the dollar, invoke austerity measures, ruin the Fed's balance sheet of MBS holdings, cancel Social Security, dissolve FNM & FRM and throw Healthcare reform out the window.

On which politician's watch is that happening? 

They will print, and print they will.

Wed, 05/05/2010 - 11:42 | 332688 Mako
Mako's picture

"So the alternative"

There is no "alternative" at the end of the cycle once you use the equation.  Collapse.

"They will print, and print they will."

Sorry credit is still going negative, there is no out, there is only in.... collapse.

It doesn't matter what you do, it will collapse.  It's pure Math buddy. 

Wed, 05/05/2010 - 12:34 | 332780 johngaltfla
johngaltfla's picture

I'm glad we have spammers that have yet to answer the question:


Name one debor nation with a fiat currency  that has ever experienced a deflationary default?

Funny thing is, no one has named one. In 30 years. If memory serves me correctly, there are several folks at Von Mises with large wagers waiting on that answer also.

If you've go the money, venture on over and name that nation.

Wed, 05/05/2010 - 12:44 | 332786 Mako
Mako's picture

All financial systems have blown up and collapse, everyone in the history of civilization except for the one that is present at the moment and is in the early stages of collapsing. 

I have no idea what the question is... let me see the Roman Empire is still coining money.  Strange.  They all collapse, every single one... doesn't matter what you use as your medium of exchange... collapse.  End of story.

Argentine defaulted in 2001, I have no idea what you are talking about.  Russia defaulted on it's internal debts in 1998, even North Korea has defaulted, the US last defaulted on bonds redemptions in 1971 when Nixon closed the gold door.

 

Wed, 05/05/2010 - 13:36 | 332882 akak
akak's picture

.

Yes, asshat, but you STILL refuse to address the pertinent point:  All those nations collapsed via INFLATION!  There has never been a single fiat currency regime that has collapsed via deflation ---- NEVER --- but hundreds that have done the opposite.

And I agree with a previous poster, your rabid and repetitious posts in this forum calling for some mythical fiat currency deflationary collapse are little more than spam.  And particularly stupid and uninformed spam at that.

Wed, 05/05/2010 - 15:35 | 333112 gringo28
gringo28's picture

would Marshall Law constitute a "default"? sort of, kind of kidding....

Thu, 05/06/2010 - 05:08 | 333996 i.knoknot
i.knoknot's picture

akak - you don't need to name-call to make good points.

Mako is not like some of the trolls in here - he/she's making some rational points!

i think that if it all falls apart, the purely primal appeal of gold will make it one of the first (non-edible/'drink'able) assets to establish liquidity as we crawl out of the rubble. does this support or refute Mako? yes and no. sort of. i don't think gold in hand will be a mistake.

that's almost as bad as i think think it might get (see Argentina/ferfal: http://ferfal.blogspot.com/)

we need to encourage this discourse, even if the tone is course. those of who get it right have a chance in phase 2...

Thu, 05/13/2010 - 02:41 | 348508 Barmaher
Barmaher's picture

Oh, I think Akak does need to name call.  He lives to name call.

Thu, 05/13/2010 - 02:49 | 348514 akak
akak's picture

.

.

And you apparently live to troll.

Wed, 05/05/2010 - 19:35 | 333498 JW n FL
JW n FL's picture

I am stealing this quote from;

 

The Daily Reckoning Presents Inflation Up; Stocks Down

 

***** "Meanwhile, a potent new inflation could inflict a negative surprise for the US economy in 2010. Already we're seeing very high producer prices. The Wall Street Journal described this phenomenon in a recent article entitled "The High Cost of Raw Materials":

"Data on producer prices released by the Bureau of Labor Statistics on Thursday shows how rapidly the pressure on corporate America is mounting. The producer-price index showed that crude goods such as iron ore, construction sand and pulp shot up 44.5% year-over-year, the fastest rate since 1974. Including energy and food costs, crude goods prices rose 33.4%."

The ISM's Prices Paid Index is telling a similar story. On Monday, the ISM announced that its Prices Paid Index registered the largest year- over-year increase since the 1970s.

Promoters of the world's crazy, unconventional monetary policies (usually bankers) like to blame rising prices on things like droughts, floods, OPEC, and labor unions. But when they do so, they fail to imagine what might happen to prices if the broad supply of money and credit were relatively fixed. If that were the case, it's likely that rising prices in one sector of the economy would have to be offset by falling prices in another.

Demand typically falls in response to rising prices (depending on the "price elasticity" of demand). But when government deficits, easy money, and easy credit (rather than income and savings) drive demand, we could easily see persistently high consumer prices, even in a weak economy." *****

I am on thier mailing list so I dont have a link... but the site is here (http://dailyreckoning.com/ )

As well all of that debt held offshore getting run over by inflation? the home prices coming back.. to a mark to market value that would take the Banks from red to black (on paper any way)...

Blue Hoseshoe Loves inflation!

Wed, 05/05/2010 - 12:45 | 332795 Blindweb
Blindweb's picture

pure Math... how's LTCM doing these days?

 

Yes, we all know the credit argument.  We know Mish, Denniger, Prechter.  It just aint that simple

 

Coincidentally I was just reading the 1/10th of an ounce of silver bought 60 lbs of wheat flour in ancient Rome

Wed, 05/05/2010 - 12:52 | 332802 Mako
Mako's picture

And eventually they collapsed, and you couldn't find wheat at all which is why the population when from well over a million to like 30k.  Let me know how Ceasar is doing.

Generation after generation, humans setup systems that work like a virus in a dish... exponential growth, then peak, then collapse.

Wed, 05/05/2010 - 15:23 | 333089 tmosley
tmosley's picture

It collapsed only after the currency was debased ie inflated to nothing.

Wed, 05/05/2010 - 14:24 | 332987 farang
farang's picture

Yep. Denniger is quoted today talking about how the entire financial collapse is because (like Mishypoo and Michael at Financial Armegeddon) of  "Public Employee Unions and unfunded Entitilement programs like Social Security and Medicare."   It's all their fault.

Look, I agree public employee benefits and wages should be in line with the public sector and should be restarined to the actual budget whatever government (local or federal) can afford. That's a no-brainer. But how is S.S. and Medicare an "Entitlement?" How? He didn't pay my FICA, he didn't pay my matching contributions for my employees, nor did he pay the matching contributions when I was an employee.

He's asking for a pitchfork where the sun don't shine. Glad to give it to him regardless of whether he lables me a "sedionist". Let's see him say it to my face. Wonder if he jas ever had a callous on his manicured hands? He'll feel some upside his head if he ever crosses my path, guaranteed.

How about this: Just give me back what my contributions were, what my employers contributions were for 36 years, and I will waive the interest due for those 36 years I have been paying in. Is that someone seeking "Entitlements?" Who knew?

Where is the discussion of the obscene DOD budgets? The Congresional pay and benefits? "Retiring police" at 45 getting $90,000/year?

He's busy dissing the Greek citizens getting scalped, of course. I hope the Greeks find the G.S. scumbags that cooked their books and fillet them. Seriously, we need role models. Maybe better would be a repeat of "Il Duce's" fate, and get hung. Twice, in two locations. Last time upside down.

I have no idea if this LCTM alumni has any credibilty regarding gold prices. But I hope so. Gold kills Fiat tomfoolery. But what do I know: only Greenspan understand the economics of fiat money.

Wed, 05/05/2010 - 16:17 | 333191 Cognitive Dissonance
Cognitive Dissonance's picture

I must be really old because I remember the day when public employees were underpaid and the only thing that attracted them to the job, where they remained underpaid, was the better than average benefits package and the legal holidays off. We're talking the 70's and 80's here.

Thu, 05/06/2010 - 04:53 | 333979 i.knoknot
i.knoknot's picture

i'dlike to respond to some of what you assert, although i agree with much of it.

with respect to public-pensions, it's not KD or Mish's fault that promises that were made to many (like you?) were based on mandatory payment of non-public folks (like me?).  who else gets such a guarantee? and before you get your panties in a bundle about what i just wrote, note that there is absolutely no opinion in the fact that unions were repeatedly promised benefits that could not be rationally be promised... yes. they were a good deal. too good to be expected. i would have signed up too. that's rational. (for another good example, google "hope and change")

but like many places in history, a good union negotiator with a revenue-projection that pointed up went up against an unelected state-manager who was spending money that wasn't his... and look what we've all got... is there any surprise things are where they are?

they're both gone, and we all lose. seems like the end of the "Star Bellied Sneeches"...

i cannot begrudge my neighbor, the retired third-grade teacher, that which was promised to her... but nor can i afford it. so who wins? i didn't make the promise. period. and yet she showed up every friggin' school day and took on those little heathens...

sure, we can cherry pick the few high-end cases of "spiking", etc. but the good folks in the trenches aren't thugs, and the folks that can't afford their pensions aren't 'cheaping' out. we're all trying to figure out what the hell to do, and resistance to the reality of a systemic reset will only make it worse. no scapegoat exists, except, perhaps the folks that agreed to guarantee that which cannot be guaranteed... hang the state pension managers up by their toes. they are ultimately the ones who architected this mess, and we're digging ourselves out of the rubble they've left us. and i don't think most folks have figured out that scam yet. and we bitch at each other.

KD and Mish are the messengers, and clearly noting that the public unions don't seem interested in finding a way to make this reset work, so they, and many of us who would like to see everyone land softly... are at the point where if the public unions won't "give", neither will we, and we have the money you need. we default. f*#k you. (just being honest)

in reality, we've all got to bend, and the thing i resent most is not the money, but that the public-unions don't seem to understand that the promises made (retire at 50 w/90%?) were never plausible to start with.

the long term fix is to give people 'responsible' rrisk-regulated IRA/401K-like options that are NOT bound to any company or organization, and help them to help themselves. same with health-care. expand unencumbered choices and help folks help themselves, but nobody gets a backstop. nobody.

as far as SS, etc. i love the ironic progressive excuse for its creation: the "common-man" cannot be expected to reasonably manage his own future solvency, so we must provide that insurance... it looks like a "common-government" has done a much better job... yeah, more like that!

we're friggin doomed.

Thu, 05/06/2010 - 12:01 | 334627 JW n FL
JW n FL's picture

farang,

           ***** "How about this: Just give me back what my contributions were, what my employers contributions were for 36 years, and I will waive the interest due for those 36 years I have been paying in. Is that someone seeking "Entitlements?" Who knew?" ***** Quoting you, farang... I offer you some reading...

http://www.google.com/#hl=en&ei=aebiS_q8MIm49gSIk4WDAw&sa=X&oi=spell&resnum=0&ct=result&cd=1&ved=0CA8QBSgA&q=privatization+failures&spell=1&fp=231d7d9be38e67c8

and... http://www.google.com/#hl=en&q=absolute+funds+failures&aq=f&aqi=&aql=&oq=&gs_rfai=&fp=231d7d9be38e67c8

Now if you think buying Gold... is a GREAT! idea with all 36 years of monies (minus interest of course) I would encourage you to buy low and sell high... is Gold a Bargain? Do I own Gold? both yes.. but your not me, you are you. http://goldprice.org/30-year-gold-price-history.html the reason I use a 30 year chart is to show what Gold looked like at its worst... and how the price curve looks very similar now. Is there room for upward movement? sure 10% - 20% and / or the world melts down.. and Gold is worth whatever someone says its worth... but the reality of the world melting down, far fetched... and if it did metl down, you better have bullets before gold.

Good Luck!

 

Wed, 05/05/2010 - 16:13 | 333184 omi
omi's picture

He means ALL credit, combined, is decreasing. Government is trying to plug the hole in amount of credit outstanding by issuing huge amount of debt, yet it's still falling.

Wed, 05/05/2010 - 17:53 | 333358 BumpSkool
BumpSkool's picture

Mako,

It is the FIGHT against credit destruction that causes Gold to rise. The Fed is printing like mad because the debt deflation/credit destruction is so huge. Tell you what - I'll admit Im wrong at $650au if you admit you're wrong at $1650 au? Deal?

 

Wed, 05/05/2010 - 11:17 | 332632 Internet Tough Guy
Internet Tough Guy's picture

You aren't listening to Rickards. He says the US will be forced back to the gold standard; divide the amount of money by gold to get higher gold price.

That had nothing to do with the price drop in the 80s, we were not on a gold standard then.

Wed, 05/05/2010 - 11:30 | 332665 Mako
Mako's picture

Gold standard has nothing to do with... the system was on what people consider a gold standard the last time, and the time before that and the time before that, etc.  Everyone of them prior systems with a gold standard collapsed... sorry the system runs on credit because all you guys think you can lend and borrow with compounding interest and you know what you can for about 60-80 years then it's goodbye system. 

You are not going to escape this.

You ran out of gold to support the equation a long long time ago. 

Wed, 05/05/2010 - 11:42 | 332692 Internet Tough Guy
Internet Tough Guy's picture

You are confused; gold standard has nothing to do with compound interest. There is always enough gold to back the money supply; it is just a question of price.

Wed, 05/05/2010 - 11:53 | 332706 Mako
Mako's picture

Sorry, you just missed 5,000 years of human history.  I mean you can tell lies all day long but don't expect me to believe them. 

Humans lend and borrow their gold attach compounding interest to it, eventually the amount credit built upon the medium of exchange is more then what exists... eventually humans can't supply or demand the amount need... bank run.  Been happening since civilization started. 

Sorry, every major financial system has collapsed since the dawn of civilization, it doesn't matter what you use as your medium of exchange is.

Sorry, you guys are not producing enough new credit right now... actually it's negative.... eventually the whole thing will collapse like Greece but much worse.   Good luck.

 

Wed, 05/05/2010 - 15:38 | 333114 Millivanilli
Millivanilli's picture

@mako  You are so fuckin stupid it hurts my feeling.  The top heavy debt payments in the US mean one thing, other nations/investors will not want the currency.  We are on a spin cycle where it takes more debt issuance in order service existing debt until booooooom.  People start dumping your currency.    In musical chairs, that is when the room goes quiet and everyone rushes for a chair.

 

 

 

Wed, 05/05/2010 - 16:16 | 333188 omi
omi's picture

Assuming that that credit will always expand is not correct as there are relatively frequent defaults which decrease amount of credit outstanding.

Wed, 05/05/2010 - 12:04 | 332723 Burnbright
Burnbright's picture

No what he is confused about is the fact that just because people default on their debt obligations that it means gold losses its value as a currency.

In reality his argument makes no sense. Take the 30's for example. We essentially got off the gold standard because "there wasn't enough gold in the banks to back up paper receipts". So what do people do, blame gold...lol. When in fact it was the banks printing up more receipts than deposits.

Gold isn't the issue here, not letting banks default is. If banks were simply allowed to go insolvent during the depression and people got wiped out when they bet with a bad bank everything would of been fine. But instead everyone is so interested in saving their own ass-ets that they would rather take a small hair cut of purchasing power than lose everything at the expense of others and future generations.

And Mako, the reason gold went from 800+ an ounce to 250 an ounce was because of confidence being restored in the dollar after interest rates were set to double digits. Nothing else.

Wed, 05/05/2010 - 13:27 | 332775 Mako
Mako's picture

I never said gold went up or down because of the amount of paper outstanding.   That guy said it goes up because you divide gold by the amount paper outstanding... which is not true and if you believe that, well then paper is going negative.  The guy makes zero sense. 

"When in fact it was the banks printing up more receipts than deposits"

Sorry, all you guys want interest, people put their money in the bank, the bank lent it out, eventually the amount owed is more then the supply... bank run... game over.   You don't even need a bank to do it... just lend and borrow with compounding interest.

Been happening since before there were things called banks.  

"If banks were simply allowed to go insolvent during the depression and people got wiped out when they bet with a bad bank everything would of been fine"

Good luck with that, see Greece, wait till the whole world looks like Greece.  Nothing has changed it's the same system that existed in 1930 or 1830 or 1730 or 1630, etc.

Wed, 05/05/2010 - 14:59 | 332893 akak
akak's picture

Mako, your repetitious argument is idiotic on the face of it, because you completely ignore capital formation and economic growth within an economy.  Collapse due to interest payments, no matter how low, is ONLY an inevitability in an economy that is perfectly stagnant, with a fixed money supply, and which sees no growth of any kind.  Please move on to sixth grade now --- you are really boring all of us with your foaming-at-the-mouth simplistic tripe.

Wed, 05/05/2010 - 13:46 | 332902 hedgeless_horseman
hedgeless_horseman's picture

Stop junking Mako, and calling him a spammer.  Know the difference between a troll, a spammer, someone you disagree with, and someone who is smarter than you.

We need more Mako's around here.

Wed, 05/05/2010 - 15:47 | 333130 Orly
Orly's picture

No kidding.  These gold bug types get their knickers in a twist fairly easily.  As long as you go along with the inflation theory and gold to the moon, you're a genius.

Once you say, "Uh...no," you're a moron.  It is obvious to me that Mako is much more correct than to have gold over five grand.

It is a deflationary environment we are in, people.  Credit is contracting in the private sector while growing in the public sector.  As Hugh Hendry easily points out, the credit expansion in the public sector is nowhere near enough to keep the credit contraction from accellerating.  If you want to stop it, you're going to have to print even more money.  Politically, that is no longer feasible.

Sorry, gold buggers, Mako is correct.  And while I would like to say that I hate to say it...that's not true.  You guys need a serious dose of reality.

See?  I enjoyed that.

:D

Wed, 05/05/2010 - 15:55 | 333143 akak
akak's picture

No, it is you paperbug deflationists who have been proven to be wildly incorrect.

Despite the fact that there is not ONE historical example of a deflationary collapse in a fiat currency regime, and hundreds of examples of INFLATIONARY collapse under the same, you keep insisting that "This time it's different!", and that SOMEHOW our political rulers are going to NOT repeat the same well-worn path of currency debasement taken in ever other historical example of a government that has spent far beyond its means and taken on an unsustainable amount of debt.

Also, your simplistic and incorrect assertion that the contraction of the amount of private debt is somehow equivalent to the contraction of the money supply is laughable in its absurdity.  You not only ignore that debt does NOT equal actual circulating money, but even assuming the validity of your assumption, you overlook the vastly expanding size of the PUBLIC (government) debt, which is overwhelming any contraction in private debt in any case.

Really, you blindly devoted followers of the charlatan Prechter are to be commended in your loyalty to his discredited notions, in the face of all evidence to the contrary.

Wed, 05/05/2010 - 16:01 | 333157 tmosley
tmosley's picture

Exactly. Credit deflation is a balancing mechanism, but it will be overwhelmed by too much printing. It won't matter one lick how much credit is available if people lose confidence in the currency.

Wed, 05/05/2010 - 16:36 | 333216 Orly
Orly's picture

Laughable...absurd...can we please stop with the silliness and have a discussion?

Understanding the expansion of credit and the necessity that it be exponential by definition is the actual key here.  It has nothing to do with interest rates or the price of gold.  Credit will contract because it has to.  The expansion has stopped and, according the to Austrian school, once that happens, an implosion of credit availablity becomes inevitable.

No credit = no price inflation.  No credit = deflation in overpriced assets that no one can get a loan for any more.

You're right.  It is pretty simple but not for the reasons you cite.

Thu, 05/06/2010 - 00:16 | 333883 Burnbright
Burnbright's picture

I think the problem with the inflation/deflation debate with regards to a fiat currency is and why so many people make really good arguments for both sides is this, fiat money is debt.

Now take what you just said and replace the word credit with debt, and it will make much more sense imho.

Thu, 05/06/2010 - 01:16 | 333920 akak
akak's picture

.

The crucial distinction that needs to be made is that, while fiat currency is indeed issued as debt, the converse is NOT true ---- not all debt is money!  Lumping ALL debt in with the money supply is simply meaningless as a measure of inflation vs. deflation.

Wed, 05/05/2010 - 21:43 | 333723 taraxias
taraxias's picture

Really, no longer politically feasible? 

Is is more politically acceptable to just the system collapse into a deflationary depression?

They only have ONE weapon and they are going to use it until the break the currency.

How would gold look then? I don't know but I can think of a lot of things that will fare worse.

Mako is right about the unsustainability of the "equation" but he's dead wrong about his views on gold.

Wed, 05/05/2010 - 15:59 | 333151 tmosley
tmosley's picture

Mako isn't smarter than anyone. He doesn't understand the concept of market based interest rates and their impact on savings and consumption. He can't imagine a world without an artificial rate set by some central authority. Every problem he is talking about can be fixed merely by having pure floating interest rates.

This is pretty basic stuff, but it isn't really taught in economics classes.

Wed, 05/05/2010 - 17:05 | 333259 Not For Reuse
Not For Reuse's picture

Let me try to rephrase what Mako is saying. I don't think the two sides to this argument are necessarily in conflict, I just think he/she is just doing an inadequate job of expressing him/herself.

Most people seem to have a vague understanding that money is not a zero sum game. What most people DON'T seem to understand, is that "not a zero sum game" is not the same as "infinite growth potential." Money is the ability to make things serve you. This includes people as well as utilities like electricity, domestic animals, etc. In any event, it is IMPOSSIBLE for the sum of all money to keep growing beyond the total capacity for global human labor and utility extraction.

Currency is just a CLAIM on some fraction of that total capacity. We can of course continue to expand our currency base as much as we want. But what good is that when there are ALREADY far more outstanding claims on the total global capacity for service than could ever be backed up by actual performance.

Unless we put the IMF in a spaceship to go plant our debt service seed on some new alien planet, or unless we discover some sort of new utility extraction which is both more plentiful AND more cost-efficient than Oil to Electricity, then massive default is the only possible endgame for where we are right now in the global debt cycle.

This is all just a power struggle by debt holders who want to avoid taking the necessary haircuts on their bad debt long enough to loot as much service as they can from the system before the state of global default is officially "recognized" and the total claims on service fall back to parity with the total amount of service that can actually be performed.

I think Mako is just trying to point out that no matter what fractional claim on service gold ends up controlling, the whole pie is going to be a hell of a lot smaller than most people are counting on.

Thu, 05/06/2010 - 00:32 | 333893 Burnbright
Burnbright's picture

"This is all just a power struggle by debt holders who want to avoid taking the necessary haircuts on their bad debt long enough to loot as much service as they can from the system before the state of global default is officially "recognized" and the total claims on service fall back to parity with the total amount of service that can actually be performed."

That is why inflation is the ultimate end game, it ends in a loss of confidence as "conmen" essentially steal everything through the currency.

"I think Mako is just trying to point out that no matter what fractional claim on service gold ends up controlling, the whole pie is going to be a hell of a lot smaller than most people are counting on."

Mako has made it abundantly clear to me that he thinks gold will be lose value and we will enter a period of dollar deflation. Now could gold not be worth as much as it is today if everything goes mad max style because their wouldn't be much stuff to really buy, sure. But to think that dollars will become more more valuable than gold at its current gold to dollar ratio is just plain silly when interest rates are essentially at 0%.

 

Wed, 05/05/2010 - 21:01 | 333648 whacked
whacked's picture

Hmm go Mako, HH and others

Thu, 05/06/2010 - 00:13 | 333877 Burnbright
Burnbright's picture

"I never said gold went up or down because of the amount of paper outstanding."  

I didn't think you did, I said that you seem to think that because dollars will become scarce that gold will lose value. That isn't always true.

"That guy said it goes up because you divide gold by the amount paper outstanding... which is not true and if you believe that, well then paper is going negative.  The guy makes zero sense."

I actually agree on this point now that I think about it. It doesn't make sense to say that somethings value is a direct division of amount dollars by amount of thing being sold. However their is a correlation between the amount of dollars in existance and the value of something. But yes not as easy as a relationship as that.

"Sorry, all you guys want interest, people put their money in the bank, the bank lent it out, eventually the amount owed is more then the supply... bank run... game over.   You don't even need a bank to do it... just lend and borrow with compounding interest.

Been happening since before there were things called banks.

This has nothing to do with needing to have a fiat currency being that it also happens with fiat currencies whith the ability to just print money exists. Now disregarding that, that was not that point I was making. My point was not that with compounding interest etc that things fail, it was that the BANKS SHOULD FAIL, and so should THE PEOPLE THAT BANK WITH THEM. Get it? You want acceptable terms to be made on loans you won't accomplish that by using a fiat currency and essentially guaranteeing loans.

"Good luck with that, see Greece, wait till the whole world looks like Greece. ."

Yeah, you are so right, I should go out and get a second job so I can buy Greek debt so that its corrupts government can continue to spend beyond its means and its people can continue to expect to get their hand held through life. /sarcasm off

"Nothing has changed it's the same system that existed in 1930 or 1830 or 1730 or 1630, etc"

Sure, only our standard of living has plummeted and now the FED owns more US property than any other entity on the planet.

Wed, 05/05/2010 - 17:55 | 333360 BumpSkool
BumpSkool's picture

ran out of incremental gold maybe ... but there is always enough gold... the question is price...

Wed, 05/05/2010 - 21:35 | 333707 GoodBanker
GoodBanker's picture

+5,000.... oh, that's impossible. I stand corrected. +1,175

Wed, 05/05/2010 - 20:59 | 333642 whacked
whacked's picture

+1

Wed, 05/05/2010 - 16:38 | 332858 boiow
boiow's picture

deleted

Wed, 05/05/2010 - 16:05 | 333166 omi
omi's picture

Wow, we actually got some intelligence in ZH comment threads. I'm impressed. I usually check out comment threads for humour,  didn't expect to find some reason.

Wed, 05/05/2010 - 11:03 | 332589 Whizbang
Whizbang's picture

Why stop at 5,000. Since we have a fiat currency, which is just "minutes" from hyperinflation, and has been since I started reading ZH almost a year ago, lets set our price target at 1 bajillion an oz. It should be obvious that an arbitrary metal form of currency is worth far more than an arbitrary paper one.

Wed, 05/05/2010 - 11:04 | 332592 ericgarland
ericgarland's picture

"Conspiracy theory" is the term given to all analysis not previously approved by elites and diffused through official media outlets.

The problem is, so little of what comes out of the media makes any sense at all, so we are all left to become conspiracy theorists if we are to predict anything.

Wed, 05/05/2010 - 13:24 | 332864 Cognitive Dissonance
Cognitive Dissonance's picture

I am a conspiracy realist who studies conspiracy fact.

Wed, 05/05/2010 - 21:35 | 333710 Marvin_M
Marvin_M's picture

it is fascinating to watch the pressure from the blogosphere (where reality exists) being exerted on the hertofore "perveyors-of-truth" monopoly that is the MSM.  Mr. Kernen & Co., along with the rest in MSM (Mr. Rattigan is trying) are going to be running for their lives before its over.  I read and heard that ABC News has layed off 25%...can the NBS cohort be far behind?

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/04/abc-news-c...

Thu, 05/06/2010 - 05:17 | 334005 i.knoknot
i.knoknot's picture

and newsweek is on the block, ABC laying off 400, CNN+CBS = twice as big, twice as much rubbish.

indeed. those changin' winds ablowin.

love the avatar!

Wed, 05/05/2010 - 14:29 | 333002 farang
farang's picture

Wasn't by accident. Wonder if there is anyway to find the very first use of that meme in msm? Be interesting to see what they were hiding, eh?

Wed, 05/05/2010 - 11:04 | 332593 lsbumblebee
lsbumblebee's picture

Unfortunately the anchors on CNBC skipped 8th grade and went straight to modeling school.

http://www.barbizonmodeling.com/

Wed, 05/05/2010 - 11:49 | 332703 Astute Investor
Astute Investor's picture

IF I remember their tagline correctly..."Be a model or just look like one".

Wed, 05/05/2010 - 11:57 | 332714 lsbumblebee
lsbumblebee's picture

Contact Nearest Barbizon Center.

http://www.barbizonmodeling.com/location_finder.html

Wed, 05/05/2010 - 13:49 | 332905 viahj
viahj's picture

you win at the interwebs for today

Wed, 05/05/2010 - 11:04 | 332594 Cheeky Bastard
Cheeky Bastard's picture

As much as i would like to see 5k p/o it will never, under any circumstances, happen. It would spell the end of FIAT and crash what is left of the economy very rapidly. It would cause prices on many many many everyday and not so everyday items to go up 100% and would kill any demand that is left for those items. Also, there is always dilution via backed-by-cash-100:1-leveraged ETFs which pretend to be gold [You cant turn a hoe into a housewife.... baby]

Wed, 05/05/2010 - 11:07 | 332600 Hephasteus
Hephasteus's picture

No 5k gold would be a "properly receipted gold".

20k gold is a crash.

Wed, 05/05/2010 - 11:15 | 332626 Cheeky Bastard
Cheeky Bastard's picture

Are you sure about that. We perceive gold here mostly as a store of wealth, but it has, as i have said yesterday, industrial usage as well. the price of electronics would skyrocket, vast spectrum of meds would also go up in price massively. Some parts of builders industry would be hit [yes, look it up] etc etc. Im not saying that i dont want to see 5000 price, but it would only do good for gold hoarders, not everyday consumers. On the other hand, everything and everyone that can speed up the inevitable crash i fully support. So im kinda divided here between what is good for me and what is generally good for everyday people who dont hold any gold and the economy. 

Wed, 05/05/2010 - 11:17 | 332634 Cognitive Dissonance
Cognitive Dissonance's picture

Cheeky,

After reading your post yesterday about controlling your own death, I dreamed last night you lived to 101. So party hearty my friend, you're chained to this earth for a long time to come.

White light to ya baby. :>)

Wed, 05/05/2010 - 11:24 | 332656 Cheeky Bastard
Cheeky Bastard's picture

Oh damn you CD, damn you so much. I dont want to hit 101. Thats to much. 75-80 would be perfect. 

Wed, 05/05/2010 - 12:02 | 332721 Cognitive Dissonance
Cognitive Dissonance's picture

OK dude. I'll revise my dream tonight and you'll be good to go. :>)

Wed, 05/05/2010 - 15:49 | 333120 Miles Kendig
Miles Kendig's picture

Just as long as this one is perfect.  Thanks for doing your part in making it so for me CB. Peace pal & thanks for being your self.

Wed, 05/05/2010 - 11:27 | 332662 Hephasteus
Hephasteus's picture

Ya quite sure. 5k gold wouldn't affect anything in electronics. Now 50 buck silver which is where IT should be would raise prices on electronics a good 5% but nothing HORRIBLE.  Electronics is switching over to surface mount eutectic ball devices which uses like 1/10 to 1/30th of a gram for each pin. This aint 1984 where they would run the boards through a solder bath sucking up ounces of the stuff.

Wed, 05/05/2010 - 11:43 | 332694 GoodBanker
GoodBanker's picture

Right on, Hephasteus. Few seem to understand the phenomenon of ceramics and composites replacing gold and silver in electronics in response to rising commodity prices. It's been staring them in the face for a decade, but no, exponential gold will shut down the electronics industry... in what world? $5000/oz silver on the other hand.... good thing Rickards isn't promoting such a price level.

Wed, 05/05/2010 - 12:11 | 332739 Hephasteus
Hephasteus's picture

Well the problem is that it's not going to work. You see engineers learn variables one at a time. Like you take a beginning engineer and they'll tell you titanium is the ultimate material for this and for that. It's not. it's a suck material. But it's a high temperature material. Once you go up past the 1200 1800 degree farenheit lines the material is pure tits because it's problems with stiffness are less troublesome and it's strenght at elevated temperatures is phenomenal compared to other materials. You see though electronic engineers don't learn this stuff till it's presented as a problem for them. So consequently they are ball mounting chips which the solder they use melts at 450 degrees. Oh no problem you say. But since strength is based on temperature you put them on a hot chip that runs 200 degrees or pack them in plastic that isn't heat conductive and suddenly that strong solder joint isn't so strong. So the chips start stress cracking on the bump balls that hold them to the main boards. You can fix them by doing what they do to attach them. Bake them in an oven at 450 degrees for a few minutes.

So were going to end up with a bunch of electronics repair shops that are nothing more than failed small catering businesses that learn how to cook circuit boards. LOL

Between that and replacing CRT monitors that had 10 year average use lifespans before the tube would finally give out (given hiqh quality electronics that don't burn first) with LCD monitors that burn out in 2 to 3 years because the liquid crystals in them turn into rather unconductive hard solid crystals after you use them a bit. Even with coupling CRT technology to crappy electronics to make them burn out twice as fast didn't lower expectations enough to not make for a huge pissed off party about this junk. Throw in a predatory banking system that wants you to have a $3500 big screen TV that burns out halfway through paying 8000 with interest on it and you're going to have trouble. Not your regular I'm disappointed trouble. The kind with hair that growls.

So not only do you have an economic system that's destined to self destruct. The entire electronics industry that drove the last leg and is cheerleaded to yank it out of it's woes is hell bent on taking all it's clothes off bending it's penis backwards and fucking itself in it's own ass just because it wants to know what it feels like. Which may be shocking to say. But there really is no better way to express what is going to happen.

Wed, 05/05/2010 - 16:13 | 333180 GoodBanker
GoodBanker's picture

Hephasteus, thanks for the insights. My point was more along the lines of Gold's commercial application not suffering inordinately under dramatic price increases due to improved technology, although I agree that the ubiquitous "faith in innovation" is often misplaced. That being said, perhaps your second point answers the quandery as to why so much reliance has been placed on hopes for our dwindling supply of engineers; we have maintained the appearance of undaunted innovation in improving resource efficiency principally due to our willingness to shorten the lifespan of electronic goods via rationing. Rationing... huh... not terribly innovative from this angle.

Thu, 05/06/2010 - 05:22 | 334007 i.knoknot
i.knoknot's picture

i ought to go long acoustic guitars or harmonicas... to use on the porch, in the dark, before 7pm bedtime.

what you wrote is just depressing.

Wed, 05/05/2010 - 12:18 | 332747 Internet Tough Guy
Internet Tough Guy's picture

Silver has no high priced future. Look at the performance of gold/silver last two days. The market has already decided; gold FTW.

Wed, 05/05/2010 - 12:35 | 332782 Hansel
Hansel's picture

2 days of trading have decided the future?  Get real.

Wed, 05/05/2010 - 16:21 | 333197 tmosley
tmosley's picture

Picking data points to confirm your trades is not a good idea. That is WAAAAAYYYYY too short a time period to be making long term projections from.

Wed, 05/05/2010 - 20:00 | 333538 Crime of the Century
Crime of the Century's picture

+1  I usually have your back ITG, but on this one I think you're missing the boat. If gold gets too high or just too scarce (likely both), then the "poor man's gold" effect should make silver very attractive in an environment where holding excess dollars is looking foolish. I would liken the action to the a skateboard rider being pulled behind a Shelby holding not a rope, but a bungee. Delayed reaction, then sympathetic acceleration. Today's Cinco de Mayo action means nada

Thu, 05/06/2010 - 05:47 | 334026 i.knoknot
i.knoknot's picture

beautiful imagery! brilliant.

Wed, 05/05/2010 - 14:46 | 333032 farang
farang's picture

If they are holding any assets C.B., is it up to someone else to decide what those assets are? If they don't hold any gold, that is their decision, and their consequences/rewards.

I get where you are coming from, but you can't save the world, only do the right thing whenever possible. Reality is: some are not-so-smart. More than some. Once I stood at a "tailgate" safety meeting, and held up one of my old "gold certificate" US Dollars (not reserve note), and asked my crew if they knew the difference, and if they knew what the Constitution says about what constitutes a dollar. What did I get? Blank stares and yawns.  They are all employed elsewhere now, for less pay and benefits. I retired at 53.

Doing the "right thing" might be as simple as telling those you care about to consider precious metals. Since when did holding 5-10% of your assets in precious metals become some kind of unconservative play? I say in certain conditions, that percentage needs adjusting up or down, nothing radical about evaluating and adjusting, right?

I tried to tell folks in 2003, they didn't want to hear. I still care, but hey, listen or suffer.

Wouldn't you rather see those less fortunate hold any gold, even a gram or so, and hope it skyrockets? Or at the very least, it is allowed to find it's own true value without manipulation by the PTB? I would. I think we would all be better off, too.

Sales in scales would be a wise move. Why not? Here in my little village, they weigh the cooked chicken and charge me by the weight...why can't they weigh a bit of gold as payment too? At $5000/oz, how much would you need to carry around? A speck? Maybe we could make arrangements whereby we deposit 10 grams, and then make purchaes until it is used up at our favorite merchants. Anyone here that would refuse to take gold right now?

Heck, I may have heard some substances are sold daily that way, off the books, so to speak...it can be done.

Mako: I don't follow your logic, sorry, maybe I am missing your point. What nation's currency collapsed from deflation?

Wed, 05/05/2010 - 11:19 | 332642 Internet Tough Guy
Internet Tough Guy's picture

Wrong. The deflation against gold will be much higher than against other goods.

Wed, 05/05/2010 - 11:31 | 332667 Cheeky Bastard
Cheeky Bastard's picture

Wrong. Global deflation does not mean all asset prices will be affected by it. Gold could easily spin into sectoral inflation if Sov-Debt crisis continues to spiral forward and if equities trade lower for a significant period of time. There is no limit to sectoral capital allocation, if the 1-year equity rally is not a proof of that i dont know what it is, and remember, this is a rally which has happened in the environment where the major economic growth machine for the past 9 years [housing] is in a deflation spiral. 

Wed, 05/05/2010 - 11:48 | 332680 Internet Tough Guy
Internet Tough Guy's picture

It would be very easy to raise price of gold to say, 5000. If you are the BIS, ECB, etc. just bid for gold at 5000, open market. What happens? Price of gold is now 5000, currency devalued. Or offer to exchange gold for euro at 5000 euros. Recommended summer reading; FOFOA blog.

Rickards thinks the gold standard comes back to US, different method, same result.

 

Wed, 05/05/2010 - 14:52 | 333048 farang
farang's picture

Glad to hear it is "easy" through more manipulation TG. God knows that's a novel idea.

I suppose just letting it find it's own level is too much to ask of the PTB.

Wed, 05/05/2010 - 21:41 | 333720 GoodBanker
GoodBanker's picture

"sectoral inflation" - aptly phrased. It worries me when everyone assumes that EVERY asset has been driven by a record credit boom and as such will suffer the deflationary consequences of a credit contraction. Those assets principally purchased in cash will likely experience price apprecation when the capacity destruction that accompanies credit busts spreads to their sectors... and that's without sovereign defaults and currency debasement at every turn.

You the man, Cheeky.

Wed, 05/05/2010 - 11:05 | 332596 Cookie
Cookie's picture

If JK had a brain he would be dangerous

Wed, 05/05/2010 - 11:06 | 332599 Hephasteus
Hephasteus's picture

He said the only choices are gold or SDR's. I sure hope they pick Special Drawing Rights because It sounds like such a workable sensible system run by level headed honest people.

Wed, 05/05/2010 - 11:22 | 332651 Internet Tough Guy
Internet Tough Guy's picture

SDR = BIS = gold backing. It's the same thing.

Wed, 05/05/2010 - 11:30 | 332672 Hephasteus
Hephasteus's picture

No SDR has been a concept since 1960. Nobodies ever sucessfully systemized it or even explained what the HELL it is.

Wed, 05/05/2010 - 11:44 | 332697 Internet Tough Guy
Internet Tough Guy's picture

And why is that? Why don't we know how much gold BIS has? SDR is the nuclear option, monetary reset.

Wed, 05/05/2010 - 14:54 | 333053 farang
farang's picture

"Nobodies ever sucessfully systemized it or even explained what the HELL it is."

Hahaha, yeah. Me neither. You "don't undertand it" because you aren't Mr. Obfuscation himself: Alan Greenspan.

Wed, 05/05/2010 - 17:05 | 333255 Temporalist
Temporalist's picture

Thanks Heph I was going over all the posts ready to mention the SDRs when I saw this.  I know you are being satirical but seriously this has been planned as the "escape" currency when the PTB all default.  They need the "next big thing" and they want to be in control of it. When SDRs come along, if they are a printed currency, say goodbye to whatever soverignty is left.

Wed, 05/05/2010 - 11:11 | 332612 jkruffin
jkruffin's picture

Rickards is just stealing my ZH post quote from the other day, where I said

5k gold,  500 silver

The least he could do is acknowledge me in his interview.  LOL

Wed, 05/05/2010 - 11:19 | 332641 dark pools of soros
dark pools of soros's picture

you pumping silver to a 10:1 ???

 

i've said $5k gold $100 silver..  that was the old normal ratio...  let's ask JPM what they think??

Wed, 05/05/2010 - 12:40 | 332790 malusDiaz
malusDiaz's picture

Actually.. Silver used to trade 5:1... (it also happens to be natural elemental distribution of the metals on earth)

 

so if gold is going to 5K silver is going to 1K

 

if we're just talking hypothetical reset, then thats the ticket

Thu, 05/06/2010 - 05:25 | 334010 i.knoknot
i.knoknot's picture

i recall reading that silver is actually more scarce than gold in earthly distribution. silver-bug article somewhere. since then  wondered what was correct. perhaps industrial consumptions rates were part of that equation.

Wed, 05/05/2010 - 13:00 | 332821 tmosley
tmosley's picture

Inventory depletion will do that to prices.

There ain't much silver left. It's all been consumed by industry at artificially deflated prices.

Wed, 05/05/2010 - 11:14 | 332621 stoverny
stoverny's picture

Kernan is such a smug corporate hack

Wed, 05/05/2010 - 11:27 | 332661 Village Idiot
Village Idiot's picture

"Kernan is such a smug corporate hack"

What happened to that guy - I remember him back in the day - he was human. He did seem to start "falling behind" in the pecking order - maybe he took a better "offer".

Wed, 05/05/2010 - 11:15 | 332627 Cognitive Dissonance
Cognitive Dissonance's picture

".....observations based on "8th grade math"....."

No no, you don't want to do that. You might actually come up with the correct answer. There isn't enough of a fudge factor in there for the financial Ponzi to manipulate. Stick with the higher level math and you'll do fine.

Wed, 05/05/2010 - 11:23 | 332653 Debtless
Debtless's picture

"The USD is the best looking horse in the glue factory."

Great quote.

Gold bitchez.

Wed, 05/05/2010 - 11:31 | 332677 Dr. Richard Head
Dr. Richard Head's picture

So does this forecast of $5,000 gold make me a moron in that I sold a bit of my gold that I bought at $740 in order to pay off all of my unsecured debt?  I mean who pays for debt let along unsecured right? 

The is one bank that I am defaulting on, JP Morgan Chase, and I am asking them to show me a bilaterally signed contract between me and Chase that outlines their financial consideration and full disclosure, but they can't seem to provide anything of the sort. 

I guess me seeking instant gratification of not having those unsecured debts is worth more to me than the best performing asset class of the past ten years.  Moron?  Perhaps, but I sleep a bit better not having to deal with the pirates as often anymore.

Wed, 05/05/2010 - 12:40 | 332788 Hansel
Hansel's picture

Do what you think is right.  There are too many wild ass opinions floating around to believe in anyone but yourself.

Wed, 05/05/2010 - 14:24 | 332988 Miles Kendig
Miles Kendig's picture

One of your very best Hansel.

Wed, 05/05/2010 - 16:00 | 333148 Hulk
Hulk's picture

Oh, got your ass junked with that outrageous remark Miles! That was good Hansel

Someone want to place a dollar value on a good nights sleep?

Going to junk myself and get it over with!

Wed, 05/05/2010 - 16:20 | 333195 Cognitive Dissonance
Cognitive Dissonance's picture

"Someone want to place a dollar value on a good nights sleep?"

I have a standard reply to clients who ask me what's the best investment for them. I tell them it's the one that lets them sleep at night.

Wed, 05/05/2010 - 18:03 | 333368 Hulk
Hulk's picture

good advice, if something is bothering you to the point were it effects your sleep, get it fixed fast...otherwise life ain't worth it..

Wed, 05/05/2010 - 11:33 | 332681 doggings
doggings's picture

Sorry credit creation has been negative for a year... credit is being destroyed.

er...  so positive 1971 to 2010 = 39 years, but negative for 1 year is going to help?

But I think you already said it..

Duh

Wed, 05/05/2010 - 11:41 | 332687 BlackBeard
BlackBeard's picture

Joe Kernan is a smelly vagina that insults all other vaginas.

Wed, 05/05/2010 - 11:42 | 332690 schoolsout
schoolsout's picture

While I understand your point, why has gold risen over the past year or two when credit has been destroyed?

 

edit....post meant for Mako

Wed, 05/05/2010 - 11:51 | 332708 Gold...Bitches
Gold...Bitches's picture

Exeter's Pyramid

Wed, 05/05/2010 - 12:03 | 332701 Rogerwilco
Rogerwilco's picture

$5K/oz.? Sure why not. But there is a price to pay for the "hoarders", "profiteers", and obviously anti-American types who deal in this ugly relic. No, not confiscation, just a big tax (90% sounds about right) on your ill-gotten, "windfall" profits. Thanks for playing.

If you think this can't happen, look at what Weimar Germany did to the farmers who held on to a different form of gold, food, and refused to sell it at mandated prices. More recently, Congress hit Big Oil with a windfall tax on their profits. A needy government and a dirt-poor electorate will take what they need, at the point of a gun.

Wed, 05/05/2010 - 12:52 | 332809 43 Steelie
43 Steelie's picture

I would agree with that. Look what Australia is doing with their miner companies in 2012. If an industry is making too much money (aka financials 2009), the government will get their hands on it.

I don't think confiscation is probable since we aren't on a gold standard like we were in 1933. But a huge tax on the capital gain is almost a certainty. Only problem to that move is that if gold gets to the point where the government gets that desperate, it'll probably be game over for the USD anyways in which case you would be a fool to be cashing it in for a capital gain. 

Wed, 05/05/2010 - 14:58 | 333058 farang
farang's picture

I'll be right behind you in the line informing the criminals of D.C. how much and where mine is.

Wed, 05/05/2010 - 20:23 | 333585 Crime of the Century
Crime of the Century's picture

What profit? I bought it yesterday... paid cash. I bought a Maple at $500 and an Eagle at $1000, is my "windfall" bigger on one oz over the other? Now say they are both Pamp bars. Or, how about this... a hungry Fed can kiss my @$$. I bought 'em with after tax dollars. Argentina has coin shops today that don't feed the Fernandez/Kirchner kleptocracy.

Wed, 05/05/2010 - 11:49 | 332704 bernorange
bernorange's picture

"... there is a meeting in Zurich on May 11th... I call it the new Bretton Woods.. Basically the IMF is convening a meeting to look at the issuance of SDRs and the alternative is gold. So the G20 and leaders want to go to SDRs to take the dollar off the hook. The market may go to gold on their own, so it's sort of a race between SDRs and gold. The dollar, as you know, is pretty much at the end of the line. ... "

I found this comment much more interesting than the 5K prediction for gold.

Wed, 05/05/2010 - 11:52 | 332709 Internet Tough Guy
Internet Tough Guy's picture

SDR will be gold backed. There is no other way.

Wed, 05/05/2010 - 12:43 | 332794 Hansel
Hansel's picture

SDRs are only for governments and central banks.  You must believe those gov't certificates will be gold backed, because it will be different this time.  For the rest of the peons, why not just hold gold instead of paper that claims to be gold-backed?

Wed, 05/05/2010 - 12:49 | 332803 Internet Tough Guy
Internet Tough Guy's picture

You are correct; SDR for central banks, and backed by gold. But on individual level, the transactional currency remains. It simply works too well to abandon so what is the future? The 3 functions of money will ultimately separate, those three functions of money being the store of value, unit of account, and medium of exchange. Gold will never be the medium of exchange again.

Silver remains an industrial commodity, has no place in the next monetary system. Look at the crash of 08, and last two days performance. Look at gold/silver ratio going the wrong way. Gold and silver are decoupled. Now gold decouples from everything. Decoupled, demonitized, decommodified.

Wed, 05/05/2010 - 13:13 | 332844 Hansel
Hansel's picture

Gold could easily be a medium of exchange for large ticket items.  Also, fiat has failed at being a store of value.

Wed, 05/05/2010 - 15:04 | 333062 farang
farang's picture

Let me put it this way: if it is good enough for a Chinese factory worker to invest, all 3 billion of'em, it's good enough for me. Or Indians for that matter.

The Chinese are the ones pushing for these SDRs at the IMF, yes?

Both China and India have more Valedictorians gradutaing this year than we do high school students.

Stupid and stubborn, filled with msm nonsense to the brim...what country does that portray? While we have teabaggers wandering in witless bunches, they just keep plugging away...and buying gold.

I know what group I favor.

Thu, 05/06/2010 - 05:29 | 334012 i.knoknot
i.knoknot's picture

BRIC vs Crimex... ought to be interesting...

Wed, 05/05/2010 - 11:58 | 332715 jkruffin
jkruffin's picture

Uh oh, the banks are cooking their books?  Who knew?  LOL

The government is going to "PROBE" all of it  LOL  like they didn't know anything

 

http://finance.yahoo.com/news/Crisis-Panel-to-Probe-nytimes-2931583475.h...

Wed, 05/05/2010 - 12:02 | 332722 M31Capital
M31Capital's picture

Gold has another leg up it has too much going for it right now.  Gold would only crash if U.S. markets do any there is mass liquidation from cash raising in the futures market.  There are a lot of countries that will have problems before it gets to the U.S. and so far gold has either 1) decoupled from risk assets (last tuesday) or 2) is bot heavily on dips like today.  There will at one point be no better place than cash, but I feel gold can break thru its highs and perhaps hit 1300.  Only thing I would want to be long right now.  

Wed, 05/05/2010 - 18:38 | 333418 omi
omi's picture

Why would you hold gold when there are many companies that sold off in europe that are viable concerns?

Wed, 05/05/2010 - 19:00 | 333449 akak
akak's picture

Why do you imply that it must be an all-or-nothing decision?

As for just one reason for holding gold: zero counterparty risk.

Wed, 05/05/2010 - 12:20 | 332755 Jeanbon
Jeanbon's picture

I remember Dow 35000 Target

I remember S&P 3000 Target

 

when the calls where made, we were pretty close

to the top of the equity markets.

 

Wed, 05/05/2010 - 12:30 | 332772 Turd Ferguson
Turd Ferguson's picture

"The best looking horse in the glue factory". Nice.

Wed, 05/05/2010 - 12:43 | 332796 Truth
Truth's picture

Gold went bonkers in the late 70's based on both speculation and crisis in the confidence of U.S. gov't.  Crisis hedge.  Sure, M1, MZM, etc. has some bearing as well.  This is a secular bull market, period for gold.

Wed, 05/05/2010 - 12:54 | 332808 Gordon_Gekko
Gordon_Gekko's picture

Jim Rickards is WRONG. $5000 is WAY too low. And the real conspiracy is that there is no conspiracy.

Wed, 05/05/2010 - 15:42 | 332996 Miles Kendig
Miles Kendig's picture

WhoT!  Are you gonna hit stride again GG?  Been a kinda long winter for ya it seems there pal.

Wed, 05/05/2010 - 13:30 | 332873 Djirk
Djirk's picture

Is he using the same 8th grade math that LTCM used when they almosed pulled the financial system down?

Wed, 05/05/2010 - 20:28 | 333597 Crime of the Century
Crime of the Century's picture

He was the lawyer, not the quant.

Wed, 05/05/2010 - 13:56 | 332920 jory
jory's picture

Goldbugs are the Dumbest of the Dumb.  Will be fun to watch their Unraveling.

 

 

Wed, 05/05/2010 - 14:00 | 332929 akak
akak's picture

Paperbugs are the most brainwashed of the brainwashed.

Wed, 05/05/2010 - 15:07 | 333065 farang
farang's picture

Maybe so, maybe no. It is called "Risk" for a reason: we aren't "Too Big Too Fail" we just pays our money and takes our chances...but you won't be buying my gold with Bernanke's paper. Ever again.

Thu, 05/06/2010 - 05:31 | 334013 i.knoknot
i.knoknot's picture

+100

until i get really hungry... my physical is worth way more than spot.

that's my market force at work. we'll just see how goes... won't we?

Wed, 05/05/2010 - 20:27 | 333593 Crime of the Century
Crime of the Century's picture

"Jory"? How many names are you running, Bates?

Wed, 05/05/2010 - 14:00 | 332926 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

$5k is the conservative estimate and this is in REAL terms.  Inflated numbers could have a long string of zeros attached.

Wed, 05/05/2010 - 14:00 | 332927 GFORCE
GFORCE's picture

Another extremist.

Wed, 05/05/2010 - 15:02 | 333001 Miles Kendig
Miles Kendig's picture

For sure! Every time I see that Joe Kernen fellow I wonder what kind of extremist conspiracies he and his associates are gonna weave today...

Wed, 05/05/2010 - 14:40 | 333020 aaronvelasquez
aaronvelasquez's picture

Since nobody ever responds to my newbie posts, I figure it is safe and proper to weigh in on this.  I just changed my mind from being long USD to buying one ounce silver rounds and ingots.  I think they will be great units of exchange in an almost-worst-case scenario, and will be great birthday presents for my grandchildren if they pull this one out of the fire and all goes well. 

Gold I can't afford to lose on, silver I can.  Gold is too valuable to trade in in a barter situation.  Silver rounds with the weight and purity stamped on them might be just right.  

Silver bitchez!

However I am still holding US dollars in the short term and plan to invest in farmland in the near future.

Wed, 05/05/2010 - 15:10 | 333072 farang
farang's picture

I think that is a great move, av. Maybe you can find yourself a fellow that accepts silver or gold, and pay it that way.

Wed, 05/05/2010 - 15:29 | 333097 Rogerwilco
Rogerwilco's picture

Junk silver is a better deal IMO. All the upside (if any) of silver, and hedged against a deflationary wipe out because a quarter is always worth 25 cents, even if the silver in it only fetches a dime.

Wed, 05/05/2010 - 16:44 | 333232 nuinut
nuinut's picture

Gold will not be a bartering trade. It is a store of wealth. The store of wealth.

Why do you think all the worlds big money hold the bulk of the worlds gold?

You need to change the whole paradigm with which you view all matters economic, IMHO.

Without the perspective, the picture remains distorted. Everyone has been conditioned to see this distorted view. It is the only view most have ever even considered. How else can the sheep be taken advantage of? They can never be allowed to see the perspective of their masters.

Wed, 05/05/2010 - 15:02 | 333061 doggings
doggings's picture

Goldbugs are the Dumbest of the Dumb.  Will be fun to watch their Unraveling.

you're partially correct, watching the unraveling will be fun alright, for some of us.

 

 

Wed, 05/05/2010 - 15:33 | 333105 Turd Ferguson
Turd Ferguson's picture

Chuckles are the only utterances Becky Quick can make while she has Warren Buffett's nuts down her throat.

Wed, 05/05/2010 - 16:44 | 333147 Whizbang
Whizbang's picture

I wonder how it continues to elude these goldbugs that if the USD collapses and we cannot borrow money from the international markets, the first thing that the feds will do is confiscate all of your gold (again), along with your 401k, and give you back "treasuries".

Put your money where your mouth is, I have physical gold I will be happy to sell you at the bargain price of 3,000$ an oz. No takers? why? your paper money isn't worth anything. It's the deal of the century if gold should go to 20,000 an oz right?

or are you just trying to find the "next sucker" to unload your gold you bought back at 800$ an oz on. Sounds just like the real estate boom to me...

Wed, 05/05/2010 - 16:55 | 333246 nuinut
nuinut's picture

Put your money where your mouth is, I have physical gold I will be happy to sell

 

Why don't you put you money where your mouth is, sell your physical gold today, at market, and then tell us all about it.

 

If gold is not worth holding then answer me this-

Why did Nixon close the gold window?

 

 

 

 

 

Thu, 05/06/2010 - 00:56 | 333910 Burnbright
Burnbright's picture

"Put your money where your mouth is, I have physical gold I will be happy to sell you at the bargain price of 3,000$ an oz. No takers? why? your paper money isn't worth anything. It's the deal of the century if gold should go to 20,000 an oz right?"

Mmm gee let me think... pay you 3k or go to apmex and pay 1200. Hmm. Hey let me ask you a stupid question. How about you buy my gold for 3k so I can buy 3k more worth of gold.

Just because someone buys or sells something at a certian ratio like 1200/oz or 3000/oz doesn't mean that is its true value. Sort of like why people still accept a dollar for being a dollar even though it took less than 2 cents to make. That is what price discovery all about which doesn't really happen under a manipulated economy. But hey as long as I can buy gold at less than 3k an ounce I will be happy to since banks like JPM are shorting the market and giving me a discount.

 

Thu, 05/06/2010 - 05:39 | 334019 i.knoknot
i.knoknot's picture

it's a fair challenge...

i won't speculate with borrowed money (leverage)... and i don't have extra $$ to buy your gold with... and although i think $2K/oz isn't outrageous, i think i can get it cheaper than that for a while longer. i'll wait. my timeline is ten+ years - except for swinging CEF in my IRA :^)

i just like how we dig it out of the ground, make it all pretty, then bury in the ground (wall-safe, etc.)... we humans are odd.

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