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Jim Rickards Tells His Clients To Get Out Of Stocks And Discusses The Fed's Final "Golden" Bullet
The increasingly more popular Jim Rickards once again takes center stage at King World News, this time focusing on the two ever-fascinating topics of market manipulation and hyperinflation. Kicking it off in fine form, Rickards notes that the "markets have ceased to function as they are intended - traditionally a place to exchange values, but more importantly to perform price discovery (people rely on markets to tell them what to do or to at least give them some guidance). What's happened is that all the markets have become so badly distorted that their price discovery function and therefore the information content around it no longer has any value." The primary culprit in this distortion is, of course, the Fed which is now and has been for over a year, openly (and not so openly when it comes to stocks) manipulating the broader market: "I always like to say if a private sector person does it, it's manipulation, but if the government does it it's policy. So they call it policy and they would say they had reasons for it, but in fact it was massively distorting." And on the oh so obvious extension from this argument to the "$1 trillion+ cash on corporate balance sheets" theory, Rickards says that this is "not healthy at all, that's a very negative sign because it means that people are afraid to allocate capital because they can not get good information from the markets. In effect the US and policy intervention from homebuyer tax credit, cash for clunkers, quantitative easing, mortgage purchases have in effect destroyed our markets, they no longer give us valuable information." Obviously, today's most recent battery of micro fiscal stimuli announced by the administration will merely make the market even more irrelevant as a price discovery and a capital allocation deterministic mechanism: and the more administrative meddling, the more money will sit on the sidelines, and the more retail investors will withdraw capital from risky assets. If you no longer invest in stocks, you are not alone: "I don't even take the stock market seriously" says Rickards, "and I mean that in all seriousness. Who's in the stock market right? You have indexers and robots. Is anybody else trading the stock market?" Obviously, that is a rhetorical question.
Rickards continues by blasting the now prevalent, and well documented HFT feedback loops, that endow the market with a certain broken fractal quality: "the market has become self-referential, an algo playing itself out, almost the way you would run a self-recursive equation on a computer and you get very unpredictable results from very simple equations. It has degenerated into a joke. Everyone is looking around for the cause of the Flash Crash: what you find in complex systems is that the cause is almost irrelevant. What matters is that the autonomous agent, the participant, the elements of the system are prone to catastrophic collapse, so once you are in that mode, once you have that scale and that degree of complexity so that you are prone to collapse, the catalyst doesn't matter. If you have an avalanche who cares what snow flake started it, what you care about is the instability of the mountainside. The Flash Crash was the warning, I don't think the warning has not been taking very seriously. The markets are not reflecting fundamentals, because there are no more fundamental traders. It is an accident waiting to happen. I recommend to clients that they not be in stocks anymore. I don't take the market very seriously up or down because it has no informational content."
In other words:
#REF!=Market Fail
Luckily more and more see through the charade with every passing day.
Rickards covers much more, including the Fed's empty bazooka and the only option left, the nuclear one, hyperinflation, as a function of money velocity exploding, and, of course, gold, on which topic he says the following:
Gold actually brings me to my second point about Fed policy, we said are they out of bullets. They don't think they are, they think they've got quantitative easing they can do in much larger size. I don't think quantitative easing is a bullet that's going to work. I think that chamber is empty. But the Fed does have a bullet that they may not even realize which I call 'The Golden Bullet.' Which would be basically conducting open market operations in gold in such a way as to devalue the dollar.
If you're worried about deflation and you want to cause inflation and you're printing money as fast as you can and the inflation is not happening, at some point you have to stop and ask yourself well what else can I do? Well the answer is that you can severely devalue the dollar against gold...So the Fed wakes up one day and as fiscal agent for the Treasury, we're a buyer at $1,495 and we are a seller at $1,505, and that represents a 20% depreciation in the value of the dollar.
And the arguably most interesting observation by Rickards, which follows logical from the prior statement:
You have to scare the American people into spending money. Right now the American people are more afraid of not having money, they are not afraid of inflation, but if you make them afraid, they will go out and start spending. So what better way than to devalue the dollar 20% against gold, and the way to do that is through open market operations...Well if that happens to be $2,000 an ounce what have you done? You've
depreciated the dollar by not quite 50%. Well that's pretty powerful
stuff if you are trying to get people to spend money and dump dollars.
So they are not out of bullets, they have what I call the golden
bullet...They have that kind of ace in the hole if they really want to
trash the dollar.
As Kohn today said, it is all about expectations... Well, why not make people expect that the dollar they have today will be worth half as much tomorrow versus gold? Fascinating stuff, and one can be sure this is precisely what Alan Greenspan is whispering in the ear of his client John Paulson on a daily basis.
Full interview can be heard here.
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"you want to cause inflation and you're printing money as fast as you can and the inflation is not happening"
but the fed knows the $ is primarily flowing only to the TBTF banks who recycle it. its not like the fed doesnt know this. doesnt seem like the fed is wondering why there is no inflation. does the fed really wish to cause inflation?
With Fort Knox loaded with tungsten bars, perhaps they really do not have a golden bullet after all. What if China comes in with 1 trillion dollars asking gold at 1500/oz each?
"You want us to spend dollars? You have it here: a full trillion. Now get us the gold. No, we don't take tungsten bars."
dlmaniac, yes, the questions about our stockpiles of Gold keep getting asked and never adequately answered.
Why can't .gov and the Fed let some reporters, auditors and assayers in to have a little look around? What's the harm in doing that?
Unless there is no Gold...
I suspect that these open market actions were to bail the LBMA riggers out rather than solving any serious issues should Fed carry them out. And 1500/oz is not gonna cut it. Not even 2000. You'd be ripped off big time to sell it to Fed that cheap.
If it is too little, then they can throw up thier gold, if they have any, at 1505, or 2005 or whatever, until they are out and the dumb fucks collapse. I'm all for that.
this shows what total nut jobs you guys are and why Ron Paul will never get elected. They don't have to show you shit; they can just take yours if they want; you have gold fever. lust for power, riches, etc.
You're right about them not having to show us shit but you're wrong about them being able to just take ours "if they want". Wouldn't quite work that way.
you've never been arrested, or thrown in jail.
Unfortunately I have and I still dont think the gov has the ability to make confescation happen without initiating their own self destruction.
You've never seen a world pulling a massive penal code 148.
Victorio:
nice avatar.....chiricahuan homeland security......fighting terrorism since 1492..................
When I lusted for Fed Reserve Notes I was a good person. Now that I lust for gold, I realize I am a terrible person. Thank you, Abu Lemon. I'm lusting for silver now that the price is dropping. Is there hope for me?
Well, we don't know how much gold is in Ft. Knox, but as my other handle Suddendebt pointed out, there could be more gold than we expect in Ft. Knox. There could be 20,000 tonnes of gold in there instead of no gold, and then gold would drop to 200. Maybe presidents like Nixon, Carter, reagan, Clinton and Bush have been saving up gold for us to help future generations, you know and they don't want to tell us to surprise us.
So there's a new argument for gold going to 200.
The one about extracting gold from used electronic equipment and making gold go to 200, well...JP Morgan made me say that
they turned ft. knox into a tungsten gold factory,
if there's anything left in there i'd guess it's fake.
http://www.shadowtraders.com/futuresblog/?p=2337
The only way to create REAL INFLATION is to raise wages. That ain;t gonna happen any time soon.
+100. On top of a stagnant wage, the middle class continues to have anything they own of worth stripped away and they don't even realize what is going on... pretty sad.
They do know why, so I don't know why Rickards put it that way. The fedgov doesn't want their TBTF buddies to fail and if the big banks went down suddenly, I guess the fedgov is afraid of the awareness that would bring of the true economic state.
Then the Fed would actually have something of value on its balance sheet, a win win. I dont believe they could do it more than once without loosing complete credibility, like qe2, maybe this will be the new qe?
value is in the mind; if no one wants to buy your gold; it has no value. even if you want to spend your nights polishing it; most people want to have sex and party; and talk about their weird gun toting neighbor who stays up all night.
Interesting theory, that gold has no value... have to bothered to look at the facts to see if it holds up?
Just askin'...
Anybody ever polish their gold? It comes pretty shiny already from the dealer. I admit I like to clink silver bars together. Now that's music. Proud to be a Dead Head. Proud to be a Silver Head. Party on.
lemonobrien:
Maybe you don't know the rules around here:
Any new anti-gold troll has to get my approval first and I don't remember you submitting the requisite paperwork.
Who do you think you ar JonnyBarvo? Well... maybe
I see, value is in the mind, and your mind is empty, therefore gold has no value!
Of course, to those with minds that are not empty...
And Spending like drunken sailors is what the government is doing tonight ($50 bill "infrastructure" job program, $200 bill capex tax cut, + new FHA underwater mortgage refis).
Imagine: if they bail out absolutely every one by removing any economic downside risks and plug every deflationary leak with price supports, then what do you have left?? HINT: it rhymes with LynnFlayshion. The killer kind, that is. Playing with fire.
If we're going to go out like that, I want to see Helicopter Ben sack up and start droppin bundles of 100s on everyone. $100k all around. "It's rainin men. Hallelujah, it's raining old dead men".
Gee golly gee maings, why does the Gov't need to spend money like this if the market is rallying on bad news.
Are they just blowing the money to make the market tank?
Or are they trying to show us how we need to be blowing money we don't have. Well, come to think of it. They are blowing money they don't have either.
Analysis: Population blew money we did not have to begin with from the housing bubble. Now the Gov't is blowing money on a bond bubble, which will lead to nobody having any money to blow. Everything seems to be okay. There are no issues, nothing here to see.
I like the sound of $1,500 AU and $2,000; but how does that spur a public with no gold and no dollars to go out and spend? You can't reverse the fear unless there are jobs. I am compiling cash and day-trading DGP and just hoping to stay employed. $2,000 AU at this stage probably works out to over $4/gallon gasoline. That's going to send people out to spend?
The peeps are branded with fear. We're fucked for a long time.
The owners of gold and gold related assets (and other productive assets, generally), would have money to spend. People who work in the mines, or for industries related to mining would also have money to spend. Folks, this is middle America, basically, that has been starved over the past 20-30 years, that would finally get some purchasing power, if gold (and resources and manufactured goods more broadly) started going up and getting the respect they deserved.
$2000 gold, or $5000 gold, or even $10k gold would also provide relatively full employment for engineers, who would then have the capital to start productive new businesses.
Rising commodity prices are the solution to the problem. Supporting the banks is a dead-end.
pitz, Gold goes up a lot, and you are right! Those of us who are owners of Gold will deploy that value when the price of Gold is very high and we feel comfortable in the regulatory environment.
Neither condition has even been close to being met. So capital hides, or even goes to Peru!
why would anyone do anything in america; after you come out of hiding; you're taxed. i like Ecuador/Colombia; friend owns surf hotel in peru. best to marry a native;
I kinda like Chile. Except the teenagers down there use a lot of Italian words to show how cool they are. That is so uncool. But, yeah. Unless you are gloriously rich, most countries don't want you unless you marry a legal resident. Como estai? Damn, I'm doing it now.
I did marry a native Peruvian! She became a US citizen in Dec 2008, but we have a nice little bearing import business in Lima, run by her family.
A surf hotel in northern Peru... Now there's a nice idea!
Captial to start productive new businesses? Did you miss the point that the "consumer" isn't there?
There's money out there, and the reason why new businesses aren't springing up is because they wouldn't have a market; doesn't matter what new whizbang product you come up with, you cannot push on a string!
The newly wealthy gold-owners are the market. And it grows from there, as firms go out and hire people, organically growing.
Its a huge paradigm shift, but demand wouldn't be a problem, especially if the ability to consume is put back into the hands of producers.
Look, the bankers have had all the consumptive power in this country for the past 30 years, yet the economy has crashed. Don't you think that giving consumptive and investment power to a group that, collectively, has been starved for the past 30 years, would actually help to improve the economy?
Might I add, gold (and gold mining equity) owners tend to have a longer term view than the next quarter (after all...owning gold has been, for the past few decades, pretty much a losing game overall). So they're more likely to take a longer-term view when they eventually convert their gold ownership into other forms of investment at the top of the gold cycle.
This will be quite opposite the current paradigm which is to think short-term, a paradigm that has been driven by the bankers and their ill-fated focus on returns in nominal, rather than real dollars.
these people don't get that; they have gold fever.
Here we go again! JB, can you inform this newbie where to look up your prior posts. It's been a struggle, but your last posts indicate that you are starting to grasp a few salient points about gold and currencies. Maybe this lemonbrain will pick up a few ideas.
Thats just it, I do get it, and when the government cant pay its bills because of not enough revenue, because of no consumer, and the fed monetizes the debt, or the gov defaults. I hope to be able to buy what ever money we are using then, or hey, maybe I already have it. But please tell me how they are going to make everything great again like in 1997? How are they going to fix the little problems again? Dump gold on the market? yea that will fix everything! YES! Tell Timmay and Ben to bring it! Two hundred dollah gold! I will take it gladly, but meanwhile, I think I will have some just in case it doesnt go that way. Oh wait, lets walk in a circle, they will come and take it from me instead.
The ironic thing about gold backing bank deposits is that it can be leveraged 100X without risk, but the commercial sector is overwhelmingly short the very thing they should be hoarding by (anecdotally) 100X.
who's to say they're not short the paper driving the price down via dollars they know will soon be worthless while quitely accumulating the phsyical money at the same time..
Actually, the problem is not that there aren't people willing to spend money, but that rising prices by devaluing the dollar doesn't work. That's what created this problem in the first place: the value of wages for 90%+ of Americans have less value today than they did in 1970, not quite by 50%, but close--and that's with two incomes for most households, when in 1970s 2 incomes was not the standard.
We've already had 40 years of dollar devaluation, where the slack was taken up first by a second income, then with credit cards. How many so-called middle class housholds need credit cards just to fill the gaps between paychecks for groceries & gas? When there's talk about dollar devaluation, etc. the focus is only on the large companies and getting them to dump their hoarded dollars, but this hoarding may be because their balance sheets are abysmal and they are, like the so-called middle class, holding vast debts that they can't pay either.
$2000 dollar gold isn't going to get people hired, its going to speed up the implosion of the economy because all the commodity prices will quickly follow suit. $4 gas had serious impacts throughout the production chain, and was even forcing companies like Walmart to rethink how they stock their stores; what happens when it's $10 gas or higher--as is the case in much of the "developing" world--in the US?
The concern in all this discussion is how to save the status quo, when it is in the process of system failure and reorganization towards something. Since there are so many individual moving pieces that determine what happens, I'm not sure anyone can really say (but I'm sure there are people who think they know--I'm just not willing to believe any of them).
Me neither, I have diversified a third each in re, paper, and pm, and a small gambling account as well. Those who come here belittling pm are missing an asset class, good luck to them.
"but how does that spur a public with no gold and no dollars to go out and spend"
Bingo. I live in a shithole surrounded by what I feel to be average people. Nobody in this motherfucker has any money. All the elders have maybe $100,000 saved and are relying on entitlements to get them through to death. The 30-40s I know have diddly aside from a 401k and maybe an underwater mortgage. The 20s just plain don't give a shit. Most are collecting unemployment and student loans with no intention of doing anything other than drinking and smoking. I can count on one hand the number of people I know who own gold and silver aside from jewelry. There will be no spending until there are jobs. There will be no jobs until there is serious change in government.
This country needs a hard, deep, fast bout of deflation to wipe out the malinvestment (a cat 5 hurricane slamming through NYC and DC wouldn't be bad either). People are going to be hurt, times are going to be disgustingly tough. But isn't it sort of an obligation to get it over with so future generations can at least have a chance?
Conrad, you may be right, all the way. Only a less than handful of people I know hold Gold (non-jewelry).
It may take a real blitzkrieg on the American economy to destroy the bad so we can rebuild. Those of us who have saved...
It's not just the economy either. Our whole culture needs a serious, grab-you by the throat and shake you senseless while punching your face in moment. When I was in school I used to be a troublemaker and would have to do volunteer work at the old folks home. I didn't mind too much at first because they had a pool table. Then, as I got to know more people, I learned A LOT. So many depression stories, and just general yarns about coming to America. People living 4 or 5 families to a house, ethnic neighborhoods where everyone knew each other and there was a bakery and butcher shop on nearly every block.
These days every spoiled fuck in the country thinks it's their right to have their own McMansion in some yuppie development. The thought of multi-generational households is abhorred. Shopping local has been replaced with pajama parties at Wally World sponsored by Busch and Winston(thanks stagnant wages). And god forbid you have to meet your neighbors!
A ravaging of the economy is certainly needed in order for productive growth to be possible once again. Hopefully it brings with it a social cleansing and reunification as well.
Yup.
A very strange and weird place this Country has become.
"Extend and Pretend" is a social phenom also.
I mean now that houses are kaput as an Investment Vehicle maybe folks will stay in a neighborhood long enough to actually come to know and rely on their neighbors....quaint idea, eh?
Your posting shows you have great empathy, you are to be admired. Your experiences have opened your heart to the weakest, elderly & children. What the Federal Reserve has done to all of us is criminal; I'm so worried about everyone.
If I thought that worrying would help, I'd worry too -- alas! Worrying doesn't help anything.
Love to Lynnybee :) Remember in November baby and who ever gets in may we remain eternally vigilant on their collectively corrupt asses until we can hit the reset button and remove the chaff from the wheat!
If only we could have another "Great Flood", eh?
Damn! I don't own a boat...
'social cleansing'.
You may wish to reconsider your choice of words, since that phrase has unfortunate connotations. I know its not what you meant, but nevertheless, this is the kind of talk that cost people their lives in the 1930's and 1940's.
i wonder why they felt the need to get rid of them?
http://tracker.zaerc.com/torrents-details.php?id=15133
A change in governemt is going to change things? How?
More magical thinking...
Resource costs are increasing due to depletion. Wages are dropping, due to global markets. US consumer (those folks that you're talking about) are going to get out of that hole because some different faces appear at the helm of the rich's ship?
I sense a failure to apply logic...
Fuck it, let's all sit around with our thumbs up our asses making snide, defeastist comments on the Internet.
You think too small. I'm not talking about replacing a captain. I'm talking about hanging the entire crew from the masts, setting them on fire, and smashing holes in the hull.
Hey Conrad, I have not seen you comment like this before! It is nice to get on here and see someone tell it like it is. I have been trying to spread the word that we as a country are in for some tribulation. Also, I have been making physical and financial contributions to establishments who are there for people who need a last resort to provide safety, food, and shelter. Heck the dollar is gonna be worthless anyway, like this article correctly infers-might as well help people who need it. Its not like I'm going to build a castle with frn's LOL! I agree, too many of us pop a thumb up the ass and just turn into a blow hard. We need to be getting up and doing what we can. No more-no less. The only way to safely cut the head off the dragon that is our "leadership" is to elect third party candidates to all offices. Make the republicrats the third and fourth parties--as they are irrelevant.
Our numbers are growing. The way I see it, if I give it my all, even if I don't see the results I wish for, at least I can die knowing I tried. Would it be easier to sit back, rake in as much as possible, and indulge until death? Sure. Hell, it might even be more fun. That's not who I am though.
I don't have kids, and don't plan on having any. So, in the minds of most, I have no reason to worry about the fate of the republic or the world. I shouldn't care if global warming ruins Earth, or if we enter into another dark age because of ignorance and apathy. But damnit, I do. Brilliant minds and brave souls shed blood and treasure so I, we, could have the recognized right to live as free men. They didn't know me, and were probably acting out of self-interest more than anything on the whole. Regardless, they skirmished on the intellectual battlefield and went to war on the physical. In my mind I owe it to them, my ideological kin, to keep up the good fight.
If ever I become so disenchanted with the prospects of the future as to not have faith that tomorrow can be better, well, I hope that is my last day in this existence. I would hate to be a burden to the parasites by using up their scant resources.
"History does not teach fatalism. There are moments when the will of a handful of free men breaks through determinism and opens up new roads" - Charles de Gaulle
A life style of less wants, less things more love and sharing. Its how i live mine, as simple as possible. growing our own food is a big help .
The individual cannot, will not be honored until he honors himself. So lies and other dishonesties must go so that we may carry our heads with the nobility we were destined with. We are not men, but "beings" in temporary human bodies and our limited time on earth is precious and deserves more notice than we give it.
That's the right spirit, son !
There will be no change without leadership. But there also needs to be a vision where the ship will go with the new crew. If the current system collapses without a viable alternative, things may go pretty ugly.
But what you are proposing will not be easy. It is the desire of the current captain and crew to keep their ship, and they will fight for it. To just wait and hope for a big deflation to act as a trigger for revolution may take longer than one might think ...
Complete agreement. Leadership is the tricky part. There are some very viable options (Paul, Napolitano, Ryan), and I will drill down into that when the time comes. I have certainly been putting in time and money for select candidates for state and local office, as well as Congress. However, my major priority this year and last has been focusing on family, friends, neighbors, etc. I have DVDs loaded with videos, audio books, and literature that I hand out to anyone who shows the slightest interest in learning. Everything from "The Money Masters", "The Ethics of Liberty", "Human Action", "The Law", "The Road to Serfdom", Thomas Woods lectures, everything I could find written by Jefferson, Locke, Paine, Franklin, Washington, and Blackstone, and plenty more.
I certainly have my vision of where I want to see things go, but there is much more power in a giant, educated, articulate mass coalesced around the first principles of natural law, equality and so forth. I have found that it's not that people don't agree, it's that they've never been exposed to it. That's been changing with this sort of renaissance the TEA party is inspiring. Yes, there are elements attempting to weasel in and steal the banner, but I don't think they'll be successful. There isn't a real leader or a headquarters. Lots of people in the movement have read "The Starfish and The Spider" and adopted the strategy outlined therein.
A hardcore depression is most certainly a catalyst, but it would obviously be better to go through established channels if at all possible. That said, no matter what the trigger or timeline is, education is key to success.
The last hardcore depression was a catalyst for fascism. Is that what you're asking for?
It worked out so well the last time; it even went nuclear! All our mad max types would be so happy. Until of course, they realized how quickly their "survivalism" gets them killed.
All political economics comes down to this: The powerful have lived at the apex of society while the majority of people have labored to support them. There were tradeoffs- promises of security or other benefits, but as long as history has been recorded this has been the reigning paradigm.
During the late seventeen and eighteen hundreds, there was a development of liberty as the industrial revolution caused power to fluctuate and workers could raise their standard of living. This time has expired, as the elite have regained the reins and righted their carriage.
The only solution to this is this:
Free markets
100% gold/silver backed money and private banking
Government invested in individuals as the most powerful action in society maximizing liberty
You cannot fix the existing systems, because they are all designed to enslave and protect an elite few. Federalism allows for the production of laws biased to the perogatives of the few and enforced by trained dogs.
The only possible solution to the enhancement of liberty is the destruction of government as previously known. Federal and state government must be restricted to the coordination of local efforts for the protection of private property only. All other rule must happen at the local level with final power resting in the individual. Anything else will produce the same system of elites- BECAUSE THAT IS THE NATURE OF MAN.
There are NO good leaders, just idealists waiting to be seduced by power and wealth. The individual is the only hope and salvation of a government of liberty, bathed in the waters of the free market and secured in the protection of private property. Anthing short of this will fail.
Revolution bitchez...
ron paul hangs out with worthless zioshill alex jones.
rand paul is a complete ziowhore. theyre all controlled opposition
a la ralph nader. tea party started and funded by low
profile koch brothers. feds are just proxy middlemen for the really big money behind the
curtain. real leaders get the jfk treatment.
Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.
H. L. Mencken
Bingo.
Exactly, all the reflation trade does is wipe out the debt people have (unless they have adjustable rates....)
But the reason they went into debt in the first place is people didn't have the money they needed to pay for basic stuff. (housing, education, etc. things people need)
The reflation trade does not address this original problem.
Aw! Come one, that's not positive thinking!
Yeah, really simple questions easily put huge holes in their logic. Pushing on a string. As long as we're playing with string we're screwed. Only a completely different game will change things; unortunately the same minds that created this mess are attempting to correct it (if even they are attempting to do That).
The peeps are branded with fear.
That's what I hear people saying.
Now we're inflating bubbles with golden bullets?
Would this really make people spend or is it more likely to make people buy hard assets like gold & silver?
Thats probably the main reason it will never happen. I could see however, the Fed have a third party bid gold up to "create" inflation. Im not so sure there isnt alot of sarcasm in Rickards suggestions.
I like Rickards but the American people could care less if the FED bought gold at 2K. That is not, in fact, a devaluation of the USD because we are not on a gold standard. An operation like that could wind up being comical, at best. True, to Rickard's point, he is suggesting a way the FED could frighten holders of cash out of cash. But even Rickard's knows this will not work. Rickards is suggesting a behavioral kick to the ass of American psychology. I get that. Just think it's too arcane to work.
GG
BUT you seemed to have forgotten the oil-for-gold/frn program put in place by a wise Saudi king. One does not need a "gold standard" or a gold-backed USD to witness a devaluation. He was smart enough to realize that sooner or later all fiat monies go to zero and thus put the program in place to protect the future wealth of Saudi citizens.
The banks have done a fantastic job at keeping the price of gold down but that time is coming to a close. As it was mentioned earlier, gold at $2k would easily command $4 gas at the pump. $4 gas as it relates to higher $$ per barrel of oil will be your devaluation and that's assuming petro-dollars are even still being used.
The "American" people will care when gas goes $4 and beyond.
I completely agree. Also I dont think alot of people realise how much gold the Saud has bought with petro dollars.
http://fofoa.blogspot.com/2010/03/us-mints-gold-disks-for-oil-payments-t...
Negative repo's or a negative discount rate will actually start things moving like metamucil, but you won't get any initiative from the banks on that one.
BNN.CA
Paul Taylor - BMO Harris On Gold Mining Stocks
http://watch.bnn.ca/friday/#clip343578
Interesting that Mr. Taylor expresses the view that even if they get the estimate on the gold price wrong, growing gold mining companies will compensate by throwing on more production.
Some currency melt-ups that will help things along are the Swiss Franc as regards bullion leases and changes in the lease rate, the Yen as an indicator to Yuan weakness thus U.S. dollar underperformance, and the Canadian Dollar which may actually see similar movement, which would benefit Canadian Miners vis a vis U.S. investors looking for miners in an appreciating currency.
Frank McGhee - Integrated Brokerage Services
http://watch.bnn.ca/friday/#clip342145
The ~$1680U.S. per oz. mentioned is an approximation of the 40-year inflation adjusted average using shadowstats.
-F6
What if the people instead of spending in things they do not need buy gold?
That will not help the government.
If the gold price keeps going up, gold will skyrocket and will have the opposite effect that Bernanke wants.
Can someone weigh on this?
Alas, I am no oracle so I cannot give you a good answer!
I kind of think that "the people" will not likely spend too much on Gold (as so few that almost all of us know who own Gold now). Things would have to probably be REALLY SCARY for the average Joe / Josephine to want Gold.
Nor can I really give a confident answer re whether a high Gold price would be what .gov would want, probably not though IMO.
...
If Gold skyrockets to the FOFOA like numbers, well, then the Chinese will have told us that "we live in interesting times."
fofoa.blogspot.com
http://fofoa.blogspot.com/2010/06/how-can-we-possibly-calculate-future.html
You can't be serious. If handed $1500, Joe Idiot is going to blow it on hookers and, well, blow. Americans are, on average, the dumbest shits imaginable! Some people might use it pay down debt, which would exacerbate the plummeting outstanding revolving credit chart. Unless you count gold rims or grills, nobody is buying any gold.
and if you blow it on gold; what's the difference? read the bible to figure this one out.A good time last forever on the mind;
+ :(
Well, seeing as I'm "Seer" I'll take a stab...
Gold will only be the realm of the wealthy. The bulk of the economic engine, the "consumer," is dead. There just ain't enough others to maintain any sense of velocity for currency. If people can't pay their bills I'd hardly think that they'd be in a position to purchase gold.
At some point the rich won't be able to jack up the "price" of gold because there won't enough demand for it: the masses will have resorted to barter.
Gold will still be better than shunned USDs.
So, I don't believe that it matters one bit whether the USD goes up or down, or whether there's inflation or deflation. The bulk of the participants are rapidly exiting the game (mases + some savvy upper-echelon folks). I suppose that this would translate to hyperinflation, a total loss of faith in the currency.
some common sense; but it won't be barter; it'll be cash/fiat; the nigga with the most guns; then he'll shoot the rich with the gold and make chains out of it to reward his generals, and give to his women, after they suck his dick.
You're going adolescent on us Abu Lemon. One minute you're talking about the quality of mind. Now you're lowering the vibration by being being rude and crude. They like that stuff over at the Daily Kos. You may be lost. The essential thing is nobody knows exactly what is coming. And we have guns and ammo to ruin the gangsta's day.
The Road to Roota!!!
One thing the author doesn't mention is how China, with, from what I hear, all orifices stuffed with T-bonds, feels about this sudden, catastrophic, 20% haircut?
Would the FED even dare try? I think not.
I can see so many ways for this to go pear-shaped in a heartbeat.
You are quoting 2009 figures. The 2010 (left hand) figures are:
China 843.7
Japan 803.6
UK 362.2
Oil Exp 223.0
Caribbean 165.2
I deleted the wrong columns. Thanks for catching that.
Why do you think China is now the world's largest producer of gold and no longer the largest holder of US debt?
They are paying attention?
They have probably been thinking about how they can buy a large quantity of gold without taking a 90% haircut. I'm pretty sure they would support this move. If not, then the Beijing put is in serious doubt.
Why is the solution to our over-indebted system always have to be to get it even more indebted?
Imagine bankruptcy court where the judge's verdict is always for the debtor to go into more debt.
The answer is that you have to think like a crook. The way the middle class is robbed is not at gunpoint (well, taxes aside) but rather through inflation. What you have in the bank was, until recently, worth less tomorrow than it was today. Deflation fucks with the scheme. We just went through the early stages of severe credit deflation--a mild credit winter, let's say. All hell broke loose for the thieving class because credit deflation made it harder for them to take their nicks. The bankster class has government in their front pocket. They ran to government for help. The attempted solution? Run huge deficits in an attempt to make up for the falling credit. The trouble is, it doesn't work--the printed up money went to all kinds of ridculous bullshit, not to anything with any lasting value or ability to provide a return. All government can do is cause a sugar high, it can't create confidence or real capital. The banksters are fucked, and they know it, but they continue on this course of action because it is better to screw the middle class awhile longer rather than just lay down and die in the dirt like they ought to.
I'd still like to see an insurrection. The whole house of cards would fall apart pretty damn fast.
You have to save insurrections for when the people have exhausted every legal remedy. We are nowhere near that. When the totalitarian socialists make legal remedies illegal, then you have an insurrection.
Judge Judy sentenced me to a Student Loan.
Chart: ES
Be short, be happy. It's September.
http://www.screencast.com/t/YjYyODg0MmQ
There is less than an ounce of gold per person in the world based on total gold ever mined, and also about 0.85 ounces per person in the U.S. based on U.S. gold reserves. A 20% devaluation versus gold wouldn't do anything, amounting to a ~$60 billion stimulus for the U.S. based on U.S. numbers. 20% is not even in the ballpark of what would be needed. Also, the commercial banks are the short sellers in the gold market, so if the Fed raised the price of gold, it would be hurting its biggest member banks.
Hansel, your remarks on Gold are always of interest to me.
That is one reason why I think that FOFOA's reasoning (about VERY high gold prices by the time we are done) have a lot of merit.
Gold goes to $1650? Big deal. Anything under $1500 / oz is a bargain to me.
Disclosure: When I get money coming in, part of that goes to buy Gold, I check the price, but it does not even matter. I buy, and will not sell except "in extremis", with the hope that my daughter (and future grandchildren?) will have something of value when this is "all over".
And the economy grows with Americans holding gold how? Spooking everyone into buying gold creates jobs how?
Ahhhhh. You say because you sell gold at a higher price and therefore you have more dollars to invest. Surely Form 1099 is not new to you. Not trying to argue.
What I remember from survivors of the Serbian War? What everyone wanted was toilet paper. "All over" scenario just doesn't work for me. CLean air. CLean water. Safe food.
Unless you live outside the USA...
here here. toilet paper is the great invention of all time; and probably the most valuable resource on the planet.
If I dab you with some, will you disappear?
I used to do business in some of the old "soft currency" countries back in the 80's. The goods I needed to get things done were coffee, cigarettes, double AA batteries, feminine hygiene products and toilet paper... They'd need D-Marks for the hard currency store but in years, nobody ever asked for gold.
TP is convenient. Not essential. Soap is worth more.
Water is the key.
+1
Gold is just a shiny rock, remember? People trade labor for these shiny rocks. That labor which is not consumed via those people's spending goes toward methods of increasing production. This is what grows the economy. Consumer spending shrinks the economy, contrary to what the voodoo witch doctor economists keep saying.
The shiny rock doesn't have value, it is simply a store of value. It is not water in a desert, it is a plastic bottle in the desert. When value is found, gold simply allows you to transport it, and to hold on to it.
that is exactly what I'm doing ! I'm gathering (mostly) silver & a few gold coins & that will be the inheritance that I leave my children. I've already told my children that if they sell it they will be sorry; they should let go of silver only if they are starving to death & have no other option. i just wish someone had told me years ago that i was supposed to be putting savings into "real money." WHO WOULD PUT MONEY INTO A BANK ACCOUNT TO EARN ZERO INTEREST ON IT ! IDIOT BANKERS !
i've got hundreds of silver and gold coins; some even older than jesus christ. it's all bullshit. pretty shinny things.
I'll take them all from you and will pay for the transport in return for a sixpack?
yeah, but the guy up the street will give me more. seriously, if the shit hits the fan and i have to sell my roman/persian silver coins; i won't get nearly the amount i paid for them; people don't understand history, or respect it. to them, or during times of desperation, it's just silver, to be melted down.
Sounds like you paid too much per oz. as speculation for a collectable.
You sir, are a douche bag
You have coins older than JC? Who believes that? You don't have an argument, you do have a lot of bluster.
I've asked the same question to a few people. Usually there is a pause. But rather than blank stares I can see they have at least started to question it themselves. Then they come back with the security thing. No one can steal it. I suggest it is already being stolen little by little. This is my hook to get others thinking about this stuff.
As a mechanic for the last 30 yrs I have learned to appreciate a good bearing. I have more PM than I can physically pick up at one time, and I will keep buying until I run out of FNR's. My desendants are already well taken care of, we dont need hope- we have real money.
The farce has to end one day, and the sooner will be the better.
But Banana Ben knows that he fights for his own survival.
Actually, if the Fed was smart, they would do exactly as Rickards suggests. What they need to do is to put money in the hands of people. In other words they need another bubble. They can't afford to have liquidity go in other commodities like oil because the last thing the economy needs is $140 oil. Gold, however, can rise to $3000 without impacting the economic recovery. Secondly, they don't have to actually buy gold. They simply have to create an environment where people will borrow money to bid up the price of gold. Just like the housing market.
The necessary conditions for another bubble simply do not exist. To have a bubble, you have to have a public mania--tech stocks, real estate, brilliant bubbles. Most everyone who dabbled in that shit got their ass handed to them, though. The lights are out. There is not enough free capital in the hands of Joe Idiot to kick off another bubble of any sort. Anyways, we're in the midst of a Treasury bubble right now.
graph it; it's a total bubble, like a hockey stick; just like tech, just like REITs
Give me a timeframe on which to plot a graph. From last week I see a hockey stick, for the last 100 years.....ho-hum, yawn. However, the fed balance sheet looks like this:
http://zerohedge.blogspot.com/2009/05/look-at-federal-reserves-balance-s...
You're tilting at a Johnny Bravo wanna be. And a less articulate one at that.
Heck, forget borrowing. Just need an environment in which the gold shorts get liquidated. They could probably accomplish this through a regulatory process (ie: auditing the fed, auditing the TBTF's), instead of a broader monetary policy initiative.
Why must they do anything? Let the economy contract, and let the insolvent companies die like they should.
The *entire* problem right now stems from the belief that something can and should be done.
The damage is done. We need our lumps.
Mr. Rickards has more brain power in his pinky than most have in their bodies. But....
Many people who have few dollars remaining are going to go dump them into crap they don't need because they fear a devaluation? So then what do they have? Crap and no dollars. Or....
They chase gold prices only to have the Feds slap a one time 33% gold "transaction fee" at the point of sale. Kiss your profit goodbye. Not to mention the average American still can't tell you the difference between an ETF and a Mutual Fund let alone know that the dollar is worth 20% less unless MTV and Cosmo Magazine are printing it as "news."
Where I see Rickards' analysis being prudent is if you are buying gold outside of the US and you have a safe place to store it. Hence advice to "Rickards clients" meaning not you and me. So basically Jim is saying Middle America is about to get phucked hard. Wonderful. Maybe Jim is also just emphasizing how important the November elections are.
fuck yeah! now we're getting somewhere. gold is a bubble created by the fed to get us to invest in a worthless asset. that's why all the big time names at cnbc are shouting GOLD!!! The markets are always trying to scam the most amount of people to get their money. I actually went to a gold dealer in town and basically just saw people selling jewelery; I talked about selling morgans and peace dollars,and pre-65 coinage i have. From the days when i was young and thought things had value.
Sell that motherfucker an get out. Banks don't have cash, what're going to do with couple of kilos of gold? store it? I know the mind set; I have silver, gold and stamps. You'll probably have to feed your monkey; i know i did.
you wanna know what the best investment i ever made was:
http://cgi.ebay.ph/PR-China-T46-Blk-4-Scott-1586-Year-Monkey-1980-MNH-/1...
guess what I paid for it in 1998?
Now that was funny. The description of the lot is a hoot.
Why does Eric King only interview perma-gloomers?
Why not interview the CEO's of some leading companies in the S & P 500 like Vornado Realty or Simon Property Group?
To find out what is really happening in Real Estate.
Simon is a gunning to be a backstopped whore, a TBTF in my opinion. They are buying up commercial real estate left and right. If they get themselves into a position where they hold a lot of cards, I think they think the gov is going to have to bail out huge holders of CRE. We are no where near the bottom, there is not blood in the streets, yet. Simon's buying is psychotic unless they are gambling on being bought by the Fed for full value.
To put this delicately, I think the Simon group is a bunch of, as you put it, "perma-gloomers" too.
"we are no where near the bottom" You damn skippy were not..People will know when we get close to the bottom, and how much there properties over shot there real worth...
Looks like hockey sticks to me.
What does a stock price have to do with "...what is really happening in Real Estate."?
To find out what is really happening in Real Estate.
Robo, I thought you played for the team! I'm sure you are well aware of what's going on with Pershing Square:
http://online.wsj.com/article/SB10001424052748704282504575472220284412674.html?mod=googlenews_wsj
I would imagine if the judge rules against them, it could set a precedent... leaving a lot of the investors who have been hatching the rumors of a CRE market rebound busted. Even IF the cases go their way, you are fighting against abysmal growth and fundamentals. Whatever you are smoking, I'll have some!
PS- VNO looking at serious resistance at $90
The best part of the article:
"once you have that scale and that degree of complexity so that you are prone to collapse, the catalyst doesn't matter"
I suspect that nature doesn't do complexity for a reason...
Exactly. And when the collapse does happen, the academics will claim that they "could not have seen it coming" because it will appear totally random. But they will overlook the reality that they created a level of complexity which invited chaos.
The gold bubble won't work. Why? Not enough gold.
Do the math. World's gold value: $6T at 1200/ounce. Inflating it by 20% is $1.2T. Meanwhile, there is $54T of debt in the US alone and since 2008 Americans lost nearly $12T of their wealth... so plugging a $12T hole with $1.2T is foolish. The Fed needs a much bigger bubble.
Listen carefully to Hugh Hendry (starting at 3:00):
http://www.youtube.com/watch?v=cQjD2sw_eg4
index funds. no one has to physically own gold; most people don't, or don't want to; own stock in a mine; all the articles i've seen talk about indirect ownership; thisis why it's a buble; and why gold ownership doesn't matter; plus, jewelery? talk it up enough, an people will buy cheap 14k gold rings an chains, bling; cause dey retarded. their is plenty of gold to go around. tons and tons of it; most gold from ancient times on; is saved; and been recycled; we have tons of it. and new mines opening up everyday. just saw one in mexico where they were estimating 18 million tons. it's in your mind. created by the fed of course :)
Good God Damn !!!
18 Million Tons of GOLD !!!
Please...please...pretty please !!!... give me the name of that company first thing in the morning. I've just put in a sell order tonight on everything I got and am just waiting for those call letters to BUY that sucker.
Thanking you in advance.
DP
18 million tons of gold lol
That kind of haul could do nasty things to the gold price. I hope this tip doesn't go mainstream.
Wave buh-bye to your credibility, lemonpartyobrien. That is more than 100 times the amount mined in all of human history.
Fuck off, you ignoramus.
The "not enough gold" meme is getting as tiresome as "you can't eat it".
There is more than enough gold. Get a grip.
http://fofoa.blogspot.com/2010/06/how-can-we-possibly-calculate-future.html
I heard the interview this morning and thought it was intriguing and insane. I like Rickards.
I have not heard anyone address the core of the "golden bullet" concept.
He is claiming the following:
Gold is allowed to drift upwards in price. This intrinsically suggests a devaluing of the dollar (I already stop here and go "oh really?" We have seen gold and the dollar decouple before). The people, scared of a devalued dollar, focus here, scared, buy ANYTHING. Middle America shoots their wad (credit cards, savings, fuck, food stamps) buying stuff before it disappears. Anything. Get your head around this. It is on! What are YOU really doing when it is on? Stuff disappears. More stuff needs to be made, shipped, stocked, displayed, sold. The theory is that this gap will serve as the final kick that starts the engine of the economy.
Now, my issues are as follows:
1. Didn't happen in Germany, Argentina, etc. No employment start up to meet demand for stuff after it all disappeared off the shelves.
2. Why will this kick, even if it happened, be enough to get the engine going in a sustainable way? Wouldn't the restocking happen and then things peter out because everyone spent every last dollar and all their credit getting stuff before TSHTF?
3. In the interview he suggests that there will come the point, could be $2000 gold, or not, where an equilibrium would be struck and the people would trust the treasury/fed and would cease to panic. Funny shit. Like there will be a choke collar on everyone when they are scared. Once you put that hyper in hyperinflation, I don't think you can put a brake on it.
I can't keep typing so I will stop for now. I see alot wrong with this and my tinfoil hat is going off regarding Rickards now. What kind of shit are they opinion polling here?
Mr. Rickards’s career, prior to Omnis, spans over 30-year period during which he was a...
first hand participant in the formation and growth of globalized capital markets and complex derivative trading strategies.
globalization {?}
derivatives {??}
He has held senior executive positions at...
Citibank {???}
RBS Greenwich Capital Markets {????}
Long-Term Capital Management {?????}
Caxton Associates
OptiMark
Mr. Rickards has been a direct participant in many of the most significant financial events over the past 30 years including the...
1981 release of US hostages in Iran {??????}
1987 Stock Market Crash
1990 collapse of Drexel
LTCM financial crisis of 1998 {???????}
in which
Mr. Rickards was the principal negotiator of the government-sponsored rescue. {????????}
He has been involved in the formation and successful launch of several hedge funds and fund-of-funds.
His advisory clients have included private...
investment funds
investment banks
government directorates.
Since 2001, Mr. Rickards has applied his financial expertise to a variety of tasks for the benefit of the
US national security community {????????}
Department of Defense {??????????}
.....................................................................................
Wow!!!
The dude gets around ... all the right places... all the right times.
He wouldn't be BS'ing anyone... would he?
Is Cabal setting up to play the Long side of Gold?
Naw!!!
He's not one of "them".
DP
I don't get whether he himself is advocating people spending their savings--that would mark him on the side of the banksters--or is he just outlining the thinking of the banksters in relation to running up gold. At some point, the bullion bankers have to cover their shorts and go long. I assume they all bought gold cheap in late '08 for their private stashes. Dan Nourcini gave a more interesting interview over at King. It has practical value.
Agree w you, but . . .
Nothing the Fed does "works". The Fed doesn't have to care about "results".
In a very macro sense, I've been saying and believing for some time that EVERY major country wants to depreciate its currency against its competitors (or else stay very low in relative value to keep a positive trade balance). Thus all countries WANT to depreciate against what? Only one non-depreciable currency: Gold.
And that's just what's been happening.
So whether the Fed does a shock therapy per Rickards or just continues to inflate gradually (15-20%+ deval PY) doesn't really matter. The alleged theory is that visibly negative short-term interest rates will force $$ out of cash.
From a pvt citizen standpt, the Rickards hypothesis is useful to potential and actual investors, as it reminds them: Don't trade your core gold holdings. As with AIG, its value can move in quanta. I think that's Rickards core point. BUY AND HOLD.
Here is my contribution (human emotion) - this thread is stressing me out.
The Fed will never buy gold to devaluate the dollar. NEVER. This golden bullet will never happen.
If the Fed wants to create price inflation, it just has to monetize more government debt. And that is what it is doing and will do even in more quantities in the future.
Why would the Fed directly benefit gold holders instead of benefiting the politicians? At the end the Fed can only operate because the government imposes a monopoly on money. The Fed wants to keep politicians happy, and that means monetizing more and more gov debt.
That said, gold will go up with either option.
That is correct. What he is proposing is a gold standard without using the phrase "gold standard".
Think about what the gold standard was--you could trade your dollars for gold at any bank at a set rate. The only difference is that this version of the gold standard allows the price to float a bit, but in reality, it means that the treasury becomes a gold shop with a 10 dollar spread.
This is absolute rubbish. 95% of Americans could care fuck-all about the price of gold. They care about the price of food, gas, iPhones, etc.
This article is a waste of a read, except to expose this Rickards guy as an out of touch idiot.
That is all.