Mr. Denninger and Gold – Part Deux or: A Rebuttal to All Fiat Money Apologists

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Sat, 06/19/2010 - 05:45 | 422479 GoldmanSux
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Gordon Gekko= Escape Key= Alak=same poster.

Sat, 06/19/2010 - 12:00 | 422621 akak
akak's picture

GoldmanSux  =  JohnnyBravo  =  JayBayBaker  =  Arm  =  My grandmother's overflowing colostomy bag

Thu, 06/17/2010 - 23:45 | 420770 Joe Sixpack
Joe Sixpack's picture

"We've already had two spectacular rises followed by two equally spectacular crashes (2000 and 2008) followed by another spectacular rise in 2009 "


Don't forget the flash crash a couple weeks back. $1 trillion gone in seconds. Thisnk how much real gold that could have bought!



Thu, 06/17/2010 - 21:18 | 420605 paladin
paladin's picture


How about gasoline?  Higher today, but far off its peak.  Same for the base stock, crude oil - pretty flat over the four years, and about double the purchasing power off its peak.


this is the same crap I read that gold was $850 in 1980

was this the true price of gold then......oh yes I old your you??

so Karl as to the price of oil to $149..


how do you play in the price today?? that deflation??





Thu, 06/17/2010 - 20:39 | 420559 paladin
paladin's picture

Karl said..

A thing that is unobtainable at any price has a value of zero.  That's the paradox.  If you're right you need guns, ammunition and the ability to produce your own food and drinkable water.  The gold will be a good doorstop, and the guy with more guns than you (and there always is someone who does) will soon have both the guns and gold


to you both....the rule of does not care what GOD you pray to......if this is what is to dog eat dog....I care not to go down that line of thought...paladin

Thu, 06/17/2010 - 20:21 | 420543 paladin
paladin's picture

are you telling me that in 1980 you could get out

of gold and into 10 and 30 year bonds at would not do it????

Thu, 06/17/2010 - 20:15 | 420532 paladin
paladin's picture

as GG has said in the thread a average price over 20 years.

I will call it....I was on the ground in late 1970 as to the rise of gold....the 1979 gold chart was a line in the sand at $400 an OZ...

$400 an OZ was the average,,,,,,up 100 then down 100 ..then 400 late or 1990 up the price was stable till late 1996----1997..

something happened then........stock com?

this was the game changer

Thu, 06/17/2010 - 19:46 | 420498 paladin
paladin's picture



It appears that Mr. Denninger has an issue with anonymity, perhaps being irritated at not getting the opportunity to engage in ad hominem attacks, as is his custom

Oh no, my issue is quite simple: Nobody snivels in the corner unless there's a conflict of interest - or an outright lie - that might be concealed.

You have the perfect right to speak anonymously, if you can find anyone who will listen.  But there's a difference between a right to speak and a right to demand others pay attention to you.  The latter comes only with some modicum of integrity, and that can only be shown when one has a reasonable means to discover what sort of conflicts you might have in your speech.

The finer points of speech, specifically credibility, seems lost on those who write under a nom-de-plume.  You're certainly entitled to do it, as is Zerohedge, and I, along with the rest of the readers, are perfectly entitled to conclude that the reason you're hiding is that there's something embarrassing that would be learned along with your identity.

Perhaps you're a gold dealer.  Perhaps you're a central banker.  Or perhaps you're a 12 year old kid posting what one of the Rothchilds' gave you? 

Do words stand on their own?  Perhaps.  You're free to deny people the knowledge of your identity, but wise people consider that those who do so usually have a reason to hide.

end (snip)market-thcket


as a poster on many sites over the years I have said to me.....I hope you die with your will die with your silver.......people will kill you for your gold....

as someone who has a site or fourm.....I anyone on your site posting with their name...or are they posting as anonymous



Thu, 06/17/2010 - 19:22 | 420472 paladin
paladin's picture


great post......I will now look at Karl's site and read what he said....


as I posted on another gold thread on ZH..


The Reagan Diaries, which follows Ronald Reagan's 8 year term through
his daily dairy entries, and lo and behold, early on at page 25 comes this obvious bombshell
from economist Arthur Laffer: "Art Laffer dropped a grenade on his colleagues when he said we weren't
going to solve the fiscal program until we returned to convertibility of money for gold. I would have
liked to heard the discussion among the economists after I left" - Ronald Reagan

Thu, 06/17/2010 - 15:38 | 419999 Gordon_Gekko
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One of the analysts I respect, Gary Tanashian of had this to say after reading Denninger's latest rant:

Karl Denninger's posts have been linked over at the main site on several occasions but more and more it seems to me as if he is rabid in his viewpoints and too emotional about nearly everything. I think he is smart, but maybe so much so that the forest is obscured by too many trees (signposts, data points... what have you).

Thu, 06/17/2010 - 07:43 | 419024 Treeplanter
Treeplanter's picture

Sometimes I regret spending half my savings on real gold and silver when I see how my mining shares have doubled, tripled, etc. since late '08.  But it may not be long before we find it hard to get delivery of real metal.  My metal is hidden where Uncle Sam or Lord Obama can't find it.  Mining shares earn more but they are far more easy to confiscate by a tyrannical gov't.  So, the hoard stays where it is.

Thu, 06/17/2010 - 07:17 | 418992 Instant Karma
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Over time gold and silver have been monetary means of exchange. But the barter system goes back perhaps longer. A simple exchange of goods and services. Back in the day food and spices and salt and seeds and sugar and other essentials and non-essentials were considered a type of money: items of value easily traded for other items of value.

Gold has historically been a store of wealth, and seemily will continue to be.

But like most things it has little intrinsic value, outside its utility as a highly ductile, malleable, non-oxidizable, shiny yellow metal.

There are other rarer, more "precious" metals like platinum, palladium, and rhodium.

Jim Rogers believes that the best inflation hedge against money printing is a well-construted basket of commodities.

Have I moved a good chunk of my money into precious metals? You betcha.

If you think about it, there's a lot of risk have all your wealth tied up in the currency of any one country. Something bad happens to that country, it's currency is worth a lot less.

Thu, 06/17/2010 - 07:08 | 418976 Grand Supercycle
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EURO bullish warnings mentioned earlier, have strengthened today. Vice versa for the USD index of course.

I have detected EURO buying support for several weeks now.

XAUEUR daily chart gives bearish warnings as of today.

This could be an important development.

The proprietary indicators I use in my technical analysis can identify trend changes before they occur.

Thu, 06/17/2010 - 09:30 | 419176 TheWord
TheWord's picture

And gold is going ape.  Well done, Karl.  Next you'll be challenging Cramer and the Squid for top contrary indicator status.

Thu, 06/17/2010 - 04:38 | 418930 yabs
yabs's picture

yeah this guy is similar to Nathan from nathans economic blogspot

espouses freedom but if you disagree with him you are banned

Nathan thinks Gold standrads are the same system we have now and its who controls the supply of money thats important, not what backs it

In a perfect world where people can be trusted I agree

but greed always trumps any system in the end

you cannot trust any human with the money supply is the bootom line

You HAVE to back it with something of worth and gold is all we have

Thu, 06/17/2010 - 09:40 | 419192 economicmorphine
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We actually have silver, too.  Readers who are unfamiliar with it should read the Coinage Act of 1873.  Also, the work of Hugo Salinas Price in Mexico to move that country to a silver standard is noteworthy.  I am a big fan of a bi-metal gold+silver standard because it gives the little guy like me a fighting chance.  Just saying.

Thu, 06/17/2010 - 03:52 | 418908 EscapeKey
EscapeKey's picture

I just want everyone to know that da Vinci's Mona Lisa is worthless. It must be, since it isn't on the market to trade. Denninger taught me that.

Gold (or whatever) must maintain it's value in real terms.  That is, I must continue to be able to buy and sell it in exchange for other things.  But you already claimed there would be none on the market at any price - that is, there would be no trade in it at all.  If this is the case then it is worthless, not priceless.

Oh, and this assumes you wish to exchange your gold for rapidly depreciating paper currency.

Government cannot steal it, or you won't have it.  But history says that government will steal it.  And they don't have to do so by outright confiscation either - they can whack you with a 90% tax on it at the point of sale and demand that all dealers register and report.  Oops - they already did the latter after 9/11!

Fxxx this, I've got better things to do than pick his downright moronic post apart. I used to respect the man, but he's clearly lost his marbles.

Thu, 06/17/2010 - 09:14 | 419145 LePetomane
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It was a mindnumbing experience to be sure.

Thu, 06/17/2010 - 03:54 | 418909 akak
akak's picture

LOL!  Great call, EscapeKey!

I had read that as well, and saw the idiocy in it.  Frankly, Denninger's whole juvenile diatribe was exceedingly hard to read, so full of logical fallacies, irrational emotionalism, and outright lies as it was.  But your analogy here with gold and the Mona Lisa is, well, .... priceless!

Thu, 06/17/2010 - 05:16 | 418913 EscapeKey
EscapeKey's picture

I'm sorry, but it's clearly worthless, seeing how it isn't available to trade.

And how about this:

Soybeans, Wheat, Corn?  Flat from 2004, roughly.  Six years, no price change of materiality.  Oh sure, it's gone up and it's gone down, but it's back where it was in 2004 for all of those basic commodities.

Karl has seen no inflation since 2004. Does anyone wish to dig through inflationary stats to prove how wrong he is. I googled a few graphs which all confirm inflation for certain items is around 20% (food, generally), but I can't be bothered finding a reputable source.

Here's one from the Daily Fail, which confirms significant inflation in the UK.

It's grossly inaccurate and dishonest to use the exact date that Nixon yanked the $36 peg as your comparison.

Yet he sees no problem with cherry picking the peak of gold prices when comparing to todays price level.

I'm not gonna comment about the picking of gold's exact date, although it serves as a less arbitrary date, considering it was the date of float.



Thu, 06/17/2010 - 19:33 | 420481 Island_Dweller
Island_Dweller's picture

I've always hated the argument that this or that crop is the same price as it was "x" years ago.....

Afterall, the government subsidises most crops; we can't possibly know what they would fetch in a free market because we don't have one.

Thu, 06/17/2010 - 03:47 | 418907 The Mighty Monarch
The Mighty Monarch's picture

Personally, I dig Karl. I credit him with helping me along in my own personal self-discovery of our financial system and how utterly screwed it is (or as beautifully put by Doug Stanhope, "it's all d*cks and no holes.").

However, his one big fallacy is that he appears to believe the system can be fixed from within. We just need the Fed to "abide by the rules" and all will be well. That's great...where are we going to find people to enforce it? How does he propose arresting the criminals when their lackeys are the ones with the handcuffs?

Reminds me of Milton Friedman schooling Phil Donahue on the supposed virtues of central planning..."Where are you going to find these angels who will organize society for us?"

Corruption is at every level and the cops are sufficiently bribed. When in this situation it seems prudent to exit the system as best you can and watch it consume itself.

Personally I'm happy to sit on a bit of cash, a few gold and silver coins, and ammo while I tend to my vegetable garden and collect a few eggs from the chicken coop. All the while preparing to bug out of the suburbs to the family ranch if need be.


Thu, 06/17/2010 - 03:25 | 418898 huckman
huckman's picture

If you doubt Denninger, then you doubt Gundlach too.  If your one of the dumb asses asking who's Gundlach, then do as the Samari did and go commit Hari-kiri !  

Thu, 06/17/2010 - 03:40 | 418903 EscapeKey
EscapeKey's picture

Since I'm one of these "dumb asses", I decided to google Gundlach:

Beno J. Gundlach

Manufacture installation tools for resilient flooring, carpeting, plastic laminate counters, and ceramic wall and floor tile . Catalog, parts list and a ...

Hmmm... probably not.

Gundlach Industrial Crushers crushing solution for coal, potash ...

Gundlach Crushers are the preferred crushing solution for coal, potash, salts, lime and other higher value industrial minerals where precise product sizing, ...

...mmm, no, not that either.

Gundlach Bundschu

Family-owned producer of a range of red, white, and rose wines in Sonoma. Includes information about their products, vineyards, and winemaking team, ...

This is followed by some guy on Twitter, an ex-star manager being jailed for drugs, a plumbing&heating expert, and a Polish engineer.

But, clearly, your prophet is better than Mises.


Thu, 06/17/2010 - 03:04 | 418886 EscapeKey
EscapeKey's picture

"Uh huh.  How many of those were due to external debt?  How many came on the back of a war?  (Oh, and you omitted Lincoln's greenbacks, although those didn't fit YOUR definition of a currency collapse.  Nonetheless, anyone who held them for more than a day sure felt they were in one.)"


I don't even understand this argument. External debts were inflated away post-WW1 in both Germany and England, but it's hardly as if internal debts haven't been either. I think he should pick up "This time is Different" - it states internal debts are easier to inflate away, as they can't withhold credit, and cease trading with the inflator nation.

And Argentina's hyperinflation in 1989 wasn't due to war, and neither were all the perennial inflationary issues in South America throughout the 20th century.

Karl's post translates to little more than a 5-year old throwing a tantrum.


Thu, 06/17/2010 - 03:06 | 418887 akak
akak's picture

In actual fact, Karl's post more closely resembles the contents of the diaper of a 2-year-old after throwing a tantrum.

Thu, 06/17/2010 - 03:20 | 418892 EscapeKey
EscapeKey's picture

I'm trying to work my way through his post, but it is hard because there's so many issues which clearly haven't been thought through, such as this:

"You can no more provide evidence that "gold is the only real money" any more than I can prove there is a Christian God.  Both are articles of faith and those who run them demand fealty - or you are called all sorts of names."

Considering he's of the faith of paper currency, that is... well, rather shocking he would post the above without even proof reading it.

Karl, OK, Gold is to an extent faith. But so is paper currency. And in the event the SHTF, the governments and central banks who, indidentally, store gold in their vaults as a significant and growing part of their reserves, can debase the paper currency, but will find it a little harder to debase gold.

Gold might not ultimately be the best asset class in the event of hyper/high levels of inflation, but you can rest assured fiat currency won't be.

"Have you ever noticed that all those who make such claims and actually put dates on them wind up committing suicide when their prediction fails to materialize as expected?  The wise ones sucker people along by refusing to provide a date."

This is SO STUPID. The smart guys in the room know that timing is everything. And yet, he seems to have a serious issue because people don't provide an exact date? Ridiculous.

If Karl had lived in Germany in 1920, and had the same conversation, Karl would have lost everything in the following years. He even carries on with this line of reasoning - "PROVIDE A DATE"

"The currency you have now (dollars, in the case of the US) will collapse.  Again, if you're going to predict this, you must both predict an event and a time or your prediction is not actionable."

This is too painful to read, I need a strong cup of coffee to continue.

Thu, 06/17/2010 - 14:44 | 419883 Gordon_Gekko
Gordon_Gekko's picture

I have provided busloads of evidence, yet cannot help someone who refuses to look at it. Idiots like Karl DESERVE to lose it all.

Thu, 06/17/2010 - 02:14 | 418866 mliu_01
mliu_01's picture

IT is very simple to settle this.  All takes is Mr Denninger Publically announce to his tickerforum readers that he will never ever purchase one ounce of gold or silver under any circumstances. That will settles all.



Thu, 06/17/2010 - 03:04 | 418885 akak
akak's picture

I see the cowardly pro-Denninger flag trolls are out tonight!

As well as a petulant "Arm", whose cover is now blown.

Thu, 06/17/2010 - 10:42 | 419341 A Nanny Moose
A Nanny Moose's picture

Hmm, I read that merely as a call for KD to put his money where his mouth is. Don't think I have ever heard him say he would never buy gold. But that really does not settle the debate.

But my brain is small, and I don't read so good. I say drink a little from all K00l-Aid glasses

Thu, 06/17/2010 - 02:01 | 418854 thisandthat
thisandthat's picture


Speaking of amendments, I came across this:

If any citizen of the United States shall accept, claim, receive, or retain any title of nobility or honour, or shall, without the consent of Congress, accept and retain any present, pension, office, or emolument of any kind whatever, from any emperor. king prince, or foreign power, such person shall cease to be a citizen of the United States, and shall be incapable of holding any office of trust or profit under them, or either of them.

Apparently it's the original 13th amendment, from 1819, and missing since the Civil War: (page 2)

Thu, 06/17/2010 - 02:00 | 418853 DoctoRx
DoctoRx's picture

Status of gold audit as of 1982 report.  Don't know follow-up

Thu, 06/17/2010 - 01:47 | 418843 dumpster
dumpster's picture

not so fast gold man

 vis MV=PT. If you would like to take a breather, Henry Hazlitt has an excellent summation on the error of Mr. Denniger's ways.

from capitalist man

Thu, 06/17/2010 - 00:46 | 418793 GoldmanSux
GoldmanSux's picture

Point, set, match to Denninger, in my opinion.

Here is his response...

Day after day excellent commentary by Karl.


Thu, 06/17/2010 - 11:57 | 419499 What a mess_man
What a mess_man's picture

I'm with you but it seems we are in the vast minority.  Gold bugs really dislike Denninger!

Gordon your posts are quite good, and give us much to think about.  But what I really like about Karl is his thorough analysis which he backs up with math - very cool.  A lot of irrefutable stuff.  You have to take a lot on faith with some of these conclusions re Gold.

In full disclosure I hole about 13% gold and have done very well with it in the past year...

Sat, 06/19/2010 - 00:18 | 422381 GoldmanSux
GoldmanSux's picture

No, we're not. For every 10 people who proclaim the merits of physical gold and the giant conspiracy, 1 actually owns even a gold coin. It's just the shouting that turns their crank.

Alak and Escape Key are Peter and Paul to Gekko's Jesus. Of no consequence unless you don't agree with Gekko. They are precisly who Denninger was writing about in his response. They've got gold religion.

Not that it needs a religion. It's in an 8 year uptrend. So, I am a 13% owner too. Will keep adding if and as it rises.

Denninger is unique in several ways. He always asks himself why things happened and what the result was. And then provides practical solutions. I don't know him, but I would think he has the mind of an engineer, but unlike 98% of the engineers I've known, realises the world doesn't run on a linear equation.

Nothing against Gekko, glad for opinions of everyone. But his minions have no substance.



Sat, 06/19/2010 - 03:04 | 422445 akak
akak's picture

Baseless assertions, ad hominem attacks, and irrelevant insults ---- wow, you do have SO much to offer this forum!

If you chose to denigrate a strong and principled stand against the massive monetary corruption and crime of fiat currency as "religion", then that is your business.  But it is interesting that you do not equally chose to label the rabid and hysterical defense of fiat currency by the current power elite as "religion" as well.

Sat, 06/19/2010 - 04:12 | 422463 GoldmanSux
GoldmanSux's picture

I don't attack Gekko's stand. I attack you, Peter. Get your own opinion, defend it, or fuck off, you acolyte.

Sat, 06/19/2010 - 11:50 | 422620 akak
akak's picture

Go back to screaming at pigeons in the park, you unhinged basket case.  You're pathetically and absurdly off base.

Thu, 06/17/2010 - 03:22 | 418895 EscapeKey
EscapeKey's picture

Well, then you clearly lack the ability to comprehend. Karl's post amounts to little more than a 5-year old throwing a tantrum.


Thu, 06/17/2010 - 01:52 | 418846 akak
akak's picture

I think Denninger just embarrassed himself further.

His ignorance of monetary theory and history, and his pigheaded obstinancy in refusing to recognize and admit his ignorance, is simply breathtaking.

Thu, 06/17/2010 - 00:41 | 418788 repo 105
repo 105's picture

Maybe you could give us the timetable you see this hyperinflation happening?  Tomorrow, next week, year, decade, century? I will predict the Sun is going to burn out, but don't know what good that does you without telling you when. I know it hasn't started yet, my money goes further this year for food, shelter, clothing than last so even a starting date would be helpful. Thanks.  

Thu, 06/17/2010 - 03:23 | 418897 EscapeKey
EscapeKey's picture

You wouldn't have predicted it in Germany in the early 20'es. Or Argentina in '89. Or Hungary in '46... you would have lost it all.


Thu, 06/17/2010 - 01:39 | 418840 LePetomane
LePetomane's picture

Hmm. You bet on infinite (the sun will never set on the US dollar for, like, a long time) while demanding exactitude from your counterparty.

Wow. Those are fantastic odds!

Thu, 06/17/2010 - 01:39 | 418839 LePetomane
LePetomane's picture

Hmm. You bet on infinite (the sun will never set on the US dollar for, like, a long time) while demanding exactitude from your counterparty.

Wow. Those are fantastic odds!

Thu, 06/17/2010 - 00:30 | 418769 Cistercian
Cistercian's picture

 Zero Hedge has a number of fantastic contributors, and among them GG is one of the best.I always look forward to your posts Gorden.Thank you very much.

 Gold is money.FRN's?Not so much.

Thu, 06/17/2010 - 00:25 | 418760 Jesse
Thu, 06/17/2010 - 00:41 | 418787 Gordon_Gekko
Gordon_Gekko's picture

I was thinking of doing a post on this very topic. Everybody is screaming how Gold is a bubble, yet they cannot see a bubble hiding in plain sight. Nice post Jesse.

Thu, 06/17/2010 - 04:07 | 418921 EscapeKey
EscapeKey's picture

Not that I'm a great conspiracy theorist, but TPTB have a potential interest in talking down the value of gold, but not the currency. And since they, in the eyes of the MSM, are claimed to be the experts in their field, they will be the ones who are interviewed with regards to their opinions.

Great piece, btw GG. I thought last round was still too close to call, but this time it isn't even close. I think you did yourself a favour by taking your time to respond. Karl's post reeks of froth-at-mouth, and he's clearly committed the mistake of not proof reading his post.


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