• BullionStar
    05/30/2016 - 21:24
    The US Gold Market is best known as the home of gold futures trading on the COMEX in New York. The COMEX has a literal monopoly on gold futures trading volumes worldwide, but very little physical...

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

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Thu, 06/17/2010 - 00:25 | 418759 Gordon_Gekko
Gordon_Gekko's picture

Denninger claims links not working:

Incidentally, the first rule of linking someone somewhere is that you actually have to make sure that the web address you link to works.  My billing rate is $300/hour if "Gordon" is incapable of managing to get his blog to work on his own, as the link on Zerohedge, along with the links on his site themselves, all say "go here" but when you do you go back where you started... but I digress.

Anyone having any issues? Seems to be working fine for me.

Thu, 06/17/2010 - 07:43 | 419022 breezer1
breezer1's picture

yes, congrats gordo. excellent response. don't keep me waiting so long next time. by the way do you have an agent? i can make some time.

by the way i have tried to reply on your blog but put my failure down to big fingers. not a problem since you always show up here. +10

Thu, 06/17/2010 - 01:09 | 418813 AVP
AVP's picture

No problems here GG. Just more lies from Denninger!

 

 

Thu, 06/17/2010 - 01:07 | 418809 Capitalist Man
Capitalist Man's picture

 

Actually, I just read his newest "rebuke”, and his link to your above post didn't work for me. Do I have to be a pontificating douche to collect a fee for his link not working? Since clearly his was arbitrarily set, my going rate is 1 troy oz for him wasting my time. 

The bulk of his refutation (or at least the second half - full disclosure: started skimming at this point) seems to be using math to dispel common sense vis a 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. http://mises.org/daily/2916

 

 

 

Thu, 06/17/2010 - 01:32 | 418832 Gordon_Gekko
Gordon_Gekko's picture

Clearly, anything above $0/hour is too high a rate for Mr. Denninger's "expertise".

Thu, 06/17/2010 - 01:56 | 418851 akak
akak's picture

Gordon, I eagerly await your next decimation of one of the public gold-hating central bank lackies!

May I suggest you go after Jon Nadler next?  I even have a working title that you are welcome to use: "Jon Nadler: The Baghdad Bob of Gold"

Sat, 06/19/2010 - 04:16 | 422464 GoldmanSux
GoldmanSux's picture

Gordon, can I suck your cock? Please, pretty please?

Sat, 06/19/2010 - 11:47 | 422617 akak
akak's picture

Troll much?

(That was a rhetoric question, asswipe --- the answer is self-evident.)

Thu, 06/17/2010 - 11:33 | 419452 Bay of Pigs
Bay of Pigs's picture

The Nadlers, Gartmans, and Christians, are all on the run. Their credibility has been shot to pieces.  I can only assume Nadler bashes gold because his outfit KITCO is short of the metal in their allocated pools. I know when silver went down (from 20 to 9) he wouldn't respond to my inquiries as to why MORE metal wasn't available. It's just "a delay, not a shortage" he told me. LMAO even today at that one! 

Amazing writers on gold here. Bay of Pigs says "oink" to that. You guys rock. I've been over at Mish's site banging away for a couple of years with little progress to convince people there to buy and hold some gold. Even Mish (who likes gold) refuses to engage on the manipulation of the PM's. He calls it "conspiracy theory". Sad.

 

Thu, 06/17/2010 - 12:37 | 419582 MsCreant
MsCreant's picture

You and Queen Bee helped me buy my first 10 Krugs @ 800. Been adding ever since listening to Gordon and others here. No regrets. I posted as They Stole my Country. Some of us listen.

Thu, 06/17/2010 - 21:54 | 420641 Hephasteus
Hephasteus's picture

I remember when you got your first rush as it rose up past what you paid and then how you got nervous when it fell below your buy price. Now you are a steely eyed gold bug. LOL

Fri, 06/18/2010 - 09:13 | 421082 MsCreant
MsCreant's picture

I started out as a Silver Belle. Naturally I bought in at 21.00 the first time I bought so I am still under water on a few of my PMs. Today's drama should help and on the whole, I am way up (better than CDs).

All of us should have nosebleeds today.

Hope you are well Heph. I enjoy your brain on here. Quirky, funny, scary smart, and insightful. 

Fri, 06/18/2010 - 14:55 | 421743 Hephasteus
Hephasteus's picture

That's funny that you are worried about the silver.

http://www.youtube.com/watch?v=UcqX-e9cOSs&feature=related

Hope makes sweet unjust deserts.

But despair has always been and always will be the master baker.

 

Thu, 06/17/2010 - 14:40 | 419873 Bay of Pigs
Bay of Pigs's picture

MsCreant, Wow. Thanks. I really appreciate that. I just found another bunch of silver in a safe deposit box. I reckon around $20K worth. LOL. Life can throw you a bone every now and then. Best wishes...

Thu, 06/17/2010 - 00:11 | 418737 trav7777
trav7777's picture

Douchinger also expounds on the "confiscation" meme repeatedly which is something I had been meaning to talk about for some time now, and so here goes.

Confiscation in 1933 and the de facto confiscation in 1973 with the end of Bretton Woods, did not serve to "fuck" gold bugs or little people.  They were to protect the FEDERAL RESERVE from a bank run.

If people recall back to the 1930s, there were bank runs all over the place.  The Federal Reserve Note came into legal existence in 1913. And, if one recalls, ALL notes at that time were *backed* by silver or gold.

Fearing a bank run on the "dollar," FDR simply confiscated the gold and in actuality forced its delivery to the Fed in exchange for FRNs.  Simple as that.  The fear was a run on the Fed's holdings, the exposure of a massive fractional lending operation, and the consequent collapse of the dollar.  It was to protect the FED, not to screw people.

The 1933 seizure really WAS just that simple...it was no different from what got usury clan goldsmiths lynched throughout the middle ages for doing the same thing, lending what they did not have, circulating unbacked notes purporting to be backed.

When Nixon closed the BW gold window, it was the same thing, effective seizure of gold, the notes went from backed to unbacked, bye bye gold you thought you were entitled to.  Again, the reserves had to be protected from a run - the period leading up to that closure are very clear in a historical sense as far as what was going on in the Gold Pool, what France was up to, etc. 

The Fed very much IS the dollar now, it's a FRN.  But at this point there's little than can be run on...wtf does the Fed promise in redemption for its notes?  NOTHING.

Another seizure event at this point or an attempt thereon, would simply show that the jig is up, because it would a desperate measure to try to move the FRN to some pseudo-backed status, essentially announcing to the world that it was at or near a point of collapse as a true fiat instrument.  I would expect dollar collapse rather than orderly turning in of private gold.  Kleptocratic governments full of corrupt bureaucrats cannot expect orderly and patriotic citizens to do what they're told.  This ISN'T 1933 anymore, it's not even 1973.  And the hands the gold is in...let's look at that as well.  Is it your average sheeple that is out there sitting on krugerrands or is it more the Don't Tread on Me type?

If they come for something, it will be pensions and 401ks, not gold.  Nations only try to back currencies when they have to and are on their last legs...to try to give value to the valueless.

Thu, 06/17/2010 - 05:12 | 418950 EscapeKey
EscapeKey's picture

Excellent post.

Sat, 06/19/2010 - 05:25 | 422476 GoldmanSux
GoldmanSux's picture

Why? cuz Gordon told you to say that? You loyal acolyte whose being paid money to waste my time?

Thu, 06/17/2010 - 01:03 | 418804 Apostate
Apostate's picture

It's not the little people that the Feds are terribly afraid of, these days.

It's the big boys in the private sector sitting on more tons of gold than could fit in Fort Knox.

He who owns the gold makes the rules. 

Thu, 06/17/2010 - 00:22 | 418752 Gordon_Gekko
Gordon_Gekko's picture

Extremely well put trav777.

+100000

Thu, 06/17/2010 - 00:29 | 418767 DoChenRollingBearing
DoChenRollingBearing's picture

Or should that be:

+ $100,000

Thu, 06/17/2010 - 00:26 | 418763 steve from virginia
steve from virginia's picture

You've been reading Murray Rothbard again, haven't you?

Thu, 06/17/2010 - 00:07 | 418733 hotkarlandthecl...
hotkarlandtheclevelandsteamers's picture

Anyone thing Denniger has gotten laid in the last decade.  I wonder if he ever covered his 930 short he boasted of on CNBC when Kudlow gave him his 5 minutes of fame awhile back.

Thu, 06/17/2010 - 00:16 | 418713 steve from virginia
steve from virginia's picture

Interesting article, like Denninger's rant, too long and too many hypotheticals.

 - Gold obviously has been a good investment since 2000, anyone holding gold since that time has made (fiat) money ... oops!

 - Willem Buiter pointed out last fall the obvious, that all forms of exchange are 'fiat' to the degree that there must be acceptance of value by more than one person. Acceptance is cultural, a form of tradition. (In the end all things are subjective.) Is gold money? Why not Palladium?

 - Conflating gold as currency v. gold as an investment is easy to do but isn't representative of reality. Gold is not a currency. It does not and would not circulate. It is too valuable to be used as 'money'. Would you exchange gold for .. gasoline? A can of beans?

 - Gold is no more or less inflationary than other means of exchange, see people buy bread for $10 - in gold:

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

 - Gold as an investment exists within two conceptual frameworks: a) the creditworthiness of gold holders, and b) liquidity 'value' of gold.

http://www.oftwominds.com/blogjun10/trickster-gold06-10.html

 a) As gold holders' portfolios are liquidated (you notice I said 'As') gold will be sold to meet margin calls elsewhere.

 b) At the same time, gold is more liquid in some ways than cash currency! Try to take $20 or 30,000 in cash out of a bank. There are forms to fill out, weeks- notice given, an armored car hired, and a place to put the paper money when you take it home. Gold? $30,000 is about 24 oz. less than a large book, ordered online and shipped by FEDEX no questions asked. After it's home, paint it black with latex paint and stick it on the mantlepiece next to Dear Ol' Dad (ashes). How liquid will gold be in the future?

 - People pitching gold ... are selling gold! (I'm not selling my gold, btw.) Take what is said by gold salesmen with a grain of salt!

 - Buying gold - and just about anything else - is easy. For what and when do you sell it? Ours is not a 'temporary' crisis, the nature of establishment reactions to it speak more eloquently than words do. There will be no point in any forseable future when gold can be swapped for some 'new dollar' (at a fat profit) and business will return to 'normal. We  have run out of cheap energy which our economies need to function. There is no more normal. The economic consequences of unremediable depletion will be amplified; all the delay and denial of the present makes the future unwinding that much more painful and permanent. The increased costs of energy have warped the credit system to the breaking point; credit gets the attention but our energy dénouement is permanent. The bottom line is if you buy gold at the high price you may be stuck with it for a long time, or ...

 - Demand for gold was very high during the beginning of the Great Depression. Gaining gold was the only form of economy in the developed world - the gold preference pulled investment capital away from production (consumption as Keynes observed). (Gold- backed) money disappeared from circulation, the tactic to best obtain gold was for gold holders with more reserves to simply wait for those with less reserves to market their gold out of desperation. In desperate times, the waits were often short ... while the long waits eroded economies and banking systems. Does this sound familiar? Keep this in mind because it is important: during the depths of the Depression, the discretionary selling of gold was abandoned and with it any semblance of commerce. Coercive selling is not an economy but is robbery.

 - Damaging hyperinflation is a currency rather than a credit phenomenon. Current finance regime relies on credit created by business itself (or business' banks) rather than on paper money printed by treasuries. Our cash money supply - M0 or base money has risen to $2 trillion; from $800 billion and much of this is out of circulation as forex reserves in China, Japan, Germany, as the national currency in countries such as Ecuador and Panama, as 'super- currency in the underground economies of the world such as in Iraq, Colombia, Mexico, Afghanistan, Pakistan, as well as and in the cash hoards of the wealthy (some are buying gold with it, for sure!) This increase in base money is certainly not evident in the economy as a whole otherwise there would be more employment (putting more money and credit into circulation. Base money has increased but is not evident in circulation):

http://research.stlouisfed.org/fred2/series/BASE

See Steve Keen's interesting observation about base money and unemployment:

http://www.debtdeflation.com/blogs/2010/06/13/empirical-and-theoretical-...

 - There are too many assets, computer 'money', various forms of credit 'hedges' available to hedge agains inflation for it to take place. In a manner of speaking, 'credit (hyper)inflation' has already taken place in dollar-landia: within inflation- hedging asset classes; residential real estate and the S&P. China - with large amounts of cash in savings and fewer investment assets - is a more likely hyperinflation candidate. All of the hyperinflation experiences have taken place in cash- currency economies, not in finance- debt economies such as ours. The talk of hyperinflation is glib, not reasonable. This is not to say that our current finance system is 'hyperinflation proof', but the structure - with its instant hedging capabilities - does not really allow for it unless the majority of participants are willing to abide it. I can, for instance, invest $100k in about 5 minutes in a REIT stock - or buy Swiss francs and put the funds in another country. A person in Argentina or Zimbabwe (or the Weimar Republic) during their periods of default needed to go somewhere and get (increasing amounts) of cash daily; a physical chore that was - and is - inherent to currency inflations.

 - Finally, the US already has a hard currency, the dollar, which is freely exchangeable on demand for a valuable (invaluable) physical good, crude oil. All the characteristics - the evil - of hard currencies will be visited upon those who have a) no experience with hard currencies and b) are not careful of what they wish for. Hard currencies (and inflation, too) are matters of public perception. The hard currency operating schema is simple; money is valuable (and less to be found in the future than currently) so it will be hoarded (for a rainy day). As money vanishes from circulation, business  collapses. Demand for goods and inputs decline (crude oil), prices decline adding more reason to hoard and the cycle amplifies itself. Central banks cannot print their way out of deflation as the issue is either hoarded (by banks and companies) or the appearance of currency triggers runs (Roosevelt added currency to the US banking system by declaring a week- long band holiday and the currency transfer was done in secret). Hard currencies are deflationary. A little bit of dollar scarcity goes a long way; note the effects of dollar preference in Europe. It is the euro and pound that are 'trash'. Since the dollar is the pathway to crude oil, the maintenance of modern economies requires dollars.

It's not that I'm an ideological dollar bull, please substitute another currency for dollars in the oil transaction or gold. The outcome is the identical. Scarcity of oil drives the value connection between crude oil and a currency - any currency, in this case dollars. As crude/dollars become more scarce their values increase, more will be taken out of circulation; the world's economy will devolve into the buying and selling of currencies to obtain dollars thence oil. As the dollar/crude pair becomes too expensive in real terms the waste- based industrialized economies of the world will simply grind to a halt.

This is the 'logical conclusion' of the process that began in 2000, (when crude prices more than doubled from $12 a barrel) and the business dependent upon cheap oil for profits began to  implode. The implosion has not ceased, is still continuing and there is no way to stop it (outside of putting four Saudi Arabias into production by next year or so). Gold here is no panacea. As in the early 1930's there is only one way out; back then economies went 'off gold' and eliminated gold exchange. We must do the same, go 'off oil'. Or, oil will 'off us'.

It's ironic that the empire will be destroyed by its currency.

Thu, 06/17/2010 - 03:13 | 418891 Arm
Arm's picture

Finally!  Sensible arguments.

I agree with most of what you say.  Would just challenge your perception that gold is money.  We would of course have to define money/currency.

Basically I see gold not producing any physical benefit.  Its value as a widely accepted means of exchange that cannot be inflated and that is resistant to destruction so it cannot deflate or decay either.  In a very real sense gold is like poker chips.  Its purchasing power is solely derived from at how many poker chips people want to price goods and services (which are true wealth). 

Of course, these are rather academic points.  The key insight which you also stated is that gold is priced in fiatco's.  People buy goods and services in fiatco's, so any gold holdings will have to be traded in and out.  This makes gold prices subject to fiatco availability.

I think by June next year a lot of the goldbugs will find the unpleasant surprise that their gold is priced 30% less in fiatco terms, eg. their brokerage statement.  They will of course still have the same amount of gold and may retain most of the purchasing power, but it will still be a shock

Thu, 06/17/2010 - 17:01 | 420218 trav7777
trav7777's picture

HUH?

GFD man, is u stupid?  Brokerage statement?  Who owns gold in a brokerage?

Money is whatever people agree it is, anyhow.

Gold is a real commodity, no more no less.  If I were to hold it it would be because I assessed the probability that someone would give me something for it to be high.  And because other commodities are harder to store (oil)

Thu, 06/17/2010 - 18:39 | 420399 Arm
Arm's picture

Actually, we agree.  That is precisely what I said.  Gold is not money.  Money is anything that people will agree to use.  Thus poker chips are money.  My personal IOU can be money if people believe in my credit.

And yes most every single retail investor holds gold in ETF/mutual fund form. Minted gold is a niche market.  Minted gold is held basically by three types of people:

a) Money launderers trying to keep their wealth away from formal financial channels

b) Investors who do not trust custodial arrangements at banks (or trust banks in general)

c) Collectors, but they only hold a couple of coins of each type.  We can neglect mentioning them

Thu, 06/17/2010 - 08:43 | 419080 Al Gorerhythm
Al Gorerhythm's picture

Gold is like poker chips? 

Please explain how the poker chips came into being and how gold coins come into being. Is wealth created when a dollar is printed?

I just came across a picture book for kids on the history of money and the life cycle of an Aussie $10 bill/note/credit.note/iou,. It shows the note being borrowed into existence by the government, being printed by the RBA and then delivered to a bank in an armored car. After being borrowed by a debtor it is then spent into circulation. The note is used for numerous transactions, lost in the street, blown by the wind and rain, found and spent numerous times again, until it is worn beyond acceptance and returned to the bank by one of the holders. On returning the note; he receives a brand spanker in exchange ( as there is no redemption. The bank earmarks the note for destruction. 

THE USED NOTE IS SHREDDED AND CHIPPED, THEN MELTED AND RECYCLED INTO ...... WAIT FOR IT......... A GARBAGE CAN. THE HORROR.

POKER CHIPS WOULD FOLLOW A LESS CIRCUITOUS PATH BUT HYPOTHETICALLY COULD END UP IN THE SAME PLASTIC MOULDING MACHINE. Ooops. Caps lock, but it works for me.

P.S. I would imagine that a paper/plastic bug would claim that the note was virtually indestructible, as it can so easily be replaced with a new one. (conveniently leaving out the destruction of purchasing power of all the preceding notes borrowed into existence.

Too many holes in your thesis, Arm. Keep reading. Keep learning. At some stage the penny will drop, as it did for me. 

Signing off. 

Regards.. Ex government believer and ex paper bug.

Al.

PPS As you state: Yes we do have to define what money/currency is.

What is your definition of a currency and what is your definition of money?

What is your yardstick? You numeraire?

You identifed the crucial question of our time but didn't follow through.

Thu, 06/17/2010 - 12:08 | 419530 Arm
Arm's picture

I don't have a gold pro or con bias.  For me gold is an investment not the holly asset goldbugs hold it out to be.

In academia the definition of money is contentious.  Some use the the term currency to denote the means of exchange, while reserving money to the underlying wealth.

I hold gold to be very much like poker chips in a casino.  Like gold there is a limited supply and it is also a tangible asset.  Also similarly, you cannot eat poker chips, and you cannot use them to build anything useful.  They have very little value in use.  However, poker chips are very valuable, because they are a socially recognized means of exchange (eg. currency).  In Las Vegas you can trade them for goods and services.  You can for example pay a hooker with chips.  The hooker prices her services based on the availability of chips.  You can easily reprice all the services of the casino based on the availibilty of this currency.  Thus, even though the poker chip is a  completely useless piece of plastic, it is still desirable because of other humans are willing to transact for it.  Poker chips also are "money".

 

Continuing the money analogy.  Imagine the casino was dishonest and saw that it was a defacto central bank (they are actually legally prohibited from doing).  It could decide to print new chips without having people deposit dollars for them.  The casino increased the number of chips, but the underlying wealth of goods and services would not change.  There would be the same amount of coca-cola behind the bar and the hooker can only service the same limited amount of customer per hour.  As the wealth base is unchanged you get inflation as the natural market reaction to the increase of chips without a corresponding increase in goods and services.

Poker chips, cacao nuts, and any good can be transformed into currency.  The advantage of gold as a currency is that it prevents there being a corrupt casino covertly printing more chips.  However, this is the ONLY difference.  Gold is not a special, quasi religious, asset. It is not the only means of exchange.  It has been historically used as currency ONLY because its supply cannot be easily increased and because it is relatively indestructible. 

When you understand this, you will see that gold can disappoint you because it is very much possible to buy it at a point in time when the exchange rate is not favourable (eg. gold IS subject to bubbles)

Thu, 06/17/2010 - 03:36 | 418896 akak
akak's picture

Even world central banks, almost all of which hold gold, and none of which hold ANY other asset aside from fiat currencies, would tend to disagree with you about gold not being money. 

Gold is NOT just useful as a means of exchange that cannot be inflated at whim by governments, but as a store of value as well, and also as a numeraire, a measure of value itself.  All three characteristics define the classic meaning of money.

And just what precisely is the basis of your doom-mongering call on the fall in the price of gold, by 30% no less, over the next year?  I will be surprised if its price rises less than 20% in that timeframe, myself, short of a fundamental reform of governmental finances and the monetary system --- but don't hold your breath waiting for either one of those to happen with the current crop of corrupt politicians and oligarchic kleptocrats in charge.

You have the Nadleresque knack for poormouthing gold and its price prospects even while  presenting yourself as ostensibly objective on the subject.  Clearly, you have an anti-gold bias that is impossible for you to hide.

Thu, 06/17/2010 - 00:18 | 418746 trav7777
trav7777's picture

I agree.  But you recognize that there is a paradox inherent?  Both the Fed and the USG *need* inflation.  Without it, both collapse.  To maintain the dollar's hardness will destroy the entities that promulgate the dollar.  These two outcomes are orthologous.

The dollar/oil peg will have to be broken, because the decline in oil supply *forces* deflation fatal to the credit base.   Even if everyone wanted to, there is no way to borrow more dollars to create more oil.

Thu, 06/17/2010 - 00:24 | 418756 steve from virginia
steve from virginia's picture

Of course, they operate upon a constantly shrinking base. What it the Xero Hedge world view?

"It's all a Ponzi, folks!"

BTW ... if you can think of a way to break the dollar/oil peg, I would love to hear it!

Thu, 06/17/2010 - 16:57 | 420204 trav7777
trav7777's picture

It will eventually be repudiated.

Real Bills will become the manner in which real commodities are traded.  At some point, for whatever reason, Ayrabs will start demanding something other than dollars.

As things stand, the SOLE thing maintaining the oil/dollar peg is the House of Saud.  If that falls, it is over in a hyperinflationary supernova.  Think about that for a second:  our entire petrodollar rests on the existence of a bunch of degenerate royals in the ME desert.  That is its achilles heel

Wed, 06/16/2010 - 23:54 | 418712 Kina
Kina's picture

I wonder how shares in a large solid (known reserves and production schedule) gold miner would go during hyperinflation?

 

Wed, 06/16/2010 - 23:47 | 418702 dumpster
dumpster's picture

we live in a world of what is

most seem not to be able to chew gum and walk at the same time

the fact  those that bought gold at 325  and silver at 4.25  are doing just fine

in the future keeping the eye on the ball,, will be important . just like any investment in the markets

those that pretend  that gold is a relic... just missed a real wealth building opportunity ,

and dennenger postulates that Sinclair is way off on his 1600 gold call for Jan 2011,, we have date and time .  so lets see who wins the bet , until then do not count your chickens before they hatch .

keep your little green backs ,, see what transpires

until then your whistling into the wind. and sucking the big pickle  

 

Thu, 06/17/2010 - 00:24 | 418755 DoChenRollingBearing
DoChenRollingBearing's picture

akak, LeP, dumpster,

We're pretty much on the same page here.  Although, dumpster, I do keep a righteous amount of FRNs in case they holiday the banks and for buying anything urgent (airline tickets, ammo, etc.).

Nadler screeches 10% gold is too much!  Well, I do not know what is the "right" amount.  But, for me 6% - 7% seems about right.  I have a lot going on...

I have been buying gold for a long time, but alas my buying over the last few years has been bigger than my buying when gold was $300 - $500.

So, Mr. IRS man, my average cost on buying my gold (plus premium remember) is about $1100...  If gold goes up to $1650, well then the average is $1400, sir.  If it goes to $5000, well then my average is $4200, sir.

Thu, 06/17/2010 - 00:51 | 418798 LePetomane
LePetomane's picture

In the short term, I'm more interested in oil.    Which offends my environmentalist dogoodnik senses.  While at the same time, are bashed to bits by the daily affirmation that the convenience places a hefty premium on any commodity.

Wed, 06/16/2010 - 23:46 | 418697 trav7777
trav7777's picture

You can't go BANKRUPT owning gold...it is an ASSET, STUPID, not a fucking LIABILITY.  WTF is Douchinger's problem?  Oh right, he's a leverage casino gambler.

So HE could go BK SPECULATING on the PAPER price of gold using leverage.  Anyone who REALLY buys gold CANNOT go bankrupt even if the price drops to 0.

Wed, 06/16/2010 - 23:44 | 418691 Kreditanstalt
Kreditanstalt's picture

KD has now responded to this post.  But he is mistaken about the nature of the coming FRN collapse...he says...

 [The currency you have now (dollars, in the case of the US) will collapse. - Gekko] 

"Again, if you're going to predict this, you must both predict an event and a time or your prediction is not actionable."

But the collapse is a PROCESS, not an EVENT, and it behooves us to prepare along the way.  I did this morning: I bought three 37.5g USB bars at a 6% commission.  That's $1310 gold.  That's how certain I am that this PROCESS will continue.

Incidentally, why is "GOLD" under "metals" in his forums?  It's MONEY, not "a metal"...Then shouldn't the US dollar be under "paper"?

Thu, 06/17/2010 - 08:55 | 419105 casey13
casey13's picture

Predicting the exact time of the event is not possible as it relies on human psychology. When do the majority of the people decide that there money is no longer worth anything? When it happens the economy will go from deflation to hyperinflation faster than the majority of people can get out of their fiat currency. That is the big surprise throughout history. How fast it happens. It may not be prudent to have all your money in gold but it can be a (living on the streets) disaster for those that do not plan for this.   

Wed, 06/16/2010 - 23:11 | 418640 AVP
AVP's picture

GG: that was a most excellent read!

 

 

 

Wed, 06/16/2010 - 23:31 | 418677 Gordon_Gekko
Gordon_Gekko's picture

Thank you for your kind words.

Wed, 06/16/2010 - 23:04 | 418624 DoChenRollingBearing
DoChenRollingBearing's picture

The anti-gold people have never successfully (at least that I have read) said what is wrong with holding a portion of one's wealth in gold.

Anyone who has got some chips should diversify, I think we can all agree on that.

I don't know what is going to happen tomorrow.  I have some assets, and you bet I have some gold.  Am I saying you should have ONLY gold?  Not at all.  Although Chumba (110% in for gold) might claw me for that...

I just cannot understand why people would not take out some insurance against .gov misbehavior or a currency catastrophe.

Wed, 06/16/2010 - 23:37 | 418680 LePetomane
LePetomane's picture

Hi.  I've been wrestling with this question for a couple of months as well.  The smart money has either been made back starting back in 2002 and the dumb money from the last peak in the 80s traded out by the mid 00s.   On an inflation adjusted basis, it makes sense to accumulate gold.  But a 20% correction as the result of profit taking / Central Bank Dump (think BofE 1999-2000) is possible.

Wed, 06/16/2010 - 23:39 | 418663 akak
akak's picture

Your argument is an utterly sound one, DCRB.  To take it in another form, it reminds me of the vapid and limp "10% in gold" (but no more!) rote advice given by Jon Nadler --- who then has frequently gone on to malevolently and hyperbolically attack those who publicly advocate putting more than that into gold over the last three or so years.  Left unsaid in his weak-knee'ed "advice" was what to do with the remaining 90% of one's assets in this time of financial and monetary upheaval.  Nor do I hear him, or others, attacking those financial gurus today or in the past who advised their clients to hold most or all of their assets in equities or bonds --- those are "OK", and apparently officially-approved assets, but anyone who would DARE hold 30% or 50% of their assets in gold at any time are "Radical Goldbug Extremists" who are fair game to be mocked and ridiculed at great length and on an almost daily basis by the mouthpieces for TPTB.

Why is it "Only 10%, maximum, in gold", and never "Only 10% in equities", or "Only 10% in bonds"?  What authority has made that determination for all time, in all places, for all people?  I frankly find anyone who has 50% or 75% of their net assets in equities or bonds today to be insane.

Thu, 06/17/2010 - 17:15 | 420245 Island_Dweller
Island_Dweller's picture

If you're supposed to just buy 10% and forget about it as Nadler always says, then why does Kitco need a Precious Metals Analyst? er Shill?

Thu, 06/17/2010 - 17:27 | 420275 akak
akak's picture

Another excellent point.

Furthermore, aside from Nadler's bland admonishment to buy and hold up to 10% of one's assets in gold, he has NEVER, not once in four years, been either brave or honest enough to even halfway suggest that anyone consider buying more than that, in the face of a decade-long bull market in gold that he still adamantly denies is even occuring!

Why does ANYONE give that pro-bankster bastard even a shred of credibility at this point?  Yet the corporate-controlled media continue to trot him out every time they want to publish a piece slamming gold, its owners, its advocates and its prospects.  Come to think of it, I guess I just answered my own question.

Wed, 06/16/2010 - 23:15 | 418614 Gully Foyle
Gully Foyle's picture

Jesus can't these bitches just have a slap fight and get it over with? Really I can't picture financial types as anything more than Bugs Bunny stereotypical bankers. Prissy little men with coke bottle glasses who stutter and can barely look you in the eye. Michael Douglas in Wall Street was the dream of manhood illusion they embrace. Except maybe the guy from Economic Disconnect who is Boxing these days.

As far as Gold goes, if every other market is being brazenly manipulated why the fuck assume Gold is not?

Eventually we ALL will be fucked. It doesn't matter if you have Gold or Pigshit. None of this will end well.

Wed, 06/16/2010 - 22:52 | 418592 Rusty_Shackleford
Rusty_Shackleford's picture

Nailed it again GG.

Kudos.

Wed, 06/16/2010 - 23:30 | 418676 Gordon_Gekko
Gordon_Gekko's picture

Thanks Rusty.

Thu, 06/17/2010 - 08:35 | 419069 Snidley Whipsnae
Snidley Whipsnae's picture

Gordy, you are doing a great job.

Denninger's weakness is his belief that MV=PQ being an absolute truth and beyond question. The 'quantity theory of money' is very questionable, and resorts to such assumptions as 'rationality of markets' and disregards the history that people and markets often do irrational things. If all people had the same information and acted on it in a rational manner, markets would not exist because all would place the same bet on the same asset!

Denninger is a fair math guy (left brain function) but does not seem to grasp that people and markets are not always rational (right brain function).

If people and markets were always rational then the Fed, Treasury, all governments and some people, would not write CDSs that would pay if a soverign, a bank, a corporation, are destroyed...neither would they allow the manufacturing base of the US to be destroyed in favor of enlarging the FIRE sector of the US economy...The enrichment of a few at the cost of the many.

Denninger's basic arguement/premis is that all people and markets should conform to MV=PQ and that all people and markets should act in the interest of the greater good, all the time. His rants continually lambast those who do not conform to his view of rational behavior.

Denninger is on a fool's errand. 

 

 

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