This page has been archived and commenting is disabled.

Redburn Partners On The Coming Gold War: "Gold Is Money And Nothing Else"

Tyler Durden's picture





 

A must read paper by Redburn Partners, "Gold War - Gold is money and nothing else", written in November 2007, which due to its extreme prescience on not only the shift of the economy following the bursting of the credit bubble, but being virtually spot on in its prediction on the price of gold, can serve as an sufficiently comprehensive introduction to anyone wishing to get up to speed with the primary forces determining the price of gold and its implications in a fiat-money world (and especially the prevailing current variant in which competitive devaluations galore).

Key highlights:

  • Gold price will reach at least US$1,500/oz: we are raising our long-term gold price estimate to US$1,500/oz (from US$900/oz) with the possibility of a spike to US$4,000-5,000/oz. We see gold acting as a ‘Giffen good’ for a period – a rising price leading to accelerating demand as its investment profile sees a resurgence.
  • Rising gold price is a warning signal: it casts doubt on the US economy. We believe inflation is far higher than reported, money supply growth is running at 14%, debt/GDP is nearly 350% (vs the 270% peak in the Depression) and the ‘fiscal gap’ faced by the Federal Government is US$50-70trn. The Federal Government’s accounts have not been signed off by its auditors for ten years.
  • The US faces rapidly rising inflation or deflationary recession: credit cycles (and this one is extreme) always end in a deflationary bust – this is the lesson of the Kondratieff Cycle. The Fed will most likely try to defy economic gravity using increasingly inflationary means. Gold is the only asset to outperform in periods of either uncontrollable inflation or deflation: the US economy is on a knife-edge between the two.
  • A “Crack-up Boom”?: should the Fed choose to stave off recession via inflation, the scene could be set for a “Crack-up Boom”. If inflation is perceived to be a deliberate policy, there will be major shift out of financial assets (like cash and bonds) and into “real” assets. Gold will be the asset of choice and gold stocks will experience a bull market. In the report, we highlight Peter Hambro Mining (rated Buy). Natural resources and natural resource stocks will also benefit: the Mining sector as a whole would continue to outperform.
  • Lack of transparency: gold is a vital barometer and if the gold market is not free and transparent, it acts against the interests of businesses, investors and the public. IMF accounting regulations continue to obscure the level of gold remaining in central bank vaults. Furthermore, the use of unallocated gold accounts masks the fractional reserve nature of most gold banking/trading and private investment. Holders of “unallocated” gold are simply unsecured creditors with general claims on  "pools” of gold. If all those claiming gold ownership demanded physical delivery, we argue the gold price would soar.

Full research paper:

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 02/21/2010 - 14:20 | Link to Comment trav7777
trav7777's picture

gold is just a shiny thing that people like and which has been USED as money

Sun, 02/21/2010 - 15:22 | Link to Comment Doug
Doug's picture

I agree. If gold is money, then so are Steinway pianos and '57 Chevys, both of which I have folded neatly into my wallet.

Sun, 02/21/2010 - 16:03 | Link to Comment Anonymous
Sun, 02/21/2010 - 17:08 | Link to Comment Anonymous
Sun, 02/21/2010 - 19:32 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Yeah, right. Let's test it over a longer term and get a definitive outcome. Why don't we start around..... oh, I don't know, how about somewhere around 1913? Duh.

Sun, 02/21/2010 - 21:21 | Link to Comment Sabremesh
Sabremesh's picture

Gold fluctuates in (fiat-determined) value in the short term, like any other investment. Yes, the fiat value of gold diminished in the period 1980-2000, but to cite this short time period as evidence that gold "is not a good store of value" is simply cretinous.

If you consider the last 10 years, or the last 100 years, or the last 1000 years it is evident that gold is unequalled as a store of value. 

Sun, 02/21/2010 - 22:25 | Link to Comment Anonymous
Sun, 02/21/2010 - 22:27 | Link to Comment Anonymous
Sun, 02/21/2010 - 18:12 | Link to Comment Anonymous
Sun, 02/21/2010 - 19:27 | Link to Comment Doug
Doug's picture

I'm no shill for Steinway, but you should consider the following:

http://www.steinway.com/steinway/sound_investment.shtml

Now about those '57 Chevys....

 

Mon, 02/22/2010 - 01:13 | Link to Comment Windemup
Windemup's picture

Drove a 1950 Chevy from Veradero to Havana last month. It had a Japanese diesel 3 speed engine , no suspension and no two bolts holding the car together had the same head.

Good store of value if you're Cuban.

Sun, 02/21/2010 - 22:58 | Link to Comment Almost Solvent
Almost Solvent's picture

Yeah GM keeps pumping out those 63 Chevys

Mon, 02/22/2010 - 01:13 | Link to Comment Dirtt
Dirtt's picture

God I love gold is king pissing contests.

You may be on to something here.  If they cranked out something like that w/o GPS...

Sun, 02/21/2010 - 19:25 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

I've got some Greek bonds I can sell you. You can neatly fold them into your wallet and keep them for a rainy day. 

Sun, 02/21/2010 - 22:37 | Link to Comment Anonymous
Mon, 02/22/2010 - 06:48 | Link to Comment Anonymous
Sun, 02/21/2010 - 20:14 | Link to Comment Anonymous
Sun, 02/21/2010 - 21:36 | Link to Comment Doug
Doug's picture

Wow!  I feel like I'm at a pets.com convention, circa December, 1999.

Sun, 02/21/2010 - 15:59 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:51 | Link to Comment akak
akak's picture

Like moths to a golden flame, any mention of gold here brings out the predictable and laughable bankster trolls and disinformation agents, to attack that which strikes at the very heart of their sociopathic masters.

Methinks you all doth protest too much.

Mon, 02/22/2010 - 01:51 | Link to Comment MarketTruth
MarketTruth's picture

"gold is just a shiny thing that people like and which has been USED as money"

Agreed, and it has been used as such for thousands of years. On the other hand, pieces of green paper made of linen/cotton made by Crane & Co, then stamped with ink and made into a Federal Reserve Note has been used as money only about 100 years. The USA has already had THREE central banks that offered such paper-like items that are said to be money. Gold has been money for a multiple of thousand of years.

Each current Federal Reserve note, from $1 to $100 costs 4 cents to make. An ounce of gold takes time, effort and (usually) some expensive equipment to mine. Costs vary yet we shall call it hundreds of dollars an ounce to bring to a final product.

PS: Gold is also a universal currency as is acceptable in Japan, China, USA, UK, EU, South America, etc. More and more places i travel to ARE NOT accepting dollars (which they were happy to do 10 years ago, yet not today).

 

Mon, 02/22/2010 - 15:59 | Link to Comment Anonymous
Sun, 02/21/2010 - 14:31 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:05 | Link to Comment Mad Max
Mad Max's picture

Yes, we should be grateful, since the people with knowledge and skills will be at home guarding their "hoards" while all the monkeys who trusted in government, Obama and fiatscos will be out looting and pillaging so that they starve a week or two later than they otherwise would.

Thank goodness.

Sun, 02/21/2010 - 16:09 | Link to Comment Anonymous
Sun, 02/21/2010 - 20:53 | Link to Comment RhoRhoRhoBoat
RhoRhoRhoBoat's picture

That is an investment allocation which is guaranteed to underperform the equity market over any long span of time.  If you want 100% real assets, why not buy assets with a cashflow, like real estate?

Sun, 02/21/2010 - 23:36 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

Real estate not too bad if there is some land with it to grow something.

But,

  1. You can't take it with you
  2. Governments can tax you to death
  3. Eminent Domain seizure
  4. Maintenance costs
  5. Insurance increasing costs
  6. Taxes on derived income
  7. Hard to sell in bad times
  8. Erosion of capital by deflation
  9. Sink holes (uninsurable.) My brother-in law's case.
  10. Spouse can take half of it. (My sister is enjoying her ex-husband's pad)
Mon, 02/22/2010 - 00:00 | Link to Comment Mad Max
Mad Max's picture

What he said.  Real estate is a terrific investment, if you can trust in a stable and fair government and legal system, and some reasonably stable economy.  Hence, anything small and portable looks a lot better at the moment.

Sun, 02/21/2010 - 16:33 | Link to Comment malvotron
malvotron's picture

+1

Gold may well go to 1500, as may the S&P...

There is no investment I can think of which engenders such a rabid obsession in the hearts of investors.

Sun, 02/21/2010 - 16:53 | Link to Comment akak
akak's picture

"There is no investment I can think of which engenders such a rabid obsession in the hearts of investors."

And that is because there is no other "investment" the holding of which strikes most directly to the heart of the corrupt and failing pro-fiat financial establishment, and against which they will go to any length to malign, ignore and attack ---- because it is an inverse play against their fraudulent paper schemes to strip wealth from the average investor.

Learn a little history, and this will become abundantly clear to any objective and open-minded observer.  Gold is the money of both freedom and security for the average individual, neither of which it is in the interests of the political-financial establishment that the average person enjoys.

Sun, 02/21/2010 - 18:43 | Link to Comment Hitman
Hitman's picture

Agreed.  I currently have 100% of savings invested in gold shares, but the only gold I own is my wedding band.  I don't consider myself a gold bug.  My investment is based on having read 30,000 or so investment articles over the past 10 years by 100 or so writers, providing real time commentary by each writer as the current diaster unfolded.  Commentators with genuine insight versus those just trying to get publicity, talk their position, sell newsletters, etc. reveal themselves over several years.  The commentators who have been most consistently correct over this period all believe gold is heading much higher.  For now, that's a good enough reason for me to remain invested.

Lot's of commentators with PhD's in economics, positions at Ivy League schools, Nobel Prizes, etc. seem compelled from time to time to bash gold, which is a good thing, as the clear lesson is each person needs to think for themselves as even people with Nobel prizes can be clueless when it comes to certain subjects.   It may be true that gold engenders a rabid obsession in the hearts of investors, but it also seems that gold engenders more ignorant comments than almost any other financial topic, and is possibly the most useful topic to reveal a commentator as a fool.

Of the hundred or so people I have discussed investments with over the past several years, I have not met a single one that had any investment in gold.  All are college graduates.  Most have advanced degrees.  The talk of a widespread bubble in gold and widespread enthusiasm by the public is laughable.

Mon, 02/22/2010 - 01:31 | Link to Comment nevket240
nevket240's picture

Wedding band = bad investment. Expensive to get out of contract and then upgrade. Signifies handcuffs.

Better off forming a company, shag everything under a Red light, get a receipt, you know the rest.

regards

 

Mon, 02/22/2010 - 07:20 | Link to Comment Crime of the Century
Crime of the Century's picture

Agreed.  I currently have 100% of savings invested in gold shares, but the only gold I own is my wedding band.  I don't consider myself a gold bug.

As you shouldn't. Gold bugs generally shun paper gold (except for mining shares), as the tinfoil hat consensus (see, I'm wearing mine) is that you will be forcibly cashed out when the fractional gold Ponzi collapses. This would likely be during a time of nasty inflation where receiving paper is not optimal.

Sun, 02/21/2010 - 18:56 | Link to Comment malvotron
malvotron's picture

I share your sentiments.  I distrust governments as much as the next man on this board..

I would like to point out to all goldbugs that gold was also "real" money in the 20 year period succeeding the 1980 high...

People 100% invested in "real" money may well wish to consider this.

Sun, 02/21/2010 - 22:16 | Link to Comment faustian bargain
faustian bargain's picture

Fiat is in a lot worse shape now than it was then.

Sun, 02/21/2010 - 20:43 | Link to Comment masterinchancery
masterinchancery's picture

I would (and did) call the investment in Dow 14000 about as rabid as you can get, with AJ Cohen and her bedfellows calling for Dow 50,000 or whatever--but nobody in the financial press talks about "stock bugs" or "bond bugs".

Sun, 02/21/2010 - 17:32 | Link to Comment rubearish10
rubearish10's picture

I don't think the correlation lasts that long. A better trade would be to short the S&P vs Gold  right now. With a .95 rate, it will correct to a more historical level.

Sun, 02/21/2010 - 22:42 | Link to Comment lawrence1
lawrence1's picture

What a stupid comment.

Sun, 02/21/2010 - 14:32 | Link to Comment Segestan
Segestan's picture

Good article. Got Gold?

Sun, 02/21/2010 - 16:10 | Link to Comment Anonymous
Sun, 02/21/2010 - 14:34 | Link to Comment gookempucky
gookempucky's picture

From 2007 to the present as gold continues to break out in all currencies. Link below.

http://www.newkerala.com/news/fullnews-55906.html

BTW looks like Ron Paul blew out the CPAC poll--this am a point/ counter point political analist had to force the words Ron Paul out of her mouth she even had the balls to say he was 74 yrs of age and to old to run this country. I got news for ya most of our senate and congress members look like this.

http://newsimg.bbc.co.uk/media/images/39805000/jpg/_39805923_miyan_ap203body.jpg

 

Nice read TD

Sun, 02/21/2010 - 14:55 | Link to Comment Anonymous
Sun, 02/21/2010 - 17:25 | Link to Comment rubearish10
rubearish10's picture

Silver's a winner either way. Lots of it gets destroyed and the Gold/Silver ratio trades lower, perhaps from 68 down to 35-40. Over allocate Silver.

Sun, 02/21/2010 - 18:18 | Link to Comment seventree
seventree's picture

My retirement savings are split 50/50 between cash and silver bullion. This is not a trading strategy; I don't expect silver to reach ridiculous prices and make me rich. I also don't envision myself sitting on a pile of silver in a post-collapse America, defending the homestead with a formidable armory of guns & ammo (with an occasional trip to the gen'ral store to trade silver shavings for a sack of flour). In that scenario there is little hope for most of us so the hell with it.

But if the country & economy keep puttering along, and the optimists and dollar bulls are right, then 10 years from now the cash will be king and the silver should still be worth something. If inflation and devaluation have devastated the dollar's buying power, it seems reasonable that the silver will worth enough mini-bucks to live on.

At least that's the plan. I could be wrong and go bust anyway. But show me a safe investment.

Sun, 02/21/2010 - 20:45 | Link to Comment Anonymous
Sun, 02/21/2010 - 23:09 | Link to Comment 35Pete
35Pete's picture

Springfield 1911 A1 .45 ACP. Bought new in 04' for 550 bucks. Sold last fall, after 3000 rounds pumped through it, for 640 bucks. 

Now that's a ROI. 

 

Mon, 02/22/2010 - 00:02 | Link to Comment Mad Max
Mad Max's picture

Most modern ammo (with noncorrosive primers) stores for 30-40 years and will be less reliable after just 20 or so years.  Still not a bad medium-term option, but I wouldn't plan on giving it to the grandkids with much value intact.

The ammo that stores forever is military surplus with corrosive primers.  The US stopped making such ammo in the early 1950's.  A lot of the Combloc ammo from the 1970's-80's is on the market with such features.

Sun, 02/21/2010 - 14:56 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:11 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:29 | Link to Comment Mad Max
Mad Max's picture

I want to see Zeno's Paradox applied to all these gold price predictions.

Sun, 02/21/2010 - 23:50 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

Zeno's paradox is busted if you just aim beyond the target. Hence, I predict gold $7,000

Sun, 02/21/2010 - 14:56 | Link to Comment Chopshop
Chopshop's picture

the argument would be more persuasive if it correctly cited (1) what a giffen good is, (2) how disinflationary push 'works', (3) the K wave itself or any other cyclic activity ... after reading that "gold prices rise very rapidly in periods of deflation" that kinda sealed the anal-ytic deal.  sounds great but did the author actually check out that 'fact.'  yeah, guess not, cause it ain't right. its only 179 degrees wrong though, so what's the big deal ?

seriously: can anyone do any work that looks back more than one fucking cycle or 30 friggin years instead of form fitting a question to meet the answer they wanna arrive at.  so lazy. so, so intellectually lazy. 

Sun, 02/21/2010 - 15:30 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

You raise a good point Chop, in that someone should study gold like Reinhart & Rogoff just did in their recent book (This Time is Different) on financial crises through the centuries.

Maybe someone already has, but I look for books on gold when I am in bookstores.  And I haven't see anything like R & R's work above.

But, then if someone did write a great book on gold through the centuries (millenia), someone would just come along and say this time is different.

Sun, 02/21/2010 - 15:39 | Link to Comment Chopshop
Chopshop's picture

best work i'm aware of is R&R, Kindleberger, Armstrong, Prechter.  Each derided for different (foolish) reasons, each unparalleled in their contrasting approaches.  The only one w/o explicit methodology as per making 'calls' is Marty Armstrong, who, when waxing philo is just doing that, not playing Pi but rather just waxing philo (like no one else can).

Sun, 02/21/2010 - 16:24 | Link to Comment Hansel
Hansel's picture

No one can see the future.  All of this is just mental masturbation.

Sun, 02/21/2010 - 17:00 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Well, OK, your point about seeing the future is true in a strict sense.

One CAN, however, look at scenarios and contemplate each one's probability.  That allows planning to make the best judgements you can in your savings & investments.

Redburn did a reasonably job back there in November 2007.

Sun, 02/21/2010 - 17:11 | Link to Comment merehuman
merehuman's picture

extrapolation from known facts doesnt rock your boat?

Asshole comes in a bar =gonna be a fight

Go in casino= come out broke

Get born= die

Future is not so hard to guess when you create it. Lets ask greenspan about what effect loose money has on shopping and house prices.

I hope one of us has the orgasm!

Sun, 02/21/2010 - 16:13 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:36 | Link to Comment malvotron
malvotron's picture

... with the help of a bunch of tin-foil hat wearing PSYCHOS!

Sun, 02/21/2010 - 21:01 | Link to Comment 35Pete
35Pete's picture

Everything is exactly as it appears Rip van Winkle. 

Now, back to sleep...

Back to sleep...

Back to sleep..

We live in a democracy. Our elected leaders lose sleep worrying about us. The Central Bank must remain secret for our own good. There's a terrorist hiding under the hood of your car... They hate our freedoms...The military fights to free peoples and nations... Television and media stand guard for our well being. TV doesn't brainwash people... Our education system is effective...Zzzzzzz.....

Sun, 02/21/2010 - 22:00 | Link to Comment Mad Max
Mad Max's picture

+1x10^i

Soma... need more soma..

BRAINS... BRAINS... BRAINS

Sun, 02/21/2010 - 23:16 | Link to Comment 35Pete
35Pete's picture

Your kudos converts to the complex number 0 +2.30i. You do know that, right? 

If you don't mind, I'll rotate it about the complex plane and normalize it's magnitude by multiplying by (1/2.30)*e^(pi*i). ;)

Sun, 02/21/2010 - 23:21 | Link to Comment akak
akak's picture

Mon, 02/22/2010 - 00:08 | Link to Comment Mad Max
Mad Max's picture

Sorry, I'm a victim of the public school system and my university's inappropriate use of foreign T.A.s for all math courses below the graduate level. In other words, I was happy to get through Calc 1.  It also doesn't help that I'm in a field where the ability to add and subtract double-digit numbers in your head is perceived as making you a math genius.

I will mark your comment down as interesting and for further research though.  Along with the time that I learned not to whisper to the actuary sitting next to me, in response to a boring presenter's rhetorical "does anyone have any questions," my own "yes, what's the cube root of Pi?"  Turns out an old guy who memorized his logarithmic tables can do some pretty impressive math without a calculator.

Mon, 02/22/2010 - 10:57 | Link to Comment Anonymous
Mon, 02/22/2010 - 11:13 | Link to Comment 35Pete
35Pete's picture

Sorry bro, I was just being a smartass. Hee heee. If anyone had checked my math then they'd have realized that I was wrong. It actually converts to 1.563 + 1.687i. ;-)

Yeah, public school system is a whole can of worms that I don't want to open here. It's amazing how stupid that "system" made the last generation and the one coming up is even worse. 

The entire reason I like this site is because the membership here at least has a brain. Try going to the CNN comment section. Jesus.... talk about dumber than a bag of hammers. Total cliched thinking and soundbite parroting. At least the disagreements here are based on reason. 

I think ZH has less outcome-based education hangover than most joints. 

Mon, 02/22/2010 - 01:39 | Link to Comment nevket240
nevket240's picture

Whats your point??

My PsychoAnalyst thinks I look cool in a TinFoil hat. Its the bondage gear she doesn't like

Regards

Mon, 02/22/2010 - 12:23 | Link to Comment Anonymous
Sun, 02/21/2010 - 17:48 | Link to Comment Gunther
Gunther's picture

Chopshop,

looking back farther then thirty years I ended up with Dow Theory as stated by Robert Rhea; in a narrow sense that applies to the known stock averages but in my opinion the principles can be applied to the price action of gold and silver as well. To present the back-testing for the available data up and down would be stuff for a whole article on ZH.

One axiom of Dow Theory states that a trend, once definitely established, stays in force until it gets definitely changed. Quadrupling price in ten years qualifies for a bull market in gold and silver.
The bull market consists of rallies and reactions making higher highs and higher lows. Right now there is a reaction in the frame of a bull market, so what, that does not change the trend.

And towards seeing the future, I do not claim to do that; I just see a trend.

Mon, 02/22/2010 - 07:30 | Link to Comment Crime of the Century
Crime of the Century's picture

Everything before 2004 is in a different paradigm. Since the advent of the gold ETFs, there is no longer a need to rely on unallocated gold to fraction the stores.

Sun, 02/21/2010 - 15:22 | Link to Comment Anonymous
Sun, 02/21/2010 - 15:35 | Link to Comment Fritz
Fritz's picture

I don't think I have seen a bearish story on gold for a long time. One has to ask, if everyone is bullish on gold, who is left to buy?

This seems like every other "story" throughout history where a chart goes parabolic, sucks in the public, and then craters.

Sun, 02/21/2010 - 17:23 | Link to Comment rubearish10
rubearish10's picture

The public that does not read this stuff, that's who. Once Gold gets shaken out of the carry trade as the most risky asset, real money comes-on and forces px's higher as pandemonium sets in.. Never mind the excessive bullish stories, you could find many bearish ones if you "look for them". 

 

FIAT currency is toast and gold will have it's day as it did in the late 70's. You will not believe your eyes but if you're smart, you'll love your long position, silver too bud.

Sun, 02/21/2010 - 19:08 | Link to Comment Hitman
Hitman's picture

Agreed.  I have been talking up gold with friends and acquaintances since 2003 and have yet to meet a single one with any investment in gold.  Therefore, I don't beleive the public has even begun to buy.

I guess that in additional to the public, another big potential buyer for gold could be those who are invested in "paper gold" and who are just beginning to understand the difference between "paper gold" and "real gold."  I don't know if it is true, but have read that there could be 60 to 70 ounces of paper gold for every ounce of "real gold" backing up the ounces of paper gold.  If true, there is no need for a single new buyer to drive up the price for "real gold" - only for a percentage of the "paper gold" buyers to switch their "investments" to the real deal. 

The number of bullish or bearish stories on an investment in newsmedia has always struck me as one of the most useless contrarian indicators.  John Hussman wrote a good article on this about 2 years ago, as more and more bearish articles on the economy appeared on various news magazines, and these were trotted out by various financial commentators as contrarian evidence that the worse was probably over for the economy.

I think Jim Sinclair will likely be correct that a public mania over gold will occur in another few years, but that it will be a mania to end all manias, and something that will be written about a hundred years from now.

 

Sun, 02/21/2010 - 19:45 | Link to Comment rubearish10
rubearish10's picture

I've read that stuff too. Although I'm not too worried about the paper vs physical thing because it's really not that unusual. In other words, what we could have is another kind of "market corner" like the Hunt's did with Silver and Gold when inflation was 18%.

 

The markets will resolve that with much higher prices should a real scare for the product occur. I think if you have a good mix of bullion, ETF, futures and options as well as some gold stocks you'll be fine.

 

Good luck brotha!

Sun, 02/21/2010 - 21:21 | Link to Comment Meridian
Meridian's picture

That's the point, GOLD IS MONEY, everybody is bullish on money.

Mon, 02/22/2010 - 07:37 | Link to Comment Crime of the Century
Crime of the Century's picture

Then you haven't read anything by Prechter, Nadler or Soros latest comments for "public" consumption. Against type, I guess you also don't watch CNBC.

Who is left to buy?

Do you measure time by your computer clock only? Was India's purchase of 200 metric tons that long ago to you?

 

Sun, 02/21/2010 - 15:36 | Link to Comment Gimp
Gimp's picture

Gold has it's place but "Bartertown" will exist for most average folks trying to survive before they carry around a bag of gold as a medium of exchange.

Sun, 02/21/2010 - 16:13 | Link to Comment Anonymous
Sun, 02/21/2010 - 17:11 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:27 | Link to Comment Hansel
Hansel's picture

Most people's "bag of gold" would consist of 1 coin.  People who envision lugging bags of gold around haven't held an ounce of gold.

Sun, 02/21/2010 - 21:16 | Link to Comment WaterWings
WaterWings's picture

Nor comprehend the consequences of a fiat currency.

Sun, 02/21/2010 - 22:01 | Link to Comment Mad Max
Mad Max's picture

Umm, why?  Does an ounce of gold weigh more than an ounce of something else?

How many quarters would you need to carry around to have the purchasing power of 1oz of gold?  (Hint: 4800+/-)  How many ounces would those quarters weigh?

Sun, 02/21/2010 - 23:11 | Link to Comment Hansel
Hansel's picture

No, but its density dictates its size.  An ounce of styrofoam, for instance, takes much more space.  If you have a "bag of gold", and I'm envisioning something that at least takes some muscle to carry, you are very rich.

Sun, 02/21/2010 - 23:24 | Link to Comment Rusty Shorts
Rusty Shorts's picture

1 Quarter = 5.5 grams x 4800 = 26,400 grams = 26.4 kg = 58.08 lbs of quarters = 1oz gold.

Mon, 02/22/2010 - 01:46 | Link to Comment Dantzler
Dantzler's picture

Depends what years them quarters be...

@ $2.9604 that 's less than 10 rolls of <=1964

Sun, 02/21/2010 - 15:50 | Link to Comment Anonymous
Sun, 02/21/2010 - 23:59 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:05 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:16 | Link to Comment Anonymous
Sun, 02/21/2010 - 22:42 | Link to Comment akak
akak's picture

Yes, you are right ---- there's nothing like a commentary on gold to bring out the shills for Wall Street and the central banks, I have noticed.  And a more financially and historically clueless bunch I have never encountered.  You'd think the government would at least send them to troll school before inflicting them on us!

Sun, 02/21/2010 - 23:20 | Link to Comment 35Pete
35Pete's picture

Troll school. LMAO. 

Mon, 02/22/2010 - 01:23 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

They've been. They graduated. They only made it to college.

Sun, 02/21/2010 - 16:23 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:29 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:31 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:33 | Link to Comment Anonymous
Sun, 02/21/2010 - 16:35 | Link to Comment Hephasteus
Hephasteus's picture

Another person who figured it out at end of 2007 and was probably laughed at for months and months.

Sun, 02/21/2010 - 16:55 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Yes, their predictions were pretty good weren't they?  And that was at pretty much the beginning of the collapse.

Are we better off now?

Got gold?

Sun, 02/21/2010 - 16:59 | Link to Comment tom a taxpayer
tom a taxpayer's picture

 

I was interested in one part of the Redburn report,  the "Unallocated versus allocated gold" section (p.66-68). The banks sold unallocated gold to customers many of whom wanted to invest in gold because of gold's safety in a time of crisis.

But, as far as the banks are concerned, the customers are nothing more than unsecured creditors. The unallocated gold is just a "liability" for the bank and an "asset" for the customer. The unallocated gold is not the property of the customer, but is now part of the working capital of the bank. The banks can use this gold any way they want, including lending, swapping, even selling. 

The Redburn report states that the bankers are operating in the gold market on a fractional reserve basis (p 68 and 89). If true, then to me it appears the bankers may have infected the gold in banks with the same "fractional reserve" virus as the fiat currency in banks.

If the bank becomes insolvent the customer could lose some or all of "their gold". As a depositor of gold rather than cash, holders of unallocated gold may have even less depositor protection than cash account depositors (p. 67).  Since a major reason for investing in gold is protection from financial instability, the banks may have hoodwinked some customers.

The Redburn report (p. 89) states that if every central bank, gold trader, and private individual demanded physical delivery of gold, the shortfall could be 10,000-15,000 tonnes.

 

The Redburn report also states "Innovation by the major bullion banks operating in the gold market (e.g. HSBC, Goldman Sachs, JPMorgan Chase, Deutsche Bank, UBS, et al.) who developed the gold loans (leasing) and forward markets." (p. 63)

 I am wondering whether the major gold bullion banks have planted the seeds of systematic risk using financial engineering (that is, the kind of reckless financial engineering that led to the subprime crisis in 2008 and the Greece crisis in 2010). 

 

Any thoughts on the part of the Redburn report dealing with unallocated versus allocated gold?

 

Sun, 02/21/2010 - 17:13 | Link to Comment MsCreant
MsCreant's picture

Step right up, step right up. I'm selling credit default swaps against the Fed's gold. Step on up, step on up, I will accept your premiums at MsCreantsPonziServices at No counter party risk here dot com. I have conveniently engaged the services of paypal to take your orders.

Serving your gold default needs since just a couple of minutes ago.

Sun, 02/21/2010 - 17:21 | Link to Comment merehuman
merehuman's picture

Now Thats America at work!

Thank MsCreant.

You are allways welcome at my rest home for over achievers

Sun, 02/21/2010 - 19:01 | Link to Comment Silver-Is-Better
Silver-Is-Better's picture

Thank you MsCreant, I am glad to read that someone is providing gold defaults for the sheeple. I prefer my gold in little round units.

Sun, 02/21/2010 - 17:11 | Link to Comment Gold...Bitches
Gold...Bitches's picture

yes.  dont touch unallocated gold/silver or paper etf(s)

Sun, 02/21/2010 - 21:37 | Link to Comment Anonymous
Sun, 02/21/2010 - 22:19 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

DoChenRollingBearing is happier with his approx 0.01% of Soros's in physical gold than in GLD.

Gold goes up, both Soros and I win!  Works for me.

Mon, 02/22/2010 - 10:01 | Link to Comment Anonymous
Sun, 02/21/2010 - 21:46 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

I get tired of this statement. Everyone who has read some newsletter guy writing from his bomb shelter about the coming end has stated thus and their little peons like to regurgitate it as if the idea is brilliant and they are somehow in the know. The shock factor of the statement itself is intended to be enough to carry the weight of fact......

bottom line......

would Soros, the guy who took down a fiat currency himself, be long $600 million+ of GLD if it was a scam?

Sun, 02/21/2010 - 21:54 | Link to Comment akak
akak's picture

If he, and you, would rather hold a paper certificate to an un-auditable, probably fractionally-backed, promissory scheme run by the largest Fed-allied bankster outfits such as JP Morgan, who do not even CLAIM to hold all the physical metal supposedly backing their outstanding promises (ETF shares), rather than the physical metal that is simplicity itself to obtain and hold in one's own posession, then be my guest.

By the way, I have some beachfront property in Arizona that you may be interested in as well.

Sun, 02/21/2010 - 21:54 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Yeah - I've heard that one too.....

Come up with something original.

Sun, 02/21/2010 - 22:04 | Link to Comment akak
akak's picture

I'm sorry if you find the probable truth to be stale and unpalatable.

Yes, opaque and questionable paper claims of those who have already proven themselves to be liars and theives are ALWAYS to be implicitly trusted!

(I guess we now know who was born in THAT particular PT Barnum-referenced minute.)

 

Sun, 02/21/2010 - 22:10 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Am I a bigger sucker than you are a nut job? Draw your shades tonight lest the black helicopters can see you through them:

One of the more outlandish GLD conspiracy theories states that GLD is a Trojan horse explicitly designed and launched to use stock-investor capital to short physical gold.  But when you consider the circumstances surrounding GLD’s founding, this theory is pretty silly.  GLD was created by the World Gold Council  The WGC is an industry association funded by the world’s leading gold-mining companies.  The biggest, best, and most beloved gold miners in the world finance the WGC!

 

These include market-darling gold miners the conspiracy theorists (and all investors) love, like Goldcorp.  At the time of GLD’s planning, the guy running the World Gold Council was the CEO of one of the world’s biggest and best gold-mining companies.  A staunch opponent of gold hedging back when it was common, this architect of GLD was universally adored by gold investors including conspiracy theorists.  He and the gold miners had a simple goal, “to stimulate and maximize gold demand by investors”.

 

Why would the biggest and best gold miners in the world, whose entire futures hinged on the ultimate trajectory of the gold price, launch a Trojan horse designed to short-circuit this gold bull?  This thesis is ludicrous, it makes no sense at all.  The gold miners of the world fund the World Gold Council and hold absolute power over its direction and agenda.  GLD was birthed by the very companies with the most at stake in this gold bull.  If you owned gold stocks between 2002 and 2004, you helped pay for GLD’s launch.

 

Conspiracy theorists often maintain GLD is a total fraud that doesn’t actually own any physical gold.  If this thesis was proven true, the resulting scandal would be incredibly damaging to gold investment.  So many investors would be burned, so much damage done to gold sentiment, that it would probably take years for the gold bull to recover from such a shock.

 

Conspiracy theorists are the first to acknowledge that many powerful forces are not happy when the gold price is climbing.  Rising gold prices undermine central banks’ fragile fiat currencies, as this metal is the mortal nemesis of all the endless monetary manipulation central banks practice.  And Wall Street hates gold too, as a rising gold price competes with the stock markets.  This metal diverts away capital (and attention) that Wall Street believes should be invested in stocks instead.

 

Since breaking the back of this gold bull would be hugely beneficial to both central banks and Wall Street, why haven’t they exposed GLD as a fraud?  Central banks surely know if GLD is really buying gold bullion or not, they could pull the plug in a second if GLD’s claims weren’t true.  Wall Street, with its intimate knowledge of aggregate capital flows, is in a similar position.  Why not expose such a fraud and destroy gold-investor psychology?

 

Why haven’t London gold traders exposed GLD?  They would know if it wasn’t really buying and selling physical gold bullion as claimed.  One trader who blows the whistle would gain considerable fame.

http://www.zealllc.com/2009/gldcons.htm


Sun, 02/21/2010 - 22:33 | Link to Comment akak
akak's picture

Nice pro-bankster rant there, buddy.

However, it is widely acknowledged that your beloved World Gold Council is just a front for anti-gold establishment forces, as is obvious in all their media releases and other statements, in which they pointedly ignore ALL references or mention of the monetary attributes of gold, and attempt to downplay ANY siginficance it may have as an investment, as a safe haven from depreciating fiat currencies and possible financial collapse, or as anything other than a commodity of almost no real use other than for shiny baubles and trivial electronic applications.  To make a listing of all the anti-gold biased disinformation emitted by the WGC and their brothers in lies, GFMS, would take the rest of my day and all of tomorrow.  Suffice it to say that the involvement of the WGC in the formation of the GLD ETF only casts further suspicion upon GLD, NOT trust, as you would know if you were any sort of unbiased and honest observer of the gold market and its major players.

And none of what you spout takes anything away from the fact that not only are both GLD and SLV NOT third-party audited, nor auditable, but neither in fact claim, if you read their prospecti carefully, to maintain full backing of their outstanding shares with physical metal.  That, and the fact that it is for all practical purposes impossible for an investor to withdraw their shares of these ETFs in physical metal, should be a giant red flag for anyone who is not so naive as to blindly believe the promises of those who have already and flagrantly violated even larger promises in the recent past (and with full legal immunity).

Sun, 02/21/2010 - 22:47 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Wuh Wuh Wuh - like a Charlie Brown adult.....

I'm sure you came up with all of this on your own too right? Sounds yet again like every other conspiracy theory on the net. You have been duped by the gold dealers.

 

As I said - you be my guest over paying 5-10% for physical, I'll match you dollar for dollar in GLD. Let's see who has more wealth in 5-10 years.

Sun, 02/21/2010 - 23:07 | Link to Comment akak
akak's picture

I'd say "Good luck, sucker", but I don't even feel that much benevolence towards such an obvious pro-establishment idiot and/or troll.  Oh, and don't forget about the 0.4% annual depreciation of your shares due to the running expenses of your ETFs.  My storage fees for the REAL thing are zero.

Sun, 02/21/2010 - 23:26 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Idiot.......

Lock those doors tight tonight........ never know who is out to get you! Go Militia!

Mon, 02/22/2010 - 02:53 | Link to Comment faustian bargain
faustian bargain's picture

wow. looks like he hit a nerve.

Mon, 02/22/2010 - 01:59 | Link to Comment MarketTruth
MarketTruth's picture

 Read GLD's 10-k filing at www.spdrgoldshares.com/media/GLD/file/10k_Sept08.pdf and pay special attention to pages 54 to 62.

Bottom line, if you want to invest in gold i would do as GLD's largest shareholder did months ago.... they sold their GLD holdings and purchased physical metal and took delivery. In this day and age counterparty risk is to be avoided imho.

Mon, 02/22/2010 - 10:05 | Link to Comment Anonymous
Sun, 02/21/2010 - 23:03 | Link to Comment perchprism
perchprism's picture

 

How can you be "NoLongerABagHolder" yet sniff at the notion that fractional gold trading is what the paper market has become? 

Sun, 02/21/2010 - 23:26 | Link to Comment akak
akak's picture

Probably because he was only holding a paper claim to a bag, not an actual physical bag, when the ETF BAG went belly-up.

Sun, 02/21/2010 - 23:34 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

BWUHAHAHAHAHA!!!!!!

+37

That was GREAT! Such a cut!

Now go climb in your geek hole and finish your Tetris game

 

Sun, 02/21/2010 - 23:38 | Link to Comment akak
akak's picture

You paper-loving, gold-hating trolls are just SUCH easy marks!

It is really quite impossible to resist tweaking your noses --- and SO easy to do!

Sun, 02/21/2010 - 23:33 | Link to Comment Rusty Shorts
Rusty Shorts's picture

Yeah, what perchprism said.

Sun, 02/21/2010 - 23:42 | Link to Comment Rusty Shorts
Rusty Shorts's picture

Holy shit, there I am.

Sun, 02/21/2010 - 23:35 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Read the link I posted...... and quit drinking what akak and his blogworld masters are feeding you.

Sun, 02/21/2010 - 23:40 | Link to Comment akak
akak's picture

Earth to TeaBagHolder: Nobody is buying your pro-establishment disinformation here.

Sun, 02/21/2010 - 23:43 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Earth to acock-

I'm not pro-establishment - I'm just not a freak like you.

Sun, 02/21/2010 - 23:45 | Link to Comment akak
akak's picture

Nope, not a freak --- just another anti-gold troll.

Like we haven't seen the likes of you 100 times before already.

Sun, 02/21/2010 - 23:51 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

I didn't realize you were the defender of ZH. Put yourself in the we I see. The spokedouche.

Your paramantra is a dime a dozen on the net. I would say I am the contrarian by liking GLd more than taking it in the rear from dealers. But since you are obviously a fag, you probably like that?

Mon, 02/22/2010 - 00:03 | Link to Comment akak
akak's picture

TeaBagHolder, your puerile insults are just par for the course for trolls such as yourself.

They affect me not at all, as it is fools like you who blindly trust the corrupt and criminal financial establishment who will suffer, not those of us holding REAL physical wealth that cannot be cheated from us via the paper scams of all the Madoffs out there who are still running the show.

Mon, 02/22/2010 - 00:08 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

acock lover -

It was you who began the personal attacks and name calling with your PT reference. I just jumped in your cesspool and beat you at your own game is all. No offense.

If you would read the link I posted (which you won't because you are incapable of hearing anything that goes against what you think, as stated in the link) you would notice it covers gay porn lovers such as yourself when it says:

Once rumor becomes accepted as fact, conspiracy theorists defend their belief system with all the ferocity of a mother bear guarding her cubs.  Their acceptance of anyone hinges on their acceptance or rejection of their pet theory.  If you advance it, they love you no matter how wrong you are about everything else.  If you reject it, they hate you no matter how right you are about everything else.  The theory is worshipped."

Bout sums it up in describing acock does it not?

 

Mon, 02/22/2010 - 00:22 | Link to Comment akak
akak's picture

Please give us more of your mindless ranting --- it is highly entertaining!

Mon, 02/22/2010 - 00:26 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

I was just thinking the same of you! I love a good paranoid rant...... please, let me hear more. Actually - go copy and paste from your paranoid newsletter writers so you can save me from waiting.

 

By the way - for a guy who has been a member for 6 days, how have you already established the ability to speak for everyone on this board?

Mon, 02/22/2010 - 00:02 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Typical wuss way to defend your point. Make a statement that "nobody" is buying what I am saying. You think too highly of your stature on this board because you seem to speak often for everyone. Typical for a paranoid physical and ammo only conspiracy lover. If it makes you feel any better, I at least bought your blow up doll dinner. You can tell her how many friends you have....

Sun, 02/21/2010 - 22:28 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

You be my guest paying 5-10% over market value to purchase and another 5-10% to sell.....

I'll stick with GLD that tracks the price pretty exactly, and save myself 10-20%

Sun, 02/21/2010 - 23:10 | Link to Comment akak
akak's picture

If your cranium were not so deeply buried in your posterior, you would know that the ostensible buying and selling premiums you are quoting are ridiculously inflated and exaggerated.  But as Ron Paul said so eloquently:

"Because gold is honest money, it is disliked by dishonest men."

That would include you.

Sun, 02/21/2010 - 23:39 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Better my head up my ass than a douche cleaning the stank.....

Which would be you.

Dishonest? You crack me up. I am 1/3 GLD 1/3 GDX and 1?3 cash. I agree with probably most of what you do, except I'm just not paranoid like you.... and that makes me dishonest?

Better try harder to get under my skin - ha

Sun, 02/21/2010 - 23:43 | Link to Comment akak
akak's picture

So in other words, you "own" lots of paper, and NOTHING but paper.

Yeah, I am SO paranoid ---- just like all those who forecast the current financial collapse in 2005 and 2006 and who were called "paranoid" as well.

Blow it out your ass, troll.

Mon, 02/22/2010 - 04:18 | Link to Comment Jesse Liversore
Jesse Liversore's picture

Bag you have 60% of you money in Gold and junior miners... AK you are sitting in a room with a padlock drinking your own piss waiting for Jaime Dimon to come through the door with his henchmen??? You are both dipshits.  It sounds like you are both all in, so why give a shit about a blog or financial news?  Just sit on your position(s) and wait... the fact that either one of you needs positive re-enforcement tells me again you are both dipshits.

Mon, 02/22/2010 - 04:59 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

+ 1/2 for getting the AK part right about his paranoia.

Trust me - I am not looking for reassurance from you or anyone. Just makeing a case because I am sick of the newletter lemmings always acting as if they know of some impending end of the world and clamor about physical gold only. Pisses me off about as much as acock style bloggers calling it the yellow metal.....

Just want the conspiracy losers to answer this question:

Central banks surely know if GLD is really buying gold bullion or not, they could pull the plug in a second if GLD’s claims weren’t true.  Wall Street, with its intimate knowledge of aggregate capital flows, is in a similar position.  Why not expose such a fraud and destroy gold-investor psychology?

Mon, 02/22/2010 - 02:11 | Link to Comment MarketTruth
MarketTruth's picture

Wow, you need to be educated. The 5% to 10% loss each way is perhaps for the worst of the worst dealers on the web or live/person. Go to www.Tulving.com and look at his buy versus sell spreads.

-----------------------

Kilo Bar Sell = $9/oz over spot

Buy Back = -$10/oz

$19 loss/spread buy to sell

---------------------

GAEagle Sell = $46.95/ounce over

GAE Buy =  +$27/oz over spot

$19.95 loss/spread buy to sell

 

GOLD OUNCE COSTS TODAY = $1123
(You can do the math of what $19 is in % of $1123, it is FAR LOWER than your 5% to 10% loss both ways.

--------------------------------

There are many more examples of course. Other dealers to try include Gainesville Coin and to a lesser extent due to a bit wider spreads Apmex.

Mon, 02/22/2010 - 02:33 | Link to Comment akak
akak's picture

MarketTruth, of course this contemptible troll knows all that --- but truth does not fit into his agenda to propagandize in favor of the dangerously opaque precious metals ETFs, which do not even claim to hold the full precious metal backing for their outstanding shares.  The fact that he tries to add lies to his pathetic arguments only demonstrates just how clueless he and his ilk really are, or how desperate.

Mon, 02/22/2010 - 04:49 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

There you go again..... resorting to name calling. Won't take the time to refute the information in the link.....

"If you can’t suppress and ignore your own greed, fear, and every other emotion, you will never grow wealthy in the financial markets.  This creates enormous problems for conspiracy theorists, as their attachment to their theories is so emotionally-charged that they surrender their ability to think rationally.  Logic is thrown out the window."

I say it again - sure sums up acock....

Call me troll one more time..... we haven't heard enough yet. It's like you have brain fart disease...... keep getting stuck on the same thing..... a duh aduh a duh.....ummmm. troll.... yeah yeah   thats it........

 


Mon, 02/22/2010 - 05:07 | Link to Comment NoLongerABagHolder
NoLongerABagHolder's picture

Thankfully I found a spot on the web where we can rate acock:

http://www.douchebagalert.com/db/x/526041052.asp

Sun, 02/21/2010 - 23:28 | Link to Comment 35Pete
35Pete's picture

Because unlike you, whatever shiny yellow metal is in JP's vaults will go to Soros first, and not some peon serf schmuck like you or me. 

All men are created equal. Just some men are more equal than others. 

Sun, 02/21/2010 - 16:53 | Link to Comment Anonymous
Sun, 02/21/2010 - 23:49 | Link to Comment delacroix
delacroix's picture

how can silver be mined, and refined, and sell for $15 an oz, when a very similar amount of energy as gold, goes into it's production?   answer:  silver is still way cheap. in 1945 there was 20 times more silver above ground, than gold.  now there is 20 times more gold. the price, still does not reflect this man caused ratio reduction. we use more silver than is produced, every year, for at least 30 years, and the new technology applications, are increasing. it costs 2 cents, to print a FRN, any denomination. theres a lot more paper and a lot less silver. hmmm which one do I want to hold?

Sun, 02/21/2010 - 16:56 | Link to Comment Anonymous
Sun, 02/21/2010 - 17:03 | Link to Comment Anonymous
Do NOT follow this link or you will be banned from the site!