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The "Sovereign Man" On What To Look For "When The Gold Market Tops"

Tyler Durden's picture


Yesterday we got to hear Doug Kass recite Howard Marks' most recent views on gold by memory (badly) and come up with the conclusion that gold may drop 25%, something not even Marks was foolish enough to suggest. Today, we present a contrary view, that of the extremely original and always provocative Simon Black, aka Sovereign Man. Writing from Auckland, New Zealand, the activist who has previously openly defended expatriation as a means of "revolting" against the collapse of US economics and society, turns his attention to gold and shares his thoughts on what to look for "when the market tops." As always Black, who has encountered more cultures in the past few months than most do in their entire lifetime, gives an unorthodox view on the metal's prospects, which if nothing else, are based on a much broader sampling of data, than merely the (biased) read of the opinion of just one other person. His conclusion is not that surprising for someone who has a worldview that is wider than just the FDR through the West Side Highway: "People are only starting to wake up to the reality that unbacked paper currency is fundamentally flawed, and it will be a long time before this belief becomes widespread once again, just as it was in ancient times."

From Sovereign Man:

When the Gold Market Tops

Date: December 21, 2010
Reporting From: Auckland, New Zealand

My friend Doug Casey has frequently written that you'll know the bull market for gold has peaked when there's a picture of a golden bull tearing up the dollar or the New York Stock Exchange on the cover of Time Magazine.

I have a similar view, but with a different indicator.

I'm sure you've seen those TV commercials, fliers, and billboards that say "WE BUY GOLD". The business model is simple-- they take in whatever gold you can find around the house (a false tooth, granny's wedding ring, etc.) and trade you for worthless paper money.

If that's not bad enough, they capitalize on people's ignorance of the gold market and offer a ridiculously low valuation, sometimes less than 50% of the spot price for gold. People are getting ripped off, and they're happy about it because they're able to sell their 'junk' for a few extra bucks.

These are the types of things that are common in a rising bull market that has plenty of room to run-- the public, largely ignorant about gold, is happy to trade physical wealth for worthless paper.

At the top of the market, we'll be seeing the exact opposite. The public will have wised up; the vast majority of people walking the streets will know the price of gold and be able to distinguish a Maple Leaf from an American Eagle. 

At this point, everyone will want to own gold, and the signs will change from "WE BUY GOLD" to "WE SELL GOLD"... and they'll be everywhere.

Entrepreneurs, flush with all the bullion they've been racking up over the years from false teeth and wedding rings, will start unloading their gold holdings to the very people who supplied them to begin with... all at a handsome profit.

In certain parts of the world, we're already seeing early signs of this. I've seen hoards of Chinese people queuing up to buy small gold bars in Shanghai during their lunch breaks. Same in India.

Gold "ATM" machines are sprouting up in Europe and Asia-- you can pop a few hundred euro (or your credit card in some cases) into what looks like a vending machine, and out comes a small, assayed bar of gold.

I've been following the spread of these machines with great interest, and I noticed that the first of them arrived to the United States in Boca Raton, Florida a few days ago.

Don't get me wrong-- this one machine doesn't constitute a top. Not even close. There would have to be thousands of these machines across the country at McDonalds and Starbucks before that happens.  If you need extra convincing, ask your neighbor what the price of gold is.

Years from now, though, I'm willing to bet that the sucker who ends up paying the highest price ever for an ounce of gold before the metal starts to decline will probably do so standing in front of one of these machines at a shopping mall somewhere in suburbia.

Another 'top indicator' that I look for is the occupancy rates for safety deposit box facilities like The Storage in Hong Kong or Commonwealth Vault right here in Auckland.

When these firms have a long waiting lists, or new facilities are sprouting up, it suggests that public awareness for gold is increasing... and the more that happens, the closer we get to the top.

Again, this is also starting to happen. Singapore's recent Freeport facility leased out to capacity almost instantly, and you're hard pressed to find an available safety deposit box at any of Singapore's banks. Buy hey, that's Singapore... not exactly representative of the entire world.

Here in Auckland, Commonwealth Vault has plenty of availability, and they charge peanuts.

Bottom line, while some of these 'top indicators' are starting to emerge, I think it will be several years before they're ubiquitous. People are only starting to wake up to the reality that unbacked paper currency is fundamentally flawed, and it will be a long time before this belief becomes widespread once again, just as it was in ancient times.

In the meantime, as long as central banks keep pumping their currencies full of hot air, gold should continue to have strong, long-term growth potential as the 'anti-currency'.


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Tue, 12/21/2010 - 18:04 | 822272 MsCreant
MsCreant's picture

Seems common sense.

Tue, 12/21/2010 - 18:09 | 822288 LowProfile
LowProfile's picture

Except that when the scenario above plays out, gold will be floating freely, and there will be no need to 'sell at the top', because the top will be the new baseline.

Tue, 12/21/2010 - 18:33 | 822372 Arius
Arius's picture


another indicator would be America best (richest) investor W. Buffet turns to gold...surely we are long way off, from people in the street being bulls...

Tue, 12/21/2010 - 18:59 | 822455 Jasper M
Jasper M's picture

I predict Warren will turn to dust before he turns to gold. 

Tue, 12/21/2010 - 19:23 | 822497 Arius
Arius's picture

My bet is Buffet will turn to gold in 2012.

Buffet will lead to gold the other less privileged americans...come to think of the blind leading the blind.

Imagine the headlines and comments on CNBS: Buffet recommends gold!

Tue, 12/21/2010 - 19:32 | 822529 traderjoe
traderjoe's picture

Buffet is one of the biggest beneficiaries of the fiat system. He will never publicly buy gold. If he does it, it will be on the sly and in smaller quantities. CNBS will continue to call gold a 'commodity' (and not an alternative money) until they shut the station down for lack of ratings. 

Tue, 12/21/2010 - 19:39 | 822549 Arius
Arius's picture

agreed on all points - what i am saying is by 2012 the GAME IS OVER...even Warren could see it.

we will be on the verge of the New World and new currency most likely w/ gold backing...

Tue, 12/21/2010 - 19:45 | 822560 The Chartmeister
The Chartmeister's picture

Us "old guys" remember when Buffett was buying silver in the late 90's.

Tue, 12/21/2010 - 19:58 | 822587 barkster
barkster's picture

betcha jpm had something to do with his quick exit from silver...

Tue, 12/21/2010 - 20:11 | 822623 Arius
Arius's picture

yup - i think he is collateral damage...did he sell when silver was smt like $5 or $6 not sure

and he goes bailout GS - they got his number all right...LOL

Tue, 12/21/2010 - 21:38 | 822863 dogbreath
dogbreath's picture

buffet was out of silver by the time of the first silver spike to 8.30.  his physical was used to crush some early silver specs.

Tue, 12/21/2010 - 22:17 | 822953 jeff montanye
jeff montanye's picture

silver's cool.  have some stocks.  like majestic.  

fofoa gave me second thoughts though.  he's so persuasive.

speaking of gold, did anyone notice jesse's gold chart with a target of 1375?  pretty pretty.  next stop 1455.

Wed, 12/22/2010 - 03:17 | 823373 LowProfile
LowProfile's picture

Most people who are bullish on gold (including those here), and bearish on everything else, even to the point of thinking there will be a hyperinflationary crack-up, still think there will be somewhere to hide in the paper markets.

They will be wrong.

Ultimately, you will only 'own' what you can physically control.

Silver is very cool, but when it starts getting too hot to handle, you need to swap it for you-know-what.  Scale out as the GSR plunges.  IMO.

Wed, 12/22/2010 - 01:17 | 823258 RockyRacoon
RockyRacoon's picture

Would anyone buy silver at $30 an ounce with an instant hedge of $20 an ounce guaranteed?  Buy $20 face value silver coins for $30 each.  Is that a better deal than U. S. silver Eagles with a face value of only $1?  Good question, eh?  Here's how to hedge that $30 purchase, and these are available all day long:

Wed, 12/22/2010 - 01:51 | 823291 Money Squid
Money Squid's picture

RC, them coins are selling $399 + $24 shipping to Amerika, so...let me see that's $42.30 an ounce, not $30. Plus, how do I know its good for $20 if its just an Olympic coin ?

Wed, 12/22/2010 - 11:08 | 823752 RockyRacoon
RockyRacoon's picture

They are averaging a bit over $300 per set and you'll pay shipping with anything you buy so that's moot.   The coins are legal tender with a face value of $20.  You can pull them out of the capsules and spend them at your local grocery store (after convincing the clerk that you are not a total nut-job).

Here are closed auctions on those particular coin sets:

Wed, 12/22/2010 - 05:59 | 823422 Lord Koos
Lord Koos's picture

I guess you aren't keeping track... 90% silver coins are presently selling on ebay for around 20 times face value as long as silver hovers in the $29-30 price range.  The face value of .999 silver in 1 oz coins is meaningless.

Wed, 12/22/2010 - 11:16 | 823760 RockyRacoon
RockyRacoon's picture

 The face value of .999 silver in 1 oz coins is meaningless.

No, it's not meaningless.  The face value of a Mercury (Winged Liberty) dime is 10 cents so that's your downside.  The face value of a Silver Eagle is $1 so that's your downside.  The face value of the Canadian Olympic commemorative is $20.  See where I'm going with this?  The face value of your legal tender coin is always a hedge against the price of the metal in the coin.  Any bank should exchange your coin for fiat if you must have paper money for a transaction in the retail market.  The U.S. Mint (Treasury) were no fools when they gave the silver a face of $1, and the gold Eagles at $5, $10, $25, and $50 for the 1 ounce coins.  They were never meant to circulate (Gresham's Law doncha know).  What were the Canadians thinking!?

Wed, 12/22/2010 - 11:25 | 823800 romanko
romanko's picture

If you're bent on hedging using the legal tender face value, just buy boxes of US nickels. Their 75%copper/25%nickel composition has current metal value of 6.6cents, an instant 32% gain, and their "downside" face value is 5 cents each.

Wed, 12/22/2010 - 12:20 | 823950 RockyRacoon
RockyRacoon's picture

True! Same holds true for cents pre-1983.  Cents were 95% copper.

If one is unafraid of prosecution for melting them into ingots, go for it. 

Recent changes in the law for these coins (cents and nickels) were not for the fun of it.

Tue, 12/21/2010 - 19:51 | 822574 Jendrzejczyk
Jendrzejczyk's picture

Just a guess, but a good portion of his real estate holdings could be sitting on gold producing soil. Stealthy, without admitting anything.

Wed, 12/22/2010 - 01:47 | 823287 shano
shano's picture

Except Warren has "bought" gold, by investing in Richline  and Bel-Oro and Aurafin, gold jewelry suppliers, and Helzberg Diamonds, a retail jewelry chain.  The best way to make money on gold is to sell it because then you can make money whether it goes up or down.

Tue, 12/21/2010 - 20:46 | 822679 akak
akak's picture

I suspect that you are exactly correct, LowProfile, and that all those who are simplistically calling for gold to eventually enter some faux, manipulated-market bubble like equities in 2000 or 2007, or real estate in the middle 2000s, are just not appreciative of the fact that the "bull market" in gold in the last 9 years is NOT in fact just another market fad, but represents a fundamental realignment (still in its early stages) of the world financial and monetary systems.  As long as the dollar continues to depreciate, the price of gold can only continue to go higher, especially as the overt manipulations of world monetary authorities to attack it and hold it back are increasingly becoming widely recognized, and are therefore increasingly failing.

Tue, 12/21/2010 - 20:50 | 822721 Al Gorerhythm
Al Gorerhythm's picture

when gold starts paying an income, it will be in a bubble.

Wed, 12/22/2010 - 03:19 | 823375 LowProfile
LowProfile's picture


Tue, 12/21/2010 - 21:00 | 822758 FreedomGuy
FreedomGuy's picture

Its not just the dollar. It's virtually every currency in the world as they race to the bottom to try and favor exports over imports. Pegged currencies like China and S. Korea have to follow the leaders down the hole. PM's are the alternative to all currencies and even the poor schlub in the article that buys at the top will find that over time he will still do OK. That schlub whether or not he realizes it just bought an insurance policy against hyperinflation, too. That's the extra benefit of PM's. It's not just the value aspect. It's also the insurance aspect. Like the insurance you buy on your house, car and life, you are likely never going to need it, but if you do, you are soooo glad you have it and it becomes a bargain.

Wed, 12/22/2010 - 01:11 | 823254 akak
akak's picture

Its not just the dollar. It's virtually every currency in the world as they race to the bottom to try and favor exports over imports.

You are correct, and I was negligent and/or sloppy in not more explicitly stating "fiat currencies" when I said "the dollar".  Yes, of course, all fiat currencies are roughly as corrupt and unsustainable as all the others, and once one major one begins to truly crumble, it is very likely that ALL of them will very shortly follow. 

All those who believe, due to their narrow and faulty focus on the contrived and artificial US Dollar Index, that if the Euro should radically fall or collapse, that the US Dollar will therefore automatically "rise", are living in mainstream propaganda-fed fantasy world.

Tue, 12/21/2010 - 22:13 | 822945 Billy Shears
Billy Shears's picture

Yeah, what he said...Mother F***in' GOLD BITCHEZ!!!

Wed, 12/22/2010 - 00:55 | 823242 masterinchancery
masterinchancery's picture

The question is, at the top what paper currency will be desirable enough to accept in exchange for gold?  Not the unbacked US dollar I think. What would make sense, as happened after the Civil War, would be to exchange gold for gold-backed notes, at a slight premium.  But most gold will never be exchanged for paper.

Wed, 12/22/2010 - 01:59 | 823307 Long Strange Trip
Long Strange Trip's picture

At the top you wouldn't exchange your gold for fiat paper but instead exchange it for Real Estate (which should have finally cratered by then), equity in businesses, capital equipment, - any real tangible asset...

Wed, 12/22/2010 - 02:20 | 823334 tdogg
Tue, 12/21/2010 - 18:30 | 822327 waterdog
waterdog's picture



Tue, 12/21/2010 - 18:29 | 822356 waterdog
waterdog's picture

It sure does- has anyone heard about what the premium is to purchase from an ATM?


Tue, 12/21/2010 - 21:17 | 822805 RockyRacoon
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It was reported on (drum roll, please) CNBC, that the premium is about 5% over spot and that the machines are linked to input that updates the prices every 10 minutes.  Considering the source I'd be suspect of the numbers...

Tue, 12/21/2010 - 18:33 | 822369 Eally Ucked
Eally Ucked's picture

Yes, it is, the only fault in that thinking is that, that it is based on outdated perception of the economic order, first old USD must be replaced with something new and then his points will be valid.

Tue, 12/21/2010 - 18:05 | 822278 gwar5
gwar5's picture

Gotta have some gold for the 21st Century.

Tue, 12/21/2010 - 18:30 | 822360 Arius
Arius's picture

yeah, but to quote one of TBTF geniuses "as long as music plays you got to dance"

Methink Buy some Google (cramer recommended) and Neflix.


Tue, 12/21/2010 - 21:17 | 822809 RockyRacoon
RockyRacoon's picture

While the music is playing, and the fools are dancing, we're sawing the legs off the chairs.

Tue, 12/21/2010 - 18:06 | 822280 Al Gorerhythm
Al Gorerhythm's picture

You forgot; Johnny Bravo will be seen standing at the head of the buy line.

Tue, 12/21/2010 - 18:20 | 822331 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

Robo will have an avatar with small tit-tays too.

Tue, 12/21/2010 - 18:14 | 822307 NotApplicable
NotApplicable's picture

Safety deposit boxes will empty out in an instant once they start being seized in earnest. I would never, ever use one.

Tue, 12/21/2010 - 18:17 | 822318 JonNadler
JonNadler's picture

you can store your gold at our vault and we'll give you a nice certificate for it. We'll keep it reaaaaal safe for ya

Tue, 12/21/2010 - 18:35 | 822381 Arius
Arius's picture

is it Fed insured?

Tue, 12/21/2010 - 18:42 | 822400 MsCreant
MsCreant's picture

Maybe method acting classes with Konstantin Stanislavsky. I dunno, you're just not hateable enough. The upside down robo photo is a plus. You need to tap into your greedy, seedy, inner salesman, desperate, scared, bitch and really let it rip. Remember, you are in denial, you must get folks to stop buying the stuff, or Jaime will make fun of you and make you a playground reject. You must have his approval, you are desperate for it, you will do anything. You are nothing without him. You'd suck the smeg.... Never mind, you get the idea. 

Make us hate you if you really want to be a righteous effigy troll. Or is your heart just not into it? How does Johnny Bravo do it?

Tue, 12/21/2010 - 18:56 | 822425 DoChenRollingBearing
DoChenRollingBearing's picture

JonNadler, looks like MsCreant turned down your offer at Jamie's place...


Remember, as the great Johnny Bravo taught us:

1)  You can't eat it!

2)  It is in a Rising Wedge!

Au to $0.02!

Ag to $0.01!

I miss Chumba...  When are you coming back, bud?


EDIT: Guess you are stuck with Blythe now,  JonNadler...  Bummer!

Tue, 12/21/2010 - 19:00 | 822456 traderjoe
traderjoe's picture

Honestly, I don't think Bravo was a troll like Harry or Toothis are. I think he was what he said he was - a college student learning how to trade. He had a perspective - but it was 'immature/uninformed' (he thought of gold as a commodity and didn't have the perspective to understand why gold was going up). He made a bet about the direction of gold, lost, and seems to have followed up on leaving. Unless he's now under a new avatar which is entirely possible. I think, personally, one of the reasons he was not liked was because he kept saying the same stuff over and over (and over) again - like how he didn't understand paying a premium over spot for coins. Over and over again. Did I say over and over again?

I don't know why I felt like defending him just then, but we've seen an increase in trolls lately, and for some reason he just didn't strike me as a troll (i.e. someone being intentionally difficult just to get a rise out of people). Just someone that had a different opinion - which I do like to hear now and again.  

Tue, 12/21/2010 - 19:37 | 822542 MsCreant
MsCreant's picture

You gotta give it to him, he could really draw fire. If he was a clown at the rodeo, he got all the gold bulls to go after him very effectively!

Tue, 12/21/2010 - 21:21 | 822816 RockyRacoon
RockyRacoon's picture

He was so obnoxious and wrong to the point of being clownish -- and intransigent.

That's about the best compliments I can pay him.


Wed, 12/22/2010 - 10:06 | 823597 Miss Expectations
Miss Expectations's picture

You probably realize that the reason the bulls are jumping and gyrating is because they have a cinch around their hindquarters that tightly squeezes their testicles.  If the clown would attend to getting the cinch off, us gold bulls would look less crazy.

Tue, 12/21/2010 - 20:06 | 822601 Village Idiot
Village Idiot's picture

Johnny wasn't a troll.  Johnny forced "opinion" out of people.  Personally, I like fact-checking opinion.  And Johnny didn't come off as an asshole, Johnny was a nice boy.

Speaking of nice boys, NORAD has a website for tracking Santa.  The kids seem to enjoy it -



Tue, 12/21/2010 - 20:11 | 822622 Johrny Bravo
Johrny Bravo's picture

Thanks to everyone above who is SOOOO understanding of me...

Goled to $200 Bitchez!

Tue, 12/21/2010 - 20:46 | 822710 Village Idiot
Village Idiot's picture

Johrny's back...

Tue, 12/21/2010 - 21:04 | 822770 Johrny Bravo
Johrny Bravo's picture

Buried canned ham in the backyard, Bitchez!

Tue, 12/21/2010 - 21:22 | 822820 RockyRacoon
RockyRacoon's picture

Oh, Jorny, me boy.  Where hath ye been?

Tue, 12/21/2010 - 21:31 | 822844 cosmictrainwreck
cosmictrainwreck's picture

Johnny, I think it would flow so much better as: "canned ham buried in the backyard, bitchez". A subtle shift....

Wed, 12/22/2010 - 11:20 | 823784 RockyRacoon
RockyRacoon's picture

He recycles his ham.  Reburies it after eating it.  Like my dog does.

Thu, 12/23/2010 - 17:05 | 826944 MsCreant
MsCreant's picture

Notice that apple of his too, all chewed, black and grey. What does that smell like?

Wed, 12/22/2010 - 01:55 | 823298 Real Estate Geek
Real Estate Geek's picture


Speaking of nice boys, NORAD has a website for tracking Santa.  The kids seem to enjoy it -

Too bad they couldn't track a few 767s.

Tue, 12/21/2010 - 21:04 | 822766 e_goldstein
e_goldstein's picture

f/u baghdad bob ;-)

Tue, 12/21/2010 - 18:18 | 822322 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

I will not look for the price in Gold in USD to get outrageos then decline to get out.  I will only look for the relative purchasing power of gold to decline.

That will be the time to trade it for stock, a gun, pair of russian nymphomaniac gymnast twins with open minds to marry etc.  There is a good possibility the nominal value of gold will keep rising after that point.

Tue, 12/21/2010 - 19:30 | 822527 XPolemic
XPolemic's picture

pair of russian nymphomaniac gymnast twins with open minds to marry

Best purchase suggestion, ever.

I wonder how many ounces there are to the russian-nymphomaniac-gymnast-pair.


Tue, 12/21/2010 - 20:09 | 822611 Village Idiot
Village Idiot's picture

I'll second as best purchase.  Christmas?

Tue, 12/21/2010 - 21:23 | 822826 RockyRacoon
RockyRacoon's picture

Looks like your fate is to live in Utah.  The Mormons would welcome your bigamy -- and your gold. 

Tue, 12/21/2010 - 21:54 | 822904 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

So will the corrupt local pols so I can live wherever I want.  Bigamy is not the same as marrying two hot ass russian sisters.  Anything is OK if they are hot enough and gymnastic enough and nympho enough.

So sayeth Jesus, Moses, Allah and Joe Smith

Wed, 12/22/2010 - 03:19 | 823374 trav7777
trav7777's picture

Russian girls are fucking ruthless been warned.

Wed, 12/22/2010 - 12:15 | 823935 RockyRacoon
RockyRacoon's picture

Russian girls are fucking ruthless mercenaries...

The operative word being the modifier of "ruthless".

Tue, 12/21/2010 - 21:36 | 822854 MsCreant
MsCreant's picture

pair of russian nymphomaniac gymnast twins

Hope you are up to it.

Tue, 12/21/2010 - 21:48 | 822896 Kali
Kali's picture

Nuttin a viagra/meth/ecstasy cocktail can't fix

Tue, 12/21/2010 - 22:11 | 822941 Village Idiot
Village Idiot's picture

I was thinking 15 minutes with one and a reach for the remote.

Tue, 12/21/2010 - 22:43 | 823012 Oh regional Indian
Oh regional Indian's picture

ooooohhhh.... ouch......

man-hood is dying. woman-hood is dying too.

Narrow hips and limp dicks cannot make babies anymore.

Such is where we are Kali. It's your hour...



Wed, 12/22/2010 - 00:49 | 823238 Kali
Kali's picture

Told ya I was coming!  Yes.  And when they do manage to have children, 1%(!) are born with autism now, and, probably still rising.  Think about that.  1 in 100.  Average lifetime cost for child with autism = $3.5 million

Wed, 12/22/2010 - 03:21 | 823378 trav7777
trav7777's picture

did they figure out yet that old man + old woman = less viable offspring?

I mean there's a goddamned reason women are so fertile from 13-27 and it goes down after that...nature has plans which do not include a career

Tue, 12/21/2010 - 18:19 | 822324 Worker Bee
Worker Bee's picture

Yea right..what people are starting to wake up? The same ones trampling eachother for ipads at wal-mart? 300 million people in the states and maybe 10% of the cattle out there have any clue about gold except that they can overpay for gold plated cables for their new 10000 in. 3d TEEVVEEEE.

Tue, 12/21/2010 - 18:21 | 822335 drink or die
drink or die's picture

The same people that put down $0 to buy a $500K house with a $50K a year income, and then took out an equity loan to buy a boat?

Tue, 12/21/2010 - 21:25 | 822828 RockyRacoon
RockyRacoon's picture

Wham!  That one will leave a mark.

Tue, 12/21/2010 - 18:20 | 822333 bingaling
bingaling's picture

I think he is right about how to determine the top . But I think his timing may be off . The internet can take gold viral in 12 months with a good hit of inflation or the death of a common paper currency.

Tue, 12/21/2010 - 19:51 | 822576 Diogenes
Diogenes's picture

90% of the population never invests in ANYTHING.To them, money is for spending. They can see spending it on a TV or a boat but to spend it on stocks, bonds, mutual funds or gold is just stupid. Where's the fun in that?

So don't worry about all the Walmart shoppers suddenly buying gold.

Tue, 12/21/2010 - 20:06 | 822609 barkster
barkster's picture

At the top of the internet craze I recall a twenty-something year old in our IT department trading like mad every day and sending out stock tips by email to other employees. Looking back, that was certainly my signal. I was not in though because I thought the market was overvalued at Dow 4000.

Wed, 12/22/2010 - 02:22 | 823337 Long Strange Trip
Long Strange Trip's picture

I don't think he mentioned a specific timeline - only to look out for gold going main stream where access to physical gold is in ATM's across the country, etc.  Personally,you give the people out there too much credit that they'd actually stop watching the TV and spend the time to understand how f*cked the financial system is and buy gold. Things going viral on the internet have the depth and substance of something like this

Methinks most of the people won't know what the hell is going on until it's too late and all financial paper is burning.

Tue, 12/21/2010 - 18:21 | 822336 koeleköpke
koeleköpke's picture

as always the smart ones already have covered their positions since long. year after year they had good returns on their physical holdings. what will bring the near future ? more debt, more paper, much more peptalk and the smart ones are still bying bars and coins in gold and silver.


Tue, 12/21/2010 - 18:23 | 822338 Flore
Flore's picture

FOFOA bitchez

Tue, 12/21/2010 - 18:39 | 822388 Drag Racer
Tue, 12/21/2010 - 18:42 | 822401 DoChenRollingBearing
DoChenRollingBearing's picture

+ $55,000

Tue, 12/21/2010 - 19:05 | 822469 traderjoe
traderjoe's picture

I've been thinking about the $55k argument since I received my order for 1/4 ounce coins. These relatively small coins are currently worth $375 or so. They are pretty small (Australian Kangaroos). I no longer think $55k is possible/relevant, as it would make this small coin worth $10k. I'm not sure someone could get their minds around that reality as they looked at the coin. $1k per coin, sure. $2k, maybe. 

Of course, I understand why they make that 'prediction' as the price of everything else would be completely different as well. In some ways, my thinking makes me more bullish on the possibilities for silver, as likely silver would close the ratio gap first before gold really shot to the moon. 

Just thinkin' out loud...

Tue, 12/21/2010 - 19:29 | 822528 Arius
Arius's picture

dont think too much...LOL

Tue, 12/21/2010 - 19:34 | 822536 XPolemic
XPolemic's picture

I'm with you. Gold has recently hit it's inflation adjusted price (my calc, based on an average 6% risk free rate of return), and will most probably move in lock step with USD devaluation.

Silver on the other hand is still 200 bucks away from it's inflation adjusted price (by the same measure). Might get me some more PAMP today. :)

Wed, 12/22/2010 - 02:00 | 823306 Sun Tsu
Sun Tsu's picture

Silver is worth $24.

Tue, 12/21/2010 - 21:02 | 822764 Simon Endean
Simon Endean's picture

Can't see how it would ever get to $55k.  Right now, those small coins aren't worth someone killing you to take it.  At $1,000, maybe.  Get much above that, and it moves from possible, to probable, to certain.  Likewise, the odds of it being "lost in transfer" or some other such mishap rise accordingly.


Point being, the headaches involved with safekeeping it will probably effectively cap its worth well before anything approaching $55K.

Tue, 12/21/2010 - 21:28 | 822834 RockyRacoon
RockyRacoon's picture

Heard the same arguments about it reaching $500, $750, and $1,000.

Tue, 12/21/2010 - 22:19 | 822957 Imminent Crucible
Imminent Crucible's picture

Simon is making a common error.  He's thinking of gold reaching $55k while $55k will still buy what it buys today.  That's why it seems improbable to him.

Gold could well reach $55k an ounce, and when it does, you won't be able to buy a decent used car for $50k.  It's like this, Simon; gold won't be going to $55k because it suddenly becomes tremendously valuable.  It will be because the dollar becomes tremendously worthless.

Gold didn't go to $55k in Zimbabwe dollars.  It went to septillions of Zim dollars, just before Gideon Gono canceled the Zim dollar.

Tue, 12/21/2010 - 23:55 | 822959 Imminent Crucible
Imminent Crucible's picture

quadruplicate post.  oops.

Tue, 12/21/2010 - 23:55 | 822975 Imminent Crucible
Imminent Crucible's picture


Tue, 12/21/2010 - 23:54 | 823166 Imminent Crucible
Imminent Crucible's picture


Tue, 12/21/2010 - 22:15 | 822936 DoChenRollingBearing
DoChenRollingBearing's picture

dupe post sorry!

Tue, 12/21/2010 - 22:12 | 822944 DoChenRollingBearing
DoChenRollingBearing's picture

I stumbled into FOFOA somewhat over a year ago.  When I saw him making his case for $55k, I thought wow this guy's an extremist!  But I've always had a place inside me for (non-violent) extremists so I gave him a read.

And then I got hooked.  Hey, I don't know what's going to happen!  But, there's too BS in the system and it looks like a lot of people are going to get fried...

As ZH-er nuinut (who knows more than I do and is more articulate) explains, the BIG price rise will happen when paper gold price diverges from the physical gold price.

Tue, 12/21/2010 - 22:39 | 823005 goldsaver
goldsaver's picture

Perhaps. But what is a 1 carat diamond "worth"? How big is a 1 carat diamond? How about a 10 carat diamond? 

I think there will be those willing to pay $50K an ounce (FRNs) for gold. Specially when there is no loose physical to be had. Of course, that will just make it more likely that the .gov would confiscate it, sorry, voluntarily recall it, for National Security purposes.

Tue, 12/21/2010 - 23:32 | 823110 traderjoe
traderjoe's picture

The diamond is an interesting counter-point. I would never pay that much for one, but obviously some people do. 

I think what is more likely is a massive bifurcation of prices in goods - tangible and useful v. discretionary and costly. As another poster on another thread said, discretionary indebted and costly items like boats, fancy cars, etc. will be driven down in value. An ounce of gold might be able to buy you a $20k bass boat. 

On the other hand, it won't be able to buy you $20k in gas, oil, or food. But again, who knows what the relative prices will be like at that time. I just can't imagine someone selling a year's worth of gas for one small coin. I'm a bear on the fiat currencies, but I'm not a raging bull at $55k/ounce (assuming relative prices stay the same as today). I get the one gold coin for 2 nice men's suits argument. But if all of a sudden a gold coin buys 20 nice suits, then I think you might have a backlash against gold. I personally want it to be a store of wealth and be of value in the future, but I'm not trying to 'profit' from owning it. 

Wed, 12/22/2010 - 01:16 | 823256 Ludwig Van
Ludwig Van's picture


Throughout history, one oz. AU buys *one* nice suit.

(Tired of seeing the ratio misquoted here; but worse, appalled at implied nice-suit inflation.)



Wed, 12/22/2010 - 12:35 | 823982 RockyRacoon
RockyRacoon's picture

A word about the "suit analogy".   It was true some time back when labor was not priced the way it is now.  The labor in making a suit was mostly human labor on a sewing machine.  Today it is labor using highly-automated equipment.  The labor cost is not so much a factor now.  Another view is the early automobile business.   A nice 1930s auto with multiple carbs took a bit of labor by a mechanic to keep it tuned and running optimally.  Now that work is done by smart chips in the car using fuel injection, etc.  So, the labor component is removed to a large degree.  It is labor that has become the expensive component of the price of goods.   It was not always so.  The suit/car analogy has transformed into the situation in which we are able to obtain a better product (more sturdy or cheaper in the suit, more reliable in the car) but the relative cost is the same.  You get an extra pair of pants with the suit, and you get more bells/whistles on the car. It's some of the thinking of the BLS when they use "hedonic adjustments" to the inflation of certain items.  There is some validity to it but not when it is used primarily to make inflation look "tame".

Wed, 12/22/2010 - 02:53 | 823360 DamnDirtyApe
DamnDirtyApe's picture

"Freegold" is a pet theory that will never happen. 

FOFOA holds mainly gold and desperately wants it to go ballistic so he can cash out and get rich. He is no dufferent than everyone else who buys equities, commodities, real estate etc.


Given two scenarios :

A) Gold and Silver form a nice bubble (say 4k for Gold), which eventually pops, and life moves on to the next fiat rigged system


B) The "freegold" dream where the world magically permanently transforms into a utopian free market open system of 55k gold that crosses all boundaries and economies and all borders and exists outside of the fiat system.


... well I'll bet on scenario A as being 99.99% more likely.

Tue, 12/21/2010 - 22:03 | 822924 RexZeedog
RexZeedog's picture

Gold is actually standing still - it's the universe of paper money which is receding behind it. If the black hole which is fiat money gets bad enough, the $10k - or any huge number is not out of the question. Before that though, the Euro will collapse and there will be a huge rush into dollars. It's a collapse of the Euro which might save the dollar for a long while.

Wed, 12/22/2010 - 00:13 | 823204 student for life
student for life's picture

I often think in the same terms but then i have to remind myself gold is stationary and the currency is moving. If we believe that all fiat returns to zero then gold goes to infinity in terms of the fiat.

I have no idea what it will be worth in trade. 1 oz = 1 horse, cow, 4 goats, acer of farm land? Any one have info about what 1oz got you in the olden golden days? Maybe we can guess the amount of gold compared to population and what to bought to those values today, might be different by region.

Things might get crazy as at some point in history black pepper in value was equal to it's weight in gold and i am sure we had other examples. I guess we can say it was a bubble in black pepper. 

Just helping you help me think out loud

Wed, 12/22/2010 - 01:08 | 823250 Derp2012
Derp2012's picture

Actually, the 55K number from fofoa is quoted in 2009 dollars, i.e. projecting appreciation in excess of dollar depreciation. This is based on the idea that all paper claims would compete freely for physical in the "freegold" model, and thus the value of all paper would be divided evenly among the physical stock.

Note that "freegold" is an opt-in idea -- those interested in speculation or investment are free to lend out their gold, or trade gold for fiat to lend at interest, or anything else.  Freegold simply gives ordinary people a way to save without fear of dilution or punitive taxation. (No cap gains, VAT or collectibles tax on gold / fiat exchanges).

Fofoa's point in a nutshell is that if enough people who just want to save follow game theory, they will collectively choose allocated, unlevered gold as their store of value, and opt out of the banksters' "savings" scams. There are enough people in the world who just want to save their f*cking money, that if they lock onto this strategy it will absorb all available gold stock.

Tue, 12/21/2010 - 18:24 | 822342 Common_Cents22
Common_Cents22's picture

It's way early in the cycle.  but the awareness in gold is increasing.  There is even a new reality show on Discovery channel called Gold Rush.  Some unemployed guys trying to mine for gold in Alaska.

Good business idea to start secure gold storage facilities. 

Tue, 12/21/2010 - 18:26 | 822350 Worker Bee
Worker Bee's picture

Oh yea..kinda like those shows about flipping houses during the height of the bubble..

Tue, 12/21/2010 - 18:57 | 822451 DoChenRollingBearing
DoChenRollingBearing's picture

At the risk of .gov seizing the gold storage facilities...

Tue, 12/21/2010 - 20:25 | 822656 Nostradumbass
Tue, 12/21/2010 - 18:29 | 822346 mblackman
mblackman's picture

Has anyone studied the life expectancy of a fiat paper currency from the time it becomes truly fiat to bust and written about it? Ralph Foster outlines more than 400 instances of fiat paper currency throughout history from the first recorded occurrence in the Song Dynasty China (1100AD) to Zimbabwe in his book Fiat Paper Money:  The History and Evolution of Our Currency but don't think he goes so far as to construct an average timeline.

So far the USD has been truly fiat since 1971 so will turn 40 next year. From memory that is the longest fiat currency of which I am aware, a situation that has been greatly enhanced by the fact that it's is a reserve currency. Generally, a fiat paper currencies death knell is indicated by a hyperinflationary parabolic curve before the inevitable bust occurs.


Matt Blackman

Tue, 12/21/2010 - 19:48 | 822568 tmosley
tmosley's picture

Yuan (Mongol) China had the longest lasting single issue of fiat currency in history, which went somewhere between 40 and 50 years, IIRC.  They had three episodes of hyperinflation during their brief dynasty, which finally brought about the end of both the Yuan Dynasty and the breakup of the Mongolian empire. some 130 years or so after it was founded.

Yuan China is probably the best historical analogy to the situation in the US in that it was a militarily unassailable power (ie no chance of invasion from outside), with a fiat currency that was also the "world" reserve currency (all of the nations they knew of accepted their paper).

Tue, 12/21/2010 - 18:28 | 822351 Burnbright
Burnbright's picture

People calling for Gold top in fiat are hilarious! 

Tue, 12/21/2010 - 23:54 | 823167 living on the edge
living on the edge's picture

They forget we have reached and surpassed Peak Gold production. Time is on our side!

Tue, 12/21/2010 - 18:29 | 822354 Windemup
Windemup's picture

1. Underpants.
2. ??
3. Profit. $$$

Wed, 12/22/2010 - 10:49 | 823690 mark mchugh
mark mchugh's picture


When I listen to pols talk about "creating jobs" they sound about as enlightened as the underpants gnomes.  You made my day.

Tue, 12/21/2010 - 18:33 | 822368 InconvenientCou...
InconvenientCounterParty's picture

You can't say paper money is unbacked. FRN's are backed by the full force of the U.S. corporatist empire.  Empires always fail but late stage Empires in survival mode might be the most overtly dangerous. Think about avoiding bank deposit boxes.

I got a big tin of snack popcorn from APMEX this year. Put it in a vinyl bag it would be a good way to bury "something".

Tue, 12/21/2010 - 18:42 | 822398 godgunsandgold
godgunsandgold's picture

Cheap tin can will rust out in nothing flat. Better to do plastic.

Tue, 12/21/2010 - 20:29 | 822665 Nostradumbass
Nostradumbass's picture

6" (or whatever you can get) PVC pipe with slip fit caps and the goods inside ziplock type bags work well underground.

Tue, 12/21/2010 - 21:36 | 822855 RockyRacoon
RockyRacoon's picture

Install sewer clean-outs on the ends of the PVC pipe so it's easy to open yet water-proof.  Makes the whole contraption re-usable.

Tue, 12/21/2010 - 21:05 | 822771 Doctor sahab
Doctor sahab's picture

I enjoyed my popcorn from APMEX as well. I'm still looking for the silver/gold bullion surprise like in a Cracker Jack box but none so far :-(

Tue, 12/21/2010 - 21:05 | 822773 Simon Endean
Simon Endean's picture

You must buy a lot from APMEX. I buy small amounts every month, and all I got was a "Merry Christmas" mass e-mail.

Yep, I'm a valued customer!

Tue, 12/21/2010 - 18:35 | 822383 KTV Escort
KTV Escort's picture

the "top" won't be nearly that pleasant

Tue, 12/21/2010 - 18:39 | 822394 godgunsandgold
godgunsandgold's picture

Old rule of thumb......."When Johnny Carson started talking about gold, it was time to get out".

Tue, 12/21/2010 - 20:47 | 822712 Al Gorerhythm
Al Gorerhythm's picture

Just waiting for the word from JC.

Tue, 12/21/2010 - 18:45 | 822408 Common_Cents22
Common_Cents22's picture

I hear people all the time say, yeah, gold is done, look at all those we buy gold scams?! They don't even take a moment to think about the scam is BUYING gold at a dirt cheap price, not selling overpriced gold to the public. what morons.

Tue, 12/21/2010 - 18:46 | 822413 ReallySparky
ReallySparky's picture

I went to a Christmas Party recently.  So there I am standing amongst the girls and they were chatting about some silly gold party they recently attended.  Three of them were anxiously awaiting their new treasures from the club. Evidently they had taken old jewelry, stuff they don't wear anymore to the gold party.  The host weighed it then they got to look though a catalogue and pick out "updated, currently stylish" silver baubles.  I just stood there and listened. Then I pulled a half eagle out of my purse and asked, "what do you think the guy would have given me for this in the catalogue?"  One pipes up and says, (using her best kindergarten estimation skills), "you could have probably bought only a hundred dollars of stuff for that little thing.  I got catalouge credit for around $1000.00 bucks. I bought a bunch of great silver stuff."( I must admit, I have never liked her.)  I said hum, "well I guess I should trade with the coin shop then, they will give me anywhere from $650 to $700 for it.  If it were twice this size and silver, I could only get around $25 bucks."  All three of them, looked dazed, deer in the head light look. One approached me later, asked some questions, I have given her many links on the internet.  Another converted.   

Tue, 12/21/2010 - 18:49 | 822421 MsCreant
MsCreant's picture

Good work. :-)

Tue, 12/21/2010 - 18:51 | 822432 Common_Cents22
Common_Cents22's picture

 I like the idea of starting some gold buying parties.  Think there is still a good oppty?   have a link for the party you went to?   So they aren't paying cash for gold but rather selling them silver jewelry?  at a good margin I'm sure.    Brilliant!

Tue, 12/21/2010 - 18:53 | 822435 DoChenRollingBearing
DoChenRollingBearing's picture

I second the lady with the gun!  Good job.

Tue, 12/21/2010 - 20:43 | 822686 Village Idiot
Village Idiot's picture

deleted - might be perceived as sexist

Tue, 12/21/2010 - 18:51 | 822429 Drag Racer
Drag Racer's picture

I'll be happy when my pantry looks like this...

Tue, 12/21/2010 - 19:00 | 822454 notadouche
notadouche's picture

From Casey Reports they pointed out the gold corrections over the last decade's gold bull market and the there were 2 corrections of 27% and those were the most severe and also the best buying opportunities.  So let's all hope for a 25% drop and load up the truck.

Tue, 12/21/2010 - 19:29 | 822517 honestann
honestann's picture

Yes!  My truck is ready... even though I'm getting increasingly low on fiat trash, and simultaneously heavy on physical gold.  However, I'm betting we don't see another 25% correction in gold for years.  Too many ultra-rich, sovereigns and central banks will be happy to convert their fiat trash into gold given a mere 10% correction.

Tue, 12/21/2010 - 21:56 | 822907 dogbreath
dogbreath's picture

I agree.   Usually the christmas period with its poor liquidity sees prices going lower.  It another 10 days till january but this year prices have been exceptionally stable.  This thursday and friday will be the low.  between christmas and newyears bargain hunters will take the prices higher and in january........lift off

Tue, 12/21/2010 - 23:27 | 823103 honestann
honestann's picture

I'll be sad not to have one last chance to get more gold and silver at a low price, but since I have 95% of my wealth in physical gold and silver, I won't cry too hard as it rockets into interstellar space.

Wed, 12/22/2010 - 00:46 | 823239 dogbreath
dogbreath's picture

all the gold in the world in above ground existance today is held by mostly private hoarders.  some of these hoarders have been doing it for multi generations and they don't want competition. 

Tue, 12/21/2010 - 19:01 | 822461 honestann
honestann's picture

The article states one possibility.

The other possibility, the one we want, is that the trend to accept gold [and silver] coins and bars as payment continues to increase... and eventually gold becomes widely enough considered as "money" to be accepted everywhere.  Already I can buy 96% of the goods I want and need with gold.  Yes, it took some looking and convincing, and I selectively shop at places what will accept my gold, but we're already doing fairly well.  If I try to spend in random places, my success is about 34%.

The appropriate outcome is not that dollars become backed by gold, because the predators-that-be will do exactly what they did before --- wholesale ripoff of people worldwide.

The appropriate outcome is for people to learn to transact in "grams of gold", not "dollars" [of gold], not "euros" [of gold], not "pesos" [of gold], but...

... grams of gold.

The unit of mass called "grams" cannot be changed by governments.  Therefore, honest money must be denominated in units of mass, not some bogus political fiction controlled by the predators-that-be.

In gold we trust.  We will probably not need to "sell" our gold.  At least, let's hope so.  Let the real, physical gold standard in grams be permanent.

Tue, 12/21/2010 - 19:48 | 822569 Worker Bee
Worker Bee's picture

As I am a curious onlooker and not a "serious" metals investor ( I own some silver) I will try and not sound to ridonkulous if a fiat regime is still around when lets say people start using silver regularly for purchases. I have an ounce of silver and trade it for rice.

So lets say I bought silver at 15 and after my trade due to the fiat regime still being around and the dollar being dilluted,the next week the silver I still carry is worth 20 bucks.

My question is,did I lose out on the rice trade? If I waited a week I coulda gotten more rice for the same silver,no? This is the hang up I have about metals. If a fiat currency is still dominant then Im always going to have to trade my metal for paper for almost all purchases and if metal is moving up,then when I do use it in transactions haven't I lost out?


Tue, 12/21/2010 - 20:09 | 822604 Diogenes
Diogenes's picture

Years ago I bought silver at $15 an ounce. In the rice market was a sign: Rice $7.50 for a 10 kilo bag, or 2 bags for one ounce of silver. Today the price of silver was $30 an ounce and the sign said Rice $15 per 10 kilo bag or 2 bags for one ounce of silver.

Someday the sign may say, Rice $299 per 10 kilo bag or 2 bags for one ounce of silver. Perhaps after that, the sign may say Rice $10,000 per 10 kilo bag or 2 bags for one ounce of silver.

Even later, I expect the government to recall the old currency and replace it with new currency at the rate of 1 new dollar for 10,000 old dollars.

The next day the sign in the marketplace will say, Rice $1 per 10 kilo bag or 2 bags for one ounce of silver.

The lesson is spend the $ while you can still get something for it and keep your silver somewhere safe. This is known as Gresham's Law.

Tue, 12/21/2010 - 20:37 | 822685 Worker Bee
Worker Bee's picture

I understand the basic concept..just one thing..when I go to walmart there is not a sign that says I can trade silver for says I can trade silver for Benny Bucks. As long as fiat is widely used my silver only goes "up" in relation to fiat.

Tue, 12/21/2010 - 21:13 | 822798 FreedomGuy
FreedomGuy's picture

Even in hyperinflation, if that's the deal, you get the Benny Bucks, run as fast as you can to the checkout with the BB's and rice. The next day your silver will be worth twice as many BB's but the same amount of rice. Hopefully, you bought a month or two's rice.


Tue, 12/21/2010 - 22:04 | 822923 dogbreath
dogbreath's picture

you've been here four weeks.  do you know how many fucking times that point has been hashed and rehashed here.  Go back in the archives and read full time for a few months and educate yourself before wasting our time with any more of your drivel. 

if you need to buy things at wallmart i'm sure you'll find a way to "earn" an income.

Tue, 12/21/2010 - 22:24 | 822972 Worker Bee
Worker Bee's picture

Wow sorry dogshit,,oops breath..didnt mean to question  your religion..Im just curious though..if its been rehashed so many times seems like there would be some short answer for an inquiring mind..maybe you just rehash everybody elses opinion and havent formed one of your own using critical thinking skills? But Ive only "been here" four weeks,what the fuck do I know,right?

Wed, 12/22/2010 - 00:39 | 823229 dogbreath
dogbreath's picture

spoken like a troll

Wed, 12/22/2010 - 02:05 | 823315 Money Squid
Money Squid's picture

Welcome to the site Worke Bee. Never mind the a-holes. Keep asking questions.

Tue, 12/21/2010 - 20:00 | 822596 Thisson
Thisson's picture

Why would you want to spend gold when they will take fiat?

Tue, 12/21/2010 - 21:16 | 822803 honestann
honestann's picture

As an experiment... only.  And in fact, I recently stopped this experiment for two reasons.

#1:  At 96%, the point is made.

#2:  I cannot bear to give up my physical gold and silver.

Tue, 12/21/2010 - 21:00 | 822759 destraht
destraht's picture

'The unit of mass called "grams" cannot be changed by governments.'

Until they start trading in grams of nothing like they did with the dollar and the pound.

Tue, 12/21/2010 - 19:06 | 822465 FranSix
FranSix's picture

What you will get through your ATM eventually will be gold and silver or copper mix, not bullion.  Why?

Because there simply isn't enough gold around.  Even if the central banks of the world and the IMF were to supply  all of their gold in the machines through the COMEX, the supply would only last a few weeks' worth.

And then when you return to the shop to pawn off your precious metal, it will have declined in value, because it wasn't proof.  Again THERE SIMPLY ISNT THAT MUCH GOLD.

There are very few venues where you can buy proof bullion coins or bars in minted gold.  And then you would have to pay over spot.

The top of the market would be in where your actual minted coin or bullion bar sells for 65% over spot or better from a reputable dealer, where the buy is 65% over sell.  This has happened in previous gold bull market parabolic phases, so why not again?

Or, you can take a more analytical approach:

Sometime after Jan, 2015 the top will be in.


Or, Jon Nadler will appear in a gold lamé jacket and gold sparkles in his hair, singing the praises of gold.


edit - or all three - F6

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