This page has been archived and commenting is disabled.

Sprott's John Embry "Gold Is On The Cusp Of A Parabolic Move Up"

Tyler Durden's picture





 

Today, the FT provided some additional information on the BIS' "goldgate" as relates to its 346 tonnes of gold disclosed as swapped recently by the ubercentral bank. As the FT says, "Investors have bought physical gold in record amounts during the past
two years and deposited it in commercial banks. European financial
institutions are awash with bullion and some are trying to pledge gold
as a guarantee." There was nothing necessarily new in the article, and as expected the swap was merely put in place to collateralize a dollar funding crunch ahead of the European insolvency, allegedly resolved by the guaranteeing of $1 trillion in the world biggest bail out fund by the IMF and the ECB. Nonetheless, at least now we can end speculating as to who benefited: it was not entire countries that had pledged their gold reserves to the ECB (contrary to the rumor that Portugal had given Bernanke a lien on its gold), but merely ten banks, of which HSBC, Société Générale and BNP Paribas were the biggest. While HSBC's presence is somewhat surprising, the latter two banks having found themselves in a massive currency crunch makes sense: as Zero Hedge had previously noted, this is confirmation that it was precisely the French banks that had found themselves on the wrong side of some major euro trades (one need only to recall BNP's call for subparity in the EURUSD from a month ago). Yet what is without doubt is that physical gold will play an increasingly prominent role as a hard collateral asset. In light of this, we present to you the thoughts of Sprott's John Embry on the precious metal, titled "Gold's on the cusp of parabolic move up" whose conclusion fits with the implications of the BIS action: "Central banks can no longer supply the amount needed  to balance supply and demand while mine production continues to stagnate at best. It is imperative that investors ignore the volatility created by the anti-gold cartel and use every opportunity that is created by them to purchase more physical gold." Yes John is conflicted, and yes, he has said comparable things in the past... maybe, as more and more piece of the puzzle come into place, this time he will finally be right?

Full Embry essay

06_23_2010 Gold's on the cusp of a parabolic move up

h/t Kyle

 

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 07/30/2010 - 14:31 | Link to Comment DavidPierre
DavidPierre's picture

Is it July 2008 all over again?

In a quick answer, yes and no, only worse in many respects! The economy was on the verge of really tanking back in 2008 as I believe it is again. Same thing with real estate and the banks, however there were no questions back then regarding the health of various sovereign governments.

Now, one can openly question the solvency and financial viability of the U.S. Treasury, Fed and thus the Dollar without having eggs, pies and other garbage thrown at you. I can remember well the bevy of e-mails and calls I received back then chastising me for my "far out" views that the U.S. was on a crash course of bankrupting itself! I welcome debate whether or not this view was not in fact pretty close to the mark.

Yes the big difference between then and now is the health (lack of) of many sovereigns including the U.S.. Don't get me wrong, sovereigns were sick and on the verge of intensive care visits but they have since overdosed on hemlock!

We have gone nearly 2 years with ridiculously low interest rates which in turn is no incentive at all to hold cash. This at a time when stock markets have risen and PE ratios etc. are certainly not cheap and "cash" would normally be a wise choice. I say "normally" but not now because cash in this environment will soon be viewed for what it truly is, namely a liability.

Liability?

Yes a liability of a sovereign government that cannot repay it's debt without the massive printing of more "liabilities" to make payment. How perverse, governments are already "over liabilitied" yet they will be force to issue more!

These sovereigns have and will reach the point where the market place will no longer accept more "liabilities" in the form of bonds so they will be forced to issue more of the "ultimate liability", their currency! It is this realization that ushers in a very fast and very panicky hyperinflation. Hyperinflation will not come upon us like the 70's where goods continually ground their way higher, no, it will come by way of PANIC out of the various currencies and into anything and everything you need to eat, can touch and feel, or use. Hyperinflation will not come from massive "over demand" for anything, it will come about from the massive oversupply of currency and the collapse in demand for these currencies!

So while I believe the deflationary forces that "forced" the hands of many Treasuries and Central Banks will again raise it's ugly head and unravel the system further, the ultimate danger is a breakdown of the entire fiat system.

This WAS a fear back in 2008 but governments still had the ability to borrow more and "guarantee" everything. Now the next logical question will be "who guarantees the government"?

It is this VERY QUESTION when asked on a mass scale that has the ability to set hyperinflation in motion! It is THIS question that when asked has the answer that currencies in today's world are liabilities.

As for now being a good time to have some "cash", I wholeheartedly agree! However it might be a good idea that this "cash" be no one's liability!

Can anyone tell me which currency is no one's liability? Yes, you are correct! Gold and Silver are nobody's liability and in fact are assets!

 Well.....there are some out there (can you say US govt. JPM etc. ) that view Gold as a liability because they either don't have the metal or are actually short the metal but in reality (upon us soon) the only currency on the planet that IS AN ASSET is Gold.

The discovery of this fact by the world is in reality the definition of hyperinflation! 

Bill H. @ LeMet

Fri, 07/30/2010 - 14:50 | Link to Comment Tarheel
Tarheel's picture

The last time I heard Gold was going parabolic was when Gartman said it 2 weeks ago and got his ass handed to him

Fri, 07/30/2010 - 15:03 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Gartman is a douche on gold. 

Fri, 07/30/2010 - 15:48 | Link to Comment J.Caesar
J.Caesar's picture

parabolic was also a common phrase 40 years ago; gold for some strange reason attracts the hysterical

Fri, 07/30/2010 - 16:20 | Link to Comment Moneygrove
Moneygrove's picture

I am happy with my platinum thanks !!!!

Fri, 07/30/2010 - 16:39 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ $1550

Diversification in PMs is the smart thing to do.  Yummy, yummy platinum...

Fri, 07/30/2010 - 15:02 | Link to Comment B9K9
B9K9's picture

All economic activity is simply a function of energy. In our present model, energy is represented by oil. Money is nothing more than an abstract measure of economic wealth, so we can state that since oil is the economy, oil is therefore money.

When considering the value of gold, it is wise to evaluate America's strategic military position in critical oil producing regions. Not only obvious places like the ME, but the Americas (Canada, Mexico & Venezuela) & parts of Africa/Asia.

When people willingly short FRNs in favor of gold, they are in essence shorting the US military. Do you really want to make that bet?

If you think our long-term military position is untenable, then by all means buy gold. However, if you think there is more than an even chance the USA will prevail - at least until the marginal cost of supporting such a franchise is greater than the net energy derived (the energy cost of energy) - then it may be wise to stick with the $USD.

Just sayin'.

Fri, 07/30/2010 - 15:14 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

I disagree with your premise that long gold is short the military but even if true, I would still take that bet. The military is spread too thin, flung across hundreds of bases. And the military hasn't won a war in 65 years. Betting against the Roman Empire was a losing bet, until it was a winning bet. And then it won big.

Fri, 07/30/2010 - 15:24 | Link to Comment B9K9
B9K9's picture

Like I said, just know who & what you're betting against. It isn't gold vs FRNs, it's really gold vs  DoD/CIA/NSA/Mossad/MI6, etc.

If one thinks the combined western forces occupy (pun intended) an untenable position, then gold should be the preferred medium. If, OTH, one believes that a combination of the world's most brilliant thinkers (ie the Tribe), backed by the world's most bad-ass mofu's (Scots-Irish) to do the actual heavy lifting, then $USD is the best value going.

As to claims that AmeriCo hasn't won a war in 65 years, that is by intention. We learned a hard lession in WWII, which is never willingly chance another depression via peace. Ever since, we have lived in a managed war-time economy.

Our next major war, if it is fought to conclusion, will simply come about as a result of the marginal cost of maintaining steady wars beginning to exceed the energy cost of the net energy derived from our occupations.

The key is to maintain an agnostic perspective about potential outcomes - emotion only means you're dead.

Fri, 07/30/2010 - 15:31 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

Your argument for perpetual war to maintain the status quo is right out of 1984. Given this choice we should all root for an Eastasian victory.

I also don't believe your premise that 'the west' is a unified force. The goals of Europe, including their central bankers, are diverging from ours at a rapid rate. Ask the Germans, Greeks, Irish, how much they will suffer to remain a vassal state. I think we already have an answer.

Fri, 07/30/2010 - 16:37 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

You can square the circle here by holding both gold and FRNs.  All smart bearings know that!

Though I lean a bit more to the Tough Guy's view.

...

I did like the comment B9K9's remark about The Tribe and kick-ass Scots-Irish.

 

Fri, 07/30/2010 - 19:05 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

The Tribe is boxed in - it happens even to the "smartest" guys. Sometimes you just play for time. Either way, PMs aren't a bet any more than they are an investment. The smart accumulators are merely imitating the power brokers who most certainly are diversifying their holdings. For the small (not necessarily weak) players, it is considered insurance. Squirrel it away and forget about it. Hope you never see it again until you bequeath it on.

Well - you can look at it as you add to it...

Sat, 07/31/2010 - 17:42 | Link to Comment KevinB
KevinB's picture

Given this choice we should all root for an Eastasian victory.

But we're at war with Eurasia. We've always been at war with Eurasia..

Fri, 07/30/2010 - 15:45 | Link to Comment Yikes
Yikes's picture

But going to war is only good if your willing to do mass destruction to industrialized economies so they have to rebuild and buy our stuff do it!

 

We don't fight wars like that anymore.

Fri, 07/30/2010 - 15:52 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

After the Soviets went bust, everyone else realized it was stupid to bankrupt yourself to fund a huge military. Now they just build nukes; much cheaper. America still hasn't learned this lesson and has gone bust.

Fri, 07/30/2010 - 19:50 | Link to Comment spinone
spinone's picture

We have a privitaized, debt based fractional reseve currency.  Once it is debt-saturated, it is broken beyone repair.  And it is.  I will bet against FRN's because TPTB can no longer extract interest payments from the system.  People are defaulting on their loans, and there are fewer and fewer borrowers with collateral.

Exchange some FRN's for gold while you still can.

Sat, 07/31/2010 - 03:51 | Link to Comment doggings
doggings's picture

tough guys only continue putting their lives on the line while you can pay them.

when the dollar collapses in value so will their interest in dying for "the cause"

so they'll double / treble the military wages (and the Police too to keep the citizenry unter control) - where does that money come from?

print it?  I suggest you study how the Zimbabwe hyperinflation really got going.

you think the US military will save you, which is ironic because it's the very thing that's caused the problems and is finally going to drag you under

Fri, 07/30/2010 - 15:40 | Link to Comment JLee2027
JLee2027's picture

The US Military hasn't had to fight a war in 65 years.  All the other stuff has been a skirmish.

 

Fri, 07/30/2010 - 16:46 | Link to Comment TrulyStupid
TrulyStupid's picture

Very expensive, inflation causing, losing skirmishes!

Fri, 07/30/2010 - 16:57 | Link to Comment russki standart
russki standart's picture

You are joking, of course.

Fri, 07/30/2010 - 15:18 | Link to Comment nope-1004
nope-1004's picture

Agree with BK

Fri, 07/30/2010 - 15:18 | Link to Comment What_Me_Worry
What_Me_Worry's picture

I may be willing to see your point if the supply of each medium were static.  However, all we see is quasi-printing of FRN and dilution of paper gold.  From a baseline percentage from a set date, it would be interesting to see the true movement in actual gold vs. FRN.  However, the data has been so corrupted for so long it would be nearly impossible to make such a comparison anymore.

Pretty much all of us here have to place our chips on one of the two bets in various proportion.  I don't think it unwise to put 25-50% of one's long-term wealth into the gold/silver side of the bet.  If everyone were to even put 10% of their perceived wealth into actual physical wealth then the prices would have to go parabolic from here.

Fri, 07/30/2010 - 15:28 | Link to Comment Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

True--can I really go out and buy an ounce at 1165? Nope. The premium is outrageous, More like 1195. So gold hasn't gone down much at all in real terms.

Fri, 07/30/2010 - 15:35 | Link to Comment What_Me_Worry
What_Me_Worry's picture

Apmex is still $40-$50 over spot on most of their 1 oz coins.

Fri, 07/30/2010 - 16:23 | Link to Comment Johnny Bravo
Johnny Bravo's picture

Think of the 'tards that were buying at 1265, and paying probably over 1300.  LOL at them.

Fri, 07/30/2010 - 16:50 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

'tard here bought some at $1240.  Also bought some at $400.  More at $500.  More at $600.  Etc.  I have bought a lot since it went over $1000, so my own cost basis over the decades is not as low as I would have liked (that is, like all my pals here, I would have been real smart had I bought a LOT nearer those lows...).

...

Bravo!  Every d**n day I look at your VXX suggestion over at stockcharts.  One day I may pull the trigger and buy.  But my past track record REALLY BAD as a short-term speculator.

...

Also, Bravo, I had to finally inform the world that you and JonNadler are really Exceutive Vice Presidents over there at JPM.  Someone had to have the balls to do it.

Fri, 07/30/2010 - 17:35 | Link to Comment Johnny Bravo
Johnny Bravo's picture

VXX can make a hell of an impact as long as you trade the right way with it.  It could be a kick in the nuts if it goes the wrong way on you though... 
I think it may be a viable trade again very soon though!  (STO appears to be topping in the indices, so we should go lower short term, at least)

And I WISH I was exec VP of JPM!  It sure beats being a lowly student/trader!

Fri, 07/30/2010 - 22:20 | Link to Comment merehuman
merehuman's picture

Bravo, humility will find you and show how you are connected to the soul that you are laughing at. Have you no noble bone in your body?

Sat, 07/31/2010 - 00:06 | Link to Comment Spitzer
Spitzer's picture

Hey fuck face, remember the "tards" of the Central bank of India that bought at a previous all time high of 1045 ?

Fri, 07/30/2010 - 16:43 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

@ What_

If everyone put 3% of their wealth in gold it would go parabolic.

Fri, 07/30/2010 - 15:25 | Link to Comment Yikes
Yikes's picture

You know, Rome had a pretty kick ass military too.

Fri, 07/30/2010 - 16:49 | Link to Comment TrulyStupid
TrulyStupid's picture

Until they outsourced war to the barbarian mercenaries!

Sat, 07/31/2010 - 19:30 | Link to Comment Backintime.v3.0
Backintime.v3.0's picture

You mean "TRIBE" ;-)

Fri, 07/30/2010 - 16:42 | Link to Comment trav7777
trav7777's picture

Gold peaked in 2000...therefore it's a good long vs the FRN as it is in supply decline.

Also, the US military has been strong for 40 years..FRN...dowwwwwwwn

Fri, 07/30/2010 - 20:40 | Link to Comment SWRichmond
SWRichmond's picture

All economic activity is simply a function of energy. In our present model, energy is represented by oil. Money is nothing more than an abstract measure of economic wealth, so we can state that since oil is the economy, oil is therefore money.

When considering the value of gold, it is wise to evaluate America's strategic military position in critical oil producing regions. Not only obvious places like the ME, but the Americas (Canada, Mexico & Venezuela) & parts of Africa/Asia.

When people willingly short FRNs in favor of gold, they are in essence shorting the US military. Do you really want to make that bet?

The mighty U.S. military can't pacify a country the size of Texas when the opposition is drawn from little more than half the population.  Nukes don't solve this problem, either.  Our new policy to "pacify" Afghanistan is the same way our government pacifies its own citizens: with bribes.  Our time in the ME is limited; when the just-begun "next" downturn is more widely perceived, the seat bars on the roller coaster come down and lock and the currency crisis starts clacking up the first hill.  The currency supports the military, and the military supports the curency, but the economy supports them both.

Even the Soviet Union could keep it together as long as they could bribe a core group of apparatchiks with pseudo-western lifestyles.  When that ability ended, the Soviet Union ended.  The Soviet military ended right along with it.  It fell apart, completely.  Twenty years later it still is a shell of its former self.

 

Sat, 07/31/2010 - 01:20 | Link to Comment MrPalladium
MrPalladium's picture

"The Soviet military ended right along with it.  It fell apart, completely.  Twenty years later it still is a shell of its former self."

In South Ossetia/Georgia that "shell" showed itself to be mighty tough and devastatingly effective.

Why on earth would any foreign nation (or domestic revolutionary, for that matter) bother to confront and engage the empire's forces when the empire is doing such a bang up job of destroying itself?

"For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill" Sun Tsu.

Sat, 07/31/2010 - 08:09 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

Tell "devastatingly effective" to those sailors who went down on their showboat submarine.

Sat, 07/31/2010 - 09:51 | Link to Comment SWRichmond
SWRichmond's picture

In South Ossetia/Georgia that "shell" showed itself to be mighty tough and devastatingly effective.

Against what?

Sat, 07/31/2010 - 07:32 | Link to Comment StateofFraud
StateofFraud's picture

WASHINGTON: After nearly a decade of rapid increases in military spending, the Pentagon is facing intensifying political and economic pressures to restrain its budget, setting up the first serious debate since the terrorist attacks of 2001 about the size and cost of the armed services.

Lawmakers, administration officials and analysts said the combination of big budget deficits, the winding down of the war in Iraq and President Obama’s pledge to begin pulling troops out of Afghanistan next year were leading Congress to contemplate reductions in Pentagon financing requests.....

Fri, 07/30/2010 - 16:18 | Link to Comment baserunr
baserunr's picture

You know, you are right!  I looked at some of my PM coins, and I didn't see the words "Federal Reserve Note" on them anywhere!

Fri, 07/30/2010 - 16:18 | Link to Comment Johnny Bravo
Johnny Bravo's picture

Remember what happened to the price of gold the last time the market tanked.  It sure didn't rise in a parabolic fashion.  In fact, it lost about 30% before the rally in March 09 began...

Fri, 07/30/2010 - 22:23 | Link to Comment merehuman
merehuman's picture

 

Johnnynadler cartoon reading palmwetter masturbator

Gosh i feel better, did it work for you?

Sat, 07/31/2010 - 00:08 | Link to Comment Spitzer
Spitzer's picture

yeah I remember, it was the biggest fall of the dow in history and it hapend

on May 6th 2010. Gold was up $25 that day.

Sat, 07/31/2010 - 07:38 | Link to Comment macroeconomist
macroeconomist's picture

What utter bullshit? That is a BLATANT LIE. Gold went up from October 2008 to March 2009 from 750 to 1000, how shameless are you to claim this?Don't take anything this guy says seriously, he either doesnt know what he's saying or lying purposefully. I'm totally convinced he works for JPM in some way

Sat, 07/31/2010 - 14:35 | Link to Comment i.knoknot
i.knoknot's picture

gotta go with jb and the graphs on this one...

may 6 aside, gold didn't do so hot when everyone was dumping their loads that month in 2008.

i don't think anyone was feeling like anything was a safe-haven in that chaos. i do think folks are more secure in their sentiments now, and that the correlations would differ if/when it happens again.

disclaimer - i like gold (real is best, paper CEF in my ira), and i'm out for a while, expecting a similar dip. i'll get back in when the time is more 'right'. honestly don't know when that is.

disclaimer 2 - i think jb is usually coarse and mal-informed. usually. but right is right, and i think he's mellowing with age. we'll see.

Fri, 07/30/2010 - 14:32 | Link to Comment Martel
Martel's picture

Gold bitchez!

Somebody had to say that.

Fri, 07/30/2010 - 14:46 | Link to Comment Cactus Rocky
Cactus Rocky's picture

Parabolic move, bitchez!

 

I am not Chumbawumba.

Fri, 07/30/2010 - 15:23 | Link to Comment kapillar
kapillar's picture

What are you morons? Like five years old or off duty from you chores at dishing out financial advice at the local Burger King? Really this has stopped being funny maybe September last year or maybe the year before. Go back to you whatever sales ward you are with and sell some cacao maybe. I have heard it's in a real bull market plus you can drink it warm when you get home to mommy.

Fri, 07/30/2010 - 15:55 | Link to Comment John Bigboote
John Bigboote's picture

Actually, the "finger, bitchez" comment yesterday was the funniest in weeks.

Fri, 07/30/2010 - 16:00 | Link to Comment kapillar
kapillar's picture

Sure. Just wait when they'll write "salad, bitchez", "gaussian blur, bitchez" or even "bitchez, bitchez". You'll need a shrink to return back to normal I presume.

Fri, 07/30/2010 - 22:21 | Link to Comment Johnny Bravo
Johnny Bravo's picture

The funny thing is that it used to be spelled bitches regularly.

I started spelling it bitchez to make fun of goldbugs, in a way that makes them look retarded, and the bitchez with a z spelling seems to have stuck.

I guess I'm just a pioneer.

Fri, 07/30/2010 - 22:26 | Link to Comment merehuman
merehuman's picture

you are indeed first, as the dummest poster so far today, a real pioneer . Is that basement dry yet? You make fun of us and we make fun of you! fair eh? You are outnumbered fiat boy!

Sun, 08/01/2010 - 00:27 | Link to Comment RockyRacoon
RockyRacoon's picture

He also invented the internet.

Fri, 07/30/2010 - 17:51 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Love your handle.

Fri, 07/30/2010 - 17:48 | Link to Comment Martel
Martel's picture

Stop whining, or those gold bitchez will have to go parabolic on you.

* * *

Looking at a gold chart in euros, I can't imagine a parabolic rise anytime soon. Priced in dollars it looks a bit better. In other words, there could be even more dollar weakness vs. the euro ahead. Priced in euros, gold has fallen about 15% from the top in a very short time. The trend is still up, but unless one is a serious believer on buying in dips, is not yet a good time to buy.

Just blame it on "anti-gold cartel", like always.

Fri, 07/30/2010 - 22:22 | Link to Comment Johnny Bravo
Johnny Bravo's picture

And the Euro has even been down a lot since au's last peak at 1220.

Looks bearish to me!  Of course, that's not a surprise...

We could still see 1220 again before the real pain happens though.

Sat, 07/31/2010 - 07:44 | Link to Comment macroeconomist
macroeconomist's picture

These two idiots are giving false information!!!Before you take these comments seriously, have a look at USD/EURO and Gold charts together during May, June and finally July. Gold is down in euros simply because of the utterly pointless EUro rally that began in July..Summer optimism as usual, thin markets and easy manipulation.I want to see both of you here at the end of September, I know you will be talking shit with different names in this blog, but I'll be calling your names under every thread. Look at the gold price in euros in May if you want to see how a parabolic move happens..And the same parabolic move downwards in July..

Fri, 07/30/2010 - 15:37 | Link to Comment MarketTruth
MarketTruth's picture

The New Old Scam: Fractional Reserve physical gold by banksters...

Sat, 07/31/2010 - 19:02 | Link to Comment Daves not here man.
Daves not here man.'s picture

thank you.

Fri, 07/30/2010 - 14:33 | Link to Comment Yikes
Yikes's picture

Good commentary:  Short on hard data and a little serve serving in the end but overall I agree with his analysis.

I fear the timeline is going to be a little longer then most of the traders on ZH are used to.  Patience is a virtue, they say.

Fri, 07/30/2010 - 18:02 | Link to Comment Martel
Martel's picture

I fear the timeline is going to be a little longer then most of the traders on ZH are used to

How about one year till the next major leg upwards? By that time, "Gold 5,000$/oz"-predictions have almost disappeared and permabulls feel just a little bit more humble. Too soon? Make it three years. Even the Rome did not collapse in one day, and the death throes of the Western financial system could still easily last a decade or two.

Fri, 07/30/2010 - 14:34 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Bloomie says turn-about is fair play, and steals Zero Hedge storyline:

Americans Splurge on IPads While Broke in New Abnormal Economy

http://noir.bloomberg.com/apps/news?pid=20601010&sid=av6psxDBo63Y

Sat, 07/31/2010 - 12:27 | Link to Comment Hephasteus
Hephasteus's picture

And there's nothing wrong with that. Who cares if 3 places write about the same thing in three different styles. You've gotten it from hollywood for years. You can't get the Abyss without Deepstar 6. Hollywood has constantly released 2 competing movies with the same topic and different styles for years and it's fantastic.

Fri, 07/30/2010 - 14:36 | Link to Comment truont
truont's picture

"Investors have bought physical gold in record amounts during the past two years and deposited it in commercial banks. European financial institutions are awash with bullion and some are trying to pledge gold as a guarantee."

I hear a massive collective facepalm across Europe, as investors realize 300 tonnes of their gold has been swapped with the BIS, who is a soverign entity not accountable to any government on earth.

Whoopie!  Better try a private depository next time!

Fri, 07/30/2010 - 14:47 | Link to Comment Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

So, do you go with your typical Swiss banker? Or are they swapping--albeit within thier own country--- with the BIS as well?

Of course the best private depository is the one you make yourself.

Fri, 07/30/2010 - 15:10 | Link to Comment Barmaher
Barmaher's picture

Bullionvault / Goldmoney BITCHES

Fri, 07/30/2010 - 14:55 | Link to Comment SheepDog-One
SheepDog-One's picture

Hell just bury your gold under a rock! 

Sat, 07/31/2010 - 12:28 | Link to Comment Hephasteus
Hephasteus's picture

Mix it with rock dust. Disinrefinement!!

Fri, 07/30/2010 - 15:50 | Link to Comment Troublehoff
Troublehoff's picture

Yep, very irritating. Wonder if these deposits @ the BIS will be held in fractional reserve and the majority will go back onto the market and used to suppress the price of gold further?

Anyone who doesn't take ownership is shooting themselves and other holders in the feet.

 

Fri, 07/30/2010 - 17:08 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Sheep and Trouble (<-- that almost sounds scary) are exactly right.  

Physical ownership only.  Just use your imagination re hiding your gold from burglars and Future Fascist Thugs.

Fri, 07/30/2010 - 22:24 | Link to Comment Johnny Bravo
Johnny Bravo's picture

"Investors" have blindly speculated on physical gold in record amounts because of Glenn Beck's fearmongering, and buried it in their backyards.

There.  Fixed it for you.

Sat, 07/31/2010 - 00:12 | Link to Comment Spitzer
Spitzer's picture

Must be allot of Glenn Beck fans at the central banks of India, Russia and China.

Sat, 07/31/2010 - 14:53 | Link to Comment DosZap
DosZap's picture

Spitzer, yep, only channel they get, is Fox "REAL" News, and GB.

Wait for the dollar to continue DOWN next week...............

We will see a move,add QE 2.0, and our buddies across de ponds, gonna start dumping even more.

 

Fri, 07/30/2010 - 14:36 | Link to Comment NOTW777
NOTW777's picture

trend resist near 1189ish; they closed mondays GLD gap but most miners and options are showing little life

Fri, 07/30/2010 - 16:15 | Link to Comment legerde
legerde's picture

I feel that "little life" directly.  Any insight on the disconnect?

Fri, 07/30/2010 - 22:26 | Link to Comment Johnny Bravo
Johnny Bravo's picture

Because the people buying physical realized they're going to go broke?

Chumba is in debtor's prison now?

Perhaps akak is waiting for a new debit card?

Sat, 07/31/2010 - 00:16 | Link to Comment Spitzer
Spitzer's picture

India must be filing for chapter 11  with that $1045 200 ton purchase of physical.

Fri, 07/30/2010 - 14:43 | Link to Comment realtick
realtick's picture

Not.

Fri, 07/30/2010 - 14:49 | Link to Comment ATG
ATG's picture

"this time he will finally be right?"

No.

Deflation bears in charge for now despite Bob Chapman, GATA, Jim Sinclair, et al.

It's illegal, it is.

So what?

It is....

Sat, 07/31/2010 - 14:59 | Link to Comment DosZap
DosZap's picture

ATG,

Agreed, until the Banks stop getting 3% and are ordered to start QE 2.250 loans to indigents, and street people again.............for the surplus of homes, trains, planes, and automobiles.

Now, it's just ON the books............

The Second round of loaning to broke dik dogs is coming.

Seems like Deja Vu, All over again!

Fri, 07/30/2010 - 14:49 | Link to Comment trav7777
trav7777's picture

yeah, um, if people "deposited" gold in banks what exactly the fuck did they THINK the bankers were going to do with it?

GAMBLE BABY.  Deposits are LOANS, they are not a claim ticket like when you put your fucking jacket in the coat room at a restaurant!

The way banks work by swapping, repoing, lending, leasing, trading your jacket.  So, like this:  bank takes your coat before dinner.  You get a Coat IOU.  Then they go and lend it to someone to walk around with or they repo it or otherwise use it to make themselves money.  At the end of the night, hopefully, they've got it back.  Then they charge you the storage fee. 

Never ever entrust anything of value to a banker!

Fri, 07/30/2010 - 14:50 | Link to Comment ATG
ATG's picture

Bingo.

Fractional reserve default banking its own worst enemy...

Sat, 07/31/2010 - 15:01 | Link to Comment DosZap
DosZap's picture

KEYNES BABEEEEEEEEEEEEEEEE...........

"Fractional reserve default banking iXts(OUR) own worst enemy..."

Fri, 07/30/2010 - 15:28 | Link to Comment What_Me_Worry
What_Me_Worry's picture

LOL.

Coat check girl> I'm sorry sir, while you were having dinner we bundled your claim ticket into a claim ticket-backed security. Oh, also while you were eating you failed to pay the coat maintenance fee that was in small print on your claim ticket.  Therefore we had to charge your account a late fee on top of it.  Then, we had to charge you an insufficient funds fee for not paying the late fee.  The Fed gave us a trillion coats, just like yours, to hold on to but we aren't going to give those out to anyone.

Fri, 07/30/2010 - 15:38 | Link to Comment i.knoknot
i.knoknot's picture

that's like the opening scene from a contemporary Zucker Brothers movie...

you're on to something good there.

Fri, 07/30/2010 - 14:51 | Link to Comment Screwloose
Screwloose's picture

Is it only a banksta that would see absolutely nothing wrong with pledging other people's property as collateral for a loan?

I wonder what they'd say if someone tried it on them...?

Fri, 07/30/2010 - 14:53 | Link to Comment SheepDog-One
SheepDog-One's picture

Confirmation of gold set to shoot up is Jon Najarian just called for shorting gold, slam dunk guarantee move up.

Fri, 07/30/2010 - 15:01 | Link to Comment israhole
israhole's picture

I hear that!  I dumped the tv 18 months ago.  Just couldn't stand the BS anymore, but if I did still watch one, it'd be used as a contrary indicator only.  And it's not just CNBC, Bloomberg, etc, but all "news" coverage on any event.

Nothing but propaganda to destabilize this once great nation, and fear mongering to induce Americans to support wars.  What's up with that "terror-meter" constantly reminding Americans they're only moments away from being attacked? LMAO!!

Enough with this shit already. Traitors should hang!

Fri, 07/30/2010 - 15:08 | Link to Comment Pegasus Muse
Pegasus Muse's picture

Read the FT piece twice.  Many words used to explain little -- something to be expected from an establishment rag.  James Turk offers his guess as to what the swap was all about:

==========

Jul 29 2010 2:00PM

Deciphering the BIS Gold Swap

Much has been made recently of the news that the BIS last year completed a 380-tonne gold swap with an unnamed commercial bank. This BIS transaction intuitively strikes me as being hugely important. Unfortunately, the BIS and the bank involved have disclosed too little information for any of us outside the inner circle of central bankers to truly understand what is happening behind the scenes. 

rest of article here: http://www.kitco.com/ind/Turk/turk_jul292010.html 

Fri, 07/30/2010 - 15:09 | Link to Comment breezer1
breezer1's picture

bill buckner, 'The privateer'. he called every move correctly so far a couple of years ago. physical gold and silver the only place to be. sovereign debt default inevitable. they are screwed if rates go up and also if they print. i'm amazed they have kept going this long without collapse. when it happens i've no doubt the msm will call a bottom and say what a great job the fed did.

Fri, 07/30/2010 - 16:51 | Link to Comment RockyRacoon
RockyRacoon's picture

As a subscriber to The Privateer since the late 1990s I'd have to agree.  The only thing that Mr. Bill suffers from is the immediacy illusion.  It has taken much longer for this to play out than he thought -- and he admits that.  The tenacity and the sheer fraud is the only thing that has drawn out the process, along with some wickedly creative "banking".  I've been buying PMs since the 2001 and have been very pleased with the "return", although to use the term is totally inaccurate.

Fri, 07/30/2010 - 17:12 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Hiya Rocky.  I have only seen a couple issues of The Privateer and was duly impressed with his views.

I too am AMAZED that they have been able to drag all this crap out so long.  I thought in early 2009 that TS would HTF.

Such bizarro times only make we want another oz or two every time the bearing gets some money.  Probably a fatal syndrome.  Economic suicide as you once said.    :)

Fri, 07/30/2010 - 18:30 | Link to Comment RockyRacoon
RockyRacoon's picture

Hey, DCRB.  Mr. Buckler is eerily prophetic.  The scenario he laid out years ago has proceeded exactly as he said.  I suppose there is some comfort in being early!

Sat, 07/31/2010 - 04:21 | Link to Comment i.knoknot
i.knoknot's picture

the folks over at the daily reckoning have been suffering the same fate: correct but perpetually wrong in the timing - it just won't break... :^)

i read a random bill bonner archive from 10 years ago... could have been written yesterday.

don't get me wrong - i think they were and are right. impressive how long it can all be prolonged...

Fri, 07/30/2010 - 17:14 | Link to Comment Sabremesh
Sabremesh's picture

I read this earlier, and James Turk concludes that the 380 tonnes were probably the Portuguese CB stash, not millions of private investors. Who's right? Either way, I certainly wasn't aware that commercial banks kept that much physical gold - I thought they only kept paper?

However, if it is private investor gold, those investors should be very concerned. In the event of bank insolvency those investors won't ever get their gold back.

Fri, 07/30/2010 - 21:54 | Link to Comment Pegasus Muse
Pegasus Muse's picture

Chris Powell offers a coherent explanation/rationale for the BIS gold swap:  

Gold in BIS swaps said to have come from looted bank customers' deposits 

If you want to believe the Financial Times, the 346 tonnes of gold swaps recently undertaken surreptitiously by the Bank for International Settlements were a matter of the BIS' requiring three of the world's biggest banks to pledge gold as collateral against U.S. dollar deposits placed with them by the BIS so the BIS could earn a little interest. According to the FT, the banks also needed to raise cash and so were glad to obtain it by collateralizing the BIS' deposits with gold.

The FT's latest account of the transaction, published Thursday and appended here, is surely the account the BIS would like the world to settle for as curiosity about the swaps is increasing and raising concerns about the grotesque unaccountability of central banks. And as the mouthpiece of the financial establishment, the FT surely was only too happly to convey this unofficial official story. But it's a doubtful story and raises questions of its own.

For why would the BIS deposit money with banks considered so shaky that they would have to be required to pledge gold to secure the deposits? Wouldn't U.S., British, German, or French government bonds provide sufficient income and security for the BIS' funds? The BIS' annual report suggests that the bank already holds such bonds:

http://www.bis.org/publ/arpdf/ar2010e8.pdf

By depositing money at the three banks -- HSBC, Societe Generale, and BNP Paribas -- according to the FT -- was the BIS really hoping to earn get premium yields from the great business those banks have done lending on condominiums in Florida, Nice, and Madrid?

And remarkably, according to the FT the gold obtained by the BIS as collateral from the three banks didn't really belong to the banks at all. Rather, as the GATA Dispatch suggested sarcastically three weeks ago (http://www.gata.org/node/8799), the gold was essentially looted from the three banks' own gold depositors.

The FT reports: "The gold used in the swaps came mainly from investors' deposit accounts at the European commercial banks. Some investors prefer to deposit their gold in so-called 'allocated accounts,' which restrict the custodian banks' ability to use the gold in their market operations by assigning them specific bullion bars. But other investors prefer cheaper 'unallocated accounts,' which give banks access to their bullion for their day-to-day operations."

At least this part of the FT's story has the ring of truth and confirms what, among others, GATA board member Adrian Douglas and GATA consultant James Turk, founder of GoldMoney, have been warning for some time: that if you own "unallocated gold," you don't really own gold at all but have only a tenuous claim against a counterparty that likely is working against you from the start. In the case of the BIS gold swaps, the tenuous claim is against financial institutions the BIS considers so unreliable that it won't loan them money unless they turn over their customers' gold as security, thereby proving their unreliability.

The FT story doesn't address what is to become of the collateralized gold just transferred to the BIS, but the section of the BIS' annual report cited at the link above shows that the BIS is constantly trading gold and gold futures and options, just as the journalist Edward Jay Epstein reported in his long profile of the BIS published in Harper's magazine in November 1983. (See http://www.gata.org/node/8773.) So odds are that the gold purchased from or supposedly kept at those commercial banks by gold investors is now being used by the international banking system to suppress gold's price against the interest of the investors who think they own it.

The FT's story is headlined "BIS Gold Swaps Mystery Is Unravelled." The BIS can only hope that people will think so, and the FT can only hope that its story will get people to stop pestering it and other financial news organizations to do some serious, documented, on-the-record journalism instead of playing along with this manipulative, confidential source-based disinformation.

CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Commtitee Inc.

http://www.gata.org/node/8875 

Sat, 07/31/2010 - 00:17 | Link to Comment nuinut
nuinut's picture

For why would the BIS deposit money with banks considered so shaky that they would have to be required to pledge gold to secure the deposits? Wouldn't U.S., British, German, or French government bonds provide sufficient income and security for the BIS' funds?

This is a rhetorical question, right?

 investors prefer cheaper 'unallocated accounts,' which give banks access to their bullion for their day-to-day operations.

And their day to day operations include smothering the price of gold. Thanks, suckers.

Aristotle said:

"Long positions in paper gold are NOT used, as you might like to think, as a "fire insurance policy" among institutions having vested interests in [maintaining] the status quo, whereby such a long derivative position would be expected (by you) to compensate them for rising Gold prices and weaker dollars. Instead, these institutions use the offering of paper gold (and its influence on price discovery) as a WET BLANKET to keep Gold from catching fire in the first place.(!)"

ie. unallocated gold is paper gold. All paper gold is used to suppress the price of gold. 

Investing in any form of gold other than physical gold, in your possession, is almost certain to ensure your investment is actually being used by the banks you loaned (deposited) your gold with in keeping the price of gold down.

 

Buying any form of gold other than physical is stupid, unless your aim is to make a loss.

Aristotle concluded:

By allowing yourself to miss the big picture, you are being played for a chump. The tragedy is not that you are throwing your paper currency away on paper gold, but rather that you approached so close to the brink of truth, and yet will likely have nothing material to show for your journey and efforts.

 

Sat, 07/31/2010 - 08:25 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

Still reading When Money Dies, and it strikes home (like a hammer) how many were caught unawares when their paper hedges returned to their intrinsic value - tied like anchors to the notes themselves. So shall all paper gold be. That is why I believe they really don't want a force majeure payout while the notes still have a modicum of purchasing power. They would chase physical into a no sale at any price condition = accelerated Game Over.

Sat, 07/31/2010 - 12:53 | Link to Comment RockyRacoon
RockyRacoon's picture

Nice .pdf from Tocqueville:

The Committee to Save the World

July 2010

 

The prevailing economic consensus is that inflation is nowhere in sight. However, conventional economic analysis, in our opinion, is ill equipped to assess the prospects of inflation in the current setting. Our view is that market acceptance of paper currency as an exchange media and store of value may have reached a tipping point. The greatest fear of central bankers today is that the inflationary expectations of the public get out of hand. When it comes to inflation, it is not capacity utilization, unemployment, and other objective data typically scrutinized by mainstream economic thinking that matters. Our view is based on the soft data of fragile public psychology and faltering confidence in the integrity and efficacy of established conventions and institutions of finance and commerce. Our friend Murray Pollitt notes: “The worst inflations come during hard times because with reduced tax revenue, governments must print to meet the payroll.” (May 21 Pollittburo Newsletter).  The fact that gold has become a popular topic of media conversation does not make it a bubble.
The chirping of naysayers usually comes from assorted wallflowers that have simply missed the boat. Against a backdrop of wilting confidence in financial assets, gold is under owned by central banks, institutions, and individuals. One must distinguish between a near term overbought condition, to which any investment class in a secular bull market can become prone, versus a full scale mania. We are a long way from silly season when it comes to gold.
In terms of Hyman Minsky’s framework for understanding bubbles, gold is some where in the middle. According to Minsky, every bubble begins with a disturbance that causes investors to see it in a different light. With respect to gold, we would argue that the new paradigm is the replacement of reverence for government and the expectation that it can create positive economic outcomes with cynicism. The new paradigm is cynicism towards politicians, the political process, and by extension fiat money. The rising gold price reflects the spread of this cynicism.
In stage two, prices start to increase and as the increases gain momentum, people start to notice. In our opinion, that is where gold is on the bubble roadmap. Stages 3 to 5 are easy credit, over trading and euphoria for this new paradigm. These still lie ahead, in our view.

Lots more pertinent information in the article -- well worth a read!

Sat, 07/31/2010 - 14:42 | Link to Comment i.knoknot
i.knoknot's picture

FWIW, found it at http://www.biiwii.com/guest4/misc/Hathaway.pdf

interesting read, tnx.

Sun, 08/01/2010 - 04:53 | Link to Comment nuinut
nuinut's picture

#62

Fri, 07/30/2010 - 15:01 | Link to Comment uno
uno's picture

From Jim Willie article, part of your required reading: 

http://www.financialsensearchive.com/fsu/editorials/willie/2010/0526.html

Word has come to the Jackass desk from the War Room itself, where important decisions were made in a series of meetings inside Germany. The new Northern Euro currency is finally in its formative stage. Contracts have been forged. Relationships with the more independent Central European central banks have been arranged. Market mechanisms with the commodity markets have been delegated to Finland. A role for Russia is being planned, source of many commodities. The timing of the new Northern Euro is planned for June 2011, with perhaps little if any formal news releases. The key element of the new Northern Euro will be its gold component. Permit a Jackass conjecture of a 1% or 2% cover clause, meaning $100 million in Northern Euros could be redeemed for assets that contain $1 or $2 million. The new currency will be born in crisis. It will be begged for. One must wonder if Saudi crude oil will eventually require payment in Northern Euros. Maybe it will contain not only a gold component but a crude oil component.

For over a year, my openly stated belief has been that the first nations to create a monetary and banking system with clear distance set from the USDollar will be the next global leaders emerging. It will be Germany and its cohorts that include the Benelux nations and Austria. In debate is the future role of France, which might be assigned squire duty for the Germans who hold 94% of their sovereign debt. The antics of Sarkozy are as annoying as a mosquito roaming near the face during bedtime hours. By the way, the Northern Euro as planned is a USDollar Killer, since the present day world reserve currency will fall rapidly in valuation, finding its true worthless value, in reflection with its hemorrhage of USGovt deficits and debt ratios that put it in the same PIGS manure pen as the Southern Europe nations heaving in convulsion.

Fri, 07/30/2010 - 15:16 | Link to Comment Yikes
Yikes's picture

Getting back to comments earlier in the thread,  the Northern Euro can't be a USDollar killer unless they have the military to back it up.  Would the U.S. allow this to happen?  Could the U.S. pull their military out of Western Europe, exposing them to Russia and/or China?  Would countries risk their assets to invest there?  Could it have enough circulation to accomodate a "reserve currency" status.

 

All of this is unlikely.  As much as everyone hates Fiat, the Socialist Western Europe countries spend way too much on social programs to be able to defend their currency.  This is a pipe dream

 

 

Fri, 07/30/2010 - 15:45 | Link to Comment Misean
Misean's picture

T'would be folly to underestimate the martial skills of the nations noted here.  Their technical and productive skills are of course impecable.

Fri, 07/30/2010 - 15:46 | Link to Comment NotApplicable
NotApplicable's picture

Well, since Russia will supposedly have a part in the Northern Euro, I don't see where the worries of a Red invasion come into play. If anything, they might protect Europe from US retaliation, restarting the Cold War with a new twist.

As for China, I would assume they will see Northern Europe with a stable currency as a replacement trading partner for the defunct US consumer. Also, their main weapons are dollars/treasuries, so their attack will continue to be one of the economic stealth variety, absorbing the world's real assets.

I expect this tipping point Wilie mentions will pit the whole world against the US, much like WWI was used to strip Germany of its preeminent global role.

Fri, 07/30/2010 - 16:59 | Link to Comment Yikes
Yikes's picture

Germany embrace Russia?  Doubtful.   As much as Western Europe dislikes American arrogance and USD reserve status, they distrust Russia much more. 

Fri, 07/30/2010 - 17:38 | Link to Comment Max Hunter
Max Hunter's picture

Yep... And for good reason.. I still haven't met a Russian that I trust.. Can't even explain why, just don't..

Fri, 07/30/2010 - 17:39 | Link to Comment Max Hunter
Max Hunter's picture

double post

Sat, 07/31/2010 - 03:42 | Link to Comment equity_momo
equity_momo's picture

Conjuring Hitler : How the US and UK created the Third Reich.

 

I think youll find the Germans have as much time for the Russians as they do America.

This Northern Euro story is plausable but i suspect the US know this and have a counter plan drawn up : like crashing world markets in a deflationary tsunami before this ever gets off the floor.

Alternatively if the dollar can depreciate gradually against another trading bloc , the US PTB will welcome this with open arms.

Sat, 07/31/2010 - 19:20 | Link to Comment Daves not here man.
Daves not here man.'s picture

my german girlfriend tells me that germany moves further from the US and closer to russia each day.  germany wants to see a strong germany, and has serious energy issues to deal with.  I wonder what will happen if they wanted their gold holdings on their own shores, and the US doesnt comply... any number of events could push germany towards russia.   

Sat, 07/31/2010 - 21:02 | Link to Comment KevinB
KevinB's picture

It's the old "two sides of a triangle" scenario. Right now, it's clear the US is declining and China is getting stronger. Russia will side with America to keep the Yellow Peril in check.

Fri, 07/30/2010 - 16:03 | Link to Comment uno
uno's picture

Looks like there will be regional reserve currencies, the GULFO is being phased in.  Russia is working Overtime to end the USD reserve status.

The IMF caused lots of enemies in Europe, so an IMF SDR is probably out.

You can see the ground work being laid, China rating agency downgrading US debt; China, Saudi, Russia, India loading up on gold, Germany looking to sue Goldman.  It shows the lack of respect for the US.

Over the next couple years, the US dollar will be cut out of many bi-lateral transactions. 

GULFO flashback:

http://www.zerohedge.com/article/us-dollar-has-failed-we-need-delink

 

Fri, 07/30/2010 - 17:22 | Link to Comment woolly mammoth
woolly mammoth's picture

Yikes said "Could the U.S. pull their military out of Western Europe, exposing them to Russia and/or China? Okay, the Huskers left the old Big 8/Big 12 for the Big 10. Alliances do change. Is Russia the future or is it the US? This is what I think on this issue, the US is a competitor for energy and Russia is an exporter. Also Russsia didn't sell any CDO's, MBS's nor any of that other rip off crap.  

Fri, 07/30/2010 - 22:40 | Link to Comment merehuman
merehuman's picture

These days we fight with money, monetary instruments and media. The greatest enemy is ourselves and our ignorance. Where it not for ignorance there would be no fear and we would not be so manipulated by it.

The appearance of strenght is not strenght.

Sat, 07/31/2010 - 08:33 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

The US isn't just openly hated, "we hate you guys" - we are also secretly despised! With good reason when it comes to economic and financial warfare.

Sat, 07/31/2010 - 21:12 | Link to Comment weinerdog43
weinerdog43's picture

"...the Northern Euro can't be a USDollar killer unless they have the military to back it up."

Nonsense.  Your premise that military strength is required for currency is not proven.  Even so, the Europeans in general and the Germans in particular have centuries of military experience.  So what if the USA left Western Europe.  Most of northern Europe is dependent on Russian natural gas and oil already.  Further, a 'reserve currency' status would not have to happen overnight.  The more hard assets like gold and silver the northern Europeans had at their disposal, the faster it would happen.  No one would know for certain.

Finally, what does "Socialism" have to do with anything?  For example, we spend far more per capita on health care than any European country with less actual treatment.  Also, a stable country is more likely to stick it out than one where it's 'everyone for themselves'.  I daresay that if a more eglatarian society is less likely to spin apart than one with the huge disparities that ours suffers.

Fri, 07/30/2010 - 15:04 | Link to Comment anarkst
anarkst's picture

Using his logic, one might suppose that land should act in the same manner.  Land, being finite, is the ultimate money, no?  Of course not, but the gold people refuse to consider this paradox.  Gold will go up and crash like all the other bubbles.  Gold is no more money than is land.  It's price (in money) will be manipulated to fullest extent possible, for the benefit of TPTB, similar to their manipulation of everything else...except with gold, with its mystical character, the ruse becomes much easier to employ. 

Fri, 07/30/2010 - 15:37 | Link to Comment Joe Sixpack
Joe Sixpack's picture

Land is not portable. Analogy is wrong.

Try taking 1/10th of an acre to your car dealer to by a BMW.

Fri, 07/30/2010 - 15:44 | Link to Comment i.knoknot
i.knoknot's picture

i agree, but then there's this whole GLD etf thing that makes just about as much sense, and it seems to be doing just fine...

bizarre world.

Fri, 07/30/2010 - 15:46 | Link to Comment anarkst
anarkst's picture

Real property is the most common collateral used as well as being the basis of this entire economic system.

Fri, 07/30/2010 - 16:24 | Link to Comment PhattyBuoy
PhattyBuoy's picture

I'll make you a deal on a condo in Vallejo, CA!

From wiki:

Bankruptcy

On May 6, 2008, the City Council voted 7-0 to file for Chapter 9 bankruptcy, becoming the largest city to do so ever in California. Stephanie Gomes, Vallejo City Councilwoman, largely blames exorbitant salaries and benefits for Vallejo firefighters and police officers. Reportedly, salaries and benefits for public safety workers account for 80 percent of Vallejo's general fund budget.

Fri, 07/30/2010 - 21:59 | Link to Comment laosuwan
laosuwan's picture

joe, you take the title deed not the dirt. works for me.

Sat, 07/31/2010 - 09:28 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

And in fact is was the land based Rentenmark that finally symbolized the end of the Weimar spiral into madness. Doesn't invalidate the point that anarkst is little more than a naif.

Fri, 07/30/2010 - 15:45 | Link to Comment i.knoknot
i.knoknot's picture

anarkst

while i like the sensiblilty, you can assume that the elites believe there are too many 3rd world primates sitting on inherently valuable land for that to be allowed... (afghanistan, s africa, west virginia, etc.) it just messes up the balance of "entitled power".

same problem with gold... too many non-players sitting on large reserves.

Fri, 07/30/2010 - 15:59 | Link to Comment anarkst
anarkst's picture

You have to recall what money is...an abstraction of labor-value.  The main deal is in not trashing money for the sake of stealing a few percent via inflation, much more important is to keep the abstraction opaque.  By transferring labor-value (the only thing which is real value) into money, all the illusions, fraud, and outright stealing can occur plain as day without anybody being the wiser.

"Money," in and of itself, is the scam.   

Sat, 07/31/2010 - 04:29 | Link to Comment i.knoknot
i.knoknot's picture

indeed anarkst,

i've seen the cap-trade folks asserting that energy is the real universal 'hard' asset, and therefore the global push for C&T as a move to a new sort of monetary standard/unit.

i actually find it hard to argue the logic, but i prefer a 'harder-to-quantify' unit of measure along the lines of your labor-hour. how many 'hours per oz' of gold/silver, and what constitutes that basic labor-hour? (GoldmanSachs prez hour, or African peasant hour?)

money as a scam only works if we honor it... dis-engage.

Sat, 07/31/2010 - 09:33 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

No, deluded one, "money" is not the scam. Money lending & money changing are the scams. Money is not the root of all evil, love of money is. Atlas Shrugged is a masterpiece of concept only up until Galt's speech, where it goes off the rails. Your teachers have done you a disservice.

Sat, 07/31/2010 - 14:50 | Link to Comment i.knoknot
i.knoknot's picture

another perspective:

trust in the transfer of value is the goal

money is one vehicle. a handshake will do in some pockets of integrity - no money transferred...

it seems that the more complex the transaction, the more likely something 'not-so-honest' is going on.

i'm glad folks are skeptical of the entire system, and hope the simple concepts (truth/trust) will bubble back up from the noise. trying not to get lost in the details (rand vs keynes vs mises/hayek etc.)

honest trades for win/wins. rational pricing and exposure of risk/reward. reward good, hang thieves.

they're very good at obfuscating the simple to hide their crimes.

Sat, 07/31/2010 - 16:07 | Link to Comment anarkst
anarkst's picture

BS

Money is indeed the problem.  Only once it is created can further confusion occur.  Again, money is only an abstraction.  This abstraction allows labor-value to be manipulated in a hundred ways, including taxes, fees, etc.  If labor-value did not go under this transformation, it would be a much more difficult proposition to steal it.  

Fri, 07/30/2010 - 16:43 | Link to Comment Rebel
Rebel's picture

There is another problem with land as a means of wealth preservation . . . property taxes. A particularly insidious aspect of this is that everyone can vote, but only property owners pay property taxes. Hence there is no way to know just how high property taxes will go in the future. An attractive aspect of land as a wealth preserver is that there can be some ability to use the land to create a cash flow (minerals, farming, ranching, hunting, etc). 

I don't think the gold crowd is saying gold instead of land, I think they are saying gold instead of paper. 

Fri, 07/30/2010 - 16:57 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Yo, this part of the gold crowd is indeed saying gold > paper.  I also own a smidgen of land that gives me an income.  I also hold on the decent amount of FRNs to cover the bases in case I am wrong.

Motto of the Gold Scouts:

Be diversified!

Fri, 07/30/2010 - 18:37 | Link to Comment Rebel
Rebel's picture

Yes, I am diversified . . . I own both Gold AND Silver. Kidding aside, I am always actively looking for ways to be more diversified. Sadly, I have found it hard to find other means of preserving wealth that are A) Compact, B) Portable, C) Long Shelf Life, D) Not a fad or whim.

Some suggest rare items like artwork, antiques and so forth, but wow I would stay away from those. Can you imagine trying to unload a Georgia O'keefe painting in the middle of a meltdown. Not for me. So, for me diversification is improvements in my home property, which I intend to be at till the day I die.

Sat, 07/31/2010 - 04:41 | Link to Comment equity_momo
equity_momo's picture

In the middle of a meltdown you dont want to be offloading anything.

You want to be sitting pretty ready to buy the cheap assets as firesale prices when you see the whites of the sellers eyes.

You shouldnt see gold as a means to purchase things in the traditional sense , just use it as a store of value , take it off the market and hope you never have to "spend" it. 

Sat, 07/31/2010 - 05:11 | Link to Comment Moneygrove
Moneygrove's picture

you imagine trying to unload a Georgia O'keefe painting in the middle of a meltdown. I will buy it !! Look at all the art the nazi`s took in ww2 !!!!!!!! the family got it back and the painting sold for 91 million last yr !!!!!!!!!!!!!! 

Sat, 07/31/2010 - 09:37 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

During Weimar fine paintings were traded for sacks of potatoes and slabs of pork. Make quite sure you can eat and stay warm before assuming that luxury goods will ride through anything unscathed.

Sat, 07/31/2010 - 11:23 | Link to Comment laosuwan
laosuwan's picture

i have always wondered, how did the rich stay rich during the great depression in america? This might be the key to understanding how to play the coming collapse of the dollar. during the depression, banks failed and stocks went to zero, right? Where, exactly, did the rich stash their wealth to ride through all that?

Fri, 07/30/2010 - 17:32 | Link to Comment DosZap
DosZap's picture

Rebel,

He we go again, back to the Founders.........

" A particularly insidious aspect of this is that everyone can vote, but only property owners pay property taxes."

You could not VOTE unless you were a Property owner...........

Now, you can vote if your an Illegal........

Fri, 07/30/2010 - 17:55 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Founding fathers. Right AGAIN.

Fri, 07/30/2010 - 18:39 | Link to Comment Rebel
Rebel's picture

But I thought they were evil? Hmmm  . . . must have just gotten lucky on this one.

Fri, 07/30/2010 - 21:49 | Link to Comment drwells
drwells's picture

Agreed, I'd be more open to using land for wealth preservation in a country where (1) it actually belonged to me instead of the gumnut and (2) the rule of law actually prevailed. I don't even know of such a place.

Sat, 07/31/2010 - 11:20 | Link to Comment laosuwan
laosuwan's picture

if you are in the usa there is one kind of land that is totally free of liens and government grabs: patented mining claims. These have a title deed signed by the president and are the highest form of fee simple title. i used to own some of them in idaho. they are like little mini kingdoms, almost independent. the land is usually worthless for anything and has no water, the minerals are long gone, but its yours.

Fri, 07/30/2010 - 21:57 | Link to Comment laosuwan
laosuwan's picture

governments can tax anything, even haircuts, so gold is at risk of being taxed too. but i think ultimately land is the source of all wealth. even gold comes from land, right? a building eventually falls to zero value with enough time but the land will always be there. gold, land, wine and a little cash for shoeshines and tipping the waiter, that's my recipe.

Sat, 07/31/2010 - 05:08 | Link to Comment Moneygrove
Moneygrove's picture

 There is another problem with land as a means of wealth preservation . . . property taxes ,thats why I like platinum ,gold , silver,art ,and rare us coins !!!

Fri, 07/30/2010 - 21:54 | Link to Comment laosuwan
laosuwan's picture

if gold is going to go up and fiat money down, wouldnt this be an ideal time to borrow money to buy productive income generating land, and pay the loan back with worthless dollars bought by a little bit of your gold?

Fri, 07/30/2010 - 22:29 | Link to Comment Rebel
Rebel's picture

"productive income generating land"

I have pondered this as well, but it is tougher than it sounds. I assume you are talking about land, not rental property. It is very hard to generate meaningful cash flow from farming or ranching. You are subject to uncertain fuel prices, the weather, and uncertain prices at market. Right now, about the most profitable income from land comes from hunting leases. Unfortunately, hunting is a luxury, and in a collapsing economy sport hunting will be something most people will no longer be able to afford. Land that includes mineral rights goes for a very high price, with no assurance that minerals are there, or will ever be produced.

The idea of borrowing money, buying hard assets, and then paying back later with worthless paper sounds like the opportunity of a lifetime, but the part I can not figure out is what to do with the borrowed money, that will provide a positive cash flow into and through a collapse.

Sat, 07/31/2010 - 08:44 | Link to Comment laosuwan
laosuwan's picture

yes, i hear you. the play only seems like a safe bet if you already have the money to pay off the loan should things go bad, in order to keep from losing the investment in the land if it becomes unable to generate income from the land. The other point is that we may be wrong about gold going parabolic; say gold goes down and the land's income goes down with it. Then you have to feed the mortage on the land out of pocket. I see a lot of farm land for sale in south america that can be rented to farmers already on the land. Argentina and chile look fairly stable and transparent. There must be other plays. Ocean front land looks like a long term sure bet. The key to this is to be sure you can carry the mortage if the land produces no income. 

Sat, 07/31/2010 - 13:19 | Link to Comment Rebel
Rebel's picture

I am afraid to try and game the system by borrowing with the intent of paying back with worthless dollars. To me, the optimum point is to be debt free, and have hard assets, and nominal local ability to produce energy, food, and other useful necessity items.

Sat, 07/31/2010 - 18:58 | Link to Comment Daves not here man.
Daves not here man.'s picture

re: gold is no more money than land

last time I checked central banks around the world dont hold reserves of land.

Do NOT follow this link or you will be banned from the site!