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Gold “Bargain of Lifetime” As Gold Standard Inevitable, Possibly Within Year - $10,000/oz Looms
Support for gold is at $1,612/oz and resistance is at $1,663/oz and $1,684/oz.
Gold climbed on Thursday on concerns that the Fed could employ more QE in a further attempt to stimulate the economy. The Fed said that the economic conditions "are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014”.
Continuing ultra loose monetary policies and negative real interest rates continue to support gold.
The Fed has already engaged in 2 rounds of asset purchases near a massive $2.3 trillion, to drive down interest rates and in a vain attempt to stimulate the US economy. QE helped push up both equity and commodity prices by providing cheap money to investors who placed it in riskier assets.
Thus, QE is leading inflation pressures and there is a risk that the Fed, like other central banks, continues to underestimate the risk of inflation.
Bernanke said US monetary policy was "more or less in the right place" even though the central bank would not hesitate to launch another round of bond purchases if the economy were to falter.
Investors will examine efforts by Europe to solve the debt crisis after ECB President Mario Draghi called for a "growth compact" but put the blame on euro zone governments to sort out their economies.
The eurozone debt crisis is far from resolved and the next stage of the crisis could be even more volatile than the recent Greek saga.
Gold Standard Inevitable, Possibly Within Year - $10,000/oz Looms
Reuters TV have interviewed John Butler who says a return to the gold standard is "inevitable" possibly as soon as within the year and $10,000/oz gold is on the cards.
Jamie McGeever interviews Butler in the Goldsmith Hall in London about his opinions propounded in his new book, ‘The Golden Revolution : How to Prepare for the Coming Gold Standard.’
Butler has 18 years’ experience in the global financial industry, having worked for European and US investment banks in London, New York and Germany.
The book says that the era of paper currency is coming to an end and a return to a gold backed dollar is basically inevitable.
McGeever starts the interview by saying that far from gold being expensive at $2,000/oz, gold may be “the bargain of a life time” especially “if the world returns to some form of gold standard.”
Butler says that this “could happen as early as next year” due to BRIC nations dissatisfaction with the dollar reserve standard, “they will start to move formally back to gold”.
There are many ways that this can happen according to Butler including one country becoming a first mover, surprising the world and the United States, by pegging its currency to gold
He points out that Russia may be the country who could do precisely that.
This could lead to a run on the US dollar and financial assets and could see the dollar lose 20% in 24 hours as investors pour into real assets such as oil and gold. This could lead to a depression in the U.S.
There could be a Bretton Woods style “crisis meeting” where the U.S. decides it must reinstate the gold standard or else the dollar “may lose its reserve status entirely.”
Gold at $5,000/oz should happen and possibly over $10,000/oz in that scenario as gold will be a “de facto monetary asset in cross border balance of payments transactions”.
Reuters’ McGeever acknowledges how the “gold market is tiny” compared to “trillions and trillions of dollars worth of cash and assets sloshing around the world financial system.” He asks how can countries back “all of that” against such a “tiny and finite amount of gold?”
Butler responds by saying that “the amount of gold is finite by weight or volume, it is not finite by price.”
If gold is going to be remonetised it is entirely reasonable that “gold’s price will rise by an order of magnitude.”
Butler correctly points out that if gold were to rise to over $10,000/oz then in fact what you would have is a market capitalisation of gold, as it were, vis-à-vis the money supply and credit volume generally which is in line with a longer term comparison – it implies stability.
It is another must watch video and shows how consciousness regarding the value of gold as a finite asset and currency is gradually shifting with obvious ramifications for all who wish to protect and grow their wealth in the coming years.
Far from gold being a speculative bubble, as suggested by less informed economic experts and financial advisors, it may remain undervalued at below $2,000/oz and may be destined to reach much higher levels as gold reasserts itself as the global currency par excellence.
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McGeever starts the interview by saying that far from gold being expensive at $2,000/oz, gold may be “the bargain of a life time” especially “if the world returns to some form of gold standard.”
Ya gotta love these "if-then" propositions.
Gee, if only my aunt had balls...then she'd be my uncle.
M.K.
It's already happening! Look at China moving to buy iranian oil in Gold to get around u.s. sanctions and restrictions through SWIFT banking transactions.
You gotta up your game to play on this field fella.
i knew it!
http://www.youtube.com/watch?v=2zQr8Rwp1tk
">$100,000/oz looms" [fixed]
Some folks have gotten spacey looking into mining rocks far away.
If they can make it happen, it's going to be dry rape expensive.
10K might pay for a bucket of rocket fuel.
For those who can't afford 10K an Oz keep this article in mind.
http://screwtapefiles.blogspot.com/2012/04/urban-mining-and-refining-for...
It's a DIY on how to refine gold from scrap computer parts using household chemicals.
Just stack .999+, its cheaper and less work.
If you measure value of collateral in units of confidence, gold and other PM's will rise much higher relative to fiat based assets.
The paradigm shift will be messy if led by BRIC's. It makes a lot of sense for the U.S. to employ the "first move" advantage. That's a scenario where the U.S. financial heirarchy might actually survive intact.
SLA
Try this one:
http://www.sharelynx.com/chartstemp/GoldeWave.php
I don't think this will come to pass, but so far the numbers are falling correctly.
Great. John Butler's opinions are sanctified like Geraldo Rivera's.
If gold is $10,000/oz then what is to keep it from being $20,000?
How do you collect? Sell the gold for dollars, right?
What if it goes to $200? It Butler going to make his clients good w/ $10,000 as a basis?
Butler's argument is that the world is going to a gold standard without connecting any dots or providing evidence that indeed the world's governments are going to embrace a gold standard. The last gold standard the US abandoned it b/c it would have run out of gold buying petroleum.
. Why would the BRICs want a gold standard? What IS a gold standard? If gold is the 'backing' for paper, the currency is still paper. Right? If people cheat w/o the gold what is to keep folks from cheating with the gold? (Nothing)
BRICs: Brazil = inflation, Russia = miasma, India = inflation, China = either hyperinflation or deflationary collapse. Gold isn't going to help any of these countries. Russia goes broke when its fuel supplies begin to deplete (now). China is choking on mal-investment, India's economy cannot keep up with population growth and Brazil is China's economic colony.
If Butler believes in $10,000 gold let him lead with his own wallet, otherwise he is another con artist/shill like the rest of finance. Throw him in jail and let him rot.
Disagree if you will but it is your money at risk, not mine.
steve - your money is at risk from debasement of the fiat currency. Please research the essential relationship between supply/demand and price.
"Why would the BRICs want a gold standard? What IS a gold standard? If gold is the 'backing' for paper, the currency is still paper. Right? If people cheat w/o the gold what is to keep folks from cheating with the gold? (Nothing)"
Wrong. If one can convert a paper fiat currency unit into gold at the central bank....how is that cheating? The CB's have to egin thnking of a gold or bi-metallic standard. There is too many USD, JPY, EUR out there because of debt creation.
There is no need for a central bank. Exchange between paper and PM can be done at the government mint, as it has been done historically.
steve from virginia 237703
If gold is $10,000/oz then what is to keep it from being $20,000?
How do you collect? Sell the gold for dollars, right?
Comment:
The article is simple sensationalism and hype. I believe in having some PMs. As for collecting, I have mentioned this several times to warn those to much into PMs. If and when the currency is backed by PMs, PMs will collapse. Why hold heavy metal when I can hold paper dollars that are backed by PM.
I do think it is prudent to have some PMs in small denominations to bypass the current fiat currency during that transition to a currency actually backed by a commodity.
Gold masturbation. Any new gold standard will start with gold confiscation. The gov will "buy" your bullion for $2000 per oz, and then create a new currency where gold is valued at $10,000 per oz.
Well said. Buying gold puts a target on your back and front. I say avoid it. If I turn out to be wrong, the police state is never institued, then I will be happily able to invest accordingly with the cash I still have. If I am right, then everyone who buys gold now will have to hand it over when the Federales come a-knocking. No fun for them
Obvously you're supposed to have your savings in Silver; which is never confisticated; but will participate in the re-pricing.
I hear what you are saying and appreciate an informed view of history.
That said, how much bullion gold do western citizens even posess for the govt to confiscate? What would the total bullion gold holdings of US citizens be as a percentage of the official 8000 tons US holds in reserve (I know some believe its gone, but I assume its not)? Would it really amount to anything in the scheme of things?
I still think Rickards has it right. On Monday one week, the media will call gold holders a bunch of crazies who probably want slavery to come back too. On Tuesday, they will be triumphantly announcing a return to sound money and a special 95% tax to remove the *totally unearned* advantage that would be enjoyed by speculators (who after all are the ones responsible for our economic ills).
Citizens will be encouraged to report their neighbours for suspicion of hoarding specie with intent to sell on the black market to those who would probably use it to fund terrorism. The reward for succesfully ratting out those who have the *arrogance* to have defended their savings will be a $50 giftcard to outback steak house.
There's a lot more gold than most of us realize. Read "Gold Warriors" by Seagrave. It's well documented and convincing.
When I put on my tinfoil hat, I even wonder if perhaps the confiscation of this huge accumulation of gold by an elite group was a (or the) major reason for WW2. It certainly turned out that way.
WW2 was probably fought to rid the world of state owned central banks and push the private central bank concept on the world. I haven't done the research to verify. Someday when I quit wasting time on ZH, I'll look into it.
Interesting premise. The causes for war are always one hundred fold. Chock it up to disagreement and misunderstanding, mixed with a healthy dose of zenophobia. And if rich people are losing money, you can count on a war right around the corner - it never fails
"The reward for succesfully ratting out those who have the *arrogance* to have defended their savings will be a $50 giftcard to outback steak house."
Which, if they are lucky enough, may buy them a soda.
I was thinking the same thing as I typed it :)
Minus a 30 dollar fee for a LED call light while you wait for a table.
You are thinking of the end of a gold standard, not the beginning of one.
Further, no-one has any gold, and those that do sure aren't going to run in and trade it for paper promises just because the government starts issuing them. Remember that trust has eroded away to practically nothing.
That is not to say that the government wouldn't try anything like that. It's just that such a move would totally destroy faith in whatever nation tried it, and no-one would trust them again until everyone that was burned by them died of old age. But then, politicians and central bankers as a whole are pretty damn dumb, and and extremely fucking greedy.
Extremely fucking is not enough to get anywhere near a event horizon of a Banker and those like sort.
The fuedal system is still very much in existance, just not publically admitted. The serfs, which includes us that frequent blogs for our own information and protection (as opposed to those that are here trying to find out how we "think", our opinions and how to change those), are just livestock as far as society's owners are concerned. Do you really think the rancher cares what his livestock think? Sure some "faith" is helpful because it makes the livestock easier to control as long as it's not too expensive and inconvenient to maintain. Sometimes, though, it's just easier and cheaper to cull the problem individuals from the flock.
I have no faith in these goddamn mofos and it's unlikely that I will have any in the future. Soon I will die of old age, if something else doesn't get me even sooner. The new generation will have been even more completely indoctrinated, thanks to modern technology. There should be less problem children in the future.
I agree the "politicians and central bankers as a whole are pretty damn dumb, and and extremely fucking greedy." But I suggest that they are only herders of us livestock and are expendable as well, even necessarily so in many cases -- this is what revolutions are often about.
Bottom line: gold might not save us, especially if TPTB suspect we possess any and plan on using it as a claim on "their" stuff. Dumb cops and soldiers are cheap and expendable. TPTB can always create more "legal tender" to pay them. They don't have to worry about running out of FRNs, regardless of what they're worth. The NSA has lots of resources, more than any of us even imagine.
Trust is for market based economies.
Force is for command economies.
Speaking as someone heavily into precious metals, I HATE seeing articles like this. It just makes the whole asset class and everyone connected with it look ridiculous.
"Speaking as someone heavily into precious metals, I HATE seeing articles like this. It just makes the whole asset class and everyone connected with it look ridiculous."
Yeah, me too.
I didn't consider buying gold for years because of all the hucksters on TV hawking it. All day long on TV, buy gold, buy gold, don't forget the IRA special, yada yada yada. Being naturally cynical, I stayed away.
But after a lot of reading on the subject, I made my decision based on what I considered factual and jumped in.
I think TPTB only allow those ads to run because the ARE so ridiculous. They discredit gold, making it look like something only old grandmothers fall for.
Now imagine if they were actually telling us that the dollar is failing. Imagine if they showed pictures like the wheelbarrow full of Weimar Marks. Imagine if they talked about the Fed, and interest rates, and so on...
Then those gold ads would be censored quicker than a Ron Paul campaign.
Agreed, I keep 50% of wealth in fiz. I really don't care what price it goes to. I have 2 stacks - one stack is for selling and getting rid of an underwater mortgage, the other stack will be in a box pushed across the table to my kids some day.
Why carry a debt? Get rid of it now before somebody buys your place somewhere on the other side of the world.
And then I can proceed to choke on my own sentence saying wny carry a student loan. GAH!
Because Obama may make that debt go poof to be reelected?
+10 Quintus...my thoughts exactly.
The deminati want the SDR as a lone worldwide digital currency backed only by the good faith and benevolence of the deminati!
While the author makes some good and valid points, I believe he is overly optimistic. All countries with a printing press know gold is their mortal enemy. They have done and will do everything in their considerable power to keep the fiat game going. Gold and silver are the only sound money as far as I'm concerned, but in my opinion it will be a whole lot more than a year before the fiat is done for, if ever.
I wouldn't call it "optimistic" to claim that gold will reach $10k within a year. It is a sign of pessimism. The world will be a colossal trainwreck if the value of the US dollar is perceived to be as weak as $10k/oz. Although I don't think we can stop that from happening, I am hesitant to pinpoint the timeframe.
My advice: forego eating out and buy 1/10 oz eaglets. For example, sacrifice an expensive dinner and a round of drinks and save what, $45? (The word "expensive" is relative here.) Do that just 4 times and you could buy the 1/10 oz coin.
I'm sorry, but are you joking!? $10,000 an ounce?
Hmmm, how long ago was gold 1/5th its current dollar price?
Just eleven years ago.
You really think that the collapse of the world reserve currency couldn't speed up that trend by a mere tenfold?
Don't forget, this article predicts 10,000 gold right away - this year.
I think you are simply underestimating our government. If you think stashing away $50000 in gold in your little cave will protect you from this so called collapse, I think that is a bit naive. I think that if, and that's a big if, our currency is collapsed, that the government will feel compelled to repo the gold of the citizens. They did it in 1933 with Roosevelt. However, unlike back then, nowadays they have many means of telling if you are withholding information. I'm sorry, but I'm betting in favor of the government in this case
LOL - well then buy Silver and Platinum!
Lead and Gold make a good combination. I have 5 words for you "From my cold dead hands"
Its too bad you think that way. Your hands won't be cold, they will be burnt and smokey. We use bombs nowadays. It ain't the wild west anymore
Just tap out dude!
There was legal authority for what FDR did. (I'm not sure, but I think such gold was in the form of coins that had been bought from the treasury. Non-coin gold was exempt. There may have been another angle that I've forgotten.)
Current law states that US coins are exempt from a replay of the FDR actions. (I forget the details.)
The government didn't simply steal the gold from its owners--they were paid back--at a devalued rate.
Relatively little gold was actually obtained, and the one case that was prosecuted was tossed out on a technicality.
Actually, there was one family whose Father died while hanging on to Pre- confiscation gold. The Father had a few coins in Probate after death. Upon discovery, the family decided to keep it.
The Government stepped in, went to Court and finished what FDR started back in 1933.
No harm, no foul.
Roosevelt's motivation was simple. Personally glory at the expense of the masses. He was brilliant in that sense. And tyrant too. Sending the boys off to go fight some other countries war. They should call him Roosevelt the Butcher. Just look at D-Day. Absolute tactical failure and blood bath for no reason except some contrived schedule written up by the powers that be
If the U.S. were to jump into a gold standard then it would have to implement exchange controls or we'd be drained of gold by the mercantilists in months. With exchange controls in place there would not be enough dollar liquidity to fuel the fires of global trade. How do you escape that conundrum?
8000 tons of gold sitting in Ft Knox is not enough.
The resulting connection to the Gold Standard is going to hurt.
And what about all that paper gold and silver? Poof they go, ashes all.