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Gentlemen, Start Your Deloreans

Tyler Durden's picture


Submitted by Lee Quaintance & Paul Brodsky of QBAMCO,

“If my calculations are correct, when this baby hits 88 miles per hour... you're gonna see some serious _ _ _ _.”

It seems engines are revving and it may be time to go forward to the past. Earlier this month, a large and well respected asset manager that has begun taking positions in gold expressions issued a report in which it began to justify gold’s relative value. One metric it used was comparing the quantity of currency in the world to the quantity of gold. The report concluded that using this metric, the relative value of gold would be about $2,500/ounce, a significant premium to its current spot price.

The analysis posited gold’s value upon a return to the gold standard, posing the question: “what if the entire world’s gold were used to back the global supply of fiat currency?” It then explained that there are approximately $12.5 trillion of physical and electronic global currency reserves and in excess of 155,000 metric tons (tonnes) of above-ground gold (which would imply a price of approximately $2,500/ounce if current global bank reserves were to be backed by gold). As you know, we agree fully with the concept of finding one’s value bearings on gold by pricing its quantity vis-à-vis the quantity of reserves (as per our Shadow Gold Price); however, we thought it important to explain the flaws in the method used above, and to augment it in a way we feel better portrays gold’s present value.

First, we do not think $12.5 trillion in global base money is the relevant figure to use as the numerator.

The only reason there would be a conversion from a fiat monetary system to a gold standard would be continuing financial pressures, specifically pressure from the commercial marketplace to deflate the value of systemic credit. This credit-deflation dynamic began in 2008, and has been forcing global central banks to print more base money (bank reserves) with which to service and repay that credit. In a global monetary system in which the future purchasing power of currencies is respected and the system is generally perceived as solvent, there would be no need for a conversion to a fixed exchange rate (a gold standard). So, any discussion of conversion must presume further stress weighing on the marketplace; the ongoing perception of endless money creation that threatens further purchasing power loss. A gold standard would be demanded by global commercial counterparties and savers. Central banks and their treasury ministries would ultimately be forced to cap such fears by “fixing” the exchange value of their currencies to gold.

So the numerator in the calculation should not be the current level of base money, but the amount of unreserved credit in the system (i.e. global bank assets). (Fiat currencies are largely credit currencies, created primarily in the banking system as unreserved loans that create offsetting deposits in kind.) Thus, we think the most appropriate benchmark to use as the numerator in the calculation would be global bank assets – about $100 trillion – not $12.5 trillion in global base money.

Second, for gold to be money in a gold standard overseen by governments, the denominator used must be official gold holdings – not total above-ground gold in the world. Otherwise, the mechanism of a gold standard – the ability to exchange a government-sponsored currency for gold interchangeably at a fixed rate – would not work.

As per the World Gold Council, about 31,000 tonnes of gold is held in official hands (only about 20% of total above-ground reserves). Central banks have no legally or ethically enforceable claim on the balance of the 155,000 tonnes, which is held in private hands. This implies that the denominator in the calculation would have to be much closer to 31,000 tonnes than 155,000 tonnes.

So, we agree with the logic of dividing base money by gold holdings to find gold’s “intrinsic value” (as per Bretton Woods and our Shadow Gold Price), but we believe the reasonable value upon conversion to a gold standard would be many multiples higher than $2,500/ounce.

We are heartened that some of the world’s largest and most sophisticated financial asset investors are beginning to consider money and gold stocks into their present value analyses for currencies, and in turn into their portfolio allocations. We believe allocations to gold will increase substantially as investors previously dedicated to stocks and bonds progress in their analysis.

Speaking of Transmissions…

Herewith a reiteration of our proposal of a transmission mechanism to a fully-reserved banking system, gold standard and fully-funded federal debt in the US:

  1. The Fed purchases all existing bank assets via the creation of base money on a one-to-one basis (i.e. deposits are replaced with base money which reduces bank leverage to 1)
  2. Banks are commensurately required to lend only against time deposits they can source (banks become credit intermediaries, not creators)
  3. Simultaneously, the Fed purchases Treasury’s gold at a price which would fully fund Treasury’s outstanding debt (yes, unfunded liabilities remain unaddressed)
  4. The Fed then guarantees the exchange value of its existing base money liabilities against the gold it then holds in reserve (a classical gold standard)

Theoretically, the notional size of the existing money stock would remain stable so there would be no diminution of purchasing power by existing currency holders. The wealth redistribution that would occur at revaluation would be from current non-gold asset holders to gold holders, which is a byproduct of bank system deleveraging regardless of whether it is market-driven or policy administered.

While some continue to argue that the US can only get its fiscal house in order by running trade and/or budget surpluses, it would seem the US’s official gold stock could be revalued to the extent that no trade or budget surplus is necessary as any sort of precondition. Going forward, of course, if the US were to allow trade and budget deficits to persist, it would lose its gold in the process and the credibility of the dollar would decline in sympathy.


The Fed would pay for Treasury’s gold at a price high enough to provide the proceeds to Treasury to pre-refund ALL of its debt. At the current U.S. bank asset to base money ratio, that number would be about 5 to 6 times the current spot price. In the aftermath of the dollar’s devaluation against gold, it clearly would behoove the Fed to support gold as its own reserve base going forward.

In aggregate, bank assets are marked at a premium to market value so banks would gladly dump their assets as marked. Banks would then have incentive to offer rates of return and maturity terms to depositors that are commensurate with the banks’ lending opportunities (as things should be).

Fears of US Treasury paper free-falling into a bottomless pit in response to the dollar devaluation are unfounded as these liabilities immediately become fully-funded by Treasury’s gold sale to the Fed. There would be no domestic or foreign public/private bids required.

In theory, the bank assets/loans the Fed would purchase could be marked down 90% if need be and still not impact the solvency of the Fed. The Fed could simply bid gold up X times to maintain its capital cushion. (After all, the Fed is the monopoly supplier of base money.)

Some have argued that such a policy maneuver would put incremental pressure on non-US entities that have borrowed in USD terms. We disagree as the USD money stock that supported that debt originally would be unchanged in terms of its quantity. Only the mix between base and credit/deposit money has changed. Some have also argued that US Treasury paper would be susceptible to ratings agency downgrades as a result of these actions. Hogwash. Nothing would have occurred except an exchange of base money from the Fed to Treasury and gold from Treasury to the Fed. Thus, if anything, Treasury paper would be upgraded immediately as Treasury payments would be immediately defeased by the newly acquired base money proceeds from the gold sale to the Fed.

As Marty McFly said; “I guess you guys aren’t ready for that yet. But your kids are gonna love it.”


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Thu, 10/25/2012 - 18:49 | 2920073 Dalago
Dalago's picture

I can't wait!!!

Thu, 10/25/2012 - 19:13 | 2920117 sunaJ
sunaJ's picture

Since when did logic determine the actions of these wunderkind PhD planners?  No, they will not let go until their fiat currency is plucked from their fingers (cold & dead, optional).

Thu, 10/25/2012 - 19:43 | 2920160 nope-1004
nope-1004's picture

This is an insane calculation.  It doesn't take into consideration corruption, fraud, further debasement, unfunded liabilities, boomer demographics and associated pensions, and central bank rehypothecation.

Gold should be at $25,000 per ounce right now, and the fuckers in power know it.

There isn't enough money to go around to satisfy all these political dreams, much less debt financed livelihoods.  $2,500 an ounce, then what?  No more MF Globals?  No more JPM short positions?  LOL.

I'll keep my 'wealth' at the bottom of the lake, thank you very much.  $2,500, $5,000, or $10,000/oz is not the level that the worlds' debt crisis gets solved.  Gold is the final bubble in this ponzi and it will shoot to levels unimaginable because fiat will sink to levels finally realized.



Thu, 10/25/2012 - 19:47 | 2920197 3rdgrader
3rdgrader's picture

Ten Thousand Dollars per ounce of pure Gold is very close to the yellow metals actual value today, by this time next year they will have printed several Quadrillions more of the counterfeit paper stuff, will make the relative value One Hundred Thousand Dollars per ounce at that time.

Thu, 10/25/2012 - 20:47 | 2920300 Precious
Precious's picture

The price of gold is whatever the next buyer is willing to pay and the next seller is willing to take.  

So, I'd say the price today is pretty much exactly where it should be.

Tomorrow might be different.

The only thing the "respected asset manager" can hope for is somebody reads his report and agrees.  Otherwise it's meaningless.

Thu, 10/25/2012 - 21:27 | 2920376 FEDbuster
FEDbuster's picture

The problem is physical price is tied to the paper gold price (so far).  The paper gold short sellers (and silver) keep flooding the market with golden IOUs to keep a lid on prices.

Average cost of production of an oz of physical gold is still a relevant number.  At $25K/oz sale price, we will have a near zero unemployment rate due to everyone digging and panning for gold.  Many unemployed construction workers here in AZ have already made that career change.  I hope to live long enough to see ex-investment banksters with a pan in their hands down at our local creek.

Thu, 10/25/2012 - 21:52 | 2920432 PeaceMonger
PeaceMonger's picture

I couldn't agree more.

Ask yourself: how many 1 oz gold coins would I trade for a new 1/2 ton truck? 5? 10? That's the price of gold currently for you for that good.   The point being is that if/when scarcity hits the goods you need to live, gold will always be accepted for exchange.  Given the portability and denomination flexibility of PMs, they will always be accepted, and thus retain their value.

Fri, 10/26/2012 - 03:53 | 2920830 Al Gorerhythm
Al Gorerhythm's picture

Yup: and people are still trusting other folk with their money. In Australia, a financial house just went bust (Banksia Securities) wiping out $750 million. It just vaporized I guess. One poor slob dropped $60 G into his account two days prior to the announcement. Trust us! Yeah, riiight.

Can't seem to wake folk up though. Family still zombiefied.

Thu, 10/25/2012 - 20:52 | 2920322 rocker
rocker's picture

I aqree with yours and the jailbirds numbers.  What many have missed is the new trend in digital dollars.  I had a problem of this years ago and it just keeps getting worse. Banks don't even need physical dollars.  I buy physical PMs because I don't want to own paper gold. Now banks don't want to own physical dollars.  They get paychecks deposited with digital dollars. People buy groceries with digital dollars.

I can not cash a check for 10 grand with out waiting a week, even when the money is in my account. Supposedly. Believe me, this wlll not end well.

Thu, 10/25/2012 - 21:12 | 2920353 fourchan
fourchan's picture


Thu, 10/25/2012 - 23:31 | 2920524 DoChenRollingBearing
DoChenRollingBearing's picture

@ nope-1004

Like you need another "+ 1"!

The best way to get this all started would be a suggestion that FOFOA made:  The Traesury and/or the Fed make an announcement that they will buy any and all gold for $10,000 per (physical) oz (or any other similar arbitrary number).  Then we all just sit back and watch as the weaker hands take the deal...  Then we are off to $55,000 or more.  

I can hardly wait to see how the saga of Germany wanting some of their gold back turns out...

Too bad about the damn boating accident and icefishing clumsiness!

Thu, 10/25/2012 - 18:57 | 2920081 alstry
alstry's picture

How much was a pound of gold worth as the Titanic was sinking?

You need systemic thinking for systemic failures when we are all milking each other for production.

As technology continues to replace human production, how much gold or currency will we need as we increasingly digitize goods and services to take on the economic qualities of air?

Thu, 10/25/2012 - 18:59 | 2920100 HungryPorkChop
HungryPorkChop's picture

Yeah, sure, but the life boats were worth their weight in gold. 

Thu, 10/25/2012 - 19:03 | 2920102 fuu
fuu's picture

168 week old account, first post 10/12/12, and you do nothing but spam that website.

Link pimping, serious bidness.

Mynhair is that you?

Thu, 10/25/2012 - 19:17 | 2920136 alstry
alstry's picture

Never forget that everything Hitler did in Germany was legal.  Martin Luther King

Thu, 10/25/2012 - 20:17 | 2920252 fuu
fuu's picture

Also, $20.67/toz * 14.583toz/lb = $301.43061.

Fri, 10/26/2012 - 06:54 | 2920926 Grimbert
Grimbert's picture

or even 1 troy lb = 12 troy oz = $248.04

Fri, 10/26/2012 - 06:57 | 2920930 Ghordius
Ghordius's picture

or that up to 1968 one million bucks could be converted to one ton of gold - in europe

Fri, 10/26/2012 - 09:09 | 2921129 fuu
fuu's picture

Fair enough, he just said a pound.

Fri, 10/26/2012 - 00:00 | 2920638 Precious
Precious's picture

And the naive German Jews kept trusting in the "rule of law" to the point of annihilation.

Thu, 10/25/2012 - 19:28 | 2920152 alstry
alstry's picture

Who is Alstry?


Thu, 10/25/2012 - 20:46 | 2920308 JuliaS
JuliaS's picture

A batshit crazy spam-bot without a single original thought.

Thu, 10/25/2012 - 19:34 | 2920168 Abitdodgie
Abitdodgie's picture

The price will go up WHEN they say it can and not before .

Thu, 10/25/2012 - 20:28 | 2920271 cranky-old-geezer
cranky-old-geezer's picture



How much was a pound of gold worth as the Titanic was sinking?

How much will a pound of gold be worth when the US dollar sinks?

Thu, 10/25/2012 - 21:44 | 2920416 Catflappo
Catflappo's picture

How much was a box full of banknotes, (or indeed an entire deck full of banknotes) worth as the Titanic was sinking?


What's your point?

Fri, 10/26/2012 - 00:01 | 2920634 MJ
MJ's picture

How much was farm land, food, or a penthouse worth when it went down? Not more than an equal amount of gold.


Edit: cat beat me to it

Thu, 10/25/2012 - 18:52 | 2920084 swissaustrian
swissaustrian's picture

I was expecting some chart porn

Thu, 10/25/2012 - 19:06 | 2920110 JPM Hater001
JPM Hater001's picture

You will have to settle for traditional but imagine gold at $56,000 an ounce...

Of course if you do your research you will find Silver in the 10's of Thousand should this be the case so I still don't understand why Gold gets the limelight...again.

Thu, 10/25/2012 - 19:31 | 2920154 Zero Govt
Zero Govt's picture

visually Gold is a stronger (richer?) colour and its value considerably more

when considering national breakdown the thought of carting Silver across a guarded border compared to Gold is a 'no contest' 

my 2+ boxes of Silver weigh a ton, the Gold slips into any envelope, file or down your pants!

Thu, 10/25/2012 - 19:38 | 2920174 zerozam
zerozam's picture

I think I've actually seen a golden buttplug...

Thu, 10/25/2012 - 19:50 | 2920178 knukles
knukles's picture


I've been waiting years for somebody to say that!

I've found it!  The Quest for the reference to the Golden Buttplug is Over!

Thu, 10/25/2012 - 19:54 | 2920204 Zero Govt
Zero Govt's picture

are airport metal detectors tuned/de-tuned for Gold teeth .........or butt plugs?

Thu, 10/25/2012 - 19:56 | 2920219 Hulk
Hulk's picture

That asshole's worth a butt load of money !!!

Thu, 10/25/2012 - 22:49 | 2920540 wee-weed up
wee-weed up's picture

zerozam said:  I think I've actually seen a golden buttplug...

How is ol' Bwany Fwank doing these days?

Thu, 10/25/2012 - 18:53 | 2920087 HungryPorkChop
HungryPorkChop's picture

Jim Sinclair offered the equation for price of gold back in 2011.  The end price was upwards of $16,000 and before QE3.

Thu, 10/25/2012 - 18:56 | 2920091 goldenrod
goldenrod's picture

No, it is $12,500 which is still a lot higher than today's price.  Buying gold is a no-brainer.


Thu, 10/25/2012 - 19:03 | 2920106 RockyRacoon
RockyRacoon's picture

Hey, how'd you know?  I don't have a brain and that's zaccly what I'm doing!

Thu, 10/25/2012 - 22:44 | 2920528 DoChenRollingBearing
DoChenRollingBearing's picture

me tu rocco, me tou.

brane, wazzat?

Thu, 10/25/2012 - 19:04 | 2920107 e-man
e-man's picture

$16,000 or $12,500 makes no difference.  Wealth is not a measure of how much you have (ask anyone from Zimbabwe), wealth is a measure of how much more you have than the person next to you.

Thu, 10/25/2012 - 19:13 | 2920128 Bastiat
Bastiat's picture

"many multiples" bitchez!

Thu, 10/25/2012 - 19:41 | 2920179 logicalman
logicalman's picture

Health is more important than wealth.

I'm knocking on the door of 60 and can still cycle 50 miles of trails without blinking, all while carrying a lot more than my physical weighs.

Might prove useful one day!

Thu, 10/25/2012 - 20:34 | 2920283 Tango in the Blight
Tango in the Blight's picture

So how much does the average Joe have?

Thu, 10/25/2012 - 22:46 | 2920534 DoChenRollingBearing
DoChenRollingBearing's picture

MEDIAN Joe would have zero.  Only 1% of Americans own ANY investment gold.

AVERAGE Joe?  Maybe 1.5 oz?  Are we all above average?

Thu, 10/25/2012 - 19:27 | 2920151 I think I need ...
I think I need to buy a gun's picture

this is where we are all depending on Bernankes expertise!!!!!!!!!!!!!!!!!!!!!!1

Thu, 10/25/2012 - 18:58 | 2920099 AgShaman
AgShaman's picture

I bought a sizeable chunk of multi-layered cheese a couple days ago...

It just seemed like the right thing to do

Thu, 10/25/2012 - 19:21 | 2920143 Xanadu_doo
Xanadu_doo's picture

Never can has too much cheese.

Or gold.

Thu, 10/25/2012 - 19:01 | 2920104 Wakanda
Wakanda's picture

Buy you fuckers, BUY!

Thu, 10/25/2012 - 20:43 | 2920299 Tango in the Blight
Tango in the Blight's picture

No, don't buy. Moar for me...

Thu, 10/25/2012 - 22:48 | 2920539 DoChenRollingBearing
DoChenRollingBearing's picture

Indeed Tango!  If we can succeed in convincing people NOT to buy, more for us!  LOL!  Sell your gold, bitchez!

Thu, 10/25/2012 - 19:03 | 2920105 UP Forester
UP Forester's picture

Fears of US Treasury paper free-falling into a bottomless pit in response to the dollar devaluation are unfounded as these liabilities immediately become fully-funded by Treasury’s gold sale to the Fed.


So, why would the Treasury sell all the gold to the Fed?

Because the Fed has proven it is uber-trustworthy and working in the "best interests of the people," or what?

Thu, 10/25/2012 - 19:17 | 2920129 Bastiat
Bastiat's picture

The country takes a long step towards restoring itself when tanks surround the Fed - instead of serving it's purposes.

Thu, 10/25/2012 - 20:25 | 2920264 unununium
unununium's picture

May I presume you have already written your senators asking them to support Audit the Fed?  It's a crucial time.

Thu, 10/25/2012 - 19:04 | 2920108 Spitzer
Spitzer's picture

Hue hendry is wrong on the gold miners.

they always go up in bull markets

this time is diffrent ?

Thu, 10/25/2012 - 19:34 | 2920166 Zero Govt
Zero Govt's picture

Yep, i'm baffled by his comments

Does he think the big money is just going to avoid miners and plump for the easy ETF's

Thu, 10/25/2012 - 20:11 | 2920246 rocker
rocker's picture

Two things have confused me of their real value.  Why are many Gold miners being pushed down in price, especially the Juniors. 

The other is silver.  It should be at least 90/100 a ounce by ratio to Gold alone.

The only thing I can figure is that the Market Makers want the stocks of miners to get real cheap so they can accumulate them on the cheap.

Afterall, when the market crashes with bonds, they will be the only stocks of value as the metals they mine are also of value and needed in the future.  

The overpriced stocks of companies in the major exchanges are laden with debt. Look at all the ones who are doing secondaires at pimped prices.  Look at all the CEO's dumping their overpriced stocks. As shown in Barron's every week. The ratio looks like it is about 100 to 1.

It is kind of funny how the market is pressing the minors down, but not phony balance sheets of companies that could not survive without the equity of their stocks.

Home builders have tripled off the bottom. But miners are still down. I guess we don't need any metal to build a house or the electronics that go into TV's, Computers, stoves, refrigerators, dish washers, washing machines, lawn mowers, cars and plumbing.  Hell, even Whirlpool is pushing new highs. Something is amiss here.

This is why I believe the stock market is rigged and manipulated to make the rich richer.  The big smart money knows when to get out and blow up stocks. I believe they also manipulate price to accumulate shares of what they want on the cheap.  Price is not truth on many companies and stocks.  Yes, we are most likely entering another recession/depression phase II.  But, if true that homebuilders are up because we need more homes so should the miners that dig the limited stuff they need to build and furbish those homes with stuff.   

The price of these miners and their downtrends  are why I won't buy any other stocks until they turn around.  Seems that most stocks are over valued and miners undervalued. The miners are the foundation of a sound market.  Call it the foundation of real growth.  QE dollars are not of a sound market. 

I do have physical PMs, (Gold, Platinum, Silver Paladium).  I am also ready to add Rhodium to my physicals in equal dollar value real soon. 

Fri, 10/26/2012 - 01:01 | 2920696 FEDbuster
FEDbuster's picture

Any copper coated lead and brass?  That's what I am adding to my PMs.

BTW I don't mind if there is tungsten in my lead.

Thu, 10/25/2012 - 23:03 | 2920251 pamplona
pamplona's picture

Hey Spitzer, I struggle with that argument as well but I can see his point.  


The risk premium goes up when the gold price goes up. Societies are more envious of your gold at $3000 than at $300. And there is no valuation argument that protects you against the risk of confiscation.


The rationalle he is using is that as the price of gold goes up, so too does the risk of expropriation/tax.  Already this is happening in places like South Africa and Ecuador - both jurisdictions with onerous taxes.  So here we are, investing in gold mining companies to profit from inflation, yet we do not consider input cost inflation and limited profit potential because of windfall taxes, which would compress margins.  

The counter argument is that a significant proportion of today's mined gold is a co/by-product of copper mining.  Many of these large copper projects depend on the gold credits to be profitable.  Putting a windfall tax on gold may unintentially make many large copper project uneconomic.  As well, what if gold miners choose not to sell the gold and instead distribute it as a dividend? (see GORO).  I also find it highly unlikely that any government would want to kill the extraction of gold wealth... I can envision a tax (in-kind, not cash proceeds) small enough to encourage miners to continue extracting gold but high enough to satisfy government fiscal needs.


I could go either way but I see his point.  If you're looking to preserve wealth, but physical.  Fractional ownership in a mine will not offer you the same protection though it could be a winning speculation.

Thu, 10/25/2012 - 19:05 | 2920109 blu
blu's picture

The day they decide to stampede back into the gold standard is the day it becomes illegal for anyone else to hold gold, and if anyone can then get $90/oz they'll be lucky.

Thu, 10/25/2012 - 19:06 | 2920114 AgShaman
AgShaman's picture

90 bucks an ounce is more than 100% return on fair value

Thu, 10/25/2012 - 19:13 | 2920126 SubjectivObject
SubjectivObject's picture

They'll buy it at market, but the [implemented before it's needed] capital gains tax will be hell to pay.

Thu, 10/25/2012 - 19:28 | 2920138 cowdiddly
cowdiddly's picture

Yep kinda like that 250 dollar an ounce sack of weed that would cost about 2 bucks if were legal. Just ask a Jamacian. you can buy I cant move my legs ganja for bout 30 bucks an ounce there and its only that high because of the tourists.

You my friend have no clue about black markets  P.S. Making something illegal does not make it cheaper. Ever heard of a speakeasy? 

In other news, I hope that German gold was not included in the world calculations and would somebody please remove them from the number two spot. They have been Corizoned. James Turk had this figured out in 2001. enjoy

Thu, 10/25/2012 - 19:50 | 2920201 knukles
knukles's picture

"I cant move my legs ganja"

Man-0-Chivas... about 250 years ago when I was young, family took a trip to Jamaica... one evening took a canoe, log platform  timgamajig up a river for some music, dancing, BBQ trip.  Cultural event.
Wound up with a bloody paper bag full of splib for about $10.  Asked the guy about papers (LOL) .... he looked at the bag with these amazingly large bright red bloodshot eyes and said "theees be papahz, mon"

Giggled a lot. 
Took a long time to respond to a question.
Lot of conversation like: hmm, wha? uh hu, blespht, xlphmpt, urp.
Mom and dad were cool with it... didn't have to worry about little Knukies....  they'd find him right where they left him....

Good music...

bl xht mon


Thu, 10/25/2012 - 22:52 | 2920550 DoChenRollingBearing
DoChenRollingBearing's picture

Does bring back a vague memory or two from long ago...  Anything to eat around here?

Thu, 10/25/2012 - 23:25 | 2920590 knukles
knukles's picture



          dijuhorder duh pizzahman?

Fri, 10/26/2012 - 01:13 | 2920718 FEDbuster
FEDbuster's picture

Lobster pizza on the beach with some "special" cake for dessert.  My wonderfully misspent youth......

First visit in 1983 Miss Cool's Magic Mushroom Tea was $1/cup served up on an undeveloped stretch of beach in Negril. In 1994 a heaping Frisbee full of weed was $10. purchased from the hotel's beach guard. 

Thu, 10/25/2012 - 20:27 | 2920268 toady
toady's picture

Huh.. .

I usually hear the opposite argument, "once it's legal it will be taxed($$$$), regulated(payoffs $%$$$$), and incorporated (we all know how that works, $$$$$$$$$$$$$$$$$$$$$$$$$$)"

Thu, 10/25/2012 - 19:07 | 2920115 SubjectivObject
SubjectivObject's picture

This leaves the Fed in place, and at the center still.

What's up with that?

We can't handle the truth, or ourselve, or somthing?

Why not the Treasury properly manage this, with participation from other branches of Govt. and in accordance with Constitutional protocols?

Thu, 10/25/2012 - 19:13 | 2920123 jefftopia
jefftopia's picture

Dont care.  Gold is a bubble and it is useless, worse than paper currency - I can do less with it. Ride the wave while you can, then get out.  There are better, more productive investments to be made.  

Thu, 10/25/2012 - 19:52 | 2920142 e-man
e-man's picture

...whereas the US dollar is backed by the full faith and credit of the American Government and the Federal Reserve, and that's gonna be around for a long time.  Gold isn't backed by anything, right?  

Bridget Brown, is that you?

Thu, 10/25/2012 - 19:55 | 2920214 jefftopia
jefftopia's picture

And there is no argument made in your text.  Love the video though!  Keep asserting!  <3

Thu, 10/25/2012 - 20:30 | 2920242 e-man
e-man's picture

You liked my video?  Thank you, I'm so proud!  Let me know when you get through Econ 101 -- I have a crap load more videos to show you!  We can be BFF!!

Thu, 10/25/2012 - 20:42 | 2920285 jefftopia
jefftopia's picture

One step ahead of you, it was one of my majors.  I actually spend a lot of time doing volatility forecasts, standard models like ARCH, GARCH and all it's children, EWMA, VAR, blah, blah etc.  

Gold's worth[lessness] to me might not be a reflectin of society's, but in general I do believe in mean reversion; gold is no exception.  So I'm going to wait a bit then short the hell out of it.  

You play your game, I'll play mine.  Then we can sit down and talk about it over some beer.  

Thu, 10/25/2012 - 21:19 | 2920366 dolph9
dolph9's picture

Shorting gold is going to be like shorting government bonds.

But this time, we are not just playing for 30 years, we are playing for centuries...for millenia.


Good luck with that short!

Thu, 10/25/2012 - 21:48 | 2920426 jefftopia
jefftopia's picture

"...This time, it's different"

Where have I heard that before?  <_< 

Thu, 10/25/2012 - 19:48 | 2920165 TWSceptic
TWSceptic's picture

There are better, more productive investments to be made.


Uhm, gold is money (real, not the fake kind), not investment. Gold stocks are investment, and yes they can be very productive in that. It's also not true that rag paper (the material of which dollar bills are made) has more industrial applications than precious metals. And finally, gold is not in a bubble, as for that to be true, idiots like you must want to buy it first.

Thu, 10/25/2012 - 19:52 | 2920211 jefftopia
jefftopia's picture

I just don't buy into the theory of commodity money.  You have convention and history on your side, but gold really is worthless to me, it is a rock.  It will not pay me dividents, it will not produce, it will not buy my groceries, it will not pay my taxes.  Gold is for engagement rings and Indian weddings as far as I am concerned.  Gold is just as faith backed as fiat or more so.  I would share your concern about paper if I also shared your concern for inflation, but I do not share that concern at all.  Oh and paper, yes, it does not produce but we use it for transactions that do.  Gold?  Not so much.  

Whoops - I just offended everyone's gold-bug sensibilities.  Oh well.  There will be no crisis, no double dip recession, no hyperinflation, and so on.  That said, I am looking forward to tomorrow's doomsday propehcies!  Please prove me wrong (note: this is a forecast, you cannot prove me wrong yet)  <3 ZH

Thu, 10/25/2012 - 20:36 | 2920286 Manipuflation
Manipuflation's picture

"Gold is just as faith backed as fiat or more so."

I would suggest that scarcity plays a much larger role in determining valuation than faith does.  My question to you is why do you care what I invest in or how I choose to invest?  How would you even know what I am invested in and to what degree?

Queston:  What are YOU invested in for TOMORROW jefftopia?  See how easy it is to turn the tables on a troll? 


Thu, 10/25/2012 - 20:44 | 2920305 jefftopia
jefftopia's picture


Thu, 10/25/2012 - 21:34 | 2920389 Manipuflation
Manipuflation's picture

OK, you got me jefftopia.:-)


Fri, 10/26/2012 - 01:21 | 2920727 FEDbuster
FEDbuster's picture

"Oh well.  There will be no crisis, no double dip recession, no hyperinflation, and so on."



Thu, 10/25/2012 - 21:41 | 2920347 OneTinSoldier66
OneTinSoldier66's picture

We also use coinage for transactions. Has the Government ever debased and devalued those? 1965 ring any bells? I ask, just how much debasing, debauching, and devaluing your currency that you use transactions for is okay with you? Whatever TPTB decrees? No matter how high the inflation might get?


Since you've taken economics I would like to hear how the $16 Trillion Debt, and the never ending addition to it at ever faster rates, figures into your value of state issued fiat paper money?

Thu, 10/25/2012 - 19:42 | 2920182 nmewn
nmewn's picture


Can you please reinstitute captcha?


Thu, 10/25/2012 - 19:55 | 2920216 Harbanger
Harbanger's picture

The name is Jefftopia, that's a clue.  When you live in jefftopia, anything is possible. So I gave him a +1.

Thu, 10/25/2012 - 20:37 | 2920289 nmewn
nmewn's picture

Yeah, two weeks old. I don't usually comment on the "paid boiler room" aspect of online venues but we're about to be overrun by unpaid complete fucking retards.

Ain't democracy grand? ;-)

Thu, 10/25/2012 - 20:51 | 2920320 e-man
e-man's picture

Wait...he said Economics was one of his majors.  They're on to us!  I think we might be in a little bit of trouble here....

Thu, 10/25/2012 - 22:57 | 2920560 DoChenRollingBearing
DoChenRollingBearing's picture

@ nmewn

Agreed!  Bring back the captcha!

Thu, 10/25/2012 - 19:52 | 2920208 reTARD
reTARD's picture

Deloreans are better than unicorns!

Gold, bitchez!

Thu, 10/25/2012 - 19:20 | 2920141 the iD
the iD's picture

1.25 x 10^13 / 155000 = ~80645161 / 32150 = ~2508

1 x 10^14 / 31000 = ~3225806451 / 32150 = ~100336



Thu, 10/25/2012 - 19:43 | 2920185 Harbanger
Harbanger's picture

Nice, I see you do much better by owning silver, 80x vs 60x.  To factor in nuclear war though, you must divide by zero.

Thu, 10/25/2012 - 19:23 | 2920144 Nels
Nels's picture

Your numbers might work, but trusting the thieves at the FED isn't going to work.

And with a fully reserved bank system, and on a gold standard, of what use is the FED?  Do we really need a government protected banking cartel?

The fed has stolen 98% of the value of the dollar over the last 100 years, why give them another chance after the big reset to gold?

Thu, 10/25/2012 - 19:24 | 2920146 AUD
AUD's picture

we agree fully with the concept of finding one’s value bearings on gold by pricing its quantity vis-à-vis the quantity of reserves

This article is flawed from the beginning. Quantity is irrelevant. Quality is the key. More shit on ZH today.

Thu, 10/25/2012 - 19:29 | 2920156 AgShaman
AgShaman's picture

Tungsten blank manufacturers agree with you "gold-heartedly"

Thu, 10/25/2012 - 19:30 | 2920157 LouisDega
LouisDega's picture

Who cares anymore? George McFly said Darth vader is gonna came down and melt my brain.

Thu, 10/25/2012 - 19:38 | 2920175 knukles
knukles's picture


Thu, 10/25/2012 - 21:40 | 2920401 LouisDega
LouisDega's picture


Thu, 10/25/2012 - 19:32 | 2920162 Zap Powerz
Zap Powerz's picture

While I do get a boner reading this stuff, I have to remember that the awake 1% will never ever ever be able to shake the 99% out of their slumber and we are still fucked.

Yep, still fucked.

Thu, 10/25/2012 - 22:59 | 2920562 DoChenRollingBearing
DoChenRollingBearing's picture

But, a little less so.

Thu, 10/25/2012 - 23:27 | 2920592 knukles
knukles's picture

How come I don't get a boner reading this stuff?

Thu, 10/25/2012 - 23:35 | 2920603 DoChenRollingBearing
DoChenRollingBearing's picture

Maybe because gold is inert?

Fri, 10/26/2012 - 13:02 | 2921971 Moronicgenius
Moronicgenius's picture

It's because you need to insert that "Golden Butt-plug"

Thu, 10/25/2012 - 19:34 | 2920167 A Lunatic
A Lunatic's picture

The fucking economy has been hijacked by psychotic warmongering devils. There will be no return to anything that cracks the door open for individual freedom of choice, especially economically. The new paradigm does not involve Mom and Pop, Main Street, or repentance on the part of TPTB. These fantasies are getting really fucking boring.

Fri, 10/26/2012 - 01:35 | 2920744 toomanyfakecons...
toomanyfakeconservatives's picture

Oh yeah? Patriots everywhere, including the ones in the U.S. military had better step in and stop the madness before the missiles fly... 

Thu, 10/25/2012 - 19:38 | 2920169 Dapper Dan
Dapper Dan's picture


Looks like the Powers that be don't what anymore publicity about this 'Sovereign Citizen' stuff.

let them go and seal the transcripts

Posted: 2:31 p.m. Thursday, Oct. 25, 2012


'Sovereign Citizens' cleared of taking foreclosed homes


A DeKalb County jury acquitted three men accused of racketeering after they were arrested for signing fake deeds to themselves and then moving into foreclosed homes.

During the trial, Yisrael told the jury that banks, which were the documented owners of the properties, should not have been allowed to own them in the first place.

The defendants did not deny their actions, but rather argued that they took nothing and hurt no one so no crime was committed.

Thu, 10/25/2012 - 19:44 | 2920188 tony bonn
tony bonn's picture

"...As per the World Gold Council, about 31,000 tonnes of gold is held in official hands ..."

anyone believing the wgc is a total 4 quad fucktard......the recent brewhaha in germany is late recognition that german gold is entirely squandered and lost... the 150 tons to be repatriated over 3 years is all which is left - if even that much...the same can be said for us reserves which have been squandered with the large majority of it having gone east and removed from circulation for generations and generations to come....

these 150 tons are stunts to fool their ignornamous public that all is well when in fact there is nothing but gold colored god people are dumber than bat shit....

Thu, 10/25/2012 - 19:47 | 2920196 hmmtellmemore
hmmtellmemore's picture

“what if the entire world’s gold were used to back the global supply of fiat currency?”

That's when I realized that the commentary is basically goldbug porn.  It is preposterous to think that the global supply of fiat currency will be backed 100% by gold.  Even 10% is borderline preposterous.  

Look, I'm a goldbug myself.   And silverbug.  I'd be happy to see much higher prices, it would be great to watch.  But numbers beyond 2x for gold and 3x for silver (based on purchasing power, not currency quantity) just won't happen.  And that won't happen for many years, probably not this decade. I'm hoping you gentlemen can truly consider my words.  There are many, many people out there with maxed out credit cards from PM purchasing, and I feel really bad for them.

Will PM help to keep your wealth inflation-free? Yes.  Will there be an average increase of a few % each year when averaged over the coming decade? Yes.  Will you get a windfall? No.


Start a company.  Buy a small house (not based on investment, but on utility).  Go back to a great college for a degree.  Landscape your property.  All those are much, much better investments if you do them in a sober way.

Thu, 10/25/2012 - 19:53 | 2920209 AgShaman
AgShaman's picture

I've considered your words.

Now I think I'm gonna go and chase some bong hits with some scotch ale

Fri, 10/26/2012 - 12:52 | 2921938 IrritableBowels
IrritableBowels's picture

cold smoke

Thu, 10/25/2012 - 19:54 | 2920213 knukles
knukles's picture


Thu, 10/25/2012 - 19:56 | 2920218 A Lunatic
A Lunatic's picture

Before one starts out to accumulate wealth two things should happen. 1) define wealth for yourself. 2)determine beforehand how much is enough.

Thu, 10/25/2012 - 20:10 | 2920241 Manipuflation
Manipuflation's picture

I have considered your words and have some questons.  How can you prove this assertion?  How did you arrive at this conclusion?

"There are many, many people out there with maxed out credit cards from PM purchasing, and I feel really bad for them."

I also fail to understand the going back to college statement.  For what purpose?  To accumulate more debt?  I flat out disagree with buying a house that you can't get a clear title to, caveat emptor on that advice.

You are not a goldbug.  Just FYI, there is no reason for gold to back any currency.  The gold is the currency itself as would be silver or any other physical object that is tradable or finite in supply.  To assume a gold standard is to assume a central monetary authority 'regulating' it.(i.e. the power to tax transactions)  Money can be anything so long as there is a buyer and seller.

Thu, 10/25/2012 - 20:32 | 2920278 robertocarlos
robertocarlos's picture

Sober? Half my money is invested in Jack Daniels.

Thu, 10/25/2012 - 20:45 | 2920307 ebworthen
ebworthen's picture

I don't know, designing flower beds drunk may bring out the Picasso in me.

Fri, 10/26/2012 - 06:42 | 2920916 nmewn
nmewn's picture

lol...good point.

I guess if we're considering mental health as an investment. I was struck by some of the things he considered "investment".

"Start a company." Yes. But the business enviroment has to be friendly/stable and the growth potential there.

"Buy a small house (not based on investment, but on utility)." Yes, not to flip but to rent or live in.

"Go back to a great college for a degree." We just got a little murky. Here we're attaching more value to the college attended than the degree itself. A degree in what?...I would say.

"Landscape your property."  I guess this is where the "great college" degree in landscaping comes in ;-)

Thu, 10/25/2012 - 20:06 | 2920237 Die Weiße Rose
Die Weiße Rose's picture
Transatlantic Relations

Germany to check gold reserves stored abroad

Much of Germany's gold reserves are stored abroad, in vaults in the US, Britain and France. No one has actually seen the gold bars for a long time - which has prompted German federal auditors to call for a look.

In times of crisis, gold is considered to be a safe haven. But as the financial crisis has engulfed the European single currency zone, that very haven has shifted into the focus of politicians and Germany's National Audit Office. Questions are being raised as to whether the German Central Bank has in the past actually checked whether its gold stored in the US, France and the UK actually has the weight it is supposed to have. Only about 30 percent of the country's gold reserves are stored within Germany itself.

The National Audit Office – an independent authority that monitors Germany's finances – has on behalf of parliament looked into whether the central bank is properly checking its gold reserves. For months now, the office has been pushing for the central bank to check the reserves in an accurate way rather than just occasionally, or simply relying on confirmation from the other banks that store the German gold.

For Folker Hellmeyer, chief economist at Bremer Landesbank, a more regular validation should go without saying. Central banks are subject to the same requirements as all of the other financial institutes, he told DW. "In this respect, the shortcomings in monitoring our gold reserves have to be viewed quite critically. It makes sense that this issue has now been taken up by the National Audit Office."

The world's second largest gold reserves

Abelshauser says Germany made a deal with the allies

After the US (8,133 tons), Germany has the world's second largest gold reserves - 3,396 tons with a current value of 130 billion euros ($169 billion). With the gold price on the rise, that value is expected to go up even further in the future.

Gold reserves are an important part of the reserves of national banks in the eurozone. According to the World Gold Council (WGC), the eurozone countries together hold over 10,787 tons of gold, the European Central Bank more than 502 tons. Austria, for instance, holds 280 tons, highly-indebted Greece has some 111 tons, Portugal 382 and Spain 281 tons.

Why store gold abroad?

Why is German gold stored abroad in the first place? Many explanations suggest that it's to do with the Cold War and with the fear of a confrontation between East and West, between the US and the former Soviet Union. Yet while this may explain why Germany chose to store it's gold in the US, it's doesn't really explain why it would have been stored in Britain or in France, says historian Werner Abelshauser.

According to Abelshauser, there are other reasons. Germany was faring very well as an export nation in the 1950s and 1960s, and the nation had a huge balance of payments surplus at the expense of the allied powers, he says. "They needed the allies' military protection, while the Americans, Brits and French were constantly short of cash."

In fact, Germany gave them loans, he says, adding he could well imagine certain 'gentlemen's agreements' were made in addition to the official loans. "Something like, we'll store our gold in your country, and that creates trust. In return, we can help you if you're in a tight spot."

The barter transaction was stationing troops in Germany, the professor explains: "Stationing troops in Germany was an effective lever to draw on Germany to compensate for their own problems with balancing payments," he says. "The Germans needed American troops in the country, if they didn't want to run the risk of becoming a nuclear battlefield."

Complete trust in partner banks

Honest guardians: the New York Federal Reserve

Germany's Bundesbank has meanwhile reacted to demands by the federal auditors, stressing it does not doubt 'the integrity, reputation and safety' of the foreign storage sites. The bank pointed out that the documents at hand and the procedure applied give proof of the stored gold reserves - completely and traceable over the past decades.

The auditors do not doubt the foreign partners' trustworthiness; however, they have demanded stricter controls. The central bank has agreed to ship 150 tons of gold from New York to Germany over the next three years, where it will be melted down and reformed to standard bars to test its authenticity.

When the German gold treasure returns to New York, it is not likely to be shipped via submarine - which is how legend has it the French brought their gold reserves home from the US in 1966. President Charles de Gaulle insisted on bringing the French gold bars to France and out of the grasp of the Federal Reserve, the US central bank that stored the gold in its vaults. De Gaulle did not want to become dependent on the US - not for all the gold in the world.


German auditors urge check of gold reserves

German federal auditors have called on the country's central bank to regularly look into the quality of its gold reserves stored at banks abroad. The Bundesbank has conceded a physical check has never been carried out. (23.10.2012) 

Germans' fondness of paying in cash remains intact

The majority of Germans still prefer using cash over electronic forms of payment, a study has found. Consumers feel real banknotes and coins are a lot safer, and that their use is completely anonymous to boot. (17.10.2012) 

  • Date 25.10.2012
  • Author Monika Lohmüller/ ai,db
  • Editor Gregg Benzow  
Thu, 10/25/2012 - 20:19 | 2920255 cranky-old-geezer
cranky-old-geezer's picture



Another one of those skittle-shitting unicorn fairytale articles.

The chance of all currencies going on a gold standard is 0.  Chance of USD going back to a gold starndard is 0.

Gold will always be viewed as a commodity, and that's fine, let the price float like other commodities.

There's lots of things you can store wealth in without worrying about loss of wealth over time.  Cases of Jack Daniels for example.  

You could say Jack Daniels has intrinsic value, like gold, like silver, like any other commodity people want.

Thu, 10/25/2012 - 20:33 | 2920280 cowdiddly
cowdiddly's picture

I dont think from what I have been watching it will be up to the U.S. to decide. The world is going back there whether the United States wants to or not.

Thu, 10/25/2012 - 21:04 | 2920342 cranky-old-geezer
cranky-old-geezer's picture



You're right, it won't be up to the US to decide.  It'll be done with the US kicking and screaming against it, threatening military action, the usual bullying.

It won't matter though, an alliance of several nuclear powers will launch a gold-backed currency and thumb their noses at the US government (and military).  Soon after the US dollar will die.

Thu, 10/25/2012 - 20:21 | 2920258 The Gooch
The Gooch's picture

The last call for liberty and justice (by peaceful means) died(!) with this final, rigged, election bullshit.

Ignorance is where we live.



The dominoes will fall.

Last call for staples.



Thu, 10/25/2012 - 20:48 | 2920311 ebworthen
ebworthen's picture

MDB worships fiat and other forms of delusional leverage parroted by the perception ponzi propagandists of the proletariat press.

He is allergic to articles about gold, and if he posts here he may develop dollar green colored hives.

Thu, 10/25/2012 - 21:24 | 2920372 Manipuflation
Manipuflation's picture

MDB?  I'm waiting.  There is no American Patriot on MW to refute anymore since cBS ruined that board.  Anyone remember AP's drivel stating that:  "Gold will revert to it's mean price of $456 an ounce?"  There were also quite a few comments about silverware and grandma's silver service sets that would drive the price of silver down to $2 an ounce or some such nonsense.LOL  Looks like there are plenty of trolls around here anyway.

Thu, 10/25/2012 - 20:29 | 2920274 robertocarlos
robertocarlos's picture

So your bits and bytes just disappear from a bank leger but some goof with toilet paper stays solvent? All my money is in real hard currency. I will be rich!

Thu, 10/25/2012 - 20:30 | 2920275 Dr. Gonzo
Dr. Gonzo's picture

Just mint the gold in soverign legal tender coins like the constitution says and the market will have to value it at +$10,000 an oz. Used to be $35 an oz 40 years ago. Kind of emabarrasing to point out the complete failure and grand larceny of your government though. Obama would have to come out and say: "Yeah. We're crooks. And no. You folks can't afford any of the new money we're making...and sorry but no more welfare and soc. security also. Shit is real now. Gold is money. Now roll with the changes you morons." 

Thu, 10/25/2012 - 20:33 | 2920281 Big Ben
Big Ben's picture

In the past, gold was used as both a medium of exchange and as a store of value.

I tend to doubt that gold will become the primary medium of exchange again. The only reason a government would consider returning to a gold backed currency would be because their old fiat currency had become worthless. And in that case, who would trust the government to maintain the gold backing of their new currency?

However I do think that gold is gaining ground as a store of value. People are increasingly chosing gold over things like UST's because they feel that gold will retain its value over time wheras USTs will not. After all, USTs are only backed by "the full faith and credit of the US government" (translation: "the worthless promises of a bunch of lying politicians"), whereas gold is backed by gold.

Thu, 10/25/2012 - 21:37 | 2920398 Manipuflation
Manipuflation's picture


"And in that case, who would trust the government to maintain the gold backing of their new currency?"

Thu, 10/25/2012 - 21:39 | 2920404 OneTinSoldier66
OneTinSoldier66's picture

Gold is backed by the fact that Wizards and Witches can't just conjure or brew it up out of thin air with Ctrl+P at a computer keyboard.


To get Gold and Silver some investment had to be made. Exploration and geological analysis, land had to be purchased, digging and drilling, you have to process the ore, etc. In other words, to get that money, you had to actually work for it!


Some properties of money:


Is a store of value over long periods of time, from generation to generation.

Easily recognizable, divisible, portable, fungible.

Capable of extinguishing debt.

Representative of an honest unit of account.

Fri, 10/26/2012 - 06:51 | 2920921 Ghordius
Ghordius's picture

good, but it lacks one (sadly) important modern property: as a unit of tax collection, aka tax-token, aka currency

Thu, 10/25/2012 - 20:51 | 2920317 ebworthen
ebworthen's picture

Prostitution is the oldest profession in the world because pussy will never be a barbarous relic.

Of course, much gold has likely changed hands by patrons of the profession.

Wonder if there is a "screw/ounce of gold" chart somewhere?

Thu, 10/25/2012 - 21:36 | 2920395 AgShaman
AgShaman's picture

Finally....something worth trading the shiny.

I need a "crib" bartertown

Thu, 10/25/2012 - 21:45 | 2920421 Harbanger
Harbanger's picture

I can't find one :(   If an ancient chart existed, I'm sure it would be in silver drachmas or something.  Gold would've probably bought you a new wife.

Thu, 10/25/2012 - 21:51 | 2920431 AgShaman
AgShaman's picture



Thu, 10/25/2012 - 21:35 | 2920392 CharlesH
CharlesH's picture

You can have all metals on the world, but wisedom will rule eventually :)

Thu, 10/25/2012 - 22:03 | 2920458 Manipuflation
Manipuflation's picture

Those who have all of the metals in the world are wise.

Thu, 10/25/2012 - 22:14 | 2920481 Harbanger
Harbanger's picture

That's why King Solomon had tons of Gold.

Thu, 10/25/2012 - 22:01 | 2920454 dracos_ghost
dracos_ghost's picture

As long as the Banksters use arbitrary "X per ounce" basis of value, it doesn't matter what is used or what value something "should" be at -- the system can and will be abused. Might as well go to a hummingbird fart mg/per cc standard. It comes down to faith in the institutional structures which doesn't exist anymore. They need to kill off a generation or two before the memory of these corrupt bastards dissipates and the circus can replay.

Gold may go to the moon but TPTB still have WMDs -- taxes, regulation, confiscation. Be careful what you wish for. 

Thu, 10/25/2012 - 22:30 | 2920508 Manipuflation
Manipuflation's picture

Perhaps you are missing the point to a certain degree.  Trade can occur despite "Banksters" arbitrary valuations.  That IS the point.  We, as human beings, reserve the right and ability to conduct trade amongst ourselves at whatever price the two parties involved in the trade deem to be equitable and advantageous for each party.

i.e., If you trade me your little 4 cylinder car,(that you own) because I have a long commute to work every day, for the tractor(that I own) that you need because you bought a farm somewhere, and we agree on even trade, there is a net benefit to both parties because efficiency occurs.  I did not need the tractor to make long drives and you did not need the small car anymore because you will not commute much.  Cui Bono?  Was there any sales tax on this transaction?  What about state regulation?

How does that relate to gold as money?  How does that relate to a paper dollar bill as money?  And what is the difference per se?  What key factor makes either specie more desirable?

If I can figure it out, so can everyone else.:-)  

Fri, 10/26/2012 - 00:41 | 2920676 dracos_ghost
dracos_ghost's picture

What about the fuels to operate the vehicles and the roads and tolls to conduct your travels -- do you buy the fuel or barter again. What about the state and federal environmental regulations for you to farm. Your productions via your job you commute to or the harvest you sell has to have some fungible equivalent value to the banking/govt institutions' arbitrary valuations to participate outside the barter scenario you mention for things that can't be satisified by the two party system. Isn't using gold vs fiat as money and what the "equivalence" should be the argument of this thread.

The numbers of $2500/oz or $10000/oz or $1M/oz being tossed around are arbitrary. The only store of value is the snapshot of whatever currency you bought your gold with. Hopefully that ounce of gold will have the same purchasing power as the ounce of gold in the future and that is in the control of the bankster class. Fractional banking is the problem more than fiat. 


Fri, 10/26/2012 - 01:04 | 2920703 Manipuflation
Manipuflation's picture

"What about the state and federal environmental regulations for you to farm." 

Yes, so what about them?

"Isn't using gold vs fiat as money and what the "equivalence" should be the argument of this thread." 

I believe that I stated that anything can be money so long as the terms of the trade between the two parties are in agreement.

"The only store of value is the snapshot of whatever currency you bought your gold with." 

I don't daytrade equities although I find all the hubub regarding the everyday roulette table results regarding red or black to be entertaining.  I stay out of that sort of trade.  I stack and occasionally sell.  How I do things and how every one else does things is quite irrelevent, and to each their own.

Here is a snapshot for you.  How did that work out for me?  That's right, another boating accident recently occurred.

Thu, 10/25/2012 - 22:39 | 2920507 Youri Carma
Youri Carma's picture

“If my calculations are correct, when this baby hits 88 miles per hour... you're gonna see some serious ...”

As Marty McFly said; “I guess you guys aren’t ready for that yet. But your kids are gonna love it.”
Thu, 10/25/2012 - 22:54 | 2920555 Stuck on Zero
Stuck on Zero's picture

The plan sounds good except for the problem of the mercantilists.  Mercantilist governments will do anything whatsoever to obtain ownership of our country's gold.  They will enslave their people and dump product on your markets an erect infinite trade barriers in return.  No.  A gold standard does not work unless you have free trade.

Fri, 10/26/2012 - 00:50 | 2920688 Bastiat009
Bastiat009's picture

The world is what it is and not what it should be. Fairies, princess and wizards are for kids.

Gold should be worth more, my house should be worth more, I should have won because I played better than my opponent but I lost because, well .... he played better. Get real.

If you really think that gold should be worth $2500/oz call me and I'll get you a great deal. I can get you an oz for $2200 or $2000 today.

Fri, 10/26/2012 - 03:33 | 2920821 Hobbleknee
Hobbleknee's picture

If I owned the world's printing press, I don't think I would give it up unless I feared for my life.

Fri, 10/26/2012 - 07:02 | 2920931 cardis
cardis's picture

@HobblekneeIf I owned the world's gold, I don't think I would give it up even if I feared for my life.

Plus 5 to T(s) D(s)

Encore – five posts a day – subito!

Fri, 10/26/2012 - 10:14 | 2921331 DowTheorist
DowTheorist's picture



What the article is saying is that gold is not to be compared with currency but with assets. To make or associate gold to a currency is to debase gold. Gold is to be compared to bonds, not to currency, since its destiny is to remain quiet, not to circulate.  Money circulates. Assets have a much lower turnover. Of course, as the article says, then the numerator is not a mere 12.5 trillion but much higher.


Those buying into the thesis of the article are well advised to have physical gold versus “securitized” gold. A comparison of costs and advantages here:

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