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Guest Post: Is The Gold Price Dependent On China?

Tyler Durden's picture


Submitted by John Aziz of Azizonomics blog,

China now buys more gold than the Western world:


Does that mean, as some commentators are suggesting, that future price growth for the gold price depends on China? That if the Chinese economy weakens and has a hard landing or a recession that gold will fall steeply?

There’s no doubt that the run-up that gold has experienced in recent years is associated with the rise in demand for gold from emerging markets and their central banks. And indeed, the BRIC central banks have been quite transparent about their gold acquisition and the reasons for it.

Zhang Jianhua of the People’s Bank of China said:

No asset is safe now. The only choice to hedge risks is to hold hard currency — gold.

Indeed, this trend recently led the Telegraph’s Ambrose Evans-Pritchard to declare that the world was on the road to “a new gold standard” — a tripartite reserve currency system of gold, dollars and euros:

The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project.

Some readers will already have seen the GFMS Gold Survey for 2012 which reported that central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century.

They added a net 536 tonnes in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen.

The countries driving the movement toward gold as a reserve currency by building their gold reserves is that they are broadly creditor nations whose dollar-denominated assets have been relatively hurt by over a decade of low and negative real interest rates. The idea that gold does well during periods of  falling or negative real rates held even before the globalisation of U.S. Treasury debt.

The blue line is real interest rates on the 10-year Treasury, the red line change in the gold price from a year ago:

fredgraph (15)


The historical relationship between real interest rates and the gold price shows that it is likely not “China” per se that has been driving the gold price so much as creditors and creditor states in general who are disappointed or frustrated with the negative real interest rate environment. What a slowdown in the Chinese economy (or indeed the BRICs in general) would mean for the gold price remains to be seen. While it is widely assumed that a Chinese slowdown might reduce demand for gold, it is quite plausible that the opposite could be true. For instance, an inflationary crisis in China could drive the Chinese public and financial into buying more gold to insulate themselves against falling or negative real rates.

Of course, this is only one factor. There are no hard and fast rules about what drives markets, especially markets like the gold market where many different market participants have many different motivations for participating — some see gold as an inflation hedge, some (like the PBOC) as a hedge against counterparty risk and global contagion, some as a buffer against negative real interest rates, some as a tangible form of wealth, etc.

And with the global monetary system in a state of flux — with many nations creating bilateral and multilateral trade agreements to trade in non-dollar currencies, including gold — emerging market central banks see gold — the oldest existing form of money — as an insurance policy against unpredictable changes, and as a way to win global monetary influence.

So while emerging markets and particularly China have certainly been driving gold, while U.S. real interest rates remain negative or very low, and while the global monetary system remains in a state of flux, these nations will likely continue to gradually drive the gold price upward.


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Sat, 01/19/2013 - 14:12 | 3169071 Poofter Priest
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The only reason to feel it is a 'gradual' climb upwards is that the price of gold is being surpressed.

Otherwise, between the demand from emerging nations AND the devaluation of currency in the western world (along with massive printing above the 'published' devaluation rate the rise of gold would be....uh...a 'bit' faster and higher.

Sat, 01/19/2013 - 14:24 | 3169105 SafelyGraze
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take-home message: when interest rates finally rise, gold price will plummet as people liquidate their stockpiles in order to take advantage of higher returns

take-home message: when interest rates finally rise, gold price will skyrocket as CBs print like crazy to cover interest payments that exceed tax receipts, devaluing the currency.

Sat, 01/19/2013 - 14:31 | 3169118 true brain
true brain's picture

Right on. The life span of fiat currency is about 40 years, historically. there is reason to expect this old hag to live any longer this time around. The world central banks can keep her on life support, hooked up to a paper drip for so long, before her fiat heart gives out. That will be one big funeral, or conflagration overshadowing WWII by several magnitudes.

Sat, 01/19/2013 - 15:08 | 3169149 AlaricBalth
AlaricBalth's picture

Dear Keynsians,
If gold is such a barbarous relic, why is Germany finally attempting to repatriate? Why is France willing to kill for it? Why is China amassing such so much? Why are more and more Americans buying gold? Why do fiat dependent banks try to suppress the price?
Just wondering.

Sat, 01/19/2013 - 17:43 | 3169240 Enslavethechild...
EnslavethechildrenforBen's picture

The price of Gold is like the price of guns. When they're dissappearing off the shelves the price goes up.


Sun, 01/20/2013 - 01:17 | 3170178 Lore
Lore's picture

Keep stacking tungsten.

Sun, 01/20/2013 - 07:26 | 3170332 GetZeeGold
GetZeeGold's picture



Keep subsidizing gold Ben's the only government program that's ever worked for me.


I thank you....and so does China.

Sat, 01/19/2013 - 16:42 | 3169389 NOTfromSanFrancisco
NOTfromSanFrancisco's picture

"Dear Keynsians,
If gold is such a barbarous relic... Why... Why... Why... Why..."

Answer... Crickets... Crickets... Crickets... and more crickets...

Sat, 01/19/2013 - 17:20 | 3169468 Al Huxley
Al Huxley's picture

And why is it going to take 7 fucking years to get a lousy 350 tons?  If the vaults are really holding ~1500 tons of German gold, and all it's doing is taking up space and costing money in storage, why not transfer the whole fucking lot of it ASAP?  The contempt for the general public's intelligence is amazing (although given the booming business the 'Cash 4 Gold' stores seem to be doing, maybe it's largely justified).

Sat, 01/19/2013 - 18:38 | 3169596 Pegasus Muse
Pegasus Muse's picture

James Turk talks about the German Gold Repatriation story and what is really going on behind the scenes. 

James Turk - Germany’s Gold Is Being Held Hostage 




Sat, 01/19/2013 - 19:07 | 3169654 sampo
sampo's picture

I think Jamie and co. are seeking for a loophole/ensurance here to be the first hand owner and to be the priviledged for the phyzz.

TBTF's are testing their grand scheme in action now. If this shall pass, then it's going to be 400 year delivery for the repatriators last in line.

And of course this will open the gateway for the TBTF's to fill the Basel III requirements, as central banks revalue gold bidding for the same bars to deliver and to stack their own stock, with the taxpayer paid freshly printed fiatmoney.

Sun, 01/20/2013 - 01:41 | 3170190 Lore
Lore's picture

You don't keep all your stuff in your bank, do you?  Surely you leave some of it with a neighbor, and more with the guy down the street, and distant relatives!

The mistake we make with a lot of this stuff is to search for logic that makes sense to us.  These people are manipulators and swindlers.  All the "sustainable" and utopian-sounding elitist narratives in the world don't change that. When they're finished sucking dry the people around them, they're bound to turn on each other. It's already started. We're in for one heck of a light show.

Sat, 01/19/2013 - 14:52 | 3169158 Skateboarder
Skateboarder's picture

Gold has almost become a metaphor for holding physical assets of any sort. As paper slowly loses value at first [and suddently at last], peeps all around will finally come to realize that if you don't possess items of physical value, you don't own jack shit. Gold has only so much use industrially - platinum on the other hand is of much higher value. Could say the same about silver.

Anyhow, the metaphor is a reminder that paper is only worth something as long as a promise is honored. And we know damn well there is no honor on the macro scale.

EDIT: Alaric, rational minds think alike. ;) My comment was trying to address the same issue you bring up. It's not about gold alone, but rather a diversity of physical ownership. Don't put all yer eggs in one glaring basket.

Sat, 01/19/2013 - 15:52 | 3169277 Winston Churchill
Winston Churchill's picture

Silver is the new copper,more an industrial metal now.

You may care to browse what happened to the industrial metals

1930/38. Gold was a different story.History may not repeat but ...........

Sun, 01/20/2013 - 07:29 | 3170334 GetZeeGold
GetZeeGold's picture



Only three years and he'll have that degree in journalism.

Sat, 01/19/2013 - 18:49 | 3169615 fockewulf190
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Confucius say: You now live in interesting time!  Great Reset coming grasshoppa!  Stack Phyzz!

Sat, 01/19/2013 - 14:49 | 3169160 agent default
agent default's picture

Message from reality:  The US is no longer a net creditor like it was in the early 80's.  When interest rates begin to rise, the Fed will take a huge hit on its balance sheet, the US Government will become insolvent overnight, and money printing will become irrelevant as the Dollar becomes worthless.  Everything in the commodity complex skyrockets as everyone dumps their USD reserves for physical assets.  Since the Dollar is  a huge currency by any standard, inflation created by massive Dollar dumping destabilizes all other currencies and destroys their credibility too, rendering them worthless as well.

I like it when some Europeans tell me that the Euro will become the next reserve currency in case of a Dollar collapse.  They must be putting something in the water in Europe.  You simply cannot be that delusional.

Sat, 01/19/2013 - 15:05 | 3169188 edwardo1
edwardo1's picture

It's not that The Euro will become the next reserve currency,

it is that there will be no reserve currency-an oxymoron if ever there was one-as physical gold will become the global reserve asset-it already is de-facto, but this will become "official". The Euro, (which marks its gold to market, unlike the U.S. Treasury-forget the Fed, as they are, and will be, irrelevant) will act as the medium of exchange that facilitates gold to, as it were, flow in sufficient size to allow global trade to continue.

A revaluation of physical will be a part of this process so as to allow extant debt to be reduced (if not outright extinguished) to a level where it ceases to cripple the global economy.


Sat, 01/19/2013 - 15:38 | 3169255 agent default
agent default's picture

Yeah, inflate until debt becomes serviceable.  Also known as losing count of the zeroes on a banknote.

Sat, 01/19/2013 - 17:32 | 3169499 Tango in the Blight
Tango in the Blight's picture

Zimbabwe eat you heart out! :D

Sat, 01/19/2013 - 23:14 | 3170031 cynicalskeptic
cynicalskeptic's picture

Doesn't matter HOW high interest ragtes go when the purchasing power of your currency is dropping like a rock.  You can pay 100% interest a year and it means nothing if inflation is running at 1000%.  In such a scenario hard assets wil hold value better than pretty much anything else.

You may think equities are great sources of value in a meltdown but you can't count on them either.  The Zimbabwe Stock market had the highest 'growth' rate in the world at one point - nothing was worth 'more' - the currency stocks were priced in was worht LESS and LESS, while the companies were imploding because of the effects of hyperinflation.

Sat, 01/19/2013 - 16:02 | 3169294 lasvegaspersona
lasvegaspersona's picture


and then there is also the other side of the trade....the seller. CBs deal in physical not derivatives of gold. There is a almost universally held assumption that buyers will drive up the price. I believe the surpise will come when sellers (of Size) suddenly leave the market. Paper gold does fine in it's function as a hedge. It does not do as a wealth asset. What happens when China suddenly finds it cannot get another 1000 tonnes this year?....tilt... game over!

Sat, 01/19/2013 - 15:04 | 3169186 Dr. Engali
Dr. Engali's picture

Interest rates rising that's pretty funny. In case it isn't clear by now ... Interest rates can never be allowed to rise. The U.S. could never service the debt. Interest rates will remain at these levels until the whole system finally comes unraveled.

Sat, 01/19/2013 - 17:05 | 3169440 NOTfromSanFrancisco
NOTfromSanFrancisco's picture

"Interest rates rising that's pretty funny. In case it isn't clear by now ... Interest rates can never be allowed to rise."

But it is possible. Depending on the Thought of the Day, and who is making the decision of the day, MEGA BUCKS will be made by someone by taking reverse positions on rising interest rates if/when they go up. Ask George Soros how he made a large portion of his money, by taking reverse positions on currencies and interest rates. It is gonna be a Lose-Lose proposition no matter what, Keep your powder dry and your PMs hidden...

Sat, 01/19/2013 - 22:31 | 3169965 Non Passaran
Non Passaran's picture

Primary dealers must buy unsold T's. Then they can repo them to get cash.
There can't be a failed auction.
Currency (confidence) collapse seems to be be the most likey ending, at least to me. We may be years away from that.

Sat, 01/19/2013 - 14:13 | 3169072 Barbaric relic
Barbaric relic's picture

What about Russia's purchases -- haven't they been buying 200 million a month of gold for a while now and 800 million in one month recently? 

Sat, 01/19/2013 - 14:47 | 3169152 Snakeeyes
Snakeeyes's picture

Whether it is China or Russia, gold has soared along with silver beating US housing and the US stock market. That should tell you something.

Sat, 01/19/2013 - 16:54 | 3169418 Never One Roach
Never One Roach's picture

true dat snakeeyes, my gld and slv are up 245% and 320% respectively,  while my humble house is down 38%....

Sat, 01/19/2013 - 23:17 | 3170036 cynicalskeptic
cynicalskeptic's picture

just wait until it comes out that GLD and SLV aren't actually holding what they claim.......  those prospectuses have holes large enough to drive huge dump trucks through (think 'Die Hard With a Vengance' and what the Fed vaults looked like afterwards).

Sat, 01/19/2013 - 14:20 | 3169093 saints51
saints51's picture

China is likely going to buy all their oil in gold with their friends like Russia. No need to fire a bullet as they know the media will have a plot to make China look like a bad guy to create a war. Instead remove the USD being the world currency and crash economies allowing China to rise from the ashes to supreme power.

Sat, 01/19/2013 - 15:41 | 3169256 Never One Roach
Never One Roach's picture

The Chinese don't trust their own companies and stock market (see the ZH caterpiller article). That's another reason why they turned to RE and now to gold, platinum, lumber, etc.; everyone there with any money already owns 4 or 5 apartments and they see houses now a Bubble.

Sat, 01/19/2013 - 14:27 | 3169111 DosZap
DosZap's picture

Gold demand from China will have little effect on the sales, EVERY country of any size on the globe is printing to keep from meltdown.

People are starting to awaken to this, I expect Au/Ag to go near parabolic soon.

Global shortages of Ag, and when the paper market cannot sustain the suppression any longer(soon) to be, look out.

Better have all you can afford now.

As the entire global ponzi HAS to come down.

Sat, 01/19/2013 - 15:36 | 3169246 Enslavethechild...
EnslavethechildrenforBen's picture

You can continue a Ponzi for eternity if you inprison everyone in a slave labor death camp like the Unted States for example.

Sat, 01/19/2013 - 17:24 | 3169479 Al Huxley
Al Huxley's picture

No, actually you can't.  You can render it's collapse irrelevant, but you can't actually continue the ponzi without bringing in new suckers in to pay off the previous tier of suckers.

Sat, 01/19/2013 - 22:24 | 3169951 Non Passaran
Non Passaran's picture

The productivity would crash. Non-physical laborers wouldn't produce much.

Sun, 01/20/2013 - 08:23 | 3170377 agent default
agent default's picture

Worked great for the USSR and the Eastern Block.  No, wait on second thought it didn't.

Sat, 01/19/2013 - 16:57 | 3169426 AustriAnnie
AustriAnnie's picture

Be careful with the word "soon"

Inevitable vs. Imminent.

Never underestimate the ability of extraordinary popular delusions and the madness of crowds to perpetuate a bubble longer than reason would expect.

That being said, I agree that "better have all you can afford now."  It's better to be too early, than to miss the boat[ing accident].  

Get your physical and wait.  Just don't put yourself in a position where you cannot afford to wait it out, and don't bet too heavily on the timing of events.

Sat, 01/19/2013 - 14:31 | 3169114 Ham-bone
Ham-bone's picture

not saying I know shit from shinola and I like PM's likely more than the next guy...but...isn't it possible reason PM prices haven't skyrocketed is because US, EU, Japan are all in massive deflation from massive unservicable debt where net credit is contracting and new dollars are only going to service old debt and dollars, euros, yen are being destroyed faster than CB's are creating them (credit base big number...dollars/yen/euros monetary base small number regardless of it's recent skyrocket)...but PMs will be the shat if and when all that money starts to actually get into an expanding (rather than contracting) credit base...again, admiting eevrything I know I only think I know...jus saying

Sat, 01/19/2013 - 14:42 | 3169134 Spacemoose
Spacemoose's picture

ham-bone.  i upped you because i've often thought the same thing.  it is possible that gold is accurately reflecting a deflationary environment for investment assets rather than being manipulated. or to put it another way, it is equities which are being manipulated, gold is actually telling the true story. in any event, i'll just keep stacking. 

Sat, 01/19/2013 - 17:27 | 3169490 Al Huxley
Al Huxley's picture

If gold wasn't something worth holding, then central banks wouldn't bother holding it, and nobody would give a damn how much an oz cost in the various funny monies of the world.  At the end of the day it's as simple as that.  No matter what anybody in the media, or the government, or on the internet says.

Mon, 01/21/2013 - 10:47 | 3172600 Sweet Chicken
Sweet Chicken's picture


Sat, 01/19/2013 - 15:54 | 3169139 francis_sawyer
francis_sawyer's picture

 "isn't it possible reason PM prices haven't skyrocketed is because US, EU, Japan are all in massive deflation from massive unservicable debt where net credit is contracting and new dollars are only going to service old debt and dollars, euros, yen are being destroyed"


Technically ~ deflation does not occur as long as the debts are kept alive on a ledger somewhere [at 'mark to fantasy' valuations]... Which makes, 'DESTROYED', the operative word [as in ~ it's NOT BEING DESTROYED]...


That's what makes it a crooked ponzi... The 'buyers of last resort' here are the CB's who blow up their balance sheets with worthless 'assets' [that would never happen in a REAL economy ~ because in a REAL economy, nobody is given a franchise to print money out of thin air]... To cut to the end ~ it basically allows them the justification of printing HUGE amounts of new debt [out of thin air] which enter into the system [as service ~ vis-a-vis $85 billion a month, at present, of QE]... Nobody essentially ever sees any of that money... The banks themselves just use it to prevent the system from collapsing on top of them & meanwhile USE it for themselves [& their cronies] to skim incremental amounts of hard goods [for themselves], & otherwise manipulate the prices for everything, rig political elections, & feed propaganda into the system to make stupid people look the other way...

The MONEY DOES NOT PRINT ITSELF... These are criminals who have purposefully clustered themselves & mostly their own gene pool at the top of the food chain... They're a bunch of shits [& their 'apologists' are just as bad]... The cognitively dissonant others are just idiots... Nature, whenever it finally 'feels' like it, will catch up to all of these fools one day & take away everything...

Sat, 01/19/2013 - 17:11 | 3169447 kliguy38
kliguy38's picture

Nature is a bitch. There ARE Laws of Nature that cannot be changed and these laws are bitch when their full force is exerted. Gold is just ONE of the issues to deal with and whether it becomes a "reserve currency" doesn't matter that already is. In terms of time we are still in the early innings of this diabolical ponzi. If you believe they can truly create a Ponzi of infinite timelines need to only look at their past actions in historical terms. They'll turn this game off soon and there will be a lot of bagholders asking "how could we have not seen this coming?"......OBVIOUSLY you can see just can't believe your lyin' eyes.......relax...get some popcorn, if you planned well it really doesn't matter if its days, weeks, or months....the further its compressed the bigger the bang....and this one is already going to be a lot bigger than most, even here, can

Sat, 01/19/2013 - 15:31 | 3169236 DosZap
DosZap's picture


The thing to keep tabs on is the loss of confidence in the USD(and is happening more by the day), and globally all types of OTHER currency trades/Excahnges are coing into agreement.

When 2/3rds of EVERU dollar ever printed is OUTSIDE the US, when it starts coming home..............LOOK OUT.

Better not have much USD's on hand.


Sat, 01/19/2013 - 16:52 | 3169415 MedTechEntrepreneur
MedTechEntrepreneur's picture

..."possible reason PM prices haven't skyrocketed"...


Seems to me that normally the Bond Market would revolt but the CB's are controlling the Bond Market, so that means the currencies will ultimately collapse.  Then PM's are going to the moon.

Sat, 01/19/2013 - 17:11 | 3169450 AustriAnnie
AustriAnnie's picture

Money printing is a form of default.  (i.e. more claims are printed on the same underlying real wealth).

In a scenario where money printing is "expanding (rather than contracting) the credit base," but where that money creates no new real wealth (meaning, there is no real growth, no real productivity arising out of that credit expansion), then investors would see negative real returns, (more money and credit thrown at decreasing real wealth creation), no?

The key for gold, as I see it, is that in a world where a fiat dollar invested gets me real returns (increases my real wealth in terms of purchasing power), then I don't need gold.

If however, I see a world where unproductive individuals and corporations are granted ever-expanding credit, which gets spent on consumption and dividend payments and P/E multiple expansion rather than on productive investment, I need gold as an alternative to getting negative real returns.

Add to that the fact that in the race-to-debase, credit expansion on the part of sovereigns only goes to servicing debt, creating this negative return scenario on a larger scale, and increasing currency risk and sovereign risk, and all I see when I close my eyes is Exeter's pyramid.  

Expanding credit base, and expanding capital base -- are they the same thing?  Credit is just credit.  Capital (or at least as the term should be) is credit used for productive purpose.  When credit expansion is severed from capital investment, then I see gold doing well.

Just my thoughts. 

Sat, 01/19/2013 - 14:35 | 3169128 A Lunatic
A Lunatic's picture

Which would you rather have, a backhoe that you use occasionally, but would be real handy if SHTF, or the monetary equivalent in PM's, which would also be real handy.........

Sat, 01/19/2013 - 15:50 | 3169272 AgAu_man
AgAu_man's picture

You offer a binary either/or scenario.  But since real life is not like that, many smart & shrewd people know to avoid these contrived 1-D, binary choices of "Backhoes vs. AU".  Expand your choices and down-select from there.

The generic advice is, as Skateboarder has shrewdly pointed out above:  Diversify into as many real assets as possible.  Ag, Au and Pt being only a part of that basket of real and useful assets.  Be suspicious of ppl who try to steer you almost exclusively into one asset (class).  Since the American culture is so conditioned to the single-solution, 'magic bullet' mentality, opportunists will try to take advantage of that.  These single-asset advocates are either ignorant fools, useful idiots, or shills.  And potentially very dangerous to your economic and financial health.

Like people, each real asset has a part/role to play for any given condition.  Conditions vary.  Happy Real Diversification!

Sat, 01/19/2013 - 17:14 | 3169453 Irelevant
Irelevant's picture

What are these other assets? Realestate? You pay taxes, easy to confiscate (see white farmers in Zimbabwe), iPads?! Rare earths? Very dificult to hold them yourself. You need something small and valuable, easy to carry without counterparty risk. Gold fits the bill. I'm doing my best in the last year to think of other assets besides gold, guns and silver and I'm not able to come up with anything. Please advise.

Sat, 01/19/2013 - 20:50 | 3169779 r3phl0x
r3phl0x's picture

Throughout history the wealthy have used a wide variety of collectibles as a store-of-value: Wine, Cigars, Artwork, Historical Artifacts, Vintage Cars, Aircraft, ...

There are some disadvantages vs PMs (not as durable, not fungible, not always divisible, not as widely-accepted in trade) but they are similar in that they are legal to own, easy to transport/physically dense, naturally scarce, have secondary/commodity value (at least for wine/cigars), are still fairly durable, challenging to counterfeit, concealable, tend to appreciate over time, and - most importantly - they are not somebody else's liability and are not subject to the whims of government or bankster thugs (currency controls, ATM limits, bank holidays, CTRL-P, and whatever evil shit they think up next).

Sun, 01/20/2013 - 05:03 | 3170273 AgAu_man
AgAu_man's picture

To each his own, but we are into 'gentrified country living':

Investment (not hope or speculation) into things that will only cost more and we enjoy regularly: lamb, beef, wine from our own land. We make hobbies out of pickling, making cheese, salami (the real jerkey!), brewing lager, cider, and making liqueurs. We buy organic foods wholesale, and eat it, freeze it, dry it (fruit, mushrooms).

And that darn fiat paper I occasionally... "win in Asian casinos", well, if I don't spend it, I like to buy golden Chinese teddy bears -- Pandas -- or carbon-based clear, shiny crystals. I leave them where I can use them on a future trip with the family.

Also like making fiat from rental property via LLCs. Trade fiat for more rental property or other real assets. An LLC and a quality CPA are all far better investments than Wall St. paperware/vaporware.

And, yes, we've had a second set of Travel Papers for years. Haven't tried it, but heard from reliable ppl, that foreign institutions don't like to see US passports. Seems they are into commerce, not central planning by foreign powers.

All good diversifications for us, beyond the Precious.

Hope this is more useful and actionable for you than a cute punchline or Bernanke expletive.

Sat, 01/19/2013 - 14:39 | 3169137 q99x2
q99x2's picture

Audit the US Gold Reserves.

Sat, 01/19/2013 - 14:40 | 3169140 Peter Pan
Peter Pan's picture

What I find fascinating is how much gold is changing hands each year. The thousands upon thousands of pawn shops in Europe and the USA must be close to depleting struggling citizens of their jewellery. Once that is done, what then?


Sat, 01/19/2013 - 17:19 | 3169463 AustriAnnie
AustriAnnie's picture

Weak hands ---> Strong hands.

Try to force my hand into giving up PM's and you will have to pay dearly.

When we see a bunch of the "We Pay Money for Your Gold" storefronts closing down, we will know that this seller is tapped out.  It will take ever increasing prices to draw more of this type of seller to market.  

Sat, 01/19/2013 - 14:41 | 3169143 Sudden Debt
Sudden Debt's picture

Stage 1: we let inda and china buy the gold
Stage 2: we attack china and india for their... dictators and stuff...

Stage 3: we teach them democracy and suddenly our gold problem is solved.


Sat, 01/19/2013 - 14:59 | 3169167 Dr. Engali
Dr. Engali's picture

Stage 4 : fly over planes full of Bernank bucks and establish a central bank with a squiddy at it's head.

Sat, 01/19/2013 - 14:45 | 3169148 Peter Pan
Peter Pan's picture

Think Fukushima, think of war and think of the IOU's in the Social Security trust fund and if you still can't see the reason for owning gold and silver, then you must be catatonic.

Sat, 01/19/2013 - 14:50 | 3169162 Dr. Engali
Dr. Engali's picture

China is very grateful to the U.S for keeping the gold price suppressed as they accumulate. It's the least we can do for them in return for financing us so we can buy their trinkets.

Sat, 01/19/2013 - 16:07 | 3169300 Winston Churchill
Winston Churchill's picture

I keep thinking there is a quid pro quo going on there.

China doesn'tt dump their wortless UST's all at once, in return for the FedRes holding

down PM's.Both get what they want short term,but the Chinese are thinking long term,

something the FedRes has proved repeatedly that it cannot.Flying by the seat of

their pants.

Sat, 01/19/2013 - 16:48 | 3169403 francis_sawyer
francis_sawyer's picture

Probably a lot of truth to that... [but which is ANOTHER way of giving example that 'The FED' has ZERO interest in US citizens, or their long term well being]...

Sat, 01/19/2013 - 14:52 | 3169166 suckerfishzilla
suckerfishzilla's picture

The Western banks are just passing the baton to the PRC.  China wouldn't begin leasing and rehypothecating their Gold inventories once reaching top stacker status.  He who holds the Gold makes the rules and appoints the regulators.   

Sat, 01/19/2013 - 14:52 | 3169169 PUD
PUD's picture

There are over 20 million people on earth that are literal slaves. Some are young women sex slaves but most are indentured servants working off inherited debts in mining operations... principally gold and silver mining. They suffer from disease and mercury poisoning often dying of these afflictions or the hazards of unregulated primitive unsafe techniques (hand dug holes in the ground) Many are children. There are vast tracts of land and watersheds tainted with mercury, the spoilage of small scale precious mental hunting. There are grand scale environmental destructions too like a proposed operation alongside the last and largest remaining salmon fishery in the northern hemisphere....

All to procure more gold to sit in vaults gathering dust or minted into coins or paper equivalents to be "traded" amongst those who wish to enrich themselves regardless of the consequences outside their narrow field of view.

Gold like stocks and debt are barbaric instruments that bring out the worst in humanity. They are things that enrich some at the expense of others and pay no regard to the future, the planet or the well being of mankind. They are the playthings of the greedy and the selfish, the meisers and the fools, the myopic and the short sighted. Owning them and coveting them with no thought of its consequence, ethics or ramifications is no different than willfully buying clothes you know are made with child labor in some 3d world sweat shop.

Like can't eat gold nor can you heat your home with it or draw shelter....a mountain of it won't get you a can of spam when the weight of this fraudulent system crashes down upon on all our heads.

Sat, 01/19/2013 - 15:11 | 3169196 outofideas
outofideas's picture

Because if I didn't buy PM's to enslave the children of the third world, those children would have bright futures and jobs in the African aero-space industries and go back to their bungallows to reflectivly write poetry and paint still life apples. Or they could be starving waiting to be eaten by a vulture. Its not that I want children dying of mercury posioning but I'm pretty sure they'd starve faster without jobs. The world is a not a nice place. I'm also betting that anyone who is shorting the world via PM's is also aware of the value of stored food reserves.

Sat, 01/19/2013 - 15:14 | 3169203 PUD
PUD's picture

The world will never be a nice place so long as the mentality of self serving regardless of consequence or suffering holds sway will it?  So long as perverted rationalization like yours exists there will never be real change, equality or justice will there?

Sat, 01/19/2013 - 15:46 | 3169265 ian807
ian807's picture

You prove his point. The world will never be a nice place. Self serving behaviors occur in all organific life from algae to apes. It will not end with us.

Sat, 01/19/2013 - 15:50 | 3169271 outofideas
outofideas's picture

Let me know how we change human nature across the globe all at once.  Lets say you managed to convinced the "western world" to change its values and adopt the polcy you suggest. Which one of the following things do you think will happen:

a) China, India, Russia, etc will recognize the wisdom and follow along

b) Chine, India, Russia, etc will laugh their ass off, continue doing the things you disaprove of, win the cultural war via power, wealth and numbers and wipe out any high flying notions of civility, freedom, and equality you have envisioned


Sat, 01/19/2013 - 15:59 | 3169288 fiftybagger
fiftybagger's picture

PUD Planted Useful iDiot(dolt)

Sat, 01/19/2013 - 15:11 | 3169198 PUD
PUD's picture

Gee, did I touch a nerve? Ruin your wealth building party? Stir your sleeping conscience and force you to evaluate your behavior?

Sat, 01/19/2013 - 15:38 | 3169253 saints51
saints51's picture

The world never was or will be a nice place as long as humans are alive. Its a failed species. Thats why there will always be someone getting fucked. Just the way it is because the utopia you dream of is just that....a dream.

Sat, 01/19/2013 - 15:52 | 3169276 PUD
PUD's picture

while you may be correct, I do not share that defeatist attitude. humans are capable of rising above their primate dna urges. we can reason, we can make rational decisions, we are capable of great things but only if we choose to walk that path. If I can think this way others can too and if they enjoin more enlightened people perhaps a new non self destructive system can be created

Sat, 01/19/2013 - 15:58 | 3169285 saints51
saints51's picture

Pud, it may have sound like I don't care or gave up. I can assure you its not the case. I try my hardest to wake people up and try to do good in my community. Some people just want to think everything is alright and some use the system to their advantage and like it. Its very hard to sway these people to be an individual again. Thats why its a failed species but I will never give up until my last breath.

Sat, 01/19/2013 - 17:02 | 3169434 PUD
PUD's picture

That is a noble effort. It's what i try to do too.

Sat, 01/19/2013 - 16:05 | 3169297 fiftybagger
fiftybagger's picture

"we can reason, we can make rational decisions, we are capable of great things but only if we choose to walk that path"

Leftist/communist blather.  The problem has nothing to do with reason.  The problem is evil people.  Until judgement day, the only treatment for that is dividing power.  You are not worthy of your forefathers and wouldn't last 2 minutes in a debate with them.

Sat, 01/19/2013 - 17:01 | 3169431 PUD
PUD's picture

is that a fact? Perhaps you should research Thomas Jeffersons vision of America and see if it aligns more with my thinking or yours. Then get back to me.

Sat, 01/19/2013 - 22:48 | 3169991 rhinoblitzing
rhinoblitzing's picture

"I tremble for my country when I reflect that God is just. "

- T Jefferson

Sat, 01/19/2013 - 22:08 | 3169916 Non Passaran
Non Passaran's picture

No, you did not touch a nerve. You astonished us with your stupidity and naïveté.

Sat, 01/19/2013 - 15:12 | 3169201 Peter Pan
Peter Pan's picture

Yes, gold is barbarous. But it is just about the only barbarian that can contain the damage caused by the fiat barbarian which is immesaurably more damaging.

Sat, 01/19/2013 - 15:27 | 3169231 PUD
PUD's picture

that is not true and shows limited defeatist thinking. there are other alternatives but they run contrary to the establishment and the innate selfishness of limited thinking individuals...try thinking outside the box

Sat, 01/19/2013 - 15:36 | 3169247 Peter Pan
Peter Pan's picture

Please tell us about the alternatives when you have psychopathic leaders that will break every rule in the book so as to maintain power and control while they fleece the man on the street of his assets and freedoms.

In the absence of being able to limit the amount of fiat printed there is no antidote other than precious metals.

By the way, I am not down ticking you because I would genuinely like to hear your suggestions.

Sat, 01/19/2013 - 15:47 | 3169268 PUD
PUD's picture

I would have to write a long essay but the short version involves several things...

1. An end to nationalism, nations competing against nations

2. An end to religion for the same reason of division between peoples

3. An end to competitive economies and a transition to co-operative ones

4. A money system backed by real world goods...a basket of commodities essential to life and well being tied to a single world currency

5. An end to financial speculation...mandatory delivery for example

I have more

Sat, 01/19/2013 - 15:58 | 3169284 outofideas
outofideas's picture

You've just described an utopian communism. This always works wonders because human nature being what is no one will seek power for their own benefit, no one will attempt to exploit the tribe over the hill while pretending it is for their own good, and natural resources are magically infinite so the billions of people on earth who all want iphones, cars, energy, roofs, food, water, and comfort will no longer need to compete with each other.

I've never done drugs, but I think I want what you are smoking. Do you take PM's?

Sat, 01/19/2013 - 16:43 | 3169393 PUD
PUD's picture

Maybe I have a higher regard for the human potential than you do?

Sat, 01/19/2013 - 17:40 | 3169507 outofideas
outofideas's picture

Or you are dillusional. Despite your avatar, lions lay with lambs not from the good of their hearts but simply cause they feel like and the lamb better shut up about it if it knows what is good for it and close its eyes and think of England.

Sat, 01/19/2013 - 16:09 | 3169301 fiftybagger
fiftybagger's picture

As I said above.  One worlder communist.  PUD = totalitarian.

Sat, 01/19/2013 - 16:18 | 3169326 PUD
PUD's picture

It's easy to slander and throw around mindless insults isn't it? Fact of the mater is sir, the world is one place...more so now than ever before. Climate change knows no borders, icbms do not respect lines on a map, food resources and the biospheres needed to produce them know no nationality. If the mindset is not changed to recognize this fact then we will all go down with the ship. Your equating rational pragmatic thinking with "commies" and "dictatorship" shows your genuine lack of understanding of the real world is a biological one not a political or ideological one

Sat, 01/19/2013 - 19:33 | 3169700 Irelevant
Irelevant's picture

While some of you asumptions are valid you fail to take into account humans as individuals. Maybe you should go to Brazil and live with a tribe in the Amazon for some years, if they wont kill you or rape you. Now, that is probably the way they see the world and good for them. The tibe is, in itself a collection of individuals that share the same traditions, customs, etc. Its a small, but very natural community for humans. For thousands of years humans were part of diferent tribes. Very dificult to lie in a small community as fact cheking is easy to do, hence the invention of religion. There is a man in the sky and I can speak to him, and there you have the lider of tribe. Maybe he can speak to trees, or other divine creatures as the tribe sees fit.
Now, if you take gold for example it will be accepted by tribes in South America, Asia, Africa. So, all of these tribes, that represent a glimpse into humanities past accept gold as a store of value. Gold has no counterparty risk, it doesnt decay or rust and if scarce. Easy to move around, high value.
So, you asuption that gold is useless is wrong from a historical perspective. Now, you say we should, all humans, hold hands and sing kum ba ya. This one is downright delusional, as humans are a collection of individuals, within strongly linked communities with diverse ways of seing the world, as such, what is reality for me might be completely irrelevant to you. So, as long as you a have a diverse mass of people your desired outcome is imposible. Note however that no matter how diverse, for over 10000 years, all human kind accepted gold as money, as a store of wealth. Now what that tells us is that gold actually brings us together, as it forces trust in the way we trade, eg you cant print gold out of thin air, and gold aint a promise of future prosperity, and also gold is not debt.

Sat, 01/19/2013 - 16:08 | 3169304 Clinteastwood
Clinteastwood's picture

Good grief, I thought Pollyanna was kicked off this site a long time ago.

Sat, 01/19/2013 - 22:05 | 3169909 Non Passaran
Non Passaran's picture

>; 3. An end to competitive economies and a transition to co-operative ones

Sure, that sounds great! Let's not forget that this should be strictly enforced and that the power of oversight and enforcement should be entrusted to recognized experts from large financial firms and non-elected bureucrats from international institutions.

Fuck off, you collectivist fool.

Sat, 01/19/2013 - 22:40 | 3169977 rhinoblitzing
rhinoblitzing's picture

Didn't Lennon write a song like that, or was that Marx?

Sat, 01/19/2013 - 22:00 | 3169901 Non Passaran
Non Passaran's picture

What a moron!
Although I have to admit I didn't get past the first paragraph...

Pray tell who forced those "slaves" to work in those mines, what kind of gold standard makes those states allow this reckless pollution and where would the freed "slaves" otherwise work?.

Sat, 01/19/2013 - 22:42 | 3169981 e_goldstein
e_goldstein's picture

That communication device that you find yourself typing on has a fair amount of gold and silver in it; so, you are just as much to blame as anyone "enriching themselves."

Cry me a river, bitch.

Sat, 01/19/2013 - 14:53 | 3169170 Atomizer
Atomizer's picture

Speculators rely on employment to spin future Gold prices. Gold will do what it always has done. One purchases worthless fiat paper to exchange commerce transactions in a shaky monetary environment. Once you made profit, you exchange your fake paper currency back into gold holdings. End of story!

Sat, 01/19/2013 - 14:56 | 3169178 Super Broccoli
Super Broccoli's picture

come on China, make my gold worth it !


Jeez, how did we get to a world where China became the only liberal & sound economical country ?

Sat, 01/19/2013 - 15:06 | 3169185 wee-weed up
wee-weed up's picture

The idea that a recession in China will cause gold to fall steeply is assinine. The state will gladly allow its people to starve in order to keep enriching itself. Any lessening of its gold-buying would be infinitesimal.

Sat, 01/19/2013 - 15:38 | 3169252 Peter Pan
Peter Pan's picture

A downturn in China might actually boost PM prices because other asset classes which are economy driven might suffer even more.

Sat, 01/19/2013 - 15:20 | 3169218 Bam_Man
Bam_Man's picture

When the fraud- and corruption-ridden Chinese ponzi-financial system ultimately collapses, there will be a desperate flight to Gold. Like a "Chinese jail break".

Sat, 01/19/2013 - 15:34 | 3169242 Atomizer
Atomizer's picture

Germany Repatriating Gold From NY, Paris 'In Case Of A Currency Crisis'

CNN - WTC Gold and Silver below Ground Zero


Let’s bring on the new Central Banking crisis, this time the architects will be caught red handed!

Sat, 01/19/2013 - 15:44 | 3169261 DavidPierre
DavidPierre's picture


Gold News

There is a lot of noise on the gold front, but little facts. Here are some.

The Germans requested to audit their gold from the NY Fed late last summer. The were told "no way" and to "go home". Thus that did not work.

Next Germany had a "gold return" program offered that was almost exactly like the current idea. They got the cold shoulder from the Fed.
Now we have the official "we will do it" from Germany.

Now if the EU is in as bad shape as we can determine, and probably worse, it will come apart from the ECB's printing over one trillion Euros, and continuing, so far in this crisis.

Yet nothing was fixed, things continue to deteriorate.

Germany is the kingpin to save their own bacon, along with the other AAA rated European nations. Fiat currencies will be dead. Thus they will need their gold in house to back the New D-Mark, the Northern Euro. Just like Russia will back the ruble with gold, and China back the yuan. No more fiat currencies. The Dutch were starting discussion on bringing back their gold yesterday. Austria and Switzerland should follow soon. Those that wait will never see their gold again - leased, sold, lost.

Now in the last week the Japanese prime minister, Abe, wants the large Japanese retirement funds to start holding physical gold, these funds are worth $3 trillion dollars. Think of just them purchasing only 10% physical gold and getting it from today's market. Wow. China was reported to continue to buy the dips. Russia talked of the beginning of the currency wars all over the world.

Did Germany fire the first shot?

India's government is terrified of the gold demand there, and the failure of faith in the rupee. Indian's have always been smart on this issue as they wear their gold. Well, so was Mr. T.

Very strangely, the Queen of England visited the bullion storage vault in the Bank of England two weeks ago. The first time a monarch had been in there in over several hundred years. There was not much there, and the second row of racks were full of "old gold" that is not .999 pure, no good delivery there. Her final comment was "pity that it is not all ours." Had she been talking to the Germans prior?

The comments section on ZH were consistent that the delivery times would probably be moved up to be totally fulfilled by the end of this year, not 2020. Very interesting, especially the EU problem with Cyprus and its Russian Mafia friends, which could start the end of the EU as we now know it.

This is all just starting.


Sat, 01/19/2013 - 15:51 | 3169273 Hulk
Hulk's picture

Germany got the gold shoulder. Fixed it fer you...

Sat, 01/19/2013 - 16:03 | 3169296 Atomizer
Atomizer's picture

Your forget the other photo op to piece the conspiracy together.

Queen audits, no formal audit was conducted other than her eyeballs

Sat, 01/19/2013 - 16:17 | 3169317 steve from virginia
steve from virginia's picture




First of all, if there is a meaningful gold standard (not Freegold or some other such nonsense) nobody on the blog is going to like it one bit (except me).


All this prattle about 'honest money' which is complete nonsense. Money is no more honest that the least honest user of it. 


In a gold world there isn't going to be any 'business' and there won't be any automobiles, airplanes, telephones, computers (the big reason why I LIKE the gold standard and like specie even more). Nobody can- or will trade gold for petroleum for very long ... the US imports 11 million barrels of crude oil per day ... and simply burns it up! You can only do that when what you trade for the crude is an empty promise.


If the Chinese adopt a gold/bi-metallic standard they will kiss goodbye that cheapo-crappo Las Vegas copy they call a country ... Vegas with 'dog' on the menu.


Furthermore, if the (Chinese) central banks buy gold they will sell forwards, futures contracts and ETF shares first and crash the price ... then scurry in and sweep up the leavings.


Yea the gold bugs' paradox: the gold could be worth hundreds of thousands of dollars per ounce and there is nothing to trade for the gold, the society has become a junkyard and all that remains is wandering in a desert where Chicago, London or Beijing used to be looking for buried cans of cat food.


Just when are you suckers going to wake the fuck up?

Sat, 01/19/2013 - 17:20 | 3169470 Its_the_economy...
Its_the_economy_stupid's picture


now where did i put my woodstove dammit!

BTW, squirrell ain't half-bad when you gete used to it, just remember to cook it slow for half a day.

Sat, 01/19/2013 - 17:27 | 3169486 Quinvarius
Quinvarius's picture

...Said the collectivist.

Your post was mind numbing nonsense.  Without gold, you cannot get any of the things you mentioned.  You are seriously confused if you think the system requires hard working morons to buy into a paper money fraud for its existence.  If we stay on paper, you won't have access to ANYTHING you hold so dear.  No one is stupid enough to stay in the system you described.  Gold has worked just fine as an engine of wealth, growth, and stability for thousands of years. 

When are YOU going to wake up?


Sat, 01/19/2013 - 22:32 | 3169966 steve from virginia
steve from virginia's picture



Said you:


"the system requires hard working morons to buy into a paper money fraud for its existence."


Exactly. Run down the street and see if you can buy a 7-Eleven taco with gold ... or a hundred of them.


By the way, there hasn't been 'wealth, growth and stability' for thousands of years. There have been a handful of empires and digging sticks.



Sun, 01/20/2013 - 02:16 | 3170210 JOYFUL
JOYFUL's picture

Are you writing solely for entertainment value, or are you hoping for some element of plausibility to be attached to your musings?

If the latter, you'd better be willing to provide some references to lived experience and historical timelines outside of the very slender temporo-spatial patch\pothole you appear to exist in.

This current moment of government by embezzlement and fraud is but a blip in the longer range perspective needed to understand money and it's role in trade and society. Of course you can't trade gold for food in the streets of Femaville. Does that mean the equation is thereby cancelled for all other peoples at all other times? Truly, the very definition of parochial perspective, and to use your own terms, an excellent imitation of Punxsutawney Phil...who appears to be your mentor when the subject of narcolepsy is broached!

For centuries(if not millenium) before the arrival of the capitalist carpetbaggers from the West, the bulk of Asia(and therefore the majority of humanity) operated on a stable exchange chicken, one dirham. Neither inflation, interest, nor invidious economic usurpers disturbed the basic extrapolation from this simple equation, which handled all manner and complexities of trade without resort to parasitical bankers, political parasites, nor pirahanic pharisees...

neither the Mughal nor Ottoman Empires were defeated by military might - rather, by the imposition of paper money onto populations who had used gold and silver successfully for ages, a project conceived by moneychangers of khazarian extraction and executed by their Anglo dupes.

China enjoys it's temporary overweighted moment in the spotlight because the Islamic world has been subject to two centuries of concerted warfare against it by deluded Europoid agents of the moneypower and it's talmudic babylonian slavemasters.

When the cyrpto House of Saud and it's surrounding neighbourhood of shabby sheikdoms is ushered into oblivion, the whole chessboard changes - instantly. We will witness the overthrow of the capitalist\usury system, the rebalancing of trade to reflect demographic realities, the return to sound money systems proven over time, and a new era of social justice and harmony unpolluted by the isms of dead dialectical sionist materialism - a terroristic ideology run amok in the world for far too long.

We are on the cusp of that change at this very moment. The only question is whether Westerners will be around to enjoy it, or allow themselves to be dragged down into the muck of spiritual and economic decay which the Phoney Pharaoh and his Pharaseeic Paymasters have planned for them. Richard Earnshaw - In Time (Grant Nelson Remix)
Sun, 01/20/2013 - 13:16 | 3170633 Xanadu_doo
Xanadu_doo's picture

If I worked at a 7-11, I'd sell/trade tacos (or anything else) for gold ALL DAY LONG. gimme that, bitchez.

Mon, 01/21/2013 - 01:21 | 3172047 MeelionDollerBogus
MeelionDollerBogus's picture

Sounds like you completely misunderstand everything.

Gold lacks the dishonesty of fiat currency.

That doesn't mean it's "magically honest" but fiat currency is no better than a gun to your head.

That's it.

Don't be so ignorant, it's embarassing.

Sat, 01/19/2013 - 16:17 | 3169321 Floodmaster
Floodmaster's picture

Gold price have not changed since mid 2011, stocks are up 40% for the same period and they pay dividend ... Gold was a good call in 2005.

Mon, 01/21/2013 - 01:18 | 3172040 MeelionDollerBogus
MeelionDollerBogus's picture

Gold has been a good call all the way to now & still is.

You just need to know why everything paper, fiat, IOU's, CD's are worthless, how fast they're becoming worthless, the rest remaining is just volatility analysis.

For example: goldpricemodel 2013 projection from goldpricemodel 2013 roc 52-week

and 2012 11 05 277week ROC -goldpricemodel and 2012 06 18 277week roc 02 goldpricemodel 2011 Jan to 2012 Dec 28 from 2012 apr 25 gold 277 week ROC -goldpricemodel and from 2012 06 18 277week roc 04 goldpricemodel trend-channel without prices

By the way, if what you want up-front is fiat dollars, euros or yen you can use charts like this to short 'em on the way down.

The math is all there, though if you'd prefer a start-to-finish explanation I can provide one.

Sat, 01/19/2013 - 16:24 | 3169334 joego1
joego1's picture

I think gold and silver is part the portfolio of the future but not the only part. Land, water seeds fertilizer and a community of resourseful people with useful skills will be vital. Oh yeah, living in a place that is easily defended and having the means to defend it will also be important.

Sat, 01/19/2013 - 16:23 | 3169335 Venerability
Venerability's picture

Gold is now "China's industry" to a very large extent.

They are Number One in Gold Retail, by most accounts; second or third in Gold Wholesale; and possibly second in Gold Production, although that ranking shifts around a lot. 

We always knew China could and would have no qualms about using Gold as a weapon in the Currency and Trade Wars, when push came to shove.

That point is ever closer!

Sat, 01/19/2013 - 16:30 | 3169352 dumpster
dumpster's picture

gold was a good call in 2000.. you must be a diaper generation just now showing signs of poop coming out each  leg hole

Sat, 01/19/2013 - 16:36 | 3169371 icanhasbailout
icanhasbailout's picture

Finally, a topic that might actually have something to do with the price of tea in China.

Sat, 01/19/2013 - 17:30 | 3169496 Eally Ucked
Eally Ucked's picture

It supposed to be forum for intelligent people, yes or no? If you are one of them intelligent guys around, you don't complain about price of gold because all those big banks playing it like violin to the tune of the FED. You wait when all that shit goes down. On other hand if you're not right your little pile will turn to a bit smaller pile than you thought. Anyway China buys gold for some time, they want to be reserve currency and print at will and reap all those benefits going with it! They will get to the stage where banks are 40% of GDP, and shitty, hard working service sector will reach 50% of GDP producing big tits and nicely polished nail for idiots. 

Sat, 01/19/2013 - 17:49 | 3169520 lieto
lieto's picture

Forget about the macro picture for a minute.

Premiums are up at the local coin store for phys. which is being rationed.

It wasn't as busy as the local gun stores but it was busier than usual today.

Limit of 5 silver eagles per customer.

I have been telling the owner for a while now that I am waiting for the day when the line to buy is out the door and supply is limited.

It looks like we are getting there.

It should be interesting to see if the mint resumes selling to the wholesale distributors in a timely manner and what quantities will be forthcoming.

Sat, 01/19/2013 - 18:16 | 3169570 whoknoz
whoknoz's picture

why do we trust the Chinese "gold buying" numbers?...nothing else they tell us is truthful...what if they are just cooking the books on their "stockpile" so when the shtf they will be "known to have" a huge quantity of hard noted, who are the sellers that are offering tons and tons of gold to  China, USSR etc?...somebody has to be giving up a monster pile of PM, and if you had accumulated such a pile, why would you be an anxious seller now?...and if there is such great demand (and an order for 10 tons of gold is pretty big, eh?) then why isn't the price going steadily upward...naked shorts aside, things don't seem to be quite right...

Sat, 01/19/2013 - 21:45 | 3169873 Non Passaran
Non Passaran's picture

Nice try.

> why do we trust the Chinese "gold buying" numbers?...nothing else they tell us is truthful...

HK export stats.

Sorry but I can't afford to waste time on other "questions" poised in your post.

Sat, 01/19/2013 - 18:42 | 3169612 Clesthenes
Clesthenes's picture

Yes, the gold price depends on China; but only a small part.

There are several factors that will influence the gold price; factors that hardly anyone has heretofore suspected.

For example, government guarantees of bank deposits, on a worldwide basis, is a factor somewhat larger than China – but less recognized.

Here’s why it is/will be a factor.  By these bank deposit guarantees, depositors would be guaranteed the deposits up to $250,000 if their bank should fail and be seized by the FDIC.  Everything over this amount would be lost.

This turned out to be a major problem for large depositors (individual and companies).  If a company had $10 million in a checking account when its bank failed, the company would lose $9.75 million.

This was a major problem for every company in the world.

Soon, banks began to offer so-called zero-balance checking accounts.  Everything in the account would be swept into US Treasuries at the end of the day, earning overnight interest and held in the world’s safest investment – or so they thought.  The following day, incoming checks payables would be offset by deposits.  If there was a surplus, it would be swept into Treasuries; if a deficit, Treasuries would be sold to pay checks.  At the end of the day, account still had a no-risk zero balance.

It did not take long before demand for Treasuries far exceeded supply of Treasuries.

What possibly could be used as an alternative to Treasuries?  Mortgage Backed Securities (MBS).

The factors driving gold keep expanding.

The point under consideration is, When the world realizes that Treasuries are uncollectable, what happens?  The Treasury will then have to pay in real property, something with intrinsic value.  And for federal government, choices are land, buildings, military hardware, and commodities.  The first three categories, at market prices, might cover 2-3% of federal liabilities.  That leaves commodities; and the only one worth discussing is gold.  The other commodities are limited to market prices; gold price is determined by dividing physical gold into face value of paper liabilities.

And, when we examine the effect of using MBS as substitutes for Treasuries – ON A WORLDWIDE BASIS, we have to deal with practical and constitutional issues… and it all makes for a rather wild ride.

Sat, 01/19/2013 - 22:24 | 3169950 hawk nation
hawk nation's picture

Does anyone know it the washington politicians are buying gold?

That should be a good indicator of how much longer this ponzi scheme can go on

On a different subject i am about to build a spec house in a beach community where people that can flee the liberal nearby state are doing so. Am i crazy to do a spec house in this economy? I am aware that people with money are buying homes in this conservative state with cash 

Sat, 01/19/2013 - 23:17 | 3170035 gnomon
gnomon's picture

If you are moving from a Blue/Blue State to a Redder than Red State, you can not lose.  But it must be a permanent move.  Cut all ties with your current State so the taxman can not get you.  And buy yourself several firearms and join a gun club so you fit in and  can make yourself useful in the event of secession.

Sat, 01/19/2013 - 23:24 | 3170046 mt paul
mt paul's picture

when the dollar collaspes....


blood will be the new currency

Sun, 01/20/2013 - 01:06 | 3170167 Zola
Zola's picture

China needs to stop blocking facebook , youtube and bloomberg. Seriously... Buying all this gold but still behaving like they are afraid of their shadow.... Come ON ! GROW UP

Sun, 01/20/2013 - 03:39 | 3170264 laomei
laomei's picture

Most of the shit that gets blocked is blocked for very good reasons.

Sun, 01/20/2013 - 10:37 | 3170475 hawk nation
hawk nation's picture

Thats the problem with communism there is always a good reason

Give me freedom

Sun, 01/20/2013 - 09:54 | 3170423 kondratus
kondratus's picture

China has at least 30 000 tonn gold reservs. Rothschilds have allready removed the world gold from London and USA to China.

And now they decrease gold price in order China to buy leftovers of phisical gold.

Fort Knox is empty. There were neither USA's nor German gold.

Sun, 01/20/2013 - 15:21 | 3170907 matrix2012
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The American Empire is nearing its End ~ Chalmers Johnson

Chalmers Johnson argues that the age of the "American Empire" is nearing its end. Author of Blowback, The Sorrows of Empire, and Nemesis: The Last Days of the American Republic, Chalmers Johnson has literally written the book on the concept of American hegemony. A former naval officer and consultant to the C.I.A., he now serves as professor emeritus of UC San Diego. As co-founder and president of the Japan Policy Research Institute, Mr. Johnson also continues to promote public education about Asia's role in the international community.

In this exclusive interview, you will find out why the practice of empire building is, by no means, a thing of the past. As the United States continues to expand its military force around the globe, the consequences are being suffered by each and every one of us.

Chalmers Johnson, author of Blowback, Sorrows of Empire and Nemesis: The Last Days of the American Republic, talks about the similarities in the decline of the Roman and Soviet empires and the signs that the U.S. empire is exhibiting the same symptoms: overextension, corruption and the inability to reform.


Mon, 01/21/2013 - 00:45 | 3172005 MeelionDollerBogus
MeelionDollerBogus's picture

Looks like that fancy FRED graph explains this:

gold 52 week ROC 1980 to 2011

and therefore this tinier fragment: goldpricemodel 2013 roc 52-week

and therefore this roll-forward prediction of prices: goldpricemodel 2013 projection

So that's why even publishing the prediction repeatedly, even to the Federal Reserve twitter account, doesn't allow it to deviate. They really have no choice so long as they continue ZIRP.

How very interesting.


Mon, 01/21/2013 - 03:00 | 3172181 nastaking
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4G smartphones are still in their relative infancy in Australia and are usually reserved for high end models. Telstra is aiming to provide a lower cost option with its new TW520 Watch Cell Phone

Wed, 01/23/2013 - 08:36 | 3178422 Cheek
Cheek's picture

Gold is believed to be the best way of investing your money today. This has increased the demand for gold and silver bars today. The prices have also started to increase day by day. China can alone be not be responsible for this drastic changes. the whole world is responsible for this.

Wed, 01/23/2013 - 20:03 | 3181195 Runs-WIth-Toast
Runs-WIth-Toast's picture

Another Trap. It has been said that as much as 99x as much “paper” or digital gold is bought on commodities exchanges such as COMEX, as there is traded in actual delivery of physical gold.

What does this mean? Simply that if all parties “stood for delivery” that it would be impossible for the warehouses and the short players to actually meet their obligations, and “someone” would be left standing without a chair.

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