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James Turk: Central Banks Are Losing The War to Suppress Gold & Silver Prices

Tyler Durden's picture





 

Submitted by Adam Taggart of PeakProsperity

James Turk: Central Banks Are Losing The War to Suppress Gold & Silver Prices

My guess is that 2013 and 2014 are going to be big up year for the precious metals, but we still have to contend with the central planners and the various government policies, which have been actively trying to keep the gold and silver prices from reaching fair value. The central planners are losing the war. They may win an occasional battle or two, but they’re losing the war, and eventually gold and silver are going to go higher.

So predicts James Turk, founder and Chairman of GoldMoney.com.

From James’ perspective, gold is not an investment. It’s a sterile asset, meaning it does not generate income. What it is, is money. Its function is to store wealth.

But money, like investments, can be overvalued or undervalued. And what we’re witnessing on the world stage is a gross mispricing of money as central banks engage in depreciation of their fiat currencies via inflation (i.e. money printing).

The process causes a transfer of wealth from those holding overvalued money to those who hold undervalued money. That’s what’s been going on for the past decade as the price of gold has steadily marched upwards versus fiat currencies.

But this process is not efficient. Mass awareness of this wealth transfer is low, so confidence in paper currencies is still high, supporting their perceived value. Market intervention by central banks and other parties conspires to keep the prices of precious metals artificially low and suspect.

This maintains an arbitrage for individuals to buy gold and silver at a discount to true value, which James believes will be slowly realized in full over the next several years as the bull market in precious metals approaches its third and final phase.

A factor in this rise will be the increasing fragmentation of coordination among the central banks. Increasingly, central banks outside the influence of the US’ Federal Reserve are treating the precious metals as true money, and becoming net buyers of bullion for their reserves.

Ultimately, Turk predicts the price of gold will move to somewhere between $8,000-10,000/oz, and that we'll see even higher price appreciation in silver.

The way markets normally work is, after you do have a big move, you get a correction. Even over the past 12 years, if you look at gold, you had big moves in 2005, 2006, and 2007 where you were in some years generating over 20% appreciation in gold. Then you had the correction in 2008. Even though that was a correction, gold was still up that year. Then, in 2009 and 2010 and the earlier part of 2011, you had again big moves. Then you had the correction where basically they moved sideways. My guess is that 2013 and 2014 are going to be big moves on the upside, because what’s important here is not so much the price of gold, but whether it’s a good value.

 

The proper way to manage a portfolio is, you move assets that are overvalued out of your portfolio and you concentrate on assets that are undervalued. That’s true regardless of whether you’re talking about investments or money. You want undervalued forms of money. You want undervalued investments. I use a couple of mathematical formulas which I’ve written a lot about, one being the Fear index and the other being the Gold money index; by both of those measures, gold is still very, very undervalued, as is silver, for that matter. Silver is even more undervalued than gold. My expectation is that these undervalued assets will continue to rise in price, because the market doesn’t like levels of overvaluation or undervaluation. The market is always constantly changing, moving money out of overvalued assets and moving into undervalued ones. And that’s what we’re basically seeing in the precious metals: people are moving out of overvalued fiat currencies and moving into undervalued gold and silver.

 

My guess is that 2013 and 2014 are going to be big up years, but we still have to contend with the central planners and the various government policies, which have been actively trying to keep the gold and silver prices from reaching fair value. The central planners are losing the war. They may win an occasional battle or two, but they’re losing the war, and eventually gold and silver are going to go higher – assuming that governments and central planners and central banks still continue to follow these same policies that they’ve been doing, which is defacing fiat currencies.

 

An interesting thing is that when we saw the price drop in gold and silver at the end of 2012, the demand for physical metal rose tremendously because people recognized that these assets are undervalued, and if they’re going to be sold down to such cheap prices, they may as well just pick them up and continue to accumulate them. So it certainly has a perverse affect when the central banks intervene. In fact, as we’ve noted, gold has risen 12 years in a row against the U.S. dollar – double-digit rates of appreciation. But I guess the best way is using an analogy. If you've got a pot of water boiling on the stove and it’s bubbling away, every once in a while you have to release or pull off the lid to let a little bit of steam out, and then you put the lid back on.

 

That’s sort of what the central planners are doing. Every year they release the lid, and gold on average has risen over the last 12 years by 16.8%. Then they put the lid back on. One of these days they're not going to be able to put the lid back on, and you're going to go into the third stage of a bull market where gold just keeps rising and rising and rising because confidence will be lost in the currency. I think that’s what we have to be focusing on.

 

I can’t say that trust between central banks is waning, but you have to recognize that there are two categories of central banks: There are central banks that are in the U.S. circle of control and dominance, and then there are central banks outside the circle of U.S. control and dominance. The ones that are outside of the U.S. control and dominance are accumulating physical gold. The ones within the U.S. control tend not to do that, although it’s interesting that Germany, Netherlands, and now Austria, too, are talking about bringing their gold back.

 

It’s quite clear that a lot of promises have been made, particularly by politicians and most governments around the world, and those promises cannot possibly be fulfilled. A lot of those promises are going to be broken. Particularly when it comes to the area of gold, a lot of central banks are relying on the promises of other central banks. Oh, yeah, we’ll be good for the gold if you ever ask for it. Those promises are likely to be broken as well, as the demand for physical metal continues to grow. Whether it’s going to accelerate in 2013, 2014, I don't know. But, my guess is the demand for physical metal is indeed going to accelerate over the next couple of years, because I’m looking for serious financial problems to be hitting. 

Click the play button below to listen to Chris' interview with James Turk (34m:47s):

Click here to read the full transcript

 


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Sun, 01/27/2013 - 00:09 | Link to Comment mkkby
mkkby's picture

Kito, there's nothing wrong with stockpiling necessities.  But how much can you really put into hens and toiletries?  If you have a significant savings you need a more efficient way to store it.  Try moving around -- perhaps on short notice -- with $100k worth of toilet paper and canned peas. 

Gold carries a lot of value per weight/volume. That $100k can now be carried in one hand, or a coat pocket.

Don't even bother mentioning paper cash, because the very inflation you're protecting yourself from will destroy that.  Only carry enough for short term needs.

Sun, 01/27/2013 - 10:03 | Link to Comment Karlus
Karlus's picture

You dont need to outrun the bear, just the fat camper next to you.

Just get over the supply chain breakdown and you will see a radically different world on the other side.

Sat, 01/26/2013 - 18:32 | Link to Comment CheapBastard
CheapBastard's picture

They wont let me put a hen in my safe deposit box and my goats are too darn big!

Sat, 01/26/2013 - 18:51 | Link to Comment kito
kito's picture

Hens are great....they give you physical retirement nest eggs.......

Sun, 01/27/2013 - 00:18 | Link to Comment mkkby
mkkby's picture

Except hens require land, hard work and luck against nature.  Land is wealth that is not portable.  Land will be taxed until it breaks you.

Sun, 01/27/2013 - 01:48 | Link to Comment FeralSerf
FeralSerf's picture

Hens eat even when their eggs aren't as valuable as the corn they eat.  You can't throttle them and still maintain your investment.

Sat, 01/26/2013 - 18:14 | Link to Comment Water Is Wet
Water Is Wet's picture

Except they aren't losing the war.  Gold has gone nowhere for 18 months.

Sat, 01/26/2013 - 18:15 | Link to Comment devo
devo's picture

Why is Turk selling gold if it's going up?

Sat, 01/26/2013 - 18:44 | Link to Comment jimmyjames
jimmyjames's picture

Why is Turk selling gold if it's going up?

***************

Turk doesn't sell gold--you send him cash-he buys gold-and stores it for a fee-if you want to trade your gold for cash--he sells it and gives you cash-

He's a gold bank-

Sat, 01/26/2013 - 18:47 | Link to Comment devo
devo's picture

Gotcha, thanks.

What about someone like Schiff or Maloney? Why sell gold if it's going up? I just can't understand why anyone who is genuinelly bullish on gold would sell it. You'd want to hoard it, no? Unless they think they have enough and they're trading it at these "undervalued" prices to buy other assets. Or are they altruistic? lol

Sat, 01/26/2013 - 18:57 | Link to Comment jimmyjames
jimmyjames's picture

What about someone like Schiff or Maloney? Why sell gold if it's going up?

***********

Gold is always for sale at some price-determined by the seller and buyer-some hold out for higher prices-some believe it's at fair value now and sell it-it's always been that way-

btw..i don't think Schiff sells gold either-

Sat, 01/26/2013 - 19:00 | Link to Comment devo
devo's picture

Schiff sells gold (Europac Metals). He also says he thinks it's going up. I guess the only explanation is that he has enough personal gold and wants to trade excess for other assets.

Sat, 01/26/2013 - 21:06 | Link to Comment S.N.A.F.U.
S.N.A.F.U.'s picture

You are confusing the dealings of Schiff's business with Schiff's personal holdings.  When you buy gold from Europac Metals, you are not getting Schiff's personal holdings.  (Just like when you go to the local coin shop and buy some AGEs, you are not getting the store owner's personal holdings, and when you go to the grocery store and buy tuna fish or whatever, that is not the store owner's personal tuna fish.)

I doubt Schiff feels "he has enough personal gold" in any absolute sense.  I certainly don't (wrt my own).  But you can only buy what you can afford.  And to afford more gold (and other assets/investments), it helps to have income.  Europac Metals is a source of income for Schiff.

Sat, 01/26/2013 - 21:17 | Link to Comment devo
devo's picture

Yeah, that was bad wording on my part. I know we're not getting his gold.

Anyway, your explanation makes sense so no point writing anything else. It's just that ever since I started buying gold a few years ago I wondered the motivation of those selling it to me. They all think it's going up, yet they all want to sell.

Sat, 01/26/2013 - 19:03 | Link to Comment fonzannoon
fonzannoon's picture

My guess is Schiff still knows that the dollar is far away from being supplanted and he likes buying shit.

Sat, 01/26/2013 - 19:10 | Link to Comment kito
kito's picture

Eggactly.....all the dollar collapse doomers have begun softening...look at the last post by sprott...no mention of the end.....he says banks are better off today.....Bernanke may be a scumbag but he's a genius making nay Sayers look foolish......

Sat, 01/26/2013 - 19:18 | Link to Comment fonzannoon
fonzannoon's picture

agreed completely kito. sprott snuck in there that lack of inflation could keep this going for years, that ain't the sprott i know. sneaky bastard that sprott. schiff still screaming the sky is falling. i'm watching him closely.

Sat, 01/26/2013 - 19:32 | Link to Comment devo
devo's picture

I wouldn't call Bernanke a genius. All he's done is print money combined with lip service. He's managed this pretty well, though. More accurate is that (a) average person is financially illiterate or (b) financially literate but know there's no risk with a FED that has debtors' backs.

History will have the final say on Bernanke. Don't think it will be kind.

Sat, 01/26/2013 - 20:38 | Link to Comment francis_sawyer
francis_sawyer's picture

Enough of this bullshit...

~~~

This is like the LAST 2 'traders' on the planet arguing about who will have the higher account balance in the end... [& you DARE to bring hens & goats into the argument]...

Sat, 01/26/2013 - 18:15 | Link to Comment kito
kito's picture

Gold $10,000 = $2 egg.......wouldn't be pretty.....

Sat, 01/26/2013 - 18:23 | Link to Comment fonzannoon
fonzannoon's picture

2 things Kito. first if you like the remnimbi and the remnimbi skyrockets because it is backed by gold does it really make a difference which one you own? 

secondly when gold hits 10k i will be in the bahamas riding around naked on a waverunner that came with some 100ft yacht that some banker coughed up. it will be like my own biggie smalls video. that is how i picture it anyway.

Sat, 01/26/2013 - 18:35 | Link to Comment kito
kito's picture

The renminbi may be backed by gold....or not...but go east young man....because I am certain it will eventually de-peg from the dollar...and when it does....it's a slam dunk.....love the visual on the wave runner.....will you have 2 bikini clad babes holding tight to you????????

Sat, 01/26/2013 - 18:36 | Link to Comment Yen Cross
Yen Cross's picture

The "yuan" is backed by $ equivelant 2.3 Trillion. The Chinese are using their F/X reserves overseas, because of capital inflows.

 The PBoC has been net outflow for almost a year, before Bernanke decided to add an additional $45 B in MBS late last year.

  China is worried about Inflation, and can't even do reverse repos, out of inflow concerns and loss of price (export) adavantages.

Sat, 01/26/2013 - 18:47 | Link to Comment fonzannoon
fonzannoon's picture

Yen when China de pegs as Kito and I anticipate won't they update their world gold holdings to reflect reality, as well as other non dollar assets to back their currency? sure their exports may get creamed but their citizens will also see substantially falling prices as a reward of a strong currency. seems like a decent tradoff.

 

Sat, 01/26/2013 - 18:57 | Link to Comment Yen Cross
Yen Cross's picture

Don't hold your breath.

Sat, 01/26/2013 - 19:01 | Link to Comment fonzannoon
fonzannoon's picture

I hear you. Trust me, I'm not holding it. I think I will be on here 10 years from now saying the same shit.

Sat, 01/26/2013 - 18:55 | Link to Comment Dr. No
Dr. No's picture

Explain how the yuan is backed.  Is Yuan convertable to gold if you walk into the CB of China and ask for a swap?

If because they have gold reserves, you think the currency is backed, you are mistaken.

Sat, 01/26/2013 - 19:00 | Link to Comment fonzannoon
fonzannoon's picture

I think they are stockpiling reserves in all sorts of commodities and resources. That may or may not play out in the future into a backed currency.

Why do we complicate all this? Why can't we keep bombing people and taking their shit?

Sat, 01/26/2013 - 19:06 | Link to Comment kito
kito's picture

Yes they are stockpiling NECESSITIES.......which everybody should be doing before physical dollars become scarce......

Sat, 01/26/2013 - 22:13 | Link to Comment francis_sawyer
francis_sawyer's picture

OK ~ We all know where kito stands...

~~~

kito thinks that grandma needs to start stacking BENJAMINS on wooden palletes in the garage so that ONE DAY she can corner the market on catfood & become a WALTON...

Sun, 01/27/2013 - 00:23 | Link to Comment kito
kito's picture

i appreciate you bolding my username....makes kito bashing easier to find..............

Sun, 01/27/2013 - 09:09 | Link to Comment francis_sawyer
francis_sawyer's picture

You're easy to find as it is...

~~~

All you have to do is look for the avatar whose sister is 'a little bit country' [but he's 'a little bit rock & roll'] with a mountain of red arrows next to it...

Sun, 01/27/2013 - 00:23 | Link to Comment mkkby
mkkby's picture

Grandma says "meow", which in english means "+1 funny".

Sat, 01/26/2013 - 19:11 | Link to Comment Dr. No
Dr. No's picture

I guess my point is , so what.  In theory, the US gov has a bunch of gold too.  Does that mean anyone can get their hands on it if they have currency and walk into the treasury?  No.  The governments gold is the governements gold.  The strenght of the dollar has nothing to do with some gold stockpiled somewhere.  Either is the yuan.

 

Show me the graph of dollar strength as a function of gold reserves again.  Lets assume gold reserves are constant at 8000 tons (just assume for a minute).  The dollar has been falling like a stone since confiscation.

Sat, 01/26/2013 - 19:25 | Link to Comment fonzannoon
fonzannoon's picture

the graph would accurately show dollar weakness as dollars expand against a steady quantity of gold. 

Sat, 01/26/2013 - 19:47 | Link to Comment Yen Cross
Yen Cross's picture

The H-4 chart in fact (dxy) shows a bottom forming. I'll gladly send a screen shot. Your Mentor KITO, is full of shit, and I'll debate (IT) at a moments notice.  Fonz you are a brilliant man. You are capeable of making your own decisions. KITO is a fucking clown, and I invite him to discuss finance with someone  his own size!

Sat, 01/26/2013 - 20:21 | Link to Comment kito
kito's picture

Yen I'm surprised by your vitriol towards me....perhaps it's masking some insecurity about your world view....I don't give a shit about your charts....I'm not concerned about your bottom, thank you...your charts are worthless when an asset catharsis occurs....the dollar chart is pointless when every digital dollar evaporates and whats left is a massive shortage of physical currency that everybody will be scrambling for.......

Sat, 01/26/2013 - 22:17 | Link to Comment francis_sawyer
francis_sawyer's picture

 "the dollar chart is pointless when every digital dollar evaporates and whats left is a massive shortage of physical currency that everybody will be scrambling for"

~~~

Biggest DIPSHIT comment ever... Haven't you looked?... THEY'RE NOT EVAPORATING MOTHERFUCKER... As of last entry, they're all STILL being logged on to CENTRAL BANK balance sheets around the world...

It's called MARK TO FANTASY... [which, I'm sure, your accountant has assured you is standard practice & you were stupid enough to believe him]...

EVEN BIGGER dipshit idea is the thought that this will all... eventually... get solved on ledgers, graphs, & "x" "y" chart matrices... IT WON'T... NONE of these records are etched IN STONE... They're etched on silicon chips... This FUCKING 'LAUGH' of a JEW WANNABEE civilization will get evaporated before anyone even has the time to go hungry... It'll probably take 20,000 years & 3 ice ages [IN THE FUTURE] before anyone ever knew Jews or Al Gore ever existed...

Ever wonder what happened to the 'CAPSTONES' on the fucking pyramids?... No ~ I'm sure not... You were to busy getting your "buy 1 get 6 FREE" sale at Jos A Bank...

Sun, 01/27/2013 - 00:24 | Link to Comment kito
kito's picture

biggest dipshit comment ever?????? more so than anything ever uttered by robotrader??????

Sun, 01/27/2013 - 00:27 | Link to Comment kito
kito's picture

out of curiosity, are you an across the board anti semite??? like the stormfront kind??? or just anti jew in power and control of the countrys monetary/finance kind???

Sat, 01/26/2013 - 22:25 | Link to Comment devo
devo's picture

Yeah but that will take Joe Sixpack (or his Chinese equivalent) 80 years to figure out. In the meantime, it will instill confidence in fiat.

 

Sat, 01/26/2013 - 18:23 | Link to Comment Sudden Debt
Sudden Debt's picture

yeah... bald eagle eggs are getting pretty expensive... but whenever you eat some with bacon... H H HMMMmmmmm!!!!

Sat, 01/26/2013 - 18:22 | Link to Comment Sean7k
Sean7k's picture

For just once, I would enjoy hearing the ramifications of gold and silver appreciating versus the methods of government to control and tax that appreciation. 

You cannot divorce the State from a paradigm shift in what constitutes money, without considering the steps it will take towards tyranny. The response of the people. Especially if the people, by and large, fail to own any of the precious. The response of business, if it has to price contracts in money that it probably has no savings of. The movement of this new money through commerce in general. 

It is not going to be all rainbows and skittles with silver at $400 and gold at $8000, because what will a dollar be defined as? Will you even want one? 

The level of economic destruction will be considerable, as will the social destruction. 

We need more discussions about real bills, freegold, new currency and capital requirements, and finally- electronic exchange. It would be a brave new world. Having gold and silver will not make you the local millionaire, unless there are systems available to maintain peaceful exchange. 

Having gold and silver is an excellent investment- because as Turk makes plain: it is undervalued money. However, money is a lubricant for exchange in an economic system. What will be important is the nature of the new system and WHO will be running it. Will they be acceptable stewards? Because my gut says it will be the same guys who screwed us this time.

Sat, 01/26/2013 - 18:31 | Link to Comment debtor of last ...
debtor of last resort's picture

Nobody knows. Shut up and keep stacking.

Sat, 01/26/2013 - 22:26 | Link to Comment WT Sherman
WT Sherman's picture

Sean7K.  Good post.  The big question is: How do people like me, who have 80% of their $$$ in cash and equities, transition from holding increasingly worthless cash to hard assets like PMs, and eventually emerge with enough capital or assets to barter or survive on as Western economies collapse?

I welcome all ideas or opinions on what this transition looks like because IMO it's the one that keeps people up at nights.

Sun, 01/27/2013 - 09:09 | Link to Comment Sean7k
Sean7k's picture

I would suggest you consider allocating your largest percentage to hard assets in general. Your liquidity needs only you know, but hard assets maintain value, regardless of the policies of the central banks. 

As for the other. The most peaceful means to effect a change is to eliminate legal tender laws. This one action would force every bank and government to reverse policies and give the people the greatest voice in determining the value of money.

Good luck.

Sat, 01/26/2013 - 18:46 | Link to Comment AgAu_man
AgAu_man's picture

The Turkmeister is so spot-on!  I like him and respect his opinion, because his views are based in reality, are rational, cogent, and verifyable.  Thanks,  Adam Taggart and Peak Prosperity.  We love your DVDs at home and with friends.

I think that the MORAL of his story -- when applied to the masses and 'We The ZH' -- is: 

   1. Buy 'Hard-PM' on fiat-currency price dips and as you can afford to

   2. Make PM's a decent part of your overall wealth-storage

   3. Keep investing in other real assets for other risks & crisis mitigation

   4. Hope & Pray that you will have stored up enough 'PM HW' and other 'HW and SW' before there is a run, and PM-shelves and store shelves are raided. 

   5. Do NOT kid or delude yourselves:  TPTB/TBTF Elite will be the first in line for the last bits of PM-HW available, and the rest will be left out. 

Don't be part of the "Woulda, coulda, shoulda" crowd!  And don't forget to SPREAD THE PRECIOUS WORD through your sphere of influence, to help make it self-fulfilling sooner than later.

 

Sat, 01/26/2013 - 18:42 | Link to Comment Jeepers Creepers
Jeepers Creepers's picture

I'm a physical stacker of precious metals, but philosophically, I don't  buy the notion that gold is always a "sterile" asset that stands still. 

How do you explain gold at $271 an ounce in 2001? Or when gold was at $615 in 1980?  Obviously there was not deflation in those 20 years.  No matter what scale of buying power you want to look at, the purchasing power of a dollar has not been eroded by anywhere near that margin when comparing the current price of gold today from when it was stuck at around $300 an ounce.

I look at gold and other precious metals as sort of a last refuge.  I have no doubt we may be in a situation where we're paying top dollar because we need water during a really bad drought, but that doesn't mean it's a bad investment when you look at the alternative.

Sun, 01/27/2013 - 04:34 | Link to Comment Vlad Tepid
Vlad Tepid's picture

The purchasing power of the dollar to buy gold sure has changed since 2001.

I think you missed that point of his, you can only compare gold as an asset to other currencies: yen dollar euro etc.  

Then look at fiat:  it is currently held together as a function of belief, hope, air, and unicorn farts.  That can continue, like the overused metaphor of Wile E Coyote, until the people who buy products (from gas to oragnes to Netflix stock) realize it's nature and it all falls apart.  This doesn't happen much in history (globally), but when it does it's a doozy.

Sat, 01/26/2013 - 18:54 | Link to Comment solgundy
solgundy's picture

fade Turk...his dropping always preceed a big drop

Sat, 01/26/2013 - 20:58 | Link to Comment AllWorkedUp
AllWorkedUp's picture

geez, I hope you're wrong but I've followed him enough to know that you could be right and that scares the crap out of me.

Sat, 01/26/2013 - 18:56 | Link to Comment AgAu_man
AgAu_man's picture

Q:  At what point can and will local or regional small banks sprout up that have their Assets backed by PMs in their vaults?

E.g., Say that you can start your own bank (with the ppl with the right know-how & credentials), with an initial Hard-Asset base of ~ $20M FRN.  If, under your banking license, you then leveraged your fiat-FRN base on a 50% basis, then you can claim to have a $40M FRN base.  The, using FRB and a ratio of 9:1, your fiat-FRN base grows accordingly.  Right?  You then operate like a traditional bank, and using FRB, you make loans and mortages accordingly.  You do NOT engage in Derivatives or in anything that increases the leverage of your asset base beyond that already stated.  You'd also grow your PM base with your total asset base.  In essence, you'd be banking like in the pre-1971 fiat era.

I have to wonder about Pete Schiff, i.e. if he isn't doing something like this, with his gold-backed credit cards.

Sat, 01/26/2013 - 19:09 | Link to Comment hairball48
hairball48's picture

Just as the planets move relative to the sun...Fiat currencies move relative to gold.

And just as the ancients finally figured out that the planets revolved around the sun. Keynsians and other fiat money believers will discover that gold will ultimately prevail over their empty paper promises.

hairball

Sat, 01/26/2013 - 19:16 | Link to Comment Dr. No
Dr. No's picture

Actually I dont think the CB care about gold and siver price.  If they did, they are more stupiud than I thought.  You mean printing $trillions is not supressing gold price??

Sat, 01/26/2013 - 21:33 | Link to Comment andrewp111
andrewp111's picture

They care about Pt and Pd, though. The price of cars does matter to governments the world over. So if speculation in Au and Ag spills over to the industrial precious metals, governments will have a hissy fit. They might even stop minting Pt and Pd bullion coins.

Sat, 01/26/2013 - 20:12 | Link to Comment oak
oak's picture

people, some observations about the relationship between gold and currency are presented here. in old time, if one nation has so much gold, it issues so much currency in a fixed ratio. that was ancient history. now in the mordern time,  if one nation issues and also increses certain amount of its own currency progressively with a fixed amount of gold, then such nation would gradually re-value the gold price based on its own currency in a controlled manner. especially it is a reserve curreny. this is called reversed gold standard. it is as simple as that.

Sat, 01/26/2013 - 20:03 | Link to Comment ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

I have to credit Jim Sinclair with giving some of the best advice I ever heard.  Here is my interpretation of it:

 

When someone is a genius or soothsayer in one area, use them for what they are good at, but dont expect them to be effective in other areas.  Stop looking for heros.

 

So I feel the gold community owes a great debt to Me Turk.  To piece together the mountains of circumstantial evidence proving the current gold price suppression scheme requires that one man in a million with the patience to walk into a library and just start pouring over those central bank and BIS statements and go line by line, hour after hour, never getting tired, never getting giving up, never failing to question every definition and follow up on every lead.  Day after day, year after year...

 

That said, I see him on KWN on a weekly basis predicting an imminent moonshot for gold for about 4 years straight now.  This man is not someone who can call a near term market. 

 

He reminds me of a much calmer Ann Barndardt.  To hear her speak about why she shut down her brokerage, is to hear a truly moral and lucid speaker.  To look her up on google is to profile a lunatic.  Its the nature of genius I guess. 

Sat, 01/26/2013 - 21:24 | Link to Comment steve from virginia
steve from virginia's picture

 

 

It's hard to argue with someone like Turk who has spent his entire career building an analytical premise: he's not going to change his mind.

 

"It's my story and I'm sticking with it!" cries Turk.

 

It's arguable whether gold has any 'value' and if it does how much. Generally, all industrial 'goods' are waste or waste products that are the antithesis of value, that is, the making of the 'goods' destroys value ... Money does the same thing, it's another manufactured good. However, gold is an element, it is a natural resource, like the others it is in limited and diminishing supply. Like other resources, gold costs a lot in energy and externalities to obtain in usable form. Today's gold is more costly to gain than what can be earned by its sale even at an elevated price ... gold is underwater.

 

The externalities and associated energy costs are gold's liabilities in the monetary sense. If gold is to be 'money' these costs/liabilities must be calculated and measured against the market price ... if this is done there will be no more gold because it will cost too much, if this is not done then gold is no different from AAA-rated mortgage-backed securities and other worthless promises to repay!

 

Unlike other resources, gold is persistent and enduring (silver not so much). Most gold ever dug out of the ground is still in human hands, the end of 'new gold' due to energy constraints will make the gold in hand worth more ... this is simply supply and demand. On the other hand, if/when gold becomes extremely scarce it will be no different from there being no gold at all and the metal will become worthless. When will this happen? Who knows but it will be prior to gold becoming 'money' ... this being the manifestation of gold's costs being properly reckoned.

 

Gold as 'money' has another gigantic problem ... gold is a political token in a particular version of American no-nothing-ism, part of the generalized lurch rightward toward 'Seig Heil 2.0' and the rise of self-appointed leadership cadres who have good, solid justifications for every sort of monstrosity and excess.

 

There is also an element of the sanctification of money: gold is a tradable asset, it is recognizable form of collateral identical to (good) money ... however, if gold is collateral what sort of loans is it collateral for?

 

Whatever that 'thing' is it would be the money, gold would be the security, the same issues of trustworthiness of the borrowers and lenders would emerge with gold collateral as with the other kinds of collateralized 'borrow' money we have today. Right now, all of our money problems are really collateral problems. Our precious enterprises are really worthless pieces of shit.

 

Where is the value in our mechanized world? There is none values are negative and going sharply moreso. In a hundred years without significant changes there will not to be any more humans ... is gold money then?

 

We need to get a better handle on priorities, step back away from the maelstrom first then we can decide whether money is something other than the root of all evil and something to be done away with.

 

Or else ... (finger cutting gesture across throat).

 

 

Sat, 01/26/2013 - 20:24 | Link to Comment mliu_01
mliu_01's picture

Need 2nd amendment. Need a gun to rob grocery story.

Sat, 01/26/2013 - 20:27 | Link to Comment steve from virginia
steve from virginia's picture

 

 

Only an American needs permission in the form of a Constitutional Amendment to rob a grocery store at gunpoint ...

Sat, 01/26/2013 - 20:45 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

In order for PMs to have any value, powerful people must agree that it does.

Sat, 01/26/2013 - 21:24 | Link to Comment They Tried to S...
They Tried to Steal My Gold's picture

Like with every stock and every asset class....once the they get their final amount allocated is when the pump and dump and scheme begins....

Not Sooner. 

What is encouraging is that countries and the Central Banks are acquiring metals at an increasing rate. This rate is what is published. 

Who knows what the real rate is? ............and Who knows how much China really has?

My suspician is that $2000 will be the ringing bell of the start of the pump and dump. And one that will last to $4000 plus. 

Because its always a minimum of a double return.....and in this case the Algos and programs will probably take it to $6000

What happens form there is anyone's guess... Gold will be like what Real estate used to be. When our parents bought homes for like $15,000 and the market hit a high of $750,000-1,000,000. 

So even at prices at $500,000 - they are still wealthy.

Those that bought gold at $300 and Silver at $8 are in the same boat. 10 Time returns....

Inflation is the measurement of man' mistakes....

Sun, 01/27/2013 - 12:01 | Link to Comment robertocarlos
robertocarlos's picture

In the long run real estate keeps pace with wages. That is RENT keeps pace with wages. You can't squeeze blood out of a turnip.

Sat, 01/26/2013 - 21:19 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

Turk consistently underestimates the power, motive, creativity and temerity of the PTB fiat pusher individuals and organizations. His overall thesis is correct, but only when the time element is stripped away. 

There is a huge amount of resources, including 401k's, sovereigns, Au and Ag that haven't been stolen or destroyed, but are on the hit list.

He doesn't understand deceit and corruption to the degree he should because HE IS A GOOD GUY. Turks pleasant demeanor, hope, and all around good nature has blinded him. 

We have a long long way to go. 

Best to all here who think they have strong hands.

Time will tell, and ZH'r better get real creative on HOW they are going to retain anything of worth in the future.

Your opponent is wily, smart, supported by the MIC, and damn good at what some would call black magic and language/reason constriction.

Sat, 01/26/2013 - 21:17 | Link to Comment robertocarlos
robertocarlos's picture

Gold at 10k dollars! Who cares. McD's double cheese burger will still be $1.69 plus tax. We'll live.

Sat, 01/26/2013 - 21:28 | Link to Comment andrewp111
andrewp111's picture

Why would central bankers give a DC grey rat's ass whether gold is $1700/oz or $170,000/oz? The only precious metals that matter are platinum and palladium, since they are indispensible for catalytic converters, among other things. If Pt or Pd went to astronomical prices, that would make cars unaffordable, and that would matter to governments - big time. But gold or silver? They could care less.

Sun, 01/27/2013 - 01:14 | Link to Comment mkkby
mkkby's picture

Gold doesn't matter, eh?  Then why is the US gold being guarded by 30,000 troops with hundreds of tanks?  What a fucking douche.

Sun, 01/27/2013 - 04:44 | Link to Comment Silversinner
Silversinner's picture

Having 100% in phys,so nothing in goldmoney.

love to listen to your golden words with a nice silver

lining.recpect and tnx to Mr Turk I learned a

lot from you,made me lot wealthier.

Keeping my gold silver ratio at 50%/50%

in dollar terms and constant buying to keep

the ratio.This made me buy a lot of silver

under 30 recently and bought only gold when

silver was topping 40-50 range.Just a little tip.

Sat, 01/26/2013 - 21:38 | Link to Comment augustus caesar
augustus caesar's picture

Gold is important. However, things are always changing. The Universe is not static. The past does not always indicate the future. Who would've guessed that the descedents of Germanic barbarians would go on to develop nuclear physics? Who would've guessed that a failed artist would end up as one of the most powerful men of the 20th century? All I ask is that people keep an open mind. Bias can end up clouding the mind until the truth can no longer be seen, or even wanted to be seen. Question all assumptions, even the very best.

Sat, 01/26/2013 - 21:38 | Link to Comment joego1
joego1's picture

The bottom line is this: If  and when things get ugly you need to login to a computer or an ATM  to get your shit you are doomed. I myself do not expect a file server farm to do well when people can't get to work or have no electricity and that is exactly where your ones and zeros wealth resides these days.

Sat, 01/26/2013 - 22:10 | Link to Comment dolph9
dolph9's picture

If you have an account with Turk's GoldMoney, you have fractional ownership of a 400 oz. gold bar.  This makes it cheaper for you to buy and sell, but there is a storage fee and in the event of bankruptcy there would be cash settlement.

GoldMoney works as long as it stays in business and you can wire money bank and forth from a bank.  I think this will go on for awhile, and I think the costs are more than made up for by the ongoing bull market.

BullionVault is similar, but also different in some ways, and is cheaper overall than GoldMoney.

I actually think in the future we will have "good delivery" bars of much smaller sizes.  400 oz. is a relic of a time when gold was $35 an ounce.

I trust GoldMoney but I certainly wouldn't keep all of my money with them.

Sat, 01/26/2013 - 22:18 | Link to Comment tony bonn
tony bonn's picture

"...although it’s interesting that Germany, Netherlands, and now Austria, too, are talking about bringing their gold back.."

yeah it's interesting because they - especially germany  - don't have any to bring back....it is all a bunch of stage claptrap to fool people into thinking that there is gold in the german account...unfortunately the fool germans buy this horseshit but they also believed hitler was going to save them....what a joke.

Sat, 01/26/2013 - 22:23 | Link to Comment mt paul
mt paul's picture

the money masters have a problem now

when they minpulate the  silver paper game

the peasants have started buying physical 

on the dips ..       BTFD

curse those  dip buying peasnts 

reduce their food ration with inflation

remind them of their place

 

Sat, 01/26/2013 - 22:30 | Link to Comment geewhiz
geewhiz's picture

Central banksters are keeping the body politic going with printed money. They are well aware that if they keep this up they will risk destroying thier money printing frachise. They are holding down gold prices with paper gold to keep the perceived value of thier fiat currency alive. At some appropriate point they will contract the money supply and blame the economic collapse this causes on the unresolved profligacy of the body politic. They will stop printing money and buying treasuries and shrink the fractional reserve money by calling in loans at commercial banks. This will destroy the value of all assets with the economic collapse. That includes precious metals, equities, and real estate and at the same time will revalue the dollar. They will then use thier supply of dollars to effect a massive transfer of assets to thier membership. The economic collapse will be the pretext to gut governments of thier deadwood and an economic recovery will ensue increasing the real values of equities and real estate but not PM's because they will still have and want thier fiat currency franchise. Thats my theory, but I'm not sticking to it.

Sat, 01/26/2013 - 22:39 | Link to Comment deebee
deebee's picture

Yep, Gold will reach 10,000 etc. etc.

I wonder how much credit a broker would get if he/she repeatedly urged that Google will reach $250,000 per share 'someday' when they conquer the smartphone, gaming, and media industries.

Sat, 01/26/2013 - 23:37 | Link to Comment Vooter
Vooter's picture

Oh...has Google been a store of wealth for the last 5,000 years? I wasn't aware of that...

Sun, 01/27/2013 - 02:47 | Link to Comment deebee
deebee's picture

.

Sun, 01/27/2013 - 02:48 | Link to Comment deebee
deebee's picture

.

Sun, 01/27/2013 - 02:42 | Link to Comment deebee
deebee's picture

so Gold will hit 10,000 because it has been a store of wealth for 5000 years. Thanks, i totally get it now.

Sun, 01/27/2013 - 00:33 | Link to Comment silverdragon
silverdragon's picture

Buy physical Silver and take delivery, its 10,000 industrial uses, and having been money through out history make it a kinda safe bet.

Sun, 01/27/2013 - 00:53 | Link to Comment OldTelem
OldTelem's picture

No one has ever claimed that American central bankers are particularly intelligent or possess any foresight.

Sun, 01/27/2013 - 03:05 | Link to Comment semperfi
semperfi's picture

LSL, I like your style.  +1000

Sun, 01/27/2013 - 03:44 | Link to Comment Sandoz
Sandoz's picture

Whoop dee f*ck'n doo. A gold salesman predicts that gold will hit $8k-$10k. This site becomes more of a joke each time I visit.

Sun, 01/27/2013 - 06:31 | Link to Comment The Swedish Chef
The Swedish Chef's picture

Anything is positive for PM pricing to James Turk. Screwtape Files did an excellent compilation of his view of gold TA: everything is bullish. 

 

Perhaps that is what happens when you make a living of rising prices.

Sun, 01/27/2013 - 06:46 | Link to Comment writingsonthewall
writingsonthewall's picture

From James’ perspective, gold is not an investment. It’s a sterile asset, meaning it does not generate income.

 

I hate to point out the obvious and destroy this myth - but fractional reserve banking is entirely based on making an income from gold (originally)

 

'Money' does not generate income - the lending of money does.

 

THis man needs a history lesson.

 

This current game has nothing to do with what is money - it's about TRUST - pure and simple. Which do you TRUST more - Gold or FIAT currency?

 

Make sure you check history before you make your decision.

Sun, 01/27/2013 - 07:58 | Link to Comment pcrs
pcrs's picture

They'd have to invade/liberate a lot of countries in order to steal their gold. Kadaffi's gold for Chavez and Mali's 7 year production for Germany. 

Sun, 01/27/2013 - 13:51 | Link to Comment Venerability
Venerability's picture

Read My Lips:

Venezuela got its London Gold back to loan to China for its new ETFs, launching right about NOW!

That is THE primary reason GLD and SLV are under such pressure and why this blitz of Anti-Gold propaganda is so loud - and lately so silly.

Gold demand in China is very shortly about to go through the roof.

Sun, 01/27/2013 - 10:12 | Link to Comment Downtoolong
Downtoolong's picture

People are willing to kill each other now over the latest hot model of tennis shoes, Victoria Secret's latest bra, or the latest release of an iPad. Imagine what they'll be willing to do when there is only one loaf of bread to split between them.

Sun, 01/27/2013 - 14:27 | Link to Comment realtick
Sun, 01/27/2013 - 22:32 | Link to Comment Kingkongballs827
Kingkongballs827's picture

Don't Wait. Burry your Guns, Gold, Ammo, and Food Now. Can be sealed with Nitrogen to keep moisture out for life. 

http://www.ebay.com/itm/160963721916?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1555.l2649

And if you think you can go buy all the Stuff in Home Depot, go do it!

 

Mon, 01/28/2013 - 02:46 | Link to Comment nastaking
nastaking's picture

Full HD screens are set to become the norm on GT-N7100G in 2013 and one of the first to bring this feature to market was HTC

Mon, 01/28/2013 - 08:08 | Link to Comment forrestdweller
forrestdweller's picture

of course he says the prices go up. he makes money from people buying gold and silver. have you ever sees a gold-dealer who says prices will go down and advices you to stay away from the PM's?

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