Santelli On The End Of Paper Gold's Reign

Tyler Durden's picture

Central Banks remain aggressive accumulators of the precious metal as we noted last night, as their actions outweigh their words; but as CNBC's Rick Santelli notes today, there is a big difference between the physical bullion they are buying and the 'gold bug' trading currently going on in our markets:

I don't even look at gold as gold anymore since they securitized it. If things [went] badly in the world that I used to observe (as a gold bug); the gold would end up in the hands of the gold bugs. If things go badly now, they're going to end up with checks from ETFs! Sorry, it's not the same. The reign of [paper] gold as the Ayn Rand endgame, to me, that's over. Game, Set, Match.

Which likely explains the incessant demand for precious metals from the US Mint over the past few months - as the other great rotation (from paper to physical) proceeds.


Starting 0:25 in this clip:


Perhaps these two charts will help explain the 'difference'... Demand continues to surge while 'prices' drop...




(h/t Alex Gloy of Lighthouse Investment Management)

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Ahmeexnal's picture

Global banking holiday starting easter thursday and no ending date in the horizon.

++ to Santelli for Ayn Rand ref.  99% of the population have no idea who Ayn Rand was.

BC6's picture

go long on divergence

and commmon sense charts

macholatte's picture



Cyprus Banking Question:

What happened to non-cash deposits in brokerage accounts? Were securities raided?

DoChenRollingBearing's picture

Real gold is a hard asset.  Paper gold is not!


"Review of American Hard Assets -- Issue No. 2"

BoNeSxxx's picture

The poster directly below me is a de facto TOOL

Joe moneybags's picture

No, I am a FACTO tool, damit!

DoChenRollingBearing's picture

LOL, BoNeSxxx!

Next time, call the good Dr Krugman out by name though...

Pegasus Muse's picture
3/27/2013 @ 3:29PM


Central Banks Bought More Than $3B In Gold In 2013: UBS

Data compiled by UBS shows central banks bought about 54 metric tons of gold in the first two months of the year; that’s more than 1.9 million ounces, or more than $3 billion at Wednesday’s prices (bullion stood at $1,606.30 an ounce by 3:36 PM in New York). South Korea, for example, announced it a purchase for 20 metric tons in February, while Russia is 19.2 metric tons deep in 2013. Other buyers include Kazakhstan (6.6 metric tons), Indonesia (1.9 metric tons), Bosnia and Herzegovina (1 metric ton), and Azerbaijan, which bought 2 metric tons after having zero gold reserves in over a decade.

. . .

Central bank purchases are clearly a bullish sign for investors, but by no means are an indication that the market is ready to turn. With the specter of rising interest rates an improving U.S. economy, along with expectations of a stronger U.S. dollar in the medium-term, gold will have to derive its support from continued flare ups of Europe’s sovereign debt crisis. But, if the U.S. continues on its upward path and Bernanke’s bloated balance sheet begins to feed inflation, gold may once again find its legs.


Dr Paul Krugman's picture

So let me get this straight - the economy collapses, the power grid shuts down, the government comes for your guns, and people are fighting over food and water - how, pray tell, does having gold matter in this case?

Sounds to me like you will be clutching gold like a baby clutches a blanket.

NotApplicable's picture

Will all of you people please stop feeding this troll!

If you haven't noticed he derails every damn thread he's in.

Texas Ginslinger's picture

My wife asked a somewhat similar question last year.

"The silver and gold coins you are buying - what real value do they have"?

Walked to my library in the spare bedroom and found a book on archeology in the Mediteranian.

Showed her a photo of some of the earliest Greek gold and silver coins.

They had value then, they have value today, and they will have value into the future.

End of story.

The difference between my wife and PK is that she quickly understood.

Chuck Walla's picture

If you haven't noticed he derails every damn thread he's in.

You mean Krugman the Ferret?  He helps derail whole nations, what's a thread to him?


All Risk No Reward's picture

Just reply with this question...

"You might have missed this question the last 8 times I asked it, so here we go for try number 9 (and yes, I will continue to increment the numbers until you answer the question):

If growth is defined in monetary terms and money is debt (interest bearing), please explain how exponential growth of debt is sustainable into eternity.

If money (debt) exponential growth is not sustainable into eternity, then WHAT HAPPENS WHEN THE EXPONENTIAL MONEY (DEBT) GROWTH FAILS?

I made the question bold in case you are having vision problems and couldn't see the question.  Hopefully this helps.


Dr. Paul Krugman will go away.

akak's picture

So let me get this straight - the ONLY possible outcome to the ongoing failure of our current financial and monetary paradigm is: the economy collapses, the power grid shuts down, the government comes for your guns, and people are fighting over food and water?  Otherwise, everything remains more or less the same as it is today, indefinitely into the future?  Total collapse vs. status-quo?

Nice false dichotomy you're peddling there, Krudman.


PS:  Did you buy that mouthwash yet?  The rank odor still emanating from your every post indicates that you did not.

Dr Paul Krugman's picture

The .001% of the world that are gold bugs/doomers and have a problem with the status quo want to see the world end, when the fact is the society we have developed over the last few hundred years (Democracy, heard of it?) suits everyone fine.  You all enjoy the liberties that we have established - weekends, holidays, minimum wage, equal rights - yet don't want to pay your fair share in taxes.  Then you become paranoid that the government we have built is after you.  Not everyone is angry about their lives like you.

Anyway, you didn't answer my question - what good is gold when the world as we know it has ended?

McMolotov's picture

Not everyone is angry about their lives like you.

The people who are the least angry about their lives are the same people who use the coercive force of the government to steal from others. This includes the shiftless welfare class as well as the mega-wealthy.

Dr Paul Krugman's picture

Go ask the poor if they would rather take welfare or earn a decent living.  Then go ask someone with money - Warren Buffett for example - if they think they should pay more in taxes.

NaiLib's picture

Dr Krugman?

Are you the Real Dr Krugman that sang glory over Sweden a couple of weeks ago in Bloomberg?

dryam's picture

Do you all realize why Dr Paul Krugman posts here??

It's certainly not because he truly believes what he is saying, and it's not that he's just trying to get a rise out of everyone.

The reason he posts here is to hijack ZH threads & misdirect people from the real issues at hand.  Good threads that would generate good discussions get watered down & pissed away because of all the hyper-ridiculous thoughts from this poster.

He's duping all of you just like a handful of other posters who realize the threat ZH really is to the currupt status quo.

LawsofPhysics's picture

"Go ask the poor if they would rather take welfare or earn a decent living." -  If the value of their labor wasn't being stolen, they could earn a decent living you arrogant fuck.

ATM's picture

And we don't have to ask, all we have to do is observe. If they wished to work over receiving free money they would work, butthey do not. They line up by the hundreds of thousands every montht on get on the dole.

Question answered.

LawsofPhysics's picture

That which cannot be sustained, won't be.  When the "dole" fails to sustain them, they will work or die.

Dr Paul Krugman's picture

Here, on this blog, it is pointed out that unemployment is high, yet when you want to put the weight of the world on the needy you ignore these facts!

How dare you!

LawsofPhysics's picture

If you really cared about the poor, you wouldn't support the theft of the value of their labor. 

TruthHunter's picture

"If you really cared about the poor, you wouldn't support the theft of the value of their labor." 


With wages flat for 10+ years except for the ~1%, who's doing the "theft"?

Who benefits from deficit spending? Isn't it those with access to free money to turn around and "lend"

to the gubment?

LawsofPhysics's picture

85 billion dollars per month, indefinitely.  Everyone holding dollars is being robbed, but you tell me, who does it impact more.  The person with millions of dollars or the person just making ends meet?  If I could not make ends make, despite working, and I knew of the truth, I'd eat you motherfucker.

Dr Paul Krugman's picture

The purchase program is supporting the slack in the economy.  If it weren't in place unemployment would be higher. 

Is that what you want?

akak's picture

Even assuming the validity of what you claim here (which any knowledgeable or honest person would not), your repeated and specious argument boils down to "give the addict MORE heroin, or he will suffer!", ignoring both the fact that the patient can NOT get better UNTIL he suffers the pain of withdrawal, as well as the fact that without experiencing that necessarily painful transition, the patient will die.

Your specious rationalizations in support of a criminal, sociopathic power elite will, if there is any justice in the universe whatsoever, earn you a very special place in Hell.

LawsofPhysics's picture

Perhaps your labor is overpriced.  Allow for true price discovery, the failure of bad business models, the success of good business models, and the economy will fix itself.  I want accountability, why don't you?

NaiLib's picture

Unemplyment is rising all the time, its just that the manipulated statistics dont. The purchase program does not help at all. And it is not proven, your claim that it would be higher wihtout it. Now im beginning top think that you are the real Dr Krugman since you time after time avoid reality.

slavador's picture

A much more interesting use of this 85B monthly print would be simply to distribute $2000 to each married with children opposite sex couple monthly. Their spending would cause real stimulus. Removing the prop of easy treasury sales would force the gov't to act responsibly.

howenlink's picture

Still practicing for that debate with Bob Murphy to raise money for the hungry.

HyperinflatmyNutts's picture

STOP FEEDING THIS TROLL!!  Do not reply to any of his post at all. Why give him power? By not replying we have the power.

akak's picture

Must ....... attack ....... Krugman ...... must ....... attack ........Krugman ........... must ........ eat ........ brains ........ oh ....... shit ........ no .........brain ......... here ..........

nmewn's picture

Ask him about spray painting zeros on a broken down Yugo in the parking lot of the Treasury and calling it "debt repayment".

I never can get a clear answer out of him on his "theoretical fiat monetary" point...I might as well be talking to a two year old on a Big Wheel with zeros spray painted on the side, it seems ;-)

McMolotov's picture

Yes, how dare you, sir!


kito's picture

just curious, are we all channeling our rage at the real paul krugman, or are we mad at the paul krugman avatar who posts these silly comments.....................

akak's picture

Who says we can't do both?


Happiness is killing two Keynesian shitbirds with one stone.

McMolotov's picture

"I think maybe it's both. Maybe both is happening at the same time."

—Forrest Fuckin' Gump

awakening's picture

That stone wouldn't be quartz with traces of Gold and Silver by any chance, would it? :)

Poor Grogman's picture

He's a fake, the real one is even more stupid.

Lore's picture

Wouldn't 'vapid' be more accurate?  His posts aren't even amusing -- just tiresome.

BigJim's picture

It's your fellow puppets in Washington who keep taxes low for the uber-wealthy, Paul.

As for Buffett wanting to pay more taxes - what's stopping him? 

Beam Me Up Scotty's picture

Doesn't Buffett owe about a billion in back taxes that hes arguing with the IRS about?  I thought I heard that somewhere...

And hes certainly free to open up his checkbook and send in any amount he feels is appropriate for him to pay over and above what he "owes".  He just wants to raise taxes because he can afford to pay it, and it will just put the hurt on any of his competition out there.  Its just a glass ceiling to keep the lower classes from moving up.  I vote to take everything he has!!