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Sprott: Why SocGen Is Wrong About Gold's Imminent 'Demise'

Tyler Durden's picture




 

Submitted by David Franklin and David Baker via Sprott Group,

A Retort to SocGen’s Latest Gold Report

Société Générale (“SocGen”) recently published a special report entitled “The end of the gold era” that garnered far more attention than we think it deserved.  The majority of the report focused on SocGen’s “crash scenario” for gold wherein they suggest that gold could fall well below their 2013 target of US$1,375/oz. It also included a classic criticism that we’ve heard so many times before: that the gold price is in “bubble territory”. We have problems with both suggestions.

To begin, the report’s authors appear to view gold as a commodity, rather than as a currency. This is a common misconception that continues to plague most gold market analysis. Gold doesn’t really work as a commodity because it doesn’t get consumed like one. The vast majority of gold mined throughout history remains in existence today, and the total global gold stockpile grows in small increments every year through additional mine supply. This is also precisely why gold works so well as a currency. Total gold supply can only grow marginally, while fiat money supply can grow exponentially through printing programs. This is why gold’s monetary value is so important – it’s the only “currency” in play that is immune to government devaluation. 

Chart A illustrates the relationship between the growth of central bank balance sheets in the US, EU, UK and Japan and the price of gold. This relationship has an extremely high correlation with an R2 of about 95%. As central banks increase the size of their balance sheets through ‘open market operations’ to buy bonds, mortgage-backed securities (“MBS”) and the like, they inject more fiat dollars into their respective banking systems. As gold has a relatively stable supply, if there are more dollars available, the price of gold should rise in dollar terms. It’s really a very simple and intuitive relationship – as it should be.

Global -Central -Bank -Assets -vs -Gold

Source: Bloomberg and Sprott Asset Management LP

This relationship between central bank printing and gold has existed since the beginning of the gold bull market in 2000. In fact, this relationship shows that for every US$1 trillion increase in the collective central banks’ balance sheets, the price of gold has generally appreciated by an average of US$210/oz.

Somewhat surprisingly, it turns out that the collective central bank balance sheets have actually shrunk over the past three months – by approximately US$415 billion. The biggest drop was seen in the ECB’s balance sheet, which shrunk by the equivalent of US$370 billion, while other central banks also experienced small declines. Based on our simple model above, a decrease of US$415 billion should produce a gold price decline of roughly US$87/oz. And as it turns out, gold fell by US$76/oz over the first quarter of 2013. Does this sound like a bubble to you? It certainly doesn’t appear to be. Gold is performing almost exactly as it should – by acting as a currency barometer for the amount of money being injected into or withdrawn from the economy... which leads us to Japan.

Japan’s recent QE announcement is a thing of wonder. It represents an absolutely massive injection of yen relative to the size of the Japanese economy. The Bank of Japan’s US$75 billion equivalent per month of yen printing, coupled with the US Federal Reserve’s $85 billion per month (through its current QE program) will addUS$1.97 trillionto the collective central bank balance sheets over the next 12 months. Given Japan’s considerable contribution, we seriously question how SocGen believes gold can drop to US$1,375/oz by the end of the year. For that to happen, we would need to see a collective balance sheet decline of roughly 15%. Does SocGen seriously believe the US Fed (or any other central bank for that matter) is going to reverse its QE accumulation and then start aggressively selling balance sheet assets over the next year?

The only gold ‘crash scenario’ that makes sense to us at Sprott is if governments begin to balance their budgets and return to sound money practices. There is no question that gold could lose its utility if western governments made a concerted effort to fix their fiscal imbalances, but who honestly believes that’s going to happen any time soon? We certainly don’t – especially in the US. While US deficit spending may diminish in scale, it will remain well above $1 trillion per year after factoring in unfunded obligations. We don’t know of any creditable forecaster who believes otherwise.

We also don’t see a chance of the US Federal Reserve ending its QE programs, despite the continual jaw-boning by various Fed officials of a planned QE exit strategy. There is simply too much risk to the US bond market for the Fed to cut the US$85 billion in monthly Treasury and MBS purchases that the current program employs. After all – remember that those purchases are what keep interest rates close to zero today. If the Fed were to remove that flow of capital, the free market would once again dictate US bond yields and stock prices. There’s not a chance the Fed will take the risk of finding out what US bonds or stocks are worth to the market without a perpetual government-induced backstop. Why take the risk?  Especially since the cumulative QE programs to date have not caused a drastic increase in inflation expectations.

While we expect the Fed to continue to threaten to lower its monthly QE purchases, we believe the chances of even a mild decrease to its current US$85 billion per month rate are negligible. Four years into it this grand QE experiment, money printing has become the backbone of the US bond market, and the unsung driver of the US equity market. In our view, gold cannot become irrelevant for the precise reason that QE is here to stay… and the collective central bank balance sheets will continue to increase over time. We would question any pundit who believes otherwise – unless they can clearly articulate how the Fed can exit QE without causing irreparable harm to the very financial markets the QE programs were designed to assuage.

We believe gold is nowhere close to ‘bubble territory’ today. It is acting exactly as a currency should. Under its current stewardship, we expect the Federal Reserve’s balance sheet to continue to expand along with Japan’s. SocGen’s “crash” scenario would require a complete reversal of this trend, which we do not believe is even remotely possible at this point.

Gold is the base currency with which to compare the value of all government-sponsored money. Investors can incorporate it into their portfolios as ‘central bank insurance’, or ignore it entirely. Either way, we believe gold will continue to track the total aggregate of the central bank balance sheets of the US, UK, Eurozone and Japan. If SocGen believes the aggregate central bank balance sheet will continue to shrink as it did in Q1, then gold should continue its decline. We strongly suspect that shrinkage is over, however. Given Japan’s recent QE decision, we would expect the aggregate to grow a lot bigger, and fast. If there was ever a time for gold to be a relevant currency alternative – it’s now.

 

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Fri, 04/05/2013 - 22:30 | 3415275 kliguy38
kliguy38's picture

Don't worry Soc Gen is only doing what they're told......put the brakes on gold is the only thing holding this illusion alive

Fri, 04/05/2013 - 22:48 | 3415316 easypoints
easypoints's picture

What country just had 100% of their gold repatriated back to Germany? France. And one of the largest banks in that country is?

Fri, 04/05/2013 - 22:57 | 3415325 Pinto Currency
Pinto Currency's picture

 

This report assumes two things:

1) The year 2000 price of gold at ~$275 was correct vs the C.B. balance sheet.  This was after 8 years of the concerted and intensified BIS coordinated, Summers/Rubin, bullion banks, & LBMA gold devaluation program.

2) It ignores the additional role for gold as a savings medium (in addition to a role as a medium of exchange).  The bond market (a savings medium) is +/- $100 trillion and is being destabilized by accumulated debt and further money printing.

Chew for your chaw.

Fri, 04/05/2013 - 23:38 | 3415414 Professorlocknload
Professorlocknload's picture

"The year 2000 price of gold at ~$275 was correct"

Damn, those were good days! Material selling way under production cost.

To think the Bank of England could be so nice!

 

Fri, 04/05/2013 - 23:47 | 3415429 Spitzer
Spitzer's picture

It was a manipulated price by Gordon Browns gold fire sale

Sat, 04/06/2013 - 00:15 | 3415477 eatthebanksters
eatthebanksters's picture

Ask yourself one question...why are they saying goldbugs are stupid?  Te answer is very clear...people buying gold now want possession...stop the gold buying stop the demands for possession.  Now why do you think they don't want owners to take pysical delivery?  Hmmm...go figure...next question: do you trust the TBTF banks (especially a French one in deep shit)?

 

Sat, 04/06/2013 - 00:49 | 3415519 markmotive
markmotive's picture

Deflation, inflation...gold will always hold its purchasing power.

That is why Texas wants its gold back.

Jim Rickards on Texas and the Fed's Battle with Deflation

http://www.planbeconomics.com/2013/04/texas-wants-their-gold-back-jim.html

Sat, 04/06/2013 - 01:37 | 3415542 strannick
strannick's picture

Sprott is a serious bad ass. Che Guevera has nothing on him. There is no need for him to argue with bankers, they know he is right.

He is more dangerous, because Sprott and his gold doesnt steal their money, he makes their money worthless.

Sat, 04/06/2013 - 04:30 | 3415654 TwoShortPlanks
TwoShortPlanks's picture


Personally, I’d love to see Gold under $1,000 again. This would be a great buying time for anyone and everyone, but I doubt supply would last more than one month.

I look at the fundamentals, and Oh-Gee, they haven’t changed, so why the negative outlook on Gold?

Not sure if you have realised it or not, but, when you add-up everything that’s happening right now, what we are seeing is nothing more than ‘Destruction Of Demand’; the Global Economy is simply moving toward a more sustainable production/consumption level. Like tectonic plate movement, it happens with small sudden jolts, but make no mistake, there’s huge pressures behind the move….mathematical inevitability.

Central Banks can dump as much cash on this as they like, it won't matter; global consumption is dropping off and it will find its' own level in due course....which is more than I can say for all that liquidity sloshing around.

Sat, 04/06/2013 - 05:45 | 3415691 Supernova Born
Supernova Born's picture

SocGen has declared the Periodic Table of the Elements a fraud.

They will be nominated for a Nobel prize in economics (yet will strangely go unrecognized by the charlatans on the nominating committee for chemistry).

Sat, 04/06/2013 - 08:30 | 3415792 GetZeeGold
GetZeeGold's picture

 

 

Personally, I’d love to see Gold under $1,000 again....

 

Hell....I'd just like to see a budget again. Is there a single country on this earth that actually has a fiscal plan?

Sat, 04/06/2013 - 09:14 | 3415851 LawsofPhysics
LawsofPhysics's picture

No.  Get your tribe in order. 

Sat, 04/06/2013 - 09:30 | 3415863 GetZeeGold
GetZeeGold's picture

 

 

We only have central bankers left...and they're not from our tribe.

 

So what the hell do we do now?

Sat, 04/06/2013 - 19:46 | 3416201 Pinto Currency
Pinto Currency's picture

 

I am not sure about Franklin and Baker's graph above showing a $7 Trillion increase in c.b. balance sheets since year 2000.

This graph shows an increase in c.b. balance sheets of ~ $10 trillion from mid 2006 to 2011 and that is for 8 central banks combined.

http://www.ritholtz.com/blog/wp-content/uploads/2012/01/balu10.gif

From this article:

http://www.ritholtz.com/blog/2012/01/living-in-a-qe-world/

 

On the "gold price is dropping because demand is too high" front,

http://silverdoctors.com/gold-run-there-is-not-one-single-ounce-of-gold-available-for-sale-in-bangkok/

Sat, 04/06/2013 - 09:15 | 3415852 rogeliokh
rogeliokh's picture

Turkey Silver imports climb 31% to 6.19 tons in March

http://1goldinvestment.com/turkey-silver-imports-climb-31-to-6-19-tons-i...

Turkey‘s gold imports climbed to an eight-month high in March as prices averaged the lowest since May, the exchange said.

Turkey imported 6.19 tons of silver in March while gold imports hit an eight month high at 18.26 metric tons..

According to Istanbul Gold Exchange, Silver imports rose 31% from a month earlier. The nation imported 142.2 tons last year.

Sat, 04/06/2013 - 08:03 | 3415789 bsdetector
bsdetector's picture

TSP, I found your posts "In Cyprus, Shock Turns to Anger" insightful. I posted late a few thoughts on the value of gold on a planet with many nations inflating their currencies as well as a quote from Woodrow Wilson. Any chance you could share a few more thoughts on those comments?

Sun, 04/07/2013 - 07:21 | 3418107 TwoShortPlanks
TwoShortPlanks's picture

@bsdetector, yes, I saw your post.

Okay, the following is just my own personal belief of what lies ahead of us all. My opinion is harsh and often not welcome, but formed from much investigation into many areas.

It’s a little rushed, but you’ll get the drift.

The following comments MUST be kept in the context of my previous posts (in 'Cyprus, Shock Turns to Anger') where, a single sector of society (Ultra Wealthy) own not only most/all currencies on earth through Bank-to-Central-Bank ownership, but, in excess of 70% of above ground gold (CB gold, private vaults etc).

An analogy to give meaning…

Imagine one person owning all airlines on earth, and to hedge those airlines that same investor owned all oil stocks on earth. Imagine the price-setting power that individual would have, on travel, trade, farming, manufacturing, politics, banks...it's endless!

So long as that individual decides that business must go on then, he/she is free to manipulate any market desired so that the desired Politico-Power-Outcome emerges in his/her favour. Does this person lose any wealth so long as global expansion is growing....nope! He or she is untouchable!

Now, replace airlines with gold, and oil with currencies....imagine the omnipotent and omniscient power and influence that person would have in world affairs; that person would quite literally run the place…..Woodrow Wilson you ask?

"The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests."
- Rothschild brothers, 1863 –

I hope you can see this quotation shine in the light of modern events (Cyprus is a classic).

Now, Mayer Rothschild wasn’t dumb, in fact, I’d hate to say it, but to me he was quite literally a genius, and in the true sense of the word. Einstein was genius because only he could see a path through all the data and concepts on the nature of gravity and light, likewise, Rothschild saw a path through the history of money. He knew the power of fiat lay in the transfer of wealth from purchasing power.

Rothschild also knew the power of the layering of command, and the brilliant use of agents. Anti-Semitism forced Rothschild to operate behind the scenes, and this is what I believed happened to not only the people who comprise the wealthiest families on the planet, but also to their wealth; they and their wealth are next to invisible…and this takes us back to my post in 'Cyprus, Shock Turns to Anger'.

Back to my point…

On Currency Inflation: Expanding CB balance sheets may only have limited affects within global economy undergoing Destruction Of Demand.

Destruction Of Demand: Money Velocity in Western countries is very low and not picking up. For the most part, the East makes the stuff the West consumes…so how can the East prosper? It can’t, it won’t. Internal consumption is a myth.

Debt: The origin of this Destruction Of Demand cycle lies in the spread between Base Money (Bank Reserves and Currency in circulation, and that of Bank Assets (a Bank Asset is its’ own Debt). This figure is around $80 Trillion. Up to this point this has been the main culprit of the increasing viscosity of the currencies running throughout the global economy. Feeding QE into the system does little more than adding kerosene to Oil, it lowers the viscosity and allows the oil to fee-up sure, but the quality of the properties of the oil itself have been compromised. With QE, money is losing its’ money-ness.

Derivatives: This is the monster which is slowly but surely gaining potency ground on the problem of debt (stated above). I would have to guess, but 90% of derivatives must hinge upon the US Dollar. That’s a ticking WMD, no? Also, watch what happens when the rich get hunted for their wealth and they start defaulting on their derivative positions.

Blame: Well, let’s face it, everyone wanted to get rich quick and few stopped to question loose monetary policy as property prices soared up-n-up. That being said, there’s a reason Greenspan has special protective powers afforded unto him by the BIS in the execution of his duties. What I am alluding to here, is that I believe the BIS (“Custodial Network…Back Bone”), through Alan Greenspan as Fed Chairman, deliberately commenced the expansion of the Fed balance sheet, all the from the DotCom bubble, way up and into the Housing Boom. The net affect of all this, in his own words;
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. ... This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights (Cyprus, Fiat or Gold). If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard”

So when you add up all the individual pieces of the jigsaw puzzle, and there are millions, the picture is still incomplete…and that’s deliberate!

Agenda21: A continuation of the UNs’ earth Summit, which is a continuation of Holdrens’ Ecoscience (1977). In simple terms, this is a blueprint for an Ultra Wealthy Utopian World where a sustainable global society exist a level standards of living (a few pegs above subsistence), and where a global elite, ruling class, sees-in a new era, new return, of Global Monarchical Rule. Agenda21 is all around us, in every state, in every suburb, and it is slowly but surely worming its’ way into becoming, trendy.

The future isn’t a rosy one I’m afraid. I believe that in due course, the financial system will be sacrificed for a new one. One day you’ll come to the stark realisation that all of the myth and legend about Gold and Silver turn out to be more than true.

The next system will come with strings. Expect UN demands that the modern financial system (currently operating with the supposition that there are in fact zero limits to growth) be widely accepted as ‘Unsustainable’ old stupidity and ignorance, and that a new, strict, system be adopted…Agenda21 will also be signed upon in ‘Hard Treaty’ across all nations.

Custodial Global Monarchical Rule 101.

Sun, 04/28/2013 - 20:31 | 3508614 margaris
margaris's picture

please go on, or explain in more detail please, I can't get enough of your posts lately lol...

Sat, 04/06/2013 - 11:32 | 3416150 SpiceMustFlow
SpiceMustFlow's picture

Yeah Sprott is a fucking badass, +a billion, he wakes up and takes a shit on a banker

 

Sprott PM Roundtable:

http://www.youtube.com/watch?v=mq_siM2Oh7g

Fri, 04/05/2013 - 23:43 | 3415420 DoChenRollingBearing
DoChenRollingBearing's picture

As always it is important to remember that the price of gold that we see every day is for paper gold.  While for now, the paper gold price may be very close to the physical price, this may not be so later on...

As I have mentioned various times over the last month or so, I have gotten out of the prediction business.

But I will write this: the Central Bank of DoChenRollingBearing will continue to buy gold as money (CA$H) comes in.  Whether the price is $1570, $1375, or $1135, or even $2000.

Sat, 04/06/2013 - 01:09 | 3415534 Flying Tiger Comics
Flying Tiger Comics's picture

Well if you really want to buy gold, we're selling physical fresh mined for 44 a gram.

Sat, 04/06/2013 - 01:43 | 3415558 Professorlocknload
Professorlocknload's picture

I predict Au will be around longer than the existing governments of the world.

I will not predict the price of it won't see $700-$1100 again before the Fed finally goes into psychotic break.

Sure, inflate it all away is all they know. But they could fall behind if they don't constantly increase the dose. Especially if Japan, California or BAC or whatever blind sides 'em.

Look at what little $85B a month now buys? Then $100B, Then $150B.

 

Just to stay in the same place.

 

 

Sat, 04/06/2013 - 08:49 | 3415829 GetZeeGold
GetZeeGold's picture

 

 

I dunno.....if they go QE_Au that crap's gonna be worthless in no time.

Sat, 04/06/2013 - 10:04 | 3415899 Stoploss
Stoploss's picture

Why is AU assigned a value in USD?

Why not GBP? JPY?  CAD, CHF? AUD?

Good thing it's pegged to the USD huh??

 

Sat, 04/06/2013 - 14:42 | 3416613 Winston Churchill
Winston Churchill's picture

The LME is proposing a yuan /gold fix.

Sat, 04/06/2013 - 09:16 | 3415854 LawsofPhysics
LawsofPhysics's picture

Stop worrying about "price".  Au is a store of value, period.  The atomic properties of the metal make it so.  The price is irrelevant as all fiat is dying.  Soon enough, there will simply be those that it have gold, and those who don't.  You tell me who will have more purchasing power.  Personally, I never have trouble exchanging the metal for the value of another's labor.  All of recorded history seems to agree.

Sat, 04/06/2013 - 10:18 | 3415912 Stuck on Zero
Stuck on Zero's picture

One thing that can cause gold to fall in price is an economic condition that drives people to give up their gold for food or survival.  If it's a choice of starving or selling your gold people sell their gold.  If a country is invaded and they need to buy arms the gold goes on the market.  We are seeing that now with pawnshops.  Another thing that can drive the price of gold down is velocity.  If cash currencies fail then gold and silver will reappear everywhere as the new currency and the sheer velocity of movement will make it look more available than it is. 

 

Sat, 04/06/2013 - 00:36 | 3415498 eigenvalue
eigenvalue's picture

The author of SocGen's report is called Sebastien Galy. I wonder why a guy specialises in fiat money suddenly becomes an expert on real money.  I scanned the report and I bet that the author knows little about the physical market. 

Sat, 04/06/2013 - 07:23 | 3415764 Room 101
Room 101's picture

OK Eigen - this will probably disappoint you on some level....but you now have an attentive audience.  You're now my fave heretic against the heresy. So what are your current thoughts on the movement of Au and Ag vice FRNs?   

Sat, 04/06/2013 - 09:51 | 3415885 eigenvalue
eigenvalue's picture

I don't know. I called a bottom on Wednesday but I can be wrong and the charts still look ugly. What puzzles me is the open interest of silver. In the past, when silver price declined, the open interest would decrease. But this time the open interest increases. Some people point at the Comex silver inventory and conclude that the demand is slowing down so more silver will be delivered at the Comex. However, registered silver (only registered silver can be used for delivery) is still lower than the 2010 level. 

Even if it were true that a lot of silver could be delivered in the future, that wouldn't necessarily be bearish for silver. I don't know if you trade soybeans. If you do, perhaps you have heard about the huge delivery in China back in 2002. (In China, the wild east, there are almost no position limits and you can take/make as much delivery as you want)

Back in May 2002, a single Chinese investor took delivery of 760,000 metric tonnes of soybean on the Chinese futures market. That was about an equivalent of 5600 CBOT contracts. That was a lot soybeans. China's annual production was around 15 million tonnes. Since only Chinese soybeans could be used for delivery, that was about 1/20 of the annual production. Back then, the total open interest of CBOT soybean was about 200,000 contracts. 

However, the buyer who took delivery was prescient and the sellers who made delivery were silly. Within 1 year after the huge delivery, the soybean price soared by 100%. 

Huge deliveries are not rare in China because of the lack of position limits. There are many cases in which sellers made huge delivery at the bottom and turned out to be stupid. (By the way, you should be glad we are more civilised than the wild east)

Trading is about forecasting the future supply and demand not the current. 

Sat, 04/06/2013 - 10:37 | 3415948 Prisoners_dilemna
Prisoners_dilemna's picture

Im in Florida for the past week from NY. I saw the dip wednesday and decided to check out gainesville coins in Lutz Fl as I saw recommendations about them here on ZH.
I felt like a kid going to disney. Didnt even stop to piss as I wanted to get there and btfd before it disappeared. They have a beautiful shop but... They couldnt sell me the silver eagles I wanted. Kid behind the counter said he had to process them in before he could sell. He told me to come back in an hour. Fuck that.
I went a mile down the road to legacy coins on manby something rd. Super friendly, had a great chat with Mark and owner Art. I bought all the eagles I could, plus two old silver certificates (one dollar bills from 57 I think), he had them in the register and was gonna give them out as change. He let me exchange two singles for them. We told some obummer jokes, bitched about the country, talked florida gun laws, aggression of wild hogs, travelling the country on motorcycle, and with the $19 toiletpaper notes I had left I got a junk half dollar, quarter, and roosevelt dime.

Point of my story, thanks for calling a bottom, and imo give your business to legacy coins on manby, gainesvilles to uppity.

(in their defense I was in sweatpants and carrying a military sgyle packpack, but first thing I did went I walked into gainesville was hand a wad of cash to the kid to count, and told him I was there to spend it all... Come back in an hour.... sheesh)

Sat, 04/06/2013 - 10:42 | 3415956 Prisoners_dilemna
Prisoners_dilemna's picture

@eigen
PS if you post a bitcoin address Ill send you a tip for the call you made.

Sat, 04/06/2013 - 12:35 | 3416133 Pinto Currency
Pinto Currency's picture

Unprecidented global silver trading volume:

Click on this link:

http://netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/FinanceChartPopUp.aspx?symbol=XAGUSD|netdania_rt&name=Silver,%20spot

Select the square 'D' for daily and zoom out until you can see the time interval Jan 2011 to today.

Now select the green and red volume bars button to the right of the 'D'; this gives global daily silver trading volume on all major exchanges.

The silver trading volume we are seeing has not been seen before. That is bound to be accompanied by an open interest increase. 

There was a comment yesterday that market manipulators can enter markets to manipulate price but that they are going to generate associated very large positions whie they fight.

What is also of note is that the price of silver is now climbing despite the enormous churning and pounding silver has taken.

Sat, 04/06/2013 - 11:29 | 3416141 James
James's picture

PD, I live where you were visiting. I believe the street you were on is called Dale Mabry.

And Gainesville Coins just what the hell is wrong w/you???

Why have a open pimped out showroom but you are unable to sell on demand. Your competition has no problem selling me as much as I can pay for and they too have a pimped out showroom. What gives? Does losing some of us just not matter?

Sat, 04/06/2013 - 20:19 | 3417438 eigenvalue
eigenvalue's picture

Correction: I double-checked the data. It should have been "Within 1 year after the huge delivery, the soybean price soared by 35%. " The 100% gain was made in less than 2 years. I have poor memory these days. That's my fault.

Sat, 04/06/2013 - 07:22 | 3415765 achmachat
achmachat's picture

you are really difficult to label! Sometimes it seems that you're just trying to bash people who like to save their wealth in precious metals, and then, all of a sudden, you give us little pearls of wisdom.

Sat, 04/06/2013 - 09:58 | 3415889 eigenvalue
eigenvalue's picture

So you want more "Die, die, die, silverbugs"?

Sat, 04/06/2013 - 11:21 | 3416104 GetZeeGold
GetZeeGold's picture

 

 

Beats paying for it.

Sat, 04/06/2013 - 15:36 | 3416724 Room 101
Room 101's picture

Naaaah. We got the "die, die, die silverbugs" part.  As you might have noticed, you have a few people who are following what you have to say. You're bright and prescient.Word spreads as to who is worth listening to and who isn't.  You're in the "is worth listening to" group.  Even if you're a pain in the ass from time to time.  

Thank you for your insights.   

 

Tue, 04/16/2013 - 02:05 | 3455167 auric1234
auric1234's picture

See how the "pearls of wisdom" worked out. Makes one wonder if the bastard knew something was about to happen, or is completely clueless about anything.

 

Sat, 04/06/2013 - 10:25 | 3415922 tsx500
tsx500's picture

anyone with a name like 'Sebastien Gayly' ..... well, i'll just leave it at that, ok ?

Sat, 04/06/2013 - 11:32 | 3416152 WhiteNight123129
WhiteNight123129's picture

Well this guy Sebastiaen Galy does not know the difference between money, currency and credit. And also he probably does not know that present goods are circulated in what we call GDP, that included into present goods are commodities and that financial assets are discounted future cash flows. The relative price of the two is governmed by the treasuries, when the treasuries goes in  peer shape, present goods price relative to future cash flows go to the moon.

Gold is a form of money which is a present good, where are treasurires are future cash flows. The asset backing the currency are in the banking system not anymore real bills with short maturity which are quasi present goods but long dated finanical assets which are mortgages. The Central bank is emitting USD agianst another finanical asset which are the Treasuries. The result is a finanicalization of the currency.

If all the assets backing the currency where just gold and quasi-present goods in the form of real bills, there would not be swings between commodities (present goods in general including gold) against finanical assets. The currency would be anchored along present goods and commodities (price stability). Instead we have a currency which is backed by finanical assets. The currency instead of being the alter ego of the circulation of present goods, is the alter ego of finanical assets. So the currency moves up and down in very large swings against financial assets with interest rates.

When interest rates rise, the present value of all finanical assets shrinks, including the Treasuries. Incidently the Treasuries is the asset backing the currency, so evidently the currency falls also against present goods. When interest rates rise, the present value of assets in teh commercial banking system shrinks as well.

THIS IS YOUR GOLD-DOW RATIO EXPLAINED!

 

Sat, 04/06/2013 - 14:44 | 3416575 Alexandre Stavisky
Alexandre Stavisky's picture

How can the Fed exit QE without causing irreparable harm to the very financial markets the QE programs were designed to assuage?

Exactly.  And just as BOJ announces a doubling of its monetary base within 20 months.  Even if you were to grant the supposition that money creation had supplied enough units of account to fill all the holes created by mismanagement, fraud, and default of the latest GFC, still all the large nations now have significant unemployment and lifetime dependencies of retirees, pensioners, disabled, and hungry.  Deficit reduction also cannot occur without reduction of money supply which forces greater defaults in a usury system which REQUIRES exponential growth of money.  C+I+G+X=GDP.  Austerity drops G component just as greater tax demands shrink C and I and very few nations (Japan included) have current account or export surpluses.  Without money printing, the entire world would wake to the true revelation of the economic state.  That would trigger a truly vicious cycle of economic actors stepping away from the table of trade.

Without money printing to smooth over the deep global contraction signifying depression, austerity would be forced upon all stakeholders with outsized effect.  No! Instead central bankers have coordinated their global efforts and by dib and drabs of competitive currency devaluations, financial asset manipulations, and periodic seizures seek to ameliorate the worsening situation.  This has bought time and misplaced confidence.  However when every financial instrument is able to be manipulated at will by the banking sector, no investors can get a true read upon any prospering viable economic output.  For instance, Groupon, Netflix, Amazon, Apple, etc have had terrific vapourware rallies, while the steadfasts like FedEx, CAT, Homebuilders have been crushed.  Hot money games distorting any reliable feedback of economic viabilities.  Since the Nasdaq crash, the Japan Nikkei and property crash, and the USA MBS real estate crash, how can anyone trust any market?  All is an enron accounting, global crossing marketplace.  Place your bets only if you can afford to lose. If all financial assets are founded upon some coordinated currency game, that eventual crippling step-devaluation will smack every sector just as instantly.  It shall be as a global EMP shock upon every asset.  Unrecoverable damage.

Unless you "freeze" your money.  If you find no confidence in this reason-defying Keynesian endpoint, you must hold some other instrument which has at least some degree of insulation from the deteriorations of counterfeit, debasement, and arbitrary value reassignments.  The GO-TO alternative currency which resists tampering...?

That may be precious metals.

Sat, 04/06/2013 - 06:32 | 3415724 jjsilver
jjsilver's picture

SoGen is controlled by Rothschild or Rockefeller, all this shows how desperate they are. Your psyops don't work anymore

Sat, 04/06/2013 - 10:19 | 3415908 Prisoners_dilemna
Prisoners_dilemna's picture

@easypoints
Teach me! Whats the largest bank?
Thank you!

Edit: herp derp, societe generale

Sat, 04/06/2013 - 22:31 | 3417724 Long_Xau
Long_Xau's picture

Soc(ialist) Gen(eration).

Fri, 04/05/2013 - 22:48 | 3415317 Stuart
Stuart's picture

Sounds like SocGen has delivery issues like ABN AMRO.   

Sat, 04/06/2013 - 02:00 | 3415575 Zero Debt
Zero Debt's picture

ABN AMRO..that had a JV with Rothschild, yeah, that sounds like a trusted partner who will store your gold.

Sat, 04/06/2013 - 09:14 | 3415849 iBuddhaTrader
iBuddhaTrader's picture

Just in case anybody missed it...

http://forexmagnates.com/abn-amro-halts-physical-gold-delivery-another-s...

... does not really say if they stop charging for custody or any related charges as the vault seems clearly empty.

Sat, 04/06/2013 - 13:24 | 3416428 Bam_Man
Bam_Man's picture

Classic. They charge you storage fees, year after year - then when you say you want your Gold, they tell you you can't have it.

Sat, 04/06/2013 - 04:50 | 3415668 Gringo Viejo
Gringo Viejo's picture

Correct me if I'm wrong but I think on a mark to market basis with GAAPs, SocGen is technically insolvent. Why then would anyone lend credence to anything they had to say?

Sat, 04/06/2013 - 07:38 | 3415742 Winston Churchill
Winston Churchill's picture

Safe presumption as they are all insolvent when assets are marked to NPV.

Your deposit is safer at a sperm bank , especially if you get a cute teller

Fri, 04/05/2013 - 22:30 | 3415276 Yen Cross
Yen Cross's picture

    I do my own due diligence. Sprott is entitled<

Fri, 04/05/2013 - 22:31 | 3415283 kito
kito's picture

when the worlds entire arsenal of assets implodes, you better believe you will see gold sub 1300........ guaranteed.....deflationary collapses are a bitch eh?????............

Fri, 04/05/2013 - 22:47 | 3415314 Yen Cross
Yen Cross's picture

  kito you looked at the left(non political) corner of Tylers chart?   You are a person of value. I'm impressed.

Fri, 04/05/2013 - 22:56 | 3415332 kito
kito's picture

@yen...first time ive received a compliment from you in all of these years....im humbled..........

Fri, 04/05/2013 - 23:10 | 3415350 Yen Cross
Yen Cross's picture

          Kito, ?  I'm trying.

Fri, 04/05/2013 - 23:13 | 3415356 The Shootist
The Shootist's picture

Is this bizzaro land?

Fri, 04/05/2013 - 23:25 | 3415369 Hulk
Hulk's picture

Its Friday night and Yen Cross be long Saki sauce...

Fri, 04/05/2013 - 23:29 | 3415394 AssFire
AssFire's picture

I was mixing a drink, came back and it suddenly became a sordid affair, with homosexual overtones... not that there is anything wrong with that

Fri, 04/05/2013 - 23:31 | 3415398 Hulk
Hulk's picture

Yen Cross loves me man, and thats all that matters !!!

Fri, 04/05/2013 - 23:40 | 3415409 AssFire
AssFire's picture

Watch, Kito waill say he thought Yen was a chick....

Fri, 04/05/2013 - 23:35 | 3415406 kito
kito's picture

Wait...I thought yen was a chic......

Fri, 04/05/2013 - 23:40 | 3415418 AssFire
AssFire's picture

LOL>>>knew you'd say that.

Fri, 04/05/2013 - 23:43 | 3415423 Hulk
Hulk's picture

Perhaps he's an organ donor, anythings possible. You ever seen one of those surgeon made vagina's??? Pretty impressive !!!

Sat, 04/06/2013 - 08:30 | 3415809 NoClueSneaker
NoClueSneaker's picture

Well, SocGen banksters know them all . The most expensive prostitutes in Paris are transistors.

Sat, 04/06/2013 - 02:06 | 3415581 THECOMINGDEPRESSION
THECOMINGDEPRESSION's picture

whats a kitco?

Sat, 04/06/2013 - 09:18 | 3415856 GetZeeGold
GetZeeGold's picture

 

 

It's a gateway drug to insanity.

Sat, 04/06/2013 - 10:44 | 3415967 kito
kito's picture

KITO

Fri, 04/05/2013 - 23:58 | 3415443 Yen Cross
Yen Cross's picture

    The village idiot is born.?  Ass fire is so 'apropos' '.

Fri, 04/05/2013 - 23:34 | 3415404 Yen Cross
Yen Cross's picture

 Hulk, Rest assured. 

Fri, 04/05/2013 - 23:45 | 3415424 Hulk
Hulk's picture

We luv ya man !!!

Fri, 04/05/2013 - 23:35 | 3415410 Yen Cross
Yen Cross's picture

 Hulk, Rest assured. 

Fri, 04/05/2013 - 23:46 | 3415426 Hulk
Hulk's picture

and you too Yen Cross !!! Bottoms up !!!

Fri, 04/05/2013 - 23:56 | 3415437 Yen Cross
Yen Cross's picture

    You obviously have? 

Fri, 04/05/2013 - 23:59 | 3415444 Hulk
Hulk's picture

Na Man, I'm dry tonight, got to wake up early tomorrow. But you enjoy yours and don't take me serious...

Fri, 04/05/2013 - 23:24 | 3415383 Harbanger
Harbanger's picture

Gold is the one asset that all the CB's are buying right now to strengthen their future balance sheets.  With a race to devalue all the major currencies, are you really going to prepare for deflation by trading your PM's for cash?

Fri, 04/05/2013 - 23:44 | 3415421 The 22nd Prime
The 22nd Prime's picture

+1 

Sat, 04/06/2013 - 05:37 | 3415690 disabledvet
disabledvet's picture

Plus 10 actually. For 800 years the Italians had one simple rule: "the gold stays." In other words "banks fail all the time. Provided the gold is always in there then presto! You can have a new bank." How did the banks get so big and powerful you ask? Because "they exist to support the State" in my view. Amazingly to the point where they steal the savings of regular folks. "Wow...and this is banking?" Can't wait to see how acting gets redefined.

Sat, 04/06/2013 - 16:18 | 3416874 Harbanger
Harbanger's picture

"they exist to support the State in my view."  I agree ,that's why I say the Fed is tied to the creation of our present day welfare state.  We no longer have the liberty that comes from a  small Constitutional Gvt and sound money as the founders intended.  Ever since the revolution there have been forces in America trying to destroy our unique model for liberty.  They planted the seeds of our destruction 100 years ago by producing a central banking system that allowed the Govt. to slowly grow to it's present size with all it's fiat money.  Which eventually drains the nation of it's wealth.

Sat, 04/06/2013 - 14:32 | 3416581 1C3-N1N3
1C3-N1N3's picture

.

are you really going to prepare for deflation by trading your PM's for cash?

Only if you think there's a single currency in existence right now that will survive the crunch. I don't.

Deflationist thought and PM stacking are compatible.

Sat, 04/06/2013 - 08:40 | 3415817 fonzannoon
fonzannoon's picture

the part of the deflationary collapse I don't understand is the part where the dow goes to 15k

Sat, 04/06/2013 - 10:47 | 3415973 kito
kito's picture

it doesn't GO to 15,000 when the forces of gravity set in....

Fri, 04/05/2013 - 22:52 | 3415323 NoDebt
NoDebt's picture

I understand that comment although I doubt everyone here will.  I think it would be better said that nobody knows the relationship of Gold to the Dollar.  If we go inflationary, gold goes up.  If we go deflationary, gold goes down like everything else (but still holds it's real-world purchasing power).  Plus you have to factor in political risk and fear (and what TYPE of fear, most importantly). 

If deposit confiscation and other risks start cropping up in more places there will be more demand for gold, but probably not so much in the "paper" gold market.  I see a gulf opening up betwen the paper gold market and the physical gold market.  They're related, but not the same.  The minute that paper claims for gold are not perceived as being truly equivalent to physically holding it, the price between the two worlds diverges based on the differential in perceived risk.  I believe we may have seen the start of that divergence.

Or maybe I'm just showing my room-temperature IQ again.  Wouldn't be the first time.

Sat, 04/06/2013 - 02:15 | 3415588 Fiat Envy
Fiat Envy's picture

"It is difficult to make predictions especially about the future" but the last time western economies expienced large scale deflation gold went up by 70%.  One thing is sure, your gold will always buy something.  I think you are correct and we will see a divergence between paper (electronic really) gold and physical gold, it is also possible that we will see a divergence between physical currency and electronic currency.  I would find that especially amusing because it would mean that both Prechter and Schiff were "right."

Sat, 04/06/2013 - 05:45 | 3415694 disabledvet
disabledvet's picture

Two words "mining stocks." Price of gold has soared...but not the miners. "They have gold as a product"! Hmmmmm. With Governments now loading up on the physical (but never producing any of course...no the Government uses banks to steal things now) perhaps we're putting in a bottom here. Obviously all the other miners have followed these folks into the Crapper. Hmmmmm. Interesting.

Sat, 04/06/2013 - 14:02 | 3416513 Winston Churchill
Winston Churchill's picture

You're missing the political risk of nationalization which increases with

the price of gold.Gold mines are not portable, unlike their product.

Sat, 04/06/2013 - 07:59 | 3415786 css1971
css1971's picture

You're pretty much spot on. Currencies are measuring sticks. The problem with them is they all change. Real stuff... Not so much.

Sat, 04/06/2013 - 11:24 | 3416126 Croesus
Croesus's picture

@ No Debt:

"I see a gulf opening up betwen the paper gold market and the physical gold market.  They're related, but not the same.  The minute that paper claims for gold are not perceived as being truly equivalent to physically holding it, the price between the two worlds diverges based on the differential in perceived risk.  I believe we may have seen the start of that divergence."

That is precisely what is happening. The "Cyprus Template" was probably the worst mistake the banks could have made, as it set the tone for what I call "The Cyprus Shuffle". Big money is running scared, and unsure of where to seek shelter, which tells us a couple of things:

1. If they're scared, shouldn't we be?

2. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012...

According to Exter’s theory of money, when economies get into trouble through the accumulation of too much debt, the levels of the pyramid disappear in order from highest to lowest. As the pyramid contracts downward, the remaining layers represent a proportionally higher claim on the real underlying wealth. In other words their value increases. Using gold as our reference point, it’s relative purchasing power increases as the pyramid contracts. Gold finds itself in a secular bull market.

In the extreme hypothetical case where all other asset classes are destroyed, including the currency itself, only gold remains. In this case the holders of gold compete with no other financial assets for claims on the underlying wealth. This scenario represents the ultimate clearing of the economy. All currency denominated debts have been wiped clean.

- Trace Mayer, "The Paper Empire".

 

Fri, 04/05/2013 - 22:52 | 3415324 nmewn
nmewn's picture

So I'll still be whole...cool ;-)

Fri, 04/05/2013 - 23:14 | 3415357 Spigot
Spigot's picture

Gold and silver bullion feels good in my hands. When all of your accounts are locked and being mugged by politicians and bankers for their benefit, with what little they allow you to have back, and the controls they will shackle you with afterward, then you will see that the "price" of gold and silver is irrelevant at that point. Enjoy the ride.

Fri, 04/05/2013 - 23:23 | 3415378 kito
kito's picture

No spigot ..... Cash, like your gold, is only to be held outside the system.....

Sat, 04/06/2013 - 08:51 | 3415833 Temporalist
Temporalist's picture

I'll sell you a 100,000,000,000,000 Zimbabwe note for not half, not quarter, not .01 cent on the dollar NAY but for .000002 cents on the dollar!  (psssssttt...it was held outside the system so it's all good)

Sat, 04/06/2013 - 10:48 | 3415976 kito
kito's picture

Once again, you presume hyperinflation.....

Sat, 04/06/2013 - 13:22 | 3416427 Temporalist
Temporalist's picture

Nah that was about somehthing having zero value.

Sat, 04/06/2013 - 00:48 | 3415518 imbtween
imbtween's picture

who gives a shit about the nominal price in a deflation? People holding physical metals will trade them for whatever the commensurate medium is at the time. An oz of silver will buy 4 gallons of gasoline in a deflation just as it has since the '60s, whether a gallon of fuel costs 25 cents or a million dollars.

 

Sat, 04/06/2013 - 08:07 | 3415791 dehdhed
dehdhed's picture

right on

quite a few posts here mention the price of precious metals goes up and down, but i think many fail to realize the value stays the same and it's the fiat currency that fluctuates.

30 years ago you might have been able to trade 20 ounces of gold for a new car, and today it's still possible to do the same.

it's not an investment, it's a store of wealth.

if two people got stranded on a deserted island for 20 years, the one with a safe full of precious metals would look forward to rejoining society more than the one with a safe full of cash.  but it's unlikely the one would be more wealthy, but rather the other became a pauper.

same thing for digital wealth.  as long as they can print more gold and silver to divert physical demand, they give the illusion that digital wealth is safe.  physical cash is even more safe than digital wealth.

if one can't touch it, they will take it away.  a house, a hammer, cash, coins, whatever physical is hard for them to steal.  if the only thing that gives a person wealth is what a computer screen tells them, then that kind of wealth can evaporate. 

Sat, 04/06/2013 - 02:03 | 3415579 Zero Debt
Zero Debt's picture

I believe your are correct that deflation is coming and the CBs will ultimately fail to inflate.

But, it is not assets that will deflate in value, but the debts. As a consequence, assets that are not backed by debt will inflate as a result.

Anyone who believes that a debt is an asset is mistaking a promise of delivery for an actual delivery.

Sat, 04/06/2013 - 05:51 | 3415705 Antifaschistische
Antifaschistische's picture

Kito,  gold, sub 1300?   Perhaps.  Hyper deflation?  Perhaps.   Will I be able to buy my dream home in Hawaii for 100 ounces of gold?   BINGO.   I'll take $1300.

What is a freakin bubble!   Bubble will be like all other bubbles through history!   When every single retard that you work with, every guy you sit next to in church and both of your neighbors are asking you whether you think they should buy 2 or just 1 ounce of gold.   THATs when you know you're in a bubble...and we are no where close to a functional bubble because the retard market is still completely out of the game.   When retards are in...you got a bubble.

Sat, 04/06/2013 - 11:37 | 3416165 e-recep
e-recep's picture

well put. the last sentence could be the definition of a bubble.

Sat, 04/06/2013 - 11:19 | 3416047 oldschool
oldschool's picture

Guarantee?  Really?  Maybe it will happen (and maybe we'll skip that stage and go right in to hyperinflation, I don't know).  But then what?

Moreover, I think one must consider what will cause that implosion?  If it is lack of fatih in fiat, what will have value?  And why presume to measure those things in fiat?  If it is a lack of faith in the fraudulent financial products that are nominally worth a quadrillion or so, isn't a similar path laid out?   What has been the standard response of central banks to implosions, and how does that affect the price of PMs?

Fri, 04/05/2013 - 22:33 | 3415288 Ignatius
Ignatius's picture

Struggling to keep on the path and stay strong?

Pastor Rodddd Flash: (2:10) https://www.youtube.com/watch?v=lmWFrMq3qNY

Fri, 04/05/2013 - 23:14 | 3415354 CitizenPete
CitizenPete's picture

Was one of my favorite alnums in the 70's.  Thanks I needed that.

Fri, 04/05/2013 - 22:35 | 3415292 tpg
tpg's picture

Just look at the silver/gold ration on a daily basis for the past 5 years that says it all.

Fri, 04/05/2013 - 22:38 | 3415297 dolph9
dolph9's picture

I agree with the article.

Gold is not cheap anymore but it's by no means expensive.  Silver is still cheap.  Right now, I wouldn't bat an eyelash at $3000 gold or $200 silver.

Of course, ultimately central banks are going to print more, so just sit tight.

Fri, 04/05/2013 - 23:10 | 3415349 disabledvet
disabledvet's picture

my view is "stealing depositor money is code for stealing privately held gold." obviously Soc Gen isn't going to say "bury it all in your backyard...otherwise it's ours." But quite honestly this stealing "craze" is sweeping the Continent right now so i guess "one can hope against all hope that the price will fall instead." gold is money...just take ten ounces from ten years ago and look what you can buy with it today. throw in the value of simply not having it taken from you and PRESTO..."now you have a bank buried in your backyard too." obviously this isn't the fault of the people of Europe but of Mr. Template & Friends. will the price of "the relic" fall? it has come down from 1900 fer sure...so one could argue based on a trend. obviously with yields so low on debt the value of holding gold as a store of PRINCIPAL is declining. but i think the Western World has a long way to go before it gets the consumer back up and running again.

Fri, 04/05/2013 - 22:41 | 3415304 Stuart
Stuart's picture

Nailed It!   Buy Physical Gold and hold it outside the banking system.  If ever there was a time, Japan and Cyprus scream, it is NOW!   Keep it away from the banksters.  Off with their heads. 

ABN AMRO defaulting on gold deliveries tells you it is really on sale, but it won't be much longer.   

Fri, 04/05/2013 - 22:42 | 3415305 howenlink
howenlink's picture

Finally I remembered to pick up that drywall saw I've been meaning to get.

Fri, 04/05/2013 - 22:57 | 3415333 NoDebt
NoDebt's picture

No good.  The IRS and US Customs has gold sniffing dogs now.  You need it under at least 3 feet of earth.  Or underwater.

<Just kidding about the gold-sniffing dogs, but you probably shit yourself when you read that, right?>

Fri, 04/05/2013 - 23:16 | 3415363 howenlink
howenlink's picture

The dog shit when I stuck the drywall saw in the customs.

Fri, 04/05/2013 - 23:24 | 3415384 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

Betcha when the time comes, they will claim to have gold sniffing dogs though. 

 

They won't say it quite like that of course.  They will be "dogs that sniff for drugs explosives ect and are targeted at those thought to have illicit cash and gold".   From there it will become common knowlege that any stay dog outside your window could be a DHS gold sniffer. 

 

Also it's now illegal to chase stray dogs off your lawn.

Sat, 04/06/2013 - 00:12 | 3415470 andrewp111
andrewp111's picture

Dogs can't smell gold because there is no vapor pressure. But neutron and muon scanners can find gold. Talk of dogs is just an excuse to do the scan without a warrant.

Sat, 04/06/2013 - 06:13 | 3415716 Praetor
Praetor's picture

Muon scanner? Not sure gold is dense enough to block muons.

Fri, 04/05/2013 - 22:42 | 3415306 newengland
newengland's picture

Central banks buy gold. Hedgies do too. Follow the money. Pity the orphans ruined by war, and despise the gold hunting career politicians who want everyone to pay for their vanity.

Fri, 04/05/2013 - 22:51 | 3415322 lieto
lieto's picture

Phys is money plain and simple.

It's on sale if truth be told.

Print, print, print.

Oh, but we have an exit strategy.

Yeh sure you do.

It is called blowing up the world's financial system with greed and foolishness.

Too bad us little guys are going to get fu...ed, er, I mean Cyprus'd in the process.

Fri, 04/05/2013 - 23:00 | 3415335 QuiteRisky
QuiteRisky's picture

Gold has very little utility and is a barbaric relic.  ...Dug out of a hole, and stored in another hole under a bank in NYC.

...but....

With such a history as being a store of value, I suppose it's death will outlive all of us on Zero Hedge...

All assets eventually return to true intrinsic value...  

It's value can't be computed.  It's based on the whims and emotions of those that cling to it.

I won't hold it, but do understand those that do.

BitCoin is the future....  sell gold, buy BitCoin.

-Risky

 

Fri, 04/05/2013 - 23:10 | 3415348 CitizenPete
CitizenPete's picture

IMHO, Unfortunately BC will sucum to TPTB controls and leverage or be under serious IP cyber attack and DOS /fraudulent exchanges directed from banking Corporations and Governments. 

Fri, 04/05/2013 - 23:35 | 3415407 boogerbently
boogerbently's picture

Bitcoin is the FB of "currencies".

Sat, 04/06/2013 - 00:37 | 3415503 RideTheWalrus
RideTheWalrus's picture

Every time a nutron-rich supernova occurs many light years away from Earth, billions of fractional BitCoins are ejected during the final moments, they then travel the long miracle of time / space toward the pull of our Sun and accumilate on Earth.

Whoops, i meant Gold does that. 
BitCoins are nothing, created by Anon, given value by groupthink.

Easy to confuse the two thou. 

Sat, 04/06/2013 - 02:10 | 3415583 Zero Debt
Zero Debt's picture

How can you not be sure that there is someone holding a backdoor or master key to the bitcoin system that can expose it to hyperinflation?

And, due to its distributed nature, there is no ability to stop counterfeiting in such a situation.

Fri, 04/05/2013 - 23:05 | 3415338 Yen Cross
Yen Cross's picture

    A massive  shift from 'right to left' is coming.   I'm speaking in a financial way. I like it/  I'll take back my neighbors property.

Fri, 04/05/2013 - 23:38 | 3415412 ekm
ekm's picture

It may not take too long. Remember when I said that I was scared when russians went too quiet after cyprus theft?

http://armstrongeconomics.com/2013/04/05/russia-north-korea/

 

Fri, 04/05/2013 - 23:53 | 3415435 Yen Cross
Yen Cross's picture

 +1 EKM

Fri, 04/05/2013 - 23:17 | 3415341 CitizenPete
CitizenPete's picture

Who knows what to believe anymore?  Nothing makes sense.  Nothing is at it seems. and worst of all the fiat debt empire and the banksters just keep on keeping on... (regardless of the crime , manipulation, and endless printing).  Its all made up of counter party Bullshit, baked in a cake, and frosted over by Politicians, the media talking heads, and other mouthpiece lackeys of the elite PTB and the status quo. 

Ultimately, war and global corruption is the only Keynesian style solution these assholes know to keep it all afloat.

One thing almost for certain, hold on to your physical assets with both hands the best you can.  

 

Peace

Fri, 04/05/2013 - 23:19 | 3415372 IridiumRebel
IridiumRebel's picture

Cold. Dead. Fingers.

Fri, 04/05/2013 - 23:20 | 3415375 Van Halen
Van Halen's picture

"Who knows what to believe anymore?  Nothing makes sense.  Nothing is at it seems. and worst of all the fiat debt empire and the banksters just keep on keeping on... (regardless of the crime , manipulation, and endless printing)."

Good point. What if this thing can go on... indefinitely? I mean, we're all sitting around here every day telling ourselves this will crash at some point but when the whole thing is a lie and there are so many liars in involved in keeping it that way, and the masses simply don't care... then what is to stop them from going on and on and on with this thing for years? I mean, look at what they've done to gold and silver. Look at what they've done to the banks. Look at what they've done to the economy here in the US for example - and every day the driveby media come out and lie to us some more. "The economy is great!" "Banks are sound!" "Metals are a bad idea!" "The stock market is great so the economy is great!" "Unemployment is turning a corner!"

This crap has been going on for 5 years straight with no end in sight. If you control the liars and you control the medium they use to lie through and you control the institutions they need to lie about, then anything's possible, I guess.

Sat, 04/06/2013 - 00:18 | 3415480 mendigo
mendigo's picture

It is collapsing now.
Think about what has happened in the past two years - how much of it was good.
Unemployment globally.
Housing weak.
Bond yields extremely low.
Every body QEing.
Corruption in finance and government going unchecked.
US government in paralysis.
Europe in disarray.
Europe snatchimg money from peoples bank accounts and refinacing bad debt with more bad debt.
Food inflation.
Student loan bubble - I think the bigger problem is that quality of education and education choices are questionable.
That's some serious shit - what were you hoping to see.

The rampant inflation. rocketing interest rates and poverty come later - somewhat after the confiscation of gold is my guess.

Sat, 04/06/2013 - 07:02 | 3415747 SmallerGovNow2
SmallerGovNow2's picture

molon labe...

Sat, 04/06/2013 - 02:14 | 3415586 Zero Debt
Zero Debt's picture

Crime is the law. Appearance is reality. Debt is wealth. Decree is voluntary. Empire is homestead. Deposits are investments. Manipulation is perception. Media is reality. Soros is grassroots. Keynes is guru. Krugman is scholar. Asshole is mouthpiece. Elite is different. War is peace. Corruption is business.

Sat, 04/06/2013 - 02:35 | 3415598 snblitz
snblitz's picture

Who knows what to believe?

You should believe what you see with your own eyes, not on TV but in the real world.

Look for freedom verses coercion.

If I may be so bold I believe you will find the results of coercion are bad, and the results of freedom are good.

To understand clearly the lie that masquerades as the US of A you need only read John Locke's Two Treatises on Government.

Sat, 04/06/2013 - 02:37 | 3415599 snblitz
snblitz's picture

Hell, try reading the US Constitution.  It is reasonably short.

Fri, 04/05/2013 - 23:15 | 3415362 The Duke of New...
The Duke of New York A No.1's picture

Something I just saw on the jsmineset.com site in regards to US DEBT;

1.) It took 206 years to accumulate the first Trillion in debt (1776 to 1982).

2.) It only took 5 years to accumulate the 2nd Trillion in debt (1982 to 1987).

3.) It now takes less than 1 year to add an additional 1 Trillion in debt.

Fri, 04/05/2013 - 23:19 | 3415370 Pure Evil
Pure Evil's picture

And in a decade or so you'll be able to add:

4.) It now takes less than one month to add an additional 1 Quadrillion in debt.

And, by that time, even fast food workers will be millionairs.

Sat, 04/06/2013 - 08:19 | 3415802 dehdhed
dehdhed's picture

there was a time when hardly anyone knew what came after billion, there will be a day when most will know what comes after quadrillion

Fri, 04/05/2013 - 23:27 | 3415390 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

Every night Bernanke says a prayer:

 

"God bless the exponential function and God bless the people who don't understand it and may God really bless the people who don't understand it and hate those who try to explain it to them..."

Sat, 04/06/2013 - 07:45 | 3415779 Obadiah
Obadiah's picture

dont you mean he prays to the lil "g"?  ie  the fake god satan?

Fri, 04/05/2013 - 23:18 | 3415365 IridiumRebel
IridiumRebel's picture

I'm scoping out our new digs in Ohio far away from CT and NY. This recent legislative shit they pulled was the last straw. I refuse to be treated like a criminal for simply wanting to be able to protect my family. That's a God given right no snake oil seller gets to mitigate. So, I found my coin dealer. Got 10 American Eagle silver ounces for 290 yesterday. I told him he'd be seeing more of me as I am moving to the area this summer. Right next door was a gun store. FUCK YOU NYC/CT gun grabbing freedom robbing assholes. I'll vote with my fucking feet. You get NO MORE of my money.

Sat, 04/06/2013 - 00:24 | 3415492 Whats_Happening
Whats_Happening's picture

Same shit happening in Maryland with regards to restrictive gun legislation.   MD SSR

I emailed the state senate president yesterday morning and told him to shit can the croc of shit bill.  In turn I was directed to a free copy of something by Marx and Engels as well as some helpful links to community organizing and how to stop free market mechanisms.

In the next production/third making of the film Red Dawn, Maryland liberals will send their minions to parachute into Virgnia or North Carolina to appropriate resources and commence the central planning and redistribution immediately!

The SE is cheap..buy some. 

Hey hey hey

 

Sat, 04/06/2013 - 00:44 | 3415512 IridiumRebel
IridiumRebel's picture

Yep, my wife's father works for MD and has a state ID. He lives just over the border in WV. He's changing his ID back to WV just because of this. Yep, MD is becoming another liberal shitstorm where they are taxing rain water collection. FUCKING RAIN. It's an economic mess. Everything is sorting itself out as to who lives where. I'm just glad we can move from CT. I used to love it there. I visited the memorial in Newtown. I'm there weekly. Good people. No legislation will bring those kids back. Last week I tried to buy some metals in downtown Shit York. 46 dollars pre-tax for just the base metal, not even in coin form. I said nothing and walked out. Place makes me wanna vomit. Everyone on their high horse like some cultural guru. SHTF they'd push and old lady down the stairs to survive. I count the minutes until we are out of there.

Sat, 04/06/2013 - 08:22 | 3415804 Miss Expectations
Miss Expectations's picture

Can I get a Rebel Yell?

Sat, 04/06/2013 - 10:04 | 3415897 Hulk
Hulk's picture

Actually, no one  knows what a rebel yell sounds like...

Sat, 04/06/2013 - 13:19 | 3416422 IridiumRebel
IridiumRebel's picture

"In the midnight hour! She cried More More More!!!!"

Sat, 04/06/2013 - 06:45 | 3415730 SmallerGovNow2
SmallerGovNow2's picture

Ohio progressives are on the train behind CT and NY.  Not much more freedom there...

Sat, 04/06/2013 - 09:40 | 3415872 Rustysilver
Rustysilver's picture

IridiumRebel,

I am in the process of getting the hell out of CT too. Two weeks before closing. My final straw was Molloy's charging sales taxes on t-shirts. We had clothing exemptions before.

The stuff they just passed on gun control is SO STUPID that I will not even repeated here. Finger printing, yeah.  They can't even go after guys that violate the law; new laws will make that so much better.

Fri, 04/05/2013 - 23:17 | 3415366 The Shootist
The Shootist's picture

So... FUCKKK you, Bernanke.

Fri, 04/05/2013 - 23:19 | 3415368 Just Ice
Just Ice's picture

"...unless they can clearly articulate how the Fed can exit QE without causing irreparable harm to the very financial markets the QE programs were designed to assuage."

Since when are market declines, or allowing markets to trade more freely considered irreparable harm? 

 

Sat, 04/06/2013 - 00:25 | 3415494 CURWAR2012
CURWAR2012's picture

 

"Since when are market declines, or allowing markets to trade more freely considered irreparable harm?"

 

when the system (governments) have bills to pay and taxes to collect. Irreparable is a political duration, not a literal one.

Sat, 04/06/2013 - 00:56 | 3415524 Just Ice
Just Ice's picture

.

Fri, 04/05/2013 - 23:33 | 3415397 lasvegaspersona
lasvegaspersona's picture

 

What is perhaps of greater concern is the rapid loss of inventory from GLD. As the big shots sense the impending failure of the paper gold market are they claiming physical? It has dropped about 100 tons in recent weeks. Fofoa has discussed this extensively recently and seems to believe this could be a sign of loss of support (you read that right) for the paper gold market.

Fofoa does not charge for his thoughts but he does not promote them either. If you want to understand what he is thinking you'll have to invest some time and effort. I have found it to be worthwhile and he has given me a perspective not found anywhere else.

Ask yourself...why is the paper gold market falling when the conditions that have existed for 10 years, during which the POG has steadily increased, have only changed in a way that should cause the price to rocket higher. I will not argue that manipulation might be a factor but is a change in that manipulation all that has happened? Are you willing to just believe that and move on?

If fofoa is correct these events signal a loss of support for the entire dollar based currency and gold (the current mostly paper gold) market in particular. He has stated that what we are about to see is a reset in the market and that it will not be the great gold bull market that every other gold writer  on the planet argues we are in (gonna blast off any day). That event will take a lot of gold traders by surprise if he is correct. I am betting he is right.

These are my interprtations of fofa's thoughts. Please do not think I represent them accurately  or completely. I do suggest you dig in and start reading though. What we are seeing in the gold market has changed. If you are in that market you ought to consider all ideas.   

 All who hold physical gold will carry through the transition  just fine. (me almost accurately quoting Another)

 

Fri, 04/05/2013 - 23:38 | 3415415 Hulk
Hulk's picture

The paper Gold market is levered at least 40 to 1. Whats coming ain't going to be pretty and folks

are starting to figure that out. 

Disclosure: Long Popcorn, Glenfiddich 12 and  La Gloria Cubana's number 7, series R, Natural.

See you Bitchez @ Au > $7500...

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