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Sprott: Why SocGen Is Wrong About Gold's Imminent 'Demise'
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.
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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I send tangible results hulk. You send Jack Shit! You send your "prognostications" and salacious accusations? Think twice before you speak (CHILD)!
I am truly shocked and appalled at your response YC !!! (did I spell "appalled" correctly ???)
The only one who thinks this shit show ends well is named Leo...
I'm amazed that you you took the time to imbibe "hulk"? You're full of shit and we all know it! Send me a chart? Send me a link ? Send me a picture of your sister!
His sister is green too...not that there is anything wrong with that (Sam I Am).
Now's not the time to get the Hulk angry!
He might smash up Zero Hedge.
Never PE !!! Its my only link to reality...
I call "bull shit"you are talking out your ass! What is the the next move for the FED.? What is the next move for BoJ?
Where is the Yen going Sunday smart ass! Where Is the euro and pound going Sunday ass Face?
I'm signing out YC, the Midnight special is on.
Watch the Wolfman introduce the Ohio Players
http://www.youtube.com/watch?v=FVlNU_8-v0g
Its Love Rollercoaster Bitchez !!!
What ever you pussy!
YC. Let me take an honest stab at it. I think the FED's next move is "Stay the Course." - unless the stock market takes a shit - they will stay easy and sort of commensurate with Japan. And if equities do get taken out behind the wood shed, then I think the FED will accelerate its purchases. 10 y will bust 1.5. Everybody talks about a bond bubble. Its a long ways between 1.5 and 1, or, 1.5 and .05. As bubbly as people think bonds are, I think that this is going to be home for a lot of the market over the next 4 or 5 months or so. Last night there was a lot of hooo haa over the jump in JP yields (.3 - .65). But in context, I'm thinking that was a fibonocci bounce off of .3 - a gap fill. I think that depsite Japans debt/GDP, yields could still go negative. And I especially think this too could be the case for US Treasuries as well.
I think the arena or hub of fun for traders will be FOREX. Shorting stocks will continue to be hazardous - like getting kicked in the nut sack - as Algos continue to remind shorties whose the fucking boss. Yet going long will make you feel you bought at the top. I don't think they are going nowhere's much (up or down). Some volatility, but, because there is no volume (commitment), direction will be weak. So, stocks climb a gradual wall of worry with 1440 serving as support and bonds cruise along with them with yields trending between 1.75 and 1.5. A move to 1440 would definitely be good for bonds (a short rotation out of risk), only to see that safety unloaded and a reload on the Snp maybe in July. Have to give Kuroda a chance to lay a beat down on the Yen and I think Bernanke will let him do that unless, like I say, equities take a shit over the next two weeks.
How's that for a call on the bat shit crazy world we find ourselves in? Oh yeah - Sterling up, Euro flat, Yen little bit down, $USD up some more.
The image that immediately popped into my mind was someone on a bike [which had an unbalanced front wheel] traveling forward at a moderate rate of speed on a somewhat bumpy road... Then they take their hands off the handlebars & the chain slips off...
~~~
Oh, & momentum & inertia & stuff like that...
All it takes is one lousy stick flipping into the spokes of the front wheel...
Gold made its death cross just recently. I remember the death cross in 2008 too. Then it went to $1920. If the secular bull is over, it should follow charting of past ends. Immediate substantial fall with continual subsequent falls as huge volume of inventory hits the market. No news of delivery issues then because price is declining, inventory is increasing, and the world is awash in the commodity. You want it? You got it. And yesterday too. Falling prices AND delivery constraints violates Econ 101 price/supply curves. Instead we get two to three day price crushes just prior to some devestating news which plays to gold's strengths as inventory continues evaporating. Soros' "the ultimate bubble"--haven't seen any action which even approaches that yet. When facebook and netflix are showing the returns we're seeing, and when say, lumber doubles in price in a year in a housing depression, that's bubbly.
No gold is just CB kryptonite. And so they bring every gun to bear upon the greatest threat to the continuation of rapidly failing system. Just more monkey business in the slide to greater babylonian captivity. Just another malmeady or battle of the bulge. Somewhat impressive locally, but doesn't change final outcome globally.
@hulk. i'm 100% with you. Ardbeg Supernova & Cohibas aplenty.
Personally, I wouldn't mind the chance to purchase gold at $1375 an ounce, or even $300 an ounce.
As the Magambo Guru says: "This investing stuff is easy!"
Pure Evil
I wonder at what point, on it's way down to 300/oz, that physical gold would become impossible to get. Paper can trade at those low levels but who in their right mind would satisfy China's appetite (1000+ tonnes per year) for anything less than the current price? I'm betting that fofoa is correct. That demand is being met with GLD inventory. That inventory has gone from about 1350 tons in January to 1205 tons today.
At what point do folks say 'hey' I'd better got physical before China gets it all. At what point do those who supply physical gold (if there are still any) say 'hey' I'm done. This stuff is worth WAY more as it is and with every central banker printing non-stop I'm going to sit on mine until things shake out.
In fact it is worth wondering: where has all the physical come from during the latest 10 year run up. Who sells into a rising hot market? Was it you? It wasn't me.
I don't know the answers to your questions.
What does fofoa say about silver?
He apparently thinks that silver will greatly lag behind gold, which he predicts will appreciate to 20-30 times its current value, while silver will remain at roughly the same (inflation-adjusted) value as today, or at least appreciate only as much as most other commodities.
I'd love to see gold take a nosedive as the leveraged players are forced to sell. That would let me buy gold at a better price. As long as real interest rates are negative, the long term price trend of gold is UP. Price movements on a months to a year timescale are just driven by short term market dynamics that have no bearing on this long term trend.
My buddies and I have build nice precious metal stacks the past 1.5-2 years. We are aiming to be 20% net worth in the metals. Any good "crash" would be a GOD send for getting there faster.
Go fuck your self Hulk! I wish I was Gay. You would be the first thing I FUCKED!
Good Lord YC !!! Go pound an artichoke would ya !!!
Hulk, just answer my questions> What happens Sunday when the markets open in Asia?
What is your opinion, (based on recent employment numbers) That monetary policy should be? (simple things)
Just answer the questions Hulk.
Good Lord ! is it that hard?
OK YC, here is what happens on Sunday
1) The FED calls it quits. Bernanke gets on 60 minutes and states "Fuck it all, I'm outta here"
2) The BOJ goes rupt
3) The Yen is devalued 62 percent
4) Cyprus and Greece invade Germany, taking all the gold that isn't there.
Now go trade on that !!!
Hulk you like metal and Farm Land', as do I. The yen has devalued just under 20% vs even the (Great British Pound).
Do yourself a favor and buy some silver (xag). If you have the spare cash, buy a cheap house. Live in it.
Simmer down boys.....
WELL FUCKING WRITTEN SPROTT. SOCGEN can suck all the fiat cock they want.
Meh. Not convinced. How does the correlation work before 2000? Not well.
Obviously central bank asset expansion influences the gold price, but not so simply and directly.
Gold is more of a store of value than a currency. It's hard to explain what drives the price of gold, other than to just say "demand". My impression is that after the huge move of the last several years, Asian jewelry buying has weakened and western jewelry scrapping has picked up, and that's what has driven this correction. ETF investors are mostly momentum chasers, up and down - they're reacting to the correction driven by the jewelry market and selling off as well.
So in my view where it goes from here is mainly up to the Indians, the Chinese, the Turks and other Asians who are really the main private savers in physical gold in this world. They make the American and European goldbug market look puny. They've had rapid real appreciation of their currencies relative to the dollar, so the price of gold relative to their incomes has not gone up so much. But $1900 was clearly too much for them to handle. Especially when the rupee devalued. I think you've got to see some more real appreciation of those Asian currencies to get gold moving up again. Japanese can make a Mount Fuji of yen I don't see that making much difference to the gold price.
There is a real physical constraint to non-rehypothicated gold. My understanding is that every portion of the paper futures contracts do in fact have some backing in physical but the actual delivery is minimal. Paper players pass around hot potatoes. If Texas, Germany, China, etc get their physical and even small "long term thinking" stackers can hold their physical, the paper market price would be harder and harder to back. However, the change in margin rules will help as the gold backing diminishes. If there is any substantial short positions, these will be hard to hold onto.
LOL!
SocGen's wet dream.
It looks like another bank has jumped on the gold bear bandwagon, but this is just a fad that will be proven wrong in the long run. We are at a critical point in history in which everyone knows that the global economy is currently not in good shape, but people are simply ignoring this.
More
http://homment.com/end-of-gold-era
Correlation does not imply causation both have risen because of economic turmoil, gold rise has been much faster then inflation and can be argued that it is over priced by historical standards. A much better comparison would be total money created compared to the price of gold. This chart is really crap as it does not show the decline in bank leverage (the dominate force in the world economy at the moment). It amazes me how educated Zero Hedge readers get this wrong all the time when there are so many pieces about the fractional reserve system and how it creates money (and how much money has already been created).
please remove head from third point of contact...
How much bail out style money did Societe Generale need to stay afloat since the GFC hit?
If they don't know how to run their own f....n business, what makes them think they know anything about gold?
Adjusted for inflation since the 1980 price (average price for that year and not the spike price), the price of gold today still has anywhere between $100 and $200 upside minimum.
The 80's had high inflation 10+%, and gold is inflation hedge so it was rightfully priced very high in the 80's, even if you argue that inflation is underrated right now it is no where near where it was when there was stagflation. If gold was really so underpriced do you really think you there would be people willing to sell it physical coins for 37 over spot (and spend tons advertising on tv to sell it?) if it was so underpriced they would not have to spend a dime to push it out the door, and would be charging much more the 37 over paper gold.
gold is a free market (and actually a pretty competitive market hence the need to spend money to attract buyers) at the moment, and buyers and sellers are setting fair prices, even for physical gold.
The Fractional PM lending market is imploding
Physical gold is a greeting card that says:
"I am not here to rip you off"
Can someone explain to me how the price of gold comes about?
I understand that there actually isn't all that much gold in the world, so that makes it scarse while demand is high = higher price.
On the other hand, paper gold has been sold 1.000.000 times over on the same piece of gold, so didn't that cause a massive rise (bubble) in the price of gold?
And if people start selling their paper gold doesn't that lower the price massively? Especially if they aren't moving into physical gold?
It seems to me that many people need to sell their paper gold because they actually need the cash now and are not converting it into something else (physical) while others who can afford to buy gold don't, because they know the price is too high?
Dear Tower,
Let me explain as best I can, although others may have even better explanations.
1. Exchange is the cornerstone of societies.
2. Barter is great but it presents too many problems which you can read about elsewhere.
3. Gold and silver have a terrific appeal in overcoming the shortcomings of barter because they have the advantage of being homogenous no matter where they are mined. They are portable and divisible. Moreover, despite 5000 years of written history, gold and silver are still the stand out measures of universally recognised wealth.
4. The sales of paper gold effectively dampen the price of gold. If there is only one Mona Lisa for sale, the price I will get for that painting will be far more than if thre were 300 Mona Lisas all painted by Leonardo Da Vinci.
5. Yes, if people start selling paper gold for paper dollars, then this will dampen the price of gold but not permanently. This is why such periods of price attack should be used by you to buy gold.
6. It is also true that many people sell their paper AND physical gold to cover living expenses as they have done in Europe in recent years. On the other hand, even the peasants in India despite their poverty will make that sacrifice to buy at least some gold and silver. They have somehow learned their history lesson extremely well. In the west, we have been blinded by consumerism, propaganda and cheap credit to get ourselves into poverty and debt.
7. Despite the propaganda, the excitement of a gold find, a treasure being found or an Olympic gold medal tells us that deep down man still has something in his intuition/DNA that recognises value of precious metals despite all the smoke and mirrors.
Then again gold and silver is not within the economic or intellectual grasp of all people. I guess that is why this world is still made up of more losers than winners.
THX for your comments, and for taking the time to write them.
Would you say that SocGen is actually correct then that the price of gold will go down for at least a while because of the sell-off of paper gold on the one hand and "big fish" not buying on the other?
It seems to me this is not the right moment to buy if you don't really have to?
PS I have the feeling that any given "unit" of gold has been sold many times over as paper gold, so couldn't the bubble be bigger than one thinks?
Your answer is in the chart in the above post... Think of it this way, if there is more sold than actually exists, and this fact comes to light, then there is less physical with more demand hence price goes up...
Somebody on this thread posted a link to a video called "Risk: It's Not Just a Board Game". It is an excellent video and may answer many of the questions you've posed. I think you will find that video to be more than well worth your time.
If you don't mind, I'd like to add one more point, and that is that most "paper" gold, and silver is bought on margin, with only a few cents on the dollar. This allows the buyer to make (and lose) a lot more money than he would if he only used cash on hand. This is one of the reasons that we see violent price moves at times. Such as in 2011, when the silver price nearly hit $50. It was quickly smacked down down when the margin requirements were quickly raised five times, in four consecutive days.
today's jobs report pretty much stopped the talk about ending QE in the US .
thinking ...
some of the paper players
are selling and buying physical
forklift long..
At what point does the paper price of gold and the physical price of gold diverge to such an extent it renders the paper price meaningless and sends the paper price to 0 but the physical to 2000+?
Is this a possibility?
I watch the premiums and availability at gainesvillecoins.com. When premiums really go up to keep them from running out then we will have a disconnect in the paper and physical prices. So far only a slight premium rise.
So, as far as I can see, the relevant question remains, what's going on with the prices of silver and gold. Does anyone, who holds gold physically, think he has lost, because of the diminishing price? And if so, be aware of the very transitory nature of this dip. This was also indicated by yesterdays ramp. With printing presses everywhere in the world nearing maximum engine speed the currencies must lose value relative to other assetclasses, including precious metals.
Don't fall for the chart baublery, it only shows, that some traders algos react to certain pricelevels by selling. This will also work with climbing prices. In the long run, the precious metals must profit from the printfest, we're witnessing.
It just ist the case, that temporarily most investors are eager to buy shares instead of precious metals, because they think it's better to have a small divident yield than nothing.
Look at the NIKKEI, if you need to see, what I am talking about. That is where the freshly printed money goes (to die). This, too, shall pass.
Will this lead us into full blown currency wars, where every nation tries to let their printing press rotate somewhat faster than the other, to devalue the own currency so to get a competitive edge? I don't know for sure, but it seems not so unlikely to me.
What I am very sure of, is the fact, that the spending capacity of the currencies will be diminished by this trend, which must lead to climbing purchasing power of the PMs, so that their prices, measured in the devalueing currencies, accordingly climbs higher and higher.
Or, in short: Hold on, it's coming!
Disclaimer: Not invested in any currency or PM, never been, and proudly out of all markets since 15 years ;-)
You must be a moron not to understand that Gold and Silver manipulated it’s the norm. It’s a fight for FIAT’s survival, if the masses lose the faith for paper money things would get wild. However would get wild for the Gold/Silver bugs too!
Too much of one thing is not good, all you need to do is hedge your physical, and buy more on the deeps with your short profits.
You wrote: "You must be a moron not to understand that Gold and Silver manipulated is the norm", and I can agree wit that. But imagine, how well off we all would be, if indeed only gold and silver would be manipulated. Sadly, that's not the case ...
As for buying the dips with short profits: Watch out below!
They're getting desperate. When an educated banker makes statements like these, you know they are in late stage desperation.
Sad to see it. Sad to see this kind of misinformation showered oine the public.
I don't get why Sprott's team would even bother to comment on SocGen's stupid ideas...It's the same with Krugman's...
I usually follow a gold bullion sales site and they are sold out....
So any dip in price that 'they' manipulate is used as an opportunity to buy.
So what the price is manipulated, just gives us a better price to buy the physical so we can store our money away from the banksters
May I suggest an alternative buying opportunity? If it's getting so hard, to get a hold on precious metals, there ist still the possibility of buying metals, that are not so precious, but valuable nonetheless:
Personally I'd suggest X 155 Crvmo 12-1, but some S 235 JRG2 would also come in handy, if construction material is needed.
Compared to PMs this stuff is dead cheap, and one can use it in so many ways, that it will always be a good thing to have some.
:-)
ABN-AMRO anounced to his Clients, that it would stop delivering physical Gold to its Clients (who bought Gold with ABN-AMRO).
They declare, that nothing has changed for the Clients. They could at any time get their money back (actual price for Gold), but not the Gold itself.
I am not English. So my vocabulary is quiete limited. But as a fact, you don´t get back your Gold anymore !!! It is confiscated by ABN. That is at least how I read the following text:
ABN stoppt Gold-Auslieferung
03.04.2013
Die niederländische Bank ABN Amro - eines der größten Finanzhäuser weltweit - stoppt die physische Auslieferung für Edelmetalle. Das teilte die Bank in einem Schreiben an ihre Kunden mit. Die neue Regelung gilt ab April.
Osterüberraschung für die Edelmetall-Kunden bei der größten Bank in den Niederlanden - ABN Amro: Das Finanzinstitut teilte seinen Edelmetallkunden in einem Schreiben lapidar mit, dass die physische Auslieferung ab 1.April nicht mehr möglich sei. Dies gelte nicht nur für Gold, sondern auch für alle anderen Edelmetalle wie Silber und Platin.
Was so aussieht, als könnte es ein Aprilscherz sein, ist leider nun Realität bei ABN.
In dem Schreiben beruhigte die Bank ihre Kunden: Man müsse sich keine Sorgen machen. Das Gold bei ABN sei sicher aufgehoben. Der einzige Unterschied sei, dass es nicht mehr ausgeliefert werde. Dafür erhalten die Kunden aber den aktuellen Tageskurs in Geld ausbezahlt.
Weiter hieß es in dem Schreiben, dass sich eigentlich für die Kunden "nichts" ändern würde, bis auf die Tatsache, dass sie für ihr Gold nun nur noch Geld ausgezahlt bekämen.
Ob dieser kleine, aber wichtige Unterschied von den Kunden so akzeptiert wird, dürfte fraglich sein. Denn wer Gold bei einer Bank kauft und es dort einlagern lässt, will am Ende sicher nicht in Papiergeld ausbezahlt werden. Für den Edelmetallkäufer ist die Motivation ja gerade, im Zweifelsfall auf die physische Auslieferung zu bestehen. Das allerdings geht bei ABN Amro nun nicht mehr. Die Bank beruft sich auf Kleingedrucktes in ihren Geschäftsbedingungen, nach dem sie jederzeit das Recht hat, statt Gold Geld zu liefern.
You got that right. Nobody will get physical from them, from 1st April on. They refer to the fineprint of their standard business conditions.
April Fools!
Sell all your gold, and buy new one (bitcoins). You'll thank me later.
Gold price is manipulated so people lose faith in it, while bitcoins are just making name for themselves and fulfil all functions of money.
Your comment seems to operate on two assumptions:
1) Gold price manipulation can go on forever without consequence.
2) Bitcoin will not, once it's a big enough market, ever be the object of government manipulation.
I believe that you are completely wrong on both counts.
Never put all of your money into any one thing.
The FBI and CIA are either players or developing a method to fuck up bitcoin. It is not a store of value but rather a place to put 1% of your wealth for interesting speculation. I support the intent, but worry about the true capability to purchase any significant variety of tangible goods.
It's trivial to fuck up bitcoin.
Bitcoin depends on a network to authenticate a transaction. It works based on majority rules.
All you need to do is develop a virus, get more nodes on the network with the virus (i.e. more computers infected with the virus than there are bitcoin nodes) and you can crash the system.
It takes a little bit of work, but nothing that can't be done.
Risk - It's Not Just A Board Game
http://www.youtube.com/watch?v=wzzoBVK3fyE&feature=youtu.be
People might have better luck finding those No Korean subs in sea rather than on google:
http://www.google.com/trends/explore#q=North%20korean%20submarines
paper gold accounts are to be settled soon in USD and right after that USD will be re-pegged to gold at a much higher value
I realize that when someone is talking about the price of gold, they are in fact talking about Gold and Silver.
That said: I'm partial to Silver. I believe the price suppression there is a bit more severe than in gold and the bounce back will be more parabolic and then stabilize in the $50-$75 per oz range for a while.
In the mean time, I would expect the price of silver to, at least momentarily, get pushed down to perhaps as low as $20 per ounce in order to give "credibility" to the recent slate of articles pontificating about the inevitable demise of Gold and Silver prices.
If you do not believe that these reports proclaiming the death of Gold and Silver are not being done at the behest of the government and/or Fed, then you simply have not bee paying attention and should instead buy more AMZN stock.
By the way, Paul Craig Roberts recently wrote an article very similar to this one. In it, he makes the following claim:
"The Federal Reserve used its dependent “banks too big to fail” to short the precious metals markets. By selling naked shorts in the paper bullion market against the rising demand for physical possession, the Federal Reserve was able to drive the price of gold down to $1,750 and keep it more or less capped there until recently, when a concerted effort on April 2-3, 2013, drove gold down to $1,557 and silver, which had approached $50 per ounce in 2011, down to $27.
The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.
For now it seems that the Fed has succeeded in creating wariness among Americans about the virtues of gold and silver, and thus the Federal Reserve has extended the time that it can print money to keep the house of cards standing. This time could be short or it could last a couple of years.
However, for the Russians and Chinese, whose central banks have more dollars than they any longer want, and for the 1.3 billion Indians in India, the low dollar price for gold that the Federal Reserve has engineered is an opportunity. They see the opportunity that the Federal Reserve has given them to purchase gold at $350-$400 an ounce less than two years ago as a gift.
The Federal Reserve’s attack on bullion is an act of desperation that, when widely recognized, will doom its policy.
As I have explained previously, the orchestrated move against gold and silver is to protect the exchange value of the US dollar. If bullion were not a threat, the government would not be attacking it."
You can read the full article here:
The Assault on Gold
http://www.informationclearinghouse.info/article34520.htm?utm_source=ICH...
The FED has trapped itself and there is no exit for IT, it's doom is sealed.
So sit back and enjoy the show folks, no movie ever made will even come close to the entertainment/educational value of what we are witnessing, tragic as it is...
In 1913 the average weekly wage was about $20.00. A custom made suit was about the same. There was a $20 gold coin in circulation. (also the Ferderal Reserve reared its ugly head)). Fast forward to 2013. Gold is in the mid 1500s an ounce. $1500/1600 per week is a good salary. You can get a suit made in the USA for the same. (Hong Kong Custom Tailors is cheaper). The puchasing power of gold is constant. The dollar has lost most of its purchasing power. I don't see where the gold bubble is.
Deflation is king right now. Japan has been fighting it for 25 years. Bad for the gold bugs but it won't last forever. I forecast a new world currency based on a basket of commodities, including gold. Worst case senario - war. Historically war has been the get out of jail card for TPTB. Right now they are choosing sides - US, Europe, ect. and the sunnis vs. China, Russia and the shiites - starting in that shit hole, the middle east or perhaps asia. Get scared when you see a bunch of chest beating, flag waving nationalism.
isn't gold in yen at an all time high (deflation adjusted)?
Well yes, yes it is - thanks for pointing that out to the poster above, so I didn't have to:)
I have a "yen" for gold and silver...
Gold is not a currency. It is MONEY!
It can act like a currency but there are far better alternatives.
gold's demise fits my vision, which is for twenty year bull market in gold. bull markets don't begin from overvalued levels, they begin at bottoms where no one wants to own that thing. at the moment gold is merely tracking the dollar, stock market, commodity market, bob prechters all in one market. that's fine, the downturn is probably the divergence i am sure will lead to the final market collapse. from that bottom you want to buy gold for the long haul. i personally feel there has never been a bull market in gold in modern times, despite some rather aggressive pricing, gold always follows economic policy, just as it did during the 70s stagflation. now gold will assume leadership, and twenty years of monetary blowback, make gold a perfect investment. i especially like the gold stocks, which have lots of value added, (people want gold, and mining that gold gets more expensive, the price goes up) but i have to wait for this divergence to play itself out. bearish calls just add more fuel to the fire.
GoLd BiTcHeZ!
wtf?
It will be interesting to see if the cross of the s&p with gold Thursday night will mark any kind of bottom. It did not last long.
+1 Woooh Jah!
Gold is just another gamble. There are people at the CFR (one of the most powerful think tanks responsible for what is happening in the world) who are calling for tightening of interest rates, too (which could cause gold to decline). The people with the power have total power over everything...still, and they will surely get us into a massive world war if all else fails (and everyone loses). You can call gold whatever you want, but people are investing in it based largely on what they are reading in the Alternative Media and what they glean from other news sources about the economy (but none of it means it is accurate).
There is no such thing as security on planet earth. You are going to die, I'm going to die, and it looks like the elites will die too. Your best bet is to be as self-sufficient as you can and to come to terms with death. You have to become comfortable with the thought of dying before you will really be able to live.
John 12:25 “He who loves his life loses it, and he who hates his life in this world will keep it to life eternal."
John 12:26 "I guess you're fucked either way, so go blow your brains on the wall."
The Western World think tanks may control, Europe, US, Russian, Japan thinking. They do not as yet control Chinese, Indian, BRIC and Middle East thinking. China and India know they are one catastrophie away from disaster. Their populations still see gold as money.
How are you going to tighten interest rates?
The federal government now takes in less than 15% of it's debt as income per year.
Raising interest rates to just 7.5% would mean that 1/2 of all tax revenue would go straight to servicing the debt.
Why would you listen to a money manager whose flagship fund is down 43% yr. to yr. and is now beginning a new campaign in the PGM's in order to stem the horrific tide of redemptions? Ever wonder what life will be like with U.S.$ gold at 3,500? Be careful what you wish for. The best resource market EVER was in the disinflationary 90's when gold couldn't get above $500.
Talking his book.. 5 year performance is pretty lacklustre ---
“With respect to personal finances, in virtually every national currency devaluation and major political upheaval in the past, gold has represented sanctuary for the affected people. Gold has not just preserved wealth, but personal freedom as well. While governments can devalue fiat currencies, they cannot, by edict, devalue gold. Yes, they can try to manipulate its price, but unless all governments join in the collusion, ultimately the price will return to market. The market for gold is global, and demand exists in all nations and among all peoples. Should the government attempt to confiscate gold, it will be an outright admission that the financial system is collapsing, and the people will know better than to hand over to a corrupt government their only means of survival. The most important point is this: devalued currencies never rise again. Once they are destroyed, they are gone forever, and those whose wealth had once been denominated in them are wiped out. As you have no doubt heard before, not one fiat currency has survived over time, and that is an indisputable fact. More significantly, no fiat currency has ever suffered the abuse that has been inflicted upon the United States dollar, meaning that it is at extreme risk. Gold has been money for 5,000 years. It has not merely survived, it has prevailed over each and every fiat currency collapse throughout history.
Given this, the most important financial question a person can ask him- or herself today is: How is my wealth denominated at this time? And given its denomination, is my wealth likely to be safe in current and evolving circumstances?”
-Stewart Dougherty - Specialist in inferential analysis, the practice of identifying historic and contemporary patterns and then extrapolating their likely effects upon the future. Dougherty was educated at Tufts University (B.A., magna cum laude), and Harvard Business School (M.B.A. and academic Fellow) – March 2010 -
http://www.24hgold.com/english/news-gold-silver-america-s-impending-master-class-dictatorship.aspx?contributor=Stewart+Dougherty&article=2876933006G10020&redirect=False
What if gold had been held instead?
(1) Venezuelan devaluation
(2) Zimbabwe experiment
(3) Cyprus confiscation
(4) German currency after loss of WWII, and three German defaults last century
(5) British pound (now worth about 1.53 dollars) what is a pound sterling silver worth now?
(6) Argentinian devaluation
(7) 2000-2013 U.S. dollar
(8) Instead of continentals
(9) Instead of CSA bonds or dollars?
(10) Instead of every defeated nation's currency after military contest?
(11) In every case where a nation's debt exceeds 150% GDP
Any 100 year span of time since 1500 AD in economic history.
Revolution, regime change, capital controls, confiscation, interest rate suppression, nationalisations, martial law, force majeur, credit collapse, bank holiday.
I suspect in every case, a little shiny might have proved your foresight right.
Too bad paper currencies don't have little touchscreen functionalities placed just where the numerical denominations are usually printed. Then they could be revalued constantly, irretrievably in real time. So for fiat true-believers, I also highly recommend the suspension of all law regulating weights & measures throughout the world. Then a kilo of rice or a pint of bitter could be adjusted to the immediate satisfaction of traders' exigencies. That is fiat's purpose--to destroy and render arbitrary all the weights, measures, volumes, and standardized capacities of all things raw, manufactered, or packaged in the material world. One grain of wheat is as good as a bushel, and both fill bellies to the same extent in the fiat rabbit holes.
We haven't even entered the flippin' gold era yet! What a bunch of clowns. We are barely into the accumulation phase
When people are lining up at gold shops to buy gold, then and only then will we be at the top of the bubble.
We have a long way to go
+1. Walk into a local coin shop and you will see 90 out of 100 people selling family silver or old gold jewelry. About 8 out of the 100 buying silver bars or coins, and 2 of the 100 buying gold bullion. Local observations show joe six pack is concerned with finding and selling anything of value and getting FRN's for it.
Once conditioned, its impossible to go back to independent thinking. The depression generation is all gone so the lessons learned will no longer be passed down to the current generations. we will have to learn the painfull truth on our own.
Gold is surely on its way down, and wouldnt surprise me if it drops below 1300, during the next 6-8 months. its clearly overvalued, and has to come down where it really belongs. the stock market, and the real economy is recovering. only ZH dont wanna admit that. Sell your gold, and get into stocks.
Clearly, like a good servile sheeple, you buy into all the government-fed propaganda and lies about the so-called jobless 'recovery'.
The real economy continues to crumble, and growth remains nothing but a fraudulent CPI-induced fantasy. You are an idiot.
Thats a typical gloom and doomer reply. Everything is bad and the collapse is gonna happen Monday morning. i mean, on what planet are you living on. if you were in stocks during the last two years, you would have made ALOT more money, than holding gold. Gold is only an insurance, and is okay to have maybe 5 % of your portfolio in gold. but to put all your money in gold is absolutely stupid. what are you gonna do with it? you will have to trade them into the so called fiat paper money you disgrace anyways at some point. You are an idiot. you are to stuid to see what stocks are undervalued, and buy them. so you just put your money into gold, sit on the couch and hope the world implodes, and at that point you will trade your gold into paper money, and be able to buy the same thing you could 25 years ago. so whos the idiot here???
Have fun willingly being led to your own shearing.
It will be well deserved.
Ouch it hurt didnt it. Being told how it really is. Now go back to your 1 bed appartment, and watch Preppers on discovery Channel.
And you, back to watching CBNC --- BUY BUY BUY!!!!
LOL LOL LOL!
LOL its called CNBC, and i dont watch it. Listen i know there is an end game to this fiat ponzi scheme, but its not gonna end monday morning. If you are smart you can make money of it. There is a time to hold gold, but its not now. I hold it aswell, but ONLY as an insurance, and i DONT hope it will rise, like my insurance on my house, just because i pay insurance doesnt mean i hope my house burns down, you stupid idiot. Your ignorance and stupidity has no end seriously.
Poopthestock said:
The collapse will happen Monday, as well as Tuesday through Sunday. It's been happening for years and will continue for years. Economic collapse is a process, not something that happens overnight. Only a birdbrain thinks of economic collapse as an event.
Djeee, is it really so difficult to comprehend? At some point, people will spend it.
Why? Seriously, why?
By the way, you wouldn't happen to know the current spot price of gold in terms of the Austro-Hungarian krone, Biafran pound, Central American Republic real, CSA dollar, Czechoslovak koruna, East African florin, French Indochinese piastre, Ionian obol, Rhodesian dollar, Westphalian thaler, or Yugoslav dinar, would you?
You are absolutely right. All goldbugs should sell all of their gold on Monday morning and load up on undervalued stocks.
Your financial acumen proves that you are a true investment visionary, and have attained a level of expertise matched only by luminaries such as Jim Cramer, Doug Kass, and Jon Nadler.
I promise to jump into the market when Poopystock promises to ring a bell for me at the very top of the current bubble, er, bull market in equities, so that I can sell at the peak like he plans on doing.
The collapse will happen Monday, as well as Tuesday through Sunday. It's been happening for years and will continue for years. Economic collapse is a process, not something that happens overnight. Only a birdbrain thinks of economic collapse as an event.
I totally agree. But most Zero Hedgers believe its gonna be some epic event.
There is a time to hold gold, and a time to be in stocks. the last two years and the upcoming years stocks are gonna outperform gold by MILES. To know when to be in gold or stocks, well you need a smart brain for that, which most Zero Hedgers dont. Some do, but most dont.
you are to kind to this shill +99
story inconsistent;
"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. "
"QE is here to stay… and the collective central bank balance sheets will continue to increase over time."
First said they shrunk second sayd they continue to increase and were increasing in the past
The Goldbull is here to stay for another few years! That is why everybody who is serious about protecting his wealth and increasing it, has to own some. Another possibility is to trade gold. I usually do that using the CFD as an instrument. I also like beleggen in zilver