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Mike Maloney: Today's Low Gold & Silver Prices Are Not Realistic

Tyler Durden's picture




 

Submitted by Adam Taggart of Peak Prosperity,

During this very tumultuous week for precious metals prices, Chris sat down with Mike Maloney, founder and owner of GoldSilver.com, one of the world's largest bullion dealers.

Mike is a true scholar of monetary history. His reasons for getting into the bullion business have their roots in a very predictable cycle that has happened time and again over the centuries (more accurately millennia):

  1. A new monetary system is introduced, based on sound money (most commonly, using gold and/or silver)
  2. Currency (e.g., paper bills backed by sound money) is introduced to faciliate trade and commerce
  3. Governments begin to tinker with ways to 'print' more currency than can be fully backed (e.g., coin clipping, partially-backed notes, FRNs)
  4. A false prosperity ensues. Those closest to the new money creation benefit most and debase the currency further to forward their advantage.
  5. Reality begins to catch up with this deficit spending and the purchasing power of the currency weakens dramatically.
  6. The monetary system collapses under too many claims on a limited pool of sound money.
  7. Eventually, a new monetary system backed by sound money rises from the ashes (see Step 1, above).

Mike believes that we are currently experiencing Step 6 and that we will witness the birth of a new monetary regime within the next ten years.

What makes this moment in history unique is that all past monetary regime collapses have happened regionally. This is the first time in human history in which all the world's major currencies are collapsing together. Which is why he is so passionate about owning gold and silver.

In his opinion, we will soon witness the greatest transfer of wealth ever seen, as countries worldwide realize they need to revert to monetary systems backed by sound money (i.e., the precious metals). Those acquiring gold and silver beforehand will not only preserve their wealth as existing fiat currencies are extinguished, but will see staggering increases in their purchasing power. Those interested in learning more of Mike's specific vision can watch Episode One of his new Hidden Secrets of Money video series. (Chris and I received advance screenings of the next few episodes, which are excellent in terms of explaining the processes and shortcomings of our current monetary system.)

On the Tightening Physical Market for Gold & Silver

What most people do not understand is that the price of gold and silver are not determined by how much gold and silver is being sold. It is how many gold and silver IOUs are being sold. And you can write as many IOUs, futures contracts and options, as you want. Those are unlimited. The supply, though, of physical gold and silver is quite limited, and so when people actually start asking for it and they want the physical, then there is a divergence of the paper price versus the physical price, and we are seeing that right now.

 

We are in a back-order situation with all of the suppliers. Spreads are going up. Silver eagles cost about fifty cents over spot more than they normally cost because all of the suppliers have had to raise their price to try and find the supply/demand equilibrium that the markets are for. The markets are there to try and find a supply/demand equilibrium, so then price is the arbitrator. Price rises; that draws more supply and reduces demand. Price falls; that reduces supply and increases demand.

 

So the price discovery mechanism of the markets is what is supposed to ensure that things are in equilibrium. We have this broken system where there are a few big players that manipulate the market, and it always shows up when shortages start developing in the physical market. You know that the price of gold and silver right now are too low to be realistic. And the good thing about that is that it cannot last.

On the Hidden Wealth Transfer Caused by Inflation Targeting

Everybody got in an uproar over [the Cyprus bank deposit haircuts], but nobody gets in an uproar over the central banks targeting 3% inflation. That compounds out to 34% of your wealth that they are confiscating every decade. People got mad because it happened all at once and they could see it. One day their bank account said one thing; the next day it said another thing. With this insidious confiscation known as inflation, this is the inflation tax – you do not see it because the number on your bank account might say that you could make a deposit and if there are no fees or anything on that deposit, $100,000 deposit a decade ago still stays $100,000. Except gasoline went from $1.25 to near $5.  Measured in gasoline, you lost 75% of that $100,000, but it still says $100,000.

 

So the central banks targeting this 3% inflation rate is a wealth transfer from the public to the financial sector.

On the Recent Price Weakness in the Precious Metals

You do not want to stay in just one investment class your whole lifetime. But it is a very powerful tool to be able to measure these classes against each other and then jump from an over-valued asset class to an under-valued asset class at the appropriate time for the road to true wealth. And it only requires a few big decisions during your lifetime.

 

Now, when I discovered wealth cycles, I was looking at the Dow Gold ratio and thinking this thing has a cycle. I made another check of the Gold Dow ratio instead the Dow Gold ratio, and put them on top of each other. Lo and behold – there is a cycle. It has a positive side and a negative side. If you are doing a Dow Gold ratio, you jump from being invested in paper assets like stocks and then back to gold for the long investment waves. I would say it is somewhere between 8 and 20 years you spend in an asset class, and you can do this with anything. If you measure your house in how many barrels of oil it is worth over a century and you jump back and forth from being invested in oil wells to being invested in real estate, it is the same thing as being invested in gold or the Dow. It is a very powerful tool that I believe has a high degree of predictability and safety to it, if you do not let the short-term noise flush you out.

 

Right now we are in consolidation. Gold has been chopping sideways for 19 months now, and it has worn people out. But basically gold is up. It is not up from 19 months ago when it was nearing $2,000, but it sure is up over the last decade. So I do not let the short-term noise affect me now that I know that we have not reached the point where the price of gold equals the points on the Dow. Right now gold’s value is one-ninth of the Dow, and so I know that it needs to rise by a factor of 18 against stocks before I need to get worried and start watching gold.

 

So I am very comfortable in these pullbacks. It gets a little aggravating, but still it does not bother me that much and is definitely not going to flush me out.

Click the play button below to listen to Chris' interview with Mike Maloney (59m:02s):

 

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Sun, 04/14/2013 - 13:31 | 3446831 Burt Gummer
Burt Gummer's picture

This guy speaks truth to power!

http://www.youtube.com/watch?v=ZS2Z19yTuPI

Sun, 04/14/2013 - 13:43 | 3446875 johnQpublic
johnQpublic's picture

it just got even less realistic

http://www.theburningplatform.com/?p=52552

 

landslide takes out 10% of US silver mining and 500k oz gold mining

Sun, 04/14/2013 - 14:01 | 3446946 NewThor
NewThor's picture

Speaking of exploded super novaeo

Y'all use your prayers and pull to get me 60 seconds on BloombergTV.

ASAP YO

http://youtu.be/eGO0HY2L_Ac

I think you guys would enjoy what I'd have to say.

:)

 

PS. Part 3 is not as strong as part 2 (Like any trilogy. :P) so try and start at the beginning. 

 

Sun, 04/14/2013 - 14:07 | 3446984 cifo
cifo's picture

So do we have an explanation for why gold went down on Friday?

Sun, 04/14/2013 - 14:12 | 3447000 Dr Paul Krugman
Dr Paul Krugman's picture

Because it is a worthless investment and everyone is slowly learning this.

Sun, 04/14/2013 - 14:14 | 3447009 Divided States ...
Divided States of America's picture

Because YOU are a worthless economist and everyone has ALREADY learnt this.

Sun, 04/14/2013 - 14:22 | 3447029 Dr Paul Krugman
Dr Paul Krugman's picture

Gold is now officially in a bear market, and all you gold bugs have made a poor investment in it for two years.

Sun, 04/14/2013 - 14:28 | 3447054 EvlTheCat
EvlTheCat's picture

Glad I have been investing in it for over 10 years.  Bear market shmare market...

Sun, 04/14/2013 - 14:58 | 3447142 Transformer
Transformer's picture

Now, come on.  You guys don't actually believe that is REALLY Pual Krugman, do you.  He is such a cowardly wimp that he would never post here, where people could actually reply and argue with him.

This guy is just another of the buffoons foisted upon us, to keep us on our toes, and to provide humor.  I find him really funny and give him and some of others an upvote most of the time, when they make me really laugh.

Just remember, though, when it comes to the real Paul Krugman, reading his collumn or what he has to say anywhere, is truly a waste of your time.  Time spent reading Krugman, is time lost out of your life, that can never be regained.

Sun, 04/14/2013 - 15:13 | 3447175 NewThor
NewThor's picture

Did you guys know gold and silver come from exploded supernova?

Maybe Gold went down on Friday because there was a big GAMMA RAY BURST

from a close by nuetron star causing a boost near by mine-able in supply.

You know our technology is well beyond what the public knows about right?

http://youtu.be/PaD4wewuVYU

It's ok to support me on my Bloomberg call to action, my brothers, sisters and bitchez.

 

Sun, 04/14/2013 - 15:31 | 3447182 Pinto Currency
Pinto Currency's picture

Shanghai Gold Exchange alone has had 420 tonnes physical purchases in less than 6 weeks.

Gold reset cannot be far away.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/12_Ma...

Sun, 04/14/2013 - 15:41 | 3447250 francis_sawyer
francis_sawyer's picture

No... listen to chindit [previous thread]

~~~

Gold prices are low because, ADMIT IT... Your trade was WRONG...

You should have been, according to chindit, investing in the SPAWN of Rockefeller, who are splitting their time between partying with Paris Hiltron & 'strategizing' on infrastructure needs [with Ellen-de-motherfucking Generes as spokesdike], to bring the goddamned JOOBUCK PAPER ECONOMY into the new millenium...

Didn't any of you people go to business school?

Sun, 04/14/2013 - 16:06 | 3447321 jbvtme
jbvtme's picture

doc krugerrand....check this shit out:  http://goldtrends.net/FreeDailyBlog?mode=PostView&bmi=1267250

Sun, 04/14/2013 - 16:37 | 3447395 Rubbish
Rubbish's picture

Gold to $1,000, more thumbs down like a couple months ago. I'll buy a little then.

 

Be happy gang, it's the big one coming you have all been waiting for. Can you imagine all the scardy cats when she hits $999?

Sun, 04/14/2013 - 17:28 | 3447513 Supernova Born
Supernova Born's picture

Aptly named (as I'm sure you've heard before).

Mon, 04/15/2013 - 00:17 | 3448632 Schmuck Raker
Schmuck Raker's picture

O M F Gawd.......

BUY THE MUTHER FLUCKIN GOLD FRANCISSSSS

 

BECUZ THE ZIONISTAS WANT YOU TO SELL IITTT    AAAAHHHHHHHHHH

~~~~~~~~~~~~~~~~~~~

 

NNNNOOOOOOOOOOOOOO!!!!!!!! WWWWWWWWWWWAAAAAIIIIITTTTTTTT!!!!!!!!!!!!!!!!!

SSSSSSEEEEEEELLLLLL DDDDDeEeeeeeeee fFOOOOOOOOOkiIIIIIIIINNNN GGGGUUUUUUUUlDDDDDDDDDD

FRANNNNCIIIIIIZZZZZZZZZZZ CCCUUUUUUUZZZZZZZ DDDDDDEEEEEEEEE      JJJJJOOOOOOOOO    OOOOOOOOOOOOOOOOZZZZZZZZZZZZZZ WWWWWWWWWAAAANNNNNNN UUUUUUUUUUUUUUUU  22222222222222222 bbbbbbbbbbbbYYYYYYYYYY      EEEEEETTTZZZZZZZZZZ!!!!!!!!!!!!!

[My heart felt apologees to any normal peeps encumbered unnecessarily with this hook um. Boy, the spell check reaaallllly let us down this weeeeeeeaaaaaak]

Sun, 04/14/2013 - 16:27 | 3447369 The Heart
The Heart's picture

The dr went down south to a Heehaw music festival. Recognized by the locals he quickly became known as, Dr. Skrugman.

Sun, 04/14/2013 - 17:13 | 3447479 EvlTheCat
EvlTheCat's picture

No I don't believe it is the real Krugman.. This guy can type and form full sentences with proper punctuation.  All the PHD's I know are brain dead.

Sun, 04/14/2013 - 17:30 | 3447517 Supernova Born
Supernova Born's picture

He certainly does negatively impact the flow of every thread.

ZH'ers are like dogs barking at the computer monitor.

Let it go. Let it go.

-John Rambo

Sun, 04/14/2013 - 17:42 | 3447547 Midas
Midas's picture

Times change John.

Sun, 04/14/2013 - 14:33 | 3447065 IridiumRebel
IridiumRebel's picture

Not if you got in around 1200 like I did. Bet you dollars to donuts it ramps up monday.

Sun, 04/14/2013 - 16:01 | 3447302 AllThatGlitters
AllThatGlitters's picture

I was thinking a ramp on Monday too.

But maybe first a headfake down tonight (Sunday), followed by a recovery / bounce into Monday open, followed by one final plunge Monday to dishearten those that bought the bounce and dissuade those that were considering a Monday purchase.

We'll see what tonight brings in a few hours. Watching the live streaming charts tonight and into tomorrow could be more fun than a good old-fashioned James Bond film.

Live Gold:  http://www.pmbull.com/gold-price/ | Live Silver: http://www.pmbull.com/silver-price/

Sun, 04/14/2013 - 16:05 | 3447315 AllThatGlitters
AllThatGlitters's picture

On my prediction above, I figure I have a less than a 50/50 chance of being right.  Had I just said it goes up or it goes down, that would improve my odds of being right.

Sun, 04/14/2013 - 18:07 | 3447604 TeamDepends
TeamDepends's picture

And we're off!  Both green out of the gates....

Sun, 04/14/2013 - 16:34 | 3447390 The Heart
The Heart's picture

Big thanks for the charts.

One little thing though; the present dollar equivalent showing on Kitco is at 25.85. Why is that not reflected on this chart above for silver?

http://dollarcollapse.com/

Just curious, and it is really nothing at all compared to the greater events in progress now on the geopolitical theatre front.

Sun, 04/14/2013 - 17:00 | 3447453 AllThatGlitters
AllThatGlitters's picture

There are multiple sources for the diff. charts on those pages.

The streaming charts are Forex.  

The prices shown separate from the Kitco charts are from Kitco and don't update immediately like the charts do.  The one on top is the bid price (25.81) and the one on the right is the ask price ($25.92).  $25.85 sits in between that and was probably the last trade. Maybe the bid and ask shifted, before another final NY Close price could print?  

I do notice that Kitco NY Close prices often change on the Kitco charts themselves, sometimes a day later.

They are all close enough to each other while live to be useful for tracking - unless there gets to be some crazy crap going down (like around Easter, at which point all the different suppliers can get whacky).

Click through on a gold / silver product on that page and the dealer there shows spot price from another supplier altogether - but I usually notice only a penny or two diff.

Sun, 04/14/2013 - 17:14 | 3447482 The Heart
The Heart's picture

Big grace and confidence.

Straight up, thank you for the time you took to express your truth so well.

One truly adores the edumacational light that flows so abundantly here on ZH. Give thanks for the sweet addictions in life...once a writer...always a writer.

Big huge ginormous Sunday evening gratitude and blessings to the ONE, and ALL that we all are here...even you...dr Skrug.

 

 

Sun, 04/14/2013 - 18:55 | 3447716 gonetogalt
gonetogalt's picture

AllThatGlitters, thanks for the info...can you explain the differences between phyz delivery and 'paper' contracts in pricing???

Sun, 04/14/2013 - 19:22 | 3447786 Jungle Jim
Jungle Jim's picture

Bond movies are fun to watch. But I didn't want to live in one. Well, okay, all the fabulous babe parts, sure. All the machine guns and flamethrowers and industrial laser vasectomies and shark tanks and acid vats, aah, not so much.

Mon, 04/15/2013 - 01:20 | 3448722 StychoKiller
StychoKiller's picture

So, are things that much better in the Jungle, Jim?

Sun, 04/14/2013 - 14:45 | 3447101 Son of Loki
Son of Loki's picture

Here is the one year chart for Gold vs. AAPL:

http://finance.yahoo.com/q/ta?t=1y&s=GLD&l=on&z=l&q=l&c=aapl&ql=1

 

Surprise, Dr Paul !

Sun, 04/14/2013 - 17:01 | 3447459 The Heart
The Heart's picture

Mark Faber calls the occupiers of central banks, the "coo-coo people."

http://www.bloomberg.com/video/faber-gold-isn-t-down-as-much-as-apple-FJ...

 

Sun, 04/14/2013 - 17:40 | 3447535 Supernova Born
Supernova Born's picture

Cuckoo for Cocoa Puffs.

Sun, 04/14/2013 - 15:04 | 3447159 resurger
resurger's picture

lol, That's good news ... more discount coming?!

On the contrary, we are happy if you can pass the message to GS, JPM, the FED's and all your Central Bank friends to push the price lower for us.

Thanks

Sun, 04/14/2013 - 15:22 | 3447204 Son of Loki
Son of Loki's picture

Every Gold Bug I know is loading up more of the yellow metal. My neighbor says it has always been, and will always be the ultimate store of value.

Sun, 04/14/2013 - 15:32 | 3447220 JPMorgan
JPMorgan's picture

PMs is not a investment Krugman, it's wealth preservation.

Do the math dickhead.

http://1.bp.blogspot.com/-glDDteUWCB0/UGA-aIDm4UI/AAAAAAAAElI/j06wow1kke...

Sun, 04/14/2013 - 15:38 | 3447240 El Oregonian
El Oregonian's picture

I'd sure like to invest my nice Silver Slipper and plant dead up your ass Mr. (O's) Glugman.

Sun, 04/14/2013 - 15:40 | 3447245 Kirk2NCC1701
Kirk2NCC1701's picture

Doc, and it will continue to get spanked in similar manner, to a still lower level? Till ppl stop fighting the Fed and the desired economy?

Sun, 04/14/2013 - 15:57 | 3447292 THECOMINGDEPRESSION
THECOMINGDEPRESSION's picture

Didn't you say the same gibberish when Gold went from 1000 to $680 in 2008? You're still allowed to write? Who listens to you anyway..just your wife/boyfriend?

Sun, 04/14/2013 - 16:05 | 3447312 Son of Loki
Son of Loki's picture

Yeah, make me cry w/ regrets....$680....my neighbor ran out to buy moar...told me to do likewise but I was too smart and did not buy any at that time.....what a loss for me.....that gain could have made up for the 40% I've lost on my house value.

Sun, 04/14/2013 - 16:37 | 3447402 All Risk No Reward
All Risk No Reward's picture

Hi Paul,

You might have missed this question the last 11 times I asked it, so here we go for try number 12 (and yes, I will continue to increment the numbers until you answer the question):

If growth is defined in monetary terms and money is debt (interest bearing) please explain how exponential growth of debt is sustainable into eternity. If money (debt) exponential growth is not sustainable into eternity, then WHAT HAPPENS WHEN THE EXPONENTIAL MONEY (DEBT) GROWTH FAILS? I made the question bold in case you are having vision problems and couldn't see the question. Hopefully this helps. TIA...

Consequences of Krugman's Pimped Fractional Reserve Banking 2) - Poverty - Debt is not a choice

https://www.youtube.com/watch?v=juQc0rLdB-E

How to be a Crook

https://www.youtube.com/watch?v=2oHbwdNcHbc

Do you get off enslaving the proletariat to debt owed to the people who made you and can also trash you like so much garbage?

Aren't you just a modern version of a well paid house slave?  How's that reality going to resonate throughout eternity?

Where is your Youtube "How to be a Crook's Mouthpiece?"

Sun, 04/14/2013 - 17:41 | 3447544 The Heart
The Heart's picture

"Where is your Youtube "How to be a Crook's Mouthpiece?"

As always, brilliant Light.

This How to be a Crook video is just over a year old. It gives any third grader a very good clue. The funny thing about truth is it is always true, and eternally carved into the Stones of History. Whereas, and surly you know sir, the lies and illusions to control and perpetuate this beast continue to change to keep the masses interested, or stuck in the cycle. What would happen if every conscious being on the planet focused their entire energy on creating truth in the words, deeds, and actions they manifested in every breath, in every day, instead of wasting so much time and energy on maintaining the illusion?

Sonday Night Pondering.

Sun, 04/14/2013 - 20:46 | 3447924 All Risk No Reward
All Risk No Reward's picture

IMHO, two cases would emerge...

1. They'd be lonely as the masses would shun them - especially their family.

2. If they were eloquent and had the personality to command a big following, they'd be assassinated by someone with three names, if you know what I mean.

People can't handle the truth in my experience.  They are like small children that don't want to leave the playground.

An argument can be made that these people are to be blame when this whole house of cards collapses...  the Great Apathetic Child-like Masses.

Another excellent video, and in line with most peoples' attention span level for things that don't entertain, is Poverty - Debt is not a Choice...

https://www.youtube.com/watch?v=juQc0rLdB-E

I've always been a saver - and the cold blooded nature of this system is that all the money I save for my family's well being, assuming I can avoid being Corzined, which will be no easy task as this MoGo progresses, IS SOMEONE ELSE'S DEBT SLAVERY...  LITERALLY THEIR UNPAYABLE DEBT.

The demonic establishmenht prattles on about "America ending slavery" when, in REALITY, I'M FORCED INTO BEING A DEBT SLAVE MASTER just by the act of saving Federal Reserve Notes...  not to mention turnkeying the slave trade operation to wicked dictators in China.

But Americans are all but brain dead...  spending their entire life oggling the woman in the red dress, as it were...

Morpheus: The Matrix is a [debt money] system, Neo. That [debt money] system is our enemy. But when you're inside, you look around, what do you see? Business men, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that [debt money] system, and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the [debt money] system, that they will fight to protect it. [At this point, Neo's attention is drawn to a passing attractive woman wearing a red dress] Were you listening to me, Neo, or were you looking at the woman in the red dress?
Neo: I was …
Morpheus: Look again. [Neo looks again. The woman has instantly turned into Agent Smith, pointing a gun at his head]

The end of that "woman in the red dress" isn't what most people think.

...

The Matrix is everywhere. It is all around us. Even now, in this very room. You can see it when you look out your window or when you turn on your television. You can feel it when you go to work… when you go to church… when you pay your taxes. It is the world that has been pulled over your eyes to blind you from the truth. … That you are a slave, Neo. Like everyone else you were born into [debt money] bondage. Born into a prison that you cannot smell or taste or touch. A prison for your mind [created by a false schooling system that stole your natural birth right - to thnk critically and creatively outside the "establishment mental plantation"].

Sun, 04/14/2013 - 17:58 | 3447573 Abraxas
Abraxas's picture

@ All Risk...

"Do you get off enslaving the proletariat to debt..."

No one loved enslaving the proletariat more than the old Uncle Milton, and he is paradoxically one of the favorite criminals around here. Some kind of a saint or something. I so hate ideological nonsense, and none more than the idea of laissez faire. Even communism is more humane than that. Yet, many here will disagree. There are none so blind as those who will not see.

Sun, 04/14/2013 - 20:32 | 3447886 All Risk No Reward
All Risk No Reward's picture

Might I suggest that you get off the predetermined "mental plantation" for a moment and consider the players and not their game in which they've immersed us?

I agree 100% that what the system calls "Free Market" will fail on its own and the mechanism is clear... 

Free Market creates people with power -> power corrupts -> corrupt people game the system and then there is no more free market.  Period.

To think otherwise is to believe in Santa Claus.

Having said that, the controlled opposition, or the Communist anti-thesis to the Free Market thesis is even worse...  and the reason is also clear...

Power structure to implement "Communism" is instantantaneously corrupted by the power and, therefore, there is no time lag between the system starting up and the citizenry being looted for all they have and enslaved, if not murdered by the 10s of millions.

Even worse, the power mad know all this, so they simply know they want a dictatorship and sell the chumps on the idea of Communism.

While you ideal view of "Communism" is "more humane" than Free Market, it has never existed at scale, so that's like discussing the humanity of Santa Claus or the Three Dwarfs - none of which has ever existed...  so what's the point?

The single most important principle, that is never discussed by the power structure, is that society needs to fully understand why big is bad and avoid big like it is the slave trader army coming to confiscate you and your children!

Yes, that includes Big Government.  Oh, but Mike, there's more! 

It also includes Corporate.

Note the higher level "good cop / bad cop" routinie that has most people mesmerized...

About half like Big Government and about half like Big Corporate.

Guess what, Bitchezzzzzz?  The "power of money," that is "gravely to be regarded" runs BOTH!

If you don't want Big Government, oh, throw the financial oligarchs into the Big Corporate briar patch, suckah!

If you don't want Big Corporate, oh, throw the financial oligarchs into the Big Government briar patch, suckah!

Capitalism, Free Market, Socialism, Communism, etc...  as simply false narratives engineered from keeping the proles from understanding REALITY.

Reality is that ever nation is run under authoritarian control and, guess what?  The only difference is the obviousness and level of the authoritarian rule.

That's it.  Capitalism doesn't exist, but a criminal debt based authoritarian societal asset stripping rulership does exist with a free market veneer.

Communism doesn't exist, but a criminal mass murder, mass enslavement authoritarian dictatorship does exist. 

Types of Government, Explained

https://www.youtube.com/watch?v=N4r0VUybeXY

The Financial fraud is based on debt based money weaponized through fractional reserve lending...

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

The criminal bubble blowing is illustrated here:

http://www.keepandshare.com/doc/3324744/wmdebt-graph-3-79k?tr=77

More research material... 

G. Edward Griffin at the University of Texas 4/29/2008: The Quigley Formula

https://www.youtube.com/watch?v=FoMezGPkyzU

The Shadows of Power: The Council on Foreign Relations and the American Decline

https://www.youtube.com/watch?v=j_gj1uZ6194

Research John Taylor Gatto's material and then the Trivium method of critical thinking.

The revolution is between our ears - and almost nobody gets it right because the well has been so polluted by the power of money to be gravely regarded.

No system will work so long as the population demands on being chumps and doesn't understand the revolution is in their ability and desire to think critically and literally abhor anything big.

I cringe when Lew Rockwell is out pimping Amazon when they are a front corporation for the very same people that have hijacked our government - like funding these demons through Amazon is righteous but through JP Morgan Chase is bad (and JPMC probably owns much of Amazon, I haven't looked it up, but the same crowd owns a controlling interest in everytinng BIG).

Imagine thriving communities with neighbors as local shop keepers, none of whom could get too big because they wouldn't be patronized...  and another shop would have to be opened up to cover increased demand.

 


Sun, 04/14/2013 - 17:30 | 3447522 razorthin
razorthin's picture

Official?  Says the fuck what official asshole?

Sun, 04/14/2013 - 17:57 | 3447580 Hapa
Hapa's picture

Is this guy for real? Paul Krugman hanging out at Zerohedge?  Or is this just somebody's playful alter ego?  Either way, this person seems to issue simple one liners so we can have the opportunity to trash him.

Thanks Zerohedge for the great entertainment.

 

Sun, 04/14/2013 - 18:30 | 3447654 Mr.Bigfoot
Mr.Bigfoot's picture

Paul Krugman wrote in his column on the NY Times that he heard someone on Zerohedge was impersonating him. He said he's too busy to post on any blog other than his own. He didn't mention that he'd get spanked on this forum

Sun, 04/14/2013 - 18:19 | 3447633 TWSceptic
TWSceptic's picture

Gold is now officially in a bear market

 

You gold haters are all so predictable. Do I really have to explain that during this BULL market of the last 13 years, a decline of 20% over 18 months is really not that unusual as bigger declines have happened, all followed by bigger rallies?

 

Go ahead, buy your expensive and overvalued stocks and laugh at people who buy ridiculously low priced gold & silver.

Sun, 04/14/2013 - 14:20 | 3447022 DoChenRollingBearing
DoChenRollingBearing's picture

Indeed, Dr Krug-girl.

Any investment where I could only buy 1 oz is worthless...

Sun, 04/14/2013 - 14:22 | 3447034 Dr Paul Krugman
Dr Paul Krugman's picture

Trade dollars in a speculative trade for a rock that you will do nothing with except fawn over.  

Brilliant.

Sun, 04/14/2013 - 14:36 | 3447074 EvlTheCat
EvlTheCat's picture

"rock"? No wonder you haven't made any money speculating in commodities.  Rock is not a commodity or even a metal for that matter.

Sun, 04/14/2013 - 14:47 | 3447107 The Shootist
The Shootist's picture

Guys, I think this might be the real Krugturd.

Sun, 04/14/2013 - 15:03 | 3447155 cifo
cifo's picture

You may be right. He even gave you -1 (or I should say took one from you :).

Sun, 04/14/2013 - 16:19 | 3447329 jbvtme
jbvtme's picture

bet germany wishes they had a chance to fawn over their gold stored in the usa. 

Sun, 04/14/2013 - 21:17 | 3447999 fockewulf190
fockewulf190's picture

The public wants it all back.  The banksters, and most of the politicians, are the only ones who don´t. 

Sun, 04/14/2013 - 16:25 | 3447363 El Oregonian
El Oregonian's picture

That would be classic if true. I mean the whole enchilada is turning to shit and the moron would spend his attention on getting monkey-hammered here on ZH. Is it any wonder. Go DO your job moron... on second thought, stick around, we're not done ass beating ya yet, and besides the more time you spend here means the less time you have to eff-up the economy...

Sun, 04/14/2013 - 18:31 | 3447659 Mr.Bigfoot
Mr.Bigfoot's picture

It's not.

Sun, 04/14/2013 - 15:46 | 3447265 LeisureSmith
LeisureSmith's picture

He's of his rocker..He comes here to get his rocks off, but the only hard thing on him is the hard candy he keeps in his pocket. He uses it to lure young boys to sit on his lap telling them about the importance of stimulation and the time he won a "Nobel" price. When they laugh in his face he cries. He both loves and hates the price. He will never be free from his need for it.

But dont tell him it's made from rocks...it will crush him.

Sun, 04/14/2013 - 15:51 | 3447276 ziggy59
ziggy59's picture

He alway lost on 'rock' in rock, paper, scissor...

Sun, 04/14/2013 - 14:37 | 3447078 Quinvarius
Quinvarius's picture

Good money is chased into hoards as bad money circulates.  Gold will be spent when the time is right. 

Thy have tried this whole fiat paper money thing before, you know.  The sheen comes off the paper pretty fast in the first crisis.  In order for that paper to be accepted the government has to exist, there has to be strict control of the supply, there can be no fraud in its distribution, ect, ect.  That is why America has returned to the gold standard to kickstart its new money many times.  And we will complete the cycle again. 

Sun, 04/14/2013 - 14:37 | 3447080 auric1234
auric1234's picture

Trade gold in a speculative trade for paper that will do nothing except slowly disintegrate.

Brilliant.

 

Sun, 04/14/2013 - 14:43 | 3447098 Peter Pan
Peter Pan's picture

Better to fawn over a rock than to fawn over a bank deposit earning almost zero thanks to Brrnanke or a Cypriot Bank account.

Sun, 04/14/2013 - 15:09 | 3447169 akak
akak's picture

Funny how Krugman and his statist ilk get so riled up when (an increasing number of ) people freely choose to hold this one particular "rock", when they claim that that "rock" is irrelevant to the modern monetary system and economy.

Hypocrisy, thy names is Keynesianism!

Sun, 04/14/2013 - 15:27 | 3447212 TheMeatTrapper
TheMeatTrapper's picture

Funny how Krugman and his statist ilk get so riled up when (an increasing number of ) people freely choose to hold this one particular "rock", when they claim that that "rock" is irrelevant to the modern monetary system and economy.

 

Bingo! If gold were truly irrelevant, they wouldn't care how much of it you bought. They would view gold like lawn ornaments. Instead, the mere mention of trading paper for gold get's their little panties in a twist; whereas trading paper for lawn ornaments doesn't. 

 

Wonder why?

Sun, 04/14/2013 - 17:20 | 3447488 RockyRacoon
RockyRacoon's picture

Akak, what if the U. S. announced that an audit at Ft. Know showed NO GOLD!?

Does anyone here propose a guess as to what would happen to the dollar?

It's a scary thought.

I guess gold does have the acclaimed store of value aspect still strong.

Sun, 04/14/2013 - 15:42 | 3447251 xtop23
xtop23's picture

Or put that money into the bank at an interest rate that doesn't keep pace even with stated inflation let alone real inflation along with taking on all of the risks of handing your money over to insolvent institutions.

Or how about equities !!?? There we go...... put your money into a historically overvalued market and hope you can extricate yourself before a DJ nosedive all the while being steadily sheared by HFT's.

Ill take my "just sitting there" rocks all frigging day long.

 

Sun, 04/14/2013 - 15:56 | 3447294 akak
akak's picture

I would much rather invest in inequities --- they're a sure bet nowadays!

Sun, 04/14/2013 - 23:47 | 3448562 xtop23
xtop23's picture

I'm really close to going short the S&P - We hit 1600 it's on.

Sun, 04/14/2013 - 15:55 | 3447287 quasimodo
quasimodo's picture

Please go back to playing butt plug with MDB already

Sun, 04/14/2013 - 17:21 | 3447494 RockyRacoon
RockyRacoon's picture

Interesting trend since 2000.  What's that tiny, insignificant drop-off at the very right side?

Hmmm.

Sun, 04/14/2013 - 14:47 | 3447113 HyperinflatmyNutts
HyperinflatmyNutts's picture


Krugman!!!  When the fuck r u going to answer this question???? This is the 4th time I have asked you this???

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

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

TIA..."

Sun, 04/14/2013 - 15:29 | 3447218 TheMeatTrapper
TheMeatTrapper's picture

He will never answer your question because to answer your question is to face reality. The bankers hate reality. They despise reality. They prefer kicking the can, pretending and ignoring - as long as they get first cut at the spoils of theft. 

Sun, 04/14/2013 - 15:49 | 3447271 ziggy59
ziggy59's picture

He wont answer it because its not the real moron, krugman.

Sun, 04/14/2013 - 15:59 | 3447296 akak
akak's picture

I agree that "moron" and "Krugman" are synonymous.

Sun, 04/14/2013 - 19:17 | 3447776 Room 101
Room 101's picture

Please quit feeding the troll. 

Sun, 04/14/2013 - 14:58 | 3447143 resurger
resurger's picture

"Everyone"

 

Lets see as for now i see (-12)

 

 no matter how long it will take, your head is going to end on a pike...

 

Sun, 04/14/2013 - 15:39 | 3447236 traderjake
traderjake's picture

Paul Krugman - promoter of the Broken Window Fallacy

http://www.youtube.com/watch?v=erJEaFpS9ls&feature=pyv

 

Sun, 04/14/2013 - 16:53 | 3447441 toys for tits
toys for tits's picture

In addition to the trillion dollar coin to pay for all those windows.

But his beaute is the inability of the internet to surpass the fax machine for business relevance.

Was that the wrong prediction that won the phony Nobel prize?

Sun, 04/14/2013 - 16:09 | 3447325 TrulyBelieving
TrulyBelieving's picture

If it it such a worthless investment then why does the IMF, central banks and governments all own it? But maybe you are right, it is a lousy investment, because what it really is, is money. "Gold is money and nothing else"

Sun, 04/14/2013 - 16:16 | 3447335 de3de8
de3de8's picture

krug, you are the DB of DB's.
Krug, the king of douche bags. Specializing in the tuna taco douche.

Sun, 04/14/2013 - 16:15 | 3447342 Yen Cross
Yen Cross's picture

    Krugman the only reason the metals have sold off is because your douch bag 'Central Banking' pals are manipulating the paper price so that they can buy up all the physical on the cheap.  You need to go finish your thesis on 'Cat Herding' at night.

Sun, 04/14/2013 - 17:23 | 3447496 cabtrom
cabtrom's picture

Krugman, I don't understand. Why do you hate gold so much and those who collect it? Do you go to comic book conventions and tell comic book collectors that there idiots for investing in comics too? Or how about baseball card collectors? Oh I also have a little nephew who loves collecting little toy tractors. I sappose you think that's crazy too huh? You have this strange hatred for people who aren't even bothering you but because they have a love for gold you seem to wanna be rude to them. How would you like it if I pissed on your parade for being a collector of toupes? You may have won an award but it definitely wasn't for congeniality? Perhaps you could try and just be a little More optimistic and maybe even polite. Life is not that bad so relax and try not to be such an asshole over something so silly as people who like to collect little gold coins and bars. I mean really wtf do you care??

Sun, 04/14/2013 - 17:42 | 3447546 Kirk2NCC1701
Kirk2NCC1701's picture

"Because it is a worthless investment"... to the Fed.  Because its gold has renounced its US Citizenship and taken up multiple Permanent Residencies offshore. 

There, fixed it for ya.

Mon, 04/15/2013 - 00:17 | 3448633 MythicalFish
MythicalFish's picture

ACCESS DENIED to your profile. Nice work, sir (I know you're not a doctor).

Mon, 04/15/2013 - 04:16 | 3448845 ParisianThinker
ParisianThinker's picture

Dr. Krugman,

I do not own gold. I have only money. Where is a safe place to put it in this world?

I am asking you sincerely.

 

Sun, 04/14/2013 - 15:11 | 3447035 savagegoose
savagegoose's picture

elephant in the goldbug room, is jap bond yeilds,  and yen cross rates,  friday JPY cross went from negative to +1.5% against most other currencies.

 

the mother of all battles  of forex traders vs central banks just started friday, and continues monday.

 

oh and 2 year bonds up from .05% to .06%. not much in actual %. but a %20 increase in actual payments if the gov actually ever pays them.

Sun, 04/14/2013 - 15:27 | 3447215 QuiteRisky
QuiteRisky's picture

What backs up gold?  It has very little economic utility. 

As a currency it could work in the days before computers and the internet, but a not in the modern day.

Currency is the lubricant of the economy, it's value is backed up by the commerce and economic prosperity of those that use it.

A modern currency needs to be easily transferrable to purchase goods and services.  Easily done with computers and internet, and debit card.  Furthermore, the "float" of the currency needs to expand and contract with the economic activity of those using it to keep prices stable (or slight inflation to encourage investment)  These criteria are difficult using gold, or gold standard.

Gold is barbaric -> it worked back in the old days, but is not optimal as a basis for a modern day currency.

I'm not advocating Ben's printing press, at least in the amount he is printing now, but don't confuse the benefits of a well managed fiat currency with erroneous monetary policy or the debt issues as a result of bad policy.  Fiat is the victim, not the cause. 

Good Luck,
-Risky

 

 

Sun, 04/14/2013 - 15:34 | 3447223 TheMeatTrapper
TheMeatTrapper's picture

Can you point me to one single example of a well managed fiat currency? The problem with your argumanet is people, more specifically bankers who control the fiat. They are greedy fucks and will never properly manage fiat currency. 

They cannot be trusted to do the right thing - they must be forced to do the right thing. 

Sun, 04/14/2013 - 15:37 | 3447235 akak
akak's picture

The phrase "The fox guarding the henhouse" comes to mind here.

Sun, 04/14/2013 - 16:55 | 3447445 Non Passaran
Non Passaran's picture

+1

Sun, 04/14/2013 - 18:09 | 3447610 mess nonster
mess nonster's picture

Back in the barbaric past, when gold was pounded into round discs, and the face of a god-man was placed thereon for use as money (barbaric!), the banks would issue "letters of credit", against the golden discs the gentiles hoped would come their way in the future. Because there wern't enough golden discs to go around, the letters of credit were used as money. Then, banks issued as many letters of credit as possible. All the paper money spurred an economic boom, quickly followed by an economic bust, as the letters of credit were discovered to be worthless. The banks, however, simply reappropriated all the golden discs, as well as the property upon which they had loaned money, and thus the banks, or at least those banks operated by tribesmen of a certain tribe, did bettter than ever. Once these banks had all the golden discs, they loaned the very same discs out to kings and prime ministers, who used them to raise armies and attack one another, which caused all manner of suffering and hardship, but most importantly, allowed the gold to flow back to the bankers, who then, once the smoke cleared, began to issue letters of credit once more...

FUCKING IDIOTS, WHY DO YOU THINK IT IS DIFFERENT THIS TIME???????????????????

Mon, 04/15/2013 - 01:23 | 3448725 Fiat Envy
Fiat Envy's picture

The DM under buba was well managed.   Of course the Euro fixed that.

Sun, 04/14/2013 - 16:00 | 3447299 Mr. Magniloquent
Mr. Magniloquent's picture

Do you believe physical paper bills are transported to Amazon.com when I make a purchase with my credit card? How does gold/silver function differently than paper within this context? I can't think of a single instance in history where a fiat currency has benefited any class other than those nearest to the presses. Can you cite an example where this was not the case?

Sun, 04/14/2013 - 16:33 | 3447362 All Risk No Reward
All Risk No Reward's picture

cifo, while most here won't agree with me, I think the data is out there to indicate what is going on.  Th eproblem is not lack of data, the problem is people don't connect the dots, identify contradictions and remove fallacies.  Take the following data:

1. JP Morgan et al are loaning 30 year money at 3.5%.

2. The Biggest Finance Capital powe rof money that controls JP Morgan, et al...  also control the actions of the Federal Reserve.

Now, just taking those two bits of information alone, is there a contradiction with the "Oh noes!  Hyperinflation is imminent" argument?

Well, yeah!  Only a moron would lend 30 year money at 3.5% while, simultaneously, triggering a hyperinflation.

I go over mad content and I've never heard a hyperinflation or serious inflation advocate ever, not even once, address this clear **contradiction** to their narrative.

So, what does this mean?

Are we safe from any potential of hyperinflation?

No, but, the money interests that control JP Morgan, et al and the Federal Reserve will orchestrate the system in order to personally benefit themselves.  What shall we make of this?  I don't know, but I know what I'd do if I were Dr. Evil and in their shoes...

1. Lever up, blow massive credit bubble.

2. When that blew up, I'd loot the Treasury of all the money while offloading the corresponding debts to the ignorant public.  I'd pay media sources to repeat "printing money" over and over so much that even smart, intellegint and decent folks would be turned into "printing money" useful idiots repeaters.  I don't like to sound harsh about it, but the truth is harsh and those folks need to educate themselves and start telling the truth.

The government borrows money, they don't print it.  The difference is as big as financing your life style with a counterfeiting machine or a credit card...  the latter is going to hurt you badly while the former won't so long as you don't get caught.

3. Once I've stolen as many trillions of dollars as I can and offloaded as many trillions of dollars of debt onto the ignorant public that thinks they won't have to pay the debt back my other front corporations (I'm so evil and the babies just want to have their candy taken, so I have to do it!), I pull the plug on credit, bust the system and...

4. Seize all the collateral based on the debt instruments I hold and, when markets are crushed and my competition is bankrupt (I'm TBTF&Jail, bitchezzzz!), I'll buy up whatever is left for pennies on the dollar and using the loot I stole from the ignorant public.

5. Once I'm all in on "hard assets," I'll hyperinflate, balance my books and tell the morons that "capitalism failed" while presenting them with my new debt based worldwide monetary Trojan Horse System.

Of ocurse, I'll finance the world's militaries and police states because they will work for me.  If they didn't work for me, I wouldn't finance the "dumb animals."  Ah, Kissinger - gotta love that guy.  Do the illegal now and spread the unConstitutional over time.

Brilliant!

I mean, isn't this what you'd do to buy up the fracking world and impose yourself as authoritarian dictator?  It's an 8th grade level scam, but the American people lack the imagination and historical context to see it and admit it.

Back to gold - at some point people are going to figure this con out - that the money supply will be cut in half or worse.  You think it is bad now - try gutting the money supply by cutting benefits deep, stealing bank accounts, crashing the markets, etc...  remember "America pays its bills," but the wolves will never tell you it is **impossible** to pay those bills because Biggest Finance Capital owns the money required to retire the debt that created that money in the first instance.

Read that sentence as many times as you need to before the hopelessness of your situation sinks in and grinds on your bones.

"If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in
circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."
by: Robert Hemphill, Credit Manager of Federal Reserve Bank, Atlanta, Ga.
Source:  In the foreword to a book by Irving Fisher, entitled 100% Money (1935)

Even Mises nailed it on the head...  but people **assume** one of the two options he mentioned...  and they assume wrong.

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
— Ludwig von Mises

Biggest Finance Capital will voluntarily abandon further credit expansion when it serves their interests to do so.

So, as the money supply collapses and people hoard all the money they can now that it becomes obvious Uncle Sugar isn't going to foot their bill, well, people will pay top dollar for the necessities of life...  to make it to the next day...  and all those extra claims on limited underlying assets will be EXTINGUISHED.  BAM!  Gone.

But not so much for gold because there will be little wealth to preserve.

The support for gold will be the criminals who engineered this collapse buying up the gold people bought over $1000 in trade for a week's worth of macoroni or sum such...  these b*stards are wicked evil.

The future isn't finance - so get that out of your head.  The future is earning your keep to feed you and yours for one more day.

We aren't there yet, but that day is coming much faster than most people presume.

Sun, 04/14/2013 - 17:12 | 3447473 Quinvarius
Quinvarius's picture

I didn't get past the part where you insinuated JPM was not moronic and therefore there would be no hyperinflation.

 

Sun, 04/14/2013 - 17:25 | 3447490 kill switch
kill switch's picture

Paul Craig Roberts

April 13

NOTE: Readers point out that gold weights are based on metric tons and Troy ounces. 500 metric tons of gold would be 16,075,000 troy ounces. This changes the arithmetic slightly but not the point

I was the first to point out that the Federal Reserve was rigging all markets, not merely bond prices and interest rates, and that the Fed is rigging the bullion market in order to protect the US dollar’s exchange value, which is threatened by the Fed’s quantitative easing. With the Fed adding to the supply of dollars faster than the demand for dollars is increasing, the price or exchange value of the dollar is set up to fall.

A fall in the dollar’s exchange rate would push up import prices and, thereby, domestic inflation, and the Fed would lose control over interest rates. The bond market would collapse and with it the values of debt-related derivatives on the “banks too big too fail” balance sheets. The financial system would be in turmoil, and panic would reign.

Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signaling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.

According to Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can be to drive down the market price.

A naked short is when the short seller does not have or borrow the item that he shorts, but sells shorts regardless. In the paper gold market, the participants are betting on gold prices and are content with the monetary payment. Therefore, generally, as participants are not interested in taking delivery of the gold, naked shorts do not need to be covered with the physical metal.

In other words, with naked shorts, no physical metal is actually sold.

People ask me how I know that the Fed is rigging the bullion price and seem surprised that anyone would think the Fed and its bullion bank agents would do such a thing, despite the public knowledge that the Fed is rigging the bond market and the banks with the Fed’s knowledge rigged the Libor rate. The answer is that the circumstantial evidence is powerful.

Consider the 500 tons of paper gold sold on Friday. Begin with the question, how many ounces is 500 tons? There are 2,000 pounds to one ton. 500 tons equal 1,000,000 pounds. There are 16 ounces to one pound, which comes to 16 million ounces of short sales on Friday.

Who has 16 million ounces of gold? At the beginning gold price that day of about $1,550, that comes to $24,800,000,000. Who has that kind of money?

What happens when 500 tons of gold sales are dumped on the market at one time or on one day? Correct, it drives the price down. Investors who want to get out of large positions would spread sales out over time so as not to lower their sales proceeds. The sale took gold down by about $73 per ounce. That means the seller or sellers lost up to $73 dollars 16 million times, or $1,168,000,000.

Who can afford to lose that kind of money? Only a central bank that can print it.

I believe that the authorities would like to drive the gold price down further and will, if they can, hit the gold market twice more next week and put gold at $1,400 per ounce or lower. The successive declines could perhaps spook individual holders of physical gold and result in actual net sales of physical gold as people reduced their holdings of the metal.

However, bullion dealer Bill Haynes told kingworldnews.com that last Friday bullion purchasers among the public outpaced sellers by 50 to 1, and that the premiums over the spot price on gold and silver coins are the highest in decades. I myself checked with Gainesville Coins and was told that far more buyers than sellers had responded to the price drop.

Unless the authorities have the actual metal with which to back up the short selling, they could be met with demands for deliveries. Unable to cover the shorts with real metal, the scheme would be exposed.

Do the authorities have the metal with which to cover shorts? I do not know. However, knowledgeable dealers are suspicious. Some think that US physical stocks of gold were used up in sales in efforts to disrupt the rise in the gold price from $272 in December 2000 to $1,900 in 2011. They point to Germany’s recent request that the US return the German gold stored in the US, and to the US government’s reply that it would return the gold piecemeal over seven years. If the US has the gold, why not return it to Germany?

The clear implication is that the US cannot deliver the gold.

Andrew Maguire also reports that foreign central banks, especially China, are loading up on physical gold at the low prices made possible by the short selling. If central banks are using their dollar holdings to purchase bullion at bargain prices, the likely results will be pressure on the dollar’s exchange value and a declining market supply of physical bullion. In other words, by trying to protect the dollar from its quantitative easing policy, the Fed might be hastening the dollar’s demise.

Possibly the Fed fears a dollar crisis or derivative blowup is nearing and is trying to reset the gold/dollar price prior to the outbreak of trouble. If ill winds are forecast, the Fed might feel it is better positioned to deal with crisis if the price of bullion is lower and confidence in bullion as a refuge has been shaken.

In addition to short selling that is clearly intended to drive down the gold price, orchestration is also indicated by the advance announcements this month first from brokerage houses and then from Goldman Sachs that hedge funds and institutional investors would be selling their gold positions. The purpose of these announcements was to encourage individual investors to get out of gold before the big boys did. Does anyone believe that hedge funds and Wall Street would announce their sales in advance so the small fry can get out of gold at a higher price than they do?

If these advanced announcements are not orchestration, what are they?

I see the orchestrated effort to suppress the price of gold and silver as a sign that the authorities are frightened that trouble is brewing that they cannot control unless there is strong confidence in the dollar. Otherwise, what is the point of the heavy short selling and orchestrated announcements of gold sales in advance of the sales?

 

KEEP STACKING

Sun, 04/14/2013 - 14:13 | 3446994 Divided States ...
Divided States of America's picture

I think the article from the big hit that Paulson took from golds drubbing last week makes a very important point...that with many players (speculators) levered to the moon and the collateral banking the entire (ponzi) banking system being almost non existent, that as every asset class gets hit, (like it did this week with Gold, Silver, Oil and to certain extent European financials and BITCOIN)...that there will be lots of margin calls out there....And in order to cover the calls, the players will eventually have to dump other assets which will eventually spread to the other asset classes which are at all time highs (US equity markets)....we are close to the top...with the tankage of Gold on friday. Gold and the rest of the commodity complex cannot keep dropping without the risk of the equity markets rising.

Sun, 04/14/2013 - 15:45 | 3447261 Diablo
Diablo's picture

WOW, a whole 5 million ounces.  too bad the annual worldwide supply is >1 BILLION ounces.

 

Sun, 04/14/2013 - 16:17 | 3447307 Diogenes
Diogenes's picture

World gold production is 80 million ounces per year. 500,000 would be .625% if you want to be picky.

Let me ask you this. If the world suddenly lost .625% of its oil production what would you expect to happen to the price of oil? Would it go up or would it go down?

Sun, 04/14/2013 - 16:25 | 3447366 Diablo
Diablo's picture

the 5 million is SILVER, not gold. (gold is 462K oz per year mined at this mine)

PS; they knew this landslide would occur. and contrary to what this "report" says it did not happen over the weekend, but last wednesday. 

 

Sun, 04/14/2013 - 15:56 | 3447293 SubjectivObject
SubjectivObject's picture

Why should the mine slide be a significant problem? 

Seems the cost of drilling and dynamiting has been saved.

Nice color of the slide rock suggests its regular good ore.

Lost shovels or something?

Sun, 04/14/2013 - 16:31 | 3447381 de3de8
de3de8's picture

The landslide was part of the "burden" that was removed over time and stockpiled. They were following protocol by benching but obviously something went wrong. Likely underestimated the strength in the underlying virgin and ended in slope failure. Lesson learned. Should stay out of angle of repose influence.

Sun, 04/14/2013 - 17:26 | 3447514 Schmuck Raker
Schmuck Raker's picture

In fact, the company's engineers new this slide was coming months ago.

The company has been warning various parties for weeks.

Sun, 04/14/2013 - 19:10 | 3447751 Alfred
Alfred's picture

the burning platform link has malicious content.

Fuck you John Q. Pubic.

Fuck you hard.

Sun, 04/14/2013 - 13:45 | 3446880 fonestar
fonestar's picture

I don't care how much silver is selling for.  I just buy a little more every month.  If silver goes to $500, maybe I can only afford a few dimes that month.  If silver goes to $35 I can get some more ASE.  If silver goes down to $20 I doubt there will be anyone out there able to find physical silver.

Funny how so many stackers say they don't intend to sell their silver and then whine and cry when the price drops.  You know the sharks who control this pool, so why the surprise?

Sun, 04/14/2013 - 13:53 | 3446924 The Abstraction...
The Abstraction of Justice's picture

I sell silver, to pay the bills, and I can largely ignore the price drops. Whatever the spot price, I get €720 per kg from Ebay (afer deducting its fees).

Sun, 04/14/2013 - 16:52 | 3447437 Non Passaran
Non Passaran's picture

You could perhaps find a local buyer and cut out PP and eB...

Sun, 04/14/2013 - 13:53 | 3446925 Diogenes
Diogenes's picture

If you knew you were going to be buying food every week would you cry if the price of food dropped? Why cry if the price of silver drops if you plan on buying it every week?

Sun, 04/14/2013 - 13:58 | 3446949 Burt Gummer
Burt Gummer's picture

Well done!

Sun, 04/14/2013 - 15:44 | 3447234 Himins
Himins's picture

Couldn't agree with you more fonestar...what difference does it make the particular asking price for PM's...it goes down to a dollar, GREAT, that only means the dollar you are spending will buy you a whole lot more. If it goes up to 500 dollars, well that doesn't really reflect some profit, it only means that you have 500 dollars and the folks who were holding fiat, don't. It shows profit on paper, but your 500 dollars won't go any further asset wise than the dollars you spent on the PM's, but you will atleast have preserved (saved) something, while those who bow to the fiat gods go without. PM's are a marker, and those who hold them now will be fortunate enough to have something. You have simply locked in the spending value of your fiat dollars, at todays value.

Sun, 04/14/2013 - 13:48 | 3446884 strannick
strannick's picture

"There will be a new monetary systm in the next 10 years"

Sure there will. It will be an inscibed mark withoutt which no one will be permitted to do business. Gold and silver will be outside that system, the domain of free commerce for men of liberty.

Sun, 04/14/2013 - 14:37 | 3447081 wee-weed up
wee-weed up's picture

"There will be a new monetary systm in the next 10 years"

Yep, and the gov't will try to make sure it's only 1's and 0's... for ultimate control.

Sun, 04/14/2013 - 18:25 | 3447627 Kirk2NCC1701
Kirk2NCC1701's picture

HSBC poster at Toronto and Vancouver airports:  "Your DNA will be your data"

"Gold? We don't need no stinking gold!"

/ Thanks HSBC, Intel and 'Club Fed', for turning us into walking, talking Fedcoins!  Fedcoins to your right, FEMA camps to your left.  /sarc

Plan for Step 7 accordingly.

Sun, 04/14/2013 - 13:49 | 3446898 Scro
Scro's picture

This is truer and mo powerful.

http://youtu.be/okg3UN-GH5I

Sun, 04/14/2013 - 14:51 | 3447123 dragoneyes74
dragoneyes74's picture

The price drop in the metals is the normal workings of positioning and sentiment in futures.  In 2011 it got carried away to the upside.  The large specs got really long and overextended.  Each high after the smackdown was lower because many of the late comers or late adders got burned.  Many of them started shorting the rallies from there.  Sentiment shifted.  The large spec position turned from really net long to a little net long to what will probably be net short in the near future.  Then they will get overextended to the downside.  The commercials, taking the other side of the trade, will stop the trend at a price they determine, which will probably be a technical level (like the QE2 breakout around $19), then the process will reverse, as long as there are bullish events still occuring.  The large specs will start to cover their shorts and take profits, others will come in and start to buy the dips, and we're off on another upleg to the overall bull market.  

It has almost nothing to do with events that are happening, and everything to do with the cycles of positioning.  I just hope silver goes through a long process of sideways accumulation in the lows $20s or upper teens.  I expect (and hope) that will be the bottom forever.  But we should get another corrective move up soon.  It will take some time to get down there.  Unless some event happens to really shakes things up and force all the shorts to cover, this process should continue to play out until it gets overextended to the downside.   

I agree with the vision of the gold and silver story, but there are no guarantees in life.  If you choose to push all-in on one asset class based on a very sound thesis, you pay the price in anxiety when it doesn't play out how you thought it would.  I do believe it will work out, but at this point, it's only a belief.  

Sun, 04/14/2013 - 19:49 | 3447827 AllWorkedUp
AllWorkedUp's picture

That was alot of things but pretty far from "normal workings" of a fucking futures market. Cycles my ass.

Sun, 04/14/2013 - 21:55 | 3448094 Lewshine
Lewshine's picture

I own PM's as a percentage of my net worth. Having said that, I call bullshit on this Tourist and his analysis. This guy doesn't get it like most on ZH. Repeat after me: "Ben owns the monetary system of the world". You can buy Gold now or wait two months and buy it for a $1000., wait another 3 months and get it for $800. Ben and the squid has told you as much just last week. WHAT? You think your wit and clever remarks one upping each other from one post to the next is gonna keep this from happening?? You are all docile little bleating sheep making useless noise before your overlord slings his high hard one up your waiting asses! The price WILL BE WHAT THEY SAY IT IS...And this I know - You will not like it!! This PM take down is gonna be Biblical in size and speed. So quit pretending like they don't have the power to shred every last one of you holding metals.

Sun, 04/14/2013 - 13:33 | 3446836 Professorlocknload
Professorlocknload's picture

Nothing in today's world is realistic. Ya pays your money and ya takes your chances.

Sun, 04/14/2013 - 13:36 | 3446841 Burt Gummer
Burt Gummer's picture

Meaning what exactly?

Sun, 04/14/2013 - 13:39 | 3446855 Bearwagon
Bearwagon's picture

It's all in your brain.

Sun, 04/14/2013 - 17:52 | 3447561 Kirk2NCC1701
Kirk2NCC1701's picture

D I V E R S I FY !   By (1) Asset Class & Type, (2) Geogr. Location.  Or you "takes your chances". 

Donations and tips gladly accepted, but only in Dilithium Crystals and Latinum.  And hot chicks in the Virgo Cluster.   ;-)   Kirk out.

Sun, 04/14/2013 - 13:38 | 3446842 freewolf7
freewolf7's picture

Ten years?!

Really?

Sun, 04/14/2013 - 19:51 | 3447834 AllWorkedUp
AllWorkedUp's picture

Exactly. Another ten fucking years of this criminality? Glad he's really bullish gold and silver.

Sun, 04/14/2013 - 13:37 | 3446844 Everyman
Everyman's picture

Well Silver pricing is going to get VERY REAL.  Kennecott mine had a collapse and a few of the investing/PM sites are commenting on it:

http://howthehellshouldiknow-wallyworld.blogspot.com/2013/04/things-are-...

http://www.theburningplatform.com/?p=52552

http://howthehellshouldiknow-wallyworld.blogspot.com/2013/04/nows-time-t...

 

When the paper to real is unknown as far as anyone can tell, and you have the silver bears telling of it, "people know", and I think silver goes from here.  My question is why did the market price of silver GO DOWN 2 days AFTER the mine collapse?????

Sun, 04/14/2013 - 13:45 | 3446879 DoChenRollingBearing
DoChenRollingBearing's picture

Everyman

 

My understanding is that Kenneccott knew the mine's walls were already unstable.  They figured a collapse of this nature was very possible.  

But, to your point re silver price, the only short answer I can think of is: manipulation.

Sun, 04/14/2013 - 14:59 | 3447144 Diogenes
Diogenes's picture

I looked up some stories on the Kennecott Bingham Mine landslide. This mine produces 5% of America's gold and 16% of its silver. It was put out of production in a day and may not be back in production for a year.

This should have made headlines in every financial and business news outlet, spectacular photos of the landslide should have caught the eye of the MSM as well.

Was it reported at all? I wouldn't know as I don't watch TV or read the papers anymore.

I would have expected copper, silver and gold to skyrocket on news like this. The slide happened at 9:30PM on Wednesday the 10th, it should have been all over the news on Thursday. Yet gold and silver made new lows on Thursday and Friday.

What gives? Will the PMs get bombed again on Monday, then this story get a big play on Tuesday while PMs take off for the rest of the week? What U think?

Sun, 04/14/2013 - 19:10 | 3447753 RockyRacoon
RockyRacoon's picture

People have to die for something to make news.  Especially if there is a "military style" weapon involved.

Sun, 04/14/2013 - 13:36 | 3446845 devo
devo's picture

Maloney thinks people will be trading a few gold coins for a house. That ain't happening, and I can't believe anyone buys it.

Sun, 04/14/2013 - 13:37 | 3446854 The Abstraction...
The Abstraction of Justice's picture

There are houses going in some parts of the US that can be bought with a handful of paper notes. Mainly in the run down areas full of looters. When it is all run down and full of looters...dead looters (post Apocalypse), and the only people left alive are the preppers, then houses will literally be ten a gold penny.

Sun, 04/14/2013 - 13:41 | 3446862 devo
devo's picture

You honestly believe that's going to happen?

Sun, 04/14/2013 - 13:48 | 3446899 fonestar
fonestar's picture

For some, buying silver is inextricably linked to their Mad Max fantasies or at least returning to "the good ol' days" before technology screwed everything up.  The truth is, nobody knows how this will pan out.

Sun, 04/14/2013 - 13:53 | 3446912 The Abstraction...
The Abstraction of Justice's picture

More like the Great Famine of Europe than Mad Max.

 

The UK Government tells the young three things, at the same time:

1) You are not going to retire.

2) You need to pay more taxes to pay for that retirement.

3) You need to invest more in a private pension scheme.

Very very soon the fact that these three do not gel well together will dawn on people in the most direct way, and the day that comes, nobody is getting a pension.

Sun, 04/14/2013 - 13:53 | 3446926 Bearwagon
Bearwagon's picture

Those London-riots come to mind ...

Sun, 04/14/2013 - 14:20 | 3447027 The Abstraction...
The Abstraction of Justice's picture

Vigilante gangs spontaneously emerged within a few days, after the police refused to do anything. In fact they were so aggressive in their defence, the police did not risk oppose them. (Would have also proved a PR disaster to have arrested vigilantes while letting the criminals burn the city).

 

I think once that kind of rioting gets too big then the good people will storm the police stations and military armouries. What I don't understand is that you people in the US, already have the weapons...yet they still walk all over you. What is the point of having fifty rifles and 10,000 rounds of ammunition if all you are willing to shoot at is paper targets.

Sun, 04/14/2013 - 16:14 | 3447340 bonderøven-farm ass
bonderøven-farm ass's picture

The Abstraction...

'What's the difference'? 

Apathy.

Sun, 04/14/2013 - 17:06 | 3447463 lasvegaspersona
lasvegaspersona's picture

Abstraction

every shooter I know hopes and prays they never have to shoot anything but paper. I don't know a single shooter with an offensive plan. Maybe some of the militias do but for most it is a plan to protect and defend. Those who have planned ahead with guns have also planned in other ways. They will not be in line at the food store on that last day of shopping.

Sun, 04/14/2013 - 13:54 | 3446928 fonestar
fonestar's picture

Well I think everyone here can at least agree that this will end badly.

Sun, 04/14/2013 - 13:58 | 3446943 Gringo Viejo
Gringo Viejo's picture

I've been following the PM markets since the Hunt brothers' attempted "corner" of silver in 1980. In the early '90s a local commodity broker explained "why gold & silver will never rise again" educating me as to "paper proxies" for metals. He was right of course, but what he failed to see were the financial excesses of the 2000's which would eventually collapse the system. And make no mistake.......the system IS collapsing.

I personally believe this is "the last takedown." This is the "last train to clarkesville" for the paper shorts. The COMEX will not exist in another year.

Sun, 04/14/2013 - 14:48 | 3447116 e-recep
e-recep's picture

i agree. the system IS collapsing. that's exactly what i told to myself a few years ago.

my reasoning was like this:

capital makes almost no return.
knowledge makes almost no return.
experience makes almost no return.
hard work makes almost no return.
education makes almost no return.

so, this thing is not working. if it's not working, it must be coming down. hence it feels like the sky is falling.

Sun, 04/14/2013 - 17:10 | 3447466 lasvegaspersona
lasvegaspersona's picture

GV

The COMEX might not exist  another day. (I might have fixed that for you if things go the way they seem to be going....if gold opens much lower I doubt much physical will be found.

Sun, 04/14/2013 - 18:36 | 3447676 Kirk2NCC1701
Kirk2NCC1701's picture

"In a year from now", i.e. after The Reset, TPTB won't need Comex for anything but industrial & decorative use of PM.  Deny, scream and rage all you want, but Club Fed will have the Fedcoin after The Reset.   Or it's poverty (for passive resistance), or the FEMA camps (for active resistance) for you. 

/ But why don't you wait till it happens, or Tyler tells you so? /sarc

Sun, 04/14/2013 - 13:39 | 3446849 The Abstraction...
The Abstraction of Justice's picture

There is one material, currently priced at $4000 per gram that Europe, UK, Japan and the US have stockpiled at several hundred tonnes each. Perhaps this will create the basis for 21st century currency, given that they gave all their gold away.

Sun, 04/14/2013 - 13:40 | 3446857 Bearwagon
Bearwagon's picture

It's deadly hazardous.

Sun, 04/14/2013 - 13:50 | 3446904 The Abstraction...
The Abstraction of Justice's picture

Well lets say they will never ship it in 5kgs bars.

Sun, 04/14/2013 - 14:52 | 3447118 Reptil
Sun, 04/14/2013 - 15:48 | 3447266 The Abstraction...
The Abstraction of Justice's picture

My youtube not working too well atm.

Sun, 04/14/2013 - 18:37 | 3447679 Kirk2NCC1701
Kirk2NCC1701's picture

I know, I know... > U2.  So to speak.

Do NOT follow this link or you will be banned from the site!