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Guest Post: Gold – Has The ‘Narrative’ Failed?

Tyler Durden's picture


Submitted by Pater Tenebrarum via Acting-Man blog,

Barry Ritholtz on the ' Gold Narrative'

Presumably alerted by the failure of gold to break to new lows and the non-confirmation delivered by the gold stocks last week, Barry Ritholtz now believes gold could be due for a bounce that might be playable for short term traders. However, Mr. Ritholtz is also convinced that once said bounce is over with, the recent cyclical bear market will resume.

The reality is of course that neither Mr. Ritholtz, nor anyone else actually knows the future. Therefore, he cannot know whether the bear market is or isn't over. However, judging from the remainder of his post, he actually seems to think that the secular bull market in gold is over. In our opinion there is no evidence for that, and we will explain below why we think that he and others in the  long term bear camp are wrong.

Further below is the evidence marshaled by Mr. Ritholtz (actually, apart from the technical analysis he provides, it isn't really evidence at all – it reads like an unsupported opinion). To be sure, he does provide a link to a previous article of his that purports to discuss gold's fundamentals. We comment on this article (and its errors) further below. Contrary to Mr. Ritholtz's repeated assertions that he is an 'agnostic on gold', his tone reveals that he is indeed biased. Mr. Ritholtz is to our knowledge essentially an establishment figure with democratic leanings. Let us just note that socialists/democrats don't like gold much and generally believe that central banking and fiat money are just fine. Here is what he writes about gold and the expected bounce:

“If you are a trader — and I no longer consider myself one — then you have to be wondering when Gold is going to bounce. It has plummeted on little inflation, a strong dollar and an improving economy. When the breathless narrative of hyper-inflation, collapsing fiat currency and end of the world failed to come about, Gold’s spectacular rise ended. Now, it has free-fallen so far that a counter-trend rally is over due.


How do the typical counter-trend rallies work? Well, the forced selling by margin clerks and futures traders becomes exhausted. A distraction may capture the investing community’s collective attention, allowing some stabilization to occur. As prices stop falling, the fear falling asset holders have been living with dissipates. A little bit of good news, a small reversal in price, and the prior (now discredited) narrative reasserts itself.


Note this scenario is non specific — we see it in stocks, bonds, commodities, real estate and yes, Gold. Apple will run this one day, AIG is already enjoying its turnaround, as all former high flyers do. And if the underlying business model improves, the turnaround could be for real, and the bounce morphs into a new sustainable uptrend.


Here comes the bad news: The bounce in a commodity like Gold — or its primary trading vehicle, GLD — is less likely to achieve that sort of happy ending. The bull market is broken, the prior narrative has utterly failed, and is no longer taken seriously, except by yellow metal jihadists and other assorted suckers.


(emphasis added)

So Mr. Ritholtz is completely unbiased about gold, but he considers any gold bulls that are still left 'yellow metal jihadists and other assorted suckers'. As a friend pointed out to us, this comes across as a racist and elitist in one fell swoop, almost a trifecta. In what way Mr. Ritholtz believes his analysis to be improved by making such insufferably arrogant comments we cannot say.

We have by the way no quibble at all with the short term trading call he makes (it seems well founded on technical grounds) and we also have no problem with someone having a bearish opinion on gold. It is true that a number of gold-bearish fundamentals have been in place in recent months, and we cannot be certain when the longer term outlook will finally trump these medium term bearish fundamentals.

However, what is the 'narrative' that Mr. Ritholtz believes to have failed? As he himself writes – we are not putting words into his mouth here – the 'narrative' as he understands it consisted of: “hyper-inflation, collapsing fiat currency and end of the world”. Since none of those things have come to pass (not yet, anyway), the secular gold bull market must be over.

That's his analysis? That gold requires a narrative about 'hyperinflation, collapsing fiat currencies and the end of the world' to remain in a bull market? If he actually believes that, then he knows very little about gold and would do better by not opining about it in public.

We must admit that there are a number of people in what is widely referred to as the 'gold community', who in spite of having their heart in the right place, are not necessarily very good gold analysts. Many stress facts that are really not all that relevant to the gold price (such as retail demand for gold coins, central bank buying/selling, primary supply/demand data, and so forth). There are also a few 'extremists' who indeed talk mainly about imminent hyperinflation and other end-of-the-world scenarios.

As readers of this blog probably know, we believe that we happen to have a pretty solid grasp of gold's fundamentals and what one's analysis should focus on (for a list of gold's fundamental drivers, see here, for an excellent summary of how the price of gold is determined see Robert Blumen's article here, and for a comprehensive analysis see Ronald Stoeferle's 'In Gold we Trust' reports here [2012] and here [2013]).

In short, neither imminent hyper-inflation, nor an imminent collapse of the fiat currency regime or any other end-of-the-world scenarios are actually required to be bullish on gold. In other words, this particular 'narrative' does not require 'reassertion' in order for gold prices to rise. It never was what drove gold's bull market in the first place.


Gold has no Fundamentals? Really?

So as to be fair to Mr. Ritholtz, we will also quote what he wrote in the article he pointed to as containing his fundamental analysis:


“We looked at Gold as a trading vehicle in the past, and identified the many ways it is different than assets like equities or bonds. Back in 2011, we noted that Gold is a trade, not a religion. During that presentation at the Agora conference in Vancouver, we discussed how commodities spike and collapse versus how equities roll over and break trend lines.


History shows Gold trades differently than equities. Why? It comes back to those fundamentals.


It has none.


This is not to say gold is not affected by Macro issues. But that is very different than saying Gld has a fundamental value, an intrinsic worth. It does not. That led to this heretical advice: Gold is not, and can never be, an investment. It has no true intrinsic value, no cash flow, no earnings, no coupon. no yield. What people call fundamentals are nothing more than broad macro analysis (and how have your macro funds done lately?). Gold is the ultimate greater fool trade, with many of its owners part of a collective belief theory rife with cognitive errors and bias.


I do not want to engage in Goldenfreude — the delight in gold bugs’ collective pain — but I am compelled to point out how basic flaws in their belief system has led them to this place where they are today. Gold does trade technically, and is especially driven by the collective belief system of the crowd. When that falter, well, you know what happens…”

(emphasis added)

Sure enough, gold has no yield, no conference calls, and no income statements (paraphrasing Jim Grant). That is actually the beauty of it. But that does not mean it 'has no fundamentals', nor does it means that it 'cannot be an investment'. In fact, since gold is currently not employed as a medium of exchange, it is nothing but an investment asset – one with monetary characteristics to be sure. The remark about gold not possessing 'intrinsic value' is entirely superfluous, as nothing in the world has 'intrinsic value'. This is not a feature that is an exclusive characteristic of gold, as all value judgments are subjective. Hence the notion that anything could possess intrinsic value is mistaken. The way Mr. Ritholtz formulates it above suggests that he believes that while gold has no intrinsic value, other things actually might have it. That is not the case.

The 'macro' issues that are driving gold are indeed gold's 'fundamentals'. To deny this is tantamount to denying that any currency has fundamentals, but obviously, every currency can be analyzed fundamentally. The fact that gold has no yield can be traced back to the fact that it is the only currency that cannot be inflated by central banks and bears no counterparty risk (see also Ronald's 2013 gold report on this topic). It is the high quality of gold as a currency that is the reason why it has no yield (it is by the way possible to lend gold out, so it actually does have a yield – but that yield is so small as to be negligible).

With regards to 'greater fool trades' and the 'cognitive errors and biases' exhibited by investors, these are also not features that can be said to be specific characteristic of gold. They can be found to assert themselves in every type of investment asset. Was buying the Nasdaq at 5,000 points in March of 2000 an example of a 'greater fool' trade exhibiting the 'cognitive errors and biases' of the buyers? We would argue that it was.

In other words, all the things Ritholtz lists as characteristic of gold's allegedly 'non-existent' fundamentals are things that are not specific to gold in any way.

Just about the only thing we agree with is that gold traditionally tops and bottoms in a manner that is different to how equities tend top and bottom out. That is however not exactly big news either. Earlier in his article Mr. Ritholtz makes a few additional points that are also worth commenting on:

1) Gold had a huge rally came as the dollar collapsed 41% from 2001 to 2007. The Dollar is now at a three year high. Why would that be a fundamental positive for Gold?


2) Quantitative easing has been going on int he US for 4 years, and worldwide for a while. What is the basis of Hathaway’s assumption that this is a net positive for Gold? We have so few examples of this phenomena that I do not understand his analysis here.


3) Cyprus is a terrible example of “governments’ new confiscatory inclinations.” Readers need to recall that Cyprus banks were paying 6% in a zero interest rate environment. These were not “risk free checking accounts” but rather high yield, high risk trades. This “confiscation” as described by the usual paranoics was nothing more than a capital loss in a high risk trade. (about 16 months of interest payments).”

We would answer these as follows: a declining dollar is better for gold than a rising one, there is no question about that. However, the dollar's exchange rate is but one of many drivers of the gold price. If that were not the case, gold could never rally in non-dollar terms, but it certainly does. In fact, the biggest gold rallies in history happen to have coincided with a stable dollar.

'Quantitative easing' or better, money printing, is indeed fundamentally relevant for gold. As Steve Saville recently pointed out, it is not 'QE' as such that drives gold, but rather its negative effects, which usually only assert themselves with a lag. Even if one doesn't know what exactly those are, one actually doesn't really need to be au fait with monetary/economic theory in order to realize the following: It should be obvious on a very simplistic level that if the supply of one currency rises relative to that of another, the currency with the faster growing supply will in the long run decline in value against the one with the slower supply growth. What's so difficult to understand about that?

Regarding Cyprus, we agree that the Cyprus affair as such is correctly characterized by Mr. Ritholtz. However, the fact that depositor 'haircuts' have been made the new 'template' of how future bank insolvencies will be dealt with does strike us as relevant for gold. Big depositors have very good reasons to worry about the safety of fractionally reserved banks and hence the safety of their deposits. A number of them may well consider holding gold a good alternative – after all, it is essentially a form of cash and it is certain that no central banker can print more of it. Gold in allocated accounts is moreover an insurance against the failure of banks.


The Long Term Bullish Case

So why is there still a long term bullish case for gold? The main point to be considered is that the central bank backstopped fiat money system and the fractionally reserved banks operating in it have created a huge debt overhang. To see how extreme this has become since the dollar's last tie to gold was cut in 1971, one must ponder this chart of total credit market debt compared to GDP:



total credit market debt and GDP

All credit market liabilities compared to GDP since 1971 – via St. Louis Fed – click to enlarge.



Although what is compared here is a stock (debt) to a flow (GDP), this chart does tell us something about the economy's ability to use debt productively, as well as its ability to service it.

It is well-known that the true liabilities of the regulatory democracies, resp. welfare/warfare states, vastly exceed even this enormous debt mountain. In fact, these so-called 'unfunded liabilities' are so enormous that everybody knows that there will either be a default or they will be 'inflated away'. Moreover, any honest assessment of the fractionally reserved banking system and its uncovered deposit liabilities must come to the conclusion that the 'end of the line' has essentially been reached.

As Ronald Stoeferle notes in his recent gold report, it is therefore a near certainty that governments will engage in various forms of 'financial repression' in order to 'fix' the situation in a manner that is regarded as politically painless. This almost guarantees that things will get even worse, as capital formation will stop dead in its tracks.

The current monetary system essentially faces two possibilities: either there will be massive deleveraging on a scale never before seen (commensurate to the build-up of the debt overhang), or it will continue to inflate. Guess what: massive deleveraging is simply politically intolerable. It can perhaps be forced on a few hapless smaller victims like Greece and Portugal, but no-one can force it on, say, France or the US. On the contrary, the current orthodoxy of central banking has one, and only one, solution for the dilemma: print more money.

As long as this is the case, we can expect the fundamental drivers of the long term gold bull market to remain intact. This time, no Volcker will ride to the rescue either. What he did simply can no longer be done. If you want to know why, compare the stock of debt of 1979 (approx. 150% of GDP) to that of today (approx. 360% of GDP).

One day we may even get to see those parts of the 'narrative' play out that Mr. Ritholtz deems to be an impossibility, namely the collapse of the current monetary system. Contrary to what one may think, it would not be a big deal historically speaking. Currency systems have imploded throughout history, and the current one is a prime candidate for that fate, given that it is entirely based on a mixture of faith and coercion. We certainly don't believe that eventuality to be imminent, but we think it is almost inevitable in the long run.  However, let us once again stress: this has no relevance to the secular gold bull market's likely progression over the next few years. We happen to believe that gold's price will eventually rise to levels that would be considered absurd today. When gold was 'cut loose' from the dollar in 1971 at $35 per ounce, a price of $850 looked like an absurdity as well, and yet it eventually happened.

Of course, right now, a cyclical bear market is underway, so let us not get carried away here. As noted above, we cannot be sure to what extent the tree will need to be shaken before the bull market resumes, but we do feel quite confident that the long term bullish case remains perfectly intact.


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Tue, 07/02/2013 - 22:43 | 3716463 LetThemEatRand
LetThemEatRand's picture

The anti-gold "narrative."  That's written on paper, right?

Tue, 07/02/2013 - 22:56 | 3716527 Eireann go Brach
Eireann go Brach's picture

The Big Picture is just a rehash of everyone's else's work, a cut and paste expert is our Barry! Fuckin wanking banker lover!

Tue, 07/02/2013 - 23:22 | 3716604 flacon
flacon's picture

How can gold be in a bull (or bear) market when GOLD IS NOT TRADED and the PRICE IS UNKNOWN in the "market"? I think FOFOA is right. Gold price to crash.... then.... to INFINITY. 

Wed, 07/03/2013 - 03:36 | 3716902 All Risk No Reward
All Risk No Reward's picture

I agree that gold will likely crash, along with everything else, when the deflationary bust is orchestrated to convey the wealth of debtors to mega banksters.  Real wealth, not monetary wealth.

Once the banksters own the hard Earth, they will likely bust the debt money and hyperinflate to balance their books, but that is bookkeeping.  By this time, they will control almost the entire planet.  They already control everything big.  Soon enough they will control even the small.

Bill Still lays it down...

Control over the necessities of life within a positive community is where people should focus their efforts.

Wed, 07/03/2013 - 06:51 | 3717046 philipat
philipat's picture

And Mr Ritholz is no fan of ZH, frequently making disparaging comments on his blog, which I agree contains NO original content (Reserved for paying subscibers to Quantum) and which has an arrogance about it. Wall Street asshole dressed up as a semi-libertarian socialist.

Wed, 07/03/2013 - 07:07 | 3717064 GetZeeGold
GetZeeGold's picture



So why can't Germany get it's gold again?

Wed, 07/03/2013 - 07:14 | 3717080 philipat
philipat's picture

Not even ALL its Gold. Just a token 300 Tons from a total of 1,700 Tons. No reason provided but trust us.......

If it is just sitting there gathering dust, I would have thought it a simple matter to schlep it over to JFK and ship it to FRA??

Wed, 07/03/2013 - 07:23 | 3717092 GetZeeGold
GetZeeGold's picture



It don't get it.

If gold is so worthless....why don't they just give it back?

Wed, 07/03/2013 - 07:33 | 3717111 ParkAveFlasher
ParkAveFlasher's picture

Hey, that belongs to China.  

Wed, 07/03/2013 - 09:05 | 3717324 Pegasus Muse
Pegasus Muse's picture

Hey, nice graphic for this rebuttal, Tyler. 

A natural pairing -- Ritholz's gold commentary and rotten dead fish.  

Both stink up the place.

Wed, 07/03/2013 - 14:15 | 3718936 MeelionDollerBogus
MeelionDollerBogus's picture

That's funny.

Jim Rickards during the financial war games he wrote about in Currency Wars faced the same challenge. He was told it was a worthless thing so like any hard-nosed trader dared them to 'sell it all' then. They did. All hell broke loose. I think they learned their lesson in the Pentagon that day, especially as real China & Russia news on gold broke loose matching the predictions & pushiness Rickards was going for.

Wed, 07/03/2013 - 07:31 | 3717106 ParkAveFlasher
ParkAveFlasher's picture

I've seen Barry on the seven train platform in lic, he was transferring from the lirr.  Type of guy who liked to talk loudly in public places, somewhat typical of the Long Island -based Cult of the Obvious.

Wed, 07/03/2013 - 10:31 | 3717754 Squiddly Diddly
Squiddly Diddly's picture

Boating accident ?

Wed, 07/03/2013 - 09:45 | 3717530 Silveramada
Silveramada's picture

and how can something be in a bear market, when the demand is at all time high???!!!  BS...

Wed, 07/03/2013 - 09:51 | 3717565 Stoploss
Stoploss's picture

Hey. it's the only way he can gain some notoriety, i don't think anyone reads his blog. 

Wed, 07/03/2013 - 08:57 | 3717332 hivekiller
hivekiller's picture

Any holdouts will be invaded as "terrorist territory". Can't have anybody get any ideas, you know.

Tue, 07/02/2013 - 22:57 | 3716531 DoChenRollingBearing
DoChenRollingBearing's picture

Ritholz can say whatever he wants.  I'll keep my gold (and buy more when able), it will all get passed along...

Wed, 07/03/2013 - 00:10 | 3716713 DavidPierre
DavidPierre's picture

Fuck 'em!... and all their blather.

Till the fraud ends... get your hands on as much gold and silver as you can!


Wed, 07/03/2013 - 07:29 | 3717103 Roandavid
Roandavid's picture

I pass through Barry's page for a minute or two, most days, mosrly for the links.  As Gertrude Stein once famously said of Oakland California, "There is no there, there."  

While he is fun to play with as he's really, really thin skinned and needy and get's really pissy when you play hard in his comment section, aside from the lulz that come with messing with the little fellow directly, that anybody would give even a minute to refute Barry's drek on any issue is a wonder to me.

Wed, 07/03/2013 - 00:28 | 3716735 buyingsterling
buyingsterling's picture

This is not to say currency is not affected by Macro issues. But that is very different than saying currency has a fundamental value, an intrinsic worth. It does not. Currency is not, and can never be, an investment. It has no true intrinsic value, no cash flow, no earnings, no coupon. no yield. What people call fundamentals are nothing more than broad macro analysis (and how have your macro funds done lately?). Currency is the ultimate greater fool trade, with many of its owners part of a collective belief theory rife with cognitive errors and bias.

Wed, 07/03/2013 - 09:04 | 3717349 Touch_It
Touch_It's picture

I see what you did I there.

Wed, 07/03/2013 - 21:55 | 3719332 MeelionDollerBogus
Wed, 07/03/2013 - 04:51 | 3716963 rivoniaboy
rivoniaboy's picture

Markets will rock, roll and lay down on the floor in spasms of laughter and revulsion.At the end of the day... when the dust settles and the music stops... gold will be the last man standing.

Bill Bonner.

Tue, 07/02/2013 - 22:39 | 3716465 Xibalba
Xibalba's picture
Ritholtz is the definition of DOOSHBAG


fukin wannabe goomba.


Here's his bio from where he a pal Cramer get gay together: Ritholtz holds a bachelor's degree in political science (with a concentration in philosophy) from the State University of New York at Stony Brook, and a J.D. from the Benjamin N. Cardozo School of Law, where he studied corporate law and economics.  <---What do you call a dooshbag who falls asleep in his car?  Cardozo. 

Tue, 07/02/2013 - 22:44 | 3716487 Pool Shark
Pool Shark's picture



I used to read The Big Picture, but then I grew up and realized Barry is just a tool of the 1%...



Tue, 07/02/2013 - 22:46 | 3716493 Xibalba
Xibalba's picture

'The Big Picture' is a cut and paste scam.  A 5th grader could do it better.  

Tue, 07/02/2013 - 23:50 | 3716686 CPL
CPL's picture

His first mistake was assuming that anyone cares to trade back into USD or anything offered ever again.  Mr Ritholtz is in for a horrible surprise soon if he and others continue to voice their delusionary belief that the system in any form will continue.

He better hope someone delivers all that paper gold he's been fucking around with.  Or he's SOL.  He doesn't understand it yet.  But he's one of those useful idiots.  Yet another sock puppet and rare as a used rubber in a brothel and just as exclusive.  Then again, he's a big boy, he made his bed.

Wed, 07/03/2013 - 08:31 | 3717227 WhiteNight123129
WhiteNight123129's picture

Ok little Barry, here we go... simple.

There is too much debt to GDP, can we agree on that?

Debt = financial assets = promise of futur dollars discounted by time. Barry you follow so far?

GDP = circulation of present goods = actual nominal dollars of circulation either using credit or money.

The ratio must shrink.

You can have massive bankruptcies, or boost the nominal GDP (GDP targeting).

What boost prices is not printing of money at all (currency school), but an inversion in interest rates and the using of those dollars to accomodate higher prices. The higher quantity of dollars used is because the prices are higher, it is not the cause (banking school). Friedman is copying Ricardo which himself was completly wrong, Wicksell tried to dismantle Thomas Tooke s view on interest rates and prices without much success. Higher long term interest rates and prices always go hand in hand. It is just getting starting.

Gold = present good undiscounted by interest rates but following price levels.

Financial assets = sensitive to higher and higher interest rates in the discounting.


Stagflation coming with higher and higher long term interest rates forcing higher prices and forcing idle money to move in circular loop, or a differential equation if you will. The only way to stop is is to raise interest rates on the short end very agressively when the loop starts to get a bit too fast (2-3 years).

Little Barry stop your view on prices copied from Friedman and Ricardo, money printing is correct only in the long run provided we have the inversion of interest rates, if interest rates keep going lower instead of moving into stagflation we move from credit hyperdeflation to hyperinflation in a snap. (Japan has the most risk of that).

So watch prices rise and long term interest rates rise for the next 20 years.

Aside from having the correct view of interest rates and prices, Thomas Tooke also came up with the concept of stock to usen ratios. Thomas Tooke was the most proeminent observer of prices and commodities in the XIX century.

Barry is cute but he is a typical second half XXth century economic ignorant. The banking school guys rule, Keynes is an amateur as far as explaining prices compared to those guys and Friedman is a wannabe Ricardo.




Tue, 07/02/2013 - 22:39 | 3716473 TeamDepends
TeamDepends's picture

Let's talk when China and/or Russia issues a gold-backed currency....

Tue, 07/02/2013 - 22:54 | 3716515 Diablo
Diablo's picture

umm, if thats your investment might wanna rethink buying gold. you might be waiting a while.



Wed, 07/03/2013 - 03:16 | 3716882 Rubicon
Rubicon's picture

Agreed. Thats isnt going to happen.

Wed, 07/03/2013 - 10:24 | 3717720 TeamDepends
TeamDepends's picture

And you KNOW that how?  It might not be backed solely by gold.  Our pal silver might be involved, and/or other commodities.  But the laughable experiment with fiat paper bux is about to come to its ignoble end, and if you can't see this you need to open your eyes.

Wed, 07/03/2013 - 01:55 | 3716820 Gief Gold Plox
Gief Gold Plox's picture

I keep hearing about this, but why would any country do that in this day and age?

It's just so much easier paying people in paper. You can conjure it out of thin air (providing you've got a little ink and some paper) and can at a push of a button wreck peoples life-long savings. Why would anyone in power deny himself/herself such potent tools of control?

Wed, 07/03/2013 - 06:19 | 3717016 Bendromeda Strain
Bendromeda Strain's picture

Umm - to screw the crooks of Bretton Woods, perhaps? I mean, sending them T-bonds to Africa for commodity deals wasn't the only card in their hands, do you think?

Wed, 07/03/2013 - 06:55 | 3717050 overmedicatedun...
overmedicatedundersexed's picture

gold, dug up in one hole to put into another, yep, but remember to dig it up is costly, and the end product is not what was dug up, it's been we dig it up it (gold) becomes rare, as it was impossibly rare to begin with.

does anyone think Germany gets it's gold back? I am not so sure it will.

one other bothersome question: a SA country demands it's gold, within months it's leader is dead.

An N African leader, tries leaving the $  and using gold based Paper, and he is killed w CIA owned goons

Not one bank will give you gold, yet they claim it is worthless ..while keeping secured in the biggest most secure vaults the world has known.

The CB of the USA, will not even let presidents or congress see the gold owned by the People of USA..

gold used as a measure of wealth for countless centuries by thousands of cultures and governments..


Wed, 07/03/2013 - 08:30 | 3717247 Xibalba
Xibalba's picture

Details, details...

Wed, 07/03/2013 - 09:24 | 3717416 Panafrican Funk...
Panafrican Funktron Robot's picture

"It's just so much easier paying people in paper. You can conjure it out of thin air (providing you've got a little ink and some paper) and can at a push of a button wreck peoples life-long savings. Why would anyone in power deny himself/herself such potent tools of control?"

A government can set the price of paper per redeemable ounce of gold to whatever they want.  Think trillion dollar platinum coin here.  As a thought experiment, let's assume the following:

The US has approximately 270 million troy ounces of gold.

The USD price is set at $100,000 per troy ounce.

They set the total USD in circulation at $27 trillion dollars.

That seems like a pretty solid amount of slosh to work with, particularly if you were to, say, repatriate domestic gold mines.

Tue, 07/02/2013 - 22:40 | 3716475 Charles Nelson ...
Charles Nelson Reilly's picture

To be fair to Ritholz, he's a total fucking buffoon.

Tue, 07/02/2013 - 22:48 | 3716495 Xibalba
Xibalba's picture

buffoons all across the planet just got insulted. 

Tue, 07/02/2013 - 23:37 | 3716655 Al Huxley
Al Huxley's picture

Buffoon's a softer word than I was thinking, but I agree with the sentiment - whatever else you want to say about him, you gotta give him that.

Tue, 07/02/2013 - 22:43 | 3716480 Manipuflation
Manipuflation's picture

So gold is going lower again?   Really?  This might just work out for me yet but I need a bigger stack and not electrons.

By the way, that is a piss poor call by Ritholtz.  Other commodity prices would be decreasing as well if there were actual deflation or a decrease in demand.  Hello WTI?

Wed, 07/03/2013 - 01:50 | 3716816 DoChenRollingBearing
DoChenRollingBearing's picture

Good evening Manipulation and any of his readers!  I made a comment at his blog about deeper levels of encryption available to us "mere mortals", even if it is SQL...:

More details of what I did:

"Learning More About Encryption"

Wed, 07/03/2013 - 10:57 | 3717863 DosZap
DosZap's picture

So gold is going lower again?   Really?  This might just work out for me yet but I need a bigger stack and not electrons.


Great, get it before the BAIL IN's start, and they will be coming to your bank soon.

Tue, 07/02/2013 - 22:43 | 3716482 Seize Mars
Seize Mars's picture


Tue, 07/02/2013 - 22:44 | 3716488 FullFaithAndCretin
FullFaithAndCretin's picture

"as nothing in the world has 'intrinsic value'"

Horse shit.

Tue, 07/02/2013 - 23:12 | 3716575 andrewp111
andrewp111's picture

Food and energy have intrinsic value. So does the best armaments. Everything else, not so much.

Wed, 07/03/2013 - 01:39 | 3716802 Rusty Shorts
Rusty Shorts's picture

Wine & Food PITCHEZ

Wed, 07/03/2013 - 08:35 | 3717266 Greshams Law
Greshams Law's picture

I used horse shit (and cow shit) on my garden. Best tomatoes I ever grew.

There's plenty of intrinsic value in horse shit.

Wed, 07/03/2013 - 15:40 | 3719296 MeelionDollerBogus
MeelionDollerBogus's picture

google "Mittleider gardening"

You'll be surprised.

Tue, 07/02/2013 - 22:48 | 3716497 Panafrican Funk...
Panafrican Funktron Robot's picture

Wonder what he would make of this:

Either IR swaps blow up, or the stock market blows up.  That level of dislocation is fucking absurd.

Tue, 07/02/2013 - 23:21 | 3716603 bulldung
bulldung's picture

'Frican Funk,

What do you make of this and how do you profit from it ? I have neither a finance nor economics background but I can recognize divergence.I just don't know what to do with it , the Fed can print to infinity if need be for the Govt to survive.

Wed, 07/03/2013 - 09:48 | 3717548 Panafrican Funk...
Panafrican Funktron Robot's picture

There are only two things that matter:

1.  How much the Fed supports the financial markets (both stocks and bonds).

2.  How long the USD can continue as the global reserve currency.

Please know that the reason many people here (most of whom could run circles around the various dipshit Ivy MBA's populating Wall St.) are fully divested of not only the stock/bond markets, but fiat currency in general, is because Fed intervention and reasoned uncertainty about the fate of the USD as the global reserve currency makes these markets untradable in a timeframe greater than a week or two, max.  

The "what to do with this" is to basically copy the high net worth people and get into real, tangible assets.  I tend to break this into categories:

1.  Limited means = physical silver + stockpiling

2.  Moderate means = land (esp. arable and near a water source) + physical gold/silver + stockpiling

3.  Extensive means = land (arable, some commercial) + physical gold/silver + stockpiling

There is a reason the "landed gentry" generationally wealthy families do the following:

1.  Own a lot of land (esp. arable/productive).

2.  Know how to hunt/shoot.

3.  Store at good portion of their wealth in stuff like fine art, expensive jewelry, and precious metals.

It's easy to look at these conclusions as being based on some "nutjob" premise or whatever, but I would just suggest that everyone look at what the wealthy people do, not what they say.

Tue, 07/02/2013 - 23:25 | 3716615 Al Huxley
Al Huxley's picture

This is my goto FED chart showing ridiculous dislocation, but your's is good too.


Why do so few ever mention this when they talk about 'bubbles'?

Wed, 07/03/2013 - 04:13 | 3716913 zhandax
zhandax's picture

All I can say is reversion to mean will really suck this time around.

Tue, 07/02/2013 - 23:33 | 3716506 Dr. Engali
Dr. Engali's picture

Why anybody takes what shiltholtz has to say to heart is beyond me. The guy is a total joke. He is one of those people who used to mock Peter Schiff when he was warning them about the housing crisis. Now he tries to claim he was one of the few people who saw it coming.

Tue, 07/02/2013 - 22:56 | 3716526 Mr. Hudson
Mr. Hudson's picture

As long as gold always taste like chicken, I don't care if it goes up or down.

Tue, 07/02/2013 - 22:57 | 3716529 Cycle
Cycle's picture

One can make pretty good guesses about the future of a commodity based on determining its cyclical price structure. In that context, it looks to me that gold is in the process of forming a double bottom, but that a robust rise can be expected in early 2014. Meanwhile most of the post hoc ergo propter hoc rationalizations as to why a price did this or that in the commodity sphere are usually ad hoc.

Tue, 07/02/2013 - 22:57 | 3716532 BadDog
BadDog's picture

Mentioning Bary Ritholtz's name on ZH is like chumming for sharks.  Here's a couple more: Dennis Gartman and Dick Bovey

Tue, 07/02/2013 - 23:57 | 3716693 ebworthen
ebworthen's picture


Haven't seen those bearded dolts lately.

They must be getting a Brazilian somewhere.

Wed, 07/03/2013 - 06:42 | 3717034 sudzee
sudzee's picture

You forgot Jon Nadler. After 10 years he's still callin for 400.00.

Tue, 07/02/2013 - 22:58 | 3716533 ToNYC
ToNYC's picture

The dollar is an illusion of stability yet the one I spent in the 50s was attached to a lot more gold, and this trend is expected to continue since it has been an unbroken string from upper left to lower right.

Tue, 07/02/2013 - 23:17 | 3716571 andrewp111
andrewp111's picture

Mr Ritholtz and the Gold Bugs could both be right, just on different timescales. I don't know the future either, so I can't say what timescale. But I do know one thing - If current macroeconomic conditions produce a Democratic wave in the 2014 Midterms, and such a wave does seem to be building right now, that will be very very bullish for Gold.

[Think massive Federal stimulus, increased minimum wages, and lower interest rates. Inflation UP, rates DOWN, real rates more negative--> bullish for Au.]

Tue, 07/02/2013 - 23:44 | 3716671 otto skorzeny
otto skorzeny's picture

what are you talking about- the repukes are polling rather well and if the economy continues its Main Street big dump the coon-in-chief will get the blame

Wed, 07/03/2013 - 04:27 | 3716937 zhandax
zhandax's picture

I don't know the future either, so I can't say what timescale.

The future and the timeline are up in the right hand corner.  "On a long enough timeline the survival rate for everyone drops to zero."  What happens between now and then doesn't have jack to do with reds or blues.  Thank you for playing, please try again.

Wed, 07/03/2013 - 00:26 | 3716733 Dr. Engali
Dr. Engali's picture

If there is going to be such a big democratic wave then why did Obummer just wave the employer mandate on Obummer care? I'll tell you why.. the demoncrats don't want to run on that record. The fact is that the honeymoon is long past and the Ametican people have petitioned for a divorce from this goon and his party. The problem is the alternative is no freaking different.

Wed, 07/03/2013 - 01:53 | 3716818 RaceToTheBottom
RaceToTheBottom's picture

Dr. It won't make a rat's ass of difference which unlucky person gets elected to the White whorehouse....  There is no real difference and you know it.  The wheels are in motion and are only rolling downhill.  At least give Gravity the respect it deserves...

Wed, 07/03/2013 - 06:39 | 3717031 Dr. Engali
Dr. Engali's picture

Did you read my last sentence?

Tue, 07/02/2013 - 23:15 | 3716578 Seychelles
Seychelles's picture

Sure, there can be a Volker-repeat of sorts if we get a Fed chairman with some cajones.  Next time long term (10yr Treas) interest rates peak it will be more like 20+% and be due to fear of default rather than inflation.  I know you guys R gonna love this.  I'll be buying modestly at $500 per oz while you R selling and my heirs will be told to just put it away and forget it for 20 yrs.

BTW I agree BR is a flake but sometimes even flakes luck out and get things right.

Wed, 07/03/2013 - 00:21 | 3716636 Al Huxley
Al Huxley's picture

How many trillions in 20% USTs do you think the government can afford before it becomes obvious to even the dumbest motherfuckers out there exactly how insolvent they are ( and what do you think a 20% coupon would do to the FEDs P & L, with trillions in next-to-0% USTs currently cluttering the their balance sheet)?  They're fucked, no way out, just gotta keep lying and hope that everybody buys it FOREVER.


EDIT - changed it to 20 since you floated that number.

Wed, 07/03/2013 - 00:43 | 3716755 Seeking Aphids
Seeking Aphids's picture

Totally agree Alduous. Is there anyone out there who disputes the fact that there is no way the US can pay the interest on its debt if rates go up? This is a fundamental that is not going anywhere soon....ok there are other influences out there attempting to push up interest rates but they cannot fight the Fed...which will force rates down again and again. QE Infinity is with us until they can lower the debt...that aint happening anytime soon unless you want riots in the streets. Gold is necessary...they would have to invent it if it did not exist. Why? As a way of measuring the value of currencies. The fact that the $US went off the gold standard actually does nothing but highlight the importance of this standard......the barbaric relic as K put it. CB's hate the standard...not gold per se. But standards are always present in all forms of human endeavour...try to think of any meaningful human activity that does not have a standard that permits objective measurement. For this reason and this reason alone gold has an important future ahead of it. Given the incredible amount of QE going on around the world gold should rise to at least $3K an ounce....and by the end of 2015. If the BRICS go to a basket of currencies with gold as part of the basket this could happen even sooner.......all imho.

Wed, 07/03/2013 - 05:05 | 3716972 zhandax
zhandax's picture

Wait a minute, lets re-examine that.  I seem to be getting the sense that the current debt creation requirement to satisfy the exponential function is so massive that .gov is throwing money at things which would have sounded silly even 5 years ago.  $100M to send obozo to Africa and the ingrateful shit didn't even stop in to see his brother.  Someone at work today was blathering about odumbass giving $7B to S. Africa for windmills.  Millions to study the sex habits of anything with sex organs.  Trillions to banks to park in deposits. 

What if a chairsatan did jack rates into double digits and then monetized the interest payments?  It took Volker about 2 years to regain control.  Couldn't berstinky's replacement balloon his balance sheet once more for the same purpose?  Not that I think there is a prayer in hell of it happening, but we have seen stranger things the last 5 years.  None of us in 2008 thought today could have ever happened without causing a collapse.  Who thought we would be watching gold go down with the monetary base at these levels?  We have a world-class propaganda machine who could convince the average amurikan idiot that bombing poor people without a hole to shit in is 'for the children'.  J6P doesn't know what the fed, much less a balance sheet is, and everyone else in the developed world wants dollars so badly they are willing to stop planes with suspected passengers they thought of as a hero last week from flying through their airspace.  This could work.

Except that GDP has been directly correlated to the outstanding debt level since WW2....  Nothing going to fix this but a new monetary system.  Do we come up with one or wait until one is formulated by the criminals and foisted upon us?

Tue, 07/02/2013 - 23:53 | 3716690 ebworthen
ebworthen's picture

Nice try.

Back to the books with you.

Wed, 07/03/2013 - 09:37 | 3717474 Seychelles
Seychelles's picture

Contemplate the implications of "poof" as in unimaginable amounts of debt being defaulted upon...or real capital being confiscated. That is very uninflationary.  Virtually all books provide algorithms (usually designed to enrich whoever wrote them) that provide speculators with fantasies of getting rich by sitting on their tuches and doing nothing.  Good luck to you.

Tue, 07/02/2013 - 23:15 | 3716583 Father Lucifer
Father Lucifer's picture

Mr. Ritholtz is a snot trying to find a place in MSM and probably will.

Tue, 07/02/2013 - 23:15 | 3716584 Mark_BC
Mark_BC's picture

gold has no yield,

Neither do Treasuries, when you account for negative real interest rates.

Neither do stocks, once their true market value is revealed after the multi-decade ponzi scheme finally unwinds.

Sure, Treasuries and stocks can make short term rallies that exceed gold's moves, but that is only because of market manipulation (which also determines gold's paper price).

The fundamentals remain: when you add up all the real physical wealth in the world, gold is highly undervalued, and stocks and bonds are highly overvalued. At some point the rigged game will collapse and those fundamentals will be reflected in prices.

Tue, 07/02/2013 - 23:20 | 3716599 Manipuflation
Manipuflation's picture

Where is the bubble and who cashes out and spends it first?  That's all it is.  We all know what the truth is though.  Resume stacking.

Tue, 07/02/2013 - 23:18 | 3716591 FranSix
FranSix's picture

Gold will be essential to hold in a devaluation of currency.

Tue, 07/02/2013 - 23:29 | 3716628 Manipuflation
Manipuflation's picture

Revaluation VS devaluation.  Which will they do?  There is no other choice except gold.


Tue, 07/02/2013 - 23:21 | 3716593 Colonel Klink
Colonel Klink's picture

I smell a RAT!

Acting man blog, is that anything like Sovereign man blog, I almost have more respect for Simon.

Tue, 07/02/2013 - 23:34 | 3716646 Al Huxley
Al Huxley's picture

Long history of pretty good commentary.  You should read him before you judge.

Wed, 07/03/2013 - 01:34 | 3716801 Colonel Klink
Colonel Klink's picture

Understood but I don't see a bear market until QE is off and derivatives pop.  Something will come apart.  Technicals no longer apply in manipulated market.

Wed, 07/03/2013 - 15:33 | 3719275 MeelionDollerBogus
MeelionDollerBogus's picture

incorrect. All cheating has predictable goals, patterns and with graphical analysis can be charted.

Tue, 07/02/2013 - 23:22 | 3716606 Hulk
Hulk's picture

Gotta love the "bear market" mantra. Record physical demand and Gold is in a bear Market !!!

Bifurcation is going to be a bitch !!!

Tue, 07/02/2013 - 23:23 | 3716607 drinkin koolaid
drinkin koolaid's picture

Gold is going to one more new low below 1179, how far below, who knows, doesn't matter, because this will finally be the selling climax, which will be the "official" end to the downtrend from the Sep. 2011 high. Then we should see an extremely explosive rally on very heavy volume. Then many months of rallies and reactions to mark accumulation. If it plays out like this, I will then add on to my gold position on weak reactions toward support. Forget V bottoms. Huge secular uptrends take a long time to "form a base". Mock me if you wish, but let's see the process of a major bottom unfold, so that we can get this long term bull back on a powerful and sound footing.

What is the obsession with picking price points where a market will end up like Ritholz is doing here. Completely useless.

Tue, 07/02/2013 - 23:23 | 3716608 Not Particular
Not Particular's picture

Sometimes, an image is worth thousands of words. This image came from my first visit to India, almost 30 years ago. Having married an Indian in Panchgani, on my honeymoon our driver was taking us on a tour through rural northern India, from Jaipur to Agra. We passed a swampy grain field full of barefoot women dressed in simple saris, bending over to harvest grain with no tools except their hands.

Several of the women had solid gold bracelets halfway up their arms. So, I asked Driver if this was common. He said: "Those bracelets are all these women have in the world. For some, the only sari they own is the one they are wearing. But gold is their savings. They never take the bracelets off, not even while bathing or sleeping. The reason is that in India, gold is safe on a woman's arm or neck. No Indian would ever take gold from a woman's body, althought he might steal it from her house."

"A woman in rural India acquires some gold when she is born, more when she is married, and perhaps more when she gives birth. She is always getting more gold. Unless there is famine she usually passes it on when she dies."

Tue, 07/02/2013 - 23:38 | 3716657 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1, interesting story

Tue, 07/02/2013 - 23:48 | 3716679 Prairie Dog
Prairie Dog's picture

Rich tourists from developed countries will walk past zerohedgies in rural Kentucky one day, as they work the fields in their bare feet with gold bangles on their arms, all they own in the world...

Wed, 07/03/2013 - 00:53 | 3716768 buyingsterling
buyingsterling's picture

On our bathroom breaks we will be wiping with FRNs

Wed, 07/03/2013 - 02:36 | 3716845 Peter Pan
Peter Pan's picture

The bare feet bit you might have got right.

It's far more likely your average American worker will be wearing an electronic bracelet so that he/she can be monitored at all times.

Wed, 07/03/2013 - 04:55 | 3716966 Prairie Dog
Prairie Dog's picture

But seriously, what do you think this anecdote actually tells us? The number of plus votes suggest that zerohedgies see it as evidence of the enduring strength of global demand for gold. I would suggest a couple of more salient observations: 1. Poor people in India have no access to the financial system or credit. 2. Poor people in India have nowhere else to store their wealth. This is not evidence of the timeless investing wisdom of rural Indians. It is evidence of India's backwardness. If these things change, as they might, one might suppose that Indians will become both richer, and rather less attached to gold in the process.


Wed, 07/03/2013 - 06:48 | 3717041 Treason Season
Treason Season's picture

You're a funny dog!

Wed, 07/03/2013 - 09:11 | 3717365 e-recep
e-recep's picture

as the USA is on its way to become a third world country, american citizens better learn the tactics of the third worlders. they'll need them.

Tue, 07/02/2013 - 23:35 | 3716648 Stuck on Zero
Stuck on Zero's picture

There are thousands of stocks out there that have not paid dividends in their lifetimes.  And people bash gold because it doesn't pay dividends?

Tue, 07/02/2013 - 23:35 | 3716650 Peter Pan
Peter Pan's picture

I would not worry about gold. I would worry about everything and everybody else. In five thousand years of history every piece of paper has bitten the dust and every politician and banker has turned to dust.

If price is your hang up, I can't help you and I can't help but feel sorry for you.

History is not written by price but by survivors.

Tue, 07/02/2013 - 23:37 | 3716652 Gordon_Gekko
Gordon_Gekko's picture

Ritzwhateverthefuck is a MORON. Enough said.

Tue, 07/02/2013 - 23:42 | 3716661 DoChenRollingBearing
DoChenRollingBearing's picture



Read and do what Gordon_Gekko suggests!


Gordon, I want to make sure I have your quotation right, please correct (and thanks, I use (and attribute it to you) your line once in a while):

"All else will be left behind when the Gold Mothership blasts off."

Tue, 07/02/2013 - 23:44 | 3716669 Peter Pan
Peter Pan's picture

Almost right, except that silver will be in the circuitry of the Mothership.

Wed, 07/03/2013 - 04:37 | 3716950 Conax
Conax's picture

At these prices, it may not be.  It's being pissed away, unprofitable mining will be abandoned as manufacturers waste what's left in children's toys and other consumer junk.

That mothership might have to use lead and tin instead.  The computers will be crude and slow, circuits overheating, their mediocre solder a bottleneck to efficiency and speed.  Such computers will make excellent cabin heaters.

Silver should be valued at least 3 times what it is today.  Ten years from now, 20 times. 

Silver, bitchez.  8')

That's right, I said it, you bet I did.


Tue, 07/02/2013 - 23:42 | 3716665 Peter Pan
Peter Pan's picture

Rit in Dutch means ride

Holz in German is wood.

Put them to together and you get IGNORANT.

Who gives a damn what the PRICE of gold is when you know what its VALUE is.

Tue, 07/02/2013 - 23:49 | 3716682 Yen Cross
Yen Cross's picture

 I deeply appreciate my fellow ZHers.  You have " genius"  Thoughts.

Tue, 07/02/2013 - 23:50 | 3716683 ebworthen
ebworthen's picture

Physically held gold in my posession has no counter party risk and I won't be paying any taxes on gains (fuck you I.R.S. - to HELL).

If you want to take it from me it is like my guns; from my cold dead hands.

My conscience is clear; are yours apparatchiks?

Wed, 07/03/2013 - 03:15 | 3716881 Peter Pan
Peter Pan's picture

Friend,take care. They probably would enjoy taking it from your cold dead hands. The idea is not to get to that point, either because you can survive without either your life or another's life being extinguished or because you have taken the effort to hide it so that they cannot locate it in the event of your untimely demise.

Wed, 07/03/2013 - 18:01 | 3719684 auric1234
auric1234's picture

What will you trade it for when we get to the other side?

If you plan to invest it, sounds like you'll be taxed on gains.

This is something I'm honestly worried about. Right now, gold is the place to be. But when the long-awaited bust comes our way, it may no longer be.


Tue, 07/02/2013 - 23:54 | 3716691 fasTTcar
fasTTcar's picture

The biggest argument by non believers of gold is that it pays no interest, spins off no cash flow, has no earnings, and gives no yield.  It serves no master.

To believers of gold, those are exactly the reasons to own it.  Gold is.  Everything else is a derivative.


Tue, 07/02/2013 - 23:59 | 3716700 monopoly
monopoly's picture

Good article and well written. Reinforces what most of us already know.

Wed, 07/03/2013 - 00:10 | 3716712 unwashedmass
unwashedmass's picture

i would agree that this article tells us what most of us already know --- you don't get on CNBC and Bloomberg unless you are willing to chant the party line....

and Barry wants a spot on both. 

good job Barry, lips were firmly applied to butts, and it seems like you are sincere...

if none too bright. FYI? before you invest your own money, you ought to take a look at what's happening with gold EVERYWHERE ELSE IN THE WORLD... and on the Comex...

if gold is so, so worthless, why can't JPM just cough it up and fulfill those contracts? 101K oz now by tonight's count that they can't seem to find...

and Germany's gold? We can't unload their junk back to them? 


Wed, 07/03/2013 - 00:17 | 3716722 Prairie Dog
Prairie Dog's picture

zerohedge comments = comedy central. never disappoints

Wed, 07/03/2013 - 00:30 | 3716738 luna_man
luna_man's picture



I crave it...The precious, that is!...Only wish I had the means to purchase more of it!


bubble or not, don't matter to me

Wed, 07/03/2013 - 00:32 | 3716739 reader2010
reader2010's picture

"To own gold is to be your own Central Banker." - Marc Faber

Wed, 07/03/2013 - 01:10 | 3716750 SqueekyFromm
SqueekyFromm's picture

Well, Mr. Ritholtz is a very smart person, and obviously he has been reading my body of economic works! If he had asked me, I would have let him use the STAXnut one, and the Pwned one , too!

Plus, and pay attention and stay with me on this one, here is what Pater T said in one breath:

We must admit that there are a number of people in what is widely referred to as the 'gold community', who in spite of having their heart in the right place, are not necessarily very good gold analysts. Many stress facts that are really not all that relevant to the gold price (such as retail demand for gold coins, central bank buying/selling, primary supply/demand data, and so forth). There are also a few 'extremists' who indeed talk mainly about imminent hyperinflation and other end-of-the-world scenarios.

THEN, a few sentences down he gives the reasons why he thinks Gold will hit $10 million an ounce or whatever. Here are those sentences:

So why is there still a long term bullish case for gold?. . .On the contrary, the current orthodoxy of central banking has one, and only one, solution for the dilemma: print more money. . .

One day we may even get to see those parts of the 'narrative' play out that Mr. Ritholtz deems to be an impossibility, namely the collapse of the current monetary system.

Sooo, on one hand he says end of the world and hyperinflation Gold Bugs are extremists, and then relies upon the same darn things for making his bullish prediction. Frankly, his article was just a big long word soup where a Gold Bug could find whatever justification he wants to support his obsession with Gold.

Squeeky Fromm, Girl Reporter

Wed, 07/03/2013 - 01:21 | 3716788 CCanuck
CCanuck's picture

Squeeky Fromm, Loopy Cunt

Wed, 07/03/2013 - 02:39 | 3716850 g'kar
g&#039;kar's picture

is that you Swearengen?

Wed, 07/03/2013 - 03:38 | 3716904 fijisailor
fijisailor's picture

Very good little girl.  You have logical skills ability.  Now lets take the next little logical step.  Will the FED print more or not?

Wed, 07/03/2013 - 08:23 | 3717217 moonstears
moonstears's picture

This is a true point fiji. To think we all want high inflation is insane. To know it is the outcome, of printing, is not so insane.

Gold is but one solution, yet one of the better ones.

Wed, 07/03/2013 - 01:45 | 3716810 RaceToTheBottom
RaceToTheBottom's picture

If flys hang around shit, the only question is which is Cramer and which is Ritholt?

Wed, 07/03/2013 - 03:04 | 3716875 FunkyOldGeezer
FunkyOldGeezer's picture

From a purely technical perspective, Gold is in a bear market and has further to fall, especially if you believe in reversions.

However, how many black swans are asleep at the moment and about to woken from their slumber?

That's the BIG dilemma, so far as I can see. Until one or more of those black swans start flying about, Gold has more potential to sink further.

Wed, 07/03/2013 - 15:24 | 3719246 MeelionDollerBogus
MeelionDollerBogus's picture

on a reasonable time frame like 3, 5, 10 years, no, this is a bull market according to all the technicals and a downswing (expected) in the bull market.

Wed, 07/03/2013 - 03:46 | 3716908 fijisailor
fijisailor's picture

I was married to an Indo Fijian for 18 years.  There is no way that anyone will convince the average Indian to not value and acquire gold.  All 1.2 billion of them plus those in other countries.

Wed, 07/03/2013 - 10:46 | 3717805 Levadiakos
Levadiakos's picture

Explains why India has the highest poverty rates on earth

Wed, 07/03/2013 - 17:57 | 3719670 auric1234
auric1234's picture

I think the average Indian has more wealth than the Fed does.


Wed, 07/03/2013 - 04:13 | 3716926 Prairie Dog
Prairie Dog's picture

Sometimes, an image is worth thousands of words. This image came from my first visit to Kentucky, almost 30 years ago. Having married a Kentuckyan from Goose Creek, on my honeymoon our driver was taking us on a tour through rural northern Kentucky, from Newburg to Franklin. We passed a swampy grain field full of barefoot white men dressed in simple Levis, bending over to harvest grain with no tools except their hands.

Several of the men had solid gold bracelets halfway up their arms. So, I asked Driver if this was common. He said: "Those bracelets are all these men have in the world. For some, the only pants they own are the ones they are wearing. But gold is their savings. They never take the bracelets off, not even while bathing or sleeping. The reason is that in the United States of America, gold is safe on a man's arm or neck. No black muslim Kenyan socialist would ever take gold from a man's body, although he might steal it from his 401K."

"A man in rural Kentucky acquires some gold when he is born, more when he is married, and perhaps more when he reads Ayn Rand. He is always getting more gold. Unless there is famine he usually passes it on when he dies, which tends to be sooner rather than later, being as how he is so poor on account of spending all his available cash on shiny ornaments."

A visitor from the future, 2050



Wed, 07/03/2013 - 04:23 | 3716932 fijisailor
fijisailor's picture

I see that you have a problem distinguishing fiction from reality.

Wed, 07/03/2013 - 04:57 | 3716968 Prairie Dog
Prairie Dog's picture

When I need a break from reality (and a good laugh), I come here.

Wed, 07/03/2013 - 06:54 | 3717049 Treason Season
Treason Season's picture

Word, Mr Dog

I needed a good belly laugh. Sincerely,thanks to you and please keep them coming.

Wed, 07/03/2013 - 04:22 | 3716929 Debugas
Debugas's picture

Gold is a reservoir for savings to be put into.

Nobody can predict how many people and when will suddenly want to spend their savings to buy something

Wed, 07/03/2013 - 04:48 | 3716940 Disenchanted
Disenchanted's picture

the grass was greener

the light was brighter... High Hopes



Rivers run dry but there's no line on his brow
Says he doesn't care who's saved
It's just the dice you roll, the here and now
And he's not guilty or afraid


One day he'll slip away
Cool water flowing all around
In the river and on the ground
Leave a pocketful of stones and not believe in other lives


Until then he'll live in wonder
He won't fight or comprehend
In his world he won't go under
Turns without him until the end

A Pocketful of Stones

Wed, 07/03/2013 - 05:47 | 3716998 Disenchanted
Disenchanted's picture

From the Foreword of The Babylonian Woe by David Astle



It is true that while no single feature in the progression of history might be regarded as basic and decisive, it is certain that neither money nor treasure will protect the weak and disarmed in the face of a brutal and determined conqueror beyond whose successful achievements, can be no decision more final. It is also certain that the money accumulation mania injected by fame into the minds of the people as a replacement to their concern with those natural qualities endeavouring to colour the current of human life through time, amongst which are numbered virtue, honour, and godliness, destroys equally as any other debilitating disease, and will surely and speedily drag any people down to degeneracy and decay... A great army could not be more efficient in its power of destruction.
Wed, 07/03/2013 - 07:18 | 3717084 Disenchanted
Disenchanted's picture

Again from the Foreword:



The great engine which is the international control of monetary emission and regulation, driven as it was until recently by the catalytic fuel of gold alone, is now almost world embracing in the scope of its operations. It seems there is no change in the attitude of those its guides, nor any admission of the folly of their misuse of this God-Power which they direct towards the good of themselves and their friends. Their obsession, despite ruin or all looming on every horizon, seems to remain the same narrow vision of the day of their own world supremacy wherein they will rule as absolute lords over all; although by now it should be apparent to them, no less than to all thinking people, that if this madness concealed within the much talked about conception known as progress is not brought to a complete arrestment, nothing remains but an end wherein shall be silence and no song, for indeed there will be no singer, nor any to sing to . .


Then from Chapter One:


Every conclusion arrived at as a result of study of the fragments of information available in respect to money and its creators in the world of the Ancient Civilizations, indicates the existence of a far reaching conspiracy in respect to monetary issuance influencing the progression of man's history in the earliest times of which written record exists. It is also outstandingly clear that it was parent to that acknowledged and most obvious conspiracy such as exists today.(1) The whole notion of the institution of precious metals by weight as common denominator of exchanges, internationally and nationally, cannot but have been disseminated by a conspiratorial organization fully aware of the extent of the power to which it would accede, could it but maintain control over bullion supplies and the mining which brought them into being in the first place. Clearly such notion had originally come into being during that historically distant period when first of all free silver began to be extensively used as a convenient and highly portable commodity in settlement of balances outstanding in foreign trade; certainly as far back as Neolithic times. This fact was indicated by the evidence existing that values (and by inference money) were already expressed in terms of silver by weight at the time of the Azag-Bau Dynasty at Kish in Mesopotamia (3268-2897 B.C.); although in a sense perhaps narrow and strictly national.


Wed, 07/03/2013 - 06:06 | 3717009 GubbermintWorker
GubbermintWorker's picture

Investment? Trading?


Screw that, my gold is

Wed, 07/03/2013 - 10:49 | 3717819 Levadiakos
Levadiakos's picture

I buy dollars

Wed, 07/03/2013 - 06:08 | 3717010 buzzsaw99
buzzsaw99's picture

Gold doesn't have insiders and CEOs looting the company.

Wed, 07/03/2013 - 11:14 | 3717960 Levadiakos
Levadiakos's picture

Worse. Gold has sellers!

Wed, 07/03/2013 - 17:54 | 3719660 auric1234
auric1234's picture

Really? Please point your sellers to the Shangai market, they ought to do something about that $30 premium which isn't supposed to even exist.


Wed, 07/03/2013 - 06:46 | 3717036 unwashedmass
unwashedmass's picture

aside from all of barry's chit chat....this crescendo of "we hate gold" from the mainstream is quite stunning....for a "dead investment" or something only kooks like, it sure is getting a lot of attention...

do we think this could be the force majeure weekend at the Comex? 

Wed, 07/03/2013 - 09:35 | 3717461 NidStyles
NidStyles's picture

Nah, it isn't time yet. The Power Freaks think they have everything under control. The hit pieces are in response to yesterdays dollar surge. If you write the timing down of major events dealing with the dollar and articles about the precious metals, you will notice an obvious trend.


None of this shit is coincidence, and none of it is occurring because of natural markets. This is merely perception management to keep people using dollars.

Wed, 07/03/2013 - 06:48 | 3717039 sudzee
sudzee's picture

The paper tide is goin out so lets see whats left in the beach.

Wed, 07/03/2013 - 07:02 | 3717057 deerhunter
deerhunter's picture

some men search for riches and some men search for fame,

some seek for approval in someone elses game,

but when the music stops and all light fades away,

will they wish the days they spent,  they'd spent another way?

Wed, 07/03/2013 - 07:10 | 3717069 orangegeek
orangegeek's picture

"... Presumably alerted by the failure of gold to break to new lows and the non-confirmation delivered by the gold stocks last week, Barry Ritholtz now believes gold could be due for a bounce that might be playable for short term traders. However, Mr. Ritholtz is also convinced that once said bounce is over with, the recent cyclical bear market will resume.  ..."


Yep - wave 4 up likely for gold.


Follow the USD folks.

Wed, 07/03/2013 - 13:32 | 3718703 MeelionDollerBogus
MeelionDollerBogus's picture

#1 the 'USD' as most traders refer to DXY is useless. It is not a balanced metric & it has no reference to tangibles like copper, gold or oil much less useful land. It's just a fiat metric.
#2 wave 4, wave anything, elliot waves, do not work. They poorly describe the past & fail to predict the future.

Wed, 07/03/2013 - 08:01 | 3717151 Quinvarius
Quinvarius's picture

Thats cool that this guy thinks he can ride out his short during this "bounce" in gold.  What could possibly go wrong? 

Wed, 07/03/2013 - 08:34 | 3717258 marathonman
marathonman's picture

'Let us just note that socialists/democrats don't like gold much and generally believe that central banking and fiat money are just fine.'  Of course.  Keeps the sheep in line with 'free' give aways, grows government for cronies, grows banking power for the biggest cronies, and enables a sprawling empire that can cover the globe.  And inflation pays for it all and we can export that worldwide too.  What's not to like?  /sarc 

Wed, 07/03/2013 - 13:30 | 3718694 MeelionDollerBogus
MeelionDollerBogus's picture

I see no difference between demicans or republocrats. The serf versions are equally sheep & the elite versions are equally bankster puppets. They are all locked into a Fascist horde, not a socialist among them. Ditch the corporations & actually see people partaking in the means of production collectively (for better or for worse) and then I'll call it socialism.

Wed, 07/03/2013 - 08:41 | 3717279 Roger Knights
Roger Knights's picture

"(it is by the way possible to lend gold out, so it actuallydoes have a yield – but that yield is so small as to be negligible)."

1% a year isn't really negligible. And GLD can earn money if one sells covered calls against it. Or one can use it as collateral to buy a bond that yields interest.

Wed, 07/03/2013 - 08:53 | 3717316 ejhickey
ejhickey's picture

"once Gold stops going up , it will go down"

Barry Ratholtz

Wed, 07/03/2013 - 10:45 | 3717793 Levadiakos
Levadiakos's picture

Gold? Gold will be CRUSHED

Wed, 07/03/2013 - 17:52 | 3719649 auric1234
auric1234's picture

Actually, it's pretty difficult to destroy gold. It doesn't rust, it doesn't react with almost any substance, and even if you smash it with a hammer, it doesn't stop being valuable.

Have fun crushing all the gold that comes your way though!


Wed, 07/03/2013 - 10:52 | 3717841 Levadiakos
Levadiakos's picture

Gold topped when the sidewalks were filled with "I Buy Gold"  sandwich boards and cars were shinkwrapped with "Sell Gold Here" ads. That was 2011 and the PAIN continues!

Wed, 07/03/2013 - 11:09 | 3717944 unwashedmass
unwashedmass's picture

got up late, did you, L? do you still get paid for the days you show up at 10:30?

Wed, 07/03/2013 - 17:59 | 3718680 MeelionDollerBogus
MeelionDollerBogus's picture

time for me to sign in for my shill shift!

gonna be a SHILLIONAIRE if I meet my quota!

gold's going to 500.


(a gram)

Wed, 07/03/2013 - 11:19 | 3717977 YC2
YC2's picture

Once again the unsophisticated public was duped into selling at the top!  Wait...

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