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Guest Post: Gold And The Four Words That Define Western Economic Policy
Submitted by Tim Price via Sovereign Man blog,
Despite nearly $17 trillion reasons, there are investors stupid enough to believe that debt issued by the world’s largest debtor country (i.e. US Treasuries) should be treated as a risk-free asset.
This is even more astounding given that the possibility of formal default is only a matter of days away.
Treasury bond defenders will no doubt point out that in a fiat currency world where the central bank has the freedom to print ex nihilo money to its heart’s content, the very idea of default is absurd.
But that is to confuse nominal returns with real ones.
Yes, the Fed can expand its balance sheet indefinitely beyond the $3 trillion they have already conjured out of nowhere. The world need not fear a shortage of dollars.
But in real terms, that’s precisely the point. The Fed can control the supply of dollars, but it cannot control their value on the foreign exchanges.
The only reason that US QE hasn’t led to a dramatic erosion in the value of the dollar is that every other major economic bloc is up to the same tricks. This makes the rational analysis of international investments virtually impossible.
It is also why we own gold – because it is a currency that cannot be printed by the Fed or anybody else.
On the topic of gold, the indefatigable Ronni Stoeferle of Incrementum in Liechtenstein has published his latest magisterial gold chartbook.
Set against the correction in the gold price 1974-1976, the current sell-off (September 2011 – TBD) is nothing new. The question is really whether financial and debt circumstances today are better than they were in the 1970s.
We would suggest that debt fundamentals are objectively worse.
Trying to establish a fair price for gold is obviously difficult, but treating it as a commodity like any other suggests that the current sell-off is not markedly different from any previous correction during its bull run:
To cut to the chase, it makes sense to own gold because currencies are being printed to destruction; the long-term downtrend in paper money (as expressed in terms of gold) remains absolutely intact:
And we cannot discuss the merits of gold as money insurance over the medium term without acknowledging the scale of the problem in (US) government debt, now closing in on $17 trillion.
Whatever happens in the absurd and increasingly dangerous debate over raising the US debt ceiling, the fundamental problem remains throughout the western economic system.
The piper must, at some point, be paid. And someone must pay him.
As to whom? This is the foundation of western economic policy, distilled into just four words: the unborn cannot vote.
Governments have lived beyond their means for decades and must tighten their belts. Taxes are certain to rise, and welfare systems certain to contract… especially for future generations.
Even if western governments manage to rein in their morbidly obese consumption patterns without a disorderly market crisis, their legacy will be felt by generations yet to come.
The debt mountain cannot and will not resolve itself. And this, again, is why we own gold; because we think there is a non-trivial chance of a gigantic financial system reset.
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Whether or not you attach interest to either gold or federal reserve notes... the outcome is going to be the same each time.
"7+ billion have lived beyond their means for decades and must tighten their belts." -fixed and made it correct
You could reduce the government to $0 and the system will still implode, matter of fact it would implode overnight. Pointing out a symptom of the problem will never fix the problem from happening again.
You have it exactly backwards.
Not at all... basic Math.
There is no inflation when on a Gold Standard... Basic math. Also, charging interest used to be punishable by death and should still be.
Without inflation the system implodes, as people attach interest to their gold. Basic math.
- Lend 10 gold oz. at 10% annually and compounded
- Million or billions do the same thing... money for nothing and your chicks for free... the money does the work... hahaha no such thing
- System expands to max potential
- System is unable to generate the needed required growth
- Peak
- Collapse
- Liquidation of the unfunded walking liabilities
Interest is only payable in vegetable and animal. Minerals do not reproduce. There is no logic in your argument.
It makes all the sense in the world as you do not understand basic credit. I lend you 10oz of gold at 10% annually and compounded, it works as long as the total in the system is able to generate the needed interest... ie new gold into the system.... once gold can't come into the system at the rate needed.... collapse and liquidation of the liabilities.
The system you are describing is one without interest, sorry but the people on this floating rock want their chicks for free.
I care not what you attach interest to, eventually the supply/demand will not be there as you would need to be God or God like... infinite power... good luck and all though.
Gold base currency, or just gold, is Banker worse nightmare. Robbery through slice salami is only effect by divisible and expandable share base for purpose of dilution. When dilute, bankster is increase number of bank share and dilute share of citizenry.
Fixed quantity basis, like gold, is not allow for theft through fiat quantitative "manipulation".
or... Bit Coin? Otherwise, why the hate from Central Bank?
I see nothing but 7 billion bankers.
Bankers could careless if you are using gold, silver, federal reserve note, dirt or bitcoin.... they want their chicks for free just like all the rest ie attach interest.... they want money to work, but that is impossible.
"theft through fiat quantitative "manipulation""
Pretty much irrelvant... system will expand, fail to expand, peak, collapse and then liquidation of the unfunded liabilities.
Re: I see nothing but 7 billion bankers.
+1 (in Fiat currency) on that one.
Survival of the fittest sociopaths, bitchz. And, it doesn't always work out as the semi-autistic Libertarians think it will.
yeah, well, it doen't always work out as the fucktard statists think it will either, n'est pas?
Yeah, well, you know, that's just, like, your opinion, man.
-Dude
Eight-year-olds, dude.
Landofree
You're a liar.
Charging interest on a gold loan is different than the fiat idea of interest.
With a gold loan, people can only lend money that already exists. Since lending and borrowing will be uncoerced, people will not lend 100% or more of the money supply. The cost of money would rise too high for that to happen. The idea of "unpayable interest" is a purely fiat concept.
But you already knew that.
You really don't understand this subject; but I can't write a whole book here. Money does work; it's called capitalism. You have an insight into one of the fundamental problems; which is that growth, in real productive activity must be greater than population growth. Growth is over, now; that's the fundamental new situation that the mass mind can't grasp. Un-fortunately population growth is not over. Which means we are going to find out how a really, really, large number of two legged monkeys are going to die early. Gold as a currency is fundamentally more honest than paper and it does work well; but nothing works when North America is built out and there is no food reserve and population continues to increase. We could save North America and let other regions collapse and die off; but that would require a clear sighted dictatorship; which isn't going to happen.
you mean growth must be presented in a format indexed to population growth, or else the value of the data is compromised.
This is part of what prevents many analysts getting a solid grip on Japan: negative GDP aint such a catastophe if it is eclipsed by even greater negative population growth: once amended to per-capita, Japan's performance over the last 20 years has only been pathetic, not abysmal
The hate directed toward BitCoin is not because it is a sensible currency, but because it is competition.
I am becoming a "Bit" more open to the Bitcoin....
The denizens of ZH as a rule tend not to think too far beyond the topic of wealth preservation.
That is no fault at all. It is a very worthy preoccupation. But I have found that it limits the level of concern regarding species preservation.
yes, i used to think wealth preservation was an extension of species preservation.
then, like everything else, you just fuck with the definiton to game it
I'm still trying to figure out how to game mid-life. Running out of time, still not having any success. I guess I'll go straight to dead at some point, or that's what they tell me. At which point notice wealth becomes somewhat unimportant to me personally.
I hear you cougar, just trying to figure out a way from here (midlife I suppose) to the grave that doesn't look like a straight diet of cat food, dandilions and rahman noodles.
Buy a convertible Porsche
Buy a hairpiece
Screw young chicks
Don't care as you make a fool of yourself
Bills of credit that mature into gold bullion were historically self liquidating. Labor and material could be paid for during the production and distribution of the goods/service. Can't do that when a fiat based bills of credit system dislocates.
.
Correct
Gold and four word...
"Bank are own you"
unless you are own gold (or copper).
Careful, Bankers are counterfeit shares of Copper to manipulate shares downward is possibility now.
Ah, you are correct, Stock Market Crash of 1907 is cause of United Copper in Butte Montana, instigate battle for control by John Pierpoint Morgan and Knickerbocker Trust. Teddy Roosevelt is give monopoly gift to JPM of Tennessee Coal Iron & Rail...
Plus ce change, plus ce le meme chose.
Re: There is no inflation when on a Gold Standard
The smart-n-savvy people will always find ways to screw the dumbasses.
Hey, give me your gold and I'll give you it back plus 10% more at the end of the years.
>Also, charging interst used to be punishable by death and should still be.
Not sure we want them thar turbine wearin' Muslums sneakin'er crosser boarders and runnin' our free-enterprise system, now do ya?
I'm not borrow your Gold at 10% or even borrow it at all. You just need stay the fuck off my farm you Banker Terrorist cock sucker.
Irrelvant if you don't, others will or have.... eventually the system can't expand exponentially as required.... peak then collape.... then the liquidation phase.... time to write off the unfunded walking liabilities.... 60-80 years generallly or a generation then the exponential power is basically too much.
@ Landotfree
Please explain why "the system" must "expand exponentially". First please define "the system". Do you mean the credit system? The one that fucked up the whole thing in the first place by expanding exponentially.
Unfunded walking liabilities?
Without the Federal Reserve Act and the subsequent 100 years of currency debasement via credit expansion there would be no method through which all the aspects of the welfare/warfare state could be funded.
Re: There is no inflation when on a Gold Standard
Why do people think this?? There's this thing called history, you can actually reference it to see how things played out in the past - pretty handy sometimes.
Yes, but over the long term (you know, that perspective that is now frowned-upon, if not actually unpatriotic), prices tended to be FAR more stable within a hard money regime than under a fiat currency regime --- in fact, there is really no comparison possible between the two, as 'rising prices' (i.e., a depreciating currency) is inherent within the fraud and the crime that constitues fiat currency.
I can create fiat anytime I want with willing other agreeable parties.
Perhaps, but you cannot FORCE anyone to accept it as a payment for goods and services, unlike government.
I always have to laugh at the ignorance and hypocrisy of statists and pro-fiat shills (not saying that you are either), who refuse to acknowledge that legal tender laws, which force all subjects of a government to accept their fiat monopoly money, ONLY exist, and have only ever existed, under fiat currency regimes. Hard money (meaning money backed by gold and silver) needs no such laws demanding compliance and acceptance.
If government-issued fiat currency is such a wonderful invention and such a boon to modern economies, as all the statists and their coopted academic shills will insist, why then do governments need to FORCE everyone to use it?
Re; Hard money (money backedc by gold and silver) needs no such laws demanding compliance and acceptance.
Agree, BUT it's really hard to have a government do REALLY cool things; like: neat war toys to bomb brown people with, giving money to farmer buddies for not growing stuff, building roads and dams for your developers buddies, creating really cool spy decoder rings, and all the rest of the REALLY cool stuff that governments love to do without the ability to move lots of loot from the dumbasses into the hands of the really cool people.
Well, I can't argue with you there.
It is true that to make a hard money regime work within a statist system (under government), a shared and widespread sense of responsibility and ethical behavior is needed as a prerequisite, which is why no such monetary regimes exist in this degenerate and degenerating era.
Re: degenerating era
degenerating era? When have humans EVER done anything but worship degenerate leaders?
Nobody has forced me to do anything since I was a child. I have to laugh at you..... sorry I am I am not a subject of the government. I laugh at fools that believe such things.
You are promoting strawman arguments.... I can create fiat, either way irrelvant.
As to the actual subject at hand... people will take the "hard money" and lend for interest... system will expand, system will fail to expand, system will collapse.... and then liquidation of the unfunded liabilities... last time 100+ milllion this time, my guess 1-2 billion.
If you don't believe that the government (doesn't matter under which government you are a subject) forces you to use their monopoly-issued fiat currency, then you understand very little or nothing about our (so-called) modern monetary system(s).
I think you are very confused individual that has not a clue as to what I believe and you definitely have zero knownledge of basic contract. Nobody forces me to use anything. If you don't want to use federal reserve notes there is nobody with a gun to your head.
As to the original discussion, I can create fiat with agreement with 3rd parties, nothing you or anyone else can do about it... .your fiat agrument is flawed as you do not see the forest from the trees.
As to the article, it need not matter what the underlying medium of exchange is... you attach interest... same result every time... I give it 60-80 or so years.
OK then, idiot, go trying paying your taxes in gold, or silver, or corn, or tobacco, or in ANYTHING other than government-mandated fiat currency of your own particular local flavor, and let's see just how far you get.
You are so far down the rabbit hole I can't help you. I love the name calling.... great spirit. Like a bull in a China shop. Just because you are a sucker doesn't make me one. :) What you think pertains to you certainly does not pertain to me.
http://www.law.cornell.edu/uscode/text/26/7852
(a) Separability clause
If any provision of this title, or the application thereof to any person or circumstances, is held invalid, the remainder of the title, and the application of such provision to other persons or circumstances, shall not be affected thereby.Nice side-stepping of the issue at hand, asswipe.
There is no side stepping anything.... you are willfully agreeing. That is not my problem because you are a "subject" and you believe yourself or you are unable to find your way out of the rabbit hole. Love the name calling. Unfortunately for you, name calling rarely helps when one is standing up for their God given Rights. I advise you to get back in line with the rest of the lemmings because they would tear you up.
What pertains to you does not necessarily apply to me... there is no collectivism in the Law.
Nobody forces me to use anything. If you don't want to use federal reserve notes there is nobody with a gun to your head.
If you purchase someone's promise to deliver gold (e.g. COMEX Futures) you have no way to enforce this promise in court. Even if you write it down in contract, the government will always allow your counterparty to breach it and pay you in FRNs instead.
And yes, if you attempt to obtain the gold you're entitled to by your own means (e.g. break into your counterparty's facilities), someone eventually will point a gun at you, even if that gold was yours according to contract.
So you choose to pay taxes?
And you choose to have that tax revenue go to build weapons to murder innocent people thousands of miles away that are of no threat to you or anyone else?
in fact, there is really no comparison possible between the two, as 'rising prices' (i.e., a depreciating currency) is inherent
Yeah, gold / silver standard is a good check on human stupidity but people are too quick to label it a cure-all.
To my mind for it to work you need a number of things to come together, chiefly - engaged citizens, accountable government and decent transparency in financial industry. People often look at it the reverse, that a gold standard would make those things a reality.
Re: engaged citizens, accountable government and decent transparency in financial industry
So, basically, a Libertarian fantasy world. Wonderful. No wonder the Libertarians and Socialist fight so much, they have conflicting fantasy worlds.
You can't use the Flaming Sword of Libertarian Justice against the Union of Unified Workers! It's not in the rules.
Droll. amuzing.
You're probably correct, all those factors are intertwined in a multi-factored "chicken and the egg" scenario. Even the most honest and straightforward hard money standard, put into place under corrupt, bloated and rapacious governments such as we suffer under today, would only be immediately compromised and negated. That is why, fundamentally, we need to totally sever the link between money and the state, even more importantly than we have the severence (in most of the world) between church and state today.
Even the most honest and straightforward hard money standard, put into place under corrupt, bloated and rapacious governments such as we suffer under today, would only be immediately compromised and negated.
Which is why I like alternative / local currencies, Switzerland is a model of this. I think part of the issue with society does come down to big currencies. The USD is so huge, complex and abstract there's no way for the average person to understand it (for anyone to understand it?).
But if you trade a local currency you can know what it's really worth and engaging in trade with other people in that currency there's a certain trust and sense of community not possible with something like the USD. It also forces people to be engaged and you don't have to worry about what crazy people in power will do affecting your day to day. Could also back it with anything you want..
This is why I don't agree with RP, instituting a broad gold standard suddenly could be catastrophic and the banks would be very quick to take maximum advantage. Alternative local currencies could slowly build toward a universal backing standard relatively painlessly and would be more difficult for centralized power to subvert.
I suspect our thinking here is along the same lines, as I take an increasingly dim view of the idea of having our central governments instituting (or re-instituting) some form of traditional gold standard. While such a step might be preferable to the corrupt and patently unsustainable fiat monetary system under which we labor today, it would undoubtedly soon be corrupted and compromised by said governments.
No, what we truly need is to entirely de-link governments, and any other monopoly force, from the issuance of money, leaving monetary issuance instead to the marketplace. It is a sign of just how corrupt and degenerate our thinking has become that most people today cannot imagine anyone OTHER than government being responsible for the issuance of money, just as they cannot imagine governments not providing for the education of our children, the maintenance of our roads, etc. etc. etc.
I see you're still fighting the good fight, my friend. I'm just too old and burned-out to carry on time after time with trying to convince folks of the obvious. Carry on!
Thanks Rocky!
Yes, sometimes when (re-re-re)discussing such topics I do feel like Sisyphus, even here.
Well, since rocky chimed in I guess I will too. That was an excellent debate, albeit painful to read the exchange. I guess I always believed the government mandated it currency so it could tax transactions of the citizens.
I'm fascinated with your idea of decoupling but I'm still unsure that anyone who had the power to issue currency, private or not, would at some point become corrupted. Living in a close small community I am comfortable with bartering for things. Our tractor was broken so when I saw a neighbor working on the dirt road near my house I gave him $20 for gas. He did the same for us last year. This works well on a very small scale but probably not in a large complex economy like today.
Soon cash will disappear and all transactions will become electronic. A government's wet dream.
Miffed;-)
I sincerely hope not. That is not a world (devoid of any semblance of privacy and anonymity) in which I would want to live.
I wonder how many people with anti-establishment & pro-liberty leanings, even here, continue to allow the erosion of financial privacy and are helping to bring about the cashless nightmare world by casually using credit and debit cards for routine transactions. And I don't want to hear any bullshit about "but I'm only doing it for the airline miles!" or any other lame excuse --- if you fail to use cash at EVERY opportunity, you are only helping feed the beast.
(Miffed, please know that that last rant was not directed at you.)
I hope you are right. I certainly dont want to exist in any world where my transactions are recorded and analyzed,my movements are recorded on cameras and my health info is available for unscrupulous government workers. However, it looks to me cash ( and PMs of course) is the last vestige of financial freedom that we have in this country and, therefore, a threat to those who want complete control.
I think if a hyperinflationary event were to occur they may float the idea of a electronic unit as a replacement. That idea occured to me when Bernanke suggested he could tame inflation in fifteen minutes. How quick and convenient it would be to manipulate these electronic credits rather than a sea of physical cash. Of course, there is always the delemma of confidence. I for one would never buy it but many more may be easily bribed. Those of us who love liberty would be driven fully underground and we will enter a very dark age, an Orwellian nightmare. But, I am out of my element,being more comfortable in the land of microbes. I'm sure others could explain how the implementation of this would be impossible on such a large scale. Or at least I hope so. ;-)
Miffed;-)
Obviously you are not a Bitcoin user.
BTC is inflation proof (because the inflation rate is established by the protocol, it is diminishing every moment and new coins go to miners and anyone could do the mining).
You can have electronic transactions and be able to pay anyone, anywhere, anytime without a third party interfering with the payment at a lower cost than CC, DC and cash (and the bandwidth for a single transaction is negligible - an SMS is enough).
For anonymity you must now use external tools, but in a few months there will be tools integrated to make any and all transactions anonymous.
And the government can not steal your money (FBI have a little unsolved problem to seize the Dread Pirate Roberts stash of 600K BTC - around 80 M USD now)
I must admit I have had a fascination with bitcoin and my husband has explained the rudimentary concept to me. However I have an innate fear of anything electronic. Especially since living with someone in the industry for thirty years and observing some shocking things he has done. Let's just say I'm allowing others to beta test this and see if it can hold up to government intervention. Just the idea the line in the sand has been drawn for an alternative currency is commendable IMHO. Anyone willing to take on the Death Star has my blessing, I just don't have the confidence. At least, not yet.
Miffed;-)
Miffed, I hope you see this, but I finally rememberd the handle of that insane 'no inflation' poster with the pig-man as his avatar: jimmyjames.
Within this thread is one of his more entertaining performances, from early this year: http://www.zerohedge.com/news/2013-02-28/you-rarely-know-youre-recession...
I came home suffering from which could only be categorized as stress due to an endless parade of idiots. Thought I'd unwind a bit here. Dear Lord. I feel like swinging a 2X4 on the head of a pig creature and twinkling eyed arrogant she devil! I remember reading that in Fiji, being completely incredulous this was even happening.
I forgot too this was the thread she and I had the microbiology discussion and proved to me she was a complete arrogant idiot unworthy of respect and attention. That's saying a lot from me because I try to err on the side of withholding judgement.
You know, I expect they'll both be back arguing there's no unemployment when the labor participation rate drops low enough to achieve 100% employment. I'm sure they'll have plenty of manipulated worthless stats to prove their point. Foolish arrogant academics who need to look outside their cloistered world.
I'm saving this link for posterity and hope someday we can use it in an efficacious way. A shining monument of lunacy! I am opening my favorite Syrah ( too many idiots today, virtual as well as corporeal). I toast to you dear akak for having the mental and intestinal fortitude to do battle with the forces of ignorance,wilful and otherwise. May your wit be sharp,your strikes reach their lethal targets and your endurance never fail!
Miffed;-)
Miffed,
I'm glad you found this, and thanks for the kind words.
Increasingly though, like our old dear friend Rocky here, I have less and less enthusiasm for trying to open the eyes of committed idiots.
I understand your reticence. It's hard to have forever patience for such a sisyphean task. And I certainly wouldn't want you to suffer a stroke with obamacare on our horizon. At least there is comfort there are still some enlightened people here.
I'm finding myself more and more irritated with idiocy and immaturity. Take our new troll Teddy Tenpole. Every time a run across his shit spewing drivel I just want him banned! Okay, I've been seduced by the dark side ;-)
Miffed;-)
Obviously you are not a Bitcoin user.
BTC is inflation proof (because the inflation rate is established by the protocol, it is diminishing every moment and new coins go to miners and anyone could do the mining).
You can have electronic transactions and be able to pay anyone, anywhere, anytime without a third party interfering with the payment at a lower cost than CC, DC and cash (and the bandwidth for a single transaction is negligible - an SMS is enough).
For anonymity you must now use external tools, but in a few months there will be tools integrated to make any and all transactions anonymous.
And the government can not steal your money (FBI have a little unsolved problem to seize the Dread Pirate Roberts stash of 600K BTC - around 80 M USD now)
Switzerland? LOL. ignorance is a wonderful thing; it allows you to believe anything you want.
Are you saying Switzerland's use of alternative local currencies is not a good model?
Re: Why do people think this??
Belief in bullshit is what makes politics, economics, religion, spatter-art, advertising, gambling, and markets possible.
Dude, this [will be | is | was ] , like, dude, awesome dude!
There is nothing wrong with charging interest so long as the system allows debt to be wiped out when it cannot be paid.
If we did it your way and prohibited interest, savings would still demand a return when deployed as investment, and it makes no difference whether rent is paid to the owners of capital in the form of debt or equity.
Oh yeah.... when the system is unable to generate the required growth... the unfunded walking liabilities have to written off ie liquidated.
Interest in itself is not necessarily a problem in a single instance... but in a larger system it is... it's a ponzi scheme. Once millions and billions get into the act it's way too late.
I'll take silver, bitchez!
I have some silver as insurance.(lost in a tragic gardening accident).
I still find it hard to believe it has the potential of gold.It is truly a commodity now
with its varied industrial uses.When the SHTF I see it going the way of copper in
the 1930's. We shall see.
Silver and Gold are both commodities. Both are also real, tangible assets. Only gold is money. Silver is a money-substitute.
Money is whatever two or more willing parties to an economic transaction, or a series of transactions, decide that it is.
Silver has been much more widely and commonly used as money throughout history than gold. Copper even more so. Just sayin'.
sorry, why?
Money is an idea. A concept. Anything can be money. The dollar is actually defined as an exact amount of silver. Silver is money. Go back prior to the 1960's and silver was money in the US. JFK got shot for issuing non-debt based silver certificates. Silver is money and as a more commonly occuring mineral is easier to produce and stands a better chance at satisfying the exponential money markets.
I like Cowrie Shells for small day to day purchases and Money Sticks for my larger purchases.
Catalyst: Uncovering China’s Rush for Gold
While a lot of people are still wondering why the Gold is beaten down again, it is important to keep the big picture in front of you. As it is happening with Copper now the main player in this market is the same - China is on track to implement state level plan to diversify US Dollar based assets. We would like to share with you brilliant report conducted by Jan Skoyles on this subject. http://sufiy.blogspot.co.uk/2013/10/catalyst-uncovering-chinas-rush-for.html# Central banks to add $15B in gold this year GLD, GDX, MUX, TNR.v
As we have discussed before: we will see very soon who is selling and who is buying Gold this time. We have very important trend change in the Gold market: after years of Selling Gold Central Bankers all over the world are Buying Gold now.
All these estimations could be proven to be very low, as China is accumulating Gold via different sources in order not to run up the market. Stephen Leeb is talking that "Chinese are looking to buy another 5,000 tons of Gold".
With Goldman Sachs and other investment banks we already know that they will be buying all the Gold that advised clients will be selling for sure.
The quote of the day is related to the copper M&A activity from China, but it says it all: http://sufiy.blogspot.co.uk/2013/10/catalyst-uncovering-chinas-rush-for.html#
Gold is a put option on the fiat system.
Hey you posted a russell chart the other day check your contact list i would like to chat with you if you are searching for the same thing on the major indexes.
Gold / Sliver only real thing - consider the US Treasury "market" if you will...
The Fed is not trying to control a $17 T treasury market - $5 T is intragov debt that always gets rolled over so no worries there - down to $12 T - the Fed owns none of the $7 T Bill market - so now the Fed only has to focus on the $4 T Notes / Bonds (TIPS) market...of which they now own over $2.2 Trillion or something like 55% (they are buying Notes / Bonds @ about 150% of their issuance)...so they buy all new plus all rollover. They will own 70% (their mandated limit) of all Notes / Bonds issued within a year @ current QE and Treasury debt issuance.
Did I mention there is no market but the Fed???
by the by - this means pretty much all $5 T of foreign held Treasuries are in Bills...standing right next to the exit.
I dont know what to think anymore , if it was manipulated it wouldnt be this obvious , if we are missing something , and i m going nuts trying to figure out what the hell is it . Perhaps Goldman call ? their CEO met with Obama a week ago ... I dont know , if they dump it now after taking into account the bad economic data the no taper in september the no taper in october the Janet Yellen for president the fact that this situation in congress + warnings from China would grant gold at least 1320 ! the fact that the USD has been dumped in the last for the last 3 years the fact that the DOW has lost 7% in the last 7 sessions then we must be missing something ... I know the charts looks awful , but hell ! what do you expect we just had the mother of all bear markets for two years now ... are charts that important ?? , Is gold telling us massive deflation around the corner ?? , and if so , why the hell is the stock market rallying !??Re: Is gold telling us massive deflation around the corner
Many think so. The people with gold configured brains tend to be obsessed with inflation as the only possible outcome.
If you remove all the conspiracy talk and view the various CB's of the world and the governments of the world as simply organizations run by humans with brains configured for group-think and running scams on dumbasses, then these guys have been petrified of deflation for 10 years now. So the CB's and gold are "signaling" deflation.
Re: why the hell is the stock market rallying
The stock market is nothing but pathologically optimistic (usually male) gamblers. If you stop using the word "market" (and mentally genuflecting every time you think about the word) and instead accept that all markets are nothing but (usually male) sociopaths trying to screw each other, perhaps "why" the stock-casino behaves the way it does would make more sense.
If you think deflation is bad for gold, you're probably misguided into thinking USDs are money.
I don't hink anyone really has all the answers beegle. If they claim they do, they are not being honest with themself.
Gold will eventually turn around. When? I don't know. My timetable is sometime in the next 12-24 months as this will be likely when either the Fed attempts to disengage from QE and allows the banks to seek higher yields eslewhere, through loans and what not.
I think the article written by ZH a couple weeks ago was pretty interesting. It talked about how QE was causing banks not to lend and instead it replaced the ability of banks to lend money and instead seek the 25 basis points paid on their reserves. QE does add volume to the money supply in the basement, but it isn't like injecting drugs into the economy, it is more like putting a soft levitating cloud pillow on the stock market, which is where all the gains seem to have gone.
This is interesting, because it is to the detriment of the velocity of money, which is close to zero. The fed doesn't want it to go below zero, they are trying to dial a temperature gauge, but as Jim Rickards says, they are playing with a nuclear reactor..... dial it too high or too low and you have a critical mass junction point. Eventually the currency wars heat up again and other countries look to devalue against the dollar.
It's a crazy game of chess or chicken, and I don't think anyone knows who will win. However, since it is uncertain, gold should gain in these times eventually. I don't want to sound like the Leebs of the world who make the same prediction end on end until eventually the broken clock is right, but I have to say, gold will eventually flourish with supply-demand disconnects, a flare up in the ME, and the currency wars. Something eventually has to give. I don't know what it will be, but it will cause gold and silver for that matter to wonder into the territory of e.
Gold is unique. It is not like other commodities that are consumed.
Whenever the demand for gold can be met with a promise of gold in the future that alone will suppress the price.
On top of the we have speculators who can short sell large amounts of gold and reap benefits by that mechanism.
As long as physical gold is delivered to those who demand it the derviative gold market will and can continue. When physical can't be delivered the paper market will end and gold's true value will be seen in a much higher price. There are signs that this has been happening for almost a year now.
It is an obscure market and much of what we think we know can't be verified but if speculation is correct we are finally nearing the breaking point of the paper gold market.
From what I read that isn't exactly true because those signs of backwardation are only in back months and are very small in magnitude. So for now, at least, there is no run on gold.
Inside 2 years we should see gold at 3000/oz. Worrying now about the price is silly. If anything I'd be worried it goes up faster than I can buy more, not the other way around.
If you're not trading the dow, spx, futures, DIA, SPY, VXX, SPXU, options on them, then really you are over-concerning yourself with a mathematical artifact.
Gold's price is hit most (up or down) by bonds, crisis & the total debt owed in each currency by each nation. That's what you pay attention to.
Thanks Tyler, this greatly improved morale around here as the beatings have really taken a toll.
Gold and silver will be relentlessly attacked all the way to the end of November. December is the biggest month for gold at the COMEX...and it will be D-Day come 1 December. Expect the attacks. They are coming for sure.
And, is it a coincidence that gold gets slapped down again on a day when the EU announced that it has entered into a deal with China to accept the RMB directly as payment for all goods without going through the $US as an intermediary currency? This is another nail in the coffin of the $US as a reserve currency....no mention of it in the mainstream media or even on this site.....China is probably happy this is slipping by unnoticed - they want to maintain the fiction of a strong $US while they are dumping them. When they are ready the emperor will be revealed in all his shining nakedness and gold will suddenly be the colour of the month.........
Color of the millenium you mean. The Chinese, and the Russians, are happy to get more physical gold tonnage on the cheap. I will as well. There is nothing more satisfying than still being able to trade paper for physical gold and silver.
thank you aphids---that's a very interesting bit of news
But, but, but you can't eat it!
Now, back to my T-bill salad. Not only delicious, but 'risk-free'!
The only question left is, "Whose population can adapt the fastest when this whole system blows up?"
To speak of the 'price of gold' in a marketplace that accepts a promise of future gold with the same certainty as immediate delivery of physical gold is puzzling. Whenever this occurs, when any substitute for physical gold is accepted, the price of gold will fall. This happens whether it is Comex or gold back currencies that provide the derivative.
Gold will only rise in value when the actual metal is the only way it is traded.
The world seems to be slowly coming tothis conclusion as the physical is being acquired even as the price of the derivative falls.
When the paper marketplace fails to deliver (to the right, important buyer) we will see a new physical only market. In this environment the price of physical will rise as all who hold paper promises will scramble to get the real stuff. At present there are 40 to 50 holders of promises for each ounce of gold held by those who have promised to deliver. This might suggest the margin of upward revaluation when the time comes.
No, No, and No. Firstly, I object to your use of the word "only." The price of physical can go up in tandem with the price of the derivatives. It can also go up as the price for derivatives fall, because, as you note, the derivatives are a substitute for the physical. In a failure-to-deliver event, yes, the price of physical can increase relative to the price of the derivatives. HOWEVER, the proportion of paper longs to the amount of physical warehoused has absolutely NO BEARING on any potential revaluation. The comex is cash settled. It makes no difference what the ratio of physical to paper claims is so long as the US dollar is still legal tender. The dollar has to collapse, and the legal system enforcing contract law and paying damages in US dollars has to collapse, before the COMEX can default. Until that point, the COMEX will be able to replenish physical inventory with fiat dollars. And when that can no longer be done, there's no way to determine the extent of the revaluation brought on by the collapse of the monetary system based on the ratio of paper claims to physical inventory in the current system.
You're saying the SHTF event cannot (in all probability) occur until they run out of toilet paper, or until the toilet paper just won't stand the strain. I can dig it.
"Eventual tapering" is pressuring gold. HAHAH, people are so dumb. Bernanke has been talking about an exit strategy for YEARS. Nothing has changed. Gold is going to do the same thing its done over the past decade, move up.
Arabs love gold.Always have.
What if there was another part of the petrodollar deal that we do not know about.
The FedRes agreed as a codicil to keep the oilprice/gold price within or below a strict band.
Kills two birds with one stone for the Feds.
Just a thought.
Arabs love Gold? What about the Gold loving Jews? What about the people from Africa and India? Gold is money. Get over it already.
Re: Gold is money
And what kinda money do people like even more than gold?
Other people's money! That's the best money in the entire world.
Git yer socialist hands off my government motor-scooter, I'm entitled to my Medicare.
The Piper does not care for gold, as he knows full well that he will be paid in full, by the blood and toils of the innocent. Some things never change, this is one of them........
So the 4 words should read....fuck you, pay me!
http://www.treasury.gov/initiatives/pages/debtlimit.aspx
Debt Limit
The debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.
Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations – an unprecedented event in American history. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans – putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession.
Congress has always acted when called upon to raise the debt limit. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. In the coming weeks, Congress must act to increase the debt limit. Congressional leaders in both parties have recognized that this is necessary. Recently, however, a number of myths about this issue have begun to surface.
Life boats on the Titanic were considered worthless and outdated until the ship started to sink, then they were priceless.
Today my neighbors had the audacity to ask me what the hell I was doing barricading their driveway and nailing their garage doors shut. I told them the bank won't give me another loan. Some people just don't seem to understand how the world works.........
We need to remember that with the 'equalization and stabilization fund' being the law of the land, the people in charge can go short or long in any and all issues to infinity.They are helped by all the other scumbag bankers and politicians around the world that want to keep running their own printing presses. As long as these criminals are large and in charge, and people remain pretty much clueless, there is little chance that the pm's can climb.
The good news is, that the lower the paper price drops, the more people in cultures that still remember inflation, will want to buy the pm's.
The piper must, at some point, be paid. And someone must pay him.
As to whom? This is the foundation of western economic policy, distilled into just four words: the unborn cannot vote.
so u.s. debt is like abortion? killing the prospects of the unborn??
Can't we just kill the piper(s)??!!
Re: Can't we just kill the piper
No, a little known fact is that for every piper you kill there's another one in the mirror ready to takes its place.
The number of asshole sociopaths (aka pipers) in the world is computed as follows:
P = N -1 Where :
P = pipers.
N = number of humans on the planet
-1 is you personally, as everybody know they personally are not asshole sociopath pipers.
That 17T of U.S. debt is collateral for at least another couple hundred trillion in derivatives.
As Raul Pal has said, It isn't the 17T of U.S. government debt that is the problem per se. The problem is the 17T of debt is collateral for hundreds of trillions in derivatives of that debt.
It is a debt based economic model, there is no honest money... for now.
That is not the problem either. The problem is that margin is not properly posted in transactions that aren't cleared through exchanges.
That last chart assumes this is a short-term correction. You can never be 100% sure. I ain't selling mine, though.
That new $100 bill shore is purdy....
Tim, you're funny, if you think that the Debt meant to be "repaid". Don't be daft. It will never be repaid, and was never meant to.
It was/is meant purely as the vehicle for a Global Net of Indentured Servants. Welcome to Indentured Planet, and its shadow Royalty.
"the unborn cannot vote."?
Hell with the way the left fetishizes abortion the unborn don't even get BORN anymore....
there is no left/right. It's a kabuki theater.
Also the right to personal freedom, the sole right of a sole individual which is ONE human, a woman who is pregnant, is very much a LIBERTARIAN choice which typically is not considered left. No state, collective, religion, etc., has any place deciding the fate of a singular adult person's body/health/survival.
I completely agree there will be a "reset" of the entire system. politics will determine the timeline.
this is why i have not been in favor of going "all in" with physical gold/silver. yes it makes a ton of sense. however, in my view the next bernanks or obamoron will simply confiscate all of the physical gold at a set price. who is to say that price is higher, lower, or the same as today's price?????
And the other thing is that some may say "fuck i am stacking mine and hiding it". well, ok. but what happens when it can only be sold to THEM via their sanctioned providers/brokers. if you hide yours but can't sell then who gives a fuck because it ain't worth shit. thank you bernanke.
Sold? Sanctioned? Brokers?
Does not compute.
Silver = some decent amount of food per coin
gold = some decent tools or vehicle
We call this barter. I didn't go to all this effort with all those boat crashes to start admitting I had gold all along at the worst possible time to do so.
No one believed your boat accident stuff. The NSA knows how many times you take a dump each day.... They know you have gold/silver
I have no official explanation how all those dumps can be rated as .9999 fine. It must be a medical mystery.
The smart assumption is that all value will be confiscated. bank account: yes. Gold: yes. Food: yes. House: yes. Commercial property: yes. Everything: YES.
Right. So gold confiscated through their channels by the mechanisms and at the price they set.
This occurs along with the "great reset" where the currency is in effect relaunched backed by said gold at a set price. they confiscate all your shit and force the new currency down your throat. all "assets" such as IRAs, 401Ks, and pensions forced to hold a certain percentage in UST of course after they have confiscated the amount of your assets that they decided to confiscate. so what the fuck is the point in trying to make that extra buck if they could literally confiscate it from you at some point.
because you LEAVE. As in outside the USA, you + all assets, like, forever. Go far enough & they'll be too busy robbing those who stayed.
D E B T S L A V E S
Without debt, the system implodes. If all the debt was paid off, there would be no money in the economy, because money is born as debt. The trick is that its lent into existence at interest, and only the principal is created, not the interest. So for the interest to be paid, one must borrow even more debt and so on ad infinitum. Given the fact that most US government debt is not invested in infrastructure, i.e. it is consumed, it only makes matters worse. However, the system is inherently rigged for collapse, as the interest proportion grows over time, until it crowds out spending in other vital areas, and bankruptcy eventually catches up. A huge "reset" comes and we start the fucking charade again. On the other hand, the gold standard, debt is kept in check and living beyond ones means is discouraged, as there is only enough gold in the world to back fiat. The downside to this is that bankers won't be making as much phantom wealth and lining their pockets with bullshit funny money. Being reserve currency status also isn't helpful in keeping debt in check, as there is a huge temptation for the reserve currency nation to export inflation to the rest of the world, i.e. print more dollars to fund stupid military adventures and pointless programs/bailouts. The only thing backing the dollar is oil and the government's creditworthiness, which will both one day run out.
I don't worry about inflation and gold, I worry about Fractional Lending of Gold