All That Glitters

Tyler Durden's picture

Submitted by Ben Hunt via Salient Partners' Epsilon Theory,

I’ve received a lot of questions over the past few weeks about Russia and the Ukraine, and why I don’t include this flashpoint in my list of greatest market risks. Sorry, but I just don’t think it’s that big of a deal from a markets perspective.

Russia is going to control Sevastapol, and everyone – including Obama and Merkel and whoever is calling the shots in Kiev – knows it. Period. End of story. Owning a warm water port on the Black Sea has been a cornerstone of Russian political identity since Catherine the Great in the 18th century, and there’s nothing that anyone can do (or really wants to do) to stop it. Does effective control of Sevastapol and the Crimea require annexation of Eastern Ukraine? Maybe. Southern Ukraine and Moldova? Seems like a stretch to me, but I hear that the Danube is beautiful this time of year, and if that’s what Putin wants that’s what he’ll get. I’m sure we’ll get the usual tsk-tsk’ing from the usual suspects, and maybe even the 2014 equivalent of Jimmy Carter’s Moscow Olympics boycott, but that’s as far as it goes.

In fact, as far as markets are concerned, the more Sturm und Drang over Ukraine, the better. Draghi needs an excuse to launch some form of European QE, and an ECB staff projection of the dire consequences of Gazprom shutting off the pipelines is just what the doctor ordered. A few days of media hand-wringing over Putin’s intentions, perhaps accompanied by – gasp! – a 1% decline in markets, and even Janet Yellen can get into the act, promising to do “whatever it takes” to support our European brethren and overcome this horrific threat to global growth.

Ultimately this all further strengthens the Narrative of Central Bank Omnipotence – the market-controlling common knowledge that market outcomes are the result of central bank policy rather than anything that happens in the real economy.

How can you know if this Narrative starts to waver or shift? If and when gold starts to work.

This is what gold means in the modern age... not a store of value or some sort of protection against geopolitical instability... but an insurance policy against massive central bank error and loss of control. So long as the dominant narrative remains that central banks are large and in charge, so long as global investors hang on every throwaway line that Draghi utters... gold doesn’t stand a chance.

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lolmao500's picture

What about nuclear war drills? Bullish?? After the Ruskies did it, now it's time for Murica... 

U.S. to Conduct Strategic Bomber Exercise Nuclear drills follow ‘massive’ Russian war games last week

LetThemEatRand's picture

"Yay!  The cold war is back!  And maybe it will go hot!"  Said the MIC who made it happen.

kliguy38's picture

If they want a hot conventional, they'll get it. If they wanna divy up the Ukrates then they will.... if they wanna go full nuke.......then they will.......we're just bugs

bania's picture

I prefer the articles from Ben's brother, Mike Hunt.

Caviar Emptor's picture

Of course the central banks will fu** up! They've gone beyond the point of no return. Just to cover up past mistakes they need to compound them by raising the stakes as the ground they stand on gets ever shakier. Reagan proved that deficits don't matter. Japan is proving that debt doesn't either. The CBs will ultimately prove that currency is superfluous when it all melts down.

DoChenRollingBearing's picture

The Central Bank of DoChenRollingBearing ("CB of DCRB") has no faith in their fellow central bankers.  

Therefore the CB of DCRB is now on a Metals Standard with two core holdings:

1) Precious metals, mostly Au, but some Pt, Ag and Pd too

2) Highly engineered products made of 52100 steel


Caviar Emptor's picture

A wise tangible fruit basket indeed

DoChenRollingBearing's picture

The CB of DCRB, in inadvertent haste to finish its holdings announcement forgot to include yet another metals holding:

3) Pb and Pb delivery devices!

Caviar Emptor's picture

Better to be close to the middle of the periodic table , I agree

Manthong's picture

Speaking of insurance and store of value...

A Washington quarter dollar coin (90% silver) would buy you a gallon of gasoline in 1964. That same 25 cent coin (after a stop at the coin store to swap it for FRN’s) will buy you a gallon of gasoline today.

A one dollar Federal Reserve Bank note (FRN) in 1964, would buy you four (4) gallons of gasoline. That same FRN today will buy you one fourth (1/4) of one gallon of gasoline.

DoChenRollingBearing's picture

Anecdotes about store of value of gold and fiats?  Ah, I have another one:

Long ago (1980s and 1990s) I used to pull $300 (which was the maximum) from our ATM once in a while to buy gold.  For much of that time gold was around $450 (rough average), so it took me "1.5 withdrawals / oz of Au".  [Gold Eagles]

Now I can take $500 out of the ATM, but now that is about 2.7 withdrawals / oz Au.

AllThatGlitters's picture

Hey, my name in the headline!  :-/

BTW, check out Gold popping hard tonight!

Live Chart:

Mistress Raindrop's picture

Gold is so tired and dead.  I'm invested in cat food futures.

GetZeeGold's picture




Shorting Mistress Raindrop - Member for 1 week 3 days


Winner of a free nailgun kit sans instructions.

Lore's picture

Mistress Raindrop = Bot.  Do not click the CAT FOOD link. eom

Charles Nelson Reilly's picture

That FreeBeacon rag is some serious neocon shit. I wouldn't be surprised to hear that in order to get a column or blog there, you have to go down on John McCain. Lindsey Graham can't watch, or he has to pay $1000.

NoDebt's picture

"So long as the dominant narrative remains that central banks are large and in charge, so long as global investors hang on every throwaway line that Draghi utters... gold doesn’t stand a chance."

Which is why you buy it very quietly, for cash, very discreetly and put it away, off the grid and forget about it for a few decades.

"Trading" gold is much too dangerous.  Owning gold is the ultimate trans-generational store of value.  

Would you rather your great aunt put aside $10,000 in cash for your in 1950 or $10,000 worth of in gold?  You have your answer.

fockewulf190's picture

I doubt my stack is going to be untouched over the next few decades. The current economic system will not survive anywhere near that long, and it's going to be my stack that is going to help me survive the chaos. I hope it lasts long enough to transcend the Great Reset. Fourtunately, I can still trade my fiat for phyzz, so I continue to stack and prep as much as possible.

daedon's picture

A problem is what do you do with gold when a facist state declares its possession criminal and punishable by death ?

bshirley1968's picture

You shoot any and every prick that comes to get it.  Either outcome means you are free in the end.

lakecity55's picture

In the distant past, Men found Gold. They tried to control the Gold, but found they could not. Gold, formed in the crucibles of nuclear fire deep in the Cosmos, was an Element, a Pure element possessing the unfathomable power of a Super Nova. The more that dishonest men tried to suppress the Gold, it lay silent, building its Elemental Power to destroy the fiat constructs of Men. In the early 21st Century, Man once again tried to destroy the Power of Gold.

They Failed.

At the precise point delineated by  Laws yet unknown, Gold exercised its Elemental Power and burst forth, crushing the constructs of Man and reasserting Itself as the Element of the Gods...

LetThemEatRand's picture

God created Man, but Man created Gold.  Man built great machines and declared that he could create the equivalent of Gold from cotton, paper and ink.  Man hailed his freedom from Gold.  "We are Goldless!", man declared.   "Let us live in a Goldless world, while we do God's work!"

bshirley1968's picture

The notion that man created God, reveals a complete lack of understanding of God.  Get some understanding and then broach the subject.

fonzannoon's picture

"so long as global investors hang on every throwaway line that Draghi utters... gold doesn’t stand a chance."

Who will be our valiant hero and stand up against the CB's? Goldman? BAC? JPM? Bridgewater? Who is going to be the firm that comes out and says "making a shit ton of easy money is fun and all....but what's right is right, so we are massively shortin the euro and ust's and have just put an order in for 5 billion worth of physical gold and a billion of silver".

Carpenter1's picture

Gold doesn't need a defender, it's plenty powerful enough to bury CB's just like it has every fool who's tried to manipulate its price.

Greenskeeper_Carl's picture

probably no one, since all of  their incomes are dependent on maintaining the status quo. But I have been doing that, slowly, although i wouldnt call my orders very significant. Can i still be your hero?

NoDebt's picture

"Who is going to be the firm that comes out and says "making a shit ton of easy money is fun and all....but what's right is right, so we are massively shortin the euro and ust's and have just put an order in for 5 billion worth of physical gold and a billion of silver".

The PBC.  They already did.

fonzannoon's picture

well I am not convinced they want out of the current system. I admit they have purchased a nice chunk of insurance. but i really am interested in seeing if they let themselves burn down. If they do, can the fed handle it. We are certainly not there yet. As of now Greenskeeper is more my hero than china, although i am concerned that there is enough production to keep him from cornering the market.

Grande Tetons's picture

When you have a house that is next to Pompei...yeah...I will add the to the insurance any chance I get. 

NoDebt's picture

Anyone tells you they know what's coming with precision is lying.  I just know that both gold and power are flowing west to east right now.  

Lore's picture

That's the key point that the author seems to stumble around. The paper pageant in NYC is irrelevant except as a mechanism for subsidizing lower nominal prices in the currency du jour. What matters is where the stuff is being delivered, to whom, and why.

lordbyroniv's picture

Gold going back to $35 an ounce?

Ignorance is bliss's picture

Let's hope so. I'd like to buy my own nation one day in the future.

fockewulf190's picture

It may be revaluated in the future, but you won't see a dollar symbol in front of the number.

Carpenter1's picture

No "all powerful" manipulators have succeeded before and certainly this version of cowards and fools will be no different. Fortunes have been made in only the last few decades trading gold.

Article thinks too much of CB's.

deeply indebted's picture

So long as the dominant narrative remains that central banks are large and in charge, so long as global investors hang on every throwaway line that Draghi utters... gold doesn’t stand a chance.

Luckily, this won't last long.

eddiebe's picture

No doubt, the central banks are playing a confidence game, and it's working. Pathetic as it is, it's working.

Kreditanstalt's picture

Too Amero-centric.

Tell the Chinese, Indians and Vietnamese that "gold doesn't stand a chance"...

LetThemEatRand's picture

Western-centric.  America is still a colony of Britain as far as the western banks are concerned.  The Eastern populations have lived through endless oligarch ruling classes and they know where the value is.  The Western powers are relative new kids of the block who think they have this new idea of paper money and Americans remember as far back as black and white TV.

Tinky's picture

What a steaming crock.

Vint Slugs's picture

Agreed.  Mr Hunt's "game  theory" perspective is just a heavy load of BS.  It's become the recent popular focus of the on-line financial bloggers - ZH included obvioiusly.  Just read any of his "articles" with a critical eye and you can see it for what it's worth:  other than a lot of verbiage not much.  I'd like to get a look at the portfolio makeup of any account that Mr Hunt "manages", if indeed he manages any portfolios.  We need to listen less to the Mr Hunts and spend a little time just rationally analyzing real-world cause and effect.

I hesitate to say, because it doesn't logically follow, but will anyway:  from his photo it's obvioius that he needs a more flattering set of spectacles as well as a dental job on the spacing of those 2 front incisors.


FieldingMellish's picture

Indian election results May 16th. Just sayin'.

Seize Mars's picture

All that is gold does not glitter, not all those who wander are lost; the old that is strong does not wither, deep roots are not reached by the frost. From the ashes a fire shall be woken, a light from the shadows shall spring; renenwed shall be blade that was broken, the crownless again shall be king.

Pool Shark's picture



In the land of Fed-dor where the shadow-bankers lie,

One fiat to fool them all, one fiat to blind them,

One fiat to bring them all, with no gold behind them.

In the land of Fed-dor where the Chairmen lie.