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Gold & A Time Of Universal Deceit

Tyler Durden's picture




 

Submitted by Tim Price via Sovereign Man blog,

“We are currently on a journey to the outer reaches of the monetary universe,” write Ronni Stoeferle and Mark Valek in their latest, magisterial ‘In Gold we Trust’. Their outstanding work is doubly valuable because, as George Orwell once wrote,

“In a time of universal deceit, telling the truth is a revolutionary act.”

The reality bears restating: as the good folk of Incrementum rightly point out,

“..the monetary experiments currently underway will have numerous unintended consequences, the extent of which is difficult to gauge today. Gold, as the antagonist of unbacked paper currencies, remains an excellent hedge against rising price inflation and worst case scenarios.”

For several years we have advocated gold as a (necessarily only partial) solution to an unprecedented, global experiment with money that can only end badly for money.

The problem with money is that comparatively few people understand it, including, somewhat ironically, many who work in financial services.

Rather than debate the merits of gold (we think we have done these to death, and we acknowledge the patience of those clients who have stayed the course with us) we merely allude to the perennial difficulty of investing, namely the psychology of the investor.

In addition to being the godfather of value investing, Ben Graham was arguably one of the first behavioural economists. He wisely suggested that investors should

“Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it – even though others may hesitate or differ. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”

Graham also observed,

“In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.”

Judgment has clearly been tested for anyone who has elected to hold gold during its recent savage sell-off.

The beauty of gold, much as with a classic Ben Graham value stock, is that as it gets cheaper, it gets even more attractive. This should be self-evident, in that an ounce of gold remains an ounce of gold irrespective of its price.

This puts gold (and value stocks) markedly at odds with momentum investing (which currently holds sway over most markets), where once a price uptrend in a given security breaks to the downside, it’s time to head for the hills.

There are only three ways of trying to handle a mountain of unsustainable debt. The options are:

1) Maintain economic growth at a sufficient rate to service the debt. We believe this is grossly unlikely.

 

2) Repudiate the debt. Since we also operate within a debt-based monetary system (in which money is lent into being by banks), default broadly equates to Armageddon.

 

3) Inflate the debt away.

At the risk of pointing out the obvious, which path do we consider the most likely? Which path does it suit grotesquely over-indebted governments and their client central banks to pursue?

But it does not suit central banks to be caught with their fingers in the inflationary cookie jar, so they now have to pretend that deflation is Public Enemy Number One.

Well, deflation is certainly a problem if you have to service unserviceable debts. So it should come as no surprise if this predicament is ultimately resolved through an uncontrollable and perhaps inevitable inflationary or stagflationary mess.

So we have the courage of our knowledge and experience. In fact, of other people’s experience, too.

As the title of Robert Schuettinger and Eamonn Butler’s book puts it, we have ‘Forty Centuries of Wage and Price Controls’ and their inevitable failure to draw upon. We know how this game ends, we just don’t know precisely when.

We have formed a conclusion based on facts and we know our judgment is sound. For the last two years, the crowd has disagreed with us on gold.

We think we are right because we think our data and reasoning are right. Not that we don’t see value in other things, too: bonds of unimpeachable quality offering a positive real return; uncorrelated assets; value and ‘deep value’ stocks. And we ask a final question: if not gold, then what?

Are we deceiving ourselves – or are our central bankers in the process of deceiving everyone?

 

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Mon, 06/30/2014 - 22:17 | 4912545 Soul Glow
Soul Glow's picture

Gold is money.  'Nuff said.

Mon, 06/30/2014 - 22:30 | 4912601 DoChenRollingBearing
DoChenRollingBearing's picture

Gold, buy it, hold it.  Stay the course.

***

Everyone should have at least 5% of their net wealth in physical gold.  There are so few who do have amount (well under 1% of the USA's population) that having 5% in gold puts you into a "1%'.

And, if you have 10% - 20% in gold, ahh...!

On the other gold thread today, I saw some special cases (retirees, etc.) that have a lot more than 20% in gold.  OK, in some cases, sure, over 20% is fine.  But, make sure you have enough cash (etc.) to "defend the precious..."

Mon, 06/30/2014 - 22:36 | 4912609 Soul Glow
Soul Glow's picture

What else should one have saved and as an invetment other than PM?  Cash?  A house and land?  All else is easily taxable.  

Gold is money in the bank, but your own bank and no one elses.

Mon, 06/30/2014 - 22:46 | 4912644 DoChenRollingBearing
DoChenRollingBearing's picture

"Diversification" is my middle name (although it is not obvious).  We own a condo, a bearing import business in Peru and some small income-generating investments.  For many people, too much gold might have a bad effect, if gold goes down, and they need to cash-out (for any of a thousand reasons), they would wind up hurt if they do not have the other assets (CA$H) to "defend the precious".

Mon, 06/30/2014 - 22:50 | 4912652 nink
nink's picture

Gold is not money. It is a measure of intrinsic value that is limited in supply and can only be obtained through wealth, Money on the other hand can be conjured up at will.

Mon, 06/30/2014 - 22:52 | 4912663 linniepar
linniepar's picture

Self directed IRA LLC seems a legit way to go if you have FRNs locked in an IRA. 

Tue, 07/01/2014 - 00:17 | 4912841 Anusocracy
Anusocracy's picture

We also have a 100 century war between the forager culture and the sedentary culture.

Tue, 07/01/2014 - 00:25 | 4912860 markmotive
markmotive's picture

Oneday the deceipt will be revealed in the form of financial crisis. When that day comes, you might turn around and see gold up $1000.

According to Jim Rickards: Catastrophic outcomes come faster than expected

http://www.planbeconomics.com/2014/06/catastrophic-outcomes-may-come-fas...

Tue, 07/01/2014 - 02:47 | 4913037 jeff montanye
jeff montanye's picture

all the foregoing are reasonable thoughts.  i even like the one gold is not money which i think zher's damned prematurely.  the idea is it is better than money.

however i don't think george orwell wrote that bit about truth being a revolutionary act.  it is a good one sentence summation of his life though.

http://www.barrypopik.com/index.php/new_york_city/entry/in_a_time_of_uni...

Tue, 07/01/2014 - 05:32 | 4913131 August
August's picture

Just terminate all pre-tax retirement plans. 

Roths might (or might not) work out a bit better, but if you're investing pre-tax dollars in a qualified plan, Uncle Sugar has a non-extinguishable claim on whatever share of your investment he cares to take.

Mon, 06/30/2014 - 23:28 | 4912739 Soul Glow
Soul Glow's picture

Uhm, no.  That is wrong.  Gold is money.  

Tue, 07/01/2014 - 02:51 | 4913039 jeff montanye
jeff montanye's picture

gold is what money should be, but, in the last century, rarely has been.

Tue, 07/01/2014 - 05:27 | 4913129 Squid-puppets a...
Squid-puppets a-go-go's picture

indeed. Er, nink, I respect your right to another definition, but just know as demonstrated over 6000 years that any other definition if swallowed by enough people will lead to economic instability sooner or later

Tue, 07/01/2014 - 08:01 | 4913267 fattail
fattail's picture

"Gold is a great short, we should have done more."  Or something like that.  Is what I was told by the three college educated late twenty somethings.  All they could talk about was their of ass kicking stocks, and how the US needs high levels of debt so the Fed can control interest rates.  "If the US had no debt, how would the Fed control interest rates, who would control interest rates, and if no govt backed debt what would all the banks and insurance company's buy?"....  I actually had this discussion.  One of them actually tried to blame the housing crash on the market mispricing interest rates.  Granted he was not probably interested in monetary policy back then, but I had to remind him the Fed kept rates at 1 percent for a year and a half, which was historically low at the time.  They had no problem with the Fed's actions.

I felt like a jew at at hitler youth rally.  

I also felt the time was drawing nigh, when this whole clusterfuck blows...   I sometimes get the feeling that everyone is buying gold for the same reason I do.  So it was nice to feel like maybe  the general public is still asleep.

Tue, 07/01/2014 - 07:30 | 4913216 VAD
VAD's picture

Gold is money.  Currency can be conjured up at will.

Tue, 07/01/2014 - 09:08 | 4913383 sessinpo
sessinpo's picture

 VAD   Gold is money.  Currency can be conjured up at will.

---

By your definition, what else is money? How about oil or coal? Maybe agriculture?

Money is any medium of exchange. Until gold is taken as that exchange, it remains a commodity that is priced in dollars.

Tue, 07/01/2014 - 09:51 | 4913490 lordylord
lordylord's picture

"By your definition, what else is money? How about oil or coal? Maybe agriculture?"

Money must have certain qualities.  Gold satisfies all of them.  Therefore, gold is money.  Any further argument on your part only shows your ignorance and I have absolutely no desire to enlighten someone so crass as you.  I suggest you do your own research on the matter before polluting the board further.

Tue, 07/01/2014 - 13:53 | 4914472 EINSILVERGUY
EINSILVERGUY's picture

Agreed

Mike maloney has a good series on money and why gold and silver historically satisfy all 6 requirements

Anyone who has spent any time learning knows why salt, coal, bitcoin and fiat are not money.  Some are commodities and some may be currency, but none can be deemed money

 

 

 

Tue, 07/01/2014 - 08:01 | 4913262 agstacks
agstacks's picture

.

Mon, 06/30/2014 - 22:54 | 4912656 linniepar
linniepar's picture

Agreed, diversification is key. Even a few dollars for liquidity.

Mon, 06/30/2014 - 23:29 | 4912757 Soul Glow
Soul Glow's picture

Agreed, diversification is key. Even a few toilet papers for liquidity.

Fixed it for you.

Tue, 07/01/2014 - 02:53 | 4913042 jeff montanye
jeff montanye's picture

alicorn?

Tue, 07/01/2014 - 08:03 | 4913269 agstacks
agstacks's picture

In a collapse physical dollars will be very scarce.  

Tue, 07/01/2014 - 05:17 | 4913122 CHX
CHX's picture

There will be no need to "defend the precious". As the masses switches on the lights they'll do that for phyzz holders with their fiat (directly or indirectly through the owners of their fiat). IMHO, we're close to critical mass. A little increase in physical demand and the shorts will have their a$$e$ on fire and hell to pay. Not that I look forward to the mayham that will cause.

Tue, 07/01/2014 - 06:24 | 4913167 JohninMK
JohninMK's picture

Timing will be everything. Hold it to long and it will be gone as if the collapse does come and PMs become important then Governments will have to act.

First, they will nationalise their citizens' gold, probably as per last time in the US, buy it at a low price then revalue it. They will start with the central vaults where many of the largest holders have their PM 'safely' stored. Then, using dealers records, they will go for the other big holders using SWAT teams with their latest weapon, the metal detector. You are probably OK if you just have a few coins or jewelry but you might think about storing them in a innocent Faraday Cage like HI-Fi equipent (you knew you kept that CD player for a reason!) or a PC (good for anti-burgler as well).

Then they will nationalise PM companies in the territory and/or shares held in PM companies.

After this, unless you are in the 0.01% or a gangster, it will be difficult to trade PMs, certainly not openly, as it will be difficult to find a buyer.

Those who are into PMs now will have to use them to ride the rise in value then trade out, before the going gets tough.

Tue, 07/01/2014 - 07:52 | 4913251 Took Red Pill
Took Red Pill's picture

I don't think confiscation of gold will happen. Our few paltry ounces won't mean much when they've let tons & tons go east. Even when Roosevelt issued the order, no one went door to door collecting it. And no one went to jail for not turning it in.

Mon, 06/30/2014 - 23:51 | 4912801 ILLILLILLI
ILLILLILLI's picture

Same document on Scribd:

 

http://www.scribd.com/doc/9442970/Collateral-Damage-U-S-Covert-Operation...

Emboldened by the lack of consequences for subverting the U.S. constitution and breaking international law duringthe Iran-Contra scandal, the Bush administration group known as “the Vulcans” planned a bigger drive to crush thesoul of Communism once and for all.  This group had graced themselves with this moniker, naming themselves afterthe Roman god of War – Vulcan. They waged war against the Soviet Union and Iraq under George H.W. Bush, andagainst Iraq and Afghanistan under George W. Bush.Belonging to this group 31 were   Dick Cheney   Don Rumsfeld   Colin Powell   Paul Wolfowitz   Richard Armitage   Condoleezza RiceThe Vulcan’s drive to bring and end to the Cold War was fueled by a covert war chest invisible to congressionaloversight. 32 This war chest would be known by several names: Black Eagle Trust, the Marcos gold, Yamashita’sGold, the Golden Lily Treasure, the Durham Trust or Project Hammer. 33 These same Vulcans would be broughtback to power in 2000 under the administration of President George W. Bush, son of  President George H. W. Bush.

 

Tue, 07/01/2014 - 02:56 | 4913045 jeff montanye
jeff montanye's picture

vulcan was the roman god of fire.  mars was the roman god of war.

http://en.wikipedia.org/wiki/Mars_(mythology)

Tue, 07/01/2014 - 03:42 | 4913084 silvertri
silvertri's picture

Read it long time ago , should be mandatory reading talk about putting all the pieces together at once...the ultimateconspiracy theory, anybody know anything about the author?

 

Tue, 07/01/2014 - 03:42 | 4913085 silvertri
silvertri's picture

Read it long time ago , should be mandatory reading talk about putting all the pieces together at once...the ultimateconspiracy theory, anybody know anything about the author?

 

Tue, 07/01/2014 - 10:01 | 4913545 TeethVillage88s
TeethVillage88s's picture

Interesting Link, Never been there before.

Tue, 07/01/2014 - 02:19 | 4913017 European American
European American's picture

"Gold is Money"

Indeed it is...

 

 

What's really in your retirement account

 

Tue, 07/01/2014 - 06:16 | 4913158 samcontrol
samcontrol's picture

a fucking LOT of SILVER options of all sorts !

and just in time. .. The world is PERFECT. Love all in RETARD.

PS .
the butchers from France will face Germany this weekend in the world's most important stadium . We have been waiting since " Seville(82) " for revenge. My flying butchers will send someone to the hospital for a third match in a row and finally get our revenge. and if you don't know what i am talking about go back to staking , dreaming or eating cheeseburgers but you are losing out..
Go Platinoush , you are a genuis.

Tue, 07/01/2014 - 10:03 | 4913552 TeethVillage88s
TeethVillage88s's picture

What's in your Wallet?

Tue, 07/01/2014 - 05:31 | 4913130 Frankie Carbone
Frankie Carbone's picture

Got gold, bitchez?

Mon, 06/30/2014 - 22:28 | 4912588 Silky Johnson
Silky Johnson's picture

My money was formed in a supernova, not in the ink cartridge of a NY yid.

Tue, 07/01/2014 - 05:10 | 4913120 CHX
CHX's picture

That is correct, must likely in several supernovae, actually. AND - in smaller amounts - during radioactive decay of heavier elements.

Mon, 06/30/2014 - 22:29 | 4912594 IronShield
IronShield's picture

If you can't hold it, you don't own it.  A portion of any portfolio should include physical metal in hand.  Just in case.  ;-)

Mon, 06/30/2014 - 22:34 | 4912612 boattrash
boattrash's picture

Agreed IronShield. Would also suggest small/medium food production to those that are able. Food will also be money before this shitstorm ends.

Mon, 06/30/2014 - 22:55 | 4912673 IronShield
IronShield's picture

Concur with that.  A 3-month supply, along with the means to defend it.

Tue, 07/01/2014 - 05:09 | 4913119 CHX
CHX's picture

Disagree. Food will be useful for BARTER, but food is NOT money (since it's perishable, bulky, and often non-divisble [eg.gs]). From barter arose the need for money in the first place! Nuff said.

Tue, 07/01/2014 - 00:23 | 4912857 Da Yooper
Da Yooper's picture

Okkkkkkkk

now what moron could give you a negitive vote on this

ohhhhhhh

I get it

 

a scum sucking liberal progressive  banker

oy

Mon, 06/30/2014 - 22:35 | 4912602 Da Yooper
Da Yooper's picture

The problem with money is that comparatively few people understand it, including, somewhat ironically, many who work in financial services.

 

LMAO

 

reallllllllllyyyyyyy

 

The problem is a select few know far too much.

 

much that is hidden from the public through the gibbersh they speak which is used to keep the public in the dark avout what & how they screw the GDP

 

soooo much so

 

they can manipulate & rigg the markets to enrich themselves at everyone else's

 

expense

 

they should be held to account for their theft from the public.

Mon, 06/30/2014 - 22:39 | 4912634 ACasey
ACasey's picture

Deceit.  Deceit is the centerpoint of this entire paper currency fiasco.  In such a short time, one government after another has integrated into the banking scheme that effectivley stole the wealth produced by labor of so many and delivered that wealth to a very select few.  Taking from others and giving to themselves based on deceit.

Dan Smoot wrote the "Invisible Government" in the 60's and aired the radio show "Dan Smoot Report".  Looking back, everything he warned against; violations of the US Constitution, private bankers seizing control of a country's money supply, and the coming consequences are all here in our face.

The entire world crossed a precipice as the looting by very few select bankers drives an entire planet's economies into their private hands.  Those orchestrating this are psychopaths but worse are the legions of men and women that swear allegiance to these private bankers; looting from others and giving to themselves.

Deceit and deception by so few threw an entire planet into havoc, carnage, refugees, rubble, war, and death.  The planet crossed the precipice and there is no going back.  That precipice, the limits of excess, are breached and what is certainly coming next spells the end of everyone including those taking the path of deceit.

Mon, 06/30/2014 - 22:42 | 4912639 intric8
intric8's picture

Come on, lets cut to the chase. Who is largely in control of monetary policy? Who comprises the most influencial banking institutions on earth? Who are our leading and most influential economists? Who uses "an appeal to figures", ie, "blame it on numbers, not us" as a clever way of absolving themselves of all blame as the winds of rectitude dismantle this house of cards we call modern monetary theory?

If we're truly interested in fingering the culprits who are spreading and perpetuating lies and deceit, its good to know WHO we're talkin about here.

Mon, 06/30/2014 - 23:58 | 4912811 john39
john39's picture

they who must not be named...

Tue, 07/01/2014 - 00:20 | 4912848 Da Yooper
Da Yooper's picture

oy vey

Mon, 06/30/2014 - 22:50 | 4912648 Caviar Emptor
Caviar Emptor's picture

But whatever we do, let's please coddle the banks. These fines from DOJ... They are distracting superior people from the hard work we are all too stupid and pretty to handle ourselves. We need to smile, indulge and forgive. No jail time? Why we should rejoice that we are not vindictive. After all, greed was so good for so long that we can fully understand any misdeeds performed in the name of capitalism. In banx we trust!

Tue, 07/01/2014 - 05:42 | 4913139 August
August's picture

Fiat "money" is, perhaps, the Great Filter. 

All across the depths of the cosmos, within the habitable zones of uncounted galaxies, billions of earth-like planets give rise to complex life forms, which develop tool use to a high degree, and then go on to discover both nuclear weapons and central banking.

Few, if any, survive.

Mon, 06/30/2014 - 22:51 | 4912654 deflator
deflator's picture

 Everyone alive today should know that they are living amidst a paradigm shift. Maybe the status quo of the past 150 years of persistent growth can artificially be extrapolated a few more decades? 20 years is a blink of an eye in the context of the history of human civilization. Like the roulette wheels in Vegas, round and round she goes, where she stops, nobody knows. Place yer bets bitchez! Mines is on the PMs.

Mon, 06/30/2014 - 22:54 | 4912666 Caviar Emptor
Caviar Emptor's picture

Yes. From paradise to paradigm we go. We are all going to be treated to watch the spectacle of collapsing empire.

Mon, 06/30/2014 - 22:54 | 4912665 Herodotus
Herodotus's picture

If we are lucky we will end up with someone like Mussolini or Franco.  If we are unlucky, we will end up with someone like Hitler or Stalin.

Mon, 06/30/2014 - 23:52 | 4912759 deflator
deflator's picture

Unfortunately we ended up with something worse than Hitlers SS children... Nancy

 Hitlers SS children were good kids, they were patriotic, they ironed their uniforms and brushed their teeth regularly and were slaughtered why?

Mon, 06/30/2014 - 23:03 | 4912686 Jstanley011
Jstanley011's picture

I have nothing against gold; just the opposite in fact. But people who talk about "unbacked paper currencies" -- as much as they may like to count themselves among the "relative few" -- actually do not "understand money." Not at all.

Of course the United States dollar -- fiat currency though it be -- is backed. By what? BY YOU and the check you write every year on April 15. The exact same thing that every fiat currency is backed by. By the power of the issuer nation to extract revenue from its tax base.

Hence, to me anyway, the appeal of gold and PMs. They have and hold value independent of that ungodly sovereign mess and its tendencies to wanna go tits up.

Mon, 06/30/2014 - 23:21 | 4912743 Clint Liquor
Clint Liquor's picture

The US Dollar no longer exists. It has been replaced by Federal Reserve Notes.

Please explain how notes created by a private corporation (The FED) is the liability of US Taxpayers.

Tue, 07/01/2014 - 00:21 | 4912851 Bemused Observer
Bemused Observer's picture

"Of course the United States dollar -- fiat currency though it be -- is backed. By what? BY YOU and the check you write every year on April 15. The exact same thing that every fiat currency is backed by. By the power of the issuer nation to extract revenue from its tax base."

LOL! Exactly. Now, what do you want, gold, or the revenue from that future tax base?

Tue, 07/01/2014 - 06:21 | 4913162 samcontrol
samcontrol's picture

both !

Tue, 07/01/2014 - 14:41 | 4914605 Bemused Observer
Bemused Observer's picture

The way things are going, that future revenue may consist of chickens and zucchini. You might even get stuck accepting someone's spare virgin daughter if they're out of chickens.

Tue, 07/01/2014 - 00:51 | 4912896 Kprime
Kprime's picture

yah, just like those detroit pensions. hahhaahahh lmao

Tue, 07/01/2014 - 08:11 | 4913285 Quinvarius
Quinvarius's picture

The second they abused the printing press to fix their problems, the FRN ceased to be backed by anything or a currency.  It is coasting on ignorance of many and the hyper expensive and extensive brute force of a few.  But the effort expended to not use the dollar will always be the path of least resistance, no matter how much effort or guile they use to force people to use it from now on.  The USD is shit money.

Tue, 07/01/2014 - 10:02 | 4913546 gcjohns1971
gcjohns1971's picture

"Of course the United States dollar -- fiat currency though it be -- is backed. By what? BY YOU and the check you write every year on April 15."

 

No it isn't.

The dollar is not tied to me or to the quantity and quality of my labor, nor to anyone elses.  They can make as many digits as they like irrespective of those things.  Hence it is not backed at all.

It is (for the time being) REPRESENTATIVE of some quantity of American Capital (Labor, innovation, resources - anything concrete and saleable).

But it is the "Some quantity of" part that is the catch.   It is a wholly arbitrary amount, thus the apparent backing is illusory and becomes a merre representation as wrinkles represent age (though not any particular quanity of it).

Mon, 06/30/2014 - 23:04 | 4912691 pakled
pakled's picture

This just in:

 

George Orwell has just released the first update of his popular best seller, 1984, in 65 years. Very minor edits. A few updates to get in synch with modern technology, and a title change.

New title: 2024

Tue, 07/01/2014 - 05:57 | 4913147 grekko
grekko's picture

More like 2015.

Mon, 06/30/2014 - 23:27 | 4912753 shouldvekilledthem
shouldvekilledthem's picture

I appreciate precious metals but I don't think they can function as money efficiently. They complement bitcoin though.

 

Mon, 06/30/2014 - 23:35 | 4912769 JohnG
JohnG's picture

6000 years of history disagrees with you.

Tue, 07/01/2014 - 02:14 | 4913013 FinalEvent
FinalEvent's picture

6000 years is unimportant.

Since 300 years tungsten was discovered and opened some opportunities. 

Now you can counterfeit gold.

Also above and below supply is not known

 

Bitcoin fixes these problems

Tue, 07/01/2014 - 05:35 | 4913135 CHX
CHX's picture

If Bitcoin was not dependent on something like working internet infrastuctures and some sort of exchanges [where is/was Mt. Gox ?], I'd tend to agree. I'm following it with interest what happens on this front, as it has the right concept, but investing in hard to crack numerical problems? No thanks, but that's just me.

Tue, 07/01/2014 - 07:52 | 4913252 VAD
VAD's picture

"Bitcoin fixes these problems."

 

 

Until the electricity goes out.

Tue, 07/01/2014 - 14:34 | 4914583 Bemused Observer
Bemused Observer's picture

A currency you can only use if you have a reliable internet connection doesn't seem very safe to me.

There is no 'kill switch' on the planet that can make the gold in my stash disappear or make me unable to access it.

Tue, 07/01/2014 - 00:18 | 4912843 Bemused Observer
Bemused Observer's picture

Gold and other PM's impose discipline on the monetary system. THAT is what is missing from our economy today, discipline.

Not being able to print at will means that you have to be more careful about things like prices and values. You can't just shoot them to the moon and print enough to support them.

In a properly functioning system, prices should be coming down over time as productivity increases. That doesn't mean a poorer economy, just a wider distribution of cheaper to make goods. Technology should be reducing the hours needed to work, yet so strong is the desire for growth that much productive capacity is wasted. Gold would reveal that. Fiat currency allows some to perpetuate the illusion of ever-increasing growth through ever-increasing prices (values) which throws the whole thing out of whack.

Tue, 07/01/2014 - 05:55 | 4913145 grekko
grekko's picture

Discipline indeed!  It also limits the size of Empire.  We've all seen the charts of every commodity and Wall Street vs Gold.  They should do the same with Empires vs Gold.  I'm sure it would make an impressive chart. The blue line for USA over the past 45 years, the Red line for the Soviet Union, Green for Germany of the teens's-40's, Black for the Roman Empire, Purple for the UK during it's fall, etc.  Let's see how we all compare.

Tue, 07/01/2014 - 08:19 | 4913296 Quinvarius
Quinvarius's picture

You Bitcoin whackos can never just admit you are chasing digital beanie babies.  You don't even understand what it is, how it gets hacked, how the value is set on exchanges which cannot allow you to make withdrawals, or the flaws in it that ensure it will die on its own.  Bitcoin is merely an overcomplicated paypal system with a ridiculous appendage of digital tokens.  I can't decide if it is more like a mutant digital wallet or a mutant Alf Pog.  It is an evolutionary dead end in finance.

Tue, 07/01/2014 - 00:04 | 4912818 hairball48
hairball48's picture

Gold is money. Gold works as money now for the same reason it has for the last 4000-5000 years:

Pure gold is like an "unimpeachable handshake"; everyone trusts real gold as money for trading because nobody can't fuck with it or fake it....easily.

It's not perfect, but nothing better has been found in millenia.

Stack em bitchez!!

hairball

Tue, 07/01/2014 - 00:07 | 4912825 Bemused Observer
Bemused Observer's picture

Why do I "do" gold? Because it is the only thing out there that I have been able to buy for next to nothing, and then turn around and sell for a good price (sometimes a VERY good price) when I needed fast cash. It does this consistently, unlike other things where saleability fluctuates. I sell antiques and collectibles, and there is nothing that has performed like this over my lifetime like gold. There are times you can't GIVE away something that just years earlier was hot. But there is ALWAYS someone who buys gold, for a decent price for the time you are selling it.

If I needed say, a thousand dollars right now, for some emergency, I couldn't borrow it from a bank. I couldn't borrow it from friends or family, because everyone we know is tapped-out. I suppose if I was desperate enough, I could call Western Sky, but really, that's barely one step above selling a kidney...

But I CAN go to my 'stash' and pick a couple of necklaces and bracelets that I don't wear that often, and go to my 'gold guy' (who pays a very fair price), and walk out of his store 15 minutes later with a thousand dollars in cash, ready to spend. For jewelry that cost me under 10 dollars when I bought it.

As to money, the currency we use? Well, I remember the silver coins we used...they are worth a couple of bucks now. A quarter now buys nothing. A 1960 quarter is worth several dollars today. What gives it value is the metal content, not the "full faith and credit" blah, blah, blah. THAT is worthless now, as is the currency. PM's say "Put up or shut up" to fiat currency, and the dollar slinks away, hoping to go unnoticed.

Tue, 07/01/2014 - 00:32 | 4912871 Schmuck Raker
Schmuck Raker's picture

"2) Repudiate the debt. Since we also operate within a debt-based monetary system (in which money is lent into being by banks), default broadly equates to Armageddon."

Gets my vote!

"Armageddon"...."Schmarmageddon". It's never as bad as you think it'll be....

Tue, 07/01/2014 - 01:05 | 4912917 cobra1650
cobra1650's picture

If you want income, look at Closed End Funds, GGN and GNT.  They sell covered calls on gold miners (80%) and energy Companies (20%), providing 10% annual yield with monthly pay.   

Tue, 07/01/2014 - 01:20 | 4912938 thamnosma
thamnosma's picture

The Tylers should pick up on this tomorrow: -- hit and run, the new way to suicide

http://www.hangthebankers.com/jp-morgan-bankruptcy-lawyer-killed-in-hit-...

http://newswatch.us/another-jp-morgan-banker-dead/

Tue, 07/01/2014 - 01:55 | 4912989 intric8
intric8's picture

I teach my ten year old the importance of gold, the relationships and disparities in different currencies and principles of what fiat currency really is by playing modified blackjack.

The goal of the game is to buy all gold available (we use these yellow plastic toy blocks), devalue the opponents currency and turn it into fiat toilet paper. Each of us pick a countries currency at the start of the game, which helps him learn yen, pound, euro, etc. We use a fixed amount of monopoly money. The loser of each hand sees his currency devalue by .5. I also made up random cards to draw that affect the strength of a players currency; for example interest rate hikes, inflation, devaluation, etc. The person winning can take advantage of his stronger currency position by buying his opponents gold up whenever he wants. After we go through the deck, each player rolls a pair of dice and multiplies it by ten, which represents gdp earnings for each respective country for a year.

Its fun, and my boy is getting a firm grasp of these principles while really having fun. Still in beta though.

Tue, 07/01/2014 - 05:38 | 4913137 CHX
CHX's picture

Ah, global monopoly, and who owns the (most) gold in the end makes the rules? I like it. You should call it MonAUpoly.

Tue, 07/01/2014 - 09:53 | 4913521 gcjohns1971
gcjohns1971's picture

I want it!

I have been looking for a way to teach my kids.

Even the adult ones.

Tue, 07/01/2014 - 02:24 | 4913022 Lord Koos
Lord Koos's picture

Price controls, really?  Not working in the supermarket.

Tue, 07/01/2014 - 03:32 | 4913083 PeaBird
PeaBird's picture

There are only three ways of trying to handle a mountain of unsustainable debt

There is a fourth way, which has been done a few times before, and is alway the last resort when the option of "inflating the currency" no longer works, and that fourth option is to revalue gold higher. This can provide the liquidity to service debts, if need be, if the other 3 options are no longer pursued for various reasons.

Tue, 07/01/2014 - 06:59 | 4913186 Jack4952
Jack4952's picture

A "REVISED DEBT JUBILEE", such as that proposed by Australian economist Steve Keen, appears to me to be the best answer.

The short version (for the U.S.): The U.S. Treasury would issue each adult American citizen credits in the amount of (let's say) $500,000 tax free per person regardless of need. NO corporations would receive any such credits.Those people who owed debts would be required to pay off those debts directly to their creditors in full before they could access any balance remaining. If a person had NO debts, then he would have immediate access to the entire $500,000 tax free to do with as he pleased.

Banks and other creditors would lose nothing, but they would no longer receive interest payments as all loans would have been paid off, so they would experience cash flow problems causing many to fail. Too bad! NO bail-outs !!!

Second, inflation would increase greatly as all this new money chased available products, BUT this would spur investment in production facilities, creating new jobs.

DEBT FORGIVENESS is an ancient custom, long before the Bible was written, that was used to stabilize sociieties by preventing massive inequalities in wealth accumulation. And for thousands of years it WORKED !!!!

 

 

Tue, 07/01/2014 - 09:35 | 4913462 withglee
withglee's picture

DEBT FORGIVENESS is an ancient custom, long before the Bible was written, that was used to stabilize sociieties by preventing massive inequalities in wealth accumulation. And for thousands of years it WORKED !!!!

Debt forgiveness is just bankruptcy recognition. It is DEFAULT on a "promise to complete a trade". The DEFAULTer would and should be admonished by the marketplace as a whole. In the olden days there was debters prison. This just penalized both sides of the trade. The solution is to recognize the tainted integrity of the defaulter and making him display his deadbeat tendencies prominently to all prospective trading partners until he makes good on his DEFAULT. It's about "notifying prospective trading partners (the whole marketplace) of an implicit risk of doing business with this trader".

Tue, 07/01/2014 - 04:01 | 4913094 airborne 71
airborne 71's picture

As I have said before , Those who ignore history are doomed to repete it !  In the last depression in the late 20s thru the 30s then President Rossevelt outlawed the ownership and use of gold .  He then had every safedeposit box opened at every bank and took all the gold that was found ! Try to convince me that the current president will not do the same.   I will even go as far as to say that the current president will include all cash , stocks and bonds as well !!!

Tue, 07/01/2014 - 05:26 | 4913128 CHX
CHX's picture

<<< True (and it's the financial and geopolitical EOTWAWKI)

<<< No true, and Gold will be revalued (much higher, and holders of gold - indlucing the (knowing) ruling elite - will save their wealth into the next financial system; gold then flowes back to the CBs that do not have what they say they have currently, and the system will be safed, reliquified, and debts inflated away with the arrival of a NWO monetary system that will include gold in some form).

Tue, 07/01/2014 - 06:43 | 4913179 Jack4952
Jack4952's picture

That is why you should NOT store any precious metals in a bank "safe deposit" box!!!

Better to BURY your gold, etc. in several different places know only to you - preferably in several different countries.

What historians do NOT report is that great quantities of gold were NOT turned over to the U.S. Treasury as per Roosevelt's order. It was hidden (by rich and poor alike) and sold later at the revalued price. I know for a fact that many New Englanders, including my grandfather and some colleagues, sent their gold to Canada where it was sold off.

 

 

Tue, 07/01/2014 - 10:20 | 4913624 TeethVillage88s
TeethVillage88s's picture

I just heard it was only "Gold Coins",

So was it just US Gold Coins or did it include foreign gold coins, jewelry, and gold bars??

Tue, 07/01/2014 - 04:44 | 4913112 I Write Code
I Write Code's picture

I should own more physical gold, silver, and lead.  But I'm a bit afraid I'll accidentally lose the two and hurt myself with the last.  So I mostly stick with paper instruments, a few steel sharps, and a lucky rabbit's foot, though I note it didn't help the rabbit much.

Tue, 07/01/2014 - 06:01 | 4913149 grekko
grekko's picture

Right, it didn't help the rabbit, but the stew was mighty fine.

Tue, 07/01/2014 - 05:59 | 4913148 grekko
grekko's picture

Discipline is the word.  But how do you expect a neocon to have discipline?  They are too high on themselves.

 

Hey man, pass that thing over here.  I want to try some.

Tue, 07/01/2014 - 06:29 | 4913171 AdvancingTime
AdvancingTime's picture

During the "boom times" when asset values are going up lots of people think they are getting rich. In inflationary times government also does well as tax revenues grow. Not only does government get to spend the money they print, the side effects of inflation on taxes are good for government, though bad for their subjects.

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens. said John Maynard Keynes. As the central banks print like crazy to control interest rates on bonds they devalue the currency.

While there are not many Bond Vigilantes there are many Currency Vigilantes. Changes in the value of a currency directly affect "buying power" and the value of assets. Inflation, deflation, what is something worth? More on this subject in the article below.

http://brucewilds.blogspot.com/2014/02/when-will-inflation-strike_1.html

 

Tue, 07/01/2014 - 06:32 | 4913174 Jack4952
Jack4952's picture

The BANKERS and other PTB (powers that be) are NOT STUPID! They will definitley NOT be the ones "left holding the bag" when the U.S. dollar (FRN) collapses. A new currency will be introduced and the masses of people will be the ones who will be devastated.

But currency is only PAPER with fancy printing on it; and credits are simply digits entered into computer ledgers - NEITHER has any REAL value. Its value, as we all know, derives from the people presuming that it has value and thereby accepting it as "money".

For three years now we have accepted as payment ONLY PHYSICAL GOLD for our services (medical-related software) - all our contracts are denominated in ounces of gold, which is held in escrow by a third party until the contracted work is completed. (We realize that some countries forbid "gold only payment contracts", but should a client attempt to pay with currency, he will lose his escrow gold anyway - so why should be bother challenging the contract.)

Gold, silver, oil, food, farm land, buildings, gasoline, firearms, ammunition, water, etc. are REAL ASSETS: you can hold and touch them. We shun Bitcoin because it is simply code within computers, much like bank ledger credits. If the internet were shut down, POOF !!!! ... there go your Bitcoins!

When the PTB roll out their new currency, what will be your reaction? Accept it and use it? Or demand something of REAL VALUE for the products of your labor ?

 

Tue, 07/01/2014 - 09:03 | 4913375 withglee
withglee's picture

The problem with money is that comparatively few people understand it, including, somewhat ironically, many who work in financial services.

Understanding money begins with knowing what money actually is (and forerver has been and will be): Money is "a promise to complete a trade". Any other definition must be a derivative (or corruption) of this very basic fact.

 

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