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Gold, Global Growth, & The Schism In The High Church Of Bernanke
Submitted by Ben Hunt via Salient Partners' Epsilon Theory blog,

Everything under the sun is in chaos. The situation is excellent.
– Mao Zedong (1893 – 1976)
Forget it, Jake. It’s Chinatown.
– Chinatown (1974)
Language is conceived in sin and science is its redemption.
– W.V.O. Quine (1908 – 2000)
I am, as I am; whether hideous, or handsome, depends upon who is made judge.
– Herman Melville (1819 – 1891)
All -ism’s end up in schisms.
– Huston Smith (b. 1919)
What Asians value may not necessarily be what Americans or Europeans value. Westerners value the freedoms and liberties of the individual. As an Asian of Chinese cultural background, my values are for a government which is honest, effective and efficient.
– Lee Kuan Yew (b. 1923)
Two years ago, the new seven-member Standing Committee of the Chinese Communist Party Politburo – the most powerful political entity in the country – was introduced to great fanfare. All seven men walked on stage wearing a dark suit and a red tie, but to me the most striking aspect of their appearance was their hair. Yes, their hair. Their dark, immaculately coifed, powerful hair. Despite an average age of 65, not one of these men has EVER been seen in public without sporting a mane that would make their grandsons proud.
On the other hand, consider this handsome man, Bo Xilai. Once the princeling of princelings, the son of a Long March vet, Bo was enormously popular for his Redder-than-Thou politics and enormously rich from his mayoral “crackdown” on organized crime in Chongqing, a municipality with about the same urban population as New York City. To put Bo Xilai in a US context, he was richer than Michael Bloomberg and more politically ambitious than Rudy Giuliani, if either of those two qualities can be imagined. And of course, this 65 year old politician had the luxurious jet-black hair as befits a man of his position.

But alas, Bo’s political reach exceeded his political grasp. Undone publicly for abuse of office and a murder conspiracy, privately for his creation of a top-notch intelligence operation that spied on his fellow Politburo princelings (again to put in a US context, imagine if a mega-billionaire mayor of New York City created his own electronic FBI that could monitor everyone’s market activities … crazy, right?), Bo found himself on the wrong end of a show trial and is currently living out the rest of his days in a Madoff-style cell. How do we know that Bo is gone for good, that he has lost whatever political support he formerly commanded? Because they took away his hair dye. He’s “gone gray”, as they say in the Chinese political lingo, portrayed to the world as a frail old man who not only lost his freedom but much more importantly lost his mojo.

Patrick Henry famously said, “Give me liberty or give me death!”, a sentiment that makes sense in Western political culture but is met with puzzled looks in the East. Personal liberty is, in an important sense, everything in Western political culture. In Chinese political culture … not so much. On the other hand, signifiers of personal potency – like maintaining dark hair – have enormous meaning in China and, at times, a diametrically opposed meaning in the West.


Okay, Ben, kinda interesting in a cultural anthropology sort of way, but what in the world does this have to do with investing?
Simply this, and it’s a core Epsilon Theory tenet: the meaning of events and market signals differ hugely from country to country, tribe to tribe, generation to generation. Ferguson does not mean the same thing as Hong Kong. Hong Kong does not mean the same thing as Tahrir Square or even Tiananmen Square. Monetary policy does not mean the same thing in Beijing as monetary policy means in Washington, which in turn does not mean the same thing as monetary policy in Paris or Rome. But we have an innate tendency to act as if these signals DO mean the same thing, and we can totally wrong-foot our investments as a result.
The biggest thing happening in the world today is the growing divergence between US monetary policy and everyone else’s monetary policy. There is a schism in the High Church of Bernanke, with His US acolytes ending the QE experiment in no uncertain terms, and His European and Japanese prelates looking to keep the faith by continued balance sheet expansion.
That divergence plays out mostly in exchange rates, and it has three HUGE implications, one for investment strategy selection, one for global growth, and one for … (gulp!) gold.
First, this is great news for global macro strategies and their low-cost, populist cousins, so-called “alternative beta” strategies. Global macro performance has been absolutely atrocious over the past five years, driven primarily by a coordinated global monetary policy regime that squeezed out the historical patterns of difference between geographies and asset classes. Now that monetary policy is uncoordinated, with every major economic region essentially fending for itself, global macro and alternative beta strategies have “room” to work. To be sure, some of these strategies will still be confounded by an investment regime where monetary policy trumps economic fundamentals at every turn, but the sine qua non for ANY active investment strategy is distinction and dispersion. For the first time in more than five years, we can see this sort of distinction and dispersion in regional macroeconomic policies, giving traditional global macro strategies at least a chance of success. Vive la difference!
Second, this divergence in regional monetary policy creates enormous strains on the tectonic plates of modern international trade – currency exchange rates. In the absence of a re-convergence of monetary policy I don’t see any compelling reason why recent dollar appreciation should slow down, much less reverse itself, with the obvious consequences for US S&P 500 earnings (negative), commodity prices and commodity-related securities (negative), most EM markets (negative), and European and Japanese earnings (positive). But the greatest risk for global economic stability from a dollar on steroids is, for my money, China. Why? Because as I’ve tried to point out in prior Epsilon Theory notes (here, here, and here), China’s political stability depends on economic growth – it’s the mojo of the Party just as surely as jet-black hair is the mojo of Party leaders – and Chinese growth depends on exports. So long as the yuan is effectively tethered to the dollar, a stronger dollar means a stronger yuan, which means weaker exports to Europe, Japan, and EM’s. Sure, it’s cheaper now to buy more iron ore and copper, so I suppose you could build another ghost city or two to keep the growth train on track, but the Politburo’s only serious answer to the politically existential question of growth is to sell more advanced products to more people, most of whom don’t live in China. That means selling medical devices to Japan and telecom equipment to Germany, tasks made much more difficult by a stronger dollar/yuan. To be clear, I do NOT see some imminent economic collapse in China. But growth is much less certain in China today, and that’s a political problem that the Politburo will stop at nothing to fix. I expect the 180-degree shift in Chinese monetary policy that began this January and paused this summer to accelerate again, which in turn will accelerate political tensions abroad with the US and Japan, as well as political tensions domestically with the mega-rich princeling families. And speaking of domestic political tensions …
Look, I don’t think the meaning of Hong Kong – even to the participants – is some pro-democracy uprising a la the Arab Spring or any of the “color revolutions” our media is so quick to christen. Maybe if we start to see fewer English-language signs and fewer teenagers lifting their smartphone “candles” I’ll change my mind, but right now it seems a lot more like a tepid expression of political identity than a determined effort by determined citizens to change the political system at a fundamental level. This isn’t a release-the-hounds moment like Deng believed Tiananmen Square to be, and it looks like the Gang of Seven in Beijing have decided as much with new orders to pull the police back and let the protesters block traffic and annoy everyone in the city who just wants to get back to business.


But I do think there’s a deeper implication of the Hong Kong protests, one likely to be missed by Western investors who want to project a Western meaning on the events taking place. I think the most important lesson that mainland leaders in the CCP and PLA will take away from the Hong Kong protests is not that the population must be brought to heel, but that they can’t be trusted, that they’re not really one of us. And that’s okay to a certain degree … the potential of “contagion” from Hong Kong to, say, Chongqing seems really remote given the State’s control over media and information flow … but it’s not okay if the “transmission wires” of Hong Kong’s financial system can’t be trusted. Hong Kong is an indispensable financial intermediary for the Chinese State, and I have zero doubt that Beijing will move to cement their control over the sinews of real power here, by any means necessary. One of those sinews of real power is the Hong Kong dollar, which means that Hong Kong monetary policy and the Hong Kong Currency Board – already reduced to a semi-independent satrap – is about to make the transition to full-fledged puppet. This lesson won’t be lost on the mega-rich Chinese princelings, either. The days of parking your mainland wealth in Hong Kong are now over, as it’s no longer a safe haven from the long arm of the CCP. Let the capital flight begin, and watch out below for the Hong Kong dollar.
As for my third point – the implications of monetary policy divergence on gold – I’m always reticent to write about gold because it incites such passion (and I don’t just mean the gold bug camp … poke pretty much any academically-trained economist and you will unleash a furious anti-gold tirade). To be clear, I believe that the meaning of gold today is NOT as a store of value but as an insurance policy against central banks losing control. With market faith in the Narrative of Central Bank Omnipotence at an asymptotic top, the price of that insurance policy – call it $1,200/oz – is as low as it’s going to go. And now with a schism in the High Church of Bernanke, monetary policy divergence, and growing pressures on the tectonic plates of exchange rates we have catalysts for both a generic and geographically specific central bank loss of control.
Now I understand that gold means different things to different people, and to the degree that gold trades as a commodity or a dollar-denominated store of value it can trade cheaper as the dollar advances. I get that. But I don’t think that’s been the principal meaning of gold for the past 5+ years, and if you think as I do that this is the beginning of the end for the Golden Age of the Central Banker (or at least the end of the beginning), gold is pretty interesting here.
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this is falling the fuc( apart...
pretty smart, those pm bugs...
they called it right...took 30 years...but they were right...
In the end, only gold and silver will shine.
It's the ore that gets the whore.
And vice-versa.
Ah it's Thursday must be a bullish precious metals article. Talk about propaganda and brainwashing. Hows that India festive season/China hoarding/ Comex lying/ CB vault empty/ Hyper-inflation/ Fuck Bernanke/ is a store/not a store of wealth/is money/ isn't money going for the sagging price of Gold and Silver. But now it's another sign of hope...it's all about central back trust, that'll get it to $5000 just like **** Sprott-sinclair-celente-faber...........n said it would. What a crock.
"To be clear, I believe that the meaning of gold today is NOT as a store of value but as an insurance policy against central banks losing control."
What a contradictory statement. What is the "insurance policy" aspect but a protection of wealth (i.e. "store of value")?!
Mind-boggling.
I stumbled a bit over that one too. I think he means that *today* the "store of value" is bonds - and gold is the insurance policy in case (when) bonds fail - THEN Gold will be come the sponge that soaks up nimble wealth during the transition and possibly far beyond as the long term store of value it has always been before the western world ran amuck.
Is that what this screed says? Thanx. Cuz I'm not about to read that much crap. If so, I kind of see what he's talking about and kind of agree. "Nimble wealth", huh, lol.
True. Money printing is only prolonging the agony. But Bernanke was right about a few things. The environment is deflationary. Furthermore, gold isn't money. You'll just have to put that info in your pipes and smoke it.
From the article:
"The days of parking your mainland wealth in Hong Kong are now over, as it’s no longer a safe haven from the long arm of the CCP. Let the capital flight begin, and watch out below for the Hong Kong dollar."
Any Chinese investor who wants a beautiful condo overlooking the ocean -- and will pay a LOT for it -- drop me a line... Park some of your money in the USA, Fish Ez!
Geez.. I keep saying it.. in multiple comments..
Even at criminal suppressed pricing, I have tubes of <1964 Washington quarters…
Each quarter dollar of which will still buy a gallon of gasoline after a brief stop at the coin store.
WTF else does anyone need to know about the “store of value” element of money?
And OK,, OK
If colored shampoo was good enough for Reagan, Saddam, Jim Lehrer and Myron Wallace, it’s good enough for me.
"I think he means that *today* the "store of value" is bonds...[ ]"
Bonds are papers that promise to buy more paper. That's a store of value? Hmmmm...
papers that promise to buy more paper. That's a store of value? Hmmmm...
It works when a stable and predictable rule of law continues to be stable and predictable. Using gold in an environment where the rule of law has broken down can (and will likely) be a very dangerous activity. What's more, depending on what it's traded for, it can only be used once for consumables and if used for land / income producing assets, a functioning rule of law will still be required which would likely include recorded debt instruments, a la fiat.
True value is not in the gold, but in the trustworthiness of a society's ability to execute justice. The eye given in payment for the eye taken in wrongdoing may appear to be a worthless bloody mass of goo in the hands of the persons involved in the immediate judicial procedure, but it's of enormous value for the future well-being of all.
jmo.
ok.. so now I read through the thread..
same darn thought process, but the above was really good.
..but I am starting to think that the game might be changing with some of the new (crypto/distributed/TRUSTLESS) technologies.
..and OMG, man.. please at least get Pinot Noir in the box.
@ meatworm: I didn't say that I was in agreement with him, if what I wrote was indeed the correct interpretation. Bonds are debt. I cannot really see an "asset" that can go from 100 to 0 in a split second, when the debtor decides he cannot or will not pay, as a trustworthy store of wealth. The nature of a system based on debt that carries compounding interest is that it must continuously expand to survive long term. Fluctuations in population size and availability of natural resources makes that system inherently unstable - which makes bonds a questionable store of value over the long term in my opinion.
so now we know two things 1.) what he believes, and 2.) he can't think worth baby poop. oh, well. onward and upward.
They say this system is going to fail. All systems eventually do. The point is that the crisis is near and now is the time be prepare. All you can defend against that with is 'it isn't going to happen because it hasn't happened' but it has always happened except in the current one and that is because there is always a new one to replace the one that just failed.
And you think it is dumb to be ready (if possible) for it? That seems silly considering the extremely minor risk involved with that preparation. When was the last period of time, under the FedRes system, that gold went down 30% and stayed there for a prolonged period of time and never ended up at least doubling? My seat-of-the-pants chart says never.
Just what facts can you point to that backup your point of view?
Ching chong, hong kong, gold and silver strike the gong. Dollar yen euro, headed toward zero.
"$1,200/oz Gold– is as low as it’s going to go." I think so , too! Bought some silver & gold today because it's basically at cost.
Time to buy silver in a big way. 3 to 4 times in 15 months, no brainer. Zorba has spoken.
warning: the cost of getting it out of the ground has no bearing on gold's value.
"We surveryed 100 people and put the top 5 answers on the board."
"Name a word that best describes the above posters comment."
"Hurry...... 5 seconds !!"
"Intelligent!?"
Survery sezzzzzzzz .....!!??
BZZZZZZZZZZZZZZZ !!!
"No....no... I'm sorry .... the answer we we're looking for was, idiot."
Actually fucking idiot, but idiot will suffice
lol.
Loved you on "Hollywood Squares" btw.
another computer screen covered...
in spit up coffee..
damn it, xtop23...next time yell,....incoming...
THAT WAS THE FUNNIEST THING IVE READ HERE ALL WEEK>>>>
CNR was great on Match Game ... with Gene Rayburn.
Ok, genius. Imagine an element, bullshiitium, and it takes $100000 per gram to get it out of the ground.
Is it worth $100000 per gram? No. So thinking it's worth $100000 per gram just because it costs that much to extract is wrong. wrong!
To literally spell it out: if the cost to extract gold goes to $9000 per oz, gold can be worth $1000 per oz (due to low demand) and instead of mining more, people just trade what is already above ground.
First .... read Blammo's post just below mine.
Second .... read your own statement that began with; To literally spell it out, and ended with, people would just trade what is already above ground.
Sounds like the very concept of supply and demand to me and a pricing mechanism operating as it "should."
Were the price to remain at such absurd levels, they would rebound to a "value" that represented the underlying asset ( this most certainly would include the minimal "out of the ground" costs ).
Of course the paper games, that I "think" you were alluding to, can disrupt such a pricing mechanism in the short term, fundamentals will always win out eventually.
Get it?
No. If something costs more to extract than it is worth, it doesn't affect the value of that item.
If it costs me $10 dollars to manufacture an M&M candy, nobody will pay me $10 for it because an M&M candy is not worth $10.
Value is measured solely in the benefit provided by a good or service; the cost of the good or service does not affect its value.
I posted that warning in case some people here thought that "cost of extraction" price level is a safe level at which to buy gold in the mistaken belief it can't go below that price level. When the cost is higher than the benefit, the good or service is not produced.
I knew what you were trying to communicate potato.
And I agree with the assertion that to assume that the "cost out of the ground" is the hard floor for PM pricing is obviously incorrect. We have been below it before, and it is certainly possible, that we will breach it yet again ( depending on the miner being discussed ).
These are the results of paper games not a true expression of value.
If something costs more to extract than it is worth, it never enters the marketplace for purchase.
The remaining above ground stockpiles, as demand continued to remain high would eventually be depleted, and the price would increase until it reached such a point where it was again profitable to resume mining operations.
So, the "out of the ground" costs DO matter, as long as demand outstrips supply.
Certainly you could have a fire sale where an item is brought to market below the cost of production in an attempt to possibly clear inventory, "get out of the game", or purposefully crush the price.
It is for that very reason that PM's are recognized as a store of value. Their rarity and the inability of them to be produced in the quantities necessary to create such an environment.
The divergence of the paper versus the physical pricing of PM's will be brutal when the wheels finally come off.
I think a lot of folks are missing the real crux of the issue..
It has nothing to do with value in the real world of small minds.
..in the traditional fed/f’n central bank reserve thinkspace, gold is crucial.. IT DETERMINES GOVERNMENT BOND PRICES.
Don’t rely on my thinking; rely on mental geniuses such as Greenspan and Summers.
http://www.youtube.com/watch?feature=player_embedded&v=T0jpso4jDC4
@potato...
"cost of getting it out of the ground" is also a moving target. It moves up & down with price. Watch the "average" cost go down when the price goes down, and they close mines with low grade ore deposits. Fundamentals are such bullshit. Look at a chart.The price won't go up big til "they"scare all the little guys into selling to them.
Thank you for posting that so I didnt have to. Sometimes.... well "most" times... people make me want to rip my fuckin' hair out.
@potato - It's fight club my man..... or at least it used to be.... I was pretty mild in response to your statement. We've all said dumb shit...... 'cept for cougar maybe.
Was on a railfan trip and spent a long evening talking to a worker at the CC&V AngloGold mine. He's a machinist, so is defintely not front-office. His comments were along the lines of "Fuel costs are $400/oz" and "eating us alive". The mine is in debt at least $800M to Anglo for development in the last few years. New debt mentioned without a number - I think (feel) total is about $2B. Repaying this per ounce? Who can say, buy it makes the all-in cost seem pretty darn near 1200.
We both agree price has disconnected from supply and demand, but we have different views about which direction the price is skewed too. I mention the daily price action in the COMEX with flippin' dumps at illiquid times and he has absolutely no idea why that would happen.
FYI to all stackers. Sorry I couldn't get him to be more definite.
you're lucky he didn't have some story to tell you; you sound like you might have believed it.
And if you actually knew what the "cost" was' which of course, you do not; would it be predictive of the price movment in the next 90 days?
gold could go down lower!
and people in the stock market are screaming SELL, SELL MORTIMER!! jesussss! LOL
But, check this out.... Big trader took the put call spread today a whopping $2 Million dollar trade! HOLY HELL!
You can see here ==> http://bit.ly/1B4K0wk
trend following is a fools employment and never ends well. you must sell when the all time highs are made and everyone tells you you are mad. have you not observed the people here telling me how deluded I am when I sell the "new highest price in the S&P"; but it's just simple arithmetic; sooner or later I'll be right; meanwhile I have only trifling losses, offset with nice profits. I rather like smiling contentedly to myself while everyone is getting excited about the "impossible market drop".
Is it your desire to be emotionally stimulated? perhaps you should try monster truck rallies; I understand they are very exciting.
The article is right, of course, the devil is in the details, and not only the devil by a lot of the meaning of things. it's part of the perennial error of the non-academic to lump things together and to be althogether too casual about contextual detail. The civilian finds the academic irritating and tiresome because he insists on careful definitions and limting conclusions to one, or a small group, of occasions, or locales. There's a wonderful pun built into the Euro; the currency contains ultraviolet markers made of "Europium"; one of the Lanthanides. The Euro is unique; and generalizations are dangerous.
WTF?
Read it again.
I think the author understands how China's leadership really thinks about Western leaders and bankers. I also think that the author understands the real difference between Bo Xilai and Xi Linping and how not only Chinese oligarchs should look over their shoulders but how this also applies to Western meddlers hiding in Hong Kong.
Further, he explains that the function of Gold has changed over the last 5 years - which coincides with a notable change in behaviour by the Chinese - and he hints that the decline of the reign of central bankers is at hand. Something that is closely related to the Chinese understanding of Gold, if I understand the message correctly.
Finally, he explains that the Chinese leadership has grown so far as to not take the bait from instigators and open a public flank, while diligently noting from where the trouble is coming in order to ensure a "fix" in private.
I thought it was an interesting read, but maybe I am just too dumb to see what many seem to think is missing.
the world is wise to the criminals who run the west. time draws short.
Agreed. I just hope that "the world" recognize the fact that not all inhabitants in the West are morally and intellectually corrupt.... when the hour glass is turned.
Make no mistake, Americans, we who follow the real news know that the citizens have lost control of their government, a small group hold the microphone, and all the numbers are phony. Everyone who matters knows 911 was symbolic to expressing what is obvious, "this is war."
Dub - sorry.
Is this the most convoluted article to ever appear on this site?
No, those are reserved for Phoenix Capital posts.
That was a tough, rambling read of an article in search of a point it never quite found.
I started to nod off somewhere around "monetary policy doesn't mean the same thing in China as it does in the US or UK or Paris, blah, blah, blah." My thought was "What? Yes it does. That's why they call it monetary policy in all those countries. Because it deals with the supply of money."
Huh? I started from the end.
You are better off investing in productive assets than non productive assets such as gold.
I bought into coal mining and ho li fuk was that a bad move
"investing", maybe. And that's a BIG maybe. Especially in this bizarro market.
"saving", no fuckin chance.
I'll take PM's, a remote piece of farmland, and a loaded AR-10 for that thanks.
What the fuck is this even about?
New ZH. There MUST be an article every half hour or less for clicks. I don't blame the new Tylers for wanting to make a buck and I can hardly complain given my free subscription, but it sucks. I am no expert in these things, but I would think the new Tylers would be smart to go back to the original formula. Why everyone feels the need to fuck with something that works is beyond me.
Ad display is up 400%+ from when I first started to read here. Just like every other site I move away from, less content more bullshit and stupid ads about Ukrainian mail order brides.
Adblock Edge, NoScript, Ghostery are your friends.
Well, they are "educated, refined and cultivated".
They may be looking for a War free zone (home)
Listen Rand.
Tyler(s) have a "GRANT" used to fund the place. The increased speed at which articles are published is for a reason.
The web"MASTER", "Cornelius" can't figure out how to prevent the buildup of comments on the right hand side of the page that is always seen in articles with high comment-count.
So. Tyler figured out if you publish more you get less comments per page and no fucking right hand build up!
"PROBLEM" solved.
Fuck. I've had my $3/day Indian worker "Steve" on this for weeks, and he told me it was for clicks. Now I look like a fool. I'm hiring smart Steves like you, and I have a generous pension program that includes you taking bathroom breaks twice a day. You can also call yourself "Grant," if you like.
Listen Rand.
Leave the comedy to "ME", otay?
Due to heavy call volume, I cannot respond to your post at this time. Your wait time is expected to be 35 minutes.
You've been doing that "Listen [insert poster's screen name]" thing for a couple of days now.
I've decided it doesn't work. Just sounds dorky and contrived.
"Why everyone feels the need to fuck with something that works is beyond me."
IMHO it is due to the "bar" being laid on the ground and anyone rising off the bed in the morning is already above par. Participation awards, no more bullying allowed in schools.(does not pertain to governments and or corporations because they are the REAL people!) but I am just an old crazy man who rants from time to time.
I enjoy your posts my friend.
"Why everyone feels the need to fuck with something that works is beyond me."
Isn't that human nature? To believe that "I" can do it better if "you" did it at all?
meh... Probably just the clicks like you say.
Not completely sure . . . but he may be suggesting the following limerick will soon be obsolete:
With stock ‘corrections’ disallowed,
protecting with gold’s disavowed
Buying each dip
and levering the rips
has clearly become today’s Tao
Hair duh.
Or maybe the fact that the theme of central bank coordination, which has dominated markets for the past 6 years is finally ending, and that with that divergence there may come the crash that everyone has been sitting here waiting for.
this is the first "too long" article i've read in its entirety in a while. it's pretty good.
i didn't think there were any downside risks to the HK dollar before reading this.
but how can gold go up if dollar getting stronger???
"but how can gold go up if dollar getting stronger???"
It's obvious if you read the article. Here, let me Google it for you. http://lmgtfy.com/?q=just+for+men+and+its+relationship+to+the+price+of+g...
I thought it was just for men gel. They put gold in that? no way...
It's therapy, it's a public service to this site. It's to stop Gold and Silver holders topping themselves.
Central Bank loss of control would be great.
As in Flounder great from Animal House, "This is gonna' be GREAT!"
China and the P.L.A. are not going to go quietly into the good night, there will be a fight and I fear for the people of Hong Kong and China who just want to have a decent life.
The rise of the BRIC's will likely mean the end of the Dollar as the reserve currency of the World.
China, India, and China value Gold highly, along with some weirdo's in the West (raises hand).
Do you still not have to lock your bike in China?
Locked bikes in the U.S.A. get stolen.
And savings, and bonds, and rights.
The path toward mediocrity was set up by Woodrow Wilson, expanded by FDR and cemented by Dubya and the Kenyan. Their staff, the financiers, the voters and bootlicking cum guzzling infiltrators (even on ZH: im looking at you headbanger) all need to eat shit and die like the true cunts they are.
Find a quiet town, know your neighborhood, have a weapon and protect your family. Everything else is beyond your control.
Yup, I have control only over myself.
And I meant Russia values Gold along with China and India - not China twice ;-)
This article assumes that QE is really ending and that there is not a stealth QE ongoing. Why wouldn't the FED lie about tapering?
The Fed lies about everything.
I'm always hesitant to believe an article that includes the new-age misuse of the word reticent. Reticent is taciturn, an emotion unsaid -- not undid, as commonly used today.
Gold is smashed because it's tied to Silver. Tin Man is much-needed in the physical form: virus-shredders, good/cheap circuit boards/framework of ASICS, heck, even new-age colloidal medicine is made from silver! "Smash paper silver and the metal will flow into the streets." There is much demand for physical silver now.
SLC to Denver the floor is $35 for physical. When can or do we decouple?
the thing i love about gold haters is they keep saying gold will drop to 400, or 500, and silver to 4 or 5. what they don't get is (1) there will be no sellers at those levels, and (2) nobody gives a horsefuck what they think.
Well, it should get more interesting once you understand several major factors that will ultimately affect gold’s price in a very dramatic fashion; factors such as 1) government insurance on bank deposits; 2) US Treasuries bought by foreign banking institutions; 3) the gold carry trade; 4) gold that may or may not be in Ft Knox; 5) “cash equivalents” that show on corporate balance sheets, domestically and internationally, (where it used to be simply, “cash”); 6) Mortgage Backed Securities (MBS, owned by the Fed) et cetera.
For example, “insurance on bank deposits”. By this, if a bank fails, all deposits over $250,000 are lost. This creates a major problem for large depositors (businesses and wealthy individuals; and led to the creation of so-called zero-balance bank accounts (they go by several names). By this device, balances in large accounts are swept into US Treasuries at the end of each day to protect against bank failures. This led to a major problem: there weren’t enough Treasuries available to satisfy this demand by domestic and international bank depositors. This, in turn, led to an astronomical demand for an alternative; such as MBS.
So, how are all these factors related to gold? They are all “cash equivalents” in that they are all economically and ultimately convertible into gold – and no one seems know to know it.
And then there is Red China, sitting with some $1.3 Trillion in US Treasuries, and very anxious about the situation. Why did they, soon after they took possession of the Panama Canal, organize an ALLIANCE among Mexican and Columbian drug cartels, Chinese Triads, Chinese communist party and several US government agencies (Congress, DoD, DoJ, DEA et cetera)? Are members of this ALLIANCE preparing for the day when they will put on DHS uniforms for the purpose of collecting on those US Treasuries?
Or, perhaps, they are practicing for a performance at the next Super Bowl?
Further, since the DHS is modeled on French Committees of terror (1792-4), the Judeo-Bolshevik cheka, and the Nazi Schutzstaffel, what possibly could its real, unstated, purpose be… and who could be more useful as assassins… native dopeheads… or members of the ALLIANCE?
Nice post, very amusing. It was called The Committee for Public Safety by the way
They will try and roll the dollar into the SDR before those things happen....
Whenever the banking mafia take full control of a nation or civilization they always destroy it**. I don't think its deliberate they just can't control their greed. In America's case I think they pushed the economy over the edge into rapid terminal decline too early before they had fully completed their transition to a new hive in East Asia and so they are thrashing around in a bit of a panic starting conflicts everywhere e.g. Syria, Ukraine and now stirring up the pro-democracy movement in China.
(**banking mafia dominance will always lead to an ever increasing concentration of wealth through their legalized counterfeiting of the money supply and the long-term effects of usury and its the excessive concentration of wealth that eventually causes a collapse in demand destroying the economy of the nation or civilization that's been infected by them. Then they move to the next tallest poppy and do it all over again.)
lickspitler you miss the point. Most people who hold precious metals want something tangible for their fiat. I may be wrong but I don't think they are hoping to see a crash- but in the event there is- holding something is better than nothing. If this bothers you it is your problem.
The Central Banks have brought this on themselves. Have you listened to any of the excerpts from the 47.5 hours of secret tapes of Goldman Sachs and the NY Federal Reserve regulators? It is sad what passes for regulation. Also for more information on how the banks have loaded the world up on debt and profitted while the people suffered read Nomi Prins 2014 book All the President's Bankers and let us know if you think the monetary system is in good hands. They have repeatedly pushed it to the brink and like a rubber band at some point it cannot snap back. In the past the bankers have staggered these events further apart letting the public forget the pain but 2008 is too close. I don't think they are going to be able to hold it together much longer.
Listen to the tapes- Goldman Sachs is doing a deal with an Italian bank to hide some stuff- get it off their books so the regulators there don't see it. Goldman was paid to do this but they were also told to clear it with the Federal Reserve regulators first. This didn't happen- an ok wasn't given. The bankers are destroying the very system they have profitted from- their hubris is palpable and I for one think being prepared is better than hope.
"When the going gets weird, the weird turn pro and start posting on ZH".
Hunter S. Thompson, if he were still alive.
I wonder if ol' HST figured out what was up about the time he was seeing some commercial success. Get your ass down to South America and write about how fucked up those countries are to take the focus away from from what was going on in the USA.
Hunter S. Thompson is alive. He will never die.
Ask any economist who is in charge of Wall Street...if they can't answer "gold" then they're the ones with the problem...not the gold bugs.
Since there is only so much THEORY that can be imemented under a gold standard...it stands to reason that neither economics nor Wall Street would ever wish to be constrained by "mere gold."
Yet Governemnts still determine it to be the ONLY arbiter of exchange.
How Wall Street determined this not to be the case sure is a mystery to me.
You do have the US dollar and it's status as the world's currency reserve.
Party like its 1945 right now?
The reason why ws economists are so against Gold is because Gold is the anti WS. It removes their ability to get something from nothing.
It would be like an engineer that builds bridges and someone found out gravity does not affect bridges if they used red paint on them. Everyone would use red paint and proclaim how smart they are. Then the paint peels and the bridge falls (in the same way the Bernanks economy will collapse).
I invented a machine to convert, or transmute, camel toe into gold, but it's not cost effective.
According to Louis Yamada (Legendary) the Gold and Silver bull markets are OVER. Done Finished. Her classical work over at King World tonight. Gold should stabilize at 600 to 700 and hopefully not go back to 250 an ounce according to LY.
No need to talk about PM markets anymore.
Shock News: Au & Ag go negative on kwn.
Anyone know which hospital Eric was admitted to?
"[...] my values are for a government which is honest, effective and efficient".
The male trout told to the female trout...
How about this, a case for physical gold.
I was talking to my Aunt the other day, I asked how much money she gets from the Gov... for old age pension.
Her reply was " well I get $200.00/month deducted because I have some investments".
So if you have no investments = no deductions from old age pension.
The West, East and Russia all had different paths through the 20th century. Bankers aren't going to unite the differing cultures. There is way too much history. To me it seems the West already knows the dream is over and are in defense mode; offering up the West as a sacrifice to cover their asses.
Correct me if I am wrong;
Bankers hate Gold for two reasons i. they cannot print it (like counterfit fiat) ii. they have to settle their debts between other banks ( Central Banks) with it (they cannot use counterfit fiat).
Doesn't the above tell you right here that it is MONEY. How about the quote below,
“Gold Is Money, Everything Else Is Credit" JP Morgan
Just think for a moment, the only thing that gives fiat money value is the non enlightened or non believers think it is worth something.
The worlds bankers cannot have you the "people" be enlightened into knowing that it is not money, that you are all being conned into trading your freedom for worthless paper.
It is for these reasons that Gold must be put down, and kept down in price. Once the animal gets out of the cage it will never be caged again, and the gov's and bankers will be thrown out of town.
Waiting for the birth of a currency backed by something other than the US Military!
http://blog.milesfranklin.com/gold-is-money-everything-else-is-credit-jp...
I have no clue what this article is about, but god damn Obama aged quickly. He must have seen some serious shit. They show him the video of the CIA shooting Kennedy. They tell him we really are ruled by reptiles. He shakes hands with Bin Laden, who turns out to be a British special agent with a costume and a camera he found at the flea market.
Or he just gets sick of weird attacks from the opposition. Reagan wears retarded clothes and gets a pass. Obama wears a relatively ok suite and he gets called a fag. He got all kinds of hate for being seen with some crazy religious leader; meanwhile, there are pictures of McCain hanging out with Al Qaeda and Rumsfeld shaking hands with Saddam Hussein, and nobody seems to care. Then people accuse his wife of being a transsexual (yes, really). Then people say he's a foreigner because Hawaii is not part of the US. Some of these attacks are so stupid that there's no way to respond to them. How do you tell someone that Hawaii is part of the US? You can't. Eventually you give up and say "fuck this, I'm going golfing" and you never set foot in the office again. IIRC, he had a record number of death threats in his first year. Everyone has a breaking point. After the millionth letter saying you're a gay Hitler, you might start to hate the public. A lot. Then you want to give the government more power. All of those people who sent fucked up letters will be tracked down and sent away to be tortured. Fuck those people. How dare they call me a fag. I looked good in that suit. I'll visit their cell in Gitmo and say "who's the fag now?"
This statement only makes sense if one earn USD's, either as income or capital gains or theft/graft. Even then, it only makes sense in the previous 3 months with the USD rallying hard. Three months is a blink of an eye when viewed with a long term lens.
It is not wise to view the gold market through the blinkered prism of just one currency, and then extrapolate that out as if everyone in the global gold market views it the same way. After all, gold is traded globally in many currencies.
Gold is a store of value because it is an insurance against the mathematical certainty that the current CB policies will end in disaster. Gold has all the properties of honest money, and it's current price - actually one should call it fiat conversion RATE - is roughly its current (or even below) cost of production. Its future cost of production will go UP due to increasing costs (higher energy costs, lower ore grades, fewer discoveries of new high-quality ore bodies, and mismanagement of mining companies). And the bonus: 100+ times more paper gold is traded than there is physical metal available at these prices, and this paper gold - available in unlimited amounts - sets the price. Same is true for silver, where the situation is even worse.
The dancing dervishes of the Oligarchy construct, desperately looking for solace like their obscurantist predecessors, in their twirling, swirling hot money placements.
So much money, hundreds of billions --nay the odd trillion-- market funds, looking for places to stash their hoards.
Looks like they will have to go full retard like the Mafia barons and start stuffing their ill gotten gains in their matresses !
Pimco, where are you ?