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FT's Tett: Gold “Tangible” and “Clear”; People “Unnerved” About “Money” in “Bottomless Cyber Space”

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FT's Tett: Gold “Tangible” and “Clear”; People “Unnerved” About “Money” in “Bottomless Cyber Space”

Gillian Tett, markets and finance commentator and an Assistant Editor and former U.S. Managing Editor of the Financial Times, looked at the increasing concerns about money today and the benefits of gold in an important article on Friday.


Gillian Tett, FT Assistant Editor

The article’s introduction pointedly states:

“Ordinary people are unnerved about how money works in a bottomless cyber space. Gold seems tangible, clear and timeless”

She refers to numerous examples of how finite gold is taking a more prominent place in the public consciousness as a monetary asset and as money.

She mentions the Swiss gold referendum which will take place on Sunday and how at least a very large minority of the Swiss population prefer gold-backed currency to fiat. She also mentions Rand Paul of the U.S. Republican party who favours greater use of gold as currency.

She makes some important points regarding gold being tangible and finite in a world of trillion dollar central bank experiments and a risky “ethereal” or intangible cyberspace:

“Most ordinary people have no idea what central banks are really doing, with their trillion-dollar experiments. They are unnerved about how money works in a bottomless cyber space. But the beauty of gold is that it seems tangible, clear and finite. It also seems timeless, creating an impression of permanent, intrinsic value.

Of course, this image is – ironically – also an illusion. You cannot actually do anything practical with gold (as you can, say, with a lump of coal). Its value, like that of fiat currency, depends on social convention. But culture, as Greenspan now recognises, is a very powerful thing – especially in a world of finance that is rushing more deeply into ethereal cyberspace every day.”

We have long made the point that owning all your assets - whether they be investments, savings, deposits, crypto currencies or even gold in a digital format with dependency on a single company and its websites, platforms, I.T., applications, the internet and electricity is imprudent. 

This rise in interest in gold among the public is based on the fact that monetary affairs are completely beyond the control of average citizens.

Before the crisis of 2008, it seemed irrelevant to the average working person. Years of austerity are now causing average people to look more closely at the system only to find it incomprehensible and unstable. The growing divide between the super-rich and everybody else is leading them to conclude that the current system is shambolic and simply not working.

We find it very encouraging that Tett should put gold back on the agenda of such a widely read financial publication as the Financial Times. It may herald the start of a more balanced discussion of gold.

This seems possible, given recent developments, such as the ECB's recent suggestion that they may buy gold in an EU QE or with the Dutch central banks repatriation of a large amount of it's sovereign gold and, of course, the recent statements of Alan Greenspan himself.

The backdrop to her article was her recent interview with Alan Greenspan at the CFR whose comments reverberated around the gold blogosphere but was largely ignored by the mainstream media.


Alan Greenspan, Ex Fed Chairman

Greenspan, who chaired the Federal Reserve from 1987 till 2006 stated in this interview at the Council on Foreign Relations that “gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.”

Coming from the most influential central banker in recent history this was regarded as quite the admission. 

In Greenspan's early career he was an advocate of the gold standard. But during his long tenure at the Fed he was a practitioner of loose monetary policies - the very policies that a gold standard is designed to curtail.

Many now regard Greenspan as a primary, though perhaps unwitting, architect of today's monetary turmoil. Tett refers to a comment by a former colleague of Mr. Greenspan - dismissing his elevation of gold on the basis of his poor performance in the run up to the crisis.

While we agree that Greenspan's legacy is a tarnished one, we also recall his statement to Marc Faber at the New Orleans Investment Conference last month where he said "I never said the central bank is independent."

At that conference he also stated that the Federal Reserve was sitting on "a pile of tinder" and that gold would go "measurably higher."

Tett has a record of unbiased analysis and commentary regarding the gold markets. In 2011 she suggested that it would be "foolish to simply deride or ignore" the Gold Anti-Trust Action Committee (GATA). 

GATA's contention of manipulation of the gold markets have now been borne out.

Tett is highly respected both in journalism but also in financial and economic circles. In her previous roles, she was U.S. Managing Editor and oversaw global coverage of the financial markets. In March 2009 she was Journalist of the Year at the British Press Awards. In June 2009 her book Fool’s Gold won Financial Book of the Year at the inaugural Spear’s Book Awards.

In 2007 she was awarded the Wincott prize, the premier British award for financial journalism, for her capital markets coverage. She was British Business Journalist of the Year in 2008. 

Tett’s important FT article can be read in full on the FT here or for those without a subscription it can be read here.  

Get Breaking News and Updates On Gold Markets Here


MARKET UPDATE
Today’s AM fix was USD 1,202.25, EUR 966.59 and GBP 767.04 per ounce.
Yesterday’s AM fix was USD 1,196.00, EUR 964.67 and GBP 764.51  per ounce.

Gold dipped 0.2% in light trading yesterday  to close just above $1,196 as rising global equities reduced demand for safe havens. The other precious metals also closed lower, with silver slipping 0.1% while platinum and palladium gave up 1.7% and 0.4%, respectively.

EUR in USD - YTD 2014 (Thomson Reuters)

The dollar was firm ahead of U.S. economic data (GDP and consumer confidence), and the market awaits the Swiss referendum on central bank gold reserves for more trading cues on Sunday. A yes vote will lead to fireworks in the gold market and higher prices.

HSBC, commenting on the Swiss vote, says: "The impact of a ‘yes’ vote could quickly translate into prices and take gold as much as $50/oz higher. The impact on gold of a “yes” vote on the gold market could be notable. On a basic level, a ‘yes’ vote would require the SNB to increase bullion stocks. But it would also be a strong signal in support of the utility of gold and may help galvanize the bullion market, which has seen steep declines since the beginning of 2013.

Bullion prices were also lifted by news that China's net gold imports from conduit Hong Kong rose to 77.628 tonnes in October from 68.641 tonnes in September, as the world's largest gold buyer saw strong demand for jewellery and bullion coins and bars.

Holdings in gold-backed ETP’s rose 1.6 metric tons to 1,617.8 tons as of yesterday, gaining for a second session, while still close to a five-year low, according to Bloomberg data.
Silver for immediate delivery advanced 1.4% to $16.7237 an ounce, rising for a fourth day in the longest run of gains since June 26. Platinum climbed 1.4% to $1,221.63 an ounce. Palladium gained 0.5% to $796.25 an ounce.


Silver in USD - 2 Years (Thomson Reuters)

Sales of gold American Eagle coins from the U.S. Mint have already outstripped last November's total with nearly another week of the month to go, standing at 53,000 oz this month compared to 48,000 oz in November last year.

Silver Amrican Eagle sales are at 3.096 million oz, up from 2.3 million oz in November last year and on track for a record year of sales.
China’s gold demand remains very robust as seen in Shanghai Gold Exchange (SGE) deliveries and Hong Kong gold exports to China . 

China's net gold imports from main conduit Hong Kong rose to 77.628 tonnes in October from 68.641 tonnes in September as the world's biggest consumer saw strong demand for jewellery and bars. Total imports from Hong Kong to the mainland rose to 111.409 tonnes last month from 91.745 tonnes in September, according to data e-mailed to Reuters by the Hong Kong Census and Statistics Department.

Essential Guide to Storing Gold and Silver In Switzerland

www.GoldCore.com

 

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Wed, 11/26/2014 - 09:16 | 5490333 Dr. G
Dr. G's picture

I've asked myself many times.  What stroke did Greenspan have to go against everything he stood for and pull the crap he did at the Fed?? Ayn Rand could not have been any clearer on the subject and he knew her personally...

Wed, 11/26/2014 - 08:34 | 5490239 Notsobadwlad
Notsobadwlad's picture

I cannot think of any reason to trust Gillian Tett.

This article reads like a promo-piece. Hopefully ZH was paid well to print it.

Wed, 11/26/2014 - 06:11 | 5490107 vyeung
vyeung's picture

You cannot actually do anything practical with gold (as you can, say, with a lump of coal). Its value, like that of fiat currency, depends on social convention.

tell that to the BRICS and merchants that are willingly taking gold as money as payment for luxury items. When you can only view things through one eye it dosen't really paint an accurate picture. Waste of time reading the article actually!

Wed, 11/26/2014 - 05:40 | 5490090 Kina
Kina's picture

A no vote...and gold will be left alone.....MSM will say ...Swiss referendum fails, gold doesn't care.

A Yes vote will see strong immediate buying of the USD, trashing of gold as much as they can....MSM saying USD safer than gold.

Wed, 11/26/2014 - 03:50 | 5489991 FighterJetsGuit...
FighterJetsGuitarSolo's picture

I can agree that there is a cultural "obsession" with gold (I would argue for good reason), but one cannot say it is unpractical industrially or illogical as a monetary store of value. A lump of coal is just a pointless analogy. You don't compare diesel with steel, so why gold and coal? Gold is the most malleable and ductile metal, is non-reactive chemically and is a great conductor of electricity. That's why it is used extensively in electronics - you know, that industry that is largely responsible for the "technology" that enables so much of our "modern" lives? It's also rare, beautiful, stuffed full of cultural history and people's social behaviour towards it has been constant since time immemorial. Sure if she had made the comparison with say silver, palladium or platinum then we can have a discussion about the "usefullness" of gold in terms of other precious metals but this author is disingenuous to suggest gold has no practical applications because it's not a lump of coal and somehow decide that therefore it is just as big an illusion as fiat. Typical MSM bullshit article. It should be a crime to be this intentionally misleading. After that little gem I realised what drivel this article actually is and stopped reading the rest of it before my BP went ballistic.

Wed, 11/26/2014 - 04:10 | 5490014 Ghordius
Ghordius's picture

aren't you mixing up the arguments? just asking

in most countries on this planet, the "cultural obsession" meme about gold does not even fly

a logical store of value is something that can't be faked or replicated and is not consumed. meanwhile, storing it means you don't need it for something else. in that sense, gold is a logical store of value because it is "useless", or at least the stored quantities are not urgently needed somewhere else

the real argument for gold being a logical store of value is that it can "sit pretty" in a vault. silver is very much needed, at the moment

the real question is if you need a store of value in order to undepin a currency or a whole bunch of them. and that is a question of trade imbalances and competitive credit creation. in short, a question of trust vs greed

all in all, Gillian Tett is completely correct: gold is a question of culture. specifically, business culture, with a particular emphasis on time preferences. and monetary systems are cultural constructs, aka inter-group agreements

as in the most basic of libertarian arguments that in order to have someone to invest in the future, someone has to consume less in the present. and there comes the saver/investor, with a preference for something tangible but not giving dividends or something more or less tangible but giving dividends (i.e. productive assets or legal rights on productive assets) or delivering interest (i.e. debt)

Wed, 11/26/2014 - 07:40 | 5490093 FighterJetsGuit...
FighterJetsGuitarSolo's picture

I see your point. Gold is what it is because of the business culture of gold and not it's use in industry or cultural tradition. That is absolutely true.

But... I still don't think it's fair to say gold has no use beyond money/jewelery and is therefore as "worthless" as fiat (it's only true value being cultural). I think my whole defence was that gold has rare intrinsic value/attributes, while fiat has little or none beyond say kindling for your camp fire which is plentiful and common. Maybe I misunderstood the article but that's how I read the argument unfolding. Gold is just another illusion, we are led to believe.

I'm also not convinced that gold is not universally recognised as valuable stuff. Could you point out some populous countries or cultures that don't revere gold? It would be interesting to hear about those, perhaps I am just ignorant! :) I can certainly imagine that in some ancient isolated societies located where gold was plentiful it may have been worth less, but completely worthless I dont think so. Typically where gold was available it was prized for it's beauty.

There are many more people today who see gold as literally worthless than those who see value in it. Value is subjective between agents and is not constant over time. However, in an abstract sense one can imagine a minimum value to a commodity based on the minimum production cost. Add to that the demand value of gold's "uses" and you get a real, significantly positive, instrinsic value before cultural "influence". Paper with ink on it is not particularly costly to produce nor does it have much use.

Essentially, silver is not less valuable than gold because it is needed (demanded) more at the moment for whatever reason or because it is a lesser "durable/storable" good, but merely because silver is more abundant in supply (and also because it is easier/cheaper to mine) - gold is also relatively more often removed from circulation indefinitely which contributes to it's scarcity. It need not be silver, we could make a similar argument for any other commodity I suppose.

An investor buying gold generally does display the preference of future consumption versus present consumption, unless you're buying for athetic or industrial reasons. As to the nature of investment decisions re dividends, I think gold investment is made as a hedge against loss and not for the purposes of earning a dividend. So the motivation is a little different versus say silver or equities or whatever. Gold is a very strange even unique good because of that.

I believe price says everything. Maybe not so clearly as it used to, these days, but the price of things should ideally be a good summary of both supply and demand information - including more intangible things that are typically better left exogenous by economists. In any case I appreciate the mature discussion of the topic, thank you.

Wed, 11/26/2014 - 09:40 | 5490401 Ghordius
Ghordius's picture

don't get me wrong, what I mean is that King Midas started the greatest, longest bubble valuation ever when he floated the use of gold as money

the strenght of gold's valuation comes from the fact that it's recognized as valuable since millennia, which leads to the educated guesstimate that it will continue to be seen as such for further millennia

sure, communist countries can forbid it's use... but communism and other totalitarian regimes... fall, eventually, victims of their own contradictions in economic matters. the US tried a gold "prohibition" against it's citizens from 1934 to 1974, to no avail

"I believe price says everything" is a tenet of "market fundamentalism", though, imho. a sane, healthy market is not a given, at any time, and today's gold market is clearly not so

so no, I don't believe in "intrinsic" value of gold. I believe in the cultural part of markets, which leads to it's psychology, and the historic lessons of market manipulation not lasting for ever

btw, even King Midas had to back gold, when he spread it's use as material for it's golden coins use. he used... iron. this was in the Bronze Age, and iron smelting technology was not yet discovered. the only source of this then legendary material for weapons and armour was... meteors. in way smaller quantities then gold or silver

meteoritic iron was so the original valuable metal, so that Achilles clad in black metal was the matter for great poems, striking fear in the ranks of lesser equipped warriors, in which he could dance, nearly invincible, like a modern tank in butter

Sparta refused to switch to gold, and continued to use iron as currency, and so experienced the equivalent of a hyperinflation, to which they responded by... isolation from the rest of the Greek world's economy, and eventually decline. as in communism with a too weak token currency

the oldest Roman families continued to use iron rings as symbol of their senatorial rank up to Augustus' times

this would be the same fate of gold if suddently there was a technology akin to the Philosopher's Stone that would make it plentiful. eventually, we would forget why it was valuable at all, in the same way as iron

Wed, 11/26/2014 - 03:11 | 5489969 theyjustcantstop
theyjustcantstop's picture

i hear good news for gold, netherlands+, russia+, china+, india+, all asia+, swiss?, france?, germany?.

timing markets, the only ones that win there are large bankers, 50% of people working in dc., what do politicians make themselves do, put their money into trust during they're terms, they just have goldman sachs as trust managers, as a good as the cattle market in arkansas.

 

Wed, 11/26/2014 - 01:31 | 5489874 lasvegaspersona
lasvegaspersona's picture

'or even gold in a digital format'

This is not gold, it is just another dollar backed paper asset...the gold that will protect you cannot be held by others...

Tue, 11/25/2014 - 22:59 | 5489521 Chat_noir
Chat_noir's picture

Gold is still in a race to the bottom with Oil.

Who is the most ridiculous ? Goldcore ? or PeakOil ? or Tyler dancing everytime SP trades down 10 ticks ?

I almost forgot Phoenix Capital whos been saying smart money has been selling the SP since 1300, or was that since 800 ?

Tue, 11/25/2014 - 22:57 | 5489511 Chat_noir
Chat_noir's picture

they mispelled her name. Its not Gillian Tett, its giant tits

Tue, 11/25/2014 - 22:57 | 5489509 Chat_noir
Chat_noir's picture

The impact of a ‘yes’ vote could quickly translate into prices and take gold as much as $50/oz higher. The impact on gold of a “yes” vote on the gold market could be notable. On a basic level, a ‘yes’ vote would require the SNB to increase bullion stocks. But it would also be a strong signal in support of the utility of gold and may help galvanize the bullion market, which has seen steep declines since the beginning of 2013

 

50$ higher ? good grief for those who bought at 1900$, 1800$, 1700$, 1600$, 1500$, 1400$

Tue, 11/25/2014 - 23:10 | 5489557 TheReplacement
TheReplacement's picture

That's exactly what they want you to think.  Stop it.

Tue, 11/25/2014 - 21:23 | 5489157 joego1
joego1's picture

I love her points.

Tue, 11/25/2014 - 23:10 | 5489553 TheReplacement
TheReplacement's picture

Too bad she has to die.  At least the nails are pointy.

Tue, 11/25/2014 - 20:41 | 5488972 honestann
honestann's picture

Yes, essence, recent mainstream babble about gold does indeed seem "staged".  The question is, were they forced into this position because the paper manipulation has been pushed close to the point of breaking, or for some other reason?

I suppose, if the western governments of the world were about to steal all physical gold AGAIN, they'd have to modify their "ancient relic" claims somehow, since obviously no plausible reason can possibly exist for "stealing all physical gold" if gold is nothing but an "ancient relic".

But yeah, something is up.

Tue, 11/25/2014 - 19:23 | 5488589 essence
essence's picture

Any writer for the Financial Times will only go so far as the editors (owners) permit them.
FT has a history of being status quo and anti-gold.

(and what's with the big picture of Gillian Tett. The fact that she's relatively young & attractive wouldn't be a factor now, would it?)

Ergo ...what's the agenda? Frankly I'm in the camp that our present situation is staged, that the elites intend to bring down the present structure in a controlled demolition in order to institute a new system that gives them a better, more comprehensive grip on the masses, a system more in tune to where the world now lies. And yes, that includes China/Russia (hey, far as I know, the russian/chinese central bank heads still continue to go to the bi-monthly meeting at the BIS, they still talk up the need for the IMF and fiat SDRs, you don't see anyone in russia/china talking about the need for balanced budgets, the need for transparency, the need to stop cronyism, the need  for sovereign governments to stop paying interest to a central bank.

This slow awakening to gold seems staged. No one from the main stream covers the REAL problem and that is our monetary system and governments have been hijacked by control freaks who use FORCE to get their way. No one in the main stream is admitting that suffocating government and a rigged banking system is the root of the problem.

Is anyone so naive to think the elites wouldn't front run the public's revulsion with fiat and in true Hegelian dialectic manner be there presenting a "solution" when the shit hits the fan.

CONTROL ...  is most important thing. Even better than wealth.
First thing I look at in any new development is ...who now has more control.

 

 

Tue, 11/25/2014 - 23:28 | 5489600 Uchtdorf
Uchtdorf's picture

Perfect. On target. 100% right.

Tue, 11/25/2014 - 23:17 | 5489569 TheReplacement
TheReplacement's picture

China and Russia are not the same at all.  China is very much like the west except they seem to be stockpiling debt, gold, and meat sheilds.  Russia seems to be stockpiling gold without the debts and their numbers will probably rely on China.

Russia appears to be in very good shape barring some kind of major war that China sits out.  I'm not calling a cakewalk but I don't think Russia could handle Nato alone, numbers tend to tell and 600m vs 250m is a big disparity.

Russia seems to be playing the margins not because they want to but for one reason or another it is the least costly without compromising themselves.  Who knows what China is doing.

Tue, 11/25/2014 - 19:27 | 5488635 Aeternus
Aeternus's picture

Gillian looks like Sharon Stone in Casino.

Mr Silver himself David Morgan was on with Steve Quayle last night talking about her.

https://www.youtube.com/watch?v=zn-Cab0XRlw

Tue, 11/25/2014 - 19:42 | 5488706 DavidC
DavidC's picture

have you got the time he talks about her, I don't feel like listening to nearly three hours of the broadcast!?

DavidC

Tue, 11/25/2014 - 18:58 | 5488483 Spungo
Spungo's picture

I bet she receives a lot of dick pics. "She likes gold. I should send her a picture of my dick."

Tue, 11/25/2014 - 18:51 | 5488408 Tinky
Tinky's picture

Focussing on the Swiss gold referendum, the Dutch repatriation, or any other narrow variable is to miss the forest for the trees. When the dust settles – and it won't be too long now – the very same lesson that has been learned time and time again, and then forgotten by most, will become apparent. Gold will once again be widely recognized for what it is: a superior and time-tested store of value, and the ultimate "good collateral" in times of crisis.

Tue, 11/25/2014 - 20:16 | 5488874 Crisismode
Crisismode's picture

"... and it won't be long now"

 

How many, many, many times has this been promised

on ZH

only to see it drag on for days, weeks, months, years

and yet nothing happens

So many, many, many posters have gotten it wrong now on the timing.

WHEN DOES ZH FINALLY GET IT CLEAR   . . .

 

PREDICTING TIMING IS A FOOLS GAME.

 

Tue, 11/25/2014 - 23:18 | 5489574 TheReplacement
TheReplacement's picture

Yes but every day they are closer to being right.  Think about that.

Tue, 11/25/2014 - 20:43 | 5488981 Citxmech
Citxmech's picture

Predicting the date might be folly - but predicting the outcome isn't.

Tue, 11/25/2014 - 18:44 | 5488364 DavidC
DavidC's picture

Brainy and beautiful, another woman like Nomi Prins.

DavidC

Tue, 11/25/2014 - 23:19 | 5489577 TheReplacement
Wed, 11/26/2014 - 09:13 | 5490317 DavidC
DavidC's picture

Not her best picture!

DavidC

Tue, 11/25/2014 - 21:25 | 5489177 Creepy A. Cracker
Creepy A. Cracker's picture

Yeah... went straight to the pictures as well.  Scrolled down just to have Greenspan ruin my appetite.

Tue, 11/25/2014 - 20:38 | 5488941 Pinto Currency
Pinto Currency's picture

 

 

FT is one of the biggest anti-gold publications out there with decades of anti-gold reporting behind them - and Tett has been at the FT for 21 years as this has been going on.

After watching the paper market lever up 100:1 to manipulate gold and reporting NOTHING about this fraud, the FT are now at the last moment discovering gold.

Right up there with that psychopath Greenspan who has been instrumental in destabilizing global markets with gold rigging and interest rate rigging.

 

Tett: You are known by the company you keep.

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