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"Gold Is A 6,000 Year Old Bubble" - Citi's Dutch Strategist Throws Up All Over Gold, Days After Dutch Gold Repatriation

Tyler Durden's picture




 

Citigroup may have been unable to prevent the Netherlands from repatriating some 122 tons of "a fiat commodity currency with insignificant intrinsic value", or in the words of Ben Bernanke, "tradition", but it sure won't stop that erudite expert on the timing of Greece's exit from the Eurozone, Willem Buiter, from doing all in his power to throw up all over the "fiat currency" known as gold. So with Buiter no longer predicting with certainly just which month in 2010, 2011, 2012 Grexit will take place, here are his bullet points that make readers scratch their heads in wonder:

  • Gold is a fiat commodity currency (with insignificant intrinsic value).
  • Bitcoin is a fiat virtual peer-to-peer currency (without intrinsic value).
  • Gold and Bitcoin are costly to produce and store.
  • Gold as an asset is equivalent to shiny Bitcoin.
  • Central bank fiat paper currency and fiat electronic currency are socially superior to gold and Bitcoin as currencies and assets.
  • There is no economic or financial case for a central bank to hold any single commodity, even if this commodity had intrinsic value.
  • Forbidding a central bank from ever selling any gold it owns reduces the value of those gold holdings to zero

Scratching... because some may ask if gold is indeed such a worthless insignificant "fiat currency" (don't ask), then why just two months ago, did Citibank rush to be "reclassified as a spot Market Making Member of the London Bullion Market Association with effect from today, 25th September, 2014... In order to qualify as a LBMA Market Maker, a company must offer two-way quotations in both gold and silver to the other Market Makers throughout the London business day." Could it be that gold actually has some value to Citi, if nothing else than pocketing commissions from traders, now that the bank's rigging of everything from Libor, to FX to, drumroll, gold, is no longer possible?

Here are some of the more amusing punchlines from Citi in its blitz-propaganda campaign aimed at the undecideds in the Swiss gold referendum:

On November 30th, 2014, the Swiss will vote in a referendum on a popular initiative 'Save our Swiss gold' (henceforth the Gold Initiative). If the Gold Initiative passes three consequences follow: (1) the Swiss National Bank (the SNB) must hold 20% of its assets as gold, (2) the SNB has to repatriate the 30% of its official gold stock that is now held abroad by the Bank of England and Bank of Canada and has to physically hold all its gold in Switzerland, and (3) the SNB may never sell any gold again.

 

Figure 1 shows the total assets of the SNB, its gold reserves and its other foreign exchange reserves, the sum of foreign currency investments, the reserve position with the IMF and international payment instruments. There is a break in the series for the value of the gold holdings and for total assets: as of 2000, gold holdings have been priced at market value. Until 1999, they were valued at the official parity price of CHF 4,596 per kilogram.

 

 

As can be seen from Figure 1, the balance sheet of the SNB has exploded in size since it began to lean against the appreciation of the Swiss Franc by active foreign exchange interventions early in 2009. Its balance sheet at the end of September 2014 stood at 522 bn Swiss Francs, about 83% of annual GDP. On that same date, the value of its gold reserves was about 39 bn Swiss Francs, about 7.5% of the value of its total assets. That represented 1,040 metric tonnes of gold, almost 129 grams (4.5 oz.) per capita. In 2000, the SNB held 2,500 tonnes of gold and it has also been the biggest national seller since.

 

If the gold initiative passes, the SNB would have to purchase at least 1,733 metric tonnes of gold to meet the 20% threshold by 2019 (based on end-of September 2014 SNB balance sheet size and gold price). The world’s annual production of gold is around 2,500 metric tons.

 

The price of gold, like that of any asset price, is volatile. In nominal terms it has increased spectacularly over the more than 200-year period shown in Figure 2, and especially since the end of the gold peg of the US dollar in 1971. In real terms, the increase has been somewhat less spectacular, from $10.08 in 1971 (measured in 1913 dollars) to $59.89 in 2013. The real price of gold hit $73.60 in 1980 and $73.30 in 2012, underlining the volatility of the (real) gold price. Someone who invested in gold in 1971 and held onto it for 42 years, that is, till 2013, would have achieved an annual real rate of return of 4.3 percent - reasonable given the riskiness of the asset.

 

 

Item (2) on the Gold Initiative ballot makes little sense to us. Holding all one’s physical assets in one nation means ignoring the benefits of geographic diversification of ‘custodial risk’. Item (3) is quite extraordinary because it would make the SNB’s gold holdings worthless. Making it illegal to ever sell any of the gold the central bank has now or acquires in the future and enforcing this gold sale ban effectively would make the gold useless as an international reserve. The gold stock can never be used for foreign exchange market interventions and it cannot be used as collateral. The gold becomes useless as a store of value of any kind. The gold has no consumption value to the central bank. Its value is therefore zero.

Apparently the Russian, the Germans and the Dutch never got this particular memo. Ukraine however sure did...

Yet in an attempt to at least appear somewhat objective, Buiter devotes a few hundreds words to what he views is "The good news for gold bugs":

Since gold is a fiat commodity currency, its value will be determined largely by its attractiveness relative to other fiat currencies – the fiat paper currencies issued by central banks. Gold should not be analyzed as one of a set of intrinsically valuable commodities (silver, iron, lead, zinc, platinum, aluminum, titanium etc. etc.) but as part of a set of intrinsically useless and valueless fiat currencies – the US dollar, the yen, the Yuan, the euro, sterling, the rupee, the rouble, Bitcoin etc. etc.). It is therefore in times that market participants are nervous about the future value of most other fiat currencies that gold will be most attractive. 

 

Such a time is what we are going through now. Many systemically important central banks have expanded their base money stocks and balance sheets massively. The Fed has quadrupled the size of its balance sheet. The Bank of England has more than tripled the size of its balance sheet. Many central banks have bought vast amounts of public debt. In the UK, out of the initial £375 bn of quantitative easing, almost everything was spent on gilts. Over the past two years, the Fed added $1.7 trillion to its balance sheet (which is around $4.5 trillion as of end-October 2014) through large-scale asset purchases involving Treasuries and Agency MBS.

 

Although in most of the developed world low-flation or even deflation is the immediate threat, there is a medium and long-term threat of much higher inflation in all countries with enlarged central bank balance sheets and the prospect of large future fiscal deficits. The great advantage to investors of gold is that, although it is not intrinsically valuable, it is very costly to increase its stock. The tap can be opened at the drop of a hat for fiat paper and electronic currency. The tap produces never more than a trickle in the case of gold.

 

So when fiscal profligacy threatens price stability in some of the main industrial countries (especially the US and the UK) because the central banks in these countries may be forced to monetize both the stock and large new net flows of public debt, the one fiat money whose quantity cannot be varied at will by a monetary authority will do well. We see that with gold  today. We also see that, to a lesser degree, in the strength of the euro. The ECB is by far the most independent of the leading central banks. It also has a heavily asymmetric de-facto interpretation of price stability: inflation is unacceptable, deflation is OK.

 

So until the risk of serious inflation is removed from the medium-term outlook for the US, the UK and other fiat currencies, gold could be a relatively attractive store of value despite the cost of storing it.

 

This argument, however, assumes that if paper or electronic fiat money loses its value, gold will keep its value. That is an assumption and, as I shall argue in what follows, most likely an unwarranted assumption.

That's the good news to "gold bugs." And now comes the propaganda.

An economy with fiat money can have many different equilibria. To make the point as clearly and simply as possible, consider a stationary economy. Population, endowments, technology, government spending, taxes and preferences are all constant. The government budget is balanced. Prices are flexible. There is a constant stock of fiat money (which could be paper money, gold, Rai, pet rocks, or Bitcoin). This fiat money is perfectly durable and therefore can serve as a store of value. It pays no interest. Because this fiat money exists and is  durable, it can, in principle, be a store of value – an asset. It is may help, but is not necessary for the argument that follows to assume that, should this fiat money have positive value, society has (informally/spontaneously/collectively) decided to use it as a medium of exchange or as means of payment. It could even be legal tender.

 

With a bit of further work, it can be shown that such an economy will have an equilibrium with a positive, constant price of money (a constant general price level). Economists call this the fundamental equilibrium. This stationary economy will, however, also have many other (in fact infinitely many other) non-stationary equilibria, called (speculative) bubbles. They always have equilibria in which the value of money starts at a positive value but falls steadily towards zero – the general price level rises without bound even though the quantity of money is constant. The holders of money anticipate the future inflation and thereby reduce the real stock of money balances they want to hold. This further increases the actual and expected rate of inflation, and the real stock of money balances goes to zero: the general price level goes to infinity or the price of money goes to zero. In other words, the economy becomes Zimbabwe.

 

What is often ignored is that this economy has an equilibrium that is even more ‘fundamental’ than the ‘fundamental’ equilibrium with a constant positive value of money. That is the equilibrium in which the price of money is zero in every period, not just in the long run (as with the speculative inflationary bubble equilibria). Remember, fiat money, including gold or Bitcoin, is intrinsically useless. It has value only because people believe it to have value. If everyone expects that money will have no value in the next period, it will have no value this period, because no-one will be willing to take receipt of money to carry it into the next period where it will be valueless. So fiat money with a zero value is always an (unfortunate) fundamental equilibrium.

 

I would actually call it the only fundamental equilibrium. All other equilibria with a positive price of money – an asset with no intrinsic value – are benign (relatively speaking) bubbles. The constant price of money (constant general price level) equilibrium is also a bubble, based entirely on belief and trust – a beneficial bootstrap equilibrium, lifting itself by its hair, like the Baron von Münchhausen. In a world with multiple fiat moneys, the zero value of money equilibrium lurks for each of the fiat currencies, including gold and Bitcoin. In a classic paper, Kareken and Wallace (1984) have shown that even in the other (nice) fundamental equilibrium, in which each of these fiat currencies has a constant positive value, those constant  positive values can be anything – there is exchange rate indeterminacy between the various fiat currencies. This holds for paper or electronic fiat money, gold and Bitcoin.

 

So if gold has positive, albeit wildly fluctuating value, it is because we are in a benign bubble for gold. Likewise, Bitcoin’s positive value represents a benign Bitcoin bubble. The gold bubble is, of course, pretty impressive. Intrinsically useless gold has positive value. It has had positive value for nigh-on 6,000 years. That must make it the longest-lasting bubble in human history.

Yup, Citi just called gold a 6,000 year old bubble: just call it "tradition."

Is there a possibility that, out of the blue, the market could produce a zero value for central bank-issued fiat paper and electronic money (base money)? Yes, if the prices of goods and services in terms of base money are freely flexible. Fortunately they are not. The world is Keynesian. Nobody understands the mysteries of the unit of account or numéraire, but for some reason in most societies and most of the time, central-bank issued fiat money or base money has been the unit of account for most contracts, and prices of goods and services in terms of this numéraire, are sticky - empirically and for reasons we don’t understand, but they undoubtedly involve limited computational capacity and other manifestations of bounded rationality. Nominal wage and price rigidities therefore rule out the zero price of base money equilibrium (notwithstanding the fundamental equilibrium at the end of a hyperinflation).

He's right: the world is Keynesian. That explains why never in the history of mankind have all central banks had to coordinate all their efforts to inject trillions of liquidity in the system to keep it from collapsing on itself, and provide the required credit money for a world in which growth is only possible as long as inside or outside money is created de novo out of thin air. It also explains, why over the past decade, western finance has gone from bubble to burst to bigger buggle, to more explosive burst... until we now find ourselves in the ultimate bubble - one where all central banks have bet all in on inflating away a global debt load which guarantees the world a slow, miserable, deflationary collapse - in the words of Albert Edwards, an Ice Age - unless there is a dramatic surge in inflation (see: Japan). Perhaps as the only natural offset to this sheer Keynesian lunacy, gold's "6000 year old bubble" nature does not seem all that shocking after all...

But other asset prices are not sticky in terms of the numéraire. There exists therefore an equilibrium in which the price of all other fiat moneys (including Bitcoin and gold) in terms of base money is zero. We are obviously not in an equilibrium in which the prices of gold and Bitcoin at zero. Does that mean that in the future also the value of gold and of Bitcoin will be (relatively stable) even if the central bank were to start running the printing presses at full speed, producing a hyperinflation in terms of base money prices? Not necessarily. Assume the initial prices of both gold and Bitcoin in terms of base money are positive and that the value of base money in terms of goods and services is positive. Once gold and Bitcoin have positive value in terms of base money today, their future value is determined by no-arbitrage relationships between these three fiat moneys – all of which don’t have any intrinsic value as consumer goods, intermediate goods or capital goods. No arbitrage means the absence of risk-free pure profits from buying and selling these three stores of value against each other. Since neither currency nor gold nor Bitcoin is interest-bearing, the exchange rate between currency, gold and Bitcoin should be expected to be constant over time. Any change in the currency price of Bitcoin and gold is therefore unanticipated. There must have been a lot of major  surprises! The fact that the stocks of Gold and Bitcoin are finite does therefore not suffice to keep them safe from hyperinflationary base money issuance by the central bank.

In other words, even if, and Buiter is quite close to suggesting that is the endgame here, there is hyperinflation at the end, even then gold may well be worthless. So... can we just use LBMA market maker Citigroup to sell it to Citigroup's prop desk?

And now, the punchline. Here is Buiter's conclusion:

I don’t want to argue with a 6,000-year old bubble. There have been hyperinflations with the value of central bank base money going to zero, but the price of gold has not followed that of paper money. Perhaps that was because, at the time, gold still  had some intrinsic value as a productive input, even today retains intrinsic value as a consumer good. Even if we view gold as an intrinsically valued commodity, it would still be unsound to invest 20% of the central bank’s balance sheet in a single commodity. If the central bank is to invest in commodities, better to have abalanced portfolio of commodities or, more conveniently, a balanced portfolio of commodity ETFs or other derivatives.

 

Requiring a central bank to put 20 percent of its balance sheet in any single commodity, even if that commodity had meaningful intrinsic value, represents a highly unorthodox and risky investment strategy, in our view, regardless of whether one judges it by its likely future profitability or by its wider social benefits. We conjecture that the SNB is most concerned that the Gold Initiative might pass.

 

Even though I view gold as a pure bubble, that bubble may well be good for another 6,000 years. Its value may go from $1,200 per fine ounce to $1,500 or $5,000 for all I know. Investing a vast amount of money in something whose value is based on nothing more than a set of self-confirming beliefs will make for an exciting ride. Whether that is enough to impose it as a requirement on one’s central bank is another matter.

Dear Willem, thank you for that valiant effort.After reading a few thousands words of empty propaganda we understand your "confusion": our advice, if you want to understand what gold really is, read the following from Kyle Bass:

"Buying gold is just buying a put against the idiocy of the political cycle. It's That Simple"

Because if there is a bubble that is even bigger and longer than the "6000-year-old gold bubble" it is that of human corruption, greed, and idiocy. And that doesn't even include the stupidity of those who don't grasp this simple truth.

As for gold being a nearly worthless fiat currency, if you can perhaps first convince your homeland to return those 122 tons of gold it just repatriated in secret from the NY Fed in direct refuation of, well, everything you just said before you go ahead advising foreign nations what they should do, well that would be just swell.

Finally, we are confident that upon reading the above JPMorgan will promptly recant and admit that what he really meant was "gold is a 6,000 year old bubble and nothing else"...

 

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Thu, 11/27/2014 - 10:42 | 5493821 Confundido
Thu, 11/27/2014 - 10:48 | 5493834 jaap
jaap's picture

He has only knowledge of pictures of dead birds and being an unfaithful husband. Say hello to Heleen, Willem. 

Thu, 11/27/2014 - 11:01 | 5493846 GetZeeGold
GetZeeGold's picture

 

 

Never let them see you sweat on your first cruise.

 

You'll do fine next time tiger.

 

 

Although I must say....getting these two words together in the same sentence is a major coup.....here it comes.

Gold and Bitcoin are costly to produce and store.

 

Nicely done......dove clap. I'm sure we all remember the Bitcoin union miners revolt of 2013.

Thu, 11/27/2014 - 11:02 | 5493877 y3maxx
y3maxx's picture

"All that glitters is not...fiat."

George Carlin

Thu, 11/27/2014 - 11:31 | 5493891 Pinto Currency
Pinto Currency's picture

 

 

If the result of 99.99999% of the population ending up broke and enslaved to a miniscule group of bankers, then paper money is socially superior to gold and silver which were naturally chosen by the market as money.

And what is the intrinsic value of paper/digital money?

Seems Rockefeller's Citi Bank has a tough time protecting their 101 year old monopoly of paper money vs 6,000 year old gold money this morning.  Perhaps there is a problem with the paper gold market ( say, gold lease rates).

Gold's 6,000 year history as money is called REALITY.  Citi doesn't like it.

One other point.  If paper money is so naturally superior to gold money then why have 50+ banking executives have been suicided in last year.

Thu, 11/27/2014 - 11:42 | 5494006 fuu
fuu's picture

Can we get on with the sub $1 gold please? Daddy has some cash to get rid of.

Thu, 11/27/2014 - 11:48 | 5494034 zerozulu
zerozulu's picture

Gold is blood and sweat of miners. Bubble will burst when you will make gold in the lab like diamonds.

Thu, 11/27/2014 - 12:01 | 5494084 Latina Lover
Latina Lover's picture

Willem is just taking the banksters book. 

Thu, 11/27/2014 - 12:16 | 5494149 kliguy38
kliguy38's picture

We must be getting over the target.....the bankster flak is getting heavy

Thu, 11/27/2014 - 12:23 | 5494166 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

I don't have the time or inclination to read that word vomit, but I do know anyone who believes that holding a currency (to store value) which can be willed into existence by a privileged minority has a mental disease.

It's like playing a game of Monopoly, seeing the banker cheat, and calling the others who decide to quit stupid for doing so.

Thu, 11/27/2014 - 12:29 | 5494201 BaBaBouy
BaBaBouy's picture

Physical GOLD Is 9000 Year Old MONEY, Currency That Is NOT Somebody Else's Liability (IE Debt)...

PS... So Why Does US Still Proudly OWN(?) 9000 TONNES Of Phys GOLD???????????

Thu, 11/27/2014 - 12:31 | 5494226 GetZeeGold
GetZeeGold's picture

 

 

 

If you ever get close to Fort Knox.....stop in and take the tour.....it's awesome!

Thu, 11/27/2014 - 13:00 | 5494336 bwh1214
bwh1214's picture

He keeps using the word bubble and fiat currency, I don't think these words mean what he thinks they mean.

Thu, 11/27/2014 - 13:16 | 5494382 Son of Loki
Son of Loki's picture

If Switzerland has any serious hope of competing with HK, Shanghai and Singapore, it better get its gold back and prove to investors it’s still a “solid currency” with solid leadership.

 

From what I’ve read, the Swiss have lost a lot of ‘street cred’ with its devaluation policies. There was a reason everyone wanted to hold Swiss Francs in the old days. That’s becoming less true day-by-day with their devaluation policies.

 

 

I think Mainstreet Switzerland sees that but the bankers prefer weak currencies they can print ad infinitum.

Thu, 11/27/2014 - 13:53 | 5494502 sullymandias
sullymandias's picture

the author seems to be missing one basic fact: money does have an intrinsic value: it facilitates trade. without it we would be stuck with barter, which is a highly inefficient means of doing trade.

Thu, 11/27/2014 - 14:13 | 5494552 BaBaBouy
BaBaBouy's picture

""If Switzerland has any serious hope of competing with HK, Shanghai and Singapore, it better get its gold back""

The Swiss Old Mainstream Is Busy Up In The ALPS Milking Their COWS And Makin Organic Cheese...
They Have Little Interest In Protecting Their Heritage From the EU Bullshit, While Their Urban
Centres Are Taken Over By Outsiders.

Prove Me Wrong, BUTT Not Lookin Good...

Thu, 11/27/2014 - 16:31 | 5494891 Mister Ponzi
Mister Ponzi's picture

Buiter is right to state that gold has minimal intrinsic value and that bitcoin has none whatsoever. The same holds for paper money. If for whatever reason people started to no longer demand paper money/bitcoin/gold as a curreny there would be very little to do with it (toilet paper in the case of paper money comes to mind). This is true for all three kinds of currencies. The difference is the probability that such a collapse in demand will actually happen is very low for gold given its history (6000 years as Buiter states himself) while it is one for a particular paper money if you give it enough time. "On a long enough time line..."

Thu, 11/27/2014 - 17:00 | 5494937 TheAnalOG
TheAnalOG's picture

Listen.

Those who are we, those who have fallen.  Drive around some more for gas is cheap and Satoshi has given us this day to buy more.  Do not crawl.

Fri, 11/28/2014 - 00:56 | 5495729 TheReplacement
TheReplacement's picture

Oh hell, I was right and he's back.  Damn.

Fri, 11/28/2014 - 01:41 | 5495799 HulkHogan
HulkHogan's picture

I quit reading at 'listen'

Thu, 11/27/2014 - 17:52 | 5495010 BrosephStiglitz
BrosephStiglitz's picture

His argument is compelling.  It's quite an interesting way to think about things and I do agree with what he says.  What he says is also not really mutually exclusive with the view that gold is a put against government.  I would however hazard that he fails to see one point:

Silver is utilized as an industrial metal in many applications because it is the best element which fits the characteristics required.  Gold can, at least partly act as a substitute in certain applications, however, the reason gold is not utilized, is because of its cost.

If silver should rise to a price (based on industrial supply/demand fundamentals) where it overtook the gold price, gold would become a substitute for certain applications, thus giving it intrinsic value.

Thu, 11/27/2014 - 19:17 | 5495152 Squid-puppets a...
Squid-puppets a-go-go's picture

amazed at his analysis

theres one history class i missed - those financial crisis where the oligarchy ended up with all the paper, and the plebs were impoverished in having the great misfortune of ending up all the gold

Fri, 11/28/2014 - 00:58 | 5495733 TheReplacement
TheReplacement's picture

You've never actually looked inside a computer have you?  People don't recycle computers for the plastic.

Thu, 11/27/2014 - 13:58 | 5494520 Deathrips
Deathrips's picture

INCONCEIVABLE!!!

 

Keep stackin! I came in with half the pile of fiat and traded it into real money at $15.50. The other truck of fiat..is just sitting idle waiting.

 

RIPS

Thu, 11/27/2014 - 12:47 | 5494159 Pinto Currency
Pinto Currency's picture

 

 

Check Table 9 on page 34 of 37:

http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq214.pdf

JPM and Citi are the only two US banks with gold and silver derivative positions.

 

Is there a physical gold squeeze on that can't be papered with derivatives and can blow-up the derivatives?

http://www.kitco.com/charts/g_leaserates.html

Thu, 11/27/2014 - 12:24 | 5494187 bwh1214
bwh1214's picture

This is simply a Keynesian economist getting frustrated that his view of the world is being threatened by the truth.  He put time, money, and effort into an education where he learned a certain school of economic thought, he spent his entire life pursuing, implementing, and pushing those ideas.  If reality sets in, his entire life’s work, and in turn his life itself will be worthless.  People have killed themselves over less. He will never be able to accept this reality for it would probably drive him mad and possibly to his death.

 

He is more likely to look at gold’s value over 6000 years as a mass delusion rather than threaten his belief system.  He will violently defend his life’s work.  He will look at gold maintaining its value, and fiat currencies and govt bonds failing over and over, as some mistake made by man because it goes against his beliefs rather than as evidence he might just be wrong.  Economics should be the study of psychology of participants in the market place more so than mathematics.  He should be observing the movements toward gold as a physiological shift, not as an irrational according to his formulas and teachings.  

Thu, 11/27/2014 - 12:37 | 5494245 Ghordius
Ghordius's picture

his Keynesian world was born on August 15th, 1971. some of us are older then that

Thu, 11/27/2014 - 13:18 | 5494393 GetZeeGold
GetZeeGold's picture

 

 

 

Wow....you were alive in 1971?

 

What was that like? Did you meet any hippies?

Thu, 11/27/2014 - 13:36 | 5494453 Chief Wonder Bread
Chief Wonder Bread's picture

Imagine if a physicist or engineer could so twist the basic terminology of their vocations. Would we have bridges, roads and pipelines let alone planes, trains & automobiles? This is what taking a 'credentialed' economist seriously will get you.

Thu, 11/27/2014 - 17:13 | 5494957 Coke and Hookers
Coke and Hookers's picture

Physicists do this all the time. In many cases their perception of reality is determined by values needed as input in some equation which they assume to be correct even if the observed universe doesn't fit the equation. An example is dark matter which was invented as input into an equation describing the current model of the universe because it needed more mass than was observed. Nobody has seen dark matter, detected it in any way or found any clear evidence for it. But it has to exist because otherwise their equations would be shit. Dark matter may or may not exist but for now it only exists as a "necessary" part of an equation - i.e. necessary for their world view to hold. The applied part of physics and math, engineering is however different. If an engineer designs a faulty plane it will crash and stuff like that is hard to cover up by some theory. But we have financial "engineers" now so ...

Thu, 11/27/2014 - 20:33 | 5495291 bwh1214
bwh1214's picture

Good points, I do however hold physicists in a much higher regard then economists.

Fri, 11/28/2014 - 01:03 | 5495743 TheReplacement
TheReplacement's picture

No kidding.  I'd trust a physicist with my gold long before an economist.  They are both nerds and probably can't run fast enough to outrun 545x39 but still, I would prefer not to have to shoot if possible. 

Fri, 11/28/2014 - 03:28 | 5495871 NidStyles
NidStyles's picture

Well, seeing as how 545X39 has no indicators of metric, it's impossible to know what you are talking about a priori.

If by you mean a 5.45mmX39mm Soviet round, then yes, no engineer or economist can outrun one, but a capble physcist and economist would be smart enough to know that no one can out run one, so his best bet would be to wait until you're sleeping, slit your throat and then have the rifle himself and not have to worry about your threats.

 

I would prefer it if you morons wouldn't encourage violence, but it seems you can't even go without pretending to be dangerous.

Thu, 11/27/2014 - 14:37 | 5494630 Lea
Lea's picture

"What was that like? Did you meet any hippies?"

Yes. They had long hair, they stank five feet away because of the raw wool clothes and patchouli they insisted on wearing plus the marijuana they smoked, not to mention that showers were out; they kept swapping records of Celtic bands, Jefferson Airplane, Popol Vuh, Tangerine Dream and Cat Stevens (etc); their women were hideous with their long unkept hair and their shapeless dangling clothes, and the man didn't fare much better, what with the aforementioned raw wool, their flared jeans and the idiotic smiles plastered on their faces.

Nothing to do with the sanitized version you get nowadays.

Can't say I miss them.

 
Thu, 11/27/2014 - 15:10 | 5494731 NuckingFuts
NuckingFuts's picture

But they did turn the world on to LSD. Not such a bad thing in my opinion.. Not that I know anything about that though....

Thu, 11/27/2014 - 16:04 | 5494846 flyingcaveman
flyingcaveman's picture

That's no way to talk about your parents.

Fri, 11/28/2014 - 01:00 | 5495734 TheReplacement
TheReplacement's picture

Did they smell bad?

Fri, 11/28/2014 - 03:04 | 5495856 OldPhart
OldPhart's picture

What was that like? Did you meet any hippies?

 

It was pretty fucking annoying. 

Go to an airport and Hari Krishna's would be begging for donations to support their useless lives.

Most hippies would talk of how they had no need for money, but bummed cigarettes, joints and booze.

The aroma of hippyhood preceeded them from 90 degree turns.

If they didn't wear shoes, their feet reflected everything they'd stepped in...complete with greenish/brown toenails.

Hair was the priority, but was usually kept in a greasy, foul-smelling bunch of tangles.

Women hippys usually wore what I now recognize as an open headed burka of anything pieced together that would reveal sights of unshaven, festering body parts that often reeked of a wharf.

Self-righteousness was pandemic within the hippy mindset...as it remains today while they begin collect social security (Don't trust anyone over 30 got extended multiple times until it's Don't trust anyone under 30.).

Pretty much everything in clothing adopted bell-bottoms, gaudy shirts, and generally made most clothing outlandish.

The era provided us with the 70's (my High School years) and the dismal era of nothingness.

How much did I know hippys?  My cousin was mentioned in Helter Skelter.  Manson offered him a couple girls for a debt he owed.  After the Manson Trial and things settled down, the family moved to a place three miles down the road from us.

 

Thu, 11/27/2014 - 13:44 | 5494448 r00t61
r00t61's picture

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

It's also nice to see the return of long-form Tyler.  Those reposts of Michael Snyder's numbered lists only go so far.

Thu, 11/27/2014 - 16:29 | 5494880 angel_of_joy
angel_of_joy's picture

A true idiot, is an idiot who cannot rest until he confirms his idiocy in public, by saying something outrageously stupid. Case study: Mr. Buiter... He even went for the compounding effect, by uttering his nonsense just a few days after it was annouced that the Dutch quietly managed to "repatriate" a good chunk of their " most useless commodity"...

Thu, 11/27/2014 - 16:56 | 5494932 Coke and Hookers
Coke and Hookers's picture

Your description applies to any type of liberal, not just the Keynesian type. When a liberal is finally living in the bankrupt third world society he dreams about and can't take a walk without being killed, raped or mugged, he will see that as a progress while blaming others for it at the same time.

Fri, 11/28/2014 - 08:16 | 5495995 StychoKiller
StychoKiller's picture

But... the paper!  Look at all the pretty pictures and fancy scrollwork! Miniature works of Art I tells ya!  (as opposed to this...)

Thu, 11/27/2014 - 14:25 | 5494604 Whalley World
Whalley World's picture

Humphrey Bogart explains it best in Treasure of the Sierra Madre:

https://www.youtube.com/watch?v=lZhtRTvwR48

that says it all!

Thu, 11/27/2014 - 15:57 | 5494831 zerozulu
zerozulu's picture

I'm firm believer. Gold is a medium of storing your hard physical labor.

Thu, 11/27/2014 - 12:10 | 5494122 chunga
chunga's picture

"50+ banking executives have been suicided in last year."

That's something we can all be thankful for.

Thu, 11/27/2014 - 15:27 | 5494773 Groundhog Day
Groundhog Day's picture

Where did I put that trillion dollar coin, it,s here somwhere

Thu, 11/27/2014 - 11:06 | 5493885 Pinto Currency
Pinto Currency's picture

.

Thu, 11/27/2014 - 11:04 | 5493890 Ozy_mandias
Ozy_mandias's picture

something... something... last job of a banker is to tell the truth.

Thu, 11/27/2014 - 12:53 | 5494305 bwh1214
bwh1214's picture

He is using an over complicated explanation as to why gold is a fiat currency with no intrinsic value.  He gives many reasons for this but as we know if more than one reason is given for something it is probably a lie.  More importantly he states that gold has no intrinsic value which is laughable.  Gold is used mainly as money and as a store of value and because it is so expensive because it is so sought after for this purpose it is not used for other applications.  That said it would be perfect for all types of things that require high corrosion resistance with some but not very high strength.  It would be perfect for a roof, toilet and other bathroom and kitchen fixtures, hundreds of marine applications, but obviously there is not very much gold to do this with even if it wasn't horded as a store of value. It would still be expensive based on its intrinsic industrial uses not just its monetary uses. 

 

If something doesn't make sense to an intelligent reader it is probably non-sense. 

Thu, 11/27/2014 - 13:54 | 5494505 reset71
reset71's picture

Thank you for clarifying. Just off the top of my head I can think of gold having intrinsic value based on humans wanting it for jewelry, electronics, art, and to put in goldschlager. It is also desirable just based on its scarcity. It is a rare metal with alluring physical properties. It is shiny and a warm color. I know a lot of people like to think that humans are super sophisticated. But at the end of the day, humans prefer shiny objects, hence, gold is valuable. 

The graph seems very dubious, especially because it makes it difficult to read the "real" price; instead it uses the y-axis scale to emphasize the nominal price. But the nominal price is irrelevant when looking over centuries of data!

 

The real price has gone up, but so has human population! The amount of gold is finite. The human population, which entails "Demand", is not. Also, as government print fiat, I believe that in some ways some of the nominal price of gold transmutes into the real price, because of the added risk produced by unsound monetary policy. 

Thu, 11/27/2014 - 15:46 | 5494809 Aaronson.Jones....
Aaronson.Jones.Rutherford's picture

Excellent Goldschlager reference my boozy friend.

Thu, 11/27/2014 - 18:01 | 5495022 flyingpigg
flyingpigg's picture

Nice try from Buiter to link gold to fiat but it is complete bullocks.

No intrinsic value like a fiat currency, c'mon Buiter, give your girl friend a paper necklace and a paper ring. Let's see if she appreciates it! LOL, what a banking idiot.

Thu, 11/27/2014 - 23:05 | 5495556 BigJim
BigJim's picture

I know, the guy is an embarrassment. What an ignoramus. Hey! Buiter! Here's fiat: a Zimbabwe 10,000,000,000,000 banknote, now worth a few cents as a novelty. Its value has collapsed along with its issuing government's credibility.

An Austro-Hungarian 4 ducat gold piece? Still wortth a few % over spot... ie, ounce for ounce worth pretty much the same amount as an American Eagle, despite the Austro-Hungarian empire's long demise.

What a plonker the man is.

Thu, 11/27/2014 - 20:51 | 5495316 Squiddly Diddly
Squiddly Diddly's picture

" More importantly he states that gold has no intrinsic value which is laughable.....If something doesn't make sense to an intelligent reader it is probably non-sense. "

Ohhh .........is that why it's securely locked in bank vaults all over the world. I scanned the article because I am an intelligent reader and didn't want to waste my time on obvious non-sense.

Fri, 11/28/2014 - 08:09 | 5495991 bwh1214
bwh1214's picture

Squiddly Diddly While I can see that it might make sense to blow off this artical as non sense, many in the general public will eat this stuff up.  They want to be told why their govt bonds, stocks and cash is the place to be.  People want to accept what he is saying off hand, and to do so it must be accepted without thought.  We are the ones who must force them to think about what he is saying or it will be accepted. 

Thu, 11/27/2014 - 13:00 | 5494334 Bay of Pigs
Bay of Pigs's picture

From Alan Blinder (1994), ex Fed Vice Chairman, CFR member, Princeton Prof., and Jewish bankster

Thu, 11/27/2014 - 11:09 | 5493900 luckylongshot
luckylongshot's picture

Yes, such obvious lying is always a sign of desperation...a buy signal for gold!

Thu, 11/27/2014 - 16:47 | 5494816 fockewulf190
fockewulf190's picture

Question is, who is this guy trying to influence with his anti-gold rant?  Stackers don´t give a shit about what he´s saying.  Indians won´t buy less gold.  The Chinese and the Russians know better.  The normal sheeple are broke, so it isn´t them.  The only crowd left are those with paper fiat in bulk, the 1%, and even more importantly, those who advise and manage that capital....as well as now, quite unexpectedly, the ordinary Swiss citizen of voting age. 

Everyone who has been paying attention knows how vunerable the physical gold and silver markets are.  The last thing Citibank, and others of similar ilk wants, is a rush to phyzz, because they have a system to protect that has generated serious profits for them.  A deep pocket on the hunt for all available phyzz, armed with a few measly billion dollars, would poison the current economic ponzi system.  

To think that the banksters at the SNB could actually be forced to evolve from big club member...one of their own so to say...into THE nightmare inducing, deep pocket phyzz hunter, is beyond ironic.  

Thu, 11/27/2014 - 12:13 | 5494129 Stoploss
Stoploss's picture

LOL!!!

F E A R

This is how you know we're getting closer...

Paper gets re-pinned to gold, because it's already over...

Thu, 11/27/2014 - 14:00 | 5494528 Larry Dallas
Larry Dallas's picture

This guy probably had to write something like this to avoid being nailgunned like his "sustainability" banker colleague...

Thu, 11/27/2014 - 11:53 | 5494017 DanDaley
DanDaley's picture

Speaking of birds, interesting that his name, Buiter, is so close to buitre, the Spanish for vulture. Curioso, muy curioso.

Thu, 11/27/2014 - 15:24 | 5494770 Groundhog Day
Groundhog Day's picture

6000 years of banisters winning, now that's a bubble

Thu, 11/27/2014 - 10:47 | 5493836 linniepar
linniepar's picture

Money is gold and nothing else.

 

This guy is a huge dick and a lousy propagandist.  The central banks and their offspring should be tried for crimes against humanity.  

Thu, 11/27/2014 - 11:02 | 5493875 DavidC
DavidC's picture

Agreed, how stupid can one man be?

DavidC

Thu, 11/27/2014 - 11:05 | 5493889 chubbar
chubbar's picture

So, paper currency is "durable and therefor a store of value"? What the FUCK is this guy smoking? How is durability make something a store of value? A fucking rock is durable, is it a store of value? This guy has absolutely no clue what makes something a store of value and if he did, he wouldn't bring it up in an argument because we've seen these asshats print several trillion of the item he feels is a "store of value". Fucking asshole.

Thu, 11/27/2014 - 16:36 | 5494908 Spigot
Spigot's picture

Certainly a high grade of hash. Probably with some acid for spice.

What stikes me is the proximity of this pc with the Repat of Dutch gold.

Is this guy tossing jelly donuts out of his rucksack, trying to outrun a bear??

Thu, 11/27/2014 - 11:36 | 5493980 Ghordius
Ghordius's picture

"Money is gold and nothing else". The correct quote is "Gold is money and nothing else"

so yes, gold is a bubble. probably introduced for the first time as money in form coins in Asia Minor, probably in the city of Gordias, named after the father (aka Gordius, and the source for my nick) of King Midas (who had to back this money, at the beginning, but this is a different story), making him the first central banker

yes, a bubble can last millennia, which is a very good indication for lasting further millennia

gold was also in direct monetary war against silver and copper, particularly when Athens discovered a huge mine in it's territory. at the end, gold did win

it's not the only form of money. it never was. salt and sheep come to mind. the very word salary has it's source in salt, since workers were paid in salt in early Rome. but it's handy for that task. after all, money is a currency that stores value, first, and an insurance policy in times of fiat monetary wars. and that's all, folks

Thu, 11/27/2014 - 11:40 | 5493999 overmedicatedun...
overmedicatedundersexed's picture

ghordius, I wronged you, paper euro's perhaps are not your end all after all?? but can there be an EU without them?

Thu, 11/27/2014 - 11:54 | 5494055 Ghordius
Ghordius's picture

nah, there can be an EUR without gold. see now. there can also be an EUR with gold. meanwhile, the EU and the EuroSystem (aka eurozone) are as separate clubs as the third one, NATO

Finland is member of the eurozone and the EU, but not NATO. Switzerland of none of the three, but an informal member of the eurozone through it's floor. The UK is a member of NATO and might exit the EU, while it's a shareholder of the ECB but does not use the EUR. France is an integral part of the EU and the eurozone, but exited NATO for a long time, and then came back to the club. Norway is in the NATO only, but it's economy is fully integrated in the EU. Montenegro is in none of the three, but it uses the EUR instead of a national currency. and so on. it's only purpose-bound alliances. modular in design and scope

there is no reason not to back the EUR with gold... eventually. the war about gold is between Uncle Sam (with some support from some european countries) and the BRICS

see in parallel the BRICS asking for IMF shares reform (and perhaps SDR reform) and the US Congress saying NO

Thu, 11/27/2014 - 16:12 | 5494859 koncaswatch
koncaswatch's picture

The JPM quote is all over the place. The quote before CONgress is "Money is Gold, nothing else." http://blog.milesfranklin.com/gold-is-money-everything-else-is-credit-jp-morgan   The link seems to clarify the "everything else is credit" quote. But...

Anyone have a link to a congressional transcript?

Thu, 11/27/2014 - 11:47 | 5494030 Sudden Debt
Sudden Debt's picture

His last point is a valid one.

If it's only stored by central bankers and if they don't allow it to be changed for paper currency of their own, it's indeed useless.

And that's where the little bastard trick lies.

THEY SAY THEY BUY IT

THEY SAY THEY HAVE IT

but you can't see or get it...

IT'S A HOAX!!!

GOLD IS ONLY GOOD IF THE PEOPLE HAVE ACCESS TO IT!! THAT'S WHAT A REAL GOLD STANDARD IS!!

Thu, 11/27/2014 - 11:59 | 5494074 Ghordius
Ghordius's picture

yes, if central banks are not allowed to sell gold... then it's... neutralized. Remember Tricky Dick and FDR before him

Thu, 11/27/2014 - 12:04 | 5494092 Urban Redneck
Urban Redneck's picture

Just because it's worth repeating:

GOLD IS ONLY GOOD IF THE PEOPLE HAVE ACCESS TO IT!! THAT'S WHAT A REAL GOLD STANDARD IS!!

Thu, 11/27/2014 - 12:11 | 5494118 Sean7k
Sean7k's picture

The committee on coinage for the US Congress in 1848 came to the same conclusion. It is necessary to insure the availability of gold and silver to the general population or they will become dependent on bank notes and suffer the consequences. 

Thu, 11/27/2014 - 11:01 | 5493864 Tall Tom
Tall Tom's picture

Gold is a "Fiat" Currency?

 

What Government declared that Gold has any value?

 

It is not Fiat by any means. But he concedes that it is a currency.

Thu, 11/27/2014 - 11:48 | 5494033 RealityCheque
RealityCheque's picture

Its not a currency. It's money. Fiat is not.

Thu, 11/27/2014 - 12:31 | 5494227 Ghordius
Ghordius's picture

I see your point. Fiat implies a decree (or even a law)

Well, the US decrees on the value of gold versus the dollar are still in place, I understand. But there is another decree forbidding the sale of this gold against dollars at any price. A case of Shroedinger's cat?

Fri, 11/28/2014 - 04:41 | 5493992 Bokkenrijder
Bokkenrijder's picture

Haha, this Buiter dude is probably just a mainstream troll, and you guys swallowed it all hook line and sinker.

Buiter is a pathetic wimp by the way: http://www.telegraph.co.uk/news/10691561/Top-economist-sued-by-ex-mistre...

http://www.businessinsider.com/heleen-mees-emails-to-willem-buiter-2013-12

Thu, 11/27/2014 - 15:07 | 5494717 Burt Gummer
Burt Gummer's picture

William Buiter is a bubble.

https://www.youtube.com/watch?v=IGYaFMFU63U

Thu, 11/27/2014 - 10:41 | 5493823 Confundido
Thu, 11/27/2014 - 10:42 | 5493825 dcohen
dcohen's picture

The Tribe wants all the gold for itself, so it spews garbage all over it.

While in secrecy, it is salivating for it.

Thu, 11/27/2014 - 11:13 | 5493848 GetZeeGold
GetZeeGold's picture

 

 

Someone's been paying attention.

Thu, 11/27/2014 - 11:52 | 5494059 Sudden Debt
Sudden Debt's picture

The king is dead...

LONG LIVE THE KING!!

Gold is dead...

LONG LIVE GOLD!!

It will be the same morons who will say "I said it all along" when gold goes parabolic to a price where the lemmings won't be able to aford it.

In the 19th century, most people never even touched a gold piece because the value was so great.

That will return.

Thu, 11/27/2014 - 13:39 | 5494462 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Yeah, I wonder why jews pass gold onto their spawn... weird...

Just "tradition" I guess...

Thu, 11/27/2014 - 10:50 | 5493833 JustObserving
JustObserving's picture

 It is difficult to get a man to understand something when his job depends on not understanding it.

Gold will always be the most-trusted form of money in ancient civilizations like China and India.

Best Thanksgiving Wishes to all Zero Hedgers

Thu, 11/27/2014 - 12:14 | 5494132 Ghordius
Ghordius's picture

I don't know if you count Europe as "ancient civilization" but I can assure you we generally accept gold as a payment medium. actually without a big fuss, in my case

Thu, 11/27/2014 - 11:25 | 5493837 williambanzai7
williambanzai7's picture

Willem Butthead...what more needs be said?

And BTW, aren't you sick and fucking tired of morons who work at bailed out welfare queens slinging fat turds of sage horseshit advice?

There is only one wise thing for Willem Butthead: Dewalt DC608K

 

Thu, 11/27/2014 - 11:27 | 5493959 Cognitive Dissonance
Cognitive Dissonance's picture

The Ponzi priests should be nailed to their own cross.

Thu, 11/27/2014 - 11:52 | 5494061 IridiumRebel
IridiumRebel's picture

When i read this i thought that this guy is a nailgun  candidate so great minds think alike!

Thu, 11/27/2014 - 17:05 | 5494943 RaceToTheBottom
RaceToTheBottom's picture

WS should become a cemetary to promote memories to affect future actions.

If the FED won't control Moral Hazard, the people could step forward.

Thu, 11/27/2014 - 11:48 | 5494037 YHC-FTSE
YHC-FTSE's picture

You beat me to the nailgun! Bravo.

I was just typing, "It's so ridiculous Willem Buiter must be another banker trying to avoid the nailgun." when I saw your post.

Thu, 11/27/2014 - 11:48 | 5494044 Sudden Debt
Sudden Debt's picture

Nice product placement here :)

Bannering version 2.0 :)

Thu, 11/27/2014 - 12:05 | 5494096 sodbuster
sodbuster's picture

Does the the DC608K shoot a 16 penny nail? Cause Bll Butthead's brain has to be damn small and he'll need all the penetration he can muster. Looking at all the central bankers have done and said, lately, I'm beginning to think that the shit is about to hit the high speed fan.

Thu, 11/27/2014 - 12:23 | 5494183 LostandFound
LostandFound's picture

Excellent, i actually think one day during my life time, i will see the bankers vs the people as a last standing and i suspect the nail gun will be held by an enlightened citizen.

Thu, 11/27/2014 - 12:30 | 5494221 lakecity55
lakecity55's picture

"Hey, put those nail guns down! Reggie and I are stooges, blackmailed. We are on your side! The Banksters forced us! No! Don't-----"

Thu, 11/27/2014 - 10:47 | 5493838 JonNadler
JonNadler's picture

and why should we care what Citigroup's Willem Buiter thinks?

Thu, 11/27/2014 - 11:57 | 5494063 remain calm
remain calm's picture

Because CNBC will parade this retard on TV to help mold the attititde of the Sheeple. The orchestrated corrruption is unconscionable. You don't care, I don't care, but given the average intelligence of the average American, I am concerned.

Thu, 11/27/2014 - 11:54 | 5494065 Sudden Debt
Sudden Debt's picture

because when everything turns evil, people will be lookig for elites to hang. And he just made the list :)

Thu, 11/27/2014 - 10:49 | 5493840 Eternal Complainer
Eternal Complainer's picture

Willem Buiter eh...?

Ok.., noted!
Double stamped. No erasies!

Thu, 11/27/2014 - 10:51 | 5493843 Cognitive Dissonance
Cognitive Dissonance's picture

That which you fear the most, thus the very thing that can and will ultimately destroy you, must either be desperately ignored or viciously assaulted. Or both.

Fear. It's what's for breakfast, lunch and dinner.

Thu, 11/27/2014 - 10:51 | 5493847 JustObserving
JustObserving's picture

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.

H. L. Mencken

Thu, 11/27/2014 - 10:51 | 5493845 Confundido
Confundido's picture

This is what this guy has to explain, this is the proof of his fallacy: If gold is useless...why do central banks keep it hidden? Why was it expropriated from the peoples between 1933 and 1971? Why don't they sell it back? Exactly...

Thu, 11/27/2014 - 10:55 | 5493853 i_call_you_my_base
i_call_you_my_base's picture

Central banks should not hold gold, they should hold trillions of dollars in mortgage backed securities.

Thu, 11/27/2014 - 10:59 | 5493859 buzzsaw99
buzzsaw99's picture

Golden years, gold, whop whop whop

Thu, 11/27/2014 - 14:03 | 5494537 MegaOlmecanManiac
MegaOlmecanManiac's picture

I'll stick with you baby for a thousand years.

Thu, 11/27/2014 - 11:00 | 5493862 yrbmegr
yrbmegr's picture

Nothing has "intrinsic" value because value is assigned by humans.  Gold has the value assigned by humans.  Oil has the value assigned by humans.  There is a case to be made that oil has more value than gold because it's useful.  But the fact remains that humans value gold, even only for it's beauty, so gold has value.

Thu, 11/27/2014 - 12:57 | 5494310 Exalt
Exalt's picture

Gold has industrial uses in electronics. Much less "usefulness" than oil but uses nonetheless. Intrinsic value of a commodity really has to do with the attributes of that commodity, for example: gold is incredibly dense, malleable, ducticle, non-reactive and conductive of electricity. Just thought I'd point that out before people forget and get caught up in the fairy tale that gold only has value because it's pretty. Most of gold's real price has to do with the cost of mining, then there's a demand element on top of that.

Thu, 11/27/2014 - 11:01 | 5493863 KansasCrude
KansasCrude's picture

Excuse me but Kitco is showing the New York Gold market is open today????  Is this the first time it has been open on Thanksgiving?  If so, Why?

Thu, 11/27/2014 - 11:12 | 5493886 GetZeeGold
GetZeeGold's picture

 

 

Is Daniela doing live reports from the market floor today?

Thu, 11/27/2014 - 12:28 | 5494207 lakecity55
lakecity55's picture

Daniela, umm, I crave her orbs.... I want to lick them and shower them with gold coins....Ahhhhh!

Thu, 11/27/2014 - 12:08 | 5494110 indygo55
indygo55's picture

"the New York Gold market is open today????  "

 

Its open so the PTB can pound the shit out of it.


Thu, 11/27/2014 - 12:17 | 5494157 Conax
Conax's picture

Because the lack of human traders made the dumping of 123,600 silver contracts (during the five minute period beginning at 10:55 Eastern) so much more effective.  Double time be damned, banksters, WE RIDE!

Thu, 11/27/2014 - 11:02 | 5493867 skbull44
skbull44's picture

6000+ years as a 'universal' currency vs. hundreds of experiments with fiat paper currency all ending badly. I think I'll put my 'money' on precious metals...

http://olduvai.ca

Fri, 11/28/2014 - 07:05 | 5495965 jonytk
jonytk's picture

"Bitcoins: as worthless as gold "

    Citibank.

Thu, 11/27/2014 - 11:06 | 5493881 kurzdump
kurzdump's picture

He almost got it right

"Money Used to Enforce Serfdom Is A 6,000 Year Old Bubble"

Gold is a precious metal in short supply on our planet.

Thu, 11/27/2014 - 11:03 | 5493882 Unknown User
Unknown User's picture

"It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head." – Warren Buffet

Thu, 11/27/2014 - 11:21 | 5493935 tuttisaluti
tuttisaluti's picture

And his wife would be upset if her jewellery becomes worthless 

Thu, 11/27/2014 - 13:58 | 5494525 EHM
EHM's picture

"Gold is not neccesary. I have no interest in gold. We will build a
solid state, without an ounce of gold behind it. Anyone who sells above
the set prices, let him be marched off to a concentration camp. That's
the bastion of money." - Adolf Hitler

Thu, 11/27/2014 - 21:32 | 5495402 crowd
crowd's picture

The fantasy marsians would be even more confused about all the other people that (metaphorically) digs holes in the ground and then fills them again to no utility.

Thu, 11/27/2014 - 11:05 | 5493883 john.smith
john.smith's picture

By Willem's logic, any currency could be called a bubble

Thu, 11/27/2014 - 12:01 | 5493996 Ghordius
Ghordius's picture

absolutely. it's not only logic, imho it's absolutely correct. valuation is the process

if enough of us value Kim Kardashian's ass, then Kim Kardashian's ass is valuable

an if Kim Kardashian's ass is valuable, she can market it and make tons of money out of it

Thu, 11/27/2014 - 11:05 | 5493892 Herdee
Herdee's picture

I didn't know that Citi hired people that ignorant.A kid with a Grade 2 education has more common sense.

Thu, 11/27/2014 - 11:10 | 5493903 Al Huxley
Al Huxley's picture

I get a lot more truth from the one-sentence Kyle Bass quote than Buiter's propaganda spiel.  Anyway, there are plenty of bigger name players doing the anti-gold, pro-fiat shtick, he should just shut the fuck up.

Thu, 11/27/2014 - 12:26 | 5494197 lakecity55
lakecity55's picture

A run on CB bank gold is just getting started. The Banksters are sweating nails.

Thu, 11/27/2014 - 11:13 | 5493911 Conax
Conax's picture

Pfffft

If these banking douches don't want to carry out their legal mandates I'm certain they can find alternate employment in the food service, house cleaning or dead-animal-in-the-road collecting industries.

Thu, 11/27/2014 - 11:17 | 5493921 JohnFrodo
JohnFrodo's picture

Everthing is an illusion the facts are beyond us. Lets bring the facts back and start with coypyright.

Thu, 11/27/2014 - 11:17 | 5493925 dizzyfingers
dizzyfingers's picture

Press that deWalt trigger, Mr. Banzai. Let's see how he looks then.

Willem Buiter - bye-bye.

Thu, 11/27/2014 - 11:20 | 5493931 Bioscale
Bioscale's picture

If that said a bank whore, the opposite is true.

Thu, 11/27/2014 - 12:31 | 5493940 SocialismIsCancer
SocialismIsCancer's picture

Shiny yellow lead is irrelevant in the current global fiat system unless + until the fiat governments collapse, and that is not happening for decades - these behemoths die very, very, slowly, unless they are defeated in war, but since USA has nukes, USA will not be defeated in war. Revolution is another theoretical possibility, however the Americans are so divided, obese, mentally & physically lazy, entitlement addicted, and afflicted with tiny-balls disease that revolution is impossible.

So the shiny yellow lead is a poor investment compared to alternatives, until just before the governments collapse, many years from now.

Thu, 11/27/2014 - 11:23 | 5493946 Seize Mars
Seize Mars's picture

What a crazy bunch of shit this essay is. Seriously, it's fucking crazy.

Well anyways there sure are a lot of bullets and bombs that result in disappearing gold these days. If gold is so worthless, then...aw, fuck it.

Thu, 11/27/2014 - 11:29 | 5493952 GC
GC's picture

Say what you wish of the other points, but the last "Forbidding a central bank from ever selling any gold it owns reduces the value of those gold holdings to zero", is actually correct economics-wise. A good that cannot be object of an economic transaction has a legal value of zero and supposing there will not be back alley illegal trades among central banks, also a practical value of zero.

If really and strictly enforced, it's the equivalent of holding a mine on Mars: you know the mineral is there, but you will neve get money for it until the time you can assure you can bring it home and deliver it.

Thu, 11/27/2014 - 11:34 | 5493977 Renfield
Renfield's picture

Central banks are a cancer. No country should ever set up a central bank.

Any law forbidding a central bank to do anything is inadequate, unless it is a law forbidding their existence.

No central bank should ever sell gold. No central bank should ever have gold to sell. No central bank should ever exist.

Thu, 11/27/2014 - 11:43 | 5494005 Ghordius
Ghordius's picture

so what do you propose? your country to abolish it's own national bank and then to go to war against all the others until they all forbid their own?

meanwhile... a country with a CB has an undeniable military advantage over one without it. so perhaps you have to win your war first, and then forbid them all

Thu, 11/27/2014 - 11:54 | 5494046 Renfield
Renfield's picture

Marked you down for the attempt to justify something bad in place by saying, "Then you come up with a better idea!" My failure to present you with a blueprint alternative for government and the economy, here and now, does not justify the existence of a central bank. Saying "It's necessary because we haven't come up with anything better" is the same fallacy as "It's necessary because that's the way it's set up" or "It's necessary because that's the way it is".

You have failed to state why a central bank is necessary, unless you are saying a central bank is necessary for a large army to be paid, which is nonsense.

Thu, 11/27/2014 - 12:10 | 5494091 Ghordius
Ghordius's picture

no, what I mean is that in the "old times", a sovereign had to possess a gold hoard. it could not make war without it, then wars are expensive

in fact, nobody would even think about going to war without assessing the enemy's gold hoard size, first. think about that

central banks issuing paper fiat allow wars without gold hoard. invade now, pay later. they give an immense advantage

see WWI: the first casualty of that war was the gold-backing of the belligerent's currencies

Thu, 11/27/2014 - 12:13 | 5494136 indygo55
indygo55's picture

Maybe you mean there shouldn't be a PRIVATE central bank. Having a public central bank owned and run by the taxpayers is a good thing IMO. There are functions that a central bank conducts to satisfy the flow of currency within an economy.

 

 

Thu, 11/27/2014 - 14:40 | 5494587 e_goldstein
e_goldstein's picture

 There are functions that a central bank conducts to satisfy the flow of currency within an economy.

Yeah, by transferring the "money" from the peope to the state or banks. Why would one still argue to turn banking over to the government after the absolute clusterfuck of incompetence and genocide we have witnessed over the last 100 years? Giving the state control of banking is like giving a homicidal special needs child a Visa black card and telling him to go wild.

Over time, the market satisfies monetary conditions naturally. Central banks--public or privately owned--are parasitical institutions set up to profit from the control and manipulation of the mechanisms and the money supply for the good of one group over all others. No central bank should be allowed to exist. The right to choose and use whatever currency they see fit belongs to the people; not to the state, and certainly not to a few corporate actors who wouldn't even exist if they were not facilitated by state-sponsored fraud via legal tender laws and bailouts.

Thu, 11/27/2014 - 12:23 | 5494188 lakecity55
lakecity55's picture

"My political ancestor, Lenin, spoke highly of Central Banks. I will use my pen and phone to make sure our Central Bank is Secure."

Thu, 11/27/2014 - 12:29 | 5494192 Zero-risk bias
Zero-risk bias's picture

GC

"economics-wise", I guess it has truth, but whats the old adage, you don't sell gold, you transact in it??

"A good that cannot be object of an economic transaction has a legal value of zero.."

I'm thinking the point about back-alley trades is key. What exactly constitutes being in a nontransactable state? Central banks can make a decision, it also can also reverse, or be made to reverse that decision. Besides, surely the fact that it exists gives it value?

For example, if there were to be a planet rich with temporarily accessible mineral deposits passing through our planets trajectory, wouldn't there be attempts to seize and transact the minerals for profit or for survival? Or if a realestate unit is not on the market, it is nontransactable, so does it follow that the value and the insurance premium are also zero?

What I can take is that everything has a perceived value, and simultaneously a nominal value. These both can and at some point in time will independantly or simulataneously arrive at zero, but since the author is on such a hypothetical linear rumination, why not continue? Eventually all life becomes exstinct, making it impossible to transact anything, which ultimately puts everything in an expanding bubble.

 

 

Thu, 11/27/2014 - 15:29 | 5494780 PN7
PN7's picture

I agree.  But it increases the value of gold for all holders of gold who are not Central Banks.

Fri, 11/28/2014 - 11:12 | 5496359 gcjohns1971
gcjohns1971's picture

Your statement is false, and displays a lack of understanding of the nature of currency, which is to say script.

To say that the bank cannot sell it is not to say that no one can sell it.

Specifically, when a bank issues script - which is what all the fiat currencies are - they are issuing shares in the assets of the bank.  Thus when you trade script, that which backs the script is the object of an economic transaction.  The asset, gold in this case, is the money being exchanged.  The script is just a receipt for it.

The reason the CENTRAL BANK should not be allowed to sell their reserves is because they do not own them.  The people who hold the receipts for those assets, the script, the currency, own those assets.

And while a CENTRAL BANK should be allowed, in general, to trade one asset for another of equal value, the privilege to do so should be entirely subject to the desires of the assets' owners.

Thu, 11/27/2014 - 11:28 | 5493962 fishwharf
fishwharf's picture

I can usually tell when someone is lying to me when they go on and on with a long winded explanation for something they should be able to explain in a few sentences.

Thu, 11/27/2014 - 11:31 | 5493968 p00k1e
p00k1e's picture

Central Banks control the float.  It's no different than a stock. 

 

 

Thu, 11/27/2014 - 11:34 | 5493982 NoWayJose
NoWayJose's picture

CitiusGroupe -- the famous Roman bankers at the time of Julius Caesar -- put all their faith in the Roman Denarius -- but after several hundred years of devaluation (by continually reducing the silver content) - the Denarius became worthless and CitiusGroupe went out of business, bankrupt, and was taken over by a bunch of barbarians, who continue to operate it today under the name of CitiGroup.  Meanwhile, gold and silver continue to hold their value...  as they always have, and always will...

Thu, 11/27/2014 - 11:35 | 5493984 Panic Mode
Panic Mode's picture

Shitigroup

Thu, 11/27/2014 - 11:59 | 5494072 Urban Redneck
Urban Redneck's picture

I think I need to reconsider the "custodial risk" of allowing ShitiBank in London to have vault custody over my paper certificates for the JBGOUA shares in the US brokerage account.

And a pre-emptive holiday STFU to the naysayers- It's only (theooretically redeamable) paper certicates for paper gold, it's not like I would let ShitBank, or any other bank, get anywhere near my physical gold.

Happy Thanksgiving.

Thu, 11/27/2014 - 17:31 | 5494979 delacroix
delacroix's picture

citibank marked the bottom of the market crash, when vikram pandit released a statement, that the bank had made a profit the prior year. the market has been up up up since.  I hope this statement marks the bottom of the gold market.

Thu, 11/27/2014 - 11:38 | 5493990 mantrid
mantrid's picture

Nobody understands the mysteries of the unit of account or numéraire, but for some reason in most societies and most of the time, central-bank issued fiat money or base money has been the unit of account for most contracts

 

sb tell that einstein about "legal tender laws"

 

anyway, that dude is just another victim of monetary illiteracy.

Thu, 11/27/2014 - 11:59 | 5494079 Urban Redneck
Urban Redneck's picture

If the Einstein isn't domiciled in US, he might have a different perspective on legal tender laws.

Thu, 11/27/2014 - 13:50 | 5493995 Goldy Locks
Goldy Locks's picture

<<Gold is a fiat commodity currency (with insignificant intrinsic value).>>

Funny.

Wasn't JP Morgan who said "gold is money and nothing else" ? (http://www.zerohedge.com/news/2014-11-21/gold-money-and-nothing-else-jp-...).

And what about Greenspan's recent "stunning admission that gold is currency" ? (http://www.zerohedge.com/news/2014-11-07/greenspans-stunning-admission-g...)

Some people must be baaaadly concerned about the Swiss vote. I'm also, but for the opposite reason : I see 70% chances for a <no> result. Too much propaganda and not enough honesty in the Swiss media. A good opportunity probably about to be wasted.

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