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Peter Schiff: Currencies Depend On Faith, Gold Doesn't

Tyler Durden's picture




 

Submitted by Peter Schiff via Euro Pacific Capital,

In his July 17th Blog, Let's Get Real About Gold, author and Wall Street Journal columnist Jason Zweig likened investor interest in gold with the "Pet Rock" craze of the 1970's, when consumers became convinced that a rock in a box would provide continuous companionship, elevate their social standing, and give them something hip to talk about at parties. Zweig asserts that investor faith in gold, which he argues is just another inert mineral with good marketing, is similarly irrational, and has kept people from putting money in the much more lucrative stock market.

First off, Zweig's comparison of gold to equities as an investment vehicle sets up a false dichotomy. Gold is not an investment. It is, as Zweig indicates, nothing but a rock. But it is a rock that is extremely scarce, with highly desirable physical properties that have resulted in its being used as money for all of recorded human history. As a result, it should not be compared to stocks or real estate, but to other forms of money, such as any one of a number of fiat currencies now in circulation. Ironically, in a world awash in fiat currencies that are created at an ever increasing pace, and whose value is solely derived from faith in the issuing state, gold is the only form of money whose value does not require a leap of faith.

I have no emotional attachment to gold. I don't use it to cover my walls, I don't run my fingers through it and laugh, I don't ask my wife to paint herself with it. What I do know is that before the world moved to a fiat monetary system in the latter half of the 20th Century, gold had become the money of choice for nearly every major culture in every age. This supremacy was based on gold's scarcity, its versatility as a metal, its unique and useful properties, its beauty, and its wide cultural acceptance as a hallmark of love, permanence, wealth and success. There can be little doubt that people will always be willing to desire and accumulate gold...for any of a variety of reasons. The only question is how much they will be willing to pay. On that point, reasonable minds can differ. But to imply that gold has no more intrinsic value than a pet rock, is to recklessly ignore reality.

Up until 1971, the U.S. dollar was backed by the faith that the government would redeem its notes in gold. But, since then, that faith has been replaced by a simpler faith that others will always accept U.S. dollars in exchange for goods and services of real value. The transformation put the U.S. dollar in the same basket as all the other fiat currencies in the world whose value stems from the faith in the issuing government. In his piece, Zweigseems to assume that holding currencies is not an act of faith. But clearly this too involves a question of degree.

Most investors would certainly prefer gold to Argentine Pesos, Ghanaian Cedis, or Venezuelan Bolivars. In reality, what Zweig is saying is that good fiat currencies (the U.S. dollar being the gold standard of fiat currencies) require no faith to buy and hold. But why is that?

But the dollar's strength is supposed to derive from faith that the U.S. government will remain fiscally sound. There is little evidence that this will be the case. All of the traditional factors that determine a currency's value, i.e. trade balances, interest rates, government debt levels, economic growth, etc. should be putting downward pressure on the dollar. The U.S. government has done nothing to solve the nation's long-term debt crisis. Even the Congressional Budget Office admits that the Federal deficit will increase by an average of $35 billion annually until the end of the decade. By 2025, Trillion dollar plus deficits become entrenched (and those projections are based on economic growth assumptions that currently have proven to be far too optimistic.)

Despite all this, the dollar has surged close to a 10-year high, based on the Bloomberg Dollar Spot Index. Wall Street has explained the dominance by pointing to troubles in Europe and Asia, saying that the dollar has its problems, but it is the "cleanest dirty shirt in the hamper." Analysts pointed to the expected higher interest rates from the Fed that would under-gird demand for the dollar as other central banks around the world were lowering rates. But that outcome has yet to materialize.

At the end of 2014 most investors had assumed that the Fed would begin raising rates in the First Quarter of 2015. But disappointing economic growth has led the Fed to continuously delay lift off. Nevertheless, investors still think that the hikes are just around the corner. In reaching this conclusion, they blindly accept that our economy can survive higher rates when all the objective evidence leads to the conclusion that it can't.

In reality, faith in the dollar is based solely on the belief that the U.S. dominance of the global economy will continue indefinitely, no matter how deeply we go into debt, how low our interest rates remain, and how unbalanced our trade becomes.

We have seen this movie before. When confidence in the infallibility of central bankers is high,mainstream voices tend to cast aside gold and put their faith in the judgment of man. In 1999, New York Times columnist Floyd Norris penned an article entitled, "Who Needs Gold When We Have Alan Greenspan?" Despite Norris' dismissal, the real answer to that question was "everyone". In the following 12 years, at its high, gold rallied 650%.

From my perspective, the markets are now placing more misplaced faith in the wisdom of Janet Yellen than they had in Greenspan. As a result, gold is being shunned as it was back in 1999. Alan Greenspan's penchant for easing monetary policy to prop up financial markets led to the creation of two dangerous bubbles, the first in stocks in 2000, and then in real estate, which finally burst in 2007, leading to the Great Recession. Given that the easing of monetary policy made by Greenspan's successors has been much larger, one can only imagine what may be the enormity ofan economic disaster that looms on the horizon.

So yes, in a way my investment decisions are based on faith, but not the same type of faith that the Wall Street Journal assumes. My faith is that governments and central banks will continue to run up debt and debase currencies until a crisis brings the whole experiment to a disastrous conclusion. There is simply no historical precedent to reach any other conclusion. I also have faith that human beings will always prefer a piece of gold to a stack of paper. Separate a paper currency from its perceived value and you just have a stack of paper and ink. However, if they would just print it on softer and absorbent stock and put it on rolls, it might have some intrinsic value if we run out of toilet paper.

 

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Wed, 07/22/2015 - 19:04 | 6343220 FinalEvent
FinalEvent's picture

Peter is an ignorant gold bug who once said that bitcoin has no utility.

hahahahaha

Message to Peter:

They once rode horses instead of cars.
They also had cavalry instead of drones

Wed, 07/22/2015 - 19:13 | 6343255 Omega_Man
Omega_Man's picture

To buy bitcoin is silly for many reasons. It's hard to believe people pay hundreds of bucks for a bit coin.... insane. Perhaps it was created by some of the money changers for them to get rich? How would you know? 

Bitcoin is just another diversion away from REAL MONEY! 

Wed, 07/22/2015 - 19:24 | 6343291 Bitcoin Meiser
Bitcoin Meiser's picture

It is clear that you have never fully researched Bitcoin or its uses. Did you know that each bitcoin can be subdivided into 100 million smaller units (called Satoshis)? As Bitcoin becomes more popular and used as internet currency the holders of bitcoins will see their BTC go up in value because there is a strict, finite number of bitcoins. Let say through some future act of fate all fiats went away and we were left with Bitcoin to perform monetary transactions, and lets say that each Satoshi was worth the value we give to a US Penny. That would make 1 BTC worth $1,000,000!

People who buy and invest in Bitcoin invest in the future. They stake their claim on what is deemed as digital property, just like people who buy gold invest in gold as something that will have value later. Bitcoiin is very similar to gold, except that you can do more with Bitcoin than you can with gold, and Bitcoin is much more liquid. If you are brave enough to invest in gold, which just sits there in a vault and does nothing, then you should be brave enough to take a chance on Bitcoin.

Wed, 07/22/2015 - 19:42 | 6343344 Groundhog Day
Groundhog Day's picture

So those that get in early can become rich, have you heard of Charles Ponzi

Wed, 07/22/2015 - 19:44 | 6343351 Publicus
Publicus's picture

My faith is that gold will go up in currency terms.

Wed, 07/22/2015 - 19:55 | 6343398 Bitcoin Meiser
Bitcoin Meiser's picture

How is it any different than the Ponzi Scheme called The Stock Market?

As with everything in life, you snooze, you lose!

Wed, 07/22/2015 - 20:53 | 6343592 Ness.
Ness.'s picture

Anyone with an electrical outlet can 'mine' BTC, right?  No thanks.  

Thu, 07/23/2015 - 04:44 | 6344482 Lurk Skywatcher
Lurk Skywatcher's picture

And if electricity varies from its current state (pun intended) - i.e. either stops or surges, then bitcoin is destroyed.

Gold was forged with the death of a star, bitcoin was forged with a nerds +3 amulet of wishing and is stored in an enchanted bag of holding.

 

Thu, 07/23/2015 - 05:25 | 6344510 FinalEvent
FinalEvent's picture

Your homework: bitcoin difficulty adjustment

Bitcoin can run on free unlimited energy as well as on a bike dynamo.

Wed, 07/22/2015 - 21:11 | 6343601 DogOfSinope
DogOfSinope's picture

Its clear that you suffer from OCD.

Yes, there's clever mathematics behind BitCoin, you can't mine it arbitrarily, it is divisible, secure, blah, blah... All nice and fine. But what escapes the tunnel vision Bitcoin crowd is the fact that it's not real. It's what you believe that it is only in it's own imaginary, make-believe bubble Universe. And, the trouble with the make-believe stuff is - you can just arbitrarily make them up: Bitcoin, DogeCoin, BlackCoin, ZeroCoin, PotCoin (yes, this thing really exist), TitCoin (yep, this one, too)...

So, to make BitCoin work you must reach global consensus. I mean, consensus among the same people that are unable to reach consensus even about the Creator of the Universe (or whatever is your preferred take on that) and are prepared to butcher each other in millions on that lack of consensus. Give me a break!

Now, back to reality. Real stuff. In that physical reality, all the stuff in the observable Universe is consisting of molecules which in turn consist of the chemical elements, conveniently represented in the Mendeleev's Periodic Table of Elements. Scientific fact. Proven both theoretically and practically - self-evident, even. Now, there's some really cool stuff on that table. Some are gases, some are tough but corrosive, some are plentiful across the Universe, some would poison you to death, some would set you alight if you would touch them with your sweaty fingers, some will give you cancer by radiation… But, you know what? There’s only one element there that is ideal for the role of money! One! Across all of the Universe! Imagine that? It is quite scarce, but not too scarce. It won’t corrode. It's malleable. It’s divisible. It’s endlessly recyclable. It won’t poison you. It won’t evaporate. It won’t irradiate you. It won’t set you alight when you touch it. You know which one? Gold!

That’s precisely why it is the ultimate money. 

And, remember the people from the beginning of the story? The ones that can’t have consensus about the Creator of the Universe? Well, funny thing is, in all of the recorded history they have consensus on one thing - that the ultimate money is gold! Funny how reality works, eh?

And, who am I to question it?

Wed, 07/22/2015 - 21:56 | 6343808 Well Hungarian
Well Hungarian's picture

Well done!

Wed, 07/22/2015 - 22:33 | 6343919 DogOfSinope
DogOfSinope's picture

Cheers, good neighbour, Sir!

I hope you'll remove that silly fence soon! ;-)

Wed, 07/22/2015 - 22:25 | 6343897 Antifaschistische
Antifaschistische's picture

"Budget Office admits that the Federal deficit will increase by an average of $35 billion annually until the end of the decade."

Was this written in 1967?  

They are at least missing a zero, and at $350 billion annually I still think they're about 1/2 of reality....assuming we have no SHTF events.   If so, we're easily back to the Trillion+ dollar deficits.

Thu, 07/23/2015 - 03:20 | 6344415 FinalEvent
FinalEvent's picture

There is already consensus about which cryptocoin is the superior one, just look at price and liquidity.

An what about all those other 'perfect' money metals? What are you talking about consensus with gold when half the time the world ran on silver.

And by the way, gold might be a nice store of (declining) value, it is NOT money. I cannot trade it anywhere for goods or services while with bitcoin I can.

Gold was money, bitcoin replaced it.

I'm happy to sell all my gold to you.

Thu, 07/23/2015 - 04:07 | 6344451 DogOfSinope
DogOfSinope's picture

Bullshit.

Go to any livestock/food market anywhere in the world, bring some bitcoin and some gold. Then try to buy a chicken with each and see what the villagers (producers of real stuff) will rather take.

Fuck the money that doesn't work even if there's just no electricity.

Other precious metals are all too scarce and hard to extract to be money.

Silver is the second best money.

Bitcoin is a tax on people incapable to make distinction between real and imaginary.

BTW, friendly advice - bullshit is worse than lying. Don't do it. 

http://www.csudh.edu/ccauthen/576f12/frankfurt__harry_-_on_bullshit.pdf

 

Thu, 07/23/2015 - 04:33 | 6344473 FinalEvent
FinalEvent's picture

People will rather take a candybar than a bar of silver. Here watch this https://www.youtube.com/watch?v=bYhTFz_SGw0

Well, let's come back here in 5 years and compare prices of both monies.

 

 

 

Thu, 07/23/2015 - 05:29 | 6344512 DogOfSinope
DogOfSinope's picture

Bullshiting! You are still doing it! Stop it!

Thu, 07/23/2015 - 05:40 | 6344524 StackShinyStuff
StackShinyStuff's picture

EMP = no more bitcoin.  Gold?  Still there.

Thu, 07/23/2015 - 20:05 | 6347306 FinalEvent
FinalEvent's picture

Oh yes.

A perfectly fine reason to stop the fuck whatever you do.

You know what? Let's prepare for a supernova, your gold will be worthless because of the massive inflation of gold by fusion of elements into gold.

 

 

Thu, 07/23/2015 - 17:09 | 6346748 Me.Grimlock
Me.Grimlock's picture

You can trade either one with me for services. I (and my company) will take either one. We've only had one pay in BTC and none in Au (as of yet). The rest have been FRNs.

Smaller companies like ours can be much more flexible. :)

Wed, 07/22/2015 - 19:30 | 6343295 Supernova Born
Supernova Born's picture

The Fed is Don Quixote and gold is its windmill.

The contortions the Fed has engaged in to keep gold down have only made the situation worse and further removed from any objective reality.

Wed, 07/22/2015 - 19:14 | 6343261 junction
junction's picture

How can you have any faith in government and financial institutions that are the world's biggest drug dealers.  HSBC knowingly laundered billions in drug money, the CIA and their main man, Pablo Escobar (with Barry Seal flying the tons of cocaine into Arkansas when Clinton was the governor), Bush and his heroin-dealing Afghan warlords, the list goes on.  

Yet, when one black woman gets caught playing a secondary role in a drug deal in Texas, she gets sent away for life on one count of conspiracy to deal drugs.  

In a Washington Post story on Sharanda Jones, given a life sentence in 1999 on her first drug conviction, there is a listing of the “enhancements” that led her to receiving that mandatory sentence.  One enhancement was that Sharanda Jones gave false testimony, an obstruction of justice.  Lying under oath is usually treated as perjury, which requires a second hearing to determine guilt or innocence.  No such hearing seems to have taken place, unnecessary in the eyes of federal District Judge Jorge Solis. 

Solis had spent over three years as special prosecutor on different narcotics task forces yet he handled the Jones case as if he knew nothing about drug dealing, the corrupt police and federal agents who protect drug shipments and the Mexican drug lords actually responsible for trans-border mega-shipments of narcotics into west Texas.  In Mexico, most top law enforcement officials are on the Sinaloa drug cartel payroll.  Why should it be different in west Texas? [Or anywhere else in America, for that matter]

--- 

When she was convicted on one count of seven, prosecutors said her testimony in her defense had been false and therefore an “obstruction of justice.”  Enhancement.

www.washingtonpost.com/sf/national/2015/07/15/from-a-first-arrest-to-a-l...

Wed, 07/22/2015 - 19:18 | 6343272 negative rates
negative rates's picture

It's called oligarch's practicing eugines in private, and then publically lie about at any cost.

Wed, 07/22/2015 - 19:14 | 6343262 negative rates
negative rates's picture

And then Kennedy got elected and had to go to the moon, you see now where things went bad?

Wed, 07/22/2015 - 19:59 | 6343326 pFXTim
pFXTim's picture

> Peter is an ignorant gold bug who once said that bitcoin has no utility.

interesting comment/implications. peter's always struck me as a pretty knowledgeable and straightforward guy. apparently he's even got the knowhow to start a bank...a frign bank...

did he really say bitcoin has no utitliy? this sounds a bit hyperbolic to me...clearly bitcoin has some utility.

it seems like most thinking people recognize that the jury's still out with regards to where/when this will all end...I've bookmarked your comment in order to congratulate you on your insight when things do in fact turn out to be different this time...

 

Thu, 07/23/2015 - 04:45 | 6344481 FinalEvent
FinalEvent's picture

Yep, he and Jim Rickards both agreed on that fact.

I'm not sure, but this could be the video where they said it https://www.youtube.com/watch?v=1zhtoJEfXBY

It was laughable.

I never took him serious afterwards

Wed, 07/22/2015 - 19:38 | 6343332 Groundhog Day
Groundhog Day's picture

Yes let's evolve to a cashless society, give all the power to a handful of bankers to appropriate the right amount of digital credits in exchange for your labor. I'm sure they will work very hard to give themselves some more since they are so smart

Thu, 07/23/2015 - 04:47 | 6344486 FinalEvent
FinalEvent's picture

No I rather use bitcoin instead.

Thu, 07/23/2015 - 00:37 | 6344197 mqg25
mqg25's picture

Ignorant? Hmm..Here is the true test for money. You go to a whore in Athens Greece and ask her if she prefer to be paid in bitcoin or gold? If you think she will say bitcoin then P.T Barnum was right and you aint gettin laid.

Thu, 07/23/2015 - 04:49 | 6344488 FinalEvent
FinalEvent's picture

I think she'll take bitcoin because the guy next door sells cocain for it.

Wed, 07/22/2015 - 19:03 | 6343223 davidalan1
davidalan1's picture

Peter be right....

Please watch to your assured amazement and pleasure....God bless Amerika

https://www.youtube.com/watch?v=bYhTFz_SGw0

Wed, 07/22/2015 - 19:09 | 6343236 wrs1
wrs1's picture

Same story different day, still wrong.  The faith here is in gold, that is all gold has either.  Faith that it's worth something to someone else.  Can't heat your house or drive your car with it or eat it or live in it.

 

Hey did the Lord buy Janice a Mercedes Benz?

Wed, 07/22/2015 - 20:49 | 6343561 Rage Against Yo...
Rage Against Your Face's picture

The elites know that Gold is the only viable way to transfer their wealth to the next financial system. Storing all your wealth in other items (food, fuel etc...) and keeping them safe is difficult enough for regular people but near impossible for the elites. It's been money for 6,000 years for a reason.

Wed, 07/22/2015 - 19:09 | 6343238 silverer
silverer's picture

Peter is almost there.  I'll have to go with Barnhardt this time.  Although gold is certainly a lot more solid as having value through the ages, the value of anything tangible taken in trade, including gold, is in men's hearts, not what you would hold in your hand.  There really isn't anything you can attach to a human externally that is guaranteed to have intrinsic value to another human being.  It has to come from inside a person.  That's the only way value for anything can really exist.

Wed, 07/22/2015 - 19:09 | 6343244 Omega_Man
Omega_Man's picture

I have some money from the soviet union, and some nazi money (the non gold type).. I suppose US dollar will have the same value as those someday someday. Maybe it won't be long...  all the the right events seem to be taking place. 

Wed, 07/22/2015 - 19:14 | 6343263 Bitcoin Meiser
Bitcoin Meiser's picture

Using gold as currency works in a world where the population is only a couple of million and there are only 300 people living in a town. But in today's modern world with over 7 billion people it is just impractical. It can only be used as a basis of measure; a way to ensure value to a fiat or digital currency by using some small measurement of it for backing. 

In the hands of normal people gold is just ridiculous and impractical. The smallest piece is way to valuable to carry around or even divide (if that is possible) so that it could be of use.

The world that Peter Schiff envisions is a post-apocalyptic, Mad Max world where marauding gangs of desert-dwellers ride around kiliing innocent people and fighting over food, water and slaves. Okay, maybe in that world carrying gold coins around may be practical, but it would probably get you killed before you could make use of it.

Wed, 07/22/2015 - 19:20 | 6343279 Omega_Man
Omega_Man's picture

That's why we had silver, copper, and nickel  coins. AND GOLD coins. 

They come in various sizes. 

Just imagine in 1972 a new toyota cost $1500, does that seem cheap to you? Is it managable with some silver or gold, or gold backed paper.

Today's same Toyota in class cost $50,000..

understand inflation now? Gold and silver can take care of any money supply... it's all in the math and value per ounce. 

 

Like it or not, the coming changes to the world's money supply will involve gold as nations won't trust each other after the shit US and money changers have been doing. 

Wed, 07/22/2015 - 20:08 | 6343452 Fun Facts
Fun Facts's picture

nickels are the only money left in the banks

Wed, 07/22/2015 - 20:57 | 6343611 Winston Churchill
Winston Churchill's picture

Not if gold floats, not unlike BTC.

But the fiatmasters would never allow that, and the same would happen if BTC ever

became a real threat.

Thu, 07/23/2015 - 02:37 | 6344367 JustUsChickensHere
JustUsChickensHere's picture

You are assuming the fiatmasters have infinite power. They already banned gold in the USA ... but that did not work.

It is true they destroyed Napster, and e-Gold (a Bitcoin predecessor), but Torrents replaced Napster (decentralised), and Bitcoin replaced e-Gold (decentralised).

Torrents have proven unstoppable, and so will Bitcoin - for the same reason.  Gold is also unstoppable for the same reason - no central point of control.

Gold simply has a much, much longer track record as both currency and money.

It is also far simpler - just an atomic structure - and 15.3 Billion years of evidence that implies its attributes are likely to remain unchanged well into the future.

Neither Torrents nor Bitcoin can claim that simplicity. Both however do have interesting attributes that gold does not have. This gives them utility value in our current technological civilisation. Will these tools continue into the future? (and will our civilisation continue?) ... far less likely than gold continuing to exist, but they will probably last long enough to be useful, and probably longer than the USD remains the reserve currency of the world.

 

Wed, 07/22/2015 - 21:48 | 6343742 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

Paper currency could still be used, or even electronic cards---it's the backing of it with tangible value that matters.  Actually if gold was revalued to reflect its value relative to the amount of the various fiats of the world,

then a small amount electroplated onto a substrate, or woven into a note, etc.. would be valuable enough to serve as a convenient medium of exchange.  Whereas coins or ingots would be for settling very large

transactions.

Thu, 07/23/2015 - 05:42 | 6344527 StackShinyStuff
StackShinyStuff's picture

Why.  Do.  Central.  Banks.  All.  Own.  Gold????  Riddle me that asshat.

Thu, 07/23/2015 - 20:10 | 6347317 FinalEvent
FinalEvent's picture

Because they don't want you to use it.
Or, they want to fuck you up with it.
Either way, they don't 'store' it for your benefit.

Give them their fun and use superior bitcoin instead.

 

Wed, 07/22/2015 - 19:15 | 6343264 Omega_Man
Omega_Man's picture

At the end of the Roman Empire the denarius had no silver in it either.... only a matter of time.....

Wed, 07/22/2015 - 19:24 | 6343297 Irishcyclist
Irishcyclist's picture

The conquered are forced to use the currency of the conqueror. The Roman Empire recognised the requirement to force those who are conquered to use currency which depicted the Emperor who forces occupied that territory. And that was the power of currency.

The British value the symbolism of the using the Queen's legal tender - depicting the Queen's image - in England.

These sort of issues are important to the conquerer and those not wishing to be conquered.

 

 

Wed, 07/22/2015 - 19:17 | 6343267 LongSilverJohn
LongSilverJohn's picture

I just bought another handful of Gold Eagles the other day. I can sleep at night knowing that when I wake up tomorrow morning, or when my grandson wakes up one morning years from now, the gold will still be worth something. That's about as intrinsic as it gets.

As for rolling fiat currency onto rolls with instrinsic value, I'd have to disagree with Peter for once: Zimbabwee ended up outlawing the use of it for toilet paper, as it clogged the pipes (I carry a 10,000,000,000,000 Zimbabwee note in my wallet as a reminder of where things are headed)...

Wed, 07/22/2015 - 19:23 | 6343289 Omega_Man
Omega_Man's picture

Well you will have wealth enough to buy nice toilet paper, while all the losers will be stuck wiping with US bills. 

Wed, 07/22/2015 - 19:31 | 6343316 Bitcoin Meiser
Bitcoin Meiser's picture

You are in denial. Gold is $1091 an ounce and dropping. It was $300 an ounce ten years ago.

Tomorrrow or by end of week gold will be less than $1084 an ounce. There is nothing stopping it from going lower. You are losing money.

Yes, gold may have value in the future. One hundred, two hundred years from now? You may be dead and buried by then.

Please use critical thinking.

Wed, 07/22/2015 - 20:27 | 6343500 F22
F22's picture

The price of gold depends on derivatives and paper gold.  There are roughly 100ozs of paper gold for every oz. of physical gold.

I expect that the price of paper gold will continue to plummet somewhere South of $900 before the market breaks.

When the market breaks, holders of paper gold will find that their holdings are worth the paper they are printed on.  Holders of 

physical gold will experience a once in a lifetime revaluation to perhaps exceed $55,000 per oz.

This is what those who understand the premise of "Freegold" anticipate.  Don't be late to the party....get some physical gold while you 

still are able to find it!

Wed, 07/22/2015 - 20:28 | 6343501 F22
F22's picture

If you don't hold it...you don't own it.

Wed, 07/22/2015 - 21:01 | 6343623 Ness.
Ness.'s picture

In 2013 BTC was $980.  Now it's $277.  Would you consider that 'dropping'?

Wed, 07/22/2015 - 22:02 | 6343824 Well Hungarian
Well Hungarian's picture

Ness. Ness. Ness. Stop with the logic and reason. Don't you know when you turn their own arguments on the mentally deficient, they use their retard strength on you!

Wed, 07/22/2015 - 23:07 | 6344016 Ness.
Thu, 07/23/2015 - 02:17 | 6344346 flyingpigg
flyingpigg's picture

DEespite the drop that's still $277 above Bitcoins intrinsic value. My gold maples can always be melted into a nice necklace for my wife.

Thu, 07/23/2015 - 02:52 | 6344379 JustUsChickensHere
JustUsChickensHere's picture

That is because Gold is a dual use currency (and money).  Bitcoin is not dual use. It can only be used as currency (and maybe money, but that requires a lot more time for us to find out).

All currency systems (including PM's) have systemic risk - if people everywhere no longer wish to recognise that system as currency, it stops having any value.  National fiat systems also have a structural failure built into them - corruption leading to debasement.

Gold itself can not be debased (though actual coins certainly can). That is why people continue to trust it as a measuring tool for trade exchanges - a currency.

Bitcoin represents something new. A non-commodity, digital currency with a builtin deflationary bias. This is a true contrast to all the other digital currencies (USD etc), which via the central banks, have a builtin inflationary bias (to fund politicians over promises).

The world has never seen a digital globe spanning currency that is voluntary and deflationary, so no one really knows what affect it will have.

The only other examples of globe spanning voluntary and deflationary currency that we know is gold (silver/copper) .... and that currency turns out to have durability that is sufficient for us to also call it money.

Please note: Bitcoin is definitely not 'fiat' - by decree - unlike national currencies, no one is forcing you to use Bitcoin. There is no decree involved here - just free market choices.

 

Thu, 07/23/2015 - 20:13 | 6344492 FinalEvent
FinalEvent's picture

Bitcoin is not deflationary, please do your homework.

There are currently a few thousand coins mined (added to the money supply) every day.

 

And also, bitcoin is not dual, it's multiple.
You can use it for many many things other than money.
You can prove history with it.
You could put something into the blockchain which is not able to be changed by the winners of war.

Wed, 07/22/2015 - 19:26 | 6343305 kchrisc
kchrisc's picture

Gold and guillotines, two things that go well together.

Gold enables one to avoid the banksters. Guillotines enables one to not have to avoid the banksters.

Liberty is a demand. Tyranny is submission..

Wed, 07/22/2015 - 19:26 | 6343306 chosen
chosen's picture

Gold also depends on faith.  It is basically as useless as paper money.  Gold simply has a history of being of some value.  I guess because it is shiny and does not rust, so ancient kings liked it.  It seems nowadays that women and queers and people from poor countries like India and China like it a lot.

Wed, 07/22/2015 - 19:37 | 6343329 Latitude25
Latitude25's picture

5000 years as money and half of the worlds population believe in it.  It's money and meets the definition perfectly unlike any other currency, bar none.  Unless you're smarter than Alan Greenspan?

https://www.youtube.com/watch?v=JlM6kNNz0G8

Wed, 07/22/2015 - 21:46 | 6343781 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

Its rarity, malleability, conductive properties, ductility also play a role.

Wed, 07/22/2015 - 19:29 | 6343307 lasvegaspersona
lasvegaspersona's picture

Peter, Peter...

how can you say gold is being shunned?

Just because  somebody did a 2.7 billion dollar Forex trade Sunday night buying Yen (or dollars or Euros) and sold XAU (gold) it does not mean    gold is unwanted. Someone just thought the Yen would do better than gold in the fractional reserved system or that they needed Euros and the EUR/XAU was the best vehicle to get there. Gold in its physical form is dissappearing fast!

The GLD inventory has fallen 5 days in a row and is now below 700 tons.

China has admitted they can't get all the gold they want because the 'market is too small' (and any attempt to get their 8500 tons would send gold into the 10s or hundreds of thousand dollars per ounce.)

Gold is highly desired. The current Forex market where most gold is bought and sold, does not care about the yellow stuff. It is just another currency. It is a valid trade only as long as physical can be produced for those who want the rock.

China could upset the apple cart anytime and take the dollar with it. Just hope they don't before you get your gold.

Wed, 07/22/2015 - 19:28 | 6343309 Pumpkin
Pumpkin's picture

I have a lot more faith, that some Satanists POS isn't going to start printing more gold.

Wed, 07/22/2015 - 19:29 | 6343311 chosen
chosen's picture

The US dollar is actually backed up by the largest economy, the largest military, and largest nuclear arsenal on the planet.  That is why it is prized by most people.  Curiously the people who hate the dollar most seem to be Americans.

Wed, 07/22/2015 - 19:43 | 6343348 Latitude25
Latitude25's picture

China now has the largest economy.

http://www.bbc.com/news/magazine-30483762

China has the largest army.

http://www.mapsofworld.com/world-top-ten/world-top-ten-countries-with-la...

Russia has the largest nuclear arsenal

http://www.ploughshares.org/world-nuclear-stockpile-report

Try again spammer

Wed, 07/22/2015 - 19:51 | 6343383 silverer
silverer's picture

And Russia only has a debt to GDP of about 17%.  What was the US again?  I heard 108%.  I'm beginning to think that what we are seeing is a blizzard of paper bullshit.  It's worth "whatever".  And it gets better every day, don't you think?

Wed, 07/22/2015 - 19:56 | 6343411 Latitude25
Latitude25's picture

What we're seeing is desperation to maintain normalcy "whatever it takes".

Wed, 07/22/2015 - 23:47 | 6344096 chosen
chosen's picture

I don't see a lot of people putting their money into Chinese renminbi, Russian rubles, Euros, or gold for that matter.  Try again, imbecile.

Wed, 07/22/2015 - 20:27 | 6343499 Pumpkin
Pumpkin's picture

Americans sense what the fiat, and man's lust for it, has done to their country and freedom.  Most could not accurately describe what or why.  But most at least know it isn't good or for their benefit.

Wed, 07/22/2015 - 21:35 | 6343740 Quus Ant
Quus Ant's picture

Lust is the culprit.   Many atrocities were committed for love of gold and silver, think of what that untempered lust did to the New World!

Men refuse to be satisfied with the gifts Gaia gives freely.

"Consider the lilies, how they grow: they neither toil nor spin; but I tell you, not even Solomon in all his swag was adorned such as these.  But if Gaia so clothes the grass in the field, which is alive today and tomorrow is thrown into the furnace, how much more will he pimp thy ride?  You men of little faith!"

"Same as it ever was."

Wed, 07/22/2015 - 20:29 | 6343506 Herodotus
Herodotus's picture

When the Fed raises interest rates to normal levels, like they say they will, the United States government will no longer be able to afford an Army or a Navy.  The money that currently pays for those departments will have to go to pay interest on the $19 trillion debt.  At 4% interest that will be $760 billion dollars. 

Wed, 07/22/2015 - 22:17 | 6343867 lakecity55
lakecity55's picture

The dollar is backed up by the Power the US had amassed after WW1 and WW2.

It is that Faith which has kept it afloat, along with the Petro status.

This is not a permanent situation.

Once it is opposed by the Yuan and drained by increasing debt, things will Change.

Thu, 07/23/2015 - 12:24 | 6345646 ersatz007
ersatz007's picture

I don't hate the dollar. I hate that we are $18 trillion + in debt and depending on who you ask, we have already reached or are close to reaching a point where we can no longer even pay the interest on said debt much less the principle I don't know what world you live in but the world I live tells me that at some point something has to give.

Years ago my mom used to say that the money she had in the bank was backed by the FDIC and that the only way that would be a problem is if the U.S. ever went bankrupt and that would never happen. I asked "why not?" then. And it seems even more plausible now.

Thu, 07/23/2015 - 12:28 | 6345668 chosen
chosen's picture

The size of the debt does not matter as long as it can be serviced.  Nobody in their right mind should expect the US government debt to be ever paid off.

Wed, 07/22/2015 - 19:30 | 6343315 Atomizer
Atomizer's picture

Faith is built on Federal Reserve to stop printing money which has no intrinsic value to validate speculative irresponsible activities without leverage to cover risk loss. 

If the bank fucks up, they take away the depositors $$$ account. If the depositor fucks up a loan, the bank takes your assets. 

Time to have a firing wall squad. Counterfeit manufacturing of currency is illegal. 

Thu, 07/23/2015 - 00:12 | 6343415 Oscar Mayer
Oscar Mayer's picture

There is no law anywhere that authorizes either the Fed or the banks the right to create money.  There is no law anywhere that acknowledges the credit created by the Fed or the banks as money.  

There is no law anywhere that even acknowledges credit as a currency.  

Credit does not qualify as a currency or money because it requires bank intermediation in every transaction for it to work.

http://carl-random-thoughts.blogspot.com/

the Frog

Wed, 07/22/2015 - 19:34 | 6343323 Börjesson
Börjesson's picture

Just how utterly out of touch with the world around him is Peter Schiff? In order for him to refer to paper currency as toilet paper, not just in passing but as a punchline, as if he's just said something clever and original, he must have been living under a rock for the last decade.

Wed, 07/22/2015 - 19:54 | 6343393 Atomizer
Atomizer's picture

Question:

How do you plan to pay off the derivative and compounding interest loan obligations?

Are you going to send in the unicorn and gay flag to shoulder financial responsibilities? They are broke back mountain types who don't have a pot to piss in. They sure look like debt slave millionaires.

 

Wed, 07/22/2015 - 19:45 | 6343359 Omega_Man
Omega_Man's picture

I live in Canada. I didn't lose on my silver cause my currency went down more than silver!! So I am ahead of all my fellow Cdns for the most part. I maintained my wealth that I had in silver. 

I spend a lot of time in Russia, when the currency went down 60%, nobody died, or went crazy. Canada down 30% nobody died or went crazy.

When USD goes down 50%  A LOT of people are going to die and everyone will go crazy!! 

It will trigger other events that lead to more problems, race war etc.... total meltdown! 

Wed, 07/22/2015 - 19:48 | 6343369 silverer
silverer's picture

Sounds about right.  When the Zim dollar went to zero, they went to the US dollar.  Looks like Zimbabwe is not off the hook yet.  Next currency will be?

Wed, 07/22/2015 - 19:47 | 6343364 Oscar Mayer
Oscar Mayer's picture

Gold had become the money of choice for nearly every bankster in every age because it's far easier to get governments and people indebted with it.

Wed, 07/22/2015 - 22:13 | 6343855 SubjectivObject
SubjectivObject's picture

And getting the whole world indebted with fiat has been how hard, by comparisson?

Thu, 07/23/2015 - 12:10 | 6344124 Oscar Mayer
Oscar Mayer's picture

I suppose you'd be surprised to learn that they didn't even use fiat to do it.

They used gold standard accounting rules applied to credit.

Question, how does a government issuing a fiat money go into debt?  What is it borrowing and what does it owe?

Peter Schiff is controlled opposition.

By the way, it's impressive how you can compress and nigate several centuries of bankster/gold history into about 35 years of observable time to formulate your witty retort.

So as it is, so has it ever been, right?

Gold is a great asset to hold as a preservation of wealth but as money, it truly sucks as all it accomplished as such is a transfer of wealth from the bottom to the top.  And the lack of sufficient quantities of gold to conduct daily commerce was the primary reason fractional reserve banking was invented.

Wed, 07/22/2015 - 19:55 | 6343405 Omega_Man
Omega_Man's picture

People, like my relatives and friends who laugh cause I told them to buy gold, (even though they live in Canada and don't realize CDN dollar lost 30% and they would have been ahead) and people who laugh at Peter and real the mainstream media with glee about gold's demise ignore the fact that Russia and China and I am sure bankers themselves are getting all the gold they can. 

So JPM says bad stuff about gold while buying up all the silver they can get. I don't see them buying bitcoin. I don't see them buying USD (borrowing it cause it has no value- free) 

There are gonna be a lot of people sad who don't have gold and silver. 

PLUS Russia and China are in a position to make gold price go UP... so that in itself says something. They can do it with one smallish order in silver $15 billion 

Wed, 07/22/2015 - 20:03 | 6343435 Bitcoin Meiser
Bitcoin Meiser's picture

I just want to say that in 1993 no one even conceived of being able to open a Windows program on their Windows 3.1 PCs that would allow them to view pages of information and pictures that were pulled over telephone lines from all parts of the world. And then it happened. That was only a little over twenty years ago. We live in a completely different world now.

There is no reason not to take a chance an invest in at least 1 bitcoin.

Wed, 07/22/2015 - 19:57 | 6343414 Bitcoin Meiser
Bitcoin Meiser's picture

All of the asian anchorwomen on Bloomberg Asia are hot. I'm moving to China.

Wed, 07/22/2015 - 22:08 | 6343840 lakecity55
lakecity55's picture

the ones in india are hotter.

Wed, 07/22/2015 - 20:03 | 6343432 Temerity Trader
Temerity Trader's picture

He is a fool. Gold is nothing but a curiosity. What “value” does anything have for that matter, other than its utility? None! Gold has a few industrial uses and for bling…right. A house is roof over your f***ing head, that’s all, its not an investment either. What are stocks f***ing worth? If you add up ALL the company’s assets and put them on sale…that’s it. And I would guess you couldn’t get 25% of what most company’s inflated phony stock price is trading at. Try selling “good will” and customer lists, used worn down buildings, distressed properties, etc, etc. Pennies on the dollar.

Gold is a joke…you can’t eat it and if you can’t find anyone to buy it, you are f***ed. Classic cars for sale at insane prices at Barrett Jackson. All due to loose Fed dollars flowing to the wealthy. When the bubble bursts, watch those prices tumble. Guns, food, water, ballistic armor, have some value in that they may keep you alive if things get really bad. The rest of the shit this society values, is worthless! Try selling an I-Phone when all the cell towers have long been blown up and then stripped for copper wire to sell for pennies for some food. Gonna sell that HDTV with no more service or internet? “Nice 72” OLED TV for sale…$75.00 or best offer….screen cracked slightly!” LMAO.

People gonna sell those gas-guzzling SUVs with ten-years more payments to go, for what? Ten cents on the dollar? This whole materialistic, debt-driven, Fed Bank enabled society is about to end real ugly. They will be doing QE-15 with the Dow at 3,200.

Wed, 07/22/2015 - 21:51 | 6343787 Pancho de Villa
Pancho de Villa's picture

Damn, Road-Warrior, I guess yer gonna be living High on the Hog, with your recipe book for Gourmet Federal Reserve Note Casserole! I do hope you enjoy it! I suppose you're expecting to see One Ounce Gold Eagles or Buffalo's revert to their "Legal Tender Value" of $50, only desired by your homies to dangle from the chain around their necks? 

 

Only a Fool Would Say That!

Wed, 07/22/2015 - 20:04 | 6343436 Omega_Man
Omega_Man's picture

Someone here loves bit coin

 

The thing is... when the system breaks it will do so worldwide. There will be a credit lock up, no new phones on ships from china, maybe no internet, in some areas, no power if they can't buy fuel, no trade... no ships plowing the oceans, no food on the store shelves. 

How many old ladies in Greece rushed out to buy a smart phone and buy bit coin in the past few weeks... zero... 

so there is your answer. 

Infastructure for bitcoin eminated from the ponzi scheme money, therefore it cannot exist without it... 

Wed, 07/22/2015 - 20:04 | 6343439 AUD
AUD's picture

Gold is not scarce. It does however have a physical property that makes it the most useful object in the universe.

Wed, 07/22/2015 - 20:14 | 6343466 Prober
Prober's picture

Gold price in USD is STILL making record-breaking declines

EVEN in is time of increasing monetary, fiscal, economic, and political crisis globally,

WHILE all the carnival-barker apocalypse-is-immanent you-must-buy-gold windbags are spewing their self-serving hype at tornadic ferocity

EVEN while there are reports that China & Russia are buying every ounce of shiny lead that they can find

AND long treasuries are rallying

OBVIOUSLY the thing lacking in confidence is GOLD, a spectacular waste of spendable investable fiat.

Wed, 07/22/2015 - 20:15 | 6343469 devo
devo's picture

Schiff is wrong about everything. He has gold and oil both going to the moon. Good one, dude.

Wed, 07/22/2015 - 22:39 | 6343939 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

I have a lot of respect for Peter Schiff and think he's right about 90% of his calls. But, like you, I questioned his oil going higher call when I first heard it on one of his podcasts a month or so ago. 

But, hey, can't get them ALL right. 

As for gold...to the moon, Alice.

Tick tock, tick tock....

Wed, 07/22/2015 - 20:23 | 6343491 Mayer Amschel R...
Mayer Amschel Rothschild's picture

Jacob Schiff was literally born in the 5-story Rothschild house that the two families shared.  Peter is Rothschild blood.  He is controlled opposition.

Wed, 07/22/2015 - 20:29 | 6343504 devo
devo's picture

Lol. You listen to infowars and live in a bunker with buckets of rice.

Wed, 07/22/2015 - 22:30 | 6343909 Mayer Amschel R...
Mayer Amschel Rothschild's picture

I have read Eustace Mullins' World Order.

 

You don't actually believe a TV personality?

 

"I really look with commiseration over the great body of my fellow citizens who, reading newspapers, live and die in the belief that they have known something of what has been passing in their times." (Thomas Jefferson)

Wed, 07/22/2015 - 20:31 | 6343513 withglee
withglee's picture

I also have faith that human beings will always prefer a piece of gold to a stack of paper.

Where has he been the last four years?

Up until 1971, the U.S. dollar was backed by the faith that the government would redeem its notes in gold.

Which was silly then as it is now. There is only 1oz of the stuff per person on Earth. Now, less than $2,000. Chump change. And in 1971 the street price was already twice the official price. The horse had already left the barn.

There can be little doubt that people will always be willing to desire and accumulate gold...for any of a variety of reasons. The only question is how much they will be willing to pay.

Cost of production sets the lower limit (and in the steady state, the upper limit). Production cost is currently less than $2,000 per ounce. The only time people are willing to accumulate gold is when the counterfeiting carried on by the government becomes obvious and intolerable to all. That's the case now ... yet propaganda and manipulation are still able to suppress the price of the shinny stuff.

Most investors would certainly prefer gold to Argentine Pesos, Ghanaian Cedis, or Venezuelan Bolivars

Perhaps, but even now with gross counterfeiting going on with the USA dollar (e.g. QE), investors ... traders ... everyone still prefers dollars to gold. When the reset comes, gold will have its 6 months in the sun. Then traders will go back to more efficient means of exchange. Hopefully they'll adopt a properly managed one.

A properly managed Medium of Exchange (MOE) recognizes money for what it really is, always has been, and always will be: "a promise to complete a trade". It is created by traders getting their trading promises certified (not by miners and printers and banks); it is destroyed on delivery as promised (not left to float around arbitrarily forever); it guarantees zero inflation of the MOE by mitigating DEFAULTs with immediate and equal INTEREST collections. The operative relation is: INFLATION = DEFAULT - INTEREST = zero.

We have had a poor substitute for a properly managed MOE throughout all history, and gold and silver are certainly not exceptions. Even with the built-in 4% inflation leak in our currently mismanged MOE, gold is not preferred over it.

Thu, 07/23/2015 - 00:56 | 6344233 Oscar Mayer
Oscar Mayer's picture

"A properly managed Medium of Exchange (MOE) recognizes money for what it really is, always has been, and always will be: "a promise to complete a trade". It is created by traders getting their trading promises certified (not by miners and printers and banks); it is destroyed on delivery as promised (not left to float around arbitrarily forever); it guarantees zero inflation of the MOE by mitigating DEFAULTs with immediate and equal INTEREST collections. The operative relation is: INFLATION = DEFAULT - INTEREST = zero."

That has got to be about the most discordant amalgamation of words I've read in a while.

Thu, 07/23/2015 - 09:58 | 6345056 withglee
withglee's picture

Oscar Mayer: That has got to be about the most discordant amalgamation of words I've read in a while.

Can you be more specific? What doesn't fit? What doesn't belong? What don't you agree with? What don't you understand?

Thu, 07/23/2015 - 11:59 | 6345533 Oscar Mayer
Oscar Mayer's picture

The entire concept is nonsensical and void of any meaning.

Money is not "a promise to complete a trade", money is "Obligations Met, Trade Completed".

WTF does money being created by "traders getting their trading promises certified" supposed to mean?

Followed by "it is destroyed on delivery as promised (not left to float around arbitrarily forever" WTF????

So what you're saying is that there is no money, that everyone is an intermediary in someone else's goods transactions and that no one ever gets paid.

Idiotic.

Thu, 07/23/2015 - 15:49 | 6346349 withglee
withglee's picture

WTF does money being created by "traders getting their trading promises certified" supposed to mean?

It means just what it says. Ever buy a house or car with a loan? You promise to pay monthly payments. You're given (you create) a certificate (money) which you give to the seller. Then as promised, you return certificates (money). Capitalism leads you to believe it is savers and investors that create and deliver that money, but with their 10x leverage on savers' money, and the ability of capitalists to double their money in two years (4% spread x10 leverage = 40% which doubles in two years), capitalism is just a way of giving a tiny group of insiders a privilege you and I don't have.

Followed by "it is destroyed on delivery as promised (not left to float around arbitrarily forever" WTF????

And as you return the certificates each month as you promised, they are destroyed. When you've totally delivered on your promise, no certificates created by you exist any longer.

It's almost exactly like the system we have now with a couple very important differences. While most traders create money as I describe, huge deadbeat traders (governments) create it with no intention of delivering on a trading promise (they roll them over ... they default). And since the money they create is essentially counterfeit and never returns, it floats around arbitrarily forever. They actually admit to manipulating it ... calling it supply-side economics ... or Keynesianism ... and money tightening ... and capital controls.

So what you're saying is that there is no money, that everyone is an intermediary in someone else's goods transactions and that no one ever gets paid.

Essentially yes ... execpt "everyone" gets paid and there is no chain reaction with default. If a trader defaults, his trade is made up with interest collections.

What I'm saying (and did say) is money is created by traders getting their trading promises certified. It is destroyed by traders delivering on those promises.

In the mean time (and I didn't say this because it is obvious), the certificates circulate as objects of simple barter ... the most valued of all such objects because they are in free supply, they never lose value (except in our current system with its built-in 4% graft leak called inflation), and they are accepted everywhere. Money enables simple barter over time and space.

Idiotic.

Not idiotic ... but obvious. The proof is in examining the three steps of trade: 1) Negotiation; 2) Promise to deliver; 3) Delivery. With simple barter, (2) and (3) happen simultaneously on the spot. Money allows (2) and (3) to happen over time and space and thus obviously represents the explicit trading promise it certifies. And the government corruption of counterfeiting and its effect is also obvious

Eliminate the government's role in our MOE management and you have a properly managed MOE. An MOE that promises, guarantees, and delivers zero inflation.

Thu, 07/23/2015 - 16:12 | 6346476 Oscar Mayer
Oscar Mayer's picture

Convoluted irrational and stupidly idiotic.

It makes no sense at all.

"You're given (you create) a certificate (money) which you give to the seller."

Why bother, why don't the seller just give you whatever you want without all the hoopla, he's ends up with nothing in the end anyway because he destroys the "certificates" you pay him with, so what's the point of making you "create" them in the first place.

You must've been on welfare your entire life.

 

Fri, 07/24/2015 - 09:29 | 6348736 withglee
withglee's picture

Why bother, why don't the seller just give you whatever you want without all the hoopla, he's ends up with nothing in the end anyway because he destroys the "certificates" you pay him with, so what's the point of making you "create" them in the first place.

Any third grader can get the concept. I'm wondering why you're having difficulty with it.

In fact, when you borrow for a house or car, what I describe is exactly what's happening. The only difference is that they're injecting this illusion of a capitalist or saver who's going to make good on the deal if you don't hold up your end of the bargain. That's where bank runs come from ... the savers saying I never agreed to get stiffed when I put the money in your bank.

he's ends up with nothing in the end anyway because he destroys the "certificates"

You're not paying attention. When you borrow for a house, the certificates you create are given to the builder. At that instant, they become the most desirable objects of simple barter exchange ... we call it money. He likely takes most of them to purchase labor, equipment, and materials to build another house (or to deliver on his promise when he borrowed for those items it which case destroys it ... the trading promise it stands for he has delivered). If he has any left over ... i.e. profit,  and it's a mismanaged MOE, maybe he tries to invest it to avoid the 4% inflation leak we think is natural. With a properly managed MOE he could just put it under his mattress with full confidence its inflation level is perfectly zero ... it never loses or gains value.

sIt is you, .... the buyer ... the trade promissor ... the money creator, who destroyed the currency ... not the seller. To do this, most typically you have an employer who makes a similar promise with you. You agree to work for him for a week, and at the end of the week he gives you certificates. These may have come from the normal flow of his business, or they may have come from some trading promise he made and got certified. Each month, you take a portion of those certificates and return them to the MOE manager as "delivery as promised" and they are destroyed (typically with a subtraction in a ledger).

Where in the world could you possibly be getting so confused?

 
You must've been on welfare your entire life

I have never been on welfare. I have never defaulted on a trading promise. I have borrowed (created money) and paid it back (delivered on my trading promise) innumerable times. What's criminal is I've paid gobs of interest. And the profit I've made has been systematically stolen from me at a rate of 4% annually (inflation).

We can do better ... but injecting gold into the mix sure won't make things better.

Fri, 07/24/2015 - 16:15 | 6350195 Oscar Mayer
Oscar Mayer's picture

I understand what you're saying, you want a system based upon 'letters of credit', which can be created, counterfeited and abused by anyone and everyone.

It's an idiotic notion.

Fri, 07/24/2015 - 17:18 | 6350582 withglee
withglee's picture

I understand what you're saying, you want a system based upon 'letters of credit', which can be created, counterfeited and abused by anyone and everyone.

It's an idiotic notion.

No. You clearly "don't" know what I'm saying or you wouldn't write what you do. But let's put that aside.

1) Are you happy with the mismanaged MOE we have now?

2) If not, why not?

3) If you are, why in the world are you?

4) If not, what would you install in its place?

5) If you are, why do you think non-zero inflation is a good thing?

Please be specific and keep it simple. This isn't rocket science. It just looks like rocket science when discussed by economists who have been trained in multi-layer double talk and claim a science no two of them can agree on.

Fri, 07/24/2015 - 23:13 | 6351716 Oscar Mayer
Oscar Mayer's picture

What kind of retarded rationalization are you using to come to the conclusion that you're gonna get zero inflation with everybody freely creating their own credit????  "Oh but, the last person to get and not use it, will destroy it.  See, zero inflation!"  Too Funny......

The problem is, you don't understand what you're saying.

If you're not a lifetime welfare recipient, then you must've spent your life working for the government.

 

https://plus.google.com/101128732088103952260/posts?partnerid=ogpy0

the Frog

Sat, 07/25/2015 - 09:47 | 6352453 withglee
withglee's picture

Oscar Mayer: What kind of retarded rationalization are you using to come to the conclusion that you're gonna get zero inflation with everybody freely creating their own credit????

My patience is running out on you. You aren't paying attention. I'll try one more time with two simple examples that prove inflation is zero when the MOE is properly managed.

Case 1: You negotiate to buy a house. You get your trading promise certified and give the certificates to the seller. You then return a portion of the certificates monthly and they are destroyed. In the beginning there were no certificates in circulation. In the end there are no certificates in circulation. Thus, inflation is zero.

Case 2: Same as case 1 except you fail to deliver ... you default. By defaulting, you leave certificates in circulation that dilute certificates representing other trading promises ... i.e. they inflate. The MOE manager monitors for this. As soon as he detects a default, he makes an equal interest collection. Where the default left certificates in circulation which then stood for a broken trading promise, the interest collected takes them out of circulation. Thus, inflation is zero.

Now Ms. Wiener, if you can't understand this, we need to be talking to your third grade teacher to see where she lost you.

Sun, 07/26/2015 - 00:02 | 6354899 Oscar Mayer
Oscar Mayer's picture

I understand, it's idiotic nonsense.

Case 1: "You get your trading promise certified and give the certificates to the seller. You then return a portion of the certificates monthly and they are destroyed."

Who is certifing the peomises?  If you give your "certificates" to the seller, then how can you return a portion of the certificates monthly when you've already given them to the seller?  And then the seller is expected to destroy the certificates in effect, destroying his profits and giving you the house or whatever for free.

Case 2: You are a silly, silly man.  "The MOE manager"  Funny stuff.......

You got ahold of some LSD or really good pot to come up with all of that....

Sun, 07/26/2015 - 20:00 | 6357100 withglee
withglee's picture

Who is certifying the promises?

The completely transparent process where none of the players or their trading promises and deliveries are anonymous or hidden. A mutual insurance company is a good model. Risk is actuarially determined (and then claims are monitored for feedback) and premiums are determined. With an MOE, propensity to default is assessed (and then defaults are monitored for feedback) and interest collections are made.  

 If you give your "certificates" to the seller, then how can you return a portion of the certificates monthly when you've already given them to the seller?

The seller "spends" those certificates while engaging in simple barter trade (e.g. purchase of labor, materials, equipment, and sustenance). You earn certificates while engaging in simple barter trade (e.g. your time for a wage). It's a closed loop market with lots of things going on simultaneously and in different phases and time spans ... just like the insurance model. There are lots of in-process trades starting, processing, and delivering, in perpetual fashion ... all driven by traders (e.g. you seeing a way clear to trade your time in the future for a car now). You've done it I'm sure. You've just been duped into believing a capitalist must first be found (and compensated) to give validity to your trading promise.

And then the seller is expected to destroy the certificates in effect, destroying his profits and giving you the house or whatever for free.

You are such a sloooowww study. The seller doesn't destroy the certificates. He injects them into the marketplace in simple barter trade (and probably slips a few under the mattress for a rainy day). It is the buyer who returns the certificates as scheduled (e.g. on a house through month payments), and those certificates are taken out of circulation (i.e. destroyed) as the constitute a partial delivery. In the end, all certificates created are removed from circulation and destroyed. The result: No certificates exist for the trading promise before it is made; all exist while the trading promise is in progress; and none exist after final delivery (or mitigation of default by interest collection). Zero in the beginning. Zero in the end. Zero - zero yields obviously zero inflation.

Case 2: You are a silly, silly man.  "The MOE manager"  Funny stuff.......

You got ahold of some LSD or really good pot to come up with all of that....

You are hopefully a child, for you are acting like one. I hope by engaging you I am at least sharpening your cognitive, investigative and  analytical skills. I'm sure you would suffer if your anonymity were removed. 

Todd Marshall
Plantersville, TX

 


Wed, 07/22/2015 - 20:32 | 6343514 Tinky
Tinky's picture

It sure seems as though there is a recent infestation of (paid?) anti-gold trolls on ZH.

No point in arguing with them, and for obvious reasons.

Wed, 07/22/2015 - 20:35 | 6343526 Omega_Man
Omega_Man's picture

it is hasbara, looking to buy gold for themselves

Thu, 07/23/2015 - 12:18 | 6345626 Oscar Mayer
Oscar Mayer's picture

Gold is, and has always been, a piss poor medium of exchange (money), it's just not suited for that task.

What it can do, and do extremely well, is store wealth.  And it is for this reason I own gold, and lots of silver.

Thu, 07/23/2015 - 15:51 | 6346377 withglee
withglee's picture

What it can do, and do extremely well, is store wealth.

Except of course over the last four years.

Wed, 07/22/2015 - 20:38 | 6343536 Omega_Man
Omega_Man's picture

How many US dollars will they have to print to settle the derivatives, or bail out the banks AGAIN . 200 trillion??

At that point I suppose the dollar won't be worth much... 

Wed, 07/22/2015 - 20:39 | 6343542 Tinky
Tinky's picture

Although it has declined in USD about 6% since I crunched these numbers on July 4, they still illustrate Peter's point well, and illuminate the ignorance of the anti-gold trolls.

The percentage change in the value of gold against these currencies for the two year period ending on July 4, 2015:

 

Euro                             +11%  

Danish Kroner              +11% 

Japanese Yen               +18%

Swedish Kroner            +20%

Norwegian Kroner        +22%

Turkish Lira                  +29%

Brazilian Real               +37%

Argentine Peso            +58%

Russian Ruble             +62%

Ukranian Hryvnia         +140%  

 

Wed, 07/22/2015 - 20:40 | 6343546 Omega_Man
Omega_Man's picture

forgot CDN dollar, AUSSIE, and KIWI

Wed, 07/22/2015 - 20:52 | 6343589 The Darwin Mode
The Darwin Mode's picture

Jason Zweig... would that be the same Jason Zweig who's been writing for the globalists at Time/Cnn/Money/Fortune/WSJ? Are we to believe that a columnist who concerns himself with ETHNIC MATTERS SUCH AS THIS would have any kind of motive to take a s#!t on gold?

Wed, 07/22/2015 - 22:04 | 6343830 lakecity55
lakecity55's picture

he writes what his tribal masters tell him to write....

Wed, 07/22/2015 - 20:58 | 6343591 Omega_Man
Omega_Man's picture

How to win an argument with any anti-gold person...

From 2003 to '11 there abouts, gold went up 6 times in value against the US dollar. More in other currencies.

Given that the financial problems have become much worse since then, it can easily happen again and likely to happen again.... $6000 gold at least on your plate. 

Recent history... no need to go back to Roman times. 

Presently we are just in a dip in the life of a 5000 year asset, buy the dip. 

Wed, 07/22/2015 - 21:09 | 6343655 who cares
who cares's picture

So gold is worhless! Tell it to Apple and ask them why they sell the gold iWafch for $14,000 and the SS for $500! bunch of jockers!

Wed, 07/22/2015 - 21:30 | 6343729 lakecity55
lakecity55's picture

It is not a "rock." It is an element, believed to be created from the explosion of a star. Some of that Au floated around and ended up inside the Earth when it solidified.

There could be giant asteroids of gold floating out there.

Wed, 07/22/2015 - 21:44 | 6343771 Jreality
Jreality's picture

It sure DROPPED like a rock!  :)

Wed, 07/22/2015 - 22:18 | 6343870 Well Hungarian
Well Hungarian's picture

Holy Jesus was that funny. Guess what? Before that it LAUNCHED. Like a rocket! How about some knock knock jokes junior!

Wed, 07/22/2015 - 21:43 | 6343764 Jreality
Jreality's picture

Anyone who had faith in SCHIFF lost a lot of money!   :) 

Wed, 07/22/2015 - 22:16 | 6343863 Well Hungarian
Well Hungarian's picture

How? You don't lose "money" until you sell. I bought at $300...I haven't made any "money" either. Think. Think again. Then don't post.

Wed, 07/22/2015 - 22:12 | 6343849 Well Hungarian
Well Hungarian's picture

I will never understand the douche guzzling idiots that spend their time trashing people for investing in gold. Don't like it? Don't invest. Think tampons are the money of the future? Knock yourself the fuck out and buy all you can. But stop with the uninformed tripe, ok?

Wed, 07/22/2015 - 22:31 | 6343915 cyberfossil
cyberfossil's picture

Great analysis, Dog of Sinope! 
Gold--the one thing a world can agree on when it cannot agree on anything else.  Which is not to say Bitcoin does not have utility, but will it be a lasting store of value--the other key characteristic of "money"?  I think Bitcoin is a genius idea in comparison to the private Fed around the world currency printers so it has shown to have much interest and it, or its successors/competitors, even could eventually replace other central bank denominated digital currency.  Or, probably, it will be usurped or co-oped by central bank/sovereign nation currency printers.  It might be considered as part of a risk portfolio of currencies.  I believe there is a new one that is also backed by gold, interestingly, but I have not investigated that product further yet.

Cheers and here's to all of us evading the thieves and cheats from the global banksters!

Wed, 07/22/2015 - 23:05 | 6344012 zeronero
zeronero's picture

Oh yes, gold has real value today. No doubt. But it's value is as jewelry only. And that translates to about $800 per oz.

Enjoy your losses morons.

Wed, 07/22/2015 - 23:21 | 6344048 Goldilocks
Goldilocks's picture

Incredibles Monologue
http://www.youtube.com/watch?v=iRlh_w6uRds (1:45)

Thu, 07/23/2015 - 00:04 | 6344132 shenzhou
shenzhou's picture

The problem with life:- Life running at lightspeed now, so even toilet paper fait currency can be too much to carry along in wallets.

The problem with bitcoin:- There is a reason why Cloud Computing has the word "cloud" in it. Puff puff and it is gone baby all gone, blown away into oblivion in an instance. Likewise, bitcoin is very puffy, hackerly hacked, and your dear to life bitcoins will disappear forever without a trace.

The problem with gold:- It cannot be used as money in the conventional sense as fait currencies, bitcoins, online credit transaction on a daily basis for your tom dick harry and for most businesses as well. The bottom line is there is not enough gold and silver for every human on earth even if everyone is willing to convert all their "monies" into these two precious metals. Payrolls alone will offer you the first of a very huge problem ahead if we want to use precious metal as full coinage payment system. Think of all the gold, silver, copper and other lesser metals needed not for any real practical application use but as a show of credit and carry the extra weight, speaking of being obese!

Not just in theory but in practise, you can chop up a bitcoin to whatever 0.decimal places piece you like but just not physically possible with gold. How small an atomic piece can a human hand hold and eyes see? (Now, I will never use bitcoin if I can help it, btw)

Gold can only be used as a form of limited insurance. No one human can convert all they got into idle gold as gold does not produce interest nor can you cut up a small piece and go into 7/11 store to buy a sandwich. There is only one hope for any gold you hold and that is that you hope the value will go up or at least stay at the price you paid for when you need to use it to exchange for any good or services.

Meanwhile, sure, you can sleep with it but it is a very frigid spouse, don't expect any sex and you still have to watch its back from an ever ready charging bear.

Ah lunch time, now how the heck do i go get my sandwich with this piece of gold and get my change back in gold as well.

Thu, 07/23/2015 - 00:11 | 6344147 JoJoJo
JoJoJo's picture

I download every Schiff podcast but must disagree and say that FAITH in gold's value is a necessity.  So much of the world is in debt that countries are fleeing anything tangible, wanting to substitute digital assets which are so easy to "produce," and difficult to personally posess like PMs. If governments  clamp down on trading valuable personal  property, and substitute digits, redistribtion by central governments/bankers is  easier because they  can own and regulate  all the digits.

That is why there is such a war on cash and gold. Dont put it past socialists/communists to kill money as we know it. Pol Pot did it only temporarily but dont expect libs to have learned anything from him. FDR and Nixon had no qualms about fixing gold, and I could expect someone like Obama surpassing them. He has become a man possessed these last days in office.The main salvation for gold is that China likes it and no one is going to tell China that gold should have no or little value.

Thu, 07/23/2015 - 02:13 | 6344343 Larry Dallas
Larry Dallas's picture

Did anyone notice that BullionDirect.com filed Chapter 11?

Thu, 07/23/2015 - 06:30 | 6344565 wstrub
wstrub's picture

On July 20, 2015, BullionDirect, Inc. filed a bankruptcy petition, Chapter 11 No. 15-10940 in the U. S. Bankruptcy Court, Western District of Texas, Austin Division Additional notices will appear at this site regarding hearings, deadlines, filing proofs of claim and other such matters. [PDF notice]

 

Thu, 07/23/2015 - 03:21 | 6344417 Panic Mode
Panic Mode's picture

Gold does rely on faith. When currency fails, the faith on currency is shifted to gold. That's all. 

Thu, 07/23/2015 - 04:03 | 6344448 quasi_verbatim
quasi_verbatim's picture

Fiat currency, perceived value of:

Cash payment has become the universal sole nexus of man to man.

 - Thomas Carlyle.

He spoke when cash was gold, or nearly so. When fiat loses all acceptability, man to man, where to find the greatest fool?

Thu, 07/23/2015 - 04:16 | 6344461 Debugas
Debugas's picture

Money by definition depends on faith because money is a contract between an individual and a society and as any contract it can be broken.

Gold as money is also subject to faith in goodwill of the society to upheld the contract

Thu, 07/23/2015 - 05:44 | 6344528 ramgold2206
ramgold2206's picture

FUCK ME THERE ARE SOME DUMB MOTHER FUCKERS ON ZH.. I personally cant understand why there is such a divide between those for and  against holding gold. Any sensible person should realise that it matters not what makes you wealthy So long as you become and remain wealthy (in the material sense) if that is your goal.

 If that means holding gold then hold gold. If it means holding stocks then hold stocks if it means holding both then hold both... FFS its like having an argument about should a person be left handed or right handed ... WHAT FUCKING DIFFERENCE DOES IT MAKE so long as they can write!!!

The world moves fast - surly the purpose is to try be ahead any which you can..Gold, Stawks, Fiat, Paper, real estate ... they are all just tools at your disposal... use whatever one is required for the "job" at hand.. (and for some of the dumb fucks in here... the job is to become wealthy) 


Sure I agree that everyone should hold a % in AU... but not to the exclusion of every other asset. 


www.teamramgold.com 

for access to small weight bullion... open a free account today... Become an affiliate, refer a friend, earn commissions and get your bullion for "free"...

Thu, 07/23/2015 - 07:06 | 6344602 GFORCE
GFORCE's picture

Peter Schiff is a douchebag who has been wrong for 5 years. Change the record. He's as bad as Gartman.

Thu, 07/23/2015 - 08:50 | 6344853 ncdirtdigger
ncdirtdigger's picture

I am not passionate enough about PMs to say much, but Imdo hold some. I have a bag of junk silver I bought as insurance back before Y2K. It is up 300%. Meanwhile, more than half of the companies that made up the Dow that same year have been dropped from the average. Who wouldn't want to own some Sears stock instead of this damn bag of silver?

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