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Some Clear Thinking About The Price Of Gold
Submitted by Simon Black via Sovereign Man blog,
On April 2, 2001, the price of gold closed the market trading session at $255.30.
And that was the lowest price that gold has seen ever since.
In US dollar terms, gold closed the 2001 calendar year higher than it did in 2000. Then it did the same thing again in 2002. And again in 2003.
In fact, after reaching its low in April 2001, gold closed higher for twelve consecutive years– something that had never happened before in ANY financial market with ANY asset.
Then came a correction; the price started falling, and gold is now on track for 2015 to be its third down year in a row.
What’s incredible is that, despite its history of gains, and 5,000 years of tradition behind it, gold is rapidly becoming one of the most widely despised assets.
But before we pronounce it dead and write the final gold eulogy, however, let’s consider the following:
1) Nothing goes up (or down) in a straight line. After 12 straight years of unprecedented gains with any asset class, it’s not unusual to have a meaningful correction.
(Just imagine how severe the correction in stocks will be. . .)
And like all frantic booms which go way past sustainable levels, corrections also overshoot fair value.
This correction in the gold market could easily last for several more years, with prices potentially well below $1,000.
But then we could just as easily see another massive surge all the way past $2,000 and beyond.
That’s the nature of these markets– to be extremely fickle (and highly manipulated).
Even over a period of a few years, the market can show about as much maturity as a middle school lunchroom, complete with pubescent gossip and inane popularity contests.
But it’s rather short-sighted to completely lose confidence in an asset that has a 5,000 year track record because of a few down years.
2) The gold price shed nearly 5% after the government of China announced recently that they owned 1,658 metric tons of gold.
This amount was lower than what many investors and analysts had been expecting, and the price of gold dropped as a result.
My question- since when did anyone start believing official reports from the Chinese government?
Seriously. The Chinese have a vested interest in understating their gold holdings.
They know that doing so will push the price of gold LOWER, which is exactly what they want.
China is sitting on trillions of dollars in reserves right now, a portion of which they’re rapidly trying to rotate OUT of US dollars.
So it’s clearly beneficial to the Chinese government if they can sell dollars while they’re strong and buy gold while it’s cheap.
And if they can push gold to become cheaper, even better for them.
3) Remember why you own gold to begin with.
Gold is a very long-term store of value. Notwithstanding a few down years, gold has maintained its purchasing power for thousands of years.
Paper currencies come and go. They get devalued, revalued, and extinguished altogether.
How much would you be able to buy today with paper money issued by the 7th century Tang Dynasty? Nothing. It no longer exists.
Or a pound sterling from 1817? Very little. It’s barely pocket change today.
Yet the gold backing up that same pound sterling from 1817 is worth over $250 today (165 pounds).
Even in modern history, the gold backing up a single US dollar from 1971 is worth vastly more than the paper currency that was printed 44 years ago.
But even more importantly, aside from being a long-term store of value, gold is a hedge— a form of money that acts as an insurance policy against a dangerously overleveraged financial system.
How much will your dollars and euros buy you in the event of real financial calamity? Or if there’s a major government default or central bank failure?
No matter what happens in the financial system– whether it collapses under its own weight, or cryptofinance technology revolutionizes how we do business– gold ensures that you’re protected.
4) Resist the urge to value gold in paper currency. We all have this tendency– we invest in something, and then hope it goes up in value.
But that’s a mistake with gold. It’s a hard thing for some people to do, but try to stop yourself from thinking about gold in terms of its paper price.
(It’s also important to remember that there’s a huge disconnect between the ‘paper price’ of gold, and the physical price of gold.)
Remember, gold is not an investment; there are plenty of better options out there if you’re looking for a great speculation.
So the notion of trading a stack of paper currency for gold, only to trade the gold back for a taller stack of paper currency misses the point entirely.
5) Having said that, if you find it too difficult to do this, and you catch yourself constantly refreshing the gold price and checking your portfolio, you might own too much.
Listen to your instincts; if you’re always feeling frantic about the daily gyrations in the market, lighten your load.
Don’t love anything that won’t love you back. Stay rational. Own enough gold that, in the event of a crisis, you will feel comfortable that you have enough ‘real savings’… but don’t own so much that you’re constantly worrying about the paper price.
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Its money everything else is, well you know. And if its so despised I present to you a chart...
http://www.coinworld.com/news/gold-american-eagle-bullion-sales-in-july-...
There are no straight lines in rigged markets for a reason.
Lots of money to be made when you can inflate and pop bubbles on demand.
I prefer Silver, thank you very much.
Its a better buy for sure. As for which I actually prefer, pound for pound I would take gold any day.
Once you hold gold and silver in your hand you realize that its real money. Not like those zinc coins our government calls money today.
Yet another gold pep talk, with the usual BTFD (= catch that falling knife) advice.
Yawn!
OK i am just a person with above average, well maybe higher, intelligence. Let me connect the dots with facts.
Back in 2012 Kyle bass was asked why he asked for delivery of the 1 billion of gold for the Texas teacher fund he was fuduuciary of and he said at that time," the comeex had an open interest of 80 Billion and in the wharehouse they had 2.7 billion in deliverables " So the rario back then was 30:1
Now, there are 351,519 oz of deliverables and the ratio is 124:1
see below link
http://mensnewsdaily.com/2015/08/03/kyle-basss-warnings-about-fractional...
The fuckers is going to blow
You'll catch the next gold bull market if you watch the signs...
http://seekingalpha.com/article/3291335-the-next-gold-bull-market
Shhh, nobody wants to hear that around here.
They wanna hear fairy tales from gold bullion dealers (Schiff, Maloney, Faber, Rogers and all those KWN charlatans) who have a personal vested interest to talk up the price, so that they can make the most (fiat!!) on commissions, or they want to hear about fairy tales like China coming to the rescue and push prices higher and/or setting up a gold backed Yuan.
I don't know about China coming to any 'rescue'... It might be more like letting fish out of water choke in the breeze...
now you know - China/Shanghai physical exchange is going to double the price in the near future - let those who play on the CRIMEX try to take delivery of PHYSICAL and sell it to Shanghai for a nice 100% profit - won't happen cuz CRIMEX has almost no inventory - which will expose CRIMEX and cause the default rather quickly
If everything is manipulated, why do we keep talking about how the price of gold is unrealistic?
The last time my wife asked about the few gold coins buried out in the woods, I said "what gold"? Then I added, "even if we have gold, it's not something we'll sell anytime soon just to pay bills." Then why do we have it? To which I replied, it's like insurance. They day you need it will be clear because something really bad happened.
But let's keep talking about little piddly $5 moves up and down.
Stupid article never mentioned a Comes paper golf to gold ratio at all time highs,
Or Comes open interest at all time highs and huge short volume at illiquid hours when the Chinese made their announce.ment.
"Gold may go up, on the other hand it may go down", opines the commentator. No shit Sherlock
Pure fluff.
"There are no markets, only govt intertventions"
-Chris Powell, GATA
Simon Black "LONG AND WRONG" Turd Fergeson "LONG AND WRONG" KWN bozos "LONG AND WRONG" Peter Schiffty "LONG AND WRONG" 5K Sinclair "HIDING"
In barbarous times it's good to have a barbarous relic to hand.
In barbarous times it's good to have a barbarous relic to hand.
Comex only has to pay out in fiat, so its all good.
Prior to commenting on the value of the world's oldest currency, perhaps some reading might help. Who knows, you might learn why some of the folks here like real money over worthless fiat.
CAn you offer something other than opinion based on innuendo?
I just know that i hear the average people in the street and they say they cant afford to pay more taxes and inflation and theres tons and tons a new fresh debt to pay. What all these average taxpayers are going to do? they will be underwater.
The article mentions nothing of a rapidly changing geopolitical environment, vis-a-vis the importance of gold and the geopolitical ramifications therein. Then again, why should it/he? These are people stranded in a Twilight episode time warp, where because everything has always been a certain way and followed a certain $path, so shall it always be.
Exactly! Gold will be 'despised' right up until bonds/equities crash-burn and/or the dollar takes a dive.
It is despised because it represents reality, history, inevitability. Investors hate that shit. reality kills their buzz and more importantly that of their muppets.
It represents truth in a shitstorm of Lies.
Gold doesn't rely on confidence.
That is the difference.
It's not so much that 'investors' hate it, as it is that brokers and fund managers hate it because they get no commission. Anyone can go buy some, all you have to do is show up at a coin shop with cash, and trade it for gold or silver. Anyone that buys from one of those shyster outfits in the TV commercials is just wasting money. You have no need for any kind of middle man or stock broker or hedge fund skimming money. Same with when you go to sell some. Go back to said coin shop, hand them your gold or silver, walk out with cash. No broker commission, no govt tax forms, etc.
Not paying the vig is so uncouth.
Simon, please address those who do not own any. Those who already own gold have their own minds made up on when where and how much to own
Wake up those who do not own and do not know how to own.
Cheers mate
"Some Clear Thinking About The Price Of Gold"
Submitted by Simon Black
Stopped reading right there. Seriously Tylers???
This is the sort of dribble that you would expect the Chinese Gov. to produce about their stock market. Hello Hello things go down, it's a market.
Dribble? I think you mean, "drivel," which appropriately enough describes your typical post.
As for markets, I view a real market to be driven by supply and demand fundamentals, not central bank manipulation. What we have is a casino, and a rigged one at that.
But feel free to have all of your wealth denominated in Federal Reserve Notes. What could possibly go wrong with that strategy?
Just 1 question I can't seem to find a satisfactory answer to: If paper gold is bogus and manipulated, and physical is so scarce, WHY ISN'T THIS SPREAD BLOWING OUT?????
I have the same question, and I think it has to do with quantities. As in, the smaller your buy, the smaller your markup. Joe Retail buys his meagre stash, inexorably bound for the bottom of a lake somewhere, at a markup of a few percent. China or Russia sell a couple of billion in US treasuries and buy tons of the shiny stuff at a massive markup. I've seen a few commentators claiming this; I've yet to see firm evidence. But it rings true. And it's still to the long-term benefit of China and Russia.
Competely right, calm.
Kyle Bass didnt' get where he was for reaon. The guy is smart.
Smarter than some of the "bears" I see on this site.....
"4) Resist the urge to value gold in paper currency."
This is the best piece of advice in the article. Gold is its own savings account.
And why always focus on gold in USD terms? For instance, look at gold vs the Ruble this year alone, up 50%. Ten year return is 460%!
I actually agree with you on this. There's too much talking/justifying/history-lessoning, etc. A shitstorm of the ages this way comes and gold will assert itself as it has always done.
Me so enlightened. Got any more pearls of wisdom?
I'm pretty sure articles like this are meant for stackers, not eTrade babies like yourself. Get back over to the yahoo forums and discuss the virtues of selling paper gold with the other prepubescents.
I constantly refresh because, I don't own enough.
I like silver too, but I can run faster with $100K of gold than I can with $100K of silver.
Yea I just took delivery on another tranche of silver.
I was just looking at my portfolio and the silliness of this market is summed up in two positions I hold one is Netflix the other is a mining stock. both printed the exact same eps last report. Netflix as most know just made new all time highs today @122.79 last earnings print was $0.06 Guess where the mining stock is trading at with the same earnings? Three dollars. Yup
7 years straight line for spx
The price of paper gold is a policy tool. Thousands of years of human experience doesn't disappear in the blink of an eye. They have to keep hammering it down again and again and again until enough people finally give the hell up on it.
Oh, and here's MY CLEAR THINKING ABOUT GOLD: If there are commercials on TV trying to sell it to you, it might be a little late in the cycle to get in at a good price point. When those commercials finally disappear from the airwaves you can consider it a sign that it's probably OK to start buying again.
Most of us cannot afford gold. And thats ok, because silver is actually a better buy (and as been for several years). The gold/silver ratio is about 1:75. Every ounce of gold is worth 75 ounces of silver. Historically, that ratio is around 1:16-25.
With silver under $15/ounce its easy for anyone to start stacking!!!
I'm almost all in Ag as well...but with this latest dip I decided I was sick of looking at that satanic queen bitch on the reverse side of my Au Canadian Maple. So I traded it in for a 50 Peso Au Centenario plus a little extra fiat.
Sweet deal! With gold this low it's nice to pick up a fat 50 Peso with 37.5 grams of gold in it. Nice and hefty in your hand.
Canada should dump the queen bitch off their coins. Australia too.
Other than little swaps like that I'm all Ag.
Keep stackin'!
Yes, I would diversify a little into Gold. If it goes back up to $1800, it may be too expensive to trade your FRNs for. I know I don't have that much extra cash laying around too often (other than my 'emergency' fund of course).
Obverse opinions aside - Canadian Silver Maples have a face value of $5, U.S. Silver Eagles have a face value of $1 , and cost the same to buy. If silver were to go to $0 - you 'd still have the face value.
really? I sincerely hope you are just joking or screwing around like Million Dollar Bonus would do...I really do...
we're not talking about pre-1964 90% silver coins here...we're talking about pure bullion in Troy ounces stacked high!
Yes, 90% Constitutional money will always be "worth" what the gov-scum stamped on it...fine. I get that. Same with nickels. I stack nickels on that theory...at least they will be worth 5 cents, but will also always be worth whatever the market value of nickel as a commodity metal will be. So yeah in that respect I will say it's plausible.
But let's face it...even pre-1964 dimes, quarters and halves are never going to trade in the future for the bullshit gov-scum "face" value stamped on them. Just like no pure silver or gold bullion will ever trade for whatever stupid number is stamped on them.
Throw that thinking right out the window bro.
would you really be thinking in those terms as opposed to what a real ounce of phyzz could trade for? No disrespect...it's just that we have to completely stop thinking about what number some government might print on not only a piece of paper, but also on a piece of phyzz. Fuck them...who are they to say??? Fucking scumbags.
I don't give a crap what they print on my metal. It won't matter...why even keep the phyzz in the form they put it in??? Melt it down and make ingots out of it. The metal is the metal. It does not matter what fiat number some scumbag bankster or gov-scum dictates should be stamped on it.
All that will matter will be grains, grams, ounces, etc.
I don't give a rip that 50 bucks is stamped on a pure 24K 9999 gold buffaloe because the U.S. Mint stamped it on there. Fuck them. Do you think anyone would take 50 fiat dollars for a gold Buffaloe if gold went to "zero"? Or take 5 dollars for a Canadian Maple if silver went to "zero".
When the "price" of gold and silver goes to zero...that means it's worth more than all the fiat in the world. It all pretty much is right now actually...the sheeple just don't know it yet. And by the time they realize it...well...unfortunately for those who would not listen us...it will be too late for them.
It's not about some fiat currency value. It's about what it'll get you. The free market will work it out. An ounce of gold might get you 20 acres of land. Or an ounce of silver might get you an acre of land.
This transition when the great monetary reset occurs will bring to light a great deflation along with a simultaneous great inflation. And how you can afford those things that have deflated against gold and silver along with those things that have inflated with gold and silver will depend on how much phyzz you have stacked ahead of time.
Food, clothes, fuel, those things we need will greatly inflate. Better have a good amount of phyzz for those things if you have not started stacking those things now ahead of time...
Other things like land and houses, cars, other things that are highly inflated right now likely will deflate in value...just look at how many cars and houses there are. Remember how all that crap deflated in value 7 years ago??? Also all credit was wiped out. It won't take much phyzz to trade for some of those things because those things are almost completely "owned" by debt. People will have to get rid of those things for anything they can because THEY WON'T HAVE PHYZZ!
So have either a shit ton of silver or a good mix of gold and silver. But either way you allocate your stack of phyzz...just make sure you have as MANY OUNCES as you can afford to trade for your extra fiat as soon as possible.
There probably isn't that much more time left.
I give it a year, tops. Then the shit hits the fan.
Don't forget to balance things: food, water filtration/storage, clothing, good shoes/boots, meds and med supplies, camping/fishing/hunting gear, guns and ammo, tools to work on car engines, fuel, generator, etc. etc. etc. Then stack phyzz along with it all. Cover all your bases.
And make sure you have lotsa popcorn too. ;-)
I fill the bath tub with my maples and rub her face all over my junk.
Is that wrong?
I signed in just to +1 you
yup! ag noob but been buying ~$1k/wk since start of summer & may pull the trigger on a 500-pack or two if I see eagles dip in 17s...
that said, I see them mainly as currency insurance rather than an investment per se (although the subject surprisingly did come up at a goldman dinner I was invited to last week)
Jakesdad - if you need eagles in the $17's, send me a message. It is not a problem. $3.25 overspot delivered at the moment.
I called up Gainesville today about a 500 monster box. They didn't have them in stock and when they come in they go fast. They assured me that they are allocated from the mint and it would take a few days to get them in. $3.25 over spot.
any article or essay on gold that doesn't mention the market is entirely rigged by the central bank cabal isn't worth reading.
The author did. He used the term "manipulated" under point 1.
I hardly noticed that gold is down really. I my currency it has remained stable recently at 1,430.00 so what's the fuss. Great hedge and store of value. C'mon CAD, drop like a rock
Gold doesn't really gain so much as fiat fails.
Bravo!
Bingo! It's the destruction of all fiat that proves Ag and Au have precious value that withstands all time on this planet. They can debase the "value" w/ paper bullshit all they want. Ag and Au just sit there as always...looking shiny...and waiting for their time to rule again after the fiat hits the fan.
It's inevitable.
paper gold is not gold
It that like saying the balance in your bank account isn't the same as cash in your hand?
This wont be the first timein history that gold goes to zero it will always be a store of value it is great to have the physical just dont expect it to go up all the time relax and watch the show
Gold has gone to zero before? When?
When a government confiscates PMs or makes it "illegal" to trade with PMs then their "official" value is zero.
But then again we all know the reality. Get long black markets and sharecropping...
yeah, ask various countries that have tried outlawing transacting in dollars how well that worked out. I was in moscow in spring 93 when exchange rate from 700s to something like 900s in the span of a week - I'll take my chances w/hillary's goons (the ones w/guns as well as the ones in suits who pay her) versus the certainty of ending up a modern greek...
I visit St. Petersburg a fair amount. The worst I saw it was in '96, something like 7500 rubles per dollar.
I remember when they outlawed marijuana....it was crazy ..everyone was throwing it away and you couldnt GIVE it away.THey had to leagalize it for it to have ANY value..right?
RIPS
Before human society as we know it. An unbelievably ignorant comment.
Gold is something that is mined and refined.
Dollars are nothing "printed."
Gold is worth more than nothing, however, the banksters demand that gold be worth less than their nothing.
Liberty is a demand. Tyranny is submission..
Dollars are nothing but plunder, and gold is something against plunder.
I would encourage folks to take a few steps back and realize that over-riding everything is protection and defense of your property. Be it Ag, Au or cans of tuna, property is worthless if some common brigand can steal it from your hands.
A far-away patch of land with a spring of water --- a luscious vegetable garden ---- a lake of fish could all be worth more than all of the gold in the world.
I despise zinc.
Rat bastards and their zinc.
And tin?
Don't get me started.
Would be interesting to see if Gold would be offered to back the dollar if Trump won the election. If you remember back in 2014, he took gold as collateral for a lease in his trump tower and during an interview cited gold as better than cash.
https://youtu.be/ZjgUdNUXGFI
Dovie'andi se tovya sagain (It's time to toss the dice)
The Daily Economist
Tell us, what good is "backing the dollar" if the US has $280 billion in gold, but money supply is $12 trillion. (The $12 trillion doesn't even begin to touch the total value of loans, and other financial insturments)
That means they could back a bit over 2% of the US money supply with gold. And to actually mean anything, money would have to be convertable.
Using your figures, the U.S. Treasury simply issues a standing order to buy gold at $42,000 per ounce. Then there would be 100% backing. People could turn in their $12 trillion paper notes and receive gold at the Treasury window at the official price of $42,000 per ounce.
This is what China will do when it decides that they are done screwing around with the West.
It sounds to me like when there is nothing else for the Chinese to buy with their U$, they trade the rest of their paper for the rest of the world's gold.
We need Eric King! Where is he? Maybe he can help and march out John Embry, Eric Sprott, Rick Rule... let's see who else. The dealers have ruined the reputation of gold for many, they can only talk up gold, any loss is manipulation, etc. Now is the time to correct. Let it correct and those who understand the hedge will buy. Damn snake oil salesmen have poisoned the well for many.
are you seriously trying to tell us that Eric King is the reason gold has been in a 4 year bear market?
No, but it's the general goldbug mindset he represents that's helped tarnishing the market. It's paranoia. In the end, it's a commodity like anything else and been correcting. The goldbug mindset is a turnoff for the masses.
you've been paying too much attention to MarketWatch & Bloomberg.
There is 320 million people in this country... maybe, maybe 500k of them own physical gold or silver. Most "goldbugs" have a portion of their portfolio allocated to gold, like 10-20%.
I would say that the US population has the LEAST amount of their wealth as a percentage in gold and silver. I would be surprised if its more than 0.5% overall. It used to be a rule of thumb to have at least 5% in PMs.
Once I see 50% of the posters on ZH become bearish, then I know the bottom is officially in. I'd say we're at about 33% right now.
Last week Karl Denninger said, "Gold is not money".
Karl Denninger is ________ (fill in the blank)
Karl is a guy that stays pissed off year round, and wants to be right 100% of the time.
I'm guessing when I say... that 6 or 8 people may still be reading his page.
Didn't Denninger get pissed off and close up shop?
Unfortunately that was an April Fool's joke.
Who?
When fraud is the status quo, possession is 100% of the law.
Reality is ignored by most as well. So fucking what? It "works" until it doesn't.
Silly "article"...
An ignoramus says what?
The 'price' of gold, mr. Black, becomes relevant only when the lampposts will bow to her dignity.
Another writer with trite opinions about gold.
Only with deeper thought and better analysis can you understand gold.
Understand this: if you want large amounts of gold (say you are a central bank like China) you cannot have it, not without destroying the entire financial and monetary system. China is unwilling to do that. Imaging bidding for the 7000 additional tons they have said they want. Gold would be at over $30,000 and everyone would be pissed at the entity that drove the dollar down to 1/30,000 th of an ounce of gold. China has imported large quantities of gold recently but apparently from mining and scrap. They have not bid for the gold in strong hands. Those who understand gold are not selling for anything near the current price.
As China CBer Yi Gong has stated 'the market is too small'. translated that means the only physical gold available is the current flow. The stock has not been moved because the price to just too low. Meanwhile bullion banks can sell paper for cash whenever they need a few billion dollars. This means there is really only downward pressure on the POG. A day will come when some entity will bid for gold at the price required to get it in size. That day will be very close to the day the dollar exits stage right.
Emotions and Cyclical Analysis, Brian Shannon
Disbelief
Hope
Optimism
Belief
Thrill
Euphoria
Complacency
Anxiety
Denial
Panic
Capitulation
Anger
Depression
Disbelief
Hope,
And so on
So why is it going to be different with PM's this time?
It's just a cycle, no need to over fucking analyze it, everyone will eventually be right on a long enough time frame.
Daily Affirmations with Simon Black.
https://www.youtube.com/watch?v=6ldAQ6Rh5ZI
What happened to that asshat that went by the screen name of Gordon Gekko? Why isn't he posting about gold anymore ad nauseum. Hell I think Tyler even had him as a guest contributor a few years ago, his dumbassedness notwithstanding.
Serious question - what exactly am I supposed to do with physical gold? Hold it and wait for society to fall apart? Then what? I'm going to pay for food and gas with gold coins?
If society really disintegrates that horribly, you don't need ANY gold. You need a gun.
Frankly, all this gold nonsense feels like pump-and-dump to me.
Perhaps but one thing will be true (as has always been with every other collapse/world war).
When the dust settles and the herd has been culled and society starts to re-build. The only real collateral that will be accepted will be PMs. Why has our farming business survived two world wars and a great depression? After the dust settled we had the preferred collateral for financing. We bought more during the good times when gold was cheaper and the fiat stronger.
Rinse and repeat, period. The families that control the majority of the wealth on earth know this also applies to real productive assets. Do what they do. It requires discipline and patience, but that's how the game is played. Let the stupid fucks die and default etc. We will be ready to scoop up productive assets on the cheap (again).
Why has our farming business survived two world wars and a great depression?
If you're talking about a "real" farming business that raises crops and livestock, the fields are littered with their dead ... obliterated by the elite banker's (and even just the run-of-the-mill bankers) farming operations they call the business cycle.
We will be ready to scoop up productive assets on the cheap (again).
For that to work you've got to be plugged into the elites farming operation. Without signals from them, you'll never get the timing right. The real pitty is, there should be no timing involved. We should have the perpetual zero inflation that a proper MOE management process can deliver and guarantee.
Remember, half the people you meet, are below average.
Try harder asshat, the poor and even the "average" are always cannon fodder.
get a fucking clue and don't be average!
when there is blood in the streets...
The idea is that society doesn't collapse all at once, so in the span of 20 years things will get progressivly worse. The last people to lose everything will be the rich. The rich protect themselves using a an array of real things that hold value. RE, productive businesses, PMs. Gold is just a store of value, and at the moment they'll let you trade fiat for it. At some point your fiat will become close to worthleless in the transition to the next fiat, as has every single fiat ever (there will be another one because humans are dumb). By having some PMs you might be able to transfew some of the purchasing power from the old system to the new, while many people without access to any real asset will be gradually wiped out.
We are not saying don't buy land and guns and things. Just if you have excess savings, might be smart to own som PMs instead if depreciating paper. Heck they'll even tell you it loses 3% a year which is obviusly understated but you get the gist.
"Serious question - what exactly am I supposed to do with physical gold? Hold it and wait for society to fall apart? Then what? I'm going to pay for food and gas with gold coins?
If society really disintegrates that horribly, you don't need ANY gold. You need a gun.
Frankly, all this gold nonsense feels like pump-and-dump to me."
Again with this goofy assumption that society needs to fall apart in order for gold to be valuable. It's a currency hedging tool. Most HNW people (esp. multigenerational) hold a portion of their overall wealth in gold, along with other tangible assets like land, art, etc. It's just a tool in the toolbox. It's fairly obvious that the US dollar is under some serious stress as the predominant reserve currency. It's already been heavily devalued by the Fed via QE. Nobody really knows where it's going to go from here. Why not hedge your wealth holdings by holding gold (along with other tangible wealth management tools)?
What’s incredible is that, despite its history of gains, and 5,000 years of tradition behind it, gold is rapidly becoming one of the most widely despised assets.
Gold isn't "a despised asset" and in spite of their stupidity, gold bugs aren't despised either.
But what is ridiculous is to suggest that gold should be used as money. And it's ridiculous to suggest that it has performed brilliantly and flawlessly as such for 5,000 years.
When they went on the gold standard they took everyone's gold and then quickly devalued the dollars they payed for it. When we got off the supposed gold standard the street price of gold was twice the official price. There are two obvious cases in point when gold clearly wasn't working.
And as for those ridiculous growth numbers and what they mean:
In 1902 the price of oil was $0.80 per barrel. In 2011 it was $115.22 (4.50% compounded annually).
In 1902 the price of gold was $20.02. In 2011 it was $1,900 (4.11% compounded annually).
In 10/2010 the price of bitcoin was $0.10. In 11/2013 it was $979.45 (2039% compounded annually).
It's likely that if they had instituted a properly managed Medium of Exchange (MOE) in 1901 ... where inflation is guaranteed to be zero, all the time everywhere ... , the price of gold today and the price of oil today would be virtually the same as they were in 1901.
Regardless of what they did, the fiction of bitcoin (trying to emulate something rare and precious) would prove ridiculous. But one thing is likely, if they had instituted a properly managed MOE and had it in operation since 1901, no one would have suggested something like bitcoin. It would be a non-solution looking for a problem.
A history of gains, just like a history of declines, of any MOE is a "bad" thing. The proper history for any MOE is no gains and no declines ... no change at all. It's just that simple.
And you can't get that behavior with commodity backing. You can only get that behavior with a correct process that can't be gamed. And with it, economists and money changers can kiss their job security goodbye. Truman would have had his "one handed economist" and it would be himself. And Paulson would still be a boy scout.
Though it's obvious we know how to implement a properly managed MOE, we won't have one as long as the elites have their way. They need something they can game with the farming operation they call the business cycle.
You are one of the noobs who are despoiling the ZH comment threads. Your verbosity adds exactly nothing to any discussion.
Langley troll alert..."SPECTRUM IS RED!"
You are one of the noobs who are despoiling the ZH comment threads.
Ooops. Scolded by the comments police.
fuck the echo chamber guys.
i'll make my reply short. you do understand the problem with the financials systems, first and foremost, is the systemic CORRUPTION? your MOE would only work if honest accounting wouldn't be an oxymoron, in other words, something that the world has never seen before. a system absolutely incorruptible. some kind of public ledger (open source)? closest thing to that is, for fuck sakes, the bitcoin, which in itself, is riddled with all kinds of skullfuckery, and doesn't correspond to your MOE's criterias, as far as i understand. i personally don't mind the financial wild west, be it bitcoin, what have you, until it's transparent enough. more choice in moneys is okay in my eyes. personal responsibility shouldn't be outlawed as with what the socialist are trying to do away with. fuck the authorities, the biggest crooks of them all.
so the question remains. how do you see it implemented that no authority or otherwise, can reap the spoils? gold has been money for a reason. it's difficult to counterweight, not impossible of course, has happened before, but at least it doesn't come from thin air.
so the question remains. how do you see it implemented that no authority or otherwise, can reap the spoils?
A very close model is a mutual insurance company. Premiums equal claims and the investment income goes to the policy holders (there are no stock holders). A properly managed MOE process does not have any investment income. Defaults equal interest collections. It would have zero appeal to bankers because there's no profit in it.
With a properly managed MOE there is "no" anonymity for the trader making the trading promise and getting it certified. There is no anonymity of the promise. They is no secrecy in the deliveries. Thus, sunshine keeps it honest. There is a huge problem with the process ... but people are so far from grasping the process, they're not close to seeing the biggest problem (which doesn't exist with the current process because it's not viewed as a problem). No one has bothered to point it out yet.
gold has been money for a reason. it's difficult to counterweight, not impossible of course, has happened before, but at least it doesn't come from thin air.
Fine. Show me how a system of gold money works. Remember, there's 1oz per person on Earth and miners have been willing to create new ounces for less than $2,000.
There is no law of nature nor of God that says: Thou shalt see the future.
Yeah well a couple of weeks ago this same noob was saying that big concrete widgets were better money than gold LOL
Yeah well a couple of weeks ago this same noob was saying that big concrete widgets were better money than gold LOL
No he didn't Latitude25 ... and you know it. He said he first bought gold for a quick getaway if necessary at the reset. He then bought junk silver US coins as objects of barter to be used during the reset if fleeing doesn't turn out to be a necessary option. He then bought cement and double-jambs as a store of value. It's way less efficient than gold, but it is of value before, during, and after the reset. It is a store of energy as well. Should the reset damage energy delivery resources, it won't be possible to create new cement. The value of cement and double-jambs doesn't get jerked around nearly as much as the value of gold, and you're likely to easily find someone to make a simple barter trade for it ... rather than to need money (to extend the simple trade over time and space ... which is what money does).
There is no law of nature nor of God that says: Thou shalt see the future.
So show me the past. And while you're at it, show me god.
If gold can't be used as money then why are these people buying bread with gold?
https://www.youtube.com/watch?v=Jt15F21jpN8
This PROVES you're an idiot.
Proves nothing. It's simply barter.
In Zimbabwe (where the video is from), the US dollar is more valuable than gold. Go there some time, or anywhere in Africa. People will take US dollars before they take gold.
So if gold is a pet rock then why are people accepting it for bread? Because it's money. It has virtually no other use but that, MONEY. Sure people will accept dollars many places but in 5000 years they certainly will not. They will still however accept gold as money if the past is any guide to valuations. History says that the dollar will DIE a certain death. IT's 100% guaranteed.
History says that the dollar will DIE a certain death. IT's 100% guaranteed.
That doesn't say gold is money. As long as the dollar is alive, it is the preferred object of simple barter we call money (even with it's built in 4% leak) ... and it has been alive (though manipulated) my whole life.
At collapse (reset), gold is probably the next best choice. But collapses come along infrequently and slowly (and unnecessarily as we now know with the proper management of the MOE). So holding gold for a low percentage eventuality is pretty silly.
And of course while you're holding it, you're not able (or willing) to use it as money. Thus, you are simply hoarding. And if you really need to hoard, gold should be one of the last things on your hoarding list.
And further, if your strategy is right for you, it's right for everyone (of course until everyone employes it). With just 1oz of gold per person on Earth, if you hoard over 1oz (less than $2,000), you've exceeded your fair share. When you are acting unfairly, no system will treat you well over time.
Resist the urge to value gold in paper currency. We all have this tendency– we invest in something, and then hope it goes up in value.
Most important sentence in this whole read.
Because when it all goes to "shit" as it has been showing us steadily since 2008... Doesn't matter what the paper barometer is telling you in a rigged COMEX. Ask yourself how more printing of the paper makes less Au and Ag "less valuable"?!!!
If you haven't figured it out within the last 8 years alone you probably don't deserve to own it anyway!
If everything goes to shit, then PM will be worthless too. Gold does NOTHING except sit there. Owning it is based on the BELIEF that they are worth something.
You can only get rid to them to someone else who ALSO believes they are worth something. In reality, gold isn't worth anything except for decoration. When everything goes to shit, who exactly is worried about decorations?
I'll trade you a 20 pound bag of potatoes for your 1 oz gold coin. But ONLY if I have spare potatoes. You of course, can always eat your gold coin, right?
I am a stacker. It may well turn out worthless when I really need it (post-SHTF). My personal experience was trying to sell a 24k 1 oz wedding band in '83. The top was in or nearly so and no one was buying AU at that time. I ended up bartering it for weed. Bad mistake but at the time I was divorcing and I wanted it gone. I want to believe it will be the magic cure to all my future economic concerns but I am uncertain. I expect I will be bartering again. Hopefully for land instead of weed the next go round.
I stack other more useful stuff too. Food is a nice hedge against economic collapse when folks will be nmore concerned with an empty belly than $25k/oz AU. My grand kids may be the benefactors of my gold buggery.
I'll trade you a 20 pound bag of potatoes for your 1 oz gold coin. But ONLY if I have spare potatoes. You of course, can always eat your gold coin, right?
"A" you obviously don't own any gold but may be a farmer if I read you correctly... Actually pre and post holocaust courtesy of the CBs you will need land to survive a catastrophic economic collapse followed by a nuclear holocaust. The first one is already well underway, and the second could be any moment now when Russia and China expend their very last roll of $$$ toilet paper! By the way...
Land is indeed probably more precious but only if it's not contaminated and is in close proximity to water which is another very genuine problem these days as drinking water may very well no longer be a right but a privilege if Corporations like Nestle have there way. Just ask the Libyans about their aquifers post 2011 and who owns them now!???!!!
You can't eat paper money either, but at least with gold you have 5,000 years of it's use as legal tender and as the kicker, an abundance of uses in medical and engineering science when it's not lookin real perty on the end of your finger or around your neck!
But to your point. Who needs advanced technology and science after you suffer the most catastrophic economic collapse followed by systematic genocide by your overlords or a nuclear holocaust? The 1% are the only ones that will be needing that "yeller stuff" while you will either be dead or near dead in your potato fields readied for the inevitable slaughter.
lol...well first off, stating the obvious...
1) An ounce of gold is a lot easier to carry than 20lbs of potatoes, so good luck with all that.
2) An ounce of gold will buy your entire farm when everything goes to shit and you're sitting on a pile of rotting potatoes.
3) Gold has no shelf life, in other words, the "price" of your potatoes will plummet dramatically as they rot becoming inedible.
4) I'll cut you in for 1% of the profits from my still taking those nasty potatoes off your hands, if you're nice ;-)
everything that can make you money operates in a cycle, usually not in a straight line. plan accordinly. buy low sell high. falling in love with an investment can be hazardous to your wealth.
Eu-googly.
Let's examine the authors' assumptions:
1) Nothing goes up (or down) in a straight line.
Why? Is there some law written that says it cannot. My personal opinions is that those controlling the markets want there to be the appearance of a free market and so they add in ups and downs in price as if there was a free and fair market. This is because, in the past when there were free and fair markets, they had price fluctuations based on human interaction ... unlike today's computer control of price.
2) The gold price shed nearly 5% after the government of China announced recently that they owned 1,658 metric tons of gold.
To assume that the China announcement had anything to do with price, one would need to assume there is a free and fair market. Since there is not, the move on the China announcement is for appearances only.
3) Remember why you own gold to begin with.
People own gold because they have been led to believe it is worth something. I challenge any human being to translate that assumption of worth into something that gold gives them of value, other than belief. I suppose one can make it into something, like a yellow tea cup... if one needs a tea cup.
4) Resist the urge to value gold in paper currency.
Gold is a useless metal and paper currency is a useless piece of paper... unless it is assigned a price in terms of something of value by a monopolistic power. Otherwise they are exactly the same, useless artifacts with assigned price. I cannot put gold to a productive use. Can you?
5) Having said that, if you find it too difficult to do this, and you catch yourself constantly refreshing the gold price and checking your portfolio, you might own too much.
People need to realize that they are not able to control the price of gold. Someone else controls what they will give you for it. It sits in your possession not generating income, not feeding you, not housing you, waiting for someone else to change the price of it in terms of something you can use. Assuming that those who are in control of the price of gold will change the price in your favor is simply hope... it is not investing.
It is hard to release paradigms.
FAIL. PMs have numerous industrial applications, especially Ag. Still the preferred metal for durable electronics, like those in cruise missles. What an asshat.
+1000. Gold is remarkably usefull, not only as a near perfect and durable conductor of electricity, but how many young men have been saavy enough to pull out a kilo bar of gold when striking up a conversation with a girl at a bar? It will easily tripple your "win" percentage. Got gold = got game!!
BTW, a 10 oz Pamp bar, with the beautiful struck image will work just as well.
Silver is a BETTER conductor of both heat and electricty than gold.
Gold is generally a usless commercial metal, only good for it's corrosion resistance. That's why only 13% of annual gold procuction is used commercially. The rest is just stored or made into jewelry, and then stored.
Gold is a better radiation shield than lead.
That's why the gods bred humans to dig it up, the gods needed the shielding.
Right ... so when the fiat shit paper currencies fail you will be able to eat and provide shelter for your family by making missiles or selling YOUR gold to those who make missiles.
I mean seriously, if it is so useful, when the dollar craps out, people will be standing in line to trade you stuff for your gold.
... and you call me the asshat? ... lol, good plan.
Yup, owning gold is entirely based on FEAR.
And owning it you have to believe that when you want to get rid of your stash, which you greedily accumulated, that someone else is just as deluded as to the value that YOU placed on it.
Fuckin A I am loading up the boat.
"But it’s rather short-sighted to completely lose confidence in an asset that has a 5,000 year track record because of a few down years."
No it's not. How many times do we have to repeat this sentence...Damnit, this time is different!!
Nice article. But the overriding reality in the gold market is that it is manipulated. All the theories of economics no longer apply. Supply and demand? History. History of fiat currencies? Irrelevant. The only question worth asking is this: How long can the manipulation last? Can it last forever? I don't know the answer to this question, and I suspect no one else does. But that is the key question. Before buying or selling gold, that is the one question you must decide for yourself. Good luck!
Can it last forever? NO Can it last until I die? Maybe
Good point David!
When I can look up at the sky for 30 days in a row without seeing aerial spraying I will know that the demonati is no longer in control. I am not holding my breath, although I certainly should most days.
Tuco
I tend to be fairly patient with the gold articles the ZH posts, but one person whose opinion I don't need to hear is Simon Black's.
I mean, when his purported area of expertise is obtaining second passports and/or diversifying assets around the world, and he was pushing Ukraine as recently as 2013, I don't need to hear his opinions on ancillary issues.
Somehow tops in gold seem easier for me to spot than bottoms. I sold half my gold in April of 2012. I haven't repurchased that stake yet. I am betting that the manipulation - price suppression - will continue once the down draft is complete and result in a base building trading range. Once the price suppression appears to be weakening relative to demand, I will buy, but not before.
The current voter anger is the PM investor's best friend. Soon the Fed and oligarchs will freak and begin showering newly printed fiat on main street in an effort to assuage the anger. Gold profits depend on reading the inflation/deflation cycle correctly. Right now we have deflation, but when the deflation creates political risk for the system, it is time to edge back into gold.
"What’s incredible is that, despite its history of gains, and 5,000 years of tradition behind it, gold is rapidly becoming one of the most widely despised assets."
That's what happens in a bear market. People despised stocks in October, 2002. Same in March, 2008.
In 1982, someone wrote "The Death of Equities." Then the next bull market began.
Gold = reality in market pricing.
The Fed and central banks cannot afford reality (higher interest rates, credit defaults)
Therefore, the Fed cannot afford the price of gold to rise up and take focus off of buying of equities and bonds.
How long before reality takes over ? I am guessing 6 to 18 months. No extra charge for the specificity on the timeframe.
If Silver drops to $1/oz it would cost you 5 U.S. Silver Eagles (with a face value of $1) to buy 1 Canadian Silver Maple (with a face value of $5). Both have the same amount of silver and are legal tender. Something to consider.
Micro-O Morgan dollars turned out to be like that. They were an incredibly good counterfeit from depression era when silver was around $0.60/ounce. They were so good PCGS had been grading them individually and didn't catch it until years later when they got a batch of them in and could cross compare them. Their dies had been made with some high quality portrait lithography equipment. The graders found die flaws that crossed dates. The coins turned out to be made of Sterling too, more silver in them than the real ones!
The profit was ~$.35/1.00, decent return for then, especially since they were never caught...
"..if you’re always feeling frantic about the daily gyrations in the market, lighten your load."
Anybody believe the Rothschilds hate gold? Think they're selling it off?
Does Lloyd have any in the Cayman Islands or some damn place? How about that Queen o' England?
If it's good for the Barons, it's good for you.
All this anti-gold crappola is a smokescreen, thrown up in desperation.
"I can feel them out there. They're worried their wives won't make love to them if their paper scam flops, they're screamin Sell Sell! I can feel it, they're out there."~ Billy Ray Valentine
"All this anti-gold crappola is a smokescreen, thrown up in desperation."
What about all the pro gold crapola in 2011, as it was running up to 1,900? What about all the pro stock crapola going into Nasdaq 5,000 in 2000? What about all the pro housing crapola going into 2006?
The smart money sells at the top and buys at the bottom.
With all this fiat creation and stealthy inflation, gold and silver don't need no stinking propaganda to go upward.
The banks do let it move up (in an orderly fashion) now and again, to clean out enemy shorts. It needs to be manipulated back down every time. It got away from them in '10 and '11, they will never let it do that again if they can help it.
That is my opinion, you can have one, too.
"Even in modern history, the gold backing up a single US dollar from 1971 is worth vastly more than the paper currency that was printed 44 years ago."
If that is going to be your starting point.
Martin Armstrong noted the other day that inflation adjusted, gold at the 1980 high would be something like 2,300 today.
But it is sitting at about 1,100.
How do you buy silver directly with gold without going through the dollar? The GSR says it should be done right away.
I have done this once years ago- contacted a forum member and we did a swap, all on the honor system. It was a little spooky, but I could tell the dude was ok somehow.
We both shipped our packages the same day. It was risky. The quantities weren't all that big of a deal.
I imagine coinshops might swap, but you'll have to eat the spread.
in person in a public place
The headlines are all that matter in the US finacial markets not wether or not Chinas report was accurate!
$2trillion in gold. 8 billion people. $250 each. Not a very good medium of exchange.
Beats the piss out of Bitcoin.
Unless houses were 75 dollars, and a good car cost 20. Look at old timey diner prices...nickel for coffee, full breakfast for a quarter.
A guy made a couple of bucks a week...it all balanced out. All values are is numbers YOU assign to a thing. Run out of numbers? You can divide to infinity and simply assign smaller numbers to more parts. Or vice versa. The assets, the THINGS you are actually trading, remain the same.
As for gold itself, it too can be divided and used in ever-smaller increments...micro-amounts on embedded strips of 'host' currency...
Currencies were never supposed to be profit-generating assets in and of themselves. Money, currencies, were always meant to be a medium of exchange and a way to store today's wealth for tomorrow's use in a form that doesn't rot. They were supposed to facilitate wider and easier exchanges of goods and services, to free us from the limitations of straight barter and allow us to accrue wealth over time by holding off on some consumption now, to put aside for a future use or need. Currencies allow us to liquidate assets in one place, and move to another place and repurchase new ones.
But they have been turned into commodities themselves, which is what the usury laws and Jubilee and all that were about. They KNEW the dangers of elevating the currency to asset status, and tried to control it.