Why 'The Regime' Hates Gold

Tyler Durden's picture

Submitted by Doug Casey via InternationalMan.com,

A meme is now circulating that gold is the investment equivalent of a pet rock, and that the smart investor should sell gold, and buy stocks. That’s a ridiculous notion. In fact, if you believe in buying low and selling high, this is the time to buy gold, and sell stocks.

It pays to remain as objective as you can be when analyzing any investment. People have a tendency to fall in love with an asset class, usually because it’s treated them so well. We saw that happen most recently with Internet stocks in the late ’90s and with houses up to 2007. Investment bubbles are driven primarily by emotion, although there’s always some rationale for the emotion to latch on to. Perversely, when it comes to investing, reason is recruited mainly to provide cover for passion and preconception.

In the same way, people tend to hate certain investments unreasonably, usually at the bottom of a bear market, after they’ve lost a lot of money; even thinking about the asset means reliving the pain and loss. Love-and-hate cycles occur for all investment classes.

But there’s only one investment I can think of that many people either love or hate reflexively, almost without regard to market performance: gold. And, to a lesser degree, silver. It’s strange that these two metals provoke such powerful psychological reactions - especially among people who dislike them. Nobody has an instinctive hatred of iron, copper, aluminum, or cobalt. The reason, of course, is that the main use of gold has always been as money. And people have strong feelings about money. Let’s spend a moment looking at how gold’s fundamentals fit in with the psychology of the current market.

What Gold Is - and Why It’s Hated

Let me first disclose that I’ve always been favorably inclined toward gold, simply because I think money is a good thing. Not everyone feels that way, however. Some, with a Platonic view, think that money and commercial activity in general are degrading and beneath the “better” sort of people - although they’re a little hazy about how mankind rose above the level of living hand-to-mouth, grubbing for roots and berries. Some think it’s “the root of all evil,” a view that reflects a certain attitude toward the material world in general. Some better-informed people (who have actually read Paul of Tarsus) think it’s just the love of money that’s the root of all evil. Some others see the utility of money, but think it should be controlled somehow - as if only the proper authorities know how to manage the dangerous substance.

From an economic viewpoint, however, money is just a medium of exchange and a store of value. Efforts to turn it into a political football invariably are signs of a hidden agenda, or perhaps a psychological aberration.

But, that said, money does have a moral as well as an economic significance. And it’s important to get that out in the open and have it understood. My view is that money is a high moral good. It represents all the good things you hope to have, do, and provide in the future. In a manner of speaking, it’s distilled life. That’s why it’s important to have a sound money, one that isn’t subject to political manipulation.

Over the centuries, many things have been used as money, prominently including cows, salt, and seashells. Aristotle thought about this in the 4th century BCE and arrived at the five characteristics of a good money:

  • It should be durable (which is why, say, wheat isn’t a good money - it rots).

  • It should be divisible (which is why artwork isn’t a good money - you can’t cut up the Mona Lisa for change).

  • It should be convenient (which is why lead isn’t a good money - it just takes too much to be of value).

  • It should be consistent (which is one reason why land can’t be money - each piece is different).

  • And it should have value in itself (which is why paper money leads to trouble).

Of the 92 naturally occurring elements, gold has proved the best money (silver is second). It’s not magic or superstition any more than it is for iron to be best for building bridges and aluminum for building airplanes.

Of course, we do use paper as money today, but only because it recently served as a receipt for actual money. Paper money (currency) historically has a half-life that depends on a number of factors. But it rarely lasts longer than the government that issues it. Gold is the best money because it doesn’t need to be “faith based” or rely on a government.

There’s much more that can be said on this topic, and it’s important to grasp the essentials in order to understand the controversy about whether now is a good time to buy. But this isn’t the place for an extended explanation.

Keep these things in mind, though, as you listen to the current blather from talking heads about where gold is going. Most of them are just journalists, reporters that are parroting what they heard someone else say. And the “someone else” is usually a political apologist who works for a government. Or a hack economist who works for a bank, the IMF, or a similar institution with an interest in the status quo of the last few generations. You should treat almost everything you hear about finance or economics in the popular media as no more than entertainment.

So, let’s take some recent statements, assertions, and opinions that have been promulgated in the media and analyze them. Many impress me as completely uninformed, even stupid. But since they’re floating around in the infosphere, I suppose they need to be addressed.

Misinformation and Disinformation

Let’s examine some memes floating around.

“Gold is expensive.”

This objection is worth considering - for any asset. In fact, it’s critical. We can determine the price of almost anything; that’s easy. The hard part is figuring out its value. From the founding of the U.S. until 1933, the dollar was defined as 1/20th of an ounce of gold. From 1933 to 1971, it was redefined as 1/35th of an ounce. After the 1971 dollar devaluation, the official price of the metal was raised to $42.22 - but that official number is meaningless, since nobody buys or sells the metal at that price. More importantly, people have gotten into the habit of giving the price of gold in dollars, rather than the value of the dollar in gold. But that’s another subject.

Here’s the crux of the argument. Before the creation of the Federal Reserve in 1913, a $20 bill was just a receipt for the deposit of one ounce of gold with the Treasury. The U.S. official money supply equated more or less with the amount of gold. Now, however, dollars are being created by the trillion, and nobody really knows how many more of them are going to be shazammed into existence.

It’s hard to determine the value of anything when the inch marks on your yardstick keep drifting closer and closer together.

“The smart money is long gone from gold.”

This is an interesting assertion that I find is based on nothing at all. Who really is the “smart money”? How do you really know that? And how do you know exactly what they own (except for, usually, many months after the fact) or what they plan on buying or selling? The fact is that very few billionaires (John Paulson perhaps being the best known of them) have declared a major position in the metal. Gold is only a tiny proportion of the financial world’s assets, both absolutely or relative to where it has been in the past:

“Gold is risky.”

Risk is largely a function of price. And, as a general rule, the higher the price, the higher the risk, simply because supply is likely to go up and demand down - leading to a lower price. So, yes, gold is riskier at $1,100 than it was at $700 or at $200. But even when it was at $35, there was a well-known financial commentator named Eliot Janeway (I always thought he was a fool and a blowhard) who was crowing that if the U.S. government didn’t support it at $35, it would fall to $8.

In any event, risk is relative. Stocks are very risky today. Bonds are ultrarisky. Real estate, at least in many major cities, is in a near mania. And the dollar, although it’s cyclically popular, is on its way to reaching its intrinsic value. In fact, stock, bonds, property, and the dollar are all in bubble territory.

Yes, gold is risky now. But it is actually much less risky than most alternatives.

“Gold pays no interest.”

This is kind of true. But only in the sense that a $100 bill pays no interest. You can get interest from anything that functions as money if it is lent out. Interest is the time premium of money. You will not get interest from either your $100 or your gold unless you lend them to someone. But both the dollars and the gold will earn interest if you lend them out. The problem is that once you make a loan (even to a bank, in the form of a savings account), you may not even get your principal back, much less the interest. And, of course, many banks around the world now pay negative interest for loaning them money - an absurd inversion of reality.

“Gold pays no dividends.”

Of course it doesn’t. It also doesn’t yield chocolate syrup. It’s a ridiculous objection, because only corporations pay dividends. It’s like expecting your Toyota in the driveway to pay a dividend, when only the corporation in Japan can do so. But if you want dividends related to gold, you can buy a successful gold mining stock.

“Gold costs you insurance and storage.”

This is arguably true. But it’s really a sophistic misdirection to which many people uncritically nod in agreement. You may very well want to insure and professionally store your gold. Just as you might your jewelry, your artwork, and most valuable things you own. It’s even true of the share certificates for stocks you may own. It’s true of the assets in your mutual fund (where you pay for custody, plus a management fee).

You can avoid the cost of insurance and storage by burying gold in a safe place - something that’s not a practical option with most other valuable assets. But maybe you really don’t want to store and insure your gold, because the government may prove a greater threat than any common thief. And if you pay storage and insurance, they’ll definitely know how much you have and where it is.

“Gold has no real use.”

This assertion stems from a lack of knowledge of basic chemistry as well as economics. Yes, of course people have always liked gold for jewelry, and that’s a genuine use. It’s also good for dentistry and micro-circuitry. Owners of paper money, however, have found the stuff to be absolutely worthless hundreds of times in scores of countries.

In point of fact, gold is useful because it is the most malleable, the most ductile, and the most corrosion resistant of all metals. That means we’re finding new uses for it literally every day. It’s also the second-most conductive of heat and electricity, and the second-most reflective (after silver). Gold is a hi-tech metal for these reasons. It can do things no other substance can and is part of the reason your computer works so well.

But all these reasons are strictly secondary, because gold’s main use has always been (and I’ll wager will be again) as money. Money is its highest and best use, and it’s an extremely important one.

“The U.S. can, or will, sell its gold to pay its debt, depressing the market.”

I find this assertion completely unrealistic. The U.S. government reports that it owns 265 million ounces of gold. Let’s say that’s worth about $300 billion right now. I’m afraid that’s chicken feed in today’s world. It’s only half of this year’s federal deficit alone. It’s only half of one year’s trade deficit. It represents perhaps only 2% of the dollars outside the U.S. The U.S. government may be the largest holder of gold in the world, but it owns less than 5% of the approximately 6 billion ounces above ground.

From the ’60s until about 2000, most Western governments were selling gold from their treasuries, working on the belief it was a “barbarous relic.” Since then, governments in the advancing world - China, India, Russia, and many other ex-socialist states - have been buying massive quantities.

Why? Because their main monetary asset is U.S. dollars, and they have come to realize those dollars are the unbacked liability of a bankrupt government. They’re becoming hot potatoes, Old Maid cards. But the dollars can be replaced with what? Sovereign wealth funds are using them to buy resources and industries, but those things aren’t money. And in the hands of bureaucrats, they’re guaranteed to be mismanaged. I expect a great deal of gold buying from governments around the world over the next few years. And it will be at much higher dollar prices.

“High gold prices will bring on huge new production, which will depress its price.”

This assertion shows a complete misunderstanding of the nature of the gold market. Gold production is now about 90 million ounces per year and is trending down. That’s partly because, at high prices, miners tend to mine lower-grade ore. And partly because the world has been extensively explored, and most large, high-grade, easily exploited resources have already been put into production. And partly because most production is now unprofitable. Miners aren’t putting any new mines into production.

But new production is trivial relative to the 6 billion ounces now above ground, which only increases by about 1.3% annually. Gold isn’t consumed like wheat or even copper; its supply keeps slowly rising, like wealth in general. What really controls gold’s price is the desire of people to hold it, or hold other things - new production is a trivial influence.

That’s not to say things can’t change. The asteroids have lots of heavy metals, including gold; space exploration will make them available. Gigantic amounts of gold are dissolved in seawater and will perhaps someday be economically recoverable with biotech. It’s now possible to transmute metals, fulfilling the alchemists’ dream; perhaps someday this will be economic for gold. And nanotech may soon allow ultralow-grade deposits of gold (and every other element) to be recovered profitably. But these things need not concern us as practical matters for years to come.

“You should have only a small amount of gold, for insurance.”

This argument is made by those who think gold is only going to be useful if civilization breaks down, when it could be an asset of last resort. In the meantime, they say, do something productive with your money…

This is poor speculative theory. The intelligent investor allocates his funds where it’s likely they’ll provide the best return, consistent with the risk, liquidity, and volatility profile he wants to maintain. There are times when you should be greatly overweight in a single asset class - sometimes stocks, sometimes bonds, sometimes real estate, sometimes what-have-you. From 1971 to 1980 and 2001 to 2011, it was wise to be hugely overweight gold. From 1981 to 2000 and 2011 to the present, it was wise to only keep an insurance position. Right now, you again want an overweight position. The idea of keeping a constant, but insignificant, percentage in gold impresses me as poorly thought out.

“Interest rates are near zero; gold will fall as they rise.”

In principle, as interest rates rise, people tend to prefer holding currency deposits. So they tend to sell other assets, including gold, to own interest-earning cash. But there are other factors at work. What if the nominal interest rate is 20%, but the rate of currency depreciation is 40%? Then the real interest rate is minus 20%. This is more or less what happened in the late ’70s, when both nominal rates and gold went up together. Right now governments all over the world are suppressing rates even while they’re greatly increasing the amount of money outstanding; this will eventually (read: soon) result in both much higher rates and a much higher general price level. At some point, high real rates will be a factor in ending the gold bull market, but that time is many months or years in the future.

“Gold sentiment is dead.”

That’s quite true. Gold sentiment is not just quite subdued among the public; most of them barely know the metal even exists.

You’ll know sentiment is at a high when major brokerage firms are hyping newly minted gold products, and Slime Magazine (if it still exists) has a cover showing a golden bull tearing apart the New York Stock Exchange. We’re a long way from that point. When it arrives, I hope to sell my gold and buy the NYSE.

“Mining stocks are risky.”

This is absolutely true. In general, mining is a horrible business. It requires gigantic fixed capital expense to build a mine, but only after numerous, expensive, and unpredictable permitting issues are handled. Then, the operation is immovable and subject to every political risk imaginable, not infrequently including nationalization. Add in continual and formidable technical issues of every description, compounded by unpredictable fluctuations in the price of the end product. Mining is a horrible business, and you’ll never find Graham-Dodd investors buying mining stocks.

All these problems (and many more that aren’t germane to this brief article), however, make mining stocks excellent speculative vehicles from time to time. Like right now.

“Mineral exploration stocks are very, very risky.”

This is very, very true. There are thousands of little public companies, and some are just a couple steps up from a prospector wandering around with a mule. Others are fairly sophisticated, hi-tech operations. Exploration companies are often classed with mining companies, but they are actually very different animals. They aren’t so much running a business as engaging in a very expensive and long-odds treasure hunt.

That’s the bad news. The good news is that they are not only risky but extraordinarily volatile. The most you can lose is 100%, but the market cyclically goes up 10 to 1, with some stocks moving 1,000 to 1. That kind of volatility can be your best friend. Speculating in these issues, however, requires both expertise and a good sense of market timing. But they’re likely to be at the epicenter of the gold bubble when it arrives - even though few actually have any gold, except in their names.

“Warren Buffett is a huge gold bear.”

This is true, but irrelevant - entirely apart from suffering from the logical fallacy called “argument from authority.” Nonetheless, when the world’s most successful investor speaks, it’s worth listening. Here’s what Buffett said about gold in an interview with Ben Stein, another goldphobe:

You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all - not some, all - of the farmland in the United States. Plus, you could buy 10 ExxonMobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?

I’ve long considered Buffett an idiot savant - a genius at buying stocks but at nothing else. His statement is accurate, but completely meaningless. The same could be said of the U.S. dollar money supply - or even of the world inventory of steel and copper. These things represent potential, but are not businesses or productive assets in themselves. Buffett is certainly not stupid, but he’s a shameless and intellectually dishonest sophist, despite his disarming and avuncular demeanor. And although a great investor, he’s neither an economist nor someone who believes in free markets.

“Gold is a religious statement.”

Actually, since most religions have an otherworldly orientation, they’re at least subtly (and often stridently) anti-gold. But it is true that some promoters of gold seem to have an Elmer Gantry-like style. That, however, can be said of True Believers in anything, whether or not the belief itself has merit. In point of fact, I think it’s more true to say goldphobes suffer from a kind of religious hysteria, fervently believing in collectivism in general and the state in particular, with no regard to counterarguments. Someone who understands why gold is money and why it is currently a good speculative vehicle is hardly making a religious statement. More likely, he’s taking a scientific approach to economics and thinking for himself.

So Where Are We?

So, these are some of the more egregious arguments against gold that are being brought forward today. Most of them are propounded by knaves, fools, or the uninformed.

My own view should be clear from the responses I’ve given above. But let me clarify it a bit further. Historically - actually just up until the decades after World War I, when world governments started issuing paper currency with no relation to gold - the metal was cash, and it was used as money everywhere, on a daily basis. I believe that will again be the case in the fairly near future.

The question is: At what price will that occur, relative to other things? It’s not just a question of picking a dollar price, because the relative value of many things - houses, food, commodities, labor - has been distorted by a very long period of currency inflation, increased taxation, and very burdensome regulation that started at the beginning of the last depression. Especially with the fantastic leaps in technology now being made and breathtaking advances that will soon occur, it’s hard to be sure exactly how values will realign after the Greater Depression ends. And we can’t know the exact manner in which it will end. Especially when you factor in the rise of China and India.

A guess? I’ll say the equivalent of about $5,000 an ounce of today’s dollars. And I feel pretty good about that number, considering how shaky the world financial situation is, and that we are - I believe - about to enter another gold bull market. Classic bull markets have three stages. We’re still in the “Stealth” stage - when few people even remember gold exists, and those who do mock the idea of owning it. Next, we’ll enter the “Wall of Worry” stage, when people notice it and the bulls and bears battle back and forth. At some point, we’ll enter the “Mania” stage - when everybody, including governments, is buying gold, out of greed and fear. But also out of prudence.

The policies of Bernanke, Yellen, and Obama - and also of almost every other central bank and government in the world - are not just wrong. These people are, perversely, doing just the opposite of what should be done to cure the problems that have built up over decades. One consequence of their actions will be to ignite numerous other bubbles in various markets and countries. I expect the biggest bubble will be in gold, and the wildest one in mining and exploration stocks.

When will I sell out of gold and gold stocks? Of course, they don’t ring a bell at either the top or the bottom of the market. But I expect to be a seller when there really is a bubble, a mania, in all things gold related. There’s a good chance that will coincide to some degree with a real bottom in conventional stocks. I don’t know what level that might be on the DJIA, but I think its average dividend yield might then be in the 6% to 8% area.

The bottom line is that gold and its friends are again cheap, and they have a long way - in both time and price - to run. Until they’re done, I suggest you be right and sit tight.

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PoasterToaster's picture
PoasterToaster (not verified) Dec 24, 2015 8:18 PM

An attitude created entirely by banker-slaver propaganda.

MrNosey's picture
MrNosey (not verified) PoasterToaster Dec 24, 2015 9:06 PM

Finite, unable to be printed out of thin air, excepted for 1000's of years as a store of wealth throughout the planet etc, etc......

The one negative unfortunately is that it can and has been confiscated/stolen by desperate governments and will be again.

Including this persons infamous father......HINT: He was especially fond of tooth crowns!


Killer the Buzzard's picture

Because gold is honest money, it is hated by dishonest men.

Socratic Dog's picture

But how much money?  Author suggests $5k.....50 pounds of wheat retails for $12 currently.  It'll feed a man for a month.  $5k would feed him for 35 years.  That seems a little excessive for an ounce of gold.

What would be reasonable?  6 months?  That's $72/oz.

The problem here is massive distortions in the economy brought about by usury and fractional reserve banking.  Trying to put a reasonable dollar price to gold is impossible.  EVERYTHING has to reset to make it work.  That would entail killing the bankers, it can't happen with them alive.  Well, that's OK by me.

At some stage, the price of food will have to come into alignment with everything else, because it is just as real as gold, or more so.  Using wheat and the present $ value of gold, and my arbitrary "6 months per ounce", that means wheat at about $180 per 50 lbs, a 15X increase.  Which means food in general costing 15X what it costs now.

Well, I guess the obesity problem will be taken care of.

Anopheles's picture

In developed countries, food is now cheaper than it's ever been in history (relative to income).  Modern efficiencies and cheap energy have distorted historical values.

This is why the price/value of gold has little relationship to what it used to be throughout history.  Today, gold is a luxury, purchased with surplus income.    It's value is driven by desire, not a s store of wealth.   This also means when the economy has a major "setback", the price/value  of gold will plummet, as will the price of all luxuries. 

Of course the glitterbugs will deny this relationship to their last breath, but their beliefs have has no bearing on reality. 

rejected's picture

And the FRN or any fiat currency is a store of wealth??

If I had a 1913 dollar how much everyday fiat spending power would it have today?   Answer: $0.04 cents.

If I had a 1913 $20 gold coin how much everyday fiat spending power would it have today?  Answer $1074.

If I had a 1785 Continental how much everyday fiat spending power would it have today?  Answer 0.00.

If I had the very first gold coin ever made and it was 1 ounce how much everyday fiat spending power would it have today? $1074

This glitterbug will take gold any day over fiat and if you have any of that junk (yuk yuk) gold, I'll be glad to take it off your hands.

Wow72's picture

What you dont understand as well as being a "Luxury" when confidence is lost in a system, any system gold reverts back to money.  Because its a simple, physical form of work.  No one has to take your word its money because thats exactly what it is.. A simple reliable form of trade used for thousands of years above and beyond being a "Luxury", Gold is what it is.  When the dollar loses even more value than it has people like you who forget or dont remember golds "other" uses will simply be fucked.  Not many people tend to share your opinion that physical money, the most "true" form is a "luxury".

Run along and go grab your check from Uncle Sham.

rejected's picture

I can say with certainty that when,,, if,,, gold reaches $5000 wheat will be a tad higher then FRN 12.

To continue,,, Trading 50lbs of wheat for Federal Reserve fiat with a intrinsic value of zero seems somewhat excessive. Taking fiat for food rates up there with burning food for transportation. 

And we do both,,, And we're the sentient species.

Socratic Dog's picture

The point I'm making is that usury and FRB have distorted everything to such an extent that to give a "real" price in $ to gold is impossible.  So I try to arrive there by looking at other real things, like food.  If an ounce of gold became worth $72, 6 months supply of food, a Tesla wouldn't sell for $100,000, about  700 years supply of food, it might sell for $280, 2 years supply of food.  And a house wouldn't go for $200k, it might do for about the same as a Tesla.

Again, the point I'm making is that the whole economy and the $ values it assigns to things is bullshit.  Think about how much you might get for your house if it had to be cash, with no loan involved.  Think about the average Joe's bank balance in the US.  Usury and FRB have taken prices to where they are.  I (well, the banker) paid 1,750 years supply of food for my house.  How sensible does that seem?  And I got a bargain, apparently.

nmewn's picture

I've never understood Casey, why would one exchange money (gold) for anything paper, besides a napkin to wipe your face or toilet paper to wipe your ass? ;-)

SgtShaftoe's picture

The sprott USA guy, he's almost a CNN puppet.  Sprott in Canada is a little more based in the true reality but not completely. 



SunRise's picture

Is SgtShaftoe a synonym for out of touch with Reality?  I'd like to know.  My assertion:  Casey is decidedly NOT a "Sprott USA guy" or anybody else's guy.  He's his own man.  Please list your major accomplishments, so I can compare yours and his to obtain a better idea of your integrity.  My summation of Casey: "The world is your's for your making.  Take what you want of it and pay the full fee - Truth and/or Consequences.

Socratic Dog's picture

Wipe your ass with a naturally antibacterial silver coin, wash it off, and reuse.

rejected's picture

He's is still using gold. just trades it for fiat to purchase goods and services. When dealing with indoctrinated idiots you have to work on their level.

Quus Ant's picture

"The ReGimee" hates gold because it limits expansion and since all of us are here, pulsating, and free to bitch thanks to reckless, unsustainable, scortched earth expansion I would like to express my deepest thanks. 

Keep it low with low volatility that would be maaavelous as alls I'm looking for is store of value, not an end times lottery ticket.

SgtShaftoe's picture

They don't want you to buy gold because if everyone does it, it will crash the ponzi.  Gold will likely have the largest rally in human history when the reset really gets underway.  Keep stacking bitchez. 

Demdere's picture

Yes, and I think that is much closer than any want to believe, as I believe we are now rolling the national debt over onto created fiat electrons : only CBs are buying treasuries, net.

If that is true, it is an IV QE, IntraVenous, that is.

We will know by the price of gold, which must be why they are willing to lose so much $ on hammering it down.  Surely they are? They are real predictable, that must be exploitable.

beemasters's picture

There are a couple of important aspects of gold not mentioned- the unbelievably huge environmental costs associated with mining it and how nations have been "colonized" by mega mining corps.

I think mining of gold should be banned. There is enough above ground gold as it is; it's just a matter of price adjustment.

OldPhart's picture

You're right on the costs, wrong on the banning.

We mine rock/sand (use it in ready mix cement, and sell whatever excess.)  These are all open pit mines/quarries.  Each quarry is about 100 acres.  We own square miles of reserves around each quarry, and hundreds of square miles of reserve land.  Reserve land is land we bought to offset the mining we're doing.  This is land that cannot be mined; ever.

Mining is an expensive business,  Just replacing tires on a tractor could cost as much as $60k, moving the pit (Adjusting the jaw, conveyors, cruchers and screening system can cost more than $1 million.)  Crusher core replacements can be as high as $200k, and they happen at least once a year from our six quarries.  Property tax on the land is over $1,4 million per year, and we're paying the state of commiefornia a fixed rate for each ton dug.  In the meantime, our back hoes, excavators, skid steers, and various other equipment costs about $70k per month in simple maintenance.

So fuck yeah, mining is expensive.  And we're not even gold miners. (Note to self:  Talk to constantly grinning mining operations exec and ask about gold in the screened tailings. and how I can get in on the action.)

Going back in time, 1967 Colorado, I dug up a nugget in Aurora in a stream we (our school, Sacred Heart Catholic School, third grade) took a field trip along.  Took it home and gave it mom (dad was overseas, again).  Mom got, at least, $400, maybe more.  And, at that time, we had a LOT more food choices.  Even cereal with a milkman delivered milk.  775 Jamaica Street, Auroura, CO.

Bear in mind, the ten ounces or so that I found has about ten tons of rock around it.  My luck was finding it all riding right at the top.  I remember some one else taking over the entire area after my find.

I'm 57 now and know how ludicrous this sounds.  But back then I was seven.  I had pretty rocks to show to mommy.  And I was a strictly raised kid, cored on catholism and the military.  I wore dog tags every day as a military dependent and thought it normal.  Our three months homelessness at Cherry Creek park, living in a tent, Aug-Dec (ok, five months) was an inconvenient adventure, and the evil thrill of liteally breaking my sisters hair clean off thier head was thouroully explored.

Yen Cross's picture

   These articles are so redundant. EVERYONE knows that gold is owned by Jewelers [anal Indians] and bad Women & Men with evil intentions.

 BTW, Donald Trump has hired a fantastic ,"management team". 

MEFOBILLS's picture

They don't hate gold.  The premise is ridiculous.

They want to take rents and unearned income.  They want the money power privledge .  It's great to be the king and live easy by making ledger entries, and controlling the flow of "exchange medium."

In the past, Goldmen had paper riding on top of gold....supposedly limited to 10:1 ratio by law.  (Since they are liars, they often exceeded this ratio.)

This "gold certificate" paper was supposedly redeemable in metal, but of course that was a con.

Credit as money comes into being when it is hypothecated against something, usually land.  Preferrably it comes into being against land that can be grabbed in a depression.

The original "gold men" also dabbled in silver, usually taking rents in the exchange rate difference.  There are times in history when silver would be demonetized, thus screwing over whole populations - Germany comes to mind.

When Jesus upset the money exchangers tables, it was because they were trading Gold for unstamped silver - silver good for the temple, at usurious exchange rates.

The original gold men invented the credit money system that the world uses now.  To those that are monetarily unaware, the full credit money system came into being, invented by about 700 unlicensed sephardic jews in Amsterdam's capital markets.  Share holding companies, gets, puts, calls and modern credit as money can be traced back to this moment in time, around 1500 AD.

These particular sephardic jews were later joined by their ashkenazi brothers.  In both cases, they previously made money from money on their caravan routes, trading the difference in metal exchange rates.  The West had more silver and the East had more gold.  This rent scheme lasted for thousands of years.

Going back to gold bothers them not at all, they will just dust off their old book of tricks.

The money system they most emphatically do not want you to know about or talk about is sovereign money.  Crickets.

Talking about metal as money, is like saying that math is money.  Money is not metal.   The true nature of money is law.

To volume and channel control money properly requires law and good monetary science.

Going back to gold is regression, and proves that man cannot learn from his mistakes.  New fools are born every day.


nmewn's picture

"When Jesus upset the money exchangers tables, it was because they were trading Gold for unstamped silver - silver good for the temple, at usurious exchange rates."

Well no, He did it because they were conducting trade (doing business) at the temple.

Yen Cross's picture

nmewn Knows history.

 When Solomon moved?

StychoKiller's picture

Correction, doing DISHONEST business!

Buster Cherry's picture

And charging the citizenry for the priveledge of taking a required  ritual cleansing bath before entering His temple.

Uncle Sugar's picture

They 'hate' gold like the 'hate' guns. They hate it if the people have some. For them it' okay.

Merry Christmas!

rejected's picture

"New fools are born every day"

Now there's a line I can agree with you.

Anunnaki's picture

Gold has no real use?

Not according to my ancestors from Nibiru

They created us to mine gold for making their atmosphere breathable

They'll be back in 2900 AD for more

essence's picture

Doug Casey is a savvy old rooster, but his argument has shortcomings.

The way he parrots that one of the tenets of "Money" is that it should be consistent in value.  Look back into the beginning part of his post where he channels Aristotle:

"And it should have value in itself".  Note Aristotle apparently isn't stating that it remains constant, and even if he did, what defines constant? Less than 1% change per year? 5%?  and who determines this.

Gold does appear to have SOME intrinsic value to a large percentage of people, but does that mean it's value should always remand the same? Anyone consider what happens when a government  attempts to enforce that? The history books tell us disastrous results is what happens.

If a traditional Gold Standard is brought back then a country's currency is defined as a certain amount of gold. So what happens if the supply or availability of gold varies over time? And note, if might vary from country to country. When gold varies in price geographically then it tends to flow where it's highest priced. That might not work out so well for the country now faced with a shortage of money.

What happens when several countries peg to gold? Fixed Exchange rates are what happens. Is the world prepared for fixed exchange rates? There's been problems in the past with it.

Finally, there needs to be a method to digitally represent Gold holdings. Yes, at the man in the street level it's a nice option to be able to pass gold hand to hand as payment (if only to escape the all seeing,invasive eye of Sauron who wants to know everyone's business).
However physically passing gold on a commercial level just isn't practical. Not in a world of 7 billion.

So where's the details Doug. Gold proponents never seem to flesh these out and present them. On the other hand there's a whole eco-system of Bitcoin aficionados working feverishly to work out the particulars of Bitcoin being used in a digital world.

I'm not anti gold or silver, but I can't endorse ANY monetary standard that's mandated.
Get government out having the monopoly on what's used as money. Let the free market decide.  Gold,silver, fiat from a trusted source, Bitcoin ... let the people decide which they prefer and not have anyone holding a gun to their heads when making a decision.



nmewn's picture

You accept (in an overly long treatsie) the premise of centralized governments while at same time holding out BitCoin as "freedom currency" from the very governments that control its function.

Or do you not know how the internet works? 

essence's picture


You post using the V avatar (least I think that's where its from), supposedly that means you're against undue/unjust government force. Yet here you rebuke me for advocating the free market.

Go back and actually read my post.  I wasn't pushing Bitcoin, only pointing out how that community is bent on making it work across networks, across countries and ironing out the details concerning payment settling and accounting.

What's wrong nmen, you underwater on your gold holdings? Has that turned you into a  hypocrite? And if Hillary comes out for a gold standard, you going to endorse her?

Yen Cross's picture

 When Solomon moved? You're the definition of an intelligent individual...

   Retractions are the " tell tell" of an Dis' Informed, individual.

   Girls like smart " gentlemen". Truth ;-)

StychoKiller's picture

Per the US Constitution, Congress is only supposed to ensure that a Dollar is just so many grains of Au/Ag, not necessarily minting them :


Section 10

1: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.


Yen Cross's picture

 Per the constitution?

 Spreadsheets Welcome?

 paging Bunny?

 the, "Children of The Debtcorn ", finally wake up?


   Lake Tahoe is  over sixteen-hundred feet deep.

rejected's picture

"No State... " That was written for the several states,,, not the national government. The states were/are not allowed to "coin money". And they are restricted to making ONLY gold/silver coin  as payment for debts.

Constitutionally the FRN and the Legal Tender laws are illegal,,, but hey,,,we are an exceptional people that requires no constitution, where even monstrosities like O-Care are "legal" and citizens now "bow" to government thugs / thieves every day at airports/bus/train terminals.

Merry F**king Christmas America!

Victor von Doom's picture

Sad truth is the US governement doesn't need to abide by the Constitution in order to function. Acting in despotic fashion works just as well.

Every day the Minutemen don't appear is absolute proof of this fact.

bardot63's picture

You said: Gold does appear to have SOME intrinsic value to a large percentage of people, but does that mean it's value should always remand the same?

Gold doesn't change. It's the paper money that goes up and down in value....a difficult concept for some. Gold was kept at $35 until 1934, because of gov't decree, not because the dollar was sound.

MEFOBILLS's picture

from bardot63

Gold doesn't change. It's the paper money that goes up and down in value....a difficult concept for some. Gold was kept at $35 until 1934, because of gov't decree, not because the dollar was sound.

My answer:

This whole gold is a standard that doesn’t change mantra is regurgitation.  Propaganda has a way of living on – something like Goebbels big lie.  Those who regurgitate are complicit in the lie.


Historically, nations and empires did set the gold/silver ratio.  They set it based on amounts available.  The amount in SURPLUSS would be set by the strong nation in order to get surplus value. 


For example, when Caesar took over, Gold supplies were increasing from the newly conquered provinces.  He raised gold’s value from 9 to 1 to 12 TO 1.


When moslems plundered 20 times more silver than gold, the set the ratio to 7:1, thus raising silver’s value.


A large supply does not guarantee price.  Supply and demand is not operative with metal money.


As I consistently say, MONEYS TRUE NATURE IS LAW.  Money is not metal.  Sorry it is an inconvenient truth.


Oh and by the way, the Moslems worked the gold and silver mines in Spain with slave labor.  Metal as money is completely unnecessary and a perversion of thought; that humans cannot learn from history is now a given.


In the interwar years, between WW1 and 2, our friendly private central bankers colluded to keep the price of credit low.  This is a FACT, and is in U.S. congressional record.  I’ve posted it at ZH before.


This keeping of credit low helped overstimulate the roaring twenties and formation of private debts.


At the same time, it caused Gold prices to DROP, especially in the U.S.  This collusion scheme then allowed both Britain and France to purchase back the gold they had lost to U.S. during WW1.

Silvio Gesell (a monetary theorist from the past) writes at length about Germany demonetizing silver, which then benefited Gold hoarders.  Since Gesell lived through this episode, it outraged him and led him into his investigations on money.


Metal is not money, asserting this as a truth is preposterous.  If the law chooses to re-monetize metal, mankind will re-lapse into the same mistakes he made in the past.




merry christmas.  please stop spreading lies now that you have been informed

Victor von Doom's picture

So it's just a barbarous relic, right?

ebworthen's picture

Tangible and immutable, versus intangible and vaporize-able.

YouThePeople's picture

They hate it for their freedoms.

Muppet's picture

Merry Christmas to all.    That.   Is all.

JailBanksters's picture

If gold is so worthless why did the US Impose sanctions on Iran from trading it.

If gold is so worthless why is it stored in vaults and  guarded by men with Guns, where as money is just in a vault guarded by cameras.

Space Animatoltipap's picture

Gold is for kings, silver for the developed citizens. Fiat currency is for the worldly smart asses and their slaves. Both will go down da drain. Nature, God's arrangement, is simply more powerful than whatever artificial arrangements. TIME, God's impersonal aspect, will make this clear. Really.

Victor von Doom's picture
Gold is for the mistress - silver for the maid
Copper for the craftsman cunning at his trade."
"Good!" said the Baron, sitting in his hall.
"But iron - cold iron - is master of them all.
- Rudyard Kipling
Gold, silver, lead and lead dispensers bitchez 
Fireman's picture

Try as the shamanic banksters will (along with their presstitutes and political whores) to ridicule the pet rock...they will never succeed in getting it out of human DNA. Even if the future of currency were not obviously a decision to be made by China and Russia (who have long since bet on GOLD) there are things that normal, intelligent humans know instinctively and the worth and value of PMs are some of these things.


Flush your Ponzi petroscrip toilet paper now and bring down the Potemkin Village "economy" of death and subterfuge.

honestann's picture

We’re a long way from that point (time to sell gold).  When that time arrives, I hope to sell my gold and buy the NYSE.

I'd be willing to bet that when precious metals peak out, Doug Casey and other rational folks will have little or no interest in the NYSE.  I am quite confident that much better (and more obvious) opportunities will exist elsewhere on the planet... and maybe off the planet too.

Monetas's picture
Monetas (not verified) honestann Dec 25, 2015 8:49 AM

"Never sell your gold .... spend it .... one dime .... at a time !"  Monedian Logic

Monetas's picture
Monetas (not verified) Dec 25, 2015 8:23 AM

The government hates OPG (other peoples gold) .... because they sold all their gold .... and want it back ?