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Bill Gross Explains Why "We Are Witnessing The Death Of Abundance" And Why Gold Is Becoming The Default "Store Of Value"

Tyler Durden's picture


While sounding just a tad preachy in his February newsletter, Bill Gross' latest summary piece on the economy, on the Fed's forray into infinite ZIRP, into maturity transformation, and the lack thereof, on the Fed's massive blunder in treating the liquidity trap, but most importantly on what the transition from a levering to delevering global economy means, is a must read. First: on the fatal flaw in the Fed's plan: "when rational or irrational fear persuades an investor to be more concerned about the return of her money than on her money then liquidity can be trapped in a mattress, a bank account or a five basis point Treasury bill. But that commonsensical observation is well known to Fed policymakers, economic historians and certainly citizens on Main Street." And secondly, here is why the party is over: "Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth, and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this up as we go along for what may seem like an eternity. A 30-50 year virtuous cycle of credit expansion which has produced outsize paranormal returns for financial assets – bonds, stocks, real estate and commodities alike – is now delevering because of excessive “risk” and the “price” of money at the zero-bound. We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time." Yet most troubling is that even Gross, a long-time member of the status quo, now sees what has been obvious only to fringe blogs for years: "Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside. Still, zero-bound money may kill as opposed to create credit. Developed economies where these low yields reside may suffer accordingly. It may as well, induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper." Let that sink in for a second, and let it further sink in what happens when $1.3 trillion Pimco decides to open a gold fund. Physical preferably...

From PIMCO's Bill Gross:

Life – and Death Proposition

  • Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside.
  • Most short to intermediate Treasury yields are dangerously close to the zero-bound which imply limited potential room, if any, for price appreciation.
  • We can’t put $100 trillion of credit in a system-wide mattress, but we can move in that direction by delevering and refusing to extend maturities and duration.

Where do we go when we die?
We go back to where we came from
And where was that?
I don’t know, I can’t remember
             Virginia Woolf, “The Hours”

I don’t remember much of this life, and like Virginia Woolf, nothing of the herebefore. How then, could I expect to know of the hereafter? I know at least that we all exist at and of the moment and that we make up those moments as we go along. I became a grandfather for the first time a few months ago and proud son Jeff asked for some fatherly advice as to how to go about raising his baby daughter Caroline. “We all do it in our own way, Jeff, you’ll make it up as you go along,” I said. Parenting, and life itself, is one giant experiment. From those first infant steps, to adolescent peer testing, flying from and departing the parental nest, gene replication and family building of our own, maturity and acquiescence, aging, decay and inevitable death – we experiment as best we can and make it up as we go along. 

That death part though, oh where do we go after we have done all the making? There was another Jeff in our family, beloved brother-in-law Jeff Stubban who was as kind a man as there ever could be. Dying within three months of an initial diagnosis of pancreatic cancer, our family sobbed uncontrollably at his bedside as his breath, his spirit, his soul, departed almost on cue while a priest recited the rosary. Where had he gone, where is he now, what will become of him and all of us? Like many grieving families we look for signs of him and in turn for clues to our own destination. A lucky penny in the street, a random mention of his beloved New Orleans, an exterior resemblance of his shiny bald head in a mingling crowd. Where are you, Jeff? Tell us you are safe so that we might meet again. 

Having now matured to trust reason more than faith I offer not so much a resolution, but an alternative to the unanswerable question of Virginia Woolf and the departed souls of Jeff Stubban and billions of others. If we don’t meet again – up there – then perhaps we’ll meet once more – down here. After all, the one thing I know for sure is that we got here once – and because we did, we could do it again. Rest easy, dear Jeff, and welcome to this world, dear Caroline. We’ll all just have to make it up as we go along. 

The transition from a levering, asset-inflating secular economy to a post bubble delevering era may be as difficult for one to imagine as our departure into the hereafter. A multitude of liability structures dependent on a certain level of nominal GDP growth require just that – nominal GDP growth with a little bit of inflation, a little bit of growth which in combination justify embedded costs of debt or liability structures that minimize the haircutting of or defaulting on prior debt commitments. Global central bank monetary policy – whether explicitly communicated or not – is now geared to keeping nominal GDP close to historical levels as is fiscal deficit spending that substitutes for a delevering private sector. 

Yet the imagination and management of the transition ushers forth a plethora of disparate policy solutions. Most observers, however, would agree that monetary and fiscal excesses carry with them explicit costs. Letting your pet retriever roam the woods might do wonders for his “animal spirits,” for instance, but he could come back infested with fleas, ticks, leeches or worse. Fed Chairman Ben Bernanke, dog-lover or not, preannounced an awareness of the deleterious side effects of quantitative easing several years ago in a significant speech at Jackson Hole. Ever since, he has been open and honest about the drawbacks of a zero interest rate policy, but has plowed ahead and unleashed his “QE bowser” into the wild with the understanding that the negative consequences of not doing so would be far worse. At his November 2011 post-FOMC news briefing, for instance, he noted that “we are quite aware that very low interest rates, particularly for a protracted period, do have costs for a lot of people” – savers, pension funds, insurance companies and finance-based institutions among them. He countered though that “there is a greater good here, which is the health and recovery of the U.S. economy, and for that purpose we’ve been keeping monetary policy conditions accommodative.” 

My goal in this Investment Outlook is not to pick a “doggie bone” with the Chairman. He is makin’ it up as he goes along in order to softly delever a credit-based financial system which became egregiously overlevered and assumed far too much risk long before his watch began. My intent really is to alert you, the reader, to the significant costs that may be ahead for a global economy and financial marketplace still functioning under the assumption that cheap and abundant central bank credit is always a positive dynamic. When interest rates approach the zero bound they may transition from historically stimulative to potentially destimulative/regressive influences. Much like the laws of physics change from the world of Newtonian large objects to the world of quantum Einsteinian dynamics, so too might low interest rates at the zero-bound reorient previously held models that justified the stimulative effects of lower and lower yields on asset prices and the real economy.

It is instructive to mention that this is not necessarily PIMCO’s view alone. Chairman Bernanke and Fed staff members have been sniffin’ this trail like the good hound dogs they are for some time now. In addition, Credit Suisse, in their “2012 Global Outlook,” devoted considerable pages to specifics of zero-based money with commonsensical historical comparisons to Japan over the past decade or so. The following pages of this Outlook will do the same. At the heart of the theory, however, is that zero-bound interest rates do not always and necessarily force investors to take more risk by purchasing stocks or real estate, to cite the classic central bank thesis. First of all, when rational or irrational fear persuades an investor to be more concerned about the return of her money than on her money then liquidity can be trapped in a mattress, a bank account or a five basis point Treasury bill. But that commonsensical observation is well known to Fed policymakers, economic historians and certainly citizens on Main Street. 

What perhaps is not so often recognized is that liquidity can be trapped by the “price” of credit, in addition to its “risk.” Capitalism depends on risk-taking in several forms. Developers, homeowners, entrepreneurs of all shapes and sizes epitomize the riskiness of business building via equity and credit risk extension. But modern capitalism is dependent as well on maturity extension in credit markets. No venture, aside from one financed with 100% owners’ capital, could survive on credit or loans that matured or were callable overnight. Buildings, utilities and homes require 20- and 30-year loan commitments to smooth and justify their returns. Because this is so, lenders require a yield premium, expressed as a positively sloped yield curve, to make the extended loan. A flat yield curve, in contrast, is a disincentive for lenders to lend unless there is sufficient downside room for yields to fall and provide bond market capital gains. This nominal or even real interest rate “margin” is why prior cyclical periods of curve flatness or even inversion have been successfully followed by economic expansions. Intermediate and long rates – even though flat and equal to a short-term policy rate – have had room to fall, and credit therefore has not been trapped by “price.” 

When all yields approach the zero-bound, however, as in Japan for the past 10 years, and now in the U.S. and selected “clean dirty shirt” sovereigns, then the dynamics may change. Money can become less liquid and frozen by “price” in addition to the classic liquidity trap explained by “risk.” 

Even if nodding in agreement, an observer might immediately comment that today’s yield curve is anything but flat and that might be true. Most short to intermediate Treasury yields, however, are dangerously close to the zero-bound which imply little if any room to fall: no margin, no air underneath those bond yields and therefore limited, if any, price appreciation. What incentive does a bank have to buy two-year Treasuries at 20 basis points when they can park overnight reserves with the Fed at 25? What incentives do investment managers or even individual investors have to take price risk with a five-, 10- or 30-year Treasury when there are multiples of downside price risk compared to appreciation? At 75 basis points, a five-year Treasury can only rationally appreciate by two more points, but theoretically can go down by an unlimited amount. Duration risk and flatness at the zero-bound, to make the simple point, can freeze and trap liquidity by convincing investors to hold cash as opposed to extend credit. 

Where else can one go, however? We can’t put $100 trillion of credit in a system-wide mattress, can we? Of course not, but we can move in that direction by delevering and refusing to extend maturities and duration. Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside. Still, zero-bound money may kill as opposed to create credit. Developed economies where these low yields reside may suffer accordingly. It may as well, induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper. 

Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth, and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this up as we go along for what may seem like an eternity. A 30-50 year virtuous cycle of credit expansion which has produced outsize paranormal returns for financial assets – bonds, stocks, real estate and commodities alike – is now delevering because of excessive “risk” and the “price” of money at the zero-bound. We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time.


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Wed, 02/01/2012 - 09:45 | 2115982 GeneMarchbanks
GeneMarchbanks's picture

Billy boy is no longer part of the club. Shame really. Poor guy now has to resort to gold.

In other news: Happy new low...


'Baltic Dry index falls 2.6% to 662 points'
Wed, 02/01/2012 - 09:57 | 2116017 VanillAnalyst
VanillAnalyst's picture

Anyone else feel like that outlook read more like a eulogy for the global economy? Scary.....

Wed, 02/01/2012 - 10:19 | 2116089 Oh regional Indian
Oh regional Indian's picture

Of course it did, it si over. Bill has probably been assigned the role of soothesayer. His "letters" have been getting more and more dirgey every time.

And I wish everyone would just start calling "Credit"...."Debt". Credit, warm and Fuzzy, Debt=Death. 

In fact, if you re-read this entire article, with the world Debt replacing Credit, it would paint an even scarier picture.



Wed, 02/01/2012 - 10:23 | 2116095 gmrpeabody
gmrpeabody's picture

Perhaps these banks should begin selling insurance policies on the purity of gold bars..., or maybe to insure that your gold fund actually has gold in it.

Hmmm...., endless possibilities.

Wed, 02/01/2012 - 10:48 | 2116170 HoofHearted
HoofHearted's picture

Big yellow hat tip to Bill Gross for getting before many of his peers, though way after some of us...

Wed, 02/01/2012 - 10:59 | 2116219 Badabing
Badabing's picture

Big yellow hat tip.... like the dog?

or this line from Bill

“Letting your pet retriever roam the woods might do wonders for his “animal spirits,” for instance, but he could come back infested with fleas, ticks, leeches or worse, Fed Chairman Ben Bernanke”

And all i did was change a period to a comma.

Maybe I can get a job with the MSM taking quotes out of context?



Wed, 02/01/2012 - 11:36 | 2116377 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

+1, That was funny.

Who knew Gross even knew what gold was?  I figured he spent all his spare time on his stamp collection and hitting his vape.

Wed, 02/01/2012 - 11:41 | 2116396 The Big Ching-aso
The Big Ching-aso's picture



"This is Karl Denninger.     Let it be known by fiat declaration that Bill Gross has been banned from my blog forever.  Anyone that agrees with Bill Gross about the merits of gold will be banned from my blog forever.   You have been duly forewarned.     Especially you, Photoguy."

Wed, 02/01/2012 - 12:05 | 2116487 redpill
redpill's picture

Welcome to the gold fold Billy boy.  Come on in, the waters fine.

Wed, 02/01/2012 - 12:20 | 2116568 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think our club needs hats.  And swords.  We need hats and swords.

Wed, 02/01/2012 - 12:21 | 2116573 redpill
redpill's picture

The Masons will get jealous!

Wed, 02/01/2012 - 12:25 | 2116590 The Big Ching-aso
The Big Ching-aso's picture



Hats, swords, and gold blunderbusses.    But no badges.

Wed, 02/01/2012 - 12:32 | 2116621 The Limerick King
The Limerick King's picture



PIMCO has left the reserve

Kleptos they no longer serve

Bill's freaking out

He's starting to doubt

The poor boy has lost all his nerve!

Wed, 02/01/2012 - 14:01 | 2116969 mr_T
mr_T's picture

Bill & Mohammed probably built a bullion vault under their newport building. Or better yet have a lot stashed in Singapore. These guys know which way the wind blows. Except the ust call last year ... Safe is good

Wed, 02/01/2012 - 14:08 | 2116994 mr_T
mr_T's picture


Wed, 02/01/2012 - 12:39 | 2116640 PaJoad
PaJoad's picture

Turd got first dibs on big yellow hats....

Wed, 02/01/2012 - 12:59 | 2116713 Scisco
Scisco's picture

Our club already has a lot of guns. But ya, swords would be cool as well.

Wed, 02/01/2012 - 20:44 | 2118443 StychoKiller
StychoKiller's picture

My Daughter's sword (she has a black belt in Kumdo)

Wed, 02/01/2012 - 12:40 | 2116645 trav7777
trav7777's picture

Just read the last paragraph tells you what the problem is.

Gross is a paperbug.  The last 30 to 50 years have produced "outsized gains" for finanical assets, aka paper.  It has allowed people like him to have "AUM" that they turn into massive gains and skim off those gains to themselves, along the way buying private islands and yachts.

What Gross is saying is that those days are over.  People like him are facing extinction and the possibility of having to WORK (gasp) for their money instead of skimming off a ponzi of financial asset growth.

Gross is pissed that NONE of his stupid assets can earn a coupon that his other rentier class customers have become used to and he faces being discarded for it.

But Gross doesn't seem to get why things are contracting anymore than the other paper pushers.  Or maybe like other "unthinkable" topics such as race and equality, people who deep down in places they don't talk about do know the truth just consciously refuse to face it.

Wed, 02/01/2012 - 12:54 | 2116690 Ghordius
Ghordius's picture

trav, try not to make your race-unrelated points without getting back to race - it's bad for your health

Gross has made some two billions riding the bonds way down for years - he could count himself lucky, couldn't he?

Wed, 02/01/2012 - 13:06 | 2116738 trav7777
trav7777's picture

why?  That's just another topic that people avoid.

Gross may or may not know the truth just like people may or may not know that you can't nurture girls to be boys.  People routinely avoid things that they wish weren't true.  This is just one of them.  I used the other one as an example.

There's nothing the fuck wrong with my health, dude...I'm not like you.

Billions isn't enough for a dude like Gross.  There's never enough.

Wed, 02/01/2012 - 12:59 | 2116712 Raging Debate
Raging Debate's picture

Thanks for the link Big Ching. Funniest stuff I have seen in a month. I like Karl's pursuit of justice but crushing dissenting opinion turned me off .

Wed, 02/01/2012 - 13:29 | 2116837 JW n FL
JW n FL's picture



The Big Ching-aso

"This is Karl Denninger. Let it be known by fiat declaration that Bill Gross has been banned from my blog forever. Anyone that agrees with Bill Gross about the merits of gold will be banned from my blog forever. You have been duly forewarned. Especially you, Photoguy."

I watched it 3 times..

Fantastic.. I dont know who this Denninger ass munch is.. but if it was not for people like him.. we would not be able to afford Gold or silver today..

SO! Lets be happy about the cheap prices in Gold and Silver!



Wed, 02/01/2012 - 16:54 | 2117612 akak
akak's picture

I watched it FIVE times yesterday, and laughed hysterically each time!

I used to be a daily reader of Denninger's MarketTicker blog, but grew tired of his hyperbolic rants, then grew annoyed by and suspicious of his absurd and shrill bleating about the non-existent "threat of deflation", then grew disgusted with his wildly ignorant and even more hyperbolically idiotic denigration of gold and its advocates.  I then became outraged by his insane and wildly inaccurate disinformation on monetary history and theory, and the final straw for me was a brief and shocking period of delving into (but never directly participating in) his authoritarian echo chamber, gulag and complete mockery of a "forum", in which the slightest transgression, such as the mere  hint of a mention of gold outside the proper "free speech zone" to which it was relegated there, was grounds for instant and permanent banning. 

Denninger is simply a central bankster-loving, fiat-worshipping narcissist and egomaniac who doesn't know squat about financial or monetary history, and who believes that his prowess at having skimmed paper profits from the Ponzi at the height of a bubble market now entitles him to spout off in the most puerile, dishonest and disgusting manner on a whole host of topics over which he has no more (and probably even less) knowledge than any of the trained parrots on CNBC.

Wed, 02/01/2012 - 17:06 | 2117730 trav7777
trav7777's picture

never thought I'd live to see the day when you got one right

Wed, 02/01/2012 - 17:27 | 2117785 akak
akak's picture

Thank you?

Wed, 02/01/2012 - 11:42 | 2116398 dlmaniac
dlmaniac's picture

When the entire spoiled "DEVELOPED" world spent several decades consuming rather than producing then what else do we expect other than the death of abundance as the result?

Wed, 02/01/2012 - 12:45 | 2116667 trav7777
trav7777's picture

are you stoned?  SOMEONE produced so someone could consume..that is what GDP IS.

Abundance is decreasing because abundance is decreasing.  There are any number of physical resources that are presently in a state of decreasing abundance. 

Wed, 02/01/2012 - 12:50 | 2116683 Ghordius
Ghordius's picture

pass the spliff, man. I see it in your hand

though GDP also contains the bills for services, like haircuts, massages, psychoanalysis and consultancy fees - all in a state of increasing abundance

Wed, 02/01/2012 - 13:07 | 2116740 trav7777
trav7777's picture

There is GDP and then there is GDP.

Wed, 02/01/2012 - 13:10 | 2116754 tmosley
tmosley's picture

We are eating our capital base, which is like someone amputating a leg to have a nice meal.  Sure, you might be able to eat well for a few days, but you are crippled in any longer time period.

But you fail to understand such things.  You don't understand that more can be made with less with the use of capital.  To you, oil is converted directly into goods at a constant rate that can never change, and oil is the only possible source of such goods.

"Abundance is decreasing because abundance is decreasing"!?  Give me a fucking break.

Wed, 02/01/2012 - 13:30 | 2116841 trav7777
trav7777's picture

you're a fucking idiot who understands next to nothing.

You raise strawmen all the time to knock down.  It's totally pointless. 

Name another POSSIBLE source, you fucking RETARD.  And by possible I mean something that isn't a mfin PIPE DREAM magical thinking that may as well be fuckin unicorns.

You still can't ACCEPT what is happening in front of your fucking eyes, can you?  You're so stupid and delusional, cliff.

Wed, 02/01/2012 - 14:18 | 2117027 tmosley
tmosley's picture

A "POSSIBLE" source?  Ok, how about nuclear, specifically using breeder reactors to turn our stockpile of nuclear waste into fuel?  

"Hurr, but ya can't duh dat caus dats majikul tinkin"

But no, no answer will satisfy you, because you worship death and decline, and will brook no heresy against your lord Ba'al.

Wed, 02/01/2012 - 17:12 | 2117744 trav7777
trav7777's picture simply DOESN'T WORK THAT WAY and it ISN'T THAT EASY.

Magic breeder reactors that turn all our nuclear waste into for FREE.  We can just fiss it, then fiss it AGAIN and AGAIN in magical reactors.

You fucking idiot. 

We already know how to reprocess spent rods to extract still-fissile uranium and other fissile byproducts such as Pu239.  It's simply not like the SNAP OF FINGERS that you bleat out that it is.  You do this all the time on very complex shit, acting like it's QED and shit, when you are a moron and have a child's understanding of the world.  You act because shit isn't metaphysically IMPOSSIBLE that somehow this makes it not only likely but EASY and anyone who says it isn't worships fucking Baal (who was a decent actor before his ego got out of control, but totally overshadowed by Heath Ledger).

Your brain seems incapable of responding to a criticism of the simplemindedness of the stupid shit you say without erecting a strawman.

When I said possible, I meant to replace what oil has done, which is provide literally free liquid energy and to have grown in supply.

Try again.  Pick unicorns this time.  Idiot.

Wed, 02/01/2012 - 20:51 | 2118463 StychoKiller
StychoKiller's picture

Let's just build a Dyson sphere, problem solved.

Wed, 02/01/2012 - 14:00 | 2116966 JW n FL
JW n FL's picture



there is LOTS! of Oil!!


the problem isnt that we are running out of OIL!

the problem is.. that Lite Sweet Crude.. that America's refineries are built around.. is not as abundant as Heavy or Sour Crude and as we move forward... Heavy and Sour Crude will be becoming more and more the norm, as we move forward.

couple that Heavy Crude is the going to make up the bulk of supply with the fact that the easy to get too or reach Oil.. is running out.. and what the World is left with is Hard to Get Too or Hard to Reach.

The cost difference is the problem.

The World Economic Model is built on Wage Arbitrage, Cheap Labor equals Cheap Goods!

But when the Fuel Costs or more accurately the Transportation Costs.. eat away at the benefit of cheap labor.. then there is no point of shipping, trading and or sharing with the other Countries.. that we have tried so very hard to bring into the flock..


what we will end up with is Protectionism.. <--- that is a Circa 2008 13% to 33% Tax by China on American cars. <---- this one is from last month.. another 2% to 215 Tariff by China on American Cars..

Obama risks trade war with China

The idiots are now SCREAMING! about how Obama is pissing off Americas 2nd Largest importer of goods, China.. for no REASON! just because Obama wants too!

Obama is a Liar..

the United States is sending its wealth to China..

Tyler did an article about Long Silver over night (China) and Short Silver during the day (United States).. which equates to.. China, the majority of the time enjoys low pricing from the price Pressure during the day that the FED thru JP Morgan put on pricing.


for the last 10 years, a decade.. China has enjoyed Cheap Precious Metals thru the Idiocy of the FED and JP Morgan.

and who does this fuck? We the People!

and who pays for this enrichment of China? We the People!

why do we drive the price down so China can buy cheap? because we are stupid? or maybe because the Majority of Americans are fucking stupid! from the fluoride in the water and public school system?

who knows and at this point.. who cares.

America is stupid and run by short sighted idiots and we will ALL pay the price for it!

Consensus Building? when the Majority is Special Needs! will allow for NO! good or even reasonable outcome.


Wed, 02/01/2012 - 18:20 | 2117979 JW n FL
JW n FL's picture



Uploaded by on Sep 13, 2011

A documentary on Michael Ruppert, a police officer turned independent reporter who predicted the current financial crisis in his self-published newsletter, From the Wilderness.

Wed, 02/01/2012 - 15:44 | 2117453 Al Gorerhythm
Al Gorerhythm's picture

Gold is going up because gold is going up.

Wed, 02/01/2012 - 20:54 | 2118468 StychoKiller
StychoKiller's picture

Au is going UP because the VALUE of FRNs/Euroz/Yen/Drachmas, etc is going DOWN.

Wed, 02/01/2012 - 23:42 | 2118852 Tompooz
Tompooz's picture

That too. Until it does down because it goes down.

Thu, 02/02/2012 - 05:44 | 2119294 pufferfish
pufferfish's picture

That sounds: Delightful.

Thu, 02/02/2012 - 20:36 | 2121797 jimmytorpedo
jimmytorpedo's picture

A Fed Chairman bit me once and I got granulocytic anaplasmosis. Like Lymes disease, only it makes you worship little pieces of paper. If you still believe in paper, get your blood tested, you might be infected.

Wed, 02/01/2012 - 10:48 | 2116171 SirPlayomic
SirPlayomic's picture

Banks selling insurance policies on the purity of gold bars... that's some dark humour there gmrpeabody. If gold is found to be counterfeit, it won't matter if you hold such an insurance policy, as it will be the end of the paper markets and thus the end of your policy :/

Wed, 02/01/2012 - 10:55 | 2116203 francis_sawyer
francis_sawyer's picture

Would that be like the "anti-serum" to the snake oil?

Wed, 02/01/2012 - 11:12 | 2116275 SirPlayomic
SirPlayomic's picture

If you are referring to Greedion, then yes, it's my attempt at an anti-serum.

Wed, 02/01/2012 - 11:08 | 2116262 Parabolic
Parabolic's picture

I'll purchase a CDS against that

Wed, 02/01/2012 - 11:26 | 2116339 Snidley Whipsnae
Snidley Whipsnae's picture

gmpeabody... Before any of your suggestions the US gold should be audited... as should all central bank claims of gold stockpiles.

Wed, 02/01/2012 - 14:59 | 2117224 SAT 800
SAT 800's picture

A human mind is a terrible thing to waste; but that's mysticism for you. Your blog is a complete waste of electrons.

Wed, 02/01/2012 - 20:56 | 2118474 StychoKiller
StychoKiller's picture

"There are more things in Heaven and Earth than are dreamt of in your Philosophy."

Wed, 02/01/2012 - 10:27 | 2116108 silver500
silver500's picture

Dont worry the yield curve wont go flat just yet, short term paper can still go negative.

Wed, 02/01/2012 - 11:44 | 2116382 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"This sandbox ain't big enough for the both of us."

Said Bill Gross to Ben Bernanke.  He was wearing a sombrero and was carring two maracas.

"I challenge you to a Mexican dance off."

Bernanke was playing in a sandbox about one mile from the Fed.  He needed to get away from Timmah who had drank enough Jolt to kill an elephant.

"Sure, I'll be your lolipop."

"That sounds gross."

"You sound Gross."

"Ok, whatever.  If I win, you raise rates.  If you win, you can have my stamp collection."

Ben loved all things paper, so he agreed.  Bill had brought a boombox and began to play some latino grooves.  The two men danced like aged squirels.  After a few minutes they realized no one was there to judge them.

"This sucks!  We had a dance off for no reason!"

Ben went back to playing in his sandbox.  "I really don't care.  I really don't care about anything anymore.  All I want to do is play in this sandbox."

Bill Gross picked up some sand and threw it in his face, and then ran off like a little girl.  Ben spit the sand out and kept playing.

Wed, 02/01/2012 - 10:32 | 2116117 smb12321
smb12321's picture

I like Gross. He makes a mistake, admits it and goes on. I have yet to hear HOW rates can ever rise when the consequence will be incredible debt payments. Are we headed down the EU road where payments on debt are not included in deficits?  And yes, I know we can simply print more!  Is there an alternate universe where we can raise rates and not blow the budget any further?

Wed, 02/01/2012 - 10:59 | 2116221 Snidley Whipsnae
Snidley Whipsnae's picture

"I have yet to hear HOW rates can ever rise when the consequence will be incredible debt payments. "


It's commonly known as default on soverign liabilities. That which cannot be paid back will not be paid back.

Soverigns default all the time. The big difference here is that all soverigns have never defaulted at the same time... or, nearly the same time.

World debt jubilee?

Wed, 02/01/2012 - 12:11 | 2116519 Calmyourself
Calmyourself's picture

Jubilee with a massive revaluation of Pm's   Its the only way to be sure..

Wed, 02/01/2012 - 13:08 | 2116744 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1



Jubilee...  That word again...

Your scenario is very possible.

Wed, 02/01/2012 - 14:35 | 2117098 CrashisOptimistic
CrashisOptimistic's picture

The N word.

You will NEVER go to a convenience store and drop a gold coin in the gas pump to pay for gasoline.

You will NEVER find the money infrastructure of the US change from electronics to gold coins that have to be vaulted and guarded.

You will NEVER walk up to a movie theater and hand over a gold coin to pay for movie tickets.

The money infrastructure of the world is NEVER going to redefine itself so that gold has everyday money meaning.  The drive in bank you go to for the ATM or maybe to deposit a paper check at the window . . . those are NEVER going to be redesigned to have a vault with armed guards to store gold coins.

This stuff is just NEVER going to happen, and I think you all know it.  You're buying and selling tulips.

Wed, 02/01/2012 - 15:34 | 2117382 Chump
Chump's picture

You're fighting a phantom.  As far as I know - and any bugs feel free to correct me - a holder of physical is NEVER going to sell their holdings in exchange for the fiat of our current economic system.  If gold zomg goes to $10K, well, that's all the more reason to hang on to it, get it?

Physical is for "the after," when the infrastructure you just described has long since been destroyed.

Wed, 02/01/2012 - 17:05 | 2117719 Real Estate Geek
Real Estate Geek's picture

I hope you're being intentionally obtuse, Crash.  Off the top of my head I can think of at least two ways for a PM-backed monetary system to work, and neither would require schlepping around bullion for everyday purchases.  (And with respect to IQ, I'm probably in the 4th or 5th quintile of ZH readers.)

Wed, 02/01/2012 - 20:22 | 2118370 Prometheus418
Prometheus418's picture

Prior to 1933, people did it all the time.

Prior to 1964, people still did it, with silver.

It's not weird, crazy, or any of that other BS defenders of the current status quo come up with- it's been the norm throughout much of human history.

That being said, I don't think we will ever go back to what you describe above- but there is nothing at all saying that electronic banking can't be retrofitted to measure account balances in ounces rather than dollars.  As long as you can take that balance to a repository and deposit or withdraw gold coin, it's a gold standard.

We could do it tomorrow, and once everyone got used to the new numbering system, hardly anyone would notice or care.  Stores would still take cash and make change, life would go on virtually unchanged, but with the potential for vastly lower inflation.

Only one thing is for sure- whatever replaces the current system will get f'ed up too.

Wed, 02/01/2012 - 21:00 | 2118484 StychoKiller
StychoKiller's picture

NEVER is a long time!  NEVER is > 5Billion years (when the Sun might transform into a red super-giant, incinerating the Earth in the process!)

Wed, 02/01/2012 - 23:45 | 2118863 Tompooz
Tompooz's picture

"You will NEVER go to a convenience store and drop a gold coin in the gas pump to pay for gasoline."

But you WILL see the day that someone swipes a debit card backed by a divisible bullion account. 

Wed, 02/01/2012 - 12:52 | 2116689 trav7777
trav7777's picture doesn't matter!

Rates are trying to rise because the ENTIRE CREDIT EXPANSION SYSTEM is in de facto default right now!

The FUTURE is the counterparty to the present in such a system.  The future is of contraction.  Therefore, the future is a deadbeat, insolvent, in default.  People are trying to extract more interest as "coverage" but at the same time NOBODY is interesting in borrowing to PAY that interest!

The Fed is forced to pay the coupon required by the credit base.  All this does is dilute money as debt is TRYING to discount itself to reflect reality.

The truth is that they can set the price of debt as they see fit.  The real world cannot cause the growth that is interest owed on today.

Gold is rising for 2 reasons, the first is that its production peaked 10 years ago.  The second is that in recognition of the impending obsolescence of debt-based paper claims, there is an increasing trend toward grabbing something that physically exists.  The future is in backwardation.

Wed, 02/01/2012 - 13:10 | 2116751 DoChenRollingBearing
DoChenRollingBearing's picture

A sustained backwardation in gold would communicate a whole lot.  

Wed, 02/01/2012 - 11:03 | 2116242 4realmoney
4realmoney's picture

Ron Paul is the only Candidate who wants to cut spending

Wed, 02/01/2012 - 11:12 | 2116273 mattu13048
mattu13048's picture

Kevin Kerr talking about the prospects of gold price on this CNBC interview:

Wed, 02/01/2012 - 10:04 | 2116043 mattu13048
mattu13048's picture

Anybody from the big oil companies here? This company is soon going to force you out of business. At least according to Armada Markets recent private note sent to clients. 

Wed, 02/01/2012 - 10:43 | 2116134 LawsofPhysics
LawsofPhysics's picture

So they figured out a way around the first two laws of thermodynamics did they?  Awesome, here take all my paper (i'll keep my PM's).

The best part is that this company is in Greece.  Perhaps Greece will be saved after all (provided someone is actually working at this company).  Thanks for the laugh, by the way I didn't junk you.

Wed, 02/01/2012 - 11:05 | 2116253 Spastica Rex
Spastica Rex's picture


Wed, 02/01/2012 - 23:15 | 2118807 Evil Bugeyes
Evil Bugeyes's picture

These guys should move their company to the US and apply for funding from the Obama administration. Should be good for 100 million at least.

Wed, 02/01/2012 - 11:15 | 2116287 tmosley
tmosley's picture

How EXACTLY does fusion violate the first two laws of thermodynamics?

You saying the sun is a figment of our imagination?

Not that this approach is anything more than a scam, but you use the death worshippers argument rather than the scientific one.  To you, there is NO way to produce energy except for that which is already in use.  This is the theology of ignorance.

Wed, 02/01/2012 - 12:01 | 2116467 LawsofPhysics
LawsofPhysics's picture

Thanks for proving you are indeed an asshole once again.  No shit fusion works, now show me one company using it to produce energy for a city on this planet.  Name one so we call all invest.

I never said fusion didn't work dickhead.  Try to stay focused on facts idiot and convince me as to why I should invest in a "green energy" company in fucking Greece.  In case you missed it, that is what the focus of this thread was about moron.

By the way, even the sun will run out of fuel some day.  Which reminds me, who is handling the nuclear waste from all these fusion reactors that are going to save us.  Better get Japan on the line, I hear they are good at such issues.

Tom, you are indeed one retarded mother fucker.

Wed, 02/01/2012 - 13:13 | 2116755 Matt
Matt's picture

How does "Hyperion" propose to violate any laws of thermodynamics?

Waste material? you mean non-radioactive copper? I imagine you just sell it to the chinese like all the rest of the copper.

BTW, an Italian company already has a patent on this, should be exciting to see the IP-battle.

I strongly suspect this is not actually fusion, but just a chemical reaction, as previously discussed. The copper is already present in minute amounts in even the purest nickel. The important thing is, is it still economically viable as a chemical energy source, and at what price range? If it takes off, good opportunity to go long nickel.

Wed, 02/01/2012 - 13:15 | 2116787 tmosley
tmosley's picture

The fact that fusion hasn't been harvested yet for energy production is besides the point.  You said they were violating the first two laws of thermodynamics, which is hogwash, end of story.

I didn't say anything about where you should invest your money.  What I AM saying is you should stop citing the fucking laws of thermodynamics to make stupid claims, like "fusion violates the first two laws of thermodynamics" which it clearly doesn't, or fusion wouldn't happen, and there would be no stars.

And FYI, fusion reactors don't make nuclear waste.  You are thinking of fission reactors.  And that waste can be reprocessed into new fuel, save for the worldwide monolith of government standing in the way.

Wed, 02/01/2012 - 13:30 | 2116840 JimBowie1958
JimBowie1958's picture

You might find this interesting:



Wed, 02/01/2012 - 14:10 | 2117003 trav7777
trav7777's picture

be awesome if true...god help nickel futures if it is

Wed, 02/01/2012 - 14:47 | 2117140 Flakmeister
Flakmeister's picture


You really should just STFU when it comes to things that you have no fucking idea about....

Fusion, depending on the elements involved, can be "clean" or can be dirty....

Clean means you get a HE gamma ray or 2.... dirty means that you get a HE neutron...

Now, if you could have D-T fusion, what fraction of the energy released is the KE of the neutron? Do you think that neutron activation might produce some radioactivity???

Do have any idea of the relative difference in neutron flux between a U based reactor and a D-T process?

My fuck, do you really think that there are people here that do not see through your pseudo-science posturing???

Wed, 02/01/2012 - 16:18 | 2117584 DiverCity
DiverCity's picture

I don't think he's really aware of what he's doing.  His belief appears to be faith-based more than anything.

Wed, 02/01/2012 - 17:16 | 2117755 trav7777
trav7777's picture

did you really need to do that?  You're going to hurt him.

We're just going to mine He3 from the moon and shit and have aneutronic reactions.


Wed, 02/01/2012 - 22:29 | 2118706 Evil Bugeyes
Evil Bugeyes's picture

Neutrons don't necessarily create long-lived radioisotopes when absorbed. For D-T fusion, all the neutrons need to be absorbed by Li6 in order to create more T to fuel the reactor. So if you could build a D-T reactor which did this, it would only generate tritium which would then be collected and burned within the reactor.

But arguing whether D-T reactors are 'clean' is a lot like arguing about how many angels can dance on the head of a pin. They are a long, long way from being a practical source of energy.

Fusion energy research is really just welfare for scientists.

Wed, 02/01/2012 - 23:21 | 2118816 Flakmeister
Flakmeister's picture

We went through this, on ZH in an earlier thread, believe it or not..Compute the thickness of Li6 needed to attenuate the flux by 1/2....

If we cannot due fission properly, there is no way fusion occurs....

You have a catch-22, you need to thermalize neutrons with low-Z materials... higher Z absorbtion tends to produce radio-isotopes...

It is legitimate research, if only for some form of future space drive....and considering the annual Wall St. bonus pool, it is a "luxury" that society appears to be able to afford...

It could be argued that the crowning achievement of H. Sapiens to date is the Hubble Space Telescope.. but I disgress....

Thu, 02/02/2012 - 01:27 | 2119064 Evil Bugeyes
Evil Bugeyes's picture

Are you kidding? Li6 has a gigantic thermal neutron cross section (>900 barns). Also has a pretty high atomic density, and its scattering cross section isn't too bad either. Only H and He have lower Z's, so it would be a good choice for a thermalizer. And you could also use it to carry away the heat generated with the reactor.

For more details, see this:

Conclusion: to capture a large percentage of the neutrons, your lithium blanket needs to be at least 1 meter thick with natural Li, somewhat less with Li6. Of course, pure Li6 is rather expensive to produce using current technologies.

And before you go off about the engineering difficulties of a 1 meter lithium blanket, please remember that I'm not the one who is arguing that D-T fusion is practical. I personally believe that fusion research is huge waste of money. But in order for D-T to be feasible for large scale energy production you must solve the problem of using the neutrons to regenerate tritium. And IF you solved that problem, then net production of long-lived radioisotopes would be very small compared to fission.



Thu, 02/02/2012 - 21:19 | 2119514 Flakmeister
Flakmeister's picture

And just what is going to support that Li6 blanket?....

Yes, the thermal xsec is huge... but the 14 MeV neutrons from D-T are hardly thermal..

BTW, it is about 30 cm for 50% attenuation of 14 MeV Neutrons

Ultimately, you must thermalize the neutrons and boil water.....

For low neutronicity processes, there are a slew of other issues as well...


I disagree, a fusion reactor will create lots of low level radioactive stuff... tons and tons....

Wed, 02/01/2012 - 12:55 | 2116694 trav7777
trav7777's picture

Nice magical thinking.

So, all we need to do to get fusion power is to have the mass of the sun laying around.  Sounds pretty fuckin "doable" to me, probably by "next week."

You suffer from normalcy bias.  This is a logical fallacy.

Wed, 02/01/2012 - 13:17 | 2116794 tmosley
tmosley's picture

What is magical thinking?  The fact that the process of fusion does not violate the laws of thermodynamics?  I never said these guys were legitimate, or that cold fusion is possible.

You suffer from strawman syndrome with severe projection issues.

Wed, 02/01/2012 - 14:04 | 2116983 trav7777
trav7777's picture

nobody said the process of fusion violates thermodynamic laws, you fucking retard.

Wtf, are you going to repeat back to me everything I identify you as? I didn't RAISE A STRAWMAN, you fucking idiot

Wed, 02/01/2012 - 14:17 | 2117022 Spastica Rex
Spastica Rex's picture


Wed, 02/01/2012 - 14:21 | 2117042 tmosley
tmosley's picture


Posted by "LawsofPhysics": So they figured out a way around the first two laws of thermodynamics did they?

Can you get any fucking dumber?  Learn to read, fucknuts.  That is EXACTLY what he said.

Your implication that I beleived that this company had worked out cold fusion, or that I beleived in fusion as a viable power source at ALL is a strawman.  I said no such thing.


Wed, 02/01/2012 - 17:29 | 2117790 trav7777
trav7777's picture

yeah because they're not doing fusion?  IDIOT.

Cliff, just STFU, ok?  You're in way over your head here AGAIN.

I didn't respond to your response to that...I responded when you started talking about how WE ALL WORSHIP BALE because we don't just join hands with you to strenuously wish for free magical energy and fusion without radioactive waste.  And magic technology to turn waste into fuel all over again!

You don't understand how fusion works.  You don't understand how fission works.  You don't understand how breeder reactors work.  You understand literally NOTHING about ANYTHING.  There is one thing you are very good at, better than anyone I've ever seen, and that's making a fool of yourself.

Thu, 02/02/2012 - 07:42 | 2119361 pufferfish
pufferfish's picture

I got these guys in to give a talk at a not for profit science event I'm involed with. It was exellent. The most interesting part for me was the disscusion on the creation of elements as the fusion reaction decays. Once you have sustanable fusion on a large scale you can create elements.

Where is your gold price now?

I suspect we're still 75-80 years off any meaningful...

Wed, 02/01/2012 - 11:18 | 2116298 gratefultraveller
gratefultraveller's picture

Well, NASA admits it works...

Wed, 02/01/2012 - 12:03 | 2116472 LawsofPhysics
LawsofPhysics's picture

Never said it didn't work idiot.  This is a trading site.  Name one company that is using fusion to produce energy for an entire city on earth so that we can all invest in it.

Wed, 02/01/2012 - 14:22 | 2117051 tmosley
tmosley's picture

Oh, your argument has failed, so now you are going to redefine the purpose of ZH?  GTFO.

Wed, 02/01/2012 - 12:07 | 2116497 Flakmeister
Flakmeister's picture

If you actually followed the research and not the hype artists you would know that LENR is possible, but a rate that makes it a lab curiosity....

Google up Steve Jones....

Wed, 02/01/2012 - 12:20 | 2116563 francis_sawyer
francis_sawyer's picture

Don't need to... I already know he won the US Open in 1996 at Oakland Hills...

Wed, 02/01/2012 - 12:36 | 2116627 Instant Wealth
Instant Wealth's picture

... and 1975-1978 he played guitar for the Sex Pistols.

Wed, 02/01/2012 - 13:44 | 2116903 Flakmeister
Flakmeister's picture

Everybody is a fuckin' comedian...

Steven E. Jones

My M.Sc. thesis used a high pressure D2 target that he designed....

Given his background and views on WTC 7, I am surprised he isn't worshipped as a minor deity here.....

Wed, 02/01/2012 - 14:26 | 2117066 tmosley
tmosley's picture


These types of things might work at some point, but skepticism is needed due to the numerous frauds and failures of the past.  I don't really like the way the E-CAT was demonstrated, to be honest.  Should have stuck the damn thing in a giant bomb calorimeter.

Wed, 02/01/2012 - 14:49 | 2117155 Flakmeister
Flakmeister's picture

E-cat is a scam.... it smells like a variation of the Sheritt-Gordon process (i.e. a fucking battery)

Look up what the putative fusion process is and what byproducts would exist if it were real...

Wed, 02/01/2012 - 15:10 | 2117266 tmosley
tmosley's picture

Seems likely, but I don't have the evidence to say it is or isn't due to the black box nature of the device (does anyone else hear alarm bells ringing?).

Who knows?  I want to see more evidence, both for and against.

Wed, 02/01/2012 - 13:52 | 2116934 DCFusor
DCFusor's picture

Better, they found a way around the conservation of mass-energy if they're taking Ni and making copper by adding hydrogen!  Only a matter of time before this is found fake; they're doing their best to keep any real scientist from knowing how they even think it works, and it crashes and burns.  Too bad we can't short Rossi.

Alt energy has been full of frauds taking money from gullible hopefuls the whole time.  They've recently added governments to their list of possible customers.  I know I've been had a time or two along the way to my own energy system that runs my house and lab.  It seems the extra-special hopium that the alt energy true believers generate is especially attractive to con men.  It's not that there aren't plenty of good stuff and reliable vendors out there - there are.  But they charge real prices and most people don't realize you get what you pay for.  If it's too good to be true....

Wed, 02/01/2012 - 17:36 | 2117820 trav7777
trav7777's picture


It's a fuckin magic proton that turns the Ni into Cu

Wed, 02/01/2012 - 12:18 | 2116544 Calmyourself
Calmyourself's picture

I'm used to being lied too, CDS are money good, Europe is solvent, bamster wants whats best for America etc..  But when you start violating physical law thats a fusion reaction too far..

You should be embarassed..  Yes, fusion is real, this cannot be scaled and we all know it..

Wed, 02/01/2012 - 13:20 | 2116807 Matt
Matt's picture

How is is possible to have something that doesn't scale? If one unit makes 1 Kw, then 1,000 units in a cluster will make 1 Mw. Whether it is currently economically viable, and at what price for electricity vs nickel it becomes viable, IDK.

Assuming, of course, that it isn't a scam, or doesn't require more money in service contracts from the manufacturer than it produces in revenue.

Wed, 02/01/2012 - 13:57 | 2116950 DCFusor
DCFusor's picture

A collegue fairly close to those guys tried to dupe their results.  He's ony an amateur scientist, but a good one.  He got energy - exactly that you'd expect from the possible *chemical* reactions.  No more, no less.  It's a scam.

They refuse to let anyone else real know how they are doing whatever-it-is, which is why the whole community of "real" scientists think this must be a fake - that is the main indicator of every other fake scheme that's ever been done out there.

Rossi's been in legal troubles for other alt-energy/green scams before.  I think he started at the top of the charlatan tree and is trying to hit every branch on the way down.

I'd love for it to be real, honestly, and would become a major booster if I could dupe good results in my lab here - which could do it if I knew how with stuff I've got already.  But I really doubt it is real.  Hence the secrecy till they collect enough money from the gullible to leave town in good style, like the rest of the scam artists in this business.

Wed, 02/01/2012 - 10:14 | 2116073 doomz78
doomz78's picture

sell all your gold and silver.  Buy 10 year bonds.  At 2%- they are a discount.  With inflation running at a real life 7% u are losing only 5% of your money... Now there is alot of upside there.  Is it possible yields will go into negative territory once greece defaults???    Now that would be a deal.  Lose 10% of your capital a year.   ??? haha  absurd.   Thanks Bill Gross for pointing out the obvious. 

Wed, 02/01/2012 - 13:21 | 2116810 Matt
Matt's picture

It is pretty cunning how they manipulate CPI, so TIPS pay negative when the entire purpose of TIPS is to insure against inflation loss ...

Wed, 02/01/2012 - 10:46 | 2116157 Snidley Whipsnae
Snidley Whipsnae's picture

I follow what Bill says. I have noticed that his comments, about the trajectory of the US and rest of world economies, over the past few years have become more dire over time. 

These comments by Gross are the most dire of all... More like a eugoly than a financial forecast.

Especially interesting to me is the comparison of interest rates at or near the zero bound and particle physics being a different ball of wax than Newton/Einsteins macro world.

I have said all along that we are living in a petri dish that is the current experiment of central bankers.

PMs are the only life ring available without counterpary risk. Of course there are other commodities where some money will certainly be made but the question there is; will the money be made by the investors or the MFGlobals?... ie; 'where are the customer's yachts?'

Wed, 02/01/2012 - 10:59 | 2116222 duo
duo's picture

The most salient point is that there is no incentive to take risk and accumulate real capital (savings) if it is going to be treated like dirt due to ZIRP.  More GDP is destroyed by imposing ZIRP on savers than what a few hundred BPs on a car loan or credit card would add.

Wed, 02/01/2012 - 12:15 | 2116541 Bam_Man
Bam_Man's picture

Well said.

Wed, 02/01/2012 - 12:17 | 2116551 Bam_Man
Bam_Man's picture


Wed, 02/01/2012 - 14:26 | 2117068 SAT 800
SAT 800's picture

Of course there's a point; every time you clear the price of a bar, after taxes, you buy another 1000oz. bar. It's just a change in the nature of the savings account; and it will pay "interest"; don;'t you worry about that. I should say I refer to silver; the difference between silver and gold is that Silver will appreciate more in value; if for some reason it embarrasses you to be as wealthy as you could by all means stick to the more contentious metal which is also of more interest to stressed out "law makers".

Wed, 02/01/2012 - 09:46 | 2115983 dildo o flaherty
dildo o flaherty's picture

More experts waking up,Bitchez!

Wed, 02/01/2012 - 10:26 | 2116103 CPL
CPL's picture

"experts" indeed, as "bush league" traders, we've been ahead of these morons since 2008.


These are the experts that created the poison pill, now with no one willing to trade and play the rigged roulette table they are only people left at the table.  And they all have to swallow it like the bitches we know they are.

Wed, 02/01/2012 - 10:55 | 2116204 blindfaith
blindfaith's picture



Stating what has been obvious for 5 years is not waking up, it is covering your ass, so next week your can say " see, I told you so".

All the 'funds' stock, bonds, ect., all see the writting on the wall, they are out of business just like main street.

Wed, 02/01/2012 - 10:58 | 2116218 Au Shucks
Au Shucks's picture

I think you meant to put "experts" in "quotations", as if they were actually "experts" they wouldn't have been asleep to the sham to begin with.  They were "experts" withIN the sham, and "perverts" outside of it.

Wed, 02/01/2012 - 12:41 | 2116651 dildo o flaherty
dildo o flaherty's picture

I admit my quotations were lacking,a failing I put down to my hastily written note. I stand corrected and salute my fellow Zhedgers.

Wed, 02/01/2012 - 09:47 | 2115990 Corn1945
Corn1945's picture

Uh oh....Bill Gross likes gold?----->Seriously consider selling all your gold.

Wed, 02/01/2012 - 09:47 | 2115991 francis_sawyer
francis_sawyer's picture

...yeah, but gold isn't "backed" by anything


Wed, 02/01/2012 - 09:50 | 2115997 atomic180
atomic180's picture

How else to flush out all that Money Market cash...

Wed, 02/01/2012 - 09:52 | 2116001 cccmachine
cccmachine's picture

damnit francis

now i've got to hunt for that bimbo video

Wed, 02/01/2012 - 10:12 | 2116069 mtomato2
mtomato2's picture

Thanks. Now my eyes are bleeding. Juuuust great.

Wed, 02/01/2012 - 10:01 | 2116033 DeadFred
DeadFred's picture

Backed by the full faith and credit of Mother Earth who only made a limited amount of the stuff and promises not to print more. Trust her.

Wed, 02/01/2012 - 11:31 | 2116354 Don Birnam
Don Birnam's picture

Well, who knows, Fred ? Perhaps one morning ( Greenwich time ), Earth may wake to find an object of considerable mass and diameter from the Kuiper belt -- composed entirely of Au 79 -- grasped in an equatorial orbit. Indeed, why do you think NASA put so much into the Spitzer telescope ?

Wed, 02/01/2012 - 09:49 | 2115995 francis_sawyer
francis_sawyer's picture

Let that sink in for a second, and let it further sink in what happens when $1.3 trillion Pimco decides to open a gold fund.

So THAT's going to be how the government confiscates all the gold this time around...

Wed, 02/01/2012 - 09:57 | 2116012 LawsofPhysics
LawsofPhysics's picture

Interesting hypothesis.  China has been doing this for several years now.  Selling treasuries and buying gold that is.

Wed, 02/01/2012 - 10:05 | 2116045 francis_sawyer
francis_sawyer's picture

easier than going door to door... Always look for the low hanging fruit first...

Wed, 02/01/2012 - 10:06 | 2116052 I am more equal...
I am more equal than others's picture

Short treasuries Long gold - when interest rates change (go up) - it will be interesting times.  What's the interest rate in Zimbawe? The "real interest rate" is the nominal interest rate minus the inflation rate.Zimbabwe continues to have negative real interest rates. These rates discourage investment and production but aid undesirable levels of speculation and in turn aid and abet inflation.

Wed, 02/01/2012 - 10:11 | 2116065 LawsofPhysics
LawsofPhysics's picture

It won't matter.  At that point the issue will be availability.  As in possession will 100% of the law at that point (just like in any other hell-hole like Zimbabwe).

This article is shit.  Here let me summarize the important part for everyone.  Simply put, there is a very real cost associated with creating capital but not adding any REAL value.  Any physical asset of real value is your only hedge against ZIRP.

Wed, 02/01/2012 - 10:25 | 2116104 francis_sawyer
francis_sawyer's picture


If you didn't or can't make it with your hands, it ain't worth anything...

(and for all the idiots who try and become clever & say that "dollar bills" are manufactured... Fine, you're correct, they are worth something... Paper footballs, origami, good for starting fires, wallpaper, toilet paper, little boats for the bathtub)...


Wed, 02/01/2012 - 11:01 | 2116229 fnord88
fnord88's picture

ideas are not worth anything? I beg to differ....

Wed, 02/01/2012 - 11:08 | 2116264 LawsofPhysics
LawsofPhysics's picture

intellectual property is always worth something.  More if it can actually be implemented.  The issue around growth and value has to do with how much energy is required to implement the idea(s) and whether or not there is an energetic return on that investment.

This gets harder and harder when energy (and capital) continues to be mis-allocated at an ever increasing rate, which is what is happening now and has been happening in Japan for 20+ years.

Wed, 02/01/2012 - 11:19 | 2116304 fnord88
fnord88's picture

my point was more that all things of value start off as an idea in somebodys head. All capital comes from human capital. And we have more human capital now than ever before. Things are fucked, and they will get worse, but it is not going to be the end of world. In 20 years the world will be a better place. That fact has a lot more history behind it than the price of gold. ( and yes I still own a lot of gold).

Wed, 02/01/2012 - 11:27 | 2116337 francis_sawyer
francis_sawyer's picture

VALUE = 100% perception (it's hard to even get two people to do a 100% across the board agreement on the subject of 'values')...

Wed, 02/01/2012 - 12:13 | 2116523 Acet
Acet's picture

As any entrepreneur will tell you, having an idea is the easy bit, the hardest bit is making it happen.

In fact, having tons of ideas is easy and on their own ideas are worthless.

Nowadays intellectual property laws are hindering progress rather than helping it because government monopolies (that's what patents and copyrights are) are being given out for ill formed, generic ideas (business method patents being the worse of the bunch). Things have gone far beyond the "I've invented a new widget and I want some protection while I finalize develoment and start selling it" domain and into the "We have a ton of IP Lawyers, paid a bunch of people to come up with ideas of things that might be one day be invented and we patented them all so that when somebody does invent any of they we can charge them money for it" domain.

Wed, 02/01/2012 - 11:38 | 2116328 francis_sawyer
francis_sawyer's picture

SOLYNDRA = "IDEA" (not worth much, as the case may be)...

An artist (musician, writer, painter, sculptor) may have many IDEAS... But no value is extracted until the soundtrack is made, the brush hits the canvas, the quill to the paper, the fingertips to the keyboard...

Until we master 'telepathy', we still have to MAKE things (unless, you're presently mind reading my typed words here)...

Look ~ I'll grant you your point (ideas do have value)... But we're arguing semantics... I'm basically saying that once an idea crosses the threshold of becoming something physically manifest... It's now in the realm of the physical world... It is a FORMER idea...

Wed, 02/01/2012 - 13:01 | 2116715 trav7777
trav7777's picture

ideas are the easy part.  Everyone has ideas and everyone has dreams because Martin Luther King invented them.  But I digress.

I have worked with idea people on ventures before.  They don't get it.  Ideas are a dime a million.  Execution and implementation are the hard part.

I laugh at morons who think scientists need to be given ideas by "visionaries."  It's horseshit.  Scientists are MORE creative than ordinary people, which is how they came up with shit that nobody else could have.  So what if HG Wells wrote about some kinda "portable long distance communication device"...he was not the ONLY ONE with the icarus wish. 

Everyone dreamt of flying...the Wrights made it happen.  Archimedes came up with the death ray.  He didn't need some dipshit pot smoker to give him the idea.  Belief in the power of ideas is a conceit held by people who can't do math and don't understand science.  It's all they have to try to buttress their self-worth.

Wed, 02/01/2012 - 14:53 | 2117178 tmosley
tmosley's picture

You laugh at anyone who would do ANYTHING other than sit around and wait for death.

Wed, 02/01/2012 - 17:02 | 2117711 akak
akak's picture

I get the feeling that Trav's sole investment is having gone long on coffins.


"But I'm not dead yet!"

"Shut up!  You will be soon."

Wed, 02/01/2012 - 12:28 | 2116603 pacu44
pacu44's picture

"an idea whose time has come can not be stopped by any army or any government" - Ron Paul

Wed, 02/01/2012 - 16:17 | 2117579 Cathartes Aura
Cathartes Aura's picture

On résiste à l'invasion des armées; on ne résiste pas à l'invasion des idées.

~ Victor Hugo


One cannot resist an idea whose time has come.

  • No one can resist an idea whose time has come.
  • Nothing is stronger than an idea whose time has come.
  • Armies cannot stop an idea whose time has come.
  • No army can stop an idea whose time has come.
  • Nothing is as powerful as an idea whose time has come.
  • There is one thing stronger than all the armies in the world, and that is an idea whose time has come.
Wed, 02/01/2012 - 11:06 | 2116257 blindfaith
blindfaith's picture



OK...I am seeing good art, antiques, one-of-a-kind, relics, wine, vacuum tubes, race cars, and RE at dead end streets going higher everyday.  It is not all PM, but as you say physical assets that have limited supply or no longer made.

Wed, 02/01/2012 - 10:51 | 2116182 Snidley Whipsnae
Snidley Whipsnae's picture

Only fools will turn over their physical PMs and take on a counterparty risk; ie, the US Gov or Pimco or whoever.

All others will lose their PMs in boating accidents...

Wed, 02/01/2012 - 13:21 | 2116808 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Those boating accidents seem to be happening all the time.  Very tragic.

One of my blog readers told his sad tale of woe when he lost his PMs while ice-fishing.  I sent him my sincere condolences.

Wed, 02/01/2012 - 13:43 | 2116898 ParkAveFlasher
ParkAveFlasher's picture

You know, I really wish Tyler would issue a PSA giving tips on how to hold on to your gold and silver whilst canoeing about the many lakes and streams of this great nation. 

Myself, I could have used the advice - a terribly unfortunate fumble while attempting to photograph a wandering moose (who stoppe to sip from the lake I was traversing) resulted in all my ingots plopping into the muddy, rootsy depths.  Perhaps they adorn the lodge of one lucky beaver but for me, my hands are empty.  I often read about similar happenstances on these here conversation threads.

Tyler, won't you help?

Wed, 02/01/2012 - 12:22 | 2116574 Bam_Man
Bam_Man's picture

Unlike 1933, there will be no gold confiscation this time. Why?

Because unlike 1933, it is predominantly the rich and the super-rich who own gold and these are the people that also OWN the government.

Wed, 02/01/2012 - 13:14 | 2116779 Scisco
Scisco's picture

Thank you for that observation. Something else I would love to see is how government would justify the confiscation. In the past the dollar was tied to gold and that was blamed for the faltering dollar. Now gold is proclaimed a barbarous relic. In order to justify confiscation, they would first have to admit failure of paper. At that point, I don't think there would be a government left to confiscate the gold.

Wed, 02/01/2012 - 13:26 | 2116827 DoChenRollingBearing
DoChenRollingBearing's picture

Two great observations Bam_Man and Scisco, + 1 to you both.  Indeed, .gov WOULD be admitting to a total failure of its policies and failure of the Fed central bank model.

Even in 1933, it is thought that FDR only got 10% of the gold.

When this becomes more realized by more people, gold will rise.


"All else will be left behind when the Gold Mothership takes off."

-- ZH-er "Gordon Gekko"

Wed, 02/01/2012 - 13:47 | 2116913 ParkAveFlasher
ParkAveFlasher's picture

Could you imagine going home to wifey-poo and telling her you just turned in your gold because the President said it was your patriotic duty? 


Wed, 02/01/2012 - 09:52 | 2116002 LawsofPhysics
LawsofPhysics's picture

Nothing we didn't already know Mr. Gross.  Ain't it funny how you see real GDP growth during all those deflationary periods in history?  Interesting how none of the talking heads talk about this.  Why, well because it would add more evidence to the existing pile of evidence that shows that the Fed is not interested in economic growth or employment or even inflation for that matter.  The Fed is about protecting the banks and the status quo.  same as it ever was.

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