Brodsky On Gold, 'Credit Money', And Real Return Investing

Tyler Durden's picture

Macroeconomic issues currently playing out in Europe, Asia, and the United States may be linked by the same dynamic: over-leveraged banking systems concerned about repayment from public- and private-sector borrowers, and the implication that curtailment or non-payment would have on their balance sheets. Global banks are linked or segregated by the currencies in which they lend. Given the currencies in which their loan assets are denominated, market handicapping of the timing of relative bank vulnerability is directly impacting the relative value of currencies in the foreign exchange market, which makes it appear that the US dollar (and economy?) is, as Pimco notes, “the cleanest dirty shirt”. Is there a clean shirt anywhere – creased, pressed and folded?


QBAMCO's Paul Brodsky (in a deep dramatic voice-over) sets the scene: In a world where time series stand still... and real purchasing power value has no meaning... a few monetary bodies stand between economic death and destruction... between commercial hope and financial despair... between risk-free returns and return-free risk. Amid this set of conditions it seems entirely prudent to position purchasing power in vehicles that would benefit as the nominal stock of base money grows at a rate far in excess of the gold stock growth rate.


Full article below

QBAMCO - Real Return Investing

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SemperFord's picture

Makes me wish I had not lost all of my PMs on that boating trip! 

DAMN you Salazar, DAMN YOU!!!

philipat's picture

"The market", whatever that means these days, seems to have linked Gold directly to QE, which probably isn't coming any time soon. This is probably a convenient way for the cartel to "Steer" Gold but, if not, how and when will Gold break free from this trap?

Lord Koos's picture

No takers, funny because usually the wise guys on ZH have an answer for everything.

RockyRacoon's picture


You read and digested that 16 page article within 11 minutes after it posted!  I'm impressed.

And such a thoughtful comment as well.

SemperFord's picture

RR, if you read enough of it, you will immediately catch some information which is very similar to other ZH articles on gold and it's actual "value". So I skim through paragraphs but yes I can not only read fast but trap the contents quite well if the material is interesting to me but you are welcome for the comments...I guess. Yes I get you are being sardonic.

RockyRacoon's picture

Why dintya just say so to start with?   Sardonic?  I'd say that is being kind.  I was being an evil prick.

New American Revolution's picture

Ding Ding Ding Ding Ding.... Give the Man a Qupee Doll.... haaeeerrrreeeee'ssss a winnah ladie's an gent'men.... step right this way please, right into the swirling blades mame', no, to the left dear.

Pay no attention to those screams Ladie's an gent'men...

WilliamShatner's picture

Gold or Quatloos...... tough choice.



Long-John-Silver's picture

You forgot about Gold Pressed Latinum (Known on earth as Gold Plated Tungsten).

ThreeWishes's picture

"eureka" Just like rotten eggs if it floats its not gold "Archimedes" 

FieldingMellish's picture

So the trade is short Treasuries, long the yellow brick road. Done.

fonzannoon's picture

THis says it all to me.

From Forbes: Ron Paul then noted that when Bernanke claims the Fed stands ready to support Europe and other geographies during times of financial and economic crisis, it’s actually the American tax payer that is shouldering the burden. The Fed Chairman responded by noting that it is Congress which delegated the responsibility to manage monetary policy to the Federal Reserve.


Have you noticed that congress can't manage their weight? Don't you expect them to help any of the people?

Beam Me Up Scotty's picture

I like.........GOOLLLDDDDD!!

Zola's picture

The FED and the Banks have been busy bankrupting all PM holders , and especially PM stocks holders (can't have competition with SPX...)since last summer.

Whalley World's picture

I suppose what they do not consider is that the miners have fallen to levels where it does not make sense to sell.  My juniors are so low (and i have been in for ten years) that they are a non expiring option that you would have to tear away from my cold, dead hands.

In 2002 I debated all phyz or stocks and phyz.  Should have just bought the metal but who could have seen the massive shorting by the powers that be on my hapless juniors.


Follow the yellow brick road...

Beam Me Up Scotty's picture

Shadow gold price at $9961 based on US gold holdings of 8300 metric tons.  You mean 8300 metric tons of tungsten?  Lets see the 8300 tons of gold.  Lets all see it with our own eyes!!

FieldingMellish's picture

I'm sure its here somewhere... I just saw it yesterday... I'm sure it will turn up sooner or later.... Oh Blythe! You know that shiny yellow stuff that I've been lending you for twenty years? You haven't seen any of it have you?

Long-John-Silver's picture

Oh it's there. The only problem is the 100 people that think they own each ounce of it. There's going to be a fight as all 100 owners of that ounce try to figure out which one of them gets it.

Stormdancer's picture

I doubt there will be a fight.  The "one" that will get the metal has long been established.  If it's not already secreted in some untouchable private warehouse it will be before any fight can begin.  Any fight that develops afterward will be between lawyers and amount to much fury signifying nothing in the end.

I suspect all that gold will remain hidden until it's time to create a new monetary system which will most likely require some reference to gold to gain trust in the new system.  When it's time to make some new rules, you'll see who has the gold.

That gold is not even "there" for nations....much less individuals, funds or even banks.

And where is Banco de Mexico's gold?

Spacemoose's picture

tomorrow i diversify.  i'm heading off to costco to buy everything i can, that i might reasonably eat in the next 12 months.  i bet my rate of return on the food beats the living shit out of the 56 cents i made on the $9K i have on deposit in the credit union over the last 2 months.  might even beat PM's over the next 12 months (although not over the long run). 

FieldingMellish's picture

It certainly will when one day you turn up at the credit union only to find the account is empty.... and it's GONE!

Spacemoose's picture

ha! you might be right but i think odds are over overwhelming that the gov would print, print, print  in that scenario.  what really concerns me is what happens when it suddenly occurs to all the other mary and joseph six packs that that food provides a much better rate of return on their money than the local bank on their piddly savings accounts.  what happens when the middle class realizes that food is their only hedge?  and you can eat it!

Al Gorerhythm's picture

In that scenario, which has been played out in the US with MFG and PFGBest, the "government" did sweet fuck all except support their colleagues in "the business". They are as one, Spacemoose.

You are onto something there buying food but it won't be too long after the fall that you will be labeled a "hoarder". I wonder if by hoarding dollars in bank account, that you could be construed as a hoarder as well? Shouldn't you be compelled to withdraw your savings and spend them into circulation? Why are you hoarding dollars, SM? Can't you see that it is good for the nation to just spend so that everyone is able to hold some? Those poor banks haven't enough to spread around, fractional reserve policies 'n all.

GeezerGeek's picture

All TPTB have to do is send interest rates on checking and savings accounts into negative territory. Use it or lose it.

Rainman's picture

cool idea, I hear honey never goes bad.

blunderdog's picture

Gotta keep it away from babies, tho, the trace botulism toxin will fuck 'em up.

Spacemoose's picture

the important thing is to buy what you use.  i've got 50 pounds of beans that i know are never gonna get eaten.  but tuna, pasta, rice, and canned tomatoes are consumed in large quantities in my home (2 teenagers).

SemperFord's picture

Mix some bacon and strips of steak with a pot of beans and your teenagers will it them, believe me!

Lord Koos's picture

Yep, learn to cook!  Black bean soup, red beans & rice, etc, good stuff.

johny2's picture

the way bees are dropping off, that may be the best idea around.

petolo's picture

Honey futures, anyone? Don,t tell Jamie.

Miss Expectations's picture

But it must be stored in a glass jar, not plastic.

blueRidgeBoy's picture

As long as it's stored in an air-tight and moisture-proof container, honey will keep forever, even if that container is plastic.  Now, we can debate the health effects of plastic food containers, but that doesn't affect the storage life.  The reason honey keeps so well is because it contains natural anti-microbial and anti-bacterial compounds (edit: hydrogen peroxide, mostly).  Honey has also been used as a topical wound treatment and a preservative for other foods.


edit: liquid gold, bitchez!   (couldn't resist)

q99x2's picture

Watch out for the glowing fin tuna.

GeezerGeek's picture

But if it glows, you'll be able to find it when the lights go out.

_underscore's picture

Yes, good idea. I've personally 'sterilised' my requirement for all household pretroleuem based products by buying (on discount/special offer) all the washing/cleaning products I'll ever need (based on my expecatations of my life expectancy..!) My return, so far like yours, has been greatly in excess of any meagre return on deposit accounts. Any non-degradable consumable products, I beleive, will  also bear the same or greater return (as opposed to cash savings)  - toilet/kitchen tissue, oils, rice  etc.

The article above has been the best overall summary of why it's sensible to buy 'treasure' that I've read here (and I'd also include the more mundane 'treasure' you can buy from CostCo in the list above - or treasure for the common person) .

I do believe I'm slipping into Prepperdom.


blunderdog's picture

That's truly one of the strangest investment reports I've read.

vincent's picture

"over-leveraged banking systems concerned about repayment from public- and private-sector borrowers"

and with reality now setting in, realize that the Fat Lady is warming up.


Fixed it.

Spitzer's picture

US dollar (and economy?) is, as Pimco notes, “the cleanest dirty shirt”. Is there a clean shirt anywhere –

That is the biggest bubble/myth out there. First the Euro, then the creditor Yen, then the dollar.

fonzannoon's picture

Spitzer why the Yen before the dollar? Would they dump all their treasuries on our head first?

Al Gorerhythm's picture

Whilst they still hold some perception of value, you bet your ass they will.

Zola's picture

This report is a keeper Tyler. However, this analysis was made in 2009/2010 by smart investors and the market action has been illogical and absurd ever since. Indeed with record negative real interest rates, the ratio of Shadow Gold Price to Gold price should have moved strongly towards 1. There is a high likelyhood there is global rigging of the Gold price.

Snidley Whipsnae's picture

Ya think?... "There is a high likelyhood there is global rigging of the Gold price."

How many Fed Govs have to say as much before you will be convinced?

buzzsaw99's picture

I don't think OPEC would be too happy with one ounce of gold per hundred barrels of oil.

Downtoolong's picture

Anything but paper, that's my new motto.