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David Rosenberg: "The Best Currency May Be Physical Gold"

Tyler Durden's picture


Stop us when this sounds familiar:

What a no-brainer to suck at the teat and go long some very transparent and liquid debt that matures in less than three years (how can there not be a rally in global risk assets when Europe's central bank pumps a combined $1.3 trillion into the financial system? Not to mention a second bailout for Greece we were told a year ago there wouldn't be any!). This must be the safest carry trade ever, or at least that is the perception (1% LTRO loan for a 5% Italian bond or a 2% short-term note even ... back up the truck!). Put up a tiny bit of capital and lever it up. It is incredible that we live in a world where the difference between going out of business as a bank and prosperity lies with cheap money being accessed from the central bank balance sheet.


At least LTRO1 was dealing with a possible breakdown of the system since the banks weren't lending to each other. LTRO2 is clearly an overt policy move from the traditional central bank role of being the lender of last resort (which even LTRO1 was to a point) to being the lender of first call, as Peter Tchir aptly puts it. There is no such thing as a free lunch, but there is such a thing as the law of unintended consequences. I can't say I know for sure what they will be or when they will show up, but there are going to be repercussions from a central bank morphing from a bona fide lender of last resort to a gift-giving institution.


Somehow a long gold, short euro barbell looks really good here. Bernanke, after all, now seems reluctant to embark on QE3 barring a renewed economic turndown while the ECB is moving further away from the role of a traditional central bank to take on the role of quasi fiscal policymaking, The German central bank, after all, is responsible for 25% of any losses that would ever be incurred by the massive Draghi balance sheet expansion. Why would anyone want to be long a currency representing a region with a 10.7% unemployment rate, rising inflation rates and free money? Mind you — the same can be said for the US (where U-6 jobless rate is even higher), which is why the best currency may be physical gold (or the producers that trade very inexpensively here and you pickup some leverage).

Short and sweet.

From David Rosenberg of Gluskin Sheff


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Sun, 03/04/2012 - 00:23 | 2220973 The Shootist
The Shootist's picture

I'm long a 'big @$$ can' of   FTW!!!

Sun, 03/04/2012 - 00:28 | 2220976 TruthInSunshine
TruthInSunshine's picture

This will be a Zero Hedge article soon, but for those who aren't aware of it, David Stockman's gone full Defcon on the Fed Ponzi & an imminent economic meltdown, warning of absolute carnage, with a full & intentional interview with the AP/USA Today.

And yes, he owns gold, saying essentially that it's risk free, and will important to hold in the period that lay ahead.

From the other thread I posted this in:

David Stockman has gone all in on calling the Federal Reserve 'out of options' and stating that the shit's going to hit the fan (if you don't know Stockman's resume, you should, and this is incredible stuff).

Is he right, wrong, lying, putting a warning out there....????

I don't know. I know he was as high ranking as it gets as an economic adviser to a sitting President of the United States.

I know that when someone like this comes forward in an intentional shout out in the loudest way possible, through the AP Wire Service (which makes its way onto every front page of every newspaper), something is probably afoot:

 David Stockman economy Q&A: Economic disaster in the works 



Stockman: "Here's the heart of the matter. The Fed is a patsy. It is a pathetic dependent of the big Wall Street banks, traders and hedge funds. Everything (it does) is designed to keep this rickety structure from unwinding. If you had a (former Fed Chairman) Paul Volcker running the Fed today 7/8— utterly fearless and independent and willing to scare the hell out of the market any day of the week — you wouldn't have half, you wouldn't have 95 percent, of the speculative positions today.

Q: You sound as if we're facing a financial crisis like the one that followed the collapse of Lehman Brothers in 2008.

A: Oh, far worse than Lehman. When the real margin call in the great beyond arrives, the carnage will be unimaginable.

Q: How do investors protect themselves? What about the stock market?

A: I wouldn't touch the stock market with a 100-foot pole. It's a dangerous place. It's not safe for men, women or children.

Q: Do you own any shares?

A: No.

Q: But the stock market is trading cheap by some measures. It's valued at 12.5 times expected earnings this year. The typical multiple is 15 times.

A: The typical multiple is based on a historic period when the economy could grow at a standard rate. The idea that you can capitalize this market at a rate that was safe to capitalize it in 1990 or 1970 or 1955 is a large mistake. It's a Wall Street sales pitch.

Q: Are you in short-term Treasurys?

A: I'm just in short-term, yeah. Call it cash. I have some gold. I'm not going to take any risk.

Q: Municipal bonds?

A: No.

Q: No munis, no stocks. Wow. You're not making any money.

A: Capital preservation is what your first, second and third priority ought to be in a system that is so jerry-built, so fragile, so exposed to major breakdown that it's not worth what you think you might be able to earn over six months or two years or three years if they can keep the bailing wire and bubble gum holding the system together, OK? It's not worth it."

Sun, 03/04/2012 - 00:29 | 2220983 I think I need ...
I think I need to buy a gun's picture

thanks for this info TIS

Sun, 03/04/2012 - 01:36 | 2221085 Not For Reuse
Not For Reuse's picture

depends on what you mean by currency.

Best thing to travel with, for sure...IF you're traveling somewhere with a strong fiat scaffolding.

If not, gold is really really fucking soft & malleable, in every sense.

Sun, 03/04/2012 - 02:25 | 2221163 DoChenRollingBearing
DoChenRollingBearing's picture

Gold vs. Buffett.  Silver vs. Jamie Dimond.

Warren Buffett (twice) and Jamie Dimon are both featured in this weekend's Barron's.  I review it at my blog ("Review of Barron's, Dated 5 March").

"I'll be damned if we don't have record profits for the next year or two." -- Jamie Dimon

This is despicable on so many levels.  Want to read more?  Gmail me at my name and promise to behave, and I will send you the link (or just use Google).

Sun, 03/04/2012 - 17:52 | 2222525 markmotive
markmotive's picture

How did Treasuries perform in 2011? David Rosenberg is definitely worth listening to.

Sun, 03/04/2012 - 07:34 | 2221425 fonzannoon
fonzannoon's picture

In a possible hyperinflationary environment this guy is recommending mostly cash?

Sun, 03/04/2012 - 10:57 | 2221578 Sudden Debt
Sudden Debt's picture

Still makes sense. Before we get the next inflation ride, we'll first pass a short term deflation period which might take 2 to 4 weeks

Sun, 03/04/2012 - 11:12 | 2221603 fonzannoon
fonzannoon's picture

maybe but that is a trader mentality and this guy does not seem like a trader. What id that 2-4 week period does not happen? Then you are stuck. I just don't see this guy illustrating such a bad outcome and yet his recommendation is to wait in cash for the short term blip of deflation. I just wish he would have expanded more on what he is doing to protect himself.

Sun, 03/04/2012 - 13:08 | 2221803 tarsubil
tarsubil's picture

I think he knows that this isn't all planned and organized. The people running this shit show are retards. It is going to start crumbling and seizing up before they start dumping printed fiat all over the place. Deflation first then hyperinflation.

Sun, 03/04/2012 - 18:28 | 2222547 smiler03
smiler03's picture

Thanks for this TIS.

It's people like this guy, who I have never heard of before today, that make me think my small pension fund is doomed. I'm roughly 66% into international funds (12 different ones and called "mutual funds" in the US?) and 25% PMs/Cash. The return on my funds this YTD is great. Now if I follow this guys advice I'd sell all of those well performing funds and get zero zip nada 0% in the cash that I'd have instead. (assuming I don't put 100% into PMs).

My questions to myself are: How certain am I that this guy will be right? When do I think the SHTF? How much will I lose if the SHTF tomorrow or in 3 years from now? How do I invest in treasuries, other than via funds? Why are treasuries better than cash?

I have no idea at all what to do so for now I'm sticking to my funds. The worst that can happen to me is I lose the price of a "cheap" luxury car.

I should say that there is no way I would put 100% into PMs, but if I had to it would be 90% silver and 10% neodymium.

Any comments welcome :O)

edit: I should have pointed out that my UK SIPP (self invested personal pension) CANNOT LEGALLY hold physical metals so please don't advise me to get physical. I'm also 15 years from the national retirement age.

Sun, 03/04/2012 - 20:12 | 2222767 MrSteve
MrSteve's picture

Try energy and top mining stocks outside the pound, like Statoil and Newmont. Could you sell out, take a penalty and reinvest in PM? That might be smart if you avoid a 90% currency revaluation.

Sun, 03/04/2012 - 13:14 | 2221811 tarsubil
tarsubil's picture

So gold for my savings, silver for the revolution? I think my buying strategy is perfect.

Sun, 03/04/2012 - 10:40 | 2221555 Element
Element's picture

"She's settling fast by the bow Sir!"

Sun, 03/04/2012 - 11:02 | 2221583 Bendromeda Strain
Bendromeda Strain's picture

Rosey better be careful calling gold a currency, one of Obama's "butch squad" may label him a Canadian terrorist and call out the drones.

Sun, 03/04/2012 - 00:29 | 2220984 Manthong
Manthong's picture



"A strange game.

The only winning move is

Not to play."


Sun, 03/04/2012 - 01:13 | 2221046 Fail2Deliver
Fail2Deliver's picture

+1 sweet WarGames reference

Sun, 03/04/2012 - 00:32 | 2220993 kito
kito's picture

Smart man

Sun, 03/04/2012 - 00:38 | 2221001 GMadScientist
GMadScientist's picture


One who has, until this point, never lost his shit to that degree.

Channeling RP for a couple beats there.

Sun, 03/04/2012 - 02:55 | 2221206 Sam Clemons
Sam Clemons's picture

Rosenberg, welcome to the world.  I think the old ZH poster Gordon Gekko pointed out that deflation is a flight to cash, and the finest cash is gold.  He definitely was no dollar deflationist, but a gold deflationist.

Sun, 03/04/2012 - 00:49 | 2221019 resurger
resurger's picture

Nice post TIS

Faber also says gold is far from a bubble, but there are some small corrections. this is nice

"No. If you went to an investment conference in 1989, 90% of the people there would have told you they owned shares in Japanese companies. In 2000, 90% of them would have said they owned NASDAQ shares. Only about 5% of the participants at an investment conference today would tell you they own gold. Very few people in this world own gold."

Sun, 03/04/2012 - 20:59 | 2222840 margaris
margaris's picture

Sources please.

from Marc Faber 's last interview in "The Gold Report":


Sun, 03/04/2012 - 00:53 | 2221025 holdbuysell
holdbuysell's picture

From the interview:

"I'm a libertarian."

Stockman for Paul's VP?

Interesting combo.

Sun, 03/04/2012 - 02:10 | 2221135 Troll Magnet
Troll Magnet's picture

stockman also thinks everyone should pay more taxes. i say no thanks.

Sun, 03/04/2012 - 02:23 | 2221154 TruthInSunshine
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He was responsible, primarily (as in he front and center), for one of the largest tax breaks in history, under Reagan, when there was still the notion that everything wasn't a literal ponzi, precariously perched on the ledge of of a scam, teetering on the narrow tip of a massive fraud.

Back then, there were still credible & smart economists who believed that the government had the ability to spend less than it took in.

They obviously are now aware of their massive naivety.

Sun, 03/04/2012 - 03:27 | 2221241 oldman
oldman's picture

Yeah, maybe

Volker and Stockman were considered corruptible shills by the old men I worked with

those oldmen probably did not know what 'credible and smart economists' were

There was a punk named Lawrence Kudlow who would fly in from NYC occasionally and they thought he was a fool

since I liked what he had to say I began listening to old men to understand why

All I can say now is that I'm glad I did and a thanks to Kudlow for having been the inspiration-----without those old men--I would have sounded like a lot on this site

it was a long time ago around '78-'80 and still nothing has happened                       om

Sun, 03/04/2012 - 20:25 | 2222787 MrSteve
MrSteve's picture

So tell us why Kudlow is in broadcasting instead of looting his Bear Sterns accounts? google his SEC consent decree. Oldman, take your nominal accounting wet dream to the grocery store in two years and tell us how you make out. Good luck to you and all the other fools sucking on Kudlow Koolaid. Load up on stocks in front of the greatest interest rate crush / currency debasement on earth. There is no fool like an Oldman Fool.

Sun, 03/04/2012 - 05:14 | 2221349 oldman
oldman's picture


He and Laffer had the same veneral disease, I forget what it was---something to do with 'trickle down' is all that comes to mind.

I don't think they ever found a cure                         om

Sun, 03/04/2012 - 10:57 | 2221576 TruthInSunshine
TruthInSunshine's picture

See Dr. Ken's response immediately below, as he preempted whatever response I would have made, and more eloquently.

I do appreciate what you're saying, however, and agree that Stockman isn't perfect idea or policy wise.

The significant thing to me now is that for a man who resigned because the President wouldn't start implementing a deficit (and debt) reduction effort, and who had the status of Stockman both pre and post-government, what's he's saying so publicly about the system being literally held together by bailing wire and bubble gum, and the enormity of the leverage and margin that's sooner rather than later going to wreak "carnage" in a way that makes Lehman appear insignificant, he cannot be dismissed casually.

Sun, 03/04/2012 - 12:06 | 2221680 kalum
kalum's picture

I esp liked the line "we need to get some SANE people at the Fed"

Sun, 03/04/2012 - 13:15 | 2221812 oldman
oldman's picture


Of course you are absolutely correct.

However, he seemed such a boy scout from the south and was quite young that he was considered very lightweight at the time and has only improved with age. This happens sometimes.

Also, please, remember that the oldmen that trained me never recovered from the dollar devaluation that came when, 1971? Shit, I can't even remember dates any more. These old fools were the dudes who  used to fly to Switzerland as couriers for their clients to be certain all was as the Swiss said it was and all the details to secure their capital were as the clients wished. Those days are gone, of course, but the oldmen turned out to have known what was coming, no matter how crazy I thought they were at the time. These guys were truly 'private bankers' and as rare as hen's teeth today.

Stockman today may be a great guy; I don't have an opinion. But I do recall being asked to leave a meeting where 'trickle-down' was being sold by Laffer buy the eyes of my colleagues for laughing out loud and posing the wrong questions. The good thing that came of this was that the partners never asked me to another meeting.

I'm still laughing and posing the wrong questions, so excuse me for any offense.

None was intended                           om

Sun, 03/04/2012 - 04:51 | 2221336 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

I believe he thinks that we should not be running ponzi deficits, and if that means raising taxes, then so be it.


Me, I would prefer to see prosecutions, clawbacks and massive penalties against companies, fiduciaries, employees and windfall shareholders in any security or asset class that involved fraud (such as MBS, CDS, etc).  Also, a reneging on all 'last resort' backstopping and any bonds held by non-democracies or the Fed.  And, of course, elimination of any federal departments whose jobs are better left to the states, a 50% reduction in defense spending (including mothballing at least 5 carrier groups) and 50% reductions in federal "entitlements", abolition of Davis-Bacon, EMTALA, mortgage interest deduction and student loan special treatment, along with antitrust exemptions for every industry including medicine, pharmaceuticals, and professional sports.

Do all of that first, and THEN consider raising taxes.

Sun, 03/04/2012 - 05:00 | 2221345 oldman
oldman's picture

Hey DR,

Why clawbacks? Why not put them in the jail and take all their assets like we do with 'drug lords'?

Theft is theft----and there ought to be a tree nearby, no?

Sun, 03/04/2012 - 02:13 | 2221138 ChrisFromMorningside
ChrisFromMorningside's picture

The bitching and moaning in the media is getting hilarious.

"WHY?! WHY wont you understand that the economy is RECOVERING? You must be a RACIST who hates Obama."

I think they've jumped the shark. Dow 13,000 and people are still running for the exits because of how farcical it all is. It seems like the wheels are about to fall off this shitwagon.

Sun, 03/04/2012 - 03:23 | 2221239 Vic Vinegar
Vic Vinegar's picture

Link, please

Mon, 03/12/2012 - 23:12 | 2249483 Silver Bug
Silver Bug's picture

Finally Rosie!!


Jewellery in Canada

Sun, 03/04/2012 - 14:37 | 2222006 RSloane
RSloane's picture

I agree it is hillarious, not only the bitching and moaning by the media, but also as you say, by ardent Obama supporters. The discrepancy between what the MSM reports about the economy and those who live and work in it is growing greater. People who were unemployed for upwards of two years and finally got a new job flipping burgers are not fooled, especially after they lost their home, life savings, and valuables which were sold off to feed their families. Millions of people on welfare, millions more on disability, grown children and their children having to move back in with the grandparents, millions more getting help with just paying bills - they all know the truth of it. 

Sun, 03/04/2012 - 23:20 | 2223119 TruthInSunshine
TruthInSunshine's picture

I am a genuine independent, knowing (not believing, but knowing) that both allegedly different political parties, that are offered up as some sort of Kabuki Theater illusion of choice, when in reality they're both working for and paid by the same people and institutions, using social wedge issues to stir their respective bases rather than issues affecting our very survival (e.g. Pledge of Allegiance in school vs. the National Debt), and if anyone who claims to be an Obama supporter doesn't see the universe of emptiness between what he pledged he'd do during his campaign in 2008 and what he's actually done (e.g. sucked up to the banks, signed legislation and executive orders purporting to strip more constitutional rights from Americans [let's hope the SCOTUS still has a remote passing respect for what is our constitution when the challenges to these actions arise], radically expanded the size of the debt and ongoing deficit spending, etc.), they are literal and true imbeciles of the highest order.

How anyone who actually thinks the constitution is an important if not vital framework upon which our system of government depends can support any legislator or President (or presidential nominee or candidate) who supports NDAA 2012 blows my mind.

Sun, 03/04/2012 - 03:10 | 2221221 jonjon831983
jonjon831983's picture

I went overseas with a thin wad of USD because I know it IS the reserve currency of the world... used and recognized globally in most countries.


Then I made my way to a store and blew my wad on a shiny little bar of gold.

Sun, 03/04/2012 - 14:38 | 2222015 BooMushroom
BooMushroom's picture

And what kind of spread did you get versus just buying the bar here?

Sun, 03/04/2012 - 05:30 | 2221357 rufusbird
rufusbird's picture

RE: Stockman, The best part...

" Q: Are you hopeful? A: No "

Sun, 03/04/2012 - 07:32 | 2221421 fonzannoon
fonzannoon's picture

So what the hell does this guy Stockman own? Some gold? Some short term Treas? Thats it?

Sun, 03/04/2012 - 13:22 | 2221833 tarsubil
tarsubil's picture

This fuckin' guy.

Sun, 03/04/2012 - 13:33 | 2221859 Idiot Savant
Idiot Savant's picture

Sounds like he owns cash and a little gold. He's hedged for inflation and deflation. I suppose if the CBs can hold this ponzi together, we'll just get inflation. If Stockman is correct, and the system crashes, it'll be a deflationary collapse and cash is king.

Sun, 03/04/2012 - 12:45 | 2221744 Silver Bug
Silver Bug's picture

Welcome to the winning team Rosie!

Sun, 03/04/2012 - 00:23 | 2220974 wee-weed up
wee-weed up's picture

May be???  Bitchez please!!

Sun, 03/04/2012 - 00:24 | 2220977 holdbuysell
holdbuysell's picture

"Stop us when this sounds familiar:

What a no-brainer to suck at the teat and go long some very transparent and liquid debt that matures in less than three years "


Sun, 03/04/2012 - 00:34 | 2220998 BigMike
BigMike's picture

Lydian International 

Sun, 03/04/2012 - 00:47 | 2221014 Conrad Murray
Conrad Murray's picture

Monster boxes and Twizzlers, FTW

Sun, 03/04/2012 - 00:48 | 2221016 resurger
resurger's picture


Sun, 03/04/2012 - 00:55 | 2221032 AmazingLarry
AmazingLarry's picture


Sun, 03/04/2012 - 01:04 | 2221041 El Oregonian
El Oregonian's picture

Coming from David Stockman, this should be a giant wake-up call to the MainStreet Zombies. On second thought, forget it, they just get grumpy when you wake them up from their nap...

Sun, 03/04/2012 - 01:19 | 2221053 Hugo Chavez
Hugo Chavez's picture

I am amazed at how uninterested and clueless most people are. Maybe they are right to be that way. If we cant add any alpha by constantly monitoring the financial situation then why bother? Life is short and financial cillapse may take decades. Maybe we shoyld just have fun with our finite lives and not worry, since we probably have no way to change the outcome or materially game the endgame, if it were to occur.

Sun, 03/04/2012 - 01:32 | 2221076 xtop23
xtop23's picture

Ignorance is bliss?


I'm sure the cow on his way to the slaughterhouse is quite content. Having been fed all his life and provided with a free range from which to feed without any significant external danger, he more than likely is very centered in his little universe.

Right up to the moment where they place a "bammer" to his skull and end his life for t-bones and ribs.

Myself, Ill endure a little apprehension and wire up tight, so my wife and kids dont end up destitute and beholden to a paradigm that cares very little about their hereafter.



Sun, 03/04/2012 - 05:10 | 2221347 Vic Vinegar
Vic Vinegar's picture

Funny thing.  Just as you were writing this semi-sensicial comment on ZH I was rocking out to:

Fuking crazy for sure.  

One day this comments section will get back to what it was, what it should be, right?

Sun, 03/04/2012 - 10:22 | 2221539 TonyCoitus
TonyCoitus's picture


I'm stealing your cow to the slaughterhouse analagy!

Well said.

Sun, 03/04/2012 - 01:13 | 2221047 Hugo Chavez
Hugo Chavez's picture

The central bankers in developed countries will try to err in a deflationary way.

Fiat repudiation ends the game.

Stockman believes any inflationary data will be shortlived. Merely speedbumps to slow our secular deflationary trend and keep it from snowballing into a cillapse.

Sun, 03/04/2012 - 03:19 | 2221232 Vic Vinegar
Vic Vinegar's picture

1. cillapse - not a word

2. you - never made a good point

3. pissing into the wind by saying this - please leave

Sun, 03/04/2012 - 01:17 | 2221051 xtop23
xtop23's picture

I am Jack's printing press. I enslave the populace of the world in debtor Hell.

Sun, 03/04/2012 - 03:22 | 2221235 Vic Vinegar
Vic Vinegar's picture

You get an ironic green from me.  That is a bad parody of a classic ZH comment if I ever saw one.

At least you give us chuckles with this from your "bio":


If you're reading this I've either .... a) said something to piss you off or..... b) managed to , quite accidentally , say something you found interesting.

Either way I'm not subscribing to your newsletter so don't bother asking.



Sun, 03/04/2012 - 01:29 | 2221072 Dermasolarapate...
Dermasolarapaterraphatrima's picture

What is COMEX?

How does it relate to the gold etf's?

Can ZH do an artilce on this subject? I am an Oilbug but would love to know what all the fuss is about COMEX, GLD, etc......I don't have that problem with USO or the oil drillers.

Sun, 03/04/2012 - 01:34 | 2221082 Tyler Durden
Tyler Durden's picture

Behold the Zero Hedge search function.

Sun, 03/04/2012 - 02:14 | 2221142 Troll Magnet
Troll Magnet's picture

love that shit! speaking of search engines, EVERYONE STOP USING GOOGLE AND ALL THEIR INVASIVE SERVICES!!!

Sun, 03/04/2012 - 02:54 | 2221202 LowProfile
Sun, 03/04/2012 - 04:31 | 2221321 weyes1
Sun, 03/04/2012 - 02:54 | 2221197 ClassicalLib17
ClassicalLib17's picture

God bless you, Mr. Durden,  I ran for local political office 3 times over the last 16 years and finally nailed it last April, 2011.  I have a high school education and have been a union carpenter for the last 35 years.  I bought my first computer about 3 years ago and found your exceptional site about 2 1/2 years ago.  I cannot place a value on the financial sector education that I have learned from reading your articles and the intelligent comment threads, as well.  Since I took office last May,  I have sent along your articles for my colleagues to read, and I can say with 100% certainty,  it has made a difference in the thought process that goes into the everyday decisions that involve spending the taxpayers money in my local gov't. I am forever grateful to you and all the zerohedge members considerable contribution to my personal education.  God bless and God speed   

Sun, 03/04/2012 - 18:43 | 2222590 debtandtaxes
debtandtaxes's picture

You sir, are an inspiration. You give me hope. Go get 'em!

Sun, 03/04/2012 - 20:51 | 2222824 SamThomas
SamThomas's picture

For a guy with a high school education, you think and write pretty darn well, and are ahead of 95% of the so-called intelligentsia in this country, including some with Nobel Prizes that write for the NYT.  Keep up the good work. 

Sun, 03/04/2012 - 01:58 | 2221117 wretch
wretch's picture

The correct term is, "CRIMEX," and it's a type of fool's gold.

Sun, 03/04/2012 - 01:33 | 2221078 LowProfile
LowProfile's picture


"David Rosenberg: "The Best Currency May Be Physical Gold" Stop us when this sounds fam..."


Sun, 03/04/2012 - 01:40 | 2221093 Sandoz
Sandoz's picture

I'd love to ask this guy when was the last time he used gold as a currency. And I don't mean exchanging gold for dollars, I mean using gold directly to buy goods or services. These hypocrites are a dime a dozen these days. 

Sun, 03/04/2012 - 03:17 | 2221229 Vic Vinegar
Vic Vinegar's picture

I haven't seen the hypocrites you speak of but pieces of shit like you are a dime a dozen on Zero Hedge these days.  

Sun, 03/04/2012 - 03:55 | 2221279 Sandoz
Sandoz's picture

That's rich. 

Sun, 03/04/2012 - 04:33 | 2221324 weyes1
weyes1's picture


Sun, 03/04/2012 - 13:44 | 2221870 Idiot Savant
Idiot Savant's picture

Probably as recently as when he used stocks and bonds as currency.

Sun, 03/04/2012 - 13:44 | 2221873 tarsubil
tarsubil's picture

If people were allowed to use gold and silver to buy stuff in competition of dollars, they'd quickly see that while prices go up in dollars they stay the same or go down in gold and silver. Which one do you think they'd choose in that situation? Do you now see why gold and silver are enemies to the government-military industrial complex-bank ponzi fiat monster?

Sun, 03/04/2012 - 01:45 | 2221099 ZenOps
ZenOps's picture

The best circulation currency that can be used as money is the metal that is best suited to make an 8-gram coin based on rarity and dilution to the masses of population that you intend to circulate it to.

There must be enough of the 8-gram coins to be useful as an exchange medium.  That means, gold was useful as a monetary coin up until 1933.  Silver was useful up until about 1967, nickel was useful up until 2011.  IE: At a circulation base of 7 billion people, nickel is no longer useful as an exchange medium as there is *not enough* of it to make it feasable for everyday transactions.

Copper is still useful as a "dollar" as an 8-gram copper coin (Sacagawea, Susan B, and Presidential dollars) being 11 times more common than nickel - it would still be useful to a worldwide population of say - 77 billion people.

But that would admit that the 8 gram "dollar" has fallen in value to be equivalent against two and a half copper pennies in a matter of 30 years (last US copper penny was made in 1982)

Sun, 03/04/2012 - 02:25 | 2221161 JLee2027
JLee2027's picture

The "not enough" is a fallacy which affects only value not usage.

Sun, 03/04/2012 - 03:32 | 2221249 AnAnonymous
AnAnonymous's picture

How so?

Value affects usage.

What is the solution? Stamping 0.1 gram of gold on a note to make sure it can be circulated?
Or going for a gold backed paper money?

With the inequalities brought and supported by US citizens and that must be reflected by the currency usage, in the end, it might mean that 0.01 gram of gold buys a loaf of bread.

Wants to claim that a currency traded by 0.01 gram bit is going to be a practical currency?

Rhetorical question: you are a US citizen so...

Sun, 03/04/2012 - 10:15 | 2221496 ZenOps
ZenOps's picture

There is about 287 million ounces in the US, which could be spread out evenly amongst 311 million people..  But its not "even" to start with.  1% of the population already has dibs on 90+% of the reserve if you were to convert paper back into gold.

That means a coin worth with actual gold of probably less than 0.01 gram of gold would be usable - or maybe a gold leafed $100 bill with 0.01 grams of gold stamped onto it.

It probably would not even be 0.1 gram, because the US would want to try to maintain a fractional reserve of 10:1

Nickel is actually far too rare now.  It costs 11.12 cents to produce a US 25% nickel (that contains 1.25 grams of nickel)  Bring the nickel content up to 8 grams (and remove the copper content) and you have a 71 cent metal dollar.

In actual nickels made since 1866, spread out to 311 million american citizens - each citizen has $8 worth of nickels or 200 grams worth of nickel per person. Yes, your fair share of nickel is about 6.5 ounces of nickel and thats spread perfectly evenly.  No, I get the feeling that gold standard fans are going to be sorely disappointed when they expect 6.5 ounces of gold but intstead get 6.5 ounces of nickel (or even copper)  That is logistically possible, that is the real world.

Sun, 03/04/2012 - 11:48 | 2221652 Thisson
Thisson's picture

What you're saying makes no sense.  You can take any amount of gold and dilute it with any amount of other material and trade it.  You could even encapsulate small specks of gold and trade them that way.


Sun, 03/04/2012 - 14:48 | 2222035 BooMushroom
BooMushroom's picture

A tenth of a 1/10 ounce gold coin, buried in acrylic with anti-counterfeit measures! Would be the equivalent of a $20, which is pretty reasonable. Either that, or make it an 1/8 of 1/10, so we can say two bits again:)

Sun, 03/04/2012 - 14:26 | 2221985 oldman
oldman's picture

Zen Ops,

You are  a zen dude and having fun

thanks, i'm enjoying your little joke

rock on                  om

Sun, 03/04/2012 - 10:42 | 2221556 Sean7k
Sean7k's picture

Last time I checked, there weren't 7 billion people in the US. Second, not everyone has to have gold for it to be a standard of value for exchange. Third, it is a poor place to start- converting gold to paper. 

Exchange does not require money, but it does facilitate it and expand its' dimensions. That being said, if you eliminate legal tender laws, people can decide what is money and what is not or at least assign values.

The real value in using a gold standard is its' ability to constrain credit- by business and government. It puts the relationship between production and consumption in balance. 

People always fail to think about the amount of debt that exists globally. This is borrowed money against future production. If allowed to continue or even be satisfied, we would have to remain as slaves forever (or so it seems). That this debt was created out of thin air through fractional reserve banking, assigning value to fiat for the purpose of seducing entire populations is the definition of evil.

That there is a class of people that are responsible for and claiming rights to this largess allows for the easy identification of the means and method of said evil. It also provides a target to wage war against and destroy. 

In their present form, banks are this evil. They are empowered and protected by the State (government). This protection comes in the form of the military and police forces. The willingness of the people to withdraw their approval and participation in these systems will effectively destroy the banks.

Exchange is as old as humanity and social groups. It is hardwired in our DNA. It never required bankers or government and never will. 

Sun, 03/04/2012 - 11:49 | 2221656 Thisson
Thisson's picture

Sean7K, there would also have to be a prohibition on fractional lending for the gold standard to constrain credit.


Sun, 03/04/2012 - 12:28 | 2221711 Sean7k
Sean7k's picture

Without a doubt, for those not aware, see fofoa.

Sun, 03/04/2012 - 22:51 | 2223036 ZenOps
ZenOps's picture

The US does have the one of the largest gold to capita ratios, it also has one of the largest copper to capita ratios.  It still makes it totally unfeasable to use gold or silver as an actual circulation currency.

China has about 32.7 million ounces in reserves.  Spread that out over 1.6 billion people and you end up with a coin that might be 0.0001 grams assuming you would need at least 30 coins per person for general circulation (generally acceptable as circulation, you must have at least that many or it is unusable as a currency.)  32.7 million ounces is tiny.  That one gold mine I was mentioning in Malarctic, Quebec, Canada is estimated to have 10.7 million ounces - by itself.

The denomination of a coin is moot if there is not enough physical material to make a coin, it becomes increasingly expensive to mint coins smaller than 1/10th of an ounce (especially gold)

Nickel is an exception, it is physically hard enough to go to a 0.5 gram size and still have some limited durability.  Canada as of this year 2012 no longer uses a 6.4 gram nickel core for the $1 "loonie" coin, it is too expensive (and more imporantly there is not enough physical metal at any price) to maintain that amount of metal for circulation to 30 million Canadians.

Gold by itself is a very foolish currency, a basket of metals is a much smarter idea.  Gold dollar, silver quarter, nickel nickel, copper penny - Sound familiar?  They had it right the first time around.

Realistically speaking in 2012, the US should have a Copper dollar, zinc quarter, and steel dimes, nickels and pennies.  The UK pound coin is Cuprozinc, they have also debased their 5 and 10 pence to steel this year.

Sun, 03/04/2012 - 02:37 | 2221180 merizobeach
merizobeach's picture

Hm, how correct you are.  With gold rising from 35 to 1710 dollars per ounce, a 4500+% increase, dollar holders during that time have lost very nearly 98% of their buying power.

Sun, 03/04/2012 - 11:47 | 2221651 AgShaman
AgShaman's picture

Gold has only increased 20%

Sun, 03/04/2012 - 14:55 | 2222057 BooMushroom
BooMushroom's picture

In 1933, a $20 gold eagle was worth ... Wait for it ... $20. So it has gone up closer to 2000% than 20%. But keep holdin' on to that paper, comrade!

Sun, 03/04/2012 - 15:24 | 2222151 AgShaman
AgShaman's picture

I don't have any paper.

I'm 95% physical PM's.....and 5% DTCC digits in PM mining shares.

Sorry, but I think you missed the point. Gold remained at $35 for decades. Today....on the US Treasury Dept's balance sheet, it's book value is $42.22. According to the Gubmint, 20% is accurate.

Plausible deniability....for when the Bernank wants people to go back to sleep with the "tradition" rhetoric.

The independent writers/pundits have failed to pick up on this dynamic....."The Culture of Secrecy"

Similar to why so many claim the Comex is primarily settling contracts with paper instead of metal....but is it cash, or is it another form of paper that's allowed within the Comex rules?

People must be afraid to bring this out into the open.

Nobody wants a hot tub party.

Sun, 03/04/2012 - 03:12 | 2221181 DavidPierre
DavidPierre's picture

              ONLY A MATTER OF TIME

  There was a recent article on ZH with a graphic that put in perspective how much Gold is mined in one year on a global basis.  A 16 'x16'x16' cube.  That is all the Gold mined in the world in one year! 

  One room could house all the Gold produced in the world for one year! 

  This is worth in Dollars? 

  More or less $140 Billion. 

  How much was it worth in the year 2000 ... the absolute heyday and peak of the Anglo-Western banking system?  

  Little more than $20 Billion.

 The ECB created ... lent... how much money on Wednesday?

  North of $500 Billion...for the second time in two months! In the last two months, the ECB alone has created roughly 7X the amount of thin air money as mined in the world in one year.

  This doesn't even take into account their partners in crime, The Fed, Bank of England nor Bank of Japan. 

  See the desperation? 

  With an open and honest monetary system, where central banks allowed to fractional reserve all of the worlds' global production, they could lend about $1.4 Trillion for the entire year.  This is about the same number that the U.S. will deficit spend for the year all by itself.

  If the total amount of lending worldwide was constrained to 10X global mine prodution, could a bubble that threatens the entire system have ever formed? Could serial bubbles in stocks, real estate and now sovereign debt have been blown?  The argument is and always has been that lending 10:1 against Gold production is just too constraining and we wouldn't be where we are now.  We would live in the dark ages.

  Maybe not the dark ages but building would have definitiely been slower and would have been absorbed by equity rather than debt. Investors would still have options, like putting their money in the bank at 5% and beat a real inflation rate rate of 2%. Investors ...widows, orphans and just plain conservative people... would not have been forced to chase yield with a true inflation rate of 10% or more.

  There is just so much that can be said about such a small and rare amount of annual Gold production.  One room per year, $140 Billion, not that much for going on 7 billion people to use for trade and banking.  Well!  Revalue Gold by adding one zero to the price and now you're talking $1.4 Trillion on it's own, before fractional reserving it.  Add two zeroes and have $14 Trillion, maybe that would do the trick without fractional reserve banking?

 There is just not enough Gold in the world for it to act or be considered for use as money!

 Au contraire, there is, always was and always will be.  If an honest price is arrived at for Gold!

  Since borrowing ...printing... is going geometric now, the price of Gold will follow ...until it leads... to account for the inflating money supplies.  The point in time will arrive where owners of Gold will withdraw from the market and no longer consider sales at any fiat price.  It is this point in time when new currencies must be brought forth because "the money" died.

  Jim Sinclair believes this is still 3 years out.  This event, which is now carved in stone and cannot be denied, only delayed; can and will happen sooner.  This event can and will happen so fast and so violently that no one ... very few... will even see it coming.

  In a computer age where information and trading is instantaneous, this situation has never existed.  We live in an age where even governments far and wide have spent themselves into insolvency.  This has occured before in isolated cases, never before on a global scale.  We also live in an age where ALL the "money" is unbacked paper and only has value based on confidence.  This situation has also never existed except in isolated cases that never survived. The point

  We live in uncharted times and the Earth, financially, truly is flat.  No amount of financial engineering hocus pocus will ever make it round.  In a system where valueless money is issued by bankrupt entities, and investors have the ability to know everything in an instant, they will one day then push that button to execute sell orders.

  It is only a matter of time before we reach the edge of the Earth. The fall will be great and the masses will be pennyless. 

  Don't be a part of the masses.

  The revaluation can happen at any time and from a myriad of triggers.  Rest assured, it will happen, it is only a matter of time!

Sun, 03/04/2012 - 14:49 | 2222040 oldman
oldman's picture

David Pierre,

Thank you.

The vision I had from outer space as I read your post came from this paragraph:

"If the total amount of lending worldwide was constrained to 10X global mine prodution, could a bubble that threatens the entire system have ever formed? Could serial bubbles in stocks, real estate and now sovereign debt have been blown?  The argument is and always has been that lending 10:1 against Gold production is just too constraining and we wouldn't be where we are now.  We would live in the dark ages."

'Serial bubbles' was a slap in my face because I imagined that they were just a single bubble where money flowed from one asset to another until there was no more 'money'(debt). I realized that this is only possible when one uses OPM(other peoples money) as did the old stock pickers, moving from one winner to the next 'great opportunity' leaving all the losers untouched in the portfolio until it shrank to a negligible amount.

But this deal makes those times look like piker's days; now it is other people who have yet to be born---no need to explain anything at all, just pick up the crumbs trillion by trillion until you hit hyperfunds.

It seems that we are there------------an amazing journey for an oldman with only a bowl of rice and a cup of tea so far today. I am so exhilarated that I must go out for a more substantial meal.

I hope that this comes out as you suggest----my ego requires a bite also as I am hedged for exactly such an outcome.

Interesting post and thank you again                 om

Sun, 03/04/2012 - 18:06 | 2222539 DavidPierre
DavidPierre's picture




Sun, 03/04/2012 - 03:14 | 2221224 Vic Vinegar
Vic Vinegar's picture

The best currency is that which gets me in and out of the Starbucks line as quickly as possible.

However gold is a better protector of wealth than e-digits on one's iPhone.  Seems like Rosenberg wants gold to be both things, which it won't be.  Sorry dude.

Sun, 03/04/2012 - 13:07 | 2221799 DoChenRollingBearing
DoChenRollingBearing's picture

Right.  Spend the money, keep the gold.  FOFOA's dilemma solved.

Sun, 03/04/2012 - 03:28 | 2221244 ivars
ivars's picture


A scenario how things might start to unfold very soon with a critical poiint in May 2012 (EUR down, USDx up, Silver UP, DJIA UP, GOLD steady for some time (4-5 months behind silver) , EUROzone inflation-all events within 2012, relatively shortterm). But may be without specific critical event.  Some of the prediction charts show how it unravels later in late 2012-early 2013 ( stocks move down, gold up etc. ) :

And here:


Sun, 03/04/2012 - 03:53 | 2221275 Shibumi2
Shibumi2's picture

j pierpont organ

warren buttlick

obama bin laden


what a train wreck of a political and financial system

Sun, 03/04/2012 - 04:08 | 2221297 HungrySeagull
HungrySeagull's picture

I will be loathe to spend actual gold coins.

It will have to form the basis of ALL money, gold and silver alike before I will convert some of the PM's to the new currency.

With that said.... you can do some business and have someone in a good trade make something for you in exchange for a few coins of silver or even gold plus a handshake.

We have so lost our way that I don't think we can ever come back to the way things OUGHT to be. That means we passed the Event Horizon.

When was that you ask?

When they saw the 99'ers cut off completely, they invented SNAP to keep the rising numbers into the Millions fed and not angry until something better can be put together.

There were times we considered taking on SNAP... but not just yet. You will be surprised how well several people can live on a few slices of properly made Kraft cheese, milk, and so on.

Finally regarding the recent gas prices.

I am getting so sick and tired (Warning OT RANT)... of people paying maybe 10 bucks as if it is a physical ordeal and then run back inside and pass much more handover fist for lotto, smokes, hot fast food and so forth and so on.


Snap is accepted...

Sun, 03/04/2012 - 08:09 | 2221445 Colonial Intent
Colonial Intent's picture

Its cheaper to remove PM from watches and such than to pay over the odds for physical gold.

Plus its a service that people will want more and more.

The greeks know this

Sun, 03/04/2012 - 14:53 | 2222047 oldman
oldman's picture

Hey Hungry

I can't even imagine letting go of a piece of gold                    om

Sun, 03/04/2012 - 05:42 | 2221365 Olympia
Olympia's picture

World War III - The First Private War in History


Those who won all battles shall lose the war.

Bilderberg Group and the crimes against humanity.


This is how things work in all countries. Whatever used to belong to their people, today it belongs to the multinational companies of the Club. People were betrayed by their given leaderships and they lost everything. Capitals and markets were handed to the Club bosses. If you understand what is going on in Greece, you can understand what is going on in Britain, France, and Germany etc..



Sun, 03/04/2012 - 06:39 | 2221387 toadold
toadold's picture

Ya know I'm thinking I need to get online and order a touch stome / acid  PM test kit.  They are small enough to be portable and if shtf it might be awhile before we get a currency we can trust and I think for  a period we might be dealing with local copper, silver, and gold coins. In it self it coud generate some revenue.  A jewlery or coin dealer store that can test isn't always handy when you need one.  

Sun, 03/04/2012 - 20:14 | 2222774 smiler03
smiler03's picture

This piece of kit costs about $16K, I think. It seems to be incredibly accurate in determining metal content by using a portable handheld x-ray device.

I can't find a price for it but the $16K seems to ring a bell from a TV program called Hardcore Pawn (as in pawn shop).

Sun, 03/04/2012 - 07:05 | 2221397 drwillia
Sun, 03/04/2012 - 08:06 | 2221442 Colonial Intent
Colonial Intent's picture

The only currency worth anything is based on trust.

Sun, 03/04/2012 - 08:07 | 2221444 cnhedge
cnhedge's picture

but it seems there's no ltro3...

Sun, 03/04/2012 - 09:42 | 2221507 Imminent Collapse
Imminent Collapse's picture

May you live in interesting times.
- Ancient Chinese curse -

Such a life on such a planet!
- The Urantia Book -

One way or another,
This darkness has got to end
- The Grateful Dead -

Sun, 03/04/2012 - 09:55 | 2221513 MFL8240
MFL8240's picture

Things are a bit different than decribed above because the real unemployment in the land of lies and propoganda is about 22%.

Sun, 03/04/2012 - 10:34 | 2221550 LookingWithAmazement
LookingWithAmazement's picture

Somehow a long gold, short euro barbell looks really good here.

Short the euro? Mr. Van Rompuy says the worst of the eurocrisis is over. So why short it?

Sun, 03/04/2012 - 10:52 | 2221565 Getting Old Sucks
Getting Old Sucks's picture

I've read things like:

It's very difficult for "the small invester" to convert paper gold into physical gold.

There's really not enough physical gold holdings to back all of the paper gold holdings.

Only a small percent of the population owns physical gold.


My question:

Why is paper gold valued the same as physical gold?


Sun, 03/04/2012 - 12:15 | 2221689 AgShaman
AgShaman's picture

Values are illusory concepts....until their charade is vanquished and a "needful" or black market establishes a price discovery mechanism that's not influenced by nefarious parties.

The US Govt. currently says an ounce of gold is worth $42 bucks.

They also say unemployment is around 10%

Do you really believe they are telling more truths....or more lies?

Sun, 03/04/2012 - 21:04 | 2222850 MrSteve
MrSteve's picture

Right now, a large number of people think there is an ounce of gold for every $17XX dollars "invested" in GLD. read the prospectus and know this is not true. When a large number of people figure out they have been scammed, they will be S.O.L. Because the prospectus directly addresses their status as unsecured creditors.

Avoid owning GLD and skip the wipeout. I would rather have all my money in nickel coin rolls than have $1700 per ounce in GLD.

Sun, 03/04/2012 - 11:07 | 2221592 Atomizer
Atomizer's picture

Gerald Celente posted this on his site this morning. Quite a few answers can be found within.

Sun, 03/04/2012 - 11:55 | 2221666 Getting Old Sucks
Getting Old Sucks's picture

Thanks for the link, interesting

Sun, 03/04/2012 - 12:57 | 2221772 hairball48
hairball48's picture

I found this on AP's site

Is there an unedited transcript somewhere? If so, can someone post it?


Sun, 03/04/2012 - 13:18 | 2221824 Freegolder
Freegolder's picture

Good job the Eurosytem central banks have a lot of gold and can mark it all to market.

Every new Euro created just rebalances via higher gold. The ECB cannot lose.

You'll never see the US Treasury marking their gold to market, cos creditors from the 1971 default are awaiting!


Game, set, and match to Europe (and China, India, name them).

Bye bye US reserve currency. Hello Freegold.

Sun, 03/04/2012 - 13:37 | 2221862 AgShaman
AgShaman's picture

Until a real audit is performed on their holdings....a myriad of theories could be surmized.

Perhaps they don't actually have 261.5 million ounces of gold

They've been known to have a bit of trouble with delivering the truth

Sun, 03/04/2012 - 14:38 | 2222017 Tom Green Swedish
Tom Green Swedish's picture

The only problem with gold is its not a currency. You can only trade it in for currency. You want to try to pick the best looking one out of the patch then exchange it for your countries standard even if it is inflated it will still only buy what it buys as legal tender. Buying gold is not a way out of inflation, its just a distraction and its totally overvalued.  Last time I checked when everybody was cheerleading for an investment it was in bubble territory. Buffett doesn't like the stuff and he has a much better track record than this scrub Rosenberg whoever the hell he is.


1920 weimar germany a wheelbarrow full of cash couldn't buy a newspaper. They resorted to bartering, and therefore since gold is totally overpriced historically speaking whoever trades with you will be getting ripped off. It is inflating just like the currencies. Only a fool would accept a trade of a gold bar for something of value; food, energy, manufacturing commodities etc at todays gold / silver prices. I don't think he understands.

Sun, 03/04/2012 - 15:09 | 2222106 goforgin
goforgin's picture

Yes, that's true what you are saying about gold. Gold is trading at a multiple just like stocks were during the 1990s tech bubble based on its terminal value. I am not saying that gold will not appreciate; however, getting out with profit is not slam dunk based on its purchasing value. Unlike currencies, gold will retain more of its value, but.......

Consider that 150 million Americans have less than $1500 in savings, yet an oz of gold goes for $1700-1800.

There is an argument made by gold proponents that if inflation reaches very high levels, farmers might refuse to work for worthless fiat. Let's suppose this is true, couldn't the society round up the farmers and send them to Guantanamo and allow Mexican farmers to work these farms in exchange for future homestead rights. While this might seem as unfair and beyond realm, the underside of this argument is starvation for 300 million Americans.


Sun, 03/04/2012 - 15:37 | 2222189 covert
covert's picture

always has been.


Sun, 03/04/2012 - 18:47 | 2222597 Shigure
Shigure's picture

I think "Money As Debt 3" covered this point really well

Sun, 03/04/2012 - 22:22 | 2223003 goldfish1
goldfish1's picture

If I had a quantity of chickens or organic corn or oats, I might trade for a piece of gold.

Sun, 03/04/2012 - 16:02 | 2222263 devo
devo's picture

What I don't understand about gold and silver advocates if how and why they sell it. e.g. Sprott, Schiff, etc...they say dollars are bad, own gold, yet on their websites they sell you gold. Never understood this. I guess you could argue they're putting the profit into other assets, but still...

Sun, 03/04/2012 - 16:14 | 2222291 dark pools of soros
dark pools of soros's picture

for the vig,  they sell a few % above and buy a few % below then blow the profits on strippers like everyone else

Sun, 03/04/2012 - 16:22 | 2222307 hairball48
hairball48's picture

The reason many of you don't understand the importance of gold is that you don't understand what "real money" is and what real money's  role in an economy is.

Go to the Mises Institute web page, or the Casey Research page or read some of Ron Paul's writings. Then you'll "get it" about holding gold.

Sun, 03/04/2012 - 16:24 | 2222313 tradewithdave
tradewithdave's picture

The best currency may be "Vector Gold."



Sun, 03/04/2012 - 22:19 | 2222992 goldfish1
goldfish1's picture

Normally, I don't care for David Rosenberg...

Sun, 03/04/2012 - 22:53 | 2223056 alphastratus
alphastratus's picture

The hedgies are PILING into gold:

Do NOT follow this link or you will be banned from the site!