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Don Coxe's Fascinating Take On Why The Time For The US To "LBO" The Gold Market Has Arrived

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Thu, 09/22/2011 - 00:24 | 1695669 Cheyenne
Cheyenne's picture

Gunny: Jesus H. Christ, Pyle! What is THIS!?

Pyle: A jelly donut.

Gunny: A jelly donut.

Thu, 09/22/2011 - 00:42 | 1695702 High Plains Drifter
High Plains Drifter's picture

they are paying for it. you might as well eat it...........

nothing like a little creed to break it on down with this gold talk....

http://www.youtube.com/watch?v=5yY1Nrznh4I

one last breath.....

Thu, 09/22/2011 - 01:05 | 1695728 nope-1004
nope-1004's picture

 

If gold were capped and governments combined their willingness to sell gold with a ban on naked short-selling of bank shares, and on naked Collateralized Debt Swaps, governments and banks might get a breathing spell.

The best solution to solve a financial crisis borne out of economic malfeasance, market manipulation, gov't involvement, rigging and white collar crime resulting out of the issuance of too much fiat credit is to.... debauch gold?

Well, makes sense, since the best way to solve a debt crisis is obviously with more debt.

Huh?  Don, c'mon.

Truth is, it's capped already, just done so undercover and under the guise of "GLD".  Plus, there isn't enough gold in CB possession to even come close to outstanding liabilities.  This article makes no sense.  It's all over the place without basic consideration for what the new valuation of gold would do to the USD.

This article is rather weak.

 

Thu, 09/22/2011 - 01:17 | 1695773 Doña K
Doña K's picture

The author here is advocating a new market manipulation scheme.

Let everyone buy what ever they want at whatever price they feel is reasonable to them. The government has its hands everywhere and can not even manage a lemonade stand.

If gold is tradition, so be it. If it's money, fine use it along with the dollar, euro and whatever. If it's a barbarous relic, fine let us have it at a reasonable price.

What is it? make up your mind world.

Buy Buy physical as no one will be selling at these prices again. These morons are printing money and supress the price. One of these days it will get away from them.

Just as silver went from a stable 16 to a stable 40. That was the first leg.

British sovereigns in Europe are selling strong with at a huge premium.

Have a nice day you gold bashing morons. 

 

 

Thu, 09/22/2011 - 02:12 | 1695845 Oh regional Indian
Oh regional Indian's picture

Dona, here is a non-money thought for you.

If gold is the "good" heart of this 'evil" ponzi-debt system that we all abhor, then when the ponzi collapses, Gold will collapse with it. Does that make sense? it will be baby and bath-water time.

Think about that for a moment. 

Later? oh yes, much later, Gold might be "wealth" again, but it does have a rather sordid history. Not for nothing was Gollum's precious made of gold, as was Midas's "touch".

He who laugh's last...etc....

 

ORI

The Curious Case of Troy Davis

Thu, 09/22/2011 - 02:22 | 1695858 JLee2027
JLee2027's picture

If the Ponzi collapses, then what would Gold be valued against? It would stand alone if the dollar is gone and there would be no collapse.

Thu, 09/22/2011 - 02:37 | 1695867 Oh regional Indian
Oh regional Indian's picture

Jlee, if the Ponzi collapses, there is no counter-party for Gold? But A dollar collapse would be a global event. Who will value what in what?

Currencies? bonds? Tangibles? What "exchange" rate mechanism would one apply, all the way from groceries to national debts? Whatever works? Hardly.

Gold hold's the polarity of being "sound" as opposed to "un-sound' fiat. But they exist in each other's death grip, only. It really is the same for silver too, but it might have a bit of a ways to go (up) yet, due to it having been more easily manipulatable.

And pound for pound, there is much more open manipulation of the Silver price, with JPM/Blythe etc. Why is that? Meanwhile the gold game is played much more at the CB, Government level. Why?

Perhaps the true nature and utility of both these so called monetary metals will become clear shortly (HAH!).

Till then, I'll hold my contrarian view-point. 

ORI

Thu, 09/22/2011 - 03:52 | 1695975 BorisTheBlade
BorisTheBlade's picture

Jlee, if the Ponzi collapses, there is no counter-party for Gold?

Zimbabweans were trading gold for food after their ponzi inception collapsed, so there is obviously a counterparty for gold even during collapse.

Gold hold's the polarity of being "sound" as opposed to "un-sound' fiat. But they exist in each other's death grip, only.

Gold outlived many currencies throughout even recent history, hell it outlived shitloads of countries that seized to exist due to a variety of reasons. You are confusing proximity of fiat to gold for the need of gold to have value to be valued in fiat.

Thu, 09/22/2011 - 04:28 | 1695998 Oh regional Indian
Oh regional Indian's picture

All points well taken Boris.

But perhaps we are beyond logic and reason now, so I'll hold my belief system in the face of some of that logic,a s profferred by you and jLee above.

ORI

Thu, 09/22/2011 - 04:42 | 1696012 BorisTheBlade
BorisTheBlade's picture

What most is referring to as collapse is simply a reintroduction of reality into the construct that blossoms on ignoring it. Quite logical.

Thu, 09/22/2011 - 07:07 | 1696119 LikeClockwork
LikeClockwork's picture

DOW surely will crash through the floor this morning. Gold 500 or at least crash and the knowledgeable buy like there's no tommorrow? That's my punt of the year.

Thu, 09/22/2011 - 09:17 | 1696543 csmith
csmith's picture

Zimbabweans were trading gold for food after their ponzi inception collapsed,

 

AND other Zimbabweans were "trading" bullets for the gold held by the ones you mention. The point being that in a "Mad Max" world where the dollar is worthless, piles of bullion will be only as good as the AK-47 to back it up with.

Thu, 09/22/2011 - 09:43 | 1696659 BorisTheBlade
BorisTheBlade's picture

The fact that during turmoil many people will be after gold, including those with guns, only proves it retains value otherwise why they would be after it and not fiatskis. Bullets will be worth more, sure, no argument about that.

Thu, 09/22/2011 - 08:48 | 1696415 jonan
jonan's picture

i thought the whole point of gold was the lack of counterparty risk, i guess i should sell it all and buy an asset where another party gives me some sort of guarantee...

Thu, 09/22/2011 - 09:23 | 1696568 Oh regional Indian
Oh regional Indian's picture

Hmmmmmm, there are other "tangibles" in the world y'know?

One's you really CAN eat too. ;-)

ORI

Thu, 09/22/2011 - 09:59 | 1696726 jonan
jonan's picture

i have plenty of bullets, but i really need to work on my stash of beans...

Thu, 09/22/2011 - 02:23 | 1695856 JLee2027
JLee2027's picture

Well said.Doña K

Thu, 09/22/2011 - 04:16 | 1695990 I think I need ...
I think I need to buy a gun's picture

as of october 1st 2011 ebay will no longer be allowing buyers of precious metals to obtain ebay bucks ......to buy more

Thu, 09/22/2011 - 13:19 | 1697757 RockyRacoon
RockyRacoon's picture

The cheap bastards weren't making enough as it was.   They just couldn't stomach the fact that they were subsidizing the sales of PMs.   I was doing quite well in that department!   Oh, well.   Back to square one.   Just proof that eBay is about as clueless as 90% of the population in understanding what PMs actually are:  MONEY.

Thu, 09/22/2011 - 06:14 | 1696078 clymer
clymer's picture

Agreed. The fact that the author has a very weak price-point in mind (2200), coupled with his love-fest for GS ("A great bank that had survived for more than a century as a pillar of Swiss prudence and rectitude had tried to become Goldman Swiss—and it lacked both the smarts and the capital for that remake.") is revealing.

Here's an idea - reign in spending. 

Even if Barry's handlers had him confiscate and place a peg on gold, and then issue a blizzard of gold-backed paper, the price point of $2200 has little realistic correlation to the sheer amount of ungodly defecit spending

 

 

 

Thu, 09/22/2011 - 09:05 | 1696487 BigJim
BigJim's picture

If the US government were to declare it would buy gold at $2000, and sell at $2200, it would indicate that gold was becoming re-monetised, and everyone would dump their USD to buy the US' gold.

At 8100 tonnes, or 286 M ounces, that's $631B to buy all the US' gold. The Fort Knox and West Point vaults would be drained dry in the blink of an eye by China alone.

But valuing gold much higher might work... $7500?

Thu, 09/22/2011 - 03:18 | 1695940 Two Towers AU AG
Two Towers AU AG's picture

Well if the USA was to cover its 14 Trillion in external debt using the 6000 tons of gold held by USA ( valued at approx 396 Billion @ approx $2000/ounce). the multiplier would be 35. Which means the price of gold would then have to be fixed at 2000*35 = 70,000, of course the USA could cover only portion of its external lliabilities say 25% of 14 trillion in which case the value for gold would have to be 70000/4 = $17500..

Feel free to correct me if I am wrong in my understanding..

6000 tons *1000kg*33 ounces per kg = 198,000,000 ounces

198,00,000 ounces *2000/ounce = 396,000,000,000

14,000,000,000,000 (external debt) /396,000,000,000 ( value of gold held at $ 2000 per ounce) = 35 ( thats how I got the multiplier of 35..)

So the gold which is today say at 2000 will become 2000*35 = 70000 ( i know gold is at 1800 odd and not 2000). :) :)

What a nice wet dream at 3.15 AM in the morning..

Thu, 09/22/2011 - 05:58 | 1696069 Dugald
Dugald's picture

This article works on the principle that the USA still has worthwile gold holdings, but has it, any body been in Fort Knox of late. As I understand it TPTB flatly refuse an audit. Given the current situation would they not be bragging about all their gold.....Why such shyness...it is not afterall the... Why no Whoopdedoo, Yahoo, Weeheee....look what we have....!!

 

Thu, 09/22/2011 - 06:17 | 1696080 PhilofOz
PhilofOz's picture

The Monday edition of Keiser on RT pretty much tells us there is no gold left in Fort Knox. The last time anyone got in there was circa 1973 and they were led to the smallest vault of them all and were not allowed to go further, and all the bars behind them had a distinct copper sheen to them.

Thu, 09/22/2011 - 09:07 | 1696501 BigJim
BigJim's picture

Probably because most of that gold came from melted down coins, which were 90% (?) purity.

Thu, 09/22/2011 - 13:23 | 1697779 RockyRacoon
RockyRacoon's picture
Good Delivery

 

Gold bars
  • Fineness: minimum of 995.0 parts per thousand fine gold
  • Marks: serial number, refiner's hallmark, fineness, year of manufacture
  • Gold content: 350 oz t - 430 oz t
  • Recommended dimensions
    • Length (top): 210 – 290 mm
    • Width (top): 55 – 85 mm
    • Height: 25 – 45 mm
 Silver bars
  • Fineness: minimum of 999.0 parts per thousand silver
  • Marks: serial number, refiner's hallmark, fineness, year of manufacture, weight (optional)
  • Silver content: 750 oz t - 1100 oz t (900 oz t - 1050 oz t recommended)
  • Recommended dimensions
    • Length (top): 250 – 350 mm
    • Width (top): 110 – 150 mm
    • Height: 60 – 100 mm
Thu, 09/22/2011 - 06:57 | 1696108 Snidley Whipsnae
Snidley Whipsnae's picture

This article makes the enormous assumption that governments own and have, unemcumbered, in their physical possession, the gold that they claim to have.

Prior to any government bonds issuance there should be a complete, audit, inventory and assay of all gov owned gold.

Otherwise, bondholders will be buying bonds based on another government promise; ie, 'trust us, we have the gold'

Thu, 09/22/2011 - 07:52 | 1696229 YHC-FTSE
YHC-FTSE's picture

The article is weak because it advocates using gold to prop up fiat to facilitate more debt. It's not just gold, it's every tangible commodity known to man used and abused to prop up the reserve currency controlled by undisciplined criminals doing it ostensibly  for our love of instant gratification. Then there's the infighting amongst the currencies to make theirs more desirable than their neighbours', often teetering on the highwire act of attracting investments without destroying their export industries. It goes on and on until the smaller players crack and their people begin to realise that what they hold in their bank accounts and their wallets is not a passport to wealth and pleasure, but coloured paper as common and useful as autumn leaves. Moreover, coloured paper that represent not just their own labours, but the labours of future generations to come. We are in the era of the big players cracking, and cracking big.

Instant gratification, greed, blind trust, and tradition are the drivers that allow central banks to issue more and more debt to play the game of creating liquidity out of thin air. Paying for things and services with magic money is almost a byproduct of their love affair with power and enslavement. Anything that threatens the supremacy of USD will end up like the rest who dared to challenge it. Deflation is not the enemy. Economic contraction is not the enemy. Inflation and growth based on gross manipulation of trust that empowers a few leeches to lord it over all of us, until the next bust, is the real enemy. 

Thu, 09/22/2011 - 13:26 | 1697797 RockyRacoon
RockyRacoon's picture

Yessireebob!  That's called eating your seed corn.   Totally inappropriate use for any gold that is accountable.   Of course, the proposition won't be adopted because, just like the shadow banking "assets", nobody now knows what anyone else holds.   PM markets have become obscure by design.

Thu, 09/22/2011 - 07:39 | 1696198 snowball777
snowball777's picture

"nothing like a little creed to break it on down with this gold talk...."

Even Jesus hates Creed.

Thu, 09/22/2011 - 02:05 | 1695839 PaperWillBurn
PaperWillBurn's picture

If the U.S says $2200..Europe will outbid at 30,000 Euros.

 

Where will the gold flow? Who's balance sheet will look better? Who's economy would YOU invest in?

Thu, 09/22/2011 - 04:49 | 1696019 Two Towers AU AG
Two Towers AU AG's picture

You are forgetting China with about 2 trillion in USD, They could outbid anyone to get their hand on gold and their hands off the USD. Hell, I am not even sure what is stopping them from initating such a mark up purchase of gold.

Thu, 09/22/2011 - 05:01 | 1696026 GoldBricker
GoldBricker's picture

Good question.

How is that 2 tril held? Methinks not much in benjamins, but rather electronically-registered bonds (govt, agencies, other rubbish). If China upsets the gold market, the US declares them a 'hostile power' and nullifies their bond holdings. Debt problem solved by selective default.

If your creditor can't hurt you, then you need to please your creditor only as long as you still need to borrow from him. If China bids up gold too much, then it means that they'll likely quit lending to the US and the game is over. China's problem is how to dump their paper discreetly.

It's a fight club for CBs. Debt and credit are weapons, with default (hard or soft, via inflation) as the nuclear options.

Thu, 09/22/2011 - 09:32 | 1696618 Bicycle Repairman
Bicycle Repairman's picture

"If China upsets the gold market, the US declares them a 'hostile power' and nullifies their bond holdings. Debt problem solved by selective default."

Ah, there's the world's strongest military again.  As long as Brit..., I mean USA, rules the waves, etc.

Thu, 09/22/2011 - 07:02 | 1696109 Snidley Whipsnae
Snidley Whipsnae's picture

Two Towers... China has already been 'outbidding' for gold... China, India, SE Asia, Mid East are the soverigns and populations that have driven the price of gold to current levels.

 

Thu, 09/22/2011 - 04:45 | 1696015 zhandax
zhandax's picture

Tyler, Hopium makes your ass look big.......

Thu, 09/22/2011 - 00:25 | 1695671 XenoFrog
XenoFrog's picture

Well, this is disconcerting.

Thu, 09/22/2011 - 01:27 | 1695794 Shell Game
Shell Game's picture

Truly. It lends mechanism to a greater Fascism..

Thu, 09/22/2011 - 01:29 | 1695796 Doña K
Doña K's picture

This may be a another propaganda (using fear) to take gold lower for next week's option expirations.

If it goes lower I am buying another stack. Every time I bought, I thought that it may be too high to buy. So far none of my buys have gone lower than purchase price.

Buy with conviction. They are printing stealthily and openly. They have no qualms. they are now desparate. there is no going back for Bernanke and co. Inflate or die.

Thu, 09/22/2011 - 02:19 | 1695854 Lord Koos
Lord Koos's picture

I've been adding physical the last few weeks ever since it started trading sidewise between $1750-1900... anything under $1800 is a go for me.  After October I think $1800 is gonna be pretty far back in the rear-view mirror.

Thu, 09/22/2011 - 02:26 | 1695863 I Got Worms
I Got Worms's picture

I buy gold and silver just as much as an investment as a philisophical stand agaist the bankers.  Please take it down to a dollor. I'll buy it hand over fist.

Thu, 09/22/2011 - 04:24 | 1695996 I think I need ...
I think I need to buy a gun's picture

theres millions of chinese with "gold" accounts in china right now they can't create the accounts fast enough and we are going to be confiscating?  I call bullsh*t...........

After all Cramer sold all his stocks and bought physical. He's first to give up his gold one way or another.

Thu, 09/22/2011 - 07:04 | 1696114 Snidley Whipsnae
Snidley Whipsnae's picture

I wouldn't believe Cramer if he told me 'the sun is going to rise tomorrow'.

Thu, 09/22/2011 - 00:30 | 1695674 Top_Kill
Top_Kill's picture

LBO Bitchez!

Thu, 09/22/2011 - 00:31 | 1695675 caerus
caerus's picture

i'll give you my gold when you pry it from my cold dead hands

Thu, 09/22/2011 - 00:31 | 1695676 freeasabee1
freeasabee1's picture

get your shavels ready.

Thu, 09/22/2011 - 01:30 | 1695798 Bananamerican
Bananamerican's picture

and your navels rooty..."we're going in"

Thu, 09/22/2011 - 00:32 | 1695678 Top_Kill
Top_Kill's picture

I am a seller at $10,000. Any takers?

ps You can have my silver at $750 in a package deal.

Thu, 09/22/2011 - 00:32 | 1695679 LaLiLuLeLo
LaLiLuLeLo's picture

Why don't the governments bring out their gold and use it to back their bonds?

Because they don't have any...

Thu, 09/22/2011 - 01:12 | 1695765 gorillaonyourback
gorillaonyourback's picture

yep, thats what i was thinking,  the author may want to fact check fort knox before positing this

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