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Dylan Grice Explains When To Sell Gold

Tyler Durden's picture




 

Following the latest temporary swoon in gold, the PM naysayers have once again crawled out of the woodwork, like a well tuned Swiss watch (made of 24K gold of course). Of course, they all crawl right back into their hole never to be heard of again until the next temporary drop and so on ad inf. Naturally, the latest incursion of "weak hand" gold longs is screaming bloody murder because the paper representation of the value of their hard, non-dilutable, physical gold is being slammed for one reason or another. Ironically, these same people tend to forget that the primary driver behind the value of gold is not for it to be replaced from paper into paper at some point in the future, but to provide the basis for a solid currency following the reset of a terminally unstable system, unstable precisely due to its reliance on infinitely dilutable currency, and as such any cheaper entry point is to be applauded. Yet it seems it is time for a refresh. Luckily, SocGen's Dylan Grice has coined just that with a brief explanation of "when to sell gold" which while having a modestly different view on the intrinsic value of gold, should provide some comfort to those for whom gold is not a speculative vehicle, but a true buy and hold investment for the future. And in this day and age of exponentially growing central bank balance sheets (chart), this should be everyone but the die hard CNBC fanatics. In brief: "Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK. Until it does, the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the  time to sell gold."

We would like to add that we disagree with this conclusion: we believe that painful contractionary medicine will never be taken, and instead the process of elimination of $20+ trillion in overhanging debt will simply take place via hyperinflation, as discussed here. Luckily, in that case gold will gain even more. However, as gold will only be convertible into worthless pieces of paper or 1 and 0s, something tells us the physical gold market will go offerless first slowly, and then very fast...

Grice "explains" what gold is:

It’s a lump of metal with no cash flows and no earnings power. In a very real sense it's not intrinsically worth anything. If you buy it, you're forgoing dividend or interest income and the gradual accumulation over time of intrinsic value since a lump of cold, industrially useless metal can offer none of these things. That forgone accumulation of wealth is like the insurance premium paid for a policy which will pay out in the event of an extreme inflation event.

 

Is there anything else which will do that? Some argue that equities hedge against inflation because they are a claim on real assets, but most of the great bear market troughs of the 20th century occurred during inflationary periods. A more obvious inflation hedge is inflation linked bonds, but governments can default on these too. More exotic insurance products like sovereign CDSs, inflation caps, long-dated swaptions or upside yield curve volatility all have their intuitive merits. But they all come with counterparty risk. Physical gold doesn’t. Indeed, during the “6000 year gold bubble” no one has defaulted on gold. It is the one insurance policy which will pay out when you really need it to.

And there you have it: no counterparty risk. Remember that the next time you look at a chart showing the $700 trillion ($1.3 quadrillion pre-revision) in total OTC derivatives, whose systemic disintegration is only a matter of time as actual cash flow, money good producing assets age, are confiscated and disappear. Oh yes, there is a reason why Bavaria Sachs is after the 107 tons of Greek gold...

Why does Grice own gold?

The reason I own gold is because I'm worried about the long-term solvency of developed market governments. I know that Milton Friedman popularised the idea that inflation is “always and everywhere a monetary phenomenon” but if you look back through time at inflationary crises – from ancient Rome, to Ming China, to revolutionary France and America or to Weimar Germany – you'll find that uncontrolled inflations are caused by overleveraged governments which resorted to printing as the easiest way to avoid explicit default (whereas inflation is merely an implicit default). It’s all very well for economists to point out that the cure for runaway inflation is simply a contraction of the money supply. It’s just that when you look at inflationary episodes you find that such monetary contractions haven't been politically viable courses of action.

Needless to say, "economists" are, for the most part, idiots:

Economists, we find, generally don’t understand this because economists look down on disciplines which might teach them it, such as history, because they aren’t mathematical enough. True, historians don’t use maths (primarily because they don’t have physics envy) but what they do use is common sense, and an understanding that while the economic laws might hold in the long run, in the short run the political beast must be fed.

The response of printing money is nothing new. Yes, one can come up with meaningless excuses that it is an asset swap which work great in theory, but when it comes to practice, forget one small thing. Money is and always has been first and foremost FUNGIBLE. Just ask the infinite asset rehypothecation accounts of all London-based companies.

I wrote about the Weimar Hyperinflation a few weeks ago and showed, for example, that Rudolf von Havenstein (Reichsbank president) was terrified of pursuing such a monetary contraction because he was so fearful of the social consequences rising unemployment and falling output would elicit. But the agonizing dilemma he faced, identical in principle if not in magnitude to that faced by policy makers today, is as old as money itself.

Dilution goes back further, as we have shown before.

In the 3rd century AD, as the Roman Empire became too large and unwieldy, its borders were consolidated and the great imperial expansion halted. Though necessary, this consolidation posed problems. While the Empire was in growth mode, driven by military conquest which strengthened public finances, the army paid for itself. It was an asset on the national balance sheet. But when that territorial growth was halted, a hole was created in the budget as while the army was still needed to defend the borders, it was no longer self-funding because there was no territorial expansion.

 

Roman emperors discovered that contracting expenditure to fit with new lower revenues was a difficult feat to pull off. So rather than contract military spending, public works or public entertainment – long-term necessities which were painful in the short run – they opted to buy time using successive currency debasements. Ultimately, this culminated in what would become the world’s first of many fiscally driven inflation crises (see charts below).

 

Two thousand years ago, the fiscal sobriety so clearly needed in the long run was subordinated to the short-run requirement to buy time. Hence the age-old short-term temptation to debase the currency and hope no one notices. Paring overstretched government balance sheets has never been easy. As the Romans should have done in the third century, developed market governments today will have to come clean to their citizens that since keeping the welfare promises they’ve made over the years will bankrupt them, those promises are going to have to be ‘restructured’ and government expenditure substantially tightened.

Where we find Grice's argument somewhat weak is his extrapolation that just because there are occasional examples where "leaders" have opted for short-term pain in exchange for long-term gain, we fail to see how this, in the current terminally corrupt and crony developed world system of governance which has been uZIRPed by banks through and through, is possible. After all short-term pain is no longer possible as even the smallest downtick leads to concerns of systemic collapse. Rememeber - the world is rapidly running out of money good collateral, a/k/a assets. That is all that matters.

Nonetheless, our view can be layered on top of that of Grice, as our conclusion would have far more stark implications for the real value of gold. In the meantime, those wondering if one should sell gold now, here is your answer.

What causes the political winds to change? A government crisis. In 2008, Ireland came very close to going the way of Iceland. They had their crisis. And historians today still refer to the “inflation fatigue” in Britain by the end of the 1970s. This was our crisis. So what we learn from these experiences and others like them is that a fiscal crisis is required to force a majority acceptance of the implications of an overleveraged government.

 

But the political winds in countries with central banks are a long way from blowing in the direction of fiscal rectitude. And while it’s true that more people are at least talking about it, talk is very cheap and no one is yet close to walking the walk. Such steps remain politically unpopular because we haven’t had our crisis yet. Given the clear unsustainability of government finances and the explosive path government leverage is on, a government funding crisis is both inevitable and necessary. Dubai and Greece are merely the first claps of thunder in what is going to be a long emergency.

 

Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK (witness the IMF’s recent recommendation that inflation targets be raised to 4%: IMF Tells Bankers to Rethink Inflation – WSJ). Until it does, the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold.

And to those who do wish to sell their gold here? Why thank you.

 

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Fri, 03/16/2012 - 10:03 | 2261532 Mr. Fix
Mr. Fix's picture

Never!

Although I might trade it someday....................

Fri, 03/16/2012 - 10:07 | 2261550 Pladizow
Pladizow's picture

Dow/Gold 1:1 or better!

Fri, 03/16/2012 - 10:17 | 2261575 idea_hamster
idea_hamster's picture

"Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain...."

Actually, he has it exactly bass-ackwards:  The crisis that forces sustainability will itself be the impetus to inflate.  Future liabilities paid by past work.

Fri, 03/16/2012 - 10:25 | 2261609 Badabing
Badabing's picture

If you can take your gold and fold it into a airplane and it flies, than its time to sell your gold.

Fri, 03/16/2012 - 10:31 | 2261628 Pladizow
Pladizow's picture

Well then its time to sell now, as gold is quite malleable!

Fri, 03/16/2012 - 10:33 | 2261635 Badabing
Badabing's picture

but will it fly?

Fri, 03/16/2012 - 10:40 | 2261658 Pladizow
Pladizow's picture

Isnt that why we invest in gold?

Fri, 03/16/2012 - 10:45 | 2261670 flacon
flacon's picture

I'm with Mike Maloney:

 

Gold And Silver - When To Sell? Insiders Report - Mike Maloney

http://www.youtube.com/watch?v=UE7QcVN5tC8

Fri, 03/16/2012 - 10:50 | 2261691 qqqqtrader
Fri, 03/16/2012 - 10:58 | 2261696 Badabing
Badabing's picture

OK Pladizow I apologize for my poor attempt at sarcasm.

What I am saying  is the paper market that is being artificially propped up will collapse at some point.

So do you sell A paper promise while it is up and buy real gold or do you wait un till the dow and gold is 1:1 or better?

 I can see it now dow   @ 1650!!!

Fri, 03/16/2012 - 11:15 | 2261800 Pladizow
Pladizow's picture

If we are going to 1:1, i'd prefer dow 14000!

Fri, 03/16/2012 - 11:03 | 2261742 CrazyCooter
CrazyCooter's picture

If I am not mistaken, gold is the only element that is so malleable it can be pressed into a foil exactly one atom in thickness (I read this somewhere regarding an experiment done by someone that needed a really thin foil to test a hypothesis).

Given that the surface area to mass ratio of an "airplane" made of such foil would be quite low, I think it would fly. Although this may also fall into the George Burn's category of sex at 90, which is "like shooting pool with a rope".

<Aside>Remember when smoking cigars while singing was hip?</Aside>

Actually, this topic of selling, is something I am currently thinking about. I do not mean in this moment, but under what signals I might actually part with my stash. Let me elaborate a bit ... (cut and paste from an email with someone on the subject) ...

... my old man is a finance major from US (he was an auditor for the state of Texas). We debate money/economics quite a bit. He is getting older, keeps sending me all kinds of stuff. Wool hats, ties, shirts, artifacts from my childhood. Anyway, in the last package of surprises, I got a bull silver market letter from 1971 that belonged to my grand father (he was a land man for HL Hunt). The document is old, but its largely intact. The primary content is 33 pages including the bull case, charts, facts, thesis, etc. There is one appendix out of five that seems to have been lost to a rat. There is also a cover letter (somewhat damaged) and a form to sign up (margin or cash).

I skimmed through it and what I found very curious was the core bull arguments; they are almost the same to today. Supply shortages for industry, Gresham's law, account deficits, etc, etc. It even talks about SDRs! Also, very curious, is the stuff marked in pen by my grandfather; he specifically gravitated to almost exactly the same points/arguments that resonate most with me (genetics? common sense?).

It really struck me how identical the pitch is. When I have time, I plan to go through it carefully, pull out and summarize the bull points, and then contrast them to today's bull argument. Since this case was made in 1971, I can validate the arguments or disprove them.

My point is that its pretty obvious that buying silver at this time would have been extremely profitable - if it was sold before the top. I think its quite fair to say the same truth applies today - there will be a time to sell. I have, for almost two years now, struggled to put a strategy on when to sell; I want a predetermined set of circumstances, arrived to logically, on when to roll out of my physical bullion position.

I think this is a starting point for my development of that thesis.

<snip>

Anyway, many in the PM space are book talkers (even if they are right for the moment), but to me that makes all the difference. I mean, can I really trust a guy who owns gold mines to tell me how to invest in gold? I understand his arguments, I think he is right, but, as I demonstrated above, the time to sell will come. I am buying with both fists right now, so I don't need more, ahem, bull; I need to know when to sell and I can not count on an owner of a gold mine to tell me that.

I am up to my ass in alligators with life right now, so this is a back burner project that may not get attention until after my state convention at the end of April. But, I don't think the time to sell will be any time this year, so I suppose that is convenient.

Regards,

Cooter

 

 

 

Fri, 03/16/2012 - 11:45 | 2261928 beaker
beaker's picture

Hey, I'm as bulish on gold as most of the others on this site.  However, just keep in mind how you can still get majorly screwed by it.  Client used to ask me if the government would/could ever confiscate their gold.  My reply was that they would never have to go through all that drama.  All they have to do is announce a 50% tax on all sales by evil speculators.  His reply was that the rest of the world would step in and buy and supprt the price.  I countered that he should note the concerted actions of all the central banks of the world and tell me that other countries would not follow suit.   

Of course, the central banks would step and buy (in preparation for their next Act) the collapse and scoop up the gold, but so what if you just lost half your wealth in it.  So you'd just hold on and not sell?  If the laws remain on the books what are you going to do?  take it to your grave?  What if you have to buy something? Barter?  Who's going to take the risk on the other side of that trade?  

Again, I'm not slamming gold bulls; I own it myself.  Just be aware that you're not bulletproof.   The bastards can still et ya....

 

 

 

 

 

 

 

 

 

Fri, 03/16/2012 - 12:40 | 2262191 LowProfile
LowProfile's picture

That only works if you can get all world governments to agree on taxing gold.

Fat fuckin' chance IMO.

There's a reason Europe doesn't tax gold (they do tax silver though).

Fri, 03/16/2012 - 13:25 | 2262393 Matt
Matt's picture

You've never heard of the Black Market, have you? Or System D, if you prefer.

Like the quote in the "Fool's Game" article says:

“Black markets will always be with us. But they will recede in importance when our public morality is consistent with our private one. The underground is a good measure of the progress and the health of nations. When much is wrong, much needs to be hidden.”

-Eric Schlosser

If people are now willing to risk the consequences of trading outside the law for things like guns, drugs and prostitution, how many more would be willing to do so for fuel, food and shelter?

Fri, 03/16/2012 - 13:27 | 2262410 LowProfile
LowProfile's picture

Careful with that crazy talk or the bankers will junk you!

Fri, 03/16/2012 - 12:39 | 2262182 LowProfile
LowProfile's picture

The last top was defined by Volker's raising interest rates to the roof.

IMO...

This time the top will be defined by interest rates returning to some small amount below the annual increase in the amount of gold production.

However, at that time gold will not collapse, as interest rates will not be able to be raised enough to "defeat" gold as a store of value compared to a "reserve" currency.  Gold will remain the reserve, and fiats will float against it.  We will see some new high price for gold, a historical revaluation.

Derivatives and such against gold will be either illegal, or transparent enough that they can no longer manipulate the price.

Silver may not benefit, as central banks do not hold it (and therefore will not use it to recapitalize their balance sheets), and it has invaluable industrial applications.  Therefore it carries a risk premium compared to gold, which may or may not pay out.

JMHOP

Fri, 03/16/2012 - 13:18 | 2262360 Gazooks
Gazooks's picture

It does fly, Coot. I use gold leaf in studio work and excess application when brushed free easily suspends in moving air.

Keep in mind that during a period of systemic 'reset', barter may be the only means of reliable transaction. Disposal of pm's in that conditional state won't entail conversion to fiat for purchasing real goods and services.

PM's offer that possible necessary insurance during a transitional monetary period of weeks, months or longer when economy becomes largely a local phenomenon.

If free-gold markets exist thereafter, all fiat will have to find equilibrium within exchange units of gold weight that may be slow to establish. Only if you think that $ confidence isn't likely destroyed in typical exponential manner should one seriously consider re-conversion.

An existing model for future workable alternatives lies in Jim Turk's GoldMoney debit system.

Sat, 03/17/2012 - 10:31 | 2264757 Hobbleknee
Hobbleknee's picture

Peter Schiff has a bank of sorts where you can use a debit card to make purchase with your gold.  When you make  purchase, the fiat is converted at the going rate and the gold is deducted from your holdings in storage.  This is the way things should be.  Of course, Americans can't open an account with Schiff because he fears the US government.

_______________________________

Compare gold prices

Fri, 03/16/2012 - 20:11 | 2263927 StychoKiller
StychoKiller's picture

Plus les choses changent, plus elles restent les mêmes!

Fri, 03/16/2012 - 21:29 | 2264109 eddiebe
eddiebe's picture

the time to sell some gold will be when some sovereign links their currency to gold and offers bonds that pay good interest.

Fri, 03/16/2012 - 11:18 | 2261813 dynomutt
dynomutt's picture

It'll only fly if we're living in an ocean of shit.

Fri, 03/16/2012 - 10:34 | 2261639 FEDbuster
FEDbuster's picture

The same can be said for an AR-10 with 5K of match .308, except it has a practical use.  Make sure you have invested in the basics (beans, bullets, band aids) before you venture into bullion.  Not arguing against gold and silver, just saying it's not at the top of my list of things to own in an economic collapse.  Needless to say paper assets (stocks, bonds and ETFs) are not on the "list".

Fri, 03/16/2012 - 10:39 | 2261656 jus_lite_reading
jus_lite_reading's picture

BINGO!!

Q: When should you sell gold?

A: Never!

Fri, 03/16/2012 - 10:46 | 2261680 flacon
flacon's picture

I suppose your statement is predicated on the meaning of the word "sell". Just don't be a sucker and keep your gold when you should be TRADING/"selling" it for other assets that are undervalued. Take a look at the Mike Maloney video I posted above:

 

http://www.youtube.com/watch?v=UE7QcVN5tC8

Fri, 03/16/2012 - 15:32 | 2263007 Gift Whores
Gift Whores's picture

I have the same philosophy on selling guns.

Collect them and shoot when necessary.

Fri, 03/16/2012 - 14:04 | 2262597 DoChenRollingBearing
DoChenRollingBearing's picture

 

Here is when you sell your gold:

 

1)  If you have children, NEVER sell it.

2)  If you have NO children or heirs, sell it whenever you want.

***

If you want to sell it, I´ll take it...

Fri, 03/16/2012 - 10:46 | 2261677 Troll Magnet
Troll Magnet's picture

what is gold? can i sell it eventhough i don't have it?

Fri, 03/16/2012 - 13:51 | 2262555 Gazooks
Gazooks's picture

Sure, if you're JPM

Fri, 03/16/2012 - 13:28 | 2262415 RollinsArline3
RollinsArline3's picture

my roomate's mom makes $83/hr on the computer. She has been fired from work for 9 months but last month her pay check was $18339 just working on the computer for a few hours. Read more on this web site .....  http://bit.ly/FPPP3j

Fri, 03/16/2012 - 14:07 | 2262616 DoChenRollingBearing
DoChenRollingBearing's picture

My cousin´s roomate´s mom makes $934/hr  on the computer doing nothing buy ofering her brownies, last month her check was for $738,934 working just a few hours.

Read more at RobotTrader´s blog!

Fri, 03/16/2012 - 20:14 | 2263931 StychoKiller
StychoKiller's picture

What's the cup size of those "brownies?" :>D

Fri, 03/16/2012 - 10:59 | 2261727 whatsinaname
whatsinaname's picture

Sell gold for what ?

Fri, 03/16/2012 - 12:10 | 2262075 beaker
beaker's picture

Sell it (some of it) for farmland; it cash flows.  Only the dumbest gov'ts will ever fuck around with their food supply.  And no it is not in a bubble.  Some areas like IL and IA have had crazy price runups where cap rates are <3%, but that is not the case everywhere.  Let's face it, there is no perfect place to hide in this global clusterfuck.  Invest in keeping yourself in shape and sane and healthy are probably as good of investments as any.

Sat, 03/17/2012 - 01:44 | 2264447 oldman
oldman's picture

whatsinaname

How about a self-contained watershed  covered in mature forest in the Andes that flows enough water to buy all the gold you can that anyone will deliver?

I only know of one                               om

Fri, 03/16/2012 - 12:56 | 2262254 GovtMediaLiars
GovtMediaLiars's picture

Yeah this was an easy one. Doesn't take an analytic genius to conclude the answer is...never.
Unless you absolutely have to for living expenses of course. 

Now, if you're a trader...
Gold could be a sell here and it will almost certainly be coming under additional pressure in the coming weeks, and even months. I would never explicitly bet against gold (ie short it etc) but from a trading perspective, neither am I buyer here quite yet.

Cheers!
GML
market madness
index updates, techniucal analysis, and commentary

Fri, 03/16/2012 - 10:06 | 2261548 JonNadler
JonNadler's picture

sell now before it drops to 300! right Trav?

Fri, 03/16/2012 - 10:08 | 2261554 Pladizow
Pladizow's picture

If you are going to be the anti-trav, you should consider inverting your avatar.

Fri, 03/16/2012 - 10:16 | 2261580 trembo slice
trembo slice's picture

seriously, that's weak sauce

Fri, 03/16/2012 - 10:21 | 2261597 resurger
resurger's picture

Antitrav guy?!

Fri, 03/16/2012 - 11:39 | 2261903 Likstane
Likstane's picture

Anti-GRAV

Fri, 03/16/2012 - 14:14 | 2262637 DoChenRollingBearing
DoChenRollingBearing's picture

I´m Jamie Dimon and I´m Warren Buffett.

And I approve this message!

 

Good having you back Jon Nadler!  Now where the hell is Bravo?

Fri, 03/16/2012 - 10:07 | 2261551 Hansel
Hansel's picture

"Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability."

BWAHAHAHAHAHAHA, HAHAHAHAHA.  HAHA!  No wait, ok... BWAHAHAHAHAHAHAHA!  NO F***ING CHANCE!  I'll get a skittle shitting unicorn with a naked lady on it first.

Fri, 03/16/2012 - 10:12 | 2261562 Conrad Murray
Conrad Murray's picture

That would be one Amazing Horse. <---- Friday Humor, totally safe for work :D

Fri, 03/16/2012 - 10:17 | 2261582 Hansel
Hansel's picture

LOL.  I wonder if anyone has ever watched the whole thing.

Fri, 03/16/2012 - 11:35 | 2261885 gmrpeabody
gmrpeabody's picture

Conrad..., where do you work?

Fri, 03/16/2012 - 14:43 | 2262778 Think for yourself
Think for yourself's picture

Definitely. I once pulled a 16 hour farming session on WoW with that song's looping flash video in the background, and I can't have been the only one...

Fri, 03/16/2012 - 10:26 | 2261615 resurger
resurger's picture

hahahahahahahahahaha

Fri, 03/16/2012 - 10:31 | 2261624 Dr. Engali
Dr. Engali's picture

I'd have to be pretty juiced up to watch all 10 minutes of that.

Fri, 03/16/2012 - 10:41 | 2261661 Hansel
Hansel's picture

It's 10 hours long.

Fri, 03/16/2012 - 11:14 | 2261791 Dr. Engali
Dr. Engali's picture

Shit I didn't even notice that. I didn't think you could put something that long on you tube.

Fri, 03/16/2012 - 11:37 | 2261895 gmrpeabody
gmrpeabody's picture

"long on the tube"

Now that's funny.

Fri, 03/16/2012 - 11:35 | 2261883 Donnie Duvanie
Donnie Duvanie's picture

Can someone watch the whole thing and tell me when the horse flies? I want to see that...

Fri, 03/16/2012 - 11:12 | 2261782 Al Huxley
Al Huxley's picture

10 hours - probably need something with a little more kick than booze to hang in there for 10 hours.

Fri, 03/16/2012 - 10:22 | 2261601 SheepDog-One
SheepDog-One's picture

LOL I agree this article is a side splitter!

Fri, 03/16/2012 - 10:28 | 2261621 Dr. Engali
Dr. Engali's picture

I always wanted one of those horses.

Fri, 03/16/2012 - 10:31 | 2261625 SheepDog-One
SheepDog-One's picture

'Course of fiscal sustainability' = FEMA forced labor camps.

Fri, 03/16/2012 - 10:36 | 2261643 Miss Expectations
Miss Expectations's picture

"Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of WAR."

Fri, 03/16/2012 - 11:00 | 2261728 DosZap
DosZap's picture

"Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability."

 

So how do you get to fiscal sanity, much less sustainability when we owe a Quadrillion dollars?

Wipe that off the books and start from zero, maybe we have a shot.

I never wanted to own one ounce of PM's, they are a PITA. I AM Forced to own it out of self preservation.

It is LIFE INSURANCE.

Fri, 03/16/2012 - 14:16 | 2262658 DoChenRollingBearing
DoChenRollingBearing's picture

GOLD will get you through times of no money better than money will get you through times of no gold.  (Slightly re-worked)

Fri, 03/16/2012 - 11:17 | 2261810 CrazyCooter
CrazyCooter's picture

Legend has it that skittle shitting unicorns come from pink mountains ...

http://lh5.ggpht.com/_sCklsUkjtrA/TJxcU3CZkwI/AAAAAAAABQ4/PCpzvjvNeBg/photoshare%20Mt%20Drum%20Sunset%20Gakona%20AK%20LDWinger%5B3%5D.jpg

Seen the pink mountains once ... but, haven't had a chance to bag me one of them unicorns yet! Mmmm, skittle shitting unicorn jerky .... skittle shitting unicorn chili ...

Regards,

Cooter

Fri, 03/16/2012 - 14:54 | 2262667 DoChenRollingBearing
DoChenRollingBearing's picture

Oh, I had always thought that was the Big Rock Candy Mountains...

¨... and the little streams of alcohol comes trickling down rocks...¨

Fri, 03/16/2012 - 15:11 | 2262913 OldE_Ant
OldE_Ant's picture

First time I read that I saw Big Cock Randy Fountains with little streams..  Guess instead of gold I should get new glasses.

lol.

Fri, 03/16/2012 - 10:51 | 2261555 yabyum
yabyum's picture

And it is on sale right now! I would trade some for some land with a well  and some fruit trees, but I lost rafting the Grand Canyon.

Fri, 03/16/2012 - 10:09 | 2261558 scatterbrains
scatterbrains's picture

I smell new highs is UGA/BNO  (gasoline funds) today after they tried to stall it yesturday. At some point don't they have to relapse  this pig market for a bit ?

Fri, 03/16/2012 - 14:04 | 2262602 GovtMediaLiars
GovtMediaLiars's picture

Any analysis behind that or just tossing out some speculation for fun? Just curious. If you do have some analysis behind it I'd love to check it out.

My analysis suggests a strong likelihood of a period of consolidation around this level. If it can break recent highs, however, it very well could be off to the races.
Some analysis and today's daily chart for UGA 

Regards,
Curtis 

Fri, 03/16/2012 - 10:11 | 2261565 GeneMarchbanks
GeneMarchbanks's picture

'And to those who do wish to sell their gold here? Why thank you.'

Indeed, increasingly I'm seeing golden momos if there is such a thing.

BTW, I thought Greece had 111t but I'm not sure, one of the Papas must have taken a 4t cut prior to the 'sale'.

Fri, 03/16/2012 - 10:12 | 2261569 mess nonster
mess nonster's picture

Where can I get a gold-made Swiss watch?

Fri, 03/16/2012 - 10:43 | 2261665 EBR MOD 0
EBR MOD 0's picture

there are some very nice Swiss watch shops in Lucerne, just check the exchange rate.

Fri, 03/16/2012 - 11:08 | 2261761 DosZap
DosZap's picture

Where can I get a gold-made Swiss watch?

Anywhere you want to plop down $20k.

Fri, 03/16/2012 - 14:22 | 2262674 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Plenty of jewelry stores will sell you gold and even platinum Rolex watches.  Be ready to pay up...

Fri, 03/16/2012 - 10:13 | 2261570 Toxicosis
Toxicosis's picture

With our new normal soon to be lifestyles with a drop in the ever precious petroleum supplies gold and silver will be a constant, since fiat paper is literally controlled by central planners and central governments a lack of cohesion will cause independence of the peoples to use that which can only be trusted.  Gold and silver are indeed the monetary revolution over the powers of all central planned countries or nations.

Fri, 03/16/2012 - 10:18 | 2261585 Atomizer
Atomizer's picture

I'll set off the emergency flare in the darkly lighten room. Grice & his birgade of cockroaches will scurry back onto their realm of darkness.

Fri, 03/16/2012 - 10:18 | 2261587 Dr. Engali
Dr. Engali's picture

I'll sell my gold when they claw it from my dead cold hands.

Fri, 03/16/2012 - 10:19 | 2261590 RoadKill
RoadKill's picture

"the PM naysayers have once again crawled out of the woodwork... Of course, they all crawl right back into their hole never to be heard of again until the next temporary drop and so on ad inf."

Nope still here!

Oct 6 2011 GLD was 160.49.  PPLT was 149.5 and SPX was 1,165.  I said buy stocks and PPLT and short gold.  Today we are 160.73, 165.90 and 1,402.6.

Stocks are way overvalued here.  Gold will eventually trade lower then the S&P 500.  PPLT should trade at its normal premium to gold.

Fri, 03/16/2012 - 11:38 | 2261901 Terminus C
Terminus C's picture

In case you missed the point...

GLD is not gold

fyi

Fri, 03/16/2012 - 10:19 | 2261592 jover
jover's picture

I think I should sell when everyone and his dog screams buy gold, sell your house!

Then ill give a tiny portion of my gold to some fart and buy his house with it.

Sheeeeeeeeeeeeeple!

Fri, 03/16/2012 - 10:21 | 2261598 BLOTTO
BLOTTO's picture

God made Go(l)d.

It cant be perverted, it cant be manipulated and you can not turn lead into gold.

It is what it is.

Fri, 03/16/2012 - 10:23 | 2261603 kurzdump
kurzdump's picture

I heard they managed to turn tungsten into gold.

Fri, 03/16/2012 - 11:39 | 2261905 Terminus C
Terminus C's picture

no no, you got it backwards... they turned gold into tungsten.

Fri, 03/16/2012 - 14:24 | 2262686 DoChenRollingBearing
DoChenRollingBearing's picture

When the Chinese perfect making tungsten One Ounce Eagles plated with gold, that will be a day to rue...

Fri, 03/16/2012 - 10:22 | 2261600 resurger
resurger's picture

Am taking my physical gold and silver with me in grave!

am putting that in my will ..

Fri, 03/16/2012 - 11:38 | 2261763 Donnie Duvanie
Donnie Duvanie's picture

And I'm going to be a grave-robber. Don't worry, you won't miss it.

Fri, 03/16/2012 - 10:24 | 2261604 Elmer Fudd
Elmer Fudd's picture

You cant beat the CB's for extending the sale, only wish my paycheck was bigger so that the stack would grow faster.  

Fri, 03/16/2012 - 10:24 | 2261605 johnQpublic
johnQpublic's picture

sorry, no gold to sell here...

wink wink nudge nudge

Fri, 03/16/2012 - 10:25 | 2261610 Hohum
Hohum's picture

Since gold is a great long term investment, why complain about the Fed? It is making investing easy!

Fri, 03/16/2012 - 10:26 | 2261614 SheepDog-One
SheepDog-One's picture

There is no time to sell gold, ass hat. PM's are for holding thru a currency collapse, which is coming since they went over the Rubicon years ago....gold and silver are NOT a 'trade' where there are longs and shorts....OMFG people so dont get it.

See the real time to buy PM's was in 2008 when the Maniacal Monetizers held a gun to the country's head and said 'Hand over the checkbook or its lights out, tanks in the streets, blah blah'...then gold was around $400 and was a buy to protect against printing the currency into oblivion. Theres technically no time to SELL it, EVER! Because what are you going to sell it for...DOLLARS? Well thats what you bought gold to get OUT of in the first place!

DUH!

Fri, 03/16/2012 - 10:33 | 2261637 Dr. Engali
Dr. Engali's picture

I might be convinced to trade some for a 50 cal sniper rifle.

Fri, 03/16/2012 - 10:37 | 2261649 SheepDog-One
SheepDog-One's picture

I just traded some of mine for a nice Keltec 12 guage shotgun! 

Fri, 03/16/2012 - 10:49 | 2261684 EBR MOD 0
EBR MOD 0's picture

I got a good deal on 12ga 3" shells at Dicks not long ago. Winchester 3"BBs for up close work, nuff said.

Fri, 03/16/2012 - 10:53 | 2261707 Citxmech
Citxmech's picture

You got a KSG?  How is that bad boy?

Fri, 03/16/2012 - 11:27 | 2261850 HungrySeagull
HungrySeagull's picture

Those are essentially street sweepers of the worst nightmare.

Reloads 15 rounds faster than you can feed a Remington with the same amount.

Fri, 03/16/2012 - 10:56 | 2261715 Dr. Engali
Dr. Engali's picture

I picked up a Saiga 12 guage.

Fri, 03/16/2012 - 11:05 | 2261752 DosZap
DosZap's picture

I picked up a Saiga 12 guage.

Good move, add some 20rd mags to the cache, and maybe even a drum,

www.classicarms.com

Fri, 03/16/2012 - 20:46 | 2264010 BidnessMan
BidnessMan's picture

Barrett M107 Baby!

Sat, 03/17/2012 - 10:40 | 2264767 Hobbleknee
Hobbleknee's picture

It's okay to trade your PMs for fiat if you're not planning on holding the fiat for long.  For example, if you want o buy a house and the timing is right- cash in your gold and buy a house with it.

Fri, 03/16/2012 - 10:26 | 2261616 JailBank
JailBank's picture

I had a dream last night that silver dropped to $14 an oz and gold collapsed as well. Of course that dream came along with riots and a complete loss of confidence in both the markets and the banking system.

Fri, 03/16/2012 - 10:29 | 2261617 mess nonster
mess nonster's picture

Inflation is just lies, and what can a liar do but keep lying?

 

Fri, 03/16/2012 - 10:26 | 2261619 Lost Wages
Lost Wages's picture

Gold doubloons, mateys!

Fri, 03/16/2012 - 10:31 | 2261627 Atomizer
Atomizer's picture

I have a grand idea Grice, allow me to sell my gold and silver in exchange for my social security & medicare trust fund monies. Upon exchange, I opt out of your ponzi scheme.

Fri, 03/16/2012 - 10:32 | 2261630 iamgogi
iamgogi's picture

Time to sell gold - When the "muppets" convert what is left of their 401k into gold

Fri, 03/16/2012 - 10:44 | 2261667 Currency is Debt
Currency is Debt's picture

That is a classic. Brutal

Fri, 03/16/2012 - 10:32 | 2261633 InconvenientCou...
InconvenientCounterParty's picture

why make things so complicated?

Sell gold after the new commodity-backed world reserve currency is in place. The dollar will be trash at that point.

Physical "long" gold is redundant. Phys gold is a saver's vehicle and there are some, albeit ahead of the curve (and not econ PhD's), that understand the nature and importance of saving.

Fri, 03/16/2012 - 10:41 | 2261659 SheepDog-One
SheepDog-One's picture

That is, if you dont get killed or imprisoned for life for even having it by then.

By the time we even get to some 'world reserve commodity currency' it will be a nightmare planet earth anyway. They havent even started the mass depopulation operations yet, looks like it will be soon though.

Fri, 03/16/2012 - 10:46 | 2261678 EBR MOD 0
EBR MOD 0's picture

SD1, they will have to find it first, they may come a lookin' and the black boots will be paying a very high price. The time for cheap patriotism is past.

Fri, 03/16/2012 - 14:27 | 2262703 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, ¨Molon Labe¨ will ensure that the jack-boots will stop coming...

Fri, 03/16/2012 - 11:02 | 2261741 Al Huxley
Al Huxley's picture

Unless you count effects of all the shit that's packaged up and consumed under the misleading label of 'food'.  Then the depopulation operations have been underway for some time now.

Fri, 03/16/2012 - 10:33 | 2261636 TruthDetector
TruthDetector's picture

Since the inception of the "Federal" Reserve Cartel, the USD has lost 97+% of it's purchasing value. Although it fluctuates, as of 03-16-2012, a PRE-1964 silver dime is worth $2.3531 (www.coinflation.com). Don't buy the paper (unless you need to wipe your arse). Protect yourself: OWN PHYSICAL.

Fri, 03/16/2012 - 11:57 | 2262008 BeerBrewer09
BeerBrewer09's picture

Mercs and Rosies for future gasoline purchases, bitchez.

Fri, 03/16/2012 - 10:35 | 2261641 slewie the pi-rat
slewie the pi-rat's picture

neither grice nor tyler invokes the constitutional mandates regarding gold and silver as money

they might as well be in india

here, they have a voice

maybe they will find it in the future;  kinda doubt it at this point, tho;  and for tyler and others who must think that the constitutional argument is just a pirate pissing into the winds of evolution: why do you support ronPaul?  b.c you don't undertand what he's saying? 

when people have the strongest legal arguments in recorded history on their side and don't use them, one can only wonder where they have now stuck their little graph-oriented heads...

Fri, 03/16/2012 - 11:28 | 2261856 CrazyCooter
CrazyCooter's picture

I don't think they will confiscate. I do think a gains tax of some kind may be applied though (to the public - not the elite).

You are correct regarding the constitunionality of the money, but it appears the constitution is cryogenically frozen at the moment (with Han and the wookie). If I am not mistaken, the complicated unfreezing process requires lamp posts, rope, and special banker weights.

I think the interesting wrinkle is states who re-establish gold/silver or alternate currencies would make great candidates for safe deposit boxes which can be legally accessed in the future when the federal government is cracking down. I mean, if gold legal tender in Utah, I can just 1:1 to the Utah currency and then 1:N into whatever the new federal currency is ... all in a bank lobby before I walk out the door.

Just a thought.

Regards,

Cooter

 

Fri, 03/16/2012 - 14:29 | 2262719 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1  An interesting idea worth thinking more about.

Sat, 03/17/2012 - 00:03 | 2264344 slewie the pi-rat
slewie the pi-rat's picture

L0L!!!  crrrraazy!

i'm not as "invested" in that exact future as you and otherz may be, but as i've said before, utah is important b/c of the Constitution, not the other way around, and i value any man, woman, or crraazy dawg who understands what utah has DONE and what it could and "should" mean for the other 49 sovereign american homelands we share and love together

so, cheers!  the law itself and tons of great articles are ez to find;  there is an interesting legal argument about the centralBank around, too, but not specific to utah

it is a constitutional argument and i'm working from memory here:  like "what jesus taught about homosexuality" in theBible, bankstering is not mentioned in the Consitution, if i remember this close to right, ok?

thus, it is not "expressly" given to the federal goobermint, either execBranch or legisBranch;  ergo1, it is de facto, de jure, and de slewie, reserved to theStates [or thePeople], by law, (so that's double~de jure, there);  ergo2,  congress and the prez have absolutely no legal authority to establish a national bank, what-so-fuking-ever!  so this is what we should be teaching in the public schools, i would think, personally

TheEnd

Fri, 03/16/2012 - 10:36 | 2261646 SheepDog-One
SheepDog-One's picture

I assume this is a 'Wall St guy'...interesting to see how they SO dont get it. 

This is not some state of affairs where the politicians and central bankers are just trying to figure out how to fix it, like some 3 Stooges episode where they pose as plumbers, good intentioned but bumbling clowns who eventualy wreck the whole house, but in the end theyll see the error of their ways and 'great winds' will force them into 'sustainability'....what a load of BS!

No this was all planned by maniacs who run the world and have been trying to turn the world and everyone in it into some prison planet where they rule as kings and everyone else is a slave. THAT is the objective here, nothing else. 

 

Fri, 03/16/2012 - 10:41 | 2261660 Currency is Debt
Currency is Debt's picture

Based on the 1970s gold bull move following the US abandonment of the Gold Standard, the price per ounce rose from $35 to around $850 in a decade or otherwise expressed as a 2400% move, 24 times. The rally lasted from 1971 to 1980. Following the peak it declined by 70% to the low $200s level settling at 600% + above the original $35 peg level. It took a full 20 years util the new bull market in 2000.

A similar outcome from this a base of $250 an ounce multiplied by 24 = exactly $6000 per ounce and a 70% decline from there would return it to a base low of $1800.

Consider that Gold has broken the all-time nominal high by 120% from $850 to $1920. 

I wouldnt be surprised to see Gold rise to this kind of level due to the debt based money printing fiat system. At the same time in the next bull market in 25 years or so caused by the perpetual loss of value of an ever expanding paper money supply relative to real, valuable, tangible assets it could rise by a similar factor to something like $40k an ounce.

I just believe that the price will become irrational at the top of markets and the $5000 an ounce will not ride relative to the value of consumer goods, real estate etc and there will be corrections. It is not ideal to just be long forever unless you are banking on hyperinflation or total economic chaos (far worse than even this great reccession) where you need to have Gold or some other sound currency etc

Fri, 03/16/2012 - 10:43 | 2261666 Fred123
Fred123's picture

Forget owning gold in the US. The gov't will outlaw it making you a criminal and then steal it.

Fri, 03/16/2012 - 10:54 | 2261710 Atomizer
Atomizer's picture

That all sounds plausible until you hit the Democracy tidbit about electing people to serve the people. Somehow, the illusion of this myth has caught up with itself.

Fri, 03/16/2012 - 10:56 | 2261717 Citxmech
Citxmech's picture

Thereby ensuring an even higher value.

Cause prohibition and anti-drug laws worked so well. . .

Fri, 03/16/2012 - 11:09 | 2261769 Quinvarius
Quinvarius's picture

Kinda like the way they stole GM?

Socialists are interested in stealing everything.  You can't bury your brokerage account.

Fri, 03/16/2012 - 10:47 | 2261681 vegas
vegas's picture

My eyes swelled over looking at the Egyptian wheat chart. The fiat Ponzi has a very long way to go and that means gold is nowhere near a top. Keep selling it shitheads.

 

http://vegasxau.blogspot.com

Fri, 03/16/2012 - 10:47 | 2261682 ZeroPoint
ZeroPoint's picture

So only sell when the system is robust and stable. I will never sell (and never surrender, for that matter).

Fri, 03/16/2012 - 11:08 | 2261762 Quinvarius
Quinvarius's picture

I don't have a problem selling it once we go back to a stable gold standard.  But that has to come with a remelt and an audit of our current gold.  There is too much secrecy and subterfuge around US gold.  That tells me there is a massive problem.

Fri, 03/16/2012 - 10:51 | 2261695 tekhneek
tekhneek's picture

I'm going with DOW:GOLD ratio of 1 to 1.

Fri, 03/16/2012 - 14:34 | 2262743 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

But, I raise you:

1) one third at Gold:Dow 1 to 1

2) one third more at Gold:Dow 3 to 1

3) NEVER sell the rest

Above proceeds from selling in 1 and 2 go to hard assets or our bearing business.

Fri, 03/16/2012 - 10:53 | 2261701 writingsonthewall
writingsonthewall's picture

"these same people tend to forget that the primary driver behind the value of gold is not for it to be replaced from paper into paper at some point in the future, but to provide the basis for a solid currency following the reset of a terminally unstable system"

 

Take that, print it on a plaque and stick it as high as you can.

This is where I get frustrated - I keep telling people buying Gold isn't about 'making money' - but securing wealth.

 

They cannot understand a currency reset means existing currency becomes worthless - they are so stupid they think I'm buying gold to change it back into $'s, Euro's or sterling in the future!!!

 

If the currencies survive- then I'll keep my gold until next time (and there will be a next time)

If currencies fail - I'll be eating while they're burning their paper for heat.

 

I don't speculate - therefore exhanging back to FIAT is not in my plan.

 

This is what happens when people simply accept money as a measure of wealth - without understanding what wealth actually is!

Fri, 03/16/2012 - 11:16 | 2261803 rpboxster
rpboxster's picture

The only thing I MAY sell my gold for is silver.

Fri, 03/16/2012 - 11:44 | 2261827 Donnie Duvanie
Donnie Duvanie's picture

Gold, Gold, bright and shiney.

Ben and his friends can kiss my behiney.

Fri, 03/16/2012 - 11:21 | 2261828 Sizzurp
Sizzurp's picture

Gold is like a clock, and it's price reflects the time that is left for the dollar.  That time is disappearing, but the banksters are desperate to stop the clock, or at least slow it down.  Their power is derived from the ability to create paper money fom nothing, and it is a power so corruptable, so absolute, that no one should ever possess it.  Yet they have this power now, and anybody standing in their way is an enemy.  We see the stories of what they are willing to do to keep this power, and I expect these stories will get worse as the clock moves forward. 

Fri, 03/16/2012 - 12:39 | 2262183 Paul67
Paul67's picture

I have a simple rule, buy physical at ‘paper prices’ and only consider selling physical at ‘physical prices’.    Even then make sure you are exchanging one hard asset for another spending as little time in paper as possible during the transaction.

Fri, 03/16/2012 - 13:40 | 2262464 Ted Baker
Ted Baker's picture

IN TODAY'S WORLD GOLD IS NOT TO BE SOLD BUT TO BE HELD..THE REASON WHY GOLD HAS AND WILL CONTINUE RISING IS BECAUSE TO THE RICH IT GIVES THEM SO SORT OF WEALTH AND SATISFACTION STATUS WHICH CAN NOT BE REPLACED OR MANIPULATED BY OTHERS..HOWEVER TO THE POOR IT REPRESENTS THE UNKNOWN. WEALTHY PEOPLE ARE EQUAL TO 1% OF THE WORLD POPULATION AND THEY ARE THE ONES WHO RULE AND MOVE THE WORLD AROUND..THE REST ARE SURVIVERS OF FATE AND DESTINITY. FOR THOSE WHO OWN GOLD I RECOMMEND YOU HOLD IT IF YOU OWN AT LEAST MORE THAN 1.0 MM $ WORTH BUT IF YOU OWN LESS THAN THAT I SUGGEST YOU SELL IT AND LET THE RICH TO FEEL RICHER...VERY SIMPLE CONCEPT!!!

FOR THOSE WHO OWN 1MM$ WORTH OR MORE GOLD PRICES WILL REACH NEW HIGHS AROUND 16-20TH APRIL

Fri, 03/16/2012 - 14:23 | 2262681 SILVERGEDDON
SILVERGEDDON's picture

In which case, it doesn't matter how much gold you own, it will be worth exactly what it is worth - relative to paper that is worth - wait for it - whatever the fuck it is currently fluctuating at market value. Gold is solid. Paper burns, rots, and is essentially a pack of printed lies and promises. Much like my early girlfriends, but with no fringe benefits. Fiat is the debt that fucks you - not the other way around. 

Fri, 03/16/2012 - 15:18 | 2262950 Odin
Odin's picture

Considering gold has done nothing but rise in value over the past 6000 years of recorded history, I would say that one should never sell their gold unless they absolutely had to.

Fri, 03/16/2012 - 15:24 | 2262984 TacticalZen
TacticalZen's picture

I tend to view gold as the "what you bring with when you get out of Dodge" money equivalent and silver as the "bribe the officials to get out of Dodge" money equivalent.  When there is absolutely no risk of having to leave then its time to sell, or, when you are retired or can't work and your FRN's won't buy anything, time to use some PM to buy goods on the black market.

It was said (by Keynes) "in the long run we're all dead".  In the long run all fiat money collapses.  Funny how gold purchasing power has remained the same for nearly 100 years.  Some trends dont' change.

Sat, 03/17/2012 - 10:44 | 2264771 It was not me
It was not me's picture

The problem that I have with gold is that it should be trading ar 2500 already. But it is not. Something is not right here.

Sun, 03/18/2012 - 03:29 | 2266720 TacticalZen
TacticalZen's picture

Moves in gold price seem to be more driven by changes or rumored changes in margin requirements.  (See the multiple, back to back margin changes that drove silver from $50 to $28 last year).  Alternately, when something else in the world tanks, often gold tanks too - for a short while.  Perhaps that is the influence of funds raising cash to cover other losses, and they're cashing in some of their gold, which is likely well in the money if they bought last year or before.  They can say they are "taking profits" and all seems well, even though they would prefer to have a greater PM position.  But note gold starts to climb again.

What I'm looking for is backwardation and extreme premiums for physical.  In the past we have seen physical premiums on single coins top $150 - the physical "premium".  Add a few hundred dollars of backwardation per oz. and we have a true breakdown.  Maybe later in '12 or in '13, IMHO.

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