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Egon von Greyerz: "Too Late To Jump On The Goldwagon? "

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From Egon von Greyerz of Gold Switzerland

Too Late To Jump On The Goldwagon?

The Stealth Market in Gold

Gold has gone up for 12 straight years in a stealth market. In the last ten years gold has had a compound annual growth of 20.5%.  This is an absolutely outstanding return but investors should not look at gold as an investment but as money. Gold reflects governments’ deceitful actions in totally destroying the value of paper money by printing unlimited amounts of it. With gold up 7 times since the bottom in 1999, is it too late to jump on the Goldwagon?

The answer to the above question is a categorical NO. Virtually no major investor group has participated in gold’s spectacular rise. In spite of a seven fold increase in the gold price, only circa 1% of world financial assets are invested in gold. Whenever I talk to major institutional investors, not only do they not own gold, but they don’t understand gold either. I was speaking at a conference for Family Offices recently where there were circa 250 family office managers present representing substantial funds. Not only did no one own gold, but they had no understanding of gold’s role as an investment class or the fact that measured in real money, i.e. in gold, their investments were declining precipitously. It must be unprecedented that an important asset class can go up for such a long period with so few investors participating. In my view this is the most bullish sign ever for gold. The mess the world is in will lead to unprecedented money printing in the US, EU, the UK and many more regions. And gold will continue to reflect the destruction of paper money. In addition, investors will increasingly mistrust paper gold and invest in physical gold only. Due to the very limited availability of physical gold, the increase in demand can only be satisfied at substantially higher prices.

Gold price projection

There are many ways to project how high the gold price can reach. Adjusting gold for real (not the published, manipulated) inflation the price would be circa $7,500. At the recent GATA conference, Adrian Douglas put forward a target of $53,000 an oz based on M3. He said that that out of every 33 oz of gold traded 32 oz are paper gold, which would lead to a price projection of $53,000 also, if all trading were backed by physical gold.
The following chart shows where gold would be if the US gold reserves were at the same percentage (52%) of us debt as in 1913 when the Fed was founded. Gold would then be $27,000 today and going up to $33,000 in 2015 with a projected increase in debt of $ 6.5 trillion (6.5T).

All of the above projections are subjective and therefore somewhat arbitrary. However, whatever method is used, gold is undervalued on any measure.  We are not just talking about a substantial undervaluation but more importantly that paper money is likely to be totally destroyed in the next few years with the gold price reflecting this obliteration. It is absolutely impossible to forecast how much money will be printed but the flood of paper could lead to many zeroes being added to the gold price just like in any hyperinflationary economy. For example, in 1923 in the Weimar Republic gold reached 100 trillion marks. Gold (and silver) is a critical asset to hold in order to preserve wealth against such a hyperinflationary destruction of paper money.

Physical versus Paper Gold

Circa 96% of all gold trading is paper. For anyone who demands delivery, there will be no gold to deliver. At the GATA conference in London Jim Rickards stated that currency wars will lead to the US government taking back (confiscating) whatever gold it has lent to bullion banks as well as gold it holds for other nations (most of Germany’s gold is said to be held in New York). He also mentioned a potential 90% windfall tax on gold. In a subsequent King World interview (click to listen), Eric King discussed with Rickards that the US government has keys to Via Mat’s US vaults.
It is of course not possible to predict what desperate governments will do, nor is it possible to protect yourself against every eventuality. What is very clear is that simple action can and will give investors a better chance of preserving wealth:
  • Only buy  physical allocated gold/silver bars or coins
  • Store the gold outside the country where you are resident.
  • Store the gold in a country with a stable political system (like Switzerland)
  • Store the gold outside the banking system in vaults with no US connection.
  • Make sure you have personal access to your gold and/or silver

Gold Making New Highs

Gold has recently made new highs against most currencies. In addition, after longer consolidations, the Dow is breaking down against gold (down 85% in 12 years), and gold is breaking up against both Oil and the Swiss Francs.

These break outs are potentially very significant and will most probably lead to a strong up-move in the gold price in the next few months.

Kicking the Can

The world is in an absolute mess, economically, financially, politically and morally. And let me be very clear; this has been evident for at least 10-15 years. The only thing that has not been clear is how long governments and central banks could deceive the people by kicking the can down the road in an endless creation of worthless pieces of paper that they call money. The lone voices of some market analysts, forecasting that the manipulation and mismanagement of the people’s wealth would end in disaster, have for long been silenced by the establishment in order to betray the gullible masses.

Intellectually dishonest and corrupt politicians and bankers have devised a system which has created perceived, debt-based wealth for the people whilst buying votes and generating massive wealth for the bankers.

But this Ponzi scheme is now coming to an end. When printed money can only be repaid with more printed money and when there are no buyers for the worthless debt instruments created by governments except for the government itself, then we have reached the end of the road with a “can too big to kick”.



Two years’ ago in the summer of 2009, I wrote an article called “The Dark Years Are Here” which outlined the likely consequences of the excesses of the last century. Let us just look back to understand the historical perspective.

Throughout history there have been regular periods of credit creation and money printing resulting in a collapsing currency. This happened for example as the Roman Empire was disintegrating starting circa mid 200 AD. So destruction of money is not a new phenomenon as Voltaire said already back in 1729 “Paper money eventually returns to its intrinsic value – ZERO”. But so far in history these events have normally been limited to one country or region. Never before in history has there been a financial system which has made it possible for the whole world to simultaneously create unlimited amounts of debt.

The graph below shows the effect of this money creation in the US but the same applies for many parts of the world. Between early 19th century and early 20th century there was virtually no inflation. A house cost the same in 1910 as in 1810. But then in 1913 the fraud in the financial system started. Private bankers in the US created a private central bank owned by the bankers and for the benefit of the bankers. This was when the Federal Reserve Bank was created with ultimate power to print money and thus destroy the value of paper money. This was the most perfect way for private bankers to control financial markets with the total blessing of the government. Thus started a worldwide credit manufacturing scheme that eventually will lead to a collapse of the financial system. In order to inflate this bubble even faster, Nixon abolished gold backing of the dollar exactly 40 years ago on August 15 1971. Nixon should not have been impeached for Watergate but instead for destroying the world financial system and world economy for many generations. Since the closing of the gold window in 1971, total US Debt (private and public) has gone from $10 trillion to almost $60 TRILLION today.


What has taken place in Washington in the last few weeks is absolutely disgraceful. Irresponsible politicians have been spending months bickering about the debt ceiling and disagreeing until the very end how to solve a crisis that will bring the US down. It is appalling that they, out of self-interest, take this issue to the wire when the country is in the process of going under. The whole procedure is only about political posturing and buying votes rather than caring about the good of the country. The politicians are rearranging the deckchairs on the Titanic whilst the country is sinking into the abyss.

The debt ceiling is totally irrelevant. US Federal debt has increased every year since 1961. Thus for 50 years the debt has gone up yearly and during that time the debt ceiling has been raised 79 times! The real issue is that the US is bankrupt and raising the debt ceiling only exacerbates the gravity of the country’s problems. What they should have agreed instead is a substantial reduction of the debt ceiling. But that doesn’t buy any votes.

Another debt rise agreed of $2.4 trillion (in two stages) will probably last a year at best. Proposed spending cuts of $2.1 trillion will almost certainly never happen but if they do they will be after 2013 and probably mainly take place at the end of a 10 year period starting from now. In the meantime the debt is likely to increase by tens of trillions of dollars.

Sadly it doesn’t matter what the reckless politicians do. This situation is unsalvageable.

The exponential growth in debt in the last 100 years has created a false prosperity by mortgaging the future for many generations for the benefit of current consumption. Wealth based on credit does not only steal from future generations but creates the wrong values based on debt, greed and materialism. Values such as honesty, integrity, courteousness, righteousness, respect and kindness have totally disappeared in large groups of the population. And the family is no longer the kernel of society. Recent social unrest and riots in the UK is an inevitable consequence of this social decadence. With youth unemployment at 25% in many countries and as high as 50% in the major cities, this problem will become unmanageable in the next few years. Failing economies and empty stomachs will exacerbate the situation dramatically.

Also, since government (and the bankers) control the system by creating money out of thin air, major resources in the economy are transferred from the productive and innovative private sector to the totally inefficient, unproductive and bureaucratic public sector. The public sector only consumes wealth and does not produce anything. By taking invaluable resources from the private sector, consuming most of what it takes and then giving the rest to the most unproductive part of society (the weak, sick, unemployed, work shy etc.), government perpetuates the worst part of the economy and destroys the ability of the nation to expand.

The point I am making is that the last 100 years are exceptional in history because this period is based on an unprecedented worldwide debt creation and money printing but not on the natural laws of supply and demand or saving and investment. Exceptional things never last since the laws of nature can only be broken for a limited period. And we have now come to the end of the world’s largest, government sponsored, Ponzi scheme ever. The consequences will be felt in all aspects of society and most likely last for a very long time, at least for several decades and maybe longer.


Add to the US debacle, the problems in Europe which are almost of the same severity. The European money markets are now starting to seize up as pressure mounts on the Italian, Spanish and French banking systems. It will be impossible for the milk cow of Europe to continue to support all the weak European countries. Initially the EU will accelerate the money printing because of political pride. But like all grandiose political unions, the EU will eventually break up.

Courtesy BOB – Daily Telegraph

The world is now staring into the abyss and we are most likely entering the Dark Years which I wrote about two years ago. The consequences will almost certainly be unlimited money printing and a hyperinflationary depression.


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Mon, 08/15/2011 - 22:29 | 1563789 traderjoe
traderjoe's picture

Gold Bitchez!

- sorry, couldn't resist...

Mon, 08/15/2011 - 22:29 | 1563791 Misean
Misean's picture

Tell 'em about the twinky Egon.

Mon, 08/15/2011 - 23:30 | 1563991's picture

And don't cross the streams. It would be bad.

Tue, 08/16/2011 - 10:01 | 1565050 MachoMan
MachoMan's picture

I collect spores, mold, and fungus

Mon, 08/15/2011 - 22:30 | 1563794 Bastiat
Bastiat's picture

Oh man, that Milk Cow!!!!


Mon, 08/15/2011 - 23:33 | 1563999 Sophist Economicus
Sophist Economicus's picture

Hubba Hubba!

Tue, 08/16/2011 - 08:35 | 1564778 Youri Carma
Mon, 08/15/2011 - 22:37 | 1563801 CapedCrusader
CapedCrusader's picture

It's never too late to jump on the Gold bandwagon.  Ebay and the Gold informercials tell me so.  Always buy gold and never sell good.  Total debt up 6x and gold up 50x.  Gold is not a bubble.  Just buy.  Don't sell.  Just think how rich you'll be.  lol.



Mon, 08/15/2011 - 22:59 | 1563878 spartan117
spartan117's picture

First, the gold infomercials you are referring to are selling gold-clad coins.  Not the same as REAL gold.  Second, cash 4 gold stores are popping up all over California.  Can't speak to the rest of the country, but if my neck of the woods is any indication, I'd say people are SELLING their gold, and not buying any.  Third, gold is not up 50x.  As a percentage to total US debt, both public and private, the total value of gold has fallen in the last 10 years.  Fourth, and perhaps the most important of all, you're a moron.

Mon, 08/15/2011 - 23:43 | 1564028 Thomas Jefferson
Thomas Jefferson's picture

All the commercial vacancies resulting from the crash of 2008 have been filled with "We Buy Gold" stores.  It is a nationwide phenomenon.

Tue, 08/16/2011 - 10:07 | 1565074 MachoMan
MachoMan's picture

I'm wondering how the hell people are still liquidating their gold at this juncture...  I would have thought they would have liquidated their entire stocks by now, but apparently the bubble (much of the stuff probably still has a credit card balance) was larger than I guessed.  If these people weren't pissed off yet, I'd think they'll be really pissed off if grandma's old ring could be traded for a house only a few years after selling it...  

Precious metals holdings necessarily require other liquid assets so as to not force yourself into a liquidation...  if you're buying an insurance policy, better make sure you can pay the premiums between now and your casualty.

Mon, 08/15/2011 - 23:55 | 1564069 Doña K
Doña K's picture

Those selling gold, need the money. Unemployed, underemployed, unfotunate, on and on. People who have something left from paying taxes and the debasement of the dollar, buy gold and silver to preserve the purchasing power of their savings.

Tue, 08/16/2011 - 16:53 | 1566723 Bring the Gold
Bring the Gold's picture

While your entire argument is very accurate, I felt that point four was really the clincher Spartan.

Mon, 08/15/2011 - 23:32 | 1563986 greased up deaf guy
greased up deaf guy's picture

my "is gold in a bubble" gauge is craigslist. i do a search for "gold coins" in the local area and the ads posted by prospective buyers versus prospective sellers is usually about ten to one. if the day comes when there are more ads posted by sellers as opposed to buyers, only then will i even start to consider gold to be in a bubble. my guess is that will be never.

Tue, 08/16/2011 - 06:28 | 1564563 Snidley Whipsnae
Snidley Whipsnae's picture

Gold/silver are headed East. When a weak hand in Cali or elsewhere sells 'scrap' gold, who is the end purchaser? Of course China/India are the big buyers but all of SE Asia, the Mid East and Europe must be considered for all of these soverigns have a long history of fiat failures and there populations do not trust paper money...for good reasons.

"Vietnam to buy 5 tons of gold to ease market crunch"

If you want to understand the demand for PMs, look East... Americans are almost totally clueless about PMs and will only realize what has happened after it has happened...

Mon, 08/15/2011 - 22:41 | 1563811 newstreet
newstreet's picture

Carthago delenda est.

Mon, 08/15/2011 - 22:45 | 1563824 choorles
choorles's picture

"The [way this] negative real interest rate story relates to gold is very interesting, because [people equate] the negative real interest rates with deflation and they equate deflation with an environment that is poor for gold. Historically, however,  negative real interest rates or ‘deflation’ are actually the best time to be buying gold … So gold is [increasing] in either deflation (which is really another word for hyperinflation), hyperinflation or inflation … So there is really a no lose situation. There’s no top on gold, because there is no amount of destruction that one can imagine won’t visit the fiat currencies around the world because the fiat currency grid is going to go the way of the dodo … There is no top on gold, $10,000/oz for gold, yeh of course, it could go a lot higher because fiat currencies are going to zero … It has run it’s course, it’s finished, it’s over, the 25 year paper bull market is finished”

Remember, it’s just a ride…

 The monetary revolution will not be televised. You need ¡SilverRevolución!

 Help us follow the paradigm shift towards a decentralized monetary system.

Mon, 08/15/2011 - 22:54 | 1563853 zorba THE GREEK
zorba THE GREEK's picture

I read this article earlier on 321 Gold and found it pretty well sums up most of the

extremely negative scenarios that have been bouncing around the Blogosphere for

the last couple of years. What frightens me the most is that, through a process of

eliminating unlikely outcomes due to unlikely actions by TPTB, it is basically the same

conclusion that I have come to believe. I continue to read on several sites hoping to

find another less dire, plausible outcome for society based on information that I was

unaware of or had overlooked. In the meantime, I have taken several precautionary

measures and will continue to prepare for the inescapable chaos and hardships which

lie ahead.

Mon, 08/15/2011 - 22:58 | 1563869 GFKjunior
GFKjunior's picture

So what's up with Switzerland? I mean they seem safe and smart with tons of gold in their banks and a well armed populace. When SHTF it seems like a good place to be, or am I missing something?

Mon, 08/15/2011 - 23:13 | 1563929 Thomas Jefferson
Thomas Jefferson's picture

Attention to detail.  US gov has keys to the ViaMat vaults.

Mon, 08/15/2011 - 23:33 | 1564001 Barmaher
Barmaher's picture

US Gov has keys to the US ViaMat vaults.  Not the ViaMat vaults in Europe.

Mon, 08/15/2011 - 23:38 | 1564015 Sophist Economicus
Sophist Economicus's picture

Yup. And they'll get a full marching band welcome at Zurich international and a ticker tape parade as they march to the vaults to carry the stuff back to the states

Tue, 08/16/2011 - 11:36 | 1565427 Pegasus Muse
Pegasus Muse's picture

Wrote GoldMoney this morning on this issue.  Just got their reply.  The bolds are mine.



The last week or two there has been a issue floating around on Precious Metal websites.  In a recent interview with Jim Rickards on KingWorldNews either Jim or Eric mentioned something about 'the US government has the keys to the ViaMat Bullion Vault'.  Now I'm reading the same thing in the comment section of von Greyerz's latest article, posted on ZeroHedge:

You guys need to detail what the truth is on this matter and the potential impact for GoldMoney customers.  If the US government (or any other government) has access to the vault in which a customer's bullion is stored they may need to consider other storage arrangements.

Perhaps Mr Turk can address this on video so people will have the correct answer 'from the horse's mouth' so to speak.  Otherwise rumors will just continue to spread. 


pegasus muse


Dear Mr. Pegasus Muse,

Thank you for your message.

Please note GoldMoney will not offer bullion storage in any country where the government requires the vault operator to give the government a key to the vault, unless we disclose to our customers this condition of storage. 

We can confirm that this condition of storage does not apply to the vaults operated by Via Mat in London, Zurich and Hong Kong. If there is a change, we will notify our customers of this change as soon as we are advised.

GoldMoney operates on the island of Jersey – one of the British Channel Islands – and follows Jersey law. While the future cannot be predicted, it is worth noting that gold has never been confiscated in Jersey.

How gold confiscation would affect customers will depend largely on the scope and specifications of the restriction. For example, if gold were to be confiscated in the US, there may not be any repercussions for US customers holding gold in vaults outside the US.

It is therefore difficult for GoldMoney to mitigate against all possible outcomes. However we do aim to provide our customers with as many options as possible to enable them to diversify their assets by class, storage location, and by offering the option of taking physical delivery.

GoldMoney provides its customers with the facility to purchase gold, silver, platinum and palladium and the opportunity to diversify and optimise their investment portfolio. Furthermore, you have the ability to choose between storage locations in London, Zurich and Hong Kong, which affords geographical diversification.

Furthermore, GoldMoney operates under the laws of Jersey, one of the British Channel Islands, and is subject to the exclusive jurisdiction of the Courts of Jersey.

GoldMoney never discloses any customer details to any third party, government or tax authority and would not do so unless obliged to by law. There is no history of gold confiscation in Jersey, the British Channel Islands or the UK.

Jersey is a politically and economically stable jurisdiction that has become a major financial centre because its legislation relies upon the principles of common law, which prioritises property rights.

For additional information please refer to our Privacy Policy:

We appreciate you taking the time to share your concerns. Please do not hesitate to contact us if you have any additional questions.

With kind regards.


Senior Relationship Manager – GoldMoney

Mon, 08/15/2011 - 23:12 | 1563922 Bárðarbunga
Bárðarbunga's picture

+1 Zorba

The Ponzi will break down. The big question is when. What has to happen to get it rolling?

On the author's use of "circa" I'm guessing he found himself a new word this week.

Tue, 08/16/2011 - 00:09 | 1564115 Doña K
Doña K's picture

IMHO, it will unravel very fast, as soon as one peripheral European country bails out of the EU and prints its own money, or the German people throw out Merkel.

Circa=Castillian expression for approx. 

His use in English is incorrect  as it is not followed by a date.


Tue, 08/16/2011 - 05:43 | 1564536 7bit
7bit's picture

Judging fom his name the native language of the author is German. The use of the word "circa" for "approximately" would be absolutely correct in *german*, its used very often in the german language. This is probably just one of these "false friend" mistakes/mistranslations that happen to everybody who is not 101% versed in a foreign language.


Tue, 08/16/2011 - 06:40 | 1564573 Snidley Whipsnae
Snidley Whipsnae's picture

The Ponzi is breaking down as we watch. Every week, and sometimes daily, we see headlines that would have been seen only in 'The Onion' four years ago.

Here is Jim Rickards on CNBC telling the bobble heads what is going to happen and, of course, the bobble heads are in denial. Rickards tells it like it is... Soverigns have to default on their bonds, big banks have to be broken up, bank stocks have to be defaulted on, bonds of big banks have to be defaulted on... Or we are all are in for 20 years of hard road.

The bobble heads say "we will go the muddle through route" with more printing, more fiat weakness, punish savers, punish Main St, etc. Rickards tells them that the WWW is going to stop that approach by soverigns, that everyone now has a megaphone and everyone is calling for an end to saving the banksters to the detriment of all others. Rickards tells them that gold will save the day and will be the new backing for new currencies...

The bobble heads are dumbfounded... lol...

Mon, 08/15/2011 - 23:17 | 1563941 AmazingLarry
AmazingLarry's picture

The whole article attempts to refute it's title: there's no goldwagon. 

Just for fun, I carried a $50 Eagle around with me one weekend and showed it to a number of people. No one had a clue what it was "worth." Only one person correctly identified it. 

But I agree, buy some gold plated clad, and try to flip it as real. You know it's the Amerikan way.



Mon, 08/15/2011 - 23:43 | 1564026 zorba THE GREEK
zorba THE GREEK's picture

Larry That would bring you bad karma, and the last thing you want to have when TSHTF is bad Karma.

Tue, 08/16/2011 - 05:52 | 1564543 Pay Day Today
Pay Day Today's picture


Tue, 08/16/2011 - 14:12 | 1566216 Troll Magnet
Troll Magnet's picture

that is NOT the american way, my friend. that's the CHINESE WAY!

Mon, 08/15/2011 - 23:20 | 1563955 vast-dom
vast-dom's picture

Fuck gold! Silver is the move!

Mon, 08/15/2011 - 23:50 | 1564041 Manthong
Manthong's picture

When I started really into this last year, mostly with Ag, $10,000 gold seemed absurd.

The more I learn about the fundamentals of the many dilemmas we are in, the more I am convinced that this number is reasonable and may very well be conservative.

I forget who said it, but one of the axioms I heard was “Gold will make you sleep well, but silver will make you rich”

Keep in mind that even with a 40:1 Ag:Au ratio $10,000 gold gets you $250.00 silver.

I find the arguments for the ratio to be lower, even to parity, credible.

That having been said, the circumstances leading to $10,000 gold require consideration of the Pb:PM ratio.


Tue, 08/16/2011 - 00:23 | 1564166 Doña K
Doña K's picture

The silver drawback is the price to weight ratio when you're on the move.

A 5' long 1-1/4"D PVC pipe full of 1oz. of gold maple leaves = $1 Million - Painted dark gray in a roll bar of your Jeep or in the kitchen plumbing under cabinets and a thousand other ways to keep it close when you have to.



Tue, 08/16/2011 - 00:48 | 1564228 Manthong
Manthong's picture

No argument on the weight and bulk of gold if you need to bug out with max value and lowest profile.

For less than absolute Armegeddon, the silver probably will provide the best bang for the buck as fiat fizzles.

Tue, 08/16/2011 - 05:29 | 1564527 PaperWillBurn
PaperWillBurn's picture

The silver drawback is that silver is best used as a commodity. Central banks don't stash silver in their vaults..they store gold. A consumable does not make a good referance point. The global economy needs a new reference point and CB's are loading their vaults with it as we type.

Tue, 08/16/2011 - 18:19 | 1566966 Manthong
Manthong's picture

"The global economy needs a new reference point and CB's are loading their vaults with it as we type."

Agreed, but..

Silver is speculation to be sure, but a good one.. it is slowly going away and that means it is becoming relatively more rare. The GS ratio is lilely to narrow and... silver alway was and always will be money.

Tue, 08/16/2011 - 07:05 | 1564589 Ketsa
Ketsa's picture

The problem with silver, at least here in Switzerland, is that you have to pay VAT on transactions.

Gold is not subject to VAT here. not sure about anywhere else.



Mon, 08/15/2011 - 23:25 | 1563974 Bansters-in-my-...
Bansters-in-my- feces's picture

"also since the Government creates money out of thin air"...???

Stay away from the dope dude,,,,I'ts too strong for you.

Mon, 08/15/2011 - 23:30 | 1563980 dark pools of soros
dark pools of soros's picture

riddle me this..  if everyone is suppose to buy gold, then who is selling?  If the thought is to tell everyone to buy gold then wouldn't those people tell the sellers to NOT sell?

Is it the thought that 'the common man is getting over on the central bankers' by buying their gold stash?  hrmmm no

Are we all buying it up hot from the miner's depths? Well that is NEW gold so won't that dillute gold once the manic buying stops?

Or is this like any other greater fool theory and we are all just loading up to sell the bubble right before it pops??

Or, lastly, we are buying all the central banker's gold so they can use all this fiat money while it can still buy them hookers and coke. Then, when it is time to make a new currency they will just trade that new 'more valuable' paper for our gold so we can finally try to have some fun with those now worn out strippers and our old ass bodies?


just food for thought on why you are here and what your plan is

Mon, 08/15/2011 - 23:38 | 1564012 Hulk
Hulk's picture

fiat money buys fiat gold...

Mon, 08/15/2011 - 23:51 | 1564047 greased up deaf guy
greased up deaf guy's picture

please allow me...

if everyone is suppose to buy gold, then who is selling?

dealers who make their living on volume and private owners who think it's had a good run and is overpriced.

If the thought is to tell everyone to buy gold then wouldn't those people tell the sellers to NOT sell?

see above. they're making a market. by the way, who are "those people"? the only person you should answer to for your financial decisions is you.

Are we all buying it up hot from the miner's depths? Well that is NEW gold so won't that dillute gold once the manic buying stops?

like oil, production will follow suit once demand diminishes. my question to you is what will be produced more in the foreseeable future? gold or fiat?

Or is this like any other greater fool theory and we are all just loading up to sell the bubble right before it pops??

maybe, but to each their own. personally, i won't be selling any gold until there is something else of tangible value that i can quickly purchase after converting that gold to FRNs or whatever the bartering medium is at that time.

Or, lastly, we are buying all the central banker's gold so they can use all this fiat money while it can still buy them hookers and coke. Then, when it is time to make a new currency they will just trade that new 'more valuable' paper for our gold so we can finally try to have some fun with those now worn out strippers and our old ass bodies?

the sooner, the better ;).

Tue, 08/16/2011 - 00:31 | 1564195 Doña K
Doña K's picture

There is a government obligation to sell coins. Of course they can stop if they want. Futures big game is played by those who need to liqidate for cash to be used as a medium of exchange like land or company aquisitions.

I for one, once I could buy a 65' ketch for 100-1oz gold coins, I become a motivated seller.

Mon, 08/15/2011 - 23:30 | 1563992 kito
kito's picture

german business groups now pushing eurobonds. just a matter of time before fiscal consolidation in europe becomes reality

Mon, 08/15/2011 - 23:33 | 1564000 Thomas Jefferson
Thomas Jefferson's picture

Martin Armstrong offered this as a solution to the Euro crisis.   Interesting to see it being implimented so quickly.  Not surprised though.  The solution is always further consolidation of wealth and power.  Welcome to the NWO.

Mon, 08/15/2011 - 23:35 | 1564007 sgorem
sgorem's picture

my gold stays with me. fuck switzerland. and i think the author was trying to say "circa jerk".

Mon, 08/15/2011 - 23:51 | 1564046 scratch_and_sniff
scratch_and_sniff's picture

Yeah, storing gold with the swiss, that worked out well for the jews.

Tue, 08/16/2011 - 03:33 | 1564460 doggings
doggings's picture

to be fair, they had bigger problems than their banks at the time

Tue, 08/16/2011 - 05:55 | 1564546 Pay Day Today
Pay Day Today's picture

Shit. That makes me worry now.

Tue, 08/16/2011 - 00:12 | 1564125 perchprism
perchprism's picture


I wish the author would not misuse the word "circa" which means "approximately in time" as approximately in general.  After the fifth time it got obnoxious.  And yes, I looked it up to make sure I hadn't just fallen off the turnip truck.

Mon, 08/15/2011 - 23:51 | 1564045 monopoly
monopoly's picture

I really enjoy when a "brilliant one" visits Zero Hedge. Gold in a bubble, my goodness, I have heard that so many times I cannot even count any more. And still, in my circle, only 1 other owns gold. They started buying physical before I did, that was upsetting. jk

I have no idea about 10, 12 or 20,000. But for now I think 1,900 might be in the cards before the year is out. Just trying to protect my family and especially my 23 year old daughter who will have to pay for all this crap. Will be adding more physical even if I do not get my 1,680 as hoped for.  This is so far from over, there is no need to even remotely discuss a top, which may not happen in this life time.

Mon, 08/15/2011 - 23:53 | 1564057 monopoly
monopoly's picture

Agree, our gold is not leaving us. But for sure, no way would we keep it in a bank or credit union. I trust no corporation or financial entity. Once Europe blows, watch the collateral damage take place. It will be beyond words.

Mon, 08/15/2011 - 23:55 | 1564067 PulauHantu29
PulauHantu29's picture

The gold price rise is only in its 3rd inning. Many super-wealthy people are just beginning to buy gold and when they buy, they add a few kilo bars at a time...not the tenth ounce stuff ...or a few shares of GLD.


I read somewhere the Perth Mint now ships way more gold to China then to the USA b/c "they are wealthier and value gold."

the gold price reflects (weaker buying power of paper) + (Fear) + (safe haven status).



Tue, 08/16/2011 - 00:01 | 1564087 Caveman93
Caveman93's picture

There has never before in history been a bad time to own, procure or buy Gold does what it always does, maintain a fixed value through time and circumstance. It's never been worth nothing. Please name the worst time to ever own gold in US or World history and I'll stop buying it. Two ounces a month till infinity and beyond for me. There is no "Goldwagon", there is only what is.

Tue, 08/16/2011 - 01:42 | 1564333 Tapeworm
Tapeworm's picture

How about when you buy in 1980 and have yet to get even in inflation adjusted figures as of now. Then you would have missed the stock runup since then too. My little pittance in glod is for sale to you when there is a reason to get into real productive uses of money that is not under the thumb of banksters and goomint.

Tue, 08/16/2011 - 00:08 | 1564110 Stuck on Zero
Stuck on Zero's picture

Each new administration rationalizes: "They went into debt 15% in the last administration.  We can go into debt 15% in this administration!" 

It has worked for a hundred years, why not for another hundred years?

Tue, 08/16/2011 - 00:33 | 1564200 DrPepperJawa
DrPepperJawa's picture

Am I missing something?  How am I supposed to keep my physical gold/silver overseas and have access to it?

I can't afford to fly and go get it.


Tue, 08/16/2011 - 00:54 | 1564239 I Got Worms
I Got Worms's picture

I've never understood this argument either. If my stash was in a vault in a country thousands of miles away, I don't think I would ever get a decent night of sleep without being heavily medicated.

Tue, 08/16/2011 - 02:46 | 1564420 Ratscam
Ratscam's picture

if you want to store abroad buy JBSICA for ag or JBGOCA for au, both trading on the Swiss SWX. they are both USD/CHF hedged and you can get physical delivery. was not able to find a better investment apart from ZKGLDHC for au, then again this is a government bank.
else you have to fly to CH and buy physical and put it in the vault or go with some other trusted Swiss private companies, which i wouldnt.

Tue, 08/16/2011 - 00:36 | 1564209 Temporalist
Temporalist's picture

Reality stranger than fiction.  I give you Paul Krugman:

"If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months," he said. "And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better--"


Tue, 08/16/2011 - 00:49 | 1564232 Tapeworm
Tapeworm's picture

 If any of you find that the prognostigations on price of gold in your currency are about to come true then why not buy yourselves the very high end foods that are silly cheap now when priced in gold. I listened to a pitch and did try the high end tin packed foods and they were quite good. They still are wildly expensive in paper currencies, but very cheap in gold or silver right now.

 Highest end freeze dried foods are tops 19 USD per day, or less than half of what they would have been just a couple of years ago when priced in gold. 3.15/ day when gold was 280.

 Check POG compared to real manufactured goods now and tell me that gold is cheap.

 I ordered a couple of binocular microscopes with PLAN objectives(5) and PLAN eyepieces(2 sets)  to give to a private high school that I attended in 1967. Each cost .26666 oz delivered, or less than fifteen dollars in gold when gold was about fifty in 1970. That is stupid cheap as are many real goods when priced in historic gold of the 1970's.

 You had better think about just how cheap manufactured goods are now when priced in gold.

Tue, 08/16/2011 - 00:50 | 1564233 fellatio is not...
fellatio is not fattening's picture

I read maybe 25-30,000 words a day and I have NEVER seen the word CIRCA used so many times in an article, WHO THE FUCK talks like that?

Tue, 08/16/2011 - 02:37 | 1564411 Temporalist
Temporalist's picture

LOL I was thinking the same...but English is not his first language I believe he's Swiss.

Tue, 08/16/2011 - 03:23 | 1564451 toto
toto's picture


Tue, 08/16/2011 - 01:07 | 1564270 Pay Day Today
Pay Day Today's picture

"The public sector only consumes wealth and does not produce anything."

I'm afraid this is BS.

I'd like to see what private sector corporates and private sector universities can do without young workers and graduates who can read and write. Without highway systems for road transport and logistics. Without a system for legally enforceable contracts, regulations for fair reliable commerce. And without air traffic control which means planes don't crash into each other.



Tue, 08/16/2011 - 01:31 | 1564313 coffee_sponge
coffee_sponge's picture

A certain amount of overhead is necessary to facilitate wealth creation. However, it is not wealth; indeed it consumes wealth. Too much overhead will destroy any business, or any economy. The less you can get away with, the better. "That government governs best which governs least." - Jefferson

Tue, 08/16/2011 - 01:41 | 1564329 Pay Day Today
Pay Day Today's picture

Sure you should get away with the least overhead that you can but not any less than that or things start to fall apart. And beyond that, it is (was?) also gubbermint's job to help create a livable society with freedom, opportunity and safety available to all, and not primarily aid in the "creation of wealth" for the few already wealthy.

One other comment is that there is a massive and destructive misallocation and stagnation of capital in the US. Hundreds of billions worth of no use to any of the tens of millions who are unemployed or are on food stamps. Both the private sector and the public sector hold responsibility for this state of affairs.

Tue, 08/16/2011 - 02:13 | 1564383 coffee_sponge
coffee_sponge's picture

...and not primarily aid in the "creation of wealth" for ANY.


Government does not "create" wealth; it can only redistribute it. When it attempts to do so, it does an egregiously inefficient job of it. Government is destructive of wealth. If we want to help the poor, as well as ourselves, we need to restrict government as much as reasonably possible.


The misallocaton of capital you refer to is caused by government regulatory, taxation, and monetary policies. The stagnation of capital is caused by the uncertainly our out of control government has engendered.


Finally, those who hold capital are not responsible to use their capital as though they are a charity. Their responsibility is to protect that capital and invest it in the most profitible ways  possible, because that's how wealth is truly created, and ultimately, that is how the poor are really helped.

Tue, 08/16/2011 - 09:34 | 1564962 Goldust
Goldust's picture

The govt is not required to "help create a livable society..." as you describe.  You and many others have ceded that responsibility to govt.  AND the wisdom of that decision is in serious question.

As to your assertion about misallocation of capital... the primary cause of most examples here, you will find, is the hand of government (see Barry OBoingo's green jobs, or years of Republocrat corn ethanol subsidies).

Tue, 08/16/2011 - 09:58 | 1565035 rwe2late
rwe2late's picture

PayDay, you are correct.

The claims that government “produces” nothing are specious.

Such claims mostly rely on vague terminology like “production” or “wealth creation”.


(i) It makes no sense to believe that a "private" sector teacher is good and productive, whilst a "public" sector teacher doing the same thing “produces” nothing.

(ii) It makes no sense to believe that private sector spending on the physical infrastructure (roads, bridges, energy grid, etc.) is productive and can benefit the economy, but public spending to fix or upgrade the infrastructure does not “create wealth“.

Actually, of course, what is implicitly meant by private sector ‘productivity or wealth creation’ is profit-making.

Consider the idea of ‘profit’.

Profit is a man-made concept. It is a limited concept. Profit does not and cannot measure the worth of every and all things and be the ultimate guide to human conduct. The concept nonetheless underpins the whole notion that the pursuit of micro self interests will result in the best of all possible worlds. And it is that mistaken notion which is often used to justify the worst of all outcomes, and pronounce that the solution to our miseries is to increase business profits.

Never mind the profits made by ruining forests, rivers, and oceans. Never mind the profits from destroying the fisheries and polluting the air. Never mind financial parasitism. Never mind sweatshops, child labor, and poisoned foods. Micro profit, it seems, does not measure the environmental losses to society, nor the debilitation and destruction of human beings. But yet, it is to be the ultimate arbiter of human conduct. Or so we are told.

A system based on maximizing work, maximizing production, maximizing consumption becomes outdated in a finite world. It values neither leisure nor the quality of life, human or other. The corporation is the apex profit-driven organization of a misnamed and impossible “free market”. It is elitist, with a narrow single-minded goal, and disdainful of all that stands in its way.

Government, like corporations, has evolved in the pursuit of profit. Government has become to be like corporations, autocratic, secretive, and obsessively entangled in the furthering of corporate profit-making, to the detriment of all else.

Tue, 08/16/2011 - 11:14 | 1565323 MachoMan
MachoMan's picture

I think we're getting carried away here...  the simple fact is that all government revenues have already been derived through private production...  the proposed counter-argument, that "government fostered the development of the private ability to produce, therefore the government is productive," is total bullshit.  If taken to its logical extreme, by mere virtue of existence of the state, regardless of the degree to which it has become economically commingled with the private sector, the state fosters production.  I do not buy it.

These arguments in favor of "government production" are best left for academic vacuums.  In the real world, government is, on net, unproductive.  Ultimately, this results in a collapse of the government when the productive sector (read: private) can no longer carry the world on its shoulders.  To the extent the government seeks to substitute itself for the private sector in the hopes of prolonging the affair, it necessarily concludes the same (given incentives to produce, among other things).

I fully concede the academic possibility that the government may act or operate like a private business and actually produce something.  However, in the real world, government is baked with two parts theft and a sprinkle of production, at best.  No free lunches.

[remember, bullying oil producing nations into using your currency so that you can continue expanding your money supply is not productive, despite resulting in prolonged ability to consume] 

Tue, 08/16/2011 - 05:52 | 1564544 DaBernank
DaBernank's picture

I suppose the only schools that count in your world are publicly funded at a cost per-pupil higher than most private institutions. Air traffic control could be provided by airports that charge a fee to airline tickets, there is absolutely no reason for these to be govt employees. The Government sticking to enforcing contracts, that's what we'd like to see and most of us would gladly fund an effective regulatory mechanism, I'm certain.

The line you quote and dispute is spot on, though, the public sector is funded entirely by the private sector.

Tue, 08/16/2011 - 10:47 | 1565198 oddjob
oddjob's picture

I'd like to see what private sector corporates and private sector universities can do without young workers and graduates.

Your latent endorsement of Lawyers and mindless graduates with useless degrees is rather desperate.

Tue, 08/16/2011 - 01:20 | 1564297 Tapeworm
Tapeworm's picture

I once had one of the TD's do a thing on how cheap it was for storage food in the case that TSHTF. They useyed my links on what COSTCO gets for that.

 The supposed one year of food for four at COSTCO now comes to well under two ounces of gold. (3500/1760=1.99 oz) Figure that out... A year of tinned food for four (actually more like nine or ten months) is 70 dollars in post 1933 dollars. In pre FDR devaluation terms it would be 41.50.

 Obviously that is so far out that there is no comparison at all between POG based food prices of then and now.

 If one has any worries about food availability when the supply chain breaks from interbank distrust, you would be better off in buying a "year's" worth of food for four than buying two ounces of gold coin.  I'll toss in the link so that you can actually see what is in the package, and make your own guesses if tou think it is worth the hassle.

 You had better have someone that is competent in making this work. I could never do this on my own as I have no skills. Therefore if I buy this type of product I will buy the high end freeze dried that only takes some water and heat.

 To each their own. That is not to say that with enough of this stuff and a good cook that can feed your own local mercenary gang if things get that bad. Of course that assumes civilized working toward a common goal, but that is an unwarranted assumption.


Tue, 08/16/2011 - 01:29 | 1564310 digalert
digalert's picture

Circa 2013 I'll be counting my gold & silver, the damage is done.

Tue, 08/16/2011 - 01:30 | 1564312 Tapeworm
Tapeworm's picture

 The avionics on many small airplanes remove most of the work of the ATC guys. In many other areas that we are paying for bloated goomint services there are private tech services and products that make the regulatory bureaus redundant.

 The ones that really count were gutted so that the frauds could get full traction.

 If the goomint lost all oversight of the medical rackets it would be the best thing for the US economy of any move. The rackets would default on their unsustainable debt and then we could get back to some sort of rational pay for result.

Tue, 08/16/2011 - 01:37 | 1564325 coffee_sponge
coffee_sponge's picture

If our currency was being inflated with banknotes, then I would concur on the inevitability of hyperinflation. However, we have been inflating through credit in our fractional reserve system house of cards. Almost every credit inflation ends in deflation through defaults. In my humble opinion, we are within a couple of hundred dollars of a top in gold. Other commodities,including silver, crude oil, copper, etc. have already topped. And, for the first time since 1929-1933, M3 has made a significant decline.

Tue, 08/16/2011 - 02:49 | 1564421 Temporalist
Temporalist's picture

In case you were unaware, Greenspan just said the U.S. will never default as it can print its own currency. 


And the U.S. defaulted on the FRN when Nixon suspended the gold convertibility...which is only transitory.


Silver will break $42 before the end of this week.

Tue, 08/16/2011 - 04:01 | 1564480 coffee_sponge
coffee_sponge's picture

I am aware of Greenspan's remarks. I'm also aware that in spite of 2 rounds of quantitative easing and near 0% interest rates, M3 is still well over 6% below its July 2009 peak. I'm also aware that while gold has been blasting to new highs, crude oil, silver, platinum, palladium, and other commodities peaked in early May, while copper peaked in early February.In addition, equities are tumbling, and real estate is still melting.


I'm not ruling out hyperinflation, I just don't see the evidence. With something like $200 Trillion (depending upon whose estimates you go with) in book entry debt dollars worldwide in that inverted fractional reserve pyramid, a massive partial implosion could occur in such a way the central banksters might be caught like the proverbial deer in the headlights. (If I see the markets I mentioned above break to new highs, and M3 makes a comeback, I'll change my opinion.)


I'm inclined to think we see deflation first. Then, after we've already gone through the pain, the Fed manages to start the credit supply inflating once again, not unlike what we saw in the early 1930's.


In case you are long silver futures, since I see you are rather certain it will go to $42 this week, I sincerely hope that works out for you.

Tue, 08/16/2011 - 04:33 | 1564499 Pete15
Pete15's picture

First Gold is money and when there is cheap money being floated all over the world the price of Gold will increase. Second Im sure there is a lot of fraud and manipulation in the silver and oil market I have no doubt by this time next year they will be higher. Finally we may get a period of deflation but Ben will add even more $ into the system which will make hard assets explode even more. 

Tue, 08/16/2011 - 10:04 | 1565032 gwar5
gwar5's picture

Time to take the red pill....

We're having deflation, but the Fed medicine has been QE and inflation to keep the economy running in place to give the illusion it is not happening.

When Argentina defaulted, their products deflated for Americans and people in other countries, but not for Argentinians holding Argentina currency. Now the shoe is on our foot. American products are deflated and cheap. But the deflation is only unmasked for those holding sound currencies like the Swiss Franc and gold.

That's just one way funny money is used to fool people. That's why bankers like to steal from you using fiat currency, people don't seem to notice when their pockets are being picked.

Priced in gold the Dow is back at 2009 lows. The GDP adjusted for inflation is negative. Real unemployment is closer to 20%. Real inflation is 8.5%, not 2%, yet wages aren't going up, housing is not going up, and equities are not going up as much as you really think, because they're priced in USD.

We are experiencing what the Great Depression might have been like if FDR had done QE instead of tightening and a 40% overnight devalution of the dollar by confiscating gold. We are incrementally printing our way to a 50% devaluation of the USD alongside our 20%+ unemployment.

The last two years the debasement of the USD has been about 16% --- that's what the Chinese are hollering about.  Go to Shadowfacts to get the real numbers on CPI, unemployment.





Tue, 08/16/2011 - 22:36 | 1567685 Gunther
Gunther's picture

Please check your facts, per M3 is growing at about 7% right now. Shadowstats shows a lower value but still a positive one.

If the bad credit gets defaulted upon the financial system will break down.

Tue, 08/16/2011 - 04:29 | 1564496 desgust
desgust's picture

Therre are so many idiots at zerohedge....


Tue, 08/16/2011 - 04:31 | 1564498 zero_sequence
zero_sequence's picture

Is it appropriate to ask for personal financial advice here?

I'm 23, graduate student in a technical field.

Content behind text host for paranoia.

Tue, 08/16/2011 - 07:34 | 1564652 Downtoolong
Downtoolong's picture

I guess it's no wonder that gold dealers are going to the trouble of sponsoring buying parties in people’s homes all over my community. They typically pay people 55-65% of the gold value in old rings, watches, jewelry, etc. I guess it’s no wonder that these dealers get really pissed off at me when I show up at one of their parties and outbid them on the buy side.

Tue, 08/16/2011 - 07:59 | 1564704 YHC-FTSE
YHC-FTSE's picture

I agree with the crux of the article, but there is volatility coming to gold prices. When even the squids, GS and JPM start extolling the virtues of $2000-$2500/oz of gold, then it's time to take notice. If it does drop a couple of hundred dollars overnight, all you can do at those potential volatile drops is stand firm with your conviction (Maybe buy more if it drops significantly enough), and watch it soar again. 


There is a flip side to buying PMs to secure your wealth: Gold as a valuable asset only works if there is a civilisation to demand it. If it all goes to hell, then skills in agriculture, carpentry, hunting, animal husbandry, and general maintenance of machinery will be more valuable than any amount of shiny metal. It may sound extreme, and in the light of day it even seems to me to be ridiculous to prepare for a complete breakdown of society, but for the first time since I was a teen, I've been watching The New Yankee Workshop to learn to make furniture! I also have a little greenhouse where I'm growing hydroponics vegetables.  Hell, the chances of a complete collapse is very remote, but I am having a lot of fun learning new skills and I recommend these hobbies to anyone.

Tue, 08/16/2011 - 08:31 | 1564767 Downtoolong
Downtoolong's picture

What is very clear is that simple action can and will give investors a better chance of preserving wealth:

Only buy physical allocated gold/silver bars or coins
Store the gold outside the country where you are resident.
Store the gold in a country with a stable political system (like Switzerland)
Store the gold outside the banking system in vaults with no US connection.
Make sure you have personal access to your gold and/or silver

All of these recommendations hint at the one thing about gold which makes it such a powerful vehicle for storing wealth. It’s not that gold has permanence and little strategic use for anything else, as even gold bugs will sometimes try to argue. There are better vehicles with just these characteristics for representing and storing the world’s wealth, such as the mass of the Sun. What makes gold so attractive is that it’s a universal bearer instrument with relative ease of actual possession. The individual owner can keep, hold, move, and conceal it from others. Tyrants and dictators can abscond with gold in a hurry once deposed. Gold can be passed from generation to generation without anyone but the donor and recipient knowing. Gold can be hidden from spouses (or ex-spouses), business partners, creditors, even the tax man if you go to enough trouble.  Perhaps most importantly, gold can be held outside of the prevailing banking system. Ironically, as the world’s government s and major banks seem to be arguing for and striving towards a single world currency, they shun the one example of it that has existed for thousands of years; gold, and for no other reason than they don’t control it (yet).

Tue, 08/16/2011 - 09:05 | 1564862 gwar5
gwar5's picture

I agree with Rickards assessment that capital controls on gold will include some form of confiscatory tax, not outright confiscation. This will effectively criminalize it's use as a tax evasion vehicle if they were to do so. Of course even a 90% tax is a 90% confiscation of gold.

I'm conviced the TSA is really just there, placed in advance, to prevent people from eventually moving wealth out of the country big time when the SHTF. Capital controls at foreign banks are already in place, and on high alert, to specifically target Americans with foreign accounts. Suddenly even retirees on SS, who have existing bank accounts, are having their accounts frozen until they bring in copies of their last 3 years US tax returns -- kid you not.

Tue, 08/16/2011 - 10:12 | 1565084 Monedas
Monedas's picture

Nice "Nude on a couch !" of Berkel ! Monedas 2011 Comedy Jihad World Tour

Tue, 08/16/2011 - 12:14 | 1565620 JLee2027
JLee2027's picture

Everybody hates Nixon, but Johnson removing silver from coins in 1964 was far more serious. 

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