Gold: 1980 vs Today

Tyler Durden's picture

When gold was undergoing its latest (and certainly not greatest) near-parabolic move last year, there were those pundits consistently calling for comparisons to 1980, and the subsequent gold crash. Yet even a simplistic analysis indicates that while in the 1980s gold was a hedge to runaway inflation, in the current deflationary regime, it is a hedge to central planner stupidity that will result as a response to runaway deflation. In other words, it is a hedge to what happens when the trillions in central bank reserves (at last check approaching 30% of world GDP). There is much more, and we have explained the nuances extensively previously, but for those who are only now contemplating the topic of gold for the first time, the following brief summary from captures the salient points. Far more importantly, it also focuses on a topic that so far has not seen much media focus: the quiet and pervasive expansion in bilateral currency agreements which are nothing short of a precursor to dropping the dollar entirely once enough backup linkages are in place: a situation which will likely crescendo soon courtesy of upcoming developments in Iran, discussed here previously

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fonzannoon's picture

From the Telegraph.

Congratulations to Iceland.

Fitch has upgraded the country to investment grade BBB – with stable outlook, expecting government debt to peak at 100pc of GDP.The OECD's latest forecast said growth will be 2.4pc this year, after 2.9pc in 2011.Unemployment will fall from 7pc last year to 6.1pc this year and then 5.3pc in 2013.The current account deficit was 11.2pc in 2010. It will shrink to 3.4pc this year, and will be almost disappear next year.

Thomas's picture

Gold was competing against 8% real returns on treasuries. That ain't so this time. The opportunity costs of owing gold are zero. When real rates go positive, I pay attention. I should add that interest rates and gold both maxed out within months of each other in 1980; anybody who thinks gold tops the second treasuries start falling (rates rising) doesn't know their history.

Max Fischer's picture



I would strongly urge readers NOT to sign up for the "Future Money Trends" newsletter, which is what this video is selling.  This is a website run by the same pump-n-dump NIA guys that Peter Schiff has repeatedly warned his followers about.  While I regard ZeroHedge as one of my favorite places on the internet, i think that promoting known scam artists subtracts from the overall quality of this site, even if they offer the same flavor of doom/gloom that ZH readers are looking for.  I know that ZeroHedge is free, so I really don't have any right to complain, but I would hope that we would be warned of guys like this, rather than be led to them.   

After several lawsuits, the guys at NIA/FMT were forced to warn their subscribers with hilariously blunt warnings.  At the beginning of their disclaimer, it reads:  "...never make an investment decision off of anything we say."  *LOL*  And they conclude their disclaimer with the same thing: "never base any decision off their website or emails."  It also reads, "our activities involve actual conflicts of interest."  

This is probably my favorite part of the disclaimer: "we receive monetary or securities compensation in the very securities we are promoting and shortly after...... we sell the securities during our promotional activities or thereafter."   

*LOL* Basically, the lawsuits forced them to admit to being a pump-n-dump operation.  

These guys are bad news.  And, yes, that's a double entendre.

I hope this comment isn't taken the wrong way.  As I said, I thoroughly enjoy ZH.  I just don't like to see pump-n-dump scammers being promoted.   

Max Fischer, Civis Mundi

cnsteph's picture

Didn't Daniel leave NIA a while back?  I know there was some thing with Shiff calling out NIA.

GetZeeGold's picture




It's all over.....send all your golds to us.....vee will dispose of it in a safe and environmentally conscience manner.





GetZeeGold's picture

 double post.....grrr.


Newsletters are for pussies. Never spent the money. They have this little thing called the internet. Info for nothing and your chicks for free.



Pringsh Peensh's picture

Speaking of creepy dual intentioned web sites, what's the deal with "ABC Media, LLC" on the bottom of the ZeroHedge web pages (in the copyright footer). Ummmmmn, please don't tell us that the MSM got a hold of this last bastion of hope. This isn't the ABC I fear it is, it is????

AldousHuxley's picture

Office 3, bl.51,
Jerusalem Str., j.k."Mladost 1"
Phone: (+359 2) 9743974
Fax: (+359 2) 8753599


Administrative Contact:
Georgiev, Georgi
Office 3, bl. 51, Jerusalem Str., j.k. "Mladost 1"
Sofia, Sofia 1000


Father Krassimir Ivandjiiski, is a writer and editor at Bulgaria Confidential


best insider info abotu wall st. comes from ex-wall st. banned for insider trading for they were the small fish fried while the big fish like Robert Rubin gets away.

clymer's picture

I'm sure Dan, co. are all thrilled that an administrative office in Bulgaria is now a SPAM target

nodhannum's picture

Chicks for free is an oxymoron. The three most expensive things in the world are home cooking, home loving and free laundry!

Lost Wages's picture

What makes me LOL is the people who pay $150/year to read Bix Weir's private posts.

StychoKiller's picture

I can think of at least $16+Trillion reasons why I don't need a newsletter to tell me the future of the Dollar...

Bay of Pigs's picture

Hey Max, you're a fuckan asshole.

bbq on whitehouse lawn's picture

Its because he's from " Neuw Yourk " the people who invented the phrase " you fuckan assshole". :)

doggings's picture

I knew I recognised the voice on the video.

but wrt to the videos they basically steal Schiff's commentary and put it to video, so the videos are usually good, just the sign-up-to-our-offers are dodgy.

TheFourthStooge-ing's picture

Mr Lennon Hendrix noted:

Ther terrists

Yep, and them's the worst kind, terrists from Sackistan, on account of 'em having big brass balls.


GetZeeGold's picture



Actually those balls are gold......just like Janet Napolitano's.




Coke and Hookers's picture

A good find. When the Icelandic banks were resurrected, the government handed the new ones over to creditors of the old ones. Outstanding debt became shares in the new banks. In the meantime, vulture funds had bought all the old debt for pennies on the dollar (6 cents a dollar on average apparently) and now own the new Icelandic banks. The new banks basically own everything in Iceland because private and corporate equity was wiped out during the crash - so now Iceland belongs to 20 vulture funds or so. The identity of these funds is apparently a state secret but among them are the follwing according to some credible inside info:

York Capital
TGP Investments LLC
Anchorage Capital Partners
Cyrus Capital Partners
Davidson Kempner
Tiger Management
Verition Group LLC

The neoliberal Icelandic government is negotiating an EU entry and this makes it vulnerable for outside pressure from the international financial elite, particularly the IMF, which now dictates economic policy in Iceland. As usual, IMF has ordered the Icelandic government to 1) defend the new banks at all cost and 2) privatize everything in sight. The privatization plans haven't gone over well in Iceland and the government periodically tests the waters to see what it can get away with. Examples:

- The government is trying to seize fishing quotas owned by fishing companies (worth 1-5 billion dollars depending on how it's calculated)
- The government is testing the waters regarding the sale of the national power company (Landsvirkjun)
- The government has from time to time 'discussed' changing roads built for public funds into toll roads
- The government has gone to extreme lenghts to use taxpayer money to pay for the Icesave debt (which belongs to Landsbanki bank) - despite the fact that its posessions are sufficient to pay the debt (which means that vulture funds wouldn't get anything) :-(

Despite massive cuts in public spending and massive tax increases, the current public deficit it 10% of GNP - meaning that there is no actual growth or recovery. Every single extra penny earned in foreign currencies is used to pay foreign public debt which "magically" went up to 90% of GDP from nothing (it may be far more though because the public figures are very inconsistent - i.e. state secret like the identity of the vulture funds).

So, to summarize, the Icelandic people have been stripped of most assets and are now slaves to the international financial system. Their government works for said system and acts as a debt collector. Could be better but it could have been worse too. It could have been an EU member like Greece in which case it would be crushed under the German/Brussels boot, it would still have grossly overvalued currency and it could have taken on the Icesave debt. In that case Iceland would be in the same exact position as Greece - basically in ruins.

trav7777's picture

the larger powers would have used military options against them had they refused.

disabledvet's picture

In other news "Brazil was upgraded for the first time in 27 years last year after sticking it to the man in 1985." Like i said: "we have Hyman Minsky banks now." Good luck financing your country!

Coke and Hookers's picture

"Fitch has upgraded the country to investment grade BBB – with stable outlook, expecting government debt to peak at 100pc of GDP."


This means nothing. The rating agencies reward or punish Iceland based on how closely they follow IMF instructions. Examples:

1) "You are not accepting the Icesave debt (which would crush your country)? We better downgrade you."

2) "You are spending (wasting) your foreign currency reserves to pay to carry trade gamblers locked in because of capital controls. Good boys! Here's an upgrade!"

The second example is the reason for the Fitch upgrade btw.