• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Guest Post: Gold Tells The Truth

Tyler Durden's picture




 

Submitted by John Aziz of Azizonomics

Gold Tells The Truth

One of gold’s greatest powers is that it is a unit of account which cannot be fudged nearly as easily as the fiat all-you-can-print buffet.

Feel like your wages are buying less in real terms?

They are:

Feel like your dollar is buying less, even though the financial press claims that the dollar is strong?

It is buying less — but so are the other fiat currencies:

Feel like the housing bubble hit you hard?

It hit you harder in gold-denominated terms:


Feel like you have less disposable income?

You do:

Feel like U.S. treasuries are really falling in value, even though the popular press keep telling investors that treasuries are priced at all-time highs?

John Maynard Keynes, Charlie Munger and Warren Buffett all said or implied that gold was a barbarous relic. But what’s the barbarous relic? The precious metal that shows prices without a veneer of manipulation, or the paper currency that smudges the true state of supply and demand through money printing, thus misleading markets and society? Charlie Munger says gold is not for civilised people, but in reality gold may be the most civilised currency of all — because it allows civilised people to purchase insurance against the risk of civilisation failing.

A central bank can claim to have demonetised gold. It can claim gold is a barbarous relic (even while keeping thousands of tonnes on its books), or just an “instrument to hedge tail risk” (although Jamie Dimon surely disagrees — J.P. Morgan prefers to “hedge tail risk” by making huge speculatory prop bets on credit derivatives).

But gold is still gold. It’s still that same shining yellow metal that investors have for thousands of years held up as a unit of account and store of value, and a medium of exchange.

Central bankers can’t just abolish history. On the other hand, history may very well abolish the central bankers and their fiat currencies.

0
Your rating: None
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 05/17/2012 - 13:23 | 2436197 Aziz
Aziz's picture

I am a barbarian!

Thu, 05/17/2012 - 13:25 | 2436202 t_kAyk
t_kAyk's picture

Truth is in the eyes of the beer-holder. 

Thu, 05/17/2012 - 13:33 | 2436246 idea_hamster
idea_hamster's picture

"But what’s the barbarous relic?

The precious metal that shows prices without a veneer of manipulation, or the paper currency that smudges the true state of supply and demand through money printing, thus misleading markets and society?"

Well, if you're going to ask and answer your own questions, then there isn't much room for a conversation, is there.

Thu, 05/17/2012 - 13:56 | 2436345 mcguire
mcguire's picture

the problem is that recently, PM prices have failed to tell the truth..

Thu, 05/17/2012 - 15:01 | 2436687 citta vritti
citta vritti's picture

for me, I'm no longer sure I know that any one day's pricing in PMs' various markets, has much truth to tell beyond that transactions occurred in the price ranges reported, and even that can be suspect.

maybe the truth is the PMs are pushed down (or up) on any given day in fiat terms by market participants (yes, that officially includes the Fed, the ECB, central banks all over, etc., their banking and financialized minions (or do I have that backwards?), so their rise tomorrow will seem more in line with how everything else is rising as the fiat easings resume, continue or whatever it is they do, as Greece is now telling Germany they must if the EZ is to continue, never mind the hundreds of billions already provided; just a little more please, or I pull the pin on this grenade.

maybe the truth is that shifts in other asset markets (gimme some of that FB, or quick, we need cash to meet margin calls on our such-and-such position) are prompting some holders to sell what they think they can most easily, prompting buyers to bid ever lower in hopes of a better price.

maybe the truth is that participants more nimble than I see opportunity to go short, with every intention to stay or go long for the longer term.

lastly, and I think least likely, maybe the truth is that the decade long bull run for PMs really is over and done with -- or do I mean the decade-long (sorry, century-long, or pick a number between 1971 and 1913 as subtrahend from today) loss in value of the U.S. dollar (sorry, FRN). As to that, that really doesn't sound like the truth, at least until there is political consensus to change our financial and fiscal systems of borrow and spend our way to prosperity and happiness, though temporarily, for a day, a week, a month, a quarter, a year (yikes!) maybe that view will gain traction for long enough, or repeatedly enough, to dissuade me and many others from buying some PMs if we could: it both costs a lot of FRNs and it decreases in FRN price after purchase! What a deal! Now, where's that FB prospectus? Central Banking god Volcker acknowledged failure to control the price of gold was a mistake the Fed made in the late 1970s - 1981; you can be sure that lesson has not been forgotten (then again they're bureaucrats so maybe they make mistakes once in a while).

God bless us, every one.

Thu, 05/17/2012 - 13:27 | 2436210 resurger
resurger's picture

+soap

Thu, 05/17/2012 - 13:28 | 2436216 Cognitive Dissonance
Cognitive Dissonance's picture

I am gloriously barbarous!

And I am at the gate.

Thu, 05/17/2012 - 14:06 | 2436368 HarryM
HarryM's picture

Gold is like strapping a lie detector to every coniving , thieving , lying , bastard, manipulating scumbag politician.

 

 

Thu, 05/17/2012 - 14:11 | 2436409 DaveyJones
DaveyJones's picture

there's not enough gold for that

Thu, 05/17/2012 - 21:58 | 2438158 StychoKiller
StychoKiller's picture

One gold brick can be used numerous time on Bankster's skulls.

Thu, 05/17/2012 - 14:23 | 2436488 Peter Pan
Peter Pan's picture

It's true that gold is not for civilzed people. Because if we were civilized we wouldn't be printing fiat crap, conducting wars for the benefit of corporations and leaving prople like Corzine off the hook. But because we ARE uncivilized we have this metal called gold which protects our wealth from our barbarous activities.

Thu, 05/17/2012 - 13:29 | 2436227 tmosley
tmosley's picture

What is best in life?

Thu, 05/17/2012 - 13:41 | 2436279 CuriousPasserby
CuriousPasserby's picture

To drink beer

holding your gun

looking at your pile of gold.

Thu, 05/17/2012 - 13:46 | 2436285 Dr. Richard Head
Dr. Richard Head's picture

Scratch that

Thu, 05/17/2012 - 13:55 | 2436340 resurger
resurger's picture

Fucking Crazy Bitch! seriously what the fuck was that, a strap on ?!

http://www.youtube.com/watch?v=5a0Sz0AGjqs&feature=g-all-lik

 

Thu, 05/17/2012 - 14:56 | 2436667 Dr. Richard Head
Dr. Richard Head's picture

Microphone was what it seemed to be.  She reached up to her mic by her chest while fiddling with the monitor strapped to her leg.  Should be a strap on considering financial media like fucking us plebes in the ass anyway.

Thu, 05/17/2012 - 14:04 | 2436375 HarryM
HarryM's picture

Speaking of guns, don't forget to stock up on bullets, they may end up being more valuable than gold.

Thu, 05/17/2012 - 13:47 | 2436309 robertocarlos
robertocarlos's picture

Something about driving forth your enemies and hearing the lamenting of their women.

Thu, 05/17/2012 - 14:07 | 2436391 Buckaroo Banzai
Buckaroo Banzai's picture

Mongol General: Hao! Dai ye! We won again! This is good, but what is best in life?
Mongol: The open steppe, fleet horse, falcons at your wrist, and the wind in your hair.
Mongol General: Wrong! Conan! What is best in life?
Conan: To crush your enemies, see them driven before you, and to hear the lamentation of their women.
Mongol General: That is good! That is good.

Thu, 05/17/2012 - 13:32 | 2436242 vast-dom
vast-dom's picture

labeling gold a barbaric relic is basically projecting : Charlie et. al. are the true barbarians that only give a fuck about money and control.

 

Munger get off the planet already!

Thu, 05/17/2012 - 16:51 | 2437268 tocointhephrase
tocointhephrase's picture

and when you get there I hope its a very cold place, laced in gold and silver thats so bright it burns your vision, I hope you see hitler you fuking war mungering barbarian arse washer! (Sorry I had to get it out guys & girls)

Thu, 05/17/2012 - 13:32 | 2436243 malikai
malikai's picture

<--- Barbar

<--- Mungerian

Thu, 05/17/2012 - 13:43 | 2436292 TheGardener
TheGardener's picture

I regretably missed that Munger discussion. Too busy out hunting, deer season here.

Had a tale to tell about sown in quarter ducats :

When rumor spread in the ghetto that there was a transport
out, hope got carried away with expectations them heading for Palestine. Bribes flowed to be on the list.

When word spread it would rather be a way out through the
chimneys, even more bribes (gold ?)
were rendered to : get off the list

Thu, 05/17/2012 - 13:53 | 2436328 TheGardener
TheGardener's picture

Even before that unfortunate boating accident, it has always been for the day after which might never ever arrive.

But now as we assembled here with all the treasure sunk, let's talk about the future. Or, the future of others being our past, our new order, not theirs.

Thu, 05/17/2012 - 17:20 | 2437400 eaglefalcon
eaglefalcon's picture

I finally figured out why people bring their gold on fishing trips. It turns that a bag of gold is a good anchor. Unfortunately, the rope of often snaps for no reason. Thus their hoards end up in the bottom of lakes

Thu, 05/17/2012 - 13:45 | 2436299 TonyCoitus
TonyCoitus's picture

Hello, my name is Tony Coitus, and I'm a barbarian.

Thu, 05/17/2012 - 14:12 | 2436404 William113
William113's picture

You may be a barbarian. But your not an illegally elected President. OOOOOPPPSS. Even in death Mr. Brietbart makes us smile.

http://www.breitbart.com/Big-Government/2012/05/17/The-Vetting-Barack-Ob...

 

 

Thu, 05/17/2012 - 13:25 | 2436204 EscapeKey
EscapeKey's picture

Gold holds governments accountable, and we can't have that now, can we.

 

Thu, 05/17/2012 - 13:57 | 2436347 Raymond K Hessel
Raymond K Hessel's picture

Gold holds governments accountable?!

 

Nothing holds governments accountable.  

 

You can book that.

Thu, 05/17/2012 - 14:15 | 2436418 DaveyJones
DaveyJones's picture

revolutions are a rather abrupt accounting method

with an emphasis on subtraction

Thu, 05/17/2012 - 20:41 | 2437976 WhiteNight123129
WhiteNight123129's picture

I beg to disagree, in the country where I was born, we had the hyper-inflation boosting drastically the work of Antoine Louis. Joseph-Ignace Guillotin proposed the machine as an execution system, hence the word guillotine. Now we can argue if that holding rulers accountable, however the paper experiment had to end by 1796-1797. Lots of government figures lost their heads in that period, the game was who will guillotine who and who be last with his head attached to his neck... :-) 

Thu, 05/17/2012 - 20:41 | 2437977 WhiteNight123129
WhiteNight123129's picture

I beg to disagree, in the country where I was born, we had the hyper-inflation boosting drastically the work of Antoine Louis. Joseph-Ignace Guillotin proposed the machine as an execution system, hence the word guillotine. Now we can argue if that holding rulers accountable, however the paper experiment had to end by 1796-1797. Lots of government figures lost their heads in that period, the game was who will guillotine who and who be last with his head attached to his neck... :-) 

Thu, 05/17/2012 - 14:52 | 2436650 Bizaro World
Bizaro World's picture

Silly serf, governments hold themselves accountable, just ask them, they'll reassure you. U.S. case in point: EPA suing DOD (Dept. of Defense) over past crimes against the environment, where, unfortunately, US citizens were exposed to high levels of known carcinogens. Gov't uses the US citizen tragedy to sue itself and grow in size....meanwhile, poor Aunt B died early and painfully from cancer and strapped Aunt B's family with debt of numerous medical care.

 

Or is that too cynical...

Thu, 05/17/2012 - 13:28 | 2436214 ebworthen
ebworthen's picture

GOLD - the immutable economic barometer that 99.9% of reality allergic economists ignore.

Thu, 05/17/2012 - 13:30 | 2436234 resurger
resurger's picture

because it's the fraud barometer eb

 

Thu, 05/17/2012 - 13:28 | 2436220 LawsofPhysics
LawsofPhysics's picture

With all fiats dying it would appear that there is a reserve currency and one world standard after all, gold.  Imagine that, same as it ever was.

Thu, 05/17/2012 - 13:31 | 2436238 resurger
resurger's picture

Amen

Thu, 05/17/2012 - 13:36 | 2436259 bdc63
bdc63's picture

agreed ... it certainly is taking the world an excruciatingly painful amount of time to figure that out though ...

Thu, 05/17/2012 - 16:56 | 2437285 tocointhephrase
tocointhephrase's picture

But precious Silver has not sung her last song. I hope its along the lines of Marley. Get up stand up, stand up for your rights, Jah!

Thu, 05/17/2012 - 13:29 | 2436223 WALLST8MY8BALL
WALLST8MY8BALL's picture

Paper Rots. Gold resists corrosion with some extreme exceptions - Munger Buffet and Keynes will soon become the relics

Thu, 05/17/2012 - 13:30 | 2436236 lordbyroniv
lordbyroniv's picture

MY ADVICE [channeling Munger]: "Suck it up everyone,...suck it up."

Thu, 05/17/2012 - 13:37 | 2436240 bdc63
bdc63's picture

You're wasting your time Tyler.  If people haven't figured this out by now, then they deserve what they have coming to them.

Thu, 05/17/2012 - 13:34 | 2436249 kralizec
kralizec's picture

Real or unreal?  I'll take real thank you very much!

Thu, 05/17/2012 - 13:34 | 2436250 Dr. No
Dr. No's picture

I have one more chart, "Dr. No's holdings over time".... it is ramping up.

Thu, 05/17/2012 - 13:35 | 2436255 BeetleBailey
BeetleBailey's picture

Long Gold.

Short (time left on earth) Munger and Buffet. Keynes is dead. Gold outlived him.

Thu, 05/17/2012 - 13:36 | 2436256 xtop23
xtop23's picture

Tell me something I don't already know about Gold, instead of belaboring the obvious.

Felt like a GD Kingworld News article. 

Buy miners they're undervalued and metals are going higher !! Well no shit, Sherlock.

edit; And FUCK Charlie Munger too

 

Thu, 05/17/2012 - 13:43 | 2436291 goforgin
goforgin's picture

When gold is @2,100 and NEM @100, the world is going to be a better place. LOL. BUY TRE!!!

Thu, 05/17/2012 - 13:37 | 2436263 A_S
A_S's picture

gold went up

Thu, 05/17/2012 - 13:38 | 2436268 semperfi
semperfi's picture

On a long enough timeline the survival rate for everyfiat drops to zero.

Thu, 05/17/2012 - 13:39 | 2436269 XtraBullish
XtraBullish's picture

Silver looks like it could pop back to $33 in a hurry...here's my favourite junior...

http://thefundamentalview.blogspot.ca/2012/05/quick-update-on-tinka-reso...

 

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