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Sprott's John Embry:“The Current Financial System Will Be Totally Destroyed“

Tyler Durden's picture


Sprott strategist John Embry has never been a fan of the existing financial system. Today, he makes that once again quite clear in this interview with Egon von Grayerz' Matterhorn Asset Management in which he says: "I think that the current financial system, as we know it, will be totally destroyed, probably sooner rather than later. The next system will require gold backing to have any legitimacy. This has happened many times in history." Needless to say, he proceeds to explain why a monetary system based on gold, one in which one, gasp, lives according to one's means, is better. Logically, he also explains why the status quo, whose insolvent welfare world has nearly a third of a quadrillion in the form of unfunded future liabilities, will never let this happen. Much more inside.

From Matterhorn Asset Management

“The Current Financial System Will Be Totally Destroyed“

John Embry, the chief investment strategist at Sprott Asset Management, talks in this exclusive interview about the motives and the means of certain interests to prevent a free gold market; tells the reason why the gold price will remain high; shows the opportunities in silver; and explains: “Gold is about the furthest thing from a bubble that I can think of.“
By Lars Schall
An industry expert in precious metals, his experience as a portfolio management specialist spans more than 45 years: John Embry, the chief investment strategist at Sprott Asset Management. He began his investment career as a Stock Selection Analyst and Portfolio Manager at Great West Life. Mr. Embry then became a Vice President of Pension Investments for the entire firm. After 23 years with the firm, he became a Partner at United Bond and Share, the investment counseling firm acquired by Royal Bank in 1987. Afterwards he was named Vice-President, Equities and Portfolio Manager at RBC Global Investment Management, a $33 billion organization where he oversaw $5 billion in assets, including the Royal Canadian Equity Fund and the Royal Precious Metals Fund. In March 2003 Mr. Embry joined  Sprott Asset Management with focus on the Sprott Gold and Precious Minerals Fund and the Sprott Strategic Offshore Gold Fund Ltd. He plays an instrumental role in the corporate and investment policy of the firm.

Mr. Embry, the perhaps best report I have ever read on the gold market was “Not Free, Not Fair: The Long-Term Manipulation of the Gold Price,” written by Andrew Hepburn and you. (1) I would like to talk with you at the beginning about the findings of that report. First of all, why do you think it is relevant whether the gold price is free or not?

John Embry: Thank you for the very generous compliment. It is essential that the gold market be free. It functions as the so called “canary in the coal mine” and its price should be allowed to reflect excesses in a pure fiat monetary system. The continued suppression of the gold price was a key factor in the many financial bubbles which have essentially wrecked the monetary system as we know it.

What has the evidence been that the gold market isn’t a free market?

John Embry: Our report which was written 7 ½ years ago revealed all sorts of chicanery in the gold market and we only used evidence which could be corroborated. Considerable additional evidence has piled up subsequently but two smoking guns are the repetitive counter intuitive price action and evidence of widespread clandestine leasing of western central bank gold.

Who are the ones that don’t like a free gold market and which objectives do they have in mind by preventing a free gold market?

John Embry: The western governments, their central banks and the allied bullion banks are the culprits. They view gold as a mortal enemy of the fiat currency system. Gold has been real money for centuries and every paper money system in history has ultimately collapsed. This drives them to continuously denigrate and manipulate gold.

Through which tools is the gold price “managed“?

John Embry: The worst damage occurs in the so-called paper gold market where derivatives, naked shorting, vicious margin hikes, etc. are employed to fleece the long side who don’t have as deep pockets. In addition, the western central banks have supplied the physical gold necessary to effect the plan through their leasing.

Recently, I was told by a former chairman of the Federal Reserve, Paul A. Volcker, that to his best knowledge “the U.S. has not intervened in the gold market for more than 40 years.“ (2) Do you think Mr. Volcker has the truth on his side?

John Embry: Mr. Volcker admitted that the U.S. had made a mistake by not intervening at one point in the gold market some 40 years, so to think that nothing has happened subsequently is extremely naïve. Technically he might be correct in the sense that swaps could have been employed and the intervention using U.S. gold could have been conducted by another party. Recently retired Fed Governor Kevin Warsh acknowledged U.S. gold swaps in correspondence with GATA just last year. (3)

Furthermore, Mr. Volcker seemed to suggest that central banks have some interest in the price of gold because of its effect on the currency markets. (4) What kind of relationship does exist between gold and the currency markets which are much bigger than the gold market?

John Embry: Very simple. Gold is a currency. Arguably it is the ultimate currency and the central bankers are acutely aware of this fact. Gold’s role as currency is once again coming to the  fore and the central bankers hate that fact.

Are gold swap arrangements between central banks a) important for the “management“ of the gold price, and b) do they represent a means of intervention in the gold market?

John Embry: They are most certainly important because it allows central bankers to technically tell the truth because it is always another central bank that is utilizing the swapped gold to intervene in the market.  It is a subterfuge.

Do you think the Western central banks have as much gold as they claim they have?

John Embry: I strongly suspect that they have materially less than they try to represent. The IMF permits a one line entry on their balance sheets which aggregates physical gold with gold receivables. That’s ridiculous and it is done to deceive analysts. For example, if the Americans had the 8,161 tonnes that they say they have, they would be delighted to submit to an outside audit and shut their detractors up. However, they stonewall all requests.

With its “QE to infinity“ program: would you say the Fed has exposed itself in a way as a hardcore goldbug entity?

John Embry: I believe they are fully aware of the extent to which they are debasing their money. We, the public, have to be the hardcore gold bugs to protect our wealth from their depredations.

It seems as if more and more gold is moving towards certain central banks and not away from them.  Is this a solid assurance that the gold price will remain high?

John Embry: I believe so. The eastern central banks (China, Russia, et al) have accumulated a lot of dollars and realize they are at risk. Ergo, they buy gold. At the same time, I think the western central banks have run their inventories down to levels beyond which they won’t go. Thus, I think central banks collective gold buying will have a salutary impact on the price going forward.

In the event of another market meltdown, which seems rather likely, do you expect a sell-off in gold?

John Embry: There could be a minor sell-off just because there are so many algorhythyms influencing the market.  It would be short lived because big money in the world now knows they need gold for protection.

Gold is in a bull market for ten years now. So an increasing number of people say it is in a bubble. Why would you say, in Gershwin’s words, “it ain’t necessarily so“?

John Embry: Gold’s price is directly related to the constant debasement of the currencies in which it is denominated. The creation of new paper money is dwarfing the amount of gold available. Gold is about the furthest thing from a bubble that I can think of.

What do you think in particular about Warren Buffett’s constant “Gold is in a bubble, I go for stocks“ talk? Does he serve here as an influential opinion maker in a specific role because he gets a lot of public attention? In other words: is he a fool or does he only act like a fool? (5)

John Embry: Warren Buffet sold out a long time ago. It’s too bad because he was a great stock picker once. Now he owns insurance companies, Wells Fargo and was a buyer of Goldman Sachs and G.E. in the global financial crisis. He is a member of the American establishment and has a lot to lose. He should have listened to his father Howard Buffett who was a U.S. Congressman and a true “hard money” advocate.

In your view, gold will gain in importance as a monetary asset in the years ahead, likely regaining an official role in the world’s financial system. Why do you think so?

John Embry: I think that the current financial system, as we know it, will be totally destroyed, probably sooner rather than later. The next system will require gold backing to have any legitimacy. This has happened many times in history.

The mining stocks both in gold and silver seem to me extremely undervalued. Do you agree?

John Embry: They are indeed, and they are being heavily manipulated by the same entities active in suppressing the gold price. In addition, many nefarious hedge funds now are active on the short side. The U.S. financial scene has become a  total cesspool.

Are there key levels in the XAU and HUI that one should pay attention to as starting points of a mining stock rally?

John Embry: I tend to pay more attention to the HUI because it is the pure gold index.  When the HUI takes out the 555 level with gusto, I think we are away to the races. However, this level is being aggressively defended by the bad guys. A higher gold price (through $2000 per oz.) will rectify this issue.

Why are you at Sprott Asset MGMT so very bullish related to silver?

John Embry: We think the supply-demand equation is ultimately better than even that of gold. New industrial and medical uses are exploding and because silver is “poor man’s gold,” investment demand for silver will go crazy when gold gets priced out of the average citizen’s capacity to buy. Given the small size of the market and very limited inventory, the price should go ballistic.

For your physical silver ETF you want to re-acquire physical silver in a big way. Do you think you could be pioneers (for other fund managers) in direct engagement with mines through direct and forward transactions, instead of going to the Comex? You certainly don’t want to “whoop” the silver price by your own buying, correct?

John Embry: I think that is a potential avenue particularly when the supply-demand equation gets progressively tighter in the future.

Is the silver market also subject of surreptitious interventions?

John Embry: Without question. In many ways it may be worse because it is a smaller market and J.P. Morgan Chase’s activities have been egregious. The fact that the CFTC has been investigating this for nearly four years without resolution is one of the great jokes of all time.

What is your information: to which extent the US silver ETFs are short and how many stocks of those have been used for covering future short contracts?

John Embry: I believe that they are but I can’t provide any information on the extent. When the very same organizations that have manipulated the market for years act as custodians for the ETF’s, it would be wise to be wary.

One highly interesting issue for me personally is the point in time when the Middle East countries will no longer sell their oil and natural gas for paper money. When do you think  they will be paid for it with precious metals?

John Embry: I suspect this whole phenomenon could occur very quickly. When confidence in paper money is lost and I think we are rapidly approaching that moment, something like that would undoubtedly come to pass.

How do you think about the conflict around Iran viewed from a perspective of the petrodollar?

John Embry: The whole Iranian issue is very disturbing and I think the U.S ‘s motives might have more to do with the petrodollar than Iran’s nuclear ambitions.

One final question. IF the financial system goes under, one can expect massive supply shortfalls and disruptions in goods and services, particularly in the energy sector. Would you recommend to our readers to take precautions for such a scenario instead of hoping for the best outcome of the global financial crisis?

John Embry: Unfortunately yes. I am a great believer in cognitive dissonance. Most individuals don’t want to face the truth, particularly if it is very unpleasant. Those that do not suffer from this condition should take precautions because the world situation is presently very dangerous.

Thank you very much for taking your time, Mr. Embry!


(1) John Embry / Andrew Hepburn: “Not Free, Not Fair: The Long-Term Manipulation of the Gold Price”, published by Sprott Asset Management in August 2004 under:

(2) See Rob Kirby: “Manifest Destiny Derailed: Treason from Within“, published at Goldseek on January 31, 2012 under:

(3) Compare

The relevant passage of Mr. Warsh’s letter to GATA said:

“In connection with your appeal, I have confirmed that the information withheld under Exemption 4? — that’s Exemption 4 of the Freedom of Information Act — “consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you.”

(4) See Rob Kirby: “Manifest Destiny Derailed: Treason from Within,“ Footnote 2.

(5) Compare for example in this context what Marshall Auerback has said in an interview about the supression of the silver price:

“It’s in contrast to the gold suppression, which is a central-bank orchestrated scheme. You’ve got a situation now where it seems to be being done amongst the banking community, but I have no doubt that it has being done with official encouragement, explicit or implicit. To give you an example, 10 years ago Warren Buffet bought a silver position, and he liquidated it a few months later. The story I heard from one of his dealers was that he basically told them, “Boys, it’s not politically correct to speculate in silver.” Now who told him that I don’t actually know; I suspect it came from government sources. More interesting to me is that he had had a significant position, and it was liquidated with a great degree of ease with a loss at time when it wasn’t easy to do. This suggests that there was an external agency involved. I have no doubt that there is some degree of government involvement as well, but the primary agents are the investment banks, the commercial banks here.”



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Thu, 02/16/2012 - 18:20 | 2167459 nope-1004
nope-1004's picture

The current financial system IS destroyed.

It's being held together with masking tape, a string, some HFT computers, and lying politicos influencing the MSM.

The system is dead.  Doesn't take much to realize anyone not preparing for the inevitable reset button will be looted.


Thu, 02/16/2012 - 18:20 | 2167467 slaughterer
slaughterer's picture

Jetzt geht die Scheisse los.  

Thu, 02/16/2012 - 18:44 | 2167529 TheFourthStooge-ing
TheFourthStooge-ing's picture

Das ist schon wahr.


Thu, 02/16/2012 - 19:27 | 2167645 SilverIsKing
SilverIsKing's picture

Was ist mit diesem Linsanity?

Thu, 02/16/2012 - 19:34 | 2167669 AbruptlyKawaii
AbruptlyKawaii's picture

iway oveslay emay omesay inesechay oodfay inlay

Thu, 02/16/2012 - 20:37 | 2167837 nope-1004
nope-1004's picture

Ud ya say?


axmay isherfay is aygay.

Thu, 02/16/2012 - 21:02 | 2167880 francis_sawyer
francis_sawyer's picture

He's a fucking dickwad... (There... fixed it for you)

Thu, 02/16/2012 - 21:04 | 2167884 francis_sawyer
francis_sawyer's picture

Your you not "LIN'tertained?

Thu, 02/16/2012 - 23:34 | 2168294 trav7777
trav7777's picture

all I know is the Sprott gang has been taking gullible silverbugz to the cleaners with that premium runup to NAV on pslv and then yanking the rug out from under them by issuing secondaries

Fri, 02/17/2012 - 01:03 | 2168544 Triggernometry
Triggernometry's picture

du is ein uberschlampe

Fri, 02/17/2012 - 05:23 | 2168782 Bay of Pigs
Bay of Pigs's picture

And you are an asshole. BFD.

Thu, 02/16/2012 - 19:35 | 2167673 SWRichmond
SWRichmond's picture

hast du in die hasse schiesse?

Thu, 02/16/2012 - 20:04 | 2167748 Black Forest
Black Forest's picture

Promising and developable. Better use the correct term:

Hast Du in die Hose geschissen?

Fri, 02/17/2012 - 00:10 | 2168399 natty light
natty light's picture

 Gescheissen Sie sich den Hosen?

Thu, 02/16/2012 - 20:16 | 2167788 Pennywise
Pennywise's picture

Ich Scheisse mein hosen.

Thu, 02/16/2012 - 20:23 | 2167800 Black Forest
Black Forest's picture

Promising and developable. Better use:

I never bought gold, silver or other precious metals, and do not plan to do so.


Mon, 02/27/2012 - 23:15 | 2202545 pain_and_soros
pain_and_soros's picture

Sind Sie verruckt??

Thu, 02/16/2012 - 20:16 | 2167787 He_Who Carried ...
He_Who Carried The Sun's picture

Children, if Mister Silver says we will all be using silver coins by tomorrow, what do you think about such a statement by that man? Bogus? Misleading?
There is one reason why its not going to happen: Expenses. It is way too expensive to revert to Silver or Gold. Simple!

Thu, 02/16/2012 - 20:53 | 2167858 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Silver is worth $500 and gold is worth $10k.  Move along....

Thu, 02/16/2012 - 22:44 | 2168170 Tortfeasor
Tortfeasor's picture

It's too expensive not to revert to silver and gold backing

Thu, 02/16/2012 - 21:27 | 2167938 Free Markets
Free Markets's picture

After a financial crash (months maybe), all commodities will lose value to become a true market price.... No fed manipulation. The difference is that your dollars will be worth nothing while gold and silver will hold some value. People will be able to obtain it at a new market price. Gold shouldn't be valued in $ terms but dollars should be valued against gold.

Thu, 02/16/2012 - 22:08 | 2168054 He_Who Carried ...
He_Who Carried The Sun's picture

Look, I do understand your argument, I just do not think its going to happen as guys like this prescribe and I have no reason whatsoever to believe that this system is going to revert to sanity because its too costly. That's all.

Fri, 02/17/2012 - 00:12 | 2168406 sun tzu
sun tzu's picture

It was also too costly for the Roman Empire to collapse. 

Fri, 02/17/2012 - 10:15 | 2169191 He_Who Carried ...
He_Who Carried The Sun's picture

Who said their empire collapsed? You must be English!

Fri, 02/17/2012 - 02:38 | 2168650 grid-b-gone
grid-b-gone's picture

Hopefully, the Fed will pull back from their current printing trajectory if there are signs that confidence is being lost in the dollar. 

If not, the cost of transition will be irrelevant because it will be like a flash mob breaking into dance. Sellers will demand to be paid in something of value, something other than a paper dollar - precious metals, food, tools, forms of barter, etc.

If the prohibitive expense you envision is that all currency is replaced by gold and silver coins, you may have a point. I think most gold bugs would agree the Treasury would resist that move in every way possible.

Your opinion speaks to the cognitive dissonance mentioned in the article. Those who can not conceive that U.S. dollars could be printed (digitally created) to the point that the full faith and credit of taxpayers means nothing are not preparing. If people like you are correct, PM hoarders will take a bath due to their paranoia. If the hoarders are correct, people like you will be part of any panic buying that may finally reveal gold's top.

The fact remains, we are at 105-110% debt to GDP. By definition, the 'full faith and credit' promise is already being exceeded. If, as in WWII, this is a short-term situation, no harm, no foul, and everything will revert to the mean, including the price of gold.

Japan is muddling through at 200% debt/GDP, so we may be able to exceed that 'full faith and credit' for another decade if that model holds up.

Then again, the Fed has stated they intend to continue with the current plan through 2014, which includes overspending by $1 trillion+ for another three years. 

We are already running on the faith and credit promise, and if a Maine caucus group of 22 can't even trust that their wishes will be honored as reported, the rot may already have spread to most of the barrel.  


Fri, 02/17/2012 - 02:50 | 2168660 TruthInSunshine
TruthInSunshine's picture

glitch in the Matrix. Double tap.

Fri, 02/17/2012 - 02:49 | 2168661 TruthInSunshine
TruthInSunshine's picture

Ben's just getting warmed up.

The printing the ECB is about embark on, once Germany gives the green light (in screwing over its own citizens by debasing their living standards at the fastest clip since...pre WWII) will provide the perfect cover for 'Ben "I will not monetize deficit spending" Bernankhole.'

Thu, 02/16/2012 - 18:59 | 2167568 Max Fischer
Max Fischer's picture



In April of 2011, a pro-silver article was written by Sprott and posted on ZeroHedge.  Within a day or two, Sprott began selling millions and millions worth of his PSLV.

In December, another pro-silver article was written by Sprott and posted on ZeroHedge.  Five days later, PSLV collapsed due to their secondary offering.

Now, what's unique about both these timely articles is that neither article was actually posted on Sprott's main website where his "real" investors go for information.  He has a section for media information with all sorts of articles, but both of the aforementioned articles where never included. What does this mean?  Using YouTube and the blogosphere, he lures in the dumb retail money with hyperbolic nonsense right before PSLV gets monkeyhammered.  And he deliberately does not do this to his "real" clients who use his website for investor services.

Beware of Sprott....

Max Fischer, Civis Mundi 

Thu, 02/16/2012 - 19:05 | 2167589 TheFourthStooge-ing
TheFourthStooge-ing's picture

Max Fischer, Civis Morondi wrote:

Using YouTube and the blogosphere, he lures in the dumb retail money with hyperbolic nonsense right before PSLV gets monkeyhammered.

The only thing monkey-like that I see is you flinging feces, Cheetah.

Disclaimer: Long, and ahead, PSLV.


Thu, 02/16/2012 - 19:37 | 2167680 SWRichmond
SWRichmond's picture

John Embry: We think the supply-demand equation is ultimately better than even that of gold. New industrial and medical uses are exploding and because silver is “poor man’s gold,” investment demand for silver will go crazy when gold gets priced out of the average citizen’s capacity to buy. Given the small size of the market and very limited inventory, the price should go ballistic.

Gold is going to be my capital going forward.  Silver is going to make me a rich man.

Thu, 02/16/2012 - 23:36 | 2168311 trav7777
trav7777's picture

ROTFL..the dream of every silverbug, to get rich speculating.

Gee, you guys are so different from the financial wall street trash and the squidzez

Fri, 02/17/2012 - 00:13 | 2168409 sun tzu
sun tzu's picture

Unless they leveraged 40:1 and losses are backed by the US taxpayers, they are very different you inbred dumbfuck

Thu, 02/16/2012 - 23:35 | 2168306 trav7777
trav7777's picture

gullible lemming silverbugz like you must enjoy getting taken to the cleaners

Fri, 02/17/2012 - 00:14 | 2168412 sun tzu
sun tzu's picture

Inbred shitheads like you must enjoy getting assraped by your daddy

Thu, 02/16/2012 - 19:25 | 2167637 LynRobison
LynRobison's picture

Right, we should all trust Ben Bernanke instead. 

Thu, 02/16/2012 - 19:54 | 2167720 Fluffybunny
Fluffybunny's picture

You don't have to trust anyone. Come to your own conclusions.

Thu, 02/16/2012 - 22:18 | 2167849 Tsunami Wave
Tsunami Wave's picture

Just ignore his dumb ass, Max Fischer is red neck repugnicant. He's also a political fanatic.. like what Winston Churchill described, someone who won't change their mind and won't change the subject.

Fri, 02/17/2012 - 00:15 | 2168420 sun tzu
sun tzu's picture

I saw nothing political in his message. Attacking a strawman?

Thu, 02/16/2012 - 19:55 | 2167724 linrom
linrom's picture

All these guys are the same. It's a family run business too.

Thu, 02/16/2012 - 20:48 | 2167853 pazmaker
pazmaker's picture

you can red arrow vote down Max, but investigate what he says here about PSLV and you will discover it is the truth.

You get a green thumbs up from me.

Fri, 02/17/2012 - 00:16 | 2168423 sun tzu
sun tzu's picture

PSLV has nothing to do with physical silver

Thu, 02/16/2012 - 20:54 | 2167862 TrulyBelieving
TrulyBelieving's picture

Let's assume that you are correct in that Sprott capitalizes in certain situations that may be questionable. Would your still agree that his view of the economics situation is pretty accurate?

Thu, 02/16/2012 - 21:02 | 2167875 Pegasus Muse
Pegasus Muse's picture

Agree with Max.  Sprott also gets a free ride from Eric King at KingWorldNews and other Hard Asset sites, besides here on ZH.  Sprott never gets called on the carpet for lying to potential investors and his clients.  He said he would not do follow-on offering in PSLV .... that he learned his lesson after investors pummeled him for screwing them over with follow-on offerings in the PHYS fund.  Promised he wouldn't do it.  Then did.  He has no ethics.  No morals.  He lies just as smoothly and adroitly as the most skillful sociopathic Wall St Gangster Bankster con man. 

You are not free of financial liars and shysters unless you hold physical in your own hands.  Period.

Thu, 02/16/2012 - 21:12 | 2167906 vamoose1
vamoose1's picture

Ditto  to  you, every word of your post is false, which  takes some doing,   best to  jamie asswipe.

Fri, 02/17/2012 - 00:18 | 2168430 sun tzu
sun tzu's picture

Once again, why attack a strawman? What he says about silver prices in the short term has nothing to do with silver prices in the long or short term. Sprott is not the silver market

Thu, 02/16/2012 - 21:09 | 2167899 vamoose1
vamoose1's picture

You are an epic  fucking horses ass,  and a cheapjack  shill,... you neglect to  mention that the PSLV premium  in APRIL  was 24 percent,  and he rolled his sale proceeds into PHYSICAL  SILVER capturing a ridiculous premium.

    More recently in PSLV2  the PSLV  premium  hit 34.22 percent pre issue,  it was being jammed by  JPM  to  desperately try and render PSLV2 an  unmarketable instrument,  it was a loss leader strategy yo  try and protect their criminal  short position. My  best  to  jamie and Blythe when  you  pick up  your next cheque,  you   supperating fuckspittle.

Fri, 02/17/2012 - 09:31 | 2169050 Crumbles
Crumbles's picture

Is it uncontrollable anger messing with your attempted posts ?

Or perhaps you need a newer keyboard and spellchecker.

(lean back a little, take a deep breath, and remember that thumbs hitting the spacebar advance the cursor with every stroke)

Nervous much ??   or just plain out-of-control ?

Thu, 02/16/2012 - 23:17 | 2168264 kito
kito's picture

would be nice to hear from tyler on this.....shirley zh isnt carrying every pro pm advocate merely for the sake of them being pro pm............especially when they are allegedly pulling goldman sachs type moves.............

Thu, 02/16/2012 - 19:22 | 2167592 Black Forest
Black Forest's picture

"Auch wenn wir einen langen Atem brauchen: Mit den jüngsten Beschlüssen für eine Stabilitätsunion hat Europa den Weg geebnet, dass der Euro gestärkt aus der Krise hervorgehen kann ... Von Alarmismus und Krisenangst wollen die Menschen wenig wissen ... Dem Jahr 2012 sehen die Deutschen relativ gelassen entgegen."

P.S.: Just a joke. I deeply apologize.

Thu, 02/16/2012 - 19:36 | 2167678 Big Corked Boots
Big Corked Boots's picture

All this German... I should have stayed in Herr Doktor Klienmann's class.

Thu, 02/16/2012 - 20:32 | 2167823 andybev01
andybev01's picture

Frau Blucher...

Thu, 02/16/2012 - 22:44 | 2168171 battlestargalactica
battlestargalactica's picture

< Horse neigh! >

Thu, 02/16/2012 - 20:19 | 2167795 Gunther
Gunther's picture

To help most readers here, this is my translation from the above quote:

Even if it is going to take a long time: With our decision to form a [European] Stability-Union Europe paved the way do emerge with a stron Euro from the crisis...People do not want to know anything of crisis and alarmism... Germans take 2012 with a relaxed attitude.

[Stated by the leader of the FDP, the small party in Germany's ruling coalition. In the last election they got about 18% of votes, now polls show them around 3% what would be insufficient to stay in Parliament.

Thu, 02/16/2012 - 20:46 | 2167843 optimator
optimator's picture


Thu, 02/16/2012 - 21:55 | 2167578 DavidPierre
DavidPierre's picture

It is important to hear the clear voice of experience and reason in this matter, whether you like it or not, whether it suits your self-interest or political biases or not.

You may listen or download the interview here. 

And you will see that fraud is virtually never discussed as even a potential major contributor. And that is poor; and that is really the tribal taboo that still exists in economics against any serious consideration of the word fraud."

Wm. K. Black


{I have to caution you in advance that it is somewhat lengthy, so it is best listened to when you have an extended quiet moment.}

Thu, 02/16/2012 - 19:37 | 2167677 tempo
tempo's picture

I don't know who will have the most trouble living within their means. The West when entitlements are dismantled and taxes skyrocket or the East when there is very little demand for slave labor to produce AAPL type products. Obviously those that can afford armed guards and fortified estates will do fine.

Fri, 02/17/2012 - 09:48 | 2169095 Crumbles
Crumbles's picture

So you think the 1% will do fine behind six foot walls topped with broken glass with a couple of rent-a-pigs on guard at the gate ?

Starve a man for a day and he will work for you.  Starve a man for a week and he will kill for you. Promise a mob food for their families, and 10% will overrun the 1%'s estates in a heartbeat - all it will take is hunger and a messianic messenger.

The future is writ large in the price and availability of the one true commodity - FOOD.

The proximate cause of the Arab Spring was so simple - bread became very scarce.  In the MENA countries, Bread is still the Staff of Life.

Shopped for fresh produce and meat lately?  Compared to prices in the 60's, food is up between 10x and 20x.  Just wait 'till June.

Thu, 02/16/2012 - 18:37 | 2167506 Silver Bug
Silver Bug's picture

John Embry has been spot on for over a decade. People like to call him crazy. I Call him right.

Thu, 02/16/2012 - 18:49 | 2167547 john39
john39's picture

But, how much gold does the rothschild system have under its control?  this is a big problem.

Thu, 02/16/2012 - 19:32 | 2167660 Mitzibitzi
Mitzibitzi's picture

Most of it, of course. Rich people don't stay rich by sitting in fiat paper. Why is this a problem for you? Surely you aren't storing any of the benefits of your labour in pieces of paper with dead guys on'em?

Thu, 02/16/2012 - 19:56 | 2167727 john39
john39's picture

having gold will only do you so much good if the same criminal psychopaths remain in control after the dollar collapses. 

Thu, 02/16/2012 - 20:02 | 2167740 eddiebe
eddiebe's picture

they may not be the same criminal psychopaths, but they will be of the same ilk. Has it ever been different to any great degree in any history that you know of?

Thu, 02/16/2012 - 20:06 | 2167752 Rubbish
Rubbish's picture

Gold isn't a way of life here in the US, I would much rather have a bag of salt or rice than a 1 oz. gold coin should I get hungry.

Thu, 02/16/2012 - 20:33 | 2167826 unrulian
unrulian's picture

really, well you eat that bag of salt.... i'll keep stacking

Thu, 02/16/2012 - 21:06 | 2167888 Nigh Eve
Nigh Eve's picture

Hey, how about...

Drinking some Goldschlager !

(Amateur ubersetzen:  Velleicht, trinken Sie ein bischen Geldschlager !)

Fri, 02/17/2012 - 00:23 | 2168449 Assetman
Assetman's picture

It doesn't hurt to have BOTH food and gold.

Who made this mutually exclusive?


Fri, 02/17/2012 - 00:25 | 2168450 Uchtdorf
Uchtdorf's picture

You should have all those items and more.

Fri, 02/17/2012 - 00:47 | 2168508 lasvegaspersona
lasvegaspersona's picture


MOST gold is in private hands not in the CBs....just look at the recent 60 minutes piece on India.

Fri, 02/17/2012 - 07:30 | 2168856 mc225
mc225's picture

the key is in competing currencies, and barter. a mandatory, gold-only standard will just be another scam. in truth, anyone should be able to set up a bank, and float any currency, backed by whatever they want it to be backed by; including thin air (caveat emptor). the crux of the matter is in opening up banking/finance to anyone and everyone; instead of having it controlled by a (few) small clique(s) as we have now.


Thu, 02/16/2012 - 18:38 | 2167517 Sudden Debt
Sudden Debt's picture

It's destroyed but the dust still needs to settle

Thu, 02/16/2012 - 18:46 | 2167532 LasVegasDave
LasVegasDave's picture

The sooner the better, yeah haw!

Thu, 02/16/2012 - 19:17 | 2167613 navy62802
navy62802's picture

We have been blessed with a brief respite from the destruction. Use this time to prepare. You will thank yourself later.

Thu, 02/16/2012 - 20:26 | 2167812 David449420
David449420's picture

"(1) John Embry / Andrew Hepburn: “Not Free, Not Fair: The Long-Term Manipulation of the Gold Price”, published by Sprott Asset Management in August 2004 under:"


This link does not work. Does anyone have a working link to this report?

Thu, 02/16/2012 - 20:56 | 2167865 I think I need ...
I think I need to buy a gun's picture

it actually died in 2008.....

Thu, 02/16/2012 - 20:56 | 2167869 disabledvet
disabledvet's picture

EXACTLY! I mean since when is "debt monetization" (which is illegal btw) considered a victory? only the idiots are paying their taxes right now. now LET'S GO INVADE SYRIA! EEEEEEE HAAAAAAA!

Fri, 02/17/2012 - 09:56 | 2169119 Crumbles
Crumbles's picture

Rightontinski !!  Here's what we can look forward to, btw ...

Look, look - he's still moving, trying to get to his pants no doubt.

And we should get involved in this madness ???  GHUA if we do !!!

Thu, 02/16/2012 - 18:22 | 2167461 TruthInSunshine
TruthInSunshine's picture

If you see something suspicious, such as the buying or selling of physical silver or gold, say something.


Thank you,


Big 'Sis*

Strength Through Unity & Unity Through Faith



Thu, 02/16/2012 - 18:39 | 2167519 Cheesy Bastard
Cheesy Bastard's picture

I thought I saw someone eating a turkey and cheese sandwich.  Should I take it away and force them to drive them to KFC?

Thu, 02/16/2012 - 18:44 | 2167531 Yen Cross
Yen Cross's picture

 I read that Blasphemy!

Thu, 02/16/2012 - 18:52 | 2167553 XitSam
XitSam's picture

Did the sandwich have mayo or Miracle Whip?

Thu, 02/16/2012 - 19:02 | 2167580 Cheesy Bastard
Cheesy Bastard's picture

I'll have to get back to you, as the sandwich is locked up in a federal evidence locker.  Evidence, ha ha, just kidding, evidence and due process are so passe...

Thu, 02/16/2012 - 20:35 | 2167832 unrulian
unrulian's picture

terrorists eat mayo..

Fri, 02/17/2012 - 02:03 | 2168630 TruthInSunshine
TruthInSunshine's picture

Terrorists are easy to spot at a ballgame.

They put ketchup on their hot dogs.

Thu, 02/16/2012 - 19:00 | 2167574 TheFourthStooge-ing
TheFourthStooge-ing's picture

Did they pay cash for the sandwich? If so, TERRIST!!!!11!


Thu, 02/16/2012 - 19:07 | 2167594 Cheesy Bastard
Cheesy Bastard's picture

Yeah, but it was a wash because they weren't missing any fingers.

Thu, 02/16/2012 - 20:00 | 2167734 NotApplicable
NotApplicable's picture

Even worse. They made it on their own!

Thu, 02/16/2012 - 19:04 | 2167584 Don Birnam
Don Birnam's picture

Did it bear the image of the Virgin Mary ?

Thu, 02/16/2012 - 19:18 | 2167616 Yen Cross
Yen Cross's picture

 You Guys are killing me! The sandwich was  ( A) PBJ!

Fri, 02/17/2012 - 10:02 | 2169146 GeezerGeek
GeezerGeek's picture

Except it was the New England Patriots that were toast.

Thu, 02/16/2012 - 18:48 | 2167543 DosZap
DosZap's picture


If you see something suspicious, such as the buying or selling of physical silver or gold, say something.


Does this mean Dealers, the U S Mint, Pension funds,Retirement Plans, Gold IRA's, (US Gov't sponsored) are, and Major College Funds, and everyone else and their dog(Corporate wise),are....ter....ter...terr...terrr..................Oh!!!!!, I just can't bring myself to say the Woid!.

Shudder me Timbers!

Sheeeeesh, someone ought to alert the FBI!!!!.

Thu, 02/16/2012 - 19:18 | 2167618 TheFourthStooge-ing
TheFourthStooge-ing's picture

DosZap said:

Does this mean Dealers, the U S Mint, Pension funds,Retirement Plans, Gold IRA's, (US Gov't sponsored) are, and Major College Funds, and everyone else and their dog(Corporate wise),are....ter....ter...terr...terrr..................

Yesssss, that is exactly what it means. We're surrounded by them. They're lurking behind every tree, in every foreclosed home, under every freeway overpass, at every flea market....

Oh!!!!!, I just can't bring myself to say the Woid!.


Shudder me Timbers!

Sheeeeesh, someone ought to alert the FBI!!!!.

Just to be safe, turn in everyone. They're probably terrists, and if not, they'd become terrists eventually anyway. Do your patriotic duty, consumer!

Thu, 02/16/2012 - 21:48 | 2168004 f16hoser
f16hoser's picture

Don't know anything about Gold/Silver but I did see the ugliest fucking woman this side of the "Event Horizon!" I think her name was Janet Nappyhole something....... Scared me so bad I dropped my Silver. Fuck, Shit, disregard last......

Thu, 02/16/2012 - 18:20 | 2167466 cossack55
cossack55's picture

It seems ZH is becoming over-populated with terrorists lately.  Hmmmmmm.....

Thu, 02/16/2012 - 18:51 | 2167552 TheFourthStooge-ing
TheFourthStooge-ing's picture

Didn't you get the memo? Because of what happened in Libya and what is currently happening in Syria, Al Qaida is on the same side as America again. It's time to go back to calling them freedom fighters instead of terrists.

The war on terra has been won!



Thu, 02/16/2012 - 19:41 | 2167692 cossack55
cossack55's picture

So, .... does that mean Freedom Fries are now Terror Fries?

Thu, 02/16/2012 - 18:28 | 2167484 zilverreiger
zilverreiger's picture

TURK and EMBRY are annoying perma gold bulls who say gold over 10k every week on KWN, someday they they might just be right, but..


Thu, 02/16/2012 - 18:54 | 2167557 Bay of Pigs
Bay of Pigs's picture

That is not accurate at all.

 -1 for being stupid.

Thu, 02/16/2012 - 18:58 | 2167564 zilverreiger
zilverreiger's picture

disclosure: I'm 100% in gold and silver


bay of pigs I exaggerate, but you know what I mean if you follow KWN

Thu, 02/16/2012 - 20:27 | 2167817 Rubbish
Rubbish's picture

You might want to add one of these to your collection, I can picture you king when the SHTF driving this. Would have very high trade in value too.

Thu, 02/16/2012 - 21:58 | 2168031 UP Forester
UP Forester's picture

Not much room to tuck in a wood gasifier on that 'Vette.

Fri, 02/17/2012 - 10:04 | 2169151 Crumbles
Crumbles's picture

THANX for the link - suddenly 17 again.  Wow

Thu, 02/16/2012 - 20:42 | 2167840 Burnbright
Burnbright's picture

To be honest I sort of agree. The best people to follow are Ben Davies and a few others. Ben and Trader Dan make some excellent calls. But a majority of the commentators on KWN are not telling people what to do for trading but rather for a long term perspective so their information is realative. 


Thu, 02/16/2012 - 21:17 | 2167916 vamoose1
vamoose1's picture

Not to mention they  have been dead right for eleven consecutive years moron.

Thu, 02/16/2012 - 22:01 | 2168039 Bay of Pigs
Bay of Pigs's picture

Hey vamoose1, I got booted by Mod Jane at Turds. Can't post there anymore.

Aloha brah...and best wishes.

Thu, 02/16/2012 - 18:30 | 2167489 chump666
chump666's picture

A major stock market crash is due.  Total leveraged and speculated market juiced by goverments/central banks and supported by low volume HFT momo machines.  I study my 1987, 2000, 2008, 2010 charts daily...but, the 1987 chart looks like the one.  History repeats baby...and pain begins.

No one escapes reality. 

Thu, 02/16/2012 - 18:37 | 2167510 fonzannoon
fonzannoon's picture

Chump the 87 crash recovered those losses pretty quickly no? You see that again as well?

Thu, 02/16/2012 - 18:47 | 2167540 TheFourthStooge-ing
TheFourthStooge-ing's picture

RobotTrader fantasy terms (nominal) or real terms?


Thu, 02/16/2012 - 19:17 | 2167615 chump666
chump666's picture

I do.  I think we are heading for a sharp sell off i.e crash.  The VIX is heading down to lows again, which is bearish - it flatlined in (old VIX gauge) 1987, before the spike. I'd also be watching Asia counter selling before US/Europe markets open as a warning sign.  But yeah in nominal terms, ECB/FED print USD and EUR goes down and stocks regain losses very quickly.  Because we got new players in town: the Algos. Recoveries will be quick. But no bull market and no momo trade like pre Algos, or pre 2008.


Thu, 02/16/2012 - 19:22 | 2167624 fonzannoon
fonzannoon's picture

I'm with you. It makes sense. The fast money meatheads were mostly calling for a "fall off the cliff" selloff today.

Thu, 02/16/2012 - 20:06 | 2167755 chump666
chump666's picture

Yeah, it's like everyone talks about the inflation hedge (stocks) with money printing.  Sure, history showed that especially the Weimar 1920's trade.  But, I don't see major flows going into markets.  HFTs/Algos set up volatility, so any idea for a super bull rally from inflation may not happen.  Instead I think we are heading towards (before the great re-set) total market chaos.  The market will swing trade in perpetual major lows and major highs...till it collapses.

Thu, 02/16/2012 - 20:08 | 2167763 amadeusb4
amadeusb4's picture

That's assuming that the country "muddles through" as has been the dominant MSM paradigm. We are heading into a recession that has likely already started but won't be confirmed for another year or so. Under those circumstances, no quick recovery will be possible as present dithering over sovereign debt issues will become paramount. The fed is right to print. In fact, the last FOMC meeting minutes indicate that the fed is quite astute and that we are now faced with an imminent threat of deflation likely to begin at the start of Q2. This will impact everything, stocks, commodities, PM's. The only safe heaven is cash, USD, unless you otherwise hedge.

Thu, 02/16/2012 - 21:43 | 2167978 hamurobby
hamurobby's picture

Deflation is already here on the street. The fed need to fire up the presses and get some easy loans out there so I can make some easy currency and buy more money.

Thu, 02/16/2012 - 23:51 | 2168345 Socratic Dog
Socratic Dog's picture

Deflation is already here?  Tell that to my health insurance company, my supermarket, my gas station.

You fucking idiot.

Thu, 02/16/2012 - 18:30 | 2167490 DoChenRollingBearing
DoChenRollingBearing's picture

Better get ready just in case it gets REALLY BAD!  I just put up my new piece "TEOTWAWKI - Mental and Physical Strength Edition" there at my blog.

Curious? gmail me at my name and promise you will behave, and I'll send you the link.

Thu, 02/16/2012 - 19:44 | 2167698 Race Car Driver
Race Car Driver's picture

Considering Google's complete lack of regard for privacy and especially in light of their new (non)privacy notices - you use Gmail?

No... seriously?

Thu, 02/16/2012 - 18:30 | 2167492 wandstrasse
wandstrasse's picture which one, gasp, lives according to one's means,...

too many got accustomed to that 'beyond one's means' out of the printing press. The rich and hyper rich anyways... but also welfare recipients, businesses, the middle class... A large part of their - our - wealth came out of the printing press. It is impossible to recognize which part of an individual's or a country's wealth comes from productive work and which part was stolen from the future. Viscious.

Thu, 02/16/2012 - 19:01 | 2167575 ChrisFromMorningside
ChrisFromMorningside's picture

It is impossible to recognize which part of an individual's or a country's wealth comes from productive work and which part was stolen from the future. Viscious.

We're about to find out soon enough. It will hit young people the hardest. The baby boomers still remember a period in their life when they didn't have access to all of the goodies the welfare/debt state makes available today. Also, most of the baby boomers that I know personally seem strangely pacified and uninterested in all of this, as if they've resigned themselves to powerlessness and would rather not bother. However, a lot of young people who are used to living the consumerist lifestyle up while doing next to nothing in some completely debt-driven "industry" ... they're going to get a really rude awakening.

Thu, 02/16/2012 - 18:32 | 2167493 AssFire
AssFire's picture

Seems never a date.

Until now... Slog claims: March 23rd is the Greece default date.

Could they finally please just get these defaults rolling???

Thu, 02/16/2012 - 18:38 | 2167516 Yen Cross
Yen Cross's picture

 It's about time you showed UP!

Thu, 02/16/2012 - 18:49 | 2167544 OutLookingIn
OutLookingIn's picture

The writing on the wall is written in Greece. Pun intended.

What is happening there is what we have to look forward to. Make no mistake about it.

Gold has been a storehouse of value to mankind since the dawn of written history and probably before that time to.

True money is now being rediscovered, as the pretty pieces of paper lose value.

Confidence in the fiat world is fast losing ground to true wealth protection.

Gold along with other tangibles will experiance higher valuations as paper becomes ever more increasingly worthless. The stock markets will rise also, giving those whose wealth is on paper a false sense of inceasing wealth.

The ongoing devalued currency induced cost push inflation will see to that, as other assets such as real estate (with the exception of farmland) continue to deflate. Much higher food and energy costs coming.

Thu, 02/16/2012 - 18:36 | 2167500 Yen Cross
Yen Cross's picture

I here by nominate ( Etch (A) Sketch), economics into the world economic forum!

Thu, 02/16/2012 - 18:37 | 2167505 zerotohero
zerotohero's picture

popcorn - check

beer - check

recliner - check

silver - check

gold - check

seatbelt fastened - check


Bring it.

Thu, 02/16/2012 - 18:55 | 2167560 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

But, check your ammo too...

Thu, 02/16/2012 - 19:01 | 2167577 Sudden Debt
Sudden Debt's picture

5 year travel Visas for the family : check

Thu, 02/16/2012 - 21:00 | 2167874 disabledvet
disabledvet's picture

where to? Life was so much easier back in the Empire days. Visas? hahahahah. "we own that place." now it's "freedom this" and "liberty that." phriggin MISERABLE.

Thu, 02/16/2012 - 19:02 | 2167582 Osmium
Osmium's picture


Thu, 02/16/2012 - 21:10 | 2167901 smiler03
smiler03's picture

And a bulletproof vest in case you accidentally stray onto a gold holders land. 

Thu, 02/16/2012 - 20:36 | 2167833 Hulk
Hulk's picture

Patience - double check...

Thu, 02/16/2012 - 18:38 | 2167509 carbonmutant
carbonmutant's picture

Actually "evolve" might be a better word than "destroyed"....

Thu, 02/16/2012 - 19:32 | 2167663 MsCreant
MsCreant's picture

Indeed. Maybe both. Out of destruction, rebirth, always. There is no other way.

Thu, 02/16/2012 - 18:37 | 2167511 krispkritter
krispkritter's picture

Cesspool...yeah, that about sums up the market as well as the District of Cesspools...D.C. God I hope the plug gets pulled this year, the suspense is driving me to drink...ok, that's one excuse...

Thu, 02/16/2012 - 18:42 | 2167524 DCFusor
DCFusor's picture

Talk his book much?

Really  - if gold is so manipulated, that's a good reason NOT to have it, since what you can get for your physical is in very large part determined by the paper-set price.  So if they manipulate the paper down, your holdings go down too.

Just try and sell your coins for twice the paper price value and you'll see what I mean.  No one will take them.

Most of the religion of gold is because people are so sure it's money - it's pure psychology.  My cat doesn't care - to any being but a human, it's just another rock.  The value of that rock is only what people agree it to be, and they all trust the "authorities" like the markets, so tell them what that is.  So it works out to being just about as fake as any paper when viewed from above that perspective.

Yeah, down this all you want to, I don't care, and I do have gold.  I just realize how insanely silly humans are on some days.

Thu, 02/16/2012 - 18:47 | 2167537 Yen Cross
Yen Cross's picture

 We all get perturbed. YET we trade.  Do some homework, and quit tossing NAMES around. Become a winner!


Thu, 02/16/2012 - 19:17 | 2167611 HurricaneSeason
HurricaneSeason's picture

It depends if you think the manipulation can continue and what the results would be if it couldn't. They were all together on the Washington Accord to dump no more than 500 ton of the worthless relic onto the market and something went wrong. Luckily Cash For Gold parties and ETFs jumped in there to pick up the slack but haven't been tested for very long. A few more MF Globals and all of grandmas rings and necklaces gone and it could change quickly.

Thu, 02/16/2012 - 19:25 | 2167636 Yen Cross
Yen Cross's picture

I feel the wind blasting upon my face? I Can't explain it?


Thu, 02/16/2012 - 20:32 | 2167822 HurricaneSeason
HurricaneSeason's picture

Well, it wasn't me. I think DCFusor farted.

Thu, 02/16/2012 - 20:07 | 2167759 NotApplicable
NotApplicable's picture


Can't you just come out and say, "I don't understand gold."?

Here's a clue, money itself is an economic good. Now just what is it that differentiates bad money from good money, economically speaking?

But hey, go ahead and dismiss it all as a religion, and see how far that gets you.

Oh, and to complete your illogical logic, your cat doesn't give two shits about Fed Notes, either.

Thu, 02/16/2012 - 21:42 | 2167975 John_Coltrane
John_Coltrane's picture

Its all about trust-true of all systems including barter.  Gold has been a medium of exchange and a store of value for over 2000 years-fiat currency more than an order of magnitude less time.  How much do you trust central authorities, their fractional reserve systems and "experts" compared to relying on your own judgment and analytical ability.  Incompetents and parasites will prefer the nanny state.  The greatest strore of wealth is of course, ability, knowledge and talent.  This is the ultimate tradeable asset.  But make sure you have guns, ammo, food, medicine and PMs too. 

Thu, 02/16/2012 - 23:01 | 2168223 chindit13
chindit13's picture

After running your comment through my Minnesota Multiphase Personality proprietary algorithm, you might be surprised to find you would be best suited for a career as a…get this…scientist.  According to the model, your strong suit is practical rationality and an ability to think independently.  Perhaps you will pursue something in the field of nuclear fusion?

Running my own comment through the algo indicated that I would be best suited as a lapsed Catholic, because while I am largely agnostic, I cover all the bases by at least maintaining the personal belief that the Pieta is the greatest work of art ever produced by the hand of man.  I figure that gets me a pardon for not believing in Papal infallibility, at least since the Borgia Popes.

Regarding that “rock”, well, it’s a shiny rock.  Shine has to have some value, one would think.  Otherwise, we’d all load up on ruthenium.

One thing I do know is that rocks do not make a man smarter, nor does possession of rocks necessarily lead to discipline.  Where I am, production of these rocks has exploded in the last few years to the tune of 30-40% of previous national GDP, and the people who have accumulated them do the same really stupid things with them that those who have too much fiat do, like bid up property prices and show off with fancy cars.  All in all, the result has been extremely rapid inflation and it has contributed to a 100,000% increase in real estate prices since 2001 (no misprint).  Makes me wonder if a system built upon random chance discovery is any more stable than one built on an ink-stained trigger finger.

Truth be told, I think it makes sense to be a little like Louis Renault in Casablanca, who “has no conviction” and “blows with the wind”, which “right now is blowing from Vichy”.  In terms of money, right now the prevailing wind is fiat.  Half of the varieties of fiat that have ever existed are being used seamlessly today across the swathe of the planet.  Such is the level of faith---contrary to the oft cited phrase on this website, money IS faith, or faith IS money---that I can exchange paper, electronic blips representing that paper, or promises to deliver one or the other at some future date, and get in return everything from food to transportation to housing…or even shiny rocks.

Whether or not I believe or just pretend to believe is immaterial.  It is only the rock worshippers who view doubt as blasphemy and voiced doubt as heresy (note your down arrows).  What is figuratively and literally material are the things I can obtain and use in return for the world’s current predominant faith.

I know other forms of money have a longer track record, but Judaism and Jainism have a much longer track record than Christianity or Islam, yet not everyone is a Jew or a Jain, in fact they are dwarfed by the former two.  Some of those who adopted the newer faiths even believe so strongly that they are willing to die for their faith, kind of like a robber who risks death trying to get paper from a bank or a 7/11.  Faith is powerful.

Along the path of human history, men have found the need to create all sorts of gods and all sorts of faiths.  Some resonated better than others.  None has resonated as thoroughly as fiat, though until the last hundred years or so gold as money, rather than just an asset class, had done well.  It also seems that the human need to create gods or some greater power in charge of a random Universe is also what bestows on national leaders---everyone from monarchs to Presidents to dictators---the perceived ability to create wealth from nothing, that is, to issue fiat and mandate its use as "coin of the realm".

That human willingness, dare I say NEED, to believe in a greater power is older than any belief in a rock, no matter how shiny.  One can call it human nature.  I suspect changing human nature is going to be pretty tough, for there is a great deal of inertia.  Many on this site like to claim that 99% of people do not own any rocks.  The rock holders believe that is a valid argument for why their chosen faith will skyrocket.  Perhaps they are correct, but until the likes of Ben Bernanke can produce that magical marginal piece of fiat that renders all previously printed pieces worthless, the 99% are going to go about their days trying to accumulate as much of that paper as their skills and cunning allow.  They might even be lucky enough to time their existence on this big rock when the predominant faith is still fiat, rather than be like Nelson Bunker Hunt and make the switch too early and go to the grave a broken man, $48.50 tumbling to $3.

Holding a couple of rocks seems like a good insurance policy, and viewing those rocks as an asset class with at least a temporary popularity can prove beneficial and has proven beneficial since 2000.  So has holding AAPL stock, by the way.  Then, when the time comes, one can always find one of those five thousand year old believers on whom one can unload the whole stack.  Trouble is, the vast majority of those folks who helped produce that 5000 year record are dead, and the vast majority of above-ground humans continue to maintain their faith in fiat.  Will the majority return their faith to rocks, or will they continue to bestow grand powers on their leaders and betters to magically create wealth from paper and electrons?

Fri, 02/17/2012 - 02:46 | 2168658 Goatboy
Goatboy's picture

I would like to read more.. do write some guest article.. if its not much to ask.

Fri, 02/17/2012 - 09:58 | 2169129 chindit13
chindit13's picture

I have written a few guest articles in the last three years, when Tyler has had the need for filler on a slow day.  He is more than obliging.  My views, however, are sometimes contrary to the norm here, so I do not necessarily play well.  I happen to be one of those people who thinks that this is all a bit of a game, and that being above ground for this brief moment we are afforded at existence is rather enjoyable, if we choose to make it so.  Mine has been glorious, and all I wish for is more.  I don't have a whole lot of hate, and my affection extends beyond things such as guns, gold and Ron Paul.  Rather than Ayn Rand, I prefer Graham Greene, Somerset Maugham, Shakespeare, Rudyard Kipling, and maybe Euripedes.  I think Alex Jones and his ilk are pandering buffoons, who never let a lack of knowledge get in the way of a good gut wrenching scroom and faux righteous indignation, and having been an Illuminati in my earlier life, I don't believe in Illuminati.  That makes me an odd man out in a world of endless conspiracy and simmering hate. So instead, I post the occasional comment.

Fri, 02/17/2012 - 14:06 | 2170455 Goatboy
Goatboy's picture

My English is not that good.. after more than a year on ZH this is literally first time I stopped and thought for myself, this guy at least glimpses something all these run-in-a-circle bugs do not. It makes me feel great actually seeing people like you exist.

Thu, 02/16/2012 - 23:12 | 2168244 DVDBeaver
DVDBeaver's picture

The earth that you and your cat live on requires a currency for use by the highest evolved species. We can't, practically, barter cows for wheat. The default currency of this earth is [drum roll] Gold. Why? - for about a dozen reasons that Aristotle laid out (fungible can't be printed like fiat etc.) - and 6,000 years of history has made the choice for you. You may live at the level of your cat - in which case we will leave you some cat food - as we are some of the few holders of real money we will make it Premium cat food - not that dry stuff. Enjoy!

Thu, 02/16/2012 - 18:43 | 2167526 onlooker
onlooker's picture


There is not enough gold to support World trade. Maybe an oil backed currency with agriculture products with gold and a basket currency.


Gold is good but it will not become the only value for a World trade system

Thu, 02/16/2012 - 19:18 | 2167620 ChrisFromMorningside
ChrisFromMorningside's picture

Don't forget silver.

The point is that physical assets are where it's at, not paper. Gold, silver, oil, land, food products, take your pick. Gold gets all the fame because it's the king of the precious metals but it's not the only game in town.

As you think about your future livelihood, realize that it's not all about the assets you're holding on the day we see Dow Zero. The entire global economy is going to be transformed over the subsequent years. Learn a skill that will be valuable post-reset, something that allows you to create physical wealth directly (i.e. with your hands) and not something that involves moving paper around.

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