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US Money Supply Surges Surges 33% in 4 Months - Gold To Follow?

Tyler Durden's picture


From Gold Core

US Money Supply Surges Surges 33% in 4 Months – Global Money Supply to Lead to Gold $10,000/oz?

Gold is trading at USD 1,623.80, EUR 1,177.95, GBP 1,027.01, JPY 124,535.72, AUD 1587.39 and CNY 10,354/oz.

Gold’s London AM fix this morning was USD 1,623.00, GBP 1,027.02 and EUR 1178.14 per ounce.

Yesterday’s AM fix was USD 1,629.00, GBP 1,033.24 and EUR 1,180.17 per ounce.

U.S. M2 Money Supply: Accelerating Sharply in 2011

Gold prices are mixed today as markets remain on edge due to increasing divisions amongst European leaders on how to solve the intractable Eurozone debt crisis. There continues to be very strong demand for physical bullion globally and support is  strong at the $1,600 level due to this demand.

The sharp fall of copper yesterday, by 6%, is an indication that the US, Chinese and indeed global economy is very fragile and may soon begin to contract.

Physical demand in Asia, mainly India and China, has entered the traditional peak season with Indian festivals and the increasingly important Chinese New Year.

This is reflected in premiums in Asia which remain good. There are reports of massive physical buying out of China on gold’s fall close to $1,600 yesterday. The most active Shanghai gold futures traded at a premium of more than $10 over spot prices earlier today. The contract stood at 335.22 yuan a gram, or $1,634 an ounce, at a premium of $3.

Cross Currency Table

Premiums in Hanoi, Hong Kong, Singapore and Mumbai remain robust on continuing physical demand.

Demand from Asia is due primarily to concerns about fiat currencies – both domestic or local currencies but also the current reserve currencies of the euro and of course the global reserve currency the dollar.

China M2 Money Supply: M2 Growth is Decelerating, Yet Still Rising

While all the focus has been on the Eurozone debt crisis recently, the US is suffering a stealth debt crisis of its own which is being ignored - for the moment. As is the burgeoning debt crisis in China.

The US fiscal position is appalling with a $1.6 trillion deficit projected for fiscal 2012 alone. For those who have lost count, the US national debt has risen to over $14.8 trillion. The latest updated projections reveal that the US will reach a 100 percent debt to GDP ratio by Halloween – in 10 days time.

Gold’s recent weakness has coincided with a period of dollar strength but with trade and budget account deficits as far as the eye can see, this dollar strength is likely to be brief.

Indeed, the dollar’s recent strength is due to the fact that while the dollar’s fundamentals are very poor – its competing fiat currencies such as sterling and the euro have similar if not worse outlooks due to imprudent monetary policies.

The possibility that gold could surge to as high as $10,000/oz is gaining traction amongst some respected market participants.

Paul Brodsky, co-founder of QB Asset Management Company has again warned regarding the risks posed to US Treasuries and the possibility of a sharp revaluation of gold that could see gold reach $10,000/oz.

A twenty-year veteran of the bond market in his own right, Brodsky told King World News that the US may return to some form of Gold Standard in order to restore faith in the US dollar.

Proponents, including Steve Forbes and Ron Paul, argue a gold standard would prevent what they see as irresponsible money creation and force the U.S. to live within its means by limiting the amount of money monetary authorities can create.
The idea that the US could revalue gold and devalue the dollar (as was done by Roosevelt in the Great Depression) is gaining increasing currency.

Gold prices would hit $10,000 an ounce or even more should current calls for a return to the gold standard become reality, according to Brodsky.

In conversation with King World News, money manager, Stephen Leeb, said that gold is remarkably undervalued and “is going to add another digit over the next five to ten years there is very little doubt about that.”

Leeb recently said that gold could rise to $12,500/oz. He concluded this based on many of the factors documented by GoldCore in recent years such as gold in terms of financial assets, the monetary base and surging money supply globally.

As the ‘U.S. M2 Money Supply: Accelerating Sharply in 2011’ chart shows, US money supply (M2) has surged in a parabolic manner in the last few months and is up by more than 50% year to date and up 33% in just 4 months - from June 1st to October 1st.

For the latest news and commentary on financial markets and gold please follow us on Twitter

(Bloomberg) -- Gold Pares Worst Weekly Loss in a Month as Commodities Advance on EU Plan

(Reuters) -- Gold edges up on arbitrage buying

(MarketWatch) -- Gold futures rebound in electronic trading

(Bloomberg) -- South Korea to Drop Gold Rings from CPI Basket

(The Motley Fool) -- Why I Was Completely Wrong About Gold

(The Telegraph) -- Italian bond yields reach point of no return

(The Economic Collapse) -- The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System

(King World News) -- Dollar Devaluation Coming, Gold to be Revalued

Brodsky: Apropos of Everything (and Gold)


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Fri, 10/21/2011 - 07:49 | 1796308 Irish66
Irish66's picture

"Printing large amounts of money"  says it all

Fri, 10/21/2011 - 07:53 | 1796319 paarsons
paarsons's picture

Good citizens of Metropolis!

Here's the truth.

We're all fucked.

Run to the hills.

Fri, 10/21/2011 - 08:55 | 1796412 Pinto Currency
Pinto Currency's picture



M1 money stock up 22.6% year over year and 19.4% YTD


M2 money stock up 10.3% year over year and 9.3% YTD


Not so bad at all.  Central planning is wise.  Repeat until it seems true.


Fri, 10/21/2011 - 09:10 | 1796537 Snidley Whipsnae
Snidley Whipsnae's picture

The Fed will keep printing until moral improves.

How's it working so far?

Fri, 10/21/2011 - 12:18 | 1797418 Pinto Currency
Pinto Currency's picture


Buy timber and paper company equities.

Fri, 10/21/2011 - 12:23 | 1797434 Troll Magnet
Troll Magnet's picture

Copying is cheaper than printing.  Long Kinko's!

Wed, 11/09/2011 - 17:24 | 1796585 barkster
barkster's picture


Fri, 10/21/2011 - 07:54 | 1796324 Cash_is_Trash
Cash_is_Trash's picture

Money can't be printed but currency can.

Fri, 10/21/2011 - 08:30 | 1796403 I am more equal...
I am more equal than others's picture

This is the 'Weimar Solution' which will lead to the 'Final Solution.' 

Fri, 10/21/2011 - 10:37 | 1796957 DaveyJones
DaveyJones's picture

nor can BTUs of energy

Fri, 10/21/2011 - 07:58 | 1796330 Snidley Whipsnae
Snidley Whipsnae's picture

The world is drowning in paper.

We need a sequal to the film "Water World"... "Paper World"...

Print Ben, Print!

Fri, 10/21/2011 - 08:11 | 1796355 bernorange
bernorange's picture

QE3 bitchez

Fri, 10/21/2011 - 08:42 | 1796440 Beastmanager
Beastmanager's picture

Wowowoww, this is it! Deflationist short squeeze!

Fri, 10/21/2011 - 09:39 | 1796632 Smiddywesson
Smiddywesson's picture

Hee, hee.  I don't think it's over just yet.  We are likely to continue to see deflation in some areas of the economy and inflation in others.  I think the reluctance to announce QE3 and bail out the EU banks shows they intend to stretch this out as long as possible.  But there are signs this is coming to an end.  In risk of repeating myself, I see those signs as:

  • Global economic based protests (over 1500 cities)
  • Step Two: The trade wars are beginning
  • Step Three:  Major military conflicts on the horizon
  • Major US and European banks at the brink of the cliff
  • There's a bank run on BOA
  • Gold refuses to stay below $1600, a clear sign that the margin hikes and manipulation were overdone and strong hands prevail and/or the price suppression mechanism is at the breaking point and can't push gold down any further without decoupling it from paper.
  • JPM silver shorts are greatly reduced and position limits will end the silver suppression game.
  • Desperation on the part of economic officials who have made themselves a laughing stock.  These guys didn't get to the top of the pyramid by ignoring their political capital.  Today, the biggest fishes are squandering that credibility.  End game is near.
  • Rapidly widening spreads in the PM markets
  • Operation Twist has turned into Operation Twisted (fail)
  • Foreign banks are dumping US treasuries.  The continuance of the USD as a safehaven is crumbling. 
  • Changing the circuit breakers to stop trading was a tell that they are about to leave the little guy holding the bag in what could be a limit down situation in stocks, where only algos get to sell during the first few minutes of trading each day 

I really don't think the Fed and the ECB will hyperinflate.  They need to boil the frog slowly, not stampede everyone into PMs.  Also, if they hyperinflate, there will be a political rebellion and the Fed and the major banks will be finished.  The ECB has replaced most of their foreign currency reserves with gold.  When the asset side of their balance sheet is fully purged, and the Fed hits its target gold acquisition, I believe they will have lost all motivation to continue kicking the can and we will get a new monetary policy based on some referrence to gold.

I really don't agree this will continue into 2013 as some on ZH have expressed.  Maybe if the game didn't change that would be so, but that's the problem with all the hyperinflation and deflation arguments, Ben and company are going to do what's good for TPTB.  That means they are going, to borrow a phrase from sailing, tack their way to their objective.  That objective is to bail out the banks, restore their balance sheets, say nobody saw it coming, and paint themselves as heroes for "saving the world."  Of course, that requires them to first destroy the balance sheets of the central banks by bailing out the major banks, which will destroy the finances of all the savers in fiat currencies, and then fill the asset side of their balance sheets with something they can inflate to balance out the expanded liability side of their books.  After the price inflation of that asset, they are instantly solvent, and anyone without that something  upon which the monetary system will be based, will instantly take a haircut without ever filling out a tax form.

The price of gold will rise when the central banks are positioned.  They are likely to crash paper prices immediately prior to the change.  The announcement will come after hours when the markets are closed.  There will be no opportunity to position oneself for the change unless you have physical, or you are willing to catch the knife when they drive prices down.

The central bankers are the only ones who know what is coming.  They are buying, and they are outright lying about gold.  So, even though this is all based on supposition, I don't see any other way for the central banks to survive this crisis. 

Fri, 10/21/2011 - 10:35 | 1796953 pvzh
pvzh's picture

What you describe will lead to hyperinflation immediately. Economy is such a funny thing -- you cannot raise price of one thing / asset arbitrary to achieve your goal. I can tell you that from experience in USSR where economy was planned, and they tried to overvalue somethings because it believed to be a "luxury". For example, they raise prices on cars (50% -- 100%) overnight (the was done several times after WW2 with the same sequence of events after wards). Same day as announced other prices that are not directly controlled by the state ("farmers' markets") saw very similar increases and after minor adjustments remained there. USA is not USSR (not yet at least fully), so next step after gold jump, oil in the world markets will jump by the same percentage and will stay locked to gold. After that either rationing plus hyperinflation in the black market or just hyperinflation.

Fri, 10/21/2011 - 10:49 | 1797030 DaveyJones
DaveyJones's picture

hyperinflation is NOT something the government does or does not allow. It is a panic moment, whose precision point is hard to predict but still a rational and innevitable result of constant currency erosion. Hyperinflation is also a natural producer of deflation in certain long term items as all the money crowds up on the short end not wishing to take a ride longer than five minutes. That's Weimar and soon us.     

Fri, 10/21/2011 - 10:52 | 1797053 Chaffinch
Chaffinch's picture

Nicely put Smiddy. A damned sight more interesting than reading Goldcore's article!

I'm not sure about the end of paper gold though. Are they going to bring other paper markets down as well - paper oil, wheat, etc?

I take the point that a crazy amount of paper gold is traded, and there isn't the physical to back it, but that situation has existed for a long time, without a real problem, because trades can always be settled for cash. There isn't enough gold to back the paper, but there is always a counter party to claim from. If shorts get stopped out in a massive upwards move, then maybe market makers will end up so short they go bust... - would the CBs let this happen? Why not?

Fri, 10/21/2011 - 12:41 | 1797457 Pinto Currency
Pinto Currency's picture





The Fed and G20 central banks have hyperinflated over the past 20 years.  That is why you have a $100 trillion world bond market which is on the verge of puking.  When the bond market sluce gates break, you will see hyperinflation faster than you can say "tsunami" as the rush into real assets and general equities accelerates.


That is why you have all the "deflation" promotion on Bloomberg and CNBC.  The only deflation that we will see will be measured in the cost of goods in gold and silver money.  The cost of goods in fiat currency will then be best described by Jackie Gleason (if he was still with us).

Fri, 10/21/2011 - 13:43 | 1797727 Smiddywesson
Smiddywesson's picture

I think we agree on that point.  We will continue to have inflation on the things we use and deflation on the assets we own, until the kick the can game comes to an end.  As you say, the size of the deluge when the sluce gates break could very well overwhelm the plans of the evil central bankers.  As far as I'm concerned, that's doubly good for holding physical gold.

Fri, 10/21/2011 - 17:31 | 1798433 Pinto Currency
Pinto Currency's picture




I think that when we measure value of goods in fiat currency everything will increase in price as the currency devalues - some things will rise in price faster than others (i.e. gold, silver, food, etc.)


However, measured in terms of silver and gold (money) the price of things will deflate in price as silver and gold increase in value the fastest.  My take.

Fri, 10/21/2011 - 14:29 | 1797930 Beastmanager
Beastmanager's picture

Too much faith on the central bankers have you, Skywalker

Fri, 10/21/2011 - 14:42 | 1797994 twotraps
twotraps's picture

really awesome, an article within the article, had to read it twice!  have a good weekend

Fri, 10/21/2011 - 13:55 | 1797788 Elliott Eldrich
Elliott Eldrich's picture

Once velocity picks up inflation is going to skyrocket. I don't see any other way this can go.

Fri, 10/21/2011 - 07:53 | 1796318 PaperBear
PaperBear's picture

Silver more so.

Fri, 10/21/2011 - 08:03 | 1796341 Quinvarius
Quinvarius's picture

People who short silver are insane.

Under 1 billion cash cleans the whole place out.

Fri, 10/21/2011 - 11:01 | 1797097 Chaffinch
Chaffinch's picture

Yes Quinvarius I agree that they are insane.

The problem is:

1) You and I lack the necessary billion dollars

2) Those who do have a billion dollars have tried and failed, because Comex does not fight fair

3) A major flaw in the plan to clean out Comex is that buyers of futures contracts cannot insist on delivery. Sellers can insist on delivery!

Fri, 10/21/2011 - 11:10 | 1797139 DosZap
DosZap's picture

Got your PVC Bitchezz,if it goes to $3k+ look for the Confiscation orders to come down.

NO way they allow prudent, and smart phys holders to kame thos profits.

It didutes the 1%. And they cannot have that.

Fri, 10/21/2011 - 07:53 | 1796320 Cassandra Syndrome
Cassandra Syndrome's picture

This is going to lead to chronic inflation, don't care how low its velocity is. 

Fri, 10/21/2011 - 07:55 | 1796326 GeneMarchbanks
GeneMarchbanks's picture

No question about inflation coming but also deflation. Biflation.

Fri, 10/21/2011 - 07:58 | 1796331 Cassandra Syndrome
Cassandra Syndrome's picture

Inflation for the stuff we need like food and energy that have highly inelastic supply curves. Deflation for all the stuff we don't need like durable goods. This off course will skew the CPI much to the glee of the Bernank

Fri, 10/21/2011 - 08:01 | 1796336 Snidley Whipsnae
Snidley Whipsnae's picture

It won't matter how much the CPI is 'skewed' if Benny and Obummer fail to feed people... Real fire works start when people have nothing to eat.

Fri, 10/21/2011 - 10:03 | 1796715 Smiddywesson
Smiddywesson's picture

And that's when your stash acquired since 1968 goes nuclear, because that's one of the few things that will force the Fed and the ECB to make their move.  That's when paper gold crashes and they try to scare everyone out of the paper market and then announce, after the markets are closed, that we are entertaining a new monetary standard, backed by gold, just not gold valued at today's price, because that wouldn't bail them out.

Fri, 10/21/2011 - 09:52 | 1796770 barkster
barkster's picture

everyone will be fed. why, monsanto will probably even be delivering to everyone's doorstep. "want a side of roundup with that soy/female hormone burger, sir?"

Fri, 10/21/2011 - 10:13 | 1796841 Smiddywesson
Smiddywesson's picture

Soylent green is so much tastier than soylent yellow.

Fri, 10/21/2011 - 08:09 | 1796344 silver500
silver500's picture

This is correct, inflation for necessities and items that are produced quickly with lower capital investment required for production.

Inflation (Phase 1 inflation):
Bus fares

Middle (Phase 2 inflation):
Washing Machines

Deflation (Phase 3 inflation):
Real Estate
Industrial machinery

Fri, 10/21/2011 - 11:05 | 1797101 DaveyJones
DaveyJones's picture

yup. Not sure about furniture since you don't really need new stuff that badly, its technology does not turn over like the microchip and its intimately tied to real estate  

Fri, 10/21/2011 - 11:36 | 1797272 Long-John-Silver
Long-John-Silver's picture

Lots of people will be very happy to repair/restore your old furniture at a fraction of it's replacement cost.

Fri, 10/21/2011 - 08:10 | 1796354 Quinvarius
Quinvarius's picture

Gonzalo Lyra wrote an awesome article about what hyper inflation looked like in South America.  That is pretty much what he described.  Prices on a lot of things actually dropped very far relative other things with more utility.  For example, you could trade a home for a car.  And knowing what it will look like, I think there is a good chance the CPI will barely show it.

Fri, 10/21/2011 - 08:39 | 1796430 GeneMarchbanks
GeneMarchbanks's picture

There's something missing here that is not discussed: DigiDollars.

Hyperinflation is a political event, not monetary. Funding for the PDs will continue but not for the so called 'real' economy. Financial bubbles forming are not a sign of hyperinflation.

Fri, 10/21/2011 - 09:22 | 1796588 Snidley Whipsnae
Snidley Whipsnae's picture

Hyper inflation occurs when citizens lose faith in the currency; ie, that the currency they hold today will purchase the same amout of bread tomorrow as it does today.

You can call that a political or monetary phenomena... Congress has abdicated it's responsibility, handing it over to the Fed.

The Fed, which is owned by bankers, is supposed to be independent of the US Gov... Do you believe this?

When the Fed and other central banks routinely intervene in all asset markets how can one say that 'hyper inflation is a political event'?

Not buying that one.

Fri, 10/21/2011 - 11:16 | 1797170 DaveyJones
DaveyJones's picture


Fri, 10/21/2011 - 19:30 | 1799033 fnord88
fnord88's picture

Agreed. If anything I would say hyperinflation is a psychological event. When people believe their money will buy less tomorrow than it does today, velocity will pick up and it will spiral out of control. An important thing to remember is massive printing occurs AFTER hyperinflation has started, not BEFORE.

Fri, 10/21/2011 - 08:18 | 1796373 silver500
silver500's picture

There are two main factors at work here:

1. As the economic situation becomes worse people must spend a higher proportion of their income on necessaties

2. The low interest rates and loose monetary policy that cause the inflation also causes too much debt funded investment into capital intensive production.  Therefore the supply of goods with a long production cycle will be too high and the price of these goods will fall in the medium term

Fri, 10/21/2011 - 09:55 | 1796780 Smiddywesson
Smiddywesson's picture

I don't think TPTB are going to have the luxery of stretching this out over a long period of time after they hyper print.  When the real printing begins (already has) the clock will begin ticking on how long they can go before they announce a new monetary system.  The end of the world deflation and inflation arguments assume the central banks don't have a plan to stick us with the bill and survive.  They are not supermen, but they have shown themselves to be very competent jugglers.  If we reach the wheelbarrow point, the central banks are dead and the New World Order will be swept away.  They know this.  TPTB have no intention of being unseated from power, and I'm not optimistic enough to believe they will be.

TPTB decide what is money.  For a time, that thing was paper.  Now, we are returning to gold as money (real money) and when they have enough of it, or their hand is forced, they will tell us gold is money (again).  The plan is for them to be sitting on a pile of it when that announcement is made, and them tax everyone without gold by ramping the price of gold.

And everyone lived happily ever after.


Fri, 10/21/2011 - 12:00 | 1797357 Soda Popinski
Soda Popinski's picture

Agreed.  I also think its fair that we start calling the bernankster 'Bicurious Ben'

Fri, 10/21/2011 - 07:55 | 1796325 Gamblor
Gamblor's picture

Ron Paul has it nailed. Gold may rise, but the real heights will be in silver - it's what the man on the street can afford. 

I got one of these back in change from my Chinese food delivery last night.  I would make sure they were out of circulation if I was the government - we wouldn't people asking questions about what the heading means...


"Silver certificate?  What does that mean?"

Fri, 10/21/2011 - 08:09 | 1796352 MonsterBox
MonsterBox's picture

More interesting is "Who printed the "Silver Certificate"? Not the Federal Reserve, but the US Treasury...

And "Why did the Treasury print them for those several years in the 1960's?"  JFK was trying to do an Andrew Jackson.

just read this piece on JFK Executive Order 11110

Fri, 10/21/2011 - 09:09 | 1796528 FEDbuster
FEDbuster's picture

How did that work out for JFK? 

Fri, 10/21/2011 - 09:24 | 1796603 pods
pods's picture

Many have a different opinion about EO 11110, including G. Edward Griffin, of TCFJI fame.  That order merely delegated the president's authority to the sec of the treasury.


Fri, 10/21/2011 - 08:14 | 1796365 s2man
s2man's picture


Fri, 10/21/2011 - 08:44 | 1796433 GeezerGeek
GeezerGeek's picture

In response to what I infer from an above post, they were not printed just in the 1960s. They go back to around 1900 or earlier.

I hope I recall this stuff correctly:

Silver certificates were U.S. currency issued up to 1964. In 1964 one could walk into a bank and exchange a $1 silver certificate for a real $1 silver dollar. Silver dollars were still in circulation, although worth more as silver than as money. Silver certificates were essentially 'retired' when they ceased to be redeemable in silver. That was in 1968, I think, the same year I graduated from college. During the same approximate time span all U.S. silver-based coinage (dimes, quarters, half dollars) ceased to have silver as part of the content.

I was introduced to silver dollars around 1960, when my one grandfather gave each of his four grandchildren a bag of 100 silver dollars as a Christmas gift. My parents induced me to deposit most of them in a local savings & loan, but I insisted on keeping a dozen. Still have them. Back then there was no real point in having the heavy silver dollars when a piece of paper, redeemable in silver, fit in a wallet much better.

The other drawback to silver dollars was they were not good for stuffing under a mattress. Too lumpy. But they did keep their purchasing power: A dollar in 1960, silver or paper, could buy 4 or 5 gallons of gasoline. Today a silver dollar (assume one ounce of silver to make it simple) can buy 9 or 10 gallons of gasoline. Not so for paper dollars. Same holds true for other items: in 1962 a Ferrari 250GT went for all of $12,500. If my grandfather had given me 12,500 silver dollars rather than 100, I could have bought it with those silver dollars. In 2011 terms, I'd have nearly $400,000, and I think I could buy some Ferrari for that amount.

Maybe we need a modern day version of Bryant's Cross of Gold speech. Now it would be a Pile of Paper.

Fri, 10/21/2011 - 08:55 | 1796470 Snidley Whipsnae
Snidley Whipsnae's picture

Bryan's 'cross of gold speech' was a stab wound to sound currency backed with gold/silver and eventually led to the destruction of sound dollars backed with PMs.

Sound money advocates are always over run by easy money advocates... and the results are what you are witness to now.

Easy money (fiat backed by nothing) allows future demand to be pulled into the present; ie, savings are not required when lots of 'easy credit' is available to anyone that can fog a mirror.

Fuck Bryan and the horse he rode in on... btw, his name is spelled BRYAN, not Bryant. 


Fri, 10/21/2011 - 08:01 | 1796337 Debtless
Debtless's picture

US Money Supply Surges Surges 33% in 4 Months - Gold To Follow? Not if they can help it. That's for sure.

Fri, 10/21/2011 - 08:02 | 1796338 eddiebe
eddiebe's picture

The answer to the title question is:  Gold will follow when the Powers that be allow it to follow.

Fri, 10/21/2011 - 08:05 | 1796347 Snidley Whipsnae
Snidley Whipsnae's picture

An alternate answer is "gold will surge when people lose faith in the dollar".

Otherwise known as hyper inflation.

Fri, 10/21/2011 - 10:27 | 1796913 Smiddywesson
Smiddywesson's picture

Theory vs. practice.

You are both right, and that is exactly the game that is being played.

Gold will surge when the central banks are forced to play their hand OR, if they are smart, they will step in before their hand is forced and announce a new gold standard, ramp the price of gold, and ensure by their positioning that they are the chief beneficiaries of the inevitable (and therefore survive this crisis). 

So as Snidely rightly pointed out, one of the things that will force their hand is people losing faith in the dollar.  Another is widespread political unrest/war, or a breakdown in the paper markets and a decoupling of paper from physical gold.  There's also a chance one of the co-conspirators (like China with the PAGE) will bring a very brittle gold suppression scheme to its knees when it suits them. 

This is why Ben stutters, he doesn't know if he will run out of time either.  He is playing a game of Three Card Monty on the tilting deck of the Titanic and the stakes are survival and continued domination of the world's money.

Fri, 10/21/2011 - 08:12 | 1796360 moskov
moskov's picture

US dollar is going to go back gold standard?


What gold standard? Those fake gold bars stored in Fort Knox and they have never been audited for years.....


Good luck with that. It's too late

Fri, 10/21/2011 - 08:28 | 1796397 s2man
s2man's picture

IF the gold is there, revaluing the dollar to, say, $6000/10z Au would make U.S. gold to debt ratio look good again, on the balance sheet.  And the poor bond holders would be paid back with dollars which are 1/4 of their previous value.  Albeit a stable, tiny dollar.

This, of course, could be viewed as a default.  Which way would the markets swing?  Stick with the now-stable dollar, or abandon the dollars, which all come flooding home and create instant hyperinflation in the U.S.?

Fri, 10/21/2011 - 10:40 | 1796979 Smiddywesson
Smiddywesson's picture

If I was a central banker, and I had almost 4 years to replace the gold, and access to unlimited reserve currency funds, and bail outs to empower the entities to whom I lent my gold to return it, and I knew the system was so awash in debt and derivatives that it couldn't be saved, I would start buying gold, encourage my counterparts to buy gold, and replace the gold that was supposed to be in my vaults.  The gold has been or is being replaced.

If all the central banks of the world are in on the plan, who will be left to call the shift to a gold referrenced system a default?  The ratings agencies?  The fiat currencies of all nations will undergo the transformation at the same time, so there should be no flooding back into their countries.  This is a global monetary debasement, consensual on the part of the banks, rape from the perspective of anyone without gold.

Which way would the markets swing?  I'm not sure that is the major consideration.  Preventing a market crash is important to create the illusion of a stable economy and to buy time.  Once the change is effected, the motivation is removed to hold markets up.  My guess is they would crash.

Fri, 10/21/2011 - 11:42 | 1797298 MissCellany
MissCellany's picture

I would start buying gold, encourage my counterparts to buy gold, and replace the gold that was supposed to be in my vaults.  The gold has been or is being replaced.

That's probably why they haven't allowed an audit of Fort Knox in decades. Hide the truth of what is (and isn't) really there in the vaults, AND hide how long ago the stuff that isn't there went "missing."

Fri, 10/21/2011 - 13:48 | 1797762 Smiddywesson
Smiddywesson's picture

And the loan sharks stall while bailing out their customers so they can put the gold back.

Fri, 10/21/2011 - 08:14 | 1796364 msmith
msmith's picture

Gold is likely headed higher for the days ahead.  "Risk On" price action to continue.

Fri, 10/21/2011 - 08:14 | 1796369 Matrix R Us
Matrix R Us's picture

The Gold mothership is still being fueled, but soon enough it will take off and leave all paper currencies behind!

Pick your seats bitchezzzz!

Fri, 10/21/2011 - 08:21 | 1796384 RobotTrader
RobotTrader's picture

Gold is going to go wherever the economy and ES goes.

Strong economy = higher gold prices

Bank implosions and financial collapse = huge crash in gold prices

Fri, 10/21/2011 - 08:30 | 1796405 Snidley Whipsnae
Snidley Whipsnae's picture

"Bank implosions and financial collapse = huge crash in gold prices"


Bank implosions and financial collapse = huge crash in PAPER gold prices...

fixed it for you robo... you're welcome.

Fri, 10/21/2011 - 10:14 | 1796851 oddjob
oddjob's picture

If you throw your Gold out the window, it still wont fall as hard or as fast as Robo's Netflix.

Fri, 10/21/2011 - 08:31 | 1796407 s2man
s2man's picture

You left out the inflating monetary supply, the resulting price inflation, and the flight to safety (i.e. gold) = higher gold prices.

Fri, 10/21/2011 - 09:01 | 1796487 Hulk
Hulk's picture

Au, Ag will be the last men standing...Robo to fade away and never be heard from again...

Fri, 10/21/2011 - 09:16 | 1796558 FEDbuster
FEDbuster's picture

Pb and Cu alloys will play important roles in the future, too.

Fri, 10/21/2011 - 10:46 | 1797008 Smiddywesson
Smiddywesson's picture

Au, Ag will be the last men standing...Robo to fade away and never be heard from again...


No, Robo's job is to make you turn green.  I doubt very much Robo takes any of those trades.  Do you Robo? 

Hulk SMASH!!!!! 

Fri, 10/21/2011 - 09:45 | 1796725 jjsilver
jjsilver's picture

Are you basing this on the ongoing manipulation, or some secret fundamentals nobody knows about. Gold historically has performed better during deflation.

Fri, 10/21/2011 - 14:41 | 1797988 TheSilverJournal
TheSilverJournal's picture

Gold has not moved with ES when looking over the last 10 yrs.

Fri, 10/21/2011 - 08:22 | 1796385 Dr Bob
Dr Bob's picture

I have been following gold and silver pretty intensily for the past 3 years. i have read all the blogs and just about everything else i can get my hands on. i feel that i have a pretty good understanding of how and why the price moves. but what im really starting to realize is that nobody has a clue to what is going to happen. mainly because nothing is normal anymore. with the government and central banks so heavily involved with just about everything under the sun there is no telling what they are going to do. i keep hearing this cry for a return to a gold standard which in reality should happen. but im afraid we no longer live in reality. if i was the gov or a central bank, im thinking that a gold standard sucks for me. it would put a limit or cap on the money supply that i would have available to do what i please. there is only so much gold and silver available out there therefor i would only be able to print so much money. so in the eyes of a central banker or gov a gold standard would totally suck. so i dont see them doing it. this is why the euro is going to fail. europe has dug such a deep hole that they cant print their way out of it like the US can since its partially backed by gold. in reality they would therefor need more gold to print more euros (wondering what happened to momars gold?). unless i have missed something, which is possible, i havent heard of more euros being printed. and im assuming if they do print then the value of gold in euros should increase and therefor the euro should drop in relation to the dollar. so i just dont see a gold standard coming, i would love to see a gold standard cause i gots me some gold and silver stashed away. but this wouldnt benefit the TPTB. i think that the world is in deep shit and govs need a way out of the mess they have created. sadly i think WWIII will happen in the near future, this may see this as their only way out of this mess. but i could be wrong. its just that we dont live in reality anymore and i think you all know that. so a future gold standard?? i highly doubt it.

Fri, 10/21/2011 - 08:34 | 1796416 s2man
s2man's picture

+1 for "nobody has a clue to what is going to happen".  I doubt even Dr. copper's ability to foretell the future.  This is a new game, and all the old indicators are probably meaningless.

Fri, 10/21/2011 - 08:34 | 1796419 Snidley Whipsnae
Snidley Whipsnae's picture

"but i could be wrong."

You are certainly right about that statement. As for the rest of your ramble... keep reading ans studying.

Fri, 10/21/2011 - 08:43 | 1796443 prole
prole's picture

I agree with Bob above and Yellow below. There will be no gold standard (in law.) Side point- I do believe we already live in a de facto gold standard world, with fiat currencies floating against gold. Why would the JTB the 1% allow themselves to be chained down to a fixed gold standard? It would be stupid on their part. As it is now they can print paper for free, use the paper to buy real gold, and also tax the slaves to recall the paper. It is a perfect system for slavery forever. God my knees hurt.

Fri, 10/21/2011 - 10:05 | 1796812 Gavrikon
Gavrikon's picture

". but what im really starting to realize is that nobody has a clue to what is going to happen. mainly because nothing is normal anymore. with the government and central banks so heavily involved with just about everything under the sun there is no telling what they are going to do."

Right there with you, Doc.  But still, I keep on accumulating.

Fri, 10/21/2011 - 10:19 | 1796871 monkeys.pick.bottoms
monkeys.pick.bottoms's picture

WW3 not likely. All major powers too broke for a war. The first two wars were large scale thefts through inflation. You got inflation during and after those wars. No such trick possible this time. Apart from MENA - those guys still have money. Yes, I can see $200+ barrel of oil as a result of a Sunni-Shiia conflict.

Fri, 10/21/2011 - 10:58 | 1797090 Smiddywesson
Smiddywesson's picture

this is why the euro is going to fail. europe has dug such a deep hole that they cant print their way out of it like the US can since its partially backed by gold. in reality they would therefor need more gold to print

Agreed, we don't know the details of the new monetary system.  However, we have logic and some facts:

  • A true gold standard would handcuff TPTB to an extent, and they wouldn't want that, so we will get some sort of gold referrenced standard.  For us as individuals, the details of how the system works don't matter, what matters is for a change to a new system to make them any more solvent, the gold on the asset side of their balance sheet has to be worth exponentially more than today.
  • Central banks are buying, all of them, all over the world
  • Ben Bernanke lied about gold in his testimony with Ron Paul.  People like him don't lie about unimportant things.
  • The ECB is currently replacing the asset side of their balance sheet form gold and foreign currencies to just gold.  Last time I checked, assets were over 65% gold.  China is dumping foreign currencies too.

"(W)hat im really starting to realize is that nobody has a clue to what is going to happen..."

Not true.  Yes, you and I don't need to know the details of the next monetary system or what frankenstein's monster it will be in comparision to a true gold standard.  Ben and all the other central bankers know what is going to happen and they are stacking gold and lying about it.  that's the tell.  That's all you need to know to win this card game.   

Fri, 10/21/2011 - 15:42 | 1798269 Chaffinch
Chaffinch's picture

I have re-watched that 'is gold money?' clip twice again today and I agree that BB is lying. He knows that Ron Paul's 5 minutes is nearly up and he plays for time - telling RP why he thinks people buy gold (tail risk etc.) when RP hasn't asked him that question. He looks off-balance, even though he has clearly anticipated being asked about gold and is ready with some gold-related waffle. His biggest pause is when RP asks him why CBs buy gold... my take on this is that RP is sounding like he is 'on to something' and BB is worried where it will lead to...

Fri, 10/21/2011 - 11:31 | 1797247 DaveyJones
DaveyJones's picture

we don't live in reality, but reality lives in us. Some sort of standard must rise from the ash

Fri, 10/21/2011 - 08:26 | 1796394 Yellowhoard
Yellowhoard's picture

Be careful what you wish for with regards to a return to the gold standard.

It is far easier for the central bankers to corner the world's gold market than the silver market.

With the power to gun the price of gold up and down, they can continue their game of lend and deflate pretty much the same as they do now with fiat.

A silver standard would be better. A broad basket of commodities better yet.

Fri, 10/21/2011 - 08:57 | 1796476 GeezerGeek
GeezerGeek's picture

I'm not sure I understand why silver would be better than gold, since I read that silver is in much shorter supply than gold. If this is true, would it not be just as easy to manipulate the price of silver as it is to manipulate the price of gold? Couldn't TPTB just give silver a 40% haircut one day? Oh, wait, that really happened...

I'd be for a gold standard if we really have our gold in Ft. Knox, as they claim, and a law is passed prohibiting government confiscation of gold or anything else.

Fri, 10/21/2011 - 09:29 | 1796627 FEDbuster
FEDbuster's picture

Let's just assume the dollar won't be tied to anything for the rest of it's reserve currency life (except maybe US Military strength).

I am supportive of Bill Still's solution to rid us of the FED, and our National Debt:

Would love to hear some feedback from ZHs on these ideas.

Fri, 10/21/2011 - 09:39 | 1796682 Snidley Whipsnae
Snidley Whipsnae's picture

Over hundreds of years the ratio of silver:gold found in the earth has now been established at about 16:1.

Silver to gold prices have varied a great deal over thousands of years. If you read the history of the great Italian banking houses you will find that they manipulated the SUPPLY of silver to some countries that were on a silver standard, and silver has at times, in certain places, had greater purchasing power than gold. For instance, the Italian banks choked off the supply of silver to England at a time when gold was virtually unknown in England. This was done not to hurt the economy of England but to bankrupt a rival Italian banking house. Banksters...the azz hats never change. 

imo, one has to look at the situation from two perspectives... Central banks hold very little silver and silver is used up about as fast as it is mined...except that silver which is hoarded or used in flatware, etc.

Central banks (supposedly) hold about 30 per cent of all the gold ever mined... So, if any metal is monetized it will probably be gold first and silver will follow shortly there after.

Logic would indicate that the gold silver ratio will vary but will eventually settle back to the ratio in which each is found in, 16:1.

Fri, 10/21/2011 - 11:28 | 1797237 Smiddywesson
Smiddywesson's picture

Speaking of industries.  The historical 16:1 ratio would logically seem to be the reset ratio but inasmuch as silver is used up, and gold isn't, shouldn't that ratio drift over time?  Also, technology has greatly increased the rate at which silver is used up, so shouldn't that drift in the ratio increase?

I don't think they will need or want to monetize silver.  If they monetize silver, they can't manipulate the price at will because too many industries need it.  A scarcity of gold was a problem under the old gold standard.  We are in a digital world today.  Paper and plastic will retain their place as the unit of trade.  If not enough gold is available to fill their vaults, they will just ramp the price of gold manipulate their balance sheets.  The game under this system will be tipping off their cronies to these actions to extract money from the market.  It's no different than tipping them off about interventions in the fiat market.  At least initially, with the amount of debt in the world, they will only be able to use gold, because only gold can be inflated at will.  With complete control of our money, why would they further complicate things with silver?  Also, where is the evidence of central bank purchases of silver today?  If they announce a gold standard, all the cheap silver will be long gone.  If that was in the cards, they'd be buying.

Fri, 10/21/2011 - 11:12 | 1797149 Smiddywesson
Smiddywesson's picture

Be careful what you wish for with regards to a return to the gold standard.It is far easier for the central bankers to corner the world's gold market than the silver market.With the power to gun the price of gold up and down, they can continue their game of lend and deflate pretty much the same as they do now with fiat.A silver standard would be better. A broad basket of commodities better yet.

And that's exactly why you will never see a basket of commodities standard, it is harder to manipulate (and cheaper to fix gold prices than multiple larger markets).  It would destroy the world's economy if they ramped multiple commodities enough in such a system to make themselves solvent.  Gold, they can run as high as they need.  Only gold can be manipulated at will with limited real world repercussions to industry.  Plus, they have plenty of experience in manipulating gold, so yes, a return to a gold referrenced standard will be no heaven on earth.

Fri, 10/21/2011 - 15:46 | 1798285 Chaffinch
Chaffinch's picture

How does a broad basket of commodities backed currency actually work. If I take my paper to the bank, to redeem it, do I carry away a selection of metals, plus a paper claim to redeem wheat, oil and coffee beans?

Fri, 10/21/2011 - 08:32 | 1796408 Tic tock
Tic tock's picture

33% in four months - does that make the Military a mercenary force? inquiring minds would like an answer.

Fri, 10/21/2011 - 08:32 | 1796411 lovedr
lovedr's picture

I don't think a gold-standard currency is possible unless the entire planet adopted it...nations who weren't on the standard could (temporarily) print their way to prosperity.  This would benefit them until the always-delayed devaluation of their currency occurs.  In the case of the US, there isn't enough gold on the planet to back the currency that exists, let alone the debt that's sitting on "the books".

I don't think a gold-standard is going to be seen again for another reason: it takes the power of the press away from TPTB and they simply do not give up power.

I believe they're going to kick the can down the road as long as possible and when the house of cards is too tall to stand any longer, they'll announce a new world government, the formation of which will "require" the reset of all sovereign debt to "zero".  There will be a new world currency, etc. etc.  Bye-bye multi-trillion $$ deficits.

You are correct:  war is coming.

Fri, 10/21/2011 - 08:37 | 1796425 Snidley Whipsnae
Snidley Whipsnae's picture

"I don't think"

Right you are, lovedoc.

Fri, 10/21/2011 - 11:49 | 1797320 MissCellany
MissCellany's picture

Oh, get over yourself, Snidley, you frigging piss-ant. [rolls eyes]

You can't even spell Snidely correctly.

Fri, 10/21/2011 - 08:44 | 1796445 Yellowhoard
Yellowhoard's picture

In the case of the US, there isn't enough gold on the planet to back the currency that exists, let alone the debt that's sitting on "the books".

Not true. It depends on the price of gold. If gold goes to $30,000 an ouce there will be plenty of gold to back our currency.

When the house of cards eventually collapses, gold will discover it's actual value in dollars.

Fri, 10/21/2011 - 09:19 | 1796576 FEDbuster
FEDbuster's picture

Gold has a fairly constant value when not manipulated, it's the dollar's value that will change.

Fri, 10/21/2011 - 11:40 | 1797289 Smiddywesson
Smiddywesson's picture

Once again, Yellow is right.

If you back the currency with gold, and ramp the price of that gold, your balance sheet balances.  Instantly, all the little people without gold are poorer, and the people that matter, like the central banks, are solvent because wealth is now measured at the top in gold, not paper.  The paper will still exist, but the gold will determine how much it is worth. 

What you won't see is gold coins or any of that gold going out into the economy.  It will move between central banks, but that's it.  So scarcity of gold is not at all an issue in the digital age.

Monetary policy doesn't create wealth, it just moves it around, so gold itself is besides the issue.  If I hold the only one-eyed albino shark in the world (assuming it can't be manufactured) and the price of a one eyed albino sharks is ramped to $70 trillion, then I just took $70 trillion out of the public's pockets.  They are stacking gold and are going to use it to pick your pocket to escape insolvency.  If you don't have physical gold, you are paying the bill for this bail out.  

Fri, 10/21/2011 - 08:32 | 1796415 i.pagnottella
i.pagnottella's picture

Can't we get gold analysis from someone who isn't biased and in conflict of interest? Gold core I think should be pretty biased.....

Fri, 10/21/2011 - 08:42 | 1796439 Snidley Whipsnae
Snidley Whipsnae's picture

Try this i.pag...

From I Tulip...

"Essential Trends: Gold in an era of global manetary system regime change"

Fri, 10/21/2011 - 10:08 | 1796824 Gavrikon
Gavrikon's picture

Doesn't EVERYBODY have SOME kind of bias?

Fri, 10/21/2011 - 08:40 | 1796436 mayhem_korner
mayhem_korner's picture



The U.S. economy is like the Minnesota Vikings.  The 1-5 record looks good compared to the Dolphins (Europe).  But for Euro-plosion, the USD would be much lower, and Au would be pushing 2K. 

Soon enough...

Fri, 10/21/2011 - 08:53 | 1796444 scatterbrains
scatterbrains's picture

Is it allready an oil standard ? Lets see what the m2 chart looks like with a Brent crude chart overlay and does the increase in oil prices keep the metals in check or at least constrained ?



Fri, 10/21/2011 - 08:50 | 1796454 beaker
beaker's picture

And on the confiscation question that ocassionally comes up re gold, all the govt has to do tax sales at 50% (or pick a number).  Game, set, match. 

The bastards will get us one way or another.  Vote 'em all out.

Fri, 10/21/2011 - 08:51 | 1796455 youngman
youngman's picture

Right now this money is very quiet......but what will happen is whenever this is a shortage of someting...this money will race to the moves will be much will be jump into the crisis...

Fri, 10/21/2011 - 08:55 | 1796469 overmedicatedun...
overmedicatedundersexed's picture

the tulip crash is what one thinks about as we value the FRN..a paper backed by nothing used in exchange of goods and services..confidence in the FRN is still very strong and the world press and banks will fight to prop the FRN up. the USA got the GUNs thats what the world sees. those that fight the FRN get shot in the head or hanged for democracy of couse. Can we PM holders really expect that to change and people of the world wake up to the FRN Tulip?? I do not see how.

but how can on support the FRN knowing the truth that it is a tool of oppression and corruption? so I own PM's.

Fri, 10/21/2011 - 09:08 | 1796522 bill1102inf
bill1102inf's picture

First off, we are not under any circumstances going back to a gold 'standard' under any circumstances because, well simple, we don't HAVE to, nor would it be in our best interest. Under our former gold standard there were price valuation fluctuations of +-20% in short periods of time, proving unstability.  Should our current debt based FRN fiat dollar need to be replaced, it will be replaced by our government since the US does not actually have an 'ACTUAL' currency, instead we have a borrowed from the 'Fed' currency.  This can, might, and I hope will change, but gold will have little to do with it.


A currency peg?  To GOLD?? LMAO. If it were that easy, advantagous we would do it. Its not, we wont.  PEG to anything other than the value of the US as a whole is absurd. Might as well peg to copper.  Look how THAT would have turned out.  PEG to anything that can be bought or sold on the world market is insanity squared, what part about that do gold diggers not understand?


Furthermore, re Gold.  Look at poor old copper, its amazing how its price fluctuates based on the 'whoring' status of China, or the hoarding status, inventory of a communist country that can't make its own food, but makes the worlds shitty plastic toys.  PEGing your currency to something like that???? Seriously???? might as well ask your wife to PEG YOU.  !!! LMAO

Fri, 10/21/2011 - 09:08 | 1796525 Iceobar
Iceobar's picture


"US money supply (M2) has surged in a parabolic manner in the last few months and is up by more than 50% year to date and up 33% in just 4 months - from June 1st to October 1st."


I might have an old calculator, but these figures show only about a 5% increase during that time period...

Fri, 10/21/2011 - 09:24 | 1796602 Georgesblog
Georgesblog's picture

Gold brings paper into judgment. The price of gold will inevitably follow the expansion of fiat currency. That is the evidence of history.

Fri, 10/21/2011 - 09:27 | 1796617 laserjock
laserjock's picture

Buy gold, says Gold Core.

Fri, 10/21/2011 - 09:49 | 1796749 jjsilver
jjsilver's picture

Again, currency collape or devalutions can happen overnight, so if you are not holding gold, silver and hard assets when this happens you're F*&KED

Fri, 10/21/2011 - 11:22 | 1797206 augmister
augmister's picture

It all about hedging.  You just need a minimum of 5% of your assets in PM's so step up and place your bets.   If you want to be a bigger player, you can convert more of the worthless FRNs.   Just remember what the investment fund for the Texas universities did back in late spring.... the bought a billion dollars of gold bars to protect their 19 billion dollar endowment.  If everything goes to hell and they are right, better plan on sending your grandkids to Texas for their education.   Wonder how many "Ivys" will be left standing?

Fri, 10/21/2011 - 20:05 | 1799130 prole
prole's picture

Texas sure as Hell won't because "their" gold is in NY... (if it exists at all lol)
If 'everything goes to Hell' they won't ever see an ounce of that gold.

Fri, 10/21/2011 - 11:25 | 1797217 laosuwan
laosuwan's picture

Physical demand in Asia, mainly India and China, has entered the traditional peak season with Indian festivals and the increasingly important Chinese New Year.


Chinese New Year is not in October.

Fri, 10/21/2011 - 12:13 | 1797394 the grateful un...
the grateful unemployed's picture

so what happens if you peg the dollar to some amount of gold and in the process the powers to be decide they can print more money to accomodate the hefty premium we are seeing. and suppose the gold price lifts, and the fed says oh boy, we can print more money, and again the next year, higher gold prices, more money. then suddenly gold prices fall, what do we do, ask for all that money back?

it seems as though once you go off of the gold standard theres no way to get back.

Fri, 10/21/2011 - 12:53 | 1797492 Quixotic_Not
Quixotic_Not's picture

The Ponzi conintues, unabated...

Fri, 10/21/2011 - 13:56 | 1797796 ActionFive
ActionFive's picture

Something different today is that as only 7% of transactions are cash. Driving transactions into digits, they will/have power to control trade like never before. Phyzz is good, and you do hear of CB's buying too, but the in CB nest/Brown sold UK gold and we have tungsten. Credit them sneaky and crooked. Crude back has merit too. They can sell it as a finite resouce like gold, know you can't hold it, yet could lie/manipulate the supply. 

Sat, 10/22/2011 - 05:46 | 1799694 Shooting Shark
Shooting Shark's picture

That 40-month rolling correlation should have the first 40 months whacked.  Otherwise in an artifact from the missing left-end data, it gives the impression that gold:M2 correlation has grown and stabilized.

Sat, 10/22/2011 - 17:40 | 1800456 Thinkor
Thinkor's picture

The article says

US money supply (M2) has surged in a parabolic manner in the last few months and is up by more than 50% year to date and up 33% in just 4 months - from June 1st to October 1st.

This is not true.  The article has probably confused the rate of growth of the money supply with the money supply.  The money supply is only up about 8% so far in 2011.





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