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This Is What Gold Does In a Currency Crisis

To say that gold is in a bear market is to misunderstand both gold and markets. Gold isn’t an investment that goes up and down. It is money in the most basic store-of-value sense. Most of the time it just sits there, and when its price changes in local currency terms that says more about the local currency than about gold.

But when currencies collapse, gold shines.

Consider the above from the point of view of a typical Russian. The ruble is tanking (no need to understand why — all fiat currencies go this way eventually and the proximate cause is almost irrelevant). Russians who trusted their government and kept their savings in, say, a bank account, are losing their shirts. But those who own boring, doesn’t-pay-interest, in-a-bear-market gold have seen their capital appreciate in local currency terms by about 60 percent in just the past month. They’re not “making money,” but they are preserving wealth.

Russian gold price Dec 2014

This is how it has gone always and everywhere when governments have destroyed their currencies. In the Roman Empire, revolutionary France, revolutionary America, most of Latin America in the 20th century, and now big parts of the developing world, local currencies evaporate but gold just sits there, buying the same amount of stuff as ever, impervious to the games governments play.

It won’t be long before this chart is replicated in a whole lot of other places. But by then it will be too late to prepare. The gold will be gone and those who trusted their governments will have to make do with promises.

793 thoughts on "This Is What Gold Does In a Currency Crisis"

  1. value comes from supply and demand, satellites create a demand and supply is very hard work to get more gold, try mining for gold.

  2. So if you stack you green backs instead of gold and silver eagles, what do you have? Paper? If you think like a collector it won’t matter, you can’t take anything with you and our time here is short or so short anyway. I think more in line of the next generation or your kids. What do you want to leave them? Paper, coinage?

  3. Pingback: The Küle Library
  4. US DOLLAR CLOSES AT RECORD 10 YEAR HIGH THIS WEEK

    The US dollar performed spectacularly this week and closed at a 10 year high of 94.99 on the DXY just a smidgeon below 95 on January 23, 2015.

    Happy days are here again!

    1. The intent of the above article was never about today’s prices. It was an attempt to see where the markets are headed. This is especially so, because the world economies are so fragile. Governments have made promises which can never be funded; they have built up debts which can never be paid off.

  5. Barry Ritholtz’s top 10 articles of faith for gold bugs:

    10. Gold talk must contain a dire macro forecast

    Your description of why gold is going higher must consist of spurious correlations, un-provable predictions, and a guarded expectation of bad things in the future. Avoid empirical data at all costs.

    9. Gold is a rejection of government

    There are no printing presses that produce gold, it is finite, natural and God created. How much we scrape out of the ground each year is limited, and the only variable to the old equation. (Just ignore Man’s natural tendency to organize into to City-States over the past 12,000 years).

    8. Never admit that gold is basically a sucker bet

    Never discuss how in the last century, gold has run up only be to trounced in repeated massive sell offs. Do not discuss how this has happened in 1915-20, 1941, 1947, 1951-66, 1974-76 1981, 1983-85, 1987-2000 and 2008.

    7. Gold will survive after the world economy crumbles

    Gold is the ultimate currency, as it has a value that will survive even after the whole world tumbles around you. Get yourself some gold coins and a Glock and you will be just fine when the whole world goes to hell in a hand basket. We welcome the era envisioned in the movie Mad Max.

    6. Gold works if the economy is bad or good

    When we have a red hot economy, gold is your hedge against inflation. When we have a bad economy, gold is a safe harbor against collapse. It is a one way trade that never fails!

    5. Government money-printing drives gold up

    NOTE: You must ignore, for the moment, that gold has not gone higher for the past 2 years as Central Banks around the world have ramped up QE. This only means that ultimately, gold will go much much higher.

    4. The world will revert to the gold standard

    It is inevitable that we will return to a gold standard. We all know this to be true. When we compare the size of the money supply to past amounts when there was a gold standard, we can derive prices of gold in the $7,000, $10,000 even $15,000. Hence, we know it’s cheap even at $2,000.

    3. Gold doesn’t fall, it’s manipulated lower

    When gold’s price falls, it is an unnatural act. It can only occur as the result of an international cabal of Central Bankers and politicians. It’s a conspiracy, and we know who the guilty parties are.

    2. When gold rises, it’s despite the manipulators

    This is the corollary to the prior Rule of Gold manipulation. When the price of gold runs up, it does so despite the overwhelming opposition to it.

    1. Gold is a currency

    This is rule No 1, and is inviolate. Gold is not a decorative or industrial metal; it is a permanent store of value, as dictated by Greeks in Lydia around 700 B.C. And, thus shall it ever be.

  6. US DOLLAR CLOSES AT RECORD 10 YEAR HIGH THIS WEEK

    The US dollar performed spectacularly this week and closed at a 10 year high of 94.99 on the DXY just a smidgeon below 95 on January 23, 2015.

    Happy days are here again!

  7. Let me weigh in on this conversation. Those who do not think gold will skyrocket can meet the rest of them down at the soup lines by 2016.

    Gold is going to double in value – this is going to happen while every thing else pegged to the US dollar is going to tank and loose 80% of its value. That means your gold will have a purchasing power 10x or more of what it does have today.

    Let me prove that this will be so and quell all debate.

    Like it or not we are in the midst of a Shemitah Year. Johnathan Cahn proved that ALL Shemitah Years correspond with major recessions and depressions. If you want proof go read the book “The Shemitah Year: Long Title.” In fact the last two Shemitah Years on their completion TO THE DAY corresponded with 7% corrections in the market. Do not think so?

    September 17, 2001 (29th of Elul) last day of last month of last year of Shemitah Cycle – market dropped 684 points (7%).
    Go forward exactly 7 years to the day to the completion of the next Shemitah Cycle – what do we have ?
    September 29, 2008 (29th of Elul) last day of last month of last year of Shemitah Cycle – market dropped 777 points (7%)

    The next Shemitah Cycle will complete on September 13th, 2015. Again if you debate this point go read the book. There has not been an exception in the last 100 years with the best example being a Shemitah year of no growth at all.

    Now that we have established that something is going to tank the markets before the end of 2015 what it is may be a massive earthquake in Japan closing their stock market in September but it could be anything (dirty nuke in Chicago.)

    So today we have
    Bonds Pay 0%, Gold is down (just starting to take off) and Stock market is only place of return.

    By end of 2015 the Shemitah Year will ensure
    Bonds Pay 0% Stock Market has collapsed at least 20%, Euro and other currencies in a downward spiral chasing 2% growth. Where will you have *any* safety from collapsing currencies no return bonds and world wide collapsing stock markets?

    The answer will be gold.

    Anyone who buys gold today will see at least at LEAST a 500 – 800% increase in buying power by mid 2016.

    Toss Cramers Buy Buy Buy button because he should be hitting the Stack Stack Stack button..

  8. As the stock market becomes overpriced I think silver becomes an attractive option , and vice-versa. It seems like it used to go up a lot every winter and down every summer , but that pattern seemed reversed this year . Seems like silver prices are just kind of treading water right now, not sure which way to go . It seemed like the one big day silver had this year was after ISIL was about to take Mosul. Really bad events do seem to make silver prices jump too. They went up after 9-11.

    1. There are plenty of examples of how people prospered during hyper inflations.

      http://www.zerohedge.com/article/guest-post-hyperinflation-part-ii-what-it-will-look

      But, in times of economic upheaval, other considerations take
      precedence. Do you live in a secure location, surrounded by trustworthy
      neighbors, near farms? Do you have ample supplies of water? Food storage? Trade
      goods? Guns and ammo? If so, then precious metals are a good store of value. They should allow you to buy the wealth of people who had real assets who bet wrongly.

  9. The Daily Dumbell run by Anthony Wile and Peak Stupidty run by Chris Martenson have to be the most imbecilic and clueless propaganda sites out there and go far beyond Zero Brains in promulgating LIES AND PROPAGANDA. They are nothing other than a bunch of metals pumperists and bashers of truth regarding the Federal Reserve and banking system in the US and are disgraceful and bogus to the max.

  10. The Federal Reserve doesn’t give the slightest bit of a hoot about gold. Gold has ABSOLUTELY ZERO FINANCIAL RELEVANCE and the total value of of all of 180,000 or so metric tonnes of gold ever mined is less than $7 trillion and about 70% of that is in the form of privately held jewelry and only 32,000 metric tonnes is owned by governments and is worth less than $1.4 trillion.

    The US government owns about 8,200 metric tonnes of gold but even at today’s absurdly elevated bubble prices for gold it is worth less than $350 billion which is less than about 4 months worth of the current federal deficit. The US government values its approximately 8,200 metric tonnes of gold at the current official US government price of $42.22 per ounce and the total value of its holdings are only a little bit above $11 billion which equates to a few days worth of the current federal deficit.

    Gold is, of course, priced in US dollars and is plunging in price all around the world and the price of gold has plummeted more than 40% during the past nearly 4 years since April 2011 when the preposterous and LUDICROUS GOLD BUBBLE BURST. One ounce of gold now buys 752 fewer $1 McDonalds hamburgers than it did in April 2011.

    The price of gold is rapidly reverting towards ad to its mean of $456 per ounce and then headed lower, perhaps as low as $232 per ounce which would put it lower than where it started its last up cycle in late 2001. If you have any other that grossly overpriced yellow bullion stuff, sell it now and cut your coming huge losses on that bogus bubble stuff.

    The US dollar is right around 90 on the DXY and will rapidly be heading to 100 and then perhaps as 120 on the DXY and its purchasing power against gold is up more than 80% over the past nearly 4 years since April 2011. Happy days are indeed here again!

  11. The so-called “currency crisis” with Russia’s ruble is long since over and it has been soaring upwards day after day. The US dollar for the first time in 9 years has now crossed over 90 on the DXY and is now at 90.07 today just as expected and just as predicted.

    As to overpriced fungible metal commodities, they have continued their downward spiral and gold is below $1178.00 and silver is below $15.80 as they continue to head towards and to their means of $456.00 and $8.00 per ounce respectively.

    Happy days are here again!

  12. SHOULDN’T THE US GOVERNMENT SELL ALL OF ITS GOLD?

    The best way for the US government to RAISE SOME FAST CASH would be to sell off it entire approximately 8200 metric tonnes in gold. It is currently valued at $42.22 per ounce for a total value of nearly $11 billion which would keep the government running for a few days, but if they sell it off now at the market price of a little over $1175 per ounce they could raise about $350 billion which would keep the government running for almost 4 FULL MONTHS. But they better not wait to sell it off or they’ll get a lot closer to their book value for it than today’s loft y market value.

    http://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm

    1. You are assuming that the federal government has any gold which has not yet been leased to the primary bankers. The barn door is open; the horse the gone. That gold didn’t belong to the government; it belonged to the citizens. Bye, Bye.

      The US government is unaffordable. 40% of the federal budget is deficit financed. No government which has continued this practice for over two years has ever avoided a hyper inflation of its currency. Having gold to restore confidence in a new currency would be desirable, but the vaults are probably empty or there may be a dozen people or institutions claiming ownership of the same bar.

      America needs to break the cycle of government dependency. A total bankruptcy will help. Our politicians will circle the wagons around themselves and let the citizens go hang. The amount of taxes collected will be meager.

      1. The US government gold is WORTH PRACTICALLY NOTHING.

        Are you not aware that the total value of all gold ever mined is less than $7 trillion which is less than 1% of the world’s total assets of around $800 trillion?

        The maximum total value of the approximately 8200 metric tonnes of US government owned gold at present prices is less than $350 billion against a US dollar money supply of around $12 trillion i the broadest M2 measure. GOLD HAS NO FINANCIAL RELEVANCE WHATSOEVER IN REGARDS THE US DOLLAR AND NEVER WILL AGAIN HAVE ANY VALUE OR RELEVANCE IN REGARDS TO ANY CURRENCY.

        The total value of the approximately 8200 metric tonnes of gold owned by the US government is less than $350 billion at current market prices for gold. As to the actual value of gold the current US government official price of gold is $42.22 per ounce and the US government places a less than $11 billion on their 8200 metric tonnes of gold in their latest monthly report at:

        http://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm

        1. Value is subjective. You mean to say that gold is worth nothing to you. That’s fine, have nothing to do with it. Other people disagree. People throughout history have disagreed. China and Russia’s governments disagree.

          Perhaps, it would be best for the US government to stop pretending that it still has unleased gold.

          Most of the gold in the world is in private hands. It will come out of hiding when the US Dollar becomes worthless. People will still need a medium of exchange.

  13. Gold is now at $1178. Expect coming $100 per day plunges in the price of that absurdly overpriced commodity.

  14. If gold gets down to $20 per barrel, I’ve definitely added it to my list to buy a couple of barrels to do a new coy pond made out of gold!

  15. The only real questions left in the gold markets are how close the price of gold will come to the current $42.22 per ounce official US government price and how fast.

  16. DollarCollapse.com is a great website with wonderful economic news aggregation, but should change its name to PMPlunge.com or DollarSurge.com, and really should have done that about 4 years ago.

  17. I love this web site and rely on it for its excellent, honest, and impartial important financial news aggregation which is really second to none, but the fine folks who make that happen daily – including on weekends – really should change the name to PMPlunge.com or DollarSurge.com.

  18. There still are some great and wonderful uses for gold in the world today.

    I don’t like to see gold parked, unless it is in the form of a bespoke 24K BMW Rolls-Royce pulling up in front of the Beverly Hills Hotel. It is best to use gold in a meaningful and productive way, and the best uses I have seen recently are for solid gold bras, bikinis, and dresses.

    They said gold bars not gold bras! Underwear made entirely from precious metal goes on sale (but it will set you back $600,000)

    http://www.dailymail.co.uk/news/article-2537647/Chinese-designer-unveils-extraordinary-set-underwear-entirely-GOLD-set-500-000.html

    Want to dazzle on NYE? How about wearing a $140,000 dress made entirely of GOLD?

    http://www.dailymail.co.uk/femail/article-2531703/Want-dazzle-NYE-How-wearing-85-000-dress-entirely-GOLD.html

    1. Gold is rare; too rare for such frivolous uses. Americans are no longer rich. The US government has been impoverishing us.

      1. The only frivolous use of gold is keeping it parked in bullion.

        As to the US government the reason it has an $18 trillion debt is that has been FAR TOO GENEROUSLY ENRICHING MOST AMERICANS with spending vastly beyond its means. Helllllooooooooo?

          1. Nope. The demand for gold in coins is miniscule compared to the demand for gold in jewelry.

          2. Obviously, nearly all money now is ELECTRONIC and there will be no “replacement” whatsoever for electronic money – ever.

          3. I have nothing against electronic money, depending on its scarcity. It’s too easy to defraud people with it, though. Paper money was easier to debase than metal coins were. Fiat currencies eventually fail.

            I’d rather have solid money. I don’t trust money which any government is associated with.

          4. There is NO LEGAL TENDER MONEY AT ALL UNLESS IT IS ISSUED BY A GOVERNMENT. Nothing else is money at all, but just COUNTERFEITING OR BARTER.

          5. Legal Tender Laws are useless unless a government is being dishonest.

            America used to have private mints. One California firm in the 1850s minted gold and silver coins which were 1% heavier than the Federal mint. It was not counterfeiting, because it delivered true value in Gold to the customer. Only the US Treasury has a right to defraud American citizens.

          6. Those are absurd and appalling assertions. As to private mints purporting to produce anything that can be used as money or currency, that is TOTALLY ILLEGAL IN THE US because it is COUNTERFEITING as no currency is legal in the US unless it is produced by the US Treasury / Mint or by the Federal Reserve.

          7. I could direct you to some real history, but you’d never believe it. You are too bigoted.

            The reason an intelligent person studies history is to verify the opinions of the powerful. So many people want to pull the wool over our eyes. It’s hard to do that when we can go back and check up on whether we are being lied to. It’s good to cross check authors against each other so we can determine their motives. And their politics, like with Howard Zinn.

            It is required that we take a logic class before for we attempt this.

  19. ACTUAL FACTS REGARDING GOLD

    Central banks have reduced gold holdings by around 10% over the past decade from 35000 metric tonnes to 32,000 metric tonnes, and the only reason they are keeping any of it is because of TRADITION and that it makes nice vault DECORATION.

    Gold has NEVER been “money” or “currency” at all. It has simply been used as one of the many materials along with brass, nickel, copper, silver, and other metals to mint coins where the MONETARY VALUE WAS THE NOMINAL FACE VALUE and not the material used to make the coins. Anyone, of course, to use a 1 oz gold legal tender American Eagle for its $50 face value at most retail establishments.

    The simple fact of the matter is that economies and currencies far outgrew gold as the world’s population has increased to its present approximate 7 billion people.

    The total value of the world’s entire gold ever mined of around 180,000 metric tonnes is only worth around $7 trillion when valued at $1,200 per ounce which equates to around $44 million per metric tonne.Gold lost more than $2 trillion in valuation in the past four years from April 2011 based on the drop from a manic high of $1,927 per ounce to less than $1,200 per ounce.

    The less than $7 trillion value of all gold in the world – 70% of which is in JEWELRY – is a mere pittance compared to the annual global GDP of more than $70+ trillion and global assets of around $800 trillion which makes gold just a tiny little niche collectible commodity of no relevance to valuation of other assets let alone for any monetary usage whatsoever.

    1. Believe any damned thing you wish.

      There is enough gold to act as the world’s medium of exchange. All that is necessary is for the price to change. That 180,000 metric tonnes equals 5,782,500,000 ounces or slightly less than an ounce per living person. Since 30% of the world lives on less than a dollar a day, that is enough.

      At 5 thousand dollars an ounce, that equals $28,912,500,000,000 or $28 quadrillion, 912 trillion and 500 billion. Of course, that is not enough to buy up all the derivatives and assets in the world, but it is close. If that isn’t enough, let the market determine the price.

      1. Those are absurdly false assertions. The total value of all of the around 180,000 metric tonnes of gold ever mined in the world is less than $7 trillion even at today’s absurdly elevated price for gold. Divided by the 7+ billion people o the world that would be $100 for each and every person in the world.

        Moreover, almot 70% of that gold is in the form of privately owned JEWELRY widely dispersed around the world and most all of the gold in the world is privately owned with the exception of about 32,000 metric tonnes (less than 18%) of it owned by governments and that 18% is worth only about $1.24 trillion which divided by the 7+ billion people of the world would be abut $12.40 cents per person.

        Obviously, the primary marked demand for gold is and always has been for JEWELRY purposes and nobody who uses it for that and nearly all other purposes has any interest even paying any more than the current less than $1200 per ounce for gold, so any talk about higher prices is utterly absurd. Gold is fundamental worth no more than its mean of $456 per ounce and is on its way to its mean and then lower.

          1. The price of gold will do as it must and plummet to $456 per ounce and then move towards the current US government official price of $42.22 per ounce.

          2. People may choose not to agree with you. Scary times are ahead. Even communist officials will grab their gold and run.

          3. Americans had a lot to fear about FDR; the man couldn’t do anything right. Every time he meddled in the economy, times got worse.

  20. Here’s the bottom line people: The gold price right now is still determined by the paper market. When that is exposed and blows up, which it will perhaps imminently (see http://www.zerohedge.com/news/2014-12-16/commodity-trading-giant-exits-physical-gold-due-lack-physical-documented-origin), the price of gold – meaning physical gold delivered – will be at least ten times what it is now. The paper gold market is a fractional reserve scheme, and it may be revealed shortly.

    See: http://www.zerohedge.com/news/2014-12-16/commodity-trading-giant-exits-physical-gold-due-lack-physical-documented-origin

    1. It is all a confidence game. When enough people catch on, they will discover how much they have lost in wealth. The game ends when enough people act to safeguard their assets; they get out of dollar denominated assets.

      1. Well, nobody should catch on more than the GOLD GOOBERS who have lost 40% of the “wealth” that they had in gold since April 2011, but it appears that they are too dull to comprehend that a hypothetical $100,000 they held in gold, for instance, is now only worth $60,000 for a loss of $40,000 in less than 4 years. Perhaps someday when they take some basic 2nd grade remedial math classes then they may be able to figure that out.

        As to the US dollar it has soared in purchasing value against gold by 80% over the same period of time from April 2011 until now and is up around 14$ on the DXY just this year and is headed to over 90 (now at 89.32) on the DXY and then 100 and higher. Those who held dollars over the past 4 years not only avoided the MASSIVE LOSSES INCURRED BY THOSE WITH GOLD AND /OR SILVER but had tremendous gains and those gains are increasing all the time as nearly all of the 27 major commodities continue to plunge.

        1. I’m not investing. I am not doing day trades. I’m storing away assets in case of a catastrophe. This is what people have done for millennia. I’m waiting for an opportunity. But, that will be only when there is figuratively blood in the streets.

          The eventual return I get from doing this depends on what decisions the FED makes. I will always find a market for my metals, but paper money might only be worth lighting fires.

          1. Well, it’s obvious that you are just a speculator. The price of metals has NOTHING WHATSOEVER TO DO WIT THE FEDERAL RESERVE, however.

          2. I am speculating that the US Dollar will continue to lose purchasing power. It has lost 98% of its value since 1913.

            Oil in terms of gold is steady in comparison.

            https://images.search.yahoo.com/images/view;_ylt=A0LEVjnrvZRU3WAAvmMPxQt.;_ylu=X3oDMTBsa3ZzMnBvBHNlYwNzYwRjb2xvA2JmMQR2dGlkAw–?p=oil+gold+ratio+chart&back=https%3A%2F%2Fsearch.yahoo.com%2Fyhs%2Fsearch%3Fp%3Doil%2Bgold%2Bratio%2Bchart%26ei%3DUTF-8%26hsimp%3Dyhs-001%26hspart%3Dmozilla&w=745&h=513&imgurl=photos1.blogger.com%2Fblogger%2F7214%2F1988%2F1600%2Foilgold.png&size=451KB&name=oilgold.png&rcurl=http%3A%2F%2Fglobalgold.blogspot.com%2F2006%2F01%2Fgold-oil-ratio.html&rurl=http%3A%2F%2Fglobalgold.blogspot.com%2F2006%2F01%2Fgold-oil-ratio.html&type=&no=3&tt=120&oid=163a2ef7decfa8f6b1588ed32bddb74f&tit=gold+and+oil+are+headed+higher+in+2006+but+gold+should+finally+…&sigr=11qvh7arj&sigi=11mdbm66h&sign=10brpqls0&sigt=103vg5ole&sigb=130m1nkfr&fr=yhs-mozilla-001&hspart=mozilla&hsimp=yhs-001

          3. That is a totally nonsensical and false assertion.

            As to the value of the US dollar over the past 100 yeas…

            No, the dollar did NOT really lose 95% of its value since 1913

            Let us take at the period from 1913-2006, where we have complete data. So what do they mean, when they say the dollar lost 95.1% of its value in those 93 years? Essentially, an average good/service that cost $1 in 2006, used to be priced at 4.9 cents in 1913. In other words, the average price level of goods/services increased by 1930% since 1913. True, but guess what, average earned income increased by 6560% during the same time period. Average earned income rose from $740/yr in 1913 to $49,300/yr in 2006. Adjusting for inflation, $740/yr in 1913 is $15,000/yr in 2006 dollars. Average incomes, not only kept pace, but beat price inflation by 230%.

            So does it make any sense all to say the dollar lost value? In reality, the REAL purchasing power of the average American, has increased by 230% in the past century. Sure, prices were cheap in 1913, but $740/yr doesn’t buy you a whole lot, not anymore than 15,000/yr today.

            http://realfactbias.blogspot.com/2012/02/no-dollar-did-not-really-lose-95-of-its.html

          4. A debasing currency loses its purchasing power over time. Increasing the supply of dollars causes prices, in those dollars, to rise. Price inflation is a symptom of how much the government, through the central banks, are cheating you.

            In gold, a commodity may vary over time, given manipulation in markets, but it will return to its average. The reason is that commodities such Gold or Oil, will continually be in demand, while paper currencies will become so debased that no one will want to use them. If people had a choice and there was not constant propaganda against monetary alternatives, people would have dumped the dollar long ago.

            Productivity, a function of the markets, tends to make goods cheaper in both dollars and gold. All this does is to hide monetary inflation. No amount of productivity can save a currency, though. All of them fail.

          5. Speaking of losing value, gold has been among the biggest losers of value over the pats nearly 4 yeas, hasn’t it?

          6. As I said, that is temporary. How much as the dollar permanently lost in purchasing power in the same time period?

          7. The only thing temporary or transitory is the ARTIFICIAL BUBBLE HIGH PRICES of gold, silver, and other preposterously overpriced commodities. As to the US dollar, the typical gains in purchasing power with substantially increases incomes of the US population over the past 100 years is around 230%. Hellllloooooo?

          8. Make your bet. Don’t jostle the people who bet differently. It’s none of your business what we do with our money.

          9. Hi Louis,
            While agree with most of your assertions I’ve got to say that you probably need to stop feeding the troll. He’s toying with you and taking nothing seriously. He cherry picks data and makes baseless assertions while ignoring the arguments he can’t win. He probably doesn’t understand the concept of insurance too well either and that when your house is on fire it’s too late to buy insurance.

            In terms of loss of value my PMs are very close to the prices (within 5%) I paid for them in my currency on the 9th of April 2010 so his figures are bullshit. Cherry picked with no background.
            Got to tell you one thing I believe though. I don’t think a COMEX default will result in skyrocketing PM prices. I think that the market will go “Meh” and move on. In the end PMs are just insurance and little more to be honest.

          10. You think I take him seriously? I totally ignore his statistics. I’m a pugnacious critter. I love swatting stupid people.

            It’s five days in, so the moderator is likely ready to shut down the thread soon. I’m content.

            I’m really playing to the peanut gallery. A lot of people, even those economically rational, don’t know this stuff. They aren’t free market. They may think they can afford to be a investor. Too late.

            The real attitude to have is asset protection. You have to live low in the hog and try to avoid the government’s gaze. Tough the crisis out. I was tempted to leave the US, but I’d rather live in a Red State. The IRS wanted too many of my assets to give up my citizenship. I’ve heard that they hound you for years afterward.

            I’ve been buying precious metals since 1976, made some money in ’79. I got carried away and was a speculator back then, but I was out of PM’s for a long time afterward. Most of my silver was bought under $12, so these prices don’t bother me. It was only a quarter of my assets, at the time. This is a good time to give away PM coins to your kids while the prices are low.

            I haven’t been a buyer in years. I’m retired so I needed to get my affairs in order and move out of LA, away from the crazies.

            I don’t believe the PM’s will be anything but reactive. The real driver of this will be a currency crisis. The end of the US Dollar as the world’s reserve currency is looming.

            I’m unsure if we will see a deflation or a hyperinflation of the dollar. That depends on some decisions which will be made in Washington. I am positioned for either, but I hope a deflation, but don’t expect it.

            I’ve been watching China very closely. They seem to be unwinding their mercantilist positions. Their US Treasury securities are starting to come home and there is a trillion dollars of them. Scary. They will need to buy up everything in sight. After the markets settle down, I may be buying stocks and real estate from them.

          11. You have done nothing other than put up bogus and preposterous assertions, dude, which are laughable.

          12. Laugh while you can. Bad times are coming.

            It’s hard to know how bad future events will be, but I’m positioned for most contingencies. I’m not ready to go to my hideout, yet. It’s secure, but not as comfortable.

          13. I’ve been enjoying your responses and I think the quiet readers on this thread have no doubt learned things from you. socalbeachdude has had the opposite effect of the one he intended since your comments are so much more rational and civil. Thanks & have a good holiday.

          14. False ideas need to be confronted with honor and dignity. “All that is necessary for evil to win if for good men to do nothing,” to paraphrase Edmond Burke.

            Our government school system and the mass media are propagandist. I don’t demand that anyone agree. I do enjoy a spirited tussle.

            Yes, have a good holiday. I hope you aren’t snowed in. LOL

          15. Ignore the facts and realities at your own peril, PP. Ignorance is a very sad thing, and refusal to comprehend facts and realities is even sadder.

          16. I’ll take my chances. I’d rather be wrong on my own terms than to slavishly comply to someone else’s demands.

          17. Sorry, I’m old. At one time, I actually watched Howdy Doody. My excuse was that I was nine.

          18. Ignoring facts and statistics is a very dumb and dangerous thing to do, dude. Obviously.

          19. Obviously anyone who purchased metals such as gold of silver has major losses in their value of 40% and 62% respectively since their manic speculative highs were reached in April 2011. Do the math.

          20. I did the math, back in the 1970s. The only thing which has surprised me is how long the FED as been able to keep its con game going. I’ve made money betting against the FED. Why would I change now?

          21. He is strange, isn’t he? He is such a propagandist; no one has a right to disagree with him.

            The only way to make a profit out of the destruction of the US economy or the US Dollar is to take the assets from people like him who bet wrong.

            I have to wonder how he can afford the time to make all these trolls. If he isn’t a pajama boy living in his mother’s basement, he has to work for the government. No way is he working for a living. I’m retired. So, I can afford the time to reply to his nonsense.

          22. Seriously.

            You are not, at all, persuasive. It doesn’t matter to me what the current price for precious metals are. I’ve discounted that. The price isn’t low enough, yet, to get me to buy. Eventually, physical metals will no longer be delivered. The supply is drying up.

            I can see some advantages in having a modest amount of dollars temporarily. We all have to pay our taxes in dollars.

          23. Well, you better discount their prices some more because they’re headed to 50% to 80% further plunges dead ahead.

    2. False. There is no difference whatsoever in the price of “physical” gold and the futures and spot markets for gold which are FOR PHYSICAL GOLD. Don’t you comprehend that?

      HERE’S THE BOTTOM LINE

      The primary price determining market for gold is the SPOT GOLD MARKET which is gold for immediately delivery and has nothing to do with “paper” at all. MarketWatch chooses to quote the nearest COMEX gold futures market price of gold which is typically pretty close to the gold spot market price of gold, but the futures price is for delivery in the future based on a paper (or electronic) contract, whereas the gold spot markets are for immediate delivery of gold.

      The price of gold is NOWHERE NEAR “BARGAIN PRICES” and won’t be until it is below its mean of $456 per ounce and.or its current inflation adjusted price of around $400 from its 1971 price of $35 per ounce. By the way, the current official US government price for gold is $42.22 per ounce which is how the US government values its approximately 8250 metric tonnes of gold for a total value of just over $11 billion as of their latest report as of November 29, 2013:

      http://www.fms.treas.gov/gold/current.html

      1. Untrue, because the future markets are uncovered. They cannot deliver on precious metals if every contract demanded physical metal rather than currency.

        1. What I stated is, of course, 100% true and correct, and your bogus assertions to the contrary are so false and preposterous as to not even merit any further response. When you report back to the Goobers Against Truth Association (GATA) tonight, be sure to tell them that you got a grade of F- today.

          1. We will have to agree to disagree. We know what the law is and how futures contracts can not possibly be covered by metal. This is because people have been demanding physical delivery in the last five years.

          2. Then, you admit that Comex’s futures trades are uncovered by metal. Thus, there is no guarantee that futures trades are backed by anything. That sounds like a good reason for not doing business with them.

          3. Huh? Are you incapable of reading and/or comprehending? No COMEX metals contracts are ever “uncovered” by the specific commodity stated in each contract. I gave you the exact link to the COMEX specification on gold contracts which clearly explains that. GO READ IT and attempt to comprehend it. Hellllloooooo?

          4. Back in the 70s, every futures trade had to be backed by physical metal by law. An uncovered trade allows the members of the exchange to speculate against their trading partner. An exchange member was supposed to be an unbiased broker. Eventually, this meant, by the late 70s, for exchange members to go bankrupt from being on the wrong side of trades when prices finally dropped.

            Now, you are saying that the exchanges no longer pretend to be honest. An excellent reason to avoid them.

          5. THERE ARE NO “UNCOVERED” TRADES AT ALL ON COMEX. Where on earth do you come up with such utterly bogus nonsense?

          6. It’s arithmetic. I can determine exactly how many futures contracts are sold and divide it by the amount of precious metal in Comex’s vaults. Since there is not one oz of physical metal for every oz sold forward, the trades are uncovered.

          7. Huh? THE NUMBER OF FUTURE CONTRACTS ORIGINALLY ISSUED CORRESPONDS PRECISELY WITH THE COMMODITY COVERED BY THE CONTRACTS WHICH IS ON DEPOSIT WITH COMEX.

            The number of times those contracts TRADE HANDS is of zero relevance and many of them trade hands hundreds of times during their duration prior to maturity, but that doesn’t mean there are ever any more contracts than what is fully covered by the original contracts issued by COMEX.

          8. The paper precious metals markets are a fraud. They are many times larger than the amount of available physical metal in trade. This must eventually fail, because physical metals have been withdrawn from circulation for the last five years.

            The amount of Dollars and US Treasury securities in the hands of central banks is larger than the US economy, now. Over 40% of the US federal budget has been deficit financed by the Federal Reserve Bank, for over three years.

            No country in history has ever retreated from this kind of deficit without a hyper-inflation of their currency. I’m not betting that the US will be the first.

          9. As I have clearly stated and proved above, your assertions are totally bogus in regards to the metal markets. You appear to have a major problem with reading and/or comprehension.

          10. I have a problem with propaganda: I tend to see through it. My Public School indoctrination must not have worked.

          11. What you have a problem with – obviously – is comprehending clear and straightforward facts and realities as you choose to live in a mindset filled with delusions and false notions and fantasies that are totally detached from actual reality and facts and many times above you have stated you REJECT OUTRIGHT FACTS.

          12. I disagree with your conclusions. The future will determine which one of us is right or wrong.

  21. A little help here please. If I was in Russia right now and had a relevant amount of physical gold in my possession could I sell my now inflated gold for Rubles and use the Rubles to pay off the mortgage on my home?? This is what I’ve always wondered if the same event played out in the US. Thanks!

        1. False. That chart MERELY SHOWS WHAT THE PRICE OF GOLD WOULD BE IN RUBLES IF NOW TRANSACTED IN DOLLARS CONVERTED TO RUBLES ON AN IMPORT BASIS INTO RUSSIA which is NOT THE CASE AT ALL but just an academic exercise done by the chart maker.

          1. Then, you admit that there is no free market in gold in Rubles? The Ruble is way down in terms of foreign currencies. That would mean, also, that it is down in terms of gold, too. If this were not true, gold would vanish from Russia.

          2. Mb<Huh? What difference does it make inside Russia as to what the exchange value of the ruble is with other currencies, except as to import prices and export prices? NONE.

          3. It is implied in your assertions. Russia does not need foreign exchange. It is mostly self sufficient, you said.

          4. You are not thinking clearly. I believe that Russia is not self sufficient from the world. I was making fun of you, because you implied that it was.

            Russia is a very poor country with nuclear bombs. Putin is acting rather fascistic; he wants to recombine the the old Soviet Union. Obama’s administration is equally foolish.

            Neither the US nor Russia is creating wealth; both are posturing politically. It is stupid. Obama has what he thinks is a good excuse; he wants to distract the American public from the consequences of his bad public and economic policies.

            He wants to ignore the electoral consequences. The last election was a disaster for the Democrats. What hurts the most is that the Republicans control both houses of 31 states, so they can gerrymander the congressional districts for the next 40 years.

          5. What I stated is 100% correct, and you are apparently having major problems in either reading and/or comprehension.

            Russia is not a poor country at all, but rather one with a very vibrant $2.4 trillion a year economy . Russia has among the lowest government debt in the world with a ratio of only 16% government debt to GDP and has more than $00 billion in government reserves. Russia’s economy has relatively low imports that equal less than 10% of its overall economy so Russia is indeed very self-sufficient. Moreover, most of those imports are LUXURY GOODS which are not at all vital to the functioning of the Russian economy.

          6. We disagree. If Russia didn’t have Nukes, most people wouldn’t know where it is. If Russia had a history of being peaceful, we could ignore it. The world is big, after all.

          7. Nuclear arms have very little to do with Russia and its position in the world. Hellllooooooooo?

          8. That is obviously an absurdly false assertion. The Russian Federation is one of the most important and influential countries of all the countries in the world.

          9. What position? If Russia wasn’t selling natural gas to Europe, it couldn’t coerce them. The Russians have used the threat of nukes against us all. Without them, we couldn’t care less.

  22. Yes you are right GOLD will do nothing but go up and up and up as the Dollar declines lower and lower. BUT when the Dollar becomes nothing but toilet paper then Gold will lose all sense of value and then start to drop lower and lower as then it’s value will be related to a bag of beans. So then for example: your one ounce of gold might buy you a 20 lb. bag of beans and later it will only buy you a 10 lb. bag of beans and still later it might only buy you a 1 lb. bag of beans and eventually it will be considered worthless except in certain local instances but those places will eventually come to the reality YOU CAN’T EAT GOLD.
    It says in the Bible “In those days they will throw their Gold and Silver into the streets”.
    For the very best totally FREE Guide on how to survive at home see:
    http://www.iplantosurvive.info

    1. Gold is an EXTREMELY TOXIC ASSET that has already plummeted 40% over the past nearly 4 years and will continue plunging towards and to its mean of $456 per ounce and then head lower.

      1. Toxic means poisonous and precious metals are neither. They are poisonous to Marxism, but that is because Marxism is a false religion. It pretends that people have no self interest.

        1. Toxic does indeed mean poisonous and precious metals at their present prices are indeed EXTREMELY TOXIC and HIGHLY POISONOUS TO “WEALTH”. Gold has plummeted 40% in value and silver has plummeted 62% in value since they both reached their manic highs of $1927 and $50 per ounce respectively in April 2011. IF YOU DON’T SEE THAT AS HIGHLY TOXIC, you’re either bonkers or severely mathematically challenged.

          Moreover, those commodity metals are both well on their way towards reverting to their means of $456 and $8 per ounce respectively and then headed lower which is EXTREME TOXICITY.

          1. Prices go up and down. They are never toxic to wealth, if you have no intention to sell now. Sometimes, we often have to position ourselves early and ride out any fluctuation.

            If gold were adjusted for the Fed’s money creation since 1979, it would be twice what it is now. If adjusted since 1913, gold would be over $5000 an ounce.

            Besides, what is it to you how I spend my retirement funds? Do you think a CD would a better investment? Then, buy it and leave me alone.

          2. LOL We know exactly what goods and services cost in terms of gold since 1913. Some prices have dropped, in gold, due to technology. The cost of a middle class standard of living would be similar in 1913 and now. We have been impoverished in terms of dollars.

          3. The average purchasing power in America based on dollars HAS RISEN ABOUT 230% IN AMERICA over the past 100 years, dude.

            Helllllllllllooooooooooooooooooooooooo?

          4. Unfortunately, your opinion is based on official government statistics which ignore the real increase in prices.

          1. Governments use politics as a guide for monetary policy. The most common form of politics in the West for central bankers is Keynesian economics. It’s recommendations failed during the staglation in the Jimmy Carter administration. We are in another stagflation.

            You don’t use the jargon of a Keynesian. You do use Marxist arguments, though.

          2. I agree, except that they destroy freedom, steal wealth and murder people. What’s not to like? LOL

          3. Huh? Bankers don’t print anything, alan. Where do you come up with such utter nonsense? Bankers don’t like gold because it is a CLUMSY AND USELESS BARBARIC RELIC OF ABSOLUTELY ZERO FINANCIAL RELEVANCE these days – OBVIOUSLY.

    2. There is always an exchange rate between commodities. When currencies fail, there is still a need for a medium of exchange, since barter is inefficient. Food tends to be available at higher quantities than specious metals, but markets always change. When the US Dollar loses its position as the world’s reserve currency, people will demand more dollars for foreign made goods. People could refuse to accept any dollars at all.

        1. Just like no one was ever going to refuse to accept the Zimbabwe Dollar, the Hungarian Pengo or hundreds of other hyper inflated currencies. Those are worthless now.

          1. Small country currencies with unstable governments and economies are an entirely different matter than the US dollar – obviously.

          2. Germany was no small country in 1923, nor was China in 1949. Economic principles are universal, in big powerful countries or in small weak ones. If a government follows certain policies, the end is always the same.

          3. Both of those economic matters were CAUSED BY WARS which left the economies of Germany and China completely ravaged.

          4. Wars often give governments an excuse to inflate their money supply. That’s what caused the Continental Dollar to become worthless. But, war was not the cause, monetary inflation was.

            Argentina was not at war when it decided to pay for Juan Peron’s welfare state through increasing the money supply. Since then, Argentina has had two hyper inflations.

  23. My long term guess on gold is, its going to continue slightly lower for awhile and once the Fed starts to scramble to control inflation it will take off against the sick dollar, then you’ll see it go up. But I fear Red China will play its gold hand and cause a revalue of gold for its reserve currency.

    So hold gold and silver but don’t go crazy. Its good insurance to use for bartering.

    I have some older US dollar bills in very good condition, nice pictures on them, issued by the Federal Reserve and I show them to my kids and tell them they are worthless. I then show them a silver quarter and tell them you can still by a gallon of gas for a quarter. I am not sure they really get it, but I try. Just be careful were you place your faith.

    1. Whatever the Federal Reserve does or doesn’t do has nothing whatsoever to do with the US dollar. As to China, its government has a tiny little bit of gold amounting to about 1054 metric tonnes which is worth less than $60 billion which is a little speck of dust relative to the money supply which is now over $23 trillion. GOLD HAS NO RELEVANCE TO MONEY WHATSOEVER, particularly in China.

      1. China doesn’t tell people how much Gold it has accumulated. Pundits guess at above 6 thousand tons. Who Knows?

        Take a look at the currency in your wallet: it is a Federal Reserve Note. A promise to pay. Sure, the US Treasury prints the note, but that doesn’t matter. The dollar is fiat currency; it is not necessarily money. Money depends on whether people will accept the note in return for goods and services.

        At one time, the Federal Reserve Note was a promise to pay in gold or silver coin in return for that piece of paper. It was a receipt. Now, it is a promise to pay nothing. The FED controls money creation through the reserve requirements of its primary banks. Also how much excess reserves they hold. How much credit the FED creates controls the interest rates.

        1. False. The government of China reports to the World Gold Council how much gold it has as government owned gold and the total for that as of November 5, 2014 is 1,054 metric tonnes which is worth less than $60 billion which is a tiny speck of dust compared to China’s preposterously inflated money supply in excess of $23 trillion.

          The World Gold Council is the definitive and authoritative source for gold reserves holdings by country and their latest report as of November 5, 2014 shows China ranked as #7 in the world with the largest country reserves gold holdings and the official amount that China holds is 1054 metric tonnes confirmed by this report.
          You can access the report using the following link and you will need to establish an account (no charge) with the World Gold Council to obtain access to the latest Country Gold Reserves document:

          http://www.gold.org/search/news/countries%20reserves

          The official numbers which state gold holdings in metric tonnes in this November 5, 2014 report which include the IMF (International Monetary Fund) are:

          1) United States 8,133.5
          2) Germany 3,384.2
          3) IMF 2,814.0
          4) Italy 2,451.8
          5) France 2,435.4
          6) Russia 1,149.8
          7) China 1,054.1
          8) Switzerland 1,040.0
          9) Japan 765.2
          10) Netherlands 612.5

          Further information about all aspects of gold are available from the home page of the World Gold Council at:

          http://www.Gold.org

          1. Governments lie. The amount of gold alone which has gone through the Hong Kong and Singapore exchanges in the last five years are larger than the above figure.

          2. I seen a couple estimations on Chinese gold between 10,000 tons and 16,000 tons based on the amount they mine and buy.
            I believe its probably close to 10,000 tons.

            Gold and silver are insurance to me and I will always accept them in trade as money. I have lived all over the world and I do not trust pictures printed on paper as money.

            Bankers will always print paper to destruction and this time will be no different.

          3. It’s hard to tell how much gold the Chinese hold. The major amount of precious metals are not in governmental hands now. Even if you tally up all the official government figures and multiply by a bugger factor, it is still a fraction to the total known gold supply.

            The reason why is Gresham’s law: monetary assets over valued by a government tend to replace, in circulation, those assets which the government undervalues. The bet is that the government will be wrong at sometime in the future. Precious metal, so hidden now, will come out of the woodwork when the time is right.

          4. Nope. It’s not hard to tell at all. Simply read the current World Gold Council reports. Helllllloooooooo?

          5. Nope, obviously you are totally ignoring the CRYSTAL CLEAR AND STRAIGHTFORWARD DOCUMENTED FACTS. Helllloooooooo?

          6. There are indeed over 10,000 metric tonnes of gold inside the People’s Republic of China and over 16,000 metric tonnes of gold in India, but MOST ALL OF THAT IS OWNED THE CITIZENS OF THOSE COUNTRIES AND MOST ALL OF IS IN THE FORM OF PRIVATELY HELD JEWELRY. The government of China only owns/holds about 1054 metric tonnes of gold and the government of India only owns/holds about 536 metric tonnes of gold.

            By the way, 10,000 metric tonnes of gold is only worth about $450 billion and the money supply in China is over $23 trillion.

          7. Why did the US government want to steal its citizen’s gold in 1933? FDR saw an advantage in doing so.

            Government officials are often arrogant and presumptuous, if they think they can get away with it. Then, they are surprised when unintended consequences hit them.

          8. FDR and others in the US government and US Treasury were UTTERLY FED UP WITH SOME PEOPLE’S SICK AND LURID OBSESSION WITH BULLION GOLD and wanted to put an end to that kind of disgusting and moronic stupidity, which they did.

            That should be done again and the price of gold would then return to where it was in 1974 when some utter dolt named Gerald Ford repealed the prohibition against US citizens holding bullion gold which was one of the most stupid decisions in the history of the United States.

          9. Governments are never wrong! LOL

            FDR’s confiscation of gold was unconstitutional. The US Constitution forbad states from making coins out of anything but precious metals. The US Consititution never gave the Federal government the power to outlaw gold. Paper currency was merely a receipt for silver or gold coins.

            But, FDR controlled congress and eventually intimidated the Supreme Court. So, nothing could be done about it.

          10. All private ownership of gold bullion SHOULD BE TOTALLY PROHIBITED except for jewelry or industrial purposes just as was the case between 1933 and 1974 in the US and the sooner that is done globally, the better. It is utterly sickening to see fools fawning over this junk and it is time to get gold returned to its proper place as JEWELRY and get all of the financial speculation in this stuff totally stopped once and for all.

          11. Who died and made you king?

            If people want gold, who are you to deny it to them? Precious metal are the common person’s best defense against a government stealing their wealth.

          12. The jewelry industry is FAR BEYOND FED UP WITH THE MINDLESS SPECULATION IN GOLD BY GOLD GOOBERS.

          13. The government of China holds 1054 metric tonnes of gold and no more.

            The World Gold Council is the definitive and authoritative source for gold reserves holdings by country and their latest report as of November 5, 2014 shows China ranked as #7 in the world with the largest country reserves gold holdings and the official amount that China holds is 1054 metric tonnes confirmed by this report.
            You can access the report using the following link and you will need to establish an account (no charge) with the World Gold Council to obtain access to the latest Country Gold Reserves document:

            http://www.gold.org/search/news/countries%20reserves

            The official numbers which state gold holdings in metric tonnes in this November 5, 2014 report which include the IMF (International Monetary Fund) are:

            1) United States 8,133.5
            2) Germany 3,384.2
            3) IMF 2,814.0
            4) Italy 2,451.8
            5) France 2,435.4
            6) Russia 1,149.8
            7) China 1,054.1
            8) Switzerland 1,040.0
            9) Japan 765.2
            10) Netherlands 612.5

            Further information about all aspects of gold are available from the home page of the World Gold Council at:

            http://www.Gold.org

          14. One problem with socalbeachdude’s arguments is that communist regimes have never had the slightest reluctance in nationalizing their subject’s gold. So, every oz of gold in China should be assumed to be in government hands. Or will be eventually.

            I’m assuming that the time will come when people will no longer accept any currency unless it is redeemable in precious metals. This is why China is accumulating it. The other is that China has trillions denominated in foreign bonds.

            China has little choice: it can buy foreign goods, the rights to natural resources in Africa, stocks in foreign companies and foreign real estate. It is doing all of these now, but as quietly as possible. It doesn’t want a panic.

          15. Now that you’ve totally lost the argument, you are making preposterously laughable and bogus assertions, I see.

          16. I could only lose to someone who makes sense. You don’t attempt to make a case. I’m supposed to accept your assertions on faith. No thanks.

          17. The government of China is MOST CERTAINLY NO ACCUMULATING GOLD and it has stated many times that it has absolutely NO INTEREST WHATSOEVER IN INCREASING ITS GOVERNMENT GOLD HOLDINGS ABOVE 10504 METRIC TONNES OF THE STUFF.

          18. All of the gold bought in China is bought by CITIZENS OF CHINA mostly for jewelry and other commercial purposes and has NOTHING WHATSOEVER TO DO WITH GOVERNMENT GOLD HOLDINGS.

          19. No doubt, you are in close contact with Chinese officials. They are your good buddies, so they would never lie to you, right? LOL

      2. Printed right on top of a dollar bills says….Federal Reserve Note.

        Last I seen estimated Red China has 10,000+ tons of gold. 1054 tons estimate was an estimate from 10 years ago or more. If gold is worthless why buy up the worlds supply?

        1. China has to have gold to prop up the Yuan. It has trillions in bonds from foreign countries and is trying get rid of them covertly.

          Eventually, China has to trade with other countries. It has little oil, so it must get it from the Middle East. Arabs want gold. It’s only smart of them. Especially when, western banks are selling gold at bargain basement prices to prop up their currencies.

          1. Those are absurd and utterly false assertions. The Chinese renminbi (yuan) is LARGELY PEGGED IN VALUE TO THE US DOLLAR with very minimal float and its exchange value or any other value has nothing whatsoever to do with any metallic substance.

            The Chinese money supply, due to their massively egregious printing of it is now over $23 trillion which is DOUBLE THE $12 TRILLION MONEY SUPPLY OF THE US despite the fact that China’s economy is about half the size of the US in terms of actual GDP.

          2. Our times are confusing. Partly, this is because government lie.

            China appears to be backing off its mercantilist positions. It is doing this slowly so as not to spook the markets.

          3. China is the most EGREGIOUS MONEY AND CREDIT CREATOR IN THE WORLD AND CREATED A $23 TRILLION MONEY AND CREDIT BUBBLE over the past 10 years despite the fact that its economy is less than 50% the size of the US economy in which the Federal Reserve has only increased the MONETARY BASE BY AROUND $3 TRILLION during the same period of time.

            China is a ludicrous, laughable, and preposterous CREDIT BUBBLE WRECKAGE. The renminbi has ZERO CREDIBILITY AS A CURRENCY. Are you not aware, Erik, that China “printed” $23 trillion in renminbi over the past 10 years and that China is BY FAR THE MOST EGREGIOUS MONEY PRINTER IN THE WORLD.

            During the same time that China increased its money supply by $23 TRILLION, the Federal Reserve only increased the MONETARY BASE (not the money supply) in the US by $3 trillion China’s economy is about HALF THE SIZE OF THE US.

            China has NO BANKING OPERATIONS IN THE US other than a single branch of the PBOC in New York with a very limited correspondent branch in Los Angeles.

            China created over $23 TRILLION IN NEW MONEY to do so making China by far the MOST EGREGIOUS MONEY PRINTER IN THE WORLD and they created an unprecedented debt bubble as a result of their unprecedented credit and money creation spree and it is now imploding.

            Fitch says China credit bubble unprecedented in modern world history

            http://www.telegraph.co.uk/finance/china-business/10123507/Fitch-says-China-credit-bubble-unprecedented-in-modern-world-history.html

            What China did with credit and money creation over the past 10 years makes the US look like a bunch of little penny pinching pikers.

            China’s economy is a CATASTROPHIC DISASTER drowning in tens of trillions of dollars of BAD LOANS for which there is highly inadequate collateral and a TSUNAMI OF BANKRUPTCIES IMMINENT AND ALREADY HAPPENING.

            China’s Li Keqiang warns investors to prepare for wave of bankruptcies – Guardian

            http://www.theguardian.com/world/2014/mar/13/china-li-keqiang-wans-investors-bankruptcies

            How China Fooled The World (Full Documentary)

            http://www.youtube.com/watch?v=cwiEKVrZFWc

        2. The government of the People’s Republic of China holds 1054 metric tonnes of gold worth less than $60 billion which is a tiny speck of dust compared to the money supply of the PRC which is over $23 trillion which is double that of the US due to egregious money printing by the PRC over the past 10 years.

          The World Gold Council is the definitive and authoritative source for gold reserves holdings by country and their latest report as of November 5, 2014 shows China ranked as #7 in the world with the largest country reserves gold holdings and the official amount that China holds is 1054 metric tonnes confirmed by this report.
          You can access the report using the following link and you will need to establish an account (no charge) with the World Gold Council to obtain access to the latest Country Gold Reserves document:

          http://www.gold.org/search/news/countries%20reserves

          The official numbers which state gold holdings in metric tonnes in this November 5, 2014 report which include the IMF (International Monetary Fund) are:

          1) United States 8,133.5
          2) Germany 3,384.2
          3) IMF 2,814.0
          4) Italy 2,451.8
          5) France 2,435.4
          6) Russia 1,149.8
          7) China 1,054.1
          8) Switzerland 1,040.0
          9) Japan 765.2
          10) Netherlands 612.5

          Further information about all aspects of gold are available from the home page of the World Gold Council at:

          http://www.Gold.org

          1. Any organization which starts with “World Council of…” is usually a communist front organization. Neither religion nor markets can be collectivized. People will always find ways of avoiding them. If nothing more, people will vote with their feet by fleeing toward freer countries. You probably think that there are fences around Russia to keep people out. LOL

    2. It’s anyone’s guess what markets will do. Fundamentals don’t change; the US dollar has lost 98% of its purchasing power since 1913. Why would anyone place their long term assets in that?

      1. That is a totally false assertion. The average purchasing power in the US for citizens is now UP ABOUT 230% over the past 100 years.

        As to the value of the US dollar over the past 100 yeas…

        No, the dollar did NOT really lose 95% of its value since 1913

        Let us take at the period from 1913-2006, where we have complete data. So what do they mean, when they say the dollar lost 95.1% of its value in those 93 years? Essentially, an average good/service that cost $1 in 2006, used to be priced at 4.9 cents in 1913. In other words, the average price level of goods/services increased by 1930% since 1913. True, but guess what, average earned income increased by 6560% during the same time period. Average earned income rose from $740/yr in 1913 to $49,300/yr in 2006. Adjusting for inflation, $740/yr in 1913 is $15,000/yr in 2006 dollars. Average incomes, not only kept pace, but beat price inflation by 230%.

        So does it make any sense all to say the dollar lost value? In reality, the REAL purchasing power of the average American, has increased by 230% in the past century. Sure, prices were cheap in 1913, but $740/yr doesn’t buy you a whole lot, not anymore than 15,000/yr today.

        http://realfactbias.blogspot.com/2012/02/no-dollar-did-not-really-lose-95-of-its.html

        1. You are forgetting productivity where companies have found cheaper ways of manufacturing goods. Also, the government always understates general price increases.

  24. Gold and silver are among the MOST TOXIC ASSETS OUT THERE at any prices above their means of $456 and $8 per ounce respectively which is where they are headed and then lower.

        1. It doesn’t matter. Since 1913, Federal Reserve Notes have lost 98% of their purchasing power. You want me to bet on that?

          1. That, again, is a TOTALLY FALSE ASSERTION, dude.

            As to the value of the US dollar over the past 100 yeas…

            No, the dollar did NOT really lose 95% of its value since 1913

            Let us take at the period from 1913-2006, where we have complete data. So what do they mean, when they say the dollar lost 95.1% of its value in those 93 years? Essentially, an average good/service that cost $1 in 2006, used to be priced at 4.9 cents in 1913. In other words, the average price level of goods/services increased by 1930% since 1913. True, but guess what, average earned income increased by 6560% during the same time period. Average earned income rose from $740/yr in 1913 to $49,300/yr in 2006. Adjusting for inflation, $740/yr in 1913 is $15,000/yr in 2006 dollars. Average incomes, not only kept pace, but beat price inflation by 230%.

            So does it make any sense all to say the dollar lost value? In reality, the REAL purchasing power of the average American, has increased by 230% in the past century. Sure, prices were cheap in 1913, but $740/yr doesn’t buy you a whole lot, not anymore than 15,000/yr today.

            http://realfactbias.blogspot.com/2012/02/no-dollar-did-not-really-lose-95-of-its.html

          2. However, real wages have been declining since about the time we went off the gold standard in 1971. But I’m sure that’s total coincidence.

          3. Much of that come from the government hiding the true effect of price increases.

            There are different opinions on how this will work out. The following author thinks that there is no easy fix; we will have a generational struggle. http://www.garynorth.com/public/12936.cfm

            I’m not sure. I’m muddling through.

          4. Little do you know. Nothing I can say will get through your blindness. You are an excellent bad example, for people still open to ideas.

          5. YOU are the one ignorant and blind – BY YOUR OWN ADMISSIONS above and below in failing to read and comprehend the actual facts and evidence and instead wallowing in bogus delusions, fantasies, and utterly false notions, dude.

          6. I’ve read them, years ago. I don’t believe them, then or now. You are the gullible one here.

          7. They are obviously true and correct, but you seem to have an impossible time comprehending and “believing” IRREFUTABLE FACTS as you are obsessed by your own admissions with “studying” utter nonsense in preposterous notions and theories by utterly clueless buffoons who also don’t want to comprehend, accept, or understand the actual facts and realities.

          8. Nothing is irrefutable. The question is only whether you can make a believable case.

            You would believe nothing I would say. That makes you a bigot.

          9. Many things are irrutable including that the color white is white and that the color black is black and that 2+4.

          10. I refuse to believe in sacred cows. It is not my religion. Marxism and Keynesian economics are not my religion either. They are eminently refutable. But, not to fanatics.

          11. What on earth do Marixism and Keynesian economics have to do with the price of gold or the price of rice in China?

          12. Marxism and Keynesian economics affect fiscal and monetary policy. Both induce politics into every economic decision. They cause central banks to manipulate the economy or increase the money supply. Both have been proven false. That was the lesson we were supposed to learn from the failure of the Soviet Union.

            China borrowed mercantilism from England. That didn’t work out well for England and won’t for China, either.

          13. I’ve been studying this issue for forty years now. I’ve forgotten more than you will ever know.

            This is very simple. People create money, not governments. Governments create currencies in an attempt to push money aside, but trouble follows because people take evasive action to protect their wealth. The government makes corrections to protect their currency until they run out of the means to do so. Precious metals always win.

          14. People do not “create money” at all as that would be ILLEGAL AND IS CALLED COUNTERFEITING. Only the government or its central bank has any power or right to create money.

          15. People create money by accepting any item as a medium of exchange. They have accepted, in the past, the oddest things as money.

            In the Soviet Union people would stand in line to buy goods which would not fit them, Why? As a medium of exchange. Goods were so scarce, and Rubles so worthless, they could use them as barter items.

            After WWII, the German People used American cigarettes as money. That was good, because they were usually smoked up before they got stale. The REAL issue was that the Allies kept NAZI price controls going until 1948. This greatly depressed the economy and made it impossible to earn currency. As soon as the Wage and Price controls were ended, the economy recovered and people no longer had to use cigarettes when they could earn German Marks.

          16. We disagree. None of your arguments have persuaded me before, so why don’t you give up?

          17. The so-called “gold standard” was TOTALLY THROWN INTO THE GARBAGE CAN IN THE US FOR ALL DOMESTIC PURPOSES IN 1933 and that is an irrefutable fact.

            All that was left of the so-called gold-standard was LIMITED INTERNATIONAL BANKS EX CHANGEABILITY OF THE US DOLLAR FOR GOLD and that was shredded entirely in 1Auygst 1971 when the Bretton Woods Agreement was tossed into the garbage heap.

            The Federal Reserve most certainly DID NOT DESTABILIZE THE US ECONOMY AT ALL during the 1921-1929 period. For a thorough review of monetary policy in the 1920s in the US, see:

            http://www.econlib.org/library/Enc/FederalReserveSystem.html

          18. One of the problems with the truth is that it keeps rearing its head. If gold can’t be ignored by government, because people won’t let it to be ignored, then it is the government which will fail. Or its currency and debts.

          19. Governments couldn’t give the slightest little bit of a hoot about gold as it is of NO FINANCIAL SIGNIFICANCE OR RELEVANCE whatsoever and its primary purpose is and will always be jewelry.

            The total value of all of the gold ever discovered in the world is less than $7 trillion even at today’s preposterously laughable prices for it. The global GDP is in excess of $70 trillion and global assets are around $800 trillion. Gold is nothing but an irrelevant little speck of dust from an accounting and financial perspective.

          20. Keep believing that. It’s no skin off my my nose. Why are you so offended at me having a contrary opinion?

          21. Yep, and we’re sure seeing that big time with the enormous price plunges in metals, especially gold and silver, aren’t we?

          22. That is temporary. A lot of bad events are coming.

            2015 should see the dollar and stocks fall while precious metal rise. Would you be persuaded that you are wrong if that happened? No.

          23. I am rolling on the floor laughing at that comment. The US dollar will MIGHTILY SOAR DURING 2015 both in terms of purchasing power and on the DXY. As to stocks, however, those are likely to fall 50% to 80% with more than a few stocks plunging 100%.

          24. Money is what people call money, whether feathers, fancy printed pieces of paper or gold. Gold however fits many of the criteria of the best qualities for money. Gold and to a lesser extent silver has always been seen as a store of value or money. This is why the rich acquire gold precious stones etcetera as a hedge against the vagaries of life as precious anything retains value, stones, art, metals, good land. The world’s fortunes are not based solely on having a skill set so much in demand that losing a fortune is of no matter as another can be quickly had. Just place yourself in an old monied family and imagine you know an economic collapse is immanent and you need to hedge your holdings of paper equities and cash in case their values fail. What would you pick as that hedge? More paper, say bonds, or something that is viewed as having intrinsic value in trade because of it’s rarity?

          25. Truly wealthy people certainly don’t collect and hoard inconsequential little stuff like gold bullion, but rather have their assets nearly entirely in big picture assets such as bonds, stocks, and real estate as well as cash deposits at banks.

            As to “fractional reserve lending,” THERE IS NO SUCH THING.

          26. So what do you call retaining a capital reserve and then lending out many times that reserve amount, creating deposits in other words, which if those owning those deposits all decided to make full withdrawal the bank would not have enough money? The Federal Reserve in their banking explanation brochure calls this practice Fractional Reserve Banking.

            Obviously someone has fed you a load of codswallop and you’ve taken it to heart and believe you are being intelligent with this denial that fractional reserve banking is the normal practice of today’s banks.

            The wealthy do own gold as a hedge. Many wealthy European owners of gold are to their dismay finding iou’s instead of their gold bullion in their allocated gold accounts in various Swiss banks. The gold has euphemistically been what the thieves call rehypothecated. Nations tend to hold some gold also, and any nation usually has a great deal of wealth, not to be confused with whatever debt they owe.

          27. Where do you come up with such totally bogus, false, and nonsensical notions?

            There is no such thing as “fractional reserve banking” such as you assert.

            No bank at any time may have loan out even 100% of its deposits and presently loans at banks in the US average about 67% of deposits at US banks which is a record BANKS NEVER CREATE ANY MONEY AT ALL AND THERE IS NO SUCH THING AS “FRACTIONAL RESERVE BANKING.”

            There are RESERVE REQUIREMENTS that the Federal Reserve imposes on DEMAND DEPOSITS AT BANKS but those RESERVE REQUIREMENTS MEAN THAT THE BANK CANNOT LEND OUT MORE THAN ABOUT 95% of those demand deposits as the 5% required as a reserve is the minimum amount a bank must maintain as cash on hand to meet expected withdrawals from customers.

            There are no such reserve requirements on time deposits and those are loaned out by banks at up to 100% of the amount of those deposits.

            I would suggest you learn about RESERVE REQUIREMENT which are fully explained in detail at:

            http://www.federalreserve.gov/monetarypolicy/reservereq.htm

          28. NO BANK MAY EVER LEND OUT MORE THAN 100% OF THE DEPOSITOR FUNDS under any circumstances.

            Reserve requirements only apply to DEMAND DEPOSITS (typically checking accounts) and are typically 3% to 5% which means that only 97% or 95% of demand deposit funds may ever be loaned out by a bank BUT NEVER ANY MORE. The very purpose of RESERVE REQUIREMENTS is to ensure that banks have SUFFICIENT AVAILABLE CASH ON HAND TO MEET WITHDRAWAL REQUESTS ON DEMAND DEPOSITS.

            Reserve requirements DO NOT APPLY TO TIME DEPOSITS (savings accounts, CDs, etc.) and banks can loan out UP TO 100% ON TIME DEPOSITS.

            Your ludicrously laughable assertion that “the very page you linked to tells you that banks have a 3% reserve
            requirement. That means they can lend about 32 dollars for every 1 they have on hand”
            is SO STUPID AS TO BE UTTERLY MINDBOGGLING. The 3% reserve requirement means banks CAN ONLY LEND OUT UP TO 97% OF THE DEMAND DEPOSITS THEY HAVE FROM CUSTOMERS.

            UNDER NO CIRCUMSTANCES CAN ANY BANK LEND OUT MORE THAN 100% OF CUSTOMER DEPOSITS, and currently the aggregate bank lending to deposit ratio is at a record low of 67% in the US.

          29. What you describe is the very essence of fractional reserve.only having on hand a fraction as reserve to what has been created as deposits/money owed. Very few deposits are strictly savings, most are what the banks call dual, savings/chequing. Term deposits and the like are the usual savings mechanisms.

            Reserve requirements have also all but disappeared,

            Sorry, but I haven’t linked anywhere so you must be confused.

          30. Huh? Banks are not required to keep any customer deposit funds in reserve on time deposits, but only on DEMAND DEPOSITS such as checking accounts that can be withdrawn at any time upon the demand of the deposit. As to time deposits that are free of any reserve requirements, they are actually the majority of all customer deposits in banks. Reserve requirements remain fully in force on demand deposits at all banks in the US. Contrary to your prior assertions, no bank may ever lend out even 100% of what it has in customer deposits.

          31. Countries like China and Russia are buying gold along with Central banks around the world, they are doing this to protect themselves from the fiat dollar scam.

          32. Those are totally false and utterly bogus assertions, dudette.

            China and Russia certainly are NOT “buying up all the gold they can get” at all and the total gold holdings of the government of the Russian Federation are only about 1,150 metric tonnes worth less than $65 billion. The government of China holds even less gold for total holdings of around 1,054 metric tonnes worth less than $60 billion.

            Gold is of ZERO FINANCIAL RELEVANCE and all of the 180,000 or so metric tonnes of gold ever mined (70% of which is in the form of jewelry) is worth less than $7 trillion in a world where global assets are worth around $800 trillion.

          33. China and Russia ARE buying gold because they know that the dollar will eventually reach hyperinflation. When the dollar crashes gold will protect there wealth from the worthless dollar. Wake up!

          34. Those are totally false and utterly bogus assertions.

            China and Russia certainly are NOT “buying gold along with central banks around the world” at all and the total gold holdings of the government of the Russian Federation are only about 1,150 metric tonnes worth less than $65 billion. The government of China holds even less gold for total holdings of around 1,054 metric tonnes worth less than $60 billion. The government of China has clearly and explicitly stated that it has NO INTEREST WHATSOEVER IN INCREASING ITS GOLD HOLDINGS BEYOND THE 1,054 METRIC TONNE AMOUNT IS HAS MAINTAINED FOR MANY YEARS.

            The government of China is the world’s largest producer of gold with a 12% annual share of new mining production which is around 300 metric tonnes and the government of China SELLS ALL OF ITS ANNUAL GOLD PRODUCTION into the markets.

            Gold is of ZERO FINANCIAL RELEVANCE and all of the 180,000 or so metric tonnes of gold ever mined (70% of which is in the form of jewelry) is worth less than $7 trillion in a world where global assets are worth around $800 trillion.

          35. BzzzT! 😉

            http://www.bloomberg.com/news/2015-01-22/russia-adds-to-world-s-fifth-biggest-gold-reserves-for-9th-month.html

            Russia Adds to World’s Fifth-Biggest Gold Reserves for 9th Month
            By Eddie van der Walt Jan 22, 2015 8:50 AM PT

            Russia is showing no signs of slowing gold purchases as the fifth-biggest holder boosted reserves for a ninth month.

            The country’s gold reserves rose to about 38.8 million ounces as of Jan. 1 from 38.2 million ounces a month earlier, the central bank said today on its website. It’s the longest stretch of monthly increases since August 2013, data from the International Monetary Fund show.

          36. As of the latest January 9, 2015 World Gold Council report, Russia has 1,150 metric tonnes of gold which has a market value of about $65 billion and is a small part of the reserves held by Russia which exceed $500 billion mostly in foreign currencies.

          37. I would suggest you read the Federal Reserve statement regarding RESERVE REQUIREMENTS as you obviously have zero comprehension as to what RESERVE REQUIREMENTS mean.

            http://www.federalreserve.gov/monetarypolicy/reservereq.htm

            RESERVE REQUIREMENTS DECREASE THE AMOUNT OF MONEY A BANK CAN LEND AGAINST CUSTOMER DEPOSITS BY THE AMOUNT OF THE RESERVE THAT MUST BE MAINTAINED BY THE BANK WHICH IS TYPICALLY 3% TO 5%.

            RESERVE REQUIREMENTS NEVER EVER ENABLE A BANK TO LEND OUT ANY MORE MONEY THAN THE AMOUNT OF THE DEMAND DEPOSITS LESS THE AMOUNT OF THE RESERVE WHICH MUST BE MAINTAINED IN LIQUID CASH BY THE BANK TO ENSURE WITHDRAWAL LIQUIDITY.

            To make that crystal clear for you, here’s the correct math:

            $100,000 Demand deposits from customers in bank
            $-…3,000 Less Reserve Requirement of 3%
            $..97,000 Maximum amount bank can lend to borrowers

            What about that simple and straightforward math is in any way unclear to you?

          38. No, it is 3% held as reserve on the diminishing deposits. 3% held on 100,000, then 3% on 97,000 or 2910, then 3% on 94,090 or 2822.70 and so on. So in the end 3% is on reserve to that which has been created as deposits/money owed which in this case will be close to 970,000 all bearing interest?

          39. Where on earth do you come up with such UTTER NONSENSE?

            You must be extremely math-challenged and totally unaware of debiting and crediting assets and liabilities in general ledger accounting.

            DEPOSITS AT BANKS ARE NOT DIMINISHED AT ALL BY LENDING. Deposits at banks are an aggregate amount on the LIABILITIES side of the balance sheet at banks and are only diminished in the case of withdrawals of deposits by customers.

            If a bank has $100,000 in demand deposits and loans out 97% (assuming a 3% reserve requirement), the BANK STILL HAS $100,000 IN CUSTOMER DEMAND DEPOSITS on the LIABILITIES side of its balance sheet. What has diminished is $97,000 in cash on the ASSETS side of its balance sheet (assuming it had no prior loans made from its $100,000 in demand deposits) and it now has $97,000 in outstanding loans on the assets side of its balance sheet while retaining $3,000 in cash on the assets side of its balance sheet which balances perfectly with the $100,000 of customer demand deposits on the LIABILITIES side of its balance sheet.

            What is so difficult to comprehend about that simple and very straightforward accounting process.

            Moreover, in the case of TIME DEPOSITS, there are NO RESERVE REQUIREMENTS APPLICABLE at all, so a bank can loan out 100% of the $100,000 in time deposits on the LIABILITIES side of its balance sheet and retain NO CASH AT ALL on the ASSETS side of its balance sheet which would show cash in assets as $0 and loans outstanding as $100,000.

            Your assertions above are so bogus and false as to be beyond laughable and are, of course, utterly absurd and totally false..

          40. I believe I have wasted enough time here but I will refute your absurdly ignorant assertions once more. Your $100,000 deposit forms a reserve requirement; you use 3%, under which by your claim the bank can now lend out a value to 97%. The bank then lends out $97,000 which forms the basis of another deposit/reserve requirement by which using your figure of 3% the bank must retain as a reserve for further creation of money/deposits…3% of 97,000 = 2910 which is now retained as reserve requirement enabling a further 94090 to be lent out with 2822.70 retained as reserve and so on….your failure to understand how the original 100,000 deposit forms a reserve and subsequent loans form deposits which then form additional reserves for further loan/deposits transforming the amount that can be lent into existence on the original 100,000 deposit is at the crux of your misunderstanding of the money creation process, also called the fractional reserve system. Your confusion over which type of deposit can or can’t be used as a reserve requirement makes no difference in the math to that which can be used as reserve. Despite your screaming CAPS you are dead wrong.

          41. I see that you are as severely math-challenged and comprehension-challenged as ever and are apparently totally incapable of comprehending standard double entry general ledger accounting.

            If a bank has a total of $100,000 in deposits, it doesn’t use 3% when it loans out $97,000 of those to a borrower, but rather uses 97% of its cash (assets) related to those deposits (liabilities). Where on earth do you come up with the totally bogus notion that the bank would use 3%.

            That $97,000 is now GONE FROM THE BANK’S CASH related to the original $100,000 customer deposit which remains a LIABILITY on the books of the bank.

            Where do you come up with the nonsense that any of thse loans funds would ever come back into the bank? Typically, on borrowed funds they are USED TO PAY A THIRD PARTY WITH NO RELATIONSHIP AT ALL TO THE LENDING BANK and are spent on assets in which the lending bank has a collateral interest under the terms of the loan.

            Your assertion that borrowed funds are somehow deposited back into the lending bank and sit there as deposits against which the bank can make further loans is patently false and utterly absurd.

            Banks NEVER “CREATE BRAND NEW MONEY” at all ever. Where do you come up with such an utterly bogus and absurd assertion?

            DEPOSITS DO NOT “FORM RESERVES” but any and all aggregate DEMAND DEPOSITS AT BANKS MUST NOT BE LOANED OUT TO AN EXTENT GREATER THAN 97% OF THAT AGGREGATE AMOUNT WHEN RESERVE REQUIREMENTS APPLY AS THEY DO IN THE CASE OF ALL DEMAND DEPOSITS AT BANKS.

            Your utter lack of comprehension as to accounting and math is absolutely jaw dropping and mindboggling. You must be a product of our sadly deficent EDYOUKAYSHUNUL system.

          42. You are reciting Keynesian dogma. Keynes’ theories failed in the Jimmy Carter administration when the US experienced a stagnant economy and high general price increases (Stagflation). None of Keynes’ solutions could tackle both.

            Paul Volcker reduced the FED’s increase in the money supply to allow interest rates to rise. They got as high as 20%; that lowered inflationary expectations for a few decades.

            We are in a Stagflation now, but Volcker’s tactic cannot work, because the US is too much in debt. The interest payment would be higher than the tax receipts.

          43. No he’s not miss understanding. He’s trolling. Don’t waste your time. What you said is 100% correct.

          44. You can’t be that stupid surely. When the loan is made that money whether it’s banked directly or spent is irrelevant as the merchant who ends up with said funds will deposit them at his/hers bank as profit or wages. The money ends up in the banks at theend ofthe day not under mattresses you absolute goose.

          45. I see that you are as severely math-challenged and comprehension-challenged as ever and are apparently totally incapable of comprehending standard double entry general ledger accounting.

            If a bank has a total of $100,000 in deposits, it doesn’t use 3% when it loans out $97,000 of those to a borrower, but rather uses 97% of its cash (assets) related to those deposits (liabilities). Where on earth do you come up with the totally bogus notion that the bank would use 3%.

            That $97,000 is now GONE FROM THE BANK’S CASH related to the original $100,000 customer deposit which remains a LIABILITY on the books of the bank.

            Where do you come up with the nonsense that any of these loans funds would ever come back into the bank? Typically, on borrowed funds they are USED TO PAY A THIRD PARTY WITH NO RELATIONSHIP AT ALL TO THE LENDING BANK and are spent on assets in which the lending bank has a collateral interest under the terms of the loan.

            Your assertion that borrowed funds are somehow deposited back into the lending bank and sit there as deposits against which the bank can make further loans is patently false and utterly absurd.

            Banks NEVER “CREATE BRAND NEW MONEY” at all ever. Where do you come up with such an utterly bogus and absurd assertion?

            DEPOSITS DO NOT “FORM RESERVES” but any and all aggregate DEMAND DEPOSITS AT BANKS MUST NOT BE LOANED OUT TO AN EXTENT GREATER THAN 97% OF THAT AGGREGATE AMOUNT WHEN RESERVE REQUIREMENTS APPLY AS THEY DO IN THE CASE OF ALL DEMAND DEPOSITS AT BANKS.

            Your utter lack of comprehension as to accounting and math is absolutely jaw dropping and mindboggling. You must be a product of our sadly deficient EDYOUKAYSHUNUL system.

          46. We are arguing at cross purposes misunderstanding one another and I am trying to explain things from your perspective. In a sense there is no longer any fractional reserve banking because reserves are in actuality no longer required. It is the promissory note which gives the banker credit to loan (and the high powered money sitting at the central bank that got the banker into the game). The only limit on money creation is how much debt can be created.

            We both view the math the same way but are expressing it differently. It was your math that said 3% was to be held as a reserve leaving 97% of the value of the deposit/liability available to loan out; the 97,000 loan (bank asset) being electronically created as bank money (exchangeable by law for fiat money) and typed into the borrowers account as a deposit. The original 100,000 deposit sits as a deposit/liability against which the loan/bank asset is made as an unsecured loan to the bank. It doesn’t matter if the money comes back to the same bank or not. The banking system in effect acts as one large bank, perhaps you have heard of the overnight rate that balances the system?. If a third party is paid from the bank loan/deposit that person will deposit to their bank. The money creation cycle is only broken when someone hoards the money outside of the banking system.

            Are we making any headway?

            SBD: Have you ever viewed “Money as Debt”? It about 45 minutes long and can explain what you and I are using up time on to no purpose. While not perfect it does give a very good explanation of the money creation process and reserve requirements and double entry book keeping.

          47. Are you not aware that the AMOUNT OF BANK RESERVES HAS NEVER BEEN HIGHER IN THE HISTORY OF THE US BANKING SYSTEM THAN IT IS NOW and that any bank reserves that are excess to required reserves are classified as EXCESS RESERVES and are kept in the excess reserves accounts of the bank at the Federal Reserve and that those balances now exceed $3 trillion when a “normal amount” in those excess reserves accounts is $25 billion?

            You are still directly confused as to the math. The $97,000 amount of the bank loan from the $100,000 customer deposit was NOT ELECTRONICALLY CREATED AS BANK MONEY AT ALL. The $97,000 CAME FROM CUSTOMER DEPOSITS OF THE BANK THAT WERE STILL IN CASH ON THE ASSETS SIDE OF THE BANK’S GENERAL LEDGER AND WERE REAL MONEY FROM CUSTOMER DEPOSITS AT THE BANK which are on the LIABILITIES side of the bank’s general ledger.

            Once the bank actually lends the $97,000 in cash of the $100,000 in actual customer deposits, it then has $97,000 in assets called LOANS OUTSTANDING and $3,000 remaining in CASH which is the 3% reserve that the bank cannot loan out. The customer deposit on the LIABILITIES side of the general ledger of the bank remains at $100,000 and is balanced on the general ledger by the $97,000 in LOANS OUTSTANDING PLUS THE $3,000 IN CASH on the ASSETS SIDE of the bank’s general ledger.

            The original $100,000 deposit does not “sit as an unsecured loan to the bank at all.” It sits on the LIABILITIES side of the bank’s general ledger as a CUSTOMER DEPOSIT that can be withdrawn at any time the customer chooses to withdraw it from the bank.

            The current OUTSTANDING LOANS TO CUSTOMER DEPOSITS UTILIZATION RATE IS THE LOWEST EVER RECORDED IN THE HISTORY OF US BANKING and stands at only 67% largely due to very slack demand for borrowing these days. Banks now have about 33% RESERVES AGAINST CUSTOMER DEPOSITS and most all of the excess reserves of over $3 trillion are in their excess reserves accounts at the Federal Reserve on which the banks earn IOER (Interest On Excess Reserves) interest rates of 0.25%.

          48. I get your game… you do know snow is initially white in colour or would you care to argue the point.

            No, you’re wrong again. Banks do not lend out directly from depositors accounts sitting on the liability side of the banks ledger. We instinctively know this as when we make a withdrawal the bank does not say “sorry we have lent your money out.” The bank creates new money from the ether to satisfy a loan but do make a ledger entry (asset side) of the required Fractional Reserve based on the unsecured loan to the bank in/of depositors accounts. Your failure to understand this simple concept requires a lot of effort on your part

            Reserves are the last thing a bank looks for “after making a loan then we look for deposits and then reserves.” that according to the NY Fed. But it is nice to see you acknowledging that banks must keep reserves and that those reserves are not equal to 100% of liabilities equating to a fractional reserve system. So you just hoisted yourself on your own petard.

            Further conversation is pointless and any further posting will remain unread and deleted as the voicing of an argumentative contrarian Have a nice delusional life…. and do please insist that the rest of the world , including the banking community is wrong and that you are correct.

          49. None of my statements are wrong at all, whereas nearly all of your absurdly bogus assertions are totally false as I have clearly pointed out in very substantial detail. Your lack of comprehension of standard DOUBLE ENTRY GENERAL LEDGER ACCOUNTING IS BEYOND APPALLINGLY DEFICIENT.

            When a customer deposit is made at a bank it is ENTERED ONTO BOTH THE ASSETS AND LIABILITIES SIDE OF THE GENERAL LEDGER OF THE BANK IN EQUAL AMOUNTS TO BALANCE THE GENERAL LEDGER AS IS THE PRACTICE OF ALL ENTRIES IN GENERAL LEDGER ACCOUNTING.

            The actual cash from a customer deposit is in the ASSETS account of the bank’s general ledger and the deposit of that amount that is the property of the customer depositor is on the LIABILITIES account of the bank’s general ledger. Loans made by a bank is made from the CASH ON THE ASSETS ACCOUNT of its general ledgers and has no affect whatsoever on the balance of the deposit amounts on the liabilities side of a bank’s general ledger.

            Banks DO NOT “CREATE” A SINGLE PENNY OF MONEY TO ISSUE LOANS WHATSOEVER. Banks simply use the depositor cash funds in the ASSET accounts of their general ledgers. Helllllooooooo?

          50. No bank lender would ever make a series of loans to a borrower or borrowers in which the amount of loans was deposited indefinitey back into that bank to make a series of future loans.

            L:ending simply does not work that way at all. Loans are made for borrowers to PURCHASE ASSETS ON A SECURED BASIS and the proceeds from those loans are NOT DEPOSITED BACK INTO THE BANK AS DEPOSITS WHICH REMAIN THERE but rather are dispersed to the borrowers who SPEND THOSE PROCEEDS ON ASSET PURCHASES SUCH AS HOUSES AND VEHICLES IN WHICH THE BANK TAKES A SECURED INTEREST AS COLLATERAL ON THOSE LOANS..

            Hypothetically, if such an impossible and bizarre scenario existed in which there was a series of loans made by a bank on an unsecured basis that were always deposited in full back into the lending bank such as you assert, the amount of funds that the bank could then lend out would be MUCH HIGHER IF THERE WERE NO RESERVE REQUIREMENTS than if there were reserve requirements as the banks would not have to reserve any funds whatsoever against any of those deposits which totally blows up your nonsensical notion that reserve requirements have anything at all to do with banks “creating money.”

          51. The FED has been increasing the money supply and most of that increase has been parked at the FED as excess reserves. As soon as those reserves are turned into loans by the banks, then general prices will vastly increase as huge numbers of dollars chase scarce goods.

          52. False. The QE funds in the excess reserves accounts at the Federal Reserve DO NO INCREASE THE US MONEY SUPPLY AT ALL BUT ONLY INCREASE THE MONETARY BASE.

            The excess reserves accounts of the banks at the Federal Reserve are part of the MONETARY BASE and not part of M1.

            FRB: What is the money supply? Is it important?

            There are several standard measures of the money supply, including the monetary base, M1, and M2. The monetary base is defined as the sum of currency in circulation and reserve balances (deposits held by banks and other depository institutions in their accounts at the Federal Reserve). M1 is defined as the sum of currency held by the public and transaction deposits at depository institutions (which are financial institutions that obtain their funds mainly through deposits from the public, such as commercial banks, savings and loan associations, savings banks, and credit unions). M2 is defined as M1 plus savings deposits, small-denomination time deposits (those issued in amounts of less than $100,000), and retail money market mutual fund shares. Data on monetary aggregates are reported in the Federal Reserve’s H.3 statistical release (“Aggregate Reserves of Depository Institutions and the Monetary Base”) and H.6 statistical release (“Money Stock Measures”).

            http://www.federalreserve.gov/monetarypolicy/reservereq.htm

            The effect of the monetary base on money supply

            http://www.mnb.hu/Root/Dokumentumtar/ENMNB/Kiadvanyok/mnben_mnbszemle/mnben_szemle_cikkei/bulletin_2007june_komaromi.pdf

          53. It’s clear that we don’t speak the same language. You use jargon which as little basis in reality. Much of what you say is not grounded in reality.

            The FED can, temporarily, hide the currency which it is creating out of thin air. But, it cannot do this forever. Any currency it creates will eventually start going into loans where it increases the money supply.

            The money supply is the currency competing to buy goods and services in the marketplace. So, the excess reserves parked at the FED are held out of the money supply, for now. As well, US Dollars and Treasury Securities, overseas, held out of circulation by the Chinese, say, do no harm until they are repatriated to the US economy. Then, everything blows up.

            Where we disagree is that I believe that the FED has built a disaster waiting to happen. Therefore, any sane person must remove themselves, as much as possible, from being caught up in the crisis when it comes. The US government has made excess promises and built a financial house of cards. I cannot know whether there will be a monetary deflation or a hyper inflation of the US US dollar.

            The only way to safeguard my assets are to remove them from the economy. Our situation is not as bad as the Roman Emperor Diocletian’s times where businessmen had to flee to the German barbarians to keep the state from stealing his assets. But, the essence of the state is that it must steal from us and we must avoid that. Precious metals are part of the strategy to avoid expropriation. But, so is living in a Red State which is likely to nullify federal edicts.

          54. Ignoring the meaning of words and phrases and calling precise use of such “jargon” is the reason you fail to understand the actual facts of the present status of the money supply in the US.

            There is a HUGE DIFFERENCE between an increase in the MONETARY BASE versus the MONEY SUPPLY.

            The excess reserves accounts of the banks at the Federal Reserve are part of the MONETARY BASE and not part of M1.

            FRB: What is the money supply? Is it important?

            There are several standard measures of the money supply, including the monetary base, M1, and M2. The monetary base is defined as the sum of currency in circulation and reserve balances (deposits held by banks and other depository institutions in their accounts at the Federal Reserve). M1 is defined as the sum of currency held by the public and transaction deposits at depository institutions (which are financial institutions that obtain their funds mainly through deposits from the public, such as commercial banks, savings and loan associations, savings banks, and credit unions). M2 is defined as M1 plus savings deposits, small-denomination time deposits (those issued in amounts of less than $100,000), and retail money market mutual fund shares. Data on monetary aggregates are reported in the Federal Reserve’s H.3 statistical release (“Aggregate Reserves of Depository Institutions and the Monetary Base”) and H.6 statistical release (“Money Stock Measures”).

            http://www.federalreserve.gov/monetarypolicy/reservereq.htm

            The effect of the monetary base on money supply

            http://www.mnb.hu/Root/Dokumentumtar/ENMNB/Kiadvanyok/mnben_mnbszemle/mnben_szemle_cikkei/bulletin_2007june_komaromi.pdf

            One of the most extensive and detailed discussions of the definitions of Money Supply is available from the Federal Reserve St. Louis Branch at:

            U.S. Financial Data – Federal Reserve Bank of St. Louis

            http://research.stlouisfed.org/publications/usfd/notes.pdf

          55. Why are we even discussing this? We will never agree; we come from different economic schools. Besides, why should you care what I do with my money?

          56. QE is being REVERSED and there is no chance whatsoever that any of those excess reserves at the Federal Reserve will be turned int0 loans by the banks. Are you not aware that the aggregate bank customer deposit to outstanding loans ratio is now at a RECORD LOW OF 67% in the US?

          57. You trust whatever the government says. I do not. The future will tell who is correct.

          58. A gold standard, even in the limited form of Bretton Woods, still forced governments to manage the growth of their money supply, which in turn discouraged inflation. Why did de Gaulle & the British break the US gold window? Because they knew we were inflating our money supply through debt issuance and were only controlling the consequent rise in gold prices through collusion in the London Gold Pool. Thus, they preferred to have an ounce of gold than to have $35 because they knew which one was worth more.

            Within a couple of years or so the dollar had officially been devalued 17% vs. gold, yet re-establishing convertibility at this new exchange rate was still not tenable– and why? Because a 17% devaluation of the dollar would still not be enough to keep other nations from demanding gold instead of dollars.

            And I’d like to know why you think Nixon — a Republican, after all — imposed wage and price controls just at the moment he closed the gold window, if he had not been advised that destabilizing inflation would result domestically.

            Difficulties in obtaining oil for import also had nasty effects on prices, though you seem to keep forgetting that imports help make international currency devaluation into domestic currency devaluation.

          59. Artificially constraining the growth of money supplies while the population is growing substantially CAUSES DEPRESSIONS. Isn’t that totally obvious?

            All governments GOT RID OF USING GOLD DOMESTICALLY back in the 1930s because populations had grown substantially and GOLD HAD NO FURTHER USE and was damaging economies. In fact, for the US, gold was just a 60 year failed experiment from 1870 to 1933 when the US terminated that “gold standard” nonsense entirely domestically.

            The dollar was not devalued at all relative to gold as you assert. The last vestige of any gold convertibility relative to the US dollar was thrown into the garbage can in 1971 as the concept of that was so stupid as to be laughable at that stage, particularly in light of how substantially the US economy and other economies had grown and how dominant and important and indispensible the US dollar had become as the world’s reserve currency and as the de facto currency of the world without equal or anything else even coming close.

            As to the oil situation back then, that was all due to OIL BEING TRADED FOR THE FIRST TIME ON COMMODITIES EXCHANGES rather than being transacted the way it had always been with long term contracts and that resulted in MANIC SPECULATORS DRIVING UP THE PRICE OF OIL and severely disrupting the markets.

          60. Wrong. A depression, or Banking Panic, is the result of a deflation in the money supply. Usually, depressions are short term events and the economy recovers. Sometimes, every time the economy starts to recover, the government throws some intervention into the marketplace. This is why the ’29 depression lasted 14 years.

          61. Avg earned income of $49,300 would put you in lowest classification of middle class. Below that you are poverty level. Families with incomes less than $50k receive food stamps. $49k works for a single person living in rural Iowa. $49k in or near any decent city won’t allow for much beyond sitting at home and watching netflix in your apmt.

          1. And over the past 4 years IT HAS PLUNGED 40% IN PRICE and anyone who bought gold over the past 4 years now has HUGE LOSSES with that absurdly overpriced stuff.

        2. The Gold and Silver price has been controlled by the paper contracts at the Comex. Gold and silver is real money regardless what its fiat paper currency price is.

          1. Obviously, gold and silver have NOTHING WHATSOEVER TO DO WITH MONEY. Hellllooooooooooooooooooooo?

          2. Gold and Silver is money…you moron. The fiat currency that you worship, is a scam created by filthy parasitic bankers. The reason why these parasites hate gold is because they can’t create gold out of thin air like they can with paper money.

          3. Obviously, and and silver have NOTHING WHATSOEVER TO DO WITH MONEY ANYWHERE IN THE WORLD. I would suggest that you learn to start respecting the FINE BANKING PROFESSIONALS without whom the world’s economies would not function, dudette.

    1. Yeah…..I guess that’s why China, Russia, etc. etc. etc. are buying up all of the gold they can get. I’m sure they are buying so that they can watch it all become practically worthless. I really thin k that they know something that YOU don’t seem to know or understand.

      1. Time for you to stop “guessing” and start dealing with the facts.

        China and Russia certainly are NOT “buying up all the gold they can get” at all and the total gold holdings of the government of the Russian Federation are only about 1,150 metric tonnes worth less than $65 billion. The government of China holds even less gold for total holdings of around 1,054 metric tonnes worth less than $60 billion.

        Gold is of ZERO FINANCIAL RELEVANCE and all of the 180,000 or so metric tonnes of gold ever mined (70% of which is in the form of jewelry) is worth less than $7 trillion in a world where global assets are worth around $800 trillion.

    2. You are certainly invested in an emotional sense. If you don’t like them, why are you spending so much time on them?

    3. Do you have any silver that you would be willing to part with for $8 per ounce. I have Federal Reserve notes, quite a few of them as it turns out. I am a prospective buyer for your silver. Let’s do some business.

      1. I have a huge quantity of fine silverware collected over the past 100 years and some proof US Mint silver numismatic coins, but do not have nor have ever had any mere silver bullion. The value of the silver that I have has very little to do with its bullion value.

        There is a VAST OVER SUPPLY (OVERHANG) OF SILVER in the markets, and there is no denying that irrefutable fact.

        Silver obviously has nothing whatsoever to do with money or currency. Most silver is PRODUCED AS A BYPRODUCT and the production costs for silver as as low as nearly zero per ounce and average cash costs for production are now around $7.50 per ounce..

        WORLD DROWNING IN EXCESS SILVER INVENTORY OVERHANG…

        Silver inventory reaches 16-year high after worst rout since ’81 – Mineweb

        http://www.mineweb.com/mineweb/content/en/mineweb-silver-news?oid=224379&sn=Detail

        Silver Cash Costs $7.50

        https://www.facebook.com/photo.php?fbid=299130080236881&set=a.106912896125268.17143.100004196737865&type=1

        Silver could easily plummet to $4 per ounce where it was in 2001.

        Silver is the most volatile of all of the metals and there is a VAST OVERSUPPLY OF THE STUFF.

        During the GREAT SILVER CRASH OF 1980-2001 the price of silver plummeted 90% from $50 an ounce in January 1980 to $4 per ounce in 2001.

        Historically, the price of silver for hundreds of years was around $1 an ounce and went up to around $2 per ounce before the manic metals speculation began in 1972.

        1. “The value of the silver that I have has very little to do with its bullion value.” It sounds like you are saying that the value of your silver is based on your, and others’, regard for it in its utile or artistic form. It follows, of course, that the same is true of any commodity, like silver bullion. Precious metals are “worth” whatever price they demand in a free market. Thank you for so ably making my point.
          Are you not aware that the sale of newly minted Silver Eagles continues to set new records and the mint had to interrupt production last year from lack of available silver? Do you think that if the cost of producing pure silver is $7.50, that is all it’s worth?
          If you think that separating silver from copper, or lead, or zinc is at “0” cost, that sort of casts doubt on everything else you wrote.
          Your ability to string two sentences together and then claim that governments don’t give a hoot about gold, when it’s widely known that central banks and sovereigns are raking in all the gold they can gather, makes me think you must be a troll.
          Don’t get too attached to your heirloom silver; in the not-to-distant future you will most likely be parting with it.

      1. Cash is king and the US dollar is the king of kings, dude, particularly in our current world of PLUMMETING COMMODITY PRICES.

        1. It doesn’t matter. We all place our bets on the future.

          Many of those bets are not in dollars. I chose to stay in the US even though I know that extreme political disruption is ahead. I believe most of that disruption will be in America’s big cities rather than in the Red States. America’s Liberal controlled cities are bankrupt. Helloooo, can you say Detroit? Chicago and NYC isn’t in much better shape.

  25. Russia should put up its entire 1,150 metric tonnes of gold on eBay with a starting price of 99 cents per pound and just get rid of the useless stuff at whatever price bidders are willing to pay for the yellow yuck.

  26. Barry Ritholtz’s top 10 articles of faith for gold bugs:

    10. Gold talk must contain a dire macro forecast

    Your description of why gold is going higher must consist of spurious correlations, un-provable predictions, and a guarded expectation of bad things in the future. Avoid empirical data at all costs.

    9. Gold is a rejection of government

    There are no printing presses that produce gold, it is finite, natural and God created. How much we scrape out of the ground each year is limited, and the only variable to the old equation. (Just ignore Man’s natural tendency to organize into to City-States over the past 12,000 years).

    8. Never admit that gold is basically a sucker bet

    Never discuss how in the last century, gold has run up only be to trounced in repeated massive sell offs. Do not discuss how this has happened in 1915-20, 1941, 1947, 1951-66, 1974-76 1981, 1983-85, 1987-2000 and 2008.

    7. Gold will survive after the world economy crumbles

    Gold is the ultimate currency, as it has a value that will survive even after the whole world tumbles around you. Get yourself some gold coins and a Glock and you will be just fine when the whole world goes to hell in a hand basket. We welcome the era envisioned in the movie Mad Max.

    6. Gold works if the economy is bad or good

    When we have a red hot economy, gold is your hedge against inflation. When we have a bad economy, gold is a safe harbor against collapse. It is a one way trade that never fails!

    5. Government money-printing drives gold up

    NOTE: You must ignore, for the moment, that gold has not gone higher for the past 2 years as Central Banks around the world have ramped up QE. This only means that ultimately, gold will go much much higher.

    4. The world will revert to the gold standard

    It is inevitable that we will return to a gold standard. We all know this to be true. When we compare the size of the money supply to past amounts when there was a gold standard, we can derive prices of gold in the $7,000, $10,000 even $15,000. Hence, we know it’s cheap even at $2,000.

    3. Gold doesn’t fall, it’s manipulated lower

    When gold’s price falls, it is an unnatural act. It can only occur as the result of an international cabal of Central Bankers and politicians. It’s a conspiracy, and we know who the guilty parties are.

    2. When gold rises, it’s despite the manipulators

    This is the corollary to the prior Rule of Gold manipulation. When the price of gold runs up, it does so despite the overwhelming opposition to it.

    1. Gold is a currency

    This is rule No 1, and is inviolate. Gold is not a decorative or industrial metal; it is a permanent store of value, as dictated by Greeks in Lydia around 700 B.C. And, thus shall it ever be.

    1. Regarding #8, an ounce of gold was about $20 in 1915 and is about $1200 now. But hey man, stuff your walls with dollar bills, by all means.

      All but #7 would appear to be straw men in my view. As follows:

      #10 Historically, people owned gold (and silver) as part of their portfolio in case of currency (or other) instability. This does not require an expectation of disaster; it is merely precaution. Granted, at some times in history disaster seems far more likely than at other times (ahem).

      #9 It’s not a rejection of government, it’s an acknowledgment of the history of governments, which shows that every single one mismanages an unbacked currency into oblivion. No exceptions. Doesn’t make you an anarchist if you own gold.

      #8, see above. Just silliness.

      #7 One doesn’t have to think it will be Mad Max, but yes, if one believes that history repeats itself one can feel confident that gold will maintain value. Unless you’re a Fukuyama fan and you think history no longer applies.

      #6 Gold fluctuates in currency price, of course. For one thing, it gets liquidated when margin calls are coming in, as in 2008. But because it is not an investment but is money (see John’s post) it does okay in various economic environments unless you’re looking at a short-term horizon.

      #5 This ignores the fact that hyperinflations are caused more by a sudden increase in money velocity than they are by increases in money supply. But increasing supply does tend to lead to a loss of confidence and an eventual panic and spike in velocity. Hard to say how long that takes when it’s a psychological event.

      #4 Most analysts seem to say that gold will have a role to play in currency markets in the future, but that’s not the same as insisting it will be just like it was before World War I. Ratios of gold price to money supply are historical and as good as any other guess as to where the currency price of gold may be going over the longer term.

      #3 Nobody said every price decline is manipulation. Absolutely no one. Some price declines are extremely obviously manipulation, however.

      #2 Similarly, nobody said central bankers are focused on gold price suppression during every single hour of every trading day. But sometimes it appears they are acting in markets even though they cannot totally cap the price.

      #1 Even if gold is not used as currency it will still be a store of value. Incidentally, in Jim Kunstler’s post-apocalyptic fiction, gold is not used as currency but absolutely has great value. It is used only in rare circumstances such as a purchase of a large amount of land, but is otherwise not seen. Some silver coins are used, but mostly things are done by barter or local commodity “currencies”. I don’t expect the apocalypse, but I think he had the right idea for what might happen in such a case.

      I might now imply that Barry Ritholtz is a typical academic economist who thinks we’ve moved beyond monetary history into a New Age of central banking bliss. But turns out he has no degrees in economics. Neither do I. But I appear to have more respect for history than he does. So make your bets accordingly.

        1. Currency devaluation is not nonsense. It happens all the time. Here are just a few. http://www.sjsu.edu/faculty/watkins/hyper.htm

          The point is not to be in a currency which is risky. Would you like to buy a few trillion Zimbabwe Dollars? Cheap?

          Everyone bets on the future, obviously. There are long periods of time when fiat currencies are stable. But, those currencies depend on confidence.

          As times appear more risky, the greater amount of precious metals a person should own. It’s about diversification. It would be a good idea to invest in stable currencies, too, if there were any around these days. The problem is that all the G20 nations are trying to inflate their money supply at the same rate, so if one falls they all do.

          Even a basket of currencies doesn’t help when all are falling in values. Eventually, some currency must be willing to tie their currency to gold, but even that can be a con if they won’t give you a gold coin on demand, so you can circulate it.

          Don’t be confused about the low prices for precious metals, because the central banks manipulate the paper gold and silver markets which are ten times the physical markets. Taking delivery on precious metals is getting longer every day. It is not unusual to take four to six months for arrival. Eventually, your order may never arrive, because no one is selling.

          If Germany cannot receive 300 tons of their 3 thousand tons supposedly stored at the FED’s New York vaults, what hope do you have? Even Belgium is trying to get their gold from the FED.
          It appears that the gold may not be at the vaults or that many people have a claim to the same bar.

          Naturally, with any confidence game, it’s best not to spook the mark. Who’s the mark? You, silly.

          1. There is NO CURRENCY DEVALUATION WHATSOEVER IN RUSSIA. There is merely a change in the EXCHANGE RATE OF THE RUBLE and that has NO AFFECT AT ALL ON DOMESTIC PRICES IN RUSSIA.

          2. Exactly. All imports will cost more which is mathematically the same as a devaluation of the local currency.

          3. Different people will bet on coming events. Anyone who understands history knows that fiat currencies always fail, against less inflated currencies and gold.

          4. We disagree. 6 thousand years of history disagrees with you; people are acquisitive creatures. We subjectively value goods and services differently, so we trade with each other.

            Put away your guns and you can’t make us agree.

          5. Gold is a PLUMMETING TOXIC FUNGIBLE NICHE COMMODITY that has plunged in price by 40% over the past nearly 4 years since its bubble started bursting in April 2011. Gold has been one of the BEST WAYS TO DESTROY WEALTH FOR THE UNFORTUNATE ONES WHO HAD THE YELLOW BUBBLE STUFF.

            As to money, gold and silver have NEVER BEEN MONEY for a floating value, but have simply been used as two of the many metals to MINT MONEY WITH A FIXED FACE VALUE and that face value is MONEY VALUE, not the metal onto which that amount is stamped.

            The world long ago outgrew any use whatsoever for gold in any financial capacity and it was a very stupid notion to ever use gold in such a capacity. The US tried it for 60 years and it proved to be an abysmal failure.

            The total value of all of the 170,000 metric tonnes of gold ever mined is only $7 trillion and around 75% of that is in the form of jewelry widely distributed around the world, leaving less than $1.87 trillion in any form of bullion that could even theoretically be used in any financial capacity and most of that is privately owned. That compares to over $800 TRILLION IN ASSETS IN THE WORLD of which gold comprises less than 1% even at its present absurdly elevated price.

            Electronic money is the best form of money ever created, and the world will OBVIOUSLY continue to operate financially on electronic money now and forever into the future. Hellllllllllllllllloooooo?

          6. Precious metals are depressed due to central bank manipulation. This presents canny people with a buying opportunity. Unfortunately, I positioned myself long ago at much lower prices. I’m running a profit.

            You haven’t a clue as to how money works. I have nothing against digital currency. It is only valuable according to its scarcity. If it isn’t tied to precious metals, it cannot perform its role in limiting the rapacity of governments.

            Eventually, that gold and silver in jewelry will return to its monetary function. But, this will only happen when the mega-state is ended. We are entering an age of decentralization. Big Labor, Big Business and Big Government are obsolete.

          7. Plunging prices of metals including gold, copper, platinum, silver, palladium, iron, nickel, zinc, etc. has NOTHING WHATSOEVER TO DO WITH CENTRAL BANKS, but rather that is 100% due to all of those metals being driven up in price to MANIC BUBBLES and those bubbles started bursting in April 2011 and are continuing to burst with many of those prices down 50% or even more over the past nearly 4 years. Hellllllooooooooooooo?

          8. We love these times when the central banks are manipulating precious metals lower. It gives us more time to accumulate more. Helloooooo?

          9. Central banks have practically nothing to do with the gold markets and as to the current prices they are headed for massive plunges just as they have been doing for the past nearly4 years with silver plummeting 62^ and gold plunging 40%.

          10. We disagree. So what?

            People aren’t allowed to disagree with you? Who died and made you king?

          11. Imports are only about 10% of Russian GDP which is a very low and rather insignificant amount.

          12. Russia’s economy only consists of about 10% imports in their $2.4 trillion GDP:

            Russian annual imports

            “Total value of imports: US$247.7 billion

            Primary imports: machinery, transport equipment, plastics, medicines, iron and steel, consumer goods, meat

            Primary imports partners: EU (50.2%), China (14.1%), Ukraine (5.3%), Japan (3.8%), Belarus (3.4%)”

          13. There is devaluation in currencies going on all around the world. Russia does not have a big enough market place to self sufficient.

          14. Russia is nearly TOTALLY SELF-SUFFICIENT and has a huge economy compared to most country’s economies and presently has about $2.4 trillion in GDP with only about 10% of that involved with imports of any kind. Helllllooooooooo?

          15. Then, Russia can cut off oil to Western Europe and experience no harm, right? It’s not the staples which Russia trades for but new items. As bad as things are in the West, we have more innovation. But, you don’t need that? Right?

          16. Huh? Why would Russia have any interest in cutting off oil to Western Europe? Europe is Russia’s biggest customer for oil and natural gas and Russia has no intention whatsoever of cutting any of its customers off from oil or natural gas – unless they are deadbeats who don’t past their past due bills as is the case with Ukraine which now has to pay for any natural gas from Russia on a PRE-PAID BASIS. Your local natural gas company wouldn’t couldn’t you to supply you with gas either if you didn’t pay your gas bill after 90 days, would it?

            Unlike the US and most EU countries, Russia is a FINANCIALLY PRUDENT AND RESPONSIBLE COUNTRY with very little government debt to GDP which is only at 16% versus the 107% of the US and aggregate 94% of the EU. Russia also has around $400 billion in RESERVES that it has saved, unlike the US government which ha NO RESERVES WHATSOEVER IN CASH and which couldn’t exist financially for even a week without borrowing tens of billions of dollars in the US Treasuries markets.

            As to “innovation” what on earth are you talking about?

          17. Make up its mind. You said Russia is self sufficient. Russia doesn’t need anything from across its borders.

            I like open markets and taking profits of comparative advantage.

            I approve of global markets even if they make us work hard to keep up.

          18. Of course, you are confused. These times are perplexing to a Marxist. The future will be even more so, since Marx was never able to predict anything.

          19. Obviously, I am not the least bit “confused” at all and I have been very clear in what I have stated. What does Karl Marx have to do with anything?

          20. Your are just wrong about everything. Your pronouncements fit a Marxian, rather than a Keynesian model.

          21. Then, give the name of your economic school. I’ve studied them all and can’t identify yours.

          22. Well, it is simply ignorant not to go the definitive source(s) for correct information on money and banking and your refusal to do so simply illustrates why you are so utterly ignorant on such issues.

          23. It is not ignorant to take biased sources with a grain of salt. I’ve been studying the FED since the 1960s. It’s track record is atrocious.

          24. False. If Congress had remained in control of money creation in the US we would have a catastrophic out of control fiscal disaster in the US.

            The Federal Reserve has done an absolutely superb job of managing the money supply and monetary policy in the US over the past 101 years during which time the US has become the biggest economy in the world and the wealthiest country in the world with over $180 trillion in assets which are offset by only about $60 trillion in debt resulting in around $120 trillion in net aggregate assets in the US..

            Without the Federal Reserve and its monetary policy and influence over the past 100 years, wouldn’t the US still be the irrelevant backwater banana republic that it was back in 1913 as opposed to the economic superpower of the world – by far – with the world’s reserve currency used in 85% of all global transactions and the wealthiest nation in the world with over $180 trillion in assets?

            The Federal Reserve has an excellent web site which explains all of the operations, functions, and details about the Federal Reserve and the Federal Reserve Act and anyone wanting to learn more about the Federal Reserve can peruse all of that information including their fully audited and highly detailed independently audited annual financial reports as well as a wealth of other information and statistics at:

            http://www.FederalReserve.gov

            The U.S. Federal Reserve Bank – How it Works, and What it Does – Money, Dollars, & Currency

            http://www.youtube.com/watch?v=y1OJlJ9COg0

      1. Both gold and silver are PREPOSTEROUS BUBBLES at anything above their means of $456 and $8 per ounce respectively but those bubbles started bursting in April 2011 and both are on their way to their means and lower.

          1. True, you are an ideologue. You are likely to have no skin in this game. This is why no one respects your opinion. You think you aren’t risking anything.

          2. Nope. I am simply a realist and pragmatist and have a very strong understanding of BUBBLES and can easily spot them and know to stay far, far away from them.

          3. The problem is that you have aligned yourself to the biggest bubble of them all: the FED.

          4. There is no “bubble” in relationship to the Federal Reserve. You apparently don’t even comprehend what the term bubble as applied assets even means, dude.

          5. A bubble is an unrealistic, over blown market position. It is bound to fail at some time when it runs out of buyers. The FED usually blows up the bubbles through monetary creation, but, eventually, it will be unable to do so. The FED’s bubble bursts when no one will accept its Federal Reserve notes.

          6. Obviously the US dollar is the MOST ACCEPTED CURRENCY IN THE WORLD and is used in 83% of all global transactions and that will remain the case for the foreseeable future.

          7. True, for now. Irrelevant, though. We were talking about the future.

            Both Russia and China are acting to remove the US dollar as being necessary to trade oil. China is attempting to lower the number of US Dollars and US Treasury Securities it holds. It has to do this slowly, because it doesn’t want to panic the international markets.

            China doesn’t buy much from the US, so any dollars it redeems must buy goods, services, stocks and Real Estate inside the US, which will cause price increases. All the FED can do is to try to hoover up those dollars when they arrive, but there is a limit to how much it can do. Many of China’s activities in Africa are in US dollars. That slows the time for those dollars to return to the FED. But, they eventually return.

          8. CHINA IS ONE OF THE LARGEST IMPORTERS IN THE WORLD OF GOODS FROM THE US. Your statement that “China doesn’t buy much from the US” is totally false and utterly clueless.

          9. Proven false by the evidence. If China was that great an importer, how did they wind up with $3.2 Trillion in foreign currencies and bonds, and over a Trillion dollars in US Treasury bonds? The reason was that China was playing the Mercantilism game. That always ends in failure.

          10. Why did China wind up with so many foreign bonds? They could have bought more from us. Why not?

          11. Why did China get into a position of having so many bonds? This is not normal. They were selling goods to the world and getting paid in deflating currencies. China was attempting to simulate purchases. That is diminished now.

            How is China going to get rid of those trillions in bonds? We’ve gone through this before with Japan in the 1990s. They brought all kinds of commodities, stocks and real estate. A decade later, they had lost money.

  27. Just to note that in fact russian citizens (excluding the putin clique I’m sure) are not allowed to buy PM’s, as one day US citizens will again not be allowed to purchase or hold them (within certain limits). so in this sense capital controls have already been put in place in Russia and it’s only Forex that is being discussed today.

  28. Not only preserving but actually making money because local purchases will not be priced by the same amount as Gold increases in the local currency.

      1. Well, true, actually, due to government suppression of the gold price, causing it be currently undervalued. At some point that comes to an end.

        1. The US government has nothing whatsoever to do with the market prices of gold, and has maintained the current official price of gold at $42.22 per ounce which is how it values its US Treasury gold of around 8200 metric tonnes for a total value currently according to their latest report on November 30, 2014 at just a little over $11 billion.

          1. That is a bit of government hypocrisy. The official price is what they will buy gold; they won’t allow you to value it at that. If you inherit gold, the IRS taxes you at the market value.

            The US government will no longer redeem gold at its official price, because Nixon closed the Gold window to foreign governments. US citizen lost the right to own gold in 1933. When the US government sells a gold or silver coin, it is at the market price plus a premium.

          2. All speculation should be stopped in the markets and the best way to do that is for the government to impose a 99.999999% on any and all trading profits made within 90 days of a transaction.

          3. Spoken like a good Marxist. You are anti-profit. This is why every Socialist country becomes dirt poor. Imperial Russia was an up and coming power before the revolution. Cuba had the highest standard of living in the Caribbean before Fidel Castro. Both are quite low now.

          4. Nobody sane would put a single penny into gold or silver at any amount above their means of $456 and $8 per ounce respectively. Only utter fools would do that.

          5. Or it could be someone who has studied free market economics and markets. I would love to see you being right, I’d be tempted into buy again.

            Unfortunately, 2015 doesn’t look good for that. There is a lot of bad news coming.

          6. What we have here is somebody more concerned with sounding intelligent than actually accepting the reality of facts. Really sounds like a liberal accounting student. A lot of numbers and blah blah blah but missing the absolute point that the currency values in GDP referenced are for fiat currency and have ZERO NAD NIL value. I am certain there will be a nice internship in Washington for the current administration for this one. I commend you for keeping your cool and patience Louis.

          7. Thanks, Nemesis66.

            Government policies have real world effects, usually they come as unintended consequences. The truth will be revealed, but it can take some time for the chickens to come home to roost.

            I don’t like Obama, but he is useful in persuading ordinary people that Leftist policies lead to poverty and death. It took two decades for the US government schools to train a new set of useful idiots. Extreme privation and loss of freedom may cause some of those idiots to wise up, but I’m not betting on socalbeachdude. He seems immune to change, so there is little hope.

          8. You’re the one lost in the pre-1933 era, dude, and apparently stuck in the 60 year failed experiment time warp of the s0-alled “gold standard” which was thrown into the garbage bin of history in 1933.

          9. Times change.

            I admit that I could be wrong. But, I’ve seen no evidence that I am.

            You are wrong if you think that I take any pleasure in being right. If what I believe will happen, I won’t be hurt, but many innocent people will be. I don’t like that, but I am not causing events to happen even when I profit from them.

            In the meantime, why should you care where I place my money?

          10. Those are preposterously false assertions, and it is apparent that you do not understand money at all.

          11. Where does money come from? What sets its value in terms of goods and services? What is the difference between money and currency?

          12. Money is a medium of exchange accepted by the marketplace. Currency is a medium of exchange forced on people by a government.

          13. That assertion is utter nonsense, dude. There is no difference between currency and money.

          14. What do you mean “where does money come from?” Obviously it comes from ACCOUNTING ENTRIES ON THE BOOKS OF THE FEDERAL RESERVE IN THE US. Hellllllllooooooo?

          15. LOL You boggle the mind.

            There was money before there were governments. A black market functions despite governments. Russia had the largest black market in the world. Gresham’s Law functions to punish government edicts. Hyper inflation of the money supply occurs when people refuse to accept government currency as money.

          16. Those are such bogus and stupid assertions as to not even merit a specific response, dude or dudette.

          17. Then, why are you wasting your time replying to me, if I am so wrong? Wouldn’t the facts or the future speak for themselves?

            I hope you don’t delude yourself that are persuading anyone.

    1. What about it? It’s way overpriced at anything about its mean of $8 per ounce and is rapidly headed there and then lower. The only real question is how close to $1 per ounce it will go.

      1. What is something worth? It has to do with the marginal buyer or seller. Prices rise when a seller won’t sell. The question is who the seller is.

        Central Banks tend to sell or lease their precious metals, because this lowers the metal price and bucks up their currency. Those banks have been doing this for decades. How much uncommitted gold and silver do they have left? The way that they are acting is not much.

        If Germany cannot get tranferred to Europe a mere 10th of the gold they supposedly possess in the vaults of the New York FED, then the FED must be running short. Germany never leased its gold to the US Government, it was just storing that gold as far away as possible from the Soviets.

        If a private company vault, had sold Germany’s gold and told them that it would take 7 years to get it back, there would be a law suit. When governments default on their promises, this could mean war.

        1. Central banks do not lease metals at all.

          Germany has made it perfectly clear that GERMANY SET THE TIME TABLE TO MOVE 20% (300 metric tonnes) of its 1500 metric tonnes of gold stored at the Federal Reserve New York Branch back to Germany over the coming 7 years, so why are you making absurd and false assertions about that?

          Your totally false assertion regarding Germany’s 1500 metric tonnes of gold they store at the Federal Reserve are PREPOSTEROUS and directly contradicted by Germany which plans to move about 20% (300 tonnes) of its 1500 tonnes of gold store there over the next 7 years which is the TIMETABLE SET BY GERMANY while planning to keep the other 80% right there where it currently is.

          http://www.forbes.com/sites/afontevecchia/2013/01/16/germany-repatriating-gold-from-ny-paris-in-case-of-a-currency-crisis

          1. You are delusive; central banks lease their gold all the time.
            The Austrian Central Bank bragged about how much currency it getting by leasing their gold in London’s vaults.

            Germany never leased its gold to the FED. The FED told Germany when they could receive their gold. Germany wanted immediate delivery. Then the FED gave the German central bank 100 tons. Only 5 tons of that came from the US.

            If Germany’s gold is sitting in the vault, unencumbered, why would it take 7 years to move it? Especially as you say, it’s not worth anything. Should Germany, like Charles De Gaulle did in the late 60s, send war ships to New York to collect France’s gold? Could the FED find it? That is the question.

          2. Your are totally DELUSIONAL. Central banks DO NOT LEASE GOLD AT ALL except for very rare exceptions.

            Where do you come up with such preposterously false and totally bogus nonsense regarding Germany? From the Goobers Against Truth Association (GATA)?

            The approximately 8250 metric tonnes of US government gold has nothing whatsoever to do with gold stored by the Federal Reserve to client central banks such as Germany.

            Germany NEVER ASKED FOR ANYTHING OTHER THAN A 7 YEAR TIME TABLE TO MOVE 20% OF THEIR 1500 METRIC TONNES OF GOLD stored at the Federal Reserve New York Branch which is in the process of timely scheduled transfers and Germany fully confirmed that they intend to MAINTAIN 80% OF THOSE GOLD HOLDINGS right there indefinitely in the bullion vaults of the Federal Reserve New York Branch amounting to 1200 metric tonnes.

            http://www.forbes.com/sites/afontevecchia/2013/01/16/germany-repatriating-gold-from-ny-paris-in-case-of-a-currency-crisis

            More than half of the 3400 metric tonnes of gold owned by Germany is stored in vaults in Germany, mostly in Frankfurt. Germany hasn’t bought or sold gold since 1973, and tried to keep its reserves “as far west as possible” during the Cold War, according to Bundesbank board member Carl-Ludwig Thiele, who prepared an important presentation (in German) on the matter. Frankfurt brought back 940 tons from the Bank of England in 2000/1 in order to avoid storage costs, according to the FT, and has sold about 5 to 6 metric tons a year to the finance ministry to mint coins. Neither the New York Fed nor the Banque de France charge Germany to store its gold.

            While Thiele didn’t speak of how it would be transported for security reasons, the 300 metric tonnes of gold coming from the U.S. will probably have to be flown in which will probably have to be done in 3 to 5 ton shipments, the maximum insurance companies will cover, meaning it will take between 60 and 100 flights.

            http://www.forbes.com/sites/afontevecchia/2013/01/16/germany-repatriating-gold-from-ny-paris-in-case-of-a-currency-crisis/

            Of the approximately 3,400 metric tonnes of gold that Germany owns, and 1,500 metric tonnes are stored at the Federal Reserve New York Branch of which Germany plans to move 300 metric tonnes back to Germany’s Bundesbank by 2020

            The 1500 metric tonnes of gold owned by Germany and held in the Federal Reserve Bank of New York Depository facility HAS NOTHING WHATSOEVER TO DO WITH US GOVERNMENT GOLD but is being stored at the request of Germany in the bullion depository vaults at the New York Branch of the Federal Reserve.

            The Federal Reserve owns very little gold of its own and that has long been the case as they do not consider it of any financial utility, but it does acts a a trusted and very reasonably priced DEPOSITORY for many other entities including foreign governments to house their gold in its vaults particularly at the New York Branch all of which is fully there and which you can see for yourself:

            Inside Americas Money Vault – National Geographic Documentary

            http://www.youtube.com/watch?v=I2m3t2Yr8Vg

          3. What you saying is that the Central Banks don’t talk about what they are doing. But, crooks never try to tell the mark what they are doing. You are being gullible. You will suffer for that.

          4. You are being utterly delusion and making clueless and baseless assertions for which there is obviously zero basis.

          5. LOL We disagree. Time will tell which one of us is correct, I am betting on the history of governments over the millennia. They always destroy their currencies.

          6. As to the US money supply that has nothing whatsoever to do with that little niche commodity called gold.

          7. The Money supply does in the long run. Increasing the money supply causes more dollars to chase scarce resources, increase the price. If all goods and services increase, this places investments in a bad light.

            The more people who exchange their currency for precious metals, the higher the price must be. Then, the central banks must short silver to suppress that price. But, the Central Banks run out of funds or they have so many debts that the game is up.

            China has had well over a trillion dollars in US Treasury securities. They have been hesitant in cashing them, but they are doing so now. This means that China must buy up real estate and stocks, because the US has very few goods it wants.

          8. Where do you come up with such preposterously false and totally bogus nonsense regarding Germany?

            Germany NEVER ASKED FOR ANYTHING OTHER THAN A 7 YEAR TIME TABLE TO MOVE 20% OF THEIR 1500 METRIC TONNES OF GOLD stored at the Federal Reserve New York Branch which is in the process of timely scheduled transfers and Germany fully confirmed that they intend to MAINTAIN 80% OF THOSE GOLD HOLDINGS right there indefinitely in the bullion vaults of the Federal Reserve New York Branch amounting to 1200 metric tonnes.

            http://www.forbes.com/sites/afontevecchia/2013/01/16/germany-repatriating-gold-from-ny-paris-in-case-of-a-currency-crisis

            More than half of the 3400 metric tonnes of gold owned by Germany is stored in vaults in Germany, mostly in Frankfurt. Germany hasn’t bought or sold gold since 1973, and tried to keep its reserves “as far west as possible” during the Cold War, according to Bundesbank board member Carl-Ludwig Thiele, who prepared an important presentation (in German) on the matter. Frankfurt brought back 940 tons from the Bank of England in 2000/1 in order to avoid storage costs, according to the FT, and has sold about 5 to 6 metric tons a year to the finance ministry to mint coins. Neither the New York Fed nor the Banque de France charge Germany to store its gold.

            While Thiele didn’t speak of how it would be transported for security reasons, the 300 metric tonnes of gold coming from the U.S. will probably have to be flown in which will probably have to be done in 3 to 5 ton shipments, the maximum insurance companies will cover, meaning it will take between 60 and 100 flights.

            http://www.forbes.com/sites/afontevecchia/2013/01/16/germany-repatriating-gold-from-ny-paris-in-case-of-a-currency-crisis/

            Of the approximately 3,400 metric tonnes of gold that Germany owns, and 1,500 metric tonnes are stored at the Federal Reserve New York Branch of which Germany plans to move 300 metric tonnes back to Germany’s Bundesbank by 2020

            The 1500 metric tonnes of gold owned by Germany and held in the Federal Reserve Bank of New York Depository facility HAS NOTHING WHATSOEVER TO DO WITH US GOVERNMENT GOLD but is being stored at the request of Germany in the bullion depository vaults at the New York Branch of the Federal Reserve.

            The Federal Reserve owns very little gold of its own and that has long been the case as they do not consider it of any financial utility, but it does acts a a trusted and very reasonably priced DEPOSITORY for many other entities including foreign governments to house their gold in its vaults particularly at the New York Branch all of which is fully there and which you can see for yourself:

            Inside Americas Money Vault – National Geographic Documentary

            http://www.youtube.com/watch?v=I2m3t2Yr8Vg

          9. We clearly read different sources. What I read was that Germany asked for 300 tons of its 1500 tons and the FED told them that it would take seven years to the return it. Why would Germany decide to wait seven years? Your first citation does not mention any time delay, just a planned move of half of its gold to Germany by 2020. That would be 1500 tons by 2020. That wasn’t going to happen.

            About a year after it requested it, Germany received 100 tons, but how it did so was strange. Most of the gold was from France and London; only 5 tons came from the US. It was also newly minted. What was wrong with returning the same bars of gold which Germany had deposited? Germany was not loaning the gold to the New York FED. It was not being leased. It was just being stored.

            The only conclusion is that the bars which Germany had deposited in the 60’s were not there to be returned. Since then, German said that it was no longer asking for its gold.

            One thing which Germany could do is to sell its gold in the FED’s vaults. Then, it could buy gold simultaneously on the open market from the dollars it would receive. Why would this be undesirable for the FED? A purchase of 300 tons on the open market would greatly jack up prices, because supplies of physical gold are getting scarce.

          10. The Federal Reserve told Germany NOTHING REGARDING THE TIMETABLE for the shipment of 20% of Germany’s gold at the Federal Reserve New York Branch Depository amounting to 300 metric tonnes back to Germany. GERMANY ITSELF SPECIFIED THAT 7 YEAR TIME TABLE AS THEY HAVE EXPLICITLY CONFIRMED.

            Germany does not want to move its entire 1,500 metric tonnes of gold stored at the Federal Reserve New York Branch Depository, but FULLY INTENDS TO INDEFINITELY KEEP 80% OF THAT AMOUNTING TO 1,200 METRIC TONNES AT THAT DEPOSITORY and only want s to move 20% of its 1,500 metric tonnes of gold stored there back to Germany over a 7 year period from 2013 to 2020.

            The gold that Germany has received back CAME DIRECTLY FROM THE FEDERAL RESERVE NEW YORK BRANCH DEPOSITORY and your absurdly bogus assertion to the contrary is totally false.

            NOTHING WHATSOEVER HAS CHANGED ABOUT THE 7 YEAR TIMETABLE FROM 2013-2020 FOR THE RETURN OF 300 METRIC TONNES OF ITS GOLD TO GERMANY FROM THE FEDERAL RESERVE NEW YORK BRANCH DEPOSITORY and that process is continuing exactly on schedule as specified by Germany.

          11. Show me a citation where Germany asked for its 300 tons in 7 years. That was not the stories that I read a year and a half ago.

            This is totally trivial. Other countries are removing their gold from the NY FED. Belgium received its 148 tons, a few months ago.

            Why should any European country hold its gold in the NY FED? It was the threat of a Russian invasion which caused them to relocate out of Europe. That threat has ended.

            If the gold is still there in the vaults and is not leased, then what’s the harm in returning other people’s property? Why wait? Like France did in the late 60’s, Germany could send a warship to retrieve it. Do you disagree? Why?

    2. Silver is both an industrial metal and a monetary metal. Silver tends to be used up, so its relative scarcity has increased. For a long time, the Gold/ Silver ratio was 16 to 1. It is way different now: 75.05 to 1 at today’s market price.

      A couple factors are involved here. The Central Banks tend to manipulate the paper Silver market to depress Gold. So, Silver is artificially low.

      The relative scarcity in mining is that around 11oz of silver is found for every oz of gold. This means that, if the price can no longer be manipulated, Silver would tend to rise to its mining scarcity. The more rare something is; the more it costs. During the Russian Revolution, Tzarist Rubles rose in value compared to Soviet Rubles, because no one was printing any more of them.

      If Gold rose to match how much the FED has increased the money supply since 1913, then Gold would be at least $5000 an oz or more. Silver would be near $455 an ounce, depending on whether the markets still work. In a panic, Silver could over shoot its mining scarcity. If it does, that is a clue to get out of precious metals and into real estate or Blue Chip stocks.

      The greatest advantage of junk silver coins is during the crisis. Many people have those coins in their sock drawer. If no one will accept dollars, then they will trade for pre-1965 silver coins. They wouldn’t make you look rich or worth robbing.

      1. False. Central banks have nothing whatsoever to do with silver markets and silver is still PREPOSTEROUSLY INFLATED at its present price of just below $16 per ounce and is already down 62% from its manic high of April 2011 and is rapidly reverting towards and to its mean of $8 per ounce and then headed lower.

        THERE IS NO “SILVER SHORTAGE” AT ALL.

        There is a VAST OVER SUPPLY (OVERHANG) OF SILVER in the markets, and there is no denying that irrefutable fact.

        Silver obviously has nothing whatsoever to do with money or currency. Most silver is PRODUCED AS A BYPRODUCT and the production costs for silver as as low as nearly zero per ounce and average cash costs for production are now around $7.50 per ounce..

        WORLD DROWNING IN EXCESS SILVER INVENTORY OVERHANG…

        Silver inventory reaches 16-year high after worst rout since ’81 – Mineweb

        http://www.mineweb.com/mineweb/content/en/mineweb-silver-news?oid=224379&sn=Detail

        Silver Cash Costs $7.50

        https://www.facebook.com/photo.php?fbid=299130080236881&set=a.106912896125268.17143.100004196737865&type=1

        Silver could easily plummet to $4 per ounce where it was in 2001.

        Silver is the most volatile of all of the metals and there is a VAST OVERSUPPLY OF THE STUFF.

        During the GREAT SILVER CRASH OF 1980-2001 the price of silver plummeted 90% from $50 an ounce in January 1980 to $4 per ounce in 2001.

        Historically, the price of silver for hundreds of years was around $1 an ounce and went up to around $2 per ounce before the manic metals speculation began in 1972.

        1. Yes, sell me all your gold and silver at reduced prices, since you think it worthless. Physical precious metals are getting hard to get. Comex’s vaults are almost bare. Thus, the paper precious metal markets are threatened. The Future precious metal markets is supposed to have one oz physical for ever oz sold on contract, but they are selling short.

          1. Where do you come up with this “worthless” nonsense? THE ISSUE IS THE PROPER PRICE OF THOSE METALS AS SUPPORTED BY REASONABLE FUNDAMENTALS. Neither will ever be “worthless” but BOTH ARE WORTH LESS – MUCH LESS – ON A FUNDAMENTAL BASIS THAN THEY ARE PRESENTLY SELLING FOR IN THE MARKETS AS THEY ARE BOTH PREPOSTEROUS BUBBLES.

            Your bogus assertions regarding the COMEX vaults are laughable and obviously totally false. EVERY COMEX CONTRACT EXACTLY CONFORMS TO THE PHYSICAL UNDERLYING AMOUNT OF METAL specified in that contract, contrary to your extremely false assertions to the contrary. Yes, the contracts CHURN UP TO 100 TIMES OR MORE but that does not equate to there being any more contracts than is precisely covered by the exact amount of gold specified in the COMEX contracts. Where on earth do you come up with such nonsense to the contrary?

          2. Then, it is merely your opinion that precious metals should be lower. We disagree over the fact that the central banks are suppressing precious metals. We do not agree on the cause/ effect relationship which have been true for thousands of years. I do not believe that the FED can keep this confidence game going forever, so it must fail. It’s anyone’s guess when it will.

            Time will tell who is correct. Don’t get your panties in a twist.

          3. Obviously the market agrees with me which is why the price of gold has plunged 40% and the price of silver has plummeted 62% over the past nearly 4 years since April 2011 and both are continuing to fall and are headed to their means of $456 and $8 per ounce respectively and then headed lower.

          4. No, events are still in play. You don’t count your winnings while you are still at the table. You make your bets; I make mine.

          5. Folks who bet against gold using the ultra-short inverse ETFs DZZ and GLL did spectacularly well in 2001 with 66% gains, dude, while those who bought that plunging bubble yellow yuck had losses of around 33%

          6. We have different visions of what the future will bring. My vision is much scarier than your’s, so I have to bet accordingly. What’s it to you? How does my preparing for bad times affect you?

  29. Wealth preservation eh? Well I’m up to nearly 5000 ouces of silver with an average of $33 per ounce so sorry of I do not share your sentiment of PM’s being “wealth preservation” when over half of my investment has evaporated. And yes, I know, I know… you only lose if you sell. Well, I have to sell one day. Funny how all of you “experts” have quicl-links to businesses taht can sell you all of the silver and gold you could want. Must be nice to get a kickback on every ounce sold through those links. Link is clicked, a purchase made and a check is sent to the site that is hosting the link. I used to buy into this bullshit, not so much anymore.

    1. If you’d been buying over a period of say 10 years using dollar cost averaging, your average price would be around $14-16/oz and you’d be ahead. The point is you have to take the long view and use a strategy like DCA rather than react to the news of the day that’s always bullshit. Just remember in every crisis the first thing the government does is go after the gold and silver (not the guns as you would think).

    2. Unless you think you will have to sell soon I don’t think you’ll “lose”. Also, I think it’s wise to have an emergency fund of say one year’s worth of expenses in your local currency. After that, hopefully you’ll never have to spend your PMs. Ideally, they should be a store of value until the dust settles. And, yes, don’t buy PMs through the internet. You can get physical delivered to your door from places like MONEX for 1-2% premiums, especially now.

      1. The plunge of silver has been a very rapid event with 62^% plunges over less than the past 4 years. Anyone who had $100,000 in silver in April 2001 and kept that junk instead of dumping it promptly when it started to collapse now has a pile of metal worth only $38,000 and a humongous loss of $62,000. Few investments have done worse, with the notable exceptions of Pets.com and GM stock which both had 100% losses.

        1. That’s great. You just hop that the trend is still down. I disagree. It’s none of your business what I place my money in.

    3. Tony,This is not about silver,it’s about gold!
      Gold is gold but silver’s value is in part as an industrial commodity.
      Because the Global economy is in decline industrial activity is falling off & demand for all commodities(& prices) are going south,this includes silver!

        1. This is a bet on what the future will bring. You are betting that no monetary crisis is coming. I am not. We will see who wins; events have not run their course.

          Every fiat currency in existence has failed in either a hyperinflation or a major depression. Those which have not are in the process.

          I would be quite happy if the US experiences a deflation of the money supply, even though a hyper inflation would net me more assets. The economy would survive better. No one knows what anything is worth in a hyperinflation. Businesses implode.

          1. Neither gold nor silver have anything whatsoever to do with money except that they cost far too much real money, but fortunately the markets have been rapidly rectifying that sad situation, dude.

          2. You do not have it in your power to determine what money is; the market does; ordinary people do. Nor do governments have the power to make their currency worth anything, once trust has failed. Fiat currencies always fail given enough time.

          3. Huh? Money and currency are easily defined and it is very clear what they are, and it is also very clear that gold and silver have NOTHING WHATSOEVER TO DO WITH MONEY AND CURRENCY other than that they both cost far too much money, but fortunately that situation has been consistently and rapidly rectifying itself over the past 4 years as the prices of both of those overpriced junk commodities has plunged..

          4. Said like a good Marxist. Not that Marxism has anything to do with human nature or markets.

            As Ludwig von Mises proved in the 1920s, Marxists cannot determine the value of anything, because they don’t have markets. That is partly the reason they kill so many people. The other reason is that people will fight to the death against their dictates and the party bosses can’t allow that.

          5. Propaganda comes in many forms. All I have to do is turn on the news where I live and see the collapse happening. I don’t need to read it any where or quote cnbc or any other source. All collapsing empires do the same thing. Deny deny deny and then go down flames in some manor.

          6. True. The king dies; long live the king!

            These events come and go as a part of Europe’s attack on our culture. I don’t believe the Marxists will win in the long run. The Industrial Revolution still goes on, because the principles on which it is based do. Nothing succeeds like success. Nothing fails so well as failure.

            Neill Furguson in his book, “Civilization: the West and the rest” identified six practices which led to the West’s success economically, socially and militarily. Naturally, other cultures will fight those practices while trying to compete with us. They will subvert the nonessential parts of our society. They will corrupt the essentials parts which will lead to bad results and a correction. We are in such a correction period.

          7. Again, dude, you are dwelling in the past. I’d suggest you get up to speed and at least move into the present. And, yes, there is a huge correction IN THE BUBBLE PRICES OF GOLD AND SILVER and nearly all of the world’s 27 major commodities that has been going on and gathering steam over the past nearly 4 years, and you can expect the prices of that stuff to fall another 50% to 80% as we move ahead. Hellllloooooooo?

          8. You certainly are a reckless and endless gambler, aren’t you;. I have no interest whatsoever in gambling, however, dude.

          9. I’m into wealth preservation, now. I’m old enough to have earned assets worth preserving and hiding them from a rapacious US government.

          10. Naturally, you would think that a personal attack disputes von Mises’ arguments. Not so, for thinking people.

            Ludwig von Mises pointed out in the 1920’s that Marxist countries have no means of determining the value of anything because they have no markets. They have to borrow prices from Western markets.

          11. That shows how little you know. You probably couldn’t make a case for why von Mises is wrong.

            I could, but I’ve been trained to look at both sides before I decide.

          12. What does Marxism and Keynesian economics have to do with the proper price for metals? Both are political ideologies. Both have failed to meet their predictions. Both make people poorer.

          13. LOL You didn’t know his name until I brought him up, right? I used to make those argument too, when I was twelve.

      1. The central banks use the paper silver market to manipulate gold. This why the gold/ silver ration is around 75 to 1, now, when the relative mining scarcity is 11 to 1. I expect silver to appreciate both against the dollar and gold when the manipulation stops.

          1. That is what central banks reduce us to. Since a monetary crisis is coming, everyone bets, with their assets or their lives. All the G-20 nations are debasing their currencies.

    4. Well, dude, you now have well more than 50% losses on that junk. My sympathies for your major WEALTH DESTRUCTION problem.

      1. No, I bought Silver at under $12 an oz, so today’s prices don’t bother me. Even back then, it was only a quarter of my wealth.

        Most of my money is out of dollar denominated assets, and into real things. A secure location, good neighbors, food, water, guns and survival goods. Some dollars, since I have to pay taxes and go to the grocery store.

        It’s anyone’s guess how the future will turn out. Some of my insurance positions will fail. Perhaps, some will succeed spectacularly. The problem is that we have to bet on the future, no matter what.

    5. That 5,000 ounces of silver is now worth a paltry little $77,500 at today’s $15.50 per ounce price, and you claim you paid an average of $33 per ounce for a total cost of $165,000, so you now have a loss of $87,500 which would be enough to buy a rather nice BMW. Great move dude! And are you aware that you can only write off $3,000 in capital gains losses each year? Helllllloooooo?

      1. This thread was about what the future will bring. Thus, today’s precious metal prices are irrelevant. Any investment strategy can experience temporary reverses. The big winners in life have always had to be stalwart when it seems as though events are not going their way.

        The future is a mystery. It’s anyone’s guess what will come. But, we cannot escape making a bet, or the future will take us unaware.

        Given that, certain political actions lead to bad results. When a country’s leadership increases the money supply, the value of its currency will diminish. This was true whenever Roman Emperor Diocletian, Franklin Delano Roosevelt or a thousand other despots did it. This action always impoverishes a country. Sometimes, that country recovers under a rebirth of freedom, but most often not.

        The more powerful and despotic a country’s leadership becomes, the more its economic power decreases. Freedom and risk are both needed to create wealth. Any government which tries to “spread the wealth around” as Obama put it to Joe the Plumber increasingly destroys a person’s incentive to work hard, take risks and invest their assets.

        The American economy has not recovered from the 2008 crisis. And it won’t until innovators can trust that, if they succeed, their wealth won’t be stolen. I’m not sure that innovators can trust a Republican administration to do that. Once Republicans get inside the beltway, they often stop representing their constituents.

  30. Which means purchasing power in this case … What do people here think about MA, he has been pretty accurate, uncomfortably so for this stacker.

  31. Just to play devil’s advocate: Martin Armstrong says after the sovereign debt default, which as evidenced by Russia is coming, everything including commodities will collapse in value

          1. False. The only reason that gold and silver are at preposterously overpriced levels is due to MANIC SPECULATORS with zero regard for fundamentals and that is the SOLE REASON THEY BECAME SUCH PREPOSTEROUS BUBBLES and why those bubbles started bursting dramatically in April 2011 with gold now down 40% and silver now down 62% since then. BUBBLES ALWAYS BURST.

          2. Yes, bubbles burst. We are seeing the US dollar bubble burst. Precious metals will merely react as people run to safety.

          3. That is an utterly laughable and bogus assertion. What we are seeing with the US dollar is it SOARING IN PURCHASING POWER against nearly all of the world’s 27 major commodities including bubble junk like gold and silver and we are seeing it soar in exchange value on the DXY where it is now around 89.32 and headed over 90 within days and then on towards 100 and higher.

            The dollar has been soaring in purchasing power against commodities for nearly 4 full years now and is up by around 100% in purchasing power against many commodities. That is an irrefutable fact.

    1. There will, of course, be no “debt default” whatsoever by Russia, but yes, commodities will continue plunging and collapsing in value as we move forward.

    2. In such a scenario: will the Fed print its obligations or stop paying them? If the former, gold would rebound. If the latter, which is somewhat comical, gold would be significantly cheaper but the whole price structure of all goods would break down in a deflationary spiral. The question is not can we avoid default or de facto default through money printing; it’s already baked into the cake. The question is which one will be more orderly. That’s why I think the Fed will print when it needs to print and gold will rise: it’s more orderly to place a frog in warm water and slowly turn up the heat than it is to throw a frog in boiling water.

      1. The Federal Reserve doesn’t have any obligations. The price of gold has nothing whatsoever to do with US government debt. The US government cannot and does not print money. The Federal Reserve is now rapidly shrinking its balance sheet. As to frogs, go cook one for dinner. They’re really quite tasty and look great when sprinkled with edible gold.

        1. As a PM bug I’m always happy to read about both perspectives in terms of PMs but I’ve got to say you’re either disingenious or or outright lying when you say the Us govt can’t/doesn’t print money. They work in partnership to get the FED to buy treasuries which has the same effect. You might say that money is borrowed ? What’s the difference if the money is brought into existence only for the purpose of funding deficit spending ?

          When it comes to your simplistic and steroetypical thinking of the PM community, you think you understand, but you don’t. So it’s better that you don’t expose your ignorance about how this group operates any further. One thing about this group is that it doesn’t feel it needs to saved by anyone.

          1. That kind of mindless claptrap is straight out of the Goobers Against Truth Association playbook and is just total false hogwash, dude.

          2. LOL. I’m close to breaking my rule of never arguing with an idiot. But no, I won’t in this case.

          3. You haven’t a clue. In a currency default or a hyper inflation, you want more than just precious metals. You need a secure location. Friendly neighbors. Food storage. Survival goods and skills. Weapons to protect your assets.

            Naturally, most people aren’t ready for “the end of life as we know it.” We keep hoping for the minimum of change. Most of the above items can be seen as insurance, if things go bad.

            The most important thing you can have is a prepared mind, which clearly you don’t have. If you invested 25% of your assets in non-dollar denominated items, the worst that would happen is that you would have some peace of mind. Insurance is always a waste if you never have to rely on it.

          4. There is no such thing as a “currency default” and the chance of even the most minimal of inflation is now less than zero in the US and most other countries. Helllllllllllllllllooooooooooooooo?

          5. You are clearly EXTREMELY STUPID AND IGNORANT if you are unable to comprehend the very clear facts and realities that I have extensively stated and detailed, dude.

          6. And the way to win arguments is to insult people? Right?

            I understand exactly what you are saying, but I disagree with your conclusions. I also give real world examples you can look up. The facts about Argentina are quite clear. If you increase the money supply, eventually you have a currency crisis.

          7. My conclusions are absolutely correct. Your assertions regarding increasing currency resulting in a “currency crisis” are beyond stupid and absurd. The amount of currencies MUST BE INCREASED AS ECONOMIES AND POPULATIONS INCREASE – obviously.

          8. Have you never heard of supply and demand? It applies to currency, too. If you increase the supply of currency, then purchasing power must decline.

            No, the quantity of money can remain the same as economies and populations are increasing. Gold and Silver will just buy more goods and services. If the government increases the money supply, it is enacting a hidden tax, one which the citizens never approved.

          9. Neither gold nor silver can buy goods or services or anything else UNLESS THEY ARE FIRST CONVERTED INTO REAL LEGAL TENDER MONEY and that is true all around the world in every country except South Africa where the Krugerrand can be used for currency and has no stated nominal fixed face amount.

          10. Untrue. People have used money before which is not sanctioned by any government. After WWII in Germany, they used cigarettes. Markets create value; governments don’t.

            If government money was always good, then government wouldn’t need to enforce legal tender laws. There does not need to be government monopoly in money. After the American Revolution, there were six types of competing money and currency. The continental dollar, issued by the Continental Congress was in hyperinflation, so most people used the Spanish Silver Real coin- pieces of eight.

            People can barter for goods in any terms, it is not customary, yet. In a hyperinflation, such as Argentina’s, people would escape the devaluation of the Peso by using US dollars in trades. The Argentinian government made that illegal, but people did it anyway. No fiat currency by any of the G-20 nations is safe now, people will need to use something else.

          11. What you are describing is NOT MONEY at all, but rather BARTER TRANSACTIONS and there is a huge difference between the two.

          12. Money is whatever people choose to use as a medium of exchange. That can be shells, engraved stones, gem stones or precious metals. Currency is whatever governments use force to impose on people, usually that is debased coins or paper.

            A medium of exchange, even a flawed, debased and obscure one, is better than none at all. The only reason governments pass legal tender laws is because they know that people would prefer to use something else as a medium of exchange.

            A monopoly is not a good thing. In goods and services, that leads to poor quality at a high price. In currencies, monopoly government money lead to continual debasement.

          13. Nope, and you have just totally proven your utter lack of comprehension as to what money is.

          14. Of course, you are the expert. What did people use for money before fiat currencies? Since there many small states issuing coins, people could determine which ones still had value, so they could price their goods accordingly. The Jochim thaler (Dollar) was a silver coin used for four hundred years. It was valuable, because it was minted full weight and was not debased. Our name for the Dollar was taken from it. Our silver coins were not debased until late.

          15. Well, there was also a time before toilet paper and toilets, but we’ve moved well beyond that in today’s much better modern world. Why are you so interested in obsessing with the inferior times of the past before modern innovations? Things were MUCH WORSE IN ALL RESPECTS BACK THEN, particularly before currencies and the advent of electronic currencies. Hellllooooooooooo?

          16. Precious metals have been valued through 5,000+ years of history during which widespread ironworking, the plow, road systems, gunpowder, the printing press, mail systems, railroads, and flight have been invented. Pretty sure the latest technologies aren’t going to unseat them, either.

          17. The primary use of gold for the past 5,000 years has been for JEWELRY and that is till the primary use of gold, although it is expanding into dresses, bikinis, and bras these days.

            As to the value of gold, it was right around $20 per ounce for the period from 1793 up until 1933 and a tremendous benefit was that it has a CONSTANT PRICE that could be depended upon. After 1971, however, gold became nothing other than the WORLD’S MOST VOLATILE AND SPECULATIVE COMMODITY with the biggest price surges and plunges that any commodity has ever experienced and that remains the case today.

            Gold plummeted in price by 70% from January 1980 into late 2001 before the second 10 year run up to PREPOSTEROUS BUBBLE LEVELS began and that lasted until April 2011 when that game came to a screeching halt and since then the price of gold has plummeted by 40% and it is on its way to its mean of $456 per ounce and then lower.

            Total gold sales globally for the around 4600 metric tonnes of the stuff on the markets each year are less than $240 billion which is about half of the annual sales of Wal-Mart, as most folks have little interest these days in gold for any purpose including jewelry.

          18. Which, of course, totally invalidates your assertions that gold is of any value at all for exchange WITHOUT A DOLLAR MONETARY VALUE BEING PLACED ON IT which, of course, invalidates the notion that gold itself has anything whatsoever to do with money as a medium of exchange.

          19. Fiat currencies come and go. Precious metals remain. People get to choose which one they trust. Long term, that is gold.

          20. You’re an idiot. That jewelry you speak of is a store of value and not a decorative bauble; because it is made of precious metals and gems it *is* wealth, it is not decoration. It works this way for most people on earth, and historically this was the case for everyone. Old, wealthy families wear replicas of their jewelry and not the real thing for a reason. The real stuff is to stay put in a vault somewhere and maintain its value over centuries. I get the sense you haven’t even read a 19th century novel before, let alone any history books. However, gold even functions this way for the poor in the US today, as evidenced by all those “We Buy Gold” pawnshops. They get ripped off, of course, because the poor always do; but gold is nonetheless acting as an inefficient store of wealth for them.

          21. Your utter lack of comprehension of jewelry is mindboggling. Folks do not buy jewelry as a “store of value” at all and most all jewelry sold in the the world has much of its value in its ARTISTRY AND CRAFTSMAN as in some underlying metallic value. Folks mostly purchasing jewelry t0 have NICE DECORATION TO WEAR AND ENJOY and have little interest in its financial value, and most jewelry can’t be sold for even close to the same amount of money that people purchase it for at retail. The only reason anyone replicates jewelry to wear is DUE TO THE RISK OF LOSS FROM THEFT or other causes – OBVIOUSLY.

          22. Skip the first 4 paragraphs, but read this as an example: http://bit.ly/1AwGLAM . The key line is: “[She] called out that we could laugh all we wanted but since the jewelry was everything she had saved since 1965, we had better be careful.”

            It is like this in China, India, much of the Middle East, etc.

          23. And when her paper money is worthless, she can sell her gold. Whoever buys can accept it for its jewelry sake or for the gold in it. When precious metals are rising, a lot of boring jewelry gets converted into bars. Rare coins do, too.

          24. The value of the US dollar soared again today, but as to her gold, unfortunately for her its value plummeted by another $24 per ounce and is racing towards the official US government price of $42.22 per ounce, so if that poor little old lady expects to get any real money from selling that stuff, she better do it real fast.

          25. Let me remind you that this actually happened in 1979 at the last gold spike. It’s on the web. You need not believe me.

      2. The Federal Reserve totally ended QE on October 31, 2004 and since then has been very effectively., substantially, and rapidly BEEN REVERSING QE and has shrunk its balance sheet from over $4 trillion down to around $3.8 trillion.

        That, of course, is JUST THE OPPOSITE OF PRINTING MONEY AS THEY ARE NOW CONTRACTING MONEY by reducing their balance sheet and destroying the funds they created from thin air as they are removed from the excess reserves accounts liabilities and securities are put back to the banks.

        Keep an eye on the Fed’s accelerating asset sales – CNBC

        The U.S. monetary authorities (Fed) are stepping up the contraction of their balance sheet at a surprisingly fast pace. Since peaking at $4.07 trillion last August, the Fed’s monetary base has been reduced by $259.2 billion as of the latest reserve reporting date on November 26, 2014.

        More than half of these Fed asset sales occurred between the end of October and the end of November. But the balance sheet remains an impressive $3.8 trillion — a huge difference with the pre-crisis monetary base of $820-$830 billion.

        http://www.cnbc.com/id/102246928?trknav=homestack:topnews:9

        1. We know that QE has not ended because interest rates have not risen. The FED is doing something they are not telling us about.

          1. That is an extraordinary stupid assertion. The Federal Reserve version of QE had nothing whatsoever to do with interest rates. Where do you come up with such utter nonsense. As to the Federal Reserve version of QE, it not only ENDED ENTIRELY ON 10/31/2014 BUT IS NOW BEING VERY RAPIDLY REVERSED.

            Keep an eye on the Fed’s accelerating asset sales – CNBC

            The U.S. monetary authorities (Fed) are stepping up the contraction of their balance sheet at a surprisingly fast pace. Since peaking at $4.07 trillion last August, the Fed’s monetary base has been reduced by $259.2 billion as of the latest reserve reporting date on November 26, 2014.

            More than half of these Fed asset sales occurred between the end of October and the end of November. But the balance sheet remains an impressive $3.8 trillion — a huge difference with the pre-crisis monetary base of $820-$830 billion.

            http://www.cnbc.com/id/102246928?trknav=homestack:topnews:9

          2. Then you must be extremely stupid and incapable of reading and/or comprehending balances sheets.

    3. It’s more complicated than you say. There are different kinds of commodities. Industrial commodities, such as aluminum and copper, must drop after the sovereign debt default, because the economy is very disturbed. No one knows what anything is worth, since the markets are not working well. There could be wage and price controls after a default.

      Precious metals are a store of value which would be bid up as people rush to get out of currencies. Necessities, such as food and fuel, are bid up because no one knows when there will be a resupply. People hoard necessities when a currency is trashed.

      1. Precious metals are certainly NO STORE OF VALUE WHATSOEVER when they are plunging as has been the case with PMs for the past nearly 4 years during which time gold has plunged 40% and silver has plummeted 62%. They are nothing but EXTREMELY TOXIC ASSETS with HUGE LOSSES OF WEALTH AND VALUE” as should be totally obvious, dude. Hellllooooo?

        1. Ah! You have no patience. Events have not run their course. Central banks manipulate the precious metal’s market, presenting canny people with opportunities.

          1. False. Central banks are mostly INACTIVE in the metals markets and have nothing whatsoever to do with prices in those markets, let alone your abusrd and bogus assertions as to manipulation. Central banks have much more important matters to deal with than the little tiny miniscule metals markets which don’t add up to an anthill of pennies in the big picture of the $70+ trillion a year global economy and $800 or so trillion in global assets.

          2. Mostly inactive in the metals markets? What does “mostly” mean? It means that the precious metals in the FED’s vaults are already gone in trying to prop up the dollar. There are multiple parties who have a claim on each bar of gold. Giving Germany back its 3 thousand tons of gold would unravel all the crooked games.

            The Fed can create money out of thin air and buy commodities, securities or equities for its balance sheet, thus propping up the dollar. But, it can’t do that forever.

          3. There is no gold “gone” from the depository vaults of the Federal Reserve at all per your absurd assertions, not are there “multiple parties who have a claim on each bar of gold.”

            Germany NEVER ASKED FOR ANYTHING OTHER THAN A 7 YEAR TIME TABLE TO MOVE 20% OF THEIR 1500 METRIC TONNES OF GOLD stored at the Federal Reserve New York Branch which is in the process of timely scheduled transfers and Germany fully confirmed that they intend to MAINTAIN 80% OF THOSE GOLD HOLDINGS right there indefinitely in the bullion vaults of the Federal Reserve New York Branch amounting to 1200 metric tonnes.

            http://www.forbes.com/sites/afontevecchia/2013/01/16/germany-repatriating-gold-from-ny-paris-in-case-of-a-currency-crisis

            More than half of the 3400 metric tonnes of gold owned by Germany is stored in vaults in Germany, mostly in Frankfurt. Germany hasn’t bought or sold gold since 1973, and tried to keep its reserves “as far west as possible” during the Cold War, according to Bundesbank board member Carl-Ludwig Thiele, who prepared an important presentation (in German) on the matter. Frankfurt brought back 940 tons from the Bank of England in 2000/1 in order to avoid storage costs, according to the FT, and has sold about 5 to 6 metric tons a year to the finance ministry to mint coins. Neither the New York Fed nor the Banque de France charge Germany to store its gold.

            While Thiele didn’t speak of how it would be transported for security reasons, the 300 metric tonnes of gold coming from the U.S. will probably have to be flown in which will probably have to be done in 3 to 5 ton shipments, the maximum insurance companies will cover, meaning it will take between 60 and 100 flights.

            http://www.forbes.com/sites/afontevecchia/2013/01/16/germany-repatriating-gold-from-ny-paris-in-case-of-a-currency-crisis/

            Of the approximately 3,400 metric tonnes of gold that Germany owns, and 1,500 metric tonnes are stored at the Federal Reserve New York Branch of which Germany plans to move 300 metric tonnes back to Germany’s Bundesbank by 2020

            The 1500 metric tonnes of gold owned by Germany and held in the Federal Reserve Bank of New York Depository facility HAS NOTHING WHATSOEVER TO DO WITH US GOVERNMENT GOLD but is being stored at the request of Germany in the bullion depository vaults at the New York Branch of the Federal Reserve.

            The Federal Reserve owns very little gold of its own and that has long been the case as they do not consider it of any financial utility, but it does acts a a trusted and very reasonably priced DEPOSITORY for many other entities including foreign governments to house their gold in its vaults particularly at the New York Branch all of which is fully there and which you can see for yourself:

            Inside Americas Money Vault – National Geographic Documentary

            http://www.youtube.com/watch?v=I2m3t2Yr8Vg

          4. Governments lie, so do financial institutions.

            You say such fantastic things. Germany gave up asking for their gold from the FED a year ago when it became apparent that they wouldn’t get it. Germany had no trouble in shipping its gold TO the FED. What’s to keep Germany from acting like France did in the 1970s and sending a warship to retrieve it? Nothing.

          5. Your assertions regarding Germany are TOTALLY FALSE AND UTTERLY BOGUS as I thoroughly reviewed in my above comment. Why put up such BLATANT FALSEHOODS AND OUTRIGHT LIES?

          6. I am an individualist. I expect governments to lie; they have not failed me in that yet. Consequently, I look for the ways in which government lie, so I can determine their motives for cheating me. Money can be made by betting against governments. A bet on precious metals is such a gambit, but it is one which is still in play. When all the people who have trusted governments are destitute, I will pick up their real assets for a song.

          7. No such luck. It must be more peaceful to be deluded.

            We believe in different things. I’m willing to argue my case rather than just insult people.

          8. YOU certainly appear to LOVE BEING DELUDED and stuck in the barbarian age prior to modern and effecient electronic currencies. Why? What’s the attraction?

          9. I favor a monetary system which is stable, secure, tangible and very hard for governments to screw up. I favor a separation of the economy and the state. Furthermore, I want a system which keeps governments from increasing the money supply, thus defrauding their citizens.

            The only system which has come close has been a gold coin standard where there is no fractional reserve banking. It’s been centuries since we have had that. But, we couldn’t have afforded two world wars and a cold war without fiat currency.

          10. MONEY SUPPLY MUST ALWAYS BE INCREASED AS ECONOMIES AND POPULATIONS INCREASE. OBVIOUSLY. Hellllooooo?

          11. Nope. That is MATHEMATICALLY OBVIOUS TO ANYONE WITH A FUNCTIONING SYNAPSE THAT CAN ADD 2+2 AND GET 4.

            How could the world’s economy function for 7+ billion people with the same amount of money that id did with 1+ billion people? Obviously, it couldn’t at or everybody would have vastly less money than when the world had 1+ billion people as was the case 100 years ago. Not comprehending that simple fact shows enormous ignorance and stupidity.

          12. No. People have a right to look at the world and come away with different conclusions. I’ve known some very smart people who did very dumb things. Their assumptions were flawed.

          13. No, I am in touch with a different set of facts and realities. Austrian, free market economics. I’ve studied the other forms of economics and rejected them.

            Our current world wide, monetary system is breaking down. The currencies of the G-20 nations are a risk. I’m not sure how, exactly, this crisis will turn out, because that depends on decisions still unmade.

            I am safe guarding my assets, by ignoring what those G-20 nations want us to do. Why should you care what I do?

          14. Nope, dude. You are wallowing in misinformation, fantasies, and delusions as is 100% clear from your comments.

          15. We must agree to disagree. The world has this nasty habit of proving arrogant statements false. We will see.

        2. For heaven’s sake, at least do your arithmetic. On this date 4 years ago gold was about $1375/oz and silver was $29. That’s a 13% decline in gold and a 45% decline in silver. If you look at silver over the past 5 years instead of 4, it’s a 7% decline.

          1. What is your problem READING OR COMPREHENDING what I stated. Do you not understand that i stated “nearly 4 years” and the specific time my numbers are based on is April 2011 and since that time gold has indeed plunged 40% and silver has indeed plummeted 62%. Hellllllooooooooooooooooooooo?

          2. You’re citing those same two numbers all over this thread and on comment threads elsewhere, and they are cherry picked numbers. Also, I would not say “nearly 4 years ago” when we are still more than a quarter away from April 2015.

          3. If someone agrees that it is “nearly” April 2015 and if nobody minds that you’re using the top priced month without stating that it’s the top, yes of course you are correct. But it isn’t “nearly” April 2015 and you’ve cherry picked the data.

            I can just as easily point out that silver is up 73% in roughly the past 6 years, and gold is up 64%. Technically that’s correct too.

          4. Soon silver will not be up at all, nor will gold, and both may fully revert back to their 2001 prices of $250 and $4 per ounce respectively and perhaps even go lower.

          5. Yes, let’s use those numbers– since then gold is up 380% and silver is up 300%. Woot!

          6. Both of those metal commodities are plunging in price with gold now down 40% and silver down 62% since April 2011. You do know, I hope, that the value of anything can only ever plunge 100% before it hits zero, don’t you, dude or dudette?

    4. There will obviously be no “debt default” at all with Russia which has over $500 billion in reserves and a $2.4 trillion economy. Helllllooooo?

      1. So say the mighty, before they are fallen.

        Not that I would say that Russia is mighty. It is the US dollar which is the real problem.

        1. The US dollar isn’t even the slightest bit of a problem, and is doing spectacularly well as has been the case for the past 4 years. Obviously. Helllloooooooo?

          1. The world does not necessarily agree. 2015 will be very bad for the dollar and the US economy.

          2. That is a laughably preposterous assertion. 2015 will bring HUGE GAINS FOR THE VALUE OF THE DOLLAR IN BOTH PURCHASING POWER AND ON THE DXY (FOREX).

            The US dollar is just a little under its 9 year high on the DXY and going much higher and will be over 90 very soon (now at 89.32) and then on to and over 100 and then headed up towards 120.

      1. Any and all foreign accounts owned by US citizens totaling more than $10,000 in any year must be fully reported on annual federal tax returns along with a special FBAR filing with the US Treasury each year. The penalties for not complying w9th US laws on that are severe and include nearly complete confiscation of any such assets along with further civil and criminal penalties.

  32. An excellent summary John!

    The benefit of possessing the global reserve currency at this time – the last bastion before it too goes under – is the opportunity to buy gold and silver at an effective discount.

        1. Why on earth would they overpriced stuff do anything but plunge to its mean of $456 per once and then head lower? It is NOTHING BUT A LAUGHABLE AND PREPOSTEROUS BUBBLE at anything about $456 per ounce. Hellllllooooooo?

          1. You don’t get it. For six thousand years precious metals have been money. You don’t get to decide what is money, nor do I nor do governments. This is why fiat currencies eventually fail. And why fractional reserve banking is a fraud.

            Paper money is rare in the West; it has only been around for three to four hundred years. It doesn’t work. One day people will wise up and deny governments this power to defraud us.

          2. False. Gold and other metals have NEVER BEEN MONEY FOR FLOATING EXCHANGE VALUES. Those metals have simply been used as a MEDIUM WITH WHICH TO MINT COINS WITH A MONETARY VALUE and it is the NOMINAL STATED AMOUNT on those coins which is the MONETARY VALUE and not the metals with which those coins were minted.

            There is no such thing as “fractional reserve banking” such as you assert.

            No bank at any time may have loan out even 100% of its deposits and presently loans at banks in the US average about 67% of deposits at US banks which is a record BANKS NEVER CREATE ANY MONEY AT ALL AND THERE IS NO SUCH THING AS “FRACTIONAL RESERVE BANKING.”

            There are RESERVE REQUIREMENTS that the Federal Reserve imposes on DEMAND DEPOSITS AT BANKS but those RESERVE REQUIREMENTS MEAN THAT THE BANK CANNOT LEND OUT MORE THAN ABOUT 95% of those demand deposits as the 5% required as a reserve is the minimum amount a bank must maintain as cash on hand to meet expected withdrawals from customers.

            There are no such reserve requirements on time deposits and those are loaned out by banks at up to 100% of the amount of those deposits.

            I would suggest you learn about RESERVE REQUIREMENT which are fully explained in detail at:

            http://www.federalreserve.gov/monetarypolicy/reservereq.htm

          3. You astound me with your blindness. The information on this is freely available on the internet.

            But, I’d suggest some non communist history books to put the discussion in perspective and Mortimer J. Adler has a very good summary. If you want to learn about Western Civilization Daniel Hannan’s “Inventing Freedom” is a good explaination about why the West is different.

          4. Information on what and from whom? A bunch of clueless GOLD GOOBERS LOST IN DELUSIONS? Sure, there’s lots of that asinine MISINFORMATION out there, but few are stupid enough to buy into any of that total idiocy and nonsense. Hellllloooooo?

          5. We appear to not be on the same continent. I can prove nothing to someone as blind as you. That’s okay, other people are reading this thread. They might like that info.

          6. I’m not concerned about him. Lies need to be confronted with reason. I think of it as a public service; I’m retired, after all.

            He is a bigot, so he’s never going to change his mind, but people like you are reading these exchanges. What with the Pubic Schools filled with people like him, you may have not never heard a rebuttal to his nonsense.

            I don’t pretend to be perfect, so I may be in error. If so, I want to hear a good rebuttal. Until then, I will muddle along with the best explanation I have.

          7. Money is “a promise to complete a trade”. This is obvious from examining the three steps of a trade: 1) Negotiation; 2) Promise to deliver; 3) Delivery. With simple barter, steps 2 & 3 happen simultaneously on the spot, Money allows 2 & 3 to happen over time and space.

            Who creates money? Traders do. And you are a trader when you trade 360 monthly payments for a house to live in today. Your promise is certified and those certificates are delivered to the seller. They never lose value so they are the most welcomed item of simple barter,. Each month you make trades to reclaim some of these certificates. You submit them to the medium of exchange (MOE) manager and he extinguishes them. When you have delivered on your promise in full none of the money “you created” remains in circulation.

            The governing relation for proper management of any MOE is:
            INFLATION = DEFAULT – INTEREST and maintains INFLATION at zero at all times everywhere, If a trader fails to deliver, that is DEFAULT and those certificates are immediately reclaimed by an equal amount of INTEREST collections.

            The marketplace enjoys zero INFLATION. Responsible traders enjoy zero INTEREST.

            If this isn’t a better explanation than you have, I’m all ears.

            Todd Marshall
            Plantersville, TX

          8. Money has three functions: it is a medium of exchange, a unit of account and a store of value. Hard Money is not a promise: it is something valuable, in itself. Barter is messy; it is difficult to find the ultimate buyer and seller.
            Having something of value in the middle of a trade facilitates it.

            The market creates money by what it will accept. It’s better to have a choice; America during the Continental Congress had six fiat currencies and hard money coins circulating. The favorite was the Spanish REAL silver coin.

            There are many forms of contracts, including installment payments. Short term (60 to 90 day) Real Bills in gold can be issued by a seller to cover real assets sold. It is discounted to an investor (not a bank.) When the assets are sold and money is attained, then the owner of the real bill is paid off.

            Profits and losses are normal in markets; inflation only occurs when the money supply increases. This leads to general price increase.

            The typical mechanism for inflation (increasing the money supply) is the fractional reserve banking system. This system causes booms and busts in the economy as bad investments are liquidated. These are also known as ‘runs on the bank.’ Central banks attempt to control the money creation of many banks, so this leads to all them failing together. This is known as a banking panic, recession or depression. It’s caused when all the bad loans of a bank come due at once. People stop making loans to the banks, so bad debt can’t be rolled over.

          9. louis_wheeler

            Money has three functions: it is a medium of exchange, a unit of account and a store of value. “check, check, and check”.

            Hard Money is not a promise: it is something valuable, in itself. “I’m paid in dollars. I buy things with those dollars. Thus, the dollar is of value to me. If I want to buy a gallon of gas with a 1964 quarter (a hard thing of value), I must first convert it to 13 of today’s quarters first.”

            Barter is messy; it is difficult to find the ultimate buyer and seller. Having something of value in the middle of a trade facilitates it.

            “Today I bartered dollars for groceries. They worked just fine. Somewhere else today, a home buyer made a trade to reclaim some of the dollars he promised to deliver … and he delivered them as promised … and they were extinguished. My dollars are still circulating as objects of simple barter, They’re in the grocery store cash register. Where did I get them? I earned them by making a trade with my employer … and we both delivered on that trade.”

            The market creates money by what it will accept. It’s better to have a choice;

            “The Federal Government creates money by making trading promises it has no intention of keeping. It gives those certificates to employees, suppliers, and dependents. It never gets them back in tax payments. It rolls them over (DEFAULTS) and INFLATION results because it doesn’t pay enough INTEREST to reclaim the certificates.”

            America during the Continental Congress had six fiat currencies and hard money coins circulating. The favorite was the Spanish REAL silver coin.
            “When you have a mismanaged MOE of exchange, it doesn’t work in barter. When it is properly managed it works better than any alternative. The key is proper management, which any robot can accomplish … but governments can’t.”

            There are many forms of contracts, including installment payments. Short term (60 to 90 day) Real Bills in gold can be issued by a seller to cover real assets sold. It is discounted to an investor (not a bank.) When the assets are sold and money is attained, then the owner of the real bill is paid off.
            “When I bought my house … “I” created the money ,., and “I” had to complete my trading promise and “return the money”. I have never negotiated any contract in gold and know of no-one who has.”

            Profits and losses are normal in markets; inflation only occurs when the money supply increases. This leads to general price increase.

            “You’ve learned you lessons well. Too bad they’re bogus lessons. There is no limit on trading promises … thus no limit on money. Supply and demand for money (created by trading promises) is always in perfect balance. It’s the nature of a trade. All INFLATION results from DEFAULTs that are not recovered with INTEREST collections. Governments are the biggest DEFAULTers (with their roll overs) by far yet the lowest INTEREST is collected from them. That’s the main problem causing INFLATION.”

            The typical mechanism for inflation (increasing the money supply) is the fractional reserve banking system.

            “In a properly managed MOE, that fraction is infinity because “no capital” is required for a trader to make a trading promise. All that is required is that he responsibly delivers on his trading promises, INFLATION derives from DEFAULTS not reclaimed by INTEREST collections. It’s simple arithmetic, founded in the three steps of trade,”

            This system causes booms and busts in the economy as bad investments are liquidated.

            “Booms and busts are caused by purposeful mismanagement of the MOE, usually by artificially rejecting responsible traders desires to make trading promises. It’s part of a financial farming operation.”

            These are also known as ‘runs on the bank.’

            “With a properly managed MOE, there are no bank runs. Traders are always free to make new trading promises and get them certified. No OPM is required. This results in a very stable market environment all the time everywhere. If the market “heats up” some traders fail to deliver and DEFAULT. This causes an increase in INTEREST collections automatically “cooling down” the market. It’s not done artificially by licking the finger and waving it in the air at LIBOR,”

            Central banks attempt to control the money creation of many banks, so this leads to all them failing together. This is known as a banking panic, recession or depression.

            “This is know as a banking farming operation. With a properly managed MOE banks could not induce panics. One of the biggest panics was caused by an attempt to corner the copper market. The attempt failed and DEFAULTed. This cause the “capitalist” system to fail. It wouldn’t cause a properly managed MOE to fail. It would just cause INTEREST collections from that class of unreliable trader to increase, making new trading promises unworkable for them. Automatic negative feedback … instantaneously … like insurance rates constantly adjust to claims experience.”

            It’s caused when all the bad loans of a bank come due at once.

            “Bad loans come about in the farming operation when bankers begin to throttle trades,. Traders make their trading promises with the view of how to deliver on them. Banks and governments act to fog that view and pull the rug out from under them. It’s a purposeful farming operation called a business cycle,”

            People stop making loans to the banks,so bad debt can’t be rolled over.
            “With a properly managed MOE it’s not necessary for people to make loans to banks. If they put ;their money with banks for safe keeping, their act of taking it back at the spur of a moment is of no import to the marketplace … because traders create money … not capitalist and savers.”

          10. Sorry, the world will not cooperate with your fantasy. There are consequences of fraud and fractional reserve banking is fraud. The world is incredibly overloaded with debt. There is no way anyone could ever pay it off. Default is around the corner, but we have no certainty of which kind.

            Back in the 50s through the early 70s, it made no sense to own gold. Dollars were fine, even though they were slowly depreciating. Most people were thoroughly brainwashed. They didn’t know enough economics to be scared.

            In 1975, American’s were allowed to own gold again and this plus the fact that Nixon closed the gold window in ’71, led us close to a hyperinflation by the late 70’s. Paul Volcker allowed the interest rates to rise enough and long enough to quash inflationary expectations.

            America is back in the same conditions as we were in the late 70’s: we have a stagnant economy with increasing price inflation. We have huge numbers of people unemployed and on food stamps. Allowing the interest rates to rise, as Volcker did, would not save the economy. At 30% interest, payments on the debt would be more than the taxes which the government takes in.

            It would be incredibly stupid for the FED to print endlessly, but there is no easy way out. If the FED stops printing, we will have a depression. Obama and the democrats will not stand aside and allow the economy to correct itself, so they must intervene and that would retard the recovery.

            The FED officials and the Democrat Party are deathly afraid of a depression. All their friends in the primary banks would be bankrupt, as would Wall Street. The government would have no credit. Tax revenues would be down in a depression, so they’d have no money to buy votes. Over 45% of the current federal budget is deficit financed.

            Any attempt to balance the budget, when no one will loan them money, would cut into the entitlements and that would kill Leftist welfare programs. This is such a horror to the Left, that they would prefer destroying the US Dollar instead. The effect is the same, but the government will be able to blame it on other people. All the programs will be paid for, but just in worthless dollars.

            I would much prefer a simple old depression, because businesses can survive those. A hyperinflation destroys the economy and the middle class. It radicalizes people. Hitler would have never risen to power without the hyper inflation of 1923.

          11. Debt is nothing but “in process trades”. How do you know when you have too many in process trades? Easy, you have DEFAULTS. You are correct, defaults are around the corner … but so are new trading promises. Collecting INTEREST equal to DEFAULTs immediately as they occur is automatic negative feedback. New trading proposals must pay that INTEREST and some will not support that load at the negotiation stage. Thus the trades won’t ever reach the “promise to deliver” stage.

          12. “We have huge numbers of people unemployed and on food stamps.”

            What part of your jobs have been specifically focused on eliminating steps in the process or making them more efficient. A varying degree of “everyone’s” job has that focus. I can answer that “virtually all of my jobs have been about eliminating steps in processes and substituting machines for people.” So should I be concerned about the people I’ve “enabled” to be unemployed?

          13. I was pointing out problems which affect the economy at large. Of course, you have no interest in your fellow man.

          14. “In 1975, American’s were allowed to own gold again and this plus the
            fact that Nixon closed the gold window in ’71, led us close to a
            hyperinflation by the late 70’s. ”
            When Nixon “closed the gold window” the street price was already twice the official price … and the French caught on and asked their trades to be in gold. And why did they make it “illegal” to own gold in the first place? (hint: the government was cornered).

          15. The US government made gold illegal unconstitutionally in 1933, because it was following some bad Keynesian economic advice. Both Hoover and FDR were interventionist in the economy and society. Neither shrunk the government.

            The New York FED caused the ’29 market crash by loaning England $50 billion to prop up the Pound. This amount was similar to the national debt to fund America’s involvement in World War One. The ’21 banking panic was over in 9 months.

            FDR was never cornered. He had campaigned on lowering the debt and reducing the size of government. That is, doing exactly what the Taft government did in 1920- 21.

            Instead FDR, increased federal interference in the economy. Several times, the economy tried to recover, but some new federal edict would put it in the toilet (higher taxes and more regulations, Social Security, using the NRA to force businesses into cartels, new benefits to the trade unions, etc.

          16. “The New York FED caused the ’29 market crash by loaning England $50 billion to prop up the Pound. ”

            Loaning money does not cause crashes. Failure to recover loaned money is what causes crashes.

            “The New York FED caused the ’29 market crash by loaning England $50
            billion to prop up the Pound. This amount was similar to the national
            debt to fund America’s involvement in World War One. The ’21 banking
            panic was over in 9 months.”

            Again, that’s a case of counterfeiting. BTW: What brought the end of the ’21 banking panic? From reading “When Money Dies” by Ferguson, Weimar hyperinflation was gotten over very quickly. I guess people just suck up their losses and go about their business.

            “Instead FDR, increased federal interference in the economy. Several
            times, the economy tried to recover, but some new federal edict would
            put it in the toilet (higher taxes and more regulations, Social
            Security, using the NRA to force businesses into cartels, new benefits
            to the trade unions, etc.”

            Summed up: Improper management of the MOE.

            With proper management of the MOE, no government would have a fraction of the power it now has … and the world would be a better place. It’s really demoralizing to have your productive efforts directed against you.

          17. That’s your problem; you don’t know any economics.

            There are many effects of money creation. It is more than simply a failure to repay. It distorts the economy by fostering uneconomic projects, such as a housing crisis when there are not enough people to buy new houses. It bids up prices because more dollars are bidding for the same goods. It bids up stock market prices even on companies which are not making money after the prices increases are factored in. All those, eventually cause people to back away from investments or purchases and that causes a crash.

            The ’21 crash ended because the economy restructured to a consumer market. Companies making war goods, either folded or turned to making consumer goods. Workers who’s wages were bid up in war production were fired and had to go to work at a consumer company at a lower wage. Over leveraged banks failed and the people who had invested in them lost money.

            A deflation and a hyper inflation are very different. The latter is far worse on a economy. Hence, you cannot compare the Great Depression in the US and the ’23 hyper inflation in Germany. They are not the same.

            I was replying to your assertion that the government was cornered. It was not; it sabotaged itself though bad economics. FDR lied to the voters. He promised limited government and delivered us a fascist regime.

            I do not trust any government to manage a country’s medium of exchange; politicians always abuse the power you allow them to have. The American Republic was based on limited government. And too soon, they abused that trust.

          18. “Allowing the interest rates to rise, as Volcker did, would not save the
            economy. At 30% interest, payments on the debt would be more than the
            taxes which the government takes in.”

            INTEREST collections should exactly equal DEFAULT experience. In so doing, they automatically rise with failed trading promises, thus bringing tighter discipline to trading promise. Governments “need” INFLATION. They can’t fund themselves with taxes alone because people really don’t want their services and refuse to pay higher taxes. INFLATION is a tax by government counterfeiting (i.e. making trading promises they always DEFAULT on).

          19. “If the FED stops printing, we will have a depression.”

            The FED is a hopelessly inept manager of our MOE. If they were a bus driver they would have left the road by failing to properly negotiate the curves. When it is obvious you are leaving the road or have left it, the first step is to slow down or stop.

          20. The FED have been very efficient in serving the interest of their primary bankers and the politicians. They just give a damn about the American public.

            Who exactly are you expecting to be this efficient manager? What record of trust do they have? Oh! I forgot, no one has tried this experiment before.

          21. “Who exactly are you expecting to be this efficient manager?”

            I seen numerous possibilities, all coexisting. For example, for home buyers it might be a simple “expert system” program. For small businesses it might be a sort of “wholesaler” who makes trading promises and then solicits small business trading promises … like an insurance industry with it reinsurance component. One thing that will never grow in complexity and that is the fundamental relation: INFLATION = DEFAULT – INTEREST.

            Cumulative INTEREST will always be known and visible. Cumulative DEFAULT will always be known and visible. They will always equal each other. That’s simple to achieve and verify … and that’s what makes it work.

            Now lets explore how we game such a system and see how it reacts to such gaming. As I have said, rollover detection is particularly problematic. Syndication is also problematic. Much can be learned by studying insurance and credit card frauds and scams,

          22. “Who exactly are you expecting to be this efficient manager?”
            A simple and clearly defined “process”. I have described the obvious simple and clearly defined process.

            Do you suggest a simpler, better defined process?

          23. “Tax revenues would be down in a depression, so they’d have no money to
            buy votes. ”

            The democrats promise us larger government at the expense of the rich. The republicans promise us smaller government at the expense of the poor. Both bring us nothing but larger government. Go figure.

          24. “Any attempt to balance the budget, when no one will loan them money,
            would cut into the entitlements and that would kill Leftist welfare
            programs.”

            They’ve addressed that problem by delivering 4% inflation when the proper level is 0%. That they see 2% as their chosen target proves they are clueless. The government is a trader. They create money like any other trader. The difference: Other traders are removed from the marketplace when they become irresponsible. The government is the most irresponsible (highest DEFAULTer through rollovers) of all traders and demands to treated as the most responsible, paying the lowest interest of all traders. That “is” the problem. The government as a trader needs to be taken out of the game. With a properly managed MOE that would have happened over 100 years ago … automatically.

          25. You are not thinking clearly. People can trade with each other without increasing prices. It is only the banks that can increase the money supply by making loans with newly printed federal reserve notes. Right now, the FED is hiding the inflation by having the Primary bankers park their excess funds at the FED. When those notes come out as loans then there is no end to the price increases.

            You need to look at the late 70’s under Jimmy Carter’s adminitration. We almost had a hyperinflation then. Looking at Argentina’s last two hyper inflations would be useful too. Of course, the Argentinians had the advantage of fairly stable US Dollars to trade in to avoid the ravages of the Peso. But, all the world’s currencies will be trashed simultaneously, so we will be forced on precious metals.

            Our economic differences aside, how do you personally plan to save your assets? Will you try to ride the wave of the Hyperinflation? Some people suceeded in doing that in Germany of 1923.

          26. True, communication is a two way street. But, if you are trying to persuade someone, then the burden of proof is on you. None of your arguments make sense.

            Answer some questions.

            Where does money come from?
            What is the difference between a currency and money?
            What role does Fractional Reserve banking have in an economy?
            In an era of Stagflation, such as we are experiencing now, what should a person do to protect their assets?

          27. “You are delusive. Nothing you say makes the slightest sense.”
            Have you not been paying attention. “All” money is created by traders. Most of it is created by traders like you and I when we enter into long term loan obligations. But a very significant amount of it is from that most unreliable of all traders, the government which defaults on “all” of its trading promises.

            “What is the difference between a currency and money?”
            There is none. Nor are they different than coin or accounting entries, all of which stand for “promises to complete trades”.

            “What role does Fractional Reserve banking have in an economy? ”

            It makes the capitalist’s con possible. Remember, capitalism can be reduced to two words: “two years”.

            “In an era of Stagflation, such as we are experiencing now, what should a person do to protect their assets?”

            Lobby for immediate adoption of a Constitutional amendment dictating proper management of our medium of exchange. In the mean time, get light and avoid the existing MOE and confiscation initiatives wherever possible. If you have significant assets, convert them to gold and bury them somewhere that you can recover them when the reset comes realizing they aren’t money but are your most desired “transportable” and “defendable” store of value. Without those two caveats I would choose land … but that’s the first thing they confiscate.

          28. Why should I believe you? I know that people can trade without creating money. Before there were banks, there was no Inflation except when governments debased their coinage.

          29. Can we really talk about “before there were banks?”

            If the genesis of banks coming from enterprises vaulting gold, then that is a time “before” the creation of money. And as I’ve illustrated, without money you don’t have simple barter over time and space. You have very restricted barter over very short time and in very restricted space … barter governed by contracts between a very small number of traders (typically 2 or 3).

            You are correct. Without money you can’t have inflation of money. But with money you can have zero inflation of money through proper management as I have illustrated.

            Re. Believing me? I suggest you don’t but work the proof for yourself.You can “believe” the Pythagorean theorem or you can “prove” it for yourself. Since it is right, you can benefit from it without the proof … just use it … it works. Since our current MOE management is bogus, you cannot benefit just by accepting their nonsense. You would be unwise to believe me because, though no one has demonstrated or proved anything I’ve said to be wrong, it’s still widely open to testing and verification. If I were Bill Gates, I know I could create a MOE, manage it properly, and defend it against all threats … because it would be the best that can be achieved. I could guarantee zero inflation everywhere all the time. I could guarantee free certification of “all” trading promises (with actuarially correct consideration for risk of DEFAULT). But being one who camps out, I’m limited to getting it done through pitiful discussions like this, hoping a Bill Gates somewhere is listening in.

          30. The world had economies before the banks were created in the 1640s. There were money lenders, but they loaned their own money. Fractional reserve bankers quickly lost their depositors in runs on the bank.

            “And as I’ve illustrated, without money you don’t have simple barter over time and space. ”

            You illustrated nothing because the assertion is lunatic. Barter, by definition, is a trade without the use of a medium of exchange. Barter is very clumsy. Even a bad medium of exchange is better than none.

            The rules of logic says that the person trying to persuade other people has the burden of proof. Sure, the current financial system is bogus, but there are endless ways of being wrong. As you admit elsewhere, your theories have never been put into practice.

            Mine have worked in the past. Why shouldn’t I trust them?

          31. “Barter, by definition, is a trade without the use of a medium of exchange.”

            “You illustrated nothing because the assertion is lunatic. Barter, by
            definition, is a trade without the use of a medium of exchange. Barter
            is very clumsy. Even a bad medium of exchange is better than none.”

            This morning I bartered a two one dollar bills for a gallon of milk. In 6 days the renter of property I own will barter many several dollars for my promise to let them live in that house for 30 days. I have always delivered on that promise. The promise doesn’t work the other way (i.e I let them live there 30 days .. then pay me) because I would have to charge more (to cover risk of their breaking their promise). Once the “media” of exchange is created it circulates as an object of simple barter. The issue is: How is the “media” of exchange created. I properly assert, it is always created by a trader making a trading promise and give “you” your purchase of a house as a perfect example. Any other instance of “media” creation is counterfeiting … which is what the government does. What could be more clear or obvious? And you are correct. A bad MOE is better than none … unless you want to put it under you mattress to be later used in retirement.

            “The rules of logic says that the person trying to persuade other people has the burden of proof. ”
            Yep. Ask Copernicus, Bruno, and Galileo. Takes 400+ years.

            “As you admit elsewhere, your theories have never been put into practice.”

            This all began by my asserting “money is a promise to complete a trade.” This statement is valid now, forever in the future, and has been forever in the past. Inability to recognize that and manage accordingly does not encroach on its validity.

            “Mine have worked in the past. Why shouldn’t I trust them?”

            From what I remember of this discussion, you have not asserted “yours”. That’s not really important though because “nothing” has ever worked in the past. If it had, we would still be using it. So why “should” you trust them … whatever them is?

          32. Barter is the exchange of something of value for something else of value. A Federal Reserve Note is a promise to pay by the FED. In what? Nothing. Those notes are worthless.

            They used to be a receipt for silver coinage. They are truly counterfeit currency waiting for people to catch on that they are worthless. When price get above 50% a month, people will do everything they can to avoid them. It won’t be easy.

            The problem with Copernicus, Bruno, and Galileo was that our scientific instruments were not refined enough to persuade anyone, then. You want people to accept their theories on faith? Faith is not science. Prove your case.

            “This all began by my asserting “money is a promise to complete a trade.”

            That is a tautology, not a proof. Worse, it is absurd. Hard money does not need to promise anything, but its purity and value. Economies existed before there were banks or paper money.

            The problem you have is that whoever is issuing your money can debase it. Governments have routinely debased their currency over the millennia. What promise is there when no trades can take place because no one trusts your medium of exchange?

          33. “Barter is the exchange of something of value for something else of
            value. A Federal Reserve Note is a promise to pay by the FED. In what?
            Nothing. Those notes are worthless.”

            Value is in the eyes of the beholder. I have beheld the value of a dollar many times this week and proved it by passing it along in exchange for groceries, gas, and other things. People who buy FRNs see value in them. They can exchange them for dollars which they can exchange for gas, groceries, and other things … until they can’t, At that point, you are correct … they are worthless, Confederate money ended up there but was of value to the people of the south for quite a while (though only in a fleeting way). If they’d won the war, people would have probably been made whole by booty from the north. But the reverse happened, Such is war,

            “They used to be a receipt for silver coinage.”
            I can remember when they said “Silver Certificate” on them. I can remember they quit giving exchange in silver before there we able to switch them all to say “Federal Reserve Note”, Such is the way of criminals.

            “The problem with Copernicus, Bruno, and Galileo was that our scientific
            instruments were not refined enough to persuade anyone, then.”
            They were refined enough to show them their predictions were wrong. They adopted complicated epicycle theories to explain what they were seeing. Copernicus showed them the light and the truth … but the religions of the time had too much back peddling to do to accept the obvious … for 400 years! Such is the academic.

            “Hard money does not need to promise anything, but its purity and value. ”
            So-called hard money is just another object of barter … less desirable to traders than paper with numbers on it or entries in a journal ,,, until the reset, All are just items of simple barter. The first originates with mining. The last two originate with traders promises. Neither are objects desired by traders at the end of their trade.

            “The problem you have is that whoever is issuing your money can debase it.”

            How? All money must arise from a recorded trading promise. All money must be extinguished with delivery on that promise? How are you going to debase it? You really aren’t a very quick study!

            “Governments have routinely debased their currency over the millennia.
            What promise is there when no trades can take place because no one
            trusts your medium of exchange?”

            Only though counterfeiting. Any MOE must have perfect defenses against counterfeiting … including “hard money”, Ever heard of shaving .,,, and tungsten?

          34. Value is subjective, but often enough we have to compete with other people for goods and services. The long term trend of any currency is worthlessness.

            The Catholic Church was not as backward as you think. They had their own scientists, who at the time were not convinced. Seventy years later, the proof was good enough to persuade the Catholics, so they changed. It was a church dogma; there was nothing in the Bible to say that the earth was the center of the universe.

            The FED phased out the Silver Certificates while using the banks to pull the silver coins out of circulation. It took several years and by this time, many of the coins were kept by citizens.

            “How? All money must arise from a recorded trading promise. All money must be extinguished with delivery on that promise?”

            Can traders lie? Can they make promises which are not delivered? Can they steal your goods and vanish? Sure they can. Who enforces this?

            Your argument sounds like a Real Bill argument. That is a good commercial tool when it is backed by gold. The Real Bill is discounted to an investor. The money supply is not increased by this. The goods are real; the Real Bill is real; the discounted funds are real and the goods when they are sold are real. What a Real Bill does is to facilitate production. It is not a medium of exchange.

            Every technique has its drawbacks. Not everyone is honest and losses are made. It’s part of the risks of doing business. Fractional Reserve banking, though, is fraud. The only reason people use it is ignorance, custom and the force of law (legal tender laws.) When ignorance flees, custom ends and no one obey the law.

            As many flaws as gold coins have, at least they work. Your theory never will. Why would any one trust it. Who would guarantee it?

          35. “The long term trend of any currency is worthlessness.”
            Trend is the slope of a line.In your example of currency it would be in units of dollars per day for example. I would view worthlessness to have units of just dollars and a value of zero. With properly managed MOE the trend line is always flat (i.e. zero dollars per day) but I wouldn’t call that worthless, I would call that “holding value perfectly all the time everywhere”,.

            “Can traders lie?”
            Yes, but the manager (a computer program) of a properly managed MOE can not,.

            “Can they make promises which are not delivered?”
            Yes. That’s called DEFAULT and is immediately countered with a like amount of INTEREST collections from that class of trader,. Reliable traders don’t default and enjoy zero interest.

            ” Can
            they steal your goods and vanish?”
            Yes. That’s called DEFAULT and is viewed the same as above. A crucial element of a properly managed MOE is authentication. Just like it must guard against counterfeiting, it must always guarantee that one person is never more than one person.

            ” Sure they can. Who enforces this?”
            The MOE manager. It is identified by DEFAULT detection. It is mitigated by immediate INTEREST collections (as there will be a continuous flow of new trading promises at all times to lay these interest collections on … it’s the built in natural negative feedback that brings stability to systems). To gain efficiency I would expect a repo industry would spontaneously arise to hunt down and reclaim property, The key point here is “it never affects existing trades in progress”. It only affects future trading promises and terms. It never results in a run because all existing transactions are protected by the process (ultimately the marketplace itself but the marketplace enjoying zero inflation feels nothing).

            The real thorny problem is rollover detection. You haven’t even thought of that have you.

            I looked at the article on real bills. To dissect them by comparing and contrasting would probably not be productive here. Your not grasping the simplest of issues.

            “Every technique has its drawbacks.”
            The major challenge is is fair classification of trader’s propensity to default. But anything would be more fair than today’s system where responsible traders and deadbeats (if they get certified) pay the same interest.

            Fractional reserve banking: It is an absolute necessityor capitalism. That’s where the “capitalism is two years” comes from. It is not a component of a properly managed MOE at all since no deposits or capitalists play any role. A properly managed MOE is way more resistant to collapse than our current system because it is more open and transparent. All trading promises and defaults are public record. There are no anonymous traders. If you want secrecy when you make your trading promises, find a secondary market and pay a higher price in interest … what the market will bear.

            Gold coins have never worked in my life time. It is hard to find any extended period when they worked in my country’s life time. It is really hard to find when they worked in the world’s lifetime. There are none working in the world now is are there?

            Why would anyone trust it? Who would guarantee it?

            They would trust it because it will obviously work under all situations. It is guaranteed by the marketplace itself (which is very large) and the marketplace is happy to guarantee it because it guarantees them zero inflation. A major major positive trait is that no default has a chain reaction effect. No one loses money. Some traders just pay a little higher interest. And governments either get their act together or are banned from trading by exorbitant interest collections made against them,.

          36. You are expecting people to trust too much. Why would they trust you or any system you could devise? This is especially so when the governments of the world are defrauding them of their wealth. People want stability and no fiat currency can provide that now.

            I have an over 140 IQ and you cannot explain your system to me. How could you persuade an average person? Rather than backtrack, thus explaining your system more simply and with analogies, you keep throwing the same catch phrases as if they mean something. It’s not my job to prove your system. I’m trying to understand and you are not communicating with me.

            I think you are a compulsive neurotic. You do not ground yourself in anything real. You do not know human nature or markets. You cannot explain how what you want to do has worked partially in the past. Your definitions are slippery, so I cannot trust what you are trying to say. You do not build up a story and the words you use is impenetrable. There is no reason why anyone would accept your promises. Or trust your software.

            America is moving rapidly toward an era of low trust. The Obama administration is a disaster. The Republican establishment is little better. Almost every governmental institution will fail us. We have the bankruptcy of the American society staring us in the face. Either a deflation or a hyper inflation of the money supply is upon us. Thus, we have financial catastrophe ahead of us. This is no time to attempt some untried system; ObamaCare was bad enough.

          37. “This is no time to attempt some untried system;”
            Your points in this reply would open up entirely new vectors of conversation, I welcome that but doubt you do.

            Einstein would grin at your closing statement quoted above.

            Let me know if you really want me to answer other points you make in this reply. I’ll happily take them as you enumerate them.

          38. “The problem you have is that whoever is issuing your money can debase it. ”

            As long as the process observes and enforces the governing relation for all MOE (properly managed or otherwise); that being:

            INFLATION = DEFAULT – INTEREST

            and monitoring DEFAULT and collecting a like amount of INTEREST and recovering and extinguishing all money certifying trading promises, no “debasement” is possible.

            Management is strictly mechanical and objective. It is not subjective in any sense.

          39. “It is only the banks that can increase the money supply by making loans with newly printed federal reserve notes. ”
            So say the banks. BitCoin, Ithaca Hours, Baltimore Green and others (all misguided and mismanaged MOE) prove you wrong. Banks don’t make loans without traders requesting them. This “is” certification of their trading promise. .Banks (and the FED benefactor) are acting as the MOE manager. Unfortunately, they aren’t coupling DEFAULTs to INTEREST collections so we have this creeping crud called INFLATION resulting.

          40. We clearly have a difference of opinion as to where price inflation comes from.

            Milton Fredman said, “Inflation is everywhere and always a monetary phenomenon.” This means that it is not intrinsic to the market place.

          41. “We clearly have a difference of opinion as to where price inflation comes from.”

            INFLATION begs no adjective (e.g. price). It is non-measurable but can be guaranteed not to affect prices in any way through proper management of the MOE … i.e. managed to be zero by the relation INFLATION = DEFAULT-INTEREST. Prices are government strictly by supply and demand under a properly managed MOE.

            “Milton Fredman said, “Inflation is everywhere and always a monetary
            phenomenon.” This means that it is not intrinsic to the market place.”

            INFLATION is an imbalance between DEFAULT and INTEREST collections. It is intrinsic to a mismanaged MOE whose sole focus should be on maintaining that balance, thereby guaranteeing zero INFLATION. Inflation is “not” everywhere and “not” measurable. Gold and silver inflation are not here. Toilet paper inflation is alive and well in Venezuela. Oops … talking about prices …not inflation.

          42. “Sorry, your theories are wrong. But, I could not persuade you of that.”

            I’m still waiting for you to try. You haven’t poked a hole in anything I’ve said and I’ve poked holes all over things you’ve said. You’ve taken their bait. As Mark Twain is reported to have said “it’s easier to fool people than it is to un-fool them”. Maybe it’s time to ask you why WTC7 fell down. By my personal poll, 92% of Americans have been fooled by the (non) reporting of that.

          43. I have tried. I have given you real examples from the past and you dismiss them. We know from history what worked. Your theories never have.

          44. “You need to look at the late 70’s under Jimmy Carter’s adminitration. We
            almost had a hyperinflation then. Looking at Argentina’s last two
            hyper inflations would be useful too.”

            In “all” such cases you see a delay and/or total decoupling between DEFAULTs experience and INTEREST collected. To work any MOE must guarantee these are “always” in perfect balance “everywhere”.

          45. You are delusive. Nothing you say makes the slightest sense.

            I hope things go well with you.

          46. “You are delusive. Nothing you say makes the slightest sense.”

            Everything I say makes perfect sense. You made no case at all against it. True, it’s not what we’ve been taught, but it’s obvious to both of us we’ve been led to believe a lot of things that are totally bogus and have been proven to be so.

          47. “But, all the world’s currencies will be trashed simultaneously, so we will be forced on precious metals.”

            Anyone or any entity can create an MOE any time it chooses (and in the olden days they did … read about Illinois banking in the 1830s). Anyone who does it and manages in properly will soon outperform all others who try and don’t manage it properly. There is only “one” way to manage any MOE properly. That is by recognizing DEFAULTs as they occur; immediately collecting a like amout of INTEREST to reclaim the defaulted trading promises; and enjoy zero INFLATION by the relation: INFLATION = DEFAULT – INTEREST

          48. “Our economic differences aside, how do you personally plan to save your
            assets? Will you try to ride the wave of the Hyperinflation? Some
            people suceeded in doing that in Germany of 1923.”

            Principally by 1) Removing my need to trade to the extent possible. 2) Accumulating a stock of barterable material to ride out the 12 to 24 months of reset chaos. 3) Minimize my assets denominated in any government managed MOE to the extent possible.

            I do (1) by living off the grid; canning “all” of the food I consume and growing an increasing amount of it. Electricity comes from the sun with occasional and continually reducing aid of a generator (sun doesn’t work on cloudy days … solar can’t power my sawmill or welder). From the rain I collect water for drinking and bathing, Requires a trivial amount (1/2 gallon for my daily hot shower). What little waste I generate I dispose of with 1000 deg. F incineration (in my masonry pizza oven) or bury with my post hole digger. Bill Gates reclaiming sewage for drinking is the ultimate in stupidity. All that is needed is an alternative to a flush toilet. For me that’s a patch of land about the size of the surface of a card table.

            I do (2) by building up a store of old junk silver coins. These were once money during my lifetime and I can remember what they traded for. They contain 90% silver so should appeal to the “hard money” zealots too. If we don’t have a reset, that initiative will be a loser. I have a few small ingots of gold if I have to abandon my current situation and flee. It’s a very compact item of barter.

            I do (3) by trading away almost all of my FED managed MOE as fast as I get it. This goes into canning jars, food, tools, electronic and computer components, and junk silver. I have already eliminated all my debt net of investment. Being retired and having converted my self accumulated “nest egg” from sector fund stocks to land and debt buy down, I have a sustainable retirement regardless of whether the government returns the money they confiscated from me through SS or not.

            It’s worked for 10 years now and I am even surprised with my success.

            But I would not have had to take any of these measures had we had a properly managed MOE all along. I could have just put my dollars under the matterss with complete confidence they would always bring in barter what they would bring the day I stashed them .,.. i.e. zero INFLATION. I also would have paid zero INTEREST all along. I have borrowed (i.e. created trading promises) much money over my career. I have never DEFAULTED (i.e I’ve always completed delivery as promised so all that money has now been extinguished and no longer circulates as an object of simple barter).

          49. I have no disagreement with your plans. I believe that the world financial situation is bad enough to warrant taking those precautions.

            I’m guessing that you are a Greenbacker. That is, that a government can be trusted to issue a currency which backed by nothing but trust. Therefore, a government can properly manage the amount of currency in circulation, absent any backing by precious metals.

            I don’t believed that has ever worked. Politicians are not good managers of a currency. If they have a war or a welfare state to finance, they will debase a currency long term.

          50. “I’m guessing that you are a Greenbacker. That is, that a government can
            be trusted to issue a currency which backed by nothing but trust.
            Therefore, a government can properly manage the amount of currency in
            circulation, absent any backing by precious metals.”

            I think that’s a bad guess. I would only trust proper MOE management to a competitive environment. It would look very much like insurance in its management and credit cards in its universal acceptance. I struggle to see where government is at the proper alternative for anything. Independent title companies even keep better records than county clerks. The MOE is backed by the entire marketplace … and the full faith and credit of the management process (acquired through accountability and transparency).

            “I don’t believed that has ever worked. Politicians are not good managers
            of a currency. If they have a war or a welfare state to finance, they
            will debase a currency long term.”

            I don’t believe it has ever been tried … as evidenced by the complete absence of historical time series of DEFAULTs while we have an abundance of inflation, price, interest rate, GDP, employment, and myriad other worthless and heavily manipulated time series, both historical and projected.

          51. I go with what worked in the past: a gold coin standard.

            I disagree with using any more pie-in-the-sky financial theories.

            Since 1880, the world has progressively been delinked from gold. This has destroyed gold’s ability to limit government spending. This has resulted in world wars and welfare states. Both are unsustainable.

            It is people who create wealth, not governments. If you leave the people alone long enough and a society will grow wealthy. That is what happened in the US after the civil war and before the FED.

          52. “I go with what worked in the past: a gold coin standard.”
            Going with that you go with 1oz per each person on earth. Can’t work for obvious reasons.

            I”I disagree with using any more pie-in-the-sky financial theories.”

            I agree. Keynes and Mises are out.

            “Since 1880, the world has progressively been delinked from gold. This
            has destroyed gold’s ability to limit government spending. This has
            resulted in world wars and welfare states. Both are unsustainable.”

            It had to. It was strangling trade … and making wars which TPTB need to prosper. This is obvious in reading the bi-metalism debates.

            “It is people who create wealth, not governments. If you leave the people
            alone long enough and a society will grow wealthy. That is what
            happened in the US after the civil war and before the FED.”

            Violent agreement here. And we would have been much better off it the South had been allowed to secede. we wouldn’t have had to corrupt (abandon) the Constitution.

          53. Since 40% of the world’s population lives on less than a dollar a day, they would naturally get less gold.

            The gold would also never stay in some people’s hands, because they are incompetent. The amount of gold never has to equal the amount of wealth in the world. A medium of exchange is always a tiny fraction of that.

            A easy money policy does not free up trade; it distorts the economy. It fosters uneconomic projects to be developed which then fail.

            Quit changing the subject when you lose an argument. I never said anything about the South. I was talking about America’s growth rate between 1870 and 1910. Are you totally ignorant of that?

          54. “Since 40% of the world’s population lives on less than a dollar a day, they would naturally get less gold.”
            Do you believe the report that 1% of the people control 50% of the wealth? I do. So lets throw away that other 50% and give them no ounces of gold. That leaves 2% for the other 50%. You don’t have to do this too many times to see your point here goes nowhere.

            “The gold would also never stay in some people’s hands, because they are incompetent. The amount of gold never has to equal the amount of wealth in the world. A medium of exchange is always a tiny fraction of that.”

            So, how many people must be incompetent for you gold backed system to work? The amount of gold must always equal the claims against it. And that means all money in circulation (including in savings) must be redeemable in gold all at once. Otherwise it’s not backed by gold. You can’t reject fractional reserve banking and accept fractional reserve gold backing.

            “Quit changing the subject when you lose an argument. I never said anything about the South. I was talking about America’s growth rate between 1870 and 1910. Are you totally ignorant of that?”

            My subject: “Money is a promise to complete a trade. Always has been. Is now. Always will be,”. What subject are we on now? What argument have I lost? You mentioned the Civil War. That was about the South wasn’t it? My comments illustrated many things that contributed to growth through that period and even before (the railroad was first tried here in the 1830’s ..,. had a lot to do with growth … canals were being actively tried then and before … contributed to growth .., all of which would swamp growth attributed to backing of the media of exchange. I also pointed out that there were huge debates about what could be considered backing. Silver lost out, yet it meets “all” the criteria “you” would attribute to so-called “sound money”. Why did silver lose out?

          55. The point you miss is one of freedom. The people who get the gold are the one’s with talent and luck. They may not keep it. Most the 1% now are there for only one year, because they sell a house or business. Very few are there for over five; mostly they are crony capitalists.

            You missed the point that there is enough gold to go around. If the demand for gold increases then goods and services must become cheaper.

            “So, how many people must be incompetent for you gold backed system to work? ”

            Everyone is incompetent at some time; fortune comes and goes. Often, we bet wrongly.

            “The amount of gold must always equal the claims against it. ”

            What a stupid idea. You have to earn your claim. No one is just going to hand it to you. There is nothing equal about it.

            “And that means all money in circulation (including in savings) must be redeemable in gold all at once.”

            Yes, that is what 100% reserve banking is about. Anything less and the banker is covertly stealing from you. It is perfectly permissible to loan your gold to a banker who loans it to some one else. The fraud comes in when the banker steals your money to loan without your permission. That eventually leads to failure- bank runs.

            You are either a scatterbrain who can’t stay on topic or you are trying to confuse people. Either way, you make no real arguments. You impress no one.

          56. ” The effect is the same, but the government will be able to blame it on
            other people. All the programs will be paid for, but just in worthless
            dollars.”

            Everyone knows a reset is inevitable and imminent. We are all in the process of preparing this chess board for life during and after the reset. The Keynesians will be blown away with the reset. Unfortunately the Mises Monks are likely to succeed them and we will have a period of strangulation before they are removed (fairly quickly) by another reset. I for one would like to avoid that particular reset bounce.

          57. “I would much prefer a simple old depression, because businesses can
            survive those. A hyperinflation destr
            oys the economy and the middle class. It radicalizes people. Hitler
            would have never risen to power without the hyper inflation of 1923.”

            Hitler would never have risen to power without the ridiculously unfair treaty of Versaise. With a properly managed MOE (like with any properly conceived and operated feedback control system) depressions and expansions would be mitigated by automatic small and immediate adjustments to INTEREST collections with DEFAULTs as the input. You can’t run an insurance company by ignoring claims when you set rates. You can’t run a MOE by ignoring DEFAULTs when you make INTEREST collections. And in both cases your adjustments need to be responsive (i.e. immediate) and fair (make the deadbeats pay or take them out of the game). All governments are deadbeats and their behavior needs to be changed. They are not “of the people, by the people, and for the people”. They are “of the government, by the government, and for the government” and need to be treated “by the people” accordingly.

          58. The Treaty of Versailles was punitive, but, by itself, it did not lead to the hyperinflation. Germany could have been easily led into a very long depression. It was the central bankers who decided to fund the government too richly which lead to the hyper inflation. You cannot get a hyper inflation without huge governmental mismanagement.

            The Communists, rather than the NAZI’s, could have as easily taken over Germany in the 30’s. Their policies were not much different from the NAZI’s. Both were anti-Capitalist and Authoritarian.

            The point I was making was that when you destroy a currency, and impoverish the productive people of a country, then extremism of the worst sort is unleashed. Robespierre and the reign of terror was the result of the hyper inflation of the French Assignat.

          59. “The Treaty of Versailles was punitive, but, by itself, it did not lead to the hyperinflation.”

            Just as our government pays back debts through INFLATION, the Germans paid the bogus French claims through INFLATION. And Hugo Stinnes laughed all the way to the bank.

            “You cannot get a hyper inflation without huge governmental mismanagement.”

            Agree. Dr. Schacht was their Keynes. What a joke.

            “Both were anti-Capitalist and Authoritarian.”

            I too am an anti-capitalist …, but not authoritarian or communist. If anything I’m a traderist … and it doesn’t take me 2,000 pages to describe free trade as does NAFTA.

            “Robespierre and the reign of terror was the result of the hyper inflation of the French Assignat.”

            There was a lot of co-lateral damage with the reign of terror … but there is not a single 0.1% today that doesn’t observe that a big chunk of the 0.1% then got their due. Any of the 0.1% that isn’t challenging the report on why WTC7 fell down will not be co-lateral damage. They are on the inside.

          60. Perhaps, our dispute is about words. I am anti-capitalist as you would define it. I believe in free markets. Crony capitalists, backed by governments, are, by definition, not free market. I oppose any restriction to entry into the economy, licenses or regulation of commerce. The courts should adjudicate trades or contracts.

            Any preemptive regulation by a government is a restraint of trade. It usually protects the wealthy at the expense of their competitors. Competition is the best way of serving the consumer.

            A gold coin standard is the only one which has worked, long term. I believe in a separation of the economy and the state, especially in having no central bank. Banks are a necessary institution, but I prefer 100% reserve banks, because there will never be a run on them. Any fractional reserve bank should be prosecuted under fraud provisions. The greatest growth period in America was when we had no central bank.

          61. “Crony capitalism”. “Price Inflation”. Neither needs their adjective. Did you understand my “capitalism is two years” assertion. I can prove it if you’d like.

            By your first paragraph, we don’t dispute words … just the over abundance of them. You don’t need to say “price” when your talking inflation. Inflation influences all prices but prices don’t influence inflation. “Capitalism” is my inspection, always crony as I will demonstrate if you like.

            I agree totally with your second paragraph.

            I’ll slide into violent disagreement with your third paragraph. It is dispelled by my own experience in my lifetime as well as by certifiable historical accounts in the last 150 years. The bi-metalism debates at the end of the 1800’s are revealing. The ultimate settlement of that debate debases any argument you could make about money needing to be of intrinsic value. Silver was of intrinsic value. It lost out. The whole episode exposes the folly of commodity backed money.

            Re. 100% reserve banks: The proper ratio is 0%. If you accept the 100% rule, that says “you” cannot make a trading promise without the blessing of a “capitalist” to back it up. That begs the question: Who backed up the first trading promise.

            Banks don’t commit fraud by loaning money out (accepting trading promises) and reclaim that money. They create fraud by not reclaiming it … or by collecting INTEREST in excess of their DEFAULT experience.

            Growth with no Central Bank: I don’t know how you measure that growth period, but I presume you’re talking about after Jackson didn’t renew the 2nd National Bank charter and before the FED. In that period they adopted the use of coal instead of timber for energy. They adopted the use of iron and steel instead of timber and rock for structures. They harnessed steam and supplanted horses and mules for power. They invented the telegraph, the telephone, and lots of irrigation and power transmission and generation methods. How? JPMorgan and his dad had a lot to do with it. Who were they? Front men for Rothschild. Who was Rothschild? The World’s central bank.

          62. In economics, which you don’t know anything of, Inflation has been defined, since 1770, as an increase in the money supply which leads to higher prices. I defined a crony capitalist as a businessman who is in bed with government. A real capitalist, such as George Westinghouse, and James J. Hill, never accepted government favors. I expect people such as a yourself to not know this so I put ‘price’ and ‘crony’ so you will know. You defend your ignorance quite well. You are an utter waste of my time. Any reasonable person reading you would think you are a nut.

          63. So, you think “economics” definition of inflation is adequate to our purposes? I sure don’t. Money supply alone determines nothing. You need to know what it is related to traders propensity to trade. Money supply must never get in the way of that. It must also be related to the number of traders. It must also be related to new emerging technology and shouldn’t get in the way of that? Can the economists money supply deal with all that? Trader created money can and does.

            Re Capitalist, crony or otherwise: “two years”

            While you’re name dropping you might mention Tesla. I probably don’t know about him either.

            Before you go, tell me what argument I lost and what argument you won.

          64. A concept is either true or not. Inadequate is a value judgement; who are you to decide?

            Since you have no idea what truth is, you have no standard to judge by. This is not a pissing match between you and me; my emotions are not involved.

            What matters is what agrees with reality. As a lunatic, you have no idea what reality is. If you were a realistic person, you would want to know what works and why. Your theory has never worked, nor is it likely to.

          65. You are assuming something which is untrue: that there is no true economics. Will events have to get bad to allow politicians to follow Austrian economics? Yes, very bad. I expect the politicians to try a number strategies well before then; defaulting on US debt, a new Dollar, etc. None of these will solve anything.

            What economic school do you follow?

          66. “You are assuming something which is untrue: that there is no true economics. ”

            Economics is one of those mushy mainly misused words. From the Wikipedia:
            Economics is the social science that studies economic
            activity to gain an understanding of the processes that govern the
            production, distribution and consumption of goods and services in an
            economy.

            My opinion of the above definition is “economics is for busybodies.” As I daily engage in trade I apply my own implicit economics. When you have a so-called “science” where “no-one” agrees, you don’t have a science or even something useful.

            “Will events have to get bad to allow politicians to follow Austrian economics? Yes, very bad.”

            The Mises Monks would like nothing more. We would jump out of the Keynesian inflation frying pan into the monetarists deflationary strangulation. Both hurt traders really really badly.

            “I expect the politicians to try a number strategies well before then; defaulting on US debt, a new Dollar, etc. ”

            And don’t forget grabbing your money out of your savings and retirement accounts. Like QE (for monetization), they have a goofy term for this which escapes me at the moment. It’s going on in Greece right now. It went on when Roosevelt made owning gold illegal and confiscated it.

            “None of these will solve anything.”

            Well, this problem has been going on my entire lifetime. People born at the beginning of the new deal and now dead or dying before the imminent reset have done just fine. That would be “my” parents.

            But the solution is trivial. Write a computer program that puts out non-counterfeitable records of trading promises made by authenticated traders; monitors them for defaults; and collects interest equal to the defaults it experiences. The most difficult task is recognizing syndication and rollovers. An advanced program would apply all the actuarial tricks we have learned from the insurance business in classifying and certifying traders.

            “What economic school do you follow?”

            All of them that I know of. Richard Cantillon and Adam Smith have written the only useful morsels I have found prescient (but also obvious). The now beloved Mises was double-talk personified and focused on prices and why people trade … which has “nothing” to do with proper management of the MOE. And of course Keynes is worse than a bad joke.

            BTW: I have reduced capitalism to two words: “two years”. Just like examining trade to find out what money is, you can examine the origination of capital to find out what capitalism is.

          67. The above post explains a lot: you are winging it. You have no history or tradition to rely on. Hence, you have no idea of what worked in the past. Absent that, you haven’t a clue what will occur in the future.

            You are a pragmatist. Those can succeed over a short period, but they have no science to back them up. This explains why it is so difficult to talk to you. Words don’t mean the same things to each of us.

            Traders live within a market place. The mass of millions of people control events; this is how we get legitimate prices. Socialist societies have no idea what anything is worth.

            My point is that governments can corrupt transactions to control markets, but they can’t do it forever.

            The FED has had an amazing run, but it has run out of options. It can’t lower interest rates without going below zero and confiscating wealth. It can’t raise interest rates because there is not enough taxes coming in to pay interest on the US national debt. It can’t keep them the same, because world events will prevent stability.

            China has trillions in bonds. If China redeemed them, the world would be pushed into a depression with a hyperinflation in the US. The FED could default on it’s trillions in bonds, but that would have political ramifications. The government would be unable to fund the Left’s entitlements; it would have no credit. The welfare state would collapse.

            The European Union is tearing itself apart. Eventually, Germany will pull out of the EURO, because Mario Drachi has promised endless Quantitative Easing. That was why the Swiss National Bank was forced to drop its peg to the EURO.

          68. “The above post explains a lot: you are winging it. You have no history
            or tradition to rely on. Hence, you have no idea of what worked in the
            past. Absent that, you haven’t a clue what will occur in the future.”

            Everything you write in paragraphs after the above is absolutely correct … and the direct result of improper management (actually deliberate mismanagement) of the MOE. Nowhere in this discussion have you served up something that would have brought a better result … though you have alluded to things that would have brought a different and equally “bad” result.

            Regarding that first paragraph, I can’t respond or I would just be debating myself. There is no substance in it.

          69. That phrase is a polite way of saying, “Sod off, Swampy.”

            What you contest that I have a right to have my own opinion. That make you a bigot. Where as I believe you have a right to be as wierd as you please, just far away from me.

          70. “That phrase is a polite way of saying, “Sod off, Swampy.”
            I don’t know what that means.

            By never agreeing to disagree I’m saying every issue I’ve ever come across in life has a treatment that is obviously more right than any other treatment. To “agree to disagree” is to abandon the pursuit of a more “right” treatment. I will issues according to what I believe and can demonstrate is right. I expect others to do the same. In the end, I will be proved wrong or I will be proved right … but I won’t be taken as irrelevant.

          71. Your nutzoidal notions regarding money are beyond laughable and utterly bogus and absurd. So-called “traders” have NOTHING WHATSOEVER TO DO WITH CREATING MONEY AT ALL.

          72. If you eliminate traders, what function does money serve? The obvious answer is “it serves no function at all.” So money is obviously a function of trade … and traders create trade. Why then would traders not logically be the ones who create money. BTW: If you’ve ever bought or sold anything, you are a trader.

          73. So-called “traders” are utterly irrelevant to the functioning of an economy and serve no function at all and should be prohibited from engaging in speculative trading activities.

          74. We are all traders. We buy and sell, but we don’t control events. Unless the price is right and the terms are acceptable to both parties, there is no trade. People can choose whatever medium of exchange is available.

            In colonial America, there were six competing currencies or coins. People learned rather rapidly that fiat currencies lost purchasing power when hard money did not. “Not worth a continental” came from the hyper inflation of the Continental Dollar. People weren’t hurt by this hyper inflation because people were not forced to accept it in trades. Most people used the Spanish REAL silver coin.

            What do you have against people being allowed choose their medium of exchange? If they won’t trust fiat money or your promises then what is your complain? Bitcoin and its competitors are backed by nothing but scarcity. I think it is fine to avoid the US Dollar in international trades, but I wouldn’t trust that it will hang onto its purchasing power. Bitcoin is no unit of account or store of value.

          75. “We are all traders.”
            Perhaps you’re starting to get it.

            “People can choose whatever medium of exchange is available.”
            True,. But they can’t choose one that is more fair to them but doesn’t exist. I’m suggesting such a MOE can and should exist ,.. actually co-exist. Unlike “bad money driving out good”, properly managed MOEs drive improperly managed MOEs to disuse,

            Re your “Continental” paragraph: Evidence abounds that those so-called fiat currencies were not being properly managed by any measure. Thus, the were “guaranteed” to lose value. Our current “Continental” loses value by design. Not good,

            “People weren’t hurt by this hyper inflation because people were not
            forced to accept it in trades. Most people used the Spanish REAL silver
            coin.”
            I presume you are addressing “legal tender” laws with your word “forced” here? I presumed you’ve read about the guy who paid his employees with “legal tender” gold coins. I also presume you’ve read about the guy who minted silver tokens. What does that tell you about laws and force. If you recall, I recommended that proper management of our “official MOE” be spelled out in the Constitution, It could be done in a couple of well crafted sentences.

            “What do you have against people being allowed choose their medium of exchange?”
            Nothing. Contracts can specify any medium of repayment, But absent a contract there needs to be an implicitly taken MOE. Ours is the dollar. I recently tried to get some of my dollars out of Fidelity Mutual Funds. They refused. They said they weren’t a bank. They could wire the funds to my bank or they could give me a check on theirs. I said I’d take their check on their bank in Houston. They said their bank was in some other state but said I couldn’t even go there and get cash. I know from experience taking their check to a bank of which I am not a contracted customer would cost me $25 to $50 and result in a 1 to 2 week delay while they confirmed the check cleared. What does that tell you about the dollar being “legal tender for all debts public and private”? What does that tell you about the law? We’re probably on the same page regarding our personal respect for our systems of finance and laws.

            “If they won’t trust fiat money or your promises then what is your complain?”
            I don’t think I understand this question.

            ” Bitcoin and its competitors are backed by nothing but scarcity.”
            Immediately exposing BitCoin’s non-acceptability as a MOE … just like gold’s, Both are essentially created out of wasted effort when considered as a media of exchange. One thing both do have however, and that is a fairly high resistance to counterfeiting when inspected carefully. Neither has such resistance in the face of casual, low cost inspection.

            “Bitcoin is no unit of account or store of value.”
            Correct … in the opposite recent sense of gold. A properly managed MOE has an absolutely flat “trend” when it comes to value. It doesn’t go up and it doesn’t go down … anytime … anywhere.

          76. I think we have a difference of opinion as to what currency and money are.

            Money is whatever medium of exchange freely acceptable to both parties of a trade. A currency is a medium of exchange forced on trading partners by some authority. A loan is a Promise to Pay in something valuable. A proper medium of exchange already is valuable in itself.

            A trade can take place without a medium of exchange: barter. You can live in a society so screwed up that the government approved currency is worthless. Goods can be in so short of supply that it is better to get out of that currency even into an item which you don’t want, so you can barter it on the Black Market. A good case of that was in the Soviet Union.

          77. “I think we have a difference of opinion as to what currency and money are.”

            You’re right. All you examples are less desirable than the MOE management I describe. Remember, ultimately are trade is barter. Money just allows the barter to take place over time and space. The best mechanism for doing that is money. All other substitutes are just “also rans”.

            Trades involving more “are simple barter trades”. The key is in the “creation of the money” being bartered.

            “Goods can be in so short of supply that it is better to get out of that
            currency even into an item which you don’t want, so you can barter it on
            the Black Market. A good case of that was in the Soviet Union.”

            And Weimar Germany, and now in Venezuela, and Zimbabwee, and anywhere else you have wide circulation of “counterfeit” money (i.e. money not created by traders making trading promises).

          78. You have a theory which has never worked before. You can’t even get your definitions straight.

          79. Do people REALLY own their homes & properties? No, not really. They may hold possession of those properties dependent on paying high rents called taxes. Government has ensured no one rises much beyond their station unless they’re members of the controlling fraternities.

            The whole new world order is akin to William the Conqueror’s quest to control Britannia. The knights are like higher degree freemasons fighting for a future fiefdom. Once the’ve depopulated the world, to sustainable levels, they’ll use the masses left as serfs. All the gold you can buy won’t stop anyone from just taking it from you if you aren’t marked as a protected class.

          80. JB: Do people REALLY own their homes & properties? No, not really. They may hold possession of those properties dependent on paying high rents called taxes.

            TBM: Real estate is more about control than ownership. Control is more problematic in some counties than others. Typically, the higher the population density, the more difficult is control of real estate. Too many people covet your real estate.

            JB: Government has ensured no one rises much beyond their station unless they’re members of the controlling fraternities.

            TBM: So what are you doing about that? I retired to a low tax, low services county. Taxes amount to about 1/5th my grocery bill. I get a “road to town” and “registration of my deed” for that. I get harassment from police organizations for that … and zero protection.

            JB: The whole new world order is akin to William the Conqueror’s quest to control Britannia. The knights are like higher degree freemasons fighting for a future fiefdom. Once the’ve depopulated the world, to sustainable levels, they’ll use the masses left as serfs.

            TBM: Did you ever stand back and look at what it takes to become a “they”? Probably 1/4th of the people I graduated high school with made it to “they”. None know that WTC7 fell down … let alone why.

            JB: All the gold you can buy won’t stop anyone from just taking it from you if you aren’t marked as a protected class.

            TBM: Ever stand back and see how you become a member of the “protected” class? Ever notice no one, including you, has done anything but expand the power (and take) of the protected class? Why is that? Your commenting doesn’t do anything to change that. Take action … I did. What action? Stop paying taxes of course!

          81. First, my comment was largely rhetorical, though it is high time people understand there is little difference between objectivist (Ayn Rand devotee Alan Greenspan and Dem Bill Clinton with Charles Schemer and 99% of GOP voted to repeal Glass Steagel which turned out to be the largest organised crime in history. That Bush II promoted mortgages guaranteed to fail with swaps bets waiting for 15yr variable rate mortgages sold to largely minority, first time home buyers with inflated McMansions across farm land 100+ miles from any job that could support the mortgage; that my own new home bought for $191k in 2000 then was sold for $450k– 4.5 years later in 2004–yet was sold in 2009 for only $278k. Unbelievable!

            I think you’re reading about what I’m doing–informing people of the reality as it is now. Our freedom died the day JFK did! Obama who is likely only 1/8 African not 1/2 sealed the NWO deal as soon as he paid out $12+ Trillion to save (?) the banks; not! Obama raised our debt by moving middle class wealth to oligarchs. Iceland faced the same situation in 2008 but told bankers to go pound sand! Now, Iceland is one healthy economy without debt. We have to hold Trump to his promises first by outlawing persons holding dual citizens, secret fraternities from serving in Congress/any government position, law enforcement/military, banking/finance, education policy. Trump needs to reclaim the $12 Trillion from Oligarchs just like Putin did and get it off our debt.
            But more than anything, the truth must come out so patriots can say screw GOP & Dems; they’re both cooped Globalists out to screw us at every turn.

          82. Many more folks use BMW Rolls-Royce motor cars than the few who uses buses where I live.

          83. That is temporary. In the coming crisis those BMW’s will be sold at bargain basement prices to people with hard assets.

          84. Gold held steady just the value of your dollar changed. Gold is money. If you never worry about a currency crisis then you will never need insurance. I like my Gold insurance coins. Diversify into Silver, Platinum, Palladium too. Everyone I helped get a coin collection was happy. Dollar cost average when buying…means when the price is lower buy more.

          85. Hellloooo- gold currently costs approx $837 per ounce to mine out of the earth. That puts a logical floor under the true floating market price of gold. What planet are you from, where limited resources like gold and land do not rise in value when demand rises? They aren’t making any more land, and they aren’t making any more gold.

      1. Alright socialdouche….Just got done reading your drivel on another article. You are either the dumbest douche on this site, or you are a troll. There are no other choices. So which is it?

      2. socalbeachdude is a Communist who just loves the Federal Reserve and the fiat currency they create. He doesn’t understand that gold and silver is real money.

        1. Life has an excellent way of dealing with people like him: bankruptcy. He probably has a cushy government job. Given his use of government statistics, he could be an economist working for a central bank. The FED employs thousands of them.

          1. Time will let us know who is telling falsehoods. Why do you try to shut me up? Can’t you stand any dissent? Is the economy so fragile that no one is allowed to have a different belief?

          2. Hi everyone, interesting debate…

            I’m kind of new to all this, and I’m thnking about getting in the “buying of gold and/or silver game.”

            But I had a few questions firs…

            My question is this…

            If the currency goes down or goes away, how and to whom will you sell your gold? And for that matter, what will you get for it in return (money, which currency)?

            I also see that there is some debate about – if gold and other metals have ever been used as currency. Of-course they have. They were traded and exchanged for many goods and services long before “cash money” every came into place, right? I don’t know, just giving my two-cents.

            Also, doesn’t the rarity of an item make it valuable, or is that a myth (or maybe no longer applicable)?

            Also, Gold is a natural metal; which makes it universal; which makes it exchangeable worldwide right?

            I would love to hear your insights. Thanks.

          3. The US dollar is certainly not going to “go away” and is on its biggest surge up in three decades similar to its enormous and rapid rise of early 1985 when it skyrocketed to over 164 on the DXY.

            METALS HAVE NEVER BEEN USED AS CURRENCIES FOR FLOATING VALUATIONS but only as BLANKS ONTO WHICH TO IMPRINT STATED NOMINAL FACE VALUES WHICH WERE AND ARE THE CURRENCY OR MONEY VALUES of those coins.

            As to gold it is a FUNGIBLE COMMODITY and no more inherently valuable than certain other metals. Aluminum was once considered FAR MORE VALUABLE THAN GOLD. The most valuable metals today are the Platinum Group (or Family) of Metals consisting of Platinum, Palladium, and Rhodium each of whch are FAR RARER THAN GOLD, not to mention far more useful. The only metal that ever had a price in excess of $10,000 per ounce (very briefly) is Rhodium, but then it promptly plunged more than 90% in price to below $1,000 per ounce.

          4. I see your point, but correct me if I’m wrong, isn’t the value of gold determined by it’s weight/volume/density? I mean, it costs a certain amount per ounce right? This amount is dependent on what (the economy)? I hear that, if the economy is doing poorly, then gold prices go up; is that accurate?

          5. Like all commodities, the price of gold is primarily determined by SUPPLY & DEMAND. What on earth does its weight / volume / densitity have to do with anything? Gold is price in TROY OUNCES. Costs of production of new mining production gold are as low as $300 per ounce for the approximately 2,500 metric tonnes of gold mined annually and as low as zero per ounce for the around 2,000 metric tonnes of gold supply for scrap / recycling annual.

            GOLD HAS ALWAYS PRIMARILY BEEN USED FOR JEWELRY AND IS A LUXURY COMMODITY more than anything else, and traditionally the primary demand has been for JEWELRY which has accounted for about 70% o the annual demand for gold. Hence, if the economy is doing poorly, THEN THE PRIMARY PURPOSE DEMAND FOR GOLD PLUNGES. Obviously.

            GOLD IS NOT A NECESSITY COMMODITY FOR ANYTHING unlike oil, corn, soybeans, wheat, pork bellies, etc. The total value of all of the gold ever mined of around 180,000 or so metric tonnes is less than $7 trillion even at present absurdly elevated market prices in a world where total assets exceed $800 trillion making gold less than 1% of the total value of assets in the world.

          6. Dude, an ounce is a unit of measurement. Hence my analogy of “weight.” Which is how they determine the price per ounce of gold. How much it weighs – in ounces.
            Are you serious? .

          7. Haha. You contradict yourself. And, I don’t think you know what you’re talking about. And, you are really rude. Grow up or shut up. you asked me what ” What on earth does its weight / volume / densitity have to do with anything? Gold is price in TROY OUNCES.”

          8. The world banking system went off gold in the 1880’s, using a series of strategies. They had to if they wanted to afford the wars which they were planning.

            Precious metals are in troy ounces, but governments never gave anyone honest money, even when we were on a “gold standard.” the only true gold standard is a gold coin standard.

            The Constitution gave congress the power to determine the value of the dollar in ounces. The dollar was defined as a specific weight of precious metals. The constitution did not give the federal government the power to issue fiat currencies, but they got around that.

          9. What do you want to know?

            Stop listening to socalbitch. Everything he says is dead wrong. I went away, because he is so tedious.

          10. Huh? Obviously troy ounces are the metric used for the generally quoted price of gold, but so what? What on earth does that have to do with the price per troy ounce which has varied from $35 per troy ounce in 1971 to $1,927 per tr0y ounce in April 2011 to $1,294 per troy ounce today? The unit of measure has NOTHING WHATSOEVER TO DO WITH THE VALUE OF ANY COMMODITY in its unit of measure. Helllllooooooooooooooooooooooooooooooooooo?

          11. Price is determined by supply and demand. The problem is that fiat currency cost very little to print up. A government or a central bank can depress the physical precious metals market though shorting futures. This loses them money in the long run, but keeps the dollar up and metals down. Eventuality, their plan will fail, but no one knows when. The world financial situation is increasingly fragile.

          12. New mining production costs of as low as $300? Show me a miner that can extract gold for that price anywhere on the planet? I own stock in one of the lowest cost producers and their cost is $900AUD/oZ. You talk absolute garbage.

          13. A currency crisis coming, but it’s effects won’t be permanent. The economy always recovers, so long as there is any freedom left.

            There are a number of ways in which a government or the central bankers will muddle through. They can deflate the money supply which causes a banking panic or a depression. Or they can default by issuing a new currency forcing you to trade in twenty to fifty old dollars to get one new dollar. Or they can print so much currency that it becomes worthless in a hyperinflation. It’s anyone’s guess how the Federal Reserve Bank will act in the coming years.

            http://pair.offshore.ai/38yearcycle/

            At one time, a bank note was a receipt for a gold or silver coin redeemable at a bank. Rarity or scarcity does make things more valuable, not just in money. The problem here is that the government and the bankers collude with each other. They use fractional reserve banking to defraud you. Banking fraud is world wide now, so there is no place to escape to.

            The bank’s fraud ends when people will no longer accept currency for assets.

            The game plan is to get through the economic disruption by having a secure location, food storage, helpful neighbors, guns to protect your assets and some silver coinage to tide you through. Many people will have bet wrong and become desperate. You can then pick up their stocks, real estate and personal property.

            The only money outside of this crooked game is precious metals. The only way to safeguard your wealth is to get it out of paper into real assets. This is not easy, in part, because no one knows when this house of cards will fall.

        2. Gold and silver has NEVER been “money” or “currency” at all. They have simply been used as two of the many materials along with brass, nickel, copper, silver, and other metals to mint coins where the MONETARY VALUE WAS THE NOMINAL FACE VALUE and not the material used to make the coins. Anyone, of course, to use a 1 oz gold legal tender American Eagle for its $50 face value at most retail establishments.

          The simple fact of the matter is that economies and currencies far outgrew gold as the world’s population has increased to its present approximate 7 billion people.

          The total value of the world’s entire gold ever mined of around 180,000 metric tonnes is only worth around $7 trillion when valued at $1,200 per ounce which equates to around $44 million per metric tonne.Gold lost more than $2 trillion in valuation in the past four years from April 2011 based on the drop from a manic high of $1,927 per ounce to less than $1,200 per ounce.

          The less than $7 trillion value of all gold in the world – 70% of which is in JEWELRY – is a mere pittance compared to the annual global GDP of more than $70+ trillion and global assets of around $800 trillion which makes gold just a tiny little niche collectible commodity of no relevance to valuation of other assets let alone for any monetary usage whatsoever.

          1. Deny reality, if you wish. Reality has ways of striking back. Unless you think that you are God, then you must conform to changing economic conditions.

            The US government sets into motion trends which must come back to haunt it. Fiat currency is a confidence game. The US dollar, say, is backed by the “full faith and credit” of the US government. What happens when people no longer have faith in the government nor do they give it any credit? The government’s financial house of cards collapses.

          2. Gold and silver is money that central bankers can’t create out of thin air like they can with paper money. Gold and silver have been money for 5000 years, Jesus was sold out for 15 pieces of silver! Corrupt governments of the past would dilute the silver content of silver coins with base metals. Now Central bankers dilute the fiat dollar by over creating the currency. Paper money is a scam.

          3. Obviously neither gold nor silver have anything whatsoever to do with money other than that they cost far too much real money, but fortunately that situation has rapidly been rectifying itself over the past 4 years with gold plunging about 40% and silver plunging about 60%.

          4. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can macth it. – Alan Greenspan. Oh and go fuck yourself troll.

          5. Gold is just a TINY LITTLE TRIVIAL NICHE COLLECTIBLE FUNGIBLE COMMODITY for which the primary use has always been JEWELRY since the stuff was first discovered. The annual sales of the approximately 4,600 metric tonnes of gold supply are only about $240 billion which is less than half the annual sales of Wal-Mart alone.

            Gold and silver have NEVER been money and have merely been used to mint coins with a fixed stated nominal FACE VALUE. You can use a legal tender 1 oz. gold American Eagle anywhere in the US and much of the world where dollars are accepted for its $50 face value but that’s as close as it gets to money for gold.

            The price of a commodity does not make that commodity of any FINANCIAL RELEVANCE whatsoever in relationship to money. The price of the Platinum Group of Metals (platinum, palladium, and rhodium) has nearly always been significantly higher than gold because they are much rarer and of far greater practical use than gold, but that does not make the PGMs of any financial relevance.

            The US long used a “silver standard” until that was discarded around 1870 and briefly replaced with the so-called “gold standard” which was totally discarded domestically in the US in 1933 as an entirely failed experiment. No currency can be limited to the production of some irrelevant “thingy” commodity such as gold or anything else when the population of that currency’s country is vastly expanding as was the case of the US by the 1930s.

            Artificially constraining the growth of money supplies while the population is growing substantially CAUSES DEPRESSIONS and causes countries to fail economically. Isn’t that totally obvious?

          6. Nice copy and paste. I do thoroughly enjoy your revision of historical facts however. Let’s see who should I believe Greenspan or a troll on the comments section who plays with toy BMW’s. What is the purchasing power of $1 US dollar since 1900 against 1oZ/au? Let’s see in1900 1oZ/au = $20.68usd. In 2015 1oZ/au = $1294usd. You deserve the Paul Krugman award genius.

          7. More absurd and nonsensical assertions from you, I see.

            The Federal Reserve has been a STELLAR SUCCESS over the past 100 years and will continue to be over the coming 100 years.

            Most price increases or decreases in goods and services have nothing whatsoever to do with the US dollar and never have.

            As to the value of the US dollar over the past 100 yeas…

            No, the dollar did NOT really lose 95% of its value since 1913

            Let us take at the period from 1913-2006, where we have complete data. So what do they mean, when they say the dollar lost 95.1% of its value in those 93 years? Essentially, an average good/service that cost $1 in 2006, used to be priced at 4.9 cents in 1913. In other words, the average price level of goods/services increased by 1930% since 1913. True, but guess what, average earned income increased by 6560% during the same time period. Average earned income rose from $740/yr in 1913 to $49,300/yr in 2006. Adjusting for inflation, $740/yr in 1913 is $15,000/yr in 2006 dollars. Average incomes, not only kept pace, but beat price inflation by 230%.

            So does it make any sense all to say the dollar lost value? In reality, the REAL purchasing power of the average American, has increased by 230% in the past century. Sure, prices were cheap in 1913, but $740/yr doesn’t buy you a whole lot, not anymore than 15,000/yr today.

            http://realfactbias.blogspot.com/2012/02/no-dollar-did-not-really-lose-95-of-its.html

          8. Yes I agree an ABSOLUTE success. They have accomplished the complete enslavement of a whole civilization. The average mum and dad leave their children at child minding services daily to raise their kids, have mortgage debt, owe on average $1000 on their credit card and have less than $100 in savings. In the mean time we’ve had QE’s, LTRO’s, ZIRP and now NIRP. Average real incomes declining and money stock velocity under 1.5. The complete destruction of the middle class by a corrupt banking cartel.

          9. Your bogus assertions are so beyond absurd as to be rolling on the floor laughable. The poor financial situations of those folks you described have NOTHING WHATSOEVER TO DO WITH THE FEDERAL RESERVE AND ARE 100% DUE TO THE HORRIBLY BAD MANAGEMENT OF THOSE FOLKS THEMSELVES – OBVIOUSLY.

          10. Nope. My knowledge of finance is at doctoral level, but as to YOURS, well, that’s pretty obvious for all to see, isn’t it?

          11. Oh no I hope you didn’t pay money for the tuition because you got ripped off son. I make a living from financial instruments forex options stocks commodities. Thanks for asking. Let me guess you flip burgers at night and teach middle school by day. Your phd is as useful in the real world as tits on a bull.

          12. His doctorate explains how he became so indoctrinated. He probably has no contact with the real world. He doesn’t listen here.

          13. Another stupid, inane, and false assertion from you, I see. I am not in the least bit surprised that you are a GAMBLER in the FOREX GAMBLING CASINO.

          14. I have to disagree with socalbeachdude on his synopsis of the bank peeps. Yes, bank CEOs are politically involved and look after their own vested interests. Much of the recent 2008 crisis was due to bank loans and their investments in hedge funds; not to mention their play on “insuring loans.” Wouldn’t you say it would be silly to think they (most of them) weren’t corrupt?

          15. Nearly all of the bogus 2008 so-called “financial crisis” was to one single thing: FASB RULE 157 which required financial firms to mark assets on their books to market.

            In fact, the real issue with liquidity issues in 2008 had very little to do with the actual balance sheets of the banks but had a everything to od with the implementation of the FASB RULE 157 “MARK TO MARKET” requirement that had just been imposed and all of the perceived problems with financial concern balance sheets totally vanished when FASB RULE 157 was essentially abolished (it was highly modified to remove “mark to market accounting”) by March 2009. The so-called “financial crisis” of 2008 to early 2009 was REALLY JUST A TOTALLY BOGUS “CRISIS” caused by accounting rules.

            No financial concerns we “saved by any bailouts” at all in 2008-2009. There was NO NET COST WHATSOEVER FOR ANY OF THOSE BAILOUTS to either the federal government nor to the Federal Reserve, but rather a profit to each of those parties which created a MAJOR EXPENSE FOR ALL OF THE FINANCIAL CONCERNS INVOLVED.

          16. Look up and familiarize yourself with what these are… Learn how these ultimately affected the crisis, and you will see things my way.

            CDO (Collateralized Debt Obligations) and MBS (Mortgage Backed Securities) and CMBS.

          17. Huh? I am very family with CDOs and MBS instruments, but they have NOTHING WHATSOEVER TO DO WITH GOLD OR THE PRICE OF GOLD. Hellllllllllllllllloooooooooooooooooooo?

          18. Welllll, I disagree. Firstly, I mentioned them because you are denying the crisis ever happened. CDOs and other schemes were utilized and responsible for much of the reasons why the crisis happened.

            Now, how does all that relate to gold. If you look at the history of gold, you will see a steep increase right around when the crisis happened. I believe that the price of gold fluctuates as the economy fluctuate. Ergo, the economy goes sour, and gold goes up.

            Also, I really do not appreciate your undertone. Is is possible to have a mature debate without immature remarks.

          19. There was no “crisis” at all in 2008-2009. All that occurred was an ACCOUNTING PROBLEM that was really of VERY LITTLE SIGNIFICANCE and that had NOTHING WHATSOEVER TO DO WITH THE PRICE OF GOLD OR ANY OTHER COMMODITY all of which were COLLAPSING IN PRICE DUE TO HAVING BECOME PREPOSTEROUS BUBBLES, especially oil (which plummeted 77% within 4 months from July 2008 to December 2008).

            As to the history of gold, it had a very stable price of around $20 per ounce with little deviation from 1793 to 1933 at which time the US government revalued it to $35 per ounce and it remained stable at around that price with little fluctuation until 1971 when it was allowed to trade as a FREE FLOATING COMMODITY IN THE SPOT AND FUTURES MARKETS.

            By 1972, gold had become one of the MOST WILDLY SPECULATIVE COMMODITIES IN THE HISTORY OF THE WORLD WITH THE MOST VOLATILE MANIC UP AND DOWN CYCLES OF ANY COMMODITY and that remains the case today.

            GOLD IS JUST A LITTLE NICHE COLLECTIBLE FUNGIBLE COMMODITY and has nothing whatsoever to do with money or currencies other than it costs far too much money, but fortunately that situation has rapidly been rectifying with the 40% plunge in the price of gold over the past 4 years and will continue to do so as that overpriced junk plunges towards and to its mean of $456 per ounce and then heads lower towards the current US government official price of $42.22 per ounce.

            THE ISSUE IS THE PROPER PRICE OF GOLD.

            An array of reasonable historical metrics can be used to establish the proper price of gold, including:

            1) Its historical mean which would put gold right around $456 per ounce

            2) Its 16:1 historical ratio against silver which would put gold right around $284 per ounce based on silver being around $17.75 per ounce

            3) Its inflation adjusted price today from its last stable historical price of $35 per ounce in 1971 which would put gold right around $400 per ounce.

            4) Its current official US government price of $42.22 per ounce which is how the approximately 8200 metric tonnes of US government gold are valued:

            http://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm

          20. Isn’t gold at over $1500.00 / ounce right now? It was around $500.00 before the crisis wasn’t it?

          21. I don’t know what planet you are living on, but on PLANET EARTH the price of gold closed today for the weekend at $1,294.10 and was down $8.00 per ounce from yesterday as you can clearly see from the chart directly below this article.

            Where do you come up with your $1,500 per ounce number?

            In 2008, gold hit a record high price of $1,034.00 per ounce price in March 2008 before collapsing to below $800 per ounce during the Fall of 2008 when all commodities prices were crashing. It then proceeded from the Fall of 2008 to move higher and hit its highest record price ever of $1,927.00 per ounce in early April 2011. Since then it has been plunging in price and hit a low of $1,130 per ounce late last year from which it has since risen to its present price at the moment of $1,294.10 per ounce.

            For complete current and historical charts of gold see:

            http://www.kitco.com/charts/livegold.html

          22. Have you noticed how many high foreign exchange officials are dying in accidents or committing suicide? Death beats poverty or jail, I guess.

          23. Let’s take a case in my lifetime. In high school I could buy a gallon of gas for a quarter. Today I can take one of those pre-1965 quarters, exchange it for 7 of today’s non-silver quarters, and buy a gallon of gasoline. If you look at inflation of 4%, that gives you a 96+% leak in the value of a dollar you placed under a mattress in 1913. Using my gas example that comes to inflation of 4% since 1964. If I ran the numbers a couple months ago with $3.50 gas, it’s over 5%. It’s “impossible” to calculate INFLATION. It’s only possible to manage the MOE in such a way to “guarantee” INFLATION is zero … which is what the marketplace wants it to be … all the time … everywhere.

          24. What Socalbitch cannot agree to is that people, not governments, determine what is money. When people no longer accept US Dollars in payment for goods and services, then it has gone the way of the Zimbabwe Dollar. About two hundred currencies have become worthless in the last three hundred years. They followed the same pattern as the US Dollar is following.

          25. THE WORLD RUNS ON US DOLLARS and they represent 63% of all global reserves and are used in more than 83% of all global transactions! A strong dollar makes for a strong global economy and increases the value of the majority of global reserves.

          26. Markets can turn on a dime. None of the world’s economies, even China’s, are stable.

            I’m thankful that you believe as you do. I can think of no one that I would rather take their asset from, than you.

          27. Exactly! You are correct and that is precisely why Gold and Silver are way under valued in terms of other currencies! Gold will rise in the future Dude

          28. Over the past nearly 4 years since gold hit its manic speculative high of $1927, it has plummeted in price by $633 per ounce which is a a 32.8% plunge in its price. Anyone who purchased gold in early April for an amount of $100,000 would have now lost $32,800 of that $100,000 and would have a balance of only $67,200 left.

          29. We disagree. So what? People have a right to disagree about where they will invest their money.

            What we disagree about is what determines the value of precious metals: the government or the markets. In the short run, the central bankers win, because they are very smart in finding ways of defrauding us. But, fraud eventually fails. Since the bankers always try to push off the inevitable, the failure is always catastrophic.

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