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2014 In Review: How Could Gold Bugs Have Been So Wrong?

Twelve short months ago, the immediate future looked like a lock. Overvalued equities had to fall, ridiculously-low interest rates had to rise, and beaten-down precious metals had to resume their bull market.

The evidence was overwhelming. Debt in the developed world had risen to $157 trillion, or 376% of GDP, by far the highest level on record and clearly unsustainable. Long-term US Treasury rates had been falling for literally three decades and despite a recent uptick were so low that the only way forward seemed to be up.

10 year treasury yield 2013 revised

Europe and Japan were drifting into recessions that could easily morph into capital-D Depressions. The eurozone would fragment, Japanese bonds and probably stocks would crater, one or more major currencies would implode. No way to know which event would come first and in what order the other dominoes would fall, but without doubt something had to give.

And gold, of course, had had its correction and was, at the beginning of 2014, perilously close to the mining industry’s cost of production. The last time that happened, in 2008, an epic bull market ensued — and gold-bugs were anxious for a replay.

Gold price 2013 revised

Yet 2014 turned out to be a pretty good year for the powers that be and the economic theories that animate their behavior. Equities boomed, interest rates fell, the dollar soared, and gold ended the year below where it started. Gold miners, after a year of operating at an aggregate loss, have seen their market values crater.

2014 should not have happened, but it did. There’s no way to sugarcoat it: the gold bugs were wrong, Austrian economics was wrong, and the Keynesians were right. And now the sound money community is left trying to figure out what it missed and, crucially, whether the problem was merely one of timing or of fundamental worldview. With that in mind, a few explanations for the debacle that was 2014:

• Inflating away the world’s reserve currency is a whole different animal. When a single not-very-important country decides to devalue its currency, it simply prints a lot of new pesos or whatever, and the exchange rate falls until a crisis ensues. That is not, however, how it works for the US because so much of the world’s debt is linked to or denominated in dollars. Consider:

When you borrow money, you’re in effect betting against, or shorting that currency because you benefit if it goes down in value. But at the same time you’re creating future demand for it because in order to pay off the loan you have to acquire more of that currency. So the fact that so much of the world’s debt is denominated in dollars means that demand for dollars is rising even as US debt increases. In the short run, this makes the dollar stronger despite America’s deteriorating balance sheet. Add in the fact that the rest of the world is in even worse shape than we are, which makes the US look like a safe haven in relative terms, and the result is a strong dollar even in the face of soaring US liabilities.

• A fiat currency printing press is an amazingly powerful tool for fooling people. The world’s governments have been able to use trillions of dollars of newly-created, largely-fictitious currency to force down interest rates across the yield curve and push up equity prices. This signals to market participants that 1) things are basically okay, so relax, 2) it’s actually prudent to go for growth and yield by buying equities, junk bonds and houses, 3) it’s reasonable to borrow for things like college and cars because there will always be plenty of money, one way or another, to cover those debts, and 4) betting against the status quo will be punished. Short sellers and savers will lose because equities will be secretly supported, competing forms of money like precious metals will be depressed, and cash will yield next to nothing.

• A global currency war allows the combatants to shift back and forth between easy and tight money for a really long time before anything serious happens. Between 2008 and 2013, the US and China were on the offensive, borrowing huge amounts of money and/or inflating central bank balance sheets. As a result, their currencies were relatively weak and they grew while Europe and Japan stagnated. Now it’s the turn of the latter two to inflate while the former try to stabilize their debt loads. Aggregate global debt continues to soar, making the eventual financial crisis that much more catastrophic. But in the meantime the game of musical chairs can go on longer than it might for any individual country inflating alone.

• Debt is deflationary. The world is more heavily laden with bad paper than ever before. And while central banks’ efforts to inflate this debt away is inflationary, the paper itself wants to implode, which is highly deflationary. These two forces have been contending for over a decade, with the advantage shifting back and forth. In 2008 deflation was ascendant, but by 2011 it looked like inflation had the upper hand. Now we’re heading back into a deflationary stretch as the past few years’ tight money in Europe and Japan push those two into recession and send global capital pouring into the supposed safe haven of US bonds and stocks.

So, back to the big question: Does the above refute the sound-money/gold-bug case, or simply delay it?

Almost certainly the latter. Rising dollar-denominated debt leading to a stronger dollar is not a perpetual motion machine. All it does is allow the US and the rest of the world to take on even more debilitating levels of debt than would otherwise be possible.

China, India, Russia and Brazil, meanwhile, are actively bypassing the dollar in favor of trading in their own currencies, while accumulating pretty much all the gold being produced by the world’s mines. So the longer the current situation continues, the bigger the disruption when the dollar becomes just one of many global trading currencies.

Meanwhile, artificially depressing bond yields and supporting stock prices can only go so far before valuations (already crazy) become impossible to support with any amount of fiat currency. The yield on some Japanese bonds recently dropped below zero, and US 10-year treasuries are around 2%. US equity prices, margin debt, corporate share repurchases and most other measures of overvaluation are all in record territory. Unless we’re moving to a world of negative interest rates (which is a whole different theoretical discussion) and dot-com era P/E ratios, the end for these trends is near.

So this has to and therefore will blow up. And when it does, the world’s central banks will respond with debt monetization on a scale that will dwarf QE3 and Abenomics. “Inflate or die” will become official global policy. And gold will behave as it always does in such situations, by going parabolic.

But when? What seemed imminent a year ago now feels a little further out, as oil keeps falling (down another 2.5% as this is written on Dec 29), the dollar keeps rising and everything else is flat to down. Maybe instead of focusing on the numbers, which clearly don’t mean as much as they would in a world of actual functioning markets, we should think in terms of philosophy and psychology. Here’s a snippet from James Howard Kunstler that gets at the spirit of things without predicting “when things stop working”.

One reason this is happening to us is that we allowed reality to be divorced from truth. Karl Rove wasn’t kidding back in the Bush-2 days when he quipped that “we create our own reality.” The part old Karl left out is that there’s a price for doing that. In the short run, it allows you to pretend that you have superpowers and can act in defiance of the way things really are. In the longer run, your view of the world comports so poorly with the facts of the world that things stop working.

271 thoughts on "2014 In Review: How Could Gold Bugs Have Been So Wrong?"

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  2. When dollarcollapse.com which credibility is questionable over US Economy says this:

    Which brings us to the last few days’ crash in gold and silver prices. Both metals are now below the production cost of most miners, whose shares are cratering on the prospect of some truly horrendous operating results in the coming year. Which sounds a lot like what Rule is describing.

    It MIGHT mean buying gold or silver is not a good deal, might as well buy US dollar? LOL

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  4. The US dollar has now reached a stunning new 9 year high of 91.46 on the DXY and at the rate it is going up it will likely break up through 100 by the end of this month!

  5. It seems we have a government troll with us. Socal Beach Dude is highly aggressive, knows his facts well and uses them with half truths to create a narrative that is effectively a lie.

    This is exactly what is done in the corporate- state owned media.

    And Socal gives us poor “ignorant”, (what he thinks of as gold bugs) a LOT of his time and attention. Why he should waste his time “illuminating” us when he could be spending it so much more productively reading Paul Krugman makes him either a great idealist or a working man. My guess is the latter.

    People who know gold like John Rubino spot trolls like Socal in a heartbeat. But trolls as good as Socal are useful for novices in the gold world too, as he will challenge them and if you are a novice that is how you can learn and grow.

    The truth of what gold is and has been comes from Alan Greenspan who called the yellow metal “Money in extrmis”.

    What that means is that gold is money when fiat currencies or social orders collapse.

    A library could be written as to why this is so, but in Rome, post early middle age Europe, China, India and Mesopotamia gold has historically been money in extremis.

    When John Meynard Keynes supporting a fiat currency, called gold a “barbarous relic”, underlying that statement, he was in effect saying that the US Empire would stay intact pretty much forever and the US treasury and central bank would “never” abuse its privilege of creating money for nothing and destroying the currency.

    In the days of Keynes, with a government whose balance sheet was the envy or the world it was possible to believe that with the US, this time it would be different than the hundreds if not thousands of historical examples of sovereigns creating failed fiat currencies throughout history.

    Today with exploding systemic global debts, propping up volatile asset values of stocks, bonds and real estate it becomes harder and harder to make that proposition.

    But sovereigns throughout history have tried to force, or at least intimidate their citizens to accept the money for nothing they create.

    Socal Beach Dude is intended to be one of these intimidators, of the intellectual variety of course.

    I will only go through two of his intentional half truths, (lies) to illustrate.

    Half Truth, (Lie) number 1 One Socal says; “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.”

    Socal conveniently neglects to say that because most people throughout history have had an ancestral memory of fiat currencies that went bust, whenever a sovereign had the wealth to do it, they would create coinage based on the market value of a metal.

    So for example if a coin was to have little value, then the underlying metal might be zinc. As the nominal value of a coin went up so did the value of the underlying metal, with gold obviously being used only for coins of maximum value.

    To the degree that such a gold coin’s nominal value represented the true melt market value of the gold it was made of, the more the public knew that they had real money.

    To the degree as Socal would have it, that the nominal value of the coin was much more than the gold’s market value it was made of, people knew that their money was more and more a fiat currency, because it had little gold backing.

    While the nominal value of the coin, which had little or no gold in it, might have been honored during the Roman Empire for example, with its collapse, other than the melt value of the coins they became worthless. But if you had at the collapse of the Empire, an old gold coin with a lot of real gold in it, it still had value although you might have to look around for a market, or as Greenspan said it was money in Extremis.

    Half Truth, (lie) number two; “China and India are the largest gold markets in the world but most of the gold purchases there are for JEWELRY purposes”.

    Now given that Socal is such an expert in the global gold market, I assume that this lie is intentional and not a statement made out of his ignorance.

    In any case for those that might not understand Socal’s duplicity here, let me explain that in China and India much of what is called jewelry is not viewed as it is in the West, as being mostly artworks and adornment.

    For the vast majority of people in Chindia gold jewelry is the same as bullion coins would be for you. The gold is typically 24 karat, or at the lowest Chinese gold is 22 carat. In India it is culturally bought for the women who hold on to the families’ wealth with their gold “jewelry”, easily redeemable and liquid whenever the family needs cash.

    Gold “jewelry” in Chindia is held the way Westerners would hold stocks, bonds and real estate.

    I could go on and on taking apart Socal’s disinformation one by one, but he is being paid for it and John doesn’t pay me a dime.

    But I have used a quarter of a can here John of “Troll- Away”. So I hope that you will allow me in return, to plug http://www.redpillviews.com to your readers, where they can learn all about the Geo Political situation now, including its financial and economic components.

    What readers of this blog get for free, is an invisible and impenetrable shield that no government troll can possibly penetrate.

    But I am fascinated Socal and would love to ask you a few questions.

    You seem very knowledgeable. Did you need a degree in finance to get your job? How much are you paid? Is it a monthly salary or are you paid per trolling? Are you actually an American, or are you Indian for example, and the US government, (or other of the Anglo 5) has outsourced trolling to you? That would be far more efficient since top level Indians are much smarter than their American equivalents and work for pennies on the dollar.

    So many people in the US for example, are either unemployed or underemployed, government trolling would seem to be a really great option for many. How open is the field? How can people look to get a job like yours.

    And how did you get the figure of global assets being worth $800 trillion? I knew all the rest of your figures, but not this one. How can one know the value of all of the assets of the entire planet? Did you get that on the government hand out fact sheet? Surely your government always sticklers for details will have reference attached.

    Thanks in advance for your sincere answers.

  6. “Debt is deflationary.” Not necessarily. The hyperinflation of Weimar Germany was a direct result of unpayable debt, and more recent times, rapidly rising prices were associated with rising unemployment in the 1970’s (stagflation.) Among the nations currently experiencing the most rapid rises in consumer prices (e.g.Argentina, Venezuela, Zimbabwe, Ukraine) these are also associated with unpayable debt.

  7. Gold closed the year at $1182.50 for another year of losses, while the US dollar soared all the way up to and over 90 on the DXY and closed the year at 90.29 just as expected and just as predicted. As to silver, that gray stuff plunged again massively for the year and closed at $15.68 and is now only $7.68 away from reaching its mean of $8 per ounce.

    In 2015, expect gold to blow down below $800.00 and silver to blow down below $9.99 and expect the US dollar to soar rapidly above 100 on the DXY.

    Happy days are here again!

  8. Anyone failing to comprehend the NEARLY 4 YEAR LONG COMMODITIES PLUNGE has to be totally asleep at the wheel. Commodities prices were driven up by manic speculators to absurd BUBBLE HIGHS by April 2011 and then began a rapid descent which is now accelerating sharply. The Bloomberg Commodities Index has hit a 4 year low with further declines today and most commodities have plunged around 50%. Silver has plunged more than 62% and gold has lagged behind with only a 40% plunge so far.

    As we go into 2015, the declines in commodity prices are rapidly intensifying and and all of the metals – with the exception of zinc which has supply issues due to Indonesia stopping exports of it – will decline much further as they revert to their means. The price of gold will very rapidly blow down through $999 per ounce.

  9. This article treats gold as if it were a stock being played for short-term gain in the casino on Wall Street. Most “Gold Bugs” own it for a long term hedge against financial collapse.

  10. So, here we are, discussing the “correct” price of gold. Can anyone on this thread tell me what the accurate value of anything is? Our market is so manipulated that God Almighty probably could not tell you the true value of anything anymore. The Fed is lying as fast as they can, the government is spending and giving away our money as fast as it can. You and me? We are just trying to get the mortgage paid and just get by.

    I can see no way this scenario is sustainable. It will come crashing down someday. When it does, what are the stocks and bonds going to be worth? That is why I subscribe to my 3B plan. Beans, Bullets, and Bullion.
    Anybody here have a better plan?

    1. Those are totally false assertions.

      What the gold goobers want, of course, is EXTREME PRICE INSTABILITY since their gold stuff has NO EARNING POWER WHATSOEVER and the only way they can get a profit on the stuff is for manic speculation to drive its price up far beyond any proper or reasonable fundamental value.

      At any price above $456 per ounce gold is preposterously overvalued and that speculative froth will rapidly be blown off the top.

      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 $252 per ounce based on silver being around $15.77 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

      The Federal Reserve couldn’t give the slightest hoot about gold as it is a trivial little collectible niche commodity that has ZERO FINANCIAL RELEVANCE and has a total value of less than $7 trillion for all of the gold that has ever been mined, and about 70% of which is in the form of jewelry widely dispersed around the world.

  11. 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. This again? You don’t really need to post. At this point everyone who’s a regular reader here already knows what you would say.

      1. Then why don’t the gold goobers actually learn and comprehend the facts and realities about this preposterously overpriced yellow fungible metal? Are they mentally deficient, or what?

  12. If you own Gold and live in Russia then you doubled your spending power recently.

    If you owned Gold in Cyprus when they had the bank-bail-ins you lost nothing.

    People forget there are countries and currencies other than just the USD.

    Here is a brilliant site that puts Gold into a very different perspective.:-

    http://pricedingold.com

    1. 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 730 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!

      1. Go on. You know you really want to. You truly would love to have some Gold. You sound like someone gay who hasn’t really admitted it to themselves.

        1. I have plenty of that yellow stuff in the form of fine jewelry and US Mint numismatics and have it all stuck away and never look at any of it. I would never ever consider buying crude gold bullion unless the price dropped below $20 per barrel in which case I would consider buying two barrels of the stuff to make a new coy pond.

  13. Gold Bugs were not ‘wrong’ at all. They were (and always have been) robbed by criminals who break Laws and statutes (including murder, no less) to satiate their lust for taking from others. This makes collusion by government ‘regulators’ all the more outrageous, since government is universally instituted to secure each Peoples’ rights to property and safety from such Crimes Against Humanity as surreptitious deprivation of their savings (tears of Labor preserved from their lifetimes).

    By their very nature, Gold Bugs are driven rather by proper rational valuation in life and this is the only ‘mistake’ they’re susceptible of … in a society infested by financial cannibals who are wholly without conscience or any sense of justice.

    1. That comment is so far out in lunar orbit as to be totally laughable and obviously is preposterously and blatantly false. Nothing could be further from the truth.

      1. Really? In what way? Are you saying that the finance sector hasn’t acted criminally to prevent PMs from reflecting their physical demand and that government hasn’t turned a willfully blind eye to the crimes?

        1. Where do you come up with such nonsense? The Federal Reserve and finance sector in the US couldn’t give the slightest bit of a hoot about metals, dude. Physical demand is down for that overpriced junk, obviously. What “crimes” are you talking about in the financial sector? The only “crimes” OI see are from deadbeat borrowers who lied on their loans and then defaulted causing major financial losses for the banking industry and they are the ones that should be severely prosecuted for their crimes against the banking industry. Hellllllllloooooooooooooooooooooooooo?

          1. Maybe it’s long past time folks decide to not ‘give a hoot’ about the Fed and re-establish their own private-coin based commerce. Then the only bother with depreciating paper will arise in dealing with government (perfect irony there).

          2. Obviously today COINS ARE TOTALLY USELESS and nearly all money is ELECTRONIC MONEY and that will continue to be the case for the foreseeable future.

          3. Only the pitifully foolish will propose or accept such blatant illogic.

            If real goods can be accountable under electronic records facilities (which is commonly demonstrable), then so can real money of coin. Any idiot can understand that once pointed out.

          4. Coins are an archaic and barbaric notion and have been nearly totally replaced decades ago with electronic money, and obviously coins will continue to have a miniscule and diminishing role in each and every currency around the world. Some countries in Europe have already moved to totally abolish coins as an annoying and useless relic with no value or purpose in a modern currency.

          5. The assertions you’ve been conditioned to make are so abysmally stupid, they’re almost embarrassingly easy to debunk.

            ‘Value’ in scrip-notes and digital accounting amounts to nothing more than assignment of ethereal concepts. To illustrate; the ‘word dollar’, is essentially the same as the ‘color blue’, both are only descriptive nouns, devoid of intrinsic worth, in and of themselves.

            So, if you can assign a value of ‘2 dollars’ (or ‘yuan’, or ‘rubles’) to anything, it’s no different than designating their value as ‘2 blues’. Either choice is nonsensical. In the real three-dimensional world, 2 dollars equals, in point of hard fact, the word dollar repeated twice!

            Conjoining two words of symbology together, doesn’t result in creation of anything real and tangible. That’s ‘hokes-pokus’.

          6. Your utterly bizarre notions have little to nothing to do with reality at all, dude. There is nothing “ethereal” at all about account which is based on ACTUAL REAL NUMBERS THAT ARE FIXED AND VERY CLEAR AND TRANSPARENT.

            If you get a property tax annual bill for $22,224.22 it means you owe exactly that amount and no other amount. If you get an electrical utility bill for $286.86 that means you owe exactly that amount. There is no “ethereal concept” whatsoever as to WHAT YOU OWE AND MUST PAY at all. And the only color that relates to is the color GREEN as in US dollars. And those amounts are exactly what you enter into your accounting system and on your checks or other form of electronic payment to clear those balances to zero.

            Hellllloooooooooooooooooooooooooooooo?

          7. Well, that’s what I said. They’re just numbers … without any relation to anything real.

            If you think you can … define what a ‘dollar’ is … in real terms.

            Anyone with a microgram of brains will have to conclude it’s only a word derived from ‘Thaler’ adopted by the first Constitutional Congress to describe a unit of government-specific money-value, only later connected to a weight of silver and since, cast into any legislated confabulation imaginable.

            I believe it was in the ‘Credit River’ decision that the court found it could be equated with a coffee bean and the ‘defendant’ proceeded to ‘pay’ accordingly.

          8. OK, Send me yours then. I’ll be glad to take those “useless relics” off your hands!-LOL

  14. Perhaps this is a bit ad hominen but never the less,,,,,,
    The name Socalbeachdude is near certainly the opposite of the person behind the keyboard. The name and the repeated use of “dude” is designed to present this poster as laidback and cool, a persona he requires to hide his trolling motivations.
    Absolutely not a troll worth feeding !!

      1. If what you say is true, than we should all be out mining gold right now since it shouldn’t cost more than $456 to find and refine…and we would make a 100%+ profit selling it. Fact is it takes about $450 in FUEL costs alone to get an ounce out of the ground. Then add capital equipment, labor, land leases,…..

        1. False. As to production costs for gold they average LESS THAN $600 PER OUNCE in North America and production costs are as low as $316 per ounce these days. Moreover, 40% of the annual gold supply amounting to around 2000 metric tonnes of the total supply of 4600 metric tonnes is from SCRAP / RECYCLING which has a ZERO COST OF PRODUCTION.

          If a number of high cost gold mines fail that will just LOWER THE COST OF PRODUCTION FURTHER as their assets will be sold for a fraction of their current values to other producers who know how to control production costs and they will be starting with a vastly lower cost basis than many of those extremely heavily leveraged mining operations. Production costs would very likely plunge down to $300 to $4oo per ounce very rapidly for gold.

  15. So-called “gold bugs” (gold goobers) just can’t seem to comprehend that GOLD IS OF ZERO FINANCIAL RELEVANCE and that it is preposterously overpriced at anything above its mean of $456 per ounce which it is rapidly in the process of reverting to.

  16. One sentence adequately answers this article – “Because the gold price, valued in fiat currency, is manipulated”. – For now…..

        1. I believe he’s already been banned from Koos Jansens website where we’ve battled previously. Scroll back up the page. This guy is ridiculous in his vehemence and consistency. He’s like a desperate teenage girl for attention. Pathetic.

          1. Koos is a total kook and it is hard to imagine anyone even capable of being as stupid as he is, so the only other possible explanation is that he is deliberately and intentionally putting up BLATANT LIES and is likely part of the Goobers Against Truth Association (GATA).

  17. Gold and silver should be treated as an insurance policy. You buy it and stick it away and hope the day never comes that you need to use it.

    1. Gold and silver have nothing whatsoever to do with “insurance” at all and are noting other than FUNGIBLE COMMODITIES which have plummeted 40% and 62% respectively over the past nearly 4 years since April 2011.

      1. Which will last longer than gold or silver?….the current US dollar, canned food, freeze dried food, stocks, banks, the great pyramids, your buddies at the Federal Reserve Inc.

        Its insurance, nothing more! Then its gets transferred to my kids some day.

        1. Gold and silver have nothing to do with insurance, and by the way, neither gold bullion or silver bullion are insurable on any insurance policy in the US other than on a Jeweler’s Block Policy available only to qualified people in the jewelry industry

          Gold is a MAJOR STORAGE PROBLEM, and any form of gold bullion is NOT INSURABLE on any Dwelling or Homeowner policy in the United States which presents a HUGE RISK OF LOSS if you have even 1 oz. of gold bullion stored at your residence.

      2. ^^^ TROLL ALERT ^^^

        My god you sound extra desperate today. Don’t you get embarrassed? We really must be at the bottom…..

  18. Some us hold long-termphysical gold and silver simply because we don’t believe certain folks will be able to keep their paper promises. Inflated or deflated, just a different set of folks unable to keep promises. I always looked forward to slowly cashing them in for solid investments, but there are no solid investments because of total market manipulation. It’s made all investments gambling on the whims of those who control the markets for the sake of their OTC derivatives. Our biggest mistake, if any, is just how much sociopaths can get away with lyin’ and stealin’ from the hard-working savings of those who created the wealth, and not be punished. Understand gold really is taking the “red pill,” and the truth is NOT a pretty sight. They hate folks holding physical gold and silver because they can’t re-hypothecate it a 100 times or over, and then steal slices of it from all the players.

    Quoted from an old 1849 book “Sophisms of Free-Trade”
    “The plague, the cholera, the black death, [ebola], the sweating sickness, are epidemics that have periodically devastated the earth. But mankind are subject to moral as well as physical epidemics.”

    I think of physical gold and silver as a vaccination (insurance) against these present times of “moral epidemics.” Who knows when and how it will end, but it won’t be pretty.

    1. Gold and silver are of ABSOLUTELY ZERO FINANCIAL RELEVANCE and are nothing other than grossly overpriced plunging fungible little niche collectible commodities. Helllllllllllooooooooooooooooooooo?

        1. Do you know what FUNGIBLE means? It means that any commodity is comprised of the SAME AND INTERCHANGEABLE UNITS which is precisely the case with gold. Any and all pure 24K gold is PRECISELY THE SAME AS ANY OTHER 24K gold. That isn’t completely true with corn or wheat and is definitely not true with oil which has a number of grades of crude oil that all are valued differently and require different refining. Gold, however, is the VERY EPITOME OF FUNGIBILITY.

          1. I do know what it means, I know that you are using it correctly. However to keep using it repeatedly like you do is quite odd.

        1. I don’t work for JPMC, but rather they work for me as I am a Private Client Banking customer of JPMC.

    2. Unfortunately, gold is re-hypothecated 100 times over. It is called the Comex. The value of gold is determined by its paper impostor. When the Comex breaks by a failure to deliver on demand, the value of physical gold will seek the level of its true value be it up or down.

      1. Those are preposterous false and absurd assertions, dude. There is no such thing as “paper gold” at all any more than there are “paper houses” because house ownership is recorded and controlled with deeds. You apparently don’t understand the commodities futures markets at all and how contracts work.

        Are you not aware that the GOLD SPOT MARKET IS PURE “PHYSICAL” GOLD FOR IMMEDIATE DELIVERY and that the current spot price for gold is $1197?

        Your assertions regarding COMEX gold contracts are totally false and utterly bogus. 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.

      2. It’s amazing that Comex could be wiped out for what was paid to acquire the Clippers basketball team. However, if someone “rich” enough to do that actually did it, they’d see the rest of their “billions” go poof! And those of their “friends.” Immediately, there would be a bull’s eye painted on their back, and those type of people can afford a black op. It’d be some nail gun accident as far as anyone else would know.

  19. Being in “unchartered territory” it is entirely possible that we have no basis for judging anything any longer. Therefore, the markets aren’t rational any longer. It’s all a confidence game, and it always has been. Who knows how long that can last?

    1. We certainly do have a basis in FUNDAMENTAL METRICS AND VALUATIONS as to the price of gold.

      At any price above $456 per ounce gold is preposterously overvalued and that speculative froth will rapidly be blown off the top.

      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 $252 per ounce based on silver being around $15.77 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

      1. That Sir, is utter nonsense right there. None of your four metrics above include ‘Paper Gold’. Which, if you knew anything about that which you drivel, would understand accounts for claims of over 99 ounces of Gold for every physical (deliverable) ounce in existence.

        1. There is no such thing as “paper gold” at all any more than there are “paper houses” because house ownership is recorded and controlled with deeds.

          Moreover, there is an overabundance of gold, and your laughably bogus assertions that there are “claims of over 99 ounces of Gold for every physical (deliverable) ounce in existence” is laughably ludicrous and categorically and patently false.

          1. That is totally false assertion. You obviously need to learn about how COMEX functions.

            All commodities contracts on COMEX are backed by the exact amount of metal specified in those contracts and NO CONTRACTS ARE EVER ISSUED BY COMES THAT ARE NOT FULLY BACKED BY THE EXACT AMOUNT OF METAL SPECIFIED IN THE CONTRACT AND ON DEPOSIT AT THE COMEX VAULTS. Never. Ever.

            Gold Futures Contract Specs – CME Group

            http://www.cmegroup.com/trading/metals/precious/gold_contract_specifications.html

          2. You are actually going to sit there and try to tell people that the gold ETF’s are not leveraged to the teeth? hahahahhahahahahahhahahahahhahahahahahahhahahahahahha
            That would make them the ONLY ones on the block that are not.

          3. There is no “leverage” whatsoever with any of the 25 or so major gold ETFs (Exchange Traded Funds) and all hold “physical” gold in direct proportion to the value of their shares outstanding. Typically ETF shares are priced at about 10% of the price of 1 oz. of gold meaning that 10 shares issued by those ETFs are supported by right around 1 oz. of gold they hold.

          4. There is no “leverage” whatsoever with any of the 25 or so major gold ETFs (Exchange Traded Funds) and all hold “physical” gold in direct proportion to the value of their shares outstanding. Typically ETF shares are priced at about 10% of the price of 1 oz. of gold meaning that 10 shares issued by those ETFs are supported by right around 1 oz. of gold they hold. Where do you come up with your totally bogus assertions to the contrary?

          5. you must live in a rich area where groceries arent up or housing isnt up no inflation for you dont have to spend any more on anything ! oh food and gas dont count in our inflation rate !! rest of world does ! when europe busts the brest of the world will be watching our bankrupt ass with more debt than the whole world together ! nobody checks the govt numbers ?? i see you turning your head the other way ! typical bob

          6. Groceries are in many cases on sale for amazingly low prices in Beverly Hills, California and gasoline prices are now down by as much as 50% over the past year here in California. We are now in a major DEFLATOINARY SPIRAL and the prices of most all of the world’s 27 major commodities are down by as much as 50% or more over the past 4 years and are continuing to fall substantially.

          7. print print print destroying the worlds currency ! china and russia and india are buying up all the gold ! us banks are starting to buy gold too mmmm we cant give germany their gold back for 15 years gone ! need something to back up our worthless green paper nobody wants it now !!! debt backs it up like in 1943 !!

          8. Where do you come up with such nonsensical assertions?

            The most egregious money printer in the world which has increased its money supply by $24 trillion from $1 trillion to a total of around $25 trillion over the past 14 years. By contrast, the Federal Reserve did not increase the money supply hardly at all in the US and only increased the MONETARY BASE with QE with 100% of that increase remaining in the excess reserves accounts of the banks at the Federal Reserve from whom the Federal Reserve purchased securities.

            As to China and gold, the government of China does not buy gold at all and is the world’s largest single country seller of gold each year with new mining production of around 300 metric tonnes. Russia buys very little gold as a country and its total government holdings of gold are only around 1,150 metric tonnes worth only around $65 billion. china’s government holdings of gold are only about 1,054 metric tonnes worth less than $60 billion. India’s government holdings of gold are very small and only around 536 metric tonnes.

            US banks hold hardly any gold at all and the aggregate holdings of gold by the central banks around the world has DECREASED BY ABOUT 10% OVER THE PAST 10 YEARS from around 35,000 metric tonnes to currently about 32,000 metric tonnes of gold.

          9. 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

          10. forbes was your first funny joke cnn would be your second controlled or out the door ! i think you need to short gold !! its a wound up time piece ready to spring ! russia has 18 trillion invested in natural resources !!! mmmmm

          11. i meant china oops ! inflation will get to the board eventually gold will explode to cover your inflation costs personally not a bankrupt piece bof paper promising to pay back the amount on the front of bill mideast trading gold for oil dont want us dollar debt lots of bull shit in dc american public not very bright just put it on tv and sensor it !

          12. For whom? Gold in Euros and Yen is actually up in 2014. Commodities are falling AFTER a big run up driven at the Margin by China’s debt-fueled export and infrastructure binge. The deflationary spiral will cause defaults and production will be shut in and prices will rebound, though not back to their bubble highs. Gold bugs are “banking” on the Fed and Treasury to team up to flood the world with dollars to drive its value down vis-à-vis other currencies, who will continue to respond in kind. They currency war. No one wins one, unless you are aren’t holding fiat currency, which is the point of this blog, I believe.
            As for “paper gold”, a few large banks dominate the trading. They are allowed to write a large number of contracts and by closing out 99% and delivering 1% of them from their own warehouses, they can control the price of gold. Look for “paper gold” at Casey Research for more info.

          13. Huh? There is obviously ONLY EVER ONE DEED TO A HOUSE and the very same is true of each COMEX commodities contract. When a contract is sold to another party, the right of delivery of the good specified by the contract fully passes to the other party.

            If the COMEX contract transacts 100 times or 1000 time or 1,000,000 times during its duration that doesn’t increase the number contracts relative to the commodity specified in the contract as ONLY THE SINGLE PARTY HOLDING THE CONTRACT UPON MATURITY HAS THE RIGHT TO TAKE DELIVERY OF THE GOODS SPECIFIED IN THAT CONTRACT as all other parties have relinquished those rights along the way by transferring the contract to successor parties.

            What is so difficult for you to comprehend about that simple process?

          14. You say “ownership is recorded and controlled with deeds”.

            Not at Common Law. Under superior fundamental Law, ownership is rather proved by possession and verified testimony of first-hand witnesses, where such administrative ‘deeds’ and ‘titles’ are secondary prima facia evidence, subject to full disclosure of Material Facts comprising a valid Agreement; the instruments themselves also only validated by verified, first-hand testimony.

          15. What century are you living in, dude? All ownership of real property in the US is recorded and controlled with deeds everywhere in the US and no property sale can clear escrow without a proper mortgage deed.

          16. Well, I won’t live in the era of Medieval Feudalism you seek to impose, I assure you. Recorded deeds are statutory, prima facia instruments attesting nothing more than government’s ‘protection’ of contracted parties … who mutually volunteer to ‘plead’ such purported ‘protection’ as ‘Wards of Court’ under ‘judges’.

            Alternatively, a man or woman wronged under or by such contract (for instance, through misrepresentation or obfuscation of Material Facts), has recourse by Claim in original jurisdiction Common Law Due Process by Jury Verdict, which is fundamentally superior to mere ‘complaint’ in government’s legislatively proprietary Civil Process (which the cursed Barristocracy has flooded our courthouses with, by sheer usurpation).

            “In the presence of the superior power, the minor power ceases.” Jenk. Cent. 214.

          17. You obviously don’t comprehend real estate property deeds at all as they are the RECORDED REGISTERED PROOF OF OWNERSHIP without which there is no ownership of any real property by any party in the United States.

          18. Ahhh yes, there’s the legalistic mumbo-jumbo terminology: “party in the United States”.

            “A citizen of the United States is a citizen of the federal government …” (Kitchens v. Steele 112 F.Supp 383)

            “The United States Government is a foreign (municipal) corporation with respect to a state.” Volume 20: Corpus Juris Secundum, (P 1785: NY re: Merriam 36 N.E. 505 1441 S.Ct. 1973, 41 L. Ed. 287)

          19. Party is, of course, the proper and correct legal term as to contracts and ownership such as with deeds.

          20. Etymologically, a ‘party’ is a group or member thereof.

            Legally, a ‘party’ is a statutory entity and what government creates by legislation it controls. A wise man proceeds in litigation as a man … not … a ‘party’, because assumption of such person is thus under statutory control by definition.

          21. False. You appear to be totally ignorant of the law in the US. Any person who is involved in a legal matter is a PARTY to that action as is clearly defined in US law. Based on your comments, it would appear that you have been DOING FAR TOO MUCH PARTYING as your totally illogical assertions are so far out in lunar orbit and detached from reality that they are utterly incoherent and just mindboggling.

          22. I know 20 wasted years about statutory ‘law’ … under exclusive Congressional jurisdiction of their United States. No. it’s you who doesn’t know squat about what real Law is and you’re precisely the sort of brain-dead goofball I relish litigating against.

            So, what’s ‘false’? The Kitchens cite … the CJS cite … the definition of Party? Connect them with this …

            “The Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States (property being authority attending a thing); and nothing in this Constitution shall be so construed as to prejudice any claims of the United States, or of any particular state.” U.S. Const,, Art. IV, Sec. 3, cl. 2. …

            and this …

            “Court: The person and suit of the sovereign; the place where the sovereign sojourns with his regal retinue, wherever that may be.” –Black’s L.D., 6th Ed. Ab, pg. 247

            and this …

            “The very meaning of ‘sovereignty’ is that the decree of the sovereign makes law.” [American Banana Co. v. United Fruit Co., 29 S.Ct. 511, 513, 213 U.S. 347, 53 L.Ed. 826, 19 Ann.Cas. 1047]

            and this …

            “The people of this State, as the successors of its former sovereign, are entitled to all the rights which formerly belonged to the King by his prerogative.” [Lansing v. Smith, 4 Wend. 9 (N.Y.) (1829), 21 Am. Dec. 89 10C Const. Law Sec. 298; 18 C Em.Dom. Sec. 3, 228; 37 C Nav.Wat. Sec. 219; Nuls Sec. 167; 48 C Wharves Sec. 3, 7.]

            That’s why a Common Law Court of Record is superior, even to any government ‘Supreme Court’. Because it is the Court of an original jurisdiction sovereign man or woman … not that of their servants, to arbitrate their petty internal squabbles.

          23. You’d certainly get a failing grade if you wrote any of that kind of bogus drivel on a law school exam.

      2. ^^^^ TROLL ALERT ^^^^

        Ignore this guy….. He trolls different gold websites. He has to be paid by the Fed or something.

        1. You must be incapable of comprehending actual facts and realities, dude. Time for you to get a grip and start understanding the truth regarding this absurdly overpriced yellow fungible commodity.

          1. Not only do I believe you are wrong,but I also am starting to think that you are an arrogant,loud & obnoxious son of a bitch

          2. I am 100% correct as to the facts and realities regarding gold and I would suggest you get up to speed on those:

            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.

          3. First time I’ve read Socalbeachdude. Here’s my take:
            There is no such natural or manufactured (printed) item that is money. Rather money has been invented as a medium of exchange, an efficient means to give relative value to differing goods and services. Over human history many items and commodities have come to be used as the medium of exchange and has been called “money.” Gold has been a popular constituent of money because of it’s relative scarcity, which provides stability for the value of a unit of money it “supports.” But gold is not money, money is what has been defined as money by different societies over time and place.
            Therefore, it would seem to me, that the common denominator or best thing used for, or backing, money would be something stable.
            Being relative scarce gold is an excellent candidate. Paper currency can be excellent if it’s kept relatively scarce. The ability to create more or less paper currency could be an advantage over other competitor items like gold; however, when too much paper is created it can be disruptive. It’s confidence that seems to be the key factor in the valuing of money. Will a unit of money hold it’s relative value for those who have or use it.
            Skipping to the present, I’d offer that confidence in the dollar has held up relatively well so far. Obviously there has been a deep well of goodwill for the US worldwide (on average). Confidence in the US. which has been built up over a century or more, and which must continue today. Nevertheless, the confidence can be depleted to a varying degree and the currency fall in value and popularity.
            I think the latter is what everyone has in mind when they consider the value of gold or land or other currencies as alternatives to fiat dollars. This ties directly into the subject of the above article.
            Since they say timing is everything in investing, I wish there was a good means to predict when confidence in the dollar gains or ebbs, but I haven’t found one yet.

          4. The price of gold is ANYTHING BUT STABLE and gold has been one of the MOST EXTREMELY VOLATILE COMMODITIES of all commodities in the world for the past 42 years since 1972. Prior to0 that time when gold was first allowed to trade on the commodities exchanges and in the forwards and spot markets for a floating price, the price of gold was very stable from 1793 to 1933 when it stayed at right around $20 per ounce before being increased to $35 per ounce.

            Moreover, the total value of all of the 180,000 metric tonnes or so of gold ever mined in the history of the world is less than $7 trillion which is less than 1% of all global assets and about 70% of that is in the form of privately held jewelry leaving only about $2 trillion that could even theoretically be used in the form of bullion and only about $1.24 trillion of that is owned by governments or their central banks.

            The total value of the US government gold holdings which are the largest in the world at about 8,200 metric tonnes is only a little more than $11 billion according to the latest report from the US Treasury based on the current US government official gold price of $42.22 per ounce which is euqal to a few days worth of the current federal deficit spending. Even when valued at the current market price of gold at about $1,183 per ounce, the total value of the US government gold holdings (which would take a very long time to sell off) is less than $350 billion which is equal to less than 4 months worth of the current US government deficit.

          5. C’mon man, lets keep it civil here. socal has a point of the falling price of silver and gold. It is in fact happening. And there is no sign of it going up.

          6. It’s just the way this arrogant character has of speaking down his nose to anyone who disagrees with him,are we cretins & nit-wits if we disagree with him?

            “You must be incapable of comprehending actual facts & realities,dude”.This is what this jerk is saying to me.The point is not whether this guy is right or wrong,the issue is I don’t care to be spoken to as though I was a moron!

            Magoo,I won’t take that horse shiut from anyone.If he spoke this way to to people face to face he would have his teeth knocked down his throat!

          7. I hear your anger sir, his arrogant style has not gone unnoticed by me as well. Personally, I hope to hell he is wrong because I’m a stacker who has been watching my investment dwindle away rapidly. But I’m long on silver and gold so lets see what happens.
            I do agree with his assertion though that gold and silver is not a currency. I still cannot buy a case a beer with it nor can I put gas in my truck by using it. We have spot prices on gold and silver bu if walk into a pawn shop and try to exchange it for cash, you most likely will receive an exchange well below spot. Very unregulated. It all comes down to perceived value Vs. real value.

      3. How many Flurnots would you pay for an ounce of gold? In case you weren’t aware, a Flurnot is an imaginary currency I just invented, but I promise you it is backed by the full faith and credit of some people I claim to know personally. Oh, so you place no value on the Flurnot? Why not? Because you have no confidence in their value? Well, now you may have just stumbled upon the real reason for gold value.

        1. I see you live in an imaginary world, Drud. Why don’t you come back to reality and start properly valuing things in US dollars as the rest of the world’s 7+ billion people do?

          1. What ride are you talking about? The delusional ride of the gold bugs? That actually ended almost 4 years ago, dude or dudette.

          2. The US dollar is well over 89 on the DXY which is a 7 year high and the purchasing power of the U&S dollar has been skyrocketing agaisnt nearly all of the world’s 27 major commodities for the past 4 years. The US dollar will soon be over 90 and then 100 on the DXY.

        2. Shoot, I have to get the bank today to get me some Flurnots. A case of beer just went up 3 Flurnots today!

      4. You say “At any price above $456 per ounce gold is preposterously overvalued”

        So, how do you define ‘price’? How does it reconcile in juxtaposition between ‘price’ derived from a naturally occurring good of limited availability and a fictitious ‘credit’ only limited by a group’s capability to (forcefully) impose ‘value’ into such ‘credit’?

        1. What on earth do you mean by asking how do I define price? Obviously the PRICE IS THE CURRENT MARKET PRICE. Many goods have limited market availability. As to metals, by far the rarest metals are the PGM (Platinum Group of Metals) consisting of rhodium, platinum, and palladium, and gold is relatively plentiful compared to those metals and yet their pries are about the same as gold (which is relatively common) right now rather than carrying the approximately 50% premiums that they normally do as compared to gold.

          1. You didn’t answer my question (gee, surprise, surprise). Now, please define the word ‘price’ as you understand it, and while you’re at it, please also define the word ‘exchange’.

          2. The price of anything is obviously what something sells for in the current markets and for all commodities that price is determined in US dollars – obviously.

          3. What’s ‘obvious’ … is that I’m clearly wasting my time trying to coax anything more than simplistic, knee-jerk, superficial rhetoric from you. Price is another term for Ratio.

            The rational effect of an ideal money is that it’s objectively derived value, in toto, should approximately equal what’s necessary to clear markets of goods … no more or less … to result in a sustainably balanced economy. In other words, something is amiss if the volume of money causes either surplus or deficit of goods to persist in markets.

            When such imbalances arise from misperception, the proper way to correct the condition is to alter the … valuation … of either the money or the goods, because one or the other has become … irrational.

            What ‘paper bugs’ do instead, is to set excessive valuation on goods, then inflate their pretended ‘money’ (through coercive loan-at-interest) to account for the willfully contrived imbalance. But, because all scrip-notes are loaned into existence as principal at interest (there’s no other way to structure the scheme), an exponential co-generation of notes and debt is put in motion, where the total volume of ‘money’ can never amortize all that’s owed. Plainly a ‘Debt Trap’, set to capture the entirety of mankind, thus Crime Against Humanity.

            “That which is permitted only at a loss, is not permitted to be done.” Co. Litt. 127. (Thus so with banknotes.)

            “Common-law cheat: the obtaining of money or property by means of a false token, symbol, or device; this being the definition of a cheat or “cheating” at common law.” State v Wilson, 72 Minn. 522, 75 N.W. 715; State v Renick, 33 Or. 584, 56 Pac. 275, 44 L.R.A. 266, 72 Am. St. Rep. 758; Black’s L.D., 2nd Ed., pg. 277 (1910)

          4. There is no such thing as an “ideal money” at all and the markets determine value. Price has nothing to do with “ratio” of anything as you laughably and preposterously assert.

          5. In your hall of paper-distorted mirrors, anything can be made to appear any way desired. Still, when the degree of distension necessary exceeds the physical pliability of those mirrors, they’re going to ‘crack up’ and it won’t come a moment to soon for mankind.

    2. There is no such term as “unchartered territory”at all. The correct term is “uncharted territory” but as to the markets, both commodities and equities (stocks) ALWAYS RETURN TO RATIONAL VALUATIONS as we have be seeing and are seeing with commodities over the past 4 years during which most of the 27 major commodities have plunged by around 50% (thereby increasing the purchasing value of the US dollar by about 100%) and we will soon see the same thing with equities (stocks).

  20. Carry trades are going to take it in the shorts as the dollar strengthens and the assets become devalued in the emerging markets. The next bubble is brewing and oil as usual is poring the gasoline on the timber.

    1. Yep, and nearly all of the world’s 27 major commodities have been plummeting for the past nearly 4 years since April 2011 and many are down around 50% or more.= including overpriced junk stuff like gold and silver which are down 40% and 62% respectively and headed much, much lower.

      1. you are right dude, you should borrow all the currency you can get and short gold and silver, take a huge position…think of how rich you’ll be!

        I will just hedge my virtual dollars with some actual metal…. just in case you’re wrong. See ya later.

        1. Folks who shorted gold last year (2013) with the ultra short ETFs DZZ and GLL had 66% profits for the year. They are likely to do even better in 2015 as gold continues it plunge towards its mean and fair value of $456per ounce.

  21. This is my Christmas present to Gold Bugs. Please listen up.

    Gold will track the Chinese and Indian growth stories. When they were growing well gold went with them.

    Now that China is reorganizing and has low growth, Wall Street will control gold, (mostly down) with paper derivatives.

    When you start to see strong Chinese growth again, you will note, not from what Beijing says but by strong commodity prices, then gold will start another secular bull market as well.

    Paper derivatives cannot fight a strong physical demand market. Should that start again Wall Street will follow it to the upside even though it is not its preference.

    Until then Wall Street will continue to push it down.

    If you own gold, do it as insurance. Because it is real money, not to speculate with as a dollar denominated asset.

    Real gold buyers view their wealth in the ounces of gold they own, not how much it is worth in nominal paper currency terms.

    If you cannot afford to own gold, should it drop to $600/ ounce, then you should own much less of it, or if you are poor none at all.

    1. @ Robert Gorden
      Like anyone with two brains cells gives a rat’s a**, since this is a battle of how many physical oz.s of PMs are actually in one’s possession when the defecation hits the oscillation. If Gold were strictly a “commodity”, then it would not trade on the “MONEY DESKS” Doh!
      For those who think the price of education is too expensive, how’s that ignorance working out for you?
      Ooh, look at the time. Only two trading days left in 2014 to turn those counterfeited fiat paper IOUs (a “dollar”, but good luck collecting) into Hard, Honest, Lawful Money before incurring that “tax” liability that Uncle Fed is going to take out on your sorry a** next April.
      But enjoy nevertheless, as you seem to every year.

      Cheers, S. Rex

        1. @scbd
          LMAO!
          Ooooh, have another HIT, of that b*tchin Cognitve Dissonance DUDE!
          Don’t harsh our mellow w/ your gnarly nonsense numbnutz!
          Cheers, S. Rex

      1. I am not sure if you were replying to my message Spartacus. If you were you should note that I NEVER called gold a “commodity”.

        In fact I called gold “real money”.

        If it has moved with commodities, that is because it has moved with the China story, which has moved in parallel with the India story and these 2.3 billion people are the REAL buyers of REAL gold in the world.

        You might want to take this to bed with you and remember it Spartacus, since YOU seem to be an American citizen- resident which I am not. It is an old saying that you have probably heard before, but it is worth hearing again.

        Gold is the money of kings. Silver is the money of merchants, barter is the money of peasants and debt is the money of slaves.

        As you said when “the defecation hits the oscillation”, the kings are going to want their gold. I assume that you are not one of them and that they view you as just another peasant, And based on a computerized psychological profile they already have of you, a potentially annoying one.

        So when that moment happens they will either take your gold or, my guess freeze it by making the buying and selling of it illegal except to the government at a fixed price in fiat dollars.

        In your surveillance police state, your chances of being able to use your gold in any meaningful way will be slim.

        So your best bet if you are to remain an American, would be a balanced portfolio with maybe 10%- 20% in gold depending on how much assets you hold.

        1. Actually Robert,
          I immediately saw by your post, the intelligence demonstrated therein that you indeed ‘get it’.
          It simply served as a convenient entry point to expound further to those who do not, and once again, it is simply a matter of physical oz.s personally held and not the deceptive delusion of market prices being expressed in counterfeited, ponzied, fiat paper IOUs, that are backed by nothing more than mere worthless B.S. promises that will never be kept, ergo inflate to oblivion, or default into the mother of all depressions.
          If nothing else learned recently by the currency fiasco with Ruble, those who held actual physical Gold & Silver, didn’t lose a minute’s worth of sleep the whole time, whereas those holding paper currency quickly discovered the costs of their ignorance.
          Cheers, S. Rex (btw: Latin for Gold holder)

          1. You are certainly right to warn people about the weakness of fiat currencies and how owning physical gold can protect them against devaluations.

            I did want to add however the dangers inherent, that when the US dollar finally collapses, (no one knows when), most criminal governments will move to seize the gold of their citizens, or at least prevent them from putting it on the market..

            So it might be wise for those trying to prepare for this day to diversify. I doubt governments, for example will mess with silver. And as Marc Faber points out stocks are good to hold as well.

            That is because the underlying value of a company is not a currency but what it produces, the prices of which can be raised as currencies fall. Of course it depends on which stocks.

            In any case as Faber recommends a balanced portfolio is always best. Even a portion in US dollar bonds is a good idea, in case he powers that be choose to not monetize the unpayable debts but instead default on them.

            That will create a massive depression in which currency will be king.

            If on the other hand they do monetize the debts, your bonds will be worthless but your gold and silver will be worth a fortune. The main thing is not to look to make a killing but to insure that you and your family have minimum suffering.

            And cheers right back at ya 🙂

          2. What utter nonsense, dude. The US dollar is getting strong eery day on the DXY and has soared in purchasing power against most commodities by around 100% over the past 4 years and is up 80% in purchasing power against gold. Are you not aware of those facts?

            As to the US government’s approximately 8,200 metric tonnes of gold it is worth only a little more than $11 trillion according to the latest US Treasury monthy report based on the current official US govenrment value of $42.22 per ounce and even at today’s market price of around $1,183 per ounce it is worth less than $350 billion.

            The US government has no interest in seizing any gold from anyone as the total value of all of that stuff in the US is extremely small. Moreover, when gold was “confiscated” by Executive Order in 1933 that ONLY APPLIED TO BULLION GOLD and had no affect whatsoever on numismatic coins, gold specifically for commercial uses such as dentistry, etc., or jewelry which has always been the largest use of gold accounting for about 70% of gold demand.

          3. I am not sure what you are talking about.

            First you say; “the US government’s approximately 8,200 metric tonnes of gold it is worth only a little more than $11 trillion according to the latest US Treasury monthly report based on the current official US govenrment value of $42.22 per ounce”

            But then you say that if gold is valued at $1,183 per ounce it is only worth $350 Billion?

            What??????

  22. “Austrian economics was wrong, and the Keynesians were right.”

    The author, John Rubino, was wrong. That’s a fact.

    Some of the so called “Austrians” were also wrong, yes, but not the Austrians who understood the power of “fiduciary media”.

    Mises wrote of such power. It’s all written right there in black and white. And what has now been proven beyond any doubt is the power of fiduciary media combined with massive leverage allows the dollar to squash the PM bugs.

    Moreover, the PM bugs got squashed (and continue to get stomped) because they misunderstand commodity money. They continue to wrongly conclude that the dollar isn’t backed by a commodity. It is. Look in the mirror, that’s the commodity which backs the dollar. The unborn back the dollar, and not just unborn Americans. The dollar is the world-reserve human-resource currency. This means the entire world backs the dollar.

    When the dollar finally collapses (and it shall) the world economy collapses with it.

    1. @ Reality?_Seeker
      How’s that Cognitive Dissonance working out so far?
      Stackers got “squashed” with the Mother of All Gift Horses, being able to snap that which has tangible value for a mere pittance, while you and yours can look forward to paying the price of your ignorance in the not to distant future. Lots of luck with that. Cheers, S. Rex

      1. “Stackers” got squashed (like Spartacus got squashed) because they listened to the gold peddlers peddle a gold fable, viz., “keep on stacking because the dollar is collapsing, the Fed is collapsing, Washington is collapsing, and hyperinflation is coming any day now”. Talk about “Cognitive Dissonance”. The stackers got buried right next to Spartacus.

        Yes, indeed, underestimating a superpower like Ancient Rome got a lot of heroes buried. So, too, it is with underestimating Washington. Washington is a collectivist Kraken. And it won’t go down as easy or soon.. The Kraken has its tentacles wrapped around everything. And when it does finally go down, it pulls everything with it— including the stackers.

        The people who made out O.K. were those who astutely paid attention to shrewd pros of whom made their bones long ago in the Forex market) — e.g., Jim Rodgers, Marc Faber.

        There’s nothing wrong with scaling into PM as monetary insurance, a hedge, a long-term investment and/or a bet against “legal tender”. Scaling into PM when the dollar exchange-rate is favorable is not a you-must-be-out-of-your-mind strategy. Listening to gold peddlers is a good way to go broke.

        1. @ Reality?_Sneaker
          Tell me about it Rockefeller. How many Swing Contracts in Silver and Gold did you hit the register with on 01 Dec?
          How many Swing Contracts in Oil did you register today?
          I’ll take “squashed” with PMs versus burnt with ponzied, counterfeited fiat IOUs any day.
          PMs were cheaper than dirt all the way down, thanks to hedging the paper the Banksters needed to short.
          You are Cognitive Dissonance personified!
          Cheers, S. Rex

          1. “PMs were cheaper than dirt all the way down”.

            Yes, and getting cheaper still. Cheaper relative to what? The dollar? The reserve unit of account?, i.e., the dollar? Yes, the dollar, and I’ll be accumulating some more PMs and other commodities for myself just as soon as the price in dollars is right.

            PMs come from within the dirt. You know, that stuff they buried Spartacus’ followers with after they tortured and crucified them to death; which is probably what Washington shall do to any inveterate silver stacker (hoarder) when the time comes.

            FYI: The dollar (billions of them) comes from a mere stroke of a finger. Yet, the dollar is buying gold and every other good and service. How can that be? If the dollar is so worthless, then why do you account and settle your transactions with it? Next time somebody offers you a worthless dollar, do what any self-respecting Spartacus would do: spit on the dollar and demand PMs.

          2. If you follow that strategy you are headed for HUGE LOSSES AHEAD as gold and silver revert to their means of $456 and $8 per ounce respectively, dude.

          3. Reality?_Sneaker
            LOL, what a surprise!
            Another Krugman Koolaid drinking Kultist.
            As IF you have a clue as to what an actual “Dollar” is, much less what the official Monetary Unit of Account is in the U.S.
            How’s that ignorance working out for you so far, numbnutz?
            Somehow I imagine you even smile every year when Uncle Phed swings by every April and tells you to grab your ankles and proceeds to tear into yours.

            Cheers, S. Rex

          4. US federal taxes need to be increased about 50% from where they are now and the federal budget will be fully balanced with some money left over to start paying down the $18 trillion federal debt. The sooner that is done, the better.

          5. DUDE!
            Did you forget that the Union actually won, ergo Import Tariffs would indeed be mainly used to pay the costs of the fed goobermint, and that the working middle class would not have to compete against slave labor?

            Phed Reserve Act of 1913 and presto chango, the Republic is turned on it’s head, Multinational Corps. RULE, and WTO is “law of the land”?

            Democracy ROCKS doesn’t it?

            Those who Work/Produce are mysteriously penalized since 1913 to subsidize those who do not? LMAO!

            Get a clue.

            Wait until you get the ‘Final Bill’ for that 80″ screen t.v. made in China, and for your vegetables picked by illegal aliens.

            “18 Trillion” Phed Reserve IOUs (a “dollar”, but good luck collecting) fraudulent debt, will either be hyper counterfeited away into oblivion, or defaulted upon, just as every other fiat paper IOU currency has done in the history of civilization, bar none.

            Cheers, S. Rex

          6. It would be absolutely impossible today to fund the federal government on tariffs and liquor taxes as was the case before the federal income tax was enacted in 1916.

            As to the federal government debt, there is zero chance of any defau6t and US Treasuries are the safest and most RISK FREE investments in the world and are considered CASH EQUIVALENTS. Hellllloooo?

          7. No one can afford a 50% increase in their federal taxes! C’mon, reality check. I cant afford that, neither can my neighbors around me. How about this instead, cut waste and federal programs and spend less.

          8. The only way somebody would even have metals is to PURCHASE THEM WITH US DOLLARS and those metals have a value in money ONLY BY CONVERTING THEM BACK INTO US DOLLARS or another currency and that involves substantial purchasing and sales transaction costs in both directions and achieves absolutely nothing.. Helllllllooooooo?

    2. Fiat currency and fiduciary media would appear to be different names for “fake money”. And I’m not trying to be nasty, but the idea of humans backing a currency is one of the most bizarre things I have ever heard. Were the Germans not some of the most industrious and well-educated people on earth when their currency collapsed in the early 1920s? Were the French elite not among the leaders in the Enlightenment when their currency collapsed (twice!) in the 18th century? Are the Japanese today, on the verge of their own currency collapse in the near future, not a well-educated people, traditionally dedicated to career, long hours and high productivity? That doesn’t save anybody.

      I think advances in propaganda have made it possible to preserve the status quo long after everyone should have realized change is inevitable, and should have headed for the exits. von Mises was born in the 19th century and couldn’t possibly have understood the incredible power that state-corporate propaganda would one day have. Not even Orwell or Huxley or more recently Neil Postman fully understood the role that propaganda was going to play in shaping culture and opinion. Orwell thought propaganda would be violently enforced upon the people instead of willingly embraced; Huxley thought Skinnerian child-rearing and drugs would be required; Neil Postman was closer to the truth with his Amusing Ourselves to Death, but didn’t grasp that we do not accept propaganda in a vapid way but often fervently embrace it. Thus, people believe that “America Is the Greatest Nation on Earth” and it is sacrilege to suppose that any bank deposits may be confiscated or that retirement funds may become, shall we say, “permanently illiquid.” Of course the stock market goes up forever, because We’re Number 1!

      It’s not the magic of fiduciary media; it’s the magic of the media.

      1. “And I’m not trying to be nasty, but the idea of humans backing a currency is one of the most bizarre things I have ever heard.”

        Nevertheless, so long as you are a productive, taxpaying human, you, and everything that you think you “own”, backs the dollar. But it goes much deeper than that.

        How about the idea of cattle backing a currency? Does that sound too bizarre? Are cattle a valuable resource? How about humans? Are humans a valuable resource? Have you ever heard of “human resources”?

        Are taxpaying humans who own cattle a more valuable resource than just cattle by themselves? Is it gold, in and by itself, which is valuable?— or is it the miners, refiners, transporters, middlemen, producers of finished gold-products, wholesalers, retailers, traders and buyers of gold and all other goods and services which constitute *value*?

        And what is value?

        Here is an axiom you should ponder: without humans there is no value…….

        …….Gold, for example, does not come out of the ground with a price tag attached. So who assigns gold its value? Hint: it’s not Adam Smith’s invisible hand.

        Money and currency are whatever the ignorant masses allow. Notice I said, “allow”. The ignorant masses don’t even know what money and currency is let alone how to design a modern-day, monetary system. The ignorant masses can only give their complicit consent.

        Moreover, the young, ignorant masses don’t want gold, they want something they can put in a Google wallet. And that’s the monetary system they’ll get.

        By the way, Mises was an intellectual giant. It’s not that Mises didn’t understand propaganda; it comes down to you ( and a lot of other gold bugs) don’t understand Mises.

          1. I understand both value and worth extremely well, but obviously you haven’t got the slightest bit of a clue as to what either mean, dude or dudette. Please explain specifically what you” think” they mean?

          2. I believe he is right on this. The definition of a fair price is whatever is agreeable between the buyer and seller. If it weren’t, no transaction will have been made. Think about it. Value and worth are based upon perception. I had a vintage snowmobile that I was selling two weeks ago. I wanted $2K for it. A buyer approached me and said that it is only worth $1K. I said I disagree. He left mumbling that I was crazy and I would never sell it. Two days later it sold at my asking price with no price negotiation at all. I got what I wanted and the buyer walked away happy with the deal.

        1. All legal tender currencies are fully backed by the current and future assets and labor and producti8vity of their citizens and their issuing governments. And that is VASTLY MORE VALUABLE than “backing them” with some little niche collectible commodity, which i nthe case of gold is worth a maximum of $7 trillion for all of the gold ever mined in the world which is a value of less than 1% of the global assets in existence today

        2. If your argument is that humans “back” a currency with their complicit consent and their confidence in said currency, I of course agree. But a backing which is psychological is subject to sudden failure & consequent hyperinflation, so that is not much backing at all.

          If you mean that the worth of the currency is assumed to equal the worth of the people and their assets and their productive capacity, this brings up an interesting issue. I don’t think it was ever possible, in past times, for a people who produced so little of real value to maintain a population at these levels. If you take out the quarter of the population (roughly) who are children and the 1/8 of the population who are over 65, you have around 200 million working aged adults but 92 million of these are not in the workforce. Of those who are, much of our economic activity is useless– a combination of excessive finance, over-valued housing, excessive prison systems, higher education that won’t lead to meaningful employment, unnecessary services, etc. Something like 2% of the population is involved in agriculture, while 15% relies on government food assistance. This doesn’t look like a very strong backing either.

      2. The US dollar is by far the most stable and most important currency and money in the history of the world, dude. Welcome to reality. Hellllllooooooo?

      3. Well said.

        Another factor besides propaganda is that the vast majority of people WANT the status quo. Too many vested interests. They don’t want to challenge the system or have another financial crisis. They don’t want to “fight the Fed/CBs”, etc. so as long as most people think that way then things hang together and become more or less self-fulfilling.

        The fact that most people don’t understand gold and desire to own some is fundamentally why its price in fiat is not higher than it is (as well as concerted efforts to suppress the gold price through financial manipulations). When the fiat monetary system collapses everything will go full circle. The “elites” and the central banks will claim power because they will have the gold (“He who owns the gold makes the rules.”) Suddenly the masses will be told that gold is valuable after all and then they will believe it, but it will be too late for them. The only question is when that will happen. “Unfortunately” it may still take a few decades, but I doubt it.

        1. There is nothing to “understanding” about gold other than it is a preposterously overpriced little niche fungible commodity that has plummeted 40% in price over the past nearly 4 years since April 2011 and that it is headed towards and to its mean of $456 per ounce and then lower towards it current US government official price of $42.22 per ounce. Helllllllooooooooo?

          1. The $42.22 US government official price for gold has not been changed since 1972. The US government currently values its silver at $1.2929 per ounce. The legal tender stated face value of a 1 oz. gold American Eagle is $50 which allows for a margin above the official price of gold, but in the case of silver, a 1 oz silver American Eagle has a stated face value of $! whereas the US government values 1 oz. of silver at almost 30% higher than that face value.

          2. its a plan to devalue 100 to 1. by knocking two zeros off today’s $5000, the resulting “$50” face value of the eagle (in new gold backed dollars) will be just about right. Now |I may be wrong, in that the plan may be to knock three zeros off….we’ll just have to see

          3. No currency will ever in the future history of the world be “backed” by any stupid commodity thingy or thingies, dude. All legitimate legal tender currencies are fully backed by the current and future assets and labor and productivity of the government of the issuing currency and its citizens and that is VASTLY MORE VALUABLE than any dumb little commodity “backing” of any currency. Helllllooooo>?

          4. Yes, but why? Why is it $42.22 and why hasn’t it changed since 1972? How was that figure arrived at?

          5. That is simply the price the last time it was “priced” by the U.S. Government. Which was 1972, when we left the gold standard. Should the government want to go back to a gold backed currency then it would be in their interest to value it as highly as they could get away with. However, like I said, they have not priced it for over 40 years.

          6. The US fully left the so-called “gold standard” entirely domestically back in 1933.

            As to that very stupid and short-lived notion called the “gold standard,” 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.

          7. You like to throw that “four year” bull around…lets talk about gold since 1970 shall we? 1980, 1990…lets talk a bit more than during the current economic crisis.

          8. Gold is an EXTREMELY VOLATILE COMMODITY and became that in 1972 when it was allowed to trade on the commodities exchanges. It was a manic 10 year run up from 1972 to January 1980 after which time it collapsed by 70% in price over the next 22 years well into 2001. Then it had another 10 year run up in price from 2001 to April 2011 and is now in another QUARTER CENTURY PLUNGE and has already plummeted 40% since its bubble burst.

            Gold is on its way to its mean of $456 per ounce and then headed lower towards the current US government official price of $42.22 per ounce.

      4. “It’s not the magic of fiduciary media; it’s the magic of the media.”

        And the bane of the incredibly stupid. Grubber is more than right.

    3. The US dollar isn’t going to “collapse” at all but will continue gaining substantially in purchasing power as it has been doing over the past 4 years against most all of the world’s 27 major commodities against which the value of the US dollar has soared by around 100% against many of them. The US dollar will also continue soaring on the DXY where it is presently around 90 as it heads to 100 and then perhaps as high as 120 or even higher.

      1. A four year gain, compared to the 96% loss in the Fed Dollars purchasing power since its inception, is nothing. It’s a fiat currency going the way of all fiat currencies, ever, in history. You deny that?

        I’ll make a bet with you. All my Physical Silver I’ll ship to you, at my expense, if, by 2020. The U.S. Dollar is still the worlds reserve currency. Against you throwing yourself under a train if it isn’t.

        1. Those assertions are totally false and utterly preposterous nonsense. Where on earth do you come up with such total BS?

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

          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. What you describe is a snake eating it’s own tail. If you’re that confident otherwise, then take my bet.

          2. As a lizard, I’m sure you are an expert on tail eating, but what on earth does that have to do with the US dollar?

        2. I have an honest question for you. If I purchase an ounce of gold today at spot price and then try to exchange the very same day, I get well below the spot price I paid for it?
          However, if I make or earn a dollar today, the dollar I have has not lost its value, or should I say, its buying power?

  23. Credibility is much like fiat currency in the sense that it takes tremendous force and effort to establish it. Yet when credibility washes away, it can happen abruptly. Both credibility and currency values can vanish in the blink of an eye. Hedge accordingly folks.

        1. That Kook dude isn’t worth bothering with as his comprehension level of facts is nearly zero and all he does on that little blog is to put up endless totally false propaganda and outright blatant lies.

          1. Yeah!
            And in Asia the Chinese, Russians, Indians & every one else,are buying gold like crazy. Why don’t you show these stupid people the error of their ways? Once they realize your great genius they will be sure to listen!

          2. China and India are the largest gold markets in the world but most of the gold purchases there are for JEWELRY purposes and that has long been the case with India and it is only recently that gold has become popular in China with about 60 million of their 1.3+ billion citizens now being able to afford luxury goods like gold jewelry. As to Russia, gold is not very popular there at all.

          3. Indians and Chinese buy gold jewelry as a store of value, so you are missing the point socal. Indians have done it traditionally because they are used to their government robbing them. The Indian government has implemented all sorts of restrictions to keep its citizens from escaping soaring inflation by changing rupees into gold. China is telling its citizens to buy gold. Wonder what they know? So you are factually correct but still ignorant.

          4. People in China and India typically buy gold to ENJOY AND WEAR and couldn’t care less about the “store of value” assertion and most are very well away that GOLD IS A PLUNGING COMMODITY that has lost 40% of its value over the past nearly 4 years and that its price could easily plummet another 62% very easily and very quickly.

          5. Good for them, they can keep it. Gold is old fashioned and pretty much worthless nowadays.

          6. Yes, it lasts longer than a conch. I doubt they could actually put it to a more valuable use outside of making pretty objects with it.

          7. You mean for objectively low value purposes like as hood ornaments. Gold’s value is mostly an artifact of rich people struggling for status (partially measured by Gold holdings).

            How much of the Gold market is productively employed like Silver?

          8. China is unreliable to anything that includes trading and Economy.
            Another very good reason NOT TO BUY GOLD, Chinese regime can change the rules anytime they want and you will never see your money back.
            Just don’t.

          9. Russians are poors, even in the wealthy population gold has a very limited attraction.
            Not all wealthy people wants to have golden jewelry. It just look good and that’s it, they would rather invest in other more lucrative sectors.

      1. Essential real world commodities cannot be created out of thin air. Derivatives / Fiat Currencies / Credit can and have been expanded at historic rates since the early 1970s. Gold will simply do the accounting work when the bank system implodes and the world monetary order is reshuffled. I suggest you put your $456 USD to 1 oz gold mean in the trash.

        1. Gold has nothing whatsoever to do with currencies. Gold is just a preposterously overpriced little niche FUNGIBLE COMMODITY on its way towards and to its mean of $456 per ounce and then on its way towards the current US government official gold price of $42.22 per ounce.

          1. Gold is money and has been for thousands of years. You can take a 3000 year old gold coin and it has a lot of value. I have some dollar bills for the 1950’s that are no long accepted. Your banker view is going to fail you and the rest of the sleeping people in this country very soon. Enjoy your looting to feed yourself!

          2. 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.

          3. The Coinage Act of 1792 established the “dollar” as a coin containing 371.25 grains (troy) of fine silver. So the dollar was just a particular weight of a precious metal. The amount of metal in a dollar didn’t change, but what it might buy would change from one day or vendor to the next. Of course the government undermined this scheme to rob its own citizens, but clearly silver was money, and green pieces of paper termed “dollars” were merely convenient depository receipts, so you claim is false.
            Let’s say gold went to $1MM an ounce. Would there enough to cover world GDP? That’s the point gold bugs are making. If fiat currency falls from grace, gold will have to rise to cover what is left of global GDP. Get it now, SoCal?

          4. Obviously, gold would have little to no demand at all at anything much above its present $1190 per ounce price point As to the US dollar it is used in more than 83% of all global transactions and is, of course, the world’s reserve currency. Gold has NO FINANCIAL RELEVANCE WHATSOEVER AND NEVER WILL HAVE ANY FINANCIAL RELEVANCE.

            The primary purpose of gold has always been for JEWELRY and that will always be the case. There is nothing whatsoever special about gold and it is just another FUNGIBLE COMMODITY and will be priced in line with other commodity values, nearly all of which are plummeting and have been for nearly 4 years.

          5. The demand for Gold is mostly dependent on perception of future demand….How many people actually have a productive use for their Gold “investments” aside (not future resale)?

          6. A paper Gold note is just as flimsy as any other paper note as a currency. There is not enough Gold and Silver to supply physical currency and actual industry for the entire world.

          7. If every person on the planet was living at US standards, the objective value of Gold would be around what it is now…problem is that poverty is common and Gold is hardly much more than a paperweight for rich people and therefore is objectively low in value.

            A US standard requires 0.5-1.0oz per person not as jewelery, bars, or coins.

            Coincidentally, 5.7 billion oz is about what we have above ground and yet +75% is wasted as a rich persons paper weight or necklace.

          8. Obviously what I have stated is 100% backed by the facts and realities, and obviously your inane and bogus assertions are totally out in lunar orbit, dude or dudette.

          9. SoCal is all I need to know it’s FOS, he’s the dude that surfs all day and buys the reduced priced, outdated sushi with his ebt card.

          10. c’mon Judeth, that was uncalled for. Socal is throwing some facts and figures out here that have yet been challenged. If you have some, please bring them forward for scrutiny. I’m interested in hearing them and learning.

          11. People are interested in easy money…that is how we understand the market properly

          12. LOL-funny. However, give socal some latitude. He does have some sound basis for his opinion. More so than a lot of so called experts out there.

          13. Wishful thinking….$1100-1300 for the next decade….another spike sometime after that right before asteroid harvesting comes on line. cash out then

        2. World currencies are based on trust, strength of the Economy, trades, usefulness (US dollar can be used in my countries) and stability.
          That’s why Chinese yuan will NEVER replace US doller, China isn’t trustworthy in Economy, Chinese yuan not accepted in contries for trade, China is quite unstable and it’s Economy is doing bad while they don’t seem to have a real emergency solution to salvage it.
          Chinese Economy is ressembling USA in 1929 during the Great Depressson, it’ s not a good choice to buy Chinese yuan especially because the regime might fall and if it does, the new regime will change the Chinese currency off course.

      2. nothing has a price it goes according to the dollar price usd is down 95% since 1930 means it takes 95%more small dollars to buy gold like candy bars for a nickle no mystery to anythings price !! bob some minipulation going on for now !!

        1. Your assertions are utterly false and bogus, bob.

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

          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 say that “Average incomes, not only kept pace, but beat price inflation by 230%.”

            Were that … truly … so, no one could possibly be described as impoverished. How then has poverty exploded globally?

            I would span the gap of credulity by postulating that the work of production, has been allotted to the politically favored few (willing to be subjugated) with scrip-bloated ‘wages’, making fewer goods, the similarly scrip-bloated ‘prices’ of which, only these ‘pampered house slaves’ can bear … everyone else ‘in the fields’ be damned.

          2. The article above is 100% correct that average incomes are now 230% above the level of inflation in the US over the past 1100 years. The average standard of living is vastly greater now in 2014 than it was back in 1914. Even the most “impoverished” in America have an extremely high standard of living by world standards and are far better off than those were were “impoverished” in the US back in 1914.

          3. Obviously the other folks on the list are correct. To bold-faced lie the way you do, betrays you as a propagandist troll, so I’ll follow their advise and starve you.

          4. The original topic was where to hold your wealth. Somehow it veered off into income gains. Income gains are a result of someone putting their wealth into neither gold nor treasury debt but productive capital. Gold and short term government debt are supposed to be temporary stores of value. Why hold gold? If you put a dollar into Argentine or Zimbabwean government debt 25 years, it would have declined by 100%. Gold would still be gold. If you think the USGov is stable and liquid, but UST’s. If we are turning into Argentina or Zimbabwe, but gold.

          5. If you want to get really poor really fast, put your money into gold or silver which have respectively plunged 40% and 62% over the past nearly 4 years since April 2011 and which are headed for 62% and 50% plunges respectively dead ahead.

          6. Donald Trump is better off than me..The same would have been true in the 1900’s.

            That is the real problem

          7. The population has grown from 1.6 billion to 7 billion in 1 century…Thats why

            Simply furnishing currency does not solve the problem of production and distribution of limited assets with limited understandings.

          8. Obviously many people do and obviously what is stated in that comment and others is 100% correct. Hellllllooooo?

          9. That’s a specious argument. The way to look at is how much the purchasing power of, say, one US dollar (FRN) has fallen since 1913. Basically, today it can only buy about 1/20 of what it could back then. That means that the value of the work, good, or service that one provided in 1913 has less value today. That is wrong and corrupting. The value of one’s work should not be diminished just by the passage of time. One should not be “forced” to invest one’s savings just to maintain its value/purchasing-power.

          10. False. The purchasing power of the US dollar based on the huge increase of inflation adjusted wages versus the price of goods and serves has increased by about 230% over the past 100 years.

          11. I can buy a satellite and a car as an average dumbass. I’d rather live on a floating currency that results in that then hold Gold in a horse and buggy.

        2. To put it another way, here’s a quote from a friend, Vas:

          The simplest answer to your amazingly stupid question my friend is that if you had a $1 bill in 1793 you would put it in a bank or buy a US T-bill which promises to return it back to you with interest. Even at 4% p.a. which is well below the 222 year average yield on US bonds, you would have today about $5,812. Whilst if you had 1 oz of gold in 1783, at best you would have 1 oz of gold today. In fact, you would probably have paid the entire value of your 1 oz in vault fees and costs over 222 years.

          http://www.ritholtz.com/blog/wp-content/uploads/2012/01/Long-Term.png

        3. Gold would make you more selling in 1980 then selling in 2012 if you bought in 1960… in inflation adjusted denominations that is

      3. Huh? lol, you should just use that one word for your comments, dude. Its all I read. Oh, yeah, if you didn’t “like” yourself, no one would.

        1. Based on the inflation rate in the US since 1971 the price of gold should be about $380 per ounce. Helllllooooooooooo?

        2. yeah and the us has no inflation !!!!
          Irrelevent.
          It’s not what fix the prices of ressources.

      4. You are a beach dude trying to be sarcastic? Gold and silver my friend are God’s created money and a store of value not meant to be manipulated. Today the “money changers” are nations with fiat currencies that have totally disrupted the market place where values are formed. Gold DOES NOT change only the so called perception of the fiat dollar or fiat foreign currencies. WWII is a thing of the past and the reward we received was having the “World Reserve Currency” status that is quickly evaporating. Why do you think central banks tell you one thing but at the same time secretly horde gold and silver. China has bought so much gold “she” is about to kick our buts on the silk road and tell us our dollar is no longer needed…by anyone. “Better buy some gold and silver dude and maybe some crypto-currencies?” Another sign that the big, “RESET” is about to happen. I think it will become more evident by October of this year and play out through all of 2018!

    1. A website called dollarcollapse.com doesn’t seem very reliable while it only wants to make the dollar collapse in any way they think possible, but even them thinks buying gold and silver now is a bad idea.

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