Where Is Gold Going In This Market

[churchill]

The NY Federal Reserve Bank is reporting empty shelves of German gold....

Your joking right;

I thought the "melted down to test overall quality" truly shows how little trust there is now

Yes ... but safer at home .. ?

Germany's gold reserve inspection could spark other central bank gold audits

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=161110&sn=Detail

[Naam]

John Embry, chief investment strategist of Sprott Asset Management, has also long maintained "I firmly believe that if you look at all of the Western central banks, and the gold they allegedly own, I believe a significant portion of that is not in their vaults."

"They can say all they want," he told King World News on Monday, "but in the end, the truth will be revealed by the lack of physical gold in the market as they run out of enough gold to keep the price under control."

and that's the reason why Gold (in the long run) can only go up, up and UP except... if it goes sideways or down

[churchill]

John Embry, chief investment strategist of Sprott Asset Management, has also long maintained "I firmly believe that if you look at all of the Western central banks, and the gold they allegedly own, I believe a significant portion of that is not in their vaults."

"They can say all they want," he told King World News on Monday, "but in the end, the truth will be revealed by the lack of physical gold in the market as they run out of enough gold to keep the price under control."

and that's the reason why Gold (in the long run) can only go up, up and UP except... if it goes sideways or down

and the reason why Monopoly money will ( in the long run ) only go down , down and DOWN ( against real assets ) ...... unless you want ....deflation

[Naam]

John Embry, chief investment strategist of Sprott Asset Management, has also long maintained "I firmly believe that if you look at all of the Western central banks, and the gold they allegedly own, I believe a significant portion of that is not in their vaults."

"They can say all they want," he told King World News on Monday, "but in the end, the truth will be revealed by the lack of physical gold in the market as they run out of enough gold to keep the price under control."

and that's the reason why Gold (in the long run) can only go up, up and UP except... if it goes sideways or down

and the reason why Monopoly money will ( in the long run ) only go down , down and DOWN ( against real assets ) ...... unless you want ....deflation

it's not a matter what we want because "in the long run" and "in the end" we'll be all dead no matter how much we are bitching about anything today.

[farang000999]

Naam if the US goes over the fiscal cliff do you think that is bearish or bullish for gold?

[Naam]

Naam if the US goes over the fiscal cliff do you think that is bearish or bullish for gold?

in my [not so] humble view the U.S. went already over the fiscal cliff and is beyond the point of no return. look at the debt and the fiscal deficit accumulating and compare it with the price of gold. do you see a bearish or bullish sentiment developing?

disclaimer: presently 51% of my liquid capital is in USD denominated "worthless paper assets" and in USD denominated "worthless fiat cash" which yielded year-to-day "worthless" 12.4%.

oops! i forgot to mention that i also hold physical gold who's value is quoted SURPRISE! in "worthless USD fiat cash".

Edited November 2, 2012 by Naam

[cheeryble]

Yes it's funny how gold is priced in worthless US$ ha-ha.

Let's do away with $ completely.

How would it work?

Ah yes.

Missus goes into a somtum shop "somtam Gung prik haa met krap"

Som Tum lady: "that'll be 129.6 micrograms of tong please, afraid I don't take your worthless baht notes"

Missus: "Certainly just a minute" (gets out microscope and tweezers to search in purse)

Som Tum lady: "I'm sorry these microscopic granules of so called gold your offering look like they're just goldplated tungsten. I can't accept them unless you come back with a certificate."

(Missus in dire need of somtum starts getting visibly testy)

"I've got the dam_n certificate! At home!"

Somtam lady: "I'm sorry I just sneezed I'll have to get the glass enclosed microgram balance recalibrated......come back tomorrow"

Missus pulls out gun and shoots

Somtam lady, bleeding profusely from head :"Naam was right. I'll take your dam_n fiat currency"

Edited November 3, 2012 by cheeryble

[farang000999]

well fiscal cliff would appear be deflationary but would also appear very bad for the us economy and thus the dollar. when the debt ceiling battle was waged last year, gold moved up a lot.

[Jayman]

Yes it's funny how gold is priced in worthless US$ ha-ha.

Let's do away with $ completely.

How would it work?

Ah yes.

Missus goes into a somtum shop "somtam Gung prik haa met krap"

Som Tum lady: "that'll be 129.6 micrograms of tong please, afraid I don't take your worthless baht notes"

Missus: "Certainly just a minute" (gets out microscope and tweezers to search in purse)

Som Tum lady: "I'm sorry these microscopic granules of so called gold your offering look like they're just goldplated tungsten. I can't accept them unless you come back with a certificate."

(Missus in dire need of somtum starts getting visibly testy)

"I've got the dam_n certificate! At home!"

Somtam lady: "I'm sorry I just sneezed I'll have to get the glass enclosed microgram balance recalibrated......come back tomorrow"

Missus pulls out gun and shoots

Somtam lady, bleeding profusely from head :"Naam was right. I'll take your dam_n fiat currency"

Well, that's just a silly scenario. They could mint the equivalent weight of any size into a coin mixed with other metals. Even the US based coin of yesteryear that were silver were not 100% silver. Even the gold sold her in the Thailand gold shops is not 100%. The important thing with minted coins is that the gold/silver content is printed on the coin.

Not that long ago, a US copper penny was worth it's weight in copper. 1 gram of copper was 1 valued at 1 cent. Then the usd lost value (or was it copper that gained in value) and the the US mint stopped making the penny out of copper.

It's actually funny to see how the base metal value in many coins to day is worth much more than the usd equivalent value printed on the coin. Of course, it's a federal crime to melt down your coinage for metal recovery.

http://coinflation.com/

Edited November 3, 2012 by Jayman

[cheeryble]

well fiscal cliff would appear be deflationary but would also appear very bad for the us economy and thus the dollar. when the debt ceiling battle was waged last year, gold moved up a lot.

Wait til you see how bad a gold standard is for an economy.

Wait.

You can see.

Look back at how the economy fared (crappily) with a gold standard.

And call all manufacturers to tell them their warehoused stocks will be worth less in a year's time so they better not take a chance on pre-empting orders.

[midas]

well fiscal cliff would appear be deflationary but would also appear very bad for the us economy and thus the dollar. when the debt ceiling battle was waged last year, gold moved up a lot.

Wait til you see how bad a gold standard is for an economy.

Wait.

You can see.

Look back at how the economy fared (crappily) with a gold standard.

And call all manufacturers to tell them their warehoused stocks will be worth less in a year's time so they better not take a chance on pre-empting orders.

you mean worse than an inflation rate of 6.5 sextillion percent as occured in Zimbabwe in mid-November 2008?

[Naam]

well fiscal cliff would appear be deflationary but would also appear very bad for the us economy and thus the dollar. when the debt ceiling battle was waged last year, gold moved up a lot.

Wait til you see how bad a gold standard is for an economy.

Wait.

You can see.

Look back at how the economy fared (crappily) with a gold standard.

And call all manufacturers to tell them their warehoused stocks will be worth less in a year's time so they better not take a chance on pre-empting orders.

you mean worse than an inflation rate of 6.5 sextillion percent as occured in Zimbabwe in mid-November 2008?

Zimbabwe inflation 2008 =

[cheeryble]

How much of anything's going to be sold when people know it's going to be cheaper next year?

That's OK.....we can live in a pre-consumerism type era and probably happy with our home made cheese etc (BTW are you preparing have you ever made cheese?).....but don't think you'll have constant new innovations to the things you're used to......like the computer I notice you're using. When prices go down every year, which happens with a gold standard, de-incentive abounds.

ps: presuming you realise as an economy grows......probably for all the right reasons: population, efficiency etc......but the gold supply stays the same (the whole point of your premise), prices fall.

To put it in terms we all understand: somtam this year will cost more micrograms of gold dust than somtam next year.

Therefore why buy somtam futures?

Edited November 3, 2012 by cheeryble

[mccw]

On the subject of new things.

Many consumer product produced today will be cheaper next year and plenty of people will buy it because they want the new technology and next year the innovation brings another one. Tech, gadgets, cars, TVs etc all work like this already and are the things you cherry by claim will not continue to be innovated. Why?

Things like toothpaste and food etc other everyday items I think would still continue to rise moderately in price because of demand from increased population, but if they did come down as a result then great, have the basics not developed enough already? You want 3D laser teeth cleaning or something? Basics coming down would make people have a better standard of living and more disposable income to spend on the more innovative products coming to market, also greater employment and prosperity. I think not in the post peak everything world though. Some stability would still be preferable

[yoshiwara]

In the post-money world of The Time Machine I remember Rod Taylor venturing amongst the Eloi who were having a lovely existence apart from the days when they were captured by the Morlocks.

[cheeryble]

Things like toothpaste and food etc other everyday items I think would still continue to rise moderately in price because of demand from increased population,

No no that's not how it works.

There is a (pretty much) fixed amount of gold (ie currency).

If you have more sales happening as an economy grows the prices must come down to make the currency go round.

but if they did come down as a result then great, have the basics not developed enough already?

No company will want to sit on stock when prices will come down.

imagine for yourself the repercussions.

The jury is back at the LSE. The gold standard would be (and was) awfully impractical, and modest inflation is the most productive environment.

ps: It has been shown that economies that actively manipulate their currencies are first back on track after crises.

Edited November 3, 2012 by cheeryble

[Jayman]

ps: It has been shown that economies that actively manipulate their currencies are first back on track after crises.

Ohh you mean the crisis that arose through manipulation?

[cheeryble]

ps: It has been shown that economies that actively manipulate their currencies are first back on track after crises.

Ohh you mean the crisis that arose through manipulation?

Which crisis would that be?

Did you think before that spurted forth?

The last crisis, a truly systemic and very major one indeed according to Ken

Rogoff in his comparisons in This Time it's Different certainly wasn't caused by government manipulation of interest rates or anything of the sort.thes things have been used time and again and can be a highgly beneficial negative feedback mechanism to help keep things like inflation within acceptable limits.

Edited November 4, 2012 by cheeryble

[Jayman]

ps: It has been shown that economies that actively manipulate their currencies are first back on track after crises.

Ohh you mean the crisis that arose through manipulation?

Which crisis would that be?

Did you think before that spurted forth?

The last crisis, a truly systemic and very major one indeed according to Ken

Rogoff in his comparisons in This Time it's Different certainly wasn't caused by government manipulation of interest rates or anything of the sort.thes things have been used time and again and can be a highgly beneficial negative feedback mechanism to help keep things like inflation within acceptable limits.

I'd be interested to hear what you think is the cause of this current crisis. Many have said it was due to the housing bubble which was directly caused by the expansion of the money supply and easy availability of said money to unqualified persons who then went out and invested it in real estate thereby driving the prices up.

Not everything is about the interest rates. That is just one of the tools the CB's have to manipulate the money supply and hence it's value.

http://en.wikipedia.org/wiki/2007%E2%80%932012_global_economic_crisis

Edited November 4, 2012 by Jayman

[cheeryble]

You can go right back and say it, the crisis, wouldn't have happened if Fannie and Freddie hadn't started bundling mortgages. However for a long time F and F enabled real people to get real homes on an equitable basis. Their basic theme was not a bad idea.

This thing was not caused by primary (M1 M2 etc) money supply movements or manipulation, it was essentially caused by loose lending standards.....for greater profit......in commercial organisations. The bundling of complicated mortgage packages were just an extension of that. The government certainly made it easier for that to happen when it loosened up regulation over quite a few years, and both government and commercial economists seem to have missed things for which some might say they should be criminally liable

A few juicy MA Econ public hangings might sharpen these peoples' brains a bit. Mitigation could be offering a method to reproduce the quality and costing of European healthcare in the US which could save a huge 5+% of GDP alone. (Machine guns might be needed to bring a few physicians and and lobbyists into line....so what, they've richly earned it).

Things may of course have had less impact without huge overspend already in the system.

This would be the basis of my second tranche of econo-executions.

Edited November 4, 2012 by cheeryble

[cheeryble]

The credit bubble would of course been much less disastrous if the banks hadn't been unsurvivably leveraged which was the real killer.

Edited November 4, 2012 by cheeryble

[Naam]

You can go right back and say it, the crisis, wouldn't have happened if Fannie and Freddie hadn't started bundling mortgages.

the bundling of sh*tty mortgages, rating them AAA and then (as you mentioned) leverage them till pigs can fly was indeed the Genesis of the crisis but also exposed how banks were turning the big wheel of trading other questionable leveraged products in form of derivatives.

unfortunately, since then ignorant doomsday sayers preach the gospel that each and every derivative is a creation of the devil.

[midas]

You can go right back and say it, the crisis, wouldn't have happened if Fannie and Freddie hadn't started bundling mortgages.

the bundling of sh*tty mortgages, rating them AAA and then (as you mentioned) leverage them till pigs can fly was indeed the Genesis of the crisis but also exposed how banks were turning the big wheel of trading other questionable leveraged products in form of derivatives.

unfortunately, since then ignorant doomsday sayers preach the gospel that each and every derivative is a creation of the devil.

there you go again talking absolute rubbish

After you failed to give any meaningful response to my question about this problem a few months ago eventually I managed to find Raoul Pal’s e-mail address ( he was Head of European Hedge Fund Sales - Equities and equity derivatives - Goldman Sachs 1997 - 2001 ) and he knows a lot more about this subject than you do.

We have exchanged e-mails a few times and he has explained in detail to me why the size of such derivatives are such a risk ( over a quadrillion – one thousand trillion – dollars in notional value ). Even if you consider the likes of Raoul Pal to be an “ ignorant doomsday sayer “ I would still prefer his explanation compared to your blustering comments

Edited November 5, 2012 by midas

[Naam]

my rubbish is no match for your rubbish. but i promise i will try harder... at least... a quadrillion times harder

Here's What Happened The Last Time Raoul Pal Called For A Gigantic Crash

May 18, 2010, when argued that a big crash was coming in 2 days to two weeks.

So how'd that turn out?

There really wasn't much of a crash at all.

http://www.businessi...lect 2012-06-05

please subscribe to the "Global Macro Investor". somehow i have to make a living. membership is extremely restricted (nice trick, n'est-ce pas?). but if you contact our subscription department you'll find out that we accept your dollars as fast as we accept the dollars of any dummy dude who believes in doom&gloom.

it goes without saying that the end is nigh and that there is no light at the end of the tunnel for the global economy. but for your fistful of dollars we provide quite some yada yada and of course a good measure of yakety-yak where to put your worthless fiat money and (perhaps) make more worthless fiat money. you mean it doesn't make sense to invest your dollars because Armageddon is around the corner? have faith!

you can trust somebody who was for full four years the co-manager of one of the hundreds of Goldman Sucks funds a decade ago.

[cloudhopper]

This thing was not caused by primary (M1 M2 etc) money supply movements or manipulation, it was essentially caused by loose lending standards...

Exactly. And money loaned is was money created, 50+ X base money creation. Debts repaid or defaulted on is money destroyed. IMO this high power money destruction will overwhelm the ability of central banks to print base money, primarily because they will be constrained by uncontrollable price speculation in needed commodities. Deflation, reduction of credit availability and aggregate decreased standard of living is inevitable.

[Naam]

This thing was not caused by primary (M1 M2 etc) money supply movements or manipulation, it was essentially caused by loose lending standards...

Exactly. And money loaned is was money created, 50+ X base money creation. Debts repaid or defaulted on is money destroyed. IMO this high power money destruction will overwhelm the ability of central banks to print base money, primarily because they will be constrained by uncontrollable price speculation in needed commodities. Deflation, reduction of credit availability and aggregate decreased standard of living is inevitable.

CH,

please elaborate in what way "uncontrollable price speculation in needed commodities" can/may/will cause deflation.

what happened to the theories of the learned doomsday gurus who prophesy uncontrollable inflation?

[cloudhopper]

CH,

please elaborate in what way "uncontrollable price speculation in needed commodities" can/may/will cause deflation.

what happened to the theories of the learned doomsday gurus who prophesy uncontrollable inflation?

I did not intend to say that. I mean that the prospect of uncontrollable inflation in energy and food would be a powerful constraint to the central bank's ability to monetize/inflate away the debt destruction and they will therefore be unsuccessful in stopping a deflationary burst. IMO. If they do try then that's why I have PM.

[cheeryble]

I

I did not intend to say that. I mean that the prospect of uncontrollable inflation in energy and food would be a powerful constraint to the central bank's ability to monetize/inflate away the debt destruction and they will therefore be unsuccessful in stopping a deflationary burst. IMO. If they do try then that's why I have PM.

Why don't you want debt to reduce via monetization/inflation?

You prefer a position it's defaulted on and banks and governments systemically collapse (as we are seeing in some places)?

Or would you prefer, like me, for the wealth of the whole populace who has or earns money to be reduced a little (which is after all a sort of taxation, and payback for previous excess)?

Perhaps your Doomsday preference would increase your wealth, as you're lucky enough to have the wealth to own PMs.

I doubt the 25% unemployed in Spain or Greece would agree with you as they beg in the streets.

They might justifiably say "off with Cloudhopper's head".

Edited November 5, 2012 by cheeryble

[mania]

Why don't you want debt to reduce via monetization/inflation?

You prefer a position it's defaulted on and banks and governments systemically collapse (as we are seeing in some places)?

Or would you prefer, like me, for the wealth of the whole populace who has or earns money to be reduced a little (which is after all a sort of taxation, and payback for previous excess)?

I know you were not addressing me but I prefer the former rather than the latter

My reasoning being if it had been instituted sooner an actual healing would have been well under way.

I know size wise the US does not compare to Iceland but in a similar way they have begun to heal.

Instead the US has chosen the kick the can down the road method.

Problem with that is twofold.

One when discussing a size of debt like this the interest alone is mounting faster than could be controlled

by any increase in taxation.

Secondly in this current environment of uncertainty, loss of faith many sectors are failing.

With that failing comes more loss of jobs.

Just who are they going to get all these tax dollars from?

As prices have risen in the US pay has not & jobs are slim.

This shell game will not have a happy ending one way or another.

So in my mind I wonder is it not better to address it sooner & suffer what must be suffered eventually

but at a time of our choosing. Or wait & let it be catastrophic collapse?

It is pretty clear what the Bailout,QE 1,2 & 3 have accomplished.

In the meantime the previous excess you mentioned has not slowed at all.

The previous excess was not something the people who are being asked to pay

really requested nor approved for the most part either.

Just my opinion

Edited November 5, 2012 by mania

[cheeryble]

Thankyou for the fair reply Mania.

I couldn't agree more that the problem, overspend, needs addressing fearlessly.

I would back you on that 100% and have not-so-comedically suggested a "dictatorship term" where a president can do as he wishes for four years as the only antidote to the demagoguery and populism needed to get him and his party's congressmen elected and to the lobbyists.

However being in the position of big public and private debt surely it's better to keep the engine running even a slow speed than letting it seize up which has awful consequences, most of all for those who least deserve it. Systemic collapses have many severe repercussions.

ps: Though your point is taken, Iceland isn't a great analogy to say America or Europe.

They have a population of about six dozen people, all named dochter and who catch cod.

Edited November 5, 2012 by cheeryble