I love listening to the anti-gold nitwits who call it a barbaric relic. They put their faith in pieces of paper produced by central bankers and politicians. Do you need any more proof than what is happening to the people of India? Their politicians have been running large deficits over the last few years. They have been able to do this because Bennie and his fellow central banker buddies have been printing prodigious quantities of paper money. The hot money crowd was willing to fund India’s deficits, hoping for a better return than the .50% they could get in US Treasuries. It seems even the talk of tapering was enough to scare the hot money crowd out of the emerging markets. The Indian Rupee has fallen 30% against the USD in the last five months. India imports all of their oil and a large amount of their food – all priced in dollars. How do you think the average Indian is doing now?
The government is in disarray. They are scrambling around with price controls, laws against buying gold, etc. This is what politicians across the world do. They create problems and then create solutions that create worse problems. If you were an Indian with $100,000 worth of Rupees in March, 2013 and converted it into gold you would have gold worth $106,000 today. By holding onto your Rupees, you have Rupees valued at $70,000 today. Do you get it?
Gold is not an investment. It is an insurance policy against the idiocy of central bankers and politicians. Keep believing the USD will always be the world’s reserve currency. Just because Bennie is printing $120 million of new dollars per hour doesn’t mean the USD will be worth less in the coming years. Right? Have some faith. Don’t buy that barbaric relic with your fiat dollars just because every paper currency in history has reached its true intrinsic value of zero. Believe the propagandists for the state who tell you gold is nothing but a giant bubble. Everyone knows that when gold makes up 0.5% of all global assets, it surely is in an epic bubble.
Some ideas are so stupid that only an intellectual, academic, central banker, politician or Wall Street shill could believe it.
“under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth… The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit… In the absence of the gold standard, there is no way to protect savings from confiscation through inflation”
― Alan Greenspan 1966
“Nations, differing in language, religion, habits and on almost every other subject susceptible of doubt, have, during a period of near four thousand years, agreed in one respect: that gold and silver have, uninterruptedly to this day, continued to be the universal currency of the commercial and civilized world.“
— Albert Gallatin, US Treasury Secretary 1801 – 1814
“The value of global assets amounted to $223 trillion as of the end of 2012. The share of investable gold currently amounts to $ 1.1 trillion, or only 0.5%. We believe that this share is going to increase considerably in the future, since the notable characteristics of gold (global currency with a long term track record, no credit or counterparty risk, highly liquid and globally traded, very little inflation through mine production) are especially desirable in the current environment.”
— Ronald-Peter Stoeferle, CMT
Going to a gold standard would be extremely deflationary. I used extreme because I could not think of a stronger word. If you listen to the last post “Look Out Below” Nicole predicts gold will be confiscated.
Look out Below is a good listen.
TBP should stop spreading this kind of misinformation. The intrinsic value of the US dollar is low, but larger than zero.
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here it is:
I’ll stick with physical bullion and other things of real value that cannot get stolen through inflation.
Insurance, EXACTLY!
That is exactly the simile I use to back up my inherent belief in the prudence in adding to my stash.
Confiscation is why I won’t allow anyone to hold it, and I hope my last purchases via firms (online, traceable) will be a great distance before outright confiscation. I’m a generous aunt, I’ve given so much away.
Just because said dollars, ruppees, yuan, rubles are worth something TODAY, is in no way a GUARANTEE that they will be worth something tomorrow.
The ONLY way to preserve ANY of your wealth, savings, work, should things go real bad (as is becoming more likely by the day, contrary to the mood of the clueless citizenry of the world), is to exchange today’s fiat for tomorrows trade-able, valuable, real, assets.
PMs are but one way, seeds, ammo, food, bandages, fem hygiene products and toilet paper would be another.
What absolute excitement this brave new world holds for the aware.
What horrors it is bringing to the willfully ignorant.
In our economies we see a pattern. It is not generally looked at or even recognized, however, since 99% of us live in denial of the possibility that our owners would abandon us would even be an option. This is a direct consequence of the fact that, first, all major news makers and decision makers reside in the core, and second, that saving that core while letting the extremities die off is somehow seen by our owners as a good thing.. Post-crisis policies around the globe are directed at saving the financial system, not the people the crisis has pushed into poverty. Since these people are not seen as crucial to the survival of the core, and the system as a whole, they are – almost ritually – sacrificed on the system’s economic altar. The core is Wall Street, the “City of London” and Frankfurt. They will seize your assets as MF Global or being Cypressed.
Among the Legal Tender fiat assets the $US is the most virtuous whore, but still a whore. It will probably be the last man standing before none are standing. Physical assets in your possession, hidden or guarded are your best bet. Arable land with water where you could sustain yourself is my first choice.
Gold should not go to zero but depending on how bad things get could be far less valuable than food and water. Gold in your possession will be more valuable than fiat Legal Tender. So much gold has been sold short by our owners I am afraid to buy now because when the markets crash people will dump gold to meet margin calls and our owners will by on the cheep to cover their shorts. The Bank of Serta could be a good intermediate bet.
Joe,
Reverting to gold as legal tender would only be deflationary if priced incorrectly.
Transfering from “Word” gremlins ate my paragraph spacing.
So is this bullish or bearish for 7 Eleven stock?!
Steve, I cannot see gold being priced correctly. No way would the government price it at 20,000 per ounce. If that occurred they would be at taking gold back with guns and you and I would be holding nothing and lucky to be alive.
SWAG on the price. 8100 tons of gold estimated 42 trillion needed to be balanced to come up with 20,000.
The only revelation that matters is that precious metals have always thru the centuries been the safe haven for hedging against diminishing purchasing power. Printing of fiat currencies(paper) = devaluation of purchasing power(economics 101). In times of lost faith, excessive expansion of currency printing, and runaway debt, PM’s will rise in value as that safe haven. At some point in the future there will come a time to exit(sell off, trade, etc.) the PM’s for goods, services, food, shelter, other investment,etc.) This is the intrinsic value of PM’s which is always a recognized fungible asset worldwide. It’s real money. It’s value changes with the times. The overwhelming indicators are pointing toward now as being a time to accumulate PMs and to hang on to them as their values rise against the worlds declining economies and the excessive devaluing of fiat curriencies>>>>your hedge against seriously decreased purchasing power and lost wealth.
Gold Confisaction Imminent? Or Does India Simply Have An Offer For Its Citizens They Can’t Refuse…
Submitted by Tyler Durden on 08/29/2013 10:08 -0400
Even as the Indian capital outflows and current account exodus may be threatening to shut down the economy altogether (except for the three oil companies that received a last ditch USD infusion from the RBI yesterday), the central bank is planning and strategizing. And it appears to have come up with more of precisely the same that has led it to its current unprecedented predicament: prevent the population from converting their wealth into hard money, i.e., gold. But while the government’s attempts to impose capital controls on gold purchases have been well documented, the latest foray is just a headspinner. Reuters reports that India is now considering a “radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.”
Here we can safely assume that the commercial banks will pay for the gold in… Rupees which just hit an all time low?
And not just any rupees but rupees just fresh off the central bank’s printer.
Ok, here’s a hint: the “ordinary citizens” are not stocking up on gold so they can (profitably) sell it to the banks, the government, the BIS, to China, or to the JPM NY vault – they are doing so because they want to preserve their purchasing power. So what is the government’s proposal? Why let’s give people worthless pieces of paper for the asset that just hit a record high in rupees.
Truly a Swiss watch plan only a central-planner could come up with. That is, of course, unless the “purchase” is enforced and made obligatory, maybe with the moral support of the local army? In other words, a confiscation. And no, it wouldn’t be the first time a broke government has confiscated the gold of its citizens to perpetuate a Keynesian lie.
Anyway, back to the story:
A pilot project will be launched soon, a source familiar with the Reserve Bank of India (RBI) plans told Reuters. India has the world’s third-largest current account deficit, which is approaching nearly $90 billion, driven in a large part by appetite for gold imports in the world’s biggest consumer of the metal.
With 31,000 tonnes of commercially available gold in the country – worth $1.4 trillion at current prices – diverting even a fraction of that to refiners would sate domestic demand for the metal. India imported 860 tonnes of gold in 2012.
“We will start a pilot project among some banks where we will allow them to buy back gold from individual households,” the source, an official familiar with the central bank’s gold policymaking, said. “This will start soon, we have discussed (it) with banks.”
The RBI will ask the banks to buy back jewelry, bars and coins for rupees. Lenders will have to offer better rates than pawn shops and jewelers to lure sellers.
Any talk of using the country’s gold to help meet India’s international obligations revives memories of a 1991 balance of payments crisis – when India flew 67 tonnes of gold to Europe as collateral for a loan to avoid a sovereign debt default.
Of course, when this plan crashes and burns, the only option for India will be the one we discussed previously: to lease out the nation’s hundreds of tons of gold to the BIS. That, or worse: selling it.
Earlier on Thursday, India’s Trade Minister Anand Sharma said the central bank should look into the possibility of monetizing gold holdings.
It was not immediately clear whether Sharma was referring to the 557.7 tonnes of gold the RBI holds in its own reserves, or gold in private hands. He did not give more details of how the proposal would work.
“I have not said there should be any mortgaging of the gold, or auction of the gold, that is incorrect. I have just said the RBI should look into … how they can benefit the people, particularly with regard to the bonds or the monetization,” Sharma said in response to a question in parliament.
Earlier this week in comments reported in the national media, Sharma said “even if 500 tonnes is monetized at today’s value it takes care of your CAD”, or current account deficit.
Selling gold reserves may sit badly with Indians, many of whom saw the 1991 sale as a public humiliation. The secret operation was only exposed after a vehicle carrying the first consignment of bullion broke down on its way to the airport from the central bank.
“It (pledging gold) will be a desperate measure, and it will send a very wrong signal to the entire country because all the time we’ve maintained that things are under control even though things are adverse,” said Madan Sabnavis, chief economist at CARE Ratings in Mumbai.
Such a sale would also dent international gold prices which took a hit earlier this year after Cyprus said it was considering selling its gold reserves to shore up its finances.
So let’s see: dumping India’s gold kicks the can on the Indian economic collapse and current account , if only for a few months, and kills the price of gold again. Why, this is a slam dunk plan as far as the internal brotherhood of banksters is concerned. Which is why it will happen sooner or later. As for the popular outcry against this move, why cares? It is not as if the popular opinions matter when bankers make decision.
And it will happen: it is only a matter of time. But once it does, everyone will be shocked, shocked that the government is dumping said gold. Just like everyone was shocked that the rupee imploded in the past month despite the extensively documented signs which we reported yesterday. The full list:
•Jan 21 – The government raises the gold import duty by 2% to 6%.
•Jan 22 – The government more than doubles the duty on raw gold to 5%.
•Jan 30 – Finance Minister P. Chidambaram says there are no plans for additional taxes or curbs on gold imports.
•Feb 1 – The Reserve Bank of India (RBI) plans to introduce three or four gold-linked products in the next few months.
•Feb 6 – The RBI says it would consider imposing value and quantity restrictions on gold imports by banks.
•Feb 14 – The central bank relaxes rules on gold deposit schemes offered by banks by allowing lenders to offer the products with shorter maturities.
•Feb 20 – The Trade Ministry recommends suspending cheaper gold jewellery imports from Thailand.
•Feb 28 – India keeps its gold import duty unchanged in its annual national budget, defying industry expectations.
•Feb 28 – India proposes a transaction tax of 0.01% on nonagricultural futures contracts, including for precious metals.
•March 1 – The Finance Minister appeals to people not to buy so much gold.
•March 18 – The Reserve Bank of India says it is examining banks that sell gold coins and wealth management products to identify “systemic issues”, with a view to closing any legal loopholes.
•April 2 – The Finance Ministry suggests it is unlikely to raise the import tax on gold further to avoid smuggling and would instead introduce inflation-indexed instruments.
•May 3 – The RBI restricts the import of gold on a consignment basis by banks.
•June 3 – The Finance Minister says India cannot afford high levels of gold imports and may review its import policy.
•June 5 – India hikes the gold import duty by a third, to 8%.
•June 21 – Reliance Capital halts gold sales and investments in its gold-backed funds.
•June 24 – India’s biggest jewellers’ association asks members to stop selling gold bars and coins, about 35% of their business.
•July 10 – India’s jewellers announce they might continue a voluntary ban on sales of gold coins and bars for six months.
•July 22 – The RBI moves to tighten gold imports again, making them dependent on export volumes, but offers relief to domestic sellers by lifting restrictions on credit deals.
•July 31 – India hopes to contain gold imports well below the 845 tonnes that were shipped last year, the Finance Minister says.
•Aug 13 – India hikes the import duty on gold for a third time in 2013, to 10%. Duties for silver and platinum are also increased to 10%. The customs duty on gold ore bars, ore, and concentrate are increased to 8% from 6%.
•Aug 14 – India turns the screws on gold buying again, banning imports of coins and medallions and making domestic buyers pay cash.
TeresaE = +1000
If you can’t stand over it with an AR15, you don’t own it. (hat tip Ann Barnhardt)
Actually, for most day to day transactions, silver is a better bet.
That being said, “things” are less valuable that “skills” when TSHTF.
If the rupee collapses, 1 BILLION Indians (the forehead dot kind) are going to be really pissed.
Lucky not too many Indians drive Hummers. That gasoline bill is a real doozy.
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Do you think there will be some social unrest in India? Food and energy already account for over 50% of their living expenses.
Reflections on Peak Oil, India, Asia, and Global Growth; What’s the Mathematical Outcome?
In response to Currency Lessons: Think a Sinking Currency is Always Good For Manufacturers? my friend “BC” pinged me with a few comments.
1.India has a trade deficit of 10% of GDP.
2.70% of India electricity generation is from fossil fuels.
3.100% of India oil consumption is imported.
4.20% of India natural gas consumption is imported.
5.India’s Domestic crude oil and natural gas proven reserves are equivalent to 4-5 and 11-12 years of consumption at the 10-yr. trend rate.
6.India is a disaster of national and regional instability in the making and not far behind Turkey and MENA [Middle East and North Africa].
7.The ongoing economic decline or collapse and social disintegration in MENA, Turkey, Pakistan, Indonesia, India, and parts of China, will make the economic, social, and political landscape increasingly difficult, if not impossible, for most of us.
What’s the Mathematical Outcome?
India wants to maintain 6% growth. China wants to maintain 7.5% growth. The US wants to maintain growth. Europe desperately wants to resume growth. Every country on the planet wants to increase exports relative to imports.
Ignoring Turkey, Indonesia, Pakistan, Africa, and the Mideast, the wants and needs of India, China, Europe and the US are mathematically impossible. That every country on the planet wants to increase exports relative to imports is mathematically impossible in and of itself.
History suggests that war is the inevitable outcome of such tensions, and clearly tensions are building.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Turd Ferguson with a fascinating case for gold to skyrocket between now and September.
http://www.tfmetalsreport.com/blog/5018/evidence-gold-corner
Hello guy
goodpost