The correlation between gold and the national debt was clear for 13 years. It made perfect sense in a free market. You can’t print more gold. It is a relatively scarce metal that has represented wealth for centuries. Fiat currency can be printed at will by corrupt bankers and politicians. Every paper currency ever created eventually reached its intrinsic value of ZERO, as human beings always take the easy way in attempting to create wealth.
So what happened in 2013? The national debt has gone from $16.5 trillion to $18 trillion, but the price of gold has dropped from $1,750 to $1,200. Is gold no longer a store of value? Is creating $2.5 billion per day in new debt now the path to long term prosperity and wealth accumulation? If gold is no longer insurance against the corrupt machinations of bankers and politicians, then why are China and Russia accumulating as much physical gold as they can get their hands on?
There seems to be only one logical explanation for the abrupt break in the correlation between gold and the national debt. The free market has been manipulated to artificially suppress the price of gold. A rising gold price reveals the inflationary monetary policies of the Fed and the outrageous spending of politicians. The Fed and their owners on Wall Street, with the approval of their captured political hacks in D.C., are using the paper markets, derivatives, and lack of market transparency to keep the price of gold from rising.
The bankers are winning for now. Can they suppress the price of gold forever? Can they prop up the stock market forever? Does history provide even one example of a fiat currency that did not ultimately reach its true intrinsic value?
Are you going to bet on Grandma Yellen or gold?
When you give a group of corrupt people the power to print all the fiat they wish. When the government also declares by law that the paper they are printing is the ONLY legal tender and must be accepted for all transactions, this is what you get.
Forget the correlations, they have no meaning anymore.
Until another powerful government, China, Russia or a combination of like decides to put a stop to this shit, or the black swan appears, this corrupt rigging can continue a while longer.
They will fuck up somewhere, the old rule of unintended consequences, and when they do there will be nothing left but Gold and weeping in the aftermath.
GOLD WILL WIN!
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C’mon Admin, you’re smarter than that. Think it through. What is the gold market that derives the price that has decoupled from debt? Is it gold bullion? Or is it gold credits and promises to deliver gold on demand or at a future date? Another way to see it is to ask whether all the “gold” trades can be cleared with physical bullion? We all know that is a fantasy. Very little gold is available for deliveries of size, let alone all outstanding claims.
Gold is a fractionally reserved market, just like our money. Would it not be natural during a bank run of old to go to the bank and pull your money? This would amount to going short bank credit and going long real money. Back when bank runs were still possible, gold and cash were base (real) money.
Is it not perfectly natural to short gold credit and go long “base gold”, IOWs physical billion for delivery, if there was a pervasive fear that gold credits could not possibly perform when tested? Do we need a manipulator in this scenario? Not really. We just need to let the market do what it will do, price gold credit to demand. The physical off take will come under intense pressure and any delivery in size will be impossible at the collapsing paper price. That will be the end of the paper gold market. The meager flow of physical gold is the only thing that gives the “gold” market credibility.
With this view it becomes ridiculous to think that a manipulator would deliberately choose this course unless he wished to destroy the global system of money that depends on confidence in debt as an asset, centered of course on the Godalmighty dollar. No, the manipulators are likely quite concerned about now, seeing the run on physical gold and short on their magic gold paper.
It’s clear for those with eyes willing to see. This “gold” market wants to go down and we see periodic levitation to prop it up. If manipulation is present, it is there to provide support. Same goes with oil. Falling oil is very dangerous to the status quo.
Ask yourself who buys “gold” and why? Are they the same as those buying physical bullion for delivery? Do they have the same motivation? Follow those thoughts and you will not find yourself mystified by the chart. You won’t need to rely on a Bogey Man to justify how a natural market will resolve.
Gold is heading for a re-definition. This is exciting. We are lucky to witness it.
The last part.How long can it all be held together? That’s the question. Gold and silver are going to sky rocket in the future. I like silver more. A poor persons gold. Anything real is better than paper money.In a SHTF situation.
Gold smold. Nice for baubles, but doesn’t allow the kind of machinations the modern world seems to require to keep business moving along. Fiat allows so much more room to make more, screw over the unwary while gold sits there and does nothing. Keep the gold, give me a volatile stock market that I can long and short and when finished I’ll buy twice as much gold as I started with, while the old gold just sat there and did nothing.
Hey Johnny
Let me guess. You shorted the market in August 2008 and went long in March 2009. I love those stories.
“The existence of gold in the economy is a constant reminder of the poor quality of the government paper, and it always poses a threat to replace the paper as the country’s money.”
Murray Rothbard
“Monetary policy of the preliberal era was either crude coin debasement, for the benefit of financial administration (only rarely intended as Seisachtheia, i.e., to nullify outstanding debts), or still more crude paper money inflation. However, in addition to, sometimes even instead of, its fiscal goal, the driving motive behind paper money inflation very soon became the desire to favor the debtor at the expense of the creditor…
With the attainment of gold monometallism, liberals believed the goal of monetary policy had been reached…. The value of gold was then independent of any direct manipulation by governments, political policies, public opinion or parliaments. So long as the gold standard was maintained, there was no need to fear severe price disturbances from the side of money. The adherents of the gold standard wanted no more than this, even though it was not clear to them at first that this was all that could be attained.”
Ludwig von Mises
I did get lucky during the market crash of 2008. I mean really, considering how far down it went, it made perfect sense betting against the herd. Piled in near the bottom and have been quite happy until recently. time to lock in some of the gains right about now.
Oh Johnny
Please regale us with your fantastic returns.
We await your investment advice on when to get out.
Johnny
I’m sure you were smart enough to invest in gold in 2000 at $300 and ride it to $1,900. Right?
Or did you miss the 12 year bull market?
I await your words of wisdom.
Oh Johnny
Please regale us with your fantastic returns.
We await your investment advice on when to get out.
Please hurry John, waiting here with keen attention.
Stop teasing us, you have let the cat out of the bag about your investment wizardry.
Did you go against the crowd and buy gold at 300? Did you Short it at 1900?
Are you sure about the market top? How about the bond market any pearls of wisdom there?
I’m lost and without guidance in financial matters with your old pal RE sent packing.
He was a financial wizard that knew gold sucked as well, he went short it at it’s exact high.
C’mon John, share the wealth.
GOLD AND SILVER FIND BIG BIDS.
Astounding action gold lifts 40 dollars of it’s lows of last night after the Swiss vote, Silver was pennies from 14 and is now trying for 16 a few hours later.
Most unusual one day ranges at these lower prices,
Low high for gold 1140 1182
Low high for silver 14.15 16.37
Gold price quoted is not spot it is February Comex contract
Same with silver March Comex contract
Gold up 20 bucks now after being pummeled overnight. Unusual action.
Something is going on for sure.
Dearest John
How short sighted you are, to incinuate that old gold just sits there. How lazy are you? My gold and silver have never sat there and not worked for me, whether at 1900/49 or at 1200/16. Would you be surprised that I have doubled my position since 2008 without additional funds in silver and gold? Yes? Because you believe in the illusion of a growing market based on if ticklish economic stability. True you may grow your investment but if/when it collapses when stocks go to zero, what have you gained?
My advise to grow a gold or silver position with physical is to trade on the gold:silver ratio. Depending on your starting position majority in silver or majority in gold, trade on the manipulation.
Silver position: when above. 45:1 ratio trade gold for silver, once ratio drops to below 40:1 reverse the trade and swap silver for gold. The the ratio today is above 60:1, you should be trading gold for silver heavily, and purchasing silver if you are funding a stronger position.
Once the ratio drops and it will, trade the silver back to gold slowly at the 40:1, moderately at 35:1, heavily anywhere below 35:1
The trade activity is longer but I will always have either silver or gold and never worthless paper.
Silver certainly appears cheap Patrick, poor man’s Gold has gotten quite affordable. Was 50 bucks a short time ago.
Wow Gold up 25 bucks now as I write after being down 40, silver up over 2 bucks from it’s low almost 30 % in a day, unreal action, something big going on for sure.
Make that 36 bucks up on gold now. WOW
Bloomberg TV Blows It Big Time
Sometimes you just have to chuckle. I had been out all morning picking up some visiting in-laws in the City. When I came home I flipped on the news, and turned on the equipment in my home office.
The mid-day news highlight on Bloomberg TV at about fifteen minutes after noon today was to say that gold was down sharply, over fifty dollars, because of the Swiss gold referendum vote.
But then I looked at my trading terminal and said, ‘huh?’ Gold is rallying hard, and silver is taking the shorts out of the pits on stretchers. What is up with this?
And as a reference they cited this ‘highly popular story’ they ran from early this morning. In the updates they mentioned absolutely nothing about gold’s spectacular comeback in the morning trade, as if it had not even occurred.
Swiss Gold Rejection Deals Blow to Investors Hurt By Slump
What is the point of a real time television network when you maintain the immediacy of daily newspaper?
A clue to this might be the presence of Willem Buiter in the early morning feature, the Citigroup chief economist who says some almost absurdly myopic things about gold every so often. Buiter Fitfully Obsessing About Gold
I really don’t mind that they put out this feature story piece about the big gold decline early this morning. After all, it must have taken some production planning.
But to completely ignore the big reversal that occurred during the morning New York trading hours in the later daily updates makes one wonder about their mission as a financial news network first and foremost, when the preconceived features get in the way of the straight news. Someone is asleep at the credibility switch.
Would Bloomberg TV be this far behind the curve on stocks or bonds, for example, if they had declined sharply and then corrected all the way back up and then broken out higher? They certainly followed the rebound in AAPL this morning quite keenly, and it did not begin to match the rebound in gold.
Granted, some of the US financial spokesmodels seem remarkably uninformed about what is happening outside the confines of North America. China? What is that, a supplier to AAPL? A subsidiary of BABA? The difference between US based news anchors and those from the same networks based in Europe and Asia is often remarkable.
But to be this behind the curve on their own Bloomberg news terminal quotes, a first rate service by the way, on an important global commodity and resurgent paracurrency is appalling. Central banks went from long time net sellers to net buyers of gold around 2006 and that means nothing? Russia and China and their central banks are buying gold hand over fist, and it doesn’t even merit a mention in their meme?
Gold and silver are certainly in bear markets, and still are even after today’s surprising reversal. Whether that changes or not who can say? We will have to wait and see.
But there are many unusual and newsworthy things happening in the world of global finance and central banking these days. And choosing to ignore them is not necessarily effective financial management. There is something going on called ‘the currency war,’ and its effects make be significant, and quite possibly historic in its importance.
The tremendous sea change that has been occurring in the international monetary markets is apparently buried under a barrage of barbarous fiatscos. And only a few can see the implications.
Jesse
The hatred of gold especially by the MSM, especially CNBC is disgusting, and it is not confined to just them.
Smart people who should know better beat on it constantly and ridicule gold bugs.
Ilargi is one such example over at TAE, Had it out with him today over his constant berating of gold.
Here is a man that decries credit, the entire bankster bubble, looks for a deflationary collapse, and constantly singles out gold and defecates on it. Hard to understand.