Arabs wait til Ackerman away to lay oilless shell !
Naturally, the Arabs announced their default in the dead night an Holiday with RA away to stun the masses !

Aloha Chris T et al

I sold my gold and silver because I do not trust trailing sell stops to get me out safely in times of mania. I may buy them back.

I still hold Exxon Mobil. WEB sold his silver and bought some XOM.

Saw your thoughtful post and attempt to respond in kind, begging the indulgence of Rick and other RA posters for this length with documented detail.

In 2009 National Geographic reported a higher total global gold estimate of 161,000 tonnes.

http://en.wikipedia.org/wiki/Gold

That’s some 5.7 B ounces of gold versus a $69 Trillion Purchasing Parity Global GDP.

At that rate, one might expect gold to trade at or above $12,105 an ounce, as we said after the 1980 peak when we wrote Milton Friedman and Alan Greenspan about dollars versus gold and AG’s 1967 endorsement of the gold standard, his Gold and Economic Freedom essay in Ayn Rand’s Capitalism, The Unknown Ideal.

http://www.usagold.com/gildedopinion/greenspan.html

Martin Armstrong sees gold at $5000.

http://www.martinarmstrong.org/files/GOLD-5000-11-11-09.pdf

Most predictions are wrong, although Rick’s are more often right than most. Things change.

China surpassed South Africa as the world’s largest producer.

There may be no global gold production peak. There was no oil production peak, despite Paul Ehrlich’s Population Bomb, The Club of Rome’s Limits to Growth, global warming Kyoto Cap Trade, war and other schemes to justify more population control and taxes.

There is gold in abandoned mines, Antarctica, Greenland, Iceland, the seabed and even seawater. At some price it becomes economic, if not political.

China, like Russia now and the USA in the post-Civil War with Comstock and the Thirties with Homestake, is buying much of its gold from domestic production.

We agree a significant quantity of global gold may be gold plated lead or tungsten. The price of gold may have already risen to discount this.

http://www.marketoracle.co.uk/Article15143.html

That is one reason Gold Eagles protected from counterfeiting by the Secret Service sell at a premium when they are available.

http://en.wikipedia.org/wiki/American_Gold_Eagle

Various exchanges reportedly recently accepted 22 karat or less pure coin melt gold at a discount from for delivery to Asians after they refused 25% cash settlement premiums.

http://news.goldseek.com/GoldenJackass/1259100000.php

The NY Fed where Treasury Secretary Geithner was President, holds one quarter of the world’s gold reserves. The third Bruce Willis Die Hard movie was about robbing it:

http://abcnews.go.com/print?id=5835433

Gresham’s Law observed bad money drove out good since ancient coins were clipped. Alexander, Egyptian, Solomon, Inca gold was stolen, the US Constitution definition of gold and silver as legal tender was repudiated and perhaps Fort Knox, New York Fed, Denver, Philadelphia, San Francisco and West Point Mint gold was moved.

http://en.wikipedia.org/wiki/Gresham%27s_law

Gresham’s Law is the reason most central banks like the Federal Reserve keep physical gold, while lending dollars for bonds and stocks backed by electrons and faith. They may occasionally sell it when they think it is overvalued, one reason GATA accused them of manipulating the gold price.

http://www.ecb.int/press/pr/date/2009/html/pr090807.en.html

We note the current proliferation of hedge gold funds and paper gold funds including GDXJ with John Paulson bringing out a new gold fund in January. These big players apply leverage to the gold price that exaggerates movements to the upside and increases downside risk.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6600825/John-Paulson-to-invest-250m-in-new-gold-fund.html

No wonder gold went parabolic, with Trailing Sell Stops protecting terrific profits like BRYN and CDE. (Please note these are not recommendations!)

http://www.goldalert.com/stories/Gold-Price-Surges-Toward-1200-5-Reasons-for-Golds-Bull-Market

Is it possible the price of gold discounts all the bullish fundamentals including the dollar carry trade and is just trading on mania momentum?

I saw gold spikes in 1971, 1980 and now. Two of the three were followed by gold crashes. Maybe this time things are different. Maybe not.

Like oil, the last dollar refuge for big money, when things go parabolic, do they not sooner or later hit air pockets, particularly when retail trade is the most ebullient?

Do we agree on that?

http://www.cnbc.com/id/34121808

We may disagree about the effect of Gresham’s Law on ersatz gold and paper gold ETFs.

Gresham’s Law does not necessarily discuss leverage. Borrowed money is often the precursor to great declines with margin call induced selling, as we saw with Dot.com, Hunt Silver, Stock and Real Estate Bubbles.

It is a singularly notable event when the IMF decides to sell 403 tonnes of gold, one eighth of their reserves, 12,965,649 troy ounces (12 Roman uncia/ounces per pound) with India buying almost half.

http://en.wikipedia.org/wiki/Troy_ounce

What frantic gold bull headlines luring lemmings to plunge do not disclose is that the IMF is selling gold accumulated since 1978 at much lower prices. Buy low and sell high makes money. Buy high and sell low does not.

http://www.imf.org/External/NP/EXR/faq/goldfaqs.htm

Despite mistakes made by Federal Reserve and Treasury Bankers at the expense of consumer citizens and taxpayers, not all investment bankers are fools.

This is why the Big4 are 170% short gold and 450% short silver. Are they really naked shorts when big banks can borrow all the money they want from the Fed?

http://www.cftc.gov/dea/options/other_lof.htm

So far, George Soros is the only person we know who broke the Bank of England with his reflexive trading after losing a lot trading against GS on 20 October 1987.

http://en.wikipedia.org/wiki/George_Soros

Now we have hysterical predictions of higher gold in 24 hours by professionals that often mark mania tops and career changes.

http://www.zerohedge.com/article/gold-set-hit-1200-within-24-hours

Even mass media headlines are ebullient, albeit hiding the fact the GLD holdings peaked out at 1134.03 tons last June 1st:

http://www.smh.com.au/action/printArticle?id=918781

Let us not forget China last Summer warned of defaulting on select underwater toxic commodity derivatives. This is hardly bullish for gold.

http://www.reuters.com/articlePrint?articleId=USTRE5801UT20090901

Combine that with the 49-week average maturity of US Treasurie3s that must be rolled over, plus growing defaults in hundreds of trillions of derivatives that dwarf gold, and we may have the making of interesting times.

Why are the Big4 240% long the dollar? Do they have a death wish?

Maybe someone can post a bearish current headline on gold to suggest it continues to climb a wall of worry?

Or is gold now a religion for true believers?

Your point on the export of America’s productivity is well taken and one with which I agree. Politicians long promised something for nothing. So your question about what productivity bonds, dollars (and stocks) represent is a good one.

Warren Buffett and Bill Gates’ answers were that the best is yet to come. I work to have enough money to share their optimism.

I agree with Steve Forbes’ observation that borrowing, spending and taxing our way to a weaker dollar that creates a weaker economy. He cited the example of Reagan and Volcker, who cut taxes and raised interest rates to protect the dollar and provide a better return on paper and industrial assets.

Some observe than China, Japan and India want to build their factories here.

Steve also observed that if a weak dollar were the answer, Argentina and Zimbabwe would rule the world.

http://www.cnbc.com/id/15840232?video=1340401174&play=1 9:42

Some argue that opportunity is long gone and it is too late to recover.

I expect not.

Based on half a century of participation in markets, I have learned to pay more attention to what people do with their money and less to what they say.

Higher prices in gold lead to higher real interest rates and scarcer money and credit. Right now Bankers are tightening, and this is not bullish for most markets except bonds and dollars.

I have often been early, one reason I read Rick and use Trailing Buy and Sell Stops.

People tend to extrapolate recent performance.

Yet there are still buyers and sellers to every market.

People who can go against the crowd may make the most money.

Meanwhile, the answer may be a transaction tax replacing income and payroll taxes on productive jobs and savings, with higher interest rates and a strong dollar signaling it really is time to Buy American as WEB said last Fall.

I have no idea if that event is days, weeks, months, quarters, years or decades away.

Meanwhile, deflation does seem to have more money on its side.

By the way, both Dr Friedman and Greenspan responded they thought there were too many dollars to return to a gold standard.

Regards*Rich

http://www.jubileeprosperity.com/

Rick,

I used the word hyper-inflation perhaps misguidedly. I meant that double digit inflation will not come back. I, under any circumstances, would not expect true hyper-inflation to take hold. It is higly unlikely simply because most industrial nations are in the same boat as we are. A global depression will not single out our economy and currency.

Rich,

as this is a belated post, you prob. won’t see it. however:

you write:

“When more of us realize they do not hold the unencumbered physical, or worse, hold gold plated tungsten, the gold game may be over.”

Your statement is contradictory. Yes, the realization of fraud in gold, where unencumbered physical was sold but fake-paper-gold-promise were delivered, will turn some/many who want gold away = declining demand.
BUT, the realization you mention will finally show that the supposed supply is MUCH MUCH smaller than most had thought. The tungsten alone has been purported to be about 12% of that mythical 150kt.
Which will be greater, the decline in demand, or the decline in supply? I wouldn’t be so sure about the former. If these frauds prove true, the game may not fizzle, it may advance to the next level.

This is not different than a bank run in a fiat system, where the same dollar has been promised to many. Those that have their cash out already (=those who hold real gold) are doing great vs. all those that stand in front of the locked bronze doors. (=those holding now-outed fake paper gold).

This is deflation, sure, as the amount of money in the bank run example suddenly gets less, so appreciates, but so does the amount of gold suddenly get less, and so also appreciates.

“Only wish we had more gold and stocks to sell for bonds and dollars in this deflationary Jubilee Winter season.”

It may happen, but what is the compelling argument for US paper, bonds or dollars? What do they represent in terms of productive output? What do we still make in this country?
For every two private sector workers, one works for government. This latter third produces NOTHING, it is pure consumption leeching off the former two-thirds.
And of that former two thirds, how much is active in furthering consumption?
Casinos, restaurants, the medical profession, hotels, and yes the housing industry (as you recently pointed out being consumptive)…

Not much left as a compelling argument for our paper.

Finally, cash and bonds are sandwiched between gold on the bottom and stocks above in Exters pyramid. The deflation in assets we read so much about here (derivatives, houses, stocks etc, etc), is crashing down onto bonds and cash, appreciating them. But the crash continues to the bottom layer, onto gold, appreciating it also.

I wouldn’t put such high praise for the Chinese Intelligence just yet.
History has a way of repeating itself but usually not during ones own lifespan. Human nature places the most current experiences as the most prominent ones when determining likely outcomes. Since the cause for deflation and depressions is so obscured by time its no wonder everyone is looking for hyper-inflation to be the end result of this massive Fed infusion.

All bets are that the dollar gets trashed and hyper-inflation ala 70’s come roaring back. Can you imagine if they are wrong?

&&&&&&

The 1970s produced nothing remotely approaching hyperinflation, Gary. Read every word at the following link if you want to understand exactly what it takes to create a hyperinflation. None of the mechanisms that Germany had in place to do so after WWI are present in the U.S. right now; nor is the will to use them. Not one person in a million could tell you how Weimar printing-press money actually found its way into the economy. Read this and you will understand:

http://mises.org/resources/4016

RA

Your phrasing (as in today’s post) including, ” … bullish environment for gold contains more testosterone than a Chicago stockyard.” and, ” …make gold bugs wish they’d stuck with stamps, coins or some other investable whose prices is governed by staid investors who clip coupons, tie flies and train carrier pigeons when they are not tuned to Prairie Home Companion.” is reason enough to thoroughly enjoy your daily posts – to say nothing about the underlying, remarkable prescience and value of your prognostications. Write on, Mr. A.

I heard an interview from Sinclair roughly 6 years ago. He said “it was not the gold guys who pushed gold to 887.50 back in 1980, it was the central banks that did it in order to balance the international balance sheet of the federal reserve.”

It’s just interesting that now we are seeing a shift here in countries and central banks buying gold. As you said it should add support for any price drops for awhile. History may be repeating itself.

Hello,

just another $8 to go to that long announced hidden pivot, then there are no more.
Any motion in the crystal ball…