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Let Gold Do Its Job!

21 comments

[A recent commentary here, Pass Line Bettors Finally Seven Out, drew a spirited response that included the post below. It is from Robert Moore, a forum regular and gold bull whose online profile describes him as “the obvious Pragmatist.” Mainly, says, Robert, its all about trying to protect one’s savings from theft-by-Government. RA]

Regarding the following, commonly held scenarios expressed within this lively discussion:  1) Catastrophic deflation, debt diminishes and debt-derivatives implode, versus 2) hyperinflation, as the the money masters print feverishly to prevent #1 above; or my personal favorites: 3) one, followed by two, which is nearly always countered with:  4) “No, you idiot, it will be two, followed by one.” There is the obvious fifth option that everyone overlooks, and yet not one person in a thousand will be honest with themselves as to why they overlook it. The fifth option is the unfettered (i.e., unencumbered, free-market) revaluation of that most contentious of non life-critical physical assets (yes, I mean Gold).

All the central banks need to do to restore faith is to get out of the way and let markets do what they have always done: clear themselves. The message that humanity is sending the Keynesian water-carriers is that “more debt will not restore confidence,” and I dare any of you to try and play God with me and declare that more debt will restore confidence.

No Debt Will Go Unpaid

There is a point where a burned lender will refuse to lend more, and there is likewise a point where a burdened borrower will refuse to accept any more burden. We (i.e., humanity) have passed that event-horizon. It is in the rear view mirror. The debts must be paid, forgiven, or defaulted, in order to start the process of restoring confidence. Period. The only reason this is not occurring (and is being fought so aggressively by bankers/lenders) is:  religion. Not Christianity, not Judaism, and not even Islam. The religion that the central bankers cling to as their jihadist rally-cry is Keynesianism. “More debt equals more happiness — just trust us on that,” they say.

Well, gang, it’s been five years, and the global “happiness” and “confidence” gauges have barely budged.  Everyone cheers when one of the gauges moves a hair off zero. Then we wail when it drops back. It’s ridiculous.  The only reason the credit-mongering jihadists refuse to step aside and let the markets work their magic is that They (i.e., the Keynesian academic powers that be) are terrified that doing so will spell defeat in a war of ideas with a bunch of unsophisticated, uneducated, uncivilized, fringe-lunatic, tinfoil hat-wearing Goldbugs.

Know the Enemy

However, the first rule in war is to know the enemy. The Western bankers will lose the gold war (or have already lost it) not just to the likes of Sprott, Rogers, Faber, Casey, Bass, et al. They have lost it to the majority of human beings who reside on this planet outside the periphery of central banking and the regulated economies of the West.

Gold is savings. Gold is money.  These ideas are embedded in people’s minds in India, Southeast Asia, China, Russia Africa, and even over a wide swath of South, Central and North America. Even the Japanese seem to know it. As to why propagandist elitists like Krugman, Summers, Bernanke, Rubin, Draghi et al. still think their war is worth fighting, the answer is not totally lost on me, however. The reason, quite simply, is nothing more than academic ego and pride. A pity that so many around the world will continue to suffer economically so that these sociopaths can continue experimenting with aggressive monetization that supposedly will be pared back someday in order to allow unrigged markets to flourish.

I say let Gold do its thing — blow the ultimate bubble; then pop; and, finally, restore human-driven concepts of value. To those who believe Gold prices would collapse if the banks let market forces prevail, then great!  Let the POG collapse. If the perceived high value of Gold must finally vanish from our psyches in order to usher in a new era of truly free markets, the price will have been worth it.  It’s long past time to restore reality and to get on with what’s important. Arguing about inflation and deflation is not.

Please do not ask trading questions!

  • mava June 11, 2013, 3:47 pm

    The US government and it’s certified priests of finance are lying. But, their lying is obvious, – because while they say that gold is a barbarous relic, they build and protect Fort Worth and their other gold storage repositories.

    If gold is nothing than give it all to me! Liars!

    Speaking of the ill peace, which would happen if Bernanke, Krugman, and other idiots admit that the gold bugs won, we do not need it. At this point, such piece would be to the benefit of Krugman et al. Instead, I like them to continue the war, destroying their positions completely.

    It is the most pleasant war of all, I must admit. You have a goldbug and an idiot, fighting. The idiot thinks gold is nothing. So, the goldbug says, ok, give it to me! Here is your paper that you love, and give me the gold that you do not need.

    In the real world war, that would be as if islamic terrorists declared that they all want to die, and without even killing anyone else. Imagine that? They would go out and seek someone in captivity, or a hostage, get that hostage to return home, and in return they would insist on being blown up.

    On the fifth option: Not so scary, I thought of it, because it had to be taken in consideration, not because it is viable, but because it could be viable if we weren’t talking about gold. And considering it, simply makes you calmer, as it is not applicable to gold.

  • John Jay June 11, 2013, 5:00 am

    Robert,
    Here is a link to a history of US Postage stamp prices since 1863.
    http://www.akdart.com/postrate.html
    Postage stamp prices bounced around at 2 cents or 3 cents from 1863 to 1958, almost 100 years of price stability.
    You can look at the chart and see the progression of inflation once stamp prices hit 4 cents in 1958.
    A wonderful synopsis that illustrates what has happened in this economy over the past 50 plus years.
    A 1500% increase in postage stamp prices in 55 years.
    Gasoline prices have gone up about 2,000% over that same time period.
    Ben ignores those long term charts and cheers when gas prices drop 15 cents.
    Wow!
    We never had it so good!

    • VegasBob June 11, 2013, 9:58 am

      John Jay,
      Your commentary about inflation is precisely why I just laugh when Ben “Bernokio” Bernanke talks about “low inflation” or “inflation expectations” being “anchored.” It’s all such an obvious lie, not that Bernokio could ever recognize the truth, much less speak it.

      Rick is right. We ought to let the system collapse. Our economic system needs to be purged of fraud, lies, deceit and deception. The masses will not suffer any worse than they have been suffering for the last 5 years.

  • Troll June 11, 2013, 3:57 am

    We don’t actually know how Gary does as a trader. It is one thing to come on here and lecture people because of negative thinking, another thing entirely to “put your money where your mouth is.” Sure, Gary has been “right” on any number of occasions, but that doesn’t really mean he’s had his own money in play, backing up his comments. I don’t mind Gary (I think it’s good to have some alternative points of view), but at the same time, we really don’t know if Gary has been trading his opinions. Some snap shots of your trading acccount would be good, Gary. Good calls and sleeping at night with money on the line are two different things.

  • BigTom June 10, 2013, 8:26 pm

    “All the central banks need to do to restore faith is to get out of the way, and let markets do what they have always done:….”

    Nice article and makes absolute sense on its merits. Gold, I agree, is a tangible form of protecting ones savings and not so much an investment strategy. However, if I may beg to differ on one point; ‘restoring faith’ is not the intentions of what it is the central banks, or whoever, are actually doing here…… ‘happenstance’ is not an option at all in this sordid affair. Whether ‘sordid’ plays out is yet to be seen, but ‘sordid’ does seem to be imposing its values via a costly distraction by most…..I’ll skip the pass line betting here and put my money hopefully on the ‘don’t come’ mark…..

    To let ‘gold do its thing’ as you say, would be a capitulation of decades of work by those at the roll box now. I don’t see that happening voluntarily…..

  • gary leibowitz June 10, 2013, 6:53 pm

    The unburdened response of letting all fall where it may is anything but. You can’t allow the financial system to fail and expect some cathartic outcome. Absurd. Do you really think “starting over” will be less painful? We have no choice and as you will see history will repeat. We have had many financial crisis in the past and the notion that this one will free us once and for all is a fools dream. It will be painful and new rules and laws will be enacted to try and prevent another debacle, but the notion that we are going to enter a new world economy is just a pipe dream and will never get fulfilled.

    Capitalism is a sloppy system. When you are a recipient of the upswing all is good in the world. No system will ever be perfect. No system will ever be truly fair to all. Perhaps an economist will emerge as radical a mind as Einstein and change the way economic systems work. Until then, expect a roller coaster ride.

    The notion that the world economies will crumble and allow for a new system to take it’s place is naïve. We will continue to live with this system and continue to experience a golden era on one end and a financial debacle on the other. And so it goes…..

    Do not count on Gold to be your savior, or life raft lifting you from this storm. It also has its cycles. You must be as nimble playing gold as the stock market. To suggest otherwise is going against all odds.

    • Rick Ackerman June 10, 2013, 9:19 pm

      As always, your misreading of what most others in this forum supposedly think is egregious. No one in here has said a ‘new’ system is going to usher in a golden era. But it will usher out the putrid lies, delusions and cancerous corruption that sustain the current system.

  • paul June 10, 2013, 4:38 pm

    Excellent commentary today! I really didn’t disagree with anything or anyone thus far. The honest declaration of the outright fraud being perpetrated by the federal reserve and the fed goverment is downright refreshing!

  • John Jay June 10, 2013, 3:30 pm

    Rick,
    I heard or read somewhere that the total of all Government debt in California is……… one trillion dollars!
    That is a combination of the debt from the smallest town to all the accumulated State government debt.
    Government has reached the point where outright Fraud is required to maintain the illusion that the five decades of looting the wealth of this Nation never happened.

    As all the recent fury over Big Brother surveillance proves, the next step will be confiscation of wealth and Civil Rights via a brutal Police State.
    It’s already popping up in Obamacare with the sales tax
    on real estate transactions above the current capital gains exclusion if you are “Wealthy”.
    It excludes 97% of us, but so did the Income Tax when it first appeared back in 1913.
    It’s all closing in now so I would expect increasingly Draconian pressure from the center of the Black Hole in DC to postpone the implosion from reaching them.
    Fraud will be increasingly replaced by repression.
    It didn’t work for Diocletian back in 301, but he did not operate on a global level like Uncle Sam.
    We’ll see what happens, won’t we!

  • KevinR June 10, 2013, 2:09 pm

    While I agree this is what ‘should’ happen, it will not. They will not step aside and let the free market decide. They will manage and manipulate to the bitter end – because after all it’s truly about CONTROL. My personal feeling is, the ONLY way that anythig will TRULY change is when the every last ounce of gold has been sucked out of these supposed ‘exchanges’ and there is no more to deliver. Until then it will be business as usual for these bankster criminals and their naked shorts, etc.

    In the mean time, if they smack it down to $1200 or even $1100 then that would be like buying it ‘on sale’.

  • John Jay June 10, 2013, 6:28 am

    It’s been one long inflation since LBJ substituted token coins for silver coins, and wages never kept up with it.
    So the use of debt to make up the difference maintained prices at inflated levels until about 2000 when Easy Al started Proto-QE for Y2K.
    The debt levels then grew so high it necessitated Fed mandated Proto-ZIRP/Bond Buying, because interest rates set by the market would spell a collapse in the Stock, Bond, and Housing Markets.

    Even ZIRP is now insufficient to keep all the bubbles inflated, so outright fraud, sanctioned by Uncle Sam has been sent “Over the top” to stop the game ending deflation that is waiting in the trenches just past “No man’s land”.
    MBS paper with the same mortgages pledged multiple times bought at par by the Fed.
    HFT scams in the stock market, MF Global etc.
    A years worth of PM production sold short in a day.
    Allocated PMs that were never really there.
    You know the drill.

    Even with all these weapons it is still beginning to implode at the Municipal level.
    Detroit, Stockton, Jefferson County AL.
    Philadelphia schools plan to layoff 3800 staffers.

    So Inflation led to Debt led to ZIRP/QE, which has led to outright, government sanctioned fraud.
    And suddenly, everyone wants their Gold back from the Fed or from bullion warehouses, the Players know about the Fraud better than anyone.
    I believe India and France are already placing restrictions on Gold owned by average citizens.
    What’s next?
    Confiscation of savings accounts, a la Cypress?
    Or pull a FDR and drive the price of Gold down and mandate you turn it in to Uncle Sam, then jack up the price!
    Hard to say, but I am certain that honest price discovery in the PM markets will remain Verboten!
    Or any market for that matter!

    • Rick Ackerman June 10, 2013, 7:11 am

      The fiscal implosion at the municipal level is an urgent crisis to watch, for sure, since, unlike the U.S. Government, cities cannot print money. Flint, MI, for one, cut its budget to the bone, eliminating nearly all basic services — eliminating nearly everything — to deal with a recurring budget shortfall of about $10M per year. But guess the size of their long-term structural problem, arising mainly from the city’s obligation to pay retirement benefits to all those lucky former Flint employees who put in their 30 years? Answer: About $600 million.

      There are probably dozens, if not scores, of U.S. cities that will have to confront similar structural problems. And if you’re talking about Detroit, New York City, Chicago and other big cities, the numbers far bigger — almost beyond imagining.

      With municipal employees continuing to retire at 55 with absurdly generous benefits while the rest of us contemplate working till we’re 80, sooner or later there is going to be a civil war over this issue. In the case of Stockton, CA’s bankruptcy, the court has established a legal precedent that could conceivably allow cities to tell their retirees, sorry, the money simply isn’t there.

    • gary leibowitz June 10, 2013, 7:24 pm

      The Union bashing continues. When we have hardships one theme always emerges. Blame the weakest group since you now have a target to vent your frustrations. Just answer me this. Why were these municipal jobs lacking worker enrolment for decades? Why did the municipalities have to sweeten their benefits to entice employment? It was and still is a lousy way to make a living. Long hours, large government bureaucracy, brain numbing rules and regulations, and stifles innovative thinking. While there are always people happy in their position in life, in this instance it would be the exception. Do you suggest that Unions were responsible for “forcing” governments to lavish contracts? Did you know that “before” the economic downturn 50 percent of NY City teachers left within their first 5 years? How can that be with such perks? They must be CRAZY!

      Ask someone that worked in these municipalities and tell me they thought they were milking the system. Ask them if they know the exact date they will be eligible to retire, and why they keep that date in their heads. Sanitation. Bus, Subway, Cops, Fireman. Check out the facts and tell me people were clamoring to get in on this great deal.

      The benefits certainly sound great on paper. In fact I wish I had a pension. I would go so far as to suggest all private businesses automatically place you into a pension system and if laid off or quit, accumulate the years on another job. A national pension system to replace social security as a form of retirement pay. This encourages working if healthy, and lessens the national burden. For businesses I would lower their tax structure to compensate for this social welfare system.

      The sad part about this whole mess is that municipalities will renege on their obligation to pensioners with the endorsement of its citizens. Divert blame to the poor snuck that went into governments work for its job safety and guaranteed benefits.

      &&&&&

      Blame the ‘poor snuck’? Hardly. An accretion of absurdly generous benefits took root more or less surreptitiously over the years, with no one to represent taxpayers in opposing them. Those were prosperous times, after all, and who cared? I benefited for a while myself, since my wife taught at a California college. That was 15 years ago, and even then, when I was receiving at no personal cost and as a tax-free benefit such perks as dental care, eyeglasses, prescription drugs and unvetted specialist visits, I knew that the teachers were getting a far better deal than taxpayers knew about or could afford. What really drove it home was the ‘free’ $600 orthotics I received through a podiatrist.

      Maybe the attrition rate for NYC teachers was so high because, unlike teachers most everywhere else, they didn’t get the free parking space that usually comes with the job. Maybe it’s because so many NYC public schools are so horrific. It figures, though, that you would cite the NYC system to buttress your lame argument. Anyway, whatever teachers are paid, such benefits as having whole summers off, plus 22 paid holidays a year, including two or three weeks for Christmas and — outrageously — a whole week for Thanksgiving, plus zero overtime demands — all of those things make me most unsympathetic toward the ‘poor snucks’. The taxpayers have been had, and the only thing that will save them is that even if you were to tax them at 100%, there wouldn’t be nearly enough money to pay off the retirement claims of teachers and other public employees. RA

    • gary leibowitz June 10, 2013, 11:34 pm

      There was never a clamoring for government jobs. The fact that local governments made a contract that in hindsight seems very unfair is not the fault of the Unions. There was no forced mandate, in fact didn’t Reagan make a show of the air traffic controllers when he was president?

      To void a government contract because you don’t like the terms is very un-American wouldn’t you agree? If you thought the benefit to your family was too generous perhaps you should have paid out of your own pocket.

      You argue against the common workers union membership while the disparity between the super rich and rest have never been this great. Never. The money is not in the hands of the middle-class. Perhaps you should look elsewhere. Blame the local criminal who robs a candy store while not one individual or institution was blamed for the mortgage debacle. I think your anger is directed EXACTLY where the people in control want it to be. Look at the stats when it comes to economic hardships and unions. The peak was in mid-50’s and late 70’s. How was the economy doing then? Did Unions make or break the economy? In the 20’s and now? Take a guess. Lets break up unions and all it stands for and lower corporate rules and taxes. Lets go back to pre-union times. As a factory owner it sure was the best of times.

      After an economic calamity where white collar theft exposed the coffer was bare, an easy target was the workers themselves. Where was the fiduciary responsibility to make sure governments had the money stored away to cover such expense? Why not blame all the retirees that are receiving double the social security they should have? Lets just euthanize all people over 75.

      Place your anger at the source, not the middle-class. You make a great case for disbanding workers Unions. Private pensions have already gone. I am sure the balance of power will right itself once Unions and Pensions are completely wiped out. Can you guess who these changes will help the most? I find it amazing that we pick a fight with ourselves and have a civil war instead of trying to change the real imbalance of wealth and power.

      &&&&&&

      You can hang the super-rich in the public square for all I care, since most of them got that way because shareholders cared even less about corporate governance than taxpayers cared about outlandish public-employees’ retirement benefits. Rising share prices and criminally generous stock-option deals were all it took for the corporatists to loot America. Who cares whether executives are scoring eight- and nine-figure compensation packages when share prices are rising and there’s some trickle-down for all of the shareholder riff-raff?

      Considering what has gone on in the boardroom, I think it’s great that the unions have been able to claw back their fair share. But taxpayers/Baby Boomers/the broad middle class should be forgiven for resenting the fact that, while they may never be able to retire at all, public employees are doing so at age 55 in these hard times, and many of them will collect 90% of their peak salaries for as long as they live. It doesn’t help when the occasional story surfaces about public employees retiring years ahead of schedule because of accumulated sick days and comp time so generously bestowed that such a policy could never even remotely exist in the private sector.

      The point I keep making, though, is that the money is not there to keep public employees’ perfectly legal Ponzi game going. Sooner or later, there’s going to be war over their retirement benefits, and it may not be bloodless. RA

    • Robert June 11, 2013, 12:08 am

      “It’s been one long inflation since LBJ substituted token coins for silver coins, and wages never kept up with it.”

      Actually, this began with Arcadius circa 400 AD…

      Attempting to destroy the value of productive peoples’ labor and effort has been the intent of non-productive and bureaucratic idiots for eons…

      Nothing new under the sun.

  • Terry S June 10, 2013, 4:40 am

    Sitting In Limbo by Jimmy Cliff
    Sitting here in Limbo
    Waiting for the tide turn.
    Yeah, now, sitting here in Limbo,
    So many things I’ve got to learn.
    Meanwhile, they’re putting up a resistance,
    But I know that my faith will lead me on.

    Sitting here in Limbo
    Waiting for the dice to roll.
    Yeah, now, sitting here in Limbo,
    Still got some time to search my soul.
    Meanwhile, they’re putting up a resistance,
    But I know that my faith will lead me on.

    I don’t know where life will take me,
    But I know where I have been.
    I don’t know what life will show me,
    But I know what I have seen.
    Tried my hand at love and friendship,
    That is past and gone.
    And now it’s time to move along.

    Sitting here in Limbo
    Like a bird ain’t got a song.
    Yeah, I’m sitting here in Limbo
    And I know it won’t be long
    ‘Til I make my getaway, now.
    Meanwhile, they’re putting up a resistance,
    But I know that my faith will lead me on.

    I don’t know where life will take me,
    But I know where I have been.
    I don’t know what life will show me,
    But I know what I have seen.
    Tried my hand at love and friendship,
    That is past and gone.
    And now it’s time to move along.

    Gonna lead me on now.
    Meanwhile, they’re putting up resistance,
    But I know that my faith will lead me on.
    Sitting in Limbo, Limbo, .Limbo.
    Sitting in Limbo, Limbo, Limbo.
    Sitting in Limbo, Limbo, Limbo.
    Meanwhile, they’re putting up a resistance,
    But I know that my faith will lead on.

    • BDTR June 10, 2013, 7:28 am

      Here’s what resistance looks like today, T, as well as limbo, …and faith.

      http://www.guardian.co.uk/world/2013/jun/09/edward-snowden-nsa-whistleblower-surveillance

      When I read Robert’s…’debts must be paid, forgiven, or defaulted, in order to start the process of restoring confidence’…, it struck me both at once reasonable,..and a now sadly naive notion of expectation.

      Like what MFG clients must have felt like, or Cypriot savers. Ask a US student in unforgivable debt in an unforgiving economy what economic slavery feels like. Ask a Vet living under a bridge what that age bracket’s alternatives are. Then we could ask the government just what the hell they want with our privacy, along with our homes, pensions, investments and savings.

      So, confidence? Confidence in exactly what? Markets?Really? Is our government not committed to ‘managing’ all markets of strategic value?

      But how about confidence in a burgeoning, institutional cult of fear by manipulation, intimidation, coercion, theft, imprisonment and overt violence, if necessary. It always seems that it is when ambitious, secretive, lying, backstabbing and vindictive cabals of criminals overtake governments. How is what we have this minute not exactly that and worsening by the day from both the ‘left’ and the ‘right’? What a bullshit paradigm that is!

      History is so damn repetitive. Not even done with one trial of a whistleblower to utterly ignored atrocious war crimes deemed unworthy of ‘journalism’ and their official cover-up and now we have to bother to think about the actual extent of the means revealed of big brother to monitor all what we say and think, all for control of the same US citizens being exploited and economically destroyed by official sanction.

      Free markets sustain economies for free societies. We have neither by design of traitors to the republic and its constitutional protections to civil rights and due process.

      Zombie banks financing zombie markets for a zombie nation. We should have every confidence in that.

  • Benjamin June 10, 2013, 1:11 am

    Good one, Robert! Don’t really have more to say than that. Oh, except…

    “I dare any of you to try and play God with me and declare that more debt will restore confidence.”

    That’s a dog whistle, to some ears around here. Have fun with them today!

    • Redwilldanaher June 10, 2013, 2:40 am

      Great job Robert and great line Ben! It won’t be long before the pack arrives. I can’t wait to read their material. I want to learn all about the workings of the “free” prosperity machine.

  • Rich June 10, 2013, 12:32 am


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