THE SATURDAY ESSAY: For as long as it’s legal, gold is to have and to hold.

During the last 21 days the gold price has fallen around 7%, with only two short-term mini-rallies along the way.  There was another brief one Thursday and Friday last week, but this first morning of the weekend, as I write, the precious metal is just holding above the $1700 line.

Once again, with the advent of crafty Draghi predictions and more QE from Bernanke – and in the absence of any more certain data to go on – gold is heading down towards another low test.

But there is nothing sacrosanct about lows or highs: a single cataclysmic event can overwhelm every preconception to produce new parameters.

One of these took place yesterday, but bad stuff often slips under the Friday Not Interested net. As the smart folks watched the Greek chances of getting their next bailout shoot down a snake, the gold price shot from $1704 to $1717 – no doubt directionalised by early-morning New York opinion leaders. They then sold bigtime during mid-afternoon, leaving the suckers more or less back where they were the day before.

Gold is an athlete warming up off the track at the moment. The questions for investors now are, as the price pulls back, (a) at what point would the time be right to buy in, and (b) this time – if and when it sets off upwards again – will it break through the $1800 barrier – a very important psychological number for the market – and quickly onto, say, $1850?

This doesn’t represent financial advice on my part, merely commonsense observations. They are as follows:

1. Gold is a manipulated market, and has been for years.  So caveat emptor – although some forces are greater than central banks and Fort Knox. However, if the real, ‘natural’ price of gold starts to rise beyond a given rate, the US will sell bigtime (as they did in the 2007-2009 period) QE will be increased to keep stock prices up and thus discourage mega-piling into gold, and other central banks will sell too.

2. Nerves are more strained today than they were in the summer. If the price pulls back to $1680 this time, I will take that as a buy signal. Gold rises, generally speaking, on bad currency and stock market news, seasonal factors – and, more recently, the stockpiling power of China. Bad news is being held off until after November 6th, the European common currency project is in deep trouble, the Pound could soon be hit by more evidence of bank toxicity, and in the coming months Indian demand will rise as a reflection of religious decoration.

3. At some point, gold will shoot way beyond $1850, way beyond £2000, and quite possibly up to £4000. As always, it all depends on how bad the news is, whether central bankers have the volume selling spine to stop (or slow down) anything beyond £2000, and what China does. So the task at this point is to assess both the depth of politico-economic doo-doo and timescales involved. As I’ve opined before, this is something of a mug’s game….but it does no harm to be aware of the possibilities.

AgAgAgAgAgAgAgAg

Although there is less central control now, China is getting smarter about gold purchase: she buys slowly and in smallish quantities – and under disguised identities at times. Occasionally, a short shock is delivered by buying nothing. The obvious reason: don’t drive up the price of your favoured investment too much. At the moment, China is probably the second or third biggest buyer of gold, and has a rapidly expanding access to locally mined supplies – 84% in the last four years alone.

Outside China, sovereign wealth funds are also changing the rules - a Slogpost from early September looked at them going direct to the miners to ensure continuity of supply.

The scope for China to build on its gold mountain is absolutely enormous, the Beijing regime having unofficially more or less given up on America solving its debt problems. If China is buying and mining lots of something – but demand for it still exceeds supply in a rapidly enriching Asia – the only way for the price to go in the foreseeable future is sharply up.

The eurozone is melting down pretty much as advertised, with the course of fiat currency compromise being directed by Mario Draghi at the ECB. Germany must either leave, or accept it. Either way, the euro will be inordinately expensive to retain in its current form – and a write-off if Berlin does leave the currency.

Nobody is entirely sure, for example, where the Greek ‘Deal or No Deal’ game show is going. But while I find it ominous that Berlin is once again this week indulging in silly spin-games to appease its domestic voters, the reality (on my spread-sheet at least) is that it will need another bailout by the Spring – locked EU escrow accounts or not.

The zone’s banks (and at least five sovereign States) have insoluble debt problems exacerbated by insanely EU-created austerity. France is already infected by Greece, and almost certain to join the debt basket-cases during 2013. Germany has enormous debts too, but currently enjoys a healthy trade balance and a low cost of debt maintenance: yet it too faces a terrifying bank exposure to Spain.

When the solids hit the fan on all this, US banks will in turn find themselves in deep trouble…not least because a good 60% of the major Wall Street institutions are massively over-leveraged, unpredictably hedged, and hugely exposed to ezone debt. The same is true of UK banks.

Finally, we mustn’t neglect the SE Med to Middle East axis. Iran is in big economic trouble, the Syrian conflict is (predictably) leaking all over the place, Israel remains bellicose about taking out Iran’s nuclear capability, and Russian influence in Cyprus is increasing rapidly. The Americans and Europeans want certainty of oil supply until shale gas gets bigger, whereas the Russians would love to produce massive supply interruptions to escalate the value of their domestic product. The Middle East is usually on tilt to some degree, but conflicting interests tend to produce bigger armed conflicts.

In short, the portents are terrible for the world, but have probably never been better for gold. We just don’t know when the portents will turn into sh*t-filled fans.

Further, the human capacity for optimism exceeds even the Chinese appetite for gold. And (I’m sure) to keep panic under control while depressing the gold price, the Chinese themselves are playing on this denial.

On Thursday, China’s Ministry of Industry & Information Technology gave an upbeat forecast for Q4, pointing to improving PMI, monthly increases in output growth, and a rise in power generation to argue its case. I regard this as hype – PM indices are a measure of opinion not orders, and the weakness in China’s overseas markets, rising costs, financing strains and profit margins are as real as ever.

However, mugs everywhere believe this guff – or are directionalised by crooks into believing it’s reflected in market movements. So the exact point at which panic will overwhelm control remains an enigma.

There is one thing, and one thing only, that could spoil the party for the nimble-footed: if manipulative control turns into a ‘global’ ban on private ownership and selling for investment purposes. As The Slog revealed yesterday (to an accepting and largely unsurprised world) such a possibility is already being given serious consideration by the ECB’s Hobgoblins.

But the nature of Draghi’s examination of gold extends beyond control: it looks like the most powerful financial strategist in Europe is considering the positive application of this metal to sovereign debt policy. Smart commentators like Gillian Tett have been writing about this for a while now, and yesterday I posted about the (perhaps not coincidental) issue of Bundestag gold-auditing in Germany – plus Berlin’s decision to repatriate a lot of gold held by the US Federal Reserve.

I have one simple observation to offer here. Logically, if the eurozone turned to offering a guaranteed and allocated gold-backing for sovereign debt products – and other global regions took up the idea – then we’re going to need more gold. The ECB’s hope, I’d imagine, is that EU citizens would sell him what gold they have if trading in it were about to become illegal. Knowing the skullduggery of Signor Draghi (and the psyche of most mainland Europeans at the minute) my instinct is that the ECB is going to need quite a lot more bullion than it has at the moment….and a lot of EU citizens are also going to hoard it in everything from bedknobs to the Caymans.

AgAgAgAgAgAgAgAg

A large investment conundrum is thus taking shape here: most central bankers are no less crooked than any other form of banking lowlife. If the intention is to stockpile gold, then in their amoral decision system it would make total sense to manipulate the price down during the quietly-piling-up period.

On the other hand, once the pile is big enough, their desire will be to inflate gold’s value on the back of using it to guarantee paper debt. It is, after all, a First Rule of the governing elite that what makes them richer is fairly pointless if it doesn’t make us poorer.

Further, nobody knows – not even Supermario himself – what the start-point and timescales are for this.

And finally, if the eurozone were to lead the way with gold-backed debt – and be seen to be successful – then the debtor world outside Europe would pile in with a similar approach. (Thanks to the Scottish Cyclops, we here in Britain don’t have much gold left…..and even less money with which to buy it. That’s not important right now, but it is catastrophically important for anyone holding Sterling).

However, while the nature of how and when remains very blurred at the edges in relation to all this, some overriding factors cannot – in my humble, private and not professionally offered opinion – be ignored or altered:

i. China is mining and buying gold – and will continue to do so on the sound bases that it represents geopolitical power in general, and a hedge against Western fiat currency failure in particular.

ii. South Africa will resume its output soon enough…and be selling it to more people in more unusual ways than ever before.

iii. The current price of gold is in a holding-to-falling posture.

iv. While in the short to medium term it will probably be in Western sovereign debtor and Chinese interests to keep the lid on gold prices, in the longer term it won’t.

v. The window of opportunity for citizen gold investors may well close at some point in the next three to four years.

vi. The Middle East is unstable and holds the potential to interrupt energy supplies. Sovereign wealth funds in the region would I suspect pile into precious metals at the first major signs of that happening.

vii. Western stock markets are being held up by an injudicious mixture of QE and hope. These are weapons of finite effectiveness…and awareness of that reality will become mainstream to the point of near-unanimity in the next twelve months. One a massive flight to safety gets under way, if sovereign States keep selling gold to stem the rush, then the exit route of backing debt with gold will be cut off for them. The rush will become unstoppable at some point.

viii. Western fiat currencies face a future in which  – with the probable exception of the Swiss Franc – their value could do anything from decrease markedly to disappear.

We are already seeing the top-end ‘glitz bricks’ property sector zooming upwards in price. For me, once gold dips under $1680, that’s a signal to buy and keep all the way until the purchasing door is slammed shut. What you do is up to you – my own opinions are free and not offered in any shape or form as advice, he said – to provide a final legal cover for his backside.

Enjoy the weekend.

64 thoughts on “THE SATURDAY ESSAY: For as long as it’s legal, gold is to have and to hold.

  1. My Economics professor was a former advisor to the Australian PM and cabinet at the time the Russians invaded Afghanistan. They asked for his advice on the economic consequences of America weighing in. His immediate response was to ask about Australia’s gold reserve situation because if TSHTF gold wIll be the only international medium of exchange simply because currency markets will be the first casualty.

    To put it another way, why do you think central banks hold any gold at all? Look at what they do, not what they say.

    • “My Economics professor was a former advisor to the Australian PM and cabinet at the time the Russians invaded Afghanistan.”
      You like to give us homework don’t you ?

    • I’m posting this here so many of you can go to Martin Armstrong’s website and inform yourselves with facts instead of opinions. Armstrong is truly brilliant and describes the current conditions in the context of history. He has been remarkably accurate about calling specific events, although I want you to only learn the history and the complex interactions between the TRUE FREE MARKET (the unmanipulated one) and the influence that politicians and governments have inflicted upon our now highly manipulated markets.
      I have been trading precious metals since 1973 and have learned lots over the last 35 plus years. I trade the markets full time and run a blog where I post current articles to help those who are trying to figure out what the hell is going on before we all die in misery from the impending economic and societal collapse which could happen at any time if certain events take place that the current psychopaths can’t influence any longer (they can’t CONTROL anything, only bugger things up and make them much worse in the end.)
      Go to ARMSTRONG ECONOMICS and select his WRITINGS tab, but explore all the tabs. http://armstrongeconomics.com/693-2/2012-2/
      Armstrong is an atrocious speller and apparently either doesn’t proofread, or is too cheap to hire someone to do it. DON’T LET THAT PUT YOU OFF. His writings are EXTREMELY VALUABLE. READ EVERY WORD and try to understand that the key to our problems is DEBT and the overspending that causes it.
      Buying gold and silver NOW and on any dips IN CASH for LONG TERM HOLDING (not trading) is the only way you will survive what’s coming.
      But first, use your money to buy all the supplies and other items you will need to survive a complete shutdown of your community’s support system, water, power, etc. We may (will) have to go back to the land to survive. Start teaching your children the REALITY of what is coming and how to cope with it for THEY are the ones that will have to endure it the most and will have to be the ones who rebuild society if that will even be possible without generations of dictators and violence.

      Cedric Ward
      Athol, ID
      USA

      • To avoid having my post not go through I am posting my blog address here as it appears when you put more than one URL on John’s comments section you post doesn’t go through. Might be nice if we had a warning instead of losing our comments the first attempt if we don’t COPY them first before having to repost after a few failures.
        MY BLOG: http://goldtradercommentsaugust2010.blogspot.com/
        Not so much gold info there unless you scroll back through all my posts over the years.
        Cedric Ward (as above)

  2. General question – If I buy gold today and the price is, say, £1000 per ounce and I sell the next day and the price remains the same how much will I lose in trading fees etc?
    Also am I better off taking time to visit a trading shop in, say, London and picking up the physical metal itself?

    • I try and buy a little gold each month. if I want to buy a sovereign, a half sovereign or 1/10 oz I go to my local coin shop. She sells at 10% above spot and buys at 10% below spot. Sometimes she has proof coins at bullion prices too, so I have some shiny sovereigns.

      If I want to buy more like a whole ounce I use coininvestdirect. Their margins are greater on small amounts but on ounces they are cheap, especially if you spend enough not to pay p&p. The website shows the buy-back price as well, and there’s not much between them.

      If I’m buying that much gold I usually buy a few ounces of silver too, but the 20% vat puts me off.

    • Gold is for buying and holding. You would need a price swing of at least 10% to stand still because of the trading costs. Just like buying currencies, the buy/sell spread is a big one. Look at buying and selling dollars / sterling. The ‘we buy’ ‘we sell’ price is miles away from the quoted market price. Gold is for keeps. You buy it, and then you buy some more. Your money in the bank? It is being vapourised at the rate of 5% per year just on price inflation.
      Think of gold as your house in the country, you buy it for a decade or longer, or until the world changes.
      If you have to buy and sell something, try Swiss francs or a hundred barrels of diesel.
      You buy your gold, and stick it in the ground. The manipulators have managed to hold gold at an average of $1650/oz for at least a year now, but they are running out of gas. The big buyers around the world are taking as much gold as they can get. Gold demand is going bonkers, but the manipulators are going all-in to stop it, because they get wiped out of the paper dollar is abandoned.
      Private purchase of gold cannot be stopped; the dissenters will find a way to buy gold. Whether it is in higher quality gold jewellery, or foreign coin, there are too many people who wont abide by ‘the law’ any more.
      If gold has to go underground, maybe that won’t be a bad thing. Might wake a lot of folks up.

      • I’ve had many of my gold coins for over 40 years and some silver coins for 50 years. It all started when I fell in love with Canadian silver dollars when I first went there in 1961. Love them still.

  3. Depends… if you are buying gold as a hedge against systemic meltdown then paying a slight premium at one of the swanky bullion dealers in London isn’t really a problem, you get peace of mind that you are buying the genuine article and these people are discreet and courteous.
    If you are playing the margins, then you need to minimise your trading costs and then it pays to shop around…

    • One must however note, that miners, bullion banks and gold dealers are all (always) eager to trade gold for currency at today’s rates.

      Does anyone ask why?

  4. I do have some Ag + Au, but tbh it’s a gamble I have ZERO control over. I’m also going for a diverse portfolio of local small businesses.

    I have purchased a nice village cafe, in the process of buying a car repair place, and on the look out for other similar small investments. (Relatively low capital start up I can self fund without the banks, delivering services that people are going “down market” for e.g. cafe < restaurant, back street < main dealer) I see this trend carrying on for a fair few years yet, so plenty of scope to get in before the trend reverses, and my investments are less attractive.

    I am employing local people to run them, it makes me a small additional income (more than ISA interest), and as a hedge to societal collapse people will hopefully like me :)

    All will be run prudently, and ultimately reinvestment will be in continuing my local area.

    The true answer to how we can gain back control is to reduce the intermediary function of banks as matchers of savings to investment.

    For this to happen people IMHO opinion need to be properly investing in income productive activities. Property to flip, or Gold, or to non div paying shares, is just speculating and just feeds the beast.

  5. John, I agree with your reasoning about the consequences of the abuse and devaluing of fiat money, for that reason, I myself have for a number of years been accumulating Silver bullion in kilo bars, and silver one oz Dollars.
    I would like to know your views on poor mans gold?

    • Gold is money and always will be. However, Silver is not only the most guaranteed investment long-term because it is both a monetary and industrial metal, but it also is consumed by industry, which gold is not. The world’s supply of silver is drying up, very fast. An excellent investment, even with the ridiculous addition of VAT. There are even theories that eventually silver may become more valuable than gold (like Platinum) because of the relative scarcity.

  6. Well, that should do the trick John – how much gold have you got stashed away?
    Personally, at $1680 for a speck of metal, I’d rather have a few nice tulip bulbs, at least they’d bring some joy into this black doomladen picture!
    It’s a very scary scene out there – even for gold, and I bet there are a few Brown clones lurking within some of these Sovereigns too, so watch it or they may catch you out!

  7. I suppose if you are fairly rich and have lots of spare cash that you don’t know what to do with, then gold coins might be worth a gamble.
    But for ordinary folk with £12000 spare I reckon they would rather have a new car than ten small coins in a drawer.
    i.e. buy things you use or need first, get adequate emergency savings put away, then play with the spare money.

    • pay 12k for a car, drive it out the dealers and it worth 8k. Duh! have a 12 year old Renault with 75k miles bought when it was 3 years old. Paid 6k, worth 1K but should last another 8-10 years.

      • Obviously. Unless your wife demands a brand new car. :)
        But the comment wasn’t about best shopping practice. The principle remains that most ordinary folk should be buying goods that they need and use rather than storing dead coins in a drawer and doing without.

      • The car is hers, I don’t own one although I pay the bills on the present one.She is too smart ever to want a brand new car.

  8. As usual, agree with all you say John .. and bow to your superior wisdom in these matters.

    My thoughts are: we increase our holding of gold . why ..? To protect wealth and earned income for sure; maybe even make a profit. To be able to buy things in the future, What will be guaranteed to shoot up in price if the SreallyHTF in the not too distant future? Energy and Food. While these are, in real terms, relatively cheap at the moment there will come a time when they are at a premium. If someone has the space to do it they may be well advised to stockpile dried foods and propane/butane with the attendant accessories.

    Alarmist? Maybe. What has anyone got to lose by doing this? A few bob and loss of face if we’re wrong. If not, you’re going to be the most popular chap in the street :-)

  9. Persuasive analysis. I confess that I have not yet purchased although I came close to it in May/June and check the price almost daily. As an engineer, I can’t help seeing our situation in terms of a piston engine/jet engine analogy. During the last major meltdown, the Great Depression, we had piston engine economies which are inherently more susceptible to component failure due to the reciprocating masses involved. With modern technology and electronic media we now have turbine economies which are capable of spinning at far higher rpm or risks per minute. In both models public confidence provides emergency braking. As long as currency debasement continues, gold has some attraction but I agree with others who point out that it is best considered as part of a long term strategy of diversification.

    • @kfc: Gold could only rise to that extent against a background of fiat currency collapse – in which case the $ would have ceased to exist in its present form and we would be back to commodity currency – a far more prudent arrangement in any case. The ‘amounts’ are, in that sense, relative if not actually notional, although Donald Trumps et al might disagree. Gold has not risen to a greater extent, so far, due to desperate manipulation by those who want to have the only game in town (fiat/bourse) as JW points out.

      • I thought the reason we haven’t had too much inflation was that the world is in a depression. People unemployed, or scraping by on part-time jobs or social security. If nobody is bidding up prices then you won’t get inflation.
        I think of gold the same as shares or property or tulips. Ponzi schemes that rely on a bigger mug paying more than you did. You can play in the game if you like a gamble, but make sure you get out before the line of greater mugs finishes.

      • Much confusion there; depression and inflation are, historically speaking, good bedfellows. Gold is is a fundamental ‘antiponzi’.

      • I have never seen proof of this gold price manipulation you talk of, but what I have noticed is that the gold price will move down along with all other ‘comodities’ when there is bad news.
        Now, just about every economy globally is tanking and it won’t be long before ‘comodities’ have a very bad period. Industry buys a lot of gold and silver and that demand will fall away leaving prices much lower.
        The price of gold increased under earlier QEs to where it is now but more recent QEs have only served to just about maintain status quo, i.e. doing a proping-up job on stocks and comodities that is all.
        Anyone who has bought gold during that last year or more could have lost c10% less c20% dealing charges – a bad investment indeed, and anyone holding gold now could wake up with a close haircut one morning soon.
        Get out now and face your capital gains tax with a smile.

      • @Hieronimusb
        Depression & inflation are called ‘stagflation’ which I understand to be a fairly rare event with two main causes. Either actual resource shortage (like oil in the 1970s) or extraordinary money printing (Weimar).
        Neither of which seems to apply at present, though, of course, there are threats that these things might happen. On the other hand, they might not.
        At present we have a worldwide depression, with unemployment unusually high. There is some inflation in specific areas, but deflation in other areas.
        I think the main reason for the recent gold speculation is fear. Fear of the unknown, fear that the worst might happen. Fear should guide you to take sensible precautions, but try not to panic.
        At least, not yet. ;)

      • @BillK: Yes, Weimar is a good example of loss of public confidence in fiat money leading to hyperinflation. We are certainly seeing ‘extraordinary money printing’, why are we not seeing higher inflation? Perhaps because this new money is not entering the wider economy? We know that it is almost entirely being hoovered up by the banks in order to keep the sovereign debt Ponzi going and to address the consequences to their balance sheets of their own Ponzi activities i.e. debt monetisation. On the back of this, the ‘markets’ are evidently allowing themselves a false sense of security – (what’s not to like?/job done) against all logic. My personal feeling is that eventually, as ever, public confidence will decide when it has had enough of economic contraction and falling living standards; everything else can be ‘managed’ now, however badly. That the ‘official’ figures are already desperately keen to paint a thoroughly disingenuous picture seems plain. Naturally, speculation in gold results from a fear of fiat currency collapse. I agree with what you say about precautions being more useful than panic and would only view gold as part of a strategy to avoid personal financial wipe out in the event of a collapse; I currently have none. Having said that, I think that a commodity currency is an inherently safer and more sensible idea in the first place than what we have at present. Furthermore, I think that at some point this will end badly.

        @mike: Propping up stocks and commodities in order to maintain the status quo, says it all. I would agree that short term speculation in gold is very likely to prove fruitless.

  10. It is I accept probably a personality defect on my part but PM just doesn’t do it for me. If I had wealth to protect I ‘d probably have to succumb hoping to resell in bulk in 10 or 20 years, but when it finally goes all horrible and when my stock of food and fuel runs out, it is the stock of other ‘stuff’ that I will rely on to barter.

    I have space to store and haven’t sold anything which is possibly useful and future proofed for 2 years because of where we’re heading. Today all of it is worth more than it was because of inflation. Come to me wanting something from the stock, be prepared to exchange for something real like food or fuel or other tools. Gold? I wouldn’t know whether it was genuine or plated tungsten so I won’t go all gooey eyed and accept it as a barter.

    But this is the view of the little guy looking to survive, not make money. Besides just hanging on to what you have will be the problem in the future and gold I suspect will make you a target to be hunted down as soon as you show possession by trading.

    • @ Full Stop
      You sound like a genuine guy, and doing the right things to future proof yourself. The gold thing is not an either/or choice. It’s as well as your ‘other stuff’. It’s also not about ‘making a profit’. It requires a bit of a shift in thinking, but people who are accumulating gold (and silver), are trying to prevent the buffoons doing the printing, to infinity and beyond, from destroying any wealth that the little guy has. These money printing monkeys are intent on saving themselves, and will do whatever it takes, including devaluing your savings (in fiat), until it has the value of toilet paper.
      Value is easy to see, if part of your ‘stuff’, is a bottle of 20 year old malt whiskey. You can store it, barter it, sell it, or drink it. It’s much more difficult to explain the value of gold when its only reason for existence is ‘storage of wealth’, ~ plus you can’t eat it. Take more time to study gold. Gold is the ultimate single currency, and has been for about 5000 years give or take.
      Take Care

      • Your best wishes are appreciated and returned in full. I agree with every word you wrote. You see? We do exist.

      • “It requires a bit of a shift in thinking, but people who are accumulating gold (and silver), are trying to prevent the buffoons doing the printing, to infinity and beyond, from destroying any wealth that the little guy has.”

        Thanks JD and I suspect you (and JW insofar as he goes) are ‘on the money’, as it were. It is about a balance I think. If you have wealth, gold will protect, but for day to day living it just won’t cut the mustard. The 20 year old malt (and stuff) will be needed for that. I’ll keep stocking up with the latter.

  11. Pingback: John Ward – The Saturday Essay : For As Long As It’s Legal, Gold Is To Have And To Hold – 27 October 2012 | Lucas 2012 Infos

  12. without wanting to state the obvious:

    PHYSICAL ONLY! No gold certs, no bullion banks, no off site storage.

    If you dont hold it in your hand, you dont own it.

    And in true ZH style-

    “keep stacking bitchez!”

  13. Anything that is sold as conferring title to something that you can’t see, touch, smell, piss on or sign your initials on is probably worth nothing.

    Paper depends on someone being honourable if it is to be honoured.

    Buy, own and operate real or ‘hard’ assets (preferably with real cash flows).

    Land and gold are but two options.

    • Oh phew! thank you Cris for saying ‘land and gold…’ I am going cross-eyed reading all this, because there is NO WAY that I can spare anything to buy gold. BUT I have land! and very glad I am to have it too. On my land I grow chickens and vegetables, so I can feed myself and my family. So I am alright, Jack.
      I am actually thankful that I dont have vast sums of money to invest, because I reckon that that money will vanish in the years to come. Sorry guys! And all your gold bars etc will be difficult to use – how can you go to the marche in rural France and buy cabbages with a gold bar???
      Seriously though, how actually will your gold coins etc be of any use when what you really want is approx 10 euros/6 quid or whatever to buy a chicken, or a bag of flour?
      And believe me, when things get really bad – a bag of flour will be worth much more than gold. Who is going to take your gold in exchange for a chicken??? What you need is gold chips…..

      • I hate to see such ignorance from the phrase “one cant eat gold”. That like saying i cant eat your land. Its what you do with it that counts. If you think u wont be able to find a buyer for gold then its not for you. Gold has been money for 5000 years. That will not change.

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  15. If the SHTF, and fiat currencies become worthless, we are back to basics a la Weimar Germany.
    The essentials then are food .clothing and shelter, this is real wealth. A small allotment will feed you along with a few chickens ,a goat and a pig. You can not eat gold or silver, but you can barter tins of bully beef and your stock of booze,
    Junk gold and silver,rings ,pendant etc are ideal for trading ,because they are low value.Large blocks and coin can not trade easily. My friend in Argentina advises this was used during their financial crisis.
    God and silver are heavily manipulated to support the strong dollar policy of the US Fed. Read the repeat article I posted previously to explain this policy below;
    In 1988, a young economist out of Harvard, Larry Summers wrote a verbose paper entitled “Gibson’s Paradox and the Gold Standard.” In the paper, Summers explains that when the real interest rate is positive, the gold price will not increase and even decrease as parties will prefer fiat currency that increases in purchasing power and pays interest. However, when the real interest rate is negative, the price of gold will increase as parties will seek to preserve their purchasing power. Gold serves as “the canary in the coal mine” for all fiat currencies. When the price of gold rises, this is the prime signal that the currency is being debased. Therefore, when the US government embarked on a lengthy period of negative interest rates, they were aware that the price of gold must be suppressed.
    Summers mentor Robert Rubin had been using gold in the carry trade while at Goldman Sachs, with the Japanese yen, which had been paying interest rates up to 14% for many years.
    Rubin of course was Secretary of the Treasury prior to Summers and had a strong dollar policy which was maintained by suppressing the gold price. Summers continued this practice and so have successive Secretary’s.
    This could not last forever and now there is a US shortage of gold bullion. Note; the US Treasury, the Fed and it agents at the Wall St banks have combined in this manoeouver for many years, they are all short gold and the fiat US dollar is about to be exposed as an’ Emperor without clothes. The faith in fiat is bust.
    To re-iterate an old saying .’At all times & all places, gold is money and a true reflecton of value’.

  16. Whilst intellectually against fiat paper currencies I can not get over the factoid that I have read, namely, that the world total tonnage of gold is somewhere around 150 to 170 K tons only, no way near enough to back so called leading nations currency issuance of many hundreds of Trillions of current value equivalent US Dollars and CB’s around the world certainly do not have enough of it.

    India is thought to own the greatest amount of gold as a nation (I do not know how much their CB has) and that it is only, apparently 18K tons.

    Also we all know that the BOE has only a couple of hundred tons of UK gold thanks to some inspired strategy by Brown (although I have read, some conspiracy theory, that leaning from the US to assist them deflect interest in some US problem was the reason the UK’s gold was offered as the sacrificial lamb for our ‘Special Relation Partner’).

  17. @CorporatocracyStinks – exactly what are you going to sell your gold Britannias or Maple Leafs for if Fiat currency as we know collapses? 17,000kg of cabbages?

    How easy do you think it will be to say to someone “I’ll give you all my gold for 20 acres of your best land”?

    It’s an interesting conundrum.

    I do own some gold, but I also own land. Out of the two, I can realise an income stream from the land, but nothing from gold. Which is better?

    • Its is an oddity i agree but even in times of black markets, barter economies and currency crises, gold is still viewed as a form of money and thus will always have a buyer.
      Land does have value yes but when fiat fails and it will, you wont be buying farm produce at markets, you will be buying Farms AND Markets. As with everything timing is the key and there is a coming gold euphoria intimately linked with the on-rushing currency crisis. That is the time to swap gold for productive land and sustainable businesses

  18. Pingback: CRASH 2: Time to sell the tulips as the Big Boys prepare for Domesday | The Slog. 3-D bollocks deconstruction

  19. Pingback: John Ward – Time To Sell The Tulips As The Big Boys Prepare For Domesday – 28 June 2013 | Lucas 2012 Infos

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