Horrific gold 'dump'?

19 posts / 0 new
Last post
wvj100's picture
wvj100
Status: Member (Offline)
Joined: Nov 20 2008
Posts: 4
Horrific gold 'dump'?

Interesting article on gold and the IMF. I have no idea if these guys are credible but it is certainly an interesting data point.

http://www.stockhouse.com/Columnists/2008/December/8/Horrific-gold--dump...

‘Interventional’ analyst expects price plunge this week

Michael
Bolser, a trained physicist who developed dollar value commodity
indexes and 10 months ago correctly forecast the scope of the current
recession, expects more than 3,000 tonnes of gold to flood the market
this week.

Bolser, based in Florida, says the International Monetary Fund will
release the gold for sale on Wednesday, Dec. 10. The 64-year-old Bolser
says the price of gold subsequently will slide as much as 40 percent –
to $455 an ounce in coming weeks from its current $760 an ounce.

Brainless's picture
Brainless
Status: Silver Member (Offline)
Joined: Dec 9 2008
Posts: 149
Re: Horrific gold 'dump'?

Would this not give investors a problem with there margins and therefore would be forced to sell the little they have.

After that it can be picked up for cheap by the banks.

Or am i reading to much into this?

Personally i have no stocks only physical gold at the moment. My uncle was not so lucky as he lost a lot when the bank raised their margins for blue chip stocks from 5-10% to 100%. Trust is not there anymore.

 

 

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 2745
Re: Horrific gold 'dump'?

If there is a significant drop in gold prices, I would see it as a buying opportunity.

radiance's picture
radiance
Status: Silver Member (Offline)
Joined: Oct 11 2008
Posts: 112
Re: Horrific gold 'dump'?

Gee why not $380? Powerful nations and people with lots of wealth know this game is fixed; any meaningful move to crush gold will be met with wild buying sprees. Then as the bungee cord is stretched to breaking, it will snap back in parabolic fashion taking paper gold control out of the elites hands. If it tanks it will be short lived. Besides the IMF has no gold them-self and sales are required to be announced months in advance and will occur only if a member nation agrees to sell some for the IMF. And then no gold actually gets moved; just one central bank logging entries to another blah blah blah same old game.This IMF gold sale scare tactic is conjured up every few months by the crooks at the top. Besides anyone who did not predict this event until 8 months ago
deserves no respect! Most here at the CC knew years ago this was coming.

Ron

krogoth's picture
krogoth
Status: Platinum Member (Offline)
Joined: Aug 18 2008
Posts: 576
Re: Horrific gold 'dump'?

Doug wrote:
If there is a significant drop in gold prices, I would see it as a buying opportunity.

 

I would see it as a lot of CM's members having heart attacks simotaniously

pwoody82's picture
pwoody82
Status: Bronze Member (Offline)
Joined: Sep 26 2008
Posts: 50
Re: Horrific gold 'dump'?

I think that I am like a majority of holders of precious metals. For me they are not an investment for profit, they are an investment in survival.They are a hedge against runaway inflation which will have us carrying money around in garbage bags to buy groceries and pay the rent. We all know that the banks and the international investment community is going to continue to play games with pm and attempt to prop up fiat trash in order to do what they do.

 

In the coming collapse of the currency, or in the coming hyperinflation and then collapse, we will need some kind of exchange medium that is acceptable to local/regional markets. One reason for holding US 90% coin silver is that it is still legal tender. If the paper dollar gets to the purchasing power that it represents, then a bimetallic standard may evolve.

 

You could go to your local businesses and say something like "If I pay you in US 90% silver, will you sell products to me at an exchange rate of x dollars silver for y dollars paper?" Suppose you agree on a ratio of 10 to 1. You could then pick out $100 paper worth of product and pay the businessman $10 silver. He then records sales of $10, and you pay any sales taxes on the $10 amount in paper. His income goes down, his tax liabilities go down, and a relatively stable exchange system could evolve. The more paper inflated the greater the rate of exchange, but until the US government makes it's coinage illegal, it is a transaction concluded by using legal tender. Then a second market could evolve involving trading bullion for coinage so that paper had little role in the local marketplace. It would drive the banks crazy. it would also be better than barter or most other substitutes for an exchange medium.

 

pwoody

radiance's picture
radiance
Status: Silver Member (Offline)
Joined: Oct 11 2008
Posts: 112
Re: Horrific gold 'dump'?

Pwoody

Good job explaining the advantages, in the coming crisis, by using silver coins. The only real gold/silver is the one held in your hands that you can protect. Paper gold is a scam of the elitist wise guys in power to convince the sheeple to not hold gold. 

 Ron

GDon's picture
GDon
Status: Bronze Member (Offline)
Joined: Apr 2 2008
Posts: 86
Re: Horrific gold 'dump'?

In the last century, contrary to the  US Constitution, (and 10,000 years of human history), the irredeemable-fiat-currency concept has gained the "upper-hand", over gold and precious metals specie as the "accepted" form of "money". 

Universal adoption of the "irredeemable fiat-currency" concept is a recent phenomenon, having occured only over the last 2 centuries or so. 

It is a system which, by design, a) benefits the few earning interest, at the expense of the many, and b) allows for Governments to more easily engage in overrun deficit-spending.  Consequently, over this time, the world's governments have alllied with Central Banks, to allow for private issue of "irredeemable-soveriegn-fiat-currencies" (i.e., paper and digital currency, backed only by human debt labor).   Politicians and Bankers and Bankers and Politicians - a dangerous mix.

Today, there are no countries or governments which establish a fixed-measure for their currency, against any unitized, pre-paid asset, like gold. 

The difference in concept, between;  a) "prepaid" gold (and silver) as specie value, and b) irredeemable paper (or digital bits) as an "apriori debt-accounting for human labor", is substantial -    they are polar opposites in terms of debt settlement.  The former allows for individuals to exist as sovereigns independent of government rule, while the latter requires government intervention to enforce it's use as a currency - i.e., to ensure the currency is "legal tender".

 As Chris has pointed out, however, the irredeemable-fiat-currency monetary concept has a mathematical flaw at the limits - it requires ever more debt, for ever more currency creation, for payment of the interest "agreed-to" in it's own generation! -   a true dilemma which insures an exponential "blowup", albiet one which benefits in interest-payments, the private Central Banks issuing that currency.

As Chris has also identified, the resulting distress this monetary concept creates "in the limit", is moving into the "hockey stick" region of exponential change (i.e., the "Credit Crisis", "Debt Crisis", "Housing Crisis", etc.), .

This distress is creating fractures in the foundation of the "irredeemable fiat-currency" concept.  

The one critical requirement to sustain it's use, is CONFIDENCE.   This confidence in the aggregate populus, is required in exactly the same mechanism as that in a "money-making chain-letter" or Ponzi-style check kiting scheme.   Currently this confidence is being eroded at an exponential pace.

As a result, this distress is creating a large counter-movement in the world, consisting of those who see gold (and precious metals) as retaining it's role as the only and original "true money". 

Indeed, over the long-term, it's conceptual role in this regard is proven:  

  • 200 ounces of gold would purchase a house in 1680, 1780, 1880, 1980 and today (more or less), and could have been stored, without the need to earn interest, in peforming this value-retention.  
  • Had your Great-grandfather buried a weeks worth of $USD wages in a coffee can in 1926, and you discovered it today, you'd have about $75 in Federal Reseve Notes ($USD).   Alternatively, had your Great-Grandfather first converted his weeks wages to the then 3 ounces of gold, and then buried the coffee can for you to discover today, you'd have about $2400 - still about a weeks worth of American wage (maybe even slightly more...).  
  • If you are lucky enough to find a gold coin dropped by a Roman soldier in your visit to Italy, it will have essentially the same purchasing power for you today, it held for him 2000 years ago.

It should be noted that this value-retention occurs WITHOUT requiring the risk of investment loss so as to earn interest.  This value-retention attribute is enhanced during bear-markets and during times of distress.   In any case, the above examples are testament to the value-retention of gold and precious metals.

So what is "at-stake" in this conceptual "battle", between irredeemable fiat-currency vs. the specie-value of gold? 

It is probably safe to say that the bounty could probably be valued at a majority of the world's GDP, and wars and every sort of human schemeing and treachery have certainly been employed for less.

 With so much at stake, the world's Governments, allied with the Central Banks, have spent amazing energy over the last century, and employed the power of political force and monopoly in countless ways, to avoid such a turning loss on the "monetary-concept battleground".   In this regard, it is hard to dismiss Bosler's projections out-of-hand.

Less obvious than confiscation, war, etc., the fiat-currency advocates discovered the power in "fractional-reserve-banking", and highly-leveraged derivatives (futures, CDS, CDO's, etc) to wield market influence.   The government's monopoly on force is required for the protection of these mechanisms, but few laypersons understand how they work.    

Consequently, it is these tools, in combination with Central Bank gold "leasing", the COMEX futures market, government and quasi-government (IMF) public statements, etc., which are employed to prevent both a loss of confidence and threatened return to gold as money, and sustenance of the fiat-currency mechanism.

In the midst of the current instability, can these tools continue to be wielded effectively?   I would expect the world's governments will stop at almost nothing to prevent this loss of wealth and power, and would not rule out anything.   Again, hard to rule out Bosler's statements as wild ideas.

But we shall see. 

Suffice to say that the current price in $USD, of gold and silver, are at or nearing, just the costs of extraction from the ground.   Many silver mines have processing costs in the $7-to-$9 per ounce range.  This has led to a large shut-down of the mining sectors, which is occuring simultaneous with a very high demand for the physical product.

There may be more downside, but it is limited against dwindling above ground stocks and mine shutdowns.   The upside is not.   As they say - "You can squeeze the Bears, but you may get run over by the Bulls".

If you are a Trader, then timing is everything, and 10% here or there might be your difference. 

If you see gold and silver as true money over a longer term, any continued drop in price for the physical would appear to be a buying bonanza.

xpatUSA's picture
xpatUSA
Status: Member (Offline)
Joined: Dec 8 2008
Posts: 12
Re: Horrific gold 'dump'?

Hello All,

 This is my first post on these fora, trying to learn the way ahead. I'm long in GLD.

Will there be a point in our near future when it would it be inadvisable to hold GLD, as opposed to bullion?

 If so, why?

 Thanks,

 Ted.

radiance's picture
radiance
Status: Silver Member (Offline)
Joined: Oct 11 2008
Posts: 112
Re: Horrific gold 'dump'?

The time not to hold GLD is now. It represents a promise. If you can not hold it and protect it it is not the gold in hand that has stood the test of time. Paper gold GLD can among other things be leased and shorted against you and naked shorted as well. Buy physical gold today before the paper promise vanishes any further. You can take delivery of Comex gold for the December contract in 100 ounce lots at paper price. Hence the reason the Comex physical is rapidly vanishing as we read.

The following is from Golden Age's post:
 
Follow the run on Comex

Daily charts on the amount of physical gold being delivered from the
vaults at Comex.  Some have said when all the calls are made, Comex
will not have enough physical gold to deliver.  Hence the value of gold
will be determined by supply and demand. 

http://meltdown2011.wordpress.com/catego...

joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
Re: Horrific gold 'dump'?

if you can find it

pwoody82's picture
pwoody82
Status: Bronze Member (Offline)
Joined: Sep 26 2008
Posts: 50
Re: Horrific gold 'dump'?

There is a problem with a precious metal backed currency in today's style financial systems. At any given moment there would be a fixed amount of gold/silver in the system. As with the fiat system, if someone lends out x ounces of pm at a specific interest rate, then theoretically the amount of bullion available must increase to cover the interest at repayment.

 

In a properly run banking system, demand deposits are not lent out at any time even though only about 10-20% of the demand deposits are in circulation at any given time. (This is why banks used to have fractional reserves, so that there would be enough for normal business and the bank could lend the rest without the depositor's permission as is currently the case). When the bank loaned money, it would lend money in savings accounts. A depositor with a savings account agrees to give up the use of the money for a specific amount of time for a specified rate of interest.

 

I know that when pm backed money systems were in use, there was some kind of mechanism for both the principal and interest to be paid without having to increase the money supply but I am not sure how it worked unless there was so much money in circulation that the problem did not arise or the lender was paid the interest in some other way. Does anyone know how that mechanism worked?

 

Suppose Sam wanted to go to the auction and buy two antique lamps, currently valued at $50 each. So he went to his bank and deposited the $100 so he could write checks to the auction. Then Joe heard him talking about that and thought he would like a lamp too, but didn't have any money. So he goes to Sam's bank and asks to borrow some money and the banker says "Sam was just here and deposited $100, so I can lend you $80 because I have to keep $20 in reserve." Joe goes to his bank and deposits the $80, and Jerry wants to go to the auction too so he goes to Joe's bank and borrows $64. Mike then borrows $51, Henry $41 and so on. Now all these people show up at the auction and at the theoretical limit, the entire $1000 at the auction is Sam's original $100. This is how inflation occurs in a fractional reserve system, and of course Sam only got one lamp instead of two because he had to bid $81 to get his first lamp. This is why lending of demand deposits and fractional reserve systems should be illegal.

 

pwoody

 

caroline_culbert's picture
caroline_culbert
Status: Platinum Member (Offline)
Joined: Oct 2 2008
Posts: 624
Re: Horrific gold 'dump'?

If I can't consume gold, use it as fuel, or at least sell gold to obtain these things, then I have no "faith" in gold.  We've been riding on markets for so long, and now with the instability of the markets and its affect on the gold market, I don't want to continue on this roller coaster.  I'd rather spend my time, energy, and money on things that will keep me alive.  Betting in the gold market is a bumpy ride right now, which may stable in the near future, but that is money that I cannot afford to lose.

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 2745
Re: Horrific gold 'dump'?

caroline_culbert wrote:
If I can't consume gold, use it as fuel, or at least sell gold to obtain these things, then I have no "faith" in gold.  We've been riding on markets for so long, and now with the instability of the markets and its affect on the gold market, I don't want to continue on this roller coaster.  I'd rather spend my time, energy, and money on things that will keep me alive.  Betting in the gold market is a bumpy ride right now, which may stable in the near future, but that is money that I cannot afford to lose.

I think the rationale here is that if we do not wish to revert to a pure barter system, then there must be some medium of exchange that most agree on.  Gold has traditionally served that purpose, and, I suppose, the hope is that it will again when all else goes to hell.  In the meantime, the USD is riding high, so you're likely to get good value in return in purchasing "things that will keep me alive."  At least, that's the logic I'm operating on at the moment.

caroline_culbert's picture
caroline_culbert
Status: Platinum Member (Offline)
Joined: Oct 2 2008
Posts: 624
Re: Horrific gold 'dump'?

We're also looking for fast cash.  It seems like everyone is these days.  I think the most important thing to learn from the drop in the price of gold is that the faster you want to make a buck, the more risk you take.  Of course this is not the case with everything and is certainly dependent on the volume of people making these decisions.  But I realized, for example, had I purchased the more expensive car in October (when my other lease was up) and if I had put down $500 non-returnable deposit for a Prius, I would have made a very expensive mistake.  I must've made a dozen calls around my area and went to a dozen car lots searching for a high mileage, relatively cheap, vehicle that was unavailable due to the gas price frenzy.  I now look back to see how desperate I was to get a Prius now.  I wasn't willing to wait six months for the back order of Prius' to come in.  I ended up with something that provided less, in terms of gas mileage, but was cheaper.  After a few months ride, along this downward spiral of gas prices, I now see that my frenzy was just that- a frenzy.  Applying this example to the gold market is something new to me.  I have always wanted to make a quick buck if I could.  I guess I have become wise (not necessarily smart) when it comes to the consumer market.  The more patient you are, the cheaper the products tend to become (speaking of mostly technology).  If you wait long enough you probably wont buy one at all.  You'll finally realize that it was just another fantasy in the consumer world.  So hang tight on the gold if you're short on cash.  If you have money to spare then gold is not a bad idea to invest in (for the long term).

radiance's picture
radiance
Status: Silver Member (Offline)
Joined: Oct 11 2008
Posts: 112
Re: Horrific gold 'dump'?

You can buy all the you want! But not at paper fraud prices. The premium of physical gold reflects the true price of ownership. The large discrepancy, going on now for months, between physical gold price and paper gold price reveals the fine art of fraud perfected by the Eastern Establishment. The same players who suckered the Hunt Brothers. Paper is the domain of elitist bankers. The elites changed the rules for margin and sales thereby crushing the Hunt's folly at monopoly of silver. The Hunts, after a year of buying physical silver succumbed to the temptation of finishing off the monopoly plan by buying silver futures on MARGIN. The bankers trap worked perfectly. Once the Hunts were deep in the Comex; the Comex changed the margin rules and walked away with the Hunts cash and accumulated physical silver. The Comex  and ETF's are the house game of the Eastern Establishment bankers. The cornering of the precious metals market started several generations ago. The laws written, in President Woodrow Wilson's term, assured an eventual monopoly by bankers of precious metals and fiat money. However the chaotic events we are witnessing now in the global financial/precious metals world is the comeuppance of their evil intent. God has stirred their cup. They are losing market control. It is only a matter of time and the lid will blow and the innocent of the world will suffer profoundly. The elites will be found by Mussolini mobs. And maybe sometime I will share the rest of the story, but some people reading this, may not yet bear with hearing it. For some hearing what is coming causes rabid gnashing of teeth.

Ron

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Rabid yellow dog at large

If there's a big gold sale coming on Dec. 10th, somebody forgot to
tell the gold market about it. Today the old yellow dog is bounding
around the greyhound track so fast, he done tore the dirt off of it.

As
Bernanke-san slashes his policy rate to ZERO, it's going to create an
even bigger Bubble than Greenspan's legendary, nutball 'One Percent
Forever Blowout Rate Sale.' Forget the yen carry trade; 2009 is the
year of the dollar carry trade. Borrow at zero percent, buy the yellow
dog to catch the inflationary wave, pay off your margin loan in
depreciated confetti currency. Instead of dead presidents, it should
feature cartoon characters. Popeye opening up a can of whup-ass spinach
would powerfully symbolize our world-renowned 'strong dollar policy.'

The more you borrow, the more you make. As your Realtor has been saying for all these years ... 'Buy now, before prices go up.'

Money mouth GOLD TO THE GOOGOLPLEX Money mouth

joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
Re: Rabid yellow dog at large

machinehead

you do not post enough. 

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: Rabid yellow dog at large

My bad, joe. Howdy from a former Arkansan.

So, how 'bout that
yeller dawg ... thirty-five dollahs one day, twenty-five the next, and
pretty soon the stuff's getting damned expensive. At least if you're
counting in sloppily-printed, multicolored confetti currency.

How do you spell Depression relief?

Cool'DEATH TO THE DOLLAR' Cool

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments