Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

[c1ue]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Basically, your saying that going to gold will kill the ponzi nature of debt.... but isn't that fiat debt scheme already terminally ill? Is it not a moot point?

No, because thinking the transition from existing currency to the new one is possible without a 'cleaning out' of the previous currency's stored value means that the existing government won't ever do it.

The Ponzi nature of debt means in turn a Ponzi nature of government unless a leader emerges who is willing to pay the price to guide through the incredibly painful transition.

Obama's cynical devouring of America's 'hope' has likely destroyed any chance of this.

Hence JT's investment strategy makes much more sense today than it did in the fall of 2008.

The point about 'nihilist' is that no government composed of FIRE-servant, weasel politicians will voluntarily undergo the wrenching societal upheaval associated with fixing the system.

[jtabeb]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Hence JT's investment strategy makes much more sense today than it did in the fall of 2008.

Yes but I made the exact same justification then, as I do know. (It's just that no one believed me at the time.) I believed me, so to me at least, it made just as much sense then as it does now.

[vinoveri]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Have faith, hope for the best and work to make the world a better place.

What else can you do?

I would point out that this really wouldn't be for the "good of all", now would it? It would be for the good of a FEW (who got us into this mess in the FIRST PLACE) at the expense of everyone else in the world. If you don't like that outcome, FIGHT against it! Don't just sit there and accept it.

(It's not enough to point out the problems in the world, you have to find solutions to all of these problems and get the solutions to the point of realization. Getting those solutions realized is the HARD part, they are easy to come up with.)

Respectfully, one man's faith, hope, and good works, are another's superstition, blind optimistm, and misdirected sentimentality paving the way to meddlsome butt-inski-ism. Remember, Goldman Sachs and many others think they are doing God's work. The road to hell is paved ... and all that ...

My question still stands. You say convert your assets to PM, and I'm sympathetic to doing that in a more measured fashion, but I simply ask, what are you doing (or will do) to mitigate the potential of confiscation/taxation. I am simply pointing to a potential problem with PM strategy in the long run. If you haven't thought that far, fair enough, but,and I may be wrong, I doubt you bought your PM based on your faith, hope, and trying to make the world a better place?

[shiny!]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Interesting ...

Can anyone compare BullionDirect (Austin, TX) with APMEX (Oklahoma City, OK)? I'm about half-way between them, near Dallas, and have been using APMEX.

I've been happy with APMEX but if I had good reason, could switch.

Does anyone know of a similarly good dealer in the Dallas area? I like the idea of being within driving distance for some situations.

Not w/in driving distance to you, but check out Tulving and Colorado Gold. Don't forget to factor in shipping costs when you compare.
www.tulving.com and www.coloradogold.com

I wish I could afford their minimums.

[c1ue]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Yes but I made the exact same justification then, as I do know. (It's just that no one believed me at the time.) I believed me, so to me at least, it made just as much sense then as it does now.

And again, I've never said your decision wasn't good for you.

I merely pointed out that there are other options than going 3G (guns, gold, groceries).

Looking at historical examples of fiat currency failure and/or hyperinflation - staying IN the country has never been the optimal choice.

Because staying in the country means all the laws aimed at redistribution as well as fiat reinflation fully apply to you.

[gnk]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

So fiat currencies go down and confidence in them wanes in accelerated fashion, and gold shoots upwards of $5,000.

Governments agree on a new currency system, which may involve gold, but as a pre-requisite for the new system (as in 1933), gold bullion ownership by private citizens is banned once again for the 'good' of all, and everyone is required to exchange their gold (at the banks of course) for fiat money, and then a devaluation of the currency occurs.

So how does one prepare for this eventuality? I for one don't think the governments are going to let a handful of those perspicaceous folks who bought and hoarded gold (and who they can blame for the collapse of fiat currencies ) to profit from their foresight.

Would you rather own worth-less stock or worth(much)less paper dollars, than something worth much more, yet taxed much higher?

We all get to choose our poison - yet I do subscribe to diversification to an extent. Disclosure: I am mostly in cash, metals ETFs, and Gold.

I am leaning towards the view that in the upcoming years, there will be such a catastrophic destruction of wealth (think Exter's pyramid) that governments will not (over)confiscate gold, if at all, as it will be one of the few remaining "seeds" of wealth for future growth in the private sector.

Another argument: the plutocrats are not new to gold. Their accumulations probably rival those of emperors past. I would think they would have a say in how gold is taxed in the future.

Invest like these Giants do, and you will share in their fate. Or would you rather prefer to share in the investment fate of the remaining 95% of the population? Take your pick.

And one more, yet less likely scenario: gold effectively is remonitized. That is, you go to a bank, any bank, and exchange your gold for redenominated dollars. This would shift gold ownership back into the banking sector, as it used to be. This is a scenario I thought of when I was analyzing the possibly reasons for India and China to engage in a "gold ownership society" promotion. Something's up.

[jtabeb]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

"I doubt you bought your PM based on your faith, hope, and trying to make the world a better place? "

Actually, I did for that very reason, I just see nothing wrong with getting rich WHILE making the world a better place at the SAME TIME! (and If you doubt that rejecting authority that treats you unjustly can cause real and meaningful change, I think you should talk to Rosa Parks).

And I did "get that far" r.e. taxes, unfairness, injustice, etc.. It's simple, we all just work together to restructure the entire world's financial and monetary system, That's it. How 'bout that, is that far enough for ya? (A bunch of independent agents acting collectively in the world market place, to make change happen when there is neither the political will to so and to restore justice to the financial system). What's not to like: Get rich AND make the world a better place. We do what I outline below, and we accomplish BOTH!


Here is my plan exactly to deal with the problems you bring up (and reform the system and end corruption):

http://www.itulip.com/forums/showthr...-TO-FIX-THINGS...

And so, my fellow Americans: ask not what your country can do for you—ask what you can do for your country.
My fellow citizens of the world: ask not what America will do for you, but what together we can do for the freedom of man.
Finally, whether you are citizens of America or citizens of the world, ask of us the same high standards of strength and sacrifice which we ask of you. With a good conscience our only sure reward, with history the final judge of our deeds, let us go forth to lead the land we love, asking His blessing and His help, but knowing that here on earth God's work must truly be our own.

So what is this wonderful solution? The one that singly, no one could succeed with, but collectively, would be unstoppable.

Perhaps I'm getting ahead of myself. You see it is no good proposing solutions if you don't know what the problem is.

So what is it then, our problem. Not the SYMPTOMS, but the true and real cause, the ROOT CAUSE, as it were?

Well if you've read up on the history of monetary inflation in the French Republic, I think you'll find your answer.

In it, you will find all of the symptoms that our failing society displays today.

If you doubt my claim, please read this short work and TELL ME, what symptoms do we have now that did not exist then? I would argue, NONE. Our society is exhibiting ALL of the problems, ALL of the fears that brought down that once new, once great creation of men's minds, the republic.

http://books.google.com/books?id=jSt...age&q=&f=false

If the symptoms are the SAME, what was the proximate cause?

Can you guess?

Yes, Inflation.

I will let you find the proof of this in your own comparison of the symptoms then versus our symptoms now. What is illuminating however is the fact that the author goes to great lengths to establish the cause of these symptoms.

What I advocate is what I like to call "The Trading Places" strategy.

Not this

[media][/media]

THIS

[media][/media]

Everybody lives, nobody dies (Randolph is okay in the end) no shots get fired.

How to accomplish this wonderful feat? Simple, it's just a variation on the old Alchemists dream. Instead of Lead, we just turn PAPER into physical gold and silver, that's all. (All of it, into all of it). No stocks, no bonds, no futures, no cash. All of your savings, all of your investments, aside from what you need to survive on. That's all. It's that simple. Fix the root cause of the money disease and the symptoms disappear. And they go away FOREVER, and it can be done in a DAY.

The corruption machine dies it's proper death, and we get to start again, the way it was supposed to be. A real economy for real people limited by productive capacity and not subject to that which is well-intended but ultimately fails due to man's unquenched thirst for avarice. A linear system bounded by linear resources, not an exponential system that is rushing head-long into a finite-resource wall that emperils us all. We either fight to the death over the worlds remaining resources, or we scale back, and find a new way forward that allows us to progress at a linear pace.

The money system is the key. Without it, the abuses and corruption that we have now would not be possible. The TBTF's, TARPS, EXECUTIVE COMPENSATION, WARS, they all go away. Starve the beast is the essence, but let's make sure of what we WANT to starve.

It is the things that degrade, divide and destroy our society. Not the things that provide comfort to the afflicted. Not things that make our society grow and prosper and provide opportunity, compassion, and happiness.

The speech below by Francisco D'Anconia in Ayn Rand's "Atlas Shrugged" says all that needs to be said. We are, right now, living in the world described below. Together we posses the power to put and end to this horrible mutation called a financial system. But ONLY together can we accomplish this task.

I've read the book, and there is only on flaw in her logic that I can detect and that is on the subject of the individual. You see, she argues (and I bought, for a time) that we are each individually responsible for everything in our own lives. We determine our own success or failure. This is true except for one CRITICAL POINT. What determines each of us? She implies that we are each the sum total of what we were born with. She is incorrect. We are each a product of all of those that made an IMPACT in our lives. Their COLLECTIVE ACTION molds who we are. It can be positive, allowing us to achieve our full God given potential. Or it can be negative, holding back our development to the lowest subsistence level existence or worse, MUCH worse. It can turn us into animals that feel no human grace, empathy or emotion. This happens not because of the people that we are, but because we were prevented from developing into the people we were SUPPOSED to be.

I'm well and truly blessed. All my bumps and knocks were ALL in the right direction. I don't know how or why it happened that way, only that it did.

So I would ask you to make an active choice and decide what kind of world you truly want to live in. And, to understand that choices have consequences. Failing to ACTIVELY Choose one, will lead DIRECTLY TO THE OTHER.

That is our CHOICE. Choose, or it will be chosen for you. Chose well, however. Because you only get to make this choice once. An opportunity exists to allow you the leisure of time, but time doesn't last for ever.

So choose, and I hope you chose with me. Tomorrow is another day but there might not be another tomorrow.

(Oh, and here is why it only takes a day)

[media]

[pococansado]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Does anyone know of a similarly good dealer in the Dallas area? I like the idea of being within driving distance for some situations.

google dillon gage. they had a walk-in retail desk a couple of years ago. decent inventory, good pricing, big operation.

[Shakespear]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

jtabeb

Thanks for refering us to the book Fiat Money Inflation in France.

http://www.scribd.com/doc/13599566/F...-it-Ended-1914

That is a great find !!!

I am currently reading about the French Revolution and this book is looking to be both interesting and relevant to what is happening today.

This part from the Introduction hits the head on the nail.

The story of "Fiat Money Inflation in France" is one of
great interest to legislators, to economic students, and to
all business and thinking men. It records the most gigantic
attempt ever made in the history of the world by a government
to create an inconvertible paper currency, and to
maintain its circulation at various levels of value. It also
records what is perhaps the greatest of all governmental
efforts with the possible exception of Diocletian's to
enact and enforce a legal limit of commodity prices. Every
fetter that could hinder the will or thwart the wisdom of
democracy had been shattered, and in consequence every
device and expedient that untrammelled power and unrepressed
optimism could conceive were brought to bear.
But the attempts failed. They left behind them a legacy
of moral and material desolation and woe, from which one
of the most intellectual and spirited races of Europe has
suffered for a century and a quarter, and will continue to
suffer until the end of time. There are limitations to the
powers of governments and of peoples that inhere in the
constitution of things, and that neither despotisms nor
democracies can overcome.

Legislatures are as powerless to abrogate moral and economic
laws as they are to abrogate physical laws. They
cannot convert wrong into right nor divorce effect from cause,
either by parliamentary majorities, or by unity of supporting
public opinion. The penalties of such legislative folly
will always be exacted by inexorable time.

And this was written in 1914 !!!!!
Correction:

The present edition is not published, but simply privately
printed for his and my own personal use, with reference
to a future edition definitive. No copies of this present
edition will be offered for sale under any circumstances.
ANDREW D. WHITE,
Cornell University, September, 1912.

This book is a Diamond :-)

I got curious regard what were some great events in 1914. Here we have some :-)

Major Events of 1914

Ford Motor Company announces an 8-hour working day, paid at a minimum, $5 per day.

First World War begins when Austro-Hungary mobilizes against Serbia after Archduke Franz Ferdinand is assassinated in Sarajevo.

USA and Panama sign Panama Canal Treaty.

Last known Passenger Pigeon dies in Cincinnati Zoo.

Federal Reserve Bank of the United States opens.

[Chris Coles]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Together we posses the power to put and end to this horrible mutation called a financial system. But ONLY together can we accomplish this task.

I've read the book, and there is only on flaw in her logic that I can detect and that is on the subject of the individual. You see, she argues (and I bought, for a time) that we are each individually responsible for everything in our own lives. We determine our own success or failure. This is true except for one CRITICAL POINT. What determines each of us? She implies that we are each the sum total of what we were born with. She is incorrect. We are each a product of all of those that made an IMPACT in our lives. Their COLLECTIVE ACTION molds who we are. It can be positive, allowing us to achieve our full God given potential. Or it can be negative, holding back our development to the lowest subsistence level existence or worse, MUCH worse. It can turn us into animals that feel no human grace, empathy or emotion. This happens not because of the people that we are, but because we were prevented from developing into the people we were SUPPOSED to be.

JTABEB is absolutely correct. We all have to stand up to be counted and make our own contribution. Some of you will already know of my own input to this part of the debate with previous posts on iTulip that resulted in my contribution which revolves around my free PDF book: The Road Ahead from a Grass Roots Perspective www.chriscoles.com/page3.html

What you will not know is that my thinking on the idea of "Local" Capital Spillway Trust funds; targeting local savings as local equity capital for new private sector job creation has been given to the people. Not not some form of altruism, simply that on my own, it would be impossible to take my thinking forward.

That in turn has caught the eye of the Bank of England who have asked me to carry my thinking into the UK government. More on that as events occur.

Two further thoughts spring to mind about Gold. If you look at the past experience with Roosevelt, the one option left untouched was Gold held by foundations. If you take that and add the idea of creating your own community, (not as a single individual, but as a group of concerned local citizens), "Local" Capital Spillway Trust fund; and place the savings into Gold and ask the recipients of the equity capital, (to create new local jobs), to also pass the savings invested into their new business into Gold, you may have a better solution than simply hanging onto the Gold yourself.

Food for thought?

[Pascal]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

So fiat currencies go down and confidence in them wanes in accelerated fashion, and gold shoots upwards of $5,000.

Governments agree on a new currency system, which may involve gold, but as a pre-requisite for the new system (as in 1933), gold bullion ownership by private citizens is banned once again for the 'good' of all, and everyone is required to exchange their gold (at the banks of course) for fiat money, and then a devaluation of the currency occurs.

So how does one prepare for this eventuality? I for one don't think the governments are going to let a handful of those perspicaceous folks who bought and hoarded gold (and who they can blame for the collapse of fiat currencies ) to profit from their foresight.

My guess is that our rulers will not choose to confiscate this time. To get there, as Bill Murray says, you have to get inside the little critters' (politicians) skins and think like they do.

The only time I know of when all gold was confiscated was in the 1930s. Conditions and potential motives are very different today. In the 1930s devaluation there were three objectives. The first was to devalue the dollar so as to reduce the value of outstanding private debt. The second was to save the remaining banks by raising the nominal value of their collateral. Official devalution accomplished these objectives. Today there is no requirement for an official devaluation. It can and is happening freely in the open market constantly. Further, Bernanke and Co. can speed this process up at any time if they choose.

Now, Roosevelt did not have to steal people's gold to devalue. He could have simply declared that all contract clauses specifying gold payment were null and payable only in dollars without adjustment for his 60% plus devaluation. This would have achieved the first two objectives. Doing it this way would have had the added benefit of increasing the public's spending power by 60%. Master planner that he was, Roosevelt presumably believed that the government could spend this wealth more effectively, ergo the confiscation and third reason for what he did. The difference once again is that our devaluation is already occurring. To benefit in the same way Roosevelt did, our politicians would have to confiscate and then devalue again.

We do still have a few constitutional protections so any current confiscation would require paying the current market price. Since any crisis forcing the politicians to restructure the dollar will be fueled by a loss of confidence in fiat, a confiscation and subsequent devaluation would be counter-productive. Devaluations do not restore confidence and restoring confidence in fiat.

With all of that said I do believe that there is a chance of confiscation but for a different reason. If the amount of new currency that can be issued is some multiple of the amount of gold held, then our rulers would have a motive to seize every ounce they could find. The difference, again, is that they would almost certainly have to pay the market price. We would have been largely protected from past inflation and would simply have to find other means of dealing with the future inflation.

Could official manipulation lower that current price some just before a confiscation? Of course. And that would be disgusting as well as unfortunate for late buyers. For early buyers it would not likely make much difference.

One other thought that I think gnk also mentioned. China's rulers appear to be encouraging their citizens to buy PMs. The Chinese know that they will need eventually to raise internal demand. To do this they need a middle class, which is a worthy goal in and of itself. To have a middle class there needs to be some store of wealth and buying power. The Chinese leaders undoubtedly understand the wasting value of Western currencies as well as their own, which is somewhat tied to the dollar. Encouraging gold ownership would help create middle class buying power as existing currency systems fail. How does this affect us? It just might be too politically embarrassing for our leaders to confiscate gold while our main rival, an openly authoritarian one at that, allows free ownership.

You asked: "How does one prepare for the risk of confiscation?" The answer is to be sure you have some for them to confiscate. They will pay the market price.

[jtabeb]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

If you take that and add the idea of creating your own community, (not as a single individual, but as a group of concerned local citizens), "Local" Capital Spillway Trust fund; and place the savings into Gold and ask the recipients of the equity capital, (to create new local jobs), to also pass the savings invested into their new business into Gold, you may have a better solution than simply hanging onto the Gold yourself.

Food for thought?

Funny, I have talked extensively with others that hold capital in PMs and have been arguing that when the time is right, we need to pool our resources (metals) and form some kind of capital source that provides funding for development of productive businesses. True capital allocators, as it were, to worthy and productive businesses. This seems to be a great vehicle with which to do that.

My brain likes your food, Chris! ;)

[shiny!]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

China's rulers appear to be encouraging their citizens to buy PMs. The Chinese know that they will need eventually to raise internal demand. To do this they need a middle class, which is a worthy goal in and of itself. To have a middle class there needs to be some store of wealth and buying power. The Chinese leaders undoubtedly understand the wasting value of Western currencies as well as their own, which is somewhat tied to the dollar. Encouraging gold ownership would help create middle class buying power as existing currency systems fail. How does this affect us? It just might be too politically embarrassing for our leaders to confiscate gold while our main rival, an openly authoritarian one at that, allows free ownership.

I think one reason that China is encouraging its citizens to buy gold is because at some point the government may want or need it, and they will order the citizens to turn it in as their patriotic duty. Free gold for government.

I don't believe the U.S. government will do door-to-door confiscation of gold. It would be political suicide, and wouldn't be cost-effective because so few Americans own gold, and what they do own isn't enough to significantly plug the holes in the deficit. The big wealth to be plundered is in IRA's and 401K's.

What government WILL do is impose a large, say 90%, "luxury" tax on gold transactions. This will be politically palatable amongst the voting majority, the "have nots". When that happens, gold owners will choose to sit on their gold for a few generations, as they did when Roosevelt "confiscated" gold. Gold transactions will take place "underground".

Just my $0.02.

[jtabeb]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

They do that and they kill capital formation for a "few generations" as well, which also would be political suicide.

[shiny!]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

They do that and they kill capital formation for a "few generations" as well, which also would be political suicide.

I've never credited politicians with an overabundance of brains.