Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

[ViC78]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

If Switzerland, France etc had not sold their Gold, the paper market would have crashed along with the dollar based monetary system, which would have been a "sudden stop".

What is your basis for this assertion? I have never seen EJ making a distinction between "paper" and physical gold. In fact, I am not even sure what you mean by "paper" market and would appreciate a non tinfoil hat explanation.

[aaron]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

I would sell my gold to the government for the right price.

[shiny!]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

I would sell my gold to the government for the right price.

Only if there was a reformed government that lived within its means, plus a trend towards economic stability.

[doom&gloom]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

I disagree. The people tend to come together in time of crisis -- I'm seeing the first stirrings of such behavior now.

I know ONE waqy the government will get people to turn in their gold for funny munny -- NO cap gains taxes upon it! Even I would take that deal, and immediately buy a buttload of farmland.

[Andreuccio]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

What is your basis for this assertion? I have never seen EJ making a distinction between "paper" and physical gold. In fact, I am not even sure what you mean by "paper" market and would appreciate a non tinfoil hat explanation.

I don't know about the assertion or the basis for it, but paper refers to gold funds you can buy and sell like a stock, whereas physical refers to holding actual physical gold in the form of bars or coins.

A few years ago ASH and others did some research into the charters of some of the gold funds. IIRC, GTU (all gold) and CEF (which holds both gold and silver) actually hold the gold (and silver) they represent, but it's more squishy with a fund like GLD, which might or might not actually have enough gold to cover the outstanding shares.

There was a lot of discussion, again a few years ago, about the relative merits of paper vs. physical and how each might behave in different situations.

[ViC78]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

A few years ago ASH and others did some research into the charters of some of the gold funds. IIRC, GTU (all gold) and CEF (which holds both gold and silver) actually hold the gold (and silver) they represent, but it's more squishy with a fund like GLD, which might or might not actually have enough gold to cover the outstanding shares.

Okay, I am aware of these funds and in fact hold a substantial amount (for me) of GTU. Of these GLD seems the only suspect one, but it was started in 2004. Sishya claimed that the central banks were selling gold in 2001 onwards to prevent the paper market from collapsing. I am not sure what this means at all. In absence of a clear explanation, I think it kind of puts a wrench in EJ's theory that gold was plan B.

[doom&gloom]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

I'm with c1ue on this, especially the comparison of the "United" States with countries such as South Korea - or Norway, Sweden, etc.

At one time we had a [mostly] common culture, but no more. Post-Modernism has effectively destroyed even a moral consensus among the American people as regarding the beginning of human life, marriage, national security, etc., among other points.

Personal peace and affluence has replaced almost every other common priority. It used to mean that as long as I have a good job and a nice neighborhood then to hell with the rest of the world. Now I fear it has come to mean that as long as I'm okay, to hell with the people one block over!

Without ever rising standards of living what is there to "hold the center" in our country? Just look at the mental and moral midgets in positions of power within the RepubliCrat party - it's enough to engender despair.

http://www.traderview.com/Global_Insights.cfm

Todays' date (Oct 13) Part 2 interview with Bert Dohman where they all discuss gold, silver, oil and c1ue's "favorite investment" farmland as stores of value.

[jpatter666]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

I don't know about the assertion or the basis for it, but paper refers to gold funds you can buy and sell like a stock, whereas physical refers to holding actual physical gold in the form of bars or coins.

A few years ago ASH and others did some research into the charters of some of the gold funds. IIRC, GTU (all gold) and CEF (which holds both gold and silver) actually hold the gold (and silver) they represent, but it's more squishy with a fund like GLD, which might or might not actually have enough gold to cover the outstanding shares.

There was a lot of discussion, again a few years ago, about the relative merits of paper vs. physical and how each might behave in different situations.

To me, "paper" PMs = unallocated. i.e., there is nothing to really point to or prove that this particular piece of gold is exclusively yours. This is one of the main arguments against paper gold -- that there may actually be multiple claimants to it.

As I see it, there are varying levels of security. From least to most:

Funds such as GLD/SLV -- there is much argument as to whether they actually have the gold/silver they claim as opposed to warrants or options (it would have to be a LOT but they are the most liquid funds and as such, several members such as myself use them for trading)
GTU/CEF -- allocated, but do not allow (to my knowledge) redemption. Watch the NAV here.
Funds that allow for redemption such as Sprott Gold. Again, can have high NAV
PM specialty sites such as GoldMoney/BullionVault
Physical (in my hand)

I personally have allocations across nearly all of these.

If I've got this wrong, I'm sure someone will correct!

[DSpencer]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

Does anyone have data on how much gold is owned by US citizens? What about other key countries?

[sishya]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

What is your basis for this assertion? I have never seen EJ making a distinction between "paper" and physical gold. In fact, I am not even sure what you mean by "paper" market and would appreciate a non tinfoil hat explanation.

FWIW

- Central banks lease Gold. Why do they do it ? to suppress gold price and get a profit on the leased Gold.
- Why suppress Gold price - Gibson paradox by Larry summers, to control CB bond interest rates better and create demand for currencies.
- These leased Gold does not mean Gold moves out of CB's but rather they are a promise by CB to provide Bullion Banks
with Gold if required. ie when a large percent of Gold futures are redeemed by futures buyers. Only in
emergency like in 1998,they will sell Gold(Brown Bottom)
- LBMA/COMEX involve Gold volumes exceeding ayear of mine production. 99% of people who buy a future dated contract
settle in dollar at the end irrespective of price. only 1% of Gold voulme is settled in physical Gold.
- The parties which supply bullion are Bullion Banks and miners. But most physical transaction is outside the LBMA/COMEX.
ie transaction between miners and buyers(Bullion banks, Jewellers).
- Physical transaction price are now following the paper price. If the paper price had not risen since 2000, there
would have been a collapse in paper markets and no physical buyers/sellers would have followed that paper price.
- Govts with bullion banks are mostly net short paper Gold which gives them an incentive to provide large amounts of
paper Gold, which they can cover by driving the price down so long as physical buyers follow the paper price and
only 1% of people demand physical.
- Govt suppressing Gold price is not tin foil material. They have been openly admitted by Paul Volker, Greenspan, Larry summers...etc.



http://fofoa.blogspot.com/2009/02/go...explained.html

[c1ue]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

It's a common misconception that FDR's order was aimed at lower and middle class gold owners. Most of the gold held by U.S. Citizens was held by the top 5% net worth group. The law was intended to motivate bank managers to not collude with important clients to get the client's gold out of the country. The "cash for gold" crowd has indeed already been cleaned out, judging by the falloff in advertising, but they will not be the targets of any future anti gold hoarding propaganda campaign.

It's also easy to underestimate the effectiveness of these campaigns. The ease with which the invasion of Iraq was sold is indicative.

I am a little unclear on what is being said here.

Is it that the wealthy who own the gold are not international and thus will voluntarily turn their gold in to recapitalize the US dollar?

Or is it that government machinations leading into the W. Bush Iraq war (I presume, as opposed to Bush Sr. Iraq war) will engender a popular support movement to recapitalize the US dollar via voluntary gold donations?

Or both?

I would posit that the elite today are far different than in 1933. Travel is much easier, as is being international. While certainly there was some extent of 'Atlanticism' in the United States in 1933, at the same time the vast majority of the US population including its elites were very much inward facing.

I also am very unclear as to how successful a 'WMD' propaganda campaign will work on elites. The failure of the Iraq campaign both in terms of even medium term information control as well as outcome bodes poorly for another attempt.

Lastly I am very pessimistic, given the decades long examples of self interested behavior at the expense of the whole on the part of the elites, that somehow this long standing pattern of behavior will suddenly transform into a willingness to take risks and make significant personal sacrifices in order to reverse the ongoing economic and political trend.

As has been noted by many others:

Where is the Pecora commission of today?

Not only do we not have a Ferdinand Pecora with full government support exposing FIRE abuses such that legislation could be proposed to correct such abuses, or even a Resolution Trust Corporation plus FIRREA, we have instead a Congress which meekly stood by while clearly criminal ratings agencies asserted that their multi-billion dollar ratings were merely "free speech".

The Ferdinand Pecora of our time, Dr. Elizabeth Warren, rather than being recognized and supported is instead shuffled off to fight a scion of FIRE with her bare hands.

Where is the Marriner Eccles of today?

Instead of a sober evaluation of the economic situation with a prescription for a restarting of the flow of the economy based on resuscitation of its base, we have instead a series of Ayn Randian Federal Reserve chairs whose primary training appears to be lowering interest rates exactly like monkeys with one crack dispensing lever before them.

Where is the FDR of today?

Instead of a scion of the elites who turned populist in order to effect massive changes, we have a window dressing President who has done nothing promised to the voters, but has accomplished everything that can be asked for by donors.

And more worrisome: who is standing in the wings who has any credibility or capability to accomplish will need to be done?

[FRED]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

EJ writes in:

[QUOTE=c1ue;211942]I am a little unclear on what is being said here.

Is it that the wealthy who own the gold are not international and thus will voluntarily turn their gold in to recapitalize the US dollar?

Yes. The 1933 law only applied to US citizens. At the time, the politics of rich versus poor in Europe was shaping into movements that made FDR's offer to the wealthy look like a good deal, to take a haircut on the value of gold holdings when exchanged for FRNs.

Or is it that government machinations leading into the W. Bush Iraq war (I presume, as opposed to Bush Sr. Iraq war) will engender a popular support movement to recapitalize the US dollar via voluntary gold donations?

Or both?

You are taking the point literally. You first have to imagine a future in the US that is more like the conditions that occurred in Korea in 1998. The propaganda campaign will focus on assigning blame to deflect it from the true culprits and identify scapegoats. In the heat of crisis the masses will accept it blindly.

I would posit that the elite today are far different than in 1933. Travel is much easier, as is being international. While certainly there was some extent of 'Atlanticism' in the United States in 1933, at the same time the vast majority of the US population including its elites were very much inward facing.

I also am very unclear as to how successful a 'WMD' propaganda campaign will work on elites. The failure of the Iraq campaign both in terms of even medium term information control as well as outcome bodes poorly for another attempt.

A well executed propaganda campaign that appeals to patriotism in crisis will erase in hours a lifetime of Internationalism.

Lastly I am very pessimistic, given the decades long examples of self interested behavior at the expense of the whole on the part of the elites, that somehow this long standing pattern of behavior will suddenly transform into a willingness to take risks and make significant personal sacrifices in order to reverse the ongoing economic and political trend.

Elites as the target of popular anger will be used to motivate high net worth gold owners, whether they are members of the elite or not, to turn in gold for the greater good.



You can see this taking shape already. What is Warren Buffett's purpose in making public pronouncements that he is under-taxed other than a move to build a reputation with the masses as one of the "good rich" to deflect popular anger that we see today away from himself?

As has been noted by many others:

Where is the Pecora commission of today?

Not only do we not have a Ferdinand Pecora with full government support exposing FIRE abuses such that legislation could be proposed to correct such abuses, or even a Resolution Trust Corporation plus FIRREA, we have instead a Congress which meekly stood by while clearly criminal ratings agencies asserted that their multi-billion dollar ratings were merely "free speech".

The Ferdinand Pecora of our time, Dr. Elizabeth Warren, rather than being recognized and supported is instead shuffled off to fight a scion of FIRE with her bare hands.

Where is the Marriner Eccles of today?

Instead of a sober evaluation of the economic situation with a prescription for a restarting of the flow of the economy based on resuscitation of its base, we have instead a series of Ayn Randian Federal Reserve chairs whose primary training appears to be lowering interest rates exactly like monkeys with one crack dispensing lever before them.

Where is the FDR of today?

Instead of a scion of the elites who turned populist in order to effect massive changes, we have a window dressing President who has done nothing promised to the voters, but has accomplished everything that can be asked for by donors.

And more worrisome: who is standing in the wings who has any credibility or capability to accomplish will need to be done?

These are all fair questions. I can tell you that from numerous personal conversations with both Bill Black and Elizabeth Warren that they conflate FIRE Economy abuses of power to abuse of power by the wealthy in general, regardless of how that wealth was earned. I have done my best to get them to see the difference but to no avail.

They do have a soft spot for technology entrepreneurs, particularly those who support liberal causes, but deep in their souls is a grinding animosity toward capitalists that I presume was learned at Mother's or Father's knee. It was for me. I had to unlearn it through the experience of running two companies and being responsible for both employees, who comprise the value of a business, and the shareholders who make the enterprise possible by supplying capital.

This is why the phrase "socialist entrepreneur" is an oxymoron.

I believe that the cure for socialism is to give socialists the responsibility of making payroll.

We may yet get the commissions you list. We have not so far because reflation was too effective, at least compared to the inaction from 1930 to 1933 that created the political conditions for formation of those commissions.

The diffuse and unqualified anger and passion of the Occupy Wall Street Protesters is a harbinger of what is to come. As Eric Hoffer noted in his seminal book on mass movements:

All mass movements avail themselves of action as a means of unification. The conflicts a mass movement seeks and incites serve not only to down its enemies but also to strip its followers of their distinct individuality and render them more soluble in the collective medium.
-- Eric Hoffer

I doubt if the oppressed ever fight for freedom. They fight for pride and for power -- power to oppress others. The oppressed want above all to imitate their oppressors; they want to retaliate.
-- Eric Hoffer, The True Believer (1951)

When our individual interests and prospects do not seem worth living for, we are in desperate need for something apart from us to live for. All forms of dedication, devotion, loyalty and self-surrender are in essence a desperate clinging to something which might give worth and meaning to our lives.
-- Eric Hoffer, The True Believer (1951)

Passionate hatred can give meaning and purpose to an empty life. Thus people haunted by the purposelessness of their lives try to find a new content not only by dedicating themselves to a holy cause but also by nursing a fanatical grievance. A mass movement offers them unlimited opportunities for both.
-- Eric Hoffer

I have long warned here on iTulip that a new era of unreason would be upon us once the bubble era ended. The ingredients and antecedents for a destructive and violent mass movement are extant: a large population of uneducated citizens who have been humiliated by financial losses from two government-backed bubbles that enriched a minority, plus the added insult to injury of long-term unemployment that grinds a sense of meaning and self-worth into despair. Along comes social media to accelerate the process. History is full of such unfortunate coincidences.

[FRED]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

Doubtful IMO. Even if there are paper claims, in the end possession is 9/10s of the law.

This is the official iTulip position on leasing of Treasury gold:

Given America's historical unilateralism with respect to foreign gold obligations, in a crisis, who would you rather be, a foreign holder of a paper claim against US Treasury gold or the US government with the gold in the vault?

[jpatter666]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

This is the official iTulip position on leasing of Treasury gold:

Given America's historical unilateralism with respect to foreign gold obligations, in a crisis, who would you rather be, a foreign holder of a paper claim against US Treasury gold or the US government with the gold in the vault?

Yep. Because.....

1 ) You're going to attack to world's preeminent superpower to "get" your gold? Uh....no. Even if you *did* get it, now you've the Goldfinger dilemma.
2 ) Even if the law was on your side -- laws can be changed -- and you can bet your last gold piece that under those (crisis) circumstances, they would be

[thriftyandboringinohio]

Re: Essential Trends - Part I-A: Gold in an Era of Global Monetary System Regime Change - Eric Janszen

EJ writes in:


...1933 ... At the time, the politics of rich versus poor in Europe was shaping into movements that made FDR's offer to the wealthy look like a good deal, to take a haircut on the value of gold holdings when exchanged for FRNs...

I have seen opinion that the term "new deal" really applied to the very rich, not to the average person. The "new deal" for the American elite was to give up part of their wealth to avoid hanging by the neck from a lamp post, as was happening in Europe under the communist and socialist movements of the day.