Obama's war against gold

Originally posted by Metal Brain
Lots of countries are buying gold and the USA doesn't like the trend, especially if it is by a country the USA wants to keep weak. It is partly about the US dollar's world reserve status at the very least.

http://theeconomiccollapseblog.com/archives/petrogold-are-russia-and-china-hoarding-gold-because-they-plan-to-kill-the-petrodollar

A lot of peo ...[text shortened]... is really undervalued if anything. That is why they are the main buyers of gold in the world.

For a long time, the nations at the head of the banking system have sought to minimize gold's importance, in order to shore up their fiat money schemes. No doubt that continues.

The problem with gold's importance in the world scheme of things, is that it is less desired and used as a commodity than at other times in history. Speculatively, if the SHTF, paper money may be nearly worthless, but then gold valued at $X of whatever currency will also be nearly worthless. For a time at least, commodities and barter take over, and it may be that lead, brass, and gunpowder, especially together are worth more than gold.

Originally posted by normbenign
For a long time, the nations at the head of the banking system have sought to minimize gold's importance, in order to shore up their fiat money schemes. No doubt that continues.

The problem with gold's importance in the world scheme of things, is that it is less desired and used as a commodity than at other times in history. Speculatively, if the SHTF, ...[text shortened]... , and it may be that lead, brass, and gunpowder, especially together are worth more than gold.

It sounds like you are saying central banks are being foolish. I highly doubt that. They know how much the currency war has devalued the world's currencies.

If you have a good reason to think gold is worth less than other commodities why do you think that? Explain your logic.

Originally posted by Metal Brain
It sounds like you are saying central banks are being foolish. I highly doubt that. They know how much the currency war has devalued the world's currencies.

If you have a good reason to think gold is worth less than other commodities why do you think that? Explain your logic.

No, that's not the point. National banks conceive of everything continuing as it has. They think they control everything, and for some indefinite period they do. At some point, the inflation can't be controlled anymore. The banks, the nations, the governments all collapse.

Presently, gold is worth a lot, but the value is designated in fiat currency dollars. When those fiat currencies all go belly up, what will gold buy? How much corn, wheat or beef will an ounce of gold buy in a setting where hyperinflation has wiped out the value of fiat money? Gold's value then will be based on supply and demand and perhaps its industrial uses as opposed to its relationship to the old fiat currencies.

Originally posted by normbenign
No, that's not the point. National banks conceive of everything continuing as it has. They think they control everything, and for some indefinite period they do. At some point, the inflation can't be controlled anymore. The banks, the nations, the governments all collapse.

Presently, gold is worth a lot, but the value is designated in fiat currency ...[text shortened]... nd and perhaps its industrial uses as opposed to its relationship to the old fiat currencies.

All currencies go belly up? At the same time??
That has never happened and I would not expect it to.

Originally posted by Metal Brain
Lots of countries are buying gold and the USA doesn't like the trend, especially if it is by a country the USA wants to keep weak. It is partly about the US dollar's world reserve status at the very least.

http://theeconomiccollapseblog.com/archives/petrogold-are-russia-and-china-hoarding-gold-because-they-plan-to-kill-the-petrodollar

A lot of peo ...[text shortened]... is really undervalued if anything. That is why they are the main buyers of gold in the world.

I really don't think so, for one thing keeping physical gold reserves is a pain - there are space and security costs. Foreign currency is just a matter of having a dollar account - or whatever currency it is. From the point of view of the U.S. dollar's reserve status the Euro is a much larger threat, as well as the Remnimbi. Sterling less so, as the economy is much smaller.

The price of gold is largely determined by investor behaviour. Industry uses about 10% of world gold production, the rest goes to jewelry (50% ) and hoarders (40% ). Since we haven't had 600% inflation since around 2000 when the gold price was $250 one has to conclude that currency devaluation is not an explanation. Gold has long been regarded as an inflation hedge and a store of wealth when market conditions aren't favourable. Like most non-loss making assets its price was boosted by the flight to quality when the crash came as well as quantative easing. As the world economy comes out of recession the price of gold will tend to fall as investors sell it for riskier income generating assets, unless wealth generation in places like India grows fast enough that they can make up in jewelry demand what is lost in investor demand.

Where you may have a point is that the price of gold started to increase after the 9/11 outrage and the wars that ensued, reflecting uncertainty over U.S. hegemony. In this view gold and the dollar may appear at odds, but a gold price collapse isn't in any administration's interests as they use it for their own reserves. The U.S. may prefer people to weight their reserves to the dollar rather than gold, but don't seriously expect anyone to divest themselves of it entirely. Gold has been used for currency reserves for so long a currency would be made unstable just by not having reserves in it.

The fact that central banks are buying has more to do with fashion than logic, they were selling it a decade ago when the price was at a historical low and were lured into selling it with the prospect of returns. They got their collective fingers burnt with sovereign debt and probably just want to re-balance back to gold.

Originally posted by Metal Brain
All currencies go belly up? At the same time??
That has never happened and I would not expect it to.

Think about it. We are in untrod ground. Every nation state on the planet has unsustainable debt. The biggest economies are US, China, EU, Russia, Australia, by my reckoning, and if I'm wrong, probably only in the order. There is more centralization than ever before, and central banks are more connected. It is not a far fetched unlikely outcome that the whole system crashes.

The Great Depression was pretty much worldwide, at a time when there was a lot less debt, and a lot less centralization.

Originally posted by DeepThought
I really don't think so, for one thing keeping physical gold reserves is a pain - there are space and security costs. Foreign currency is just a matter of having a dollar account - or whatever currency it is. From the point of view of the U.S. dollar's reserve status the Euro is a much larger threat, as well as the Remnimbi. Sterling less so, as the e ...[text shortened]... tive fingers burnt with sovereign debt and probably just want to re-balance back to gold.

"I really don't think so, for one thing keeping physical gold reserves is a pain"

I have it buried in the ground on my property. It is not a pain at all. You are obviously not very creative. No pain at all.

Originally posted by normbenign
Think about it. We are in untrod ground. Every nation state on the planet has unsustainable debt. The biggest economies are US, China, EU, Russia, Australia, by my reckoning, and if I'm wrong, probably only in the order. There is more centralization than ever before, and central banks are more connected. It is not a far fetched unlikely outcome that t ...[text shortened]... pretty much worldwide, at a time when there was a lot less debt, and a lot less centralization.

Whatever dude. If you really think that is the case buy a farm. I live in the country, so even if you are right I will do fine. In fact, I hope you are right. I am prepared for that.

Originally posted by Metal Brain
Whatever dude. If you really think that is the case buy a farm. I live in the country, so even if you are right I will do fine. In fact, I hope you are right. I am prepared for that.

You are indeed in a good position. People who are at least almost totally autarkistic are less vulnerable to possible disaster scenarios. If I were you I'd be storing other metals, like brass, lead and copper.

The problem with owning a farm is that in SHTF situations you become the target of food riot mobs. You want survivability without appearing to have it.

Think about it. Central banking only became popular toward the end of the 19th century, and only became international in the 20th. We have only a bit over 100 years of experience with this beast.

Originally posted by normbenign
You are indeed in a good position. People who are at least almost totally autarkistic are less vulnerable to possible disaster scenarios. If I were you I'd be storing other metals, like brass, lead and copper.

The problem with owning a farm is that in SHTF situations you become the target of food riot mobs. You want survivability without appearing to ...[text shortened]... me international in the 20th. We have only a bit over 100 years of experience with this beast.

Whether I am right or you are right city folks will be screwed big time. Doesn't matter to me. I am ready.

Originally posted by Metal Brain
"I really don't think so, for one thing keeping physical gold reserves is a pain"

I have it buried in the ground on my property. It is not a pain at all. You are obviously not very creative. No pain at all.

The Bank of England has 9.98 million Troy ounces of gold, I don't think burying it in the back garden's an option. (Figures from http://www.bankofengland.co.uk/statistics/Documents/reserves/2013/jan/tempoutput.pdf)

Originally posted by Metal Brain

I have it buried in the ground on my property.

Lol. Very clever!

Originally posted by DeepThought
The Bank of England has 9.98 million Troy ounces of gold, I don't think burying it in the back garden's an option. (Figures from http://www.bankofengland.co.uk/statistics/Documents/reserves/2013/jan/tempoutput.pdf)

I hardly think nations consider storing gold a pain any more than banks consider storing money a pain. It is just business as usual. You have a funny way of looking at things.

Originally posted by KazetNagorra
Lol. Very clever!

Thanks.

It works. Even if most people knew which parcel they would not have a clue where to look first.

Originally posted by Metal Brain
I hardly think nations consider storing gold a pain any more than banks consider storing money a pain. It is just business as usual. You have a funny way of looking at things.

As I recall it was part of the motivation for the Bank of England selling off about half of its gold reserves in the early 2000s. You have to pay for the storage and 15 or so billion dollars worth of gold comes with significant storage costs. Government bonds take up much less space than gold. Banks would prefer all transactions to be electronic.