Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold - Currency Status since 2600 BC, Like A Thief In The Night

Commodities / Gold and Silver 2010 Sep 27, 2010 - 11:40 AM GMT

By: D_Sherman_Okst

Commodities

Best Financial Markets Analysis ArticleTo date, the crime syndicate has struck 3,800 times. At the bottom of this article you will find a partial list of the mob hits that have been made by the organized crime syndicate many refer to as: La Cosa Nos(Cen)tra(l) Banksters. The families of the diseased are large - entire nations. They made the unfortunate and common mistake of trusting their late, and once rich Uncle Currency with safeguarding the value stored in their life savings. Those that didn’t take out a life insurance plan suffered. Many, like the little children of Argentina, actually starved to death.


The modus operandi is identical in every case. The loot is taken first, the heist ends with a rub on the mark.

Let’s look at the above crime scene. Germany lost World War I. They were saddled with war debt and forced to pay reparation. The French took over Germany's industrial base when the Germans got behind on their payments. Without the industry revenues the German government began printing to cover their debt and avoid default.

  • ‘Gave up its industrial base’.
  • “...government began printing to cover their debt and avoid default.”

Sound familiar?

It should. Globalization off-shored the bulk of our industrial base. In 1959, manufacturing accounted for 30% of U.S. economic output. In 2008, it was 11%. The United States lost 32% of its manufacturing jobs since 2000. Manufacturing employment in the U.S. computer industry is now lower today than it was in 1975. Asia produces 84% of all printed circuit boards. The United States has lost 42,000 factories since 2001. In 2008, 1.2 billion cellphones were sold, none were made here.

An out of control deficit has left Ben-Willy-Nilly-Bernanke printing. The formula for what we print is this: (Tax revenues taken in + What Communist China et al will loan us) - (What we owe out) = Counterfeit / print the difference.

I hate gold - but I’m not stupid. I’m a realist. I know what Enron fraud smells like. I know that we have 13 trillion dollars of federal debt, add the GSE (Freddie/Fannie) debt to that and our Federal Debt is really over 18 trillion. Pile on the unfunded liabilities hidden off balance sheet on the government's cooked books:

Liability Unfunded (read: looted) Liability
Social Security 14.6 trillion
Prescription Drugs 19.2 trillion
Medicare 76 trillion
Total 109,800,000,000,000.00

109.8 trillion + 18 trillion = 127.8 trillion dollars.

Then we have the most disastrous deficit of all: The leadership deficit who continually make the absolute worst and totally incorrect economic decisions. With that in mind, gold for me is a life insurance policy against Uncle Buck.

Super guy our Uncle Buck is - but he’s a marked man. Street rules for dealing with marked men, two words; total avoidance. Willy-Nilly and his crew are going to do what made men have done for centuries - a loot-job followed by a hit-job.

Back to the German Job: The inflation alarm sounded in 1921 when gold spiked from 1,349 to 2,175. I bet a lot of Germans didn’t purchase an insurance plan then. I say this because of of a conversation I had with a friend of mine that I hadn’t seen in a month. When I saw him again, I asked, “Bought any gold?” “No, I looked at the [gold] chart (see current price chart below) and saw that in 1980 it was at $840.00 [an ounce] and in 1982 it fell to $290.00 [an ounce]”, he answered.

gold london pm fix 1975

My hunch is that in Germany a lot of folks looked to the 1920 drop from 1,340 to 1,201 and thought deflation, or that things were under control. Just like my friend let this current retracement frighten him out of his purchase of life insurance.

The Germans were robbed and it came like a thief in the night. A year later their marked Mark was dead, rubbed out Central Bankster mob style. Their entire savings had been looted. Look at the table at the bottom of the page. You do not have to be a rocket scientist to understand what an overextended county’s M.O. is.

Recently gold has been “going up” (most of us know the basket of Fiats are going down and the price of gold just appears to be going up, when in fact it is just storing the value of “yesteryears” wealth / purchasing power).

Lets do a simple exercise: “If” gold were to go up to $2,175.00 an ounce within the next 12 months - how many Americans:

  1. Would buy gold (take out life insurance against Uncle Buck) at $2,175.00 an ounce?
  2. Would listen to the deflationists saying that gold will crash (I don’t think they see the 128 trillion pound debt gorilla)?
  3. Would listen to the chart technicians calling for technical retracements?
  4. Or, would they listen to CNBS’s guests who missed the housing bubble, the biggest bubble of the century (well save for the coming bond bubble)?

Please see the 44 second point, listen to the sarcasm in her voice.

“If” Gold then ‘shoots up’ to $3,976.00 an ounce a few months later how many would buy then?

And finally, if gold jumped to $30,381.00 an ounce weeks after - how many could even afford to buy it? My point is that “if” this happens, that will be the precise point at which they are priced out of the market.

Hope they can afford silver then. Plan B.

A lot of really smart people have affixed $5,000.00 or $11,000.00 price ceilings to gold. Their merits are actually quite excellent. I won’t argue them on those merits. But, I sincerely don’t think they take into account how stupid our government is or how inept our financial wizards are. We are talking colossally inept, totally incompetent economic imbeciles here. I am not being mean - these morons have repeatedly demonstrated destructive financial tendencies. Take Summers: He helped blow away Glass-Steagall with Congressman Phil Gramm, then he helped Greenspan, Congress, the banking criminals and Wall Street derivative mob muzzle Brooksley Born (then Chairperson of the Commodity Future Trading Commission) when she tried to regulate the derivatives which would years later blow up the economy. Summers, up until recently was Obama’s number one economic advisor. Frontline did a wonderful piece on this, if you haven’t seen “Warning” it is well worth the watch. Video. Podcast. Audio.

Going back in history we count 3,800 Fiat currencies that have been whacked by the Central Bank / Government Mob. I’m amazed at how many people I encounter think that we have some special bullet proof Kevlar paper that our currency is printed on. They believe that because our dollar is backed by the full faith and credit of our great country that Uncle Buck will never get whacked. We have no more faith and our credit is running out. We take in less than we owe. We borrow more to try to bridge the gap between what we take in and what we owe. And, when we can’t make ends meet - we counterfeit the difference so we don’t default. Full faith in having a date with Miss. Certain Disaster. One meeting can replace Uncle Buck with a newly elected reserve currency. And as they say in the city where I was born: “Whaddya gonna do bout it? Huh?”.

Here are some of the 3,800 Fiats that have been rubbed out. When I read this list I try to put my feet in the other citizens’ shoes and wonder what life would have been like without an insurance policy when thousands of zeros get added to the price of gas or food. What would it have been like when they tell you that it takes 1 million old dollars to get 1 new dollar. Most of all, I wonder how many of them regret not having a golden insurance policy or a silver bridge to preserve the value of their accumulated wealth.

Conspicuously missing from deceased list is the barbarous relic we call gold. I know a lot of us categorically categorize gold as a commodity. Oddly, the realization that it is listed on many currency exchanges gives credence to the fact that gold is also a currency. And, so far as I know, the only currency that dates back to 2600 BC when the Egyptians established it as a standard for trade. Seems that gold acts as a true barometer as to what the value of any currency is - or isn't.

There is a lot of speculation that we are going to see a major change in Quantitative Easing. Released in the minutes of one of the near future FRB FOMC - perhaps even as early as the November 3, 2010 - the Fed is expected to announce the beginning of direct monetization (buying bonds directly from Turbo-Tax-Cheating-Timmy-Geithner. No longer using the Primary Dealers as middlemen). The balance sheet is set to explode. We’re talking another 1.5 - 3 trillion here.

From ZeroHedge:

One of the main problems facing the Fed in indirectly monetizing US Treasurys (keep in mind the proper definition of monetization is the Fed buying bonds directly from the Treasury, as opposed to using Primary Dealer middlemen, which is how it operates currently), is that there simply are not enough bonds in circulation to be bid, under its current regime of operation! Readers will recall that as part of existing SOMA guidelines, the Fed is limited to holding at most 35% of any specific marketable CUSIP. Furthermore, applying the SOMA limit to the $2 trillion in upcoming next twelve month issuance, means that in the interplay of the prepayment feedback loop coupled with collapsing rates, the Fed will need to either change the cap on the SOMA 35% limit, or the Treasury will need to issue far more debt to keep up with the sudden expansion in the Fed's outright, and not just marginal, capacity for incremental debt.
...(and in fact we believe this is merely the first step to an outright monetary collapse also known in some textbooks as hyperinflation)

“If” this happens, where do you think Uncle Buck will wind up? Uncle Buck will NOT be taking to the mattress in my house! Total avoidance.

In Summary: My faith in the 5Gs: (G*(religious edit)d, Gold, Guns, Grub & The Government Will Continue to Screw It Up) remain really, really, really strong.

Country Year Old Dollars Needed To Buy New Dollars
Angola 1991-1999 1 New Kwanza = 1,000,000,000 1991 Kwanzas
Argentina 1975-1991 1 New Peso = 100,000,000,000 1983 Pesos
Belarus 1994-2002 50,000 = 100,000,000 2000 Rublei
Brazil 1986-1994 1 Real = 2,700,000,000,000,000,000 1930 Reis
Bosnia-Herzegovina 1993 Massive hyperinflation
Bulgaria 1991-1997 Defaulted on its debt, food shortages, reduced the number of zeros that were added to its currency.
Chile 1971-1973 500%+ Inflation military overthrew the democracy.
China 1939-1950 1937 3.4 Yuan traded $1.00 USD. By May 1949, $1.00 USD = 23,280,000 Yuan
Ecuador 2000 Pegged to USD after 70-80% drop in its dollar
England 1100s 1455-1485 1543-1551 1100s silver in coins fell. Coins were clipped. Henry VIII debased the coins to raise money
Greece 1944-1953 1 1953 Drachma = 50,000,000,000,000 1944 Drachmai
France 1789-1797 Death sentence on anyone selling the notes at a discount to gold and silver livres. 1795 a new currency was issued, the mandat, which promptly lost 97% of its value. 1797, both paper currencies recalled new monetary system backed by gold.
Georgia 1995 1 new lari = 1,000,000 laris.
Germany 1923-1924 1945-1948 See chart above.
Hungary 1944-1946 Forint 400,000,000,000,000,000,000,000,000,000 = 4 × 1029 Pengõ
Israel 1979-1985 Price freezes
Japan 1944-1948 5,000%++ Inflation. Issued military currency, anyone caught with Honk Kong currency was tortured.
Krajina 1993 Country folded became part of Croatia.
Madagascar 2004 1 Ariary = Madagascan Francs - Riots persisted.
Mexico 1993-1994 Defaulted 1982. 1 Nuevo Peso = 1,000 Old Pesos.
Nicaragua 1987-1990 1 Gold Cordoba = 5,000,000,000 1987 Cordobas.
Peru 1984-1990 1 Nuevo Sol = 1,000,000,000 1985 Soles de Oro.
Poland 1990-1993 1 new Zloty.10,000 old Zlotych
Romania 2000-2005 1 new Leu = 10,000 old Lei
Ancient Rome 270AD Took the Romans 300 years to do what the Fed did in 84 years - debase the currency by 95%. The Roman empire fell, they welcomed the Barbarians.
Russia 1992-1994 100 Rubels = 1 USD 1991 30,000 Rubels = 1 USD 1999.
Taiwan 1940-1950 1 New Taiwan Dollar = 40,000 old Taiwan yuan.
Turkey 1990-2005 1 New Turkish Lira;= 1,000,000 old Lira.
Ukraine 1993-1995 1 Hryvnya =100,000 Karbovantsivi
United States 1812-1814 Continental Currency - Failed
United States 1861-1865 Confederation Notes - Failed
Vietnam 1981-1988 Gold trading was outlawed.
Yugoslavia 1989-1994 1 Novi Dinar = 1,300,000,000,000,000,000,000,000,000 Dinars.
Zimbabwe 1999 - 2010 Ongoing mess.

By D. Sherman Okst

Bernardston MA USA

davossherman @ gmail.com

http://UnveilingTheEconomy.blogspot.com/

I'm an ex-airline captain with about 15,000 hours and am amazed at all the BS we are taught. Most of my friends still in the business were also taught the wrong aerodynamic principles with respect to what makes planes fly. Aviation or economics, Keynes to Austrian - Bernulli to Newton we've been sold bad goods. It's amazing anything works as backwards as we do things.

© 2010 Copyright  D. Sherman Okst - Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Frank Wackernagel
28 Sep 10, 09:54
Hyperinflation insurance

Hi Sherman,

reading you from Germany I can give you some true stories of insurance against Weimar Hyperinflation:

- my neighbours grandma build her farm-house (where now my neighbour lives) in the hot-hyperinflation summer of 1923 in the south of Germany near by the border of Switzerland! How did she manage it without a credit from a bank (because money was only half worth tomorrow - there was no sense to take a credit today because you had to pay the workers daily and over 3 or 4 month every day the double salary or more - you would run very quickly out of your lent papermoney)?

Answer: she payed with the goldcoins she had since 1913 in her wardrobe and which she hasn't given away for paying the WWI of the emperor. And the construction of the farm-house was very cheaply payed in goldcoins with about 900 Goldmarks (about 214 US-Gold-$) changed day by day as she needed it into current hyperinfla-money or sometimes paying also directly with gold coins in 1923 - believe me - 900 goldmark is a little bit more than 10 ounces and the house was not for a dog. My nearly similar house was built in 1903 for about 12000 Goldmarks (2857 US-Gold-$). The grandma of my neighbour made big profits by using her gold insurance and bought her house for less than 10% of its gold value!

- I know a lot other stories which go the same way like the stories that on Sundays at the german border a lot of people from Switzerland came over the border for buying with their gold currency very cheap everything they liked in Germany (from bread to clothes everything was sold at about a quarter of the price they have to pay at home)

- other examples are the great number of US or UK's businessmen who bought with gold currency ($ and £) a big part of german industries for nearly nothing getting them running and producing cheap stuff with workers payed in hyperinfla-money for exporting to the States and UK.

- Weimar Inflation was not full of riots and murder (even if it had some) - it had also nearly no unemployment because there was lots of money (everyday more) with obligation to invest very quickly in order not to loose it. The people had all day the problem to change their daily wages (at the end even 2 wages a day) against something which was stable in value whatever it was to change this afterwards with more time to do into something to eat. And gold and silver or dollar notes were the things the most stable und recommended.

Greetings from Germany

Frank


Shelby Moore
28 Sep 10, 17:53
Hyper-inflation scenario

There can't be hyper-inflation unless the central banks drop money from helicopters directly to the masses, because the masses have negative net worth:

http://www.getmoneyenergy.com/2010/03/net-worth-of-whole-entire-world/

By hyper-inflation, I mean a sustained period of monthly double-digit price inflation.

What is more likely at the end game, is a quick devaluation (replacement of fiat system with something new), which leaves the masses impoverished. This will come after years of declining interest rates (1%, 0.5%, 0.25%, 0.125%, etc) wherein each halving of interest rates, also halves the interest payments on the fiscal public debts, thus enabling the public sector to take on orders-of-magnitude more debt between now and the end game time.

We will see inflation in commodities, because the declining interest rates and public sector debt crowding, is a deflation that forces companies to lower labor costs to stay alive. With 7 - 10 developing world workers hired for every outsourced westerner, demand for basic commodities increases.

We have deflation of the western hemisphere and inflation of the developing world. Mixed in with this is massive mis-allocation of capital due to centralized interference, e.g. Yuan peg is causing real estate and export infrastructure bubble because capital can't escape to greener pastures.

Thus the end game is implosion of the western hemisphere which will drag the developing world mis-allocations into their Great Depression (as what happened to USA in 1930s as Europe imploded).

This is why gold & silver are the most preservative, i.e. gold has the highest marginal utility of any commodity due to its highest stocks-to-flows ratio (copper etc have only 6 months supply above ground).


DavosSherman
22 Nov 10, 16:01
Frank

Frank: Thanks, super read!


Post Comment

Only logged in users are allowed to post comments. Register/ Log in