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GOLD Bugs Vs. Politicians/Analysts… Who pushes Greed/Fear More???

Commodities / Gold and Silver 2010 Apr 07, 2010 - 03:21 AM GMT

By: Brian_M_Thiesen

Commodities

Best Financial Markets Analysis Article Well again, if you made it past the headline, like so many of you claim the general public cannot do, without allowing yourself to be clouded with the very emotions that allow you to make irrational decision, which we all know ARE NOT GOOD for traders/investors… I applaud you.


If it is possible to suspend at least one emotion (maybe anger?) to look at some undeniable facts/numbers/figures wrapped in a soft blanket of “Gold Bug Scenarios” you may “see the unseen” that two other emotions GREED and FEAR, May have been blinding you from.

Again my objective is not to “predict” gold prices in the next timeframe of choice. For my predictions like so many others mean nothing really.  If I was to say I think gold could have some more room to the upside…. Maybe even $1500 all the bugs have been crying aboiut is inevitable… After this declines of a great maginitude would ensue. If this does not happen though I will be happy and surely will not be crying manipulation for generations like some others.

If it does reach there then many bugs will be saying I told you so and conversely if it manages to go to $900 or less they will be whining about manipulation that has been happening for decades… while many others who might have predicted the price fall now will not be mentioned. Nor will be any mention of the massive profits that might have been made by those individuals. Even if Gold reaches $1500/ounce or more in order to extract gains from such a scenario you  would have to sell or trade the gold, which according to the bugs is the “biggest mistake of your life.”

(Sounds like the “advisors” or “hacks” they so aggressivley attack)

Their investment time frame is forever, in these types of markets I wouldn’t advise any forever investment… but I’m not an advisor. If I was to say the longest timeframe anyone should be investing is no more than a few months except in cases of real estate if someone really wants to go there. Of course if your investment is a winner to let it ride to the moon.

My objective here is to drill some holes into the “rock solid” theories on future scenarios for gold/silver/pm’s in general. As well as the price targets and “survival/profit/value” locks that would ensue “without a doubt” if said events transpired.

Also to try and show a side of the bugs that you and them may not see, that they like politicians/advisors etc. have their agendas. Also that they like politicians etc. are NOT your best advisors. Your best advisor is always Entry/ Exit, P/L etc and frankly what the charts say not what I or anyone says.

There were a few replies to previous article http://www.marketoracle.co.uk/Article18280.html

for me to get gold… I have enough, and silver… that too.

Some said I think gold is “worthless”… if this is what you got out of it… what can I say I cannot possibly reason with you.

There were many that said gold was used for thousands of years in many societies, this I never doubted nor refuted. As were hundreds of other items deemed more valuable than the metal itself.

There were many who said there is plenty of gold to go around and argued how much there is with numbers ranging to 250k tonnes. This I also do not doubt and allowed whoever that wished to play with the figures higher or lower

There are those that said fiat is garbage, this I also do not doubt…well… because it is paper and for all intents and purposes should not be worth more than the cost that that size and type of paper is worth at your local stationary store.

But if it is so worthless how come its all you get when you cash in your gold? And accept it! If it is so worthless why is it accepted at any store for “hard assets”

Many mentioned hyperinflation… yes possible so? Read on and see why this neccesarily isnt the be all end all to buy gold/pm’s

For those of you who brought this up, great these are obvious to most, myself included which is why I myself mentioned these very topics

I wonder if they know at so many times in these same societies that gold mostly was less valuable than some spices, incences, grains and salts etc? Many times a kings or high office ability to use frankinscence etc. was a higher salute than any gold offering. Was it any wonder it was gold, frankinscence and myrrh not gold, gold and silver? (check into this it is not “theory”)

I wonder if they know many societies gathered and amassed gold solely for artistic purposes as aztec and south american records show gold was solely used for this and seashells etc. had more worth.

These peoples could not understand the spanish obsesssion with gold (who I will say used it as a type of money but this does not mean NOW that it is “money”) I wonder if they know that many societies cared less about gold than simple firs etc. like the millions of north american indians who got along just fine without it. By record also showing they lived a pretty content and harmonious life with nature etc. without gold… imagine that.

Lets say we go back only 5000 years or so, (by the way the oldest mines are actually about 200 000 years old! Hmmm I invite the reader to look into the pruposed reasons gold had value then) gold had many uses, most of it was not as a “currency” as some say was the only reason.

Gold was used as a medicine, for agriculture in technologies that most economists have no idea of in their tunnel vision. This is why Greeks, Egyptians etc. (at least royalty)valued so much.  (Some say this is why the elites who have ties to mystery schools like it so much as well… you decide for you)

Otherwise in all the markets they would have just traded gold for silver back and forth if it was the only thing that made the world go round. Afterall who cares about eating if you have gold right?

For these reasons mostly it gained value as it could be traded for something (like nearly everyhting that existed…giraffes, cows, sheep you name it. So in this respect… ALL THAT EXISTS IS MONEY not just GODs gift to man G-O-L-D.

Now the church and countries more later (like the Romans) compiled mass amounts of gold and used these as a “type” of currency, not the “only” one.  For if gold was so importatnt they likely all would have went into Africa.  If gold is the most important why did they even think to go to USA with all its useless agricultural land and timber cotton, fish etc.?

Instead they fought over some of the best growing regions (land) Which without their armies would have died (unless they ate gold) Not saying they did nothing if they came across a mine but likely wasn’t the reason for their land conquests. Unless of course to take from the previous rulers where it like all other things was taken. The most valuable of which were slaves. hmmmmmmm

Markets where gold then (LIKE NOW) was not and is not required for any reason existed and thrived.  (kind of like when you go to any store that is not a bullion exchange)

Just think about how often or how many times you use gold in a day.

Maybe we could say that that which you use to buy all things and can be exchanged for all things might be considered the medium of exchange of the consensus. (MONEY.) Whereas gold  is the medium of exchange (only for the consensus medium of exchange) for a very small % of collectors and hobbyists. Therefore “money” to them but not “the rest of the free world”…. My “money” is on the free world not some guys thoughts on what it may look like without any real “backing” of these thoughts besides the words “It’s the way it will be” and nothing else.

As mentioned before when Rome was burning what was the concern of the masses GOLD? … or pretty much anything besides. Could it have been those that they knew had it fled for the hills or were struck down before they made it and said gold distributed amongst the angry mob? This happened to the most royal of the time is it possible it could happen to a “average joe” now? Should we think for 1 second even if these angry mobs took down even the “elite” or anyone else and found their gold they would hand it out for the cause?

Maybe an angry mob is more valuable than gold! In which case the one who could feed said mob would end up with all the gold!!!

If a man was to trade some wheat for some cattle what is the requirement of gold for the common man? Which I would say then like NOW was a pretty close ratio of today of few owning/controlling the many. Therefore it is likely then that %95 of people did not have gold. (please note I am not denying gold or silver were used just not likely in a high percentage of transactions and if so petty varieties) Now why might they not have much gold for the “commoners?” Keep in mind “money” now has no resemblance whatsoever to gold and in fact way before 1971…. Likely 1694 or sooner didn’t at all either. So if people want to live that far into the past… go crazy!

Because then like now the “elite” would likely be hoarding it all! Now if you are now “elite” Good on you likely you care not of the words mentioned here.

Call me crazy for thowing this out there but a lot has happened since the middle era of the last millenium. (at least 5.5 billion)

If your family managed to buy into the Federal Reserve pool At some % of $450 million good for you. If you are among the rest of the %99.99 of population the rest of this piece may mean something.

Again, then as now most people hoard gold. When Sheiks or Big “families” in Asia, Middle East, England Russia Etc. Call for their gold, they don’t call for a hundred ounces they call by the Tonne. Most of these are in large bars (not tiny little coins like bugs would have you believe) and this again as said likely constitutes %80-90 of above ground accountable gold. (and take a wild guess as to owns most of the gold below ground as well!)

Now in order to allow a “magical” currency to appear it seems that these families or groups like them will have to give up large portions of their gold… I don’t see this happening.

Many of the “righteous” out there said this “Is the only way” which of course I laughed at for this reason.

I made a public challenge (10 ounces to any man who could get a group to give a way %50 of their gold and my offer varied on the amount those parites would give “for the cause”) for them to give away %’s of their gold… which they balked and said (like my pesonal PM buddies did) “I would never do that… why should I” etc. etc.

So even they with their magic theories, hold theories they themselves cannot even support (EVEN HYPOTHETICALLY!!!) It was even said by  a few “I Wouldn’t give away 1 Gram!!!”  Even they cannot in good times put their “money” where their mouth is. Yet they expect the rest of mankind to do so during “systemic collapse” they call for?

So then again there may well be enough gold depending on whose figures you use, but who is willing to give to the cause… even hypothetically let alone reallistically?

Also if  %1-5 own %90 of wealth that means a lot of gold wil have to be “redistributed in an orderly fashion”

Maybe these men have fantasies of becoming the very elite by default that they claim manipulate markets?

Maybe they want to control the new system in an egotistical stab like the “elite” today?

Maybe they think that they can head a new system, one only smart people like them should have the right to run.

Maybe they want to control the majority of what they think will be the new currency for the benefit of the rest of us?

Note that these people are likely hobby investors compared to the big dogs lets say 1000 ounces or less. There are times like now where one man can control many but in times as predicted by these men, one man and even armies stand no chance against an angry mob.

Therefore again (citing the above “availability projections” ) lets assume there is even now 250k tonnes of gold for the entire world to use as a currency and 500k tonnes of silver that is just floating around out there for all to use. SORRY folks…. Not enough to keep the entire global economy afloat. I wonder if you can even contemplate the implications of this even being”forced” through? The very attempt to “force” this through would create the collapse! Which create many unpiad debts which would create deflation… which I think we could say would not be good for gold…. And in the end is likley to happen no matter what humans do.

250 ounces at double today’s price is not now enough to buy a house with and if gold doubled housing would likely double or close to, so you would actually need double that number… if you have this much gold… you are smarter than the rest of us and may become king of your county and we could all one day aspire to whatever you please.

You will say “neither is fiat suitable to keep economy going” I will say exactly! The elite control the FIAT and the gold, so what does it matter! GOLD USED TO BE A MEASURE OF CURRENCY AND IN 1971 that went out the window.(officially) So those who speak of it is…. Live in the past… it is “was” not “is”!  This like all other things the elite throw you a few bones to let you think you are something in their game but you have nothing compared to them.

Lets look at Zimbabwe Or Weimar Republic the two oft talked about in comparison to what will be.

Does anyone really think more than maybe %0.1 Zimbabweans care about gold price?

What did “hyperinflation” do to gold price in the Weimar? Was the general public scrambling around bidding up gold at ever higher and higher numbers in a manic frenzy that made all the “smart” people huge cash and these “smart” people were “protected?”

Again ask any average person who lived through depression, WWII how much they even for 1 second thought about gold price! While all around them people were starving to death.  I use these examples because this I think is the best that the public will understand as a “collapse” remotely comparable to the one “envisioned” by the “smart guys”

You may ask anyone who knows strories of the Weimar that people were trading gold jewelry for bread and cabbage DARE I SAY IN HYPERINFLATION GOLD WAS WORTH CABBAGE!!! I expect gold bugs at my door with pitch forks and torches in hand any minute now!!!

Who won in that deal?? Both as they both got a trade for what they thought was worth what. Gold worth cabbage? Dare I say in a systemic collapse that maybe gold doesn’t rise to the moon setting the “smart guy” up for “massive profits” if not protection??

Now if this collapse (which again I don’t doubt we some sort of shock or even complete overhaul in the 1-3 years or so) is supposed to be global… dare I say the globe will not give a damn about COMEX. LME etc. and even if comex has gold at $1000000 will it mean a damn thing in your town?? (that of course if they actually have any gold period now)

Dare I say that if all currencies go to zero, it is possible that the globe amidst the chaos wont stop, price everything in gold, distribute all gold in perfect little coins for all everywhere peacefully and nicely in fully fueled trucks and planes and no one will be the wiser and all will be well after gold becomes the currency for all mankind even though it never really has been the “sole” currecncy  in even small countires?

Dare I say that if currencies go to zero, that the pricing mechanism for gold will not exist anymore and the reversion to markets will be hasty and quick to local needs and situations and that gold may not be required as it has not been in the past in millions of cases of thes types of markets that existed in the past and do to this day?

Dare I make a crazy calculation that ZERO X  XITEM is ….. ZERO therefor worth will not be determined by WALL STREET HACKS…. But by MAIN STREET…. The kind of main street the “GOLD BUGS” are themselve crying for. The very main street they themselves even in theory would not support and likely would prefer to “rule” like the wall street hacks themselves do now.

Now if a dollar or yen or euro get dvalued by %50 but still exist then ALL ASSETS WILL MOVE ACCORDINLGY HENCE THE CURRENCY (OR MONEY FOR MOST) STILL EXISTS HENCE YOU WOULD HAVE TO TRADE IN YOUR GOLD FOR THIS CURRENY TO BUY OTHER ITEMS HENCE ABSOLUTELY NO PROFIT IS MADE UNLESS THE NEXT ITEM YOU GO TO PURCHASE WENT UP AS A % LESS THAN GOLD. For you to be able to predict gold will be higher than the asset you want when you sell is like saying the market will be sky high “for sure” when we go to cash in johnny’ s money for college in 15 years!

I again invite the reader to see how much oil has gone up since 1998 (%800) compared to gold (%450) to see a very small comparison as to for this one very important pricing mechanism, with inflation GOLD IS NOT THE WINNER, PROTECTOR, OR WINDFALL PROFIT BRINGER. Nor likely in this way will it be later.

Don’t You think for 1 second even that if gold goes up %50 then all else will? Please explain the profits here?

Even in fact it we want to shorten the timeframe down,  Crude recent lows to highs would present an investor with decent timing with +%100 gains in months… unlike gold. Those gains if the investor so chose could have been pulled to buy even more gold for example. But the money may have been tied up in some safe in the basement.

Hopefully you didn’t buy near 1200 as now you would be sitting on a nice %10 loss while stocks of various types have gone up nice %’s over the same time frame.

Could we then even say that in this time the credit structure which has allowed the population structure to skyrocket would fall hand in hand with that structure (at this time the reader is reminded to check credit charts to population growth charts)

This implies chaos, this implies gold basically becomes a “weight” rather than a measure. This implies a broken decimated and ailing populace will care not for Gold but likely for that which will ensure their basic survival as in chaos survival becomes paramount as chaos brings fear… not rocket science folks! Anyone see the VIX in octobers past?

Time and time again this scenario has popped up in all areas of the globe in lesser or more degrees of magnitude. Time and again survival has been the goal, with gold playing a minimal if not non-existant role for %99 of population. Now if you can guarantee you are in that %5… good on you. Think as Well how much of a role gold is playing in your survial right now?.... Not much huh.

IS it really true that all things were priced in gold in the past? Like when a regular guy went to the market and bought bread with his gold “shaving” he knew 1 loaf was 1 shaving and 2 was 2? Or that he was constantly doing gold conversions for his catttle or skins or barley? Or might he have been doing conversions for what he needed at the time which may have meant nothing to the guy  he needed it from!

Dare I say that gold only had worth for those that will likely become the most despised on the planet at that time and likely in a time the “smart guys” are forecasting?

Dare I say Gold will represent all that was wrong with the entity that caused such a massive collapse that most are callig for? In this case might it be that it will be shunned like the plague as might be those that own it as a consequence?

Dare I say that at this time the “Smart guys” will be in a very very small minority, and that in crisis a minority is not good in any way, especially if that minority might be blamed justly or unjustly for the cause of said calamity?

Finally dare I say that gold will be worth closer to ZERO than it will be to $10000 or even $5000 if such a scenario as is predicted by the “all-seeing smart guys?”

Go right now to your stash big or small and hold it in your hand and ask yourself “what is this really worth”… do the same with a $20 bill. It is only worth what the general concensus thinks it is worth. Approach 100 people on the street right now and ask them to stop and ask if they will buy your coin silver or gold I bet you %95 say NO for various reasons… many cited here in this article.

Markets now show $1120 as of this writing That is so to speak this is consensus, in the event of total collapse and all “going to zero” I doubt this gauge will be cited and the general consensus will be the one within a 10 mile radius or less. As it TRULY was in the past.

I am not here predicting cataclysm, on this I have beliefs that are far to much for most to handle (as likely this article is especially for all you gold worshippers or those with some type of short attention span)

What I am trying to convey is some logic or a deeper look into the “logic” offered by “the smart guys” who think gold is the only way and who themselves cannot even support their “smart” theory that gold will “skyrocket, become money and present windfall profits.”  Sometimes I wonder if selling hope is the real way to go. Politicians seem to be very good at using it to get elected, or fear to get others unelected or not elected.

Maybe like for you to elect gold and not all other assets combined? hmmmm

Maybe it seems some of these guys sound exactly like the guys they despise and whom are supposed to be the cause of these “predictions” HMMMMMMMMM………..

I do not doubt gold could be a part of a broader solution in time but not in the sense if you hold it for the time period they like that it will represent windfall profits all around and will be the single thing that makes the world go round.

People are very good salesman and in the case they are selling belief/hope/fear/greed they are all politicians. The people who are good at any arena, trading, relationships, life in general find ways to find some logic/reason beyond the emotion. Which I’m sure you know by now is the NUMBER 1 downfall of all INVESTORS.

Many of these guys use both GREED and FEAR as per their support of this theory which is even less than most politicians who ususally use one or the other!!!

Don’t listen to this, do some research, step back and then decide. If Gold or anything else makes sense then… Buy or not. If you are wrong at least you can say you thought about it and not that you got caught up in emotions like so many times before. If you are right…. You will likely feel like a pretty “SMART GUY”

Let Emotion be a problem in any relationship you want… just not the one with you and your money!!!

Brian M Thiesen,      Author “Time Filter”  “Egolution”,

Owner of gold and silver as a % of asset allocation, fan of quantum thinking in a quantum age over linear one way thinking.

I am a Man of no real credible accolades in economics, writing or english besides the above books which have won nothing close to an award or acknowledgement by anyone accept a few friends…. Which is enough for me.

© 2010 Copyright  Brian M. Thiesen - All Rights Reserved 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
07 Apr 10, 16:25
Gold Wiemar

Hallo Brian,

I read you from Germany even if I don't understand all what you write I like to give you some hints:

you're wrong if you say that gold was nothing worth in Weimar hyperinflation some examples:

- my neighbours grandma build her house (where now my neighbour lives) in Summer 1923 in hyperflation! 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)?

Answer: she payed with the goldcoins she had since 1913 in her wardrobe and which she hasn't given away for paying the kaisers war. And the construction was very cheaply payed in goldcoins with about 900 goldmark 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.

- I know a lot other stories which go the same way like the stories that on Sundays at the german borders a lot of people from the Netherlands Switzerland etc. 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 etc. 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 for not loosing 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.

Another thing:

Why do you think in case of hyperinflation or state bancrupt the people with pm have to give it away to the others who have nothing - nobody will do this !

What will happen is :

After a hyperinflation or bankrupt the state has to do his work means creation of a new stable currency and anybody will think that the state could not create a new stable currency in creating new fiat money without backing because people won't accept it without a backing. But on the other hand there is no obligation to make a new currency in gold coins - the state will print new notes which are backed in gold or other stuff - that all.

So the state will create a new currency with backing (in Weimar it was called Rentenmark and was backed with land). The new currency could be backed with everything the people have confidence in (land, pm, oil, gas, wheat, a basket of some things or my old socks).

Might be in some countries there is gold in the backing might be not.

It is not necessary that the new currency ist backed for 100% - for ex. the old goldmark of 1913 was only backed 30% in gold). But you are right that possession of gold is very inegal there are few persons who have a lot but there are also only a few countries which have a lot.

So I don't see the gold bug from the next corner give his gold to me and I don't see the Americans giving their Fort Knox gold away to the Africans because they don't have anything.

It is only possible for about 10 countries in the world to create a gold backed currency that are

USA, Germany, France, Italy, Switzerland and Netherlands (might by something like Luxemburg, Liechtenstein and Monaco also) even in UK it is not possible cause of the lack of gold in posession of the state and the people and all the others have to back with others assets.

Third thing:

You say there is not enough gold to create a gold currency

like I told above there are countries which could do others not.

The amount of pm in a pm-currency necessary for each person living in a country is not so high examples:

- Goldmark Germany 1913:

about 5 Billions of Goldmark in circulation means about 60 to 70 goldmark for each inhabitant means 23.3 grams of gold but only backed at 30% means on reality about 7 grams of gold for each inhabitant was enough for a gold currency.

- in France before the Revolution in 1789 there was gold and silver (counted together in gold) for about 28 gr Gold for one person

- in France in 1689 under the sunking Louis XIV. it was about 10 gr

- in France in 1850 it was rosen to 55 gram of gold for each person

- the USA minted up to the gold rush (means up to 1848) only about 50 Million $ in gold coins having about 20 Millions inhabitant means 4 gr. for one inhabitant (we know that additionally at that time also Pillar Dollars and Spanish Gold Escudos and also some banknotes were in cirulation - how much ?).

- in Germany in the moment the central bank has about 42 gr and privat persons about 13 gr for each inhabitant.

- France it is 38 gr in state posession and about 60 gr in private posession

greatings from Germany

Frank


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