TFMR Podcast #31 - Jeff Nielson of BullionBullsCanada

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On Thursday, I spoke again with Jeff Nielson of BullionBullsCanada. Jeff has recently written a terrific series entitled "The Road To Bullion Default" and I thought you'd find it interesting.

There are two parts in the series. Here is the first:

http://www.bullionbullscanada.com/gold-commentary/25964-the-road-to-bullion-default-part-i

And here is Part II:

http://www.bullionbullscanada.com/gold-commentary/26017-the-road-to-bullion-default-part-ii

I'm confident you'll enjoy reading Jeff's work and listening to this podcast.

TF


30 Comments

Istack's picture

More information

podcasts for the reading impaired

Thanks!

QE to infinity's picture

2nd?

2nd!

Thanks very much for the podcasts, will try to listen and digest all the info.

Mammoth's picture

Umpteenth!

(Just kidding...)

RRJJ's picture

Dollar bounced of its 200dma.

Dollar bounced of its 200dma. Im calling my bottom for PMs here but what do I know?

Condor's picture

Thanks Turd

I just wanted to take a second and thank you Turd for your continued work on the site.   The podcasts are great!  More weekend material.

Have you seen Jim Willie's latest piece: http://news.goldseek.com/GoldenJackass/1351713600.php.  Today's smash is all just part of the ongoing gold wars he talks about... no reason to be discouraged.

Mr. Fix's picture

I love pod casts,

Just got to figure out how to get it to play.....

Edit:

nevermind, got it.

Thanks.

Bugzy's picture

Hmmmmm

So this guy suggests that Physical metals can be confiscated via Government order. Yet goes on to say that the miners are a great investment.

So let me get this right. Gov says it needs Gold - makes law to steal all Gold from folk. Then pays the miners the going rate for the new Gold they bring to market? @$10,000 /oz?

Ermmmm. If they are willing to do away with property rights to take folks Gold, surely they will "nationalize" production too. You hold shares you get jack. You only have to look at South America

Bugzy

Southern Cross's picture

How To Make Extra Fiat

Just wanted to share with those who are in need of some extra money.    Here's an easy way to make some extra money if you live near a town or city.  I was never one to work for other people, but I have always been willing to take a humble task. 

My 13 year old son is not old enough to work and I really did not want him to pull weeds or some such work.   I am hoping to train him to be more productive so we decided to make a business out of picking up other peoples curbside junk.   What we came up with is "curbside shopping" twice a week for 2 hours when the trash is put out.    I looked on the internet and it's legal to do "curbside shopping" as long as you don't root through garbage cans.  We just pickup whatever is beside the cans that looks sellable and in decent condition.  Twice a week we head out and visit all the homes in several subdivisions.  We can pass at least 1,000 homes in 2 hours.   The car is ours and the gas I pay for is about $10.00 a week.    It really does work for us.  Although he has not sold much so far in garage sales or Craigs list, were building inventory,  I would say at garage sale prices he is making about $150.00 a week.   For a 13 year old putting in about 4 hours a week shopping and fixing up stuff thats pretty good.  My wife has bought several items from him because they were like brand new.  I help him clean every item.  We focus on easy to clean or slight repairs.  No big projects.   The only bad experience I have had was 3 weeks ago when we picked up two machine made orientals with dog urine in them on a rainy night,  the smell was horiffic and the rugs were almost to much to lift.  Of course we cleaned them on the driveway with ammonia, enzimes, and vinigar.  My wife helped and today they are perfect with absolutely no odor.  Each is probably worth used several hundred.  Last week we picked up a pressure washer somebody was throwing out.  We just cleaned all the walks and drives with it and now it's tested and ready for sale.  The washer just needed blown out from some clog.  Works perfect and probably worth around a $100 used..  This week we picked up 2 brand new chaise lounges each worth about $75.00 that the neighbor decided he did not want after just buying them last year for $275.00.   We picked up a large fiberglass fountain with a lions head spewing water several weeks ago that should be worth $150 new was $400.  All the fountian needed was a new $14 dollar water pump.  This is easy money folks if you are willing to go looking.  My son wants to get a couple more guns with the money.   Our garage is filling up for the upcoming garage sale.   On school nights we limit the time out, but if you are willing to stay out the sky is the limit if you have enough houses in your area.   We don't fool with large furniture.   I did know a guy that all he did was pickup old furniture as long as the frame was solid he would reglue and refabric the piece.   That was his specialty to make some extra fiat.  Seems to be very little competition to "curbside shopping."  

What's cool is this is a father / son project we both enjoy.   He is learning business and how to repair items.   In the last 6-7 weeks I would say he has collected about $1000.00 worth of sellable items.   Each week now we both look forward to making the circuit to see what is thrown out.  I wanted to share this with everyone as it might be a help to someone who needs extra money or to some father to help his son or daughter get ahead.    I would say all said and done he will make between $25 and 40 per hour for his efforts not counting the car and gas.   My son should make about $7-10,000 for a full year doing this.   After the guns and a mini bike he wants, I hope he will add to his silver collection. 

I think this business works best in middle to upper middle class neighborhoods with some discretionary income.  Condos seem to work well also as they have limited space so when they buy an item they have to throw out some other item. 

Maybe someone needs a way to make a little extra to buy silver.  This might work for you.   God bless.

TJeffson's picture

@southerncross

That's some good info.   Similar to buying storage units at auction.   A friend of mine wanted to get into that.   One of the agents I worked with owned a storage rental place, he said some of his auctions were going for 5 bucks... one lady bought one that had a car in it for 5 bucks... fixed up the car and sold it for 2 grand.   But since those storage wars shows all came on tv, I guess there's a lot more people buying now.   Also watch airports... they auction off unclaimed luggage I've heard.  

Lots of ways to make extra fiat out there, a person just needs to be innovative.  

reefman's picture

Jeff Nielson lacks even a basic understanding of economics.

After reading Jeff Nielson's latest rant I must conclude that he lacks a fundamental grasp of how economics really works and what exactly CAPITAL is. The following article written by Jeff Nielson (just this week) is riddled with fantastically false notions and Keynesian-pseudo-intellectual cliché.  Read it for yourself:

http://bullionbullscanada.com/intl-commentary/26019-prosperity-index-shows-capitalism-kills

"In other words, by any/every definition of the word; the U.S. has become steadily more “capitalist” over the past three years. Yet with three years of “economic recovery” and three years of the West’s most-extreme version of capitalism becoming yet more extreme; the net result has been a significant overall decline in well-being – and the immediate prospect of further deterioration (as indicated by the decline in ranking)." ~ Jeff Nielson 

BrotherJohnF has scathing commentary on this piece by Jeff Nielson:

Forward to 15:20

S Roche's picture

I.Just.Cannot.Resist...

"doing so because the precious metals markets are among the most complex (and misunderstood) in the world."

and that would be because...?

http://www.bullionbullscanada.com/gold-commentary/25804-the-fraud-of-negative-goldsilver-lease-rates

For an explanation of the how and why of Jeff's confusion on this issue:

http://goldchat.blogspot.com.au/2012/09/negative-lease-rate-confusion-again.html

Turd, your own ideas and impressions I find very worthwhile, warts and all. The great Jim Sinclair even carried your original analysis recently, but carrying interviews and the writings of regurgitating circle-jerkers like this guy just doesn't cut it with me.  

Fred Hayek's picture

Terrific analogy early on

Early on in the podcast, Nielson made a great point asking why shouldn't those who buy precious metals and hold them, "hoarders" from some perspectives, be looked at similarly to how those who practice environmentalist conservation are regarded? 

Fred Hayek's picture

Terrific analogy early on

Accidental double post.

WhyMeLord's picture

@southerncross

Man, what you are doing is just great! I wish more people were into this.

Myself, I visit the local transfer station on a weekly basis. This area has a large amount of "second" homes which are constantly being remodeled. Can't believe where they get the money, but most of them are from Wall Street and they're only around for a few weeks a year. Go figure...

Anyhoo, I have picked up things like solid oak doors, real wood paneling, granite countertops, desks, you name it.

Don't have enough space to store what I can't use myself or time to resell it, it is so sad as most of it is just crushed.

But our house has been remodeled for a fraction of the cost...

Have also noticed that some of the local hungry gumnut officials are starting to crack down on "permanent" tag sales and going after things like permits and sales tax.

WhyMeLord's picture

Ah so timely, even after 40 years...

A trip to the Future!

tmosley's picture

Paper bullion to zero, huh?

Paper bullion to zero, huh?  Gee, who has been beating THAT drum for the past two years?

And for Bugzy:  Gold was confiscated under FDR, yet gold mines remained in operation and continued production of gold.  Indeed, the sector held pretty much the only stocks that didn't fall during GD1.

SIlverbee's picture

I disagree with Jeff

Firstly if the price is suppressed it will dis-incentivise the producer to supply. Less suppliers will be able to supply at a profit as the difference between the costs and profits will become to small. The miner will extract less. This is irrelevant with silver produced as a by-product but supply will be adversely affected by a general economic downturn. Silver mines will need to continue to produce to cover overheads but can deliberately restrict supply at low prices by reducing costs etc. All businesses have a motive to profit maximise and therefore will not produce/extract but leave the material dormant. Bearing in mind that whilst silver investors buy to make a profit through increased price in the future, silver users that also buy the material want it cheap to profit maximise. Since they are fewer, larger and more likely to collude they will want the price to remain low. They also consume more than 50% of the material mined. Therefore it is in the silver user's (industry) interest to short the market. Finally as the miner will extract less or not choose to expand production as their is less profit motive to do this the end result is that the silver users will have cheaper material for longer as the material will not be extracted and their share of the material will not diminish due to increased demand from silver investors.

Edit: Is not extracting hoarding? 

Galearis's picture

JEFF NEILSON IS NOT GOOFY!

Gee, a couple of posters thinking Jeff is goofy! Wow, and here it is 2012 and we still find posters who are metal bugs who don't really know how the world works,,,and that economics as practiced by financial system are on time out...Why should we be surprised, as most of the population including more mining company CEOs don't know how they are being robbed either....Well, I could sit down and post a rant about this, but by coincidence my brother Rhody posted an email to me about this very subject...If you want to know how the maggots have done this to the world, just read his words, I am too busy right now to bother. But given the interest, and given I consider myself a responsible member of this community, I will post this rebuttal on behalf of my brother. I consider it succinct,,,,and in complete agreement with Jeff Neilson:

I sympathize with the plight of mining companies. Do they manage their operation poorly? Possibly, but realize that none of these guys gets fair value for ANY the metal they sell. It's not just silver, but gold and copper and zinc and lead that are also suppressed by the futures market. EVERY COMMODITY UNIT IS SOLD AN AVERAGE TEN TIMES IN THE FUTURES MARKETS. The metals would be sold more than ten times. Allow me to give you an example: Copper sold at $.85-$1.25 in 1970. That was a high price as copper was generally $.35 to $.45 before that, but there was actually a shortage in 1970. A 1970 dollar was 12 times the size of the present dollar in buying power. So, to be fairly priced today, copper would need to be around $12 per pound, as we have the same sort of shortage conditions today. So, are copper prices $12 today? No? So why do analysts call present copper prices at $3.50 'high'. Frankly anybody mining resources that are priced in the futures pits is being grossly underpaid. So, this Dia Bras operation is being grossly underpaid for all metals produced. They show a net loss. This is not a surprise. Is it because they are an inefficient operation? Probably not. Don't invest in mining shares, The pricing corruption is institutionalized and so entrenched that it is considered normal and is ignored, and the mines are being fleeced and they consider this a market phenomena...

 
I don't sell anything that has a futures contract associated. In fact, I don't sell anything period, because all prices are warped by "financialization" of the market. Every price, cost and profit is an illusion. I recognize this, and so do millions. Just as I have, they opt out of the system and don't produce into the market. Millions are doing this, or are forced to do this. Millions go hungry in North Africa because farmers grow carnations for export to Europe instead of beans because there is no futures contract in ornamental flowers yet there is in beans, which are needed to feed the local population. Farmers grow carnations for export, while people starve. Do you see it? The Anglo-American Hegemony kills millions of people each year just by suppressing commodity prices with derivatives. Do you see the real reason for social unrest in North Africa and the middle east? NOBODY IS GETTING FAIRLY PAID! That includes you. If you work, you get paid in legal tender. You weren't paid at all because currency is not money. That goes for all the mines. Unless they are fortunate and have very low cost orebodies they are slowly driven into insolvancy by a system than pays for nothing, and then cheats on the price as well. This is decline of civilization stuff, not just accountancy shenanigans.
 
I don't have the figures for how many times each lb of copper is sold in derivative (futures) form but it will be way more than ten times. The situation in gold and silver is well north of a 100 times for each ounce produced. There are over 100 derivative ounces dumped on the market for every real one. The market thinks there is over 100 times as much silver or gold as actually exists. Silver may be trading at 1% of fair value because derivatives suspend the law of supply and demand. The eventual result will be hunger in the metal markets just like there is hunger in North Africa as mines quit producing just like the bean farmers.
 
The only logical course of action for a mine is to shut down. Conserve your ore body. You are not being paid if you operate the mine. The financial sector is slowly strangling the real economy. There is no solution other than opting out. Producers stop producing, creating shortages. The financial sector CAN'T allow prices to rise even in the face of growing shortages because the system is protecting the value of fiat currency, not the economy. I wish you luck in figuring out the true total costs of producing an ounce of silver, but the real meat of the issue is figuring out how to fairly PRICE the metal in the first place. Unless this happens, the mines are doomed. Regards,
Rhody.
 
Both my brother and I have been watching these shenanigans for fifteen years. We are all in metals and tangibles and very little paper - except Canadian dollars. I sleep very well and know now that Jeff Neilson is not wrong at all...On the other hand I continue to be amazed that all of this criminal activity can be done so out in the open and with readers found on this web site being completely oblivious to the scope and the processes involved....But then again, only one to two percent of the population are even remotely informed as that is the percentage that generally buy precious metals. So open your minds and learn about the real world, not the fiction that used to be called economics.
Regards,
Galearis
Bugzy's picture

@ Tmosely

I appreciate your comments.

However, Gold was taken gently gently back then. Folk were still very trustworthy of the state. There was no patriot act back then or ---all the other stuff.

We are now on the brink of tyranny - the rule of law has broken down, especially financial. MF global and all the rest. Not one has gone to prison.

I believe that it maybe naive to believe that because gov did not acquire mines then. That they are safe now.

Cheers,

Bugzy.

Silvergunn's picture

@ Galearis

Thanks for posting that summery of the futures/financial markets impact on the supply/demand curve!!

Silverbugs's picture

Fantastic. I love their

Fantastic. I love their website. Good interview.

http://schiffblog.blogspot.ca/

Prize Fighter's picture

Random thought on mining

Great thoughts Galearis!  I wholeheartily subscribe to that macro view of the global economic matrix.  We export dollars and inflation in prices while controlling commodity prices for our poor.  What works for us, crushes others.  They hate us for our freedom because it's at their expense.

Random thought on mining companies....perhaps mining companies aren't allowed to realize real value because they are viewed by governments as subcontractors who mine national minerals and metals.  I know mineral rights are another conversation but do govts consider all minerals theirs regardless of who "owns" the land? 

Mining companies are allowed by markets to operate at just enough profit otherwise the govt would be forced to mine (at a loss of course) and in full purview of the public wondering why they are wasting losing money on tradition.  After the metal is out of the ground and small profits taken, what do the mining companies have left?  The govt meanwhile, gets the metal out of the ground at a price which is supportive of the dollar and taxed or criminalized out of our hands, all without lifting a finger.

ancientmoney's picture

@Galearis . . .here, here!

Your brother wrote it succinctly.  Accurately.  Profoundly.  If anyone in turdland doesn't understand this, they need remedial work in internalizing today's financial reality.

And yes, Jeff is correct--the paper price of gold and silver will approach zero.  Default/decouple--take your pick.

S Roche's picture

@Galearis Yes He Is Too!

I think Jeff has made some whopping errors and I provided an example that shows he does not understand gold leasing. Now, we all make mistakes. But, my real beef with Jeff Nielson and people like him in precious metals is that they do not acknowledge and correct their mistakes. So, false information is perpetuated and people end up being misguided and/or confused.

Now, with the greatest respect to you and your brother, what you have provided us with here is opinion, not fact. Some of the causes and outcomes you mention may be correct. But, as an occasional poster on a blog run by a guy called Turd you are allowed to state your opinions, and they are interesting. A regular writer about precious metals, like Jeff Nielson, I hold to a higher standard and do not believe he has any right to be believed when states opinion as fact, as he does. Especially, given his track record on gold leasing.

I do not take anything he says at face value and all his links only go to other opinion pieces.

S Roche's picture

Gold Manipulation by The Fed, Smoking Gun with source:

"I have one other issue I'd like to throw on the table. I hesitate to do it, but let me tell you some of the issues that are involved here. If we are dealing with psychology, then the thermometers one uses to measure it have an effect. I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market. There's an interesting question here because if the gold price broke in that context, the thermometer would not be just a measuring tool. It would basically affect the underlying psychology. Now, we don't have the legal right to sell gold but I'm just frankly curious about what people's views
are on situations of this nature because something unusual is involved in policy here." Alan Greenspan, May 18 1993
 
 
Dimitri Speck is very worthwhile for those interested: http://www.gold-eagle.com/research/speckndx.html
Katie Rose's picture

@ Southern Cross ~ Thoughts about weeding...

Here's a quote from your post:

My 13 year old son is not old enough to work and I really did not want him to pull weeds or some such work.

I come onto this board and yammer about farming as it is something I am learning about. It makes a whole lot more sense to me than the manipulated metals market. I began buying silver when it was $10.70, so I have been at it a little while. What this former city girl is learning is horrifying when it comes to future food costs and production.

In the past, junior and senior high school students, living in and out of the small USA towns, made their money during the summer bucking hay, weeding, etc. Nobody thought anything about it. They were paid a small daily rate ($3-$5.00) and given a huge lunch at mid day. All the kids did it, and the farmers could count on there being help from the local youth when they needed it. It was part of the social structure of small farming communities. The kids worked. Period. They all worked.

Today's youth won't do it. Today's parents don't want them to do it. And so the farmers have had to change their strategy.

Rather than weeding and getting help with the weeding from local youth, the farmers have switched to "Round-Up Ready Seed." This is GMO Seed. I won't go into my rant about GMO again, but it is deadly. It isn't that the farmers are bad guys, they simply have no choice due to the artificially low prices they receive for their produce and the fact that today's youth will not do this back breaking, hot physical labor.

The same goes for alfalfa, grass hay, and straw for over wintering animals. The bales used to weigh 50-75 pounds. At harvest time the fields were filled with youth bucking the hay onto trucks. The days were long, hot, and dirty, but no one cared. All the youth did it. This is how they earned their spending money.

Fast foreword to today. Farmers have spent tens of thousands of dollars on new equipment for baling hay and straw. The bales are huge (650-900 lbs.) Farmers can bale, then pick the bales up mechanically, and stack them with their new equipment. There are very, very few small bales being produced today. This is because they can not get help bucking the hay from today's youth.

Farming is no longer labor intensive, it is petro intensive. From fertilizers to expensive equipment, farming depends on cheap diesel. With our dollar imploding, cheap diesel is truly a thing of the past.

In my community it is now a rite of passage for the young men to visit  the county social service office and sign up for food stamps at age eighteen. I kid you not! When talking to one of them the words, "I'm entitled" and "Everyone's doing it. My friends are all doing it." kept popping up.

So the male youths in this small town (in just two short generations) have gone from spending their Summer days working in the fields, weeding and bucking hay, to signing up for Food Stamps, playing video games, taking drugs, etc.

The ramifications are horrifying on so many levels....

El Gordo's picture

High school football

I grew up in rural Texas and played high school football, which always began with 2 a day practices in the hot days of late August.  If you were not "in shape" when you showed up the first day, you would most likely fall out.  Hauling hay was the mainstay summer job for staying in shape, building strength and endurance (we would contest each other to try to toss those heavy bales onto the truck with one hand, see who could toss them the highest, etc.) and make a little pocket change at the same time.  A dollar's worth of gas and another dollar at the drive-in movie for a car load would provide entertainment, and the rest of the weekend pay would last all week for girlfriend gifts and personal needs.  And needless to stay, we got as strong at oxen.  I eventually translated that experience into a college football scholarship, a diploma, and a career (in something other than football).  A few others that I knew did the same. Just to make sure that someone does not complain about this tale being off topic, I stack silver as a result of what I learned in the hayfields of west Texas, or in the college dorm room, or in the business world, or somewhere.  Thanks Katie for the reminder.

Silvergunn's picture

@ Katie Rose

That is what has been happening, through only a couple generations the dependency grows!

Maybe we can get some more farm land for you, (some for) me and the Turdville community(?) with some old bailing equipment on the cheap wink keep me in mind!!!

@El Gordo

A old friend of mine is from Oregon, he tells me the same thing and how they trained for football as kids!!!

Sheetrocker's picture

Baling Hay

Several posters above made me recall a few memories. I grew up in a small town in Kansas, and baling hay was one of our main money making opportunities as kids. It was called "putting up hay" where I came from. We also mowed lawns, hoed weeds out of crop fields, etc.

Farm work usually paid $1.25 an hour, if I remember correctly. We always got a great noon meal. I remember one old farmer we always hated to work for, not because he was a bad fellow, but because he had an old A-C round baler. That thing made 90 lb. bales, when your normal square bales were 50-60 lb.

Our football practices were only one a day, but  August afternoons were plenty tough. Of course most of our free time all summer, we were playing touch football, pick-up baseball, and walking or riding our bikes several miles round trip to go fishing or swimming.

I drank water from a well and raw milk. Our chickens were cage free. A lot of folks had big gardens which were pretty much organic, just not called that in those days. Most people still had close connections to the farms.

We all got mumps, measles, chicken pox and other diseases because they didn't have vaccines for all that stuff then. I think my generation was the last to grow up with a toughness that has  been mostly  lacking since.

I know in the late 70s, 10 or 12 years after I was out of high school, local farmers couldn't get help to bale hay for $5.00 per hour. People will learn to work again. It's just sad it's going to take a total collapse for it to happen.

I think the lifestyle and diet I had, and the immunities acquired when I was young, have a lot to do with the fact that I have hardly been to a doctor in my life. In my 63 years, the only time I've ever really needed medical attention was when I cut the back of my hand about 30 years ago. It wasn't really that severe, but cut a couple of tendons to my fingers. Had to get that repaired.

Just old memories from an old man. Best wishes to all.

Monedas's picture

Hoarding is Capitalism !

Thanks Brother John F .... and it doesn't matter if you invest your hoard or sit on it .... you are participating positively in the economy !  If you choose not to vote .... you still are participating in the election !   "You can't not participate !"....     Monedas      1929      Comedy Jihad Weed Picking, Nose Pickin' Capitalist World Tour   devil

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