Distracted

402
Fri, Jul 19, 2013 - 12:34pm

I keep trying to type up this post while at the same time watching The British Open. It's now 10:45 EDT. The British Open is winning.

I don't know why I enjoy watching links golf so much. I think it dates back to when I was a Teenage Turd, ESPN was in its infancy and they used to show old British Open highlights for programming. As an aspiring, young golfer, I found it fascinating. But now it just frustrates me. Why? Eight years ago this fall, my good friend BucketHead (and helluva golfer) died of a brain tumor that I will always blame on his incessant cellphone use. I pledged then that I would soon cross "Golf in Scotland" off of my bucket list. Eight years on and I still haven't pulled it off. Fortunately, I'm still healthy and fit so perhaps next year will be the year. However, the state of the global financial system is far from "healthy". Will The End of The Great Keynesian Experiment continue for another year or is massive change right around the corner? I wish I could say with certainty but I can't. All I can do is prepare...and twist Sweetness' arm for 2014. I need him to come with me so that I can fund my trip with a daily nassau.

I have hope that we are beginning to see a bit of a sea change in gold. Does anyone else sense a "buy the dip" mentality emerging? Since the snapback bounce off of the lows of July 5, gold has been beaten back from $1300 and toward $1270 on three occasions and each of those dips have been bought.

So now here we are, two hours away from closing out our second, consecutive UP week in gold. IF we can hold on...and it looks like we will as we're up about $12 on the week right now...it will set up an interesting week next. Why? As you can see below, since this brutal smashdown scheme began last autumn, gold has never had three, consecutive UP weeks. Would a third week next be a conclusive sign of a bottom? Of course not! It would, however, be another positive signal that we are getting very close. With August13 option expiry next Thursday, anything is possible. Given the overall bearish sentiment and Spec Short market control, there exists a pretty good opportunity for The Cartel to squeeze some of those who have sold the $1300+ calls. We'll see...

There's not much to discuss in silver at this moment. It's still being held below $20 and its chart doesn't look as interesting as gold's. The next bit of excitement will come when price finally encounters the top of the channel again. Can/will it break out or will it simply drop lower again? WTFK but we should get an answer in a week or two.

GOFO rates were stable today but still deeply negative for a record-shattering tenth day in a row. As mentioned above, Aug13 option expiry is next Thursday and FND is on the 31st. The negative GOFO rates and the sharply declining Comex stocks would seem to indicate that the next few weeks are going to be interesting, to say the least. Jesse offers an excellent summation here. I suggest you read it. https://jessescrossroadscafe.blogspot.com/2013/07/comex-registered-gold-fall-to-another.html

(Remember, "eligible" or "total" gold is simply the unallocated gold held in the vaults. To be deliverable, the gold must be classified as "registered". As of last evening, total Registered gold at the Comex fell to 29.56 metric tonnes. This is enough gold to physically deliver just 9,504 contracts in August.)

A few words on crude here, which is kickin-ass-and-takin-names, much to the bewilderment of many. For example, there's this complete idiot who somehow achieved contributor status at ZeroHedge. I'm not sure this guy could find his ass with both hands and the recent movement in crude has him all aflutter. https://www.zerohedge.com/contributed/2013-07-18/gasoline-supplies-highest-july-period-1992

Look, this isn't complicated. Since the overthrow of the Egyptian government two weeks ago, crude has risen over $10. Why? The Muslim Brotherhood is the parent organization of nearly every terrorist group in the MENA. Taking power in Egypt was the culmination of 80+ years of effort. They ain't gonna take their forced removal quietly. Already, a completely overlooked and unreported WAR is taking place in the Sinai Peninsula. If you failed World Geography back in school, you might want to take a look at this map:

Crude is rallying because of realistic fears of supply disruption. Remember, what does one do in a futures market if one is concerned about future supply issues? You hedge and lock in price and delivery today by buying a futures contract. More buyers than sellers mean higher prices. Period. And here we are.

The Big Question is: What happens next? We're already seeing some downside volatility today:

Did President Milhous send out some cronies to plant the predictable rumors of Strategic Petroleum Reserve releases in a pathetic attempt to talk down price? If not today, they'll try that oft-repeated trick soon, of that you can be certain. Regardless, I've told you for months that there need be no concern over Hot War in the MENA until and unless crude makes a sustained move through $100. Well, here we are. What happens next is anyone's guess but, if crude bursts through the early 2011 highs of $114, watch out! And get your ass out of The Middle East!!

Finally, today, we've got to talk about this: https://www.zerohedge.com/news/2013-07-18/jobs-number-bs-says-former-head-bls.

And here's the source link to read, too: https://www.nypost.com/p/news/business/bls_number_is_bs_jaKS2Nc8Yu2TrnETK2bXEM

We talk about LIES and MOPE and SPIN all the time here. Maybe you, my dear reader, think that I'm the one who is full of it. That I'm the one who lies and spins. Well, I submit to you the information above.

Understand this: Keith Hall was, from 2008 to 2012, the head of the Bureau of Labor Statistics, the BLS. The Head Honcho. The Big Cheese. If anybody is going to know the inner working of the BLS, it's this guy. And what does he say in the article above? That's it's all bullshit. (Thus the justification for our term "BLSBS".) Hall explains as much right here:

“Right now [it’s] misleadingly low,” says Hall, who believes a truer reading of those now wanting a job but without one to be more than 10 percent.
The fly in the ointment is the BLS employment-to-population ratio, which is currently at 58.7 percent. “It’s lower than it was when the recession ended. I think that’s a remarkable statistic,” says Hall, a senior research fellow at the Mercatus Center at George Mason University in Fairfax, Va.
That level tells Hall the real unemployment rate is actually about 3 percentage points higher than the BLS number. If the jobless rate is unacceptable at 7.6 percent, it’d be shockingly bad if he is right and the true rate is 10.6 percent."

If the "unemployment rate" was actually reported at 10.6% instead of 7.6%, what would be the status of:

  • The treasury market and interest rates
  • The stock market
  • QE "taper"
  • Milhous' approval rating
  • Congress' approval rating

You see, it's all lies! The actual data doesn't matter, just make up a number and have CNBS report it. It's all good and the music plays a little bit longer. But the Day of Reckoning is coming. Like any other human endeavor, you can lie and cheat your way through life for a while...but eventually it catches up with you and it all comes crashing down. Will The End come next week or next month? Hell, I don't know. If I've learned anything these past four years it's that I should never underestimate the power of TPTB to extend and pretend their way to a maintenance of their power. With the politicians, bureaucrats and media in your corner, you're bound to have temporary success in avoiding reality. But this will end and, when it does, you're going to be grateful for every ounce of physical gold and silver you have in your possession. These last nine months of contrived Bullion Bank scheming will be a long-forgotten memory.

Have a great weekend.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  402 Comments

judejin
Jul 20, 2013 - 11:41am

wealth in real estate will be wiped out in terms of silver

luxury apts around the world are priced anywhere between 8 to 35 ounces of gold per square meter or 15 to 60 kilos of silver per square meter.

so for a two bedroom, 100 square meter apt, someone's willing to hand over 800 to 3500 ounces of gold, or 1500 to 6000 kilos of silver!

that's 1.5 to 6 tons of silver!! when fiat money becomes trash, in the entire world, we'd have only 100,000 tons of silver in bullion/coin form, or 3 billion ounces.

i believe eventually 1 ounce of silver can easily fetch one square meter of an average luxury apt. or 1 ounce of silver will become one month salary of a typical white collar labor. in the old days, in china, a school teacher makes about 1 ounce of silver a month. and that was when per capita silver was about 5 ounces per capita worldwide vs 0.5 ounces per capita now.

not only the chinese, the entire world hasn't waken up to silver yet.

alan2102
Jul 20, 2013 - 11:49am

judejin

"how times have changed! only two generations ago, silver was money in china."

Indeed! Was money for centuries. Old habits like that die hard, especially in a place like China where traditions are culturally very important. (Similar to India, where gold is an ancient tradition and holdings by common people run into 10s of thousands of tons.) Modern estimates of silver holdings might be wildly inaccurate. It is possible, even likely, that enormous quantities are still held privately -- bullion that never was counted officially and that cannot be counted. I believe Fekete has written about this. Worth a look at his site.

"when i mention silver to rich people in shanghai, they all say that silver is too bulky and almost worthless. they prefer a 40 million RMB painting to 10 tons of silver."

Rich people, maybe. What about the common people? There's a BILLION of them.

judejin
Jul 20, 2013 - 11:50am

small-size gold bullions are back-logged in china

delivery can be up to 20 days or who knows.

i think the physical shortage is real. they are scrambling to fill the retail orders while looting the sovereign, ETF, allocated accounts. at the same, they have positioned themselves well before the ship turns.

physical gold delivery at shanghai gold exchange slowed to a trickle again in July.

Fred Hayek
Jul 20, 2013 - 11:56am

What if the US-UK PTB tilted toward AG and away from AU?

One of the fears of stackers who have much more of their preserved wealth in silver than in gold is that the powers that be will disproportionately favor gold in any coming reset at the relative expense of silver. This fear has historical basis to it. There was the crime of 1873 in which, contrary to the U.S. Constitution, the country was taken off a bi-metallic standard, both gold and silver backing our currency, to a gold only standard.

Not surprisingly, there were a lot of angles to this play that helped the big banking interests. As opposed to midwestern farmers and businessmen who had more of their preserved wealth in silver, elite eastern U.S. and British financial entities had more of their wealth in gold. Read Ankal Fekete's (sp?) piece on this event if you can find it. It's not without fault but it presents a fascinating larger context to this event. German financial interests were also allied with the U.S. and U.K. and war reparations in gold from France suddenly became more valuable. China, not part of the . . team and heavily invested in silver, took a huge hit.

And there was LBJ quickly taking silver out of our coins after becoming president. There's solid historical precedent for silver stackers to point at to back up a fear that TPTB will try to favor gold. Also, central banks own . . some gold. They really don't have much silver at all, at least according to what I've read.

Okay, but here we are in July 2013 and Turd points us to stories that JP Morgan is feverishly buying all the silver it can get its palsied hands and cloven hooves on. Turd points out that the Morgue has a lot of silver contracts that it might need to try to live up to. Fair enough. But . . what if . . ? What if there's more to it than that? According to the official numbers, the SLV etf hasn't been losing much silver at all while the GLD has lost more than a third of its previous holdings. And who's the custodian (a word which also means janitor in common parlance. Blythe! Somebody's kid had a big accident in the first floor bathroom. Get a mop!) of SLV? Why, it's JP Morgan.

So, just an idle thought here. What if all the western central bank gold is, indeed, melted into new bars in the eastern hemisphere but the U.S. and U.K. PTB intend to pull a bit of a Hunt brothers themselves and not only permit but actively promote the return to glory of the precious metal of which they actually have some inventory?

Just thinking out loud.

alan2102
Jul 20, 2013 - 11:57am

judejin, again

"i believe eventually 1 ounce of silver can easily fetch one square meter of an average luxury apt. or 1 ounce of silver will become one month salary of a typical white collar labor."

Therefore, I think it is safe to say that you are a silver bull.

Welcome to the small club of people (bix, hommel, et alia) who think that silver will go to 4 figures in purchasing power terms. Another one, whom I have not seen around for a long time, is Izzy Freidman (sp?) -- supposedly Ted Butler's mentor, from the 1970s. He used to post over at eagleranch, a forum now near-defunct. He was always wildly bullish. Good silver-porn.

judejin alan2102
Jul 20, 2013 - 12:01pm

common ppl in china has no idea about silver too

i only mentioned rich people in china because they are supposed to be savvy investors. average folks have no idea about silver too.

china's mint produce 8 million silver panda a year starting in 2011 or 2012. before that, much much less. US silver eagle sales so far this year roughly equals the entire silver panda production in the past 30 years!

the chinese government made a big fuss about rare earth, but hasn't done nothing regarding stockpiling some silver.

yet, they want to promote RMB with Mao's head on it. the irony is all the major financial centers of the western capitalist "free" world want the privilege of becoming a RMB offshore center.

how times have changed! well, the banksters will never change. as long as it's paper game, they're ok regardless of whose head is printed on it.

Fred Hayek
Jul 20, 2013 - 12:18pm

@judejin -- Friday's WSJ had a breathtaking example of hubris in

Friday's WSJ had a breathtaking example of hubris in regard to the real estate market.

It's been a long time since I bought the WSJ though I once read it pretty regularly. I wanted to see what they'd say about Detroit's bankruptcy. Nothing particularly insightful was the answer.

But included in this edition was an insert section titled "Mansion" (I think. In your face plebes suffering in this economy!). And it had an article about young rich people who are feverishly buying up real estate as fast as they can. You'd have thought that 2008 never happened. They even had a quote from some 28 year old guy who could fill his pool with the self-satisfaction dripping off him, about how he thinks real estate is the way to go for wealth preservation. The whole section of the paper was amazing for the opportunities for future schadenfreude that it presented. When the 5hit hits the fan, I will have tremendous sympathy for average people encountering difficult circumstances. These a55holes who got their smug faces in the WSJ to pose as trend setters and taste makers but who couldn't be bothered to remember events from five fvcking years ago and the implications of them . . well, I will casually take pleasure in the misfortune their willful stupidity visits upon them and if I happen upon one of them I will try to speak in a controlled tone of voice as I aver that no, I don't want fries with that.

judejin
Jul 20, 2013 - 12:21pm

privately held silver in china is long gone

when the communists took over china, they nationalized private land and nationalized every private business. rural landlords and urban businessmen got beaten up and their houses got ransacked. ppl were ordered to surrender all gold/silver. chinese communists are the richest dudes in the world, they own the entire country's land and all the big business in china: banks, telecom, oil, infrastructures, major real estate develepers, everything that makes big money.

one corrupt official in a big city boasted that he slept with every famous female performer who ever performed in the city. the top official of china's railroad dept was sentenced to death(delayed by two years) for corruption ( 360 houses/apts). his business partner sponsored a famous TV series just for selecting candidates for his bedroom. tip of an iceberg, baby.

on taobao, china's ebay, volume of old silver coins is much less than US'. plus, in china, fakes are everywhere.

Strongsidejedi judejin
Jul 20, 2013 - 12:38pm

good conversation gentlemen

I've been reading your intriguing conversation.

@Judejin - you sound like you are in PRC.

How do citizens in the major chinese cities buy their silver or gold?

Do they go to a local bank?

Do they go to a local coin store?

What are the premiums like for silver versus gold in China?

Mammoth
Jul 20, 2013 - 12:40pm

Distraction from Doom & Gloom

Well, since the title of this thread is 'Distracted,' posting this photograph of my latest acquisition does not seem inappropriate. The car cost me the equivalent of eight common-date silver dollars. Unfortunately, the previous owner of this classic lost the title, so she is destined for being parted out and the remainder being scrapped. Too bad, because there aren't too many of these station wagons left.

But on the bright side - various folks are searching for the hard-to-find parts which I will gladly sell them - and I will certainly recoup my initial investment. And that 326 motor with just over 80,000 original miles on it will be stored in my barn for future use - or as an investment...perhaps to be converted into silver at some point in the future!

Motley Fool
Jul 20, 2013 - 12:42pm

so lets see

chinese dont hold silver, or know about it, there are plenty of fakes and the premiums are ludicrous; central banks dont hold it either...and this is bullish for silver?

The Doc
Jul 20, 2013 - 1:00pm

Excellent interview by Andy

Excellent interview by Andy over on KWN...lets get him back here for another interview with TF.
This week's SD Metals & Markets recap for the Turdites who are interested:

SD Metals & Markets: “MOPE” As Far As The Eye Can See

In this week’s SD Weekly Metals & Markets The Doc & Eric Dubin discuss:

  • Bernanke’s congressional testimony- Bernanke admits he doesn’t understand gold, and that the economy would tank if the Fed actually withdrew QE
  • GOFO negative 10 days and counting- indication of gold shortage of historic proportions
  • 90% silver out of stock at nearly all US wholesalers, shortages again occurring in Eagles, Maples, and even generic rounds and bars
  • Cartel defending $1,300 gold and $20 silver with everything they have because they know a gigantic level of short covering will ensue at prices just above those levels

https://www.silverdoctors.com/mope-as-far-as-the-eye-can-see/

https://www.youtube.com/watch?v=2K1fub74hcw

Dyna mo hum judejin
Jul 20, 2013 - 1:02pm

@judejin

You speak of fakes and corruption in China. I cant see why anyone would buy any gold or silver what nots that originate in China based on what you say. It is just not worth the risk period. I would much rather source my goods from long time reputable dealers here in the USA. Given what some in China are capable of I will just abstain. Your insight reaffirms my caution regarding PM'S that originate in China. Your insight is certainly welcome here.

judejin
Jul 20, 2013 - 1:21pm

silver jewelry demand in china is rising rapidly

while silver investment demand is fickle because of the price giration in the past two years. ppl in china usually buy gold from gold jewelry shops although banks sell gold bullion too .premiums at banks is around 5 to 10% ,less than the 10 to 20% charged by jewelry shops. Silver investment bars are rare buys so premiums run wild,from 10 to 100%.

very few ppl in china knows about silver investment. Silver bullion investment is than gold in weight! Chinese has much less silver than gold in weight!

Of course we don't count silver in electronics.

a whole generation of ppl including my parents lack good education due to cultural revolution . So it's only natural they can't figure out whats going on in the world. And these ppl right now runs china. Officials boast of masters and doctors degrees,either fake or awarded by school of communist studies(doctorate in Marxism and socialist theories).

onealpha
Jul 20, 2013 - 1:24pm

@Mammouth

Nice! Why not have the previous owner do a lost title form?

¤
Jul 20, 2013 - 1:42pm

Chinese Shorts & the 'gold' Yuan

The comment about the Shanghai Exchange and the PM shorting is notable and foreboding on some level. It's not shocking by any means and it's what I thought would occur if China copied what the west has been doing.

I made the comment awhile back that some of you might share (the big short in the markets, through 3rd parties, has in large part been China all along) about how when given the opportunity to use their own PM markets that Chinese shorting might only exacerbate the situation of mostly downward manipulation.

My guess is that China will eventually mimic to some degree how the shorting of metals and ETF's etc are huge money rakers for bankers over here and they'll somewhat copycat the playbook. True price discovery from these new PM exchanges in China might not be the panacea we once thought if they're slanted in the shorts direction and the market oversight is corrupt also like we complain about over here.

Why wouldn't the Chinese want metals as cheap as possible for as long as possible so that they could buy as much as possible in a shorted market they turn a blind-eye to? Sound familiar?

Also, regarding the Yuan and it's possible future backing by gold. I've been thinking outside the box a bit and wondered if the Yuan gets backed by gold not out of a position of strength but because it was necessitated out of a position of weakness?

What if the Great Bubbles of China start popping and their economy starts to get really sluggish and a huge correction happens over there like it did here? If the worlds 2nd largest economy and up and coming world power (and also the supposed sole savior of global economic growth) falters what happens?

We've already got Japan (3rd largest economy) on the brink and we have the US as No. 1 but totally dependent on the health of those export driven countries. With the Yuan already being weak compared to the USD what happens to todays Yuan if/when their bubbles collapse?

The Yuan gets much weaker possibly if the top 3 economies in the world stagnate and it causes a deflationary growth atmosphere. China's currency might get so weak during their correction phase that they might have to prop the Yuan up with a gold implied backing so that it' not seen as being too weak and still a viable trading currency.

In this scenario the Chinese don't launch a gold implied yuan out of strength but out of reassurance that it's still a viable global currency that can be traded in the FX markets while they experience their own hiccups instead of being this mighty reserve currency savior or replacement of the USD globally.

At it's current exchange rate to the USD the Yuan has a long way to go to be strong enough for most countries to adopt the yuan as the go to currency before they totally or mostly eschew the USD.

Whether the Yuan is backed by gold during a period of Chinese weakness or strength is yet to be seen. But imho the Chinese only get one clear shot at making a historic move and I'm wondering if it's when they're on top of their game and they launch a gold yuan like an exclamation point or if they're almost forced to use gold at a time when they're trying to reassure their trading partners that the Yuan is still viable and strong when their economy eventually pops one of their bubbles.

For whatever reason, there's always been a part of me that has had these doubts about China being this unstoppable constantly growing market force that will relentlessly overtake the west and the USD as the worlds reserve currency.

The story sounds a bit too clean or simple and it relies on a near perfect ascendency of China and everything going smoothly for them and crappy for everyone else for the most part. But what if they experience a hiccup or some burst bubbles from their almost too good to be true expansionary or growth cycle. Ghost cities/malls/airports/ anyone?

However the gold Yuan eventually shakes out the Chinese only get one shot at it in the foreseeable future imho.

Will it be and exclamation point moment for them or will it be one of a question mark by others about the Yuan's viability?

Mammoth onealpha
Jul 20, 2013 - 1:45pm

@onealpha

Mainly because it is a HUGE pain in the butt to submit the paperwork and deal with the State, then wait three years for the title. Besides, it seems as if nearly every single time I deal with any county, state, or federal entities, somebody in there fvcks up and it becomes a great big hassle. Has anyone else here reading this had this sort of experience?

¤
Jul 20, 2013 - 1:54pm

Informal poll / My pick is...GOLD

Judging by comments over the years, many people see this site as a silver bug site and automatically assume it's anti-gold for whatever reason.

So in order to get a more accurate gauge of your PM sentiments from those who want to respond to my question, I'll ask this....

If someone gave you or you won $1,000,000 dollars, euro's, yen or pounds etc. and said you only get the money if you spend it all on either gold OR silver or you don't get the money at all...what one metal (at current prices) would you spend it all on if you had that tough/easy choice?

I like silver a lot but in all honesty if it came down to it and I only had one choice I'd buy all gold and not anguish about it at all.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Although the money question was not the central issue in the 1900 presidential campaign that it had been in 1896, Republicans continued to warn that William Jennings Bryan’s refusal to abandon the quest for inflationary money was a risk to the economic future of the nation. The twofold message of this 1900 Judge cartoon is that free silver remains the biggest issue and that it “attracts all the bad elements in American politics.”

Those disreputable figures are (clockwise from lower left): the Tammany Tiger, Tammany boss Richard Croker, a Populist, New York City Mayor Robert Van Wyck, Tammanyite Augustus Van Wyck (the mayor’s brother), Senator “Pitchfork Ben” Tillman of South Carolina (the Red Shirts were an anti-black paramilitary group in South Carolina during Reconstruction), the scissors and paste of “yellow journalism” (press sensationalism), the crown of “Democratic imperialism,” Bryan the fool with his free-silver balloon, the stupid Democratic Donkey, former Illinois governor John Peter Altgeld with the flame of anarchy, a bomb- and gun-toting Socialist, Democratic vice presidential nominee Adlai Stevenson holding a placard announcing his alleged Copperheadism (Confederate sympathy during the Civil War), and former senator David B. Hill as an unwanted (Gold) Democrat.

Huge version...https://elections.harpweek.com/1900/cartoon-1900-large.asp?UniqueID=40&Y...

SilverSurfers
Jul 20, 2013 - 2:02pm

Front Running

AM's signals, for his prediction with CTFC personnel purportedly present, and presented again and considered again, are signals to cohorts in gold cartel racketeering, which I referred to as "front running". That is a smoking gun. That is direct evidence of a crime, yet, nothing from the CTFC??? Go figure. I have, bankster greedster undue influence out of Wall Street upon government agencies and courts. So, what if anything from wet pants bart? Position limits went down in flames. And now, what, smoking guns thrown into the 2nd amendment melting pots?

If you got the storage space, and dont mind the break back hassles. SILVER BABY

Maxwell's Silver Hammer

The duality of mankind.

The Lone Ranger Opening Theme Song
Iceberg Slim
Jul 20, 2013 - 2:07pm

Personal Silver to Gold Ounce Ratio

given DPH's example, i would probably go with gold as well in the scenario where i could ONLY pick one metal.

just to throw it out there..currently, i have 40 ounces of silver for every 1 ounce of gold. and i feel pretty comfortable with that distribution. would be curious to know what others have....

i would love to get some more gold though, i'm actually welcoming another stab lower to be honest lol..however i do feel the bottom may in fact be in at this point, just so many factors and implications piling up that are making a bullish case at this point with GOFO and massive inventory drops at the major vaults/ETF's, etc..

Dagney Taggart
Jul 20, 2013 - 2:39pm

@DPH

Those who actually produce value-adding goods and services will choose silver. Those who just want to wave their arms at others will choose gold.

The former always wins in the end once they realize they can starve the latter at their leisure.

Bongo Jim
Jul 20, 2013 - 2:40pm

Lost title forms

Not that big a deal. Had to deal with lots of that lately, just a little paper work, some FRNs and a little time.

DeaconBenjamin judejin
Jul 20, 2013 - 2:41pm

1 ounce of silver will become one month salary

Remember the parable of the workers in the vinyard (Matt. 20:1-15). The workers were hired for a denarius; an Augustine denarius is approximately 3.74 grams of silver. Silver denarius of Augustus

In the Wealth of Nations, published in 1776, Adam Smith identifies the daily wage of a Scottish farm laborer as 6 pence. A contemporary sixpence of the period contained 3 grams of sterling silver or 2.78 grams of silver. The rate of English farm labor was somewhat higher, being even closer to the Augustine denarius.

For what it's worth, I've read that during the Weimar hyperinflation, the going rate for an armed watchman was an imperial half mark, or 2.5 grams of silver.

Yet even at these rates, unskilled labor earned well above an ounce of silver in a month.

TheGoodDoctor philipat
Jul 20, 2013 - 2:54pm

@philipat

We know that the bond and equities markets will crash eventually. My scenario is their last efforts to knock down PM/miner prices. If there is one thing we have learned throughout this criminality is do not underestimate the powers of the EE.

I'm just saying there is more pain to come. I reference Turd's post a few days ago about the pattern he found on delivery months the other day. I think that will be the time they try to knock the prices in PM/miners down again.

Europe's problems will continue (and have been albeit not widely shown via the MM) after Merkle gets re-elected. Those problems haven't gone away. And when they return in the media en masse I believe (as history has shown with the EU/$ currency pair) that there will be a boost to the dollar coming. That will be temporary too especially if there is a correlation between dollar strength and QE. Which I haven't looked into that. I lean on guys like Turd when it comes to charting.

And when guys like Jim Rogers say that $900 could be a bottom in gold, you have to take that in and think about it. What does he know? Is he tipping off the PM community?

The Fed cannot let the interest rates rise. We have seen it is already damaging the housing markets again. House flipping is back en vogue, first time buyers are not involved in the market, and now housing starts were just lowered again. There is more pain in the housing market to come. People can't afford higher rates.

At some point people (and the markets) will stop believing the MOPE, lies and manipulated .gov stats that are coming out. At this time the Fed just hopes to get their wanted results by talking about tapering. Whether they do it on not is up for conjecture. I find it funny now they kicked it to mid 2014 instead of later this year in the fall. So, it won't happen on Bernanke's watch.

gold slut
Jul 20, 2013 - 2:55pm

Silver v Gold

Almost 50/50 silver to gold, but only because wifey used to live in the Middle East and they used to give away silver ounces on special occasions (wow, what a place!!)

Soon to change in favour of gold though as time goes by.

Missiondweller ¤
Jul 20, 2013 - 3:04pm

@drkpurple I love your thinking

You're definitely asking the right questions.

My thoughts on gold backed Yuan:

The Chinese will roll out an implied gold backed Yuan when it meets their needs and is to their advantage.

It could be from a position of strength, possibly to "attack" the dollar at a time of their choosing, OR

It could be used to set a floor under the value of the Yuan in a global crisis where they no longer desire to have the Yan linked to a decimated dollar.

I believe the gold backed Yuan came about as a lesson from the 1990's when George Soros was able to create an Asian currency crisis (for his own profit) aka: The Asian Contagion. A gold backed Yuan inoculates them from this type of currency attack and allows them to separate from the dying dollar.


Jul 20, 2013 - 3:10pm

Email to The Jackass

Jimbo had emailed me earlier asking for some comments on JPM. I thought everyone might like to read it:

If Harvey's math is right, and I believe it is, JPM received 5,024 delivery notices for the June gold contract and he can't find where they have settled any of them...and now it's mid-July.
That's 502,400 troy ounces that needs to come out of their dealer or registered side. Problem is, as of last night, they've only got 390M ounces. Uh-oh.
Yesterday's w/d of eligible gold looks like it finally satisfied the delivery requirement JPM had from May.
So, now, the only have left 43,000 ounces of eligible and a shortfall of 112,000 registered.
How many folks have delivery claims or physical certificates from JPM, yet JPM doesn't have the gold. It's gone!
They are left with two choices:
  1. Uncover more gold in order to deliver and make future deliveries.
  2. Cash everybody out at the bid, similar to ABN AMRO earlier this year.
My concern at this point is that they will attempt to put the hammer down in Comex gold. Massively raid price in order to:
  1. Dissuade August contract holders from standing for delivery
  2. Create a cascade of GLD sell orders which they can use to raid the GLD for the tonnage to satisfy August and the leftover 112,000 ounces from June.
Crazy, crazy, crazy. Is the entire fractional reserve bullion banking scheme unraveling before our eyes?
TF
see Harvey numbers here: https://harveyorgan.blogspot.com/
Eric Original
Jul 20, 2013 - 3:13pm

DPH, I'll take the Gold

If my abacus is right, a million dollars in silver would weigh around 3500 pounds. What the heck am I going to do with 3500 pounds of...anything?

This is really the same example I've used on this site many a time. Most of us can probably fit our life savings into a fanny pack, if it's in gold. In silver, now you need a wheel barrow and a strong back. Good luck making your getaway with silver.


Jul 20, 2013 - 3:23pm

Oh, stop with the gloating

Oh, stop with the gloating already Motley, though the recent discussion gives you cause. (your avatar is particularly well-suited for an obnoxious gloat ) I argue that both metals will do quite well--especially at these prices. Demand for AG to use in solar power is already increasing while the mining yields decline.

"China raises target for solar power capacity." (Can you say fundamentals?)

many have stated that AG is the speculative, volatile investment while AU is the more stable and conservative? I see not risk at these prices.

I do feel heavy in silver and my last three stack events have been gold. But at sub-20, how can I not buy more AG next time I have a chance?

@Iceberg Slim: I am at 110 to 1 in ounces

Motley Fool
Jul 20, 2013 - 3:26pm

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