What Does An Ounce of Gold Cost?

172
Thu, Jan 30, 2014 - 1:17am
This is a metals site, right? Is this not a simple, basic question that one would ask when one first decides to investigate the purchase of an ounce of gold? Of course. But, think long and hard about this simple question, because it sets up the whole discussion:
What does an ounce of gold cost?
No, it is not a trick question. The correct answer requires an understanding. But, the smart ones say, sure, spot, futures, what is the premium, etc. But, stop right there. Let's talk about the real issues.
Before we get there to the answer, let’s look at some facts and connect a few dots. Oh yeah, and let’s brag a little for getting the taper correct, too.
Mr. TF, as good a chartist as he is, is also a mighty fine prognosticator.
TF called the BLT long ago (Bernanke Legacy Taper). Of the pundits, TF was the first one ever, from what I recollect, to correctly make this call. I recall agreeing with him, but I was not 100% committed at the time, as my analysis was more like guesswork. I really did not understand why he was so damn sure of himself, and even more puzzling, how the hell could he have gotten it so damn correct? No one else got it close.
So, let's look as some more. Just a short time ago, TF expressed, eloquently, but firmly, and even posted an excellent guest post from an astute thinker which explained, convincingly, that there was and is NO CHANCE that QE ends, ever. Stated succinctly, QE in the form of FRN creation to purchase US Treasury debt, cannot ever end. Ever.
The reason for that is simple: interest payments paid to hold new debt must increase, to absorb the new borrowing, to reflect the risk and devaluation over time of the dilution of the FRN by the constant increase in their supply by the FED. Simple, right? We all agree on that concept, don't we?
So, as interest rates increase, the existing payment obligations on existing debt increase; the flow, as they say on ZH, will have to increase simply to be able to service the debt. The interest payments are not at all about paying OFF the debt, or paying DOWN the debt. No, not at all.
The interest payments are SOLELY about debt service; that is, keeping payments current so as not to default. IF interest payments, and interest payments only are timely paid, then the market says: Go ahead USA, keep creating FRN's out of thin air, we know you will pay off eventually, but we need to NOT lose money so we need to be paid interest to make up for the loss of purchasing power from your central bank creating more and more FRN's from thin air. Keep the payments coming, and we will gladly let you borrow forever and ever.
Eventually, though, as more debt gets piled into the system, from continued creation of FRN’s by the FED to purchase US debt, the interest payments alone–no principal is being paid at all–will surpass the GDP of the USA. Once that situation is reached, that payment obligation, that is, simple debt service of existing debt, in the form of interest only payments, will go parabolic eventually, the timing being defined mathematically depending upon the interest rate. It is NOT IF, IT IS WHEN!
So, IF the FED stops QE of Treasury debt, that demand sopped up by the FED purchasing US Treasury debt will have to be made up somewhere else. That fall off in demand will have to be made up somewhere, for sure, but there will not be an increase by others unless something changes. Since there is no other good collateral that can be posted, or anything of a secured nature that can be liened, because the sovereign debt repayment pledge is about as good as it gets, short of the creditors occupying the debtors' land and physically taking the goods and services in repayment, the creditors can only accept the sovereign debtor's promise to pay backed by the taxpayers' efforts. As Jim Willie says it, the USA debt is backed by the IRS payment stream.
If interest rates do not increase, then no rational market participant will risk buying US Treasury debt which will in essence guarantee losses unless interest rates go up accordingly.
Simple thought, really it is. QE of US Treasury debt stops = interest rates increase on new debt = higher debt service payments.
The whole scheme collapses once interest rates result in payments exceeding current cash flow revenue. So, either revenue increases, or interest rates must NEVER go up, or else the system collapses. Guaranteed.
Everyone here has been warned, repeatedly, of this reality.
Now, the facts are coming in fast and furious. One need only look in a cursory manner to see signs everywhere.
Today, the readers here all saw with clarity the TF magic of his predicting what the FED would do. Note well, that Pining equally called this outcome, he even had a pretty picture, too. Heck, even a lowly humble attorney, like me, was able to make this easy prediction. How did we know?
Remember, I said it was a near 100% certainty. How could I know?
Easy.
I have been reading this blog since the inception. I have read and read and read, and studied, and questioned everyone and everything. I read everything that people post, I have no agenda, I censor no one, and I prefer to be challenged in my viewpoints, rather than have a monolithic echo chamber. I am a critical thinker.
I am sure that I have also sounded like a complete dufus, knowing nothing, but asking questions and trying to learn, and getting angry replies to my posts from people who would rather attack than help. No matter, any of it.
Slowly, over time, the basic kernels of universal truth took hold, expanding, until at one point, it became clear what the western banking system was really about. When was that magic moment? I am not sure. But it happened here, on this blog, from all the great thinkers, teachers, and the patient types who put it all together, every day and night, for free, out of a spirit of sharing and helping. I am truly grateful.
Now, it is time to pay attention again, in a most important way.
The FRN system is under severe pressure. Signs are everywhere. Western banking will radically change, forever, and those forces of change are acting on the system in a major way as I write this.
Capital controls (China, Russia, Argentina, et al.), forced purchase of USA FRN by the populace (announced by Obummer last night) bail-ins (Cyprus for sure, and other western sovereigns pending), currency devaluation (Venezuela, Argentina), US dollar hegemon collapse (look at all the trade agreements that allow for trade to be settled in currencies other than the US dollar), all of this, is happening in real time right now.
Now, ask WHY such dramatic steps are being taken by the western banking system?
Now, ask WHY the stories are coming fast and furious that gold is moving to the East, that demand for gold by the East is INSATIABLE, and then add to that the anecdotal stories by Andrew Maguire, Jim Willie, and others that gold is both moving East dramatically and per Willie, simply vanished from western control, forever, and what conclusions can be drawn?
None of this is mysterious to anyone that has been a regular reader here at tfmetalsreport for any length of time.
The FED HAD TO TAPER, a BLT if you will, because the only important thing going on now is MOPE. Of course the FED cannot end QE for US Treasury purchases, but paying lip service as to MBS purchases is critical for the banksters to keep alive any semblance of confidence in western banking. There is no longer any real housing market. It is broken beyond repair. There are pockets, but not any real market. Finance is broken. MBS is broken. Freddy and Fanny are broken and broke. Asset values are historically completely out of whack compared to median incomes. Yet, home prices are high, and climbing. Who is buying with all cash? Who is the landlord renting out millions of formerly owned homes? What segment of society will step forward and buy homes like before? Who is going to buy all of the boomer homes once they pass or downsize?
From what source will the formerly consumer driven economy find a new revenue stream? If there is no consumer consumption, then what is going to expand the economy and help pay debt service on the massive interest payments?
Is the picture starting to become clear?
Now, knowing all of this, let’s go back to the question above:
What does an ounce of gold cost?
If you said anything relating the cost of one ounce of gold to a fiat currency, then there is simply more work to be done on your part, and you best get educated before this fiat scheme collapses.
The correct answer is, naturally: Priced in terms of fiat? Who cares? Just get more as soon and as fast as you can while these low prices in terms of fiat exist and the physical gold is available.
The same goes for silver, too.
Please prepare accordingly.

About the Author

  172 Comments

ivars
Jan 31, 2014 - 9:03am

@Mantis- here is bit more personal explanation

Well in my case I have some cash in bank and also around some debt left over. No defaulting no calling in, but: Now last year inflation in Latvia was -0,7% , or deflation. What I am feeling- if this continues ( and it will) the debt I owe and interest payments will become more expensive in terms of goods ; what happens if this accelerates- deflation? As in inflation income usually trails inflation, in deflation it would be natural if employers tried to reduce salaries or expenses on workforce in total faster then deflation. So its either reduction in salaries or dismissal to replace me with cheaper( =younger) person. From this perspective I do not see chances ( leaving potential windfall gains in my trading away:)) that i will be able to pay debt off better in future then now. Which makes me to save some extra money and every 3 months I try to pay down principal as much as I can . Also, in deflation the value of the house that is as collateral will shrink relative to debt so risk to lose it is increasing - in case I can not pay. The money burns in my hands as it wants to move towards repayment of debt. It was never so in inflation times- then i took more debt and did not worry at all about faster repayment. Debt repayment is a transaction with real consequences. So for me, the velocity of money towards debt repayment transactions is increasing while debt is decreasing. I suggest that is what the whole debt money based economy will do. Saver money velocity decreases, but debtor increases. Since they both are in equal amounts , net velocity stays the same, however, money supply shrinks as debt is repaid. There is no need for defaults or calling in of loans. Debt repayment guarantees acceleration of deflation.

ancientmoney
Jan 31, 2014 - 9:19am

What does an ounce of gold cost?

I've been thinking about that question.

Several here have posted the current spot price--which is wrong. Nobody at our level can get gold for spot. Maybe spot plus $50 or more . . .

But, that's still not really what an ounce of gold costs. Currently, gold is subsidized by the Fed, through the TBTF bullion banks. Of course, the subsidization is paid for by the paper longs (GLD shareowners and especially COMEX longs) who get fleeced, and by the taxpayors and debtors (China, Japan, etc.) who lend or lent money to the U.S. government.

I am not sure how to put a price on the real cost of this subsidization. Some say the price, without subsidization (we call it manipulation) would be $7,000/oz and some others say upwards of $50,000/oz.

However, given the downward spiral of the world financial system, we will soon see what the real cost of gold is. Until then, I think, it is wise to take advantage of this wild and crazy subsidization, and buy as much as possible with any excess fiat not needed to pay daily expenses. Caveat: assumes other preps already completed, like food, water, shelter, protection, etc.

ancientmoney ivars
Jan 31, 2014 - 9:27am

@ivars re: debt . . .

"Debt repayment guarantees acceleration of deflation."

That is correct, so far as it goes.

However, When inflation in food, fuel, and other of life's necessities gets so high that there is no money left over to pay debt service, then default occurs.

But, that default did not destroy any currency. The money that was lent to the homebuyer, say, has already been spent by those who received the proceeds--the person who sold the borrower the home. The money still exists somewhere. The lender is repaid in this default scenario by foreclosure, and whatever he can get reselling the property.

¤
Jan 31, 2014 - 9:35am
ag1969
Jan 31, 2014 - 9:43am

Ancientmoney

That is a very interesting concept re: subsidizing. I have stated here often that one law that holds true throughout all governments in history is that what a government subsidizes it gets more of and what it taxes it gets less of. ie: we subsidize corn and have mountains of GMO corn, we subsidized poverty starting in 1964 and 50 years later we have way more poverty than we did in 1964, and the middle class that was taxed to pay for it is all but nonexistent.

In this case, however, "subsidizing" gold has left less of it, not more, as we watch our countries treasure leave to the East, never to return. I wonder if this is because it is a Giffen Good? But that doesn't make much sense because the price isn't rising.

Is it because it is not the government subsidizing it, but the Federal Reserve? Is it because gold is money? I'm so confused.

Edit: Or could it be that what they are actually subsidizing is not gold, but the dollar? Which if this law is true, would leave us with a whole lot of dollars?

buzlightening
Jan 31, 2014 - 9:59am

Reverse repoing + Taper caper=Boulder crash.

No stopping the crashcading now. Markets in for a terrible sell off. All the white noise for lower prices in the real reserve currency; GOLD, are simply desperation of criminal banksters to maintain the paper fiat ponzi. With last '08 crash, the metals sold off but are so long term oversold, the compression would be minimal. Likely nothing as the whole of the end game plays out and all governments printing fiats to worthlessness; including the USDinker dollar. With criminal fraud running coast to roast, it won't be long now, for all mark to fantasy wealth illusion to disappear; suddenly overnight.

ag1969
Jan 31, 2014 - 10:14am

NYC mayor: Defending Israel is part of my job

The new mayor of New York City has told members of the American-Israeli Public Affairs Committee (AIPAC) that part of his “job description is to be a defender of Israel.”

Bill de Blasio, who took office on January 1, made the remarks during an unannounced speech at an AIPAC gathering on Thursday, The New York Times reported.

According to the Times, reporters were denied attendance and even a reporter who tried to attend the gathering was escorted away by security guards.

https://www.presstv.ir/detail/2014/01/25/347656/ny-mayor-backing-israel-...

Now why would defending Israel have anything to do with being mayor of NYC. Ivars earlier comment about New Amsterdam seems to make sense now, doesn't it?

Nana
Jan 31, 2014 - 10:21am

Are TPTB Tying Up Loose Ends....33...

https://www.stevequayle.com/index.php?s=33&d=779 "the recent string of "suicides" among bankers is a purge a tieing up of loose ends. The most recent being the exec over at Deutsche Bank and the exec at JPM who took a leap off the "33" floor of their London HQ." Read entire alert via link. And please remember Super Bowl Sunday is the 33rd day of this year...

Mantis
Jan 31, 2014 - 10:35am

Debt repayments

If people start repaying debts en mass, the borrowed principle only can be paid off. The money doesn't exist to pay off interest for everyone. You as an individual may successfully pay down your debt, but all people cannot. The system guarantees that people will have to default. You can't pay interest you owe if the money doesn't exist.

This is the absurdity of it and why constant growth of debt is required.

dgstage
Jan 31, 2014 - 10:36am
ag1969
Jan 31, 2014 - 10:39am

dg, just got done reading that

Haven't we all always said that we know the time is getting close when they all start to turn on each other? Something wicked this way comes.

Gene Burnett - Jump You F*#kers (A Song For Wall Street)
Mr. Fix
Jan 31, 2014 - 10:39am

It's not a lemonade stand, but it's close enough…

Girl Banned From Selling Cupcakes Proves Government Out of Control

Michael Snyder
Economic Collapse
January 31, 2014

America is being suffocated to death by red tape. You are about to read about an 11-year-old girl in Illinois that had her cupcake business brutally shut down by government bureaucrats. Her name is Chloe Stirling and her crime was doing something that we used to applaud young people in America for doing.

Image: Cupcakes (Wikimedia Commons).

Instead of sitting on her sofa and watching television all day, she actually started her own business. And it turned out there her little business started thriving. In fact, it started doing so well that a local newspaper took notice of it. Well, that is when the control freaks swooped in and took her business away and banned her from selling any more cupcakes. The really sad thing is that people are being paid to do this with our tax dollars. All over America, little entrepreneurs are having their lemonade stands shut down and are being banned from selling Girl Scout cookies, and our tax dollars are paying the people that are doing it. As I wrote about earlier this month, the level of economic freedom in the United States is at an all-time low, and it gets worse with each passing year. The country that so many of us love is dying, and it is being replaced with something that I like to call “the USSA”.

In the Union of Soviet Socialist Americans, you have to have a government “license” or “permit” to do just about anything. If the government does not give you permission, you can get into a whole lot of trouble.

Little 11-year-old Chloe Stirling must have thought that this was still the nation that George Washington and Thomas Jefferson once founded, because she dared to actually start a business and sell cupcakes to the public. Little did she know that she would soon make national news

An 11-year-old girl from Illinois got a dose of regulation American-style this week when local government officials shut down her cupcake business.

Chloe Stirling, from Troy, got the front-page treatment from her local newspaper, which featured how well her business, Hey, Cupcake, was doing. By all accounts, it was a successful little enterprise. Chloe was getting $10 for a dozen cupcakes and $2 for each specialty cupcake. She even donated her cupcakes when a boy in her school fighting cancer held a fundraiser.

So why did they shut her down?

Well, it turns out that she didn’t have a “permit” to sell cupcakes and her kitchen was not “licensed”.

Like I said, you have to have permission from the government to do just about anything these days.

Another example of this phenomenon that is absolutely infuriating took place out in Fauquier County, Virginia. When a mother held a birthday party for eight 10-year-old girls and posted the photos on Facebook, she never imagined that she would soon be hit with $15,000 in fines…

Martha Boneta owns a small farm in Fauquier County, Virginia, where she recently hosted a birthday party for eight 10-year-old girls. They wore hats, picked veggies, and made goat’s milk soap. The county says she should have obtain a license before hosting such an event and hit her with a $5,000 fine.

Boneta also got slammed with two more fines for $5,000 each, one for advertising a pumpkin carving and another for violations in the small shop on her property. Boneta sells produce from her farm, as well as eggs, yarn, birdhouses, and local crafts. She sought and received a license for the shop in 2011, but the county now says she can’t sell handiwork or produce from her neighbors under that license.

Stuff like this just makes me want to scream sometimes.

What is happening to this country?

A few years ago, my wife used to take old pieces of furniture, sand them down, repaint them and sell them to others. It was something that she really enjoyed doing and she made some extra money along the way.

But if you try doing that in some areas of the country today, the EPA could potentially hit you with a fine of $30,000 for a single incident in which you do not follow the proper procedures. The following is an excerpt from a discussion that some furniture painters were having on Facebook. It is a little technical, but it is worth reading. In this excerpt the identity of the business has been removed to protect the business from overzealous regulators…

As a painter in PA, I am required by law to test everything that I disturb and I must charge the customer $60 for every test I perform which adds up. What the law states in my area is that if I disturb more than 6 square inches on anything made prior to Jan 1 1979 I must test it. Disturbing means, sanding, scraping, or even using a sponge/scuff pad (like you use on your pots) if I disturb more than 6 inches, I must take photographs, document in 4 different logs, I have local, county, state, and federal log books. If I find lead then I must suit up. Originally, the law stated that if there were no children around then you didn’t have to do that however some lame brained legislator decided that if a child enters the premises for more than one hour a day, we must assume they will be in contact with the lead and therefore will contract lead poisoning. Then the legislators decided that if you were over the age of 60 then it didn’t matter, you didn’t have to test who cares if you get poisoned. Lo and behold OSHA stepped in and joined forces with the EPA, they decided that all were at risk including your pets and the leaves on your trees can hold the lead dust and …..well, that’s a whole other issue.

What is happening now is that so many painters decided they weren’t going to follow the lead law, that OSHA and EPA send out secret shoppers. A lot of us don’t even put our logo’s on our vehicles because that invites these shoppers to investigate. If you come to the **** ********, you won’t see signage on the building, you have to get to the actual door of the workroom to know we are there. We no longer have logo’s on our vehicles either as the fines are too stiff. There isn’t one of us that can afford a find of $30,000.00 A DAY, not a year, A DAY.

The government bureaucrats are running wild and the rest of us are just sitting back and letting it happen.

Things have gotten so bad in this country that the federal government even requires small-time magicians to submit “disaster plans” for the rabbits that they use in their acts. The following is an excerpt from one of my previous articles

Central planning in this country is getting completely and totally out of control. These days, you can hardly do anything without running into a suffocating web of red tape. For example, a small-time magician from Missouri that does magic shows for kids was absolutely horrified when he learned that the Obama administration is requiring him to submit a 32 page “disaster plan” for the rabbit that he uses in his shows. Yes, this is actually true. His name is Marty Hahne, and he thought that it was bad enough when the U.S. Department of Agriculture busted him for not having a “license” for his rabbit. He went out and acquired the proper “license” for his rabbit, but he never dreamed that eventually he would also have to submit a 32 page “disaster plan” for the same rabbit.

You can read the rest of that article right here.

Are you starting to get the picture?

ivars
Jan 31, 2014 - 10:40am

I collected in as short as

I collected in as short as possible form some beliefs I held in " fortune teller" mode:

Tanking of S&P to 1300 within few months; tanking of EUR USD to parity over this year or early 2015; Monetary losening in EUR, tightening in USA, UK, Japan, Swiss; Extraordinarily FED meeting to taper more in FEB; Terror act in Sochi on Feb 7th targeting/involving Turkish delegation; or some other day during Olympics; No increase in debt ceiling or something very short lived max 1 ,5 months ; govt shutdown in March and no economic data from govt in April as they turn sour; Israeli attack on Iran perhaps as soon as June - July 2014. Oil price rise approx 25-50% ( BRENT 150, WTI 120) by the end of 2014. Prices of PM- bottom in Silver in FEB ( lower then previous lows) , gold in April- June. Level- silver below 17, gold below 1000 ( BTW a good place to go long or buy some gold but do not keep it in Swiss vaults). Final lows for PMs in USD. Slow recovery during 2014 back to 1100-1200. Further slow raise in 2015.
Hammer
Jan 31, 2014 - 10:50am

I think we are on track :)

I think we are on track :)

Right Here, Right Now by Fatboy Slim [Official Video]
SilverRunNW
Jan 31, 2014 - 11:02am

@Nana

"V" must be a turdite at heart. I've listened to Hagman & Hagman when V has been a guest. Pretty much alerts on the same issues we talk about here. While I visit Steve Quayle's site frequently, he really needs to scrutinize better the articles he links to. Too many stupid bogus alien sightings and just plain crazy articles.

ag1969
Jan 31, 2014 - 11:03am

Fix

My view on your cupcake post is the same as Obamacare and the MyRa. Please see here:

https://www.tfmetalsreport.com/comment/243922#comment-243922

dgstage
Jan 31, 2014 - 11:12am

AG

More to come, I bet.

ancientmoney ag1969
Jan 31, 2014 - 11:24am

@ag1969 re: subsidization of gold price . . .

"In this case, however, "subsidizing" gold has left less of it, not more, as we watch our countries treasure leave to the East, never to return. I wonder if this is because it is a Giffen Good? But that doesn't make much sense because the price isn't rising."

--------------------------------------------------------------------------------

They are subsidizing the price to us of gold, as buyers of physical. They are giving cheap prices to us by providing to the market more and more gold. It does not (currently) matter that it is paper gold. in our goofy PM futures market, this paper gold counts as though every bit of it is physical.

So, just like when they subsidize corn farmers, we get more corn--only this is in reverse.

The TBTF bankers provide more "gold" which drives down price--providing us with an extra price subsidy; without all that paper gold smothering price through their selling of comex contracts, the price would be much higher.

Yes, this is the Giffen concept. A Giffen good is one which is in higher demand as the price rises. They are subsidizing the price (driving it lower), to prevent higher demand (for physical) amongst the masses.

abguy4
Jan 31, 2014 - 11:27am

Ag

Damn, that is a catchy little tune.

It's sorta stuck in my head now....................................;-}

Mr. Fix
Jan 31, 2014 - 11:27am

AG 1969, I just read your post on My RA,

Yes, we are becoming a nation of criminals, and it is by design, it is also becoming apparent that only the “lawbreakers” have any hopes of survival. Complying with every rule and regulation is a guaranteed bankruptcy, not to mention the system is geared so that all who have any hopes of prosperity will be stamped out.

My strategy of “staying under the radar”, probably has a limited shelf life, as although I am quite busy right now, it is only a matter of time before the wrong person finds out who I am and what I do, and then I will be dealt with.

Such is life in the USSA.

Hammer
Jan 31, 2014 - 11:58am

Oooh feisty Well, President

Oooh feisty

Well, President Obama’s glowing report of the US economy in his State of the Union Address should have waited a few days. Real disposable personal income fell (YoY) by the most since 1974.

https://confoundedinterest.wordpress.com/2014/01/31/real-disposable-pers...

This warrants a Beastie Boys 70's track. Huzzah

Beastie Boys - Sabotage
ag1969
Jan 31, 2014 - 12:09pm

Mr. Fix

If "staying under the radar" doesn't get you, something else will. Who was it that said that the passage of the income tax created more criminals than any other single act in history?

Obamacare may be running a close second.

And if Al Gore (if you are not familiar with him, he invented the internet) has his way, breathing is going to be illegal, or at least not paying for the air you breath will be illegal.

"There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws."

Hammer
Jan 31, 2014 - 12:24pm

Been there done that, wrote

Been there done that, wrote the song. Neeeeext. (jeez it has only taken you guys 200 or so years to turn into your captors...what took you so long ?)

The Beatles - Taxman (2009 Stereo Remaster)
ag1969
Jan 31, 2014 - 12:52pm

The lost Century by Egon von Greyerz

End of an era

The world is now at the end of an era that has lasted for many centuries. The last hundred years have been the culmination of a major cycle and the Fed together with other central banks have created the perfect crescendo with worldwide credit bubbles and asset bubbles which have led to the excesses and decadence which are the normal finale to end a secular trend.

The world financial system almost collapsed in 2008. With the help of $25 trillion in printed money, loans and guarantees the world got a temporary stay of execution. But none of the underlying problems were solved in 2008 and the risks are currently greater than ever. The world has never before been in a situation when most countries are bankrupt and with a financial system which is also insolvent. Japan is a basket case, China’s financial system is under massive pressure, Europe is a failed experiment in socialism and a common currency with Spain, Portugal, Italy, Greece and France all on the verge of collapse.

The UK is having a temporary bounce but is probably not far behind these countries. And the US is the most indebted nation in the world and is borrowing and printing money at an exponential rate

Ben Bernanke has been the most productive chairman of the Fed ever. During his reign US debt has gone from $ 8 trillion to $ 17 trillion. Remember that it took the US over 200 years to go from zero debt to $ 8 trillion. Bernanke managed to preside over US debt going up by $ 9 trillion to the in just 8 years. Not a mean feat! But not only that, Bernanke also printed over $ 3 trillion as the Fed balance sheet went from $ 800 billion to $ 4 trillion during his 8 years. So in total Bernanke has managed to create a total of $ 12 trillion during his rule which is a 133% increase in total debt including the Fed. These amounts can of course never be repaid in today’s money.

There are only two alternative outcomes, default or hyperinflation. Both will have disastrous consequences for the world economy.

https://goldswitzerland.com/the-lost-century/

ancientmoney
Jan 31, 2014 - 2:27pm
Swineflogger
Jan 31, 2014 - 2:46pm

Dead Bankers Everywhere

What's up with all the dead bankers? This is almost "Jim Willie-esque".

Bollocks
Jan 31, 2014 - 3:33pm

Insane

Revealed: the day Guardian destroyed Snowden hard drives under watchful eye of GCHQ – video

On Saturday 20 July 2013, in the basement of the Guardian's office in Kings Cross, London, watched by two GCHQ technicians, Guardian editors destroyed hard drives and memory cards on which encrypted files leaked by Edward Snowden had been stored. This is the first time footage of the event has been released.

https://www.theguardian.com/world/video/2014/jan/31/snowden-files-comput...

---------
Everyone knows that you can copy files and send them elsewhere or store them anywhere. Forcing them to destroy a computer like this is just for show - it's an act of pure intimidation and thuggery.

ancientmoney
Jan 31, 2014 - 3:49pm

The financial world is falling apart globally yet . . .

the "taper" hasn't even manifested yet.

All the EM countries are going down on the mere announcement. What will happen if the Fed ever really does reduce the juice?

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/30_Celente_-_Disastrous_Global_Collapse_%26_Riots_Will_Engulf_World.html

Now for some juvenile humor: Q. why are turds tapered? A. so your a$$hole don't slam shut.

Silverivalist
Jan 31, 2014 - 4:03pm

EM decline will signal collapse

Interesting that there seems to be more info on EM's from UK Reuters then other MSM outlets in the US.

EMERGING MARKETS-Sell-off resumes despite central banks' support

Fri Jan 31, 2014 4:19pm GMT

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By Walter Brandimarte and Sujata Rao

RIO DE JANEIRO/LONDON, Jan 31 (Reuters) - Investors resumed their flight from emerging markets on Friday as the latest round of central bank actions proved insufficient to offset concern about rising economic and political risks in many developing countries.

Currencies, stocks and bonds fell in developing nations, from Asia to Europe to Latin America, with the Russian rouble sliding 1 percent to five-year lows. The turmoil also appeared to engulf central European countries such as Poland and Hungary, which fared relatively well in the first sell-off phase earlier this month.

https://uk.reuters.com/article/2014/01/31/markets-emerging-idUKL2N0L50ZC20140131

DeaconBenjamin
Jan 31, 2014 - 4:19pm

World's top money manager finds what really moves the gold price

Nicholas J. Johnson, an executive vice president at PIMCO, the world's largest money manager with an eye-watering $2 trillion in assets across its various funds, is also the company's portfolio manager focusing on commodities.

In one of the giant financial company's latest missives, Johnson makes a compelling attempt to demystify the gold price; something some of the smartest people in the financial world are more than willing to admit they cannot explain or understand.

PIMCO makes a convincing case that above any other consideration including the growth of gold-backed ETFs, central bank purchases or government actions like India's import curbs, the number one factor influencing the price of gold is the real yield on 10-year US Treasurys:

"Based on our study, the regression shows that, all else equal, a 100-basis-point increase in 10-year real yields has historically led to a decline of 26.8% in the inflation-adjusted price of gold."

Johnson goes on to say that the correlation is so strong that the gold price can be used as a predictor of interest rates:

"Using this framework, consider the 15% price drop in gold in mid-April following talk of Fed tapering. This move predated the sharp move higher in yields in the fixed income market by two weeks. Over the month of May, 10-year real yields rose 57 bps. Even though the markets moved at different times, the size of their moves over this period was remarkably consistent with the historically observed 27-year real duration. In hindsight, we believe the move in gold gave an excellent early warning of both the direction and magnitude of the move in rates."

https://www.mining.com/worlds-top-money-manager-finds-what-really-moves-...

My view: Brilliant analysis! I'm sure that if we look at 1979, we will see that 10 year rates fell to zero while gold prices jumped to over $800/oz. /sarc

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