Let's Play "Who Said It?"

As you've probably figured out, I recently received another shipment of hats, so we might as well give away another one.

So we begin today with a game of "Who Said It?" The first person to correctly identify the author of these thoughts will win a genuine, authentic and autographed Turd Ferguson hat. Of course, with google and the like, this contest may end fairly quickly but so be it. All I ask is that you read the entire passage before entering your guess.

"Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which - through a complex series of steps - the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss of value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

​In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its illegal, as was done in the case of gold (in the 1930s). If everyone decided, for example, to convert all of his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payments for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. Therefore, the financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

​This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

​OK, have at it. TF


ivars's picture

Higher USDx usually means lower Treasury yields

Which means stronger negative real interest rate which is good for PMs, even if CPI (official)  falls.

tmosley's picture

Thank you for the kind words,

Thank you for the kind words, Molly.  

Be sure to remember that when the paper price spikes, and hold back the euphoria.  Spikes are likely not much more than volatility, unless the spike has Dimon's head on it.  Even then, you must be on the lookout for a replacement.  Blankfein is the only one I can think of who might be able to shoulder that responsibility.  Otherwise, it will be central banks directly, and then the writing will be on the wall for pretty much everyone to read.

SilverWealth's picture


I don't know where you get the final reactive low stuff. IMO the dollar rules. Gold responds in this phase inversely. Close under 1500-1510 and then 1410. Close under 1410 and then 1310. No support, just inverse relationship to Dollar.  This is Martin Armstrong stuff and as far as I know he is the only one who is tracking this longer term with accuracy this year. Last I saw Alf Fields has not resurfaced since getting blown out below his line in the sand at 1650 which he then readjusted downwards to accommodate the move.

Also assuming any slingshot bounce is iffy since there is a lot of chart damage and overhead supply imo.

all I am saying is that anyone averaging down into this is averaging down in a downtrend. I like gold and silver but not in a solid downtrend.

Mariposa de Oro's picture

gold articles

Lots of good gold related articles here, including the one by Greenspan.....


Xty's picture

Nobody can know the future

I am surprised at the firmness some people attach to their prognostications. 

I would like to argue but will refrain.  The dollar may be a temporary king, but do not get talked into selling by the constant barrage of strong statements.  People are throwing out numbers rather randomly.

Robespierre's picture


The Quote was by Alan Greenspan.

Robespierre's picture


The Quote was by Alan Greenspan.

Xty's picture

I mean immediate future

We can know that gold and silver have had monetary value for most of recorded history, and we can know that all fiat money systems have failed.  This certainly hints at a safe guess as to what will eventually occur.

dgstage's picture

Martin Armstrong

Any opinions on Martins latest forecast for Gold.

boatman's picture

ben would hint qe3 wayyyyyy

before 1310 gold.

wayyyyyyyy before due to the dow

Grigeo's picture


Just your typical beat down prior to gold option expiry date,


and we've got a monkey from the Corner talking about no support and sub $1,310 gold.

"The world is undergoing tremendous, seismic changes as I type and through the remaining balance of 2012. Very soon, $27 silver and $1550 gold will be but vague, distant memories." - TF

And when Turd's forecast proves accurate, we can still look forward to the monkeys showing up to tell everyone how wrong he is.

Dr G's picture

Xty, a big LOL at "throwing

Xty, a big LOL at "throwing out numbers randomly." 

and nobody is advising selling.  I'm doing the opposite and advising people to buy physical metals, but with caution. I believe a bigger drop is in our future. Maybe $1 for silver or $5...I don't know. But the evidence says it should happen. No QE, Euro on fire, summer doldrums = lower prices. This is evident by fact. I don't know (but Turd would) if there are even enough players in the Comex market for a short squeeze to give silver anything more than a $1 up. 

Cottonbelt21's picture

Cooper & the PM Miners ...

… not copper

Fwiw, a guy named Jeff Copper is signaling a near-term, positive ‘technical’ setup in the PM mining shares … have followed his ‘technical’ Gann-based approach to the markets since 1998-ish and surprisingly accurate (a marriage of price & time) – over the years, have found it has often reinforced timing related to my investment strategies when the Gann stars align.

Re: Greenspan & his comrades … likely end up in jail Milliken-style before this is all over given the damage these guys have caused particularly over last 15-20 yrs - N. Branden’s ‘My Years w/Ayn Rand’ gives some insight into early Greenspan who clearly lost his way with age.

Dr G's picture

@Griego, why do you ignore

@Griego, why do you ignore the fact that they can both be right?! Those predictions of lower prices in the short term and higher prices in the long term are NOT mutually exclusive. Why do you bury your head and treat them as such? At $40 we thought $35 was impossible. Same story for $35 dropping to $30 and $30 to $26. And here we are below $28 again. 

The hopium is out of control. 

Xty's picture

re LOL

Dr G - I am trying very hard to be polite and you are making it difficult.

Stock_Canines's picture

Question to those smarter than I

I was just reading an article where the analyst stated that if the US dollar was to break 82.5 than the next resistance would be in the 87 -90 area. His conclusion was if that was to occur, gold and silver would trade significantly lower and by significantly lower he meant in the range of 1100 - 1200, possibly lower. What do people here think. Is this likely to occur. I imagine in the long-term, the US fiscal problems will hurt the dollar, but when compared to the Euro, the dollar is obviously seen as comparatively strong. Zero Hedge also had an article today stating that explicit QE III was probably ways off and more damage needed to be seen in the indices before that would be considered. Given the fact that the mentioning or suggestion of more easing is the only thing that seems to elevate the metals, and with that not likely for the foreseeable future, and with the strengthening of the dollar, what argument is there that gold and silver will move higher? Long term I think that is probably going to happen, but it looks like we will probably first see the metals significantly lower than where they are now. Kind of a bummer considering we have already endured quite the correction.  

apex101's picture

Did gold just put a double

Did gold just put a double bottom in and this Bullshit over with or what?

SRSrocco's picture


THIS IS NOT 2008 ALL OVER AGAIN...Here's why?

If we look at this 2008 chart of the DOW JONES, GLD & SLV we see that in the big decline, the Dow lost 35% in 6 months, the GLD dropped 14% and the SLV got clobbered in a waterfall of -45%.  If we compare this to 2012, we see a much different picture:

The Dow Jones has actually gained nearly 10% since late Nov 2011, while the GLD has fallen 8% and the SLV 11.5%.  This is nothing like 2008 in regards to the fact the DOW has been manipulated higher by PPT while they have allowed commodities and the precious metals to decline.

If this was like 2008, we would be seeing a much lower Dow Jones already.  Furthermore, if this was going to be like 2008, then that would mean the SLV would have to fall an additional 30% from here.  That would mean the SLV would fall another $8.oo to hit a low of $18.73.  Does anyone really believe it will fall this low?

If the Dow Jones does fall considerably, I would imagine the GLD & SLV will decouple as they have had serious losses already.

Grigeo's picture


I don't see any hopium around here today.  There have been too many cries of 2008 and no support on a typical smash down day.  How many times have we seen this preceding expiry dates?  Talk of no support is absurd when done on an all-to typical smash down day.

Eric Original's picture

Amazing action in the miners

Amazing action in the miners today.  That's all I'm saying.  I don't want to jinx it.

proton777's picture

I dunno

Maybe I'm just battle scarred, but pretty much every recent rally has been sold. I would like to think now it's different - this is "it" - but I can't allow myself to think that yet again.  I never thought we'd see 30 again, or 29, or.....

Edit: I should add that no one hopes I am wrong more than me

gatortrader's picture


Is gonna be hot

tpbeta's picture

Squeeze Schmeeze

Yeah there probably will be short squeeze. And then a long squeeze after. You have to keep sight of the fact that PM bull market is driven by federal funny money, not TA, and we're currently approaching the end of the current Fed program.  Until QE3, I expect silver to ocilate within the $28 - $32 range, with the occasional breakout either side. That's why $26 is such a good price IMHO

boatman's picture


i think it is over n 2x bottom is in

Grigeo's picture

re: Amazing action in the miners today

WOW!!!!  Eric, thanks so much for the post, I just took a peek.  On days like today I do NOT look at the miners.  You just made my day!

Hrunner's picture

Honorable Mention


I cited the Greenspan quote that was "revisted" upon him in a May 1 Bloomberg interview, posted May 1st.


Also cited the reference originally published by Ayn Rand in the Objectivist.

Do I get an honorable mention yellow hat?  Maybe a free Shiner at Turdapalooza?  Schlotzsky's sandwich? 


The Heat Miser's picture

Guess who said it...

Was it Carter Glass who said that quote?

Turd Ferguson's picture

My 2c


There is ZERO CHANCE that gold is headed to $1200. ZERO.

Physical demand will not allow it. Additionally, at some point, mines will close due to the lack of profit on extracting difficult veins. This means even less supply. This is all well and good but it's just noise.

Nope. I will eat my hat at 1200. It would be the opportunity of a lifetime. Post-whateverthisis, as fiat finally collapses, the world (including the U.S.) will be forced back onto a gold standard. A gold price that is anything other than multiples higher from here would be tremendously deflationary and counter-productive. Simply divide your favorite measure of dollar money supply by the (alleged) number of ounces held by the U.S., add a few extra thousand dollars on for good measure to allow for overshoot, and you get an ultimate dollar value. Again, multiples higher than today.

Knowing this, why do I even care about $1550 vs $1500 vs $1450 vs $1600. It simply doesn't matter toward the end game. And trust me, The End Game is coming a lot sooner than you think.

foggyroad's picture

AAPL Hedge funds Market Dips Liquidity

Interesting point of view? 

Rosenthal Investing Axiom: When vitriol against sound investment analysis reaches a fever pitch, a top (or bottom) is close at hand

Based on the responses to the earlier "Stalking the Bear" articles, one would think I had questioned the very existence of the Judeo-Christian belief of a higher deity. Or perhaps I had s


Author's Note: I have not been long or short AAPL during this entire period, nor am I advocating an AAPL short position. I am merely using AAPL's dominance as a market leader to help gauge market direction. I do not have a vendetta out for AAPL. In fact, I have no emotion towards AAPL one way or the other. Word to the wise: emotion clouds judgment, be advised.

As long as we are on the topic of emotions, I suggest we all bow our heads and offer a moment of silence for those who have fallen to this nemesis of sound investing principles. Who can forget those who charged into the Yahoo breach in the year 2000 when the shares were trading at $500-per and analysts were calling for a sure $600+. How did that call turn out? Recently, we saw AAPL trading above $600 and the same analyst crowd was crowing for $1,000. The similarities raise the hair on the back of the neck.

Don't like the Yahoo example? How about the owners of Dell in 1999. Anyone else remember the monthly Dell 'millionaire' shareholder barbeques CNBC was only too happy to cover? These shareholders would look into the camera with an adorable almost infant like honesty and explain their entire portfolio was invested in Dell because it "only goes up". Haven't see a barbeque in a while. Where do they meet up now? At a local 711 for a big gulp and some Yodels. Maybe a little beef jerky if they are missing that smoky taste of barbequed steak.

and from ZH click heading...

The World's Biggest Hedge Fund Hotel Just Got Bigger - 226 Hedge Funds Owned Apple As Of March


Apple Goldman Sachs goldman sachs NASDAQ Reality

According to some estimates, there are currently about 500 hedge funds in the world with AUM over $100 million. This means that roughly half of these asset managers collected performance and management fees for one simple task: to hold AAPL stock. According to the latest just released Hedge Fund Tracker from Goldman Sachs, a record high number of hedge funds, or 226, were long AAPL stock as of March 31, just days ahead of its all time highs, in what can only be described as the world's biggest hedge fund hotel (California). Because the only thing that is roughly comparable to the chart of the recently parabolic move higher in the AAPL stock is the number of hedge funds holders: 216 at the end of 2011, 209 at the end of Q3, 181 at the end of Q2, 173 at the end of Q1 2011, and so on. And while they may all be long the stock for their own "fundamental" reasons, the reality is that whenever there is a scramble for safety, on margin calls or simply due to general Risk Off behavior, it is the winners that would get sold, as selling beget selling, and eventually liquidations. Only in this case, 226 hedge funds all have the same winner. So far the AAPL drop has been relatively benign, not least of all because the stockis the NASDAQ, which just happens to be the growth frontrunning of the 2012 stock market. But what happens if the Fed continues to push off the NEW QE announcement:  


Credit to Seeking Alpha- Bret Rosenthal, and ZeroHedge

Given the FP fiasco where is all the pent up liquidity, Charles Biderman spoke of last week going to go?

ps. I couldn't locate Trim tabs daily vid yet , the gist was ES and Gold won"t move much due to cash raising by Managed money for Facebook IPO.

Post facebook, where is that money going to go?

Could get interesting!

Turd Ferguson's picture

I actually caught some of this as it was airing


Good stuff. Includes Peter Schiff.

Syndicate contentComments for "Let's Play "Who Said It?""