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Ananrefugee said:   12 Rules of Goldbuggery My apologies if this has already appeared in the thread somewhere

If you use the British meaning of "buggery" then the term is an accurate description of what will happen to you.

nsdp said:   
Investing in gold is a leap of faith that never worked out in the 20th Century when push really came to shove. The almighty dollar trumped all. the Yuan(Rembi) is the next probable reserve currency not gold.


ha ha

If someone held gold throughout the 20th century, they still have all of their purchasing power.

If someone held "almighty" US dollars, they lost more than 96% of their purchasing power.

Fiat currencies get devalued and fail over time unless they are backed by intrinsic value to prevent governments from increasing the supply out of thin air.

Bret the situation that is the core assumption to your position is that markets remain orderly. If order breaks down as the goldbugs claim then the your postulate breaks down as well. I can give you no better place than Saigon today. If at the end of 1973 (16 months before the south collapsed ) you could convert your piasters to $2500US or 250oz of gold (remember that the world price of gold at the moment was $35/oz, in Saigon it was $10 in Phnom Penh it was $6-7/oz) $2500 in US dollars invested in US treasuries would beat gold by about 3 times. Today you would have about 4 times as much money if you invested in the SPP 500.For Example I invested $400 in 1978 from my HL&P ESOP in American Funds, my March 31st shows a current market value $26,732. Gold would have to be $4,200/oz to break even. Your assumption is that markets remain orderly. Every example I can think of you are better converting to some tangible income producing investment and taking advantage of the income stream of that asset. You are saying that the market for the dollar tanks and the local gold market during the period where it tanks remains orderly. You cannot cite me a single instance where that happened in the 20th century. If the local currency tanked the price of gold in local markets tanked even faster(Germany twice, Japan, Laos, Cambodia, Vietnam, mainland China in 1949when converting to US Dollars, Thailand). The optimal strategy was to convert to tangible assets that are income producing(farm land except mainland China or Vietnam) or securities in a stable currency. Land values or foreign securities for instance do NOT drop in terms of gold. They are a store of wealth that also produces income in the interim. Gold finishes dead last relative to either. As to the dollar your case is correct if someone hid their money in a hole in the back yard. The correct comparison is to investing in something as mundane as US Treasury certificates. Then gold really sucks because it has no annual income producing potential. Lack of income producing potential is where the gold investment strategy falls completely apart for any time horizon longer than 5 years.

The only investment strategy gold beats for long term is digging a hole in your back yard and burying the money.

During the entire 1970's decade the US dollar tanked and society remained orderly. I would much rather own Land than US dollars... I would rather own anything tangible rather than US dollars. My entire portfolio is short USD.

I have a coworker who came over here during the fall of Saigon, he was very thankful to come to this country with gold. His family was able to use that gold to get started farming and raise their 9 kids. Had he kept his domestic fiat currency the family would have lost everything they had and came over here penniless.

I do not expect society to breakdown, just a large devaluation of the US dollar relative to Asian currencies and a decreased standard of living for Americans. Most people would agree the US governments and US consumers are overly dependent on unsustainable debt accumulation.

Gold is not an investment, it is a store of value. An alternative to fiat currency that gets devalued over time. To compare it to an active investment such as stocks and farmland shows a complete misunderstanding of gold.

Nevus: I am not sure why you think I am trying to marginalize anything. There are lots of valid arguments for holding some amount of precious metals as part of a diversified portfolio - and even good arguments for the percent of that holding to be up there (if your the really paranoid type, I think up to 15% at this point would be considered still within the range of reasonable). But when people who are hoarding the gold justify it by arguments that just aren't reality - of course I am going to make fun of it.

This general appeal to ignorance your making is an insane goldbug argument though - just because I can't know for certain why the gold price goes up or down doesn't mean you should equally consider all possible reasons. There are insane reasons, like your idea that a vast cabal is instituting a "engineered take down." Is it a possibility? Sure. But just because something is a possibility doesn't mean its a credible possibility. When I lose my keys, 99.9999999999999999999999999999999999 to infinity % of the time its because I'm forgetful. It COULD BE that the aliens beamed them up into their spaceship. But if I spent all my time believing every time I lost my keys that the aliens were responsible, I'd be in a mental institution. Same thing with goldbugs ascribing every price move in gold to a massive conspiracy.

Likewise, given reality as we understand it, hoarding physical gold is equally an irrational act of faith based on economic doom porn. I'm not even sure what to say to you argument that its reasonable - its so disconnected from reality that I can't really address it without you thinking I'm insulting you by questioning your mental competence. There is just no corollary to what happened in Cyprus and the United States, for example - Cyprus was a well known money laundering place for Russians. And hyperinflation? My god, we just went through this, there is 0 evidence for it (we know, we know, the BLS and MIT are in a conspiracy about that). Just because goldbugs bought physical gold after a gold price drop doesn't mean anything - people also run and buy up all the guns and ammo after every mass shooting event because of similar fear mongering (except that fear mongering is "THEYRE GOING TO TAKE YOUR GUNS!" instead of "BUY GOLD! THE ECONOMY IS COLLAPSING!").

Since guys keep on wanting to compare it to non interest earning(keep in mind that in most periods you earn interest on cash via deposits, money markets, or short durations) cash all I can say is where are all of these people that bury huge amounts of cash in their backyard?

Since basically the only cash people hold is their own emergency fund are you suggesting that people dump emergency fund cash and buy gold? It seems that we get agreement that gold is inferior to stocks, gold is inferior to bonds over time, gold is inferior to real estate over time, gold is inferior to things like revenue royalty trusts over time, gold is basically inferior to everything out there except cash in a non interest bearing account.

Well it seems to me that you're just competing with the emergency money cash at that standpoint because that is all you have left to compete against. So what say you goldbugs, should people put their emergency cash in gold?

It is the function of the priest class to maintain social confidence in the status quo. It is the purpose of renegades and innovators to attack and break the status quo. I think this thread underlines the different types quite clearly.

The fraudulent markets need a steady stream of new investment to avoid an implosion. Many, many people are compensated based on the continuation of this fraud. At what point does it all implode? At the point you wish you had physical gold in your possession. Until then, the priest class is correct. After that point, they couldn't be more wrong. Predicting systemic financial collapse now is like predicting the housing collapse just after the dot com bubble burst. You would have been right, but you had to watch your neighbors celebrate buying either prison cells or tickets to an eventual bankruptcy in the meantime.

The linked article said: The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It's not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever's in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing and it's only just coming into view.

They can't do that to a gold or silver coin in my pocket.

boards5503 said:   It is the function of the priest class to maintain social confidence in the status quo. It is the purpose of renegades and innovators to attack and break the status quo. I think this thread underlines the different types quite clearly.

The fraudulent markets need a steady stream of new investment to avoid an implosion. Many, many people are compensated based on the continuation of this fraud. At what point does it all implode? At the point you wish you had physical gold in your possession. Until then, the priest class is correct. After that point, they couldn't be more wrong. Predicting systemic financial collapse now is like predicting the housing collapse just after the dot com bubble burst. You would have been right, but you had to watch your neighbors celebrate buying either prison cells or tickets to an eventual bankruptcy in the meantime.

The linked article said: The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It's not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever's in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing and it's only just coming into view.

They can't do that to a gold or silver coin in my pocket.


You're an idiot!!!

dshibb said:   boards5503 said:   It is the function of the priest class to maintain social confidence in the status quo. It is the purpose of renegades and innovators to attack and break the status quo. I think this thread underlines the different types quite clearly.

The fraudulent markets need a steady stream of new investment to avoid an implosion. Many, many people are compensated based on the continuation of this fraud. At what point does it all implode? At the point you wish you had physical gold in your possession. Until then, the priest class is correct. After that point, they couldn't be more wrong. Predicting systemic financial collapse now is like predicting the housing collapse just after the dot com bubble burst. You would have been right, but you had to watch your neighbors celebrate buying either prison cells or tickets to an eventual bankruptcy in the meantime.

The linked article said: The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It's not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever's in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing and it's only just coming into view.

They can't do that to a gold or silver coin in my pocket.


You're an idiot!!!
Thank you for your kind words. I'll be sure to agree with everything you think in the future.

boards5503 said:   Predicting systemic financial collapse now is like predicting the housing collapse just after the dot com bubble burst. You would have been right, but you had to watch your neighbors celebrate buying either prison cells or tickets to an eventual bankruptcy in the meantime.

I know when I need to get the truth about global financial markets, I read Rolling Stone. Let me guess, your information about how we are assuredly going to enter financial collapse comes from other well known scholarly sources like youtube?

But since you are just so certain that global financial collapse is right around the corner, put your gold bullion where your mouth is: tell us how long we have to wait until the much promised collapse occurs. If the collapse occurs, I will buy 1oz of gold and send it to you. Presumably even in a total financial collapse the mail will work for at least a few weeks before hyperinflation bankrupts the government, right? And if you are wrong, then you send me 1oz from your stash? Sound like a deal?

magika said:   ..If the collapse occurs, I will buy 1oz of gold and send it to you.You show your blindness in this one comment. Please tell me what you will buy your gold with. Will a student give you gold to be further brainwashed? Will a university pay you with gold to maintain your office hours? In a systemic collapse, you will have to barter to get my gold? Do you have guns, food, or liquor? Perhaps you would offer sexual favors to earn my gold. Whatever is your plan, or lack thereof, does not give me confidence that the bet between gentlemen would be honorable (in spite of your honorable intention).

BTW, I never suggested that financial collapse was right around the corner. You should pay closer attention to my arguments rather than assuming in error. What I suggested was simply an argument for gold as a store of wealth. This is greatly different than the irrational act of faith you are suggesting. Stated even more simply, the strawman you erect for me doesn't represent my arguments. I apologize for identifying you as a compensated member of the priest class, but anyone can see it in your ridiculous rants against arguments that haven't even been championed.

boards5503 said:   magika said:   ..If the collapse occurs, I will buy 1oz of gold and send it to you.In a systemic collapse, you will have to barter to get my gold? Do you have guns, food, or liquor?

The better question is - in such a situation, if magika did have guns, food, or liquor, why would he trade it for your gold?

dukerau said:   boards5503 said:   magika said:   ..If the collapse occurs, I will buy 1oz of gold and send it to you.In a systemic collapse, you will have to barter to get my gold? Do you have guns, food, or liquor?

The better question is - in such a situation, if magika did have guns, food, or liquor, why would he trade it for your gold?
The reasons gold will always have value during systemic collapse is the same reason civilized people have always enjoyed gold as a currency. Concealable, divisible, rare. What all of you paperbugs fail to realize is the difficulty of storing and transporting all the things you think is so much better than gold. Today I can trade an ounce of gold for an assault rifle or 10 cases of liquor. Isn't it obvious why I'd rather have 2 pounds of gold than 24 assault rifles or 240 cases of liquor?

At some point the acceptance of counter-party risk is an irrational act of faith. Just ask a cypriot or an MF global customer. In fact, take a look at how the gold Germany wants to repatriate is being trickled back to them. They were paperbugs for decades. Now they're waiting nearly a decade to eliminate only some of their counter-party risk. I understand how you all want to reinforce the financial construct which you are 100% bought into, but pot, meet kettle.

boards5503 said:   It is the function of the priest class to maintain social confidence in the status quo. .


No no no, the function of he priest class is to heal the rest of the party and turn the undead.

jerosen said:   boards5503 said:   It is the function of the priest class to maintain social confidence in the status quo. .


No no no, the function of he priest class is to heal the rest of the party and turn the undead.


Don't forget, they provide someone to give that otherwise useless mace to.

Boards I wish I had a magic time machine because I would take you and all your gold back to April 28-30,1975. You would find out that no matter how much gold you had, you couldn't buy bullets, Kerosene(helicopter fuel), or standing room on a boat at Vung Tau. You and all of your gold would be stranded waiting for the T-55's to roll into Independence Square and the NVA to pick you up and confiscate all of your gold. Gold was something you did not want to any association with. Guaranteed ticket to the reeducation camps for at least the next 9 months.

During 1980, both the Dow and Gold charted between 500 and 800. You make the call which was the better buy.

magika said:   Nevus: I am not sure why you think I am trying to marginalize anything. There are lots of valid arguments for holding some amount of precious metals as part of a diversified portfolio - and even good arguments for the percent of that holding to be up there (if your the really paranoid type, I think up to 15% at this point would be considered still within the range of reasonable). But when people who are hoarding the gold justify it by arguments that just aren't reality - of course I am going to make fun of it.

This general appeal to ignorance your making is an insane goldbug argument though - just because I can't know for certain why the gold price goes up or down doesn't mean you should equally consider all possible reasons. There are insane reasons, like your idea that a vast cabal is instituting a "engineered take down." Is it a possibility? Sure. But just because something is a possibility doesn't mean its a credible possibility. When I lose my keys, 99.9999999999999999999999999999999999 to infinity % of the time its because I'm forgetful. It COULD BE that the aliens beamed them up into their spaceship. But if I spent all my time believing every time I lost my keys that the aliens were responsible, I'd be in a mental institution. Same thing with goldbugs ascribing every price move in gold to a massive conspiracy.

Likewise, given reality as we understand it, hoarding physical gold is equally an irrational act of faith based on economic doom porn. I'm not even sure what to say to you argument that its reasonable - its so disconnected from reality that I can't really address it without you thinking I'm insulting you by questioning your mental competence. There is just no corollary to what happened in Cyprus and the United States, for example - Cyprus was a well known money laundering place for Russians. And hyperinflation? My god, we just went through this, there is 0 evidence for it (we know, we know, the BLS and MIT are in a conspiracy about that). Just because goldbugs bought physical gold after a gold price drop doesn't mean anything - people also run and buy up all the guns and ammo after every mass shooting event because of similar fear mongering (except that fear mongering is "THEYRE GOING TO TAKE YOUR GUNS!" instead of "BUY GOLD! THE ECONOMY IS COLLAPSING!").



So you are saying it's insane to believe, beyond a reasonable doubt, that parts of the financial system (such as Precious Metals) could be contrived by the Fed, Government, or the banks? I guess that Libor thing didn't happen (remember, it was commonly labeled a conspiracy theory until it wasn't), or the blowing of the housing bubble, or the Fed's pedal to the metal interest rate policy which manipulates the most important price of all; the price of money.

Once again, you have resorted to trying to marginalize me and skew posted comments. I have argued for well balanced, diversified portfolios which includes having physical gold/silver. Everyone has their own individual financial situation and investment needs. I've never said hyperinflation was going to happen. When I mentioned hyperinflation my point was how quickly things can happen when there is a bump in the road. To reiterate, there is a lot of disequilibrium in the system. When complex systems go awry highly unpredictable outcomes tend to occur (I'm looking forward to you twisting that last sentence as me saying there is going to be total collapse and the world is going to end LOL).

To address your analogy about the buying frenzy of gold after the price drop & the fear mongering associated with people buying guns & ammo, there is no analogy. Your comment is a very America-centric comment. The frenzy to buy gold was not associated with fear mongering. The frenzy was associated with the drop in price, period. The frenzy was not just in the U.S. It was all over the world. The U.S. PM market is just a fraction of the World Market. The people in India, China, Australia, Europe, etc. were not all buying because they thought economic doom was around the corner. Again, they bought because the price dropped.

Btw, the BLS has multiple Motives in trying to minimize CPI. It's like the fox guarding the hen house. The lower the CPI, the higher the GDP appears. Thus, goosing the CPI lower helps give the impression the economy is more robust than it is. The Fed can only print money when the CPI appears to be low. I'm not going to argue an indepth topic such as the CPI in this forum because it's not worth the effort. Suffice it to say, I clearly believe the basics of the cost of living are inflating from my personal experiences. Why has the Big Mac index been diverging from the CPI since 2002? Has McDonald's gotten less efficient in how they process their burgers and run their restaurants? You really should stop making the binary inflation/deflation argument. Some prices are going up, some are going down. Credit-money is contracting because of the lack of lending. My strict definition of inflation (deflation) is the net increase (decrease) of the money supply & credit, when credit is marked to market (definitions from Steve Keen & Mish Shedlock which make the most sense to me). So yes, overall deflation is currently happening & will continue to occur. This is why the Fed is printing like mad, and will continue to do so for a very long, long time (well past 2015 like they have said). When fiat currency is backed only by faith and that faith takes a hit because an awful lot of Monopoly money is printed, then that's a road to a currency crisis. Again, don't twist what I'm saying. I'm not saying there's going to be a currency crisis, but it's certainly not a possibility that should be completely dismissed.

Again, call me mentally ill, call me a gold-bug, call me whatever name makes you feel better about your world. My intentions in posting here are not about getting into a pissing match or trying to show my di*k is bigger than anyone else's. I have no delusions in thinking you are going to change your mind about anything. I'm the last person to pretend I know where the markets are going to go. I've been posting to help educate people who are relatively new to all of this, so they can see there's more to the story than crazy people buying gold and to dispel some poor information in this thread. One of the surest ways to see if you are truly learning a complex topic is by how much you are able to recognize how little you really know.

nevus said:   magika said:   Nevus:..

Btw, the BLS has multiple Motives in trying to minimize CPI....

One of the surest ways to see if you are truly learning a complex topic is by how much you are able to recognize how little you really know.

You should read this very thread you are posting in.

kamalktk said:   nevus said:   magika said:   Nevus:..

Btw, the BLS has multiple Motives in trying to minimize CPI....

One of the surest ways to see if you are truly learning a complex topic is by how much you are able to recognize how little you really know.

You should read this very thread you are posting in.


This smart quip adds no substance to this forum.

Discussing a topic such as CPI, the way it's calculated by the BLS, and reasons to skew the the statistics is fruitless in a forum such as this. I would recommend people do their own research on this topic.

nevus said:   kamalktk said:   nevus said:   magika said:   Nevus:..

Btw, the BLS has multiple Motives in trying to minimize CPI....

One of the surest ways to see if you are truly learning a complex topic is by how much you are able to recognize how little you really know.

You should read this very thread you are posting in.


This smart quip adds no substance to this forum.

Discussing a topic such as CPI, the way it's calculated by the BLS, and reasons to skew the the statistics is fruitless in a forum such as this. I would recommend people do their own research on this topic.


A few years ago I tried to explain people in the I-bonds thread how they'll end up getting screwed because the government will claim there is zero inflation.

Now they're holding bonds that yield 1.18% scratching their heads.

Nevus, I'm having a hard time following what you're saying.
1) How do you define the money supply? M2? M3? Total Credit Market Debt?
2) You say you define inflation as the increase or decrease in the money supply. You then say we're in deflation. Deflation under your definition is the money supply shrinking. M2 is way up. M3 is up. Total Credit Market Debt is also growing very slowly after bouncing back after the crash. What money supply is shrinking that you feel like we're having deflation?
3) Just to clarify do you see gold as primarily an inflationary hedge or a deflationary hedge or do you actually believe it's both?

dshibb said:   Nevus, I'm having a hard time following what you're saying.
1) How do you define the money supply? M2? M3? Total Credit Market Debt?
2) You say you define inflation as the increase or decrease in the money supply. You then say we're in deflation. Deflation under your definition is the money supply shrinking. M2 is way up. M3 is up. Total Credit Market Debt is also growing very slowly after bouncing back after the crash. What money supply is shrinking that you feel like we're having deflation?
3) Just to clarify do you see gold as primarily an inflationary hedge or a deflationary hedge or do you actually believe it's both?



Here is a good article that touches on these topics.

nevus said:   
Here is a good article that touches on these topics.


I read that piece before you even linked to it(despite the weirdos that post in the comments section Zero Hedge has some rather smart staff to get original information from even if they're a bit too off the deep end in doom and gloom).

But honestly to you really even understand much of that post? I mean I consider myself pretty smart on financial matters and particularly monetary theory, but there is a couple elements in there that I even struggle with even though I can follow what he's saying pretty well.

So when I read it I ended up disagreeing with a few of their assertions.
1) I don't believe the money supply is M2 + shadow credit markets. First of all that says that things like a derivative are money before even money market accounts which I find to be a very dubious proposition. That also tells me that they see derivatives are money before the bond market which doesn't make any sense.
2) I just disagree that derivatives are money. Now I tend to stay in the world of the practical a little more than he does. Let's talk about an interest rate swap for example. Let's say you have variable debt and I have fixed debt once. And let's say that you would prefer fixed debt and I would prefer variable debt. Now both of us could try to refinance the debt, but maybe we have covenants with our bond holders that make that hard to do or maybe the costs of issuing new debt to pay back existing debt is just too high. So instead we engage in an interest rate swap together. You pay me the difference between variable and fixed while variable is cheaper than the current fixed rate and when the fixed debt rate is cheaper than variable rates I pay you. Has money been created out of our situation? The same amount of debt exists before and after. The notional amount is higher, but that is just a yard stick for determining how much you owe I or I owe you. There is also a small amount of counter party risk involved(which I agree is a bit of a minor systemic issue), but for the time being there really is no net credit creation that has occurred or new money in the system.
3) Also, looking at the derivatives market or rehypothecated assets what is interesting is that really it only maintains the properties of the storage of money like you have with any asset. You own stock in ABC company. That position is worth $500k. You act like you have $500k in capital. If it goes down you wont feel like you have as much anymore. But do you actually buy goods and services with stock? No! Do you actually buy goods and services with derivatives? No! Do you actually buy goods and services with pristine collateral like T-Bills? No! So clearly assets that get people to partially behave like they have more money go up and down and fluctuate in size over time, but they have to take cash in order to liquidate a position in order to go spend it. For bonds, stock, etc. that is at least true. With derivatives you don't even necessarily have cash paid upon liquidation or ending the contract. Again the example of the interest rate swap sure it might take some cash to pay **for the difference** if interest rates move, but otherwise there is no 'return of principal'.
4) So I could get into a lot more details here, but I just don't agree that all assets are money. I don't agree that all value is money. Therefore I don't agree that even all net notional(let alone all total notional) in the derivatives markets is money. They may represent different degrees of wealth, but they don't represent money.

5) That said what I see when I look at the size of the derivatives market, the need for more collateral to back them up, the falling size of the derivatives market, etc. is not a declining monetary supply or a money supply with insufficient base, but instead a systemic issue that may or may not ever happen. The need for more collateral against that market means it will just continue to shrink and to the extent that people want to participate in it will only increase demand for things like US treasuries. Really a break in the derivatives chain is the only major systemic issue for the US financial system. Otherwise they're highly capitalized and have more liquidity than they know what to do with. But something happens in the derivatives market it's not like the money supply blows up necessarily and instead it's more akin to the stock market falling for a company that invests capital in public securities. Their balance sheet and income statement are hit, but that doesn't necessarily mean that there are less dollars available to buy food. It just means that the relative value of equities are lower.

So this is a very complicated subject matter that I am still trying to always add to my knowledge about, but I don't believe that you fully understand the notions that were put forward in that article and what that means about the money supply and the prospects for something like gold.


And we are not in deflation.

nevus said:   kamalktk said:   nevus said:   magika said:   Nevus:..

Btw, the BLS has multiple Motives in trying to minimize CPI....

One of the surest ways to see if you are truly learning a complex topic is by how much you are able to recognize how little you really know.

You should read this very thread you are posting in.


This smart quip adds no substance to this forum.

Discussing a topic such as CPI, the way it's calculated by the BLS, and reasons to skew the the statistics is fruitless in a forum such as this. I would recommend people do their own research on this topic.

Since you obviously didn't read my link, MIT economists calculate CPI too... You should go to my link and read the posts.

Title should read "When criticizing investments not approved by WallStreet and Federal Government becomes an irrational act of obsession"

Hey, goldbugs Get to buying!!! Quick before gold hits 1200



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