By Yggdrasil | 29 Comments | 
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The Power of Gold (video)
In my discussions with other investors about the great inflation-deflation debate, I always point out the elephant in the room that seems to be invisible to everyone else. Namely, who exactly bought the thousands of tons of gold that the central banks sold off at ridiculously low prices in the 1990′s and through 2003?
And why is it that nobody ever talks about the identity of the buyer or buyers? Indeed, as far as I know, I am the only one who ever asks the question. Given the years that have passed and the events that have taken place since those huge and probably fateful purchases, it seems obvious that the buyer has an extraordinarily long term investment horizon and is supremely confident of the outcome of his investment.
If we knew the identity of the buyer, we would probably know a great deal more about the probable course of this rally in the precious metals. Given the utility and value of that inside information, I am more than amazed that the identity of that buyer is still shrouded in mystery.
But the video below gets the actionable advice exactly right for the individual investor.
You see, gold soars independent of the whole inflation-deflation argument. Gold is about power and control – not inflation or deflation.
Corrections are engineered to shake loose supply. /Caveat vendor/
Could the answer to Yggdrasil’s question of why he is the only man to ask who owns all the gold be found in the closing sentence of the Silence of the Lambs trilogy where the author wrote that A man can only learn so much and live.
I cannot adequately express my appreciation for all the work Yggdrasil has performed over the years to not only awaken us to some of the larger dimensions of our predicament, but also to show by example how to use one’s perspicuity, intellect, and sense of humor in the process of shoveling ourselves out from the pile of gnostic crap under which we find ourselves.
Thanks for this particular intervention–I too have often asked myself “Just who is buying all the gold?” and assuming it was the Rothschilds and friends. I recall when Gordon Brown sold off so much of the British reserve back around the turn of the century, and wondering, “Why?” The following steady rise in the price of gold made his decision seem fatuous at best and treasonous at worst. C’mon, worthless media. Why don’t you check this out?
A question to Yggdrasil–do you find value in the “meme watching” exercises of the Daily Bell? While they are VERY (too?) careful to avoid the imputation of “anti-semitic”, it seems to me that in a number of respects they are doing valuable work in reading the PE tea-leaves. What do you think?
Yearly rebalancing of my portfolio is the best I have been able to do and it has certainly worked through this latest financial crisis. Gold appreciation has led me to recently buy more stocks and real estate just as previous stock gains allowed for more gold purchases.
You can’t win big without a certain degree of luck (or a lot of hard work in the real economy) but you can certainly protect capital and keep your investments afloat with a balanced approach.
You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all — not some — all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?
-Warren Buffett
Of course you want the cube – you can’t store 10 Exxon’s in an underground vault!
Considering that there isn’t a single central bank that denominates its monetary base in terms of gold, its value should be regarded as completely arbitrary. Gold no longer fomrs the basis for a medium of exchange and it is unlikely to acquire that role again.
If you are concerned about a collapse in the currency sink your money into real assets with real utilitarian value. Diesel fuel, lumber, grains, guns, ammo, or anything else might be expected to increase in value in the event of a panic, but gold will be as worthless as paper currency.
Also it should be noted that commodities tend to be depreciating assets under ordinary circumstances as increasing rates of real output tend to decrease the value of existing factors of production.
“Gold no longer fomrs the basis for a medium of exchange and it is unlikely to acquire that role again.”
Nonsense. It is used to settle foreign trade accounts between central banks and the 9,000 odd tons in possession of the US Treasury most certainly is a major factor in the dollar remaining the de facto global reserve currency.
No, quant analyst is right.
You honestly think U.S. gold and not Predator drones with Hellfire missiles are what makes the dollar the reserve currency?
When the gold ostensibly in Fort Knox has never been audited?
It’s long gone! And foreign intelligence services would know. And they would also know about the other persuasive ways of getting a country to borrow dollars or borrow money from Wall Street for pointless infrastructure boondoggles.
“You honestly think U.S. gold and not Predator drones with Hellfire missiles are what makes the dollar the reserve currency?”
Actually using our armaments has been counter-productive. The world likes peace and stability.
Your tinfoil hat is slipping if you think the Treasury inventory count of the gold is inaccurate.
And your vague references to World Bank imperialism are a bit of a non-sequitur.
Plus you have a troll tag-team profile name.
The assertion that “the world likes peace and stability” is ludicrous on it’s face. Nothing could be further from the truth. Just look around and look at history.
A certain group of people always have , and still do, want peace and stability, but regrettably none of us are in control of our own country’s governments. Haven’t been for a long time.
A poster above correctly stated that the gold has all been “bought” by rothschild, morganthal, etc. But, as they own and control the press, and the governments in the countries that the controlled press operates in, naturally none of this will ever be front page news.
And sir, should you think any government “audit” is accurate and that the US has any more gold than a virtual thimble full, may I interest you in some prime Florida real estate? Or a really nice bridge?
You deluded goose steppers routinely resort to ridicule, but that’s OK I guess. I’ll just pull my tinfoil hat down and re-read those words “Let him who has eyes to see, and ears to hear, take heed”.
“John” writes:
“And sir, should you think any government “audit” is accurate and that the US has any more gold than a virtual thimble full, may I interest you in some prime Florida real estate? Or a really nice bridge?”
8000 tons is hardly a thimble full although it is only about 5% of the global stock. And statistics about the amount and whereabouts of the world’s gold are at least as accurate as they are for most other commodities.
BTW, blaming the wascally joos for yet another crackpot conspiracy makes you sound like an uneducated moron.
“If you are concerned about a collapse in the currency sink your money into real assets with real utilitarian value. Diesel fuel, lumber, grains, guns, ammo, or anything else might be expected to increase in value in the event of a panic, but gold will be as worthless as paper currency.”
Sadly, I lack storage facilities for diesel fuel, lumber and grains. And I already have as many guns as I can carry at one time. Gold is easy to store and easy to conceal.
“Considering that there isn’t a single central bank that denominates its monetary base in terms of gold, its value should be regarded as completely arbitrary. Gold no longer forms the basis for a medium of exchange and it is unlikely to acquire that role again.”
It is the value of fiat currencies that is completely arbitrary. The dollar has lost 81% of its purchasing power since 1971.
Value is determined by markets which set the price of currencies and gold more or less continuously throughout the day. The market will decide the relative values of fiat currencies versus gold, and it is the markets that determine whether holding gold is a good investment relative to those fiat currencies.
Although no central bank denominates its currency in gold, most nevertheless hold gold in reserves against the threat that some other nation might decide to denominate its currency in gold.
And the IMF recently floated a trial balloon by announcing that gold will be held in addition to currencies as reserves behind its new special drawing rights.
Gold is not dead yet.
In regards to the inflation/deflation debate if as Yggdrasil says The dollar has lost 81% of its purchasing power since 1971. Would not the direction of the dollar not now be up? Would the real owners of the dollar really let it fade away completely?
The “real owners” of dollars are those who hold money market fund balances, bank CDs and savings accounts. They are getting nailed by price increases and stagnant wages, and I see no reason why the money shufflers who benefit from the inflation inherent in the exponential expansion of debt would have any other interest than to keep nailing the “real owners” of dollars as they have done so successfully in the past.
Well technically I would only include those in M1 as actual owners although in a credit collapse demand deposits will be just as hard to access as money market funds when the front door to the bank is locked up tight.
Not to offend the master but would not the real owners be those that own the Federal Reserve? Or would it not be those who own the Bank of England since the Queen knighted Alan Greenspan? Most folks I know have their dollars on loan! In the meantime let us pray that Armstrong is right and that gold goes to $5,000 an oz and I can borrow a few more dollars!!!??
Within the Star Trek universe, the currency of choice for the Ferengi Alliance is gold-pressed latinum. Why? Because it cannot be “replicated” and allows ease of transaction.
QuantAnalyst said:
“If you are concerned about a collapse in the currency sink your money into real assets with real utilitarian value. Diesel fuel, lumber, grains, guns, ammo, or anything else might be expected to increase in value in the event of a panic, but gold will be as worthless as paper currency.”
No thanks, I don’t want to go back to a barter based economy, too complicated. What if I need diesel fuel from Harry but he demands ammo which I don’t have?
I would have to trade my guns with David for grains
then trade my grains for lumber with Larry
then trade my lumber for ammo with Tammy
and finally ammo for diesel duel from Harry.
Woah life sure would be easier if there was a ***medium of exchange*** something that we can all agree upon that has value. Something that allows ease of transaction.
Now what would that be? hmmm?
Ah. The power of gold: Late in the eighth century, there arose a band of non-Muslim slave hunters, the Vikings, in Europe. Vikings were a North European people, originating in Scandinavia (Sweden, Denmark), who turned brutal raiding brigands between the eight and eleventh centuries. Belonging to the so-called barbarian Germanic race, they engaged in raiding and pirate attacks along the coasts of the British Isles and mainland of Europe as far east as the Volga River in Russia.
At the rise of the berserk Viking raiders, the Scandinavian fur traders reached the Europe-Arab trading center of Bulgar Volga (in Russia), where they met traders from the Muslim world, who had huge demands for white women for Islamic harems. The savage Vikings, thereafter, embarked on capturing young white women for selling to traders from the Muslim world. This first opened the Eastern European route of slave trade with the Muslim world. The supply route of white slaves via Spain also soon opened. (Khan, Islamic Jihad, p. 323).
I wish to bring the following animated movie to Yggdrasil’s attention, “The American Dream.” This short movie is extremely well done; if the link below does not work type “The American Dream,” into youtube. Thank You!
http://www.youtube.com/watch?v=ZPWH5TlbloU
This is surely an important question.
I think it makes more sense to see financial elite as a class that shares certain interest, but also engages in conflicts. They are happy with fiat currency but know that the game can’t continue on forever. Currency fluctuations are natural to fiat currency, not necessarily organized. And certainly they are buying gold.
When China, just a few months ago, bought a 40% stake in a Texas oil company we saw the market respond positively. The message was that America will sell off its strategic assets for continued support of our currency, thus Wall Street will continue to receive blood transfusions. Of course this may have been in response to the West’s demand that China’s central bank become privatized, which they had done a few short months earlier. Was this in hope that China will then create financial elite that would become less ethno-centric and thus join the “international community”? This is my thinking, though I don’t believe the futre will play out this way.
Excellent comment!!
There is no doubt that our aliens in the Financial Industry are trying to worm their way into China in any way they can. It won’t work as well with them as it did with us.
If history be our guide, an unusual proportion of the “missing” gold, including what’s (not) in Ft. Knox, and no longer in the BOE, is located in….Israel. It amounts to a financial version of the Sampson Option. All in all, I’d stay away from gold. Too Jewish, too dangerous. Silver will, post PonziCollapse, be safer and more negotiable. But only if you’ve got a 9 mm strapped on plus willingness to use.
quote:
“All in all, I’d stay away from gold…..”
If we look at history we learn that there is always something going up in price whether it’s tulip flowers 1600′s, South Sea bubble 1700′s or railway shares 1800′s. More recently here are some previous spectacular bull markets:
1970′s = commodities
1980′s = Japanese companies, real estate
1990′s = tech stocks
2000′s = housing bubble
2010′s = gold / commodities again???
History also teaches us that all bubbles must eventually pop. So the smart ones ride the bull market while it’s good and jump off before it falls off the cliff. I’ll see you in 2020 and tell you how my gold investments turned out.
Wish me luck okay!
Eumaeus: Fiat currency is a tool of government control. As observed all governments use it. Why would any government give it up. Fiat currency gives them so much power to manipulate the economy– and their subjects– they’d never give it up. Look at how Churchill got spanked after the WW2 over the austerity imposed on England due to the return to gold standard. He lost the election and the next parliamentary cabal pulled the plug on it.
They can keep this game going indefinitely, as observed, because what they need to do in order to push down or dip the price, is dump supply.
how can they keep recycling supply? well they just make up some fiat currency to buy contracts and then they dump it again when they are ready to smack down the price.
with no audit of central banks they can do it as much as they damn well please and nobody will even know outside the walls. as a percentage of the overall amount of fiat they are making up out of thin air I’ll bet its a negligible amount anyways.
after the smackdown they just make up more fiat and begin accumulating again.
they can use and coordinate central bank sales of physical gold reserves to mask and perpetuate the illusion that this is all not just market manipulation.
this is a great video because in part it shows how futile the how GATA business is. GATA is pissing in the wind. No nation is going to give up fiat any more than they would give up nukes. Well the RSA did but they were crazy werent they.
It was auctioned off to the aliens from Nibiru who need the gold to repair the atmosphere of their planet. Ever read the work of Zecharia Sitchin?
“Sitchin goes on to claim that the Earth was visited by aliens as far back as 450,000 years ago. These aliens came from another unknown planet of the solar system that the ancients called called Nibiru. He claims that these aliens were seeking to save their atmosphere from serious degradation and for this they needed extremely finely powdered gold. This gold dust was then pumped into the atmosphere in an effort to resolve the problems associated with heat retention when their planet was in the aphelion region of its long looping orbit around the sun. Gold was, of course, relatively plentiful on Earth and is even used today by NASA because of its unique properties.
Sitchin applied his understanding of ancient Biblical stories to studies of ancient (even older) writing from Sumeria and Mesapotamia, reaching the general conclusion that the Nefilim (Gods and Sons of God) used advanced genetic engineering to create humans from a combination of Nefilim genes and those of a compatible pre-human evolved species. The result was basically us, initially created to mine gold for the Nefilim but later with the capacity to understand commands, speak and procreate!
Author Lloyd Pye confirms and expands on Zecharia Sitchin’s interpretations. A short video clip of Lloyd Pye on the channel 13 news can be viewed here: http://www.planetxvideo.com/lloyd.htm
Zecharia Sitchin studied many ancient civilizations and concluded that the Gods worshipped by all of them were really ancient space travellers with a superb knowledge of advanced technology and a desire for gold! When viewed this way, much of the world’s history, as told in the Bible and other manuscripts, falls into place. Suddenly we can understand why there were gold mines 8-12,000 years old in South and Central America. Sitchin makes the claim that humankind was developed to mine this gold to satisfy their needs.
- http://www.alien-ufos.com/armageddon-end-times/16860-important-datas-about-nibiru-approaching.html
If the world was to move to a gold standard wouldn’t that mean the people controlling the physical gold (not the one that is on a piece paper) would acquire quite a lot of power? I have read some influential people pushing for a gold standard in the last years.
eg. Zoelick:
http://www.ft.com/cms/s/0/eda8f512-eaae-11df-b28d-00144feab49a.html
how much has gold declined in value. iwant clarity acoolhead underpressure and who know when to fight we are great because weve won wars .and great literary accomlishments in all fields and endeavers.
Sorry comrades,
But I’m not rally good at economics, yet I try to study some of it. Right at this point, I cannot quite comprehend what is intended in the video when they talk about gold manipulation… What do they intend with it? They explain the ralations and the mechanisms involved in exchanging fiat money for gold and viceversa and its consequences for the market, but they do not specify what they mean talking about gold manipulation… Can you explain that to me?
Cheers and keep up with the good work!