CHAT Current price of gold...

[Dozdoats]

http://caps.fool.com/Blogs/jp-morgan-quotgold-is/530059

The Motley Fool

J.P. Morgan: "Gold is Money. Everything Else is Credit."
January 26, 2011 – Comments (11) | RELATED TICKERS: CDE , HL , AXU

No, that's not a capitulatory concession by Jamie Dimon, but rather a quote from the company's namesake from the year before the creation of the Federal Reserve. It's as true today as it was then.

With that in mind, I strongly recommend that Fools give John Embry's latest article a careful read. John is chief investment strategist with Sprott Asset Management, the wildly successful hedge fund that has been on the correct side of the gold and silver bull market from the beginning. He states essentially everything I was trying to convey within my recent article "Your Last Chance to Go for the Gold and Silver", only he does so with greater effect.

As Dan Norcini reminds us, these inevitable corrections are essentially an exchange of assets from weak hands to strong. The algorithm-led momentum chasers of the big money world, combined with the least certain and most recently arrived portion of the retail public, has just been washed out of the sector with incredible speed. Enter the stronger hands like you, me, and longer-term oriented big money interests to accept unsavory gift, and we are left with a far stronger base from which to mount the next upward leg.

Again, like Embry, I am less concerned with divining the absolute bottom of this correction than I am with ensuring that I systematically adapt to the condition with continued and accelerating buying activity. If the president's speech about spending freezes has you spooked, then you may not be a strong hand in gold. Projections for this year's deficit alone just ballooned to $1.5 Trillion. The state and municipal debt crisis has yet to explode, and yet its detonation is unfortunately 100% unavoidable. The California pension fund (CALPERS) is being forced to accept 21.4 cents on the dollar for Lehman bonds ... a mere sign of things to come as these funds have yet to absorb their full derivative losses.

We're starting to see a bid come into the pm equities even on weak days for the metals like today. That's a sign of the strong hands coming in. You want to follow the money flows of the strong hands, not the weak ones. Buy into weakness, and raise cash into significant strength. This manufactured sell-off is designed to shake you out of your positions so that wealthy momentum traders can cycle their capital back in for a repeat ride on the end-of-year surge. Invest in gold and silver on your terms, not theirs. Keep some powder dry for $1,280-$1,290 if you consider that a likely critical support, but continue to hunt for anamolous bargains on the way down. The USDX has broken down through 78 yet again, and (absent another acute Euro crisis in the near-term) any disposition to remain below that threshold is likely to signficantly hamper the designs of the gold shorts to extend this correction to $1,280 or deeper.

Long and strong, and getting stronger every day...

Sinch
===================================

US Constitution, Article I Section 10
--------------------------

http://press-pubs.uchicago.edu/founders/tocs/a1_10_1.html

Article 1, Section 10, Clause 1

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

 

[coalcracker]

Absolutely. Gold is a store of wealth.

Your analogies of horse-and-buggy must have come straight from the Fed, the Soros clan, or something of similar ilk....

Go peddle your wares somewhere else. No sale here.

Ouch!
Sage, you got me all wrong here.
I hate the future cashless system. It will be pure evil.
I'm basically saying 2 things. One is theological and one is sociological.


1. Gold has no eternal value.
2. Gold's role as money/wealth has been forever changed by the computer.

Preppers may need to consider their assumptions in light of these facts. My wares are humanitarian. I assure you.

 

[Hfcomms]

If it is true that Russia and China (and maybe others) are buying up gold to greatly increase their supply, then why is the price of gold basically flat for the last few years?
Yes I do realize that it is a proven fact that banks manipulate the price of gold but for how long and to what extent can this be done?

You answered your own question even if it's not obvious to you. Take a look at this chart of the last pricing dump a few days ago;

This is PRE-MARKET and at the thinnest trading time.

That is one of the ways you know this is a manipulated, artificially suppressed, a.k.a. rigged market.

Nobody in their right mind would just all of the sudden have to sell 13,500+ contracts of gold, all at once, in one single minute, one hour before the market officially opens. I mean, when you sell something you want to get the best price for it don't you?

These are blatantly illegal naked shorting of both gold and silver for metal that does not exist. In any other commodity you can think of if you do that you end up in prison. But the banks do it and get away with it. That is why the prices are flat. But the game is ending.

Why?

Because they are running out of gold to fulfill the contracts that are standing for delivery. A contract that can't perform is worthless. Yes, China, Russia and others are in on it. Why not? They get to absorb the available supply at suppressed prices. Who wouldn't do that? So where is all this gold coming from? It's been going from western central bank vaults, being sent overseas and remelted to good delivery bars. And banks such as the NY Fed that hold gold for other nations have leased this gold and re-hypothcated much of it. That is why when Germany wanted to repatriate their gold it took several years and they didn't get back the bars that they deposited. The cupboards are empty and the day is quickly coming where the game won't work anymore.

 

[SageRock]

@Sage

...buying gold in 2018 no longer valid? That is quite a presumptuous statement on your part. Using your analogy (flawed imo) then someone could of made the same statement 120 years ago when industry and transportation moved from steam power to the internal combustion engine. Someone could of said back then that gold no longer held value for this new motor age they were moving into.

Gold has held value for all of recorded human history. Let that sink in a bit. What is 'big money' doing? They are the ones who write the laws and run the banking and financial systems. They all speak as your opinion of gold being a barbarous relic that no longer functions as it used to. That is what they speak but what are they doing?

Take a look at gold holdings for the major eastern central banks and world powers. Power is moving from west to east. Gold is moving from west to east. Gold holdings are increasing drastically in China and Russia. Other nations are repatriating their gold from the U.S. And bringing it back home. Ask yourself the simple question of why?. They know that gold is money and a store of value at the same time they push fait currency and credit to the rest of us. If your premise was correct gold would be playing less of a role and not more. Like all thing we discuss here pay attention to what they are doing and not what they are saying.

Hfcomms, I was responding to Coalcracker -- you apparently misread my post. I agree with you. It was Coalcracker who implied buying gold in 2018 was no longer valid.

 

[Dozdoats]

Markets are a price discovery mechanism - nothing else.

So what are you supposed to think about prices, when markets are a lie?

 

[Hfcomms]

1. Gold has no eternal value.
2. Gold's role as money/wealth has been forever changed by the computer.

Fully agree with your first statement. Gold is temporal and not eternal. But we currently live in the temporal and both gold and silver are honest money...God's money if you will as he set the precedent for it's value early in the scriptures.

Gen 2...can't get much earlier than that.

Gen 2:11-12 The name of the first is Pison: that is it which compasseth the whole land of Havilah, where there is gold; And the gold of that land is good: there is bdellium and the onyx stone.

Your second point is your opinion and you are certainly welcome to that opinion as we all are. I would simply point out again that Sovereign governments and central banks around the world disagree with you as most of them are trying to get and hold on to as much as they can. What do they know and perceive that you or I might not?

 

[Hfcomms]

Hfcomms, I was responding to Coalcracker -- you apparently misread my post. I agree with you. It was Coalcracker who implied buying gold in 2018 was no longer valid.

Yeah...sorry about that. I was on my iPad at the time and I have not figured out how to copy and paste a comment with it's attribution so I did it by finger and got the wrong handle.

 

[Rayku]

Apples, oranges, and peanuts, those are the comparisons being made. There are no incidences I am aware of where gold or other PM's were widely traded in the immediate aftermath of a collapse. Things like food, medicines, and other things required for sustaining life are another story. A starving family will chose a basket of bread over gold 99% of the time.

On the other hand, once the immediate threats to life are assuaged, and life is trying to return to normal, the coin of the moment tends to be in question. Russian rubles, Venezuelan bolivar, Phillipine WW2 Japanese peso, Ecuadorian Sucre, just to name a few, were not trusted after the collapse. The people had no idea what or how it would shake out. At those times, it was tangibles not tied to the coin of the day that were accepted.

In the latter paragraph, is where precious metals come into their own.

For clarity, remember things like stocks, bonds, etc pre-collapse that were valued in the former coin of the day are effectively worthless post-collapse.

I've had a lot of people try to argue that, but despite attempts at revisionist history, the truth of those statements comes through.

Comparing apples, oranges, and peanuts doesn't make them any less true.

 

[Dozdoats]

http://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/42/Gold-in-the-IMF

Gold in the IMF
April 20, 2018

Gold played a central role in the international monetary system until the collapse of the Bretton Woods system of fixed exchange rates in 1973. Since then, its role has diminished. But it remains an important asset in the reserve holdings of several countries, and the IMF is still one of the world’s largest official holders of gold. In line with the new income model for the Fund agreed in April 2008, profits from limited gold sales were used to establish an endowment, and used to boost the IMF’s concessional lending capacity to eligible low-income countries (LICs).

How the IMF acquired its gold holdings
The IMF holds around 90.5 million ounces (2,814.1 metric tons) of gold at designated depositories. Based on historical cost, the IMF’s total gold holdings are valued at SDR3.2 billion (about $4.6 billion), but at current market prices, their value is about SDR82.8 billion (about $120.1 billion).

The IMF acquired its gold holdings through four main channels:
when the IMF was founded in 1944 it was decided that 25 percent of initial quota subscriptions and subsequent quota increases were to be paid in gold. This represents the largest source of the IMF's gold.

all payments of charges (interest on member countries' use of IMF credit) were normally made in gold.

a member wishing to acquire the currency of another member could do so by selling gold to the IMF. The major use of this provision was sales of gold to the IMF by South Africa in 1970–71.

member countries could also use gold to repay the IMF for credit previously extended.
The IMF’s legal framework for gold

Role of gold.
The Second Amendment to the Articles of Agreement passed April 1978 fundamentally changed the role of gold in the international monetary system by eliminating its use as the common denominator of the post-World War II exchange rate system and as the basis of the value of the Special Drawing Right (SDR). It also abolished the official price of gold and ended its obligatory use in transactions between the IMF and its member countries. It also required the IMF, when dealing in gold, to avoid managing or fixing its price.

Transactions.
The Second Amendment to the Articles of Agreement limits the use of gold in the IMF’s operations and transactions. The IMF may sell gold outright according to prevailing market prices. It may accept gold in the discharge of a member country's obligations (loan repayment) at an agreed price, based on market prices at the time of acceptance. Such transactions require Executive Board approval by an 85 percent majority of the total voting power. The IMF does not have the authority to engage in any other gold transactions—such as loans, leases, swaps, or use of gold as collateral—nor does it have the authority to buy gold.

Over the last six decades of the IMF’s existence, there have been several instances when the IMF has decided to return gold to member countries, or to sell some of its holdings. The reasons for this are varied: between 1957–70, the IMF sold gold on several occasions to replenish its holdings of currencies. During roughly the same period, some IMF gold was sold to the United States and invested in US Government securities to offset operational deficits.

In December 1999, the Executive Board authorized off-market transactions in gold of up to 14 million ounces to help finance the IMF’s participation in the Heavily Indebted Poor Countries (HIPC) Initiative. Most of the gold was sold in transactions between the IMF and two members (Brazil and Mexico) that had financial obligations falling due to the IMF.

The IMF’s strictly limited gold sales (2009–10)
On September 18, 2009, the Executive Board approved the sale of 403.3 metric tons of gold (12.97 million ounces)—one-eighth of the Fund’s total holdings of gold at that time. This move was part of a new income model agreed in April 2008 to help put the IMF’s finances on a sound, long-term footing. Key to this new income model was the creation of an endowment funded by the profits from the sale of this gold.

The first phase in the Fund’s gold sales was exclusively off-market transactions to interested central banks and other official holders, at market prices. In October and November 2009, the Fund sold 212 metric tons of gold in separate off-market transactions to three central banks: 200 metric tons were sold to the Reserve Bank of India; 2 metric tons to the Bank of Mauritius, and 10 metric tons to the Central Bank of Sri Lanka.

In February 2010, the IMF announced the beginning of sales of gold on the market. At that time, a total of 191.3 tons of gold remained to be sold. To avoid disrupting the gold market, sales were phased over several months.

In December 2010 the IMF concluded the gold sales program with total sales of 403.3 metric tons of gold (12.97 million ounces). Total proceeds amounted to SDR9.5 billion (about $14.4 billion), of which SDR6.85 billion constituted profits over the book value of the gold and SDR4.4 billion of this was used to establish an endowment as envisaged under the new income model.

In February 2012, the Executive Board approved a first distribution of SDR700 million of reserves from windfall gold sales profits (realized because of a higher gold price than the assumed price when the new income model was endorsed by the Executive Board), subject to assurances that at least 90 percent of the amount would be made available for the Poverty Reduction and Growth Trust (PRGT). This distribution, which became effective in October 2012, was part of a financing package endorsed by the Executive Board to boost the IMF’s lending capacity. To date, members whose shares represent 95 percent of the amount distributed have pledged to transfer these shares to the PRGT (or make an equivalent budgetary contribution) and 89.1 percent of the amounts distributed have been transferred.

In September 2012, the Executive Board approved a second distribution of SDR1,750 million of reserves from windfall gold sales profits, subject to the same assurances as the first one. This distribution became effective in October 2013. To date, members whose shares represent 95 percent of the amount distributed have pledged to transfer these shares to the PRGT (or make an equivalent budgetary contribution) and 89.4 percent of the amounts distributed have been transferred. The successful distributions of gold windfall profits were a key step toward making the PRGT sustainable over the medium and longer term, and assuring an annual lending capacity of about SDR1¼ billion on average on an ongoing basis.

 

[Doc1]

Axe heads

Years ago on this board I posted that a good hedge against collapse and monetary inflation would be a boxcar of axeheads. Why? The generally accepted four required characteristics of money are:
1.) Durability
2.) Divisibility
3.) Transportability
4.) Noncounterfeitability

Axeheads work well in conforming to these requirements. They are very durable in terms of a human life span. They are divisible down to the point of individual axeheads and they are fairly easy to transport. They are not subject to counterfeit status as a steel axehead is, well, a steel axehead. Yes, one could counterfeit a brand name, but not the actual tool.

The problem one would have with axeheads is exactly the same problem one has with gold and silver: Selling (or bartering with) them. As far as actual day-to-day utility goes, axeheads are (generally) far more useful than gold or silver.

The point here is that one should put away stores of value against future need and gold and silver are not the only ways to do this. The closer one is to satisfying the four requirements of money with their store of value, the better it will be.

While I do hold and believe in the value of silver and gold, they are not the only things to hold. Tools, firearms, ammunition, certain storable foods and - of course - cash can all serve these requirements to greater or lesser degree.

Some of you may recall that - as a hobby and sideline - I like to deal with motorcycles and small farm tractors. There is, especially in times of fuel shortages, always a market for motorcycles and the market for homestead-suitable farm tractors is always strong. I have found that by buying these items that require small repairs, I not only have a great store of value, but my repairs essentially result in me producing a value-added-product.

Gold and silver are unquestionably manipulated by the central bankers. Used tractors, motorcycles - and axeheads - not so much so.

Best regards
Doc

 

[hiwall]

There are no incidences I am aware of where gold or other PM's were widely traded in the immediate aftermath of a collapse.

While not exactly what you are referring to, look at Venezuela. That government is living by selling the gold they had on hand. The people can not really do that because they cannot have gold there.

 

[Rayku]

While not exactly what you are referring to, look at Venezuela. That government is living by selling the gold they had on hand. The people can not really do that because they cannot have gold there.

That is taking it completely out of context. Government and individual survival are two distinctly different things. There are multiple examples of governments selling gold to prop up their economies. That does not translate to the individual survival.

In 1995, Venezuela had a semi-collapse. Official history has since been rewritten, but for those of us on the ground when it happened, an exchange rate jump from 50:1 to 175:1 with black market at 300:1 it was to the people, a massive hit. While the government had a fire sale on gold and oil to pull it's arse out of a fire, the people spent a few months on a forced diet minus medications. Anything tangible was like gold at the time. It was a good time to have a box full of the early Leatherman tools I can assure you.

Then there was Ecuador. 98-99 the Sucre bit the bullet. It wasn't just a semi collapse like Venezuela, it was a full crash. At the time, Ecuador had given the finger to opec. OPEC crashed their economy in retribution. That's something you won't find on wiki, and had to be either following it at the time, or in my case, on the ground when it happened. When the black market rate went to 17,000 to 1, the company I worked for pulled up stakes as it prompted a rash of kidnapping of expats. In the end, they were forced to dollarize and back down.

Moral here is, personal and government survival comparison is again, apples, oranges, and peanuts comparisons.

 

[Bubble Head]

I like gold. It feels real and has been used along with silver in exchange for far longer then it is written. I don't get all knotted about the current market. They are trading paper not gold. As an example I have a 20 dollar gold piece. It will still buy me everything it could when it was issued in 1913. Of course some of the stuff would be cheap Chi-Com crap but a milk cow would not. I bet Doc1 and I could get to together on one of his rebuilt tractors and come up with a fair gold exchange. Now you know why bankers and hucksters fear it and will do whatever necessary to remove it from you into their hands. For safe keeping of course.