Monetary Base Rocket
Today we got news that the U.S. monetary base consisting of bank reserves and currency in circulation has skyrocketed to $1.15 trillion from $850 billion a mere 6 weeks ago, which is an increase of 35%, or 300% annualized. Meanwhile, the Adjusted Monetary Base tracked by the St. Louis Fed (which calculates the monetary base using bi-weekly averages) clocked in at $1.19 trillion. Here is how it looks on a chart:
Click Chart to Enlarge
The Fed has added as much to the monetary base in 6 weeks as it has added in any prior 10 year period going back to the early 1980s. Indeed, the rate of increase appears to be about $100 billion every two weeks and yet the logjam in the credit markets still has not been cleared.
So, is this the fabled helicopter drop? Yessirreee! There is, however, a slight matter that deserves some mention. The money dropped from the helicopter has not reached the ground yet. In other words, most of this money is still being held by the banks in the form of Reserve Balances. Put another way, it has not yet started to work its way down through the fractional-reserve lending process to the credit-strapped private sector.
The reason these funds are being held and not loaned out by the banks is simple. The Fed is actually paying banks to hold the funds in reserves. Indeed, the Fed has just today increasing the rate it is paying by 40 basis points. Some of you may know that the Fed was originally going to start paying banks for excess Reserve Balances starting in 2011 but the recent emergency bailout legislation moved that date up so that Reserve Balances would start to earn interest immediately. The Fed’s intent is to try to keep the massive increases in Reserve Balances close to the heart so that these funds serve mainly to shore up the banks’ balance sheets but don’t create a tsunami of “unnecessary liquidity” in the money supply. Remember what I said earlier about jumping out of a burning building. In helicopter lingo, the $300 billion has been dropped but it is fluttering in midair due to an updraft created by the rotor.
I suspect, however, that the Fed will have to dispense with its “gradualism” before too long and fly the helicopter to open airspace in order to avoid a crash. Even if the Fed has no intention of moving clear, the longer the money stays out there fluttering in midair, the more difficult it will be to keep it aloft. Moreover, once the dropped money has cleared the updraft from the helicopter’s rotor, it can no longer be reclaimed by the Fed without consequences, especially while the global economy remains on an unsure footing. Thus I suspect most of the dropped money will eventually flutter to the ground.
What I think we should watch for in particular is an increase in M1, which includes circulating currency (Federal Reserve Notes) and demand deposits. The latest data only goes up to October 13, but that data actually shows weekly average M1 shrinking by as much as $100 billion since the end of September. If and when we see M1 reverse sharply upwards, we could start to suspect that the first batches of the monetary drop are starting to reach the ground and that a “hyperinflationary event” will not be very far behind. How long could this take? I give it 6 to 18 months although others say it could be literally weeks from now. Jim Sinclair claims something big will happen in 13 to 88 days, which is the timeframe between the U.S. elections and the inauguration of the next President.
October 23rd, 2008 at 7:49 pm
i am not exactly clear on the sequence of events or source of funds as described in this article.
1. is us monetary base the same as “total fed credit” and “high powered money”? does it equate to any of m1, m2, or m3?
2. what is the source of the 300 billion usd? is it pure printing press activity? is it secured in any way either by treaury bonds or other collateral?
3. under open market operations, does the treasury sell t-bonds to bond brokers who in turn resell? so then at some point after the bond sales the fed purchases those bonds with fed reserves? are these reserves which the member banks keep on reserve through reserve requirements against outstanding loans? or does the treasury take the proceeds from the bond sales and deposit them in a federal reserve bank which then buys the t-bonds on the open market? or the fed prints money to buy the bonds?
i am just trying to get a clear picture of sequence of events and understand the point of money creation. does the federal reserve print the reserve notes? what does the treasury / mint print if anything? i guess they only design the currency and the federal reserve creates it based upon its own arbitrary determination?
October 23rd, 2008 at 8:01 pm
one last question
Monetary Base = Reserve Balances + m1?
October 23rd, 2008 at 8:08 pm
are there any updates to this table?
Here are the figures for “Reserve balances with Federal Reserve Banks” since the beginning of September:
September 3, 2008: $3.8 billion
September 10, 2008: $25.0 billion
September 17, 2008: $81.7 billion
September 24, 2008: $87.9 billion
October 1, 2008: $171.5 billion
October 23rd, 2008 at 8:32 pm
well i can answer my own question from h41
week ending amount
10/22/2008 301,270
10/15/2008 281,070
10/8/2008 119,749
10/1/2008 166,996
9/24/2008 104,506
9/17/2008 46,996
9/10/2008 7,978
9/3/2008 10,893
8/27/2008 8,720
8/20/2008 10,696
8/13/2008 7,990
8/6/2008 10,290
7/30/2008 14,676
October 23rd, 2008 at 8:42 pm
Silveraxis: I dont know much about all this stuff, but doesnt velocity of money fit into this somewhere? Isn’t it only when we see an increase in the velocity of money that we experience inflation?
October 23rd, 2008 at 9:14 pm
Well, when that much money hits the ground, it will hit the ground running.
October 23rd, 2008 at 9:17 pm
… and don’t forget to multiply it by 10.
October 23rd, 2008 at 9:51 pm
well boys and girls it looks like the treasury has been having some big fun at the fed!
the supplementary finance program has injected massive amounts of money into Deposits with F.R. Banks, other than reserve balances. This treasury money now accounts for 95% of fr deposits….
it is coming from treasury issued “marketable debt” which i assume mostly foreigners are buying which means that we are now more of a chinese owned vassal statethan we already were. we sell more and more of our dowry to our enemies. if americans are buying the debt then it is diverting money away from the producer to the bond vultures….but how does marketable debt differ from treasury bonds?
i do not understand all of this yet but i will soon.
week ending supplementary finance acct
10/22/2008 524,771
10/15/2008 494,853
10/8/2008 405,771
10/1/2008 266,081
9/24/2008 117,046
October 23rd, 2008 at 10:53 pm
looks like the “Reserve balances with Federal Reserve Banks” is actually evidence of the credit lock up rather than inflationary pressure….i guess i need to rethink my federal reserve is bankrupt theory.
October 24th, 2008 at 1:11 am
With the monetary base expanding and DOLLAR/YEN hitting 95.1 -2.9 as i write the Japan’s Ministry of Finance will soon authorize the BOJ to undertake currency intervention by printing the yen bigtime.
October 24th, 2008 at 1:58 am
2 Questions…
A) Is it still inflationary when the Fed is in a way “replacing” money that has essentially evaporated from bad debts, so the net effect on inflation might be very little?
B) How is it possible for ALL currencies to debase simulataneously? Isn’t it always bull market in some currency because of the currencies’ relationship with one another?
Thanks
October 24th, 2008 at 2:01 am
I agree Freddy, there is a big whirring sound coming out of Japan. They could be engaging in Check Kiting. These big holders of US debt do not want to see a dollar collapse, so a controlled decline is what we have. Competitive currency devaluations are the order of the day, however the Aussie dollar has gone a bit to far!
It is interesting to note that the Nikkei is now down over 80% since its peak 18 years ago. It took the DJIA 25 years to surpass its 1928 peak and back then we had “relatively” honest money!
October 24th, 2008 at 2:15 am
I am bullish on the Nikkei, am I stupid?
October 24th, 2008 at 2:15 am
My…my…my……. EUR/YEN….117 -9.91…..DOLLAR/YEN………93.1 - 4.91!!!!!! Huge 5%+moves across the board. A total disaster is unfolding.
Could we see the VIX INDEX spike to 100+ when US trading commences.
October 24th, 2008 at 2:18 am
With gold plummeting below $700, I get this eerie feeling we ARE heading towards a depression. Unemployment at 20+% within months?
I think the only way the FED can restart the credit cycle and economy is by BYPASSING the banking system and LENDING DIRECTLY to businesses and consumers.
It is 30 seconds before 12.00….
October 24th, 2008 at 2:19 am
1929 - 1931 all over
October 24th, 2008 at 2:29 am
The Dollar index seems to have gone parabolic! This is at the expense of nearly all the non-Yen currencies. Emerging markets are being encouraged to buy even more Dollars, so the whole system is feeding on itself. At what level it will stop I do not know - a previous comment featured 95 Yen as a possible limit, and this has already been surpassed. I am just hanging on to my physical silver as insurance.
October 24th, 2008 at 2:36 am
I agree, I am 75% cash and rest is silver and gold. Fortunately sold my stocks a while back.
Dollar index could go to 92-95. That would be a 50% retracement from the high set in 2001.
October 24th, 2008 at 2:43 am
DOLLAR/YEN…….91.08 - 6.85!!!!!!!!!!! SPELLS WORLDWIDE CURRENCY CRISIS….Denmark raised rated to defend the Krona this morning.
Only those who own gold and silver bullion and farmland and firearms are going to survive this FIRESTORM.
They may have to declare a bank holiday’s coming monday.
TOM….where’s that HYPERINFLATIONARY WAVE because it better hit the financial shores soon.
October 24th, 2008 at 3:46 am
While everyone’s worried about deflation and inflation it is worthwhile to remember that today the whole world operates on a credit based monetary system. In the 1930’s money possessed 100% integrity. Today’s money has no integrity what so ever. History says we are in a Kondratieff winter, the effects of which may have been delayed and worsened due to Greenspan’s actions earlier this decade. So while the deleveraging may continue for a while the Kondratieff debt deflation will not end until the irredeemable dollar is wiped out, since it to possesses counterparty risk and is therefore debt.
Tom, I’m ready to jump as the flames are making it hot in here!
October 24th, 2008 at 3:59 am
In case readers missed yesterday’s nwes bulletin.
JP Morgan Chase chief Dimon sent death threats
The US Postal Inspection Service has offered a $100,000 (£62,000) reward for information after Jamie Dimon, the chief executive of JP Morgan Chase bank, was sent death threats.
By Tom Leonard in New York
Last Updated: 10:44PM BST 23 Oct 2008
Jamie Dimon, chief executive of JP Morgan Chase bank, has been sent death threats Photo: Bloomberg News
Jamie Dimon and various outlets of his bank – one of America’s biggest - were targeted in at least 45 anonymous, typewritten letters which all seem to be from the same source.
The sender accused Mr Dimon of stealing Washington Mutual, whose banking operation was bought by JP Morgan Chase last month.
“You need to be pay back. You will be killed in 10 days,” one of the typewritten letters read, investigators told ABC News.
Another letter sent to Mr Dimon in New York threatened a series of attacks culminating in a bombing similar to that in Oklahoma City, in which 168 people died in 1995.
At least 45 letters, all postmarked in Amarillo, Texas on October 17 and 18, were sent to Chase bank offices in nine US cities as well as the Federal Deposit Insurance Corporation, the Office of Thrift Supervision in Dallas and the Federal Home Loan Bank in Atlanta.
The letters contained a powdery substance which tests have shown to be harmless but Chase branches across the US were said to be “on alert”.
Federal investigators believe the letters could have been sent in anger about the downward spiral of the US economy.
Authorities say the letters “articulated threat of bodily harm” and appeared to be connected to the bank’s lending practices.
Postal inspectors said the public should “take no action to apprehend this person” by themselves.
Mr Dimon has been seen as a potential US Treasury Secretary if Barack Obama wins the presidential election.
Last week, just hours after his bank was forced to sell a stake in itself to the US government, he accused Washington politicians of worsening the banking crisis through dithering.
In a separate case, the FBI is investigating a series of letters sent to the Los Angeles Times and the campaign offices of Senator Barack Obama in New York, Philadelphia and Los Angeles.
Those letters also contained substances, including sand and food seasoning.
Officials said one letter claimed “the world will end” if Obama is elected.
A letter containing similarly harmless white powder was also received by the New York Times on Wednesday.
October 24th, 2008 at 4:15 am
RGE Economics update
Bloomberg (October 23, 2008): Roubini Says `Panic’ May Force Market Shutdown. Friday Morning Update: Markets are becoming dysfunctional and S&P and DJIA futures trading already suspended today by Nouriel Roubini
2008-10-23 09:49:21
October 24th, 2008 at 4:32 am
Look at the Kitco currency exchange table….what a mess!
October 24th, 2008 at 6:00 am
Freddy Krug….oh what would we do without your wonderful blow by blow commentary. I have to say….I agree with you totally. This will NOT be a RECESSION….or DEPRESSION….but rather what I term, THE GREAT DISINTEGRATION.
And yes, Krug….you are right again…if you own FARMLAND, BULLION and BULK FOOD this will not be a big problem. I also believe my timeline for the MASS EXODUS out of the SUBURBS will begin 2010….but it might start in 2009.
When we lose the US DOLLAR as a world currency….the USA will be in IMMEDIATE SHORTAGES….as time goes by and REAL ESTATE PRICES continue to fall, the MAD EXODUS out of SUBURBIA will pick up speed.
Lastly….ART CASHIN…head of floor trading this morning on CNBC said this:
THE GLADIATOR SALUTE:
We who are about to DIE….SALUTE YOU.
October 24th, 2008 at 8:49 am
There can be NO “hyper-inflation” when the capital losses/wealth destruction/deflation far outnumber the Gov’s attempts to reflate the collapsing Bubble economy.
Whatever they have pumped in, and will pump, it will not match the amounts lost during this deflationary episode. Maybe once the deflationary period is over, but by then, the Gov will be very constrained in spending by falling tax revenues and rising liabilities.
So far, deflation is winning by several miles. Down the road, that may change, but this unwind will have to finish first, and that is not close yet.
Read the ‘Hayman Advisors’ letter to clients posted on FT (Financial Times) this week, they total up the losses from the present great unwinding, and the amounts are so large they will be beyond the ability of Central Banks and Governments to inflate away, no matter how much they try. I am sure they will try, but I predict they will fail in spectacular fashion.
The $ price of precious metals may rise during this period, but there will be no explosion in price until the US $ starts falling hard, and that is not yet in the cards. Just the opposite so far, to the consternation of most goldbugs.
Yes, America is in sad shape, but most other countries are in worse. Which is one of Denninger’s points, btw, and I must say I doubted him when he made that call way back, but so far he has been very accurate. Right now we are looking at many “emerging” nations collapsing, which will only drive the US $ higher near term.
Looking back to the last GD is wrong, IMHO, this one will play out a bit differently, like a reflection in a cracked mirror.
October 24th, 2008 at 9:23 am
CanadaMetal….you bring up some good points….but whats the big deal if we have to WAIT until the DOLLAR FINISHES its RISE….just as the CANCER COUNT of a DYING PATIENT increases right before DEATH.
This is much more SERIOUS than PRECIOUS METAL PRICES…..this will be the LEAST of peoples worries. According to ORLANDI’s most recent article:
“I’ve been on the road almost all day and have one hour before the next leg of my trip so this will be short. Yesterday I learned that sixty-four countries cannot issue letters of credit necessary for international trade and likewise cannot insure import/export shipments since no one knows if the insurance companies are good for it. It is an understatement to say this makes international trade almost impossible. The reason is the credit crisis and the fact that banks don’t trust each other, or anyone else for that matter. This demonstrates that the US credit crisis has now become a global issue and there are no easy solutions. President Bush has called for a global conference on November 15th but for the life of me I don’t understand why he would want to wait so long. What could be more important than the economy of the United States?”
http://www.gold-eagle.com/editorials_08/orlandini102408.html
Folks this is the DISINTEGRATION of the world markets. Yes, the ASIAN and BRIC countries are falling as well…but they have the RESOURCES to support their country as well as EXPORT….the UNITED STATES is a LARGE LEECH….sucking life from the rest of the world. This will not continue.
The CREDIT MARKETS are SEIZING because they realize the IOUS we have been giving them might only be worth 10 cents on the DOLLAR. No one trusts anyone anymore. This will not change anytime soon.
But what will take place when this REALLY UNRAVELS in the UNITED STATES is IMMEDIATE SHORTAGES of ENERGY and FOOD…..because we can no longer send IOUS for REAL GOODS….and our SUBURBAN ECONOMY is actually DEFICIT LIVING.
Who gives a RATS AZZ about HYPERINFLATION or DELFATION at that point….but I would ARGUE….we will have the WORST of BOTH WORLDS….DEFLATION of ASSETS and HYPERINFLATION of GOODS.
I am still PUZZLED why ANALYSTS and the PUBLIC are looking at this as a RECESSION or DEPRESSION. These ANAL-LISTS are using OLD TECHNCALS such as COMPASS, OLD GAUGES, and SLIDE RULES to figure out the future from the past. This can not be done.
This is what I term…the GREAT DISINTEGRATION….which will spread to SHORTAGES in the USA…..and further collapse of REAL ESTATE VALUES….then in 2010 and onwards….the MASS EXODUS out of SUBURBIA….and into the LARGER CITIES or SMALL FARM TOWNS….if one was SMART….they would head to the SMALL FARM TOWNS.
REPEAT….being OVERLY FOCUSED on PRECIOUS METALS prices…..is FOLLY…especially when things really UNRAVEL. The GOOD NOTE….is precious metals will be great INVESTMENTS…..as will BULK FOOD, FARM LAND, GUNS….and POPCORN.
October 24th, 2008 at 9:41 am
Uncle FEKETE tell’s it how it should below…..here’s a snapshot:
UNCLE SAM CRYING “UNCLE”
by Antal E. Fekete,
Gold Standard University Live
February 11, 2008
Tertium datur
People tend to think in terms of black-and-white. Many of my correspondents think that either hyperinflation or deflation is in store for the dollar; tertium non datur (no third possibility given). I would say tertium datur. The third possibility is a hybrid of hyperinflation and deflation. I described this scenario in my previous article “Opening the Mint to Gold and Silver”. It is possible, even probable, that we shall witness collapsing world trade and collapsing world employment together with competitive currency devaluations, as the three superpowers compete in trying to corner gold. The lure of gold is very strong. “There is no fever like gold fever” and, contrary to conventional wisdom, governments are especially susceptible.
A large part of the problem is that the Central Bank is helpless in the face of bond speculation. The Fed is no Sorcerer. It is the Sorcerer’s Apprentice. It can pump unlimited amounts of “liquidity” into the system, but cannot make it flow uphill. As we shall see, new dollars flow to the bond market causing a lot of mischief there, instead of flowing to the commodity market as hoped by the Fed.
Up to now leading commodities have outperformed gold. That could change. A select few commodities might continue in the bull-mode for a time, although gold could easily beat them. Most other commodities might go into a bear-mode similar to that of the commodity markets of the 1930’s. If that’s what was in store, then most investors would be totally lost. They would be navigating without a compass. There would be endless debates whether the country is experiencing deflation of hyperinflation. Your motto in this hybrid scenario should be: “expect the unexpected”.
Of course, the Fed will keep printing dollars like crazy. Few of them, if any, will go into commodities. Indeed, most of the newly created dollars will go into bond speculation. Why? Because commodity bulls are running into headwind and face grave risks. By contrast, bond bulls enjoy a pleasant tailwind. Bond speculation is virtually risk-free. Under our irredeemable dollar bond bulls have a built-in advantage. The Fed has to make periodic trips to the bond market in order to make its regular open-market purchases of bonds to augment the money supply. In order to win, all the bond speculator has to do is to stalk the Fed and forestall its bond purchases. This is the Achillean heel of Keynesianism: it makes bond speculation inherently asymmetric favoring the bulls, and that will ultimately derail the economy on the deflation-side of the track.
October 24th, 2008 at 9:44 am
Remember that defaulting on debt does NOT wipe out any money–in fact it means that the money issued under that debt is now PERMANENTLY in the system and cannot be withdrawn by bank lending activity or lack thereof. Only the Fed can withdraw it by selling Treasuries (which is pretty hard at the moment considering it doesn’t really have much in Treasuries left to sell). If and when we see inflationary expectations perk up while Treasury Bills are still yielding under 1%, I expect there will be a mass exodus out of Treasuries. As far as how the $300 billion of Reserve Balances were built up, there is no way to tell for sure but undoubtedly it was a combination of offshore borrowing by the Treasury and direct liquidity injections by the Fed (I see this happening primarily in the commercial paper and money market mutual fund facilities because they are purchased at or near par so bank capital ratios are not impacted).
October 24th, 2008 at 2:52 pm
So the M1 dollar death watch begins.
Should we start a pool?
I feel like the kid in The Sixth Sense. I walk around town, and all I see are dead people, who have nary a clue that they are dead.
All they care about is tomorrow’s football game.
October 24th, 2008 at 4:43 pm
(8?….now that’s FUNNY….that is mine line tho. But you got it….people are walking around like everythings fine. And if you did say something….the reply you might get is….”WHAT UP DOG”
October 24th, 2008 at 6:01 pm
SRSrocco - if what you say comes to pass, I believe it is highly likely the government would just confiscate your precious metals, like the did last time. Then where would you be?
Farmland in a far rural area is way better choice. Grow food and barter it for what else you need.
I wouldn’t want to be known as the guy holding precious metals on hand if that happens. Think being in the ghetto in LA with a bunch of gold, how long would you last - until you have to reload? Every time you pull some out to barter it, people will look at you as the next target.
So far, deflation is winning, in a big way. Maybe that will change. I remain flexible, and call it as I see it. If that makes goldbugs angry, so be it, that’s their problem, not mine.
October 24th, 2008 at 7:00 pm
For all you survivalist, anyone care to comment on this:
http://tinyurl.com/6s2nfw
October 24th, 2008 at 7:13 pm
Just how is M1 (FRNs in circulation) measured? Do they
take the number printed and issued, subtract the notes withdrawn
from circulation, and come up with the figure? Or is there some
esoteric mathematical model which supposedly gives an accurate
figure?
There seem to be many variables which are by their nature
unknowable when it comes to figuring what should be a fairly
easy calculation. How much is “stuffed in the matress” or
otherwise squirelled away? How much is overseas, circulating
as defacto local currency in foreign countries? How much, what
is the velocity of FRN’s used to fund the drug and other illicit
trade?
I wonder how valid the reported shrinkage of M1 by $100 Billion
since Sept is. If credit indeed is “drying up”…if credit cards
shut down, if people no longer want to deal with banks…there
will be an ever increasing need for FRNs to conduct normal
commerce. For sure the massive injections of credit by
the government has the potential to eventually flow down
through the system and create lots of new FRN’s.
I think it unlikely though that any hyperinflationary scenario
would follow the silly model of Weimar…people loading up
wheelbarrows full of currency to go to the bakery and buy
a loaf of bread. Americans may be too lazy and overweight to tote
all that weight in cellulose around to do their daily business!
Weimar inflation played out over a 2 year period…but the 20′S
was barely out of the horse and buggy days. The modern
hyper scenario…speeded by modern electronics and communications,
may play out in a relatively short period of time…maybe a few
weeks, perhaps in a few days.
October 24th, 2008 at 7:30 pm
after studying the h.4.1 data more it is clear to me that inflation is not really our problem. i see no evidence of it in the reserve balances figure. quite the contrary, we are suffering a serious business contraction and deflation as witnessed by the drop in gold, oil, and stock prices. the fed has succeeded in redirecting investment into bonds as they are at all time highs…
inflation was a problem from 2005-8. now that we are in severe contraction - the true meaning of the 300 billion usd pile up of reserves - then what is its cause? i suspect that it is capital destruction as professor fekete states but it would be nice to see evidence of it in the fed numbers….
the best clues which we have of the contraction are derrivatives problems, and bad real estate loans. fractional reserve banking is very sensitive to marginal problems. the sub-prime loans truly were a small number over all but fractional reserves don’t care. the buyouts and mergers of banks will not help the banking problems any more than packaging bad loans with good loans helps debt securities.
a columnist at forbes ripped greenspan a gigantic new hole today which is telling given his mea culpa on derrivatives.
i think there is more truth to be discovered in the fed h41 numbers but it will take some more work and thought.
October 24th, 2008 at 10:22 pm
Okay Gentleman……I am out…..here is why…..
Silver is depressed, and probably manipulated…..but this is the way I see it. We all know that “Physical Silver” is impossible to get at these prices. I have been reading Tom’s site for years…..and I see it all.
Here is what I am doing…….and the way I understand it….
On Ebay, Eagles, and Maples are selling for $19 to $23 per ounce……cash me in. I sold $60,000 last week and will do the same next week.
Here is why…..you need to follow me on this with these premiums…
Current Spot Buy (on Net) Sell Ebay Price
$9.50………………..$16.70……….$19 to $23
Okay as the price increases…this is the way it works…..
Spot……….Buy on Net………….Sell Ebay…
$12.00………$16.70………………$19 to $23
$15.00………$16.70………………$19 to $23
$19.00………$21.00……………….$21 to $23
$25.00………$25.99………………..$25.99
Do you see the trend….
Why would I not cash out now at an average of $21 an ounce on Ebay……and then Re-Buy if needed.
Better yet…..why not sell all of my silver at $21 an ounce (NOW) and re-buy gold at $690 an ounce with a 10% premium when I can grab a 110% premium now on my silver?
Explain this to me as I liquidate my silver position at $21 an ounce…..
I can re-position myself in silver at anytime……..
Do you understand what I am saying??
October 25th, 2008 at 8:14 am
Comex deliveries are slowly declining because people and dealers are taking delivery of physical bullion, because of the shortage.
http://www.resourceinvestor.com/pebble.asp?relid=47347
October 25th, 2008 at 8:16 am
Johnny,
I would do the same and go buy 1000 oz bars on the Apmex site or take delivery of Comex 1000 oz bars directly. Then if silver moves up to say $14-$16 in the nexted 6-12 months. You could make a good deal of money.http://www.resourceinvestor.com/pebble.asp?relid=47347
October 25th, 2008 at 11:13 am
Antifiat, dieuwer : Yes the dollar has gone parabolic on the monthly charts - just like Oil in its run-up to $147. Yes, this is unsustainable. Tom’s fundamental helicopter commentary & the technical parabolic nature of the dollar rise are necessary pre-conditions for FANTASTIC & SUPER BULLISH RISE FOR THE GOLD PRICE. [Sorry, for the capitals - couldn't
resist the temptation].
Meanwhile in the intergnum period gold will shed some more blood - yes I would love $300 Gold, please. Let us all bless the dollar to go to 120. Yeah, the higher they go the mightier they fall. But the damn gold price does not fall that much. over & above there is a line for retail coins & damn premiums.
Adam Hamilton has written that large pools of money had to quickly move large sums of money from harm’s way since July when Fannie & Freddie fell. there is no quick way for them to move into gold. whereas they could do so in a matter of a few mouse clicks into T-bills. This was the reason for USDX to rally & consequently for gold to fall. Brilliant.
Hamilton believes that the markets would inevitably return to V-shaped recovery once the fear abates. Hopefully, he is correct.
October 25th, 2008 at 12:09 pm
Since SilverX is a hugh fan of Ted butler, I believe he will appreciate this inview and totally disagree with his analysis. Listen to Eric King 3 hour interview part 1&2. http://www.financialsense.com/fsn/main.html
October 25th, 2008 at 6:09 pm
“As long as my health care premium rises by double digits each year, there cannot be deflation.” LOL
October 25th, 2008 at 6:40 pm
I just got off the plane from MUC to BOS. Guess how many money magazines on board the plane had a picture of a gold bar on their cover?
ALL OF THEM!
Oh NO!!!
October 26th, 2008 at 12:54 am
John #1 - Not concerned about perhaps being defaulted on when you try and get your hands on more silver? I am happy to have the silver I have in-hand. One in the hand is better than two in the bush….just sayin’…
October 26th, 2008 at 4:04 am
Comex has 130 million ounces of silver.
This means 130,000 bars of 1000 oz (assuming all bars are 1000 oz).
Any middle class “saver” can afford a 1000oz bar worth say $10,000. So, the problem is to find a 130,000 such savers. The end result would be to make Comex default.
This would set the silver market free for ever. thereby making the dream come true - A FREE GOLD MARKET.
Can you imagine how much good that would flow through A FREE GOLD MARKET ? We would literally jump into the honest world, honest money scenario. Never in the history of mankind there was a moment when so much really depended on doing so little. I guess fiat money has really destroyed our spirits to this extent.
October 26th, 2008 at 4:48 am
Remember with the comex inventories numbers, not all the silver is available for delivery. A large portion of silver is already accounted for and the comex is storing it. Simply put they may only have half the 130 million ounces available for investment deliveries.
October 26th, 2008 at 8:28 am
dieuwer, After reading your post I wanted to see for my self so I went to the news stand today. None of the ten plus magazine covers had a picture of gold or references to metals. May be the airlines are cutting costs by providing old magazines on the flights.
October 26th, 2008 at 10:23 am
trevor-es, those magazines were german. Dated November 2008.
October 26th, 2008 at 10:39 am
Bush is planning for a World Central bank. A Super Fed. How close are they towards a world govt? Capitalism is dead. Long live capitalism.
October 26th, 2008 at 10:47 am
I finally found the cover of the magazine I was refering to:
http://p3.focus.de/img/gen/K/0/HBK0oopE_Pxgen_r_Ax480.jpg?http://p3.focus.de/img/gen/K/0/HBK0oopE_Pxgen_r_Ax700.jpg?http://p3.focus.de/img/gen/K/0/HBK0oopE_Pxgen_r_Ax900.jpg
Dated 22. Oktober 2008
October 26th, 2008 at 11:06 am
kersei…..I have to say….I agree with Jim Willie and his understanding that other countries already have a new plan for a world currency….and that is the Gulf Dinar backed by Gold, Japnese Yen, Nordic Euro and the Chinese Yuan amongst some. Looks as if the AMERICANS and BRITISH will be the last to know when these foriegn countries PULL THE PLUG at the right time.
U.S. has plundered world wealth with dollar: China paper:
BEIJING (Reuters) - The United States has plundered global wealth by exploiting the dollar’s dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.
The front-page commentary in the overseas edition of the People’s Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.
A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order, the newspaper said.
http://www.reuters.com/article/email/idUSTRE49N1XX20081024
Looks like some sort of US TREASURY BOND DEFAULT, US DOLLAR DEFAULT or DEVALUATION are in the cards soon. I have to agree also with ANTAL FEKETE….we will have the worst of BOTH WORLDS…..DELFATION of certain assets and HYPERINFLATION of others.
October 26th, 2008 at 11:43 am
SRS : I don’t trust the Chinese. they normally don’t announce their intentions unlike the Americans or Europeans. Unless it is a diversionary tactics.
In the past they were consistent chatterboxes saying pretty much similar things. In actual practise they were excellent bed-fellows consistently increasing their stakes in the US treasury market. They are the biggest beneficiaries of the current deflation - their treasury investments secure them all their Oil needs.
Meanwhile they can swiftly increase their wages & stimulate internal demand. The other scenario of a failed Bretton Woods is of no use for them. India is also a beneficiary similarly. Already the wages of the massive govt. sector in India has been hiked by 30-40%. How convenient.
October 26th, 2008 at 12:09 pm
Keseri….who can we trust…..do you think we can TRUST our US GOVT more than the CHINESE??? The REAL DEAL is…..when the DEBTOR nations get together and Plan for a new Bretton Woods without the CREDITOR NATIONS….this is like a bunch of homeowners in a suburb in DEBT up to their EYEBALLS telling the banks that hold their mortgages what new type of currency and what terms they are going to pay back the LOANS…..arrogant is it not? Of course….the ARROGANCE of the ANGLO-SAXON world never ceases to amaze me.
I live in AMERICA….but I will tell you this…..If I was the CHINESE, RUSSIAN, ARABIC or etc, I would PULL that FRICKEN DOLLAR right from underneath the WESTERN WORLD. Our country has acted like a PIECE of SHEET for the past several DECADES…..I see no reason why these foreign countries should do us any FAVORS.
You REAP what you SOW.
October 26th, 2008 at 12:48 pm
Here is the cover: http://p3.focus.de/img/gen/K/0/HBK0oopE_Pxgen_r_Ax480.jpg
October 26th, 2008 at 1:56 pm
Guys just a question. At the end of the day when the dollar falls, what happens to the 8,700 tons of gold that ‘We’ own? Do you see a foreign country coming to collect this stuff out of deep storage? Is there any any nation with as much physical gold in their hands? Thoughts?
October 26th, 2008 at 4:11 pm
If anyone tries to move gold out of fort knox the Army will not allow it. They’ve as much as said so as gold is needed to fight a war. Even Hitler was able to buy oil with gold during ww2.
October 27th, 2008 at 9:48 am
Ft. Knox has not been audited since WWII. The USG says the Gold is there but will not verify it. If there is a new world currency and I believe it will happen, the US will be forced to audit Fort Knox or be cut off and not be a part of the new world currency.
Either way, the USD as world reserve currency is over. This alone will kill US Empire. It could become very obvious we are into 3rd world status before the end of this year.
October 27th, 2008 at 10:01 am
Gold is in strong bull markets in all currencies except USA & Japan. The gold bull is still alive & kicking.
October 28th, 2008 at 2:57 am
dieuwer: Germans are gold centric naturally because they naturally believe that the end-game is hyper-inflation. That is what they saw during their last financial crisis (Weimer era).
The Americans & Japs believe the opposite (deflation) & are therefore holding their currencies to their chest. Cash is king for them.
I guess we all are guided by herd instincts.
Guys, assume this deflation continues unabated while the USD keeps on strengthening ad infinitum. Which means a currency collapse for all the rest of them. Remember Iceland & Pakistan. How many countries can the IMF bail out - ten,twenty….hundred? Then what happens? US is not in a position to loan trillions of dollars to IMF since all the freshly printed dollars are being used to fight deflation. This means the gold will skyrocket in all currencies except the USD & probably the yen. Uncle Fekete is right - Gold has an important function in all portfolios. Except for the Americans & Japs.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3260052/Europe-on-the-brink-of-currency-crisis-meltdown.html#comments
October 28th, 2008 at 3:43 am
Today, 28 Oct is Diwali in India. Would be interesting to watch the gold price in Indian rupees tommorow.
October 28th, 2008 at 5:25 am
At the moment people are hoarding FRNs, even with the printing presses at full steam. Therefore we have temporarily deflation.
However, FRNs are not stuck in the matrasses forever. When they come out, we will have hyperinflation.
And don’t give me the bullshit about credit destruction. If I pay back my loan to the bank, it constitues a transfer of FRNs. Money is NOT destroyed. The FRNs are still there. Only when the FED calls in the FRNs and burns them, that is REAL deflation.
October 28th, 2008 at 5:34 am
Just opened a small short position in the 10-Y treasury.
October 28th, 2008 at 5:55 am
I’ve been long RRPIX which is inverse of the 30yr. Seems to me we have 3 peaks on the charts of the 30yr. All we need is a breakdown now.
October 28th, 2008 at 6:13 am
Some weeks ago I took the devils advocate position on fiat money deflation since at the time most people here were convinced that it was hyperinflation “all the way without question”. The Professor has outlined “The black hole of zero interest” where a deflationary scenario in fiat money terms could unfold as long as the bond market remained intact. This appears to be the case for now, however the fiat monetary system could collapse into hyperinflation if the bond market breaks.
The fundamental difference between the Kondratieff deflation of today and the 1930’s is that today we are on a credit based monetary system. In a Kondratieff winter debt is deflated. Since today’s money is credit based, it will not be spared in the end, meaning eventual hyperinflation in fiat money terms. It is also worth noting that hyperinflation does not solely depend on the Quantity of money printed as many believe. Just as important is the Quality of money as outlined by the Professors extensive writings. This aint our Grand daddies bond market, as it does not have the integrity of bond markets of yesteryear.
From the Professors latest piece,
“The global banking system is disintegrating in hyper-deflation; the irredeemable dollar will survive only to succumb to hyperinflation later”
October 28th, 2008 at 6:47 am
dieuwer,
Burning FRN would be deflationary. However, an economy built on layer and layers of credit will also deflate if credit defaults.
You paying back you loan is not deflationary because the bank has recovered the money and can relend. However, if you default - you clearly have no asset and the bank no longer has an asset either. Eventually, it’s balance sheet must reflect a lower level of assets and a diminished ability to write further loans.
As these default spread through the system, fewer and fewer loans can be written and the economy collapses. In the ridiculous end, the economy would only have FRNs circulating. Most people would not have many and prices for the goods and services available would have to be low.
At that point, enter the government with its printing presses.
October 28th, 2008 at 8:30 am
I am not sure that an economy should deflate if credit defaults.
Most goods are bought with “cash” and not on credit. You do not seriously expect people to get a loan and buy e.g. bread at the supermarket, do you?
Taking myself as an example, the only instance I used credit was to pay for education. But my car, furniture, and food was all paid for with cash.
October 28th, 2008 at 10:50 am
dieuwer : Why is the 10 year behaving funnily compared to all her sisters. Somebody should throw some light. Is it because it is the most important?
October 28th, 2008 at 12:51 pm
keseri, I’m not sure what you mean by “the 10 year behaving funnily”.
I think that the t-bills have surged in price because they have acted as short term havens. To park cash so to say.
That does not mean that the commercial participants are willing to bet that in 10 years from now the inflation is still below 4%. I suspect that that is the reason the 10 year has actually dropped in price (yield up).
October 28th, 2008 at 7:18 pm
It is very difficult to make money right now even for the professional trader. You might want to look at SRS on the long side. It sold off thirty plus percent today and should give a decent entry point. Disclosure. I am long at todays close. The commercial real estate sector is very vulnerable here. It is sort of pitiful when I have to support my bullion habit with other trades.
October 29th, 2008 at 4:14 am
dieuwer: I meant exactly what you have understood. The yields for the 10 year treasury, if you like it this way, are not following a similar pattern like the short term treasuries. The yields are up. While the yields of all the other treasuries including the 30 year treasury were down.
October 29th, 2008 at 4:37 pm
Kudlow was just on CNBC discussing how the Fed/Treasury are now monetizing our debt. They even showed a graph of the yoy % change in the monetary base. Kudlow seemed pretty upset about the fact that we are acting like a Latin American country in the 1980s. Frankly I am surprised that he couldn’t see this coming. He was a strong supporter of the bailout, so I’m curious as to exactly where he thought the money was going to come from. The country has no net savings and is already deep in debt. We have no cushion to fall back on and our creditors are catching on to the fact that we never intend to pay our outstadning debts with anything of real value. The only option going forward is going to be printing money.
October 29th, 2008 at 5:32 pm
No more new articles on this website?
October 29th, 2008 at 5:41 pm
Jeff…..Larry Kudlow is a CLASS “A” PUTZ. Anytime you watch his show…he always STACKS it with BULLISH MORONS and STRONG DOLLAR ADVOCATES. I agree with you….he’s been WRONG FOREVER.
dieuwer…I agree where is the ‘Ol WISE ONE…TOM?? I gather he must be working to get the AugMentor website up and runnng…now that the stocks they are listing may double and triple shortly when the US DOLLAR and TREASURIES tank.
Taiwan was the FIRST to leave the SHIP this past friday…..Taiwan is SELLING US TREASURIES and FANNIE MAE DEBT. The smart one is the first one to leave…..soon it might be an AVALANCHE….last one holding dollars and TREASURIES will get the GRAND PUTZ AWARD.
October 29th, 2008 at 6:02 pm
SRSrocco: I agree that Kudlow is a moron. After pointing out that we are now using the printing press to pay our bills, he stated that the dollar is a strong currency.
Regarding treasuries, I also think they are destined to crash soon. Do you have a link for the Taiwanese selling US debt?
I tried to short the TLT today but Ameritrade said the security was not available to borrow.
October 29th, 2008 at 7:13 pm
Jeff…here ya go;
Taiwan Dumps Fannie, Freddie.
And Uncle Sam?
http://online.barrons.com/article_email/SB122482470725666021-lMyQjAxMDI4MjI0NDgyMjQ0Wj.html
October 29th, 2008 at 9:32 pm
larry kudlow has a bright neon dunce cap on his head which he lacks the ability to see. i wrote some rather stern responses to his nro imbecilities when he was playing cheer leader for the 850b usd swindle….i believe that one of those broad sides got me banned there but truth is not welcome in politics.
steve forbes turned complete moron and idiot jumping up and down with kudlow that this bailout had to happen. they are both shameless enablers of the marxist bush that i have lost all respect for them.
so watching mccain triy to paint obama a marxist is like watching a looney tune road runner episode. otherwise it’s the pot calling the kettle black.
October 29th, 2008 at 10:58 pm
Ambry suggests that Comex gold is going to default by December. Any comments guys?
October 29th, 2008 at 11:04 pm
Sorry for the typo - it is Embry. Here is the article -
http://envast.blogspot.com/
October 30th, 2008 at 12:59 am
Let’s look at what Embry says…to be fair…
“What will have to happen is the people that are on the long side of the paper market in, say, on Comex, are going to have to call for delivery. When they call for delivery and there isn’t enough gold available to meet that call, the game changes. That is probably going to be the event that changes the perception. There’s a suggestion that something may happen around the time of the maturity of the December contract”.
There is a big difference between GOING to default by December and there’s a SUGGESTION that something MAY happen…let’s not get carried away here…people are running with this a bit too far. Not saying it may not happen, I just don’t think this was necessarily his opinion, just what he has heard suggested could happen if shortages still exist.
October 30th, 2008 at 3:26 am
Today Eisuke Sakikibara ex Finance Minister of Japan spoke on CNBC Europe stated we will not allow DOLLAR/YEN below 90….. the line in
the sand has been drawn.
Where’s TOM ?
October 30th, 2008 at 3:43 am
Sideshow : Suggestions are very important when things are over-extended like one of these days. You got to consider what happened when somebody “suggested” that Bear Stearns or Lehman Bros were broke at that time. These are not definetely your everyday soup & parlour days of yore. And commentators like Embry “suggesting” that he has heard somebody “suggesting” have meaning. Otherwise why would he bother to make such a suggestion in the first place. It is a matter of separating signal from noise.
Maybe I am jumping the gun too early - if it pleases you. But then we have to wait for the truth to surface. Utill then all of us are struggling to complete the big picture.
October 30th, 2008 at 5:34 am
INFLATION ….DEFLATION ….DEPRESSION….. HYPERINFLATION…..WHO GIVES A S*** … ITS TIME TO COMPLETELY STOP USING DOLLARS FOR INTERNATIONAL TRADE !!!
PM Putin suggests Russia, China ditch dollar in trade deals
15:23 | 28/ 10/ 2008
MOSCOW, October 28 (RIA Novosti) - Russian Prime Minister Vladimir Putin proposed on Tuesday that Russia and China gradually switch over to national currency payments in bilateral trade, expected to total $50 billion in 2008.
“We should consider improving the payment system for bilateral trade, including by gradually adopting a broader use of national currencies,” Putin told a bilateral economic forum.
He admitted the task would be tough, but said it was necessary amid the current problems with the dollar-based global economy.
Chinese Prime Minister Wen Jiabao described strengthening bilateral relations as “strategic.”
“Mutual investment by Russia and China has already exceeded $2 billion, this is a very good index,” Jiabao said.
He praised the success of numerous projects, including additional construction of China’s Tianwan nuclear power plant and the opening of a joint pharmaceuticals center in Moscow.
A number of large Russian companies, including state-run oil producer Rosneft and aluminum champion RusAl, are seeking to develop investment projects in China, Jiabao said.
The Chinese premier said bilateral cooperation in the helicopter industry, mechanical engineering, the energy sector, timber production and innovation sector was also showing signs of progress.
“China is a staunch supporter of Russia’s accession to the WTO, but is categorically against politicizing the issue,” Jiabao said.
The Russian premier invited Chinese investors to join Russian timber projects.
“We welcome both domestic and foreign investment in Russia’s timber sector,” Putin said. “As one of the largest consumers of our products, China could be a source of such investment.”
He also offered Beijing Russia’s assistance in developing a large passenger plane on the basis of Russia’s experience with its wide-bodied Il-96 aircraft.
October 30th, 2008 at 5:59 am
Jeff S.,
TBT is a leveraged proshares product to go long the long-term treasury yield.
October 30th, 2008 at 6:56 am
Silveraxis readers ……..Baron Bob is ready to take your orders.
http://www.baronbob.com/dollarbill-toiletpaper.htm
October 30th, 2008 at 7:22 am
Isn’t Tom at a conference in Las Vegas or on his way to Australia?
October 30th, 2008 at 7:43 am
Australia is not until Nov 11-14. Antal Fekete is speaking in Santa Clara, CA on Nov 3. But I believe he must be working on getting the Metal Augmentor up and running.
October 30th, 2008 at 10:29 am
RED ALERT - SILVERAXIS MISSING. FINDERS WOULD BE AWARDED WITH GREEN TOILET PAPER.
October 30th, 2008 at 11:17 am
IMF to start “printing” money as well? Our fiat monetary system is truly a joke:
http://www.gata.org/node/6821
“The International Monetary Fund may soon lack the money to bail out an ever-growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.
The fund is already close to committing a quarter of its $200 billion (L130 billion) reserve chest, with a loans to Iceland ($2 billion), Ukraine ($16.5 billion), and talks under way with Pakistan ($14.5 billion) and Hungary ($10 billion) as well as Belarus and Serbia.
Neil Schering, emerging market strategist at Capital Economics, said the IMF’s work in the great arc of countries from the Baltic states to Turkey is only just beginning.
“When you tot up the countries across the region with external funding needs, you get to $500 billion or $600 billion very quickly, and that blows the IMF out of the water. The fund may soon have to start calling on the West for additional funds,” he said.
Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil, and India have together spent $75 billion of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.
“Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We’re in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is,” he said.
The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing ‘AAA’ bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.
The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world’s central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis. “
October 30th, 2008 at 11:25 am
I wonder what an IMF DOLLAR looks like? If they are going to be printing these up….it would be interesting to see what one look like.
October 30th, 2008 at 12:03 pm
SrSrocco,
The IMF DOLLAR looks like that which you accidentally step on in the street…………i.e dog crap!!!!!
October 30th, 2008 at 12:14 pm
If everybody is still waiting for Tom best to pass the time and get updated via Jim Willie’s most recent article :
http://news.goldseek.com/GoldenJackass/1225389600.php
October 30th, 2008 at 12:24 pm
Oh, almost forgot this interesting little peice.
3 men with gold confuse sheriff’s sale
They say bidders’ paper cash is ‘illegitimate.’
By Matt Assad | Of The Morning Call
October 29, 2008
With the economy in decline, the list of foreclosed properties up for Northampton County sheriff’s sale this month was long, but Deputy Sheriff Dave Ruberry figured his last stint supervising the sale would be uneventful.
Then Michael Proetto of Whitehall Township, clutching a bulging sandwich bag, walked up.
”I’d like to register my bid of $30 [over costs] in gold and silver U.S. currency,” said Proetto, bidding on a two-bedroom condominium in Williams Township.
”Excuse me?” Ruberry said.
”I have lawful gold and silver U.S. currency,” Proetto said, plunking the bag of gold and silver on the table.
At the Oct. 10 sale, Proetto and colleagues Michael Reis of Bethlehem and Victor Balletta of Allentown would make unsuccessful bids ranging from $12,000 to more than $75,000 on nine properties. At the time, they declined to reveal their motives, and their bids left county officials scratching their heads.
Ruberry thinks the three men are anarchists, while a county lawyer thinks they could be after a quick buck.
Whatever their motives, the three returned last week to file 27 notices challenging the foreclosure sales, in which they lost bids to people using ”illegitimate paper” money.
”[The other bidders] made an unlawful money bid in credit in opposition to my lawful money bid,” Proetto wrote in nine challenges he made. ”I was the only lawful bidder and therefore the only bidder.”
In other words, Proetto said earlier this week, his gold was the only valid money at the sale and the rest of the bids used ”worthless paper backed by nothing more than black ink.”
Ruberry, who has run the sale for five years and is handing the duty over to another deputy, said, ”Obviously the United States of America takes a different view and so do we….This isn’t the barter system, where you can bring your jewelry here to be melted down to buy a house.”
Ruberry speculated the three men might be part of an anarchist movement engaging in a ”paper terrorism” campaign to clog the courts.
Assistant county solicitor Christopher Spadoni, who handles the sheriff’s sales, said they may simply be opportunists.
Most of the properties the men made unsuccessful bids on were bought by the banks holding the mortgages. By challenging the sales, the men could hold up the bank’s ability to sell the property for up to two years, Spadoni said.
”A bank lawyer might just want to pay them to go away. Maybe they are smarter than we think,” Spadoni said. ”But if their argument is that their money is real, and everyone else’s is fake, well, I find their argument baseless.”
Courts in Lehigh and Carbon counties report no similar appeals.
Ruberry believes the men may be fellow travelers of anti-government groups such as the Sovereign Citizen, Posse Comitatus and Liberty Dollar movements that believe paper money is not legal tender.
In some states, members of those groups have clogged court systems, flooding government offices with liens, civil suits and legal challenges to purchases made with what they say is illegal money. In Texas, a group calling themselves Republic of Texas conducted such a successful effort that the Texas Legislature passed a law in 1997 to prevent it, and similar efforts were reported in Wisconsin and Ohio in the 1990s, according to newspaper reports.
Proetto said while he and his colleagues may hold similar philosophies to those organized groups, they are not associated with any of them and are not on an anti-government campaign.
”Don’t read too much into this,” said Proetto, who would reveal little about himself other than that he is retired and once served in the Navy. ”We’re just three guys trying to buy $4 million worth of property with gold and silver — the only real money that was bid.”
Spadoni said if the men filed their appeals properly — he questions whether that will happen — the matter would have to be heard by a county judge.
In the end, Proetto, Reis and Balletta walked out of the sheriff’s sale still carrying the gold and silver they came with.
And Ruberry walked out thankful that if they return at the next sale Nov. 7, they’ll be someone else’s problem.
”It’s not every day you get someone trying to buy property with 30 pieces of gold,” Ruberry said. ”Interesting, but I won’t miss it.”
NORTHAMPTON COUNTY CHALLENGE
Background: Three men, during an Oct. 10 sheriff’s sale, unsuccessfully bid on nine foreclosed properties using bags of gold and silver.
At issue: The men have challenged the winning bids, arguing that the bids were made with ”illegitimate paper money.”
What’s next: Officials of the county sheriff’s office have to decide whether the matter should be heard by a judge.
October 30th, 2008 at 12:27 pm
Hyperinflationary talk is when you talk about trillions as if they are billions, and billions as if they are millions etc. “Pretty soon you are talking real money”.
October 31st, 2008 at 1:19 am
Guys let us assume the problem we face is raging deflation, that is how most people look at it. Which means that currencies other than the dollar are toast. Wouldn’t Gold be coveted by all those freakin’ foreigners under this circumustance? Will gold go to $200 if this scenario unfolds.
How long can IMF or the US Govt. with its swap-O-rama antics hold the burning babies (foreign currencies). And will China (untill recently which was mutilating its currency) or Europe allow their currencies to trash against the USD in the face of nose-diving international trade scenario? I mean the US cannot afford any longer to be consumerist.
No way. Temporary Deflation would be followed by raging hyperinflation. That is the end-game Sir. Look how handsomely gold is holding her fort in the face of a nuclear winter of deflation.
October 31st, 2008 at 4:10 am
Even Jim Willie endorses Embry’s December default suggestion. This is how the buzz morphs into prophecies. He is adds that the gold market is pretty tight because of much higher lease rates. CBs are no longer willing to lend their PM to the market - that makes the likely-hood of a default very likely. Hmm.. makes sense.
Now, all you need is a bunch of small fries like Bunker Hunt to raid Comex with delivery pistols.
October 31st, 2008 at 10:55 am
Add Jim Sinclair to the “Break the Comex” bunch.
October 31st, 2008 at 11:29 am
I was waiting for somebody to comment on the 10-Y treasury. Here is a little TA on this one from Marty Chenard.
http://www.safehaven.com/article-11706.htm
You will notice the double or possibly triple bottom for the treasury yield on the monthly chart. Also, a triangular pattern is evident which the author feels may break on either side latest by Jan. Whereas, I feel the double/triple bottom cry out for the yields breaking to the upside.
OK I have to admit I know close to zilch on TA. And I pay scant attention to it. Any comments?
October 31st, 2008 at 11:40 am
Keseri,
Take a look at the following outlook by Mr Barbera which was posted Tuesday and pay close attention to last the part regarding the 10-year treasury….follow the link.
http://www.financialsense.com/Market/daily/tuesday.htm
October 31st, 2008 at 3:10 pm
Some thoughts on the Dec. gold default. Personally I don’t think there will be an outright default or even a force majeure. Although I’d love to see that happen. A short squeeze is much more likely. If the price goes high enough some people will take the money and run rather than standing for delivery. that might be enough to clear the market.
Does anyone have any idea how much gold is being recovered from scrap gold sales and “parties”?
I think it must be fairly significant as we’re seeing quite a bit of advertising and publicity about it. I’d guess maybe a million ounces a month. This I would think is helping to depress the gold price. And is also serving to separate the people from gold.
I also think some people/investors are afraid to buy gold because they fear it is likely to be confiscated or in some other manner controlled or manipulated to the detriment of the gold investor.
I also think we’re kind of on hold for blast off until after the elections-it’s kind of a wait and see. Even though most believe Obama will win. I think he’ll have no choice but to drop $ from the sky to keep the average person from starving, literally. If the banks don’t lend the feds will make sure the $ get into people’s hands. Does more good there at this point anyway than giving it to the zombie banks.
And a thought for the survivalist scenario. I’d love to see it happen, let it all crash and burn then we can rebuild. But I doubt it will play out that way. Martial law of some sort is more likely. So be careful what you wish for, collapse of the $ could bring a lot more negative consequences than one might be able to handle. However if you think it will come to this don’t go too far into the wild as you will be easy picking, but there are many small communities that will pull together and survive by providing food energy and shelter-that’s where one should setup-someplace where there are new age community orinted people. Places like
Eugene Or, Boulder Co. come to mind. I’m in Socal near the beach and my garden is still producing. The place I wouldn’t want to be even now is in a metro area in the NE freezing and with no local food supply in winter time.
Bottom line I think the best scenario for us PM investors is that the $ survives albeit after much inflation and PM become part of the world monetary system. Then only the few of us who were prescient enough to accumulate PM will have any. The rest is being sucked out of the general population and into the hands of the big bullion bankers. That’s their end game. Bulls in bear cloths. BTW who is buying all the gold and silver shares that the hedgies etc. are being forced to dump? Who do you think will end up owning all the producers?
Good luck to us all. We’re all gonna need it no matter how well prepared one is.
October 31st, 2008 at 4:06 pm
Tom, I am sad to learn, has passed away. I read about it when I googled his name. I wondered why there hasn’t been anything new written in his blog. RIP
October 31st, 2008 at 4:58 pm
Sebastian, I couldn’t find that reference on the web, except for a Tom Szabo who died in 1993. Can you send a link?
October 31st, 2008 at 5:02 pm
I just assumed that since there was a possibility that California would change the same sex marriage laws, he and Fekete were rushing to get hitched. Hope that’s the case and not that he has passed.
October 31st, 2008 at 6:17 pm
Folks….stop ya worrying. I got an email from David Zurbuchen, Co-Editor of the Metal Augmentor….Tom just got back from a Silver Project they were investigating….he should be around soon.
Rob….about people not wanting to buy GOLD because of Confiscation….I don’t think that will happen. Why? Because Gold and Silver were in COIN form back in 1933. At that time there was Millions and Millions of ounces of Gold and Silver in Coin form. You have to remember, Silver was 1 dollar, and Gold were worth $20.
Because GOLD and SILVER was used in COINAGE…..it was easy to CONFISCATE the coins as the public had an easy way to HOARD THEM…..as they were LEGAL CURRENCY. Today….sure there is a PITTANCE of gold and silver being coined at the US MINT…but this is a FRACTION of what was coined in the early 1900’s.
It is not worth the GOVT’s time to try and confiscate GOLD or SILVER from the public….because the public does not have much at all compared to the 1930’s.
October 31st, 2008 at 11:11 pm
Freddy Kruggerand: Thanks for the Barbera piece on the 10-Y. I Love it. Frank plots it in a way that depicts the 10-Y breaking key resistance of 4.30% (and consequently USD breakdown) by April-May ‘09. Good Work.
Rob: Scrap or any damn physical does not decide the POG. Comex paper trading does. This huge trading in paper is legitimised by a relatively small stash of physical lying around their vaults. Picture the tail wagging the dog.
If some fund-managers trading Comex - not you, me or Jim Sinclair - decide to take delivery and the number of those fund managers is significant the game is up. e.g, Comex deliverable silver is 50 million ounces. Which means 10 fund managers decide to take a delivery of 5 million ounces AT ONCE - the silver market and the gold market will be FREE. Can you smell fresh air? And what is 5 million ounces of Ag cost - 50 million USD? Can you see the descrepency. A ridiculously “small” (small from the manager’s perspective) amount of money is needed to
turn the tables & make super-profits.
November 1st, 2008 at 1:43 am
If this were a real deflation then why is it necessary for China, UK and Japan to buy trillions of Dollars worth of treasury bonds to keep the yields down and to service the bailouts?
If free market principles applied then the bond market would rapidly unwind, freeing massive inflationary forces that never really went away and sending PM’s to the moon.
We now have the additional problem of commodity supply being restricted by shuttered mines and shipping constrained by lack of fiat money acceptability. Has demand really fallen by the amount that has been priced in? When the monetary tsunami hits then the record prices seen earlier this year could seem like bargains, as trillions of Dollars chase a restricted supply of commodities. As Tom said, contango in the base metals could be the canary in the coal mine.
November 1st, 2008 at 3:49 am
Here is the TA on the 30-Y treasury at the end of the article. Note the firm triple bottom at 3.89%.
http://www.gold-eagle.com/editorials_08/fatprophets103108.html
November 2nd, 2008 at 12:47 am
keseri : I hear ya…it’s ok…I am not saying Embry is necessarily wrong, but your post makes it sound like it’s a guarantee…which it’s not. So to be fair to Embry’s “sggestion”, it should be relayed as just that…a suggestion. He never said “going to” default….but suggested it “could” happen…which if you are on this site, likely hope it does. Let us not forget that it was also “suggested” that the price of gold was “going to” soar when this crisis took flight…I don’t hear a guarantee in his words…so just trying to be fair…and realistic that it might not as well.
November 5th, 2008 at 12:09 pm
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November 12th, 2008 at 8:11 am
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November 13th, 2008 at 12:07 pm
Interesting - because that is the same thing I found out last Thursday.
November 14th, 2008 at 2:23 am
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November 14th, 2008 at 3:07 pm
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