Some information for the tinfoil hat(e) crowd from the former $3 trillion hedge fund (GOLDBUG!) mgr who (Milton Friedman admired! and) spent $100 million (inflation-adjusted) collecting the history of the world:
https://www.armstrongeconomics.com/uncategorized/gold-backwardation-the-real-story/
The Gold backwardation has been distorted as all sorts of reasons for everything.
Now let’s talk reality. The Gold backwardation is simply nothing more than the collapse in interest rates as capital lost faith in banks and then the Sovereign Debt Crisis began with Greece in 2010. Much of the liquidity that came to gold in the early years was OPEC money. It had absolutely nothing to do with gold. The problem was OPEC was getting all this cash, but religiously they could not earn interest. Thus, I took clients and showed them if we bought gold and sold it forward we were earning the effective interest rate but it was called the “carrying cost”. Backwardation in this case is not indicative of any shortage whatsoever or a collapse in “trust” of the dollar. The dollar has been rising! Just look at German interest rates on short-term paper went negative by 0.6%. This has NOTHING to do with fiat and people losing faith in paper money –yada, yada, yada. If that were true, interest rates would not COLLAPSE, they would SOAR because people would not trust government bonds and they would have to pay up.
https://www.armstrongeconomics.com/uncategorized/confusion-in-gold/
The collapse in interest rates has led to a very unstable environment as far as the traditional interest and carrying cost for gold and other commodities. Of course people have made a big deal out this BACKWARDATION claiming it is a sign of real bullishness and manipulation. In truth, it is simply the interest and carrying costs. In the 1970s, we showed our Arab clients who could not earn “interest” that they could buy gold and sell it forward and collect the spread that was effectively the interest rate plus costs. This is what gave depth to the future market as it was in its infancy in 1975.
https://www.armstrongeconomics.com/uncategorized/gold-never-really-made-new-highs-yet/
Gold will rally. But that will NOT be until Europe and Japan melts down. Look for the real rally after 2015.75.
https://www.armstrongeconomics.com/uncategorized/gold-perpetual-propaganda/
ANSWER: First of all, I never said gold would go to $12,000, $5,000 was the best I saw.
https://www.armstrongeconomics.com/markets-by-sector/precious-metals/gold/gold-when-money-dies/
They say one ounce of gold would buy a man’s suit in the 1920s. It still does today. Forget the $50,000+ nonsense. Even making such stupid statements are implicitly saying the dollar survives. How can you value something in a currency that would no longer exist? Welcome the new world monetary system when government gets its ounce of flesh out of everyone clinging to power as it slips from their grasp.
https://www.armstrongeconomics.com/writings/2012-2/the-truth-about-gold-why-you-should-buy-it/
So the argument is NOT gold per say, but what is government up to? That is the key! To go where the Goldbugs say that gold will become money again, there has to be an overthrow of government before that would ever happen. Everything has to go from the national debt to government and that includes both politicians and bureaucrats. We are talking about REVOLUTION to achieve that. Why do you think they are authorizing indefinite detention and the kill switch for the internet? Trust me. It has nothing to do with the 19 guys and the camel.
The PRESUMPTION is that those buying PAPER GOLD are “real” and the shorts are all just a conspiracy and if they were not there, then the longs would drive the price up dramatically to $50,000+. You could say that about every future contract from oil to wheat. Hell, life insurance is a futures contract. A number of people can take a life insurance policy on you from yourself, family, or your employer. There is only one life, but there can be numerous policies. So?
The FREE GOLD arguments today are similar to the FREE SILVER arguments of the 1890s that virtually bankrupted the USA in 1896 claiming silver should be raised in value and FREE SILVER will save the day. PAPER GOLD by no means is suppressing the price. The longs do not have to roll their futures. You can let your contract do to the end and take delivery! The longs are no more “real” than the shorts. This is a trading market. Sorry – that’s it. The so-called shorts are by NO MEANS suppressing the price of gold. If all the longs went to delivery, which they have the power to do not a short, then the “conspiracy” would be broken. Gold is just not ready for price time – IT WILL BE! JUST NOT YET! If all this nonsense would stop, a lot more people would buy gold. Right now, far too many assume to buy gold is a religion that makes no sense. I also get emails asking am I really serious and think gold would rise absent all the nutty scenarios?
It is nonsense to think that gold will go up to $50,000 to $100,000 or that China will back its currency with gold at such levels. The world abandoned silver after the Prussian War. The silver miners convinced U.S. politicians to buy their silver and force the world to accept whatever ratio they dictated. Well, they bankrupted the USA because the silver/gold ratio that they fixed at 16:1 was 30:1 outside of the USA. That did not end very nicely, yet they think arbitrarily raising the price of gold to $100,000 will solve the problem. China has absolutely ZERO intention of such insanity.
The speculation is rather absurd like gold will be $50,000 or $100,000 is just total nonsense. What do such figures even mean? These gold promoters hurt so many people for they imply that everything will crash and only gold will rise to such levels. If everything crashed, that would be deflation and gold would decline not rise. Gold would ONLY rise when it is the monetary base or the money everyone uses. That it is not.
Those who keep preaching that only gold is money are in the same category. Money at the end of the day is labor be in physical or mental. You accept whatever in exchange for that because someone else will accept it from you. Throughout history, just fill in the blank as to what that medium of exchange has been from sea shells and cattle to sheep skins and slave girls. The earliest bronze medium of exchange took the shape of the previous familiar medium of exchange be they cowrie shells in china or sheep skins when the Bronze Age appeared in Europe.
Besides, for gold to reach such levels, nothing would be left including a place to even spend it. If there is nothing you can spend it on, it becomes worthless for it is only a medium of exchange. The dark pictures they paint are not something gold would survive. At that point, the control-alt-delete buttons are pushed and everything would rest back to the hunter-gather period meaning food is everything.
This is Alice in Wonderland, plain and simple to say gold will rise to $50,000 or higher. The maximum our models project is $5,000. That is probably the point at which total chaos is unleashed anyhow and you end up with a completely new monetary system. So the question is rather simple insofar as gold will be the hedge against government and that means it will retain a reasonable value for the transition from the current monetary system to the next. That is what gold will do for the buy & hold strategy.
Keep in mind, however, gold will not go so easily into the light. There is a high probability that they will declare gold illegal for transactions and prosecute under money laundering, which has been redefined as simply hiding money from government. The end game is really the collapse of the monetary system and hopefully that coincides with a collapse in government power. That is where gold will make the transition from the old to the new.
NOTE THE ABOVE “coincides with a collapse in [nation-state] government power” IS THE RISE OF GLOBALIZED CRYPTOCURRENCY!
https://www.armstrongeconomics.com/uncategorized/gold-the-black-market-50000/
To see gold above even $10,000 requires the assumption that the dollar decline placing such a move in the realm of currency inflation. For that to take place you must see a like advance in everything else, real estate, wages etc.. The maximum price projection for 2032 seems to be the $22,000 to $24,000 dollar level. That is derived purely technically – not my opinion or what I think. That is not even a forecast saying that is where it will rise to reach by 2032. That is just what it is – answering a question as to how high is it possible FROM A TECHNICAL perspective for gold to reach. If that was reached and there was a collapse
“How does one liquidate their gold holdings in a private manner?” Good luck. The French went after coins shows requiring that they report all attendees. The shows no longer go to Paris. The coin and bullion dealers were by law in France barred from dealing in cash. The French started to travel to Belgium to buy and sell gold. The French complained to Belgium and hence we now have coordinated G20 level monitoring. So gold may no longer provide the easy way to facilitate life as it once did. It will depend upon someone taking it in barter and to understand that possibility, you have to use coins – not bars. I know gold refiners and they must report every gram in and out even if it is coming in and out from overseas. So the Feds know who buys and sells metals.
“Will the have to smuggle metal out if the country to be paid in cash?” There comes the metal detectors and Xrays. Then just traveling with more than even $3,000 is a presumption of guilt and they get to just seize it. Perhaps now you are starting to get a feel for why the NSA really monitors everything.
https://www.armstrongeconomics.com/uncategorized/yes-in-a-mad-max-dark-age-not-even-gold-has-value/
Some nasty comments immediately focus on that statement and as always only emerge from the gold fanatics who will never change their mind about anything no matter what the facts might be. Of course they are based upon a PRESUMPTION that gold always has value without any historic proof whatsoever. The only thing in a dark age that retains value is food – PERIOD! In Japan all money vanished for 600 years and rice became money. The government taxed in rice and didn’t bother issuing coins because nobody would accept them. After the fall of Rome, gold vanished from the money supply as well and did not reappear until the 1200s.
You cannot eat gold or anything else but food when society crumbles into dust. The assumption that gold will retain value in such circumstances is brain-dead. When you are starving, the most honest man will become a thief. What do you think feudalism was? People abandoned even their property because there was NO SECURITY. If there is no rule of law, nothing has value. People fled the cities and gave their labor to the landlord who had a castle and protected them when someone else came by. He provided what government use to – security and the rule of law.
Wages vanished as well until the Black Death killed 50% of the population and then made labor scarce. That is when wages reappeared. You earned not even a bronze coin no less gold when there were no wages. Without the rule of law gold has no value. Someone just takes it from you. Who do you go to? There is no police. No government. It is a Mad Max event.
It is a bell curve. You go too far and everything is lost for it is anarchy – uncivilized survival of the fittest. Keep your gold – it will do you no good. Food will be worth far more. You eat or you die. Assuming gold will ALWAYS have some value is absurd. Money is a medium of exchange but if there is no exchange you also do not need money. There is a point where nothing has value but food for there is no economy. There are just enclaves like tribes.
This is NOT opinion it is fact!
Government will make transactions in gold or silver illegal and equivalent to money laundering.
The likelihood that you will be able to travel with gold is about zero. The likelihood that you will be able to go to the local grocery store and buy food with silver or gold coins is also zero.
RE: Facebook’s Libra + Bitcoin + Trump + Israel = 666 Orwellian Dystopia