Loading ...Written by Keith Weiner
My thoughts on that Rickards piece:
– I am not a fan of quantity analysis. Take a measure (real or imagined) of macroeconomic aggregate A. Take a measure of B. Now divide A into B. If that is supposed to tell you something, you may be surprised to learn how little it does tell you.
– The gold standard is not about the government owning or controlling a large quantity of gold.
– No matter how much gold the government of China owns, there is no mechanism to retroactively declare their purely paper yuan to be gold “backed”. It’s impossible to reverse cause and effect.
– In a gold standard, every paper bank note, every deposit, began life as a deposit of gold. The deposit is redeemable. Today, every dollar or yuan or euro began life as an irredeemable credit. You cannot turn paper into gold. No matter what quantity of gold the government owns.
– China has a seat, nothing to do with its gold, but with its economy. That and the fact that it’s a big creditor.
– “took the lid off gold” and “ended the price manipulation” — this is a fantastical allegation, not a fact. I have tons to debunk it.
– “this reset” <– a goldbug fantasy. Buy gold now because IT’S REALLY GONNA GO SKY HIGH!
– Gold does not go up, but the dollar can go down. Suppose the gold price hits $5000. That is not a profit. It is a collapse in the value of everyone’s life savings, and business capital. Gold owners will avoid that loss, which is good. But when they sell the gold, they pay 28% at the federal level plus state income tax and lose a third or more to taxes.
– China is vulnerable so the US needs to keep China happy? This logic is backwards.
– “if they have a mix of paper and gold, and we inflate the paper, they’ll make it up on the gold.” <– gold bug thinking right there. Like saying “If my stocks go down and my gold goes up, I am good.” Gold does not go anywhere. If you own a trillion dollars, that’s worth about 833M ounces. If the value of the dollar falls by 80%, you have just lost 667M ounces worth. Even if you own 100,000,000 ounces of the metal, that does not mitigate the loss.
– “That’s not speculation. It’s in the footnotes of the annual BIS report.” <– typical not just of gold bug writing, but conspiracy theory writing like 9/11. Paint a fantastical picture with unicorns and Holy Grails and Merlin himself casting spells… then point to a real source to prove some incidental point. Sure, the BIS is involved in gold deals when one central bank buys gold from another. Great. That does not support his story.
– “if we are transparent about the gold acquisition, the price will go up too quickly.” Is this article really about the monetary system? Or is it the gold bug infomercial on Why To Buy Gold Right Away? The gold bugs sit and think about three things. (1) I sure wish the gold price would go up so I can sell my gold, (2) someone must be keeping gold down, (3) what scenarios would destroy my enemies and make gold go to $10,000.
– “The point is that is that there is so much instability in the system with derivatives and leverage…” <– a non sequitur in a long series of non sequitur.
eeos- my friend posted keith’s article from his facebook handle. I wrote back to my friend and told him I’m still up 300 to 400% on the phiz side. Where’s my loss Keith? How’s come it’s legal to hit me with so many taxes? Who decided that? I’ll just hold until the rules change again