Empire Club Outlook 2012: Why Rising Debt Will Lead to $10,000 Gold

[escobar]

 

[pmbug]

I listened to the whole presentation. Monotone delivery, but excellent content. Nice find and thanks for sharing.

 

[escobar]

haha yeah. Here is his presentation in print:

http://blog.bmgbullion.com/authors/...-lead-to-10000-gold-empire-club-outlook-2012/

 

[bluecollargoldtieguy]

Unlike Alex Jones, this guy doesn't sensationalize the truth. I enjoyed all three panelists speeches. You could have heard a pin drop in that room when Nick was speaking. It was kind of spooky. I think a few attending may have swallowed the red pill after that presentation.

 

[ancona]

Wow. That's good stuff!

 

[DSAbug]

Unlike Alex Jones, this guy doesn't sensationalize the truth. I enjoyed all three panelists speeches. You could have heard a pin drop in that room when Nick was speaking. It was kind of spooky. I think a few attending may have swallowed the red pill after that presentation.

The problem with alex jones is that he thinks the "global elite" are the cause of pretty much everything. Not everything is planned and the amount of control they have over everything is greatly exaggerated.

 

[escobar]

Have been poking around his sight. Some great info there. There is an e-book section where you can get some great gold/inflation/economic books for free. great stuff!

 

[bluecollargoldtieguy]

I agree with you, Derek. People need to learn the difference between cooperation, collusion and conspiracy. I find I think better with my tin-foil hat off.

 

[Shelby-villian]

I don't mind the Alex Jones' type of journalism. You need some people to go extreme in one way to balance out the effects of mainstream media. And then its up to you to filter out the signal from the noise.

Excellent article. But its another article which doesn't address the true unknown, in my opinion, which is if gold hits $10K, will the powers that be, actually allow us to benefit from this?

When this happens, the 1% who have PMs are truly going to be enriched and the other 99% are truly going to think the 1% robbed them blind. Now the .1%, with real power are going to protected through the government but the other .9% (the gold bugs) are going to demonized and made the scapegoat.

Are we ready for that?

 

[escobar]

I think this pt is overplayed. Add up the mkt caps of apple, google, msft, exxon, maybe add a couple more and you get the value you would need to get gold to 10k. Most blue collar people and poor people dont own stocks. Are there riots in the st about those companies?

There are many 20 something billionares from FB, Twitter, google etc. That is much more concentrated visible wealth vs some gold bugs. I dont see people going crazy about that.

just another fear tactic and propaganda.

 

[Silver_Bug]

The problem with alex jones is that he thinks the "global elite" are the cause of pretty much everything. Not everything is planned and the amount of control they have over everything is greatly exaggerated.

Spot on! No elite in history was/is responsible for everything, knows everything or controls everything. Why? Very simple: because they are not Gods. They are neither omniscient nor omnipotent. They are just faulty humans.

 

[DSAbug]

Spot on! No elite in history was/is responsible for everything, knows everything or controls everything. Why? Very simple: because they are not Gods. They are neither omniscient nor omnipotent. They are just faulty humans.

That's not to say that people are not working towards the goals he discusses.. IE.. World Government. There are people that believe in it and it's not a conspiracy. It's just how certain people view how the world should operate.

There are also plenty of people who are eugenicists and you probably meet them in your daily life. When someone talks population control... It's rare they see the slippery slope. My father in law needs a mental beating for his view on that.

if we continue this discussion, it should probably be in a different thread lol

 

[bushi]

I think this pt is overplayed. Add up the mkt caps of apple, google, msft, exxon, maybe add a couple more and you get the value you would need to get gold to 10k. Most blue collar people and poor people dont own stocks. Are there riots in the st about those companies?

Hi escobar,

not to argue on something that really is an unknown, but where do you think all that money that is being "quantatively eased" (ie printed out of nothing) eventually go? In the short run, I believe it will flood the markets, increasing it's value, leading to a violent bull, followed by another collapse (eh, you can only blow all these bubbles so much). And it will eventually end up in the REAL, reliable stores of value, like PMs. This market convulsions are inevitable, it is fiat money kicking the dust, before dying.

good piece about the fundamentals (or the lack thereof) behind the recent moves:



It is just my humble opinion, but one that seems to be a logical conclusion.

 

[ancona]

Right on Bushi. I think whenever the banks get the go from the oval office, we'll see a flood of cash quite unlike anything ever before seen. Our economy will see an influx of cash that cannot be appropriately handled, and so it will cause m,massive inflation.

But that's just my opinion.

 

[DCFusor]

Of course, since gold is the benchmark of monetary value, what you really mean here is the dollar goes down factor of 5 or 6. Since paychecks always lag inflation, that means a lot of pain for a heck of a lot of people - think gas over $20/gal and so on.

I think it's the end of the world as we know it before that happens - war, internal or external and so on. This speculation is just gold-bug porn - it can't happen without some other real major issues coming up before that will destroy the world as we know it utterly. And your gold eagle, though now worth 10k, will still only buy about the same amount of stuff it does now. You can't have it both ways.

 

[Silver_Bug]

You really think it is impossible for the purchasing power of gold to rise? In very inflationary times as ours it is possible for gold`s purchasing power to rise. Also in times of major currency collapse gold can rise in purchasing power.

 

[ancona]

You really think it is impossible for the purchasing power of gold to rise? In very inflationary times as ours it is possible for gold`s purchasing power to rise. Also in times of major currency collapse gold can rise in purchasing power.

I agree to teh extent that when a currency goes hyper, you reach a point where no one wants them.....kind of like Zimbabwe, and the alternatives begin to be used instead. Gold turned out to be the ultimate store of wealth in 'Zim, but i think it was only because there were other fiat vehicles that were considered stable, such as the Swiss Franc, USD, Euro, etc. When all fiat fails, I believe the ultimate store of value will be food, fuel, bullets and band aids.

 

[bushi]

...only because there were other fiat vehicles that were considered stable, such as the Swiss Franc, USD, Euro, etc. When all fiat fails, I believe the ultimate store of value will be food, fuel, bullets and band aids.

...see, in the "end of days" scenario, gold/silver ARE the ultimate store of wealth, because they always were, in less complex societies/economies, and because they have all the necessary qualities that money need to have. The things you mention (necessities) will go up ballistic in price (fiat) in the high/hyperinflationary environment, but they do not expose the required qualities of money. All of them are highly perishable (and by design and necessity so), so you cannot really use them as money. As highly desirable items in barter, yes, but they cannot perform the function of money, per se. Oh, and rightly DCFusor, it is not exactly that these basic commodities are getting up in value (although in fact they ARE, since they become scarce and much more desirable than iPads) as much as the high/hyperinflation wipes the rest of the purchasing power from the fiat.

I think that crucial thing to analyse would be the ratios of all important physical stuff against gold, I wouldn't mind to see the charts comparing the ratios of gold/silver, gold/arable land, gold/food, in the economies that have suffered hyperinflation. IT would be also interesting to see the black market ratios of whatever currency became de-facto locally accepted replacement for a failed local fiat, like in Zimbabwe I believe it was USD, in Poland it was USD and DM (at some stage DM were considered more desirable). Once we assume that this "strong, external fiat currency" in the historical cases will be replaced by gold/silver (or other non-fiat replacement - I am intrigued by BitCoins, I think the ideas backing them are simply genius - assuming grid & internet is still there, which I will not bank on!) in the future case of systemic fiat failure, we could draw some conclusions in terms of possible real value (wealth) gains/losses of PMs against other stuff.

I personally believe that PMs will appreciate in real-world value, since they become widely accepted as money and widely desired - as opposed to current situation, where they are desired by few, and in the physical form - by even fewer . Also, all the current market manipulations by governments are happening in fiat money, so it is very likely the effects of these artificial manipulations will backfire at the today's beneficiaries (ie: govt subsidies to arable land in EU, making it prohibitively expensive in a FIAT currency of today - if the fiat became worthless, and a farmer would not buy a liter of diesel for a billion of whatever paper shillings, because no one will be exchanging it for that paper with him, that land will suddenly get way less attractive. OR actually, it will get back to a normal, sustainable, market price*, that market would command, if it was the buyer's, and not the govt's business how to make it productive after the purchase).

Something very similar happened in communistic Poland, at the end of the era- you could buy basically anything, despite the official shortages of everything, and empty shelves in every shop - but only on the (semi)black market, and preferably, if paying in USD. Semi-black market - it is when the clerk in the shop tells you that there is no pork being delivered today, but after wink-wink-nod-nod, and exchanging less-than-official tender - pork suddenly materialized . Same with bigger transactions - there were always people wanting to sell a car, a house or a farm, but forget about official tender/channels, they were laughed at and dismissed.

But if so happened, that someone somehow have spend 10 years in New York, ripping asbestos from the skyscraper's roofs and was able to save and bring back say 10k USD in his shirt pocket, he became an equivalent of a local multi-millionaire, having a stash of widely accepted and wanted currency.

I think the same will most probably happened to the physical gold/silver, in case of systemic fiat currencies collapse - save the global war and the total end of societies/civilization. If you can hold it, you will probably benefit greatly from it.

If anything like stable society is to emerge after these shocks we start to experience, I firmly believe it will be something like BitCoins (assuming mild collapse scenario, and most of the infrastructure surviving), or Gold/Silver in a serious SHTF case, sending us back into 1800. Just look what was used back then, and assume it was mostly for pragmatic reasons (because it was)



*Disclaimer: I am talking about EU's sick subsidary policies for govt-regulated farming. Maybe it is slightly better than food megacorps, but only slightly, it puts the local farmers at the mercy of policymakers, or worse still, at the mercy of the govt officer approving grants.

 

[bushi]

Hello,

You know what, it just struck me, I will reiterate, because I think it is crucially important to plan an optimal "exit strategy" on PMs:

When the fiat monetary system fails on a global scale, people will start looking for alternatives. The same will happen in high/hyperinflation scenarios, for obvious reasons.

Traditionally, in deeply troubled countries, it was always a foreign currency, perceived as strong & stable. In many places in the world it used to be USD. In some, local currency was even replaced later on with that strong, stable one (Argentina-their local currency was linked 1:1 with USD, effectively replaced by, and lost control on their money supply/monetary policy). But the specific currency is not so much important, only to put things into a perspective. The point is, people have ALWAYS turned to something out of their government control (for obvious reasons), DESPITE all the efforts of their govts to stop them from doing that, and to something perceived as "stable, strong". If it happened, to be a ready made foreign currency (=money by design), well, so much better and pragmatic. But what if it will became increasingly obvious, that NO single currency is safe? Because ALL the govts are cranking up the presses and central banks' hard drives?

So I think it would be extremely valuable to analyze the buying power of such an external, strong currency in the troubled countries, to see how it performed before, during, and after the shock - right until the local currency stabilized back to normal.

IMHO, that foreign, strong currency, will be a perfect model for simulating the PMs buying power, in case of a global fiat meltdown (high/hyperinflation). It just seems to follow logically. Historically, that "replacement currency" had all the qualities, that PMs will have (or already have), in the above scenario, like:
1) it was out of local govt control, so they could not print it and inflate it even more, thus diminishing people's buying power, or destabilizing businesses, which could not put any price tag on anything (==PMs)
2) it was scarce (==PMs. And physical? hell yeah, comparing to the monstrous fiat bubble we are in, globally - there's NO WAY that PMs would provide enough supply of money for all that "monopoly money" floating above the REAL, tangible economy. So I guess there will be a lot of vanishing fiat capital in the future, despite PMs appreciating sharply)
3) it was widely perceived as stable (==PMs, even in today's propaganda environment, in anything but short term speculation - they are outperforming everything else)
4) it was widely desired by the people (my assumption/belief: just you wait, it will ==PM)
5) people were saving in them (my assumption/belief: just you wait, it will ==PM)
5) it was quite often made illegal by local govts (quite possible for PMs, if they start to threaten local fiats, confiscation laws in US are historical case, and not to mention totalitarian countries like former Soviet block, where western currencies were outright illegal for citizens to invest in/possess)

...It all just clicks, it seems..

Do you guys think it would be possible to analyze the above, somehow? I am new to the brave (or crazy?) financial world, so am totally green and don't even know where to look for that kind of data.

Regards,

 

[pmbug]

bushi, typically in these cases, there is a devaluation immediately preceding (or in conjunction with) a peg to a foreign currency. Many people are expecting a devaluation of fiat to gold should gold be remonetized (there would have to be to make it work, not enough gold relative to the money supply at today's spot price).

I think you hit on the essential point though. Central banks are desperate to maintain confidence in their fiat instruments. They are abusing markets to keep up the debt money illusion. They are desperate to prevent flight into sound money (gold) because they lose their monopoly at that point.

 

[bushi]

OK, thanks PMBug!

So with a common sense approach, if we assume such a devaluation of fiat to PM (gold, presumably) is to happened (well, again assuming that future currencies will be pegged to gold, at least temporary, to stabilize the whole global easy-cash-junkie economy...), I presume, the size of such devaluation is as big, as the size of the local fiat bubble was, correct? Which in strictly arithmetic and numerical value terms, if I had to put any solid numbers on it, would have to mean "gargantuan monstrously big one", for current, half-century-old, global fiat money bubble - am I right?

 

[pmbug]

Yes. Rickards concludes his Currency Wars book with speculation on just how big the* devaluation is going to be and he estimates a range with, IIRC, a minimum bound of $7,500/ozt for gold.

*he thinks it's inevitable after they are done playing with SDRs/IMF/etc.

 

[KMS]

I'm currently reading that book. A good lesson in global financial history so far.

 

[ancona]

Wow! Great thread....... ;-)