Precious metals are not useful in a collapse scenario!

[iamnotback]

To my BCT friends who are goldbugs, the reason I speak frankly is because I want you to look at the situation objectively. I know from my own infatuation in the past with precious metals, that the drug of fighting back against the system is very intoxicating.

But the fact is that absent our existing governance and monetary system, a power vacuum forms, which sucks in roaming armed gangs which then gives rise to warlords. The warlords are the market makers. Feudalism. Power is a fact of physics and nature.

The only way your fantasy of a silver dime monetary barter system would take form is if you have an organized community with governance, security, and enshrining silver dimes as the monetary system to give it the confidence it needs. And then some market makers to provided the liquidity between debt, silver dimes, and production. And you have to then provide for defense against more powerful invaders, so your community can't be too small.

If you don't understand how governance, market makers (i.e. power-brokers), and the economy are all dependent on each other, then you of course will make silly fantasies about people trading silver dimes as a fall back option.

Understanding power vacuums, the power-law distribution of wealth in nature, etc.. are critical to forming a rational assessment of the future.

Money has always been what people trust and have confidence in. This doesn't mean the metal itself, but as Armstrong has explained many times it was the stamp on the metal. Even when the invaders took over the Roman Empire, they used the stamps on the coins from the former Empire because it was more trusted.

Bitcoin (crypto-currency on a blockchain) enable trustless money, where we don't have to trust any authority. We trust the decentralized protocol. Now that was the ideal. Unfortunately Satoshi's proof-of-work centralizes and thus we end up trusting Gregory Maxwell and the Chinese mining cartel.

So crypto-currency is not quite ready for being independent of the powers-that-be yet.

Someone may invent a solution. I happen to know someone who claims he may have such a solution. We'll see...

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[iamnotback]

Money has always been what people trust and have confidence in. This doesn't mean the metal itself, but as Armstrong has explained many times it was the stamp on the metal. Even when the invaders took over the Roman Empire, they used the stamps on the coins from the former Empire because it was more trusted.

Bitcoin (crypto-currency on a blockchain) enable trustless money, where we don't have to trust any authority. We trust the decentralized protocol. Now that was the ideal. Unfortunately Satoshi's proof-of-work centralizes and thus we end up trusting Gregory Maxwell and the Chinese mining cartel

I disagree that that trust in the case of hard currencies has anything to do with authorities and the stamp on the metal they make. In fact, in medieval times you could just grab a piece of gold and take it to the royal mint where you got your royal coins stamped for a small fee. This tells us that the stamp had rather a utilitarian function than an existential one. On the other hand, if it all came down to trust in authorities, there would be no case for Gresham's Law where you had essentially the same stamp but, nevertheless, different levels of trust...

Which wouldn't be ever possible unless you in fact trusted the metal more than the stamp on it as you claim

Sorry but if you have access to a lot of data such as Armstrong who has collected all the ancient coins (at enormous cost), you will come to learn that your understanding is factually incorrect.

Why did we build the largest coin collection in the world? Because coins are the documented history of the fiscal mismanagement of centuries of mankind. There is nothing that does not fluctuate even what is used for money.

The Mongols conquered China and maintained their monetary system. They honored the paper money in circulation and used that as the monetary base rather than coins.

The barbarians issued coins at first maintaining the pretense of the Roman Empire pretending that they now held the throne.

...the next target marks the end of the Roman Empire that formally falls in 476AD with the last real emperor. However, then the barbarians assume the throne for a brief period of time. They issued coins that appeared to be Roman in appearance. Effectively, at the end, the barbarians wanted to be Romans where as the Vandals just stripped even the copper from the roofs of temples in Rome.

The idea that money must be tangible also has no basis in fact. Money has been many things to many people. The entire basis of money is you will accept something as money as long as you have CONFIDENCE that in turn someone else will accept it from you.

This idea that somehow gold coin is not fiat has been so misleading. Here is a Roman tax collector gold bar because the government minted gold coins cheating in quality but refused to accept them in return for taxes. Thus, taxes were imposed based upon weight – not coins! Therefore, the gold coins of the day were not trusted and even government had no CONFIDENCE in them, which is why they were NOT legal tender (acceptable for taxes).

...

Early attempts at wage and prices controls always failed from Babylonian times right up to the Wage & Price Controls of Diocletian (284-305AD) who attempted to restore silver coinage AFTER the Great Monetary collapse. It did not matter that coinage was restored. CONFIDENCE still collapsed and the coinage was rapidly hoarded and vanished from circulation. So yes, even when the money is of full value, it still will not circulate if people do not BELIEVE government. Indeed, there was still another war and finally Constantine (309-337AD) emerged as Emperor after defeating all rivals. He enjoyed some success but had to abandon Rome and created a new Capital Constantinople and revised the monetary system again.

...

Government then began to stamp the image or badge of the city to impress people.However, the first city to “coin” money was also the first to discover “fiat” meaning the value is simply dictated by government

...

The whole reason people began to use banks was because the “money” could not be verified. Just because the coins were silver or gold did not mean anything. They could be debased, shaved, or forged. You deposited money in a bank and the bank CERTIFIED you were paying in “good” money. People did not want coins, they wanted the bank paper receipts. Like the moneychanger, the bank was certifying the transaction was taking place with proper value in “money”. Thus, paper money began in middle ages as receipts certifying deposits.

...

Ancient Egypt always had “fiat” money receipts for grain in public warehouses trading as money. They did not have any coinage until Alexander the Great conquered them in 334BC. Virginia also had the same system of tobacco receipts that circulated as money in colonial times.

China and Japan were the same. They never had circulating gold or silver coinage. This nonsense that money has to be tangible is NOT supported by the facts. Money has always been based solely upon what someone else is will to accept. Go to a WaWa or Starbucks and try to buy with a gold coin. They will not accept it. Hell, some places will not even take a $100 bill anymore and want plastic. If they do not BELIEVE gold is acceptable for payment or you hand them $1 in 1964 silver quarters to by a $5 coffee, you are out of luck. They will see it as $1 not worth $5. This is the real economy. MONEY is only valuable based upon what the OTHER person believes – not you!

It is NOT the fiat. It is simply CONFIDENCE. Bank and warehouse paper receipts have circulated as money for thousands of years. Even dollars under Bretton Woods gold standard were simply receipts redeemable in gold in international transactions. It was NOT gold that actually circulated. When people as a whole distrust government, then barter replaces official “money” and that can be a lot of things and the worse it gets the more likely it boils down to food. We have run every possible correlation and have the database to do so.

When Genghis Khan invaded China, which was using paper money, he too accepted it and did not devalue the paper money that was in circulation. He too accepted the paper money from the previous emperors.

By the time this economic implosion is over, you will PRAY for HYPERINFLATION. What we face is far worse. It is loss of everything with the risk of tanks rolling down your streets hunting money!

It has always been a confidence game. Those in power are constantly trying to boost the confidence of the people in order to stabilize their control over society. Above is a Roman coin from the tetrarchy period of Diocletian & Maximinus. The term meant “leadership of four” whereas there had been a chaotic period that spanned across 20 emperors whereby they came to power only to be overthrown by another. There was no political stability. The Emperor Diocletian sought to create political stability and established the tetrarchy where there were two emperors and two “Caesars” who were like vice presidents in waiting. The power of governing the empire was split and marked the end of the crisis of the third century.

You do not see hyperinflation in Britain or China despite the fact that both declined from major economic peaks. Money never becomes worthless in a major core society for if the core were to collapse then everything else must fall as well. Genghis Khan accepted the paper currency of China upon his conquest and did not render it worthless. It continued to circulate and he accepted it in payment himself. That is showing the Moguls wanted the dignity of conquering civilization and merely replaced the emperor.

Human nature does not change with time. It remains consistent and this is why history repeats. With the fall of Rome, the invading barbarians wanted to be Roman. Their rulers initially issued coins merely pretending to be the emperor. One of the great kings was Theodebert I (534-548AD) whose tomb is erected and still standing as if he too had been a Roman Emperor. Thus the invaders wanted to be the head of the civilization both in China and Europe showing confidence did not vanish, just a change in ownership and no hyperinflation.

The term ‘barbarous coinage’ of the 3rd century refers to imitative coins that are typically crude in style. Their origin stems from the use of Roman coins outside the empire and as a result there was a high demand that was not often met. Consequently, then shortage of official coinage was compensated by the strike of imitative coinage that was underweight, but there was no real intrinsic metal value. Like US dollars circulate in Russia and China, it is the confidence in the foreign government that provides the inherent value to the monetary instrument rather than the metal content.

Indian Ancient Imitations of Roman Coins

The peripheral economy with respect to the center core economy has routinely imitated the coinage of the dominant economy which is the financial capital of the world. In the case of India, these imitations of Roman coinage in gold are known as far back as the Roman Emperor Tiberius (14-37AD). These are imitations rather than counterfeits for the metal content is the same or at times even better. Pictured here is an Indian contemporary Indian imitation of a gold aureus of Tiberius (AV Aureus 19mm, 6.69 grams) copied from a coin struck at Lugdunum (Lyon) mint issue in modern day France which obviously made it to India.

Even your example is another confirmation that it is indeed the confidence the public has in the authority which drives the use as currency, because the public innately understands that power vacuum of society which I had explained.

You misunderstand Gresham's Law. The hoarding is for the melt value, not for the currency value. In fact, the hoarding is removing the currency attribute.

[iamnotback]

Precious metal bugs are irrational extremists, who are locked and loaded in their basements.

SOMEONE sounds jealous there are no basements in the Philippines to be locked and loaded in.

While you are enjoying boasting about how foolish you are, note that my experience of chaos in the Philippines has made me more attuned and realistic about the chaos that is coming. Whereas, you are overconfident and making the wrong decisions, because you have not experienced chaos first hand.

I will be realistically prepared. You'll be blindsided by reality because you are deluded by your comforts (and the comfy coin dealers which will disappear).

[iamnotback]

Even your example is another confirmation that it is indeed the confidence the public has in the authority which drives the use as currency, because the public innately understands that power vacuum of society which I had explained

The authorities had been collecting taxes in gold coins, so the population had to use the royal mint to get these coins. The authorities had also been heavily after counterfeiters, despite their own constant debasement of coinage

When you stop studying the bark and structure that comprises the forest, look over the tree tops. There is a huge billboard, "PUBLIC CONFIDENCE" that determines whether the forest exists.

You misunderstand Gresham's Law. The hoarding is for the melt value, not for the currency value. In fact, the hoarding is removing the currency attribute

No problem really. But you have to:

  1. Explain what exactly I misunderstood in Gresham's Law
  2. Give a correct explanation of it

You see, just claiming that someone doesn't understand or misunderstands something won't work. Gresham's Law is not about melting coins and it has nothing to do with the melt value. Basically, it says that people don't believe the nominal value of a specie set by authorities, which directly challenges your point...

Namely, that value of a coin is the stamp on the metal

I already told you that when the melt value (i.e. the value of the metal) is greater than the legal tender value, the coins stop circulating as currency. This is the definition of Gresham's Law.

On the other hand, if it all came down to trust in authorities, there would be no case for Gresham's Law where you had essentially the same stamp but, nevertheless, different levels of trust...

Which wouldn't be ever possible unless you in fact trusted the metal more than the stamp on it as you claim

The people haven't stopped believing that the authorities can set the legal tender value of currency. It shows that the people respect the power of the authorities to dictate the exchange value of legal tender. So the people stop using the metal as currency and hoard it for its metal value, abandoning its value/utility as a currency (where circulating currency has a multiple of each exchange value/utility due to multiple exchanges per unit time, aka monetary velocity).

I made the claim that PUBLIC CONFIDENCE in the authority that dictates what is currency is that enables currency to exist. You claimed Gresham's Law was a counter-example. I am explaining to you that it is not a counter-example and thus you have a mistake.

The public doesn't hoard coins for the metal value thinking that they will be useful for currency at full metal value. They hoard it thinking they can sell it for its metal value as an investment or for melting. Most people are not as delusional as goldbugs (about what is money and currency) and are quite rational. They realize they hoarded silver dimes so they could sell them to collectors. That is why you can buy bags of silver dimes now. They did not circulate back to the US Mint for melting when they became worn.

[freshman777]

The problem is that physical silver coin is not ever going to be used as currency ever again, no matter what happens. Period.

1. We are in a digital age and no one is going backwards, no matter what happens. Period.

2. When global collapses ensues such that you think you might be able to use metal coinage, what actually happens is as follows.

You can't transfer digital value when electricity and internet are down. You need substitutes. And I don't mean permanently disrupted, just a week is enough to remember the "barbaric" past. Sure, food will be a priority but those who have access to large stockpiles of food will accept barbaric metals and other such items of value. They would accept digital but electricity and internet will be turned on next week only and so they accept what they have confidence about, many people have confidence about metals. Not to mention that two-three billion people in the world don't have bank accounts (including developed countries) and aren't really accustomed to and haven't gone full digital, and I don't mean tribal people of some remote islands. Everyone knows metals, they will always have some value.

• As Fernando “FerFAL” Aguirre points out, only the currency that can be exchanged external to the crisis area has value. People are not bartering silver dimes, rather if you had German DMarks in Bosnia or USA dollars in Argentina, then these were accepted and liquid. Gold coins were much more difficult to liquidate because there is a funnel of few dealers that can't actually exchange them for the externally liquid currencies of USA dollars.
• As Dmitry Orlov points out, everyone's priority is on food, security, and transportation. Direct trade of these is more valued than some metal which can't be traded for these needs, because these metals are not liquid.
• Armstrong has also explained that gold and silver only have a value for as long as the collapse is not total and there is still an external market. During Dark Ages such as in Japan or fall of Rome, the gold and silver become entirely illiquid (is buried in the ground) and only food, guns, fuel, and alcohol+cigarettes become money.

• This is relevant if other fiat currencies have stable value. In FerFAL's time they did. This is not guaranteed as central banks are all in a competitive devaluation race.
• There is a lot of ground and time space leading to what you call total collapse and between that and now there could be temporary disruptions of infrastructure that call for trading metals for items of necessity, while access to digital is limited. A simplest case is ATM malfunction, bank is closed, you have a gold chain you can take to the pawn shop. Expand that to ATMs and banks being closed for a week.
  You can't easily stockpile food to last you a year of these temporary disruptions, unless we talk canned food which is shit and can give you major stomach issues after you consume it for a couple of weeks. You see just two extreme ends: dark age and digital age, one or the other happening fast - this is your problem. There is a lot of distance and a lot of opportunities to use metals and crypto and other items of value, depending where and when you are. Even in most dire circumstances (war, widespread famine) there are always stockpiles of food somewhere that someone has access to and will sell for the right price in valuable items.

[iamnotback]

When you stop studying the bark and structure that comprises the forest, look over the tree tops. There is a huge billboard, "PUBLIC CONFIDENCE" that determines whether the forest exists.

If what you say were true (i.e. the trust in the stamp prevailing over the trust in the metal itself), authorities could debase the coins indefinitely.

Let me try to unravel it a bit so you can wrap you mind around it, because you are thinking too simplistically (conflating) thus entirely missing the point.

A human being can be rational by doing both of the following:

• Recognizing that the value of the metal is greater than the legal tender exchange face value of the coin and deciding to not circulate it at face value and instead sell it to collectors/speculators/investors at metal value.
• Recognizing that only currency that is endorsed by the government is trusted by the public-at-large, and only it has PUBLIC CONFIDENCE and thus liquidity as a universal unit-of-exchange.

You are conflating two orthogonal judgments that rational humans make.

The trust in the stamp doesn't prevail or not prevail over the value of the metal. The use as a currency is orthogonal to the use as an investment/collectable/speculative asset.

I can guarantee you do not have a Mensa level IQ, but that is okay. You aren't dumb. You simply made a logic error.

In fact, they wouldn't even need to mint the coins from precious metals at all in the first place...

I don't really see why you continue challenging that point

It is quite common for someone who doesn't understand their logic error to think they are correct, when in fact they are incorrect. It is a form of Dunning-Kruger myopia.

This is why it is very important to be humble, unless you are sure you have a 180 IQ like Freeman Dyson. <--- He dismantled Richard Dawkins author of the Selfish Gene.

You misunderstand Gresham's Law. The hoarding is for the melt value, not for the currency value. In fact, the hoarding is removing the currency attribute

No problem really. But you have to:

  1. Explain what exactly I misunderstood in Gresham's Law
  2. Give a correct explanation of it

You see, just claiming that someone doesn't understand or misunderstands something won't work. Gresham's Law is not about melting coins and it has nothing to do with the melt value. Basically, it says that people don't believe the nominal value of a specie set by authorities, which directly challenges your point...

Namely, that value of a coin is the stamp on the metal

I already told you that when the melt value (i.e. the value of the metal) is greater than the legal tender value, the coins stop circulating as currency. This is the definition of Gresham's Law.

This is just another way of saying that people no longer believe in the stamp. Or, alternately stated, they believe in the stamp only as long as the nominal value of the coin corresponds to the real metal content of it...

You are conflating the belief in the stamp as enforcing PUBLIC CONFIDENCE in what should be the currency, with the recognition when the value of what the stamp is printed on is worth more than the face value of the stamp.

Which, in its turn, basically means that the stamp is pretty much irrelevant in this aspect

Incorrect. The stamp remains what people trust to enforce what circulates as currency. That doesn't mean they have to lie to themselves about if the metal content is worth more than the stamp.

With modern day fiat money it isn't necessary for the value of the metal to be equal to the value of the stamp, rather it can be much less. The $100 bills I use do not contain $100 of paper.

[iamnotback]

The problem is that physical silver coin is not ever going to be used as currency ever again, no matter what happens. Period.

1. We are in a digital age and no one is going backwards, no matter what happens. Period.

2. When global collapses ensues such that you think you might be able to use metal coinage, what actually happens is as follows.

You can't transfer digital value when electricity and internet are down. You need substitutes. And I don't mean permanently disrupted, just a week is enough to remember the "barbaric" past. Sure, food will be a priority but those who have access to large stockpiles of food will accept barbaric metals and other such items of value. They would accept digital but electricity and internet will be turned on next week only and so they accept what they have confidence about, many people have confidence about metals. Not to mention that two-three billion people in the world don't have bank accounts (including developed countries) and aren't really accustomed to and haven't gone full digital, and I don't mean tribal people of some remote islands. Everyone knows metals, they will always have some value.

This line of reasoning was already rebutted in the discussion upthread. If you read the entire thread, you will find the rebuttals.

I will add to the upthread points that people will use fiat money at face value, before they will resort to gold and silver coins at metal (not face) value. Not only because it is more well known and trusted (also no need to assay the metal value and content purity), but because there won't be enough gold and silver coins in circulation to attain the economies-of-scale to be trusted as a universal unit-of-exchange.

People accept money that they think they can spend. Even those with large stockpiles of food, will want the money they can liquidate for replenishing their farm or operation. The gold market makers are many heads of basically one bank JP Morgan. So gold liquidity can be shut down overnight when they are ready to cause maximum chaos.

• As Fernando “FerFAL” Aguirre points out, only the currency that can be exchanged external to the crisis area has value. People are not bartering silver dimes, rather if you had German DMarks in Bosnia or USA dollars in Argentina, then these were accepted and liquid. Gold coins were much more difficult to liquidate because there is a funnel of few dealers that can't actually exchange them for the externally liquid currencies of USA dollars.
• As Dmitry Orlov points out, everyone's priority is on food, security, and transportation. Direct trade of these is more valued than some metal which can't be traded for these needs, because these metals are not liquid.
• Armstrong has also explained that gold and silver only have a value for as long as the collapse is not total and there is still an external market. During Dark Ages such as in Japan or fall of Rome, the gold and silver become entirely illiquid (is buried in the ground) and only food, guns, fuel, and alcohol+cigarettes become money.

• This is relevant if other fiat currencies have stable value. In FerFAL's time they did. This is not guaranteed as central banks are all in a competitive devaluation race.
• There is a lot of ground and time space leading to what you call total collapse and between that and now there could be temporary disruptions of infrastructure that call for trading metals for items of necessity, while access to digital is limited. A simplest case is ATM malfunction, bank is closed, you have a gold chain you can take to the pawn shop. Expand that to ATMs and banks being closed for a week.
  You can't easily stockpile food to last you a year of these temporary disruptions, unless we talk canned food which is shit and can give you major stomach issues after you consume it for a couple of weeks. You see just two extreme ends: dark age and digital age, one or the other happening fast - this is your problem. There is a lot of distance and a lot of opportunities to use metals and crypto and other items of value, depending where and when you are. Even in most dire circumstances (war, widespread famine) there are always stockpiles of food somewhere that someone has access to and will sell for the right price in valuable items.

The point that gold and silver are not viable alternatives applies regardless of whether there is another stable money to trade to externally. Collapse goes from known currency to barter with food and guns as money. There isn't much coping in the middle unless you have stable barter societies accustomed to operating at that level of low efficiency such as using manual handcranks to pump their water up from the well, and making their own clothing, weapons, and tools from locally sourced cottage industry. That doesn't exist any more in most places in the world. And the places where it does exist, you wouldn't want to be there in a collapse scenario because of the barbarism.

The technology sector is very innovative. Temporary disruptions will cause the networks to become more resilient as the engineers build in infrastructure innovations to future episodes.

I see three scenarios, Digital Age, intervening paper fiat age, and possible Dark Age. We must come out the other side into the Digital Age. There  is no other choice, unless you want to go to nuclear war and reduction of the global population to 500 million.

[iamnotback]

With modern day fiat money it isn't necessary for the value of the metal to be equal to the value of the stamp, rather it can be much less. The $100 bills I use do not contain $100 of paper.

I expected that you would end up saying something along these lines. But this has evidently nothing to do with the trust that people reveal towards precious metals. You seem to have massively forgotten what you started with. Namely, that the trust that people have toward a gold specie doesn't depend on what this specie is made from, but only on the stamp of it.

You are paraphrasing me incorrectly. I wrote:

Money has always been what people trust and have confidence in. This doesn't mean the metal itself, but as Armstrong has explained many times it was the stamp on the metal. Even when the invaders took over the Roman Empire, they used the stamps on the coins from the former Empire because it was more trusted.

By "money" I obviously mean what people trust to be currency (a universal unit-of-exchange). This has nothing to do with chunks of metal (in whatever form) hoarded for speculation and investment. You are conflating orthogonal concerns.

But you still can't escape the simple question why authorities continued to use precious metals for minting coins until very recent...

They debased the coins in the Roman Empire and got away with it up to a point, because people trust the stamp and the strength of emperor stamped on it. But eventually the emperors were being overthrown every decade, so the stamp had to be backed by more metal value in order to bring back the confidence.

Also modern banking and paper money had not yet been invented in Western Europe yet, and I believe not until Florence, Italy if I am not mistake. China had already invented paper money though.

So if the government is perceived to be strong and stable (e.g. the USA since at least WW2), then that government can debase the hell out of their fiat, which is exactly what the Fed has been doing with the world's reserve currency and formerly strongest military power.

And why people started evading such coins when the authorities began debasing them

No one stopped using FRNs and zinc pennies and quarters. The USA government is still perceived to be strong. But we are witnessing the fall of the USA empire now. Exactly as predicted by Armstrong's model. In fact, Armstrong's model for the US empire peaked on the day Edward Snowden made his final move of no return for releasing the NSA exposé.

[iamnotback]

Goldbugs will likely have at least one more dead-cat bounce to sell before any collapse back to $1050 and potentially below:

Gold should bounce and rally to test the 1340 level by year-end. We need a weekly closing above the 1336 level to show some sustainability. Resistance begins at 1308 and we need a daily closing above 1319 to be impressive.

But by no means does this mean that USA stocks and the dollar are poised to crash. Rather gold is just getting some dead-cat bounces because of the uncertainty over the US election. As the dollar and USA stock blast off in 2017 due to the massive dollar short coming home and the stampede into the dollar safe haven, then dollar up, gold down:

QUESTION: Mr. Armstrong; So many people keep calling for a stock market crash. At the same time, it has hung on to the 18000 level in the Dow for dear life. Do you see such a devastating crash as even possible?



ANSWER: No possible way. Retail participation is at near record lows. It has just started to lift begrudgingly. Even the Gallup poll on Americans shows the same thing. Retail participation is at best 55% down from 65% in 2007. Liquidity, however, is still off by 50%. This does introduce the likelihood of Flash Crashes and Flash Rallies. Such events are by no means because of a pending major crash. Just where do you put money if bonds are dead and banks a questionable? Of course some will yell gold. But gold is for the individual. Pension funds and institutional investors with billions and trillions cannot invest in gold bullion with no yield. Gold stocks, yes, but bullion no.



November is a Directional Change and then our next big target is January. We will be doing a Gold Video Update tomorrow.

[freshman777]

People will use fiat money when they have it and when the other side accepts it. Hint: they will gradually stop accepting it in hyperinflation surroundings, sorry but legal tender law can't help in hyperinflation - food is only for sale after you tell what money you'll use to pay, otherwise "no soup for you". Hyperinflation aside, just 3% of fiat money exists in paper notes. When you don't have paper banknotes (electricity has been down for a week in your area, they promise to fix it next week), what will you do? You will trade PMs, even at a discounted metal value. Try that with paper gold in your brokerage account - this is to make the point that only gold that you can hold in your hand is gold, any other form is obligations (which are a joke under bankruptcy law).

It doesn't need to be a universal unit-of-exchange, it only needs to be a unit of exchange that your local owner of food stock accepts. I have a good feeling many of them will accept PMs as they always did and do in war times, in other calamities. They will hope to sell it later for a good price when things have stabilized. They understand paper notes losing value fast, but gold value has been forever. Who don't "get it", they don't have stocks of food when it's in short supply, meaning when you come to buy food in those times, you automatically talk to those who "get it".

You assume that the dark or digital age will happen everywhere in the world at the same time. The truth is there will be spreads between status of dark chaos or of digital enlightenment in different parts of the world lasting years, decades probably. This presents opportunities for exchange and liquidity, arbitrage. You only need good enough, not the best, liquidity to make a trade when you're hungry. Fiat paper money of course works best until it doesn't.

[iamnotback]

People will use fiat money when they have it and when the other side accepts it. Hint: they will gradually stop accepting it in hyperinflation surroundings, sorry but legal tender law can't help in hyperinflation -

Hyperinflation NEVER occurs in a major economy:

HYPERINFLATION has ONLY taken place in minor peripheral economies. It has NEVER taken place in a major economy. All major economies implode from deflation because as they need money, they attack their citizens destroying their own economies as we are doing right now. So while you wait for HYPERINFLATION, your taxes will rise, your rights will vanish, and you will see tanks on your streets before $30,000 gold that will still be the cost of a men’s suit. Forget this HYPERINFLATION and fiat nonsense.

We have run every possible correlation and have the database to do so. It is just hype! Just as the stock market has never peaked with the same level of interest rates, you cannot find any such evidence that if money is “fiat” then it collapses and going into HYPERINFLATION. Good sales pitch – but’s it.

By the time this economic implosion is over, you will PRAY for HYPERINFLATION. What we face is far worse. It is loss of everything with the risk of tanks rolling down your streets hunting money!

ore silver coinage AFTER the Great Monetary collapse. It did not matter that coinage was restored. CONFIDENCE still collapsed and the coinage was rapidly hoarded and vanished from circulation. So yes, even when the money is of full value, it still will not circulate if people do not BELIEVE government. Indeed, there was still another war and finally Constantine (309-337AD) emerged as Emperor after defeating all rivals. He enjoyed some success but had to abandon Rome and created a new Capital Constantinople and revised the monetary system again. That lasted for some time and once more you find silver vanishing from circulation.

QUESTION: I have done my own homework and it appears you are correct regarding monetary history and that simply because a currency is “fiat” does not result in hyperinflation, Even the Greenback of the US Civil War did not result in hyperinflation. Is it correct to say then that hyperinflation takes place only with revolutionary new governments?

ANSWER: To be precise, hyperinflation takes place when there is a collapse in confidence that supports a government so it can be an established government such as in South America. The key is the currency is not accepted by the people. That comes FIRST and then we see that they print more and more following the trend and propelling it. This is the chicken or egg dilemma. It is not the REVERSE that the supply increases and that causes the currency to decline as characterized by the gold promoters.

Hyperinflation unfolds when the people no longer trust the government and that can occur with an established government as in South America without war, but it is traditionally associated with revolution such as the American colonies during the American Revolution, French Revolution, German 1918 Communist Revolution, Russian Revolution, Hungary etc.

The British economy peaked in 1914. There was no hyperinflation thereafter despite the abandoning of the gold standard. So both the USA during the Civil War and Britain abandoned gold during war and neither entered into hyperinflation so it is true – fiat does not automatically create hyperinflation. Sorry. I believe in gold as an asset class. I do not believe in gold as the economic savior, exclusive form of money, or any other nonsense that cannot be demonstrated on a CONSISTENT basis in history.

Many people pay attention to the German Hyperinflation of the 1920’s, yet fail to understand that such an economic crisis followed the German Revolution of 1918. The German Revolution was a politically driven civil conflict in Germany at the end of World War I, which resulted in the replacement of Germany’s imperial government with a Weimar Republic.

Nonetheless, keep in mind that the Russian Revolution was 1917. Consequently, the German revolutionaries were certainly inspired by the emerging communist ideas. However, the German communists failed in their effort to hand power to soviets as the Bolsheviks had done in Russia. In Germany, it was the Social Democratic Party of Germany (SPD) leadership that refused to work with communists who supported the Bolsheviks. Moreover, the SPD feared that an all-out civil war would erupt in Germany between the communists and the German conservatives. Hence, the SPD struck a middle ground and did not plan to completely strip the old imperial elites of their power and assets. The SPD sought a compromise whereby they were integrated into the new social democratic system. The left wing fell into political fragmentation that prevented Germany from turning communist at the time. The Weimar Constitution was adopted on August 11th, 1919. It was this government that moved into hyperinflation, not the old Imperial Government.

Consequently, this was a revolutionary government. All economic activity stopped. The wealthy were scared to death. They saw the bloodshed in Russia in 1917. Capital hoarded and the velocity of money imploded. So while many point to the German Hyperinflation and then say we will enter the same result, are taking only the hyperinflation and ignoring the events that caused it. There were NO gold reserves. There were no lenders to the government. There were no bond markets. There was absolutely nothing. Nobody would dare lend anything for the fear was Germany would go the way of Russia.

This is why I say the hyperinflation of Germany and Zimbabwe are just not even plausible today.  Yet these events are touted and used as sales tools for gold and that is dangerous for when the fundamentals do not pan out, confusion and crisis follow. Feeding people bullshit stories is highly dangerous for when the truth emerges, they lose confidence rapidly.

QUESTION: Mr. Armstrong; What did people really do during the German hyperinflation? It seems that all you hear about has been people running around with wheelbarrows of cash to buy anything. Was that truly reality or just the extremes?

ANSWER:
Life actually went on. People used American dollars and other foreign currency. In December 31, 1923, Time Magazine reported that the German currency was worth almost nothing and yet $12 in American money could pay for good seats at the National Opera in Berlin to see Mattia Battistini. As countries move toward an inflation crisis, it is CONFIDENCE that collapses and so they turn to external currency. The American dollar will still rise and its usage will remain in cash transactions. Ukraine is currently using the US dollar in the face of their currency’s inflation. Zimbabwe has lost the right to print its own money. People use the currencies of other nations to this day. The same result took place in Japan when the government lost the CONFIDENCE of the people and was unable to produce money that people would accept. The Japanese used rice and Chinese coins, but not their own currency.
In Germany, people used foreign currency. The hyperinflation was the result of a collapse in CONFIDENCE of the German government. The people turned mostly to foreign currency. They did not trust the new Communist Revolutionary government. This is why the hyperinflation took place. The bulk of the people turned to commodities, and others used foreign currency. This is a standard pattern which has ALWAYS emerged. Therefore, life goes on, just as we see in Kiev. However, apartments for rent in Kiev are prices in foreign currency right now, not its domestic currency. The people lack CONFIDENCE in the government and will not retain savings in their local currency, which will propel inflation.

Hyperinflation aside, just 3% of fiat money exists in paper notes. When you don't have paper banknotes (electricity has been down for a week in your area, they promise to fix it next week), what will you do? You will trade PMs, even at a discounted metal value.

I already told you that there isn't enough gold and silver coin available and widely enough distributed to even make any dent in that usage scenario.

Onboarding a new currency is very difficult as Bitcoin is finding out.

It doesn't need to be a universal unit-of-exchange, it only needs to be a unit of exchange that your local owner of food stock accepts.

Incorrect and that demonstrates that you have a very low IQ and/or a lack of education in the area of economics and monetary systems.

You don't seem to understand anything about how economies work and the reason economies-of-scale in units-of-exchange and liquidity-of-exchange are critical. And I don't have time to teach you.

I have a good feeling many of them will accept PMs as they always did and do in war times, in other calamities.

They did not accept PMs in other calamities. Not unless PMs were already the legal tender.

Study history. Learn. Or continue to be fooled by incorrect propaganda from goldbugs.

You assume that the dark or digital age will happen everywhere in the world at the same time.

No. I know that if there is stable external currency, the region in crisis will adopt that because they can't adopt PMs.

The truth is there will be spreads between status of dark chaos or of digital enlightenment in different parts of the world lasting years, decades probably. This presents opportunities for exchange and liquidity, arbitrage. You only need good enough, not the best, liquidity to make a trade when you're hungry. Fiat paper money of course works best until it doesn't.

Regardless PMs will never be widely accepted as currency. Never.

But don't listen to me. Please buy moar precious metals now before the drop to $1050 or below.

[freshman777]

I have no time to argue with stubborn mules.

[just_Alice]

Yes, we are in digital age and believe it or not digital goods are more valuable than physical ones already. Same goes for the money, just look at prices of any physical urrency in USD and compare it to Bitcoin price.

[iamnotback]

I have no time to argue with stubborn mules.

Ditto. It is a mutual perception. My perception is based on a higher IQ comprehension than yours. Yet you are welcome to stick with your Dunning-Kruger "reality". Idiots always think they are correct, because they lack the mental capability to build a comprehensive model (of reality).

I do encourage you to bring some gold and silver coins into any collapsed economy right now and test your theory. Go to Venezuela and try spending gold and silver coins. Lol. Make a YouTube for us.

[iamnotback]

The facts for 2016:

Gold +22.5% YTD
Long Bond US Treasury TLT +9.1% YTD
SP500 +2.7% YTD

Armstrong & shills predictions for 2016:
OMG gold going to sub $1000 or even to sub $850.
Bonds US Treasury exploding to the downside (the infamous 2015.75 big bang).
SP500 skyrocketing due to capital flows.

The BS is over. No verbal (or should I say written) diarrhea is going to change anything. The emperor is naked.

Facts:

• Edward Snowden making his final move of no return to release NSA exposé on the exact turn date (April 22, 2013) for Armstrong's model of the peak of the USA empire.
• Putin officially entered the war in Syria on Oct. 1, 2015, precisely Armstrong's major ECM (Economic Confidence Model) turn date 2015.75.
• Per my prior post above, Assange+USA intelligence+FBI initiated a counter-coup against the Establishment politicians on Oct. 28, 2016, precisely to the day of the current turn date of Armstrong's ECM. Also the Bundy's were acquitted which was the first time a jury went against the Establishment in 200 years.
• Dollar is up since the peak (various currencies peaked between 2011 and 2016):
  +90% against gold
  +60% Australian dollar
  +41% British pound
  +53% Canadian dollar
  +60% Chilean peso
  +13% Chinese yuan (non-floating currency rate)
  +38% Euro
  +35% Indian rupee
  +60% Japanese yen valley-to-peak (note the dollar has slumped against yen so far in 2016)
  +43% Swiss franc
• FX exchange volume $5.3 trillion daily, versus $3 billion monthly for precious metals
• USA DJIA up +75% in same period. Armstrong's model has been predicted a double to triple since 2011.
• Armstrong's War Cycle model pinpointing Ukraine, Middle East, and rapefugees crisises decades before they occurred.
• etc

You'd have to be a fucking blind moron to not see what is going on.

[BADecker]

The facts for 2016:

Gold +22.5% YTD
Long Bond US Treasury TLT +9.1% YTD
SP500 +2.7% YTD

Armstrong & shills predictions for 2016:
OMG gold going to sub $1000 or even to sub $850.
Bonds US Treasury exploding to the downside (the infamous 2015.75 big bang).
SP500 skyrocketing due to capital flows.

The BS is over. No verbal (or should I say written) diarrhea is going to change anything. The emperor is naked.

Facts:

• Edward Snowden making his final move of no return to release NSA exposé on the exact turn date (April 22, 2013) for Armstrong's model of the peak of the USA empire.
• Putin officially entered the war in Syria on Oct. 1, 2015, precisely Armstrong's major ECM (Economic Confidence Model) turn date 2015.75.
• Per my prior post above, Assange+USA intelligence+FBI initiated a counter-coup against the Establishment politicians on Oct. 28, 2016, precisely to the day of the current turn date of Armstrong's ECM. Also the Bundy's were acquitted which was the first time a jury went against the Establishment in 200 years.
• Dollar is up since the peak (various currencies peaked between 2011 and 2016):
  +90% against gold
  +60% Australian dollar
  +41% British pound
  +53% Canadian dollar
  +60% Chilean peso
  +13% Chinese yuan (non-floating currency rate)
  +38% Euro
  +35% Indian rupee
  +60% Japanese yen valley-to-peak (note the dollar has slumped against yen so far in 2016)
  +43% Swiss franc
• FX exchange volume $5.3 trillion daily, versus $3 billion monthly for precious metals
• USA DJIA up +75% in same period. Armstrong's model has been predicted a double to triple since 2011.
• Armstrong's War Cycle model pinpointing Ukraine, Middle East, and rapefugees crisises decades before they occurred.
• etc

You'd have to be a fucking blind moron to not see what is going on.

Too busy having fun to see things like that.     

[freshman777]

Idiots always think they are correct

Exactly! Stubbornly too. LOL. And they love to parrot charlatans with "super computers" who claim they can see the future.

[iamnotback]

The Rothschilds apparently like gold a lot.  It is not at all clear how much they own, but is reputed to be substantial...  Where else are you going to invest your $billion$ after you have plenty of castles and vineyards?

https://en.wikipedia.org/wiki/Rothschild_family

It would not surprise me at all if the Rs own many tonnes of gold.

Do the Rothschilds know something you don't?  

That family is the classic example of owning lots of quietly held gold, passed down through the generations (other wealthy Europeans have been doing the same for centuries).

Gold is a language between the uber-wealthy. Rothschilds clan are preparing for the SDRs to be backed by a basket which will include gold. This will be for clearing exchanges between nations and the uber wealthy. This is not for you and I.

They can allow gold to be tradable between themselves with no tax and no restrictions, while than confiscate or tax your silly coins and bullion to hell. Sure you can pile yours up at home and do nothing with it to avoid their control, while they can lease theirs earning an income.

Remember they are the market makers that enable the coin dealers to exist. Your gold (and silver) has no (useful) autonomy and no (reasonable) liquidity without them.

I read that the Rothschilds gave up their seat on the London gold exchange. I don't know the significance of that.

[iamnotback]

Maybe somebody should tell him we are end 2016 and not end 2015. He seems a bit lost  

Deadcat bounces (to $1300s) don't count.  

Hang-on because dollar up, gold down. Thus $1050 will likely be revisited before we see ATHs in gold again.

The world needs liquidity and a scorched earth is not in anyone's best interest, thus PUBLIC CONFIDENCE will shift to the dollar and USA stocks once it becomes clear that the global collapse is unavoidable, and this will give the false illusion that the USA is strong. This will work as a bubble for a while.

Then eventually the dollar peaks and we are headed down into the abyss. Then gold goes to as high as $5000.

Get the timing right. We have one final bubble in the dollar underway first.

[iamnotback]

I been emailing our entire discussion about gold this past week to Martin Armstrong.

He has replied to r0ach, sloanf, John999, freshman777 and rest of their cohort goldbugs.

You can thus be damn sure he read my emails and that he is ignoring my point about Rothschilds controlling Wikileaks.

COMMENT: Marty, the gold bugs are at it again desperately trying to say you are wrong as always and just misrepresent whatever they can. They acknowledge you called for new highs in the Dow, but claim even that was not until 2013 when I read about your forecast back in 2011 in Barrons. They seem to be so desperate to try to prove you wrong yet they have never been right. They do not understand anything about markets. You are correct. They are as bad as politicians preaching the same nonsense and then misrepresent your record to tell lies. They do not mention you said gold would rally up to 1362 and back down. Unbelievable how dishonest and unethical these people are especially ——–.


Thank you for being straight up

KW

REPLY: The gold promoters have a single agenda and are not students of the market. They are just wrong on their theories, and you are right, they are like politicians. Every election is vote for me for change. It seems like vote for me because I have been less wrong than my opponent. They cast everything into right or wrong and shun trying to learn anything the markets are telling us. They cannot learn because they have a predetermined fixed image of how the world should be. They only focus on gold and cannot see what else exists in the world or how everything is connected. They function the same as central bankers who try to talk markets up by giving false impressions of reality. It’s a shame how many people they ruin because they are fixed on one scenario (And yes, the forecast for new a high was made at the bottom of the ECM back in 2011 when Barrons reported that forecast). The lift-off for the Dow to move to new highs with our first target 18500 could NEVER have been correct if gold did not also peak in 2011 and turn down. They have fought that decline all the way.

Look. We need fools on the other side of reality in order to trade against them. They are the fuel that makes markets move. It’s a shame how many people lost money lining the pockets of bankers because of these people. Nothing happened on October 1 when the world was coming to an end because the IMF included the Chinese yuan in the SDR. They thought that Shanghai would start trading “real” gold, not paper, and that New York would have collapsed by now. Their scenarios are childish and absurd to say the least. They have no respect for people. They are like Hillary: it’s all about them.

This is a battle of us against them. They are on the side of the establishment, preaching the same story that made the bankers rich and selling into every high they chased up the flagpole