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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1805079 times)
cypherdoc
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June 11, 2012, 01:45:18 PM
 #2001

wow, quite the reversal from yesterday's initial 1609 ramp in response to Spain.
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June 11, 2012, 11:25:54 PM
 #2002

Here's another chart I just found, total debt - public (gov) and private (businesses and consumers). Shows that we're still early in the deleveraging cycle. Without inflation, gold won't go up.






does this look like inflation?



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June 11, 2012, 11:26:30 PM
 #2003

wow, quite the reversal from yesterday's initial 1609 ramp in response to Spain.

That's paper, not real gold. When wheat falls in price, you get excited to buy it at a discount. Gold works the same way because it's physical! Paper gold does not behave the same as physical gold.

And really? A $30 gyration is going to topple an inert metal that has seen every civilization and empire in human history come and go? It wasn't even an outside reversal for short-term technical influence. You're smarter than that. Don't be dumb.

Read and understand: The Situation Is Even More Dire Than I Imagined

Quote
I also believe there is bad news coming out of Pascua Lama.  Again, this represents 25% of Barrick’s gold reserves and if Pascua Lama is not allowed to go commercial, it would be disastrous for Barrick’s stock price, balance sheet and contractual obligation to supply Silver Wheaton 170-200 million ounces of silver.

If Pascua Lama is unable to mine gold and silver without threatening the glaciers in both Argentina and Chile, Barrick will have to go into the futures markets and purchase silver to deliver to Silver Wheaton at its contractual price of $3.90 an ounce.

A contractual obligation to deliver 170-200 million ounces of silver at $3.90 an ounce, much of which will have to be obtained at current market prices!

Quote
Even though I have read about the real demand going on in the precious metals’ markets, I still focused on the information I was getting from typical sources that we all read from.  Harvey helped open my eyes by reinstating the REAL DEMAND going on which is not being reported by the media or by most of the alternative media.

Ironically, both Turd Ferguson and I had an EPIPHANY on the precious metals about the same time last week.  Turd mentioned in one of his posts that he was no longer going to produce charts every day in his blog entries due to the fact that the markets are so manipulated that it really doesn’t call for it much anymore.  I also reached the same conclusion but in a different way when it came to INVESTMENT DEMAND in the price discovery mechanism.

Of course I still believe investment demand is the real force driving up the price of silver, but now I think it is more due to the huge volume of physical buying by the Eastern buyers that is determining the price and not individual investors buying Silver Eagles or Canadian Maples.

This is just talking about Barrick. Other mining companies are having issues as well, and that's with current demand. And current demand can't even be measured properly because many of the largest trades are not done through public exchanges.
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June 11, 2012, 11:34:57 PM
 #2004

wow, quite the reversal from yesterday's initial 1609 ramp in response to Spain.

That's paper, not real gold. When wheat falls in price, you get excited to buy it at a discount. Gold works the same way because it's physical! Paper gold does not behave the same as physical gold.

And really? A $30 gyration is going to topple an inert metal that has seen every civilization and empire in human history come and go? It wasn't even an outside reversal for short-term technical influence. You're smarter than that. Don't be dumb.

Read and understand: The Situation Is Even More Dire Than I Imagined

Quote
I also believe there is bad news coming out of Pascua Lama.  Again, this represents 25% of Barrick’s gold reserves and if Pascua Lama is not allowed to go commercial, it would be disastrous for Barrick’s stock price, balance sheet and contractual obligation to supply Silver Wheaton 170-200 million ounces of silver.

If Pascua Lama is unable to mine gold and silver without threatening the glaciers in both Argentina and Chile, Barrick will have to go into the futures markets and purchase silver to deliver to Silver Wheaton at its contractual price of $3.90 an ounce.

A contractual obligation to deliver 170-200 million ounces of silver at $3.90 an ounce, much of which will have to be obtained at current market prices!

Quote
Even though I have read about the real demand going on in the precious metals’ markets, I still focused on the information I was getting from typical sources that we all read from.  Harvey helped open my eyes by reinstating the REAL DEMAND going on which is not being reported by the media or by most of the alternative media.

Ironically, both Turd Ferguson and I had an EPIPHANY on the precious metals about the same time last week.  Turd mentioned in one of his posts that he was no longer going to produce charts every day in his blog entries due to the fact that the markets are so manipulated that it really doesn’t call for it much anymore.  I also reached the same conclusion but in a different way when it came to INVESTMENT DEMAND in the price discovery mechanism.

Of course I still believe investment demand is the real force driving up the price of silver, but now I think it is more due to the huge volume of physical buying by the Eastern buyers that is determining the price and not individual investors buying Silver Eagles or Canadian Maples.

This is just talking about Barrick. Other mining companies are having issues as well, and that's with current demand. And current demand can't even be measured properly because many of the largest trades are not done through public exchanges.

Can they manage that large of a loss, or will they just bankrupt?

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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June 11, 2012, 11:37:24 PM
 #2005

wow, quite the reversal from yesterday's initial 1609 ramp in response to Spain.

That's paper, not real gold. When wheat falls in price, you get excited to buy it at a discount. Gold works the same way because it's physical! Paper gold does not behave the same as physical gold.

The fact that there's two separate forms of gold, paper and physical, is exactly why I've come to dislike it. There's only one bitcoin, so its frictionless and that makes it much harder for TPTB to manipulate the price.

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miscreanity
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June 12, 2012, 12:14:48 AM
 #2006

Here's another chart I just found, total debt - public (gov) and private (businesses and consumers). Shows that we're still early in the deleveraging cycle. Without inflation, gold won't go up.

Rats flee a sinking ship, and people don't stand under a falling building. Smart capital has not remained under collapsing debt - it is finding shelter anywhere it can: precious metals, agriculture, fine art, real estate, gemstones, productive enterprises, etc.

Inflation is unnecessary at this point, even though it's unavoidable for the status quo to maintain its power base. Real assets, especially gold, will continue to gain for some time even if the monetary spigots were shut off today, because chaos and disruption are not conducive to security of wealth.

You wouldn't visit strange websites if you thought they'd steal your Bitcoin wallet, would you? If that were the case, 'safe' sites would garner much more traffic. Now ask yourself: How do you get a crew to want to get off a submarine? Or: How do you get people to want paper instead of the real thing?

The fact that there's two separate forms of gold, paper and physical, is exactly why I've come to dislike it. There's only one bitcoin, so its frictionless and that makes it much harder for TPTB to manipulate the price.

I agree to an extent and no longer trade traditional markets for that reason, but that doesn't change the fact that Bitcoin still has a long way to go in terms of both awareness and utilization before it's a universally-realistic alternative.

Can they manage that large of a loss, or will they just bankrupt?

If sufficient paper is supplied for acquisition, they'll manage it. Who wouldn't be able to with an unlimited bankroll? There's also a question of how much has been delivered already. Seeing as how the CEO was ousted and a prominent JPM exec was recently appointed to Barrick's board, there's probably much more going on behind the scenes than we're aware of.

If Barrick defaults, the end result is the same as open market purchases with inflated fiat - reduced supply being chased by a growing proportion of a stable supply of capital (no inflation/deflation) causes prices to increase. Default has the potential to be much worse than inflation, since the entire structure of the financial system would be viewed as unstable. As an aside, debt deflation could balance this out in terms of fiat-denominated pricing, but it can't prevent the purchasing power ratio from shifting in favor of gold and other real assets.

I think the inflationary course is most likely right now, which would lock up production from multiple sources for quite a while. Without more than a trickle of availability to rising public and competing sovereign demand, bids will rise rapidly. Then requests for the real thing would increase pressure further (e.g. futures delivery requests), possibly consuming all available production that was supposed to be committed to SLW (China, India, Russia, et al).

The evidence and patterns over the past few years definitely point to the inflationary route.

Rock<-Barrick(JPM)->HardPlace = Gold & silver prices ^^^
silverbox
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June 12, 2012, 12:15:03 AM
 #2007

Here's another chart I just found, total debt - public (gov) and private (businesses and consumers). Shows that we're still early in the deleveraging cycle. Without inflation, gold won't go up.






does this look like inflation?



hmm what is happening to the national debt..



hmm what is happening to the money supply...



It could just be me, but they seem to be going umm... UP..
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June 12, 2012, 12:42:08 AM
 #2008

And the rules haven't changed.


silverbox is wise to show the debt levels. With massive government deficits piling onto more and more debt, how can you expect the political leaders to allow for it all to collapse?

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June 12, 2012, 01:42:04 AM
 #2009

hmm what is happening to the national debt..

hmm what is happening to the money supply...

It could just be me, but they seem to be going umm... UP..

But the national debt is a small part of total US debt (public + private). That's the point of this article. The national debt is ~$14 trillion of a $50t total (granted, the $14t is growing). From wikipedia:

Quote
As of the first quarter of 2010, the Federal Reserve estimated that total public and private debt owed by American households, businesses, and government totaled $50 trillion, or roughly $175,000 per American and 3.5 times GDP.[6]

More importantly, the money supply chart is only M2. Most of the money supply is M3.

Quote
M3: M2 plus large and long-term deposits. Since 2006, M3 is no longer tracked by the US central bank.
...
Generally, the types of commercial bank money that tend to be valued at lower amounts are classified in the narrow category of M1 while the types of commercial bank money that tend to exist in larger amounts are categorized in M2 and M3, with M3 having the largest.

This stuff is part of M3.

Quote
As of the first quarter of 2010, domestic financial assets A totaled $131 trillion and domestic financial liabilities $106 trillion.[2] Tangible assets in 2008 (such as real estate and equipment) for selected sectors B totaled an additional $56.3 trillion.[3]

And they don't even mention the $600 trillion in derivatives / mortgage-backed securities or whatever other exotic forms of leverage. All that imploded in '08-'09, has been deleveraging since, credit still contracting despite 0% interest rates. The Fed, god bless em, is doing what they can to pump in liquidity, but they're pumping against gravity, and its a drop in a bucket.


With massive government deficits piling onto more and more debt, how can you expect the political leaders to allow for it all to collapse?

It collapsed in '08-'09. And still falling..

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June 12, 2012, 02:00:39 AM
 #2010

Here's another chart I just found, total debt - public (gov) and private (businesses and consumers). Shows that we're still early in the deleveraging cycle. Without inflation, gold won't go up.

Rats flee a sinking ship, and people don't stand under a falling building. Smart capital has not remained under collapsing debt - it is finding shelter anywhere it can: precious metals, agriculture, fine art, real estate, gemstones, productive enterprises, etc.

Inflation is unnecessary at this point, even though it's unavoidable for the status quo to maintain its power base. Real assets, especially gold, will continue to gain for some time even if the monetary spigots were shut off today, because chaos and disruption are not conducive to security of wealth.

These are good points. Given how fickle markets are, its not outlandish to imagine a run from the dollar. It seemed probable last year when DXY was at 74 and falling. But at 82 and rising, seems unlikely any time soon.

One more the thing.

Quote
Of course I still believe investment demand is the real force driving up the price of silver, but now I think it is more due to the huge volume of physical buying by the Eastern buyers that is determining the price and not individual investors buying Silver Eagles or Canadian Maples.

With the recent news from China, I'm not holding my breath for the East to ride in and save the day. They cut interest rates for the first time since 2008, the economy is slowing, inflation there now easing.. That news could be the straw which pushes (paper-)gold to a new low.

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June 12, 2012, 03:07:59 AM
 #2011

way to go bitcoinBull.

and not only does inflation require increasing debt, it requires an accelerating debt:

http://www.zerohedge.com/news/steve-keen-why-2012-shaping-be-particularly-ugly-year
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June 12, 2012, 03:18:53 AM
 #2012

These are good points. Given how fickle markets are, its not outlandish to imagine a run from the dollar. It seemed probable last year when DXY was at 74 and falling. But at 82 and rising, seems unlikely any time soon.

The only thing I'd question is whether the USD is still rising. Note the 72-74 range has been defended several times since 2008, and each bounce has been successively weaker in its angle of ascent. There is enough room now for further inflationary intervention, although I'm sure >85 would be more comfortable for bumbling Bernanke.



With the recent news from China, I'm not holding my breath for the East to ride in and save the day. They cut interest rates for the first time since 2008, the economy is slowing, inflation there now easing.. That news could be the straw which pushes (paper-)gold to a new low.

I wouldn't wait with bated breath either. The thing is, the Chinese are putting their wealth into real assets instead of paper. They can dump their foreign currency holdings in token gestures to help keep things from getting too far out of control, but it isn't as though they're propping up the whole world, only intervening strategically to look like saints when they may wind up as pied pipers. When the floor falls out from under most of the world, China will be one of the few remaining on solid ground - the 'least worst' in the global debt collapse. Unless a big asteroid lands in Shaanxi...

Finally, more on the HKMex: since last Friday, the open interest in gold is up 5-fold to a new record, and silver's rose almost an order of magnitude to its second highest level. Of note is gold's volume from the beginning of June - off the charts. I wouldn't be surprised to find many of these contracts are being opened in lieu of COMEX/LBMA holdings.




The possible dynamic of COMEX/LBMA contracts being abandoned in favor of HKMex, and possibly others, is exactly what we're seeing with the growing abandonment of the Euro, USD, and other currencies in favor of Bitcoin. That means neither gold/silver nor Bitcoin have to 'grow' - they just need to remain viable and relatively stable in purchasing power while capital flows into them. Time is on their (our) side.
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June 12, 2012, 03:06:54 PM
 #2013

Its about that time..

this thread was started 3/13

Bitcoin  5.40

Gold 1690.


today 6/12

Bitcoin 5.56   (up ~3%)

Gold 1610  (down ~5%)

BTC is up, Gold still hasn't collapsed.  BTC is outperforming gold.


GLD 156 (cypher shorted at 152)

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June 12, 2012, 03:18:37 PM
 #2014

Quote
But the national debt is a small part of total US debt (public + private). That's the point of this article. The national debt is ~$14 trillion of a $50t total (granted, the $14t is growing).

You miss the point entirely. The only way to monetise government deficits over the long term is with inflation.

Quote
It collapsed in '08-'09. And still falling..



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June 12, 2012, 03:36:15 PM
 #2015

You miss the point entirely. The only way to monetise government deficits over the long term is with inflation.

But the US isn't getting rid of its debt. Just making it irrelevant via record-low bonds yeilds.  Later on, after 5years or so of virtually free debt. They can turn on the taps of inflation again, then this entire circus will start-over.

One off NP-Hard.
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June 12, 2012, 04:51:19 PM
 #2016

Bond yields are lowered by inflation. Inflation is needed to keep them low.

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June 12, 2012, 05:56:49 PM
 #2017

Rats flee a sinking ship, and people don't stand under a falling building. Smart capital has not remained under collapsing debt - it is finding shelter anywhere it can: precious metals, agriculture, fine art, real estate, gemstones, productive enterprises, etc.

Those are all smart investments and are a part of business as usual (especially the last one).  You would make those investments regardless of whether you thought the global economy was about to go in the shitter.   If your argument is based on those investments being flags of whether investors anticipate global collapse you're wrong.
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June 12, 2012, 07:06:19 PM
 #2018

Rats flee a sinking ship, and people don't stand under a falling building. Smart capital has not remained under collapsing debt - it is finding shelter anywhere it can: precious metals, agriculture, fine art, real estate, gemstones, productive enterprises, etc.
Those are all smart investments and are a part of business as usual (especially the last one).  You would make those investments regardless of whether you thought the global economy was about to go in the shitter.   If your argument is based on those investments being flags of whether investors anticipate global collapse you're wrong.

Business as usual will always be sought after because stability is conducive to commerce and productivity. This is present in booms and busts; the flag comes from why the relative flow of capital is imbalanced.

Who's doing what with their capital? In regard to the above, high net worth individuals and organizations are becoming increasingly wary of financial instruments. Capital flows are key: relative to bonds, currencies, demand deposits, stocks, etc, real assets are receiving the overwhelming majority of funds.

This effect is being masked by a growing supply of financial instruments - it's akin to shouting louder to drown out the growing rumble of flow now stampeding into real assets.
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June 12, 2012, 07:26:46 PM
 #2019

i'll tell you what's a great thing about this rally is that all the hootin' and hollerin' that used to go on during rallies like this is pretty much gone.

this is a serious rally.

things around here are quiet cuz everyone's on the phone with their bank trying to wire money to the exchanges! Grin
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June 12, 2012, 08:25:21 PM
 #2020

i'll tell you what's a great thing about this rally is that all the hootin' and hollerin' that used to go on during rallies like this is pretty much gone.

this is a serious rally.

things around here are quiet cuz everyone's on the phone with their bank trying to wire money to the exchanges! Grin

Something we can agree on! Smiley

Euro fears boost virtual currency Bitcoin

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“We’re getting requests from people literally saying, can we mail you euros [for bitcoins]? We can’t do that legally, but they keep asking.”
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