Friday 20 September 2013

"Shit!"? Or "get off the pot!"?

The suspense is painful… like being trapped in some kind of interminable Vulcan Death Grip, or something…
  • Western paper traders won't bid up the paper (spot unallocated, GLD shares, futures, forwards, options, XAUUSD longs, swaps, leases, whatever) gold $price, while their technical analysis tells them gold's in a bear market and headed for the S bend (or even just circling the bowl).
  • Others buy physical, and they much prefer to do that on price weakness… but if the strength seems sustained then they seem to buy a little anyway, perhaps grudgingly, but certainly less so (at least by weight, if not $cost).
  • The mines can't feed more physical through the system reserves stream, while the $price is too weak and their costs to bring to market haven't fallen at least as hard.
So we either need to see:
  • something to make the paper traders think "gold" has escaped from the bear, so that (a) the Eastern physical buyers drain less weight from the system reserves, and (b) the miners can increase the physical coming through the market (i.e.: to see the quiet run on the fractionally-reserved gold banking system's reserves stopped, even reversed).
  • the physical system reserves will finally fall below a critical level, and the system will break when the next call comes for allocation or delivery. 

Ultimately, either the price "goes up enough from here" to keep the wheels on the present system, meaning the physical bullion and paper derivative prices of gold continue trading in lock step because the markets perceive them as fungible, or the wheels fall off because the physical reserves, underpinning confidence in the fungibility across all these various products, were stripped out at bargain basement prices by unsophisticated-but-savvy value seekers. Leaving, quite obviously to all, only the prospect of cash settlement for all of these paper derivative products… yes, including fully-paid-up spot unallocated credits in the bullion bankers' books and XAUwhatever longs in the, somewhat huge, forex market.

Will the market then proceed to bid up the price of these paper derivative products, in lock step with the price of physical bullion? Or are they more likely to avoid the foul-smelling paper that they find trying to make its way back through the S bend, while instead embracing the real deal?

Hey! … Freegold team sucks!!

… yeah, whatever…

Thursday 19 September 2013

New Gold Dream

Gold is not "financial capital", because it is not money but a tradable asset.

It is also not a "capital good", because it is not significantly part of the means of production.

It is, however, a durable physical wealth asset that can be readily traded for financial capital, which can be used to procure capital goods (or consumption items… or gold!).

If gold were routinely demanded to settle current account imbalances, and was traded free of "fiat gold" (a creditised financial anacronism, left over after the bygone international financial system of yesteryear) and were priced accordingly, this 'Freegold' would significantly reduce the necessity to attract capital account surpluses (for trade deficit countries to go ever-deeper into debt to trade surplus countries).

Balance in global trade would be restored.

Happy happy happy!

Tuesday 17 September 2013

Occupy This!

             The revolution begins within, comrade!

Nobody is forced to use Wall Street's (The City's, etc, etc) products and services.

You don't have to keep a fat stack of "cash in the bank", that those evil Banksters can gamble with.

You don't need to put on your credit cards a load of pointless stuff you don't need and can't afford.

Everyone is not required to go to university and amass huge, life-sucking debts in the process.

It is not necessary for you to take on a massive mortgage that you will perhaps never be able to repay.

All of these things are choices we all have to make, as individuals. They are not mandatory checkboxes in the margin of your life story, which some corporate or public [busy] body demands that you must fill in, on pain of death, or imprisonment, or y'know, maybe just a wedgie… a Chinese burn… or a stern and disapproving look?

What is the Occupy movement today really all about? Is it about relieving Joe & Josephine Average of the requirement to make these kind of life choices and deal with the consequences that may ensue?

An example…

Sick of the banks getting bailed out when they make a mistake? Great, me too! So, let's stop the bank bail-outs.

But, wait a minute… how about those bail-ins, with innocent bank depositors like you'n'me losing our money? So unfair! Yes, that kind of thing is much more fun while it's happening to someone else (but especially those evil bankers of course).

Maybe your bank made a mistake with its bets… but that's not your problem — it's theirs! You didn't place any bet on anything, you didn't make any bad choices that went wrong for you. Right? ;-)

Be the change you want to see.
Throw yourself down the well. Or… just take your head out of your ass.

Thursday 5 September 2013

OMG teh government is coming to take our money!!

I disagree with those claiming "evil government will take our bank deposits!!".

I think instead there simply isn't enough money in the system to cover the amount of assets (bank liabilities… "deposits") that will at some point get called. The banks will not receive a government bail-out again, but savers (those with deposit balances above the insured limit) getting bailed-in.

That isn't the government doing anything -- it is the government not doing something! IMO ol' Marty (among others) has scrambled his noodle in his bid to blame government for every problem that comes along.

The government will this time simply not be available when the call comes to provide offseting assets (UST bonds) to the Central Bank, in order to enable the creation of that lovely moar money for the banks… so they can turn around and make good on all their promises to "depositors".

This is credibility deflation. Of over-leveraged retail banks. Savers have given the banks too much credit.

It is to say "the link between retail banks and the nation State will be severed". (smile)

Bank deposit credit balances are not "money".
This is analogous to "spot gold" credits not being gold.

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