For years, bulls of gold and silver have complained about how derivatives have been used to suppress their prices. Their dreams of the practice ending could be coming true.
Alasdair - I have benefitted so much from your writings over the last several years. Your credibiity was the primary reason my wife and I selected GM as our partner for long term acquisition and storage of our PM's in both personal and IRA accounts so thank you for what you have purposed to do, we are part of the fruit of your efforts...which brings me to a question...I hear your voice say over and over, "get the hell out of credit..." along wiht the work of David Rogers Webb on the Great Taking, which you have echoed, I often get curious when so many say your should have a 10-40% or greater allocation to the metals. When I think about diversifying assets while avoiding credit and counterparty risk, it seems that where we are, PM's and a bit of realestate, nothing in the markets or government debt or currenc instruments...I find myself in a quandry of where else can one safely diversify while guarding against the looming disasters. We are very much in hte preservation of wealth mode and my tendency is to have a much higher allocation that anyone seems to be willing to say...except for you, and Egon...am I reading you correctly there or are their places you would invest outside of these in the next handful of years given all we know?
I decided to hold as little fiat as possible. Fortunately I can buy physical Gold here in KL at my Singaporean bank (UOB) and I just convert it back to fiat, again at the bank, for monthly costs. I guess I'm lucky being able to do this.
The fiat currency mechanism as we know it is indeed coming to an end, and if people want to be able to best protect themselves, then gold (and to an extent silver) are likely to do that based on history!
Alasdair, have you seen Coinage Act 1971, 'power to regulate coinage by proclamation', item (e). They believe they can call in any gold/silver coin they have minted! Yes, the CGT-exempt ones!
Wow ...exceptional as usual and as usual so much to unpack and get my head around. Education is never easy with the neuroplasticity becoming more and more less flexible
Alisdair you mentioned gold being money in common law. In commonwealth countries does ultimate ownership of precious metals still reside with the crown and over ride private rights ?
I wonder if someone could explain the "Big Bang" to me. I don't understand this paragraph:
"The first and most obvious was to reform the financial system so that the banks would wrest control of financial securities from the brokerage industry: this resulted in London’s big-bang, implemented by the Thatcher government in the mid-eighties at the US Treasury’s behest. A capital-starved securities industry would become turbocharged by bank finance, ensuring a perpetual bull market in financial asset values, including government debt, and ensuring everlasting demand for dollars."
As usual Alasdair gets to the very heart of the issue. Just one additional point of my own; i.e., gold isn't real money because Roman Law says so. It is real money because it is the best indirect medium of exchange as recognized by the people from time immemorial. In my humble opinion, Roman Law confirmed this fact.
in theory if you want something from china, lets say, you wire them gold from your blockchain account, fractional shares, and convert to yuan, pay the shipping, and you choose air freight. port of entry is where the big box retailers get tagged. the yuan to gold ratio will soon be fixed. the same item in dollars will cost more and will be subject to tariffs. most u.s. banks will have fractional gold accounts which link directly.
Thanks for this essay. I have a question. You write: "Put another way, the buyer and seller will both value money or its substitute the same, but the buyer values the goods or services more highly than the seller: otherwise, the exchange won’t take place." I don't understand this formulation. Why do you say both parties to the transaction value the money the same? It seems to me that the seller of the goods values the money more than the goods, and the buyer of the goods values the goods more than the money. That is what enables the transaction to take place. Can you explain why you think both parties put equal value on the money? Thank you.
You're confusing "objective" and "subjective" values. The objective value of the dollar is set by the government and industry. Since you know what the prices are, you know what the objective value is of your dollars. Whether or not you will spend those dollars for goods is the subjective value. My subjective value of my dollars may change depending on my circumstances but the objective value of those dollars is out of my control.
My take of Alisdair's point, is the only objective money is gold and silver. In the case of gold and silver, the objective value is set by the market - it's market money - because it's objective quality is it's weight. One ounce (or grain, or gram) today is an ounce of gold or silver, tomorrow, and unchanged.
However, given the nature of fiat money, it is subjective because the market price of fiat money regularly fluctuates, as does the market price of goods. Therefore, they are both subjective. Having said that, I might have mistook his meaning.
Alasdair - I have benefitted so much from your writings over the last several years. Your credibiity was the primary reason my wife and I selected GM as our partner for long term acquisition and storage of our PM's in both personal and IRA accounts so thank you for what you have purposed to do, we are part of the fruit of your efforts...which brings me to a question...I hear your voice say over and over, "get the hell out of credit..." along wiht the work of David Rogers Webb on the Great Taking, which you have echoed, I often get curious when so many say your should have a 10-40% or greater allocation to the metals. When I think about diversifying assets while avoiding credit and counterparty risk, it seems that where we are, PM's and a bit of realestate, nothing in the markets or government debt or currenc instruments...I find myself in a quandry of where else can one safely diversify while guarding against the looming disasters. We are very much in hte preservation of wealth mode and my tendency is to have a much higher allocation that anyone seems to be willing to say...except for you, and Egon...am I reading you correctly there or are their places you would invest outside of these in the next handful of years given all we know?
I decided to hold as little fiat as possible. Fortunately I can buy physical Gold here in KL at my Singaporean bank (UOB) and I just convert it back to fiat, again at the bank, for monthly costs. I guess I'm lucky being able to do this.
And isn’t it interesting that as gold and silver rise dramatically in dollar terms, people rush to SELL their jewelry, cutlery, etc.
Desparation or Brainwashing?
Totally agree sir and well written as per usual.
The fiat currency mechanism as we know it is indeed coming to an end, and if people want to be able to best protect themselves, then gold (and to an extent silver) are likely to do that based on history!
Alasdair, have you seen Coinage Act 1971, 'power to regulate coinage by proclamation', item (e). They believe they can call in any gold/silver coin they have minted! Yes, the CGT-exempt ones!
Wow ...exceptional as usual and as usual so much to unpack and get my head around. Education is never easy with the neuroplasticity becoming more and more less flexible
Alisdair you mentioned gold being money in common law. In commonwealth countries does ultimate ownership of precious metals still reside with the crown and over ride private rights ?
I wonder if someone could explain the "Big Bang" to me. I don't understand this paragraph:
"The first and most obvious was to reform the financial system so that the banks would wrest control of financial securities from the brokerage industry: this resulted in London’s big-bang, implemented by the Thatcher government in the mid-eighties at the US Treasury’s behest. A capital-starved securities industry would become turbocharged by bank finance, ensuring a perpetual bull market in financial asset values, including government debt, and ensuring everlasting demand for dollars."
Thanks,
Pat
As usual Alasdair gets to the very heart of the issue. Just one additional point of my own; i.e., gold isn't real money because Roman Law says so. It is real money because it is the best indirect medium of exchange as recognized by the people from time immemorial. In my humble opinion, Roman Law confirmed this fact.
in theory if you want something from china, lets say, you wire them gold from your blockchain account, fractional shares, and convert to yuan, pay the shipping, and you choose air freight. port of entry is where the big box retailers get tagged. the yuan to gold ratio will soon be fixed. the same item in dollars will cost more and will be subject to tariffs. most u.s. banks will have fractional gold accounts which link directly.
Thanks for this essay. I have a question. You write: "Put another way, the buyer and seller will both value money or its substitute the same, but the buyer values the goods or services more highly than the seller: otherwise, the exchange won’t take place." I don't understand this formulation. Why do you say both parties to the transaction value the money the same? It seems to me that the seller of the goods values the money more than the goods, and the buyer of the goods values the goods more than the money. That is what enables the transaction to take place. Can you explain why you think both parties put equal value on the money? Thank you.
You're confusing "objective" and "subjective" values. The objective value of the dollar is set by the government and industry. Since you know what the prices are, you know what the objective value is of your dollars. Whether or not you will spend those dollars for goods is the subjective value. My subjective value of my dollars may change depending on my circumstances but the objective value of those dollars is out of my control.
My take of Alisdair's point, is the only objective money is gold and silver. In the case of gold and silver, the objective value is set by the market - it's market money - because it's objective quality is it's weight. One ounce (or grain, or gram) today is an ounce of gold or silver, tomorrow, and unchanged.
However, given the nature of fiat money, it is subjective because the market price of fiat money regularly fluctuates, as does the market price of goods. Therefore, they are both subjective. Having said that, I might have mistook his meaning.