Still time to buy gold imo. - Page 131 - Economics -- Two Plus Two Poker Forums

But once the current dollar reserve system fails and freegold is unleashed, it will no longer be manipulated via the paper gold and derivatives market and we will be left with the valuation given to gold by the world's central banks as it will continue to be used to settle trade. Maybe they could restart the paper gold and derivatives scheme once again but that should take a while since everyone with paper gold will have just gotten screwed.

I think the US system fails in the future but, the ensuing madness won't last long enough for us to grow accustomed to trading and bartering. When a new system is ushered in and people feel "safe," the gold trade is over. I don't want to hold gold when the gov't, central banks or BIS/WorldBank fixing the price. Gold will be discouraged through taxation and will likely be a part of a new system, not the focus.

I appreciate your other responses.

Have to go.

01-14-2011 , 06:27 PM

#3252

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Chris Martenson - JP Morgan Wins: CFTC Position Limits Do Not Apply (To Them)

Quote:

Speaking of changing the rules...

Gold and silver are now down hard over the past two days, and the reason may have something to do with the fact that the CFTC utterly caved to JPM in their long-awaited decision on position limits in a 4-1 vote.

Quote:

But this is:

Quote:

Spot-month position limit levels set at 25% of deliverable supply for a given commodity, with a conditional spot month limit of five times that amount for entities with positions exclusively in cash-settled contracts

That's just horrible.

For anybody like JPM that has no intent of taking physical delivery, they will be prevented from accumulating a position that is more than 125% of the total deliverable supply. What sort of a limit is that?? That's like trying to limit the damage from auto accidents by 'limiting' freeway speeds to 'no more than' 175 mph.

Also, anybody who might want to actually buy the physical is limited to 25%, so any potential Hunt Bros. need not apply. The outer limits of this game have been exclusively reserved for speculators and manipulators.

That's not even remotely the outcome I was hoping for. This 'ruling' tantamount to saying "carry on!"

...

Quote:

But it gets worse:

Quote:

Exemptions for bona fide hedging transactions (based on the Dodd-Frank Act’s new requirements for such transactions) and for positions that are established in good faith prior to the effective date of specific limits adopted pursuant to the proposed regulations.

Translation: "JPMs silver position is in complete violation of even these generous new 'rules' so we're just going to let them keep it."

01-14-2011 , 07:01 PM

#3253

tolbiny

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Quote:

Originally Posted by Mrmusicrecorder

A new diversified SDR or a new basket of currencies (that may or may not be backed by any tangible assets).

New currencies have been tried. They fail. The reason pegging to the dollar has worked in the past is not that the promise to peg to the dollar is any more believable than the promise that the new currency will be managed well- its that the a peg to the dollar can be monitored more easily.

01-14-2011 , 10:36 PM

#3254

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by tolbiny

New currencies have been tried. They fail.

Would you have said this about the pound sterling before the dollar became the new world reserve currency?

But I see your point.

Quote:

The reason pegging to the dollar has worked in the past is not that the promise to peg to the dollar is any more believable than the promise that the new currency will be managed well- its that the a peg to the dollar can be monitored more easily.

It wouldn't be monitored more easily if the USD was devaluing faster than the new currency relative to a "stable" basket of world currencies. As a bad example, I'll use the IMF in 2003 switching from CHF to SDR as a unit of account... because it was "monitored more easily".

But again, I see your point, the implementation would be difficult and possibly not work.

Let's take a quick poll on who has been working toward a new world reserve currency:
China
the IMF
the UN
G8
G20
the Council on Foreign Relations
Russia including Medvedev and Putin
Gordon Brown
Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates)
the World Bank
the World Trade Organization
India
Brazil
the Bank of International Settlements
and prominent business leaders throughout the world.

These powers have been telling you for about 4 years now, on a regular basis (and for nearly a decade on occasion), that they are developing a new reserve currency system (most, based on a new world currency)... you can consider it a strong possibility. Anyone (not listed above) with competing theories is at a disadvantage imo.

01-15-2011 , 04:05 AM

#3255

Bigdaddydvo

King of the Politics Forum

Join Date: Aug 2004 Posts: 21,329

Decent size dip here down to $1362

01-15-2011 , 11:40 AM

#3256

Nitrub

Pooh-Bah

Join Date: Mar 2008 Posts: 4,386

Quote:

Originally Posted by J.R.

I'd just buy GDXJ.

alright good!

http://tfmetalsreport.blogspot.com/2...ke-minute.html

apparently TF recommends this too, hopefully PMs will weaken further this coming week and will be buying GDXJ

01-15-2011 , 03:20 PM

#3257

Nitrub

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Join Date: Mar 2008 Posts: 4,386

oh also I cant seem to find how dividend structure works on GDXJ, when is the ex-div date?

01-16-2011 , 02:11 AM

#3258

Mediocre_Player

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lol @ dividends + junior minors in the same sentence

01-16-2011 , 07:19 AM

#3259

Nitrub

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Join Date: Mar 2008 Posts: 4,386

Quote:

Originally Posted by Mediocre_Player

lol @ dividends + junior minors in the same sentence

I know its weird, but everywhere I watch it shows it pays 8% dividend

maybe its because over 30% of it are just exploring not mining?

01-16-2011 , 08:34 AM

#3260

clowntable

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Of course gold>silver because in many countries gold isn't taxed and silver is. Can't support them gobernments yo

01-16-2011 , 09:09 AM

#3261

clowntable

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Quote:

So you take a piece of paper and you write "basket of oranges" on it. He then gives you some eggs. The fiat monetary system has been restarted. It is an inevitability and a necessity.

If the person writing the IOU is trustable then there's nothing wrong with this system. If however he someday simply removes the "redeemable for oranges" part on the IOU then he's probably a government official

Actually what would happen is that if the person has some doubts about the credibility of the IOU guy he'll demand the oranges instead and just trade the oranges away later. After some oranges rot away people will realize that oranges are not ideal as a medium of exchange and eventually a commodity with certain characteristics will be used instead (i.e. durable, easy to split up, easy to carry etc....see cigarettes in POW camps or well them gold coins yo)

Quote:

This is what worries me that you basically only buy a hedge vs inflation.

As long as you belive that the FED will keep printing money this isn't horrible and I mean realistically what other option is there for the FED/US government.

Quote:

Would you have said this about the pound sterling before the dollar became the new world reserve currency?

I'd gladly exchange one pound of sterling silver for a 1 pound bill ;P

Last edited by clowntable; 01-16-2011 at 09:28 AM.

01-16-2011 , 01:34 PM

#3262

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

FOMC September 20, 2005 meeting transcript:

Quote:

CHAIRMAN GREENSPAN. Several years ago I recall that we ran a correlation with the gold price against levels of inflation. We actually came out with some forecasting capability. Has that been rerun in recent years?

MS. [Karen] JOHNSON [(PhD. MIT, 1973)]. Not by us.

MR. STOCKTON: Not by me. I think we did that at your request. [Laughter] And we were not so convinced by the evidence that we’ve maintained that particular series for forecasting.

MR. REINHART. I think you actually alternated your requests—asking each one of us in turn—and we haven’t updated that in a long time.

CHAIRMAN GREENSPAN. The problem is that it kept coming out, for reasons I can’t understand, with some information capability. The reason I raise it, as you know, is that we have a big, fat spike here, and I don’t know what to make of it.

MS. JOHNSON. Yes, a 17-year high. I volunteer to run the gold price. [Laughter]

CHAIRMAN GREENSPAN. Provided that you don’t tell anybody you’re doing it!

MS. JOHNSON. Right.

01-16-2011 , 05:32 PM

#3263

Mrmusicrecorder

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Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by Nitrub

oh also I cant seem to find how dividend structure works on GDXJ, when is the ex-div date?

GDXJ's div ex date was 12/23/2010, paid over 8%, since it has sold off beyond the div (typically it should sell off 8% in this case). I believe GDXJ is an annual payer, next year should be a good dividend check for those who hold it.

Gross Expense ratio 0.59%.

01-16-2011 , 05:34 PM

#3264

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by Nitrub

I know its weird, but everywhere I watch it shows it pays 8% dividend

Not weird, over 8% fwiw.

01-16-2011 , 08:32 PM

#3265

galmost

adept

Join Date: Sep 2006 Posts: 1,036

fwiw, regarding Blondie's comment here, & JR's reply here

Karl Otto Pöhl, former president of the Bundesbank, is one of the fathers of the Euro.

Quote:

He was a former president of the Bundesbank and he had been eased out of that presidency by Helmut Kohl specifically to work with Jacques Delors in the creation of the new currency, the Euro. And he was, I thought, extremely forthcoming. He said, ‘It is my duty to tell you my English friends (they never say British, I don’t know why, they always say English) that you will have to abandon the British nation state because the future has no provision for the nation state within it’.

http://www.brugesgroup.com/mediacent...?article=13265

maybe a piece in the freegold puzzle

01-17-2011 , 08:00 AM

#3266

Nitrub

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Join Date: Mar 2008 Posts: 4,386

Quote:

Originally Posted by Mrmusicrecorder

since it has sold off beyond the div (typically it should sell off 8% in this case).

can you explain a bit more that selloff part?

so if i would buy this week i wouldnt be getting dividend this year end right?

01-17-2011 , 10:56 AM

#3267

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Quote:

Originally Posted by galmost

fwiw, regarding Blondie's comment here, & JR's reply here

Karl Otto Pöhl, former president of the Bundesbank, is one of the fathers of the Euro.

http://www.brugesgroup.com/mediacent...?article=13265

maybe a piece in the freegold puzzle

Good stuff galmost.

I think that is a reference to the triffin dilemma, and how the Euro was designed to avoid this issue by severing its link to any particular nation state.

You've probably seen one of the common argument against the Euro from people like Krugman is that is can't do individual monetary policy because the actions effect the money supply across all euro nations, so there are conflicts of interest and thsi will cause the Euro to fail. Krugman:

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The crisis brought further evidence of a basic design flaw of monetary union, namely that we could not rely for its sound working on member countries to carry out appropriate economic policies

http://www.huffingtonpost.com/2011/0..._n_808471.html

That's true, but there is also a benefit they see, which is why it was built as it was.

Quote:

Back to that first flaw, the dollar is the national currency of a single nation-state, yet it is also held globally as a reserve currency to serve all of its global uses, which in turn give it value even today through the global network effect. So how is this a flaw? Well, it leads to a conflict of interests between the issuing nation-state's internal and external obligations as manager of the currency. This is called the Triffin Dilemma.

From Wikipedia: The Triffin dilemma (less commonly the Triffin paradox) is the observation that when a national currency also serves as an international reserve currency (as the US dollar does today), there are fundamental conflicts of interest between short-term domestic and long-term international economic objectives. This dilemma was first identified by Belgian-American economist Robert Triffin in the 1960s, who pointed out that the country issuing the global reserve currency must be willing to run large trade deficits in order to supply the world with enough of its currency to fulfill world demand for foreign exchange reserves.

The use of a national currency as global reserve currency leads to a tension between national monetary policy and global monetary policy. This is reflected in fundamental imbalances in the balance of payments, specifically the current account: some goals require an overall flow of dollars out of the United States, while others require an overall flow of dollars in to the United States. Currency inflows and outflows of equal magnitudes cannot both happen at once.

The Triffin dilemma is usually used to articulate the problems with the US dollar's role as the reserve currency under the Bretton Woods system, or more generally of using a national currency as an international reserve currency.

...

Quote:

In the wake of the Financial crisis of 2007-2008, the governor of the People's Bank of China explicitly named the Triffin Dilemma as the root cause of the economic disorder, in a speech titled Reform the International Monetary System.

It is clear, at least to me, that today we have the mother of all tensions between national monetary policy and global monetary policy. The Triffin paradox is in full bloom! The dollar is exhibiting its contradictory nature in view of the world. As Costata asked in a recent comment: Are the US external creditors and issuers of the currencies affected by these policies going to stand for this?

Meanwhile, as the dollar (mis)management was busily becoming complacent, a new competitor emerged. On January 1, 2002, euro notes and coins were introduced to twelve nations as a new medium of exchange. On January 18, 2002 it was announced that the Charlemagne Prize, which is normally given to people the likes of queens, presidents and Popes, would be awarded to a thing, the new euro. During his acceptance speech, President of the ECB, the late Dr. Willem F. Duisenberg said this about the euro:

Quote:

The euro is the first currency that has not only severed its link to gold, but also its link to the nation-state.

...

Dilemma

01-17-2011 , 01:10 PM

#3268

Bremen

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Quote:

Originally Posted by Nitrub

can you explain a bit more that selloff part?

so if i would buy this week i wouldnt be getting dividend this year end right?

They pay it with assests from the trust, which means the value of the trust drops and as such the value of the stock drops.

01-17-2011 , 08:10 PM

#3269

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by Nitrub

can you explain a bit more that selloff part?

At the ex-dividend date you can expect the instrument (GDXJ in this case) to sell off or be discounted by the pay out of the dividend (loss of earnings to owners of shares) and that new share buyers will not receive dividends until the next pay out and so you are now buying an ex dividend (without dividend) as opposed to purchasing GDXJ in November that was cum dividend (with dividend).

Quote:

so if i would buy this week i wouldnt be getting dividend this year end right?

It is very likely GDXJ will pay another large dividend at the end of the year, yes.

01-18-2011 , 03:38 AM

#3270

Nitrub

Pooh-Bah

Join Date: Mar 2008 Posts: 4,386

thanks for clearing things up for me

01-18-2011 , 12:51 PM

#3271

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Hu Gets Full State Honors as Visit Displays Obama's Dueling Views of China

Quote:

Hu arrives in Washington today for his first state visit to the U.S. with Chinese executives

What's Hu been up to?

Hu highlights need for U.S.-China cooperation, questions dollar

Quote:

January 17, 2011 (The Wall Street Journal) — Chinese President Hu Jintao emphasized the need for cooperation with the U.S. in areas from new energy to space ahead of his visit to Washington this week, but he called the present U.S. dollar-dominated currency system a “product of the past” and highlighted moves to turn the yuan into a global currency.
...

… Some of Mr. Hu’s most significant comments dealt with the future of the dollar and currency exchange rates.

“The current international currency system is the product of the past,” he said, noting the primacy of the U.S. dollar as a reserve currency and its use in international trade and investment.

The comment is the latest sign that the dollar’s future continues to concern the most senior levels of the Chinese government. Beijing fears not only that loose U.S. monetary policy is fueling inflation, but that it will erode the value of China’s holdings of dollars within its vast foreign-exchange reserves, which reached $2.85 trillion at the end of 2010.

China’s central bank governor, Zhou Xiaochuan, created an international stir in March 2009 by calling for the creation of a new synthetic reserve currency as an alternative to the dollar. Mr. Hu’s comments add to the sense that China intends to challenge the post-World War II financial order largely created by the U.S. and dominated by the dollar.

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RS For brief and potentially helpful background/context on China’s prior reserve-related stirrings, read this and this just for starters…

**

first this: China’s Dollar Delusion

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The People’s Bank of China recently reiterated the need for a global currency to rival the US dollar—through a vastly expanded role for the Special Drawing Rights (SDRs)…

China has now achieved creditor status. And, consciously or otherwise, its latest moves are pushing it toward a hard currency. It seeks to make Shanghai an international financial center. It has entered into renminbi swap arrangements with several countries, including Brazil and Argentina. And it seeks the strengthening of the Chiang Mai Initiative to create a regional Asian pool of swappable foreign exchange reserves. These three moves constitute unilateral, bilateral, and regional moves in the direction of a hard currency. If China admits to itself where this road is leading, its attitude toward SDRs will change.

Quote:

RS View: China’s attitude is likely already where it needs to be. I’ve previously expressed the view (back in March) that the SDR-specific remarks of Zhou Xiaochuan, governor of the People’s Bank of China, were more of a superficial political nature — and that perception of the actual truth of the matter was largely borne out just a month later when China announced April 24th that it had added 454 tonnes of gold to its stash of foreign exchange reserves, increasing its official gold holdings by 76%.

One may reasonably expect more activity of this nature to follow.

**

second this: Dollar Is Funny Money in Push for World Currency

Quote:

...The U.S. dollar is rapidly transforming into a Mickey Mouse currency. This has led to a rising call for the creation of an alternative to the dollar in the form of a new world currency. It would be an enormous mistake to discount these calls as a sideshow. The odds of a world currency emerging have never been higher.

The calls are coming from many corners. Nobel Prize-winning economist Joseph Stiglitz chaired a United Nations panel that recommended the creation of a global reserve currency. Zhou Xiaochuan, governor of the People’s Bank of China, proposed that the International Monetary Fund take over the global leadership role traditionally ceded to the U.S. And Russian President Dmitry Medvedev handed out minted coin samples of a new world currency at the recent Group of Eight meeting in Italy.

These calls are worth paying attention to for a number of reasons. The arguments for a world currency are much better than you might think. An alternative to the dollar clearly has a promising market that can develop even if it is opposed by the U.S. And the idea of a world currency is most attractive to those who devoutly believe in multilateral institutions and the Canon of Lord Keynes — beliefs that are hardly in short supply in Barack Obama’s White House....

Quote:

RS Comment: So often in commentaries of this sort that propose a “solution”, the author is strangely obsessed with the notion of replacing the dollar (as a reserve currency unit) with simply another institutional emission of similar ilk (such as currencies of other nations, SDRs, bancors and whatnot). Their avoidance of any meaningful discussion of the most obvious remedy is almost pathological in the extreme. To be sure, we don’t need to invent any manner of universal reserve currency to fill the role of a unit of account because that role is already served in a fully functional capacity for any given country by its own monetary unit.

What IS desperately needed, however, is a universally respected reserve asset capable of filling our current void with a reliable presence that serves as a store of value. And far from needing to be conjured or created by complex international committees, that asset is already in existence and held in goodly store by central bankers and prudent individuals around the world — it’s known as gold. From amid the ruins of a chaotic financial crisis that was brought about by its own complexity, a degree of sanity will prevail, and gold as a freely floating asset will arise in stature as THE important element of global monetary reserves. The floating aspect is the vital evolutionary improvement over all previous structural monetary failures which tried to use a gold standard at a fixed price (i.e., unit of account) perversely joined to the very elastic money supply of any given country’s banking system.

01-18-2011 , 05:29 PM

#3272

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by Nitrub

thanks for clearing things up for me

You are most welcome sir.

01-20-2011 , 10:02 AM

#3273

Nitrub

Pooh-Bah

Join Date: Mar 2008 Posts: 4,386

metals on sale, yay!

01-20-2011 , 11:40 AM

#3274

Bremen

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Join Date: Aug 2004 Posts: 15,799

Wow, silver under $27.50. US Mint has already broken the monthly silver eagle sales record, I doubt this will help...

01-20-2011 , 12:41 PM

#3275

tolbiny

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Getting tempting to break my target in the 1330s and buy back my options.

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