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Red Alert: Gold Backwardation!!!

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posted on Dec, 7 2008 @ 07:56 PM
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The question that Ayn Rand posed in one of her writings was: If money is the root of all evil, then what is the root of money? Evil? Surely not.
In a nutshell she postulates that it derives from the effort of production. Work has a value attached to it. The creation of something through work establishes a wealth credit. Held in value, items or wealth credits can be exchanged for other goods, a market is established between producers. Honest work is the root of all wealth.
On Professor Fetkes' web page www.professorfekete.com... there are numerous essays that provoke the reader to question prior beliefs about money. The first, at the bottom of the list, is Ayns'.
Basically, she explains, in "A Hymn to Money", that for transactions to be successful there has to be an exchange of value for value. Effort for effort. As the complexity of transactions grew from diverse wants and needs, it became obvious that the direct bartering system was inefficient. A new medium of exchange was needed, a system of payment-in-full, based on value for value, that would facilitate the flow of goods between parties. The new medium had to be universally recognisable, (cross boarder recognition and acceptance) limited to supply via effort or wealth creation, seen to hold standards such as consistancy of quality or fineness, portabililty, durability and hold its value over time. That last requirement meant that your labour could be stored (savings) for future transactions with other parties, without loss of purchasing power. It needed to convey to each participant a trust in each other's promise of good faith, in delivery of quality goods for payment-in-full on competion of the transaction. In other words, the effort for producing goods and services has to be compensated with an item of equal value.
To be seen as payment in full, a medium of fair exchange must not carry a risk of liability to the seller. i.e. the seller should not be left at a loss in event of the buyer defaulting.
Gold and silver were the answer.
Because there is a huge effort required in the production of PM's, there is a "wealth credit" or "Effort Credit" attached to them. Because uf their rareness and their ability to fulfill the criteria of money, they were universally accepted. Effectively, once in your hands, they are nobody's liability to you. No promise to pay, Payment-in-Full.
They simply cannot be denied their importance in the context of the history of money. That wholesale investors have been holding them for thousands of years speaks volumnes.
Because NO modern country fully backs their currency with gold or any other tangible item (Don't be fooled by the claim on this blog that the Swiss back their currency with it, that ceased just a few years ago), there is a breakdown in every criteria of what constitutes sound money. These modern curriencies lose purchasing power over time through overly easy supply at little cost to the issuer. Their over-issuance destroys saved labour's purchasing power and therefore destroy personal wealth. Ask any pensioner who has saved their labour in paper currencies.
The government sponsered private banks (or is it the other way around) have created a system of payment whereby when you sell your goods you must accept the paper currency of the day, as payment-in-full, for goods and services. The bewildered seller is left holding a printed cheque, a note of debt, a debt instrument. Eventually the market becomes flooded with these un-backed promises of credit, resulting in the market participants' faith in money to convey value for value, destroyed. Look again at the above criteria of what constitutes fair and sound money and ask yourself if there is any modern currency that fulfills any of the required criteria.
When everyone is holding promises to pay in exchange for our labour, we are all left holding the bag. The question is; " What's in the bag!?" Answer ......IOU's.
Demand Payment-in-Full.



posted on Dec, 10 2008 @ 03:18 AM
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Back in the 70's when Nixon took the US off of the gold standard which pegged or fixed the price of gold to the dollar, set back in 1947 at $40/oz gold began it's ascent from $40./oz Up to $750./oz.

Selling of gold reserves by Central Banks has kept the price of Gold down but for example when the IMF recently told Germany it was their turn to sell some of their Gold, they refused to part with it.

China has announced that they are in the market for massive amounts of GOLD to replace a fair portion of their Trillions of US Dollar reserves. The sheer amount of Gold that they are in the market for will only raise the price of gold. Especially with the supply diminishing due to mines unwilling to mine the ORE profitably with the price currently pushed so low.

The Russians are apparently looking to pull an act of cornering the GOLD market similar to what the Hunt Brothers had done with SILVER.
In the 80's the Hunt brothers drove up silver prices by buying up all of the contracts AND by taking delivery. Silver went from $4/oz to $80./oz practically overnight.

This is a perfect storm, the USA is bankrupt and the bailout was used to keep things afloat until Bush and crew are out of office.With the state of the economy sliding deeper into recession and unemployment on the rise, the tax revenues are continuously decreasing. This is what the Govt uses to pay the interest on the Debt. With fewer and fewer revenues the govt will eventually have to default on it's payments and that will be all she wrote.

I feel that that is what is going on behind the scenes with all of these 0% and negative rates of return. The FED is scrambling to hold things together until January.
When that happens there will be a mass exodus of the Dollar and GOLD will only skyrocket in value due to it's historically been a safe haven during economic calamity.



posted on Dec, 13 2008 @ 02:30 AM
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Comex said warning brokers about December gold squeeze

I received a call this morning from a commodities broker who told me that the Comex is alerting various futures firms about the potential of a squeeze on the December contract and is advising the $840 December shorts to exit their positions. That is the remaining open position....

My broker friend said his back office said this sort of alert is highly unusual and that the concern is real, not only for gold, but for other commodities too, like copper and palladium, as there is a good deal of talk of taking deliveries there too. But gold is the one for which the advice to cover went out.

This is an extremely productive development and could spur the price of gold up quickly as word spreads....

Full Text


But hey, why give credence to the relatively few folks that spend entire careers studying the complexities of Gold, from market-to-monetary policy...

...when commentary...unsupported by logical argument, devoid of fundamental reasoning, and unfettered by boring technical analysis...

is so readily available on the Internet:


Originally posted by disgustedbyhumanity
....anyone with half a brain can see that Gold is going to keep dropping over both the near and long term.


Translation: I don't own any Gold



 
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