TWITTER AND GOLD. MY 2014 FORECASTS BECOME REALITY. BECAUSE ... I AM RIGHT

Most often, I am not one to brag, but because there are too many hustlers, scam artists and shills out there distorting reality, staging their Bizarro Theater plays, cajoling the innocent with their blather about gold and Twitter, I have decided to share this with you.

Here, here is a nutshell is what I wrote about in my forecasts:

1. There are no drivers for gold, none.
2. Twitter has horrible business design — expenses outpace revenues by a wide margin.

In current dollars, Twitter is down -59.8% from the December 26, 2013, peak of $73.31. The annualized loss on Twitter is -43.3%.

Many might not believe so, but likely, Twitter is a fad that has passed. Those 15-24 have taken up Line, KIK, Viber, Whatsapp, Snapchat and Instagram.

Read the forecasts from 2014:

Gold

• LOSING ITS LUSTER. THE SECRET FUTURE OF GOLD REVEALED., Friday, May 23, 2014
• IS THERE EVER REASON TO BUY GOLD?, Wednesday, July 9, 2014
• "BUY GOLD" ADVICE IS AARON BULL*S$T IDOL WORSHIP, Tuesday, December 9, 2014
• FOLLOW THE YELLOW BRICK ROAD INTO THE LAND OF FOOL'S GOLD, Thursday, December 11, 2014
• MORE FOOL'S GOLD FOOLERY. GOLD VS COMMODITIES, Thursday, December 11, 2014
• AFTER THE GOLD RUSH. YELLOW BRICK ROAD FINAL DESTINATION. FOOL'S GOLD VS THE S&P 500, Thursday, December 11, 2014
• S&P 500 VS GOLD, Wednesday, May 7, 2014
• SILVER AND GOLD, Saturday, May 24, 2014

Twitter

• TWITTER TO DIE WITHIN THREE YEARS, FIVE TOPS. #OUCH, Tuesday, April 29, 2014
• TWITTER VS DIRECTV; OR TWITTER REVEALS DOT COM 2.0 MADNESS IN THE 21ST CENTURY, Wednesday, April 30, 2014

Because I know the true price of things, that is, the price of things in True Dollars™, I can see pricing relationship among things that many others cannot. In short, they are truly clueless and if you believe them, you are letting them lead you into the deepest caves without any flashlights or torches.

Soon, you can gain access to all my real-time charts priced in True Dollars™.

So what is the bottom line? Americans are living in the Greatest Depression. Credit continues to fall. Law givers in the USA demonetized gold last century. For all practical purposes, money — coined metal by weight and fineness — has not been used for more than a century.

Unless anyone believes in worldwide collapse, gold will be what it is, a rarer metal with industrial and commercial purposes only.

Some of the most popular blogger and YouTube personalities tied to the speculating business with the word Pacific in their business names shill for gold. Their incomes are tied to brokering gold, mostly selling it. And only one of those personalities actually has a background in finance.

So once again ...

Read more ...

A GOLD HUCKSTER GETS SMELTED. ALL THAT GLITTERS DOESN'T YIELD PROFITS IN THESE TIMES.

On Friday, July 24, 2015, a popular blogger cut and pasted a story from Bloomberg about hedge funds betting on a decline in gold prices, a first for hedgers.

In the Disqus comments, a comment by a guy named Doug Eberhardt caught my eye. That Doug Eberhardt seems to be the same Doug Eberhardt who writes gold and silver blog and who has written a book.

So in the comments, Doug claimed this:

Gold maintains its purchasing power over time. Silver too. Speaking of real rate of return, how about 51 years ago and how a quarter could buy you a gallon of gas and today that same quarter exchanged for the "scrip of the day" can still buy you a gallon of gas in most states except the left coast (up until a few weeks ago) at $2.65. Meanwhile a 1965 quarter can buy you 25 cents worth of gas today. 

Not one to believe anyone's boldface claims and already knowing that against many things, gold has lost buying power, I decided to look up Doug's claim about gasoline. The facts easily refute Doug's claim.

According to the DOE, the average price of a gallon of gasoline in the USA in both 1964 and 1965 was 30¢. At face value, a 1932-64 Washington quarter has been quoted to sell at $2.6566 (the quoted price on July 25 , 2015).

So in either 1964 or 1965, at face value, it would take 1.2 quarters to buy a gallon of gasoline.

Today, in all other states, except Washington, Nevada, Hawaii, Alaska and California, you could buy more gasoline with that same coin first sold to coin collectors than you could with that coin at face value in 1965. However, in Washington, Nevada, Hawaii, Alaska and California, every 1932-1964 quarter lost buying power with respect to a gallon of gasoline purchase. 

It never dawned on Doug that rather than any 1932-64 quarter keeping its buying power, oil production and refining become more efficient since 1965 thus letting sellers accept lower winning bids.

All should note there are storage, discovery and transaction costs associated with holding coins, finding buyers and transferring property as well as possession of the coins for today's legal tender. So the net gain anyone gets for selling gold or silver spot will be less than the spot price times quantity. It is this net gain that counts.

Also, if everyone rushed to sell his collection of 1932-64 quarters, the price for those quarters would fall. That said, nothing would preclude anyone from melting his coins, illegally of course, extracting the silver and selling that silver spot. As well, there are costs associated with smelting that would reduce the net gain upon sell.

After I presented Doug the facts, Doug accused me of being a nitpicker. Ironically, by his doing so, Doug revealed himself as one doing nitpicking. What Doug believes is nitpicking is what I call  prudent businessman reckoning.

After which, Doug engaged in a bit of ad hominem by writing, "Smack, if you knew anything about this industry, people don't rush out to sell their 90% silver quarters and dimes, they hoard them."

Of course, I never made any claims about what anyone actually does. However,  if people hoard their silver quarters and dimes, as Doug claims they do, what is the point of holding silver coins at all? Doing so is like hoarding a 1980s VHS porn collection or a collection of 1960s TOPPS baseball cards.

Doug then asked as if he believed he had something, "Did they [hoarders] rush out and sell them when silver as $49.50 an ounce in 2011? No."

Of course, stupidly, anyone who hoarded, lost out. Being paper rich is useless.

Like Bitcoin collectors, Doug seems to miss why anyone buys collectibles. If anyone sold his silver-laden coins at the top in 2011, he would have bought cash or other bank credit denominated in dollars. At day's end, collectibles are worthless until sold and what people want when they sell their collectibles is cash or other bank credit denominated in dollars.

Of course, Doug's beloved hoarders could spend their silver-laden coins for everyday products right now. However, they could only get 25¢ of buying power for each quarter, regardless of silver content.

Doug's livelihood seems to be tied into price appreciation for gold and silver. In the comments, Doug made this boldface claim: Gold maintains its purchasing power over time. Silver too.

Yet, I have shown many cases where Doug's claim is quite false. You can see proof in charts that Doug's claim is false: 

• FOLLOW THE YELLOW BRICK ROAD INTO THE LAND OF FOOL'S GOLD
• MORE FOOL'S GOLD FOOLERY. GOLD VS COMMODITIES
• AFTER THE GOLD RUSH. YELLOW BRICK ROAD FINAL DESTINATION. FOOL'S GOLD VS THE S&P 500

So, after being showed facts vs his mere claims, seemingly agitated, Doug began a campaign of bragging and more ad hominem  — "Smack, I'll put my reputation on the line of understanding this market better than you or anyone else...... Congress ... asked me to testify before them in 2010." Further, Doug accused me of committed the fallacy of the strawman argument.

Comparing gold and the S&P 500 isn't a strawman. Doug doesn't seem to understand what the strawman fallacy is.

Doug's position is this: "[G]old and silver hold their purchasing power over time."

My refutation of his position is direct: Against many things, gold has lost buying power. For my argument to have been a strawman, I would needed to have argued something like this:

You say, gold and silver hold their purchasing power over time. But I say, so what! FDR banned gold ownership with Executive Order 6102. You could buy gold today and have the government take it tomorrow.

Doug made this boldface claim: "Gold maintains its purchasing power over time. Silver too."  For his claim to be true, there could be no instances where gold and silver lose purchasing power against other commodities, other products and other vehicles of speculation.

The S&P 500 is one such vehicle of speculation. Gold has done poorly against the S&P 500.

As anyone can buy a share of the S&P 500, for your claim to be true, someone with gold would have needed at least to buy the same number of shares of the S&P 500 today as he could have done so many years ago.

From Q3 1976 to Q3 2011, True Gold grew at less than 1% a year, coming in at a scant 0.5% a year for a total of 19.6%, from $87.11 to $104.18. In the same period, True S&P 500 grew almost 4 times as fast, albeit at 1.8% a year for a total of 95%, from $78.12 to $152.33.

All can enjoy the facts right here on Bizarro Theater: IS THERE EVER REASON TO BUY GOLD?

As anyone can buy a share of the S&P 500, for Doug's claim to be true, someone with gold would have needed at least to buy the same number of shares of the S&P 500 today as he could have done so many years ago.

The exact opposite has happened. It has taken ever fewer shares of the S&P 500 to buy the same weight of gold. Said another way, it has taken ever more gold to buy one share of the S&P 500. In short, gold has lost buying power to the S&P 500 as it has to many things.

Against many uniform contract commodities, gold has lost buying power. Such comparisons are valid. Since demonetization, against many things, gold has lost its buying power.

If Doug believes his claim, he doesn't understand the reality of commerce. If Doug doesn't believe his claim but says it to get others to buy from him, Doug uses questionable business practices. 

Gold and silver have been demonetized. The price of gold, the price for silver as well as anything else conforms to the one, true, infrangible law that governs all of commerce, the Law of Prices.

The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer sets the price. Unlike man-made law, this law is inescapable.

Back in 2014, I showed readers of Bizarro Theater the future of gold. If you have not done so, you should read this: LOSING ITS LUSTER. THE SECRET FUTURE OF GOLD REVEALED.

Under the current state of the economy, bank credit and interest rates, the time to buy gold long has long gone. There are no drivers to buy gold. None.

Doug's livelihood seems to be tied into price appreciation for gold and silver. Doug said, "All my company sells are bullion coins as opposed to all other gold dealers," which seems that Doug is in the business of selling rounds. Selling gold rounds is a business predicated on finding buyers who believe people like Doug and who hope for a rise in the price of gold.

The worst bit are all the gold and silver hucksters preying upon gullible who suffer from end times delusions and thus feel compelled to become preppers for a future. It never dawns on them that if there would be worldwide financial collapse and reversion to money — coined metal by weight and fineness — even a small weight of gold and silver would make anyone rich.

Under total collapse, there won't be credit. Without credit, there won't be massive edifices of capital. Without capital there won't be products or wages.

It will take little gold to buy much of the few things that can be had.

UPDATE:

Today, 7/28/2015. a day after I wrote the above work, Doug couldn't resist himself. At the end of debate, one day ago, Doug wrote:

"I'll give you the last word and ignore you as you have your own agenda."

Doug lashed out recklessly, engaging in ad hominem. Some of Doug's gems were these:

• "You wouldn't make a good attorney."
• "I have now classified you as a troll who sits in their underwear at his computer and has nothing better to do with their time."
• "Next you used a strawman to make a point in bringing up the S&P 500 and not sticking with the 'issue.'"
• "#troll"

It seems Doug has stewed on everything I've written and having become enraged, Doug had to lash out it what seems to be little more than a childish tantrum. 

And yet, Doug Eberhardt wants adults to enter into purchases and sales with him by selling them gold or silver and buying from them their cash or bank credits. Doug's behavior should give anyone pause before considering entering into contract with him to buy gold or silver from him.

Doug still does not seem understand the fallacy of the strawman argument. Idiotically, Doug claimed "gold and silver hold their purchasing power over time". Whether or not Doug believes that to be true or Doug says such a phrase to wheedle others into buying gold and silver from Doug lacks relevancy.

It is not a strawman argument to compare things directly to which anyone would have lost their purchasing power had they bought gold and silver. It's a direct counterclaim. Producing a factual direct counterclaim so refutes your false claim, easily. 

One of those things is the S&P 500. Anyone can buy a share the S&P 500. The S&P 500 is one of those factual direct counterclaims.

I gave Doug a perfect example of what would be a strawman argument:

Doug's premise: You say, gold and silver hold their purchasing power over time.

Strawman: But I say, so what! FDR banned gold ownership with Executive Order 6102.

Knocked down strawman: You could buy gold today and have the government take it tomorrow. 

Ironically, Doug Eberhardt of buygoldandsilversafely.com's (that is the site Doug who commented put into the Disqus comments) argument against me is an example of the strawman fallacy. To wit:

After Doug Eberhardt said all should buy gold and silver because "gold and silver hold their purchasing power over time," Smack MacDougal showed factual instances where gold and silver lost purchasing power against other things.

Doug Eberhardt responded by implying that he was surprised that Smack hates anyone speculating on gold and silver so much that he wants them to become bankrupt by losing out on going long gold and silver. 

Doug Eberhardt of buygoldandsilversafely.com ought to prove to the world that he can time the market for gold and silver, exactly. His publicly-accessible writing on his blog alludes to Doug having such skill. However, Doug's publicly-accessible writing on his blog seems to be a whole bunch of gibberish masquerading as experience.

In True Dollars™, which is what counts, gold and silver will be going down for years, not months, but for years to come. There are no drivers for gold, none.

Read more ...

AFTER THE GOLD RUSH. YELLOW BRICK ROAD FINAL DESTINATION. FOOL'S GOLD VS THE S&P 500

This work is Part 3 on the Gold-to-Silver ratio and the Gold to whatever else ratio.

Here is the one graph many want to see.



Right now, hardly does it take any of a share of the S&P 500 to buy an ounce of gold.

Gold is so done. There are no drivers for gold.

Anyone who has bought gold since the end of Q3 2011 has lost buying power, that is three years running. Gold is a horrible speculation today. Since hitting a peak at Q3 2011, True Gold (discounting for inflation) has fallen -43.3%, falling at a yearly rate of -16.0%.

In the long bull run between Q3 1974 and Q3 2000, True S&P 500 grew at a yearly rate of 7%, growing a full 484.3%.

In the long gold run from a Q3 1976 to Q3 2011, True Gold grew at less than 1% a year, coming in at a scant 0.5% a year for a total of 19.6%, from $87.11 to $104.18. In the same period, True S&P 500 grew almost 4 times as fast, albeit at 1.8% a year for a total of 95%, from $78.12 to $152.33.

Easily then, compared to gold, even with the crash of 1987 and the following bear that ended in Q1 1988 (-32.2% annual decline), and the much longer bear markets of 2000-2002 (-21.7% annual decline) and 2007-2009 (-35.9%), stocks were still a much better deal than gold over the period 1976 to today.

The 2000s gold rush has brought out every gold bug who at long last felt vindicated for all of their ranting against financial asset-backed cash vs their favored gold-backed cash. That rush is over and has been three years.

Today. Bloomberg quoted spot gold at US$1,226.85, but in true terms, erasing the effects of inflation, True Gold (gold discounting for inflation) traded 15.3% below its long run average price, an average price billowed by the huge spike that happened between Q3 1976 and Q1 1986. Removing spikes from the average, and today, True Gold closed 2.5% below what likely is the long-run normal average for True Gold.

Those who take to the Internet proclaiming to be bullish on gold and encouraging others to buy gold should get forced to give answers.

• What are the drivers for gold? 
• Where is all the buying power coming in to buy gold? 
• Where are the latest winning bidders outbidding the previous ones pushing up prices?  

Worldwide, the primary purchase and use of gold is jewelry. At least four times as much gold goes into jewelry as it does into rounds.

• How are economies everywhere? 
• Are true incomes growing so there are more jewelry buyers with more buying power?  

Read more ...

MORE FOOL'S GOLD FOOLERY. GOLD VS COMMODITIES

In FOLLOW THE YELLOW BRICK ROAD INTO THE LAND OF FOOL'S GOLD, I shared with you graphs and other links that show the inverse relationship gold has with energy commodities and metal commodities.

Now, I shall show you how gold fares against other commodities.

Fertilizers

Grains

Fruits

.

Oils

Soybeans

Sugar

Tea

Wool

Wood

Commodities Where Gold has Fared Better Against 

Read more ...

FOLLOW THE YELLOW BRICK ROAD INTO THE LAND OF FOOL'S GOLD

Far too many have been indoctrinated into the false belief that buying gold is investing. Never is buying gold investing.

Betting on price is speculating and not investing. Speculating is merely betting on prices either rising or falling.




Investing is buying assets organized for earnings flow in effort to gain profit and being paid from that profit. When someone buys a bond for the yield payments, that is investing. When someone buys a stock that pays a dividend, that is investing.

When someone buys ovens, tables, chairs, a dough making machine and ingredients, and then opens up a pizzeria, that one is investing. There is no guarantee that one will sell enough pizza to cover ongoing expenses much less earn a profit from which to get paid.

Buying gold means the speculator has gone long gold. The long speculator in gold believes the price of gold shall rise in the future high enough that should the speculator seek to sell his or her property in gold, the speculator shall gain a profit.

Many gold speculators, even the knuckleheads wrongly who call themselves gold investors, believe in what they call the "Gold to Silver Ratio." As I explained in OK CORNELIUS, SAM THE SNOWMAN SAYS EVERYONE WISHES FOR SILVER AND GOLD, NOT SILVER OR GOLD. The Gold-to-Silver ratio is the amount of silver in ounces one ounce of gold will buy. However, when gold speculators talk of the Gold-to-Silver ratio, they mean the amount of silver in ounces it takes to sell for cash to buy one ounce of gold. Saying either way means the same thing.

True believers in the Gold-to-Silver believe so because at one time gold and silver were coined by weight and fineness into money. In fact, coined metal by weight and fineness is the only way to define money.

Anyway, in the U.S.A. by acts of various Congresses, these Congresses defined ratios of silver-to-gold. The 2nd Congress defined the value between gold and silver as 15 units of pure silver to 1 unit of pure gold with the Coinage Act of 1792. With the Coinage Act of 1834, the 23rd Congress defined the silver-to-gold weight ratio at 16:1.

By the Coinage Act of 1873, the 43rd Congress stopped buying silver at a statutory price and stopped producing a silver dollar. The effect of both demonetized silver rendering silver no longer as money.

With Executive Order 6102, the President Roosevelt decreed money illegal, which stopped all gold coining and ordered the confiscation and destruction of all gold coins. Since then, Americans have traded almost exclusively with legal tender cash and bank credits known as checkable deposits.

Now that you know the salient background intel, which gave rise to the belief in the Gold-to-Silver ratio, we can discover for ourselves if one exists. Here is the graph I shared before on Bizarro Theater.




As you can see, the Silver-Needed-to-Buy-Gold ratio over the last 30 years hit an all-time low at the start of April 2011. After hitting a peak at the start of February 1991, the number of ounces of silver needed to buy an ounce of gold has fallen, -6.4% a year from the peak to the low hit at the start of April 2011.

Right now, using true prices, it takes 5.9 ounces of silver to buy an ounce of gold. Recently, the number of ounces of silver needed is growing at the yearly rate of 11.7% having grown over the last 15 months 34.3%. So speculators who trade between silver and gold take that as a signal to sell silver and buy gold.

While the Internet yields to us much good, the Internet also lets deceivers weave their deception easier than ever before. One kind Internet deceiver prevalent today is the gold doomsayer. The gold doomsayer is a contemporary Aaron who tries to corrupt the many into becoming gold idol worshipers.

In these works, which you can read right here on Bizarro Theater: "BUY GOLD" ADVICE IS AARON BULL*S$T IDOL WORSHIP, IS THERE EVER REASON TO BUY GOLD? and LOSING ITS LUSTER. THE SECRET FUTURE OF GOLD REVEALED, I have shown you the folly of worshiping Aaron's gold idol. In the era of exclusive legal tender bank cash, there are two kinds of states that prove favorable for going long gold:

1. A big rise in the prime rate of interest undertaken to quell borrowing of bank credit
2. A big inflation, which is always a big rise in bank credit, such as the Greenspan-Bernanke Inflation, the biggest credit bubble in the history of mankind [ see: THE BUBBLE ALAN GREENSPAN COULDN'T SEE WITH ROUTINE DATA COLLECTED BY HIS ONE-TIME EMPLOYER, THE FEDERAL RESERVE and THE CONSUMER PRICE INDEX NEVER HAS MEASURED INFLATION, EVER. CLAIMING SO HAS BEEN A EPIC CON JOB. ]

So, having thought more on contemporary Aaron's and their gold idol worshiping, I decided to look into gold relative to other kinds of speculation.

First, let's look at a chunk of carbon relative to gold.




The faint line seen in the graph is a trend line. The trend slopes downward  to the right. That tells us Aussie Coal and Gold have a relationship over the last 30 years. Over the last 30 years, it has taken less and less coal to buy an ounce of gold. The trend is clear, gold has become less important relative to coal over the last 30 years.

Everywhere along that trendline, from a point on the trend line, had a long speculator sold gold and bought coal, holding coal to a bottom, that speculator who have profited by dumping gold and buying coal.

And now let's look at the relationship between heating oil and gold over the last 30 years.




What about other energy commodities?











How has gold fared against lowly metals?









Had gold dominated rubber from the rubber tree?



Now, it is true, had any long gold speculator bought at lows below the trend line and held until peaks above the trend line, such a gold speculator would have earned profits. However, it takes true genius to reckon exactly the timing of markets.

The long run trend above is clear. Over the last 30 years, gold has become little more than a commodity with its price decided by winning bidders in purchases and sales primarily for commercial purposes (jewelry) and industrial purposes (plating).

In Part 2, I shall reveal the graphs for more commodities and the one many might be curious about, how much of the S&P 500 does it take to buy gold?

Read more ...

OK CORNELIUS, SAM THE SNOWMAN SAYS EVERYONE WISHES FOR SILVER AND GOLD, NOT SILVER OR GOLD

The gold-to-silver ratio is the amount of silver in ounces one ounce of gold will buy. Said another way, the ratio is the amount of silver in ounces it takes to sell for cash to buy one ounce of gold. Many believe a high ratio means it is a signal to buy silver and thus conversely, a low ratio means it is a signal to buy gold. To calculate the ratio, divide the price of gold by the price of silver.



As can be seen above, there isn't correlation between the ratio and the True Dollars™ price of gold. From 1983 to 1991, the ratio rose and gold fell. From 1991 through 1997, the ratio fell and gold still fell.









Silver and Gold
Silver and Gold
Everyone wishes for Silver and Gold
How do you measure its worth?
Just by the pleasure it gives here on Earth
Silver and Gold
Silver and Gold means so much more when I see
Silver and Gold decorations on every Christmas tree
Silver and Gold
Silver and Gold
Everyone wishes for Silver and Gold
Silver and Gold
Silver and Gold means so much more when I see
Silver and Gold decorations on every Christmas tree

Read more ...

"BUY GOLD" ADVICE IS AARON BULL*S$T IDOL WORSHIP

Elsewhere today, I read yet another satisfy the Israelites story whereby a contemporary Aaron pushes buying gold, specifically unallocated gold held outside the USA.

Right now, in true terms, gold trades at 14.8% below it's long run price since Nixon ended the US$35 dollar for gold exchange rate in 1971 ($116.66 vs $99.36).



The Great Greenspan-Bernanke Inflation is the main reason why gold rose from the December 2001 low to credit peak of March 2008. The banking crisis and uncertainty aftermath from the credit collapse of December 2008 to the peak of September 2011 is other reason why gold rose. In the first run, True Gold hit $157.04. In the latter run, True Gold hit $196.09.




Many of Aaron's gold idol worshipers say all must bow to the gold idol and own gold as sort of insurance because sooner or later, the Zombie Bankers' Apocalypse is going to happen. Without doubt, if a Zombie Bankers' Apocalypse were to come, everything would come to a halt, including production of all products. Likely, then, you couldn't buy anything anyway.

So why hoard gold if a Zombie Bankers' Apocalypse is going to happen? Why not hoard Levi's jeans?

If credit disappears, so do prices. Worse, all products will disappear.

Within days, most likely from looting, all supermarkets will be cleaned out. There won't be any re-stocking of shelves. There won't be any electricity for any refrigeration.

There won't be any fuel for trains and so no trains will run to carry crops. There won't be any futures markets to form prices insuring against glut or shortage.

Everything will stop. Gold will be as useless as everything else for a long time to come. Anyone would be better off with stacks of Levis in various sizes with which to barter.

And why would anyone own gold outside the USA? Likely, if a Zombie Bankers' Apocalypse were to come, there would be no way to leave behind the USA.

You along with everyone else will be stuck here. You might get lucky to get into Canada. However, there would be no chance you could ever get to Australia or Singapore, two popular places where many store their gold.

If a Zombie Bankers' Apocalypse were to come, if you owned an ounce or two of gold, you would be rich and at least well enough to have a running start against everyone who owned none.

Were a Zombie Bankers' Apocalypse to happen, when prices were to come back because production and credit were to come back, every day products would sell at pennies. A couple of ounces of gold would buy much.

As well, those who claim gold as insurance do not understand insurance at all. Insurance requires insurers. Insurers are parties other than you who specialize in compensation against loss by splitting losses into fractional duties against which losers have rights. In this way, insurers broker fractional duties.

If you have property (right of ownership) in gold, you don't have insurance. You wouldn't say that you have insurance because you have property (right of ownership) in a television.

If someone acquires property (right of ownership) in gold, whether they take possession of it or not — landlords have property in apartment houses but never take possession — that someone has a thing, which might or might not become an asset, which can be sold at street prices for something else.

It's flat out bad financial advice to tell anyone to own gold, much less own it outside of one's respective country and away from one's easy access.

Much smarter advice would be to own land in another country, land that can be farmed readily, preferably in a country that shall adhere to Anglo-Norman jurisprudence. Even smarter advice would be to buy that farm land and move there now while one can still freely move out of the USA.

Even telling someone to own a sea-worthy, blue ocean sailboat would be far better advice.

Gold preppers are as bad as all other mind-disorder suffering hoarding preppers. If a societal apocalypse were to come, among the first to be attacked and likely killed are hoarders. Bands of rovers will scour everywhere looking for stashes of products, outgunning the lone wolf hoarder. By sheer superiority of numbers bands of rovers will win any struggle for hoarded food, water, clothing, bathroom tissue and so on.

In the era of floating exchange rates and fiduciary, legal tender cash, there isn't a case for gold under the usual course of commercial activity. As I have shown elsewhere, the true price of gold tracks the true prime rate and its magnitude of tracking depends upon the state of bank credit.

Anyone who would have bought gold after Q3 1980 until Q1 2001 would have taken a bath, with the first washing done from Q3 1980 until Q2 1986. After a head fake through Q4 1987, gold buyers continued to lose buying power every year until the end of Q1 2001.

Only twice since the era began has gold risen, once to dizzying heights and more recently to a much smaller degree. The first rise, the spectacular one, happened because the true prime interest rate when through the roof, between the first quarter of 1977 to the fourth quarter of 1980.

The second rise, between Q1 2001 to Q3 2011, happened in two waves. The first wave happened because of a once in two life times massive inflation of bank credit (the true definition of inflation), the Greenspan-Bernanke Great Inflation, the largest credit bubble in the history of mankind. Excessive-credit fueled speculation billowed that wave between December 2001 to March 2008.

The second wave to the top happened from the banking crisis and the uncertainty aftermath from the credit collapse between December 2008 to the peak of September 2011. In the first run, True Gold hit $157.04. In the latter run, True Gold hit $196.09.

Everyone can be almost assured they will never experience in their lifetime another inflation as the Greenspan-Bernanke Inflation. And if ever there comes a massive rise in the true prime rate, there will be enough time to buy gold.

The only ones you see pumping gold are those with commercial interests in selling gold and the fools who believe them.

Read more ...

IS THERE EVER REASON TO BUY GOLD?

The Internet attracts all kinds of crazies, doomsayers and hucksters. Sometimes the Internet attracts doomsaying hucksters. Among those are the gold bugs.



Gold bugs shall tell you there is no better time to buy gold. Then they shall tell story after story saying the apocalypse is nigh.

Many of them earn their living brokering gold. The more they can cajole others to buy, the higher the price for gold. The higher the price, the more commission they earn from the same percent.




Buying gold is speculating long on price. It's not investing. 

Investing means buying an income stream. Speculating means betting on price changes.

Anyone who tells you that you can invest in gold either is clueless or is lying. Never is there an income stream from gold.

Since going long gold is speculating, what counts is how much stuff you can buy when you sell gold should you own any. What you want to know is how many gallons of gasoline can you buy in future or how many airline tickets or how many back massages and  so on.

Anyone who has bought gold since the end of Q3 2011 has lost buying power, that is three years running. Gold is a horrible speculation play today. 

Anyone who would have bought gold after Q3 1980 until Q1 2001 would have taken a bath, with the first washing done from Q3 1980 until Q2 1986. After a head fake through Q4 1987, gold buyers continued to lose buying power every year until the end of Q1 2001.

Sure, if someone caught the wave of gold starting Q1 2001 to Q3 2011, that one lucked out. True gold, that is gold priced in gold window dollars, the only authentic inflation deflator, went from a low of $51.94 to a peak of $172.05. Gold grew at a yearly rate of 11.8%, growing a whopping 231.2% from low to peak.

In that time, True S&P 500 fell at a yearly rate of -5.8%, falling a painful -47.7%.

Yet, had someone bought the True S&P 500 at $86.50 at the end of Q1 1994 and rode that until Q3 2000, that lucky one would have enjoyed a yearly growth of 22.3%, double the return of the great gold rush of the 2000s, with the total growth coming in at 251.4%.

In the long bull run between Q3 1974 and Q3 2000, True S&P 500 grew at a yearly rate of 7%, growing a full 484.3%.

In the long gold run from a Q3 1976 to Q3 2011, True Gold grew at less than 1% a year, coming in at a scant 0.5% a year for a total of 19.6%, from $87.11 to $104.18. In the same period, True S&P 500 grew almost 4 times as fast, albeit at 1.8% a year for a total of 95%, from $78.12 to $152.33.

Easily then, compared to gold, even with the crash of 1987 and the following bear that ended in q1 1988 (-32.2% annual decline), and the much longer bear markets of 2000-2002 (-21.7% annual decline) and 2007-2009 (-35.9%), stocks were still a much better deal over the period 1976 to today. 

As I show in LOSING ITS LUSTER. THE SECRET FUTURE OF GOLD REVEALED, gold trades in ratio to true prime rate. Current gold already has priced in what true prime should look like absent interest rate suppression by your friendly Fed Res central bankers.

In S&P 500 VS GOLD, I show the true price of gold and the true price of the S&P 500. As politicians long ago demonetized gold, gold pricing works the same as any other commodity, adhering to the forces of the Law of Prices — the winning bids of purchase and sale in the face of what is on offer set the price — and the Axiom of Profit — the sum of sales set on winning bids must at least equal the cost of production, otherwise the producer goes to ruin.

The days are long past when faced with inflation — too much bank credit circulating beyond trade needs — pushed anyone to ship their gold to other countries with bankers who offered higher interest rates.

The 2000s gold rush has brought out every gold bug who at long last felt vindicated for all of their ranting against financial asset-backed cash vs their favored gold-backed cash. That rush is over and has been three years. All of the doom and gloomers lack facts of reality as you now have them. For if they had them, long ago would they have shut up about gold. 

And if you stopped and then started to think about it, that should be so. Mankind gets ever smarter and more efficient at organizing matter and energy into property that ever more desire. Efficiency with respect to gold mining and possession is much harder to gain.

Likely, no one is going to see another gold run as we have seen for another 25 years. The big run up in gold mostly came with the big credit expansion and bubble. Gold then went higher when uncertainty grew. 

No one on earth is going to see another big run in gold like the run between 2001 and 2011 unless another credit expansion happens at an alike rate of 7.1% a year. Normal true credit growth from low to high runs at 2.5% a year.

The 2000s gold rush has brought out every gold bug who at long last felt vindicated for all of their ranting against financial asset-backed cash vs their favored gold-backed cash. That rush is over and has been three years.

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THERE ARE 1,297 TRILLION BITCOINS NOW AVAILABLE!

The 400 troy ounce gold bar is the only size recognized by players in the inter-bank market for settling gold trades of unallocated accounts. Specifically, players accept the 400 troy-ounce London Good Delivery bar, 99.9% pure (.999 fine).

An accepted estimate of total gold ever mined by mankind is 171,300 metric tons (BBC). Since 400 troy ounces is the equivalent of 438.9 U.S. customary unit ounces, 171,300 metric tons calculates to 6.04243 × 10⁹ ounces. Said another way, if the 171,300 metric tons estimate is right, for all the gold ever mined, mankind could fashion a total of 13,767,212 and ¾ bullion bars.

If every ounce of gold ever mined were coined into one ounce coins, there would be 6,042,430,000. That is six billion forty-two million, four and thirty thousand coins.

Right now, one 400 troy-ounce London Good Delivery bar sells for a princely sum of $577,984.80!

Bitcoins have been the rage de jour for the last eight months or so going back to at least December 2013, ever since the US dollar price of a Bitcoin hit US$1,147.25 back on December 4, 2013.

As of this writing, XE reports that one full Bitcoin (1 XBT) sells for US$649.16, CAD$693.31, €477.079, £378.11, and AUS$690.63. Other quote sites include Bitcoin Watch and Blockchain Info.

Most have been looking at Bitcoins quite wrong. Most see one Bitcoin (XBT) much as a one-ounce gold coin. Yet, one XBT is more akin to one bullion bar rather than one coin. For this reason, one XBT should be known as a Bitbar and not a Bitcoin.

An XBT is the sum of 10⁸ discrete data, each datum known as a "Satoshi." So one Bitbar consists of 100,000,000 Satoshi bitcoins. All software that implements the Bitcoin protocol, which enables participants to transfer ownership, transmits in Satoshi and not the popularly quoted XBT as most might believe.

Right now, there are 12,975,575 XBT existing, each consisting of 100,000,000 Satoshi. So in total, there are 1.2975575 × 10¹⁵ Satoshi in possession and capable of being circulated.

Written out, that is 1,297,557,500,000,000! Said another way, there are one quadrillion, two hundred and ninety seven trillion, five hundred and fifty seven billion, five hundred million true bitcoins in existence already rather than the misleading 12.98 million most often quoted by almost everyone.

Huckster promoters of Bitcoins rave about the limited number of Bitcoins in existence. I don't know about you, but one quadrillion two hundred and ninety seven trillion plus of anything should not strike anyone as limited.

Between 1849 to 1889, the United States Bureau of the Mint coined gold dollars consisting of 0.04837 of one troy ounce or 0.0530688 of one U.S. ounce. If all the gold ever mined were coined as U.S. gold dollars of the 1849 through 1889 design, there would be 113,860,309,636. Spoken that number is one hundred thirteen billion, eight hundred sixty million, three hundred nine thousand and six hundred and thirty six 1849-1889 gold dollar coins.

Right now, already there are 11,396 times more Satoshi (bitcoins) in existence than if all the existing gold were coined as 1849-1889 U.S. gold dollars! If mankind gathered all the extant gold and coined that gold into one ounce coins, there would be a whopping 214,741 times more Satoshi bitcoins than one ounce gold coins, .999 fine.

If mankind play with Bitbars into the future, the total number of Bitbars, which anyone can produce is 21 million. Bitcoin users can break up 21 million Bitbars into 2.1 ×10¹⁵ Satoshi, which is 2,100,000,000,000,000 Satoshi!

The current estimate for gold yet to be mined is 53,000 metric tons (BBC). 53,000 additional tons could yield another 1,869,520,000 one ounce coins or 35,228,232,031 1849-1889 style U.S. gold dollars.

So when all is done, in one future, there would be 265,421 times more Satoshi than all the one ounce gold coins that ever could be coined from all the gold ever expected. In another future, there would be 18,146 times more Satoshi than all the 1849-1889 style U.S. gold coins that ever could be coined from all the gold ever expected.

The current market capitalization of Bitbars is US$8,423,224,267, or US$8.4 billion. The current market cap of gold is a whopping US$7.9554633 × 10¹², which is US$7.955 trillion! The market cap of gold is 944.5 times bigger than for Bitcoin.

At the current quoted price of US$649.16 for what should be called one Bitbar, one Satoshi would trade for U.S.$0.0000064916. So, one million Satoshi would trade for US$6.49. Thus, US$1 would buy roughly 154,045 Satoshi.

Since hitting a peak of US$1,147.25 on December 4, 2013, the price of one XBT in USD has fallen a whopping -44.5%, falling at an annualized rate of -58.6%.

UPDATE: From the peak to November 4, 2014, , the price of one XBT in USD has fallen a whopping -70.5%, falling at an annualized rate of -73.6%.

In 2013, global e-commerce retail spending summed to $1.25 trillion. Total retail spending perhaps summed to $30 trillion in 2013.

Likely, there are many trillions of transaction in real world retailing. A fair estimate would be 4,280,000,000,000. If you can't read that number, try four trillion, two hundred eighty billion based on assumption of $30 trillion annual transactions at average of $7 each transaction, likely a high estimate for outlay per transaction.

Right now, it seems Bitcoin data transaction rate is near 63,000 a month or a yearly rate of 23 million transactions. That means as a percent of worldwide yearly retail transactions, Bitcoin data transaction constitute 0.00053738317%!

If you can't read that number, at this current rate, Bitcoin data transaction will account for 5.4 ten-thousandths of one percent of all retail transaction. Likely, the percentage is much, much smaller as the $7 average is high.

There are many hipsters swallowing the hype over Bitcoin. There are many pump and dumpers pushing that hype.

When western world economies begin to rise after this long economic depression, and you can be sure that will happen sooner rather than later, what shall become of Bitcoin? Shall it rise along with it? Instead, shall ever more become part of various banking systems using debit and credit cards rather than Satoshi?

The Bitcoin craze reminds me of the Beanie Baby craze, those plush toys that made Ty Warner a billionaire. Because of Ty's Beanie Babies, a marketing smarty at AuctionWeb, which later became eBay, fibbed a story that eBay's founder Pierre Omidyar created the eBay site for Omidyar's girlfriend to buy and sell Beanie Babies.

Numerous sites have sprung up since 2012 to buy and sell Satoshi in the same way.

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SILVER AND GOLD

Historically, the true price of silver in True Dollars™ averages $1.65. The April 1, 2014, price sits at $1.161. 

The average of the true gold to true silver is $64.71. The April 1, 2014, true gold to silver price sits at $64.68.  

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LOSING ITS LUSTER. THE SECRET FUTURE OF GOLD REVEALED.

The gold bugs likely will hate seeing this, but the future of gold hardly looks shiny. Once we price gold in gold-weighted dollars, we see reality. Let's have a look.

From when Nixon slammed shut the gold window, gold hit its all-time peak of $377.28 (in GWDs) in July 1980. From there, gold fell, first violently and  then slowly until hitting its all-time low of $51.94 by April 2001. Gold fell a whopping 86.2% from its peak to its trough!

Yet, when we look at gold in GWDs against the true prime rate deflated by the FRBU deflator, we see a strong relationship.


True gold prices closely follow the true prime rate. Where true gold crossed the true prime is when the banking crisis of 2008 hit. And while Fed Res bankers have kept true prime flat since 2009, gold has been falling.

Looking back to the first chart, we see that when Greenspan kicked in inflation of the credit bubble with a fury, gold traded higher in lockstep with higher true credit.

True gold rose 1.54 times between Jan 1, 1999, and March 31, 2008, from $59.24 to $150.36. True gold fell from that peak 17.1% hitting a short-term low at the end of Q4 2008 before shooting up 38.1% at the top at the end of Q3 2011. 

Between 1999 and 2000, gold rose 9% on a rise in true prime of 18.7% and then retreated 11.3% as Greenspan engaged in rate suppression. And then gold shot up thereafter following the final massive leg of inflation of the bank credit bubble.  

Between the end of Q1 2004 through the end of Q2 2006, true prime rose a whopping 108%. Gold went along for the ride fueled by cheap credit. 

The true gold price rose 28.5% from the start of the banking crisis Q3 2008 after true peak credit plateaued beginning Q4 2007.  

Since then, the true price of gold has fallen 39.4%. Where true prime goes, gold goes. Extended ZIRP of Fed Res bankers has pushed down gold from it's peak true price hit at end of Q3 2011.

The true price of gold tracks the true prime rate and its magnitude of tracking depends upon the state of bank credit.

Now let's look at gold versus black gold.



While the relationship isn't exactly a love fest, West Texas Intermediate, though volatile by comparison, seems to hint the way of gold.




So, unless Fed Res bankers lose their minds, again, its not likely that we shall see another Greenspan-Bernanke credit bubble for years, perhaps decades. 

In the short-term, when Fed Res bankers return setting the Fed Funds Rate in relation to the "normal" state of affairs, and thus when true prime rises, gold might hitch a ride and thus as a short term speculation play, there might be profits. 

However, it's likely the gold play of 2001 to 2011 was one of two-in-a-lifetime chances to profit substantially from gold.

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