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Thread: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

  1. #1
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    Default Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    http://jessescrossroadscafe.blogspot...gold-bank.html

    From Jesse...........

    "The interview is refreshing because Mr. Rickards lays his thoughts out clearly and without excessive jargon. I found his rationale for China's desire to increase its gold holdings to be intriguing. The price objective of $5,000 - 10,000 is somewhat arbitrary, but directionally correct if it is not accompanied by a reissuance of the currency, which I think is much more probable. Essentially it works out to be the same, since the new currency is likely to be a factor of 1 for 100 exchange for current dollars. If this seems outlandish, it should be kept in mind that this is not all that far removed from the fairly recent post-empire experience of the Soviet Union.

    Jim Rickards audio interview on King World News

    Highlights (aka Cliff's Notes):

    • There is obviously not enough gold and silver to cover the physical demand if holders of paper certificates in unallocated accounts demand delivery, and most likely only a small fraction could be covered with the practical supply available. Cash settlement will be enforced in the majority of cases.
    • Cash settlements would be for a price as of a 'record date' which is likely to be much less than the current physical price which would continue to run higher
    • There is more here than meets the eye - if you holding metal in an unallocated account you are likely to be considered an unsecured creditor
    • 100:1 leverage is reckless no matter commodity or asset it involves - little room for error
    • There is no way to pay off the existing real US debt without inflating the currency in which the debt is held, to the point of hyperinflation
    • If the Fed's mortgage assets were marked to market the Fed itself would be insolvent
    • Anything involving paper claims payable in dollars (stocks, bonds) are a 'rope of sand,' a complete illusion that is fraught with risk
    • $5,500 per ounce of gold would be sufficient to back up the money supply (M1) as an alternative to hyperinflation and a reissuance of the currency. Target price is 5,000 - 10,000 per troy ounce in current issue US dollars
    • The break point will be when the US debt can no longer be rolled over. US will not be able to finance its debt without taking drastic action on the backing or nature of the currency
    • China needs to have about 4,000 tonnes of gold, and only has 1,000 tonnes today
    • China cannot fulfill this goal by taking even all of its domestic production for the next 10 years. The Chinese people are showing a strong preference to hold gold themselves.
    • From 1950 to 1980 the US gold supply declined from 20,000 to 8,000 tonnes, basically moving from the US mostly to Europe.
    • The Chinese are frustrated that they cannot obtain sufficient gold at reasonable prices as Europe did, to withstand the currency wars and the reworking of international finance
    • Holding your gold in a bank correlates you to the banking system, the very risks which you are trying to avoid"
    Last edited by Camtender; 04-15-10 at 11:49 AM.

  2. #2
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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Cametender,

    Thank you so much for posting this. I currently hold gold in an unallocated account overseas...it used to be allocated, but the company changed my account to unallocated, in 2006, if I remember correctly, and there is a provision for cash settlement in the new regs governing the accounts.

    I think I will have to go overseas to receive the physical, and then bring it back to the US, if my timing is right. The soonest I can go is 3 weeks to a month. What kind of timeline are we talking about here? Does the timeline for a run on gold correspond with particular US treasury auctions, etc???

    As far as the highlights you listed, and the important points that stand out to me, which I've listed below, I understand the statements. However, in spite of reading the content on Itulip for several years now, I still have trouble "connecting the dots," so to speak. The technical aspect of economics is not intuitive to me, and I have been way overwhelmed with moving and caregiving for the past 8 years.


    So I would like to request, if you, or anyone else, would be so kind, as to indicate what readily accessible, public domain references and information would indicate the following events, before they would end up on the CBS Evening news, Cramer, etc...What information feeds should I be watching like a hawk to determine the following:
    • The break point will be when the US debt can no longer be rolled over.
    • US will not be able to finance its debt without taking drastic action on the backing or nature of the currency.
    • China needs to have about 4,000 tonnes of gold, and only has 1,000 tonnes today. (Does this suggest that China may let the Yuan rise to get a better deal on gold at some point???)
    • From 1950 to 1980 the US gold supply declined from 20,000 to 8,000 tonnes, basically moving from the US mostly to Europe. (Is there some information source that documents the movement of gold to China??? And/or that documents typical gold and silver trade with China???)
    • The Chinese are frustrated that they cannot obtain sufficient gold at reasonable prices as Europe did, to withstand the currency wars and the reworking of international finance.(Does this suggest that China may let the Yuan rise to get a better deal on gold at some point???)
    Please anyone who would be so kind, help me connect the dots, so I can then keep an eye on them!

    Thanks,
    Ken

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Nice Avatar!,
    Yes thank you cam for posting this. I really like your summary. I don't have high speed internet, and I would not be able to hear the interview.

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    now to answer your question.
    I agree that the key to this thing is the gvt no longer being able to roll/grow the debt. I think there are a few more tricks up there sleves.

    - Bush tax custs expire this year.
    - Medical reform will drastically decrease medicare payments.
    - An engineered stock market crash may drive people back into treas
    - other sovereign deaults happen first

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Quote Originally Posted by ken View Post
    Please anyone who would be so kind, help me connect the dots, so I can then keep an eye on them!
    Ken, I would guess the dots are connected in this forum about as fast as anywhere else in the media. I would recommend just keeping tabs on the site. That should give you a decent thermometer. The rumblings are obviously already out there and anyone who doesn't have at least a position in physical PM's is swimming naked. There will likely be big events in the future that are unpredictable by the lay investor.

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    Default Jeffrey Christian: Gold & Silver should be financial instruments

    His exact words were that Gold & Silver trade like bonds & treasuries & currencies, so the exchanges should not treat Gold & Silver differently from financial instruments.

    so his stance seems to be that Gold and Silver "should be treated like financial instruments - bonds & treasuries & currencies"

    there must be thousands of entities that can instantly create billions of dollars worth of financial instruments.

    Hedge funds with lines of credit
    banks
    governments
    large industrial companies

    How can Gold and Silver be treated the same way?

    The boiled frog analogy really seems to fit here - this a system that's been built up over decades - it came to be so slowly that no one inside the system questions its validity but if you

    step back for a second
    and seriously look at it

    It's insane

    JMHO
    Last edited by Spartacus; 04-15-10 at 09:52 AM.

  7. #7

    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    I try hard to find at least one thing that I can like about everyone, or any group that I encounter. It helps to maintain a balance, and keep a counterweight to anything they might do that seems unlikable or disreputable.

    It usually works well.

    So far Jeff Christian has eluded my ability to find anything about him that is likable or admirable.

    Perhaps he is nice to cats, although I have to confess a particular dislike of them as well.

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    Default Re: Jeffrey Christian: Gold & Silver should be financial instruments

    Quote Originally Posted by Spartacus View Post
    it came to be so slowly that no one inside the system questions its validity but if you

    step back for a second
    and seriously look at it

    It's insane

    JMHO
    JMHO too! (ain't that a riot, the only people who see it are those looking in from the outside. Those on the inside look out and only see their own reflections in the mirror).

  9. #9
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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    It looks like most of Gold Bugs would like a Run on Gold. I don't know if that would be good as a society,. Though I hold everything in physical, it will be a new paradigm and we don't know what is the outcome and what is out there. Deer looking a Headlight syndrome - I guess. If Full Body scanners are put in Airport, and if Gold is banned, USA can be a huge Prison.

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    sorry to be a wet blanket, but ...

    fiat legal tender laws, which are effectively global, coupled with coordinated global de/revaluation, and add in banning of PM trading/holding via taxation for instance, and it's checkmate ... financial oligarchy/governments win, you lose. Nothing you can do about it except gnash your teeth, or maybe do what most everyone else is doing .."if you can't beat em', join em", i.e. pile into speculative assests, b/c you have no other choice to retain any wealth save stand on principle.

    Having a self-sufficient farm with enough resouces to support and defend oneself in a community of like-minded folks, and in a country that still has a semblence of respect and protection for contracts and private property is the only solution I see.

  11. #11
    Raz is offline iTulip Ambassador, Select Premium Member
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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Quote Originally Posted by Jesse View Post
    I try hard to find at least one thing that I can like about everyone, or any group that I encounter. It helps to maintain a balance, and keep a counterweight to anything they might do that seems unlikable or disreputable.

    It usually works well.

    So far Jeff Christian has eluded my ability to find anything about him that is likable or admirable.

    Perhaps he is nice to cats, although I have to confess a particular dislike of them as well.
    Who are you talking about? The hockey player?:confused:

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Quote Originally Posted by charliebrown View Post
    Yes thank you cam for posting this. I really like your summary.
    You can thank me for posting, but Jesse wrote the article - I copied and pasted verbatim from http://jessescrossroadscafe.blogspot.com/

    which I try to read everyday as Jesse has a new post or two each day.

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Quote Originally Posted by Raz View Post
    Who are you talking about? The hockey player?:confused:
    http://www.financialsense.com/fsn/team/christian.html

    Jeffrey M. Christian
    Commodities Research Analyst

    FSN News Team Metals Expert

    CPM Group was founded in 1986 by Jeffrey M. Christian, who was the head of commodities research at J. Aron & Company, which was acquired by Goldman Sachs & Co. Mr. Christian formed CPM group through a management buy-out of the commodities research group of Goldman, Sachs & Co. at that time, with his partners to provide independent market leading research on the commodities markets to a variety of customers ranging from governments to investment funds worldwide.

    CPM is a leading commodities research, consulting, investment banking and asset management company. CPM is focused on the fundamental analysis of global commodities markets. For twenty one years, CPM's research team has consisted of impendent, experienced analysts who dedicate their time to the use of primary data and statistics compiled during the company's history. CPMs market contacts around the world provide information and insight that enables CPMs research group to formulate unique market analyses and forecasts. CPM research bolsters and complements the other services we provide to clients, including asset management, investment banking and commodities management.

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Quote Originally Posted by vinoveri View Post
    sorry to be a wet blanket, but ...

    fiat legal tender laws, which are effectively global, coupled with coordinated global de/revaluation, and add in banning of PM trading/holding via taxation for instance, and it's checkmate ... financial oligarchy/governments win, you lose. Nothing you can do about it except gnash your teeth, or maybe do what most everyone else is doing .."if you can't beat em', join em", i.e. pile into speculative assests, b/c you have no other choice to retain any wealth save stand on principle.
    There would be a giant black market.

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    Default Re: Jeffrey Christian: Gold & Silver should be financial instruments

    Quote Originally Posted by jtabeb View Post
    ... Those on the inside look out and only see their own reflections in the mirror).
    Except for Goldman's Blankfein -- he sees God in the mirror :rolleyes:.
    Most folks are good; a few aren't.

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Thanks for your input. It would also be great to hear from some senior members too. That is a great interview. It really makes clear what the major gold market moving forces are likely to be.

    I still don't understand exactly what raw data would be best to look at, and where to access it, but I'm wondering if the futures markets, and something akin to "options interest" in US treasuries and gold, are the best places to look for technical information, as opposed to fundamental information, such as news articles, etc...:confused:

  17. #17

    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Quote Originally Posted by vinoveri View Post
    sorry to be a wet blanket, but ...

    Having a self-sufficient farm with enough resouces to support and defend oneself in a community of like-minded folks....
    Amish Paradise: Tonight we're gonna party like it's 1699

    No thanks.

    -joaquin-

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    Raz is offline iTulip Ambassador, Select Premium Member
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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Quote Originally Posted by globaleconomicollaps View Post
    http://www.financialsense.com/fsn/team/christian.html

    Jeffrey M. Christian
    Commodities Research Analyst

    FSN News Team Metals Expert

    CPM Group was founded in 1986 by Jeffrey M. Christian, who was the head of commodities research at J. Aron & Company, which was acquired by Goldman Sachs & Co. Mr. Christian formed CPM group through a management buy-out of the commodities research group of Goldman, Sachs & Co. ...
    Thanks, Global. I had no idea who he was.

    But, how did he enter the discussion via Jesse and Jim Rickards? :confused:

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    Quote Originally Posted by Jay View Post
    There would be a giant black market.
    Absolutely.

    I hope, US will have significant part of its economy move into the black market, because most of the over-regulated gov't economy just will not work.

    Back in the USSR the black market always played significant role in the economy. For many people it was the only (albeit pretty expensive) way to obtain some basic products and services (including medical care).

    I am also sure, in the US the black market will function much better than in the USSR.
    медведь

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    Default Re: Possible Run on the Gold Bank, Fed Insolvent, Currency Endgames in US Debt Crisis

    ok, a good chess player has a contingency plan. I am not a farmer. Suppose you get wind of the comming move on PMs. Where do you go next? Any option should be liquid, hold its value, be practically storable legal, moral etc. I am a suburbanite.

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