THOUGHTS ON “HUME’S MULTILATERAL ADJUSTMENT MECHANISM” Part 2
JC Collins APRIL 5, 2015 AT 10:24 PM First, I did not say investing in gold is an attempt to gain unearned wealth, only expecting it to revalue at multitudes of thousands is unrealistic and people believe that script because of their greed which is being manipulated.
Gold as a store of wealth, being time and labor, is extremely appropriate. You have actually supported my position rather thoroughly.
In regards to currencies, I do not state how much I think they will re-valuate, only that they will. Which is something the government of Vietnam has stated itself. It is the extremely high multiples I reference, not the daily fluctuations of a few dollars here and a few dollars there.
Yes, getting rich quick is a part of our reality, whether its penny stocks or bitcoin. Unfortunately those who experience such things usually end up suffering in unforeseen ways. So once again, you are supporting my position.
My statements in reference to valuation levels are based on research, logic, and pattern trending. Because you, or anyone else, don’t like hearing or reading my conclusions, do not make them any less true, or possible.
Human denial is a powerful force, which is evident in the responses whenever I state gold valuation patterns that go against the norm.
This high price of gold script is such a support beam of the alternative analysis that people get emotional when it is questioned.
This could be looked at as proof of the effectiveness of those who have built this storyline, but for me it has more to do with the human predisposition to believe just about anything, and fight for those beliefs. History is replete with such ignorant absurdities.
My analysis and conclusions have been questioned and doubted on almost every front, and yet time is proving the validity of those conclusions, as real world events catch up to the things we have discussed here.
It matters not though, the divide between human ignorance and wisdom is littered with the forgotten dreams and desires of countless generations. No matter what happens in the coming months and years, that is one trend that will continue for generations to come.
Cramley APRIL 5, 2015 AT 2:56 PM There’s one problem with sub 1000 gold. Nobody’s going to mine it at that price.
JC Collins APRIL 5, 2015 AT 4:04 PM That’s an unquantified assumption Cramley. In a deflationery cycle the cost to mine and produce will also decrease. This is basic economics. Your comment is a perfect example of the unrealistic conclusions I referenced in my original comment.
Peaknikmicki APRIL 5, 2015 AT 4:16 PM Apologies if it came out wrong. I didn’t suggest the $6,000 price suggestion came from yourself. It was from a linked paper on what share/value gold ideally should have in the SDR composition.
This combined with your stated position that gold will be part of SDR was taken by myself as a “bullish” view. Add to this Jim Rickards’ suggested revaluation of gold to $7,000+ it seemed like a reasonable ballpark.
As other posters here also mentioned there is a debt issue that needs to be addressed.
But it is of course possible that SDR doesn’t address this in any way and that each nation needs to deal with such separately. But as I see it that still sets the foundation for a revaluation of gold.
Although it might not happen, I don’t see $6,000 gold outlandish in any way if gold balanced against debt or monetary base or used as a mechanism to debase currency.
In 1980 gold price reached a level where USA could have gone back to a gold backed currency. If same happened today POG would be >$12,000
Rick Donaldson APRIL 5, 2015 AT 4:30 PM I have been reading your essays for more than 1 year and agree with most of the facts. A couple of things still don’t add up.
Recently Jack Lew stated he was dead set against the Yuan entering the SDR basket and as we know the US did not pass the 2010 reforms. I can only conclude that if the other countries continue with Plan B, the US will become isolated from the world economy.
If the US is cornered they could become a very dangerous nation and cause all kinds of problems worldwide including the use of nuclear weapons…..worse case. At the very least disrupt every attempt of reform.Sorry…I don’t see the US cooperating.
In regards to the price of gold going to 600 dollar range.If we follow through on reforms and gold goes to 600 dollars, that would put silver in the 9-10 dollar range.
That means that silver could not be mined profitably Silver is the most widely used commodity next to oil. So I’m guessing that we will have deflation in wages, commodities, and taxes, but what about our mortgage?
Cramley APRIL 5, 2015 AT 5:01 PM If we have deflation in terms of USD then the banking assets become NPLs. SDR bonds become NPLs.
But if we have deflation as measured by ounces of gold then life can go on.
Why do CBs have gold on the balance sheet? For much of the time it hangs around looking pretty and amounting to a very small contribution to the balance sheet. But then BAM! When all fails.
When the marginal utiily of debt becomes negative (which going to the SDR will not correct), CBs always have that fail-safe–the nuclear option–the modern debt jubilee.
“These episodes demonstrate two occurrences during the last century of the typical monetary cycle, which has five phases. The first cycle unfolded as follows:
· Phase One: stability under a Gold standard until 1914
· Phase Two: inflation until 1921 which resulted in a build-up of Debt
· Phase Three: disinflation which brought stability and allowed asset inflation until 1929, but encouraged a further build-up of Debt
· Phase Four: instability after 1929 caused by deflation of assets from over-priced levels and exacerbated by excessive Debt levels, leading to depression of economic activity
· Phase Five: Monetary reform enabled by a revaluation of Gold to overcome deflationary Debt depression
In the second half of the twentieth century we saw a repeat of the first three phases of the same cycle:
· Phase One: stability from 1944 to 1968 under a Gold Standard
· Phase Two: inflation from 1968 to 1981, which caused and justified another build-up of Debt
· Phase Three: disinflation from 1981 until the end of the 20th Century, and maybe to the present
However, it appears that Phase Four (instability and ultimately deflation due to excessive Debt) may have started.
If so, Phase Five (revaluation of the Gold price to raise the monetary value of the World Monetary Base and hence reduce the burden of Debt) becomes likely or inevitable.
The extent of that revaluation would need to be major according to our calculations, probably by a factor of at least 7 times, possibly up to 20 times the current price of Gold.”—May 2006 when gold was trading around 700 USD.
JC Collins APRIL 5, 2015 AT 5:48 PM Hogwash, the error of your assumption is found in the nature of the monetary base itself. As I mentioned in the post, the monetary base of each nation can be reduced through the SDR allocation process.
The debt will still need to be managed, but it is no longer a factor in the functioning monetary base. This is what many are not understanding, the monetary framework is shifting and it will not function under the same principles as currently exist.
The accumulation of currencies in foreign reserve accounts will be reduced and the assumed relationship between fiat currency levels and gold falls apart.
As Steve H. has stated, we will not allow this site to fall into pointless debates about the valuation of gold. There are bigger things in motion which we need to focus on.
Bruno de Landevoisin APRIL 5, 2015 AT 5:10 PM Nice to see Gold mentioned in the same light my brother;-) Many a slip between the cup and the lip my…………..
Our malignant monetary masters don’t have our interests in mind, they always put their self serving interests first, that’s what troubles me in all of this.
In the end, is this simply a new more advanced globalized form of debt servitude.
I’d rather nature’s own shiny glow act as the golden governor on the means of exchange throttle.
God help us all………….
Beverly Adams (@Beverly_Adams70) APRIL 5, 2015 AT 5:12 PM This all has to do with governments, national finance and big business. Where does all this leave the “little people” ???
JC Collins APRIL 5, 2015 AT 5:50 PM Same place we’ve always been, the zero-sum position between want and need.
Jeff bernard (@TheAvariceofmen) APRIL 5, 2015 AT 6:43 PM Hi JC – like many I have followed you for a while and appreciate the balanced POV you present in the Jack Webb style. Like many, I have too seen the dramatic response to the price of gold discussion when it surfaces.
Where I feel comfortable is in the knowledge that most here recognize that the tempo is increasing toward something different and have the drive to understand what it is and what it will look like.
I am interested in shifting the gold discussion to value versus price. IOW, in the vision you see of lower “priced” gold – do you see it being able to acquire more tangibles in the future than it does now or do you see it as a linear power to purchase? respectfully, TAoM
Bruno de Landevoisin APRIL 5, 2015 AT 8:51 PM IMO
Gold acts as a placeholder to assure you have a place in the coming global monetary reset…………same as it ever was.
When the trust breaks down between the Sovereigns, Gold remains the only common denominator still left standing to re-establish a new means of exchange.
Speedspirit APRIL 5, 2015 AT 8:23 PM Gold rises during periods of war thru history and when confidence in Government disappears. So Gold in an insurance against things going wrong.
Silver on the other hand is a technology necessity. Rare earth metals production is corned by the Chinese and prices there they will control to keep their technology based industry moving but silver is a commodity that is getting increasingly harder to mine.
Gold has always been preserved and hoarded but silver has been used and disposed of as a cheap industrial metal. Silver one day in the near future will be the Achilles heal of this debt paradigm system. Technology needs Silver for all devices and investors who cannot afford Gold cherish Silver.
So let them cap the price of Gold who will that really effect ? The rich who are not in the Boy’s Club.
But they cannot cap silver because supply and demand will lead to much higher prices in a free market system. Apple will pay much higher silver prices to continue supplying iphones.
So when a shortage appears large manufactures will seek to hoard large enough supplies to keep their supply lines moving.
Our future depends on technology and China depends on technology and technology depends on Silver. Silver is mined as a by product mostly. Investment demand vs industrial demand vs unprofitable mining operations are coming together to reveal cheap Silver prices vs demand.
~GetReal APRIL 5, 2015 AT 9:22 PM Another spirited conversation on your work, JC. Great to have the opportunity to read and absorb the content. ~Get Real
glennb6 (@glennb666) APRIL 5, 2015 AT 10:35 PM Hi, have been reading since day 1, excellent stuff JC, sort of a rolaids for the spirit too.
IMHO, gold may spike but drop back and net out somewhere close to it’s current range. Spikes can happen and smart people take advantage of them.
Also, to relay the thoughts of Martin Armstrong, gold may be a hedge against government and against overall lack of confidence. CONFIDENCE is a huge key to money and “good as gold” is understood by the masses.
Might the SDR need a golden vote of confidence in it’s beginning? And might certain sovereign intra-county currencies need the same (if they are subject to relative devaluation?).
JC, you’re one sharp dude!
Dripfood APRIL 5, 2015 AT 10:51 PM JC, do I understand right that you don’t see the SDR evolve into a currency anytime soon or maybe even at all? (But rather be used asn asset in the form of SDR bonds?)
JC Collins APRIL 6, 2015 AT 12:41 AM The SDR will pave the way for a true global currency. This will not happen until at least 2023 or later.
Cramley APRIL 5, 2015 AT 11:56 PM JC, this is a good video. It illustrates the problem of deflation and the banking sector.
Cooper (@coopersmith648) APRIL 6, 2015 AT 12:09 AM Some interesting information on some upcoming viable energy sources that appears to be directly on the horizon.
Electrical Power from Water Fuel http://www.blacklightpower.com/blacklight_power_inc/
“Blacklight has developed a system engineering design of an electric generator that is less than a cubic foot in volume, to generate ten million watts of electricity, enough to power ten thousand homes.”
“…BlackLight’s nonpolluting power-producing SunCell™ catalytically converts H2O-based solid fuel directly into brilliant light-emitting plasma power, an essentially fully ionized gaseous physical state of the fuel comprising essentially positive ions and free electrons.
The SunCell™ plasma is the same temperature as the Sun emitting the same solar spectrum of light, but at extraordinary power equivalent to 50,000 times the Sun’s intensity at the Earth’s surface.
Optical power is converted directly into electricity using photovoltaic cells (solar cells). Very high-power, high-efficiency cells are commercially available to convert the SunCell™ optical power directly into electricity at its 100 billion watts per liter power density…”
“…Specifically, BlackLight has developed a commercially competitive, nonpolluting source of energy that forms a predicted, previously undiscovered, more stable form of hydrogen called Hydrino…”
“…Essentially all power sources: thermal, electrical, marine, rail, aviation, aerospace, as well as automotive sources, become untethered from an electrical distribution or fuel infrastructure and are also independent of the Sun, wind, or other external variable power sources at capital cost of less than 10% of that of historic systems…”
YouTube channel https://www.youtube.com/user/BlackLightPowerInc
You also have the likes of Italian scientist Andrea Rossi and his eCat: http://ecat.com/
“It took Andrea Rossi almost 18 years to develop the Energy Catalyzer (ECAT), a device which will be the principal component in a new energy product range.
Leaving neither toxic nor radioactive waste, Rossi’s ECAT has the potential to solve the global energy problem by delivering inexpensive and completely green energy.”
We’d have to argue that technological advancements in energy production are just around the corner and that those systems are being designed for a managed cost effective integration into existing systems – without breaking the global economy.
One reason perhaps for keeping the value of PM’s contained is for the absolutely off the chart applications for gold and silver nanoparticles in science/medicine/clothing/electrics etc. Is Gold scarce?