Comments On “The Coming SDR Gold Standard” By JC Collins Part 2
matt (@speedspirit42) September 30, 2014 at 5:46 pm Deejj87- Even if Silver went to $1000 per ounce companies like Apple, Samsung would still be able to sell their products at affordable cost to consumers.
The amount of silver in the circuitry is less then 1/10 ounce so Americans will still by big screen TV’s, cell phones and medical equipment for the average increased cost of $100.
matt (@speedspirit42) September 30, 2014 at 5:49 pm And how do you explain how the Government is going to go door to door to ask for said Silver?
They will have their hands full with bigger issues if it gets bad enough where they need to search for peoples Silver. How many DHS officials would lose their lives doing house searches? They couldn’t even keep a rancher off Government grazing lands without real Americans ready to take lives.
daneackerman September 30, 2014 at 10:24 pm And we wonder why they have such police vehicles and equipment. Didn’t the US recall gold in the past? How did that work out?
I think they made US citizens sell their gold to the government for cheap and then they said it could be bought back for much more correct? Did the people rise up against them then? If so did it stop the government back then? I don’t recall the details.
During the last gun ban scare the police had devices to search out underground staches of guns and ammo. Maybe it works just as good for PM’s.
But why would we get to killing our fellow man for such things. How can we celebrate this first time consolidation of wealth without a world war if we are going to incite a civil war instead? It will be a sad day.
matt (@speedspirit42) September 30, 2014 at 5:50 pm And it is not hoarding Silver. Where do you keep your savings in a bank?
deejj87 September 30, 2014 at 9:28 pm Matt, I wrote my opinion and do not have all the answers, none of us do. The accumulation of assets and money usually comes from a very human place of lack, survival, and scarcity.
I was simply pointing out that confiscation of resources like silver is a possibility. It is really no one’s business where I keep my savings and find that question to be defensive. It was not my intention to offend you by expressing my opinion.
Michael MacDonald September 30, 2014 at 9:05 pm I certainly hope to not go outside your best practices on your blog, so please delete this post if it does… And sorry..
I just received this interesting email from Bix Weir… Interesting timing… And all this Gold talk going around everywhere these days… Hmmm… Thoughts?
I just received over 100 emails related to Greenspan’s latest OpEd telling China to BUY GOLD if they want to lead the world’s economic system!!
The Golden Rule: Why Beijing is Buying By Alan Greenspan
“If China were to convert a relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system.
It would be a gamble, of course, for China to use part of its reserves to buy enough gold bullion to displace the United States from its position as the world’s largest holder of monetary gold.
(As of spring 2014, U.S. holdings amounted to $328 billion.)
But the penalty for being wrong, in terms of lost interest and the cost of storage, would be modest. For the rest of the world, gold prices would certainly rise, but only during the period of accumulation. They would likely fall back once China reached its goal.” END
Yes, the rest of the world is scratching their heads concerning Greenspan’s “coming out” about gold again. Even ZeroHedge seems a little confused…
Why China is Hoarding Gold: Alan Greenspan Explains by Zerohedge
Remember when instead of pontificating on and explaining the consequences of three decades of devastating, ruinous, irresponsible Fed policies, and eagerly sharing ideas on how to “fix” these unfixable problems, Alan Greenspan was the primary culprit behind everything that is now wrong and broken with the world’s financial system? Oh, and also was not an “Austrian” economist? Good times.
Today we bring you the “other” Greenspan: the one who is blissfully unaware that, almost singlehandedly, he destroyed western capitalism, which is now living day to day, on borrowed time from one central bank printer to another.
Ironically, the topic of his most recent Op-Ed for the Council of Foreign Relation’s Foreign Affairs magazine, is none other than the default Kryptonite to every central banker, himself included if only a decade or so ago: gold. END
This is NOT a mystery flip from Alan Greenspan but rather a very carefully planned out transition that began in the 1960’s as cooked up by Greenspan and his mentor, Fed Chairman Arthur Burns, to destroy the fiat system thus forcing a return to a TRUE Gold Standard!!
I laid it all out in January 2007 and if you haven’t read it yet here it is…
Greenspan’s Golden Secret by Bix Weir
http://www.roadtoroota.com/public/101.cfm January 2007…
“This book is part detective story.”
Alan Greenspan — First Line Back Cover of “The Age Of Turbulence”
No truer words have been spoken when examining this book or the rhyme and reason behind the life and career of Alan Greenspan. He is a “mystery wrapped in an enigma”…or is he?
A life long admirer, student and follower of Ayn Rand, Greenspan spent his early years as an economist trumpeting the virtues of sound money and value of a gold standard.
Midway through his career, though, Greenspan abruptly pulls a 180 degree philosophical change of conviction to embrace the fiat money, welfare system that he so vehemently despised in earlier writings.
Not only did he embrace fiat money, but he used and abused it to a degree which steered us down the path of irreversible self destruction. What came over him?
How does such an intelligent and seemingly honest human being become so corrupt as to use and abuse the monetary system of the entire world further enriching the wealthy and abusing the poor?
Or should I ask a deeper question… Could he have done it all on purpose?
I contend in this article that Alan Greenspan learned from ex Federal Reserve Chairman and mentor Arthur Burns how the banking cartel stole the global monetary system from the people.
This knowledge has been his lifelong obsession and he has finally devised a way back to the Gold Standard by orchestrating the pending destruction of the fiat money system. END
We are long past the time for the TRUTH to be exposed. It is time to awaken the masses to the long term manipulation of our markets via computer programs started in the 1960’s by Alan Greenspan and Stephen Devaux.
It is time to EXPOSE ROOTA!!
May the Road you choose be the Right Road. Bix Weir http://www.RoadtoRoota.com
Michael MacDonald September 30, 2014 at 9:26 pm
And is Mr. Greenspan a co-vert gold bug? I think so… He was also a very close friend of Ayn Rand’s… http://www.constitution.org/mon/greenspan_gold.htm thoughts?
n3angus October 1, 2014 at 2:35 pm When all these countries revolt to this lie about the US economy doing better than theirs these Central banks will revolt and look for the alternative which is the SDR ….
Major Foreign Currencies Collapsing as U.S. Vs. World Policy, Growth Gap Grows!
chuc1997 September 30, 2014 at 11:28 pm Wealth is created thru work. Work is done thru expended energy. Energy expended has been primarily oil for 50 years.
Yet no oil exporters get a seat at the SDR table?
What if oil won’t sell their oil for SDR’s? Then what?
“There is one oil exporter that no one will play for a fool.”
cramley Sept 30, 2014 at 11:43 pm The famous exchange between Ben and Ron Paul:
July 13 2011 Ron Paul to Bernanke : “Gold is Money?” -“No it’s a precious metal” Ron Paul to Bernanke : “Why do central banks hold it?” – “Tradition.”
The hard money crowd like to tout this as Ron Paul showing up the Bernank, but I see it differently.
It is Ben that really understands gold, not Ron. It is “tradition” to go back to gold as financial flint to engender a new fire. a rebooted credit cycle. Gold is not money.
It is collateral for the whole human experiment of long term trust and enterprise. This is why gold is not an inflation hedge and does not respond to the quantity of money.
cramley October 1, 2014 at 3:08 am Have you guys listened to the The Secret Recordings of Carmen Segarra? Good example of social inertia in an institution.
Hard not to imagine the same at the IMF and BIS. Sure these ivory tower types can draw up substitution accounts and SDRM’s that look great in theory, but after reading a good number of their papers it’s apparent they don’t understand leverage or else nobody’s brave enough to step outside of the box upsetting a boss.
You can’t just have a little deleveraging, not with how the system is cross-linked now with all these swaps that will never be able to perform when necessary.
George October 1, 2014 at 4:02 am SDR is unfeasible. Look at the failure that is the euro, most nations want to succeed as it entraps many of the nations such as greece, that lose any competitive advantage that would otherwise come from their own individual weaker currency.
Also look at the issues that arise from our biology. Tribalism. I just can’t see orientals mixing with Caucasians in such a cohesive manner.
Problem with most economists and the like is that none of you have done any biology studies. We’re all hominids at the end of the day with innate behavioural instincts/mannerisms that are truly different from one another and act upon those differences objectively whether you like it or not.
nanook73 October 1, 2014 at 2:33 pm “I just can’t see orientals mixing with Caucasians in such a cohesive manner.” Really? I have one word… Vancouver (Affectionately referred to by us white guys as “Hongcouver”). Racial humour aside we all generally get along and do business/live together quite well.
irrelevant111 October 1, 2014 at 11:07 am Appears to be a well designed plan. Depends on how one perceives it. The masses will not see it until the semi-truck hits. Our current generation is blind. Once again, hope abounds n wise men will obtain balance.
codizil October 1, 2014 at 1:36 pm Motley Fool said: The SDR ‘solution’ touted by Rickards remains doomed to failure.
Using http://en.wikipedia.org/wiki/Special_drawing_rights … as source, let us examine this non-solution. I will be altering some numbers for ease of calculation.
Current SDR in existence : XDR 476.8 billion. Let’s call it 500 Billion.
It has a currently defined value of 41.9% USD + 37.4% EUR + 9.4% JPY + 11.3% GBP.
This basket weighting is reconsidered every 5 years. ( Just short enough when currencies are failing rapidly, right, right? :P )
Of course, this definition has little meaning in and of it self, as it does not give you the value of one SDR.
This is further defined as follows (currently): 1 SDR = 0.66 USD + 0.4230 EUR + 12.1 JPY + 0.1110 GBP.
The currency crosses relative to USD is computed daily here : http://www.imf.org/external/np/fin/data/rms_sdrv.aspx
Currently 1 SDR = 1,54335 USD. Let’s call it 1.5 USD. So at present there exists real value reserves of about $750 billion. Ok. So let us do a few gedanken experiments.
First let’s assume Rickards is right and there is a currency collapse, and each of these currencies lose 90% of their value over one month at the same rate. So after the month each would be worth 1/10th of their current value.
Firstly the currency crosses would be unaffected so the SDR would still be defined as 1.5 USD. However in real terms each of these currencies are now worth a tenth of what they were before. So the real value of all SDR falls to $75 Billion in real terms.
Ok. So say we include gold today in this basket. Instead of playing around with the numbers too much let’s just call it 0.01 grams of gold added to the basket.
Assuming gold priced at $1300, we get 0.418 USD for this 0.01 gram. So this means the SDR is now worth about 1.9 USD and gold makes up 22% of this new basket. This is close enough to Rickards estimate of 25% gold backing for illustrating the general idea.
Let’s just call it 2 USD per SDR. So now we have the total SDR value of $1 trillion.
Let us now repeat the same experiment with there being a currency collapse and each currency losing 90% of it’s value. We will also assume as Rickards does that gold remains constant and only currencies fluctuate, and so gold would be worth 10x as much in each currency than it was before this month long currency collapse.
( I should note that Rickards is wrong here. Gold does not remain constant in value. Both gold and currencies fluctuate in value.)
So after the month 78% of the basket is now worth 7.8% in real terms, and 22% is now worth 220%. What percentage of the new basket is gold? Well (220/ 220 + 7.8)*100 = 96.6%.
So what does this addition to for confidence in the failing currencies? That’s right! It further erodes it! Seeing this rapid rate of devaluation, people with simply start rushing to gold with even more haste. Oops.
Before I forget to mention, presently SDR’s are defined as a call option “ for euros, Japanese yen, pounds sterling, or US dollars, SDRs may actually represent a potential claim on IMF member countries’ nongold foreign exchange reserve assets, which are usually held in those currencies.” – from wiki
Notice the “or”. So if you were to trade your SDR’s you would get only one of these (rapidly depreciating) currencies. Presently you have no call option on a country’s gold reserves, but the moment we include gold in the basket, it must become such a call option.
So, seeing this rate of devaluation, what are you going to exercise your SDR call option on? Gold, or one of these rapidly failing currencies? That’s right! Gold.
Seeing as there are 500 Billion SDR’s and I defined them initially as 0.01 grams of gold, this means the whole stock is a call option on 5000 tonnes of gold. Ok.
So this leaves some breathing room for the IMF to create more SDR’s. I am sure everyone will be very happy they can create extra call options on their gold. Haha.
How much, well I don’t think more than there are gold central banking reserves, let’s call that 32,000 tonnes. So what happens if they want to create more SDR’s after this point…like the trillions Rickards think they can? Right.
So in effect in this option we see that SDR’s simply become a call on gold, as currencies continue to devalue. It will become 99% of the basket, then 99.9% and so on till it is in effect the whole basket.
Ok. So let us try and conduct a third gedanken experiment. This time we only include gold in the basket after our month of devaluation.
So what happens this time? Well, the currencies are still continually losing value. We included the gold, because according to Rickards this will boost confidence in the SDR.
Instead, what will we see, the percentage value that gold represents of the basket creeping up, just like before, and the higher it goes, the faster confidence is lost, and the faster it goes to 100% of the basket.
In conclusion, all roads lead to FreeGold. ;)
n3angus October 1, 2014 at 2:46 pm if you are holding gold in a country thats not holding the mantle of world trade currency status then your gold will be confiscated from you by your government so they can have something to trade with .
kbnow October 1, 2014 at 3:56 pm I would hope that the SDR is able to make a smooth transition into the global economy. Otherwise we are looking at a deflationary or hyperinflationary crash of the world economy. Time will tell…
JC Collins October 1, 2014 at 4:08 pm Whether the transition is smooth or rough, the SDR system will once again corrupt into mass debt creation and debasement, like all the fiat systems before it. How long it will last is open to debate. I’m thinking 10 to 15 years. But it could last longer than expected.
D Mac October 2, 2014 at 12:48 am Simply crazy that this isn’t the big story being talked about… In a real world, this would be a game changer but in this fantasy world we live in it’s swept under the carpet. Not but talk going on about this anywhere… Secret tapes pull back curtain on Goldman Sachs
JC Collins October 2, 2014 at 12:56 am I agree D Mac. I’m attempting to write something on it but every time I start I end up writing about something else. And I was going to tonight and then Dee asked me a question which required a post length answer.
Still though, I’m waiting for something else, which should happen soon, which I can add to the Goldman tapes angle and make for a better post. Stay tuned…