JC Collins June 11, 2014 at 7:56 pm Thanks for the compliments on the site. It’s definitely turning into something more than I ever intended. I’m glad you found it as we have much to learn from you. It’s never about right or wrong but understanding.
Everything we share and analyse brings broader understanding to the group. Perhaps in some ways both a spike and a drop may happen, at different times for different reasons.
Your book The Silver Bomb has invaluable information and I would encourage all readers to get a copy and understand fully what you’ve presented.
JC Collins Continues: In regards to the silver fix I’m hesitant to add much of anything as I haven’t delved too deep into that segment of the system. I’m confident that it has plenty to do with the transition to a multilateral system.
Since the new system, in theory at least, will eliminate arbitrage, perhaps the fix changes coming will have something to do with that. Everything will change with the full implementation of the multilateral financial system.
Axx fann (@fann_axx) June 11, 2014 at 11:10 pm Mr. Collins continues to attract bright minds into the fold. The crystal ball continues to evolve… The struggle to obtain balance is a daunting task.
What is most interesting at this juncture, is whether man collectively seeks common ground or ego once again becomes the distraction. When one observes objectively, the vast diversity of all sovereign nations seeking a voice, therein lies the dilemma… No one can predict the future, but attempt to steer.
What is most profound, at this time of ‘NOW’, we acknowledge the current heading.. Be Well Always JR
matt (@speedspirit42) June 11, 2014 at 11:12 pm “They would owe you the debt or value of the gold which would be balanced through other means than handing over physical gold” JC Collins
And how many lost souls will want Physical Precious Metals in hand from then on to store their wealth for a future date. The answer is more then is physically available. So those who posses it will not share any for a derived manipulated SDR Bank value but the street value. The Black Market price. That price will be multiples higher then what the paper price is. Is this not a likely scenario JC?
JC Collins June 11, 2014 at 11:18 pm Sadly I think most people will accept what they’re told to accept. I’m surmising that a collapse scenario, where such matters would become relevant, will be avoided by a sovereign debt consolidation and SDR bond allocations. We’ll see, but interesting times for sure.
chuc1997 June 12, 2014 at 2:41 pm JC- I generally agree with you, but if gold = work, and work = energy expended, then in our world, energy expended = oil.
If you were an oil exporter, would you export a depleting asset for eroding fiat forever? Or would you demand to be paid in a currency that held its value, as you rightfully note gold does, through time?
Why would an oil exporter ever sell oil for eroding paper which it knows will lose value over time? Historically the answer was “b/c the US will kill you if you don’t”, but as you again rightfully note, that is changing.
By process of elimination, the only answer I can arrive at is “Oil exporters will, over long periods of time, only be willing to sell oil for currency which holds its value.” We all know that is only gold.
If we can agree on that, then the next step is to calculate the dollar-value of gold mined annually and compare it to the dollar-value of oil produced annually. The dollar value of annual oil production is some 25x the dollar value of annual gold production.
My question is this: If we take your (IMO correct) assertion that gold = work & work = energy & energy = oil, then by transitive property, gold = oil. If that is the case, why is the annual production of oil measured in USD’s some 25x higher than the annual production of its equivalent measured in USD’s?
If you grasp that, then IMO you will understand what the purpose of the creation of gold futures priced in dollars was all along…to facilitate the US’ exorbitant privilege.
And it also suggests that at some point in this cycle, gold will be repriced not by debt, but by oil exporters looking to receive a currency that preserves their wealth. Otherwise, as oil supplies continue to deplete, they will deplete at an accelerating rate b/c they will know that oil in the ground will be more valuable with each passing day than the fiat (USD or SDRs) they will receive today for it.
Gold must be repriced by oil for the oil to flow to drive the global economy. Thoughts?
JC Collins June 12, 2014 at 3:38 pm For man’s purpose his time and labor equal his wealth. Gold is collectively recognized as a stable container or holder of wealth, being that wealth will be maintained while held in gold.
Oil is only one commodity of many which comes from mans production, being his time and labor. As such, I don’t follow the connection between gold and oil. What drives the global economy is production.
The last 70 years wasn’t a world dominated by the United States but a world dominated by international bankers who used the United States as an economic and military weapon to set up central banks in all countries. These bankers are even more in control of the world today and will regulate the US down to one country among many.
Gold and oil, along with other commodities, including consumption commodities like oil, rice, wheat, etc., will most likely be used in valuing a production percentage of the multilateral currency, but not all of it. Fiat will still play at least a 50% role in valuation. And as the pattern repeats, the multilateral currency will again debase back into full fiat at some future point.
chuc1997 June 12, 2014 at 3:52 pm What drives the global economy is production, but what drives production is oil. Oil is the master commodity. Without oil, agricultural yields would fall by 70%+ as neither oil-based pesticides nor oil-driven mechanization is able to bolster yields.
Without oil, production of all other commodities ceases. Copper, iron ore, aluminum – all production bases have been so tapped that further raw material stores are only able to be obtained via oil-driven machinery and transport.
Even transport of that production from areas of production (east) to areas of consumption (west) are driven by oil (ships, planes, trains, trucks).
I agree with your assessment on Central Bankers over the past 70 yrs.
Finally – regarding the basket of currencies using productive commodities partially: I readily admit that is possible, but where I have difficulty is this: Given levels of global debt, the degree to which the price of those commodities would need to be written up would be enormous, which would ensure the starvation of billions and guarantee social unrest everywhere…
It seems clear that authorities are making ready for spot instances of social unrest, but they simply could not manage social unrest among billions…and keep in mind that food riots broke out world wide with food prices only marginally higher than here.
Given that, IMO it seems that the key component of any physical basket backing a currency would need to be “not used for anything”, so that nobody starved as a result of the write up in value necessary to offset debt to effect the currency transition.
If corn, wheat, rice, etc. are used as currency, in order to de-lever the global economy, they will need to be written up enormously. Billions will stave and they will burn down the joint before they go…IMO TPTB have no interest in watching their global empire burn up before their eyes…
Much better to write up gold by orders of magnitude – nobody starves, the wealthy own the gold, the oil exporters get compensated properly, the oil flows to support the global production…everything runs smoothly.
IMO, that’s why TPTB have been swapping fiat for gold at “We Buy Gold” stands all around the world for the past decade…so that when it’s written up as part of a transition, they have it, not the hoi polloi.
JC Collins June 12, 2014 at 4:15 pm In regards to oil being the “master commodity” I disagree. What is used to extract oil? Iron ores, human labor fueled by agriculture, and a combination of all other commodities, both sociologically and economically. All commodities work in symbiosis to facilitate production, which is born from human time and labor.
Commodities will not be used directly as currency but only as a portion of currency valuation, along with other economic indicators, such as GDP, human demographics, etc..
With that in mind, food prices, along with other goods, will not see any “write ups”. The sovereign debt in the world will be restructured through an SDRM method, Sovereign Debt Restructuring Mechanism, leaving the valuations of currencies to be pegged at realistic and workable economic indicators, most likely at fixed rates adjusted annually.
chuc1997 June 12, 2014 at 4:46 pm Perhaps…but oil is millions of years of human time compressed. Every barrel of oil contains 25,000 man hours of work. That means the “value” of a barrel of oil, if you value human labor at $20/hour, is $500,000.
There is no other commodity so widely used that can be acquired for $100 that conducts $500,000 worth of human labor for you! Give me enough copper, I may not be able to get you more oil. Give me enough oil, I will be able to get you all the copper you want!
We can document that corn yields in the US were 20-40 bushels/acre before oil, and 165 bu/acre now. Without oil, yields will return to 20-40 bu/ac, and human population will adjust accordingly…Iron ore and copper are part of the tractor, but without the oil, those tractors are simply expensive yard decorations!
E: SDRM – I agree with you in concept, but don’t understand why nations will be honest with their assessments of their economies? Or perhaps this is why China is running up their debt as much as they can? Why not ahead of what is effectively a jubilee?
It just seems like an awful lot of work when basically the same outcome can be accomplished by simply removing the USD as the sole oil currency (ending the Petrodollar) and shifting the sole oil currency back to the only other currency that ever priced oil…gold.
Except let gold’s value float against all currencies individually…then Central banks can use fiat open market operations against gold to manage in-country liquidity like they do currently with sovereign debt operations, etc, while oil countries will still be happy with their currency. Why not just do that?