Eat my words 
Silver is Approaching Stage Two of its Bull Market - James Turk
- Thread starter Ouch
- Start date
hilaire9 said:
One of the most intelligent things I've read on this forum.
millededge
Active Member
intelligencer said:
rofl
Gideon Gono was no fool. Placed in a position where you put your power on the chopping block versus printing your way out, the latter is more politically palatable, but the citizens lose.
millededge
Active Member
I've just got through the first 25 pages of 250 or so in James Turk/John Rubino's (www.dollarcollapse.com) book
The Collapse of the Dollar - and how to profit it from it
The book was written in 2004. I have the 2007 update.
These guys demonstrate their capacity to write succintly.
This is from the first page of Chapter 2:
"Governments are fundamentally incapable of maintaining the value of their currencies.
Every leader, whether king, president or prime minister, serves two powerful constituencies: taxpayers angry about what they currently pay and steadfastly opposed to paying more, and those receiving government help who support greater spending on everything...Alienate either group, and the result can be an abrupt career change."
The Collapse of the Dollar - and how to profit it from it
The book was written in 2004. I have the 2007 update.
These guys demonstrate their capacity to write succintly.
This is from the first page of Chapter 2:
"Governments are fundamentally incapable of maintaining the value of their currencies.
Every leader, whether king, president or prime minister, serves two powerful constituencies: taxpayers angry about what they currently pay and steadfastly opposed to paying more, and those receiving government help who support greater spending on everything...Alienate either group, and the result can be an abrupt career change."
hilaire9
Member
Hey Mr. heartastack (blue ribbon for cool nicks),
I know well the phrase "Gold is Money".
I have been telling my friends that for...many years,
all I get back are blank stares.
Gold or silver are not money!
Money is the paper crap you keep in your wallet.
When the value of that paper drops to zero, will
silver help you?
I got into PMs via the sainted Harry Browne's 'You Can Profit from a Monetary Crisis' (1974).
I believe it was a Bestseller, and I am a reasonably social person, but I have never met anybody who took his advice.
After the Fall:
"I want a kilo of rice. How many shiney 1oz silver rounds do you want?"
Answer:"None really, but do you have anything I can use?"
I know well the phrase "Gold is Money".
I have been telling my friends that for...many years,
all I get back are blank stares.
Gold or silver are not money!
Money is the paper crap you keep in your wallet.
When the value of that paper drops to zero, will
silver help you?
I got into PMs via the sainted Harry Browne's 'You Can Profit from a Monetary Crisis' (1974).
I believe it was a Bestseller, and I am a reasonably social person, but I have never met anybody who took his advice.
After the Fall:
"I want a kilo of rice. How many shiney 1oz silver rounds do you want?"
Answer:"None really, but do you have anything I can use?"
millededge
Active Member
I think there is a parallel to the "Tragedy of the Commons" article posted recently on ZH.
The strength of this idea is that a bunch of people acting in their own self interest end up with less individually than if they had cooperated.
Reminds me of Sesame Street when I was a tot...
Given that the world reserve currency is a fiat, a promise, and given that it is denominated in electrons more than printed promises, and furthermore that each promisory note is backed by debt, and that debt is unpayable, then logically that currency is going to lose value, except for the fact that when the currency is smoked by defaulters, the value of each remaining electron, and particularly the paper, increases in value.
I smell an algebraic equation...
The strength of this idea is that a bunch of people acting in their own self interest end up with less individually than if they had cooperated.
Reminds me of Sesame Street when I was a tot...
Given that the world reserve currency is a fiat, a promise, and given that it is denominated in electrons more than printed promises, and furthermore that each promisory note is backed by debt, and that debt is unpayable, then logically that currency is going to lose value, except for the fact that when the currency is smoked by defaulters, the value of each remaining electron, and particularly the paper, increases in value.
I smell an algebraic equation...
intelligencer
Active Member
hobo-jo said:
It raises an interesting dilemma for me. I'm not a gambler by principle but say something really could be 100%, like knowing the outcome of an event. Lets make it straightforward - a double headed coin flip. Would I bet on that? The answer would be no for me. But it does raise the question about when is an 'investment' really a gamble.
So all I'll offer is a simple "we'll see."
millededge
Active Member
Benjamin Franklin said this:
Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
Letter to Jean-Baptiste Leroy (13 November 1789)
Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
Letter to Jean-Baptiste Leroy (13 November 1789)
hilaire9 said:
Yeah mate I hear ya, that's why I edited my post (a bit too late). I do that a lot around here
True, if the value of fiat went to zero quickly we would probably be cut off from global trade, and many pockets of the world would find that there is not enough gold or silver to sustain a viable currency system, and would probably find more reasonable means of exchange - an extreme scenario.
My original reply to your post was because I assumed you thought that money has always existed as paper, when paper money was orginally derived from the value of gold and silver (or other commodities).. Because what you're essentially saying is that a lack of demand for paper money (zero value) represents a lack of demand for gold and silver, which paper hasn't even been pegged to for many decades. You could just as easily say that the value of land will be zero when paper is at zero too. It makes no sense. Fiat simply gives us nice snap-shot of what the market deems is a fair price for 'things'.
hilaire9 said:
Yes I have a few things in my modest collection, but with these silver coins (standardised + non-perishable) you can go to Mr. X and get what you REALLY want, because you don't have anything that he can use, but he sure loves his silver.
double post
Turk
Active Member
hilaire9 said:
Some good points hilaire. Many people will sell their stack FAR too early.
But like heartastack above, I must disagree with the idea of silver having no value in a fiat collapse. Fiat 'collapse' is a value collapse meaning your cash buys less and less goods as prices rocket upwards. Commodities, land, PMs etc all go UP in price never to zero.
Never forget that MONEY (in some form) WILL ALWAYS EXISTS - because people will always find *something* that makes a financial exchange more convenient than pure barter. (And that's all that money really is - in a very general sense) During a fiat collapse your 'normal' money approaches worthlessness - but cigarettes, alcohol, ammunition (for renovator etc!), gold and silver - and even tinned sardines can (and have!) become replacement monies. One lady survived the Weimar collapse simply by selling one link per week from her gold rosary chain.
Silver and gold become VERY usable and valuable in a collapse. Those who hold them do very well indeed.
hobo-jo said:
Bernanke is a puppet of a regime far older than any of us. Their plan does not need perfection only LOTS OF DEBT. As intelligencer pointed out, even though US citizens are paying down their debt, Ben can undo all their hard work with a few keystrokes without *increasing* inflation. He just replaces their debt then adds to it. (The additional part will add to inflation).
If the *total* debt actually decreased you WOULD have deflation and the value of cash would INCREASE relative to goods. Effectively, the clock would tick backwards and inflation would be reversed and undone. But the US debt is utterly unpayable. By adding (greatly) to the debt today Ben APPEARS to be doing something good at least buying enough time for false hopes to flourish but what he is doing will actually make the inflation clock tick even faster in the FUTURE. It is like throwing a time delayed financial time bomb disguised as a floatation device to a sinking people. The built in time delay means that few people will EVER really understand the cause and effect of what is coming.
The game plan is actually VERY simple and mainly just needs LOTS of debt. The plan works like charm (every time) because people are 'misinformed' about so many economic principles. And when hyperinflation is actually happening, it FEELS like there isn't 'enough' cash to go around (You needs fifties rather than twenties) so people naturally think that printing more money will help things - so they demand more cash! It DOES seem to help for a short time - so they demand more! It seems crazy when you understand from the outside, but when you are actually IN a crash the perception on the street is VERY different.
millededge said:
This is a very practical book with lots of good suggestions for people in a range of financial positions.
hobo-jo said:
True, but they don't understand what is going on; the rapid collapse will take them completely by surprise. They are misinformed and distracted. Bernanke should have been an undertaker he has a remarkable ability to make a corpse look alive with a dab of financial makeup. Eventually the stench will give him away.
hobo-jo said:
No need to use USD unless you live there. What you perhaps mean is we should short the US Dollar index and go long on precious metals. Exactly. (But perversely, when Europe collapses the US dollar will surge for a short time) so be careful.
But long term you are correct. Buy food too.
heartastack said:
Actually, during hyperinflation the export sector THRIVES, but importers suffer terribly. Speculators (with REAL cash and silver etc.) move into the country and snap up *unbelievable* bargains in valuable items like antiques, grand pianos, automobiles, buildings, factory equipment etc. In a word the country is plundered; Ben Bernanke is silently and deliberately now destroying the walls that now protect the nation's wealth. The vultures are already circling.
Now, going back to Ouch's question (which benjamind210 was so quick to answer) "In the case of severe deflation, would it be better to be in Aussie cash or US cash?"
It is impossible to answer this question without knowing WHO has the hyperinflation. Did anyone here feel anything when Zimbabwe 'took off' several years ago?
Whenever your OWN currency is experiencing hyperinflation you are better off in ANY another currency (like silver and gold!). In Germany in 1921, those with US, French or Swiss currencies were FAR better off. Hyperinflation means everyone is dumping your currency - and so should you!
intelligencer you might as well give up on try to educate benjamind. His mind is closed to historical data, proof, charts, etc. When I showed him proof of bonds crashing during the US Great Depression, he ignored it. Benjamind, Prechterites, and others will soon learn a very expensive lesson in life. Bernanke has promised to create inflation/devalue the USD and he has the power to do it. He foolishly believes or hopes that he can create inflation and then limit it to 4%/year. The surge in food prices should tell him that he and the other central bankers are creating massive worldwide inflation that is going to devastate the poor and harm everyone else. Ordinary citizens in the US can see everyday inflation and they are starting to question the falsified economic data that they are being fed by the Main Stream Media. Inflation is becoming accepted and with that acceptance comes acceleration. Interest rates will be going up this year. Do not be surprised if US interest rates double in the next year. The genie is out of the bottle.
I hope none of our Kiwi members were affected by the earthquake. My silver stocks are still below their January 3rd peaks, so I am hoping that they start catching up tomorrow. This is my busy season, so I will not be posting much. Good luck everyone.
I hope none of our Kiwi members were affected by the earthquake. My silver stocks are still below their January 3rd peaks, so I am hoping that they start catching up tomorrow. This is my busy season, so I will not be posting much. Good luck everyone.
Turk
Active Member
spets1 said:
Sure Spets1, although perhaps I should refrain from calling fiat currencies a wall!
As you know, money should be a store of value; when we dig up pirate's chests from the 1770's we are delighted with the gold and silver coins we find. That old money STILL has value today.
But today, a USD is worth 20 times less than it was 40 years ago! And at that rate of depreciation, a pirates treasure worth $650,000 in 1770 would be worth exactly one cent today.
This is what happens after about 30 months of hyperinflation. Prices take off like a rocket and people suddenly realize that their paper money has no real value. That (missing) 'real' value SHOULD have been the solid WALL that protected their wealth. (Like gold and silver. OK, yes, and now Tin too!).
For decades now, people have 'felt' secure under the great Ponzi scheme - but that was because the early players got paid out - and things looked fine.
Ben's actions are simply hastening the collapse of those already paper thin walls, but he is doing it in such a way that it will not be detectable now, and when it does fall it will be so fast people will be helpless to take proper action.
Here are the 'walls' that will collapse as the currency loses value:
* Cash will evaporate from your hands.
* Fixed benefit pension funds will shrink to worthlessness - a yearly income might but a cup of coffee. Seriously.
* Savings in your bank will shrink into insignificance.
* Share dividends will lose their value.
* Imported goods will cost astronomical sums.
* Gold and silver will become unimaginably expensive in the local currency.
In fact - during hyperinflation beggars have been seen to pick up genuine currency notes - and drop them down again as worthless!
Eventually people learn to minimize cash use and resort to barter - or they sell their goods for cash and spend it quickly. This is where the vultures come in. These are the people who are dumping equities even as we speak - cashing up for the coming shopping spree!
With hard currencies these people can legally plunder the people whose financial walls have collapsed.
Some examples:
- In Germany in 1921 the French used to pop across the border and gorge themselves on pastries and cream buns that the locals could not afford.
- One tourist was seen eating an apple and a local German asked him how much it cost. It was about USD $ 0.03 cents but that was FAR more than the local could afford.
- Foreign students found that their living allowances eventually allowed them purchase entire ROWS of apartment buildings;
- Half a dozen young men from the USA took USD $10 for a night on the town, and dined themselves silly, and went shopping, and went to the theatre etc - and came home with about $4.18 in change.
- Grand pianos were exchanged for a bag of potatoes.
Hope that helps Spets1!
-- If that doesn't make people want to stack, nothing will!
Mi lao shu
Member
Highest monthly inflation rates in history:
Country Currency name Month with highest inflation rate Highest monthly inflation rate Equivalent daily inflation rate Time required for prices to double
Hungary Hungarian peng July 1946 4.19 1016 % 207 % 15 hours
Zimbabwe Zimbabwe dollar November 2008 7.96 1010 % 98 % 24.7 hours
Yugoslavia Yugoslav dinar January 1994 3.13 108 % 64.6% 1.4 days
Germany German Papiermark October 1923 29,500 % 20.9 % 3.7 days
Greece Greek drachma October 1944 13,800 % 17.9 % 4.3 days
Taiwan Old Taiwan dollar May 1949 2,178 % 11% 6.7 days
As i am one of survivors of hyperinflation in Yugoslavia, i will tell what i remembered since i was very young that time.
I was discussing with my father about this because i give him instruction to buy me some couple kg silver and few oz of gold in Serbia, and he didnt want to listen to me. These are his arguments:
1-in case of total crash no one wants silver and gold, he says that they try to sell some gold coins what we have in family during this period and nobody wants them, so value was 0. I need to notice at that time Yugoslavian citizens cant leave country bcoz we were under sanction of UN, so Yugoslavia was closed market, so look at this like global crash. Only thing who were trade able were food, clothes, cigarettes,oil and weapons. We survived bcoz weapons trading. My father is very serous man and i believe him about this, situation in my country now is that nobody is buying silver and everybody was surprised including juweliers with my request and quantity i want to buy. Situation with gold is little bit better and i purchase some 70gr of gold coins 999 for 32eur/gr yesterday, for silver will be hard bcoz nobody have it on stock bcoz no demand at all, juweliers buy it only when they have request make some piece of silver juwlery,but i think i will manage it on the end. Second very important thing during hyperinflation we all were using backup currency german mark DM. Before crash started everyone have lot of savings in banks in local currency and foreign currency as well , bcoz interest rate was very high, between 10-12% on DM or CHF. So when crash started u cant take ur foreign savings from the bank, government issued bonds with date of payment and today is still paying off this savings to citizens . That one who have local currency savings lost everything. Average salary was 1-5 DM or 0,5-2,5eur today, this u can buy when u get salary. There were no food in shops, no bread no milk, gas or cigarettes,u need to buy powder and milk from villagers, all these products u can get from black market. And the people who will dealing with foreign currencies and gas became very rich. One good think was that in shops u cant use foreign currencies and prices are in local currencies, and they cant change prices so quickly, so if u have friends in some shops u can get really expensive goods who u desire for long time for 0 money, only if they keep it old price for few days. One day all this thing end, how, government stop printing money and connect value of dinar for DM, ratio became 1:1 and inflation goes to 0. After some time they star printing money again and now 15 years latter ratio is 105 RSD: 1EUR. So my conclusion if we see hyperinflation in future it will end at one moment 0 rate inflation, all prices will be reset but will need some time for the market to start working and to make world prices. It is true that there is not enough gold and silver to make them money but i dont see th problem to turn gold/silver ratio ,
like any one who bring 1oz og gold to bank bank will give him 10000eur, so I think gold and silver will be used after hyperinflation for new currency, i think China is doing that now,they advise they citizens to buy gold/silverand at thre same they must print rmb to keep chinese products cheap bcoz usa is printing money as well, and when USA collapse they will make swap, and make rmb world currency.
Country Currency name Month with highest inflation rate Highest monthly inflation rate Equivalent daily inflation rate Time required for prices to double
Hungary Hungarian peng July 1946 4.19 1016 % 207 % 15 hours
Zimbabwe Zimbabwe dollar November 2008 7.96 1010 % 98 % 24.7 hours
Yugoslavia Yugoslav dinar January 1994 3.13 108 % 64.6% 1.4 days
Germany German Papiermark October 1923 29,500 % 20.9 % 3.7 days
Greece Greek drachma October 1944 13,800 % 17.9 % 4.3 days
Taiwan Old Taiwan dollar May 1949 2,178 % 11% 6.7 days
As i am one of survivors of hyperinflation in Yugoslavia, i will tell what i remembered since i was very young that time.
I was discussing with my father about this because i give him instruction to buy me some couple kg silver and few oz of gold in Serbia, and he didnt want to listen to me. These are his arguments:
1-in case of total crash no one wants silver and gold, he says that they try to sell some gold coins what we have in family during this period and nobody wants them, so value was 0. I need to notice at that time Yugoslavian citizens cant leave country bcoz we were under sanction of UN, so Yugoslavia was closed market, so look at this like global crash. Only thing who were trade able were food, clothes, cigarettes,oil and weapons. We survived bcoz weapons trading. My father is very serous man and i believe him about this, situation in my country now is that nobody is buying silver and everybody was surprised including juweliers with my request and quantity i want to buy. Situation with gold is little bit better and i purchase some 70gr of gold coins 999 for 32eur/gr yesterday, for silver will be hard bcoz nobody have it on stock bcoz no demand at all, juweliers buy it only when they have request make some piece of silver juwlery,but i think i will manage it on the end. Second very important thing during hyperinflation we all were using backup currency german mark DM. Before crash started everyone have lot of savings in banks in local currency and foreign currency as well , bcoz interest rate was very high, between 10-12% on DM or CHF. So when crash started u cant take ur foreign savings from the bank, government issued bonds with date of payment and today is still paying off this savings to citizens . That one who have local currency savings lost everything. Average salary was 1-5 DM or 0,5-2,5eur today, this u can buy when u get salary. There were no food in shops, no bread no milk, gas or cigarettes,u need to buy powder and milk from villagers, all these products u can get from black market. And the people who will dealing with foreign currencies and gas became very rich. One good think was that in shops u cant use foreign currencies and prices are in local currencies, and they cant change prices so quickly, so if u have friends in some shops u can get really expensive goods who u desire for long time for 0 money, only if they keep it old price for few days. One day all this thing end, how, government stop printing money and connect value of dinar for DM, ratio became 1:1 and inflation goes to 0. After some time they star printing money again and now 15 years latter ratio is 105 RSD: 1EUR. So my conclusion if we see hyperinflation in future it will end at one moment 0 rate inflation, all prices will be reset but will need some time for the market to start working and to make world prices. It is true that there is not enough gold and silver to make them money but i dont see th problem to turn gold/silver ratio ,
like any one who bring 1oz og gold to bank bank will give him 10000eur, so I think gold and silver will be used after hyperinflation for new currency, i think China is doing that now,they advise they citizens to buy gold/silverand at thre same they must print rmb to keep chinese products cheap bcoz usa is printing money as well, and when USA collapse they will make swap, and make rmb world currency.
I never saw PMs being used as money during hyperinflation as Mi loa shu says but as merely a wealth preserver to cash in after everything turns back to (sort of) normal.