Fool’s Gold

06 Jan

Fool's Gold #1:  Iron Pyrite [courtesy Google Images]

Fool’s Gold #1: Iron Pyrite
[courtesy Google Images]

Most of us have seen “Westerns” that included some grizzled old prospector scolding the new-comers for mistaking iron pyrite (“fools’ gold”) for real gold.   How could people be so dumb as to confuse iron pyrite with physical gold, hmm?

And yet, today, virtually every American who invests in gold is just as likely to mistake “fools’ gold” for physical gold.  Except, today, our “fools’ gold” isn’t iron pyrite—it’s paper gold; it’s the paper promises to pay in physical gold that are accepted on COMEX rather than real, physical gold.

In fact, because COMEX reportedly sells about 60 “ounces” of paper gold for every ounce of physical gold, we might reasonably refer to COMEX as the world’s preeminent market for fool’s gold.  Those who believe that “paper gold” is “as good as gold” are fools.

Fool's Gold #2:  Paper Gold (those who accepted this "gold certificate" were paid off in paper, fiat currency. [courtesy Google Images]

Fool’s Gold #2: Paper Gold (those who accepted this “gold certificate” were paid off in paper, fiat currency.  No piece of paper, no “promise to pay” is “as good as gold.”
[courtesy Google Images]

Andy Hoffman recently wrote a few words on the difference between physical and paper (fools’) gold: 

“. . . suggesting COMEX prices may decline, ignores the fact that this is no longer a dollar-centric world; as it’s entirely possible that amidst falling paper prices in the States (due to additional manipulation, of course), we’ll simultaneously witness soaring prices overseas; as is the case currently in India, where premiums have surged above 20%, creating significant physical shortages. To wit, gold priced in dollars, Euros, and Pounds is roughly 35% below its all-time highs; but in Rupees, it’s just 20% below its high–and in Yen, barely 10%.”

Q:  How is it possible that we don’t have global price equivalence for physical gold?  Sure, prices might vary by a percent or two between different continents.

Q:  But how can prices (as measured in fiat dollars) for physical gold be 20% higher in India and 10% higher in Japan than the price of paper gold in the US?

A1:  Market manipulation.

A2:  The prices of paper gold and physical gold are beginning to diverge in global markets as the world begins to see the difference between fool’s/paper gold and physical gold.   The world is recognizing that the price of paper (fool’s) gold (as determined in American and British markets) is no longer an accurate reflection of the price of physical gold on international markets. Inevitably, that recognition will spread to the US.

In fact, that recognition is already here insofar as many gold investors who were previously content to accept payment for their investments in the form of paper gold are now demanding to take delivery in physical gold.

What’s that mean?

It means that investors increasingly understand that $1 million in physical gold is worth far more than $1 million in paper (fool’s) gold.

As the prices of paper/fool’s and physical gold continue to diverge, the price of paper gold will be seen for what it is:  a derivative that’s every bit as speculative as investing in Iraqi currency.  Paper gold and paper gold markets (like COMEX) will become as increasingly disparaged and irrelevant as iron pyrite.  Physical gold will be become increasingly valuable and controlling.

Andy Hoffman continues:


“In other words, global gold fundamentals are decidedly not focused on a nation with just 5% of the world’s population and demand, no matter how powerful its fraudulent commodity exchanges appear to be. As it is, the COMEX is nearly “sold out” of registered gold inventory, whilst the Shanghai Exchange has delivered more physical gold in the past four years than is supposedly held at Fort Knox. In other words, it’s only a matter of time before pricing is dictated in Shanghai, not New York or London.”

More, it’s only a matter of time before pricing is determined by physical gold rather than paper (fool’s) gold.  When that time arrives, the price of physical gold will be freed from the price manipulation that’s inherent and easily achieved with paper (fool’s) gold.  The price of real gold will begin to soar.  Simultaneously, those who’ve invested in paper gold will realize they’ve played to fool and will suffer the fool’s penalty:  poverty.


Posted by on January 6, 2014 in Fiat Currency, Gold & Silver Coin, US Dollar, Values


Tags: ,

22 responses to “Fool’s Gold

  1. silverlemniscate

    January 6, 2014 at 3:32 PM

    Before all is said and done:
    They will fling their silver into the streets and their gold will become an abhorrent thing; their silver and their gold will not be able to deliver them in the day of the wrath of the LORD…Ezekiel 7:19
    Not much time left to get our priorities in straight, wake up people.

    • Pat Fields

      January 7, 2014 at 3:00 AM

      Sorry, silverlemniscate, I clicked the wrong ‘reply’ button below and I can’t delete the entry.

      Total economic collapse is not ‘End Times’. The entire Asian region suffered through this same event in 1450 AD, when China’s ‘flying money’ imploded. It took three centuries, but we still know China as a consistant unit of polity … unlike Rome.

      When an asteroid or super-volcano blackens the entire atmosphere … THAT will be ‘End Times’. Till then … toss that metal out your window … I’ll be there to gather up your ‘trash’ as a ‘public service’ for you.

  2. Jetlag

    January 6, 2014 at 4:12 PM

    Who benefits from a rise in the price of gold?

    Here’s the short list of (publicly known) big players:

    Top 10 gold holdings, in tonnes

    1. United States 8,134
    2. Germany 3,391
    3. International Monetary Fund 2,814
    4. Italy 2,452
    5. France 2,435
    6. China 1,054
    7. Switzerland 1,040
    8. Russia 1,015
    9. Japan 765
    10. Netherlands 613

    Data by the World Gold Council, June 2013

    • Adask

      January 6, 2014 at 5:31 PM

      There’s reason to doubt those numbers. There’s been no comprehensive audit of US gold holdings since A.D. 1953. Some believe that the US has been secretly selling it gold treasury and may have lost half or more of the alleged 8,134 tons. If the US has been secretly seliing its gold to, say, China, it’s entirely possible that the principle treasury of gold is now located in China rather than the US.

      • Pat Fields

        January 7, 2014 at 2:48 AM

        Al, the math works out to strongly indicate that the government has emptied its vaults over the past half-century in attempting to invoke false ‘value’ in its paper. The glaring truth of that contention was disclosed in the recent ‘German Incident’.

    • Pat Fields

      January 7, 2014 at 2:58 AM

      Total economic collapse is not ‘End Times’. The entire Asian region suffered through this same event in 1450 AD, when China’s ‘flying money’ imploded. It took three centuries, but we still know China as a consistant unit of polity … unlike Rome.

      When an asteroid or super-volcano blackens the entire atmosphere … THAT will be ‘End Times’. Till then … toss that metal out your window … I’ll be there to gather up your ‘trash’ as a ‘public service’ for you.

  3. Pat Fields

    January 7, 2014 at 12:26 AM

    A large part of the purpose for foisting paper currencies on the world’s countries is to manipulate their ‘values’ according to advantageous targeted resource ‘pricing’ in any given country. In other words, when industrial monopolists need to cheapen, say iron, or copper, the bankers go to work devaluing the paper of countries producing those resources and the elitist politicians play their parts by coaxing ‘treaties’ conducive toward this plunder. That’s why the ‘Triumvirate’ of government, banking and monopolists exists … to co-operatively engineer this ploy.

    There’s only one force that can break the ‘Triumvirate’ … Universal Honest Money of copper, silver and gold (others in the monetary mix would serve to strengthen the effect) so as each acts on the others to ‘shepherd’ their Free Market worth against over or under valuation. A truly advanced form of contract settlement terms would leave the money form open until completion or as demanded in its course, so consistent ratios would be encouraged worldwide, only variable under specific supply-demand conditions evident under objectively derived general experience.

  4. Joe L'Amarca

    January 7, 2014 at 2:18 AM

    Dry Foods and Clean Water is the new coming precious substance to posses you can’t eat gold or silver its not easy to chew .

    • Pat Fields

      January 7, 2014 at 2:42 AM

      Joe, for folks who have no cognition of realities beyond their mouths and bellies, that’s certainly true enough.

      • Tony

        January 7, 2014 at 10:34 AM

        I don’t know, Pat. I think your reply to Joe is pretty harsh.

        What specific cognition of reality favors silver over food and water when food and water are scarce? Is it like favorable to curl up in a corner and die of thirst, content that you have your sacks of gold and silver?

        He makes a point and I do not see how you refuted it. Now, I am not against having silver. But, I sure see logic in the idea that if drinkable water is hard to come by, that will make one heck of an impact on demand.

        Do you disagree? Do you think a starving, thirsty person will fork over his food for a few silver shekels?

      • Tony

        January 7, 2014 at 10:43 AM

        To add to my reply, the only thing I know is of more value than any physical thing is faith.

      • Pat Fields

        January 7, 2014 at 11:21 PM

        Harsh? Tony, I disagree. That old ‘can’t eat metal’ saw is a simplistically silly retort that works to ‘justify’ plunder of Man’s Labors through credit instruments, which ought never to be tolerated a single utterance by People of Reason.

        The rational positioning of copper, silver and gold suit them so well to the purpose of money (almost mystically) that Haggai 2:8, cited by Al, captures their role quite well. Few know that if all silver ever mined were divided out among all living Peoples today, each share would be a little over seven ounces … as are the days of a week! Fewer still, know that prior to the 19th century (ancient times excluded), an average day’s Labor equated to an ounce of silver, which provided two days average sustenance. Even fewer folks know that the amount of silver recovered from the earth is very slightly less than population growth … meaning that its proportional value grows over time … yielding natural appreciation to savings of the thrifty and more assured provision for the elderly. That, for me, is compelling empirical evidence of its existence as ‘God’s Providence’.

        The truly important function of money is to fully extinguish indebtedness in all instances of exchange, as occurs in Barter of goods and services. Since pre-monetary Barter suffered debilitation from ‘Coincidence of Needs’, so the ideal money media, itself satisfies avoidance of debt while assuaging the immediacy of needs in so many ways (time, volume, spoilage, et cetera).

        That the money metals exist in consistent relative supply-demand abundance, juxtaposed against all other goods-at-market, lends to objectively derived ratios of worth (dare I suggest God’s Just Dispensation?) to trend across the entirety of all goods (money itself inclusive).

        Further, where money is in the poly-metallic scheme, each strata of social station is afforded a large degree of protection against economic oppression by others, ‘high’ and ‘low’. Also, social ‘mobility’ is enhanced for ‘aspiring’ and ‘fallen’ members alike.

        So, eat then. Take the moment’s consolation. Dwell not on the fact that God has put us in Company of equal fellows with whom we’re duty-bound to make Justice by our interactions.

      • Tony

        January 15, 2014 at 10:02 AM


        Just for clarification, you might be arguing something different.

        At the least, you are reading into what Joe L’America wrote. No where in his brief post does he suggest any justification of credit instruments as a (so called) money system. I don’t see that he is making a case for any money system.

        All I see him saying is that there can be circumstances where water is more precious than gold.

        Now maybe you can demonstrate to me that Joe was arguing for a credit money system.

        I suggest in the absence of what you asserted, you let him speak for himself.


      • Pat Fields

        January 15, 2014 at 3:30 PM

        Tony … “demonstrate to me that Joe was arguing for a credit money system.”

        I’m content to let my post stand on it’s own merits.

    • Adask

      January 7, 2014 at 11:43 AM

      Make no mistake. I do not worship gold. Gold coins are just disks of shiny metal. I have no doubt that the day will come when people throw their gold out into the streets. But, until that day comes (and it it will very close the the “last” day), I believe you’ll be better off holding gold than you’ll be holding paper debt instruments.

      The Bible verse (Ezekiel 7:19) about throwing your gold into the streets is not necessarily meant to indicate that gold is or will ever be worthless. Instead, the verse may be a metaphor to indicate that in those last days, circumstances will be so incredibly dire that people will be tempted to do the craziest, most irrational thing they could ever imagine doing: throwing their gold, even their GOLD, out into the streets. In other words, Ezekiel 7:19 may be less about gold than about the unprecedented stress and danger of the last days.

      More, when will the “last days” occur? The Bible says no man knows the date. In theory, those lost days might happen next month or they might happen twenty years from now. Until we reach those last days, gold rocks.

      Finally, Haggai 2:8 offers a statement that’s intrigued me for years: “The silver is Mine, and the gold is Mine,” says the LORD of hosts”. I won’t say it’s true, but it’s possible that the reason the world has sought gold and silver for centuries is not that those metals are malleable or shiny, or good conductors of electricity. Maybe the reason people around the world have been attracted to gold/silver is that they are metals that are somehow “special” to God. Maybe they are the only metals that God claims as his own,while other metals are subject to the dominion of mankind.

      If that were true, gold and silver would be ideal mediums of exchange. I.e., I believe legal title to Federal Reserve Notes is held by the Federal Reserve and/or the federal government. You and I get equitable title to those FRNs. As a result, because we use the Fed’s currency, the Fed gets legal title to whatever we purchase with FRNs and we only get legal title. Result? The Fed (owner of legal title to the FRNs) can effectively “own” all of our property.

      But if our monetary system were based on gold and silver, and if the owner of the gold and silver were God, then use of gold and silver as money would not cause legal title to our property to fall to the Federal Reserve of some other group of super-wealthy elitists. By buying properties with gold and silver we might own those properties with a “perfect” (legal and equitable) title–subject to no man and subject only to God, Himself.

      If the gold and the silver are God’s, I want to possess some of those substances.

  5. J.M.

    January 7, 2014 at 7:57 AM

    Joe L’Amarca,
    I understand what you are saying, & will do as you say, but when it comes to the so called “monetary system,” Pat Fields, is the MASTER.

  6. palani

    January 7, 2014 at 11:53 AM

    I hardly know what to think of sovereign debt and its relationship to gold or silver. My own relationship is must smaller. For access to law (that would be common law to those who might mistake it for some other) I must include one dollar of specie as a lawful and proper consideration. If I want any contract disputes to come before a jury I must make the amount of the contract over $20 but I don’t believe this all needs to be specie. In any case the entire contract does not need to be in specie as the remaining amount is described as either ‘love and affection’ for relatives or ‘and other valuable consideration’ for strangers. The use of specie is symbolic only.

    In the case of sovereign debt gold is used to balance trade deficits. At least that is the way the system used to work. The U.S. has trading partners who know the score (because they really are keeping track of it). If they let the U.S. get by with the appalling balance of trade that has been going on these past 40 years then that is their business. I consider them to have been paid when they accept the terms. If they complain give them $1 in gold and ‘other valuable considerations’ as a new offer and a novation.

    • J.M.

      January 7, 2014 at 2:11 PM

      ‘love and affection’ for relatives or ‘and other valuable consideration’
      Very good !!!

    • J.M.

      January 13, 2014 at 12:38 AM

      Hi palani,
      Help me out here. If the debt cannot be questioned,(Amendment 14) it seems to me the medium of exchange used to create the debt cannot be questioned nigh-thur.Penny for your thoughts & it will be an Injun head penny too

    • Pat Fields

      January 15, 2014 at 4:15 PM

      palani … “For access to … common law … I must include one dollar of specie as a lawful and proper consideration.”

      As I understand, (negotiable) offer of constitutionally compliant dollars is only essential in dealings with … a government agency … to compel preservation of its adherence to Common Law.

      In Private Contract, by the ‘Law of the Flag’, offer of a constitutional dollar invokes the (constitutionally compliant) statutory regulation of the United States on the dealing, for its ‘Benefit of Protection’. However, in Private Contract, the alternative use of metal, purely in form and definition of weight and fineness, also preserves Common Law circumscription, while dispensing superfluous statutory complications (now, all dominated by UCC Code). The formal symbology to employ for such condition would be to transact business under one’s family ‘Coat of Arms’.

  7. J.M.

    January 7, 2014 at 3:49 PM

    Well isn’t this something,I think all 3 of you are right. Also I do not see what is accomplished by throwing gold & silver into the streets or anywhere else except as Alfred says,a metaphor. Lately, I have seen news clips of federal reserve notes being dropped in the streets & people are scrambling everywhere to GET some of it. HOWEVER, IF a tidal wave 300 feet high is approaching, & the people are running like a scalded dog trying to escape it, & frns are being dropped too along with the visible tidal wave rushing in, I garnt T they ain’t goan B scramblin to pick any of it up.

    • J.M.

      January 7, 2014 at 3:52 PM

      @ >I garnt T they ain’t goan B scramblin to pick any of it up.
      This goes for gold & silver too.


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