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Grandmaster Putin’s Golden Trap II

22 Dec

Chessmaster?? [courtesy Google Images]

Chessmaster??
[courtesy Google Images]

As I’ve written previously, Russian writer Dmitry Kalinichenko wrote an article entitled “Grandmaster Putin’s Golden Trap”.  I view that article as generally brilliant.  Here are some more of my comments on Mr. Kalinichenko’s observations.

 

Mr. Kalinichenko’s article focused on what he believed to be Russian President Vladimir Putin’s most brilliant financial strategy: buying gold with US fiat dollars.

On the face of it, that “strategy” doesn’t sound like much. Buying gold with fiat dollars?   It’s done every day. What’s so brilliant about that?

Well, the brilliance (or just common sense) behind Putin’s strategy is based on two fundamental premises:

 

1) The fiat dollar is significantly overvalued and thus able to purchase more than it’s really worth; and,

2) The price of physical gold has been artificially suppressed and is therefore far lower than its true price would be in a “free” (rather than “manipulated”) market.

 

If either of these two premises are true, buying gold makes good sense.

But, if both of these premises are simultaneously true, then President Putin (and anyone else who has access to fiat dollars) is virtually compelled to spend all the over-valued fiat dollars he acquires to purchase all the underpriced physical gold he can find.

I.e., if both of these premises are true, it’s like not only having physical gold’s price fall to $500 an ounce at the same time you’re allowed to purchase that gold with the “Monopoly money” that comes with the Parker Brothers game.

If both premises are true, you’ve got be ignorant or crazy to not take advantage of the resulting buying opportunity.

Putin believes these two premises are true and welcomes the rising purchasing power of the dollar and the falling price of gold. Therefore, Putin gladly accept over-valued fiat dollars for Russian crude oil and then uses those fiat dollars to purchase underpriced gold.

 

•  In A.D. 1971, President Nixon closed the “gold window” by declaring that paper dollars held by foreign entities and governments could no longer be redeemed with gold from the US Treasury.  Nixon’s order reduced the paper dollar to a pure fiat currency.  The world didn’t like the dollar’s fall from “good as gold” (redeemable in gold) to a pure fiat, but generally speaking, went along with the change.

According to Kalinichenko, by accepting fiat dollars for crude oil and then quickly converting them into physical gold, Putin has effectively re-opened the “gold window” that Nixon closed.

But that’s an exaggeration.  Technically, assuming that that US Treasury is not directly redeeming the paper dollars with gold, paper and digital dollars are still fiat dollars that are being redeemed indirectly by purchasing privately-held gold.  The US government still refuses to redeem those fiat dollars, but the modern Western world (based on fiat dollars) will exchange its physical gold for fiat dollars.

Nevertheless, Kalinichenko thinks that strategy (buying underpriced gold with over-valued fiat dollars) makes Putin a genius—a “grandmaster” of the games of geopolitics and international economics.

I agree that Putin’s strategy is both brilliant and obvious, but it’s not as impressive as Putin helping to change the world’s perception of the dollar from a final “payment” suitable for saving, to merely an intermediate means to receiving a real “payment” (gold).  Insofar as Putin’s strategy helps the world to understand that the dollar is not really a “payment,” the fiat dollar’s value will decline and the dollar might even die.

 

•  Kalinichenko made additional observations concerning the current global conflict over crude oil, fiat dollars, Western sanctions on Russia, and gold.

For example, although President Obama has previously declared that the United States is the world’s one, “indispensable country,” Kalinichenko argues that, today, Russia is the “indispensable country”:

 

“Not so long ago, British scientists came to the same conclusion as was published in a U.S. Geological survey a few years ago.  Namely: Europe will not survive without energy supply from Russia. That means: The world [economy] will not survive if oil and gas from Russia is subtracted from the global balance of energy supply”.

 

Kalinichenko implies that if the West’s sanctions succeed in crippling the Russian economy, a resulting shut-down of Russian crude oil and natural gas production will:

 

1) cause the collapse of the energy-dependent European Union; and,

2) an EU economic collapse will trigger a global economic collapse.

 

Kalinichenko argues that, therefore:

 

1) under today’s economic circumstances, Russia is the world’s “indispensable country”; and

2) left unchecked, the West’s sanctions on Russia are counter-productive since they may not only collapse the Russian economy, but also the EU and then global economies.

Kalinichenko continues:

 

“The Western world, built on the hegemony of the petrodollar, is in a catastrophic situation: it cannot survive without oil and gas supplies from Russia, but Russia is now ready to sell its oil and gas to the West only in exchange for physical gold!”

 

How long Russia will continue to turn whatever fiat currency it receives for petroleum products into a gold “payment” remains to be seen.  Whether Russia will ultimately and openly demand gold for its crude oil also remains to be seen.

Nevertheless, if Russia has found a way to be “paid” in gold for its crude oil, how many other oil-producing countries will also soon demand to be paid in gold?   In fact, how many others are already doing so?  If more oil-producing countries implement a strategy that allows them to be paid in gold, how many other nations, and then common people will follow?

More importantly, what will happen once the West’s gold is largely gone and no longer available to be purchased by Russia, China and the BRICS nations with fiat dollars?  It seems certain that once fiat dollars can no longer be used to purchase Western gold, we’ll see the value of the fiat dollar fall and the price of physical gold jump.

But what else?  What would be the effect on the global economy if natural, physical resources like crude oil were primarily (only?) sold for physical gold?  Will the Powers That Be allow such a development?  Can they stop such development without collapsing the global economy or going to WWIII?

If Putin’s strategy is brilliant, it’s also dangerous to the world, and especially dangerous to Russia.  Will the Powers That Be allow Putin to continue to implement his strategy if the end result is the dollar’s death?

 

•  Kalinichenko also offered insight concerning the “hidden costs” of gold price manipulation:

 

“Right now the West spends much of its efforts and resources to suppress the prices of gold and oil. . . .  Today, assets such as gold and oil look proportionally weakened and excessively undervalued against the US dollar.  It is a consequence of the enormous economic effort on the part of the West.”

 

Kalinichenko argues that there’s an “enormous economic effort” required to artificially support the fiat dollar and artificially suppress the price of physical gold.  That “effort” may not yet show up on any accounting ledgers, but is nevertheless too expensive to be indefinitely sustained.  Sooner or later, the West will be bankrupted by the “hidden costs” incurred by the effort required to artificially manipulate the values of fiat dollars and physical gold.  That “cost” (“hidden,” for now) will be recognized when the US government is forced to admit that, in order to support the illusion of value in the fiat dollar, it had to secretly sell off virtually all of the US government’s 8,200 tons of physical gold at artificially-suppressed prices.

Kalinichenko is simply reminding us that there’s no free lunch.  The Powers That Be can’t simply “wave a magic wand” to support the fiat dollar as if that support would be “cost-free”.

Market manipulation of the price of physical gold is achieved by means of trading “paper gold” in the markets and convincing investors that the price of “paper gold” and physical gold are identical. But, Kalinichenko reminds us that,

 

“For reference: the turnover of the market of paper gold, only of gold futures, is estimated at $360 billion per month. But physical delivery of gold is only for $280 million a month. This equates to a ratio of trade of paper gold versus physical gold of 1000 to 1.”

In the West’s gold markets, there are 1,000 ounces of paper gold traded for every one ounce of physical gold actually delivered.

I can’t say that a 1000 to 1 ratio of paper gold to physical gold necessarily means that the price of physical gold is likely to rise by a factor of 1,000 any time soon.  But, if that 1000 to 1 ratio is true, would it be irrational to suppose that the price of physical gold might soon increase by a factor of 10?  20? Even 50?

That potential price increase is part of the significant “cost” ultimately incurred by manipulating markets to simultaneously over-value the dollar and underprice physical gold.  One “cost” was the $3 trillion we spent to invade Iraq in order to punish Saddam Hussein for daring to sell Iraqi crude for currencies other than the “petrodollar”.  We invaded Iraq to protect the petrodollar.  Another “cost” of market manipulation is the loss of America’s physical gold and the shift in gold ownership from West to East.

Because of that cost (loss of physical gold), if and when America needs gold, and the gold has been sold to support the fiat dollar, Americans will be bankrupted.  Big time.  The fiat dollar will die.  Chaos will loom.  Collapse is possible.

That chain of events provides a fantastic implication:  even after President Nixon closed the gold window in A.D. 1971, the fiat dollar has been implicitly backed by gold—not necessarily the US government’s gold—but the gold of the Western World.  If so, for the past 43 years, the world has not accepted fiat dollars not because they were implicitly backed by petroleum, but because those dollars could be redeemed, somewhere, for physical gold.

If so, even now, the fiat dollar is backed by gold rather than petroleum.

If that conjecture were true, it would follow that if West’s gold supply dried up, the fiat dollar would die.

 

•  Kalinichenko believes the dollar’s doom is sealed:

 

“Using the mechanism of active withdrawal from the market of one financial asset (gold) artificially underpriced by the West in exchange for another financial asset (fiat dollars) artificially over-valued by the West, Putin has thereby started the countdown to the end of the world hegemony of petrodollar. Thus, Putin has put the West in a deadlock of the absence of any positive economic prospects.”

Not so.  That “countdown” may have already begun, but Putin is not the first to realize that fiat dollars are over-valued and gold is underpriced.  Putin may be an excellent chess player, but he’s not the “grandmaster” that Kalinichenko imagines.

For at least a generation and possibly two, the dichotomy between the over-valued dollar and underpriced gold may have provided the mathematical and financial motivation for gold to flow massively from West to East.

During that time, Asian and Middle-East governments have been selling their natural resources and human labor to the West in return for intrinsically-worthless fiat dollars.  Are we to believe that the East is populated and governed by a bunch of morons?  Or could we reasonably wonder if some sort of “secret deal” had been agreed to by the US, Saudi Arabia and OPEC whereby at least some percentage of the “petrodollars” received by oil-producing nations could be converted into physical gold at bargain-basement prices?

Did the “petrodollar” agreement entered into by President Nixon secretly allow the oil-producing nations to redeem some of their fiat dollars for US gold?  Could that at least partially explain why the US gold treasury hasn’t been fully audited for over 60 years?  Could such secret agreement underlie current suspicions that the US gold treasury (allegedly 8,200 tons) is already exhausted?

Probably not.

That speculation is a little too extreme, even for me.

But consider this:  SRSrocco recently published an article entitled “U.S. Gold Exports Jump 70% In September”.  The author of the article researched the amount of physical gold actually exported by the US to foreign countries since about A.D. 1970.

He reported in part, that:

 

“I have to say, the more I research these older US Geological Survey Gold Yearbooks, the more fascinating data I uncover.

“For example, in 1974, the U.S. exported 3.3 million ounces [about 93 metric tons] of monetary gold.  Of this amount, 2.58 million ounces of monetary gold [almost 80% of the total exported] were shipped to Saudi Arabia.  This is quite interesting due to the fact that the U.S. Arab Oil Embargo started in 1973.

“Furthermore, it’s truly amazing how much gold the U.S. exported since 1971 . . . and this doesn’t even include foreign gold held at the NY Fed.”

The author admits that his research is preliminary and he draws no conclusions at this time.

Still, you have to admit that it’s a little “odd” that 93 metric tons of gold were exported from the US to Saudi Arabia just a year or two after the Saudi’s signed on to the petrodollar strategy, and a year after the onset of the US-Arab Oil Embargo.

(Incidentally, it might be interesting see the number of tons of gold the US exported in the years before A.D. 1971 (when Nixon closed the “gold window”) and compare those sums to the amount of gold exported from the US after the A.D. 1971.  Could it be that the rate of US gold exports actually increased after Nixon closed the “gold window”?  I’ll bet it did. . . .  It’s also interesting that the same year that Nixon closed the “gold window,” he also opened relations with China under the guise of “Ping Pong Diplomacy”.  Prior to closing the “gold window,” the US had the world’s largest treasury of gold.  Today, some believe that China may hold the world’s largest gold treasury.  Curious coincidences, hmm?)

In the improbable event that, in return for signing on to the petrodollar strategy, the Saudi’s and OPEC were allowed to secretly withdraw 100 tons each year from the 8,200-ton US gold Treasury, that treasury would now be reduced to about 4,000 tons.

In the improbable event that the Saudi’s and OPEC were allowed to withdraw 200 tons per year from the US gold Treasury, that Treasury would now be virtually empty.

If this speculation were true, then the fiat dollar would’ve been secretly backed (but only for some oil-producing nations) by gold (rather than crude oil) even after Nixon closed the gold window in A.D. 1971.

Under this speculation, Putin’s “brilliant, new strategy” isn’t new at all, but was more-or-less implemented by the Saudi’s and OPEC 40 years ago.  If so, Putin is, again, not the genius Kalinichenko believes.

Still, Kalinichenko correctly observed that,

 

“The problem for the West is that the stocks of physical gold in possession of the West are limited.  Therefore, the more the West devalues oil and gold against the US dollar, the faster it loses physical gold from its limited reserves.”

“The Western world has never faced such economic events and phenomena that are happening right now.  The former USSR rapidly sold gold during the fall of oil prices.  Today, Russia rapidly buys gold during the fall in oil prices. Thus, Russia poses a real threat to the American model of petrodollar world domination.”

 

I suspect that Russia not only poses a “real threat” to the US but also to the New World Order’s “petro-currency world domination”.  If so, we can expect the US and/or the New World Order to try to destroy Russia.  That means massive economic sanctions or nuclear war.

I’m not predicting that a third world war is imminent.  I’m only observing that, logically, some people in positions of power in the US and/or N.W.O. must be contemplating that possibility and weighing their chances of successfully launching a surprise nuclear attack on Russia.

More, if it’s true (as Kalinichenko previously claimed) that Europe (and even the western world) can’t survive without Russian petroleum, the idea of nuking Russia won’t be well-received by European allies since it would constitute an act of self-destruction for the EU and even the world economies.

Would the US government be willing to destroy Russia or at least collapse its economy to save the fiat dollar, if the results included a collapse of the EU economy?

If the gov-co thought they could get away with it, the answer must be Yes.

 

•  Kalinichenko argues that,

“Leading Western economists are certainly aware of the severity of the predicament and hopelessness of the situation the Western world finds itself in, in Putin’s economic gold trap.

“But everyone in the West is silent about it because no one knows now how to get out of this situation.”

 

•  Today’s fiat dollar is called the “petrodollar” because, since the early 1970s, it has presumably been “backed” by the world’s crude oil. Any nation that wanted to purchase crude oil from Saudi Arabia and OPEC had to “pay” with fiat dollars.  Since crude oil could only be purchased with fiat dollars, there was a global demand for intrinsically-worthless fiat dollars.  That demand created a perceived value for the fiat dollar.

However, the fiat dollar may have actually been supported by the supposedly sacrosanct 8,200 tons of gold held in the US Treasury—or by privately held gold in the Western World. If so, it’s at least arguable that the post-1971 fiat dollar was secretly supported by America’s and/or the West’s supply of physical gold.  Could it be that, all the while that government called gold a “barbarous relic” and disparaged its value, gold still (secretly) provided the ultimate support for the illusion of fiat dollar value?

If so, and if (when) the US and Western World run out of gold (not out of petroleum or even the fiat dollar’s status as “World Reserve Currency”), the price of gold will skyrocket and the fiat dollar may die.

This implies that the fiat dollar’s longevity ultimately depends on the West’s supply of gold, rather than the fiat dollar’s status as “petrodollar” and/or “World Reserve Currency”.  When the dollar can’t buy gold, it dies.

 

•  Kalinichenko concludes his article with, “This is called ‘Checkmate,’ ladies and gentlemen. The game is over.”

It remains to be seen if Kalinichenko is right.

But, if the “game” is over, what’s next?

Could it be something more serious, even more deadly, than a “game”?

 

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20 responses to “Grandmaster Putin’s Golden Trap II

  1. Margaret

    December 22, 2014 at 3:08 PM

    IMHO they will use Great Lakes water, and the Bakken oil, to back up the dollar. They’ll have to seize both assets but that doesn’t seem to bother them. They’ll do something like that to buy them time to bring the world to its knees in war.

     
  2. Roger

    December 22, 2014 at 3:38 PM

    Adask asked, “Nevertheless, if Russia has found a way to be “paid” in gold for its crude oil, how many other oil-producing countries will also soon demand to be paid in gold?”

    Not many, for the simple reason that there isn’t enough gold.

    Petroleum exports worldwide come to about $1 trillion per year, which happens to be about equal to the total value of all the world’s gold reserves.

    So, if the petroleum exporters were to accept only gold in payment for their product, they would clean out all their customers’ gold vaults in about 1 year.

    The gold holders of the world, who are way more powerful than the oil producers, aren’t likely let that happen.

     
    • Adask

      December 22, 2014 at 4:06 PM

      I disagree. There’s plenty of gold–depending on price.

      It’s true that there’s currently not enough gold at $1,200/ounce. But there could be plenty of gold if the price were raised to $20,000 per ounce

       
      • Roger

        December 22, 2014 at 4:54 PM

        Say what? The price of gold in dollars has nothing to do with it. If oil exporters price their oil in gold, only the relative value of oil and gold matters.

        At the moment, a year’s worth of global petroleum exports is equal in value to all the world’s gold reserves. This means it would take only about 1 year for the oil exporters to accumulate all the world’s gold.

        This relationship between the value of petroleum exports and the value of gold reserves is independent of the prices of petroleum and gold in dollars.

         
      • Henry

        December 22, 2014 at 9:25 PM

        Roger,

        Looks like Al is talking about raising the price of gold to $20,000 by fiat so there would be enough of it to buy oil. Except the oil sellers would answer this magic trick by inflating their own prices to compensate, rather than parting with their product at a 94% discount imposed by their customers. The result being there would still not be enough gold to trade for oil.

        But yeah, prices in dollars are beside the point here anyway. Only the relative worth of oil versus gold would count, if oil exporters began trading their oil for gold.

        Moreover, I seriously doubt Russia is being paid in gold for its oil, even indirectly. The annual revenue Russia takes in from its oil exports is equal in value to 2,800 tons of gold. This is as much gold as the IMF’s total reserves, and twice as much as Russia’s reserves.

        If anyone tried to accumulate that much physical gold over such a brief period, 1) the price of gold would be sky high rather than back down to where it was in 2010, and 2) this activity would be impossible to hide and thus be huge news globally (not something we find out about from an obscure internet pundit in Russia).

        We observe neither of these results. Therefore Russia is, for the most part, not being paid for its oil in gold.

         
      • Roger

        December 23, 2014 at 5:25 PM

        gold fiat currency > paper fiat currency

         
  3. timmy

    December 22, 2014 at 9:33 PM

    I’m fairly confident that Fort Knox is empty. They haven’t allowed an audit or inspection since 1953. They’ve turned away US congressmen from the door, demeaning entry. What possible reason would there be to be so belligerent in resisting disclosure/audit? Only one… also, there is a huge (media suppressed) scandal with tungsten filled gold bars, exported by the US to china and others. (Dig around for stories…) Clintons apparently behind that one. Upshot being, we don’t have any significant backing left, other than ‘full faith and credit’, which obviously can evaporate overnight in the right circumstances.

     
  4. wholy1

    December 23, 2014 at 10:50 AM

    Is it true that prior to the United Snakes Corp’s complicit murder of Gadaffi in Libya, Gadaffi had accumulated at least $150B in gold with which he was attempting to establish a gold-based Dinar?
    If so, what happened to said gold? Which begs the question: what are the requirements for “holding/securing” a large amount of physical gold? Does the “logistics” of “holding” said physical gold enhance or denigrate One’s physical “situation”?

     
  5. Adask

    December 23, 2014 at 4:18 PM

    8PM Central.

     
  6. gary

    December 23, 2014 at 7:33 PM

    serious question………..if the US Fiat Dollar ( mis-nomer ) is over inflated, then it seems logical that to acquire it you must over-pay in what every currency used to buy the US monopoly money.

    I’m not sure how you are engaged in a winning strategy here….???

     
  7. Adask

    December 24, 2014 at 6:25 AM

    You’re using the term “over inflated” in a way that’s ambiguous. You seem to imply that the fiat dollar is currently suffering from too much “inflation” (which typically means LOSS of purchasing power).

    The terms “inflation” and “deflation” are used by economists in ways that seem counter-intuitive to most people. The average person would think that a dollar that was subject to “inflation” would INCREASE (“inflate,” grow larger) in purchasing power, while a dollar subject to “deflation” would DECREASE (“deflate,” grow smaller) in purchasing power. But, in fact (or at least in economics), an “inflated” dollar is one that’s losing value and purchasing power, while a “deflated” dollar is one that’s gaining value and purchasing power.

    The argument advanced by Mr. Kalinichenko is that the dollar is “over deflated” (not “over inflated”). In other words, the fiat dollar’s current purchasing power is much higher than its fundamentals would warrant. Thus, if you have any fiat dollars, now is a good time to buy some other good or service whose prices are reduced below whatever fundamentals of the free market might otherwise indicate.

    It’s hard to find the words to describe and compare inflation and deflation. I sometimes wonder if that’s an accident. At times, I wouldn’t be the least bit surprised if it turned out that whoever first defined “inflation” and “deflation” intentionally used the definitions in a way that would confuse laymen and inhibit them from understanding those concepts. But, more likely, the terms “inflation” and “deflation” were not originally intended to reference the VALUE of a fiat dollar, but rather the SUPPLY of fiat dollars.

    I.e., when the supply of fiat dollars is subject to “inflation,” the SUPPLY of dollars increases and therefore the relative VALUE of each dollar decreases. In time of “deflation,” the SUPPLY of dollars decreases but the relative VALUE of each dollars increases.

    The confusion comes in because most people tend to think of “inflation” and “deflation” in terms of fiat dollar’s value, rather than supply.

    I’m guessing that you may have intended to write your statement as: “if the US Fiat Dollar (mis-nomer ) is over deflated, then it seems logical that to acquire it you must over-pay in what every currency used to buy the US monopoly money.” If so (and as confused as I am), I believe that’s not true. If the dollar is over-deflated and therefore worth more than fundamentals would warrant,then it should be possible to acquire the dollar with fewer, less valuable foreign currencies.

    My previous guess is based on the apparent fact that, according to the US Dollar Index (USDX), the fiat dollar has been in deflation since July of this year. The dollar is not clearly subject to inflation at this time and is therefore not currently “over inflated”. However, for the moment, we might say that the fiat dollar is “over deflated” (at least according to the USDX) and thus, over-valued.

    (My confusion comes from writing about inflation and deflation. The more I write about them, the more I feel as if I’m writing in tongues.)

    The answer to your ultimate questions “I’m not sure how you are engaged in a winning strategy here….???” depends on who you mean by “you”.

    If you’re asking if it’s dumb for someone like the US to trade underpriced products (like gold) for over-valued fiat dollars, you’re right–that’s a dumb strategy and sure to push us into the poor house.

    On the other hand, if you mean “you” to signify someone like Putin and/or Russia to trade over-valued fiat dollars for undervalued gold, then that IS a “winning strategy”.

    I think . . . .

     
    • gary

      December 24, 2014 at 11:33 AM

      Al:

      You wrote: “On the other hand, if you mean “you” to signify someone like Putin and/or Russia to trade over-valued fiat dollars for undervalued gold, then that IS a “winning strategy”.”

      I see now. Thanks.

       
    • henry

      December 29, 2014 at 2:17 PM

      If you have a scale with all of the currency on one side and all of the goods, services, and resources on the other side, the value of the currency could be adjusted to make the scale balance. If you doubled the amount of currency but did not touch the other side of the balance then the value of each piece of currency would be cut in half.

      The average Joe, who doesn’t know the difference between money and currency, will find that the prices of goods and services will be higher. The word he associates with this is inflation. If Joe saves his money and put it in a mattress then he will find that the value of his money has decreased.

      Joe can’t quite determine where that value went. He may then put his currency into a bank and get 0.1% interest at the same time that prices are increasing at a rate much higher than 0.1%. He also realizes that the small amount of interest he gets on his money is taxable so he will only get to keep a portion of this small amount.

      He may determine that the best thing to do is to spend all of his money as fast as he can earn it. This will cause his standard of living to increase but cause him to get poorer. He may realize that he can borrow money to continue the standard of living that he has been accustomed to. The result of this is to decrease his ability to plan for the long term.

      Joe and his neighbors may then tell their Congressman to steal from others to pay for Joe’s debts. Congress does steal more money from everybody but Joe is not one of the lucky ones to get relief. He may realize that he is not indebted enough. So he borrows more.

      If Joe borrows as much as he can and uses his house as collateral, he then gets underwater if interest rates go up. This is because property values go down as interest rates go up. He will owe more than his house is worth. The decrease in the price of houses could be considered deflation. This is not a problem. If he loses money on a stock then the government will not bail him out but if he loses money on a house they might.

      Increasing prices of a share of stock or of a house is not considered as inflation. Likewise, declines in stock or housing is not considered deflation.

      Gold and silver is money. It can be bought with currency. The price may go up or down relative to the currency. This is also not considered inflation or deflation. Why? Because the common man thinks that currency is money.

       
  8. palani

    December 25, 2014 at 7:53 AM

    Let’s see if I get this right. Fiat is undervalued and merchandise like gold is underpriced. Therefore the logical action is to convert one to the other.

    I would have to underwrite these concepts because they are the same reasons I use when I shop Walmart.

     
  9. Adask

    December 25, 2014 at 9:14 AM

    You don’t have it right.

    Fiat is overvalued, and gold is underpriced.

     
    • palani

      December 25, 2014 at 9:39 AM

      You are right Alfred. But my conclusion is right though.

      Merry Christmas.

       
  10. stoppolitical

    December 30, 2014 at 7:03 PM

    Reblogged this on Stop Political Bullshit

     
  11. Cody

    January 4, 2015 at 8:57 PM

    Gold may be declining in price because, there appears to be glut of the glittery stuff…
    http://www.mining.com/global-gold-silver-production-to-hit-fresh-records-this-year-66566/

     
  12. messianicdruid

    January 9, 2015 at 2:16 AM

    Gold is a sapling, silver is an acorn.

     

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