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Gold and Systemic Crisis - Most money has no tangible existence.



September 05, 2009 – Comments (11) | RELATED TICKERS: GLD , SLV

MY COMMENT: The panic into physical gold/silver might rival the NASDAQ and Housing bubbles. I was at a public auction back in March any time a $90 gold coin (1/10 ounce) came up they would bid it up to $130 - 235++. There more 5-10 people bidding like crazy for the gold and silver.

One guy bought a painting at the auction for $3000ish, with no competitive bidders. He had it appriased for $350k-435k the following week. A 1800ish black powder brass pistol came up for auction no bidders until it hit $20 dollars...I sold for $80. That pistol might sell for $300++ in the right market place.

MY POINT:  If you are panicing into gold/silver now, you should ensure you are not blind to the other opportunities around you. The bigger money was made with pistol and the painting. The dumber money was paying a very high premium for gold and silver. I love physical gold and silver. However, I like other assets too.  I told Fooldom to buy ammo and ammo makers 9 months ago, that has 100%+ return in less then 12 months.  Gold and silver are holding.  There have been some other Fools making some great calls also. IMO, gold and silver are very crowded trades now, so keep your eyes open for less crowded opportunities too.


Gold and Systemic Crisis

Zerohedge has an outstanding post for those that might not grasp the current panic into gold/silver.

To many of us, it is obvious the US equity markets will soon crash, but the real crisis will come with the failure of our currency -- a currency which is IMPLICITLY and historically linked with trading of both dollars for oil, and dollars for gold. Thus, these spot markets are the ones to watch. Some may be aware Russia recently surpassed Saudi Arabia as the world's number 1 oil producer -- and last week , number 2 oil producer Saudi Arabia has signed a $2bn weapons deal with Moscow. The final strategic alignment of Saudia Arabia and the rest of the Middle East remains up for debate, but we have certainly witnessed the tentative steps of the BRIC nations and their affiliated satellites to build their own international clearing system, based in Hong Kong and Moscow, rather than New York and London. Ultimately this will probably involve some form of the IMF SDR -- rebalanced with new currencies and possibly a gold component. Remember Medvedev at the G8?

11 Comments – Post Your Own

#1) On September 05, 2009 at 6:51 PM, abitare (29.51) wrote:

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#2) On September 05, 2009 at 7:45 PM, NVTreasureHunter (28.43) wrote:

abitate. Could you post some tickers for ammo makers please? I've been watching ATK and some gun makers but I would like to check out any others.

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#3) On September 05, 2009 at 8:36 PM, Tastylunch (28.52) wrote:

hah very true

Gold and SIlver are red hot right now. It's usually better to to look for bargains in the freezer.

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#4) On September 05, 2009 at 9:00 PM, MattH42004 (28.12) wrote:


Never heard value/contrarian thought put like that. It's catchy, I like it. I'll probably be stealing that later on when I try to convince others that Apple hasn't become a better buy because it has doubled in a few months and is "on a roll."

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#5) On September 05, 2009 at 10:02 PM, checklist34 (98.39) wrote:

a thought and potential warning for all the gold bugs:

my friends wife, who couldn't name a single stock ticker, recently put all of her savings into gold and silver.  I asked why, she said stocks were going to crash again and gold was going way way higher.  


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#6) On September 06, 2009 at 12:30 AM, ChrisGraley (28.48) wrote:

Great post!

For anyone that missed the gold/silver train, you still have a little time to buy sugar.

A lot of the other commodities still have plenty of room to run as well.

Gold and silver will keep running, but you are really just dog-piling at this point.

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#7) On September 06, 2009 at 12:58 AM, prose976 (< 20) wrote:

The gold standard effectively came to an end in 1933 when President Franklin D. Roosevelt outlawed private gold ownership (except for the purposes of jewelery).

The Bretton Woods System, enacted in 1946 created a system of fixed exchange rates that allowed governments to sell their gold to the United States treasury at the price of $35/ounce.

"The Bretton Woods system ended on August 15, 1971, when President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed". The gold standard has not been used in any major economy since that time.

Gold trade is probably the biggest ponzi scheme of all time.  Everything you think you know about it has been fed to you by the holders of the physical gold.  It is an antique and unless there is a global return back to the gold standard, it will remain continue to be covetted by the naive.

Shares of physical gold (if you own it) will never be delivered to you for various legal reasons.  But even if you managed to get through all the red tape, what you receive in value would hardly resemble what your value was in shares. 

China is making lots of moves that appear to have some wisdom behind them, but their most sage moves are into ownership of natural resources, energy, fertile lands, fossile fuels, mines and the like.

The world may wean itself from the USD, but gold will not regain it's position as that standard by which global currency is valued.  I don't claim to know what that standard will be, but I believe it will be, unlike gold, essential to the preservation of human life.

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#8) On September 06, 2009 at 3:33 AM, throwerw (28.28) wrote:


no governments sold their gold to the US treasury for 35 dollars and ounce.  it was the other way around... as the fed printed money to pay for the great society, man on the moon, and the vietnam war, other countries saw that the dollar was a flawed currency and rushed to buy gold at that fixed price.  The United States' gold reserves were decimated and Nixon was forced to go off the gold standard.  note, we went off the gold standard not because gold was worthless, but because the dollar was.

the biggest ponzi scheme of all time is social security.  

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#9) On September 06, 2009 at 5:00 AM, kaskoosek (30.31) wrote:

The biggest ponzi scheme of all is actually the US dollar.

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#10) On September 06, 2009 at 11:05 AM, Nainara (< 20) wrote:

I don't understand why there is a disconnect between the price of futures and physical gold and silver. If physical gold and silver commands such a premium, some capitalized players should be able to take delivery on contracts and make a significant margin by retailing it against the pent-up demand, if such demand is really more than just anecdotal.

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#11) On September 06, 2009 at 6:57 PM, Tastylunch (28.52) wrote:


hah thanks yeah I just made that up. But it does describe how I think about thing slike that.

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