Wednesday, May 15, 2013

Glimpsing the Hereafter 2





Mining Shares and the Freegold Revaluation













Date: Sun Apr 19 1998 15:09


Here's how I put it back in 2011:
















Gold lending and collateral use in Freegold






















Gold's True Function


This section is my answer to the debate.



Victor writes:
Poopyjim wanted to mock what I wrote and said:





So I am going to make two related arguments:



1. Why gold will always rise in Freegold






Back to gold…












The Money Concept














































Tyrone said...

Is this the Free Gold that awaits...

Free... gold?

I'll take the regular FreeGold.

Cheers! (LOL)

Sam said...

I consider my questions about the freegold function debate answered. Thanks FOFOA

S P said...

The basic problem is that the current amount of gold above ground (even if it flows) is not enough to satisfy the needs of every saver.

This means one of two things:
1) genuine freegold can only work after a dieoff and the human population growth rate once again begins roughly compatible with the biosphere as a whole

2) if there is no dieoff, this means the human superorganism will turn to other precious metals as no amount of fiat money earned will obtain a proper amount of gold. Gold will not become a universal for savers, it will become a universal for wealthy savers.

Do you really think people will keep $1000 of purchasing power in a tiny gram of gold that could very easily be misplaced even if taken care of?

No they won't which means they will have no other recourse other than fiat, which brings us right back to the problem again.

Aaron said...

S P said...


Says who? Gold will flow to anywhere it needs to flow at the right price. There is PLENTY of gold to meet savers needs, ~180,000 tonnes -- a 60 year supply at current consumption rates.

Indenture said...

If you are new to FOFOA, welcome.
Understanding Freegold is a difficult endeavor because it touches on so many different aspects of the financial world. There are now 400 posts on this blog and reading them all can be time consuming so to help new readers 'Matrix Sentry' has organized lists of FOFOA articles to help the beginner.

They are located at Ron M's Air-Friendly PDFs

I suggest:

Aquilus & Matrix Freegold 101- An Introduction
Indenture’s Reading List
JR’s Suggested RPG- Freegold Reading List
Blondie’s Freegold Summary

If you have any questions please don’t hesitate to ask.

If you are a returning customer:
Please remember that FOFOA appreciates donations.

JR said...





Gold is nearly infinitely divisible, and since it's value is arbitrary, there will always be enough to satisfy savings demand.

Brady said...


Thanks fofoa, that pretty much hits in on the nail.

In my mind, before the transition, I break it down as a) paper price gold will go down not up b) paper currency will burn ie. worthless c) ergo, if i held mining shares (ie. paper), they will likely go to zero. On the other hand, even if mining shares did rise, I don't care b/c I need to sell the paper shares for paper currency that is worthless. Or I'm a gambler and need to not only predict when to sell mining shares but also have the understanding to buy physical gold presuming it is available.

1) Ergo, pre-transition, it makes sense that I buy physical gold now and wait vs. holding paper mining shares/paper currency.

2) If hypothetically I had the gall to hold mining shares through the transition, watched as they plummeted to zero, with the hope (prayer?) gov'ts do not control the gold mines, I think it makes sense to hold physical gold now until after the transition, let the dust settle and aim to buy some mining shares on the cheap post transition.

3) If post transition gov'ts will control gold mines, I'd still prefer to hold physical gold now and post transition, continue to hold physical gold and wait/see/compare risk/return of continuing to hold physical gold or deploying some physical gold into currency and then into the purchase of select mining shares.

Ultimately, it makes the most sense to this simpleton to hold physical gold now, before and post transition as before transition a) paper price of gold plummets down b) paper currency is worthless c) mining shares go to zero

and post transition d) gov'ts will control gold mines and keep the windfall (for the collective) that would otherwise be profits to the shareholders.

Attitude_Check said...


Good answers to the recent questions. i was confused about the concept of Gold-loans. I couldn't understand why I couldn't use Gold as collateral in Free-gold. That would appear to make Gold worthless. Now I understand, and It makes sense. Fractional gold loaning would destroy the limited amount of gold (financially at least) harming it's SOV function, and have the same macro-economic credit/debt instabilities as fractional fiat lending.

M said...

Excellent explanation on the miners.

No wonder why Sprott or Casey Research wont touch freegold with a ten foot pole.

My mining share investments where predicated on a paper bull market in gold first. Looks like I am losing that bet but I don't think its over yet.

One weird thing about these times.... The great unwashed appears to be right about gold. Appeared being the operative word here.

Nickelsaver said...


So simple a dimwit can understand it. Lucky me.



Physical bullion fund GTU is currently trading at over a 4% discount. Pretty strange. Side, note I do own a couple of miners and have been feeling the pain. ANV might have the saddest chart I have ever seen.

Michael dV said...

even now in India small groups of the impoverished pool resources to buy gram quantity gold bars at $ US 55 per gram at todays rates. I could easily see bank storage of small quantities of small amounts of gold and clever products to enable buying and selling it in less than a gram quantities.
BUT remember only savers need gold. Fiat will work just fine for the marginal folks who live paycheck to paycheck.

jeb said...

Personally, Im hoping the new system will bring about a more healthy productive vibrant society and less people demanding something for nothing. A change in attitude. More Jobs and cheap oil.

Anonymous said...

If you are interested in Blondie's argument and how it was developed, please feel free to take a look at this discussion at the NeuralNetWriter forum (up to their page 6) and at the snippets on my blog. Although time didn't permit to turn these into a proper blog posts, you should be able to understand

1) why Blondie's point of view is superior in explaining the monetary system AG (=after gold functions again)
2) that with his point of view, the Euro architecture and the present actions by the ECB make a lot more sense
3) that Blondie's and my argument about international settlement, it never depended on whether it was done centrally or by the private sector in millions of smaller transactions
4) that this


was never the main point of the argument nor one of the key insights. But that you cannot get from FOFOA's remarks above. For this, I am afraid, you need to take a look at the original. (Although it is true that I expect gold's real value to fluctuate quite a bit AG, perhaps even +/- 5% per year over two years and then back, pretty similarly to how it behaved before WW1. But this is a consequence of a conceptual insight rather than an assumption without which the argument would fail.)

I am not an "activist" as FOFOA likes to call it. I don't think Blondie is either. All that material is offered for your open minded consideration, hoping it provides you with some "value" AG and allows you to understand the current actions in Europe better.

As I don't think it is productive if I repeat stuff that was explained elsewhere, I will let this matter rest on FOFOA's blog. If you are still interested, please follow the other sources. I am not going to advertize here in case there is some new material over there.

Kind regards,


Kieran O B said...

FOFOA is saying gold will match the CPI closely, is Victor just saying that it will match the CPI over a longer timeframe, but fluctuate massively over short periods, maybe rising up to 5% faster than the CPI for 2 years, then 5% less than the CPI over a different 2 year period?

If that is the case Gold would still be considered a stable SoV over the medium and long term. Sure if your near retirement you might make a loss on the gold you purchased over your last 2 years of net producing, but over your long 30-50 years of saving gold you have preserved purchasing power pretty darn stably.

RevolutionOfNations said...

FOFOA is getting more and more into the mainstream. Jim Sinclair often refers to Freegold and the FOFOA writings in his commentaries. Other more gold related "gurus" are latching on to FOFOAs writings as well. It could take a long time before MSNBC catches on, but I suspect it will be the same transfer of knowledge and awareness as what took place 2005-2011 regarding gold as "investment". This time it will be gold as a hard currency for savings and preservation of wealth. A ticket out of the failing fiat system for those who want to keep their savings until a new system can be established with gold as the main pillar of confidence.

burningfiat said...

Wow, number 400? Congratulations FOFOA!

And what an anniversary! No. 400 is without doubt in the all time top 10 of FOFOA articles IMHO.

In essence it feels like the subject of gold and its (future) function have been treated deeper than ever before in this very article. Thank you FOFOA!

I would also like to tip my hat for Victor and Blondie. Without them openly exploring this side-trail, FOFOA wouldn't have been pressed into making this piece...
I hope that the miniature Freegold economic community continues to make open and polite discussion possible, such that we can continue to have these debates between differing views.
It has really driven my understanding further I think.

(No troll, bad troll, that was NOT meant as encouragement for you!)

Anand Srivastava said...


I recently bought a 0.5gm gold coin. Yes it was packaged in a credit card sized package. I don't think I will be losing it. And it is like money. I won't be taking out the coin either.

Expect post transition such packages for even smaller sizes of gold. It could be made easily for 10 milligrams of gold. You would see a very small very thin wafer of gold in a plastic window inside a credit card package :-)

ein anderer said...

Thanks, FOFOA, again for your kind and logical warning to all those mining share holders out there. Hope some will understand and appreciate. Great post.

Anand Srivastava said...


Thanks for a very good article.


I think what you are meaning here is that it will be more or less stable. There will be swings but not very wild. At 55000$/oz, a swing of 5% will be very very large, but will still be considered stable in the big picture.

If the currency is depreciating at around 2%, it would amount to 3% reduction in price in the short term, maybe a few months. But even over a couple of years it would not be very far from 2%+ some_natural_appreciation_linked_to_growth_of_the_economy.

I hope I am getting your intent right. I don't see how it can be as stable as fiat in the short term :-).

FOFOA said...

Don't get hung up on 5% not being a "wild" enough fluctuation. "Wild" is the term Victor likes to use. I used 5% in the post to avoid being accused of exaggerating Victor's "wild" fluctuations because that was the smallest number he has mentioned. And again, I'm mainly disputing downward fluctuations that would make true savers dishoard gold in favor of currency, even for unknown future expenses. Here's what Victor has repeatedly predicted: "You should expect fluctuations in the real price of gold of perhaps 10%-15% over 2-3 years." And he says that's "nothing special," so perhaps he's expecting fluctuations even greater than 15% over shorter time frames. I don't know, but I'm not.

Anand Srivastava said...


10-15% would be unimaginable for me :-), and that too over 2-3 years. This could happen on the positive side in badly managed regions, but downward is not possible IMO.

Agree with you, wild fluctuations do not make sense. It wouldn't be a store of value if it did vary that much.

Motley Fool said...

Personally I think option (2) is more likely for the miners. If we are talking about a supertax, option (3) then it changes the behaviour of the company, incentivizing them to make as much expenditures as possible to lower their tax burden...and employ other such tricks. I think governments will get more benefit from option (2), and hence go with that. I know that for both South Africa, and Australia, two big gold producers, this is how it used to work prior to 1971, and in both cases those laws are still on the books and have only been suspended 'temporarily'.

Still, it's a minor disagreement. :)


Robert said...

Congratulations, FOFOA, on the 400th addition to the library. I do not doubt the other reviews that proclaim that your analysis is as erudite as ever, but I confess that this one did not grab me in the way your older work did. At the moment I could care less what happens after the transition. I think we get way ahead of ourselves if we start spending a lot of time speculating about what a Freegold world would look like after the Great Reset. Will prices fluctuate? Will people pledge gold as collateral? Will people embrace the system or will they reject it? Will the government try to seize gold or tax gold transactions? Will Freegold "work"? Thinking up answers to all of these questions before the transition actually happens is a complete waste of time in my opinion. But I am no monetary theorist. I do not seek an "economic utopia" to fit with my political convictions. My eyes glazed over as I tried to follow the exchange between VtC and Blondie. All I care about is undertstanding the next major development in the world's monetary system, and how to protect myself against the risks of what is coming with the Great Reset. This is no criticsm of your work, as I see that you are simply trying to answer the questions that we in the peanut gallery have been raising. It's the questions and the direction of the conversation that I think has gone off in a tangent -- not your answers or analysis.

I think it is far more important to focus on the questions leading up to the Great Reset, rather than to opine whether it is good or bad to to speculate what happens after that. But that's just me. So today I went back and reread Deflation or Hyperinflation (April 2011) -- the first post I ever read and still may favorite of all time. And it's work like that that has me checking in every day, even two years later.

Jeff said...

Happy birthday FOFOA. You don't look a day over 250. :)

Freefiat is the dream of an idealist and a mechanist. Is it theoretically possible to enforce a 0% inflation standard? Maybe. Is it desirable to ignore the time continuum and the continuum between MoE and SoV, forcing the currency to do everything? Is it the stated goal of the ECB to castrate the debtors? Is this consistent with A/FOA?


It was made for men, not some men (savers). All men. Our human tribe won't succeed with hard money, the old gold standard or freefiat. Don't ignure human nature.

Trail Guide (02/11/00; 09:49:21MDT - Msg ID:24996)


Many writers today offer nothing less than a philippic discourse about the flaws in today's fiat systems. Always looking backwards, they are lost to grasp how what was considered "hard money policies then",,, "eventually failed then". Truly, a hard financial structure trying to blend with a soft, flexible "human nature". In a larger degree, how much more could it not work in today's modern world. Once implemented today, these same policies would again "crash and burn" in response to the demands from "real people" living a "real life".

No longer do we hold our greatest portions in real forms that transcends the peaks and valleys of fiat money value ,,,, a variable fiat money system that our "changeable nature" demands. No, we opt to ignore the true purpose of this paper money system and cast the entirety of our resources into it. Never stopping to understand that this money is but an "economic need" "to process a trade". Not an "economic product" and therefore wealth itself.

Throughout recent time, fiat money has responded well to human nature, flowing like a river as it expands and contracts to our wants and desires to buy and sell things. From drought to flood it is the channel of our trading system, as it moved the "end product water" that flows within its wide banks.

JR said...


Do you recall what the government did with the gold? Were they a middleman to final distributors or did they undertake the merchant role and sell via directly to the public via like Krugerrands?

Just curios how much the governments entered the market as opposed to (1) contracting the private sector to do it for them for or (2) just acting as middleman for the private sector.

Pat said...

My wife has gently taken me to task. My rationale to buy at much higher prices, even after explaining to her that the "paper" price will plummet, has her baffled. She just pointed out that not only has the lower and lower paper price not affected physical premiums upward, but just the opposite. Apmex for example is only offering a $37 dollar premium for purchasing AGE's, while it used to be $40+ for years. I noticed the premium to buy from them is lower as well. Sigh. I guess the notion that it would increasingly difficult to find well priced physical as the paper price drops was not to be. I know I know hindsight yada yada.
It does give me pause though to wonder how long this charade can be maintained, it seems TPTB have all the power, to levitate the stock market in defiance of sanity, to suppress gold in defiance of sanity, etc.

Anonymous said...

Damn, Fofoa, you are one freaking brilliant dude. Such clarity of thought! Thank you!

I LOVED this part:

One of the biggest things I learned from this blog, probably more important than any other, is the difference between "wealthy on paper," and real wealth. Wealth is real physical possession of things used in one's life. I would never save in currency again, except as you say, to accumulate some MoE for a planned purchase, such as a car or house, or to have a modest reserve for contingencies, such as car repairs, etc., or if I were a Giant, to purchase some company I had my eye on, or to have slush find to jump on opportunities that might present themselves. A difference of scale, not of the fundamental distinction between currency and wealth. Having seen, I won't unsee. I don't care how secure the Euro or any other currency is, it's still freaking currency, not wealth.

Thanks for a fantastic post!

Anonymous said...

Bringing our spouses with us along the Gold Trail is a challenge for all of us. It seems that, for some reason, our spouses don't seem to find this blog the page turner that keeps them wanting more! So we have the job of trying to explain the Trail simply, in table conversation, to garner the support of our loved ones, and we are sure to be challenged when the price is falling and we are risking savings in gold while the stock market is going up, up, up. I do the best I can, and I am fortunate to have succeeded in explaining it well enough that my wife is comfortable enough with the situation. I RRTFB not only for my own understanding and peace of mind, but so I can communicate my understanding better to the mostimportant person in my life.

However I admit that I am greatly aided by the fact that we are both so ticked off at the financial and political system's shenanigans and sociopathology, that we would never give those bastards the chance to play with any surplus we produce ever again. Eff 'em, hypothecate this, jackasses! is our attitude, Russian scorched earth is our policy. We'll live in a trailer park and eat cat food before we let those a-holes "manage" our money ever again. And yeah, we're sharing those sentiments with our children, so there's a generation coming behind that will feel exactly the same way.

Unknown said...

For me, the first two points were already in the bag. This third idea, I hoped to better understand.

Intuitively, I see the price of gold as being relatively stable post FREEGOLD (unlike today) while all assets around it fluctuate mildly, not wildly.

With gold as the preferred reference point for value, and with it's value in currency terms no longer being the focal point of "price suppression" I hope (and believe) that we will evolve into a much more stable system than the current "wild" boom and bust cycles which facilitate the unequitable transfer of wealth.

These cycles come through leverage and fractionalization, the crux of which we are departing in the destruction of the fractional paper bullion market.

So FREEGOLD is a self-referential corrective mechanism (for me) as a stable value reference, which in turn brings stability to other assets through relative association with a stable value of gold, in essence the "anti-bubble."

I may have to devote more time to better understand Victor and Blondie's revelations, but they are not a point of great interest to me, as they do not materially alter the onset of FREEGOLD, but rather examine certain details of it.

More important to me are the forces that would and could prevent or stall FREEGOLD and the problems that would create.

There are powerful forces, I suspect, with a vested interest in preventing, minimizing and/or delaying the USD hyperinflation. Giants benefit from stability and maintenance of status quo.

And while I hear the term "inteconnected" quite a bit, I prefer Zbigniew's term "interdependent" to describe the IMF$ and it's highly charged tectonic political component.

Thanks so much for this post FOFOA, and for your diligence in providing a worthwhile means of discussion around this important topic.

To leave you with one tidbit of value, and over at neuralnet they seemed to be channeling Greenspan for a moment along these lines, I found this reference at the Cafe quite interesting:
"I think that a fiat currency can 'work' if it emulates the rigor of an external standard. (is this not yet another wonderfully concise description of FREEGOLD?) and it was made in reference to Greenspan's commentary here:

Kieran O B said...

Had a better read of the collection of posts on the forum linked. Be careful, Vtc makes the case that the Euro, not fiat currencies in general will be a SoV. This is based on it being managed well and simply adjusting their inflation target from 2 to 0%. The Euro's severance from the nation state makes this good management possible.

Sam said...


Freegold is a complicated subject. You might have an easier time if you got her hooked on a typical gold bug site. Then when she thirsts for more knowledge introduce FOFOA. I used to check the SPoG everyday. Now I simply keep track of how many ounces I possess and rejoice at the low price and available inventory each payday. I can tell you that for me personally I have already revalued them in my mind.

Sam said...

@ Robert

398 posts about the coming transition and 2 glimpsing the hereafter is ok with me. Though most of the conversation is about the boats hitting the shore, I still want to have an occasional insight at what to expect after we storm the beach

Kieran O B said...

MatrixSentry, I'd love to see this discussion in a pdf file.

Up to you though.

Polly Metallic said...

I particularly like this passage:


A couple thoughts:
There will be many small savers in countries like India and China who will sell some of their gold as it becomes a windfall , life altering change in their wealth. They will be able to buy things they never dreamed of, and that will be good for their local economies, and for deficit nations as well as these new consumers buy products from around the world. The governments, who will become the primaryl beneficiaries of the dishoarded gold, will be benefited by the privately held gold flowing into their reserves. Little wonder the Chinese government has been encouraging its people to buy gold as personal savings. It will be a double windfall for the government in providing new consumption by the population and a new source of gold reserves for themselves.

When I first read the concept of the average person buying gold after the revaluation, I found it a strange thought. Why would people buy gold at that high price when it wasn’t likely to go up in value? I was trapped in the old mindset of always needing to “invest” in things that increased in value rather than to be content to “save.” Savings for all of our lives have been a battle to simply stay even with the ravages of inflation over time, and to find a means of savings that didn’t incur risk of loss as well as risk of loss due to currency devaluation. How many of us have used those “retirement calculators” to see how much we needed to “save” during our working careers just to keep ahead of inflation? Once it dawned on me that saving in gold made all those worries and headaches go away, the light came on in my head and I “got it.”

Brady said...


Here's one of my fav quotes:


Real wealth. Get you some. ---Aristotle

KindofBlue said...


Simple. Direct. Class.

Motley Fool said...


If memory serves they had to sell it to the Rand refinery at a government mandated price. It was then cast into bars and exported.

Kruggerrands were first minted in 1967 I believe, so until that point I do not think they sold to the public.


Ps. Prior to 1965 the Republic was still a Union and under the influence of the commonwealth. I do think some sovereign gold coins were made locally. I recall seeing some of the same coins (sovereigns) originating in Australia.

Motley Fool said...


You may find this of interest.

Pamplona said...

VtC made an interesting comment in some previous post about Jim Sinclair and his royalty ownership.

I've tried to ask questions here before but no one has really bothered to hold my hand walk me through.

Two questions yet unanswered.

(1) Will royalty covenants/arrangements be honored in Freegold? Wouldn't that make royalty trusts an attractive investment? Maybe not for capital gains but if royalty trusts dividend out gold every quarter I would really care less what my shares are worth because I would never sell them.

(2) How does does this windfall tax account for the fact that much of the world's unmined gold is a byproduct of copper mining? I would think that if these copper deposits lost their optionality to gold, many of the largest copper projects would be uneconomic. And the world certainly needs copper.

JR said...

Thanks TF

Motley Fool said...


With some searching I also hit a 'jackpot' of sorts as regards the south african reserve bank.

Their annual and quarterly reports are available from 1946.

I have skimmed over a few interesting years...but I don't have the patience to sift through it all. Perhaps Mortymer would be interested.


JR said...





Randy: Gold as a store of value in national reserves




JR said...

One more Brady,


AT said...

@Pat: Times of great change are fraught with peril for everyone, including gold dealers. More than a few will likely be driven out of business as we go through the transition because they will continue blindly along, selling inventory at the spot price and standard markup percentage, expecting replenishment of inventory that never comes.

The rational approach for any merchant experiencing a supply shock relative to demand is to rapidly mark up prices by 100, 200, 300 percent until demand vs supply stabilizes. However, all the good little public-school educated citizens have been conditioned to react in anger (and legislation) to such "price-gouging" and so retailers are caught in an impossible position.

Either the inventory recovers and gold dealers such as Apmex continue on a while longer or it doesn't and they will have provided us with one last gift of cheap gold while running themselves out of business.

Woland said...

Re: The new trading arrangements between Russia and China are

I'm kinda puzzled no one has seen fit to comment on the Putin/Glaziev
document made public at the BRICS conference in Durban in May of this
year. Anyone (hint, hint) have any thoughts???

Nickelsaver said...

Victor writes:
Poopyjim wanted to mock what I wrote and said:



Victor. What I believe you have presented here is a fallacious argument.

It goes something like this:

$IMFS inflation necessitates Euro inflation,
ALL inflation is bad,
therefore, the Euro will be not allowed to inflate post $IMFS.

IMO, the best any currency issuer can hope for is stability of the currency relative to goods and services. The natural cycle within Freegold, given the spur/break, will be for currencies to modulate up and down (inflate and deflate). As opposed to continually inflate as they do now, because of the downward pressure of the $IMFS.

I tried to illustrate this with my car analogy found here:

Now because there will be a modulation (an Ebb and Flow of inflation and deflation) in the new system, the Euro will see it's currency fluctuate nominally in purchasing power. Not a lot, but enough that price signals (like the heartbeat of the system) will be apparent. But, I don't believe that the Euro managers will want to see real deflation (which I think we could agree is destructive).

Yet if they targeted zero, then this modulation would would see real deflation in the currency. If we imagine this modulation as a sine wave, as the currency deflates it crosses over that zero point into real deflation. It then reverses direction as it inflates and crosses over the zero point again. But, if it crosses over that zero point, that is a negative price signal to goods and services. And potentially destructive to the growth of the economy within that currency zone.

But, if that target where to be set above zero. Then the modulation would see nominal deflation as opposed to real deflation, because the zero point would never need to be crossed.

Now as to this statement ..."allows them to manage their fiat currency as a proper SoV"

Wouldn't the proper statement be "allows them to manage their fiat currency as a proper MoE". I think it is, because while any currency has SoV properties, its primary function is that of MoE - the facilitation of the flow of value. The SoV function is secondary, and to the extent that its stability (slow loss of value) is predictable to the market place, makes it undesirable as a savings vehicle, but very good as measuring stick.

For if gold does not perform primary SoV function, then Gold would find an even narrower distribution within the collective, thereby changing the entire dynamic of Golds network effect.

This to me is not merely a side trail, this is an entirely different mountain path altogether. It is to say "don't follow in the footsteps of giants, let them carry you"


Brady said...

one more JR, again from Aristotle:

Aristotle (2/7/2000; 8:10:15MDT - Msg ID:24593)

"While reaching out to my idealistic friends, I also hope to present a "roadmap of thought" for that larger, all-important population which falls into the second category mentioned above --those that have not tapped into a more thoughtful, enjoyable life which I have seen to be the general hallmark of my few Gold-minded friends (the ones who have themselves avoided the extremist idealistic trappings.)"

Roacheforque said...

Desperate measures to maintain the staus quo even include encouraging gold's bid for oil to continue unabated.

Nickelsaver said...



What about this -

Actually, FOFOA discusses Freegold "what will be" over and over and over again throughout many posts. You just have to read the posts in a mindset that is not merely interested in obtaining some conformation on a 30x revaluation. Don't get me wrong, that is a very important aspect. But it's not and hasn't been the only aspect of FOFOA's posts.

Anonymous said...

If gold fluctuates wildly against everything else, or if everything else fluctuates wildly against gold - doesn't it pretty much amount to the same thing?

Tommy2Tone said...

I was just wondering: everyone keeps adding Blondie to this debate but Blondie committed HarryCarry, or is it Hara-kiri?
VtC engages so it would seem to be mostly him. Is this really just VtC's argument?

Now, supposedly, Blondie rose from the ashes as CGV on another forum....but that is a semi private forum (afaik no new memberships allowed.-well maybe if you petition in writing to the admin)
So from there, the pontiff writes, VtC transcribes, then delivers the message?? Is that this new trail?
Nice and insulated. One could get used to that. (#notrollsthere)
And what about pre-FG, money and the transition itself did Blondie disagree with so much so as to delete his writings on it?
I thought his disagreement was solely this stuff AG.
It's bizarre. Maybe we are in Seinfelds Bizarro world. Maybe Blondie and VtC ate one of the bad mushrooms on the side of the trail last fall??? They do ripen in fall but you really need your shroom guide on hand.
Anyway, it would be nice to see them address Fofoa's 1 and 2 above right here so we can all hash it out right here where it started.

Sam said...

macrofreegoldnomics - a good one I haven't re-read in a while. Gold under $1400. Mainstream explanations completely unconvincing. Many people will be seeking answers on the internet. If you are new and you just found this place, may I recommend you read until your eyes bleed, hit the donate button, and sleep well tonight.

Dante_Eu said...

Fantastic article FOFOA, thank you very much! not, I repeat do not, change the Debtors and the Savers, ever! Why? It's personal. Me and my brother have been fighting (literally) with each other for over 3 decades. Why? Because he allways spends more than he earns (and borrows no question asked), while I allways put aside no matter how little I earn. Polar opposites. Right now he makes much more fiat than me but guess who is borrowing from whom? Do I need to mention that he would never touch physical gold, not even with 50-foot pole?

Anyway, long story short, when I first come across Debtors and the Savers...oh was like describing us two. So, I explained to him that saving and borrowing is a natural tendency and that we should not be mad at each other because of that. He no longer questions my useless yellow rocks, nor do I try to persuade him to save.

No more fights. Ok, once in a while, but it's order of magnitude less than what it was before Debtors and the Savers. :-)

Unknown said...
This comment has been removed by the author.
Unknown said...

Hast du etwas Zeit für mich, dann singe ich ein Lied für dich von 99 Luftballons auf ihrem Weg zu einer realistischen Freegold. Leider hört keiner zu.


ein anderer said...

thx a lot for the Kosares-Link on USAGold!
Kosares seems to be a very wise man …

M said...

@ Pat

I think we are too far ahead of the game because we understand freegold now.

It looks to me like paper gold will be going through the motions of a bull market before we have freegold.

Then again, the price discovery mechanism is completely backwards. Gold crashed in April. So what was the result ? Buying like it was 1980.

If the physical market cant crash the paper market in these conditions then what will ?

A bunch of shrimps add up to a giant or two fairly quickly.

tintin said...

GLD lost another 6 tons, and the 90-day bill rates dropped to 0.25%:

Hi OBA, are we there yet?

Michael dV said...

JR (9:02) links an article, 2 actually, one by Michael Kosares and the other bu Randy Strauss. The one by MK is interesting. It discusses gold as a 'reference' point. It reminds me of the debate between (a very young) Ron Paul and Charles Partee. Fofoa linked this debate a few years back. Partee discussed gold as an Indicium, again a reference point.
In the RS article we see the discussion of 'mid 2013' as a possible transitional time.
What I enjoy about all these is that is shows we are not alone. Other serious and high ranking world thought leaders are (it is subtle mind you) also openly mentioning the need and plans for a reset. These are not just blow hard 'bring back the good old gold standard' folk. They are really discussing freegold in every way we discuss here.
If one needs some confidence in addition to knowledge to get up and do what needs to be done...there it is.
With a little extra effort this can also be 'spousal convincing material' as well.

One Bad Adder said...

@tintin: - Ask me on Monday (next) mate ;-)
We need to see whats going to happen tonight FriDAY local) - if they take out 84 (DX) ...then I'd say we're on the cusp.
An announcement over the weekend isn't out of the question.

One Bad Adder said...

We're also seeing (on the back of the continual $IRX loss-of-traction) how this is affecting Gold Futures.
A "genuine" contango isn't evident until the Apr 14 Contract.

Dante_Eu said...


Can you translate that to plain English? Or even better, real life example? :-)

vizeet srivastava said...

It is one of the few post I could complete because I am a bit bad at reading long posts. This post does excellent job in giving answers to few of the sticky questions.

Michael dV
I think the people who live on paycheck to paycheck are the one who keep gold for security in India.

Polly Metallic
After revaluation we may think that lot of people in India/China will sell gold to live luxury life but where would the luxury come from. These are the people who are producing for rest of the world to consume. For people to utilize their increased wealth they will need production to travel to them so world has to turn upside down. This won't be quick probably things will get bad before it improves. I think primary sellers of gold after revaluation will be middle class in India who is debt ridden and will use gold to get off the debt. Rich middle class (Investors holding gold) may invest in properties in top cities but middle class does not hold most gold. It is the little giants (poor unorganized labors) or big giants who hold most gold in India. They will continue to hold them even after revaluation because they cannot do much about it. And so even after revaluation 95% of gold will never hit market. Even the 5% that will hit market will be absorbed by big giants.

Roacheforque said...

Where I said abov ,"These cycles come through leverage and fractionalization, the crux of which we are departing in the destruction of the fractional paper bullion market."

I probably should have clarified with "leverage and fractionalization of debt."

With Freegold, currencies can properly multiply to lubricate commerce in the modern world, but they are not backed solely by debt.

There's quite a large faction out there who believe that "fractional reserve banking" is the root of all evil.

But when you think about it, it's fractional debt reserve banking that is unsustainable.

For currencies to be goverened by their free market bid for gold rather than their freemarket bid for unbacked promises does "emulate the rigor of an external standard" in a most eloquent compromise between the traditional "gold standards" and today's fiat standard.

That may be overstating the obvious, but ... I think it settles well.

Roacheforque said...

Noyer is obviously advocating for his Euro to be seen as safe. The line one item on the asset side of his balance sheet assures it.

It does not need to be mentioned ... far too obvious. Gold will give the Euro strength, i.e. safety in gold.

Jeff said...


You're feeding a deranged troll, aka FakeAnother, aka Franca, etc. Here's Blondie's, er...CGV's take on him.

CGV: Franca's contributions, such as they are, should be read in context: Franca is simply yet another alias employed by Gary Morgan, FOFOA troll extraordinaire, with whom we are all unfortunately familiar.

Anonymous said...

Big news to the readers of this blog, I think. It looks like the legal authority for unlimited rapid-fire printing (no more debt ceiling problems) has just been granted to the Treasury with the passage of the new House Resolution 807. See "Did the House of Repersentatives Just (Unintentionally) Eliminate the Debt Ceiling?"

Pete T said...

Brilliant, as usual. Impressed by what looks to me to be a concerted effort to tinker with style in order to facilitate accessibility, whilst at no point sacrificing the highest wisdoms and insights we have come to expect from your work. Thank you.

Sam said...

One can always do well in an argument if allowed to set up a false premise. (Though I’d say in this case Wil quickly dispatched you anyway). “Who knows more about what is coming Christian Noyer or a blogger (FOFOA)?” But that isn’t the right question is it? FOFOA is predicting the intentions of Christian Noyer and the BIS through careful study and analysis not challenging him. So the real question is who is interpreting Christian Noyer’s words better. A random troll commenter on a blog or the author of said blog? I’m going to go with the author that does no advertising or promotion and has a huge word of mouth following based on thoughtful work.

ein anderer said...
This comment has been removed by the author.
MatrixSentry said...

Sugarlover is banned Troll Gary. His posts will be deleted. Do not respond to him.

MatrixSentry said...

Another 3 tonnes of bullion left GLD today.

The window remains open.

One Bad Adder said...

Gold / Currency watch!

The curious thing with DX is that it took approx 3 mths to take out 83 on this go-round ...and three DAYS to best 84.
The comparison with $IRX appears to be following it's anticipated divergence and I'd be expecting a VERY interesting 3 mo Auction ahead this week.
the alt-currency:$PoG Chart isn't indicating a Physical - Paper disconnect ...YET! FWIW.

Unknown said...

Awful quiet around here lately. Calm before the storm?

401K's being inflated before being annuitized??

The divergence between the DOW/DAX and the real economy are simply mind-blowing.

Clench your sphincters tight boys. I think the blowback on this one could bend your ankles a bit.

byiamBYoung said...

Brother Wil,

I stand (well, crouch) in sphinctermonious solidarity.

Something wicked this way comes.

We watch together, yes?


Nickelsaver said...

this we learn from the flower of understanding?

Nickelsaver said...

commonly known as the corpse flower due to its smell, its genus name is "titan arum"

which if I did not know otherwise, would have thought stood for "Giant Gold"

Roacheforque said...

Indeed My Brother, the iron horse comes, and dancing bear retreats to the great burial place of our ancestors.

The medicine man speaks of the flower of understanding, but his words smell of the white man's rotting scalps in the desert sun.

The shadow of the Vulture stands tall.

Roacheforque said...

If you can laugh at this world, surely you have beat it. I know I crack my own self up. They can probably hear me next door.

Roacheforque said...

Good scotch helps.

M said...

@ Wil Martindale

"The divergence between the DOW/DAX and the real economy are simply mind-blowing."

What is there to be said ? The world is fuct from one continent to the other. Anyone with an ounce of sanity is numb to it. Its killing me. Good thing the national hockey league playoffs are on. I don't even pay attention anymore. But I did take delivery of some more gold today.

If this doesn't crash the paper gold market then nothing will.

Unknown said...

I echo these sentiments.

GOLD: payment in full!

And yet every ounce has a hundred paper counterparty claims upon it.

Ownership and possession.
Two sides of a coin.

And two ways to change title:
Voluntarily and by claim.

Another said that as the price rises it dries up. "It has a way of doing that."

And our central planers, learned in such truisms, carefully try to manage the perception that it is declining in price ... to shake gold loose, in opposite fashion...

And yet this does not seem to be working.

Did Another not account for the lack of credibility of the drop in paper price?

Or do claims trump the weak hands who voluntarily sell into the demand?

Ownership and possession ... voluntary and by claim.

The time comes when all gold changes title by claim alone ... when the weak hands are fully wrung.

These are the thoughts of the flower.

Jeff said...

Dax in gold

farmersteveg said...

I believe that by the time we read about "China and (fill in the blank) are entering into an agreement to bypass the dollar for trade, it is already in effect.

I believe that by the time we read about "the BRIC nations are setting up a development bank similar to IMF.... , it is already in effect.

I believe that by the time we read about anything pertaining to the logical end of the $IMF regime, it is already in effect.

As such, when I continue to read about US gold exports, I believe we are already settling our monthly trade deficits with physical gold.

Something happened towards the end of last year, and as such, we are easing our way into a new system of global trade not $$ based.

To me, the only thing left to happen for Freegold to arrive is the separation of physical gold from paper price. This will probably be the only part of this whole transition which we will be able to witness as it happens, instead of reading about it after it is accomplished. Followers of FOFOA will be the only "goldbugs" out there cheering every day as the paper price of gold collapses. We've got to be close to that day.

I believe that when we now read about "China continues to buy US Treasuries at a record pace ....,' Freegold is already in effect.

With Benghazi, IRS, sour economy, poll numbers plunging, ......, what better time for a distraction ????

tEON said...



And I see the DOW rising much higher - continuing a downward pressure on the 'paper price' of Gold. We are going to see some incredulous, forehead-slapping, pundits in the Gold community this year, shaking their collective fists at those evil 'banksters'. :)

byiamBYoung said...

gary (Not the troll)

you mean like these pundits?

They are so self assured, I can't help grinning from ear to ear watching it. The whole clip is worth watching (with popcorn), but the guy at 3:10 makes me laugh out loud.


tEON said...


I can't seem to access that video - maybe because I am in Canada. :(

But I don't think I meant THOSE pundits - I meant the 'Gold Community' pundits like Sprott, Embry, Turk, Sinclair and those at the fringes... all those sites extolling the advantages of Silver (to da moon!) - David (we'll never go below $30 again!) Morgan .

Like most 'Miner Newsletter' guys have thrown in the towel - I bet we won't be hearing from many of these guys in the future. Some who have Forums on their site have removed them (Tekoa) and those that have left them show their following are restless to say the least. Many have come to realize you can't 'talk up' the paper price of Gold. Sinclair is trying the opposite, expounding daily it seems, and just continues to put his foot in his mouth... poor soul. The $1600 line-in-the-sand was bad but the Bo Baloney charts were the nail in the coffin. 2 years ago he made the call to go heavy into Juniors... ohh my.

Woland said...

World Gold Council reports CB's added 109 Tons in Q1, with
Russia and S. Korea among the largest buyers. (Well, we're still
the world leader in scrap supply)

M said...

@ Wil

Think about this for a minute...

First Japan doubles its monetary base. Then the ECB cut interest rates again. Then Australia cut rates for the first time in forever.

Australia is particular had no good reason whatsoever to cut rates. They created the equivalent of 600,000 jobs in Australia the last time they counted. The price of oil in AUS is close to hitting the $150 barrel equivalent.

The point is, all of these actions by the BOJ, ECB and Australia happened for ONE reason. Because the US told them to. They all did this for the good of the status quo. (to prolong the US privilege on the backs of their own citizens.)

Dante_Eu said...

Oh man, you can't make this things up, from ZH:

First this: Federal Reserve Jobs: Great job opportunity! Penetration Tester

Then this: Job description

Great success FED, Great success...



Great video. Perfect for a "Peter Schiff was right" type of video once gold is revalued. What do these people see that I don't? I can't imagine that it is I who see more than they? I see the fed buying debt with newly printed cash, subsidizing the very problem that got us into the current mess, making it exponentially worse. They truly believe the fed can/will exit? HOW?!?

michael3c2000 said...

From Jim Sinclair's blog- mainstream media notwithstanding - wealthy fund mangers reverse bets on gold and miners, money talks we are told, no soul has been sold, come in from the cold, bet and bet bold... ;>)

michael3c2000 said...

The die have been rolled, this never gets old, it was meant to unfold, so we've been told. /8:P

michael3c2000 said...
This comment has been removed by the author.
michael3c2000 said...

LOL, good one. Fed should've asked for "Bad arse hacker needed. Apply within."

byiamBYoung said...

Two interesting articles from... Pravda! Those Russians sure don't seem to like the US...

Dollar crisis and the coming collapse of US global hegemony

Gangster state America


Edwardo said...

On a related note to M's "taking one for the team" theme, we have this from Christine and friends over at the IMF at the mere suggestion by The Fed that QE be wound down. As if they could or would. Now that's what I call playing good cop/bad cop.

KindofBlue said...


"Two interesting articles from... Pravda!"

Paul Craig Roberts wrote Gangster State America and is a former U.S. Assistant Secretary of the Treasury and author of several books worthy of note. He was a Republican until, as he put it, "I didn't leave the Republican party, the party left me." He is also a former editor at the Wall Street Journal.

He is well worth the time IMHO.

byiamBYoung said...

Kind of Blue,


I thought that name didn't sound so Russian. Thanks for the link.


Dr. Octagon said...

On the topic of taxing mining companies, I read this in today's issue of The Economist magazine (May 18th, page 32):

"Nevada’s constitution enshrines a tax on the net proceeds (ie, after operating expenses) of mineral sales. Since 1989 it has been capped at 5%. Several Republican legislators have called for the cap to be removed, and for the rate to be doubled. Democrats want to raise the payroll tax and to apply a uniquely high rate to mining. Any or all of these proposals may be put before voters in 2014. “The target is on our back,” says Tim Crowley of the Nevada Mining Association.

KindofBlue said...


No problem. Reading Roberts' work help cure me of being a Democrat which came about due to the issues of my youth: civil rights and Vietnam. I now reside in what might be the non-ideological, non-affiliated center. What I particularly like is that he thinks and I believe that same habit of thinking is what attracted me to FOFOA's blog.


MatrixSentry said...

Excellent post that has addressed many of the topics discussed here lately.

The trail FOFOA is following is a little clearer than before. Not so much the trail VtC and Blondie are following.

Our trail guide is a valuable resource. If you agree I suggest a donation may be warranted.

RTFB. Please consider a donation. RRTFB.

Unknown said...

The status quo is the objective. For as long as possible, no matter the cost.

Yes, fill in the blank farmer Steve? Russia.

And NO they don't like us.

But the time comes when all gold changes title by claim alone ... weak hands in this Depression fold early.

This time I speak of is a time when small dogs should hide with what's in their belly.

When Ender's Giants fight over the last lion sized scraps, this is called WAR. The BIS has a plan ...

Edwardo said...

Speaking of mining, particularly PM mining, I see "news" has been trotted out regarding hedge funds of some repute taking sizable positions in derivatives instruments related to such entities as GDX and GDXJ. The irony is thick here since these inveterate pillagers of paper (POP) are exposing themselves to the derivatives of derivatives. I'm sure their paper bug metrics have flashed a big green light regarding "value", and their technical signals are, likewise, screaming sigma three oversold.

If the reports are accurate, it appears unlikely that these POP have, even briefly, considered that maybe, just maybe, what this free falling paper gold market is signaling is not another big, fat, buy set up, but, rather, the onset of an entirely different business model that screams "No Leveraged Paper Profits Here".

In the meantime, I'm guessing these hedge fund blokes took these positions well in advance of the press release and, so, they are already under water by a goodly amount. After all, GDXJ was trading at 12.75 on May 9th, and Friday's close was 10.46.

Dr. Octagon said...

I found Captain Goodvibes and Victor the Cleaner's discussion very interesting when I found it last week, and I appreciate the response to it here, FOFOA. Some of VtC's posts especially, were worthy of printing out, in my opinion.

Something which has been bothering me a bit lately is summed up in this statement from above, from FOFOA: "Now when I say that most people are savers, that simply means they are more interested in preserving their surplus purchasing power than gaining from it. They will forego a gain in favor of a lower risk of loss."

I wonder, are most people really savers? This is something I'd like to look into some more. Given the AG-era choice between preserving purchasing power, and "putting your money to work for you", I wonder how many of us are truly going to choose saving over investment. I'm sure it will be some mix, but given people's propensity to gamble, I wonder if the mix will me more toward investment than safety, even when we are fully aware of the risks, and feel their full consequences.

If the majority turn out to be investors, not savers, then I think the AG-era will be quite different.

Michael dV said...

Doc Oct
The 'Republicans' who led that effort were recently petitioned to leave the party (I signed the petition). The leader of the gang, swore an eloquent oath that he was conservative and all for smaller government. After he was elected....Apparently he got a whiff of power and maybe someone whispered in his ear that he could become governor if he played his cards right. Taxing mines is NOT the position of any good Republican. As Grover Norquist (Americans for Tax Reform)
has said: politicians who spoil the brand are like 'rats in a Coke bottle'. The rest of us work to make a party of lower taxes, smaller government and other 'leave us alone' stuff. These guys come around and kill the brand.

michael3c2000 said...

This Friday, I think Jesse tried to describe a mysterious, dark, and suspenseful scene like Edgar Allen Poe's The Pit and the Pendulum.
As Poe "Quothe the Raven- "Nevermore"" so many suspenseful times in a portentious, romantic New England precursor.

Excerpts (to compliment your bedside drink, the distant thunder and the wind in the trees):

"Gold Daily and Silver Weekly Charts - Curiouser and Curiouser


Sir Eddie George, Bank of England, September 1999

...I think we saw another such period of 'staring into the abyss,' and the Western central banks have reacted, and that reaction has continued, most likely to an excess...

I think that the official picture of what is going on is not what is happening, and that for some reason we are being misled.

I hate to engage in speculation, but that is required by the nature of how these things are now...

One thing I am sure of is that this is not your father's market correction in the metals, or rally in the stock market for that matter. This has semi-official hands all over it, and something significant happened late last year, and it is behind what is going on.

There is also not much doubt that China and Russia could shed more light on this, as well as the other central banks, and a few of the bullion banks, but they will not be talking until it is in their own good time.

No one I have read or spoken to really knows what the heck is going on. They don't. They might wish you to believe that they are somehow 'connected'...

But even the guys who would ordinarily be in the know at least to some extent do not know what is going on. And they are getting concerned. And that bothers me. There is something out of the ordinary going on."

All right. That's enough carnage and confusion. I have to sleep too you know. Well, okay there's more.
Have a look while I step out for a minute...

"That is what is tipping me over to think that this is something fairly significant. When I see water running up hill, it doesn't take a whole lot of effort to realize that something is not quite right with the contextual backdrop being presented.

I think the shit hit the fan late last year, and everything that has happened since then has been a reaction to that. I do think there will be a bank/market holiday, of perhaps three days, and I am looking for any little things that suggest when that might be. Then we can work back from there..."

ampmfix said...
This comment has been removed by the author.
Anonymous said...

There only so many gold miners. The sector is tiny. You don't have to worry about which ones to hold if you do it through a mutual fund. All the gold funds own the same companies in varying proportions. Notice FOA didn't say they would go to zero, just near zero and not staying there.

Let's do the math and weigh risk vs. benefit. A = a mutual fund's portfolio. The 30X revaluation in gold is a 2900% gain. The formula

(percentage of A not expropiated)X(2900%)X(leverage factor)= gain in portfolio A

First let's assume there is no leverage in the shares in that they merely match bullion's appreciation so leverage factor is one.

If half of portfolio is lost then
(0.5)(2900%)(1.0)= 1450% still a 15 bagger, not as good as bullion but you will be getting mofo dividends.

If 90% of A is lost, a worst case scenario then
(0.1)(2900%)(1.0)=290% even if 9/10 of portfolio is nuked you still have a 4 bagger.

Now set the leverage factor to a weak 1.5, barely any leverage.

(0.5)(2900%)(1.5)= 2175% nearly a 23 bagger very close to bullion, but you have a dividend stream possibly in gold. Hercules, Hercules, Hercules!

The above are pessimistic projections. Now for the realistic ones. The leverage factor is normally between 2-3 to be conservative. Let's use 2.5 and crunch the numbers.

If A is 90% nuked (0.1)(2900%)(2.5)=725% an 8 bagger.
If A is 50% nuked (0.5)(2900%)(2.5)=3625% outperforms bullion & get sweet dividends so the precious can be left alone in savings.
If A is only 10% nuked ( this is really the worst case scenario) then (0.9)(2900)(2.5)=6525% a friggin 66 bagger bitchez.

If you have enough bullion where a 30 fold reval will be life-changing, why not put a small wager on the miners for the chance of ending up with more money than God. What if gold is only set to 5-12K intially by the BRICS and the full reval is put off by a decade? You'll be stuck with non-yielding bullion in the meantime. Currency wars can last awhile.

Anand Srivastava said...


I would expect that they all will go bankrupt and will require assistance from the govt, and then govt will fix their revenue as public utilities.

They can only survive if gold stays above production costs. But that is not at all likely. Notice that the price is already below where they are profitable, most will lose money at this price. Expect it to go lower within the month, and then all will start losing money. This will continue till they close shop. That is the whole point. They all have to close shop and the weak hands have been shaken off before gold will not be available in the market.

The revaluation will happen only after the gold is not available in the market.

Anonymous said...

Who says they'll sell at the comex price? It's a global market.

Motley Fool said...


There is your flawed assumption....then you compound it.


This too was priceless. I suppose you think someone can be half-pregnant too?

Aquilus said...


If you're still interested in Freegold definitions, I changed mine around a little bit to be more accessible:


A monetary system in which long-term savings (transaction settlement) self-focuses in a medium that is not essential to the real economy.

Large scale demand for this settlement medium, from international trading all the way down to personal savings, does not affect consumer prices (and the price transmission mechanism) because this medium not used in industry or as a raw material.

To work, this medium cannot be debt based, and must already be a focal point of the global super-organism: gold."


Anonymous said...

When Another and FOA were writing miners were hedged. That was the rationale for miners failing. It's a different world now. No one is hedged. Since 2008 the minions of the ESF have been shorting the shares as well as gold/silver to discourage people seeking the natural K-wave winter refuge. Great fortunes will be made in the shares. You guys are just scaring yourselves away from the greatest opportunity of many lifetimes. If you are psychologically prepared to see bullion prices nosedive before a windfall reval, why can't you do the same for the shares? I left plenty of dry powder around just for mispricing opportunities if the boogeyman of expropiation is used as a final trump card. The threat if made would be merely the opening negotiating stance to be countered by real world market forces. This happens all the time when govt's try to jack up a royalty fee. The miners counter threat with lack of production/jobs/no revenue. Govt becomes reasonable, proposes a better deal for all.

There is leverage in the shares. If gold is $7000/oz all of a sudden the cutoff for grades is much lower. Companies can count as economic reserves parts of a property they couldn't before. The mining life of a property can be extended.

If there is any windfall tax it will likely be a temporary one-off expense like in other industries. Govt will realize it can get more revenue by letting the gains trickle down as dividend income out into the economy. What better way to fix the pension crisis for public & private sector than to let gold miner dividends flow unimpeded.

What do you think the boyz at Goldman's Ballsack and the Morgue as well as the pedophiles in Congress and the Knights of Malta in the Pentagon are invested in? They are in the mining shares. That's why there will be no expropiation at the end of the day.

Motley Fool said...


Why do you feel the need to convince us? Go buy mining shares if it makes sense to you. You even get to say "I told you so." if you are right. To me, it makes not sense, and none of what you have said has changed my mind.


ampmfix said...
This comment has been removed by the author.
tEON said...


Your comments are frequently couched in 'If's and 'likely's. If you believe in the Freegold thesis - there is only one outcome. Trying to exceed that tremendous windfall, on something you don't sound particularly sure of yourself (hence you aren't trying to convince us as much as you are yourself) seems beyond greedy. Not dissimilar to all those GoldBugs who 'bet' on the mining shares not content in believing the price will rise. It's betting the longshot instead of the favorite - which, strangely, is human nature. People like to gamble.

I left plenty of dry powder around....

Well I haven't. I am all-in physical Gold. If you believe in FG and aren't 'all-in' you are trying to time the market (that's okay - hope you get it right) or in your case, improve upon, what will probably be the best investment of any lifetime.

It reminds me of when I hear Sprott talking - he has tunnel-vision on the paper price rising. He never even mentions the possibility of it crashing.

If gold is $7000/oz all of a sudden

Why would this happen? This sounds like something Jim Sinclair will eventually say.... it isn't Freegold. 7K Gold means the paper market isn't dead.

MF is right - believe in the courage of your convictions - buy a whole whack of mining shares and come back and flaunt it to us. Honestly, I won't feel bad in the slightest if you do. I will congratulate your decision.


Motley Fool said...


If I can make a semi serious suggestion...with prices down this much the premiums on physical silver are higher as there are manufacturing bottlenecks. I have seen quit ea few over on TFmetals ask if anyone is selling silver. You might make use of such opportunity. They are likely to give you more than market pricer and be happy to do so.


ampmfix said...

Thanks a lot MF, but the silver is in ETF form.

In fact half of it is still above water, so I should get moving asap.

I have failed miserably 3 times in my life because of not recognizing an "unjustifiable" fast move up: 1st, NASDAQ in August 2000, 2nd, housing in July 2007, 3rd, silver in March 2011.
That has taught me the big lesson, do not invest, but SAVE! and what better than phys Au...
Once all the conversions done, hopefully within a short time frame, I will start sleeping well, and not caring if FG comes this year or in 20. Enough playing the game of the "elite"!

Motley Fool said...

Ahh, well if it is paper then as long as you are willing to write it off as a complete loss, you can gamble I suppose, that when the shit starts hitting the fan silver will rise more than gold, and that you can still get gold at that point, if you like gambling that is.

Seems you have been burned a few times. :(

ampmfix said...

I used to like the silver story, not so much anymore, it is only an industrial asset and I am not a commodity trader (even though it is a very interesting metal; it might shoot up one day, when the mines are empty at any mining cost, maybe in 200 years?).

Cheers and good luck to you.

Motley Fool said...




Anonymous said...

MF and gary,

My intent is to offer a different POV and some help. The forum needs a contrarian. Too much confirmation bias. I'm always sounding out for an anti-gold, anti-miner thesis to challenge my view, but alas no one can muster a good argument. I find the FOA quotes actually make the case for holding miners. By the "right" ones he meant unhedged producers. That's why you had two indices for the sector: XAU for hedged miners and the HUI for unhedged. Now they are all unhedged. What FOA inferred was that you would need an iron stomach for the volatility in the shares. He didn't mean they would go extinct. A low stock price does not mean a miner is going under. Even if the POG goes below production cost on the Comex, a miner could continue to function by stockpiling ore, keeping the unprocessed ore as an asset on the balance sheet, pay employees & suppliers in the metal ( remember they mine money), find other exchanges in Asia that deliver the metal ( I guess big fish would come to them to strike deals for way above spot, just like the deals Another talked about).
Gary, I've already established a big position with my 3 gold mutual funds and I am taking advantage of this beatdown to lower my cost basis. I don't believe in the FG thesis. I see nothing on the horizon to suggest it's coming. The CB's will simply reboot the system by delevering it with a higher gold price, probably much lower than 55K. I like to be conservative and keep expectations low, say, about 5,000 to 17,000. We'll just get a new and improved Bretton Woods but on the BRICS terms.


Hang in there brother. When I decided in 2008 to buy miners I had alot of angst about selecting individual stocks. The volatility and risk was too great. I chose the no-load mutual fund route to distribute the risk. This is a megatrend of megatrends so I bought the whole sector. That way if a mine collapses I only take a 0.1-0.5% hit. The picks you have will be ok. Now is just a time of max pessimism. Those silver stocks will fly to great heights.

P.S. Gary, I won't gloat. I'll pull a Gore Burnelli and financially go post-physical.

ampmfix said...

Thanks Grumps, good luck.

tEON said...


Hey, I appreciate your take. That is why they have horse races - because people disagree. We Freegolders (if I may) believe we have Secretariat, and for you to be even close - some of your miners are going to have to be juiced.

Personally, I think the mining sector is dead for at least a decade. Look what happened in the past ten years - Gold goes up and miners stay flat.

I am taking advantage of this beatdown to lower my cost basis

What if the ones you picked go lower - or to zero? or is that impossible?

I don't believe in the FG thesis.

I gathered that. My only advice in that regard is RTFB, or RRTFB.

I see nothing on the horizon to suggest it's coming.

Me neither... except the crashing paper price, the draining of GLD, QE2 (was enough, or how about Global QE) aka the US directly monetizing their own debt and some countries openly trading Oil for Gold. Other than that not much to suggest FG is on the horizon. No, no, I am not the brain specialist. No, no, I am not... --pause-- Yes! Yes I am!

Hope you get three jackpots LambBartGastronomy - or at least two cherries.


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