Geodan

Gold In Backwardation? Not So Fast ..

Skip the tongue-in-cheek first paragraph of this report, absorb the rest of it, then enjoy a VERY Happy Thanksgiving weekend if you have physical gold.

www.financialsense.com...

Surprising Call for Return to the Gold Standard

1 .Rothbard reminds that Mises shows a crucial difference between a 'credit transaction' (involving the purchase of a future good [interest on CD's for example?] by the creditor in exchange for a present good [money]), and that of a 'claim transaction' (bank notes or deposits where the depositor retains an immediate claim to the funds).

Banks should only lend from the credit transaction funds, and not from fractional reserves of the credit transaction funds, nor from the claim transactions funds.

2. It is hard to imagine life without electronic accounting and distribution of funds. Most of us are willing to temporarily forfeit the security of gold or silver in hand for the convenience of entrusting the bulk of our funds to 'insured' third-party accounts. It seems possible to retain electronic funding as a subsystem of the monetary system, whereby the funds enter and exit the electronic subsystem as gold or silver (or government backed certificates of same if provided by the monetary system).

This would place the burden on the individual to determine whether to entrust 100% of his monetary wealth to the hazards of physical silver and gold, or to entrust a significant portion of that wealth to the risks of electronic accounting and distribution of his funds (via online banking, direct deposits and direct payments, for example).

Surprising Call for Return to the Gold Standard

P.S.
Include the Federal Reserve System, and all the banking it represents, in the list of those disconnected from aggregate individual flow control.

Surprising Call for Return to the Gold Standard

Use of a gold standard would, at some point in the trading chain, throttle the flow of money through the aggregate decision of individuals, where it rightly belongs.

All of fiat money, leveraging, short selling, futures contracts other hypothecating schemes fail under their own momentum when they disconnect from aggregate individual flow control.

Example: Oil is now under $55 per barrel from a recent high of $142. Why? Because people still control the rate of fuel consumption, and the combination of all their individual reactions to high fuel prices restored fuel flow to the supply by throttling demand, practically overnight.

In a similar manner people balance production and consumption in their domain through monetary choices. Their direct participation is the enabling factor to a responsive economic scheme, and therefore to the success of the underlying monetary system. A gold standard seems to provide such control.

What Does the Recent Saudi Gold Rush Mean?

In January, 2003 Jim Sinclair wrote a prophetic article about Federal Reserve Gold Certificate Ratio (FRGCR), a.k.a the "Gold Cover Clause," that foretold what is the crisis we have now, with his analysis at the time of using FRGCRs, all of which he now suggests may finally be under consideration during the G20 meeting this weekend, therefore worthy of your review:

www.gold-eagle.com/edi... with a follow up article, www.gold-eagle.com/edi....

Jim's MineSet website, www.jsmineset.com/, has the updated article, "The Mother Of All Crises: Gold Moves Back Into The Monetary System" regarding today's possible use of the FRGCR.

This would be a G20 agreement linking the M3 dollars to a gold value ratio of M3 to U.S. Treasury gold ... a brand new ballgame with a new set of implications. This could be the underlying reason for the Saudis, Iran and China buying gold, and for others recently reducing short positions in gold.

Ten Reasons Why Gold Isn't Above $1,000

These points suggest why paper gold is not at $1000, but they do not adequately answer the question you posed in your October 9th article, "'Unprecidented Demand' for Gold Eagle Coins," which is "With unfulfilled physical demand, why has the market price of gold remained stagnant?"

We are looking at a recent precipitous fall to $732 for paper gold. I understand the free market value for gold bullion remains much higher, though still under $1000/oz., if you can find any.

Rumor suggests this dichotomy will persist until the presumed fraud of insufficient gold backing for paper gold is exposed, setting off a panic to redeem the paper. Unfortunately for many, it is said, redemption may well be in dollars, and not gold. That expose' event could drive the price of gold to $1200, and could happen very soon.