Saturday, August 24, 2013

Gold, Fishez! -- Is A Reset Coming Soon?

                                            "All the gold in California
 Is in a bank in the middle of Beverly Hills 
 In somebody else's name.
 So, if you're dreaming
 About California
 It don't matter at all where you played before
 California's a brand new game."

-- Gatlin Brothers, 1979

There have been a few developments in the world of gold lately that I thought were worth taking a look at.  Two blogs I regularly read have somewhat raised the possibility that big and ugly changes are dead ahead, and that buying gold was the best defense.

Also, in recent weeks and months I have run into more bloggers who think gold will indeed have its reset to the $55,000 range.  There are now four knowledgeable bloggers who are looking at $50,000 or higher gold prices!


FOFOA lately (in various pieces so far in 2013) writes that he thinks that we are fairly close to his Freegold reset.  Snippets (FOFOA in beige/olive background, bold emphasis mine) from his latest piece, and this piece is relatively short! (Link here:  In this article of his, (his blog's fifth birthday, by the way), he is explaining how it is at the very top (central banks) there appears to be a growing gold supply problem, and what this will mean...  And remember, this is a very short version (smile, LOL...):

So once those reserves at the top are gone, what happens?  

(R. Mix: comment: next paragraph, in italics, is FOFOA's follower "Edwardo" (part of an email from Edwardo to FOFOA), recently featured on RT television (!) discussing Freegold, the show was broadcast worldwide...)

"The top tier not getting physical will require something like a Def Con 1 response. The bombers will have to be let loose and the world as we knew it can never be the same again." 

Yes. But do you see how the Def Con 1 response has a lot of moving parts and detailed resolution? We can't know exactly what has transpired at the top, except for what ANOTHER alluded to. But just imagine that 100,000+ tonnes of promised or at least expected gold (that's marginal-flow-gold, not global-stock-gold, so a simple doubling of the price would never suffice) never flowed. 

(R. Mix comments: (1) When FOFOA writes the "top" here, remember that he means the central banks, only those who own tremendous amounts of physical gold and (2) that 100,000 tonnes is the amount "expected, but not produced" since anonymous "ANOTHER" predicted all of this long ago...)


What is the price that will unlock the gridlock at the top level, convincing those who have no reason to sell and every reason to buy more to sell? Who can act first, and what would that action necessarily entail? Here's what I think. The first to act would have to not only understand what is happening, but also be willing and able to sell or buy any amount of gold. This eliminates the Giants, SWFs and oil states because, even though they have plenty of gold, they don't have the printing press the way the CBs do. And that's why I think the CBs will be the first to act, probably under the auspices of the BIS. 

In order to break the gridlock, they will have to announce a very high spread, a bid price and an ask price, either of which can be voluntarily accepted by the other top "savers", the Giants, SWFs and oil states, or "arbed" by the top "dealers". It would look something like this: "We will buy any amount of your gold that you are willing to sell at a price of $55,000 per ounce, and we will sell you any amount of gold that you would like to buy at a price of $56,000 per ounce." How's that for a Def Con 1 response? 

Here's the key. Which do you think you need to lend credibility to a really high revaluation price, a buyer or a seller? The answer is you need a buyer, and not just any buyer, an unlimited buyer. The physical gridlock requires a physical seller to unlock it, but the revaluation that will make that happen requires an unlimited buyer. So the "first to act" can't just be a willing seller at a high, revalued price, it must also be a willing buyer at that same price and in any quantity offered. 


I think the draining we see today at the top via daily GLD inventory updates is just buying enough time to divvy up the few remaining scraps. At some point you're giving away the scraps by buying more time to divvy up the scraps, so where's the point of diminishing returns? Is it now? Is it next week? Who knows?

An even shorter version ("Robert's Version") is that once the flow of gold stops at the very top, THAT is when all Hell will break loose, and some BIG player (central bank level) will offer to resolve the gold flow problem in one fell swoop, raising the price of gold (by offering to buy it) to what seem now to be astronomical levels.


Jim Willie (link here: writes that gold will sharply rise to $5000 or more, but for a variety of reasons.  He distills this down into 13 reasons in his latest (free) article.  I will examine the parts of his article that seem to offer reasons why his big gold price increase (to a “modest” $5000 - $7000) is inevitable and likely to come soon.  I break down Jim Willie’s 13 reasons into two major reasons (or groups of related reasons):

Banking system meltdown: a toxic combination of accounting irregularities (very bad), massive thefts (including allocated gold bars), interest rate derivatives gone bad (and now with interest rates rising…), fractional gold management and bank “Bail-Ins” (in which customers take a big loss of money in their accounts.

Geopolitical/ financial reasons: a combination of the BRICS setting up a new trading system to exclude the US dollar, the rejection of US treasury bonds (the BRICS buying gold and infrastructure with the Treasuries), other BRICS measures that will weaken the USA’s financial position and the weakness of or abandonment by traditional allies of the United States (Germany and Saudi Arabia).

OK, I am not nearly as well connected as Jim Willie is, nor am I close to a professional geopolitical analyst, but I would have to agree with him re the delicacy of our financial position.  I would disagree with his strong relative bullishness on the BRICS…  India, Brazil and South Africa are much weaker than he portrays (IMO), and while China and Russia are indeed powerful rivals, I contend that they are not natural allies in the longer-term and further that they have their own problems (serious demographic, environmental and social) that will bedevil them more than he claims.


Below are links to two more bloggers who also believe that a reset to much higher gold prices is likely.  Each has their own "take" on how gold will move up.  BOTH of the below use similar, but not identical, logic in their analyses.  Both write shorter pieces than FOFOA, and so might be more accessible for people who want a shorter version.  BOTH are highly recommended if gold is a part of your investments or savings:

^--- I need time to examine his take and how it may differ or complement FOFOA's.  He does take the gloves off, pow!

A snippet from his blog (gray background) describes almost identically (with different words) FOFOA's idea of the "Superorganism" not needing gold (and so perfect for using as a Store of Value) while silver is very much needed, and so hoarding of silver in an important sense somewhat damages the economy (by driving up cost of silver used in so many products):

From an investment standpoint, the key merits for Gold is that it’s completely dispensable, and the key merits against Silver is that it’s completely indispensable.

In this way you can now see that Silver is far more valuable than Gold, and therefore it must be protected and stabilised, otherwise we risk revolt. Gold, on the other hand, is completely free to bob up and down.

So Gold is precious in its ability and capacity to support limitless Debt/Liability within the global financial system, and Silver is precious in its ability to support Modern Standards of Living.

Even Jim Sinclair (aka "Santa", "Mr. Gold". "St. Clair", etc.) is now writing that gold will go to $50,000, although you will have to dig around on his site to find his logic, it is NOT quite the same as FOFOA's logic. This is a new position for Sinclair, that gold will rise so high.

Q:  Who is "most" correct of all of them?
A:  Who of us can predict the future...?


"All the Gold in California", live from 1979 in HD!  Mandatory listening if your knowledge of American music is deficient...  This is the kind of song that I will sing in the shower if no one is around...  From the days when people knew how to sing, use their voices!  *Click* on the link below if the image does not play the song.


  1. Excellent write up. Been reading you on Zerohedge for a few years now; my first look at your blog did not disappoint.

  2. Thank you Heward, but do not expect all of my stuff to be a smash hit like this one... 2200 hits for this (so far) in a day, my 2nd highest ever.

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    Check out these comments:

    Normalcy Bias of the Ebenezer Gold Scrooge.

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