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Old July 14th, 2009 #1
Alex Linder
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Why Gold's Price Rose in the Great Depression

by Gary North

I keep coming back to this theme because the non-Keynesian, hard-money deflationists keep pitching the same old deliberately deceptive statement: "Gold's price rose in the Great Depression." They tell their readers to buy gold.

If there is price deflation, gold's price will fall, unless there is a war or a non-monetary crisis.

These people never respond to my arguments. They pretend that I have not raised this issue. I have. Repeatedly. Examples:

* http://www.lewrockwell.com/north/north497.html
* http://www.garynorth.com/public/5115.cfm

There comes a point when readers who cannot make up their minds about who is right had better say to themselves: "I think I had better pay no attention to the guys who refuse to respond to North's argument."

Here is my argument.

THE STORY OF A GOVERNMENT-RIGGED COMMODITY

The United States government guaranteed the dollar-price of gold from the end of World War I until August 15, 1971. On that Sunday, Richard Nixon announced a new policy. The United States government would no longer redeem dollars for gold at $35/ounce when presented with dollars by foreign governments and central banks.

Until then, the world's gold price had a floor: $35/ounce. Gold was a rigged commodity. It was not a free market commodity. Nobody sold gold below $35/ounce because the United States Treasury would buy gold at this price. The United States Treasury guaranteed a market for gold. It was not a free market.

This is always the meaning and effect of a government-guaranteed gold standard. For as long as the investing public believes that the government will not break its contract, gold's price will not rise above or fall below the fixed price in the nation's currency, except for transportation costs, which are very low in relation to the price of gold.

Under these circumstances, gold's performance will be the same as money's performance.

The reason why gold's price did not fall during the price deflation of 1930–33 in the United States is because gold functioned as money, meaning paper money. Paper money held outside of banks appreciated. This is the meaning of price deflation: money appreciates. This is why there were bank runs, 1930–33. Depositors recognized that currency held outside of banks was safer than deposit receipts from banks, which were uninsured until 1934. They withdrew their money. Over 6,000 banks went under – but no New York City multinational bank. The Federal Reserve made sure of that.

There was a time, earlier than the nineteenth century, when government money was money only because the government redeemed money at a fixed price for gold. Gold supported the value of the government's money.

After World War I and especially after World War II, gold was no longer money. It was merely a government-rigged commodity because it could be sold at a fixed price to the U.S. Treasury for money. It was illegal for Americans to own gold bullion, from 1933 to December 31, 1974.

There is no government-fixed price for gold today. Therefore, any argument based on the price of gold during the Great Depression, when gold coins were still money, is not just ill-informed; it's deliberately deceptive. The editors who keep repeating this argument know what I have argued, but they prefer to keep their readers from examining my argument. They do not answer me. That is because they cannot answer me without departing from the logic of free market economics: supply and demand.

Gold was not a free market commodity from 1844, when the notes of the Bank of England were made legal tender and redeemable in gold, until August 15, 1971, when Nixon ended gold's legal redeemability for foreign governments and central banks. Gold had a price support from the American government after the end of World War I: $20 an ounce through 1933; $35 after.

Roosevelt announced in 1933 that it was illegal for Americans to own gold bullion. He forced law-abiding Americans to turn in their gold to the government at $20 per ounce. Then, when the gold came in, he raised its price by 75%, to $35. The government pocketed the difference.

This was a devaluation of the dollar. The dollar's gold content was reduced by 40%.

The Great Depression was an era of monetary deflation. Ours is not. The Great Depression was an era of systemic price deflation, 1930–33. Ours is not. The Great Depression was an era of a government-guaranteed floor price for gold. Ours is not.

Gold's price did not rise until the United States government ceased selling gold at $35 per ounce to foreign governments and central banks. Nixon announced that policy on August 15, 1971.

Gold's price bottomed in 2001 at $257. Gold was a rotten investment, 1980–2001: $850 to $257. Silver was worse: $50 to $4. Yet consumer prices rose by about 100%.

Fact: gold did terribly in a time of steady monetary inflation and steady price inflation. The precious metals bubble of 1979 popped in January 1980 in response to the FED's tighter-money policy. Gold has never come back to its January 1980 peak: $2,100 in 1980 dollars.

WHO ARE THE DEFLATIONISTS?

With the exception of old-line deflationists Martin Weiss and Robert Prechter, today's deflationists did not show up until a few years ago. The deflationist argument disappeared in the two decades of declining gold prices, 1980–2001.

At the same time, people who were interested in buying gold disappeared. So did the hard-money newsletter market. A lot of the gold bugs died. They left their gold coins or gold mining shares to heirs, who sold them.

The handful of companies that sold gold coins in the great precious metals boom, 1976 to January 1980, went out of business or shrank. There were never many of these firms, probably under a dozen with significant retail sales: Investment Rarities, Blanchard & Co., Camino Coins, and Don McAlvany.

Because gold did so poorly, 1980 to 2001, the number of people who had heard the story of gold in 2001 was tiny. Those who knew anything about it thought – correctly – "popped bubble."

Then the monetary inflation of Greenspan's Federal Reserve drove up the price of gold, beginning in the second half of 2001. I began promoting gold once again in October 2001.

The readers of the deflationist sites are newcomers. They were not investors in gold from 1980–2001, let along in 1970. They have no knowledge of the history of gold. They have almost no understanding of basic economic theory, whether Keynesian, Friedmanian, or Misesian. They are babes in the woods. Lambs to the slaughter. They are the blind who the equally blind are leading into the ditch.

They will buy gold because their deflationist guru told them to. This is good. Why? Because their deflationist guru is wrong. There will be price inflation. Their gold will appreciate.

MONETARY CRANKS

Recently, I wrote a long article on the primary monetary crank of the modern world: John Maynard Keynes. It is titled "Keynes, Crackpots, and Deflation." I showed how he got his economic ideas from two men who were universally regarded as monetary cranks in Keynes' era. Keynes even acknowledged that they were regarded as cranks. Still, he praised them. One was an engineer, C. H. Douglas. He founded a movement called Social Credit. The other was Silvio Gesell. He served in the government of the one-week Bavarian Soviet Republic in 1919.

What is a monetary crank? Here is what I wrote in my article:

I define a monetary crank as someone who proposes a system of causation for money different from causation for other market phenomena. Ludwig von Mises subsumed monetary theory under the same logic that governs all market processes: Theory of Money and Credit. In contrast, a monetary crank tells us that private property, entrepreneurship, and the forces of supply and demand explain causation in the overall economy, but then insists that money is different, that government-created and government-planned money is required to balance supply and demand for all other goods and services. He abandons his theory of economic causation when he gets to money.

A monetary crank argues for supply and demand in the general economy. Then he exempts monetary theory from this analysis.

The supreme monetary crank of the twentieth century was Yale professor Irving Fisher. He was a contemporary of Mises. He wanted pure fiat money. He hated the gold standard. His influence is greater today in the realm of monetary theory than anyone else. That is because of the influence of his chief disciple, Milton Friedman.

Keynes tried to move economic theory away from strictly free market explanations of pricing, supply and demand, and employment. In other words, he was less of a monetary crank than Fisher. Keynes did not believe in either the pure free market or the gold standard. Fisher believed in the free market and fiat money. He was schizophrenic intellectually.

Fisher lost his personal fortune in the Great Depression. He was the inventor of the Rolodex. He lost at least $6 million and maybe $10 million. As John Kenneth Galbraith quipped: "This was a sizable sum, even for an economics professor." He also lost his sister-in-law's fortune. He became famous for this statement in September 1929. "Stock prices have reached what looks like a permanently high plateau."

He did not understand monetary theory. He did not understand capital markets. He did not understand gold. But he is still widely regarded as the number-one expert in monetary theory.

In 1933, after he had lost his money, which the academic world knew, he persuaded a high-level academic journal to publish his essay that explained it all retroactively – which he had failed to see coming. This article is still widely quoted and highly regarded by academic economists. It was re-posted on the site of the Federal Bank of St. Louis. Its title: "The Debt-Deflation Theory of Great Depressions."

Non-hard money economists who worry about price deflation still quote it. Examples:

* http://tinyurl.com/nu8h3w
* http://tinyurl.com/ntcs5g

But by far the most relevant reference to Fisher's theory was Ben Bernanke's famous 2002 "helicopter" speech. He cited Milton Friedman on the helicopter filled with currency. But Friedman got the idea of Fisher's 1933 article. Bernanke wrote this.

Second, the Fed should take most seriously – as of course it does – its responsibility to ensure financial stability in the economy. Irving Fisher (1933) was perhaps the first economist to emphasize the potential connections between violent financial crises, which lead to "fire sales" of assets and falling asset prices, with general declines in aggregate demand and the price level. A healthy, well capitalized banking system and smoothly functioning capital markets are an important line of defense against deflationary shocks. The Fed should and does use its regulatory and supervisory powers to ensure that the financial system will remain resilient if financial conditions change rapidly. And at times of extreme threat to financial stability, the Federal Reserve stands ready to use the discount window and other tools to protect the financial system, as it did during the 1987 stock market crash and the September 11, 2001, terrorist attacks.

Beginning in October 2008, the FED has reacted just as he said it would. Hard-money deflationists say the FED cannot reverse price deflation. Bernanke said they are wrong.

But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation. . . .

Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.

I agree with him. This is why I think gold is a good long-term investment. That is because I think the FED can and will inflate. It can and will force commercial banks to lend, if only to the U.S. Treasury. Anyone who says there are no solvent borrowers for banks to lend to is out of touch with reality: a $11.5 trillion Federal debt, which is growing by a trillion dollars a year. The Treasury must roll over $250 billion each month. No borrower?

CONCLUSION

The argument that gold's price increased in the Great Depression and therefore will appreciate in the coming deflation is the single most misleading argument in the deflationist camp. Do not pay any attention to this argument. I suggest that you pay no attention to anyone who uses it, except as a convenient source of links to other people's articles.

In short, the guy is either incredibly ignorant about economic theory – a monetary crank – or else he is being paid to sell gold.

July 15, 2009

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.

http://www.lewrockwell.com/north/north734.html
 
Old July 15th, 2009 #2
Rick Ronsavelle
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". . .So now we know why the site exists. He wants to spread the word about Christian Reconstructionism. Not a bad thing in itself, until you dig a little deeper and get closer to the roots of North's beliefs. In this quote he talks about religious freedom, which is the entire basis for the existence of this country. His words are shocking and horrifying to me, and, I think, to any US citizen.

[So let us be blunt: we must use the doctrine of religious liberty to gain independence for Christian schools until we train up a generation of people who know that there is no religious neutrality, no neutral law, no neutral education, and no neutral civil government. Then they will get busy in constructing a Bible-based social, political and religious order which finally denies the religious liberties of the enemies of God.]

--Gary North, quoted in Albert J. Menendez, Visions of Reality: What Fundamentalist Schools Teach (Prometheus Books, 1993)

North wants to gain power for the Christian Reconstructionists, then wipe out the liberties of anyone else who disagrees with their beliefs. This is one scary dude, and I shudder to think where, or in whom, he's investing his substantial monies. He's a man with a plan, and if the reconstruction goes his way, it's going to be worse for 95% of us than all the fan-hitting manure he's predicting for Y2K. . ."

http://www.sweetliberty.org/garynorth.htm

Doctor North has also claimed that adulterers and non-believers should be stoned to death.
 
Old July 15th, 2009 #3
Alex Linder
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Quote:
Originally Posted by Rick Ronsavelle View Post
". . .So now we know why the site exists. He wants to spread the word about Christian Reconstructionism. Not a bad thing in itself, until you dig a little deeper and get closer to the roots of North's beliefs. In this quote he talks about religious freedom, which is the entire basis for the existence of this country. His words are shocking and horrifying to me, and, I think, to any US citizen.

[So let us be blunt: we must use the doctrine of religious liberty to gain independence for Christian schools until we train up a generation of people who know that there is no religious neutrality, no neutral law, no neutral education, and no neutral civil government. Then they will get busy in constructing a Bible-based social, political and religious order which finally denies the religious liberties of the enemies of God.]

--Gary North, quoted in Albert J. Menendez, Visions of Reality: What Fundamentalist Schools Teach (Prometheus Books, 1993)

North wants to gain power for the Christian Reconstructionists, then wipe out the liberties of anyone else who disagrees with their beliefs. This is one scary dude, and I shudder to think where, or in whom, he's investing his substantial monies. He's a man with a plan, and if the reconstruction goes his way, it's going to be worse for 95% of us than all the fan-hitting manure he's predicting for Y2K. . ."

http://www.sweetliberty.org/garynorth.htm

Doctor North has also claimed that adulterers and non-believers should be stoned to death.
He's a mixed bag, to be sure. But much of what he writes about gold and money is true and useful.
 
Old July 15th, 2009 #4
Alex Linder
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[by Don Stott at coloradogold.com]

Trust
May 28, 2009


Life is full of things we trust. We trust our mates, kids, banks, cars, structures, forecasts, investments, religious beliefs, and of course ourselves. A new Vanity Fair article examines Bernie Madoff's scam in detail. It was written by his long time secretary, and it is very interesting. Here was total trust in this man by thousands of true believers. They thrust their dollars on him, and got a check every month in interest or return on supposed investments. Or so they thought. It all came crashing down when, as all Ponzi schemes must, the new recruits' input, can't equal the expected payouts of the already captured investors' dollars. Madoff had an expensive life style, offices and a trading room manned by a staff of traders, but the secretary didn't know what they were 'trading.' Madoff was 'Mr. Personality' personified. He became famous for his returns on investments, even though for years, experts had warned that the whole thing was a ripoff and Ponzi scheme. $60 billion went down the drain. Trust misplaced, even though it appeared sound and trustworthy.


In the stock market or 'dot com' crash, it is estimated that $7 trillion was lost. Stock buyers figured that the boom would go on forever. When something is working well, the thought of failure never even enters the mind, a-la Madoff. Trust. When you are driving your car down the road and it is just humming along beautifully, the thought of a blowout, overheating, or mechanical failure is the furthest from your mind. Trust. I am currently reading a very long book on Andrew Carnegie. In 1873 there was a huge depression. Everyone was getting laid off, wages cut, businesses were failing, and all progress had come to a shuddering halt. Bankruptcies were everywhere as well as failures of previously well thought of businesses, railroads, and iron mills. Carnegie himself had to sell most of his stocks and holdings to keep from going under himself. Throughout history, there have been waves of prosperity as well as corrections. Depressions are nothing new. In 1873, that depression solved itself, as ours would, if there were no government interference or 'help,' which prolongs recovery and makes it more difficult. In 1873, salaries were cut, expansion halted, and everyone buckled down.


In 1929, fortunes were lost, because millions put their trust in stocks, which many thought were so strong that a new age had dawned, and eternal prosperity was at hand. A few sages warned that it was a bubble, and sold everything they had. Since 'those who won't learn from history are doomed to repeat it,' what in the world can one put their trust it today, as an example? Real estate? Millions bought homes, lied about their incomes, and took out mortgages on homes which everyone knew would continue to go up. People were buying homes and flipping them at unheard of profits. Appraisers and mortgage brokers were lying through their teeth to get deals consummated, and all looked so rosy, that life indeed was going to continue on with unabashed happiness. Trust us. Oh sure.


Maybe it would be considered a truism if I said that, 'when things seem too good to be true, they mostly aren't.' Trust is an extremely important part of life, and if you can't trust a thing or person, life can be extremely sad. Lots of people put trust in what I consider to be so silly that I can't understand their trust in the first place. Remember the Jim Jones sect and those characters who thought they were going to heaven or outer space on the Halley comet? I think they got what they had coming to them.


The thing we all need to trust in is our method of staying alive. Be it health or money, both are necessary to continue living. We need what money buys, such as food, housing, and transport. We need health to continue life, and good health will make our lives last longer and with greater pleasure. That's why I take a lot of vitamins and minerals, don't smoke, have never done drugs, and have a bit of alcohol a few times a week. My health at 75, is virtually perfect. As far as economics are concerned, trust is paramount. I have few dollars, and lots of gold and silver. I must admit that buying gold and silver in 1979 and early 1980, was similar to buying stocks at the peak of the 'dot com' boom, or in early 1929. They were a classic bubble, waiting to burst.


Gold and silver a 'bubble?' Absolutely, and I was doing then, what I am doing now. I was making people really angry by telling them that I thought things were out of hand, and I was advising not to buy. "You're supposed to be selling gold and silver and you're telling me not to buy it?" "No, I am merely saying that I think the prices are too high, and there may be a huge correction. Gold has gone from $40 and silver from $4.50 to $750 and $45 pretty fast, that's all." Most bought anyway. Why was there a bubble in gold and silver? We had the hostages in Iraq, Jimmy Carter was President, we were giving away the Panama Canal, the prime rate was 13% and mortgages were 21% interest. Everyone was scared and turning to gold and silver for safety. Couldn't blame them! Then in November, Ronnie Reagan got elected and things began to turn around. When he took office, they really turned around, and prices corrected. The bubble had burst, and prices have been going up practically ever since.


Will there be another bubble in gold and silver like there was in real estate and stocks? Maybe, if certain things are present, which are similar to early 1980. I'll let you know, but certainly not now. Remember, gold and silver have been true money for thousands of years, through all governments, dictatorships, monarchies, wars, ruination, floods, fires, earthquakes, and myriad disasters. Gold and silver, throughout all these historic happenings, and even in the 1980's, had a ratio of 16 to 1. Now it is 64 to 1, and I know of no earthly reason not to expect it to return to 16 to 1 eventually. If the ratio were 16 to 1 today, silver would be $60 an ounce, not $15. Trust me. That ratio will eventually resume.


Another item of trust: I think that if you look through history, the majority have always been wrong. Literally. Now what does the majority put their trust in today? Stocks, bonds and dollars. The dollar has lost 98% of its value, stocks are still a third of their former bubble glory and I think will go far lower. Bond holders are in such bad shape, that nothing need be said about them here. Stop following the majority who are placing their trust in all the wrong things. Be a smart minority and place your trust in historic money.


Gold and silver are not dependent on a political party, government, laws, rules, promises, paperwork, or anything to give them value, any more than does any tangible thing, such as a piece of steel, tree in the woods, or a dozen eggs. Tangible things stand alone in their value, regardless of which party is in power. While their prices will invariably go up as the currency which they are bought with goes down in value due to inflation, the eggs, steel, tree, and gold and silver remain exactly the same. Only their prices go up as money loses value due to endless printing of it. So does it make more sense to store surplus assets in tangible things, or what is used to buy them? Eggs will spoil, steel will rust, etc, but gold and silver are the most easily bought, stored, and sold of any tangible, and besides they are absolutely beautiful! I guess it all boils down to get out of dollars, which are a shrinking measurement. They don't rust either!

One other thing. Since the election of Obama; guns, bullets, gold, and silver have been in great demand, and rightfully so. This has brought on a wave of TV commercials with pitchmen urging buying gold from this outfit or that one, none of which are of good character. Ask yourself: Who pays for all these commercials, which certainly aren't cheap? The answer obviously, is those who do business with these nocturnal airlines, which phrase can be translated into: 'fly by night.' Make one phone call to them, and you're on their list and you'll never get rid of their incessant telephone harassments. Just a word to the wise. When someone calls you, they're trying to sell you something on which they'll make a lot of money or commission. When you call someone such as us, you want something, and we are delighted to serve you, and we will never, ever call or bother you.

http://www.coloradogold.com/archive/Trust-863.html
 
Old July 15th, 2009 #5
Rick Ronsavelle
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I didn't want to detract from North's article, but I have known for a very long time that Gary wants theocracy. I wonder if the folks at Rockwell know of North's hatred for freedom.
 
Old July 16th, 2009 #6
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Old July 22nd, 2009 #7
Igor Alexander
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Originally Posted by Rick Ronsavelle View Post
I didn't want to detract from North's article, but I have known for a very long time that Gary wants theocracy.
Under Alex's decentralized system, he and like-minded people can have their theocracy, as long as they keep it white.
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Old February 22nd, 2013 #8
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The Untold Reality of Gold and Silver Price Controls

Wednesday February 20, 2013 13:39

The financial backdrop to the current prices of precious metals like silver and gold is that trillions of dollars and other currencies have been created in order to reflate stock markets and attempt to create a recovery in the property market, which will only serve to re-inflate real estate prices back to their former unsustainable levels once again. This seems so utterly obvious, and yet it is rarely discussed.

Furthermore, far too many investors continue to rely on and even hope for the continuance of the status quo, despite the fact that their futile wishes for the financial alchemy to prevail — so that the “free lunch” creation of money from nothing but paper and ink will lead to more jobs and economic growth — have been increasingly frustrated.

Trading Volume Speaks Volumes

Consider for a moment the remarkably high volume of COMEX contracts traded during the days when the spot prices for gold and/or silver were driven sharply lower.

An illusion of weakness tends to prevail in these situations because the majority of precious metal traders do not seem to understand the difference between a paper claim and the real thing, nor do they seem to realize that only paper contracts or claims are being sold when the price of the precious metals drops — not the actual metal itself. Basically, the futures contract seller cannot be forced to deliver physical metal, and so sellers can simply settle their profit or loss on the trade in cash.

Furthermore, the fact that such price drops are typically initiated by the dumping of huge swaths of paper contracts by proprietary traders working at giant bullion banks that are too big to bail and/or fail, makes them seem more like manipulative attempts to scare the precious metals market into a selling panic.

No one is actually selling real bullion during these allegedly “not-for-profit”-led precious metal sell-offs. Instead, the paper market is moving the metal prices as the tail seemingly wags the dog.

Perhaps this was once a civilized way to discover the fair price of a commodity, but in today's age — regardless of the obvious and highly questionable concentration of only a few sellers comprising the entire net short position of the futures market — every market trades in a high speed, momentum-based, and computer program monitored environment.

Regulators and Exchanges Permit Manipulation

This manipulative activity is also permitted by regulators and exchanges in the equities market via dark pools that spoof and front-run millions of unsuspecting penny stock day traders who seem caught up in the race to catch the elusive Red Queen of a good trade.

In the meantime, the bullish fundamentals for higher silver and gold prices are slowly but surely forcing their way into the psyches of the few market participants whose minds remain open to that possibility.

On the surface, the alleged ‘not for profit’ seller(s) has created the illusion of a bear market — fanned by a slew of market experts who fall right into line by describing a hundred reasons why the selling might have occurred — without ever getting close to stating the real reasons that the crash happened.

Practically every notable move lower comes from concentrated short sellers intentionally destabilizing the market to force precious metal prices down, although the so-called exports never seem to see it this way. Furthermore, no matter how blatant the sudden dumping is, it is almost always painted and viewed publically as a 'longs selling' event.

If all of that were not enough, predictable sell-offs almost always occur after margin announcements. As a case in point, maintenance margins were lowered last week, thereby providing an incentive for unsuspecting momentum or technical oriented longs to enter the market.

As usual, these weak longs were quickly harvested in less than two trading sessions after the margin announcement was made. Traders operating on margin face considerable pressure to put up more money or exit their positions — typically ultimately dumping their positions at a loss. This is exactly why this harvesting goes on month after month.

Open Interest Offers Better News

The good news, or the flip side, is that open interest has remained high in the precious metals futures markets, despite the numerous downdrafts. This indicates that stronger hands are accumulating.

Uncharacteristically, dips have been bought aggressively — often intra-session — which seems especially unusual for silver.

Furthermore, awareness is growing among futures traders about retail and wholesale shortages developing in the physical market — combined with the widespread acceptance that central banks of the developing world are accumulating gold at a feverish pace.

This ongoing process is leading more and more investors to wonder why they are not also accumulating silver and gold for their own portfolios.

For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit http://www.silver-coin-investor.com



By Dr. Jeff Lewis,
Editor, Silver-Coin-Investor.com
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Old February 23rd, 2013 #9
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Just bought some silver coins today from a local place. Funny story, because he happens to be a "prepper", so we hit it off great.

He is willing to sell me US circulated silver coins at daily/current silver market value. He has more than he knows what to do with, so he is offing them right now.

I told him he would be seeing me once or twice a month. He was nice enough (white Italian) to go over the conversion weight values for each type of coin (which I verified online once I got home).

Just happy to find this deal. Keeping an eye on prices from now on.
 
Old September 5th, 2012 #10
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A Billionaire's Bet on Inflation - Frank Giustra Interview

Wednesday September 05, 2012 11:09


Quote

When asked about the parallels between today's Western societies and previous civilizations, he replied that a strong example would be, "Sixteenth century Spain. In just over 100 years, it went from an almost nothing nation, to a great empire, and back to a nothing nation. They became a consumption economy...They waged a number of wars with almost everybody on the planet...because they felt they were a superior nation...[and] that's what's happening in America today...There's no way out except currency debasement." (15:30)
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We cannot allow the natural passions and prejudices of other peoples
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Old September 7th, 2012 #11
Alex Linder
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Anti-Gold Fool
Gary North

Sept. 6, 2012

David Weidner wrote a piece for MarketWatch: "Fool's Gold Standard."

It was standard stuff, i.e., a combination of economic stupidity, attempted cleverness, and the rhetoric of contempt.

It deserves my special treatment, which I reserve for mainstream media journalists who hate the idea of a world not run by the Federal Reserve and who try to be clever. Weidner is not clever.

Let me explain. I quote him verbatim and in context.

He begins with this:

Quote:
Every few decades the nation has a financial panic, and in doing so questions its mode of currency. Should we be on a gold standard, or not?
I ask: Why does the nation continue to experience these panics? Also, when? I recall no financial panic comparable to 2008 in the past 70 years. There was the S&L crisis of the mid-to-late 1980s. Government regulation of the industry caused this crisis.

Let us review chronology. Jesse Helms in 1980 called for a gold commission to study gold. A Democrat Congress passed it, and Jimmy Carter signed it. It was held in 1982, four years before the S&L crisis began. It was a dead issue by 1986.

Also, no one in Washington suggested a return to gold in 1982, other than Ron Paul. No one suggested it in 2008, other than Ron Paul.

So, the article begins with a false premise: a supposed relationship between financial panics and calls for a gold standard.

There was price inflation, 1971-1980, but no financial crisis. That decade of price inflation was the result of the policies of the Federal Reserve System under Arthur Burns and G. William Miller. Those policies resulted from Nixon's unilateral killing of Bretton Woods on August 15, 1971. He killed the gold exchange standard, itself a Keynesian imitation of the post-World War I gold exchange standard (1922 Genoa Conference), itself a government-manipulated counterfeit of the pre-World War I gold coin standard, which had ended in 1914.

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This post-financial crisis era is no exception. The Republicans have just put a plank in their party platform that called for the formation of a gold commission, a move that's generating some buzz on Wall Street.
It is generating no buzz anywhere. The platform is taken seriously by no one, especially Speaker of the House John Boehner. It merely reflects that Ron Paul scared the Republican Establishment this time. He did not in 1982.

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What would adopting a gold standard accomplish?

We've just come through the worst recession since the 1930s. It's healthy that we are challenging our monetary System, our fiat currency and the Federal Reserve system.
Who are "we"? No one on Wall Street. No one in the mainstream media. No one in Washington, other than Ron Paul, who is retiring. Weidner knows this. He is trying to tar & feather him, once and for all.

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But if anything, these cyclical crashes only underscore what a folly this is. Reinstitute the gold standard? Please.

Is this what people are doing now that Ron Paul is out of politics?
Not enough people.

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Look, let's acknowledge what adopting a gold standard would do:

• It would guard against inflation by linking currency to something in fixed supply.

• In doing so, it would lessen government's ability, through the Fed, to manage wealth. That's because inflation effectively shifts wealth from citizens, who can't print money, to the government, which can.

• It would effectively fix international exchange rates -- something that could potentially help us in our imbalance with China and other countries that have gamed the foreign exchange system to their advantage. (China would suffer inflation, U.S. deflation making our goods more competitive.)
This is all true. So far, nothing else has accomplished this in history. Bretton Woods worked only when there was a gold-exchange standard (1946-1971).

So, he knows what works. But then he offers reasons why not -- Really Dumb Reasons.

Quote:
It all sounds wonderful, of course, until you consider the downside:

• Deflation is a necessary part of a currency on the gold standard. It absolutely crushes debtors. That's why politicians talked about the standard nailing people to a "cross of gold." When you owe money and your wages fall, you may be able to buy the same things at lower prices and maintain a quality of life, but your debt gets bigger.
It "absolutely crushes debtors." I see. So, from 1879 to 1933 in the USA, there were no debtors. They all were crushed. I had not heard this before.

What kind of rhetorical nonsense is this?

The gold coin standard was restored in 1879. The system had been abolished in the early months of the Civil War, in order to allow mass inflation of the currency to pay for the war. There was a bond market, 1879 to 1933 in the USA. Businesses issued them. So did governments. Banks lent money. How? To whom, after the debtors were "absolutely crushed"?

Weidner must figure that his readers are economic imbeciles.
Quote:
• As a result, it would have a dampening effect on the credit markets.
I see. Yes. If all debtors were "absolutely crushed," this would have a dampening effect. But there was no such effect. The period 1879 to 1933 was the golden age of bonds.

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• The government would have little power to do any managing of the economy. It couldn't set the price of gold, or pump money into the economy by expanding the money supply as the Fed does today.
This is the heart of the matter. Anti-gold writers -- 99.9% of all financial writers -- love the FED and the government. They love the central planning of money.

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Now, I don't want to entirely discount the benefits of the gold standard. The system would do much to solve the problem of debt bubbles and trade imbalances.
Correct with respect to debt bubbles, though not with a central bank to protect the largest banks, as the FED did, 1930-33. As for trade imbalances, they would continue for as long as foreign central banks inflated their currencies to promote mercantilism: subsidized exports. This is a subsidy of American consumers. I enjoy being the beneficiary of economically stupid government subsidies as much as the next guy.

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A big problem is that the gold standard never works. It's like getting back together with that old girlfriend. Your memories of how good it used to be are tainted by your current pain of loneliness. I get it. The pull is very, very tempting. But haven't we gone down that road enough already?
"Your memories of how good it used to be. . . ." To have a memory of the last year of the gold coin standard economy in 1933, you would have to have been born in 1913. And the memories, if any, would not be pleasant. To recall the good old days -- 1922-29 -- you would have to have been born in 1900. This is not an argument. This is silly.

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Another problem is that rather than try to improve our currency systems, we keep going back to this 600 B.C. technology that's a step up from seashells. Gold is pretty, but it's just a piece of metal. Its uses are limited. It can be dug out of the ground. In other words, it's really all about human confidence that gold is worth something. And, you know, the earth is flat too.
First, there has only been one sustained period of stable money in man's history, the Byzantine Empire, 325 A.D. to about 1028. After less than a century of debasement, the Byzantines returned to the high-content gold coins of the earlier era. There was no inflation until the fall of the empire to the Ottoman Turks in 1453. He either does not know this or else he conceals it.

Second, as to the flat earth, this is the rhetoric of contempt. It is based on appalling, though common, historical ignorance on his part.

Classical Greek scientists knew that the earth is round. Medieval scientists did, too. Anyone on the seacoast who could see the white sails of a ship appear before the body of the ship was visible knew the earth is round. The story of the flat earth as a medieval myth was invented by American novelist Washington Irving in 1834. The proof of this was provided in a 1991 book by medieval historian Jeffrey Burton Russell. His book is as close to universally accepted by scholars as any historical book is: Inventing the Flat Earth: Columbus and Modern Historians. You can read his own synopsis here: http://www.veritas-ucsb.org/library/...FlatEarth.html. (He taught me medieval history, 1965-66, for my M.A. degree. He had read my B.A. thesis in 1963, which turned into a 1,300-page book in 1996. I sent him a copy, apologizing that it was late. He replied that he it was his policy to deduct one full grade for every decade that a term paper was late.)

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There's one more thing that bothers me about the gold standard people. They always seem to be of the same economic and political stripe. They are anti-government libertarians who are hell-bent on ending the Fed, shrinking government and letting "free markets" rule.
Guilty as charged!

Quote:
I was reminded of this last week when Seth Lipsky, writing in The Wall Street Journal, argued that gold was coming back to the mainstream. He then went on to acknowledge that all of the people who were against it -- Anna Schwartz, Ronald Reagan, Milton Friedman -- would probably have been for a gold standard if there wasn't an overwhelming public, political and economic crowd of voices against it.
Friedman and Schwartz built their reputations on a defense of fiat money and an attack on the gold standard. To suggest otherwise is to suggest nonsense.

Quote:
Moreover, many gold-standard enthusiasts always seem to be gold bugs themselves. They're deeply invested either financially or ideologically in the idea. Talking about it helps their portfolios, their careers and their self-esteem.
So what? Many advocates of the Federal Reserve seem to hold dollars. Many advocates of the U.S. government hold T-bills. And so on.

Quote:
After driving across the country and seeing the devastation the financial crisis -- one caused by a credit bubble fueled in part by the Fed -- like most Americans, I'm angry and willing to try a radical approach. But I'm not willing to repeat mistakes.
If he has written anything of systematic substance on an alternative to the FED, I have not seen it. Until he does, he is not willing to try anything radical. Neither is anyone else in the mainstream financial media. They are knee-jerk FED acolytes.

Quote:
Without a compelling new argument, this discussion should really end there. If investors want to buy and sell gold because they believe it has value, that's their choice. But to make this faith-based metal our national currency?

You'd have to be a fool.
I say: "It takes one to know one."

He knows the good side of the traditional gold standard, but when he offers arguments against it, he sounds like either an economic imbecile or a self-conscious deceiver.

This is standard operating procedure in the mainstream financial media.

We are competing against intellectual incompetence. Their support of the Federal Reserve robs them of their ability to think straight.

http://www.garynorth.com/public/10027.cfm

Last edited by Alex Linder; September 7th, 2012 at 03:07 PM.
 
Old September 7th, 2012 #12
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80 years ago, gold was 30 dollars to an ounce and they practically gave silver away in the 1930s. You could get a full ounce of silver for one quarter dollar. Now it is fast on its way to 40 dollars an ounce, possibly more.

Is there any other physical investment that is up 15,000 percent that I should be aware of? How'd the stock market do the last 80 years, presuming you weren't wiped up in any number of recessions, depressions and crashes?

Silver and gold are things you can have in your hand. Hold a stock certificate lately? You thought you did, but the Depository Trust and Clearing Corporation and Cede and Co. do. In just one year, DTCC cleared nearly 2 QUADRILLION worth of securities transactions. Who owns your stock? Is it you? You might want to think about that! You might want to research that just a bit!

http://en.wikipedia.org/wiki/Deposit...ng_Corporation

Silver and gold can't lie about its balance sheet. They can't go to prison. They never go to zero. You can always use silver and gold for SOMETHING.
It is portable. It is indestructible. It is insanity that the White race has chosen the debit card over gold doubloons.
 
Old September 7th, 2012 #13
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Can Gold Save a Choking Planet?

Richard Russell snippet
Dow Theory Letters
Posted Sep 6, 2012

September 4, 2012 -- "A noble man cannot be lost in a crowd." An old Maori saying.

The national debt of the US is now well over $16 trillion and growing at the rate of over one trillion dollars a year. It can never be paid off through the "normal" means. Paying off by normal means would entail a huge, really killer boost in taxes and a brutal unmerciful, slashing of entitlements.

The only way the US's debts can ever be seriously addressed is to devalue the dollar.

The US owns the world's greatest hoard of gold. Here's what I think the authorities have to do. They should unilaterally, overnight raise the price of gold to a high value, maybe around $10,000 an ounce. Thus, each dollar would be worth one ten-thousandth of an ounce of gold. This would allow our enormous debt to be paid off with vastly devalued dollars.

This would be inflationary, since everyone who owned gold would own a pile of devalued dollars. The huge increase in the number of dollars would drive prices up, and that would work against the current forces of deflation.

Nations owning gold would in turn (in order to compete) -- devalue their own currencies, and thus be able to pay off their own "impossible" debts. In the end, a new world monetary system would have to be established, but the terrible problem of a planet choking on debt would be solved.

I think this is the only way the world-debt problem is going to be solved. It will, in the end, be solved by devaluation (as Roosevelt did in 1933, when he suddenly and unilaterally raised the price of gold from 20 to 35 dollars an ounce). Interestingly, we now hear an increasing amount of talk regarding gold entering the world monetary system. Furthermore, I think we are going to hear even more about gold in future months. Smart, wealthy, well-informed investors will start accumulating gold. (Soros and Paulson are doing it already. I don't doubt that Soros has inside information.)

I also believe that the US will, in due time, start backing its currency with part-gold and the dollar will be convertible into gold at around $10,000 an ounce. This will render the dollar the most wanted currency in the world.

I believe the Chinese are onto the same idea. But as of now, China does not own as much gold as they desire, which is one reason China has rushed headlong into the gold business -- China is currently the world's biggest producer of gold. It is also why China is encouraging its own people to buy and accumulate gold. China knows that gold is the future of the world monetary system.

http://www.321gold.com/editorials/ru...ell090612.html
 
Old July 22nd, 2009 #14
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Quote:
This is always the meaning and effect of a government-guaranteed gold standard. For as long as the investing public believes that the government will not break its contract, gold's price will not rise above or fall below the fixed price in the nation's currency...
Maybe in theory, but not in practice. There were lots of moments between 1945 (Bretton Woods) and 1971 when the dollar deviated from its gold peg, sometimes dramatically so.

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Gold has never come back to its January 1980 peak: $2,100 in 1980 dollars.
What were 1980 dollars worth? Wasn't that a period of near hyperinflation?
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Old November 16th, 2009 #15
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North overlooks the fact that Gold traded higher throughout the 1930's
internationally ( ownership was not criminalized everywhere) Homestake appreciated 6x :

 
Old November 17th, 2009 #16
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Yes, foreigners visiting Ameriqaeda could legally buy gold from 1933-1975 while
Ameriqaedan slaves could not do so.
 
Old November 17th, 2009 #17
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Alix Steel

TheStreet.com Published on Monday, Nov. 16, 2009 1:31PM EST Last updated on Monday, Nov. 16, 2009 5:18PM EST

Jim Rogers, renowned global commodities investor and author, says gold prices will hit $2,000 (U.S.) in a decade.

Gold prices have risen 20 per cent in the past year, recently testing a new high of $1,133.50. With strong speculative fund buying, a weakening U.S. dollar and inflation fears, investing in gold is a popular trend as the precious metal becomes an alternative asset class.

Physically backed SPDR Gold Shares (GLD-N111.970.340.30%) has risen almost 15 per cent YTD and Market Vector Gold Miners ETF (GDX-N51.530.190.37%) has popped over 30 per cent.

Rogers' love of gold is nothing new, but with gold in a strong bull market, I wanted to know if the trade was too crowded.

Jim Rogers: I don't ever like to buy something making all time highs however I'm not selling my gold. Gold is going to go much higher in the course of the bull market. Doesn't mean it can't go down 20 per cent next year but during the course of the bull market it is going to go much higher it is certainly not a bubble yet.

Jim you are typically a contrarian investor. If everyone is buying, shouldn't you be selling?

Jim Rogers : Yes, I should be selling at the top, but I don't think this is the top. Gold, if you adjust it for its old highs, adjust it for inflation back in 1980, gold should be over $2000 an ounce right now. In my view, in this bull market in commodities gold will make all new highs adjust for inflation.

What about mining stocks as a way to play rising silver and gold prices?

Jim Rogers: Not with my money. The studies show that you would make more investing in commodities themselves rather than commodity stocks unless you are a very good stock picker. If you are a good stock picker, unless you find a company that is going to discover silver in Berlin you buy all you can and then you call me and I'm going to buy it too ....short of something like that and there are a hundred gold stocks and most of them don't pan out. But if you own gold, gold is making all time highs.

Aside from gold, what other precious metals do you own?

Jim Rogers: I own silver as well. I would suspect that if you were buying [gold or silver right] now silver would be a better buy. I mean gold is making all time highs, [but] silver is 70 per cent below its all time high. Now, if my thesis is right about commodities that they're going to make new all time highs, obviously you would make that much more [money] in silver than in gold.

What about palladium and platinum?

Jim Rogers: I own them all. I think probably now the better plays would be palladium and silver but again let me hit you over the head and say I am world worst market timer and trader. I think you would make more money with silver and palladium at this point but I own all four [gold, silver, palladium, platinum].

What would you say would be the best diversified portfolio right now?

Jim Rogers: If the world economy is going to get better , commodities are going to lead the way because there are shortages developing in all commodities. If the world economy is not going to get better, I promise you stocks are not going to be a good place to be, but commodities will be the better place to be because they're printing so much money. And if the world economy doesn't get better they are going to print a lot more money. So if you're going to own something you should own commodities or you should own currencies. That's another way that you can invest in what's going on in the world.

When will gold hit 2k?

Jim Rogers: I wish I was that smart. You should watch TheStreet.com. They know everything.

http://www.theglobeandmail.com/globe...rticle1365211/
 
Old November 17th, 2009 #18
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http://www.timesonline.co.uk/tol/new...cle6919516.ece

From The Times November 16, 2009

Army tells its soldiers to 'bribe' the Taleban

(Reuters)
Taleban fighters at an undisclosed location in Afghanistan: British forces are being told to buy off potential recruits with 'bags of gold'
Michael Evans, Defence Editor
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British forces should buy off potential Taleban recruits with “bags of gold”, according to a new army field manual published yesterday.

Army commanders should also talk to insurgent leaders with “blood on their hands” in order to hasten the end of the conflict in Afghanistan.

The edicts, which are contained in rewritten counter-insurgency guidelines, will be taught to all new army officers. They mark a strategic rethink after three years in which British and Nato forces have failed to defeat the Taleban. The manual is also a recognition that the Army’s previous doctrine for success against insurgents, which was based on the experience in Northern Ireland, is now out of date.

The new instructions came on the day that Gordon Brown went farther than before in setting out Britain’s exit strategy from Afghanistan. The Prime Minister stated explicitly last night that he wanted troops to begin handing over districts to Afghan authorities during next year — a general election year in Britain.

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Addressing the issue of paying off the locals, the new manual states that army commanders should give away enough money to dissuade them from joining the enemy. The Taleban is known to pay about $10 (£5.95) a day to recruit local fighters.

Major-General Paul Newton said: “The best weapons to counter insurgents don’t shoot. In other words, use bags of gold in the short term to change the security dynamics. But you don’t just chuck gold at them, this has to be done wisely.”

British commanders in Afghanistan and Iraq have complained that their access to money on the battlefield — cash rather than literal gold — compares poorly with their US counterparts.

Adam Holloway, a former army officer and the Tory MP for Gravesham in Kent, said that the idea was a matter of “shutting the door after the horse has bolted”. He added: “I know that a number of generals thought in 2006 that, rather than send a British brigade to Helmand, they should buy off people in the tribal areas. Now it’s too late.”

Mr Brown told the Lord Mayor’s Banquet at Guildhall in the City last night that a summit of Nato allies would be held in London in January, which could set a timetable for the transfer of security control to the Afghans starting in 2010. Military sources said that the first areas to be involved would probably be in the north and west of Afghanistan — not in Helmand in the south, where British troops are based.

The counter-insurgency field manual also highlights the importance of talking to the enemy. “There’s no point in talking to people who don’t have blood on their hands,” General Newton said, launching the document in London.

Britain’s early experience of handing out cash in Afghanistan proved abortive. About £16 million in cash was given to farmers to stop them growing poppy crops for the heroin trade, which helps to fund the Taleban. The money is believed to have had little impact on the opium yields.

The manual says that money can be the answer, if it is prudently distributed. “Properly spent within a context of longer-term planning, money offers a cost-effective means for pulling community support away from the insurgents and provides the military with a much-needed economy of force

measure,” it says. “Unemployed and under-employed military-aged males typically provide the richest vein from which insurgents recruit ‘foot soldiers’. Short-term, labour-intensive projects are therefore the best way to disrupt such recruiting.”

“The counter-insurgent should be careful not to be over-generous since this will distort local economic and social activity and may lead to unproductive dependency.”

The positive impact of military units going into battle with bags of cash at their disposal is underlined in the manual by the experience of a top British commander who served in Iraq. “The hoops that I had to jump through to get the very few UK pounds that were available were . . . amazing; the American divisional commanders were resourced and empowered in ways that we could only dream of,” he says.

“UK commanders on recent operations have not had quick access to the same levels of cash as . . . their US counterparts,” the manual says. “Where possible, mission command should apply to money as much as any other weapon or enabling system.”

It is more than eight years since the Army last published a counter-insurgency doctrine, when the main lessons contained in it arose from operations in Northern Ireland and the Balkans.

General Newton, Assistant Chief of Defence Staff Development Concepts and Doctrine, said that new ideas were needed to cope with the media-savvy insurgents who are fighting in Afghanistan and that there was no place for arrogance on the part of the British military hierarchy, relying on their experience of past campaigns.

The Americans complained in Iraq that the British in Basra too often referred to the lessons of Northern Ireland in dictating how the insurgency should be handled.

A bomb disposal specialist from 33 Regiment Royal Engineers was killed by an explosion near Gereshk in central Helmand province on Sunday, the Ministryof Defence said yesterday. He was part of the Counter-IED (improvised explosive device) Task Force and the 97th member of the Armed Forces to die in Afghanistan this year.



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Ash khan wrote:
if they are giving gold after 8 years, i wonder what will UK offer to taliban if they stay another 5 or 6 years over there.....
dont play with the life of poor soldiers, u could not protect Afghans, at least save UR own people by bringing them home!
November 17, 2009 11:21 PM GMT on community.timesonline.co.uk Recommend? (2) Report Abuse Permalink
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Old November 18th, 2009 #19
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Old June 3rd, 2012 #20
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the Chinese were paid in gold bars from the Fed, and they drilled holes in them and found they were full of tungsten.

There's no way to tell, if your gold coins are full of tungsten, short of drilling holes in them, that's why they're selling them as coins, because they know nobody is ever gonna drill a hole through a gold coin and ruin it.

Also, these new super deep drilling techniques, they are finding huge deposits of high quality gold, when they dig down 6 miles, 35,000 feet. Gold veins get thicker, and higher quality, when they go that deep, and it's all untouched, no humans have ever mined that deep.

They are going around, buying up old gold mines, so they can dig down under them, finding that's where the real mother loads are, 6 miles deep. Same thing with all the precious metals, and rare earths.
 
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