Ready or not jail bars ain’t golden gates for Buster Keaton and the Fugees as they reach their Nash equilibrium.
If you’ve been following the news lately, everybody and their brother has had something to say about the price of gold. You see it’s at that price where it’s expensive for people who haven’t bought it and maybe too late to get in. It’s been profitable for people who bought it and maybe its time to get out and take their profits. When this happens people get nervous and when people get nervous as Joe Friday of the 1960′s TV series Dragnet will tell you, Buster they talk.
Here’s just a sampling of what 14 forthcoming folks had to say about the barbarous relic and its future on the global stage of fiat finance where the Greek tragedy of central planning is playing out for all to see.
Chris Martenson: the price of gold is manipulated downward but it may be going upward: http://www.chrismartenson.com/blog/gold-manipulated-thats-okay/72892
According to Thomson Reuters Goldman Sachs calling for $1,940 gold within year : http://www.resourceinvestor.com/2012/03/28/goldman-gold-bullish-1940-oz-in-12-months?t=precious-metals&page=2
According to Eric Sprott gold and silver will continue to appreciate in value: http://sprott.com/markets-at-a-glance/the-%5Brecovery%5D-has-no-clothes/
According to the Wall Street Journal, the Turkish Government tries to persaude citizens to transfer their gold into the country’s banking system: http://online.wsj.com/article/SB10001424052702304636404577295582725596106.html?mod=googlenews_wsj
Jewelers who work in gold go on strike in India to protest gold taxes: http://www.marketwatch.com/story/indias-gold-jewelers-strike-for-12th-day-2012-03-28
Mr. & Mrs. Evelyn de Rothschild remind us that gold isn’t money, it’s technology: http://tradewithdave.com/?p=9629 http://tradewithdave.com/?p=9714
According to Tim Price, Director of Investment at PFP Wealth Management; We have entered the most favorable era for gold prices in our lifetime: http://www.zerohedge.com/news/tim-price-we-have-entered-most-favourable-era-gold-prices-our-lifetime%E2%80%9D?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Paul Brodsky said; ”Has anyone asked why so many powerful people are going out of their way to discredit an inert rock? We think it comes down to maintaining power and control over commercial economies. After professionally watching Fed chairmen cajole, threaten, persuade and manage sentiment in the markets since 1982, we argue this latest permutation is understandable, predictable and, for those willing to bet on the Fed’s ultimate success in saving the banking system (as we are), quite exciting…. Gold is no longer being ignored and gold holders are no longer being laughed at. “The Powers That Be” seem to have begun a campaign to discredit gold.” http://www.zerohedge.com/news/annotated-paul-brodsky-responds-bernankes-latest-attempt-discredit-gold
Tungsten filled gold bullion bars show up in the market: http://ausbullion.blogspot.com.au/2012/03/tungsten-filled-gold-bars.html
Paul Mylchreest formerly of Chevreux issues 57 page report detailing the massive manipulation in the precious metals market: https://docs.google.com/file/d/0B3MkIMeosHr3SG1UbW9fNlJTdm1hZWYzNnpHc2t0QQ/edit?pli=1
Will Brown’s Bottom become Osborne’s top as the U. K. hints at increasing gold reserves: http://www.marketwatch.com/story/the-next-leg-of-golds-bull-run-2012-03-28 http://www.economicpolicyjournal.com/2012/03/is-uk-government-about-to-launch-gold.html
Correction: U. K. Treasury says no plan to increase gold reserves. Osborne wasn’t “gold specific”: http://uk.finance.yahoo.com/news/uk-treasury-says-no-plan-135424251.html
Charles Neener says gold is going to bottom in mid-April and if you don’t catch this next rally you need to be “educated”: http://www.businessinsider.com/gold-2500-2012-3
In other news Citigroup says gold prices may advance to $1,802, near the November high, before climbing to near September’s record of $1,921.15: http://www.zerohedge.com/news/iran-oil-flow-slows-price-fears-rise-%E2%80%93-risk-war-support-gold
Please allow Dave to recap:
a) The gold is going down and then going up camp: Chris Martenson, Charles Neener
b) Gold is going up: Goldman Sachs, Eric Sprott, Citigroup
c) Please give us your gold… now: Turkey
d) We quit buying gold because of taxes: Jewelers in India
e) Gold isn’t money, it’s technology: The family Rothschild
f) Gold miners are embarassed (huh?): Tim Price
g) Powerful people are discrediting gold: Paul Brodsky
h) Someone put tungsten in their gold and gold in their tungsten: Probably the folks at Reese’s
i) Gold is manipulated… what else is new?: Paul Mylchreest
j) We’re buying gold. Cancel that. We’re not buying gold: George Osborne
So that’s a lot to take in. Nobody really said that gold is going to go down. If you read Dave, then you know Dave has written a lot about gold. Dave is seriously considering making a call that gold is going down. Dave’s been saying all along that gold is going to go up. Dave’s starting to sound like the other folks on this list.
What’s Dave trying to say exactly? Dave is saying that what we have here is a prisoner’s dilemma as it relates to the price of gold. Let’s say that there are two prisoners. One prisoner is the central banker (representing probably less than 50 people in the world) and the other prisoner is everyone else (representing something like 7 billion people… most of which don’t have any gold). How does a prisoner’s dilemma work? Allow Dave to explain.
For example, let’s say two criminals conspired to commit the crime of robbing Ron Paul of his gold coin collection following the congressional hearing and Bernanke bash-fest. The criminals are apprehended following the act and interrogated in separate rooms. If the two prisoners stay loyal to each other and keep their secret, then they go to jail for only one year. We’ll measure this outcome by saying that the purchasing power of their Ron Paul precious metals collection will be divided by two to let’s say $850 each in current dollar purchasing value (eight tanks of gas for your Hummer).
If one prisoner rats out the other prisoner, while the prisoner that is ratted out remains loyal to his co-conspirator then the ratting prisoner sees their coins maintain their current purchasing value of $1,700 (a one year jail term equivalent) while the prisoner who is ratted out sees their value divided by 8 or $212.50 (an 8 year jail term equivalent). The same would be the case for the other prisoner if the roles were reversed.
Finally, if both prisoners rat out each other, then the purchasing power of both of their Ron rounds is divided by 5 or $340 (the equivalent of a five year prison term for both). As you can see, if the two prisoner’s are loyal to each other, they can walk out in two years scott free or their crimes and collectively have coinage with buying power of $1,700 (half of their original pirated booty). If one is them is disloyal and the other loyal, then the disloyal player keeps his full $1,700 (one year in prison) and the patsy gets $212.50 (8 years in prison) for a collective total purchasing power of $1,912.50. In the third and final scenario they are both rats and receive $340 each plus five years in prison and a money supply worth $680.
According to Professor John Forbes Nash, one of these scenarios is the dominant outcome. Can you guess which one it is? If you’re in the money supply business, it seems obvious that the biggest money supply outcome is $1,912.50. The problem with that scenario is if the central banker walks away with $1,700 in purchasing power, then the other player (you in this example) gets shafted out of $1,487.50 and is left with only $212.50 and eight years in the Federal Austerity Prison. The central banker on the other hand keeps his original $1,700 and spends a year in Butner, North Carolina at the Bernie Madoff Tennis and Country Club.
How do you know which of these scenarios is being played out by the central bankers? It’s simple. Look for the cashless solution. When you think like Dave, you have to think real simply. Cashless. Less… cash. As you move towards the cashless society and banking system model, you become cashless at $212.50 and the central banker becomes cashmore at $1,700. How does this work exactly? It’s about the velocity of money and technical accounting jargon like vostro and nostro and other Latin terms that only Larry Summers would understand.
With the globally connected financial system we’ve gone from a system that reconciled itself inter-day to a system that reconciles itself intra-day. That’s what all this new surveillance and clearing house arrangements are about for the over the counter swaps market. It’s not good enough to wait until the end of the day (think Greenwich mean time at midnight) to reconcile your standing. In a world where money moves as SWIFTly as the speed of light (or not at all in the case of Iran) a continuous state of reconciliation for electronic money (i.e. money as a technology) is the order of the day.
First you had real money and then we passed the Federal Reserve Act. Then we still had gold-backing and then Nixon closed the gold window and your Dad got a credit card and a collateralized debt obligation (i.e. the mortgage on the house you grew up in before Bedford Falls Building and Loan went the way of Long Term Capital Management). Now you’re going to have an iPhone with one of those square glyphs on the screen and that’s how you’re going to launch your overpriced cupcakes as a sweet salvo in the Jim Rickard’s currency war for one.
What Nash taught us about the equilibrium of cupcakes is simple. When you’re served up cupcakes where the dominant strategy that is baked into the dilemma is primarily beneficial for a party for one (i.e. $1,700 vs. $212.50), we already know the outcome. When money goes from being a store of wealth to simply being a means of exchange all you have left at the end of the day (which never ends by the way in the new vector-based/fiber optical velocity model for money) is one of those paper cupcake wrappers and a few crumbs. There would be significant risks to the central planning model if they took the Antoinette-ian approach of simply telling society to “eat cake.” That could get messy. However, if they can simply serve individual cupcakes to the prisoners who are locked in a relationship with their mobile phones and Siri, they can maintain the all-important Groupon equilibrium known as “The Daily Deal.”
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