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We are approaching what Ludwig von Mises described as "the crack-up boom":

There is no means of avoiding the final collapse of a boom brought about by credit [debt] expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.

Marie Laveau wrote:You can't eat gold. Just sayin'.

Hugo Chavez to nationalise Venezuela's gold industry

CHAVEZ THE FREE MARKET LIBERAL
Chavez has a well-crafted revolutionary image, but when it concerns stashing his country's gold Chavez clung to the decisions of his predecessors steeped in admiration of Mrs Thatcher's free market ranting. Nearly one-half of all Venezuelan gold "parked" in the capitalist world's central banks and bullion banks was held in Thatcher's England, from very early on.

As Chavez said, August 16: “We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home. It’s a healthy decision.”

The Venezuelan decision was simultaneously announced by central bank president Nelson Merentes, noting that for the world’s 15th-largest holder of gold reserves, repatriating the yellow metal is not unassociated with its 28 percent price leap, to date, in 2011. His colleague, Venezuelan finance minister Jorge Giordani hinted the real reasons for why Chavez is pulling his gold back home at this moment. He referred to the weakening U.S. dollar, the near-default by the U.S. government on its sovereign debt, and the pan-European sovereign debt crisis which all signal danger for Venezuela’s savings in the shape of yellow metal. This could opportunistically disappear or get sucked into IMF "virtual gold" operations, swapping real gold against SDRs but pretending the liquidated gold is still there, safe and comfy in a vault somewhere, and not replaced by titanium alloy bars with a thin covering of real gold.

Chavez could also have taken stock of what is happening to oil - which supplies around 95 percent of Venezuela's national revuenues, exactly like Saudi Arabia. In a nosedive of the global economy, those go-go markets will heftily mark down black gold prices, but gold prices could quite easily go on growing. Simply for Venezuela to buy the food it cant produce at home, it will be handy to have those 210 tons of yellow metal on site and in place.

REVENGE IS NIGH
Chavez is far from a darling of the liberal economic world, and his gold repatriation decision will have quick and strong anti-Chavez results. Apart from the UK gold stash, Venezuela parked even more tons in Switzerland, and a large amount in the USA, too. Bringing that gold back home is highly able to generate revenge action, and could itself be a reason why Chavez is acting now. The key term for possible revenge action against Chavez is "encumberment risk", in arbitration case rulings able to freeze Venezuela's international assets, including gold, cut its credit rating, and raise interest rates on Venezuelan debt.

As Chavez Pulls Venezuela's Gold From JP Morgan, Is The Great Scramble For Physical Starting?

"The Bank of England recently received a request from the Venezuelan government about transferring the 99 tons of gold Venezuela holds in the bank back to Venezuela, said a person familiar with the matter. A spokesman from the Bank of England declined to comment whether Venezuela had any gold on deposit at the bank." That's great, but not really a gamechanger. After all the BOE should have said gold. What could well be a gamechanger is that according to an update from Bloomberg, Venezuela has gold with, you guessed it, JP Morgan, Barclays, and Bank Of Nova Scotia. As most know, JPM is one of the 5 vault banks. The fun begins if Chavez demands physical delivery of more than 10.6 tons of physical because as today's CME update of metal depository statistics, JPM only has 338,303 ounces of registered gold in storage. Or roughly 10.6 tons. A modest deposit of this size would cause some serious white hair at JPM as the bank scrambles to find the replacement gold, which has already been pledged about 100 times across the various paper markets.

Stephen Morgan wrote:

Marie Laveau wrote:You can't eat gold. Just sayin'.

More accurately, you can't digest gold.

Nordic wrote:I've never gotten the "you can't eat gold" saying. WTF?

Pretty soon, gold might be the only thing you can buy a bag of groceries with, and that seems close enough for me.

(not that I have any gold ......)

8bitagent wrote:I've had it banged into my head by my leftist friends that "only those racist Tea Party wackjobs talk about gold". As if talking about gold being an investment=gun toting anti government christian patriot larouche quack. Doesnt surprise me tho in this crazy global financial frenzy gold prices keep rising though

Nordic wrote:I've never gotten the "you can't eat gold" saying. WTF?

Pretty soon, gold might be the only thing you can buy a bag of groceries with, and that seems close enough for me.

(not that I have any gold ......)

Marie Laveau wrote:

Stephen Morgan wrote:

Marie Laveau wrote:You can't eat gold. Just sayin'.

More accurately, you can't digest gold.

So true.

Nordic wrote:I've never gotten the "you can't eat gold" saying. WTF?

Pretty soon, gold might be the only thing you can buy a bag of groceries with, and that seems close enough for me.

(not that I have any gold ......)

We have a JIT (Just-in-time) delivery system. It is reckoned there is, at most, two weeks of food on the shelves. I just got back from a road trip through the midwest and to the East Coast. Corn and soybeans. That's pretty much it. For tens of millions of people.

You do the math. And it don't add up to "I"M GONNA BE RICH!"

Hugh hasn't done a psy-ops meme on TPTB and punching up gold prices, has he?

Edit: Oh, and it ain't sweet corn and edible soybeans they're growing, either. It's field corn and "beans" (as they say) for plastics, high-fructose corn syrup, ethanol, etc. etc.

Let them eat....well, dirt, I guess. Oh, wait, the dirt is poisoned with chemicals. I guess they'll have to eat the rich. Which, seeing as how it's like, what, 2% of the population? that won't last long, either.

wintler2 wrote:Gold price - i guess theres a whole lot of cash sloshing around looking for a notional return or at least somewhere to hide,

and less and less of anything of durable value left to hide in. But the more of it hides in gold, wont real economic activity shrink?

Or is most of the cash wealth that is going into gold surplus to the requirements of economy anyway, in which case we could simply erase it with no significant downside.

Venzuela recalling its gold - What sort of bank is it if withdrawing your cash prompts threats in the media? Venezuela has picked a fine time to recall its gold, and timing is everything; besides, what else can we do to them? coups - been there. military provocation via US proxy Columbia - done that. Sanctions - ditto. I can believe its a problem for JP Morgan, and i wouldn't assume the Bank of England has the readies either.