No, seriously, all I meant is that Goldenstein (that’s “gold-n-SHTEEN,” of course) need not be a country in the normal sense of the word, with a flag and a UN seat and all. It could be an evil breakaway bandit province controlled by evil, Cyrillic-typing mafia dons. Or it could be nowhere at all. The fundamental question is economic – it is quite orthogonal to political structures.

This is not to say political structures have, or can have, no effect on it. But the converse is also the case. For example, it will be very interesting to see if Treasury can get its new IMF gold sales plan past Harry Reid (D-Nevada). If it couldn’t spin HIPC debt forgiveness, how the heck is it planning to spin paying IMF salaries – especially since IMF has turned into, as bsetser I think put it, the “Turkish Monetary Fund?”

The problem for IMF is that if the story doesn’t work, they look weak, and if it does work, the market can infer that it must have been something good. It is also quite significant that IMF plans – at least according to unidentified sources, who as we all know are always right – to sell within the CBGA.

As Leonard Cohen put it, everybody knows the dice were loaded, everybody knows the good guys lost, and everybody knows the CBGA is an obligation rather than a restriction. If Treasury wants IMF to sell within the CBGA, it can only mean the Euros are balking and want some of the strain taken off their backs. Selling is selling and the effect, if it happens, will surely be salutary. But the message matters, too. The situation is hardly checkmate or anything close, but a type of zugzwang definitely seems to be developing.

Now the “good” thing, is that we re heading into the worst ever world economic depression, reason being : we ve allowed too much debt piles over the last 30 years and we are now just like at the end of the 20’s in need of erasing them.

The coming world depression will drastically reduce the needs for oil, gold, steel etc. There will be no shortage of those materials until demands picks up to present levels… Probably not before another 10 years at least.

I’m opposed to helping undeserving people, whether individual homeowners or banks. But not, however, at the price of destroying our economic system.

There’s only one small problem in your logic, which is that you assume the smart money has to exit.

It’s not for nothing that the IMF prohibits members from linking their currencies to gold. Imagine if there was a country, just one, on gold. Call it Goldenstein. Suppose you work at a Western financial house – American, European, Japanese, etc – and you’re trying to persuade Goldensteiners to move their savings into dollars, euros, yen, or instruments valued in same.

How exactly do you pitch that? If it helps, try to imagine it in Powerpoint. Now imagine pitching the reverse, and you’ll see the problem.

Of course, there is no Goldenstein. But does there need to be?

‘peak gold’ may be a good theory or a pathetic illusion, but when the smart money exits gold, the slow suckers are still piling in for the ski jump. it’s the smart money that stabilises the market. the suckers buy at the top, and lose heart at the bottom – thus exaggerating the volatility. the smart money is kiss and tell money, always persuading you to follow where they have already gone . . .
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i actually had already found that, and was interested if something similar could be observed with the bonds Fannie issues as opposes to just guaranteeing. i think i found the answer — see the update.

I agree

Combined Jewelry demand, investment demand, and industrial demand exceeds current gold production by 100 tons. The deficit in the past years was covered by US and European Central Bank leasing of Gold reserves to investment banks. There is real industrial demand for gold in the electronics industry especially for electrical connectors. Your computer’s microprocessor also contains a tiny bit of gold within the microwires connecting the semiconductor chip to the external data contacts.