*Granted, tar sands are more expensive than conventional oil fields but the Saudi's now have expensive social programs to quell dissent which are funded through oil revenue.
Energy costs have to be low to encourage people to spend their electronic debt tokens on other items. If oil becomes expensive then our electronic debt tokens get swallowed by high energy costs instead of purchasing 'soon to be landfill' goods.
My current thinking reckons they'll be a bail out of the oil companies, probably nothing as overt as that but the financial tools which allow them to drill (junk bonds) will be swallowed up by central banks otherwise the economy tanks.
Great idea, Luke! We can just tuck them next to those Sub-Prime Mortgage Backed Securities sitting on the Fed's balance sheet as reserves. If the MBS's are still tied to actual properties, maybe the banks can donate them to the millions fleeing the war zone in the middle east as a re-settlement effort and get a tax credit for their benevolence. Then all we'll have to worry about is food and water: gold will be an after thought. Or am I just being silly and taken this thread too far??
This is the way the world ends. Not with a bang . . .
Maybe I was trying too hard to be funny, Dave, and didn't make my points clearly enough or maybe it even seemed like I wasn't following the conversation closely enough.
I agree with your points: the bullion banks seem like the potentates of the universe right now, they're very clever and they have plans within plans within plans. I also agree with you that's it not in their best interests to have an accident or run into a brick wall at 60 mph. I also agree that they will maneuver and scheme to keep the system going as long as possible (as long as it continues to be a money tree for them); they will attempt to soften for themselves any negative events that do occur; and they will attempt to engineer a profitable way out of "the system" if it ever does collapse, and install themselves at the top of the next system.
Now let's see how many of my points you might agree with:
The bullion banks only SEEM to be the potentates of the universe. They can't control everything. They don't know everything. They aren't as monolithic as they SEEM. Therefore, things may happen that are not in their best interests, that they don't see coming, that they are not positioned to profit from. (In fact, my view is that something bad would already have happened it if weren't for the mass psychology that they ARE in control. I think it's only psychological duct tape and twine holding the whole system together at this point. I believe that once the psychology turns the whole system will fail.)
"Black Swans" are real. Unexpected things happen, accidentally and on purpose, even to the bullion banks, to Presidents and Kings and Central Banks, and me and you. Clever Lilliputians like us (and the giant bullion banks too) are aware of "Black Swans" and can take steps to be somewhat prepared for them and to possibly make them slightly less likely. But when it all comes down to it, "Black Swans" will still happen from time to time and even the giant bullion banks can be caught off guard and not completely prepared. And at times like these, "Black Swans" happen more often than they "should," sort of like a county having two "500 year floods" in 12 years.
Bad things can happen suddenly, and other bad things which develop over a long time span can SEEM to happen suddenly because the observers do not see all of the build up over time. Observers may not see the fuse burning until the day it detonates the explosive, though in hindsight one might conclude all the signs were there if anyone wanted to put them together. So, I conclude something could happen suddenly, even in the gold market.
Everything has a life cycle: good things and bad things. Good and virtuous systems gradually decay due to human weakness and evil, though they are amenable to reform and a new start. Evil and destructive systems have a life span too, and it's my observation they tend to collapse quickly at the end, instead of just slowly evaporating. The COMEX system and the fiat money system are fraudulent (and logically flawed) in my view and are currently decaying. But I expect them to go the way of most frauds with a relatively sudden collapse in the end. Call it karma, call it a natural cycle, or call it the moral law of the universe (God), but a day of justice and payback is inevitable given enough time. Is this the year? I don't and can't know that. Bernie Madoff is a prime modern example of how frauds usually collapse "suddenly" at the end, despite the brilliant Bernie's best efforts and plans.
I think of the London Gold Pool as just one example of the above truths. The central banks, bullion banks and governments SEEMED to have it all under control. But something bad happened. It was a long time coming (because the whole thing was logically flawed and fraudulent from the start), but to most people it SEEMED sudden and a "Black Swan" out of the blue (is that too many color allusions?). And over, say, 12 years, gold went from $35/oz to $850. That was not the bullion and central banks' plan, but since they make the rules and print the paper/digital currency, and own the politicians (and we allow all this), they were able to recover, re-write new rules in their favor, and get back on the gravy train (our current, aging, decrepit gravy train).
There are some big picture things I'm sure of, but I'm agnostic as to your detailed questions:
But back to the original point - how do you see the "gold moving from west to east" story playing out? Will it end in a COMEX default and all the gold vanishing over the weekend? Or will it just result in premiums going up, and then prices going up, and then prices stabilizing at higher levels? If you were in charge of the bullion banks, which would you pick?
In my post above (#35) I meant to introduce into the conversation some of the "wild cards" hiding in the deck somewhere. My point being: I'm 100% sure the end results will not be Plan A, B or even C in the bullion banks' playbook. I'm aware enough of my limitations to know I can't even come close to predicting the details of what will happen, but the movers and shakers at the bullion banks don't seem to be hindered by any such awareness of their limits and fallibility. And like all arrogant tyrants, their fall will catch them like "a thief in the night." At least, that's what I think.
"Welcome to the Hunger Games. And may the odds be ever in your favor."
Tom-
Sure, I can buy the basic theory that things won't die as a result of something that's easily seen coming. Eurozone is having its biggest problem from those migrants, which certainly nobody saw coming one year ago, and nobody was prepared to handle.
And that would suggest the COMEX won't die from a slow transfer of gold from west to east. Everyone sees that coming. Price will simply adjust and life will go on. It will be something else.
Please read "Fiat Money Inflation in France" as it answers all the questions asked in this thread. Helicopter money doesn't work. Fiat money is doomed by politicians.