KDave

1947 Mexico Gold 50 Pesos   Received from @SVcollector,  a rather splendid 1947 Mexican specimen  - 37.5g to add to the stack. My compliments and thanks to both @CadmiumGreen and @trp for their wise words of advice.  

It does not matter how much silver is mined compared to gold in regards to the price of either metal. 

Worth noting at the time of creation of the sovereign (1816 Coinage act), £1 was 20 shillings.  Those weigh 5.6g each so 112g, less than a third of a troy pound.  And thats sterling silver, so lose 7.25% silver.  Silver was not legal tender for values above £2 as a result of the new coinage too, interesting for all the what is money debates.  Comparisons of gold to silver values through history fall apart as soon as you dig into detail.

Is it fair to compare a single sovereign to 16 oz of silver? This is very interesting if the case and explains the GSR. Silver then becomes seriously overvalued at the previous GSR lows, rather than seriously undervalued as is proclaimed by many today at our recent records.

I’ll try.
A Sovereign is/was already classed as £1/One Pound Sterling.
In a Pound of weight, there are 16ozs.
Historically £1/One Pound contained 16ozs of Silver
16 ozs of Silver should therefore buy £1/One Pound in Gold.
In today’s money a £1 Gold Sovereign is £350 ish and 1oz of (physical) Silver is £22. Manipulated paper prices not applying.
16 Silver Ozs @ £22 each is £352 = One Sovereign/£1/One Pound.
I’m not comparing one oz to one oz. Simply the fact that the historical ratio has remained the same in physical prices.
Just a bit of fun 

Also...
One pound (a Gold sov) in Silver (Ozs in a Pound) would be 16oz of silver.
£22 per oz of physical silver x 16 = £352 
£352 will just about buy a sovereign now.
So all the people who say silver is massively undervalued may be wrong??? It’s bang on what it always was. In £s Sterling that is 😉 

Just for ***** and giggles I went on the Bank of England interest calculator. It's a fun thing that. It goes back to medieval days so you can pretend how much you would have got paid in your current salary value back whenever. https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator
Then I thought... if £1 was 1 sovereign back in the day, I'll pick a random date and work back from there to see how much i would have if i had those same sovs now.
Take £1000 now. Transport its fiat value back to, say, 1914 (before sovs were 'withdrawn'). You would have got just under 9 sovs for that.
Now, take those 9 sovs and time machine it back to now and the combined value of them would be c.£3000 spot... 
So. Could gold be 3x overvalued right now! Could it really be worth.... a third of current prices (£480)... therefore hitting pretty close to Wonglers crash claim (£400).
I jest again.

1887 Quintuple Sovereign from HGM

Did you honestly think the bears had gone into hibernation? That $40 drop will become a $400 drop very soon indeed and now today you can hear a pin drop on this thread after two days of loud music, keep watching!😁  

2019 Gold £100 Hundred Pound Britannia 1 One Ounce Oriental Border Bullion Coin Elizabeth II 5000 Mintage - Reverse
This is the first of this version we have seen.

A big thank you to @coppernut for these two lovely bars😉

Strength and Honour. Army folk know what that actually means and it aint traders.

I am not selling any gold but I have genuinely enjoyed this thread for its arguments/discussion, I don't think I have seen monetary theory discussed this in depth anywhere else on the forum its good stuff.
 

I am not selling any gold but I have genuinely enjoyed this thread for its arguments/discussion, I don't think I have seen monetary theory discussed this in depth anywhere else on the forum its good stuff.
 

If Wonga said he was Mark Carney what difference would it make.
Perhaps a bad example, if it was Mark Carney you would know without doubt that the prediction was wrong. 
 

Here again I will help people out to understand 
 
 

In the Morning I get a Taxi to work and pay the driver £20, the Taxi driver goes for breakfast and tips £20 to the waitress, the waitress goes to the hairdresser lunch time and tips the hairdresser £20, the hairdresser goes out to lunch and tips the waiter £20, the waiter goes to the Barber's and tips the Barber £20, the Barber has the shop windows cleaned and pays £20, the window cleaner goes for dinner and tips the waiter £20, the waiter gets a Taxi home and pays the driver £20, there has been £160 of GDP created, there has been a velocity of x 8 on the £20, however there is still only the original Currency of £20, no additional Currency whatsoever has been created, therefore Inflation is exactly the same at the end of the Day as when the Day began because you simply can not have Inflation unless the Currency supply is increased because the Currency supply simply does not  exist to support any price increases whatsoever.    
Not only has no Inflation been created, no wealth has been created either, GDP is a complete Hoax, Currency Velocity is a Hoax, the entire World of financial Academia is a Hoax!
I notice there is a Farmer here, I bet he understands this far better than any Financial Academic who has been brain washed with complete and utter non sense from the Hoax financial Academic world of lies! 😁

The argument being put forward by the Wonger is that prices cannot rise until and unless there is more currency to support those higher prices. 
So if the amount of currency in circulation is fixed, if one price goes up, others must go down. 
He ignores money velocity.

Following the 2007/08 financial crisis the Fed went into several rounds of QE and dropped interest rates. 
Gold is real money and as such is a zero risk asset. Gold is gold - it has no liabilities. When you hold physical gold it cannot be defaulted on. A company might go bust and its shares become worthless, a government or corporation might default on their bonds - but gold is gold.

If you listen to Ned Naylor-Layland, who in my estimation is a proper gold/silver expert, he is at pains to point out that the price of gold is determined by what fiat and bonds are worth and what the market thinks they will be worth in the future. So what we are looking at is purchasing power and real interest rates - the difference between the headline interest rate and inflation.

The falling interest rates following the financial crisis and the spectre of massive QE indicated to the market that real interest rates would be very low - as a result the price of gold and silver went up.

As it was, the published inflation rates did not shoot up. What happened was this new currency from QE did not enter the general circulation. It sat on and propped up bank balance sheets - it did not appear on Main Street. There wasn't more cash in circulation and prices did not go up.
What happened in effect was this new money sat on balance sheets and was not lent out - it had zero velocity. If cash is hidden under the mattress and never comes out it might as well not exist. If people hoard and do not spend their cash, it might as well not exist. It has zero velocity, it cannot contribute to the economy or cause inflation. There is often an assumption that money velocity is a constant and so more cash pushed out will lead to more inflation and less cash will result in deflation. This is not necessarily the case. 

Currency that is circulating 10 x a day purchases 10 x as much as the same amount of currency that circulates once a day. 
Prices can go up with the same amount of currency if its velocity is higher.
When people stop spending, you may well see prices start to fall as sellers drop their prices. No-one is buying - their cash is under the mattress. This is not because there is less currency in the system, it is because the velocity of money has dropped. 
There is a view that there is a dollar shortage. That a large amount of debt held in the world is denominated in dollars. A lot of this is in the Euro-Dollar system. Dollars created outside the US, outside the control of the Fed - some people say this is what is the actual world reserve currency. How many Euro dollars there are is not clear but estimates i have heard are around $12 trillion. The thesis is there are not enough dollars to pay this off and as borrowers go chasing dollars, the value of the dollar will get bought up and up against other currencies. This is the Dollar Milk Shake Theory of Brent Johnson. 

Now it does seem there is a shortage of dollars - but what will happen is foreigners will sell dollar denominated assets such as Treasuries. The demand for Treasuries outside the US, which is low as it is, will evaporate. US stocks held by foreigners will get sold off. All to raise dollars. These dollars all end up back in the US - more currency in circulation which will likely end up causing inflation. US stocks and other bonds sold off. The world will divest dollar assets and de-dollarisation will accelerate. There is already increasing real world de-dollarisation going on, where trade does not involve US entities, payments will avoids the dollar. 
The outcome is not good for the US. Products and services in the US would become overpriced. As USD assets are divested and dollars come back home, inflation takes off. Steps would be needed to devalue the dollar. To fill the dollar shortage. The Fed is and would do currency swaps - putting dollars out into the world in exchange for other currencies. What is different from 2008 is that currency is not just sitting on bank balance sheets. It is being paid out to people. The US Treasury has a cash account at the Fed which normally had around $400 billion in - this balance recently grew to $1.45 billion - it is now being spent. It sits there to be spent into the circulation. It is likely this account will be topped up. This will cause inflation as we see the US economy rapidly shrinking - GDP falling heavily. The US government is splashing the cash in support cheques - a helicopter money - i expect there will be more splashing with the recent riots. More cash in circulation with falling GDP. This is by definition - inflation.
There are deflationary and inflationary forces in play. Central banks really, really hate deflation. In all this turmoil there is real money. i go with real money.
There is another factor which of course will not get officially discussed and that is the missing money - the money stolen away. The Missing $21 trillion that the US Department of Defence and the Department of Housing and Urban Development cannot account for. Catherine Austin Fitts talks about this a lot.  i have heard there is another $10 trillion missing. There is probably more cash that has been sequestered. At some point this will reappear - it will enter the system. When and how is anyone's guess. It is not going to sit in the Cayman Islands or Jersey or wherever forever. That is a lot of wongo to reappear. It would be hard for that not to be inflationary.  

If Wonga said he was Mark Carney what difference would it make.
Perhaps a bad example, if it was Mark Carney you would know without doubt that the prediction was wrong. 
 

I believe people are using furlough money to pay off their debt. It could be propaganda but if you are basically unemployed (furlough) and have no promise of a job in a few months time you are not going to be living large, you would want to reduce your liabilities. I said a few months ago that the stimulus checks were not inflationary because they are at best replacing what liquidity has been lost, it looks now in reality that they are being used to further reduce liquidity as people pay off debt - destroying currency - and not spending the money like they did their normal wages - this is very deflationary.

If Wonga said he was Mark Carney what difference would it make.
Perhaps a bad example, if it was Mark Carney you would know without doubt that the prediction was wrong. 
 

If Wonga said he was Mark Carney what difference would it make.
Perhaps a bad example, if it was Mark Carney you would know without doubt that the prediction was wrong. 
 

If Wonga said he was Mark Carney what difference would it make.
Perhaps a bad example, if it was Mark Carney you would know without doubt that the prediction was wrong. 
 

I believe people are using furlough money to pay off their debt. It could be propaganda but if you are basically unemployed (furlough) and have no promise of a job in a few months time you are not going to be living large, you would want to reduce your liabilities. I said a few months ago that the stimulus checks were not inflationary because they are at best replacing what liquidity has been lost, it looks now in reality that they are being used to further reduce liquidity as people pay off debt - destroying currency - and not spending the money like they did their normal wages - this is very deflationary.