Quote from: netrin on September 19, 2011, 02:47:40 PM

However, as has been pointed out various times in this thread, higher aggregates will evaporate in our economy, which was not possible in the Axis economies. Paper money just kept piling up.

Quote from: cypherdoc on September 19, 2011, 04:24:49 PM

those paper marks were not debt and could never be cleared from the economy thru default. USD debt however is vaporizing as we speak decreasing the amt of virtual USD's.

Sure, if debt were simply debt. Securitization has changed debt into a form of money - it now functions as such.

There is a difference between debt that is simply extended credit which can be withdrawn, and debt that is effectively monetized by market actions. The Fed's printing is really just a formality, so it doesn't matter whether it continues or not (although pressure will persist for it to proceed).

Quote from: cypherdoc on September 19, 2011, 04:24:49 PM

gold bulls are making a big deal about Operation Twist and how the extra liquidity is going to drive gold much much higher.

Cause and effect are reversed here. Again, the functional monetization has already taken place. Gold is not dependent upon the formality of the Fed introducing monetization to maintain liquidity; everything is already in place for gold's upward revaluation. The base monetary inflation is reactive and simply locks that fate in.

Quote from: cypherdoc on September 19, 2011, 04:24:49 PM

also the famous Volcker quote that the CB's failed back in the 1970's to "suppress the price of gold" as being a mistake. why can't the gold bulls take that statement for what it is? what it is is a lesson to CB's to never let that happen again b/c they lost a lot of money in the HT of the 1970's. this time they won't let it happen again. what ever happened to the accepted theory that the Fed used the gold price as a warning sign that their profligate activities were getting out of hand? everyone assumes they've forgotten that tenet but i say they haven't.

The quote in question from February 12th, 1973 is available at Jesse's. It is from Volcker's memoirs.

"Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake." Paul Volcker, Nikkei Weekly 2004

Note the bolded section in the full sentence. When taken in context, it suggests a controlled appreciation in gold's price, not an all out assault to keep it down. Many held US dollars because they were conveniently convertible to gold, much like Perth Mint certificates are today. At that time, gold was still set at a fixed rate in relation to the dollar, so the same trick of severing the connection is not available this time around.

What happened after the dollar was no longer directly backed by gold? Demand for gold via dollar convertibility, now being viewed by other nations as unreliable, shifted to direct ownership of gold.

As Jesse states in the Volcker post linked above: "The banks love to whack gold and silver prior to a market operation. This way if the metals rally, they have less opportunity to break out and run even higher."

By running the price down prior to revealing QE3/OT/Flood-the-world-with-snakeoil, gold and silver will simply run up to resistance at prior record highs instead of hitting new ones. Subsequently, their rise will continue, but it won't be with as many participants as it almost certainly would've been if gold were nuzzling its peak when the banks let loose. Instead, many will be surprised and in disbelief that the price could continue to rise, then hesistant to re-enter for fear of another top. That's the systematic "intervention in gold sales to prevent a steep rise in the price of gold" in action.

It is good to keep in mind that commodity trading firms did not merge with the major banks until after the gold bull in the 1970s. Having these trading houses under their wing, the bullion banks now stand to gain from gold appreciation rather than be raked across the coals.

The question has been posed before, but wasn't answered: if gov't has the power to permanently maintain a low price in gold, why did it rise at all? In fact, why do these crises even occur?

Other than that, I agree with your and netrin's assessment. Also, gold will be sold - but with dollars unreliable as a store of wealth (again), that (massive amount of) capital will flow into gold.

As for how things will unfold - a spike in gold's (and silver's) price to entice selling (the cure for high prices is high prices) prior to futures delivery deadline at the end of the month, followed by another violent smash down at the beginning of October. The same will repeat after options expiration in October - a large spike rise in gold's price during the latter half of October.

Finally, the debt crisis in Europe will be proclaimed "solved" and the pols will pat each other on the back while the system continues to crumble under their feet. Regardless of the fact that the same pattern arose in 2008, this is very apparent from everything but price action. Use all the tools at your disposal when it comes to gold, or resort to running blind.

The gold price analysis I'm describing has already been explained in detail; cypherdoc, maybe you could post your most clearly explained analysis to make assessing the accuracy of differing methods easier to follow.