Greetings

Thanks for looking in on a new blog.

 About 15 years ago, two anonymous Listserv members gave us lots of new paradigms for understanding the gold market, particularly its pricing and the pricing implications for a new monetary order. I speak of Another (paper will burn) and Friend of Another - FOA (freegold will emerge).

 They have a number of interesting students posting in the blogosphere who are focused on this or that A/FOA insight. None of them is sketching the emerging picture and none are interested in black gold, it's movements, or its collection into dark pools (analogous to dark pools of capital). This is especially odd, since both A/FOA were very interested in off-the-books transactions.

 There is, among gold fans generally, a common concern around the eventual repricing of gold. You hear numbers like $5,000 an ounce and higher. These repricing scenarios do not consider the allocation of black gold, nor do they consider the geopolitics of a repricing event. (A more basic problem, is that they forget to delink the "price of gold" from the futures market where it is set, more on which in another post). This represents one kind of problem.

 Attempts to speculatively price gold depend on different yardsticks and parameters. You see the gold/silver ratio, the gold/M1 ratio, the gold/GDP ratio, etc. You have people tell you that all the gold ever mined will fit into a certain sized swimming pool or a large room, or some such. But we do not actually know how much gold has been and is being mined, nor where the black gold is flowing, nor where it is stored (I'll give some spectacular illegal mining output projections in another post).

Our production models wildly undercount what is being produced. Our above-ground estimates impinge on state secrets. We have to be brave and confront the known unknowns.

 There is a second problem. The leading edge of FOA's readers are braced for the emergence of a new monetary order but they overdetermine the outcome as a freegold system (in which fiat and gold run on parallel pricing tracks). Some of them envision an orderly transition now in preparation (look at the gold reserves at the ECB). Others accept Another's apocalypse in which all paper burns either due to the laws of the market or because of a "nuclear option" (someone deploys gold backed currency first, causing an overnight revaluation of world currency and a freeze-up of paper trading).

 This blog proposes that FOA's students are probably correct in saying that central banks are preparing for a new international monetary regime and that this regimen may have a gold component. However, this is not necessarily a freegold solution and it will not necessarily bonus private collection, as we will see.