Category Archives: Gold

The Debut of The Mint Money Supply Digest

5/3/2013 Portland, Oregon – Pop in your mints…

Today at The Mint we are launching The Mint Money Supply Digest.  Longsuffering readers of The Mint will recall that we launched a now defunct service known as the “72 Hour Call” which was an attempt to predict the future direction of a specific trade three days out.  After roughly 63 attempts, of which we were batting .524 (correct 52.4% of the time) we decided that the short term call was a fool’s game best left to high frequency traders and those with insider information.

However, the 72 Hour Call exercise was not in vain, rather, what it revealed was that while our Key Indicators (listed below), when taken together, revealed no reliable and/or actionable data with regards to short term trades.  Over time, however, the Key Indicators have proven extremely helpful in projecting longer term trends which tend to underpin the S&P 500 in particular and US equity indices in general.

Before we go further, we must give credit to both Lee Adler at the Wall Street Examiner and Greg Guenther of the Daily Reckoning’s Rude Awakening for their brilliant coverage of the frequent gyrations in the financial markets.  If you need information which is actionable on a shorter time horizon, we highly recommend following their insights.

The intent of The Mint Money Supply Digest is to provide insight via the observation of changes in the trend of our Key Indicators as to the direction of one simple yet critically important trend.

The simple trend is that of the money supply in terms of US dollars.  The goal of the monetary stimulus every central bank on the planet has undertaken to some degree or another over the past three to four years has been to simply increase the money supply and hope for the best.

Graph of Normalized DJIA and Gold assets classes vs. M1, M2, and Federal Funds Rate measures
Graph of normalized DJIA and Gold assets classes vs. M1, M2, and Federal Funds Rate measures

The strategy is a recipe for disaster, as we have explored in depth both here at The Mint and in our eBook series “Why what we use as Money Matters.”  The goal of The Mint Money Supply Digest is to keep our readers informed as to the trend of the Money Supply in terms of US dollars in an effort to keep you ahead of the curve when the disasters (for there will be a series of them) occur.

The disasters will come in one of two flavors.  The first flavor, which we will call vanilla for the moment, takes the form of the increases in the money supply begin to take hold to the point where inflationary expectations by a majority of the actors in the world economy who use dollars or dollar proxies (currencies and debt instruments which are pegged, directly or indirectly, to the US dollar) in trade become embedded to the point where inflation in consumer prices sparks a level of demand in consumer goods which quickly outstrips supplies of such goods.  The vanilla disaster is a mouthful, and it is where the trend is gently heading today.

The second flavor, the disaster which is unlikely in the short term save the appearance of black swan type events, we will call the chocolate variety.  The chocolate variety of disaster is simple, it takes the form of an unmitigated collapse in the money supply similar to what the world experienced in 2007 (which most people realized was occurring in 2008).  Were this to occur, it is time to get all chips off of the table.  Fortunately, our Key Indicators should give us roughly three to four years of advance warning of a full blow chocolate disaster taking place (barring the unpredictable, or black swan event, as it were).

As you can see, while the chocolate disaster is to be feared above all, it will be easier to prepare for given the lead time in the data.  The vanilla disaster, which is currently underway to some extent, will be somewhat more difficult to pinpoint in terms of timing but will likely have a lead time of roughly two to three months in which to take action.

Our bias, then, at the outset of The Mint Money Supply Digest, is to be on the lookout for the vanilla disaster while gauging, via the trends in our Key Indicators, just how much chocolate is mixed into the swirl which is the combined disaster that is slowly unfolding in US dollar land.

As a logical offshoot of our analysis, we keep an eye on something we call the “Monetary Premium,” which is our term for what most people simply refer to as money.  In our worldview, money does not exist in the tangible way that most people assume it does.  Rather, the concept of money comes into being when people begin to attach the attributes of money to something which gives that something (usually one of our Key Indicators) a premium above and beyond what normal market conditions and that special “something’s” physical or ethereal composition might otherwise dictate.

This increase in relative value of that special “something” is what we refer to as the Monetary Premium, and it is important, for a big part of making money is accurately identifying not where the monetary premium is, such as the US dollar, but in where it is gravitating towards, such as gold, Bitcoins, or sea shells.

With the preamble out of the way, we hope to keep the Digests as simple and sweet as a cone on a hot summer’s day.

The Mint Money Supply Digest for May 3, 2013

Today the swirl of disasters continues to tend towards the vanilla variety.  Jobless claims continued their positive trend and the unemployment rate reported by the BLS came down a notch to 7.5%.  This is good news and bad news.  Good news in that more people have jobs, and bad news in that every tick down in Unemployment moves the world closer to the day where the Federal Reserve is likely to turn the switch on their monetary Mega maid, their Quantitative easing programs, from suck to blow.  That day is still far off, however.

Today’s jobs report, coupled with the ECB’s dovish meeting announcements yesterday (they are throwing in the towel, albeit in slow motion, on austerity) and the BOJ’s Turbo Kids monetary strategy for an aging population are all buoying the money supply to counteract the unmitigated, innavigable disaster that is the world economy.  An economy that is desperately trying to reset itself without the benefit of knowing who is really solvent.

The vanilla disaster is still winning.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 3, 2013

Copper Price per Lb: $3.28
Oil Price per Barrel:  $95.68
Corn Price per Bushel:  $6.99
10 Yr US Treasury Bond:  1.73%
Mt Gox Bitcoin price in US:  $91.78
FED Target Rate:  0.14%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,468 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.5%
Inflation Rate (CPI):  -0.2%
Dow Jones Industrial Average:  14,987
M1 Monetary Base:  $2,565,500,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,571,400,000,000

Silver bullion storage options in Singapore now available at Bullionvault.com

The following is a brief public service announcement from The Mint.  Our affiliate, BullionVault.com, is now offering silver bullion purchase and storage services in Singapore.  This is great news for a variety of reasons.

First, silver has taken a significant drop in price over the past month.  While there is rarely a bad entry point into the precious metals market given that the fundamental debasement of every currency on the planet is ongoing, the past month has offered a unique opportunity to stock up at the lowest prices of the year.

Second, Singapore is one of the safest countries on the planet in terms of banking sector fundamentals, and the country’s competitive advantage is its friendliness to foreign investment and intolerance of corruption.  What better place to store your precious metals.

Third, Singapore is outside of the reach of bankrupt western democracies, which makes it unlikely that gold or silver stored there would be confiscated.

You can even make gold and silver purchases and sales on the go using BullionVault.com‘s convenient iPhone and Android apps.

BullionVault gives you all of the benefits of owning precious metals with the comfort knowing that the security experts at Brinks Global Services are keeping it safe and accessible when you need it.

What could be better?

 

On Rumors that Zimbabwe will officially adopt the Bitcoin

4/16/2013 Portland, Oregon – Pop in your mints…

Much has occurred since our last correspondence.  First, tragically, another act of terrorism has rocked the land of the free.  Our thoughts and prayers go out to all affected.  Once again, we are reminded of Robert Kennedy’s speech on the menace of violence.  For those who have never heard it, it is well worth a listen.

Source IMF via the Money Game.
Source IMF via the MoneyGame

Well before the twin blasts interrupted a peaceful Boston afternoon, two of our key indicators and our investment of choice here at The Mint, silver, took an unprecedented bath.

No, the data below on both the Bitcoin and Gold price are not typos.  As a Goldman Report put it:  “There are weeks when decades happen” or something to that effect, with regards to the action in the gold markets.

Essentially, 500 tonnes of gold were sold in the most recent selloff.  Where it will come from or whether or not it will actually be delivered, nobody knows.  It is certainly fodder for those who claim these markets are manipulated.  Even so, there is no divine law as to what the price of things in US dollars should be.  As such, those involved in the trade must accept their random fate, no matter how unjust it feels.

The Bitcoin somehow found its footing around $65 USD after crashing down to the canvas from $260.

However, the amazing, or perhaps not so amazing, if you have read our most recent eBook, part of the story is that it is still trading around $65 USD.  This is an amazing commentary on the state of national currencies.  How long can the central bank issued national currencies compete when a lifeless logarithm is doing their job better than they ever could?

Bitcoins: What they are and how to use them
Bitcoins: What they are and how to use them

We, along with the rest of the Bitcoin community, have been developing some innovative ideas about how to make Bitcoins more accessible to the general public.  If you have $150,000 and care to help us launch the initiative more quickly (as an investor, naturally, this is not a charitable endeavor, at least, that is not the intention!) please email us for more information.  You could significantly reduce our launch time in what will soon be a highly lucrative and competitive market:  Building the Bitcoin infrastructure.

Perhaps our seed capital will come from none other than Zimbabwe.  Those who have followed currency matters will recall that just five years ago Zimbabwe gave the world a rare glimpse of hyperinflation and one trillion dollar bill.  In the now infamous words of Gideon Gono, Governor of the Reserve Bank of Zimbabwe:

“I’ve been condemned by traditional economists who said that printing money is responsible for inflation. Out of the necessity to exist, to ensure my people survive, I had to find myself printing money. I found myself doing extraordinary things that aren’t in the textbooks. Then the IMF asked the U.S. to please print money. I began to see the whole world now in a mode of practicing what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.”

In a page that has since been removed from CNN’s ireport {SEE UPDATE BELOW}, we saw a rumor that Zimbabwe was poised to adopt the Bitcoin as its official currency.  Perhaps Mr. Gono got a hold of our book?

{UPDATE 4/17/2013: The page has been updated and can be seen here.  It now appears that Zimbabwe rumor is now official, though unverified by CNN.}

Meanwhile, as Bitcoin, Gold, Silver, and Oil crash, the monetary measures continue to spiral out of control.  There are some big naked shorts out there, and Mr. Bernanke may, for a finale as Fed Chairman, borrow a page from Mr. Gono’s playbook circa 2009 in an attempt to cover them.  Given the IMF’s global growth forecast, we deem it a virtual certainty.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 16, 2013

Copper Price per Lb: $3.44
Oil Price per Barrel:  $88.97
Corn Price per Bushel:  $6.63
10 Yr US Treasury Bond:  1.72%
Mt Gox Bitcoin price in US:  $68.00
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,374 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  -0.2%
Dow Jones Industrial Average:  14,757
M1 Monetary Base:  $2,655,000,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,636,100,000,000

Jobs, Gold, and Bitcoins

4/5/2013 Portland, Oregon – Pop in your mints…

Today’s BLS jobs report was seen as an unmitigated disaster.  This should give the Federal Reserve the cover they need to turn Japanese with regards to their QE program (the BOJ came out with a QE program that is roughly 30%! of GDP over a year, by way of comparison, the FED has pumped out 15% of GDP in 5 years).

Bitcoins, gold, and silver jumped.  The management of what the world calls currencies is heading for the exits, and from the looks of things, so are many Dollar, Yen, and Euro holders.

Don’t bother to turn off the light or lock the doors, just get the heck out.  A four alarm fire coupled with an earthquake is on the verge of breaking out in the currency markets.  The monetary premium is looking for something to affix itself to, and it will trample many an asset class in search of it.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 5, 2013

Copper Price per Lb: $3.38
Oil Price per Barrel:  $92.70
Corn Price per Bushel:  $6.29
10 Yr US Treasury Bond:  1.69%
Mt Gox Bitcoin price in US:  $142.88
FED Target Rate:  0.14%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,582 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,565
M1 Monetary Base:  $2,534,800,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,501,300,000,000

 

Pacioli’s Gift or Bernanke’s Curse? is Now Available! and thoughts on today’s flight to safety

3/28/2013 Portland, Oregon – Pop in your mints…

At long last, the much anticipated fifth volume in our “Why what we use as Money Matters” series is available in on Amazon’s Kindle and over at Smash words.com for your immediate reading pleasure.

Pacioli's Gift or Bernanke's Curse?
Pacioli’s Gift or Bernanke’s Curse?

The volume has a hero, Luca Pacioli, the Franciscan Monk who not only taught mathematics to Leonardo Da Vinci but dissimenated to Western Civilization nothing short of an economic super power.

It also has a villian, Central Banking, born of the super powers of dual-entry accounting, it uses this super power against humanity and has become dual-entry accounting’s arch nemesis.

How will it end?  At this point, you’ll have to shell out $0.99 and a couple hours of your time to find out.  However, by doing so, you may end up changing the world for the better.  Not a bad return on investment!

We pray you will enjoy it.

Today, Bitcoins traded near $100 USD, silver and gold continued to mysteriously get crushed, and US stocks, perhaps more mysteriously, continued to defy gravity.  What does it mean?

The events in Cyprus have once again caused a sort of flight to safety.  Unfotunately, the flight to safety is a very crowded trade, and is causing the US Dollar to suffer from an unwelcome bout of strength, or potential deflation.

Bernanke and the Fed will never stand for it.  US Dollar strength cannot be tolerated, and will be swiftly dealth with.  As it is dealt with in the coming weeks, Bitcoins, gold, and silver will seem like a steal at today’s prices.

Then there is the matter of the brewing war in Persia, but speculation on that scenario must wait, for the Passover is at hand.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 28, 2013

Copper Price per Lb: $3.40
Oil Price per Barrel:  $97.23
Corn Price per Bushel:  $6.95
10 Yr US Treasury Bond:  1.85%
FED Target Rate:  0.12%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,597 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,579
M1 Monetary Base:  $2,425,500,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,547,600,000,000

The Presumption of a Monetary Constant

3/26/2013 Portland, Oregon – Pop in your mints…

Today, we offer a second course on the menu of our upcoming eBook release, Pacioli’s Gift vs. Bernanke’s Curse, it is a chapter on the importance of a monetary constant when employing the methods of dual entry accounting.  Enjoy!

The Presumption of a Monetary Constant

Luca Pacioli was first and foremost a mathematician.  He understood that mathematics relies upon certain constants to remain, well, constant in order for the calculations that depended upon them to be meaningful.  Whether or not Pacioli was conscious of the fact, implicit in his presentation of the methods of dual entry accounting is the assumption that the money in which he was directing merchants to keep their accounts on the basis of was sound money.  The use of the monetary unit as a unit of account implies that he understood that money was to the economic world what constants were to mathematical calculations.

Also implicit in his assumption was that the monetary units which were to be used as units of account on the accounting ledger contained a constant weight of silver or gold which existed in the natural world.  Silver and gold that had been hewn out of the ground and struck into coinage of a set weight and metallic alloy by the men at the old Zecca, the Mint of Venice in the Rialto district which preceded its famous successor was completed in 1545.  This was an important assumption, as dual entry accounting only works when the accounts balance.  By design, it implies that physical goods are in existence or are reasonably expected to come into existence and become available for exchange.

When Pacioli penned Summa, the Venetian Zecca was one of the largest and most reputable mints in the world.  This reputation was born in no small part of a scandal at the Zecca which consummated with the Doges, who ruled Venice at the time issuing a decree on the 11th of November, 1457 against then noted variations in the weight and purity of the gold and silver coins that the Mint at Venice.  As a result of this renewed commitment to monetary purity, the coins which circulated in Pacioli’s time and locale, the Silver Ducat, Soldo, Lira Sequin, and Gold Ducat, served as the standard of trade in the world known to Pacioli.

Given that the Venetian merchants could count on this sound monetary standard on which to base their accounts and, by extension, their choice of activities, their use of dual entry accounting not only benefited their own interests, but had the side effect of benefiting all who circulated and traded the Venetian coinage, whether or not they had mastered the art of dual entry accounting.

Luca_Pacioli_Gemaelde by Jacopo de' Barbari circa 1496
Summa de Arithmetica, Geometrica, Proportioni et Proportionale – Pacioli’s great gift to Western Civilization

For those who had mastered the art of dual entry accounting in this environment, the ability to properly recognize and record their transactions and to make sense of the results gave them a sort of super power.  This super power, the ability to recognize the value of transactions over longer time horizons and therefore direct investments over longer time horizons, was further refined by Pacioli, who employed the use of Arabic numerals and proposed a system of mercantile accounting that could apply uniformly to all trades and nations.

However, dual entry accounting, as mankind is now coming to understand, is a two-edged sword.  For dual entry accounting to work in favor of those who practice and/or rely upon it, the unit of account must hold a stable value.  The assumption of the relatively stable value of the monetary unit in relationship to the natural world is essential for interpreting the primary output of dual entry accounting, the profit or loss signal.  The stable unit of account is also essential when evaluating the worth and employment of items that are represented by entries to the balance sheet, upon which the profit or loss signal ultimately depends.

In short, the stability of the monetary unit of account was essential if dual entry was to be relied upon for sound decision-making.

For the Venetians, this requirement was met by virtue of their relatively stable monetary unit.  As such, the Venetian Mercantile class rose to dominate the Western world.  Indeed, with few notable exceptions, dual entry accounting has rendered an invaluable service to mankind and has allowed human progress to follow a generally upward trajectory in terms of material well-being ever since Pacioli made his bequeath to mankind.

As a stable currency enables the super powers of dual entry accounting to operate, an unstable currency, of which there are numerous examples in the largest economies in the world today, circa 2013, is its kryptonite.  A currency that does not have a relatively stable value over long time horizons, specifically the time horizons required for large-scale investments of capital to be planned with the precision required for them to be successful, serves to render the gift of Pacioli powerless.

In doing so, an unstable currency threatens to take mankind from the comfort of their large screen televisions, sofas, and smart phones, and throw them back into the dark ages, from which the world that Pacioli lived in had recently emerged.

In the irony of ironies, mankind has unwittingly made use of Pacioli’s gift to create the largest system of unstable currency that the world has ever known, the one that has operated for the past 100 years.  This disastrous invention is known as central banking, and it has quickly turned the world’s economy into an unmitigated catastrophe waiting to happen.

Stay tuned for the release and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 26, 2013

Copper Price per Lb: $3.45
Oil Price per Barrel:  $96.17
Corn Price per Bushel:  $7.30
10 Yr US Treasury Bond:  1.91%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,600 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,560
M1 Monetary Base:  $2,368,600,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,521,800,000,000

I’m Latin, I can’t Keep Calm! Adios Euros

3/21/2013 Portland, Oregon – Pop in your mints…

On Monday, we shared with you our friend Tom’s first hand experience and general impressions with the Spain’s currency conversion from pesetas to the Euro.

Adios Pesetas: A look back at adoption of the Euro in Spain

The conversion to the Euro, for most practical purposes was a long, drawn out process which took two years to implement, starting with the final exchange rate peg to the Euro and culminating with the coin and bill conversion which Tom so eloquently described.

Adios Euros!
Adios Euros!

Today, thanks to the prospect of forced bail ins, the term for a levy or tax (depending upon your preferred term for asset confiscation) such as the one proposed in Cyprus which would bail out the government and/or banks, there is a run on banks throughout Iberia.

The reason is that the preference for the bail in solutions are now popping out of central banker’s mouths like pop corn.  Even Ben Bernanke, slave master of the US currency, has uttered that it would be a possibility.

However, this is the twenty-first century, and bank runs aren’t what they used to be.  For one thing, banks now have instant access to all of the digital currency they could possibly want.  It is a simple ledger entry for the bank to replace the customer’s deposit with a Central Bank liability.

However, there is still the matter of cold, hard currency.  As the Spaniards begin to withdraw currency en masse, the bank branches are bound to run out of Euros.  Thanks to technology, holding Euros, either in physical or digital form, is no longer an absolute necessity and, at this point, it is extremely undesirable.

According to a report at Zerohedge.com, Spaniards are getting a crash course on Bitcoin adoption:  Spain Bitcoin run has started

As the monetary authorities are just now beginning to understand the practical implications o

Bienvenido real money!
Bienvenido real money!

f forced bail ins, the peoples of the world are not content to stand pat while their leaders sqauble over how much to confiscate from whom.  Thanks to digital solutions like the Bitcoin, Spaniards and people the world over are making a run on banks from the comfort of their own homes on their smart phones.  The Euro, which took two years to implement, may be largely replaced in commerce in a matter of weeks.

Even so, the Bitcoin has its limits, as wealth held digitally has a flight risk of its own.  Silver and other hard currencies do not have this problem, and the first stages of the next leg up in Silver and Gold is commencing in lockstep with the Bitcoin app downloads in Iberia.  Either way, it is a unanimous democratic process whose end result will be the Euro being voted off the continent.

While the monetary authorities prepare their familiar mantra, “Keep Calm and Carry on,” the response in Iberia is ringing back “I’m Latin, I can’t Keep Calm!”

Neither should you.  Here at The Mint, we have taken the step of accepting Bitcoins in exchange for silver coins to deal with this contingency.  We ship worldwide and guarantee your satisfaction.  If you are interested, please email us at the address below for a quote as we have yet to fully automate this process.

Adios Euros!  Bienvenido real money.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 21, 2013

Copper Price per Lb: $3.47
Oil Price per Barrel: $93.15
Corn Price per Bushel: $7.32
10 Yr US Treasury Bond: 1.94%
FED Target Rate: 0.15% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,614 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*: 0.25%
Unemployment Rate: 7.7%
Inflation Rate (CPI): 0.7%
Dow Jones Industrial Average: 14,512
M1 Monetary Base: $2,466,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base: $10,499,300,000,000