1. Game Over –Leaving theDollar
(and other fiat currencies)
John Hayes
Gainesville, FL
January, 2013

2.  Raised in Peterborough, Ontario
 Moved to the US in 1996
 Began trading commodities „98 (FOREX, PM‟s)
 From 2000 – 2012 – Director of Marketing and
Business Development for a global engineering
firm (continued trading)
 After selling company, on sabbatical, still
trading
 Continuing to pursue my MBA from the school
of hard-knocks!
“You can ignore reality, but you can‟t ignore the consequences of ignoring reality” - Ayn
Rand 2

3. “You always have to ask the
question why is it that central
banks hold so much gold which
earns them no interest and which
costs them money to store. The
answer is obvious: they consider
it of significant value, and indeed
they consider it the ultimate
means of payment, one which
does not require any form of
endorsement.”

4. "In the absence of the gold standard, there is
no way to protect savings from confiscation
through inflation. ... This is the shabby secret
of the welfare statists' tirades against gold.
Deficit spending is simply a scheme for the
confiscation of wealth. Gold stands in the
way of this insidious process. It stands as a
protector of property rights. If one grasps this,
one has no difficulty in understanding the
statists' antagonism toward the gold
standard.”

5.  Brief History of Gold – Very Brief
 Commodity vs. Currency
 Present Gold Market
 Future (Not just my opinion)
 Strategy

6. Money will become whatever the people
accept as the medium of exchange and when
government fails to provide that medium, they
create their own fiat system.
“I believe that banking institutions are more dangerous to our liberties than standing armies.” –
Thomas Jefferson

7.  Gold has performed the task of a currency, or trade-able
form of exchange since the 5th millennia BC
 1) Gold is the money of kings
 2) Silver is the money of the working class
 3) Barter is the money of peasants, but
 4) Debt is the money of slaves.
 Gold‟s functionality lent itself to this role:
 Rarity
 Malleable
 Density
 Portability

8.  First and foremost a commodity in all respects. It must
be mined, refined and defined.
(Can‟t be “wished” into existence)
 Role as a currency is not unlike the Government fiat
currencies - $, ¢, £, ¥, €, ₠
 Value is based on what others are willing to exchange
for it.
 Portable store of wealth
 It is the canary in the coal mine (30yr bond, M3)
 What gold is NOT (or Definition in reverse):
 An investment (it offers no guaranteed financial return – 0%
interest, no dividends and it costs money to store it)
 A debt (it is unencumbered by any government or debt facility)
 Cure for economic malfeasance (A Gold standard will not cure
nor prevent governments from making bad decisions)

9. Examples of paper
“wealth” at the hands
of government – these
all within 100 years

10.  What is a Dollar? (or a Loonie, Yen, Pound or
Franc)
 1913 – 1933 – $20 was equal to 1oz of Gold (fully
convertible – or $1 = 1/20oz of Gold)
 1933 – 1944 - $35 was equal to 1oz of Gold (not
convertible)
 1944 – 1971 - $42 was equal to 1oz of Gold (only
countries allowed to redeem US Treasuries for Gold
 1971 – Nixon closes the Gold window and the $ is
worth a wing and a prayer
 By 1980 – Gold is worth >$800 ($1 = 1/800 oz)
 Current price of gold $1675 ($1 = 1/1675 oz)
"...The man that controls Britain‟s money supply controls the British Empire,
and I control the British money supply.” - Nathan Rothschild

12. Something odd
1996
∨ ∨

17.  Gibson Paradox and the price of Gold – The
price of gold is inversely related to the interest
rate of money. As interest rates rise due to a
rising demand for sound money, the price of
gold will decline and vice versa. L. Sumners
 What was more important than the $40
Billion/month ad nausea from the FED?
 Locking interest rates to essentially 0% through 2015
 From a LIRP to NIRP (very Gold friendly)

18.  This is the total number of tonnes of gold
mined since the beginning of civilization.
 .. all of which would fit into a crate of 20 metres
cubed.

20. Bulk of global trading in gold and silver is conducted on the over-the-counter (OTC) market.
London is by far the largest global centre for OTC transactions followed by New York, Zurich,
and Tokyo.
Exchange-based trading has grown in recent years with Comex in New York and Tocom in
Tokyo generating most of the activity.
Annual world gold production 2 500 metric tonnes
1 metric tonne = 32,150.7466 troy ounces
2 500 tonnes = 80 million oz
80 million x $1700 = $136,000,000,000.00 Billion
U.S. is creating new paper at a rate 9 - 10 times faster (1.3T/136B = 10) – think annual deficit
Average daily volume of gold cleared on the London Bullion Market Association (LBMA) is
approximately 18 million oz ($32 B per day)
Annual gold mine production is cleared through the LBMA approximately
every 4.4 days
Is the price manipulated, or managed?
Yes (and not just in my opinion)
“You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist
down on the table) I will rout you out!” – President Andrew Jackson

21.  The Sellers
 Some Central Banks (The Fed, IMF, ECB, BIS)
 JP Morgan et al (a cartel?)
 Who are the buyers?
 Central Banks (the same group that was selling in „98 –
‟00)
 Some Institutional
 Large Funds
 The 1%
 The Chinese
 The Indians

22.  Short list of large Gold buyers
 Jean-Marie Eveillard - manages $60 billion
 John Embry – manages $10B (Big Gator Fan)
 John Paulson – Hedge Fund($25 billion)
 John Hathaway – Tocqueville PM ($2 billion)
 Felix Zulauf - Zulauf Asset Management
 Egon von Greyerz – Matterhorn Asset Management
 Caesar Bryan - Gabelli & Company ($33 billion)
 George Soros – Hedge Fund ($10 B)
 Bill Gross – PIMCO ($1 T)
 Warren Buffett - (yes even him – the Old Dog)

23.  Perhaps a glimpse
 There is an end game for all this – 2018 - 2020
 A mixed basket of currencies with Gold a major
component – perhaps as much as 20%
 At this point Gold ceases to trade – the price of Gold
will be fixed (applicable to later conversation)
 There will be inflation, deflation and hyperinflation,
much of this occurring simultaneously around the
world

24. Wealth is created by, and morally belongs to the
individual creator. As Rand observes, since “man
has to sustain his life by his own effort, the man who
has no right to the product of his effort has no
means to sustain his life. The man who produces
while others dispose of his product, is a slave.”

25.  Purchasing “Good Delivery Bars” from a
variety of sources – e.g. – Mints
 400 troy oz bars – current value - $710,000 US
 $10 M ≅ 14 GDB
 $100M ≅ 141 GDB
 ≅ 80 GDB = 1 metric tonne

26.  Storage – I think that is a moot point here!
 What about a currency – a la the Shawnee
 Good idea! (Go for it, but with caution – make a call)
 Native Americans have issued their own commemorative
coins.
 The Shawnee Tribe of the Indian Nations, which is a
Sovereign Nation (Oklahoma) began issuing
commemorative coins in 2002 and were the first Native
Americans to do so.
 The Five Dollar denomination coin contains 1/5 oz. or
6.22 grams of pure (99.9% fine) gold.
 Having been struck by the Perth Mint in Australia the
2002 Shawnee Proof Gold coins have a proof grade
quality. These coins are also legal tender within the
Shawnee reservation.

28.  Consider Gold based Savings Accounts (see
GoldMoney)
 Electronic forms may be just as effective (that will be
for others to determine)
 One other reason – you may be premature

29. Common Questions/Queries/Concerns
 The Precious Metals market is too volatile!
 There is no inflation!
 Gold/Silver aren‟t liquid, like cash!
 “You can‟t buy groceries with a Gold coin”
 (You can and you will probably only need Silver)
 Gold (Silver) are in a bubble
 Actually they have simply kept up with the paper
 They cost money to store
 True, Gibson‟s Paradox (low interest rates and you own PM‟s
outright – they are not encumbered

31. “You always have to ask the question why is
it that central banks hold so much gold which
earns them no interest and which costs them
money to store. The answer is obvious: they
consider it of significant value, and indeed
they consider it the ultimate means of
payment, one which does not require any
form of endorsement.”

34.  “You can ignore reality, but you can‟t ignore
the consequences of ignoring reality” - Ayn
Rand
 Wealth is created by, and morally belongs to the
individual creator. As Rand observes, since “man
has to sustain his life by his own effort, the man who
has no right to the product of his effort has no
means to sustain his life. The man who produces
while others dispose of his product, is a slave.”

35.  “I believe that banking institutions are more
dangerous to our liberties than standing armies.” –
Thomas Jefferson
 History records that the money changers have
used every form of abuse, intrigue, deceit, and
violent means possible to maintain their control
over governments by controlling money and its
issuance. -James Madison
 You are a den of vipers and thieves. I have
determined to rout you out, and by the Eternal,
(bringing his fist down on the table) I will rout
you out!

36.  Bulk of global trading in gold and silver is conducted on the over-the-counter (OTC)
market.
 London is by far the largest global centre for OTC transactions followed by New York,
Zurich, and Tokyo.
 Exchange-based trading has grown in recent years with Comex in New York and Tocom
in Tokyo generating most of the activity.
 Theaverage daily volume of gold and silver cleared at the London Bullion Market
Association (LBMA) in November 2008 was 18.3 million ounces (worth $13.9 billion) and
107.6 million ounces (worth $1.1 billion) respectively.
 This means that an amount equal to the annual gold mine production was cleared at the
LBMA every 4.4 days, and to the annual silver production every 6.2 days.[1].
 The Gold Anti-Trust Action Committee claims that clearing data substantially
understates the true amount of gold traded, due to the netting of trades in the calculation
of Clearing Statistics.[2] They claim the LBMA market is $5.4 trillion a year.[3]

40. How do you miss this opportunity?????

41.  Storage – I think that is a moot point here!
 What about a currency – a la the Shawnee
 Good idea! (Go for it, but with caution – make a call)
 Native Americans have issued their own commemorative
coins.
 The Shawnee Tribe of the Indian Nations, which is a
Sovereign Nation (Oklahoma) began issuing
commemorative coins in 2002 and were the first Native
Americans to do so.
 The Five Dollar denomination coin contains 1/5 oz. or
6.22 grams of pure (99.9% fine) gold.
 Having been struck by the Perth Mint in Australia the
2002 Shawnee Proof Gold coins are have a proof grade
quality. These coins are also legal tender within the
Shawnee reservation.

42.  As mentioned, Gold coins
 No collectables
 9999‟s purity minimum
 Wafers can be as good as coins due to larger volumes – 10oz,
100oz etc.
 Purchasing “Good Delivery Bars” from a variety of sources
– e.g. Mints
 400 troy oz bars – current value - $710,000 US

43. Avenues to Owning Gold
IMHO, at this stage (economically) there are few avenues left (think in
terms of savings);
 The physical acquisition of Gold (and Silver) Bullion
 Coins are best for Gold (Eagles, Maple Leafs, etc)
 Investing in Gold/Silver Mutual Funds (or ETF‟s)
 Caution here, these are probably not good long term
 The GDXJ (Gold Index of Junior Gold Miners)
 On an investment play – this may be the best >100% ROI in 12-
24 months
 Individual Gold Stocks – Goldcorp, Agnico Eagle