Greg Weston

Expecting Epic Gains in Gold Miners

Sorry people, the money supply growth all occured 1993-2006.

Expecting Epic Gains in Gold Miners

bot: banks AND borrowers need to cooperate with the Fed if the collapse in the money supply is to be corrected. Right now they are not. Consumers and businesses are being crushed with record levels of debt, and many, perhaps even most, financial entities are insolvent if their assets are marked to market.

Japan has done everything it could to fix its deflationary spiral, but failed. The Nikkei and nominal land prices are well below levels from the early 1980's.

It is certainly possible, in theory, that we will see an inflationary overreaction to the current inflation. That's why I am short gold via GLD puts rather than outright shorts: my downside is limited.

Nonetheless I think this is very unlikely. Japan 1990-2008 is not the only example of prolonged deflation BTW, this happened to the US during the great depression as well as several times between 1865 and 1914.

Finally, even if deflation is not as bad as I fear, a return to the low stable inflation of 1984-2000 would still be horrible for gold.

Expecting Epic Gains in Gold Miners

Hal confirms the stereotype of goldbugs as Rush Limbaugh-listening nuts ranting and raving about "Marxism."

Buy and hold? Well if you had done that in 1980, you only would have had to wait 28 years to make your money back.

See you in 2036 Hal. In the meantime more rational investors will be buying companies that produce and sell goods and services for a profit. Your metal will sit in you backyard bomb shelter collecting dust while normal investors will enjoy reaping dividends and capital gains.

Gold Miners: Amazingly Cheap

If "Fed money is flooding the market" then why is it so hard to get a mortgage or business loan?

The US real estate market and stock markets have lost a combined $8-$12 trillion. Leverage is collapsing. This means a vastly smaller money supply. Which means fewer dollars chasing the same amount of gold (and silver, oil, corn, etc) leading to falling prices.

I would not be surprised to see gold return to $400-450 range.

Gold Miners: Amazingly Cheap

The second of 2 SA articles today pumping gold that ignore deflation.

For an overview see this article by a former gold bull:
globaleconomicanalysis...

Even better, look at the rise in the dollar and the fall in every single other commodity.

BTW India is the biggest buyer of consumer gold, and is now deeper in economic crises that the US.

Expecting Epic Gains in Gold Miners

Another article pumping gold that doesn't mention that the current worldwide deflation.

An overview from January that has been proved right:

globaleconomicanalysis...