The only problem with your analysis is that gold has been up every year for the last eight years. That includes the 4.8% gain last year. Your analysis that the dollar is the best of a bad lot is correct however a paradigm shift is slowly occuring. Every fiat monetary system in history has failed and this one will also. One most keep in mind that just because something is certain doesnt mean it is imminent.
"He claims in this article that the Fed has thrown trillions into circulation; that is factually wrong, money velocity has not increased at all. The money is being "hoarded" by banks that received it. To define 'hoarding" , they are only making new loans to companies and individuals that actually qualify, not a bad thing at all."
You need to check the St, Louis Fed website and look at the recent Excess Reserves reporting. In fact it significantly dropped this week which indicates banks are taking money from deposit from the FED and loaning it out. This stupid idea that banks are hoarding cash is not logical. Banks have to pay depositers for their deposits. In addition they have overhead; leases on offices, salaries, taxes, etc..The banks will and are lending again thats what they do they are banks if they do not they go out of business. These things take time to happen. You mention velocity but do not mention the fact that the TED spread has dropped fromm 400 to below 90. The fact that LIBOR is down shows that risk tolerances are increasing. Look at the the Baltic Dry Index, Gold, the emerging markets stockmarkets have bottomed and turned up. Even Dr. Copper has shown that it has bottomed. These are all prelimenary indications that the next reflation cylce has begun.
Economic history has shown the trend towards inflation not deflation. Governments and Central Banks can create inflation 100% of the time if they want to. Money supply aggregates are increasing (inflation) and after we have transitioned through a time lag will be reflected in higher prices. The Baltic Dry Index, Oil, CRB have put in bottoms and we are already seeing higher lows on the charts. Patience grasshopper.
Poor Alan wrote an article on folding on gold back on 8 Dec 08 here on Seeking Alpha. In the meantime the gold price has continued to advance. I am now adding Mr. Brochstein to my list of reverse barometers. When he turns bullish on gold then I will think of selling.
On Feb 15 08:18 AM Alan Brochstein wrote:
> There's an old adage: Feed the pigs when they are at the trough...
The Economy And The Coming Collapse Of Bond Prices [View article]
What moron is going to hold a 10 year or 30 year treasury to maturity when we are in a negative real interest rate environment and the only path for rates is up?They get a capital loss in addition to a loss in purchasing power. People are panicking into US Treasury debt because of its perception as safe. I think this view is analogous to running out of a burning building towards a nuclear mushroom cloud.
The reason politicians do not discuss serious problems like oil imports, deficits, ongoing wars, etc...is that they do not want to disturb the child like fantasies of the american people. Due to two and four year election cycles there is no profit for the politician in bringing up problems that would require real pain to solve. That is not how one gets re-elected. Secondly why would you expect any of these people in government to have a solution? Have you ever had the misfortune of talking with some of these rumheads? Most of them have never done anything and never been anywhere and you look to them to solve serious problems. Good luck with that one. The US will continue to import oil and the percentage imported in relation to total use will increase until we can't do it anymore. Just like we will continue to borrow and spend until we cannot do it anymore. Once these behaviors are forced to change by the markets than there will serious readjustments that will negatively impact people who refused to deal with reality.
Crude Reality: How Long Can Oil Stay Down? [View article]
As usual no discussion about depletion. The IEA report cited that without substantial investment in new fields that world oil supply could decline 8% per year. In the short term you may be right. However depletion continues unabated and with investment being curtailed by lower prices it is just a matter ot time until demand exceeds supply and the price rises. No V you are correct but probably a U.
The Fed Is Not Monetizing U.S. Government Debt [View article]
"I don't write these articles for my health. I write them because I am passionate about these issues and feel that there is a disturbing misunderstanding with regards to our monetary system."
This may be true but you also write these articles on SA because it has over 600K readers and it is a cheap way to drive people to your website.
Why CNBC’s 'Gold Bubble in 2011' Prediction Is Nonsense [View article]
"Most of the economic indicators have been flashing positive, and things are getting better."
Yes the government produced economic indicators are showing some positive gains. That tends to happen when you throw trillions of dollars of borrowed money at an economy. I would not say that things are getting better for most people. We now have one in seven people on food stamps. There is no new innovation or technology that is going to lead to job growth sufficient to significantly lower the unemployment rate. In addition even with the slight increase in economic activity oil prices are nearing $90 per barrel and once they get over $100 (most likely by the second quarter of 2011) that is the end of your so called economic recovery. With rates already at zero and deficits over a trillion per year what are the braniacs going to do when the economy threatens to dip back into recession. Yes the gold price may decline but to say the secular gold bull is over is incorrect.
Gold 'Believers' Appear Distraught Over Dollar Strength [View article]
So this is personal for you? Please seek psychiatric help. Do you not understand the concept of a secular bull market. Most of you did when stocks were is a secular bull market from 1982-2000. Now because you have missed the majority of the move in gold you are getting some kind of schadenfreude from a correction in an asset class you did not have the foresight to buy when it was cheap. The political and economic conditions that have propelled gold from $250 and ounce in the late 1990's to where it is currently are still in place so I see this as nothing more than a correction. When the economic and political conditions change such that they are no longer conducive to a higher gold proice I will sell. That will probably when you will be on here proclaiming you are a buyer. But thats the way it is always is in every market.
Congress Considers Bailing Out Its Ethanol Mistakes [View article]
Good article and a warning for all of those out there that expect the federal government with Obama's now planned one trillion dollar stimulus to be anything execpt a honey pot for lobbyists and connceted corporations. Do people ever learn? Central economic planning has never worked and led to around 100 million people being killed last century until it finally collapsed on itself. Why does anyone think it will work here?
What does "National Energy Policy" mean exactly? If it means top down solutions from politicians in DC that are without portfolio when it comes to energy production count me out. The free market price discovery mechanism is working just fine. Please leave it alone.
Exactly, I see no discussion of the collapse in the rig count or the fact that injections into storage have been below the 5-year average for the last fifteen weeks straight. In addition because of the decline rates that many of these wells experience (anywhere from 50-90% the first year in many cases) there is actually a risk of over correction in price on the upside if we get a cold winter.
The commodity markets are bottoming due to the massive money pump going on worldwide. In addition the North American rig count is down over 50% in the last year so nat gas is heading higher not lower. Although the price of oil and gas do not necessarily influence the pipeline MLP's, for them its more about volumes, the positive sentiment should lift prices.
Yawn another fool who has learned nothing and forgotten nothing. Gold is the best performing asset for the last eight years. Every year we are told that gold has topped, it produces no income, it is a commodity, etc... ad infinitum. The fact is for over 5000 years gold has been a store of value. Look at the the Dow to gold ratio, it has went from around 40:1 to a recent 8:1 and will eventually get to 1:1. That will be the top for gold. I agree it will be volatile but I have been holding gold since 1998 and so far so good. I recently caught a video on the internet that showed people in Zimbabwe panning for a few grams of gold to buy bread for the day. The food sellers were not accepting dollars, euros or rand they were accepting gold.
What Is Going On With Gold? [View article]
This Is Just the Beginning [View article]
You need to check the St, Louis Fed website and look at the recent Excess Reserves reporting. In fact it significantly dropped this week which indicates banks are taking money from deposit from the FED and loaning it out. This stupid idea that banks are hoarding cash is not logical. Banks have to pay depositers for their deposits. In addition they have overhead; leases on offices, salaries, taxes, etc..The banks will and are lending again thats what they do they are banks if they do not they go out of business. These things take time to happen. You mention velocity but do not mention the fact that the TED spread has dropped fromm 400 to below 90. The fact that LIBOR is down shows that risk tolerances are increasing. Look at the the Baltic Dry Index, Gold, the emerging markets stockmarkets have bottomed and turned up. Even Dr. Copper has shown that it has bottomed. These are all prelimenary indications that the next reflation cylce has begun.
The End of Gold, Part Two [View article]
Major Investors Piling into Gold [View article]
On Feb 15 08:18 AM Alan Brochstein wrote:
> There's an old adage: Feed the pigs when they are at the trough...
The Economy And The Coming Collapse Of Bond Prices [View article]
Why Won't Policymakers Discuss Foreign Oil Imports? [View article]
The reason politicians do not discuss serious problems like oil imports, deficits, ongoing wars, etc...is that they do not want to disturb the child like fantasies of the american people. Due to two and four year election cycles there is no profit for the politician in bringing up problems that would require real pain to solve. That is not how one gets re-elected. Secondly why would you expect any of these people in government to have a solution? Have you ever had the misfortune of talking with some of these rumheads? Most of them have never done anything and never been anywhere and you look to them to solve serious problems. Good luck with that one. The US will continue to import oil and the percentage imported in relation to total use will increase until we can't do it anymore. Just like we will continue to borrow and spend until we cannot do it anymore. Once these behaviors are forced to change by the markets than there will serious readjustments that will negatively impact people who refused to deal with reality.
Crude Reality: How Long Can Oil Stay Down? [View article]
The Fed Is Not Monetizing U.S. Government Debt [View article]
This may be true but you also write these articles on SA because it has over 600K readers and it is a cheap way to drive people to your website.
Why CNBC’s 'Gold Bubble in 2011' Prediction Is Nonsense [View article]
Yes the government produced economic indicators are showing some positive gains. That tends to happen when you throw trillions of dollars of borrowed money at an economy. I would not say that things are getting better for most people. We now have one in seven people on food stamps. There is no new innovation or technology that is going to lead to job growth sufficient to significantly lower the unemployment rate. In addition even with the slight increase in economic activity oil prices are nearing $90 per barrel and once they get over $100 (most likely by the second quarter of 2011) that is the end of your so called economic recovery. With rates already at zero and deficits over a trillion per year what are the braniacs going to do when the economy threatens to dip back into recession. Yes the gold price may decline but to say the secular gold bull is over is incorrect.
Gold 'Believers' Appear Distraught Over Dollar Strength [View article]
Congress Considers Bailing Out Its Ethanol Mistakes [View article]
Natural Gas Is Between Two Walls [View article]
Natural Gas: Look Out Below [View article]
Nervous About MLPs [View article]
The Case Against Gold [View article]