geotopia

Precious Metals’ Gleam Is Not Tarnished: When Will They Finally Bottom?

Gerdreflux is spot on, there is NO RECOVERY. It's all smoke and mirrors and is being presented in the false light that the government can generate wealth (which is really what we're talking about, right?!). The government can't make wealth, it can only spend it. Because of numerous conflicts of interest, when it gets in the business of trying to manufacture or create private services, it wastes it through inefficiencies. Because of the arbitrary way in which government picks winners and loser, the way it distributes wealth, it's simply an inefficient mechanism in the market and until it gets out of the way of the private sector, there will be no turn around. The longer it waits to get out, the more money the private sector will lose because of uninvested capital.

Of course the next big problem America (and the world) will have to deal with is declining tax revenues from declining business revenues and income from which it derives those revenues. Having pre-spent those taxes, the temptation will be to raise tax rates, but it doesn't take an economist to know that further pressuring capital doesn't create incentives for investment, but discourages it, and thus another turn further into a downwards cycle. The longer we wait to reverse the trends, the worse it will get.

I'd warn against relying on technical indicators because they are based upon linear predictability and what we're heading for is frenetic regions of chaos. Tomorrow could be massive inflation or deflation, we don't know, but use your gut... print more money, it dilutes the value, just like a stock split, except in this case the shareholders aren't getting the new issues deposited in their bank accounts.