Randy_H

Gold: The Only Remaining Bubble?

Also Treasuries are *not* in a speculative bubble. Speculative bubbles are Greed-Bubbles. The housing bubble was a Greed-Bubble. The Dot-Com bubble was a Greed-Bubble.

The fear of missing out on gains, and therefore losing out relative to those who play.

What's happening in Treasuries is a Fear-Bubble. That's a whole different animal. It's the fear of losing, period. It's a hell of a lot harder to pop a fear bubble than a Greed-Bubble. The Fed & their international friends are learning that lesson right now.

Gold: The Only Remaining Bubble?

Gold is not a "hard currency". It is a store of value, of sorts, but not a currency. It's also a commodity with commercial and industrial application. It's also a vehicle for speculation and hedging.

All currencies are fiat in the end. Even gold coins with a silhouette of the king stamped on them. Beyond a kingdom of a few thousand subjects, currency is necessarily authorized and regulated. Thus, fiat. If a new king comes along, you can't melt your old gold and put the new king's face on it (without paying tribute to your monarch) without losing your head for counterfeiting.

People keep confusing Gold, Commodity-indexed fiat currency systems, Floating exchange-based fiat currency systems, and barter. I get the sense what most are hoping for is a total breakdown of currency and a reversion to barter.

Be careful what you wish for.

This Is Just the Beginning

The phenomenon of Peter Schiff is well understood after one reads Taleb's "The Black Swan". Not only do I believe that Schiff's success is more a result of our own cognitive selection/survival bias, but he himself suffers from a terrible tendency to project trends linearly into the future.

If even some of what Peter predicts comes to pass the results will be so non-linear in nature that all his best positioning and prognosticating won't prove any greater than just rolling the dice.

Not surprisingly, nearly all the Schiff faithful I encounter tend to also suffer from overconfidence bias, arrogance about their own ability to predict the future, and the delusion that they have never been wrong about anything.

U.S. Debt Default, Dollar Collapse Altogether Likely

If I read about "hyperinflation" one more time, I'm going to start losing control of bodily functions.

It is very simple: Hyperinflation is a case where a country continues to pay foreign debt despite its devastating effects at home.

No country, and I mean literally *none*, has ever submitted itself to hyperinflation so long as it maintained a credible, military force. Those that did suffer hyperinflation did so up until such time as (a) they established such a military offset or (b) they were backed by a country or countries with such military offset.

Schiff and his zealots think linearly and ignore the non-linear nature of global geopolitical reality. Russia did *not* suffer hyperinflation for more than a brief--almost insignificant--moment. Why? Because they didn't have to. End of story.

Your EUR denominated stocks and gold are simply not going to skyrocket to the moon because the US is dying of hyperinflation. The greater forces of history will take over long before that point. And you, the Schiffeans, will be sitting there wondering how you could be so right yet so wrong.

Read Taleb.

U.S. Debt Default, Dollar Collapse Altogether Likely

Apparently the value of the "Top 10" badge does not imply value or accuracy to one's comments:

--Without taking sides on the issue of the possibility of default, I'd like to add this recommendation for this article: the caterwauling from the deflationists and radical dollar bugs centers on the impossibility of US default and the US dollar's "King of the Fiat Sewer" status. --

a) Saying "without taking sides" does not excuse proceeding to immediately take sides.

b) "Deflationists" do not deny the possibility of default.

c) In fact, most cyclical, it'll-be-real-bad "Deflationists" believe there will be a default. Maybe not a declared one, but at least a "stealth" one.

d) Default results in/is cause by a deflation spiral, Hyperinflation is caused by not defaulting.

Before caterwauling, try to get your macroeconomics straight.

Don't Miss the Coming Gold Bull

On "hyperinflation", which is the core premise of your article:

*Sustained* hyperinflation, the sort of condition which utterly destroys a nation's economy, has _never_ occurred within a (modern) country that maintains a credible and project-able military force. In fact, historical sustained hyperinflations have been halted by either (a) establishment of a credible military power as in the post Weimar Germany; or (b) foreign intervention inevitably by a country or countries which maintain such a power, as in the case of Israel.

Other countries such as Russia, when facing a long-run hyperinflation scenario, simply change the rules -- ie. default in one way or another. The world simply must accept that outcome and endeavor to restructure global financial positions accordingly.

The goldbug theories are all predicated upon terribly flawed thinking. The sort which Nassim Taleb eloquently describes in his books. They are assuming a linear-style projection of macroeconomic factors in arriving at their outcomes which, of course, inevitably favor gold becoming worth a zillion dollars per ounce.

I am not smart enough to tell you how this current situation will play out. But I am smart enough to tell you that I don't, and that I simply cannot. And neither can you. What you can do is think outside the box and broaden your consideration of possibilities. You can prepare for the unknowable unknowns by maximizing your exposure to positive things you can know, and minimizing your exposure to things you can't. Or more concretely, minimize your exposure to gold (note I didn't say eliminate it, just make it minimal).

Why Oil and Gold Are Headed Much Higher

"you can bet that it, along with oil and real estate and any other hard assets, will skyrocket"

I heard that before. Circa 2004. Real estate: buy now or be priced out forever. Give me a break.

Do you guys even realize that you're just wishing and begging for yet another bubble? You disguise yourself in language of economic reformers, but in truth you just want the bubbles-R-us economy to rage on. You're just jealous you missed the last one and want the next to be in something you own.

The rest of us are for no more bubbles. Period.

Five Ways the Global Economy Is Rebounding

Oh no! It's the bottom again already? I just got over the daily bottom called yesterday.

Why Oil and Gold Are Headed Much Higher

--"When the ones on here that read this do not own any of either are crying I really, really do not want to hear you complain or even whine. You had a chance now before it just blows up like a bomb to get some and then you will just be wondering how to buy groceries and pay for bills."--

Wow. Sounds just like every other bubble blowhard. If I had a double eagle for every time I heard a realtor tell me "buy now or be priced out forever!!!" The problem with being an extremist is you end up looking just like your enemies. I'm sure you're one of those who was beating up on real estate bubble cheerleaders, but you failed to see the pom poms you're shaking.

--"I on the other hand will be able to take a vacation away from all the ones that are asking if I can spare a Silver dime...."--

Good luck with that strategy. Even if you're right you're going to find out quite rudely why your precious metals are spendable in a Mad Max economy exactly once. Once and only once. After that, everyone will know you've got it, and trust me, guys like you and I who post on SeekingAlpha are not going to be the sort who can hold onto their gold against the sorts of Alpha-males who'll be running the show in your fanciful all-gold, barter economy.