Anandakos

24 Trillion Reasons to Buy Gold

Woo-hoo! All aboard the Tinfoil Hat Express. "arcane European cliques" with their "Ticino banks" (ah yes, that World Financial Center, Ticino)..."inflation spawned by deflation" (or is it deflation triggered by hyperinflation? I forget), "information kept in prison" (with manacles????)

All aboooooaaardd!

On Jul 23 07:31 PM AuGod! wrote:

> A massive devaluation of the US$ is probable with concommitant competitive
> devaluations thus sending price inflation to unprecedented levels
> globally. That is the medicine. The disease is inflation spawned
> by deflation and the cause is hoarding by banksters and the terra
> incognita of fast and cheap money back-channelled through direct
> government monetarist interventions. The stock market rally is a
> symptom of the problem and a tipping point that the problem persists.
> The price of gold bullion, a small market dwarfed by the general
> market, is thwarted by paper issues for which there is probably insufficient
> physical gold to cover. Still, when the stock market tanks, which
> it must, (it may even be planned) much gold and other liquid assets
> will be thrown over in a mad rush to deleverage and cover. It is
> then that the realization will come to the financially savvy, that
> physical gold's liquidity is more important than its SPOT price.
> That SPOT price could be extremely high. But that value (of the metal)
> will not be obvious immediately during the rush to cover. It will
> only become obvious after it all shakes down and people get up off
> the floor, dust themselves off and realize how much pre-hyperinflationary
> or devaluation FIAT was spent on < US$1000. per ounce gold bullion
> by entities with strange names. Many of those names will be on the
> rolls of very old, arcane European cliques through their private
> Ticino banks. The "end" always precedes a beginning. That is an Historical
> fact. We are approaching the event horizon. Information is fuzzy
> and/or is kept in a prison. Everyone here at SA knows or suspects
> this but drifting through ambiguity is no way to go through life.
> My bet is on physical gold because my "best" information supports
> that conclusion.

Time to Exit Oil / Gold Pair Trade

Long Roh,

I have been surprised that the Saudis and Kuwaitis haven't started demanding gold for their oil, or at least a portion of it. The logic would be: "We're selling you an irreplaceable resource. We want something that you can't inflate away from us."

On Jun 10 12:32 PM long roh wrote:

> Interesting article and data. Given that gold is essentially money
> and that oil keeps getting harder to come by (Peak Oil), I suspect
> that if one drew a moving average on that chart, it would show a
> irreversible long-term trend down, which is scary since there is
> really no cost-effective way to sensibly profit from it (too much
> volatility). Only a breakthrough alternative energy technology can
> save us from an eventual 1:1 gold to oil ratio.

Has Gold Been Manipulated?

Do you play the theme from <i>"The Twilight Zone"</i> when you write your posts?


On May 20 06:32 AM rick12345 wrote:

> The gold price mysteriously falling by $10 (exactly at the break-out
> range) in the span of minutes while $USD and equities markets drop?
> Gold price in europe falling twice as fast as the gold price in the
> US even though the USD weakens?

How Does $9000 Gold Sound?

Like Dow 36,000

Interview with Peter Schiff: Reflating the Bubble

396040.

Very well said. Those are exactly the basis of our economic success.

On Apr 24 07:55 PM user396040 wrote:

> This is the argument Andrew Mellon made during the Hoover Administration
> - "liquidate everything." Theoretically, it has some merit. In
> the long run, it is possible that markets would clear at lower prices.
> But, as Harry Hopkins said - "people don't eat in the long run."
> In a democracy, there will always be a strong demand for government
> action to avert a depression. I think the Republicans missed the
> boat last Fall. They could have proposed a simple stimulus - everyone
> subtracts 10% from his 2008 taxes and every state gets a check in
> the amount of $1000 for every person counted in the last census.
>
> Inflation is helpful at a time like this because it makes it easier
> for debtors to pay back their debts and it makes it easier to reduce
> real wages(just refrain from giving raises).
> A strong dollar does not enable us to rebuild our industrial base;
> instead, it makes it impossible for US industry to compete with imports
> unless we go back to imposing high tariffs. The dollar is up a great
> deal against many of our key trading partners in the last year(Canada,
> Mexico, Brazil, UK). A lower dollar would give the industrial part
> of the economy a shot in the arm and automatically increases the
> dollar earnings of multinational companies.
> In the long run, we will need a value added tax, a lower and simpler
> income tax, more money spent on education more effectively(people
> are by far our most important resource). We also desperately need
> some infrastructure upgrades. We need to reduce our dependence on
> oil imports. In the long run, these things - the intelligence and
> resourcefulness of our people, the quality of our infrastructure,
> our energy independence, and a tax system more oriented to taxing
> consumption rather than production - and not a strong dollar or
> the amount of gold buried in our back yards - are the things that
> will make us strong.

Interview with Peter Schiff: Reflating the Bubble

Utilitus,

I agree that what you stated seems sound, but it's not really.

Securities are not "money". Depending on a specific security's liquidity it can be exchanged more or less readily for money. But by so doing the money supply is unchanged. The person who formerly had the security now has the money that the person who now has the security used to have. (Confusing syntax, I know). Net change in money supply: zero.

The fact that securities held by people which have lost value can now be traded for fewer dollars does not reduce the money supply. If anything it actually increases it! What has changed is the VELOCITY of money. That has given us the appearance of deflation.

So flooding the money pool with dollars created to buy previously non-existent government bonds does increase the money supply and will eventually lead to inflation when velocity returns to a more normal rate. We can hope that the inflation is largely limited to the price of assets as it was during the first seven years of this decade. But don't bet on it; the Fed has lost 25 years of credibility in the past few months.


On Apr 27 02:14 PM utilitus wrote:

> Exerpt from Bill Gross' current PIMCO 'Investment Outlook':
>
> "The Dollar – As the center of structured finance and the shadow
> banking system, the dollar was bolstered as it sold paper to the
> rest of the world. To date, its recent strength seems counterintuitive.
> Weakness may more accurately describe its future."
>
> On Apr 24 12:55 PM mavericks wrote:

Interview with Peter Schiff: Reflating the Bubble

Because they will "un-peg"! It's already happening. Most of the Gulf states are beginning to peg to a basket of the dollar, yen, and Euro, because they sell to all three. By pegging their currencies to a basket they can sell oil in any of the three currencies and "convert" it to their own with limited currency risk.

On Apr 24 07:55 AM Freya wrote:

> Yes, it is thought provoking and it will come to pass in some form
> eventually.
>
> I do have a real problem figuring out one of his statements though:
> The USDs collapse is a gimme but when asked what currencies he would
> be in he says " Well, ultimately, a lot of the currencies which are
> currently pegged to the dollar will be very strong, a lot of the
> Asian currencies."
>
> If the USD is going to collapse, how will buying currencies pegged
> to the USD go up? Especially since the USD is a basket of currencies
> to begin with.
>
> It just sounds very, very complicated.
>
> I figure that you should just go with the Resource rich nations and
> their currencies.

How the Gold Game Could End

I Short You,

What are people "filling in their bones" with? I HOPE it's calcium and marrow!

On Apr 19 09:24 AM Ishortyou wrote:

> since the beginning of ancient civilizations gold was seen as a trading
> asset, and like any other asset its price is determined by supply
> and demand, because it is not practical or more difficult to trade
> the real bar of gold the GLD fund was created, this is to supposed
> to be in practical terms 'real gold' but represented as paper in
> the market, you can take it like a dollar pegged to gold like in
> the good old days before the bolshevik of FD Roosevelt depegged it
> to print money and pay post war world debt (what a crook!). Because
> currently they are printing dollar paper massively to give liquidity
> or solvency to a current very recessive market and because the dollar
> is not peg to anything of relative value, many people are filling
> in their bones that a massive inflation is coming due to a worthless
> dollar, if China and Japan dump the treasuries because of this forget
> it god save us all, they will buy gold for sure at least they will
> think that is better than a paper dollar even if it is sitting in
> their coffers at least it shines pretty.

Gold: The Only Remaining Bubble?

Austrian,

You have slandered George HW Bush and Bill Clinton unwittingly and unjustly. The US government went on a THIRTY year deficit spending spree when Ronald Reagan cut taxes so dramatically in 1981. It is true that he rectified some of the shrinkage in the next two years with partially compensatory increases, but he set the stage for thirty nearly uninterrupted years of spiraling debt. Bush 41 made an attempt to right the ship and lost his second term, and then Clinton pumped more water out and lost Congress. By the end of Clinton's term -- partially because of the DotCom boom but mostly because of the 1993 tax increases -- the government was running an overall surplus. No, it hadn't gotten back to a full operating surplus as it should have, but it was a lot better than anything since Kennedy's term.

People will argue forever about the proper proportion of GDP to devote to government activities, but one thing is not debatable: the only long-term (greater than 10 years' duration) debt that the government should accrue is for genuinely productive infrastructure investments and the cost of wars of defense. It's fine for it to run temporary (3 to 5 year) deficits during the low part of business cycles, but it has to liquidate the debt in the high part of the cycle.

The problem is that selfish people say "we have to give the people their money back" in the high part of the cycle, so the debt has only rarely been liquidated.

On Feb 18 04:14 PM austrian63 wrote:

> Gold is simply a safe haven. Your arguments against inflation are
> not correct. I challenge you to research and publish the actual
> year over year rate of deflation (reduction in the general price
> level) in Japan during the 1990's. In fact, you must strip out real
> estate, equities and fuel from your rate. Then see if actual daily
> costs, food, insurance, health care, wage rates, commodities, etc.
> actually were in a "deflationary spiral." I bet the rate of general
> price decline in the daily costs of living will surprise you by how
> small it was and that many costs actually increased.
>
> General price level declines are not possible in fiat currency economies
> as the paper money is not backed by a tangible asset.
>
> I also disagree with your asessment of the Treasury bubble or lkack
> thereof. This is the current bubble and when it pops, gold will
> probably become more of a safe haven. Treasuries, and the dollar,
> are only backed by the "full faith and credit" of the U.S. Government
> which has no ability or intention of paying off its debt. Here are
> the "assets" that back the dollar and Treasury Debt Securities:

>
>
> The U.S. tax revenues, which are decreasing.
> The U.S. budget deficit which is increasing-lack of fiscal discipline
> usually harms borrowers-it will eventually harm the U.S.
> The U.S. trade deficit is large and will continue in perpetuity.

>
> Unfunded Social Security and other entitlement liabilities
> The now "unknown" assets on the Fed's expanding balance sheet.

>
>
> Once holders of treasuries realize this, they will begin to liquidate
> their treasury holdings as their yields are not compensating them
> for their risk. Moody's created a new AAA rating for the U.S. and
> the U.K. that states these countries' securities are "AAA with a
> risk of default." The U.S.'s sovereign rating is now lower than
> Norway's.
>
> In my college finance courses years ago, the Treasury rate was the
> "risk free" rate. I suppise things change when a nation goes on
> a 20 year deficit spending spree. The U.S. is broke and mathematically
> insovent. Treasury yields will eventually reflect this.
>
> It will be interesting to see how our government addresses these
> issues as they begin to bubble up.

Is the GLD ETF Really Worth Its Metal?

Here's a question for any and all. Is what the author says about GLD also true of IAU? Does it have the same sort of "shady characters" he claims are behind GLD? According to Schwab the trustee is World Gold Trust Services, LLC, which sounds like it's a partnership with a corporate overcoat like a law firm. In Schwab's ETF comparison tool, GLD is shown as being in the Bank of New York Mellon Corporation fund family. Are the "shady characters" Bank of New York or the financial system in general?

IAU is shown as being in the Barclays Global Investors fund family, which makes sense since it is an "iShares".

U.S. Debt Default, Dollar Collapse Altogether Likely

Scholar,

Ah that it were so easy. Just raise the retirement age to 75 and everything will be fine. Wipe the unfunded liability slate clean! Make the buck a 12 pointer again!

Ummm. Where are all us boomers going to work for the extra nine years? I just turned 63 and have a twenty three year career in I/T with many successful systems in my resume, but people laugh when I apply for a job. Business knowledge and proven skills solving problems are no longer desired; nope, it's all Java all the time. As long as it looks pretty it doesn't matter if it chokes. "It was probably a Denial of Service attack that brought down the server", (not crappy SQL queries generated by the webtool used by the hipster who knows nothing about business except splashing Flash elements around an HTML screen). Who was hired by a bitter Gen-X'er who also knows nothing about business.

And if you don't hail from Bangalore or Mumbai don't even bother applying. You're too expensive. No, I don't care what you'll work for; you're too expensive. (Meaning of course, "Since I don't have the threat of revoking your H1B I'm afraid that you'll make me look stupid in front of my boss by speaking out". That would REALLY be "too expensive", wouldn't it?)

Remember that I work in an "in-demand" career classification. What about all those mortgage originators, salesreps at Ikea, BestBuy, and Macy's, truck drivers, framing carpenters and on and on? What will everyone do between 66 and 75? Very few people have enough in retirement savings to live entirely without an external income for nine years.

While your solution is good from the "macro" economy viewpoint, it's hell for the "micro" of peoples' lives. I'm not saying retired and retiring people are "entitled" to bankrupt the country. Rather I'm saying that we need to think long and hard about any amelioration, and not make misery and want more severe than they will be anyway.

On Feb 03 09:55 AM cyclingscholar wrote:

> With the financial markets desperate for gov't bonds, the US gov't
> wouldn't have to default..it could 'merely' ROLL over the debt as
> it comes due, to 100 year treasury bonds. Given the increase lifespan
> humans will have as medical breakthroughs proceed apace, this would
> make alot of sense. Raise the retirement/social security eligibility
> age in stages up to 70, 75, 80, as is appropriate; and most of the
> government's unfunded liabilities would disappear.
>
> cyclingscholar

Own Gold? Time to Fold

Mr. Knights,

BINGO! That is precisely the difference between Japan's struggle with deflation and the US' likely course. Japan financed almost all of its deficit spending domestically. Oh that we could say the same! If the "gnomes" of Shanghai and Riyadh decide we're deadbeats, we're not only deadbeats, were fricasseed deadbeats.

That plus the reality that Japan makes nearly all the manufactured stuff it's people consume, paying only for the raw inputs whereas we in the US buy almost all of our consumer goods.

A closer parallel to the US financial position is Bobby Mugabe's cholera ward.

On Dec 08 05:46 AM Roger Knights wrote:

> "We do run the risk of inflation if we keep interest rates too low
> after the crisis has passed, but worrying about that challenge now
> seems extremely premature. Consider the Japanese example, as it seems
> very analagous to ours."
>
> But did the Japanese dilute their currency the way we are doing?