ozzy43

Why I Got Gold Wrong

"...the false, chimerical belief that somehow gold is money"

Musta been one of those people who whined 'I hate history - it's so boring!' Just because we are facing near term deflationary pressures does not mean that we are facing longer term net deflation. In fact, the lessons of history are utterly clear: empires at this stage, having exhausted their currency via monetary manipulation and fiscal abuse, who owe and cannot possibly pay, have only two choices: default or debase. Either scenario is a positive for gold.

Fiscally speaking, this nation owes, not $10T, or even $11T - $12T now, but anywhere from $60t - $90T, depending on assumptions. Boomers are starting to retire. This is imminent. Where will that money come from? The only *possible* answer: the printing presses.

Monetarily speaking, the size of the tsunami heading our way has barely registered yet - $700B for a "bailout" plan? Think that's 'real money'? Are you kidding? There are $60T in CDS's out there, and over $600T in derivatives of dubious value. This bailout is aptly named, however - it is intended to serve as an opportunity to the money elites to cash in for a few weeks, a few months, and then leave regular investors holding the bag when it all comes crashing down when the tsunami hits.

Trillions and trillions and trillions of dollars are coming due, both in private and public, and China, Russia, Japan, and the petroStates are almost done lending.

As Arthur Silber has put it: "How in the world does any adult -- any adult who is not suffering fatal impairment of his cognitive faculties -- convince himself that this kind of make-believe can continue indefinitely? The United States government is completely broke and drowning in debt that extends through the next three, five, ten, who knows how many generations. Finished. Washed up."

And Mike Whitney notes: "The system is at the breaking point, and despite Wall Street's elation from the proposed $1 trillion dollar bailout to remove toxic mortgage-backed debt from banks balance sheets, the market is still correcting in what has become a vicious downward cycle. This cycle will persist until the bad debts are accounted for and written off for or until the exhausted dollar-system collapses altogether. Either way, the volatility and violent dislocations will continue for the foreseeable future."

You got gold wrong not because gold bugs got lucky, which is essentially your assertion here (and a rather snide one at that). You got gold wrong because you are ignorant of both history and of the reality surrounding you at this moment in time. Your analysis is laughably limited, that's why you got gold wrong, and why you still have gold wrong for the longer term . For you to be right, the US govt and the financial sector would both have to be essentially solvent, such that there would be 'good places' to put 'money' once the current 'unpleasantness' is over and things return to 'normal'. Normal is over. Things may well 'look' more or less normal again, and this may persist for some time, but real 'normal' is ancient history.

Precious Metals: Emotions Still Stronger Than Fundamentals

"Why would anyone buy gold when the dollar is heading up? Also why are some advisers so slow to see that there has been a change?"

Perhaps 'some advisers' have determined that your 'change' - in dollar fortunes - does not appear to have any basis whatsoever in fundamentals, and therefore does not, in fact, represent a lasting change at all, but a transient rally to be followed by a crash.

Or did the US government suddenly do a 180 and become the very model of fiscal responsibility when I wasn't looking?? Fat chance.