Sakata

U.S. Economy: Golden Dreams, Fallacies and Nightmares

Sorry, there was a typo I jjuts noticed in my last comment. Sovereigns sell at 15% premium, not 25%.

U.S. Economy: Golden Dreams, Fallacies and Nightmares

You said:
"Of course the ultimate nightmare is that fiat money collapses and then you can kiss any gold, gold mining stocks, and foreign gold stashes bye bye. Just like in 1933-1934 gold will be outlawed so only bankers can hold it. We must hope for something in between."

In 1933 gold was confiscated but it was still permissible to hold numismatic gold. Pre-1933 gold coins continued to be bought and sold for the next 40 years. Many people believe that if gold is confiscated again then there is a good chance that the same will apply. This explains why gold bullion on Ebay is only selling for about a 10% premium but coins are at a 25% premium. (I used Krugerrands and Sovereigns to get those numbers but other coins are similarly priced.) It is also hard to believe that the US government would have been selling Eagles and Buffaloes for the last 20 years only to confiscate them, so there is a reasonable case to be made that those will not be confiscated either. Holding gold bars or non-US bullion coins can be considered to be a higher risk that modern US coins or old numismatic coins.

Confiscating gold is easy to imagine and the chances of it happening may not be over 50% but it is certainly not zero. Silver, on the hand, seems reatively safe from confiscation. There is much less of it available and it is much lower priced. I think a prudent investor in precious metals should have a significant holding of physical silver, Eagles and numiscatic gold. I would be wary of holding gold in any other form.

Five Impossible Thoughts After Breakfast

On Mar 07 03:30 PM InnocentsAbroad wrote:

> As most Americans have at one time or another known or faced bankruptcy
> themselves, they will easily understand the concept of putting the
> banks in receivership.
>

What circles do you move in? I am not aware of a single person I know who has filed bankruptcy. I am sure that are some and I just don't know it, but to say "most" seems a little excessive.

I have to agree with the other comments that "gold $5000 by 2016" does seems to designed to create panic. Panic, that is, in gold bugs who hope for it to get there much early.

Some Bank Behemoths Now Sub-Single Digit Midgets

Your DOW to gold ratio of 5-6 is looking very high to me. Has anyone calculated the change in the C-to-gold or BAC-to-gold ratio? One thing I find amazing is that the highest open interest for BAC August calls is for a strike price of $10, priced at $0.36 There must be some real optimists out there.