AuGod!

China Diversifying Out of U.S. Dollars: Bullish for Gold

I had contributed a rather long, perhaps tedious comment on this topic here, but it has been deleted. I don't know why it was, I was not informed why it was deleted, so this will be my last comment at Seeking Alpha. Good luck to everyone.

Gold Is Still the Opportunity of a Lifetime

This is a complex topic and has many aspects. A stock is a stock, an ETF an ETF, a gold certificate a gold certificate and I like gold bullion in my hands. Without subscribing to any apocalyptic views of the U.S. dollar and appreciating that the gold bullion market is volatile, any arguments against holding some physical gold (coin, bar) are specious. That should appear obvious when so many TV commercials offer to buy your used 10-14-22 carat gold jewelry, albeit at severe discount, which as scrap is then sold on, refined and sold on again, often to meet rising demand for gold coin and bar. It is cheaper to get the metal this way than through traditional mining and smelting. It may be a good idea to sell your used gold jewelry through "reputable" firms for U.S. dollars so you can then buy 99.99 bullion, while the price is still (marginally) under $1000. per ounce. The Asian economic meltdown of the 90s saw much gold sold by strapped consumers to meet their obligations. That asset, culturally ingrained and held in various forms, helped save many a family in the downturn. In fact a major reason why Asians hold gold is for just such emergencies. If Americans had, over the years, modestly and steadily, accumulated gold instead of (often Chinese manufactured) consumer goods through costly credit card purchases, as the Chinese government is now recommending their citizens do, American family wealth (not to mention the U.S. Treasury) would be a rosier picture. That is the bottom line and it is obvious. Have a nice Monday.

Why You Should Have Some Gold in Your Portfolio

I agree. I hold gold bullion because whatever it does in the short term, its long term prospects are very bright. When all the Chinese who can, do buy the metal, its relative scarcity and consequential rise in price will become obvious to everyone. Interesting to note that the Chinese government is telling its citizens to buy gold bullion while in North America people are encouraged in TV commercials to buy everything China manufactures.

Two Good Economics Books: Spin-Free Economics, Animal Spirits

Now we're getting somewhere. Maybe someone should write an article entitled: "AMERICA: Zero, Infinity and Applied Keynesian Economics".

And what about zero = 0 anyway? Imagine, an infinite number system predicated on "nothing".

In a final word I will thank those who engaged me here by citing the logician John Myhill, who was inspired by Gödel to declare, "No non-poetic account of reality can be complete."

Two Good Economics Books: Spin-Free Economics, Animal Spirits

Since edification is suggested, I think it might be a good idea for all who do not presently know to learn something on the subject. To that end I offer this link to a short and simple blurb with invitations to interested parties to comment freely and without fear of serious mockery, on its contents.

www.econlib.org/librar...

Since I placed a Wiki link to criticisms of the so called "Austrian School" in my first post, this is added for balance. Here also is a good article from just before Obama's inauguration, on the Chicago School, Milton and a bunch of other economic noteworthies.

www.bloomberg.com/apps...

Have a nice weekend.

Two Good Economics Books: Spin-Free Economics, Animal Spirits

Mr. Machiavelli, Thank you for your Keynesian comment.

2+2=5

2+2 = 2+2+0

correct? right.

Now according to Robins Lemma proof
Let x be a non-zero number, and set y=x. Thus:


x = y
x^2 = xy
x^2-y^2 = xy-y^2
(x+y)(x-y) = y(x-y)
x+y = y
2y = y
2 = 1
1 = 0

Now since 2+2 = 2+2+0 and we apply the lemma proof so that 0 = 1, 2+2+0 = 2+2+1 =5

THEREFORE
2+2 = 5

SO .. do I get the job as the nation's banker? By the way, I plagiarized the above equation from an internet source so am not "responsible" if it is proven incorrect. I promise to buy pencils with very large erasers attached if I get the job and will adopt "neo-Keynesianisms" in all of my economic decision-making because I can't think for myself..

Two Good Economics Books: Spin-Free Economics, Animal Spirits

Thanks but I'm Austrian School. Notwithstanding and in fact mostly because "mainstream" economists reject it, bless their little hearts..

EG: see criticisms: en.wikipedia.org/wiki/...

Is the Gold - Dollar Relationship Breaking Down?

Gold is gold. I don't think folks who like the metal advocate the day-to-day use of it as a currency. It can provide some basis for a currency that is arguably more intelligent than a smokin printing press but its price, due to relative scarcity would quadruple in a flash if a gold standard were re-adopted. If I had a "gold clause" in my contracts, I would as likely as not exercise it and take more in bullion as opposed to paper. That is just a personal preference and for my own reasons obviously.

The relationship of the U.S. dollar to physical gold is simple enough to understand. The gold SPOT market is in U.S. dollar so its price is in U.S. dollars. When the dollar rises vis other currencies it makes the metal more expensive in those currencies. The opposite applies equally. As for the U.S. dollar as Reserve Currency, I think it is safe enough. A reserve currency is just a trade tool, a medium of exchange. As a forex investment the U.S. dollar is another matter entirely. Those long and short the dollar have different volatility worries than those managing gazillions in foreign reserves. Despite any blustering by the latter. As an example, note the Chinese purchase of U.S.$ 50 billion in IMF SDRs, which is about 32 billion in SDRs. That is a drop in the ocean in the currency world, but worthy of note is that SDRs are interest-bearing IMF assets based on a basket of four international currencies: the Japanese yen, the euro, the British pound and (drum roll please) the U.S. dollar. It is a means of diversification while at the same time supporting the IMF's need for about 10 times that number to be used to help troubled economies. For the Chinese seeking diversification, the SDRs represent a relatively stable and secure investment not an abandonment of the U.S. dollar. Also worthy of note is that the Chinese government is recommending its citizens buy gold. Now why would that be? I think we all know.

Money Supply: The Myth of Hyperinflation

YAWNNNN .... whatever "it" is, if we (and "them") don't know what "it" is and can't agree on "it", we all really are "freakin doomed"!

A Warning to America from the East

"Hmmm.... Public debt in the US is about $11 trillion, GDP 14ish, so where does that leave us?"

I take your point Karl, but think GDP was 13.8 trillion. Now you can probably knock ten percent off of that.

The Market, Valuation and Future Earnings

For some reason lately I have been thinking about negative P/E ratios. I am told by Investopedia that it is possible but probably unreportable. I quote:

"Mathematically, there are only two ways for a ratio of this form to have a negative value:
1.The numerator falls below zero
2.The denominator falls below zero.
In the case of the P/E ratio, it is impossible for the numerator to fall below zero because this represents the price of the asset. However, the denominator, which is equal to the earnings of the company, can become negative. EPS values below zero mean that the company is losing money and is the reason why it is possible to have a negative P/E ratio.

Negative EPS numbers are usually reported as "not applicable" for quarters in which a company reported a loss. Investors buying a company with a negative P/E should be aware that they are buying a share of a company that has been losing money per share of its stock." (End quote)

So, I ask two questions.: What are the implications of this? Does it matter?

Bernie Madoff Was Almost SEC Chairman?

Bernie Madoff Almost SEC Chairman. "Almost" could apply to grenades and horseshoes but not this. If Bernie had been offered the SEC position and had he accepted, "who" would have run his ponzi businesses?

Recession a Buzzkill for Alcohol Industry

Gee realbeerlover, I didn't know you were a sensitive person. But now that I do, let me put in another way. Most "American beer is like making love in a canoe". Google that quoted phrase if you don't already know the rest.

realbeerlover wrote:
"Whole crap augod! you've been duped, major canadian beers are just as flavorless as american beer, and NO, canadian beer is not any stronger than US beer"

Is a Crash Impending?

Many commentaries speak of this rally as unsustainable or sustainable in terms of bottoms or tops or tanking altogether. But how can such a market tank? Probably for the same reason it can't reach new "historical" highs. I think most of this rally is machine buying. Computer trading programs running a market? Heresy!!! I could be wrong and don’t know if this is a global thing but if correct in believing that most (one commenter claimed as much as 73%) of the trading volume of the NYSE is HFTPs then who are being bought – who are they? And what does it mean? In poking around some interesting factoids - and as has been said before, there are five companies which account for as much as 40% ( - who cares about absolute numbers – the number is very very large by any reasonable measure – ) of the NYSE trading volume. According to several sources, those five : “ ... Citigroup, CIT Group, Fannie Mae, Freddie Mac, and AIG., out of thousands, are accounting for 40% of trading.” OK, so let’s say that most trading is done by computers and most bought firms are those five, which are propped up by the U.S. government in one form or another and what does that tell us?

Gold: Four Reasons to Expect September Gains

As Chuck Butler put it: "Imagine if you will for a moment, where the price of Gold would be today, if those Central Banks hadn't dumped Gold on the markets for the last 9 years? The fact that Gold has risen from $250 to $950, in the face of these Central Bank sales is amazing! And now... The amount the Central Banks can dump on the markets each year is smaller... What do you think that means for the price of Gold? I know what I think it means!"

Well today (September 2, 2009 2:08PM EST) Gold Spot is - bid/ask 976.30 - 977.30 which means - well you can do the math. Yesterday it was around USD 950 oz. What I am reading from Adrian's article, is that this could go up or down depending on "hot money" and not the usual flux fundamentals due to India's buying season etc, the latter notably down over previous years. That "driver" from investments is a dynamic which portends high volatility. So watch your timing. All obvious I know.

I am long gold bullion so a day's ride up or down is of no real consequence except delaying a purchase of bullion until the smoke settles a bit.