Stephanie

Hard Money Inflation: Oil and Gold Continue to Plunge Downward

Wow...

Amberger has no clue, does he?

I'm going to say it again here. Just love copy and paste, don't you?

Notice that the media makes little mention of gold prices on upswings, forget silver, and yet mentions gold when it takes a hard hit. Also note that bull markets always NEVER go straight up. There are ups and downs as markets overheat and back off a bit to blow the steam off, and then recover again and keep going. It happens to shake off the weak, speculative hands to restore the foundation to a more sensible level. Blowing the froth off, as it were. And bear markets NEVER go straight down, either. The US stock market has been experiencing bear traps, especially when you take in consideration inflation.

Now, I will add that the deflation argument has some weight. I was just thinking about it the other day last week. "Deflation... Deflation... How would that happen?" Well, I realized that it's taken decades for the total markets to build up to well over $500 trillion (including the derivatives markets). You have hundreds of thousands, okay, maybe millions of people (or parties) involved in these transactions. How many employees do the Feds, FDIC, Freddie Mac, Fannie Mae, Ginnie Mae, HUD, etc. have altogether? Maybe a few thousand. How many of those people are the actual decision makers that will get the wheels moving to bail out all these defaulted parties? One person can't move fast enough to cover the activities of 1,000 other people. Heck, I can't keep with anything more than 5-8 people in the clothing department's fitting rooms! It's a matter of velocity. Which number is moving faster? The rate of money creation to bail out people, or the rate of debt collapse? I'd bet on the debt collapse at this point.

If you have money (credit) supply collapsing like this, then prices on most services and goods at some point will drop, I mean drop way down. HOWEVER, this is what you have to watch out for. People will at some point scramble for gold and silver because it will be the only thing they can trust (after seeing their bank accounts wiped out, their retirement accounts gutted, ad nauseum). If you have, say $900 gold and $0.94 gallons of water, and things deflate to say, $250 gold and $0.20 gallons of water, then gold still has more purchasing power at $250 than it did at $900, only assuming that it will indeed happen like this and prices drop uniformly across the price index. It's not done once the price collapse occurs. The demand for gold and silver would take off, and prices would have to adjust to account for this.

Know this - no single fiat currency has survived intact in human history. Not the Ancient Roman debased currency, not China's first fiat experiment, not the French Assignat, the US Continental Dollar, the Union Greenbacks, etc. Read up on how the public responded with a flight back into gold/silver or something tangible each time it happened. Gold/silver has a history of being money for several THOUSANDS of years.

And I'm going to throw in that at a coin shop last week, I saw $12,000 worth of silver being bought by TWO people, and that's in Houston, an area not strong in gold/silver ownership. I have one former coworker who has silver, ONLY because he was given silver as an anniversary gift by his father-in-law. NOBODY else talks about it there. Only two or three out of 120 people in my life talk about it or are even curious about it. On the other hand, I had about 3-4 people at work alone with any money talk about real estate, how great it was, and that it always goes up, and that was in 2005-2006. I had already seen the writing on the wall by mid-2005 when I noticed that dogs and cats became homeowners as well. This is not happening among the general public in the US, and this used to be a market where everyone had at least some silver change in his pocket or her purse!

Good luck!