Top Gun

The Problem with GLD and SLV ETFs

Bad article. Unless you buy the gold and put it in your house, you have counter party risk. Safe deposit - bank could be closed. Own part bullion held by another, they could have a problem. Nothing is risk free, with GLD you trade liquidity for a tad bit more risk. The issuers are highly thought of, so use GLD to increase your gold exposure by maybe 5x over what you would want to hold in physical. That IS an inflation hedge, the physical gold is an armageddon hedge.

Dow Will Equal Gold in 2009

I meant $100's of billions of money supply.

Dow Will Equal Gold in 2009

The dollar remains last safe place to hold reserve wealth as worldiwde assets deflate. Once the deflation stops elsewhere, dollars will be switched back to local currencies, just at the time a bigger supply of $ hits from our absurd deficit.

I'm not convinced the main outcome is massive increase in gold prices, but other commodities should reflate, a good thing if not over done as that ensures planting and harvesting of crops. I'm sure some very smart people in our Treasury have calculated what might happen. Don't forget the last few months have destroyed $100's of millions of money supply that was erroneously deployed to pump up asset prices (houses and ABS's) just so that investment banks/realtors/mortgag... brokers could collect management fees. The bank writedowns mean the $ are no longer available, and the TARP $250B must still be raised (by debt or equity) in order to repay Uncle Sam. I think of this as a stool, where one leg was knocked out and temporarily replaced with government funds - the banks must remake the lost leg and replace it.

There is a small chance things can work out without disaster happening, but now would seem a good time to buy as much of the commodity ETF's as you can as a hedge against rising prices in the stores, and gold as an investment. It's pretty obvious, as stated above, that defaulting on our debt through inflation is the only logical outcome, and we need to convince ourselves to contribute to debt reduction by halting Social Security COLA(remember those from the 80's?) for a while, or reducing like President Reagan wanted.

Have Gold and Silver Prices Reached a Tipping Point?

Question - how does the fact the we must deleverage all the assets inflated by the 30:1 investment bank leverage impact this? Seems to me we have massive asset deleveraging that requires(bad word, it doesn't require anything, just we've chosen to replace) monetary replacement. How much of that newly created money will be used to replace bad debt and not be usable in the system for purchases? This has been going for about a year as best I remember, shouldn't it equilibrate with out a huge spike or dip in gold if done properly?

After this, we need to real economy people into the banking system. This is absurd.