Long Silver John

Weekly Recap: Is the U.S. Going Bankrupt?

If the Treasury is shifting to short-dated maturities to carry a growing debt load, and if the Fed is therefore even more reluctant to raise short-term interest rates, then if velocity starts taking off, what's left to stop the runaway train of inflation? How can reverse repos be undertaken in sufficient quantity to offset Treasury needs to borrow for both principal and interest payments? What tools would be left?

On Gold and Silver Coin Shortages

I can't imagine any legitimate reason why a gold/silver repository would not eagerly want an independent audit and publish the findings. It's pretty fundamental to their mission of safeguarding other's property.

Potential COMEX Gold Fail

Roosevelt tried outlawing the holding of more than a small amount of gold. Didn't work, as everybody just dug a deeper hole for their stash. All I know is that earlier this year, archeologists in Jerusalem dug up a cache of ancient gold coins. They had held their value. By contrast, when I go to my neighborhood coin dealer, they have cases full of old paper currency that became worthless. Even the clear redemption promise on the $50 Gold Certificates (Grant's picture on them, no less), were reneged upon by the Supreme Court in the "gold cases" of 1937. Gold and silver physical holdings give you self-sufficiency. No need to trust anybody.

Gold as an Inflation Hedge

It's pretty simple: physical gold and silver are the only assets I can think of where I no longer have to trust anyone. Our history is replete with examples of how the government, their banking pals, industry and others having control over money can't be trusted. For fun, read the "gold cases" from the US Supreme Court in the 1930's, where they turn themselves into a pretzel to renege on the plain promise stamped on every Gold Certificate, that it can be redeemed for gold coin. They completely reneged on that promise.

Tipping Point for U.S. Treasuries?

Price signals are all out of whack. If the Fed is directly (or through proxies) buying up Treasuries, to keep interest rates low, then why wouldn't they later just transfer cash to Treasury without bother going through the public bond market? That next logical step in hiding our finances would keep Treasuries off the market and the reported rates low.... That would make it difficult to execute "my plan... to continue to track the signals indicating when and where a tipping point may be reached." Seems like we're headed for Niagara Falls in the night, without knowing just when we'll be going over the cliff...

Gold Set for Huge Rally

Just finished reading Rothbard's History of Economics, going back 2,000 years. An artificial increase in money supply (by debasement, issuance of fiat currency, etc) has never had any effect other than to lower the value of the currency. It can sometimes be masked by countervailing real-world situations (e.g., deflation caused by technological increases in production, flight to the dollar), but in the end it causes inflation. What's scary is how the governments/IMF are manipulating the price signals that we usually rely on to see where things are really headed.

G20 and IMF Gold: A Late April Fools'

You can almost hear them saying, in their meeting: "Hey, let's announce another huge stimulus." "But what about inflation concerns?" "Okay, let's also have the IMF dump some gold, to drive down its price and dampen any stampede to gold."

Did the ECB Save COMEX from Gold Default?

Sifting through all the comments, is it fair to say that the large banks are, in effect, trading paper short promises on Comex for physical gold at a depressed price from the OTC market? Then, when the chickens come home to roost on their Comex shorts, they get bailed out in a sweetheart deal by the ECB gold reserves?

Revisiting the Weimar Gold and Silver Ratio

Buy physical. It's the only asset not exposed to government confiscation or private fraud by counterparties.

Oracle of Omaha Warns of 'Onslaught of Inflation'

In Weimar Germany, just as inflation was taking off, it's my understanding from Rothbard's analysis of the Great Depression, that the wealthy and upper middle class moved their wealth in to gold. They survived financially. The middle and working class families, and those who didn't convert to gold, were wiped out by the hyper-inflation.

Dow/Gold Ratio of 1:1 or 2:1 in Coming Years?

What I mean is that Maryland exempts bullion/coin sales if the sale exceeds $1,000, while next-door Virginia would impose a use tax of 5% if those items were brought into Virginia, even though purchased in Maryland....

Dow/Gold Ratio of 1:1 or 2:1 in Coming Years?

If you're going to buy physical, check your local sales/use tax regs. If you buy in a no-tax state like Maryland, and live in a sales/use tax state, then you might store it in Maryland (or wherever you bought it), rather than bringing it in-state where the use tax would apply to it. This will help save you the sales/use tax rate, so long as it's kept out-of-state (e.g., in a bank vault).

The Shedlock-Schiff Affair: A Chronicle

Austrian economic theory predicts that when the money supply becomes artificially expanded, there will develop a "cluster of errors" whereby smart business people as a group make systemic errors of judgment. It is because the money supply pushes them further out on the risk curve.

This is what happened in the 1920s and which happened again in the past five years. Peter is basing his overall judgment on the validity of Austrian economic theory. I believe he will be proven correct, despite the near-term glitch caused by the deleveraging.... Time will tell.

U.S. Dollar Strength and Implications for Gold

Won't there be a stampede toward gold in non-US countries as their currencies fail? If US bonds are paying almost nothing in interest, the choice seems obvious...

Five New Forces to Drive Gold Higher

BTW, on the gold standard: I was for it originally, but have lost hope that our government leaders would ever actually reinstate the gold standard. Instead, I look to digital gold currency from the private sector as the more likely de facto gold standard for currency. Check out sites like goldmoney.com. It's a pretty cool concept. Of course, you need to trust the company and also trust the auditors. Sort of getting back to American Eagles as the best solution...