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?

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.

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?

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...

Five New Forces to Drive Gold Higher

In the early 1600's, King Phillip of Spain wiped out his war debts by debasing copper coinage by 2/3rds, fueling rapid inflation. In the 1930's the US government confiscated gold, devalued the paper currency by 41% and the Supreme Court then refused to honor the promise written on every Gold Certificate that the bearer could redeem it for "gold coin" on deposit with the Treasury. Trust is indeed the word, and it's rapidly running out.... you can't trust government, you can't trust investment advisers, you can't trust public companies, you can't trust their auditors. But you can trust an American Gold Eagle in your hand. It is the only asset without counterparty risk and the need to trust someone.

What Is Going On With Gold?

As economies around the world race to zero interest rates, the currency game will collapse if the Middle East creates a new currency backed by gold, with oil priced in it. That will tip the balance on currency manipulation. All I can say is that when the archeologists uncovered 264 gold coins in Israel the other day, those coins were still worth something....

Peter Schiff: Outlook for the Gold Market

If you have the time, read Murray Rothbard's "America's Great Depression" (free in PDF). It's uncanny, but most of the things that are now happening also happened during Hoover's term. The bailouts, the propping up of unsound banks and businesses, the inflationary policies of the 20s, and the final devaluation of the dollar. All these interventions, according to the Austrian theory, prolonged and worsened the depression by preventing the shake-out of misallocated resources caused by the loose monetary policy of the 1920s. As for me, I wouldn't even consider buying ETFs. If the government reneged on Gold Certificates in 1934, what makes you think the ETFs will deliver physical gold? So I'm buying physical gold and silver.

Will COMEX Default on Gold and Silver?

The whole system is based on "TRUST" and "honesty" which are in short supply these days. Even the federal government reneged on the gold certificates issued before 1934. Read the Supreme Court "gold cases" to see how the highest Court simply sidestepped the "ironclad" promise to redeem the certificates in gold coin. As a lawyer, I can tell you there's no rule that can't be bent or circumvented once the lawyers get into the act. It's a joke. Take physical delivery now so you don't have to trust anybody.

Consensus Gold Estimates

I guess we should sell our PM's and buy into the Madoff fund.