noob

Fed Sends Gold Higher, But What Is It Good For?

More gold will be discovered. But the gold represents the productivity and wealth creation. it's legitimate.

Creating 1T$ on a computer terminal at the Fed does not create nor represent wealth. It's erosion and destruction.

There is a valid point that if we were to somehow convert to a gold standard the demand for gold would increase signficantly as would it's value. So collecting gold today would reap tremendous benefits in a future of gold standard backing.
If we don't convert to gold it's easy to convert your gold to any other currency in the world or you can use it directly.

On Nov 18 10:39 PM odin wrote:


> Re: gold investing itself even assuming a return to a de jure if
> not de facto gold standard:
> People also extrapolate the data of a last few years to project supply
> (the best we can do). True, gold isnt printed, its mined. But what
> happened to silver as a monetary store of value when silver mines
> were discovered in the American west? If we are thinking of gold
> only in terms of a currency, we should know that there IS a growth
> rate for gold -- will it always be lower than the growth rate of
> global GDP? Are we so sure there is no more gold to be discovered
> beyond current mines?

Fed Sends Gold Higher, But What Is It Good For?

Gold has intrinsic value as an agreed upon exchange commodity. If you can find a better exchange commodity then use it. Silver, Copper, Gold seem have been the best solutions for the past 5,000 years.
It frees us from a barter-only system and works a lot better than using fish for exchange. Especially after the third day.
Time and again, Gold and Silver have been looked upon as the final option for an exchange commodity -- and that is where the value is.


On Nov 18 04:33 PM Davewmart wrote:

> Gold has no intrinsic value? Hardly. It is a very valuable metal
> for many uses in electronics etc.
> We also seem to have hit 'peak gold' so I very much doubt that in
> 100 years time an onze of gold will still only buy a suit.

Asset Valuation and the Dollar

Wow, I really thought SA had better material than this. Perhaps it's time for a moderator.

Have you any clue what Ben has actually done to this nation? Technically the only thing we have so far is: significantly higher inflation than predicted following the QE, a debt that no one can imagine paying off, dollar falling faster than all major currencies.

Even this morning we have more news of lower earnings, continued loss, and now we have more issues with companies and people just leaving the country because it's a sinking ship.

And you want to reward him for his actions?

Now We're Really Due for a Pullback

I don't think there is that much incentive to pull back. Hitting the 10,000 market has created a great psychological achievement in the economies image of a recovery with long lasting implications. I said Image, not fact. After all, by the numbers we have risen to pre-crisis levels.
Meanwhile the dollar falls consistently. Almost as consistently as the ups and downs of the Dow. Dollar goes up, Dow goes down. Dollar goes down, Dow goes up. Same with the price of Gold but with a subtle undercurrent of always going a net "up".
The inflationary pressures of a falling dollar are so great that we are able to achieve 10,000 on the Dow, yet the net worth of the Dow is almost unchanged since March through the currency failings of the US.
Comparing the Dow to the price of Gold and we are in a far nastier spot than we were the last time the Dow was at 10,000.
There will not be any significant pullbacks on the Dow for a while yet. And when it does happen, the pullback will not be in the Dow directly but in the currency -- leading the net purchasing power of the Dow into a pullback. But the numbers on the bottom of your screen will not show that.

The Greatest Depression Is Coming

It's helpful to recognize that Ben's track record is 0.00% accurate. So when he says the Recession is over you can bet your life savings that it is most decidedly not over, not likely to be over soon, and only the Keynesians will buy into that tripe.

And when Geithner says we have a policy of a strong dollar then it's assured that we will all be using dollar bills for toilet paper soon enough. His track record for improving matters ranks with Ben.

For the most part this is all accurate information in the article. The problem is that there is not much new here and yet, despite the consistency and volume of such articles there is nothing to be heard like this in mainstream media. Which begs the question: are we all insanely wrong or is the media pushing as hard as it can against some unseen force with it's consistent message of misinformation?

I'm inclined to be VERY skeptical of anyone who changes the term inflation to reflation or anything else than what it is. Today sure feels like a Depression but my grocery bills sure look like Inflation.

Personally, I'm betting that the mainstream media has got it all wrong as they are still following the Keynesians and are rejoicing that the stock market is up-up-up. Never mind USDX or spot Gold prices.

Every fiat currency is sinking, some faster than others. Put your money in the most buoyant item you can find for the long run.

On Oct 17 09:05 AM TripleG wrote:

> Real Estate foreclosures will continue
> despite the announcement of 'the recession is over' by Bernanke,
> Obama and Co., and others.

Obama's Financial Reform - A Distraction from the Real Issues

I find it fascinating that the only way to keep an entity from hurting itself, and others, is to wrap them in more bubble wrap at every offense. This is not how creatures learn.

Adding bubble wrap to the offending banks gives license to continued moral hazard. No one gets "hurt" so who cares what happens?

Remove moral hazard. Make pain real. Have banks fail and hard. This will keep them behaving.

How to do that?

Remove Federal Reserve bubble wrap.
Remove Fractional Reserve bubble wrap.
Remove Fiat Money bubble wrap.

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

I think there is going to be a slow trend upward on Gold for the next nine months as countries and individuals start to back away from USD. There is no information coming forth to indicate that the USD will do anything better fall hard in 2010 with speculation of a collapse/crisis of the currency.
If people think the dollar will remain intact after all this is done, they are going into foreign investments to shore up against the dollar. This is consistent with the lack of industrial investment in this nation as reported elsewhere.
If people think the dollar is going the way of the Confederate Dollar and others, then gold will be about the only option available. That or some other commodity with hard money exchange properties (silver, platinum) that you can get physical possession of.

Money Supply: The Myth of Hyperinflation

Even a 4% increase in M2 results in a 10X increase in checkbook money that appears at the bank. Add to this a 5% (last I heard) savings rate, further decreasing the leveraging of the banks. Once this fear of the economy clears and people start spending and lending the fractional reserve limits will return to their nominal values. This transition from saving to spending, combined with the magnification affect of fractional reserve banking will take this 4% and increase it significantly.

Only then will the real power of inflation become realized. After we recover from this deflation. Which you can see because of the inflationary increase in the money supply offsetting it.

No matter how to try to spin it -- we have a huge inflationary bubble sitting just behind every bank tellers window waiting to get out. As one person said, you can't just create wealth by printing money. All you get to do is dilute wealth. So the $100 in my wallet is diluted by the $10,000's Ben has printed on my per capita behalf. Problem is, he's not giving me that $10,000's. So I'm losing out.

Bernanke will be reappointed for a second four-year term as Fed chief. Obama will make the announcement later today.

I recognize the need to continuity, but this guy really doesn't understand the causes of the Great Depression. Perhaps when we are awash in collapse in 2011 he might reconsider just who's version of past events was the most rational.

Who's Blowing This Bubble - And When Will It Pop?

What would happen if the Fed just let rates float according to their natural value instead of screwing with it?

Might help avoid some of these problems.

Of course, we could do better if we just removed the Fed completely


On Aug 07 01:32 PM Michael Clark wrote:

> I couldn't agree more. The Maestro (Greenspan) should have started
> raising rates in 2000 slowly, anticipating what 18 years of cheap
> credit would do. It's political suicide to raise rates unless we
> are swamped by inflation. The Fed is supposed to be independent
> so he can afford to make such decisions without being worried about
> the politics.

Why Another Stock Market Collapse Could Be Imminent

The irony is we all know what happened that time around and can take measures to protect/improve our positions. And it seems to me that the Government has no clue what actually happened then or what will happen now.

I'm more concerned about us passing the Great Depression One and creating the Great Depression Two wherein we suffer a cataclysmic currency collapse and are unable to get the economy corrected because of government interference.

As long as we have a Federal Reserve protecting the banks and allowing fiat currency & fractional reserves we have no sound foundation to this economy other than good looks and a smile. And that's not holding up very well these days.

At least in 1920 we had hard money on the gold standard. In 1929 they fixed that by removing our hard money. In the 1970's we removed the gold standard. Ever since then we've been living on a dream.

On Aug 05 05:39 PM Russ Wetherill wrote:

> We aren't on the 1920s tax-cut recovery road, we are on the 1932
> tax-increase (or deficit spending) depression road.
>
> On Aug 05 03:07 PM Angel Martin wrote:

Scorecard: Inflation Takes Charge

I agree with much of what you have here. Inflation is not always as easy to calculate. I take the approach of looking at specific product prices and aggregate grocery bills for me personally. Food will be the first undeniable sign of inflation -- which is probably why they don't use food to measure inflation anymore.

So far I'm still in the noise of weekly/monthly variations for this area. There is certainly no such thing as Deflation when you go shopping for food. But there's little sound evidence of inflation either.

I suspect we have achieved the same stage as the Weimer Republic. We have trillions saved up or pent up awaiting credit issuance. When that comes out and people start buying more than their Cash for Clunkers and spending the money they've stored to "keep up with the Jone's" once again, we will know what inflation really looks like.

On Aug 07 07:07 PM Fighting Yoda wrote:


> Deflation is what we have all over - gas prices to homes, to autos,
> even food. So don't hold your breath for inflation, not for quite
> some time at least.

Inflation vs. Deflation: Pick Your Poison

In reality, one of the two pirates would find the chest and purchase all the goods from the other for 2 coins and at the same time raise his prices to 25 coins. The recipient of the new money (source of inflation) would grow immensely rich at the expense of the rest of the population.
If he were smart he would initiate a program of welfare wherein he would give the other man 20 coins for goods and tax him ten. And collect the rest on sales leaving him forever a despot.
Until the other man revolts against "The Man" slitting his throat in the middle of the night and taking all the gold for himself. And living off nuts and berries for the rest of his life....


On Jul 24 08:20 PM msoori wrote:

> The article hides out the middle man completely, making the argument
> a completely flawed one. In the real life, majority do not participate
> in this "discovery of a treasure chest." Though we see and hear
> the printing presses roll, none of that makes it beyond the pockets
> of the rich bankers that are too fat to fail! I personally haven't
> seen any of these shiny new Benjamins and nor will majority of Americans.
> So the 2 people argument is completely flawed, yet the majority of
> the populous ends up having to cough up more and more for the same
> goods with a dwindling supply of money (as we loose jobs) while the
> new money clings onto the deep pockets, finding comfort in the flabby
> crevices where the sun never shines.

Inflation vs. Deflation: Pick Your Poison

Mystery of Banking - Murray Rothbard

Inflation is great if you have a debt. If you have a payment of $1000 a month on a house, with inflation this will move from 3X your groceries to 1X your groceries over decades. This makes inflation attractive to those who are into deficit spending or living beyond their means.
If you save $1000 a month then deflation is what you want because that money will buy more groceries in a decade than it can today. When we were under the gold standard this was the case and people who saved their income over the years had that nest egg for retirement. Today it melts away under inflation until you are living in a box by the side of the road.
If you hold someone elses debt, like a mortgage or some other loan, then inflation is bad because your return on your investment by interest earned is diluted by the inflation you are realizing at the same time. I would love to lock into a massive loan for 6.5% and watch inflation run up to 10% over the next 10 years. That would almost make me money.
The Federal Government loves deficit spending. That allows them to purchase whatever programs are necessary to get re-elections without fear of having to pay for it. And they manage it through the inflation or the dollar. Effectively, inflation is a black-tax because no one sees it on their ledgers but it insidiously erodes your earnings, assets, and income. And it makes their debt relatively smaller with each passing year.
The holders of American Debt (China, Japan) hate inflation because that makes their purchased debt of dollars worth less every year -- hence the concern about the American Dollar as a global form of currency exchange. With inflation, we win and they lose.
The Federal Reserve inflationary practices will always be supported by the Government until the government is void of it's debt and deficit spending. And that will eliminate any voluntary move towards a hard currency standard which would remove any future of inflation by fiat currency measures.

5 Reasons to Avoid the Gold Rush

Gold is not money. You cannot use Gold in the US as "tender" by law.

However, gold has a 5,000 year history (far longer than any concept of deposit notes) that enforces the idea that gold, along with silver, is one of the few materials on this planet which meet all the requirements for specie money or money in absolute terms.

If you believe in a true currency crisis then why would you purchase something like GLD? It's not gold. It's a $USD representation of what Gold (AU) is worth on a US stock market. If the $USD goes to zero how will you be able to retrieve your wealth from a busted ETF riding on a busted Market on a busted currency?

GLD is nice for inflation hedging and very convenient.
GLD is useless for a currency crisis. For that you need something you can put in your pocket and take to someone who can give you Euro's, Rupees, Yen, Pounds based on the value of what you have in your pocket.

On Jun 19 08:54 AM The Geoffster wrote:

> Gold is money and it will still be money when the greenback is sold
> on ebay to nostalgia buffs.