With some volatility, the price of gold had tracked the national debt and the debt ceiling from 2000 through 2012. It doesn’t take a goldbug to figure out that if you increase your debt from $5.7 trillion to $16.7 trillion over 12 years by printing paper fiat dollars, those dollars will become worth less in relation to a scarce commodity that has functioned as money for over 2,000 years. The price increase of gold is simply a matter of supply and demand versus the USD.
But something unusual has happened in 2013. The national debt has continued to soar. Just because the government stopped counting on May 21 doesn’t mean it hasn’t continued to go up by $2.5 billion per day. Your government says the national debt stands at $16.747 trillion today, which is $48 billion higher than the official debt limit. In reality, the national debt has reached $17 trillion. By the time Obama leaves office it will be $20 trillion.
Despite the rhetoric in Washington DC, no one will be cutting anything. Obamacare will cost far more than any CBO projections. The economy is in recession, so tax receipts will be far lower than projections. We will surely fight another war or two between now and 2016.
So was the 12 year increase in gold prices that tracked our increase in debt just a coincidence? Does the 2013 disconnect prove that gold prices have no correlation to debt and dollar debasement? Or has there been a concerted effort by the Federal Reserve, the government and the Wall Street banks to suppress the price of gold artificially through the paper gold markets and use of derivatives? Do they know that the price of gold reveals their debasement scheme?
If you believe that artificial suppression will fail and that gold truly is correlated to the amount of debt being accumulated by your political leaders and money printing (QEternity) being done by Ben and his boys, then you will conclude that gold would be fairly valued at $1,800 per ounce today. It will be fairly valued at $2,200 per ounce by the end of Obama’s term.
Do you believe Bernanke and Wall Street will win this battle? Or do you believe the market will ultimately prevail?
The tech bubble, and housing bubbles were based on greed, and made many people lots of pocket change. When people wake up one morning to the realization that their savings are rapidly becoming just lint in the farthest corners of their pockets they will scramble, crushing, crawling over each other in a mad stampede to get some crumbs of what gold is actually available. Nothing like a fear driven bull. No more keeping a lid on the price at that point. Same applies to silver, only more so due to more consumption and tighter supply.
Central banks keep it down and keep buying, they are no fool. John
As stated above, “The price increase of gold is simply a matter of supply and demand versus the USD. ”
I wish it were that simple. But it is not. The amount of public debt stated above is $16.7 trillion, which I agree is horrendous. I agree this debt (and other structural issues) are condemning future generations to reduced opportunities of prosperity and a lower quality of life. But our mutual dislike and distrust of those that have placed us in this tenuous position is not justification for our viewing this situation with a gold bias. Unless the public debt is viewed as only a part of the equation the complete view will be lost.
Private debt exceeds $40 trillion, more than twice the public debt. Since 2008, $7 trillion in private debt has been written off. Much more of this private debt will be written off, especially as banks allow their RE inventories to slowly re-enter the market (the foreclosed properties are being held back to prop up values and prevent a collapse in RE. This is why QE infinity is remains in place; proping up the balance sheets of the banks.) As debt is written off, the deflationary forces of debt destruction will continue to offset the appreciation potential of gold. The statement form the post, “Then you will conclude that gold would be fairly valued at $1,800 per ounce today,” is revealing. Gold is not $1,800. Attributing this disparity solely to market manipulation is too narrow to justify this disparity. Does market manipulation exist? Yes, to some degree in all markets. But to accuse those that would manipulate (governments, etc.) the market as being of questionable intelligence and then suggest that they have become the Illuminati that have manipulated the global gold market and kept this plan a secret is a huge contradiction. It cannot be both. If they are the bumbling idiots that many on the Platform claim, please explain how these Barney of May Berry types have manipulated the gold market and kept it a secret? Adding to the idiots’ position is the fact that they escaped prosecution and profited. When will they will be brought to justice? When will the tipping point will occur that will send gold skyrocketing? Could there be less nefarious forces at work that are suppressing gold’s potential? Can it be something as clearly visible as debt destruction offsetting gold’s climb beyond the simple calculation of ‘Gold should be worth.’ Such broad questions and thinking are at least worthy of consideration and discussion. Thanks for the opportunity.
“The fanatics in the Washington establishment don’t get it that Keynesianism does not work. You cannot increase your debts to pay off your debts. You cannot print more money to cure all of the money you’ve printed, and all of this printed money is flooding out all over the world and wreaking havoc everywhere. They are all running the printing presses. Mark my words, if you don’t own gold you will rue the day you decided not to buy it.”
— James Dines
“The chart above is an extreme example of an exponential function. It could be a picture of anything, and the analytical conclusion would be the same. It is the picture of something which is completely/mathematically/irrevocably broken. There is no way such a function could ever be “fixed”. It is mathematically impossible.”
— Jeff Nielson
Falling gold prices could also be the first sign of a deflationary collapse. As faith in paper money backed by nothing, being printed at an $85 billion per month clip evaporates, everything will be worth less and less.
On the other hand, reckless money printing risks inflation, which is evident every day at stores and places real people spend real money. As soon as ‘Ol Yellen is running the Fed, we are going to see the mother of all QE, worse even than Japan. I’m guessing within a year or two, we’ll have a currency crisis, hyperinflation, or some other disaster resulting from money printing.
Sorry, there aren’t any positive signs for the economy. It’s contracting big time, no jobs now or in the future, the FSA and entitlements continue to grow at an exponential rate, Obamacare is the biggest economic weapon of mass destruction this country has ever seen, and the Fed is printing $85 billion a month in a desperate effort just to keep all the plates spinning. ‘Ol Yellen will probably doubt QE to $170 billion a month “to get the economy going and created jobs”, which results in economic collapse.
Whatever plans the Chinese have on gaining reserve currency backed by gold are getting closer every day, and will dramatically accelerate with ‘Ol Yellin at the Fed. Our days are numbered folks. Not sure who’s going to have the money to buy your gold after the collapse. Maybe the Chinese will issue COD mailers so you can exchange your gold for Yuan, the new world reserve currency.
I’m with AWD.
Credit issuance occurs only in an environment of credit ACCEPTANCE.
As long as people trust the debt’s valuation then growth in credit/debt pumps up the money supply.
The Fed can double its $85B/mo bond buying binge, but if in doing so it spooks people’s perception of the FUTURE value of $17T (TTTTT T!) of debt already on Uncle’s books and nearing $60T of total credit market debt outstanding, the net effect will be a COLLAPSE in the value of total debt and a commensurate collapse in the size of the money supply, which will be the opposite of the inflation process that got us to where houses average $250k and gold is worth $1300/oz.
No credit inflation in history has failed to end in a deflationary collapse in the money supply, as I understand it.
What happened to gold during the Weimar credit inflation?
What happens when the Fed pumps an incremental $85B in debt-from-nowhere into the economy but commodity prices remain solidly BELOW record peaks?
This is a symptom of something.
Weinmar is irrelevant because the entire globe is experiencing the same debt debacle that is occuring in the US (Believe it or not, Japan and the EU are worse). Because currency is cross traded and all of the G20 is in a devaluation phase, this reference is not applicable.
Admin states, “The fanatics in the Washington establishment don’t get it that Keynesianism does not work.” I agree, but I believe the problem is far worse than stated. The Keynes approach worked when demographics supported future growth. The DC crowd, the Fed, and all the talking heads in the media do not recognize this structural change, demographics are no longer supporting these past policies. The growth that would normally be expected by injecting liquidity is failing because the flow of funds is not providing the stimulus that has occurred in the past. The only entities that benefit from Fed purchases of $85 Tillion are the banks that prop up their balance sheets.
The boomers are past their prime, not borrowing as before, not starting new businesses as before, not having children, and cutting back on debt. Home equity loans no longer fuel vacations and large screen TVs purchases. These are a few simple examples of the enormous structural changes that printing money will not solve. The Keynesians are driving down the road and only looking at the rear view mirror. They have two options; add liquidity or withdraw liquidity. They have chosen the former because it has worked in the past. As with Japan, it will no longer work and the best case is that it will be a generation before we return to a degree of normalcy.
Tommy makes my argument for me. The entire globe is printing currency at hyper-speed. Therefore, they are all debasing their currencies in relation to gold.
The worldwide monetary system is based upon nothing but faith and trust in the authorities issuing the paper. The trust is dissipating rapidly. As people lose trust in paper, they will turn to something that has retained value for centuries – gold.
If the banker fucks have their way, they will attempt to default on the debt through a reset of the monetary system. They would try to create a new currency system. Those who have gold would be able to convert that gold into the new currency. Anyone left holding the old currency would take a huge haircut at a minimum.
I find that people who didn’t own gold from 2000 through 2012 are the ones who argue most vociferously against gold. No biases there.
Anyone who doesn’t hedge their bets with some physical gold is a fool.
Admin,
Was the Wiemar hyperinflation a banknote or a credit event?
Were people lugging around wheel barrows full of marks or German government bonds?
Weimar hyperinflation was caused by cental bankers printing money to pay off debts they couldn’t pay with the revenue being generated in taxes.
Sound familiar?
I love seeing people make arguments about it being different this time.
It’s always amusing.
So gold is going to go to the moon.
This presumes it will take more and more and more dollars to buy an ounce of gold.
This presumes that the trend toward ever FEWER dollars in people’s pockets (declining real wealth among the middle class), MORE dollars will be available to chase ounces of gold.
People are getting poorer, but there will be more dollars available to chase gold.
Who are these mythical people who, pressed to buy food and clothing, and whose stocks and other investments are collapsing in a heap, will also be FLUSH with cash to buy gold?
Where is the break in my logic?
You really think financial markets and assets are driven by the middle class and poor?
What planet are you living on?
Only the top 10% in the country own any financial assets. They own virtually no gold.
I’m guessing you don’t own any gold and missed the 500% bull market from 2000 through 2013, a period when the stock market was up about 10%.
Gold performance during deflation is difficult to because deflation is an unusual event,
where one has to return to the great depression for a comparison. Gold fared well in that past deflationary cycle, performing marginally better than the DJIA.. Commodity linked metals did not do well. To be objective, this was a pre-keynes time period. Therefore these comparisons may not be as relevant.
To restate prior comments, I am not a gold hater. Neither am I a gold lover. It is a commodity that can be traded, but unlike other metals provides fear insurance in these uncertain times. Because gold should hold its value relative to the DJIA during deflation, it may be easy to conclude that Gold offers insurance in any environment. I would agree with that statement and trade it accordingly. But to make correlations based on narrow standards is akin to supporting the global warming argument. Correlation does not equal Causation.
They are the same. Inflation is running rampant across the globe.
The stock market is up 120% since 2009 due solely to money printing.
Oil is up 175% since 2009.
Home prices just rose by the largest one year rate in history – over 12% nationally. This was higher than during the 2003 -2006 boom years.
Tuition is skyrocketing as the printed fiat is loaned to millenials.
You people and your deflation – hysterical.
JP Morgan, The Fed and the rest of the financial elite have been manipulating the paper gold and silver markets to keep the price from rising. If you had been paying attention to the articles I post from Jesse, you would realize that they have pushed that envelope as far as they can go. The physical gold has been bought up by the Far East and when JP Morgan and the rest of the Wall Street shysters have to deliver the gold they say they have, all hell will break loose.
Theory is very comforting to intellectuals. I deal with reality.
dc-
the break in logic comes when you assume that everybody will be the same as everybody else. as is the case now there are those with money and those without, those what want gold and those what got it.
of course your mythical people won’t be the ones buying when we are selling, but they might have something to trade.
all this talk about deflation.
every inflationary period is followed by a deflationary period.
we will get there eventually, but this expansion of the money supply we are currently experiencing has not run it’s course, and probably won’t be done till it collapses.
I wonder what would happen to the price if it became a whole 2% of asset allocations? Sure looks like a bubble to me.
Admin, they are not the same.
I am unable to explain the difference to your satisfaction.
You see inflation (as do I). Imagine it’s 1929…nine years of inflation…and all you expect is more of it.
Then you get 2 straight years of crushing deflation.
Gold did well in this period (1930’s) because it’s dollar value was fixed. It was not pricing in a market. Anything that was NOT fixed in price by gov’t fiat got crushed as the money supply collapsed.
I’m going to stop trying to sing to deaf people. You get this or you don’t. If you think in concrete terms you will never grasp the difference between printing banknotes and trading imaginary credit for imaginary (gov’t) debt.
Those who cling to the Quantity Theory of Money cannot explain why all prices haven’t doubled in the last couple years. Those who expect deflation watch as the Fed creates oceans of credit yet only select markets continue to make new highs while others remain way below their prices of 2008 (oil, for instance, or silver).
We’ll probably know pretty soon how this is going to play out. Maybe I’ll be wrong, but one thing I will happily do, given the arrogance of gold bugs and hyperinflationistas, is ram $800 gold sideways up your asses should that time arrive. You people think your position is infallible. I at least have the wisdom to grasp that I could be wrong, while you drip with arrogance.
As expected, you missed the entire gold bull market since 2000, therefore you can’t wait to say I told you so when you are ultimately proven right after being wrong for over a decade.
You call it arrogance. I call it being rational. Anyone who thinks they know the future is an arrogant prick. I have not sold all my assets and coverted them to gold bullion, but I do systematically add bullion to my holdings as a hedge against what our dear leaders may do.
My facts about inflation seem to infuriate you.
Interesting.
How precious that you put your faith in the inflation numbers produced by your owners. No deflation if you measure CPI exactly as it was measured in 1990.
Jim, how much gold did you buy when it hit $253/oz in 1999? How about in 2001?
You’re full of shit if you claim you were buying into the lows of that period. Perma-bulls were capitulating after a greater than 80% draw down over a 21 year period.
Was there no inflation in the 1980s or 1990s?
I can admit I watched Bob Bishop cease publication of his Gold Stock Newsletter, and watched Newmont Mining sell forward its full year production on the futures market, and sadly did not realize these were screaming bottoming signals.
What I laugh at are people who got the gold religion long after those lows and, looking at their paper profits today, thump their chests and tell us all how brilliant they are. The same could be said of people who bought Ford’s common in 2009, who are up far, far more money than those holding gold during that period.
You don’t know the future. I don’t know the future. We’ll see who laughs last on this cycle in a few short years. Until then, I hope you’re all mortgaging yourselves to the hilt to buy gold (and rural land) or whatever else your heart desires. I got completely out of debt, I live small and I am following my own theories as to where to “hold” my meager wealth.
We’ll know soon enough who was reading the right tea leaves.
I bought gold in 2004 after coming across the writings of Bill Bonner and Richard Russell. Gold was around $400 per ounce in 2004. The stock market is up 50% since 2004, gold is up 325% since 2004. And that is after the 30% plunge in the last year.
Again, you make claims of all or nothing. No one is mortgaging anything. I have no debt other than my 3.25% mortgage on a house where I have $200k of equity.
Since you or I don’t know the future, why not rationally hedge my bets? Gold is a debasement hedge. Gold is an evil government hedge. Gold is an Obama hedge. Gold is a Yellen hedge.
If you are so sure of your deflation, why don’t you pile into long term zero coupon bonds? You’ll get rich when your scenario plays out.
No guts, no glory. Put your money where your mouth is. Go all in baby.
Also, Jim, your side-handed swipe at me (“your owners”) proves you haven’t read one among the thousands of words I have published in public fora for all to see and criticize. I’ll match my –“individualist-anarchist’s” credentials against yours or anyone’s any time, any day.
I at least can give your view the benefit of consideration. You, however, regurgitate the gold-bug argument like the owner of a precious-metals storefront has his hand up your ass working you like a sock puppet.
I don’t have all the answers. I pity those who are so certain they have them that they “bet the farm” on being right. If I turn out to be right and you wrong, I hope those who mistook your dogmatism for wisdom look you up in person someday to express their “disappointment.” I stake out no such position, and am responsible only for my own future.
I don’t envy you and your self-confidence and hubristic certainty.
Somebody is getting hot under the collar. I use “your owners” when talking about the Wall Street assholes. I wasn’t taking a swipe at you, but I’m glad it irritated you. I haven’t read anything you have written. I’ve given you publishing priveleges on TBP, but you haven’t posted anything.
As usual, you put words in my mouth. You and your “bet the farm” bullshit is getting tiring. Gold makes up 1% of global asset allocations. I guess numbers aren’t your strong point.
Face it. You have been wrong for 12 years and now you have a wild hair up your ass for anyone who was right. Keep predicting your deflation and maybe before you die, you’ll get it right.
Meanwhile the average American’s standard of living declines every year due to Federal Reserve created inflation.
I like gold. I’ve bought and sold it. Made money and more recently lost money. Lots of money, both directions. Now I only believe in holding physical metal, and as a hedge against what the admin is talking about, a hyperinflation event.
But I fully expect a MAJOR deflationary event to come first.
Key concepts:
Hyperinflation is not the same as inflation caused by slowly inflating the money supply.
Garden variety inflation is caused by increasing the money supply. Hyperinflation is caused by a sudden loss of confidence in the currency by the general population. As long as inflation is gradual and GDP growth is forever positive, the one does not necessarily lead to the other.
If the equity markets and/or real estate markets tank and drop precipitously like many of us fear, there will be serious deflation as all the leverage in the world unwinds. Book it.
At some future time, the dollar will become toast, because you can’t keep doing what the Fed has been doing forever and not expect the dollar to lose its appeal to investors.
Oil hegemony protects the US dollar. (At the moment).
Absence of any good alternative for a reserve currency protects the US dollar. (At the moment).
The second the dollar is abandoned as the world currency, hyperinflation become very likely for the US, imho. In that scenario, you might be able to buy Detroit for a couple of gold eagles. so it’s nice to have a couple, just in case.
Without going into specifics, Jim, I’ve done exactly what you suggest would be “all in” for my view.
WRT your 200k in mortgage, unless you can immediately pay off a call on your mortgage you own none of it. All your “equity” represents is the cushion the mortgage holder has on the price before they have to worry about losing money on the note.
I read a book in 1993 called “Crisis Investing for the Rest of the 90’s.” It was by Doug Casey (yeah, you know, THAT Doug Casey.) I bought the whole idea hook, line and sinker.
I bought silver. I bought mining stocks. Doug was a GOD, he was THE anarchist’s anarchist. I still LOVE his political analysis.
His investment advice cost me a fortune. I hope he got a nice kickback from Rick Rule’s brokerage.
What I’m saying is, I did what you did (read compelling analysis), just at a different time. I got pushed past my loss tolerance level and bailed. Year after year of losses does that to you.
You read something no more or less brilliant but the difference was that you had the good fortune to do so early in a bull run for the recommended asset class.
Yay for you.
The difference between us is that I’ve experienced at least two more asset cycles than have you. My experiences chastened my table-pounding certainty.
You have “enjoyed” the biggest danger to long-term success: early success. It’s easy to confuse good timing with intelligence.
I don’t have a $200k mortgage. I have far less than a $200k mortgage. My house is valued $200k more than my mortgage.
You don’t own your house even if you have no mortgage. Try not paying your real estate taxes.
You seem to think I’m an all or nothing guy. I have no idea where you get that idea. I had about 10% to 15% of my financial assets in gold or silver related investments from 2004 through now. The bull market didn’t make me rich and the current bear market hasn’t made me poor.
I don’t read gurus and do exactly as they say. I think for myself.
I’m guessing those zero coupons didn’t perform too well as rates went from 1.5% to 3.0%.
Look at that. Gold and zero coupons have both performed horribly at the same time. I guess we can both be wrong.
The CRB Index bottomed at 209 in early 2009 when Bernanke began his money printing. Today it stands at 285. That is a 36% increase. Is that deflationary? Do you ever tire of having the facts completely obliterate your theory?
I also am a Bill Bonner DR reader. I bought gold gold in 2005 as well on a technical signal. Based on that signal, I got out in December 2012. What has happened since 2012 with gold? Money printing has not stopped. Why has gold moved sideways to down since then? Why have commodities not gone through the roof? Conspiracy? I doubt it. Gold. It’s a metal. Trade it. Don’t fall in love with it.
Oh. We are dealing in reality now? Those increases mentioned above pale in comparison to the bloat of the Feds balance sheet. The market up 120% and it has responded as one would expect when liquitiy is prevealent. Wages are down. Is that inflationary or deflationary?
The problem with the inflationist is that they have been wrong since 2007. We have been told that we were doomed. Yet, we are not Zimbabwe, there is till food available, oil did not got to $400 as many claimed, there are plenty of countries that hold US Dollars, Treasury rates have not gone to the moon, and the dollar has not gone to zero. Deflation is sometimes supply-led, sometimes demand-led. Historically, the former is relatively benign while the latter can be nasty.
I’ll gladly accept an $800 oz value for gold at the point when $800 (in the new NWO currency) will buy you 40 acres of tillable farmland and a modern 3 bdrm house.
We need to face reality, the game that’s being played today cannot continue w/o some serious shit going down. When TSHTF, gold, however you measure it at that point, will be THE store of wealth IMHO.
I bought all my gold coins from 2000 to 2004. I purchased these one oz gold coins from $283.00 to $365.00 during those years. I stopped buying gold at $365 an oz because I felt it was “too high”. I still have the 10 Krugerrands that I bought at $365.
This debate over gold is pointless. When this economy falls and the printing scheme ends society will be ripped apart. Unless one can make the argument law and order will stand.
Sell gold buy ammo, the price will inflate, it can be broken down in small lots and bartered with and you can load a clip and defend your life, try that with a gold coin.
agreed sensetti on your point of owning ammo. i have a shit-load of it. when the system crashes, bartering will work for sure. (don’t forget TP.) however, you don’t suppose the barter system will last forever do you? if you have $100k or more in savings, it would be prudent to put a sizable portion in physical gold, so that when the new fiat regime or quasi gold standard emerges, you can come out of the cave relatively intact. gold will preserve your wealth.
I wish I was as smart as Admin, D.C., Tom and others who understand economics far better than me.
I have my few meager ounces of gold as some sort of hedge, insurance, store of value, etc. I agree with all of you that it is hard to predict how all this will play out. I don’t hesitate to predict, however, that whether it’s deflation, hyperinflation, stagflation, or any other -tion, little people like me will somehow be manipulated to make our gold hoards neither a hedge, insurance, or a store of value. Barring some sort of miracle, we will not be allowed to gain any financial advantage by owning gold. Bank on it, as you like to say.
Where is the gold? It certainly is not in the jewelry stores. Is it in the vaults? Could it be that Asia has it all?
Technical analysis is bullshit.
It is nothing but voodoo used to rationalize what did happen.
gayle, for what it’s worth, i don’t think your gold coins will become the focus of the government’s attention. if there is just a whiff of decency among the feds, in a confiscatory environment, they will raid/tax the big accounts with 400 troy oz. bars before anything else. if the tax on gold is hiked unreasonably, don’t sell it, trade it.
on the other hand, you may be right. given what the feds are capable of, i am surprised that the baby of that woman who was shot (murdered?) at the capitol wasn’t led away in handcuffs. “OK TOT, PUT DOWN THE FORMULA, HANDS UP ON YOUR LITTLE HEAD BABY, SPREAD ‘EM, YOU HAVE THE RIGHT TO REMAIN SILENT…”
An interesting article for Tom. Technical analysts make economists look accurate.
http://www.businessinsider.com/its-official-again-technical-trading-doesnt-work-2009-10
Admin, you are probably correct. Technical analysis is bullshit and everything Admin believes is the truth. I am going to consider refunding the money I took off the table a year ago before gold started its slide because that money was earned using technical analysis to augment my fundamental assessments. On second thought, I think I will keep the profit.
The topics and discussions on the Platform are not religion and it takes more than belief in one’s position to be true. Other possibilities exist, even if Admin has never heard of or experienced them. The Platform is an interesting place to exchange ideas, unless of course, those ideas conflict with those of Admin? Such a narrow view may gain the support of the faithful. However, it will not facilitate an exchange of information for those that seek a broader perspective. Mea Culpa, Mea Culpa, Mea Culpa. Unless Admin considers adding an online confessional for those that have strayed from the pack, I fear absolution will not be forthcoming. I heard the App Store has a Mea Culpa APP for those that have really strayed. ” Admin, Admin. Is that you?” Nah. Its only God. He just thinks he’s Admin.
Tom seems to be getting annoyed with the free for all style of TBP.
You see, I allow anyone to post anything. My arguments have happened to be more well thought out than yours. So solly.
If you don’t have the cajones to make your case, then you can crawl back under your rock.
I love when anonymous posters proclaim their brilliant analysis and huge riches from their great trades which are unverifiable on the internet.
Why don’t you regale us about flipping homes from 2000 through 2006 and getting out at the top.
Tell us about you exiting the market in March 2000 because of your technical signals.
Those stories always give me goose pimples.
I love getting under the skin of know it alls.
I’ve clearly succeeded in pissing Tommy Boy off. Don’t sulk over your thumbs down. Let us know what your technical signals are telling you now.
The TBP community awaits Tom’s advance technical signal so we can judge his performance in advance.
What should we buy Tom? Your technical signals must be flashing.
Let me guess. Your technical indicators are so secret, you don’t want to reveal them.
tom, could you tell me about this “broader perspective”, namely the deflationary view? because i haven’t experienced yet it in food, energy, or healthcare prices. nor in taxes, tuition and phone bills, or post office box rentals. nor in stocks, diamonds, artwork, wine, or real estate. please tell me about this mythical place of deflation where harry dent dwells. i am very much looking forward to 1 dollar gas, 2 dollar cigarettes, 10 dollar hookers, and a 100 dollar weekend in nyc. all that would be the best thing to happen to the common man since the hula hoop and jim beam. i am sure those in power, our masters, will do everything to make it happen because they love us. i can’t wait. do tell.
i will forward your words of wisdom to my alma mater, a boarding school in new jersey, which now charges a criminal $55k per year in the hopes that they will subsequently charge only $4.26 instead, upon hearing your theory.
We have silver, some gold, and ammo.
Me, personally, I don’t give a shit if gold goes up, down or sideways. At the moment, I get to trade damn near worthless fiat script for real money – gold and silver. How cool is THAT!?!
Why would I want to trade it back for even MORE worthless fiat script in the future? If a SHTF event does not happen in my lifetime, then my holdings will pass to my son, who will (hopefully) build on them. If a SHTF event happens during his lifetime, then he will be okay.
Planning on adding a bit more gold to the stash tomorrow, and this weekend is the Knob Creek Machinegun shoot- planning on adding some more ammo, too. Maybe even some powder and primers.
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I thought I made my case. It does not take cajones to express one’s view in this format. An open mind to consider another persons view would be helpful.
For the record, I used to write a private macro financial newsletter. In 2006 I advised everyone that real estate was due for a correction. The result, those with a closed mind (and real estate holdings) took umbrage. I was contacted indirectly by compliance officers of a major firm for possible SEC violations unless I backed off. That the accusations were false did not matter. What mattered was counsel informed me that such proceedings would require a retainer of $75K and expect the fees to be in excess of $250K if the matter was settled in arbitration. A jury trial would double that amount. I thought those fees were excessive for a person who wrote the letter as a sideline. I declined the fight and complied with the cease and desist. Also in 2006, I transferred all equity holdings to cash. Again, I used technical analysis to augment fundamentals. One of the brokerage houses had me sign a waiver that stated I was transferring these accounts of my own free will and against the advice of the firm’s advisers. A year later all hell broke out, they called asking how I came to that decision. My response was, “When the USP guy tells me he took out a mortgage to buy stocks, the party is over.” Was I facetious? Yes. But, did I mean it? Yes. A firend in the scrap metal business used the price of scrap to determine the health of the investment environment. That is somewhat of a technical indicator. I did research that demonstrated that scrap price correlated with a specific techincal indicator that worked 75% of the time. I know, its bullshit. You never heardn of it.
In my early years, before the grey hair, I was as ethnocentric about investing as Admin. Now, I err on the side of safety. Its not sexy. But the crowd is usually wrong and so are belief systems that do not allow for challenge. It is not personal. I have on more than one occasion expressed my appreciation for the opportunity to exchange ideas on the Platform. Claiming another persons’ view is bullshit, or that they don’t have the cajones, and making claims that those with a different view cannot be telling the truth is sophomoric and narrow minded. Seems a bit personal, but as I do not know you and you do not know me, it really does not matter. For all I know, you are as full of shit as you think I am. Ah, the exchange of ideas. Is this the only freedom yet to be curtailed?
Open minds go both ways.
I can regale you with my prescience in predicting the 2000 collapse and the 2005 collapse. I have documented my exits from a furniture retailer and a homebuilder due to my brilliant analysis, which management did not like. I can even regale you with my prediction of the bankruptcy of a real estate company who just so happened to be a major contributor to my university and complained to a top faculty member. They went bankrupt 4 months later.
You have the freedom to post anything you want on TBP. I have the freedom to disagree and make my case.
This site will never be civil if I have anything to say about it.
Anyone who doesn’t like confrontation will not stay long on TBP.
The only rule is there are no rules.
It should be obvious that I enjoy discourse and do not consider it to be confrontational. For confrontation, I remain engaged in the martial arts (since 1976). Though my physical skills have declined (I approach 63), my desire, though tempered, persist. The arts, years of sparring and grappling, give one the ability to walk away from a fight, the ultimate expression of confidence. It also reduces the anxiety that some consider presented with disagreement.
It is obvious that there are no rules and that Admin does not require testosterone replacement therapy. However, Admin brings to the table the buttressing of reputation that does carry a certain degree of responsibility. You have followers that believe in you, which in some cases eliminates or minimizes critical thought, and artificaially magnifies your position. I do not post when business demands prevent the time required. I also do not write when we agree. But, blind faith serves no one. The cult like behavior of gold bugs may leave many weeping. For those of us that were present during the Carter era, we remember those that had their heads handed to them as gold crashed.
I enjoy the sparring and I will continue to post as time and Admin permit.
I don’t have followers. People need to think, not follow. This isn’t an investment site. I’m a dude blogging on the internet posting my opinions. People have a responsibility for their own lives. They can read my view, your view and anyone else who chooses to post a comment and make up their own mind.
Anyone who blindly follows what is posted on the internet is a dumbass and I don’t want them coming to TBP.
The same idiots who “manage” our money today have “managed” it for 100 years.
The same stupid theories have been cited to perpetuate monetary folly and theft-by-con-artistry for a century.
The sky has yet to fall.
The fiat wastepaper still buys gasoline and beanie babies.
I think most of the “rich” today are wealthy because they embraced highly leveraged speculation. They exist with a tiny slice of actual capital, and if (when) the credit-inflation machine goes into reverse they will go from “wealthy” to “penniless” in an eye-blink.
The past 5 years have been a period of insane excess, attempting to cover up the nakedness of these many emperors. It is the last wild party before the entire edifice collapses in a heap.
In 1982 the USA was in recession.
Books on finance were predicting Armageddon.
Gold had run from $102 to $847 in nine years. People were predicting the imminent demise of the dollar.
Silver had run to $50-ish (a much bigger % rise than gold).
Money market funds were yielding 16%.
Mortgages were running 14-16%.
Inflation was running AWAY. If you think food/gasoline/etc are running now, you weren’t around then.
Stocks had gone NOWHERE since 1968. Wall Street was where capital had gone to die.
Who wanted to buy stocks then?
Who wanted to SELL gold then?
Who wanted to trade a 16% yield in their MMF for anything?
I’m glad I think for myself and don’t buy at the top and sell at the bottom.
Gold Daily and Silver Weekly Charts – G20 Central Bank/Finance Meeting in Washington Tomorrow
“Above all, don’t lie to yourself. The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others. And having no respect he ceases to love.”
Fyodor Dostoyevsky, The Brothers Karamazov
As a reminder, the G20 finance ministers and central bankers will be meeting in Washington DC starting tomorrow 10 October for a two day meeting. They will be continuing the discussions of changes to the international financial architecture and banking system.
There was a 31,000 oz. deposit made to customer storage at HSBC yesterday, and one bar of bullion was moved from customer to deliverable status at JPM.
Today was the usual slap and cap, wherein gold is hit early and then held down for the rest of the NY trading day, rebounding a bit in the afternoon.
It turns out that in August there were 300 tonnes of gold bullion shipped to Hong Kong from the US and Switzerland. The game is afoot.
Let’s see how the debt ceiling discussion fares as it seems to be the big market driver now. Expect the lies and hysteria to get thicker as the date grows closer. There is a slim chance that this amounts to a serious crisis other than the usual deterioration of nearly everything from systemic corruption, but there is a chance.
People offer their fears to all the wrong things, to their false gods. They live in constant fear of phantoms and dustballs, in service to their pettiest vanities. If we only knew. But we don’t, even though God has sent Moses and the prophets to warn us.
How terrible it would be, to hear those awful words.
Weighed, and found wanting.
I shop, pay bills and have two kids in college so I see the inflation.
And yet when I listen to this Professor Antal E. Fekete during the second half of the Max Keiser show (13:00) I hear that the PACE of credit creation is not keeping up with the printing of dollars and he’s calling that hyper-Deflation – or Capital Desctruction.
I thought the whole discussion interesting but I remain weary, wary and confused …..
Thoughts?
PS: the mag oil seems to be helping with the arthritis – thanks!
Paging Dr. Crane
By Turd Ferguson | Tuesday, October 8, 2013 at 11:21 am
Occasionally, we are allowed glimpses of the inner workings of The Evil Empire. Let’s just summarize how this works because, frankly, I’m already so angry that my blood pressure is boiling AND it’s only Tuesday.
Back on April 10, two days before the Brutal Beatdown Scheme of April was launched, Goldman Sachs rolled out their “analysts” to report that they were officially forecasting a drop in gold prices. They not only advised clients to sell their gold, they even took the unusual step of recommending their clients to go short. Below is some text from this link:
http://online.wsj.com/article/SB10001424127887324240804578414872583064816.html
Investment bank Goldman Sachs Group Inc. GS +0.29% said Wednesday that gold’s prospects for the year have eroded, recommending investors close out long positions and initiate bearish bets, or shorts. The shift in outlook was the latest among banks and investors who have soured on gold as its dozen-year runup has been followed by a 12% decline in the last six months.
Goldman began the year predicting gold would decline in the second half of 2013, but said Wednesday the drop began earlier than expected and doesn’t appear likely to reverse. Like others, the firm said the usual catalysts that have been bullish for gold during its run are no longer working.
The precious metal, normally a haven for investors in troubled times, has continued to fall in recent weeks despite persistent concerns about the global economy, including continued euro-zone debt troubles with the bailout of Cypriot banks, an aggressive new economic-stimulus program in Japan and surprisingly weak U.S. jobs data last week that raised questions about the domestic recovery.
“A large rebound in gold prices is unlikely barring an unexpected sharp turn in the U.S. recovery,” Goldman’s analysts wrote in a research note. “While higher inflation may be the catalyst for the next gold cycle, this is likely several years away.” The firm noted that its year-end price targets of $1,450 a troy ounce in 2013 and $1,270 in 2014 are below prices in the futures market pegged to those delivery dates.
On the surface, this worked beautifully for Goldman’s clients. Just two days later, gold fell $60 and, on the following Monday, it fell another $140. Wow! Pretty remarkable bit of good timing, wouldn’t you say? Tell your clients to short something and then, magically, that “something” falls 13% within the next week!
Of course, you and I know what really happened. Some 400+ metric tonnes of paper gold were dumped onto the Comex at the critical support level of $1525. This supply simply overwhelmed the existing bids and price began to cascade downward as sell-stops were triggered with price breaking down and out of its 19-month range. An excellent summary of the event can be found here: http://news.sharpspixley.com/article/ross-norman-gold-crushed-by-400-tonnes-or-usd20-billion-of-selling-on-comex/159239/ and here: http://www.zerohedge.com/news/2013-04-15/gold-crush-started-400-ton-friday-forced-sale-comex
Having executed The Perfect Crime Trade for their clients, what did Goldman turn around and do next? They bought, of course! From the Q2 updates , we found that the the biggest institutional buyer of the GLD between April 1 and June 30 was…wait for it…GOLDMAN SACHS!
Administrator says:
“I don’t have followers. People need to think, not follow.” Well said, but not realistic. Do you honestly believe that those who express allegiance with your views are typically independent thinkers? There is a reason celebrities and athletes endorse products. That reason is “Most people are followers”. Though the visitors to the Platform are not of the mainstream, it is unrealistic to think that you, as the moderator, do not wield increased influence.
” This isn’t an investment site. I’m a dude blogging on the internet posting my opinions.” While this statement is factual, I believe you underestimate your position and your opinions. For example, your insightful assessments of the blight in West Philly as you drive to work are a reflection of your ability to assess this condition clearly. That you have expressed these thoughts with clarity and conviction influences those that have shared your sentiments but cannot express them as well as you. You by default become the celebrity endorsing the Chevy. Imagine a health club where one of the personal trainers is a genetic freak that builds muscle mass with any program he chooses and looks like Mr. Universe. The other personal trainer is a guy with a PhD in exercise physiology, who looks like an average Joe. The Mr. Universe guy is as dumb as blue mud with a GED, the PhD knows more about exercise than Mr. Universe can imagine. Who do gym members flock to for advise? Mr. Universe. Because of your position, you become a defacto Mr. Universe.
I am not suggesting you are as dumb as blue mud or that you do not know anything. I am merely pointing out the human condition to seek approaval from authority. Though you desire that people think for themselves, an admirable view, it is not realistic in these circumstances. Presenting information that runs contrary to the theme of the platform administrator therefore is in full compliance with your desire. However, to suggest that my opinions matter as much is yours is generous but not reality. That you allow such dissent is a reflection of your views and your character. But intentions are not as relevant of the outcome.
I don’t care if it is realistic or not.
This site has been around for a few years and one thing it is not – a place where everyone agrees. I’ve had run ins with every regular commentor on this site. Many have left for days, weeks, months or forever. Their choice. I don’t care who I offend or piss off. It’s called the Burning Platform for a reason.
I have responsibility for my life and my family. I feel no responsibility for other people’s lives. It is up to them to believe what they feel is true.
If people are so shallow that they need me to make up their minds for them, then that is their problem. Not mine.
My goal is to discredit the establishment and reveal their lies and corruption.
People who need to follow others are the problem in this country. I will not be followed, except by the NSA.
The Case for Gold
I fully expect the Fed to continue its efforts to spur economic growth, but I do not expect the Fed to succeed. In the meantime, and unless it’s different this time, gold stands to be the beneficiary (sooner rather than later, and well within reasonable investment horizons).
The Case for Treasuries
Amusingly, the case for treasuries is similar. The Fed is highly unlikely to hike and probably will be far slower at tapering than most think.
Growth will be far lower than most think. That combination is not enough to ensure treasury yields drop, but it is enough to suggest treasury yields are not likely to soar out of sight.
For further discussion, please see Case for Gold vs. the Case for Treasuries; Is Bill Gross Talking His Book or Talking Reality?
So here we are. One does not have to like US treasuries, but it sure would behoove analysts predicting massive inflation to consider the entire global picture instead of focusing solely on US money supply growth.
Global Picture
1.Glut of labor – nearly everywhere
2.Dearth of jobs – nearly everywhere
3.Pressure on wages – nearly everywhere
4.Consumer attitudes towards borrowing and going into debt have soured – US and Europe
5.Demographics of Aging Boomers – US, Japan, Europe
6.Student loans turn kids fresh out of college into debt slaves – US
7.Low household formation – Many countries including US
8.Household deleveraging – US and Europe
9.Property bubbles in China, Australia, Canada, UK
10.Credit explosion in China
11.Massive overbuilding of infrastructure in China
12.Massive problems, inefficiencies, and hidden debt related to SOEs in China
13.Technology trends suggest more layoffs in widespread industries – everywhere
14.European banks leveraged to the hilt in their own sovereign bonds
15.European banks in worse shape than US banks
16.Abenomics – Japan
17.Insufficient retirement savings – everywhere
Huge Price Inflation Not Imminent
Yes, I understand the Fed is doing “all it can”. And it has created bubbles as well as economic distortions everywhere.
But bubbles, by definition, collapse. And collapsing bubbles are deflationary.
So forget about hyperinflation (or even strong price inflation), and ponder the implications of collapsing bubbles, the change in consumer attitudes towards lending and borrowing, the glut of labor, the dearth of jobs, increasing competition, Abenomics, and a huge demographic need to save for retirement.
Implications
All things considered, I fail to see how one can look at the global picture and conclude a huge amount of price inflation in the US is imminent.
And if high price inflation is not imminent, are treasury yields going to rocket higher? Is the Fed going to hike rates? Taper? In turn, what does that suggest for gold?
No answers are guaranteed. But it’s important to consider things from a global point of view instead of running around like chicken little screaming “hyperinflation” at every opportunity.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Mish.
Well said. In one concise post, you have compiled much od what I have stated in several posts. Numbers 1-17 are structural changes that have not been experienced in the US, especially to this degree, in more than 60 years. All the rear view analysis provides experience but not insight into our current condition, and to use the hyperinflation model that is simply based on monetary policy misses the macro view.
Japan has been out in front with these structural changes for at least 20 years, with monetization that puts the US to shame, and no inflation. A major difference between the US entry to these changes and Japan’s entry into the deflationary structural changes do not bode well for the US. Japan had a savings rate of more than 20% at heir entry into the world of deflation, the us about 1%. The stimulus programs in Japan were actually deployed to build infrastructure improving the quality of life, while the majority of the US stimulus paid off the unions. Japan has a high degree of national identity that encourages responsibility. We have a country where the looters exceed the producers and taxpayers, fake disability claims grow more quickly than employment, and a President that encourages victimization mentality. Our advantage is that we have the deepest bond market in the world that is backed by the global currency standard.
And Mish’s conclusion is to buy gold.
ROTFLMAO 🙂
As was mentioned in a prior post, gold is a commodity and I will buy gold again. I will probably use a bullshit technical signal to augment fundamental analysis to determine that entry point, but I will be a buyer when the time is right. I view gold the same as stocks, bonds, RE, and cash. As Admin stated about the Platform, there are no rules, I do have models, and those models are influenced by the current circumstances. Fortunately, I have been correct more than I have been wrong.
As for a call based on technical models I use and future trading, one model I employ projects 10/ 14 is a possible re-entry point for equities, with an exit in 8/15. Based on the cyclical flow of funds, those are the two time frames to consider presently. As circumstances permit (war, constitutional crises, Hagen Daz goes out of business), those will be my next points of focus.
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How much gold does Shedlock recommend?
10%?
50%?
99% (leaving a few useless FIAT wastepaper pieces to pay the bills each month?)
I wonder….the entire banking system is technically insolvent. What if this was recognized and everyone’s deposits were simply “bailed in?”
How much change is under those couch cushions?
Stucky,
I wil cut through the pschobable for you. I was not stating that everyone on TBP does not think for themselves. I was suggesting that there are people like you that frequent the blog. I read your two posts on this topic and it is apparent that you probably have never experienced an original thought in your life. You are an electronic tough guy, a beer drinkin’ ass kickin’ blogger that believs he is the Marlborogh Man of the internet who makes women swoon. In reality, the only date you have had in the last three years has been with Mrs. Palm and her five sisters. Do what you were meant to do; that which you have perfected and is apparent whenever you post. Masturbation.
Now Stuck has gotten under Tommy Boy’s thin skin.
Maybe his model can tell him how to respond and fit in on TBP where my FOLLOWERS do whatever I tell them to do.
ALL TBP FOLLOWERS
Listen very closely to my instructions and do as I say. Buy Tommy’s model and you too can become rich and successful and boast on some two bit blog about your brilliant investing acumen.
tom, i am still waiting for your response to my query about existing deflation. i am not experiencing it. by your own admission you seem to know so much. i was hoping to learn something.
Tom
Do you live within 150 miles of Scotch Plains, NJ? If so, email me at [email protected]. I’ll be glad to meet you in person, anytime, and we’ll see if I’m the real deal, or not. Simple as that. Pussy.
run for the hills, Tom, you bit more dick than you can chew.