We already live in a world where gold is (or should be) priced at $1000 based on the 13X increase in money stocks since 1982. Even figuring on the simple inflation that the BLS says occurred, gold should be priced at 4X the 1982 levels ($2000). Using the 13X factor produces a number that would be considered impossible by most.
$715 gold was tapped today. Then some beating back and then stabilizing. Almost looks like the PPT pumped the dollar up some in the late afternoon and then let 'er go again. This has been fairly typical behavior by the FED's "boys" that as soon as London closes for the day, to go ahead and put in sell orders (with no intention of actually completing the transaction and delivering physical shares). However, gold finishing out the week at $708 was certainly bullish.
The gold shares moved very strongly as well. Now if only the Yanks can sweep the Sox this weekend.
Well, just checking my pockets for the week...seems that the concensus of this thread back in January (paraphrased) was that everyting for the year was already in play and it would be the end of the summer before we really had some usable information about what is going to transpire. Granted that I take a broad view, here's what now looks like to me.
So far:
1. The sub-prime played out with a few collateral damage type suprise casualties such as foreign banks and large brokerage houses, and then it drug the entire government economic apparatus of many countries into the frey as well. It does kind of give us regular types a feel for how deeply invested in our own personal where-with-all (houses, employeers/employment, income tax benefits, energy, interest rates) that corporate America become.
2. The dollar has continued to weaken against the Euro but that has also included some steady M3 money infusions over the year but there are more dollars out there running around too so surely they have to be worth less.
3. Gold (London December) has taken a nice, measurable bump in dollars albeit partially because of the weakened dollar but gold is certainly stronger and holding 700 for the week very well, thank you. Seemingly optimism about the metal abounds. Finally moving the price of gold to where it is a better market for small time sellers for a change.
4. The small cap and mid cap stock market seems like a craps game although there are some steady performers even if they can't make as many acquisitions or buy-outs, they seem to be scheduled to continue paying dividends. Folks just have to be able to step up to some of the more pricy stocks at a time when private and corporate cash is being hoarded and protected...tough call.
5. The yen, yuan, dollar, and euro are really evolving and seemingly they are evolving with each other. What they will become is something we probably won't see till next year. One thing for sure, they are evolving. The pace of economic news has noticibly increased since maybe June/July. Throw in a national presidential election or two among those currencies, a little Iran BS and some Russian posturing, some Chinese manipulation and then there may be some critical mass...watching.
6. It seems like there is a financial battle going on between the parties that want a stronger value for gold (less gold for the dollar) and the governments that want to keep their currencies strong (same gold for the dollar). The US economy seemingly wants to favor a lower gold price and cheaper dollars at the same time but the two seem to be opposing forces. I guess we'll see.
It is kind of fun discussing this situation, there is a lot going on and it's very interesting to watch and compare notes eventhough we probably all have our own ideas. Looks like 800 gold is the next convenient number to look for if gold is going to make a nice run and it would be great if it were this year...Dear Santa,
Act 1 of the sub-prime fiasco played out and gave gold a nice launch point. There will be many more acts of sub-prime related contagion to follow. This stuff will infect every portion of the credit markets eventually. And at this point there is no real cure until it all plays out and washes itself clean. Selected tangible assets will have a field day in this environment.
Looks like the subprime fiasco is not just in the U.S. of A.....
From todays' newspaper (Omaha World Herald 16Sept07):
"London (AP) - Hundreds of customers lined up to withdraw their savings from a British mortgage bank Saturday, ignoring government assurances that their money was safe despite the bank's request for an emergency loan. Police were called in some cities to steer panicked crowds away as Northern Rock bank branches closed for the day. Fears have spread over the bank's request earlier in the week for an emergency Bank of England loan amid the global credit crisis."
When is the last time we have heard of any bank runs???
I would not rule out the possibility of people pulling money out of their banks. In fact I would be surprised if this did not happen with a significant part of the population. Whether we see a $2 Billion bank run as Britain just did seems a bit more far-fetched. Britain and Australia are ahead of us on the timeline with dealing with financial and mortgage problems. You can look to them as a mirror of what could be coming in our direction.
This is a thread I do not often post in, but have followed regularly for the past couple years. Thanks to you all for such an informative discussion.
Generally speaking, a recurring theme of this thread is that the U.S. is living beyond its means, as evidenced by the housing market, the manipulation of the inflation index, and now the falling dollar, coupled with the selling of many brands to foreign investors and the almost total loss of manufacturing jobs – a pretty bleak scenario to be sure.
Then over the weekend, I came across this article, which basically points out that a falling dollar means that American goods can once again be competitive in a global market. Forgive me if I am out of depth in this dialogue, but is it possible that rising and falling currencies are cyclical aspects of a comprehensive economy, and that the current state of the dollar may not be an entirely bad thing in terms of the opportunity it creates domestically?
“and that the current state of the dollar may not be an entirely bad thing in terms of the opportunity it creates domestically?”
Artist, This is correct. Most of the ideas and posts in this thread are only good or bad depending on which side of the equation you are on.
I think that what most of us are trying to do here is stay on the right side of what is happening. Yes if the dollar drops more U.S. goods can be sold outside of the country, on the other hand this makes the desirability of holding dollars go down, and we need to print billions of dollars in debt, or paper mone, each month to keep up with our deficits.
Selling more products over seas will help with the trade deficits, but will hurt our ability to finance our huge government social and military programs.
As far as investments go, if the dollar weakens then oil, gold, silver, coins, and many other liquid hard assets will rise in price.
based on what Im hearing, I would certainly start moving some assets to the PM/rare coin area - if the $ continues to slide, I would not want to be holding a bunch of weak bills - inflation and a weak dollar are in the cards - just how bad remains to be seen - but dont put all your eggs in the same basket - diversify!!!!
currently putting together a EF/AU/BU 18th & 19th Century Type Set; and CC Morgan Set
just completed 3d tour to Iraq and retired after 28+ years in the US Army
The FED only follows where the market is pushing interest rates to. They are not a leader even though 99% of the masses believe they set policy and control where markets are headed. Actually they are more like the flagman in the caboose telling everyone where they've been. Day late and a dollar short.
It looks like the dollar longs have finally capitulated. I'd look for a quick move to the 76 area where it will hold a while as everything goes up. It won't be possible to hide inflation much longer. There is no viable alternative to a lower dollar.
Once again the Fed has decided to punish savers and reward creditors, perhaps that is because the creditors out number the savers by 50 to one. That’s O.K. my gold is going up and away and my oil spdr’s are up 8% in 60 days.
To bad for Joe six pack though, everything he buys, food, gas, and items of all kinds are going to keep going up, even though WE HAVE NO INFLATION!
<< <i>It looks like the dollar longs have finally capitulated. I'd look for a quick move to the 76 area where it will hold a while as everything goes up. It won't be possible to hide inflation much longer. There is no viable alternative to a lower dollar. >>
While I don't disagree, a quick trip to 76 would trigger a rush for the exit. I don't think the principle holders of $ can let that occur. I see a concerted effort to prop the dollar coming.
<< <i>It looks like the dollar longs have finally capitulated. I'd look for a quick move to the 76 area where it will hold a while as everything goes up. It won't be possible to hide inflation much longer. There is no viable alternative to a lower dollar. >>
While I don't disagree, a quick trip to 76 would trigger a rush for the exit. I don't think the principle holders of $ can let that occur. I see a concerted effort to prop the dollar coming. >>
I confess that when I wrote that I didn't know that the FED had cut interest rates today. The dollar is more likely to stabilize where I suggested in the first place (in this thread) in the 77/ 78 area before taking another dip in a couple or few years.
You know...there is a lot of bad paper and a number of foreclosed houses out in the market place right now and all of that stuff is gonna need a place to land or some of the prime money people, like banks, are going to lose large money and that would be very bad.
On the other hand, June 2008 gold contracts on comex are $750 and Dec. 2007 are $731 and there is good volume so...Oh yes, don't forget about all those unc wrapped buffs you got last year for $670.
It"s nice to see this forum is not filled up with the news of the Fed rate cut, and dropping dollar. Many,in other forums are either happy{gold up} or scared ("Inflation"big time)...Guess all one can do is have a balance of assets . Having an interest in this field/hobby, we are likely "informed" better than alot of people to better prepare for market "swings". Least I hope so
So what really changed with the rate cuts? Are the trillions in derivates now safe?
Absolute Capital Halts Redemptions After Homm Quits
Sept. 19 (Bloomberg) -- Absolute Capital Management Holdings Ltd. will stop clients from pulling money from eight hedge funds with $2.1 billion of assets after co-founder Florian Homm quit.
An exerpt from Antal Fekete's 321gold article on gold miner hedges. Not the usual dry stuff but almost bordering on interesting. Fekete is an academic rather than your typical newsletter stumper. The reference is to Barrick mining which at times has been assumed to be linked with the FED's actions to supress the pog. Whether true or not is not the isssue. What is true is Barrick's 9 million oz hedge against their forward production. This will cost them billions as the pog rises.
The fluctuating price of gold, as well as fluctuating forex and interest rates, are not nature-given as are the fluctuating prices of agricultural products. They are man-made. They have deliberately been inflicted upon the people by governments in betrayal of their sacred mission to protect them. The fluctuating gold price and gyrating bond prices are the instrument of the most vicious exploitation the world has seen since chattel slavery. The government in regulating futures trading has approved "double standards" in an effort to create a practically infinite supply of ersatz gold, including paper gold (such as gold futures that can be sold greatly in excess of physical gold in existence), and unmined gold locked in ore bodies below ground (which can then be sold forward), in the hope of keeping the price of cash gold in perpetual check. This is not a myth. This is a well-established fact admitted, at one time or another, by many a government in its more sober moments. Niagara-on-Potomac
The world-wide regime of irredeemable currency would have come to a sorry end decades ago if it weren't for gambling casinos foisted upon the world by governments hell-bent to keep the game of musical chairs going non-stop. Governments, in the best tradition of casino owners, want people to gamble in gold, bond, and forex futures. The futures markets in gold, bonds and forex serve a purpose, and one purpose only: to provide an outlet for the Niagara-on-Potomac, money supply gushing forth from the Federal Reserve that could drown the entire world in a hyperinflationary deluge. If it hasn't, that's because excess money has been soaked up by the gambling casinos. So far. People scramble for the excess because they could use them as chips at the gaming tables. But as growth in the derivatives markets (the size of which doubles every other year and by now exceeds half a quadrillion dollars or $500,000,000,000,000) shows, this is not a stable process secured with proper checks and balances. This is a runaway train on which the brakes (i.e., natural limitation on gold production) have been deliberately disabled. Fraudulent hedging of gold mines, and double standards in regulating futures trading are part of the sabotage. This is a world disaster waiting to happen.
Hedge fund masqerading as a gold mine
Mr. Shedlock has missed my point. We may honestly disagree on the question whether long-term unilateral hedges are prudent or fraudulent. But there is no ambiguity about the fraudulent nature of a hedge fund masquerading as a gold mine. If it is the world's biggest gold mining concern, then the masquerade assumes cosmic proportions.
I repeat the verdict: the gold carry trade is criminally fraudulent. In more details: to lease gold, to sell it for cash, to invest the proceeds like a hedge fund, and to report the income from these investments as profit to shareholders, as if they were profit from gold mining operations, constitutes fraud. Paper profit is no profit. It is encumbered with a contingent liability, the extent of which cannot be ascertained until the hedge is lifted and the hedgebook closed. The trouble is that by that time management will have spent the 'profit' taken out of the corporate treasury fraudulently.
The practice of window-dressing income statements using unrealized paper profits, especially as they are encumbered with unlimited liabilities, is a blatant fraud dealt with by the Criminal Code.
Are Barrick's officers masochistic or incompetent?
In Peak Gold! Part One I mentioned that Barrick President Greg Wilkins and Executive Vice President and CFO Jamie Sokalsky announced extremely optimistic predictions about the gold price for the next five to seven years in a conference call that has been widely publicized. These predictions are based on a study of gold fundamentals commissioned by Barrick. (Reuters, August 3, 2007.)
Here is my parting shot to Mr. Shedlock. He says that he disagrees with Citigroup analyst John Hill, who publicly called on Barrick to rid itself of the remaining 9.5 million ounces left on its 'project' hedge book. According to Shedlock Barrick should not cover those hedges now at $700. "If it did and the price of gold collapsed to $500, Barrick would be in a world of hurt... Barrick would be betting the farm that prices are heading north of $700... and will stay there for quite some time... Is [this contingency] really worth betting the company on?"
I ask Mr. Shedlock what makes him think that Barrick's actual bet (namely, that the price of gold will collapse to $500) is a more worthwhile contingency to bet the company on? Who is Messrs. Wilkins and Sokalsky trying to fool in making prognostications potentially very damaging to the financial health of the company - in view of its hedgebook deeply under water? Are they masochistic? Do they think that they have been hired by the shareholders to run the company aground? Why did they not lift all their so-called hedges, as John Hill suggested and Newmont has done, in good time, before releasing such a devastating report putting the company in jeopardy? This is what common sense would seem to dictate, to lift the hedge first, and make the announcement afterwards, is it not? If they did not have and could not raise the money to do it, at the very least they should have suppressed the optimistic prognostication on the gold price, in order to soften the blow to shareholders who are going to suffer one way or another the consequences of gold breaking above $700, due to Barrick's insane hedging policy.
It is understandable that Barrick's officers are reluctant to admit publicly that they have made the most colossal blunder in the history of mining, by committing their company to the policy of unilateral downstream hedging through unlimited forward sales of gold. Such an admission would be hard on the ego. They may hope against hope that their blunder will be quietly forgotten, and the shareholders will buy the desperate propaganda-line that a higher gold price is good for them, hedgebook or no hedgebook.
But you cannot keep kicking garbage upstairs to the attic forever, because it will keep rotting there until something gives and the accumulated garbage will come crashing down.
I have issued a public challenge to Barrick to explain why they ignored my warning ten years ago that unilateral downstream hedging is a dangerous trap they should avoid. I also pointed out to the top brass how their hedge plan could be made bilateral, a winning combination. Had they listened to my advice, they would have avoided having to carry the yoke of a millstone-size hedgebook around their neck. I take this opportunity to report that Barrick has so far ignored my challenge.
I am not sold on the conspiracy theory according to which Barrick is a front set up by governments to keep the gold price in perpetual check. Not yet anyhow. But then, the only conclusion is that the officers of Barrick are incompetent bunglers whose name will go down in ignominy in the annals of mining.
RR, Very interesting article! Another very good reason to say out of the mining stocks, and buy and take possession of ones coins and bars.
All of these markets have become so manipulated who knows what games are being played out there with commodities of all kinds? Can the oil companies be selling forward contracts on their in ground reserves every time there is a spike? Even Boone Pickens says oil is not yet adjusted for inflation, and we know that if Gold were adjusted for inflation it would now be north of $1,300.
This article brings to mind another question, if Barrick and others have sold their gold at $500 then who owns it, and what will be delivered to the market in the future?
All of this paper creation, of trillions of dollars in currency, debt, and derivatives each year must come crashing down on us eventually, and then what?
Oh, and who in the Hell is keeping the price of silver down?
One more thing, the Euro broke 1.40 this morning and the dollar hit 78.80.
RR, In looking at the charts of Barrick this morning it looks like a mountain climb. Why are people still holding this stock, if the company has been sold down the river?
Oh, and insiders have sold $12 million dollars worth of stock in the last 30 days in a straight up market?
OK, so, maybe there's a play here to think about...
So we have steadily ratholed some PM and we've seen nearly a 20% roi. So, I'm thinking that a good play might be to get out of a majority of the PM/coin holdings now and put the cash overseas into something that is fairly liquid, like a foreign currency account. The obvious questions come to mind like IRS special situations, liquidity/trading delays, downside risks. Any ideas or experience in this type of investment from our threadites?
MH, I think you hit on it TAXES! It appears that Gold moves along with the foreign currencies, so one might as well just hold the Gold and not pay the taxes.
The other thing I am doing as you know, is buying a few choice stocks in international companies, that can sell their products just as well over seas as here. Oil is a good example.
Our Canadian friend is right, the bigger gains in commodities, oil, gold, wheat, etc. is here as the dollar weakens. These worldwide commodities, all seem to move in price here, as the dollar gets weaker.
So yes the Canadian dollar, Euro, etc, get stronger but the cap. Gains are just as easy to capture here in big, strong, solid companies selling worldwide commodities.
The other problem I have with currencies, and what I have been telling Peter Schiff for over a year, is that Canada, Europe, etc. have the same problems in the end that we do, big social governments, baby boomer’s, etc. So why move money into those currencies and take the chance that there will be problems there, these derivatives, bank problems, and mortgage problems are all over?
<< <i>OK, so, maybe there's a play here to think about...
So we have steadily ratholed some PM and we've seen nearly a 20% roi. So, I'm thinking that a good play might be to get out of a majority of the PM/coin holdings now and put the cash overseas into something that is fairly liquid, like a foreign currency account. The obvious questions come to mind like IRS special situations, liquidity/trading delays, downside risks. Any ideas or experience in this type of investment from our threadites? >>
Finally, what we have been jabbering about since dec 04 , gold at 455 and silver at 8, comes true and you want to bail ??? Hopefully you have already diversified into some overseas assets , I would consider holding gold at this time and lighten up on the DOW and S&P 500 .Have a look at symbols JAIGX, USO,FXE. There is some protection there as psrt of a diversified plan.
Why would you buy foreign currencies / stocks at their all-time highs? You'll only make money buy buying LOW and selling high - not the other way around.
I see some serious risk / reward in the U.S. dollar, and I wish I was living overseas because I would load up on some cheap US dollars. In fact, I recommended that just yesterday to my father-in-law, who lives in Spain in keeps his money in Euros and Pounds. The US dollar is oversold, just like the Euro was oversold back in 2000-2002 (when the sky was allegedly falling over there due to their slow growth and demographic problems and 1 dollar bought about 1.1 euros.) Today the sky is allegedly falling in America and our currency is turning into banana republic funny money based on a lot of overreaction.
The dollar is weakening recently due to the differential in interest rates -- rates in the euro zone and UK are still higher, and that is drawing investment capital in to those countries and out of Treasuries and other US dollar-denominated debt. However, the US will not be able to cut rates much further (if at all) for two reasons. First, most overseas investors (China maybe excepted) are not going to plow money into low-performing US assets. If the US wants to sell its Treasuries it will need to keep the rates attractive. Or else - heaven forbid - raise taxes to cut the budget deficit and reduce the need for foreign borrowing. If that happens - which will happen anyway if Hillary or Barry Obama gets into the White House - the dollar will strengthen again.
Second, and more important, a weak dollar leads to inflation because of higher import and commodity costs. Cutting rates is inflationary, and if some scary inflation numbers start to come down the pike, the Fed will return to its primary mandate and jack up rates again. That will stengthen the dollar.
Our economy is trapped between a rock and a hard place -- we can't really cut afford to cut rates, yet we need to in order to boost the economy. I predict a period of anemic economic growth like that we had in the 1970s. But that does not mean the dollar will continue to weaken. In fact, my guess is that the dollar in the next few years will make a significant comeback.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
Oversold implies that they are needed and someone has sold short. What we have is a system that has manipulated the dollar for decades and is now starting to unravel. The countries of the world have no legitimate need for trillions of US dollars. Sooner or later they will do what they should have all along ...spend them, maybe to buy other currencies, gold, oil or buy the food from our farmers for more than we can afford to pay.
"...buy the food from our farmers for more than we can afford to pay."
That would not surprise me at all. For example, the Chinese start buying/leasing farm land? We have always been the world's bread basket, that's how we began as a growing nation, before we became industrialized. Look at the trade dollar...used mostly for trade with China in the 1870's and 1880's, late in our agricultural development. Lady Liberty surrounded by grains, sitting on a bale of cotton, facing west and holding out an offering for trade...this is not a new idea to have this relationship with China.
So, think about the food by thinking about the Chinese buying or leasing the land to grow the food. It would be advantageous for them to do it here because you need good farm land to get good crop yields and that's one thing we have in spades and China would like to have (they don't have enough). We may be the best ag people in the world with the best soils in the world, we've been at it a good while and we can do some serious world class food production. This ethanol binge we are embarking on has put the agribusiness back on the map so the pump is primed and people are getting back into farming again. All God's children have to eat and you can't grow corn in the desert.
I do predict that within the next 5 years, food production will become an issue in the US and it will probably be an issue for China before it becomes one here so ownership of farm land production is a current issue whether it's in the news or not. Food is going to cost more and since it is in the CPI calculation, it will start showing up in the numbers, it can't be hidden. Surely folk have been thinking about this. CPI items
<< <i>"...buy the food from our farmers for more than we can afford to pay."
That would not surprise me at all. For example, the Chinese start buying/leasing farm land? We have always been the world's bread basket, that's how we began as a growing nation, before we became industrialized. Look at the trade dollar...used mostly for trade with China in the 1870's and 1880's, late in our agricultural development. Lady Liberty surrounded by grains, sitting on a bale of cotton, facing west and holding out an offering for trade...this is not a new idea to have this relationship with China.
So, think about the food by thinking about the Chinese buying or leasing the land to grow the food. It would be advantageous for them to do it here because you need good farm land to get good crop yields and that's one thing we have in spades and China would like to have (they don't have enough). We may be the best ag people in the world with the best soils in the world, we've been at it a good while and we can do some serious world class food production. This ethanol binge we are embarking on has put the agribusiness back on the map so the pump is primed and people are getting back into farming again. All God's children have to eat and you can't grow corn in the desert.
I do predict that within the next 5 years, food production will become an issue in the US and it will probably be an issue for China before it becomes one here so ownership of farm land production is a current issue whether it's in the news or not. Food is going to cost more and since it is in the CPI calculation, it will start showing up in the numbers, it can't be hidden. Surely folk have been thinking about this. CPI items
And, thanks for the tips on the possible play...not a good play but heck, not all ideas are good ideas. >>
Gosh that's the scariest thing I've read in some time. Sounds like the deal the Irish had with the British during the Potato famine. British land owners in Ireland (and to be fair - I'm sure some Irish land owners as well) were actually exporting food to England during it, because the English would pay more for it then the starving Irish could.
It's frustrating to see the price of gold climb and not benefit financially from it.
Goldcorp (GG) is a quality Canadian gold mining company selling on the US stock exchanges. It has recently run up from a beat back low of around $22 to now $30+. It's high in 2006 was $40. This a gold miner right in your back yard away from many of the problems elsewhere in the world, also a quality operation, and unhedged to boot. This is one way to take advantage of the gold move.
I've read Sinclair stating that Barrick has problems but also will try to consolidate the industry. Each smaller firm it gobbles up with help it's hedge book somewhat. I wouldn't be surprised if many of it's hedged gold is still way back at $350/ounce. Eventually there will only be a few big gold miners left. Too many smaller operations have lopsided derivatives deals that will lose the owners the company in the long run. If Barrick is indeed a "favored son" of Goldman Sachs and the FED, they can live a lot longer than we think. I'm sticking with unhedged mining stocks.
Another article by Fekete on why Barrick officers recently dumped 230,000 shares of company stock to be the first guys in the life boat. This is very sad.
Over the last several years we have ask the following question, " What exactly happens when Foreigners STOP buying our debt?”
Well I guess we are about to find out. How far behind can the Chinese and the Japanese be if the Arabs start buying all the good stuff?
Until just recently, I don’t think those financial geniuses in Washington and N.Y. ever counted on Foreign governments buying up companies directly.
Sept. 21 (Bloomberg) -- The Persian Gulf states, flush with cash from burgeoning oil revenues, are buying overseas assets at a record rate.
Abu Dhabi agreed yesterday to pay $1.35 billion for 7.5 percent of Carlyle Group, the world's second-biggest private equity firm.
Dubai and Qatar took competing stakes in Nasdaq Stock Market Inc., London Stock Exchange Group Plc and Nordic bourse OMX AB. Qatar also won approval to examine the financial records of J Sainsbury Plc, the second-largest U.K. supermarket chain.
All told, the deals are worth $25 billion, according to data compiled by Bloomberg. The pace of international investments by Gulf states, which earn $1.2 billion a day from oil exports, is quickening as they seek to diversify beyond energy. The nations have already spent a record $68 billion on overseas acquisitions this year.
``They are not just putting their money in bank deposits and government bonds any more,'' said Eckart Woertz, chief economist for the Gulf Research Center in Dubai. ``They are after strategic assets. About $188 billion of deals were announced last month”
Ever wondered what 1000% inflation looked like? Here's a link with a photo showing some happy (believe it or not) people dining at their favorite steak and beer hang out. The waiter doesn't need a wheelbarrow to carry the stacks of 1,000Z? notes away, but he's not far from it. You'd have to hire a money counter full time just to do business.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver, copper, or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” [Alan Greenspan, Gold and Economic Freedom (1966)]
Amen big Al. Too bad you tossed this aside along the way.
<< <i>Conclusion The decision by the US Fed to reduce its bank lending rate – ostensibly to counteract a reduction in the producer price index – was probably a seminal development in the history of the world’s economy. If the end result is that this rate reduction gives rise to a continuing fall of the US Dollar index, then inflation within the USA will likely rise strongly, and volumes of transactions will likely fall. Paradoxically, the cut in interest rates seems likely to have the opposite effect of its stated intent. It seems more likely to give rise to an acceleration of the arrival of recessionary conditions – having bought sufficient time to allow maintenance of the status quo until after the US Presidential Elections. Sadly, we are living in an extraordinarily cynical world where the parochial interests of the few now patently transcend the interests of the many. >>
........HYPERINFLATION OR RECESSION? by Brian Bloom ....... .........This sounds like Alan Greenspan...!!
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver, copper, or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” [Alan Greenspan, Gold and Economic Freedom (1966)]
Never have truer words been spoken.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
Greenspan delayed the inevitable at least two decades. I can't fault him for that.
Some would agree, and some would not: by delaying the inevitable, Greenspan made the bubble worse by making it larger, thus the inevitable collapse will be greater than if it happened 20 years ago.
Great looking gold drachma, by the way!
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
Here are some American public debt to GDP ratios. This is a VERY CRUCIAL number. The higher the number, the more in trouble an economy is. If it gets too high, an economy can get into a "death-spiral", where interest payments become so large there is no money to spend on anything else.
Carter ... 33% (post WWII low) Bush I ... 65% (1992) Clinton ... 58% (2000) Bush II ... 66% (2006) 2009 projection ... 70%
One unknown on that GDP to debt ratio is the huge amount of "off balance sheet" debt being carried. If you included that, the ratio would be off the charts. It's not Joe Public's debt ratio that really worries me, it's what the corporations, hedge funds, banks, and brokerages are carrying, most of it with undefined value and miscalculated risk.
As far as those published debt ratios go, like father like son.
I guess Jim Sinclair is getting a little more worried than usual when he starts sending out direct emails, this came in Friday, been out of town.
“Dear CIGAs, The following are some important notes in response to the following article: 1. Have some cash at home. 2. Have some one ounce gold coins at home. 3. All investments should be taken in certificate form if are positive you will not misplace them as replacing certificates can be a disaster. 4. No investment you have should have the anything to do with over the counter derivatives. Would you believe that GE is a major derivative dealer? 5. Think twice about any Internet financial service from banks to brokers. 6. Since you must have a broker, select a small traditional human broker with no over the counter directives on their books, in their safe or on the Internet. Ask for a letter confirming that before opening your account. When you make a trade get certificates. For sales, deliver the certificates and make the trade. 7. Park spare cash in Canadian National, not Provincial, T Bills.
Think positive and hope for the best, but know you are now prepared for the worst. This is a $20 trillion dollar problem that lacks any functional final solution.”
<< <i>I guess Jim Sinclair is getting a little more worried than usual when he starts sending out direct emails, this came in Friday, been out of town.
“Dear CIGAs, The following are some important notes in response to the following article: 1. Have some cash at home. 2. Have some one ounce gold coins at home. 3. All investments should be taken in certificate form if are positive you will not misplace them as replacing certificates can be a disaster. 4. No investment you have should have the anything to do with over the counter derivatives. Would you believe that GE is a major derivative dealer? 5. Think twice about any Internet financial service from banks to brokers. 6. Since you must have a broker, select a small traditional human broker with no over the counter directives on their books, in their safe or on the Internet. Ask for a letter confirming that before opening your account. When you make a trade get certificates. For sales, deliver the certificates and make the trade. 7. Park spare cash in Canadian National, not Provincial, T Bills.
Think positive and hope for the best, but know you are now prepared for the worst. This is a $20 trillion dollar problem that lacks any functional final solution.” >>
Wow , thats the definition of dont worry be happy...I shouldnt have gotten out of bed this morning
Sinclair's advice makes good sense for any time period imo. Be safe and take precautions. He's not telling you to invest your life savings, or even 10% of it, into gold. The Canadians are one of the better countries and maintaining their currency sound. Not doom and gloom....but good sense. My Dad had all his stock certificates with himself. But he saw the great depression and learned some hard lessons from it.
Comments
Even figuring on the simple inflation that the BLS says occurred, gold should be priced at 4X the 1982 levels ($2000). Using the 13X factor produces a number that would be considered impossible by most.
roadrunner
signals to each other, as to who the top bull will be, as it comes to
vital resources. What the heck, there are already too many people on
earth. What's wrong with a few billion less. So 4 of the continents become
radioactive for a thousand years. As long as we have canned beans and
diet coke, all will be well.
Camelot
The gold shares moved very strongly as well. Now if only the Yanks can sweep the Sox this weekend.
roadrunner
with the non radioactive destructive power of A-Bombs.
Signals a new series of large scale wars with super,
non nuclear weapons.Time for chap stick and Preparation-H.
Camelot
So far:
1. The sub-prime played out with a few collateral damage type suprise casualties such as foreign banks and large brokerage houses, and then it drug the entire government economic apparatus of many countries into the frey as well. It does kind of give us regular types a feel for how deeply invested in our own personal where-with-all (houses, employeers/employment, income tax benefits, energy, interest rates) that corporate America become.
2. The dollar has continued to weaken against the Euro but that has also included some steady M3 money infusions over the year but there are more dollars out there running around too so surely they have to be worth less.
3. Gold (London December) has taken a nice, measurable bump in dollars albeit partially because of the weakened dollar but gold is certainly stronger and holding 700 for the week very well, thank you. Seemingly optimism about the metal abounds. Finally moving the price of gold to where it is a better market for small time sellers for a change.
4. The small cap and mid cap stock market seems like a craps game although there are some steady performers even if they can't make as many acquisitions or buy-outs, they seem to be scheduled to continue paying dividends. Folks just have to be able to step up to some of the more pricy stocks at a time when private and corporate cash is being hoarded and protected...tough call.
5. The yen, yuan, dollar, and euro are really evolving and seemingly they are evolving with each other. What they will become is something we probably won't see till next year. One thing for sure, they are evolving. The pace of economic news has noticibly increased since maybe June/July. Throw in a national presidential election or two among those currencies, a little Iran BS and some Russian posturing, some Chinese manipulation and then there may be some critical mass...watching.
6. It seems like there is a financial battle going on between the parties that want a stronger value for gold (less gold for the dollar) and the governments that want to keep their currencies strong (same gold for the dollar). The US economy seemingly wants to favor a lower gold price and cheaper dollars at the same time but the two seem to be opposing forces. I guess we'll see.
It is kind of fun discussing this situation, there is a lot going on and it's very interesting to watch and compare notes eventhough we probably all have our own ideas. Looks like 800 gold is the next convenient number to look for if gold is going to make a nice run and it would be great if it were this year...Dear Santa,
JMHO
roadrunner
From todays' newspaper (Omaha World Herald 16Sept07):
"London (AP) - Hundreds of customers lined up to withdraw their savings from a British mortgage bank Saturday, ignoring government assurances that their money was safe despite the bank's request for an emergency loan. Police were called in some cities to steer panicked crowds away as Northern Rock bank branches closed for the day. Fears have spread over the bank's request earlier in the week for an emergency Bank of England loan amid the global credit crisis."
When is the last time we have heard of any bank runs???
Is it coming to the US also??
<< <i>
Now if only the Yanks can sweep the Sox this weekend.
roadrunner >>
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
roadrunner
Generally speaking, a recurring theme of this thread is that the U.S. is living beyond its means, as evidenced by the housing market, the manipulation of the inflation index, and now the falling dollar, coupled with the selling of many brands to foreign investors and the almost total loss of manufacturing jobs – a pretty bleak scenario to be sure.
Then over the weekend, I came across this article, which basically points out that a falling dollar means that American goods can once again be competitive in a global market. Forgive me if I am out of depth in this dialogue, but is it possible that rising and falling currencies are cyclical aspects of a comprehensive economy, and that the current state of the dollar may not be an entirely bad thing in terms of the opportunity it creates domestically?
>>>My Collection
>>>My Collection
Artist,
This is correct. Most of the ideas and posts in this thread are only good or bad depending on which side of the equation you are on.
I think that what most of us are trying to do here is stay on the right side of what is happening. Yes if the dollar drops more U.S. goods can be sold outside of the country, on the other hand this makes the desirability of holding dollars go down, and we need to print billions of dollars in debt, or paper mone, each month to keep up with our deficits.
Selling more products over seas will help with the trade deficits, but will hurt our ability to finance our huge government social and military programs.
As far as investments go, if the dollar weakens then oil, gold, silver, coins, and many other liquid hard assets will rise in price.
just completed 3d tour to Iraq and retired after 28+ years in the US Army
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Day late and a dollar short.
roadrunner
quick move to the 76 area where it will hold a while as everything
goes up. It won't be possible to hide inflation much longer. There
is no viable alternative to a lower dollar.
76 will not hold indefinitely.
To bad for Joe six pack though, everything he buys, food, gas, and items of all kinds are going to keep going up, even though WE HAVE NO INFLATION!
<< <i>It looks like the dollar longs have finally capitulated. I'd look for a
quick move to the 76 area where it will hold a while as everything
goes up. It won't be possible to hide inflation much longer. There
is no viable alternative to a lower dollar. >>
While I don't disagree, a quick trip to 76 would trigger a rush for the exit. I don't think the principle holders of $ can let that occur. I see a concerted effort to prop the dollar coming.
<< <i>
<< <i>It looks like the dollar longs have finally capitulated. I'd look for a
quick move to the 76 area where it will hold a while as everything
goes up. It won't be possible to hide inflation much longer. There
is no viable alternative to a lower dollar. >>
While I don't disagree, a quick trip to 76 would trigger a rush for the exit. I don't think the principle holders of $ can let that occur. I see a concerted effort to prop the dollar coming. >>
I confess that when I wrote that I didn't know that the FED had
cut interest rates today. The dollar is more likely to stabilize where
I suggested in the first place (in this thread) in the 77/ 78 area before
taking another dip in a couple or few years.
This presupposes that OPEC can up oil production.
On the other hand, June 2008 gold contracts on comex are $750 and Dec. 2007 are $731 and there is good volume so...Oh yes, don't forget about all those unc wrapped buffs you got last year for $670.
Coin ON!
So what really changed with the rate cuts? Are the trillions in derivates now safe?
Absolute Capital Halts Redemptions After Homm Quits
Sept. 19 (Bloomberg) -- Absolute Capital Management Holdings Ltd. will stop clients from pulling money from eight hedge funds with $2.1 billion of assets after co-founder Florian Homm quit.
Not the usual dry stuff but almost bordering on interesting. Fekete is an academic rather than your typical newsletter stumper. The reference is to Barrick mining which at times has been assumed to be linked with the FED's actions to supress the pog. Whether true or not is not the isssue. What is true is Barrick's 9 million oz hedge against their forward production. This will cost them billions as the pog rises.
The fluctuating price of gold, as well as fluctuating forex and interest rates, are not nature-given as are the fluctuating prices of agricultural products. They are man-made. They have deliberately been inflicted upon the people by governments in betrayal of their sacred mission to protect them. The fluctuating gold price and gyrating bond prices are the instrument of the most vicious exploitation the world has seen since chattel slavery. The government in regulating futures trading has approved "double standards" in an effort to create a practically infinite supply of ersatz gold, including paper gold (such as gold futures that can be sold greatly in excess of physical gold in existence), and unmined gold locked in ore bodies below ground (which can then be sold forward), in the hope of keeping the price of cash gold in perpetual check. This is not a myth. This is a well-established fact admitted, at one time or another, by many a government in its more sober moments.
Niagara-on-Potomac
The world-wide regime of irredeemable currency would have come to a sorry end decades ago if it weren't for gambling casinos foisted upon the world by governments hell-bent to keep the game of musical chairs going non-stop. Governments, in the best tradition of casino owners, want people to gamble in gold, bond, and forex futures. The futures markets in gold, bonds and forex serve a purpose, and one purpose only: to provide an outlet for the Niagara-on-Potomac, money supply gushing forth from the Federal Reserve that could drown the entire world in a hyperinflationary deluge. If it hasn't, that's because excess money has been soaked up by the gambling casinos. So far. People scramble for the excess because they could use them as chips at the gaming tables. But as growth in the derivatives markets (the size of which doubles every other year and by now exceeds half a quadrillion dollars or $500,000,000,000,000) shows, this is not a stable process secured with proper checks and balances. This is a runaway train on which the brakes (i.e., natural limitation on gold production) have been deliberately disabled. Fraudulent hedging of gold mines, and double standards in regulating futures trading are part of the sabotage. This is a world disaster waiting to happen.
Hedge fund masqerading as a gold mine
Mr. Shedlock has missed my point. We may honestly disagree on the question whether long-term unilateral hedges are prudent or fraudulent. But there is no ambiguity about the fraudulent nature of a hedge fund masquerading as a gold mine. If it is the world's biggest gold mining concern, then the masquerade assumes cosmic proportions.
I repeat the verdict: the gold carry trade is criminally fraudulent. In more details: to lease gold, to sell it for cash, to invest the proceeds like a hedge fund, and to report the income from these investments as profit to shareholders, as if they were profit from gold mining operations, constitutes fraud. Paper profit is no profit. It is encumbered with a contingent liability, the extent of which cannot be ascertained until the hedge is lifted and the hedgebook closed. The trouble is that by that time management will have spent the 'profit' taken out of the corporate treasury fraudulently.
The practice of window-dressing income statements using unrealized paper profits, especially as they are encumbered with unlimited liabilities, is a blatant fraud dealt with by the Criminal Code.
Are Barrick's officers masochistic or incompetent?
In Peak Gold! Part One I mentioned that Barrick President Greg Wilkins and Executive Vice President and CFO Jamie Sokalsky announced extremely optimistic predictions about the gold price for the next five to seven years in a conference call that has been widely publicized. These predictions are based on a study of gold fundamentals commissioned by Barrick. (Reuters, August 3, 2007.)
Here is my parting shot to Mr. Shedlock. He says that he disagrees with Citigroup analyst John Hill, who publicly called on Barrick to rid itself of the remaining 9.5 million ounces left on its 'project' hedge book. According to Shedlock Barrick should not cover those hedges now at $700. "If it did and the price of gold collapsed to $500, Barrick would be in a world of hurt... Barrick would be betting the farm that prices are heading north of $700... and will stay there for quite some time... Is [this contingency] really worth betting the company on?"
I ask Mr. Shedlock what makes him think that Barrick's actual bet (namely, that the price of gold will collapse to $500) is a more worthwhile contingency to bet the company on? Who is Messrs. Wilkins and Sokalsky trying to fool in making prognostications potentially very damaging to the financial health of the company - in view of its hedgebook deeply under water? Are they masochistic? Do they think that they have been hired by the shareholders to run the company aground? Why did they not lift all their so-called hedges, as John Hill suggested and Newmont has done, in good time, before releasing such a devastating report putting the company in jeopardy? This is what common sense would seem to dictate, to lift the hedge first, and make the announcement afterwards, is it not? If they did not have and could not raise the money to do it, at the very least they should have suppressed the optimistic prognostication on the gold price, in order to soften the blow to shareholders who are going to suffer one way or another the consequences of gold breaking above $700, due to Barrick's insane hedging policy.
It is understandable that Barrick's officers are reluctant to admit publicly that they have made the most colossal blunder in the history of mining, by committing their company to the policy of unilateral downstream hedging through unlimited forward sales of gold. Such an admission would be hard on the ego. They may hope against hope that their blunder will be quietly forgotten, and the shareholders will buy the desperate propaganda-line that a higher gold price is good for them, hedgebook or no hedgebook.
But you cannot keep kicking garbage upstairs to the attic forever, because it will keep rotting there until something gives and the accumulated garbage will come crashing down.
I have issued a public challenge to Barrick to explain why they ignored my warning ten years ago that unilateral downstream hedging is a dangerous trap they should avoid. I also pointed out to the top brass how their hedge plan could be made bilateral, a winning combination. Had they listened to my advice, they would have avoided having to carry the yoke of a millstone-size hedgebook around their neck. I take this opportunity to report that Barrick has so far ignored my challenge.
I am not sold on the conspiracy theory according to which Barrick is a front set up by governments to keep the gold price in perpetual check. Not yet anyhow. But then, the only conclusion is that the officers of Barrick are incompetent bunglers whose name will go down in ignominy in the annals of mining.
Very interesting article! Another very good reason to say out of the mining stocks, and buy and take possession of ones coins and bars.
All of these markets have become so manipulated who knows what games are being played out there with commodities of all kinds? Can the oil companies be selling forward contracts on their in ground reserves every time there is a spike? Even Boone Pickens says oil is not yet adjusted for inflation, and we know that if Gold were adjusted for inflation it would now be north of $1,300.
This article brings to mind another question, if Barrick and others have sold their gold at $500 then who owns it, and what will be delivered to the market in the future?
All of this paper creation, of trillions of dollars in currency, debt, and derivatives each year must come crashing down on us eventually, and then what?
Oh, and who in the Hell is keeping the price of silver down?
One more thing, the Euro broke 1.40 this morning and the dollar hit 78.80.
In Canada, the price is going nowhere - due to the exchange rate.
Gold may increase 10% (in USD) but then our Canadian Loonie soars 12%. I lose 2%!
It's frustrating to see the price of gold climb and not benefit financially from it.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
In looking at the charts of Barrick this morning it looks like a mountain climb. Why are people still holding this stock, if the company has been sold down the river?
Oh, and insiders have sold $12 million dollars worth of stock in the last 30 days in a straight up market?
So we have steadily ratholed some PM and we've seen nearly a 20% roi. So, I'm thinking that a good play might be to get out of a majority of the PM/coin holdings now and put the cash overseas into something that is fairly liquid, like a foreign currency account. The obvious questions come to mind like IRS special situations, liquidity/trading delays, downside risks. Any ideas or experience in this type of investment from our threadites?
MH,
I think you hit on it TAXES! It appears that Gold moves along with the foreign currencies, so one might as well just hold the Gold and not pay the taxes.
The other thing I am doing as you know, is buying a few choice stocks in international companies, that can sell their products just as well over seas as here. Oil is a good example.
Our Canadian friend is right, the bigger gains in commodities, oil, gold, wheat, etc. is here as the dollar weakens. These worldwide commodities, all seem to move in price here, as the dollar gets weaker.
So yes the Canadian dollar, Euro, etc, get stronger but the cap. Gains are just as easy to capture here in big, strong, solid companies selling worldwide commodities.
The other problem I have with currencies, and what I have been telling Peter Schiff for over a year, is that Canada, Europe, etc. have the same problems in the end that we do, big social governments, baby boomer’s, etc. So why move money into those currencies and take the chance that there will be problems there, these derivatives, bank problems, and mortgage problems are all over?
<< <i>OK, so, maybe there's a play here to think about...
So we have steadily ratholed some PM and we've seen nearly a 20% roi. So, I'm thinking that a good play might be to get out of a majority of the PM/coin holdings now and put the cash overseas into something that is fairly liquid, like a foreign currency account. The obvious questions come to mind like IRS special situations, liquidity/trading delays, downside risks. Any ideas or experience in this type of investment from our threadites? >>
Finally, what we have been jabbering about since dec 04 , gold at 455 and silver at 8, comes true and you want to bail ???
Hopefully you have already diversified into some overseas assets , I would consider holding gold at this time and lighten up on the DOW and S&P 500 .Have a look at symbols JAIGX, USO,FXE. There is some protection there as psrt of a diversified plan.
I see some serious risk / reward in the U.S. dollar, and I wish I was living overseas because I would load up on some cheap US dollars. In fact, I recommended that just yesterday to my father-in-law, who lives in Spain in keeps his money in Euros and Pounds. The US dollar is oversold, just like the Euro was oversold back in 2000-2002 (when the sky was allegedly falling over there due to their slow growth and demographic problems and 1 dollar bought about 1.1 euros.) Today the sky is allegedly falling in America and our currency is turning into banana republic funny money based on a lot of overreaction.
The dollar is weakening recently due to the differential in interest rates -- rates in the euro zone and UK are still higher, and that is drawing investment capital in to those countries and out of Treasuries and other US dollar-denominated debt. However, the US will not be able to cut rates much further (if at all) for two reasons. First, most overseas investors (China maybe excepted) are not going to plow money into low-performing US assets. If the US wants to sell its Treasuries it will need to keep the rates attractive. Or else - heaven forbid - raise taxes to cut the budget deficit and reduce the need for foreign borrowing. If that happens - which will happen anyway if Hillary or Barry Obama gets into the White House - the dollar will strengthen again.
Second, and more important, a weak dollar leads to inflation because of higher import and commodity costs. Cutting rates is inflationary, and if some scary inflation numbers start to come down the pike, the Fed will return to its primary mandate and jack up rates again. That will stengthen the dollar.
Our economy is trapped between a rock and a hard place -- we can't really cut afford to cut rates, yet we need to in order to boost the economy. I predict a period of anemic economic growth like that we had in the 1970s. But that does not mean the dollar will continue to weaken. In fact, my guess is that the dollar in the next few years will make a significant comeback.
Oversold implies that they are needed and someone has sold short. What we have is a system that has manipulated the dollar for decades and is now starting to unravel. The countries of the world have no legitimate need for trillions of US dollars. Sooner or later they will do what they should have all along ...spend them, maybe to buy other currencies, gold, oil or buy the food from our farmers for more than we can afford to pay.
That would not surprise me at all. For example, the Chinese start buying/leasing farm land? We have always been the world's bread basket, that's how we began as a growing nation, before we became industrialized. Look at the trade dollar...used mostly for trade with China in the 1870's and 1880's, late in our agricultural development. Lady Liberty surrounded by grains, sitting on a bale of cotton, facing west and holding out an offering for trade...this is not a new idea to have this relationship with China.
So, think about the food by thinking about the Chinese buying or leasing the land to grow the food. It would be advantageous for them to do it here because you need good farm land to get good crop yields and that's one thing we have in spades and China would like to have (they don't have enough). We may be the best ag people in the world with the best soils in the world, we've been at it a good while and we can do some serious world class food production. This ethanol binge we are embarking on has put the agribusiness back on the map so the pump is primed and people are getting back into farming again. All God's children have to eat and you can't grow corn in the desert.
I do predict that within the next 5 years, food production will become an issue in the US and it will probably be an issue for China before it becomes one here so ownership of farm land production is a current issue whether it's in the news or not. Food is going to cost more and since it is in the CPI calculation, it will start showing up in the numbers, it can't be hidden. Surely folk have been thinking about this.
CPI items
China food imports
And, thanks for the tips on the possible play...not a good play but heck, not all ideas are good ideas.
<< <i>"...buy the food from our farmers for more than we can afford to pay."
That would not surprise me at all. For example, the Chinese start buying/leasing farm land? We have always been the world's bread basket, that's how we began as a growing nation, before we became industrialized. Look at the trade dollar...used mostly for trade with China in the 1870's and 1880's, late in our agricultural development. Lady Liberty surrounded by grains, sitting on a bale of cotton, facing west and holding out an offering for trade...this is not a new idea to have this relationship with China.
So, think about the food by thinking about the Chinese buying or leasing the land to grow the food. It would be advantageous for them to do it here because you need good farm land to get good crop yields and that's one thing we have in spades and China would like to have (they don't have enough). We may be the best ag people in the world with the best soils in the world, we've been at it a good while and we can do some serious world class food production. This ethanol binge we are embarking on has put the agribusiness back on the map so the pump is primed and people are getting back into farming again. All God's children have to eat and you can't grow corn in the desert.
I do predict that within the next 5 years, food production will become an issue in the US and it will probably be an issue for China before it becomes one here so ownership of farm land production is a current issue whether it's in the news or not. Food is going to cost more and since it is in the CPI calculation, it will start showing up in the numbers, it can't be hidden. Surely folk have been thinking about this.
CPI items
And, thanks for the tips on the possible play...not a good play but heck, not all ideas are good ideas. >>
Gosh that's the scariest thing I've read in some time. Sounds like the deal the Irish had with the British during the Potato famine. British land owners in Ireland (and to be fair - I'm sure some Irish land owners as well) were actually exporting food to England during it, because the English would pay more for it then the starving Irish could.
The Fireman...
Goldcorp (GG) is a quality Canadian gold mining company selling on the US stock exchanges. It has recently run up from a beat back low of around $22 to now $30+. It's high in 2006 was $40. This a gold miner right in your back yard away from many of the problems elsewhere in the world, also a quality operation, and unhedged to boot. This is one way to take advantage of the gold move.
I've read Sinclair stating that Barrick has problems but also will try to consolidate the industry. Each smaller firm it gobbles up with help it's hedge book somewhat. I wouldn't be surprised if many of it's hedged gold is still way back at $350/ounce. Eventually there will only be a few big gold miners left. Too many smaller operations have lopsided derivatives deals that will lose the owners the company in the long run. If Barrick is indeed a "favored son" of Goldman Sachs and the FED, they can live a lot longer than we think.
I'm sticking with unhedged mining stocks.
Another article by Fekete on why Barrick officers recently dumped 230,000 shares of company stock to be the first guys in the life boat.
This is very sad.
Man the Barrick lifeboats - CEO and CFO first - woman and children last
Why gold was really at $700 for several years...good analysis
roadrunner
Well I guess we are about to find out. How far behind can the Chinese and the Japanese be if the Arabs start buying all the good stuff?
Until just recently, I don’t think those financial geniuses in Washington and N.Y. ever counted on Foreign governments buying up companies directly.
Sept. 21 (Bloomberg) -- The Persian Gulf states, flush with cash from burgeoning oil revenues, are buying overseas assets at a record rate.
Abu Dhabi agreed yesterday to pay $1.35 billion for 7.5 percent of Carlyle Group, the world's second-biggest private equity firm.
Dubai and Qatar took competing stakes in Nasdaq Stock Market Inc., London Stock Exchange Group Plc and Nordic bourse OMX AB. Qatar also won approval to examine the financial records of J Sainsbury Plc, the second-largest U.K. supermarket chain.
All told, the deals are worth $25 billion, according to data compiled by Bloomberg. The pace of international investments by Gulf states, which earn $1.2 billion a day from oil exports, is quickening as they seek to diversify beyond energy. The nations have already spent a record $68 billion on overseas acquisitions this year.
``They are not just putting their money in bank deposits and government bonds any more,'' said Eckart Woertz, chief economist for the Gulf Research Center in Dubai. ``They are after strategic assets. About $188 billion of deals were announced last month”
Hyperinflation or recession - having dinner in Zimbabwe
Quote from Greenspan;
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver, copper, or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” [Alan Greenspan, Gold and Economic Freedom (1966)]
Amen big Al. Too bad you tossed this aside along the way.
roadrunner
<< <i>Conclusion
The decision by the US Fed to reduce its bank lending rate – ostensibly to counteract a reduction in the producer price index – was probably a seminal development in the history of the world’s economy. If the end result is that this rate reduction gives rise to a continuing fall of the US Dollar index, then inflation within the USA will likely rise strongly, and volumes of transactions will likely fall.
Paradoxically, the cut in interest rates seems likely to have the opposite effect of its stated intent. It seems more likely to give rise to an acceleration of the arrival of recessionary conditions – having bought sufficient time to allow maintenance of the status quo until after the US Presidential Elections.
Sadly, we are living in an extraordinarily cynical world where the parochial interests of the few now patently transcend the interests of the many. >>
........HYPERINFLATION OR RECESSION?
by Brian Bloom
.......
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” [Alan Greenspan, Gold and Economic Freedom (1966)]
Never have truer words been spoken.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
My latest acquisition BTW, a gold drachma.
So this thread really is still about coins.. just in case.
Some would agree, and some would not: by delaying the inevitable, Greenspan made the bubble worse by making it larger, thus the inevitable collapse will be greater than if it happened 20 years ago.
Great looking gold drachma, by the way!
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Carter ... 33% (post WWII low)
Bush I ... 65% (1992)
Clinton ... 58% (2000)
Bush II ... 66% (2006)
2009 projection ... 70%
American debt to GDP ratio
Now, when does this number reach a crisis? We have one recent datapoint. When Argentina's debt/GDP hit ~65%, its economy collapsed.
Argentina data
Camelot
balance sheet" debt being carried. If you included that, the ratio would be off the charts. It's not Joe Public's debt ratio that really worries me, it's what the corporations, hedge funds, banks, and brokerages are carrying, most of it with undefined value and miscalculated risk.
As far as those published debt ratios go, like father like son.
roadrunner
I guess Jim Sinclair is getting a little more worried than usual when he starts sending out direct emails, this came in Friday, been out of town.
“Dear CIGAs,
The following are some important notes in response to the following article:
1. Have some cash at home.
2. Have some one ounce gold coins at home.
3. All investments should be taken in certificate form if are positive you will not misplace them as replacing certificates can be a disaster.
4. No investment you have should have the anything to do with over the counter derivatives. Would you believe that GE is a major derivative dealer?
5. Think twice about any Internet financial service from banks to brokers.
6. Since you must have a broker, select a small traditional human broker with no over the counter directives on their books, in their safe or on the Internet. Ask for a letter confirming that before opening your account. When you make a trade get certificates. For sales, deliver the certificates and make the trade.
7. Park spare cash in Canadian National, not Provincial, T Bills.
Think positive and hope for the best, but know you are now prepared for the worst. This is a $20 trillion dollar problem that lacks any functional final solution.”
<< <i>I guess Jim Sinclair is getting a little more worried than usual when he starts sending out direct emails, this came in Friday, been out of town.
“Dear CIGAs,
The following are some important notes in response to the following article:
1. Have some cash at home.
2. Have some one ounce gold coins at home.
3. All investments should be taken in certificate form if are positive you will not misplace them as replacing certificates can be a disaster.
4. No investment you have should have the anything to do with over the counter derivatives. Would you believe that GE is a major derivative dealer?
5. Think twice about any Internet financial service from banks to brokers.
6. Since you must have a broker, select a small traditional human broker with no over the counter directives on their books, in their safe or on the Internet. Ask for a letter confirming that before opening your account. When you make a trade get certificates. For sales, deliver the certificates and make the trade.
7. Park spare cash in Canadian National, not Provincial, T Bills.
Think positive and hope for the best, but know you are now prepared for the worst. This is a $20 trillion dollar problem that lacks any functional final solution.” >>
Wow , thats the definition of dont worry be happy...I shouldnt have gotten out of bed this morning
roadrunner