I'm actually just being dramatic to echo the headline, but the article does make some good points and observations.
As we enter the final 10 months of this parabolic move in gold, there are likely to be several price drivers, two of which I expect to be a) weakness in the USD (but not necessarily collapse) and b) weakness/turmoil in the EU/euro and c) chaos in the world (Iran, N Korea, etc.) and d) the oil spill, if not capped soon.
Not necessarily all of these things. Gold has shown that it does not need a weak dollar to propel to higher and higher prices, but it definitely would help.
Interesting article out of the UK about the plunging M3 money supply. This is a serious threat to the US economy, and leads us to a lot of conflicting goals and realities:
1. Obama wants to double exports, but difficult to do with a strong dollar 2. Hard to devalue the dollar while decreasing money supply (deflationary) 3. Hard to drive an economic recovery with deflation 4. Hard to boost stocks with deflation and a strong dollar
Something's got to give. I sense a monetary policy change coming soon, and whatever it is, it will probably be good for gold.
<< <i>I thought all this printing of money was increasing the money supply? >>
Maybe RR or someone can explain it, because I guess I don't understand if the M3 numbers include or exclude the stimulus spending or other money printing that has been going on.
I guess there is a difference between stimulus spending which adds to our nation's debt (spending money we don't have) using money that already existed compared to the creation (or destruction) of money which is new money that I guess is "owned" by the Fed Reserve. And maybe that has been my confusion... there really is no link between US debt and the actual M3 supply of money, except at the basic level that the borrowed money has to come from some supply.
I guess in the past the easiest way that the fed grew the money supply was with fractional reserve lending... but that requires money to be lent in order to grow the supply. Obviously that's been curtailed lately, so that would explain the shrinking money supply. So assuming that increasing lending is out (because rates are already as low as they'll get and banks aren't willing or able to accept additional risk), and lowering rates is out, how else can the fed increase the money supply? The only way I can think of is for the federal government to borrow enough money (Trillions more than they are already planning/doing) to cause the creation of dollars which can then be spent to enter the economy. The only entities that can borrow mass amounts of dollars are governments at this point. I'm anxious to see other's comments on this.
<< <i>I thought all this printing of money was increasing the money supply? >>
Yes, and losses decrease it. Pretty scary that trillions added and still it's shrinking, as in losses are really piling up, liquidity is being withdrawn, etc.
I put the following on the "newby thread" ( meaning new thread not newbies in the thread ). I sholud have put it here.
The latest from Richard Maybury/Early Warning Report
Be Ready for More Chaos By Richard Maybury Editor of Early Warning Report newsletter May 31, 2010
Dear Reader, Page one of the February 2010 EWR contained a warning to be ready for "another downturn in the economy and most investments this year." The warning was repeated in the April 2010 EWR, page two. I think there is a 95% probability the downturn has arrived.
The main reason is the velocity of circulation of the US dollar.
It looks to me like the euro crisis has triggered a huge flight of capital out of Europe and into the US. This new demand for the dollar and dollar-denominated assets is causing the velocity of the dollar to fall. A fall in velocity has the same effect as a deflation of the money supply. Dollars that are being held and not traded are dollars that are effectively out of circulation — they're not bidding up prices. Interestingly, this connects with recent money supply changes. Some background: The broader measures of money supply — M2 and M3 — are lower velocity than the narrower measures, especially the Monetary Base. This is because broader measures contain financial instruments that change hands more slowly. M3, for instance, counts large-denomination time deposits. These are not included in narrower measures. An even broader measure is L, which, as far as I know, is no longer compiled by the government, or at least officials do not admit to it. L contains, among other things, Savings Bonds, which some people hold for twenty years or more. Why L is no longer compiled, or is complied in secret, we don't know, but I think we can safely conclude it contains information the government does not want us to have. Recently, the broader measures have been shrinking, while the narrower ones, especially the Monetary Base, have been exploding. I think people are moving money from instruments included in the broader measures to instruments in the narrow measures. The narrower measures have a hair trigger, they can be sold or moved instantly. I think people are very frightened and they want this flexibility. They are afraid of any kind of long term commitment. But the narrower measures, especially the Monetary Base, are mostly still just sitting in the banks. Bankers are afraid to lend, and a lot of borrowers are afraid to borrow, so the money just sits, waiting for launch. It seems likely that people are moving into narrow-M instruments because they want to be able to move their cash quickly, in hopes of dodging the effects of the next crisis. Summarizing, because of the rise in money demand and fall in velocity, triggered by the fear generated by the euro crisis, I think we are in another severely deflationary situation. This constitutes a buying opportunity, because I'm sure the Fed will not allow the deflationary conditions to spiral down into a depression. They will look for ways to get the money out of the banks, or inject more money directly into the economy (more "stimulus") setting us up for a runaway inflation that will drive prices of practically everything to the moon. Repeating what I've said often, you should learn all you can about money demand and velocity because, in my opinion, they are now by far the dominant forces causing changes in the economy and investment markets. Velocity was explained in the June 2008 EWR, in chapter 8 of my little Uncle Eric book #2, WHATEVER HAPPENED TO PENNY CANDY?, and throughout my Uncle Eric book #7, THE MONEY MYSTERY. (There are 11 Uncle Eric books.) On another matter, I am sometimes asked...
... why I don't use stop loss orders?
Because I've never had good luck with them. This newsletter isn't called Early Warning Report for nothing. I'm usually early. I buy the investment, it goes down, I get stopped out, then it takes off like a skyrocket. This isn't to say stop loss orders should not be used by you. Maybe your luck is better than mine. However, I would point out what happened during the May 6th "flash crash." The Dow plunged 998.5 points in 20 minutes, then came back. Thousands of investors were stopped out and left with big losses that would not have happened if they hadn't used stop loss orders. I think a lot more of that kind of thing is headed our way. The fiat money system has begun to crumble. This is becoming obvious to all, now that the euro is in trouble. And, the heavily regulated global investment system is riddled with fraud, foul-ups and fear. The tens of thousands of incomprehensible financial regulations are a jungle where the crooks hide. Many things could trigger more downward (and upward) spikes. Examples would be war with Iran or North Korea, more revelations about the colossal frauds committed by the euro governments, a natural disaster, or a US invasion of Pakistan. Also, very likely, the "plunge protection team" (aka the President's Working Group on Financial Markets) will make a mistake. Everyone on that team is as much a member of the species homo sapiens as you and me, and equally inclined to occasionally fumble. The Plunge Protection Team has so much power to intervene in financial markets that it's like a Greek god — supernatural powers steered by the emotions and guesses of exceedingly fallible humans. It seems to me a certainty that the day will come when they will pull the wrong lever and demolish the whole world financial system. And if the US team does not do it, the Greek gods in some other government will. This is one of the many reasons it is important to have a portion of your wealth outside the financial system.
A gold, silver or platinum coin in your hand...
...is a great deal safer than your bank account, T-bill, stock or any other financial instrument in the hands of the Plunge Protection Team. The Aden sisters are two of the best analysts around, and I never hesitate to recommend their newsletter, The Aden Forecast. In their May 11, 2010 issue, they wrote,
It's impressive to think that gold's bull market is in its tenth year. It's had consistent yearly gains since 2001, averaging 17% per year, yet it's still a quiet market. The average investor is really not aware of this, but they are slowly seeing the turn. This alone strongly suggests the gold market is far from being a bubble. Bubbles cause a lot of attention while euphoria is in the air. But comparing the enthusiasm in today's gold market to the tech frenzy bubble in 2000, or the real estate craze in 2007, the difference is like night and day. This is good for gold investors because it's saying that the gold market still has much further to rise in the years ahead.
I agree with every word of that, and I would conclude the same about silver and platinum. This isn't to say the precious metals won't go through frightening gyrations. I think they will, because I think everything will. As money demand and velocity bounce around, so will prices of nearly everything you can name. As long as governments have as much economic power as they do, wild gyrations will be the rule, and stability will be unknown. If you are not holding at least a quarter of your wealth outside the financial system — in precious metals, fine art, a business, antiques, real estate, or other tangible assets — then I suggest you get started. And, I hope you will encourage everyone you care about to do the same. I will continue doing my best to get you through this period of turmoil as safely and profitably as possible. I believe there is a better world waiting for us on the other side, and I want you and yours to be in fine shape to enjoy it when we get there. Sincerely, Richard Maybury
yes, and losses decrease it. Pretty scary that trillions added and still it's shrinking, as in losses are really piling up, liquidity is being withdrawn, etc.
The more I read on "classic" money supply theory the less I feel it has any reliably accurate predictive powers on what's happening today and what will happen down the road. Yeah, M3 has contracted a whopping 10%. M2 is essentially stable. M0 has more than doubled in the past 2 yrs...and so would have M1 if it were reported properly. Does one believe the narrow money supply aggregates over the more liberal ones (M0/M1 vs. M2/M3) ?
In my mind the bankers have created a supercharged (though fraudulent) money supply system based on credit, debt, and derivatives over the past 10 years. It was their way of working around the purse strings of Congress. Who needs their approval when you can create "debt" money at will and in much larger quantities. And in order to help bail out the paper losses being seen by nations, banks, and corporations, govt's are keystroking TRILLIONs into existence that never appear in any M0-M3 money aggregate (ie they continue to work around the classical money system). Before it's all over $20-$50 TRILLION will have been keystroked into existence and gone to pay off losing bets of bankrupt nations, states, pension funds, GSE's, corporations, etc.
The banks created a system of $1.1 QUAD in otc derivatives that has essentially acted as tens of TRILLIONs in tradeable/bankable "play-money" to them. From this they have received income and bonuses...assuming they were on the right side of the bet.
The majority of ransom payoffs are being made outside the classic money system. Obviously J6P cannot be allowed to see this or he would disapprove. All the PTB want him to know is that CPI is low, money supplies are stable or even shrinking, GDP is growing at 3%, the stock market is on a bull run, treasuries and dollars are safe places to park money for the long term, and that unemployment is <10% (ie everything's fine so keep on adding ever increasing amounts to that 401K).
The question as to what "money" has morphed into today is harder to answer than ever before.
Reminds me of that story that went kind of like this...
A business guy walks into a hotel that's $100/night and books a room. The hotel owner immediately takes the $100 and pays a maintenance worker the money he owes him. The maintenance worker then runs and pays his supply show the $100 he owes. The supply shop owner goes and pays his employee the $100 he owes him. Then the employee runs and pays back the hotel owner the $100 he owes him. The business guy then comes back to the office after seeing the room and says decides not to rent the toom, so the hotel owner gives him back his $100.
Sorry I forgot the details that make this sound better, but you get the idea.
This linked article has some good charts that compare the 40 year gold price to misc items such as CPI, average hourly wages, total bank loans & leases, M2, and household net worth. An interesting read. In no case does the author come up with an adjusted 1980 gold price of less than $1900.
Gonna be interesting when the Chinese sheeple wake up.
Conversation on the production line is forbidden, bathroom breaks are kept to 10 minutes every two hours and constant noise from the factory washes past his ear plugs, damaging his hearing, Ah Wei said. The company has rejected three requests for a transfer and his monthly salary of 900 yuan ($132) is too meager to send home to his family, said the 21-year-old, who asked that his real name not be used because he is afraid of his managers.
At least 10 employees at Taipei-based Foxconn have taken their lives this year, half of them in May, according to the company, also known as Hon Hai Group. The deaths have forced billionaire founder Gou to open his factories to outside scrutiny and apologize for not being able to stop the suicides. Gou built his company into the world’s largest contract electronics manufacturer and now clients from Apple Inc. to Hewlett-Packard Co. are probing the company’s working conditions.
Foxconn’s Longhua complex outside Shenzhen spans three square kilometers (1.16 square miles) and is criss-crossed by tree-lined streets with a water fountain at the center of the facility. Workers wearing polo shirts emblazoned with “Foxconn” in Chinese characters over their hearts walk along the streets. Men wear blue, women wear red. Security personnel wear white. The complex boasts its own hospital, a collection of restaurants and a swimming pool surrounded by palm trees.
The workers, 86 percent of whom are under 25 years old, live in white dormitories with eight to 10 people sleeping in a room. The living quarters have stairs running up the outside walls and the company has begun covering them with nets to prevent people from jumping.
Inside the compound, at a factory devoted to computer motherboards, rows of young men and women stand at assembly lines, their feet shod in blue slippers and white caps on their heads. The smell of solvent hangs in the air. About 80 percent of the front-line production employees work standing up, some for 12 hours a day for six days a week, according to Liu Bin, a 24-year-old employee.
“It’s hard to make friends because you aren’t allowed to chat with your colleagues during work,” Liu said at Shenzhen Kang Ning Hospital where he was seeking help for insomnia. “Most of us have little education and have no skills so we have no choice but to do this kind of job. I feel no sense of achievement and I’ve become a machine.” Foxconn Workers in China Say ‘Meaningless’ Life Sparks Suicides
<< <i>Gonna be interesting when the Chinese sheeple wake up.
Conversation on the production line is forbidden, bathroom breaks are kept to 10 minutes every two hours and constant noise from the factory washes past his ear plugs, damaging his hearing, Ah Wei said. The company has rejected three requests for a transfer and his monthly salary of 900 yuan ($132) is too meager to send home to his family, said the 21-year-old, who asked that his real name not be used because he is afraid of his managers.
At least 10 employees at Taipei-based Foxconn have taken their lives this year, half of them in May, according to the company, also known as Hon Hai Group. The deaths have forced billionaire founder Gou to open his factories to outside scrutiny and apologize for not being able to stop the suicides. Gou built his company into the world’s largest contract electronics manufacturer and now clients from Apple Inc. to Hewlett-Packard Co. are probing the company’s working conditions.
Foxconn’s Longhua complex outside Shenzhen spans three square kilometers (1.16 square miles) and is criss-crossed by tree-lined streets with a water fountain at the center of the facility. Workers wearing polo shirts emblazoned with “Foxconn” in Chinese characters over their hearts walk along the streets. Men wear blue, women wear red. Security personnel wear white. The complex boasts its own hospital, a collection of restaurants and a swimming pool surrounded by palm trees.
The workers, 86 percent of whom are under 25 years old, live in white dormitories with eight to 10 people sleeping in a room. The living quarters have stairs running up the outside walls and the company has begun covering them with nets to prevent people from jumping.
Inside the compound, at a factory devoted to computer motherboards, rows of young men and women stand at assembly lines, their feet shod in blue slippers and white caps on their heads. The smell of solvent hangs in the air. About 80 percent of the front-line production employees work standing up, some for 12 hours a day for six days a week, according to Liu Bin, a 24-year-old employee.
“It’s hard to make friends because you aren’t allowed to chat with your colleagues during work,” Liu said at Shenzhen Kang Ning Hospital where he was seeking help for insomnia. “Most of us have little education and have no skills so we have no choice but to do this kind of job. I feel no sense of achievement and I’ve become a machine.” Foxconn Workers in China Say ‘Meaningless’ Life Sparks Suicides >>
They're making 20c an hour with all the overtime anyone could possibly want and they're complaining!!! Don't they know there are people in Africa working under far more adverse conditions and their employers are mere millionaires. They should be proud to live and die for a billionaire. They're mere children any- way so what the hell do they need with a life or to be treated like a living breath- ing human being. The important thing is they turn rice into crap or whatever else cheap food their owner decides to feed them, not to think, and not to have bas- ic human needs and instincts.
Beat some of these guys with a brand new stick and they're still going to whine about how bad they have it. Now the rich bosses might get an upset stomach thinking about all the suicides. The workers should be ashamed.
My question - why can't an existing agency take care of the census? I imagine the IRS would be a good fit. Count everyone paying taxes, who is listed as a dependent, or who receives government assistance. Can't imagine that leaves out too many people. They already know how many people there are. Not sure why they have this big circus boondoggle that has become the census. Oh, but we won't know how many teachers we need without a census! Does anyone buy that crap?
My question - why can't an existing agency take care of the census? I imagine the IRS would be a good fit. Count everyone paying taxes, who is listed as a dependent, or who receives government assistance. Can't imagine that leaves out too many people. They already know how many people there are. Not sure why they have this big circus boondoggle that has become the census. Oh, but we won't know how many teachers we need without a census! Does anyone buy that crap? >>
The Government sells the census data to industry and the Census Bureau makes a profit...the only Gov't agency to do so. At least that's the skinny we got as contractors to the 2010 Census. So, they get carte blanche.
"Not sure why they have this big circus boondoggle that has become the census. Oh, but we won't know how many teachers we need without a census! Does anyone buy that crap?"
Yep, things have changed a lot. My mother took the census three times for '60, '70, and '80. She was usually invited into the homes, and she got to share bits of the lives of the people she visited. It was a good thing and everyone wanted to be counted. She was paid but I don't recall that it was ever more than a few dollars, it was more of a duty than a job. She enjoyed doing the census and enjoyed the connection to the people. There were folk that worked the night shift and slept in the day but they would let her know when she should come by because she would leave our home phone number with them and they would call and she would go over and enumerate them. It was something everyone participated in with little exception. She finally became tired of it and she was getting too old to do it anymore because there was a lot of driving and walking. She enjoyed being an "Enumerator" and felt it was her duty.
I see the stories in the paper now about people posing as census workers getting into peoples homes and doing what criminals do. Census workers getting shot, arrested for trespassing, and all the other treacherous things about dealing with the public now days. I see the big O used the hiring of census workers to boost his employment figures which he officially calculates at 9.9% and they get paid pretty good money and the intrusive questions like your phone number for in case the gov needs to contact you...yeah, right, I'm giving you my private phone number so you can call me, send me messages...not happening. It used to be the households address, race, age, where you were from, how many folk live there and how much house hold income do you have. A basic enumeration form and that's it.
Now the census does feel like a boondoggle, not unlike most of the fed govt programs now. Sure the census is used to decide the number of seats in congress that each region/state gets but the census is being pitched as a minority entitlement affirmation to get more federal tax money ( I thought we were broke) to those that need/want it. There will be redrawing of congressional districts and the race baiting crap and law suits that go along with it. The irony is that most of the minorities like the hispanics don't want anyone anywhere near their house counting heads and gasp...nationality. The black people don't want to cooperate because they don't like the term "black, negro or african american" on the census form, the white people don't seem to mind but they aren't giving out phone numbers at least not real ones. The asians and pakastanis don't even know what the government form is about and they sure aren't doing anything with it. The interesting thing is that the census worker doesn't even have to enumerate everyone now, they can extrapolate from similar house holds and just wash the whole neighborhood in some color or another...it's not even real data, it's kinda real, sorta and were paying for this garbage? The national guard should do the census, in uniform and every one in every house should be enumerated or their electricity gets cut off, make it easy for everyone.
Once can only wonder how this census will be gimmicked, marketed, gerrymandered into something meaningless so one group or another gets dominance and funding and maybe, if we're lucky, we can create some more departments and government offices to distribute the money or set up some programs for those in need. I would really appreciate someone that could get ahold of this runaway train and put things on the right track again, what a mess this thing has become in such a short time. So when the census is over, what will happen to the unemployment rate, is this just a chance to buy some time with all these new hires so the current admin can get through the November elections with good employment numbers?
Oh well, this is not your fathers Oldsmobile. Have a nice day.
A census worker left a business card in the beginning of the year but I won't call him. My mother received her Census Form in the mail which I promptly filled out and sent in. I am waiting for that Form and it has not arrived. I guess I won't be counted.
According to an analysis from GoldCore, premiums on British gold sovereigns have increased from 3% to over 7% in just one month on British sovereigns as British investors buy the coins as they do not attract CGT. Recent buying has seen supply issues develop in the gold sovereign market which could see a further rise in premiums in the coming weeks.
Fourteen of 20 traders, investors and analysts surveyed by Bloomberg, or 70 percent, said bullion would rise next week. Four forecast lower prices and two were neutral. Gold for delivery in August was up 0.2 percent for this week at $1,217.40 an ounce at 10:18 a.m. in New York yesterday.
How many states are in similar situations? And how long until the states get bailed out?
This should be a big sign to the unions in the US just how dedicated their union bosses are to their own memberships, and every taxpayer who votes should take a look at their Senator's and Representative's vote on the GM & Chrysler Bailouts.
Q: Are You Printing Money? Bernanke: Not Literally
We all know the horrors of inflation, but often disregard the heavy costs of the tax on inflation. This author suggests there is a way to overcome the taxation on "gains" from higher nominal values of investments in precious metals, but doesn't bring them up in the article. Do you know what he is suggesting?
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>We all know the horrors of inflation, but often disregard the heavy costs of the tax on inflation. This author suggests there is a way to overcome the taxation on "gains" from higher nominal values of investments in precious metals, but doesn't bring them up in the article. Do you know what he is suggesting?
>>
There is at least one potential fallacy about his scenario. And that is he is assuming that the entire increase in the value of gold is due to inflation, so that when you cash in, you have made no real gain in purchasing power. You get more FRNs, but each is worth less, so in this scenario, you have just the same purchasing power you had before before you pay taxes on top of that.
But what if the increase in the price of gold is NOT due to inflation, but due to demand from others and the market? That has been happening the last several years..... while there has been some inflation, at least according to the government the inflation rate has been very low, in fact, some say we are in deflationary times. So in this scenario, if the price of gold doubled, you have made some very REAL gains. While you still have to pay taxes on it, you have definitely still come out ahead.
The writer is also implying the tax rate will increase to 50%.... not sure that much of an increase will take place. If it did, I think we will have more problems than trying to figure out whether our gold investment was a good idea or not.
Bottom line, the writer appears to be pitching what may be a questionable tax avoidance scheme.
But what are the alternatives? It's all relative. If gold outperforms every other option, then what's your best choice? Gold. If there's an option that will do better, put your money there. Regardless, you want to pick the best option, even if you still end up losing.
1.As confidence in the U.S. dollar wanes, gold’s popularity rises. More and more people are realizing that gold (and silver) are safer (as a store of value) than are paper dollars.
Not only are central banks becoming more reluctant to sell their gold holdings, but some nations are actively trying to increase their gold reserves. China, in particular, with more than one trillion U.S. dollars in reserve, is trying to accumulate gold as quickly as possible without causing a panic rush into gold. A panic would raise gold prices quickly, thus defeating China’s ability to accumulate more gold at a reasonable price and simultaneously reduce the value of its U.S. dollar holdings. In fact, China is requiring a majority of its domestic gold mines to sell their finished product to the Chinese central bank. Even U.S. citizens are demanding more gold and silver coins than the U.S. Treasury can produce.
If inflation does occur, your profits will be absorbed by taxes and inflation. It's called the hidden tax. I believe the author is recommending putting any profits in Non-financial assets, such as land, machinary, buildings.... real assets. Therefore he is assuming profits won't be eaten away by inflation. It's assumed a real asset like art, classic cars, and what was mentioned before will hold their value.
Yes, the author was calculating a tax rate of 50%.... THIS IS NOT OUT OF THE REALM OF REALITY. Heck on January 1,2011 when Bush's tax cuts expire the estate tax goes from -ZERO- to 55%!!!!! Yikes. More than half of your wealth at death will be taxed and paid by your beneficiaries.
<< <i>We all know the horrors of inflation, but often disregard the heavy costs of the tax on inflation. This author suggests there is a way to overcome the taxation on "gains" from higher nominal values of investments in precious metals, but doesn't bring them up in the article. Do you know what he is suggesting?
>>
There is at least one potential fallacy about his scenario. And that is he is assuming that the entire increase in the value of gold is due to inflation, so that when you cash in, you have made no real gain in purchasing power. You get more FRNs, but each is worth less, so in this scenario, you have just the same purchasing power you had before before you pay taxes on top of that.
But what if the increase in the price of gold is NOT due to inflation, but due to demand from others and the market? That has been happening the last several years..... while there has been some inflation, at least according to the government the inflation rate has been very low, in fact, some say we are in deflationary times. So in this scenario, if the price of gold doubled, you have made some very REAL gains. While you still have to pay taxes on it, you have definitely still come out ahead.
The writer is also implying the tax rate will increase to 50%.... not sure that much of an increase will take place. If it did, I think we will have more problems than trying to figure out whether our gold investment was a good idea or not.
Bottom line, the writer appears to be pitching what may be a questionable tax avoidance scheme. >>
I saw this and thought it was flawed due to the assumtion of no increased demand in bullion as well. The other item is the value of your existing debts would be smaller, so if you owed 200k on a house and the value of the dollar was halved, you would owe the equivalent of 100k now. So if you have the bullion you are way ahead versus paper assets even with the 50% tax assumption.
The fact that gold has increased in price nearly 5X since 2001, while the US dollar has fallen 27% clearly shows that gold has appreciated at much greater amount than the published rate of inflation. It may be that investors in gold are not buying the govt's reported CPI, GDP, and jobs numbers.
Based solely on the dollar's drop since 2001, the price of gold should only be $350/oz. Clearly something else is at work here to push gold up 3.5X the "expected" level. And it's not likely it's just maniacal speculation by crazed gold bugs. In any event with gold appreciating approx 5X over 9 years, that leaves plenty of room for inflation, taxes, etc. and still come out pretty far ahead in purchasing power. Note that past performance is no indication of future performance.
Hey, maybe the government can go after those "islamo-fascists" ( who hate us because of our freedom and prosperity of course ) and spend another few hundred billion eh?
U.S debt to rise to $19.6 trillion by 2015
June 8 (Reuters) - The U.S. debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015, according to a Treasury Department report to Congress. U.S debt to rise to $19.6 trillion by 2015
<< <i>The fact that gold has increased in price nearly 5X since 2001, while the US dollar has fallen 27% clearly shows that gold has appreciated at much greater amount than the published rate of inflation. It may be that investors in gold are not buying the govt's reported CPI, GDP, and jobs numbers. >>
There's other factors at play as well that are likely to increase in significance. One of them being the "peak gold" theory. We have supposedly reached peak global production of gold as of a few years ago, and it is projected to continue to decline into the future.
There is at least one potential fallacy about his scenario. And that is he is assuming that the entire increase in the value of gold is due to inflation, so that when you cash in, you have made no real gain in purchasing power. You get more FRNs, but each is worth less, so in this scenario, you have just the same purchasing power you had before before you pay taxes on top of that.
It doesn't matter too much whether the gain is via inflation or via good investing. It's the fact that the value of the investment is going up. As the value of the asset goes up, the tax (regardless of the tax rate) hits harder.
The writer is also implying the tax rate will increase to 50%.... not sure that much of an increase will take place. If it did, I think we will have more problems than trying to figure out whether our gold investment was a good idea or not.
Our taxes are already over 50% in the aggregate. We do have more such problems already. We've been in the kettle a long time and the water is getting pretty warm - we just didn't notice too much.
Bottom line, the writer appears to be pitching what may be a questionable tax avoidance scheme.
Yes! Yes! Yes! Tax avoidance is not tax evasion. The guy thinks like I do. The difference is that he's been busy combing the Tax Code for nuggets and analyzing the impacts of stagflation on investments.
Has anybody here subscribed to his report? I am betting that he's got some good ideas.
His webpage starts to give details that answer the problem that he states at the end of the article:
Reverse inflation taxes - Instead of paying real taxes on illusionary income, you are paying illusionary taxes on real increases in net worth. Reverse inflation taxes, so that instead of paying real taxes on imaginary gains, we are paying imaginary taxes on real gains.
He also states, "Inflation taxes don't appear on your tax return," and I assume that he is getting at a situation where inflation gains also don't appear on your tax return.
I must be a little slow today, but what could be "the reversal of paying real taxes on imaginary gains?"
From his webpage:
Reading 1: How individuals can use inflation to directly take net worth from corporations & other individuals.
Reading 2: How the government can use inflation to convert after-tax assets into pre-tax income, & then take your assets.
Reading 3: How to use the tax code to turn a 10% rate of inflation into the net worth benefits of a 27% investment.
Reading 7: A little studied lesson from the 1970s on how to turn $40,000 into $300,000 during a time of stagflation.
Reading 9: How to use the tax code's inflation blindness to triple the potency of an inflation hedge strategy.
Reading 12: How to turn inflation and the upcoming Social Security & Medicare crisis into a potential 44% annual return.
He may just be a tax planner or a tax attorney who has become interested in gold and in inflation. All of his scenarios seem to hinge on the Tax Code. His stuff may be worthwhile, if just for the read. I may sign up for his free stuff and see where it goes.
Q: Are You Printing Money? Bernanke: Not Literally
Britain announced that it has raised it's VAT from 17.5% to 20%. The big O's bag men have to be looking at this, it's like free money. They could finance health care with just a stroke of the pen...and the approval of congress but there's the rub. Seems like another of those conspicuous choices for our conspicuous consumption consumers but everyone would have to pay it. It'll never work here unless they could issue some kind of VAT exemption cards.
This is a consumer driven economy. The VAT will definitely put a damper on it. The idiots in Washington don't get it. It not taxes that need to be raised, its spending that needs to be cut. Austerity is already in place in Britain. That is what needs to be done here, but the career politicians won't do it.
There will definately be a VAT in the USA. And it will curb economic growth. But those who expected growth similar to what we've experienced the last 30 years would have been disappointed anyway. We just do not have the demographics to support 1980-2005 growth rates.
A VAT could actually help the dollar, even if the economy slows. If that tax is used to cut debt and not for further spending, then it will show that the USA is taking a stance towards fixing its problems.
Seen this rant on Kitco found it awakening = REAL economy J6P view
"So let's talk houses.
For those who remember back in late March, I said Lumber was gonna take a big hit. It was making a perfect ending diagonal right into the end of the FED's buying of mortgage backed securities. That was between 300 and 320. $Lumber today is now sitting at 185 last I checked, nearing almost a 50% pull back in price and the complete erasure of the gains of 2009 and early 2010. ALL in just a few weeks. The lumber market has been heading straight down looking for the center of the earth. A great move for traders (1 contract shorted at 300 would would now be worth about $12,650) but is bad news for the economy going forward.
I live in a timber producing county. One mill in particular has built up massive inventories of pre-production timber and hundreds of thousands of board feet....just sitting. Rail cars passing through used to be over 50% lumber cars.....no longer, many trains now a days don't have a single lumber car.
Here it is summer, prime home building season, and nothings moving.
I read an article this week, pointing out that the government program to ease mortgages for some buyers is losing more program participants than are being added. Even those that have have had their mortgage payments eased with sub 5% fixed rates, still can't make the payments!
The rental market is having a tough time because traditional apartments are now competing with a glut of homes for renters. And now many families are 'doubling up' and adult children are moving back in with mom and dad.
I'm not sure what the percentage is, I'll have to look it up, but I thinks it's near 1 in 8 jobs are directly related to the construction industry. When the FED stopped buying up MBSs, I think the housing contractors gave up the ghost. No point in fighting and pretending a bottom is in, time to fold it up and wait it out. New home purchase numbers came out today. Not only did they fall below expectations , but also fell below last months level. I think existing home sales numbers come out tomorrow.
So with people unemployed in the construction sector, they too are losing their own homes, adding even more inventory to the glut.
It is also my opinion that the US will also suffer a credit crisis similar to Europe, but likely much worse. A Multi-decade long bond advance will see a massive correction, yields will climb and credit will become expensive. But not for previous reasons of countering inflation. No this time yields will likely soar because of default or threat of default. Who is going to lend money when chances of repayment look dismal? Who is going to forge 30year fixed mortgages unless the return out ways the risk....welcome to 12-18%+ fix mortgage interest rates, only reducing the number of home buyers even further, keeping the house glut in place.
I've said before that real estate and banking are leading sectors, they foretold the economic collapse and will foretell the economic recovery. I DON'T SEE A RECOVERY HERE!
The FED has eased and eased, pushing that string vigorously.....but still no takers.
So far the Velocity of Money has been to the downside with ever increasing accounts of debt destruction. When Debt = Money in a fiat economy, and debt/credit is being destroyed.....money is being destroyed as demand for cash to pay debts spirals upward. So far outpacing every attempt the government makes to stem the hemorrhaging Plus we now have a growing tide of political support for austerity. The next politician to say 'bail-out' or 'stimulous' is going to be hung up by their toe nails. Right now 'I' for incumbency is a red letter.
What's a guy to do? I'll say it again, keep some cash, keep some metal, keep some food and do your best to keep your job. And of course the believers should keep their faith.
I'd like to chat about food demand and supply soon, but power nap is next on the agenda.
I hope you all found this one man's rant interesting and enlightening." ' '
<< <i>Seen this rant on Kitco found it awakening = REAL economy J6P view
"So let's talk houses.
For those who remember back in late March, I said Lumber was gonna take a big hit. It was making a perfect ending diagonal right into the end of the FED's buying of mortgage backed securities. That was between 300 and 320. $Lumber today is now sitting at 185 last I checked, nearing almost a 50% pull back in price and the complete erasure of the gains of 2009 and early 2010. ALL in just a few weeks. The lumber market has been heading straight down looking for the center of the earth. A great move for traders (1 contract shorted at 300 would would now be worth about $12,650) but is bad news for the economy going forward.
I live in a timber producing county. One mill in particular has built up massive inventories of pre-production timber and hundreds of thousands of board feet....just sitting. Rail cars passing through used to be over 50% lumber cars.....no longer, many trains now a days don't have a single lumber car.
Here it is summer, prime home building season, and nothings moving.
I read an article this week, pointing out that the government program to ease mortgages for some buyers is losing more program participants than are being added. Even those that have have had their mortgage payments eased with sub 5% fixed rates, still can't make the payments!
The rental market is having a tough time because traditional apartments are now competing with a glut of homes for renters. And now many families are 'doubling up' and adult children are moving back in with mom and dad.
I'm not sure what the percentage is, I'll have to look it up, but I thinks it's near 1 in 8 jobs are directly related to the construction industry. When the FED stopped buying up MBSs, I think the housing contractors gave up the ghost. No point in fighting and pretending a bottom is in, time to fold it up and wait it out. New home purchase numbers came out today. Not only did they fall below expectations , but also fell below last months level. I think existing home sales numbers come out tomorrow.
So with people unemployed in the construction sector, they too are losing their own homes, adding even more inventory to the glut.
It is also my opinion that the US will also suffer a credit crisis similar to Europe, but likely much worse. A Multi-decade long bond advance will see a massive correction, yields will climb and credit will become expensive. But not for previous reasons of countering inflation. No this time yields will likely soar because of default or threat of default. Who is going to lend money when chances of repayment look dismal? Who is going to forge 30year fixed mortgages unless the return out ways the risk....welcome to 12-18%+ fix mortgage interest rates, only reducing the number of home buyers even further, keeping the house glut in place.
I've said before that real estate and banking are leading sectors, they foretold the economic collapse and will foretell the economic recovery. I DON'T SEE A RECOVERY HERE!
The FED has eased and eased, pushing that string vigorously.....but still no takers.
So far the Velocity of Money has been to the downside with ever increasing accounts of debt destruction. When Debt = Money in a fiat economy, and debt/credit is being destroyed.....money is being destroyed as demand for cash to pay debts spirals upward. So far outpacing every attempt the government makes to stem the hemorrhaging Plus we now have a growing tide of political support for austerity. The next politician to say 'bail-out' or 'stimulous' is going to be hung up by their toe nails. Right now 'I' for incumbency is a red letter.
What's a guy to do? I'll say it again, keep some cash, keep some metal, keep some food and do your best to keep your job. And of course the believers should keep their faith.
I'd like to chat about food demand and supply soon, but power nap is next on the agenda.
I hope you all found this one man's rant interesting and enlightening." ' ' >>
gsa1fan, thanks for that posting. I missed it over on Kitco. Fascinating reading.
Comments
Dollar Primed for Collapse by End June: Charts
I'm actually just being dramatic to echo the headline, but the article does make some good points and observations.
As we enter the final 10 months of this parabolic move in gold, there are likely to be several price drivers, two of which I expect to be a) weakness in the USD (but not necessarily collapse) and b) weakness/turmoil in the EU/euro and c) chaos in the world (Iran, N Korea, etc.) and d) the oil spill, if not capped soon.
Not necessarily all of these things. Gold has shown that it does not need a weak dollar to propel to higher and higher prices, but it definitely would help.
On another note...
US money supply plunges at 1930s pace as Obama eyes fresh stimulus
Interesting article out of the UK about the plunging M3 money supply. This is a serious threat to the US economy, and leads us to a lot of conflicting goals and realities:
1. Obama wants to double exports, but difficult to do with a strong dollar
2. Hard to devalue the dollar while decreasing money supply (deflationary)
3. Hard to drive an economic recovery with deflation
4. Hard to boost stocks with deflation and a strong dollar
Something's got to give. I sense a monetary policy change coming soon, and whatever it is, it will probably be good for gold.
Knowledge is the enemy of fear
<< <i>I thought all this printing of money was increasing the money supply? >>
Maybe RR or someone can explain it, because I guess I don't understand if the M3 numbers include or exclude the stimulus spending or other money printing that has been going on.
I guess there is a difference between stimulus spending which adds to our nation's debt (spending money we don't have) using money that already existed compared to the creation (or destruction) of money which is new money that I guess is "owned" by the Fed Reserve. And maybe that has been my confusion... there really is no link between US debt and the actual M3 supply of money, except at the basic level that the borrowed money has to come from some supply.
I guess in the past the easiest way that the fed grew the money supply was with fractional reserve lending... but that requires money to be lent in order to grow the supply. Obviously that's been curtailed lately, so that would explain the shrinking money supply. So assuming that increasing lending is out (because rates are already as low as they'll get and banks aren't willing or able to accept additional risk), and lowering rates is out, how else can the fed increase the money supply? The only way I can think of is for the federal government to borrow enough money (Trillions more than they are already planning/doing) to cause the creation of dollars which can then be spent to enter the economy. The only entities that can borrow mass amounts of dollars are governments at this point. I'm anxious to see other's comments on this.
<< <i>I thought all this printing of money was increasing the money supply? >>
Yes, and losses decrease it. Pretty scary that trillions added and still it's shrinking, as in losses are really piling up, liquidity is being withdrawn, etc.
We are close to the edge.
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The latest from Richard Maybury/Early Warning Report
Be Ready for More Chaos
By Richard Maybury
Editor of Early Warning Report newsletter
May 31, 2010
Dear Reader,
Page one of the February 2010 EWR contained a warning to be ready for "another downturn in the economy and most investments this year."
The warning was repeated in the April 2010 EWR, page two.
I think there is a 95% probability the downturn has arrived.
The main reason is the velocity of circulation of the US dollar.
It looks to me like the euro crisis has triggered a huge flight of capital out of Europe and into the US.
This new demand for the dollar and dollar-denominated assets is causing the velocity of the dollar to fall.
A fall in velocity has the same effect as a deflation of the money supply. Dollars that are being held and not traded are dollars that are effectively out of circulation — they're not bidding up prices.
Interestingly, this connects with recent money supply changes. Some background:
The broader measures of money supply — M2 and M3 — are lower velocity than the narrower measures, especially the Monetary Base. This is because broader measures contain financial instruments that change hands more slowly. M3, for instance, counts large-denomination time deposits. These are not included in narrower measures.
An even broader measure is L, which, as far as I know, is no longer compiled by the government, or at least officials do not admit to it. L contains, among other things, Savings Bonds, which some people hold for twenty years or more.
Why L is no longer compiled, or is complied in secret, we don't know, but I think we can safely conclude it contains information the government does not want us to have.
Recently, the broader measures have been shrinking, while the narrower ones, especially the Monetary Base, have been exploding.
I think people are moving money from instruments included in the broader measures to instruments in the narrow measures.
The narrower measures have a hair trigger, they can be sold or moved instantly. I think people are very frightened and they want this flexibility. They are afraid of any kind of long term commitment.
But the narrower measures, especially the Monetary Base, are mostly still just sitting in the banks. Bankers are afraid to lend, and a lot of borrowers are afraid to borrow, so the money just sits, waiting for launch.
It seems likely that people are moving into narrow-M instruments because they want to be able to move their cash quickly, in hopes of dodging the effects of the next crisis.
Summarizing, because of the rise in money demand and fall in velocity, triggered by the fear generated by the euro crisis, I think we are in another severely deflationary situation.
This constitutes a buying opportunity, because I'm sure the Fed will not allow the deflationary conditions to spiral down into a depression. They will look for ways to get the money out of the banks, or inject more money directly into the economy (more "stimulus") setting us up for a runaway inflation that will drive prices of practically everything to the moon.
Repeating what I've said often, you should learn all you can about money demand and velocity because, in my opinion, they are now by far the dominant forces causing changes in the economy and investment markets. Velocity was explained in the June 2008 EWR, in chapter 8 of my little Uncle Eric book #2, WHATEVER HAPPENED TO PENNY CANDY?, and throughout my Uncle Eric book #7, THE MONEY MYSTERY. (There are 11 Uncle Eric books.)
On another matter, I am sometimes asked...
... why I don't use stop loss orders?
Because I've never had good luck with them. This newsletter isn't called Early Warning Report for nothing. I'm usually early. I buy the investment, it goes down, I get stopped out, then it takes off like a skyrocket.
This isn't to say stop loss orders should not be used by you. Maybe your luck is better than mine.
However, I would point out what happened during the May 6th "flash crash." The Dow plunged 998.5 points in 20 minutes, then came back. Thousands of investors were stopped out and left with big losses that would not have happened if they hadn't used stop loss orders.
I think a lot more of that kind of thing is headed our way. The fiat money system has begun to crumble. This is becoming obvious to all, now that the euro is in trouble. And, the heavily regulated global investment system is riddled with fraud, foul-ups and fear. The tens of thousands of incomprehensible financial regulations are a jungle where the crooks hide.
Many things could trigger more downward (and upward) spikes. Examples would be war with Iran or North Korea, more revelations about the colossal frauds committed by the euro governments, a natural disaster, or a US invasion of Pakistan.
Also, very likely, the "plunge protection team" (aka the President's Working Group on Financial Markets) will make a mistake.
Everyone on that team is as much a member of the species homo sapiens as you and me, and equally inclined to occasionally fumble.
The Plunge Protection Team has so much power to intervene in financial markets that it's like a Greek god — supernatural powers steered by the emotions and guesses of exceedingly fallible humans.
It seems to me a certainty that the day will come when they will pull the wrong lever and demolish the whole world financial system.
And if the US team does not do it, the Greek gods in some other government will.
This is one of the many reasons it is important to have a portion of your wealth outside the financial system.
A gold, silver or platinum coin in your hand...
...is a great deal safer than your bank account, T-bill, stock or any other financial instrument in the hands of the Plunge Protection Team.
The Aden sisters are two of the best analysts around, and I never hesitate to recommend their newsletter, The Aden Forecast. In their May 11, 2010 issue, they wrote,
It's impressive to think that gold's bull market is in its tenth year. It's had consistent yearly gains since 2001, averaging 17% per year, yet it's still a quiet market.
The average investor is really not aware of this, but they are slowly seeing the turn. This alone strongly suggests the gold market is far from being a bubble.
Bubbles cause a lot of attention while euphoria is in the air. But comparing the enthusiasm in today's gold market to the tech frenzy bubble in 2000, or the real estate craze in 2007, the difference is like night and day.
This is good for gold investors because it's saying that the gold market still has much further to rise in the years ahead.
I agree with every word of that, and I would conclude the same about silver and platinum.
This isn't to say the precious metals won't go through frightening gyrations. I think they will, because I think everything will. As money demand and velocity bounce around, so will prices of nearly everything you can name.
As long as governments have as much economic power as they do, wild gyrations will be the rule, and stability will be unknown.
If you are not holding at least a quarter of your wealth outside the financial system — in precious metals, fine art, a business, antiques, real estate, or other tangible assets — then I suggest you get started.
And, I hope you will encourage everyone you care about to do the same.
I will continue doing my best to get you through this period of turmoil as safely and profitably as possible. I believe there is a better world waiting for us on the other side, and I want you and yours to be in fine shape to enjoy it when we get there.
Sincerely,
Richard Maybury
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
The more I read on "classic" money supply theory the less I feel it has any reliably accurate predictive powers on what's happening today and what will happen down the road. Yeah, M3 has contracted a whopping 10%. M2 is essentially stable. M0 has more than doubled in the past 2 yrs...and so would have M1 if it were reported properly. Does one believe the narrow money supply aggregates over the more liberal ones (M0/M1 vs. M2/M3) ?
In my mind the bankers have created a supercharged (though fraudulent) money supply system based on credit, debt, and derivatives over the past 10 years. It was their way of working around the purse strings of Congress. Who needs their approval when you can create "debt" money at will and in much larger quantities. And in order to help bail out the paper losses being seen by nations, banks, and corporations, govt's are keystroking TRILLIONs into existence that never appear in any M0-M3 money aggregate (ie they continue to work around the classical money system). Before it's all over $20-$50 TRILLION will have been keystroked into existence and gone to pay off losing bets of bankrupt nations, states, pension funds, GSE's, corporations, etc.
The banks created a system of $1.1 QUAD in otc derivatives that has essentially acted as tens of TRILLIONs in tradeable/bankable "play-money" to them. From this they have received income and bonuses...assuming they were on the right side of the bet.
The majority of ransom payoffs are being made outside the classic money system. Obviously J6P cannot be allowed to see this or he would disapprove. All the PTB want him to know is that CPI is low, money supplies are stable or even shrinking, GDP is growing at 3%, the stock market is on a bull run, treasuries and dollars are safe places to park money for the long term, and that unemployment is <10% (ie everything's fine so keep on adding ever increasing amounts to that 401K).
The question as to what "money" has morphed into today is harder to answer than ever before.
roadrunner
A business guy walks into a hotel that's $100/night and books a room. The hotel owner immediately takes the $100 and pays a maintenance worker the money he owes him. The maintenance worker then runs and pays his supply show the $100 he owes. The supply shop owner goes and pays his employee the $100 he owes him. Then the employee runs and pays back the hotel owner the $100 he owes him. The business guy then comes back to the office after seeing the room and says decides not to rent the toom, so the hotel owner gives him back his $100.
Sorry I forgot the details that make this sound better, but you get the idea.
Buyers remorse...told ya those euros were a bad thing.
Bingo! The only guy who has to be concerned about "money" is J6P, because he needs it to live, and TPTB need J6P to "work".
Now, if J6P sees that he is "working" so that the "non-workers" don't have to "work", what then is that arrangement called?
I knew it would happen.
Gold ratios in various forms
roadrunner
<< <i>The question as to what "money" has morphed into today is harder to answer than ever before.
Bingo! The only guy who has to be concerned about "money" is J6P, because he needs it to live, and TPTB need J6P to "work".
Now, if J6P sees that he is "working" so that the "non-workers" don't have to "work", what then is that arrangement called? >>
The Matrix comes to mind.
Conversation on the production line is forbidden, bathroom breaks are kept to 10 minutes every two hours and constant noise from the factory washes past his ear plugs, damaging his hearing, Ah Wei said. The company has rejected three requests for a transfer and his monthly salary of 900 yuan ($132) is too meager to send home to his family, said the 21-year-old, who asked that his real name not be used because he is afraid of his managers.
At least 10 employees at Taipei-based Foxconn have taken their lives this year, half of them in May, according to the company, also known as Hon Hai Group. The deaths have forced billionaire founder Gou to open his factories to outside scrutiny and apologize for not being able to stop the suicides. Gou built his company into the world’s largest contract electronics manufacturer and now clients from Apple Inc. to Hewlett-Packard Co. are probing the company’s working conditions.
Foxconn’s Longhua complex outside Shenzhen spans three square kilometers (1.16 square miles) and is criss-crossed by tree-lined streets with a water fountain at the center of the facility. Workers wearing polo shirts emblazoned with “Foxconn” in Chinese characters over their hearts walk along the streets. Men wear blue, women wear red. Security personnel wear white. The complex boasts its own hospital, a collection of restaurants and a swimming pool surrounded by palm trees.
The workers, 86 percent of whom are under 25 years old, live in white dormitories with eight to 10 people sleeping in a room. The living quarters have stairs running up the outside walls and the company has begun covering them with nets to prevent people from jumping.
Inside the compound, at a factory devoted to computer motherboards, rows of young men and women stand at assembly lines, their feet shod in blue slippers and white caps on their heads. The smell of solvent hangs in the air. About 80 percent of the front-line production employees work standing up, some for 12 hours a day for six days a week, according to Liu Bin, a 24-year-old employee.
“It’s hard to make friends because you aren’t allowed to chat with your colleagues during work,” Liu said at Shenzhen Kang Ning Hospital where he was seeking help for insomnia. “Most of us have little education and have no skills so we have no choice but to do this kind of job. I feel no sense of achievement and I’ve become a machine.”
Foxconn Workers in China Say ‘Meaningless’ Life Sparks Suicides
Knowledge is the enemy of fear
They definitely need Unions over there.
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<< <i>Gonna be interesting when the Chinese sheeple wake up.
Conversation on the production line is forbidden, bathroom breaks are kept to 10 minutes every two hours and constant noise from the factory washes past his ear plugs, damaging his hearing, Ah Wei said. The company has rejected three requests for a transfer and his monthly salary of 900 yuan ($132) is too meager to send home to his family, said the 21-year-old, who asked that his real name not be used because he is afraid of his managers.
At least 10 employees at Taipei-based Foxconn have taken their lives this year, half of them in May, according to the company, also known as Hon Hai Group. The deaths have forced billionaire founder Gou to open his factories to outside scrutiny and apologize for not being able to stop the suicides. Gou built his company into the world’s largest contract electronics manufacturer and now clients from Apple Inc. to Hewlett-Packard Co. are probing the company’s working conditions.
Foxconn’s Longhua complex outside Shenzhen spans three square kilometers (1.16 square miles) and is criss-crossed by tree-lined streets with a water fountain at the center of the facility. Workers wearing polo shirts emblazoned with “Foxconn” in Chinese characters over their hearts walk along the streets. Men wear blue, women wear red. Security personnel wear white. The complex boasts its own hospital, a collection of restaurants and a swimming pool surrounded by palm trees.
The workers, 86 percent of whom are under 25 years old, live in white dormitories with eight to 10 people sleeping in a room. The living quarters have stairs running up the outside walls and the company has begun covering them with nets to prevent people from jumping.
Inside the compound, at a factory devoted to computer motherboards, rows of young men and women stand at assembly lines, their feet shod in blue slippers and white caps on their heads. The smell of solvent hangs in the air. About 80 percent of the front-line production employees work standing up, some for 12 hours a day for six days a week, according to Liu Bin, a 24-year-old employee.
“It’s hard to make friends because you aren’t allowed to chat with your colleagues during work,” Liu said at Shenzhen Kang Ning Hospital where he was seeking help for insomnia. “Most of us have little education and have no skills so we have no choice but to do this kind of job. I feel no sense of achievement and I’ve become a machine.”
Foxconn Workers in China Say ‘Meaningless’ Life Sparks Suicides >>
They're making 20c an hour with all the overtime anyone could possibly want
and they're complaining!!! Don't they know there are people in Africa working
under far more adverse conditions and their employers are mere millionaires.
They should be proud to live and die for a billionaire. They're mere children any-
way so what the hell do they need with a life or to be treated like a living breath-
ing human being. The important thing is they turn rice into crap or whatever else
cheap food their owner decides to feed them, not to think, and not to have bas-
ic human needs and instincts.
Beat some of these guys with a brand new stick and they're still going to whine
about how bad they have it. Now the rich bosses might get an upset stomach
thinking about all the suicides. The workers should be ashamed.
Kill 'em all and get in a fresh batch.
My question - why can't an existing agency take care of the census? I imagine the IRS would be a good fit. Count everyone paying taxes, who is listed as a dependent, or who receives government assistance. Can't imagine that leaves out too many people. They already know how many people there are. Not sure why they have this big circus boondoggle that has become the census. Oh, but we won't know how many teachers we need without a census! Does anyone buy that crap?
<< <i>The US Census is wasting your money:
My question - why can't an existing agency take care of the census? I imagine the IRS would be a good fit. Count everyone paying taxes, who is listed as a dependent, or who receives government assistance. Can't imagine that leaves out too many people. They already know how many people there are. Not sure why they have this big circus boondoggle that has become the census. Oh, but we won't know how many teachers we need without a census! Does anyone buy that crap? >>
The Government sells the census data to industry and the Census Bureau makes a profit...the only Gov't agency to do so. At least that's the skinny we got as contractors to the 2010 Census. So, they get carte blanche.
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I knew it would happen.
Yep, things have changed a lot. My mother took the census three times for '60, '70, and '80. She was usually invited into the homes, and she got to share bits of the lives of the people she visited. It was a good thing and everyone wanted to be counted. She was paid but I don't recall that it was ever more than a few dollars, it was more of a duty than a job. She enjoyed doing the census and enjoyed the connection to the people. There were folk that worked the night shift and slept in the day but they would let her know when she should come by because she would leave our home phone number with them and they would call and she would go over and enumerate them. It was something everyone participated in with little exception. She finally became tired of it and she was getting too old to do it anymore because there was a lot of driving and walking. She enjoyed being an "Enumerator" and felt it was her duty.
I see the stories in the paper now about people posing as census workers getting into peoples homes and doing what criminals do. Census workers getting shot, arrested for trespassing, and all the other treacherous things about dealing with the public now days. I see the big O used the hiring of census workers to boost his employment figures which he officially calculates at 9.9% and they get paid pretty good money and the intrusive questions like your phone number for in case the gov needs to contact you...yeah, right, I'm giving you my private phone number so you can call me, send me messages...not happening. It used to be the households address, race, age, where you were from, how many folk live there and how much house hold income do you have. A basic enumeration form and that's it.
Now the census does feel like a boondoggle, not unlike most of the fed govt programs now. Sure the census is used to decide the number of seats in congress that each region/state gets but the census is being pitched as a minority entitlement affirmation to get more federal tax money ( I thought we were broke) to those that need/want it. There will be redrawing of congressional districts and the race baiting crap and law suits that go along with it. The irony is that most of the minorities like the hispanics don't want anyone anywhere near their house counting heads and gasp...nationality. The black people don't want to cooperate because they don't like the term "black, negro or african american" on the census form, the white people don't seem to mind but they aren't giving out phone numbers at least not real ones. The asians and pakastanis don't even know what the government form is about and they sure aren't doing anything with it. The interesting thing is that the census worker doesn't even have to enumerate everyone now, they can extrapolate from similar house holds and just wash the whole neighborhood in some color or another...it's not even real data, it's kinda real, sorta and were paying for this garbage? The national guard should do the census, in uniform and every one in every house should be enumerated or their electricity gets cut off, make it easy for everyone.
Once can only wonder how this census will be gimmicked, marketed, gerrymandered into something meaningless so one group or another gets dominance and funding and maybe, if we're lucky, we can create some more departments and government offices to distribute the money or set up some programs for those in need. I would really appreciate someone that could get ahold of this runaway train and put things on the right track again, what a mess this thing has become in such a short time. So when the census is over, what will happen to the unemployment rate, is this just a chance to buy some time with all these new hires so the current admin can get through the November elections with good employment numbers?
Oh well, this is not your fathers Oldsmobile. Have a nice day.
Got Cash?
Box of 20
Edited to add:
World Collapse Explained in 3 minutes
According to an analysis from GoldCore, premiums on British gold sovereigns have increased from 3% to over 7% in just one month on British sovereigns as British investors buy the coins as they do not attract CGT. Recent buying has seen supply issues develop in the gold sovereign market which could see a further rise in premiums in the coming weeks.
Fourteen of 20 traders, investors and analysts surveyed by Bloomberg, or 70 percent, said bullion would rise next week. Four forecast lower prices and two were neutral. Gold for delivery in August was up 0.2 percent for this week at $1,217.40 an ounce at 10:18 a.m. in New York yesterday.
How many states are in similar situations? And how long until the states get bailed out?
NY Nearly Goes Broke Again, Delays Paying Bills
deleted...sorry
Big 3 outsourcing jobs
I knew it would happen.
I knew it would happen.
My main point is that corporations"american companys" are allowed & rewarded to do this.
There are plenty of states that are right to work states. Unions have little/no power in them.
Right to work states
I knew it would happen.
They would not do this if there was no $$ incentive( Politicians turning a blind eye)
10 million plus tax payers out of work. Hard to pay taxes with out a job.
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>We all know the horrors of inflation, but often disregard the heavy costs of the tax on inflation. This author suggests there is a way to overcome the taxation on "gains" from higher nominal values of investments in precious metals, but doesn't bring them up in the article. Do you know what he is suggesting?
There is at least one potential fallacy about his scenario. And that is he is assuming that the entire increase in the value of gold is due to inflation, so that when you cash in, you have made no real gain in purchasing power. You get more FRNs, but each is worth less, so in this scenario, you have just the same purchasing power you had before before you pay taxes on top of that.
But what if the increase in the price of gold is NOT due to inflation, but due to demand from others and the market? That has been happening the last several years..... while there has been some inflation, at least according to the government the inflation rate has been very low, in fact, some say we are in deflationary times. So in this scenario, if the price of gold doubled, you have made some very REAL gains. While you still have to pay taxes on it, you have definitely still come out ahead.
The writer is also implying the tax rate will increase to 50%.... not sure that much of an increase will take place. If it did, I think we will have more problems than trying to figure out whether our gold investment was a good idea or not.
Bottom line, the writer appears to be pitching what may be a questionable tax avoidance scheme.
1.As confidence in the U.S. dollar wanes, gold’s popularity rises. More and more people are realizing that gold (and silver) are safer (as a store of value) than are paper dollars.
Not only are central banks becoming more reluctant to sell their gold holdings, but some nations are actively trying to increase their gold reserves. China, in particular, with more than one trillion U.S. dollars in reserve, is trying to accumulate gold as quickly as possible without causing a panic rush into gold. A panic would raise gold prices quickly, thus defeating China’s ability to accumulate more gold at a reasonable price and simultaneously reduce the value of its U.S. dollar holdings. In fact, China is requiring a majority of its domestic gold mines to sell their finished product to the Chinese central bank. Even U.S. citizens are demanding more gold and silver coins than the U.S. Treasury can produce.
CONTINUED
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Yes, the author was calculating a tax rate of 50%.... THIS IS NOT OUT OF THE REALM OF REALITY. Heck on January 1,2011 when Bush's tax cuts expire the estate tax goes from -ZERO- to 55%!!!!! Yikes. More than half of your wealth at death will be taxed and paid by your beneficiaries.
<< <i>
<< <i>We all know the horrors of inflation, but often disregard the heavy costs of the tax on inflation. This author suggests there is a way to overcome the taxation on "gains" from higher nominal values of investments in precious metals, but doesn't bring them up in the article. Do you know what he is suggesting?
There is at least one potential fallacy about his scenario. And that is he is assuming that the entire increase in the value of gold is due to inflation, so that when you cash in, you have made no real gain in purchasing power. You get more FRNs, but each is worth less, so in this scenario, you have just the same purchasing power you had before before you pay taxes on top of that.
But what if the increase in the price of gold is NOT due to inflation, but due to demand from others and the market? That has been happening the last several years..... while there has been some inflation, at least according to the government the inflation rate has been very low, in fact, some say we are in deflationary times. So in this scenario, if the price of gold doubled, you have made some very REAL gains. While you still have to pay taxes on it, you have definitely still come out ahead.
The writer is also implying the tax rate will increase to 50%.... not sure that much of an increase will take place. If it did, I think we will have more problems than trying to figure out whether our gold investment was a good idea or not.
Bottom line, the writer appears to be pitching what may be a questionable tax avoidance scheme. >>
I saw this and thought it was flawed due to the assumtion of no increased demand in bullion as well. The other item is the value of your existing debts would be smaller, so if you owed 200k on a house and the value of the dollar was halved, you would owe the equivalent of 100k now. So if you have the bullion you are way ahead versus paper assets even with the 50% tax assumption.
World Collapse In Three Minutes
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Based solely on the dollar's drop since 2001, the price of gold should only be $350/oz. Clearly something else is at work here to push gold up 3.5X the "expected" level. And it's not likely it's just maniacal speculation by crazed gold bugs. In any event with gold appreciating approx 5X over 9 years, that leaves plenty of room for inflation, taxes, etc. and still come out pretty far ahead in purchasing power. Note that past performance is no indication of future performance.
roadrunner
U.S debt to rise to $19.6 trillion by 2015
June 8 (Reuters) - The U.S. debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015, according to a Treasury Department report to Congress.
U.S debt to rise to $19.6 trillion by 2015
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>World Collapse In Three Minutes >>
This was posted here 10 days ago...
<< <i>The fact that gold has increased in price nearly 5X since 2001, while the US dollar has fallen 27% clearly shows that gold has appreciated at much greater amount than the published rate of inflation. It may be that investors in gold are not buying the govt's reported CPI, GDP, and jobs numbers. >>
There's other factors at play as well that are likely to increase in significance. One of them being the "peak gold" theory. We have supposedly reached peak global production of gold as of a few years ago, and it is projected to continue to decline into the future.
<< <i>
<< <i>World Collapse In Three Minutes >>
This was posted here 10 days ago...
>>
Terrific, well I posted it again
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
It doesn't matter too much whether the gain is via inflation or via good investing. It's the fact that the value of the investment is going up. As the value of the asset goes up, the tax (regardless of the tax rate) hits harder.
The writer is also implying the tax rate will increase to 50%.... not sure that much of an increase will take place. If it did, I think we will have more problems than trying to figure out whether our gold investment was a good idea or not.
Our taxes are already over 50% in the aggregate. We do have more such problems already. We've been in the kettle a long time and the water is getting pretty warm - we just didn't notice too much.
Bottom line, the writer appears to be pitching what may be a questionable tax avoidance scheme.
Yes! Yes! Yes! Tax avoidance is not tax evasion. The guy thinks like I do. The difference is that he's been busy combing the Tax Code for nuggets and analyzing the impacts of stagflation on investments.
Has anybody here subscribed to his report? I am betting that he's got some good ideas.
His webpage starts to give details that answer the problem that he states at the end of the article:
Reverse inflation taxes - Instead of paying real taxes on illusionary income, you are paying illusionary taxes on real increases in net worth. Reverse inflation taxes, so that instead of paying real taxes on imaginary gains, we are paying imaginary taxes on real gains.
He also states, "Inflation taxes don't appear on your tax return," and I assume that he is getting at a situation where inflation gains also don't appear on your tax return.
I must be a little slow today, but what could be "the reversal of paying real taxes on imaginary gains?"
From his webpage:
Reading 1: How individuals can use inflation to directly take net worth from corporations & other individuals.
Reading 2: How the government can use inflation to convert after-tax assets into pre-tax income, & then take your assets.
Reading 3: How to use the tax code to turn a 10% rate of inflation into the net worth benefits of a 27% investment.
Reading 7: A little studied lesson from the 1970s on how to turn $40,000 into $300,000 during a time of stagflation.
Reading 9: How to use the tax code's inflation blindness to triple the potency of an inflation hedge strategy.
Reading 12: How to turn inflation and the upcoming Social Security & Medicare crisis into a potential 44% annual return.
He may just be a tax planner or a tax attorney who has become interested in gold and in inflation. All of his scenarios seem to hinge on the Tax Code. His stuff may be worthwhile, if just for the read. I may sign up for his free stuff and see where it goes.
I knew it would happen.
Trouble is brewing. If this thing escalates, you'll probably want to be sure you own gold.
Britain announced that it has raised it's VAT from 17.5% to 20%. The big O's bag men have to be looking at this, it's like free money. They could finance health care with just a stroke of the pen...and the approval of congress but there's the rub. Seems like another of those conspicuous choices for our conspicuous consumption consumers but everyone would have to pay it. It'll never work here unless they could issue some kind of VAT exemption cards.
Box of 20
A VAT could actually help the dollar, even if the economy slows. If that tax is used to cut debt and not for further spending, then it will show that the USA is taking a stance towards fixing its problems.
Knowledge is the enemy of fear
"So let's talk houses.
For those who remember back in late March, I said Lumber was gonna take a big hit. It was making a perfect ending diagonal right into the end of the FED's buying of mortgage backed securities. That was between 300 and 320. $Lumber today is now sitting at 185 last I checked, nearing almost a 50% pull back in price and the complete erasure of the gains of 2009 and early 2010. ALL in just a few weeks. The lumber market has been heading straight down looking for the center of the earth. A great move for traders (1 contract shorted at 300 would would now be worth about $12,650) but is bad news for the economy going forward.
I live in a timber producing county. One mill in particular has built up massive inventories of pre-production timber and hundreds of thousands of board feet....just sitting. Rail cars passing through used to be over 50% lumber cars.....no longer, many trains now a days don't have a single lumber car.
Here it is summer, prime home building season, and nothings moving.
I read an article this week, pointing out that the government program to ease mortgages for some buyers is losing more program participants than are being added. Even those that have have had their mortgage payments eased with sub 5% fixed rates, still can't make the payments!
The rental market is having a tough time because traditional apartments are now competing with a glut of homes for renters. And now many families are 'doubling up' and adult children are moving back in with mom and dad.
I'm not sure what the percentage is, I'll have to look it up, but I thinks it's near 1 in 8 jobs are directly related to the construction industry. When the FED stopped buying up MBSs, I think the housing contractors gave up the ghost. No point in fighting and pretending a bottom is in, time to fold it up and wait it out. New home purchase numbers came out today. Not only did they fall below expectations , but also fell below last months level. I think existing home sales numbers come out tomorrow.
So with people unemployed in the construction sector, they too are losing their own homes, adding even more inventory to the glut.
It is also my opinion that the US will also suffer a credit crisis similar to Europe, but likely much worse. A Multi-decade long bond advance will see a massive correction, yields will climb and credit will become expensive. But not for previous reasons of countering inflation. No this time yields will likely soar because of default or threat of default. Who is going to lend money when chances of repayment look dismal? Who is going to forge 30year fixed mortgages unless the return out ways the risk....welcome to 12-18%+ fix mortgage interest rates, only reducing the number of home buyers even further, keeping the house glut in place.
I've said before that real estate and banking are leading sectors, they foretold the economic collapse and will foretell the economic recovery. I DON'T SEE A RECOVERY HERE!
The FED has eased and eased, pushing that string vigorously.....but still no takers.
So far the Velocity of Money has been to the downside with ever increasing accounts of debt destruction. When Debt = Money in a fiat economy, and debt/credit is being destroyed.....money is being destroyed as demand for cash to pay debts spirals upward. So far outpacing every attempt the government makes to stem the hemorrhaging Plus we now have a growing tide of political support for austerity. The next politician to say 'bail-out' or 'stimulous' is going to be hung up by their toe nails. Right now 'I' for incumbency is a red letter.
What's a guy to do? I'll say it again, keep some cash, keep some metal, keep some food and do your best to keep your job. And of course the believers should keep their faith.
I'd like to chat about food demand and supply soon, but power nap is next on the agenda.
I hope you all found this one man's rant interesting and enlightening."
'
'
<< <i>Seen this rant on Kitco found it awakening = REAL economy J6P view
"So let's talk houses.
For those who remember back in late March, I said Lumber was gonna take a big hit. It was making a perfect ending diagonal right into the end of the FED's buying of mortgage backed securities. That was between 300 and 320. $Lumber today is now sitting at 185 last I checked, nearing almost a 50% pull back in price and the complete erasure of the gains of 2009 and early 2010. ALL in just a few weeks. The lumber market has been heading straight down looking for the center of the earth. A great move for traders (1 contract shorted at 300 would would now be worth about $12,650) but is bad news for the economy going forward.
I live in a timber producing county. One mill in particular has built up massive inventories of pre-production timber and hundreds of thousands of board feet....just sitting. Rail cars passing through used to be over 50% lumber cars.....no longer, many trains now a days don't have a single lumber car.
Here it is summer, prime home building season, and nothings moving.
I read an article this week, pointing out that the government program to ease mortgages for some buyers is losing more program participants than are being added. Even those that have have had their mortgage payments eased with sub 5% fixed rates, still can't make the payments!
The rental market is having a tough time because traditional apartments are now competing with a glut of homes for renters. And now many families are 'doubling up' and adult children are moving back in with mom and dad.
I'm not sure what the percentage is, I'll have to look it up, but I thinks it's near 1 in 8 jobs are directly related to the construction industry. When the FED stopped buying up MBSs, I think the housing contractors gave up the ghost. No point in fighting and pretending a bottom is in, time to fold it up and wait it out. New home purchase numbers came out today. Not only did they fall below expectations , but also fell below last months level. I think existing home sales numbers come out tomorrow.
So with people unemployed in the construction sector, they too are losing their own homes, adding even more inventory to the glut.
It is also my opinion that the US will also suffer a credit crisis similar to Europe, but likely much worse. A Multi-decade long bond advance will see a massive correction, yields will climb and credit will become expensive. But not for previous reasons of countering inflation. No this time yields will likely soar because of default or threat of default. Who is going to lend money when chances of repayment look dismal? Who is going to forge 30year fixed mortgages unless the return out ways the risk....welcome to 12-18%+ fix mortgage interest rates, only reducing the number of home buyers even further, keeping the house glut in place.
I've said before that real estate and banking are leading sectors, they foretold the economic collapse and will foretell the economic recovery. I DON'T SEE A RECOVERY HERE!
The FED has eased and eased, pushing that string vigorously.....but still no takers.
So far the Velocity of Money has been to the downside with ever increasing accounts of debt destruction. When Debt = Money in a fiat economy, and debt/credit is being destroyed.....money is being destroyed as demand for cash to pay debts spirals upward. So far outpacing every attempt the government makes to stem the hemorrhaging Plus we now have a growing tide of political support for austerity. The next politician to say 'bail-out' or 'stimulous' is going to be hung up by their toe nails. Right now 'I' for incumbency is a red letter.
What's a guy to do? I'll say it again, keep some cash, keep some metal, keep some food and do your best to keep your job. And of course the believers should keep their faith.
I'd like to chat about food demand and supply soon, but power nap is next on the agenda.
I hope you all found this one man's rant interesting and enlightening."
'
' >>
gsa1fan, thanks for that posting. I missed it over on Kitco. Fascinating reading.
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163