Please remember that there are 1 billion more Chinese than Americans, and their gold buying is from a low base, and that buying has slowed down, albeit not as much as India, where the government has stepped in to stop the current account being worsened by 'wedding' gold imports - things are changing by necessity.Indians and Chinese buy gold with US$ — there's the problem for them. Third world currencies are in trouble, and this will cause a rush to US$ not gold — so stop thrusting extrapolated charts of presumed Chinese gold imports in our faces and making classic gold bug extrapolations from these extrapolations.
The charming erudite Alistair Macleod was the main proponent of this theory and he has gone very quite and has stopped doing interviews and gold presentations — I suppose because he doesn't get invited anymore – just like John Williams of Shadow Stats who become a voice in the wilderness - Cassandras or just plain wrong?
Cheers, GB
GB… speaking as someone who owns Gold and has seen a large drop in dollar value for said Gold (though to be honest I bought most of it in 2009)… I constantly ask myself the same questions you do… is the case still right for Gold… I come up with a very different answer/worldview than you do. The Chinese rush to Gold is real… here is the long term chart of physical Gold delivered in to China via the Shanghai Gold Exchange, courtesy Koos Jansen;
I think that the trend is self-explanatory. The demand through just this one exchange is in some weeks rivaling the entire worlds mined Gold supply.
The reason the price is down so hard is that TPTB want you to do exactly what you are doing… they want you to question reality, and come up with a new reality that says the dollar is sound, Gold bugs are wrong… Gold is useless, Nicole Foss is right… etc. They want you to sell your Gold. They want you to believe they are in control and will never lose control… to believe that debt no longer matters… that printed money now means printed wealth and that the old ways of scarce money are done for…
I fully understand the pain of thinking about the loss of dollars in holding Gold… but I don't see anything to make me believe that just because bad things have not happened yet… that they are not going to be happening soon enough. I believe that you will be very, very sorry that you sold your Gold, and that you may in fact be bottom-ticking the market here.
Please remember that there are 1 billion more Chinese than Americans, and their gold buying is from a low base, and that buying has slowed down, albeit not as much as India, where the government has stepped in to stop the current account being worsened by 'wedding' gold imports - things are changing by necessity. Indians and Chinese buy gold with US$ --- there's the problem for them. Third world currencies are in trouble, and this will cause a rush to US$ not gold --- so stop thrusting extrapolated charts of presumed Chinese gold imports in our faces and making classic gold bug extrapolations from these extrapolations.Earlier today, Reuters published an article detailing the extent to which Indian smugglers will go in order to bring the money of kings into the country. This includes hiding it in underwear, swallowing it whole and even painting gold staples gray. What is most disturbing is the lengths authorities are willing to go to in order to stop a supposedly free people from buying a brick of metal. From Reuters: (Reuters) – Indian gold smugglers are adopting the methods of drug couriers to sidestep a government crackdown on imports of the precious metal, stashing gold in imported vehicles and even using mules who swallow nuggets to try to get them past airport security. Stung by rules imposed this year to cut a high trade deficit and a record duty on imports, dealers and individual customers are fanning out across Asia to buy gold and sneak it back into the country. Sri Lanka, Thailand and Singapore are the latest hotspots as authorities crack down on travelers from Dubai, the traditional source of smuggled gold. Stop one and another will rise. As always. In a sign of the times, whistleblowers who help bust illegal gold shipments can get a bigger reward in India than those who help catch cocaine and heroin smugglers. Because that makes a so much sense. “There has been a several-fold increase in gold smuggling this year after restrictions from the government, which has left narcotics behind.” Full article here
Hi again, I'd just like to say again how much I value the quality of discussion on this site and the high standards by which Chris, Adam, et al have lighted the way. Chris's self - evident honesty and generosity of spirit and the clarity and scope of his articles are some of the reasons I'm still a paying member. I'm only too conscious that it's easier for me to play the " Assessor of Assessors " at a distance but without the studied contributions of you guys, Chris and GB, I'd have a lot less sense of direction.
And I'm not at all sure I don't feel a fool today and tomorrow! Anyhow I've still got the valium.
Peace
Declan
I cannot argue with your position on gold. I have no expertise. Being a long time follower of Nicole Fosse I own no gold except jewelry and have little inclination to purchase any.
My question is: How can you be sure Bernanke will be hailed as a hero and that a new financial structure will emerge for better or worse. For all appearances the powers that be are merely pumping fuel into the already existing and stalled economic engine in the hope that it will somehow catch a spark and take off again. In reality they have probably flooded the thing and damaged it beyond repair. Far from evolving into a new reality it seems more likely to blow up from the pressure of debt and money creation.
What possible mathematical reality will allow the continued creation of debt which can never be repaid? The Federal Government is racing to the point where every tax dollar collected will not be sufficient to pay the principal and interest on our debt. What possible set of numbers can change this direction or offer a gradual way out? If the Federal Government stops borrowing it will immediately be insolvent. If its stops supporting the multitude of social programs there will be revolution. If the Federal Reserve stops printing it will not be able to lend the money required by the government. The liquidity trap is here. How can the Federal Reserve continue to will money into existence without destroying faith in the very thing it is creating from fiat?
Judging from the bursting of past bubbles there will come a point where people loose faith in this system. History has few examples of a slow evolution to something new, but is full of examples where pushing things beyond their limits produces rapid, violent change.
I am sure that the kings of seventeenth century England, the French nobility, the last Emperors of Russia and Austria and the Soviet apparatchik thought they could hold the reigns forever.
JT
Jim, I may indeed be sorry. But I'm now of the view that it may be quite a while yet, if ever, before gold comes into it's own. I will concede that maybe nine months ago? there was a book review somewhere about I think , a former Chinese Assistant Director of the IMF, who was proposing a paper gold backed international currency? What I find it hard to get away from is GB's argument that TPTB will do anything to have their state's economic manouverability restricted by a real measure like gold. As Chris himself says, which of us could have anticipated the stratagms governments have deployed to keep the show on the road up to now ? Declan
Regarding the comment made a few times that we just can’t understand how the world works and can therefore not predict the future, so why bother investing in anything financial (and might as well get out of gold as a result…), I somewhat disagree. If we understand how energy, resources, and the mechanics of our societies work (and how these all relate to the financial system that is supposed to be representing them), then we can indeed predict the future with pretty good precision because those are mechanistic and deterministic processes that are highly predictable. The information is freely available and very clearly pointing to the conclusion that today’s exuberance is not in any way supported by fundamentals. Therefore, it will end.
On the other hand, how our leaders, and we collectively, react to the reality imposed on us by the above mentioned physical reality, well that’s not deterministic and predictable, because we are people. How are we reacting? We’re stretching a rubber band.
Our trajectory of decline has been set, and it will continue because we are really doing nothing on a social scale to change our future (i.e. reducing consumption and developing alternative energy systems). The financial manipulators can stretch the rubber band to create a façade to make the current downward trajectory resemble past prosperity, but it is an illusion. The trend is downwards and the rubber band will snap back at some point.
In hindsight, the extreme lengths the Fed has gone to in order to keep the system going can be understood and they make sense. But they have merely stretched the rubber band even further; they haven’t changed the fundamentals at all; in fact, they are now worse. They can only do so much before the rubber breaks.
Debt-backed fiat currencies (and all Ponzi schemes) are built on CONfidence. Without it, they collapse. Right now the reason TPTB can manage to distort things so much is because we are on the rising side of a bubble stretching the rubber band away from fundamentals and people have confidence. Clearly, when the bubble breaks, as it must, then confidence will be lost and TPTB will lose control, at least financially. That may be when the military will be brought in. But that can only go so far as well.
This is why fiat currencies will be rejected in the future, and why real things like PM’s will become more valuable. The purchasing power of fiat currencies is too high in relation to the real energy and resources supporting it; therefore, the purchasing power of dollars will be reduced. To those that say that gold has no value or use; that is wrong. It will have a very important use when fiat currencies die – as money! Many view gold as a barbarous relic and that it is unproductive, but neither are fiat dollars “productive”. Currency is merely a “medium of exchange, store of value, holder of wealth, yadda yadda yadda”. In effect, money is a CLAIM on the production that the energy and biomass and other natural resource systems provide, as transformed by technology. The value of a currency is merely a reflection of how well it mediates those claims, and clearly fiat currencies are getting worse at that by the week, which is why they have to print up over $100 billion a month to maintain the illusion.
I worship no one or no One. I have a wonder for the world and rather than lamenting our future or striving for some after-life reward, I try to be thankful that my life is better than most throughout history and that I will probably be around to witness the next few years which will likely be the most interesting in the history of the world. And, if my investments turn out to be fruitful, as I’m sure they will be because I understand the mechanics of the underlying processes providing value to them, then I may even come out a “winner”. Life will move on, likely minus several billion people, we’ll likely raze the planet before we’re done, and new life will evolve and develop. There will be no fossil fuels left to create another bubble like humanity today. The planet still has a few hundred million years left before life gets vaporized off its surface, and a lot of interesting new life forms will develop. I am just glad to have been a part of it. Maybe all the wisdom on sites like this should be immortalized in something physical rather than digital so that in a few thousand years someone may be able to analyze it and remember who really turned out to be right.
Thanks for the great article and the great discussion as well. It appears that belief systems are creeping to the fore with regard to PM. There a so many statistics, charts and variables that one side of the argument is just as likely to be right (or wrong) as the other side. Both sides have credibility… it is so hard to tell which way it is going to go. The biggest factor continues to be the (unprecedented) interventions which have had the effect of sending the game into (triple) overtime. For now the fans are still in the stands, but for how much longer until they realize the match is fixed and head for the exits?
I tend to fall back on the wise words my dad gave me when I left home way back when, that being that there is only one security in this life, and that is the ability to take care of yourself come hell or high water. That is where my focus continues to be, as outlined in many steps in the article. As others have said, invest in developing a simple, authentic life that will require minimal adjustments when (not if) things turn south. What I find rather funny is how some think that living a simple life implies depravity. Nothing could be further from the truth. Abundance is a state of mind. Most of the folks here at PP have that in spades. That is not something that money can buy. It must be experienced to really feel the true value of it.
Jan
gbcm-
I think deflation is indeed what is happening right now especially in europe but that doesn't imply a guaranteed Nicole Foss deflationary crash outcome. Suggesting that the US government will never default, there will never be a return to the gold standard, the USD will always remain the world's strongest currency, and so on - it turns out, "never" is a very, very long time. Absolute statements from the goldbugs make me nervous, and so do those from the deflationists. Most certainly, deflation is where we are now - although its not your great-grandfather's deflation. How can the standard deflationary model explain SPX 1800? However, assuming this strange asset-inflation credit-deflation situation is where we must stay seems quite dangerous - locked-in worldviews of any sort are dangerous to wealth. My guess is, a deflationary situation is likely one of the better times to pick up some gold. Viewed with my longer term investment hat on (one I don't wear all that often here) I believe gold is on sale at these price levels. The only question in my mind is, will the sale get better? The Black Swan (and not really so black) is the state of the banks in europe. What happens when if and when they start to get bailed-in? The deflation from that will be immense. How will our lords and masters in the central planning offices respond? Depending on the response, gold could go absolutely nuts, or it could drop further. The fact that JPM (and the COMEX Producer futures holders) appears to be positioning itself long gold after a $660 drop in the gold price says to me - I'd prefer to be aligned with them, position wise. They may make their share of mistakes, but they are connected in a way that I'm just not. Regarding Chinese Gold Sales overstated: While I think the Shanghai delivery numbers are not being looked at in the right sort of way, its not for the same reasons you do. What percentage of Shanghai delivery is new gold from outside China to Chinese buyers? Some of it, certainly, but - no doubt the Chinese like to trade physical gold amongst themselves. The Thais certainly do. What percentage of those Shanghai delivery numbers are just one Chinese person selling their gold to another Chinese person? That said, I do think the Indian demand situation is the real deal. India is crazy for gold, and for the customs people there to be treating gold as more of a serious threat than drugs - now that's just odd. I can't go the next step and talk International Gold Conspiracy, but it certainly is odd.
Deflation is established not inflation, the US$ is and will remain the worlds strongest currency, the US government will never default on its debt, there will never be a return to the gold standard, and trading in gold may be banned or heavily restricted or taxed - call it the FDR solutions …
GB,
I just saw this on Jim Sinclair's site. I would characterize your words as being nearest "anger and despair." Do you still want Chris to say owning gold is a bad thing? You would have been prescient had you focused on this tirade a year ago. Gold is literally much closer to the bottom today. Didn't you miss the boat? Would it be better to cash your tickets in now or take the next ride? As I've heard Warren Buffett say, "buy when they cry and sell when they yell."
Your comment (on another thread) about Iran being specifically prohibited from paying debts to the US in gold should tell you something. Did the US specifically prohibit food, oil, water, or any other physical payment? Why did they single out gold? I strongly believe that they are trying to discredit gold. If it truly is a barbarous relic, why do they need to discredit it so?
I know you said (a few posts back) that " ----- PS this is positively my last post !" … so I hope you'll honor your commitment and post negatively. I wait with bated breath,
Grover
http://www.jsmineset.com/
The problem with these online discussions is that there're endless and too democratic - not all views/opinions/bias has equal merit - that's why learned journals and newspapers have editors. I'm not saying my opinion is the correct or most correct - that's why we need the editor to step in.
Lets get back to basics and ask why gold has value, and why it should hold and appreciate !
-
historically gold was valued for its scarcity, density and durability by many societies.
-
Fiat currencies and debased 'hard currencies' reinforced the notion of gold as hard to counterfeit.
-
Hyperinflation episodes in former stable countries generated by government debt reinforced 2.
-
Gold became established as the only currency that travels well & had universal acceptance.
-
The gold standard was established by Great Britain to make its currency as the de-facto world currency.
What's changed ?
-
Governments straddled with unpayable debts after WW1 came to realise, thanks to Keynes and others, that a gold standard prevented them from creating new money (now called QE) and locked them into deflationary depressions. So all major countries came of the gold standard by 1936, and none have any intention of restoring one or tolerating a de facto one, and now are intent on using inflation to errode debts, and this has been refined by the widespread adoption of 'financial repression' which is the combination of real negative interest rates with some inflation - the latter is now skillfully hidden because governments don't count asset inflation as inflation, nor are food, health costs or declining real wages counted !
-
Although world trade has been around for centuries, globalized interdependent world trade wasn't, but its now in the DNA of all countries and the world economy has become financialised. The major governments like the IOUSA have been captured by Wall St and its counterparts in London, Paris,Toyko, Bonn & Beijing and what's good for Wall St is the most likely major influence on government policy for the foreseeable future.
-
Debt at all levels of society has deprived people of freedom of action - now many are effectively debt serfs - student loans are just the latest most malignant variety. But its government debt that is the most toxic and threatening. The interest on the debt is now the paramount reason for the necessity of endless QE and ZIRP - all other considerations are secondary. Governments have the final threat to one and all - default!
Default of bonds — take that Arab oil states , China and Japan ! Default on unfunded promises - death by a thousand Detroits is already well underway - what we havent seen yet is company pension plan defaults except for GM, but they are surely coming, because that money has not been collected and put away. Every pension plan like Calipers is grossly underfunded because they continue to be allowed by governments to act like Ponzi schemes - make projections and promises that everyone knows is fanciful and is currently under water, and will get exponentially worse sooner rather than later.
So like fearful concentration camp inmates, populations are ruled by the few, because they choose death tomorrow and not defiance today - that's human nature.
Gold is not a widely held asset - what goes on in places like India and China cannot be generalised. Despite the obvious smuggling and high margins being charged by a few, Indian gold imports are down 90% — 90%. Chinese elites have been trying to get their ill gotten gains out of the country for a decade but this has now reached a crescendo. Stories of 'asian' buyers inflating real estate are every where, as well as buying up cash business like taxis, stores, especially 7/11's and lottery outlets - the UK, Canada, Australia and the IOUSA, especially in English speaking countries as English is the international language for finance, and especially in places like NY, London, Vancouver, San Francisco , Sydney and Melbourne to name a few places where the RE bubble has exceeded pre GFC levels ! Gold is probably being used by rich Chinese to convert their Yuan into a US$ equivalent, which they can export legally or otherwise, or use as collateral for US$ loans that will never be repaid. The idea that they are accumulating enough to have a Yuan backed by gold is a -----gold bug fantasy. The Chinese Yuan does not need gold backing anymore than the US$ does - who wont accept it ? - Australia, Canada, the IOUSA, Japan ?? The Yuan has become the second most traded currency, not because of its supposed large gold holdings, but because of its massive trade , economic and military power !
Prior financial eras did not have the internet, through which all person and financial movements can be tracked and hacked — NSA-isation ?? Nor did governments and their central banks have such enormous power and cooperation - sort of like a super evolved mafia - transnational, ruthless, efficient and all powerful. Soon, it will be compulsory that all transactions be electronic, eliminating cash, and of course the need or functionality of cash equivalents like gold - and then they could charge you for 'keeping your money safe' aka 'negative interest rates' and make 'hoarding of cash equivalents' illegal — gold will be purely for decoration and some very few industrial uses. Then mankind can stop wasting truly precious things like irreplaceable oil to power the digging up, refining and storing gold et al.
Sorry for being so long winded but the historical justification for a golden future is not based on current circumstances or likely future developments, and those that want a gold backed currency etc are heavily outnumbered and out gunned by those who don't — so , I'm still waiting for a credible , succinct explanation of why gold is not a barbaric relic. I don't doubt that another economic and financial crisis is brewing , and it may be far more destructive than GFC 2 ( Great(er) Depression 2) but I just don't see how gold will be allowed to be a meaningful part of the post GFC 2 scenario , by TPTB !
Cheers, GB (former gold believer)( thank you Jim Puplava , former gold bug )
PS - I promise , no more golden comments - life is too short !
CB,
Everyone needs to make their own decisions on how they choose to hold their wealth. Above all other economic/financial/political lessons over the past couple of years the most important one is to not blindly trust anyone or any entity. This website is about self-reliance. CM has been more than forthright regarding his position on the PM's. Why do you think you are owed anything more? The PP website provides a common place people can come together and exchange thought in an effort to make everyone that much more knowledgeable and self-reliant. CM is not Moses professing he's going to lead people out of financial bondage. Instead, CM has given us a great meeting ground, helped educate us on the predicaments of this world, and ongoing insight on these predicaments. I would not recommend necessarily relying on anything he or anyone else says. Make your own decisions that best suit your situation, and then take ownership of those decisions.
As for gold (and silver),
We live in a complete Ponzi money system, and it's currently sagging which has prompted QE. At some point it will come to an end and a reset will have to occur. That could be a year from now, or it could be 30+ years from now. The war the Fed and the U.S. government have been fighting is that of hiding how sick the internal workings of the Ponzi system are. If the Fed stops QE interest rates skyrocket, debt quickly becomes unserviceable, there's a massive contraction of the money supply, the economy comes to an absolutely grinding halt, and the jig is up. This won't happen because the goal is to have this play out over the longest period of time possible. If the Fed continues QE (btw, they'll never stop/slow down QE), then at some point the distortions throughout the U.S. economy and the economies around the world will become too great to bear. You stated third world currencies are in trouble. I completely agree with this statement, but disagree with the overall picture you paint. Those currencies are in trouble because those countries have chosen to import high inflation from the U.S. It will be their decision when enough is enough and they stop sending goods in exchange for USD's. At that point the Fed will become impotent. The magical game of having huge trade deficits year after year from people sending you real goods in exchange for paper dollars is not sustainable.
I think the primary problem the government has with gold is that it's a truth indicator if left to true market forces. It seems silly that they would care much about the small amount of wealth held by citizens in the form of gold. In the 1930's gold was widely owned. Even in the 1970's gold represented a large portion of wealth in the world. Now gold makes up something around 1% of all financial asset classes.
The U.S. government is doing everything it can do to keep it's fraudulent money system going and ripping off the rest of the world as long as possible. Gold is hated just as Eric Snowden is hated, but when the Ponzi system comes down literally overnight when the truth is too obvious for the world to ignore the damage will be done. I think it's unlikely gold will be confiscated, excessively taxed, etc. at that point. Until that point however the great truth indicator will be manipulated and hated until the bitter end.
If there is indeed a shift in economic power from the west to the east, gold will likely hold it's value well based on the east's actions and their culture.
There are so many moving parts to the worldwide financial chess board that I'm very wary of anyone who is certain on any outcome.
Full disclosure, I have plenty of skin in the game, but not excessively so. I believe in robust diversification.
GB,You wanted a succinct answer, so I'll give you my bottom lines first.
Fiat currencies are backed by faith. What happens if/when faith in fiat disintegrates? Is that at all unavoidable? Has any fiat ever survived at any point in history for more than a few centuries? Is the dollar healthy after losing more than 95% of its purchasing power in the last century?
What gives TPTB their strength - dollars, control of the government, military might, what??? Aren't they all interrelated? Why are they spending as much effort as they do to drive the price of gold lower? Are they just tricking current holders into selling? At every instant, all mined gold has to be owned by someone. Who is buying? If what you say is true, they really don't need to fight gold. Yet, they do.
The enemy of my enemy is my friend.
I agree. Your opinion isn't the most correct. Of course, neither is mine. I don't want an editor gussying up my words. I don't want them destroying my intent. I don't want to wait while an editor finds the time to review my posts. As long as I can decipher the intent, I can forgive someone for misusing there, their, and they're. I can overlook someone adding an apostrophe followed by "s" to pluralize a word, number, or acronym. I've lived with both, so I can distinguish between PMS and PMs. (I prefer PMs.) As long as the gist comes through, the rest just don't matter at all.
Gold was considered money before any government declared it so. That is a key to this discussion. By looking at your list, gold only has value because governments say it does. Are there any governments today that officially say "gold has value" for the common man? Yet, most independent central banks own gold as a reserve. That strikes me as odd if it truly needs government approval to establish value. Your cart is before the horse.
Again, your cart is before the horse. A gold standard would have limited the government's ability to fight the war … simply because taxes would need to be increased on the current taxpayers to provide funding. (Would a rational person support a war that impoverishes them unless they truly believe it is necessary?) Once the war effort concluded, taxes could be lowered (by demand of the taxpayers) and there would be little to no net change in inflation/deflation.
Keynes and his monetary theory gave governments and central bankers glorious justification to borrow the currency so they could build a better war machine. By borrowing, they taxed future generations rather than the current voters. Wars could be bigger and more deadly than ever before. Being first users of the money, they (governments and banks) got full value from it. By the time it had filtered through society, there was too much currency for the goods available and inflation ensued. When the war ended, there should have been massive deflation. Fortunately for governments and bankers, Keynes' theory came to the rescue and allowed governments to become the larger caretakers of the commoners. Over the years, this has morphed to have commoners defined as those whose votes can be purchased cheaply (the poor) and those who fund the political campaigns (the rich.) Since there is no free lunch, someone has to pay. Since future generations never complain at the voting booth, they're stuck with the tab.
To go back to honest money would be a huge imposition on the status quo. As such, I agree with you that no government will willfully engage such a system. They are pulling all sorts of shenanigans to keep control of the situation. I don't know how long it will last, but it won't last forever. If you've ever pushed down on a wet watermelon seed on a table, you know that the harder you push, the further it squirts out when it finally goes. As hard as TPTB are pushing to keep everything in control, I expect similar results.
They fund the political campaigns so they can get "favors" from the politicians at the future generations' expense.
Very well said! I agree. Governments will try to kick the can down the road as long as they can. They will continue to borrow and print until there is simply too much in the system. If you've ever had a cheating spouse, you know how hard it is to retain confidence. Confidence in fiat will disappear quickly when the printed money can't kick the can further. I've got a vision of a watermelon seed in my mind. Will another forced fiat currency be acceptable to people? How long?
I doubt Indian gold imports are down 90%, but I'll agree that they are down some. China is the world's largest gold miner and yet their net gold imports are increasing. (Look at Jim H's chart way above.) It is a cultural thing and the Chinese government has encouraged their people to own gold. We may not know why, but there is a reason for it.
On paper, Western countries have the bulk of the world's gold. The US has the largest hoard in the world (on paper.) How much is really there? Why won't they allow an independent audit? Why is it taking 7 years for Germany to get its gold back? There have been other government scandals that have been covered up. Why is something as important as gold immune from shenanigans?
Do you really think Jim Puplava has sold ALL his own gold? He may have sold some. He runs an investment house. His investment models were saying gold was overvalued. He trusted his business decisions according to his models and had to justify the results. Do you think he will refill his own stash before announcing to the world that he is a gold bug again? I sure do.
If you want a succinct summary as to why I own PMs - I don't trust the bastards and I think their best efforts to kick the can will ultimately fail.
If you want my best advice, I'd suggest learning to trust yourself first and foremost. Chris advocating owning a portion of wealth in gold/silver or Jim Puplava publically advocating not owning gold/silver shouldn't be the only factor in your decision matrix. When the facts change, they both will reassess the situation and act appropriately for their personal goals. Your wellbeing will not be their uppermost consideration.
Unless you're looking to have a single massive bar of gold, owning gold needn't be an all or nothing decision. You may have invested too high a proportion of your wealth thinking that it will make you richer. Reevaluate your situation, play some what-if scenarios, and determine what level of investment is right for you. After all, you will be the one most impacted by your decisions.
I sincerely wish you the best,
Grover
I think it's unlikely gold will be confiscated, excessively taxed, etc. at that point.If gold is viewed as a threat to fiat currency legitimacy by TPTB why then would they not make it illegal to own just before or during economic collapse? (I can hear it now...POTUS: "we're instituting these measures for the greater good of the nation")
Aloha! The one goal of every politician on Earth is to remain in power for as long as possible in order to be close to the creation of money and be privy to its flow. You do not get rich by serving in Congress for one term. All those who got to Washington DC have one thing in common … to enrich themselves at the expense of the taxpayer, that even includes environmentalists.
To me the issue is not so much inflation vs deflation as it is the quality of capex(capital expenditure). Right now capital is being expended at the US Treasury in the most destructive practices. Capital at the US Treasury is being expended(aka: invested) in the attempt to keep the current poli-monetary system in power. Right now the sovereign debt markets of the world have diverted valuable capital to government projects like the Iraq War, which tend to favor bank and corporate interests over the interests of their citizens. As an example, right now the US Treasury has created close to another $500BIL in net debt over a 30 working day period. It took Exxon half a century(18,250 calendar days) to get a market cap of $411BIL. Gold’s value is about the destruction of capital which is the formula for currency debasement. Something Karl Marx talked a lot about as the bane of the democratic capitalist system.
Compared to the value of the total global gold markets the debt markets, at all levels, federal, state or local, including corporate debt is like comparing the size of a flea on an elephant’s ass. More capital is locked up in debt than gold and the capex of gold. The same goes for commodities needed for consumption in our daily life, like copper, iron and oil. As the US Fed keeps interest rates low the capital to buy bonds increases, and this has been going on for over 30 years now. Imagine what we could have done with that capital in the private sector if more and more capital was not being diverted to support exponentially growing debt markets the past 30+ years. This is why we all feel so alienated now and why we can only determine the value of an asset by the “greater fool” analysis.
Let face it … whatever gold the Chinese and Indians are accumulating now is a pittance compared what gold the US Treasury has taken from both WW1 and WW2 and the FDR anti-gold laws. Right now the US Treasury holds some 7,200 tons of gold that they value at $42.22 per ounce. Please do not tell me that the “West” does not value gold. Until Congress gives the US Treasury to sell its gold holdings the Asians will have a tough time accumulating more gold than what the US government owns, especially in the current environment of peak gold. By the way, I am told that the US Treasury is the only entity on Earth that does not value its gold holdings based on free markets. The US Treasury still believes in a fixed price. It is too bad the same limits are not put on Treasury debt.
I find it amazing that FDR chided American citizens for “hoarding” gold and he made it illegal for citizens to own gold because of a 33 year "Bank Emergency". In the end who becomes the world’s greatest hoarder of gold?
It is simple. So long as the US Treasury, the largest holder of gold on the planet, hordes gold it will always be valuable.
I find it amazing that FDR chided American citizens for "hoarding" gold and he made it illegal for citizens to own gold because of a 33 year "Bank Emergency". In the end who becomes the world's greatest hoarder of gold?What would prevent the government from making it illegal to own again? Let's assume they decide it should be re-valued from $42.22/oz to say, $422/oz and every citizen owning it today is required by law to turn it in for redemption at the new price...is this an unfounded worry?
Aloha! The strategy you just described is almost exactly what FDR did in 1933. It was a different time in FDR days and a very different monetary system. Why would a non-gold based monetary system that is free floating debt all of a sudden want to return to the gold standard? That one act would destroy the very basis of the current political and banking power structure and way too many salaries and bonuses depend on keeping the current crony system intact.Also what message does it send to the world that the global reserve currency just devalued itself 1000% to gold? I do not think the USD would last long as the preferred currency. In my guesstimation that is exactly why the US Treasury has not repriced its gold reserves at current COMEX levels or London Fixed.
Unless the current monopolistic system of politics and money suddenly has no interest in retaining power I think your worry is unfounded. I think their power is their utmost concern … JOB ONE!
"Stay The Course"
The U.S.equities just broke through a 13 year old resistance level (1580 S&P 500).
The S&P 500 has been in the longest sideways channel in it's history for 17 years. The tightly wound spring has POPPED!
That 1580-1600 level will become the new support level.
Inflation is kicking in with the trillions of printed dollars slowly leaking into global markets.
Inflation will accelerate. AND IT WILL RESEMBLE BUBBLES.
Equities will correct and confirm 1580-1600 in the S&P 500.
This is the beginning of the next leg of bull market.
Gold will go on a run too, once it picks a new base of support around $1,000-$1,200.
[quote=AngeloS]"Stay The Course"
The U.S.equities just broke through a 13 year old resistance level (1580 S&P 500).
The S&P 500 has been in the longest sideways channel in it's history for 17 years. The tightly wound spring has POPPED!
That 1580-1600 level will become the new support level.
Inflation is kicking in with the trillions of printed dollars slowly leaking into global markets.
Inflation will accelerate. AND IT WILL RESEMBLE BUBBLES.
Equities will correct and confirm 1580-1600 in the S&P 500.
This is the beginning of the next leg of bull market.
Gold will go on a run too, once it picks a new base of support around $1,000-$1,200.
[/quote]
I gave up trying to read the tea leaves a long time ago. I haven't seen anyone who is consistently successful at it, even those making things happen. I just work on positioning myself so that no matter what happens, I'm not caught too off balance.
All is vanity.