Thursday, October 14, 2010

Gold Non-Believers: You Can "Eat It"

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Recession, depression, or recovery, gold is poised to continue its run.
The case for gold is a simple one. But as gold sets new all-time highs, a minority of investors are in it, more are waiting for a dip, and most will miss out on the bull run altogether. Well, until the top when everyone will be herding into it.
But today we’ll look at why the gold boom how historical evidence shows the “weight” behind this gold bull will keep pushing prices higher.
The Long Boom in Gold
All the fundamentals are in place in place for the gold bull run to continue well into the future.
The U.S. budget deficit is likely to be much worse than predicted.
In Too Much Hope and Audacity, we found the government’s deficit forecasts to be a bit too optimistic. Although they called for a cumulative $9.7 trillion budget deficit over the decade, further analysis revealed it was a “best case” scenario. The official forecast included expiration of the Bush tax cuts, no recession in the next 10 years, and a greatest hiring boom in the past fifty years. As a result, the 10 year deficit is likely to exceed the $9.7 trillion estimate.
Also, deflation has the Fed very concerned. The Fed is, at a minimum, going to keep rates at or near zero for a long time to come. That means real interest rates will likely be negative, which are going to keep gold prices on the rise.
Finally, there’s a much bigger driver for gold: gold is still an outside-the-mainstream investment class.
Great Things Come to Those Who “Weight”


  1. The article didn't even mention the things that could spell extreme doom for the economy and US$, driving gold even higher:
    - Loss of world reserve currency status for US$
    - Foreclosuregate could finally kill the big banks
    - FDIC is basically insolvent
    - Pension are underfunded and at risk (see Foreclosuregate)
    - Tax revenues declining
    - Employment not improving
    - State budgets are a disaster
    - Massive naked shorts on gold/silver
    - Large fractional reserve gold/silver funds "meeting demand" with false supply

    As a wealth preserver, it only takes 3-10% of your liquid assets to protect what you have.

  2. It is not these problems as listed separately, but the combination of the above internal problems and their interconnection with other external problems that guarantee the collapse of the great Ponzi economy.

    This includes externaly ,the cost of wars and the military industrial complex a major source for the deficit spending that has bankrupted government finances.
    War is politics using other means that have an economic cost for imperial powers.
    Thus while this is an blog that reports on economic problems that might lead to a economic depression,these economic problems are related to the costs of militarism and war costs.

    For example the Dollar hegemony depends on Americas ability to prop up and supply its own military and local agents and puppets like the Saudi royal family in order to gain access to cheap natural resources, including oil,rare earth materials for electronics for computers , cheap labor commodities and even foreign vendor financing to purchase those imported commodities on credit.

    The military front is not doing so well for the US and its NATO “partners” in Afghanistan as the US is proving incapable of its enforcintg its military will and its “elected” government on small tribal groups in Afghanistan.

    Not even fear of torture assassination teams and unseen drone bombers can frighten these Afghanis.The death of every Afghani “Taliban” or so called” Al Quaida terrorists” costs it is said $50 million dollars per fighter. Although The US now claims not to do body counts ,it does not do a good job of economic accounting either. As a lot of these War costs are hidden elsewhere in the US budget ,counted as foreign aid etc So it is hard to work out the real cost of American wars, in any case it bleeds its wealth away achieving these small killing "victories" .

    Despite its inability to enforce its own will in Afghanistan ,the US and NATO like to pretend that the same task could easily be done in Pakistan,and somehow thinks the Pakistani Military is pussyfooting around against the “Muslim” “extremist” fighters.
    It demands results from Pakistan –or else.
    CNN-IBM reports:
    "Islamabad: NATO is feeling the heat in Pakistan as more than 100 oil tankers have been torched in seven days. 6,000 supply vehicles and 150 fuel trucks are stranded at the Torkham crossing on the Afghan border and Pakistan is letting them stew. There is no indication when Islamabad will allow the trucks through.
    Peoples wars for independence using different forms of guerilla tactics in a protracted war , whether fought by nationalists , Muslim religious nationalists or communists are difficult to combat.
    As Britain found out in its war against the American people when they fought for their own independence. Britain had a long supply line.
    Overextended militarily America has difficulties with its own supply lines for both troops and materials in this war.
    How much is the cost of supplying and replacing the lost 100 oil tankers in a war zone?
    Whatever! Americans will payfor the Bush/Obama wars .No wonder with these mounting war costs America wants to cut the cost of unemployment benefits and food stamps programs.

    There will be no COLA adjustments for pensioners either this yearin an insolvant and militarily incompetant america with its out of control war costs.
    Enjoy your militarism America.

  3. The previous two posters are extremely brilliant and thoughtful! Great posts. Since you have totally covered the processes and problems, I can only say that last night, after gold hit another all time high, I fired my "assault" rifle out into the night, at the base of a small mountain. Yes, the police were called, yes the searchlights, yes the town was in turmoil, but I simply sat in my fort and cleaned my weapon.

  4. You are making the case for gold but not even acknowledging the problems with gold. If the economy goes into a depression the government will most likely make private ownership of gold illegal and will force you to sell your gold to them at a value they set. You could buy gold today for $1300/oz and be forced to sell it to Obama at $360/oz. This has happened before and given similar circumstances it will happen again.


  6. @7:20am

    Doesn't make any sense. Why confiscate a few billion $ worth of peoples gold. Thats chump change. I doubt a large percentage of the population even has gold.

    The real confiscation will be the 3-4 trillion $ sitting in retirment accounts your 401k' and IRAs. Basically take the cash and write IOU's on them with no intention of ever paying it back.

    When that happens picthfork time!

  7. 7:20 total nonsense. Most just don't get it. That's like saying because oil went to $140, its only worth $10. Can you imagine Goldman Sachs, the holders of billions in Gold, having to sell it to their servant, OBAMA, for $360 oz? Or CHINA, INDIA and RUSSIA all selling it for $360 an oz? The dollar will be worthless so the GOVERNMENT doesn't have a foot to stand on. (Zimbabwe as an example). Now if the MAJORITY of the public held GOLD, then that's a different story! 99% do not own gold, so you're saying they will take it from the 1% of the "elite"? UTTER NONSENSE!

  8. 8:44 Exactly correct. Also, the often used analogy to the gold confiscation by FDR was when gold was linked to the dollar and the US deficit could be cleared up by doubling the price of gold. Only a small part of the population actually turned in their gold trinkets and coins. Since 1971 gold no longer was linked to the dollar and that was when the dollar became nothing more than just a piece of Fiat paper with absolutely no backing. Also the debt in the 30's was very small compared to what we are faced with today, millions vs trillions. Thus, confiscation of gold today would not make even a dent toward reducing the national debt, like a flea on an elephants butt.

  9. One possible option for those of us with less $
    might be Silver Saver.
    It allows one to accumulate silver via a monthly payment plan.

    Also has a monthly accumulation plan available for gold, but I'm thinking SilverSaver might be better for silver because of the extensive funding options available.

  10. "The real confiscation will be the 3-4 trillion $ sitting in retirment accounts your 401k' and IRAs. Basically take the cash and write IOU's on them with no intention of ever paying it back."

    When the magician is at work keep your eye on both hands not the distractions.

    Remember, America is no longer an industrial producer of great commodity wealth but a country thats GDP was counted or driven by consumption consumer of wealth,not production of wealth. The great Ponzi was fueled by foreign credit supply and vendor finance .
    American consumption was fueled by credit supply backed by bubble creation of invesments in seemingly ever rising property values and trillons invested in sub prime and other dud bonds that could not deliver the promised dividends.
    There is no need for the government to officialy confiscate these 401k and other assets of the middle class outright ,the process is already ocurring of the elite looting the middle class by destroying the value of savings and assets.

    Investment of money as capital is for titles/claims to incomes from a share in the profits from future wealth creation.
    Most investment is in property personal housing,incomes from rented housing and comercial property.
    These asset values are falling .
    Low interest rates already mean small savers can make little income from investing their savings in bank accounts or even government bonds .
    The government has turned to the printing press in an attempt to prop up the fraud incomes
    of the Banksters Great Ponzi economy.
    The fall of the dollar value relative to other currencies destroys the real inflation adjusted value of investments by pension funds 401k in stocks etc.
    The banksters use their Bailout money and high frequency computer trading to manipulate the value of stocks as it is now increasingly seen to be a fake market small investors and pension funds are icreasinly abandoning investing in stocks.Treasury bonds once a safe retreat to "security" are paying low dividends that are themselves looking very iffy as the paper printing is cranked up with Quantative easing. Some therefore say buy gold as the last refuge as a store of wealth.
    The cost of The social security/ pension Ponzi
    cannot be paid out on from falling current government revenues paid from those currently contributing to the social security Ponzi.
    state and municipal pensions are threatened too.
    Especialy as there are competing claims for government tax revenues as payouts for bailouts and for paying interest on past Treasury bonds issues .(mostly war bonds and bills for past deficit spending)
    As you say:
    Basically take the cash and write IOU's on them with no intention of ever paying it back."

    as the great Ponzi has imploded this is now impossible.

  11. FOFOA present a compelling argument for Gold $50,000. Given the enormous amount of "Paper Wealth" (fake) in the world, I believe it could happen. There are a lot of paper dollars that will seek an alternate source of wealth preservation. However, at a minimum, Gold will always be your insurance.

  12. Anyone been to the grocery store this week. The prices are exploding. Food will be the new gold! Spare yourselves the agony of worrying about investing and start preparing for day to day survival. Time is running out and the most valuable thing you can be in possession of will be food and water as our economy crashes. Soon as the banks realize "its over" then they stop lending and businesses crash and even more jobs are lost. Millions of people will be thirsty and hungry. In regards to wealth preservation, there will be nothing to preserve. It will all be gone "overnight." Americans prepare because the only help there will be is what you have done for yourself. This is not a doom and gloom opinion but our new reality. Begin to live as if it is your last day to go to the grocery store safely and this will be the best "wealth preservation" there is. Preserving one's life and the life of family is where you will find Gold!

  13. 9:10 Agreed! I believe most posters here are aware and preparing. When I read about the past turmoil in Argentina, one man said he wished he had toilet paper and simple gold rings to barter. That about sums it up.

  14. 9:10 - Amen; at someone gets it!

  15. Well,Here we have it.
    The United States Citizens have woken up to the real facts of the matter.

    Its a new paradigm,And you finally woke up from your "SLUMBER"

    You are the U.S.S.R.

    "FINISHED,NULL and VOID"Obsolete and ET,AL.
    Welcome to the real world America,You were,
    Are ,and will forever just be a CORPORATION.
    You are now "BUST"
    Enjoy the land of the "FREE" and the home of the "BRAVE".

  16. 3:23 Some are awake! You have to be very careful when you ask people about the economy and if they're preparing. You can't give the impression you know something they don't or you'll become a target. How do you get people to prepare without exposing yourself? How do you find like minded people? Is there a secret handshake??? LOL


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