Wednesday, November 10, 2010

You No Longer Have to Be Crazy to Buy Gold

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The good news is that you no longer have to be crazy to buy gold. Until recently, certifiable believers chasing the barbaric relic were driven by a host of urban legends and wild conspiracy theories which frequently appear on the Internet, such as the imminent bankruptcy of the US Treasury, Fort Knox holding only titanium bars that had been painted gold, Weimar style hyperinflation that is just around the corner, or the gold ETF (GLD) owning only paper, and not physical gold.
No more. The long term structural demand for the yellow metal is now so well known, that I can read about it in the tabloids while waiting in line at Safeway. There is an emerging market central bank bidding war going on, with India and China trying to outmaneuver each other to raise their gold holdings to developed world levels. The EC or the IMF may sate that demand by selling off their remaining holdings to bail out Greece. A rising emerging market middle class also brings large, newly enriched consumers from countries that have long cultural preferences for owning gold and silver over paper fiat currencies.
Now that we have decisively broken through to a new all time high, how high can we go? Surely peak gold is upon us. Barrick Gold (ABX), the world’s largest gold producer, would not be hacking out new mines under incredibly harsh conditions at 15,000 feet in the Andes if there were easier supplies to develop.
My own long term gold forecast has been the old inflation adjusted high of $2,300. But higher altitudes beckon. If you want to take gold up to its historic peak in world GDP last seen in 1980, that would see gold at $5,300. Also, keep in mind that the total world gold supply has increased since then from 110,000 tonnes to 170,000 tonnes. For gold to recover the old peak percentage of the world monetary base, M3, it would need to rise to $5,700.
More Here..

The Missile Saga Continues: 
The Twitterati had a field day Tuesday, tweeting comments like "Can someone please tell me how our Department of Defense has no idea who launched a missile from California's coast?"; "So nobody in our government or military knows? Scary."; and "If you misplaced a missile off the coast of California, the U.S. government would like to have a few words with you."

Contractor Who Got Stimulus Money Now Laying Off 1,400 


  1. I prefer a transition to oil priced in gold, along the lines of the Gold Trail...
    Dated Dec '97:

    The first few moments after the Saudi's proposal to trade oil for gold at a very steep discount of 1000 Bbl/oz there would be roars of laughter. One fast thinker after another would think "Hey. I buy some gold at $300/oz, trade for oil to receive 1 Mln Bbl, then sell the 1 Mln Bbl for US$ 10 Mln. Net profit is

    $10,000,000-$300,000=$9,700,000. Easy money.

    Everyone at once turns to the gold market to buy, which promptly shuts down. Now no one is laughing. Because everyone realizes that gold is now worth at least $10,000 per ounce and no one is prepared for that revaluation. Whoever has gold now has 66.67 times the purchasing power in that stockpile. What appeared to be a stupid offer has now become a complete revaluation of all gold stockpiles vs all currencies.

    Who has the gold?

    Bring it on!!

  2. Gold and silver emergence as handy portable accumated hoards of wealth and used in internal and external trade as money in certain particular economic circumstances and different natural environments .

    These hoards of PM could be used for simple usury loans in times of need .

    In modern capitalism money may be invested as capital ,controling the actual means of production and circulation of wealth ,controlling the whole economic system top to toe.
    The returns are not usury profits but profits made at sale of the commodity ,share dividends loan capital claims a proportional share of the future profits , thus capitalist investment is not simply a usury loan a claim over past wealth ,but a title and claim over future wealth production.
    Everyday Circulation as coins leads to wear and tear and to worn down coins ,a loss of their metalic weight ,but gold has never peen plentiful and hard to find.
    With world trade so large today ,the small amount of PMs available would make circulation impracticable as money.

    Modern non fiat money need not be simply PM coin but an agreed standard value commodity backed currency ,they could be created based not simply on one commodity such as oil ,but from a mixture of industrial metals, oil or gas energy unit, food grains such as wheat and other useful commodities could be used and exchanged at market value, that is currencies not restricted to just the traditional PMs .

    For example .a government of a developed industrial country could promise to deliver in return for its paper a fixed weight of industrial grade copper metal.
    The government might even form a hoard of copper metal with a market value of say $10,000 a ton and issue copper metal backed certificates of 1 tenth of a ton equal to a $1,000 dollar note, one hundredth of a ton =a one hundred dollar note ,with hard metal metal tokens circulated as coins marked in smaller $ value denominations EG a $10 coin .

    That is how printed banknotes arose as a bearers certificate convertible on demand for an amount of gold held in storage in the vault of a bank .

    Carrying around a lot of actual gold was not desirable then , no more than carrying round a kilo of copper would be today.
    The importance was confidence in the bank or government –that the banknote COULD be fully convertible to solid metal - on demand
    For convenience say monthly international settlements of accounts between countries and with a more balance trade, equal opposite held debt payments cancel each other out ,but any balances might even be more conveniently paid by gold rather than by heavy copper.

    These problems of developing a new international standard of value as the dollar hegemony implodes will be decided by the PTB.
    The G20 especially the developing countries are talking about that.
    They want to hit the dollar out of the ball park .Especially because the US is practicing currency wars by exporting extra dud dollars created by money printing.

    Dreamers who think that the PMs ,gold and silver are the ONLY suitable replacement and that they will get rich long term, on the coattails of the PTB might be in for a shock.
    The PTB might just pass over precious metals like gold as a “barbarous relic’ held by a few survivalists sentimentalist militia type ' monetary terrorists' in the US and that is also still worn on the necks of rich Hindu Indian brides as family heirlooms.
    Hey, the US government may even offer to cash in 'terrorist ' held old gold coins for the new copper metal backed dollars –at the their face value of issue only of course , not by weight of gold value.
    So any old U$ 50 buffalo coins might have some value yet.
    After the good old US government can always be trusted to keep its word!
    Old lamps for new?
    Trades ins available !
    Face value for face value, $50 old for $50n new coins and equal exchange is no robbery!


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