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Wednesday, August 19, 2009

Gold Could Be Bottoming Here

Gold could be bottoming here (Wednesday), again, or rather yesterday, Tuesday, the 18th:

Today's morning gold price action. Heck, gold did get down to the bottom of the triangle, the up trend line of the triangle on the 6 month and 2 year charts. :




The 6 month chart:




The 2 year chart:




The 36 year chart:






When gold blows, it will take most by surprise. That it goes into the $thousands will take most by surprise.

Saturday, August 15, 2009

Buy Gold and Silver Now

Buy Gold and Silver Now. Do not wait for the blast off into new high territory. It will probably take people by surprise and be relatively fast. Gold and silver have been building a big, over a year long base. The bigger the base, the bigger the move up. And, don't be fooled by the talking heads in the mass media. Most are clueless. We are just in the eye of the storm at the moment.



Many of the best mortgages in the US are due to default (even these people with good credit are losing their jobs) along with the commercial mortgages. The FDIC is almost broke, almost out of bank rescue funds. The rate at which banks in the US are going bust is increasing. Citi and AIG are still in trouble, probably JP Morgan, too. US bonds are looking to break their long term up trend line (since about 1982). Then yields / interest rates will climb. The US federal government is up against its debit limit again when it has not been even one year since the last time they had to raise the debt limit. The fact that they have a limit is a sham. What is the point?

The BIS's (Bank for International Settlement) total for derivatives was about $1.4 quadrillion. There is not enough wealth in the world to settle this amount. It is a crazy scene that built up fast over a few years.

Recommended reading:

Pressure (Countdown) Toward Breakdown
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My best sources of information report that some unexpected deep shocks are coming from USGovt creditor nations. They are simply fed up, frustrated, and astonished at the manner of lost control, spiraling debts, and blatant monetization amidst lies in denial of that same monetization. The USTreasury auctions now have domestic hidden elements, and global hidden monetization elements. The USFed is purchasing through Permanent Open Market Operations the bonds grabbed by the primary dealers. Some of the auctions are actually underbid, and fortunately for the statistics, the bid/cover ratio includes obligated dealer bids. The USFed liberally uses its USDollar Swap Facility to enable strong bids by foreign central banks, except that they are highly likely coming from USFed accounts on foreign soil, or else from money lent by the USFed itself. Warning after warning have come not to monetize, not to debauch the USDollar currency, not to permit skyrocketing deficits. Yet they continue, and worse, little if any reform or actual stimulus has occurred. Mainly what we witness is more channeled funds to the big banks, more coverage of credit derivative fires, and more announcements of bond support. See the $1.25 trillion support for Fannie Mae bonds, aka USAgency Mortgage Bonds. The Green Shoots have now been dismissed as a marketing ploy. The Stress Tests have now been dismissed as a marketing ploy. The Stimulus Plan has now been dismissed as a marketing ploy. The only USEconomic recovery will be a statistical recovery. A Jobless Recovery is a recovery for stocks and a redemption for the bankers. Main Street continues to be discarded.

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China's Silver Bulls Are on the Loose

Monday, August 10, 2009

Official Chinese TV announced last week that silver bullion is now available for the investing public. China, once on a silver standard where nobody knows today what happened to the hoard, now offers 500 gram, 1-, 2- and 5 kilo bars. The news lady alluded that silver is comparatively cheap to gold, citing the current gold-silver ratio of 1:70.

China encourages Silver Bullion for investment



It is going to get ugly. Real actual money ( gold / silver ) and other atoms are going to make a huge difference for those who had forsight and took action to protect themselves as best they could. In economics and markets, the crowd is wrong. This is the first time in the history of the world that virtually everybody uses a government fiat token that is not tied somehow to gold or silver, let alone reserved by these metals, to make payments. There is no escape to a currency tied to or reserved in gold or silver, like there was prior to 1971. There is only money itself and other atoms as an escape, safe store of value.

Wednesday, August 05, 2009

The US Dollar

The US dollar makes a new low as it heads down from its rally:



Not a pretty looking picture.


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Peter Schiff, one of the few that told it like it is for a number of years, gives his take on the state of the economy. If nothing changes (nothing in sight yet), in 10 years, the US could be a wasteland. This video is new, dated August 3.



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The new Austrian silver coin:



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The physical possession of gold and silver is going to be critically important.

Tuesday, August 04, 2009

Gold And Silver Are Chomping At The Bit To Run

Gold and silver are chomping at the bit to move higher, a lot higher. Gold and silver will roughly move inversely to government fiat tokens. Gold, silver and the HUI outside reversal days at the end of the first week in July were significant.

6 month chart of gold:

6 month chart of the US dollar:


2 year chart of gold:

2 year chart of the US dollar:


9 year chart of gold:

9 year chart of the US dollar:



People who understood what was happening inside the US and paid no attention to regular stocks, nor any attention to real estate, are way ahead of the herd.

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Now for some bad news for the US, signs of the times, indications of the state of the US dollar:

1.

"Wal-Mart has already broken out of the pack. Wal-Mart, the world's biggest retailer, plans to sell five-year "Samurai bonds" (commercial bonds denominated in Yen) out of its Japanese operations. The company filed documents with Japanese financial authorities on July 21. It is a law of markets that where commerce goes, Treasuries go later - to borrow - that being where the money is. Once the US Treasury follows Wal-Mart's lead - because it has to - the next step will be to "swap" debt paper still denominated in US Dollars for new paper denominated in other nations' money.

Once that happens, the US Dollar has lost its single reserve currency status and becomes just another currency amongst many while the US Treasury loses its ability to borrow internationally in US Dollars." - The Privateer

2.

Jul 28, 2009, 11:15 a.m. EST
Citigroup sets final terms on 10-year euro bond

LONDON (MarketWatch) -- Citigroup Inc. will issue a EUR1.75 billion bond due to mature September 2019, at a spread of 385 basis points over mid-swaps, in a self-lead deal, the bank said Tuesday.

Order books for the transaction have exceeded EUR7 billion, attracting attention from more than 450 investors, the bank said.

The deal will be priced later Tuesday.

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Can you imagine the US Treasury having to price their debt in non-US dollar denominations to get the junk sold? For instance US Treasury debt denominated (priced in) Yuan? It's a real possibility. The federal government's budget deficit will be about $2 trillion or more this year. They do not have it. It all has to be borrowed some how. Crazy!!! Insane!!! Especially when you consider the fact that they have $10s of trillions of dollars worth of unfunded liabilities to honor, which they will not, because there is no possible way that they can. The biggest, baddest, record breaking debtor in the world does not have anywhere near the wealth required. In fact there is not enough borrowable wealth in the whole world that can get the job done.





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350 Years of Economic Theory in 50 Minutes



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A good new article on silver and some big picture aspects of markets by David Morgan:

Silver Investing/Risk And Reward


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What? 1,2,3 months till new all time highs in gold and silver?
There is no rush like a gold rush!!!!
The best parts of this bull market are still in front of us.

The AMEX's Gold Bug Index - HUI

The HUI (a gold bug index of gold and silver companies) looks like it is getting ready for a significant move up as it formed an upside down head and shoulder pattern:




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Why You've Never Heard of the Great Depression of 1920




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"Another Time - Same Place:

The place is, of course, the United States. The data is from the Statistical History of the United States:

Real wages for the working man tripled in the years 1850-1913. US GDP increased over 500 percent, averaging 4.3 percent annual growth from 1870-1913. This highly productive era was accompanied by steadily FALLING consumer prices. From 1800 to 1913, there was an overall 30 percent reduction in the Consumer Price Index from 43 to 30.6. "Modern" economists stand dumbfounded before these facts, but the "Gilded Epoch" which lasted from about 1870 to 1910 has often been called the second American industrial revolution. US wholesale prices, for instance, increased by an annual average of only 0.1 per cent from 1879 to 1913. The long-term stability of the late 19th century was not, of course, due to US government measures. It was the semi-automatic effect of the international Gold standard. There was no Federal Reserve and the US income tax amendment to the Constitution had not been enacted. Gold and Silver coinage was there and Americans had the most productive period ever as living standards climbed." - The Privateer

Saturday, August 01, 2009

Crash The US Economy or Trash The US Dollar

If the US Treasury and the Fed create too many US dollars (that do not represent any new wealth what so ever, just increased US Treasury and Fed debt) to try to fend off (delay) the decent into the Greater Depression, they will trash the US dollar. If they do not do that (stop increasing the debt build up in the system) they will crash the economy. Actually, it is crashing already. They would just allow it to crash faster and not as badly as it would if they try to artificially prop it up (increase the debt in the system). The economy would also recover a lot faster than if they did not interfere. Plus, the US dollar would not be devalued as much.

If they do not create too many US dollars, they would allow the economy to crash. But it would crash faster, not crash as badly, and would repair itself a lot faster.

(more on the fast 1920 depression that nobody talks about in a later post)

Politically they are between a rock and a hard place. The history of human nature of both those in power and those who have given over their power to government says that both want to delay the day of reckoning for as long as possible no matter the cost in real terms, in degree and time. Neither group wants to "do real", "do reality", "get real" or "face reality".

"There are perhaps 5% of the population that simply can't think.
There are another 5% who can, and do.
The remaining 90% can think, but don't."
-- R. A. Heinlein, The Moon Is A Harsh Mistress

The US Treasury/Fed combo have already spent, made guarantees and promises totaling over $13 trillion in less than a year. That is practically speaking, eventually, almost doubling the US dollar supply in less than a year. Most people need serious protection from this, in the form of gold and silver, but still do not realize it.

"The best way to destroy the capitalist system is to debase the currency" - Nikolai Lenin

"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it." - Frederic Bastiat, 'The Law'

Boy!!!!!, is it going to get ugly as the last remnants of capitalism inside the US are dismantled/squashed.

"In a separate lecture, Hayek noted that, "I am more convinced than ever that if we ever again are going to have a decent money, it will not come from government: it will be issued by private enterprise, because providing the public with good money which it can trust and use can not only be an extremely profitable business; it imposes on the issuer a discipline to which the government has never been and cannot be subject." - F.A. Hayek, Nobel Prize Winner, The Road to Serfdom


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Rogers: America Bordering On Communism

Wednesday, July 15, 2009 9:41 AM

By: Dan Weil

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“Karl Marx must be somewhere standing up in his grave cheering.” And why is that? “America has become a socialist and maybe even communist nation in many ways,” Rogers said.

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“They’ve been doing the wrong thing for over two years. Nothing has worked. I don’t know why they think this is going to work. This is going to make things worse, too.”

Rogers said that Japan implemented a huge stimulus in the 1990s. “It didn’t work in Japan, and Japan was a creditor nation… It’s not going to work for us, either.”

Treasury Secretary Tim Geithner, former Federal Reserve Chairman Alan Greenspan and White House economic adviser Larry Summers “used to say to the Japanese: ‘You’re doing it wrong. This approach isn’t going to work,’” Rogers said. “We’re doing exactly the same thing.”

Rogers isn’t too happy with the massive monetary easing the Fed has engineered under Chairman Ben Bernanke, either.

“Printing money has been tried many times throughout history in many countries,” he said. “It has never worked in the long term; it has never worked in the medium-term. Occasionally, it has worked in the short term.”

Still, he says, “Printing money is going to lead to serious problems down the road.”

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Hear the whole interview: