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Saturday, April 17, 2010

The Gold Chart Is Looking Good - II

Gold hit the high (resistance) of early January. This is normal.



It is back down to the neckline. Let's see if it holds at the neckline.

Gold should hesitate again in the future when it hits the old higher early December high of about 1220. Last call for cheap gold, and silver.

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The Keynesians now have to try and convince people that not only are the people that understand Austrian economics nuts, but so is the BIS (Bank for International Settlements) nuts.

http://www.bis.org/publ/work300.pdf?noframes=1

Excerpt from .pdf file link above:

" ...
To answer these questions, it is helpful to review the mechanisms by which persistently high fiscal deficits could lead to inflation.

A first mechanism stresses the ultimate impossibility of continuing to roll over ever increasing levels of public debt when monetary and fiscal authorities are pursuing inconsistent objectives. When the public reaches its limit and is no longer willing to hold public debt, the government would have to resort to monetisation. The result, consistent with the quantity theory of money, is inflation. And anticipation that this will happen may also lead to an increase in inflation today as investors reassess the risk from holding money and government bonds. In such an environment, fighting rising inflation by tightening monetary policy would not work, as an increase in interest rates would lead to higher interest payments on public debt, leading to higher debt, bringing the likely time of monetisation even closer.
... "

The "wealthy", industrialized nations are in deep dodo, especially the US, the biggest, badest, net debtor nation in the world. Yup, it had a good run, but it's over now.

The US Treasury/Fed combo are creating USD like it's going out of style. About 11 trillion of payments, guarantees and promises worth in the last 1-2 years. Wait till that and more gets into the economy and see what happens to the value of USD and prices of the necessities of life.

Too many economies are saturated with debt. More government spending (stimulus) can't solve the problem. That's because too many governments are broke. That means they have to borrow more to spend more. This, when too many economies can't handle any more debt. Heck, if it was just a matter of a government spending more without debt being involved, then people could sit back and nap in the shade rather than go to work ... for ever.

The only reason that governments do this is that too many of their citizen units are too dumb and ignorant to realize that they can't have government spending to benefit them for free. A price somehow, somewhere has to be paid. If everyone was smart and educated (not ignorant), could not be conned, fooled, there wouldn't be any need for governments.

Even the super rich do not really understand what's happening. They don't need to know exactly since most of the super rich are that way from paying governments to protect them and do away with their competition. They don't need true economic knowledge to succeed. So, don't look to them to see what to do or how to protect yourself.


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UNCOMMON COMMON SENSE
For People Who Think


"The amount of Silver supposedly available for purchase today has plummeted by 90% in less than 20 years. Thus, thirty years of price-fixing has set-up the Silver market for the "Mother of all Supply Squeezes". That is one reason why you should not be afraid of the "rigged" markets for Gold and Silver. ... " - Aubie Baltin CFA, CTA, CFP, PhD.

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