GOLD: $10,000 Gold?

Friday, October 8, 2010

http://www.chinadaily.com.cn/thinktank/2010-10/02/content_11374685.htm

$10,000 Gold?

*** begin quote ***

Indeed, another critical fundamental factor that has been sustaining high gold prices might prove far more ephemeral than globalization. Gold prices are extremely sensitive to global interest-rate movements. After all, gold pays no interest and even costs something to store. Today, with interest rates near or at record lows in many countries, it is relatively cheap to speculate in gold instead of investing in bonds. But if real interest rates rise significantly, as well they might someday, gold prices could plummet.

Most economic research suggests that gold prices are very difficult to predict over the short to medium term, with the odds of gains and losses being roughly in balance. It is therefore dangerous to extrapolate from short-term trends. Yes, gold has had a great run, but so, too, did worldwide housing prices until a couple of years ago.

If you are a high-net-worth investor, a sovereign wealth fund, or a central bank, it makes perfect sense to hold a modest proportion of your portfolio in gold as a hedge against extreme events. But, despite gold’s heightened allure in the wake of an extraordinary run-up in its price, it remains a very risky bet for most of us.

*** end quote ***

A gold price of 10k$/oz has terrible implications for the American economy and the average American. It’ll freeze global commerce as the price of oil gets denominated in gold. Hope they’re wrong.

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GOLDBUG: The discipline of a commodity-based currency

Sunday, September 12, 2010

http://dailyreckoning.com/if-gold-were-money-again

*** begin quote ***

In his short but trenchant analysis in 1994 of fractional reserve banking, The Case Against the Fed, Murray Rothbard laid out another methodology for establishing an benchmark price of gold based upon liquidation value of the Federal Reserve. For perspective, in 1994 gold closed the year at $384/ounce, while the broadest measure of money having been printed in the United States (M3) stood at $4.4 trillion, or only 31 percent of its 2008 quantity. When he performed this exercise using the balance sheet of April 6, 1994, he calculated that shutting down the Federal Reserve and distributing gold bullion to its creditors would reset the dollar’s value to $ 1,555 per ounce.

*** end quote ***

If it were, we could be sure that the Gooferment was not plundering us by the invisible taxation of inflation. And, none of this deficit nonsense, if they want to spend it then we have to pay for it. Remember the Spanish American cell phone tax! At least, our forefathers had the stones to pay the bills for what they wanted done and not leave an I_O_China for our progeny to pay off.

Argh!

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GOLDBUG: Gold price predictions

Tuesday, August 24, 2010

From: reinke
Date: August 20, 2010 11:15:10 PM EDT
To:
Cc:
Subject: Re: CNNMoney – Gold is glittering again. But why?

I can give you my opinion why gold is “glittering”.

  • Tax law will change with respect to gold purchases on 1/1/2011
  • Taxes are going up dramatically in 2011; that will kill the economy. Look for 15-20% unemployment. (P.S., I think they are lying through their teeth about the unemployment rate. If you look at the unemployed, underemployed, discouraged — and even ignore the disgruntled, left the workforce, women becoming pregnant, “frozen in place” workers — I thin the current rate is in the 20’s NOW.)
  • Taxes are going to impact the profitable small businesses and kill the unprofitable or marginal ones in 2011.
  • Obamacare has frozen employers; they don’t know how much benefits are going to cost in 2011. (Insurance companies have jumped the gun and are preemptively raising rates. Small companies are figuring how to slim down under the size bar. Big companies, like ATT and Verizon, have put disclaimers in their financial reports about the benefit costs. Verizon is actually considering DROPPING benefits and pay the fine on the theory that it’s cheaper. I’m hearing rumors that large enterprises are considering how to reorganize their business units so that they would slip in under the bar. Think Comcast of South Brunswick with out sourcing contracts for all sorts of stuff and it’s a wholly owned by the stockholders who also own Comcast of North Brunswick, Comcast of Mt Holly, etc etc. Think Baby Bells and that’s the model. All to get under the size requirements.
  • Inflation is right now being artificially suppressed by the Federal Reserve printing press and they’re buying Treasury long bonds. At some point, this is going through the roof. (I’d suggest that 5-10% of EVERYONE’S portfolio should be in silver bullion coins kept in one’s basement.)

My prediction is: it depends totally on the 2010 election.

  • If it looks like the D’s are swept, things will continue in a Japanese style lost decades.
  • If it looks like the D’s are NOT going to be convincingly swept, this is going to get very ugly very fast.

Remember that the Great Depression was triggered by Smoot Hawley being passed and signed into law, it wasn’t due to go into effect for months. Now, the speed of dikw (i.e., data, information, knowledge, wisdom) flow is such that as soon as the “tipping point” is reached, the blood bath will ensue. It’ll make ’29 look tame.

In the hyperinflation scenario, I’d expect real interest rates to be double the Carter years’ 21%. I’d expect oil to be priced in gold rather quickly (i.e., remember it’s Sadam’s golden dinar exchange for Iraqi oil that got him in the USA dog house.) I’d expect food prices to quickly go up 50%. Business would lock up; Gooferment would be stalled.

The lack of funds to spend would quickly result in:

  • End of the Fed; replaced by some type of commodity money
  • Default on Gooferment debt; States’ debts; Social Security; Medicare; Medicaid
  • End of the drug war and begin to tax it.
  • End of the foreign military adventures and bring the troops home.
  • End of the “public education” of Dewey, Mann, and the teachers’ unions.

Any economic restart would probably be led by the oil producing states: alaska, texas, pennsylvania. And the breadbasket states: Kansas, California, Florida, Nebraska. To restart: Taxes would have to go down. Obamacare nuked. Flat or near flat tariffs and excise taxes. Corporate taxes to zero. Capital gains taxes to zero.

If it has to go worst case (i.e., the Gooferment doesn’t slim down to save itself in time), you might see secession. (Hey, worked for the USSR!) I’d look for Texas, Alaska, and Vermont to be first out. Followed quickly by: Hawaii; Montana / Idaho aka Jeffersonia; New Hampshire / Maine; and South Carolina. It would be politically very ugly. What does the District of Corruption do? Roll tanks into the secession states? Remember the American Revolution was fought by the 10% hot heads, where a third supported them, a third hated them staying loyal to England, and the other third could not have cared less.

Very ugly.

I predict in scenario #1 — D’s swept, gold goes to 2k by June of 2011 and in scenario #2 — D’s not swept, gold goes to 2k before the end of 2010.

Then, a similar “cliff” appears with the 2014 presidential. As long as the markets perceive BHO44 as a one termer, we get the calm lost decade scenario. If a reasonable R takes the lead — Ron Paul like fellow, calm. Even if there was a reasonable D, (although I can’t think of one who fill the bill), calm. HOWEVER, if it looks like BHO44 might be reelected, or Hillary, or any of the wackaloons, it’s “Katie Bar The Door” time again. Look for the markets to crash big time, as folks try and hit the exits at the same time.

In the calm lost decade scenario, I’d predict that gold would be at 3500$ in December of 2014. In the BHO44 reelected or any wackloon election, the “gold bugs” would be right and a 5000$ gold price would be well within reason. If you could buy ANY gold with dollars. (Think German WW1 hyperinflation or Zimbabwe!)

So, now you have my reasoning about gold. IMHO nothing but upside.

I’d try and be a little like a Mormon or the Amish. Beans, bandaids, and bullets. A year’s worth of food, sufficient medical supplies to minimize the trips to the drug store which won’t be open, and sufficient firepower to keep your beans. I’d put 10% of my capital in silver bullion 1 ounce rounds in a “basement”. And, watch very carefully how the winds blow.

imho,
tin foil hat fjohn

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On Aug 20, 2010, at 6:48 PM, XXXXXX wrote:

Sent from XXXXXX’s mobile device from http://money.cnn.com

Gold is glittering again. But why?

Night, night. Sleep tight. Don’t let the gold bugs bite.

# – # – #

Gold prices have come roaring back in the past few weeks and are once again getting close to hitting a new all-time high. Prices were down a bit Friday. But at about $1,230 an ounce, they are still up more than 5% in the past few weeks.

The yellow precious metal rose to an intra-day peak of about $1,265 an ounce back in mid-June — the height of the fears about the sovereign debt crisis facing Europe’s PIIGS.

So why is gold on the rise again? The move is a bit curious since gold is often viewed as a classic hedge against inflation because it’s a tangible asset, unlike a paper currency. But many market experts and economists seem to be more worried about deflation than inflation.

Still, gold prices aren’t always tied to inflation expectations. The price of gold often spikes at times of fear. And with more and more concerns about how the economic recovery in the United States is losing steam, investor nervousness appears to be the most likely reason for gold’s recent move higher.

“It’s the mirror image of what’s going on with stocks. The only thing that we’re certain of is uncertainty and gold benefits from that,” said Richard Ross, global technical strategist with Auerbach Grayson, a broker dealer in New York.

Gold is undoubtedly a momentum play. With compelling reasons to avoid stocks, fears that the Treasury market may be a bubble, and concerns about both the state of the dollar and euro, gold could keep climbing.

Brian Hicks, co-manager of the U.S. Global Investors Global Resources fund in San Antonio, said gold could hit $1,300 by the end of the year and $1,500 sometime in 2011.

Hicks said that even though it may seem counterintuitive for gold to do well when people are worried about deflation, he thinks that some longer-term investors are still concerned about the potential for inflation at some point down the road. And that could push gold higher.

“Gold has been resilient in the face of a lot of discussion about deflation. But people are also discussing what the possible cure for deflation will be,” Hicks said. “That could be an expansion of government deficits and excessive printing of money. That would debase the dollar and fuel eventual fears of inflation.”

Keith Springer, president of Capital Financial Advisory Services, in Sacramento, Calif., agreed. He said gold could spike to between $1,400 and $1,500 next year.

“Gold is acting like a third currency, a crisis currency. Right now, you can buy it for deflation or inflation fears,” he said.

But the recent gold rush may not be all about economic worries.

Ross said the run-up may also have been sparked by the fact that several well-known hedge fund managers, including John Paulson, Eric Mindich of Eton Capital, George Soros and David Einhorn, have disclosed investments in various gold-related assets, such as miners and exchange-traded funds tied to gold bullion.

“There’s a dream team of investors that appear to be backing gold,” Ross said.

But Ross warned that following the lead of the so-called smart money is risky. For one, it’s tough to know for certain how big a hedge fund’s positions are in gold since many funds often make quick moves in and out of investments.

Many hedge funds may also be making bets on both the long and short side of an asset. So it may be a mistake to look at a fund’s holdings and conclude that a manager is 100% bullish on gold.

Sure, gold may have momentum on its side for now.

“Investors are attracted to things that are working. An object in motion tends to stay in motion,” Ross said.

But investors in Internet stocks, real estate and oil have all learned the hard way that this is true for both directions. Springer noted that once the trend reverses, as he believes it inevitably will, gold could crash hard.

“It’s going to take a while but once the financial crisis is over, there will be no reason to own gold,” he said.

Reader comment of the week Merger activity is starting to heat up again, a trend I wrote about on Tuesday. I noted that the increase in deal making could be a bullish sign from corporations about the economy. But not everyone agreed that merger mania is a good thing.

“In my experience, mergers were really bad for jobs, but made the financial reports look great, even if the companies were totally inefficient and wasteful,” wrote Brad Fox. “Many times I have seen corporations brag about huge revenue increases, only to find out the growth was the result of mergers, not true growth. Magic with numbers.”

– The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney.com, La Monica does not own positions in any individual stocks.

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GOLDBUG: a store of value

Monday, July 19, 2010

http://economist.com/node/16536800

Gold
Store of value
Low returns on other investments and fears about the world economy have caused the price of gold to soar. Don’t count on its continued rise
Jul 8th 2010 | Delhi and london

*** begin quote ***

The appetite for gold arises partly from the paltry, uncertain returns from more conventional investments. Gold’s main drawback is that it pays neither a dividend, like a share, nor a coupon, like a bond, nor a rent, like property. But monetary policy has been keeping official interest rates, and thus the opportunity cost of holding gold, low and seems set to do so for a while. The yields on the government bonds investors regard as safest, notably America’s and Germany’s, are also thin. Equity markets are weighed down by worries about economic growth. Investing in property, which lay at the root of the financial crisis, requires a boldness that many still lack.

At the same time, the looseness of monetary policy has made many investors fear the eventual resurgence of inflation. The wretched state of many governments’ finances makes some worry about states’ ability to repay their debts—or about the temptation to inflate them away. Banks’ exposure to sovereign debt and to a still-fragile world economy adds another layer of concerns. And when all governments would like their currencies to be weaker rather than stronger, whose paper money do you trust? Hussein Allidina, head of commodities research at Morgan Stanley, reckons: “Gold looks better every day with growing sovereign risks.”

*** end quote ***

Over the past few years, the market’s net return has been zero or maybe negative depending upon the interval, so gold and siler look good.

Cheap insurance.

If inflation spikes, it’ll really pay off.

Depending upon what loon you listen to predicting the price of gold, it could be essential.

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GOLDBUG: Speculating about gold confiscation is asking the wrong question

Wednesday, July 7, 2010

http://www.silvermonthly.com/195/government-confiscation-gold-happened-beforecould-happen/

Government Confiscation of Gold: It Happened Before — Could It Happen Again?
by: J.D. Seagraves

*** begin quote ***

Although the U.S. dollar is constantly under pressure, the U.S. government continues to stockpile debt, and impossible-to-fulfill entitlement commitments loom on the horizon, the idea that the U.S. government would try to confiscate citizens’ gold today or anytime in the foreseeable future certainly seems spurious at best. After all, the government did so in the past in order to recalibrate the gold standard, which we have not been on since 1972.

However, our government has become increasingly bold in its refusal to be restrained by the Constitution, and following the return to limited government (at least in rhetoric) by the Reagan administration in the eighties, the Constitution has been all but ignored by subsequent administrations and congresses.

*** end quote ***

Sorry, but that is absolutely the wrong question.

Yes! With Gooferment debt as far as the eye can see. And “unfunded liabilities” that even scare politicians and bureaucrats abound. (Not for the reasons you think; they are worried how they are going to collect! Did you forget the three “laws” of policial behavior again? Remember the three “laws” of political motivation: (1) reward your friends; (2) punish your enemies; and (3) feather your own nest.)

So with this “crisis” looming, the popular tin foil hat worry is “gold confiscation”. Sorry, but that won’t help the politicians and bureaucrats through this crisis. Last time, it was easy and there was enough wealth that could be stolen to make it worth their while. This time, not as many people own gold, they don’t old anywhere near as much of it, those that do own gold also own guns, the population isn’t as docile and complaint as back then, and the We, The People are aroused and as irritable as a cranky tired child .

No, there will be no “FDR-style gold confiscation” because, pure and simple, it can’t give the politicians and bureaucrats enough wealth to pay their own pensions. Or, even allow them to buy enough votes to get reelected. That’s what the “crisis” is all about.

I think the correct question is “what WILL they seize that can end the crisis?”. That’s the question.

The only pot big enough is the 401k / IRA wealth save by Americans for their retirement and held by a small number of “custodians”. 13T$! Sticking there waiting to be stolen.

That will be their target.

Of course, it will have to be done: “to save the children”. In this case, it’ll be the “child-like investor” who will be deemed to need their “retirements” protected from the inability of Wall Street to be honest and to generate the returns necessary for a “safe and secure” retirement. And, of course, the “crisis”, the American version of the “Reichstag fire”, will be to “save Social Security, Medicare, and the Drug Benefit”. There have to be some “poor children” in there somewhere.

Think back when Bush supposedly wanted to “privatize” Social Security. (Like that was going to ever happen. It sent the message that “you victims have been getting screwed big time” and now were going to “allow you to be screwed a little less”. It said sotto voce that maybe you the individual didn’t need the wise old Gooferment to plan your retirement!) Remember how the politicians and bureaucrats screamed that the Stock Market was “unsafe”. (Yeah, like getting a negative 3 per cent return on your “Social Security” investment was safe. Or, that depending upon Gooferment not to change the rules on “Social Security” again. Remember it was never going to be taxable. It was never to be changed. It was the supposed “third rail” of politics. It was “retirement insurance”)

Get ready for a large dose of propaganda!

I suspect the argument will run concurrently along several lines: “Save Social Security for Future Generations”, “Save your Social Security from the Boomer shift”, “No Social Security for the Wealthy”, “IRAs and 401ks are not ‘safe’ in the Markets”, “It’s not fair to poor people who couldn’t save”, and “The Gooferment gave you a tax break so some or all of it is theirs”. Argh!

When the Gooferment first created IRAs in my early days, I didn’t go into one because I was concerned about them changing the rules on them. If we had blogs back then, I’d have ranted about them. Eventually my then accountant, (I’ve gone through several since then), convinced me to “take the tax deduction”. It meant I paid less taxes out of my own pocket and had this pot of money, that I couldn’t touch until I was old, over on the side. Eventually, I thought this was how they were going to get out of the Social Security “problem”. (Little did I know then!) But I was concerned then about taxablity. I suspected that they end the program at a “bad time” (i.e., for the Gooferment; when they needed the money), make it all taxable right there and then, and I’d be stuck for an even bigger bill. Argh!

SO! Short story, long! No gold confiscation. IRA / 401k confiscation.

It’s easy. Only have to “rob” a few thousand “custodians” who are mostly big banks and brokerages that are already under the Gooferment’s thumb.

It’s “enough”. 13T$ will allow the Gooferment to keep on spending.

It’s “politcally feasible”. Propagandize the Sheeple. Promise them “enhanced Social Security”. (With interest rates at below 1%, how much cash flow would you have to pay on 13T$? Think lie they are taking out fixed rate mortgage and you’re stuck with the paltry returns. No adjustments. Argh!)

That’s the question.

And so what are you going to do about it.

Sheeple!

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GOLDBUG: Time to return to Constitutional money

Sunday, July 4, 2010

http://www.commodityonline.com/futures-trading/technical/Can-gold-be-valued-in-currency-or-is-itself-money-16935.html

Can gold be valued in currency or is itself money?
Published on June 21, 2010 14:45:00 IST

*** begin quote ***

My suggestion to Ron Paul and all those wanting to return to gold, is the best way to accomplish this is not by proclaiming your determination to replace the Federal Reserve Board with the gold standard, but to attack the legal tender laws of this country.

*** and ***

The key is to go after the governments monopoly on money. If broken, gold will find it’s way into the monetary system, as it is today, and reclaim it’s superior role as long as it is not prevented from doing so. Legal tender laws do just that. They prevent choice.

*** and ***

If governments fail to get their fiscal houses in order there is no telling what the future will bring. Gold offers some semblance of security. Among other things, it is a hedge against stupidity. Given the almost criminally reckless fiscal policies of government, who in his right mind would not want to protect himself. And if a currency crisis occurs, who would believe the promises of a new government paper currency in light of the broken promises of governments everywhere. Gold is not a promise that can be broken, and therein lies its present appeal.

*** and ***

To all the pundits that believe a gold standard is impractical, I suggest they look at the present fiat system and then judge it against the hundred years of monetary stability we enjoyed in years past under the gold standard. Then talk to me about which system is practical and which system is not.

*** end quote ***

The Dead Old White Guys had just experience the inflation of paper money. They saw first hand how it let the Gooferment buy more than it had without any check or balance.

By the creation of the Federal Reserve Bank —

(which: ain’t “federal”; it’s a private cartel of banks; ain’t a “reserve” of anything; it’s ious with the taxpayer being the ower; and ain’t a bank; it’s a price fixing machine that makes the bankers rich and the politicians with an unending supply of spendable “money”.)

— they have made the Dead Old White Guys’ worst nightmare true. Unchecked gooferment.

Argh!

Time to roll back “progress” and go back to gold.

As a check on gooferment spending. ANY gooferment!

How can we be “independent” without honest money?!

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GOLDBUG: A buying opportunity

Friday, July 2, 2010

Like the guy on the TV says: “Wealth Protection”. Gold has never been worth zero. Unlike the Zimbabwe dollar, the German pre-WW2 Mark, and countless other fiat currency (i.e., printing press printed paper that is only “money” because guys with guns say it is). Even the most wildly bullish tout like Kudlow, and “the every feeling is expressed” Orman, wouldn’t argue with 5 to 10% in gold. Due to the “interesting” numbers in the CFTC, the number of contracts outstanding, and the various derivatives around commodities, I’d suggest that bullion coins from a low cost / low overhead reputable dealer is the best way to have that investment. Call it Gooferment Insurance. I’d further suggest that you want “good delivery” where they put the coins in your hot little hands. Then you can put them in an interesting place (e.g., curtain rods; taped to the hidden in the wall side of your medicine chest, or (my personal favorite) inside some furniture that ain’t easy to move like a grandfather’s clock. (No fire risk. Gold doesn’t burn. Like paper money.) I don’t recommend burial because you, or your heirs, will forget where you stashed them. (And, for my fellow tin foil hats, the gooferment has ground penetrating radar.) :-) And, please, don’t even consider “numismatic coins” from ANYONE. (Overpriced misgraded and in some cases fakes and frauds. And, the Gooferment will seize them as quick as anything else if they’re desperate enough.) Remember FDR broke into bank vaults during the “bank holiday” for folks’ gold stashes.

imho ymmv faiwwypfi tanstafl!

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From: APMEX News <news@apmex.com>
Date: July 1, 2010 6:28:53 PM EDT
To: @reinke.cc
Subject: APMEX – Gold Now Below $1,200 Per Ounce

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GOLDBUG: In your back yard; not your IRA or 401k

Tuesday, June 8, 2010

http://dumpdc.wordpress.com/2010/05/30/put-gold-and-silver-in-your-ira-or-401k/

Put Gold and Silver In Your IRA or 401k

*** begin quote ***

“It’s called the American Dream because you have to be asleep to believe it.” George Carlin

In my opinion, any consideration about investment income right now is a big mistake. Your NUMBER ONE CONCERN should be protecting the purchasing power of your money.

Buy gold and silver coins and keep them in a safe at your home. Then, with your retirement accounts, transfer your positions in money markets, bonds, mutual funds and stocks into gold and silver.

*** end quote ***

I’m not sure how viable IRAs and 401ks are in the scenario where gold and silver makes sense. The politicians can “seize” the accounts via the “custodians” and you are screwed. You know that in a hyperinflation scenario that the gooferment will be desperate for funding. In even a moderate inflation, a la Carter of the 80’s, the metal in your IRA won’t help you. And, you must always remember the FDR seizure of gold.

I think 5-15% metal holding is appropriate in today’s economic climate.

BUT, BUTT (there’s always a big but), that metal is in one ounce rounds in your physical possession.

Despite Milton Freedman’s “People must work hard to dig gold out of the ground in South Africa – in order to rebury it in Fort Knox or some similar place.”, better buried in your back yard than in OHB44’s spending plan.

imho!

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GOLDBUG: Just because there’s an obvious bias, doesn’t mean what being said is wrong

Tuesday, May 18, 2010

http://www.kitco.com/ind/GoldReport/may32010.html

*** begin quote ***

In terms of preserving the purchasing power of your assets, the best thing I can think of is physical gold. That’s worked over the millennia. I’m not per se a gold bug. It just happens to be a circumstance in which it’s the cleanest asset around for that. You don’t need to put all your assets into gold, but hold some. Hold some silver. I’d look to get some assets out of the U.S. dollar and look to get some assets out of the U.S. When I say outside of the U.S. dollar, again, I look at the Canadian dollar, Australian dollar, Swiss franc in particular. I think they will tend to do particularly well, whereas the U.S. dollar is going to become effectively worthless.

As the dollar breaks down, you’ll also likely see disruptions in supply chains, including shipments of food to grocery stores. People should consider maintaining stockpiles of basic goods needed for living, much as they would for a natural disaster. I sit on the Hayward fault in California. I have a supply of goods and basic necessities in case something terrible happens—natural or man-made—that will carry me for a couple of months. It may take that long for a barter system to evolve, which I think is what you’re going to end up with; at least until a new currency system is reorganized and you get a government that’s able to bring its fiscal house into order. No currency system in the U.S. is going to work unless the fiscal conditions that drove it into oblivion are also addressed.

*** end quote ***

Ignoring for the moment Kitco’s inherent bias, (just because they’re biased, doesn’t mean they are wrong), it would seem that buying 1,000 ounces of silver rounds (about 19K$) is good “inflation insurance”. Remember Zimbabwe used silver, gold, and American dollars when their currency collapsed. A lesson form the Mormons about food storage; it’s be nice to keep a year’s worth. And, an urban yute discouragement device or two with a sufficient of individual reminders to go away, and you have a nice “insurance police” in case crazy as a loon Ferd is right once in his life. Remember forewarned is fore armed. Or, four armed. As I see it, fjohn

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GOLDBUG: But who owns it?

Monday, March 29, 2010

http://moneywatch.bnet.com/economic-news/article/is-there-gold-in-fort-knox/385523/

Is There Gold in Fort Knox?
by Constance Gustke
Jan 20, 2010

*** begin quote ***

The reason Fort Knox will remain a mighty fortress, however, may come down to something Alan Greenspan once told Paul. When Paul asked the former Fed Chairman why the Fed hangs onto its hefty gold reserves, “Greenspan said ‘just in case we need it,’” says Paul. “You hold onto it because it’s the ultimate in money.”

*** end quote ***

Yes, we should know what’s there. Otherwise, why are we paying to guard it? And, maybe we should be selling it to reduce the National Debt. Along with selling other things.

Do you think any one would buy Congress?

(That’s a trick question. We all know it’s bought and paid for already.)

More importantly, even if there’s gold in Fort Know, and possession is nine tenths, is it “ours”? Or has it been sold or mortgaged already?

We should know.

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GOLDBUG: Implication in gas

Sunday, November 22, 2009

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100002059/is-6300-fair-value-for-gold/

Is $6,300 fair value for gold?
By Ambrose Evans-Pritchard Economics Last updated: November 19th, 2009

*** begin quote ***

He sees an eery similarity between the decision of India’s central bank to buy half the IMF’s entire sale of gold, and the move by France’s central bank to start converting dollars into gold in 1965 — which was, of course, the start of the slippery slope leading to the collapse of Bretton Woods and the closure of the US gold window under Nixon.

In the gold mania that followed, the price rose to levels that matched the US dollar monetary base (it reached 140pc at the peak). If that were to occur today after Ben Bernanke’s go at the printing press, gold would have to reach $6,300 an ounce. The US owns 263m ounces of gold while the Fed’s monetary base is $1.7 trillion. Simple equation.

*** end quote ***

Wow!

This portends a very difficult time for the USA.

Gas = 3 $ / gallon ~ 0.0026 oz gold @ 1,150 $ / oz

0.0026 oz * 6,300 $ / oz = Gas 16.43 $ / gallon

At 16.43 $ / gallon, the economy stops. (Pundits have said the stop point is less than $10 / gallon.)

Argh!

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GOLDBUG: Why gold?

Monday, November 9, 2009

http://www.321gold.com/editorials/casey/casey110509.html

Why Gold Has a LONG Way to Go
Jeff Clark
Casey’s Gold & Resource Report
Nov 5, 2009

*** begin quote ***

Now ask yourself the same thing: how many of your family, friends, neighbors, and co-workers are buying gold and silver coins? Are any of them giving you hot stock tips about a fantastic gold producer, or telling you about the latest gold discovery made by a company in China? Have any fellow investors told you they’re dumping their brokers because they can select gold stocks better on their own? Anyone telling you they’re going to night school to learn the gold mining business?

*** end quote ***

Gold is the money of a thousand years. With the Gooferment spending us into oblivion, how else does one preserve wealth? And, after the “inflation tax” and “inheritance tax”, what’s left?

Argh!

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GOLDBUG: Never ask a gold bug for comments!

Wednesday, October 21, 2009

http://tslrf.blogspot.com/2009/10/buying-gold.html

Friday, October 16, 2009

Buying Gold?

*** begin quote ***

We may or may not face serious inflation but I would like to hold as much gold as possible either way. It might cost me a couple bucks more for the same thing but worst cast I will just laugh about that when I buy for less in a few months.

Thoughts?

*** end quote ***

Gold — bullion; not “collectibles” — currently has a 10% premium. Silver seems to be about 12%. (Palladium is an “interesting” play; rarer than platinum, but priced 60% below gold?) Unfortunately, that’s a lot of “commission” to pay. (A loan shark’s vig?) In the past it was as low as 2%. A mutual fund with a 10% load would be found unacceptable; why should we treat bullion any different. Hold it for 10 years and it doesn’t feel as bad.

The other consideration is what are your protecting against. In an “orderly” inflation scenario, other investments may “surf” the riding tide of inflation (i.e., real estate; stocks). In a “disorderly” inflation scenario (e.g., hyperinflation like Rwanda or pre-WW2 Germany), then you want the bullion coins in your possession. (Or, where you can get to them in a pinch.)

Bottom line: In hyperinflation, bullion coins will overcome the premium in a heartbeat. But what’s the probability of it happening? Tough call.

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GOLDBUG: Myths, Misunderstandings, and Outright Lies

Tuesday, July 21, 2009

http://www.cmi-gold-silver.com/gold-confiscation-1933.html

Myths, Misunderstandings, and Outright Lies

# – # – #

Well worth reading BEFORE buying or selling anything gold, silver, or other “valuable stuff”.

As a veteran “gold bug”, I knew this stuff, but it’s well written refresher.

It’s long, but let me summarize: If you see it on TV or hear it on radio, be afraid. Be very afraid!

If Wall Street is a casino, then a lot of the gold dealers are just fraudsters.

Fore warned is fore armed.

Now can I interest you in Nigerian Gold Shares?

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GOLDBUG: 5k$ gold?

Tuesday, July 14, 2009

http://www.bi-me.com/main.php?id=38821&t=1&c=62&cg=4&mset=

Gold is ultimate store of value for a discredited dollar, says Peter Schiff
Author: BI-ME staff
Source: BI-ME
Published: Fri July 10, 2009 4:12 pm

*** begin quote ***

INTERNATIONAL. Renowned Wall Street financial forecaster and economist Peter Schiff, the president of investment firm Euro Pacific Capital and author of ‘Bull Moves in Bear Markets’ said gold prices are poised for a “spectacular” and prolonged rally as the recession deepens and investors finally become disillusioned with the US dollar.

Schiff, who warned of the October 2008 stock market crash and accompanying recession as far back as 2006, has predicted a gold price of US$2,000, and rising as high as US$5,000 as inflation takes hold.

Speaking at a recent interview with Business News Wire, Schiff suggests that the looming prospect of a hyper-inflationary environment in the US will severely debase the US Dollar over the next few years.

“The global investment community will realise that gold represents the ultimate “store of value” as a safe haven replacement for a discredited dollar,” Schiff said.

*** and ***

“The only solution to the economic problems that we have today is a return to sound money… The world is ultimately going to have to move away from the ‘Dollar Standard’ and back their currencies with something real. I think gold is the best thing to use. Gold has been money for 5,000 years,” he said.

“One of the reasons that gold isn’t stronger is because of this temporary strength of the dollar. This is keeping the gold market in check. And the dollar is getting some of the safe haven money that should be going into gold,” Schiff added.

“At some point that will stop. The people who are buying dollars will realize that there’s no safety in dollars. Because the central banks are going to try to pay for the economic bailouts and stimuli by looting the world’s savings and by printing money and debasing it.”

“So, if you want to escape that, you hold gold, which is something that the government cannot debase,” he concludes.

*** end quote ***

Music to a Gold Bug’s ears.

The implication of 5k$ gold is that inflation as measured in dollars is 400%. That translates to a gallon of gas is $16, a package of hot dogs is $10, and a six pack of cheap beer is $20! Makes Frau’s social security check and my pension a lot lot smaller!

On the positive side, it makes it much easier to pay off the 11T$ “national debt”. But, how do you think the Chinese will feel holding 5T$ of diminished purchasing power? Not too happy!

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MONEY: Don’t mess with Uncle Sugar’s monopoly

Monday, June 15, 2009

http://www.wired.com/threatlevel/2009/06/e-gold/

Threat Level Privacy, Crime and Security Online
Bullion and Bandits: The Improbable Rise and Fall of E-Gold
    * By Kim Zetter Email Author
    * June 9, 2009

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Jackson has finally registered E-Gold with FinCEN, and has begun applying to states for money transmitting licenses. The company is also blocking people who appear on the Treasury Department’s list of Specially Designated Nationals and plans to follow bank procedures for verifying customer income and sources of transmitted funds. There are other plans in works to clean up the system as well.

*** end quote ***

Read this with an eye towards why this fool was targeted.

Think they care about catch bad guys?

Or, could it be that he was undermining their monopoly over “money”.

That stuff they laughable call “money” … Federal Reserve Banknotes.

Paper!

Fiat trash.

No, he was giving people an easy and cheap way to store value.

That couldn’t be “taxed” by inflation.

Imagine how much better the Chinese would be if they had 5T$ of gold as opposed to Uncle Sugar’s little green pieces of paper.

No, anyone who messes with that monopoly, will bring the goons out in force.

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GOLDBUG: 10K Gold?

Wednesday, April 29, 2009

http://www.garynorth.com/public/4857.cfm

Why Gold Owners Are Targets of the Government
Gary North

*** end quote ***

At some point, the number of investors who figure out that they had better buy gold is going to go from less than 1% of the public to 5%. When that happens, the supply of gold will not increase, and the price of gold will skyrocket. If as many as 10% of the investing public tries to put 10% of their assets in gold, I suspect the price of gold would go to $10,000 an ounce. The gold market is so marginal in the overall commodities market that the attempted 10% of investors to increase their holdings of gold to 10% of their assets would make today’s holders of gold very rich and very happy. I think at some point this is going to happen, but I think it is going to happen in a time of price inflation so bad that the purchasing power of the currencies will decline so fast and so far that the fact that you can get rich in fiat money by selling your gold will not persuade you to sell your gold.

*** end quote ***

Like musical chairs, when the music stops, will you be left with worthless paper?

OH, I forgot, it can’t happen here!

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GOLDBUG: What is a dollar?

Tuesday, March 24, 2009

http://www.lewrockwell.com/murphy/murphy152.html

Defend the Gold Standard
by Bob Murphy

*** begin quote ***

I don’t trust central bankers to stick to a gold standard; that’s why I think the government should get out of the money industry altogether. Suppose we were starting in an initial state of pure laissez-faire in money and banking, and someone said, “Hey I know! Let’s give this Princeton professor – what was your name, sir, was it Ben? – a printing press, but be very stern that he can’t overdo it and allow the gold price to rise more than 1 percent from the day he starts. Does that sound like a good idea?” In response, I would obviously say, “No, that seems rather risky. I think we should stick to the current system, where the market determines how much new money is brought into the economy through gold production.”

*** end quote ***

We fall prey to these bozo bureaucrats when we let them mess with the money supply.

If we tie the value of a dollar to gold, then the Fed can’t just manufacture dollars out of thin air. And, congress critters can’t spend what they don’t take it.

It restores honesty to finances. It disciplines them into husbandry. It forces them to live with in OUR means.

After all in fiat currency, what is a dollar?

A toilet paper alternative?

Argh!

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GOLDBUG: Can we EVER get back to “honest money”?

Thursday, February 19, 2009

http://news.goldseek.com/JamesTurk/1232989200.php

Restoring Sound Money in America
By: James Turk, Founder & Chairman of GoldMoney.com
— Posted Monday, 26 January 2009 | Digg This ArticleDigg It! | Source: GoldSeek.com

*** begin quote ***

There is a determined grassroots movement in the United States seeking the restoration of sound money. There are many different groups comprising this movement, but all share the same aim. It is to restore gold and silver to its rightful role as the money of the United States, as mandated by the Constitution.

I have written about this movement before. In “The Quest for Sound Money in New Hampshire” in May 2005 I discussed the bill, called the “New Hampshire Sound Money Bill”, that was drafted by Constitutional scholar and lawyer, Dr. Edwin Vieira. It was presented to the New Hampshire legislature, but sadly, remains pending in committee.

If enacted, the bill will enable people to use gold and silver in their transactions with the state of New Hampshire. An article by me discussing this bill, the aims of its several sponsors and some important background information on the monetary provisions of the Constitution can be found at the following link: http://www.goldmoneybill.org/turk.html

*** end quote ***

Sad to say, imho, not without a revolution.

When the people realize that gooferment is funded with inflation of fiat dollars, then they might wise up.

Saving in gold ounces is one option still open to the average bloke.

Buy one or more gold coins from a “paperless source” and bury it in your backyard.

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GOLD: Demonstrating the eternal value of commodity money

Tuesday, December 30, 2008

http://news.bbc.co.uk/2/hi/middle_east/7797977.stm

*** begin quote ***

An amateur British archaeologist has discovered almost 300 gold coins dating from the 7th Century at a dig just outside Jerusalem’s Old City.

*** end quote ***

Wonder how much a paper IOU from the then Byzantine Emperor Heraclius would be worth today?

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GOLDBUG: More paper money; higher gold values?

Saturday, October 11, 2008

http://www.lewrockwell.com/rozeff/rozeff228.html

Gold, the Dollar, and the Dollar Index
by Michael S. Rozeff

*** begin quote ***

Since 2001, gold has risen as the dollar index has fallen, but it has risen more sharply because the other currencies have also fallen in terms of gold. This appreciation in gold coincides with a world-wide inflation of paper currencies. Gold caught up to the inflation, so to speak. As long as these central bank currencies continue to be manufactured without solid backing, either gold or tax revenues, gold will continue to have a long-term upward trend. The volatility in gold prices will, in all likelihood, also continue, and that makes it hard to forecast the shorter-term movements with a factor like money supply. Note that the big increases of recent days have not pushed gold to new highs. In the longer run, however, we can be quite sure that gold will move higher if nothing is done to improve the backing of the world’s central bank currencies.

*** end quote ***

Seems obvious to me.

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GOLD: Derivative risk

Wednesday, October 8, 2008

http://www.survivalblog.com/2008/10/jims_quote_of_the_day_971.html

*** begin quote ***

Jim’s Quote of the Day:

“There is no counter-party risk — when you are holding Krugerrands.”

– SurvivalBlog Reader Rob C.

*** end quote ***

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GOLDBUG: The Federal Reserve allows Congress to borrow and spend!

Thursday, September 25, 2008

http://www.bobbrinker.com/

On Sunday, I heard a caller call into Bob Brinker and point out Ron Paul’s call for the end of the Federal Reserve. Bob went off the deep end on the fellow. The fellow’s point was that Ron Paul had been right on predicting the trouble coming with all these bail out issues.

Bob misstated Ron Paul’s remedy as “Abolish the Fed and return the control of money to the Congress.”

I agree that, if that was what Ron Paul advocated, it would be a terrible idea.

What Ron Paul did advocate was not that but:

http://www.lewrockwell.com/paul/paul53.html

*** begin quote ***

In fact, Congress’ constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation’s founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy.

*** end quote ***

So, what Ron Paul advocated was a return to the Constitutional definition of money as gold.

But, no one follows the Constitution anymore.

Sigh!

Sorry, Bob, have to disagree with you on this one.

*** begin quote ***

I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans’ standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.

*** end quote ***

The lack of any competition in the definition of “money” allows the “Sovereign” to adulterate the money supply without the bother of clipping coins, adding base metals to gold coins, or redefining the unit of account. Commodity money prevents the welfare / warfare state from writing itself a blank check. The politicians love the current system just fine. It’s the ordinary working stiff, pensioner, or other non-elite person who pays for their excess.

Wrong, Bob!

Repeal the legal tender laws and watch the free market take off as politicians have to justify the tax burden. It would be the end of their Ponzi schemes. Want to pass a perscription drug benefit, great! Where’s the money for it? Want to wage war in foreign lands, fine! Where’s the money for it?

You want accountability in Congress? Take away their “blank checkbook” given to them by the Federal Reserve!

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GOLDBUG: Gene Epstein on Gold, the Fed, and Money

Sunday, June 8, 2008

http://www.econtalk.org/archives/2008/06/gene_epstein_on.html

Gene Epstein on Gold, the Fed, and Money
June 02, 2008, Featuring Gene Epstein

Gene Epstein, Barron’s economics editor, talks to EconTalk host Russ Roberts about the virtues of the gold standard relative to fiat money. Epstein argues that privately issued money, backed by gold, would lead to an economy with much greater price stability and fewer and milder recessions.

# – # – #

Casualties under a gold standard:

* Federal Spending (“Teenager model”)

* Spending upon dubious things

* “Deficits don’t matter” “Guns and Butter both”

* Monetize the debt; index to inflation

* Unfunded liabilities

* Gooferment can fight wars

* Gooferment can make promises

* Foreign entities buy Federal debt giving them a lever politically

* Banks protected by Gooferment; a cartel

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GOLDBUG: A day that will live on in infamy!

Friday, April 4, 2008

“I, as President do declare that the national emergency still exists; that the continued private hoarding of gold and silver by subjects of the United States poses a grave threat to peace, equal justice, and well-being of the United States; and that appropriate measures must be taken immediately to protect the interest of our people. Therefore, pursuant to the above authority, I hereby proclaim that such gold and silver holdings are prohibited, and that all such coin, bullion or other possessions of gold and silver be tendered within fourteen days to agents of the Government of the United States for compensation at the official price, in the legal tender of the Government. All safe deposit boxes in banks or financial institutions have been sealed pending action in the due course of the law. All sales or purchases or movements of such gold and silver within the borders of the Untied States and its territories, and all foreign exchange transactions or movements of such metals across the border are hereby prohibited…”

– Proclamation by President Franklin D. Roosevelt, April 5, 1933

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GOLDBUG: Why buy and hold gold?

Tuesday, February 26, 2008

In one of our semi-regular meetings of the old foggies’ society, I was trying to defend my love of the shiney metal to Luddite and Frau Reinke. Luddite’s wife stayed out of the fray; she’s the strong silent type. You know! The type that hangs back, listens carefully, and then forms her own opinion.

So why gold?

(1) It’s the only currently available “store of value”. Remember the dismal science’s (Economics) formulation of “money”? The first one was store of value that didn’t rot, erode, or get eaten by rats. Today’s fiat currencies are eaten by the gooferment rats.

(2) It’s not subject to the gooferment’s inflation tax. If you think about it, the gooferment funds its current version of guns and butter by debt to the Chinese, inflating / printing money, and taxes. If there was only a hundred dollars, and the gooferment prints five more, then you could understand that your dollar was worth less. The market place quickly adjusts prices to reflect reality. (In actuality, when more “money” is availble to pay for something, the price will rise due to the action of competing interests.

(3) It’s really an “off the books” investment. While it doesn’t throw off interest, what do you call the increase in purchasing power due to inflation?

[As an aside, you really have to laugh when the gooferment charges you a “capital gains tax” on the inflated value of an asset. If inflation is, for example, 5%. (Some commentators guesstimate it is as high as 18%!) So you buy a hundred dollar stock, in a year it goes up $5 and you cash out. Of your 5$ gain, 15% is paid in tax to the federal gooferment — 75 cents.  And the kicker is that your 105$ is really — if inflation is 12% — only worth 92.5 as measured in the prior year dollars. It compounds annually. Do you really think that a Kendall Park NJ house that was 12k new in 1950 is magically worth 330k in 2007? What did they use golden nails? No the dollars are depreciating and all things held in non-dollars are being repriced to reflect reality.]

(4) There are some interesting  nuances in holding American Gold Eagle, which are produced by the gooferment (i.e., the Treasury Department’s Mint), and are asserted to be dominated in dollars. The one ounce gold American Eagle is stamped 50 “dollars”. AND, it is really worth ~940 “dollars” in Federal Reserve Notes. (There’s a recent tax case where the employer declared his employees earnings in “dollars” as represented on the Eagles he gave them. Everyone paid less taxes.)  Does my estate executor report any coins I don’t give away to my heirs prior to my death in the metal value OR the “face” value.

<< IMHO — this bears on gift taxes, inheritence taxes, and anything where one has to report value.>>>

(5) When one wants to give a gift, you are limited to 12k without reporting it to the gooferment. So, if I give Eagles at face value, that’s 240 ounces. Or,  ~225k$ in Federal Reserve Bank Notes (Those funny green peices of paper).

(6) When one is at the end of one’s life, and the death taxes are facing you, you give a few coins to each visitor. No tax due!

In short, I think you have to think about gold differently.

Now Luddite brought up that in TEOTWAWKI (The End Of The World As We Know It) scenario, gold will be useless.

I disagree. You will be able to trade gold for stuff. You’ll need tools to keep what you have (like a gun). But, gold has a demonstrated history of being the “money of last resort”. In turbulent times, gold is highly valued.  His argument was that an ounce of gold was too much to pay for a loaf of bread. (Depends upon how hungry you are.) But Eagles come in different weights half, quarter, and tenths of an ounce. So just as today, you’ll need “change”. (Try buying a loaf of bread with a hundred dollar bill!)

I don’t give much credence to the TEOTWAWKI  scenario that trading gold for stuff will be difficult. I think that is the low probablility scenario. But gold does have value as part of portfolio and financial plan. (The coins; not gold stocks,  not gold IRAS,  not any kind of paper representing gold!)

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