Do not be distracted by headlines touting Gold’s “record high” (closed today at $1054.80). George Washington (of Washington’s Blog) prudently notes that gold’s nominal high is not quite one-half of it’s inflation adjusted all-time high, and cautions a reversal if the USD strengthens.
So, will the dollar strengthen? I find this implausible, to say the least (likewise, GW suggests “the dollar will get creamed in the long-run”). I hate to be the bearer of bad news, but this means things might get worse. Way worse.
Far more important that the elementary observation of a “high” price, is determining why the price is high. Some analysts now are saying that the nominal increase in the price of gold is due only to a “weak dollar”. Weak currency = lower purchasing power = higher nominal prices. D’uh!
Presently, the dollar is weak because of crazy amounts of inflation and debt being piled up in attempt to sustain the musical-chairs of perpetually rising prices (often misinterpreted as indicators of economic well-being) which phenomenon was itself brought into existence principally by monetary expansion at the hands of the Federal Reserve. Recently, the Fed announced plans to absorb another $1.25 Trillion in (probably toxic) mortgage-backed securities.
When gold was at its all-time high, the eventual “strengthening” of the USD was brought about by prime rates in the neighborhood of 15%. They got away with it in the early 1980s, but I do not believe that policy makers have the stones to pull out those sort of stops today.
The economy is not recovering. Unemployment is 10%+ right now. Baby boomers are staring at an extra decade of nine-to-five since their retirement plans got the FUBAR treatment last year. Businesses aren’t hiring, they aren’t developing and they’re not investing; they’re hunkering down and trying to lean it out. Meanwhile, people are being tossed out of their homes because they can’t make the ARM payment.
Now imagine three times worse than that: Soup lines. Hoover blankets. Mortgages at 15% and 20% car notes. One-in-four Americans out of work. Would the people tolerate this? I hope they would not—you couldn’t lead lambs to this sort of slaughter.
So, you can’t but the brakes on it. But you can’t keep it going, either, without ultimately finding yourself neck-deep in hyperinflation, Zimbabwe style. The alternative is to try and avoid a total financial SHTF and economic collapse, by engineering instead a sustained period of economic stagnation, a long and painful restructuring.
Pick your poison.
This is the frog in the boiling water thing.
The temperature is slowly increasing and everybody is aware but nobody knows what to do or does not feel complelled to do anything until they cross that uncomfortable line in the sand.
What will that uncomfortable line be?
It could be employment loss, it could be mortgage foreiture, it could be a major health issue, or all of the above.
After the crossing of that uncomfortable line the threshold of rage looms large.
This thing can draw out for a long time, maybe years, maybe even a decade.
But we all know what the eventuality is, but we all hope *something* will avert it, something will save the day.
What could that something be?
We have never been this far down this road before and we know not where it leads.
Uncharted territory.
When Lewis and Clark set out on their uncharted journey each of their members were individualists, survivorists capable of taking care of themselves.
But today a majority of americans have been bred to loathe such a thing as individualism and are nothing more than obscenely obese herd members at open graze incapable of stringing two or more thoughts or concepts together.
What will happen to these people?
How many of the people reading this are these people?
Or are you an individualist?
These are drastic questions brought on by drastic actions by a heinous gov't empowered by retarded herd members.
Your enemies are all around you, ready to rat you out in a second and they are disguised as everyday people.
I'm almost done with the "End The Fed" book by RP and he has found a way to blow my mind once again.
I wonder if this is why I see all those Cash4Gold commercials now as the people running those companies are more than willing to give away USD for gold that will be worth more in a matter of weeks or days.
From what I know, their bid prices are well under spot. I wouldn't be surprised if they had a 50% markdown, so if you give them 1 ounce of gold, they'll give you $500. If you're a rube, you think "Hey, I just got $500 for my old nike swoosh earring!" and all is well.
I think what's more likely is this: they're cashing in on stupid people who have no idea what gold was selling for yesterday (or last year). More precisely, they're using the news reports of gold's upward trend to position their commercials as a "This is the best opportunity to sell your gold, ever!"
Remember, balance in all things.
You can't eat gold.
What if a loaf of bread costs $4000.00, in gold, how long will your gold allow you to survive.
You can live without gold, if you have food (and water).
Thats why I've been telling everybody, grow food and buy lots of ammo.
It took 200+ years to get to this point, it might 200+ years to get back.
Right now I'm developing a system to filter water without commercial filters.
Its a gravity based system that uses common disposable rope as the filter.
Been thinking about this for 20 years and now is the time to make it happen.