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Gold Backwardation-The Meltdown of All Meltdowns-Karen Hudes
USAwatchdog ^ | 09/18/2013 | Greg Hunter

Posted on 09/18/2013 11:53:51 AM PDT by Rusty0604

Former World Bank Senior Counsel Karen Hudes says, “It’s pretty clear where we’re headed, and that is something called permanent gold backwardation. That’s a fancy word for people losing confidence in paper currency.

Hudes says even though the credit ratings agencies rate U.S. debt high, they know just the opposite is true. Hudes contends, “This is actually an underhanded move because they know the U.S. dollar is going to lose its status as an international currency.” What would that look like to the man on the street? Hudes predicts, “Prices would change on a daily basis. They would double. The number of families that would be employed would be in the minority . . . there would be lawlessness.”

(Excerpt) Read more at usawatchdog.com ...


TOPICS: Business/Economy
KEYWORDS:

1 posted on 09/18/2013 11:53:51 AM PDT by Rusty0604
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To: Rusty0604

At least we would have a Black President! One must always look on the bright side.


2 posted on 09/18/2013 11:57:00 AM PDT by AEMILIUS PAULUS (It is a shame that when these people give a riot)
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To: Rusty0604

And my urban relatives want to know why I own gold silver and lead.


3 posted on 09/18/2013 12:00:18 PM PDT by muir_redwoods (Don't fire until you see the blue of their helmets)
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To: Rusty0604
The number of families that would be employed would be in the minority . . . there would be lawlessness

Sounds like many Lib cities today ...

4 posted on 09/18/2013 12:20:16 PM PDT by 11th_VA (I want a president who won't enforce tax laws ...)
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To: Rusty0604
Prices would change on a daily basis. They would double. The number of families that would be employed would be in the minority . . . there would be lawlessness.

Representatives of the Democratic [sic] party would dance in the streets.

5 posted on 09/18/2013 12:20:51 PM PDT by Standing Wolf (No tyrant should ever be allowed to die of natural causes.)
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To: Standing Wolf

Yep, mission accomplished for the Dems.


6 posted on 09/18/2013 12:22:06 PM PDT by Rusty0604
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To: Rusty0604

7 posted on 09/18/2013 12:22:22 PM PDT by BenLurkin (This is not a statement of fact. It is either opinion or satire; or both.)
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To: BenLurkin

Silver up too!


8 posted on 09/18/2013 12:23:15 PM PDT by Rusty0604
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To: Rusty0604

Not buying this.

The federal deficit dropped by 350 billion this year to 650 billion from over 1 trillion.

As well the trade deficit is shrinking because the USA is fracking its way to oil independence at the rate of 1 million barrels a day annually for the last three years. Estimates are that this increase will continue for at least the next 5 years.

The dollar has been trending up for the last three years. If the fed stopped printing money — the dollar would vault to the moon.

Nobody but nobody is going to be dumping dollars as a reserve currency. Not when capital flows are turning back in favor of the USA.


9 posted on 09/18/2013 12:39:54 PM PDT by ckilmer
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To: Rusty0604
 photo WHATINGODSNAME_zps6c350445.jpg

10 posted on 09/18/2013 12:41:46 PM PDT by Dick Bachert (Ignorance is not bliss. It is the road to serfdom.)
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To: ckilmer

Countries have begun trading with each other with their own currencies already.
And although fracking our way to oil independence is a good thing, that trade deficit will also mean less petrodollars out to be traded or invested in U.S. treasuries.


11 posted on 09/18/2013 12:50:03 PM PDT by Rusty0604
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To: Rusty0604

Countries have begun trading with each other with their own currencies already.
And although fracking our way to oil independence is a good thing, that trade deficit will also mean less petrodollars out to be traded or invested in U.S. treasuries.
..........
All true. But if the US deficit keeps falling—the need for foreign investment in US treasuries declines. That’s what’s in the cards right now. As long as the USA keeps adding 1 million barrels@ day annually to oil production—as it has for the last 3 years—the trade deficit and the federal deficit are going to keep falling. State government budgets of even incompetent blue states like California have already swung back in the black.

And as the trade and federal deficits decline —the pressure on the dollar is upwards—meaning that the dollars in foreign central banks gains in value. That puts downward pressure on both the price of oil and the price of gold.

For guys who are old enough to remember the 1970’s—ie US oil production peaked in 1970 and then declined sharply...— this environment is rewinding that decade backwards.

What does this mean for the QE’s. For now, the QE’s just keep the dollar from punching straight up.


12 posted on 09/18/2013 1:32:02 PM PDT by ckilmer
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To: ckilmer

I hope you are right as I do not wish for a dollar collapse. But I think the possibility is out there, especially if the gov’t continues to spend more than it receives (confiscates). If our increased oil production saves us, it will be in spite of the liberals, not because of them.


13 posted on 09/18/2013 1:38:41 PM PDT by Rusty0604
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To: Rusty0604

I hope you are right as I do not wish for a dollar collapse.
Look at this graph of the dollar index http://www.marketwatch.com/investing/index/dxy
The dollar has been trending up since 2011 (and generally sideways since 2008.) The two big pressures on the dollar are the downward pressure of the QE’s and upward pressure of rising oil production.

But I think the possibility is out there, especially if the gov’t continues to spend more than it receives (confiscates).
..............
True but government deficits are fast falling—just as they did in the clinton years when a rising economy and budget caps put in by Newt’s congress gave clinton his only bragging rights.

If our increased oil production saves us, it will be in spite of the liberals, not because of them.
.......
you have this exactly right.


14 posted on 09/18/2013 2:07:47 PM PDT by ckilmer
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To: ckilmer

‘Nobody but nobody is going to be dumping dollars as a reserve currency. Not when capital flows are turning back in favor of the USA.’

If people don’t agree with this, then buy my silver for $40.00 an ounce.


15 posted on 09/18/2013 2:40:49 PM PDT by WILLIALAL
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To: WILLIALAL

Here’s an inflation adjusted historical chart of gold and silver. It looks very much like we are doing a historical replay of 1980.

http://www.macrotrends.net/1333/gold-and-silver-prices-100-year-historical-chart


16 posted on 09/18/2013 3:28:13 PM PDT by ckilmer
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To: ckilmer
And as the trade and federal deficits decline —the pressure on the dollar is upwards

Yes. And as the dollar continues to rise, foreign imports get cheaper and cheaper causing the trade deficit to rise yet again. Floating interest rates are always and everywhere a disaster waiting to happen.

17 posted on 09/18/2013 3:52:12 PM PDT by BfloGuy (People who know what they’re talking about don’t need PowerPoint.)
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To: BfloGuy
Floating interest rates are always and everywhere a disaster waiting to happen.

That should have read "floating exchange rates are always and everywhere a disaster waiting to happen.

As are two stiff gin-and-tonics before posting.

18 posted on 09/18/2013 3:53:32 PM PDT by BfloGuy (People who know what they’re talking about don’t need PowerPoint.)
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To: Rusty0604

“One measure of wheat for a penny...”


19 posted on 09/18/2013 4:01:41 PM PDT by editor-surveyor (Freepers: Not as smart as I'd hoped they'd be)
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To: BenLurkin

Overall, we’ve gone nowhere on metals for quite a while.


20 posted on 09/18/2013 4:06:29 PM PDT by editor-surveyor (Freepers: Not as smart as I'd hoped they'd be)
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To: ckilmer

“Nobody but nobody is going to be dumping dollars as a reserve currency”

Russia and China have agreed to do so.


21 posted on 09/18/2013 4:09:53 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
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To: ckilmer

“The federal deficit dropped by 350 billion this year to 650 billion from over 1 trillion.”

No, it hasn’t. It has only been postponed due to no budget, but the spending has still happened, it just isn’t on the books. That, and do you really believe $650 billion is healthy? “Gosh, we beat you less this time, comrade, why so glum?”


22 posted on 09/18/2013 4:12:10 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
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To: ckilmer

“historical replay of 1980.”

If you knew anything about 1980 you’d know it was manipulation. The price of silver and gold today are market driven.


23 posted on 09/18/2013 4:13:02 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
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To: BfloGuy

“And as the dollar continues to rise, “

If you read the article you’d realize that cannot continue. We are not healthier compared to other currencies by much.


24 posted on 09/18/2013 4:14:28 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
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To: CodeToad

“historical replay of 1980.”

If you knew anything about 1980 you’d know it was manipulation. The price of silver and gold today are market driven.
////////////
Yeah the price of silver was manipulated by the hunt brothers. but not gold. even still both gold and silver went up and down together.


25 posted on 09/18/2013 9:10:20 PM PDT by ckilmer
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To: CodeToad

“Nobody but nobody is going to be dumping dollars as a reserve currency”

Russia and China have agreed to do so.
..........

no they haven’t. what they have agreed to do is to NOT use dollars for trade between them—but rather their own currencies. the dollars they have in their bank vaults remain there as a store of value like gold.


26 posted on 09/18/2013 9:13:13 PM PDT by ckilmer
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To: BfloGuy

And as the trade and federal deficits decline —the pressure on the dollar is upwards

Yes. And as the dollar continues to rise, foreign imports get cheaper and cheaper causing the trade deficit to rise yet again. Floating interest rates are always and everywhere a disaster waiting to happen.
..............
the upward pressure on the dollar of falling trade and federal deficits is met by downward pressure on the dollar by the various fed QE’s. The result is that the dollar has been going roughly sideways since 2008.

http://on.mktw.net/1dr0xkg


27 posted on 09/18/2013 9:19:39 PM PDT by ckilmer
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To: CodeToad

“The federal deficit dropped by 350 billion this year to 650 billion from over 1 trillion.”

No, it hasn’t. It has only been postponed due to no budget, but the spending has still happened, it just isn’t on the books.
..........
no the deficit reduction is real because of higher taxes and higher revenue generated by a growing economy. this growth in the economy has already turned blue state government budgets like California back into the black.

That, and do you really believe $650 billion is healthy? “Gosh, we beat you less this time, comrade, why so glum?
,,,,,,,,,,,
No 650 billion is not healthy. However, if the deficit keeps declining at a pace even remotely like it has in the last year —then it will quickly return to normal ranges.

Obama will have had nothing to do with the balanced budget. It will all be about a growing economy—mostly in the oil patch—and the caps on spending imposed by the republican house.

Pretty much the same thing happened in the late 90’s. Clinton’s best brag is that he balanced the budget. Yet a balanced budget happened despite his best efforts not because of of. The growing economy produced the revenue and Newt kept the federal spending in check.


28 posted on 09/18/2013 9:50:45 PM PDT by ckilmer
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To: ckilmer

“However, if the deficit keeps declining at a pace even remotely like it has in the last year —then it will quickly return to normal ranges.”

You must be 18 and without any knowledge of economic trends to think one year makes for a trend.


29 posted on 09/19/2013 7:55:21 AM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
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To: ckilmer

P.S. It hasn’t even been but 3/4 a year and you and Obama are proclaiming a reduced deficit for an entire year. Obama is king of “revised” numbers. Get back to us in January after the year is complete and let’s see how reduced his numbers turn out. Just like his unemployment numbers, always reported to his favor and always revised against him later when no one is looking.


30 posted on 09/19/2013 7:57:34 AM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
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To: AEMILIUS PAULUS

And he is smart, and does not care about “style points.” Which is good, because the only style we will be able to afford is in the salvation army store.


31 posted on 09/19/2013 8:18:12 AM PDT by Vermont Lt (Quis custodiet ipsos custodes? Who will watch the watchers?)
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To: ckilmer

As we become more energy independent, watch the OPEC countries turn from the dollar to an SDR or gold.

Then the games will begin.


32 posted on 09/19/2013 8:19:23 AM PDT by Vermont Lt (Quis custodiet ipsos custodes? Who will watch the watchers?)
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To: ckilmer

Out deficit has fallen. This is true.

But our debt has increased (except for the last 140 days or so.)

Deficits are worth noting. But in a higher interest environment, the size of the debt is going to be a problem. As we roll over more and more, those rates will have an impact. As we deal with more and more unfunded mandates, we will dip into that credit line.

I agree that there are some areas that are moving in the proper direction. I just think the inertia of the rising debt and the unfunded liabilities will squash the deficit improvements like a bug.


33 posted on 09/19/2013 8:22:28 AM PDT by Vermont Lt (Quis custodiet ipsos custodes? Who will watch the watchers?)
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To: ckilmer
Nobody but nobody is going to be dumping dollars as a reserve currency. Not when capital flows are turning back in favor of the USA.

Yup...as bad a shape as we're in, the rest of the world is far worse. Basically, as financial risk goes, the US just sucks less. Where else can people with money put their money?
34 posted on 09/19/2013 8:23:48 AM PDT by rottndog ('Live Free Or Die' Ain't just words on a bumber sticker...or a tagline.)
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To: ckilmer

“The federal deficit dropped by 350 billion this year to 650 billion from over 1 trillion.”

Only because we hit the debt ceiling and Obama is doing his best to propagandize raising it. Let’s us know in January what the final deficit became.


35 posted on 09/19/2013 8:47:00 AM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
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To: Vermont Lt

As we become more energy independent, watch the OPEC countries turn from the dollar to an SDR or gold.

Then the games will begin.
..................
Agree that there are huge shifts underway in worldwide capital flows with loads of unanticipated consequences.


36 posted on 09/19/2013 1:44:42 PM PDT by ckilmer
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To: Vermont Lt

I agree that there are some areas that are moving in the proper direction. I just think the inertia of the rising debt and the unfunded liabilities will squash the deficit improvements like a bug.
............
maybe so. I’m coming around to the opinion that there was a massive shift of capital flows back in the 1970’s away from the USA that funded overseas oil purchases to the tune of 300-500 billion annually. .... —(as well I think the offshoring of US industry is reversing) that these capital flows are reversing in the favor of the USA...with the result that there is going to be a lot more money in the USA than has been seen since the 60’s.

The current US admin of course will have had nothing to do with these successes...but they will take credit for it. same as happened in the late 90’s.


37 posted on 09/20/2013 5:44:28 AM PDT by ckilmer
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