Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Don't Wait for GDP, $1,500 Gold IS the Recession
RealClearMarkets ^ | 04/20/2011 | John Tamny

Posted on 04/20/2011 9:48:48 AM PDT by SeekAndFind

Back around 2005 when housing was booming, far from a sign of economic vitality, the proverbial "rush to the real" signaled a growing economic downturn. Thanks to a dollar in freefall as evidenced by a spike in the price of gold, always limited capital was migrating toward the hard, unproductive assets least vulnerable to currency devaluation.

To put it simply, the real recession was the housing boom.

Since the dollar's lurches in either direction tend to set the tone for global currencies, our monetary error was something shared by everyone as a run on paper currencies around the world fostered a global misallocation of capital into land, rare stamps, art, gold and other unproductive assets. The alleged worldwide boom characterized by a rush to the tangible was a classic "money illusion" that flashed economic hardship due to the world's innovators suffering capital deficits in concert with sinks of hard wealth receiving capital in abundance.

SNIP SNIP

Though it traded in the then nosebleed range of $800/ounce back in 2008, gold has since nearly doubled to $1500/ounce. Its spike to previously unseen levels is a signal that all the chatter about whether there will be a downturn is well too late. Gold at these levels IS the downturn, and an eventual "recession" that hopefully includes a revived dollar to undo all the misallocations occurring at present will be the cure.

Indeed, much as the weak dollar drove a recessionary rush into the real not long ago, so is the same occurring once again.

SNIP

Gold's rise is the dollar's decline, and it confirms as it always has that today's and tomorrow's innovators will suffer a capital deficit relative to the kind of investment they'd receive were the dollar strong and stable. Evidence of this recessionary malinvestment abounds,

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


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: devaluation; gdp; gold; recession

1 posted on 04/20/2011 9:48:53 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

An oz. of wheat for an oz. of gold. I’ll keep my wheat.


2 posted on 04/20/2011 9:52:17 AM PDT by annieokie
[ Post Reply | Private Reply | To 1 | View Replies]

To: annieokie

My plan is to have enough wheat to eat what I need and trade the rest for gold.


3 posted on 04/20/2011 9:58:06 AM PDT by american_ranger
[ Post Reply | Private Reply | To 2 | View Replies]

To: annieokie

At this rate an oz. of gold will soon buy your whole neighborhood...you may eat your wheat but you won’t be able to sit it down anywhere.


4 posted on 04/20/2011 9:58:06 AM PDT by wastoute (Government cannot redistribute wealth. Government can only redistribute poverty.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: annieokie
An oz. of wheat for an oz. of gold. I’ll keep my wheat.

Yes, but I can melt down that one oz of gold into 4 110gr 9mm slugs and then take the rest of your grain! ;-)

Mark

5 posted on 04/20/2011 10:09:16 AM PDT by MarkL (Do I really look like a guy with a plan?)
[ Post Reply | Private Reply | To 2 | View Replies]

To: wastoute

Silver is going up like a Rocket now also.


6 posted on 04/20/2011 10:09:18 AM PDT by sr4402
[ Post Reply | Private Reply | To 4 | View Replies]

To: MarkL

?????, just wow!!! you won’t get nothing if I don’t sell.


7 posted on 04/20/2011 10:12:34 AM PDT by annieokie
[ Post Reply | Private Reply | To 5 | View Replies]

To: american_ranger

Yours is the most sensible so far. That’s the plan, for sure.


8 posted on 04/20/2011 10:13:16 AM PDT by annieokie
[ Post Reply | Private Reply | To 3 | View Replies]

To: wastoute

What you gonna eat?, I am a suvivor and I will always have a place to rest.


9 posted on 04/20/2011 10:14:24 AM PDT by annieokie
[ Post Reply | Private Reply | To 4 | View Replies]



Your choice is clear
Help keep Free Republic's lights on


Give once
Or donate monthly and a sponsoring FReeper will contribute $10

Urgent: Save Lazamataz! Donate today

10 posted on 04/20/2011 10:20:50 AM PDT by TheOldLady
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

I predict that if Obama wins another term (heaven forbid) that gold will shoot up to unprecedented highs. $5,000, $10,000, possibly $20,000 an ounce. Sound crazy? Just remember that a few short years ago those who predicted $1500 an ounce gold where called crazy, fear mongering doom and gloomers. Now those who were doing name calling are rushing to buy as much gold as they can.

I also predict, as they did in the 30’s, the US Government will confiscate all gold from we slaves, er citizens I mean.
http://www.the-privateer.com/1933-gold-confiscation.html


11 posted on 04/20/2011 10:23:30 AM PDT by Graneros ("The difference between genius and stupidity is; genius has its limits." — Albert Einstein)
[ Post Reply | Private Reply | To 1 | View Replies]

To: sr4402
SSSShhhhh..Quiet, keep silver below the radar, what the Wall Street Whizzer;s don't know is good for the rest of us.
12 posted on 04/20/2011 10:27:32 AM PDT by BooBoo1000 (Never pass up an opportunity to " Shut Up")
[ Post Reply | Private Reply | To 6 | View Replies]

To: Graneros

“I also predict, as they did in the 30’s, the US Government will confiscate all gold”

They might try. But thats like hijacking a plane to fly it into a building,, a one trick pony. Make a rude comment to a flight attendant post 9/11 and 50 passengers dogpile you. It’s the same for gold confiscation.

If you had 80,000 in gold, it would very roughly be the size of 2 rolls of old silver dollars. The USA government says turn it in. Do you smuggle it to the rest of theworld that isnt under US law? Or like an idiot,, do you turn it in for paper? LOL

With a modern incarnation of the FDR order,,, there will be WIDESPREAD ignoring of any such order by people who physically possess gold. Not when you can get on an airliner, and the 3 or 4 coins in you pocket are worth 5, 6, or even 10k. Or make a visit to the local Chinese restaurant owned by immigrants,, they treasure gold, have friends in the old country, and will gladly help you for a fee.
There is simply NO reason whatsoever to turn it in, unless you absolutely need the paper money today and intend to spend it quickly.
Nothing but a booger eating moron would turn it in.


13 posted on 04/20/2011 10:46:57 AM PDT by DesertRhino (I was standing with a rifle, waiting for soviet paratroopers, but communists just ran for office)
[ Post Reply | Private Reply | To 11 | View Replies]

To: american_ranger; annieokie; wastoute

We all had better have some of everything. Gold and/or silver, food stores, and other basic needs. When and if the SHTF your stores will last only so long. If you don’t have something to barter then you’ll be up a creek. It’s not a bad idea to start learning how to grow some of your own “wheat” for when it gets hard to find, no matter how much AG or AU you have. And, don’t forget the Pb.


14 posted on 04/20/2011 11:21:03 AM PDT by rickomatic
[ Post Reply | Private Reply | To 3 | View Replies]

To: sr4402
"Silver is going up like a Rocket now also. "


15 posted on 04/20/2011 11:26:44 AM PDT by blam
[ Post Reply | Private Reply | To 6 | View Replies]

To: SeekAndFind

Some wit said it best:

“The US dollar is now valued at 1,500 per ounce of gold.”


16 posted on 04/20/2011 1:40:56 PM PDT by yefragetuwrabrumuy
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Did someone say GDP ? ,, The US GDP has been negative or flat for 10 years if you discount home equity withdrawal activity ... if you really want to scare yourself take this chart and subtract the portion of GDP that is attributable to government spending...
17 posted on 04/20/2011 4:47:45 PM PDT by Neidermeyer
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Did someone say GDP ? ,, The US GDP has been negative or flat for 10 years if you discount home equity withdrawal activity ... if you really want to scare yourself take this chart and subtract the portion of GDP that is attributable to government spending...
18 posted on 04/20/2011 4:51:15 PM PDT by Neidermeyer
[ Post Reply | Private Reply | To 1 | View Replies]

To: Neidermeyer

oopsie! slow computer...


19 posted on 04/20/2011 4:52:14 PM PDT by Neidermeyer
[ Post Reply | Private Reply | To 18 | View Replies]

To: rickomatic

“If you don’t have something to barter then you’ll be up a creek.”

We will NEVER barter, at least to any measurable extent. Currency has been around for thousands of years and to get rid of it would mean living in pre-historic times. If we ever do end up at that place, it will suck, because, to be alive then, means that you killed many, many, people and were very lucky no one shooting at you hit you in a lethal way.

So what will happen? Simply, an Argentina-type meltdown, and life, for a while, in VERY INFLATIONARY conditions. These are conditions where if you don’t spend your cash, or savings, in a month, it loses 10% of its value...month after month. Expect about 2 years of that, which will triple prices on most goods. At that point, we will have wiped out enough savings and enough value out of debt holders to at least be solvent again (kind of). After that, things will improve for a while, except a re-run (same as Argentina, and Russia) is likely until (and unless) the country pulls together and seriously makes an effort to stop spending money that doesn’t exist. And anything we borrow will be in foreign currency, which then puts us at risk of real hyperinflation (as the debt will grow as the dollar dives further).

“We all had better have some of everything. Gold and/or silver, food stores, and other basic needs.”

This is spot-on. Any FReeper, with money, or even access to money (i.e., credit) that hasn’t already done this is PLAYING WITH FIRE...for that inflation will not be matched at all with wages...wages will be stagnant...or will trail prices by that 10% per month. But having to live on one half (not really one third, because some things, like mortgages will not be affected...and some other things, like domestic labor, will not go up as fast) of what you live on now is only part of the problem. The next part of the problem is when the government tries to ‘fix things’ through price controls. When that happens, expect SHORTAGES, EVERYWHERE...that is why every self-respecting FReeper (with the means) needs to hoarding-up at this moment.


20 posted on 04/20/2011 7:42:09 PM PDT by BobL (PLEASE READ: http://www.freerepublic.com/focus/f-news/2657811/posts))
[ Post Reply | Private Reply | To 14 | View Replies]

To: BobL
We will NEVER barter, at least to any measurable extent.

The next part of the problem is when the government tries to ‘fix things’ through price controls. When that happens, expect SHORTAGES, EVERYWHERE...


THAT is the scenario where we will need barter material. I agree that we'll never go completley TEOTWAWKI (The End Of The World As We Know It), but when those shortages you speak of come about, you had better have some beans or bullets to swap for the fresh eggs your neighbor has, and the local grocery store doesen't.
21 posted on 04/20/2011 9:46:46 PM PDT by rickomatic
[ Post Reply | Private Reply | To 20 | View Replies]

To: rickomatic

I hear you, but I just don’t see that happening. But it still doesn’t hurt to be fully prepped up, as I am.


22 posted on 04/20/2011 10:32:57 PM PDT by BobL (PLEASE READ: http://www.freerepublic.com/focus/f-news/2657811/posts))
[ Post Reply | Private Reply | To 21 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson