Asia shares nosedive as gold scales another peak

Reuters ^ | 08/09/11

[TigerLikesRooster]

Asia shares nosedive as gold scales another peak

(Reuters) - Asian stock markets nosedived on Tuesday and the Swiss franc held near a record high, as investors dumped riskier assets in a global rout triggered by fears that political leaders are failing to tackle debt crises in Europe and the United States.

Major indexes across the region fell between 2 and 5 percent, following drop of more than 6 percent on Wall Street in the first trading session since the historic downgrade of the United States' AAA credit rating by Standard & Poor's.

The panicked flight-to-safety pushed gold to the latest in a string of record peaks, boosted the Swiss franc and the yen and lifted Japanese government bonds and, ironically, U.S. Treasuries -- the asset directly affected by the downgrade.

"Market players are seeking emergency refuge and fleeing to safe assets," said a customer trader at a major Japanese bank in Tokyo. "In the money market, where there is heightened demand for dollars, dollar lenders are running away."

While the U.S. downgrade late on Friday was the most obvious blow to confidence, investors have also been spooked by data suggesting the U.S. economy could slip back into recession and Europe's ever-worsening sovereign debt crisis.

[Tzimisce]

The socialist utopia playing out before our eyes....

[TigerLikesRooster]

Symbol	Name	Last Trade	Change	Related Info
^AORD	All Ordinaries	3,858.00 9:30PM EDT	198.70 (4.90%)	Components, Chart, More
^SSEC	Shanghai Composite	2,450.61 9:35PM EDT	76.20 (3.02%)	Chart, More
^HSI	Hang Seng	19,175.66 9:35PM EDT	1,314.91 (6.42%)	Components, Chart, More
^BSESN	BSE 30	16,990.18 6:30AM EDT	0.00 (0.00%)	Chart, More
^JKSE	Jakarta Composite	3,850.27 5:00AM EDT	0.00 (0.00%)	Components, Chart, More
^KLSE	KLSE Composite	1,450.00 9:35PM EDT	46.99 (3.14%)	Components, Chart, More
^N225	Nikkei 225	8,705.04 9:30PM EDT	392.52 (4.31%)	Chart, More
^NZ50	NZSE 50	3,068.02 9:34PM EDT	117.43 (3.69%)	Components, Chart, More
^STI	Straits Times	2,884.00 5:10AM EDT	0.00 (0.00%)	Components, Chart, More
^KS11	Seoul Composite	1,750.83 9:30PM EDT	118.62 (6.35%)	Components, Chart, More
^TWII	Taiwan Weighted	7,244.84 9:30PM EDT	307.96 (4.08%)	Chart, More

[TADSLOS]

Round # 2. Get the mic and teleprompter ready for Obama again.

[Presbyterian Reporter]

Those who have been short gold are getting their clock cleaned.

[TigerLikesRooster]

Teleprompter says: Read my lips: More taxes. Fast!

[virgil]

Gold keeps ticking up, up, up

[John Leland 1789]

"gold scales another peak"

I keep looking for comprehensive books and articles on the subject . . . .

WHAT DO YOU DO WITH YOUR GOLD IN THE EVENT OF A COMPLETE CATASTROPHIC CRASH?

If people physically hold gold, and the bottom really drops out of paper currency . . .

HOW DOES THE GOLD HOLDER USE THE GOLD?

I'd like to have one or more books on this subject, even if they are written on carefully calculated projections and guesses.

[razorback-bert]

I have no idea, how this is going to play out.

Could be a repeat of the “Panic of 1907”, I just finished the book on it. It started with one stock and one man, ending up causing a run on banks all across the US.

[TigerLikesRooster]

I think Fed and Treasury are ready to jump in at the right moment to avert free fall. I suspect they drew a line somewhere they figure they can defend. They will let this thing fall until the momentum slows and jump in to stop the fall. If momentum does not slow, they have a big problem. But they will still pull something including suspension of trade for extended period.

[roadcat]

HOW DOES THE GOLD HOLDER USE THE GOLD?

I'm just a novice on this, no expert. I've bought some metals from a local coin dealer. As long as there isn't total chaos, one could simply sell the gold at the counter of the coin dealer at the going spot rate. So if you bought gold at $1800, and the going rate becomes $3000 then that's what you get.

What concerns me is that the ratio between gold and silver is huge right now. Something like 43 to 1, traditionally 16 to 1 for thousands of years. Silver is overdue to go way up. And silver is easier to trade (but harder to carry - a little gold is worth a lot).

[roadcat]

A COMPLETE CATASTROPHIC CRASH?

Whoopsie, posted too quick. If total chaos, I suppose you bury the gold and wait years for normalcy, in which case you can pass wealth to your grandchildren.

[kevao]

As long as there isn’t total chaos, one could simply sell the gold at the counter of the coin dealer at the going spot rate. So if you bought gold at $1800, and the going rate becomes $3000 then that’s what you get.

---

If the SHTF, you can bet that Fedzilla will confiscate citizens’ gold holdings as FDR did in the 1930s. When Fedzilla’s only way out of its debt crisis is through debasement/inflation, it cannot allow a flight out of fiat into precious metals.

In total chaos, you’ll still be able to sell your gold on the black market for the monopoly dollars you’ll need for purchases, but the transaction fee will be confiscatory, and the people you’ll deal with will be...well, let’s just say you will take some friends with you when you go to make these transactions.

If you want to know how this really works out in practice, read this first-hand survival account from a guy who lived thought the 2001 Argentina collapse:

http://www.amazon.com/dp/9870563457?tag=surviinargen-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=9870563457&adid=0YS947GSKAMG2T1ARMC6&;

By the way, he recommends gold chains (jewelry), as that way you can sell a few links of what you really need, and not have to sell a coin which gives you a boat-load of cash you either use immediately or lose as hyperinflation eats away your purchasing power by the hour.

[razorback-bert]

This time it could be global and the Fed can't stop it.

[TigerLikesRooster]

Probably so. Fed has some friends, though: central banks in Europe, Japan, and China.

[kevao]

What I want to know is, when are all these too-big-to-fail types around the world going to raise the cash to bail out the USA? Is not the USA “too-big-to-fail”?

[Atlas Sneezed]

Could be a repeat of the “Panic of 1907”, I just finished the book on it.

---

Is it worth reading? What’s the title?

[TigerLikesRooster]

They all have to print money to take care of their problem or others' problem.

If they want to defend all those too-big-to-fail countries or institutions, that is the only way. Money is getting cheaper and cheaper.

[TigerLikesRooster]

Of course, money-printing creates its own problem: high inflation and resulting widespread riots in the street.

[Atlas Sneezed]

If the SHTF, you can bet that Fedzilla will confiscate citizens’ gold holdings as FDR did in the 1930s.

---

Last time, they paid “market rates.” You’re better off owning, and enjoying the ride up. But here is my more complete analysis:

Why I’m not worried about confiscation.

1. There ain’t enough gold in private hands to make a bit of difference to the national economy.

2. The political consequences wouldn’t be worth the trouble. Any government motivated enough merely to punish its political detractors would be a terrible police state, and we’d have much more to worry about.

3. Gold owners have learned their lesson, and are holding it where the government can’t get it, and will refuse to turn it in, knowing that a future administration will legalize it.

4. The non-compliance factor will make it not worth the trouble. Those who dare contemplate it will be advised that no one will comply: “You might as well try to take away their guns.”

5. “Confiscation” isn’t and never was. It was redemption for dollars at the current market price. You might get screwed by debasing of the dollars you get in exchange, but not buying gold in the meantime is no protection from this, and loses you the benefits of the gains.

6. Last time gold was confiscated the dollar was on the gold standard, meaning that gold in private hands prevented the government from monkeying with the dollar. Now they can (and do) monkey all they want for their own political ends, and don’t need to confiscate gold to do it.

7. Silver (or platinum, especially these days). ‘Nuff said.