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Inflation 1923-24: A woman in Germany feeds her tiled stove with money. The money is worth less than firewood.
Posted on 04/17/2006 11:18:47 AM PDT by DebtAndDelusion
A rising gold price acts as a barometer for financial storms ahead. The daily rise and fall reflects buying and selling as with any other commodity. If you believe some of the GATA types then a lengthy conspiracy to suppress the price of gold and silver through illegal naked short selling is finally coming apart at the seams. If this is accurate then a parabolic spike not only could happen but should happen as the shorts are crushed.
If those holding gold don't sell then the price continues to zoom as the shorts must cover. Current paper trading practices at the COMEX would get people thrown in prison in any other endeavor.
However that is all about the price of gold in dollars. If people want to trade pieces of paper in the hopes of acquiring more pieces of paper then they need to make sure they are not the last ones holding the (paper) bag.
In Asia the Chinaman is quietly buying gold. Most Americans would not know a Krugerrand or American Eagle from one of those fancy gold plated dollar coins. Meanwhile gold, silver and copper explode in "price."
The world drowning in dollars and debt yet an ounce of gold remains an ounce of gold regardless of the actions of government...
HG
How have the Yen and Euro been doing against hard assets such as copper, natural gas, or steel?
The dollar vs. the Euro is just a Special Olympics race of competitively debased currencies.
The United States of America E Pluribus Unum Still Not As Socialist as France!
I heard on the street that it was affluent Indians buying Gold when they get married that is a significant factor. The middle class is getting bigger on both ends and that translates into a cultural increase in demand.
An increase in demand from India is not related to a weakening $$. The price will rise so long as the supply is tight.
Especially after the government factors out food, energy, housing and medicine.
CEF: Central Fund of Canada. It is a closed end fund that holds gold and silver bullion.
Just because hard assets have had a few great years, does not mean squat.
The dollar vs. the Euro is just a Special Olympics race of competitively debased currencies.
Those Special Olympic competitors beat the hell out of your world class gold for 20 years. Currencies are what they are, pieces of papers representing debt used to buy products which have an inherently depreciating value as you print more. It is better than having to back them with gold, since there is not enough gold to back all the currencies. Our economy would be prisioners to Russia and South Africa for their gold everytime we wanted to increase our money supply.
I made a million dollars trading commodities and my method was very simple: I started with two million.
Gold was money before, and will be money long after the collapse of, the U.S. Dollar.
But rather poorly in the last 2000 years.
The fact is a dollar barely buys half the housing it did 10 years ago, half the food and less than half the energy.
When T-bills reach the Volker style rates required to stop inflation, I'll happily trade my ugly metal for those.
But don't hold your breath.
"An increase in demand from India is not related to a weakening $$"
I've noticed gold and the dollar rising concurrently on several occasions over the past year, so what you've heard could very well be playing some part.
For decades gold was $20 an oz, then it was $35 an oz for a few more decades. Ending with Nixon. So gold beat paper from any period before 1971, big time. Your $35 cash is still $35, your 1oz of gold is now $600.
By cherrypicking dates you could still construct a scenario where dollars have held value more than gold, but that game will soon come to an end, in my opinion.
Currencies are what they are, pieces of papers representing debt used to buy products which have an inherently depreciating value as you print more. It is better than having to back them with gold, since there is not enough gold to back all the currencies.
?? Any amount of gold could back a currency.
Our economy would be prisioners to Russia and South Africa for their gold everytime we wanted to increase our money supply.
Why do you need to increase the money supply. A finite amount of money would cause prices to fall over time, rewarding savers and builders, as opposed to the current system that rewards bankers. You've become habituated to the illness (inflation) to the point that you can't imagine living without it.
Murry Rothbards "The Case Against the Fed" lays out this scenario very well.
So my $200K house would be worth $190K 5 years later and in your book that is good? Falling prices is not good. You need to keep increasing the money supply or it is impossible for the economy to grow.
Heard something about the Fed being ordered to crank up the presses to the tune of 2 Trillion or so and I was curious if that's why M3 won't be published any more and do these actions affect gold directly?
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Inflation 1923-24: A woman in Germany feeds her tiled stove with money. The money is worth less than firewood.
You might be most comfortable with the gold ETF symbol GLD. Each share is worth one tenth ounce of gold. It has the advantages of owning bullion without the disadvantages. It also does not have the leverage of a well-chosen mining company's shares.
The Indian wedding season is mostly in the fall, so that doesn't account for the current rise. One factor MIGHT be Chinese central bank buying. They don't have much gold in their reserves.
The money supply needs to be controlled to keep inflation under control. If you reduce the supply too much deflation can result in a depression. As the population increases, additional money would need to be created.
Those Special Olympic competitors beat the hell out of your world class gold for 20 years.
Gee, ya think that might have been different if CB's didn't sell into spikes and the government promise exhorbitant interest rates (i.e. Volker) in times of crisis guaranteed by our sweat no less???
Our economy would be prisioners to Russia and South Africa for their gold everytime we wanted to increase our money supply.
Hogwash. The third largest producer in the world is the state of Nevada. Most American producing areas are barely exploited, the Comstock with all it's activity, barely 30% and the state of California a mere 15-20%...
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