Big Al and David McAlvany discuss the gold market
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HI Marc,
Just got back from a night away and sat down and started to read today’s WSJ.
All I can say is, “Holy You Know What”!
Big Al
Hey Big Al,
Specifically, what in the WSJ that is a ” HOLY……..?”or is that just a general..Oh crap! 🙂
Marc
Hi Marc,
How about almost everything that I read!
Big Al
Geeezz, brutal….Big Al….brutal!
Big Al,
I agree with your guest, David McAlvany, that there is a shortage of investors in the market but lots of traders. I wonder what will happen to the traders if the retail investor comes back into the market?
I still like Freeport McMororan. I think this stock presnet three advantages for the holder: a good dividend, upside if gold goes up and a good upside if the economy starts on the path of recovery.
Morning Martin,
Good thoughts on your part.
I am a firm believer in utilizing precious metals as a final bastion of financial safety as you know.
I really feel comfortable having them in my possession.
Best to you, Martin
Big Al
It is my belief that in substantial deflation, gold and silver may not be a good store of value. I.e. ehen prices of goods are dropping and/or the money supply is shrinking, I believe the price of gold and silver will drop also.
Can anyone refute my beliefs without resorting to the price behavior of Homestake Mining during the thirties?
cfs,
How about this:
“Gold performance during deflation is difficult to come by since it’s such an unusual event, but JP Morgan did a bit of time traveling back to the Great Depression to study the price action in silver (since gold prices were fixed):
“How can the decreed gold price of the 1930s help us now that the gold price is floating? We decided to seek a proxy. Until relatively recently, silver was a partner monetary metal to gold, with very large tonnages in circulation. The advantage of silver is that a market price is available for the 1930s.”
What they found was interesting. Silver performed well in relative terms:
“Figure 7 shows how, after peaking in 1929, the DJIA fell sharply to less than a quarter of its peak value. Gold, because of its fixed price, was unaffected. Silver fell too, but it significantly outperformed the reported DJIA on the way down. What is also encouraging is that after the deflation bottomed in 1932-1933, silver bounced back quickly, and by 1934 it was higher than its 1929 level. Intriguingly, gold seems to parallel this with its repricing to $35/oz in 1934. This seems to suggest that even after a very tough pre-Keynesian (deficit spending) deflation, the bounce back significantly helped the precious metals. With modern economists already pointing to the money presses as the best medicine against deflation, any postdeflation precious metals bounce is likely to be more vigorous.”
“Interestingly, commodity linked metals were not so fortunate. Copper prices, being very economically sensitive, performed more in-line with equity prices:
“As a check, we also looked at copper’s performance during the depression to differentiate between monetary and commodity metals. However, this test showed that copper’s price performance was very similar to that of the Dow.”
All of this bodes well for gold and silver prices in a deflationary period (as early 2010 has clearly shown us):
“The performance of silver gives us confidence that precious metals are likely to outperform the general markets in a downturn. In a really tough deflation, the absolute price levels of the metals could weaken, even as they outperform most other sectors.”
Source: JPM
Interesting and good information. I couldn’t agree more. Right now we’re looking at a deflation bias. I’ve commented many times that I feel the conventional markets are in all likelihood moving down and will for awhile. I also commented that it looks like gold would move down as well but not as much. That would be similar to silver’s response in the 30s.
That does appear what is currently happening Doc!
Big Al
Great information, Peter. Thank you for passing it on.
Big Al
CFS,
Thank goodness for that post!! I think you REALLY extrapolated out a VERY, VERY important piece of evidence of a concern for A LOT of the folks here! Thanks so much.
All the best,
Marc
Thanks.
It is fairly difficult to get raw data from so long ago.
I have llooked real estate over the centuries and mining companies and it was my conclusion that nothing really holds its value during deflation.
In the case of Homestake mining, it was definitely the case that it was better to sell the stock in 1928 and then buy back in as soon as the market began to bounce back.
cfs2000’s question is a good one, and Peter’s answer is quite reasonable. But the survivorship bias of record keeping makes it very hard to really compare to any other deflationary period. Back in 2002, I was studying bubbles pretty carefully. There are questions whether, say, the South Seas deflationary period can be compared to a chart of the DJ30, as that was a European “exchange”, and much earlier than when New York stock exchange records began, around 1873 I believe. Still, some like Prof. Shiller or R.N. Elliot have tried to do so (so did I!).
The best example I can think isn’t really even deflationary, but just neutral, through the early to mid 19th century (i.e. 1815-1860 or so). Sorry, I don’t have inflation adjusted gold prices over that time (someone on another laptop that was stolen..it’s backed-up somewhere on Iron Mountain but I’m too lazy to go get it). What I do recall is the general summary, as most of you already know…prices for most things in the 19th century were generally stable, an odd concept for today. Industrial improvements started having the effect of lowering prices for finished goods, but the price of gold and silver was relatively constant (as did money itself), so personal wealth generally improved. As noted, this was not really deflationary, except for the first half of the 19th century, at least in America. Regional availability and variations in records around the world make it a bit difficult to answer the question properly.
This .pdf shows the price of gold (and other things) throughout the 19th century, generally unchanging at $18.73 USD per ounce.
http://measuringworth.com/gold/#
I’ll post another link in a minute…
I guess there’s some key word that’s preventing my follow-up post. Either that, or Al’s finally had enough of me.
Not even close, John W.
I don’t understand the workings of this blog as I perhaps should.
Any questions family, please e-mail Sarah at skorelin@gmail.com
Best to all,
Big Al
Compare the inflation-adjusted and unadjusted returns for the stock market, 1801-1900…in effect, you can see there was no inflation. 1800-1840 was quite deflationary, if you can find a graph of prices for that period.
In the end, I’m not necessarily sure it matters. We will probably continue to see asset deflation for real estate for a little while longer, but monetary supply inflation will eventually lead to price inflation, which should be favorable to gold and silver. Remember too that in the 19th century, gold and silver were real money and everybody had some. Today, virtually no one has it, so there’s also a question about supply-and-demand, should central banks, hedge funds and sophisticated individuals wish to allocate some amount of their holdings back into metal of some kind.
The above predicates you view the link, but the blog isn’t letting it through. It’s at efficientfrontier dot com, at /ef/402/2cent.htm, and shows a couple of statistics about inflation. Rather than go there, here they are, as it’s all the above comment is based on:
Returns:
Years 1800-1901___Years 1901-2000
Stocks 6.51%_______Stocks 9.89%
Bonds 4.99%________Bonds 4.85%
Same info, but inflation adjusted:
Stocks 6.76%_______Stocks 6.45%
Bonds 5.23%_______Bonds 1.57%
Source: Jeremy Siegel
In other words, the rate of inflation (and at times, deflation) in the century from 1800-1901 was so little, that adjusting the returns made on stocks or bonds was almost the same.
Evening John W,
Your comments are very astute and are good examples of what makes this a great site.
Trying to get some space, but this is all too interesting!
Big Al
You go get some space. Sounds like a very busy two weeks for you. Sorry for the disjointed comment….think it was some weird issue with the second hyperlink I was trying to post. Sarah, don’t worry about it…probably well beyond anything you can control. This is a pretty reliable platform actually.
Thanks John W,
You know, I was back on the blog last night and I must say that there are only a couple of things in life that I enjoy doing more than this.
Speaking of space, Kathy and I spent Thursday and most of Friday in La Conner. Want a great place to go simply to unwind!
Big Al
John,
I guess what you are saying is that as the nature of the economy is in flux so should our definitions of what is and causes deflation and inflation.
Even in deflation, an ounce of gold will still buy a good men’s suit,
Evening Keep Stacking,
The last suit I bought was half the price of an ounce of gold!
Big Al
My brain fart from yesterday continues…..” ehen “above should be “when”.
(Actually I’m having just my usual vision problems, alas!)
Just wait “Enry Iggins” until you get to be my age!
Big Al
We are buying collateral in a debt plagued world.
There is a scarcity of collateral.
Collateral up leverage it later.
BTW John W. I mad an executive decision to convert Reggae Long Weekend 2012 to
Slacking Off with the Stones Weekend 2012.
I’m never get any work done on Fridays anymore!
A confluence of I’ll Have Another scratching and Goof Off Stones Weekend 2012: ENJOY WITH EARPHONES ONLY:
http://www.youtube.com/watch?v=EhVLiHPUOIM
As they say, “The Greatest Rock and Roll Band” in the world!
You may not believe this, but Big Al saw the Stones in concert in Seattle, Washington way back in, I believe, 1962. They play at the old Civic Arena.
Big Al
Do not follow this Stones link unless you have 1/2 hour to enjoy…the band…live with horns ..in a bar…lotsoffun:
http://www.youtube.com/watch?v=3Gf-CXBCfhY
Those wishing to distract us from more important things….. did well!
The Stones are an AMAZING act!
Big Al
Big Al!
What a great year! That when I entered the party of life – HA!! I should have grabbed my diapers and pacifier and got up there to party with ya – wet diapers and all!!!
Marc
Yep Marc,
And after Sept. 1st it will even be a better year!
Kathy and I are looking forward to getting together with you.
Best,
Big Al
Al,
My first “real” concert was the Stones in 1975 at Indiana U. What a great summer! Billy Preston was a guest performer on keyboard. Thanks for causing me to remember a great Event! 😉
Jody D
Hi Jody D,
Let me tell you, nobody loves rock and roll as much as I do. Perhaps as much but certainly not more!
Big Al
P.S. Want to watch a great performance? Check out “A Tribute to Fats Domino” Absolutely fantastic. Recorded at Storyville in New Orleans with Paul Shaeffer; Ron Woods; Ray Charles; and, Jerry Lee Lewis. Let me tell you it is hard to sit down even if you are sitting in your living room!
Trust me and spend a couple of bucks,
Big Al
While I personslly do not believe gold and silver will hold value during deflation, I do believe gold and silver producers WILL have a chance of holding value during deflationary times.
The reson for this being a drop in production costs, and the increasing profit margins that would be possible if dold/silver bullion prices do not drop as fast as production costs.
One thing that slightly suprised me, when looking though the list of gold producers by market cap, was the appearance of newer lesser-known companies. Just to save some of you the effort of listing up a list of gold producers by market cap I include such a list down to $750 mil Market Cap.
(Sorry if this folds due to line length)
Company Symbol Last Chg % Chg Open High Low Vol Mkt Cap
Barrick Gold Corp ABX 39.10 0.32 0.83% 38.26 39.38 38.08 4.23 m 39.12 b
Goldcorp Inc GG 39.53 0.46 1.18% 38.43 39.64 38.33 2.26 m 32.02 b
Newmont Mining Corp NEM 50.22 -0.12 -0.24% 49.77 50.53 49.13 2.35 m 24.64 b
Newcrest Mining Ltd Ord NCMGF 24.10 -0.95 -3.79% 23.90 24.10 23.90 3.10 k 18.44 b
AngloGold Ashanti Ltd. ADS AU 36.32 -0.04 -0.11% 35.90 36.36 35.46 1.20 m 13.87 b
Anglogold Ashanti Ltd Reg Shares AULGF 35.00 0.00 -0.00% N/A N/A N/A 0.00 13.39 b
Yamana Gold Inc. AUY 15.85 0.16 1.02% 15.40 16.03 15.39 3.09 m 11.82 b
Compania de Minas Buenaventura S.A. ADS BVN 40.91 0.59 1.46% 39.58 41.19 39.58 351.48 k 10.41 b
Gold Fields Ltd. ADS GFI 13.44 0.06 0.45% 13.20 13.48 13.11 2.32 m 9.72 b
Kinross Gold Corp. KGC 8.19 0.10 1.24% 7.95 8.17 7.82 4.22 m 9.33 b
Gold Fields Ltd. GFIOF 12.75 0.00 0.00% N/A N/A N/A 0.00 9.24 b
First Quantum Minerals Ltd. FQVLF 17.56 -0.38 -2.12% 17.56 17.56 17.56 100.00 8.36 b
Eldorado Gold Corp. EGO 11.70 -0.31 -2.58% 11.79 11.81 11.55 4.09 m 8.34 b
Randgold Resources Ltd RGORF 89.25 0.00 0.00% N/A N/A N/A 0.00 8.19 b
Randgold Resources Limited GOLD 88.45 1.34 1.54% 85.95 87.69 84.93 652.19 k 8.10 b
Agnico-Eagle Mines Ltd. AEM 40.23 0.51 1.28% 38.99 40.48 38.71 657.95 k 6.89 b
Franco-Nevada Corp. FNNVF 46.34 0.00 0.00% N/A N/A N/A 0.00 6.67 b
Franco Nevada Corp FNV 44.29 0.17 0.39% 43.85 44.99 43.42 93.13 k 6.38 b
Central Fund of Canada Ltd. CEF 20.33 -0.02 -0.10% 20.04 20.27 20.03 391.64 k 5.17 b
Royal Gold Inc. RGLD 79.00 1.66 2.15% 76.62 79.08 76.37 536.29 k 4.65 b
IAMGOLD Corp. IAG 12.10 0.12 1.00% 11.78 12.17 11.65 1.32 m 4.55 b
Harmony Gold Mining Co. Ltd. HGMCF 10.20 0.00 0.00% N/A N/A N/A 0.00 4.40 b
Harmony Gold Mining Co. Ltd. ADS HMY 10.15 0.01 0.10% 10.06 10.19 9.95 1.24 m 4.37 b
Centerra Gold Inc CAGDF 12.13 0.00 0.00% N/A N/A N/A 0.00 2.87 b
Detour Gold Corp Common DRGDF 22.99 0.07 0.31% 22.98 23.00 22.89 4.10 k 2.59 b
Allied Nevada Gold ANV 28.68 0.41 1.45% 27.69 28.89 27.53 459.22 k 2.58 b
European Goldfields Ltd. EGFDF 13.13 0.00 0.00% N/A N/A N/A 0.00 2.42 b
Sprott Physical Gold Trust PHYS 13.70 -0.04 -0.29% 13.60 13.71 13.60 402.78 k 2.31 b
AuRico Gold AUQ 8.20 0.02 0.24% 8.01 8.28 7.95 837.13 k 2.31 b
Alamos Gold Inc AGIGF 17.21 -0.18 -1.04% 17.21 17.46 17.07 52.50 k 2.06 b
Alacer Gold Corp. ALIAF 6.38 -0.36 -5.37% 6.54 6.54 6.38 1.20 k 1.83 b
ETFS Gold Trust SGOL 157.11 -0.37 -0.23% 155.99 157.31 155.96 92.31 k 1.75 b
NovaGold Resources Inc. NG 6.10 0.10 1.67% 5.91 6.11 5.86 1.17 m 1.71 b
Semafo Inc SEMFF 5.54 0.05 0.95% 5.35 5.54 5.35 12.00 k 1.51 b
Gold Resource GORO 26.35 0.50 1.93% 25.65 26.20 25.19 60.17 k 1.39 b
China Gold International Resources Corp. Ltd. JINFF 3.39 0.08 2.42% 3.24 3.41 3.24 2.00 k 1.34 b
B2Gold Corp BGLPF 3.34 0.04 1.35% 3.30 3.37 3.26 18.12 k 1.29 b
Perseus Mining Ltg PMNXF 2.71 0.03 1.27% 2.65 2.71 2.65 2.80 k 1.24 b
Centamin PLC CELTF 1.11 -0.02 -1.77% 1.11 1.11 1.11 2.00 k 1.21 b
Central GoldTrust GTU 60.13 0.18 0.30% 59.40 60.22 59.26 56.77 k 1.16 b
Medusa Mining Ltd. MDSMF 5.60 -0.40 -6.67% 5.45 5.60 5.45 2.18 k 1.06 b
High River Gold Mines Ltd HRIVF 1.14 -0.03 -2.39% 1.17 1.17 1.14 175.00 k 959.53 m
Lake Shore Gold Corp. LSGGF 2.29 0.00 0.00% N/A N/A N/A 0.00 940.69 m
Banro BAA 4.46 0.04 0.90% 4.31 4.44 4.25 64.52 k 894.23 m
Kirkland Lake Gold Inc KGILF 12.43 -0.04 -0.30% 11.99 12.43 11.78 1.60 k 872.12 m
Continental Gold Limited New CGOOF 7.48 0.12 1.62% 7.42 7.48 7.42 6.60 k 823.55 m
Torex Gold Resources Inc. TORXF 1.93 0.15 8.27% 1.93 1.93 1.93 2.30 k 797.53 m
Argonaut Gold Inc ARNGF 8.62 0.11 1.28% 8.40 8.62 8.40 600.00 797.13 m
Aurizon Mines Ltd. AZK 4.71 0.03 0.64% 4.59 4.79 4.50 301.92 k 773.76 m
Rio Alto Mining Limited RIOAF 4.38 0.00 0.00% N/A N/A N/A 9.00 k 750.41 m
I included some funds, e.g. CEF and Sprott Phys, for size comparisons.
Again cfs,
Many thanks,
Big Al
Sorry about the line compression above, I forgot this blog takes out column alignments. Hope the table is still useful…
It is useful…copying the content into a spreadsheet typically will restore most columns quite well, should anyone need to.
It is great and we all appreciate it.
Big Al
FRUSTRATED!!!!
Why can’t people leave Gold & silver well alone?
BTW Al, I like the return to your original musical intro. It is erm…very you. 🙂
“What happened yesterday in the gold market was very interesting. One full hour before Bernanke’s testimony, the bullion banks started selling. Over the next 4 hours, the bullion banks sold the equivalent of 515 metric tons of paper gold. This was in just 4 hours, and again, the selling started one hour before Bernanke’s testimony.
The selling went on for another 3 hours after the Fed Chairman began to speak, and as I said, over 515 metric tons of paper gold was sold. During this entire takedown, there was zero physical gold available for sale in the market. However, this action did create tremendous supply for the Eastern buyers to lock in the spot price of gold. This will patiently be converted to physical in the coming weeks. The real question here is, how could an entity begin selling such a massive amount of paper gold when there hadn’t been any news (starting to sell before Bernanke’s testimony)?
During this coordinated attack on gold, hedge funds and managed money were being forced out of their paper positions. A large wave of selling entered the paper gold market and traders saw the price of gold drop $40 in a matter of minutes. So the action was orchestrated by the Fed, and Fed-speak was used to assist in the takedown.
On the opposite side, the rise we saw last Friday was not a natural rise, it was a squeeze of the hedge fund shorts. After squeezing the hedge fund shorts on Friday and actually getting them to take on some long side exposure because gold took out key resistance levels, they then dropped the gold market like a stone yesterday. So the commercials are ringing the register at both ends of the tape. But in reality, what the bullion banks are trying to do is to get out of some of the massive naked short positions that are on the books.
During all of the chaos of the last couple of months, the Eastern hemisphere have been vacuuming physical metal the physical metal out of the market. However, supply is very tight out there. As I mentioned earlier, no physical gold was for sale yesterday during the takedown, just paper gold. Gold actually went into backwardation, and silver has actually been in backwardation for weeks. For immediate delivery of gold, in size, we are seeing delays, but silver is extraordinarily backlogged.
Also, there was an absolutely staggering amount of silver that was purchased by an Eastern buyer three weeks ago near the $27 level. This order was breathtaking in terms of the size. It is currently queued up at two refiners, but has been backlogged for the last three weeks and running. In other words, we are looking at serious backlogs for physical silver.
So as I said earlier, the bullion banks are ringing the register at both ends, while trying to extricate themselves from their short positions in the paper market. They are attempting to do this before transparency comes in to the market. They do not want a situation where the aggressive hedge funds actually get evidence that these bullion banks are naked short.
Doc,
Your comments on this site are truly valuable. Thank you again!
Big Al
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From The Management
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Thanks naomal,
We have Sarah to thank for that today.
Big Proud Dad
If you look at the P/E ratios, Income statements, etc. for the biggest gold companies you will be shocked! MOST OF THEM are not making a profit!
The best are: IAG P/E 5.8, BVN P/E 10.8, GFI P/E 11.1, AUQ P/E 11.4, and AU P/E 11.5 with the next closest P/E being over 20.
cfs2000 about gold being a store of value.
I look at it this way, currency is a gauranteed loss. We also have the risk of the institution you keep it in closeing, potentail 100% loss. We have the risk of the entire markets shutting down or an mf global event.
Gold is money. same amount buys same stuff for thousands of years.
Yup, we may get deflation, many have predicted a deflationary event prior to an inflation takeing hold, possible hyperinflation. Those nimble enough may be able to take advantage. I feel we are moving back too production being of value, so, farmland,oil wells, fishboats the skills of a carpenter should become valuable, gold should remain the same as it always has. What should decrease in value is banking, managment of malls, haircuts etc, things with not much use, people will slowly wake up to a pair of shoes that work are better than the ones with lites on them.
Take a look at the dollarrama share price.
Anyway, there is risk in everything and varying degrees of reward but gold in my opinion is the least risky thing going.
And that benb is exactly why we own gold and silver!
Big Al
For those who have not seen this yet PAULS sell out to neocons
http://sgtreport.com/2012/06/rand-paul-betrayed-someone-but-who/#more-66503
This is the part that says it all.
“Mitt Romney was asked if he would have signed the National Defense Authorization Act as it’s written if he had been President. He acknowledged that he most certainly would have signed it, no question about it. We must sacrifice our liberty for security, Romney style. Mitt Romney has absolutely no intention of dismantling the NDAA. Mitt Romney has absolutely no intention of ending the unconstitutional wars of aggression or the “empire building”.
“Mitt Romney believes that the privately owned Federal Reserve can help revitalize the economy through further “stimulus”. Mitt Romney supported the TARP and Wall Street bailouts. Yes, the new Goldman man Romney supports all of it. Everything that is now shall be in the future under Mitt Romney.”
If any additional proof was needed that the US has a two-headed one-party system, here it is.
peter, you said it all.
Boy Bobby!
Did he ever! 🙂
Marc
Look for a Daily Editorial on this hopefully tomorrow.
Big Al
Big Al –
I re-established a position with New Zealand Energy Corp. this week. It looks like a good entry point to get back in. In fact, I like both NZERF and Tag Oil. New Zealand looks like a good jurisdiction to operate in if the the fracking vigilantes can be held at bay.
NZERF looks like a younger version of Tag Oil. Tag has more current production and a joint venture partner (Apache) that has some mighty deep pockets and terrific know-how. NZERF appears to be on a similar developmental trajectory as TAOIF.
As for the meaning of Obama’s press conference today and Bernanke’s yesterday and some of the Euroland pronouncements this week, I have a feeling that they are trying to calm the masses. They are trying to avoid an increase in the tempo of the Euro bank runs and I suspect that something BIG will be announced this weekend or next. Timing is hard to predict, but I do believe that they know they are playing with fire and they need to do something SOON.
As you know going down fast, I did too. Purchased additional share in NZ on Wednesday.
Big Al
David and Al: Come on, New Investors who trade? How can you figure that when nearly all the trades are High Frequency trades, these are not new traders. David You know better than what you said.
I’ve just done two posts in a row, and don’t currently see them…this is a test to see if I can post anything at all. 4:02pm Friday Jun 8
John W,
I am seeing your latest post of 4:02pm.
Jody D
Thanks Jody…not sure what’s wrong. I think the blog software is automatically keying on something and discarding my post. Maybe I ended a sentence with a preposition and it considers that a fatal error?? 🙂
This is hardly the end of the gold market. I believe we have a long ways to go. Draghi may be trying to pull the US into the European problems more because he’s talking to the IMF—-who knows what these people will think of next in order to maintain now the EU and Euro. None of the options in front of them are any good. What I find fascinating is that from the peak in to gold market in September of 2011 to now, the gold chart has not been damaged that much. We are in negative territory in the momentum technicals and have come down from that high yet gold on the GLD is essentially trading in a sideways band . Now thqt may change but in my view it won’t change that much. We may move slowly down from here but this consolidation period isn’t one that signals a damaged market. Al, your host was correct in his statement about patience which we have posted a number of times. It’s only a matter of time before this market takes off again. My gut tells me according to the charts it could be as long from now as the end of the year or the first quarter of 2011. But it will happen.
HI Doc,
End of the gold market?
Big Al
With regards to deflation and precious metals. We should maybe keep in mind that any deflation we might see will not be of the same quality that there was in the ‘30s. The ‘30s were marked by a pronounced contraction of the money supply. There were no QEs back then.
I think we are already well into the ‘30s, but one of the reasons we don’t quite notice it is because of all the liquidity that has been injected. THEY will probably print money, even if it turns out it does not turn things around. A QE depression is preferred by them to the kind of depression experienced during the 30’s.
If this hypothesis is correct, gold will certainly continue to benefit. Or can we envision a scenario with massive money printing that would not see gold go up in nominal paper money? If so, I’d be interested to hear how this could happen.
Peter,
That was a little along the lines I was trying to mention. We may continue some asset deflation, in specific areas. But monetary inflation will eventually lead to price inflation, or so it seems. Not sure how it could happen otherwise.
Yes John,
The reason we are seeing relatively little inflation now is because most of the printed money has not escaped into the economy to chase goods. Instead, it is sitting as excess reserves or other velocity challenged assets.
Once the money that is printed is no longer “sterilized” inflation will lift off.
Yep, Peter, right on!
Big Al
A big ditto on that…Peter and John W.!!
John W,
I am not sure how it could happen otherwise either.
Best,
Big Al
Peter: I believe things are so screwed up that it is impossible to fix them. The people in the US have been told so many lies by their current government, they don’t believe anything even the truth. But you know what really saddens me is not the probably fact that most people can’t handle the truth, but the indubitable fact that most of government actually belief their own lies.
QE has never stopped and it can’t stop without a complete reset in the US dollar. The 30’s was a deflationary depression, the one we are starting is a hyper-inflationary depression. The word hyperinflation is really a misnomer and not correct, what is about to happen is the failure of trust in currency. Two really good books describe the future of the US as exemplified in the past. “When Money Dies” by Adam Fergusson, and the other book “The Dying of Money” by Jens O. Parsson.
http://esocap.com/uploads/files/Dying%20of%20Money.pdf
The current depression is similar in many ways to the Great Depression, but one very big difference is the indebtedness of Sovereign nations.
Peter,
You bring up an interesting point. Perhaps a QE depression is preferred by THEM.
What interesting times we are in!
Big Al
There’s an old adage that we all know, partially, namely “we reap what we sow”. If we plant carrots we get carrots, not cabbage. But there’s two corollaries to that old truth: one, we reap AFTER we sow; two, we reap MORE than we sow. So, in the first case, we need to exercise a little patience because on planet Earth things don’t happen instantaneously, we need to weed and fertilize and wait for sun etc. In the second case, why bother planting unless you expect to get more than your seed back? No farmer would do such a thing, neither should an investor. The problem with our society today is we’ve planted lots of weeds and thorns and now they’re choking us to death. We’ve got to uproot these things, clean house, so to speak, and plant good stuff or we’ll be in trouble forever. Gold and silver are God’s money, ie, not made by man, hence their eternality and universality for thousands of years. We can’t build on sand and we can’t build on thin air.
Evening Arnie D,
That, my friend, is a great comment! Thank you!
Big Al
On behalf of LUNA GOLD CORP in partnership with our company , we want to inform serious buyers , we sell gold from our mining area at the cost of 35000USD PER KILOGRAM ,NEGOTIABLE ABOVE 5KILOGRAMS
For more information , we cant be contact through the address .
BEST REGARDS
Mr.PASCAL ASSISTANT DIRECTOR
KASPAL EXPORT LTD
William street -Kampala -Uganda
+256704703705
On behalf of LUNA GOLD CORP in partnership with our company , we want to inform you that , we sell gold from our mining area at the cost of 35000USD PER KILOGRAM ,NEGOTIABLE ABOVE 5KILOGRAMS
For more information , we can be contact through the address .
BEST REGARDS
Mr.PASCAL ASSISTANT DIRECTOR
KASPAL EXPORT LTD
William street -Kampala -Uganda
+256704703705
Big Al,
The carrying costs of carrying gold (silver) is now and has been negligible for quite some time now. The question is what do you have to lose by having a portion of your assets in precious metals? The answer is nothing – absolutely nothing! Not only that, gold and silver are the only “firewalls” left between you and financial calamity. It is imperative to insulate yourself from these risks. I think David made some outstanding points and many kudos to him for such well-versed and well- articulated truths . I firmly believe that the world leaders controlling the global “puppet strings” are absolutely terrified of a massive global depression with deflationary qualities. My bet is massive money printing until the patient dies of an overdose! That’s when you pull out your gold (silver) bullets and put them in your 357 “inflation protection’ magnum and fire at will. The target? – $10.00 bread, $10.00 gas, $10.00 milk, and other nice, massive indications of the destruction of the dollar’s purchasing power. BTW, probably much higher – target prices – just threw those out their for illustrative purposes, only. But, I am sure you all get the picture!
Marc