Tuesday, December 30, 2008

The US Dollar and Gold - II

Below are some scary US Dollar charts. It looks like the panicky selling of US Dollar assets to meet cash demands has subsided for now, not that it can not happen again.

But first back to basics:

Money (gold, silver, packs of cigarettes), Currencies (silver and gold certificates), and tokens (government fiat paper and digital bits) have 3 things in common:
1.) Medium of exchange
2.) Store of value
3.) Unit of measure/account

A. Money does not have any liability attached to it.
B. Currencies have liabilities attached to them. They are redeemable in something specific. Prior to 1971, there used to be redeemable currencies, usually in gold, that people could flee to if a government or governments were devaluing, ruining their currency or token. For all practical purposes, no more.
C. Government fiat paper and fiat digital bits while not redeemable in anything can not be created without debt/credit being created at the same time.

Inflation (increase in supply, not increase in price), depending on the degree of:
1. Causes people to shy away more and more from using it (US dollar loosing its reserve status amongst central banks).
2. Steals/robs stored value.
3. Shortens the yard stick (unit of measure) while people still use it as a full measure, screwing up their financial and economic calculations for the future (mal/bad investments).

So, what is the no-brainer protection from what is going on at central banks and their treasuries? Or is it treasuries and their central banks?

Gold and silver.

The more they create government fiat paper and fiat digital bits (most US dollars are just digital bits on a hard drive, and that hard drive sure as heck is not yours), the higher in price gold and silver go.

Here is something to think about. If you deposit dollars in a bank, where exactly are those dollars once you have deposited them in the bank?

Now for the charts:

Reserve bank credit.

Currency in circulation.

Excess reserves of depository institutions.

Borrowings from the Fed.

Base money supply.

The US Dollar rally looks to be over:

This is all probably just for starters. Since most of the financial system is corrupt, what can safely store value for you? Not much. Gold and silver are 2 of the obvious.

Wednesday, December 17, 2008

Wednesday, December 10, 2008

HUI - AMEX Gold Bugs Index

The HUI (the AMEX's Gold Bugs Index) looks to be leading gold up.

Notice how the HUI made a higher low in November and gold did not. In December it made another higher low and gold did, too.

It sure looks like the shares are leading gold.

Tuesday, December 09, 2008

The US Dollar and Gold

There have been a huge amount of US dollar denominated loans called in throughout the world, thus the rally in the USD.

It looks like the rally could be over since a head and shoulder topping pattern is developing in the USD.

M3 is about 14 trillion dollars. The US federal government and its central bank, The Fed, have already loaned, gauranteed, made promises of about 8 trillion dollars over just a matter of months with probably a lot more to come.

Do not be surprised if the US Treasury at some point can no longer borrow from the rest of the world, and The Fed breaks.

While this is excellent for the USD price of gold, it is ugly for the future of and life inside the US. Most Americans do not realize what is about to hit them.

While the boyz have a new puppet in the White House, not much has changed. They are still doing more of what caused the problem; creating more digital bit dollars and dollars worth of debt.

To see what life is like when governments and gangster banksters screw up the "money" supply royally, read about real life in Argentina after "1:1" (2001)

Argentina after 2001 - 1
Argentina after 2001 - 2
Argentina after 2001 - 3

For most inside the US, there will be no escape.

The wise already have major protection, gold and silver, from what is coming.