Sunday, November 08, 2009

Gold, Silver and US Treasuries

US bonds have been going up at a good rate since the early 1980s. This can not last much longer considering the number of USD being created out of thin air, which means an equal amount of debt is being created for each USD. This, when the problem is too much debt in the system to begin with. Nutty, crazy, incredibly irresponsible action! Why would the price of bonds keep going up as the US treasury keeps pumping out more and more of them? If people and governments around the world start selling them, watch interest rates / yields go up. Rates are one of the most powerful drivers to the upward trend of the price of gold and silver.
Now THAT is a scary picture of a bubble!


Jeffrey Rogers Hummel explains the reasons behind a possible default or partial default by the US government on its debt at:

AUGUST 3, 2009
Why Default on U.S. Treasuries is Likely


Increasing rates are one of the most powerful drivers to the upward trend of the price of gold and silver, and to a crashing economy. Increasing rates on debt are a major indicator of the gradual loss of principle due to too many of what ever was promised as repayment of the debt, in the US's case, USD because too many of them are being created out of thin air at the Fed central bank.

Inflation is not just a US problem. Many government treasuries/central banks are doing it.


Iceland says goodbye to the Big Mac


REYKJAVIK, Iceland – The Big Mac, long a symbol of globalization, has become the latest victim of this tiny island nation’s overexposure to the world financial crisis.

Iceland’s three McDonald’s restaurants — all in the capital Reykjavik — will close next weekend, as the franchise owner gives in to falling profits caused by the collapse in the Icelandic krona.

"The economic situation has just made it too expensive for us," Magnus Ogmundsson, the managing director of Lyst Hr., McDonald’s franchise holder in Iceland, told the Associated Press by telephone on Monday.

Lyst was bound by McDonald’s requirement that it import all the goods required for its restaurants — from packaging to meat and cheeses — from Germany.

Costs had doubled over the past year because of the fall in the krona and high import tariffs on imported goods, Ogmundsson said, making it impossible for the company to raise prices further and remain competitive with competitors that use locally sourced produce


Friday’s (Oct. 23) The Dennis Gartman Letter displayed some unusual enthusiasm for the gold story:

"When the "Jeremiads" of the "Hard Money" disdainful right-wingers become the order of the day, times are difficult at best. But we shall have to admit that the anti-deficit brawling of the "Hard Money" crowd that seemed for the past many decades to be nothing more than screeds is now coming true.

…now their wailing and gnashing of teeth is serving their followers well, and rather than being the fact that stopped clocks are right twice a day, perhaps those on the "Hard Money Far Right" are on to something as the deficit does not simply rise, it explodes."


World's richest & most successful speculator warns of great inflation

This is it. This is your last wake-up call... At a recent breakfast, John Paulson, the most successful speculator of the last 20 years, explained exactly how the great inflation will come to pass. Says Paulson: The banks will resume regular lending – thereby releasing all of the excess money supply into the system – within six to 24 months. Two or three years after that, we will see 12% annual inflation.

Paulson is recommending investing in gold. He's already placed more than $4 billion of his firm's assets in the metal. Why is Paulson building his position so early if he doesn't expect inflation to kick in for four years? Scarcity. Paulson notes, of the $200 trillion of investable assets in the world, only $800 billion is gold. You won't be able to get much of that $200 trillion into gold at any reasonable price. But that won't stop people from trying.

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