Friday, February 26, 2010

Good Technicals For Gold

On Thursday, the gold price finished going down to close the gap up it made last Tuesday, and made an outside reversal day.

This is very positive for the gold price.

A Tango 2 Learn From
Argentine Currency Crisis 2001 – Review and Reflection


Tuesday, February 16, 2010

Staggering Debt and Dollar Creation

Tidbits to show the insanity of the US government's debt and dollar creation madness. This should be scaring the bejeesus out of people, pushing them into gold and silver. Still, too many remain clueless.

On January 28, the US Senate approved by a 60-39 vote a bill to increase the debt "limit" of the US Treasury by $US 1.9 TRILLION to $US 14.294 TRILLION.

In 1985, the whole debt was $1.9 trillion. Now that number is an increase in debt for just one year. Why bother having a debt limit to begin with if they keep increasing it annually or when ever they want? Crazy ruthless action.

The White House said the new budget will be $US 3.8 TRILLION. That's 3.8 not available for the private economy. Imagine what could be done with that by the private economy in increasing people's standard of living. The government is eating alive the private economy inside the US at least.

US Treasury average annual debt increases from 2003 - 2007 were about $556 Billion.
2008's debt increase: $1,017 Billion
2009's debt increase: $1,885 Billion

1787- 1981, it took 194 years for Treasury debt to reach $1 TRILLION.
After that it took just 27 years (2008) to reach $10 TRILLION.
Now, 2010, it's over $14 TRILLION.
There is a compound curve heading up here.
Almost all of this debt started accumulating after the US reneged on it's promise to redeem dollars for gold in 1971. Since 1971 all dollars are backed by nothing but debt. It literally takes the creation of a dollar's worth of debt before a dollar itself can be created.

The more dollars, the more debt, the bigger the economic crash. An argument could be made that the rest of the world is slowing down or has stopped buying US Treasury debt and that it is the Fed that is doing the buying now. It has to create dollars out of nothing to do this.

Gold and silver are your easiest protection from what is coming from the biggest, baddest, broke, dead beat (can never keep all these promises to pay, they're too large), net debtor nation in the world. The net present value of unfunded liabilities are up around $100 TRILLION.

Bill Buckler at The Privateer:
What is shown by the monstrous increase in government debt since 1961 and especially since 2000 is the diversion of precious REAL economic goods and resources from production to consumption. The size of the funded (AND UNFUNDED) debt of the US government is a measure of what has been lost. It measures the productive jobs which have not been created, the capital goods which have not been built or maintained and the real wealth which has not been saved. Worst of all, it measures the erosion of liberty through this wealth diversion into the hands of government. It has taken nearly three years of financial "crisis" for the majority of the American people to wake up to the fact that something is badly wrong.

In JFK's time, money still had a connection to economic reality since the US Dollar was still redeemable in Gold. That is why Treasury funded debt in 1961 was about two percent of what it is today. For Americans and for the rest of the world, the cost of freedom and liberty has come VERY high - especially since none of us has received what most of us thought we were paying for.

* * * * *

Peter Schiff on the State of the Union speech and what the government is doing that is wrong:

Gerald Celente on Obama's State of The Union Speech on YouTube

Ron Paul: State of the Union Address Part 1 of 3 on YouTube
Ron Paul: State of the Union Address Part 2 of 3 on YouTube
Ron Paul: State of the Union Address Part 3 of 3 on YouTube

Gold and silver are your easiest protection from what is coming.

Wednesday, February 03, 2010

Misc. Dollar and Gold News From The Past That Should Be A Wakeup Call

Saudis drop WTI oil contract

By Javier Blas in London
Published: October 28 2009
Saudi Arabia on Wednesday decided to drop the widely used West Texas Intermediate oil contract as the benchmark for pricing its oil, dealing a serious blow to the New York Mercantile Exchange.

The decision by the world’s biggest oil exporter could encourage other producers to abandon the benchmark and threatens the dominance of the world’s most heavily traded oil futures contract. It is the main contract traded on Nymex.


Turkey to use national currencies in trade with Iran, China

.ANKARA, October 28 (RIA Novosti) - Turkey is switching to national currencies in trade with Iran and China, ending dependence on the U.S. dollar and the euro for about 20% of its commodity turnover, local media reported on Wednesday.

Turkey has already switched to settlements in national currencies with Russia amid weakening confidence in the greenback as the world's major reserve currency. The move was initiated by Turkish President Abdullah Gul during his visit to Moscow in February…


U.S. Inflation to Appear Next in Food and Agriculture

October 30, 2009

The average American consumer today spends approximately 30% of their income on housing and only 10% of their income on food. We expect these numbers to reverse in the years ahead as the U.S. dollar loses its purchasing power. In Germany during hyperinflation, rents fell from 30% to less than 1% of the average households' expenditures while food rose from 30% to a high of over 91%.


Former Wall Street Player Reveals the Inside World Behind Shady Bailouts to Bankers
By Joshua Holland and Nomi Prins, AlterNet. Posted October 30, 2009.

An interview with Prins, former managing director at Goldman Sachs, now a razor-sharp financial muckraker and author of the new book, "It Takes a Pillage."

[What's going on right now is the greatest heist of value stored in the USD in the history of the US. After all, that's the main function (theft of stored value) of a central bank's monopoly on issuing what ever it is that people are forced to use for a medium of exchange, store of value and unit of measure of value. It's just that now, it's gotten totally out of hand. Nothing new in history though. It's just that the masses never learn, which is why central banks can get away with the theft. And, at the moment, the masses do not know what is happening. Even when it all falls down, many still will never understand the causes of what happen.]


Paul Tudor Jones: Why Gold Will Soar

“precious metals exposure has been increasing and is currently the largest commodity exposure. As a result we have included, for this quarter, a separate discussion on gold as an appendix. I have never been a gold bug. It is just an asset that, like everything else in life, has its time and place. And now is that time.”

[ There are very few in the commodity trading world who are true legends. Paul Tudor Jones, who began his career as a cotton trader for Refco, is not only a legend, but among the best of them. His comment that gold’s time has come will reverberate in the commodity world and be taken VERY SERIOUSLY. ]


Inflation by Stealth

John Browne
Oct 29, 2009
The TARP money, financed by an increase in the monetary base, has been provided to the banks at zero cost. And for the first time ever, the Fed is paying interest on bank reserves. Therefore, the banks can loan money to the Fed and to the government, via Treasury securities, at an interest rate spread of some 3 to 4 percent without risk. Given these incentives, it makes no sense to loan to anybody else. So, despite a massive increase in the monetary base, credit remains tight and price levels flat.

However, if the Fed stops paying interest on bank reserves or otherwise 'persuades' the banks to lend, the $1 trillion will be leveraged up by the banks and spewed out into the economy. Fractional reserve banking will transform a $1 trillion monetary base injection into a $9 trillion increase in money supply. When that happens, prices for everything will go through the roof.

So for now, inflation is like a ninja stalking our economy. It's lurking in the shadows but can't easily be seen. But once its strikes, it will be fast and deadly.


A 5 page .pdf file:
Surreality Check Part Two..
Dead government walking

By: Eric Sprott & David Franklin
October 2009

In November 2007 we wrote an article entitled “Surreality Check... Dead Men Walking”, in which we
discussed the early warning signs of the impending credit crisis and highlighted companies that were looking particularly troubled to us at the time.
As respected market commentator David Rosenberg recently wrote, “the stock market is divorced from economic reality”.1 It’s time for another surreality check, but this time it isn’t the publicly traded companies that deserve attention, it’s the governments that have saved them. Make no mistake – the dead men are still walking – they’re just a lot bigger now than they were two years ago, and they don’t generate earnings – they print money and tax their citizens.
we thought we’d state it outright for our readers this month: the United States Government is on a trajectory to default on their obligations.
There simply isn’t enough taxing power, value creation or outside capital willing to support its egregious spending.
Three years later, the financial condition of the US government is completely untenable. The projected US deficit from 2009 to 2019 is now slated to be almost $9 trillion dollars.
[That's using cash accrual method of accounting (illegal for the rest of us). 10s of trillions using GAAP (Generally Accepted Accounting Principles)]

On a GAAP basis, US government unfunded obligations increased by more than $9 trillion from last year alone!
The real shocker that we discovered some time ago is that the FDIC ‘funds’ were never even held in a segregated bank account – the fees collected from the banks are accounted for as a part of the government’s general revenues that go towards military spending, bailouts, interest costs and other government programs.

[Don't you wish you could write yourself an I.O.U. and put it down on a loan application as an asset, or to just kid yourself about what your net worth is?] [The FDIC "insures" (fraud) about 5 trillion of deposits, yet is broke.]


Central banks are going from selling gold to buying gold; Germany has stopped selling it while India bought 200 ton. Here is just another country, the latest, that is getting it:

Sri Lanka buying gold to diversify reserves

Nov 5 (Reuters)NEW DELHI, India -- Sri Lanka's central bank has been buying gold for the past five or six months as it diversifies its reserves amid volatile markets, the bank's governor said in an interview on Thursday.

"We have been fairly strong accumulators of gold reserves over the past few months," Sri Lanka Central Bank Governor Ajith Nivard Cabraal told Reuters in a telephone interview from the southern Indian city of Chennai.

"We haven't stopped yet," he added, declining to quantify how much gold the central bank had bought or how much of the more than $4.8 billion of the country's reserves were in gold.

"Many countries are today diversifying. They are also looking at intrinsic value of their reserves, so gold would be a natural candidate for that kind of reserve accumulation," he said.


In the New York Times no less:

November 8, 2009
Inside the Global Gold Frenzy

MENDRISIO, Switzerland

HERE, in a corner of Switzerland where Italian is spoken and roughly one-third of the world’s gold is refined into bars and ingots, business is booming. Every day, bangles, bracelets and necklaces arrive in plastic bags — from souks in the Middle East, from pawn shops in Asia and from corner jewelers in Europe and North America.
“It’s not that gold has changed, but gold buyers have changed,” said Suki Cooper, a precious-metals strategist for Barclays Capital. “It’s a structural shift we’re seeing on the investing side, from Asian central banks right down to individual investors buying ingots and coins.”
At the airport in Zurich, where there are special vaults to hold gold, shipments of jewelry arrive daily on early morning flights before making their way here via a twisty, three-hour journey through the mountains on tightly guarded trucks. After the jewelry is unloaded, gold ingots, bars and other forms of bullion — already stacked like cordwood along the sooty corridors of Argor-Heraeus — are sent back to Zurich in the same trucks.

“The truck never drives back empty,” said Mr. Oberli. “Time is so important because the value of the material is so high.”
Gold has been around as an investment for 6,000 years,” Mr. Oberli said. “When there is no alternative, it’s there.”

Tuesday, February 02, 2010

Double Bottom For Gold?

It looks like a double bottom for this correction in gold (the right hand bottom being a final shake out of the weak longs).

Yes, it went a tad/hair below it's initial correction hesitation but people are now, after 5-10 years, starting to get reality. The US government is going to go crazy spending (creating out of thin air via the combination of the US Treasury and the Fed) huge amounts of dollars. And since an extra dollar can't be created without first creating a dollar's worth of debt to go along with it, there is an explosion of debt being created.

This explosion of debt is exactly that which caused the problem to begin with. Therefor the goverment in the US will cause a deeper depression and a longer depression than the depression has to be. Many people allow their governments to worsen the situation because they confuse "money"/dollars/euros/etc with wealth. They don't understand that what counts is actual wealth, not "money"/dollars/euros/etc. One of the things those things are is a way to measure wealth. They are not wealth itself.

Not only are they creating huge amounts of dollars, they are creating an equally huge amount of debt equal to the dollars created. This is something most people don't understand which is why they can get away with it till the system crashes and burns. Too many people do not stop and wonder or know where all these new dollars come from, how they come into existence, what the price to be paid is for all these new dollars/euros/pesos and the debt that comes with them.

This is the US Treasury's and the Fed's way of doing things:

This is too many people in the western hemisphere:

There is already talk/planning by the US Government to steal assets from people's retirement accounts (IRAs, 401Ks, later maybe pensions) and replacing those assets with US Treasury debt in the hopes of replacing the foreign demand for US Treasuries with forced domestic demand. A possible last desperate measure to keep the price of US debt from taking a dive. It looks like the US Government was paying attention to Argentina's grand theft, and learning a trick or two.

Now a days, you can't count on digital bits on someone else's hard drive. Most "money"/dollars/euros/etc/stocks/bonds/other financial instruments are just digital bits on a hard drive, in a very convenient form and place to steal. Theft is rampant, particularly by governments. Gold and silver in your own hands are some of the best defences from the theft, one of the best **stores of value**. All those government controlled "savings" accounts of one form or another are dangerous places to store value, to "invest" in, etc. When government's backs are against the wall, they get ruthless. All you have to do it study the history that they will not teach in most schools.

"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it." … Frederic Bastiat (1801 – 1850)

2009, the ninth straight year that Gold has gone up in US Dollar terms:

2001 - from $US 273 to $US 279 - up 2.20 percent
2002 - from $US 279 to $US 348 - up 24.73 percent
2003 - from $US 348 to $US 416 - up 19.54 percent
2004 - from $US 416 to $US 438 - up 5.29 percent
2005 - from $US 438 to $US 518 - up 18.26 percent
2006 - from $US 518 to $US 638 - up 23.17 percent
2007 - from $US 638 to $US 838 - up 31.35 percent
2008 - from $US 838 to $US 884 - up 5.49 percent
2009 - from $US 884 to $US 1096 - up 23.98 percent

And the other market(s) that have done this?

Amazingly most in the western world are still comatose about the economic realities that will determine the state of their future. This is starting to change. Something is up, politically, geo-strategically, economically, financially. Gold, silver and other atoms (commodities) are the defence against what's coming.

You can not own real estate in the US. You can only rent it from the government. If that was not the case, then real estate would be a good store of value.

What other stores of value are there, besides gold and silver, that have no connection to debt and taxes? There are some, but not many; and they do not have the quality/nature of real actual money like gold and silver do.