Let things settle down for a minute or two. Permit yourself to see the forest through the trees. Now ask yourself, why is gold going higher?
Is it a trade? A bounce? Or does it signify something more meaningful?
Is gold being used to store cash, by wealthy people afraid of their local banker? Is it a repudiation of central bank over planning?
There are a thousand theories as to why gold continues to outperform. In theory, gold is supposed to be an inflation hedge. If so, how can gold trade up 30% for the year when there isn’t any inflation?
My theory is fear. Fear of the unknown, the persistence of central banks to do anything, a careless recklessness to avoid writing down losses, that has given birth to a new era of irresponsibility from our alleged protectors of capital. We’ve become creators of capital for to explicit purposes of financing bloated fiscal budgets.
I’ll repeat that for you. We literally lend ourselves money, by creating new money, in order to fund bloated budgets, because our politicians don’t want to cut back on spending. We are spending way more than we can afford. But if you take away the entitlements, people will get mad and politicians won’t get reelected. This is dereliction of duty at the highest level and everyone is going to pay for these sins.
As such, gold and gold miners are ripping higher today.
I am long GLD, AU, AUY and NEM with 25% of my assets.
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Wouldn’t chase GLD here. Need a 50% retracement of the January lows ($115 or so). Found a new fun 3x ETF. USLV…….silver !
I wish it would retrace there but doubt it. The only thing that could bring it in is the Fed threatening rate hikes.
Do people forget how easily gold and silver where smashed overnight last year?
I think gold is in the early stages of a bull market. It is going up because investors are realizing that there is a debasement of paper currencies going on around the world as every central bank tries to generate growth. The problem is that its a zero-sum game. Each devaluation (via lower and lower interest rates) begets another (extra Biblical) from another economy. This has also contributed to bitcoin’s rise.
The currency race down will come to a head when most of the large central banks are at negative rates and monetary policy has been completely sterilized. Then the real shit will start. Then will come political instability or war that will allow a reset of debt but at a horrendous cost.
“We literally lend ourselves money, by creating new money”
National debt has completely stopped being debt, and it isn’t just the U.S., it’s Japan, the EU, etc. None of these debts can ever be repaid except with more money created out of thin air. National debt has turned into just a rough measure of how bad inflation will be in each country and what currency exchange rate trends are going to look like.
Interesting way to look at it.
Some economic writers make a convincing case that debt does not matter at all– especially if you have the world’s reserve currency.
http://www.rweconomics.com/
http://neweconomicperspectives.org/
I give some thought at times to the question: How do you get to be awarded the prize of having the world’s reserve currency? The most disturbing answer I come up with, once I start guessing about that is “Well, of course, you have to commit to being the world’s police force.” But not just anyone would be allowed to do this. You have to be seen as a highly stable country and also you have to earn the trust of the most powerful nations on earth. So very few nations– perhaps only 1 at present– would be allowed to apply for the job.
FUCKING BORING
Boring?
If it is true that we pay for having the world’s reserve currency by being the world’s police force, to the satisfaction of other powerful nations– then that is why we have such disastrous counter-productive foreign policies. And such a ridiculously large military budget. And why we have a lot of soldiers getting killed or injured or suffering from PTSD from conflicts that accomplish nothing.
And why we have a population that doesn’t know what is going on with our government, and is being fed distractions from reality at a thousand per minute pace.
You’ve been reading Karl Denninger again haven’t you? He’s been writing on this for years and sadly I think you both are right.
I haven’t been reading Denninger. I am googling him. I see that I don’t agree with most of what he says, but will look for the parts about debt to see if those parts make any sense to me. He sounds childish to me. But acting spiteful and childish has certainly been the key to success for some people who write or speak about politics or economics. Adults don’t generally get as much attention or fame.
I guess I must be the reverse of many readers. I have to grit my teeth and plow through the spiteful parts of a column, in order to try to get to the substance, if there is any. And this guy is mild mannered, compared to people like Alex Jones.
I haven’t. But I used to like KARL, double blue blazer, DENNINGER.
Breadth looks good. Climbing a wall of worry. Things won’t look rosy until they already are. Work hard, buy periodically.
THIS v v v v
” I’ll repeat that for you. We literally lend ourselves money, by creating new money, in order to fund bloated budgets, because our politicians don’t want to cut back on spending. We are spending way more than we can afford. ”
Our institutes of “higher learning” are doing their best to indoctrinate collegian young’uns into believing this is normal monetary policy. All lessons of history contrary to their mandated curriculum are tossed on the….well….ash heap of history.
The great majority of the unwashed have their faces so glued to their Androids and iPhones they will not see it coming until it runs them over.
Eventually though, a generation from now or possibly sooner, the light bulbs will begin to flicker on in the collective mind of said masses and there will be hell to pay. “How could you let this happen”, will be the hue and cry directed toward our career politicians and central bankers. Hopefully a few of them can be caught and physically dealt with for their deeds. Public hanging, castration, tar and feathers or a few losing their heads in the public square, if Islam rules the world by that time, will provide a little bit of balm and solace to the peasants as they starve in the streets.
Eventually it will unwind. It always has through some impetus or another. Wars are good for the economy. The Bilderberg and Rothchild types see is as a double bonus. Create demand and weed out the population a bit.
….Feeling rather moribund today, even doomed, in light of the fact that Hitlery was not indicted by the FBI, proving once and for all there are indeed two standards of justice in this formerly fair country. One for the elites and one for the peasants. Anyone else but that Satan in a dress would have been in jail by now.
Yes, it does appear to be that way, about Hillary, if you believe every word you hear from Right Wing media, imagining that it is true.
Hillary is not the Great Satan. But she is an establishment candidate and Trump is not. Since the establishment still has full control, Hillary will win. She’s not particularly evil compared to others, simply establishment, the same as before. Sanders’ chance is gone, unfortunately.
If we don’t want career politicians and central bankers to be in charge, then we need to find a way to unglue people from their phones and organize to replace current politicians with public servant type people.
Bashing the very people to whom we give control is childish. It’s exactly what a toddler does: Says “I hate you Mommy/Daddy” as he lives in their house, allowing them full control– because the toddler is too immature to take the reins himself.
Are we the people too childish to organize and take the reins ourselves? We would need to do a lot more than just vote. But even in voting, we have more choices than most people realize.
Did you know that the Presidency could be won by a write in candidate?
http://www.dailykos.com/story/2015/7/21/1404380/-The-Write-In-Vote
Jake Gint – where art thou?
This is exactly the very same message in Mike Maloney’s:
The Hidden Secrets Of Money Part 4: The Biggest Scam In The History Of Mankind (In 7 Easy Steps)
http://www.zerohedge.com/news/2013-10-17/hidden-secrets-money-part-4-biggest-scam-history-mankind-7-easy-steps
Though there is some truth to this, it’s mainly a sales pitch to sell people gold and silver. Which may be worth buying soon, as it’s possible that their time has come. But those assets have been losing value since 2011, as the sales pitches went on and on.
+ 80% on AUY, 5% position, should only be a 5-15 any given portfolio, sticking with the avg down on a hedge eventually got winner