Thursday, May 26, 2011

Got Gold?

Here is a simple reason, succinctly summarized, why gold is going much higher:

The prognosis for the dollar is terminal, in our opinion, short of political sea change. In that sense, our view, right or wrong, is at odds with the consensus view (emphasis is mine). Hope that the political battles over the debt ceiling and the future of government spending will result in fiscal sanity and that, pending such an outcome, normal economic progress will resume, to us seems misplaced. Welfare state democracy is incompatible with sound money, in our opinion

Here's the LINK of this must-read commentary from John Hathaway on King World News.  "Consensus view" is that gold/silver are in a "bubble" that is ready to collapse at any moment.  I can't tell you how many conversations I've had with many many people who think gold is "too risky" right now, or that it has "run up too much,"  or that "their investment advisor says its best to avoid."

LOL.  I love the hoi polloi and their idiot "expert" investment advisors.  Why?  Because as long as that consensus attitude and view - and Wall Street promoted view, I might add - persists, it tells me that very easy money in gold, silver and mining stocks is yet to be made.  It's incredible really.  I was just discussing with someone last night how I thought in 2002 that what is happening now would have happened by 2005.  I never imagined that the public would still place this much faith in the sytem and their comatose money advisors like this.  I still know people who are in the process of buying mid-high six figure homes.  That's insane.  Never in my wildest dreams did I ever expect that the markets would still be seriously mispricing the precious metals and mining stock sector. 

Oh well, it's the power of Government thought-control per Orwell - and the willingness of the masses to have blind faith in that which they are too lazy to think about for themselves - that enables those willing to look at the Truth and to think outside-the-box to take advantage of the predicament...


  1. Good stuff. Touches on much of what Hathaway says. Listen to the second (10 min) interview first to see if you’re interested. The other longer clip is more of the same.


    Rob McEwen Interview from Germany (in English)
    Some excellent questions were asked in this interview. The questions were presented on screen in German but you can get the gist of what was asked by Rob’s answers. His perspectives on Europe, bailouts, energy, gold, silver, gold confiscation, real estate. This is the best McEwen interview I’ve seen in some time.

  2. People who say gold is "too risky" have drunk the State's kool-aid, IMO. Little do they know that it is the fiat currencies that have ALL THE RISK.

  3. OK here is what I don't understand.
    If the dollar loses value, won't all prices go up including land and buildings and wages?
    And gold of course.
    You seem to be saying buy gold but avoid real estate. I don't understand.

  4. The consensus view is of less importance when we understand not everyone has the same vote...follow the big money held by the Giants -

  5. bix1951,

    In terms of gold real estate will crash from where we are today. High unemployment does not create people to buy up real estate anytime soon.

  6. "I never imagined that the public would still place this much faith in the sytem and their comatose money advisors like this."

    This isn't the first time the sheep have followed a know it all shepherd off a cliff.

    Quotes to remember, and the year they were said-

    "We will not have any more crashes in our time."
    - John Maynard Keynes in 1927

    "There will be no interruption of our permanent prosperity."
    - Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

    "There may be a recession in stock prices, but not anything in the nature of a crash."
    - Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

    "This crash is not going to have much effect on business."
    - Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

    "There will be no repetition of the break of yesterday... I have no fear of another comparable decline."
    - Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929

    "We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices."
    - Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929

    "Buying of sound, seasoned issues now will not be regretted"
    - E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929

    "In most of the cities and towns of this country, this Wall Street panic will have no effect."
    - Paul Block (President of the Block newspaper chain), editorial, November 15, 1929

    "Financial storm definitely passed."
    - Bernard Baruch, cablegram to Winston Churchill, November 15, 1929

    ...and on and on and on etc. etc. etc.
    It is always good news on Wall Street, no matter what the decade or condition the world is in.

    ....My footnote on real estate vs gold.

    Yes, real estate will go up if the dollar goes down, but there is no guarantee that wages will go up to match the dollar’s decline. Consider what is happening right now, food and energy are going up, but ’official’ inflation claims that price rises are tame, so an increase in wages is unlikely to occur. Employers won’t raise wages during flat or declining sales, so an increase in wages is unlikely.

    No wage increase, not enough money to buy real estate, no real estate sales.

    Don’t’ forget Zimbabwe, their dollar turned into dust and anyone holding real estate found few buyers but an increase in costs, real estate taxes, utilities, etc.
    Lastly, if we do enter a period of steep inflation it will be much easier to exchange gold for food than a house for food.

    For everything there is a season, and that goes for investments too.
    Just my views on the matter.

  7. Once again I have egg on my face. I figured I would get some more yellow metal lower after the silver margin games, but of course it never really moved down. Good stuff Dave.

  8. LOL GYC. I'd be more worried about getting some period than I would trying to "game" the market for the best price.

  9. Great post Dave.

    Stupid Americans, good more for me.

  10. About the question above when the dollar loses value. Its difficult perhaps to get your head around - however....

    There are three things at play here...
    1) De-leveraging - pricing of items bought with debt - real estate, cars etc - things you can go without to some extent. Meaning second home, second car etc will not be in demand during hyperinflation. A visit to Zimbabwe will highlight that. Buildings are empty.

    2) Huge inflation in items you absolutely need to survive - food and energy

    3) Protection of your savings - excess "money" for a rainy day - where on earth do you put that - hence the only way Gold and Silver.

    Perhaps that answers to some extent the question.

  11. Rob McEwen - Once $3,000 Falls Gold will Launch Like a Rocket

    When asked how this cycle will play out McEwen had this to say, “If we follow the course of history, we’re going to see the value of the dollar, in terms of its purchasing power, further reduced. Our cost of living is going to go up and that’s not good for anyone. So we need to find ways to protect ourselves, and historically gold, silver have been one of those areas that have protected large parts of financial assets when you have monetary systems being debased by governments that are eager to try to ward off the creditors.

    The QE3 is going to happen and there will be a QE4 and probably a QE5. We’re looking at unprecedented amounts of monetary stimulation occurring not only on this side of the Atlantic, but over in Europe and it has been to stave off a collapse. There has been tremendous loss of value, but we haven’t seen a big jump in employment and we haven’t seen a large jump in capital investments and that’s what we need to see.

    We need to more jobs created and this money isn’t doing that. So, that’s where you go back to the government saying, ‘well, we can’t stop right now because the job is not done.’ But for every one of your listeners, while this job is being done they have to go out and protect their assets against what’s happening.”$3,000_Falls_Gold_will_Launch_Like_a_Rocket.html

    Consumer sentiment index rises to 74.3 in May
    yet..Consumer spending tallies the smallest gain in three months, up 0.4% for April. Adjusted for inflation, spending advances just 0.1%, suggesting a feeble consumer and a sputtering U.S. recovery.

    If you believe the consumer confidence #'s they may have polled people near these hotels...

    Marc Faber Is Shocked By How Many Ferraris And Bentleys He Sees In Newport Beach During His Smoke Break

    He did however branch out into the topic of class divergence in both
    emerging and developed economies: "in front of far too many luxury
    hotels there are far too many Ferraris, Maseratis, Bentleys... I see a
    boom everywhere, except for the working class, except for the lower,
    middle class. But among the well to do people the wealth that is
    floating around and the prices you pay for high end properties is
    incredible, and I think that will come to an end, and a lot of people
    will lose a lot of money... I was in La Jolla, Laguna Beach, Newport
    Beach, I was in front of a restaurant smoking and I've never seen so
    many Ferraris, Maseratis, Bentleys and fancy cars anywhere in the
    world, and this is in America. I am not saying this is wrong, but
    there is an opulence among a small group of people that is huge when
    there are lots of people that are struggling. This gives me a bad
    feeling because I've seen so many emerging economies when they were
    booming, that was the time to get out."

  12. Anonymous said...
    "Lastly, if we do enter a period of steep inflation it will be much easier to exchange gold for food than a house for food."
    Having a vegetable garden, I can say that I would be very happy to trade food for your gold. But if you are hungry and all you have is one oz of Gold, how is this going to work?

    I would also be happy to trade food for your Silver.

    Get it?

    Friday, 27 May, 2011

  13. This describes the mentality of 90% of population!

    Risk Redefined

    I remember the first time I saw someone us the terms “risk on” and “risk off” as a way to describe the flow of capital into and out of certain baskets of assets that are supposedly “risky” or “safe.” The terms got under my skin back then and they continue to do so until this day. Wall Street and the media just love coming up with trite and untruthful statements as a way to condition investor behavior and ultimately separate you from your money. First of all, the world and the successful deployment of capital is much more complicated over any serious investment horizon than the simplification of everything into “risk on” and “risk off.” This way of thinking is even more dangerous when conventional wisdom allocates to the “risky” category many items that are in reality the true safe havens and to the “safe” category those that are guaranteed to destroy your financial well being.

    So why do people think this? Mainly because the economic central planners want it to be this way and they have done everything in their power to make the market act that way on a regular basis via manipulation.

    Lenin is said to have called such people “useful idiots.” Treasuries are safe and gold is a risk asset. Glad I got the memo!