Thursday, May 17, 2012

John Boehner: "Obama Debt Ceiling Increase Demand Took My Breath Away" .

I consider gold outside my regular investments.  I don't trade bullion.  I hold it as a unit of wealth.  I know that one hundred years from now, bullion will possess purchasing power.  The dollar?  I don't know.  I do know that the history of every fiat currency is a descent into worthlessness.  No fiat money has ever survived.  - Richard Russell on King World News LINK
It's coming, people.  Both a big debt ceiling increase and a lot more QE.  Anyone who thinks the Fed is serious about not printing any more money is either cluelessly naive or hopelessly ignorant.  The apathy and nonchalance about what is happening in this country is beyond appalling.  And now Charles Schumer, a supposed Democrat, wants to prevent anyone giving up their U.S. citizenship from re-entering the U.S. ever again.  Dare I remind Herr Schumer that is exactly the kind of law the Nazis imposed on Schumer's relatives (my relatives too) in the 1930's?  Those who forget the past are condemned to repeat it (Santayana), Chuck.

Here's a list of Schumer's largest campaign contributors:  LINK.  A mix of wealthy, sophisticated Wall Street, law and accounting firms.  I would like Schumer to come out and publicly investigate the partners and upper management of each one of those firms for offshore tax shelters and tax-evasion schemes.  There's no way in hell that Schumer can say his biggest donors are not also big tax evaders.  No f--cking way.  F-ck you Schumer.

Aah but I digress.  The Fed is already beginning to show its hand on QE.  I don't know if it will be overt money printing/Treasury buying or if they'll use some other kind of veiled money printing scheme, like the massive dollar/euro swap facility that's in place and likely to go parabolic in size.

Circling back the Boehner's statement after his meeting on budget and fiscal issues with King Barack, I have to believe that the number Obama put in front of Boehner for a higher debt ceiling is somewhere in the $18 to $20 trillion range.  And Obama wants this done without commensurate budget cuts.  Here's the LINK

Make no mistake about it, if this country was forced to use a cash in-cash out spending procedure, there would not be any need for a debt ceiling increase.  Until that happens the amount of Government debt issued and outstanding will continue to go parabolic, in bubble fashion:

FRED Graph

THIS, my friends is what the chart of an asset class that is in a bubble looks like.  The relative price of gold is probably right around 1985 on this chart.  Gold and silver will never be in bubble-mode until their long term charts look like this.

This is why big institutions, domestically and abroad, are beginning to move their capital into gold.  We haven't even begun to see the massive wave of institutional capital pile into the gold and silver asset class.  We have seen this already in Treasuries, and it's coming to an end.  Thus, the very crux of the reason why the Fed will soon be printing a lot more money and why gold and silver are getting ready to launch into their next cyclical phase higher.

I rarely like to stick my neck out and put a price/timeframe projection on the metals because the market is so highly manipulated.  But I will say that I am betting a lot of my own money that gold will be over $2000 and silver will be over $50 before most people have put up their Christmas trees - that is, if they can still afford one...


  1. AUMN is collapsing on no news. This is brutal!

    1. capitulative selling. i know for a fact there's nothing wrong behind the scenes. sometimes you have crawl under that rock Sinclair talks about and pull it over your head and don't look out for awhile...

  2. Lol on can buy the 492M ounces of silver for .45 per ounce.

    The best part of that deal is you get all the other base metals, gold, equipment, and property for FREE!!!!!!!!!

    The action reeks of forced liquidation due to redemption.

  3. Honestly who the f is selling down here! The market cap is now 139 million. Give me a break.

    Dave thanks for letting me vent on your blog btw. Just tell me i'm not crazy that the fundamentals are in place that makes this company worth many multiples of this market cap. I feel like i'm living in the twilight zone.

  4. But big institutions are putting money into ETFs not physical (Kyle Bass excepted). Does that delay the price increase?

  5. Sentient is the likely fund dumping AUMN.

    They are probably being forced through redemption's. They filed a prospectus with the SEC saying they intended to sell 4.11m shares of their 7.1m share holdings in AUMN

  6. Shumer need not worry about Americans who give up their citizenship returning to the US, with the way the US is going, ex-pats might never want to return. For US citizens living overseas, FATCA might be the straw that breaks the camel's back, or the tax law that drives citizens away for good.
    What is FATCA you ask? It was a law passed to crack down on tax cheats who used financial institutions outside the US to hide income and asstes. FATCA was an over reaction to the problem and now foreign financial institutions will be required, in 2013, to tell the IRS if any of their depositors, investors and the like are US citizens. Non compliance with the law leads to a withholding tax of 30%. The result-some foreign financial institutions are telling US clients to get lost, are closing their accounts or are seriously considering avoiding ALL US investments rather than risk the tax penalty. How this will all play out when the law goes into effect is yet to be seen, but it is forcing many foreign institutions to seriously consider if they should invest in any US investment and is forcing some US citizens living overseas to consider renouncing citizenship.
    The US Government- If you think the problems we create are bad wait until you see our solutions.

  7. Look at AUMN coming back today! I should have picked up shares yesterday. Dave, do you think there will be another pullback to pick up shares?

    I'd love to buy some, but not sure if it's a good idea while it's rebounding right now.

  8. Dave, pardon me if you've covered this before recently but I'd love to know what you think about nationalization risk pertaining to buying/holding gold and silver mining stocks. Even those in the U.S. and Canada. Thanks and really appreciate your blog/commentary!

    1. It's probably the lowest in the U.S. and Canada. But I would only trust that ALL industries in the U.S. will remain private to the extent that you trust the Govt.

      The only way to completely insulate yourself from Govt domination of your life is to convert most of your wealth to physical, including your IRA, remove it from the banking system and move to the Bahamas.

    2. Dave,good stuff-thanks for your insight. Jim Sinclair pointed out a few weeks ago when asked the same question that that you need to be willing/able to live in the country your wealth is stored. Jon...