Thursday, February 4, 2010

Quote of the Day

Sourced from Zerohedge.com:
Nassim Taleb, who speaking at a Moscow conference today, the same place where Roubini said to get the hell out of the dollar, said that "it is a no brainer [that] every single human being" should be short Treasuries," citing the policies of Federal Reserve Chairman Ben S. Bernanke and the Obama administration...Deficits are like putting dynamite in the hands of children,” Taleb said in an interview with Bloomberg Television. “They can get out of control very quickly.”
I was wondering when someone with a high public profile was going to make that statement.  Make no mistake, the Chinese will not ignore that comment.  The more interesting question is:  at what point will the market crossover from using the US dollar as a flight-to-safey instrument to using gold?  There is plenty of evidence to suggest that this transition is beginning to take place.  It can't help when people examine the reality that California is about ready to collapse unless Obama prints up some big loans ($20 billion or so) to that State. California has a larger economy than Greece and Spain combined - especially when looked at as a percentage of the overall U.S. economy.

Please keep in mind that Moody's is now making noises about the potential ratings downgrade of the U.S. Government.  Remember that Moody's failed to officially downgrade Enron until just before Enron collapsed.  In other words, Moody's is usually way behind the curve on risk analysis, so if Moody's is expressing concern, it's far too late to fix the problem.

13 comments:

  1. Dave,

    If today is any indication, gold is not yet showing up as a currency. Fears of sovereign default today has been dollar bullish and bearish everything else.

    The anti-dollar trade has been crowded recently. Problem is everyone else will default before the U.S. does, which is dollar bullish.

    Dollar just passed 200d MA with conviction. Could be a long year for dollar bears. I don't see gold acting as a currency until 2012 or 13 when the mortgage markets get cleansed and the liquidity is unleashed.

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  2. on days like today i feel like i'm the one being taken for a ride... sigh

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  3. Dave i think untill china, russia, or some other big country initiates a gold backed currency, gold will continue to be viewed as a commodity.

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  4. Bill, the only reason others may default before the U.S. is because of the currency status. But the people in this country for the most part aren't the gold buyers anyway. If everyone else is loading up on gold because they fear their own currencies, gold will go up against all currencies including the dollar. Look at most of 2005.

    My view is that obviously gold is not THE flight to safety vehicle right now, but is slowly transitioning into that.

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  5. Agree Dan. Tomorrow's o/i numbers for today will be interesting.

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  6. Dave when in god's name will people realize the us government is fudging their own economic data?!?!?! I mean cnn for christ's sake has an article saying BLS understated job loss by almost a million this past year!!!!!!!! great now i have a migrane!

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  7. Silver is in my target area, gold still a bit off. Decision time this weekend for me!

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  8. Whoa. gold/silver ratio back to almost 70. I'd buy a little of both and save some gun powder in case they get slammed again.

    At this point I don't care what the dollar does from here, gold should start moving higher regardless of what the dollar does.

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  9. Dave,
    I have a few thoughts on all this tonight but I think there will be time before a need to move is at hand.

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  10. We can definitely go lower - a lot lower on the metals. But my view is the bulk of the pullback is over. I don't think the Govt has the ammo left to engineer the kind of hit put on the commodities that happened in July '08. We we're now well below the 200 dma on silver, and extremely oversold. We may see another big gap down, but it won't last long.

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  11. The present bid on this beauty is a mere 500 dollars + over spot.

    No waning in enthusiasm from gold bullion and gold coin shoppers on E-Bay.

    http://cgi.ebay.com/2009-MS70-50-AMERICAN-GOLD-EAGLE-1Oz-999-FINE GOLD_W0QQitemZ280461111066QQcmdZViewItemQQptZCoins_US_Individual?hash=item414cc8ef1a#ht_745wt_1028

    And from Jim Willie:

    http://www.financialsense.com/fsu/editorials/willie/2010/0203.html

    And this:

    http://johngaltfla.com/blog3/

    Scroll down for the gold related post.

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  12. You read the Shenandoah blog? I've been reading it for about 6 months. I like his work.

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  13. Yes, I've only started visiting there recently.

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