Thursday, July 7, 2011

Buongiorno da San Gimignano, Italy (Heart of Tuscany)

It's beautiful here in "San Jimmy G" and you certainly wouldn't know that Europe and the U.S. are financially melting down from the heat of too much debt.  The Brits and Euros here certainly have no idea.  But here it is:  LINK

Please note how that article is NOW attributing the rise in gold to higher Chinese interest rates and the flight to safety from Euro debt.  How ironic since it was very recently that gold would get hammered when the Chinese raised their short term banking rates.  And since when is gold now described as being a "flight to safety" refuge?  LOL

But there it is, in black and white from - no less - the U.S. media.  If you notice, gold and silver have staged a massive rally over the past few days, despite very weak equity markets.  This is the "dislocation/flight to safety" attribute I've been looking for which will precede another big move higher in the price of the yellow dog and it's monetary cousin. 

For everyone scratching their head wondering why analysts like James Turk and John Embry are calling for a big move in gold this summer, please re-read the above-linked article and understand that historically, gold has made its best moves when interest rates are rising.  And rising not because economies are getting stronger, but because inflation is accelerating (money supply expansion = inflation) AND because investors are losing any remaining faith in sovereign-backed paper investments.

Basta! (Enough for now).  Time to go enjoy the surrounding hills covered with olive trees and sangiovese and nebbiola grapevines!  Then on to Cinque Terre (the Italian Riviera) and then Rome!  Ciao ciao! (And buy more gold before it gets even more expensive!).


  1. Cool. I have been in San Jimmy. Beautiful. On the way down to Rome go to Monte Argentario too, over the causeway to Porto Ercole. We were based on yachts in Cala Galera. Good memories

  2. And have a Cuba Libra. I love stiff drinks.

  3. Looks lovely!

    My wife is lobbying for a trip to the home of my paternal forebearers, Abruzzi. Your trip may have loosened my pursestrings.

  4. Dave,

    A few months ago I bout some euros do diversify my assets. I now wish I had bought more gold. Do you know of any place in Denver that I can buy gold with euros (and not at the sell exchange value)?

    Thanks, Jim

  5. Looks great, enjoy Dave!

  6. Why would anybody in their right mind, traveling where you find yourself at this very moment in time, have any desire whatsoever for stamping your passport back to the U S of A? Are you nuts? Tuscany...Cinque Terre. Does it get any better?


  7. Ben Believes Gold Only Has Value Due To Tradition

    paul then asks why banks hold gold on their balance sheet? why not
    diamonds? the bernank says, “tradition, I suppose.” so let me get
    this straight, banks hold billions of dollars of an asset that pays no
    interest or dividends on their balance sheet for reasons of
    "tradition". nothing to do with anything else, just tradition. uh,
    yea. that must be it.

    That’s funny, when Ron Paul asked GREENSPAN the same question in 2005
    he got a COMPLETELY different answer:

    So what are the conditions that you might anticipate when the world
    may reconsider gold?

    MR. GREENSPAN: Well, you say central banks own gold — or monetary
    authorities own gold. The United States is a large gold holder. And
    you have to ask yourself: Why do we hold gold?

    And the answer is essentially, implicitly, the one that you’ve raised
    — namely that, over the generations, when fiat monies arose and,
    indeed, created the type of problems — which I think you correctly
    identify — of the 1970s, although the implication that it was some
    scheme or conspiracy gives it a much more conscious focus than
    actually, as I recall, it was occurring. It was more inadvertence that
    created the basic problems.

    But as I’ve testified here before to a similar question, central
    bankers began to realize in the late 1970s how deleterious a factor
    the inflation was.

    And, indeed, since the late ’70s, central bankers generally have
    behaved as though we were on the gold standard.

    And, indeed, the extent of liquidity contraction that has occurred as
    a consequence of the various different efforts on the part of monetary
    authorities is a clear indication that we recognize that excessive
    creation of liquidity creates inflation which, in turn, undermines
    economic growth.

    So that the question is: Would there be any advantage, at this
    particular stage, in going back to the gold standard?

    And the answer is: I don’t think so, because we’re acting as though we
    were there.

    Would it have been a question at least open in 1981, as you put it?
    And the answer is yes.

    Remember, the gold price was $800 an ounce. We were dealing with
    extraordinary imbalances, interest rates were up sharply, the system
    looked to be highly unstable — and we needed to do something.

  8. (Dave)

    Hey Jim, you might be able to get that trade done at Dave's Coin Shop on south Broadway. It's two doors down from Rocky Mountain Coin (to the south). It's south of Virginia on B'way. Rocky Mtn Coin can probably do it too but I like dealing with Dave a lot more. He's a good guy.