Sunday, May 16, 2010

More Thoughts on Gold

Disclosure: I don't actually own any gold. Nothing to steal here. I'm a tangibles guy. Can't eat gold, but it is useful to gauge the extent and timing of the financial collapse, which looks to be worldwide in scope.

First up, read this article about gold ownership. Jeff Clark discusses why gold has not moved higher. Good arguments, but we preppers all know that the fat Greek lady hasn't sung, the Eurocommies are fleeing to the dollar, and that gold is underinvested. The interesting point is the degree of underinvestment: In one survey of money managers, 76% admitted owning no gold. Only 1% of global financial investment is in gold.

Next, read this article. If the implications of what Stewart Dougherty is saying does not make you put the Kitco Gold Chart on your reading list, I think you need to read the article again. Mr. Dougherty essentially discloses how to tell when Big Money is heading for the exits, and how and when it will happen. That is the panic, SHTF, TEOTWAWKI moment. When the Banksters take their ball and go home, it is over.

In reading the usual gold bug investment articles, it is easy to get caught up in the fervor that gold is going to soar to $2,000.00 or $3,000.00 or $5,000.00 per ounce. Some may think that investing in gold can increase one's wealth, because each ounce of gold is going to be worth so many more dollars as the fiat currency-denominated price keeps going up. It only holds true as long as the world believes that the dollar (or other fiat currency) represents a substantial store of value. When gold hits $5,000.00 per ounce, it will be clear that nobody believes that the dollar represents a substantial store of value, or any reasonable store of value. The question is whether the actual widespread realization will occur at $2,000.00 per ounce or $3,000.00 per ounce or maybe even at $1,300.00 per ounce.

Considering that gold went over $800 in 1980 during an inflationary crisis and that with seemingly "normal" inflation the price of goods seems to double about every ten years, I figure that gold is massively undervalued vis-a-vis the dollar and should actually be selling for at least $2,400.00 per ounce. I am not an economist (thank God) by any means; I am considering the price of goods in dollars, and gold is clearly a "good" in the marketplace.

I have been watching the price of gold for months, and I have noticed that sudden downward movement in the price seems to occur on a regular basis while the New York NYMEX market is open. Just like it did on Friday when it dropped about $30 in little over an hour. Not a huge drop, but a significant "correction" that occurs with regularity when NYMEX is open, interrupting upward trajectories in the price. Could this be the New York banksters subtly influencing the price of gold to keep confidence in the dollar and the dollar-denominated U.S. stock markets until the banksters milk them dry? I believe this is what is going on.

The stock markets are worthless as an indicator of our present status. The nervousness alternating with false confidence is enough to drive a person crazy. Its down today because Greece may default, then it's up tomorrow because the Fed will print money out of thin air to save the world. None of that market reaction is relevant because it is based on feelings. The feeling that Greece may affect other economies. The feeling of elation when the Fed pumps money from nowhere. The only exception to this will be when the panic goes full-tilt. When we see a day like Thursday, May 6, 2010, where the DJIA loses almost a thousand points in minutes, except that it keeps on falling, it is SHTF, TEOTWAWKI, or whatever you want to call it. That's when the banksters are taking their money and heading for the exits. That is when preppers head home to bar the door, fill up the bathtub, and oil the guns one more time while the rest of society makes suicidal treks to the Mega Mart to buy the stuff they should already have stored away.

When stocks are worthless, the dollar is worthless, and no fiat currency seems to be trusted, a huge rush will be made into physical gold. There is simply not enough to go around, and even the paper gold market has outsold the physical gold by at least 100 to 1. That is when gold will hit insane highs as the Big Money looks for a place to store it's pillaged fiat-money denominated worth before it becomes worthless. That will be my ROFLMAO moment. Gold is a relatively stable store of value when in competition with a fiat currency. The same is not true when gold is in competition with food, water, heat, fuel, clothing, shelter, and other necessities that cannot be obtained with a collapsed fiat currency.

The moral of this rambling story? Tangibles, tangibles, tangibles. Preferably things you can use, so that maybe someday you can trade your tangibles for gold from cold and hungry banksters after they realize they have not escaped the collapse they created.

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