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Jake
2nd April 2010, 15:47
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DaleFromCalgary
2nd April 2010, 16:29
"todayís Internet articles find predictions ranging from "headed back down to $500" to "heading up to $6,500 in the coming years"."

While the market will continue to vary (as J.P. Morgan so famously said during the Panic of 1907), I don't expect $500 gold any more than $20 oil, and any pundit who predicts either has lost me as a reader. As far as $6,500 gold goes, I don't expect to see that in a low-inflation scenario. On the other hand, if bread is $20 a loaf and milk is $25 per litre, then gold could make $6,500 but it would be a Pyrrhic victory for the gold bugs.

ccjoe
2nd April 2010, 19:33
Gold and Silver Equal Future Purchasing Power
http://www.silverbearcafe.com/private/04.10/power.html
By: Jim Wesley
Emphasis: Jake
Red Comments: Jake
http://www.silverbearcafe.com/private/04.10/images/Gold-Silver.jpg

Today it is as difficult for a person to fathom gold at $5,000 per ounce as it was for a person to fathom $1,000 per ounce back in 2002. After all, hold a Krugerrand, in your hand and try to imagine it being worth the purchasing power of $5,000 - enough to buy a good running, nice looking used car.

Dollar predictions of gold are naturally what a prudent investor considers - todayís Internet articles find predictions ranging from "headed back down to $500" to "heading up to $6,500 in the coming years". I must admit, I have been caught up in it since I jumped in [when spot gold was] at $395. But recently, I have been of a different mindset. Forget about dollar exchange; that will only confuse the issues. The way to fully understand and appreciate the value of gold should be / will be in itís ability to exchange for goods and services.

The day cometh when confidence in the dollar will evaporate - itís already fading worldwide. Last in the world to recognize and accept it will be Americans. But they too will wake up to the reality that their paper dollars are little more than paper promises from a government known more and more for breaking their promises. We are surely headed for double digit inflation and there are strong arguments for hyperinflation. Gold and silver will be recognized worldwide as the store of wealth - almost all currencies will be suspect. Unfortunately, for the masses, it will be too late.

Soon - I suspect within a year - gold and silver will jump significantly in value. I believe the rise will be faster than the rise from $1,000 to $1,224. I can imagine a string of ~5% days that result in a $200 move in spot. That will definitely grab media and public attention, but most will not jump in - waiting for the price to fall back. Instead, after a small consolidation, it will again jump by another couple hundred dollars. Exciting! But more important to your well being is to realize - this scenario means - the separation of the value of paper gold and real gold. You will have a heck of a time getting your hands on hard metal. And most of the people you know will have stored none of this new (old) money.

Donít get me wrong, gold and silver will have a dollar equivalency, so you will be able to make exchanges. You will still be able to go to Kitco and get the spot price for precious metals. But the Central Bank manipulation game will be crumbling; supply and demand will dictate pricing and it wonít be pretty for many. You wonít be able to buy an Eagle anywhere. You can order it, but you wonít be able to get immediate delivery. Youíll pay up front with no committed delivery date - only estimated.

Fair market value for products and services will be up-in-the-air as well. For example, a truck (valued at $25,000 in 2007 dollars) might bring $10,000 or $6.500 or $14,000. Depending upon how useless the truck has become to the owner and how desperate he is for cash. You might be able to hire a $25.00 / hour carpenter for $50 per day. You might buy a $250,000 (2007 pricing) property for $100,000. The price for products and services will be - whatever you can get!

Forget about dollars. I might be able to exchange two of my ($395 cost) Krugers and a couple rolls of [silver] quarters for the truck. And both parties would be pleased with the sale. One pre-65 dime might buy a loaf of bread; a quarter might buy a T-bone steak; a silver dollar - a bag of groceries. I can see the carpenter willing to work under the table for a silver quarter per hour. Still receiving unemployment in paper dollars, he/she wants some Ďrealí money for the family. Gold and silver will be in greater demand than paper dollars. You will go to the front of the line if you are buying in either.

What kind of world would this be? Pension plan failures leaving millions of retirees without income, 25%+ unemployment leaving millions of young families in dire straits, the Dow at 5,000, (I believe Dow at 25000 because of out-of-control inflation---"prices of things" will be high) bond market failure, further collapse in the residential housing market, unbridled monetization, state defaults, collapse of the division of labor, $7.00 gasoline, high food prices, abandoned malls, abandoned sections of cities, rationing of necessities, and a lot of social unrest. This world will leave the average citizen in a heck of a bind; desperate for day-to-day necessities. They will have lost their purchasing power; lost control of their lives.

Does this sound absurd? Do you think you just read the ranting of some nut? Is there a doctor in the house? Study the charts - study history - open your eyes. The status quo is history. We are in transition. Get ready. Donít freak out - just get ready! If you want to preserve some personal/family wealth, then get out of the dollar - fast! In our immediate future, if you want to purchase items of value - you will need to exchange something of value. Iím betting on gold or silver? - M.R.B. in Oregon<---This guy is a little excited, but I'm seeing more of these types of articles lately

http://goldismoney2.com/showthread.php?469-Junk-Silver-in-Grocery-Stores-(video)
It's going on right NOW Jake.

maplesilverbug
2nd April 2010, 19:54
We are surely headed for double digit inflation...

As I posted somewhere else on this growing heap of a board, Canadian Fed politicians have reaped an annual 10% pay raise for the last 10 years. That screams double-digit inflation to me, plain and simple. Stats from the government website report that, for the province in which I live, "in real terms, average hourly earnings increased by just 1.3%" for the same 10-year period. So...Mr. and Mrs. Taxpayer get a whopping barely above 1% per annum increase in wage, whilst gov't fat cats haul in TEN TIMES that? Nope, no corruption in politics!

As well, the province I live in just got sh!t on with a round of new tax increases: electricity +9%; natural gas +6%; ferry fares +7%; public transportation fares +11%; park fees +15%. Not to mention the fore-coming +7% "Harmonized" tax on July 1.

But no need to worry, inflation is only 2.1% (Feb '10) according to the gov't because...oh, right, they don't count the eight most "volatile" items (ie. the eight most commonly and widely used items: fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products) in their inane calculations!

And when the BoC says, "Recent studies of this bias suggest that the CPI may overstate inflation by about half a percentage point", you know it's a complete and utter joke.



What kind of world would this be? ...further collapse in the residential housing market, unbridled monetization, state defaults, collapse of the division of labor, $7.00 gasoline, high food prices, abandoned malls, abandoned sections of cities, rationing of necessities, and a lot of social unrest. This world will leave the average citizen in a heck of a bind; desperate for day-to-day necessities. They will have lost their purchasing power; lost control of their lives.

Take a look around and tell me you don't already see most of that.
With more to come...

With more and more politicians and government employees getting paid more and more and doing less and less (less construction, more destruction), and with each and every tax increase draining the middle class, there will come unrest and upheaval.
There will be so many poor people who are addicted to government funding, which will not be able to support said poor masses because the tax base will have evaporated (to either side, tax "efficient" rich or tax "deficient" poor) that the machine will have no choice but to break.

Fun.

Jake
2nd April 2010, 19:55
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