View Full Version : Metals in a bad future

9th February 2008, 10:44
I have questions about the long position in our current economic situation. Nothing I read is really satisfying. I think this is novel situation. Metal will probably help, but there need to be a great many other considerations. The information on historical markets is of limited benefit. But, there is a demonstrated preference for inflation at this time, which is good for the (relatively) long position. However, an overall look at your resources is now required.

The charts from London and the US provide very little useful information about Gold. Very little changed for many years prior to WWII. http://www.kitco.com/scripts/hist_ch...rly_graphs.plx
In that cycle of deflation, gold prices actually dipped in 1931. Silver sucked (in a chart-specific kind of way).

With monetized gold and silver, a couple of interesting things seemed to happen. There was no issue of confidence with the currency, I would think, since the metal was there to back it.

FDR did seem to indicate a price increase was in order. He confiscated gold at 20.67 and then established a price to redeem bucks at 35.00 per ounce. That sounds a bit inflationary and was a bull run with a rather limited participation. Regardless of the legitimacy of this engineered price, it was an increased price at a time of deflationary pressure. (Actually, I am not sure what the actually CPI was through 1939.

With so much silver coinage in actual circulation, what exactly would be the point of hoarding silver during the depression years? The question is, do these historical charts have meaning for a system that relies upon paper money?

As you can see, I am a bit worried about the deflationary issue and how it might affect these investments. And I am tired of all the bloody technical charts and resistance levels.

Of interest are the many storied on the web about the economic conditions of in the late 1920s and into the depression. There was rampant land speculation. Much land was being leveraged. There was apparently quite a rush for farmland that was regarded as a bit subprime-bubblish at the time. And, the result was an eventual deflationary cycle in which many people lost their shirts due to loans being called.

The news in 1929 and early 30s was a credit crunch and lack of liquidity. That has concerned me as much as anything. In trying to figure out what to do with the historic highs we now have.

We all might be a lot better off hoarding generators, toilet paper and shotguns, quite frankly. Maybe.

Here is kind of a neat summary of hyperinflation, which is the bet many are making. http://en.wikipedia.org/wiki/Hyperinflation

One thing that catches the eye there is the lack of confidence in currency. What was the best economic news of last week? That the Euro maybe sucks a little more than people thought when they were dumping dollars. It was kind of funny to watch the resulting optimism at Deutschebank, UAB, etc. That the preference for inflationary lending policy indicates the type of sacrifice our fearless leaders are willing to make. The buck is on the altar right now and the knife is being raised.

By the way, does anyone have any idea what the price of gold or silver is going to be in Ameros? Didn't think so.

But, there apparently will be an inflationary run up, managed to keep things moving, even if it means more inflation. That seems to means metal will rise in a measured way to keep pace, arguably. The key is, this will be managed. I have little interested in hearing about net shorts being overrun. It would be nice, but I can't plan my life around it. This situation apparently will be managed by draining whatever is left in the dollar until the dollar is just gone.

But, what if there was an auction for US bonds/debt and nobody came? As long as the buyers come, the inflation proceeds. Does anyone have a thought for what happens when the buyers lose interest? Is that when the dollar is just plain gone? I doubt very much you are looking at Weimar Germany then. I think that the next step has already been managed, and maybe that is the Amero. And, lets not forget about the purveyor of RonPaul gold coins, a gentleman now no longer allowed to buy or sell, lacking the mark of the beast on his particular coinage. This is going to be a managed market.

Now, what other bets could one make? How about putting your money in the bank? That consideration always helps me save a lot of time in my decision making.

Either in an inflationary or deflationary cycle, one thing that seems to pay off is a local market and barter. It seemed to have helped Germany. Human capital is not to be overlooked. But, like everything else, it needs a market and medium of exchange. Barter is an imperfect science. Maybe silver coinage is helpful, but being able to feed people and access resources is a question of time, knowledge and availability. All those things are at a relative premium now. When the big markets go, a new market is needed. Those guys standing on the ledges or whatever they do now in glass towers are going to be of little help to you.

Have a look at the latest marketing process happening in this area. Its called tradebank. http://www.tradebank.com/ I don't know if this is multilevel, or whether the guys doing it have all the same tans and fancy talk as the last bunch that bought me and 100 other mooks a lobster tail as big as two fists before going to jail because the stuff I was supposed to buy into didn't exist in any kind of tangible, non-ponzi kind of way. (Like my Social Security payments.) But, the fact that tradebank exists is an awfully interesting development. What does it say about the future, if it is allowed to exist?

Go to Church. Ask Jesus to save your sorry butt. I firmly believe in money from God. And no, I don't have a technical chart. But, most people, and particularly government funds, big commercial houses and luciferian overlords are net short in a big way on prayer. Having read the answers at the end of the book, I firmly believe they will be overrun.

Talk to some relatively moral people about local networks to pool information, find resources and keep one another alive into the future. But, I rather think there will be some use for the odd bag of Kennedys in the future. But, again, there is this issue of time, connections, information, trust, wisdom, etc. These things all exist locally. Think about it. If you have 30 people that you can shake hands with and mean it, and you all have some reasonably meaningful talent or resource to trade, you really have something. And that doesn't happen overnight like zero down and flip it real estate.