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Old 12-18-2011, 06:02 PM   #1
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Wink Did Ron Paul Slay The Gold Bull?

I don´t agree with the conlcusion of the following article that gold would plummet under president Paul, it would rather stabilize.

Quote :
Did Ron Paul Slay The Gold Bull?
By Brady Willett
The price of gold was off by nearly 5% yesterday, with comex gold losing over $97 an ounce on an intraday basis. This price collapse is comparable, in percentage terms, to the carnage seen in other precious metals, but well beyond the damage seen in other ‘risk’ areas of the marketplace (i.e. commodities and equities). Accordingly, the question deserves to be asked: why is gold outpacing the recent decline in other ‘risk’ areas of the marketplace?...
what no one in gold land is doing is blaming Ron Paul.
‘End The Fed’ or End The Gold Bull?
On the surface, there is no larger political supporter of gold and precious metals than Ron Paul. After all, Paul’s investment portfolio is heavily slanted towards gold, Dr. Paul’s image was once (illegally) emblazoned on precious metals coins, and he has constantly – since Nixon closed the gold window – championed gold as being real/sound money. Yet despite being pro-gold, what should be remembered is that Paul is, first and foremost, anti-fiat or anti-Fed. In other words, if given the power Paul would abolish the Fed, which, in Austrian-speak, would stop the inflation that serves as one of the major engines behind skyrocketing gold.
This brings us to the rather extreme speculation that Paul’s recent surge in some polls could be adding some pressure to the price of gold. Did any gold bugs take notice when Paul posted a ‘big increase’ in Iowa?
In short, Ron Paul is the only politician within striking distance of the Presidency that offers any hope that the dollar can be salvaged as a viable currency longer-term. Despite being one of the only politicians that has spent 40-years accumulating gold, if the highly principled Paul actually did get elected he would undoubtedly adopt policies that harm his current investments. President Paul would balance the budget, rein in the Fed’s printing presses…and gold would likely collapse to levels most do not think is possible.
As for the difficult question of why gold has outpaced the recent decline in other ‘risk’ areas of the marketplace, it is worth remembering that gold has raced ahead of all areas of the marketplace for many years now. There is nothing inherently dangerous about a healthy pause in the ongoing precious metals bull, so long as central banks, when tempted to do so, remain free to print.
http://www.fallstreet.com/dec1511.html

Last edited by PMBug; 12-18-2011 at 08:35 PM. Reason: remove email address per forum policy
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Old 12-18-2011, 06:27 PM   #2
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Yep - while I agree that a big contextual change such as RP in power would tick one of the necessary boxes and set the stage for more (such as positive real interest rates - eventually), there are several boxes left to tick before gold goes back to sleep.

The reality is, pages of new tickboxes keep turning up, and the pen is lost behind the sofa.

This is also the kind of article that makes me think '2008, rinse, repeat'.
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Old 12-18-2011, 08:39 PM   #3
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That article is retarded IMO.

This forum is chock full of discussion on the real issues that are driving the precious metals markets. Investors aren't going to abandon gold in the immediate terms because a politician might possibly be elected a year away.

The article is intended to cast doubt and fear (appealing to greed) in Ron Paul supporters who are also precious metals investors. However, the author clearly doesn't understand what Ron Paul is really advocating.
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Old 12-18-2011, 10:39 PM   #4
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Here's my take on Ron Paul and what could happen. I am very-pro Ron Paul.

1) If Ron Paul wins, our country will have terrible problems and the pain will be enormous.

2) If Ron Paul does NOT win, our country's problems will be MUCH WORSE and the PAIN MUCH GREATER.

I am going to "guess" that the price of gold would not change too much either just because a sensible man would be president. I agree with above comments that there are many factors moving the price of gold around.
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Old 12-18-2011, 10:52 PM   #5
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RP may start to move the country in the right direction which would be long term negative for gold. However, I think he would also push to repeal the legal tender laws and allow gold to compete as a currency. this would greatly expand its appeal. also possibly lower taxes on its sale etc. and if we went back to some form of gold standard that represented the current monetary base gold would be much higher. also likely would try to root out any price suppression schemes in gold and silver at the Fed.
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Old 12-19-2011, 05:58 AM   #6
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If we went back to the gold standard, gold would stagnate at some price. And inflation would no longer exist unless gold production increased faster than the population. Most likely gold production would not keep up with population, so we would be in a permanent deflation mode, much to the chagrin of any big spending government.
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Old 12-19-2011, 06:11 AM   #7
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mmerlinn - this is all true, except the rate of gold production is irrelevant. There's already enough above ground to form a practical counterbalance for the number of heads alive on the planet and their need to store up productive output as money. The unsolved variable is price - that will have to change to suit, and this part is only harmful if the gold is all in the wrong hands. This is the bit that worries me, not the lack of gold or it's production rate per se.
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Old 12-19-2011, 09:08 AM   #8
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Originally Posted by PMBug View Post:
That article is retarded IMO.

This forum is chock full of discussion on the real issues that are driving the precious metals markets. Investors aren't going to abandon gold in the immediate terms because a politician might possibly be elected a year away.

The article is intended to cast doubt and fear (appealing to greed) in Ron Paul supporters who are also precious metals investors. However, the author clearly doesn't understand what Ron Paul is really advocating.
I think the whole article was meant to be a joke and not a hit piece.
I thought it might be thought provoking. No pun intended
I´ve cut out one paragraph in the op that would have clarified the intention of the author. Maybe I shouldn´t have done this. Here it is:
Quote :
As you would suspect, there are numerous speculations to draw upon. For starters, precious metals lease rates, which as we know allow powerful interests to more readily manipulate gold, have been sliding of late due to European banks scrambling for dollars. Falling lease rates, as a basic rule, imply that it is easier for other banks to borrow gold and short/push the price of gold lower. Next, there is the idea, taken from Tuesday’s dull FOMC statement and some of many quotations coming out of Europe, that deflation could be a lesser evil than inflation in Europe. Although this outlook could drastically change tomorrow, it nonetheless seems to have played a role in dampening investor’ appetite for risk. Finally, there are the usual suspects: the strengthening dollar sent gold lower and as gold broke through key technical levels the weak hands started to flee and ‘forced selling emanated from the hedge-fund world’.
Ron Paul has advocated slightly different gold standard models over the years. One is the competitive currencies model a la Hayek.
Dr Paul has also been advocating for a pure gold standard (100 % backed) without referencing competition by fiats.
I´ve also heard him talk about bi-metallism (gold + silver) which has it´s flaws because a fixed gold-silver ratio can turn into a problem when the actual ratio of physical stocks fluctuates, e.g. after of a big discovery of silver. There would have to be some correction mechanism for that.

His current position of competing currencies is meant to offer a transition program under which FRNs slowly become irrelevant because Mr Market chooses gold over FRNs and by doing that also diminishes the power of the FED.
I haven´t really thought about it in detail, but this seems to be his current idea.
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Old 12-19-2011, 04:15 PM   #9
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A gold standard is something we'd switch to after we clear away these excesses. To do so right now would pretty much ensure bankruptcy of well over 70% of the general public. The economy would be exposed as the fraud that it is but it would also really hurt a public that has no savings and huge debts. Imagine having to actually pay off a home with interest in a deflationary environment..

Probably the one thing people are overlooking is that he'd probably expose the naked short selling currently occurring in mining shares.
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Old 12-19-2011, 10:49 PM   #10
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Been listening to a lot of podcasts from James Rickards. He dispels a lot of common misperceptions about the gold standard and deflation etc. The reason why the gold standard was deflationary during the great depression is because they picked too low of a price. money supply had doubled over a period of time but they didnt choose a gold price high enough to compensate for that. That is why he believed if they picked something like 8k now would do the trick. all depends what u use for money supply, % backing, gold stock etc.
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Old 12-20-2011, 03:36 AM   #11
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If the dollar was gold backEd.. the price per ounce would have to rise tenfold ..which could be good initially for holders of gold.
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