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Old 01-22-2013, 02:03 AM   #1
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An Introductory Rant

Hello everyone of PM Bug, this is my first conversation with other serious sound money advocates.

I guess I'm ranting because an investor I somewhat hold in esteem (though only for his ability to read charts and flip stocks, he's more of a gambler) has recently been trying to tell me that a massive move up is coming in the dollar and he's one of the only people who can see it coming. The only foggily possible factor I could think of to cause this would be the disintegration of the Euro, which could indeed buy some more time for the dollar.

But he also goes on to tell me that gold is "look out below" because "everybody is rushing into gold and calling for the end of the world." He says that gold is topheavy, but looking at the gold chart it is a very easy conclusion to make. Nonetheless, this is where I break ranks with him. "Everybody is rushing into gold"? When I turn on CNBC, I hear constant poo-pooing of gold and everybody is still flipping AAPL and buying bonds. Though it is nice to hear someone as big as Bill Gross talk bullish on gold, all the other money managers are sitting in cash and building positions in dividends. Gold is still persona non grata on Wall Street.

So this notion that "everybody is rushing into gold", as if sound money guys are lemmings and the guys sitting in cash and bonds are smart, I can't even begin to get my head around that. 99.99% of the American public has *zero* exposure to gold; they don't own gold and they aren't invested in gold equities. Heck just drive down the street and it looks like everybody is pawning their gold for paper when they should be getting rid of their paper for gold.

2001 really marked the beginning of the end of fiat dollar somnambulism, but now the country is sitting on $16T in debt and a gazillion in unfunded liabilities, and Bernanke is monetizing debt to the tune of $85B a month and the fed gov is running trillion-plus deficits...man I think the dollar price of gold hasn't even begun to move yet, but I'm not even all that worried about it, I just want to keep buying it cheap as long as I can. My greatest concern is that the Chinese are using their dollars to buy gold while the western central banks are suppressing gold in order to keep their ponzis going, I don't know...everything tells me to keep buying gold, what say you?
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Old 01-22-2013, 03:04 AM   #2
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No matter what happens, gold ALWAYS has value. Not so with FRNs.

Does that mean you will make money with gold? Not necessarily. But even if you lose with gold, you CANNOT lose it all. Again, not so with FRNs.

My take? Better safe, and maybe lose SOME, rather than sorry and maybe lose ALL.
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Old 01-22-2013, 04:25 AM   #3
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Your summary is pretty much the situation we're in.

It's so ineveitable that most goldbugs like you don't even want the gold price to rise just yet because they're happy to have another year or two of accumulation.

Regarding stocks, could be another good year for them. The money printing goes from the fed to the banks & instead them loaning it into the economy as usual and creating instant inflation they are pumping it into things like the stock market and creating inflation there.

My problem with following the money is that the high frequency trading machines are so fast that when the party crashes the whole thing will take an hour at most imo. Good luck being quick enough to get any of your money out when that happens and then being lucky enough to find anyone who will sell you PM's at that point.
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Old 01-22-2013, 05:57 AM   #4
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Welcome to the forum MiningNut!

There will likely be a few more updrafts with currency crises here or there (I think Japan is also a key to watch). I don't care much for trying to time the market. I know how the game is going to end, so I'm not sweating the small stuff between now and then.
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Old 01-22-2013, 06:25 AM   #5
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Originally Posted by Unbeatable View Post:
Regarding stocks, could be another good year for them. The money printing goes from the fed to the banks & instead them loaning it into the economy as usual and creating instant inflation they are pumping it into things like the stock market and creating inflation there.
Totally agree. This, and share buybacks, that dwarf new IPOs (in dollar terms), and the picture is clear: big demand (money printing, struggle to find a profit, ANY profit), and less supply of stocks (buybacks > IPOs), and the picture is clear. Companies don't invest their money ATM, they rather do buybacks, to boost up their shares, consequently, corporate elite's bonuses. But it is hardly sustainable business model.

As for the "smart investors" (and let's call the thing by it's real name, "speculators" - not to belittle them, not at all, I do appreciate them for knowing how to read the markets and make a fortune while not contributing anything to the society back (which is remarkable achievement)), here's the thing: extremely few of them are ever bothered to look behind the curtains of HOW EXACTLY is this whole fecking global financial machinery working??? What makes it tick, is it a sustainable model, etc. They simply assume it always worked as it should, it is working as it should, and that it forever will, as it did for the last 40 some years (since Nixon).

Well, squandering that immense wealth that has been accumulated by our hardworking, prudent ancestors, mostly on wars and some stupid collectivist pipe dreams, takes its time. Soviet Russia have lasted for how long - about 70-80 years, before collapsing.

But the gears of the monetary systems worldwide are broken. Something new will have to emerge, sooner rather than later. It is simply impossible to keep it going, I mean, who the hell will be willing to take on more & more debt, just to pump some fresh blood (money) into the system? While it is bleeding out even faster.

The model is broken. Debts worldwide are accelerating faster than economic growth, and the gap between the growth and debts, is also only accelerating.

Stocks can move up, and they will, but PMs, they will shot up exponentially at some stage - when the trust in the monetary system is broken. No doubt, we will see shocking volatility even before that - all that "hot money" trying spasmodically to find some safe place to be in, while still trying to convince themselves, that "gold is a barbaric relic", before eventually capitulating (and being lucky enough, to get any physical metal, for whatever price commanded.

It would be wise to be able to go stealth with your PM holdings while/before it happens. Better yet, keep it under the radar from get go. Because no doubts that our official bullies will do whatever they please with our properties - whichever they find valuable for them. And We the People can cry "faul" as loud as we want. It would feel awful, when you are in that position, and the government thug that you face, just laughs at you.

We have to be smarter than these psychopaths, it is due diligence.

Long story short, don't go "all in", but if you want to start, Jim Rickards still suggests 20% of your portfolio in physical PMs (he prefers gold), and I'd rather believe his narration.

"Everybody is rushing into gold", is a pile of bovine . People TALK a lot about gold, but ask around, how much they are actually INVESTED in it? ZIP, that's how much.
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Old 01-22-2013, 07:53 PM   #6
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@ MiningNut

Rants are one of my favorite things about pmbug.com... So, welcome, I look forward to more!

I suspect that at the end of the long tunnel ahead we will have a VERY HIGH gold price, for physical gold only. I still see ZERO gold buying among my family & friends (except for the same two who always have been there, but even they have slowed their purchases).

Hey, could be that the US$ has a big bounce up and gold goes down. Gold going down is something we all have seen, it has gone down 30% or more various times since I started my purchases.
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Old 01-22-2013, 08:03 PM   #7
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Awesome rant and welcome!
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