The Terminal Beginning Of The Western Financial World

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Unobtanium

Big Eyed Bug
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Jim predicts 2012 and 2015 as critical years.


 
Good catch Unobtanium!

It is hard to see how this gets resolved in a pleasant manner.

Jim's scenario makes seems the most likely one to happen. No one will force anyone to take their medicine or pay their swaps until it is too late. Politicians think short term. They can... We cannot, we must defend our own families against what they are doing.

Gold may go up much higher than Jim Sinclair thinks...
 
Sinclair thinks the dollar can effectively go to zero so the sky is the limit when it comes to gold.

Personally, I think we will get a gold bubble.
 
I agree that the dollar is really just a fantasy, but I see it holding together just a bit longer than predicted because of it being the worlds reserve currency. I see as the first major FIAT currency to really get crushed is the YEN. The demographics and debt to GDP ratio are both very ugly. Then the Euro, It will take some serious money printing and then ECB bond buying to run its course until that currency fails. Then the dollar will fail, but it is only after China figures out another reserve currency and liquidates its foreign reserves to purchase hard assets and other things like oil and food. Whithout the Japanese and Chinese buying our debt, the Fed will buy it all because the alternative reserve currency will have rendered the dollar a moot point.
 
I don't get the fascination with "gold to infinity". After that it will still buy you one Colt peacemaker and rig, one suit, one hotel room, and one night with a saloon girl, just like 100++ years ago.

Except now, you'd have to substitute a Glock (or S&W) and a crack whore, as Peacemakers (genuine ones) have appreciated much more than gold has since then.
You'd need more than an ounce of gold now to get just one, with nothing else, if it was in good condition. Forget new-in-box, I'm talking 80% NRA grade here, which are in the 2k to 2.5k range right now - if you can find one at all. That's why cowboy shooters use replicas.

All that's really saying is dollar to zero...so TV's will go to infinity too, so what? And so will the phone bill - or a cup of coffee. It's a throughly bogus thing to be excited about - it's something to fear because of the disruption it will cause everywhere. If you have a lot of gold in that case, you might be better off than a lot of other people, but no one will be well off - it's be worse for you than it is now, most likely, on any absolute measuring scale.

Remember, it's been true since at least the fed that you can make all kinds of money in nominal bucks while losing actual value.

Not to be mean - gold holds value better than almost anything else - you'd have had to be real lucky - and careful - to decide to keep that peacemaker all this time.
 
DCF - Fine art has appreciated better than gold too, but, as with the Peacemaker, you are paying for collector value. Collector value is the cream of the Ponzi money economy. When the economy goes south, people stop buying collectables and their premium shrinks as liquidity dries up. IMO, it's a much riskier long term investment game than metals if you think we are at the edge of a monetary policy induced economic hardship.
 
Sure, that's why I mentioned a Glock or other (something functionally equivalent)...and said you'd have had to be prescient to choose to hold the peacemaker as an investment - then, they were pretty common - expensive but nothing super special, though most people had something cheaper if they had a gun at all, not like Glocks, which are belly-button guns. More like maybe a Desert Eagle is today, or a Dan Wesson - something a bit more pricey than the norm. Whether either of those is actually better than a Glock or S&W is not something I'm prepared to comment on - they do cost more.

And...much fine art isn't recognized as such until late in the game, so that's a hard one to pick too.

Though in hard times, a Peacemaker might be pretty handy...They've separated quite a few people from their gold, even.

The point actually was - gold hasn't appreciated at all - it still buys the same stuff it did in cowboy days. It's just the currency going down, any nominal dollar gains are mostly illusory as this anecdote demonstrates. Seems the only times gold gives an actual increase in buying power is if you buy it in times of no fear, and get out in times of high fear - the inverse dollar correlation isn't always timely and perfect - only on average over longer periods - but in that case, its very close. You probably did pretty well buying in the 70's or so till now, but longer term that smooths out. This is why I trade it mostly, rather than just stack it only. You can actually increase purchasing power trading it if you're good and somewhat lucky.

This is also why I get exercised at the "gold to the moon" "bug porn" sometimes. For one thing, wishing for that to happen is wishing bad times on most people and wanting to be the one of the few who doesn't experience them (as much) - along with thinking one good idea allows you smug superiority over the rest. I find the morality of that a little questionable. And who really wants to get to the "top" of a thoroughly degraded world, if that's what it takes? Wanting others pushed down so you can be over them is a trait most find pretty repugnant (KKK, anyone?), here it's just disguised as something else - but that's what that wish amounts to unless I'm seeing things really wrong.

So, I see it as a plan-for-the-worst kind of thing - but hoping for the worst I find kind of immoral, and getting excited about the prospect, sort of sick. Maybe I'm off there - enlighten me!
 
DCFusor said:
...
The point actually was - gold hasn't appreciated at all - it still buys the same stuff it did in cowboy days. It's just the currency going down, any nominal dollar gains are mostly illusory as this anecdote demonstrates. ...
Click to expand...

I'm with you 100% there. I was just adding some clarity to your example above that while you may do better in the game of lesser fools with collectibles, they aren't necessarily the smartest investment play with economic hardship and monetary policy madness on the near horizon.

I would also point out that gold is actually under-performing with respect to gains attributed to currency devaluation as discussed here. It's still got a ways to go to break even with the inflation adjusted purchasing power from 70's and 80's (or to break through the M0/M1 curves).


"to the moon" euphoria may be attributed to the baser instincts you highlighted there, but I also believe there is a large degree of relief/validation at play. People love a pay off on a "gamble". They want to be right in their decision making and thinking even if they have a pessimistic outlook on the future.

For my part, while I embraced the "bug" label, I try to keep a sober perspective on PMs, monetary policy and the future. I keep tabs on what the pumpers at KWN (et. al.) are saying, but I don't take it all as gospel.
 
I thought we might actually be in pretty good agreement here - which is why I was emboldened to make the statement in the first place. And it's why I stick around here, I don't get along too well with the really irrational bugs of any sort. Or, more directly, they don't get along with me shining a light on them.

Your point on "validation bias" is well taken. In fact, as a trader, I find the catalog of unconscious biases quite valuable, as to the extent I myself don't get trapped in them - I'm able to trade better than those who do. As a plan, it works when I can pull it of, but of course it's fairly hard work to fight your own mental wiring. I guess that has to be OK, as unearned wealth doesn't feel right on some level, it's hard to be proud of if it comes too easily. The trick is recognizing these biases in others - they are the "tells" in this grand poker game.

I'd guess that while my short term gold trading system says "look out", we do indeed have some catching up to do - it's always that way with inflation, it takes awhile for a flood of fiat money to hit the streets and really have the effect, especially in this case, where it's largely sequestered in replenishing bank reserves or weird bond swaps - not really so much in common circulation - yet. It has a tendency to leak out however.

And after all, my short-term system doesn't have a clue about what's going on in Yurp...

My longer term irrational (but often lucky) gut on the other hand, says to expect some violent swings in the coming year - either way, and on a lot of different assets. This game is going to go to the nimble, there will be some interesting opportunities on both sides of most trades that won't last long.

Can't yet predict what, when - because which way things go first depends a lot on the order in which all the trains in this slow motion wreck get to the track intersection, and it's too hard to call that still. I'm not confident I know enough about possible surprise skeletons in closets - call them gray swans - to predict when the inevitable "oops" will happen, or exactly from which entity in what order - only a fairly certain feeling a few are on the way, as historically, these closets are kinda messy. That normally doesn't matter until it does, then its a crisis.
 
Two thoughts, DCFusor:

1) The unconscious biases... That must be why I never had any luck trading. I would take a "story" and buy into it. And get hosed every time! The solution to that allergy for me is "don't trade".

2) I have a friend who traded somewhere in the "middle" between you and me. He did not day trade, but would make bets based on technicals, mostly on the easy to monitor indices. I do not have the exact date in Sept. 2008, but he was SHORT BIG TIME vs. the S&P 500. Overnight after one of those crash days, the computers screwed him out of his VERY PROFITABLE trade. I do not have the details. But, he would have made $250,000 if they had not taken it from him.

The moral on Number Two above? If all the trains go off the track, you still have counterparty risk. The system is rigged. And I ain't playin' 'cause I am not good at high speed trades, nor will I risk going short nor will I risk other dimly understood things like options...
 
A friend of mine challenged me a couple of months back to a bet. We were to pick three stocks each and we had a hundred grand to play with. Whoever made the most money in 45 days won fifty bucks. We could pick one, two or three stocks, but we had to stick with them for the entire time. I bought NVDIA and BAC. We sold a week or so ago and I won the bet. The point is, if it's someone else's money, it is a hell of a lot easier to take a risk than it is with your own. At the time, I bought BAC because it was hovering just above five bucks, beneath which if it fell, tens of billions would have been sold because it is the threshold for many pension and investment funds, and I knew the PTB wouldn't allow it to happen. Either way, had I taken all of my cash and bought at 5 then sold at 8.15, I could have fucking retired.

Back on track, i feel we are certainly witnessing the final glory days of our financial system and we will soon witness it's complete collapse. The current construct is no longer trusted. As more and more things like MF Global occur, people will withdraw from the system and it will collapse.
 
@ DCFusor and PMBug

I believe that gold will do MORE than hold its present value. If/when we get BAD inflation, SOME things will rise in price faster than other things. I believe that GOLD will rise (at least relatively, keep reading) considerably more than almost anything else (in deflation or inflation).

@ ancona

SPLAT! I hope it does not happen, because that would be bad for everybody, including those of us who are ready or partly ready (me the latter).

But, I agree that each day it looks like it is more inevitable that some kind of reset is going to happen, and that the pace is picking up. And I do not see the reset as being anything other than being BAD as we go through it.
 
ancona said:
The current construct is no longer trusted. As more and more things like MF Global occur, people will withdraw from the system and it will collapse.
Click to expand...
Question: HOW people can withdraw from the system? Physical Gold/Silver seems to be the only natural choice to me: in collapsing economy (and I have little doubts, that we will see such), other commodities are not a guarantee of preserving the wealth or making gains (why would anyone need more copper, if demand is dying, etc.)

Thus why I believe that gold has a good chance to actually gain in buying power over almost anything else.

regards,
 
@ bushi

Actually the single biggest step you can take IS to buy gold and silver, especially gold once you have enough silver to take you through any likely SHTF scenarios. I think that gold will do great.

But, I am NOT at the "All Inn". I am a big believer in diversification. DCFusor is an example. He owns a nice plot of land with water sources, a reasonable climate, far away from the city and with solar panels and all.

Hey, I own some stocks and bonds too. But, I have been a net seller of those for years!

I am at about 10% in PMs. Although as income arrives, I do take some and buy gold... That is enough, as I cannot predict the future.
 
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