Posts by dustyheron5

A few solid charts worth checking out........

http://oilprice.com/Metals/Gold/Gold...he-Upside.html

http://www.alsosprachanalyst.com/eco...f-control.html

A few telling statements from the mainstream media—all pointing toward a coordinated effort by the world's major central banks to implement massive monetary easing.

Sure—the Federal Reserve is going to keep pushing this forward until they hit... well, their ultimate target...

http://sgtreport.com/2012/09/james-t...een-2013-2015/

Melissa Sanchez17 said:In that sense, yeah. Though I'm still struggling to wrap my head around how the Euro is even being considered "saved" at this point.🙂

It's saved relative to the very real possibility that it might have already collapsed 😂
Which certainly doesn't mean that risk has vanished...

Melissa Sanchez17 said:I don't know about that, honestly. Gold bugs just can't seem to wrap their heads around the actual intrinsic valuation problems inherent to gold.😂

You have a point there—we should probably flip the liquidity pyramid back over for the fiat bugs, just so they can finally see which currency is actually the most liquid. 😂

Amy Sanchez2 said:Well, nobody can, because if the Federal Reserve can't even explain why velocity is cratering, then we're lost. Alan Greenspan just dropped yet another one of his legendary gems when he muttered, "We don’t know what money is, any more."
Since the Federal Reserve has zero influence over velocity, the whole idea of controlling the economy via the quantity theory of money is basically dead in the water.
That's why, ever since the 80s, the Federal Reserve has been leaning on this thing called the Taylor rule.
But hey, 2008 happened, and it turns out even that rule doesn't guarantee "control" over the economy—you know, the whole low inflation and low unemployment dream—so now the Federal Reserve is just cooking up these new uber-methods of control that will inevitably fail us all over again.

If you're betting on someone deciding to dump massive amounts of US Treasuries in the future to spike velocity and trigger (hyper)inflation, you've got two big problems to deal with.
(1) The US market is just too massive; there isn't a single market out there capable of absorbing that kind of cash injection (that's what M. Armstrong was talking about)
(2) The President could just step in and freeze the sale of Dollar-denominated assets and a whole bunch of other stuff under the International Emergency Economic Powers Act Quote.

And honestly, that might be the catch right there. Banks aren't handing out loans because they're terrified of going insolvent again, which could happen the second the Federal Reserve decides to hike interest rates. So, yeah, velocity is just going to keep on falling.

If the Federal Reserve has truly given up on quantitative theory as you claim, how then do you interpret the Federal Reserve's targeting of nominal GDP?

( keeping in mind that GDP = money supply x velocity )

rapidranger54 said:I shall correct my own previous estimation regarding those 100 kg I claimed were being redeemed daily in America. Upon further calculation, I suspect I may have been somewhat hyperbolic. Let me recalculate—brother to brother—300 branches multiplied by an average of 100 grams per day.🤔—roughly 30 kg at most.

It’s all fine; honestly, the volume being bought domestically doesn't even matter. These numbers are purely symbolic when you consider what the Russian and Chinese central banks—along with other massive institutional investors—are actually moving into position...

The attachment above shows exactly who else is driving this new demand for gold...

For instance, major global pension funds don't even hold it at all...

Here is how this looks in practice:

Interestingly, Deutsche Bank recently said their high net worth clients are buying physical gold. Barclays is currently completing one of the largest vaults in the United States—a facility designed specifically to secure physical gold and various other precious metals...

rapidranger54 said:I have been following this thread, and I must admit it is quite engaging for someone who isn't an economist by trade, but simply follows these matters out of pure curiosity. However, there are a few points I cannot quite grasp. I will jump in briefly to pose a question, though I will likely end up looking foolish...
The entire situation regarding fiat currency and the inflationary pressures exerted by central banks—which politicians pressure to print unbacked money just to maintain some semblance of "domestic peace" or economic stability—is clear enough to me.
It is also obvious that this results in the erosion of purchasing power. I am certainly not young enough to be unaware of how much one could buy with a hundred dollars decades ago compared to what fifty dollars buys today. It is the same principle.
It stands to reason that people "flee" from paper money in favor of gold. After all, it is a millennia-old alternative that serves as the most efficient way to preserve the value of one's savings...
But I am somewhat perplexed by one fact: the amount of investment gold in circulation increases every single day. In the US alone, perhaps 100 kilos of gold from old family jewelry probably find their way to buyback stations every day to be converted into investment grade. And that is to say nothing of what is being pulled from the mines...
How, then, can we expect the price of something to rise when its market supply grows daily?
Ultimately, both gold and paper money are symbols. Behind the dollar stands America and her economy; behind gold stands a thousand years of reliability. Who stands behind the Euro? The Germans? The Greeks?🙂I shall stop here before I appear too ignorant.

You have to understand that demand for investment gold is drawn from the total pool of liquidity—much like stocks, bonds, real estate, silver, commodities, and so on. For example, someone holding bonds—pension funds, hedge funds, etc.—might find they aren't satisfied with the returns because they aren't beating inflation. They decide to sell those bonds and buy gold—and just like that, you have new demand...

Or perhaps you own real estate and decide to pivot into gold. You could have simply kept that money in a bank account earning, say, three percent interest—while the official inflation rate here is four percent. In that scenario, you are essentially accepting a negative real return just by keeping cash in the bank...

Regarding mining, it only increases the gold supply by about two percent. If investment demand grows faster than production, then logically, it cannot exert downward pressure on the price...

Furthermore, without crises, Zira, NIRPa, or interventions from the CBA, gold wouldn't be nearly as sought after—the price would likely remain stable rather than climbing...

One shouldn't forget that gold is the ultimate form of liquidity—which is absolutely vital during times of crisis...

Melissa Sanchez17 said:Japanese 🙂

😁

Who actually determines the velocity of money?

Melissa Sanchez17 said:Ah, Egon von Greyerz

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/12/29_Von_Greyerz_-_Gold_Will_Trade_$3,000_-_$5,000_in_2012.html

I just can't take this guy seriously. He manages to call things right almost as often as some drunk at a dive bar in New Orleans.🤣

Which specific parts of his text are you disagreeing with?

A little something for my fellow fiat-believers to chew on—let’s talk hyperinflation. 😍

http://goldsilver.com/news/concerted...yperinflation/

nimblepanther18 said:I wanted to ask you earlier regarding this price drop—is there going to be a significant hit at the beginning of October? Will prices tumble? I would also like to ask you and others to weigh in on Marica carica's charts. To me, everything looks like a decline for metals, particularly silver, which I am considering buying more of. It seems foolish to buy now if I have a chance to pick it up at a better price later. I am concerned that if Germany slips into a recession, we will all go down with them. That triggers other issues, such as a general drop in revenue; when sales stall, prices are slashed, which leads to a deflationary spiral that could negatively impact metal prices. Does anyone have any insight?

Nothing out of the ordinary is expected. I did some digging into how metal prices behaved following Quantitative Easing 2—prices actually climbed for a few months leading up to the official announcement... only to see a pullback (lasting about a month) once Ben officially announced the program.
So, we're looking at a window roughly until October 10th—which is why I suggested there might be an opportunity to pick things up at a discount.

There is, however, a much nastier possibility: the world could sink into a deeper crisis or another recession. The global economic outlook is pretty grim—just look at China—and despite the various Quantitative Easing programs from the Federal Reserve, the ECB, the Bank of Japan, the Bank of England, and the PBOC, we could still face that nasty deflationary spiral scenario you mentioned.
A lot of this hinges on how Americans handle the fiscal cliff and the debt ceiling issues.

We need to keep a close eye on how things develop.☕

neondriver5 said:

I'm struggling to wrap my head around this. Two things to start with:

Is it actually possible that Canada has the second-highest unemployment rate on the planet? I don't know if we're talking about surveyed data or official government stats, but this chart is claiming a staggering 48% unemployment rate!?
Most of Africa looks better than that, wtf?

Second question: how is it that fewer people are heading over to Switzerland? They have some of the strongest economies in Europe, an unemployment rate of just 4.8%, and their currency has strengthened significantly against the Euro and the USD—currencies they likely use for most of their imports...

As for gold, I have nothing to add. Nobody knows anything. Everyone is just guessing, and Goldbugs are wandering around aimlessly. I'm still just searching for a reliable broker here in Rhode Island to invest in gold (not miners, actual physical gold, or maybe an ETF) and so on... nothing new in the West.
I'm struggling to wrap my head around this. Two things to start with:

Is it actually possible that Canada has the second-highest unemployment rate on the planet? I don't know if we're talking about surveyed data or official government stats, but this chart is claiming a staggering 48% unemployment rate!?
Most of Africa looks better than that, wtf?

Second question: how is it that fewer people are heading over to Switzerland? They have some of the strongest economies in Europe, an unemployment rate of just 4.8%, and their currency has strengthened significantly against the Euro and the USD—currencies they likely use for most of their imports...

As for gold, I have nothing to add. Nobody knows anything. Everyone is just guessing, and Goldbugs are wandering around aimlessly. I'm still just searching for a reliable broker here in Rhode Island to invest in gold (not miners, actual physical gold, or maybe an ETF) and so on... nothing new in the West.
You’d be better off looking for a broker who won't go belly up rather than just one that's "reliable"... there are far more reliable options out there than there are firms that aren't facing total collapse.😁

hollowmoose21 said:Got a specific target in mind for this pullback? Looking for an entry point. 😍

I don't have a set target—I haven't been diving deep into the charts—and frankly, I don't plan on adding to my position (unless there's a chance to reclaim some of the SLWe I sold, naturally), but if you're looking for a general idea, a decent entry price might emerge during the first week of October. 😍

nimblepanther18 said:I’ve been reading several articles suggesting that Germany is headed straight for a recession. If stocks take a dive, what does that mean for metals? dustyheron5 shared an article claiming that JPMorgan Chase is recommending gold purchases right now, but I personally struggle to see how that makes sense if we are actually entering a recession. Furthermore, when looking at silver—which is essentially an industrial metal that tends to peak when industrial demand is high—I would actually expect silver to see an even steeper decline than gold. Because of this, I intend to hold off on buying until a correction occurs. Am I miscalculating here? What are your thoughts, or are there other factors at play that might prevent such extreme volatility in metal prices?

PS. Personally, I found the market's reaction to the announcement of QE 3 quite disappointing.

You're absolutely right—if Germany (and the rest of the world) enters a recession, it’s better to hold onto your ammunition, namely the dollar; though, once again, Benjamin isn't a fan of that🤣 and has been quite vocal about pushing us away from the dollar and toward risk-on assets...😁

No smart man joins forces with whatever evil power😛 ends up winning.😂

Regarding QE3, this pullback was entirely expected. We'll see where things stand with metals around October 10th. It was similar last time during QE2—metals rallied leading up to the announcement, followed by a minor correction immediately after, before resuming a fierce rally... I see no reason why this time would be any different.😍

Two facts worth considering...

http://harveyorgan.blogspot.com/2012...urce=pulsenews

http://a.yfrog.com/img739/3225/eonhb.png

Over the weekend, JPMorgan Chase released a report urging investors to pick up gold—not just as a hedge, but as a primary asset. They didn't stop at recommending the metal, either; they actually went as far as advocating for a return to the gold standard.
Quite unusual for a major institution like that.

Gerald Chavez7 said:I'm still scouting for a broker... if anyone has recommendations, I'm all ears.

I'll likely stick with US-based firms, but I've got questions regarding wire transfers, security, and the whole ordeal...

You really need to weigh what’s smarter versus what’s safer. The reality of the system here is this: using a domestic bank isn't exactly ideal—it lacks some polish—but it might be more secure than going abroad. If things go sideways with an overseas bank while you have active positions and cash tied up in a brokerage account, you're in trouble.

A friend of mine got locked out of a foreign brokerage and hasn't been able to touch his money for over a year—and he can't even justify selling his position because the proceeds would just get swallowed by the broker.😍...plus, the whole process of re-registering a position could turn into a total nightmare that drags on forever.😉

boldsailor7 said:Yeah, that’s what I was thinking too, thanks...🙂
I actually headed out to the exchange yesterday because I needed some cash on hand, so I went in with my Swiss Franc, but I ended up walking back out empty-handed. The exchange rate was just brutal, so I'm putting off any currency swaps until things settle down...
I really feel for everyone stuck with those CHF loans, but honestly, it's hard to believe our precious Dollar is holding this much value right now🙂)

The Dollar will remain the world's strongest currency:
1) Until the very last economic entity in America collapses...
2) As long as politicians can keep borrowing money in our name...
3) Until federal tax revenues finally dry up...
Whichever one hits first...🙂