Gold: Past, Present, and Future

Paul Peterson4 said:There’s a pretty interesting angle to this whole Dollar vs Euro debate: it really comes down to who's going to blink first. The US is running this massive trade deficit, whereas the EU is a bit of a mixed bag—you've got Northern Europe exporting everything while Mediterranean countries import most of their stuff. But overall, the EU manages to cover its own demand for goods and materials through domestic production, while the US is basically stuck depending on Chinese people and others to supply them with goods in exchange for those greenbacks.

All the major currencies right now—Dollar, Euro, Pound, Renminbi, you name it—are essentially being "printed." Or, more accurately, we're seeing massive amounts of money being digitally generated without any real backing (well, if you count newly issued government bonds as backing). It feels like we're drifting toward that Nostradamus idea of funding a state budget through primary issuance—except, obviously, there are banks in the middle taking their cut, often state-run ones at that. Unless some miracle happens and the economy just takes off, it's a safe bet that cranking out new money will lead to inflation. I'm not talking about that crazy, hyperinflationary mess you saw in America, but we're looking at maybe 5%, 10%, or even 15% annual inflation—though they'll probably try to hide the true scale using some shady statistical gymnastics early on.

For now, I’m sticking with the Euro since my expenses are in Euros, and honestly, I find it more stable than the Dollar. If the Arabs & CO start selling oil for something other than USD—and hey, the Iranians are already doing it—then the US printing press won't be able to tax the entire world anymore. That would trigger even bigger trade issues because, frankly, the US won't have much left to pay for imports. They'll be forced to bring manufacturing back to the States, which is going to be an expensive, long-term headache. As it stands, the Fed is basically the biggest buyer of T-bills. Once the Chinese stop buying them, pretty much everyone else might follow suit.

The pension fund situation is also worth watching. Traditionally, one of the largest institutional investors stays well away from PM. Lately, though, they've been taking heavy hits on government bonds—which are supposed to be the "safe" bet, assuming you follow the legal mandates on where that capital can go. If they even direct a tiny fraction of their capital toward PM, it could send the price skyrocketing. Right now, they're struggling to find decent places to park money; between playing poker with the Greeks and worrying about the Spanish, they're facing actual negative interest rates from the Germans. At this rate, they'll be handing out starvation pensions.

You sure about that?

Melissa Sanchez17 said:You sure about that?

Fair point—I guess I should double-check the math.

European Union trade deficit in 2011 was $4.1 billion, then jumped to $7.6 billion in 2012.
epp.eurostat.ec.europa.eu/.../6-17062011.../6-17062011-AP-EN.PDF
epp.eurostat.ec.europa.eu/cache/ITY.../6.../6-16032012-AP-EN.PDF

United States trade deficit in 2012 hit $42 billion.
http://www.census.gov/indicator/www/ustrade.html

So, we're looking at a difference of roughly six times.
Economy size back in 2011:
European Union: $15.65 trillion
United States: $15.29 trillion

Basically, the European Union and the United States have almost identical GDPs. But let’s be real—GDP includes all sorts of fluff like lawyers, therapists, and a bunch of other nonsense that doesn't actually help much with trade or exports and carries some pretty questionable value.
When you look strictly at manufacturing and actual trade power, the European Union is definitely outperforming the US.

We should probably also mention that the dollar is way more popular than the euro on the global stage, which naturally drives up demand. It’s basically the go-to for trading stuff like oil and all those other commodities, plus it's the world's main reserve currency.

So, honestly, that actually helps trim down the US deficit a little bit.

So, why the manipulation today?

Melissa Sanchez17 said:So, why the manipulation today?

http://www.zerohedge.com/news/2012-1...us-metals-soar

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/

Anthony Evans78 said:http://www.zerohedge.com/news/2012-1...us-metals-soar

Seriously, who even bothers watching CNBC these days? 😁
It's all noise.

Paul Peterson4 said:There’s a pretty interesting angle to this whole Dollar vs Euro debate: it really comes down to who's going to blink first. The US is running this massive trade deficit, whereas the EU is a bit of a mixed bag—you've got Northern Europe exporting everything while Mediterranean countries import most of their stuff. But overall, the EU manages to cover its own demand for goods and materials through domestic production, while the US is basically stuck depending on Chinese people and others to supply them with goods in exchange for those greenbacks.

All the major currencies right now—Dollar, Euro, Pound, Renminbi, you name it—are essentially being "printed." Or, more accurately, we're seeing massive amounts of money being digitally generated without any real backing (well, if you count newly issued government bonds as backing). It feels like we're drifting toward that Nostradamus idea of funding a state budget through primary issuance—except, obviously, there are banks in the middle taking their cut, often state-run ones at that. Unless some miracle happens and the economy just takes off, it's a safe bet that cranking out new money will lead to inflation. I'm not talking about that crazy, hyperinflationary mess you saw in America, but we're looking at maybe 5%, 10%, or even 15% annual inflation—though they'll probably try to hide the true scale using some shady statistical gymnastics early on.

For now, I’m sticking with the Euro since my expenses are in Euros, and honestly, I find it more stable than the Dollar. If the Arabs & CO start selling oil for something other than USD—and hey, the Iranians are already doing it—then the US printing press won't be able to tax the entire world anymore. That would trigger even bigger trade issues because, frankly, the US won't have much left to pay for imports. They'll be forced to bring manufacturing back to the States, which is going to be an expensive, long-term headache. As it stands, the Fed is basically the biggest buyer of T-bills. Once the Chinese stop buying them, pretty much everyone else might follow suit.

The pension fund situation is also worth watching. Traditionally, one of the largest institutional investors stays well away from PM. Lately, though, they've been taking heavy hits on government bonds—which are supposed to be the "safe" bet, assuming you follow the legal mandates on where that capital can go. If they even direct a tiny fraction of their capital toward PM, it could send the price skyrocketing. Right now, they're struggling to find decent places to park money; between playing poker with the Greeks and worrying about the Spanish, they're facing actual negative interest rates from the Germans. At this rate, they'll be handing out starvation pensions.

Don't forget that back in 2012, Americans were meeting 83% of their energy demand from domestic sources. That’s the highest amount we've seen since 1991. click and click.

They have a functional, cohesive state, unlike Europe, which seems only superficially unified and suffers from huge internal divides.

The economy is incredibly flexible, whereas many EU countries act somewhat semi-socialist, where reacting to shifting market conditions tends to be slow.

And then there was this past summer; when the Euro dropped, it was a real lesson in just how much 'mass' actually trusts the dollar (even if it's just a choice between the lesser of two evils 😁). It showed what being a global reserve currency truly means. I honestly expected people to rush toward every other currency except the dollar. Wrong.

So, I guess you just have to weigh all that up.

I suspect America is stronger than most people realize.

First off, they say "energy needs," not just oil.
Second, if we were actually pulling enough oil from our own backyard, there’d be no reason to be in Iraq or trying to force democracy on Libya.
Third, the US is arguably more socialist than any European nation. Just look at how many people work for the government—from local offices all the way up to the Federal Reserve—not to mention the roughly 50 million people on food stamps and those massive unfunded liabilities in healthcare and social security.
Also, the American economy is driven almost entirely by consumer spending.
There are really only two reasons why the dollar remains the world's reserve currency: one, our military might, and two, the fact that oil is traded EXCLUSIVELY in dollars.
Right now, the dollar is the fastest horse in the glue factory. 🙂

Thanks, I fixed that earlier

The bottom line is that they’re way more stable than the EU across all the metrics we just went over
and if we're talking about who goes down first, I guess the Euro would crumble long before the Dollar does

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.

Just a quick little tangent

I was watching the movie Looper, which takes place in the year 2044.
The protagonist is a professional hitman—for the "small fry" jobs, he gets paid in silver bullion (roughly eight 250g bars per hit)—but for his final job, he's promised eight gold bars (maybe it's sixteen, the scene moves pretty fast) which is supposed to be enough to sustain him for the next 30 years.

I'll let you all draw your own conclusions.😉

rapidsurfer90 said:Just a quick little tangent

I was watching the movie Looper, which takes place in the year 2044.
The protagonist is a professional hitman—for the "small fry" jobs, he gets paid in silver bullion (roughly eight 250g bars per hit)—but for his final job, he's promised eight gold bars (maybe it's sixteen, the scene moves pretty fast) which is supposed to be enough to sustain him for the next 30 years.

I'll let you all draw your own conclusions.😉

Does he really have to kill people?😍 It’d be way better if they just paid him in stock options for, I don't know, ExxonMobil or Dow Chemical. By 2044, those companies will definitely have been fully privatized anyway.

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

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

Andrew Barrett4 said:Don't forget that back in 2012, Americans were meeting 83% of their energy demand from domestic sources. That’s the highest amount we've seen since 1991. click and click.

They have a functional, cohesive state, unlike Europe, which seems only superficially unified and suffers from huge internal divides.

The economy is incredibly flexible, whereas many EU countries act somewhat semi-socialist, where reacting to shifting market conditions tends to be slow.

And then there was this past summer; when the Euro dropped, it was a real lesson in just how much 'mass' actually trusts the dollar (even if it's just a choice between the lesser of two evils 😁). It showed what being a global reserve currency truly means. I honestly expected people to rush toward every other currency except the dollar. Wrong.

So, I guess you just have to weigh all that up.

I suspect America is stronger than most people realize.

Indeed. Even I find the concept of a total Dollar collapse difficult to grasp, despite my affinity for those dystopian sci-fi films. If you are referring to the long-term erosion of the Dollar's value, then yes, that is observable. I recall when $1 used to equal two Deutsche Marks, and receiving $100 from relatives abroad as a kid felt like a fortune. Today? If I offered a kid $100, they’d likely tell me to get lost.
However, can I truly envision a sudden, catastrophic crash of the Dollar?
What, precisely, would trigger it? Would a news anchor suddenly appear on television tonight and announce: "Sorry folks, bad news, the Dollar is no longer valid, we are paying everything in gold"?
In reality, the logical progression would imply the downfall of both the Dollar and the Euro...
But politics and central banks will not permit such an outcome. It is akin to owning an old Fido junker; everyone tells you to buy something newer, yet you simply keep repairing it, over and over, just to keep it on the road.

What exactly are central banks going to do about it? 🙂 Point a gun at Chinese people and Russians and tell them they have to use the dollar? It’s actually the central banks themselves that are working so hard to destroy the dollar, the euro, the pound, and everything else...
Throughout history, plenty of people assumed their policies would last forever, thinking nothing could ever stop them. But unfortunately, there's always a critical mass of workers and regular folks who see things differently than those in power. 🙂

dustyheron5 said: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.

Honestly, this might just be a tactic to sidestep🙄 hyperinflation:
they loosen the reins just a tiny bit here and a little bit there, never committing to specific dates or clear amounts. I guess they're operating on the logic that if they sneak it through the cracks, nobody will notice.😍 🙂

Robert Vaughn10 said:Velocity could continue its descent; what actually matters is the scale of that drop relative to inflation. Take the US, for instance—if we used the pre-1980 Federal Reserve methodology, inflation would have been sitting around 6% back in early 2012. That discrepancy alone highlights just how much money was printed, considering prices should have plummeted given the falling velocity and the contraction in the money supply.

Which basically means 'hidden' inflation is already way higher than what's being reported, though God knows exactly how high. And that's before you even factor in the endless money printing...

Also, while there’s a general 'roadmap' provided (whether it’s optional or, as dustyheron5 puts it, orchestrated QE), I can't seem to find any actual, relevant short-term forecasts or potential scenarios for the next two years that go into any real detail beyond just saying: "inflation is coming." I'm not seeing a clear timeline anywhere.

Since these two points are weighing on my mind quite a bit, I'm heading to a lecture next weekend specifically on this topic.

It's a talk by Edin Mujagic, a monetary economist at Harvard University, who is also a well-known columnist, journalist, and (formerly) blogger in North America, focusing on inflation. I'm interested not just because he's an expert, but mostly because he's independent. Plus, he mentioned he has some sort of forecast. I'm just not entirely sure if he meant for the US, Europe, or perhaps the "entire world." 🤷

quiettrucker12 said:Sure, but (haven't read the full piece) that phrase "it is not the Euro that will collapse next but the dollar" sounds to me like the author thinks the Dollar is the next one to hit the floor (which, let's be honest, isn't a shocker), not the Euro. If they actually meant the Dollar would tank before the Euro, they would have phrased it differently.

I've actually seen this play out firsthand lately, and it's become pretty clear to me just how much the Euro acts as a sort of tripwire for the Dollar. It's not the Euro that's going under; it's the Dollar that's eventually going to hit the floor, sooner or later. The Euro is really just going to serve as our early warning system, giving us
a heads-up right when things are starting to fall apart.

Andrew Barrett4 said:Which basically means 'hidden' inflation is already way higher than what's being reported, though God knows exactly how high. And that's before you even factor in the endless money printing...

Also, while there’s a general 'roadmap' provided (whether it’s optional or, as dustyheron5 puts it, orchestrated QE), I can't seem to find any actual, relevant short-term forecasts or potential scenarios for the next two years that go into any real detail beyond just saying: "inflation is coming." I'm not seeing a clear timeline anywhere.

Since these two points are weighing on my mind quite a bit, I'm heading to a lecture next weekend specifically on this topic.

It's a talk by Edin Mujagic, a monetary economist at Harvard University, who is also a well-known columnist, journalist, and (formerly) blogger in North America, focusing on inflation. I'm interested not just because he's an expert, but mostly because he's independent. Plus, he mentioned he has some sort of forecast. I'm just not entirely sure if he meant for the US, Europe, or perhaps the "entire world." 🤷

I'll be the first to admit I don't know this stuff inside out, so forgive me if this sounds like a dumb question...

Basically, are money supply and money velocity interdependent? Specifically, does money velocity depend on the amount of money in the system? (I'm assuming it does.)

The reason I ask is...
If the Federal Reserve increases the money supply (and if that indirectly impacts money velocity since they're linked), then there should be a mathematical relationship between inflation and both variables: money supply and money velocity.
At that point, it stops being a qualitative guess and becomes a quantitative issue. It opens up the possibility where money supply rises and velocity rises, yet the CPI (or whatever inflation metric we use) doesn't rise proportionally—regardless of the function used. In other words, if the money supply skyrockets but inflation doesn't keep pace, shouldn't we actually be talking about real deflation? 😵