Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

[jtabeb]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

From my post above

"debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationist get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms!"

[metalman]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

But the USD/EUR can?
Look, failure to bring back down gold in usd (good luck with that, sans CB selling) means they have to squeeze the euro shorts, euro-gold is now parabolic.

gold rising in all currencies... gold is the only appreciating currency...

charts from 4th currency site... http://fourthcurrency.com/...

Gold in US dollars daily



Gold in EU euros daily



Gold in Japanese yen daily



Gold in British pound sterling daily

[jtabeb]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

What if things don't calm down?

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Nothing goes up in a straight line...

But the USD/EUR can?
Look, failure to bring back down gold in usd (good luck with that, sans CB selling) means they have to squeeze the euro shorts, euro-gold is now parabolic.

[unlucky]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

You don't have to worry about the other 66% you know, you can just as easily choose to put them where the other 33% are. (And yes you do indeed sleep better, trust me, okay?) ;)

I have been tempted to do that, and I do understand the rationale behind it Hyperinflation is a possible outcome but as someone with only passing knowledge of financial matters I find I cannot reach any definite conclusions about it.

On the whole I appreciate the measured approach advised by EJ taking due regard of the many uncertainties we face. I will probably increase towards 50% once things calm down for a while.

[gnk]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

I disagree with this. A tie-in of the existing dollar to a tangible commodity is out of the question due to the Ponzi nature of the debt. A new currency doesn't change this; only if the old currency is destroyed (i.e. all present savings destroyed) would said new currency be useful in any way.

And if the attitude in http://www.itulip.com/forums/showthr...Nihilist/page3 is correct - and I personally believe it is - then there will be luge runs in Hell before the US governing elite voluntarily does this.

If you believe in the characterization of "ponzi nature of debt", then you must also admit that all ponzi schemes ultimately fail. Which would include the current system. Thus, in my view, the dollar would have to go back to a gold backing of sorts to retain credibility.

Basically, your saying that going to gold will kill the ponzi nature of debt.... but isn't that fiat debt scheme already terminally ill? Is it not a moot point?

[c1ue]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Funny.. please quote me correctly. I said 'may'. And the show isnt over yet...$USD is knocking on the door of a new powerful trend...

This trend is going to last at most until July. If Greece showed the euro Emperor had no clothes, in summer the States will reveal King Dollar has no clothes.

As we speak California lurches towards yet another $20B deficit; for a presently $84B budget with $60B in previous deficits, this is quite serious.

A Latvia style state austerity regime means tens, if not hundreds, of thousands of laid off state government employees and or 30% cuts in pay on top of previous cuts.

And how will that affect the CA economy?

The other JIMy COFFas are right behind.

The difference is that Greece is like Nevada in size, but California combines Greece's problems with Spain's size. And there ain't no German pot of gold to steal from.

Jim thinks that the dollar will be replaced by a new currency and that there is a good chance that its replacement will need to be at least loosely linked to some tangible asset since confidence in pure fiat will be shattered.

I disagree with this. A tie-in of the existing dollar to a tangible commodity is out of the question due to the Ponzi nature of the debt. A new currency doesn't change this; only if the old currency is destroyed (i.e. all present savings destroyed) would said new currency be useful in any way.

And if the attitude in http://www.itulip.com/forums/showthr...Nihilist/page3 is correct - and I personally believe it is - then there will be luge runs in Hell before the US governing elite voluntarily does this.

[gnk]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

As this article rightly discusses, the key question is when to sell.

Jim Sinclair has had some interesting observations on that. Jim thinks that the dollar will be replaced by a new currency and that there is a good chance that its replacement will need to be at least loosely linked to some tangible asset since confidence in pure fiat will be shattered. An example might be France after one of its great fiat inflations. To restore confidence it issued a new currency backed by land that the government stole from the church if I recall correctly. In our case, gold would be the most obvious choice. It's internationally accepted, we supposedly have lots of it (and whatever amount the government says we have will be accepted -- forget about an audit), and at the right nominal price the amount we say we have could back lots of currency.

If this occurred then there would be no price collapse such as happened in 1980. Instead gold would trade in a band around a floating value linked to the amount of currency and/or debt issued.

Alternatively, there are plenty of examples of countries successfully replacing failed currencies with new ones backed simply by stronger promises to not over-inflate. Germany in the 1920s might be an example of this. In such a situation PM prices presumably would fall hard immediately after the new currency announcement if the government's promises were widely accepted.

Looking at it purely from a PM standpoint, I hope it goes the way Jim Sinclair speculates. Otherwise timing the exit will be critical and will be a game of some chance -- even if iTulip manages to give us an ace hole card

Good observation Pascal.

I agree with your point. I was just going to add that to my question above. I don't think the new global monetary regime is totally hashed out yet - nonetheless, the issue is being discussed much more openly and much more often. To me, that means a transition may be in order sooner than originally planned. Both EJ and Jim Rickards seemed to have observed this and I would agree.

That said, I agree that should gold make it into this basket of currencies, at a high valuation, then it may become a permanent store of value at such a valuation - thereby making the exity strategy and timing of such a moot point. I don't rule out this scenario.

In the alternative, influential elements in the US or EU may decide to ignore this global push and use some sort of gold backing in their own currencies. That would likely involve a high valuation of gold, with the same consequences for gold investors.

[Pascal]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

As this article rightly discusses, the key question is when to sell.

Jim Sinclair has had some interesting observations on that. Jim thinks that the dollar will be replaced by a new currency and that there is a good chance that its replacement will need to be at least loosely linked to some tangible asset since confidence in pure fiat will be shattered. An example might be France after one of its great fiat inflations. To restore confidence it issued a new currency backed by land that the government stole from the church if I recall correctly. In our case, gold would be the most obvious choice. It's internationally accepted, we supposedly have lots of it (and whatever amount the government says we have will be accepted -- forget about an audit), and at the right nominal price the amount we say we have could back lots of currency.

If this occurred then there would be no price collapse such as happened in 1980. Instead gold would trade in a band around a floating value linked to the amount of currency and/or debt issued.

Alternatively, there are plenty of examples of countries successfully replacing failed currencies with new ones backed simply by stronger promises to not over-inflate. Germany in the 1920s might be an example of this. In such a situation PM prices presumably would fall hard immediately after the new currency announcement if the government's promises were widely accepted.

Looking at it purely from a PM standpoint, I hope it goes the way Jim Sinclair speculates. Otherwise timing the exit will be critical and will be a game of some chance -- even if iTulip manages to give us an ace hole card

[Chris Coles]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

Interesting ...

Can anyone compare BullionDirect (Austin, TX) with APMEX (Oklahoma City, OK)? I'm about half-way between them, near Dallas, and have been using APMEX.

I've been happy with APMEX but if I had good reason, could switch.

Does anyone know of a similarly good dealer in the Dallas area? I like the idea of being within driving distance for some situations.

Come on Wriggly; what you really mean is you want to be first in the queue to find out if the AU is really there and if not, to be able to catch up with the truck running off with it.

[Chris Coles]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

This is a little like watching a War Game; but the war is being fought between national currencies. At the moment, the US Investment banks are winning hands down with the $US gamely fighting to subdue the rest of the planet; particularly the Euro. But we all know that the $US has an especially weak flank and sometime soon someone is going to marshal sufficient forces to drive a coach and horses through into the next phase of the war. No graph goes up forever.

[Andreuccio]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

I find pricing to be better on BD.

[gnk]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

hey jtabeb - are you also familiar with Antal Fekete?

Here's an interesting short read:

http://www.professorfekete.com/artic...tionPaper1.pdf

[gnk]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

...and the dollar has been subsumed into a multi-lateral currency system.

I'm assuming you are referring to the potential (or in the workings) emergence of the SDR here? (Or a similar global monetary scheme)

And thus, the end of dollar hegemony? If so, would this not affect our "exorbitant privilege" as the Euros would say - thus making oil, if not most imported resources much more expensive? What would the subsequent inflationary aspects be if we could no longer export our inflation as much as we used to? I would assume rather problematic.

[jtabeb]

Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen

More perspective for those that are lacking.

http://ftalphaville.ft.com/blog/2010...-not-a-chance/

AND

http://www.breakingviews.com/2010/05....aspx?sg=false