romans holiday

The commentators on CNBC seem to be getting more jittery, almost panicky, with each passing week. The latest news on the giant US mortgage providers Fannie and Freddie are playing havoc with the markets. The video mentions they are practically insolvent with less than 2 cents in the dollar to cover their commitments, with the further point that if the Fed rids to the rescue, it could destroy any credibility they may have left. I can see a lot of investors piling into gold soon. http://www.cnbc.com/id/15840232?video=791559797&play=1 http://www.cnbc.com/id/15840232?video=791551896&play=1 http://www.cnbc.com/id/15840232?video=791558399&play=1 http://www.cnbc.com/id/15840232?video=791513375&play=1 The last one; Freddie and Fannie are 80% of the market.

I intend to ride the price of gold as it goes up and assets deflate. At some point, I hope to jump [like Mario the plumber] and swap gold for stuff I really want, like land, a house and a boat [perhaps the DOW when it can be bought for 1/2 an ounce ]. I hope I will never need to swap any for fiat. Gold really looks to be riding up on wave 3 now. Doubt the sharks can do much.

The second coming? No, just joking. But seriously, there was a vein running through that article I liked; that there is a timeless allure to gold which makes it an almost mystical substance. I know as a hard headed investor you are not supposed to be emotionally involved with your investments, but I sometimes wonder if I will be able to part with my gold when the time comes. Certainly will not part with all of it.

I thought Peter Schiff's radio show was particularly good today. He really goes at it with hammer and tongs. http://www.europac.net/radioshow_archives.asp

This chart dummy has been trying to cut and paste a chart of the DOW for the past half hour. I will give you the link instead. My thought is that gold may repeat the pattern of the DOW. Now before you get upset, I mean repeat the bull market of the DOW from 1980 onwards. The DOW, like gold, traded for a long time below 1000...... before finally soaring to 14,000 over the following years. http://en.wikipedia.org/wiki/Image:DJIA_historical_graph.svg I have liked Peter Schiff's idea that the DOW and gold will at some stage in the future be at the same price. I am now starting to further think that they may quickly part company, with gold continuing to soar while the DOW continues it's dive. The DOW bear nearly down to 11,000 now and can only see bad news on the horizon.

I do not think gold holders have much to fear from the prospect of rising interest rates. Though interest rates continued to rise during the seventies, so too did gold. It took a Volcker and phenomenally high rates to finally dampen inflation and put the brakes on the gold bull then. Also, the macro-economy today looks a lot more dire than that of the seventies. If only it was a simple case of inflation.......but it seems to be a lot more complicated than that. If you have inflation, buy some gold. If, as Steve points out, you have a crisis, buy a lot of it.

Nice chart diet cola... I was thinking this pattern would repeat a month ago, but now think things are developing too fast in the stock markets/dollar... or should I say unravelling. I reckon gold will stay solid here and move up steadily before taking off with the coming "earthquake". "The same sort of thing happens in markets. It is the source of the saying that “markets spend 90% of the time making up their minds and 10% of the time doing what they have to do”. Countervailing pressures build up causing minor tremors. Then pressures continue to build until there is a major change in the market place, the equivalent of an earthquake. The US dollar index was 120 seven years ago. It is now 72, a decline of 40%. This magnitude of decline over a seven year period gives the impression of several minor declines (tremors) stitched together. The world situation is now fast developing to the point where the downward pressures on the US dollar will become overwhelming and there will be a sudden, earthquake-like, decline to a level where there is the prospect of the US trade deficit being eliminated. Once the US Dollar index drops to a new low below 70, events will probably happen quickly. That will be the signal that the dollar’s doomsday will not be far away." http://news.goldseek.com/AlfField/1215529200.php

Like that graph Steve, looks like gold is laughing at the world as the markets go to hell in a handbasket. Anyone for wave three?

I loaded up at 930... my reasoning was why worry about pennies. ... which is what dollars are going to be worth soon.

Preaching? Did not realize I had any orthodox views.

Yes, labels can be limiting. The way I see it is that inflation and deflation are two sides of the same coin... pun intended. In the near future, we will no doubt see a period of rampant inflation which may be followed on by deflation. The essential matter is a currency crisis and that is where monetary metals will do extremely well as an alternative currency no matter the flavour of the flation.

If we do not see gold dip to $870 this side of the recession/depression, how will we see it on the "other side"? Oh... you must be a deflationist.... hmmmm.

Yep,...hmmm...... let me do the math.... 10% + 4-5% = 15% .... and we ain't gonna see that from Bernanke soon. [i wonder if this would still be too low to derail runaway inflation in the near future ]

It is a common misconception today that an interest rate rise must be negative for the POG. Throughout the course of the 70's as interest rates were being raised... so too the POG went up. No doubt we will see history repeat. Let them raise their petty rates and watch them recoil in horror as that orthodox instrument fails to vanquish the vampire of inflation.

927... also small rally on stocks

Hmmm.... I wonder if gold might have embarked on Wave 3. http://news.goldseek.com/AlfField/1215005723.php

Of course we do....................................after we go down a little...... then sideways..... then up...... then down... .....then sideways again. As for interest rates... I think the ECB will go another 25 points next time round. The US dollar will continue to weaken. As for stocks........ Good article here by John Browne; http://financialsense.com/fsu/editorials/s.../2008/0702.html

Hi Steve, mission accomplished. Thanks again for the info. I found the NZ mint great to do business with as everything went smoothly. They will store my new Gold kiwis at 2%..... which I made sure to pay for in advance.

Here is the link to Peter Schiff on CNBC squawkbox. http://www.europac.net/Schiff-CNBC-7-1-08_lg.asp

I am expecting a pullback shortly. Gold is so volatile at the moment and seems bound to repeat its erratic moves. Conventionally thinking, you would expect gold to settle down and stabilize after a period of volatility, therein building strength to scale new heights. Yet given the awful news in the stock markets, the continuation of soaring oil and political developments, I am not so sure whether it will settle. I have decided to use all my dry powder this week. Sure, gold may dip, most probably will, and I will lose out on a few bucks, but the peace of mind of not having to worry about it is well worth a few bucks. For me, as a long term bull, the most important thing is to get in. Hoping to do the deal tomorrow or Friday. Also hoping gold dips very soon.

Stocks sliding into an official bear market while gold takes off. 938!

"Cuthbert, what is your interpretation of this? " Could I hazard an interpretation? [but more based on the US though could be loosely applied to the UK] Based on the Boom/Bust theory of Von Mises. This graph represents the big picture. While we hear a lot about inflation these days the bigger picture is deflation. If we take inflation to be both the growth in money supply and credit, the correlating deflation is a reduction of money supply and credit. Sure, we have heard a lot about the “credit crunch” [such a nice little pithy phrase] but have pretty much neglected to factor in what it may mean to the larger macro-economic picture. The collapse of bank offered credit, which will only get worse, is a huge deflationary force. I would suggest it is the bigger “background” story, though the inflationary story seems more pressing as it is in the foreground. Today, all the focus is on the Fed’s “printing” of new money. The Fed is here trying to re-flate the bubbles. Of course, we all know this can not be done, and a lot of this new money is going into commodities and the queen of commodities, oil. The Greenspan years were inflationary years [the boom], with inflation going into paper assets and property. [this inflation is only now working itself out in inflated prices]. Bernanke’s job is to try and reflate those assets which are crucial to the economy. I believe Bernanke has in his mind the bigger deflationary background story [the bust]and is terrified by it. I also think the “zombification” of the banks [the collapse of credit] will define the Bernanke years. I would imagine that the amount of “money” involved with the withdrawal of credit, bank failures, collapse of derivatives and bankruptcies may dwarf the amount of money the Fed is issuing. Much of this new money seems to be going into the coffers of oil-rich countries, so Americans will be faced with the worst of both possible worlds. On the one hand there will be inflation, where their dollars lose purchasing power. On the other hand, there is deflation, where access to money and credit is drastically reduced. In this scenario, American assets will become very cheap………for foreigners. I saw recently, Europeans are already starting to snap up properties in New York Just my 2 cents worth. A word of warning, my opinions are not fully thought through [prefer it that way actually]. Also, I think that both future inflationary and deflationary scenarios are positive for the value of gold. [The defining feature of the great depression was huge amounts of bank credit made available beforehand and then the collapse of that credit]

Check out europac.net Interviews are usually posted there. May take a couple of days. Well worth watching.

They finally let Peter Schiff back on CNBC! He killed them in debate... couple of his detractors even admitted he had been right so far. Looks like he might be a regular fixture at CNBC again.

Thanks for the information Wren. Decided to swap $20,000 for the real stuff at the New Zealand Mint. They also store for a 2% charge [thanks Steve] which is not so bad for a few months. I am thinking if I have a larger sum of money at a later date [and the POG is still as cheap as it is now] I will look then at using the services of BV. I have to admit, I just love having the physical stuff around.