Ben Bernanke : "(pauses) No."
JP Morgan (a long time ago) : "Gold is the only money - everything else is credit"
It seems there is a difference of opinion here...
This is going to be blog about silver, gold, markets (stocks/bonds/futures, etc), the economy, and current events, and my thoughts where things are headed ...
Today was an interesting day (for a first blog post)
The dow lost 500+ points. S&P lost 50, Nasdaq down 130+Gold lost 40 points in approximately 1.5 hrs. Silver lost over 2 in about 15 minutes.
So, where's this thing headed?
In the long term, gold and silver will be much higher than they are today, but it's going to be a roller coaster ride getting there.Gold will go up in price as long as the clowns in DC keep printing money. As they don't really know how to stop, this is a practical certainty.
Silver is completely different. It has industrial as well as economic uses.
Silver has a bunch of fundamentals going for it including
- fixed rate of supply (takes a couple of years for a mine to become operational)
- inelastic demand (used in small quantities, with not easy replacement, it's use pattern is price inelastic)
- voracious consumption (more is consumed than replaced)
- limited inventories (comex inventories of silver are at all time lows)
A Brief History of ...
If you're new to the silver and gold story, here's a brief history of the precious metals, and the US economy ...... sometime around 1933, President Roosevelt seized all the gold from US Citizens at about $20/oz and the next day, repriced gold to $35/oz
... after WWII, the US Dollar achieves the status of the world's reserve currency. The US will exchange it's dollars for gold for non-US citizens. This is known as a gold-backed currency.
... up until 1964, most US coins (exception being pennies) were 90% silver. Lyndon B. Johnson takes silver out of US currency, and says "Don't hoard your present silver coins, ... [it] won't be profitable"
http://sgtreport.com/2011/07/dont-hoard-your-silver-coins-president-johnson-1965/
(In 1964, a silver dollar was worth, it's weight in silver - about a $1)
(In 1964, a silver dollar was worth, it's weight in silver - about a $1)
... circa 1972, President Nixon takes the US Dollar off the gold-standard, and in exchange, allows US Citizens to buy gold (at that time, gold was around $41/oz)
... and some history about the Hunt Brother's silver position (circa 1980) which took silver up to $50/oz
their famous quote : "Any damn fool can run a printing press"
... from 1980-1990 the price of gold, silver, and oil collapsed. This combined with President Regan's "Star Wars" program resulted the bankrupting and subsequent collapse of the USSR.
... circa 1999, something happened that you may never have heard of - Brookley Born (then head of CFTC) predicts that derivatives could cause a financial meltdown. Six months later, a wall street firm called Long Term Capital Management (LTCM) goes bust - and gets bailed out to prevent systemic collapse!
... by 2000, the price of gold was around $230+/oz and silver around $4/oz. Gordon Browne decides to sell the UK's gold, and around mid-year 2000, high tech stocks collapse - the Nasdaq goes from 6000 to 2000 and stays there for a decade. (... and by, the way, Warren Buffet decides to buy silver).
... by 2008, the housing market collapses - causing a liquidity crisis - resulting in stock market collapse - several large wall street firms get "bailed out". (Gold has been quietly climbing from $230+ to $950+/oz. Silver went from $4 to $19). After the collapse, silver drops to $9/oz and gold drops from $950+/oz to $750/oz. (Interestingly, there were several complaints of delays, and other difficulties that people encountered when trying to buy silver at the sub $10/oz price point from dealers. Silver was available on Ebay at $30+/oz).
... by 2011 (today), gold gets to $1600/oz, and silver gets to $50/oz (before being slammed down to $35, and is currently around $40/oz). All currencies today are fiat based (backed by the full faith and confidence of their various governments), and all governments are trying to devalue their currency to stimulate trade.
... and we see China come onto the world market. They import raw materials, and export finished goods to the entire world. The Chinese own over a $1 Trillion of US Debt. (The US dollar is a debt based currency).
No comments:
Post a Comment