Financial topics

[Trevor]

A few weeks ago I was asked about the future price of gold and silver. So related to that, I ran across this interview with one of Charles Nenner's people and he gives their opinion. I'll try to sum it up. Gold and silver are bottoming but will probably go lower. I don't think he gave an estimate of how much lower or how long it would take. Then gold should go up to about $2500 and silver back up toward $50 but may not exceed $50.

I think it's got a ways to go before it bottoms. The prices of gold and sliver crashed in the 1980's and can certainly do so again. I've listened to numerous analysts say that neither of them can go down in value because of how rare they are, but they've fluctuated in price over the decades just like everything else.

[vincecate]

I think it's got a ways to go before it bottoms. The prices of gold and sliver crashed in the 1980's and can certainly do so again. I've listened to numerous analysts say that neither of them can go down in value because of how rare they are, but they've fluctuated in price over the decades just like everything else.

In 1971 gold was $35/oz. After the crash 10 years later it was like $250/oz. It is wrong to think of going from $35 to $250 as a "fluctuation", one definition of which is "wavelike motion". Now gold is $1,600/oz. It will not see $35/oz, nor even $250/oz, ever again, unless the US makes a new currency after this one fails. Imagine two currencies where one has a trillion new dollars printed each year and the other is not printed at all. Will the ratio between these two just randomly go up and down with "regression toward the mean" or will there be a continuing trend in one direction? If Bernanke announced today that on Krugman's advice he will do a QE3 of $2 trillion, would the price of gold in dollars go up or down? Gold is the one currency that nobody can print. There will continue to be a clear trend as long as they keep printing dollars, and they can not stop printing dollars as long as they are spending nearly twice what they get in taxes. They can not stop spending twice what they get in taxes. You need to get this to understand gold. Gold will be much higher 10 years from now when measured in US dollars, if US dollars even still exist 10 years from now.

There is another thing you need to understand. If you have gold hidden away someplace, it is very hard for the government to know or tax you on it. If you have real estate they can increase your property taxes so high that your rents don't cover your costs and your asset has no real value. If you have stocks they can tax the companies so much that there is little value left for the shareholders. If you have bonds they can print more money so that what you get paid back with in the future is not worth nearly as much as when you bought the bond (inflation tax). A change in tax or money printing can destroy the value of any of the 3 major asset types. When the taxes on the 3 major asset types get crazy you are best off to just hold real money, which is gold. As more people hoard the finite amount of gold the value goes up, which means an ounce of gold can buy more and more. This is deflation in terms of gold money. If your taxes are not already crazy they will become so as things get worse or a war starts.

Substantial price deflation in terms of paper money not backed by gold is a mythical danger used to justify more money printing. We have never seen it in the real world so far and we never will.

[aedens]

Old news to nothing new under the Sun. http://thelibertyclub.net/emry.pdf

http://curezone.com/upload/Members/Chaz ... _Secon.pdf

Death is your only escape from debt. They own you. Blue or Red could care less.

[Higgenbotham]

Will the ratio between these two just randomly go up and down with "regression toward the mean" or will there be a continuing trend in one direction?

Both I would say, though not quite random.

[aedens]

http://thelibertyclub.net/emry.pdf

[aedens]

Swedish economist, the late Gustav Cassel, London, 1934.
From Protectionism Through Planned Economy to Dictatorship.
The leadership of the state in economic affairs which advocates of Planned Economy want to establish is, as we have seen, necessarily connected with a bewildering mass of governmental interferences of a steadily cumulative nature. The arbitrariness, the mistakes and the inevitable contradictions of such policy will, as daily experience shows, only strengthen the demand for a more rational coordination of the different measures and, therefore, for unified leadership. For this reason Planned Economy will always tend to develop into Dictatorship.…
The existence of some sort of parliament is no guarantee against planned economy being developed into dictatorship. On the contrary, experience has shown that representative bodies are unable to fulfill all the multitudinous functions connected with economic leadership without becoming more and more involved in the struggle between competing interests, with the consequence of a moral decay ending in party — if not individual — corruption. Examples of such a degrading development are indeed in many countries accumulating at such a speed as must fill every honorable citizen with the gravest apprehensions as to the future of the representative system. But apart from that, this system cannot possibly be preserved, if parliaments are constantly over-worked by having to consider an infinite mass of the most intricate questions relating to private economy. The parliamentary system can be saved only by wise and deliberate restriction of the functions of parliaments.…
http://www.zerohedge.com/contributed/20 ... -once-more
Economic dictatorship is much more dangerous than people believe. Once authoritative control has been established it will not always be possible to limit it to the economic domain. If we allow economic freedom and self-reliance to be destroyed, the powers standing for Liberty will have lost so much in strength that they will not be able to offer any effective resistance against a progressive extension of such destruction to constitutional and public life generally. And if this resistance is gradually given up — perhaps without people ever realizing what is actually going on — such fundamental values as personal liberty, freedom of thought and speech and independence of science are exposed to imminent danger. What stands to be lost is nothing less than the whole of that civilization that we have inherited from generations which once fought hard to lay its foundations and even gave their life for it.

The Spanish stock exchange was halted Monday morning due to a technical glitch, according to a spokesman for operator Bolsas y Mercados Espanoles SA . The spokesman did not give a time for the resumption of trade nor specify the nature of the glitch.

[aedens]

In time a few will see how the arc really covers the discussion. The lense is focusing.
http://generationaldynamics.com/forum/v ... rust#p1739

"people who manufactured phony worthless securities and then sold them to people,
destroying their savings and their lives. It's one of the most engaging features of my personality."

[aedens]

It would be in TD Ameritrade's best interests to keep Knight afloat, as the firm, the No. 1 U.S. brokerage by trading volume, has exclusive clearing deals with Knight. Two months ago, Knight bought Penson's futures business for $5 million.
http://www.4-traders.com/TD-AMERITRADE- ... -14446858/

[shoshin]

interesting take on history and "cycles"....can we (I mean John) predict the future?...

http://www.nature.com/news/human-cycles ... ce-1.11078

[Reality Check]

http://thelibertyclub.net/emry.pdf

Interesting take on the Federal Reserve System and it's relationship to banks.

At the time of the article, 1998, banks had already been turned lose to operate across state lines, and some laws that made a bankers collusion with related parties subject to 30 years in federal prison ( even if no other wrong doing like theft or fraud was proved ) had been repealed. But most of the other Depression era restrictions remained in place until right around that time ( late 1990s or the year 2000, when President Clinton a Democrat, working with a Republican Congress ) turned Banks lose to get into all types of insurance and stock brokerage businesses they had been bared from for decades. The federal government even passed a law forbidding state governments from enforcing state insurance laws against banks at around this time.

The point of the above is that the period covered by the article was the period during which the worse behavior by banks had not even started yet.

The article is written about the good old days when banks were only greedy; and not yet: stupid, authorized to engage in all types of business, totally unaccountable, and greedy.

Of course the best part is that Presidents Bush, a Republican, and President Obama, a Democrat, worked together to reward the banking executives ( the people who actually made the decisions that led to the ongoing financial crises ) for all their fraud and other bad behaviors, by leaving them in positions of power and giving them Trillions in government loans at near zero interest ( it was money printed out of thin air by the FED - but it loans/spends the same ).

The banks, true to form, did not loan the money to small business at only slightly higher interest rates, but instead held it back to loan the money to governments and fools at much higher interest rates.

They also extended, first temporarily, under Bush, U.S. taxpayer guarantees against losses to the "huge private investment banks" ( who had never had them before ) and vastly increased the guarantee per depositor by a factor of almost 4. Obama has since made this temporary guarantee to the "private investment banks" permanent. The bankers, do, of course, continue to keep all the profits, they must only share the losses with taxpayers.