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Morning Gold Fix: June 11, 2010
Courtesy of www.fmxconnect.com
As a consequence of globalization, our economies are more tied together than ever. One of the factors that brought about the great depression was a nationalistic backlash against trade. The end result was countries pulling in the reigns, drying up liquidity, and consequently deflating asset prices even more. Global credit risk is causing institutions to decrease international loan exposure, and banks are beginning to repatriate their money and lend more locally. This is an economic nationalism, and can have the same effect as the political ones did in the 1930’s. Governments have little choice but to engage in competitive devaluations in an attempt to stave off the effects of these (localized) lending practices.
In order to attract trade away from competing countries, it behooves most governments to opt for a weaker currency. If every country knows this, then we have a prisoner’s dilemma situation. We believe there is less honor among governments than among thieves, and a race to the bottom will be the result. Such a situation may be good for the winning individual country, but it is bad for the group and citizens everywhere. In this case, global inflation is the outcome. The countries with the most to lose are those with the most debt, and the least flexibility to deleverage. They must devalue fastest.
The first warning shot was fired June 6th when “European Central Bank President Jean- Claude Trichet and Treasury Secretary Timothy F. Geithner diverged on prescriptions to sustain growth, with Europe set to tighten budgets and the U.S. seeking stronger domestic demand. (Bloomberg)” We think this is the table being set for the U.S. to start escalating its rhetoric urging the rest of the world to spend more. And if the world does not comply (how could it?) we think competitive devaluation will become the only choice for the U.S.. Got Gold?
Gold is trading mostly flat this morning ahead of the much-watched May retail sales. The market traded technically in lieu of any new developments until that morning saw fund liquidation triggering stops. Gold dropped slightly over $12 yesterday as the euro rebounded, and oil and equities also rallied. The market then stabilized and chopped in the range for rest of the day. August gold was up 1.9 to $1224.1 per 100 troy ounces as of 8:09 AM EDT, this morning. The June U.S. dollar index was down .036 to 87.03. July platinum was up 12.2 to $1548.4 per 50 troy ounces. Silver was up 4.4 cents to 18.395.
-Elizabeth Thawne
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Goled bitchez?
http://twentypercent.tv/2010/06/11/ron-paul-asks-to-restore-a-full-audit...
"One of the factors that brought about the great depression was a nationalistic backlash against trade"
That did not bring on the GD, the implosion of the UK which was the world currency of the world happened. Next all the rest of the countries started imploding from the lack of the UK demand. Then it was a race to the bottom, despair came into view, countries started to act defensive, which was result of the system collapsing. Trade wars happened because humans incorrectly thought there was an out.
That was a result of the implosion of the credit system, it did not cause it.
I agree, most world trade was financed by bills of exchange demoninated in Pounds Sterling cleared through London. When the Bank of England defaulted on its gold obligations in 1931, the Pound was devalued some 30% in one day, not conducive to clearing.
Thank you for putting that 'truism' about restraint of global trade causing the GD right. The tariff wars did actually affect some countries more than others, specifically the net exporters. I believe that the US at that time was one of them.
If one looks at the recovery rates from Great Depression I it appears that the US lagged quite a bit. This had more to do with the Fed's missteps than trade, although the lag of a robust stimulus to domestic consumption ranks right up there, and it will probably do so again.
Nationalism is to say independence. Globalization is empires. Like Mako says... and it was the UK who was attempting in it's day globalization, and the result ing failure was felt throughout the free world.
Its got nothing to do with inflation. Gold often rises in a deflationary environment. Gold is a barometer of confidence in government. When confidence declines, when geo=political power is challenged - Gold rises. You can map the price movements in Gold on the basis of geo-political power shifts.
Good beginning, but lacking important detail. Like the chart.
The gold bull is running like a freight train as fiat is being abused all over the world. Get gold and get on board or refuse to protect yourself and get COMPLETELY FUCKING RUN OVER BY A FREIGHT TRAIN.
Yours Truly,
Nathan Wind
They are really fighting 1226 becoming new support line.
Actually, The Empire will do anything and everything today to keep the weekly close today below 1230, the old high from December.
They managed to keep it below there back in early May. They'll battle to do it again today.
It's about 11.20am east coast and gold has climbed to $1228.30... Fed better wake up those azzhats at JPM if they want to hold under $1230.00...
Blatant Manipulation today with a capital BM.
I don't think Bart Chilton and Gary Gensler exist. I think those two guys that we occasionally hear from are actors playing the parts of CFTC Commissioner and chairman of Commodity Futures Trading Commission.
TD this warn out, "cause of the depression", was trade wars is 20th century sacred cowism at its worst. Today the average tariff on US exports world wide is north of 20% (see dept treasury web site). USA imposes ave 2-3% tariff rates. who's been the sucker folks?
Most here on ZH post about the loss of jobs in USA over the last few decades. IMO this tarrif imbalance has added fuel to the fire of burning down our economy.
The only way the USA avoids much deeper depression is to raise our tariffs to match other countries there by moving more jobs back on shore.. Our economy could withstand price increases as JOBS are created here. The exporting countries will suffer ..but then I am a hard hearted man who loves America first.
How about instead of more tariffs, we fight for more stable currency across the globe?? I cant see how adding more manipulation on top of the already heavily manipulated fiat currency is a long term solution.
If you want a real solution, you need to get to the root of the problem.
http://www.amazon.com/Politically-Incorrect-Guide-Depression-Guides/dp/1596980966
i'm on commission, if 10 of you click on this i get a half ounce gold coin. So go ahead, make those clowns who got straight A's in university economics eat their worthless degrees.
would link the keynes v hayek rap from youtube but you've all been there.
EDIT: 'One of the factors that brought about the great depression was a nationalistic backlash against trade.'
Utter bullshit
I clicked on it 10 times, send me a share...
~$65 per click? Good luck with that. (I clicked anyhow just to help out a ZH brother, no matter how delusional . . .)
if a more stable currency is the solution then bring on the AMERO, if for no other reason than it would solve the immigration problem which is already costing us trillions (war on drugs, war on terror, war on immigration, war what have you got left? weather?)
the solution to the depression is to revalue assets, (write off bad debts) and move on.
and while WWII brought us out of the depression, and killed millions of people, the world ppulation still managed to double in the next hundred years. now we should accept the fact that we are up against the limits of endless population growth, and new consumers to replace the old ones (the worlds biggest ponzi scheme)
Einstein said those who keep doing the same thing over again expecting a different result aare the definition of insanity, so Einstein invented the bomb. everything happening in this century will repeat what happened in the last century, with the opposite result. Tariffs and protectionism are good ideas for starters.
I'll kill anyone who tries to make me use a currency with pictures of John Pierpont Morgan and Rockefeller on them. You're welcome to kill me back but usage of the Amero will not be forced on me.
Agreed. Maybe one day, after we finish cleaning the s*** from the fan blades, we can bring back real role models, like Liberty and Mercury, to our currency.
yes but imagine all those worthless US dollars being orphaned, and we set the exchange rate, and the deadline to redeem those dollars. and of course the AMERO is back with gold from Canada and Mexico. jim rogers has been predicting the end of the EURO for a long while, suppose he's wrong, suppose regional currencies outlast their critics. suppose the BRIC issues its own currency. imagine how much simpler it will be to run the transfers, Libor rates and such, which are a flash point in the global economy. imagine there's no heaven?
hey where did that come from?
grateful:
I personally don't know what complex of economic factors caused the "great depression" but I do know that a several year dry spell, with the agricultural practices of the day, produced a several year "dust bowl" problem in the midwest.
I had a personal acquaintance (of 48 years ago teaching at St. Louis U.) from Iowa who described a period during his childhood with no breakfast and with lunch consisting of one slice of bread "buttered" with bacon fat. Not opinion- fact! The dust bowl was a significant factor in the troubles of the time, in the Midwest at least.
IMO, today's REALITY is that things like cars that use repetitive assembly processes will be increasingly built by robots. In fact, it might be an interesting exercise to determine how much human labor actually goes into the completion of a car relative to raw material cost. That is not so easy, of course, because human labor goes into the raw material. Sounds like a problem for someone who has access of good databases. I guess a rough number could be worked out from published data but, for me at least, that will take time I don’t have right now.
But, IMO, there is a lot of work that could be done on national infrastructure. We don’t need much in the way of imports and exports for that. The problem is public support and political will. Who is allegedly going to build a “maglev(?)” rail in sunny California? China?
When the aquafer under the midwest dries up, welcome to Dust Bowl II!
[quote]
RICH Economy step 1:
Offer a prize of $50,000/year to any worker that designs a
machine/software/process that will replace him/her.
Offer an additional prize of $30,000/year to ALL OTHER WORKERS
that get replaced.
Answering conservative objections:
1. A machine works 24/7, thereby tripling output immediately.
2. Machines do not take sick leave.
3. Machines are never late for work.
4. Machines do not form unions and constantly ask for higher wages
and more fringe benefits.
5. Machines do not take vacations.
6. Machines do not harbor grudges and foul up production in sneaky,
undetectable ways.
7. Cybernation was advancing every decade anyway, despite the
opposition of Unions, government, and other Alpha males; it was
better to have huge populations celebrating the reward of $30K
to $50K/year for group cleverness than huge populations suffering
the humiliation of welfare.
8. With production rising due to Cybernation, consumers were needed
and a society on welfare was a society of very meager consumers.
The majority of the unemployed, living comfortably on $30k/year, spent
most of their time drinking, smoking, engaging in primate sexual
acrobatics and watching TV.
When Moralists complained that this was a subhuman existence, Hubbard
answered, "And what kind of existence did they have doing idiot jobs
that machines do better?"
[/quote] -- R. A. Wilson
The answers are out there.
over,
Can't do that bro,( but I agree 100%) it's not part of the AGENDA.
Folks here think this admin wants to get America off it's decayed slump, nope.
This is ALL by design...........if you think differently, I have some swamp land to sell in AZ.
Great summery!!!