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From SEC Employee Rick Bookstaber "We All Know Gold Is In A Bubble"
Former Bridgewater-ite (which we hear is not doing that hot lately) Rick Bookstaber, who was recently appointed at the SEC in some risk management capacity, comes out with a truly amusing rant on why gold is in a bubble, and, not just that, but that "we all know gold is in a bubble." Ignore the fact that all multi-billionaire hedge fund managers have been loading up, all relevant and semi-relevant pundits have been claiming that gold is gradually becoming the one alternative to fiat debasement which has recently become a global phenomenon, and ignore that even with the dollar going up, gold has defended its 1,100 an ounce price quite successfully. Bookstaber compiles vivid imagery upon even more vivid imagery, and goes as far as comparing the quest for gold with the pursuit of hookers "Even if a guy is just after sex, he at least has the decency to act like there is some substance behind his interest. But with gold, no one seems even to
care about giving a justification, other than “gold has been a store of
value throughout 5,000 years of monetary history”. No one? Dear Mr. Bookstaber, feel free to peruse the following thoughts by Eric Sprott, Dylan Grice, Hugh Hendry, David Rosenberg, Fred Hickey, Jim Grant, David Einhorn and last but not least, Goldman Sachs, on some contrarian opinions to your prevailing dogma. And speaking of unconflicted advance warning vis-a-vis ponzi bubbles, where was your current employer cautioning the general population about the dot com bubble? Or the housing/credit bubble? Or the Madoff ponzi? Or the current Great Currency Deflation Bubble? Perhaps you can expend your time and energy on the real source of soon-to-be unparalleled wealth loss instead of focusing on the fringe "tin foil"-hatted gold community which nobody takes seriously anyway (except India of course which just incidentally bought 200 tons of gold north of $1,000).
From the SEC-member's blog:
This represents my personal opinion, not the views of the SEC or its staff.
I am not going to spend time here talking about how the price of
gold is off-the-wall, that it is not just a bubble in the making, but a
bubble waiting to burst. I don’t want to waste your time on that
point.We all know it is a bubble.
George Soros has said “The ultimate asset bubble is gold”. Many of
the top asset managers, such as Tudor and Paulson, are piling on; Paul
Tudor Jones recently said gold “has its time and place, and now is that
time.” The banks are echoing this view with their research. Goldman has
a research piece that looks for gold to approach $1,400 in the next
year. The more ebullient Charles Morris of HSBC has said, “I absolutely
believe it’s heading into a bubble, but that’s why you buy it. ” He,
along with a number of other professional and otherwise rational
managers, looks for gold to move as high as $5,000 an ounce.
More interesting than this almost universal agreement is what that agreement tells us about the dynamics of the market.
The Naked Bubble
Usually the markets have the
courtesy of giving cover for bubbles. We adorn the bubbles with some
justification. Even if a guy is just after sex, he at least has the
decency to act like there is some substance behind his interest. For
the Internet bubble, it was that fundamental analysis based on the
brick and mortar world did not bear relevance in the New Paradigm. For
the Nikkei bubble, it was that the crazy P/E ratios were not
considering one subtlety or another in the Japanese accounting system.
But with gold, no one seems even
to care about giving a justification, other than “gold has been a store
of value throughout 5,000 years of monetary history”. Which is fine as
far as it goes, but that doesn’t say anything about what the price of
that store of value should be.
Pump and Dump
Given that “hedge fund” and “highly secretive” are usually said in
the same breath, don’t you get suspicious when so many of the top
managers are so vocally out there about their gold investments? And
when their positions are structured in a way that make them open to
view? Paulson and Soros have huge positions in gold ETFs. We know that,
because if you buy ETFs, they show up in your 13-F filing. Granted,
with an equity investment you can’t help putting that information out
into the market, but with an asset there are plenty of ways to take the
position without signaling it.
That they are taking a highly
visible route to their positions suggests the game that is being played
is one of leading the herd. The 13-F reports positions with a big lag,
so no one will notice if they quietly slip out the side door while the
party is still hopping. And how about when the view is backed up by
none other than Goldman Sachs? Will they let everyone know when they
think it has gone too far before they get out. Or before they go short?
Maybe they already have.
Herds, crowds, mobs, and the Top Ten
And yet, we follow the herd, as we have countless times in the
past. Herding is a timeless and universal market behavior, but one that
seems less than rational. It is broader than markets; think of the Top
Ten phenomenon. We feel better if a lot of other people think that our
favorite artist or actor is The Best. We like a song better if we know
a lot of other people are liking it as well. Thus our love affair with
lists. Magazines featuring the Ten Sexiest, the Five Best, the 100
Whatever are all best sellers, even if the list is the product of a
story meeting between an editor and five reporters.
Herding can be explained as an
artifact of what was rational behavior in earlier times, when we were
running around as hunter gatherers. Back then, mob and herding behavior
made sense. Mob behavior if attacking a competitive group or killing a
large animal; herding behavior if protecting against predators or
uprooting to a new location. Whatever it was that got started, you
could be pretty sure there was safety in having a crowd on hand to
finish it.
The very notion of mobs and herds evokes a certain spontaneity. But
with the gold bubble, we are moving on to a concept of herding by
appointment. Everyone seems to be happy in agreeing that this is a
bubble, and we are all going to participate in this bubble in a
rational, genteel way. We have all decided that this is going to be a
number one hit, a Top Ten. Though we might want to ask who is leading
this herd, because my bet is they will be stepping aside and cheering
us over the cliff.
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This guy is CFR all the way. His picture won't make the financial terrorist deck of cards, but he will be remembered when the 'jacobin' accounting takes place. (Disclaimer:figure of speach)
Hey if you go to this page you can find out more on the David Rockefeller Studies Program.
I wish someone would fly a plane into the Pratt House....figuratively that is....
Dickens couldn't give this putz a better name!!
http://www.cfr.org/project/1282/cgs_directors_roundtable_series.html
CGS Director's Roundtable Series: Financial Innovation and Market Crises
Roundtable MeetingFebruary 21, 2008
Related Project: CGS Director's Roundtable Series
Presider: Sebastian Mallaby, Director of the Maurice R. Greenberg Center for Geoeconomic Studies and Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations Speaker:Richard Bookstaber
I just found out from that website that Angelina Jolie is in the CFR. I'm not sure what to make of that.
I know anybody can google....
But I'll tell you what! when anyone says something that you(zh'ers) think is whack, just google "name and CFR" and you'll see the connection. Muckety.com is real helpful when it comes to putting pieces together too. (like Carol Browner + APX, Inc.)
Here's the story on Angie's CFR induction anyway.
http://www.people.com/people/article/0,,20041839,00.html
lol since when has a person working for the government ever seen a bubble? I have a few dozen youtube clips about how these geniuses couldn't see a housing bubble. Now in their defense I know they saw it, they just lied to us so the ponzi could trundle forward.
They haven't seen a bubble because they're in a bubble. The US Government is a huge bubble. Someone pop it, please.
LOL the guys name is Dick Bookstaber
hahahahahhahahaha
Sounds like a porn star.
Agreed! This is the most likely scenario--
Collapse of the American Empire: swift, silent, certain.
Commentary: Historians warning of a sudden 'thief at night,' an 'accelerating car crash'
http://www.marketwatch.com/story/the-rise-and-certain-fall-of-the-americ...
Paranoid Diabetic Bankrupt American Beggar:
"Please, I need to swallow some gold nanoparticles so I can suffer asbestos-like poisoning symptoms and die. Thats much better than my former Metmorfin and Lorazepam dependent lifestyle.
I'll say now, I've said this before and I'll probably say it again. Forget this bubble BS, the market will determine the price for this asset. Not the FED, not the Gov't , not Russia and not China. There's way too many players in commodities, period. Players who do not understand true supply and demand scenarios. If there is a problem prices will rise and sellers will resolve "physical" issue. That's the real story. Everyone thinks all holders will demand delivery. That's not how it''ll go. People will sell after they've achieved the goal and target of $5m or more.
This guy is merely taking care of his career advancement program once he gets out of "government" service and wants a kazillion dollar job with the majors.
Talk his book, expand his rolodex, cover his career. It seems that's all goverment service is anymore
Sure Rick...gold is in a bubble...and up is down...and my cat shits candy bars.
"Yeah I hear he's got a blog. Probably nothing, but every little bit helps. I'm sure he knows absolutely nothing about gold or the gold market. Just ask him to write a hit piece. He will. We all know Rick is a toady."
"At least it will give him something to do. The other day he kept following me around mumbling something about pretending to like sex, and herding sheep."
*beep*
"Uh hello?"
"Rick get in here."
Over the past few years Russia has massively increased its gold reserves. Putin is shrewd, not stupid. The Chinese government advised Chinese citizens to buy gold at the $1,000 mark. A handful of nations have been loading up on it, BRIC nations and smaller states. South African mines are being depleted or gold is too deep to mine with profit and the threat is great of further nationalization of the mines like Argentina has done and continues to do with its natural resources. A history of KRY shows me an attempt at the government to bankrupt it by denying mining licenses, then will take it over that way as a direct takeover may inspire costly international lawsuits. Gold resources are being depleted and controlled and bought at increasingly higher rates, and Americans are again asleep behind the wheel going into the curve.
barrick sure paid a high price, to close a big chunk, of their shorts
There is obviously a bubble of incompetence at the SEC. Can you say Bernie Madoff?
Personally, I don't think the Bernie thing at the SEC was incompetence, but endorsed at the highest level and claims buried intentionally.
Definately endorsed; because of his name? Made Off. The clowns running the circus only care about the joke, HONK HONK!
they must SHT SCARED... I'm telling you
They've been saying sht like this ever since gold was in the $500 area, DEAD WRONG.
Gold will go to stratosphere VERY VERY SOON
Did SEC ever tell people that real estate was in a bubble?
No, of course not.
They speak of a bubble when they DON'T WANT people to buy into it.
Buy more. Buy often. Hold it.
When propaganda says one thing, do the opposite.
Rick is part of the propaganda.
Since gold has no intrinsic value and is only a price for an object that does not pay a return it pays to look at the price action and who is pushing it. Take a look at Nova Gold. At current prices it may or may not have any NPV. Since the hot money is now moving into it, it seems that the stage is being set for the ultimate pump and dump. Personally, I think I'll wait for the pump and short the dump.
Wow!
After Failing to spot BOTH the Tech Bubble AND THEN the HOUSING BUBBLE,
Our Government has FINALLY found a bubble (too bad it is one that doesn't exist)
How bad do you think things are if the Government has to go on a daily triad against gold.
Pretty FUCKING bad, me thinks.
They know bubbles but can't stop a ponzi chauffeured to the front door? LOLOL....Comedy Central on line 1 they are looking for a SEC Employee named Rick Bookstaber
Did this guy work at this SEC?;)
In today's [3/9/2010] Wall Street Journal, page A19, Richard J. Tofel of ProPublica reviews Harry Markopolos's book "No One Would Listen." Tofel titled the commentary "Shadowing a Swindler."
http://online.wsj.com/article/SB10001424052
748703936804575108180543849168.html
(subscription required)
Do the following statements from his article sound familiar to anyone?
Quote
The response of the SEC's enforcement staff was nothing less
than appalling—a complete dereliction of duty. Mr. Markopolos
made detailed submissions to the SEC in 2000, 2001 and 2005,
each time showing why Mr. Madoff's investment "system" was
fraudulent. A range of SEC staffers in Boston and New York
ignored the documents that Mr. Markopolos submitted or
studied them only briefly, eventually letting the
whole matter drop.
The crook simply outmatched the watchdog. As Mr. Markopolos
observes: "The quants who create these financial products
understand differential equations and nonnormal statistics;
they program in languages the SEC doesn't speak; they run
statistical packages the SEC doesn't even know exist. The
quants are busy data mining with supercomputers while the
SEC is still panning by hand."
Hey Black Duck monkeyspank boy shit on a stick is for speculators, GOLD is for REAL. If a fool didn't buy when it was below $1k then tries to justify by slamming those who have physical then have fun with speculating fool 'cause it's only just begun.
I would suggest everyone (especially this Rick fella) take a look at this piece on the factors affecting the supply and demand of gold, which cites none other than Larry Summers (who I think is one of the chief architects of the problems we find ourselves in) as evidence to suggest that the gold price remains in a very favorable environment:
http://www.goldalert.com/stories/Gold-Price-Up-Dollar-Down-Does-it-Really-MatterThe key part of the article is: "Per Summers and Barsky's research, the recent investment climate characterized by tepid long-term returns in stocks and bonds, combined with the prospect of continued monetary inflation to combat the credit crisis, strengthens the case for increasing an investors exposure to the gold price and gold equities in spite of the risk associated with short-term oscillations."
Has there been any speculation/investigation into who is behind all these "cash for gold" commercials and campaings?
Almost every check cashing place, jewelry store and coin shop has a "we buy gold" sign in it's window.
I've heard speculation that the government is behind it and is stocking up gold they buy via these programs, paying the sellers pennies on the dollar of course.
This post reminded me of someone else's inane observations about gold...
http://blogs.ft.com/maverecon/2009/11/gold-a-six-thousand-year-old-bubble/
The tag team of Buiter & Bookstaber, striking fear in the hearts of goldbugs since, well, never.
They'll get us next time though. Every dog has his day. LOLZ.
This guy sounds just like me when I come home from happy hour and begin to comment on a post I did not read. Or, if I did read it, I forgot what I had read before I made my comment. This guy had to be drunk, watching the Atlanta NASCAR race yesterday when this BS exploded in his mind. I bet when he sobered up he thought just what I do every time I sober up and realize what I wrote- what the hell was I thinking? I've got to quite commenting when I am blasted.
Z-Z-Z-Z-Z... Is that the SEC talking ? I put a lot of faith in these people to watch out for the common folks and ...Z-Z-Z-Z-Z-Z....
Do I even need to read this or what?
How can it be in a bubble when the majority of the population hasn't even entered the fray?
Good question! Here's a better one:
How can it be a bubble when mining stocks aren't outperforming?
For those of you who want to learn more about Rick, come take a peek...
http://www.google.com/search?hl=en&source=hp&q=rick+bookstaber&aq=0&aqi=...
He's an amazing guy. Just ask his mom.
This is patently offensive. I demand that this Rick Douchebager remunerate me immediately for the minutes of my life that were torn away from me and trampled upon mercilessly until dead as I read his piece.
Anyway, let these jackasses bray, because here's the best part: gold will go parabolic, and certainly, people of small thought will say that it is at the peak and the bubble will pop, but the bubble will not pop, because it's not a bubble. Because when the shit hits the fan, when it is obvious the dollar is being inflated to infinity, when paper promises are relegated to their intrinsic value, when supply shortages start to show up at your local supermarket and gas station, who the fuck is going to want to have a dollar? You may as well go around trying to hand out hand-written pieces of paper with funds drawn on the Bank of You.
No, gold will go up and stay up, because it will triumphantly return to its true place as the King of Money, as money and wealth itself. People will acquire it after much effort or labor and will keep it.
Cockstabber is just playing his role as gold cock-blocker to keep the regular guy from loading up before it's too late, since retail supply is dwindling. His essay as it were can be boiled down to: "Awww, don't listen to that squealing about gold! It's just a ponzi scheme like all the rest. Treasuries are where it's at!"
Hey, here's a joke: what sound does Rick Cockstabber make when he jumps into a pool? The answer: "DOOOOOOOOOOOOUUUUUUUUUCCCCCCCCCCHHHHHHHEEEEEEE".
I am Chumbawamba.
I'm offended by this simpleton...gold...in a bubble...hahaha.
Cigarettes and Cognac bitchezz
Good article by mister Bookstaber.
If it hadn't been about gold, it would have been interpreted as a good read. But now that it touches the holy (golden) calf it is considered to be nonsense
The only thing keeping gold prices down is the US dollar rally. But I expect gold to continue moving higher over the next months.
time123
Called the bottom: http://invetrics.com/?p=973
I always come to these Gold Smackdown's a little late. Oh well. My usual long winded, eminently junkable piece can serve as an anchor to bring this entire conversation to a lower level.
One poster here (trav7777) keeps noting that "production of gold fell 10% last year". Maybe. Maybe not. I wonder how many readers here have been to Siberia or Western China or northeastern Myanmar in the last two years? Not many, I suspect. For those who have, have you also visited South African gold mines before, so that you know what large scale production looks like? If so, you may well question that 10% number.
Russia, China and Myanmar are unlikely to keep the World Gold Council informed about production levels. Obviously they do not tell me either. My experience and that of mining engineers with whom I have spoken, however, suggests to me that production in these Middle of Nowhere Places (defined as poor resolution imaging on GoogleEarth) has been pretty darn good as of late. Frankly, I'm a little more concerned about mercury and cyanide supplies (as well as fresh water fish who do not take kindly to these leeching chemicals).
In any event, production looks pretty good. Yes, the amount on the planet is finite, but it was finite in 1980, too. And 1932. And 1848. Despite that, gold only popped $1000 the last two years (nominally, of course).
Yes, I own some, though a whole lot less than I did in 1999. I sold most of it in the last year, though I have kept some. It was the best performing asset class, but that doesn't mean it will continue to be. Equities looked pretty good in 2007, but past was not prologue.
The term "paradigm shift" is overused, but I'll have to use it again here. Paradigm shift is what I have seen in Asia over the last few years. Gold was traditionally a store of value because banks were not trusted and the list of available asset classes for the vast majority of Asians was limited. That is no longer true. Gold seems to be yesterday's store of value in Asia, having been replaced by bank accounts and real estate. Increasingly, gold is almost viewed pejoratively as "the Peasant's Bank". I do not underestimate this change in sentiment. Then there is this dichotomy: the peasants like gold but have no money; the emerging middle class has money but doesn't want to look like a peasant.
Nor do I underestimate the penchant for wanting to show off. Jade and diamonds are how one shows off. It is a whole lot easier to wear $1 million of jade or diamonds than it is for some typical hundred pound Asian woman to don $1 million of gold. Jade prices, incidentally, are up 700% in three years, and good pieces are being flipped faster than Huntington Beach condos back in '06. (just saw a piece bought on Thursday last for $700K and sold Tuesday for $850K, all physical fiat paper transaction).
Here's something that might seem silly to the typical Westerner, but makes perfect sense to many upwardly mobile Asians: a house costs $1 million, but can be rented on a long term basis for $600/month, in an interest rate environment of 5% (or 5% per month for Myanmar). What is the move? Exactly. Buy the house.
Why buy the house? If one loses all of his money, he still has a place to live. Now one can take a pencil and paper and try ad nauseum to show that it makes more sense to bank the money and rent, but few will accept the "logic". A home is security. Also, most Asians do not accept that land can ever decrease in value, save for the Japanese. Even in Hong Kong, where prices peaked in 1997, people simply do not consider that RE can decline, at least until after they sell. Many people in Asia firmly believe in the Greater Fool.
Many say gold has a "5000 year history as a store of value". I have not owned it for quite that long, though it sometimes seemed so. As seductive as that argument appears on the surface, I remind myself that children do not always inherit all of their parents values. Things do change. It is changing today in Asia. Maybe what is happening to day is only a temporary blip in a 5000 year love affair, but it still must be considered.
So is gold a bubble? Could be. Clearly it is now just being rediscovered by the West, and admittedly many world governments are turning to it as a source of reserves. Just because the average Westerner does not own any coins, however, isn't prima facie evidence that it is NOT a bubble. Not everyone owned Pets.com, either, but that was a bubble. A bubble is when the universe of interested parties devotes an increasingly large amount of their wealth toward a single asset class. That universe of interested parties may grow, or it might remain static. At present we have a combination of governments, billionaire HF managers, and the "tin foil" crowd moving in (I use that term with the utmost respect). In and of itself that might be enough to get gold to move higher. It might not, however. There's a lot of privately held gold in Asia still, and as RE continues to take center stage, the supply coming to market could well turn into a flood. I believe it has been this supply which has kept gold in check since $1228, and my visits to gold souks, where the "Sell" lines are longer than the "Buy" lines, back that up. Add to that the greatly increased production in non-traditional locales (my opinion), and gold could be capped for some time.
There is no exact right answer a priori, and anyone who believes there is can be in for a rude awakening. People who disagree with someone else' firmly held future view are not "idiots" until time proves them to be so. Or not. I remember there were lots of "idiots" in 1980 when inflation was 15% and "going to 100%", and gold and silver hit $850 and $48.50. The passage of time changed a lot of labels. The idiots suddenly became geniuses, and vice versa.
The caveat, of course, is the Great Fear (which also keeps me up at night). If (when) the marginal piece of paper is produced that finally makes people question the "inherent" value of fiat currency, gold may well be the alternative. Sometimes, however, I think the alternative might be something else, like coffee. Yes, that is a facetious statement, but when I look at the charts for Diedrich and Green Mountain Coffee, I can almost believe. On the other hand, it might be arable land. Or late 1920's Bugatti Type 35's. They're not making any more of those, either. French blue anyone? (I bet Cornelius knows what I'm talking about.)
In the end, we'll all do what makes us most comfortable. Closing one's eyes to possibilities, however, rarely serves anyone well. Buffett (no, I do not care for him either) likes to say we only know who is swimming naked when the tide goes out. I say we'll only know who the idiots are with the passage of time. Might be me. Might be you.
+1
Bizarre post. Asians are flipping jade and wearing million dollar necklaces to show off, but they are afraid of losing all their money? So they overpay for bubble real estate?
You must be one of those "rational consumer" economists from UChicago.
While being an inveterate gambler is fairly common in many parts of Asia, particularly China, there is also an underlying fear about personal financial security. Once the house is in the bag, however, a lot of people are willing to take a flyer on quick riches. Actually, such behavior is pretty common across the globe, now that I think about it. There are very few rational consumers.
In the US, you have people who will keep a savings account yielding .1% but pay off a 29.9% CC balance in installments. Others will consider themselves savvy for buying a big ticket item at 20% off, but do it via a credit card which they will pay off over three years at 29.99%. Go figure.
"Russia, China and Myanmar are unlikely to keep the World Gold Council informed about production levels"
Right. Those amounts, whatever they may be, do not appreciably affect world supply. Check the premium on Chinese Pandas. Therefore, when gold leasing slows down and the Washington Accord is neglected, the squeeze is felt. Paper gold will work only until it doesn't, and a sizeable amount of people will be actually outraged to find that they were in yet another Ponzi.
As usual, you demonstrate why you are (and always have been) one of the best commentators here.
Had to stop at " if you lose all your money you still have a home". Only if you have a lifetimes worth of tax money somewhere.
Intelligent observations as usual chindat13.
But I will stick with Gold for now.
I would buy agricultural land in my country but it is still inflated by EU subsidies although the price is lower here (Ireland) then recently, besides It is sold in large lots which I cannot afford and the smaller sections generally come with a house attached whose price is artificially inflated by government whose only purpose it seems is to save the banks.
Also I was always interested in investing money in the French nuclear industry but that is also a politicalized sphere, that works for the French but not for the investor.
I will stick with Gold and some nice cashable tax free Irish bonds that will earn me 10% if I hold them for 3 years.
If they don't default in three years.
Sure I consider government bonds as a riskier investment then my gold which I consider my core wealth but who knows what the future holds.
So maybe I am still the governments Bitch
Check out the Mcalvany weekly commentary today from a intelligent non gold bug view of the world from Russell Napier.
His central view is that governments are now major participants in the market and can prevent the equilibrium from happening for some time.
www.mcalvany.com/podcast
I can't listen to the podcast now, but I agree the government has been in every market for decades. They haven't done a very good job controlling them though. Certainly gold had a good last decade.
Passport Capital's piece on reasons for owning gold (physical only) is worth reading: http://www.marketfolly.com/2010/01/passport-capitals-rationale-for-ownin...
I just to make a few points that Bookstaber seems to have overlooked or doesn't understand.
1. I don't want to speak for the rest of you but I am not really bettering that my gold and silver go up in value, I am better that the dollar and other currencies are going to fall in value. I have no plans to get rich from my gold and silver. I only hope that these assets can provide a bridge for me to get to the other side of very messy situation.
2. Everybody I talk to tells me that gold is in a bubble, Bookstaber says that we all know it. This is not how bubbles typically work. If everybody thinks there is a bubble there probably isn't one.
Last point, I really enjoyed his book, A Demon of Your Own Design. That said, he was a risk manager that nearly blew up the world three times. Like with anybody else, what he says should be taken with a grain of salt.
I'm thinking out of the box here, but I'm considering a completely different strategy lately. Why am I working my ass off to acquire excess wealth that I then need to concern myself with storing. I think Chindit and others are correct to say none of us really knows for sure how this will all play out. The ecosystem of Man is a complicated one. Lots of variables to consider and couple that with the temperamental human psyche and Lord knows what the future holds. So if we forecast a bleak future regardless of the details, why bother saving over the long term. Enjoy life now. Work less or spend the excess you do make. Building relationships may be more valuable than gold. Useful old fashioned pioneer skills may come in very handy and indispensable to our neighbours. I say this because I don't have a lifetime of stored labour to fuss over. Excess wealth is tough to acquire in these times. I have my eight acres surrounded by maple trees and beaver ponds. It's time to invest in learning how to make the most of it. Beaver meat and maple syrup are my bet.
This guy is working with Pallet Tim ... just noise..
Ignore the Noise... Buy Gold and Silver before the mad rush..
Government stupid is also in a bubble.
-MB
Read this article today on GATA's website. He makes a rational case for hyperinflation and for owning assets of intrinsic tangible value.
Hera concludes:
“When social, political and legal arrangements are strong, reliable and endure over generations de jure value may be preferable for any number of reasons. However, when social, political and legal arrangements prove to be unstable, or fail, de facto value trumps de jure value in every case.
When the balance sheets of US banks are maintained by suspending accounting rules and when banks hold financial derivatives liabilities greater than world GDP, both the stability and credibility of the banks is questionable. When US economic data consistently seems to reflect a Pollyanna bias and the US federal budget contains unrealistic projections of GDP growth and tax revenues, while public debt and government liabilities (which now include unlimited bailouts for government sponsored entities Fannie Mae and Freddie Mac) are obviously unworkable and the US government’s own central bank is already a major buyer of US Treasuries, the federal government’s credibility is questionable. When private financial losses and toxic financial assets are transferred to taxpayers while profits and bonuses abound on Wall Street thanks to accounting rule changes in the midst of the worst economic contraction since the Great Depression, the credibility and competency of the US Treasury and Congress, with respect to the finances of the nation, is questionable. When the US Federal Reserve defies the US Congress, resists independent auditing, engages in ongoing QE (Quantitative Easing = Money Printing) and is the lender of last resort for banks that under normal conditions would be insolvent, its credibility is questionable. When the Chairman of the Federal Reserve, who failed to detect the largest asset price bubble in the history of the world and who has been consistently wrong in his assessment of the US economy is reappointed following the worst financial and economic disaster in generations, both his credibility and that of the Obama administration are questionable. The plethora of red flags spewing from Wall Street, from the Federal Reserve and from the federal government point to a breakdown of de jure value that is already in progress, thus to a hyperinflationary outcome for the US dollar.”
-------------------
Bernanke’s Dilemma: Hyperinflation and the US Dollar
By Ron Hera
March 9, 201
©2010 Hera Research, LLC
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Hera Research, LLC, provides deeply researched analysis to help investors profit from changing economic and market conditions.
I have it on good authority that there is a test to work at the SEC where the interviewer holds up two fingers and asks the interviewee how many they are holding up. The correct answer is "I don't know". The interviewer (still holding up two fingers) then says that there are three and asks the interviewee again how many there are. The correct answer is "three". If the interviewee gets both questions right they are hired to work at the SEC.
Clearly in the medium-to-long term, fiat money is doomed and gold is a good place to store value. So in the long run, Bookstaber is on shaky ground. However—to paraphrase Grand Moff Tarkin’s aide—we’ve analyzed the hedge funds’ attack, and there is a danger: a Euro-crisis-engendered flight-to-safety that triggers the same asset-decline-fueled run to the dollar that we saw in 2008-09. If you don’t think the short sellers are perfectly able and willing to set off a crisis with, let’s say, Spanish debt in an attempt to spark a selling stampede that would enable them to clean up on cheaply purchased out-of-the-money gold puts (and short plays on other assets classes), you weren’t paying attention to what happened with Bear Stears, Lehman, Fannie, and Freddie et al.
Clearly the conventional wisdom here is that any such maneuver by the hedgies would, insofar as it succeeded in setting off a flight-to-safety stampede, *boost* the value of gold. Could be—intuitively, that seems to be what *should* happen—but it didn’t work that way in 2008-09.
Some people mare so smart that they are stupid. I guess Bookstaber's book didn't sell that well after all.
I do believe I called Master Bates = Junior Troll several gold posts ago.
The Troll-fu is still strong, although they don't go all half-assed and admit it quite so easily.
great thread again ZH, lovin' your work.
Short the paper, buy the physical
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