Tim Geithner Added To List Of Gold Bugs' Best Friends

Tyler Durden's picture

Yesterday we asked rhetorically if Ben Bernanke has become the gold bug's best friend courtesy of his FOMC announcement which led to a surge in gold, and a kneejerk whimper in stocks, which has now been completely wiped out courtesy of a subpar GDP number. Today we note that it is not only the Fed, but the US Treasury, and specifically the ravenous Mr. Geithner, who just got a green light to issue another $1.2 trillion in debt, and bring total debt to $16.4 trillion, which would still be 107% of today's GDP (which we don't see growing much if at all over the next year), that can be added to the list of best Goldbug friends. As the chart below demonstrates quite vividly, in addition to global and local monetary expansion, the price of gold tends to correlate quite well with the US debt ceiling. Which means that per yesterday's Senate 52-44 vote authorizing Timmy to go hog wild (which in turn means that Bernanke will have to step in and monetize much of this new debt issuance), the price of gold just got a green light for at least $250 in upside - the implied price just got raised to $1960. Of course, anyone who thinks the US will stop issuing debt there needs a brain MRI stat. Thank you Senate. And thank you Timmy. And, of course, thank you Ben.

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Yes We Can. But Lets Not.'s picture

No, thank me.  And us USA tax slaves.

Al Huxley's picture

Relax, NOBODY's ever going to pay off all this debt. Of course, the downside is everything's going to get WAY more expensive.

Buckaroo Banzai's picture

Sixty comments in, and I have to be the one to say it?? C'mon guys.

GOLD BITCHEZ!

TruthInSunshine's picture

Break it again, TIMMMMAY!

Barofsky had talked openly, and nearly literally, about serious crimes that Geithner may have committed regarding the AIG bailout (which was a bailout of of Goldman, JP Morgan, and many other best friends of the NYC branch of The Fed, in reality), not to mention his interference regarding his orders to wind up Citigroup (which never happened due to his interference), or a complete lack of willingness to initiate any aerious investigation of Goldman or John Paulson regarding the Abacus/Timberwolf/Hudson scam.

And what happened since that time?  The sound of crickets chirping.

It's funny how the media and TPTB work in conjunction to bury the worst deeds of the criminal class.

Enter the way-back-when machine:

Geithner In the Crosshairs? Criminal Charges on Table for AIG
  • April 28, 2010

Neil Barofsky, The Special Inspector General for TARP oversight, better known as SIGTARP, says criminal or civil charges are still on the table in the AIG cover-up, according to a long profile at Bloomberg.

In the eye-opening piece, Barofsky talks about how he got a crappy basement office in the Treasury building and likens its foul smell to relations between the Treasury department and himself.

Since Barofsky's job is to watch over TARP funds and how they're used, it should come as no surprise that when $700 billion is on the line, funds are bound to be misappropriated.

So what's the essence of Barofsky's beef? A few things:

  • * "Barofsky's most recent broadside came on April 20, when a SIGTARP report labeled a housing-loan modification program funded with $50 billion of TARP money as ineffectual."
  • * He has also criticized Tim Geithner in reports for his handling of the AIG bailout back when he was Chair of the NY Fed.
  • * Mortgage deals involving CDOs similar to the ABACUS deal.
  • * How both Obama and Bush handled the financial crisis.

 

So now the SEC and Barofsky are working together to comb over the details and review whether or not filing charges is appropriate, according to Bloomberg: Geithner better have one eye over his shoulder.

Bicycle Repairman's picture

There you go with that 'law' stuff again.

VegasRage's picture

Now, now, now look at the bright side. This is a solution for helping everyone who is upsidedown in their house, they'll be able to pay off their loans with a couple months worth of work. Everyone should then able to afford the $10,000 carton of milk and $12,000 for a dozen eggs. Now that's winning! We could have gotten here faster if only Robert Mugabe could have been our president.

tocointhephrase's picture

The future is bright, the future is Silver and Gold

Thomas's picture

The gold bull is part coming off a bottom, part inflation, and part blowing off a top. I suspect we may have dealt with the correction off the bottom, are tracking inflation, and will eventually get some ill-gotten gains that will require an exit strategy.

Gold bug since 1999.

s2man's picture

Well put, Thomas.  A flight to safety will certainly bring us more than just inflation tracking.  Now, if only we could conjure up a good financial crisis to cause that flight. 

But alas, TPTB have everything under control and will never let that happen...

DosZap's picture

Thomas,

I suspect we may have dealt with the correction off the bottom, are tracking inflation, and will eventually get some ill-gotten gains that will require an exit strategy.

I agree, but we are a long ways from that event, and at what price?,AND,when you decide your exit strategy, where are you going to invest your gains?.

Until there is a SOLID vehicle for exiting into, I see no way to exit.

n8dawg84's picture

Why not Real Estate?  Either housing properties, rental properties, or farm land?  Personally, I think farm land might be best because you can live more self-sufficiently.  Although, I've never worked on a farm and I'm sure it's hard work...

Beam Me Up Scotty's picture

Farm land might be ok, if you are going to live on it, and use it.  But be prepared for your property taxes to sky rocket too.  They can tax you right off of your property if they choose to do so.  You can bury your gold though.

As for real estate for an investment?  Same problem, property taxes.  And if you have a nice lake cabin?  Good luck kicking out the squatters who will inevitably invade it, if they SHTF.

n8dawg84's picture

Thanks for your response.  In regards to to property taxes, who taxes you on the property?  Is it a federal, state, or municipality tax?  Would it be possible to pay the taxes early?  For example, I use gold/silver to buy the property from the bank who owns it.  Couldn't I then take more gold/silver to the appropiate level of government and pay the property tax for 15 years?  I don't own any property so I'm not sure of how the system works yet...

Papasmurf's picture

It's easy work.  You plant pop-tarts in the spring, harvest them in the fall.

Random_Robert's picture

You are thinking about it wrong... you are not making ANY capital gains in Gold and Silver. All you are doing is preserving the PERSONAL value of your savings.

The correct sentiment is to be willing to trade G/S for ANYTHING that you value more than G/S at that particular moment in time.

In today's world - would you trade an ounce of Gold for a $1900 flat panel TV that will be worthless in 3 years?.... I wouldn't.

But if/when the day comes that the Gold market is going hog-wild and people are offering you a 2 year old, 30 foot yacht in exchange for the equivalent value of a couple ounces, and you really want a 30 foot yacht, then what will your answer be?

If the G/S market goes stratepheric and the time comes where the personal value of your G/S has so much purchasing power that it is actually making you nervous then believe me, there will be an asset class somewhere that will be sooo undervalued that no one else will even touch it (my guess is that it will be common equities).... and that will be when/where to make that speculative move.

Spigot's picture

Beat ya by 2 years, bud (1997).

I am seeing 1750, 1800 and 1900 as resistance levels that WILL get drubbed. We may be seeing an inflection point here where the sovereign crisii gigg the rate of change to the next (higher level) than what we've been seeing between 2009 and late 2011.

The 6 mo, 1 yr and 5 yr charts show we have broken to the upside once again. ZIRP and Trillion dollar deficits keep being bumped out 1-2 years at a time, allowing freedom for the price to move significantly higher.

Other nations and power blocks are building systems of trade which allow them to avoid use of the US$ in trade, and as that occurs more of those "trade dollars" will be free to bid on the remaining trade flows, hence price increases IMO.

skully1969's picture

I'm jealous...I only started in 06.

Gold was about 600...

Bicycle Repairman's picture

The bull is also driven by the possibility that PMs are re-monetized.  And there's your exit strategy.  Do exactly nothing.

Cash_is_Trash's picture

As posted below:

Remember - gold does not go up. This is a dollar event.

This printing will result in widespread economic and societal collapse, bitchez.

HoofHearted's picture

to coin...and I hope that coin is some sort of 90%, whether silver or gold...

the future is bright in the physical silver and gold. Let's not let any of our fellow ZHers get MFed, even if it happened to our allies Gerald Celente and Turd Ferguson. My wife just saw the credit card bills from all the junk silver and the gold coins I bought over the last month of the beatdown. When she saw US$80,000 on the CCs, even at 0% interest for now, she freaked. Then I showed her the vault with even more of the precious. No longer buying here, but I would welcome another drop back to the 1500s and mid 20s so that I could finish everything off...

Too bad I took all that stuff on a boating trip with me to get it some fresh air. Damn accidents! 

Backspin's picture

no kidding.  And I can never remember exactly where I was on those boating trips.  All those lakes and rivers that all look alike.... oh, well.

Beam Me Up Scotty's picture

I bet you will start to remember when that starving rat in a cage is strapped to your face.....

tocointhephrase's picture

100% physical metal, 100% all in 99% pure. I cant deal with the extra weight on my back ;)

malek's picture

Call me crazy, but I will never go fully into anything, including gold.
50% physical is my absolute limit.

Papasmurf's picture

You're ass-et is half safe.

Badabing's picture

@Hoofharted

I give you credit “pun intended” you got some steel balls, $80,000 on credit cards.

Now go into personal bankruptcy I triple double dare you!

Inibo E. Exibo's picture

"even if it happened to our allies Gerald Celente and Turd Ferguson"

Turd did a few trades and got his money back, plus a little. 

Oleander's picture

I am now seeing a lot of ads for diamond investment. Are TPTB trying to trick us w/ these baubles? 

GeneMarchbanks's picture

Golden arrow is looking up. Options behind us I see no way to oppose this viewpoint.

Snidley Whipsnae's picture

Big spikes up in gold/silver on GDP announcement... click on desired commodity to see price chart...

http://finviz.com/forex.ashx

Cognitive Dissonance's picture

In this case there is a correlation and causation connection between US Treasury debt and the price of Gold.

PMs are your friend........friendo.

http://www.youtube.com/watch?v=5-H1Buew8Qg

Snidley Whipsnae's picture

I wonder where Johnny Bravo was digging up silver for $5 per oz? And... why isn't Million Dollar Bonus commenting on the GDP news?

Just wonderin'...

EvlTheCat's picture

Hammy and MBD were fudge packing in an earlier article. I am sure they are sleeping it off.

Mr Kurtz's picture

I have a new found respect for 1958 quarters!

BLOTTO's picture

They won't admit it openly - but the Illuminati love gold too - gauranteed.

Thats part in why us good folks who are stacking - WILL do well...

BLOTTO's picture

I think this is a simple - but powerful question to answer:

Does the illuminati and those big Royal banking elite/houses of Europe - like Gold?

My answer is a big YES.

IMO, if they didnt like it... i THINK we would have some problems with our theory. 'Us' - who are stacking - are definitely on to something.

Its sorta like we are riding on the back of the beast with our stack of Gold and Silver - but for a good-righteous cause! Its not like we have any other choice damn it.

We just need to know when to jump off...way down the road...

Bicycle Repairman's picture

I agree.  This strategy only succeeds, if it's in best interest of TPTB.

ag3nt0rang3's picture

Might I ask silvers implied price?

tocointhephrase's picture

Somewwwwwwwwwwwwwwhere oooover the rainbow

mushioov's picture

Does anyone here think of gold price as a "crystal ball to the future" as to where prices of commodities in relation will eventually be? Like almost exactly?

I think it has been fairly accurate so far.

francis_sawyer's picture

My "crystal ball" sees food shortages as this continues to escalate...

Time to top off the granaries...

Backspin's picture

I hear you.  It's exciting to see the gold price go up, but there's a scary side to it as well.

If you are a trader, of course it's nice to jump out with a profit.  But if you are buying PM for what is essentially insurance, then consider that the holder of an insurance policy doesn't necessarily like the circumstances that cause him to file a claim.

Dr. Engali's picture

The only thing that scares me about a chart like that is....I've never seen one run up like that, that didn't fall in on itself.

SheepDog-One's picture

Then again, gold isnt even near as high as it should be with all the increase in debt and money printing fests.

Vaga222's picture

Think of it in relation the dollar, all currencies go to 0 eventually, this means that Gold can go to an infinite value in terms of USD and never crash back down. Compare gold to other commodities and you may not see such a steep curve.

BLOTTO's picture

Dr. E,

I understand that feeling too...i think everyone does no matter how bullish they are...

However, i think it is fair to also say - 'I/we have never seen a world financial crisis AS bad as this either' - and thats only 1 of the many MAJOR problems.

In other words - its all relevant to the situation?

Dr. Engali's picture

 

 'I/we have never seen a world financial crisis AS bad as this either'

I agree. I'm not certain why I got junked. My comment was on the chart. Usually when I see a run up like that it falls in on itself. I'm a buyer of physical but something has to give on that chart. Either the dollar debt collapses and gold is no longer denominated in dollars or gold collapses. My guess is on the dollar debt collapes.

mayhem_korner's picture

 

 

There really isn't any need to guess.  There really aren't two things represented on the chart.  The green line is the debt ceiling being raised, and the gold line is the resultant debasement of the currency.

The gold price is like the sun - it's stationary and everything around it is moving.  But the world still thinks of gold as if the earth (dollar) is the stationary thing and speculates as to what's causing the sun (gold price) to rise and fall.

My point is that your "either" isn't applicable.  These things are going to move together, save for the manipulation that will persist 'til the end.

But the REAL question is what would cause the green line to "fall on itself"?  There are only two avenues that get you there: default or austerity.  Austerity has been proven to be politically impossible and at this point beyond the realm of being mathematically tenable.  Outright default is a also a non-starter.  So why would the pattern revert?