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#1 Fri, Jul 15, 2011 - 3:14am
Joined: Jun 14, 2011


Just posted this on my blog. Enjoy!


Ambrose is back!
The best mainstream media economics journalist in the world has returned from several months of sabbatical in Central America making rainsticks and playing those funny flute things.

And he's not muckin' around...

He quotes Peter Hambro, founder of the £2bn FTSE-listed Russian gold miner, Peter Hambro Mining, now known as Petropavlovsk:

"One of the big US banks texted me today to say that if QE3 actually happens, we could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money."


Gone are the days when Ted Butler would pussyfoot for five hundred words trying to avoid telling the reader too directly that he thought $4.50 silver had the potential to exceed $200 per ounce.

What's going on! Mainstream journos quoting respectable businessmen price-projecting a thirty-time gain and four figure silver??

Pass the smelling salts.

Silver at £24 ($39 in new money) remains the most screaming buy imaginable. What the hell more do you want? A direct quote from the Pope?

As Hambro says, first and foremost it is NOT about chasing outsized speculative profits. It's about the fact that gold and silver are monetary commodity barometers of what is going to happen to your sterling or dollar purchasing power of all other commodities: food, energy - the very cost of living. It's about protecting yourself.

Every penny that remains frozen in the outdated, 1980s strategy of fixed income denominated in fiat currency is going to be laid to waste in the months to come. Your wealth will simply dissolve. We don't live in that era anymore. Get over it.

For God's sake recognise that times change, and that only dodos fail to adapt. Switch the vast majority of it into the hard currencies of gold and silver while you still can. There's not much time left. Gold will be attacking $1,800 to $2,000 before year end.

The closest proxy for a liquid fiat currency bank account where you don't have to take responsibility for self-storage is GoldMoney or BullionVault

They both manage over a billion in assets and are well-established. You can liquidate at the click of a button online and have fiat funds back in your normal bank account within 24 hours. GoldMoney is like any other currency account, except that it is backed 1:1 by real, hard money. It is your own personal gold standard.

It is utterly and completely psychologically defective to keep money in low interest GBP sterling assets. It takes five minutes to open a GoldMoney account.

Do it today.

It doesn't bite. It DOES preserve your purchasing power.

This is the guy who founded and runs it:

He's not Al Capone. He was the keynote speaker at Cheviot's recent Sound Money conference at London's Guildhall. He's quoted in the FT on a regular basis.

Worrying about losing your capital in gold and thinking that you are safer with the devil you know in sterling or dollars is a total inversion. It is an ignorant and defective emotional failure. All of the fundamental analysis, all of the technical analysis, all of the contrarian commentators who have been spot-on for a decade, and now even mainstream journalists and businessmen are openly saying that you need to get out of paper money double-quicktime and preserve your wealth in hard money.

Read Ambrose's article. Remember the "Greenspan Put"? Sir Alan's propensity to flood the market with liquidity and activate the Plunge Protection Team every time the stock market wobbled? In 2011 it's the China Put
. The Chinese - and plenty of others - will be buying any and all dips in the gold price. They are underwriting it. Why? Because they understand the bigger picture and where gold is going. They've openly said that this is what they are going to do. Wringing your hands about gold and hoping to curl up for safety in paper money is nothing less than an abrogation of responsibility. The gold price is not going to collapse. There is a floor. It is the paper currencies that are going to collapse. Yes, that lifeboat may look like a bit of an unknown quantity, but electing to stay on the Titanic when there's still a space for you on the lifeboat is the choice of a deranged coward, not a prudent investor. The waves in the ocean move in accordance with objective realities beyond your control; they don't automatically align with your emotional state. It is you that needs to align yourself with objective reality, not the other way round.
Bernanke has said a million times that he has a "dual mandate". They are not tailoring monetary policy for low inflation so much as targeting employment. It's the same playbook as 1920s Germany. Don't you read history? The latest employment figures released last week were an execrable shock to the downside. And if that weren't enough, over the last couple of years buyers in the monthly Treasury auctions that fund the US budget have disappeared. The Chinese announced that they want to dump $2tn of US dollars. They're not buying. The budget is largely funded by QE now. It can't stop. More QE is guaranteed. It's misleading even to imply that there's any doubt it will resume.

Wake up. Ambrose's article is a shout into the theatre.


You have maybe only days or weeks before the stampede begins into the aisle. That's what the charts are saying. Clearly, this year gold and silver are not waiting for Bernanke to announce QE. It's being taken as read.

Read this again and for your own sake ACT

"One of the big US banks texted me today to say that if QE3 actually happens, we could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money."

Edited by: silvernomics on Nov 8, 2014 - 5:09am
Fri, Jul 15, 2011 - 10:12am
Joined: Jul 8, 2011

Pricing gold and silver in dollars is pointless

After QE3 is announced that will signal the pending end of the fiat experiment. So to make predictions for where gold and silver will go in terms of dollar valuation is meaningless.

I again caution people into thinking that gold and silver will now rocket straight up regardless of what happens with the debt ceiling. The markets are showing signs of hesitation which suggests that a default would send PMs parabolic while a deal would create downward pressure.

Inflation is [supposedly] easing thanks to the lower than expected CPI and PPI. Bernanke WILL use the threat of deflation to send the markets spiraling down (as he did last year before QE2). There WILL be a final dip to capitalize on. Continue stacking and buy in increments. Go all-in whenever Bernanke indicates that QE3 is a go.

Fri, Jul 15, 2011 - 3:55pm
Nove Mesto nad Vahom
Joined: Jul 15, 2011

ground tent camping

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Wed, Jul 20, 2011 - 7:53am MyncLymnDaddy
Joined: Jun 14, 2011

Latest post at my blog

Latest post at my blog

A 0.25% bubble!

Expanding on the theme that Stage 2b of the gold bull market has not yet begun, let's consider the USA's two largest pension funds, CalSTRS and CalPERS. Here is how the $154bn in CalSTRS is currently allocated:

No gold in there (unless it's included within the 0.7% of the portfolio described as "Cash". But the 2010 figures, at least, showed that 0.0% of cash or cash-equivalents were composed of gold holdings). How much of the .1bn of "Global Equity" is invested in precious metal miners? I have gone through the 2010 list of thousands of US and non-US equity holdings, and there's about 0m of gold, silver, platinum and palladium miners in there that I could see. I might have missed a few companies, and that's not including the base metal miners who mine precious metals as by-product. Let's call it 0m. It's still less than 0.5% of all equities, despite being the best-performing asset class for several years. You can see from the chart above, they had plenty of advance warning before 2010 to weight up their gold holdings. The ten year gain for gold is now more than 500%. In total, according to its 2011 overview and the 2010 breakdown from its website, 0.25% of the CalSTRS pension fund is invested in precious metals. Does that sound like a bubble to you? Does that sound like big dumb money is saturated with gold exposure? Nb the total amount of CalSTRS's $154bn currently invested in silver bullion (none) and silver miners? $17.5m If I had a pension with these people, given that silver went from $4 to $40 over the last decade, I'd be spitting blood. Many silver miners are up a lot more than 1000% in that time. For the record, CalSTRS owns shares in Fresnillo, Hochschild, Coeur, Pan American, Silver Standard, Silver Wheaton, Silvercorp, MAG, Minefinders and ECU. If I ever recover the will to live after going through CalSTRS's portfolio, maybe I'll look through the $237.5bn CalPERS and some other funds. But it's hard to motivate myself to do it, because I know what I'll find. It won't look much different from CalSTRS. These by-nature, by-culture and by-regulation consensus hedgehogs who manage the many trillions backing your pension and insurance policies will start buying gold bullion once it breaks $2,000. And they'll drive it higher. If they ever try to buy silver, the tiny silver market will blow up and the only question will relate to the identity of the first digit of the triple digit silver price.
Sat, Jul 23, 2011 - 4:48pm silvernomics
Joined: Jun 14, 2011

The 1:1 Dow/Gold Ratio One

The 1:1 Dow/Gold Ratio

One of the first historical yardsticks I learnt about when I began to study the nascent gold bull market was the Dow/Gold ratio. The leading exponent was Richard Russell, author of The Dow Theory Letter. It's the longest-running investment newsletter in America. He started writing it in 1958.

Going by historical precedent, Russell forecast that the gold bull market would behave as it did in the 1930s and top out at a 1:1 ratio with the Dow Jones Index. At the time, in the early 2000s, he assumed that the coming depression would deflate the Index considerably, like in the 1930s, from 9,000 down to 3,000 points. Thus from 2003, with gold at $350 per ounce, he was forecasting gold $3,000.

Since that time the arch-deflationist crowd, led by Robert Prechter, have been on the run as an exact replica of the 1930s has not transpired. The first reaction to the Great Crash was led by the incumbent President Hoover while the USA was still on the gold standard. People didn't just print money from thin air in those days. They couldn't. If banks were insolvent, they went bust. People lost their money. Others threw themselves off buildings. And the stock market was allowed to deflate. It met gold halfway.

But ever since Alan Greenspan instituted the Plunge Protection Team we've had none of this unsightly protracted stock market deflation. It started in 1987. Stock market feeling unwell? No problem. Get out the bicycle pump and intravenously administer artificial liquidity. You can do that when you have detached the currency from gold, from the discipline of a fixed supply. We've seen the same ever since. The Dow Jones index has been levitated, not by actual profits and growth but by currency debasement. It closed this week at 12,681. You see the same principle at work when the stock market in places like Zimbabwe goes to 100,000. A healthy economy it does not indicate!

Now there's every chance that without QE1 and QE2 the Dow would have been crashing lower, drawn down inexorably towards gold. Destined to meet, who knows, at 3,000 or maybe 5,000? If they do not raise the debt ceiling by August 2nd, if they default openly and honestly, if they raise interest rates and take the medicine, then that would happen. But realistically, it cannot happen. If a government is seen deliberately to allow an economy totally to implode, that government would be out on its ear by ballot or bullet pretty darn quick, just like Hoover was.

There really is no choice but to complete the death spiral. The debt limit will be raised, by hook, crook or Presidential Executive Order, and later this year Ben Bernanke will announce something approximating to QE3. And the stock market will be kept liquidated, levitated, floating along the flatline towards expiry by hyperinflationary depression.

The Dow is currently at the level Sinclair has calculated that gold would need to reach to balance the US books. Does this mean that further bouts of QE will be ineffective to stimulate additional bull market strength? Yes, if Sinclair's forecast holds and this mess ends at the 1:1 Dow/Gold ratio. But he has always allowed for the possibility that money printing could become so Weimarian that the gold price would go Zimbabwean. So the Dow and Gold could meet at 12,500, or they could meet at 20,000 or 30,000.

This current debt ceiling standoff is a phoney war, as the Republicans will not want to overplay their hand and torpedo the chance to eject Obama in November 2012; and Obama will resort to money-printing one way or another. If the debt limit isn't raised and people stop getting their checks, political pressure will become uncontainable very fast to permit more borrowing.

The real point of interest comes in January 2013 when Rick Perry is sworn in as the 45th President of the United States. Just for a change, we could see the Hoover-up of liquidity come halfway through the depression and not at the beginning. That's the unspoken reason why Dalio (see post below at blog), the founder of the world's largest hedge fund, predicts severe economic and currency turbulence in that precise time period.

That's the Hoover Dam. Putting a stop to liquidity. The people ain't gonna like it. Perry had better take a tip from Margaret Thatcher. The first thing she did when she took office was to give the police a big pay rise.

I think there's a good chance Perry may try to sort the situation out. It depends on whether the Washington political and financial elite get their hooks into him. If they don't, it could mean that the US dollar as we currently know it may have only 18 months left to live. If he can pull it off and stop this thing in its tracks by radical action sooner rather than later, maybe gold will meet the Dow at 3,000 or 5,000 new dollars rather than 12,500 or more old ones.

Mon, Jul 25, 2011 - 1:26pm silvernomics
Joined: Jun 14, 2011

"The squirrel's not

"The squirrel's not relevant"

Video unavailable

Had the law not captured my heart (stop sniggering), I always thought I'd quite like to have gone into advertising. I can't help watching commercials with a deconstructionist eye, trying to work out the subliminal forces at work. Everything you see on screen in a thirty second ad, however brief, incidental or inconsequential, was specifically chosen and probably cost a fortune to shoot.

I have seen the above advert countless times, and it's only just struck me what they're up to. Maybe I'm thick that it has taken me this long; or maybe I wasn't paying attention.

I'm talking about the squirrel.

I had previously dismissed the squirrel as just a bit of whimsy to lighten the mood in a boring financial advert. But it nagged away at me every time I saw the commercial. Why the switch to the squirrel at the climax of the sales pitch?

It's so obvious. What do squirrels do? They squirrel away nuts. What are savers doing when they are squirreling away money in low interest bank accounts or fixed income securities?

They are squirreling.

While Barclays are pushing a subliminal message to would-be mortgagees to stop hoarding their would-be deposit in cash and instead take out a mortgage, they are disclosing a broader truth. The squirrel is not just inimical to Barclays' business model, the squirrel is irrelevant to the UK and US economic model in general. Our ponzi-esque financial system depends on consumer spending, cheap financing and the sustenance and inflation of asset values. None of these goals is compatible with protecting or paying a decent interest rate on liquid capital.

If you are saving cash or invested in fixed income securities, you are not relevant. Your capital will be plundered for the system's preferred goals. If you want to be a relevant squirrel, choose nuts that will keep up with or outpace inflation.