Saturday, January 31, 2009

Why Has Gold Soared?


My view is that what is driving gold higher is the ever louder death rattle of the entire post Bretton Woods system whose soft underbelly has been badly, more likely, fatally exposed by the European and American banking system collapse. And speaking of the banking system, whatever is done going forward will involve more, much more, quantitative easing, to the point of engaging in thoroughly unsterilized monetization if need be. That, to me, is a given. The only question now is who will foot the bill for the removal from the bank's balance sheets of those holdings which are deemed "bad assets." In such an environment, when so much currency debauchery has already occurred, but hardly run its course, owning gold, and even silver, makes a great deal of sense. And though there will certainly be volatility going forward in the precious metals markets, the path of least resistance, over periods of months and years, is higher, much higher.

10 comments:

Thai said...

And if the government says you are legally required to turn in your gold and silver, as it has in the past, will you do it?

Which is a higher priority, your legal obligation to fall on the sword for the collective because the collective is unable to make other hard choices, or your personal obligation to protect yourself and your family from a world gone mad and not cooperating all that well?

Edwardo said...

What gold? I don't have any gold. It's not going to happen this time for the simple reason that the last time the Government confiscated gold they could claim that, at least as far as coins were concerned, they were legal tender, and therefore the property of the government. Not this time. As for silver, there was no confiscation. Confiscating silver now would be a practical impossibility since it has so many industrial uses.


Were someone to choose to hold their stash of coins, they wouldn't be making the choice that you have outlined. Turning in one's gold would not be, in any way, good for the collective, comrade Thai. No, as it would be encouraging the continuance of purely fiat regime which as we all know has brought us to ruination. In short, I plead Thoreau.

Edwardo said...

By the way, I was just kidding when I said comrade Thai.

Thai said...

I know ;-)


But I think capital controls are a very real possibility. Argentina did it, why would we be any different?

Mike said...

Which is a higher priority, your legal obligation to fall on the sword for the collective because the collective is unable to make other hard choices, or your personal obligation to protect yourself and your family from a world gone mad and not cooperating all that well?

There's no serious choice at work here, is there? Option one doesn't seem an option at all.

It's not going to happen this time for the simple reason that the last time the Government confiscated gold they could claim that, at least as far as coins were concerned, they were legal tender, and therefore the property of the government. Not this time. As for silver, there was no confiscation. Confiscating silver now would be a practical impossibility since it has so many industrial uses.

You're making the mistake of thinking the government needs a rational explanation for its policy.

No.

It'll do what it wants, when it wants, and the masses will support it. Accusations of "the rich" "hoarding gold" is all it'll take.

Edwardo said...

Well, you are quite right, Mike.
The "government" can do whatever it likes, but the point I was trying to make, but making poorly, is that the government will have no legal leg to stand on. This time they would be attempting to confiscate what is purely private property.

What's more, there is no practical way for them to confiscate any gold unless it is in safe deposit boxes where it will most assuredly not be. Think! The government is already financially bankrupt, and in due course, will be seen to be morally bankrupt as well. When government's legitimacy is hanging by a tether, they will have little leverage to command.

Many, many people across the socioeconomic strata own precious metals in various forms, and they will not, despite being, in the aggregate, slow on the uptake, turn it in to a government that has already fleeced them. The fact that they are buying gold to the degree that they are is evidence of that fact.

Defiance is already starting to manifest in other ways as well,(see the refusal of more and more homeowners to pay mortgages or move out of foreclosed homes) and there even a few figures in government who
on the right side of the battle.

And this just in:

http://www.gencourt.state.nh.us/legislation/2009/HCR0006.html


As Twain observed, "History doesn't repeat, but it rhymes", and so, I posit, that if and when the government desires the rich and the not so rich to dishoard their gold, they will, instead of demanding it via illegal decree, simply stop standing in the way of gold's price rise, and allow it to seek its own level. At that point they will be able to get their hands via the open market. Any other method of acquiring gold, this time, will fail miserably.

Edwardo said...

Well, you are quite right, Mike.
The "government" can do whatever it likes, but the point I was trying to make, but making poorly, is that the government will have no legal leg to stand on. This time they would be attempting to confiscate what is purely private property.

What's more, there is no practical way for them to confiscate any gold unless it is in safe deposit boxes where it will most assuredly not be. Think! The government is already financially bankrupt, and in due course, will be seen to be morally bankrupt as well. When government's legitimacy is hanging by a tether, they will have little leverage to command.

Many, many people across the socioeconomic strata own precious metals in various forms, and they will not, despite being, in the aggregate, slow on the uptake, turn it in to a government that has already fleeced them. The fact that they are buying gold to the degree that they are is evidence of that fact.

Defiance is already starting to manifest in other ways as well,(see the refusal of more and more homeowners to pay mortgages or move out of foreclosed homes) and there even a few figures in government who
on the right side of the battle.

And this just in:

http://www.gencourt.state.nh.us/legislation/2009/HCR0006.html


As Twain observed, "History doesn't repeat, but it rhymes", and so, I posit, that if and when the government desires the rich and the not so rich to dishoard their gold, they will, instead of demanding it via illegal decree, simply stop standing in the way of gold's price rise, and allow it to seek its own level. At that point they will be able to get their hands via the open market. Any other method of acquiring gold, this time, will fail miserably.

Thai said...

Edwardo, I would posit you are picking a position and justifying your stance. And while this is a legitimate view, I wouldn't kid yourself either, and its inconsistency with other statements you have made could be readily exposed. Mike is quite right. The government is in the end only you and me, the fact they are doing exactly the same thing does not at all undermine their authority to do so. But I would totally agree that it undermines its integrity... But I am guessing you knew I would have said this anyway.

It is what it is.


Oh, and Mike, I read this the other day on one of my journal watches and thought you might be interested. It does appear that gene therapy is much further along than you may have realized.

Edwardo said...

Thai wrote:

"The government is in the end only you and me."

That's exactly what the government wants you to think.

Thai said...

Edwardo wrote:

"That's exactly what the government wants you to think."

You know, I actually have to recant what I said and agree with you here. I am the one that thinks the world is just a collection of people (some good and some bad).

I don't work for government so at some level, you are right, they are just a collection of 'those people' of which I am not a member, and their interests may not agree with my own.