Oldtent Archives 2007 - 2008

 I’m with you guys on the dollar.

 Good company with Merk, Willie and Schiff.

 For now it’s the only rhino horn in town - for now.

They are trying to make idiots out of us all…..a re-write of econ 101. Best I remember, any time a commodity is in abundant supply, a price reduction is a certainty. The damn dollar is no different than anything else. It has an over supply situation that is beyond comprehension. I agree my friend….the cards just don’t show me a stronger dollar. The boyz are just painting the tape. You must keep in mind however…..I did graduate from Texas A&M.

All the best.——-aggie.

Silly season…

Texas Congressman’s Bill to Set Gold Price to $500 Still in Committee
by Northwest Territorial Mint Staff

The bill introduced in the House on July 31 by Rep. Ted Poe (R-TX) directing the Fed to “make the value of the U.S. dollar equal to the market value of 0.05 of a troy ounce of gold and maintain the value of the United States dollar at this level” remains in committee.

Part of an overall bill entitled, “The Sound Dollar and Economic Stimulus Act of 2008,” Rep. Poe’s attempt to limit gold to $500 also calls for 100% depreciation of all business assets in the year acquired.

According to Poe, writing in RealClearMarkets, “The Fed would do this by announcing that its Open Market Desk was prepared to sell government bonds and contract the monetary base until the price of gold falls to $500 per ounce.”

Poe says that the monetary base was $827 billion the last time gold sold for $500, in December 2005. The base has since expanded, and was $872 billion at the time he wrote, which would mean the Fed would need to sell about $45 billion worth of bonds to remove currency from circulation.

The 110th Congress will be in session beginning November 17, at which point it will be seen whether the lame duck House moves the bill out of the House Budget Committee.

-END-

Adrian…

Bill, Chris,
WOW! Calls for returning to a gold standard are surfacing and from the most unlikely places….

washingtontimes.com/news/2008/nov/09/golden-opportunity/

Lawrence A. Hunter is former staff director of the congressional Joint Economic Committee and currently president of the Social Security Institute.

QUOTE

Making the dollar as good as gold once again would hit the reset button on the American economy and launch it forward toward stability and prosperity, and it would accomplish what Candidate Obama promised the American people he would do as president: It would change America and the world dramatically for the better

END

Bill H:

Deflation/Hyperinflation

To all; I had a conversation yesterday with a good friend and client, he made the observation that those who own precious metals physically and or mining shares have already “won the game”. I agree completely! No, we are nuts that have been released from the asylum for a weekend furlough, please let me explain.

For those who have “made it to this point” with their metal’s positions intact and have not thrown in the towel are unlikely to do so no matter what happens today, tomorrow, or even through the end of the year. As you know, I am of the belief that we will shortly have a market “holiday” where anything and everything finance will be closed for business for an unspecified period of time. If I am correct with this line of reasoning, then you will re-enter the “new” financial system with the absolute currency of choice. I do not have a crystal ball, however I can use common street sense to know that we will either have a complete deflationary collapse or the greatest hyperinflation of all time, or both. THERE IS NO MIDDLE OF THE ROAD! The system has gone too far over the edge for any middle of the road ending, this will go one way or the other…or both at the same time.

The point my buddy was trying to make was that really no matter which way the scales fall, precious metals will outperform every asset on the planet. This is not rocket science nor a theory, this is history! Throughout history the best asset to own in a deflation has been cash, until 1971 cash either WAS, or WAS backed by Gold or Silver and actually significant gains in purchasing power. In hyperinflations, Gold has always been a life preserver, just ask any survivors from the Weimar Republic, Argentina, Zimbabwe, Russia, Brazil, or even citizens of Iceland. Owners of metal have always exited currency crises’ with at least the same purchasing power as they began with.

The last 2 months have felt like a bad dream for us all but as long as you understand the monetary concepts of deflation and hyperinflation, you can be confident that the road to preserving and enhancing your wealth on the other side of this currency crises is to “follow the yellow brick road”. Hang in there and keep using common sense, you will be rewarded by Mother Nature. Regards, Bill H.

TOCOM

way too damn steep….kinda like the rocket shot gold took to $1033. Too far too fast and it dropped like a cow pattie. The same fate awaits the crappy buck…..especially likely with it’s fundamental reasons for climbing being so suspect in the first place. If gold can crash with such strong fundamentals…..why in the hell would anyone think the dollar might not encounter the same fate?

All the best.——-aggie.

While it must be wonderful to have been elected the next President, for Obama the time before his taking over command must be like watching a clock on the wall tick off each and every second. Tick….Tick….Tick….’how many more seconds is it before I can take over?” Tick….Tick…Tick….

I was watching a bit of CNN this afternoon and they where placing on the screen some viewers comments. One such comment was along the lines of: “President Bush, please just leave. Dont bother to pack anything, we will send your clothes to you. But Please leave NOW!” Figure that is a statement echoed by Obama with every tick…tick….tick. I bet Obama is praying a lot these days. Praying that Bush doesnt leave him ‘hog tied’ with even greater problems. Like the G 20 Meeting Bush is sponsoring at the White house on Nov 15.

If the opinions of this author are anywhere near correct.

http://www.merkfund.com/merk-perspective/insights/2008-11-11.htm

Obama has a lot of worrying and praying to do while watching from the sidelines. The basic idea of the article, as I understand it, is the G20 have grown weary of our Fed, and Wall St Follies. Rightly, or not, they(the world) are blaming all economic problems on the US, and the dollar. The meeting on the 15th, will be to address thier concerns, and seek some sort of ‘promise’ from Bush as to how he might help correct the ‘Crisis’. Perhaps the biggest of all the ‘crisis’ is the dollar itself? No longer backed by anything, and being handed out like candy at a July Fourth Parade. I can see Bush agreeing to whatever the G20 members wish. Giving any concesion they want. (He wont have to live with it) And would it not be a feather in the Bush hat to announce he has signed such and such agreement, and has saved the economic future of the USA. (Thinking of last minute legacy rights here…) Legacy bragging rights such as some expect Bush to quickly announce a troop withdrawal plan from Iraq, thus stealing an Obama feather.

I have been reading a lot lately, from some much greater minds than mine, (folks like our own Aurum), on how strong the charts look for the dollar. I cant argue with those charts or thoughts….but, it just dont make sense to me. At least on two levels the idea that the dollar can go higher seems so improbable. One level is the amount of printing shown in the M2/M3 charts. Talk about a rocket launch!
The other level is that the dollar is backed by the ‘good faith’ of our supposed strong economy and ‘honest’ government (ie…corporations). And even loose interpetations of our so called ‘accounting standards’ clearly shows they are anything but honest, or transparent. And, I cant help but wonder if what those dollar charts are showing is clearly a prime example of ‘painting the tape’ in attempts to persaude the rest of the world that ‘all is well’.

What I am really wondering about though these days is what is an ounce of gold worth? If gold was ‘worth 325/oz around the year 2000, when Federal Budgets where still within a ‘reasonable’ debt level what is it worth today? Basically, gold tonight stands about double the price. The debt of the Federal Govt is hundreds of percentage points higher. Same thing for the amount of dollars floating around the world. How many times has that figure doubled since the year 2000? A million plus jobs lost since gold was at 325…how many business doors now closed? America’s largest insurance company going belly up, and then ‘bailed out’. Bear Sterns going under. General Motors and Ford on the ropes.

Is it possible, that gold tonight at 740/oz is by far actually much of a better purchase than even at 325 in 2000? Am I missing something with my simple thinking and questions?

Well….Obama aint the only one praying a lot. I have been praying for some sense to understanding this mess of an economy. Or at least how to survive what comes next. Want to hear something funny? I heard on some financial talk show today that if the Fourth Qtr results are what they expect them to be…it will be the second such negative Qtr…and that Finally, will tell us that we are in an ‘Official Recession’. And I have to wonder….what person or persons, has been waiting for the official acknowledgement before taking measures to protect themselves? That is kinda like getting an invitation to a party…the day after.

I once thought working those crossword puzzles in the newspaper where sometimes tough….(grin) Farmboy

the weekly and monthly usdx chart just seem to indicate that this rally is a correction. the run is way too steep to sustain. if it makes a fib correction and starts up at a lesser angle, i would be inclined to agree with you. a fib correction in the usdx may be what some of the currencies are indicating.

rno

was only $3.68/US gallon!!!  (or $4.32 USD/US gallon)…

A few short weeks ago I was paying  $5.88/us Gal..   Life is looking up !! 

sure glad that my province and my neighbor’s -Alberta, are the second largest producers of Oil in the world.

…under the waves of the economic tsunami.

State retirement fund loses $1 Billion.

General Growth Properties, owner of the largest mall and shopping center complex… some of it still under expansion/construction, may declare bankruptcy.  Stock has gone from $50 to 50-cents.

I gotta get off this boat.

USTBonds & Printing Press

I just read Ian Gordon’s latest “Long Wave” report on the Kondratieff cycle thesis. Ian starts, “This is it! The Kondratieff winter is now underway in earnest and nothing can stop it. The huge credit expansion initiated by the ‘Maestro,’ the past Federal Reserve Chairman, Alan Greenspan, has now reversed. The ensuing credit contraction will be devastating. It will take down creditor and debtor alike and will result in a destructive and frightening deflationary depression.”

“This time it is different. As the 4th Kondrataieff winter unfolds, most of the world is party to the debt bubble and the congruent speculative mania. The sheer size of this situation is at least 100 times greater than the 1920s. Thus the repercussions are likely to be far more punishing than during the “dirty ’30s.”

…..It looks to have broken out (Up) of a triangle…….and maybe ready to make a new leg up……wave 5 of this statling move ?

……..what do you think…?……..tia

stockcharts.com/h-sc/ui?s=&p=D&yr=0&mn=6&dy=0&id=p22858222089

Even were this to be a longer term bull market, there still would be dramatic corrections. But I agree with you to the extent that the look (pattern) of this correction is important. As you say, this could just be a counter trend rally with another 7 year cycle bear in the US Dollar. But I don’t think so and until I see the chart proof I will stay with the current trend - up.

aurum (US Dollar UUP)