but 1929-1931 was a very different era
I wonder how similarly the HUI might track Homestake's performance 70 yrs ago during the initial portion of the panic
back then the USA was a creditor nation with large exports, good savings, and zero federal debt
totally different world, therefore difficult to compare
now we have a $6,000,000,000,000 debt to contend with where 45% of it is held by foreigners who might be shaking their heads soon in disbelief at any number of events and developments
and back then, currencies were ALL tied to gold/silver in a bimetallic standard of 16:1 ratio
today we are 30 yrs into a distorted period in which gold has been decoupled from currencies, dumped upon by central banks, lied about in corrupt fraudulent reports to Congress, suppressed in price to support an unsupportable currency, denigrated in the press, misunderstood by illiterate masses, even dismissed by economists, with faith in the "paper-based" bi-cameral stock/bond world never having been challenged for decades
it is questionable whether the 1973-1980 period even saw destroyed faith in the stock/bond world
the Trez market was seeing losses, the opposite of a bubble
back then more like a huge price inflation problem which enjoyed a direct hedging link to GOLD
gold has only recently enjoyed a counter-stock role
and a counter-dollar role
only in the next few months or two years will trust be challenged in the bond world
I recall never before a Bond Bubble since 1930
in fact, in 1930, I dont believe there was much of a bond market at all
maybe an immature corporate bond market
the TrezBond market was born to finance the VietNam War
sure, it might have existed before with FDR or Ike or Kennedy
but the Trez debts were miniscule versus the US GDP
I believe the real question centers on GOLD's potential to appreciate during a panic vis-a-vis the TBond
if the Trez market still has room to rally, with even lower (absurdly lower) yields possible, then I dont see the gold stocks enjoying a safehaven status that overshadows the Trez well-established haven
however, if the banking sector suffers badly, and a systemic failure seems more than remotely possible, we could see something truly historic in GOLD
if a bank panic coincides with derivative accidents relating to bonds and/or gold (how else?), then we could see something incredible for GOLD
gonna be wild & woolly, as we move off the Bond Bubble
a bond bubble is the natural endpoint of a paper-based financial market collapse
since we are a debtor importer nation, the likelihood of falling into a Japanized Liquidity Trap is absolutely nil
Japan is/was a saver exporter nation, total opposite
they save money in enviable fashion
they keep pressure on their currency to stay DOWN
the FOREX markets will never allow USTBond yields to fall to zero
the risk/reward equilibrium level for a debtor importer is far from zero percent yield
we will find out where it lies !!!
then all hell breaks loose in a downward spiral Vicious Cycle
for Japan, a 0% yield was acceptable, since nobody gave a crapp
their govt forced continued inflation of that absurd bubble from govt employee pension funds
what a crime!
the rest of the world said "big deal"
pardon the rambling... I couldve worded this better
oh well, just a flow of thoughts
/ jim |
