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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (83052)	11/11/2011 12:04:36 PM
From: carranza2	3 Recommendations Read Replies (2) \| Respond to of 218059

The more I read this from Pater Tenebrarum, the more I am impressed with the clarity of his reasoning.....it is really a MUST read piece. Heinz often blows me away with his wisdom and stellar judgment. Unfortunately, the statists (I no longer call them Keynesians as that label is too limiting) have won. A shame, really, but it is what it is. It will take at least five or six decades of boom/bust created by credit and monetary expansion before the statists see the light. The Germans, or some significant German minority, seem to have good sense, and there is not doubt that this is because the institutional memory of Weimar and its bloody aftermath is deep. A Germany with significant numbers of unemployed and in an economic crisis is a dangerous Germany. I am not sure if the Austrians say this, but it seems that credit-fueled boom/bust gets progressively worse because more credit and increasing monetary expansion is the statist Rx for the bust part of the boom/bust cycle. Thus, we can look forward to increasing calamities. At the end of the day, if the statist mania for printing is not controlled, there may well be global hyperinflation. Not now or any time soon, but eventually, in 20 years or so. As Heinz says, the statists are indeed pigs at the trough. As Jay says, getgold.

To: carranza2 who wrote (83052)	11/12/2011 3:02:03 AM
From: elmatador	Respond to of 218059

Why Proposals That Italy Should Sell Its Gold Are Ridiculous by: Bob Kirtley November 11, 2011 Many have suggested that Italy should sell its substantial gold reserves in order to pay down some of its debt and avoid a sovereign debt crisis. We view such proposals as ridiculous, due to the magnitude of Italy’s debt relative to the value of its gold holdings. However, one proponent of such a transaction is Gunther Krichbaum, a lawmaker in German Chancellor Angela Merkel’s governing coalition and also the Chairman of the Committee of the Affairs of the European Union. The German Bundestag has proposed that Italy sell its sizeable gold reserves in order to lower its debt, implying that Italy’s gold reserves are relatively high and could be used to pay off its sizeable debt. The same suggestion has been put to Germany in the past and it was met with an emphatic rebuttal. Whilst Italy does have substantial gold holdings and should be commended for not selling these reserves (as Gordon Brown did in the United Kingdom, selling at a gold price of around $275/ounce), Italy's reserves are dwarfed by the level of debt. The Italian Government has approximately EUR1.6 trillion in outstanding debt. This is an incredible amount. The schedule of repayments for the next ten years is shown below. (Click charts to expand) So we know about the debt, but how much gold does Italy have? Italy has 2701.9 tons of gold, one of the largest reserves in the world. Assuming that Italy could sell all its gold for USD$1800/oz, then these gold reserves are worth EUR115.28 billion. On its own this number may be impressive, but it pales into insignificance when compared with Italy’s EUR1.6 trillion debt. Italy’s interest obligations over the next three years come to more than EUR127 billion and the value of its gold is just more than EUR115 billion, therefore, selling all its gold now will not even cover interest payment obligations for the next three years. In 2012 Italy will have to repay more than EUR167billion in debt, the value of the gold stands at a little more than EUR115 billion. So we can see that selling all the gold now will only raise enough cash to repay 68.8% of next year’s debt obligations. Even if Italy were to sell all of the gold reserves it would only reduce its outstanding debts by just 7.14%. So Italy would have no gold reserves and still have 92.86% of its debt. As this move has little effect on Italy's financial health then we have to question the wisdom of such a transaction. Also bear in mind that such a transaction has been proposed in the past and rigorously rebuffed by the Bank of Italy. These suggestions amount to chasing after billions when the problem is in the trillions. This is typical of the eurocrats in that their strategies are usually too little too late and this one is looking increasing like it is too big to bail. The European crisis continues to look like a train wreck in slow motion. It will take a long time to co-ordinate an all encompassing solution to be formulated, agreed upon and then implemented. As investors our core position is made up of physical gold and silver, and a small number of what we deem to be quality precious metal mining stocks, along with the occasional options trade. We will maintain this strategy as we remain unmoved and unimpressed by the actions of our political masters. seekingalpha.com