I sent this note to marcos, (via PM) on Sept 13, as a response to a mention he made in TM about Price of Gold, he suggested I would post it here.
I am no expert in PoG, but fwiw, here it is.
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Re: Your post in TM about Gold.
I have often wondered, in fact I USED to be a supporter of the gold standard, if gold would get its former following.
However, as years went on, and gold lost its sheen, I wondered if finally there was an agreement between financiers and politicos, or the dawn of an era of productivity had arrived and in fact, the politicians were shit out of luck about secretly taxing their corresponding flocks via inflation. Therefore, I assumed that gold, as a standard of value was dead.
For a few years now, I have been convinced that such was the case.... although, I am not so sure now. On paper, the gold standard seemed to be a logical argument. However, if politicians were an honest lot, then I would place my bet on an industrial and productive society where value would lay on what such society could produce, achieve, etc.
At first, the currency markets, and indeed lately the Internet seemed to be taking away the control that politicians had over the value of paper currencies.
The markets seemed to establish under a free market environment, what the proper value of a currency would be. The internet simply facilitated the availability of information to the general public.
However, the Clinton debacle, is beginning to confirm to me, (or at least I am so assuming), that the value of anything, particularly when it is used as a "standard for measure of value" (i.e. the US Dollar), that it is TRUST that really matters, the rest seem to be justifications for one belief or another. Highly dependent on human psychology and "perception of things"..... somehow subjective.
And so, as usual, human folly will succeed again, as in this time of world-wide crisis the trust of a single office, that of the president of the US, has now being broken. To what extent such foolishness will succeed, I do not know.
However, I am beginning to suspect that a major crack is now open for all to see, it will be a matter of time, but eventually many will see it. How many will see it and what will be the consequences is the trick to figure out.
This is not an easy matter to understand as there are many aspects of the equation to establish the value of gold are not widely understood by many, and so we go back to the matter of human psychology deciding that gold is (or would be), the standard again.
If so, what about all the gold that Central Bankers still hold ? not to mention their interest to keep the price down, and what if, they themselves have bought calls on the same gold, that they have sold initially, (this is a mere speculation on my part as I do not know that).
In the case of the US, the country has the capability to pull itself out of a crisis, but not the rest of the world, so I would assume, that once this Clinton bs is over (however I ignore how bad it will get, nor how long will it last), somehow the US will restore its former credibility.
I doubt that the idiots running the Senate, etc. really understand the implications of the mere possibility of an impeachment/resignation. All they are interested is their own election and power hunger, and this is a golden opportunity for them to grab some of what will be available.
I can agree to the use of debt in a moderate and productive way, but when the excesses that have been shown by all involved, the margin of error is greatly diminished, your word, becomes all that is left, and if the word is no longer trusted, then surely, something will happen.
I am not too sure that a run for gold will be the outcome....
If you think I am not so sure of what is next, you are correct, frankly I am no longer as assured that we could exist without the need of a "Gold backed currency", but by the same token, I am not entirely convinced either.
Gold seems attractive at these prices, as an speculative play, but the same can be said of most commodities, in my eyes, much of what will happen in the markets, (equities, bond and commodities), in the next six months to two years will be determined by how the Clinton mess ends up. Once trust is broken (as I believe it has happened, except only few people know it), then who knows what will happen, will there be a crazy run for gold, and then the return to reason ? (that would assume that politicians would start behaving, a highly unlikely possibility).
I will be observing patiently, and somehow anxiously, I must confess).
Z.
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p.s. that was then..... and this is now......
Sept. 21st.
As I watch the opening salvos in the "Clinton Tapes".... I am observing and beginning to think..... so what !! so the man is an Adulterous man, and what is new under the sun...... the zealots from the right at at it again, i.e. another witch hunt.
The sexual life of a man, so long so, it does not impair him from leading a nation as their president, is private, and none of anyone's business but his own.
So far, I have not seen anything in the tapes that will affect Clinton greatly...... unless there is something in there dramatically different than so far.
Frankly, I have a hunch that these tapes are going to affect more the Republicans, (particulalry the zealots, i.e. goodie goodie christian coalition apostles), and if so... good riddance.!!
As this takes place, the long bond sits here at 5.059 % and stocks are beginning to come back.... is that a sign ? I do not know, but it may be. (which can not be bad for stocks).....
To this day, I understand that if interest rates head lower, that can not be bad for stocks.
I have never been a Clinton supporter, but he was elected as president, and so far, it appears that he is no different than any other politician, (other than the fact that he is a master particularly when he is under pressure).
More and more I am convinced this is a witch hunt, and as such the hunters are going to end up as hunted, if such is the case, then this gold standard stuff I wrote above..... may be.... just another cry... the sky is falling !!
The absolute worse would be if Clinton does get impeached..... but I am beginning to doubt it, if so, the next worry remains the Japan asset markets, and US fiscal responsibility.
I understand to solve the problem with the Japanese Yen, equities, and real estate the Japanese government needs to lower the taxes on capital assets, which are excessively high.....
Well... duh!! why would anyone invest on such assets, to give any possible gains to the same idiots that put them in the hole in the first place..... (i.e. the politicians).
Now that is real evil, TAXES, NOT SEX.
Ideal world ?..... get rid of politicians, and yes of religious zealots.
Los dos pertenecen a la misma raza de perros sarnosos....
Sal£ compadre. |
