Why Isn’t Gold Higher?’ Oil Drops, Bank America Spews Workers, Labor Deflation Remains
After the recent move up for gold, gold continues to consolidate. Should anyone be surprised that gold is not at higher levels? NO. We still live in a paper world, even with the financial chaos in Europe, the financial chaos in Europe, doubts about the health of the Chinese economy and the rest of the geopolitical problems. Actions taken to stabilize the system as we have known it are taken first and foremost for the purpose of propping up the delusional financial way of thinking that our system can live on to see another day through it be piled high and deep with impossible levels of credit and potential liabilities in the area of an inconceivable quadrillion dollars. The Bernanke, Dragi, Shirakawa (U.S., Europe and Japanese Central bank heads) motivations are for the paper system.
Gold stands in the background of Central Bank efforts as the stalwart opposing force that benefits from the unintended consequences of the reckless 21st century monetary policy. Gold is real money, all else is credit and liability. These consequences of a new QE don’t show up on day one, but will translate into the gains for gold that will captivate a broad segment of society (just as the 10 year move from $250 to $1920 but on a grander scale). A much larger group of people will wake up to the notion that the Fed has done us all wrong. That’s when investment demand will become overwhelming for those who are now comfortable in the gold business. There won’t be enough gold to satisfy those future investment demands. That’s when prices shall really move by leaps and bounds for gold. This is not fantasy, it has aleady happened in the last 11 years minus the scarcity. I see future gold scarcity when everyone will want to jump on board (except that the Johnny come latelys will be too late).
Some have a bad habit of saying the positive gold price look is a function of simple math – they say, ‘ do the math’ without ever showing the math. What math would that be exactly? Is there a mathematic equation, or formula to do determine when people and our trading partners might eventually lose faith in the dollar, or refuse to see it as anything but a valueless piece of paper from over printing? No, there is not such a mathematic formula that I know of. The dimmed outlook for the dollar is tied at a deeper level to something called HISTORY. There are no examples of a successful tango for any society – whether the last 60 years, or the last 6 thousand years.
So no surprise, I remain a gold bull. Here’s a nice feel good analysis: ‘Golden Cross’ For Gold And Silver Signals Further Gains http://tinyurl.com/d2v9szx
Gold is RARE. How much of it is above ground? All Of The Gold In The World [Infographic] by @bySamRohttp://read.bi/UkKgBU. So our smart society has bounded far outside its supply of gold. Not so smart. This is why the fiat dollar system is not long for this world. It is why some of us cannot ignore the concept of reversion to the mean. Money supply and gold do not necessarily go hand in hand, but gold had in the past stood as a sort of traffic cop to blocking societal excess, unless those societies went fiat. Unfortunately, for the West, it’s fiat shenanigan’s have gone so far afield that a real threat of all out financial collapse is in the cards – coiling ever tighter as the excesses grow exponentially larger.
I like the views of Jim Rogers on gold: Jim Rogers On QE3, Gold, Silver and Oil (GLD, SLV, USO, IAU, OIL, DBS) http://sns.mx/GciUy0.
Gold today is also under the influence of the overall commodities complex, where crude has made a mad dash lower (head fakery at its finest) on Saudi jawboning that it will inexplicably provide more crude to the markets. I wonder if the House of Saud really has that much extra to spare, though relief at the pump would be nice if the recent slide in crude sticks. That’s the worry – IF the drops stick. Short term benefit of lower gasoline prices when they eventually appear after a move in the crude market would not be so beneficial to consumers if the price were to bounce back like a jack in the box after the elections. Think about it. Are the Saudi’s acting out of concern for the American public and what they pay at the pump, or for their own interests?
I’m never at a loss for words about the banking system. They eat their own, or if not useful they are spewed from the mouth of the banking beast: Bank of America is cutting 16,000 jobs by December, writes @abebrown716 http://bit.ly/PX8eoR.
Speaking of Bank of America and how it will eventually benefit from QE3. If the Fed has its way: QE3 – Pay Attention If You Are in the Real Estate Market http://www.scoop.co.nz/stories/HL1209/S00107/qe3-pay-attention-if-you-are-in-the-real-estate-market.htm via @scoopnz
More Labor deflation… (which is likely not to go away under the Fed’s QE, yet people do not connect the dots and realize this): Jobless Claims Worse Than Expected: This morning, the Labor Department reported that 382,000 Americans filed for… http://bit.ly/PKAbN4
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.
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