Posted on 12/30/2014 11:33:06 AM PST by blam
December30, 2014
John_Rubino
Twelve short months ago, the immediate future looked like a lock. Overvalued equities had to fall, ridiculously-low interest rates had to rise, and beaten-down precious metals had to resume their bull market.
The evidence was overwhelming. Debt in the developed world had risen to $157 trillion, or 376% of GDP, by far the highest level on record and clearly unsustainable. Long-term US Treasury rates had been falling for literally three decades and despite a recent uptick were so low that the only way forward seemed to be up.
Europe and Japan were drifting into recessions that could easily morph into capital-D Depressions. The eurozone would fragment, Japanese bonds and probably stocks would crater, one or more major currencies would implode. No way to know which event would come first and in what order the other dominoes would fall, but without doubt something had to give.
And gold, of course, had had its correction and was, at the beginning of 2014, perilously close to the mining industry’s cost of production. The last time that happened, in 2008, an epic bull market ensued — and gold-bugs were anxious for a replay.
Yet 2014 turned out to be a pretty good year for the powers that be and the economic theories that animate their behavior. Equities boomed, interest rates fell, the dollar soared, and gold ended the year below where it started. Gold miners, after a year of operating at an aggregate loss, have seen their market values crater.
(snip)
(Excerpt) Read more at marketoracle.co.uk ...
If they are rich enough to have enough gold at home to "slam" on a grocery counter then they will be smart enough to take their "bar" and use it to make a long term contract with a party that can supply the needs they seek over a long period of time.
Anytime one person refused to sell another person something for Gold.
Don't confuse "market" with "situational value"...
You're cherry-picking dates. Try it from the early 30s, the early 70s, the late 90s to now.
I wouldn't give a penny for a fruitcake, so are you saying that the price of fruitcake is currently zero?
If the economy collapses how will the grocer arrange to get food in the long term?
How will a grocer in New Hampshire get a delivery of frozen food produced in Ohio? How will the factory in Ohio pay employees to do the work if the economy collapses (which means the dollar becomes worthless)and there is no currency to pay employees? how will they get diesel to put in the tanks of the trucks to haul the food?
Better example: You and your family have one can of food left. The stores are empty and their is no gasoline to put in your car to drive to another town. The only news on the radio 9battery powered) is that FEMA will be in your area soon to hand out food and they have been promising the same for 2 months and still they have not shown Its the middle of Winter and you are now burning furniture to stay warm because the gas and electric haven't worked for months.
Now a neighbor who has no food drops by and sez he will give you gold for your can of food. You have two kids and a wife.
How many Gold bars will you sell the can of food for?
Who says it would have to be a grocer? If it was me I would deal with a private farm or ranch to supply me with food, then contract with others to supply other needs.
How will a grocer in New Hampshire get a delivery of frozen food produced in Ohio? How will the factory in Ohio pay employees to do the work if the economy collapses (which means the dollar becomes worthless)and there is no currency to pay employees? how will they get diesel to put in the tanks of the trucks to haul the food?
Your original scenario was how would a gold owner eat. If the economy collapses, then factory workers will be on their own.
LOL That's a stupid gold owner right there! No, the gold owner would be better off going to a maker of food to buy food. If I were a rancher or a farmer I would certainly sell food for gold in the event of a currency collapse, then take that gold and buy fuel and other needs. Diesel can be made on a farm BTW.
I live in a town of 6 thousand people. There are maybe 3 commercial farms big enough locally that can produce more food than they need to eat for a year. FDA tells us the average commercial farmer can produce enough food to feed 125 people for a year.
I will be generous sand say they can produce 3 times higher than the average. And that is of course when they use gas powered machinery to farm. (We will assume the farmer has his own personal oil well and refinery and a perpetual motion machine to run it so he can produce his own fuel to run his farm machinery on)
So our local commercial farms can produce enough food in the year after the economy collapses to feed 1200 people. What will the farmer do with your gold bar when a couple thousand hungry people show up at his farm wanting food? Do you think he has enough guns and ammo to chase them away? If he doesn't does he then give them food or risk dying at the hands of a hungry mob. If he decides to give the food out then what is your long term deal worth?
Yup — beef is way up. Meanwhile, it costs dramatically less to fill a gas tank. Inflation of course is measured as a general trend, not as the price of a single item of goods or services. And on that measure, inflation is unusually mild — for now.
Do they just lay down and die? Or do they go to the local farms and make an offer the farmer can't refuse?
Good for you. You are a supremely intelligent Rancher/Farmer.
BTW there are 400 or so People at your front gate and they have no Gold but they want your food. Most of them are armed. How many Gold bars will you need to pay them off so they will leave you in peace?
I would move! lol Where I live, I have friends that farm and own cattle. There is a winery within 5 miles that grow their own grapes. I have a friend that builds guns from scratch. I have a friend, part Indian that is an expert hunter, and a lot of friends that deer hunt and make their own deer summer sausage. I don't own physical gold yet but when the time comes I will start to build a network. I agree it won't be as easy as having gold bars in your house and then waiting for collapse and then just throw gold bars around, there will have to be pre-networking done.
So our local commercial farms can produce enough food in the year after the economy collapses to feed 1200 people. What will the farmer do with your gold bar when a couple thousand hungry people show up at his farm wanting food?
I think he'll take my bar and make a deal with me, then send the others to the reincarnation of FDR, whoever that will be.
Do you think he has enough guns and ammo to chase them away?
Did they in the Great Depression?
If he doesn't does he then give them food or risk dying at the hands of a hungry mob. If he decides to give the food out then what is your long term deal worth?
We will defend what is ours. The rest will go to government as their savior like they always do. Yeah it may resemble a serfdom for a while. That's the way it it go if it comes to that.
You're naive if you think gas is staying at $2.00.
Did it happen in the Great Depression? Flyover country isn't Ferguson, we don't put up with looting out here. The hungry will go to government, like always.
Much smarter than anyone that says "you can't eat gold" anyway.
BTW there are 400 or so People at your front gate and they have no Gold but they want your food. Most of them are armed. How many Gold bars will you need to pay them off so they will leave you in peace?
Did that happen during the Great Depression?
The Treasury pays interest to everyone who buys a T-Bill, T-Bond or T-Note.
Look at it this way. The US Gov’t owes the Federal Reserve Bank $11 trillion.
The Fed owns less than $2.5 trillion in Treasury securities.
Why would you pay someone who owes you
Because the US Gov't owns the Fed.
I expect that the price of gas — like all prices — will fluctuate. In the meanwhile, lower gas prices contribute to the current minimal rate of inflation.
A depression isn't a total collapse. During the Great Depression he dollar was still viable.
From reading your posts you seem to believe if the dollar collapses that the government will still function as it does now or did during the Great Depression. How will they do that? Issue new money? If the current dollar is valueless give us a reason why anyone would believe a new dollar would have value?
"We will defend what is ours. The rest will go to government as their savior like they always do. Yeah it may resemble a serfdom for a while. That's the way it it go if it comes to that."
The government will need food to pass out. I wonder where they will get it?
I Cherry picked in reaction to the article’s cherry picking. I used the average price of $640. In 1980 I had Goldbugs trying to get me in at the peak near $800 and into silver at about $35. All investing is relative, sometimes gold is ahead of inflation, sometimes it’s not. To me gold is just another way to invest.
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