Posted on 07/15/2011 6:21:22 AM PDT by quesney
"It is very scary: the flight to gold is accelerating at a faster and faster speed," said Peter Hambro, chairman of Britain's biggest pure gold listing Petropavlovsk.
"One of the big US banks texted me today to say that if QE3 actually happens, we could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money."
(Excerpt) Read more at telegraph.co.uk ...
The chart is a logarithmic chart. Doesn't it need to be arithmetic, in order to display properly the catenary rise of a bubble curve?
Log scales tend to flatten out rising charts, thus masking unstable rises.
Comment? Discussion?
Another factor in the 1980 crash is that it was absolutely manufactured by the Carter Administration. Carter Treasury and the Fed went to the Chicago Board of Trade and demanded changes be made to trading rules. CBOT complied, n/w/s that the Government desired, and was acting to secure, the bankruptcy of the CBOT's best metals customers, the Hunt brothers.
My point is not to weep over the Hunts; they were big boys playing a game with an overseas government (the Saudis). Their object was to accumulate a large silver reserve, against which the Saudis would float a new international, metal-backed, stable currency that Arthur Burns (the then-Fedhead) couldn't inflate. (Burns had been doing so at the request/direction of the President, who sanctimoniously wanted to Save the Third World on the backs of American savers, investors, and anyone who used U.S. currency -- which annoyed the Arabs hugely.)
At Carter Treasury's instigation, CBOT changed the trading rules not once, but four times, until they succeeded in forcing the Hunts to begin selling down, which of course collapsed the market they'd bid up and damn near cornered.
Mr. Bush had Helicopter Ben and Hank the Shank do the same thing in 2008 because the dollar was declining and ECB bankers were complaining to the Fed. So they arranged to force the hedgies to start a run to the exits by making some abstruse, backroom rule-changes about settling and clearing CDS and CMO contracts (requiring they be settled in dollars, basically, to drive up demand for the dollar and start a dollar boomlet to collapse commodities, initiate margin calls, and drive the hedgies to sell).
That was another example of direct government interference in open markets to secure policy goals at the direct expense of investors -- to "teach them a lesson" not to diversify out of dollars.
Since then the Fed has been following a "repression" policy, using short interest rates to force savers and investors to go into longer maturities to obtain some sort of yield, and then inflating their principal out from under them, just as Arthur Burns had done in the 1970's.
Carter's motive was film of staveling Ethiopian tots -- and sanctimony.
Ben Bernanke's is inflationary (or should I say "repressionary") destruction of the TARP/Stimulus debt.
Obama's, I fear, is a doctrinaire (and racist, and pathological) desire to destroy the freest and most productive economy the world has ever seen.
Log scales tend to flatten out rising charts, thus masking unstable rises.
Comment? Discussion?
That way, you can look at the chart, and see that a given slope in the past and low prices and a given slope recently might have the same slope.
A linear scale would show the same rates of increase as being very flat if at low prices, and very steep at high prices. Worse, they obscure real information and distinctions by making steep rises look vertical, even though there may be major differences in the rate of increase. The current rise and the 1980 spike look the same in the linear graph, but the significant difference is revealed in the log graph.
A log scale won’t give you an alarming hockey-stick graph in the long term of a gradually rising value, which might be important to illustrate. But the hockey stick obscures lots of data useful to investors.
That 75 o F keeping temp for canned goods is quite vulnerable to a/c failure and power failure in hot parts of the country.
As you can see from this well-researched chart for MRE storage, the effect on shelf life is modest until temps ar much higher:
MRE Storage Life Chart
Temp Months of Storage
120 1
110 5
100 22
90 55
80 76
70 100
60 130
So a week spent at 100F is like 5 weeks (out of 8 years) spent at 70F. Canned food will be proportional, and may have a much longer shelf life.
Wine is different. One heat exposure can cause pressure inside that expels wine or gas around the cork. A return to seller temp then sucks air back into the bottle, so the oxygen can oxidize the wine.
People who have no money to invest need not concern themselves with the question...
True. But what that means is that as the temp is higher the "indefinite" life span begins to shorten. And the "shortening" process is only occurring during the periods of increased temps. IOW, where I am, it is 3-4 months a year. So, while mine may not be indefinite, it is still going to be pretty long.
And while it is interesting in an academic sense to talk about 15-20 years, realistically after say 5 years, there are so many other variables to screw you, I really think it is pointless for a middle aged adult to be looking any further down the road than that.
If we descend into a level of chaos which requires that level of self sufficiency for more than 5 years, you better worry a lot more about disease, illness, accident or getting shot by someone, than feeding yourself.
Most people don't think about how they will get needed medications for extended periods. Many don't realize the longer term implications of going off medications that they take for granted. My heart arrhythmia will not affect my life span, but if I stop taking the meds, my odds for heart attack and stroke go way up. I maintain a 2 year supply of the meds, much past that is difficult because of age degradation. In a SHTF scenario, do you think I devote much concern to more than 5 years down the road?
Very good point. And if it gets that bad, "displacement" begins to look like a realistic scenario -- put away the AK and the shotgun, and start relying on the silver and gold stash to escape to e.g. the Antipodes. If it goes to hell here, Ascension Island, Kerguelen, and Christmas Island all begin to sound pretty good, and Christchurch (with my 400 very distant relatives) starts to sound like Paradise.
Most people don't think about how they will get needed medications for extended periods.
Now there's a thought. Outlaw smuggler and drug mule for pack-trains loaded up with Tenormin, Capoten, and generic ACT inhibitors? Hot loads of knockoff Actos and Zyban? Who knew Obozo's lockup of Stateside medical care ("Medical care is the keystone of the arch of Soviet power" -- V.I. Lenin) would open up vistas of opportunity and the possibility of living flush like a Medellin drug lord for enterprising American conservatives?
Getting rich while getting well and subverting Communism. What a thought. Maybe I'll have a late-life opportunity to learn to fly ancient C-123's and Beech Barons and operate a Hughes chain gun. Thanks, amigo!
Thanks for discussing.
Honestly, it depends on what you are trying to coney. If you are conveying whether current times are like past times, or whether a current rise is equivalent to a past “bubble.”
On the other hand, if you want to convey the powerful effects of compounding, then a linear scale will show how gradual annual changes can create dramatic rises to unsustainable levels in the present and near future.
That might make sense for things like oil consumption, which is a physically limited resource, but the price of gold is not a limited resource (because it is simply a reflection of the lack of value of a dollar, which can go as close to zero as those in control wish it to.)
It's the ratio that would matter then, not the nominal.
Gold was still used as money while the Black Death ravaged Europe. It was still used as the Mongols cut a swath all the way to Eastern Europe and while the Visigoths sacked Rome.
Can you think of any tougher times than that when gold had no value?
People who say gold would be worthless in extremely bad times have to be seriously deficient in historical knowledge. Of all the empire collapses, plagues, barbarian invasions, wars and famines in history that would make anything that could happen today look like a cakewalk gold could be used to buy things.
It could buy you everything from food, to mercenaries, to women to a crown and a throne. In fact the harder the times the better the prices.
“Que the one world currency.”
Gold served as the world currency during the classical gold standard era.
” what can do it with gold? I’m not sure”
Congress not authorizing an increase in the national debt. The Fed ceasing QE. Higher US interest rates. Booting Obama out of the White House.
Right now you have Congress increasing the potential money supply by raising the debt limit. You have the Fed increasing the money supply by monetizing that debt through QE. There is no penalty for holding gold with interest rates as low as they are. And the US under Obama is unfriendly to business, investment, and anyone with savings.
The ratio I was concerned with was simply the portion of the US federal budget that was in deficit, vs the worldwide production in that year of metals. I know there’s not going to be anywhere near enough reserves to back all the US dollars.
Gold was still used as money while the Black Death ravaged Europe. It was still used as the Mongols cut a swath all the way to Eastern Europe and while the Visigoths sacked Rome.
Can you think of any tougher times than that when gold had no value?
During those times gold was the money as were other metals.
What good does a pocketfull of bullion do you when you and your family are hungry ?
Nothing unless there is someone willing to trade foodstuffs or other needed items for shiny metal.
Granted, gold can and will preserve value IF the economy will recover ... what if it doesn’t ?
What good is the metal except to make high dollar fishing sinkers or cast bullets.
I still say money is better spent on canned goods, barter items and bullets.
Yes, that's the point. Even as extreme as those conditions were, the economy wasn't reduced to barter. A form of money was still used.
Now if the paper collapses, gold will be that money. Barter just isn't efficient enough no matter how tough the times are.
If 1/3 of Europe's population dying off in a plague isn't enough to eliminate money as a medium of exchange, what possibly wild scenario could you imagine in our time that could do that?
What good is the metal except to make high dollar fishing sinkers or cast bullets.
Yet it never has been reduced to that in recorded history, but this time will be different I guess.
Somebody is always going to have a surplus above and beyond what they need for subsistence and the odds of them wanting a form of money as opposed to more subsistence goods are high. Otherwise the use of money wouldn't have arisen in even the most rudimentary forms of civilization.
Yes Sir, SS is indexed (to what the politicians want to pay out).
Under New Proposed Inflation Measure Seniors Would Lose $720 per Year in Social Security Payments
Economic Policy Journal
Robert Wenzel
July 18, 2011
As I have pointed out before, as part of the current deficit-reduction talks, White House officials and Congressional leaders on both sides of the aisle are advocating changes to the way inflation is calculated by using a method to measure inflation known as the “chained consumer price index.”
This method would likely result in a slower inflation adjustment rate payment on social security. So if you think the current CPI doesn’t reflect price inflation accurately, just wait until the SS administration starts using a Congressionally approved ‘chained consumer index”.
According the the Senior Citizens League, the average retiree would receive about $720 per year less in inflation adjusted benefits. But the SCL is assuming real price inflation rates around current levels, if price inflation accelerates, as is likely, the reduction in adjusted benefits based on the current measure of CPI will be much greater on an annual basis.
This fraudulent indexing scheme that will screw seniors is being hailed by some as a method a positive step social security. “This is a start in helping us fix Social Security,” says David John, a senior fellow at the Heritage Foundation, according to Smart Money. If Bernie Madoff ever proposed such a thing he would of ended up in the slammer, much earlier on in his Ponzi scheme than he did.
The United States shouldn’t be in the savings business at all, as is evident, they will use the money to engage in wars and otherwise siphon money off to the politically collected. That said it is an outrage that the government will play with the promised income of the elderly, many of whom trusted the government and have no other sources of income.
Rep. Ron Paul (R-TX) said on the House floor today.
“If we don’t understand this, this default will not be because we don’t send out the checks. We will send out the checks. It will be defaulted on because people will get their money back, or they will get their Social Security checks and it won’t buy anything.”
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.