Free Republic

Last Friday, the central banks of Europe extended their landmark agreement on gold sales. 18 national central banks, along with the European Central Bank itself, signed the third Central Bank Gold Agreement. CBGA 3, like its two predecessors, has major implications for gold that investors need to understand. Due to their propensity to sell gold from their massive hoards, central banks have long sparked fear and suspicion among gold investors. While CBs absolutely add supply, thus weighing on gold's price, the misinformation and intentional disinformation surrounding these institutions is often way overdone. Instead of fearing them, taking a pragmatic perspective...

In my previous article you can see the actual executive order in which U.S. citizens lost the right to own gold. From May 1st 1933 until 1971, U.S. citizens could no longer hold gold as a protection against paper money, which also lost its gold backing at the same time. Foreign central banks could continue to exchange the U.S. dollars that came into their possession [known as Eurodollars for decades] for gold and did so particularly when the $ was devalued and then floated against the gold price in 1971. Why? The ‘why' of it all, is critical to our...

"There's no reason to invest in gold," said the finance editor of a major newspaper interviewing me. "If gold goes up because of inflation, then so does everything else, so why buy it? It's not really a good investment." She was serious. Yes, she is a finance writer. And yes, it's a newspaper you've heard of. But I can address Betsy's misunderstanding now, because part of what she said is correct: gold is not an investment. Let's trace what an ounce of gold or silver - true money - has been able to purchase at various periods in history, and...

All in all, I vote for Paul Krugman losing his Noble Peace prize in Economic Science because he clearly has no idea what he’s talking about. Things are not fixed Paul! Since they aren’t fixed you can’t say we avoided a second great depression! Perhaps you can explain to me what will happen when the Fed, the Treasury, US banks, or anyone else for that matter with trillions of dollars in bad positions has to unwind those trades? Will we just stimulate our way through that too? You know what, on second thought, perhaps Krugman is right, maybe we should...

Sometime people do learn from history, though the number that intentionally do so are few. Perhaps one of the largest groups of people that seem to lack the ability to learn from history is composed of economists. The facts that they choose to intentionally ignore are near mind boggling. Two asset bubbles, technology and housing, were claimed to be non existent, until they collapsed. Now, that same group of myopic number crunchers believes that economic growth in Western economies is about to reignite. Is some skepticism appropriate? Now again, in the aftermath of the Federal Reserve doubling its assets, we...

While it sure looks like we are ready for a pullback in entire market we just may not get one for some time. We could get higher prices for 2-6 weeks still. Everyone is anticipating a market correction, which is identical to what everyone thought back in March, yet prices continued to rise for two more months (June).

If I told you that an investment in California was riskier than Russia, would that surprise you? Well according to the current prices for 10-year credit default swaps, Russia is less likely to default on its debt than the state of California. Credit default swaps are basically credit insurance. As the likelihood that a debtor will default on its debt narrows, so does the cost to insure that debt. As the chart below shows, it costs 278 basis points of the principal amount to insure State of California debt and 268 basis points to insure sovereign Russian Federation debt.

Since the government’s only goal was to capture more control of the “well being” equation (also known as GDP) they saw an opportunity in our failing banks. By taking control of the banks they effectively took control of gross investment and they did so as quickly as they possibly could.

We assure you, this is not a fatuous question. Is it possible you may well ask under what circumstances did this happen in 1933? What we can confirm is that in 1933 the U.S. government banned the ownership of gold by U.S. citizens and purchased all but rare gold coins from the U.S. Public

There's a lot of Internet chatter these days about the possibility of the U.S. government seizing its citizens' private gold holdings. What are the chances?

Among gold investors, the major drivers of the gold price are well-known. From mine production and central-bank sales to jewelry and investment demand, gold's fundamentals have been and will continue to be extensively studied. But over the past year, a curious and sometimes dominating new gold driver has emerged. Believe it or not, it is the US stock markets. And they certainly have not been driving gold in the traditional loose opposing manner. Historically, secular gold bulls happened during secular stock bears. Over these long time frames (17 years or so), persistent stock-market weakness gradually ramped up gold investment demand....

During the great recession here have been ups and downs, ins and outs, tons of tears and very little rejoicing. At some point we've all been on the wrong side of a trade, seen the damage of broad company layoffs, had our 401k's destroyed, or have harbored deep ill feelings towards at least one (or more) government announcements. At times such as these the emotions connected with our dire and depressing circumstances can become overwhelming. So rather than being held down by circumstances that we cannot possibly control, what can we do about it? When considering this and the oppressive...

There have been disturbing stories/rumors going around that the USD is poised for a crash episode in the Fall. The stories are basically anecdotal. One suggests that US embassies have been told to gather a year's local currency in their host country... In fact, one astonishing story by a US congressman later on the events was that one fateful day in Fall 08, there was a run on US money market funds and banks to the incredible tune of $2 trillion in a mere two hours! And until the US Treasury stated they would guarantee US MMFs, the Fed and...

As we all know, the Federal Deposit Insurance Corporation (FDIC) guarantees depositors that they'll get their money back if a bank fails, at least up to a certain amount...Since the Great Depression, a period marked by widespread runs on banks, the FDIC has done a good job of fulfilling its mandate. So how are they doing in this crisis?

Since the 1950's GDP has largely been used to measure the economic well being of nations. It is the arguably the foremost statistical factor that economic growth is derived from. To illustrate the idea of why GDP is a poor gauge of well being in a country consider this example for a moment. In the US, any money spent to re-develop the World Trade center in New York after September 11th has in one way or another counted towards GDP growth. The same goes for any other natural or manmade disaster throughout the country. Likewise, any money spent by the...

According to the diligent statistical elves of Barron's Market Lab, the amount of U.S. Treasury Gross Public Debt outstanding is $11.611 trillion. A year ago, according to the same elite statisticians, that value was $9.533 trillion. In one year, the true deficit of the U.S. government was therefore $2.0178 trillion. That is a true accomplishment!

When the books have been written on 2009, the prevailing story will undoubtedly be one of lost opportunity. Countless numbers of investors caught up in the tangled web of pessimistic headlines failed to pull the trigger on what is turning out to be one of the best market recovery years of our lifetime. Where else but in the perverse world of the financial marketplace can we witness such a sad spectacle?

Some sage gold watchers are expecting a major $ devaluation before the end of the year! Some say it could be any day now. Certainly the fundamentals have pointed that way, as we have discussed for some time now, this despite the repeated "Strong $ Policy" statement from this and the last Administration. The concept is no doubt alarming and implies a radical change in global economics.

The latest in the Amero saga... I know it sounds impossible, but the world is being forced to a point of having to implement a one world currency. Or at least a one world currency among the major economies - maybe Tunisia might escape. But, ultimately, since the world economies are all linked now, none can stand alone whatsoever, so then the idea of individual currencies is fading. In fact, all individual currencies do now is cause trade and currency frictions, like the US complaining the Chinese are using a cheap Yuan to manipulate their trade to their advantage, and...

Given the Treasury's need to flog on the order of $3 trillion worth of its unbacked paper this year just to keep the government's doors open - and that is a four- or fivefold increase over 2008 - the foreign buyers not only have to show up for the Treasury auctions, they have to show up in droves. It's not for nothing that the Goldman Sachs Secretary of the Treasury Timothy Geithner is hotfooting it around the world lately, last week to Saudi Arabia and the UAE... last month to China. The purpose of his trip, Geithner told reporters in...