Gold and Silver: The gifts that keep on giving!

Historically Gold and Silver have always been money.  They have something called intrinsic value, where the value is actually the physical properties of the metal itself.  They are shiny, they do not rust, and they are rare.  It is in these things that we find real value.  And is why we can exchange other goods or tangible assets for silver and Gold.  Only in the last 40 years or so, have people really forgotten what money truly is.  (40 years ago is when President Nixon severed the dollars tie with Gold)  Our dollar bills now, are actually just a debt instrument circulated throughout the world, and only have value because we believe it to have value.  We have faith that tomorrow when we wake up, we will still be able to purchase goods with our dollars.  Since the dollar is not backed by anything of value, once that trust fades our currency starts to lose value.  And once the trust is completely gone, then the currency will revert back to its mean, and eventually become worth the paper it was printed on.  Nothing.  Another thing that will destroy a currency (such as our beloved dollar) is inflation.  Inflation in its simplest form is increasing the currency supply through printing money.  And in itself is one of the main reasons a nation might lose faith in its currency.  This is what is happening now and has been happening for decades.  (Much more so recently)  We are currently in a global financial crisis in which we are all tied together.  Our government (and others) are currently printing more and more dollar bills to cover up the true source of the problem.  Historically any government that has taken this course in the past has always ended up destroying the currency.  This is why commodity prices are rising at very scary levels, and as I write this crude oil just hit $91 a barrel today (which translates into just about $3 gas prices).  It is my belief that this will only continue to get worse, and unlike in 2008, these prices won't come back down this time.  Our government is currently debasing our dollar to pay for a broke system, and I fear this will only end in hardship and an immense amount of pain and suffering for those unprepared.  What they are doing in Washington D.C. is playing with fire and is highly inflationary.  And will only result in virtually everything going up in price.  But there is hope.  There is a reason Gold and Silver have recently hit several all time highs in price.  Because they are real money!  They are the one true currency that will never fail.  Their price will continue to rise along with other commodities and goods because they maintain their value!  Prices in reality are not really going up, the value of our dollar is actually going down!  So things seem more expensive.  But if you hold Gold and Silver you actually see that prices stay the same, or actually only rise because of true supply and demand.  Not just inflation.  So I wish everyone a Merry Christmas and get ready for 2011 because it's gonna be a wild one.

Gold, dollar, oil, jobs, deficits

100% Sure Thing? Bernanke think again. The End game is on...

Submitted by Bruce Krasting on 12/05/2010 20:47 -0500


Bernanke did himself and the American people a great disservice tonight. He said that he was 100% certain that “He” could contain the consequences of his policy of quantitative easing. No person in a position of responsibility should make such bold statements. There is always risk.

Bernanke’s TV fireside chat was a bomb as a result of this gross misstatement of the risks of the Fed's monetary policy. There is a “zero” chance that QE will end badly? Please, that is idiotic and insulting. The thousands of people around the world who have stood up and said it is voodoo economics are all wrong? Talk about hubris.

I’m not going to write the article documenting the Fed’s prior mistakes. To suggest that they will not err this time around is too much of a stretch. Ben should have acknowledged that there is risk. That he and his mates don’t sleep at night knowing they have crossed a line to the dark side of monetary policy. I wanted to see a humble Ben. One who said that he is facing a daunting task, one where the risks of action and inaction are substantial. But he chose to brush it all off. He is either blind to history (that he claims to study), he is lying or he made a boastful statement of his powers that are totally unjustified.

History is unkind to those who look into the future with myopic eyes and see the outcome of an uncertain world as 100% certain. Ben made some history tonight, but we won’t know about it for a few more years. Then we will be looking at Ben’s video with both a laugh and a cry.

For the record. Ben is not printing money. He is monetizing debt. He is, in effect, financing the current deficit of the government. He is actively intervening in the bond market. There is no limit that has been established for this policy. Ben said tonight he would do more if it suits him. Monetizing debt is a desperate act. That we are doing it will make us desperate.

In my opinion QE is not necessary and exposes the global economy to a variety of risks. There will be little benefit to the US economy. We will have a long-term headache as a result. Ben’s persistence with QE at this juncture looks like a gamble by a desperate man. He was slapped down of late and made the unusual (unprecedented?) step of going on nationwide TV to say that all is well and not to worry.

I’m worried. I think the market for the dollar and gold will read it as I do.