Is Gold the next bubble?

[exhausted girlfriend]

Hello,

I was seriously considering investing in gold & silver. My question, is gold the next bubble? What do you do with the silver and gold once the currency has collapsed?

[SillyWorld]

Well you would be S*** out of Luck, I would SELL ASAP if I had Gold cannot stay up that high for too much longer

[exhausted girlfriend]

That's what i was thinking. Is there a connection between the value of the dollar dropping and the price of gold?

[SillyWorld]

Yes, Dollar Value Falls Gold goes up

[exhausted girlfriend]

I am trying to understand. If the dollar is falling, why do you think the price of gold couldnt sustain?

[davephx]

Gold makes no sense to me pure Doom Sayer emotional play. Very little volume but the doomsters drive price up.

A Year After the Crisis, the Global Economy is Firing on All Cylinders

Almost all the world is now in recovery -all major countries except UK (and soon will have growth) and Spain.

Financial system is stable thanks to worldwide Central Bank etc actions. Libor very low, even the VIX index way down.

Neither deficits nor inflation not an issue at least for many years with excess capacity etc.

U.S. Deficit is being financed at all time low interest rates. almost 3 times the demand yesterday for six month T bills than supply. Short term treasuries actually had negative yield briefly for the 2nd time this year.

Corporate profits rapidly recovering and some signs for stronger consumer spending.

Shoppers cautiously re-emerged in October at both the low-priced and upscale ends of the market. October was the second monthly year-over-year increase for retailers this year and the best performance since April 2008, according to Retail Metrics. The fall momentum has given retailers, beleaguered by a year of sharp sales declines and steep discounting, more confidence heading into the critical holiday shopping season.

Unemployment and lack of credit biggest issues but not enough to derail the recovery in the view of most economists, the Fed etc.

[exhausted girlfriend]

dave,

you don't see our debt to china as a serious problem? I see this only going 1 way. Have you noticed that other countries are dumping our currency?

[davephx]

China continues to buy our debt but their buying has not been needed as much since lots of demand from U.S. institutions and other countries.

There is no "dumping" going on just a steady decline in the dollar which helps the U.S. economy but other nations are concerned because it hurts their exports (helps our exports).

Long term just as the Fed and Obama have said the deficit has to be reduced but don't see it as being any serious issue for a few years. Health Care will reduce the deficit a bit (Per OMB vs Republicans lies and spin)

In my view the very wealthy who enjoy some of the lowest tax rates in the world should pay higher taxes as they have done historically. Today the top rate of 35% only kicks in at $372,950 taxable. After 2010 when the Bush tax cuts for the rich expire will go back up to 39.6%. It use to be 70% and we had a great economy. Rates should be more progressive in my view especially for over $1 million taxable. The wealthy have benefited the most from our free enterprise sytem and should contribute more back in my view.. Just like they do in almost every other county in the world with much higher taxes on the wealthy.

Today the $15 million a year athlete or heads of all the banks pay the same top rate as those with "only" $372,950 of income.

[exhausted girlfriend]

Are you saying the wealthy once paid 70% of their income???? I have very mixed feelings about giving the government almost half of the money i make (if i were to reach those income levels). IMO, everyone can benefit from the free market system. Americans just don't take advantage. What i find interesting is how immigrants come and use the free market system to their advantage.

Hey, i appreciate your input on this gold issue. It seems to be like the housing bubble. Who will be left holding the hot potato!

[davephx]

Actually it was worse. in 1944-1945 top rate was 94% on income over 200,000.

From 1951-1963 the top rate was 91% over taxable income of $400,000

This was before my time, but I was a tax supervisor for than BIG 8 CPA firm, than a regional CPA firm and then my own practice when it was great to have taxable income of $52,000 since that qualified for the max tax on earned income of only 50% with unearned income up to 70%. This was the decade of the 70s.

The following link has a table of all the US top tax rates since 1913 and also a chart showing the top and earned income rates.
Top US Marginal Income Tax Rates, 1913--2003 (TruthAndPolitics.org)

Also the social security tax is regressive - only those with incomes up to .. forget the amount $1xxk something pay FICA (social security) taxes. Higher incomes pay none.

[AZOwner]

The idea behind metal purchase is diversification.

4 years ago an ounce of Gold was 483 dollars. Now it's 1100. I guess you have to define bubble? Is it eventually going to devalue? Sure -- in the best case scenario which is the saving of the US dollar. Until our WWII agreement expires (I don't remember the exact date but it's in the next 10 years) the world currency is the dollar -- that is to say that other countries currency is based upon a dollar value. Oil value, for example is set by the dollar. China and Russia have had numerous discussions with regard to pulling the dollar out of it's world standing once the agreement expires.

Now, in a worse case scenario, you would be able to take gold to a merchant and purchase, for example, your groceries. You could also take silver or copper. So, Dave is correct, investing in metals in being done for worst case scenarios. It's not enough to invest and get a piece of paper -- you must physically own the metal.

If you look at the rate of investment of China, in the United States, you're as good as looking at the future Little China.

while I wouldn't recommend putting all of your investment funds into metals, it is a good diversification and a tangable asset that will always have some value!

apmex.com

[exhausted girlfriend]

AZowner, thanks for that explanation. I was buying silver coins and was going to buy gold coins. What i had in mind was diversification and not invest everything i own. As far as the bubble, i was wondering if the price of gold was rising so much because everyone is now buy it and it will collapse like the housing market.

[davephx]

There was also a good article about the $US dollar in the Wall Street Journal about a week ago.

One main point is what currency would replace the dollar. Certainly not the China whatsitsname which doesn't even trade freely. The Euro is too new and most of their countries have more debt than the U.S. The $US dollar is by far the only currency that has been around so long and no one believes the U.S. will ever default on debt other than the radical doomsayers. There is no other country that has any objective likelihood of replacing the dollar as the worlds strongest currency.

[Maurice Bedard]

This is my opinion and is not to be taken has investment advice - Gold is on the way up and will at the very least, reach the $2,000 mark by summer. The dollar is on the way out and will be worthless in the next few years. It is nothing but paper that has been used and abused. The true market players know this and are hedging against the dollar as well as most all the very rich are doing.

The fools as always are the American people who for the most part are leveraged with just dollars, worthless property and still buying into the Wall Street game. Why? Because they get their info from the TV and cannot think for themselves.

Is gold in a bubble now? Hell No! We have a long way to go for that to happen.

Commodities are in. Gold, food and things of substance. You know, non snake oil items seem to be all the rage.

The powers at be do not want a dollar collapse, but you better bet your bottom dollar that they are preparing for the worst and they are doing this by buying gold or have had hundreds of ounces long ago folks.

The currency that will replace the dollar will be just like they did in Europe with the introduction of the Euro. Here we may have the Euro or the new Amero which I have researched is in place and "ready" in case of a dollar collapse.

The North American Currency Union is a theoretical economic and monetary union of the three largest countries of North America: Canada,
the United States and Mexico.



Map of a proposed NAU, with Canada, Mexico, and the United States



Implementation would probably involve the three countries giving up their current currency units (U.S. dollar, Canadian dollar, and Mexican peso) and adopting a new one, created specifically for this purpose. (Some versions of the theory, particularly those circulating in Canada, assume only the United States and Canada would be included.) The hypothetical currency for the union is most often referred to as the amero.[1][2] The concept is modeled on the common European Union currency (the euro), and it is argued to be a natural extension of the North American Free Trade Agreement (NAFTA) and the Security and Prosperity Partnership of North America (SPP).

Conspiracy theorists contend that the governments of the United States, Canada, and Mexico are already taking steps to implement such a currency, as part of a "North American Union (NAU)".[1] No current members of any country's government have officially stated a desire to create such a body, nor has anyone introduced a common currency as part of this concept.

The euro (€) is the official currency of 16 of the 27 Member States of the European Union. The states, known collectively as the Eurozone, are Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.[17] The currency is also used in a further five European countries, with and without formal agreements, and is consequently used daily by some 327 million Europeans.[18] Over 175 million people worldwide use currencies which are pegged to the euro, including more than 150 million people in Africa.

The euro is the second largest reserve currency and the second most traded currency in the world after the U.S. dollar.[19] As of November 2008[update], with more than €751 billion in circulation, the euro is the currency with the highest combined value of cash in circulation in the world, having surpassed the U.S. dollar.[20] Based on IMF estimates of 2008 GDP and purchasing power parity among the various currencies, the Eurozone is the second largest economy in the world.[21]

The name euro was officially adopted on 16 December 1995.[22] The euro was introduced to world financial markets as an accounting currency on 1 January 1999, replacing the former European Currency Unit (ECU) at a ratio of 1:1. Euro coins and banknotes entered circulation on 1 January 2002.

http://en.wikipedia.org/wiki/North_A...currency_union

http://en.wikipedia.org/wiki/Euro

[Maurice Bedard]

In his gloomiest prediction yet, Marc Faber sees big financial bust leading to war - Business Intelligence Middle East - bi-me.com - News, analysis, reports

"I think eventually there will be a big bust and then the whole credit expansion will come to an end," Faber added.



"Before that happens, governments will continue printing money which in time will lead to a very high inflation rate, and the economy will not respond to stimulus".

In one of his Gloomiest predictions, Faber, referred to as Dr Doom, said "the average family will be hurt by that, and then in order to distract the attention of the people, the governments will go to war".
"People ask me against whom? Well, they will invent an enemy," Faber said.

"At some stage, somewhere in future, we will have a war - that you have to be prepared for. And during war times, commodities go up strongly,” said Faber.

"If you want to hedge against war, you don't want to own derivatives in UBS and AIG, but you have to own them physically, like farmland and agricultural commodities. That is something to consider for you as a personal safety and hedge. You have to own some commodities," he added.

In a Bloomberg Television interview in Singapore Wednesday, Faber said "What will continue to happen is that the S&P 500 and the Dow Jones will go down relative to gold.

"I think gold will go up more," he added.

“Will it go US$2,000, US$200,000 or US$2 trillion? I don’t know,” Faber said. “But if you have money printing in the world, then the price will over time rise. It will go up more for things that you just can’t increase the supply, and the supply of precious metals is very limited.”

Faber expects the US government to increase its stimulus spending should the Standard & Poor’s 500 Index fall toward 900. The US budget deficit under President Barack Obama’s administration reached a record US$1.4 trillion in the fiscal year that ended Sept. 30. Debt amounted to 9.9% of the nation’s economy, triple the size of the 2008 shortfall.

“I don’t think the S&P will drop below 800 or 900, and eventually will go higher in nominal terms, but not necessary in real terms,” he said, predicting a correction in the measure in the “near term.”

Faber has been warning about a collapse of the capitalistic system 'as we know it today,' massive government debt defaults and the impoverishment of large segments of Western society.

In a May interview with CNBC, he said central banks will continue to print money at full speed, but long-term this strategy will lead to a fall in purchasing power and living standards, especially in developed countries.

The years 2006 and 2007 were "the peak of prosperity" and the world economy is not likely to return soon to that level, he added.

Unless the system is cleaned out of losses, "the way communism collapsed, capitalism will collapse," according to Faber. "The best way to deal with any economic problem is to let the market work it through."

"I repeat what I have said in the past," Faber said. “No decent citizen should trust the Federal Reserve for one second. It’s very important that everyone own some gold because the government will make the dollar (in the long term) useless."

[davephx]

Conspiracy theorists contend that the governments of the United States, Canada, and Mexico are already taking steps to implement such a currency, as part of a "North American Union (NAU)".[1] No current members of any country's government have officially stated a desire to create such a body, nor has anyone introduced a common currency as part of this concept

Busting Myths Surrounding the Amero

There are plenty of myths surrounding the Amero, from so-called coins that have been minted and bills circulated, to the idea that the release of the Amero is imminent across North America. These sites offer motivations behind the perpetuation of the Amero myth, as well as debunking the idea that a North American Union is about to descend upon us.

1. Snopes.com debunks the idea that the U.S. (possibly at the Denver Mint) has been producing Amero coins.

2. The Lang Report offers in-depth information about the exaggeration of current events that is feeding reports of an imminent North American currency union.

3. The Seattle Times offers an editorial by Bruce Ramsey about the origin of the mythology surrounding the Amero and a super-sovereign North American Union — and why it is largely unlikely.

4. Mises Economics Blog provides a brief look at where the Amero coin images came from, as well as debunking the reasons that the Amero myth keeps circulating.

5. Irregular Times follows the ways in which the Amero myth is used as a political tool to drum up fear for American sovereignty and try to and mobilize supporters.

6. The Boston Globe delves into what is behind the fascination with the Amero myth, and the basics of this conspiracy theory.

7. Mr. Swing points out that Candian radio host Hal Turner is largely responsible for the most recent frenzy over the Amero, with his assertion that a “rogue Treasury agent” provided him with a “real” Amero coin.

Opposition to a North American currency union exists high up in the governments on both sides of the Canada–United States border. Herbert Grubel, the first proponent of the amero, admits that American officials show no interest in the topic.[1] He concedes that "there wouldn't be very much benefit for the United States" in an amero.[1] Likewise, the Canadian Department of Finance strongly opposes the creation of a common currency with the United States, citing the loss of economic sovereignty. In briefing documents to Minister of Finance Jim Flaherty, finance officials concluded:

"A North American common currency would undoubtedly mean for Canada the adoption of the U.S. dollar and U.S. monetary policy. Canada would have to give up its control of domestic inflation and interest rates."[12]

Trade-offs

From the point of view of the Canadian and Mexican governments, a major obstacle to the creation of a unified currency is the sheer dominance of the United States in any such union. Unlike any country in the EU, the USA has a larger economy than the rest of its respective continent/union combined.[citation needed]

A paper from University of California, Santa Barbara puts forward the idea that the United States simply has too many advantages from the status quo to move toward a single currency.[13] The United States dollar already acts as a global currency, meaning any transition to a 'new' currency would risk compromising this position and could cause a shift toward the euro, yen or yuan.[citation needed] The U.S. dollar is currently being used in over half of all the world's exports, double the total United States foreign trade. The adoption of the amero could threaten the seigniorage that the U.S. currently gains from its dollar. While seignorage would still be gained from the amero, this would be shared among the Bank of Canada, the Federal Reserve, and the Banco de México. Therefore, even if the amero were used just as much as the U.S. dollar, the advantages would be shared among two or more countries, and not exclusively earned by the United States.
[edit] Differing economies

Several problems could arise in regards to macroeconomic management. By submitting to a common currency, the countries would lose considerable autonomy in the management of the currency itself, including the setting of interest rates. Amongst the three potential participants, there is considerable difference in policy which would have to be reconciled.

Debt is a factor affecting currency prices. As of 2008, the debt of the United States continues to increase, while the debt of the Canadian federal government is being reduced. [14] This is a clear advantage for Canadians and it would not be reflected if the currencies were to merge. The importance of commodities also factors into this equation.

A concern with any unified North American currency is the differing economic situations between each country. The Eurozone is broadly similar being service-based economies[15] based on high public spending (compared to the United States), high taxes and wealth being created by the sale of goods and services. North America on the other hand has three distinct economies; one based mainly on agriculture and manufacturing, with a demand for free trade (Mexico), another based on services such as retail, with low taxes and low public spending (United States), and a third based on services with higher taxes and higher public spending, with a large sector in primary goods such as oil, mining and lumber (Canada).

[SillyWorld]

Well Gold Been on its way down last 3 days

[davephx]

And with the big concern about a Dubai default Asian and European markets are plunging as they did Thrus (now open on Fri in Asia/Europe) and folks are running for the safely of the U.S. dollar and US Treasuries.

Most of Europe and Asia now down 3+%

U.S. Dow futures now down 200

Gold dropping only dollar is safe haven at the moment.

I think its an over reaaction on the Dubai six month hold on their debt since no European, Asian or U.S. banks have huge exposure from what I'm reading. But it an emotional sell off it seems mostly.

[SillyWorld]

The Stock Market right now has been nothing more than a FAKE, added by the GOV to encourage more buesneses to think things are turning around....Hahahah They think we are all Stupid, and it ain't gonna work, would not surprise me if we have a big stock crash very soon

[arunkumarrr]

In future there is going to be a stock crash for sure...

[Garry]

I'll buy guns, you guys buy gold. If shit hits the fan we will see who made the smarter investment!

[Garry]

Turns out I should have bought gold....live and learn!

[walkin]

Turns out I should have bought gold....live and learn!

Really? Since earlier this month, I believe costs for guns and ammo have gone up, somewhere around 18%, not sure. The right wingers are flippin out. One must have a diverse supply of zombie gear! Enjoy your gold...I chose the other route :-)