Gold continues its relentless rise; as the dollar continues to spiral down.
Check out the Kitco website for the current quotes.
It is so obvious the gold markets have been manipulated for years and now all the efforts to conceal the abuse of the dollar are coming to a climatic close.
Think of the price of gold as the canary in the coal mine. When a currency is being overspent by a government, the market knows this and prices gold in that currency accordingly. Many people do not believe the official inflation reports, so they rely on the price of gold as an indicator of what is really going on with the currency.
The government knows this, hence, the daily manipulations of the price of gold in an attempt to disguise the demise of the dollar. This is done by shorting the price of gold every day on the Comex and other gold exchanges. Of course these short positions have to be covered eventually. Usually people will accept paper money to cover the shorts. What's happening now is the physical market for gold is overtaking the paper market. Instead of trading a piece of paper representing a certain amount of physical gold, more and more people and institutions are demanding the real deal.
Reasonable observers think gold will reach at least $1600 per ounce. Here's my take on the question:
During the last bull market of gold, it reached a price of $850 per ounce on Jan 21, 1980. The average price of gold that month was $675.30. The same numbers in 2006 dollars would be $2275.99 and $1808.21 respectively. So if we assume similar conditions for the dollar today, we can expect some significant climbs in the price of gold.
What people have real difficulty in understanding with respect to inflation is that the value of items being purchased does not go up. Rather, the value of the dollars you are using to purchase these items is going down.
A few weeks ago everyone was outraged at the sudden surge in the price of milk. Everyone's thinking "Are those dairy farmers or supermarkets gouging us?" Of course not. A gallon of milk in 1980 is pretty much the same thing a gallon of milk today is. What has changed is the dollar. The dairy farmer and all the middlemen down to the local supermarket have the same struggles everyone else has in dealing with inflation. There are more dollars, about four times as many, as there were in 1980. So each dollar is less valuable. It's too bad dollars don't physically shrink with inflation. If they did, the phenomena of inflation would be much easier to understand.
While governments can easily make more copies of their currency to pay their bills when the tax revenues fail to do so, they cannot manufacture more gold. This is why governments hate gold.
Everyone wants government services, but no one wants to pay for them. So the government, with the complete cooperation of the public, fudges by printing money they don't have. You can get away with this for a while, but it eventually catches up with you. Hence the surge in gold prices and the really scary economic situation we have today.
Monday, November 26, 2007
Sunday, November 25, 2007
Always There
Now that the sun is peeking over the house, it's time to think about the mountains to the West.
They've always been there as an anchor to my world. Mt. Evans, Pikes Peak, Longs Peak, Lookout Mountain; with Green Mountain and the Table Tops at their feet.
I've always wanted to be up there, but always the obligations were down here on the plains. If not school, it is work. If not work, it's those I care about.
Silverheels was the name given to a peak overlooking South Park; the real South Park not the TV pretend place. Apparently, so the story goes, a kindly prostitute cared for miners suffering from smallpox. She contracted the disease, died, and to memorialize her kindnesses, the mountain was named for the distinctive trademark she was known for.
I believe the town was Fairplay. So called because the settlers there were forced out of other diggings over claim disputes. Feeling abused, the miners wanted a name reflecting a 'fair play' for everyone.
One of the most spectacular views in Colorado is provided by the overlook at the top of Kenosha Pass as one makes a start down into South Park.
They've always been there as an anchor to my world. Mt. Evans, Pikes Peak, Longs Peak, Lookout Mountain; with Green Mountain and the Table Tops at their feet.
I've always wanted to be up there, but always the obligations were down here on the plains. If not school, it is work. If not work, it's those I care about.
Silverheels was the name given to a peak overlooking South Park; the real South Park not the TV pretend place. Apparently, so the story goes, a kindly prostitute cared for miners suffering from smallpox. She contracted the disease, died, and to memorialize her kindnesses, the mountain was named for the distinctive trademark she was known for.
I believe the town was Fairplay. So called because the settlers there were forced out of other diggings over claim disputes. Feeling abused, the miners wanted a name reflecting a 'fair play' for everyone.
One of the most spectacular views in Colorado is provided by the overlook at the top of Kenosha Pass as one makes a start down into South Park.
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