Gold is Going Nowhere

December 14, 2011 10:11 pm 8 comments

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It never ceases to amaze me how normal corrections in gold get everyone so bent out of shape. Europe is collapsing and Western nations can’t balance their budgets. Japan is headed for a monumental collapse, and the combination of an aging population, a 200% debt-to-GDP ratio, and an overly xenophobic population guarantees an epic crisis there. Here in the U.S., the profligate spending of our leaders has put us in a situation where it costs about $300 billion a year to service our debt. Given this backdrop, why the hell are you concerned that gold fell $60? The bill has literally not come due for America, Japan, and Europe.

Today’s sell-off was driven largely by technical factors. I said in my newletter that a break below $1600-$1614 would precede a sharp drop. This is a market that is not being driven by fundamentals right now, and if you get shaken out of your position before a rocket launch to new highs, well, that’s your fault. I guarantee the smart money is salivating right now because they see the value in gold.

My problem is probably that I read too much, so current events just seem like a replay of the past. To forecast events accurately, you need to understand history and human nature. People are fundamentally driven by self-interest, and the only time leaders actually do things to benefit the people is when their self-interest is aligned with the people’s. Think about it: why have there been so many instances in history where a leader is good at home and an absolute brute abroad? Same people, but different behaviors required for self-preservation. Understand that the self-interest of our leaders guarantees there will be no solution to this crisis because they want to pass the blame to someone else. People like Barney Frank screw us over, then they just retire as millionaires. Do you think most politicians care about our future?

These are extreme times, so you must re-calibrate the way you think and your understanding of price movements. On a percentage basis, these moves in gold are not that big. But since so much money is being printed, the perception will be of extreme volatility. Both the stock market and gold have been extremely choppy within a range, and this means we will probably see some crazy volatility. But I would be buying all the huge corrections in gold.

I see the big picture. Our leaders are acting like morons, but Americans are letting them get away with it. After I make my money from this debacle in the U.S., I’m probably leaving the country because the lunatics have taken over the asylum. U.S. citizens can now be detained indefinitely in U.S. soil if they are suspected of being a terrorist. Seems pretty subjective to me. If you don’t think this is bullish for gold, you are nuts.

I could write a book about the troubling trends in America and their precedents in history, but I’m too busy protecting myself from the collapse in America our leaders are creating. A new monetary system MUST be created. This implies bank runs and serious civil unrest. A default in America will come, probably before 2020. Try to see things from a broader perspective and stop worrying about insignificant corrections in gold.

  • Jf

    Buying USD as a safe heaven is like getting on the top of the Titanic when it’s sinking.

    • http://www.expectedreturnsblog.com Moses

      Haha, nice analogy, although I would add that the dollar will probably rally before collapsing.

  • Blondie

    Any idea on where you want to leave?

    • http://www.expectedreturnsblog.com Moses

      Probably Asia, maybe Singapore

      • Afidie

        Singapore? bad idea… :) They are one of the biggest US trading partner…  get  me?

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  • CF

    Singapore is a great place. Our monetary system is ring fenced to protect against expected financial shocks from US and Europe. You are welcome to park your money in the many international banks in Singapore & be a Singaporean PR. We’re a little short of foreign talents. Come over.

  • Ascot

    After WWI, the German paper currency was only fit for burning to keep warm.
    Everyone took advantage of the beaten Germans, the dregs of life from Eastern Europe, financed primarily by their brethren in New York  went swooping in like swarms of locusts and were able to acquire properties for a few American Dollars. The French stripped the German Industrial equipment and left it to rust.
    As a result, for years the hard working Germans became beggars in their own land.
    Today, without having been defeated in war, the same fate has befallen the trusting American public.

    America’s Industrial Base has been stripped and shipped out of the Country.
    First, it was a trickle to Japan, then a stream.
    Hong Kong and Taiwan were next……..  finally that stream became a raging torrent, Communist China has become the last stop.

    When a nation’s ability to manufacture is removed, it must go belly up.
    Look at the once mighty Great Britain, NOTHING is manufactured there now, even the automotive industry in Britain consists only of assembly plants, the real manufacturing is done outside of the country; the same thing was pulled by the crafty Japanese with their assembly plants in the United States. There is NOT ONE Japanese vehicle made in the U.S.A., they are either shipped in fully assembled and simply prepared for the showroom, or they enter in kit form ready for farmers and little old ladies in the Southern States to stick together.
    Then, there is such as Walmart with its factories in China paying thirty cents an hour while millions and billions are being paid to the Communist Party Bosses to keep their slave labor in check….. Unions?  They ask, “They don’t need no stinkeen union!”

    When was the last time anyone has seen an item with a stamp or label stating that it was made in the United States? 
    Still, the financial ‘geniuses’ pretend that they are puzzled as to why the United States is in debt to the tune of TRILLIONS of dollars.

    Now as to gold, the Chinese will decide what it’s worth when the Yuan becomes the ‘New and improved World Currency’.  The Chinese will pay the lobbyists and politicians in Washington to push for “laws” that they, and they alone want, such as the confiscation of all privately held gold, and anyone resisting, or hiding gold will face the same fate as dissidents in China…… two ounces of lead ….. to the back of the head. 

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