Skip to main content


Showing posts from April, 2010

Market fundamentals favor gold

According to standard wisdom, a strong dollar makes gold less attractive, and vice versa. But as Peter Degraaf points out, the rising dollar of recent months has failed to dampen investors' enthusiasm for gold. As he explains:
A powerful source of energy for gold and silver is the ‘real interest rate’. At the moment US T-bills are yielding 1.5%. The rate of price inflation according to Mr. John Williams at is about 5.5%. This means inflation is eating away 4% of a dollar that is invested in a T-bill for a year. That is ‘negative real interest’, and gold historically thrives under those conditions.He goes on:
Other bullish factors for gold and silver include the accelerated increase in national debt of which Greece is just the tip of the iceberg. Next in line will be Spain, Portugal, Ireland and Iceland. There will no doubt be others. In the USA a number of states are technically bankrupt and will be looking for the Federal Government to come to the rescue (r…

More prowling for revenue

From Declan McCullagh: filed a lawsuit on Monday to fend off a sweeping demand from North Carolina's tax collectors: detailed records including names and addresses of customers and information about exactly what they purchased.

The lawsuit says the demand violates the privacy and First Amendment rights of Amazon's customers. North Carolina's Department of Revenue had ordered the online retailer to provide full details on nearly 50 million purchases made by state residents between 2003 and 2010.

Amazon is asking a federal judge in Seattle to rule that the demand is illegal, and left open the possibility of requesting a preliminary injunction against North Carolina's tax collectors.

Governments prowl for more revenue

Governments much prefer to acquire their revenue like thieves in the night. And like smart thieves, they take care to leave evidence implicating some other party or class. Inflation is the classic method of underhanded theft, but printing too much money has been known to hurt even the printers. A variation on the invisible tax approach is raising tax rates on the rich. Because most people aren't rich and never will be, they don't care. But one can only shake so much money from a piggy bank, even if it is a big one, and when that source dries up government can move down the line to anyone with a dime in his pocket. Democracies have always wrapped their arms around the poor, but if they start squeezing the game is over. So what can a rapacious government get away with in today's world?

Enter the Value-Added Tax (VAT). Vedran Vuk writes:
VAT works like a backdoor sales tax. Essentially, every time a producer of goods purchases raw materials, he must pay a percentage tax. W…

Quote of the Day from Ben Bernanke

Found here in footnote 9, at the bottom of the page:
The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.Bernanke sees "costs and distortions" trying to maintain minimum reserves, which have shrunk to almost nothing, but fails to see any distortions caused by massive injections of that famous Fed "liquidity."

NY Post publshes story exposing gold. silver price suppression

Andrew Maguire, a former Goldman Sachs trader working at the London Bullion Market Association (LBMA), gave an exclusive interview with the NY Post recently in which he claimed that JP Morgan Chase and HSBC have been playing a key role in maintaining the illusory value of the U.S. dollar. The banks do the Federal Reserve's bidding in the precious metals market, acting to keep the prices of gold and silver down to make the Fed's paper dollar look less debauched than it really is. The Post quotes Maguire as saying:
JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the US dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the US taxpayer.According to the Post,
Maguire was scheduled to testify last week before the Commodities Futures Trade Commission, which is looking into the activities of large banks in the metals market, but was knocked off the list at the last moment. So, he wen…

What to expect from the FCIC

When government forms bipartisan "commissions" like the one investigating the causes of the 2008 crisis, we can expect anything but the truth to come out. Not because I'm cynical about government, but because the Federal Crisis Inquiry Commission is charged with finding truth in all the wrong places. It will look at the voluntary area of the economy - what little remains of it - and conclude there was insufficient regulation, and proceed to ramp up the power of the regulatory agencies that failed in 2008, with the promise that this time it will be different.

It's never different. The cause is not in the free market. The cause is the lack of a free market.

Ron Paul understands the issues perfectly. He writes:
The reality is that the Federal Reserve relentlessly expanded the money supply through artificially low interest rates for over two decades, and this expansion of easy money caused a wholly predictable bubble. To a myopic Keynesian regulator, the bubble may a…

What to do with your tax refund

Buy gold. Not paper gold, physical gold. Have it delivered into your hands and hide it. Hide it so that only you can find it. There are well-known historical reasons for this.

Gold's price has mostly idled the past few months, but don't fret. Over the past decade, the S&P 500 has lost 25 percent, while this time ten years ago gold was selling for around $300/ounce. Today it's up to $1,135/ounce. You can do the math.

But what about the future?

No one knows what will happen, but given that the world's economies are dominated by central banks and fiat paper money, and that both of these are simply tools for governments to take money from your pocket and put it someplace else, without telling you, and that every paper money scheme in history has ended in disaster, with the little guys taking the hit, I wouldn't be surprised if the current trends continue for a long time to come.

Don't be caught papering your walls with Bernanke's notes. Buy gold. If go…