The price of gold fell 13 percent in just two days this week – its biggest two-day decline in thirty-three years.
What happened?
“The most important factor is that global inflation is falling, reducing gold’s value as a hedge against rising prices,” writes Peter Coy at Businessweek. “Gold bugs who were betting on an outburst of inflation are scrambling to reverse their bets and exit their gold positions at any price.”
Okay … that’s true, but why?
Here’s the depressing back story, courtesy of Chris Martenson’s Peak Prosperity …
The most recent gold bear raid has vastly enriched the bullion bankers, once again, at the expense of everyone trying to protect their wealth from global central bank money printing.
The central plank of Bernanke’s magic recovery plan has been to get everybody back borrowing, spending, and “investing” in stocks, bonds, and other financial assets. But not equally so, as he has been instrumental in distorting the landscape towards risk assets and away from safe harbors.
That’s why a 2-year loan to the U.S. government will only net you 0.22%, a rate that is far below even the official rate of inflation. In other words, loan the U.S. government $10,000,000 and you will receive just $22,000 per year for your efforts and lose wealth in the process because inflation reduced the value of your $10,000,000 by $130,000 per year. After the two years is up, you are up $44,000 but out $260,000, for net loss of $216,000.
That wealth, or purchasing power, did not just vanish: It was taken by the process of inflation and transferred to someone else. But to whom did it go? There’s no easy answer for that, but the basic answer is that it went to those closest to the printing press. It went to the government itself, which spent your $10,000,000 loan the instant you made it, and it went to the financiers who play the leveraged game of money who happen to be closest to the Fed’s printing press.
The result of this transfer? The rich get richer and the poor get poorer … i.e. the exact opposite of U.S. President Barack Obama’s stated ideology.
But hey … let’s just keep printing money, shall we?
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28 comments
Maybe Goldfinger is still alive.
Maybe Goldfinger is still alive.
She looks like Bobby Harrell’s girlfriend, the real estate lady, Nancy Latham. One of the two women in the murder-for-hire sensation in Charleston.
She looks like Bobby Harrell’s girlfriend, the real estate lady, Nancy Latham. One of the two women in the murder-for-hire sensation in Charleston.
Hey! Who was jerk on here pushing gold and shit a while back?
Glenn Beck did constantly.
Hey! Who was jerk on here pushing gold and shit a while back?
Glenn Beck did constantly.
Tax day liquidation contributed as well…banks are stuffing away reserves keeping a lid on inflation(for now) with a booming stock market.
There was also the Cyprus gold entering the market as a psychological factor among other things.
If you think that $85 billion in new issuance a month isn’t going to drive it back up then short it. For some, it’s a another good time to buy on dips if you are long.
Tax day liquidation contributed as well…banks are stuffing away reserves keeping a lid on inflation(for now) with a booming stock market.
There was also the Cyprus gold entering the market as a psychological factor among other things.
If you think that $85 billion in new issuance a month isn’t going to drive it back up then short it. For some, it’s a another good time to buy on dips if you are long.
this is an impossibly stupid analysis of the movement in gold prices. and a tremendously gullible re-tweet of a bad analysis of bond prices.
this is an impossibly stupid analysis of the movement in gold prices. and a tremendously gullible re-tweet of a bad analysis of bond prices.
listen just to help you out cause i’m a nice guy – rich people want bond returns to rise so that they can sit on their fat fannies and live off the safe income of t-bills. as far as they’re concerned, the sole purpose of the treasury is to mail checks to trust fund babies. they cannot understand why the treasury is messing around trying to fix the economy for someone other than them. chris martenson is a tool. a dull tool. don’t be a tool’s tool.
listen just to help you out cause i’m a nice guy – rich people want bond returns to rise so that they can sit on their fat fannies and live off the safe income of t-bills. as far as they’re concerned, the sole purpose of the treasury is to mail checks to trust fund babies. they cannot understand why the treasury is messing around trying to fix the economy for someone other than them. chris martenson is a tool. a dull tool. don’t be a tool’s tool.
The banking investors are smart, you dump a shit-load of gold into the market which causes others to dump right afterwards. The price plummets and then you go back in and buy everything you sold plus more at a lower rate. At the end of the week you dump one million ounces and then buy back 1.2 million ounces for a break even price. It’s not rocket science.
The banking investors are smart, you dump a shit-load of gold into the market which causes others to dump right afterwards. The price plummets and then you go back in and buy everything you sold plus more at a lower rate. At the end of the week you dump one million ounces and then buy back 1.2 million ounces for a break even price. It’s not rocket science.
What’s gold? What, who what?? Story. Oh. Yeah. Sure yeah gold ok. Whatever :)
What’s gold? What, who what?? Story. Oh. Yeah. Sure yeah gold ok. Whatever :)
Why would gold be valuable as a method of exchange after a global financial collapse?
What in the hell would you do if someone hoarding food supplies said “No thanks.”
If it were valuable it would only get you and your family killed. With a little luck maybe Glen Beck also.
Why would gold be valuable as a method of exchange after a global financial collapse?
What in the hell would you do if someone hoarding food supplies said “No thanks.”
If it were valuable it would only get you and your family killed. With a little luck maybe Glen Beck also.
Wait…you mean all the freaking out about inflation didn’t pan out? I see the usual suspects are still flogging it despite all the evidence. Well, I’m sure there’s other things to ring your hands over. Maybe a kid’s art project. Oh yeah, that was last week.
M.I.T. metrics show inflation: http://bpp.mit.edu/usa/
Wait…you mean all the freaking out about inflation didn’t pan out? I see the usual suspects are still flogging it despite all the evidence. Well, I’m sure there’s other things to ring your hands over. Maybe a kid’s art project. Oh yeah, that was last week.
M.I.T. metrics show inflation: http://bpp.mit.edu/usa/
Brilliant analysis, as always. Central banks’ expansive monetary policy, which has been going on for what, 6 years?, was going to jack up inflation. It didn’t. Now the gold bugs look even sillier than normal and so they claim “those closest to” the centrals banks have somehow pocketed the inflation? Good Lord. Did anyone take economics in college at FITS?
Brilliant analysis, as always. Central banks’ expansive monetary policy, which has been going on for what, 6 years?, was going to jack up inflation. It didn’t. Now the gold bugs look even sillier than normal and so they claim “those closest to” the centrals banks have somehow pocketed the inflation? Good Lord. Did anyone take economics in college at FITS?
So, just to nitpick….
What does the picture have to do with gold?
So, just to nitpick….
What does the picture have to do with gold?