What's not to Like about Gold ?

Money Supply Explosion !

• The above Glenn Beck video illustrates clearly what kind of terrifying deep shit hole we are all in. The FedRes has undoubtedly outdone themselves and the entire world too. No right minded individual who understands economics can remain positive. Printing so much money out of thin air means : Currency Devaluation !
   
• I find it hard to believe that the FedRes is not out to debase the currency. It is grossly overvalued. In other words, the real intention of the FedRes is to devalue the USD and inflate away the government debts, banksters’ debts and all American debts I suppose.
   
• What this means is: massive hyperinflation will kick in. How does this voodoo economic magic work? Imagine you owe US$10 T  and your current asset is worth only US$250B. When hyperinflation kicks in, prices will rise astronomically but your debts are still US$10T. Eventually your asset will rise in price say to US$10T . Hey presto! You are now solvent. Of course I am simplifying this a bit. But it is essentially true.
   
• When hyperinflation kicks in, your salary say US$100K/year will become US$1T/year rapidly. So servicing a debt of US$10T is less of a problem.
   
• Of course what this means is : the USD will become worthless! A loaf of bread will cost US$1B. And the price of Gold will soar. Gold is money! Gold is currency anywhere in the world !
   
• We now have people coming out and saying the bank bailout will cost up to US$ 4T. Really? A figure of US$40T is more believable looking at all the derivatives exposure (US$512T derivatives market). Anyway, CNBC says in Bank Bailout Could Cost Up to $4 Trillion: Economists :
    
  The cost of restoring confidence in U.S. financial firms may reach $4 trillion if President Barack Obama moves ahead with a “bad bank” that buys up souring assets.
   
  The figure far exceeds even the most pessimistic estimates of how great the loan losses might be because there is so much uncertainty about default rates, which means the government may need to take on a bigger chunk of bank debt to ease concerns.
    ……
  Goldman Sachs estimated that it would take on the order of $4 trillion to buy troubled mortgage and consumer debt. That number could shrink if the program were limited to only certain loans or banks, but it could also grow if other asset classes such as commercial real estate loans were included.
   
  New York Sen. Charles Schumer has said that a number of experts thought that up to $4 trillion may be needed to buy the bad assets, an estimate that a Senate aide said was based on informal conversations with people in the industry. The Wall Street Journal said government officials had discussed spending $1 trillion to $2 trillion to help restore banks to health, citing people familiar with the matter. At $4 trillion, that would be the equivalent of nearly 1/3 of U.S. gross domestic product. If the government had to fund that amount by issuing additional debt, it would intensify investor concerns about massive supply scaring off demand.
     
• Americans are going to have US$4T of debt shove down their throats. That does not include the stimulus plan of US$825 B and ….whatever. It is about 40% of GDP. Are they out of their freaking mind?? Hyper inflating away the debts does not look so dumb right? If all of us each earn US$1T/year, US$4T does not look like a large figure.
   
• Larry Edelson writes in Exploding Gold Demand as Governments Print Money :
   
  The U.S. banking system is toast. It’s bankrupt in every sense of the word and in every number you can imagine.Don’t kid yourself. Citibank, Bank of America, Washington Mutual, you name the bank — are broke. Insolvent! The entire U.S. banking system — dead broke.That’s why authorities in Washington are panicking, creating money out of thin air. Mind you, it’s the only thing they can do!
   
  But be aware of the consequences: Eventually, the purchasing power of the dollar — indeed all currencies — is going to fall dramatically. Even more so because …
   
  The U.S. Government is also broke. I’m constantly amazed at how so few people … so few analysts ask the question, “Where is all the money going to come from to bail out the banking system and the economy?” Simple — Washington and the Federal Reserve can create UNLIMITED amounts of money and credit. But again, think of the implications of creating more debt to pay off existing debt … printing more paper money to circulate in the economy … spending trillions of previously non-existent dollars to try and stimulate the economy.
   
  Then printing still trillions more to save the banking system … to pay off eventual Social Security obligations as they come due … to pay Medicare liabilities … to fund failing pensions … and more. Either way — compared to an asset whose supply is strictly limited, like gold — the value of current money must and will decline. There’s no question about it.
    …..
  The giant government bond market is now also collapsing. In just the past six weeks, the prices of long-term U.S. Treasury bonds have plunged more than 12 full points — wiping out almost six years of interest income for investors holding bonds. Why? Because investors who panicked and flocked to the relative safety of long-term government bonds are now beginning to realize that bonds are about the worst investment one can make right now — for all the reasons I just cited. 
    ….
  Gold has now closed above the important $879 level. Its next important level is $929. Once gold closes above $929 — new record highs will be forthcoming. Now I ask you again, “What’s not to like about gold?!” 
   
• So what’s not to like about Gold? The safe haven and real money for thousands of years! Greenlight Founder Takes Grandfather’s Advice on Gold : 
   
  Greenlight Capital Inc. founder David Einhorn is finally taking his grandfather’s advice. The $5.1 billion hedge fund is buying gold for the first time amid the threat of inflation from increased government spending.
   
  Since Einhorn was 10 years old, his grandfather has warned him that investing in bullion and gold-mining stocks was the only “sensible” thing to do given the threat of inflation and the risks of so-called fiat currencies, New York-based Greenlight said in a Jan. 20 letter to clients. The firm had never before considered buying bullion or mining-company shares. 
   
• See also :
   
  Massive US Dollar Devaluation Against Gold During 2009
  Gold Rush Worldwide!
  Obama, Roosevelt, Gold Confiscation and Dollar Devaluation
  Economic Depression and Gold
  

Disclaimer – I am not a financial advisor. This is not an advice to buy, sell or hold any stocks or bonds or any precious metals.
 
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