Global Economic Crash Late July!

Originally posted by kosmicjack
reply to post by behindthescenes

 

Exactly. It's all just a big shell game or ponzi scheme. The banksters will do whatever it takes to prop it up and keep it going, but eventually the bill will come due. July...August...September, the point is the game is up.

Thank you, Kosmic. Yes, and the creator of this scheme was none other than Goodl Ol' Alan Greenspan. History will demonstrate how stupid his policies were. Economic expansion at the expense of the dollar? How freakin' nearsighted.

Originally posted by jfj123
And don't forget something awful was supposed to happen on 08-08-08 and guess what? NOTHING....

Something awful DID happen on 8-8-8 - the Russia/Georgia incident. The beginning of a new cold (hot?) war with Russia

this thread is the nearest thing i can find that has something to do with this 'observation'

today is Wed, 8 Oct '08, the Asian & European markets are going parabolic...and Gold is up $30 to around $915.


i see a disconnect-> spot Gold is up past $900+ but every major Gold mining producer stock is off 20-30%.

i see a panicky rush to buy existing, physical gold.
And ETFs are the easiest way to have a (singular removed) tangible grasp on physical gold, and a panicky portion of investors are bidding high prices on the illusion of wealth preservation in buying these Gold ETFs.


i say, be careful if your considering buying one of these (now expensive) Gold ETFs... because-> the purchaser only has the veracity of the Gold ETF that there is the required physical bullion to back up the price of the ETF.
[keep in mind that the ratings agencies gave all the toxic RMBS the 'AAA' rating when the trash was only worth a 'd-', junk bond rating]
If i recall correctly, the two major Gold ETFs out there, have physical bullion stored in the MS (morgan stanley) GS (goldman sachs) gold vaults.

now if the credit markets are seized up because banks won't lend to each other....
then i have to wonder out loud, do other banks & investment houses know that all the supposed Gold bullion in the vaults that underlie the value of the ETFs... is in reality just 'promises' of future Gold delivery ?

without planting false fact in your mind, i'm just pointing out the 'what if' situation.
I'm sticking with the gold mining stocks i still own, as having the truer real value f today's Gold, as opposed to the Gold ETF documents


hope this helps, thanks

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the article is more than the distant, and mostly academic... Default by the USA Treasury in some future..


of more immediate and practical concern to me is the current state of Gold mining stocks. (which this article with P. Schiff adresses in the top 2 paragraphs)

the current PE ratio of miners is around 10 insteads of the 30-40 that was considered normal when gold was a lot less than $1500. plus oz.
Mr Schiff points out that the extremely low PE indicates a wall-of-worry is now stronger than greed & profits among the gold mining stocks traders.



What might be the cause of this worry?
could it be a nationalization of the gold miners all around the globe?
could it just be that it is expected that bullion will plummet back to $800-$1000


i think neither is the whisper reason...
it may be that gold mining stocks are so cheap because the next stage of 'costs' has not been built into the price--- i would expect that stringent security and minute detailed production records will be instituted because Gold & PM will be designated a Strategic Resource and will be coveted to a greater degree than oil from the well head is now...

with these new expenses of very secure storage and transport added to the present mining infrastructure
...there will be a major refiguring of the value of these prominent miners and the stocks.

Expect big name like Barrack Gold to not trade at the current 10X forward earnings but nearer to 40X forward earnings as the new balancing point of stock value


unless the miners are required to divert all their gold production to the Fed and Treasury vaults, then the gold miners stocks will be almost worthless

just a heads up from my POV.... to any of youse interested, thanks

reply to post by St Udio


Are the P/E really that low for gold mining stocks? Barrick is at 12.6

Gold production hasn't increased much, but the price of Gold has. Doesn't seem like that big of a disconnect to me, especially since the price is volatile. Since the price has been dropping, as to has the stock's value (though it hasn't dropped much). There is also market volatility to deal with, the markets have been shaky.

www.zerohedge.com...
Belgium has admitted it's given a loan of 41% of it's Gold reserves for .3% interest

This is a reminder that the paper gold market is significantly larger than the physical market. Just like a run on a bank in a fractional banking system, GREED & fear suspects it will be very hard to settle all the paper claims to gold physically in a real scramble for the metal. This is why in a parabolic spike physical gold is likely to trade at a significant premium to paper claims. On this point GREED & fear should make it clear that the 25% of the global portfolio for a US dollar-denominated pension fund allocated to gold bullion is in physical gold.

If it's true that Reserve banks around the World are lending out their Gold stores at increasing rates, it could be a sign that Gold prices will rise, not fall, in the opposite direction of the current trend. Or, sensing the danger, it could lead to the Gold prices collapsing as people flee metals and try to liquidate assets.

Central banks have been actively leasing Gold since the early 1990s. GATA affiliate Frank Veneroso was one of the first analysts to draw attention to this practice. If you search Veneroso Gold Leasing you'll find a virtual compendium on the topic dating back to 2001. CB sales, leases, and lease related producer forward hedging programs, are three of the main pillars supporting GATA's manipulation thesis.

Ostensibly, central banks lease Gold to cover the costs of storing and insuring their bullion reserves.

Bullion banks lease Gold from central banks at low rates of interest, for example, say 1%. They dump the Gold on the spot market in London, then invest proceeds from the sale in secure financial assets primarily sovereign bonds, for instance a 10yr bond with a 4% coupon. Bullion banks would have a positive spread on this transaction of 3%. They're now positioned long bonds, and net short Gold. When the lease expires the position needs to be unwound...the Gold repurchased on the open market and returned to the central bank. This exposes the BBs to potential losses should the price Gold rise precipitously during the contract period. They hedge this risk by simultaneously going long in the futures market. After mediation costs the BBs can net a cool, risk free 2% from this transaction.

The initial "dump" on the spot market can depress the POG until the additional inventory works it's way through the market chain. But when leases are unwound, they have the opposite effect. We recently witnessed this effect after mining giants Barrick and AngloGold announced the unwinding of their hedgebooks in 2009.

*Producer forward hedging is a financial transaction involving central bank Gold leases, where bullion banks act as intermediaries between the central banks and major Gold producers.

A Detailed Look at Gold Hedging.

Considering Belgium's tenuous debt situation and spiraling interest rates at the end of 2010 when the leases were made, maybe someone was offered cheap rates on Gold leases...in exchange for their commitment to ply the proceeds into the Belgium benchmark 10yr bond. After spiking to the precipice from September through December, look how rates flattened-out into January 2011.

Debt Crisis Spreading to the Heart of Europe as Belgium Bond Yields Surge

Sweetheart deal ?

Jus speculatin'.

GL

reply to post by OBE1

Critics of metal leasing say, because gold and silver leasing artificially increases the supply of the precious metals for industrial, commercial, and investment uses, thus holding down the prices of the commodities. Central banks and the bullion banks are insensitive to the price of gold or silver—profits are locked in and guaranteed—so this distorts the real supply and demand relationship between buyers and sellers.

www.silvermonthly.com...

A second type of gold swap involves only one central bank’s gold reserves, which are lent for currency to another central bank. The real problem with this tactic is the banks consider these swaps to be “collateralized loans,” and thus they don’t appear on their balance sheets. No one knows for sure just how much gold and silver the Fed and other central banks have lent to each other this way.

My point over all (in this thread and the thread where you insulted me) is that Central Banks purposefully manipulate the markets through various leasing, swapping and any other shenanigans will result in the markets moving the way they want them to. The run up in metals has mostly been due to the fast depreciation of Western currencies, especially the USD with the Feds QE1 and 2 it would make sense before the next round of inflation is pushed by the Fed that they would work to depreciate the commodities market and strengthen the Dollar in the short term. Since most Reserves leases in Gold are done in 1m-3m intervals they can work to saturate the market with as much metal as they need to bring down prices.

It appears to me at least that in the past 9 months the prices of Gold and Silver have inflated so dramatically because of pure speculation, fear and the depreciation of the Dollar. By strengthening the Dollar and easing supply fears the prices will continue to drop. Hence my position Silver would never reach $150/oz by the end of the year...

Assuming anyways something catastrophic didn't happen.

Originally posted by Rockpuck
My point over all (in this thread and the thread where you insulted me) is that Central Banks purposefully manipulate the markets through various leasing, swapping and any other shenanigans will result in the markets moving the way they want them to.

From the other thread:

Originally posted by Rockpuck
Why was the price of silver so high in 1980?

In 1980 the price of silver was escalated due to the US Reserve issuing $2 billion ounces of silver as a loan (theoretically to banks or other nations)....

At the time the Government exhausted it's own reserves of metals by infusing them into the markets as loans this in effect actually doubled the existence of silver but meant only 50% of the silver in the market was "real". When people began buying Silver and never got a delivery there was a sudden panic resulting in a sort of "run on the bank" for all metals, including silver and gold.

Actually RP, this is the specific "point", or claim that I was responding to. Ultimately demonstrated as impossible. I'm pretty sure you understand that.

I wouldn't have contributed to GATA for the past 9 years if I believed that official sector price manipulation was nothing more than a Gold Bug pipe dream. And what has this management plan yielded since 2001 ? Gold from $265 to $1500 an ounce. Manipulation ? Bring it!

GL

July? September? Who knows, but things are going to have to change, and as long as most people continue to cling to denial of our economic realitites.

The problem isn't gold metal, it is liquid gold, black gold, OIL, and the reality that our planet is running out of easy to get supplies. You can't even find decent information on oil production anymore.

This is the best link I could find, and ever this link doesn't give out the real numbers, which is sweet crude production. Sure, production of lower grade crudes has increased, but they produce less octane, and are more expensive to process. Most likely a complete picture will show that Saudi sweet crude production is in serious decline, and the same situation exists for all of the OPEC countries.

www.zacks.com...

Well, it turns out that the economics textbooks are not the only ones that apply; the geology textbooks are at least as important -- if not more so. The simple fact is that the world is running out of cheap, easily accessible oil. That is why oil companies have been going to the ends of the earth to find more of it. It is the reason why they have to drill in more than a mile of water or locate in more and more politically unstable parts of the world.

Oil is, after all, a non-renewable resource. Once you have drained the oil from a nice, safe, easily accessible place like West Texas, it is gone, and gone for good. Oil consumption and production fell in 2009 relative to 2008 in response to the worldwide economic downturn, and the increases in 2010 are due to the economic rebound around the world.

I think the last comment about demand is a smoke screen. Oil production increased in the short term in 2010, because the industry worked harder to wring the last barrels out of our planets declining reserves.

The giant corporate entities that have gained far too much power over the world's economy, will hide the reality of the situation as long as possible, because the ICs know, that as the worlds oil supplies dry up, so does their dominion over the world's economy. It will be too expensive to ship goods half way around the planet to take advantage of third world slave labor.

Here is the only real answer to our economic situation.

www.salon.com...

Energy efficiency: Given the lack of an obvious winner among competing transitional or alternative energy sources, one crucial approach to energy consumption in 2041 will surely be efficiency at levels unimaginable today: the ability to achieve maximum economic output for minimum energy input. The lead players three decades from now may be the countries and corporations that have mastered the art of producing the most with the least. Innovations in transportation, building and product design, heating and cooling, and production techniques will all play a role in creating an energy-efficient world.

We can not continue to drive 2 ton plus, disposable behemoths for a single person to commute to work daily.

We should be driving lightweight vehicles powered by electric motors, that could last a lifetime, that use a minuscule fraction of the energy that these giant disposable machines use.

The largest part of the energy being used, is to turn the wheels of commerce, producing disposable products with planned obsolescence. With out the disposable products turning the wheels of commerce, the bankers wouldn't be able to control the economy. As long as we have to keep on buying, the banks can keep scooping up larger chunks of our earnings, while providing no actual contribution to the economy.

This is our chance to escape from the rat race.

Just thought I would jump in (in case some of the newer posters weren't aware) that this thread was written in 08', referring to July 08' . Hate when that happens.

reply to post by Wookiep


I would say that it is just as applicable today. We are pretty much in the same boat now as then, with a few small details changed.

Odds are high that we will see a repeat of 2008.

reply to post by poet1b


If the biggest issue facing our economy is that we don't "produce" enough to create a sizable tax base for our expenditures, resulting in massive deficits.. getting rid of oil would be a death blow!

Oil taxes and permits are the second highest source of income for the Federal Gov after the income tax.

The States alone would start defaulting if their gas taxes were taken away.

reply to post by Rockpuck

If the biggest issue facing our economy is that we don't "produce" enough to create a sizable tax base for our expenditures, resulting in massive deficits.

We have the highest GDP in the world

How is it that we don't produce enough, when we produce more than any other nation, and have the highest output per capita?

The problem is that we don't make corporations pay their fair share of the taxes. Before the huge tax cuts for the super rich, we had high enough tax revenues.