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XMFSinchiruna (27.35)

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October 06, 2009 – Comments (54)

... any questions?

$1,050, then $1,250, then $1,650, and then $2,000, with wild and increasing volatility throughout the progression (as well as the inevitable calls by naysayers each step along the way declaring an end to the multi-year run despite mounting evidence to the contrary).

Please be clear ... I take zero pleasure in today's confirmation of my broader macroeconomic outlook. This is a sad day for my country. I mourn the fate of my nation's currency, and the looming hardships of those that will be impacted thereby.

No pleasure ... no celebration of any kind ... just a sincere hope that Fools will consider the ramifications of today's events very very carefully and prepare themselves accordingly.

Fool on! 

54 Comments – Post Your Own

#1) On October 06, 2009 at 1:39 PM, awallejr (85.54) wrote:

What ramifications?  What we are seeing is the world starting to grow up, and about time.  That, however, will put pressure on natural resources, but it isn't doomsday for the US.  You and I agree on what started our economic crisis (Glass-Steagall Act change).  And we are absorbing the excesses of that crisis.  This is a function of time as I have repeatedly blogged. 

Unemployment, however, is going to be interesting down the road.  With baby boomers retiring you will actually see jobs opening.  And those that can't afford to retire will work at least part time to supplement income.  That could be a good thing since it is cheaper for an employer to hire 2 part time workers than 1 full-time one, and the employer gets the benefit of that person's greater experience.

The US still produces, in food, in technology, in specialized equipment (military and scientific), health care, natural resources, etc.  So we don't have the sweatshops like we used to (they are in China and India).

Even Roubini has said there is now light at the end of the tunnel.  Doesn't mean there isn't risk, but there is also promise.  Stock market is seeing the promise right now.  If the future doesn't deliver then the market will act accordingly, as it always does.

So what if gold goes up.  That makes those holding it happy.  But whether it is up or down really doesn't impact the day to day affairs of nearly everyone.  Even a weak dollar isn't the end of civilization as we know it and is probably good (except for those in Tbills or cash I suppose). The Countries crying the most are the ones holding the Tbills (China and Russia). 

I don't see this as a sad day for my country, just another day in a slow, and hopefully steady, recovery.

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#2) On October 06, 2009 at 1:45 PM, jesusfreakinco (28.78) wrote:

Sinchy,

I echo your comments and concerns.  Gold is a lifeline for many of us to protect our wealth and perhaps the ability to feed our family.

Most Fools are clueless as to the long-term implications of the USD no longer being the reserve country of the world. 

My blog from last night for those that haven't heard the shot heard round the world as told by The Independent.

JFC

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#3) On October 06, 2009 at 1:49 PM, outoffocus (22.75) wrote:

I tell you one thing. I'm eating a nice healthy dose of inflation crow right now.  I greenthumbed SLW at $7.51 and its gone up 80+% since then.  Not that I'm not invested in precious metals, but SLW didnt fit my (highly conservative) investment criteria. The good news is I'm still positioned to benefit from (more likely being protected from) dollar weakness.  But I'm kinda at a crossroads right now as far as where I should put the rest of my money.  Sit in cash (because market is overvalued), purchase some dividend stocks, or get more agressive and invest in Brasil or something.

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#4) On October 06, 2009 at 1:55 PM, GeneralDemon (< 20) wrote:

How is it a sad day? Doesn't it mean most of us with debt (including the collective U.S.) will be paying it back with cheaper dollars?

When the debt burden is lessened by dollar devaluation - it makes for an easier recovery for the country - that's my 2 cents (in gold).

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#5) On October 06, 2009 at 1:56 PM, catoismymotor (51.71) wrote:

OOF, if you don't find ETFs off putting I would suggest EWZ or EEB. Both should return a healthy amount each year for the next decade and they have a yield. Just my two cents.

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#6) On October 06, 2009 at 1:56 PM, XMFSinchiruna (27.35) wrote:

awallejr

I don't see this as a sad day for my country, just another day in a slow, and hopefully steady, recovery.

If I have not succeeded in influencing your expectations by now, I suspect I never will. The word recovery has no meaning within that which is presently underfoot. Steady, no less? I fear you are in for a grave disappointment.

I don't know whether to feel vindicated today or give up trying to help people to see what's happening before their eyes.

And we are absorbing the excesses of that crisis.

Tell me, precisely how does a planet with a $60 trillion GDP absorb the deleveraging of a $600+ trillion derivatives market?

It does so at the sacrifice of the paper currencies in its wake, with the USD, Pound, and Euro front and center.

Gold is money, paper has become a sick and twisted joke.

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#7) On October 06, 2009 at 2:24 PM, cbwang888 (25.80) wrote:

As a working man in US and have to raise my family, my paycheck is in USD. No way I would have to see USD plunge. I moved all my 401K in foreign stocks. I'm buying gold miners in my portfolio and IRAs.

I own a house with 70% principle paid and I would rather see housing price going down with higher interest rate and stronger USD. 

US economy is sick and the government failed to cure the root cause (reckless debts and spending). More debts will take down the future generation. Weaken USD is equal to weaker US influence in the world.

Buying gold is the only way to prepare the worst scenario --- US T-bond / USD go bust.

 

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#8) On October 06, 2009 at 2:25 PM, catoismymotor (51.71) wrote:

"I don't know whether to feel vindicated today or give up trying to help people to see what's happening before their eyes."

Don't lose heart. You are a good guy doing his best to serve this investing community and himself with the best information he can gather. Some of us hear you and thank you for your efforts. Others simply don't or can't understand. I do appreciate your research and dessemination of the truth as you see it. You never come off as being heavy handed or browbeating as others do. You have always answered my questions in a clear way any newbie could understand. Being something of a newbie I appreciate that. Today you sound a bit down because you see some evidence that the economy is about to encounter some dark days. That is understandable. But take comfort that some of us have added precious metals to our portfolio because of your guidance. I am up 49% on SLW since it became clear to me that it was the right way to go. And much of my decision was reached because of your blogs which prompted me to execute DD on the matter. Thank you, Chris.

Cato

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#9) On October 06, 2009 at 2:26 PM, XMFSinchiruna (27.35) wrote:

catoismymotor

Thanks for the pep talk ... I needed that. :)

Every once in a while I feel like I'm just banging my fingers against a keyboard with few tangible results.

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#10) On October 06, 2009 at 2:40 PM, booyahh (< 20) wrote:

The attachment to a strong dollar is mostly emotional.

A weaker currency is an advantage in our global economy. That is exactly how China has managed to become such a large exporter. China has artificially kept its currency weak by printing yuan.

I never saw anybody predicitng China's demise all these years as it blatantl pegged its currency by printing yuan.

As the dollar weakens, our exports will become affordable to the rest of the world again. This will allow us to manufacture products that others can afford, and this will also make outsourcing more expensive.

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#11) On October 06, 2009 at 2:58 PM, Bays (30.13) wrote:

Sinchi,

When you going to compile all your latest blogs for the MF in a blog on CAPS?

I like those.

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#12) On October 06, 2009 at 3:00 PM, XMFSinchiruna (27.35) wrote:

outoffocus

Just curious, under what sorts of investment criteria was SLW deemed insufficiently conservative? :) Did you realy dive into DD on the stock?

It's the closest thing to the perfect equity I've found, and I've crawled through every nook and cranny of the company over the course of the past 5 years.

If someone can find me a more conservative bet (considering that costs are fixed in perpetuity while the product remains in a secular bull market) within the universe of equities, I'm all ears.

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#13) On October 06, 2009 at 3:01 PM, XMFSinchiruna (27.35) wrote:

Bays

Later today  :)  I can't turn down a request like that.

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#14) On October 06, 2009 at 3:03 PM, XMFSinchiruna (27.35) wrote:

booyahh

You have fallen prey, dear Fool, to deceptive propaganda and spin. The historical record is crystal clear.

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#15) On October 06, 2009 at 3:12 PM, leohaas (31.85) wrote:

What event took place today? Gold up 2% to an all-time high? Is that all? Or did I miss something? Don't all assets set all-time highs on a regular basis?

Why is that sad for this nation? And what if gold continues going up to $2000 and beyond? Is that really so bad for the US?

Disclosure: long calls on a slew of gold mining companies. So this is not really a sad day for me ;)

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#16) On October 06, 2009 at 3:13 PM, outoffocus (22.75) wrote:

Well, for my IRA I generally look for P/E <10, P/B <=1, cash rich, dividend payers.  Combine that with a lack of expertise in mining I shyed away from it.  Of course it was obvious to you, but because I have limited funds, if it doesnt fit my criteria I leave it alone. 

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#17) On October 06, 2009 at 3:18 PM, jesusfreakinco (28.78) wrote:

Sinchy,

You are one of only a few decent substantive bloggers on CAPS (at least that I listen to).  Chin up man!  Our day is here (at least our day our hedge is to pay off).

Last night after I saw the Independent article, I wrote the strongest email to friends and family.  There is so much press in the past few weeks anti-dollar that I fear we are not far from a panic reaction to the USD.  I hope it is orderly, but fear eventually it will become disorderly - hopefully later rather than sooner.

JFC

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#18) On October 06, 2009 at 3:26 PM, cbwang888 (25.80) wrote:

#15:  leohass

 

USD lost is value against almost all currencies today (except BGP).

It is not a sad thing for self-serving wall street bankers, overleveraged firms and investors who went all in for stocks and commodities. It is not helping individuals with heavy debts because there will still be no job for them

For majority of working US citizens or unemployeed ones, it means that inflation is coming soon and don't count on Uncle Sam to save them because our uncle himself is in big trouble.

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#19) On October 06, 2009 at 3:26 PM, Bays (30.13) wrote:

Sinchi,

Thanks man!  I went back to your last one last night and was reading up on some of your older articles.  A lot of the stuff you preached back then seems to be panning out. 

Keep it coming...  

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#20) On October 06, 2009 at 3:28 PM, XMFSinchiruna (27.35) wrote:

Grab This Gold Bull by the Horns

http://www.fool.com/investing/general/2009/10/06/grab-this-gold-bull-by-the-horns.aspx

 

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#21) On October 06, 2009 at 3:41 PM, XMFSinchiruna (27.35) wrote:

leohaas

Aside from the obvious ramifications if the Independent's reporting proves accurate, there was also the small matter of Australia's unexpected rate hike.

http://online.wsj.com/article/SB125482726538767271.html?ru=yahoo&mod=yahoo_hs

Perhaps our politicians WERE telling the truth about pursuing a strong dollar policy ... they just neglected to specify which dollar.

:)

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#22) On October 06, 2009 at 3:49 PM, binve (< 20) wrote:

Sinch, You know I am with you man. And yes, it sometimes feels like you are going insane when you have to make the same argument over and over. (Believe me I know) :). But I appreciate your blog, always have and always will. And I know that there are *many* people in this camp. Thank you my man.

Gold is about value, gold is not about price. We know it is manipulated, we know that it is the enemy of central banks. We have tons of proof that you have provided. But that is all irrelevant.

Because gold is real money in a sea of fake paper. And when all of the funny money gets exposed for what it is (claims on debt with no intention of every being repaid, and only ever able to provide "value" through depreciation). All of these economic shenanigans are increasing the likelihood, if not guaranteeing, a currency crisis in the US Dollar. When will this happen? Who knows. Black swan events are by their definition unpredictable.

So does gold go up to 1500 from here? Maybe
Does it go up to 1100 then down to 800? Maybe
Does it go straight down to 600? Maybe.

If it does any of these things .... ** I DO NOT CARE!!! ***

I am an investor in gold. Short term all is noise. But gold is in a huge bull market because the world runs on paper, and is in control by politicians who will always choose the temporary fix at the expense of long term sound economic decisions. The is why the Dollar is going lower (and like Sinch, I take no pleasure in this). But this is the reality of the situation, and I recognize that.

So I will not time the purchase of real money with fake money. I invest in gold and happily sit through all the whipsaws up and down. And if we are fortunate to get a pullback to $800 or less, *I will be ecstatic!* Because I will get a more favorable exchange rate on real money with fake money. 

Sinch, thank you again for all your blogs and the effort you put into them. I truly appreciate them.

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#23) On October 06, 2009 at 4:08 PM, XMFSinchiruna (27.35) wrote:

Well, one certainly can't remain demoralized for long with uberFools like you guys in my corner. binve, thank you so much for the kind words. If I've helped even just a small handfull of people to find perspective on the challenges ahead and prepare accordingly, then the 18-hour days of incessant research, sitting here in front of my computer screen to the detriment of my poor eyeballs, will have been time well spent.

If I may concede just one guilty pleasure from today's breakout in gold, it came just moments ago ... when I encountered this post. If this provides a timely wake-up call for those trying to divine gold and silver's trajectories from technical analysis alone, then the missed opportunities of any who acted on the basis of the above post will have likewise served their greater purpose. No Schadenfreude against GV for his ill-timed call ... just a hope that people will now take future near-term predictions that ignore fundamental developments with a bullion-sized grain of salt.

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#24) On October 06, 2009 at 4:12 PM, leohaas (31.85) wrote:

All of you:

Send you fake money to leohaas!

Listen, I agree that long-term the case for gold is compelling. I also agree the value of the dollar will go down. However, I disagree that that spells the end of the world as we know it. I don't see a collapse. But maybe I am just blind.

PS. Did you build that bunker yet? And is it stocked with canned food, water, gold, silver, guns, and plenty of ammo?

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#25) On October 06, 2009 at 4:15 PM, StopLaughing (< 20) wrote:

Actually it is not a sad day. The gold price is a shot of reality. I suspect that a lot of Moderate Dems and Voters have noticed a trend between the $ and gold.

If the Health Care bill gets dismembered or totally defeated and if cap and trade are defeated the $ will flutter down to its support/low under Bush and then make a stand.

If the $ breaks down thru the support then the Dems will get drop kicked as they are making the situation worse not better.  Unemployment will stay in the 10% range for more than a year and maybe for 2 years.

Raising the energy costs will kill any recovery and also anger the voters. The Dems had better get a grip in a hurry or they will get replaced and richly deserve it.

The new Congress will stop some of the idiotic behavior and Obama will get replaced with someone who will create real jobs (not just talk about green jobs that will actually go to China) and who will straighten out the economy.

We suffered thru Carter. We will survive the current Clueless. The US can't move forward without crisis but will eventually deal with the problems and emerge stronger.

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#26) On October 06, 2009 at 4:27 PM, binve (< 20) wrote:

Well, one certainly can't remain demoralized for long with uberFools like you guys in my corner. binve, thank you so much for the kind words

LOL! Thanks man :). And absolutely, I meant every word.

No Schadenfreude against GV for his ill-timed call .


I have to differ a bit with you here though. A few thoughts on this post by GoodVibe

1. GV is only making a call based on the TA as he sees it. He is trying to be fair and impartial. I know him and he really does share his thoughts and analysis freely. The spirit of the post is in this vein.
2. GV is a trader. And there are many things that I am also a trader in (Gold is NOT one of them). So I can understand where he sees the pattern as bearish for the short/medium term he will trade that patter. Obviously, I see the pattern and count differently, but from a trading perspective, he is making a trading call. And I can understand his perspective here.

3. However, I have serious issues with him personally calling you out in his post. I think that was uncharacteristic of him and I highly disagree with it.

So while there are many things that I do trade. Gold is not one of them. Gold is by far my biggest holding in my overall portfolio, and much larger than anything I use for trading. I am a gold investor, not a gold trader. I know you know this Sinch, but this is for the benefit of everybody else.

This is why I say that I literally *do not care* what the short term price of gold is, nor do I care about the short term changes. Gold is about value, gold is not about price. It is real money and a safe haven against bad economic decisions and shenanigans. This is why I will never write a blog post taking about gold as a trade, only as an investment.

Take care my man, and again, Thank you for everything

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#27) On October 06, 2009 at 4:38 PM, XMFSinchiruna (27.35) wrote:

leohaas

I think you're reading into what was said above. I didn't hear anyone talking about TEOTWAWKI.

I have no expectations of societal collapse nor chaos, though I also wouldn't begrudge anyone's desire to hedge against such a scenario with some basic preps. Nothing is lost by being prepared.

For me personally, the source of sadness upon witnessing confirmation of my long-held misgivings regarding the course of the USD stems around the corrollary increase in certainty that we face a powerfully stagflationary environment ... one of the most unattractive scenarios I can visualize short of the SHTF scenarios that people routinely presume gold investors consider inevitable.

There are billions of things about the future that I would not venture to forecast. I am careful to assemble a compelling case based upon objective analysis of available evidence before offering forecasts of any kind. And all of my readers know how desperately I HOPE that I am wrong about this one pillar of my macroeconomic outlook, but I can not help the conclusions I have drawn after these years of full-time scouring of available information.

Stagflation, represented by currency-driven devaluation of the USD concomitantly with horrendously weak business conditions domestically as fueled through a negative feedback loop of ever-increasing spending and diminishing revenue, has just leapt out in front of all the other potential scenarios floated by endless scores of pundits over the airwaves.

I believe we are in the early stages of a stagflationary depression that will alter the global balance of power and the course of U.S. history in profound and lasting ways. Although I am fully invested in accordance with this view, I hope beyond all hopes that I am completely mistaken.

 

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#28) On October 06, 2009 at 4:58 PM, RootnToot (29.82) wrote:

Indeed a sad day when the USD not being the 'king of the mountain' regarding currency is even mentioned. Rec 25 from me and thanks for all you do.

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#29) On October 06, 2009 at 5:30 PM, maxhoffa (< 20) wrote:

sinch: i cannot tell you how many times i've searched this site using your name and the ticker symbol of whatever miner i'm interested in researching . . . figuring you've *probably* already done my work for me . . . but that number would be in the hundreds i'm guessing

seriously, you're step #1 of my miner research most times and because of your blog i own chunks of NG, SLW, and JAG

now if you've just tell me what you think the odds are of ABX trying to buy out NG again are i'd be a happy guy.

don't get discouraged

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#30) On October 06, 2009 at 6:02 PM, XMFSinchiruna (27.35) wrote:

maxhoffa

I'd like to be more encouraging about NG, as it used to be one of my absolute favorite pre-production prospects, but honestly we've seen so little movement there over the past couple of years that I now consider it suitable only for small, speculative positions. 

It is, of course, a stunning takeover target, but there are plenty of those. If you're seeking companies on the basis of takeover speculation, which I don't necessarily condone either as a principle reason for the selection, you want a company that's approached from a position of strength. NG at this stage is really a pawn in whatever ABX and TCK decide will be its fate.

I still own a chunk from years ago that I'm deeply in the red with, but it wouldn't be found on my list of top 20 mining stocks I'd like to add positions in during any pullback, for example.

Do I see a likelihood that the NGs of the world (few possess such a scale of untapped resources) will be consolidated into the folds of producers in rapid succession during the coming phases of this bull market? Absolutely! Do I think NG will garner a price above what I initially paid for it ... unfortunately, probably not. If I end up owning ABX shares with a value below my cost basis, I'll be most displeased. :)

NG could certainly surge to the upside on the basis of a decision to fast-track either major project, but my expectations for NG are mellow compared to some of the other gems floating around out there. 

Perhaps if I were not down 44% on my holding, I could offer a rosier outlook. :)  There has just been so little momentum in this company in terms of moving demonstrably closer to production.

I hope this rambling diatribe is helpful, even if its not the glowing recommendation you may have wished for.

Whatever you decide, good luck!!

 

 

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#31) On October 06, 2009 at 6:20 PM, XMFSinchiruna (27.35) wrote:

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#32) On October 06, 2009 at 6:27 PM, blahblah000 (< 20) wrote:

TMFSinchiruna, I completely agree with your assessment of gold and the dollar. What's your opinion on silver, however? I am very interested in Alexco Resource Company (Ticker: AXU) as a play on silver, and I wanted to know what you thought of the company.

Thanks in advance.

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#33) On October 06, 2009 at 7:29 PM, XMFSinchiruna (27.35) wrote:

kzrup

Silver Wheaton is very bullish on Alexco, featuring the company prominently within a corporate presentation earlier this year. 

I own a small chunk of Alexco myself, but have double exposure through my large holding in SLW.

I love that their secondary competency of conducting mine remediation and reclamation leaves them in a perfect position to pursue mining of resources at operations that were often shut down within a completely different pre-bull-market price environment.

Keno Hill is a monster, Bellekeno has been permitted, and I believe Alexco will soar as these projects are moved towards production using the unique cash flow source from their environmental segment.

A very compelling business model built around some amazing properties.

 

 

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#34) On October 06, 2009 at 8:06 PM, awallejr (85.54) wrote:

TMFSinchiruna

Sinch I will absolutely defer to your expertise on mining stocks.  It is a sector I don't really follow.  I will never bash anyone for wanting to even hold gold or silver as an asset.  I devote a part of my assets to them as well as a diversification hedge.  But as for this comment:

"Tell me, precisely how does a planet with a $60 trillion GDP absorb the deleveraging of a $600+ trillion derivatives market? It does so at the sacrifice of the paper currencies in its wake, with the USD, Pound, and Euro front and center. Gold is money, paper has become a sick and twisted joke."

You really think gold has any relevance here?   Gold is no different to literally everyone on the entire planet than a Rembrandt painting.  While both are asset classes that can appreciate, virtually few people have it (aside from some form of jewelry regarding gold).  When currency was linked to gold it had relevance.  Not now. 

Today was a good day, my stocks finished up nicely.  Tomorrow, who knows. 

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#35) On October 06, 2009 at 8:09 PM, binve (< 20) wrote:

Sinch, Hey man, I just put up a post you might be interested in Some Gold Charts and Thoughts.

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#36) On October 06, 2009 at 8:13 PM, awallejr (85.54) wrote:

"Stagflation, represented by currency-driven devaluation of the USD concomitantly with horrendously weak business conditions domestically as fueled through a negative feedback loop of ever-increasing spending and diminishing revenue, has just leapt out in front of all the other potential scenarios floated by endless scores of pundits over the airwaves."

Now had you said this in your initial blog I would have responded differently.  I am already on record here in another thread having said stagflation is one of the main concerns, potentially caused  more from increased demand by emerging markets on natural resources  than dollar devaluation. 

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#37) On October 06, 2009 at 8:28 PM, XMFSinchiruna (27.35) wrote:

awallejr

Alan Greenspan last month:

"What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment."

The Independent, today:

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves. 

TMFSinchiruna, last month:

"China is actively encouraging its 1.3 billion citizens to invest in precious metals. I have viewed excerpts from state television touting the extraordinary relative value of silver to gold given the large deviation from the historical ratio between prices of the two metals. Because gold and silver are surprisingly small physical markets, even a minor uptick in investment demand could fuel sizeable price increases."

"Hong Kong is repatriating its physical gold reserves from London to high-security vaults at home, and it is inviting the region's central banks to store their bullion there. Announced just this week, the move deals a significant blow to London's historical role as a global hub in the precious metals market, and it raises the specter of a potential price-settlement hub in Asia to rival the New York and London daily spot-price fixes. The Hong Kong Monetary Authority is also targeting a new gold bullion ETF using the new vault as a repository, which would remove yet more physical supply from the market. The SPDR Gold Shares (NYSE: GLD) reports holding 1,078 tonnes of gold, slightly more than China's last-reported gold reserves."

TMFSinchiruna in June:

As confidence in the world's leading fiat currencies erodes, gold's immutable role as the universally recognized alternative to paper money is plain for all to see. Whether it's in the tripling of gold prices since the dollar began to tumble in 2002, China's timely expansion of its gold currency reserves to 33.9 million troy ounces, or the introduction of bullion ETFs like SPDR Gold Shares (NYSE: GLD) and gold futures exchanges from Dubai to Shanghai, in practice, gold's relevance as a currency cannot be cancelled by a short-lived preference for paper.

Jeffrey Christian, CPM Group, last month:

"You will see a net buying of 6 (million) to 10 million ounces per year by central banks, and that is an extremely conservative projection,"

If you know something about gold that the world's central banks need to know, I suggest you tell them now before they make a huge mistake. :)

 

"Gold still represents the ultimate form of payment in the world."

Alan Greenspan - Testimony before US House Banking Committee, May 1999

""In the absence of the gold standard, there is no way to protect
savings from confiscation through inflation. ... This is the shabby
secret of the welfare statists' tirades against gold. Deficit spending
is simply a scheme for the confiscation of wealth. Gold stands in the
way of this insidious process. It stands as a protector of property
rights. If one grasps this, one has no difficulty in understanding the
statists' antagonism toward the gold standard."

Alan Greenspan

from the book "Capitalism, the Unknown Ideal" by Ayn Rand with additional articles by Alan Greenspan - 1967

“You have to choose [as a voter] between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold.”

George Bernard Shaw

“Paper money eventually returns to its intrinsic value ---- zero.”

Voltaire (1694-1778)

 

 

 

 

 

 

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#38) On October 06, 2009 at 8:36 PM, XMFSinchiruna (27.35) wrote:

awallejr

Right chicken, wrong egg. :)

I'm not saying demand for natural resources won't play a substantial role, but a massive portion of looming demand for hard assets will emerge DIRECTLY from the crisis of confidence in the USD, as clearly evidenced by China's ongoing diversification of dollar holdings into hard assets through international loans, domestic loans for corporate investment overseas, or directly through investments by SOEs.

Fool on.

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#39) On October 06, 2009 at 8:40 PM, awallejr (85.54) wrote:

TMFSinchiruna

"Alan Greenspan - Testimony before US House Banking Committee, May 1999

""In the absence of the gold standard,. . ."

And that says it all.  It isn't the world standard.  China can huff and puff all they want, but that is because they are becoming rapacious natural resource consumers now.  But their economy is still only 1/4th the size of ours, which economy was built off the American dollar.

I won't dispute concerns about "over printing."  But right now we really don't have much choice.  We simply have to monetize the debt, despite Bernanke saying otherwise.  Or we could hit a world "reset" button and tell everyone let the race begin.

I take with a grain of salt anything Russia might say, for example.  And if Russia and China want to get together and trade with something else, go ahead.

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#40) On October 06, 2009 at 8:54 PM, XMFSinchiruna (27.35) wrote:

awallejr

The lack of a gold standard is precisely how we arrived in this mess where paper is now a worthless failed experiment and gold is revealed, as Greenspan clearly stated in the other quote above, as holding "reign over the financial system as the ultimate source of payment".

The myth that gold was rendered into something other than money by the planetary experiment with free-floating fiat currencies has been incontrovertably busted. Floating of the paper proxies changed gold in no way, shape, or form ... only in its perception. That is what Greenspan means by "what is fascinating...". The central bankers mistakenly thought they had the power to change the nature of gold as a monetary instrument by replacing it with scrip, never truly comprehending that when scrip disintigrates into worthlessness in a crisis of confidence, the result is that nothing has changed at all. That reviled barbarous relic is the only recognized monetary instrument with no counterparty risk, no debt burdens attached to it, and no geopolitical risk. Show me a brand of scrip that can make that claim, and I'll say you have found money.

 

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#41) On October 06, 2009 at 9:07 PM, Bays (30.13) wrote:

Sinch....

Im guessing you also like agriculture....

I just bought Migao (MGO.TO)

Have you ever looked into them?  Chemicals for tobacoo, fruit, and vegtables in China!!

Seems to me they are selling at a discount compared to historical valuations.  

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#42) On October 06, 2009 at 9:24 PM, awallejr (85.54) wrote:

TMFSinchiruna

So the countries with the gold mines rule the world?

Gold as an asset to hold, yes. Gold as a currency, nah unless it was accessible to all under identical terms, which it simply cannot.

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#43) On October 06, 2009 at 9:40 PM, XMFSinchiruna (27.35) wrote:

awallejr

Whether you realize it or not, gold is now, and has always been the primary currency of the modern world. The history is clear, the present is confirmation for any remaining skeptics, and tomorrow will be too late. :)

The countries with the least exposure to derivatives, and with the highest proportion of gold in reserves to sovereign fiat debt will come out in a favorable position, regardless of where the mines are.

If/when protectionsm strikes the gold sector and no one permits exports, then alternate commodity-based pegs instruments could emerge, but by that time the value of gold would have skyrocketed to heights that will still render me right on the money - so to speak. Those are hypotheticals I prefer to leave to time to reveal, as no one can accurately guess how nations may work together to adapt to the fiat crisis, the potential for conflict, etc., etc.

Silver is the poor man's gold.

I can not debate forever ... I must also eat, sleep, and work. Until the next time ... :)

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#44) On October 06, 2009 at 11:04 PM, uclayoda87 (29.14) wrote:

Excellent post and comments.  The summer boredom appears to be over, now we are in the Fall.

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#45) On October 07, 2009 at 12:10 AM, blahblah000 (< 20) wrote:

TMFSinchiruna, I'm glad we have similar viewpoints on Alexco. It's my favorite junior silver play. Furthermore, I definitely agree with you that silver will outperform gold in the long run.

That said, what are you favorite junior gold plays (if you don't mind)? I only have room in my portfolio for one or two, so I figured I should ask someone who's pretty experienced with the sector. I would prefer to kill two birds with one stone (i.e. a miner with both gold and base metal exposure--a Northgate Minerals or Taseko Mines), but I'll keep an open mind.

 Thanks in advance.

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#46) On October 07, 2009 at 2:04 AM, awallejr (85.54) wrote:

TMFSinchiruna

Good discussion overall, but it is your thread so I will let have  the last word (not counting this ;p)

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#47) On October 07, 2009 at 3:14 AM, ATH001 (< 20) wrote:

Sinch, thanks for your research and your heads up. Thanks also for the heads up on SLW, its been a great investment for me, which I owe totally to you.

Do not be disheartened, I am a concerned investor, guess you could place me in the bear camp right now, but I read all the blogs by the bulls, and see if they challenge my position, they should do the same with your great research.

As to the fellow Fools on this site that believe that the weakening of the USD is good for the citizens of the USA, I think that is extremely short sighted. If that were the solution, all countries would just weaken their currencies and become super competitive. Can it be so easy? Def not.

Also, it robs all the holders of USD of value. If you are paid in USD, you are being robbed by the devaluation of the currency, even though you personally do not deserve to be robbed by your govt.

I live right next door to the best example in the world of currency devaluation, and even though the USD will never suffer as the Zimbabwe Dollar did, devaluation is not pretty.

Thanks again Sinch

Luis in Africa

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#48) On October 07, 2009 at 7:06 AM, XMFSinchiruna (27.35) wrote:

kzrup

I consider Taseko one of the most undervalued equity in my portfolio. What an unbelieveably miniscule market cap for a company that is producing low-cost copper in droves while sitting upon a fortune in gold that appears completely ignored by the market. Prosperity will be just that for Taseko holders, IMO.

Great Panther is breaking out in a big way, and enjoys a highly scalable production operation with significant and growing long-term reserves.

More when I have a moment. :)

I bought Fronteer Development Group for the gold, and consider the company's uranium exposure an interesting aside.

There are plenty of prospects in even smaller companies trading on the pink sheets (like Great Panther), but for now I've sworn off any additional exposure to the pink sheets. I have come to see pink sheets as instruments of the gold and silver manipulators, and investors' long-term holdings as ammunition in their naked-shorting arsenal.

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#49) On October 07, 2009 at 11:27 AM, JakilaTheHun (99.93) wrote:

Admittedly, I see no value in this blog.  Not that I haven't seen value in a lot of your blogs, Sinch, but this is nothing more than some overconfident predictions unbacked by any evidence or arguments.

The supply of gold on the market seems to be increasing at a rapid pace, especially compared with other commodities.  In fact, the decade-long momentum of gold is precisely the reason we are seeing so much gold supply coming on line now.  

Isn't it a possibility that maybe we could see excess supply driving down prices from here?  Fear was part of the reason prices were going upwards, but the level of fear has lessened significantly over the past six months.  

I don't necessarily feel like gold will fall dramatically, but I don't think the fundamentals support the outlandish predictions of multi-thousand dollar gold prices.  The only thing that will drive gold that high is extreme inflation and there are better instruments to buy to protect you from that, while giving you some upside (most notably REITs).  

I don't really like gold right now.  I liked it in Sep '08.  I liked it in Nov '08.  I turned more neutral after prices tipped $950 per ounce (I can't remember when). 

Now, I see myself as neutral to slightly-bearish on gold.  I'm just not seeing the impetus that will drive it significantly higher over the next year. Supply is high; demand could weaken.  The only thing that might drive it upwards is if we get driven back into a second leg of a worldwide recession, but I'm not wagering on that happening for at least another year or two at the earliest. 

 

One way or another, I believe there are much better commodities and commodity stocks to invest in right now.  Oil and gas service companies are still attractive.  REITs are still mostly attractive (if you find the right ones).  Palladium and platinum could still be attractive (I'm admittedly becoming more neutral on them, as well).  Cotton and some agriculture commodities still look attractive.  Gold may end up being alright, but I still think there are much better commodity-related investments out there.

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#50) On October 07, 2009 at 1:14 PM, silverminer (30.99) wrote:

JakilaTheHun

this is nothing more than some overconfident predictions unbacked by any evidence or arguments.

The written record I have compiled over the past four years fills many thousands of printed pages. You might want to have a look at the evidence already offered. Geez!

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#51) On October 07, 2009 at 1:23 PM, outoffocus (22.75) wrote:

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#52) On October 08, 2009 at 12:20 AM, herztical (27.91) wrote:

I disagree with your conclusions on the most fundamental of levels for the reasons detailed ad nauseum throughout my articles and blog posts.

Nonetheless, I'm happy to read an alternate perspective.

 

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#53) On October 09, 2009 at 4:54 PM, XMFSinchiruna (27.35) wrote:

herztical

I recognized the reference. Very clever. :)

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#54) On October 10, 2009 at 12:52 PM, ayekappy (< 20) wrote:

Silverminer: Well I have compiled a written record contrary to yourom point from information compiled over the last 10,000 years! HAH!

 

Seriously though... why would you say something like that and not even bring out a few examples since you obviously have a cornucopia of it.

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