 Thanks for your response. You got many things right. Most sadly, you were correct about my age.
There is more than just debt deflation going on. Both gold and bonds have been heading lower and they are both asset classes. Folks are not only getting out of certain assets to cover their asses elsewhere, some folks just see the wisdom of being in cash at times such as these. And some folks operate with the understanding that every dog has its day, but as no day lasts forever, they rotate in and out of various investments.
You are also correct about the current situation being unique. That being said, all situations are unique and even though that is so, it does not mean that certain commonalities are not shared and that history cannot shed some light on what has worked and what has not. Myself, i see enough similarities between what is going on now with what took place in the Rome of Julius Caesar's time to believe that we would do well to attempt the same reforms he undertook. [By the way, i loved how you fit the term "gedanken experiment" into your post, letting me know that you have more than just a pedestrian knowledge of theoretical physics.]
Many different examples of what was used for money in ancient times exist. Silver, bronze and grains are some of the most familiar. My favourite is the kumal system, which might have given rise to the expression "it cost an arm and a leg." That aside, today it is paper that is used to represent money. Gold is an asset class these days. And for that we should be happy. i make that claim because our putative leaders are busily doing their best to destroy the value of our money and so it is good to have an asset that we can turn to as a hedge that is both liquid and easily transportable, unlike land. Were it that gold is still money, they would have been doing their best to destroy its value (with equal success) and pieces of paper with numbers written on them, while easily transportable, would have no liquidity.
By the way, i am not a Keynesian. (But neither are those who are in power these days. Keynes believed that easy money had to be accompanied by lowering taxes and none of the swine are lowering taxes.) At this point, not believing in any economic theory that is known, for giggles i have been trying to develop one of my own.
In my many posts, there has been but a single attempt to give anyone specific advice on what to do with their money. That would have been back at the end of March when Dom 1971 was begging someone to kill him. i felt bad for him and with gold at $1,600, i suggested he figure out how much money he would require to see him through the next 6 months, divide that total by 400 and then sell that number of ounces of gold. i told him that by the end of September, he would be able to buy back all of the ounces he had sold with the $1,200 he had set aside from the initial sale, thereby living "for free" those 6 months and still having the same number of ounces left. Admittedly, my estimate for how long the $400 drop would require was off, but not in a way that could have hurt him. Foolishly, (like my idiot brother) he did not follow my advice, if his continued whinging is any indication.....But that has been it for advice. i understand that different people have different circumstances and so there is nothing that will apply to everyone, regardless of age, geographic location or disposable income.
i, too, am looking to start layering in buys, though i might wait until August to do so. [Silver seems to have more upside potential, though the current premiums for it are outrageous.] This correction may still have some legs to it and as i do not expect gold to do much of anything for perhaps 2 years once it has run its course, waiting that extra month ought not to hurt. But buying at this price will certainly pay off for you if you are able to wait for gold to shine again.
i actually do have a secret decoder ring. It came in a box of Tide that i got off Matonis on a dark street corner.
In truth, there is no secret. i pay attention to capital flows. Follow the money. It is as simple as that.
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i laughed my ass off when i read your post from Sunday on the NSA. Your use of the lines from "Santa Claus is Coming to Town" was hilarious.
 Commented 3953 days ago |
