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Re: Before the FIRE Gold Update: Is $1,237 the new $720? - Eric Janszen
Good points. Your comments would lead one to think that "they" won't tax gold based on one's profit (sell price minus cost basis), for lack of a well documented cost basis.
Therefore, sooner or later, they will find other ways to make one eventually wish that one had not remained invested in gold. In the 1930's, FDR confiscated it, then devalued the Dollar against his newly expanded hoard of gold. In the 1980's, Volcker turned the corner on Dollar inflation fears, cramming down the price of Treasuries (jacking up their interest rates) hard enough to put a floor under Treasuries and begin a 30 bull market in them. Gold backed off from its peaks when this was done and was a poor investment for the next 20 years.
Perhaps this time around we'll see much of the gold held by private Chinese interests end up helping fund a greater Chinese holding of SDR's. Or perhaps we'll see the beginnings of a multi-decade bull market in SDR's (though not a market that us peons get to play in directly), which would correspond to another bear market in gold.
The inflation vs deflation argument has become a hot potato, as do seemingly all important topics. iTulip does a good job of not getting caught up in much of the agit prop, but perhaps not so (in my view) on the inflation vs deflation topic.
My (non-iTulip compliant) view is that tracking debt creation is more useful than tracking retail prices of some basket of goods. The massive "money printing" by the Fed is being "sterilized" rather affectively, meaning that they are monetizing the debt of favored insiders, while depriving debt to others. Giant holes are being blown in the balance sheets of less favored corporations, banks, governments (federal, state and local), pension funds, and individuals, as the value of their assets and their cash flows both collapse, while their debts (secured by those assets and cash flows) become increasingly onerous. The collapse of retail sales volumes is a more important driver of retail pricing than any abundance of cheap and easy money. For us peons, there is no such abundance. Any company with a non-trivial amount of debt or another wise high fixed cost structure has to squeeze suppliers, customers and employees to survive.
For now, all national fiat money is increasingly suspect, racing to the bottom while gold shines. At some point, in perhaps a year or two, "they" will crank up the volume on the economic stress machine all the way to "11" on the dial, and come riding to the rescue with a major reset of the international monetary system. That will usher in a "new era" with a new world-wide reserve currency (based out of BIS/IMF/G20) supported by a world-wide regulatory, economic and taxation structure "just affecting the rich bad banks and spendthrift nations" for now, though imposing "well deserved" austerity on the citizens of one or two dozen bankrupt nations.
I detoured from the topic of gold to inflation because I suspect that when the matter of failing confidence in numerous national currencies, including the Dollar, is resolved by this major reset, then will be the time to move out of gold ... plus or minus a few days. That minus could hurt; the time to move may come the day before we know when or where to move. For now we have to take that risk, being prepared to lose some wealth in the crossover but still doing the best we can until then.
In short, what's sometimes called "inflation", meaning in this case a loss of confidence in the legal tender of the land, is what's driving gold at present. At some point, that confidence will bottom out, likely I suspect in the days before a major reset. That will be the time to move, if only one can anticipate it and if only one can figure out where to move to, without excessive loss of wealth in the transition.
Originally posted by karim0028
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Therefore, sooner or later, they will find other ways to make one eventually wish that one had not remained invested in gold. In the 1930's, FDR confiscated it, then devalued the Dollar against his newly expanded hoard of gold. In the 1980's, Volcker turned the corner on Dollar inflation fears, cramming down the price of Treasuries (jacking up their interest rates) hard enough to put a floor under Treasuries and begin a 30 bull market in them. Gold backed off from its peaks when this was done and was a poor investment for the next 20 years.
Perhaps this time around we'll see much of the gold held by private Chinese interests end up helping fund a greater Chinese holding of SDR's. Or perhaps we'll see the beginnings of a multi-decade bull market in SDR's (though not a market that us peons get to play in directly), which would correspond to another bear market in gold.
The inflation vs deflation argument has become a hot potato, as do seemingly all important topics. iTulip does a good job of not getting caught up in much of the agit prop, but perhaps not so (in my view) on the inflation vs deflation topic.
My (non-iTulip compliant) view is that tracking debt creation is more useful than tracking retail prices of some basket of goods. The massive "money printing" by the Fed is being "sterilized" rather affectively, meaning that they are monetizing the debt of favored insiders, while depriving debt to others. Giant holes are being blown in the balance sheets of less favored corporations, banks, governments (federal, state and local), pension funds, and individuals, as the value of their assets and their cash flows both collapse, while their debts (secured by those assets and cash flows) become increasingly onerous. The collapse of retail sales volumes is a more important driver of retail pricing than any abundance of cheap and easy money. For us peons, there is no such abundance. Any company with a non-trivial amount of debt or another wise high fixed cost structure has to squeeze suppliers, customers and employees to survive.
For now, all national fiat money is increasingly suspect, racing to the bottom while gold shines. At some point, in perhaps a year or two, "they" will crank up the volume on the economic stress machine all the way to "11" on the dial, and come riding to the rescue with a major reset of the international monetary system. That will usher in a "new era" with a new world-wide reserve currency (based out of BIS/IMF/G20) supported by a world-wide regulatory, economic and taxation structure "just affecting the rich bad banks and spendthrift nations" for now, though imposing "well deserved" austerity on the citizens of one or two dozen bankrupt nations.
I detoured from the topic of gold to inflation because I suspect that when the matter of failing confidence in numerous national currencies, including the Dollar, is resolved by this major reset, then will be the time to move out of gold ... plus or minus a few days. That minus could hurt; the time to move may come the day before we know when or where to move. For now we have to take that risk, being prepared to lose some wealth in the crossover but still doing the best we can until then.
In short, what's sometimes called "inflation", meaning in this case a loss of confidence in the legal tender of the land, is what's driving gold at present. At some point, that confidence will bottom out, likely I suspect in the days before a major reset. That will be the time to move, if only one can anticipate it and if only one can figure out where to move to, without excessive loss of wealth in the transition.
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