Hey Jef, Ray meant he wanted to know what I disagreed with.

Ray, I re-read your post that my disagreement comment was based on, and I suppose, I only disagree with one thing, and only partially. I am hard pressed to decide whether or not gold will eventually be pushed into bubble territory. I don't think it is now, but could it be? Maybe.

I suppose I should be more open to the idea that they could form a bubble. The reason I should is because I am a believer that the price of both gold and silver can be manipulated on the way down, so why couldn't they be manipulated on the way up? I think it was the August (?) Bank Participation Report (that almost nobody looks at) which showed a very clear indication that fewer than 3 banks sold physical gold and silver supplies to cover massive short positions. If they sell physical bullion, then they can artifically suppress the price temporarily, helping them to get out of their net short positions at a huge gain. How else would anyone explain the massive drops in spot and futures prices when the reported CPI (don't get me started on how this botched, baked, and pressed # is way off) was still increasing, Total Fed Credit was still increasing, and the no longer officially reported M3 money supply was increasing?

A big reason that I don't think we are in bubble phase now is because there are only a tiny fraction of people that go out and actually buy physical bullion. When the housing bubble was roaring, so many were cash out refinancing, using HELOC's to pay off other bills, take trips, or do major renovations to "flip" the property. Two phrases come to mind: "Buy now or be priced out forever" and "Real estate always goes up". My friends thought I was completely retarded way back in 2003, all the way up until 2007, when I suggested that RE would revert to the mean (and probably overshoot) either by an all out drop, or the incomprehensible (to them) theory that REAL values would slip because everything else would be inflated around it, while RE remained immobile. Finally on this note, I remember the old story about shoe shine boys in NYC giving stock tips just before the big crash in '29. I don't see shoeshine boys (or hamburger flippers) saying how great they've done in gold and silver. When that day comes, I'm out, waaaay out.

Now, the reason I am torn, and am not sure there could ever be a gold/silver bubble is this. Unlike housing, dot com stocks, and tulip bulbs, gold and silver are not easily produced (read: mined). We know that no matter what we do, there is a finite supply of the stuff. However, there can be an infinite number of "dollars" or any other currency floating around at any time. Injections of hundreds of billions of dollars into financial markets, hundreds of billions "returned" to taxpayers in stimulus packages (how far did that go for anyone here, BTW? - we removed a tree), hundreds of billions in rescue packages for "banks", and trillions in a now forsaken mortgage agency (and has anyone considered that since Fan and Fred are now nationalized, that over half of Americas housing is now nationalized?) all add up to something. Something major. The numbers, when not backed by real, time tested, always recognized, always redeemable, always liquid, currency (gold and silver) don't mean a thing. They're just numbers (dollars). They can be created on a whim, at the single stroke of a computer key. And it's being done. Nevermind that the bill didn't pass, the Fed and Treasury injected a couple hundred billion more yesterday anyway (and so did foreign reserve banks), and will continue to do so. All in all, when others might think there could be a gold bubble eventually, I really think that it might be more accurate to call it a dollar bubble.

My two copper coins.

Chad

Well, the US markets alone lost about 2,564,102 new Murcielago LP640 Roadsters yesterday.

You are totally correct. The finger pointing in Washington is just ridiculous. Though Bush did not have to fortify the idea of these new regulations (they really weren't voluntary, Clinton made sure of that) with the completely obscene idea of a "100% ownership society". Let me find the article that backs up your Clinton comment.

Just a snippet from the article. I love a paper trail. They absolutely knew that this melt down would come. Seems as though someone played the race card, and here we are. Search the article title to read the whole thing, and you'll agree.

"NEW YORK TIMES
September 30, 1999

Fannie Mae Eases Credit To Aid Mortgage Lending

By STEVEN A. HOLMES

In a move that could help increase home ownership rates among
minorities and low-income consumers, the Fannie Mae Corporation is
easing the credit requirements on loans that it will purchase from
banks and other lenders.

Fannie Mae, the nation's biggest underwriter of home mortgages, has
been under increasing pressure from the Clinton Administration to
expand mortgage loans among low and moderate income people and felt
pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have
been pressing Fannie Mae to help them make more loans to so-called
subprime borrowers. These borrowers whose incomes, credit ratings and
savings are not good enough to qualify for conventional loans, can
only get loans from finance companies that charge much higher interest
rates -- anywhere from three to four percentage points higher than
conventional loans.

In moving, even tentatively, into this new area of lending, Fannie Mae
is taking on significantly more risk, which may not pose any
difficulties during flush economic times. But the
government-subsidized corporation may run into trouble in an economic
downturn, prompting a government rescue similar to that of the savings
and loan industry in the 1980's.

''From the perspective of many people, including me, this is another
thrift industry growing up around us,'' said Peter Wallison a resident
fellow at the American Enterprise Institute. ''If they fail, the
government will have to step up and bail them out the way it stepped
up and bailed out the thrift industry.''

In July, the Department of Housing and Urban Development proposed that
by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's
portfolio be made up of loans to low and moderate-income borrowers.
Last year, 44 percent of the loans Fannie Mae purchased were from
these groups.

The change in policy also comes at the same time that HUD is
investigating allegations of racial discrimination in the automated
underwriting systems used by Fannie Mae and Freddie Mac to determine
the credit-worthiness of credit applicants. "

I know I'll get a lot of conspiracy theory grumbling from some of you, but here is a brief history of how the Federal Reserve was created. Watch all parts if you want.

I should also qualify all of my previous comments, and say that they are my opinion, and are not offered as investment advice.

YouTube - Zeitgeist - The Movie: Federal Reserve (Part 1 of 5)

Good post's bull.

Just a few quick things here:

First off, the USA has moved far away from a capitalist society, we're now on the verge of some strange form of social corporatism or some other bizarre amalgam. It is the tremendous amount of regulation that has gotten us into this mess, combined with the problems of a false currency as Taurean Bull mentioned (and obviously, the two are linked). I forget who, but someone brought up Bill Clinton. It didn't start with him. It started with Carter when he signed what I believe was called the Community Reinvestment Act (circa 1977-78). This made it law that banks had to do a percentage of their lending to people who would otherwise not qualify (they often called this "redlining"). In the late 1990's Clinton revised and expanded this bill. A number of people warned against it then, and then again in the earl-mid 2000's.

Now, it should be noted that currently only 5% (plus or minus) of the loans are bad, which is within the industry norm. The bigger problem is that this created what has been referred to as a bubble, inflating the price of the purchased real estate. It is this combined with a devalued currency. The properties are overpriced and the money is worthless. This clearly isn't good and the current situation is the result.

Taurean it is good to hear you are into gold and silver. If we still had real money this never could have happened.


EDIT:

Another good movie to watch is The Money Changers

EDIT:

The above article is precisely what I am referring to.

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I think there is a place for gold and silver but not as a world currency. As already stated there is a finite supply and you could hardly sustain a large economy with it. In short it's too speculative and volatile. I remember in the 80's when the Hunt brothers tried to corner the market in silver and were near wiped out. In any case it's a good investment and surly no more risky than stocks anymore.

Gold and silver are in the process of becoming obsolete.
Diamonds and oil are a man's best friends.

Canadian Diamonds are a very good investment.

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