21 January 2009

Gold should be 6000 ~ Capt Hook

Perhaps the best analogy to explain the fundamental condition of gold is that it’s like a beach ball being held under water, where at some point it will escape the clutches of its oppressor, springing it into the light of day for all to see its true worth. Even a child could understand such a condition when explained in terms of a beach ball. When it comes to the day-to-day trials and tribulations of gold however, it’s not that simple unfortunately, because although gold is the oldest form of true money on the planet, it’s also a political metal caught up in the biggest fiat currency / Ponzi scheme in the history of mankind.

It’s the Ponzi scheme that even though Bernie Madoff has now made it fashionable to expose them, you will not hear talked about in the mainstream media. This is because ‘The Creature From Jekyll Island’ is still in control all these years later, given it’s feeling its oats these days for sure. That is to say, the Fed, and it’s counterparts around the world, are finally staring at the same end game dynamics as Madoff was seeing just a few weeks ago now, but because their game is much larger and complex, it’s going to be with us for a little while longer yet.

Once the jig is up however, which will be when foreigners no longer support US debt / currency markets (a condition now taking hold), that’s when the party for our fiat masters will be over, and when gold will volley out of the water into the air. In this respect, I must agree with Bill Murphy. Gold will not be allowed to rise anywhere near it’s true fiat currency based values until it’s forced on what’s left of the ruling elite because it suits their needs at the time, implying little to no international trade will occur at some point in the foreseeable future unless contract values can be grounded in stable money. (i.e. gold-backed external currency units.)

How do we know gold is too low, suppressed by an authoritarian regime of central banks, and poised to vault higher at ‘the right time’? Well for one thing, like a beach ball held too far under water for too long, its oppressors can’t keep it down. Since the bull market in gold began in the year 2000 it’s been up an unprecedented 8-years in a row, which by ‘modern standards’ is a record. Of course we don’t have much to go on in this regard, because in terms of years falling within the Fed’s reign, gold has only been trading ‘freely’ (whatever that means) since the early 70’s, which is not much time to base historical precedent.

But that’s not the only measure we have in this regard. We also have the fact just to reflect past ‘inflation’, which saw gold last peak in 1980, if measured in terms of the Consumer Price Index (CPI), it should be trading well north of $2,000 today. And that’s if we measure inflation using the CPI, which is fundamentally incorrect because the proper definition of inflation is not measuring how much our self-serving bureaucrats think prices are rising, which is too low. No, inflation, by definition, is not properly defined in terms of resultant price increases, but in terms of monetary largesse, which John Williams, from Shadowstats.com, takes into account in his phantom measures, pointing to the fact gold should be trading north of $6,000 on this basis.

Gold's going North.

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