30 August 2009

Bron and Kevin attempt to qualify Armstrong

Will Gold Reach 5000+? 809

Armstrong believes that gold is NOT a hedge against inflation but rather a hedge against a loss of confidence in government. There is a difference, and Martin does a good job explaining it. He is reiterating his latest papers in stating that a loss of confidence in the government sector is coming soon if not here already.

He gives a complete technical update for gold stating:

“I have provided the technical analysis on Gold based on a monthly chart. The first real resistance is formed by the Primary Channel that shows $1,350 - $1,750 between 2010 and 2012. this represents still a plain old normal technical move with nothing that would reflect a meltdown. It is breaking this overhead resistance where it becomes support that we enter in the “danger zone” of a true meltdown in PUBLIC CONFIDENCE.

Most of the projected resistance from the major low back in 1999, shows various targets from $1,700 to $2,750. However, if gold exceeds this level and it too forms the subsequent support, now we are looking at the $3,500 to $5,000 target zone. This is where we see the potential for Gold is a true economic meltdown of CONFIDENCE.”


Bron writes...
Here is the problem though, kids. Most mature investors retain their life savings fully invested within the financial industry, denominated in dollars, and will not get off these tracks even when they see the train coming. They will stay there because it is impossible for them to believe they occupy the wrong position! Who can blame them or call them fools? They have been trained their whole life to believe in saving for the future inside of a monetary system that serves no purpose other than as a medium of exchange.

Worse, they perceive that all of their assets are correctly valued by this system that does not care about the value of a digit. How can they possibly be correctly valued in a system that only functions properly as a medium of exchange, not a store of value? How can assets meant to be stores of value be correctly valued when denominated in a unit whose value DOESN'T EVEN MATTER in the context of its primary function? They can't. They shouldn't. They aren't. And soon this FACT will be known by everyone.

I would add.

When the economic and geopolitical stress behind the scenes become explicit and overt
and when Japan and then the gulf States, one by one, move to reorder their monetary systems by way of a tilt to regional currencies and a dollar depeg, gold will move.

And considering the size of the bond market, which rests entirely on the US treasuries, a mad rally in equities in spite of fundamentals might be expected if smart money was sensing the inevitability of hyperinflation.

We are not there yet..but.


Bron Suchecki said...

Kevin, that bit you have from me is actually from fofoa.blogspot.com, my linking wasn't clear. However, I agree with what he is saying - current money works as a medium of exchange, but not as a store of value (due to inflation). This causes people who are risk adverse and just want to sit on money to HAVE to "invest" it, either by giving it to bankers to on lend on their behalf or directly invest in share or chase other returns.

kevin said...

This post was hasty, took a self indulgent turn and then blew right up away. Sorry, dear readers!