gold and inflation etc
I INVITE YOU TO LISTEN TO THE LINKED AUDIO WHILE YOU READ ALONG:
In the article linked below, the media uses the same “cause” to explain gold prices falling as has been frequently used to explain gold prices rising. Isn’t that at least slightly odd? It’s kind of like saying that burning more wood in your fireplace causes the temperature in your house to rise, but burning more wood also causes the temperature in your house to fall.
By the way, inflation both causes temperatures to rise and to fall, right? Note that many competent, accurate forecasters have been concluding that in places like the US, UK, and EU, inflation is NOT THE ISSUE and in fact NOT AN ISSUE at all. However, the media is focusing a lot on inflation, so… shouldn’t you?
Well, the media is also using the “demonic evil” of inflation to explain gold prices falling… as well as gold prices rising. So, consider that the financial media may have NO CREDIBILITY. They may be slightly influenced by the advertisers and shareholders who pay the editors to publish the confusing interpretations, perhaps designed… to confuse as many people as possible about some really quite simple stuff.
But wait, hasn’t the mainstream media consistently offered you relevant advance warnings of the major financial developments of the last several years or decades? So, when the PR engines of the Federal Reserve tell you that they are very concerned about inflation in the future and they are fighting inflation tenaciously, are you thinking of the Federal Reserve as responsible for your financial future, as both competent and personally loyal to you… personally?
Consider instead that the massive waves of the writing-off of bad debt (“accounts receivable”), also known as “credit deflation,” have been driving down prices in real estate and stocks in Europe for many years, in Japan for over two decades, and in the US to a somewhat lesser extent in the last several years. These waves of write-offs are like ocean waves slowly but surely “melting” the sand castles of prices in the housing market and stock market, wave after wave after wave.
Following decades of easing in credit markets (lending), the progressive MASSIVE UNDERVALUING of cash finally has reversed, even in the US. As people stop thinking of credit as easily available (like for real estate purchases), then each cash dollar becomes less valuable to them. Also, the poorer someone is (like the less income they receive), the more conservative they are with each dollar- valuing the cash more! Similarly, the less of a credit line that someone can access, the more valuable each cash dollar is to that person, including decision-makers for organizations.
In contrast to the mainstream media and most “financial professionals,” many people including me forecast years ago that households, businesses, and governments around the world would be facing budget issues due to a cluster of related developments. In 2003, I reported that credit markets had already started to shift and de-stabilize… like the tide was showing signs of turning, with each new wave of credit inflation producing a smaller movement up the beach. In 2004, I publicly identified an emerging global oil crisis as the primary fundamental issue behind the already evident credit crisis. In 2005, I published a very simple set of facts clearly establishing the functional prominence of oil and the near irrelevance of the now rather minor market of gold, which has no major primary economic function.
Here is a very, very brief summary:
Gold is primarily a secondary store of value… like paper currency or accounts of electronic credits. In other words, gold is money… merely money. Oil, however, is actual energy (fuel)!
So, I titled that piece “worth its weight in… oil!”
This weekend, I will be launching my new website,www.TheDominOilEffect.com. In it, I will probably say virtually nothing new. However, I am constantly simplifying my presentation format. Attached is an image I recently made that presents a memorable reminder of a very simple logical sequence:
1. Oil prices rise “unexpectedly” … causing
2. Gasoline prices to rise “unexpectedly” … causing
3. total spending to “unexpectedly” rise (at least for gasoline-dependent people and organizations) … causing
4. many people (and organizations) to have less extra cash remaining than expected (after the increased spending on “essential” fuel expenses)… causing
5. many people (and organizations) to “unexpectedly” use less cash for investing (like in stocks) or lending (like to finance other people’s speculative borrowing in real estate) …. causing
6. declines in purchases (and prices) of things like stocks and real estate… all “unexpectedly”
Note of course that the word “unexpectedly” is inserted for people who have been investing their attention (and financial futures) in the questionable effectiveness of folks like the mainstream media. Then again, consider that the mainstream financial media may have been extremely effective in advancing the short-term financial interests of their advertisers and shareholders… by confusing the mainstream public and contributing to producing a massive flow of wealth away from the middle classes of Japan, Europe, and North America.
So, when a government comes in and “rescues” an industry or economy, it does not matter if that government is Cuba or the USSR or the UK. Ownership has shifted from a “publicly-traded” operation to… an armed monopoly.
But this is not a complaint. This is merely an observation- though perhaps excessively dramatic.
Sometimes, wealth and power are re-distributed to more and more people. Other times, wealth and power are re-distributed into smaller and smaller concentrations, whether that concentration of wealth is called an empire or “the Vatican” or a cartel of drug-dealers and so forth.
By the way, if you think that I was making a moral condemnation when I mentioned drug-dealing, you might be right. Then again, I might own quite a bit of stock in pharmaceutical companies! So, just because I may be extremely hesitant to use most of their products and I may consistently warn my friends and acquaintances about the drug companies and their constant propaganda about the alleged existence of incurable diseases, that does not mean that I would not ever trade in their stock….
Heck, I have so little shame that I would even invest in insurance companies or… government bonds. If you knew what I know about those organizations, then you would know why I say “so little shame.”
Anyway, in conclusion, beware of the mainstream media. They generally say whatever they are paid to say. Or, they are only paid to say the kinds of things that further the interests of those paying them. That is, there is a massive systematic bias as to what gets widely published.
Again, this is not a complaint. This is merely an observation.
Also, some investments profit more than others. That is merely an observation, too.
If you have been investing in the ideas and purchases that are being promoted by those who create media empires to influence you, you may experience a different set of results than the results of those who create those empires to influence or govern the masses. So, what if the media trains the masses to focus on the prospects of inflation? What if that is a strategic campaign for a specific purpose?
Now, do I have your attention yet? Let me know.
- Renowned Online Investment Consulting Company Predicts Gold Prices to Skyrocket to $3000 per Ounce by the End of the Year in their New Website (prweb.com)
- Gold Prices Sag as Bank Downgrade Threat Boosts Dollar (thestreet.com)
- Gold Prices – Blip, Dip or Flip (quicktake.wordpress.com)
- What Gold and Silver Outperformance Means for Barrick and Goldcorp; Report by Profit Confidential (prweb.com)
- A Glittering Year For China’s Gold Bugs (chinabystander.wordpress.com)
- A gold puzzle (economist.com)
- Universal Coin’s President Cites 15 Reasons Why Gold Should Reach $1500 in 15 Months (prweb.com)
- Gold Prices Struggle to Attract Investors (thestreet.com)
- Is Gold Really an Inflation Hedge? | LearnBonds.com (learnbonds.com)
- Rising Food Prices Propelling Inflation Worldwide, Special Report by Profit Confidential (prweb.com)
- Inflation drops to 3.4% in February (moneyexpert.com)
- What Your Financial Planner Isn’t Telling You (Part 2) (yeyoungeconomist.wordpress.com)
- Inflation or Deflation? (adask.wordpress.com)
- Golden age for gold is behind (rt.com)
- into the sky quotazione oro in every place (foodstaycation.com)
- A gold puzzle (economist.com)
- How to hedge against inflation (hint: forget gold) (cbsnews.com)
- Malcolm Berko: Investments protect against inflation (goerie.com)
- John Embry’s EXCLUSIVE Interview With Patrick MontesDeOca on 2012 Gold Outlook! (superbullinvestor.com)
- Gold prices retreat as U.S. dollar strengthens (business.financialpost.com)
- Chris Martenson Explains How Gold Is Manipulated… And Why That’s Okay (zerohedge.com)
- A Skeptic’s View On Why Gold Prices Rise And Fall (italianenglishblog.wordpress.com)
- Forbes: Gold, Money Creation, and the Monetization of Debt (cointrader.wordpress.com)