Reader Thoughts & Comments on “Multilateral Economics 101” By JC Collins
Kbnow: JC as always, appreciate the insightful commentary. Cash is king during deflation, right? However, trying to time the end of deflation before the bubble once again inflates itself could prove to be a fools errand. Dangerous business indeed…
thomas18z: Thank you. Recalling the time and productivity metrics in one of your other writings, I’m concerned those Americans receiving pensions will be particularly vulnerable during (and after) this restructuring of the dollar.
If the US system which emerges after adjustments are made is capable of sustaining the majority of its citizens then I’m guessing things will remain relatively similar to as it is now.
Gavriel Shaw (@GavrielShaw): I understand gold pricing relates to money supply, as it’s main investment use is in hedging.
However, in the case of silver given its real, constant and growing industrial use, supply shortage compared to high demand would create higher prices, surely?
And given the apparent high demand from china, india, russia, I fail to see why silver prices can go down due to fiat money supply. If there’s not enough silver for industry, the open bid will be increased, thus wouldn’t the real price will go up, regardless of economic shenanigans?
JC Collins: Then why has it been going down?
Gavriel Shaw (@GavrielShaw): Because russia, india, china have been happy to subsidize the US dollar pricing of silver by buying more US dollar treasuries etc, while stocks last.
But several commentators say that stocks are rapidly running out from warehouses in the West, which means there would be a very definite shortage of physical supply.
Industry requires the physical, and will pay multiple times current prices to get it, so when they literally can not buy it at today’s prices due to actual physical supply not being sufficient, they will bid much higher for it in order to get it.
And so the price would rise.
Does that factor in to your assessments and what might I be missing?
daneackerman “We have all suckled at the tit of mammon and went back for more. The adjustments that we will see in the coming months will be on par with this distortion in wealth due to the disconnect between consumption and production.”
I have accepted responsibility for my part in this and made the appropriate self governing adjustments as many have I’m sure.
Unfortunately though so many more of our fellow man will choose to remain in the bliss of ignorance.
When their lives crumble around them and panic sets into their minds is when this will get really interesting. Who’s property will they be stealing in order to sustain this mammon thirst?
And to think everyone is worried about the government coming to take their stuff. I don’t think they have to come door to door anymore. Heck we give them everything they want as long as their politicians look good on TV right?
Be well fellow tourists. We have one ** of a tour guide. Thank you very much JC.
thomas18z : Yes! JC is an exceptional tour guide. These discussions are the first time I’ve read intelligent conversation of what for years has to me been intuitively not right with the world. I feel privileged to be on this tour with like-minded folks.
matt (@speedspirit42) “Then why has it been going down?” JC
So they can buy lots of it cheap. Have you seen the latest sales from the US Mint? The sales numbers are big! Stackers already spent their savings long ago that means new money coming in.
That new money would not be those people cashing in their wonderfully growing IRA’s and 401k’s so who’s buying. Its the Elite! You cannot be a day late to get your share of PM’s.
When the SDR gets implemented no one knows the revaluation they have in mind regarding PM’s.
When PM’s finally are given fair value which could come overnight or during a weekend that next day they are going to be expensive compared to now and even hard to find, IMO.
Even if you do not believe in this scenario you should at least be 20% of your portfolio in Physical PM’s as a insurance. Me I am all in if you haven’t guessed.
Low prices do not unsettle me I just keep buying while on sale. I do not need my Silver until I retire by then I will be able to retire very nicely. And my family will be very thankful I did all that studying of the markets, the manipulation and that I saw the future clear as day.
JC Collins: I agree with you Matt. The cheaper it goes the more I buy.
Cadwaladr: Most enlightening, JC, as always. Thank you. What is your assessment of how “resolving the too-big-to-fail problem and implementing effective cross-border resolution of systemically important firms,” which is a priority of the IMF
(http://www.imf.org/external/np/cm/2014/041214.htm) will fit into this picture, please?
It concerns me greatly that selling other assets for cash could see that cash being bailed-in during the resolution process. Do you share my concern and is that one of the reasons you favour precious-metal bullion, please?
JC Collins PM’s are something you can hold in your hand. Over the duration of a lifetime gold and silver are the best methods of maintaining wealth.
The too-big-to-fail problem will straighten itself out with a few failures along the way. We are likely to see some large takeovers, buyouts, and mergers between the large banks on the a global scale.
mag51 Thank you once again for another great article and straightforward information JC. It explained the missing link as to why we have not seen hyperinflation as one would expect with the drastic increase in money supply.
Michael MacDonald Great article JC! Much appreciated! And if you have sometime to check out some recent news from the “Dragon Family”, I found it interesting. Somethings overlap with your analysis. https://www.youtube.com/watch?v=_QxiZhewlhA#t=422
deejj87 I know the gravity of the articles you write are of a more serious tone, but this made me laugh: “We have all suckled at the tit of mammon and went back for more.” Yes, yes we have.
Daneackerman: I surely second that Dee:) It was hard to keep composure while commenting.
Smifg: JC, thanks for your courage to get a bit more specific! Three comments on your statements concerning gold.
“Supporters of $10,000 gold have been unable to explain why the precious metal is going down in price in the face of QE”.
You provided an answer to that question by yourself in a recent article. Your anwer was: Simply for the reason that the FED wants to depress the price of gold. To make the USD look stable relative to Gold. I agree.
Artificially low-pressing the gold price of course doesn`t necessarily mean that it would shoot northwards in an unrigged market. But there is no question that its price would be considerably higher than today.
One manipulation tool of choice is the paper gold market: paper contracts out of thin air.
The FED`s vicarious agents/ shareholders (Goldman & Co) fabricate selling orders for gold and put them onto the “market” in very illiquid moments so huge selling orders result in sharp price decreases.
It`s important to note that this all happens WITHOUT moving physical gold from sellers to buyers. The trick with “gold leasing”…
The rigging of gold price via paper contracts and gold price collusion is well documented and partly acknowledged even by the players themselves incl. ex FED heads.
“The deflationary period, which hopefully will only last a few months, will be devastating to the savings and pensions of many Americans and citizens of other countries”
I agree. Wouldn`t that be the long awaited (narrow) time window for skyrocking PM prices? IMHO, the price of gold may well go thru the roof for a few days/few weeks.
People overreact, see their paper wealth evaporate and rush into PM. Herd instinct.
The owners of gold will be happy to sell (gladly accepting fiat knowing that fiat will remain part of the micro level), the buyers are driven by fear & panic and like to have an insurance to store what is left from their “life time and labor”. So they buy the gold.
Of course, the new owners of gold will be skimmed yet another time when the organized elite announces a partly gold coverage of SDR (and maybe fiat) as you have outlined.
From that moment, the price of gold sinks into abyss. Because the insurance (=gold coverage) is (again, after 1971) official part of the monetary system.
“Gold, for its part, could also be added to the basket, though I’m beginning to suspect that gold may be added after another 5 years have passed, sometime around 2020.”
What lets you suspect that introduction of gold as an SDR foundation will be delayed? Why none of the other fundamentals that you have listed in “SDR’s and the New Bretton Woods – Part Five”.
Again, thanks for sharing your thoughts with us. This is an exceptional blog. Stefan
Michael MacDonald Another big wow interview! A must watch IMO… http://jhaines6.wordpress.com/2014/10/17/alfred-webre-interviews-uk-councillor-simon-parkes-raised-by-mantid-ets-the-great-shift-begins-in-2017-no-to-ebola-vaccine/#comment-316054