Saturday, June 19, 2010

Gold Hits Record High

The reports that gold hit a record high (in nominal dollars) at $1258.30 per ounce.  I view this as a speculative market driven by fear of global monetary collapse and short term investors.  I doubled my gold holding on the hunch that the bubble will continue for at least a few weeks although the market could collapse at any time.  Nevertheless, "expert" gold investors  on Kitco often quote an old saying "sell in May and go away" until the fall. But here it is mid-June and the gold market is breaking new highs.  This seems to be a very strong bull market.

As I noted a few days ago, other commodities are not bubbling like gold.  Silver has its advocates and it went up more than two percent today, but it is not moving as fast as gold.  Nor is there inflation.  According to the Bureau of Labor Statistics there was 0.2% deflation in May although prices increased 2.0 percent year over year.  These numbers are likely understated as the CPI statistics are biased against inflation to minimize social security increases.

There is reason to fear monetary collapse.  The debt that the US government is issuing will need to be repaid. If interest rates rise, then the repayments will become burdensome.  That will put pressure on the Fed to continue inflating.  If it does, foreign bond holders may sell, which would stimulate further inflation.

Modest commodity price increases in other areas suggest that other commodities may be better long term holdings than gold.   The DBA, DBC and SLV, agricultural, commodity and silver indexes, may be less speculative and require less buying and selling.  El Dorado Gold, which I sold at about 17 is now at 18 and going strong.

I don't invest more in gold than I can afford to lose half  in the short term.   In the long term gold will likely go up.  It does not seem that the centralized money supply is a system that will last.  Throughout history monetary collapse has been accompanied by inflation.  Another alternative would be the bankruptcy of the federal government. 

Americans should fear any impetus toward global centralization of the money supply.  Much as the Greek economy has dogged Germany do we really want to deal with Venezuela's economic problems, as bad as America's are?

Bill Gates and Depopulation

On a tangentially related front, there is a video circulating that has Bill Gates saying that he would like to depopulate the world. Gates holds that vaccines will cause lower population. "If you reduce childhood deaths population growth goes down."  However, the fixation on population control is like marijuana (so they say)--it leads to stronger stuff.  When the vaccines are distributed, then restrictions on human reproduction are sure to follow. The video below argues that vaccines are not enough to reduce infant mortality in the Third World.  Undrinkable water, for example, causes a large share of deaths.  So why use vaccines to reduce population? And if vaccines fail to reduce population, what do Bill Gates and the UN next have up their sleeve?

The depopulation issue seems to be related to the monetary issue. Just as government mismanagement leads the greedy government officials to call for more power, so the mismanagement of public health leads to ever greater calls for repression by health officials.  Both lead to increasing centralization. 

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