Saturday, June 19, 2010
Barbarous Relic Back From the Dead
Another day, another new nominal high in the U.S. Dollar Gold price. Paperbugs hate it and can't explain it other than to say it is a bubble and will collapse any second. Short-term noise aside, of course, the truth is actually the opposite. Because it will be the non-believing paperbugs who will eventually pile into the "long Gold" trade and push us to incredible higher highs. Though it remains fun for me to guess and speculate on when such moves may occur, my core physical Gold position is never traded. I simply like to buy more physical Gold on decent price dips. I am not buying Gold at current prices but I would be if I didn't already have a large Gold position.
Gold is not going away. Gold is giving its warning that the Kondratieff Winter is in full force. Gold is the money of choice, not paper debt tickets backed by apparatchiks and bankstaz. Debt is a cancer during a secular credit contraction. The cold of a K-Wave winter squeezes those who have leveraged themselves against declining asset prices. Gold is debt-free money and the enemy of the state.
The concepts of money and debt are powerful and have been warped and corrupted now to the point where most people alive today actually believe that "this time is different," just as most believed in past fiat regimes. The end of the world is not at hand, but the end of the current monetary system is coming and that ain't good for those stuck with U.S. Dollars when the change comes. And no, you will not be notified in advance. And yes, Gold will be the best item to hold through the transition.
Let Roubini eat Spam and paper fiat notes right through the transition. The market continues to speak the truth of what is to come and what is to be valued over the remainder of this cycle, which will continue until the Dow to Gold ratio hits 2 (and we may well go below 1 this cycle). It's just a Gold secular bull market, as the financial pendulum of history continues its swing away from the Wall Street casino.
To say the barbarous relic is back from the dead is to state the obvious. Gold always comes back from the dead when it is needed because it never dies. It remains the anchor of the international monetary system because Gold, unlike the promises of compromised men and women, never changes. All paper promises and asset classes decline relative to physical Gold during a K-Wave Winter. This trend will continue and is not close to ending in either time or price.