The Falling US Dollar

[billinchina]

The US Dollar has been falling in comparison with other currencies around the globe for quite a while now. Congratulations Canada, our dollars are the same now (actually yours are worth more than US dollars).

Things are starting to make sense. Rising stock market at record highs. Rising oil prices at record highs. Rising real estate at record highs (well, except for a recent dip). Dollar goes down, prices go up and records are set.

I see purchasing power being eroded as inflation skyrockets for certain items.

So, if things continue, be very excited about rising PPC and rising domain values. However, since dollars will probably be worth less, perhaps you will be no better off.

Just my observations...

 

[pergamon]

Remember the bet from October 8th. Maybe time for a little update:

October 8th:
SP&500: 1,552.58
1oz gold: 732.50

October 27th:
SP&500: 1,535.28
1oz gold: 783.50

So it seems I'd be winning the bet! Because the S&P500 lost 1,10% and Gold gained 6,50% since October 8th! Good for me and good for everyone that got some gold.

Remember that it is still not too late to buy some gold (the sell time-frame will between 6-12 years from now).

Enjoy and thank me later!

October 8th:
SP&500: 1,552.58
1oz gold: 732.50

October 27th:
SP&500: 1,535.28
1oz gold: 783.50

November 2th
SP&500: 1,498.80
1oz gold: 806.00

The goldilocks are up 10,10% and the paper boys are down 3.5% since the October 8th bet.

 

[goodkarmaco]

dollars make cheap tp

The proof is in the pudding.

Of course if we were looking at 2002 when Bush took over in the white house and started pegging the dollar against gold, the gold would have lost for a long time. The reason of course is why we are talking about this today.

The dollar and the economy was in a big growth phrase, due solely to the printing presses running full time to flood the banking system with money. Money to loan at low interest rates to fuel a economy that would produce a false sense of prosperity. The reason? To fund the Irag war. Print and go into debt, all of it based on the housing market.

Everyone felt the USA economy was strong in those early years of George Bush and the magicans with their paper fiat money. Sell the home, buy a bigger one, flip houses and build huge housing projects, oh the fiat money was making us feel wealthy.

Then the bubble got to big and as in all monetary expansions based on fiat money or the printing of money it is debt based. That debt is now hanging on us and pulling us down and the world is getting this message now and that will propel the dollar even further.

The housing market today has almost one half a million homes in foreclosure. That is up 100% from last year! The fed this week has pumped another 51 BILLION dollars into the banking system to try to stop the bloodbath to property owners..

Their previous attempts have not done the job of stabilizing the economy and this 51 billion will not help either. We are playing in the park and the slides we are sliding down are plastered with U.S greenbacks, and soon all holding dollars will get their asses wiped as they slide to poverty.

Not much time for people to purchase gold, or silver, or gold or silver stocks.

marketgoldprice.com

 

[pergamon]

There will be plenty of time to buy gold but watch out in which form you buy it. Always go for bullion. While today's prices look expensive it is only a fraction of what will be seen in the future when gold will trade completely free without manipulation.
10% in 3 weeks is extreme and you might want to wait for another pullback to load more. On the other hand it seems like a perfect storm is forming. Extreme monetary inflation coming from lower interest rates and the FED pumping liquidity in the market, big investment banks reporting huge write-offs of their bad debt paper, oil at record levels, the $ at record low levels, geopolitical tensions in Iraq/Iran,...

The ironic thing is, is that the only event that can completely reverse this situation is a 100% succesful attack on Iran. That would boost the US economy and the dollar big time.
I'm afraid that this attack is what's going to happen very soon.

 

[$1.00]

Lets face it money nothing but paper, backed by nothing. Its Fiat money,

50 years ago U.S money change was ciruclated .925 silver! But it had to go becuase "fake " and real and dollars created in imbalance and the silver change ended being worth more then the its face value by "fake dollars".

 

[goodkarmaco]

Pergamon

well if you think you have plenty of time to put off buying gold or silver, then keep your money in the bank. After your description of the situation we have in America I would think folks would come to the conclusion that any moment the panic may set in and gold would skyrocket.

I also remember a comment from someone that a person can take a shower and when they come out be shocked to find gold had doubled in price. My view then is why wait until it makes another major jump?.

Buying gold stocks is just as viable as buying the bullion. Actually in all inflationary periods in America in recent years the gold stocks even outperformed bullion. That may not be true in other countries, but here it is a given.

If folks have money to protect, get it into metals quickly.

marketgoldprice.com

 

[pergamon]

Pergamon

well if you think you have plenty of time to put off buying gold or silver, then keep your money in the bank. After your description of the situation we have in America I would think folks would come to the conclusion that any moment the panic may set in and gold would skyrocket.

I also remember a comment from someone that a person can take a shower and when they come out be shocked to find gold had doubled in price. My view then is why wait until it makes another major jump?.

Buying gold stocks is just as viable as buying the bullion. Actually in all inflationary periods in America in recent years the gold stocks even outperformed bullion. That may not be true in other countries, but here it is a given.

If folks have money to protect, get it into metals quickly.

marketgoldprice.com

That was my comment and yes maybe that's what will happen one day. Gold will not skyrocket in a day unless it gets very bad. It will continue to climb but it will never explode (unless real financial armageddon kicks in). And when it does the price of gold will be the last thing on your mind.
There is no need to convert all your dollars into gold, that's just plain stupid.

While gold stocks might be a good option in the first phase of this gold bull market they will surely be a very bad investment if you hold them to end.
Many of these gold stocks are in big debt, are over-leveraged and some have awful hedge books. Next to that, gold mining is a costly proces.
If you can understand the true meaning of what gold is used to be then I'd find it very ironic that you invest in a piece of paper (the stock certificate) that holds a value in a gold company.
Few people know this but as a stockholder in a gold mining company you hold absolutely 0% interest in any gold reserves. You are only owner of the material (trucks, buildings,...) but not of the gold.
Next to that I believe that many gold mining companies will be nationalised overtime by governments.
The reserves of one of the US biggest gold companies (Barrick) are already called the official US reserves in case of emergency.

 

[goodkarmaco]

Some good points. Here are some more. Newmont mining just posted their profits for the third qtr, 07, they have doubled.

It may be true you are not holding actual gold, but the buck starts with the mining company. Thats where the first action will be for monetary gain. A person does not have to stay in the stock if government takes a hard approach, such as confiscation of your stocks.

That is true of physical silver too. If your government wants control of wealth they will confiscate everyones gold, look at the time they asked everyone to turn in their gold eagles when they took the gold backing off the dollar. The lemmings turned them in, the smart people kept them.

About buying gold stocks. Be smart. A person would do well to research who are the most solid gold producers with a history of getting the gold out at a low cost. Newmont mining comes to mind as an industry leader and all who invest in their gold stocks will do very well indeed.

Sure if the U.S. can get out of this mess we are in in a year or two, then if we pay down the debt and stop printing so much paper and manage the debt we will then start the long cycle over again and during the first few years of the new monetary expansion, then gold stocks will not be such a steller vehicle for profits. That is also true for holding physical gold.

But if the dollar drops and martial law is in force and government wants your investment, then holding the actual physical gold, (hiding it from the government parasites) is prudent.

I am mainly talking about saving ones worth in this coming dollar devaluation.

I am not talking about gold holding forever. It is important to be in the market at all times, but in times of monetary expansions, such as the recent housing boom, a person will do better with their investments in the early stages of the expansion by investing, not in gold but the market that is getting the big push. If a person invested in real estate in the early years of the Bush presidency, they would be well off if they started getting out of that market a year or so ago.

Now, its time to get "into precious metals".

At this stage that is mining stocks for the biggest bang for the dollar. Of course physical gold or silver can be held as it is soon to take off. When it does take off it will be pretty hard to get your hands on it. So buy it now if you can.

marketgoldprice.com

 

[pergamon]

I would go for 30% gold, 20% silver both in an ETF fund(as liquid as can be)
10% in the Aussie, 10% Yen and 10% Euro. The rest keep in $ or if you wanna go full house 20% in Swiss Francs.
That is what I'd do.

By any means NO £££

You see, you can write as much as you want but when the facts proof you're right I love it. Gold up almost 100$/oz in a month.

Anyone who went for the above in early october like I said made a killing. Silver up 4% today alone.

Watch gold. If it breaks above 850$, the old time high, the sky is the limit. Currently at 820$ and if it breaks 850$ soon we will most likely see 1000$ this year.

I don't think it will break 850$ near term but when it does it should break it nicely and close above 850$ before it is a strong buy signal.

Dollar at record lows versus Euro. Think this will reverse now too in near term. A major short squeeze could be unfolding with retesting of 1.40 or even 1.35. Long term: bet against the dollar.

 

[pergamon]

Market blood-red today. Getting very crucial from here. I bet most banks and brokers are in very big panic now.
The interesting thing is that in inflationary times (like now) the stockmarket tends to go up as saving becomes very unattractive and investors flee to higher yielding assets like stocks. There are two things that are even worse then inflation. That's deflation and stagflation. If the market keeps tanking and the FED keeps cutting the American consumer is literaly being diluted and squeezed at the same time. If the FED keeps cutting and the stock market keeps tanking it also means that the FED has lost power over interest rates as a tool for the US economy.

to be closely followed!

 

[Peter]

The £ seems to be continuously rising at the moment. There was a big thing made of the £ getting to $2 not £1 is worth $2.10.

 

[goodkarmaco]

Consumer confidence in the spotlight

Yesterday was a disaster for the stock market.

Tech stocks and housings stocks plummeted bringing down the market over three hundred points. This was more than since 2002. It surpised me that such a strong sector of the economy, the tech stocks such as Microsoft, Yahoo and Google got hit so hard having such a low confidence from investors.

Fear was prevelent everywhere. Was the market going to continue to plumment? Was this it? Gold went over $850 for a short while settling in at close to $830.

Then the bottom feeders came in and bought up the bargains pushing the market back up some, ending the day about half of the days drop.

The ignorant came back in with puffed up comments that everything is ok for the market in America. Until the next market plunge.

Count on it this country is going to go into a very bad recession.

The first signal will be announcements of higher gas prices. That will dampen retail sales and the last vestage of stability will be threatened, consumer confidence.

 

[gou]

The dollar is backed by NOTHING!! No commodity index, no gold, NOTHING!

Private banks create dollars out of thin air!

Imports surpass exports.

Let us not forget the US owes the world TRILLIONS of dollars and the national debt has been deemed unrecoverable.

Countries are pulling all of their dollar reserves out and exchanging them for Euros! It may not matter much when Iran does this, but if China does this, be ready for a historic plunge.

Who can fix this BS and take us off of the fiat money system?

RON PAUL!

The fiat currency system is causing none of the things that you have listed. It is important to educate yourself about creation of money in order to detect intellectually dishonest conspiracies.

Let's start with your first claim: The dollar is backed by nothing, therefore private banks can create money out of thin air.
This is false. Commercial banks can create money under a gold standard by practicing fractional banking. That's how banks operated when the US was on the gold standard.

Next Claim: Imports surpass exports.
The fact that we have a negative net export has nothing to do with our currency system. Negative net export can be achieved under the gold standard.

Next Claim: Let us not forget the US owes the world TRILLIONS of dollars and the national debt has been deemed unrecoverable.
We would have a huge debt anyway. The Fed buys government securities in the open market and not directly from the Treasury. In other words, the government already has a full funding source without the Fed creating money.

Next Claim: Countries are pulling all of their dollar reserves out and exchanging them for Euros! It may not matter much when Iran does this, but if China does this, be ready for a historic plunge.
Milton Friedman (R.I.P.) talked about this possibility in 2005. He said that:
1) It would not happen since it would be a long-term loss for China.
2) Even if it did, money would only be transferred from weaker hands, i.e. foreigners, to stronger ones, i.e. the people of the United States.

Final Claim: Ron Paul can "fix this BS and take us off of the fiat money system."
In conclusion, going back to the gold standard will not stop the private banks from creating money, and it will not reduce government spending. Therefore, your final claim is false.


I will present an alternative plan for you: control fiscal spending. Sure, Ron Paul could probably achieve this.

 

[htmlindex]

That's fantastic news for me, wish it went lower. Then domains would be cheaper to register!

 

[goodkarmaco]

Gou,

you state banks can create money under a gold standard by practicing fractional banking. What are you saying here?

Are you saying that the money is ok if it is backed by a small percentage of gold?.

I cannot see how you can possibly say it is false that the money is backed by nothing since we have fractional gold backing. Do the math, today we have nine trillion dollars of debt and a very small pile of gold to back it. So small of an amount of gold you might as well say there is NO gold backing.

Lets tell the truth here. It would be like saying to your best friend, "here is a iou for $500.000 and don't worry about not getting your money as it is backed by this two cents worth of gold dust".

That is the situation today, our dollar is nothing but paper debt, backed by nothing, oh I forgot it does say on it, "in God we trust".

Personally I liked it better in times past when we actually did have the amount of gold in Fort Knox for the paper dollars that were printed.

If that makes you happy to know we have some kind of gold standard here in the U.S. and it will help you to feel the money in your bank is ok, cheery oh.

For me it is nothing but a piece of paper that is a debt on future generations, as it is worthless as the paper it is printed on. The only reason today people feel the dollar is worth something is most of the sheep have not noticed they are getting fleeced.

 

[gou]

Gou,

you state banks can create money under a gold standard by practicing fractional banking. What are you saying here?

Are you saying that the money is ok if it is backed by a small percentage of gold?.

I cannot see how you can possibly say it is false that the money is backed by nothing since we have fractional gold backing. Do the math, today we have nine trillion dollars of debt and a very small pile of gold to back it. So small of an amount of gold you might as well say there is NO gold backing.

Ok, I'm going to stop you here since you are completely misunderstanding some basic economic concepts. Fractional banking is a practice where banks take a fraction of their total reserve and loan it out. The amount they must keep as a reserve is called the required reserve, and the amount they are able to loan out is called the excess reserve. "Reserve" doesn't mean gold, and that's probably where you got confused. The excess reserve that they loan out creates new money by the money multiplier. Fractional banking can be practiced under the gold standard by using Gold Certificates rather than Federal Reserve Notes.
Now that you are familiar with some of the terms, please reread my post.

 

[goodkarmaco]

I already said that. I said they are using a small gold reserve, ( albeit miniscule) and using that to say there is some gold backing. If the government states the money is a gold certifcate, it still does not mean they have the money backed by gold.

The only point I can think you are trying to make about using a fractional gold system is, we are idiots to think all is good in la-la land, because our treasury tells us we have a miniscule backing of gold for the piles of money reaching to the moon.

It does not matter what they have in place as we all know it to be a lie that our money has value.

Let me put it this way.

If you are creative you can chop down a tree and make pulp out of the tree. You can make enough pulp from one tree to make thousands of paper sheets as big as a piece of plywood (4x8 feet). Lets say you are really creative.. so then you run the sheets thru a very large printing machine. Then you have them cut into little 2 inch by 6 inches pieces of paper.

From that one tree cut down and turned into paper pulp and then made into little sheets of paper you spray dollars signs on them with every denomination from $1.00 to $1,000 printed on them.

Now you have created out of thin air millions of dollars worth of money, ( if that is what you want to call money). If it makes everyone feel good to know the government has a miniscule amount of gold to back up this phony money scheme, then you will be a content puppy right?

Many of us are not and want to see real money backing our ecomony. Real money is not a by product of a lumber mill, a almost worthless pulpy substance.

This pulpy substance is also made into a product that is similar to money and is looked at today by people as having the same value. The product is toilet paper. Both toilet paper and paper money are made exactly the same way out of a by product of lumber and both are worth the same, except for perceived value.

Soon folks will not have to run to the grocery store when they run out of toilet paper. They can simply reach in their wallets and understanding its worth will wipe their ass with it.

 

[gou]

I already said that. I said they are using a small gold reserve, ( albeit miniscule) and using that to say there is some gold backing. If the government states the money is a gold certifcate, it still does not mean they have the money backed by gold.

The only point I can think you are trying to make about using a fractional gold system is, we are idiots to think all is good in la-la land, because our treasury tells us we have a miniscule backing of gold for the piles of money reaching to the moon.

You are completely misunderstanding everything I wrote. None of our currency is backed by gold. It's not a "fractional gold system" as you put it. "Reserve" in "fractional reserve banking" doesn't refer to gold reserves; it refers to dollar reserves.
My point is that even if our money was backed by gold, the amount of money in an economy could easily surpass the amount of gold within it. The only way to prevent this is to enforce a 100% required reserve ratio, i.e. full reserve banking. Full reserve banking is only theoretical and not practical.

 

[goodkarmaco]

spend only what you have

OK Gou,

now we are on the same page.

The way you stated your words above would leave people to believe we have a gold backed currency or a fractional backed currency, at least that is what I thought you were saying. I have seen this problem thruout Namepros. It is my opinion when we talk here that everything is needing to be explained plainly.

Gou,

thanks for following along with your patience and not attacking me. I hope you feel that I was not attacking you either. It is the information and the understanding that is important and that is what we went for. So for me I have learned something here.

People who are economist's often dismiss that gold could once again back our dollar by saying there is not enough gold in in the world to back it. Many ways could be used. One is simply let the dollar fall against gold. If it finally ended with gold being valued at $20,000 per ounce because we have so damn many greenbacks, that is ok as at least the money is backed and we know what the dollar at that time is worth.

So if the gold to the dollar ratio is $20,000 to one ounce of gold then we can go from there and start the very long process of getting our debt under control. Doing that the gold would be looked to as money.

I have no problem with two or three metals being pegged to the dollar. Gold and silver and maybe even one or two of the more scarce precious metals.

Think of all the unnessasary wars and debt we would eliminate if the government could not go froward with their plans if they did not have the money in their coffers, ( ie gold) to fund their programs. Programs that the majority of people are against in the first place.

In my town my city hall is lined floor to the wall with two inch thick marble. The cost is millions of dollars just for the floor to walk on and the walls to look at.

It is my opinion government does not need these kinds of non essential decorations to function as our governing body.

The reason they get these items is they go into debt. Then they raise prices for parking tickets and taxes to chain us to generations of debt repayment. Of course city government is not breaking the country like the Federal government is, so a real money backed government will shrink our national debt and make all politicians play the same game we are forced to play.

That game is spend only what you have.

Best regards,

 

[gou]

goodkarmaco, the gold standard is not going to prevent the government from deficit spending. Money is not created to pay for the war; it is borrowed. They can still borrow money under the gold standard.

 

[goodkarmaco]

You probably know that when the government was on a gold backed money system years ago, they had to have gold in their reserves to fund whatever they were funding. Now they do not.

Lets get back to that way so we can have a stable economy Ok?