QE3 is here! RALLY!!!

[tvbcof]

QE isn't about weakening the dollar... that's a side effect

its about forcing banks to loan money.

And forcing cash hoarders to spend/invest.

Works well to a point.  I habitually keep as few USD as possible.  To some degree I buy things that I may or may not if I were not wanting to unload rapidly declining USD denominated assets in risky entities (e.g., anything quote/unquote 'regulated' by those retained by our political leadership for that purpose.)  A fair fraction of the excess goes into PM's however, and for a time a chunk of it went into Bitcoin.  As more and more people turn into PM/Bitcoin 'weirdo's like myself, I would expect a shift in strategy.  Until then I figure that QE will keep on keepin' on.

Of course, I am referring to U.S. corporations that are sitting on hoards of cash.

Accd to Sinclair, large corporations are already or soon will be taking almost exactly the same actions I am personally.  That is, keeping a portion of their reserve in the form of gold.

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[jojo69]

Shareholders expect companies to put their cash to work.

You mean like the hoards of cash they are sitting on?

[tvbcof]

Accd to Sinclair, large corporations are already or soon will be taking almost exactly the same actions I am personally.  That is, keeping a portion of their reserve in the form of gold.

Outside of hedge funds, that is extremely unlikely.

If shareholders were interested in gold on a company's balance sheet they would just buy gold instead. Shareholders expect companies to put their cash to work.

Yes, it sounds like a tall tale, but I have about as much respect for Sinclair's insight, knowledge, motives, and all around decency as anyone I can think of in the space.

Though I don't have personal experience as a shareholder (since I dump all such assets immediately if I end up with them) I would expect that shareholders want the best return they can get and expect the corporation to deliver.  If parking some reserve in gold is a good way to whether a storm (and recent history demonstrates that ain't a half bad strategy) then it does not seem to me that shareholders would care that much...but for the 'unorthodoxy' which we've all been conditioned consider gold reserves as being.

[jojo69]

Granted, I was just pointing out a certain irony in the juxtaposition of your posts.

I do not find it unlikely in the least that prudent companies might hedge their operational reserves in commodities.

[tvbcof]

Accd to Sinclair, large corporations are already or soon will be taking almost exactly the same actions I am personally.  That is, keeping a portion of their reserve in the form of gold.

Outside of hedge funds, that is extremely unlikely.

If shareholders were interested in gold on a company's balance sheet they would just buy gold instead. Shareholders expect companies to put their cash to work.

Yes, it sounds like a tall tale, but I have about as much respect for Sinclair's insight, knowledge, motives, and all around decency as anyone I can think of in the space.

Though I don't have personal experience as a shareholder (since I dump all such assets immediately if I end up with them) I would expect that shareholders want the best return they can get and expect the corporation to deliver.  If parking some reserve in gold is a good way to whether a storm (and recent history demonstrates that ain't a half bad strategy) then it does not seem to me that shareholders would care that much...but for the 'unorthodoxy' which we've all been conditioned consider gold reserves as being.

Yes, because MF Global taught us all exactly how secure gold deposits are.

Chumping Gerald Celente is one thing.  Chumping GE is quite another.  Anyone with a modicum of thoughtfulness can keep that asset safe...and although you don't want to hear it, they can also convert it to other forms of wealth without a great deal of effort.  (Voice of experience, BTW.)

Actually it would probably be somewhat more difficult for a corporation to keep their deep storage gold safe given that they need to comply with laws and that they would likely have a big enough pile to go after.  I've a sneaking suspicion that the entities who run ETF's are going to find that out.  But I consider the wisdom of keeping one's gold at an ETF to be only slightly higher than keeping one's BTC with pirateat40.

[Raoul Duke]

[labestiol]

Accd to Sinclair, large corporations are already or soon will be taking almost exactly the same actions I am personally.  That is, keeping a portion of their reserve in the form of gold.

Outside of hedge funds, that is extremely unlikely.

If shareholders were interested in gold on a company's balance sheet they would just buy gold instead. Shareholders expect companies to put their cash to work.

Yes, it sounds like a tall tale, but I have about as much respect for Sinclair's insight, knowledge, motives, and all around decency as anyone I can think of in the space.

Though I don't have personal experience as a shareholder (since I dump all such assets immediately if I end up with them) I would expect that shareholders want the best return they can get and expect the corporation to deliver.  If parking some reserve in gold is a good way to whether a storm (and recent history demonstrates that ain't a half bad strategy) then it does not seem to me that shareholders would care that much...but for the 'unorthodoxy' which we've all been conditioned consider gold reserves as being.

Yes, because MF Global taught us all exactly how secure gold deposits are.

Some companies understood that, and don't invest in ETFs. The famous example is the university of Texas.
And when you see the bond king advising to buy gold, you know that there's an increasing number of people/funds/companies thinking about it.

And again, if you all agree the Fed is giving everyone an incentive to buy gold, you should ask yourselves why. It's not that they are so stupid that they don't understand the consequences of their actions. They want people to sell their dollars. A cheap dollar boost exports (thus GDP) and devalue the debt. But obviously they'll never say it publicly.

I advise you to read "Currency Wars" by Jim Rickards, it explains this a lot better then I do.
You can also check what he said in this article published the 20th of August :

So look for the following sequence of events. On August 31, the Fed will give strong indications that more quantitative easing should be expected if economic conditions do not show substantial improvement. On September 6, expect the European Central Bank to lower its main lending rate by 25 basis points to 0.50 percent. Then on September 7 look for an employment report weaker than consensus estimates due partly to quirks in seasonal adjustments. This will give the Fed economic justification and political cover for the start of a new quantitative easing program on September 13. This double-dose of ECB and Fed ease should give stock markets a lift through the fall at least until the twin dangers of the fiscal cliff and war with Iran stare investors in the face later this year.

To be fair, he got it wrong on the kind of easing the ECB did (Buy short-term bonds Vs. Lower interest rate)

[sadpandatech]

yes youtube videos are telling everyone the dollar is going to crash hardcore very soon.
the solution? buy gold!

right....

buy can food / rice if your scared of a financial meltdown.

no one in their right mind is going to trade their food for your gold....

Of course they will. The prepared will still have needs/wants that go beyond their preparations. What does a well prepared person trade a well prepared dentist to fix a cavity? Set a broken bone? Purchase antibiotics? If I have a surplus of food, but I am running low on ammunition, how do I purchase ammunition from someone who has a surplus of food and ammunition? Gold, of course.

nah, better be bringin' me some other commodity that I can use. Maybe that could be blankets, fuel, #H of manpower. But it sure wont be gold at my lil pit stop.  Well, atleast not if conditions were such that a recovery to 'advanced' society were not going to happen in my life time.

I can picture several scenarios where people would trade gold and several where gold or anything else that was non essential to survival would be uncommon. Some form of a central market would have to exist to ultimately give gold value.

[labestiol]

yes youtube videos are telling everyone the dollar is going to crash hardcore very soon.
the solution? buy gold!

right....

buy can food / rice if your scared of a financial meltdown.

no one in their right mind is going to trade their food for your gold....

Of course they will. The prepared will still have needs/wants that go beyond their preparations. What does a well prepared person trade a well prepared dentist to fix a cavity? Set a broken bone? Purchase antibiotics? If I have a surplus of food, but I am running low on ammunition, how do I purchase ammunition from someone who has a surplus of food and ammunition? Gold, of course.

nah, better be bringin' me some other commodity that I can use. Maybe that could be blankets, fuel, #H of manpower. But it sure wont be gold at my lil pit stop.  Well, atleast not if conditions were such that a recovery to 'advanced' society were not going to happen in my life time.

Basically you're advocating barter. Nothing bad with that, if possible it's always better, I agree. But if it's not, then you need a "common good that most people accept". That's called money.
And what humanity historically selected as the "best money" is gold. But that's ok with me if you don't accept it, I'll buy what I need to your neighbor.

I can picture several scenarios where people would trade gold and several where gold or anything else that was non essential to survival would be uncommon. Some form of a central market would have to exist to ultimately give gold value.

Obviously pricing is difficult without a central market (not only for gold, same with any goods), but it is still better than no trade.
And if you look at history, gold wasn't imposed. It emerged (bottom-up).

[sadpandatech]

And if you look at history, gold wasn't imposed. It emerged (bottom-up).

I disagree. I believe this phrase, 'rich as Croesus,' would find quite the opposite point of emergence if studied a bit. Just to say that I feel the value given to gold from its collection by great societies, rulers, empires, etc lead to its use in trade and not the other way around.

[adamstgBit]

gold is cool and all, but this is the 21st century

can't we make the a perfect money?

limited supply
impossible to counterfeit
easy to transfer, secure p2p exchange

 

[labestiol]

And if you look at history, gold wasn't imposed. It emerged (bottom-up).

I disagree. I believe this phrase, 'rich as Croesus,' would find quite the opposite point of emergence if studied a bit. Just to say that I feel the value given to gold from its collection by great societies, rulers, empires, etc lead to its use in trade and not the other way around.

From what archaeologists know, humanity began to play with gold around 4000BC (link), a lot before Croesus. And it's the first proof we have, so it's probably even older.
At that time it was only jewelery, just another good to trade. Quite the same idea as today, people like to wear shiny rocks, something I don't really get, but apparently the average human disagree with me (ask women  ). That's where the value of gold (or silver) appeared.

It was only later that it became one of the most used form of money, because people understood that it was scarce, and impossible to create from something else (though a lot of people tried). Nowadays it's possible, but insanely expensive (Synthesis of precious metals).

And btw, rulers never liked gold or silver as money, because they were not able to counterfeit it. How are you supposed to pay for crazy invasion wars with a limited amount of money ?
A interesting example is one of the first inflation of modern history during the roman empire, where the silver denarius went from 95% silver to 0.02% in 200 years (link).

gold is cool and all, but this is the 21st century

can't we make the a perfect money?

limited supply
impossible to counterfeit
easy to transfer, secure p2p exchange

 

I wouldn't be here if I didn't agree with that. But we have to let the market make this choice. That's a lot of people, with a big inertia. Gold still have a long time to go (if only for jewelery).
Anyway is it really a problem if we use both ?

[Inedible]

gold is cool and all, but this is the 21st century

can't we make the a perfect money?

limited supply
impossible to counterfeit
easy to transfer, secure p2p exchange

 

If only someone would come up with som... hey, wait a minute, I see what you did there.

[World]

PETER SCHIFF: The Fed Just Unleashed 'Operation Screw'
http://www.businessinsider.com/operation-screwed-2012-9

[tvbcof]

I wouldn't be here if I didn't agree with that. But we have to let the market make this choice. That's a lot of people, with a big inertia. Gold still have a long time to go (if only for jewelery).
Anyway is it really a problem if we use both ?

Nope, no problem at all! In fact I think they compliment each other nicely. I can use Gold without electricity and the internet. I can travel without carrying anything of value (other than myself), and my Bitcoins are waiting for me wherever I arrive (no need to worry about search or seizure).

Furthermore, both Bitcoin and gold are fungible.  If you can find someone 'here' who wants to get their gold from 'there' to 'here' (once you are on-site 'there'), Bitcoin could make it safe and easy to transfer gold as well.  Each person would need a trusted party on the opposite side, though, to carry out their wishes.  Possibly this would be a good related business for someone doing escrow.

[World]

PETER SCHIFF: VIDEO Operation Screw: The Fed goes all-in on QE
http://www.youtube.com/watch?v=LS879r7xeLc

[evoorhees]

how badly would gold crash if the economy recovered?

back to 300$/oz?

If the economy recovers, interest rates will rise, rendering the US Gov debt untenable, and encouraging further purchases of gold as a hedge against USD collapse.

[jojo69]

If the economy recovers, interest rates will rise, rendering the US Gov debt untenable, and encouraging further purchases of gold as a hedge against USD collapse.

I think this is really important to understand

there is no way out for the Keynesians at this point...when the music stops there will not be enough chairs