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Wednesday, January 4, 2012
My portfolio was up 10% in 2011
Friday, December 16, 2011
The US Federal Reserve will secretly bail out Bank of America
More than three European governments will default.
Hopefully the European governments just restructure the debt and stay in the Euro, but they long to go back to the days when stealing was easy.
The only reason to have a currency not based on gold is to create the opportunity to steal from the people who use your currency. When California defaults, they won't go create their own currency. The same should be true of all countries in the Euro.
Also coming soon, The US Federal Reserve will print money to buy mortgage bonds primarily from Bank of America. This will be a secret rescue of Bank of America.
145 on GLD may be a time to start buying.
Google is taking over the world oh so quietly. I would sell shares at 645 and buy more at 570. If it gets to 535, back up the truck.
Wednesday, November 2, 2011
Set up a bank account in Gold
The original constitution had a provision that stated, "the legistature of the United States shall have the power to borrow money and emit bills of credit." Alexander Hamilton, who became the first Treasury Secretary of the United States, told a majority of the delegates "to emit an unfunded paper as the sign of value ought not to continue a formal part of the constitution, nor ever hereafter to be employed; being in its nature, repugnant with abuses and liable to be made the engine of imposition and fraud." Hamilton won the removal of that term from the constitution. Then later as Treasury secretary, he set up the first US Mint and backed the new currency with gold and silver. This set off the greatest economic boom in world history and soon became the most valued currency worldwide.
In 1972, Nixon took the US currency off the gold standard. As a result, the currency declined in value rapidly, and the economy suffered job losses, slow growth and depressed financial markets. In 1981 Reagan got interest rates up to over 14% in order to stop the printing presses. But from October 2008 to October 2011, the Federal Reserve printed 2 trillion dollars. The Federal reserve's printed money increased by over 300% from 800 Billion to now almost 3 trillion. Bernanke, US central bank chairman says the bank will continue to print more money. (Fed printing stats from: Wall Street Journal)
The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month. Founded in 1694, the British pound Sterling is the oldest fiat currency in existence. At a ripe old age of 317 years it must be considered a highly successful fiat currency. However, success is relative. The British pound was defined as 12 ounces of silver, so it's worth less than 1/200 or 0.5% of its original value. In other words, the most successful long standing currency in existence has lost 99.5% of its value. (Quote from: Washington's Blog) From 1972 to 2011 the dollar has lost 72% of its value. (dollar value calculator)
Gold has been a world wide currency for over 2000 years. Washington politicians will tell you that gold is a risky investment while the US currency and US Government debt are "riskless". Meanwhile the US dollar continues its decline while gold has increased over 800% since 2001. This beats the government backed bank's savings rate of less than 1%. Gold can be volatile, but if you buy on dips and sell on up trends, you can use that volatility to your advantage.
My suggestion is to open up an account at Etrade and keep your "savings" account in an ETF called GLD. And keep your checking account as a "Cash credit" that is not put in money markets. You can use the Etrade account without ATM or checking fees or monthly fees. The only cost is the buying and selling of gold at about $8 a trade.
In 1972, Nixon took the US currency off the gold standard. As a result, the currency declined in value rapidly, and the economy suffered job losses, slow growth and depressed financial markets. In 1981 Reagan got interest rates up to over 14% in order to stop the printing presses. But from October 2008 to October 2011, the Federal Reserve printed 2 trillion dollars. The Federal reserve's printed money increased by over 300% from 800 Billion to now almost 3 trillion. Bernanke, US central bank chairman says the bank will continue to print more money. (Fed printing stats from: Wall Street Journal)
The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month. Founded in 1694, the British pound Sterling is the oldest fiat currency in existence. At a ripe old age of 317 years it must be considered a highly successful fiat currency. However, success is relative. The British pound was defined as 12 ounces of silver, so it's worth less than 1/200 or 0.5% of its original value. In other words, the most successful long standing currency in existence has lost 99.5% of its value. (Quote from: Washington's Blog) From 1972 to 2011 the dollar has lost 72% of its value. (dollar value calculator)
Gold has been a world wide currency for over 2000 years. Washington politicians will tell you that gold is a risky investment while the US currency and US Government debt are "riskless". Meanwhile the US dollar continues its decline while gold has increased over 800% since 2001. This beats the government backed bank's savings rate of less than 1%. Gold can be volatile, but if you buy on dips and sell on up trends, you can use that volatility to your advantage.
My suggestion is to open up an account at Etrade and keep your "savings" account in an ETF called GLD. And keep your checking account as a "Cash credit" that is not put in money markets. You can use the Etrade account without ATM or checking fees or monthly fees. The only cost is the buying and selling of gold at about $8 a trade.
Wednesday, July 13, 2011
Bernanke will eventually print money and give it to European banks
European governments are going to have to default on their debts.
There is no way they will get everyone to agree and with enough speed to print all the money they will need to to bail out Spain and Italy.
Since most European bank capital is based on European government bonds which are considered solid investments, once those governments default, European bank's capital becomes junk and the banks go bankrupt.
Since many US banks are intertwined with these European banks, this will further effect US banks.
Thus, shortly after Europe defaults, Bernanke will print more money and give it to the European banks in order to keep the banking system afloat. This will likely result in a stock rally and another great burst of inflation.
There is no way they will get everyone to agree and with enough speed to print all the money they will need to to bail out Spain and Italy.
Since most European bank capital is based on European government bonds which are considered solid investments, once those governments default, European bank's capital becomes junk and the banks go bankrupt.
Since many US banks are intertwined with these European banks, this will further effect US banks.
Thus, shortly after Europe defaults, Bernanke will print more money and give it to the European banks in order to keep the banking system afloat. This will likely result in a stock rally and another great burst of inflation.
Tuesday, April 19, 2011
US government debt is officially not "riskless"
David Beers, global head of sovereign and international public finance ratings at Standard & Poor's says he rejects the thesis that a government with a central bank that has the ability to print money does not remove the risk of default from that government. For if it did many governments throughout history would have printed their way to riches.
The S&P stated that they may downgrade US debt ratings. This statement formalizes the idea that US government debt is not "riskless" as it is so often defined. In today's world where people accept bizarre philosophies such as "Too big to fail" and persistently ignore the law that you can't spend more than you make; this S&P statement is surprisingly informative to many people around the world.
This US credit warning is a bigger deal that people may realize. For 30 years, markets have labled US debt as "riskless" and based many other debt prices off that zero risk interest rate. Now that US debt officially is not "riskless", rates based off US treasuries need to be re-priced. This is similar to why so many investors are afraid of Greece defaulting. A Geek default is a relatively small amount of money, but the fear is that investors begin to price in the idea that western governments in general can default. Government debt being considered the safest investment or in some cases "riskless" is well ingrained in the foundation of our financial system, and political leaders are hoping they can maintain the myth for as long as possible. This S&P warning about the US debt problem makes this myth harder to maintain.
The S&P stated that they may downgrade US debt ratings. This statement formalizes the idea that US government debt is not "riskless" as it is so often defined. In today's world where people accept bizarre philosophies such as "Too big to fail" and persistently ignore the law that you can't spend more than you make; this S&P statement is surprisingly informative to many people around the world.
This US credit warning is a bigger deal that people may realize. For 30 years, markets have labled US debt as "riskless" and based many other debt prices off that zero risk interest rate. Now that US debt officially is not "riskless", rates based off US treasuries need to be re-priced. This is similar to why so many investors are afraid of Greece defaulting. A Geek default is a relatively small amount of money, but the fear is that investors begin to price in the idea that western governments in general can default. Government debt being considered the safest investment or in some cases "riskless" is well ingrained in the foundation of our financial system, and political leaders are hoping they can maintain the myth for as long as possible. This S&P warning about the US debt problem makes this myth harder to maintain.
Saturday, January 29, 2011
I have that strange feeling again . . .
In 1995 i wondered . . . should I buy sextoys.com OR sextoy.com?? Each cost $70 and I didn't want to waste my money. I tried to asses the value of the domain and although I decided to only buy sextoy.com, somehow I had this strange feeling that sextoys.com was worth not only more than $70 but somehow, much much more. but it was all so new and inexplicable, so I passed on the purchase. Now its easily worth 1 million or more. I hope not to make that same mistake again.
I have the same feeling about gold . . . or more specifically about the impending peril on the US government's financial situation or the dollar itself. This video helps understand what we are not able to visualize.
I have the same feeling about gold . . . or more specifically about the impending peril on the US government's financial situation or the dollar itself. This video helps understand what we are not able to visualize.
Wednesday, January 19, 2011
Do not buy TBT to short US treasuries!
If you want to short US treasuries many people recommend the double short ETF TBT. I have been watching that ETF closely and if interest rates stay even, you will lose 20% on TBT! A much better way to profit is to sell long term naked calls on TLT or simply short TLT.
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