Loss Of Wealth
The following is an excerpt from commentary that originally appeared at Treasure Chests for the benefit of subscribers on Thursday, October 1st, 2009.
Human beings are not designed to think in terms of loss, or at minimum, are not built to deal with it well psychologically. And if you look around one can see this in how we have structured our modern day society, with the economy counting on steady and consistent growth even if its not to be. Of course even though it's not to be, we humans would prefer to be optimistic, and lie about the reality of the situation. Here, because of this desire, our bureaucracy feels they have sufficient license to lie about the economy in increasing measure; whatever it takes to avoid loss - loss of wealth, loss of jobs, and most importantly loss of the fictitious wealth most have saved in fictitious dollars ($'s). Oh yes, naturally when we speak of bureaucracy we cannot ignore the desire for power within the formula, however for our purposes we lump all these desires into one easily understandable obsession, that being the desire to increase and maintain one's wealth, where today, this also means at any cost unfortunately.
And there is nothing wrong with this desire as long as one goes about it in the right manner - not exploiting others past the known rules of the game. The problem today however is in our bureaucracy's desire to postpone loss for a completely corrupted and spoiled society, they must change or ignore the rules all to frequently, which naturally sends out the message this type of behavior is the 'new norm'. What's more, this is the dynamic which is of course breaking down our society from within as we lose our morality and the rule of law that defines civilization, which ironically then, will bring loss on a grand scale to all those working so hard to avoid it. The irony lies in the realization they have already lost in adopting draconian means to an unsustainable end that is not in harmony with nature, or the natural progression. Apparently this is because human beings, as a race, must push forward until they crash due to the collective will that nature has instilled in us within our primitive beings, much like lemmings going off a cliff.
So, what does the thinking man do in knowing this - play the game along with the lost and doomed masses - or go the lonely but logical route in an attempt to avoid this suicide mission? If you know anything about me, you will know what my answer is, that being of the thinking man. How do we protect ourselves from pending calamity then, if and when it comes? Well, for one thing, you should realize that for all intents and purposes calamity is already here, which is measured in a gold price attempting to break through four-figure resistance to confirm this belief. Here, the optimists (opportunists) prefer to see the glass as still being half full, and have given bureaucrats license to maintain the illusion, so gold is not sending the proper messages (reality). Of course for the thinking man that can see past the pressures forced on us by the bureaucracy, this is good news in that gold is still cheap, making it suitable for continued accumulation at strategic times.
In this regard then, gold (and silver) are real money alternatives to the deception fraught within our markets, where as increasing numbers become disenchanted with the inevitable losses unavoidable in fiat currency based economies, despite their best laid plans, the bureaucracy will be unable to holdback the rush to true safety forever, ultimately allowing precious metals to reflect reality. Here, the largesse that has served the bureaucracy so well in perpetuating the illusion all these years will come back to haunt them as gold and silver are re-priced much higher deflation or not. There is already so much currency in circulation that when increasing numbers attempt to exit our fiat currency economy in sufficient numbers, precious metals should rise anyway, both in nominal and real terms. To give you visual context in this regard, consider the chart below provided by Hugo Salinas Price in his latest showing how paper reserves have come to tower over gold as a central bank asset since Nixon dropped the gold standard, with no reversions to the mean allowed. (See Figure 1)
This is why gold and silver can do strange and wonderful things in years to come, as individuals seeking to avoid further confiscation of wealth from an increasingly hostile bureaucracy attempt to exit the system - whether it be due to fear of loss, tax avoidance, or inflation - they will run at some point. According to Martin Armstrong in his attached above, the geometry of time suggests such a move will start in earnest in 2013 as a revolt against our fraudulent and oppressive bureaucracy is ignited. And who knows, perhaps he is correct in this respect, with gold providing us confirmation along the way marked by a solid and lasting breakout above the $1,000 Rubicon. When this occurs, and it's realized gold has push past the four-figure resistance on a lasting basis, somewhat of a rush into precious metals should ensue. Despite what logic / conservatism with respect to the overbought condition of equities right now would suggest (and the risk of a rising dollar [$] if stocks turn lower), perhaps this is why we witness a run higher in precious metals through decade's end into 2010 anyway. (i.e. like tech stocks, the mania de jour at the time, did in the year 2000.)
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Good investing all.