E.D. Hart

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  • Gold - Not the Safe Haven People Think it Is
    The US dollars value is purely psychological, and only accepted as valuable because it is backstopped by the "full faith and credit of the US Government." In short, the ability of our government to tax and borrow.

    Every paper currency ever created has reverted to its intrinsic value given enough time.


    Gold has had value in every society ever discovered, from tribes in the Amazon, the Egytians, the Macedonians, Greeks, Romans, and Byzantines. Gold has 10,000 years of history as a store of value.

    To say golds value is purely irrational and psychological begs the question: compared to what?
    Dec 10 13:55 pm |Rating: +1 0 |Link to Comment |View article
  • The Manipulation of Gold Prices
    Excellent writing. Keep it up. Please use more cited sources next time. Id like to look at where some of your facts come from please.
    Dec 05 00:44 am |Rating: +2 -1 |Link to Comment |View article
  • Why Oil and Gold Are Headed Much Higher
    The authors comment, citing an analyst that gold would be $2200 inflation adjusted is based on published reported Government inflation data.
    Real inflation over the last 25 years is likely 2-3 times higher, based on shadowstats.com, and global monetary growth.

    Thus, by my back of the envelope calculations, gold has quite a bit of catch up to do, and in real inflation terms, (not bogus government data) the price should be headed to north of $3500 per ounce.

    Moreover, gold is perhaps the single most manipulated commodity by governments worldwide.

    It is always in the interests of the gov. to encourage gold leasing, gold paper contracts short sales, and falsifying government reserve holdings.
    Considerable evidence has been published to show this is exactly what is happening.

    As the world comes to a new era of the unwinding of the great credit bubble of 1983 to 2008--metals and commodities will be primary beneficiaries.

    In the short term, (two years) gold and other commodities may fall another 20%--but the bull market is intact for commodities, and gold.

    Full disclosure: I don't own a concrete bunker, nor so I stockpile bottled water, ammunition, and old Soldiers of Fortune magazines.
    Oct 19 23:33 pm |Rating: 0 0 |Link to Comment |View article
  • Update: Crude Oil, Priced in Gold
    I find this article illogical and inconsistent.

    Why must oil fall? There is no economic law that finite commodities in tight supply must revert to the mean. Particularly in a declining currency.

    Hence the comparison to gold?

    But gold is not a stable currency, and is also effected by some of the same forces driving oil. (inflation hedge).

    If anything, as peak oil moves beyond the US fields which are in decline, to the Middle East, the supply/demand will become even tighter. Oil becomes more dear.

    Longer term, prices must rise in stable currency. You could have just as easily written that Oil has much more to gain looking out to 2015 as demand marches upward, and production fails to keep up with demand.

    The best minds (Maxwell, Goldman Sachs, Wulff) all point in the same direction--higher prices down the road.

    But your comparison is not to a stable currency--but Gold--which is interesting, but is widely know to be a manipulated commodity.

    You could have compared the price of oil in mangoes and rice and it would give you a different result, but still interesting.

    I read the Forbes article:

    "It was a perfect storm. The Federal Reserve was cutting interest rates and people were running away from the dollar as it lost value. Hedge funds, pension funds and mutual funds started pumping money into commodities because they were the safest place and the safest of them all was crude oil. There were too many dollars chasing too few physical assets. That's the bottom line."

    I would not call it a perfect storm, but the perfect climate. We still have too many dollars chasing too few physical assets. Its the same climate.

    The Forbes Article makes the case, in my mind, that we are at the early stages of a bull market in commodities. The dollars fundamanetals have only declined.

    There is nothing to break the long term trend of a declining buck. There is nothing, long term, to break the oil supply/demand imbalance. (yes, demand destruction is baked in for short to medium term)

    Therefore, oil will continue to be an inflation hedge.

    Therefore, oil will continue to see so called "speculation"... from those protecting their declining dollars.

    Nothing has changed in the long term picture. (albeit credit contraction could drive short to medium term contraction of money supply).

    long term, nothing has changed, thats the bottom line.

    Sep 30 15:58 pm |Rating: 0 0 |Link to Comment |View article
  • It's the End Of the World As We Know It and I Own Gold
    "Gold's run-up in recent years is the direct result of the negative real interest rates you mention. This is a historical anomaly, and we will eventually see reversion to the mean spread between inflation and interest rates. These low rates have both driven down the value of the dollar and driven up the value of gold and real estate. When that trend inevitably reverses, expect investors to flee back towards cash. You mention that gold can be used as loan collateral - could this be how the big investors are earning income with gold? Expect these positions to be violently unwound if anyone gets even a tingling sense that the price is about to drop. "

    I have no doubt that the secular bull market in commodities will eventually come to a close--in about 15 years.

    Why do we have low rates?

    Is it because we are in a very low inflationary period and it is required to keep prices relatively stable?


    or is it because we have a federal reserve that is too afraid to take its medicine and pay the price of the tech bubble, then the housing bubble, and eventually the commodity bubble?

    If you believe the goverments reports about inflation and jobs then you may be inclined to the former. If you beleive that the government systematically lies to us about jobs, growth, and inflation for their own agenda--then you may be inclined to the latter view.

    If the latter view is correct, then we are likely headed into a period of much higher inflation for a sustained period of time.

    If you believe the "crisis is largely contained" Fed and Treasury...then it is feasible that we are merely witnessing an anomoly that will revert to the mean shortly.

    The government would love for you to believe that Gold is a horrible investment, and that you should hold dollars and treasuries.

    Who do you believe? I expect gold to violently explode to the upside as people get a tingling sense that dollars are guaranteed to lose much more value than they are used to losing.

    Kinda depends on whom you trust.

    And I'm not even a conspiracy buff...just a middle class guy with a two kids that i want to send to college.
    Sep 26 19:00 pm |Rating: 0 0 |Link to Comment |View article
  • It's the End Of the World As We Know It and I Own Gold
    Diamonds are also a good currency for hoarders...you can put $250,000 in your mouth and take it out of the country.

    Gold is good also.

    These equity and debt bugs are puzzling to me.

    Cant eat gold? So what?

    You cant bury a steak in your back yard and dig it up when you need to to trade for anything you need--like bullets or cigarettes, bribes, etc.

    Stock bullets? Yep that makes sense, you can do both.

    Gold isn't insurance as most insurance expires worthless. Gold is a store of value--like cash--only better.

    if you are a debt bug---and have all of your assets stored in treauries--I hope you are taking into account that you are paying the government for the privelege of loaning it money.

    You are guaranteed to lose money by buying US bonds in todays market.
    Sep 26 18:45 pm |Rating: 0 0 |Link to Comment |View article
  • Six Situations to Monitor for the Remainder of 2008
    Wham: "Let's not forget that Bush didn't have a choice. Nothing is worse for our economy than letting terrorists mow us down on our own soil. Sounds like you'd rather take your chances with that. Typical leftist Dem philosophy."

    No choice other than listen to Cheney and not listen Colin Powell? He had to listen to his inner Neocon circle of advisers, and ignore others who said that invading the country that didnt attack you is a bad idea? Thats not leftist rhetoric, that historical fact. Dozens of books have been written about it, from left, right, to center.
    Sep 09 20:05 pm |Rating: 0 0 |Link to Comment |View article
  • The Disconnect Between Supply and Demand in Gold and Silver Markets, Part II
    Didn't the German experience last century prove that you couldn't carry enough paper to buy a loaf of bread? But gold was one of the best stores of value, and in fact a 20M coin (gold, of which I have a few) continued to buy food and supplies. Therefore, even in the event of total collapse of the economy, (which is extremely unlikely) gold will still be a store of value, where paper will not.
    Aug 27 19:58 pm |Rating: 0 0 |Link to Comment |View article
  • Independence Day: Decoupling Gold and Silver from the Dollar
    GDP is calculated after subtracting for inflation. if inflation is rising, then it impacts GDP more. If government uses bogus inflation data, then it can show growth, when in fact real inflation adjusted GDP would show a recession. Therefore it is to the governments advantage to use artificially low inflation 9for a number of reasons) to make growth look greater than it is.

    Global GDP could contract and "go down" to negative value, and this is completely consistent with rising inflation. in fact, as inflation accelerates further, it incrementally subtract from GDP. Iflation is not causes by growth, but by increasing money and credit.

    it is true that money and credit have been contracting recently--but over the last 8 years, iflation has been galloping ahead. The credit and money supply growth contraction of the last 18 months does not reverse the collosal rising in credit and money supply.

    Much of the US currency reserves (of our own government and other governments) are recycled into bonds. This is a an ocean of money sitting on the sidelines--4 to 5 trillions dollars. Some of these holders of bonds are getting nervous and realizing that their "safe haven" status of bonds is not so safe--as inflation is a guarantee of loss over time.

    This inflation that was impoted to China, Japan, and MiddleEastern bond holders will now be unwound as we import our inflation back home. Inflation can have a long lag time between the creation of the money and the rise in prices.

    In summary: it is possible to have negative GDP growth (recession) globally and still see a rising inflation trend.

    And, due to the lag time inherent in the creation of money and the subsequent off shoring of those reserves invested in bonds, and the further eventual repatriation of those dollars--it is possible to have a contraction of the (recent) money supply and of credit creation--and still see global inflation.

    In fact that is just what we see, and it will get worse as the bond trade for excess dollar trade unwinds and foreign holders of dollars wise up and see inflation as a biggest threat to their capital. They are both a cause and effected by this rising inflation trend.
    Aug 27 16:11 pm |Rating: 0 0 |Link to Comment |View article
  • The Real Story of Precious Metals' Returns
    Insurance usually expires worthless, unless the insured event comes to pass. (or whole life insurance).

    Gold doesn't expire worthless. Its also a store of value. I'm not buying insurance on when I buy gold because it doesn't go to zero if inflation moderates. it might under perform for a decade or two.

    The authors main point is an excellent one--that different asset classes have periods of out performance, followed by underperfomance.

    Certainly a decade or more of gold out performance doesn't mean that gold is "only for trading", but rather should be part of a diversified portfolio, along with oil and DBA, and other commodities.
    Aug 25 19:15 pm |Rating: 0 0 |Link to Comment |View article
  • Long Term, Gold Is On Its Way Down
    You can pick virtually any price for gold, and then find a chart to support your reasoning. Bottom line: we are all guessing.

    I have my own guess, that is based on a chart that links the value of the DOW to the price of gold.

    Long term this chart says that gold is going to $4000, and the DOW is headed to a fair value of 8000. Not a prediction, just a reading of the chart.
    Aug 10 22:44 pm |Rating: 0 0 |Link to Comment |View article
  • Two Moves to Make as the Fed Inflates the Commodities Bubble
    Lets be clear in the use our our language so that we can be clear in in our thinking. What is a bubble?

    1) Created by cheap and easy credit (many go out borrow much more than they can repay--unless the asset keeps appreciating).

    2) takes on the fever of greed--a mania and generally held belief that prices cannot go down--and very little accounting for risk, therefore virtually no fear of collapse.

    3) widespread public participation--everyon... wants in.


    Apply this to Dutch tulips--credit easy, yep. Widespread greed, absence of fear--yep. Everyone wanted in--definitely.

    NASDAQ -1999-2000.
    Excessive Margin and easy credit? Yep.
    Greed far outpacing fear with belief that stocks always go up in the long run(faith in tech stock investing) Check.
    Widespread public participation--check.

    Real Estate in US 2001-2007
    1) Check (incredibly easy credit)
    2) Check (real estate never goes down)
    3) Double (very widespread participation)

    Japanese Stocks--1989 (nikkei 39,000 to present)
    1) Yes
    2) Yes
    3) Yes

    Great-- so now we have some clear examples of bubbles.

    Lets run the criteria on commodities:
    1) Created by cheap and easy credit (many go out borrow much more than they can repay--unless the asset keeps appreciating).Widely available cheap and easy credit extended to commodities.

    Some but not excessive. Many commodities such as the index funds are fully paid to 100%. Futures involve margin, but levels are not out of historical norms.

    2) takes on the fever of greed--a mania and generally held belief that prices cannot go down--and very little accounting for risk, therefore virtually no fear of collapse.

    Absolutely not. There are people every shorting commodities like the dickens because there is widespread fear and belief that prices must come down. (note how this is the opposite of bubble thinking).

    3) Widespread public participation--everyon... wants in.

    Not on your life. "Commodities are risky and not for mom and pop." Very few retail investors want anything to do with commodities, or tread carefully with very marginal participation, choosing to allocate a conservative "5% to 10% to their portfolios as a hedge against inflation.

    The lesson: everything that goes up is not a bubble. in this case we are seeing the reversal of a 25 year commodity bear market. We are in the first few innings of a commodity bull market.

    Its simple really: asset class outperformace alternates with the economic realities. Like earthquakes, the forces at work can happen quickly and leave the landscape utterly different in a very short order.

    In this case the earth quake is the treble forces of constrained oil capacity, money supply growth explosion, and globalization contributing to greater middle class consumption worldwide. You may even want to add: political instability, and historical underinvestment in commodity production infrastructure.

    We will be in a commodity bubble when people are margined to the hile and mortgaging their homes (whats left of their homes), when you hear the talking heads and the neighbors saying that they just got into soybean futures to fund their retirement because soybeans never go down for goshsakes!

    And for the record: the inflation adjusted price of gold is not $2000 something it is actually $4000 something using constant 1980 dollars. The discrepancy results from bogus US government inflation data.
    Jul 03 02:18 am |Rating: 0 0 |Link to Comment |View article
  • Inflation Protection: Government vs. Gold
    A different view from the peanut gallery:

    Inflation is indeed the greatest threat to our markets, and the lack of a reasonable and sustainable energy policy, is the greatest threat to national security. (not terrorists that hate our freedoms).

    It is not leftist that are overspending but it is the neocons that are creating inflation. We have to fear not leftifts--which is passe, and was never a real threat in this country-- but Neocon fascists that are ruining the economy.

    Beat the drums of war, and a cowered populace will follow nearly anywhere. AS we have repeatedly seen.

    We have to fear this cancer within, and we need to hold the neocons, and the non voting public to blame.

    Lets start with Nation building and reconstruction in our own country, and bring democracy to the United States. Before we try to remake the world.

    Here we need people to exercise their right to vote, after they learn the specifics of the various issues. Rather than mindless fear mongering, and FOX non-news propaganda.

    Yes, I know, this has nothing to do with gold and inflation, except that the government is doing the old bait and switch and we look outside for the cause of inflation and we look to government TIPS for protection from inflation.

    This is exactly backward--our government is the cause of inflation--not the oil producers.

    And our salvation is not in TIPS but from equities and commodities with physical backing.
    Jun 29 21:17 pm |Rating: 0 0 |Link to Comment |View article
  • Gold/Dow Ratio: Where Are We Holding?
    As near as I can tell, when the ratio line drops below the average it is approximately 20 years until the average crosses the line on the upside.

    Since we are just crossing to the downside now, this suggests another 20 years below average--If the past if predictive of the future.

    Thats a pretty big if. I agree with the broad brush strokes of this theory, but not the application of years to go in the trend.

    As this recent stock bull market and gold bear market was quite extreme, we may see much longer to work through the excesses of inflation and pent up commodity demand---in other words, the peak to peak may be much longer as this last peak was more pronounced.

    Theretofore, golds recent out-performance may last a lot longer than the authors article states.

    We also have the additional phenomenon of central bank gold hoarding that skewed the picture in the 80's and 90's.

    As the dishoarding comes to an end, and other newly powerful banks come into the markets for gold...we will see a more natural gold demand. (i.e.-not subject to government manipulation to the same degree).

    or not.
    Apr 23 20:01 pm |Rating: 0 0 |Link to Comment |View article
  • Who's to Blame for the Commodities Boom?
    The authors article is dead on. People are protecting their wealth by buying the commodities boom.

    What is a speculating anyway?

    Someone who thinks they know where the price is going to be at a point of time in the future. It has always been thus.

    I own 80% of my portfolio in long commodity based equities, and I'm outperforming the market, plus a few ETF's that are long silver and gold.

    Is this specualtion? Of course it is.

    Do I contribute to the problem? Incrementally, yes.

    Is it rational, right, and legitimate to do so? Well according to some yes, others no.

    The US government, and the current neoconservative cabal is anticonservative in the cpaital markets in ways that no other group has been in American history.

    Without commodities in my portfolio, I believe strongly that great wave of inflation currently hitting our economy would prevent me from ever retiring, or preserving my wealth.

    If the worlds average Joe is the one bearing the cost, well, diversify your portfolio friend.

    Unhappy about the price of gas? Buy oil/gas stocks with good growth profiles: DVN, CNQ, and PWE are a few of my favorites.
    Apr 16 15:09 pm |Rating: 0 0 |Link to Comment |View article

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