Goldbug Hyperbole
No matter what the news, the goldbugs find a way to constantly talk a market up detached from all reality. One reader wrote:
“Now they way they’re spinning this is that the confiscation of deposits is all being done to encourage people to take their money out of banks and thus increase the velocity of money to then create inflation…
Ok so what they’re saying is, they want to collapse the banking system so people spend their money… And this solves what exactly?!
And the argument doesn’t even make sense! People can just take their money and hide it under a mattress and besides, hello?! Did they miss the part where they are imposing CAPITAL CONTROLS?
And apparently this is all a good thing because all these bank runs will make gold skyrocket. It’d be funny if it wasn’t downright sad I tell ya…”
If the Euro cracks, we have to realize that the first response is go to the dollar. The open interest of ALL contracts on COMEX is less than $75 billion. This is less than 1/2 of 1% of the outstanding bond market just for the USA. Gold pays no interest so it is not a place for big money. Gold in bullion form remains a private hedge against government. Gold stocks, however, have been unable to match the precious metal in performance over the past couple of years. The miners have faced rising costs, tiny dividends and the acquisitions have been too costly resulting in driving the institutional investors away. Gold shares have done poorly in recent weeks in the face of the equities surge in the US marketplace.
The Goldbugs have desperately turned up the heat as always claiming we face a “inflationary holocaust” as the banks are moving to “enslave humanity”. They have misconstrued the entire Cyprus debacle and only see bull markets as they did for the 19 year decline. The hyperbole as always in trying to suck in more people to buy yet at the same time they blame the decline on huge short positions by banks ignoring that they are hedges.
We are in a Sovereign Debt Crisis. We face a economic meltdown that no amount of gold will save if we see the infrastructure collapse. How can you claim gold is suppress by the big banks, but they advocate buying every high, and somehow the losses are acceptable because it was really just a manipulation. We have to see the dollar rally first, then there will be the gold rally. The dollar peaked into 1932. The devaluation of the dollar was proposed byGeorge Warren who nobody knew.
The Euro is DEAD – Long Live the Cyprus POUND
I have gotten off the phone with contacts in Cyprus. Everything is getting very scary. Politicians in Brussels and Germany are clueless. They assume that since they have the power to enact a law, the people will just follow it without repercussions. It does not work like that and they have crossed the line into the realm of all bets are off.
The real number is 50% of whatever you had at the Bank of Cyprus will be gone. Russians are threatening bank managers. Riots are brewing. We are looking at the breakdown of a nation in modern times thanks to European politicians who have their head at least in the sand if not up their ass.
They have NO understanding of reality. Their lives are not at stake. Do you really want to be a branch manager of a local bank in Cyprus tomorrow or even a clerk? They are suppose to open but there will be no cashing of checks and the only thing they will do is allow you to withdraw €300. So the banks will not really be open.
Cyprus must make a choice. Follow the nonsense from the ECB, Brussels and Germany, or abandon the Euro, stay within the EU like Britain, create a new currency, and then create a public utility for the gas reserves whereby you can swap out into shares. Unless Cyprus abandons the Euro, it will enter a dark age for its financial sector will never rise again and the economic decline will be massive with job loss at record levels. As unrest rises, there goes any hope of tourism. This will be a spiral that Cyprus cannot afford. It is decision time. The Euro is DEAD! Long live the Cyprus POUND!