Fed's Irresponsiblity = High Gold Silver Prices?

It's interesting that so many people are talking about identifying an exit point for your silver "investment." An exit point into what? US dollars? Do you have an exit point for your US Dollar investment?

I take this to mean that you have most of your money tied up in US Dollars, US Stocks, or US Treasury bonds (all paper or pixels on a computer screen). I don't pretend to know everything that's going to happen in the coming months and years, but I sure as hell wouldn't want to be totally dependent on the US financial system for my well being. My grandparents got away with that, but it's WAY too risky for me. I certainly don't feel like those in charge of the Federal Reserve Corporation, Wall Street, or the US Gov't have my best interests in mind.

Very wise move. My only concern is that you won't have a lot of time to buy the dips (or BTFD as the Bears would say). You just made your first silver purchase yesterday. I'd take a long look at your financial situation and decide how much of your wealth you want to diversify away from paper assets. Then go out and get what you need ASAP. Don't worry so much about the short term fluctuations.

As far as an exit point for silver: trading it for real estate, food, gas, or MAYBE the next US currency seems like a good plan to me.

 

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LOL Thanks, Yeah I guess my exit plan for the dollar IS silver at this point LOL as for my current investments.. I really dont have any! Still living paycheck to paycheck... (feel wierd saying that as I am realizing most people here have some kind of wealth LOL)

BUT I agree and dont trust the gov, fed, or the dollar and dont think they give a **** if they drive the economy into the ground and would rather be holding something of real value than freaking paper... that's why i never have understood the paper collectors... what the heck do they think makes a $2 bill so valuable etc? at least I will have some kind of precious metals etc.

Also, I am planning to buy a bunch of 1 0z or 1gram bags of silver shot the little BB looking ones ... what do youthink about that? My idea is that if the dollar is no longer accepted everywhere, then these little silver BBs will be like the new pennies LOL or maybe worth even a dollar or so in today's sense. ... is that a realistic idea or am I just crazy LOL

 

ol' Ben Franklin said some cool shat:
1 - beware of trading something with inherent value for something with none... ie.- land for paper money, etc....
2 - beware of melting your guns to make plows, for those who do will often end up plowing for those who did not.
3 - I feel sorry for those among us who don't drink, for when they wake up, that will be as good as they feel all day long....

The biggest thing i can offer to you is to become a saver and not a spender.... at some point turn that paper into land (the ultimate security of wealth).... bubble or no bubble, wealth stored in land will serve you as well or better than any other investment you pony up.... and as a measure of security if offers you the ability "live" off of it... can't eat silver, or paper, etc.....

 

I believe I am in the minority with this opinion, but as WingedLiberty also eluded to, I have been expecting a parabolic curve in precious metals since 2005 due to our monetary policy, and its impact on the inverse relationship between PM's and the US dollar (though there is a case to be made this relationship is tied more closely to the global economy than the USD recently).

I wouldn't consider us near a high unless quantitative easing subsided, and the economy was stable enough to sustain very high interest rates for the forseeable future. Again, my opinion and speculation, but I do not expect the price to stop trending upward as long as the USD is not tied to gold or silver, and my expectation is that when the USD loses its place as the global reserve currency (the IMF is proposing SDR's [Special Drawing Rights - more paper money] as a replacement) that it will suffer and face an overhaul. Whether it might be replaced with a new currency, or if we decide to bite the bullet and implement a gold/silver standard with a weak dollar, PM's will be a better investment than paper in either case. If a PM standard is in place that would be the other scenario I'd consider it a good time to cash in, but only if I needed the money personally.

 

Thanks, love hearing about Ben Franklin. Very wise man. I definitely want to own some land as you are right, owning it is the ultimate asset and (in most cases) cannot be taken away even by the government (although I have heard of them doing so, but it's rare)

 

and what is quantitative easing? Does that mean printing more dollars?

 

Yes,,, "bailout" renamed... involves printing more money and giving it away to buddies at the highest levels.

 

ah yeah... i thought so.. stupid theory of "trickle-down" economics... ugh of course that crap won't help the economy. I don't know a single person who ever got a dime of this bailout money. I laugh in their faces when I say "when did you get a bailout check?" And they say the got $600 extra on taxes one year... and people are so stupid enough to think that was the bailout???

 

There is a lot wrong with the Fed's actions, but everyone has to consider the alternatives. Anybody who got a mortgage in the past 3 years can thank the Fed for it. Anybody who keeps money in a money market fund can thank the Fed that they prevented all of them from imploding when the short term market froze in 2008. A couple of large insurance companies were on the brink of insolvency, and all of the policyholders and annuity owners [many of them pension plans] can thank the Fed for their assistance. Everyone who leases their car can thank the Fed, for the lease market would have ended in 2008 without intervention. And on it goes. You see, it wasn't the bailout that was mishandled by the Fed. It was the decade leading up to it where Fed policies created the conditions that required a bailout for the economy to function. Right now they are trying to save the Treasury market with QE2. And as bad as QE2 might be, consider the consequences of a Treasury default and failed auctions. The people at the Fed aren't stupid and they aren't crooks. They were dealt a bad hand by the folks who were there before them. I'm not sure what else they could do now that the crisis is here.

 

HMM.. interesting to know this! It's good to know that at least they are doing and have done stuff to help the economy from totally collapsing. Maybe they aren't 100% evil after all

 

meanwhile silver hits a new 30-year high today

 

not crooks ?,, I've leave that alone and simply ; )

anyway,... everything you've mentioned would have been good things to occur imo.... it would have driven accountability and visibility back to those who enabled the raping of wealth from US citizens. Those business' which took part in that rape would have been dissolved, and thier owners could have met the masses pitch forks in hand, face to face in court. Those business entities which did not play in the game could have stepped up and replaced the those that did... NOT EVERYONE was insolvent, and the free market process of good business replacing bad business would have evolved naturally,, political ties prevent that from happening. What you have now are essentially crooked entites being rewarded (bailed out)...... so what do you think will happen with all that Qe2 $$ being handed out to them for "free",,, my guess is that most of it will find a home in thier back pocket, while the vast minority of it will be put back in play in the same 1 - 1,000 leverage game they played before.... and Q.E. will evolve to a standard line item in the US budget.

Throwing good money after bad imo....... sooner or later everything you'ved noted above will happen, and it will be a good thing (provided it drives accountability - meaning those who are responsible realize personnal asset seizures, liquidations, etc...) If that doesn't happen, don't expect anything to change.

 

So when to draw the line between fed's responsibility and a truly free economy is the question? I agree a business should be let to fail. No company should be too big to fail, even a bank. That is economical survival of the fittest right? Well then I propose that we are no longer living in a free economy.. no longer capitalism but rather socialism!

 

They may have been if the short term credit market collapsed. Few companies can operate when (1) their customers stop paying, (2) their banks won't finance them, (3) their suppliers stop delivering, and (4) the cash disappears overnight from their balance sheet. Pitchforks sound fun until you are the one on the sharp end of it. I think what people are missing is that QE2 might be the second worst thing the Fed can do, with the worst being to permit a systemic collapse. The correct course of action is to never get into this situation to begin with. But now we are in deep trouble, and it makes no sense to let the patient bleed to death because the stiches might hurt.

 

".. no longer capitalism but rather socialism!" <<< oh my.. lol. you are late to the game ; ) we've been a socialist society for decades...... welcome to the party, it just keeps on getting bigger, enjoy ; )

... btw,,, the "fate of the nation" is not dependent on the short term credit market. .... for what it's worth, local economies can be very robust,,,, local markets can keep food on the tables for extended periods of time....I have ledgers only a couple generations old noting services and goods transactions completed in "chickens", etc.... I doubt we'd sink to that level due to a short term vapor lock of short term credit solvency,,, but if needed, it could & should be done !!...... hell and damnation would not follow a temp collapse of the short term credit markets !!,,, ... and even if it did collapse, those bailed out companies (many of whom didn't have squat to do with short term credit) could have been replaced with healthy banks, or by new banks, pretty quickly.
The "world will end" sound bites your rolling are overblown and were employed to convey fear and panic to the sheeple so they didn't do what ol' Ben once said,,,, "..if the masses ever came to understand how the bankers conducted business with thier tax dollars the streets would be full of people with pitchforks.." (.. or was that Hamilton?) anyway, - to me it sounds like very very old money has been running the banking game for a looooong time.... and I don't expect the banking game will ever be fully understood by the sheeple, nor do I think the games rulers or it's erosive effects are ever likely to change..... but it's fun to chat about.

 

LOL fun to chat about indeed! I admit, I am just now the past couple of years beginning to grasp the true nature of our so-called "free country" and just hope that the "impending doom and crisis" that the end-of-world peeps are saying is wrong.. although i wouldn't be surprised if they were right LOL

Yes, it does make sense though that even if the federal government and the national economy crashes or something, of course the local economy would still survive and thrive in most areas.. many will just have to learn how to do things like grow food, raise animals etc... thankfully I grew up in the country on a ranch and would feel right at home in that situation LOL

 

One of the worse things a new investor can do is to take serious the projections of the extremes and not look for factual backing, even if it a derived indications.

The US debt is not in difficulty towards default.
There will be no precious metal based currency in the near future. read the many threads in the bullion section on this.
The US$ will not be replaced by another world currency in the near future.
There is similar chance of deflation as inflation.
Most TV business channels, and precious metal websites and newsletters excite the hope in people, but only benefit few in the end.
One should hit the ball that is being pitched and not wait with the bat on your shoulder until the 3rd strike goes by.

http://www.cnbc.com/id/38451750/

For instance look at the above URL: Credit default values. This is the amount $ it costs to insure debt of individual countries in $1000 to insure $10,000,000 debt. The higher the cost , the more likely of default.

As expected, the Sweden/Switzerland 5 yr. rate is the lowest given at 32
The US is currently #4/5 with A 5 YR. rate of 43, even less than Germany 48 or Japan 103
The worse is the PIIGS , with Greece at 1011.

Forums may consider the US debt load will cause default, but the insurer pros do not.

Read and research before making any investment. All is IMO.

Jim

 

Jim,

Great post. The market is signalling that QE2 is not a problem. But one has to wonder what the insurance would cost without Fed intervention.

 

Anyone who has a checking, savings or brokerage account, mortgage or credit facility at one of the top-15 financial institutions benefitted directly from the bailout. As much as I'm against QE/QE2/(and probable QE3-QE5), the reality is that the financial system would have failed, period. It wasn't necessarily a matter of access to credit (M3), but moreso the perception of access that was in question. When I spoke with GS in Jun '07, the opinion of their US equity and Asia Global Finance groups held in concensus that credit would never fully dry up. Their hubris paid off with QE.

As much as we hate that Wall Street insiders benefitted from QE/QE2, the reality is that trickle-down works both ways. Although individuals didn't see a check written out to them from the government, they did benefit from their bank accounts not being frozen. Anyone with a credit card, and moreso for those who carry any size of a balance, benefitted from the bailout, as the terms of their lending facilities weren't amended due to the crisis.

Yes, QE2/QE3 (when it happens) will result in long-term inflation. But it won't affect core inflation significantly. Why? Because the reality is that EVERY currency will be inflated. The USD currently trades at near historical lows relative to the basket of currencies. I won't tell you what to do about that, but I know what I'm doing.

 

Yes, World finance is like a iceberg, it is usually what you can't see that can hurt you. But I think all of the world's financial systems are icebergs, and some like China's is extremely scary because no one has an idea of what is there. I don't mind calculated risks, but you can't calculate with Chinese stocks IMO. I can't imagine investing for a future if I lived in one of the worse ( above the surface) credit problem countries like Greece, Portugal, etc. than the US. AIMO.

Jim

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