10/01/10 Tampa, Florida – An interesting graph of “a useful road map to any secular bull market” appeared in Casey’s Daily Dispatch. It was a graph showing how investment interest in a developing bubble classically proceeds through four stages.
First, there is the Stealth Phase where nobody is paying attention to the undervalued asset except for a few forward-thinkers who are buying, which I figure is probably because they are hip to the Austrian school of economics.
Secondly, the market moves into the Awareness Phase as more and more people recognize the value, and the gently rising price, and they start buying, too, leading to higher and higher prices, proceeding to where things are then in the Mania Phase, where suddenly everybody is buying, buying, buying, the price is soaring, soaring, soaring, and fortunes, fortunes, fortunes are being made, the details of which blare from every news source – Gold! Gold! Gold! – causing further buying by the envious latecomers to the investment party, leading to that distant theoretical time when the market is saturated with investors and paper profits, which leads to, as it always seems to, the eventual collapse in the tragic “Blow Off Phase,” where the price falls to “the mean.”
The interesting part was when the graph, created by Dr. Jean-Paul Rodrigue at Hofstra University, shows that the mean price of gold is always rising, and by the end of the graph, the mean price is almost twice as high as at the beginning, meaning that inflation is now an accepted part of life, even in gold! Yikes! We’re freaking doomed!
If you are like me, then you are already pretty numb about the horrors of inflation after the years and years of continual, relentlessly rising inflation, a vicious monster that rises slowly up out of the stinking miasma, gathering its strength from the foul Federal Reserve’s creating too much money and credit, a terror made worse by the recently-renewed promise of the Federal Reserve to create more and more inflation because – absolutely unbelievably – they think that inflation is too low! Too low!
The lying government says inflation is around 2%, which is, they say, unbelievably, too low! Too low! John Williams at shadowstats.com says inflation is running at more than 8%! Gaaahhh! We’re freaking doomed!
So, if you are, again like me, not only Completely Freaked Out (CFO) about inflation, but also a greedy, money-grubbing little lowlife who is interested only in getting as rich as possible, as soon as possible, without working, where are we on this “road map”?
Fortunately, we do not have to rely on my stupid ideas on the subject, and Mr. Casey refers to a guy named David Rosenberg, “who has a large following among the institutions,” as saying he thinks that “the Mania stage is still well off, and that gold won’t really gain steam until it hits $3,000.”
“This,” Mr. Casey adds, “despite his being a staunch deflationist.”
Of course, I look askance at anyone who is a deflationist when the Federal Reserve is promising to create more trillions of dollars to keep inflation high, and I look even more askance at anyone who is not buying gold as a result of such monetary madness!
Dominic Frisby of the Money Morning newsletter seems to show that a lot of people agree with me, and says, “Gold, of course, has broken out to new highs. And it pushed still higher yesterday after the Federal Reserve’s announcement that inflation is ‘becoming undesirably low.’”
The LA Times headline was, “Dollar Sinks and Gold Soars as Fed Signals It Wants to Stoke Inflation.” They opined, “The markets’ verdict was clear: They believe Fed Chairman Ben S. Bernanke is willing to debase the dollar to avoid the risk of the economy falling into deflation.”
They got that idea from the FOMC’s post-meeting statement, where “policymakers signaled that they’re worried that inflation has fallen too low, with the ‘core’ consumer price index rising year-over-year at a rate of less than 1.0% in recent months, a 44-year low.”
Yikes! 1% inflation (which is a lie) is a 44-year low? Inflation has been a fact of life for at least 44 years in a row! And inflation since 1966 has caused $1.00 of 1966 buying to now require spending $6.74! It looks like 574% inflation to me, but I always get these percentage things all wrong, but even if I do, even an idiot like me can see that this is a lot of inflation!
Agora Financial’s 5-Minute Forecast had the actual words from the FOMC release, which were horrifying. The committee said, “Measures of underlying inflation are currently at levels somewhat below those the committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability”!
Inflation is too low to maintain “price stability” they say! I involuntarily let loose with a Mogambo Scream Of Outrage (MSOO) at such a stupid, stupid, stupid thing to say, and apparently I am not the only one, as these “two key sentences from the FOMC press release” were enough, says The 5, to get “gold traders all lathered up.”
See how easy this mindlessly investing in gold, silver and oil is when your government and your central bank collude to destroy you? Whee! This investing stuff is easy!
The Mogambo Guru
for The Daily Reckoning
The Mogambo Guru
Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning , and other fine publications. For podcasts featuring the Mogambo, click here.
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Hitherto, investors in the gold market are predominantly from institutions, banks and central banks. By and large, individual involvement are relatively rare and the majority hasn’t even get close to a gold coin. That is to say gold market is still in its infancy, still lack of perfection, still in the initial developing stage and individuals are still not brain washed to tune in the latest financial development – notably the awesome fiat multiplication and the streaming gigadebt that only a powerful processor could possibly handled.
Unless redress by a marx’s brand of
revolution or a white wash of war, the
existing spectacular prospect is not diminishing in any scale or magnitude.
Imagine, the day when everyone owns just a single oz.
Gold and fiat are traditional arch rivals.
When fiat is freaking doomed then gold freaking good and vice versa. I don’t see any reasons as to why both are sinking freaking doomed simultaneously.
Inflation tinkering is a cash cow for us.
http://youareproperty.blogspot.com/2010/09/how-we-ripped-you-of-with-inflation.html
Why doesn’t Daughty ever comment on silver (the metal)? Is he not aware of the maniplation by (mainly) J. P. Morgen? A crime in progress to say the least!
The Mighty Mogambo has mentioned silver many times in the past and often quotes Ted Butler concerning the manipulation of silver.
Silver is his second love, right after gold, and oil (oil stocks) comes in as a close third.
Oh yes, he also loves his wife and kids, though it is sometimes tough to say which he loves the best.
If there ever is any setback in gold and silver then the only thing could be is their premature vulnerability. Though, 5 thousand years of civilisation has taken place, they are about just to initiate their experience. As gold and silver are growing up from an infant to and adult, we need to be alert of infant mortality and premature death. As mentioned, a matured perfect market needs buyers and sellers from all walks of life, not to the inclusion of only institutions, banks, central bank or government subsidiaries alone. All arrows point to the word infancy. Awareness of child vaccination and antidote application certainly is not to be underestimated.
So, gold and silver need to get in to everybody’s life to the extent of everyone desires of getting a fraction of an oz. In a world of fiat flood, I don’t see any valid reason as to why gold and silver can’t get essential drinking water to keep their pulse moving.
At the core this is not a fight between gold and fiat currency, but rather a fight between the merchant class and the elite. Right now the elite are winning. The consistent currency of the world is power which can be quantified in gold, fiat currency, food, guns, etc. I am not sure exactly how and when, but I am sure that the elite will end up with your gold if they win. They will not congratulate you for your clever investing. The only way to keep your gold is to defeat the elite. Then it will not matter if your wealth is denominated in gold or not.
Given the antics and loud ravings I read from the Mogambo Guru I expected to see him wearing beads and a mullet….what the hell is going on here!!!!
As far as I am concerned, if you are buying gold when most people are telling you to buy gold, you are ont he tail end of it and likely the one left holding the over inflated bag so to speak. Gold will decline and then i will buy from all you suckers that got in at $1300.
LOL G report, do you work for the CDC?
I think the powertrain for the driver of gold prices will be under the hood of rising foreign economies, we will probably have the exhaust pipe stuck up … or maybe the brakes will be all that is made in America… wrong… obviously America will only make the accelerator… there are no brakes on this ride Goldy Locks… exciting isn’t it?
Is there ever any good place to jump out of a car being driven by maniacs when you’re doing 100 mph? I hope the maniacs know how to stop at an overlook, spread a picnic blanket and enjoy (Peace)… it don’t seem to be a trait shared by maniacs I have read about so if you’re a maniac, take notice! It’s a request.
Regarding politics, the deficit spending, economists like Paul Krugman, let’s just shoot 10% of them each year from now on when we have a budget deficit.
Whee! This politics stuff is easy!
Goldy Locks: You are right and wrong. You are right that when most people are telling you to buy gold that you should get out. You are wrong about gold declining from here. You have no evidence to back up what you are saying. I’ll sell gold when the store teller tells me they are buying gold. Most people still looked at me cross-eyed when I mention gold. There is a long ways to go.
There is a veryvery long ways to go…and it might just happen fast, if that makes sense. When the fiat problem hits the fan I think it will surprise most just how fast the destruction will pace.
My question, and I have no answer, is if PMs go parabolic (blowoff – there is always an overshoot), what the heck currency is there going to be to take your profits *in*??
“The only way to keep your gold is to defeat the elite”.
A wise quote from a poster above.
Focus on that… because it says it all.
Seriously folks, this is what it comes down to. Ben Bernanke (fed chairman) as head butler to his lords is doing his damnest to scuttle to USD and formant a worldwide currency crisis. In which case … their planned fed successor (the IMF … International Monetary Fund) is oh so willing to step in with a “solution”. A kind of .. ‘the king is dead, long live the king’ ..type of solution.
The IMF is yet another institution of the elite. Those elites are so evil & devious. They positioned a “fed equivalent” onto the scene just for this point in time.
To the elite, the other side of this crisis is a global “fed”, and yes, along with it plethora of taxes and restrictions to be included.
As in GOLD RESTRICTIONS.
After all, gold is an enemy to their printed up fiat. Gold is truth to their lies.
Let me put it bluntly for those who need it as such. In the US and Europe there are, … oh, maybe 5000 families that are ultra rich (we’re talking 100 million USD plus). They have extensive holdings in major companies. Through these companies they enjoy a huge amount of leverage (think… leverage=other peoples money).
They exert an exorbitant amount of influence on the political process (i.e …they have bought off whore politicians).
With that powerful dynamic established, please do comprehend that these folks are smart, and they employ smarter people still. And they know how to utilize this.
Their end game is to establish a world wide central bank. World wide CONTROL.
After all, control of the money/credit supply is ultimate control. N’est-ce pas? Using the US Fed as an example’, why wouldn’t they seek this?
I mean, the US fed as been this incredible money maker for the elite because … get this, the US Fed HAS A MONOPOLY on the creation of credit & currency in the USA. What a scam. No doubt the mafia is envious.
How did it happen? Same old story..the elites bought off the politicians back in 1913. And you America…got sold into slavery whether you realize it or not.
Enough whining.
Ways to thwart this?
Stop the buying of politicians by shifting to public financed elections and term limits for politicians. Also, ditch the US “PRIVATELY OWNED” central bank known by the name … ‘the fed’
Hello people …the fed is PRIVATE (as in for the benefit of the elite).
No way in hell they look out for you.
It’s all about the welfare of their owners.
Cut the pay of ALL receiving money from the government by 10% every year until the budget is balanced.
If the decline of the western fiat currencies manages to happen at a slow steady pace it will not be good for PMs. Given enough time TPTB, the powers that be, will get around to either confiscating gold or doing something like outlawing cash and require all moneys to be in electronic form only thereby damaging the portability of gold wealth. I really am hoping for a global meltdown as TPTB will not have had time to organize their theft of the PM holders and the street market for things of store able value will skyrocket. Anarchy, bring it on! I also believe only such an environment will bring the tax and spend elites to their knees. CHAOS!