06/04/09 Tampa Bay, Florida I thought that as part of the new Mogambo Program To Stop Freaking Out (MPTSFO) and maybe get some sleep that is not disturbed by screaming at nightmares of the horrors of inflation and economic ruin that are the just desserts of an America that has now embraced ignorance, stupidity and sloth as virtues, I had turned off the alarms in the Mogambo Bunker (the MoBu) that were connected to the circuits monitoring the creation of bank credit by the Federal Reserve.
This new bank credit is the stuff from which “money” is instantly made when someone borrows from a bank, which increases the money supply, which creates inflation in something when that new money is used to bid up the price (or prices) of part (or parts) of the existing stock of goods and/or services, the recipient of which goes out and bids up the prices of stuff that HE wants, round and around.
My Mogambo Sleepy-Time Plan (MSTP) was, alas, to no avail, and I tossed and turned fitfully all night, especially now that the far-Left, commie-think, brain-dead Obama administration – which I now refer to as The Obamaniacs – has gotten the Democrat-controlled Congress to spend a monstrous 28% of GDP, of which 13% of GDP (slightly less than half!) is borrowed money!
The Federal Reserve has two choices here. It can choose to tell Obama and the idiot Congress to go to hell because creating that much money will produce ruinous inflation, like it has always produced all the way through history, destroying the economy.
But instead, the despicable, incompetent Fed has chosen to acquiesce, and print the money necessary to buy all of that new debt! Trillions and trillions of new dollars flooding into the economy through governmental spigots! Yikes!
Perhaps this is why I am hearing a lot of things like, “The US dollar has fallen below important support at 81 on the index, and everyone expects it to fall more. This is what the guys and I were discussing while hanging around the water cooler instead of engaging in our usual banter of plotting some sick revenge against our boss, and we were wondering what you thought of this idea that the ailing dollar will go down, meaning that that other currencies are getting stronger, and we were also wondering if you would still be leaving work next Thursday at the usual time and walking down that same dark, deserted side-street to where you park your car for free instead of paying for parking like everybody else, you cheap bastard?”
Well, to the latter I say, “Not any more! Hahaha!” and to the former I say, “The dollar index is just a measure of the relative monetary stupidity of governments and their central banks. If you want to know the future of the dollar in terms of its buying power, on the other hand, then look at the dollar-price of gold, you moron!”
And on that golden note, Jim Willie of Goldenjackass.com reports, “The ratio of the 10-year USTreasury Note yield to the 2-year USTreasury Bill yield has always been highly reliable in predicting a move in the gold price.”
So the Treasury market says “gold bull market ahead!” and one of the things that tells me that we are in a bull market for gold is that, according to Barron’s, the Krugerrand is selling at the same price as the US Eagle and the Austrian Philharmonic, which is weird because the Krugerrand is one troy ounce of 22-karat gold and is only 91.7% pure gold, while the Eagle and Philharmonic are one troy ounce of 24-karat gold and are 99.999% pure gold.
So it seems that buying Eagles and short-selling Krugerrands would guarantee a profit when the price gap opens back up and people slap themselves on the forehead and say to themselves, “Wait a minute! You mean that I paid the price of an entire ounce of pure gold but I only got 91.7% of an ounce of gold? Sell!” Hahaha!
So what is the point of all of this technical analysis stuff that I do not understand, other than wasting everyone’s time? It is simply that gold is obviously getting ready to zoom, as the steepening Treasury yield curve attests, meaning that bond owners are belatedly realizing that all of this new money means that inflation will rise, making interest rates go up, handing bond holders a loss, and the longer the bond, the bigger the danger, so they are demanding higher yields.
As an interesting aside, as in, “We’re freaking doomed by a clot of corrupt government devils,” Mr. Willie says to “give credit to the USGovt statrats in their busy laboratories. They decided to ramp up the Q2 Gross Domestic Product by including all USGovt rescue funds for the big banks, including the diverse funds from the many liquidity facilities. All those funds will go directly into the GDP for Q2 as a special line item. Expect a miraculous economic recovery in the second quarter, based on vapor.”
Miraculous indeed! Hahaha! What a blatant governmental affront! What a colossal, transparent, low-IQ fraud!
I noticed that my trigger finger was twitching, my voice was bellowing in fear and outrage, my blood pressure was 500/400 and my kids were running away, crying out, “Run for the hills! Dad’s freaking out again!”
After they were gone, I calmed down in the sudden blissful peace and quiet, and it was then I remembered that gold, wonderful glorious gold, will save me like it has saved everybody else in the last 4,500 years of episodes of governmental monetary and fiscal insanity.
Even my trigger finger stopped shaking, so I used it to dial the phone and order some more gold, remarking to myself as I did that “Whee! This investing stuff is easy!”
I just realized something. Little bits of paper with stuff (like dead presidents) already printed on them have NO industrial applications! I just wanted to point that out to people, who always try and tell me the same thing about gold.
A krugerand _is_ 22kt like you said o great mogambo, however the 1 oz Krugerand actually weighs
1.0909 troy ounces (33.93 g). So you are getting 1 OZ of gold, and enough other material to make it 1.0909 troy ounces reducing the purity to 22kt, and thus making it a coin you can circulate, rather than have it bend or get beat up as pure gold is soft.
Dear Mogambo, the Kurgerrand does contain one ounce of gold, the coin is actually heavier weighing 33.93g. An ounce of gold is 31.103g. So you don’t get pure gold, but you get an ounce of gold! The same with the Eagle, it’s not 9999. The American Buffalo however is 9999. As are the Maple Leaf, the Philharmonic and the Nugget.
you idiot. sleep is achieved by imbibing vast quantities of alcohol, drugs and pizza, not necessarily in that order.
why do your students have to quote you back at yourself ? you teach then you forget what you taught us.
your sleeplessness is understandable and warranted. now drink up. oh, and that half joint is still up on the grenade rack. sleep tight….
“Every normal man must be tempted, at times, to spit on his hands, hoist the black flag and begin slitting throats.” H.L. Mencken
Mogambo is my favorite author. However, there is a serious error in this article. Gold Eagles and Krugerands have 1 oz of gold in the 1 oz coin. They weigh more than one ounce because copper and silver is added to make the coins scratch resistant (pure gold is soft). Therefore, Gold Eagles and Krugerands give you one ounce of gold and as a bonus approximately 9% copper and silver. American buffalos, Austrian Philharmonics, Canadian Maple Leafs and Australian Kangaroos are pure gold. The one ounce coins weights one ounce, which again is less weight than the one ounce Gold Eagle and Krugerand which has one ounce of gold plus copper and silver to give approximately 9% more weight.
I figured the Great Mogambo had a variety of gold coins stashed in his bunker. Maybe he only buys bars???
“Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it.” Mark Twain.In the case of the fed, obviously the latter.
That Wille guy is alright… I just don’t know about the fabulous Costa Rica thing he adds. Seems a little too risky. You ever see the look on those banana plantation workers? They work the cords like baby-Conan in the 1st movie. Bet those guys are tough. And Poor. And Angry. I bet Cuba’ll be coming around soon…
Mogambo!
Apologize to your intelligent readers for spotting the error in your mention of the gold content of the coins or you will be condemned to spend your next lifetime here on Earth amongst the humans without pizza!
What The Freak?!?!? (WTF), I am truly a Big Freaking Fool (BFF) taking the advice of a guy that doesn’t know a Krugerrand, American Eagle and Austrian Philharmonic ALL contain 1 troy ounce of gold. The Eagle is not .9999 gold either. It has silver and copper in it. My blood curdled like cottage cheese when I saw this boneheaded mistake.
That’s it. I am swearing off alcohol and putting down my bong. I hope Mr. Guru does the same.
You find when trading coins a 24k
coin when dropped can be dinged…This can reduce value in some trades. Kruggerands and Eagles or any 22K coin is a superior coin to use in trade where handling is a factor.
A litle more Mogombo juice spit on certain faces in Washington, and I’ll bet those s*** eating smiles would fade away fast.
The Daily Telegraph today has an excellent piece buy Ambrose Evans Pritchard. However right at the end he argues that inflation cannot occur as a result of QE because of the severe reduction in economic activity.
Also that Angela Mercal is very wrong. Do the authorities conspire to be all brain dead or is Bernankee buying gold to.
I would have put my comment there but the Telegraph no longer accept my posts.
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