Gold – the final bubble, page-4352

Timber, firstly, I do not have an obsession with gold. I am just interested in PM's because they offer diversity in asset class. I am a long term investor in all the asset classes and thus, I am interested in educating myself accordingly (which is why I dwell on HC ... ie - to learn from others).

Secondly, I admit I hold contrarian views in not only my investing habits, but also on the US and what role they play in the in the on going financial mess. For instance, IF they really do have 8,000 tons of gold in their possession, who and where did they purchase it from? How did they get it?

Thirdly, I do not think the US is a “productive” economy. On my visits there I constantly see 3, 4 or even 5 people doing the work that 1 or 2 could do. Also, the “velocity of money” (a “productive” indicator) within the economy is/has been slowing for ages. I read somewhere the other day that the same $100 used to be spent up to be 8 times (or go through 8 sets of business hands) … but nowadays that same $100 is only being spent up to 2 times.

Fourthly, I think this QE rubbish is merely delaying the inevitable and the longer it goes on…the bigger the crash is going to be. As per the “velocity of money” example mentioned above, most of this QE cash (circa 80%?) is still sitting in the balance sheets of the big banks. So, to me, QE was more about the banksters strengthening their balance sheets than national productivity.

How can you bring money into the world that isn’t backed by PRODUCTIVITY? To simply create debt (a la QE & the fractional reserve system etc) that is not backed by any tangible valued thing, is craziness. It makes a mockery of the supply and demand curve and incites greed and gorging etc etc…. which, if you look at the US – seems to be rampant!

IMVHO, the world financial problems have been caused essentially by the US (& the FED) and the fractional reserve banking system. Not only have they caused it, but they are making it worse by not addressing the core problem – “unbacked” DEBT! Until they do, it is going to be “rinse & repeat” every 7 years with each crash being larger than the last one!

And what is all this got to do with gold…well, if you don’t know now – a bit more study may be in order.