Jubilee Prosperity

Forget the talk of gold and silver Eagles as the new coin of the realm. $684 Trillion of derivatives face off with $6 Trillion of gold and far less platinum and silver, an over 100 times misvaluation of one or the other or both.

Precious metals including copper sell at premiums to face value. A copper wheat penny sold for almost two cents. A silver dollar ounce sold for $22 in 2008. A gold ounce sold for $1224 in 2009. How long can this last? These are financial accidents waiting to happen when reality hits hard.

Those who pay precious metal premiums on blind faith may one day realize the $50 gold and $1 silver face value of American Eagles is closer to financial reality than $1300, $5000, $50,000 or $500,000 an ounce.

Yes, the Constitutional mandate for gold and silver legal tender was violated in 1933 and 1971 by Presidents Roosevelt and Nixon. Their Congresses and Supreme Courts looked the other way, with the exception of US Rep Ron Paul.

There are so many paper and electronic IOUs relative to copper, gold, platinum and silver that Milton Friedman and a former Fed Chair wrote us precious metals would not be recognized as money. (At least until one or the other adjusted compellingly.)

While the fantasy of many true believers in gold and silver is they will inflate their way to monetary heaven, the reality is our economy is defaulting and deflating, not growing or inflating, despite the best efforts of all the King’s men. Paper assets are correcting down to gold and silver, slouching toward Gomorrah, as the Clintons’ Yale Law Professor and Supreme Court Nominee expressed it.

During times of default and deflation, scarce dollars become more valuable.

A $13 Trillion GDP, no matter how encumbered by debts and derivatives, still has more real value than all other national economies of the world. Rather, it is the encumbrances as derivatives and unfunded government liabilities that may default and disappear, leaving King Dollar for those who understand the liars’ dice poker game.

Thus, our admonition to keep a third to half of net wealth in dollars until the financial markets deflate to reflect underlying economic realities.

Those who forecast more inflation are fighting yesteryear’s war. To anyone who dares ignore widespread government monopoly media doublespeak broadcast in HiDef, we are in Deflation, with occasional government-induced hiccups that subside.

We encourage people to trust their own eyes rather than the headline news or talking heads. Our financial future depends on it.

Happy Holidays!

Regards*Rich

JubileeProsperity@gmail.com

Pages: 1 2 3 4 5

This entry was posted on Sunday, December 20th, 2009 at 11:27 am and is filed under Market Psychology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.