Another quote, this time from Ludwig von Mises (via the Daily Reckoning Australia):
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
Like any sane person, my preference is the first option.
I have no idea how much longer this expansion will continue, but we've asked to take our modest holdings today. Maybe we'll miss out on a further commodity boom in the next few weeks, though it seems that when the market gets skittish gold runs with the herd for a while. We plan to come back in soon enough, on a regular premium basis; but unless Monday sees a significant drop, we've done all right over the last couple of years. Thank you, Mogambo Guru and others.
Friday, August 03, 2007
Official market intervention?
Interesting quote from today's Daily Reckoning Australia:
Meanwhile, is the Plunge Protection Team (PPT) hard at work in the US? For the second day in a row, Wall Street rallied over 100 points in the last hour of trading.
You can interpret this in one of two ways. First, bulls and bears are earnestly engaged in combat for control of the market. Bears are winning the field for most of the day, with the Bulls rallying late.
The other, more sinister theory is that there exists in the financial market a buyer of last resort who comes in to goose the indexes at critical times, when investor confidence is especially fragile. We take no position on the matter. But it sure does look weird on a chart.
This could be connected up with the UK's surge in US Treasury security purchases over the last year. The conspiracy theory here would then be that the plane is already in trouble, and the stewardesses (I've forgotten the PC term) are walking the aisles to reassure the passengers.
Time to take gains?
Meanwhile, is the Plunge Protection Team (PPT) hard at work in the US? For the second day in a row, Wall Street rallied over 100 points in the last hour of trading.
You can interpret this in one of two ways. First, bulls and bears are earnestly engaged in combat for control of the market. Bears are winning the field for most of the day, with the Bulls rallying late.
The other, more sinister theory is that there exists in the financial market a buyer of last resort who comes in to goose the indexes at critical times, when investor confidence is especially fragile. We take no position on the matter. But it sure does look weird on a chart.
This could be connected up with the UK's surge in US Treasury security purchases over the last year. The conspiracy theory here would then be that the plane is already in trouble, and the stewardesses (I've forgotten the PC term) are walking the aisles to reassure the passengers.
Time to take gains?
Hiding Public Debt
In response to comments from "City Unslicker" (see previous post), a Business Wire article trawled via Highbeam (subscription required) reveals that in the UK, the equivalent of US $98 billion of projects have already been agreed under the Private Finance Initiative.
These are, apparently, also known as BOT (build-operate-transfer) projects. Half are to do with transport, but PFI is also used for schools and hospitals.
These are, apparently, also known as BOT (build-operate-transfer) projects. Half are to do with transport, but PFI is also used for schools and hospitals.
From: In the UK, under the Government's "Private Finance Initiative" Launched in 1992, BOT Projects with a Value of GBP 48.3 Billion Had Been Signed by March 2006.
Source: Business Wire, January 15, 2007. Via: 
The Independent (June 6) reports on a National Audit Office finding that many PFI projects are poor value. This kind of financing has been controversial for a long time, and seems like another way of burdening future generations while pulling the wool over the eyes of the present electorate. It seems to me like another sign that governments are losing control of our money and trying to pretend they're not. The pretence merely prolongs and increases the problems.
From: Half of PFI deals fail 'good value' test ; Business News IN BRIEF
Source: The Independent - London, June 6, 2007. Via:
...and now a high-profile project in London, servicing the underground railway system, has suffered financial collapse, leaving behind extra costs and political embarrassment:
From: Tube's 17bn upgrade at risk as Metronet collapses ; Mayor will need to find 50m a week by DICK MURRAY
Source: Evening Standard - London, July 18, 2007. Via:
Thursday, August 02, 2007
Poll update
Early responders seem to prefer gold and silver to foreign currencies, as stores of value. As Shylock correctly pointed out, "thrift is blessing, if men steal it not", and the fear of inflation's theft appears to be greater than the promise of interest on foreign bank accounts. The "breed of barren metal" is winning at the moment.
Please vote in the polls opposite.
Please vote in the polls opposite.
Gold stocks heading for a postwar low
I've looked at the World Gold Council's long-term series from 1948 on. Current gold stocks held by governments are at a low not seen since before 1949: WGC figures for June 2007 total 30,374 tonnes (another 9 tonnes down from last December).
In 1948, official world gold reserves weighed 30,182.6 tonnes; in 1949 they were 30,623 tonnes, more than today's holdings. From then on, the hoards increased, reaching a peak in 1966 (38,283.6 tonnes). In 1967, they dropped suddenly to 36,900.9 tonnes.
Then the slow slide, taking these periods to lose around 1,000 tonnes at each stage:
1968 - 1978 (11 years): 36,000 - 37,000 tonnes
1979 - 1992 (14 years): 35,000 - 36,000 tonnes
1993 - 1996 (4 years): 34,000 - 35,000 tonnes
1997 - 2000 (4 years): 33,000 - 34,000 tonnes
2001 - 2002 (2 years): 32,000 - 33,000 tonnes
2003 - 2004 (2 years): 31,000 - 32,000 tonnes
2005 - 2006 (2 years): 30,000 - 31,000 tonnes
You'll see that the rate of loss steepened from 1993 onwards, and accelerated further from 2001. We're now approaching the lowest point since these records began, 59 years ago.
Are gold stocks a measure of world economic progression and regression?
In 1948, official world gold reserves weighed 30,182.6 tonnes; in 1949 they were 30,623 tonnes, more than today's holdings. From then on, the hoards increased, reaching a peak in 1966 (38,283.6 tonnes). In 1967, they dropped suddenly to 36,900.9 tonnes.
Then the slow slide, taking these periods to lose around 1,000 tonnes at each stage:
1968 - 1978 (11 years): 36,000 - 37,000 tonnes
1979 - 1992 (14 years): 35,000 - 36,000 tonnes
1993 - 1996 (4 years): 34,000 - 35,000 tonnes
1997 - 2000 (4 years): 33,000 - 34,000 tonnes
2001 - 2002 (2 years): 32,000 - 33,000 tonnes
2003 - 2004 (2 years): 31,000 - 32,000 tonnes
2005 - 2006 (2 years): 30,000 - 31,000 tonnes
You'll see that the rate of loss steepened from 1993 onwards, and accelerated further from 2001. We're now approaching the lowest point since these records began, 59 years ago.
Are gold stocks a measure of world economic progression and regression?
Where's the gold gone?
Looking again at World Gold Council stats, there's something odd: a heck of a lot of gold has disappeared.
In seven years, from the first quarter of 2000 to the last quarter of 2006, the total tonnage held by countries and the IMF and World Bank has declined from 33, 375.1 to 30,383.8. That's a total reduction of nearly 9%, 2,991.3 tonnes of gold to be exact. At today's price ($21,426.87 per kilo), that's $64.09 billion gone off the radar.
Or to put it another way, at this rate of attrition, there will be no officially-held gold in the world at all in about 71 years' time, less than the lifespan of an average American.
The people must be voting in the only way that makes much difference these days, squirreling away pieces of gold. Or does anyone have a better explanation?
In seven years, from the first quarter of 2000 to the last quarter of 2006, the total tonnage held by countries and the IMF and World Bank has declined from 33, 375.1 to 30,383.8. That's a total reduction of nearly 9%, 2,991.3 tonnes of gold to be exact. At today's price ($21,426.87 per kilo), that's $64.09 billion gone off the radar.
Or to put it another way, at this rate of attrition, there will be no officially-held gold in the world at all in about 71 years' time, less than the lifespan of an average American.
The people must be voting in the only way that makes much difference these days, squirreling away pieces of gold. Or does anyone have a better explanation?
Bad news update; listen to Grandad
Peter Schiff has been quoted in various sources, e.g. the LA Times, as predicting oil at $100 a barrel.
Michael Panzner refers us to a site called Grandfather Economic Report, which like me is concerned about the impact of bad economics on families and the next generation.
Michael Panzner refers us to a site called Grandfather Economic Report, which like me is concerned about the impact of bad economics on families and the next generation.
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