Fleckenstein Wonders Why Gold Gets No Respect

Bill Fleckenstein is nobody's fool.  His Contrarian Chronicles are often an interesting read.  At the least, you can expect to see an original thought from time to time, and that's quite rare in my opinion.

Naturally I appreciated the following from Mr. Fleckenstein.

As an asset, gold has helped protect and deliver gains versus paper money for 10 years running, yet the popular media heap nothing but scorn on it.

So obvious, but also so vitally important and largely unmentioned by the hacks in the mainstream.  As if that weren't enough, he goes on to include this priceless gem.

I keep waiting for the day when folks realize that if you invest in the shares of a gold-mining company, you basically own a piece of the money-creation machine. It's sort of like owning a piece of a central bank that isn't staffed by losers.

This single article was worth the price of my subscription!


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Will gold enter a mania phase?

As I've said before, DailyWealth.com is often a good read.  In this entry, Brian Hunt explains why gold may explode to much higher prices.  Interestingly, he feely acknowledges that the highest prices we see in this cycle are likely to be irrational.

As we've noted many times in DailyWealth, you can make a good case that this time is different. Never before has the nation with the world's reserve paper currency – which is backed by nothing but faith in a bankrupt government – promised so much to so many people (Social Security, Obamacare, unlimited military commitment).

Think we're already at the mania phase?  Maybe, but take a look at Brian's chart showing gold as priced in euros.  If I'm right, gold will also spike in dollar terms, and I expect it to leave the area of the chart and climb at least 3-5 paragraphs up the page.  Of course then the question will be, "When do I sell?"


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Shadowstats John Williams--Buy Gold

If you've never visited Shadowstats.com, don't wait another minute.  John Williams does a great job of showing us "what's behind the curtain."  For just a taste of his thinking, though, check out the following.  In the first paragraph he makes it crystal clear that inflation is the only way out for our government.

"Now to put that into perspective, if the government wanted to balance its deficit on a GAAP basis for a year, and it seized all personal income and corporate profits, taxing everything 100%, it would still be in deficit. It can't raise taxes enough to contain this. On the other side, if it cut all government spending except for Social Security and Medicare, it still would be in deficit. With no political will to contain the spending, eventually the government meets its obligations by revving up the currency printing press."

If that paragraph doesn't make you a little queasy, please read it again.  Of course he did leave out the option of default, but which will Washington prefer, an outright admission of failure, or a thinly veiled swindle?  Later in the article he points out how tranparent and politically inspired are everything we hear out of D.C.  Remember when we had to have the bailout or unemployment could top 8%?  Now that we sprung for that, all we hear is nonsense along the lines of "green shoots."

"You are getting happy news from governments, central banks, financial markets, Wall Street analysts and the popular media, which does tend to cater to Wall Street."

Finally, he gives his thoughts on wealth preservation (that's preservation, not getting rich!)

"In terms of preserving the purchasing power of your assets, the best thing I can think of is physical gold."

Please check out the entire article on Mineweb.com if you have time, and again, be sure to check out Shadowstats.com.


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