Wow? I feel like this must be the 15th or 20th piece I've read like this in the past few months. Was there something specific in this one?

Only that the dam is about to break on gold, and that the Fed and other central banks will not be able to magic up "liquidity" to fix it when it is gold and not dollars people are owed.

Whether or not peoplle realize it, gold really is at the foundations of the financial system, and always has been, and that foundation has far fewer bricks in it that most people realized. I don't see how the problems in the gold market don't break out in a very short time frame.

The golden **** is about to hit the golden fan my friends.

An excerpt from a recent report from Chris Martenson describing what he sees as an inevitable flight of wealth from paper to hard assets, what he calls "The Wealth Trap"

By the way, in case it wasn't obvious:

Buy more physical gold for physical delivery.

Like, right now.

I hope that the gold market holds together longer than the stock market, and that when the stock market falls back into a dollar rally gold will fall with it and you can buy gold low on dollar high, but there's essentially no way to know it. The gold market is coming unglued, unraveled, coming apart at the seams, and when it goes, it will go hard and fast, just like Taso likes it.

I typed my post before you quoted that, bdvdvo, and yes, I completely agree. It will come fast, like a phase change.

I'd especially like it if J.R. or Zygote could chime in, but does anyone else foresee a decoupling between gold and equities? As this article points out, the Fed et al pouring liquidity into the system has led to a steady bidding up of both asset and equity prices. Oil, Gold, and the stock market have been basically plays against the dollar and have roughly moved in tandem since March.

But today a funny thing happened. The DOW got clobbered, the dollar rallied a bit, and Gold, while slightly weaker, did not sell off at nearly the level of its equity counterpart. IMO Stocks are way overvalued right now in terms of fundamentals, their appreciation being almost solely a product of cheap money. People I suspect will eventually realize this. My question is, do you see a "decoupling" of Gold/Oil from the greater equity market as simply plays against the Dollar? The market selling off upwards of 20% would not surprise me...gold OTOH selling off at that level would. I don't see them moving in tandem for much longer and would appreciate the input.

The more I think about the more convinced I am that this is the vector of collapse.

Yes, they will undoubtably diverge, but it might not as simple as one going up and the other down in nominal terms. Zimbabwe stock market etc.

Today seems significant because the sell of in equities was fairly large, but I don't think the discrepancy between gold/the dollar/equities was particularly. When decoupling does happen it will probably look something like this in the end, but I bet if we looked over the past year we could find numerous days that had divergence from previous trends. There is just so much going on.

So how is this going to play out?
Will you be selling your gold when the shoeshine boy tells you to buy gold @ $6k/oz?
Or are you holding out for post apocalyptic zombie world?

I hear from Max Keiser, financial sense, etc about commodity backed currencies eg AUD, NZD, CAD surviving while the USD goes into hyperinflation. Does anyone buy this? If the USD collapses would this be the end for the fiat money regime?

What about silver? More upside to silver?

Chiming in here, although not an expert. I can def. see this happening because hyperinflation really comes after a collapse of the value of a currency. There's no reason that AU dollars should collapse, they are based on something. Look at the value of oil/gold in US dollars vs the value in AU dollars. It's not that gold is gaining, it's that the dollar is losing. Currencies that are backed by gold shouldn't have any (major) problems.

I use the last great gold rally that culminated in 1980 as a guide. Accordingly, I'll be reducing my exposure to metals when 2 things happen:

1) The government takes the draconian steps necessary to get its fiscal house in order.

2) A badass cowboy mother****er like Paul Volcker takes over as Fed Chairman with the mantra "Dollar demise? Not on my watch, you ****suckers!" and proceeds to crank up interest rates to a level somewhat commiserate with where they should be for a nation with effectively zero real savings, and further forces #1 by refusing to monetize any more government debt.

As far as #1 goes, there are $9 Trillion in deficits forecasted over the next decade with expensive healthcare legislation on the way and continual new arrays of free ponies being dreamed up. Not likely any time soon.

For #2, when choosing between an immediate ultra-deep recession/depression or debasing the hell out of the $USD, Bernanke picked the latter. Our poison is picked, and the economy would immediately and severely contract if this tidal wave of liquidity were taken away (though imo that's our only shot to eventually have a chance to recover from this) Also not likely to happen any time soon.

As a result, I see no reason as to why not to accumulate metals and mining stocks atm.

Gary North had a very interesting article about how he thinks hyperinflation in the US is unlikely. He says that the Fed will no longer be willing to monetize the debt and the government will actually default on it's debt, rather than print its way out of it. I agree with him, and with Bigdaddydvo about when the right time will be to sell the metals. Although it will be sort of tough to really nail down when to sell.

http://www.lewrockwell.com/north/north777.html

Above: Rare example of an actual badass cowboy mother****er Fed Chairman

I haven't read the article yet, but there is a huge problem with this scenario and the one BigDaddydvo described with a badass Fed chairman shooting rates to the moon and refusing to monetize any more Federal government debt. It's this: The country would come apart. Quite literally. Because the only thing holding it together is taxation, debt, and printing, and the real economy of the US alone cannot support the size of its government. The US government needs its foreign creditors, it needs foreign central banks to accumulate dollar reserves in order to hold itself and the country together. And if the US comes apart, then the dollar is certainly not coming out the other side in any recognizable sense.

Put another way, virtually our entire economy is a bubble. Take away the bubble juice, and virtually the entire economy has to be liquidated and restructured, with a dramatic reduction in our debt based standard of living. The existing political order would not survive this. There is no international organization (like the IMF) that is big enough to "bail out" the US government indefinateli. This ain't Iceland.

So hyperinflation or explicit default, it doesn't really matter at this point. They've printed themselves into a corner. The size of the US government is going to dramatically reduce, I believe the Union will dissolve (probably not entirely, perhaps into smaller sub-unions), and the dollar is doomed.

I don't mean to imply that "this isn't it" or that "this is it"- I mean I don't ****ing know. But I do know that I've had the "this is it feeling" multiple times in the past few months hearing about divergence, backwardation of gold or whatever was going around- and then saw some "unusual" activity.

I am sure that a this is it will happen, and I am sure it will start with a big sell off with previous correlations breaking.

I agree with pretty much all of this. There'd obviously be tons of pain with Volcker 2.0, but imo that's pretty much our only shot to avoid an eventual catastrophic unraveling. Not to say it wouldn't happen anyway with the immediate corrective measures I've suggested, it's simply that said collapse is inevitible given our present course of action. We're basically a really sick version of Nicholas Cage's alcoholic character in Leaving Las Vegas. We might die anyway, but regardless the only hope for survival is to take away the bottle.

In any event, this discussion is pretty much academic, as the probability of these measures being employed is essentially zero. It is important, however, to note that a situation exists, albeit presently in theory, where the time is right to move out of metals. FWIW the ultimate standard that Chris Martenson foresees is 1oz Gold being traded for 1 acre productive farmland.

How could this ever be possible? I imagine in any kind of disaster scenario, the means to make food would rise in relative value at least as much as gold, and probably more.

What does an acre of farmland go for? Ten grand? I can easily see gold at ten grand of today's purchasing power.

If the large scale sprint for the doorway from paper assets to hard assets materializes, this is easily possible.

Dead Government Walking

This complements and expands the post above quite well imo.

OK, I didn't realize an acre was so cheap. But still, an acre of land seems like a hard asset to me as well.

Undoubtably, but I don't think that negates the point.

im just gonna go ahead and subscribe here...

carry on gentlemen

in saskatchewan you can pick em up for $3-500 CAD an acre. We should all pool and buy some up. I'm not even kidding.

Anyways, im jailbreaking my iphone as i type so i can skype you over 3g. will call tomorrow, today was just crazy time wise.

hope to get more involved in this thread over next couple days.

happy halloween everyone!