GUN Got this gem from my dad

Discussion in 'On Topic' started by THT, Jan 28, 2009.

  1. THT

    THT The easy way is always mined

    Joined:
    Mar 16, 2005
    Messages:
    12,748
    Likes Received:
    0
    Location:
    The booby hatch
    Someone on his team proposed the question of what will the company do if social order breaks down and the world's major currencies fail.

    [FONT=Times New Roman, serif]World Economy Leads To Currency Instability & Strong Gold[/FONT]​

    [FONT=Times New Roman, serif]Christopher Laird
    January 26, 2009
    [/FONT]​

    [FONT=Times New Roman, serif]The fast deteriorating world economy is putting pressure on currencies. Fast rising unemployment is going to cause social strife, and gold is reacting accordingly. [/FONT]
    [FONT=Times New Roman, serif]World unemployment rising fast[/FONT]
    [FONT=Times New Roman, serif]US unemployment is publicly stated to be 7%. But those numbers are understated. If you add the people who stopped looking, and the part timers who want full time, that number roughly doubles. ShadowStats.com talks about that. 14% unemployment is over 1 in 8 people. You can basically apply that rate to the US and Europe as well.[/FONT]
    [FONT=Times New Roman, serif]Now, we estimate the US will see a minimum of 3 million more jobs lost in 09, probably a lot more, maybe 4 to 5 million. If we take the number of people working in the US (roughly 130 million) 3 million more lost jobs will increase unemployment by roughly 2 to 3%. That would bring official US unemployment to 10%, and the unofficial rate to about 20% by the end of 09.[/FONT]
    [FONT=Times New Roman, serif]That is depression level unemployment.[/FONT]
    [FONT=Times New Roman, serif]The rest of the world is faring as badly. GDP in Germany and the UK declined at a 6% rate in the last months of 2008. GDP in the US is expected to decline 5 to 6% in the last months of 2008. China has lost over 10 million jobs in 2008 and is seeing riots in the big manufacturing cities, something that China is very worried about. 100,000 factories were closed in China in 2008.[/FONT]
    [FONT=Times New Roman, serif]Japan saw an astonishing drop of 35% in exports (by some measures) in later 08. China stated their 'growth' slowed to 6.8% annualized, but I want to offer this proposition: that China actually saw zero growth in latter 08. Time will tell on that one, but it's no secret that China often understates bad economic data, and who doesn't?[/FONT]
    [FONT=Times New Roman, serif]The EU is having fits with a debt bubble implosion, and the weaker economies like Spain, France, and particularly the Eastern EU members are either having riots now or are on the verge of them.[/FONT]
    [FONT=Times New Roman, serif]How well will the world handle a depression today?[/FONT]
    [FONT=Times New Roman, serif]If the world is entering the beginning of an actual depression, how will it fare socially, and what effect will this have on the currencies, bonds, and financial standing of each country? And what will happen to gold and oil as well? Well, for one thing regarding oil, it was thought to be as good an inflation hedge as gold in recent years. We can see now that was definitely not true.[/FONT]
    [FONT=Times New Roman, serif]I want to point out that if the US and the EU end up having 20% plus unemployment by end of 2009 (which would be 10% officially), that the people in these areas will not tolerate the pain well. And the 'economic web of stability' will unravel, and the people will not handle it without chaos. The matter is made far worse by the huge debts all segments of society have built up in the last decades, particularly the last 10 years.[/FONT]
    [FONT=Times New Roman, serif]China is worried about this social instability, they have repeatedly stated this. The EU is closely monitoring the various riots, such as in Greece, which were sparked by local incidents with the police, but are thought to be actually a result of simmering discontent due to the terrible economies in those areas.[/FONT]
    [FONT=Times New Roman, serif]The social pressures will force each country to try massive stimulus, which will put pressure on their currencies and bonds.[/FONT]
    [FONT=Times New Roman, serif]Fate of Euro is called into question [/FONT]
    [FONT=Times New Roman, serif]The fate of the Euro is being called into question by this. The weaker EU economies such as Spain, France, and especially Greece, Ireland, Italy, Portugal and Spain may face the decision of either going bankrupt or leaving the Euro. The single currency is proving difficult to manage with very disparate economies, some strong like Germany, and some terribly weak and debt burdened and uncompetitive.[/FONT]
    [FONT=Times New Roman, serif]If any of these nations bolt the Euro, and they can by the way, the Euro will fall like a rock. It might survive as a currency still, but its credibility will be severely damaged. In any case, it is doubtful at this stage that the Euro can be regarded as a safe haven currency right now, due to this issue alone.[/FONT]
    [FONT=Times New Roman, serif]If the web if economic stability falls apart, the social pressures and riots that result will force some of these countries to bolt the Euro. And, I think we are already seeing indications of this in the South and Eastern EU.[/FONT]
    [FONT=Times New Roman, serif]British Pound[/FONT]
    [FONT=Times New Roman, serif]The pound has taken a severe beating in the last year. The British Pound has dropped 30% to the USD, fallen an amazing 40% plus to the Yen, and fallen drastically to the Euro.[/FONT]
    [FONT=Times New Roman, serif]The UK has more debt problems than even the US. Their bank problems are so severe that they barely managed to avoid a bank crisis and holiday in October last year. This is why the pound is tanking. It's said that the pound may fall to parity with the Euro, and in fact drop below parity. If that happens, FX experts say the Pound can fall a great deal more from there.[/FONT]
    [FONT=Times New Roman, serif]Again, social instability is assured if this happens, and the UK will find it impossible to easily resolve the financial causes of the Pound's decline; they have very limited borrowing prospects in the Bond markets to alleviate the pain with stimulus.[/FONT]
    [FONT=Times New Roman, serif]Asia/West currency and trade frictions- and gold[/FONT]
    [FONT=Times New Roman, serif]The rapidly slowing Western economies are causing even more slowing in the Asian export economies. That is not a surprise since they predicated their entire economies on exporting to the West. If the West slows, they slow even more.[/FONT]
    [FONT=Times New Roman, serif]This leads us to the Chinese Yuan manipulation controversy. The US, with a new Democrat government which is very labor friendly, is likely to push for sanctions if China keeps the Yuan low. But, the problem is China's likely strategy to combat their rapidly slowing economy will be to keep the Yuan low, or even let it fall lower to encourage exports.[/FONT]
    [FONT=Times New Roman, serif]That will definitely lead to growing US/China trade frictions. If that gets out of hand, with the US bleeding jobs and China too, the recipe will be for trade restrictions or tariffs. And that is what really caused the last Great Depression to deepen in the 1930's.[/FONT]
    [FONT=Times New Roman, serif]The EU zone will have the same reactions to China using a weak Yuan to prop its economy up. IE, certainly trade restrictions and tariffs.[/FONT]
    [FONT=Times New Roman, serif]Gold here[/FONT]
    [FONT=Times New Roman, serif]If a trade war develops and there are competitive currency devaluations (each country lowering its currency to try to stimulate exports) then you can guarantee that gold will rise inexorably. Gold will then detach from its commodity correlations, and become primarily driven by currency developments around the world. This is already starting to occur.[/FONT]
    [FONT=Times New Roman, serif]With the trouble the British Pound, the Ruble, the Euro, the Korean Won, and the USD are facing, and then add this pending competitive currency devaluation, gold will be the final measure of the whole situation. It will rise relentlessly in all of these currencies.[/FONT]
    [FONT=Times New Roman, serif]Now, gold is already near new highs to the Pound and the Euro. It's not at a new high to the USD as of yet because the USD has risen so much since April of 2008, from about 70 on the USDX (basket of currencies heavily Euro weighted) to around 85 now. But gold will rise to new highs in the USD too, and we believe likely this year.[/FONT]
    [FONT=Times New Roman, serif]Bond fatigue[/FONT]
    [FONT=Times New Roman, serif]The world governments are already hitting some resistance to all the new sovereign debt issues. Germany amazingly had what's being termed a failed Bund auction in January this year, when only about 80% of the issue was taken up. If that happens to Germany, the strongest of the EU economies, what does that bode for the rest of the EU bond markets? They all were rattled when that happened.[/FONT]
    [FONT=Times New Roman, serif]US, UK and other long term bond rates have just started turning up. Spain was just downgraded by Moodys below AAA. The UKs prospects to issue new Gilts are getting thinner, since talk is going around about the UK even going bankrupt, something that seems unlikely ultimately, but their public financial situation and banking system is a shambles.[/FONT]
    [FONT=Times New Roman, serif]So is the US a financial shambles. The world bond markets are just about hit the wall, or certainly will by the end of 09 or latest by early 2010. Since the only thing that has slowed the economic decline at all is massive public borrowing and bailouts around the world, when the bond markets call it a day, a new true economic depression will rapidly rear its head. Social strife and currency instability worldwide will follow.[/FONT]
    [FONT=Times New Roman, serif]Copyright 2009[/FONT]
    [FONT=Times New Roman, serif]Christopher Laird[/FONT]
    [FONT=Times New Roman, serif]Editor in Chief[/FONT]
    [FONT=Times New Roman, serif]www.PrudentSquirrel.com[/FONT]
    [FONT=Times New Roman, serif]Disclaimer: Chris Laird is not an investment advisor/professional. This article, and the PrudentSquirrel newsletter and alerts, are general market commentary only. They are not intended as specific advice. You should talk to your own investment professionals for specific advice. Information here is deemed reliable but should be verified by you if you think it's important.[/FONT]
     
  2. TwoGuns

    TwoGuns Medical Crew

    Joined:
    May 3, 2001
    Messages:
    8,756
    Likes Received:
    0
    Location:
    Pasadena, CA/Northern AZ
    Obligatory allthatshit.jpg post
     
  3. LancerV

    LancerV Something Happened OT Supporter

    Joined:
    Sep 16, 2003
    Messages:
    49,871
    Likes Received:
    74
    Glad I got gold :bowdown:
     
  4. 7

    7 First comes smiles, then lies. Last is gunfire.

    Joined:
    Jul 5, 2002
    Messages:
    25,055
    Likes Received:
    0
    God dammit I just traded all my gold for cash! FFFFFFUUUUUUUUUUUUUUU
     
  5. HorseDick

    HorseDick Active Member

    Joined:
    Oct 1, 2005
    Messages:
    4,586
    Likes Received:
    5
    Location:
    FL
    fixed
     
  6. LancerV

    LancerV Something Happened OT Supporter

    Joined:
    Sep 16, 2003
    Messages:
    49,871
    Likes Received:
    74
    Gold and Guns I got the best of both
     
  7. phoenixTX

    phoenixTX New Member

    Joined:
    Sep 10, 2004
    Messages:
    3,613
    Likes Received:
    0
    Location:
    Dallas and OKC
    guns and ammo :wiggle:
     
  8. 1979TA

    1979TA OT Supporter

    Joined:
    Oct 19, 2003
    Messages:
    19,875
    Likes Received:
    0
    Location:
    Copperhead Road
  9. JaimeZX

    JaimeZX Formerly of :Sep 2001: fame - Also: Sprout Crew OT Supporter

    Joined:
    Nov 7, 2005
    Messages:
    9,226
    Likes Received:
    26
    Location:
    Charleston, SC
  10. 99_civic_ex

    99_civic_ex Active Member

    Joined:
    Mar 30, 2000
    Messages:
    6,835
    Likes Received:
    0
    I've thought about purchasing gold previously but decided against it. First, I don't have anywhere secure enough to put it. Second, if/when our money becomes useless, I'm not gonna carry around gold to buy shit. :rofl:
     
  11. idleprocess

    idleprocess Bring a dollar with you baby in the cold cold grou

    Joined:
    Nov 15, 2006
    Messages:
    1,678
    Likes Received:
    0
    Location:
    "world-class" to the brim Dallas
    Why do I get the feeling that the only people making money on gold right now are the folks hyping it as a "safe investment" with full knowledge that it's going to drop in value as soon as this business cycle turns back around?
     
  12. 1979TA

    1979TA OT Supporter

    Joined:
    Oct 19, 2003
    Messages:
    19,875
    Likes Received:
    0
    Location:
    Copperhead Road
    because it's true

    don't be fooled...

    [​IMG]
     
  13. THT

    THT The easy way is always mined

    Joined:
    Mar 16, 2005
    Messages:
    12,748
    Likes Received:
    0
    Location:
    The booby hatch
    Eh, I might buy a bag of small silver coins just in case... It's only about as much as an upper for an AR.
     
  14. fatmoocow

    fatmoocow bored OT Supporter

    Joined:
    Aug 27, 2002
    Messages:
    18,329
    Likes Received:
    307
    Location:
    the intarweb
    $700,000,000,000 bailouts does not a business cycle make. We're 5+ years out. Not saying gold is necessarily a good investment, but this is not a market based down slow period.
     

Share This Page