Day: July 18, 2011

Thank-you Ben “gold-is-not-money” Bernanke: Celebrating $1600 gold

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In this video (towards end), Ron Paul asks that colossus of economic brilliance, Chairman Ben Bernanke, if gold is money and he answer with a flat “no”.  Even though it has been money for “6000 years” according to Ron Paul, Bernanke says that the only reason central banks hold this asset is “tradition”.

I have to thank Ben Bernanke for his ignorance about gold.  He is the main reason that it is now selling at $1600 per ounce and this is a great boon to my portfolio.  He is the one who is responsible for adding nearly 2 trillion dollars to the adjusted money supply in less than three years; he has also ripped off retirees and other creditors by keeping interest rates at near zero.  I don’t suppose Chairman Bernanke could possibly admit that the following two charts have any relationship.

Adjusted money base 18 July 2011: source St. Louis Federal Reserve

10 year gold chart: source Kitco.com

It is important to add that although QE2 officially ended at the end of June, there is good reason to think that QE continues.  I.e., there is no need for an announcement, QE3 started where QE2 left off, as the adjusted money supply has not leveled off but continues to expand.  And it must do so, as the United States government must roll over nearly 1/2 trillion dollars of expiring treasury debt by the end of August.  Monty Pelerin, in a must read article, writes:

From Zerohedge is this table of Treasury securities that mature in August:

The US government must fund both its deficits plus the maturing debt. In August that amounts to  $600 billion. Can this be done month after month? Not indefinitely! Annualized, the US government must sell new and rollover debt of about $7 trillion this year. Next year the amount will be larger.

The death debt spiral is coming to a head.  The next couple of months are going to be interesting.

My investment summary:

Long:  Canadian intermediate and junior oil and gas sector, gold mining, physical gold and silver (via Sprott Physical Gold and Silver Trusts).

Short:  US dollar

Also in this series:

April 20, 2011 Stuck on stupid: celebrating $1500 gold and the East Coast geniuses that made it possible

September 24, 2010 The education bubble IV: In celebration of $1300 gold

The New Berlin Wall IV: A reader’s comment

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The United States government is acting like a trapped animal in a desperate attempt to keep capital in the United States.  The New Berlin Wall consists of the various laws, many of them recent, which attempt to force American citizens and companies to keep their capital in the United States.  But instead of having success, these laws will cause many to leave permanently, with no intention of ever returning.  It will eventually result in a mass exodus if the U.S. doesn’t begin to implement measures that tries to entice capital to stay rather than measures that try to stop it from leaving.  The exodus of capital is already occurring.

A reader responded to my first New Berlin Wall with the following comment, which I edited to protect her and myself from a rapacious evil government (I’ve changed the identity of her country to X and omitted her name):

I am in the exact same situation as you. I have lived in X for thirty years. I have been told by the IRS when I call as I have been a stay at home mom of a disable X-IAN child that I did not have to file since I did make enough to file but, that I might want to fine and use my husband *who claims me as a dependent** income, he is X-IAN. I do not have to file her as “American for tax purposes” but, was told I could. Why would I want to do that?

My health is not good and this is such a royal pain. It is exceedingly confusing. This year I inherited some money when my mother passed away. I will of course report it but, it’s right in the middle of this U.S. tax change for citizens residing in other countries.  …

Why should people of lower middle income be subjected to this after living outside the country for so long. I no longer have any desire to be American because of these draconian practices. It puts such hardship on law abiding citizens. I want to renounce. The stress of it all is too much. I am only worried about being able to visit my family in the U.S. occasionally but, have no desire what so ever to EVER live there again.

Shame on you United States for this monetary slavery. We are not rich and my husbands income supports me *I have lupus and RA* AND my son with disabilities. Now you want me to feel like I’m a servant to you though I’ve done nothing wrong. This puts such a hardship on people.

I have already applied for my X-ian citizenship, I want to renounce American citizenship and not be penalized for traveling on my X-IAN passport. Thirty years of not living in the U.S. and we still have to contend with this ridiculousness.

Of course now that I will be travelling on Canadian passport, I can still visit the US but I can’t reside there any more.  But expatriation and the relinquishing of my US citizenship is what I had to do to avoid the stupid and draconian legislation against Americans who live outside the country.  The government is attempting to stop millionaires from expatriating their capital and is instead making life hell for stay-at-home mothers.  Shame on you indeed.

The New Berlin Wall series