What Happens To Gold And Silver Next? Look Out Below?

The rarest allocation is not in gold in hand it is cash held in hand. Smart money has been buying gold, but I know some people who actually have more cash in the safe than the bank since they reinsituted the FDIC limit. They are worried about deflation. Others I know have gold because they are worried about inflation. The one thing they have in common is that they are worried, and that doesn't make for a good market. I have been selling equities for cash and I need to shop for a safe.

Thats my plan. Except I always hold long T-bonds. But whenever I see large movements in bonds or gold I sell risky assets which I consider to be equities. To me that means a central bank has problems and thats never a good thing for anything but cash in hand.

Yes and some that hold nickels although cumbersome have a hedge on inflation and deflation


Absolutely. Nickels are the perfect acquisition right now. Just like 40% halves @ $>5 spot. That was a no brainer and so are the nickels.

Couldn't edit to add, nickel composition may soon be changing. Although there has been talk for some time now, you just never know if they stop minting them or if composition will change. Then the issue to sort to get the ones with the true face value.

@ wjL: "Its actually the US economy that has outlived it usefulness so far as capital is concerned. Most corporations have been liquidating US assets and investing overseas. So we shed produtive assets and replace them with debt. God help the debt markets if the economy recovers."

I'm curious where you get your claim that "most" US companies are liquidating US assets? Some companies are closing facilities in the US but others are opening new ones. You are also choosing to ignore the fact that foreign companies are building new factories in the US. Just a couple of examples in my area:

Mercedes is just finishing a $2 billion expansion of their factory in near Birmingham, AL. They are adding capacity to build the C-Class and an additional SUV model.

ThyssenKrupp Steel spent $5 billion to build a new steel mill near Mobile, AL.

Airbus has just started construction of a $600 million facility also near Mobile, AL

VW spent $1 billion to build an assembly plant in Chattanooga, TN

International companies are building product in the market it will be sold. Very light and expensive items can still be built and shipped across oceans but heavy items like cars need to be built locally to cut down on shipping costs.

My own company (a fortune 600 company) is spending tens of millions upgrading facilities in the US as well as just building a factory in China and expanding one in Mexico. Of course that doesn't necessarily mean rosy times for the average working man. The facility that I work in has seen our sales double in the last 3 years but we employee fewer people. The millions are being spent on equipment to replace people with machines. We now have an automated foundry where the mold making, furnace, and metal pouring operations are controlled by one operator replacing manual operations that employed seven. We've done similar upgrades to the machining operations with CNC machines replacing manual equipment. It isn't just the blue collar workers getting the boot, we also just opened an engineering office in India that does data analysis, modeling and drafting work. Instead of my company hiring new engineers locally now I send my modeling work to India and I get a finished product back the next day. A seasoned Indian engineer cost ½ what a recent graduate does straight out of school in the US.

All of the above is great for the company's bottom line and we have had three years of record profits. The stock price is way up (50% over 2008), dividends are up and the executives and shareholders love it but that success has not improved the regular worker's life. We just had a meeting covering the 2012 annual report. Last year our labor costs increased by $20 million but productivity increased by $25 million. That is a $5 million transfer of wealth from labor to capital last year.

What is the point of all of this? That the economy is improving. Not for everyone and not in every area. However, just because people you know of people in your area aren't doing better doesn't mean that the Wall Street isn't doing better. For several decades now capital has been taking a bigger and bigger cut of the pie and labor has been getting less. That doesn't mean that the investor's profits aren't real or that companies can't make money unless US unemployment drops. While the everyday American may not have money to spend, multinational companies have been successfully selling to the new rich and middle class in the developing world. It only makes sense that as the economy improves, gold will fall. Gold's record run over the last couple of years has been fueled by fear. It looks like institutional investors are no longer fearful. As they sell gold, take their profits, and funnel that money into other investments, gold will continue to fall. There simply isn't enough demand from fearful small time investors to offset the institutional buyers that buy and sell millions at a time.

I am so glad someone finally stepped up to correct him.

I know I wasn't, I dont have time to point out every single wrong thing he says... all I will say is WJL goes way to extremes and hes been completely wrong in how the debt, bond and equity markets work.

Excellent points JSH and facts, THIS is what I was saying when I see in the markets everyday, I see US companies and companies around the globe embarking on such projects because the world economy, the US economy is pulling ahead.

No one is saying its all babies with candy canes and caramel candy,, but its far from rolling over into a cliff and not going backwards.

THIS IS a global recovery, US recovery that is slowly but surely working itself up, and with the help of central banks, it should pull itself up even more to the point that CB's will eventually step aside.

Arksun comment strikes a chord with me-

It is sad that folks are putting every single dime into gold and silver. It makes me sick how dealers are still marking up coins even as the prices are falling hard.. and later on they will slash the mark up on those coins as the prices drop and fewer and fewer people think the price drop is a great thing...