Goldbug Hyperbole

No matter what the news, the goldbugs find a way to constantly talk a market up detached from all reality. One reader wrote:

“Now they way they’re spinning this is that the confiscation of deposits is all being done to encourage people to take their money out of banks and thus increase the velocity of money to then create inflation…

Ok so what they’re saying is, they want to collapse the banking system so people spend their money… And this solves what exactly?!

And the argument doesn’t even make sense! People can just take their money and hide it under a mattress and besides, hello?! Did they miss the part where they are imposing CAPITAL CONTROLS?

And apparently this is all a good thing because all these bank runs will make gold skyrocket. It’d be funny if it wasn’t downright sad I tell ya…”

If the Euro cracks, we have to realize that the first response is go to the dollar. The open interest of ALL contracts on COMEX is less than $75 billion. This is less than 1/2 of 1% of the outstanding bond market just for the USA. Gold pays no interest so it is not a place for big money. Gold in bullion form remains a private hedge against government. Gold stocks, however, have been unable to match the precious metal in performance over the past couple of years. The miners have faced rising costs, tiny dividends and the acquisitions have been too costly resulting in driving the institutional investors away. Gold shares have done poorly in recent weeks in the face of the equities surge in the US marketplace.

The Goldbugs have desperately turned up the heat as always claiming we face a “inflationary holocaust” as the banks are moving to “enslave humanity”. They have misconstrued the entire Cyprus debacle and only see bull markets as they did for the 19 year decline. The hyperbole as always in trying to suck in more people to buy yet at the same time they blame the decline on huge short positions by banks ignoring that they are hedges.

We are in a Sovereign Debt Crisis. We face a economic meltdown that no amount of gold will save if we see the infrastructure collapse. How can you claim gold is suppress by the big banks, but they advocate buying every high, and somehow the losses are acceptable because it was really just a manipulation. We have to see the dollar rally first, then there will be the gold rally. The dollar peaked into 1932. The devaluation of the dollar was proposed by George Warren who nobody knew.