Saturday, January 1, 2011

Commodities to rumble and tumble in 2011

I expect this year will include wild swings and volatility in commodity, credit and currency markets. Investors, savers and speculators are piling into commodities as a hedge to Bernanke's madness. Take a look at the bizarre behavior of sugar in the past week.




Massive intraday swings larger than 10 percent as governments intervene and investors become seduced by greed but terrified by fear. The best summary is this as to why the roller coaster will continue. As the government continues to print more digital money and the deficit and debt become ever larger, investors will run out of dollars and into things they can actually touch and hold. Real things. However, there will also be periods where they realize that they have purchased sugar, corn, wheat, or soybean futures at the highest level in history and will sell off after making some gains. Take note that commodities have recovered after every single take down which portends a healthy bull market.

It is not set in stone that the dollar will get wiped out or even become severely devalued. There is still a possibility that the ship gets turned around away from the rocks and towards the harbor. Unfortunately our leaders keep sailing towards that hyperinflationary outcome "full speed ahead". Their hubris is astounding. Congress recently passed the extension of the bush tax cuts and payroll tax cut extension for the next two years which will cost close to $900 billion. Thats $450 in more debt each year. So much for the deficit projections made by the Congressional Budget Office as the third (and likely not the last revision) will have to be made going forward. I'm a firm believer in FREE markets unimpeded by government and I think lower taxes is always better as people know best how to spend their own money. However, at a time when our store of value and medium of exchange (dollar) is at risk I think its safe to say that these types of policies are fiscal suicide.

For those that are fortunate enough to have some cash on the side, it never hurts to hedge out of the "official" currency of the day. Although fiat digital dollars will be exchanged for goods and services it is possible that some day soon the value of those dollars may drop suddenly and violently. Currencies have collapsed over and over again all around the world and throughout history. Why let the thieves at the top rob you by stealing your purchasing power? Hedge by buying some silver coin. Here is a photo of a silver eagle coin.



Would you rather trust fiat digital currency or this? Im going with my silver bitchezz.

4 comments:

  1. Gold and silver are great investments, but you shouldn't back your currency with a rare commodity.

    There's nothing inherently wrong with fiat money (listen especially during the periods from 7:00 to 9:45, 22:10 to 24:00, and 28:50 to 32:00):

    http://video.google.com/videoplay?docid=-7027020665149585773&q=Bill+Still&total=4338&start=0&num=10&so=0&type=search&plindex=0#

    ReplyDelete
  2. The problem with fiat currency is that it can be created and destroyed by the people who issue and manage it. If the US was operating with a commodity backed currency then the country would be forced to lived within its means. However, by issuing trillions of fiat currency units by decree, we prolong the day of reckoning and are in fact only exacerbating the pain when we revert to the mean. Today, the national debt hit a record $14 trillion dollars. By January 2012 said debt will balloon to $16 trillion. By 2015 we will be so utterly bankrupt and insolvent that surely the world will take note and take the appropriate response by dumping our toilet dollars. Our generation is so incredibly fucked in so many ways.

    This is why new, honest, moral and strong leaders must rise to lead the people during this incredibly difficult time that will come in due time. Either liberty and freedom revives or fascism and oppression will continue to grow. I stand with liberty and freedom. Unfortunately, I cannot say the same about my generation as so many of them are ignorant, apathetic, cowardly, and frankly, just too indoctrinated (i.e. conditioned aka brainwashed) to think independently about what is truly happening. Nevertheless, I hope and believe that the sons of liberty will grow in number to lead the sheep out of their slumber. I realize that there are a certain amount of people that will never be receptive to the truth. But there are countless others who just need a little tug, a little knock on their hands in order for their eyes to open.

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  3. "Another evil arising out of the adoption of the Domestic Gold Standard is that gold can be cornered and thus the power to see-saw prices in different countries will fall into the hands of a few men."

    For this and a thorough exposition of the Gold Standard:

    Fr. Denis Fahey, Money Manipulation and Social Order, 1944

    http://www.scribd.com/doc/22358926/Money-Manipulation-and-Social-Order-Denis-Fahey-1944

    ReplyDelete
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