Friday, August 19, 2011

So It Begins

It begins:  the final move into whatever way the financial world crumbles has started.  It could mean hyperinflation of the currencie, it could mean using a gold standard to back currencie, it could mean the Dow falls to Zero, it could mean anything, and it has begun.

I have watched in amazement as the world has revalued gold up and up higher this summer, and until now, I felt like I was dreaming, but waking up and seeing that my all important number of $1850 was broken last night, I realize that this is not a standard move- this is the move that reintroduces the world to gold being monie.

I have written about $1850 so much that I think I was actually numb from  it.  I had $1850 as my target price for last winter's solstice starting the spring before.  When I did not get close I went to the drawing board and became more conservative.  Then I watched gold breakout this summer, something that is very unusual, but still I thought this move would happen in Fall.

So now here we are, the end of summer, and gold is heading home full steam.  This is why JPM called gold to be at $2500 by the end of the year, because gold has nothing stopping it.  There are a few reasons for this.  Central Banks need their gold worth something so to leverage their bad loans, as both sides of the balance sheet need to be balanced (Assets=Liabilities), and also investors will try to catch the wind by throwing their dollars at the metal.

Most investors will buy Barclay's ishares and eventually they will come up empty handed.  Only the five largest shareholders will get payment in physical; everyone else will get paid in cash.  Cash that is likely to be worthless.

So here goes nothing:  Gold to the moon!

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