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[Clansgian AT wmconnect.com]

Leslie, it has taken me some time with the holiday goings on to think through 
your comments.  That’s because, of course, they go beyond the rather mindless 
blather proffered by the gold infomercials, "Gold has been a universal store 
of wealth for 5000 years!"  It  most certainly, of course had not.  The 
points 
you bring up about the bubble are apropos.  When the volume is turned down on 
 the AM talk radio so that one is not bombarded by the infomercial blather, 
the historical view of gold says, just as you outlined and just as is 
described 
in the article you linked, that when currency is about to tank in value while 
gold holds its value, gold becomes scarce, not for sale.  It disappears from 
transactions entirely.

So it brings me to this:

>Say I buy a gold coin from a local retail gold dealer. He may take part of 
the fiat currency and buy some groceries for his family (the grocery is still 
accepting dollars),,,, and take the rest and replenish his retail gold for 
sale 
supplies from a gold mint. 



If the gold retailer really thought that gold was about to increase greatly 
in value compared to the fiat currency (or the currency tank in relation to 
gold, little odds), this above ploy would be the last thing he’d want to do.  
He’d sell as little of his gold as he could to meet his cash needs.  But why 
would he sell gold to you to take the money to buy more gold??  He’d only be 
risking losing money if he could not buy more gold before the price went up 
and 
he’d gain nothing.



Picture yourself as a gold retailer and you have in your possession $200K 
worth of gold.  If you really, really believed that in a few weeks that gold 
was 
going to be worth $300K, would you sell it to me or hold it?  Would you be 
willing to liquidate $100K of it into cash if you though you might have to 
pay 
$120K to buy back that much gold in a short while?

>The gold mint takes the dealer's dollars because the gold mint needs to pay 
employees in >dollars who buy their groceries & supplies from stores that 
still accept dollars as a >medium of exchange, and then the gold mint 
replenishes 
their inventory of gold by >trading with various gold mining companies who 
are 
still accepting dollars.

But look at the history of gold.  During historical times when currencies 
collapse and the relative exchange of gold does not (and the two do not 
necessarily have to be dependent on one another), the gold becomes 
unavailable due to 
hoarding at all levels.

If people have gold for sale, it is because, and ONLY because they are 
betting that the price of gold will NOT go up significantly.

Take for example the reason why gold has not currently gone up in price in 
relation to declining currencies.  Banks were holding gold as a hedge.  When 
the 
toxic mortgage backed paper came due and could not be collected upon, the 
banks dumped their gold to meet obligations.  With all that gold on the 
market, 
the price remained modest.

Gold is not the stable storehouse of wealth the infomercials claim, it is and 
always has been a gamble.  



I would not be surprised to see a gold bubble and if so, it will end just 
like the dot.bomb stock bubble and the real estate bubble …. and the Tulip 
Bubble 
for that matter.









>Are you missing that the sellers of gold are drying up.... Retail outlets 
don't have it. Comex gold banks are being emptied. Infomercials are trying to 
convince people to sell, not buy, their gold jewelry. (This is similar to the 
beginning of the tulip mania phase where all the bulbs were initially 
acquired.)



No, didn’t miss it.  Recall that during the real estate run up while you had 
people standing in line for the opportunity to buy condos at 18%, you also 
had 
unlimited adds, spots, and even roadside signs offering to buy all and sundry 
real estate.  Look into the fine print of those infomercials begging to buy 
your gold.  They are perfectly willing to buy your gold which has a market 
value of the metal content of $500 … they are perfectly willing to go $200 … 
maybe even $225.  It’s just the flip side of the same scam.







>Are there any signs that gold is in the initial phase of a bubble? I believe 
so.

There are signs, agreed.  But there are no guarantees, and I’d go so far as 
to say, there are no really favorable prospects.  All other things being 
consistent, I think we’d be in for a classic bubble.  But other things aren’t 
consistent.  Riding a gold bubble would be a very risky proposition for 
financial  
solvency in the financially irregular times to come.What are the historical 
average percentage moves for bubbles? 2000% - 3000%>Some people buy gold to 
hedge against the collapse in purchasing power of a currency, utilizing the 
price 
movement inherent in human nature best exhibited in history by "tulip mania".

Leslie, my comments on the notion of using gold as a hedge against the bad 
economic times that are coming are based on the unwise proclivity most have 
now 
of days of looking at the extremely short term.  I am talking about plans for 
the next 30 years, not the next 30 weeks.  Now recall the tulip mania, how 
long did it last?   It was about three months (roughly from Nov of 1636 until 
Feb 
of 1637).  Let’s suppose that you buy gold as a hedge against sinking 
currency and you are hope to exploit the possible coming bubble for that 
hedge.  
Historically, as in the tulip mania, you have a matter of weeks if not days 
to 
dump your asset back into currency or you lose.  And when this happens, you 
had 
better hope you are among the first 5% who sell.  During the recent real 
estate 
bubble, some people made a pocket full of cash, but only the first few 
percent who sold at the peak.  The rest lost.  And even if you are one of the 
clever 
ones who sells at the zenith of the bubble, you  had better hope that holding 
cash at that time is a good thing.



Such speculations and transactions as these have little to do with a long 
term sustainable plan.



I’ve got a piece to say, an abridgement of a much longer piece I wrote for 
another forum, about how so many people think this is a temporary down turn 
in 
the economy.  If they only have a few gold coins to jingle in their pocket, 
times will turn around again in a year, two or three at the most, and they 
can 
once again resume day trading, house flipping, and all such activities.  What 
we 
are facing is not a downturn but rather a permanent change in the way of 
things.  It only looks like hard times to those who long for things to return 
to 
the way they have been once.>I had interpreted something you wrote at one 
point 
that you have "hedged" yourself so >that you could close your front gates and 
survive without obtaining supplies from the >outside for some 5 years. I 
interpreted that to mean that you thought that there was a >high probability 
that 
you would have to do that --- not so much for roving gangs of >theives, but 
because supplies from beyond the front gates might not be available (or too >
costly to obtain). If that is correct, what I'm asking is have you speculated 
at 
all about an >approximate time frame that you think that might occur - where 
supplies are unavailable >or difficult to obtain.>Or did I misinterpret your 
prior writings? 



You have, I’m afraid, somewhat misinterpreted.  



In John Seymour’s homesteading classic "The Fat of the Land", he talks about 
returning to England in the mid 1950’s with the intent of homesteading.  
There 
is not talk, no consideration, no possibility mentioned of buying a farm or 
owning a farm.  Instead he finds a land owner and leases 50 acres (if memory 
serves) and a cottage (called "The Broom") for 25 years.  Personal land 
ownership, and especially land ownership by purchase rather than distribution 
or 
inheritance, is much more an American phenomenon than elsewhere.  In other 
parts of 
the word certain people own the land and if you make use of it you pay rent.  
Owning it is not an option.  In the flick "McCabe’s Field" , Bull McCabe 
(Richard Harris) is the fifth generation who has farmed a small plot of Irish 
ground although his family has never owned it but rented it generation after 
generation from the family that does own it.



Our mindset, our default, is that if at all possible we will buy our 
property, own it outright, and not pay anyone but the county tax assessor 
forever 
thereafter.  Elsewhere people do not share this mindset.

We are, however, quite well conditioned and indoctrinated to view our fuel 
and food as a recurring, periodic, cash expense.  To think otherwise does not 
occur to us.  Homesteading as an economic basis is simply changing from the 
acceptance and expectation of this recurring expense to one where we own the 
means 
of providing these things in perpetuity much as we opt out of paying rent for 
perpetual ownership.

There is a great constitutional resistance to this notion.  In another forum 
I pontificated at length the steps one takes (on or off the homestead) to 
breaking the cycle of a monthly food budget and accumulating some food equity 
in 
one’s affairs.  Someone wrote back asking if I could be "specific".  Rather 
than talking philosophically, could I instead give them examples of monthly 
budgets and monthly menus!  It did no good to try to crack the nut and get 
them to 
see that as long as their mind was on monthly expenses and specific menus, 
they would be managing their affairs by a different paradigm than I was 
talking 
about and would not establish any food equity in their personal economy.

But the gist of what I mean by homesteading as an economic basis is to come 
into possession of the means of providing those major things, just as major 
as 
rent vs. owning a home, outside of the installment mentality of a monthly 
budget.

As I have opined, this notion is so foreign to our thinking that it is 
natural for someone to think that if someone wants to gather his own fuel and 
raise 
his own food, it must be either because he thinks that those things will 
become unavailable or else be vulnerable to theft or confiscation.

Would it be a good idea for you to own your own house?  Would your answer to 
that question be different if times were good or bad, economy up or down, 
economic thing stay the same or change dramatically??  Like that stepping 
outside 
our mindset that it is normal and desirable  to pay monthly (or weekly, or 
daily) rent for food or fuel (and heaven forbid, for clothes and such) is not 
as 
good a thing as owning the means to have those things without this perpetual 
tribute.  And that’s true whether times are good or bad, the economy is up or 
down, etc.



The gate closing is real, we can really do it.  But it is also philosophical. 
 It is no more out of fear of unavailability than owning a house is out of 
fear of no rentals being available.  It’s just better to own.



What do I really think, you might ask?   I think the roaming hordes idea is 
ridiculous.  You need ranks from which to recruit the hordees and we have 
none. 
 As far as availability, I don’t look for a sudden disappearance of anything. 
 But a trip to any grocery store or mart or building store will instantly 
reveal that availability is already being constrained as is represented by 
price 
increases.



But it really doesn’t matter.  A hedge against scarcity or marauding hordes 
is a fringe benefit, not the reason for embracing this economy.


James