The Economy

In my opinion, if you own gold it should be in lieu of keeping any excess savings you have in dollars.

That wouldn't be money you want to subject to excessive speculative risk over time (which is what most people do with their 401(K) savings). It's money whose purchasing power you want to (hopefully) protect.

That's how I look at it. I started buying physical gold for $784 an ounce. I wish I had understood what I did then before I did, but it took Ben Bernanke announcing QE1, while our government fiscally was springing TARP on us, for me to understand that they were going to devalue the currency, and therefore make my savings worth less. Bernanke came up with some 2 percent inflation targeting nonsense, too, so it's not like anyone shouldn't have been thinking that way. ... they have now turned that into a matter of "policy," even though 1) the central bank has zero ability to translate their monetary inflation into consumer price inflation with the degree of accuracy they pretend they can, and 2) nobody has ever explained to me how eroding the purchasing power of my money by 2 percent annualized translates to "stable prices," which is their supposed mandate.

Once I realized what was happened, and watched it continuing as they propped up a debt problem with exponentially greater debt loads. ... I was earning way more money from work than I needed, and rather than letting them inflate away the value of what I could save , I started buying hard assets. ... including physical gold, because it had thousands of years of history as a form of sound money. I even got cute with it, buying gold in euro and yen terms (by hedging currencies) when it made sense, and I proved fairly good at it.

I don't know about the collapse some of you talk about, or what it actually means. But I do know that if I had those savings in dollars right now, the actual purchasing power of those dollars today would buy me a ton less than when I earned the money. The gold bars I own (way more than I ever thought I'd accumulate) will fetch me way more dollars than I traded to get them. ... so they have protected my purchasing power just the way I posited they would. And that is with gold still being fabulously undervalued in my estimation relative to how much they have grown the money supply because they drove money into speculative, financialized things to the detriment of more tangible, hard assets that I have been drawn to instead. Fear of missing out drives money flows in the kind of environment they created, which is why insane behavior begets more insane behavior.

If the money supply growth madness ends, or even better if we find some form of sound money that naturally limits the ability to try to inflate away bigger and bigger debt loads, I will get rid of the gold I now own in a nanosecond, and I'll gladly save in dollars instead.

I hope, for the good of the country (and the world) that happens before a prolonged depression forces it to happen (or worse, we get the depression, but we don't get sound money).

I'm not hopeful, unfortunately.

 

I don't know specifically what Economist story you're talking about, but I strongly suspect it was something you read recently (not at the end of 2022 -- why wasn't it being reported THEN?; a number that isn't in the trillions, magically gets thrown out there just as banks are failing?) and it wasn't The Economist saying that there are $620 billion in unrealized loses on bank balance sheets, it was The Economist saying that THE FDIC is saying that.

I don't think you can go through a publicly-traded bank 10K (or an 8k, which banks put out more often) and come up with a number like that. You'll see a balance sheet, you'll see "fair market values." ... but you won't specifically see what they bought in any detail, when they bought it and what they paid for it.

Whatever number the FDIC wants to throw at people today can be an ESTIMATE at best. ... and when you get into the realm of estimates, being thrown out by someone whose job is to to shore up confidence in the banking system, is it really meaningful?

Either way, like I said, the question isn't whether it was $620 billion in unrealized losses at the end of 2022 or more than that. It's what the losses would be WITHOUT interest rate manipulation. If someone doesn't agree with me saying that. ... then they are saying that the whole "stable prices" mandate for the Fed is complete bullshit, because with the CPI still running at 6 percent. ... they should be jacking their overnight rate and aggressively letting bonds roll off their balance sheet, even selling bonds (at the same losses their member banks are on the hook for right now. ... with all of us bearing the cost; the only reason the Federal Reserve itself isn't insolvent is that it can create money out of thn air at the press of a button).

They won't do that, though.