"Everything you need to know about gold"
Always searching, always relentless in the quest for more, bigger, better, etc. It is a never-ending thirst that cannot be quenched; a hunger that cannot be satisfied.
Today’s investor seems oblivious to whatever it was that brought us to this point in world civilization. Economic fundamentals have taken a back seat to fantasy and hyperbolae.
Case in point: Bitcoin.
After a recent spike to the upside over the past seven days, both gold and silver have turned negative again and could be headed back to their recent low points reached early in the day on Monday, November 30th.
The movement in both gold and silver is evident of a decided shift in trend direction to the downside. What happens after prices return to their recent lows could prove interesting; or downright discouraging if you are expecting a resumption of the trend to higher prices.
Sometime after the end of the second quarter, news of Berkshire Hathaway’s acquisition of Barrick Gold made headlines. Not known for a favorable opinion on gold, Warren Buffett surprised some people with his move. Also, the addition of Barrick Gold Corp to the Berkshire portfolio was noteworthy for another reason…
“…Warren Buffet, while he did add to his positions in a few stocks, he added only a single new stock to his portfolio – Barrick Gold.”
As significant as Buffet’s entry into the gold arena is, news of Berkshire Hathaway’s third quarter reshuffling prompted some confusion among observers and investors. The original stake of 21 million shares had been reduced by almost 9 million shares to a total of only 12 million shares at the end of September.
JUDY SHELTON AND JANET YELLEN…
Last week the Senate failed to confirm the nomination of Judy Shelton as a member of the Board of The Federal Reserve. Some thoughts and observations.
If it had done so, and once she was occupying a currently vacant seat on the board, we might reasonably have expected some fireworks.
The Fed always does its job. So, just what is their job? And, how well do they perform?
For the answer to the first question, one statement will suffice: The Fed’s job is to create money; at all times and in all seasons.
The Federal Reserve Bank creates money for the US government to spend and for banks to loan. It is a partnership that dates back more than one hundred years.
Apparently investors don’t tire of hearing the same old thing; and their advisors willingly provide the same questionable advice: “The best way to play this new bull market in gold is to buy gold stocks” or something to that effect. Are gold stocks a better choice than golditself? Let’s find out…
MMT IS A SOCIAL AGENDA
The subtitle of Stephanie Kelton’s book, The Deficit Myth, is “Modern Monetary Theory and the Birth of the People’s Economy”. The material in her book supports and encourages that theme and what it implies.
It isn’t that Ms. Kelton and others have not explained carefully how MMT can presumably work, both financially and economically; they have. The financial details have been enumerated and dissected adequately. However, the justification for implementation of MMT appears to be based on expectations of grander social programs, and how to pay for them.
GOLD VS. SILVER
In the five months between March and August this year, the price of silver increased from a fourteen-year low of $11.77 per ounce to a seven-year high of $29.26. That is a whopping gain of one hundred sixty-three percent.
Meanwhile, gold’s price rose from its low of $1472 per ounce to a recent high of $2061. That represents a gain of forty percent, which is certainly a handsome number. Nevertheless, silver’s performance outshone gold by a ratio of four-to-one.
However, five months doesn’t tell the whole story. For those who were and are, hopeful that this is just the beginning of silver’s day in the sun, be warned. Looking at the bigger picture historically, silver can’t hold a candle to gold.
(Note: This article is an updated version of an original article published in 2017. On March 15, 2020, the Federal Reserve Board reduced reserve requirement ratios to zero percent effective March 26, 2020. The action eliminated reserve requirements for all depository institutions.)
FRACTIONAL-RESERVE BANKING
The expression “elephant in the room“…
“…an important or enormous topic, question, or controversial issue that is obvious or that everyone knows about but no one mentions or wants to discuss because it makes at least some of them uncomfortable or is personally, socially, or politically embarrassing, controversial, inflammatory, or dangerous. (source)
A wordy definition, yes; but it is applicable to our topic of Fractional-Reserve Banking. After reading the rest of this article, you should be able to see just how important and enormous Fractional-Reserve Banking is; as well as how dangerous.
Lets’s start with some history.
