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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of Aubie Baltin
October 19, 2011
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When it comes to Gold, my theory is that the rising price of Gold is not just an increase in the price of Gold. In reality, it is a reflection of the reduction in real purchasing power of the world’s Fiat currencies as evidenced by the fact that Gold has been rising in price against all currencies and the pace of credit and money creation is actually accelerating the world over. We will shortly enter WAVE V or the fifth phase of the bull market in precious metals. When it comes to commodities, fifth phases always end up in a mania and like back in 1979-80, the last 128% of the entire move (from 1971–1980) took a little more than a week. But this time around, the bubble will be much larger than it was thirty years ago because at that time, although no longer Gold backed, the US DOLLAR was still king and there was not even a hint of downgrading America’s $’s or Debt.
Today, the US is in a much worse fiscal situation than it was back then and ours as well as the rest of the world’s economies were nowhere near as highly leveraged as they are today. We had a much smaller national debt relative to GDP, a trade surplus and favorable demographics.( Social Security was taking in a lot more money than it paid out) This time, we have the world’s largest debt, a massive trade deficit, ever expanding Social Security and Medicaid deficits as well as additional factors exacerbating the situation. We have the world’s biggest Ponzi scheme, our Treasuries are selling at prices that have nowhere else to go but down, Muni Bonds and our stock market are completely mispriced due to zero interest rates and our currency is shrinking in value. All of which will surely burst in the not too distant future. Can you believe that the only thing keeping us afloat is the fact that Europe is in even worse shape than we are and 100’s of billions of scared money is running to US Treasuries? (The socialist chickens are all coming home to roost.)
Perhaps of even greater importance to the price of Gold, is the 100’s of millions of newly wealthy Chinese, Indian and Asian investors, who all own Gold as part of their culture on top of their financial reasons for becoming big buyers of Gold. This time, the bubble will be truly global in nature. There are also millions of savers in the USA and Europe who are just beginning to realize that their wealth is being stolen by Inflation and they too will soon be rushing into precious metals. As Gold and Silver prices continue to levitate higher and millions of investors around the globe finally realize their wealth is being stolen by Fiat money, they will rush to protect what wealth they have left and buy Gold regardless of price. I have long ago calculated that Gold and Silver will rise to my eventual price targets for Gold of $6,250 and Silver at $250 to $400 by 2017.
The current but temporary flight back into dollars and US bonds is a misguided flight to safety (panic is always misguided), but that will turn out to be just a short-term emotional move based primarily on FEAR and the fact that they think that only US Treasuries are a big enough market to absorb all the flight money so quickly. Slowly but surely that money will flow out of Treasuries into Gold and Silver. It will become a matter of self preservation as the PM markets resume their upward trek at $50 to $150 plus per day moves.

Ben Bernanke’s unbelievable and unnecessary emergency monetary policy steps have increased the money supply by over 350% just since 2008. If there wasn’t continued and ongoing deflation of bubbles (real estate, construction etc.) in the US economy, inflation would be raging out of control by now, but nonetheless it is still occurring. Inflation is already at an understated 3.6%. However, all of the excess money printing and incurring of massive amounts of new government debt will eventually leave the banks and show up in the economy and rapidly escalating inflation, not only here, but in Europe as well as throughout the rest of the world, which will result in the Gold and Silver Moon Shot. BUY, BAA, RIC, AUY and GSS

SILVER

China has become the top consumer of Silver in the world. China has now become the third largest producer of mined Silver in the world, and its net imports of Silver increased by 400% in 2010 to 3,500 tons. China used to be a Silver exporter, now it has become the largest importer of Silver. About 70% of China's Silver demand comes primarily from the industrial sectors. However, Silver’s use in jewelry and for investment is rapidly increasing as more and more people become rapidly wealthier, which will add further pressure on prices and may cause me to raise my long term target prices. Two of my favorite Silver miners are SVM, China’s largest Silver producer, and EXK whose mines are all in miner friendly Mexico.