I am now receiving invitations from coffee companions who had previously found my bangings on for the last few decades, odious. They have noticed the green shoots in some local building sites and are now seeking advice. Not so permibull now. “What do I do with my super, its going down!!” “My 10% PA “investments” with builders are lost I’m told that I might get 30% of my capital in the fullness of time”!!

The “economists” I know are now dodging my question on why it is OK to turn foreign debt into government debt when foreign debt “does not matter” and government (“National”) debt does matter.

No doubt they will all be pleased to know that they are stimulating the German auto industry.

thanks for the link.

I know what you mean. I have been steadily losing clients for 2 years now. Some have listened. Some have told me I am too extreme and some just don’t want to know.

I try to keep my “extreme” views to myself but I find it too hard to hold back some times.

When the stock market flips back to bearish again (if it does of course) it will be easier to make our case again.

At the moment people are being deceived by bear market rally positive sentiment. When that flips confusion will reign and fear supreme.

i’ve lost a few coffee companions myself , given the way i’ve banged on about the debt over the last 5 years.

no one likes bad news bears.

we would truely have carved out for ourselves a little piece hell if gold were ever to become a common medium of exchange and replace the currency in this modern world.

the state has the power to tax and hence to control the currency. so for gold to replace state fiat currency, the state would need to loose the rule of law, and hence the ability to control the currency.

i can see nothing short of a civil war or revolution that would create the conditions for such a scenario. and even still the currency will most likely be preserved at all costs

anything short of this, the inclination for the state will be to monitise its way out of trouble, put up trade barriers, and confiscate or make illegal anything that would undermine its ability to control the currency, and if you are the US, strike out at anyone who stands in your way through the barrell of gun.

whether such scenarios emerge in the g20 over the next 30 years, we’ll have to see, as we lurch from one crisis to another.

civil war and revolution, words i hope we do not have use too often in describing our collective experience over the next 30 years.

Once again – crystal clear and persuasive analysis. I also agree that the particular topic I brought up has probably been well and truly exhausted by now, and I’ll leave it be. There are much more interesting aspects of this building Greater Depression to discuss in any case…

Bill.

http://www.pointbite.com/2009/06/27/niall-ferguson-the-ascent-of-money/

http://www.financialsense.com/metals/main.html

- Ernie.

I am trying not to get sucked into discussing gold. Gold has too many religious followers, which takes the fun out of discussing it.

I will comment about silver though. I think silver may be a better predictor or proxy for where the economy is going. Silver is an industrial metal, so as aggregate production falls, the price of silver should fall. This is somewhat true, although speculation and positive/negative mood can always distort “the rule”.

So, where is silver at. Using an elliot wave count. I count silver either just completing or about to complete a small 4th wave bounce, in an overall down trend. This will be followed (if my count is right) by a small 5th wave fall. The price of silver will fall below $13.60 (the 3rd wave low) and I guess a low around $13.00 to $13.20 will develop. Wave 5 may extend lower though.

After the next short term low is in, the trend for silver should turn up again. Silver should rise in a larger degree wave 2, correcting most of the fall from $16.25. For this count to hold, silver cannot go above $16.25 before it turns down again.

The very interesting part of all this is that after the wave 2 bounce will come wave 3. Wave 3 will likely head towards or go below $8.60 over the next year or so.

If this forecast develops, I will take it as a very strong signal that the depression is well and truly underway.