The Case For Gold Going To $3,000 Is Getting Stronger By The Day

[Kruger_Man]

David Rosenberg: The Case For Gold Going To $3,000 Is Getting Stronger By The Day

Joe Weisenthal | May. 5, 2010, 10:10 AM

David Rosenberg of Guskin-Sheff is a deflationist, but unlike some (like Robert Prechter), he's also pro-gold.

Today he argues that the breakdown of the euro is very bullish for gold.
ECB IS NO BUNDESBANK, EURO IS NO D-MARK

In the interim, the ECB has been forced to water down its charter as it permits
sub-investment grade Greek bonds as collateral. Sadly, the central bank is not a
remake of the Bundesbank and the Euro is less of a “hard currency� than its
architects could have ever envisaged a decade ago. Now there is talk that the
ECB is contemplating a quantitative easing plan (see ECB Should Resist QE
Siren Call on page C14 of the WSJ). The case for gold heading to $3,000 an
ounce is getting stronger by the day. The Euro has already broken below 1.30 to
the U.S. dollar and there is plenty of room for additional decline going forward.
It’s only at a one-year low — wait until it moves to a decade low.

Make no mistake — the problems in Greece are mirrored in places like Portugal
and Spain — this is not about liquidity, like Bear Stearns and Lehman, it is a
crisis in confidence (Banco Santander, widely seen as a barometer of financial
health in Spain, cratered 7% yesterday). The FT reports today that there has
been some market chatter that Spain has been “negotiating� with the IMF for
assistance (€280bln) too. History shows that crises over confidence are tougher
to repair over the near-term than liquidity crunches. The fact that Greek short-
term bonds have collapsed in price even more — even though the country does
not have to come to the market for the next few years so long as Germany
comes through after the vote — is a case in point.

So contagion risks loom and there are simply not enough trees on the planet
that can provide enough paper currency to backstop countries like Portugal and
Spain. Moreover, what investors see is that if there is so much political foot-
dragging in Germany and other EU countries to approve a bailout of tiny Greece,
achieving a rescue plan for other large basket-cases will be even more arduous
a task. Have a look at Martin Wolf’s column on page 9 of the FT — A Bailout For
Greece is Just the Beginning. What a tale of woe. And let’s not forget about Italy
— its public finances are less dire but still fragile (see Much to Play For on page
7 of the FT)

[FunnyMoney]

So contagion risks loom and there are simply not enough trees on the planet
that can provide enough paper currency to backstop ....

Even if there were enough trees, that doesn't do it. The rotation of bail-outs is a funny game, but they are just kicking the can down the road. At a certain point the can falls apart and they're left trying to kick dust particles in the wind.

Fiat money may actually not survive the end of this decade, at least not at anywhere near present purchasing power values.

[Ragnarok]

You're right on KM.

Gold is already way past that mark "behind the scenes"/"officially"; apparently "we're" just waiting for the curtains to part. Here's the latest from Fofoa on just that:

http://fofoa.blogspot.com/2010/05/op...-of-state.html

R.

[FunnyMoney]

You're right on KM.

Gold is already way past that mark "behind the scenes"/"officially"; apparently "we're" just waiting for the curtains to part. Here's the latest from Fofoa on just that:

http://fofoa.blogspot.com/2010/05/op...-of-state.html

R.

It's a very good article, I liked it. But there's something missing there, and that is the timeline of events. The article mentions many of the things that must happen and are, which will eventually send gold into the front seat to take over and drive the financial system. But there's a problem, one remaining problem which will keep fiat in front, no matter how painful, for quite some time to come. That problem is simply the truth about the true nature of gold. Gold is an honest medium of exchange. Once gold is revalued, it will take over as the global monetary standard, the ultimate in reserve currencies. But are TPTB ready for an honest system, where one's wealth is earned, not stolen? Of course they're not.

Now some would say, but they have to, the nuclear option must be played or everything turns to dust anyway. While there's a lot of truth to this, there is also a slow grinding away which is a lot more likely. It is slower than most think and the suffering that the workers can absorb is also a lot more than many might think. But those are not the details I would be watching for the clues as to when the nuclear option is played. I would watch the mining industry, in particular the production supply of new gold into the marketplace.

You see, once the option is played and standards gravitate toward gold and thus toward honesty, what are you going to use to buy the newly mined gold? To buy that gold you will need to actually produce something, you will need to exchange honest wealth for honest wealth. TPTB never go backwards, they don't want to actually have to work or sell something of value to capture this new gold entering the marketplace. They would rather, and they will continue to buy new gold from the mines with paper, paper they print and stamp numbers on. But once the gold begins to seriously run out and once TPTB have captured as much of it and of the desired industries (through stocks and other ownership methods) that they possilby can. Once there's nothing left to steal and once the system begins turning to dust, not just simply on life support, but really dust, then the nuclear option can be played, either that, or the real one.