Gold Is Tarnished As The Dollar Rises
Once again, the pundits got it wrong. Or perhaps even better yet, they got it right by persuading people to invest in gold. Thus, the old media paradigm switches into high gear in order to protect the status quo. In the final analysis, vertical integration will not help the investment world. The melding of media conglomerates with industrial giants has proven to be a catastrophic failure to the notion that strong banks can conquer the world through effective advertising.
Much is being said about the power of the new media. One of the reasons why webtaxcpa.com became a blog is to get away from the usual methodology of waiting until after trends have set in to recognize them. Strictly speaking, finance is front and center as it has never before been. With the money supply mushrooming to satisfy the hunger for “safety”, the government’s ability to borrow seems almost limitless. And with a overly friendly Federal Reserve, the multiplier effect could only become amplified.
Strictly speaking, gold is vanishing quickly as a safe haven. So many dollars are in play now, most of which are held institutionally, meaning the so-called ‘stimulus’ is being reserved for a while. Conservatism today means the wealthy are in hunker down mode. The market bubble they foisted upon investors in the name of a false sense of economic recovery is proving fruitless. It is the proverbial double whammy of investor shock: Loss of portfolio value while missing out on the new rising star, which is cash.
Cash positions will count for everything as dollars are unleashed on the economy and inflation sets in. The pecking order of this payout does not come in the form of capital gains or dividends, but rather the ones who will benefit the most are corporate bondholders. The debt of the major players will be wiped off the books, further devaluing key assets in return for cash. This means that for the shrewd investor hedging against inflation while maintaining equity will become tantamount to success.
This is the viewpoint of key economists, which we could cite, who specifically point to inflationary pressures coupled with devaluing asset values. The reason for the move at this time is key toward securing the financial structure of the big banks, who got handed bad assets in return for money from the government which they promised to pay back. To fill in the shortfall there will have to be a proverbial white knight, and this happens to be an abundance of cash from foreign central banks that the Federal Reserve doled out during the economic “crises” for precisely this kind of maneuver.
The Euro is falling against the dollar making European goods cheaper. Every good opportunity deserves a strategy, and regardless of the lullaby sung by the federal government to the Europeans and how wonderful their socialist system is, the bottom line is that the financial structure of the United States always comes out on top. Free markets allow for the building of vast economic empires. Contrary to what the pundits would have one believe, there is still money to be made in a world in which the commonly held politically correct version of the world is that of shrinking resources and too much competition from abroad. Nothing could be further from the truth as gold becomes tarnished and the dollar rises.
Chalk another one up to the genius of American finance, and investors everywhere will look back on these events as evidence that distractions from what goes on behind the scenes is almost without fail the worst path to take when wanting to hitch a ride on history. The joy of making good financial decisions does not necessarily spring from monetary gain but rather the wisdom gained from the experience. Think about this the next time you hear that the President or Congress is considering health care reform. Then ask yourself why anyone in Washington would be so dumb as to decimate one of the pillars of the financial empire of America, which is the insurance industry.
On the contrary, the old media paradigm has once again proven the WMD theory still works. If you repeat something long enough people will believe it. The all-consuming health care debate that wound up becoming nothing more than a faint whimper was the fitting exit for what was from the outset nothing more than political showmanship. Meanwhile, what was going on behind the scenes is the building of another epic leap forward for the U.S. financial juggernaut.
