Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199


Search Gold Prices
Gold Price
[Most Recent Quotes from]
Our RSS Feed

Gold Updates by Mail

Enter your email address:

Follow Us on Twitter
« Kinross Gold Corporation Fails to Perform | Main | Too soon to say U.S. economy out of danger: Fed »

All Eyes On Spain


To talk about a bailout for Spain at the moment makes no sense.  Spain is not going to be rescued.  It’s not possible to rescue Spain.  There’s no intention to, it’s not necessary and therefore it’s not going to be rescued.”

Spanish Prime Minister Marino Rajoy, April 12, 2012, according to Doug Noland of the PrudentBear

The respite from the European debt crisis has run its course, and with the return of market stress comes a ratcheting up of vitriol directed at the Germans.  I find it all worrying.  For a moment today I tried to take comfort from a UK Telegraph headline that scrolled by on the Bloomberg screen:  “Worrying Is Good for You and Reflects Higher IQ.”  I’m adding this to my list of notions that sound appealing and I only wish were true.

By this point in the ongoing global Credit crisis, it should be clear that the real villain is the anchorless global Credit “system” devoid of anything, any mechanism, or any sound money and Credit principles that might help to restrain excess.  Self-adjustment and automatic self-correcting mechanisms would be invaluable.  Instead, our central bank, steward of the world’s so-called “reserve currency,” indicates its willingness to become even more “activist” - and global finance spirals only further out of control.  For decades now, global Credit has been allowed to expand unchecked – with no limit to either the quantity or quality of debt instruments.  Perhaps the timing and sequencing of various crises was unknowable, though the end results were for the most part predictable.

Over the years I’ve been a fan of the euro.  I’m saddened that my and others’ hopes for a sustainable sound currency failed to materialize.  It is surely not going to be part of any solution to a rudderless global monetary system but instead appears poised to become its biggest casualty yet.  But to blame Europe’s travails on the Bundesbank is really stretching the bounds of reasonableness – and sound analysis. 

In hindsight, a common European currency was not a good idea.  Yet European monetary integration is in jeopardy today because for too many years the dysfunctional global marketplace mispriced finance.  Greece, Portugal, Ireland, Spain, Italy and others for too long had access to unlimited low-cost borrowings (along the lines of Fannie Mae and Freddie Mac, and the U.S. Treasury).  This prolonged mispricing of Credit led to financial and economic imbalances and deep structural maladjustment, just as one would have expected analyzing the situation from an “Austrian”  (or, even, German) economic perspective.  I often recall the words of wisdom from the great economist, Dr. Kurt Richebacher:  “The only cure for a Bubble is to not allow it to develop.”

The nineties saw Credit crises ravage Mexico, Thailand, South Korea, Malaysia, Indonesia, Russia, Brazil, and many others.  The developing economies were the “periphery” for that Credit crisis period.  Their problems were blamed on ill-advised policies, “currency pegs,” borrowing/spending excesses and other domestic shortcomings.  Our and other developed world policymakers had complete understanding as to the causes of various crises, and the IMF delivered the harsh medicine.  No one in power wanted to deal with the root of the problem – a dysfunctional global monetary apparatus.  No one was willing to address the proliferation of leveraged speculation and derivatives that was integral to distorted market pricing, gross liquidity excesses and attendant systemic fragilities.  Indeed, it appeared that officials from key developed countries were content to use the increasingly powerful leveraged players as political expedients and monetary transmission mechanisms. 

In the U.S., the unprecedented expansion of (mispriced) mortgage debt and related leveraging was instrumental in fueling a New Paradigm economic expansion, complete with surging government revenues and budget surpluses (not to mention incredible wealth accumulations/redistributions).  In Europe, leveraged speculation was critical to the historic yield convergence that permitted the introduction of a single currency.  Policymakers on both sides of the pond were so enamored with their new tools and busy patting themselves on the back that they apparently did not have time to ponder long-term Bubble consequences. 

To read this article in full please click here.

Regarding In 2011 we outperformed

Gold by 31%,

Silver by 41%,

S&P by 42%

HUI by 53%.

Our model portfolio is up 445.53% since inception

A success rate of 90.72%

An annualized return of 91.38%

Average return per trade of 36.17%

97 completed trades, 88 closed at a profit

Also many thanks to those of you who have already joined us and for the very kind words that you sent us regarding the service so far, we hope that we can continue to put a smile on your faces.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. Winners of the GoldDrivers Stock Picking Competition 2007  

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our  Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here. 

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>