Loading ...Plunger’s Weekend Report is UP.
Plunger has not disappeared but he is now posting exclusively at Rambus Chartology and Rambus Forum.
Here are a couple of paragraphs from tonites report
Members (Rambus and Plunger the Dynamic Duo )
I do not believe this is the beginning of Phase II in gold’s bull market which started in Dec 2015, however one cannot know for sure this early. It is my assessment that it is simply just another rally within an on going correction of the upside move from Dec 2015-Aug 2016. It is however, a tradable rally which is likely now approaching it’s halfway point. Late February to early March would be appropriate timeframes for it to end. If this is how it actually unfolds I will be taking profits at that time.
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Gold is historically undervalued relative to the US Government’s outstanding debt position. When these debt obligations are finally resolved either through default, inflation or renegotiation, gold will become the prime asset that collateralizes the FEDs balance sheet since the value of its existing collateral made up of its bonds will be diminished. This process will cause gold to rise to levels which the general public cannot remotely conceive of today.
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In the next financial crisis gold will serve the role which the CDO fulfilled in the last crisis in 2008. As debts imploded the short sellers used the CDOs as their vehicles to capture the trade. However, those CDOs didn’t move until the crisis was well developed. This is why the characters in the movie The Big Short underwent prolonged pain before their accounts finally rose. I suspect gold may perform the same way, with its vertical rise not arriving until late in the sequence since its price is principally determined through paper instruments. However, once the paper is swept away the spring tension will be released. This means that its rise should be instantaneous and could occur literally overnight. This is what occurred in 1934 when FDR reset the gold price 40% higher all at once and its why one needs to be in the trade early on. Keep in mind that central banks create not only bubbles, but they also create anti-bubbles. The foremost anti-bubble in the world today is of course gold. When the compressed spring gets released in the next crisis it will be too late to acquire a position
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The point here is that prolonged excessive speculation leads to contractions. The FED has been enabling rampant speculation since the mid 1980’s starting with Michael Milken’s bond orgy.
The FED has been intent on blowing a bubble to induce speculation. This plan is revealed in the below quote taken from FED minutes by none other than the new FED chairman Jerome Powell in this rather shocking revelation:
Von Mises made clear that a credit bubble can have only one resolution: liquidation. The historical record bears this out and gold is the only asset one can count on to rise during such liquidation. Credit bubbles run in cycles and they inevitably end. Our keynesian overlords have blown this bubble beyond all historical boundaries. It will deflate, however this time the process could entail an inflationary outcome due to the purposeful devaluation of the USD
Portfolio Construction
So what should we own in this coming environment? We need to own investments that have intrinsic or tangible value. Assets that will go up with inflation without lifting a finger. This is an investment sector that has been out of favor for almost 40 years now. Beginning in 1980 the cycle slowly turned away from this sector and began to favor financial assets over tangible assets. That cycle is about to turn again
Much more in the Report including Plunger’s incredibly well researched PM Picks and other Sector picks as well.
Great stuff. Thanks.
Plunger’s take on this sounds A LOT like “Freegold” from the FOFOA blog (http://fofoa.blogspot.ca/). I agree that this route is very plausible, since all of the major players have gold (either in the ground or in vaults), so this method of re-balancing the debt obligations makes a lot of sense, and hopefully could be done without a war.
Allow me a little speculation here (I’m admittedly out of my depth): What if CB gold amounts were revalued, fully audited, and then tracked via blockchain? That way, all major players could be sure of exactly how much “real money” each CB/Soveriegn had. Gold would be for “the giants” in the words of “Another”, and the advantage for the rest of us would be that we would finally have some price stability, since inflation could not be exported (as the US did) via massive bond sales.