Thursday, May 17, 2012

Own Gold. The Rest Is Noise.

So JP Morgan reported a loss this week. In the region of $2 billion. I say 'in the region' as no one really knows the final figures. Perhaps not even JP Morgan.

So here's a rant. Jamie Dimon, the CEO of JP Morgan, called it a 'stupid thing' that his traders did. But we are still going to earn zillions of dollars and are worth gobzillions, so don't worry.

Don't worry. Hmm, well that is really easy for him to say. You see, Jamie, and his Wall Street bet-takers, are supposed to be Banks. Banks traditionally are supposed to use capital deposited with them and invest in the labour and sweat of human endeavour in order for the economy to grow and to make us more prosperous. Those Banks then make money from the growth. For example, they might invest in a pimply Bill Gates hoping it will turn into a Microsoft.

Instead, these people have been seduced by greed. They now take 'bets' using all sorts of financial derivatives (instruments 'derived' and packaged from something else, for example, real estate) and hope to be on the winning side. There's no growth encouraged, no prosperity created, just a massive shift in wealth from you and I pleb to those with the means and know how to bet on such large positions.

You suffer. Your money is cheapened. Your labour and savings are stolen. How? Through bailouts of the same leaching "to big to fail" Banks through money printing.

Is this criminal behaviour? Maybe. I have no idea what goes on in these illustriously complex trading systems. For example, do they undertake 'naked' shorting; pretending to have the asset or instrument they are selling? A highly illegal practice. Probably.

The cards are stacked against the 'little guy'. People suddenly lose their jobs or find out the real estate boom was a lie and get caught owning property way below its purchase price.

Right now, the world economy is falling off a cliff. Greece has spooked the markets terribly and all asset classes are taking a hit in price. Gold in New Zealand dollars is doing very well, but again, any measure of value using a fiat currency is difficult right now. Anyway, the end of the price declines in gold could well be close.

The whole Wall Street story will go down in history as one of the most sinister thefts of wealth ever. If you own physical gold, your wealth is not being stolen. The rest is noise.

Gold in New Zealand dollars: $2013.87 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $35.62 per oz
Previous all-time high: $59.19
per oz (30 Apr, 2011)

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