Economic Collapse

Big Inflation Coming, by Adam Hamilton
http://www.zealllc.com/2009/biginf.htm

“M0 has gone parabolic! Year-over-year in December 2008, it was up 98.9%! This is so shocking it defies belief. In late September as the stock panic started, it had grown by 9.9% over the past year. By October, this rate ballooned to an all-time high of 36.7%. In November, it rocketed again to 73.0%. And in December, it surged up to the staggering 98.9% you can see above. Ben Bernanke’s Fed has doubled the monetary base in a single year! Holy cow.”

http://www.ft.com/cms/s/0/6ab85cd8-e335-11dd-a5cf-0000779fd2ac.html

A few quotes:

“Gold production in South Africa in 2008 sank to its lowest level since the Boer War, pushing the country into third place in the league of global producers behind China and the US.”

“The country’s gold output dropped by an estimated 14 per cent, the sharpest decline since 1901.”

“GFMS said gold prices could be expected to reach a fresh all-time high above $1,000 an ounce in the first half of 2009, as investors focused on the possible return of inflation and the threat to the dollar caused by aggressive interest rate cuts and massive government spending.”

“’I’m sure a strong rally is going to emerge,’ said Philip Klapwijk, executive chairman of GFMS.”

Chaos & Order, by Krassimir Petrov and Alar Tamming
http://www.financialsense.com/editorials/petrov/2009/0112.html

Chaos theory, Hegelian dialectics and the world economic crisis. The article concludes:

“One of the properties of chaos and organisation theory is that we can’t possibly know what the new system might be. It is frequently the opposite of the previous one. In Hegelian terms, this is the dialectic nature of growth and development, where the current stage in the spiral of development is replaced at a higher stage with its dialectically opposite. The next stage completely negates the previous one, while completely resolving all of its problems. Later, the new system reaches a crisis once again, and it seemingly reverts to its previous stage of development, however at a new, higher level.

In this sense, it is very likely that the collapse of the dollar will be most likely replaced by a new and better system. However, according to the Hegelian dialectic approach, gold — the antithesis of paper money — may once again return as global money, since gold has been sufficiently displaced as money since 1971. It may well be that gold is the money of our future.”

Global Gold 5, by Adam Hamilton
http://www.zealllc.com/2009/glogold5.htm

Some highlights from the article:
*) Canada-gold breaks March 2008-record as stock market crashes.
*) Euro-gold breaks March 2008-record as stock market crashes.
*) UK-gold hits all time high since records began in 1717.
*) Indian gold investors find safe haven as the Rupee (in USD) collapses.
*) Australia-gold reaches new hights.
*) South-African-gold reaches new hights.

And I can add that Swedish SEK-gold is steady at about 230.000 SEK/kg as news of gold as a safe haven investment becomes more and more mainstream in Swedish financial media.

The Zeal article concludes:

“So unlike lamenting American gold investors, the great majority of the world’s investors witnessed strong gold performance in recent months. Since demand for any investment grows with higher prices, gold investment should accelerate substantially in 2009 as global investors see how gold could have protected and grown their capital even while everything else was melting down around them. You couldn’t hope for a better advertisement for the merits of gold investing.

The sharp US dollar rally that drove the poor gold performance in the US and China (and maybe Japan) was an unsustainable anomaly. Acute panic conditions generating extreme fear spawned it, but this fear is abating and those panic conditions no longer exist. And the US dollar is already reflecting this as its panic-driven rally started failing the day the US stock markets bottomed. As more flight capital emerges from its temporary hideout in US Treasuries, this dollar weakness will probably persist on balance.”

Gold returns as Money
- A New Stage in Gold’s Return to Money
by Hristo Assenov and Krassimir Petrov, PhD
Prince Sultan University, Saudi Arabia
http://www.financialsense.com/editorials/petrov/2008/1226.html

During December gold appears to have entered a new stage in its return as money. We recently observed a very interesting development in the prices of gold bullion coins that has important monetary implications. Not long ago bullion coins traded with some price differences […]. Interestingly enough, just recently, the listed bullion coins now trade with one price.

So, what is the economic significance of this development? Basically, a single price for all major one-ounce gold bullion coins is a significant sign that gold is regaining its function as money again. However, we are not saying that gold has returned today as money; we are only saying that there is strong anecdotal evidence that the monetary system has evolved today into a new stage, where gold is now much closer to money than a few months ago.