Wednesday, March 14, 2012

Corporate dividends paid in gold and silver?

Marketwatch reported today about a company purporting to pay dividends in gold and silver coins.  This might sound novel to some and perhaps even quaint to others, but it will appeal to many people and the idea will catch on. Over the years in private emails and public posts like this one I have stated many that I believe corporations will eventually begin listing gold and silver on their books as assets again.  They will have to do it as a protection against government debasement of their buying power.  It will be out of necessity, not desire. 
There are other strategies whereby it will benefit corporations to carry gold on their books including those which choose to pay dividends in gold.  If I were them, I would buy gold on the dips and store it as a corporate asset.  But when it came time to pay dividends in gold coins, I would value it at current market prices.  If the dollar price of gold had dipped below the corporate asset buy price then I would buy the gold used to pay dividends to shareholders on the open market.  However, if gold was trading at a higher dollar price than what I paid, I would have the option of paying the dividend with gold that I bought at a lower price and then someone in the corporation (or the corporation itself) could pocket the difference legally and better still, tax free.  After all, a penny saved is a penny earned but government cannot tax savings (yet).  Corporations have staying power through asset price dips (they won't run out and panic-sell their gold if government temporarily manipulates the price down) and they love no-lose scenarios like this.  Why wouldn't they hold gold on their books if that's what was needed to support this dividend payout mechanism?
Getting dividends in fake money is now being recognized as an illusion but when someone pays up in gold or silver coin then the value cannot be stolen by corrupt and greedy, and more importantly, desperate governments.  I'm not just talking about the US here.  Significant parts of Europe are now in a depression that rivals the great depression.  Overall unemployment in Spain is 22% and for young people that number is 50%.  Statements by public officials and intelligent estimates indicate it will be 24-25% by the end of 2012.  In contrast, US unemployment during the great depression peaked at "only" 25% in 1933.  Portugal is rolling over and Germany and France are getting very nervous as well. 
The piece of work that France currently calls its "leader" (Sarkozy) is starting to blame foreigners and immigration for all of its problems.  He is threatening to pull out of the so called Schengen Zone which currently allows passport-free travel throughout a large part of civilized Europe unless the EU "does something" to control immigration.  All of this was foreseen by Prechter in his 2002 book "Conquer The Crash".  He explained that the credit collapse would lead to nationalism and protectionism.  And so today we see Sarkozy pushing his "Buy European Act" which is really a "Buy France Act" in sheep's clothing. 
What he is basically saying is that people should ignore the best bang for the buck and just buy at any price from locals and Sarkozy himself will profit from the taxable portion of the difference.  Of course, this type of unionistic/socialistic/nationalistic protectionism thinking only made things worse during the great depression and so it will only have the same effect today.  But con men like Sarkozy don't care about that; they care about pandering to buy votes from powerful organizations.  It is just another way that leaders will sell their country or company down the river for a few measly bucks even if millions of other people get totally screwed in the deal.  All that matters to these con men is what they get and what their friends get TODAY.  Long term viability or sustainability doesn't even enter the equation.
The only way out of the Global Debt Ponzi is the eventual arrival of massive inflation for much of the world. It has to happen.  It's coming.  Nobody can say when but when it does come then people whose retirement savings are locked up in federally controlled dollar denominated accounts will get creamed.  Smart people will see it coming.  They will not panic.  They will stroll for the economic door like cool customers.  They will buy gold and silver coins over time and store them physically lest government count dollar losses as taxable value gains.

Monday, March 5, 2012

When will the Australian riots begin?

We know that Australia is rolling over in a big way.  We could see it coming 10 miles away and I reported on it in these pages many times before it was obvious in the data.  We knew it was coming because government conned all the willing sheeple into buying ridiculously priced Ponzi houses via the assumption of large amounts of unpayable debt.  These are relatively modest looking homes.  I've seen them on House Hunters International many times and was always shocked at the prices and even more shocked at the people who had been conditioned to pay so much for them.  The people were convinced that the homes are "worth" 1-2 million Aussie bucks each when in fact they won't be be sellable for 1/10th of that amount as soon as the banks stop giving out loans to people who can't afford them. Repeat after me: you house is only worth what the next guy can borrow to pay you!  When the credit runs out, so will the high prices.  Don't believe it?  Go check out Detroit.  When the jobs run out, the credit will evaporate coincidentally.

Mish summarized today the state of the Australian economy in about as bleak of terms as one could imagine: "Expect an across the board retail and housing bloodbath because one is coming."  Ouch!  Even I am looking for some sugar coating on that nasty message.

Open email to all hard working Aussies:

G'day from the States.  Economati here.  It's like this: your banks are bankrupt because they made real estate loans to people who can't possibly pay them back.  The US has already shown you what the outcome will be: your lying politicians will bail out your scum bag bankers and the people will go aggro about it.  Nobody can say exactly when but it could be any tic of the clock.  The politicos will get the money to pay for these bail outs same as every other scumbag politician does: they will borrow it.  And when that doesn't work they will try to tax it from you.  And when you get aggro about that they will just print it up out of thin air which is nothing more than the sneaky inflation tax.

Do yourselves the biggest favor in the world: buy gold like you were a Greek!  Others have more time than you do because their housing bubbles weren't as bad as yours (and Canada's) are.  Mark my words, there is no way out of this than for those lying a$$holes that you voted into office than to debase your currency like it was their hobby.  Buy some gold and silver right now before the price goes much higher and save yourself from getting all your buying power wiped out.  And then next quarther buy some more.  Don't go all in at once; Aussie-dollar cost average your way into a position in over time.  Make this physical metal your savings instead of putting it into paper money where liars and con men can play with the value of it thus risking your eventual retirement.
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