Solar is now a screaming buy [SPWR]

I generally avoid discussing particular sectors or stocks on this blog but I just have to point out that solar is a screaming, flaming buy.  It is now exactly at the levels that Prechter predicted many if not all stocks would go: down to about 5% of their real worth.  One of my favorites for the coming big bounce is Sunpower (SPWR).  At its credit induced bubble peak the company shares were going for $165 each.  Now the market has run them into the ground as if they are nearly worthless at $3.77 each.  That is a whacking far worse than the Dow average decline of 89% during the great depression. 

If any stock has value, SPWR does.   While it doesn't currently pay a dividend, is forward PE is now a very fair 8.02.  Better still, its P/S is only 0.19 and P/B is only 0.36.  Prechter predicted that many stocks would see PEs of 5-6, P/S of 0.5 and P/B of 0.5 before the collapse is over.  Sunpower is below that right now. 

It posted a huge loss of $6.66 per share over the trailing 12 months but it has 302mn cash and 693mn debt.  Its basically trading at breakup value right now.  10.4 % of its shares are held short (pretty high - these people all have to cover some day and will likely do it all in a hot hurry to lock profits in quickly).

In addition, one of the world's largest petroleum companies, Total SA, purchased 60% of the company for around $24 per share back in 2011.  As part of the deal, Total will provide a $1 billion line of credit. Finally, Sunpower is right up there in the list of solar panel efficiency as shown above-left.

So why now?  The stock has been falling like a rock (along with other solars) for a long time.  Why buy now?  Several reasons:

• At today's price of $3.77 it's like buying a long term, non-expiring call option.
• At some point the shorts have to cover.
• Volume has been falling off.  This is generally a good sign that a trend change is near.
• Electricity prices are climbing.  I have a friend who explained to me how his electric bill has jumped both in terms of cost per KWH and in terms of new fees and charges.  The result: his typical $400 something electric bill is now an $800 something bill.  As a result he is now thinking about solar panels.
• EU countries that bought heavily into solar (to fuel the original bubble) will soon default on the Euro debt and will revert to their historical currencies.  When this happens they will again be able to buy solar without the Germans and the French telling them not to spend money.  The market is forward looking.  At some point it will factor in a Euro crash.  This will send the blue chips into the tank and the smart money will be running to cash and then later on into commodities and into energy. 
• Why?  Because deflation NEVER lasts forever and when the markets finally bottom there will be a massive inflation based on a much larger monetary base than has ever been in play in history.  It will cause solar companies to get a huge bounce as people flee from rapidly rising oil prices into something that at least they can control.  Solar power might still be expensive but at least you will know that your monthly bill is simply going to be the payment on the loan you used to buy the system with.  If anything, that debt will get easier to pay off once the Great Inflation hits us.  I'm not saying we are ready for inflation yet (deflation has not yet played out).  But someday it will come and solar panels have a working life of 25 years or more.  They will still be there producing power when the inflation arrives.
• Total SA already bought 60% in the low $20s. If they announce they will purchase the rest of it the stock could double or triple overnight.  Even a simple extension of larger credit lines by Total to Sunpower will cause the stock to rocket.  Why? Because it will give Sunpower not only staying power in a depression but it will also give it acquisition power.  Solar industry consolidation is upon us and those with credit lines will pick up the pieces of those who go under for literally pennies on the dollar.  It will make the survivors very strong during the recovery. That has to be a concern for the short sellers.

If all of the above reasons didn't convince me that now is the time to start accumulating, all I had to do was look at the chart.  I see that SPWR is currently tracking out a 5th of a 5th of a 5th.   It has also completely retraced its mania chart.  This is getting to be, if not already there, a once in a lifetime buying opportunity.  A good strategy here is to dollar cost average in.  If it goes down a lot more then pick up the pace of buying.  All you need is about $5K worth of the stock at these price levels in order to have something that could return some real money in just a few year's worth of holding. 

Italy and Spain, of course. But France and Germany as well....

By now people all over the world are starting to get it.  Iceland was the tip of the iceberg.  Ireland was just window dressing.  Greece is a relative side show.  It has yet to default but smart people know that it's a foregone conclusion.  The big show is now on the stage as Spain (which Mish says is now in a "death spiral"), Italy and France start to slide into the abyss closely followed by Germany.

Yes, that's right, Germany.  The big export powerhouse of the EU.  Many people still haven't seen it because it is unfolding right here, right now.  Mish is now reporting dramatic reductions in exports over the last quarter for Germany.   Its getting to an economic blood bath and in fact it's starting to smell like late 2008 again wherein the global economy almost came to a full stop for several weeks.  Sales are just collapsing.

The fact that Germany is starting to slide down the tubes might be news for some people but not for Economati.  From my uniquely early view that the global economy is now one huge interconnected debt Ponzi gave me a vantage point where I could clearly see what was coming and why.  In fact, I posted several times (including this little gem) on the fact that France and Germany are as screwed as those they are wagging their fingers at.

Brace for impact, folks.  These things have a way of getting held back and held back until they erupt like Krakatoa.  As the economies go under, the banks associated with them will teeter and tumble.  There will be capital flight.  There will be bank runs.  Banks will go bankrupt en masse because banks that practice fractional reserve lending (which is all of them) are basically running a controlled bankruptcy at all times.  All that has to happen is for people to take their money out and the banks will be insolvent.  When that happens governments will bankrupt themselves bailing out their beloved banks without which there might be no market for government debt.

It's one big massive circular debt Ponzi.  At the end of the day the money of all countries will be severely devalued against gold and silver metal.  That is going to happen.  The longer governments fight it, the worse the backlash is going to be and the higher the metal is going to soar once the people panic in unison out of fiat currency into tangible goods. 

The end game for the US will be after all the foreign currencies get trashed that US dollars will be the last man standing.  When that happens, US exports will become very expensive to foreigners who will have to curtail the purchase of our stuff.  When that happens the US government will have little choice but to fire up the printing presses and debase the dollar even more.  This will drive a period of massive inflation.  First the other nations have to collapse though and the dollar will see renewed strength as the best looking horse in the glue factory.

People of Greece: if you have not already taken your money out of your banks and put it into gold then it's too late for you.

People of Spain: run, do not walk for the exits.  Your government is going to collapse.  There will be even more riots and massive inflation.  There is zero reason to leave any long term retirement wealth in an Spanish bank.  The fact that your wealth is Euro denominated means NOTHING.  Run into gold and silver as quickly as your feet will allow.

People of Italy: look at the rapidly rising interest rates of your government debt.  Your government cannot afford to roll over its debt at these high rates.  Your country is in the end game.  Get the heck out of your banks or get left holding an empty bag.  When the Euro disintegrates, gold and silver will still be useful in trade.  

People of France and Germany: I've already explained why you are only 1/2 step behind the PIIGS.  In short, your paper fortunes were built by selling exports to deadbeats who cannot and therefore will not repay you.  Your governments were in on the scam right there supporting your multinational corporations taking out massive loans in order to build production capacity to feed the credit-juiced exports market.  When the deadbeats default on you it will be a double whammy. 

You will lose the paper wealth you thought you had (think retirement funds, etc.) and you will be stuck with useless excess production capacity which requires regular loan repayments at a time when exports are not selling.  Your government will have to step in but many of your banks will collapse because they are leveraged up 40-80x (not percent, TIMES).  They are all Bear Stearns now just like the big US banks.  They will collapse.  It will end up debasing the value of any savings that you have stored in paper money or other fiat currency denominated assets.  The math of this will not be put off forever.  Get yourselves into money metals ASAP or go down in economic flames.

Tick Tick Tick...

PS, the dollar is not a good or safe long term resting place for your stored wealth.  It might look strong today but that is a Madoff-ism, an apparition.  You can get away with hiding your assets in dollar denominated investments for now but over the longer term the only safe haven will be monetary metals (gold and silver).

Bernanke is soooooo full of $hit!

When the credit Ponzi was still in the run up portion of the mania, Bernanke was busily concentrating power into the Federal Reserve and into his moneymen pals.  As a result, its mission and objectives became larger and larger and bankers became systemically important to the economy.  The most recent federal reserve mission statement reads:

• conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
• supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
• maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
• providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system

It's pretty clear that the federal reserve has pretty much failed on every count but the hubris involved with trying to be responsible for the items highlighted in red is out of this world.  Why didn't they also take on "a chicken in every pot, a car in every garage and sex 5 nights a week" while they were at it?  And all of this is coming from an organization that doesn't actually DO anything productive.  All it does is sit on a throne and dictate how others should behave economically.  What an elitist scam!

In any case, the basic tenet behind Keynesian / Federal Reserve policy was/is that the government should be a sort of economic shock absorber.  If people didn't feel like spending, government would do it in their name.  If government didn't have the tax revenue to pay for it, it would just borrow the money to fund it.  Then (supposedly), after the danger is past, the government would tighten up the screws, collect more taxes and use the good times to pay down the debt so that the shock absorber would be ready and waiting to absorb the next shock.

The only problem with this obvious con game is that the shocks are coming faster than the shock absorber can recover from the last one.  Bush's tax cuts were supposed to be temporary cuts designed to boost a flagging economy.  But the economy has never recovered and so Bernanke is now warning that allowing them to expire will cause a recession.  But wait, oh omnipotent Ben, aren't you in charge of  "maximum employment, stable prices, and moderate long-term interest rates"???  Why is it is all of a sudden going to be the fault of Congress when we slip into recession/depression?

At the same time, the article goes on to say, "But the Fed chairman made clear his most urgent concern is what would happen to the economy if Congress can't resolve its budget impasse before the year ends.".  So clearly, Bernanke is trying to set the Congress up for a fall.  Damned if they do, damned if they don't.  If they do the honest thing and raise taxes then it's recession (depression more likely).  But if they don't balance the budget then expect massive inflation which is just as bad if not worse than a depression.  Bernanke, you shameless B@$T@RD!  Nobody can have it both ways and you know it!  You took all the credit when the Ponzi was being pumped but now that it's being dumped you want none of the blame.  You are a criminal!  You need to be put behind bars for high crimes and treason.  You have betrayed the American people and all peoples of the world with your elite con game.  You deserve no less than to share a small jail cell with Greenspan until the life leaves your old, tired body due to natural causes.

I can assure you, the blame game is a clear sign that the end game is playing out.  In fact, there is no avoiding a massive recession and more likely a massive depression.  Bernanke is just a ridiculous con man and I guarantee you his credibility will be $hit within 2 years.  People will spit when they hear his name.  You will know it is going to happen if the federal reserve is ever audited by an independent source which can be trusted by the people.  Many skeletons will be dragged up in the process which would never occur if the economy wasn't collapsing.

To be fair, it really won't matter much if the Bush tax cuts are extended or not.  The debt Ponzi that was architected by "maestro Greenspan" is rolling over and jobs will go with it.  When that happens the spending will collapse and corporations will go into hibernation mode hoping to survive long enough to make it through the hard times so that they can be one of the few left standing on the other side.  In other words, they will do the same thing that the big money has been doing as it ran into US government bonds that carry an effective negative return when inflation is factored in.  If you wonder why people park their money in such investments in times such as this, that is the reason: they want to have cash on the other side of the great crash so that they can buy distressed but valuable assets for pennies on the dollar.  Corporations that manage to survive the depression will be the new leaders.  Many of the current leaders are debt bombs which will not survive.

If Bernanke is allowed to remain in control, expect a deflationary crash.  Why?  Because fed-mandated massive inflation will certainly be blamed on him and on the federal reserve.  So unless there is a compelling reason for Bernanke to allow him and the federal reserve to become public targets, Bernanke will opt for austerity, not more money printing. But he also knows that will get very ugly - no different than Greece, Spain, etc.  There will be unemployment, demonstrations, riots and perhaps even worse.  And so Bernanke tries to slip out the back door with comments from the article such as ""Congress is in charge here, not the Federal Reserve".  All of a sudden, the fed "mandates" are looking a bit more like wishful thinking by a group of pompous elitist asses.

Bernanke is running scared now folks and the markets will sense it as certainly as I write this.  Prepare for rough waters ahead.  It is going to be unprecedented in US history IMVHO.

This is how the Ponzi crumbles.

The US government has been running a decades long debt Ponzi.  It fueled rapid US growth and it kept the world at bay but the Ponzi is in the end game.  Not necessarily the last days, but if you look carefully you can see the beginning of the end on the horizon.  In short, people are getting tired of having their labor stored within a corrupt money supply which is hyper controlled by a corrupt government. 


People know that the salary they earn for the work they do is first partially confiscated by government mandates before the people have access to their own money.  Don't like it?  Too bad.  Didn't vote for it?  Too bad.  Don't want to comply with it?  Well, government would like you to believe there is no alternative but there certainly is.  The bottom line is that it is way too expensive to track each individual and what they do.   Government has been trying to use computers to help with this but they are losing control. 

Government still holds the winning hand as long as people use their money because it means government benefits from the daily activity of the economy.  Each transaction is another "ring the register" moment for the tax man.  Unfortunately for the government, too many people are just barely making it by these days and so they are getting very, very weary of supporting the system by the sweat of their brows.  Once the herd gets tired of its conditions, such conditions will not just accept that forever.  They know their labor is being stolen by government via inflation and via direct taxation.  They know that government pensions are far better than the normal day to day worker will ever see.

The only way out of the scam is to remove oneself from the grip of the government's fraudulent money system which is based on the con of fiat currency and fractional reserve banking. It's not easy to do because it's all most people have ever known.  But, once people begin to prosper by avoiding the laborious burden of big government, the herd will start to move with it and when it does then it's game over for the Lighthouse Crowd.  There have already been some attempts at creating new local money supplies (such as the Liberty Dollar) but government has made a federal case of them using stupid technicalities and then punishing those involved very harshly.  But the government can only attack something that has not reached critical mass of public acceptance.  For example, it seems that the Berkshares currency does not have the feds attacking them yet as they cannot come up with some technicality to attack with.  http://www.berkshares.org/whatareberkshares.htm#circulation.

Berkshares may or may not make it over the long term but what is important is that many people, both domestic and foreign, are looking for dollar alternatives and trying to build new economies  around them.  Never forget that economies are really all about the exchange of labor and that money is only a proxy for that labor.  Maybe someday someone will come up with a currency called workshares.  That would really send the message that new wealth cannot be created simply by printing new paper markers, only by engaging in productive labor.

Fractional Reserve Lending is Fraudulent

Ron Paul taught me that the federal reserve is a scam.  It was because of him that I even started researching economics because what he was saying sounded crazy yet it explained so many things. It was during this research which started in early 2007 that I started finding people like Bob Prechter, Peter Schiff, Mike “Mish” Shedlock, Marc Faber, Reggie Middleton, etc. who spoke plainly in common terms with the goal of educating as opposed to Greenspan, Bernanke, politicians and moneymen of all sorts whose actual goal is “the purposeful language of obfuscation” which Alan Greenspan called “fedspeak”.  Read the wiki on this term and if you aren’t a bit pissed off afterward, check your pulse to see if you are really alive.  What’s described is a clear strategy at conning the people by the elite.  Greenspan did not act alone.  He was part of a grand banking conspiracy.  It is no longer a theory folks.   It is more akin to a silent coup.  The bankers own our politicians and they are calling the shots.

I was able to suspend disbelief early and do the initial research because I was not indoctrinated into “the system” in college.  I instead spent those years in the USAF which was more of a school of hard knocks.  It had enough scammers and a$$holes for me to study yet they were unsophisticated enough in their ways that I was able to catch on.  It provided valuable lifelong experience for me.  Contrast that with the con men running the government.  They are well educated, sneaky and generally cover their tracks quite well.  They know every trick devised by man since ancient Egypt to deceive man.  They know how the human mind works and they use it against us.  They know how herding works and again, it is used as a weapon against the individual.  This is why so many people still just don’t (and won’t) get it.

I suspect that few people actually get it even after all that has happened since the crash of 2008.  If you are still unsure what to believe then try this on, a direct quote from Mish:

Fractional Reserve Lending Is Fraud

By lending out more money or gold than exists, asset prices reach unsustainably high levels before they crash. Sound familiar?

Greenspan compounded the problem in 1994 by allowing banks to "sweep" checking accounts (unknown to customers) into savings accounts (via accounting entry).

Savings accounts have no reserve requirements. Effectively, money that people think is in their checking accounts is not really there at all. In fact, it has been lent out multiple times over.

This fact exacerbated the run-on-the-bank problems we saw in 2008. As a side note, FDIC insurance is another form of fraud.

http://globaleconomicanalysis.blogspot.com/2012/07/notes-from-steve-keen-on-lending.html

Do yourself a favor and think about these words very carefully, line by line.  Here’s what I hope you can internalize from it:

·         Fractional reserve lending is indeed fraud.  It is government sponsored, government supported fraud, period.  It is not done without reason; someone is getting rich in the deal but it’s not you.

·         Fraud is crime.  Criminals should be prosecuted.  Apologies and clawbacks are not enough.  Punishments should fit the crime.  Fractional reserve banking has caused mountains of suffering in the USA and even more so abroad.  No serial murderer ever caused so much aggregate suffering.  Few wars have even done so and we are not even in the 4^th inning of this yet.

·         More money has been lent out than exists.  A LOT more.  So much more that it can never be repaid.  Add to that the Ponzi promises of social security, medicare and pensions (which are effectively loans by people to the controlling organization).  Add to that the fact that loans can, are, and will increasingly be dismissed as a result of bankruptcy.  The mathematical result is that a lot of people who think they have something coming to them are not going to receive it.  Plan on it.  Start now or don’t whine later because whining will not fix it.

·         Our banking system is based on fractional reserve lending which is a fraudulent practice.  Fraud is where someone steals your money quietly using guile, deceit, the art of the con, grifter’s tricks and of course sophistry.    In a fraud people don’t know what’s going on, they suspect nothing until it’s too late.  They only become aware when the fraud collapses and it collapses suddenly.  If a very well informed financial person like Mish tells you that you are caught up in someone else’s fraud game, you should listen.  Our banking system is a fraud game.   Don’t leave any more wealth in it than you need to because all fraud eventually is discovered and no con game ever ran indefinitely.  We are in the End Game now.

·         The US Dollar is the creation of our fraudulent federal reserve.  If you have all your assets in dollars you will eventually be defrauded of them.  Nobody can say when and I’m not predicting it will be tomorrow or even next year.  In fact, the dollar might even strengthen from here for a period of time as Euroland collapses, Japan collapses and China hits very hard times and has to print.  In fact, I’m on record many times as saying the dollar would strengthen vs. global currencies as the first stage of the collapse and indeed it has been strengthening as you can see from the UUP ETF chart.  But it is a conviction-less strengthening as can be seen by collapsing volume that has been accompanying the dollar’s rise.  People are only getting into the dollar out of fear, not out of real desire.  This is not the underpinning of a long term trend.   The collapse of the dollar is in the cards somewhere on the horizon.  Math will not be denied.

·         The FDIC will not save you.  The FDIC is another unfunded government promise.  The FDIC is another government fraud. 

·        Physical gold is outside of all this fraud.  It is real and true.  Paper claims on gold held by someone else are not the same as physical gold in your hand, not even close.  At some point everyone will give up on the fraudulent money system and everyone will pile into the only source of wealth that can be trusted: gold (and perhaps some silver if you want to have some additional volatility in your metals portfolio).  Gold price may come down even more as deflation of the fraudulent money supply sets in.  Just dollar cost average into it over time with no leverage and you will be a big winner in the end.  The end must arrive before all of the boomers retire because that will be the maximum load on the fraudulent system.  It is what will cause the collapse (if global bankruptcies don't do it before that).  In other words, this is not some open ended fear factor.  It must occur before the patsies get paid otherwise they weren't patsies.  But we know they won't get paid because they are in a fraudulent monetary system ergo the system must collapse in step with or before the mass retirement of the boomers.  There's still some time left to defend yourself but action is required.

The truth about a gold standard for global currencies

I can't tell you the number of really smart people I know who just don't get the fact that not only is a gold standard possible, some form or fashion of it is actually the most likely eventual outcome.  We have a corrupt global money supply consisting of debt based money along with a corrupt global banking system which is also bankrupt.  It cannot be saved.  It will collapse.  Something must be ready to replace it and it must be something that people can have real confidence it.  Period. Nothing less will be acceptable to those who will lose everything while just being told to start over again from scratch.  They might indeed start over if they were convinced that they would not get screwed by the moneymen again.  But nobody is going to agree to anything without some strong assurances at a time when governments have lost the confidence of the people.  Gold is the only thing that will satisfy this need.

What throws people off the gold standard trail every time is the high price of a 1 Troy Oz. gold coin which currently goes for about $1680 on Monex.com.  The naysayers look at average people and know that they cannot afford to buy very many oz of gold and thus the gold standard is unworkable.  Plus, who buys $1600 items with any regularity?  Very few, that's who.  I've explained to these folks that most transactions will take place for far less than one oz of gold and that all you have to do is create electronic (or paper) "shares" that, as a whole, match up to whatever amount of gold weight is available in the economy at some ratio paper currency units to oz of gold. 

In other words, 10 measly lbs of gold could easily back the entire world's paper currency supply if you set the ratio of real money (gold) to Cheerios box top coupon money (Dollars, Euros, Yen, Rubles, Lire, Francs, etc.) low enough.  For example, if 1 USD were backed by 1 trillionth of an oz of gold then 1 trillion dollars could exist for every oz of gold owned by the US government.  Yes, it really is that simple!  And it would also be a significant upgrade from what we have today which is a fraudulent money supply that is worth literally nothing: 1 trillionth of an Oz of gold per paper currency unit is infinitely better than zero Oz, would you not agree?

Of course, the risk with the use of such small numbers is that gold miners can scrape the gold traces off of their shovels and become millionaires.  A ratio must be picked such that gold miners cannot change the supply dramatically each year.  This is actually quite an easy number to select because the US is supposed to have 8133.5 metric tonnes of gold in its back pocket (2010 figure).  So all you have to do is to determine the number of physical dollars that government wants circulating in the economy and add it to the existing debt on the books and then divide the gold weight by that sum.  Given the amount of debt that needs to be paid back (you would want enough money in the economy to actually pay all debts, public and private, should the desire to do so arise).  It would probably come out to $10,000-$15,000 per Troy Oz. 

If the government is lying about owning that much gold, the dollar price per Oz could be much higher.  At the end of the day, it doesn't really matter what the price of gold is because everything else will adjust in price automatically.  If gold becomes 5x more expensive in dollar terms, expect gas, food, energy, health care and eventually salaries to follow suit.  Ever been to Japan or Taiwan?  Stuff in their markets always costs thousands of Yen and NT respectively.  The price of items will adjust automatically based on how diluted the currency is relative to production.  The absolute numbers are immaterial; actual purchasing power is what determines whether or not you are wealthy.  1 USD=1165 Korean Won.  Does it bother you if lunch costs 5 thousand Won?  It shouldn't because your salary will be a large number of Won as well. 

To underscore my point, please consider that Switzerland is now discussing a new "gold" coin that would be a parallel currency to the Swiss Franc which it seems to be selling down the river by tying it to the dying Euro.  Of course, the Franc is just fiat currency and therefore has an intrinsic worth of zero.  Eventually it will be worth exactly that and the quicker the people are given better alternatives, the quicker they will abandon the money that is worth nothing and which is tied to the dying Euro in favor of currency that has at least calculable and historical value based upon some guaranteed content of real gold.

So how are they doing this?  Backing a paper note with some known quantity of real, existing gold is one thing.  But then you have to trust whoever is auditing the gold and trust in governments is running very short these days.  You could also issue pure gold coins of very small size but who wants to deal with gold coins the size of a shirt button or even the size of a grain of rice?  The answer is beyond simple: you don't have to.  Simply mix a known quantity of gold into a big vat with a known quantity of lesser metals at some known ratio and use this diluted mixture to stamp out coins from.

And so that is what the Swiss are considering.  Read for yourself!.  As to the dilution level, the article states, "A single new gold franc, on the other hand -- with a gold content of 0.1 grams -- could be purchased for just 5 francs (at current prices), which would, in theory, make the metal more widely owned throughout the population. That could lead it to become a medium of exchange as is the case in several U.S. states, where gold has become legal tender."  Since 5 Swiss Francs currently trade for about 5.25 USD, the new coins would value 1/10th of a gram of gold at $5.25.  1 gram of gold therefore would be worth $52.20.  Since there are 31.103 grams in a Troy Oz, this new coin would value 1 Troy Oz of pure gold at $52.20*31.103 or $1632.91.  The fact that this is a few percent cheaper than the price of a pure gold coin today would make such coins a very popular option for initial introduction. 

But more importantly, gold-content coins do not require anyone to trust the government.  It would be ridiculously easy to audit coins in the money supply without the government's knowledge or blessing.  If you ever found them cheating on their promise you could sue them or simply write them off as not serious about supporting honest money.  The fact that you actually have the gold in your hand means you don't have to take government's word for anything.

At the end of the day, people are going to find that gold-content coins and audited gold standards for paper money are not only not impossible, they will instead become the savior of the global economy.  Or maybe there will be world war 3 first and THEN gold becomes money again in the aftermath.  But sooner or later, expect gold to be part of the money supply because, as JP Morgan once said, "Gold is money and everything else is not".

Debt Ponzi Meltdown Snapshot and Gold Chart

This post is a summary of the state of the growing collapse of the global debt Ponzi.  First off, if you have any misconceptions that a soft landing is even remotely possible, abandon them right now.  Childish views of reality do not change reality.  Get through Kubler-Ross quickly.  Get to the acceptance state as soon as you can.  Just avoid the shock, anger, pleading, etc. if possible.  It won't change anything and will only distract you from doing the right thing for yourself and your family.

The facts are exactly as I have laid them out many times on this blog and in private emails to friends and family:

• We the people of the world stupidly let con men get in charge of our money supply.  They corrupted it for their own purposes.  Some of them might have believed they were doing good but most were just in it to win it for themselves.  They were and are greedy bastards; con men and grifters.  Much of what they did wasn't even illegal per se even though it was all immoral.  But the real culprit here is that we gave over control of something very important to us-the soundness and honesty of our money supply.  We should have known that handing keys to the henhouse to a group of foxes will lead to slaughter.  It's in their nature.  They can't really help themselves. 
• The result of decades of neglect regarding this matter is that these con men have created a global debt Ponzi the likes of which the world has never seen.  It is beyond the imagination of man.  Can you imagine a number as big as 1.2 quadrillion dollars?  No, I don't think you can because I have been working hard at it for years and still cannot really fathom it.  But that is the size of the unregulated derivative exposure out there.  In short, all the big banks are leveraged up to their eyeballs trying to fleece suckers out of their money.  But the suckers are in short supply now and the markets are mostly high frequency traders battling it out.  They are hollow.  The recent flash crash was proof of just how hollow.  They are as rotten wood, termite-eaten right up to the paint.  It still looks like wood but you can poke your finger into it at will.  It is a shadow of its former self propped up by regulatory forbearance and lies.
• The initial collapse of 2008 was just the beginning.  The strong players like the US rushed in to prop it all up with money printing and promises.  Bernanke threw the kitchen sink at the deflationary forces.  But it was only a short reprieve.  Gold reacted to his efforts by skyrocketing.  Now the next wave down is happening: the EU is crashing.  It will start with the PIIGS but France and Germany will fall into the black hole quickly enough.  The jig is up.  The scam is bust.  Everyone is finally more worried about return of their capital than return on their capital.
• We don't feel it badly in the US right now.  Unemployment is somewhere between 8 and 15% based on how you count (or obscure) the unemployment data.  The US government is in the propaganda business now, telling the people what it thinks they need to hear in order to not panic, in order to not leave the Ponzi all at once.  They are even trying to make it legal (this has not been an impediment to them to date).  The smart money is already heading for the door.  The herd will get very nervous once the EU begins to collapse.  Expect a breakup of that little scam and the rise of border guards, nationalism, protectionism and trade sanctions if not regional war as those people try to get what they think is owed them.  Spain and Greece are in outright depressions, every bit as bad or worse than conditions experienced during the Great Depression.  The rest of the EU will follow and the rest of the world will not be far behind.  The debt based global economy can, will and must implode because debt based money is a scam and it always was a scam.
• The Japanese Topix stock market index (think of it like the Japanese version of our S+P 500 except broader with 1669 public companies represented) is now at a 28 year low.  Yes, that's right, Twenty Eight Year Low.  Anyone who put a dime into that scam in the last 28 freaking years is underwater in nominal terms and of course they have gotten wiped out in inflation adjusted terms.  In fact, Japan is a failing, bankrupt state.  Their debt:gdp of 220% is far worse than any of the EU PIIGS.  Idiots like Bloomberg concede that they have this debt but then go on to explain how it is still a wealthy country, blah blah blah.  It is more of the same tactic of admitting a little truth and then working to calm the herd with a lot of double talk.  Japan's paper wealth will collapse as soon as people begin demanding higher interest for government bonds.  This is coming sure as sunrise but everyone discounts it.  Except of course, near genius types like Mish who rarely gets anything wrong and when he is wrong he admits and corrects quickly.  Mish sees the continuous credit downgrading of Japan, knows it will eventually drive higher interest rates on government bonds which will lead to collapse and sudden panic.  Read for yourself.  Mish wrote, "... if exports collapse or interest rates rise significantly for any reason, the party will be immediately over.  Bear in mind that "significantly" means a mere hike in the 10-year rate to 2.5% or so, perhaps less. Such a hike would consume 100% of Japan's revenues just to meet interest on the national debt."  Are you getting that?  A rise of interest rates to just a stinking 2.5% on their 10 year bond means economic Armageddon for Japan.  This is math my friends, not emotion.  Everyone will do well to grok this just as soon as possible.  When Japan rolls over, and it must, I think the rest of the world follows quickly.
• China is one big stinking mass of corrupt real estate debt.  It is so bad that I don't have time or words to describe.  It is so bad that the sheer magnitude of it stops people from seeing it.  The lie, the fraud, the corruption is so big, so widespread that nobody can actually get their arms around it.  An economic collapse is certain there and when it picks up speed it will suck Australia and Canada down with it because their recent wealth is mainly based on selling commodities to China.  The crash is already well underway.  It is like watching the twin towers fall.  It takes some time to play out.  It takes time for the smoke and dust to clear.  What is left afterward will be a pile of economic rubble.  It will throw China into a depression.  Expect massive civil unrest there as the core elite protect themselves and throw the peasants to the wolves.
• The final piece to fall will be the US. The US is at the top of the debt Ponzi; the Eye of Horus looking down upon the world from on high.  There have always been financial con men but the financial criminals that have been running the US for the last 5 decades have turned the art of the money con into a global art form.  They control the debt based global reserve currency and use threat of military force to keep the world in line under it.  We basically took the world down this path with Bretton Woods and then the subsequent abandonment of dollar-gold convertibility cemented our future.  Things will get very bad in the US but not as bad as in many places elsewhere. 
• The real question will be is what happens when bankrupt states like California try to pay its ridiculously generous public pensions with "loans" or grants from the Federal Reserve or the national treasury thus effectively making everyone in the country pay for their profligate, liberal left coast ways.  I can tell you now: it will NOT be pretty.  More conservative people living in the likes of Texas, etc. will tell NY and CA to solve their own problems.  It will get ugly and it will get personal.  Political correctness will be out the door.  If forced to pay for others, there is a nonzero chance that some states will decide that involvement in the union has worn out its benefits.  Think it's funny just because it hasn't happened yet?  Tell it to the USSR which is now Russia and a bunch of X-stahns.  It's not funny, it's a real possibility.

I'll finish today with a picture of the GLD chart.  Looks to me like 4th wave consolidation is nearly ended and I expect another big move up to a higher high as people around the world start looking for safe havens for their stored wealth.  One by one they are waking up to the fact that the only real safe haven is gold.  The words of JP Morgan are still true: "Gold is money and everything else is not."  Real money is not a risk asset and as governments themselves begin to collapse people will begin to realize that governments are just people, people are corrupt and you want to get away from corrupt people in any way possible during a global crisis like this.  If you buy land then you are a sitting duck for the tax man.  If you invest in paper assets you will wake up one day and find yourself Madoffed in some form or fashion.  The only 100% safe play is physical gold in your hand.  Everything else represents some sort of a default-able promise.  At some point there will be a massive demand for physical gold which will bring down the metals markets (which are basically trading mostly paper promises for metals).  When people figure out that there is no real gold behind the promises, the real thing will rise to its true value.
I don't advocate market timing with gold.  It is for savings, not for gambling.  Just keep buying a little bit each quarter and save it as you would save in your 401k.  By the time you retire you will not be worrying about what the government might or might not do with your retirement funds.  Your funds will be in real money held outside of the corrupt fiat money system.  Still, it is interesting to me to watch the ebb and flow of gold's dollar based price as the global debt Ponzi works through its inevitable collapse.  I like to use Elliott waves for this.  While it is not yet confirmed by the chart data, I suggest that the fundamentals will probably drive gold up into a very strong 5th wave move from here.  Silver, being poor man's gold and thus more prone to more panic based movements, will probably be even more dramatic.