Gold: Time to Sell?

“. . .we shall urge the greatest of caution upon everyone, everywhere regarding gold. It is not just over-extended to the upside; it is hyper-extended. It is not just overbought; it is hyper-overbought. We cannot strongly enough urge everyone to avoid buying gold here and we shall go so far as to suggest that those who are long begin the process of quietly heading for the exits and to reduce their positions to the most minimal ‘insurance’ positions possible. Everyone should have perhaps 5% of their liquid assets in gold, but at this point anything beyond that level is excessive.”

–Dennis Gartman, September 29 2010

source

My thoughts: In the next 3-5 years (10 years at the most), I expect expect gold to double or triple in value. Despite gold being at all time high (nominal) prices, Don't underestimate the ability of Bernanke to destroy the value of the dollar with his printing press. I think gold remains a bargain anywhere under $1500.

Mises and Mellon on Crisis

If the crisis were ruthlessly permitted to run its course, bring about the destruction of enterprises which were unable to meet their obligations, then all entrepreneurs — not only banks but also other businessmen — would exhibit more caution in granting and using credit in the future. Instead, public opinion approves of giving assistance in the crisis. Then, no sooner is the worst over than the banks are spurred on to a new expansion of circulation credit.

Ludwig von Mises



Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.… It will purge the rottenness of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.

Andrew Mellon

Quote

"This is worse than a divorce. I've lost half my net worth and I still have a wife."
from a trader

(HT: Marginal Revolution)

Random Quote

...the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."
Cicero , 55 BC

Random Quote

"You can get all A's and still flunk life." - Walker Percy

Economic Ignorance

From David Leonhardt's NYT piece on Obamanomics:

Yet laissez-faire capitalism hasn’t delivered nearly what its proponents promised. It has created big budget deficits ...

Laissez-faire capitalism may or may not live up its proponents hopes (I think it does--or would if we actually tried it since what we see in the world around us isn't truly laissez-faire capitalism), but it certainly does not create big budget deficits. The responsibility for deficits lies with pols about whose abysmal performance there can be no doubt. Leonhardt's assertion has to rank as one of the stupidest things ever written.

from Division of Labor

Famous Economist: Frédéric Bastiat (1801-50)

Political economists are in general quite suspicious of governmental intervention. They see in it inconveniences of all kinds—a diminution of individual liberty, energy, prudence, and experience, which constitute the most precious resources of any society. Hence, it often happens that they oppose this intervention.
Frédéric Bastiat

A Short Biography