Nov 11 2008
We are kind of in a holding pattern on the legal and political front until we see what the federal government is going to do now that the Democrats will control the executive branch (President Obama) and the full legislature starting in mid-January of 2009.
The last thing I want to do is undermine anyone’s hope. After all, it is hope alone which keeps prospectors going. On the other hand, more prospectors likely fail from false hope than anything else. What is false hope? It is when we refuse to look at the conditions which truly exist, and just keep on going even when the prospects look terrible.
The most successful prospectors are driven by hope of success that is based upon careful observation and consideration of the situation as it actually exists. As important as hope is to a prospector, he or she also must be willing to look for the truth and adjust his or her plans accordingly. This is also true in life and business.
I may be wrong about this, but my best guess is that with Democrats running the federal government pretty-much unopposed, the American people are not going to receive the “change” that they voted for and are hoping for. This is because the problems we are now experiencing with our economy are the result of long term bad economic policies which have long since become foundations within America. These things cannot be fixed without inflicting severe pain which Americans are not prepared to endure. As much as we can all hope for one, there is no magic wand that is going to straighten everything out.
While it is sometimes difficult to apply the advice, someone wise once said that it is a losing proposition and waste of effort to resist those things in life that you do not have the power to change. At the same time, I personally believe that it is very wise to look ahead as best you can and prepare yourself for what is likely to happen.
With this in mind, I'll offer up some likely projections:
1) Economics (natural law) should constrain the Democrats from imposing the social agenda which they certainly would like to see. More social services, free heath care for everyone, wealth redistribution (trillions in American wealth have already evaporated from our economy during the last few months), increased regulation of remaining productivity, increased protection of the environment, a full cap & trade system (carbon taxes) across the country, etc., etc., etc. -- this all adds up to massive increased costs with substantially decreased productive activity.
In addition to the immediate negative consequences upon our economy, this scenario also will strongly discourage reinvestment of capital in America.
2) While I could be wrong, I doubt if the Democratic party or President Obama want the legacy of having destroyed America’s economic base altogether. We all know the economy is already in big trouble. How much more burden can you pile on top of the existing system? Regardless of the rhetoric, President Obama will have to be mindful of these realities. Especially since he is saying that fixing the economy is his first priority.
Even if we are not there yet, there will come a time when America is going to wake up and realize that productive activity is the only thing that will keep the country going; that productive activity is the fundamental which must be protected and preserved; that we cannot continue to spend more than we produce; and that all of the social programs which people want must be supported by productive activity.
Productive activity requires capital investment. Bad policies will force capital to find other counties where productive activity is appreciated and rewarded. That is already happening with large sectors of American productivity being relocated in China, Mexico and elsewhere.
I am hopeful that the new powers that be will have a basic understanding of these economic realities. So, despite all the rhetoric to the contrary, my best guess (hope) is that higher taxes, more social programs and increased regulation upon industry will have to take a back seat to getting the economy up and running again.
3) On the subject of the economy, in case you guys are not aware of it, America is now so far in debt, it is amazing that anyone is willing to continue placing their remaining capital in anything that is “guaranteed” by the U.S. government.
Here is a basic reality that we should all face: When our government spends massive amounts of money more than it takes in, and its credit finally begins to dry up, unless it cuts back severely on its spending (not likely with the new administration), it will have no other choice but to start consuming American assets which belong to the people. I predict we will see that process accelerate during the coming years. There are already serious discussions in congress right now about confiscating the assets from all private retirement accounts in America, including 401(k)s and IRAs, and placing those funds in the Social Security Trust Fund where they can be “better protected” by the government. It is no secret that the federal government has been “borrowing” all surpluses from the Social Security Trust Fund, redirecting that money into the general fund and spending it.
Increased productivity and reduced expenditures are the only real answer to solving America’s long term economic problems. Anyone who runs a business or a household knows that you cannot spend more than you make for very long before you are ruined. Since these things are not on the Democratic agenda, unless they can somehow manage to regenerate another business cycle (propped up by taking on more debt), my best guess is that we can expect economic conditions to get worse. How much worse? I'd rather not go there. But it can still go a long way down from where we are. You can be hopeful of a better future, but is important to face this possibility and plan for it!
4) Because the money to pay for government programs must come from somewhere, I predict the powers that be will be forced into doing each of the following three things: (1) They will target the capital and assets of those Americans who still have some (maybe beginning with private retirement accounts); (2) They will continue borrowing (selling bonds for which they/we must pay the money back with interest at some later time) for as long as people and other governments are willing to go along. (This cannot last forever!); and, (3) they will have to make up the rest by printing money. Printing money is basically the same as confiscating the value out of our existing currency, making existing currency equally less valuable in its purchasing power. This means we should plan on serious inflation as the new Administration is taking over the show and for the foreseeable future.
5) All this adds up good for future gold (and silver) prices.
On the subject of gold prices, there is presently some kind of disconnect in reality which causes metal prices to decline almost every time the stock market takes a dump or there is some other kind of bad economic news. This is a big mistake by the market which creates an interesting investment opportunity that cannot last much longer. I predict the public will catch on at some point, realizing that gold and silver are true wealth which should not be confused with the stock or bond market. Once the public realizes this, to the same degree that there is a long way that the economy can still go down, the Dollar-value of gold and silver is likely to go up, up, up. Predictions of $2,500 gold (or maybe double that) do not seem that unrealistic anymore, at least to me.
I’m betting that we are going to see a substantial spike in the Dollar-value of gold and silver as the bad economic news just keeps coming, and the world begins to realize that President Obama does not possess the magic to make it right again. This is not a slam on the new president. I'm talking about deep-rooted economic problems which cannot be resolved with charisma or additional government programs.
While I am sure there are people in the big planning process that are a heck of a lot smarter than me, the solutions I am hearing from President Obama and our other elected officials (another stimulus package, a bailout of financial institutions and the insurance industry, a bailout of bad mortgages, a bailout of the auto industry, etc.) all have to do with the U.S. government increasing its spending programs and taking on more and more debt.
Listen: All this money either must be earned through new productive activity, or it must be confiscated from wealth that has already been created by Americans. The money has to come from somewhere! And since we are not hearing anything about starting up massive new wealth-creating enterprises, then we should all be very weary of our remaining property rights…
Let me just say that this discussion is not about rich and poor. It is well known that inflation hurts the poor and those on fixed retirement incomes (elderly) the worst. In the long run, everyone is hurt by the socialist agenda. History has proven this to be true time and time again.
6) “Mining Law Reform” will now be a near certainty, since the Democrats will control the votes necessary to bring it about. I figure this is going to happen pretty fast. This will mean an end to the creation of new mining claims as we know them.
However, prior existing rights on pre-existing mining claims should make them very valuable indeed. Since there remains a semi-conservative majority on the Supreme Court, I predict that prior existing rights on our mining properties will remain intact. We should not have to get involved in that litigation. The large mining companies will step right up to fight over that one, because they have the most to lose if the government attempts to confiscate existing private property (valid mineral rights on the public lands are real property in every sense of the term).
If you ever thought you would like to own your own gold mine, now is the time to do it before the gold prices really surge forward, and before the law prevents new mining claims from coming into existence.
7) It is difficult for me this early in the game to predict if and how the new federal government will impact upon the small-scale type of mining that we do. Recent federal court cases (which we fought with your help) have already decided that the U.S. Forest Service (USFS) has zero jurisdiction over small-scale mining activity that does not create a significant surface impact. For those of us who hold valid existing mining claims (The New 49'ers possess 60+ miles), I believe there is a good chance that the new government will pretty-much have to leave us alone. Still, we will have to remain ever-vigilant; because the beast will be looking for sustenance anywhere Americans are willing to give it up!
8) And finally, I could be wrong, but my best guess is that gold and silver are the best and safest investment opportunity at the present time. Under the present circumstances, I believe it to be very risky to bet on stocks, bonds, U.S. Dollars or any other currencies or traditional institutions until the economy really does find the bottom and there begins a clear stability and recovery which is based upon wealth-building from productive enterprise (rather than credit-based speculation). I don’t think we are even close to that at the present time.
While none of these predictions bode well in the short and mid-term for the traditional and civilized structures which we are all accustomed to, those of us in the gold production business are positioned about as good as can be done at the moment. Let’s see; if gold were selling for $2,500 per ounce, that would make a pennyweight worth $125. I can pan a pennyweight of gold per day nearly anywhere on our extensive claim holdings; more than that in many places. We have members who consistently pan more than an ounce of gold per week using nothing more than some basic hand tools and their own effort!
So, as long as the new government doesn't outlaw gold mining altogether (which would be contrary to existing Supreme Court law concerning the property rights afforded to mining claims which already exist), small-scale gold mining, The New 49’ers, other existing prospecting organizations, those of you with your own mining claims, and the small-scale mining industry as a whole should fare pretty well under the new federal government, even if other parts of the economy continue to slide.
That’s my take, for whatever its worth! What’s yours? If you want to share it, I ask that you please be civil and non-offensive. Please leave saber rattling and threatening behavior off this forum. Thanks for this.
Nov 11 2008
I think you may have missed one important and very worrisome point however. The government has a history of making the personal possession of wealth in the form of bullion or other non-sanctioned (read official US coinage only) precious substances illegal, and places rather severe penalties on such possession and "hoarding" or it's usage in any "Black Market" situations that preclude proper taxation and revenue sharing (read redistribution)! So gold may in fact prove hard to hold and use, even if we are in a position to occasionally get some. Perhaps old US minted gold coins, as in numismatic collector pieces, will still be allowed as they have in the past, or not?!?!
Throughout history there has often come a point where there is no concern in government as to what the effects of policy might be on the economy, the institutions nor the people, for their ultimate interest has nothing to do with benefiting anything, but rather only the total securing of all power unto the government and it's bureaucratic tentacles.
I would hope that we are not there yet, but history often shows that when that time comes, it can come all at once, and crisis, whether real or artificial, is the horse it rides!!!
Hope this is not too harsh, and certainly hope it is dead wrong, but that is my perspective on possible occurances and outcomes.
Please feel free to delete this post if you feel it fails to fall within your guidelines.
Nov 11 2008
If it should ever come to pass that laws are passed which prevent Americans from owning real wealth, than we will all know that we have arrived at a place that is beyond financial crisis. Let's prey that it never comes to that!
Your right that we should avoid discussions going much further along that track.
In any event, the gold that we mine from the ground is not classed as a bullion until it has been refined, even though placer gold does remain as a very valuable trading commodity.
Nov 11 2008
There are so many angles to this situation we are in. How did you ever keep that post as short as you did! :P
So Dave,... rather then add my 2 cents to every point I will just stick to one for now. :smile:
"On the subject of gold prices, there is presently some kind of disconnect in reality which causes metal prices to decline almost every time the stock market takes a dump" -Dave M.
While this might be counter intuitive, I believe the falling prices may make sense.
Gold is one of those commodities that is not only consumed, but horded. I have been assuming that there are a lot of gold holders who are seeing that "rainy day" that they bought the gold for in the first place and are now selling their gold to raise cash in the wake of the stock market crash.
Personally, when I look at the numbers, how much bad debt is out there mostly, we still have a ways to go. And I believe gold prices will not start to climb steadily until the market settles and gold it not being sold off at the present rate.
But that is just one aspect. There are huge gold reserves in the world held by various governments. If large reserves of gold are sold by governments, that will also lower the price temporarily. So... while we can look to a long trend of rises prices for gold as our currency is being inflated by our government (do we all agree that is what they are doing?) there will still be plenty of ups and downs.
A future price of $2500?
Dunno. I certainly would not rule it out.
Nov 11 2008
Pucker Factor Time, folks................
Thank you Dave.........a well mannered take on what we are headed for.
America may start seeing a surge in suicide bombers, and they will not be islamic.
I am one of those who saved. Did so at the advice of everyone whom I respected, and trusted.
I bought the smaller home........did without the 'vette.
ate half a chicken instead of a whole one,..yadda yadda.... sure you get the point.
Then lost my career job of 26 years, along with 30,000 other souls, due to the same kind of greed, and lack of regard for the future. Got bad enough, I had to ask to put my membership in the 49er's on suspension. Now we face a group of people who are considering taking all I have saved, that totally belongs to me.............period!
So now I suppose you are going to force me to recend my self imposed suspension and go find some gold in order just to survive. Funny how the tables turn on you.
Except now there will be a renewed vigor when I toss those cobbles, and visulize those faces whom they should be raining down on.
Some months back on the thread "gold Prices".........
when everyone was estatic about gold prices going up, and that jerk "bitter bob" was trying to rain on your parade at every turn.............NOW DO YOU GET IT?
Hope to see you fellow Americans on the river next season, and may "God bless this sometimes stupid country"
Nov 12 2008
I agree its a supply and demand situation which is causing the wide swings. The big drops could be the result of governments or large financial institutions selling to meet critical payment deadlines due to losses.
The point I'm making is that despite the huge economic problems, most conventional thinking worldwide still remains trustful of the U.S. Dollar. Most people still believe that governments are going to solve the problem. I hope they do. But I wouldn't bet my life savings on it!
Huge spending increases with loss of productive activity, triggering high inflation, or panic caused by more bad economic news, in my opinion, are likely to undermine trust in conventional investment programs and increase demand for the metals (by the masses) as a safe haven for savings.
You guys might not be seeing it on the U.S. news stations (I'm in Asia at the moment), but there are near-riots going on by thousands of people in Hong Kong who lost their money when Lehman Brothers went down. Big demonstrations; people are demanding a return of their money! They are very mad!
If and when it happens that the masses turn away from conventional investments through financial institutions, demand for metals could push prices out the roof.
I know this is speculation. But we have to do our best to predict the way things will go under the new leadership "changes" that are coming our way. More spending and less production can't be good!
My motto: Hope for the best. Plan for the worst!
I noticed, by the way, that the new Administration is now proposing a new and powerful national army to secure the homeland. Secure it against angry Americans, or what? Does anybody have any idea what that's about?
Please let's keep this discussion informational and civilized, and not place ourselves on a security watch list...
Nov 12 2008
Yes. Planning is good! And having a Plan B and C too!
I too have little doubt gold prices will go up and I personally want to hold as little currency or other paper assets as I can get away with and still conduct the business of living.
As far as worldwide confidence in the dollar goes, I am wondering what the world's banks "solution" will be when they return from their conference this month. I may have a to formulate a Plan D. No problem, there are still 22 letters left in the alphabet. <grin>
As far as the new administrations security plans, the only thing I know about is contained in Obama's July 2 speech. Here is the quote:
"We cannot continue to rely on our military in order to achieve the national security objectives we've set. We've got to have a civilian national security force that's just as powerful, just as strong, just as well-funded."
Personally, I don't put much stock in this comment. I believe it was pure politicking with no substance.
No.. I do not know the man personally and I cannot begin to know what he is thinking. Just my best, quite possibly wrong, guess.
You know... McCain is out there gathering support from those are afraid of the terrorism threat. Obama, losing support from those who want us in Iraq or are otherwise frightened or concerned about terrorism wants some of that group to get behind him so he throws in a line in his speech he believe will gather support from those same people.
While it really bothers me that someone we have as our president even remotely thinks that is a good idea. I believe it is just another empty political "promise" and the reason that he has said nothing more about it is that he realizes it was a bad idea politically.
I don't think anything will come of this.
PS. On another note, I hope in the context of what is happening lately, I hope the 49ers value what you have created for them, Dave. You may recall, 15 years ago, I came out for the professional training program. You asked what my personal reason was for doing so. To paraphrase, I told you that I wasn't sure how long our country could go in the direction it is without some sort of financial collapse. And mining was my Plan B.
As nerve wracking as it might be to walk through this financial minefield. It gives me tremendous peace of mind to know that I always have the option of supporting myself on the river.
Thank you very, very much.
Nov 12 2008
It would seem that people have learned bad behavior for at least a couple generations , and it will take some time for those & new to learn better behavior , behavior I mean most of what has been said here , taking away the foundation of this country [ selling of all value=production of goods ] , a service economy , is a lie to me , that's just giving more to management & laying off line workers at GM [ example ] .
Every yr. I hear more about how this & that corporation has been bought by some outside this country .
As far as hope goes , I want to work expecting the worst , while hoping for the best .
Now if only hadn't left the gold country , now I have too many tools & not enough income to get back .
But I am happy that I am a small part of a good group .
Nov 13 2008
Our country's representatives have been making law to save GE, The Auto industry, The Banking institutions, The Insurance Companies, The Credit Card Companies, Buying bad home loans, Bailing out The State of California and who knows what else they will throw money at could bring this country to it’s knees. That Golden Printing Press can print all the money it wants, but it comes with a cost. This cost could make The U.S. dollar at its all time low. Where is all the money going to come from? Where is the end? Somebody must know or at least I hope someone does. I believe if this is left to continue on the path it seems to be going, which is down, GOLD should go out of site. Current gold prices are hovering around $700.00. Go on Ebay and see if you can buy gold at this price. Prices on Ebay are in the $800 to $1100 per oz. price and this price doesn’t seem to be going down despite the world market price.
We just had an election and it looks like we have elected a bunch of blinded rep’s. I love this country and as much as I would like to see gold go to $2500/oz. I would rather like to see OUR country’s rep’s take a hard look at what they are doing to this country.
Nov 14 2008
Nov 14 2008
Gold has been following oil. Anybody notice that? I guessed the price of gold by the middle of last August would be $750.00 and missed it by $20.00. I next said that by October the price would be $1,050.00. Whoops ! How was I supposed to know the world would be taking a dive ecomically? I still think gold will follow oil because of all the money involved in buying oil.
Look for the price of Copper (used in manufacturing) to improve and so goes the economies of the world. This means more oil will be used and the price of oil will go up. And gold will follow.
My optomistic guess is that by next summer (July), during the up-swing of the world economies gold will hit $925.00 an ounce.
Nov 15 2008
Nov 22 2008
On that note, I can't even imagine how much gold must have been bought off the world market to drive the price up by $57 on Friday!! Does anyone know how to calculate that? Might this by the first big step by foreign governments to convert their US Dollar holdings into gold? Or what?
Dec 1 2008
Dec 1 2008
One of my hobbies is astronomy. I have always said 'man' does not understand time and distance. I was looking at a galaxy, with a little help from somebody that knows a lot more than me, that was 2 million light years away. Let's see, light travels at 186,000 miles a second x 60 seconds in a minute x 60 minutes in an hour x 24 hours in a day x 365 days in a year = a whole lot of zeros just to tell me the distance and time in just one year never mind 2 million light years to that galaxy ??
Now, I'm hearing billions here and billions there to bailout companies and at the beginning of the New York Times Article they mentioned Trillions !!
Gold prices could go to the "moon" because of all the demand for something secure instead of the worthless paper (money). For example, if somebody was sniping around and getting $20/30 a day in gold, that could be $200/300 in the near future.
I may spend more time on the Klamath this coming year.