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The Gold/Silver ‘bubble’ will follow current ‘bubbles’!

March 14, 2013

We live in a ‘bubble’ economy. Currently the Stock market is in a ‘bubble’ that will most likely crash sometime in 2013. The Bond market is also in a ‘bubble’ that will most likely bust sometime before or after the Stock market (most likely in 2013). The Derivative ‘bubble’ is near 700 trillion and will bust after the above two ‘bubbles’ bust. All this is likely in 2013 (in my opinion). So what then follows these ‘bubbles’? What will emerge as the biggest ‘bubble’ of ALL? Keep in mind that money and Keynesian economics (prices and value) are psychological in nature!

What is likely to happen as traders, investors, and the politicians recognize that our VIRTUAL money economy is built on ‘sinking sand’ (imaginary emotion and deception) is a run for historical money (GOLD/SILVER). The supply of gold and silver is so limited relative to the effective demand…that these precious metals will create ‘virtual’ prices (within the computer screen) which will reflect the ‘fear’, ‘greed’, and ‘herding’ that happens when awareness of an economic collapse emerges! Those of us who understand history and money realize that the foundation of Western Capitalism is the concept of ‘value’ and the money units which represent this ‘value’. Precious metals are the foundation of Capitalism and a run for these money units is bound to occur. Just wait and watch!

Today, I talked to a very intelligent financial investor and a medical doctor who I respect for his understanding of reality. Both these individuals understand that our current money units are ‘virtual’ units (within the computer screen) and that these units are created via the computer…bits and bytes become our money units. They also recognize that these bits/bytes are units of information (words that create images within the computer screen). They also understand that these bits and bytes (becoming digits or numbers within the computer screen) are imaginary and unrepresentative of any ‘thing’ of VALUE. This means that our money units today (some 96%) are virtual, imaginary, and immaterial (with zero ‘value’ when push comes to shove). Immaterial digits disappear when the ‘power’ is shut off!

When the general market (traders and investors) discover that we have a ‘virtual’, ‘imaginary’, and ‘immaterial’ financial market which is destined to crash and burn, awareness will seek some physical, material, historical money as a STORE of Value. Even the Central Bankers are now recognizing this reality (slowly)! Gold and Silver units (money) are  logical to everyone who becomes AWARE of our current illusionary money and market structure. Until the ‘bubbles’ mentioned above crash, however, the vast majority of traders, investors, and the general public will ride this train until it crashes. Deception is ‘reality’ to the many who are riding this market!

Remember the ‘tulip’ bubbles of 1632 and after in the Netherlands? The deception and emotion of traders, investors, and the public reached such a level that ONE viceroy tulip (imported from Turkey) would purchase 5 acres of land and two oxen. This continued for a short season until the people’s psychology changed and their logic changed. Then the tulip bulbs returned to the ‘mean’ (reality) and then everyone wanted no ‘mas’ (more) to this type of money. What does this history reveal of human nature?

What it reveals is that people prefer deception, illusion, and group think emotion for a season (as long as it lasts). We are now within another group think emotional bubble that may continue for a short season. We could witness this trend of emotion until some ‘black swan’ event emerges to change the ‘herding’ psychology of the general markets. Is it likely that some ‘black swan’ event emerges within the next few months? Emotion and hype (as we witness on the Larry Kudlow Show daily) will continue UNTIL it ENDS! Traders and the media will attempt to ‘push’ this market UP, Up, and UP (as the short term high is so positive).

I witnessed this same type of behavior when I worked as a bartender for some 10 years within a business hotel facility. A drunkard does not ‘know’ that they are a drunkard! One who consumes excessive amounts of alcohol to alieviate their emotional pain, will continue with this behavior as long as the ‘ride’ seems positive and deceptively appealing. Eventually, however, the ‘ride’ becomes excessive and the pain leads to a depression (emotionally). This is when awareness arises and change emerges (gradually). Our economy today is much like this drunkard who is deceived and unaware of his/her own behavior.

Keep watching the markets for a sign of some ‘black swan’ event that will CHANGE the psychology of the traders and investors within our globabl markets. I sense that some event will emerge in the near (2013) future. That is my view and opinion! Enjoy the ride…as it may not last that long! I am:

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