Schlagwort-Archive: who's wrong?

It does not make sense

to read the comments on price development at least for Gold. I tend to day it does not make sense at all to expect anything of worth from stock “experts”.

Can one talk about a down for gold if it’s moving just 0.5%? Well I think no. And what’s worse, this opinions must make your head spin. Ask yourself has anything changed
the last two days which really can have any big influence of the prices?

Well Greece will get more money, money that we don’t have and if the states want to give it away they just can do on one way. More debts. So again we see some new bonds in any form
and well these bonds may get bought. At least not from me but that’s unimportant. Some banks probably will add some “risk-free” bonds of states to their bad debts of states. We have not heard of a bigger QE or the like and so not much has changed really. And indeed the prices just floats around a bit. That’s it.

And still you can read “cut back” for gold, the other day it’s gold on the raise and the explanations are not even a thing worth laughing. So just ignore it and ask yourself a few question. Do you think money printing does matter? Do you think the debt crisis was solved at least a bit? Do you expect the states doing something or nothing. That are the base questions.

I for my part have answered the questions this way. Money printing does matter it inflates the money base and will lead sooner or later to devaluation of the currencies. So if you want to save your money somehow you probably are not doing much wrong with some precious metals. It was nothing solved also. The debts are still raised and the stupidity of believing one could fill one while digged by debt with other debt is as insane as can be. However what I don’t know will the people consume much less? I’m sure the privates people will I do not expect anything like saving from states. They will raise the taxes for their endless appetite. for money. So will the bankrupt distort the currencies immediately or later? We simply do no know. But we do know Gold will always have some price, it scarce and people know that gold is money. So still some precious metals are a good idea. Now will states stop interventions? No they will not, they will extend the “control” (well as I wrote yesterday or so, this is just the imagination of control, states can not control much theses days) The sheer amount of debts is devastating. So what will happen I can not imagine a sane approach. So I just think the money printing will get on and so I’m back to “the case for gold”.

I’m quite sure they will consider making private gold holdings illegal again. But don’t think this will happen world-wide and still in this case I have at least some “confidence” that the highest courts will rule out the expropriation. That may just be wishful thinking but it’s the only chance we have. So having gold in your own country and abroad is proably one of the better and more intelligent things to do and have. And if you see it that way there is no excuse not having at least some gold. I have take my share of it, and I speculate that I’m right on this. Well I base my confidence on the work of the economists of the austrian school. And I think this is the safest bet you can have. Nobody else has pointed out the maniac behavior of the states and all they told and written has come true. That’s now true for more than 100 years, and as long as man has to do economics, this will not change. Yes agreed they are not explicit pro Gold but they do know Gold has worked as money and there’s not reason that is should not in the future… So do you want money? Take gold or other precious or not so precious metals.

A few calculations

Well our German politicians claim that the speculants are the reason for the turmoils around the EUR. Now let us see whether they may be right or wrong.

Let us assume the following situation interest rate at 10%, time-frame 1 year (to avoid compounded interest)
Now let us assume the probability on not getting back a credit is 10 % (which is extraordinarily high)

So if we spend 100 EUR today what will we have in one year.
– 100 + 110 * 0.9 = -1
This is well negative, and therfor one would not take that much of a risk
Now let’s take failure probability of 5% so the calculation is.
– 100 + 110 * 0.95 = 4.5

Well that sounds “reasonable” you get en expected return of 4.5.
When would you consiser spending the 100 whatever?
Well in case that you get “more” back.
Now let’s see what this means to bonds of Greece. The 10 % is currently a number which the Greece has to offer. So currently the markets think that Greece will not pay with around 10% probability.
Now what if the speculant thinks the likliness on failure is around 20%
When will he/she accept this rate?

– 100 + x * 0.8 = 5

So x has to be 118.75 or 18.75 % interest rate. Well Greece will not ever offer this much interest so there must be another way.
We know hat Greece will have to pay back 100 % of the value of a bond. So we can write:
– x + 100 * 0.8 = 5
-x = 5 – 100 * 0.8
x = 75
So the speculant is just willing to buy bonds if the course is that low.

You can see high risks inevitable ask for high interest and/or low prices. Now the figure changes unexpectetly.The speculants “hope” that the EU bails out the Greeks. Suddenly the
75 course is very tempting, because it’s high income with “low risk”. That’s what every speculant is dreaming of. So in fact while the other EU states
offer this credits to Greece the speculants do make a good surplus. Now is that a fault of speculants?

Who has enforced the governements to offer the credits? No one, so the politicans action to back up the Greeks will lead to a “victory of the speculants”. So it’s the other way round
it’s not the speculants will earn big while Greece fails, no it’s the speculants earn big because of “stupid” and very doubtful (legal) actions of the political leaders.

Now it’s getting really absurd. One would not buy any bonds from Greece, but the politcians say. Come on people please buy the bonds we have to help the Greeks.
So the politicans are asking the to help them back up their stupidity and raids. I can not say how distasteful that is.

The whole economic reasoning is lead ad absurdum. In fact defrauding is right, honesty is wrong. Laws are made to save the defrauders and enforce the costs of this action to the honest people.