UNSHURE

The following link is the latests from Martin Armstrong. There is a pdf that can be downloaded with the article. http://howestreet.com/2011/12/whats-up-with-gold/ Some of his points: For a prolonged decline of the gold price into 2013, the yearly gold price would need to finish the year below $1058. For a short term uptrend, gold would need to finish the year at $1704. The market is now "clearing out tired longs who are sitting there counting their profits". "The market is poised for retest of the 1225-1325 area going into 2012". A decline into January is "the most likely course of action". Posibly a low in February.

There was a bloke at work today talking about gold. He's not someone who talks about finances economics etc. very much. One of his friends was selling some coins that he had bought a few years ago. The bloke seemed dumbfounded about how much the value of the coins had increased. He was telling everyone that people are buying gold because of the uncertainties about the banking system. This is the first time I have encountered someone who is not normally interested in 'things financial' talking about gold in such a way. He sounded a bit like me five years ago. This, to me, was a clear sign that at least a small part of the general public are now beginning to grasp the notion of the role of gold in the economic mess that that the world is in.

Over the last day gold has had five attemps to breach the $1.764 level. Each time it breaches $1,764, it promptly gets knocked back down again only to have another attempt a few hours later.

Equity ISA/SIPP - similar to a share account. You buy shares and other investments which are held in the account. These are fully funded because you fund them yourself! These are NOT ponzi schemes and it has nothing to do with Keynsian economics. Stakeholder Pension Funds/Private Pension Funds - similar to SIPPs except that people tend to use the default option. This ends up with people holding a lot of investments that they might prefer not to invest in if they could be bothered to find out more. Company Pension Funds - final salary private pension funds are decreasing in number. Other, money purchase pension funds, are replacing them. These funds are run by trustees and an annual report is issued that breaks down the investments of the fund and the performance of the investments. Tend to be a bit more opaque but not ponzi. State Pension - Unfunded and paid for by the tax payer. These have aspects of a ponzi scheme when a population is aging (UK currently). Less tax payers more claimants. Public sector unfunded pension schemes - Same as State Pension - aspects of a ponzi scheme and potentially crippling to the public sector finances. Not all animals are equal.

Whilst all this capital is flowing out of other markets into government bonds, these other markets would tank. The stockmarket, corporate bonds, property, PM's (to a lesser extent); and anything else that the pension funds currently invest in. The economy would also tank shortly after. I presume the aim of this also would be to get all pension debt into pound sterling and then inflate the debt away - very high inflation.

It depends which pension schemes you are talking about. Some pension schemes (e.g. NHS) are unfunded and will have to be paid by the tax payer. They are unaffordable and will place a great strain on the pubilc sector budget. Some pension schemes are funded. For example a SIPP or a stakeholder pension in which the policyholder buys a range of investments. When it comes time to retire, the policyholder sells the investments to provide a POT OF MONEY with which to purchase an annuity (unless he goes for the income drawdown option). Company pensions work in the same way. They invest in order to be able to pay employees when they retire. In that respect they have a large pool of investments. The income and returns on these investments enable them to pay their retired employees. In this respect, the pool of investments represent the POT OF MONEY. It is possible that some funded pension schemes can run into difficulty but in the main they are fully funded. It is the UNFUNDED pension schemes that have some of the ponzi scheme attributes but the tax payer is expected to pick up the bill.

Gordon Brown found a mechanism by which he could tax private pension funds and rake in several billion pounds. I dare say that there could be other wheezes to get tax income out of Private Pensions or delay/avoid paying public pensions: Tax the cash component of Private pensions. Abolish State Pensions for those on a certain level of income or asset wealth, Abolish or reduce the current Tax incentives to invest in a pension. Continue to raise the age at which people qualify for State Pensions. You can be sure that wherever there is a big pot of money, there are several sets of greedy eyes watching over it and scheming how to get their gruubby hands on it. However, a wholesale confiscation of ISA's SIPPs etc.is something different altogether. It would be difficult to accomplish for the reasons I stated in the last post.

Which countries are currently confiscating pensions? I can see a few problems with the confiscation of pensions in the UK. If it is undertaken by the Conservatives, it will hurt a lot of their own people. If it is done, it would probably be under a Labour government. The older generation is currently expanding and the baby boomers tend to have a high propensity to vote for their own self interests. It could be very bad for the housing market if there are large numbers of people relying on the cash part of the pension to pay off the mortgage. Pensions consist mainly of bonds, equities, property funds etc. The government would suddenly find that they have taken a large slice of the ownership of these markets into the public sector. What would the government do with all these bonds and equities? They wouldn't be able to sell them to pension funds. The government would, in an instance, wipe out a large part of the financial services industry. How would the industry react? Pension funds buy government bonds. Wiping them out would cause one of the main purchasers of government bonds to be removed. It could only be done once. Following that, everyone would be drawing state benefits and there would be no government income from the taxation of private pension assets (e.g. dividends). If public sector pensioners were alowed to keep their final salary schemes, people would want similar schemes after their pensions had been seized. Politically, it would be a move towards a more authoritarian government. ISA's - do you tink that government wil seize savings accounts as well as pensions?

Has anyone used the following site. It has some interesting coins and bars http://www.silvercoinsbullion.co.uk/index.php

I wonder if anyone can shed any light on this. I have noticed for quiet a while that the pound seems to do badly when the main world stock markets are falling and recovers during the mini rallies. It seems to fall against the dollar, the Yen and the Euro when the markets are doing badly. Does anyone know why this is the case? It has been good for people who invest in Gold though.

The housing market, on the way down, is likely to undershoot the long term trend which would likely take it below £300K. I think that, in a deflationary scenario, we would see houses prices at much lower levels than today (take Japan as an example with 70% falls from the top). In an inflationary scenario, house prices might start going up again (though continue to fall in real terms - eg against gold). The other factor is the average wage. Will this keep pace with inflation? - possibly not. This would result in real wealth and income destruction. People would have to adjust their spending patterns to the new paradigm. Many people, who are currently living beyond their means would be forced to sell things like property. In an inflationary environment, debts would also be reduced in value. However, interest rates would also be very high.

Where I work, most people think that buying gold is some sort of joke - even if you show them the Kitko 10 year Gold Chart they just laugh. I think that most are waiting for a resumption of the long term property bull which will start any second now. A few are chuffed because they are benefitting from the current low interest rates on their mortgages. I don't think that anyone believes that there is a possibility of serious wealth destroying trends in the coming years. Suggestions of hyperinflation or long term depression or peak oil are put down to 'dooming and glooming'. We also have a stakeholder pension plan. I don't know of anyone, except for me, who has selected their funds. Everyone has just opted for the default 'lifestyle plan'. The main topics of interest are things like 'celebrity media stuff'; 'Saturday evening singing contests on the TV'; football; holidays; luxury or sports cars; and tabloid newspaper rubbish. If people like these start to buy gold, I will be convinced that we are in the final phase.

The idea of 'getting weimarized' has always been at the back of my mind. I am hoping, that in two or three years time, I will be able to cash my gold in and buy, or part pay for, a decent house. The problem I see is that, if we get into hyperinflation, how can this be done? As soon as the gold is converted to money it would be devaluing (assuming big inflation). Since a property deal takes time to go through, it may be diffcult. Does anyone think that it would be possible to a do a direct deal - property for gold? It would benefit both parties. Has anyone any other ideas about how this could work? Another question, if we head into hyperinflation, would be when to sell Gold ETF's.

The other week, Peru Saxena and Chris Waltzek (Goldseek radio) briefly discussed UK house prices. They were of the opinion that they will fall back to 1996 levels. I can see something like this happening. There is 'too much' stacked up against house prices at the moment. A decade long downtrend with some sharp falls along the way is a serious possibility.

The Goldseek radio people had been predicting a pullback in the Gold price to about $800. They were predicting that when Gold was on it's way up to $1,000. They were right about the pullback allthough it has not dropped to $800 yet. Folowing the pullback they are predicting gold to rise to around $1,500 this year I think. Last year, when we had the first 'mid summer credit crises', gold fell along with stocks (albeit mederatly). However, shortly after, Gold went on it's third and fourth quarter bull run. There could be some sort of pattern emerging in that Gold initially goes down due to traders selling off to meet margin calls in a cises (and perhaps central bank intervention to stop gold taking off when the rest of the market is tanking). However, following this, there is a 'flight to quality' along with a 'seized opportunity' (going by what people on this site are doing). This sends Gold soaring back up. This kind of thing might be repeated numerous times in the coming months.