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Exit Stage left...the sooner the better.

The Wall St Journal  reported on October 13th that the U.S. Mint was broadening it's Freeze on the sale of Gold Bullion coins due to extraordinary customer demand.


Investors were running for the hills to have something with real worth in their portfolios.
As the WSJ intoned....
"Due to the extreme fluctuating market conditions for 2008, as well as current market conditions, gold and silver demand is unprecedented and the demand for platinum is unusually high,"
Production from mining cannot keep up with demand and Central Banks are not selling their allocated quota either..everyone is holding on to it.

Since then, the tide seemes to have turned as mounting panic extended even to the traditionaly reliable bastion of Gold. Hedge funds have been liquidating their portfolios (including Gold holdings) to avoid the wrath of their Investors and everyone decided that liquidity was infinitely more desirable than plunging portfolio values. This flooded the market with Gold for sale. How lucky for anyone with a bit of foresight...now is a wonderful time to grab it at bargain basement rates and wait for the soon to arrive Day of Reckoning.

But liquidity in what ? Dollars ? It's like a drowning man who jumps from one sinking piece of the ship to another, looking for something that will float above the abyss. The dollar and all the financial alchemy that props it up despite the cancerous nature of it's underlying support, is now in such  vast quantity in the US and foreign economies that Hyperinflation becomes an inevitability that nobody really wants to think about especially the holders of US IOU's ie T Bills. It is indeed a very frightening time for Central Bankers who, inevitably, will have no choice but to cut Uncle Sam's credit card in two and ask him for Real Money.
These same hedge fund managers are the same ones who lost their clients' wealth by playing Russian Roulette with their clients money and lost miserably. So now they are trying to find a safe haven before their portfolios are worth a big fat Zero. Liquidity might be a temporary breather but as each week passes we see reality based Economics coming more in to play.
Every analyst worth his or her salt, is predicting that Gold will see a monumental rise once investors realise that they have to leave the stage and stop relying on  the vacuous thinking that got them into this pickle in the first place. But, like all Behemoths, Wall St and it's Financial Alchemists won't die an easy death and continue to prance around the stage like Emperors with no clothes.

The "third worldisation" of Iceland with a population of around 300,000 in less that a week was a graphic illustration of what is to come but , in their case, arrived in a very short space of time. The rest of the world is seeing it in almost slow motion as each domino knocks over another ten. But, there's a lot of Dominos out there and the falls are becoming more accelerated every week.

Each move that Governments make by throwing more money at the problem just makes the inevitable outcome even worse and the payback even more of a bitch. Banks have not started to lend in any significant terms to businesses for them to invest in greater production and the irony is that even if they did , there's fewer and fewer people with the cash to buy the goods. Populations everywhere are being driven in to poverty and businesses are closing at an accelerating rate. These are the factors which will determine the outcome of the current financial storm; without real capital and real production, being consumed by people with cash in their pockets, there is no remedy to this situation. Talk about putting the cart in front of the horse !
With each donation of public money to the very people who got us all in to this mess, they are subtracting from the potential funds which could be used constructively to build a new base of an intelligently conceived Economic model.

The "Credit Crisis" is a peculiar term for what the world currently finds itself in now as it was the unleashing of "Credit" that blew up the bubble until it burst. There's no having your cake and eating it here. Unless people are working in well paying jobs and actually making things instead of just consuming them, the writing will remain on the wall and the resultant catastrophe will be inevitably worse.

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