May 15th, 2013 by Dissolving Dollars

Today gold and silver underwent another round of technical damage, thus reducing the probability of reversing the down move anytime soon. In the meantime, U.S. stocks continue to march higher, with nearly no pullbacks. The dollar keeps trying to go higher too. This is all part of setting up the next U.S. recession, which is still a few years down the road.

The danger going forward is hypertaxation not hyperinflation. Yes, hypertaxation will make things expensive, but that won’t be hyperinflation. With hypertaxation, the bond holders will get paid and the government will be able to maintain its obese figure for a little while longer without having to start its diet. I’ve heard chatter that a backup plan for dealing with the government debt when the day of high interest rates comes to the U.S. is to take over retirement funds. They will do it under the guise that the safest place for retirement funds is government bonds and thus they will force the $20 trillion or so in retirement funds into government debt at low or even no interest.

A recent example of the trend to hypertaxation is the internet sales tax. It hasn’t passed yet, but even if it doesn’t they’ll keep trying. The cry is that the lack of online sales tax isn’t fair for local brick and mortar stores…as if most truly local brick and mortar stores couldn’t engage in online sales themselves. But regardless, if it is unfair for brick and mortar stores, then get rid of sales tax altogether. That would be super fair. But of course that’s never even proposed as part of the dialogue. Ignoring the fact that taxation is the socialization of theft, taxes suck for doing business. Taxes are a layer of regulation that gives unfair advantage to those with the economies of scale to comply. Here’s a novel concept, instead of stealing money and spending it on stuff that is supposedly important, how about charge people money for stuff they actually want and use.

But no, taxation is a brutal political weapon that no government ever wants to give up. The recent IRS scandal involving discrimination of anti-tax political movements goes to show the power of the tax weapon. And I just love how these scandals are always blamed on some low level peons. But when there is something to brag about, it is the people at the top of the pyramids that take the credit (namely presidents). Tax is a weapon of control to force support of the government, and it has been and always will be used as such for as long as people accept the concept of government. That is why Bitcoin is another thing the government is starting to crack down on in preparation for hypertaxation.

Hypertaxation doesn’t mean gold and silver won’t still rise in price, it just means they won’t rise hyperinflation style. Nonetheless, in the hypertaxation environment, I could see something like junk silver being highly valued. People will sell things for junk silver and pay tax on the face value of the coins rather than the metal value. Just something to think about for anyone wanting to buy metals before they bottom out and in due time eventually start marching higher.

May 7th, 2013 by Dissolving Dollars

You may have seen this segment from the commencement speech Obama gave at Ohio State.

This little rant of straw man misinformation shows that more people need to start calling government what it really is: a monopoly on the initiation of force. This is Obama talking, but just about any politician in power would read the same thing from a teleprompter to protect power and gain support for things requiring more power. One thing Obama said was that the U.S. is an experiment in self rule, which is another way of saying self governance. Get rid of that word “government” and replace it with “initiation of force” and you get “the U.S. is an experiment in self initiation of force”. When worded like that, it reveals what a sick thing government is. It is true that most people support government of some kind. Thus, the acceptance of the initiation of force (government) in society is an exercise in self initiation of force; it is self-abuse in the name of preventing abuse. True self governance would mean we all can exercise the initiation of force, thus the initiation of force would not be a monopoly. The only way government is not totally a monopoly on the initiation of force is that people get to vote to use force on each other, such as through taxation and determining what victimless, non-aggressive things should be deemed crimes. But anyway, Stefan Molyneux gives a good breakdown of Obama’s little rant if you’d like more.

The reality is that it’s all the same old crap, just a different millennium. As Thrasymachus said in Plato’s Republic: “different forms of government make law democratical, aristocratical, tyrannical, with a view to their several interests; and these laws, which are made by them for their own interests, are the justice which they deliver to subjects, and him who transgresses them they punish as a breaker of the law, and unjust. And that is what I mean when I say that in all states there is the same principle of justice, which is the interest of the government; and as the government must be supposed to have power, the only reasonable conclusion as, that everywhere there is one principle of justice, which is the interest of the stronger.”

May 1st, 2013 by Dissolving Dollars

April 30th, 2013 by Dissolving Dollars

This interview is from the beginning of April. That was before the metals really started to sell off. Martin forecasted the sell-off. That’s the beauty of working off of a good model. He’s still calling Jacob Coxey Coxley though.

April 24th, 2013 by Dissolving Dollars

These two videos demonstrate two forms of physical Bitcoins: paper wallets and Casascius coins.

April 23rd, 2013 by Dissolving Dollars

The silver and gold sell off has not reversed in the paper market. But in the physical market, premiums are high if you can even get the metals at all. At Provident Metals, they are out of most stuff and the premiums are high. Like there is a $6 premium on 90% junk silver. And there is even a $2.75 premium on 40% junk silver; historically 40% has been available below spot price. If paper prices stay depressed for awhile, premiums should come down and the metals should become more available. But there is no guarantee that will happen, because the people buying physical aren’t buying to trade it. The traders buy the paper markets not physical. The few traders taking physical delivery are the people using physical and selling physical to physical buyers. Conspiracy theories aside, the discrepancy between paper and physical metals just goes to show the difference in psychology between those who trade the metals and those who accumulate physical bullion. The big money must trade and it can’t go into or out of these tiny metals markets without causing big price moves. And the producers, sellers, and buyers of physical must use the paper futures markets to hedge. So far, it looks like the paper metals want to drop more. Perhaps the paper markets will keep going down until even the individual physical buyers turn bearish too. I don’t know, either way is fine with me. All I know is that it will be interesting to watch.

April 15th, 2013 by Dissolving Dollars

I’ve been waiting for this to happen and am surprised it took this long; there is an old fashioned shake out going on in the precious metals. This is called shaking out the weak hands. The more people that get scared and sell, the quicker a bull market in metals can resume. But the longer people hold on, the further prices could fall. As I said Friday, the prices of the metals were at the edge of a cliff, and they decided to jump Sunday evening when trading resumed. Now gold and silver are near the edge of another cliff. Whether the suppression of metal prices is a conspiracy or not, the fact is the prices are what they are…even when there is a disconnect between paper and physical prices. Like I’ve been saying, I expect gold and silver to trade lower rather than higher for awhile (although they’ve already moved down quite a bit). But the highs will be broken in due time. It just might take a few years or so. Gold and silver are a global market. When things align globally for the metals, things will change. These markets are small and when big money has to go into them, they will have to go up big.

Anyway, it’s been an exciting and eerie few weeks with Cyprus, Bitcoin mania, and now the metals shake out. And now before I hit post I’m seeing this Boston Marathon news, which gives a whole new layer of meaning to the title I gave this post.