kidmercury

Just a quick update on the economy. I'll try to do this once a month, so here it is for September.

1. Unemployment is still rising. Obama says the economy will grow while unemployment rises, but...that makes no sense whatsoever. Like most of what Obama says.

2. In the markets, the dollar and the key indices (DJIA and S&P 500) are reaching key technical levels. Folks are arguing whether there will be a breakout (and a new bubble?) or a bounce (and a new crash) when the market reaches these key technical levels -- about 10,300 on the DJIA ((DJIA closed today at 9778; it fell from 14,000 in the first half of 2008 to 6,500 in March of 2009).

3. Personally, I'm of the opinion the market will crash and reach new lows. Now if this happens, what will happen to the US dollar? Last time the market crashed, the dollar rallied strong, and gold fell. What will happen if equities crash this time? Well I think at some point there will be a run on the dollar, and it could happen if/when equities crash. But in any event, I'm exiting my paper gold positions if gold falls below $980 per ounce. I'm continuing to purchase physical gold through Bullion Vault.

So if gold falls below $980, in my opinion, that would strengthen the chances of the dollar system (which is basically our current world) surviving. If gold breaks above $1250, that's the next key level towards social breakdown (the more gold rises the more likely the dollar is becoming worthless and the economy will stop working). Of course gold can go much higher before the dollar gives way, so the journey is long, and remains unlikely. If gold holds above $980 and can move towards a sustained break above $1250, that would signal another step in the path towards economic self-destruction via monetary inflation.