Bubbles are, basically, a ball of air, surrounded by a liquid, such as soap, or whatever, but they are certain to burst when they get so big, that the air leaves it quickly. A bubble is marvelous, can be beautiful, and in a way miraculous that a thin film can hold a big amount of air. All bubble burst eventually.
We had a stock market bubble in 1929. A very few, maybe 1% realized that the stock market was in a huge bubble, and sure to burst. That 1% sold out, and did very well. The 99% lost their shirts, and we were into the Great Depression. On October 28, 1929, the Dow Industrials were 260.64, and by July 8, 1932, they were at 41.22. What caused the depression? A few things, but basically it was the Federal Reserve. Roosevelt did all the wrong things to get us out of the Great Depression, none of which worked, till he got us into WW II, which did work…as far as getting us out of the depression anyway, but at a huge cost.
There have been dozens of bubbles which burst in history, but the latest in stocks, was in January of 2007, when on January 9th, the Dow 14,164.53. By March 9, 2009, the Dow was 6507.04, a loss of over 50%.
Housing crashed about the same time as the Dow, and the foreclosures went on and on, with millions of homeowners being ’underwater,’ meaning they owed more than their property was worth. Before the crash, thousands of realtors and speculators were buying homes, and ’flipping’ them at a profit, and laughing all the way to the bank. Flimsy mortgages, gotten by millions of unqualified persons, went south and were bundled together with fake “AAA” ratings, and sold around the world to the unsuspecting. They were insured, and when it came time to collecting, one of the largest insurers went bust, naturallyto be bailed out by us taxpayers.
Bubbles of all types occur in history, such as the great tulip bubble in Holland. In 1637, it became ’chic’ to buy and sell tulip bulbs, and it soon became a fad. Everyone wanted tulip bulbs, and fancy ones were soon bred to suit the sophisticated. Finally, a single bulb could cost as much as the equivalent of $1250 US dollars. Soon, the fad wore off, and prices crashed, to a few cents each. Hundreds of millions of Dutch Florins were lost by those who were fooled by he tulip bubble. Bubbles are extremely difficult to realize while they are in progress. If it were easy, most people would not be sucked into the frenzy.
We then had the gold-silver bubble, which was prompted by the election of Obama. When he was first elected President, gold was about $970 per ounce, and silver about $15. The bubble was building, and gold went to $1895 briefly,and silver to close to $42, People looked at Obama and his Democrat laws, Obamacare, and the whole mess. They wanted security, and naturally, they bought gold and silver. Then, it became obvious, in retrospect anyway, that prices had far exceeded the cost of mining, milling, smelting, manufacturing, and distribution. So people sold, and prices crumbled. They hit the bottom, when, as of last week, they were so low, than mines were closing,
since mines couldn’t break even at the prices last week. I believe the bottom had been reached. The bubble we had, had done the same as all bubbles had done. It had burst, and prices cascaded down, as they had done in previous bubbles previously. Obama was, and still is a total disaster, and his policies are still wrecking the nation. Now the prices will rise, I am certain. Gold and silver were, and still are the utmost security, because they require exploration, and huge capital investment to produce, as opposed to paper money and stocks. I HAVE NO CRYSTAL BALL. NO ONE HAS, AND THOSE WHO THINK THEY CAN PREDICT WHAT WILL HAPPEN TOMORROW OR NEXT WEEK ARE FRAUDS. It is obvious to me, that as the presses continue to run, all prices of tangibles will rise in dollar prices. In retrospect, I wish I had realized what was happening. Back in 1980, there was another bubble, caused by Bunker Hunt attempting to corner the world’s silver supply. I knew that one, and actually refused to sell to people, so certain I was that it was going to burst as soon as Hunt was sabotaged, as I knew he would be, and he was, which caused prices to go down.
The above does not include the manipulation by the big futures traders, who endlessly engage in illegal ’naked shorts’ to lower prices, so they can then go long and make a killing, which affects the prices of physical gold and silver.
Government agencies such as the Securities and Exchange Commission, enforce certain laws only. In my opinion, the bottom was reached, when the mines were shut, or threatened to be shut, due to low prices. No one is able to predict the future! If all the guys who do charts, and write expensive newsletters, were so smart, why didn’t thy sell as $1895 gold and $42 silver, and buy back last week? I would have, if I had known. We can only do the best we can as far as advice is concerned, and maybe we shouldn’t give advice at all.
In Las Vegas a couple of months ago, there were so many foreclosures and empty homes, that it was a national disgrace. As is typical of all burst bubbles, when the bottom has been reached, it is realized by smart people, who begin buying, as in Las Vegas. Now, there is a mad scramble for cheap houses in Las Vegas, and prices have gone up about 20% recently. Big companies are buying blocks of foreclosed houses, and realtors are begging people to sell. People who were ’underwater,’ are no longer so, so quickly have housing prices in Las Vegas gone up. When the latest stock market bubble burst, Ford was $2. I thought of buying, but didn’t. Now it’s about $13. Bubbles are almost impossible to recognize when they are in the process of inflating. After they burst, and prices go down, in retrospect, it was an obvious, but almost invisible bubble. In all bubbles, except probably the tulip one over 400 years ago, when bottoms are reached, prices always climb to their former level, and then continue upward, once again, in my opinion. Remember, gold and silver have been real money throughout recorded history, and this includes Biblical times. Now, to change our faltering nation and economy:
LET’S GET A PETITION GOING!
I hear that people in Texas have a petition going for secession that has over a million signatures. Go for it Texans! The petition I am thinking of, is to get rid of Obamacare, which is one of the great legislative disasters of all history…passed by not a single Republican vote.
Maybe it could read to the effect of: “Obamacare has proven to be a huge mistake. Not a single Republican voted for it. Tens of thousands of pages of indecipherable rules and regulations, the majority of which have yet to be enforced or put online. So complex, that Obama has postponed enforcement of the most deleterious section for a year, and given hundreds of exemptions of it to his favorite unions and contributors. Tens of thousands of employees, who used to have full time jobs, have been placed on part time, as a result of Obamacare. Thousands of IRS enforcers are to be put on the trail of Americans, to be sure they are complying with its impossible rules and regulations. All the promises of lower rates, fuller coverage, keeping your former plan, have been proven to be totally untrue. Thousands of doctors are retiring now, and will in the future, rather than fight the Obamacare rules and regulations. The following signatures are those of registered voters, who demand that their Representatives, and Senators vote to abolish Obamacare totally, and resume the former Medicaid and Medicare system, which had worked well for over 45 years.” Or words to that effect.
Someone get a petition like the above going, and see to it that all America has access to sign it. We need a hundred million signatures! Detailed address and authentic signatures would not be necessary, as it is to overwhelm Congress with proof that a large American majority want no part of Obamacare, and want it abolished before itcauses more harm. Get busy readers of this, and maybe we can get rid of it.