Happy Birthday!

The Jini index is 0.00 when wealth is evenly distributed, and 1.0 when the wealth is in the hands of the few. This index was at its lowest at 0.5 between 1690 and 1780. Mozel will get a kick out of that. Around 1800, it started to rise, and peaked in 1900 at 0.9. I guess this was the effect of the industrial revolution. It dropped slightly from 1900-1930, and then dropped to about 0.75 in 1960. That was the time when the US middle class was at its wealthiest. Unfortunately, it has been rising ever since, and the last data point on the curve seems to be about 1995 when it reached about 0.92, which is above the Jini index for the 1930's.

I cannot get you the Jini index after 1995 on short notice, but Donald probably knows. As I recall it is still going up.

Hope this answers your question. I appreciate your encouraging me to look this up, since I did not know how far we were from the wealth of our colonial days when so many of us worked off the land. Also, I was surprised to find out that the disparity between wealthy and poor is even greater than it was before the great depression.

Another interesting point I did not know -- the Jini index did not drop right after the great depression. It was not until after WWII that the wealth of the American middle class began to rise. I don't know what we were doing then, but it would be worthwhile to see what was so special about that time. It wasn't LBJ's 'great society'.

Why is this important? History has shown that wealth concentrated in the few is unstable. The strongest economies are ones that are broad, where the wealth is fairly evenly distributed. Think about our welfare society as the extreme example. How many of them know how to be self-sufficient, and wealth-producing, again complements of our 'great society'?.

Now -- the way I interpret this is that our current economic system encourages the confiscation of wealth from the many -- taxes, fiat currency loans, etc. Our creeping socialism is a major cause of this inequality. The average American is at the mercy of the taxation methods of our indebted government, whereas the large corporations and the superwealthy can move their assets around the world at will. The response of our government to a decreasing tax base will be to raise taxes for the less mobile of us who are left behind, this raising the Jini index even more.

I think this is also why there is so much unofficial trade going on in rural areas in the US -- as the taxation levels ( and other regulatory rules ) have reached the point where the rural less affluent find this advantageous, to the annoyance of our IRS. This bartering will increase with time as the tax base continues to diminish.

away.....to boil wort

Éß

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Predator8-boy......when are you casting off......ahoy matey.

away

Éß

JTF wrote: Now, the wealth of the US is again concentrated in the hands of a few…..

From whence this statistic? Everything I have read adds up to more rich folks than ever before……......…. In the western world at least.

Also, I told you: It was LGB who personally shipped the missile technology to China. He had a dickens of a time getting it out as there was a raging storm at the time. After shutting down the perimeter fence and cramming all the technology in the trunk, he took off willy-nilly down the dirt road - which was rapidly turning into a mud road. When he reached a fork in the road, the sign was knocked down and he crashed his car and while he was winching it out of a waterfall, a curious and hungry dinosaur thingie with this fan-like ring of flesh around his head almost ate LGB up - but he will be back for the sequel ....... ( LGB that is, not the diny )

Indeedy

-------------------------------------

Jerry Falwell was seated next to President Clinton on a recent flight. After

the plane was airborne, the flight attendant came around for drink orders.

The President asked for a whisky & soda, and the flight attendant asked

Rev.Falwell if he would also like a drink.

The minister replied in disgust, Ma'am, I'd rather be savagely raped by a

brazen whore than let liquor touch these lips!

The President then handed his drink back to the attendant and said, I'm

sorry, I didn't know there was a choice...

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go silver........AWAY ( ! )

Éß

The kids learn young, they survive.

Except on the balance sheet of the stock purchaser, who then borrows from the bank against it, and so it goes. That's why asset deflations can hit so hard and fast, and leave people so stunned.

Now, the wealth of the US is again concentrated in the hands of a few, and the wealth is about to be redistributed once again. Lets hope that this time our collective memories are better, and we do not repeat the same mistakes all over again ad infinitum. One step in the right direction will be to stop trying to eliminate the business cycles. All that does is delay the cleansing action of these cycles so that the pain is excruciating, instead of just uncomfortable.

I wish I was not convinced that this depression will be much harder on us than the last one. There will be much civil unrest, at the very least.

The only positive sign I see is the remarably peaceful process in Indonesia -- so far. Also one very positive sign is that we live in an information revolution -- equal in significance to the industrial revolution, when there was much turmoil as well. It's the best of times, the worst of times....

So -- it is a no-win situation. If AG does not inflate the dollar now, more pegs in the tent will come out. But if he saves the world from implosion, the cost to the US will be incalculable later. That is why that wise individual ( whose name I have forgotten ) said that we must wean the world off the US dollar standard before it is too late. His message was that the US is behaving unwisely because it has enough debt problems of its own, and should not naively think it can shoulder the debt problems of the world as well. Just look at the IMF as a mini-example of that.

Does that help? It is easier to think of the foreign investor buying and selling treasuries with foreign assets.

The direction of US interest rates can be reasoned out depending on whether there is demand or not for US treasuries. Demand for treasuries makes interest rates go down ( scarce dollar ) , massive sales of treasuries make interest rates go up -- dollar flood -- no one wants treasuries.

Hope this helps. This is the only way I can figure this out without getting hopelessly confused. It is very easy get everything backwards.

And -- everything changes if the Fed is the cause of the interest rate change.

There is one problem with this scenario. This time around the world's currency is the US dollar not the pound Sterling. So the British can raise rates, but we can't. We could put the World's economy in a tailspin, and AG will not let that happen -- as long as he is at the helm.

I would be interested in your response regaring how the US dollar will appreciate without finishing what is left of the worlds economies.

This time, my investment is very limited. I think I will wait for 'the whites of their eyes' this time -- A Brazil or mainland China event might clear the air for a while, and make me more confident. But -- I am tired of buying just before the next deflationary event, and watching my investments go the wrong way.

Make sure you keep your powder dry, as you must be nimble these days.

So we have a run on the US dollar, as well as the US markets. Rising US interest rates -- if they persist for any length of time -- are likely to cause the US investors to get cold feet, and bail out of the markets a bit later ( was about 2-3 months later in 1987 ) . So rising interest rates -- due exclusively to foreign investors selling US treasuries -- could tank the entire US economy.

What is really frightening is that the US economy could be doing just fine -- just like what happened in the 1987 crash. I think that time the 'China syndrome' or 'rollover' as it was variously called, was due to the Japanese dumping US treasuries.

There is one example. I'm sure others can think of more.

LGB -- I repeat my concern to you -- please make sure that nothing can be traced to you. I know from observing others that an innocent 'fall guy' can be set up without his personal knowlege. It's the way office politics often works, and the unwary can get more than they bargain for.

Inflating out of debt is something our government can do that we can't, because we don't have control over the money supply. If one ( USG ) does it without incurring more debt, it can work ( in principle ) because the money you owe is worth less and less, though it does not make the creditors happy, and risks collapsing the economy. But -- it does not seem to work that way as new debt always seems to be created due to the basic defective process that caused the debt problem in the first place. Eventually the interest on the debt becomes uncontrollable.

I think what will happen is that all of our attempts to prevent world financial collapse will steadily put more and more stress on our economic system, as other economies collapse around us like dominoes. The collapse will probably not be this year. Perhaps y2k. Perhaps 2010-2015, though I expect signs of trouble long before that.

It will be interesting to see how our Fed reacts to the British raising interest rates. What a surprise! Perhaps the British inflationary pressures are greater than we thought. Their economy is very much like ours. But -- on the other hand -- their currency is no longer hamstrung by being the world's currency, and they can do what they please. We can't. If we raise interest rates right now, we might as well say the last rights to the world's economic system.

I think someone very wise recently said: 'The US will not get their financial house in order until the US dollar is no longer the World's currency'. Well you know the answere to that just as well as I do. We are apparently doomed to repeat the same catastrophe that befell the British pound Sterling. It is just a matter of time.

The Euro is not a GOLD backed currency nor will it be stricto sensu.

The closer we can get these days to a gold backed currency is the swiis FRANC which has a constitutional link to GOLD. On the other hand, the ECB will have foreign exchange reserves some denominated in US $ some in Yen and some in GOLD. But at any time it will be entitled to sell its GOLD to intervene in the capital markets on the relative value of the EURO. ( All GOLD reserves in regional CBs will also be callable by the ECB at any time )

A GOLD backed currency is in my opinion a currency redeemable in GOLD at a fixed parity at anytime by anyone.THAT IS NOT THE CASE

The $ will go down for other reasons ( mainly rising trade and current account deficits and maybe stock market collapse )

The next deflation if it ever comes will be particular as never in the world history such a debt orgy has developed. If a deflation occurs it will burst the financial bubble and make the huge pile of debt collapse.Then , the FED won't have any othr option than flood the world with liquidity which will eventualy prove inflationary.

inflation = inflation

deflation = inflation

GO GOLD

http://www.greysheet.com

http://www.gospelcom.net/chat/

Avalon, your daily quote is much appreciated.

Too many to list: Names of posters who added something of value these past 2 days. Thank you. Kitco reminds me of a basketball game when the first string comes back into the game after their break.

Now back to my chores, but what if the Japanese, Hangseng, oil, gold, are in fact finding footholds here? Does that mean the deflation freight train may, in fact, hit the breaks successfully? If the Chinese are selling defense to Pakistan, Iran, etc. does this mean new cold war/reflation? Off to ruminate - you need three stomaches to digest these markets.

Namasté

The Chinese do have 'official' US dollar reserves in their Central Banks, as does any CB the world over. So -- my intuitive guess is that the Russians have more US dollars than the Chinese. And, I suspect that the Chinese are actively accumulating gold.

The problem is that the I.M.F. has become the Typhoid Mary of emerging markets, spreading recessions in country after country.

The I.M.F. lends its client governments money to repay foreign investors, with the condition that the government also jack up interest rates, cut the flow of credits to the banking system and close weak banks. The measures are intended to restore investors' confidence. Instead, they kill the economies and further undermine confidence. . . .

http://www.nytimes.com/yr/mo/day/oped/04sach.html

In emerging markets all over the world, the drama is repeated. Investors who chased high short-term interest rates with short-term loans in recent years are calling in their loans. In just about every case, the I.M.F. is urging a heroic defense of the currency through draconian interest rate increases, sometimes backed by bailouts, sometimes not. The monetary medicine is now being applied with I.M.F. moral support in Brazil and South Africa, and with I.M.F. financial support in other parts of Africa, in Russia and throughout Asia.

It's worth registering with the NYTimes to read the whole article, Safire's editorial on the Supreme Court and today's cartoon. It's free.

http://www.uexpress.com/ups/opinion/cartoon/po/archive/po980514.html

I'll stay with a buy for gold in either a deflation or an inflation until another currency comes along that is the currency in power as is the dollar.

Got it - I was looking for the individual files. Thanks!

Here's a great site for US market indicators, if you don't already know about it.......something strange about the URL - if I copy from a working link, the new link works - if I type it in, it can't be found.

http://www.marketgauge.com

One thing is clear -- a currency collapse causes the sale of gold, not purchase. Another thing that is clear -- people can only buy gold when they have the assets to do so. If they are broke, and need food and shelter, they will sell whatever they must sell -- even gold.

After a currency collapse, and the gold flood is over, then the price of gold goes up in that currency. Or more accurately, as Donald says, the buying power of gold goes up.

When you think of gold and silver in this manner, you see what might happen even to silver in a deflationary scenario ( see above ) . The demand for silver might go down some more. Personally I doubt this, as I think there is still enough wealth left in the world for it to go up before the last deflationary collpase occurs. I think we are in unusually complicated times when only hard assets are predictable.

Thanks a lot for the GSR charts - it looks ( on the shorter-term one ) just as I thought - a really good chance the trend will continue to 30 or below, perhaps below 20.

It is amazing to see how stable this ratio was until the time of the Industrial revolution and/or silver demonetization, and very volatile thereafter.....Hmmmmmmmmmm.

Do you have access to an index of all the charts you have posted on Kitco?

Yesterdays action could very well have been a capit. of sorts ( but I thought that last week too ) . A classic island reversal formation was made. I know plat likes to do this and many other indicators say oversold. Perhaps I will buy today ( ? ) If it goes lower I will buy more....and lower more.......etc. Ya' know......'cost average' I believe is the term many at kitco like to use. RJ is using the same strategy ( from his earlier posts ) and it is a sound one. This metal will *move* while gold wallows in it's own foul depths of despair....... ( ugh ) .

How low can it go I dunno. But I like it here. I read the report about non PGM catalysts and I think that Volvo is one of the only manufacturers tooled for this new instrument.

http://www.infobeat.com/stories/cgi/story.cgi?id=2554460663-5d9

Meanwhile we have a tightening supply......or so it is said. Those Japanese will be have singed ( or burnt ) fingers before this is over.......and I will be laughing all the way to my favorite vacation spots.......... ( tee-hee ) ...

nuff said now......YES?

away......to pick up the phone

Éß

Kuston - Karsten ( ASU ) sounds good. We are putting together a travel plan. Will keep you informed. Perhaps I will have my new driver by then..........am making one.

But if a nasty depression crushed silver's demand, it would also crush the supply from silver which comes as a byproduct of other mining - about 80-85% of the total new supply.

On the basis of a lessening in industrial demand, it isn't clear that there would be a lessening of the overall deficit between total supply and total demand.

Jewelry ( a big demand factor at present ) and monetary and collecting demand ( nonexistent demand factors at present ) are the main driving forces which I would expect to control the price in such an event. Which way the price would move would be greatly dependant on the balance between those things.

I am encouraged

Yes

Here is annual data on the Gold/Silver ratio going back forever:

http://www.globalfindata.com/goldsil.htm

Also on the same site is a lot of other interesting long-term historical information on various markets:

http://www.globalfindata.com/samples.htm

Again I refer you to HARVEST OF RAGE by Joel Dyer {reviewed Sat May 09 1998 13:44} which documents the atrocities by the USG and its corporate partners/campaign contributors as well as the predatory advantages taken by anti-gov't groups preying on people's fear.

P.S. They are called Freemen not freeman. They have discredited and blackened both terms to the point where people now think they mean gun-toting, neighbor-screwing radicals rather than Jeffersonian revolutionaries.

I subscribe to a 50-year old magazine called THE FREEMAN - Ideas on Liberty published by The Foundation For Economic Education, Inc.

http://www.fee.org/

Ever since the freemen went on their campaign against gov't and neighbor no issue mailed to me has arrived - except in a plain manila envelope. Somewhere in the USPS censorship is working. My issues of FREEMAN are being rerouted - likely to the trash can. In the censor's eyes I must be the same kind of crazy, anti-gov't, conspiracy mongering subversive revolutionary that characterizes the freemen. Again I emphasize that if the freemen only picked on the gov't I could agree with them. But because they used the freeman philosophy to screw their neighbors - I want them tried by a jury of honest militia members who are trying to maintain credibility with their friends and neighbors while standing guard or fighting against government tyranny.

No revolution can succeed without the support of enough countrymen to lend assistance, cover, men and military materiel. Groups like the freemen are destroying OUR capability of mustering that support.

I think it is a no-win scenario for the 'fiat' currency crowd. But -- there is one reason why the inflation of the US dollar might commence. Just how is the US goverment going to deal with the mountain of debt that will be coming due very soon if interest rates go up due to a US crisis of some kind? We have virtually no official long term debt anymore, thanks to the wisdom of our current administration. The only answer is to let the dollar drop. Also -- I think AG and RR fear deflation much more than the enemy they understand -- inflation.

Keep your powder dry!

Take the world's ( 'Western' ) financial system. Add decades of inflation and debt, and an ample supply of gold in the world's CB's. Eventually the debt catches up with you, and serial deflations start knocking out the members of the financial 'trade' group. But you naively try to maintain the ( belief ) system by selling ( or leasing ) one of your most precious assets -- gold. It is profitable to trade with the one asset you have that cannot be inflated/corrupted. Your trade group gets smaller and smaller, as the 'weaker' members fall out of the group, but you desperately keep repeating the same mistakes, whittling away at your gold 'savings' until you have no 'savings' left ( gold ) . Finally at some point you have ( as the last remaining fiat currency member ) nothing left to do except capitulate with a final deflationary event.

So -- the question is just how far will the 'fiat' currency trade group members go in their endeavors to prevent the inevitable. 280/0z, 260/oz, etc.? If gold goes below 280/oz, IMHO, it will be because Germany had to capitulate due to a major deflationary event in Europe. Germany has debt problems already with their welfare society. If things get that bad, even Switzerland may be forced to sell some gold to keep the illusion going a bit longer. A combined Russian/SEAsian/South American collapse might force their hand.

On the other hand, even major deflation cannot go on much longer, IMHO. And one way we can keep track is to count the 'fiat' economies that have -- or have not devalued. You can't do any real damage to the price of gold if you don't have any left to sell. But there are CB's that could still sell/lease more gold. Finally, there is no way of predicting how many chairs will be left when the music stops for the last time. One? More than one?

Just a thought, IMHO.

Jeil: How about looking at silver?

Candlestick patterns are patterns recognized and used by the Japanese

for day to day trading. Most of them are useful in recognizing a

potential change in direction. One of the ones I like the best is the

Doji Star. This pattern occurs when the closing price equals the open.

This represents indecision in the market, and can be a precursor to a

reversal at the end of an uptrend or downtrend. Watch for it in an

average, commidity or stock.

say the least ) .

today's candle opens in the same direction as yesterday's move, but

reversese direction, closing well into the territory of yesterday's range ) . Piercing lines are of major significance especially at the end of

long moves. Several other daily signals were fired, including stochastic

divergence, a momentum peak, a Kirshenbaum band, and a Relative Strength

Index Peak.

This doesn't mean that it takes off immediately. It just means that

the troops have lined up, and are waiting for the moment to attack.

Also it doesn't mean the battle is going to be won; but the odds look to

be improving as time passes.

This morning in South Africa, Anglogold and the shareholders of several other smaller gold mining companies including, Eastvaal, Elandsrand, Ergo, Freegold, Joel, Southvaal, and Western Deeps will probably join forces to create the world