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Paul Brodsky continues:

 

“It takes a large dose of humility to realize that all the value in the world can’t necessarily predict timing for when that value will be manifest.  What we’re doing is playing a rope-a-dope, like Ali did to Frazier, and when they throw a punch at the precious metals market, we take the punch and we buy some more.  We increase our weighting even further.


Eventually they will be punched out and there will be nothing but value and that’s when you will see the market turn.  If less than 1% of the broad market of investment capital is invested in precious metals today, it probably won’t take much to see that number rise to between 5% and 10%.  In that case, the magnitude of change will be quite parabolic.


If nothing changes, I think what you will see is a natural accretion in price, a steady rise....


Continue reading the Paul Brodsky interview below...  




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“Yesterday I noticed Martin Wolf wrote what most would consider a thoughtful piece in the Financial Times.  First he laid out, quite nicely, the issues behind current macro economic instability.  


He borrowed from Hyman Minsky, specifically from his great book ‘Stabilizing an Unstable Economy.’  He said, ‘Leverage becomes perceived as the most efficient path to wealth, then the stable period of nominal asset growth during the leverage buildup.  This masks the necessary future macro economic deleveraging that must occur.


The third phase is, eventually, an increasing proportion of new debt issuance must go toward servicing and refinancing existing debt, rather than financing new capital projects.  Finally, a Ponzi scheme becomes obvious to all and the system fails.’  Wolf then connected Minsky’s theory to the current state of affairs when he asked the question and then answered it.  He asked, ‘Does this sound familiar?’


Wolf established himself as a credible observer by doing this.  But I was saddened by the rest of the piece, which comprised 80% of the piece, when he tried to answer how to get out of this conundrum.  He began that portion, and I thought it was fascinating, he began by saying, ‘We can see 3 elements if one puts to one side the notion that we should return to the 19th century gold standard or eliminate banking.’


So, he spent 80% of his piece going through all of the things related to Keynesianism and how to fix finance, inequality, jobs, corporate governance, taxation, politics, globalization, all of these things from a policy construct.  But his lattice of options completely eliminated stable or hard money, which should be considered at the very source of why the problem of why the problem exists in the first place.


He proposed the same fixes that, mathematically, can’t possibly provide a solution to the problem even he and others are willing to acknowledge exists now.  As a fund manager, I come back to the point that there is only value and there is only trying to anticipate the ultimate outcome.  This is the situation and for the time being we must wait for the largest percentage of the so-called market to come around.


We’ve made our bets and whether the market for gold is $1,500 spot or $2,000 spot or $2,500 spot, it doesn’t matter to us.  We see gold is already extraordinarily undervalued given past inflation.  The price of gold should be over five times than where it is currently trading.  The fact that central planners are going to print more money means it should be even that much higher.”


To read Paul Brodsky’s previous KWN interview “Gold, Silver, Lost Confidence & Systemic Failure” CLICK HERE. 


© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.


Eric King

KingWorldNews.com

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