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One of Brian’s Favorite Quotes

If Caesar had been as virtuous as he was daring and sagacious, what could he, even in the plenitude of his usurped power, have done to lead his fellow citizens into good government?..  If their people indeed had been, like ourselves, enlightened, peaceable, and really free, the answer would be obvious.  ‘Restore independence to all your foreign conquests, relieve Italy from the government of the rabble of Rome, consult it as a nation entitled to self-government, and do its will.‘ But steeped in corruption, vice and venality, as the whole nation was… what could even Cicero, Cato, Brutus have done, had it been referred to them to establish a good government for their country?..  No government can continue good but under the control of the people; and their people were so demoralized and depraved as to be incapable of exercising a wholesome control.  Their reformation then was to be taken up ab incunabulis.  Their minds were to be informed by education what is right and what wrong; to be encouraged in habits of virtue and deterred from those of vice by the dread of punishments proportioned, indeed, but irremissible; in all cases, to follow truth as the only safe guide, and to eschew error, which bewilders us in one false consequence after another in endless succession.  These are the inculcations necessary to render the people a sure basis for the structure of order and good government.  But this would have been an operation of a generation or two at least, within which period would have succeeded many Neros and Commoduses, who would have quashed the whole process.  I confess, then, I can neither see what Cicero, Cato and Brutus, united and uncontrolled could have devised to lead their people into good government, nor how this enigma can be solved.”
— Thomas Jefferson (1743–1826) to John Adams
 1819. ME 15:233

Liquidity Cuts Both Ways In The Crazy Gold Market (GLD)

Friday’s sell-off in gold sent the yellow metal .  In other words, the value of gold is down 20 percent from its recent high.

At least some of this elevated volatility can be attributed to the fact that it’s just easy to sell gold.

This is apparent in the by investors.

“Prior to the introduction of Gold ETFs, investors seeking exposure to the metal were limited to gold mining stocks, bullion, coins and futures contracts, which carry among them extra risks including mining company fundamentals, bid and ask spreads, valuation, storage costs, liquidity constraints and futures expiries,” said in an interview with Business Insider last December.

“We surmise that the introduction of the U.S.-traded Gold ETF (GLD) on November 18, 2004 has been in no small part responsible for the persistently good performance of the precious metal for close to 8 years since.”

This .

In a phone call on Friday, Stoltzfus told Business Insider, “Liquidity cuts both ways.”

As prospects for interest rates to rise down the line, Stoltzfus notes that investors have to ask themselves “What is my best choice here?”

“Combined with extreme liquidity, it’s easy to respond to that thought,” he said.

ETFs have allowed investors and speculators to easily rush into gold.  And that same investment vehicle is allowing them to rush for the exits.


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